Abstract

Alliance Resource Partners LP will report second-quarter 2026 results on July 27, 2026 (Pre-MKt); the market currently looks for revenue of 545.89 million US dollars and adjusted EPS of 0.63, and our preview reviews the margin setup, segment dynamics, and post-quarter strategic moves that may shape guidance.

Market Forecast

Consensus for the current quarter points to revenue of 545.89 million US dollars, down 5.67% year over year, alongside an adjusted EPS forecast of 0.63, up 3.69% year over year; EBIT is projected at 98.06 million US dollars, implying a 0.95% year-over-year increase. No formal gross margin or net profit margin forecast is available, but the mix of long-term contracts and cost control is expected to underpin earnings stability relative to revenue pressure.

The main business is coal sales, where management’s prior commentary emphasized that shipment disruptions seen early in the year were expected to normalize, setting up a cleaner volume trajectory for the rest of 2026 under an anchored contract book. The most promising segment is oil and gas royalties, which delivered 41.34 million US dollars last quarter; while explicit year-over-year growth for the segment is not disclosed in the available dataset, the company’s recent acquisition is set to expand its footprint and supports a constructive revenue trajectory beyond the current quarter.

Last Quarter Review

In the most recent reported quarter, Alliance Resource Partners LP posted revenue of 516.02 million US dollars, down 4.52% year over year, with a gross profit margin of 32.09%, net income attributable to the partnership of 9.09 million US dollars, a net profit margin of 1.76%, and adjusted EPS of 0.36, down 36.84% year over year. A key feature was operational disruption from winter weather and high water levels that delayed shipments early in the period, followed by an anticipated recovery; the board declared a 0.60 US dollars per unit quarterly distribution and updated full-year guidance. Coal sales accounted for 443.28 million US dollars, or about 85.90% of quarterly revenue, with oil and gas royalties, other sales, and transportation contributing 41.34 million, 22.75 million, and 8.64 million US dollars, respectively.

Current Quarter Outlook

Main business: Coal sales and margin bridge for Q2

Coal sales remain the core earnings engine, and the quarter’s setup is primarily about clean execution on shipments and cost discipline against a largely contracted revenue base. Following the weather-driven interruptions that weighed on the prior quarter’s revenue and mix, rail and river logistics normalization should allow Alliance Resource Partners LP to release previously delayed tonnage and move closer to planned shipment cadence. In this context, volume recovery is the first lever; if realized, the company can better absorb fixed costs, which is supportive for unit cost metrics and operating margin resilience even in a period where average realized pricing may face mild pressure.

The forecasted decline in total revenue by 5.67% year over year suggests price/mix remains a headwind versus the comparable period, though the projected 3.69% year-over-year increase in adjusted EPS indicates efficiency and cost containment are offsetting factors. The prior quarter’s gross profit margin of 32.09% provides a reference point for the cost base, and a normalization of throughput could support a sequential improvement from the depressed net margin print of 1.76% even without a material change in average pricing. The quality of the contract book is an additional stabilizer: a higher share of volumes under long-term agreements can dampen volatility in realized pricing and reduce sensitivity to spot markets, which supports the forecast of positive year-over-year EPS growth despite lower revenue.

Within coal, shipment timing matters. If destocking at customer sites or railcar turn times improved into late Q2, the company should have captured more contracted deliveries before quarter-end, which would be margin accretive relative to a scenario in which deliveries slip into Q3. On the cost side, a more normalized production cadence helps dilute fixed overheads, while continued discipline in purchasing and maintenance scheduling can keep cash costs per ton nearer to plan. Put together, the bridge from revenue to profit looks anchored by volume normalization and cost control, with limited reliance on price improvement in the near term.

Most promising business: Oil and gas royalties trajectory and incremental optionality

Oil and gas royalties contributed 41.34 million US dollars last quarter, and the segment’s directional setup is reinforced by corporate actions that closed shortly after the quarter ended. The company announced it completed a 206.20 million US dollars acquisition of certain interests in AllDale Minerals III and AllDale Minerals IV on July 2, 2026, funded by cash on hand, draws on its revolving credit facility, and a new 150.00 million US dollars term loan at Alliance Minerals. Post-transaction, Alliance Resource Partners LP controls roughly 115,680 acres within the royalties arm, including more than 44,770 net royalty acres in the Permian Basin, increasing long-term cash-flow depth and diversification.

While the transaction closed after the second quarter cut-off and therefore does not affect Q2 revenue recognition, it is immediately relevant for management’s commentary and any updates to distribution capacity and 2026 outlook. Prior communications around the transaction indicated the economics are expected to be accretive to per-unit free cash flow, creating a pathway for higher royalties revenue and improved capital returns as activity levels on the acquired acreage translate into production-linked payments. For the quarter at hand, absent the consolidation of the new assets, royalties revenue will primarily reflect the legacy portfolio, where quarterly production and realized prices will drive the run-rate; the segment’s contribution should remain a steady earnings buffer. As the acquired interests begin to flow into reported results from Q3 onward, the royalties line gains incremental visibility, setting up a constructive narrative for the back half of the year.

At the segment level, the key watch items this quarter include stability of royalty volumes and the cadence of operator development on existing acreage. Given the expected stability implied by consensus EBIT and EPS forecasts, a flat-to-modestly improved royalties contribution in Q2 would be consistent with the broader earnings bridge that emphasizes cost control on the coal side and a steady royalty base. From an outlook standpoint, investors will listen for color on how the enlarged portfolio will be prioritized for development and cash flow allocation, as this informs the medium-term slope of segment revenue and its contribution to consolidated margins.

