Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $571.4 million, down from $613.6 million in Q3 2024, primarily due to lower coal sales prices and transportation revenues, partially offset by higher coal sales volumes [4] - Average coal sales price per ton decreased by 7.5% year-over-year to $58.78, but increased by 1.5% sequentially [4] - Net income attributable to Alliance Resource Partners, L.P. in Q3 2025 was $95.1 million, including a $3.7 million increase in the fair value of digital assets [10] - Adjusted EBITDA for the quarter was $185.8 million, up 9% from Q3 2024 and up 14.8% sequentially [10] - Total liquidity at quarter end was $541.8 million, including $94.5 million in cash [10] Business Line Data and Key Metrics Changes - Total coal production in Q3 2025 was 8.4 million tons, an 8.5% increase compared to Q3 2024, while total coal sales volumes increased by 3.9% to 8.7 million tons [5] - Coal sales volumes in the Illinois Basin increased by 10.8% year-over-year, but decreased by 0.8% sequentially [5] - Coal sales volumes in Appalachia decreased by 13.3% year-over-year but increased by 21.8% sequentially due to improved mining conditions [6] - Total revenues from royalties segments were $57.4 million, up 11.9% compared to Q3 2024, driven by higher coal royalties tons sold [8] Market Data and Key Metrics Changes - Year-to-date utility coal consumption increased by 15% in MISO and 16% in PJM, reflecting strong demand fundamentals [17] - Analysts project 4% to 6% annual growth in electricity demand in PJM and other markets over the next several years [18] - The recent PJM capacity auction cleared at maximum allowable prices, indicating a need for coal-fired power plants [18] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet, investing prudently in core operations, and positioning for long-term growth [19] - The company has secured additional contract commitments for 2026, with 29.1 million sales tons contracted, up 9% from the previous quarter [12] - The company is actively pursuing disciplined growth opportunities in its oil and gas royalties business [20] Management's Comments on Operating Environment and Future Outlook - Management noted that U.S. coal demand is supported by favorable federal energy policies and rapid electricity demand growth [17] - The company expects to increase production at Tunnel Ridge and in the Illinois Basin in 2026 to meet anticipated demand [18] - Management expressed confidence in the sustainability of lower costs in Appalachia due to improved mining conditions [63] Other Important Information - The company generated free cash flow of $151.4 million after investing $63.8 million in coal operations [10] - Distributable cash flow for Q3 2025 was $106.4 million, leading to a distribution coverage ratio of 1.37 times [11] Q&A Session Summary Question: Duration and structure of supply contracts - Most contracts are for two to three years, primarily fixed pricing, with some escalation in years two and three [25] Question: Pricing guidance for 2026 - Overall pricing is likely to be down year-over-year due to contracts rolling off, but cost improvements at Tunnel Ridge may maintain margins [28] Question: Impact of Department of Energy investments - Increased engagement from utilities and the Department of Energy is expected to enhance demand for coal [32] Question: Equity method investment income outlook - Modestly positive numbers are anticipated for Q4, with some investments starting to yield distributions [37] Question: Confidence in uncommitted MET tons - Historically, MET tons are committed quarterly, and the company is confident in placing those tons [50] Question: Logistics of increasing production - No additional staffing is required to increase production; existing capital investments will be utilized [49] Question: CapEx expectations - Full-year CapEx is expected to come in toward the midpoint of guidance [60] Question: Future M&A outlook - Focus is more on minerals rather than expanding coal operations [46]

