Natural Resource Partners L.P. Reports Third Quarter 2022 Results and Declares Third Quarter 2022 Distribution of $0.75 per Unit

Rhea-AI Summary

Natural Resource Partners L.P. (NYSE:NRP) reported strong third quarter 2022 results, achieving record free cash flow of $83 million, totaling $199 million year-to-date. The company closed a new $130 million revolving credit facility and fully repaid its 9.125% Senior Notes. With a pro-forma leverage ratio dropping to 0.6x, NRP's financial health appears robust. The Mineral Rights segment showed significant net income growth, primarily due to strong metallurgical coal demand. A cash distribution of $0.75 per common unit was also announced, reinforcing NRP's commitment to unitholder value.

Positive

• Record free cash flow of $83 million in Q3 2022, totaling $199 million YTD.
• Closed new five-year revolving credit facility of $130 million, increasing borrowing capacity.
• Fully repaid $121.4 million of 9.125% Senior Notes due 2025.
• Net income from Mineral Rights up by $35.6 million compared to the prior year.
• Executed second subsurface CO2 sequestration lease with estimated storage capacity of 500 million metric tons.

Negative

• None.

HOUSTON--(BUSINESS WIRE)-- Natural Resource Partners L.P. (NYSE:NRP) today reported third quarter 2022 results as follows:

		For the Three Months Ended				Last Twelve Months Ended
(In thousands) (Unaudited)		September 30, 2022
Operating cash flow (1)		$	82,496			$	253,111
Free cash flow (2)			83,012				254,731
Cash flow cushion (last twelve months) (2)							129,607
Net income		$	74,555			$	260,915
Adjusted EBITDA (2)			85,625				308,750

______________________________
(1)		Operating cash flow for the nine months ended September 30, 2022 was $197,950.
(2)		See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

Highlights:

• Generated record free cash flow of $83 million in the third quarter of 2022, and $199 million in the first nine months of 2022
• Closed new five-year, $130 million revolving credit facility
• Announced full repayment of outstanding 9.125% Senior Notes due 2025
• Executed second subsurface carbon dioxide ("CO₂") sequestration lease
• Pro-forma leverage ratio of 0.6x following the repayment of 9.125% Senior Notes, down from 4.6x as of June 30, 2021

“NRP's record year continues with third quarter free cash flow generation of $83 million, bringing our year-to-date free cash flow to $199 million, primarily due to the strong results of our Mineral Rights segment," stated Craig Nunez, NRP’s president and chief operating officer. “It is fitting that the 20th anniversary of the Partnership's initial public offering coincides with the best operating performance in our history. Not only has this year been exceptional from a free cash flow perspective, but we continue to execute on our strategy to de-risk the capital structure and grow our carbon neutral portfolio. During the third quarter, we closed a new five-year revolving credit facility that increased our borrowing capacity from $100 million to $130 million. We also announced the redemption of our outstanding 9.125% Senior Notes due 2025 and fully repaid the Senior Notes in October. After giving effect to the redemption, NRP has permanently retired $249 million of debt this year. In the third quarter we also executed our second subsurface CO₂ sequestration lease for an estimated carbon storage capacity of at least 500 million metric tons of CO₂. NRP currently has approximately 140,000 acres of pore space under lease for carbon sequestration with estimated potential CO₂ storage capacity of at least 800 million metric tons. We continue to believe that de-risking the Partnership and leveraging our asset footprint in this regard, while continuing to provide unitholder distributions, is the right strategy to maximize unitholder value.”

NRP announced today that the Board of Directors of its general partner declared a cash distribution of $0.75 per common unit to be paid on November 22, 2022 to unitholders of record on November 15, 2022. In addition, the board declared a $7.5 million cash distribution on its outstanding preferred units. Future distributions on NRP's common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the board determines is necessary for future operating and capital needs.

NRP's liquidity was $190.9 million at September 30, 2022, consisting of $60.9 million of cash and $130.0 million of borrowing capacity available under its recently amended revolving credit facility.

Segment Performance

Mineral Rights

Mineral Rights net income for the third quarter of 2022 increased $35.6 million as compared to the prior year period. Free cash flow for the third quarter increased $42.0 million as compared to the prior year period. These increases were primarily due to stronger metallurgical coal demand and pricing in 2022. Approximately 65% of coal royalty revenues and approximately 40% of coal royalty sales volumes were derived from metallurgical coal in the third quarter of 2022.

Metallurgical and thermal coal prices remain supported by ongoing tightness in the supply-demand balance for coal. Many operators are limited in their ability to increase production due to ongoing labor shortages, global supply chain interruptions, and access to capital. Thermal coal prices are further supported by the European Union's ban on Russian coal due to the war in Ukraine, as well as increased natural gas prices and demand for electricity. While metallurgical markets are seeing weakened demand for steel, and thermal markets continue to face ongoing environmental and political pressures, supply constraints should provide continued support for metallurgical and thermal coal prices for the foreseeable future.

