Alliance Resource Partners, L.P. (ARLP) Reports Q1 2026 Results, Declares Dividend, and Updates 2026 Guidance

Key Financial and Operational Highlights

• Total Revenue: \$516.0 million, a decrease of 4.5% year-over-year.
• Net Income: \$9.1 million (\$0.07 per unit), down from \$74.0 million (\$0.57 per unit) in Q1 2025.
• Adjusted EBITDA: \$155.0 million, a 3.1% decrease year-over-year.
• Quarterly Cash Distribution: \$0.60 per unit (annualized \$2.40 per unit), payable May 15, 2026.
• Leverage Ratios: Total leverage at 0.73x and net leverage at 0.69x trailing twelve months Adjusted EBITDA.
• Oil & Gas Royalty Segment: Record revenues and volumes, up 14.6% and 16.1% respectively year-over-year.
• Mineral Interest Acquisitions: \$16.2 million completed during the quarter.
• Guidance Update: 2026 coal sales volumes over 95% committed and priced at the midpoint of guidance.

Detailed Financial and Segment Performance

1. Revenue and Profitability Analysis

ARLP’s total revenues fell 4.5% to \$516.0 million compared to Q1 2025, mainly due to lower coal sales pricing. This was partially offset by record oil & gas royalty revenues and higher coal sales volumes. Net income dropped sharply to \$9.1 million from \$74.0 million in the prior year period, largely driven by:

• Lower coal sales pricing
• Higher depreciation expenses
• An \$11.6 million decrease in the fair value of digital assets
• A significant \$37.8 million non-cash asset impairment charge related to ceasing longwall production and uncertainty at the Mettiki mine

Adjusted EBITDA fell 3.1% year-over-year to \$155.0 million. Compared to the previous quarter (Q4 2025), revenues were down 3.6% and net income plummeted by 89%, mainly due to lower production and coal sales volumes at the Hamilton mine (impacted by a planned extended longwall move), increased depreciation, and lower investment income.

2. Segment Results

Coal Operations

• Illinois Basin:
  • Tons sold: 6.07 million (up 0.4% YoY, down 5.9% sequentially)
  • Sales price per ton: \$51.05 (down 7.4% YoY due to expiration of higher priced contracts)
  • Segment Adjusted EBITDA: \$99.2 million (down 21.4% YoY, down 10.6% sequentially)
• Appalachia:
  • Tons sold: 1.79 million (up 3.6% YoY, up 8.0% sequentially)
  • Sales price per ton: \$74.51 (down 4.8% YoY, down 11.1% sequentially)
  • Segment Adjusted EBITDA: \$26.2 million (up 67.9% YoY, down 24.3% sequentially)
• Total Coal Operations:
  • Tons sold: 7.86 million (up 1.1% YoY, down 3.1% sequentially)
  • Sales price per ton: \$56.40 (down 6.5% YoY, down 2% sequentially)
  • Segment Adjusted EBITDA: \$125.1 million (down 10.8% YoY, down 13.2% sequentially)

Royalties Segment

• Oil & Gas Royalties:
  • Barrels of oil equivalent (BOE) sold: 1.022 million (up 16.1% YoY, up 3.3% sequentially)
  • Average sales price per BOE: \$40.47 (down 1.3% YoY, up 17% sequentially)
  • Segment Adjusted EBITDA: \$34.6 million (up 15.8% YoY, up 15.2% sequentially)
• Coal Royalties:
  • Royalty tons sold: 6.61 million (up 30.4% YoY, up 1.7% sequentially)
  • Revenue per royalty ton: \$2.89 (down 7.1% YoY, down 16.2% sequentially)
  • Segment Adjusted EBITDA: \$12.3 million (up 30.6% YoY, down 15.7% sequentially)
• Total Royalties Segment Adjusted EBITDA: \$46.9 million (up 19.3% YoY, up 5.1% sequentially).