What could move the stock on print and guide: execution, costs, and forward narrative

Three elements are most likely to influence the unit price around the report. First, shipment execution versus plan in the core coal business will be crucial: delivering contracted volumes after the weather-related shortfall in the prior quarter would validate the anticipated catch-up and support sequential margin improvement. Any evidence that logistics fully normalized by late Q2, with rail and river flows supporting throughput, should be taken positively, as it confirms the temporary nature of earlier disruptions and sustains the premise of a back-half recovery.

Second, the cost trajectory will frame the earnings quality. With last quarter’s net profit margin at 1.76% and adjusted EPS at 0.36, consensus is effectively underwriting that unit costs improve with better absorption and that controllable expenses were kept in check. Investors will scrutinize commentary on production rates, labor scheduling, maintenance intervals, and procurement to gauge whether high-cost pockets in Q1 were transient. A clean cost print that aligns with the 98.06 million US dollars EBIT forecast would support the 3.69% year-over-year growth in adjusted EPS despite lower revenue and would likely be read as confirmation that the company can defend profitability even as top-line drifts lower year over year.

Third, the forward narrative on capital allocation and the recently expanded oil and gas royalties platform will shape guidance perception. The board’s 0.60 US dollars per unit quarterly distribution declared with Q1 provides a baseline for cash returns. As the AllDale III and IV interests begin contributing from Q3, management’s comments on the integration timeline, expected run-rate cash flows, and potential implications for distributions will be central to the H2 setup. Clear articulation of how the enlarged royalties footprint complements the core operations—and whether it enables maintaining or enhancing the distribution while funding organic needs—could be a supportive catalyst for sentiment, particularly given consensus already anticipates moderate profit resilience in Q2.

Beyond these, mix effects across contracts and shipment timing can influence reported average realized pricing, which in turn affects gross margin translation. A favorable mix skew—more volumes under higher-priced legacy contracts delivered during the quarter—can lift margins even if revenue is down year over year. Conversely, heavier weighting toward lower-priced deliveries within the quarter could compress margins but would not necessarily derail the full-year path if the timing evens out across Q3 and Q4. The critical point for the print is whether the quarterly composition supports the modestly positive EBIT and adjusted EPS trajectory implied by forecasts.

Analyst Opinions

Across recent published views within the last six months, the balance is tilted bullish based on available coverage, with positive opinions outweighing negatives; our tally indicates a clear majority of bullish stances and no identified bearish initiations or downgrades in the period reviewed. Notably, Noble Financial’s Mark Reichman reiterated a Buy rating with a 33.00 US dollars price target, underlining constructive expectations for cash flow resilience and the support of a stable contract book and disciplined costs. Preview commentary in the market also frames the quarter as one where revenue may slip year over year while profit metrics hold up, consistent with the 98.06 million US dollars EBIT and 0.63 adjusted EPS projections.

The bullish case emphasizes three themes that align with the quantitative setup. The first is earnings durability through mix and costs: despite the 5.67% year-over-year decline in revenue, the forecasted 3.69% improvement in adjusted EPS suggests that controllable levers—mainly normalization of shipments and cost absorption—are doing the heavy lifting. Analysts focused on these mechanics see the prior-quarter weakness in net margin as a transient effect of disrupted logistics rather than a structural deterioration, and they expect a sequential margin lift in Q2. The second theme is capital returns supported by balanced reinvestment: the 0.60 US dollars per unit distribution alongside prudent balance-sheet usage for the 206.20 million US dollars acquisition signals a strategy aimed at sustaining cash payouts while layering in new royalty-driven cash flows that can diversify and bolster the earnings base over time.

The third theme is optionality from the oil and gas royalties expansion, which closed just after quarter end. While it will not contribute to Q2 results, analysts view it as a near-term catalyst for management’s guidance language and back-half trajectory. With control of roughly 115,680 acres and more than 44,770 net royalty acres in the Permian Basin added to the portfolio, coverage expects a gradual uplift in royalties revenue in subsequent quarters. The prospect of immediate free cash flow accretion from the transaction supports a constructive view on future distributions and debt capacity, and it reframes the narrative from a single-engine earnings model toward a more balanced mix.

In synthesizing these opinions with the numbers, the bullish majority is essentially underwriting a “volume-and-cost” quarter rather than a “price” quarter. If contracted deliveries flowed as planned and unit costs tracked closer to normalized levels, the company should meet or modestly outperform the profit side of consensus even if revenue finishes near the 545.89 million US dollars estimate. The last quarter’s 32.09% gross margin benchmark and the subdued 1.76% net margin are seen as depressed by unusual factors; a rebound toward a more typical net conversion, paired with steady royalty receipts, sets up a reasonable path to the projected 98.06 million US dollars EBIT and 0.63 adjusted EPS.

On guidance, bullish analysts look for explicit linkages between the enlarged royalty footprint and cash returns. Clear timeframes for when the acquired AllDale III and IV interests will be visible in reported results, color on operator plans across the 115,680 acres, and management’s framework for allocating incremental free cash flow between distributions, debt reduction, and organic investments will be focal points. The more tangible and near-dated the cash-flow ramp appears, the stronger the case for maintaining the positive stance.

Overall, the majority view frames the upcoming print as a checkpoint on execution rather than a referendum on pricing trends. Delivering on contracted coal shipments, demonstrating a cleaner cost run-rate, and outlining how the newly closed royalties acquisition supports the second half should validate the consensus that earnings can grow year over year even as top-line declines. With the forecasted adjusted EPS up 3.69% year over year and EBIT up 0.95%, the bar is set for a measured rebound in profitability, and analysts leaning bullish expect management to meet that bar while enhancing visibility into cash generation in the quarters ahead.