NRP continues to identify alternative revenue opportunities across its large portfolio of land and mineral assets. NRP owns the rights to sequester CO₂ on approximately 3.5 million acres of pore space in the southern United States. As announced previously, in the first quarter of 2022 NRP executed its first subsurface CO₂ sequestration lease on 75,000 acres of underground pore space NRP owns in southwest Alabama with the potential to store over 300 million metric tons of CO₂. In October of 2022, NRP announced its second subsurface CO₂ transaction with the execution of a lease for approximately 65,000 acres of pore space controlled by NRP near southeast Texas with estimated storage capacity of at least 500 million metric tons of CO₂. In total, NRP has approximately 140,000 acres of pore space under lease for carbon sequestration with estimated CO₂ storage capacity of 800 million metric tons. While the timing and likelihood of additional cash flows being realized from these activities is uncertain, NRP believes its large ownership footprint throughout the United States will provide additional opportunities to create value in this regard and position NRP as a key beneficiary of the transitional energy economy with minimal capital investment.

Soda Ash

Soda Ash net income in the third quarter of 2022 increased $7.9 million as compared to the prior year period primarily as a result of increased international sales prices. Free cash flow in the third quarter of 2022 increased $10.3 million as compared to the prior year period due to Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021.

Supply interruptions in China and input cost inflation which significantly increased the global marginal cost of soda ash production led to historically high soda ash prices in the third quarter of 2022. Though soda ash demand weakened in many parts of the world during the third quarter due to slowing global economic growth and lower construction activity in China, Sisecam Wyoming remained sold-out as it took advantage of its low-cost position to profitably export soda ash. Consequently, Sisecam Wyoming delivered strong financial results in the third quarter of 2022.

Corporate and Financing

Corporate and Financing costs in the third quarter of 2022 decreased $1.6 million as compared to the prior year period primarily due to lower interest expense resulting from less debt outstanding, partially offset by the loss on early extinguishment of debt. Free cash flow in the third quarter of 2022 was relatively flat as compared to the prior year period.

During the third quarter of 2022, NRP repaid $60.5 million of debt and refinanced, upsized, and extended its credit facility to $130 million due 2027. In October of 2022, NRP fully retired its outstanding $121.4 million of 9.125% Senior Notes due 2025 at its redemption price of 102.281%, utilizing cash on hand and $70 million of borrowings under its new credit facility. After giving effect to this redemption, NRP's remaining total debt outstanding is $189.4 million.

Additionally, in August of 2022, NRP paid a second quarter 2022 cash distribution of $0.75 per common unit of NRP and a $7.5 million cash distribution on the preferred units.

Conference Call

A conference call will be held today at 9:00 a.m. ET. To register for the conference call, please use this link: https://conferencingportals.com/event/kfJdSHYP. After registering a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, however, to ensure you are connected for the full call we suggest registering at least 10 minutes prior to the start of the call. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com. To access the replay, please visit the Investor Relations section of NRP’s website.

Withholding Information for Foreign Investors

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of NRP's distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, NRP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable rate.

Company Profile

Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns, manages and leases a diversified portfolio of properties in the United States including coal, industrial minerals and other natural resources, as well as rights to conduct carbon sequestration and renewable energy activities. NRP also owns an equity investment in Sisecam Wyoming LLC, one of the world’s lowest-cost producers of soda ash.

For additional information, please contact Tiffany Sammis at 713-751-7515 or tsammis@nrplp.com. Further information about NRP is available on the Partnership’s website at http://www.nrplp.com.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership. These risks include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on the Partnership’s common and preferred units; the Partnership's business strategy; its liquidity and access to capital and financing sources; its financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by the Partnership's lessees; Sisecam Wyoming LLC’s trona mining and soda ash refinery operations; distributions from the soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving the Partnership, and of scheduled or potential regulatory or legal changes; global and U.S. economic conditions; and other factors detailed in Natural Resource Partners’ Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

“Distributable cash flow” or "DCF" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, distributable cash flow is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. Distributable cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

“Free cash flow” or "FCF" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. Free cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. Free cash flow may not be calculated the same for us as for other companies. Free cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

"Cash flow cushion" is a non-GAAP financial measure that we define as free cash flow less one-time beneficial items, mandatory Opco debt repayments, preferred unit distributions and redemption of PIK units, common unit distributions and warrant cash settlements. Cash flow cushion is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. Cash flow cushion is a supplemental liquidity measure used by our management to assess the Partnership's ability to make or raise cash distributions to our common and preferred unitholders and our general partner and repay debt or redeem preferred units.

-Financial Tables and Reconciliation of Non-GAAP Measures Follow-

Natural Resource Partners L.P. Financial Tables (Unaudited)

