Alliance Resource Partners(ARLP) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Q2 2025 Financial & Operational Highlights ARLP's Q2 2025 saw reduced revenues and net income, driven by lower coal prices and an investment impairment, despite increased sales volumes, alongside a $0.60 per unit distribution and updated 2025 guidance Q2 2025 Key Financial Data | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Total Revenues | $547.5 Million | $593.4 Million | -7.7% | | Net Income | $59.4 Million | $100.2 Million | -40.8% | | Net Income Per Basic and Diluted Unit | $0.46 | $0.77 | -40.3% | | Adjusted EBITDA | $161.9 Million | $181.4 Million | -10.8% | - Coal sales volume increased to 8.4 million tons, a 6.8% year-over-year increase, with Hamilton and River View mines setting monthly shipment records in June 2025[3][4] - Added 17.4 million tons of committed and priced coal sales (including 1.1 million tons of customer options) for the period 2025-2029[4] - Oil and gas royalty BOE (Barrels of Oil Equivalent) sales volume increased 7.7% year-over-year, flat with Q1 2025[4] - Declared a quarterly cash distribution of $0.60 per unit, an annualized rate of $2.40 per unit[4] CEO Commentary CEO Joseph W. Craft III noted strong Q2 performance, increased coal shipments, and significant new contracts, emphasizing robust domestic coal demand and its critical role in grid reliability, supported by favorable government policies - Tunnel Ridge mine expects improved productivity and lower unit costs in H2 2025 after completing its longwall move[8] - Coal shipments reached 8.4 million tons, up 6.8% from Q2 2024 and 7.9% sequentially, with Hamilton and River View mines setting monthly shipment records in June[8] - Added 17.4 million tons of committed and priced coal sales this quarter, bringing the year's total new commitments to 35.1 million tons for delivery over the next four and a half years[8] - Domestic market fundamentals remain constructive, with strong coal consumption driven by rising natural gas prices and increased power demand, leading to improved dispatch economics for coal-fired generation[8] Financial Performance Analysis Consolidated Financial Results ARLP's consolidated revenues and net income declined year-over-year for both Q2 and H1 2025, primarily due to lower coal prices, reduced transportation revenues, and a $25 million investment impairment, partially offset by higher sales volumes and digital asset value Three Months Ended June 30, 2025 vs. 2024 ARLP's Q2 2025 saw a decline in total revenues and net income compared to Q2 2024, driven by lower coal sales prices and an investment impairment, despite increased coal sales volumes Q2 2025 vs. Q2 2024 Consolidated Financial Data | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Total Revenues | $547.5 Million | $593.4 Million | -7.7% | | Coal Sales Price (Per Ton) | $57.92 | $65.30 | -11.3% | | Coal Sales Volume | 8.4 Million Tons | 7.9 Million Tons | +6.8% | | Net Income | $59.4 Million | $100.2 Million | -40.8% | | Net Income Per Basic and Diluted Unit | $0.46 | $0.77 | -40.3% | | Adjusted EBITDA | $161.9 Million | $181.4 Million | -10.8% | - Total revenues decreased primarily due to an 11.3% decline in coal sales price and reduced transportation revenues, partially offset by a 6.8% increase in coal sales volume[3] - Net income decreased due to lower revenues, increased depreciation, and a $25 million non-cash impairment loss on an investment in preferred stock of a battery materials company in Q2 2025, partially offset by a $16.6 million increase in digital asset fair value[3][5] Six Months Ended June 30, 2025 vs. 2024 ARLP's H1 2025 saw a significant decline in total revenues and net income compared to H1 2024, primarily driven by reduced coal sales and transportation revenues, along with an investment impairment H1 2025 vs. H1 2024 Consolidated Financial Data | Metric | H1 2025 | H1 2024 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1.09 