Natural Resource Partners (NRP) 5 Nov 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Danica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Natural Resource Partners L.P.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Tiffany Sammis, Manager of Investor Relations. ahead. go Please

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

include financial non-GAAP also measures. comments Our today

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

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

you, NRP million free quarter generated flow morning, good of flow third Tiffany, of and in last $XX the free million XX months. and cash $XXX cash Thank the everyone. over

cash prices realized eliminating make prices and of lower we obligations. the soda for for our robust flow significantly lower toward we and ash, free While to metallurgical financial during and coal noteworthy quarter thermal all goal continue progress generate

now $XX warrant preferred free the paid securities and the liabilities. are during and remaining we preferred all of off Notably, million of quarter

stand $XXX of a X decrease ago. XX% financial of As of obligations, consists million, which solely today, at year from debt remaining total our

compared softness deleveraging resulting a as While the for free the foreseeable we current with remain drop the will market our last plan. future, track on persist cash months, material in flow in expected to XX for our our we commodities key believe

pay common to down and partnership's to cash that strategy per in continue the intrinsic when the competing will coming internally forward maximize We cash will free generated steadfast unit. claims the unitholders remain in no debt best is We day this with our belief look value have the flow. months to on

Additionally, a facility date financial greater and revolver's October over X-year in derisks closed with October, extends us XXXX. further we our credit years extension that structure. bank our X provides maturity capital This to flexibility

have an more We business group They partners. than exceptional are become have banks trusted of that lenders.

quarter. segment Rights Mineral $XX third free of the generated Our flow million during cash

and coal American demand and to thermal metallurgical Soft We to levels depress prices. the continue North global steel term. natural near low-priced inventory in prices at pressure material expect generating market coal improvement not continues gas high electric do coal facilities

than cost labor higher we of at American levels term, steel, in demand offset impact and we supply continued input new for cost secular support investment when the prices from trends more factors to secular on shortages inflation, industry historical shortages, thermal limited in those thermal should by to expect But decline benefit Longer investment. new production Long-term from metallurgical demand. positive thermal coal prices attractive North be and norms. labor prices compared the long-term provide limited will believe for

months the prices last influx from XX production soda This decline and capacity over new for massive than $X third of a which XXXX, reflects of ash. in and year. Turning the significantly $XX flat for quarter distribution of million from is glass to soda automobiles. in demand soda We softening the the Wyoming quarter received last less third distribution Sisecam lower ash used resulting construction ash received cash million the

reach take several an lowest remains equilibrium ash believe last market Soda to quite positive, we while of levels most the it for are their the in long-term our supports outlook decade. realized levels that prices higher will price at the And for decades. years

below the to we from Wyoming, Sisecam norms historical distributions for a foreseeable expect future. As result, remain

conservatively While the we outperforms our pleasantly near-term plan others, soda surprised be ash outlook may and market appear that our than expectations. more if to prefer pessimistic of

our in Long facility one producer. ash characteristics lowest in the fleet. producers of most linked world's moats urbanization fundamentals has we've commodity the cost that global competitive a soda These and to the term, remains durable of electrification one provide a of the growth commodity energy, that the renewable seen favorable auto society of of

sequestration, the wind underground and initiatives, COX for carbon-neutral short, to electricity we solar our lease sequestration, production assets to or our opportunities COX of CNI and energy. generation explore surface continue for Regarding lithium forest and geothermal, mineral using

observed have acreage of COX for leasing slowdown sequestration. notable We underground a in the

reluctant uncertain are lithium, political to seeing of developers. the environment. increased we positive capital by developers in a On light and activity regulatory solar geothermal invest note, are Project and leasing

do lease these see lithium, bonuses of geothermal expansion the steps individual overall While portfolio. the from to are our positive upfront as solar not and leases CNI we in partnership, material

that, financial And I'll to over Chris with to our it cover turn results.

million and Thank generated free $XX of million XXXX, of $XX you, $XX third quarter million of income, cash flow. of In Craig. operating net NRP the cash flow

flow segment Our $XX of XXXX. operating during the and cash $XX income of flow Mineral of free Rights generated and million third million net both cash quarter

decreased cash year income in resulting cash both due primarily operating quarter, lower metallurgical thermal the decreased flow When coal coal free These million. Rights our prices. net prior Mineral $XX markets, million decreases segment's and flow $X to sales and and were soft compared to

volumes. coal coal quarter XX% third coal royalty our mix, up of met sales our revenues and Regarding XXXX, royalty royalty XX% approximately metallurgical thermal made of coal

