Alliance Resource Partners Posts Strong Q4, Sees Coal Demand Surge Amid Grid Reliability Concerns

Monday, February 2, 2026, 10:00 AM ET

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TULSA, Okla. – Alliance Resource Partners, L.P. (NASDAQ: ARLP) delivered a strong finish to 2025, capitalizing on tightening fundamentals in U.S. power markets. The coal and royalty producer reported fourth-quarter adjusted EBITDA of $191.1 million, a significant 54.1% increase year-over-year, underscoring a period of operational efficiency and favorable market conditions.

During Monday's earnings call, Senior VP and CFO Cary Marshall highlighted a net income attributable to ARLP of $82.7 million, or $0.64 per unit, a sharp rise from $16.3 million in Q4 2024. This performance was bolstered by lower operating expenses, reduced impairment charges, and a $20 million boost in investment income—partially offset by a $15.4 million decrease in the fair value of the partnership's digital assets.

While total revenues saw a year-over-year dip to $535.5 million, primarily due to lower coal sales, this was countered by record oil and gas royalty volumes. The company's Illinois Basin operations, particularly the Hamilton mine, set production records, driving down segment adjusted EBITDA expense per ton by over 16%.

The outlook for 2026 appears bullish. ARLP has already committed and priced over 93% of its expected coal sales volumes for the year, a position "materially better" than a year ago, according to management. Guidance anticipates coal sales volumes between 33.75 and 35.25 million tons, an increase from 2025 levels, supported by robust contracting activity.

Chairman, President, and CEO Joseph Craft framed the results within a broader macro narrative. "The January Arctic blast proved once again that reliability goes hand-in-hand with affordability," Craft stated, referencing record natural gas freeze-offs and regional price spikes. He emphasized that coal-fired generation served as the grid's backbone during the extreme cold, supplying 40% of MISO's generation at the peak.

Craft directly linked sustained demand to long-term structural shifts: "Load growth from rapidly expanding data centers, AI computing, and U.S. manufacturing is one of the most significant forces shaping power markets." He also acknowledged policy tailwinds, noting that utilities in 19 states have reversed or delayed over 31,000 megawatts of coal retirements based on reliability concerns.

The call did address challenges, notably the decision to issue a WARN Act notice at the Metiki mine in Appalachia after a key customer signaled reduced future demand. This impact is factored into 2026 guidance. Looking ahead, ARLP expects capital expenditures between $280 and $300 million and remains committed to returning capital to unitholders, ending the quarter with a strong liquidity position of $518.5 million.

Analyst and Market Reaction:

During the Q&A session, analysts probed the sustainability of pricing power and production capacity. CEO Craft suggested that with limited supply growth industry-wide and rising demand, the environment supports firmer pricing, especially for 2027 and beyond. He indicated that if current market conditions persist, realized prices could trend toward the high end of 2026 guidance.

Expert Commentary:

"ARLP's results and guidance confirm a thesis that many in the market have been slow to grasp: coal is not in a terminal decline but in a phase of rationalized supply meeting unexpected, policy-driven demand," said David Chen, a veteran energy sector analyst at Horizon Capital. "Their contracted position provides exceptional visibility and de-risks the near term."

"Let's not get carried away with 'resilience' talk," countered Maya Rodriguez, founder of the Clean Energy Transition Fund. "This is a company benefiting from short-term weather anomalies and political maneuvering. The long-term fundamentals for thermal coal are still bleak. Celebrating record production while the world burns is a dangerous disconnect."

"The operational execution is impressive, particularly the cost control in the Illinois Basin," noted Robert Gibson, a portfolio manager specializing in natural resources. "The royalty segment is becoming a meaningful and stable cash flow driver. ARLP is navigating this transition better than most, balancing shareholder returns with strategic investments."

Disclosure: This analysis is based on the Alliance Resource Partners Q4 2025 earnings conference call and accompanying materials. Investors are encouraged to review the official SEC filings.