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NATURAL RESOURCE PARTNERS LP (NRP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was resilient despite commodity headwinds: revenue rose sequentially on one-time carbon-neutral and lease-related items, but declined materially year over year on lower coal and soda ash pricing; net income was $42.8M, diluted EPS $3.15, Adjusted EBITDA $58.9M, and free cash flow $66.9M .
  • Balance sheet de-risking remains the central equity narrative: NRP ended 2024 with ~$142M of debt (0.6x LTM leverage), declared a $0.75 regular Q4 distribution and a $1.21 special distribution to cover 2024 tax liabilities, and now has no preferreds or warrants outstanding .
  • Fundamentals: mineral royalties were supported by met coal mix (~80% of coal royalty revenue in Q4), but soda ash equity income collapsed with global prices; Sisecam distributions fell year over year and are expected to remain below historical levels for several years .
  • Outlook: management does not expect a near-term rebound in coal or soda ash; 2025 free cash flow should be lower vs. recent years, but deleveraging positions NRP for potential increases in cash available to common unitholders as debt is paid down .

What Went Well and What Went Wrong

  • What Went Well

    • Deleveraging and simplification: all preferred units and warrants were eliminated; debt reduced to ~$142M; credit facility expanded to $200M and extended to 2029 .
    • Sequential operating strength: revenue, Adjusted EBITDA, and free cash flow improved vs. Q3 driven by ~$12M of one-time carbon-neutral and lease items in Q4 and higher mineral revenues .
    • Strong met coal mix: met coal comprised ~80% of coal royalty revenue and ~60% of volume in Q4, supporting realized royalty/ton vs. thermal .

  • What Went Wrong

    • Year-over-year deterioration: revenue (-29%), Adjusted EBITDA (-22%), free cash flow (-15%), and EPS all fell vs. Q4 2023 on weaker coal and soda ash pricing/volumes; Sisecam equity earnings dropped from $14.8M to $0.9M .
    • Soda ash headwinds: global oversupply and weak construction demand pushed prices to multi-decade lows; Sisecam distributions declined and are expected to remain below historical levels for years .
    • Carbon capture setback: Exxon terminated the previously announced CO2 sequestration lease on NRP’s Baldwin County acreage, signaling slower progress in this carbon-neutral vertical .

Financial Results

Overall P&L, cash flow, and non-GAAP metrics

Metric ($USD Millions, except per-unit)Q4 2023Q3 2024Q4 2024
Total Revenues & Other Income$93.16 $60.33 $65.73
Net Income$64.98 $38.60 $42.77
Diluted EPS ($/unit)$4.31 $2.00 $3.15
Adjusted EBITDA$75.92 $45.82 $58.86
Operating Cash Flow$77.79 $54.15 $66.22
Free Cash Flow$78.42 $54.82 $66.91

Segment performance

SegmentQ4 2023 Net Income ($M)Q3 2024 Net Income ($M)Q4 2024 Net Income ($M)Q4 2023 Adj. EBITDA ($M)Q3 2024 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA ($M)
Mineral Rights$63.13 $40.64 $52.39 $69.57 $45.46 $55.21
Soda Ash$14.73 $8.09 $0.87 $15.31 $6.30 $10.61
Corporate & Financing$(12.88) $(10.13) $(10.49) $(8.95) $(5.94) $(6.96)

KPIs and operating drivers

KPIQ4 2023Q3 2024Q4 2024
Coal Sales Volumes (k tons)8,980 7,190 6,244
Combined Avg Coal Royalty ($/ton)$6.29 $5.24 $5.59
Equity Earnings – Sisecam Wyoming ($M)$14.76 $8.11 $0.93
Cash Distributions – Sisecam ($M)$15.34 $6.32 $10.67
Carbon-Neutral Revenues ($M)$0.06 $(0.04) $11.38

Drivers and bridge

  • Sequential improvement (Q4 vs Q3) was driven by ~$12M of one-time carbon-neutral/lease items and higher mineral revenues, lifting Adjusted EBITDA and FCF; soda ash equity earnings and volumes remained pressured .
  • Year-over-year declines reflect materially lower coal pricing/volumes and a sharp drop in soda ash profitability amid global oversupply and weak flat glass demand (construction/auto) .

