Q1 2025 Alliance Resource Partners LP Earnings Call
Greetings and welcome to Alliance Resource Partners L. P first quarter 2025 earnings conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Carrie Marshall Senior Vice President and Chief Financial Officer. Thank you you may begin.
Thank you operator and welcome everyone earlier. This morning Alliance Resource partners released its first quarter 2025 financial and operating results and we will now discuss those results as well as our perspective on current market conditions and updated outlook for 2025.
Following our prepared remarks, we will open the call to answer your questions.
Before beginning a reminder, that some of our remarks today may include forward looking statements subject to a variety of risks uncertainties and assumptions contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press release.
While these forward looking statements based on information currently available to us if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect actual results may vary materially from those we projected or expected.
In providing these remarks the partnership has no obligation to publicly update or revise any forward looking statement, whether as a result of new information future events or otherwise unless required by law to do so.
Finally, we will also be discussing certain non-GAAP financial measures definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of our press release, which has been posted on our website and furnished to the SEC on form 8-K.
Speaker Change: With the required preliminaries out of the way I will begin with a review of our first quarter 2025 results give an update of our 2025 guidance and then turn the call over to Joe craft, Our chairman President and Chief Executive Officer for his comments.
Speaker Change: Our overall operating performance and financial results for the first quarter of 2025, which we refer to as the 2025 quarter was generally in line with our expectations. We discussed with you on our last earnings call.
Total revenues for the 2025 quarter were $540 5 million compared to $651 7 million in the first quarter of 2024, which we refer to as the 2024 quarter.
Speaker Change: The year over year decline was driven primarily by reduced coal sales volumes and prices as well as lower transportation revenues.
Speaker Change: Our average coal sales price per ton for the 2025 quarter was $60 29.
Speaker Change: A decrease of six 9% versus the 'twenty 'twenty four quarter, the 0.5% higher on a sequential basis and in line with our expectations for the quarter.
Speaker Change: And the Illinois basin coal sales price per ton decreased by four 2% compared to the 2024 quarter as a result of lower domestic price realizations at several of the mines within the region, while in Appalachia coal sales prices decreased by eight 5% compared to the 2024 quarter due to.
Speaker Change: Reduced export price realizations from our M C mining in Med D key operations.
Speaker Change: As it relates to volumes total coal production into 2025 quarter of $8 5 million tonnes with seven 2% lower compared to the 2024 quarter coal sales volumes decreased 10, 4% to $7 8 million tons compared to the 2024 quarter.
Compared to the sequential quarter coal sales volumes were lower by seven 7%.
Speaker Change: Total coal inventory at quarter end was $1 4 million tonnes.
Speaker Change: In the Illinois Basin coal sales volumes decreased by $6, one and eight 4% compared to the 2024 and sequential quarters, respectively. Due primarily to timing of committed sales from our Hamilton mine.
Speaker Change: Reduced export sales volumes from Gibson, South also contributed to the sequential reduction in coal sales volumes in the Illinois Basin and.
Speaker Change: In Appalachia coal sales volumes were down 22, 7% and four 9% compared to the 2024 and sequential quarters, respectively. Due to continued challenging mining conditions, particularly at tunnel ridge, which led to lower recoveries as well as longwall moves at both <unk> and tunnel Ridge we.
Speight: Speight that tunnel ridge will be in more favorable geology, beginning in the second half of 2025.
Speight: Turning to cost segment adjusted EBITDA expense per ton sold for our coal operations was $42 75.
Speight: An increase of four 7% versus the 2024 quarter, but down 11, 1% as compared to the sequential quarter.
Speight: The impact of lower volumes I just discussed in Appalachia were the primary driver of the increase year over year in the Illinois Basin segment adjusted EBITDA expense per ton for the 2025 quarter decrease by four and 12, 6% compared to the 2024 and sequential quarters respectively.
Speight: Primarily to increased production.
Speight: And lower maintenance and materials and supplies costs at several mines in the region as well as reduced longwall move days at our Hamilton mine.
Speight: Additionally, an $11 million noncash deferred purchase price adjustment recorded in the sequential quarter also contributed to the sequential decrease in the Illinois Basin.
Speight: In Appalachia segment, adjusted EBITDA expense per ton for the 2025 quarter increased compared to the 2024 quarter due to increased longwall move days and the challenging mining conditions discussed previously at tunnel Ridge, which led to lower recoveries in the region.
Speight: Compared to the sequential quarter Appalachia costs decreased nine 2% due in part to lower subsidence and reclamation expenses.