Billion | $1.25 Billion | -12.6% | | Net Income | $133.4 Million | $258.2 Million | -48.3% | | Net Income Per Basic and Diluted Unit | $1.03 | $1.98 | -48.0% | | Adjusted EBITDA | $321.9 Million | $419.9 Million | -23.3% | - Total revenues decreased 12.6% primarily due to reduced coal sales and transportation revenues[7] - Net income decreased due to lower revenues, increased depreciation, and a $25 million investment impairment loss, partially offset by reduced operating expenses[7] Sequential Quarter Comparison (Q2 2025 vs. Q1 2025) ARLP's Q2 2025 saw a slight sequential increase in total revenues and Adjusted EBITDA, but net income declined due to an investment impairment and higher expenses, despite increased coal sales volumes Q2 2025 vs. Q1 2025 Consolidated Financial Data | Metric | Q2 2025 | Q1 2025 | Sequential Change | | :--- | :--- | :--- | :--- | | Total Revenues | $547.5 Million | $540.5 Million | +1.3% | | Net Income | $59.4 Million | $73.983 Million | -19.7% | | Adjusted EBITDA | $161.9 Million | $159.935 Million | +1.2% | - Total revenues increased $7.0 million sequentially, primarily due to a 7.9% increase in coal sales volume, partially offset by a decrease in coal sales price per ton[6] - Net income decreased $14.6 million sequentially due to a $25 million investment impairment loss and increased operating and depreciation expenses, partially offset by higher revenues and increased digital asset fair value[6] Segment Results and Analysis Q2 2025 coal operations saw mixed regional sales volumes and lower average prices, while oil and gas royalties declined due to lower prices, and coal royalties increased from higher volumes and reduced expenses Coal Operations Coal operations in Q2 2025 experienced increased sales volumes in the Illinois Basin but a decline in Appalachia, with varying sales prices and improved unit costs across regions Illinois Basin Coal Operations Key Data | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | Q1 2025 | Sequential Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales Volume (Million Tons) | 6.665 | 5.787 | 15.2% | 6.042 | 10.3% | | Coal Sales Price Per Ton | $51.59 | $57.37 | (10.1)% | $55.15 | (6.5)% | | Segment Adjusted EBITDA Expense Per Ton | $34.69 | $37.35 | (7.1)% | $34.75 | (0.2)% | | Segment Adjusted EBITDA | $114.2 Million | $118.0 Million | (3.2)% | $126.2 Million | (9.5)% | Appalachian Coal Operations Key Data | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | Q1 2025 | Sequential Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales Volume (Million Tons) | 1.717 | 2.064 | (16.8)% | 1.729 | (0.7)% | | Coal Sales Price Per Ton | $82.49 | $87.54 | (5.8)% | $78.24 | 5.4% | | Segment Adjusted EBITDA Expense Per Ton | $65.71 | $66.26 | (0.8)% | $69.73 | (5.8)% | | Segment Adjusted EBITDA | $29.4 Million | $45.3 Million | (35.1)% | $15.6 Million | 88.7% | - Illinois Basin coal sales volume increased 15.2% year-over-year and 10.3% sequentially, primarily due to higher volumes from Hamilton and River View mines; coal sales price per ton decreased 10.1% and 6.5%, respectively[11] - Appalachian coal sales volume decreased 16.8% year-over-year, primarily due to lower production at Tunnel Ridge; coal sales price per ton decreased 5.8% year-over-year but increased 5.4% sequentially[11] - Total coal inventory at the end of Q2 2025 was 1.2 million tons, a decrease of 1.4 million tons from Q2 2024 and 0.2 million tons from the prior quarter[11] - Illinois Basin Segment Adjusted EBITDA expense per ton decreased 7.1% year-over-year, primarily due to lower maintenance and materials costs, improved recovery, and fewer longwall move days at Hamilton. Appalachian Segment Adjusted EBITDA expense per ton decreased 5.8% sequentially, mainly due to improved recovery and increased production at the Mettiki mine[12] Royalties Royalty segment performance in Q2 2025 was mixed, with oil and gas royalties declining due to lower prices despite higher