Natural Resource Partners L.P. Q4 2025 Earnings Call - $39M Sisecam Investment Delays Distribution Increase as Commodities Sit at Cyclical and Generational Lows

Operator: Hello, everyone. Thank you for joining us, welcome to the Natural Resource Partners L.P. fourth quarter 2025 earnings call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Tiffany Sammis, Investor Relations. Please go ahead.

Tiffany Sammis, Investor Relations, Natural Resource Partners L.P.: Thank you. Good morning, and welcome to the Natural Resource Partners fourth quarter 2025 conference call. Today’s call is being webcast, and a replay will be available on our website. Joining me today are Craig Nunez, President and Chief Operating Officer, Chris Zolas, Chief Financial Officer, and Kevin Craig, Executive Vice President. Some of our comments today may include forward-looking statements reflecting NRP’s views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in NRP’s Form 10-K and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today also include non-GAAP financial measures.

Additional details and reconciliations to the most directly comparable GAAP measures are included in our fourth quarter press release, which can be found on our website. I would like to remind everyone that we do not intend to discuss the operations or outlook for any particular coal lessee or detailed market fundamentals. I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: Thank you, Tiffany. Good morning, everyone. NRP generated $46 million of free cash flow in the fourth quarter and $169 million of free cash flow in the full year 2025. All three of our key commodities, metallurgical coal, thermal coal, and soda ash, continue to struggle with sales prices that are near or below our estimates of operators’ marginal costs of production. Metallurgical and thermal sales prices are at cyclically low levels, and soda ash prices are at generational lows. We do not yet see any catalysts on the horizon that are likely to change this outlook in the foreseeable future. In 2025, softening global economic activity and subdued demand for steel weighed on metallurgical coal pricing, while low natural gas prices and mild weather pressured thermal coal.

While sentiment toward thermal coal is benefiting from the projected rise in electricity demand from data centers, we have yet to see any material market improvement. Until we see clear evidence of a structural market shift, we remain disciplined in managing the partnership under the assumption that demand for North American thermal coal remains in long-term secular decline. As we said over the course of last year, 2025 was a very challenging time for the global soda ash industry. We believe 2026 will be worse. While we were early to warn about the potential for excess capacity hitting the market, the extent and potential duration of the downturn is exceeding even our expectations. International prices are currently below the cost of production for most producers. We believe supply rationalization is not a question of if, but when.

We also believe rebalancing global supply and demand will take time, and we expect it could be several years before a healthy bid returns to the market and prices return to historical levels. We anticipate further pressure on Sisecam Wyoming’s financial performance. We have not received distributions from the joint venture for the last 2 quarters, and we do not expect distributions to resume for the foreseeable future. Our managing partner is retaining cash to support investments in safety, operational integrity, and to shore up the capital structure. Earlier this month, we agreed with our partner to invest capital in the venture to reduce outstanding amounts under its bank credit facility and better position it to compete in the current environment.

NRP share of this investment is $39 million. We evaluated it as we would any other capital allocation decision, with the goal of maximizing NRP’s intrinsic value per unit. Regarding carbon-neutral initiatives, leasing interest for underground carbon sequestration remains lackluster as political, regulatory, and market uncertainties pose significant hurdles for developers contemplating large capital investments for these types of projects. We continue to work on multiple geothermal, solar, and lithium opportunities. We are making small-scale progress on several initiatives but have nothing material to report. In conclusion, coal prices remain at cyclical lows. Global soda ash prices are at generational lows. Our coal lessees are operating at or near their costs of production. Our soda ash investment, one of the world’s lowest-cost producers, is managing through what may be the worst bear market in its 60-plus year history.

Despite this, NRP continues to generate robust free cash flow and make progress toward our goal of retiring all outstanding debt. We retired $109 million of debt in 2025 and finished the year with $33 million of debt and no other financial obligations outstanding. Our timeline has been to retire all debt and significantly increase unitholder distributions in August of this year. Although we’ve cautioned that extended bear markets for all three of our key commodities would increase the likelihood that some event would occur that could push that timing back. The $39 million investment in Sisecam, Wyoming, is one such event and will push the distribution increase we had expected to occur in August back to a subsequent quarter. I’ll turn it over now to Chris for more details.

Chris Zolas, Chief Financial Officer, Natural Resource Partners L.P.: ... Thank you, Craig. In the fourth quarter of 2025, NRP generated $31 million of net income, $45 million of operating cash flow, and $46 million of free cash flow. For the full year 2025, NRP generated $136 million of net income, $166 million of operating cash flow, and $169 million of free cash flow. Of these consolidated amounts, our Mineral Rights segment generated $40 million of net income, $49 million of operating cash flow, and $50 million of free cash flow in the fourth quarter, and $166 million of net income, $182 million of operating cash flow, and $185 million of free cash flow in the full year of 2025.

When compared to the prior year fourth quarter, our Mineral Rights segment net income, operating cash flow, and free cash flow each decreased $13 million. When compared to the full year, our Mineral Rights segment net income declined $41 million, while operating and free cash flow each decreased $60 million. These decreases were primarily due to weaker metallurgical coal markets, resulting in lower sales prices and volumes. Regarding our net thermal coal royalty mix, metallurgical coal made up approximately 70% of our coal royalty revenues and 45% of coal royalty sales volumes for the fourth quarter, and 65% of our coal royalty revenues and 45% of our coal royalty sales volumes for the full year 2025.