Speight: And our royalty segment total revenues were $52 7 million in the 2025 quarter down 6% compared to the 2024 quarter the year over year decrease in revenues reflect lower realized oil and gas commodity pricing for B O S.
Speight: As well as lower oil and gas volumes and coal royalty tons sold.
Speight: Compared to the sequential quarter total revenues from our royalty segment increased by eight 8% led primarily by an 11% increase in oil and gas royalty revenue per Boe.
Speight: Specifically in the 2025 quarter oil and gas royalty volumes decreased 2% on a Boe basis, while coal royalty tons sold decreased 8% compared to the 2024 quarter.
Speight: The decline in volumes from oil and gas resulted from decreased drilling and completion activities on our properties.
Speight: Sequentially oil and gas royalty volumes increased by six 9%.
Speight: Co royalty revenue per ton for the 2025 quarter was down eight 3% compared to the 2024 quarter, while lower oil and gas prices reduce the average realized sales price per Boe.
0.5% versus the 2024 quarter.
Speight: Sequentially coal royalty revenue per ton was down three 7% and oil and gas royalties average sales prices were up 11% per Boe.
Speight: Our net income in the 2025 quarter was $74 million as compared to $158 1 million in the 2024 quarter. The decrease primarily reflects the previously discussed lower coal sales volumes and realized prices and a decrease in the fair value of our digital assets of $5 6 million.
Speight: Adjusted EBITDA for the 2025 quarter was $159 9 million.
Speight: Now turning to our balance sheet and uses of cash total debt outstanding was $484 1 million at the end of the 2025 quarter, our total and net leverage ratios finished the quarter at <unk> 76, and six three times, respectively total debt to trailing 12 months adjusted EBITDA.
Speight: Total liquidity was $514 3 million at quarter end, which included $81 3 million of cash on the balance sheet <unk>.
Speight: Additionally, we held approximately 513 bitcoin on our balance sheet valued at $42 million at the end of the 2025 quarter.
Speight: At this morning's price of 94500 per coin 513, bitcoin would be valued at $48 4 million or $6 1 million higher than the end of the 2025 quarter.
Speight: For the 2025 quarter Alliance generated free cash flow of $52 7 million after investing $83 4 million and our coal operations distributable cash flow for the 2025 quarter was $84 1 million.
Speight: We declared a quarterly distribution of <unk> 70 per unit for the 2025 quarter equating to an annualized rate of $2 80 per unit.
Speight: This distribution level is unchanged sequentially and compared to the 2024 quarter.
Speight: As a reminder, each quarter the board considers multiple factors when determining the appropriate distribution levels, including but not limited to expected operating cash flows generated by our business capital needed to maintain our operations distribution coverage levels implied yield on our units both on a pre tax.
Speight: It's an after tax basis current impossible and investment opportunities and debt service costs.
Speight: Turning to our updated 2025 guidance detailed in this morning's release.
Speight: The cold winter weather resulted in more favorable natural gas prices and increased coal consumption in the eastern United States, helping reduce customer inventories and increased domestic coal burn compared to 2024.
Speight: As a result, we continue to see a higher level of domestic customer solicitations for both near term and long term supply contracts and have increased our Illinois basin sales tonnage expectations by 500000 tons for the 2025 full year.
Speight: Alliance has been active in domestic utility solicitations, securing commitments for an additional $17 7 million tonnes over the 2025 to 2028 time period.
Speight: Customers continue to value, our product quality and reliability of service and financial strength.
Speight: We now have 32, and a half million tons committed and priced for 2025, including $29 4 million tons for the domestic market and $3 1 million tons for export.
Speight: <unk> estimated full year sales of $33 seven 5 million tonnes, which is at the midpoint of our updated 2025 full year sales guidance range of $32 75 to $34 seven 5 million tonnes. We are now 96% contracted for 2025 and 61% contracted in.
Speight: Price for 2020 set much of our guidance for other key metrics is unchanged.
Speight: On a net net basis, we continue to expect a material improvement in full year cost to roughly offset lower realized pricing in our coal business for 2025.
Speight: Second quarter 2025 coal sales volumes are anticipated to be 8% to 12% higher than the first quarter.
Speight: The added volumes and cadence of the longwall moves means we expect cost per ton to be lower in the second half of the year based upon the midpoint of our total cost per ton guidance range.
Speight: On the cost side, we continue to expect full year 2025 segment adjusted EBITDA expense per ton to be in a range of 35% to $38 per ton in the Illinois basin and $53 to $60 per ton in Appalachia.