Consolidated Statements of Comprehensive Income

		For the Three Months Ended												For the Nine Months Ended
		September 30,								June 30,				September 30,
(In thousands, except per unit data)		2022				2021				2022				2022				2021
Revenues and other income
Royalty and other mineral rights		$	81,379			$	47,884			$	79,333			$	231,795			$	114,422
Transportation and processing services			5,969				2,171				5,612				15,377				6,545
Equity in earnings of Sisecam Wyoming			14,556				6,672				14,643				44,036				11,246
Gain on asset sales and disposals			354				68				345				699				243
Total revenues and other income		$	102,258			$	56,795			$	99,933			$	291,907			$	132,456
Operating expenses
Operating and maintenance expenses		$	7,898			$	8,354			$	10,015			$	25,989			$	19,076
Depreciation, depletion and amortization			6,850				5,182				5,847				16,565				15,145
General and administrative expenses			4,518				4,052				5,052				14,037				11,550
Asset impairments			812				57				43				874				4,116
Total operating expenses		$	20,078			$	17,645			$	20,957			$	57,465			$	49,887
Income from operations		$	82,180			$	39,150			$	78,976			$	234,442			$	82,569
Other expenses, net
Interest expense, net		$	(5,141	)		$	(9,652	)		$	(8,108	)		$	(22,636	)		$	(29,308	)
Loss on extinguishment of debt			(2,484	)			—				(4,048	)			(6,532	)			—
Total other expenses, net		$	(7,625	)		$	(9,652	)		$	(12,156	)		$	(29,168	)		$	(29,308	)
Net income		$	74,555			$	29,498			$	66,820			$	205,274			$	53,261
Less: income attributable to preferred unitholders			(7,500	)			(7,961	)			(7,500	)			(22,500	)			(23,530	)
Net income attributable to common unitholders and the general partner		$	67,055			$	21,537			$	59,320			$	182,774			$	29,731
Net income attributable to common unitholders		$	65,714			$	21,106			$	58,134			$	179,119			$	29,136
Net income attributable to the general partner			1,341				431				1,186				3,655				595
Net income per common unit
Basic		$	5.25			$	1.71			$	4.65			$	14.36			$	2.36
Diluted			3.71				1.10				3.29				10.24				1.98
Net income		$	74,555			$	29,498			$	66,820			$	205,274			$	53,261
Comprehensive income (loss) from unconsolidated investment and other			289				4,204				(4,013	)			(1,179	)			7,469
Comprehensive income		$	74,844			$	33,702			$	62,807			$	204,095			$	60,730

Natural Resource Partners L.P. Financial Tables (Unaudited)

Consolidated Statements of Cash Flows

		For the Three Months Ended												For the Nine Months Ended
		September 30,								June 30,				September 30,
(In thousands)		2022				2021				2022				2022				2021
Cash flows from operating activities
Net income		$	74,555			$	29,498			$	66,820			$	205,274			$	53,261
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Depreciation, depletion and amortization			6,850				5,182				5,847				16,565				15,145
Distributions from unconsolidated investment			10,339				—				10,486				34,055				3,920
Equity earnings from unconsolidated investment			(14,556	)			(6,672	)			(14,643	)			(44,036	)			(11,246	)
Gain on asset sales and disposals			(354	)			(68	)			(345	)			(699	)			(243	)
Loss on extinguishment of debt			2,484				—				4,048				6,532				—
Asset impairments			812				57				43				874				4,116
Bad debt expense			1				2,069				(388	)			641				1,715
Unit-based compensation expense			1,429				1,118				1,339				4,216				2,837
Amortization of debt issuance costs and other			215				653				1,297				1,887				1,899
Change in operating assets and liabilities:
Accounts receivable			2,494				(9,163	)			(5,033	)			(10,118	)			(12,332	)
Accounts payable			210				182				73				223				89
Accrued liabilities			278				357				2,047				(4,831	)			(839	)
Accrued interest			3,177				7,262				(7,413	)			3,014				6,971
Deferred revenue			(7,519	)			(2,652	)			(2,259	)			(17,094	)			(2,121	)
Other items, net			2,081				2,236				1,204				1,447				3,471
Net cash provided by operating activities		$	82,496			$	30,059			$	63,123			$	197,950			$	66,643
Cash flows from investing activities
Proceeds from asset sales and disposals		$	353			$	74			$	346			$	699			$	249
Return of long-term contract receivable			575				540				563				1,138				1,622
Capital expenditures			(59	)			—				—				(59	)			—
Net cash provided by investing activities		$	869			$	614			$	909			$	1,778			$	1,871
Cash flows from financing activities
Debt repayments		$	(60,494	)		$	—			$	(120,474	)		$	(197,665	)		$	(19,061	)
Distributions to common unitholders and the general partner			(9,571	)			(5,671	)			(9,570	)			(24,813	)			(16,973	)
Distributions to preferred unitholders			(7,500	)			(3,921	)			(7,500	)			(22,500	)			(11,591	)
Acquisition of non-controlling interest in BRP			—				—				—				—				(1,000	)
Redemption of preferred units paid-in-kind			—				—				—				(19,579	)			—
Other items, net			(4,219	)			—				(2,722	)			(9,754	)			(690	)
Net cash used in financing activities		$	(81,784	)		$	(9,592	)		$	(140,266	)		$	(274,311	)		$	(49,315	)
Net increase (decrease) in cash and cash equivalents		$	1,581			$	21,081			$	(76,234	)		$	(74,583	)		$	19,199
Cash and cash equivalents at beginning of period			59,356				97,908				135,590				135,520				99,790
Cash and cash equivalents at end of period		$	60,937			$	118,989			$	59,356			$	60,937			$	118,989
Supplemental cash flow information:
Cash paid for interest		$	1,729			$	1,898			$	15,128			$	18,501			$	20,829
Non-cash investing and financing activities:
Preferred unit distributions paid-in-kind			—				3,921				—				—				11,591

Natural Resource Partners L.P. Financial Tables (Unaudited)

