ARLP Q3 2026 Earnings: Lower Coal Costs Lift Profit

Alliance Resource Partners (NASDAQ: ARLP) reported Q3 2026 revenue of $603.0 million, up 5.5% from $571.4 million a year earlier, while diluted earnings per unit rose 47.9% to $1.08 from $0.73. Net income attributable to ARLP increased 46.8% as higher coal volumes, lower per-ton costs, and expanded royalty operations combined with favorable digital-asset and acquisition-related valuation items.

Core Earnings Data

Revenue growth came from record oil and gas royalty revenue, increased coal sales volumes, and higher other revenue, partly offset by a lower average coal sales price. Operating expenses declined despite the increase in revenue, supporting faster growth in profit and adjusted EBITDA.

Net income also benefited from higher equity-method investment income, a $16.5 million increase in the fair value of digital assets, and a $6.3 million gain from remeasuring ARLP’s previous AllDale III investment. Higher taxes and a $7.3 million loss on derivatives acquired with AllDale III & IV provided partial offsets.

Adjusted EBITDA is a non-GAAP measure, while distributable cash flow and distribution coverage are partnership cash-distribution measures.

Business and Segment Performance

Coal operations remained the largest earnings contributor, with higher volumes and lower costs more than offsetting an 8.3% decline in the average coal sales price. The royalty business delivered the fastest growth following the July 1 completion of the approximately $206.2 million AllDale III & IV acquisition.

Illinois Basin coal adjusted EBITDA increased 32.6% to $139.8 million. Sales volumes rose 6.4% after Hamilton resumed longwall production, while higher Hamilton output and lower River View costs reduced adjusted EBITDA expense per ton by 10.2%.

Appalachia showed a different pattern. Tons sold increased 10.7%, but the average sales price fell 25.1% to $62.35 per ton because of a greater mix of lower-priced Tunnel Ridge volumes and lower pricing at Tunnel Ridge and Mettiki. Per-ton costs declined 19.9%, but that was insufficient to prevent segment adjusted EBITDA from decreasing 10.4% to $48.5 million.

Oil and gas royalty growth primarily reflected the AllDale acquisition. Average sales price per BOE was 15.5% higher year over year but 16.6% lower sequentially due to lower realized crude oil prices and a greater natural gas mix. Coal royalty adjusted EBITDA rose 6.2% to $18.2 million as royalty tons from Tunnel Ridge and Hamilton increased.

Lower Costs and Valuation Gains Accelerated Profit Growth

Revenue increased by approximately $31.6 million year over year while operating expenses decreased by approximately $15.4 million. Higher coal production helped spread operating costs over more tons, allowing coal segment adjusted EBITDA to rise even as average coal pricing declined.

Reported net income grew faster than adjusted EBITDA because it also included the digital-asset fair-value increase and the AllDale remeasurement gain. These benefits were partly offset by the acquired derivative loss, meaning Q3 earnings reflected both improved operating performance and valuation or acquisition-related items that may vary between quarters.

Cash Distribution, Liquidity, and Balance Sheet

ARLP generated $136.8 million of distributable cash flow and reported 1.76x distribution coverage. The board declared a quarterly cash distribution of $0.60 per unit, equivalent to $2.40 per unit annualized, payable November 13, 2026, to holders of record on November 6.

At September 30, total debt and finance leases were $679.9 million. Total and net leverage were 0.89x and 0.78x trailing-12-month adjusted EBITDA attributable to ARLP, respectively. Total liquidity was $430.8 million, consisting of $84.8 million in cash and cash equivalents and $346.0 million available through credit and receivables facilities.

ARLP also held 673 bitcoins valued at $56.3 million. The size of this position helps explain why digital-asset fair-value movements can have a visible effect on reported net income.

Full-Year Guidance

ARLP updated its guidance for the year ending December 31, 2026. The supplied release does not include the previous ranges, so the direction and magnitude of the revisions cannot be determined from the available information.

The partnership has 35.0 million coal tons committed and priced for 2026, matching the midpoint of its sales-volume guidance. It also has 31.7 million tons committed and priced for 2027, including 3.0 million export tons. Oil and gas guidance consolidates AllDale III & IV volumes beginning July 1, 2026.

Management Commentary

Management attributed the coal improvement to a strong shipping quarter, Hamilton’s return to longwall production, and solid operations at River View and Tunnel Ridge. It expects growing electricity demand and constraints on new generation capacity to support customers’ coal consumption, while acknowledging that export conditions remain dynamic.

For oil and gas royalties, management said elevated crude oil prices could support another record quarter. It also expects the full-year contribution from mineral interests acquired in 2026 to support year-over-year comparisons in 2027.

Recent Insider Transactions

The supplied insider dataset contains three transactions with a stated direction, price, and reported value. Its six-month summary nevertheless shows zero purchases and zero sales, creating a data inconsistency that investors should consider when interpreting the records.

Seven other filings in the supplied list lacked a stated transaction direction or value and therefore are not treated as valid directional transactions. The disclosed purchases and sale do not, by themselves, establish insiders’ views on ARLP’s outlook.

Risks Investors Should Watch

• Appalachian pricing pressure: Appalachia’s average coal sales price fell 25.1% year over year, and segment adjusted EBITDA declined despite higher volumes and substantially lower costs. Continued unfavorable pricing or sales mix could pressure coal margins.
• Oil and gas price and mix volatility: Royalty volumes increased sharply, but average price per BOE declined 16.6% sequentially. Lower realized crude oil prices or a further shift toward lower-priced natural gas volumes could reduce royalty earnings.
• Valuation-related earnings volatility: Q3 net income benefited from a $16.5 million digital-asset fair-value increase, while acquired derivatives generated a $7.3 million loss. Both items can create fluctuations that are separate from underlying coal and royalty operations.
• Operational execution: Coal cost improvements depended partly on Hamilton returning to longwall production and increased output at Tunnel Ridge. New interruptions or lower production could reverse some of the per-ton cost benefits.
• Capital and liquidity requirements: ARLP completed a sizable mineral acquisition and expects $270 million to $290 million of full-year capital spending. Distributable cash flow, leverage, and available liquidity therefore remain important measures to monitor.

Summary

ARLP’s Q3 2026 results combined higher coal shipments, lower mining costs, and a larger oil and gas royalty portfolio, allowing profit to grow considerably faster than revenue. The main questions for subsequent quarters are whether coal cost improvements persist, Appalachian pricing stabilizes, acquired royalty assets sustain their contribution, and cash generation remains sufficient to support capital spending and distributions without materially weakening liquidity.