Speight: We completed two scheduled longwall moves in the 2025 quarter at tunnel Ridge in Med Tiki and have another longwall move at tunnel Ridge in the second quarter of 2025, and one at Hamilton in the third quarter of 2025.
Speight: In our oil and gas royalties business. We continue to expect sales of 155 to $1 65 million barrels of oil.
Speight: Six 1% to six five.
5 million Mcf of natural gas and 775 to 825000 barrels of natural gas liquids.
Speight: Segment adjusted EBITDA expense is now expected to be approximately 15% of oil and gas royalty revenues for the year.
Speight: We continue to expect $285 million to $320 million in total capital expenditures for the full year 2025.
Speight: This is down significantly from 2020 for capital expenditures of $429 million as we near the end of a roughly two year period of elevated capital spend to make long term strategic investments and our river view Warrior Hamilton and tunnel ridge mines that ensure they're reliable low cost operation for many.
Speight: Years to come.
Speight: We continue to expect the remaining work for these projects to be completed in the first half of 2025.
Speight: Oil and gas minerals acquisition activity has been slow to date for 2025 is lower oil prices have impacted a number of opportunities in the market as well as willingness of sellers to transact at these commodity prices. However, we remain committed to investing in our oil and gas minerals business and we plan to actively pursue.
Speight: Growth in this segment in 2025 and beyond with the ultimate amount of investment depending upon the number and quality of the opportunities available and their ability to meet our underwriting standards.
Speight: And with that I will turn the call over to Joe for comments on the market and his outlook for ARLP Joe.
Joe Craft: You carry and good morning, everyone.
Joe Craft: Our operations ran well in the first quarter in line with our expectations.
Joe Craft: Thanks to the hard work and dedication of our entire team.
Joe Craft: Illinois Basin operations continued to deliver strong results and we are seeing cost improvements in Appalachia.
Joe Craft: Well costs have not yet reached our target levels. They remain on track with our 2025 full year guidance expectations.
Joe Craft: <unk> as we near the completion of mining and the more challenging areas at tunnel Ridge in Med Peaky.
Joe Craft: We expect our cost in those operations will continue to decline in the quarters ahead.
Joe Craft: Now turning to an update of current market conditions.
Joe Craft: The domestic market strengthened considerably in early 2025 due to the cold weather excuse me a cold winter season.
Joe Craft: Natural gas prices declining coal inventories, leading to increased coal consumption in upward revisions to electricity demand forecast from our customers.
Joe Craft: In contrast export opportunities for our high sulfur coal out of the Illinois Basin.
Have not been as attractive.
Joe Craft: With the strength of domestic demand for Illinois Basin coal our guidance assumes we will not enter into new export contracts.
Joe Craft: Illinois Basin deliveries this year.
Joe Craft: With the outlook for near term data center, driven demand growth and the extended life of the coal plants, we ship to.
Joe Craft: We will continue to give preference to the domestic market.
Joe Craft: I want to emphasize that we remain a cornerstone of our customers' supply plants consistently supporting them throughout market cycles.
Joe Craft: We will prioritize customers, who recognize our quality reliability and financial strength.
Joe Craft: On years, and even decades of service to their critical assets.
Joe Craft: With inventories on the decline utilities have come back to the market for both flex tonnage request for 2025 as well as term business in 2026 and beyond.
Joe Craft: I'm pleased to report that we have been successful in a number of those solicitations year to date.
Joe Craft: Including entering into an arrangement with a long term customer to supply essentially all of their needs through 2025, excuse me 2028.
Speaker Change: Just curious stated we are nearly sold out and priced our expected production for 2025.
Speaker Change: Current market indications suggest sales for the year could even approach the upper end of our guidance range.
Speaker Change: Next I would like to spend a few minutes highlighting the ongoing shift in energy policy out of Washington.
Speaker Change: The administration's recent actions regarding the coal industry and grid reliability.
Speaker Change: <unk> address the realities, we have warned about for years.
Speaker Change: That overdependence on intermittent renewable energy sources, while simultaneously disadvantaging coal.
Speaker Change: Puts the reliability of our country's energy backbone at risk.
Speaker Change: We welcome these policy actions is a recognition.
Speaker Change: Of course, the central role and energy security.
Speaker Change: Notably on April eight 2020 by President Trump signed four executive orders to.
Speaker Change: To expand domestic coal fired generation seeking affordable electricity for the American people.
Speaker Change: And grid stability in anticipation of growing energy demand.
Speaker Change: Which is critical for our country's national security interest.
Speaker Change: The executive order addressing grid reliability.
Speaker Change: I did that rapid technology advancement.