Consolidated Balance Sheets

		September 30,				December 31,
(In thousands, except unit data)		2022				2021
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	60,937			$	135,520
Accounts receivable, net			34,726				24,538
Other current assets, net			1,228				2,723
Total current assets		$	96,891			$	162,781
Land			24,008				24,008
Mineral rights, net			421,351				437,697
Intangible assets, net			15,168				16,130
Equity in unconsolidated investment			284,806				276,004
Long-term contract receivable, net			29,570				31,371
Other long-term assets, net			7,216				5,832
Total assets		$	879,010			$	953,823
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable		$	2,179			$	1,956
Accrued liabilities			5,913				10,297
Accrued interest			4,227				1,213
Current portion of deferred revenue			8,886				11,817
Current portion of long-term debt, net			89,989				39,102
Total current liabilities		$	111,194			$	64,385
Deferred revenue			35,882				50,045
Long-term debt, net			148,734				394,443
Other non-current liabilities			5,231				5,018
Total liabilities		$	301,041			$	513,891
Commitments and contingencies
Class A Convertible Preferred Units (250,000 and 269,321 units issued and outstanding at September 30, 2022 and December 31, 2021, respectively, at $1,000 par value per unit; liquidation preference of $1,850 per unit at September 30, 2022 and December 31, 2021)		$	164,587			$	183,908
Partners’ capital
Common unitholders’ interest (12,505,996 and 12,351,306 units issued and outstanding at September 30, 2022 and December 31, 2021, respectively)		$	358,332			$	203,062
General partner’s interest			5,054				1,787
Warrant holders’ interest			47,964				47,964
Accumulated other comprehensive income			2,032				3,211
Total partners’ capital		$	413,382			$	256,024
Total liabilities and partners' capital		$	879,010			$	953,823

Natural Resource Partners L.P. Financial Tables (Unaudited)

Consolidated Statements of Partners' Capital

																		Accumulated
																		Other				Total
		Common Unitholders								General				Warrant				Comprehensive				Partners'
(In thousands)		Units				Amounts				Partner				Holders				Income				Capital
Balance at December 31, 2021			12,351			$	203,062			$	1,787			$	47,964			$	3,211			$	256,024
Net income (1)			—				62,621				1,278				—				—				63,899
Distributions to common unitholders and the general partner			—				(5,559	)			(113	)			—				—				(5,672	)
Distributions to preferred unitholders			—				(7,603	)			(155	)			—				—				(7,758	)
Issuance of unit-based awards			155				—				—				—				—				—
Unit-based awards amortization and vesting, net			—				(1,754	)			—				—				—				(1,754	)
Capital contribution			—				—				112				—				—				112
Comprehensive income from unconsolidated investment and other			—				—				—				—				2,545				2,545
Balance at March 31, 2022			12,506			$	250,767			$	2,909			$	47,964			$	5,756			$	307,396
Net income (1)			—				65,484				1,336				—				—				66,820
Distributions to common unitholders and the general partner			—				(9,379	)			(191	)			—				—				(9,570	)
Distributions to preferred unitholders			—				(7,350	)			(150	)			—				—				(7,500	)
Unit-based awards amortization and vesting			—				1,231				—				—				—				1,231
Comprehensive loss from unconsolidated investment and other			—				—				—				—				(4,013	)			(4,013	)
Balance at June 30, 2022			12,506			$	300,753			$	3,904			$	47,964			$	1,743			$	354,364
Net income (1)			—				73,064				1,491				—				—				74,555
Distributions to common unitholders and the general partner			—				(9,380	)			(191	)			—				—				(9,571	)
Distributions to preferred unitholders			—				(7,350	)			(150	)			—				—				(7,500	)
Unit-based awards amortization and vesting			—				1,245				—				—				—				1,245
Comprehensive income from unconsolidated investment and other			—				—				—				—				289				289
Balance at September 30, 2022			12,506			$	358,332			$	5,054			$	47,964			$	2,032			$	413,382

______________________________
(1)		Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.

Natural Resource Partners L.P. Financial Tables (Unaudited)
Consolidated Statements of Partners' Capital
																		Accumulated
																		Other				Total
		Common Unitholders								General				Warrant				Comprehensive				Partners'
(In thousands)		Units				Amounts				Partner				Holders				Income				Capital
Balance at December 31, 2020			12,261			$	136,927			$	459			$	66,816			$	322			$	204,524
Net income (1)			—				8,213				168				—				—				8,381
Distributions to common unitholders and the general partner			—				(5,517	)			(113	)			—				—				(5,630	)
Distributions to preferred unitholders			—				(7,461	)			(152	)			—				—				(7,613	)
Issuance of unit-based awards			90				—				—				—				—				—
Unit-based awards amortization and vesting, net			—				215				—				—				—				215
Capital contribution			—				—				32				—				—				32
Comprehensive income from unconsolidated investment and other			—				—				—				—				732				732
Balance at March 31, 2021			12,351			$	132,377			$	394			$	66,816			$	1,054			$	200,641
Net income (2)			—				15,074				308				—				—				15,382
Distributions to common unitholders and the general partner			—				(5,559	)			(113	)			—				—				(5,672	)
Distributions to preferred unitholders			—				(7,571	)			(155	)			—				—				(7,726	)
Unit-based awards amortization and vesting			—				515				—				—				—				515
Comprehensive income from unconsolidated investment and other			—				—				—				—				2,533				2,533
Balance at June 30, 2021			12,351			$	134,836			$	434			$	66,816			$	3,587			$	205,673
Net income (3)			—				28,909				589				—				—				29,498
Distributions to common unitholders and the general partner			—				(5,558	)			(113	)			—				—				(5,671	)
Distributions to preferred unitholders			—				(7,687	)			(156	)			—				—				(7,843	)
Unit-based awards amortization and vesting			—				959				—				—				—				959
Comprehensive income from unconsolidated investment and other			—				—				—				—				4,204				4,204
Balance at September 30, 2021			12,351			$	151,459			$	754			$	66,816			$	7,791			$	226,820

______________________________
(1)		Net income includes $7.7 million of income attributable to preferred unitholders that accumulated during the period, of which $7.6 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.
(2)		Net income includes $7.8 million of income attributable to preferred unitholders that accumulated during the period, of which $7.7 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.
(3)		Net income includes $8.0 million of income attributable to preferred unitholders that accumulated during the period, of which $7.8 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.

