Alliance Resource Partners: Record Royalties Drive Profit Surge

Financial Performance - Alliance Resource Partners, L.P. reported a fourth quarter EBITDA of $191.1 million, reflecting a 54.1% increase year over year, resulting in a free cash flow of $93.8 million after Capex adjustments [1] - The royalties segment achieved a record year with an adjusted EBITDA contribution of $30 million for 2025, indicating strong performance in oil and gas royalties [4] Market Conditions - Average coal sale prices decreased by 4% year over year due to the expiration of higher-priced legacy contracts and lower coal sales volumes, which were affected by the timing of committed deliveries [2] - Despite the revenue decline, increased production and inventory suggest significant earnings potential in upcoming quarters, supported by favorable long-term and short-term industry conditions [3] Valuation - The company appears undervalued with a price to earnings ratio that is 44% lower than coal peers and 51% lower than oil peers, despite generating record free cash flow and maintaining a strong balance sheet [5]