Speaker Change: An expansion in AI data centers and increased domestic manufacturing are driving an unprecedented surge in electricity demand and placing a significant strain on our nation's electric grid.
Speaker Change: The White House now forecast U S. Electricity demand is expected to rise 16% over the next five years or three times the growth forecasted just a year ago.
Speaker Change: These orders are designed to help level, the playing field and Jack common sense approaches to the calculation of reserve margins and prevent premature retirement of critical generation.
Speaker Change: Additionally, the administration is calling for greater federal involvement and decisions regarding capacity reserves that have typically been made at the utility or regional transmission organization level.
Speaker Change: Which could further promote the extension of base load capacity lives.
Speaker Change: The results are likely to be material for our customers and our industry.
Speaker Change: Recent analysis by energy Ventures analysis estimates that 10, six gigawatts of coal plants scheduled to retire or convert to natural gas by the end of 2027.
Could be extended representing coal demand of 23 million tons per year.
Speaker Change: As a result of these executive orders.
Speaker Change: This includes a number of coal plants, we currently serve.
Speaker Change: We have long maintained that premature closing of coal generating capacity with threat and grid reliability the.
Speaker Change: The market is already signaled the scarcity value of coal fired generation as evidenced by last year's PJM capacity auction clearing price increasing tenfold.
Speaker Change: The next PJM auction scheduled for June of this year.
Speaker Change: Cover the period from June 26 through May of 2027, and as indicating more of the same with a $350 per megawatt day price cap already announced.
Speaker Change: While this policy momentum supports constructive long term fundamentals for future coal production.
Speaker Change: The initial fallout from the April 2025 Liberation day tariff announcements at.
Speaker Change: Has created significant uncertainty as to the future inflation supply chain interruptions global economic activity and energy prices among other things.
Speaker Change: Making it difficult to predict with any certainty how these policies will impact us.
Speaker Change: As Carey mentioned, we have secured solid volume commitments for 2025 and 2026.
Speaker Change: Over similar to this year as our higher priced multiyear contracts signed during the 2022 energy prices roll off our average coal sales price per ton is trending lower.
Speaker Change: Based on current market developments, including a favorable natural gas futures price curve.
Speaker Change: We anticipate that 2026 average coal sales price per ton could be 4% to 5% below the midpoint of our 2025 guidance.
Speaker Change: Like this year, we are hopeful we can maintain margins with cost savings.
Speaker Change: The trade policy uncertainty makes actual car sales opportunities and pricing very hard to predict.
Speaker Change: We're 25 for 2025, we have tried to factor in what we believe the known impacts of the tariffs.
Speaker Change: And to our cost and our guidance.
Gary: Gary mentioned.
Speaker Change: Yeah.
Speaker Change: Our royalty segment faces the same uncertainties from potential trade implications.
Speaker Change: As we navigate rapidly evolving market dynamics, we are committed to maintaining a strong balance sheet and disciplined approach to capital allocation.
Carefully monitoring the potential impacts of trade policy uncertainty on coal demand pricing and cost.
Speaker Change: As Gary mentioned, we declared a quarterly distribution of <unk> 74.
Speaker Change: For unit four the 2025 quarter equate.
Speaker Change: Equating to an annualized rate of $2 80 per unit.
Speaker Change: This distribution level was unchanged sequentially and compared to the 2024 quarter.
Speaker Change: The board and making this decision recognized the uncertainty regarding trade policies.
Speaker Change: But decided it was premature to make any adjustment this quarter.
Cary: Cary also outline the multiple factors the board considers in determining the appropriate distribution level.
Cary: The board will closely be evaluating the potential impacts of tariffs on future results, which will among other factors informed our board's decision regarding future distributions.
Cary: In closing we are off to a solid start for the year.
Cary: With an improving regulatory framework and the realities of natural gas and coal fired electric generation being critical for grid security.
We believe alliances investments in oil and gas minerals as well as the recapitalization.
Cary: Coal mines have positioned us well for continued success.
Cary: That concludes our prepared comments.
Cary: Comments and I will now ask the operator to open the call for questions.
Cary: Yeah.
Cary: Thank you the floor is now open for questions.
Speaker Change: I would like to ask a question. Please press star one on your telephone keypad at this time all confirmation tone will indicate that your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys.
Speaker Change: And Thats Star one to register a question at that time. Today's first question is coming from Nathan Martin from the Benchmark Company. Please go ahead.
Nathan Martin: Thanks, operator, good morning, Josh.
Speaker Change: Good morning Nathan.
Speaker Change: I appreciate your thoughts.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Now youre kind of breaking up a little bit here.
Speaker Change: Sure.