Guidance Changes

Metric/AreaPeriodPrevious (Q3 2024)Current (Q4 2024)Change
Coal pricing outlook2025“Remain relatively soft” due to muted steel demand; limited supply/capital provides some floor No major change expected in 2025; still above long-term historical norms Maintained
Soda ash pricing/distributionsMulti-yearPrices to stay low until excess capacity absorbed; distributions down Prices to remain low “for the foreseeable future”; many producers below cost; Sisecam distributions below historical levels Maintained (more cautious tone)
Balance sheetOngoingDebt “just under $200M” after Q3; preferreds retired $142M debt; 0.6x leverage; credit facility $200M to 2029 Improved leverage
Regular common distributionQ3/Q4 2024$0.75 per unit (paid Nov 2024) $0.75 per unit declared for Q4 (paid Feb 25, 2025) Maintained
Special distribution2024 taxNone$1.21 per unit special to cover 2024 tax liability Introduced

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Deleveraging/capital allocationRetired last warrants; continued preferred redemptions; delever focus All preferreds retired; facility extended to 2029 Only ~$142M debt; 0.6x leverage; facility $200M to 2029 Continued progress
Coal market outlookLower prices vs 2022–23; volatility expected; structural support from constrained supply Prices “relatively soft” on weak global steel, mild weather, nat gas No rebound expected near term; still above long-term norms; met mix supportive Soft near term, floored by supply constraints
Soda ash marketPrices down on new Chinese supply; expect lower through next year Prices low; several years to absorb capacity “Foreseeable future” low; many producers below cost; Sisecam payouts below history Worsened tone duration
Carbon-neutral initiativesExploring forest CO2, geothermal, wind/solar, lithium Continued exploration; uncertain timing Exxon CO2 lease not renewed; geothermal/lithium interest rising Mixed: some interest, one setback
2025 cash flow outlook——2025 FCF lower vs recent years; deleveraging enables potential increases to common as debt rolls off Cautious near term, constructive medium term

Management Commentary

  • “We have paid off over $1.3 billion of financial obligations over the last 10 years and currently have only $142 million of debt remaining.”
  • “Metallurgical and thermal coal prices dropped by half last year from the highs seen in 2023. We do not expect coal prices to rebound in the near term.”
  • “Global soda ash prices fell roughly 60% from the record highs of 2023… We believe it will take several years for the market to fully absorb excess capacity.”
  • “Exxon has notified us that they will not be renewing their carbon dioxide sequestration lease… on our Baldwin County, Alabama acreage.”
  • “2025 is shaping up to be a difficult year… Lower prices will lead to lower free cash flow… [yet] we are conservatively financed… with the potential for noteworthy increases in cash available for common unitholders as debt is paid off next year.”
  • “In Q4… decreases were primarily due to weaker coal demand… partially offset by $12 million of revenues and $15 million of cash flow from one-time transactions.”

Q&A Highlights

  • No analyst Q&A was included in the published transcript; prepared remarks emphasized deleveraging, commodity outlook, soda ash weakness, and carbon-neutral initiatives, with explicit caution on 2025 free cash flow .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q4 2024 EPS/revenue were unavailable due to access limits at the time of analysis; as a result, we do not present vs-consensus comparisons for this quarter. This aligns with NRP’s limited formal guidance practices and episodic Street coverage [GetEstimates error].

Key Takeaways for Investors

  • Deleveraging nearly complete; with only ~$142M of debt (0.6x), FCF after debt service could increasingly accrue to common unitholders once debt amortizes, a potential re-rating catalyst .
  • Near-term headwinds persist: management does not expect a coal price rebound or soda ash normalization in 2025; model lower FCF vs. 2023–24, with sensitivity to met coal indices and Sisecam distributions .
  • Q4 sequential strength was non-recurring: ~$12M revenue and ~$15M cash from one-time carbon-neutral/lease items aided results; avoid extrapolating Q4’s uplift into 2025 run-rate .
  • Mix remains favorable: met coal at ~80% of coal royalty revenue provides relative support vs. thermal-exposed peers, but volumes and $/ton remain below 2023 levels .
  • Capital allocation: regular $0.75/unit distribution maintained; $1.21 special declared to cover 2024 tax liabilities—continued potential for specials/tax-related payments while deleveraging completes .
  • Strategic optionality: carbon-neutral initiatives offer upside but timing remains uncertain; Exxon’s lease termination underscores execution risk; geothermal/lithium leasing interest is a watch item rather than a base-case driver .
  • Positioning: favor accumulation on commodity pullbacks for investors underwriting a de-risking/FCF-to-equity story, while recognizing 2025 FCF compression and soda ash downside as ongoing risks .

Supporting Detail: Additional Press Releases and Disclosures

  • Q4 distribution declared: $0.75 per unit (paid Feb 25, 2025) .
  • Special distribution: $1.21 per unit for 2024 tax liabilities (payable Mar 18, 2025) .
  • Liquidity: $116.7M at 12/31/24 (cash $30.4M; revolver availability $86.3M) .
  • Credit facility: $200M capacity, maturity extended to 2029 .