For our Soda Ash segment, net income for the fourth quarter and full year of 2025 decreased $3 million and $15 million, respectively, when compared to the prior year periods. Operating and free cash flow for the fourth quarter and full year of 2025 each decreased by $11 million and $31 million, respectively, as compared to the prior year periods. These decreases were primarily due to lower international sales prices, driven by new natural soda ash supply from China, as well as weak glass demand from the construction and automobile markets. We have not received a distribution from Sisecam Wyoming since the second quarter of 2025. Do not expect distributions from Sisecam Wyoming to resume until soda ash demand rebounds or there is a significant supply response to this weakened market, most likely from higher cost synthetic production.

Moving to our Corporate and Financing segment, Q4 2025 net income, operating cash flow, and free cash flow each improved $3 million as compared to the prior year period. Full year net income improved by $9 million, while operating and free cash flow each improved $8 million as compared to the prior year period. These improvements to the Corporate and Financing segment were due to significantly less debt outstanding, resulting in lower interest costs and less cash paid for interest. We used the free cash flow generated from our business segments in 2025 to repay $109 million of debt. Even including the impact of our planned $39 million capital investment into Sisecam Wyoming, we remain on track to accomplish our de-leveraging goal this year.

Regarding our quarterly distributions, in November of 2025, we paid a third quarter distribution of $0.75 per common unit. In February of this year, we paid a distribution of $0.75 related to the fourth quarter of 2025. In addition, today we announced a special distribution of $0.12 per common unit to help cover unitholder tax liabilities associated with owning NRP’s common units in 2025. With that, I’ll turn the call over to our operator for questions.

Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when you are asking a question, and if muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from David Spier with Nitor Capital Management. Your line is open. Please go ahead.

David Spier, Investor/Analyst, Nitor Capital Management: Hi, how are you? just to better understand the capital contribution to the Soda Ash JV, is there any way to provide how much bank debt was outstanding and whether the JV is now debt-free following the contribution?

Chris Zolas, Chief Financial Officer, Natural Resource Partners L.P.: The JV is not debt-free. The JV has $50+ million of debt remaining, after the contribution.

David Spier, Investor/Analyst, Nitor Capital Management: Is there any plans, or intention to continue making, contributions to pay down the remaining debt? Is that on the table?

Chris Zolas, Chief Financial Officer, Natural Resource Partners L.P.: We do not have that. That’s not our plan right now. What I will say is that, you know, this is a very difficult soda ash market. You know, we were early, and we were right on the downturn, but we’ve been wrong on the extent, the depth and the duration of the downturn now that we’re in it. If things get worse.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: There could be situations where we would elect to put more capital into the soda ash venture. That’s always a possibility, but that’s not what we’re planning at the moment.

David Spier, Investor/Analyst, Nitor Capital Management: Last week, was this a requirement or is it, you know, your election an option?

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: It was our election.

David Spier, Investor/Analyst, Nitor Capital Management: Got it. Okay. I appreciate the call. Thank you.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: You bet. Thanks.

Operator: Our next question comes from Dan Adler. Your line is open. Please go ahead. Please unmute yourself locally so we can hear your question.

Phillip Cramer, Investor/Analyst, BATS Wireless: My question is related to the capital investment as well. I lowered my hand, but not in time.

Operator: Thank you.

Phillip Cramer, Investor/Analyst, BATS Wireless: Thanks.

Operator: Thank you. Our next question comes from Phillip Cramer with BATS Wireless. Your line is open. Please go ahead.

Phillip Cramer, Investor/Analyst, BATS Wireless: Yes. Congratulations on the foresight and great moves by significantly de-leveraging the partnership over the last years. Do you anticipate that we’ll be in a position to substantially increase distributions in the May quarter?

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: No, not in May. If you do the math, you take our run rates that we’re generating in free cash, you take into account the $39 million distribution or contribution we’re making to the Sisecam Wyoming joint venture, the timing, we’d say, is probably in November.

Phillip Cramer, Investor/Analyst, BATS Wireless: Thanks for the clarification.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: You bet. I want to say what we’ve said before, though, in prior calls, and that is that, you know, the longer the bear market continues for all three of our key commodities, the greater the likelihood something happens that pushes that timing back. Right now, that’s what the timing looks like.

Operator: If you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Alberto Padilla with Fruit Tree Capital. Your line is open. Please go ahead.

Alberto Padilla, Investor/Analyst, Fruit Tree Capital: Good morning. I attended the Pure Land Management’s sale auction of mineral rights for two of Warrior’s mines. I was just curious why you guys Warmoth, didn’t bid. Thank you.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: Good, good question. Let me just tell you that the opportunities to acquire passive interests in natural resource assets at attractive prices, which are what we try to do, does not come along often. Auctions are typically not places where you come away with attractive opportunities and for mineral-type assets. You’re not likely to see us participate in auctions. Furthermore, I’ll tell you, we are still on our path to de-lever, and our goal is to essentially pay off all of our debt and then focus primarily on returning capital to unitholders and to form a distributions. Those are the reasons we weren’t there.

Alberto Padilla, Investor/Analyst, Fruit Tree Capital: Thanks a lot.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: You bet.

Operator: There are no further questions at this time. I will now turn the call back to Craig Nunez for closing remarks.

Craig Nunez, President and Chief Operating Officer, Natural Resource Partners L.P.: Thank you, operator, and thank you everyone for, participating in this call, and thank you, all of you, for your support of NRP, and, have a good day.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.