Alliance Resource Partners' Q2 Earnings Fall Short, Revenue Drops Amid Transportation Delays, Stock Falls

Alliance Resource Partners LP ARLP shares are trading lower after the company reported second-quarter results below the consensus.

Revenue declined 7.6% year-over-year to $593.35 million, missing the consensus of $632.338 million.

Total revenues fell due to an 11.8% drop in coal sales volumes from transportation delays, partially offset by a 3.8% increase in coal sales prices.

Segment adjusted EBITDA stood at $202 million, down 25% Y/Y, in the quarter, and margin fell 793 bps to 34%.

Earnings per unit of $0.77 fell short of the consensus of $0.95.

As of June 30, 2024, the company had a total liquidity of $666 million, including $203.7 million of cash and cash equivalents.

Coal sales prices rose 3.8% year-over-year to $65.30 per ton, while oil & gas royalty volumes increased 6.8% to 817 MBOE.

“Coal sales volumes during the 2024 Quarter were impacted by flooding on the Ohio River, delaying barge deliveries. Rail and port logistics were disrupted by the Baltimore bridge incident, which as time progressed impacted shipments from our Appalachia rail operations. These delays, combined with lower export sales, lifted our inventories higher by 0.8 million tons compared to the Sequential Quarter,” commented Joseph W. Craft III, Chairman, President, and Chief Executive Officer.

Additionally, our Oil & Gas Royalties segment reported a 6.8% increase in BOE volumes year-over-year during the 2024 Quarter as our Permian-weighted minerals portfolio continues to realize production growth from recently drilled and completed wells.”

FY24 Guidance, updated: The company now expects sales volumes in coal operations of 33.50M-34.50M short tons (prior 34.0M-35.8M short tons)

Distributions: On July 26, 2024, ARLP’s Board approved 2024 Q2 cash distribution of $0.70 per unit, payable on August 14, to unitholders of record on August 7, 2024.

Mr. Craft concluded, “The increase in coal-fired generation and inventory drawdown is constructive for the U.S. thermal coal market and for ARLP as we look forward to next year and beyond. We remain confident in the core fundamentals expected to drive rapid growth in electricity demand for many years to come, including the increasing power requirements stemming from AI, data centers, and the onshoring of U.S. manufacturing.”

Price Action: ARLP shares are trading lower by 4.85% at $24.54 at the last check on Monday.

Photo by Andrey Andreyev on Unsplash.