Investment Thesis
Alliance Resource Partners faces structural headwinds with declining revenue (-10.4% YoY) and net income compression while operating in a secularly declining coal industry. Weak interest coverage of 2.8x combined with meager free cash flow generation ($9.8M) relative to substantial debt ($426.1M) raises solvency concerns, and razor-thin operating margins (4.2%) offer minimal protection against downturns.
Strengths
- Positive operating cash flow of $105.5M demonstrates ongoing operational cash generation capability
- Current ratio of 1.46x provides adequate short-term liquidity cushion for operations
- Continuing to generate positive net income ($9.1M) despite cyclical industry pressures
Risks
- Revenue declining 10.4% YoY consistent with coal sector secular decline and energy transition headwinds
- Dangerously low interest coverage ratio of 2.8x indicates limited ability to service debt during economic stress
- Free cash flow of $9.8M is critically insufficient relative to $426.1M long-term debt burden, raising solvency concerns
- Razor-thin profit margins (1.8% net, 4.2% operating) leave virtually no room for operational deterioration
- Bituminous coal mining faces structural decline from energy transition and environmental regulation
- Severely poor capital efficiency evidenced by ROA of 0.3%
Key Metrics to Watch
- Interest Coverage Ratio - critical debt serviceability indicator; must improve above 3.5x
- Free Cash Flow and Debt Service Coverage Ratio - ability to delever from current unsustainable trajectory
- Revenue and Operating Income Trends - further deterioration could breach profitability sustainability
Financial Metrics
Revenue
516.0M
Net Income
9.1M
EPS (Diluted)
$0.00
Free Cash Flow
9.8M
Total Assets
2.9B
Cash
28.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
4.2%
Net Margin
1.8%
ROE
N/A
ROA
0.3%
FCF Margin
1.9%
Balance Sheet & Liquidity
Current Ratio
1.46x
Quick Ratio
0.95x
Debt/Equity
N/A
Debt/Assets
37.6%
Interest Coverage
2.82x
Long-term Debt
426.1M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T07:02:36.088083 |
Data as of: 2026-03-31 |
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