Alliance Resource Partners Lp (NASDAQ: ARLP)

Sector: Energy Industry: Thermal Coal CIK: 0001086600
Market Cap 1.90 Bn
P/B 4.52
P/E 9.21
P/S 1.27
ROIC (Qtr) 12.55
Div Yield % 8.59
Rev 1y % (Qtr) -6.88
Total Debt (Qtr) 471.55 Mn
Debt/Equity (Qtr) 0.26
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About

Investment thesis

Bull case

  • Strong operating cash flow of 675.68M provides robust 1.43x coverage of total debt 471.55M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 94.48M provide 4.04x coverage of short-term debt 23.36M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 675.68M provides exceptional 110.03x coverage of minority interest expenses 6.14M, showing strong core operations.
  • Operating cash flow of 675.68M provides exceptional 18.07x coverage of interest expenses 37.40M, showing strong debt service capability.
  • Operating cash flow of 675.68M provides strong 63.66x coverage of stock compensation 10.61M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 675.68M barely covers its investment activities of (354.20M), with a coverage ratio of -1.91, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 675.68M provides thin coverage of dividend payments of (350.13M) with a -1.93 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 300.64M show weak coverage of depreciation charges of 285.45M, with a 1.05 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 353.31M represents just -13.25x of debt issuance (26.67M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 285.45M relative to operating cash flow of 675.68M, which is 0.42x suggests significant maintenance capital requirements affecting free cash flow.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Thermal Coal
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CNR Core Natural Resources, Inc. 4.45 Bn -29.06 1.07 452.49 Mn
2 BTU Peabody Energy Corp 4.41 Bn -135.00 1.11 407.60 Mn
3 ARLP Alliance Resource Partners Lp 1.90 Bn 9.21 1.27 471.55 Mn
4 NRP Natural Resource Partners Lp 0.88 Bn 9.00 3.21 69.38 Mn
5 HNRG Hallador Energy Co 0.74 Bn -4.24 1.60 53.23 Mn
6 NC Nacco Industries Inc 0.42 Bn 8.07 2.07 87.85 Mn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.80 1.12
EV to Cash from Ops. EV/CFO 5.32 8.19
EV to Debt EV to Debt 4.95 10.87
EV to EBIT EV/EBIT 7.61 19.66
EV to EBITDA EV/EBITDA 5.52 5.56
EV to Free Cash Flow [EV/FCF] EV/FCF 18.17 13.40
EV to Market Cap EV to Market Cap 1.23 1.13
EV to Revenue EV/Rev 1.57 2.11
Price to Book Value [P/B] P/B 4.52 2.36
Price to Earnings [P/E] P/E 9.21 -23.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.70 0.09
Dividend Payout Ratio % Div Payout % (Qtr) 142.90 10.83
Dividend per Basic Share Div per Share (Qtr) 2.60 1.41
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 94.51 31.65
Interest Coverage Int. cover (Qtr) 8.04 2.12
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 29.59 0.67
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -51.65 30.70
Dividend Growth (1y) % Div 1y % (Qtr) -7.14 -1.04
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -43.18 -223.40
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -22.78 53.05
EBIT Growth (1y) % EBIT 1y % (Qtr) -40.15 -202.48
EBT Growth (1y) % EBT 1y % (Qtr) -43.93 -123.41
EPS Growth (1y) % EPS 1y % (Qtr) -46.31 -114.77
FCF Growth (1y) % FCF 1y % (Qtr) 30.48 18.87
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -15.54 -1.88
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.77 0.67
Cash Payout Ratio Cash Payout (Qtr) 0.35 0.13
Cash Ratio Cash Ratio (Qtr) 0.37 0.61
Current Ratio Curr Ratio (Qtr) 1.90 1.89
Debt to Equity Ratio Debt/Equity (Qtr) 0.26 0.20
Interest Cover Ratio Int Coverage (Qtr) 8.04 2.12
Times Interest Earned Times Interest Earned (Qtr) 8.04 2.12
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 26.10 19.53
EBIT Margin % EBIT Margin % (Qtr) 13.37 8.90
EBT Margin % EBT Margin % (Qtr) 11.70 6.55
Gross Margin % Gross Margin % (Qtr) 31.90 31.52
Net Profit Margin % Net Margin % (Qtr) 10.90 7.43