Natural Resource Partners L.P. Financial Tables (Unaudited)
The following table presents NRP's unaudited business results by segment for the three months ended September 30, 2022 and 2021 and June 30, 2022:
		Operating Segments
		Mineral								Corporate and
(In thousands)		Rights				Soda Ash				Financing				Total
For the Three Months Ended September 30, 2022
Revenues		$	87,348			$	14,556			$	—			$	101,904
Gain on asset sales and disposals			354				—				—				354
Total revenues and other income		$	87,702			$	14,556			$	—			$	102,258
Asset impairments		$	812			$	—			$	—			$	812
Net income (loss)		$	72,173			$	14,525			$	(12,143	)		$	74,555
Adjusted EBITDA (1)		$	79,835			$	10,308			$	(4,518	)		$	85,625
Cash flow provided by (used in) continuing operations:
Operating activities		$	75,948			$	10,309			$	(3,761	)		$	82,496
Investing activities		$	928			$	—			$	(59	)		$	869
Financing activities		$	—			$	—			$	(81,784	)		$	(81,784	)
Distributable cash flow (1)		$	76,876			$	10,309			$	(3,820	)		$	83,365
Free cash flow (1)		$	76,523			$	10,309			$	(3,820	)		$	83,012
For the Three Months Ended September 30, 2021
Revenues		$	50,055			$	6,672			$	—			$	56,727
Gain on asset sales and disposals			68				—				—				68
Total revenues and other income		$	50,123			$	6,672			$	—			$	56,795
Asset impairments		$	57			$	—			$	—			$	57
Net income (loss)		$	36,606			$	6,596			$	(13,704	)		$	29,498
Adjusted EBITDA (1)		$	41,845			$	(76	)		$	(4,052	)		$	37,717
Cash flow provided by (used in) continuing operations:
Operating activities		$	33,968			$	(36	)		$	(3,873	)		$	30,059
Investing activities		$	614			$	—			$	—			$	614
Financing activities		$	—			$	—			$	(9,592	)		$	(9,592	)
Distributable cash flow (1)		$	34,582			$	(36	)		$	(3,873	)		$	30,673
Free cash flow (1)		$	34,508			$	(36	)		$	(3,873	)		$	30,599
For the Three Months Ended June 30, 2022
Revenues		$	84,945			$	14,643			$	—			$	99,588
Gain on asset sales and disposals			345				—				—				345
Total revenues and other income		$	85,290			$	14,643			$	—			$	99,933
Asset impairments		$	43			$	—			$	—			$	43
Net income (loss)		$	69,408			$	14,620			$	(17,208	)		$	66,820
Adjusted EBITDA (1)		$	75,298			$	10,463			$	(5,052	)		$	80,709
Cash flow provided by (used in) continuing operations:
Operating activities		$	70,351			$	10,430			$	(17,658	)		$	63,123
Investing activities		$	909			$	—			$	—			$	909
Financing activities		$	—			$	—			$	(140,266	)		$	(140,266	)
Distributable cash flow (1)		$	71,260			$	10,430			$	(17,658	)		$	64,032
Free cash flow (1)		$	70,914			$	10,430			$	(17,658	)		$	63,686

______________________________
(1)		See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

Natural Resource Partners L.P. Financial Tables (Unaudited)
The following table presents NRP's unaudited business results by segment for the nine months ended September 30, 2022 and 2021:
		Operating Segments
		Mineral								Corporate and
(In thousands)		Rights				Soda Ash				Financing				Total
For the Nine Months Ended September 30, 2022
Revenues		$	247,172			$	44,036			$	—			$	291,208
Gain on asset sales and disposals			699				—				—				699
Total revenues and other income		$	247,871			$	44,036			$	—			$	291,907
Asset impairments		$	874			$	—			$	—			$	874
Net income (loss)		$	204,548			$	43,931			$	(43,205	)		$	205,274
Adjusted EBITDA (1)		$	221,987			$	33,950			$	(14,037	)		$	241,900
Cash flow provided by (used in) continuing operations:
Operating activities		$	194,475			$	33,934			$	(30,459	)		$	197,950
Investing activities		$	1,837			$	—			$	(59	)		$	1,778
Financing activities		$	(614	)		$	—			$	(273,697	)		$	(274,311	)
Distributable cash flow (1)		$	196,312			$	33,934			$	(30,518	)		$	199,728
Free cash flow (1)		$	195,613			$	33,934			$	(30,518	)		$	199,029
For the Nine Months Ended September 30, 2021
Revenues		$	120,967			$	11,246			$	—			$	132,213
Gain on asset sales and disposals			243				—				—				243
Total revenues and other income		$	121,210			$	11,246			$	—			$	132,456
Asset impairments		$	4,116			$	—			$	—			$	4,116
Net income (loss)		$	82,980			$	11,115			$	(40,834	)		$	53,261
Adjusted EBITDA (1)		$	102,265			$	3,789			$	(11,550	)		$	94,504
Cash flow provided by (used in) continuing operations:
Operating activities		$	91,958			$	3,817			$	(29,132	)		$	66,643
Investing activities		$	1,871			$	—			$	—			$	1,871
Financing activities		$	(1,132	)		$	—			$	(48,183	)		$	(49,315	)
Distributable cash flow (1)		$	93,829			$	3,817			$	(29,132	)		$	68,514
Free cash flow (1)		$	92,580			$	3,817			$	(29,132	)		$	67,265