Financial Performance - For the 2025 Quarter, net income increased by 10.2% to $95.1 million, or $0.73 per unit, compared to $86.3 million, or $0.66 per unit for the 2024 Quarter[3] - Adjusted EBITDA increased by 9.0% to $185.8 million in the 2025 Quarter compared to $170.4 million in the 2024 Quarter[3] - Total revenues for the 2025 Period decreased by 10.7% to $1.66 billion compared to $1.86 billion for the 2024 Period[7] - Net income attributable to ARLP for Q3 2025 was $95,104, up from $86,281 in Q3 2024, reflecting a 9.5% increase[39] - Adjusted EBITDA for the three months ended September 30, 2025, was $185.8 million, compared to $170.4 million in the same period of 2024, reflecting an increase of 9.5%[56] - Free cash flow for the three months ended September 30, 2025, was $151.4 million, up from $103.2 million in the same period of 2024, marking an increase of 46.6%[51] - Distributable Cash Flow for the three months ended September 30, 2025, was $106.4 million, compared to $97.6 million in the same period of 2024, an increase of 8.9%[48] Revenue and Sales - Total revenues decreased by 6.9% to $571.4 million in the 2025 Quarter, primarily due to a 7.5% decline in coal sales price per ton and reduced transportation revenues[3] - Coal sales volumes rose by 3.9% to 8.7 million tons sold in the 2025 Quarter compared to 8.4 million tons sold in the 2024 Quarter[3] - The Illinois Basin coal operations saw tons sold increase by 10.8% year-over-year, while Appalachia experienced a 13.3% decrease in sales volumes compared to the 2024 Quarter[13] - Total revenues for Q3 2025 were $571,367, a decrease of 6.9% from $613,569 in Q3 2024, primarily due to lower coal sales[39] Cash Distribution and Investments - The company declared a quarterly cash distribution of $0.60 per unit, or $2.40 per unit annualized[4] - The Board approved a cash distribution of $0.60 per unit for the 2025 Quarter, equating to an annualized rate of $2.40 per unit, payable on November 14, 2025[21] - ARLP invested approximately $22.1 million of a $25.0 million commitment in a limited partnership that operates a coal-fired power plant during the 2025 Quarter, supporting growth in energy infrastructure[18] Operational Efficiency - Operating expenses decreased to $466,403 in Q3 2025 from $512,502 in Q3 2024, a reduction of 9.0%[39] - Operating expenses for the three months ended September 30, 2025, were $354.6 million, a decrease from $384.8 million in the same period of 2024, representing a decline of 7.8%[53] - Capital expenditures for the nine months ended September 30, 2025, were $218,521, down from $335,586 in 2024[42] - Capital expenditures for the three months ended September 30, 2025, were $64.7 million, down from $110.3 million in the same period of 2024, a decrease of 41.4%[51] Debt and Liquidity - Total debt and finance leases as of September 30, 2025, were $470.6 million, with total liquidity of $541.8 million, including $94.5 million in cash and cash equivalents[20] - Cash and cash equivalents at the end of Q3 2025 were $94,481, down from $136,962 at the end of Q4 2024[40] - ARLP holds 568 bitcoins valued at $64.8 million as of September 30, 2025, contributing to its liquidity position[20] Future Guidance - For the full year ending December 31, 2025, total sales tons are guided at 32.50 to 33.25 million short tons, with coal sales price per ton expected to be between $58.00 and $60.00[26] - The company anticipates 4-6% annual growth in electricity demand in PJM and other markets, driven by normalized utility inventories and demand from data centers[24] - The 2026 book includes 29.1 million tons committed and priced, representing a 9% increase from the previous quarter[24] - Oil & Gas Royalties segment is adjusting BOE volume guidance due to the timing of a multi-well pad in the Delaware Basin, expected to come online in early 2026[24] Segment Performance - Segment Adjusted EBITDA for the Appalachia coal operations increased by 44.2% to $54.1 million in the 2025 Quarter compared to $37.5 million in the 2024 Quarter[11] - Segment Adjusted EBITDA for the Coal Royalties segment increased to $17.1 million in the 2025 Quarter, up from $11.1 million in the 2024 Quarter, reflecting higher royalty tons sold and average royalty rates[16] - Segment Adjusted EBITDA for Coal Operations for the three months ended September 30, 2025, was $356.7 million, compared to $386.3 million in the same period of 2024, a decrease of 7.7%[53] Asset Management - Total assets as of September 30, 2025, were $2,908,341, slightly down from $2,915,730 at the end of 2024[41] - The company reported cash flows from operating activities of $507,260 for the nine months ended September 30, 2025, compared to $634,711 for the same period in 2024[42] - The company recorded a change in fair value of digital assets amounting to $3,739 in Q3 2025, compared to $332 in Q3 2024[39] - Impairment loss on investments was $25.0 million, related to a preferred equity investment in a battery materials company[50] - Estimated maintenance capital expenditures for 2025 are projected to be $7.28 per ton produced, down from $7.76 per ton in 2024[50]