Free in demand quarter. of a and decrease Shifting prices quarter this market million, to XXXX, year prior cash oversupplied income $X compared of construction glass. as of third the to $X decrease was to was was segment. flow prior year the quarter. XXXX million the $XX an by in million a Net quarter our from lower segment flat weakened to $X for third This decrease million compared of sales ash the due soda business driven

has to supply additional last pricing for muted record the received market from glass highs our expect seen China, to until demand Sisecam we from flat remain the declined is ash reflect rebounds performance. business absorb and and the prices distributions from the to and year Soda Wyoming able

Moving of another by third final issued the at In pleased note preferred XXXX, we the to Corporate preferred goal the $XXX segment. redeeming obligations cash. that redeem par of our all towards million million quarter outstanding eliminating of achieved to able financial with originally we and units our to milestone units. I'm Financing of our were $XX

originally issued of X redeemed outstanding XXX,XXX have in also with million we saves units $XX common quarter. the cash to the cash flow outstanding. We're issued to preferred by under the were final last million warrants units $XXX originally units. Having warrants tranche settled annual issuing and compared settled pleased us aggregate, million of when preferred all just In the of

all For amount outstanding million issued were warrants million the your still common be the if would units. $XXX approximately reference, today, originally settlement or X.X

of result financial these under of the our at only a consist milestones, quarter. sit the just debt remaining obligations $XXX third and As accomplishing at end of million

flexibility. just liquidity as debt down million and which greater runway October internally continue by the free make us $XXX derisked XXXX credit the flow. with further last lengthened our to As And month, credit progress $XXX us our million is to balance of amending facility, generated we facility financial gives of to X by paying available partnership cash years today, our we over

the the of the result results, prior operating on and cash higher primarily flow free a each income, for quarter, warrants. increased as interest million XXXX compared cash third the units facility quarter and outstanding XXXX used For to decreased retire paid segment's the financial credit that in borrowings were year and expense cash permanently to preferred net due $X flow interest to

our to later in we of XXXX, distributions, unit month. per paid distribution regarding be lastly, and and million preferred our quarter cash of And paid a August announced third quarterly common $X.XX unitholders. first per declared distribution unit distribution a this of $X our common to And today, quarter $X.XX we

I'll turn call And the to operator, our back with over for that, questions. Danica,

Instructions] [Operator

Wexford. we It have looks Mark from Zand one question with like

I the call. hear and very to of good beginning congratulations. you, It's missed the

preferred to heard pay So I'm you what do, to down pay in your with of need extinguishment in of on forward be ability unclear I But wanting order basically warrants, just -- anything, the about terms explain just if of it and the are to is going in to the debt. dividends. part redemption exactly your thoughts to the distributions? what unconstrained me

that, our Our at which liabilities, we believe have the outstanding other on of happen. we cash is our And be rate that you or cash the consider flow, coming at we're cash things you the look can the forecast cusp that of as point. $XXX debt it goal before talked the date past, currently is in point and that of the see to to specific eliminated at we you and will But of still to not to generated. stand up we free look that we've we million have all practically can of making doing free appear where can about you get with eliminated that reaching run balance, --

to So really get X? debt is down to your goal

reality be is But ]? be exactly $XX be Well, [ goal. to Sure. million that It it Could the $X that it X? could of have our million? is it yes, does

Yes, close to X.

is. Yes. It

be a have payout after And would sense you your then do what on that? policy

distributions tell you our what owners. than advance we have potentially. here don't more we to for is, now that will we the No, to now will do We're we're use to -- -- XX year it in as advance going for going But out paying have distribution years, think it last policy in be. the that you decide approached cash way same distributions intelligent the I tell or not -- a not we've approach and what a do