______________________________
(1)		See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

Natural Resource Partners L.P. Financial Tables (Unaudited)

Operating Statistics - Mineral Rights

		For the Three Months Ended												For the Nine Months Ended
		September 30,								June 30,				September 30,
(In thousands, except per ton data)		2022				2021				2022				2022				2021
Coal sales volumes (tons)
Appalachia
Northern			440				422				392				1,260				947
Central			3,503				3,199				3,484				10,238				8,824
Southern			498				642				312				1,171				1,058
Total Appalachia			4,441				4,263				4,188				12,669				10,829
Illinois Basin			3,490				2,689				3,403				8,395				7,987
Northern Powder River Basin			835				1,047				699				2,772				2,291
Gulf Coast			188				13				67				324				13
Total coal sales volumes			8,954				8,012				8,357				24,160				21,120
Coal royalty revenue per ton
Appalachia
Northern		$	6.74			$	7.18			$	11.84			$	9.48			$	5.57
Central			9.04				5.74				12.19				10.85				4.91
Southern			9.78				11.61				17.67				14.28				9.82
Illinois Basin			2.57				2.33				2.07				2.30				2.13
Northern Powder River Basin			4.56				3.71				4.74				4.24				3.59
Gulf Coast			0.59				0.54				0.57				0.58				0.54
Combined average coal royalty revenue per ton			5.85				4.87				7.54				7.08				3.99
Coal royalty revenues
Appalachia
Northern		$	2,965			$	3,031			$	4,640			$	11,946			$	5,272
Central			31,680				18,357				42,461				111,121				43,308
Southern			4,872				7,452				5,513				16,725				10,390
Total Appalachia			39,517				28,840				52,614				139,792				58,970
Illinois Basin			8,967				6,261				7,061				19,331				17,044
Northern Powder River Basin			3,805				3,881				3,314				11,751				8,222
Gulf Coast			111				7				38				187				7
Unadjusted coal royalty revenues			52,400				38,989				63,027				171,061				84,243
Coal royalty adjustment for minimum leases			(19	)			(6,557	)			(82	)			(286	)			(18,148	)
Total coal royalty revenues		$	52,381			$	32,432			$	62,945				170,775			$	66,095
Other revenues
Production lease minimum revenues		$	1,885			$	3,235			$	65			$	3,542			$	10,241
Minimum lease straight-line revenues			4,778				4,808				4,674				14,235				15,773
Carbon neutral initiative revenues			8,600				—				—				8,600				—
Wheelage revenues			2,977				1,964				4,379				11,073				5,589
Property tax revenues			1,360				1,466				1,695				4,527				4,522
Coal overriding royalty revenues			1,367				757				682				2,307				3,592
Lease amendment revenues			759				1,519				811				2,450				3,159
Aggregates royalty revenues			884				429				1,037				2,691				1,339
Oil and gas royalty revenues			6,170				1,154				2,906				10,890				3,420
Other revenues			218				120				139				705				692
Total other revenues		$	28,998			$	15,452			$	16,388			$	61,020			$	48,327
Royalty and other mineral rights		$	81,379			$	47,884			$	79,333			$	231,795			$	114,422
Transportation and processing services revenues			5,969				2,171				5,612				15,377				6,545
Gain on asset sales and disposals			354				68				345				699				243
Total Mineral Rights segment revenues and other income		$	87,702			$	50,123			$	85,290			$	247,871			$	121,210

Natural Resource Partners L.P. Reconciliation of Non-GAAP Measures (Unaudited)

Adjusted EBITDA

		Mineral								Corporate and
(In thousands)		Rights				Soda Ash				Financing				Total
For the Three Months Ended September 30, 2022
Net income (loss)		$	72,173			$	14,525			$	(12,143	)		$	74,555
Less: equity earnings from unconsolidated investment			—				(14,556	)			—				(14,556	)
Add: total distributions from unconsolidated investment			—				10,339				—				10,339
Add: interest expense, net			—				—				5,141				5,141
Add: loss on extinguishment of debt			—				—				2,484				2,484
Add: depreciation, depletion and amortization			6,850				—				—				6,850
Add: asset impairments			812				—				—				812
Adjusted EBITDA		$	79,835			$	10,308			$	(4,518	)		$	85,625
For the Three Months Ended September 30, 2021
Net income (loss)		$	36,606			$	6,596			$	(13,704	)		$	29,498
Less: equity earnings from unconsolidated investment			—				(6,672	)			—				(6,672	)
Add: total distributions from unconsolidated investment			—				—				—				—
Add: interest expense, net			—				—				9,652				9,652
Add: loss on extinguishment of debt			—				—				—				—
Add: depreciation, depletion and amortization			5,182				—				—				5,182
Add: asset impairments			57				—				—				57
Adjusted EBITDA		$	41,845			$	(76	)		$	(4,052	)		$	37,717
For the Three Months Ended June 30, 2022
Net income (loss)		$	69,408			$	14,620			$	(17,208	)		$	66,820
Less: equity earnings from unconsolidated investment			—				(14,643	)			—				(14,643	)
Add: total distributions from unconsolidated investment			—				10,486				—				10,486
Add: interest expense, net			—				—				8,108				8,108
Add: loss on extinguishment of debt			—				—				4,048				4,048
Add: depreciation, depletion and amortization			5,847				—				—				5,847
Add: asset impairments			43				—				—				43
Adjusted EBITDA		$	75,298			$	10,463			$	(5,052	)		$	80,709

