NATURAL RESOURCE PARTNERS LP (NRP)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered resilient cash generation amid commodity weakness: net income $30.9M, operating cash flow $41.1M, and free cash flow $41.8M; diluted EPS was $2.28 . Mineral Rights drove results; soda ash equity earnings turned negative and no distribution was received from Şişecam Wyoming .
• Balance sheet strengthened: $32M debt repaid in Q3 with liquidity of $190.1M (cash $31.0M, revolver availability $159.1M); leverage ratio fell to 0.4x vs 0.5x in Q2 .
• Distribution maintained: declared $0.75 per common unit for Q3 (paid Nov. 25), consistent with Q2 .
• Strategic context and catalyst: management reiterated intent to raise distributions once a “fortress balance sheet” is achieved (no permanent debt, ~$30M cash); potential timing “third quarter next year,” though macro commodity headwinds could delay. Soda ash market remains in a generational downturn and carbon sequestration leases were dropped (Oxy in Polk County), tempering near-term optionality .

What Went Well and What Went Wrong

What Went Well

• Robust free cash flow despite weak pricing: “NRP continues to generate substantial free cash flow…” ($41.8M Q3; $190.1M LTM) .
• Accelerated deleveraging and lower interest costs: $32M debt repaid in Q3; corporate net income and cash flow improved YoY on less debt and lower cash interest .
• Coal volumes and mineral cash flow held up: total coal sales volumes rose QoQ to 7.53M tons; mineral rights operating cash flow $44.4M and FCF $45.2M in Q3 .

What Went Wrong

• Soda ash deep downturn: segment net income fell $10.5M YoY; equity earnings were -$2.39M; no Q3 distribution from Şişecam Wyoming and none expected near term given oversupply and weak demand .
• Carbon-neutral setbacks: Oxy dropped the subsurface CO2 sequestration lease (Polk County, TX), following Exxon’s prior exit; management sees industry-wide economic/regulatory barriers persisting .
• Coal royalty pricing compression: combined average coal royalty revenue per ton fell to $4.51 vs $5.24 YoY, reflecting weaker met coal pricing; net income declined vs prior year .

Financial Results

Consolidated performance vs prior year, prior quarters, and commentary

Notes: EBIT and margin calculated from reported “Income from operations” and “Total revenues and other income” . CFO emphasized rounded FCF (“$42M”) vs reported $41.823M .

Segment breakdown

KPIs

Guidance Changes

NRP did not provide quantitative guidance for revenue, margins, OpEx, OI&E, or tax rate; management commentary remains directional: weak coal and soda ash pricing expected to persist, deleveraging remains priority, and distribution increases contingent on achieving “fortress balance sheet” criteria .

Earnings Call Themes & Trends

Management Commentary

• “NRP continues to generate substantial free cash flow despite ongoing depressed market conditions for all three of our key commodities.”
• “We are in a generational bear market for soda ash… Rebalancing supply and demand will likely take several years.”
• “We continue to believe that we will be in a position to increase unit holder distributions in August… the longer we slog through… bear markets… the greater the likelihood that some event occurs that pushes that timing back.”
• “We’re looking to establish what we define as an NRP fortress balance sheet… no permanent debt… and $30 million of cash on the balance sheet.”

Q&A Highlights

• Lithium leasing optionality: active in the Smackover formation (southern Arkansas, NE Texas); leasing terms not disclosed .
• Cost structure questions: operating and maintenance includes property taxes and royalty expenses; management follows zero-based budgeting to minimize costs .
• Oil & gas minerals: most rights in Haynesville; activity picked up but revenues are not material to partnership .
• Capital allocation priorities: post “fortress balance sheet,” priority is distributions, then repurchases at material discounts to intrinsic value, then opportunistic acquisitions; buybacks feasible if pricing is attractive .
• Thermal coal and data centers: increased data center power demand would likely require significant mine, processing, and transport CapEx; timing/extent uncertain .

Estimates Context

• Wall Street consensus (S&P Global) for NRP’s quarterly EPS and revenue was unavailable; as a result, formal “vs. estimates” comparison cannot be made for Q3 2025. Values retrieved from S&P Global.*
• Given limited coverage, revisions are likely minimal; the absence of Şişecam distributions and ongoing commodity price pressure suggest downward bias to soda ash-related expectations, while deleveraging and cash generation support distribution stability .

Key Takeaways for Investors

• Cash generation remains robust and balance sheet de-risking is on track; with leverage at 0.4x and liquidity up, NRP is nearing its “fortress balance sheet,” a prerequisite for higher distributions and potential buybacks .
• Soda ash is the principal headwind: expect prolonged price weakness with no near-term distributions from Şişecam Wyoming (negative equity earnings in Q3) .
• Coal royalties resilient: volumes rebounded QoQ, but pricing remains under pressure; met coal exposure is ~70% of royalty revenues and ~50% of volumes this quarter .
• Distribution stability with optionality to increase next year, subject to commodity markets and balance sheet milestones; current $0.75/unit maintained .
• Carbon sequestration optionality pushed out: Oxy lease drop underscores economic/regulatory hurdles; treat CO2 pore space as long-dated optionality rather than near-term cash flow .
• Near-term trading lens: headline FCF and leverage improvements are positives; watch for continued soda ash negatives and any signs of thermal demand tied to data centers (infrastructure-dependent) .
• Medium-term thesis: royalty model supports cash generation through cycles; capital allocation discipline (distributions first, then repurchases at discounts) could enhance per-unit value once “fortress” criteria are met .

Footnote: *Values retrieved from S&P Global.