Speaker Change: It's a little bit better.
Speaker Change: Yes.
Speaker Change: Hum.
Speaker Change: Going back to work.
Speaker Change: Your comments Trump's et.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Right.
Speaker Change: From that point.
Speaker Change: Okay.
Okay.
Speaker Change: Sure.
Speaker Change: We see some coal plant retirement delays. So now what are you guys hearing from your customers at this point I think you mentioned a couple of plants, who served are impacted there any additional color would be helpful. And then second you see.
Speaker Change: The possibility of additional capital being spent to bring online or are there more thermal coal production or keep coal fired plants running longer.
Speaker Change: Not you know what kind of commitments do industry needs to feel comfortable doing that.
Speaker Change: As far as the response I mentioned.
Speaker Change: The EBITDA analysis.
Speaker Change: And that's on top of announcements had already been made previously which is about double the amount that the Ada.
Speaker Change: I was analyzing.
Speaker Change: Thank you mentioned the mats extension, which is a two year extension there was a schedule attached.
Speaker Change: To that that included the various utilities had requested that extension.
Speaker Change: I would say most if not all of the utilities. We serve were included on that list and intend to take advantage of that.
Speaker Change: I think that window is still open for those utilities that haven't declared that there would be a.
Speaker Change: Openness to consider them.
Speaker Change: Utilities to take advantage.
Speaker Change: Of that extension.
Speaker Change: As far as trying to understand exactly what that is.
Speaker Change: What is clear in our conversations with utilities is this demand for electricity for data center.
Construction is real.
Speaker Change: And so I think every one of our customers is trying to deter.
Speaker Change: Determined exactly how fast.
Speaker Change: That electricity can come online.
Speaker Change: And and what that means for them I think again.
Speaker Change: The executive order from President Trump was driven primarily because of the realization that that the growth.
Speaker Change: For these data centers is real and there's a national security interest.
Speaker Change: That is under consideration that once these data centers to be completed.
Speaker Change: Uh huh.
Speaker Change: As a result, the data the executive orders are driven to make sure that the coal fleet stays open.
Speaker Change: And I think that that reality is going to occur specifically as to whether theres going to be increased.
Speaker Change: Investments for bringing on more coal.
Speaker Change: I think thats going to happen.
Speaker Change: I think that there is adequate capacity to meet the existing coal fleet.
Speaker Change: I think the permanent utility perspective will they continue to invest and hopefully there is going to be strong encouragement.
Speaker Change: The utilities to invest in the existing coal fleet.
Speaker Change: So that they can in fact operate at higher.
Speaker Change: Capacity factors.
Speaker Change: As part of the.
Speaker Change: Executive borders there are the valuations on <unk>.
Speaker Change: New source review a modification.
Speaker Change: Adjustments.
Speaker Change: Which would give the utilities.
Speaker Change: With comfort to go ahead and make some investments there has actually been encouragement that.
Speaker Change: And both at the state level and the federal level to see if they can help the utilities and encourage them to make.
Speaker Change: Investments in their current fleet, if they have not been maintaining those to the level that allow them to run at nameplate capacity. So.
Speaker Change: I do see that the utility industry is being responsive because they see the increased demand is.
Speaker Change: Is requiring them.
Speaker Change: To provide power at the lowest cost possible.
Speaker Change: Yeah.
Speaker Change: From my perspective is the only common sense that if you can maintain what your AD. It's a lot cheaper than trying to build new especially with the supply chain.
Speaker Change: Not going to allow for the new construction that come on at a rate that the.
Speaker Change: Projected energy demand is being forecast so.
Speaker Change: Hopefully thats responsive I Didnt hear totally your question, but.
Speaker Change: If there is something I missed.
Yeah.
Speaker Change: Please ask me.
Speaker Change: That was great that's great Joe appreciate economy.
Speaker Change: Maybe sticking with the macro for a second you guys have talked about how clearly everybody is dealing with.
Speaker Change: Trade policy uncertainties at the moment, making things difficult in a number of fronts.
Speaker Change: Could you talk a little bit more specifically about which policies or potential policy no matter, if you're impacting arlp's business promotion and how you plan to mitigate or manage any potential challenges.
Speaker Change: Yeah.
Speaker Change: The impact that we've included.
Speaker Change: What we're actually seeing from the tariff increases for steel and aluminum.
Speaker Change: And also monitoring copper prices those are gone up so those are the main things that we've factored in.
Speaker Change: Our guidance.
Speaker Change: I think that as we try to think beyond that we're like everybody else.
Speaker Change: And the world trying to understand.
