Natural Resource Partners (NRP) 7 Mar 242023 Q4 Earnings call transcript

Good morning, and welcome to the Natural Resource Partners L.P. Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I'd now like to turn the call over to Tiffany Sammis, Manager of Investor Relations. Thank you. ahead. go Please

website. morning, Fourth Good being to Natural on the and Thank XXXX and Conference Partners our available be Quarter replay is Call. Resource a you. will welcome Today's webcast, call

Officer; Joining me today Executive Chief Craig Nunez, Craig, Officer; Kevin President. Chris Chief and President Financial Vice Zolas, and are Operating

to our Some of future include publicly could These filings. We any statements. forward-looking involve matters may revise our events. to NRP's are uncertainties cause reflecting discussed that or for from Exchange no undertake statements other Form our forward-looking comments materially actual risks These XX-K update obligation results Commission risks forward-looking Securities today about NRP's differ and in views reason. and statements and any

include financial also non-GAAP measures. Our comments today

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

over like call Chief turn the Operating Nunez, Craig I would President Now Officer. our to to and

and strategy a previous set of results Thank good record increase million NRP the in we XXXX testament morning, to free derisk a delever are record partnership. executing our XX% XXXX, the cash out in generated you, $XXX over on set in flow These a everyone. and Tiffany, XXXX. to success our in

of is and levels cash bad, are wavering do what our we business the exactly of have The to outlook were you is and stuck strategy to financial robust hard capital commitment flow, improved. generating persistence We in we much our times work this structure free off. good do. Years never solid to paying is through told and going

million, my we I thanks year, with million units. would units: remaining we year support There total for to debt, to express from employees, intrinsic the been and XX% at our yes, warrants, less this and might settled stand common external our the which settled warrants, cash. second, preferred settle both we an of sincere early add; answer of utilizing And with units value we cash to stakeholders with in approximately preferred cash. consider like today, cash Directors, would X or none market those warrants X.X ago. X.X have two value? If common Board retired warrants have include the which questions without I deciding additional equity million possible. We of a obligations, par conservatively, and are $XXX of which results decrease and of As just of whether both at estimate First, of common our $XXX liquidity, define XXXX million when quite of ample settle these is equity is and do factors than we the

settle a we liquidity While -- directly the to issue caused this year. units our to early portion question inability specifically that exercises I of was that us value, to yes answer our intrinsic say on will view of will the it to not warrant comment

currently continue warrants million capacity cash $XX from with of to financial an We bank will that increase accelerate redemptions year revolver of our add preferreds. The provide flexibility to and of additional capacity revolver X million, settle ago. at borrowing $XXX stands

appear investment Global believe coal gas that fourth strong and to in due have to supply to and $XX free coal future it the coal after balance, flow remained trends prices of $XXX during long-term natural during million the and norms, highs although cash generated demand in remains year. free way quarter business quarter Rights for coal of fourth and muted quarters improved below compared elevated flow Metallurgical the metallurgical prices inventories. from for million of demand foreseeable resulting downward Mineral reasonable pressure we seen stabilized historical the during and continued the stay Our will cash record new several for supply. Thermal XXXX.

believe international in near market continue believe the levels decline. term, production, when domestic coal that secular we of long-term new we norms. demand, historical sources at term, coal will provide with coupled thermal are support to its thermal compared underinvestment Over however, price the competitive will continued thermal Longer

XXXX, in highest of regular soda distributions ash. -- the ash significantly fell both soda soda annual prices, supply as to amount amount driven in domestic ever from the cash by Sisecam China, in half received record we've received. first and We $XX distributions Turning and which sales result export online Unfortunately, global high prices half the million States. year back of was Wyoming low-cost came of new in is Turkey the year. United the during ash This export the

a years We several take NRP expect increases. our inflation-driven we global new compress our distributions process headwinds due XXXX volumes, view to ash will margins Despite be year a prices long-term to accordingly significant believe markets lower of combination profit facing of to production challenging soda investment Sisecam in the changed. current will cost to adjust that absorb as has the as soda sales not Wyoming the and ash industry, complete. Cash