volumes, while coal royalties increased from higher sales volumes and reduced expenses Oil and Gas Royalties Key Data | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | Q1 2025 | Sequential Change | | :--- | :--- | :--- | :--- | :--- | :--- | | BOE Sales Volume (Million BOE) | 0.880 | 0.817 | 7.7% | 0.880 | —% | | Average Sales Price (Per BOE) | $40.30 | $44.60 | (9.6)% | $41.00 | (1.7)% | | Segment Adjusted EBITDA | $29.9 Million | $31.3 Million | (4.4)% | $29.9 Million | —% | Coal Royalties Key Data | Metric | Q2 2025 | Q2 2024 | Year-over-Year Change | Q1 2025 | Sequential Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Royalty Sales Volume (Million Tons) | 5.492 | 4.973 | 10.4% | 5.072 | 8.3% | | Royalty Revenue Per Ton | $3.21 | $3.33 | (3.6)% | $3.11 | 3.2% | | Segment Adjusted EBITDA | $11.8 Million | $10.0 Million | 18.7% | $9.4 Million | 25.8% | - Oil and gas royalty Segment Adjusted EBITDA decreased to $29.9 million from $31.3 million in Q2 2024, primarily due to a 9.6% decrease in average sales price per BOE, partially offset by a 7.7% increase in sales volume[13] - Coal royalty Segment Adjusted EBITDA increased to $11.8 million, up from $10.0 million in Q2 2024 and $9.4 million in the prior quarter, primarily due to increased royalty sales volume and lower expenses[14] Balance Sheet & Liquidity As of June 30, 2025, ARLP maintained strong liquidity of $499.2 million with manageable debt levels, despite reduced cash, and held $58.0 million in digital assets Key Balance Sheet & Liquidity Metrics as of June 30, 2025 | Metric | Amount | | :--- | :--- | | Total Debt and Finance Leases | $477.4 Million | | Total Leverage Ratio (Debt / Trailing Twelve Months Adjusted EBITDA) | 0.77 Times | | Net Leverage Ratio (Debt / Trailing Twelve Months Adjusted EBITDA) | 0.69 Times | | Total Liquidity | $499.2 Million | | Cash and Cash Equivalents | $55.0 Million | | Available Borrowings Under Revolving Credit and Accounts Receivable Securitization Facilities | $444.2 Million | | Bitcoin Held | 542 | | Digital Assets (Bitcoin) Value | $58.0 Million | Distributions ARLP declared a $0.60 per unit Q2 2025 cash distribution, with the board considering various financial factors and anticipating higher after-tax distributions in 2025 due to the restoration of 100% bonus depreciation under OBBBA Q2 2025 Cash Distribution Details | Metric | Amount/Date | | :--- | :--- | | Distribution Per Unit | $0.60 | | Annualized Distribution Rate | $2.40 | | Payment Date | August 14, 2025 | | Record Date | August 7, 2025 | - Per Treasury regulations, 100% of ARLP's distributions to non-U.S. investors are considered effectively connected income with a U.S. trade or business, subject to federal income tax withholding at the highest applicable effective rate plus 10%[18] - The board considered operating cash flow, capital needs, distribution coverage, debt costs, and potential investment opportunities when determining distribution levels. Due to OBBBA restoring 100% bonus depreciation, after-tax distributions for most outstanding units in 2025 are expected to exceed the prior tax law's $0.70 per unit distribution rate[22] Outlook & Guidance Management Outlook Management adjusted 2025 coal sales guidance, increasing Illinois Basin volumes and oil and gas royalties while lowering Appalachian volumes, anticipating maintained margins despite potentially lower average coal prices due to increased production and reduced unit costs, with a positive outlook on domestic coal market fundamentals - 2025 coal sales guidance midpoint remains largely unchanged, but regional composition adjusted: Illinois Basin full-year guidance midpoint increased by 0.625 million tons, while Appalachian full-year guidance decreased by 1.0 million tons[19] - Oil and gas royalty segment's 2025 BOE sales volume guidance midpoint increased by approximately 5%, despite lower oil prices[20] - Average coal sales prices are expected to potentially decrease next