Speaker Change: What the intent is and what the.
Speaker Change: Unintended consequences could be.
Speaker Change: And I think our.
Speaker Change: The impact of mining.
Speaker Change: There's been several articles.
Speaker Change: By a different.
Speaker Change: Publications with investment banks that try to show the impact of various industries.
Speaker Change: And mining is on the low end, which is good.
Speaker Change: But the general economic impact the entire economy, obviously would have an impact.
Speaker Change: <unk>.
What the future demand could be.
Speaker Change: And then you have the total uncertainty of supply chain interruptions again, I think for US we don't anticipate any.
Speaker Change: Significant impac.
Speaker Change: The impact there, but it's really really hard to predict.
Speaker Change: I think that one of the things that is encouraging for us is.
Speaker Change: The administration is serious about this emergency or.
Speaker Change: Protecting grid.
Speaker Change: So they are very responsive to hearing what the industry has to say if there are issues.
Speaker Change: Issues that start popping up that would suggest that.
Speaker Change: The top of the trade policies could have a negative impact.
Speaker Change: To achieve the goals that he striving for.
Speaker Change: For the energy.
Speaker Change: Landscape so.
Speaker Change: Yeah.
Speaker Change: Again I feel that.
Speaker Change: The administration is very aware of.
Speaker Change: The importance of.
Speaker Change: Although oil gas and coal the whole energy space to the strength of our economy.
Speaker Change: It is not.
Speaker Change: Not in 10 years.
Speaker Change: There his intent the presence in 10 is not.
Speaker Change: Allow that.
Speaker Change: Yeah.
Speaker Change: So he has antennas and not impact the energy sector by his trade policies. If he can avoid it.
Speaker Change: Not even.
Speaker Change: Yeah.
Speaker Change: It's very hard to predict.
Not impossible.
Speaker Change: Okay.
Speaker Change: Okay, Great Gioia hurdle, so congrats or alone there.
Speaker Change: I guess the assistant gears finally, just Appalachian segment cost stubbornly high.
Speaker Change: Correct.
Speaker Change: I know you guys are still working through a panel of copper Ridge I think before you move to some better conditions.
Speaker Change: How confident are you that you can kind of get within that full year cost per ton guidance range. Obviously, you maintained but where do you think cost per tonne can friend for Apolo, Oxford once you're past all these challenging conditions.
Speaker Change: Well, we've guided to where we think that would be for the year.
Speaker Change: We are.
Speaker Change: Confident that we can achieve those cost.
Speaker Change: We've already moved into a new longwall panel at Med Peaky and seeing positive results there still work to do.
Speaker Change: Tunnel Ridge, our movement to the next district is now scheduled for the end of June I believe.
Speaker Change: So for the second half.
Speaker Change: We should see improvement next quarter and second quarter, but.
Speaker Change:
Speaker Change: In the second half is what we're targeting to get us to.
Speaker Change: So the range of cost that are shown in our guidance numbers.
Speaker Change: So when you think through what that means for 'twenty six.
Speaker Change: On a full year basis, we should have more stability compared to our 25 numbers.
Speaker Change: In that way, that's what gives us some hope that we will be able to have lower cost at 26.
Speaker Change: <unk> the lower cost.
Speaker Change: Cost of sales prices to hope that we can maintain our margins in 'twenty six like we are doing in 'twenty five as compared to 24.
Speaker Change: Got it appreciate those thoughts guys. Thank you for your time and basketball Court.
Speaker Change: Yeah.
Speaker Change: Thank you. The next question is coming from Mark Reichman of Noble capital markets. Please go ahead.
Mark Reichman: Thank you you talked a little bit about the uncertainty Ah you know I think everybody recognizes that.
Speaker Change: So how are you kind of positioning in terms of when you talk about capital allocation internally.
Mark Reichman: And particularly as it pertains to 2026.
Speaker Change: How are you thinking about.
Mark Reichman: Capital expenditures in investments.
Speaker Change: The the distribution.
Speaker Change: Are you taking kind of a more defensive posture.
Speaker Change: Or because I know you you did make an investment in a kind of a power.
Speaker Change: Power plant.
Speaker Change: I think it was $25 million. So I'm just kind of curious kind of how this environment is.
Speaker Change: Influencing your capital allocation.
Speaker Change: Yeah.
Speaker Change: It is.
Speaker Change: Right now our <unk>.
Speaker Change: <unk> is just totally driven off just maintenance capital.
Speaker Change: For our coal operations.
Speaker Change: We are evaluating opportunities to participate.
Speaker Change: And the data center infrastructure.