Natural Resource Partners L.P. Reconciliation of Non-GAAP Measures (Unaudited)
		Mineral								Corporate and
(In thousands)		Rights				Soda Ash				Financing				Total
For the Nine Months Ended September 30, 2022
Net income (loss)		$	204,548			$	43,931			$	(43,205	)		$	205,274
Less: equity earnings from unconsolidated investment			—				(44,036	)			—				(44,036	)
Add: total distributions from unconsolidated investment			—				34,055				—				34,055
Add: interest expense, net			—				—				22,636				22,636
Add: loss on extinguishment of debt			—				—				6,532				6,532
Add: depreciation, depletion and amortization			16,565				—				—				16,565
Add: asset impairments			874				—				—				874
Adjusted EBITDA		$	221,987			$	33,950			$	(14,037	)		$	241,900
For the Nine Months Ended September 30, 2021
Net income (loss)		$	82,980			$	11,115			$	(40,834	)		$	53,261
Less: equity earnings from unconsolidated investment			—				(11,246	)			—				(11,246	)
Add: total distributions from unconsolidated investment			—				3,920				—				3,920
Add: interest expense, net			24				—				29,284				29,308
Add: loss on extinguishment of debt			—				—				—				—
Add: depreciation, depletion and amortization			15,145				—				—				15,145
Add: asset impairments			4,116				—				—				4,116
Adjusted EBITDA		$	102,265			$	3,789			$	(11,550	)		$	94,504

Natural Resource Partners L.P. Reconciliation of Non-GAAP Measures (Unaudited)

Distributable Cash Flow and Free Cash Flow

(In thousands)		Mineral Rights				Soda Ash				Corporate and Financing				Total
For the Three Months Ended September 30, 2022
Net cash provided by (used in) operating activities of continuing operations		$	75,948			$	10,309			$	(3,761	)		$	82,496
Add: proceeds from asset sales and disposals			353				—				—				353
Add: return of long-term contract receivable			575				—				—				575
Less: maintenance capital expenditures			—				—				(59	)			(59	)
Distributable cash flow		$	76,876			$	10,309			$	(3,820	)		$	83,365
Less: proceeds from asset sales and disposals			(353	)			—				—				(353	)
Free cash flow		$	76,523			$	10,309			$	(3,820	)		$	83,012
Net cash provided by (used in) investing activities		$	928			$	—			$	(59	)		$	869
Net cash used in financing activities			—				—				(81,784	)			(81,784	)
For the Three Months Ended September 30, 2021
Net cash provided by (used in) operating activities of continuing operations		$	33,968			$	(36	)		$	(3,873	)		$	30,059
Add: proceeds from asset sales and disposals			74				—				—				74
Add: return of long-term contract receivable			540				—				—				540
Less: maintenance capital expenditures			—				—				—				—
Distributable cash flow		$	34,582			$	(36	)		$	(3,873	)		$	30,673
Less: proceeds from asset sales and disposals			(74	)			—				—				(74	)
Free cash flow		$	34,508			$	(36	)		$	(3,873	)		$	30,599
Net cash provided by investing activities		$	614			$	—			$	—			$	614
Net cash used in financing activities			—				—				(9,592	)			(9,592	)
For the Three Months Ended June 30, 2022
Net cash provided by (used in) operating activities of continuing operations		$	70,351			$	10,430			$	(17,658	)		$	63,123
Add: proceeds from asset sales and disposals			346				—				—				346
Add: return of long-term contract receivable			563				—				—				563
Less: maintenance capital expenditures			—				—				—				—
Distributable cash flow		$	71,260			$	10,430			$	(17,658	)		$	64,032
Less: proceeds from asset sales and disposals			(346	)			—				—				(346	)
Free cash flow		$	70,914			$	10,430			$	(17,658	)		$	63,686
Net cash provided by investing activities		$	909			$	—			$	—			$	909
Net cash used in financing activities			—				—				(140,266	)			(140,266	)

Natural Resource Partners L.P. Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)		Mineral Rights				Soda Ash				Corporate and Financing				Total
For the Nine Months Ended September 30, 2022
Net cash provided by (used in) operating activities of continuing operations		$	194,475			$	33,934			$	(30,459	)		$	197,950
Add: proceeds from asset sales and disposals			699				—				—				699
Add: return of long-term contract receivable			1,138				—				—				1,138
Less: maintenance capital expenditures			—				—				(59	)			(59	)
Distributable cash flow		$	196,312			$	33,934			$	(30,518	)		$	199,728
Less: proceeds from asset sales and disposals			(699	)			—				—				(699	)
Less: acquisition costs			—				—				—				—
Free cash flow		$	195,613			$	33,934			$	(30,518	)		$	199,029
Net cash provided by (used in) investing activities		$	1,837			$	—			$	(59	)		$	1,778
Net cash used in financing activities			(614	)			—				(273,697	)			(274,311	)
For the Nine Months Ended September 30, 2021
Net cash provided by (used in) operating activities of continuing operations		$	91,958			$	3,817			$	(29,132	)		$	66,643
Add: proceeds from asset sales and disposals			249				—				—				249
Add: return of long-term contract receivable			1,622				—				—				1,622
Less: maintenance capital expenditures			—				—				—				—
Distributable cash flow		$	93,829			$	3,817			$	(29,132	)		$	68,514
Less: proceeds from asset sales and disposals			(249	)			—				—				(249	)
Less: acquisition costs			(1,000	)			—				—				(1,000	)
Free cash flow		$	92,580			$	3,817			$	(29,132	)		$	67,265
Net cash provided by investing activities		$	1,871			$	—			$	—			$	1,871
Net cash used in financing activities			(1,132	)			—				(48,183	)			(49,315	)