year, but increased production and completed capital projects are anticipated to lower unit costs, aiming to maintain margins similar to this year[20] - Domestic thermal market fundamentals are strong, driven by data center expansion and domestic manufacturing growth. Recent government policies, such as OBBBA, support fossil fuel baseload generation, reinforcing coal's critical role in maintaining grid reliability[20][21] 2025 Full Year Guidance ARLP provided comprehensive full-year 2025 guidance, detailing coal sales volumes, prices, and Segment Adjusted EBITDA expenses for both Illinois Basin and Appalachia, alongside oil and gas and coal royalty projections, and consolidated financial estimates including capital expenditures 2025 Coal Operations Sales Volume Guidance (Million Short Tons) | Region | Sales Volume Range | | :--- | :--- | | Illinois Basin Sales Volume | 25.00 — 25.75 | | Appalachian Sales Volume | 7.75 — 8.25 | | Total Sales Volume | 32.75 — 34.00 | 2025-2026 Committed and Priced Sales Tons Guidance (Million Short Tons) | Year | Domestic / Export / Total | | :--- | :--- | | 2025 | 29.5 / 2.8 / 32.3 | | 2026 (Includes 0.9 Million Option Tons) | 25.3 / 1.3 / 26.6 | 2025 Coal Sales Price Per Ton Guidance | Region | Price Range | | :--- | :--- | | Illinois Basin | $50.00 — $53.00 | | Appalachian | $79.00 — $83.00 | | Total | $57.00 — $61.00 | 2025 Segment Adjusted EBITDA Expense Per Ton Guidance | Region | Expense Range | | :--- | :--- | | Illinois Basin | $34.00 — $37.00 | | Appalachian | $58.00 — $62.00 | | Total | $39.00 — $43.00 | 2025 Oil and Gas Royalty Guidance | Metric | Range | | :--- | :--- | | Oil (Thousand Barrels) | 1,650 — 1,750 | | Natural Gas (Thousand MCF) | 6,300 — 6,700 | | Liquids (Thousand Barrels) | 825 — 875 | | Segment Adjusted EBITDA Expense (as a % of Oil and Gas Royalty Revenues) | ~14.0% | 2025 Coal Royalty Guidance | Metric | Range | | :--- | :--- | | Royalty Sales Volume (Million Short Tons) | 23.75 — 25.25 | | Royalty Revenue Per Ton | $3.20 — $3.40 | | Royalty Segment Adjusted EBITDA Expense Per Ton | $1.20 — $1.30 | 2025 Consolidated Financial Estimates (Million $) | Metric | Range | | :--- | :--- | | Depreciation, Depletion and Amortization | $280 — $300 | | General and Administrative Expenses | $80 — $85 | | Net Interest Expense | $38 — $42 | | Income Tax Expense | $20 — $22 | | Total Capital Expenditures | $285 — $320 | | Growth Capital Expenditures | $5 — $10 | | Maintenance Capital Expenditures | $280 — $310 | Company Information About Alliance Resource Partners, L.P. ARLP is a diversified energy company, the second-largest coal producer in the eastern U.S., supplying coal to various users, generating royalty income from mineral interests, and positioning itself as a future energy partner through infrastructure investments - ARLP is the second-largest coal producer in the eastern U.S., supplying coal to domestic and international utility, metallurgical, and industrial users[29] - The company generates operating and royalty income from its mineral interests in strategic U.S. coal and oil and gas producing regions[29] - ARLP is committed to becoming a reliable energy partner for the future by investing in growth and development opportunities in energy and related infrastructure[29] Forward-Looking Statements & Risk Factors This section highlights that statements and projections are forward-looking, subject to risks and uncertainties that could cause actual results to differ, including declining coal share, commodity price volatility, geopolitical events, macroeconomic shifts, regulatory changes, operational disruptions, and cybersecurity risks - Statements and projections in this press release are forward-looking, and actual results may differ materially due to risks and uncertainties, excluding the potential impact of any mergers, acquisitions, or other business combinations that may occur after the release date[31][32] - Key risks include the decline