Speaker Change: Side of the business you mentioned that.
Speaker Change: $25 million investment we've made in.
Speaker Change: Our power plant.
Speaker Change: Through.
Speaker Change: A larger.
Speaker Change: <unk> if you will.
Speaker Change: Where.
Speaker Change: There was a group that bought the Gavin plant and so we bought a percent of that.
Speaker Change: We think more opportunities like that will present themselves.
No.
Speaker Change: We're not going to slow down our growth capital if we can find.
Speaker Change: You know assets it would be.
Speaker Change: Be.
Speaker Change: To be promising for the growth in the future.
Speaker Change: At the same time.
Speaker Change: We're going to be prudent and looking at those and trying to understand.
Speaker Change: Whether there are opportunities that allow that growth and we believe there will be some opportunities and what we call the.
Speaker Change: Datacenter infrastructure.
Speaker Change: Arena, where.
Speaker Change: We're weekend.
Speaker Change: Work with customers and try to understand how we can be better that's beneficial to them.
Speaker Change: To grow at the same time provide growth opportunities for our company.
Speaker Change: And we've mentioned a little bit in the mineral space.
Speaker Change: That.
Speaker Change: We're very committed to staying in wanting to grow that however, with the decline in oil prices.
Speaker Change: Has muted our seller expectations or it has not muted Derrick.
Speaker Change: In other words they are not.
Speaker Change: Adjusting their expectations, but it does.
Speaker Change: If we maintain our underwriting standards, it's going to limit our ability to allocate capital to that area unless there's some change in mindset or we get back to a price curve that is comparable to what we've experienced over the last three or four years.
Speaker Change: So I think that will play as to exactly how.
Speaker Change: How much we can participate in that area.
Speaker Change:
Speaker Change: Well you know I was more I was curious because I think the question is really back to when we think of opportunities.
Speaker Change: We will be mindful of our balance sheet to determine what to do.
Speaker Change: In an uncertain environment.
Speaker Change: Okay. No. That's helpful. And then just you know you've got that portfolio input item in France in synergy.
Speaker Change: And item has a great relationship with matrix, but like does this executive order I mean does that have you have you broadened or maybe even narrowed.
Speaker Change: The scope of your investments. So you mentioned the power plant, but with this grid reliability, because there'd be investments around the grid or just kind of just kind of curious how you're thinking about those investments and the opportunity set.
Speaker Change: Yeah, I think we've narrowed our focus to the various transition.
Speaker Change: Type investments that were made under the previous administration is due.
Speaker Change: Where the direction was going sort of stalled.
Speaker Change: And benighted, we still are working closely with them and we are advancing.
Speaker Change: The joint development agreement, we have with them and we are very encouraged by the year prospects of that so that's moving yeah.
Speaker Change: As we contemplated it doesn't take much capital, but it does take labor.
Speaker Change: And.
Speaker Change: Our growing sales.
Speaker Change: Prospects, so that looks good.
Speaker Change: When you think of.
Speaker Change: Significant it's not going to be a significant number for 'twenty five 'twenty six but we're still very excited about the longer term growth potential.
Speaker Change: For that relationship.
Speaker Change: Back to the infrastructure.
Speaker Change: There are areas within matrix that we're looking at that will allow us to do some things and the components of data centers.
Speaker Change: That sort of fit this infrastructure concept of how we could participate in that.
That could add some value that we're excited about and then beyond that it would be.
Speaker Change: Looking at properties, we have and or.
Speaker Change: That are in regions, where our existing coal fleet that we serve.
Speaker Change: Are located.
Speaker Change: To see if we can facilitate somehow data centers being located to where the coal burn.
Speaker Change: Benefit.
Speaker Change: From the investments in those regions.
Speaker Change: And just one final very specific question related to the executive order did you do you think theres any possibility that that two year relief you know will kind of be made permanent or core.
Speaker Change: Well I think this rule.
Speaker Change: Well all six of the EPA rules that are needed to be repealed and replaced our.
Speaker Change: Are actively.
Speaker Change: Acted.
Speaker Change: Acted upon and the Mats rules went out of them.
Speaker Change: So the law gave the president the opportunity to go ahead signal to the utilities that they had the automatic extension there.
Speaker Change: And I think that.
Speaker Change: The quicker that they can move on the clean power plant two or the coal combustion residual rules or the EOG rule.
Speaker Change: They are already doing some things on the ozone transport rule like.
Speaker Change: I think the EPA is very focused on trying to move as fast as possible with the goal of having clarity by the end of this year.
Speaker Change: So that the utilities can make decisions with what the new rules are going to be.