Core Viewpoint - The Zacks Coal industry is experiencing significant challenges due to declining coal usage in U.S. thermal power plants, with projections indicating a marginal improvement in demand by 2025 followed by a drop in 2026 due to ongoing energy transitions and utility operators phasing out coal assets [1][3]. Industry Overview - The Zacks Coal industry includes companies involved in coal exploration and mining, with the U.S. holding an estimated 252 billion short tons of recoverable coal reserves, 58% of which is underground mineable [3]. - Five U.S. states contribute to approximately 70% of annual coal production and 60% of surface mine extraction [3]. - The industry faces long-term challenges as renewable energy adoption accelerates and coal-fired power plants are gradually retired [3]. Trends Impacting the Industry - Coal export volumes are expected to decline in 2025 and continue into 2026 due to a global supply surplus and falling prices, particularly affecting metallurgical coal exports [2][4]. - The U.S. coal production is projected to be 531 million short tons in 2025, an increase from 512 million short tons in 2024, but expected to drop to 494 million short tons in 2026 [5]. - Coal's share in U.S. electricity generation is anticipated to decrease from 17% in 2025 to 16% in 2026, driven by rising environmental concerns and the transition to cleaner energy sources [5]. Industry Performance and Valuation - The Zacks Coal industry ranks 230, placing it in the bottom 5% of 243 Zacks industries, indicating a lackluster performance outlook [6][8]. - The coal industry has outperformed the Zacks Oil and Gas sector and the S&P 500 composite over the past year, with a gain of 22.7% compared to a 4.2% decline in the Oil-Energy sector and a 13.9% gain in the S&P 500 [9]. - The industry currently trades at a trailing 12-month EV/EBITDA of 8.84X, significantly lower than the Zacks S&P 500 composite's 18.12X [12]. Notable Companies - **Alliance Resource Partners (ARLP)**: Based in Tulsa, OK, ARLP produces coal primarily for utilities and industrial users, with projected sales tonnage in 2025 between 32.75-34 million short tons. The current distribution yield is 9.58% [16][17]. - **SunCoke Energy (SXC)**: Located in Lisle, IL, SXC focuses on metallurgical coal essential for steel production. The company benefits from its acquisition of Phoenix Global, which is expected to enhance earnings and cash flow stability. The current dividend yield is 5.82% [21][22].

Company Overview - Alliance Resource Partners, L.P. is primarily engaged in the production and marketing of coal, generating revenue from these activities [1]. Industry Context - The coal industry has undergone significant changes over the last two decades, impacting the dynamics of energy production and market demand [1].

Company Overview - Alliance Resource Partners, L.P. is primarily engaged in the production and marketing of coal, generating revenue from these activities [1]. Industry Context - The coal industry has undergone significant changes over the last two decades, impacting the dynamics of energy production and market demand [1].

Summary of Alliance Resource Partners Conference Call (October 08, 2025) Company Overview - **Company**: Alliance Resource Partners (NasdaqGS:ARLP) - **Market Capitalization**: Approximately $3.5 billion - **Structure**: Master Limited Partnership (MLP) which is tax-advantaged and yield-oriented, primarily focused on energy infrastructure and natural resource activities [2][3][5] Business Segments 1. **Coal Operations**: - Generates 80% to 85% of cash flow - Second largest coal producer in the Eastern United States - Operates seven underground mining complexes across several states - 92% of sales in 2024 directed to domestic electric power generation markets [5][6][10] 2. **Oil and Gas Mineral Interests**: - Represents 15% to 20% of cash flows - Generated approximately $115 million in segment-adjusted EBITDA in 2024, up from $40 million in 2020 - Focused on passive investments in royalty interests, primarily in the Permian Basin [6][19][20] 3. **Other Growth Investments**: - Includes investments in energy technology (Matrix) and digital asset technology (BitTiki for Bitcoin mining) - Recent investment in Gavin Coal-Fired Power Plant, representing a 5.5% equity stake [7][22][24] Industry Outlook - **Coal Industry**: - Positive outlook supported by current administration policies emphasizing coal's role in grid reliability - Anticipated increase in U.S. electricity demand driven by data centers, onshoring, and AI [8][10][13] - Shift towards domestic markets with 92% of sales expected to be domestic in 2025, compared to an average of 86% from 2021 to 2024 [10][11] - **Government Support**: - Recent actions from the administration include extending compliance timelines for environmental regulations and funding for modernizing coal plants [15][16][17] Capital Allocation Priorities 1. **Strengthening Balance Sheet**: - Low leverage with gross debt to trailing 12 months adjusted EBITDA at 0.8 times [26][27] 2. **Investments in Coal Operations**: - Planned capital investment of $285 million to $320 million in mining operations for 2025 [27][28] 3. **Oil and Gas Royalties**: - Approximately $100 million allocated for reinvestment in oil and gas minerals [28] 4. **Distributions to Unitholders**: - Focus on providing attractive yields through cash distributions rather than stock buybacks [29][30] Additional Insights - **Growth Potential**: - The oil and gas minerals segment is expected to potentially double in size over the next eight years [21] - Investments in technology and diversification into non-fossil fuel sectors are seen as growth opportunities [23][24] - **Market Dynamics**: - Domestic pricing for coal is currently more attractive than export pricing, leading to a strategic focus on domestic markets [11][12] This summary encapsulates the key points discussed during the conference call, highlighting the company's structure, business segments, industry outlook, capital allocation strategies, and additional insights into growth potential and market dynamics.