of the coal industry's share in power generation, changes in macroeconomic and market conditions, commodity price volatility, geopolitical event impacts, regulatory and legal changes (including environmental regulations), liquidity constraints, customer defaults, operational disruptions, increased transportation costs, litigation outcomes, and cybersecurity risks[32][33][35] Condensed Consolidated Financial Statements Statements of Income and Operating Data The condensed consolidated statements of income and operating data detail revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024, illustrating the impact of various operational and non-operational items on profitability Condensed Consolidated Statements of Income and Operating Data (Summary) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales Volume (Thousand Tons) | 8,382 | 7,851 | 16,153 | 16,525 | | Production Volume (Thousand Tons) | 8,105 | 8,437 | 16,562 | 17,551 | | Mineral Interest Volume (BOE) | 880 | 817 | 1,760 | 1,715 | | Sales and Operating Revenues: | | | | | | Coal Sales | $485,469 Million | $512,659 Million | $953,980 Million | $1,074,538 Million | | Oil and Gas Royalties | $35,473 Million | $36,429 Million | $71,557 Million | $73,459 Million | | Transportation Revenues | $8,558 Million | $26,701 Million | $18,758 Million | $57,454 Million | | Other Revenues | $17,963 Million | $17,561 Million | $43,636 Million | $39,596 Million | | Total Revenues | $547,463 Million | $593,350 Million | $1,087,931 Million | $1,245,047 Million | | Expenses: | | | | | | Operating Expenses (Excluding Depreciation, Depletion and Amortization) | $346,288 Million | $351,605 Million | $685,724 Million | $715,464 Million | | Transportation Expenses | $8,558 Million | $26,701 Million | $18,758 Million | $57,454 Million | | Purchased Coal | $7,179 Million | $10,608 Million | $14,524 Million | $19,720 Million | | General and Administrative Expenses | $20,380 Million | $20,562 Million | $40,960 Million | $42,691 Million | | Depreciation, Depletion and Amortization | $76,340 Million | $66,454 Million | $144,969 Million | $132,003 Million | | Total Operating Expenses | $458,745 Million | $475,930 Million | $904,935 Million | $967,332 Million | | Operating Income | $88,718 Million | $117,420 Million | $182,996 Million | $277,715 Million | | Interest Expense, Net | $(9,252) Million | $(9,277) Million | $(17,686) Million | $(17,026) Million | | Change in Fair Value of Digital Assets | $12,856 Million | $(3,748) Million | $7,282 Million | $8,105 Million | | Investment Impairment Loss | $(25,000) Million | — | $(25,000) Million | — | | Net Income Attributable to ARLP | $59,410 Million | $100,187 Million | $133,393 Million | $258,244 Million | | Net Income Per Basic and Diluted Unit | $0.46 | $0.77 | $1.03 | $1.98 | Balance Sheets The condensed consolidated balance sheets present ALP's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and partners' capital, with notable changes in cash and digital assets Condensed Consolidated Balance Sheets (Summary) | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | $55,004 Million | $136,962 Million | | Accounts Receivable, Net | $177,659 Million | $166,829 Million | | Inventories, Net | $138,712 Million | $120,661 Million | | Digital Assets | $58,030 Million | $45,037 Million | | Total Current Assets | $461,126 Million | $513,230 Million | | Property, Plant and Equipment, Net | $2,174,944 Million | $2,166,270 Million | | Total Assets | $2,869,446 Million | $2,915,730 Million | | Liabilities and Partners' Capital | | | | Accounts Payable | $98,248 Million | $98,188 Million | | Total Current Liabilities | $234,850 Million | $233,142 Million | | Long-Term Debt, Excluding Current Portion, Net | $439,023 Million | $450,885 Million | | Total Long-Term Liabilities | $822,106 Million | $829,055 Million | | Total Liabilities | $1,056,956 Million | $1,062,197 Million | | Partners' Capital Attributable to ARLP | $1,793,137 Million | $1,832,747 Million | | Total Partners' Capital | $1,812,490 Million | $1,853,533 Million | | Total Liabilities and Partners' Capital | $2,869,446 Million | $2,915,730 Million | Statements of Cash Flows The condensed consolidated statements of cash flows detail cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024, showing decreased operating cash flow, continued investment, and significant financing outflows Condensed Consolidated Statements of Cash Flows (Summary) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $297,379 Million | $425,439 Million | | Net Cash Used in Investing Activities | $(168,253) Million | $(222,993) Million | | Capital Expenditures | $(153,793) Million | $(225,288) Million | | Net Cash Used in Financing Activities | $(211,160) Million | $(58,556) Million | | Distributions Paid to Partners | $(181,630) Million | $(181,982) Million | | Net Change in Cash and Cash Equivalents | $(81,958) Million | $143,890 Million | | Cash and Cash Equivalents at End of Period | $55,004 Million | $203,703 Million | Reconciliation of Non-GAAP Financial Measures EBITDA, Adjusted EBITDA, DCF, and DCR Reconciliation This section reconciles GAAP net income to non-GAAP metrics like EBITDA, Adjusted EBITDA, DCF, and DCR, defining their utility for investors while clarifying they are not GAAP substitutes - EBITDA is defined as net income attributable to ARLP plus net interest expense, income taxes, and depreciation, depletion, and amortization. Adjusted EBITDA further adjusts EBITDA for certain items considered not representative of ongoing operations[42] - Distributable Cash Flow (DCF) is defined as Adjusted EBITDA less equity method investment earnings, interest expense, interest income, income taxes, and estimated maintenance capital expenditures, plus equity method investment distributions and litigation expense accruals. Distribution Coverage Ratio (DCR) is defined as DCF divided by distributions paid to partners[42] - Management believes these non-GAAP measures provide investors with useful information regarding the company's performance and cash flow generation capabilities, serving as an analytical framework for management's financial, operational, compensation, and planning decisions[43] Reconciliation of Net Income Attributable to ARLP to EBITDA, Adjusted EBITDA, DCF, and DCR | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to ARLP | $59,410 Million | $100,187 Million | $133,393 Million | $258,244 Million | $73,983 Million | | Depreciation, Depletion and Amortization | $76,340 Million | $66,454 Million | $144,969 Million | $132,003 Million | $68,629 Million | | Interest Expense, Net | $12,042 Million | $9,979 Million | $24,097 Million | $18,750 Million | $12,055 Million | | Income Tax Expense | $5,348 Million | $3,860 Million | $9,530 Million | $8,809 Million | $4,182 Million | | EBITDA | $149,780 Million | $177,694 Million | $304,141 Million | $412,722 Million | $154,361 Million | | Change in Fair Value of Digital Assets | $(12,856) Million | $3,748 Million | $(7,282) Million | $(8,105) Million | $5,574 Million | | Investment Impairment Loss | $25,000 Million | — | $25,000 Million | — | — | | Adjusted EBITDA | $161,924 Million | $181,442 Million | $321,859 Million | $419,867 Million | $159,935 Million | | Estimated Maintenance Capital Expenditures | $(59,004) Million | $(65,471) Million | $(120,571) Million | $(136,196) Million | $(61,567) Million | | Distributable Cash Flow | $90,693 Million | $102,440 Million | $174,818 Million | $242,498 Million | $84,125 Million | | Distributions Paid to Partners | $90,739 Million | $90,736 Million | $181,630 Million | $181,982 Million | $90,891 Million | | Distribution Coverage Ratio | 1.00 | 1.13 | 0.96 | 1.33 | 0.93 | - The $25 million investment impairment loss represents a write-down of an investment in preferred stock of a battery materials company, which converted to common stock during the quarter[48] - Maintenance capital expenditures