Speaker Change: And not be constrained by the rules around the books today.
So I do believe that there will be more clarity for the utilities, where they're not having to be bound by the dates and.
Speaker Change: The various rules that were designed.
Speaker Change: Actually prematurely Cowen <unk> co.
Speaker Change: Coal plants.
Speaker Change: So I do believe that as the year progresses.
Speaker Change: All of those six rules.
Speaker Change: We will be revised in some way shape or form.
Speaker Change: To give the utilities more clarity on exactly how they should invest in.
Speaker Change: And factor in the <unk>.
Speaker Change: The lives of their existing coal fleet.
Speaker Change: Okay. Thank you very much that was very helpful.
Mark Reichman: Okay. Thank you Mark.
Speaker Change: Once again, ladies and gentlemen that is star one if you would like to register a question at this time.
Speaker Change: Our next question is coming from Dave storms of Stonegate. Please go ahead.
Good morning, everyone.
Dave Storms: Alright I appreciate you taking my questions just wanted to get started with your current capacity levels.
Speaker Change: Volumes in commitments are.
Dave Storms: Strong I'm just curious as to what your thoughts are with.
With your current capacity levels, given those strong volumes.
I assume you're talking about our customers' capacity or our sales volumes to meet customer capacity Elliot.
Speaker Change: Sure I understand I think I I think Dave as you as you look at ours, our capacity, we've tried to factor that in within within our guidance ranges that we have out there right now for 2025.
Dave Storms: Not to say that as we get into 2026, we may be able to have a.
Dave Storms: A little bit more.
Dave Storms: <unk> out there, we're just not quite there as we get to 2026, but but I will say within the guidance ranges that we've provided and there may be a little bit more that we can get out of there because typically we don't we don't account for a weekend type production and things of that nature. So there could be a.
Dave Storms: A little bit more capacity that we have in terms of what we provided out there, but you know what.
Dave Storms: We think with within that guidance range. That's a that's a pretty good number to be focused on in terms of overall capacity.
Dave Storms: Yeah 25, I understand the question now 26, we will have the.
Dave Storms: Benefit of better conditions were projecting for tunnel ridge, so that could add another 1 million tons of capacity compared to what we produced in 'twenty five or 'twenty over the last 12 months at tunnel Ridge.
Dave Storms: And.
Dave Storms: We with the.
Dave Storms: Yeah.
Dave Storms: The completion of the transition.
Dave Storms: At River view.
And to our new reserves, there there's potential for another 1 million or million a half tons. There if the market would allow for us to grow for that.
Dave Storms: Yeah.
Dave Storms: To be able to utilize the prep plant capacity, we have at that complex.
Dave Storms: Understood that's very helpful. Thank you.
Dave Storms: And then just trying to think about.
Dave Storms: Tori levels in the industry, you mentioned that there's some extra coal inventories do you expect that to be rectified with.
Dave Storms: Maybe a catch up.
Dave Storms: <unk> spray or maybe is this just a more normalization of buying patterns going forward.
Speaker Change: Yes, I don't think that the utilities are.
Speaker Change: Looking to really add I think theyre just looking to maintain.
Speaker Change: Uh huh.
Speaker Change: The current levels I think that.
Speaker Change: If you look at last year, we had good demand excuse me good coal consumption.
Speaker Change: But a lot of that was taken out of their piles as opposed to being co production selling into that market. So we're seeing that continue coal consumption first quarter was like 20% higher than it was last year.
Speaker Change: We see a very favorable natural gas curve.
Speaker Change: That would support.
Speaker Change: Demand for coal.
Speaker Change: And so.
Speaker Change: So I think the utilities are not trying to build for anything I think they are just looking at buying to meet what they see the demand is going to be.
Speaker Change: 425, as an example.
Speaker Change: Of the solicitations that are out there as well as theyre looking to.
Speaker Change: Yeah just.
Speaker Change: Fill their book contracts that are rolling off for 26 and beyond.
Speaker Change: Understood. Thank you for taking my questions and welcome to you too.
Speaker Change: Thank you at this time I'd like to turn the floor back over to Mr. Marshall for closing comments.
Marshall: Thank you operator and to everyone on the call. We appreciate your time. This morning and also your continued support and interest in Alliance. Our next call to discuss our second quarter 2025 financial and operating results is currently expected to occur in July and we hope everyone will join US again at that time. This concludes our call for <unk>.
Speaker Change: The day thank you.
Speaker Change: Ladies and gentlemen. This concludes today's event you may disconnect. Your lines are lock up about cast at this time and enjoy the rest of your day.
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