Group 1 - Alliance Resource Partners, L.P. (NASDAQ:ARLP) experienced a share price increase of 6.14% from September 25 to October 2, 2025, making it one of the top-performing energy stocks during that week [1] - The company operates as a diversified energy entity, primarily focused on coal production and marketing to major American utilities and industrial users [2] - The American coal sector received a significant boost following the White House's announcement to open 13 million acres of federal lands for coal mining and allocate $625 million to enhance coal power generation [3] Group 2 - The Environmental Protection Agency (EPA) plans to ease regulations on water and air pollution, which is expected to prolong the operational lifespan of coal power plants [3] - The strategic initiatives are part of the Trump administration's efforts to reverse the decline in the American coal sector and promote coal as a power generation source [3]

Group 1 - Alliance Resource Partners, L.P. (ARLP) has garnered significant hedge fund interest, making it one of the 11 Best Coal Stocks to Buy According to Hedge Funds [1] - ARLP recently hit a 52-week low, closing at $22.21 on September 11, 2025, with a strong dividend yield of 10.56% and a consistent payout history of 27 years [2] - The stock appears undervalued with a P/E ratio of 12.49, but faces challenges from the energy industry's issues and overall market conditions [2][3] Group 2 - In addition to coal production, ARLP is involved in managing royalties and leasing oil and gas assets, and it provides mining technology solutions across the United States [3]

Industry Overview - The Energy Information Administration (EIA) forecasts that U.S. power demand will exceed previous records in 2025 and 2026, reaching 4,187 billion kWh in 2025 and 4,305 billion kWh in 2026, surpassing the 2024 record of 4,097 billion kWh [2] - Coal's share of electricity generation is expected to increase from 16% in 2024 to 17% in 2025 before declining again in 2026, while renewables will rise from 23% in 2024 to 26% in 2026 [3] - The ongoing demand for coal highlights its role as a reliable electricity source in the U.S., presenting investment opportunities in coal producers benefiting from long-term contracts and stable pricing [4] Investment Opportunities - The best coal stocks to buy offer a mix of conservative positioning and income potential as global energy consumption rises [5] - The methodology for selecting the best coal stocks involved using the Finviz screener and assessing hedge fund sentiment through Insider Monkey's database, tracking over 1,000 hedge funds [7] - Research indicates that imitating top hedge fund stock picks can lead to market outperformance, with a reported return of 373.4% since May 2014 [8] Company Highlights - NACCO Industries, Inc. (NYSE:NC) has 5 hedge fund holders and announced a quarterly dividend of $0.2525 per share, representing a 2.81% yield, with a dividend growth rate of 11% over the past year [9][10][11] - Alliance Resource Partners, L.P. (NASDAQ:ARLP) has 8 hedge fund holders and offers a strong 10.56% dividend yield, with a P/E ratio of 12.49, despite facing market challenges [12][13][14]

Group 1 - Samuel Smith has extensive experience in dividend stock research and investment, having served as lead analyst and Vice President at various firms [1] - He is a Professional Engineer and Project Management Professional, holding degrees in Civil Engineering & Mathematics and a Masters in Engineering with a focus on applied mathematics and machine learning [1] - Samuel leads the High Yield Investor investing group, collaborating with Jussi Askola and Paul R. Drake to balance safety, growth, yield, and value [2] Group 2 - High Yield Investor provides real-money core, retirement, and international portfolios, along with regular trade alerts and educational content [2] - The service includes an active chat room for investors to share insights and strategies [2]