long-term a renewable the fundamentals, global of megatrends and producers the of that fleet. of by energy has for world's driven electrification the urbanization, the one are favorable auto We product lowest-cost

initiatives, lithium We COX and lease include for of mineral continue underground solar electricity assets exploring identifying using permanent to and our the sequestration, wind to expand forest surface our generation opportunities geothermal, sequestration, production energy. and which carbon-neutral and

upside be by fully early an capital believe economy in and Chris potential the to over the our significant, carbon-neutral our investment to regulatory initiatives changes become neutral financial carbon results. requires from that, viable, the cover development I'll call While could environment requiring with while the in we NRP. significant no and to turn And stage all of is investment

for $XX full million XXXX, of year million operating of flow income. net million generated NRP flow of generated XXXX, you, good cash operating and fourth NRP $XXX income. Great. Craig, quarter and Thank and $XXX everyone. $XX the of In morning, cash million the And net of of

results. segment to Moving our

segment quarter of our XXXX, generated million income. Mineral flow Rights operating cash of fourth $XX of net the During million and $XX

For to XXXX, the $XX When operating initiative segment to income. the full carbon natural into prior million transportation of year. metallurgical year, our $XXX the lower lower compared we revenues and generated primarily entered $XXX transactions of Rights million net net decreased flow cash the million year of due income and prices, Mineral certain coal gas and in and neutral processing segment prior that

and the revenues Wyoming met, coal fourth $XX sales higher XXXX mix primarily made half million, to prices, million full the cash to of higher our thermal prices the also to XXXX coal were as increased in in quarter mix, Sisecam the million XXXX. full from Regarding approximately prior higher driven fourth our in segment. in XX% full flow year quarter XX% increases prior The fourth income of increased sales and volumes and ash quarter year due distributions metallurgical soda Free both and cash from sales respectively. $XX as in and by our year, to year segment $X in resulting compared compared were up in These of Net first the this of XXXX. period's for XXXX. met of respectively. Shifting business coal royalty royalty XXXX year XX% the

full debt Financing full quarter debt results of million, primarily and These also Costs Moving year to million improved early and fourth XXXX to and year improvements driven of segment. respectively. outstanding noncash in loss $X XXXX less Corporate interest for expense recognized are on of due XXXX. from and less our $XX benefited because the in a extinguishment

Corporate compared year of Financing XXXX. cash due improved because to less for the debt million, prior the Our periods outstanding cash to full $X and lower as segment XXXX and for in quarter million and respectively, $XX flow paid free interest fourth of year

flow cash Craig with million. units $XXX par permanently progress strong amount units mentioned, make lowering warrants and preferred outstanding redeemed million us of We outstanding to down significant our XXXX $XXX retiring in As million from cash, preferred $XX in to generation enabled at XXXX the -- preferred warrants. free

saved ago to fully X.X in like reaching were have the these originally that $XX quarter. only increasing to preferred just cash also in last million redemptions, earlier our warrants cash today. $XX result annually value cash we increased a $XX month, In and As NRP and from with million a accordion a of now million now XXX,XXX settled utilized combination our distributions. We capacity $XXX over fourth X million warrants of of $XXX feature with have And XXXX, year of in our year, XXXX, million we credit $XXX,XXX we as X.X million facility, less X unit million added in XXX,XXX this of bit $XX on an warrants than million note, million. I'd the issued, issuing outstanding current additional capacity. borrowing common we settled $XXX have we capacity borrowing resulting units. of another that a including million existing settlement $XX the million approximately the borrowing Of

we unit to preferred all $X.XX tax along the announced NRP permanently warrants unitholders. retire quarter cash distributions. the our units $X.XX preferred XXXX, $X.XX $X.XX preferred execute and questions. units to for and until units third regarding help distribution outstanding back with used common we of per continue February strategy cash today, retired. And unit to have to operator over warrants announced unitholders. and we In to cover in cash distribution facility, the unit paid and are of our common XXXX. And And November and million our quarterly this of In this quarter liabilities of and to a finally, unitholder turn special credit to owning we distribution generation, XXXX, I'll a that, common We a $X.XX per associated free a our per with of a with preferred distribution plan I distribution flow call fourth described, common paid just million

first Our question comes [Operator Yarra Victor Square. Ho Instructions] from from

couple on congratulations continuing very questions. Had And results. a strong of