XX% debt more etcetera. more this believe our we XX% time, balances redeeming be the And the have for a practically intelligent point don't it intelligent up we do or to we becomes decision had get preferreds use easier. to or opportunities a to to in When debt, have are make many point The cash, we where things. X, as much distribution X and

out. I against the is for to it we intelligent money say we an at all. would use distributions internally or just bias increase have not bias a value that intrinsic else have business we to send the that do of need The

would a Okay. sense you would would you if something other so, I than that you invest be that possibly business do line have some might for the that there'd it use And of cash be? that mean, distribution? you in, do any what

ideas about had that in of be end near we've that we looking have place the get to the moment. the step, as what have moment process, We finish time. we time. -- closer a at we're public and do little now, a strategy bit at the for Right next explaining not that And at plans trying do not we'll any that to the any the and out will we the plan to clearly be to at do quite long

the are many on? How stock I of the outstanding guess, warrants shares and so after redemption now, of

million. $XX.X Roughly

Can you on the makes give the one said are I just sense. what Could else persist of if has the questions, Okay. one on to elaborate and sort met me you extended coal ask conditions period you weak and you an thoughts of for but just expect in we any let time. can That final market your -- know -- got market? just that don't anybody Can see. you

Yes.

X we and capacity, see intermediate change And thermal to all metallurgical moment, our near ash can't coal. are environment drivers excess soda the key in coal, future. this any that at have commodities, sluggish have I and going demand in to here that's the We of specific

But now, surprised that but the always any to do do the I'm I point turn. that are eventually factor the -- for right I Now they these to cannot about because going of see that. market drivers never turn commodities, just

of the us of negative time good of collective here pretty all key cash business obligations our end a there be we of the robust X terms important the and of that outlook news our equity. is a that simply equity freed for time very time be are -- that's eliminating up all this that despite for for note will actually a the lot of our which The common of our common sentiment think coming X because the free that at It's fact fact collective to I would commodities. for in is outlook for the to

is with X So the COVID, sort worst cities. all the it's I of almost collective outlook years an for tale certainly outlook. NRP. the Actually, of at standpoint this almost at holder of exception of our say the that It's in the business that XX-year outlook we've bad a a would we've collectively had business from in commodities time together, best X had tenure been equity that it's of my NRP. here the I've But for XX

taken gotten done. you've fixed. a everything Well, while, It's it's but

congratulations. So

to Well, along thank stakeholders But thanks and that. everyone the way. you for us you and all our who's also supported to

Our comes Mason ]. [ Aegis question from with next John Company

how just notes facility both all before just the I the return doesn't strict to the is debt, mentioned wanted be really ask including X. senior it quickly, to know you of capital? I you eliminate and have to initiate plan

December at on off want and the begin -- understand. mean just let just yields senior is to number attractive totally that really if on I now, to just like 'XX common to understand you the -- allocation senior the a then facility and flexibility, the X I roll notes, of of first, order how like to to off we I the capital in XX get priority sense? and or relative I'm or distributions basically the I notes could trying strict the is pay think, it especially get maturity, given wanted

approach, when as it's off And penny. described, a we pay approach. highest so use strict. then We're first. yes, sense actually. to the debt It's sense to cost -- going you to It not strict we're No, it's is, the common going not a common that and

] Beach We [ have with a Sawgrass question Neil from [ Patel ].

team the have that Chris, to deleveraging over the very discipline. the work and sticking all with and terms few impressed of past done you in years and Craig

yield at So curious when and especially any current if you the rapid more. way have and about could or a preferreds XX% into units, there's of as around now it calculating, of common debt speed, of put I'm the warrants thought now out kind the kind the deleveraging are be as repurchasing

recent if I know So agreement. but credit that's not equity mentioned changed language I'm curious. some there's sure the related, interest. within it most that's

know about price curious I just where on earlier back And So you've in the your year? philosophy all the given of kind bought that, was price is. warrants

of would Craig. In they value? thought This in estimates our question, discounts have answer first take to of we at and a your and to repurchases answer units we consider traded if is stab intrinsic is the The that. we of material do I'll future consider at yes.

you I of what cash is I a to yield. that in want not referring our want you're to I common clarify, point about do there yield clarify current made a our to believe comment equity at XX% is our this It free flow actual time. yield.

wanted to that. clarify Just

And that. up third you reasons to Chris team credit agreement main were credit agreement. and did. did Yes, his the mentioned thing, new on place in the X you There pick then that put

time extend to first longer was The longer to period get us maturity maturity. the to of a a

And of things going some to creditworthy to up been us were borrower. handcuffs forward repurchase -- units. The loosening such makes for we the the had when up less handcuffs place a loosen the in easier do frees as it put second was that of

will At this closing the remarks. for now to Craig call back time, I over turn Nunez

Danica. call you you And a of you, for in our thank Thank today and your continued everyone, NRP. for day. very thank Have participating good much, support