Alliance Resource Partners LP (ARLP) Q4 2024 Earnings Analysis: Revenue Miss and Margin Pressure

Summary

Alliance Resource Partners reported weaker Q4 2024 results with revenue of $590.1M, missing estimates of $640.24M, and adjusted EPS of $0.12, significantly below the estimated $0.60. The quarter was marked by lower coal sales volumes, higher operating costs, and non-cash impairment charges, though partially offset by gains in digital assets.

Financial Performance

Revenue

• Q4 Revenue: $590.1M vs. $640.24M estimated (Miss)
• Year-over-Year Growth: -5.6% decline from $625.4M in Q4 2023
• Key Revenue Drivers:
  • Coal sales volume decreased 2.3% YoY
  • Lower transportation revenues
  • Reduced coal sales prices in Illinois Basin
  • Oil & gas royalty revenue declined 17.2% YoY

Profitability Metrics

• Adjusted EPS: $0.12 vs. $0.60 estimated (Miss)
• Net Income: $16.3M vs. $115.4M in Q4 2023
• Operating Margin: Declined due to:
  • Higher operating costs
  • $31.1M non-cash impairment charges
  • $13.1M non-cash accruals for long-term liabilities

Operational Highlights

• Illinois Basin coal sales increased 2.8% YoY
• Appalachia coal sales decreased 17.1% YoY
• Total coal inventory reduced to 0.6 million tons
• Completed $9.6M in oil & gas mineral interest acquisitions
• Record full year 2024 oil & gas royalty volumes of 3.4 million BOE

Forward Outlook

Near-Term Guidance (Q1 2025)

• Revenue Guidance: $651.94M (analyst estimate)
• EPS Guidance: $0.89 (analyst estimate)
• Management expects improved costs and productivity due to completed infrastructure projects

Full-Year Fiscal 2025 Outlook

• Revenue Target: $2.50B (analyst estimate)
• EPS Target: $3.24 (analyst estimate)
• Strategic Initiatives:
  • Focus on domestic market with goal to ship 30 million tons
  • Active pursuit of growth in Oil & Gas Royalties segment
  • Reduced capital spending planned

Investment Implications

The Q4 results indicate significant operational challenges and margin pressure. Investors should be cautious due to:

• Missed revenue and earnings expectations
• Declining margins and profitability
• Higher operating costs across operations
• Significant non-cash impairment charges

However, positive factors include:

• Strong contract portfolio
• Reduced inventory levels
• Completed infrastructure projects expected to improve efficiency
• Potential benefits from cold weather driving higher natural gas prices

Long-term investors should monitor cost control measures and the success of strategic initiatives before increasing positions. Short-term traders may face volatility due to operational uncertainties and market conditions.

Additional Resources

View Full ARLP Earnings Report

View ARLP Stock Chart

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. All trading and investment decisions should be made based on your own research, experience, and risk tolerance.