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NATURAL RESOURCE PARTNERS LP (NRP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was resilient on cash generation but down year-over-year; NRP delivered $35.1M free cash flow, $40.3M net income, and $60.5M total revenues and other income as commodity price weakness persisted across metallurgical coal, thermal coal, and soda ash .
  • The board declared a $0.75 per common unit distribution for Q1 2025, maintaining the quarterly level and paid a $1.21 special distribution in March to address 2024 unitholder tax liabilities .
  • Balance sheet continued to strengthen: debt declined to $139.0M; leverage ratio was 0.7x, setting up potential for materially higher distributions as debt is paid down next year (management highlight) .
  • Key headwinds: met coal prices at or below marginal cost for many operators, thermal coal inventories high vs five-year average, and soda ash markets pressured by 2024 capacity additions (mainly China) and weak flat glass demand; Sisecam Wyoming distributions likely remain muted .
  • Potential stock reaction catalysts: accelerating deleveraging and the “prospect of freeing up cash for significant increases in unitholder distributions” once debt is retired, amid disciplined capital allocation priorities favoring liquidity and distributions over buybacks and acquisitions .

What Went Well and What Went Wrong

What Went Well

  • Strong cash generation despite commodity pressure: $35.1M free cash flow in Q1 and $214.1M LTM provided continued deleveraging capacity .
  • Disciplined capital allocation: emphasis on balance sheet strength, then distributions, then opportunistic repurchases, and acquisitions last; management reiterated priority hierarchy on the call .
  • Clear path to distribution increases: management highlighted “prospect of freeing up cash for significant increases in unitholder distributions as debt is paid off next year” .

What Went Wrong

  • Year-over-year decline in Mineral Rights: net income down $15.4M; operating and free cash flow each down ~$26.5M due to weaker met coal prices and volumes; met coal was ~55% of coal royalty revenues and ~40% of volumes vs ~75% and ~50% last year .
  • Soda ash pressure intensified: net income down $0.8M YoY and a lower cash distribution from Sisecam Wyoming drove an $11.3M decline in operating/free cash flow; management expects muted distributions for the foreseeable future .
  • Commodity backdrop challenging: management sees met coal, thermal coal, and soda ash pricing “relatively weak for the foreseeable future,” with no clear near-term catalysts for higher prices .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Total Revenues and Other Income ($USD Millions)$76.414 $60.327 $65.726 $60.538
Net Income ($USD Millions)$56.213 $38.595 $42.772 $40.253
Diluted EPS ($USD)$3.83 $2.00 $3.15 $2.97
Adjusted EBITDA ($USD Millions)$73.114 $45.817 $58.859 $45.260

Segment breakdown (Revenues, Net Income, Adjusted EBITDA):

SegmentQ1 2024 Revenues ($M)Q4 2024 Revenues ($M)Q1 2025 Revenues ($M)Q1 2024 Net Income ($M)Q4 2024 Net Income ($M)Q1 2025 Net Income ($M)Q1 2024 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)
Mineral Rights$70.964 $64.795 $55.928 $60.644 $52.386 $45.208 $65.293 $55.209 $49.213
Soda Ash$5.450 (Equity earnings) $0.931 (Equity earnings) $4.610 (Equity earnings) $5.388 $0.872 $4.550 $14.148 $10.608 $2.880
Corporate & Financing———$(9.819) $(10.486) $(9.505) $(6.327) $(6.958) $(6.833)

KPIs (Mineral Rights operating statistics):

KPIQ1 2024Q4 2024Q1 2025
Total Coal Sales Volumes (tons)7,648 6,244 8,221
Combined Avg Coal Royalty Revenue per Ton ($)$6.12 $5.59 $4.36
Coal Royalty Revenues ($USD Millions)$46.818 $34.925 $35.498
Oil & Gas Royalty Revenues ($USD Millions)$3.640 $1.610 $2.444
Carbon Neutral Revenues ($USD Millions)$2.161 $11.381 $0.595

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Distribution per Common Unit ($)Q4 2024 vs Q1 2025$0.75 declared for Q4 2024 $0.75 declared for Q1 2025 Maintained
Special Distribution ($)March 2025N/A$1.21 paid to cover 2024 tax liabilities New (one-time)
Commodity Price Outlook (Met/Thermal/Soda Ash)2025Pricing weak into 2025 Pricing to remain relatively weak; muted demand persists Maintained negative outlook
Sisecam Wyoming Distributions2025Expected lower vs historical due to global capacity/demand Expect distributions to remain at lower levels throughout 2025–2026 Maintained lower outlook
Leverage and Debt TrajectoryQ4 2024 vs Q1 2025Debt $142.3M; leverage 0.6x Debt $139.0M; leverage 0.7x Improved debt; leverage up on LTM EBITDA

