Alliance Resource Partners, L.P. (ARLP) Cash Flow Statement

The consistent gap between operating cash flow and net income suggests that depletion and depreciation of roughly $66M to $82M per quarter are depressing reported earnings relative to cash generated. The extreme ratios appear driven by depressed earnings rather than an improvement in cash conversion, which investors should not mistake for a durable quality signal. Working capital and accrual timing, which the reported data does not break out, may also contribute to these swings and warrants further investigation.

The Q3 2026 spike to $194.0M in free cash flow appears to reflect strong operating cash generation combined with minimal growth capex, rather than a sustained improvement in underlying economics. Comparing 2024 quarters, where FCF margins sat between 12.8% and 19.3%, with 2025 and 2026 quarters suggests the business generates less cash per dollar of revenue on a normalized basis. Investors should treat the Q3 2026 print as a single-quarter outcome until subsequent periods confirm repeatability.

Capex intensity dropped from roughly $103M to $121M per quarter in 2024 to a few hundred thousand dollars to $4.4M in recent quarters, excluding the $59.0M in Q3 2026. Such a sharp reduction may reflect a deliberate pause in growth investment or a deferral of sustaining spending, and the reported data does not allow these to be distinguished. If the low capex level persists it could flatter cash flow, while a catch-up in maintenance spending would compress future FCF.

The steady distribution level means payouts are fixed while cash generation is volatile, creating a structural coverage risk during weak quarters. The $219.0M acquisition outflow in Q3 2026 far exceeded that period's free cash flow, implying the partnership funded it from balance sheet resources or other financing, a point the reported data does not fully clarify. Investors should monitor whether distributions remain covered by free cash flow on a trailing basis as the revenue base continues to contract.

The persistent gap between operating cash flow and net income suggests reported earnings understate the cash economics of the partnership, largely due to non-cash charges embedded in mining operations. This gap should not be read as proof of excess earnings quality, since depletion represents the real economic cost of consuming finite reserves that must eventually be replaced or exhausted. The divergence therefore warrants caution in interpreting cash yield as sustainable without accounting for reserve depletion.