Natural Resource Partners L.P. Reconciliation of Non-GAAP Measures (Unaudited)

Cash Flow Cushion

		For the Three Months Ended
(In thousands)		December 31, 2021				March 31, 2022				June 30, 2022				September 30, 2022				Last 12 Months
Net cash provided by operating activities of continuing operations		$	55,161			$	52,331			$	63,123			$	82,496			$	253,111
Add: proceeds from asset sales and disposals			—				—				346				353				699
Add: return of long-term contract receivable			541				—				563				575				1,679
Less: maintenance capital expenditures			—				—				—				(59	)			(59	)
Distributable cash flow		$	55,702			$	52,331			$	64,032			$	83,365			$	255,430
Less: proceeds from asset sales and disposals			—				—				(346	)			(353	)			(699	)
Free cash flow		$	55,702			$	52,331			$	63,686			$	83,012			$	254,731
Less: mandatory Opco debt repayments			(20,335	)			(16,697	)			(2,365	)			—				(39,397	)
Less: preferred unit distributions and redemption of PIK units			(3,980	)			(27,079	)			(7,500	)			(7,500	)			(46,059	)
Less: common unit distributions			(5,672	)			(5,672	)			(9,570	)			(9,571	)			(30,485	)
Less: warrant cash settlement			(9,183	)			—				—				—				(9,183	)
Cash flow cushion		$	16,532			$	2,883			$	44,251			$	65,941			$	129,607

Leverage Ratio

		For the Three Months Ended
(In thousands)		December 31, 2021				March 31, 2022				June 30, 2022				September 30, 2022				Last 12 Months
Net income		$	55,641			$	63,899			$	66,820			$	74,555			$	260,915
Less: equity earnings from unconsolidated investment			(10,625	)			(14,837	)			(14,643	)			(14,556	)			(54,661	)
Add: total distributions from unconsolidated investment			7,350				13,230				10,486				10,339				41,405
Add: interest expense, net			9,568				9,387				8,108				5,141				32,204
Add: loss on extinguishment of debt			—				—				4,048				2,484				6,532
Add: depreciation, depletion and amortization			3,930				3,868				5,847				6,850				20,495
Add: asset impairments			986				19				43				812				1,860
Adjusted EBITDA		$	66,850			$	75,566			$	80,709			$	85,625			$	308,750
Debt—at September 30, 2022																		$	240,819
Less: Redemption of 9.125% Senior Notes																			(121,396	)
Add: October 2022 draw on revolving credit facility																			70,000
Pro-Forma Debt—at September 30, 2022																		$	189,423
Leverage Ratio (1)																		0.8 x
Pro-Forma Leverage Ratio at September 30, 2022																		0.6 x

______________________________
(1)		Leverage Ratio is calculated as the outstanding principal of NRP's debt as of September 30, 2022 divided by the last twelve months' Adjusted EBITDA. Note that Adjusted EBITDA under the indenture governing NRP's 2025 parent company notes may be different than the amount shown above. However, NRP's last twelve months Leverage ratio as of September 30, 2022, was 0.8x as calculated under the indenture governing NRP's 2025 parent company notes.

		For the Three Months Ended
(In thousands)		September 30, 2020				December 31, 2020				March 31, 2021				June 30, 2021				Last 12 Months
Net income		$	7,216			$	14,687			$	8,381			$	15,382			$	45,666
Less: equity earnings from unconsolidated investment			(1,986	)			(5,528	)			(1,973	)			(2,601	)			(12,088	)
Add: total distributions from unconsolidated investment			—				—				3,920				—				3,920
Add: interest expense, net			10,254				10,077				9,973				9,683				39,987
Add: depreciation, depletion and amortization			2,111				3,013				5,092				4,871				15,087
Add: asset impairments			934				2,668				4,043				16				7,661
Adjusted EBITDA		$	18,529			$	24,917			$	29,436			$	27,351			$	100,233
Debt—at June 30, 2021																		$	458,819
Leverage Ratio (1)																		4.6 x

______________________________
(1)		Leverage Ratio is calculated as the outstanding principal of NRP's debt as of June 30, 2021 divided by the last twelve months' Adjusted EBITDA.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221103005139/en/

Tiffany Sammis, 713-751-7515

tsammis@nrplp.com

Source: Natural Resource Partners L.P.

FAQ

What were NRP's third quarter 2022 results?

NRP reported record free cash flow of $83 million and net income of $74.6 million for Q3 2022.

What is the stock symbol for Natural Resource Partners?

The stock symbol for Natural Resource Partners is NRP.

When will NRP pay its cash distribution?

NRP will pay a cash distribution of $0.75 per common unit on November 22, 2022.

What is the current leverage ratio for NRP?

NRP's pro-forma leverage ratio is 0.6x following the repayment of its 9.125% Senior Notes.

How much debt did NRP retire this year?

NRP has permanently retired $249 million of debt in 2022.