Note: NRP does not issue numeric revenue/EPS guidance; commentary is qualitative around commodity markets and capital allocation .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Commodity pricing (met/thermal coal)Ongoing weakness; muted steel demand; persistent softness expected Weak throughout 2024; new price floor from cost inflation, labor shortages, limited capital Prices “relatively weak for the foreseeable future”; at/below marginal cost for many operators Worsening/unchanged
Soda ash marketPrices down due to China capacity, weak flat glass; several years to absorb supply Low prices expected to persist; distributions below historical levels Prices at lowest in decades; distributions muted; multi-year stabilization expected Worsening/unchanged
Capital allocation prioritiesDeleveraging first; distributions; then buybacks if discounted; acquisitions last Redeemed preferreds/warrants; expanded revolver; distribution maintained Reiterated hierarchy: liquidity, distributions, repurchases, acquisitions Consistent discipline
Carbon-neutral initiatives (CNI)Exploring CO2 sequestration, renewable/leasing opportunities Exxon CCS lease terminated; continue exploring CNI Leasing interest lackluster; progressing small-scale geothermal/solar/lithium Slowed, selective progress
Volumes/regions (Illinois Basin)Thermal volumes lower YoY; mix dominated by met Met share elevated in Q4; volumes down YoY Illinois Basin volumes up QoQ; within expected range; met producers near breakeven Mixed; IB steadier, met pressured
Regulatory/macroSoft construction/manufacturing; global headwinds Headwinds continued; de-risking focus No material regulatory changes anticipated; plans unchanged Stable

Management Commentary

  • “NRP generated $35 million of free cash flow in the first quarter of 2025 and $214 million of free cash flow over the last twelve months… We have only $139 million of debt remaining with the prospect of freeing up cash for significant increases in unitholder distributions as debt is paid off next year.” — Craig Nunez, President & COO .
  • “We expect prices for metallurgical coal, thermal coal, and soda ash to remain relatively weak for the foreseeable future.” — Craig Nunez .
  • “Met coal made up approximately 55% of our coal royalty revenues and 40% of our coal royalty sales volumes in Q1 2025, compared to 75% and 50% in the prior year first quarter.” — Chris Zolas, CFO .
  • “Leasing interest for underground carbon sequestration remains lackluster… We are, however, continuing to see activity in the geothermal, solar, and lithium space and are making small-scale progress.” — Craig Nunez .

Q&A Highlights

  • Distribution outlook and capital return mix: Management would not pre-commit on next year’s dividend level but emphasized distributions as a top priority after ensuring liquidity and balance sheet strength; unit repurchases only at material discounts to intrinsic value .
  • Asset monetization: No plans to sell assets; as royalty/mineral owners, NRP prefers long-term holding; could monetize only at prices above intrinsic value .
  • Illinois Basin volumes: Q1 uptick viewed as within expected range; management doesn’t comment on specific operators; volumes expected within normal ranges .
  • Met coal production: Prices at or below marginal cost for many operators; idlings wouldn’t be surprising, but no specific material volume changes identified yet .
  • Regulatory backdrop: No anticipated material changes to business from new administration; plans remain unchanged .

Estimates Context

  • Wall Street consensus estimates via S&P Global were not available for Q1 2025 (no EPS consensus; revenue consensus data not populated). Values retrieved from S&P Global.*
  • As a result, formal beat/miss analysis against consensus is unavailable. We anchor evaluation on actuals and management commentary .

Key Takeaways for Investors

  • Free cash flow durability: Despite commodity headwinds, NRP generated $35.1M FCF in Q1 and $214.1M LTM, continuing deleveraging and supporting distributions .
  • Distribution policy: Quarterly distribution held at $0.75; one-time $1.21 special distribution paid for tax liabilities; management signals distributions prioritize cash use post-liquidity needs .
  • Deleveraging catalyst: Debt at $139.0M and 0.7x leverage; management explicitly tied debt retirement to the potential for significantly higher distributions next year, a likely stock narrative driver .
  • Commodity risk: Met coal/thermal coal pricing and soda ash remain weak; combined average royalty $/ton fell to $4.36; investors should monitor operator idlings and pricing inflections .
  • Segment mix shift: Met coal share of royalty revenues fell to ~55% vs ~75% YoY; Illinois Basin volumes rose QoQ; mix evolution could temper revenue per ton without price recovery .
  • CNI optionality: CCS leasing interest has slowed, but geothermal/solar/lithium efforts continue with minimal NRP capital; potential longer-term upside, not near-term thesis .
  • Near-term trading lens: Headlines likely center on cash generation vs commodity weakness; upside surprise would be faster debt paydown and earlier distribution increases; downside risk is deeper commodity trough or Sisecam distributions staying lower for longer .