3. Balance Sheet and Liquidity

• Total debt and finance leases outstanding: \$507.7 million
• Cash and cash equivalents: \$28.9 million
• Total liquidity: \$431.2 million (including \$402.3 million in credit availability)
• Digital assets (Bitcoin): 618 bitcoins valued at \$42.2 million as of March 31, 2026

4. Dividend Declaration and Tax Notice

• Quarterly cash distribution of \$0.60 per unit (annualized \$2.40 per unit) declared, payable May 15, 2026
• Special tax notice: 100% of distributions to non-U.S. investors are considered effectively connected income and subject to maximum U.S. withholding tax rates plus 10%

5. Outlook and Guidance Update

2026 Guidance (updated):

• Coal Sales Volumes: 33.75–35.25 million short tons (ILB: 26.00–27.00m, Appalachia: 7.75–8.25m)
• Committed & Priced Sales Tons for 2026: Over 95% committed and priced at midpoint of guidance
• Coal Sales Price/Ton:
  • Illinois Basin: \$50.00–\$52.00
  • Appalachia: \$66.00–\$71.00
  • Total: \$54.00–\$56.00
• Segment Adjusted EBITDA Expense/Ton:
  • Illinois Basin: \$33.00–\$35.00
  • Appalachia: \$49.00–\$53.00
  • Total: \$37.00–\$39.00
• Oil & Gas Royalties (2026):
  • Oil: 1,600–1,700 thousand barrels
  • Natural Gas: 6,600–7,000 thousand MCF
  • Liquids: 875–925 thousand barrels
  • EBITDA Expense: ~14% of revenue
• Coal Royalties:
  • Royalty tons sold: 30.0–30.8 million
  • Revenue per ton: \$3.00–\$3.20
  • EBITDA expense/ton: \$1.10–\$1.20
• Other Key Guidance:
  • Depreciation, depletion, and amortization: \$315–\$325 million
  • General and administrative: \$95–\$100 million
  • Net interest expense: \$43–\$47 million
  • Income tax expense: \$22–\$24 million
  • Total capital expenditures: \$280–\$300 million

Management highlighted ongoing strong contracting activity, with most coal sales for 2026 already committed and priced. The company also capitalized on a brief reopening of U.S. thermal coal export opportunities in March to secure export contracts for 1.8 million tons for 2026 and 2027. Weather-related shipment disruptions in Q1 are expected to be recovered over the remainder of the year, and no further longwall moves are anticipated in 2026 after Q2.

The oil & gas royalties segment is outperforming expectations, prompting ARLP to increase its volume guidance for the year. With the company’s portfolio unhedged, realized pricing will directly benefit from any upward moves in commodity prices.

Key Risks and Shareholder Considerations

• The sharp decline in net income and the significant non-cash impairment at the Mettiki mine may raise concerns about future profitability and asset valuations.
• Ongoing volatility in coal and oil prices, regulatory changes, environmental pressures, and operational disruptions (such as weather and longwall moves) remain material risks.
• ARLP’s high level of coal sales commitments for 2026 provides revenue visibility, but any production issues or market downturns could impact results.
• The company’s increasing focus and success in oil and gas royalties diversify its earnings base, which could be a positive for long-term investors.
• Tax treatment of distributions to non-U.S. investors may impact demand for ARLP units in international markets.
• ARLP retains a significant position in digital assets (Bitcoin), which adds exposure to cryptocurrency volatility.

Conclusion

ARLP’s Q1 2026 report presents a mixed picture: while coal pricing pressures and asset impairments have impacted net income, the company continues to deliver robust cash flows, maintain a strong balance sheet, and grow its oil & gas royalties segment. The high level of committed coal sales and updated guidance provide some stability, but investors should weigh ongoing risks in the sector and monitor the company’s operational execution in the coming quarters.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should review the full SEC filings and consult with a financial advisor before making investment decisions. Past performance is not indicative of future results. All forward-looking statements are subject to risks and uncertainties as detailed in the company’s filings.

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