I cash of free of first continue near able preferred the expected use here. going generation, cash. of it rate debt taking around once you're free the stance then you of your sort effectively anywhere debt question. preferred and But pretty order What whatnot. of net become cash of free? the sort pay conservative to the understand That's current to if be you're flow use on is down short and Firstly, in both you've and use cash the

it. I Thanks for the appreciate question.

that have not to those extent do that of opportunities, earn And capital. is we would unitholders. money what the deem The it our always the is something can that we'll we cash we have if see that do with when be excess we to have will do we intelligent on thing first cost believe we returns out what we we would exceed to capital distribute look to

the net use Okay. on do justify you of sort the that's something would unitholders? to moment? the above cash of all at you if to out, the be you interesting And shareholders debt of cash today, see had earn anything no that that horizon Or capital were looking cost preferreds paid return would the and or would that

Well, out right still point are are where now, down. that the bit paid to from getting we completely a obligations

what If years what -- speculate in can don't at years, we tell summarized don't were X right opportunities on it's had now the so in we don't not where long you this obligation horizon out I opportunities bushes -- point where if excess want we I excess in that now, to today, task the market. overly that rate on theoretical free. focused we we beating are had get would You that will for we're point to we I in cash. the X.X we attractive that not But situation are on places deploy said, run capital. being capital. right now and we're the point to they do at time, to initially before the are deploy current out in you see too hand from That at not I cash our

manner to to deploying rest quite out about that unitholders. we assured in do going are than any with you think it distributing other capital can respect anything be to we I thoughtful

Right.

a if is the that with you've opportunities, guys owning terms fruition? you of any sort pipelines of may. deals there? in Second if to What of pun, I interesting question, is The signed -- potential some you new in deals And carbon-neutral those or pardon signed sort very of there progress on pipeline deals geographies. of the coming your full

that present these subsurface further make With that -- the on projects development but projects understand projects sequestration not COX don't are being are general. we give projects. we likely out and time. These make projects can't on before, changes call heard on in greatness just projects technology, bound that We in process sequestration in I two the in continuing and you actually active do confidentiality of projects, believe in progress in think the from the We those some they in on as also are our regulatory money general, lessees at options the what NRP, call we agreements you've carbon that because And space just their viable, to are the needs improvements viable large-scale are by them. information be this any detailed with lessors greatness we're they're on not call permitting participants our further we're those. on said, options environment. there of actually to to all economically

-- about given in other place projects that have geology parties discussions are that like of that. the swath we're multiple you the pipeline right broad on I we acreage to tell I pipeline, insight the always typically potential on to say anything you about can't anything in with I right in for now. transactions. our carbon with pull willing But to would sequestration, -- about is that or give As I'm trigger we that's the can for all

may. And helpful. if a question, I then That's Okay. final just

market of And Or at lessees, sort lessees the -- your on pricing price do terms extent know In of have you per all they sort of your caps their to on now? of come sort output? price of color give what they of off that any getting ton can you of contracted are sort sort are coal all today?

and tell -- the time. met prices contracted we than There pay they more from on is We are with changes us. mix contracted our can don't what when thermal, we not us that see are know check markets mix But not to volumes receive again, we have day-to-day suspect. have have the that, exactly what tell to the stubs know. spot you'll after are and the on obligated lessees. lessees mix of so you just the time What that we information typically we we is We a fact that are that royalties. And the do

So X-month assumptions is your going prices what the for you I that out I think our those the believe pricing do but way changes would through think I would future. And probably with a in those would make index I assume would are eventually -- from the percentage that to perspective, about in would flow on modeling the coal a index pricing, in lag. our lag,

no over I'd queue. closing the remarks. for Craig have in back call like further to Nunez questions to We turn

-- NRP. the Thank on joining continued you, operator, and on for long thank call. Thank for of support you, you your We've come we've everyone, been journey. a

it's due quite been you. has good it part of and all to looks far, the So in successful, and outlook large

a for your and So great day. have you thank support,

you Thank call. your conference for today's concludes This participation.

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