are capital outlays required to maintain the existing infrastructure of coal assets over the long term, estimated to average $7.28 per ton annually for the 2025 planning period[48] Free Cash Flow Reconciliation This section reconciles GAAP net cash from operating activities to non-GAAP free cash flow, defined as operating cash flow minus capital expenditures and related payables, emphasizing its role as a supplemental liquidity measure - Free cash flow is defined as net cash provided by operating activities less capital expenditures and changes in accounts payable and accrued liabilities related to property, plant, and equipment acquisitions[47] - Free cash flow is a supplemental liquidity measure used by management to assess the ability to generate excess cash flow from operations[47] Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $151,693 Million | $215,766 Million | $297,379 Million | $425,439 Million | $145,686 Million | | Capital Expenditures | $(67,017) Million | $(101,442) Million | $(153,793) Million | $(225,288) Million | $(86,776) Million | | Changes in Accounts Payable and Accrued Liabilities | $(5,644) Million | $613 Million | $(11,840) Million | $4,944 Million | $(6,196) Million | | Free Cash Flow | $79,032 Million | $114,937 Million | $131,746 Million | $205,095 Million | $52,714 Million | Segment Adjusted EBITDA Expense and Segment Adjusted EBITDA Reconciliation This section reconciles Segment Adjusted EBITDA Expense and Segment Adjusted EBITDA, defining them as adjusted operating expenses and Adjusted EBITDA, respectively, used by management to evaluate the operational performance of individual segments, especially coal operations - Segment Adjusted EBITDA expense is defined as operating expenses, purchased coal (where applicable), and other revenues or expenses, adjusted to exclude certain operating expense items not representative of ongoing operations. Transportation expenses are excluded as these costs are passed through to customers, and the company does not realize any profit from them[50] - Segment Adjusted EBITDA is defined as Adjusted EBITDA adjusted for general and administrative expenses. Segment Adjusted EBITDA – Coal Operations represents Adjusted EBITDA from wholly-owned subsidiary Alliance Coal, used to evaluate the operational performance of the Illinois Basin and Appalachian segments[54] Reconciliation of Operating Expenses to Segment Adjusted EBITDA Expense | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Expenses | $346,288 Million | $351,605 Million | $685,724 Million | $715,464 Million | $339,436 Million | | Purchased Coal | $7,179 Million | $10,608 Million | $14,524 Million | $19,720 Million | $7,345 Million | | Segment Adjusted EBITDA Expense | $353,450 Million | $363,171 Million | $699,620 Million | $721,498 Million | $346,170 Million | | Segment Adjusted EBITDA Expense – Non-Coal Operations | $(7,550) Million | $(6,996) Million | $(21,497) Million | $(11,009) Million | $(13,947) Million | | Segment Adjusted EBITDA Expense – Coal Operations | $345,900 Million | $356,175 Million | $678,123 Million | $710,489 Million | $332,223 Million | Reconciliation of Adjusted EBITDA to Segment Adjusted EBITDA | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Three Months Ended March 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $161,924 Million | $181,442 Million | $321,859 Million | $419,867 Million | $159,935 Million | | General and Administrative Expenses | $20,380 Million | $20,562 Million | $40,960 Million | $42,691 Million | $20,580 Million | | Segment Adjusted EBITDA | $182,304 Million | $202,004 Million | $362,819 Million | $462,558 Million | $180,515 Million | | Segment Adjusted EBITDA – Non-Coal Operations | $(40,413) Million | $(41,775) Million | $(80,723) Million | $(91,434) Million | $(40,310) Million | | Segment Adjusted EBITDA – Coal Operations | $141,891 Million | $160,229 Million | $282,096 Million | $371,124 Million | $140,205 Million |