NATURAL RESOURCE PARTNERS LP Q3 FY2024 earnings call

• NRP generated $55 million of free cash flow in Q3 and $263 million over the last 12 months. - Paid off remaining $32 million of preferred securities, now free of preferred and warrant liabilities, with total remaining debt at $181 million, down 44% from a year ago. - Mineral Rights segment faced soft coal markets with lower metallurgical and thermal coal prices. - Soda Ash had lower prices due to oversupply and weakened demand for construction flat glass. - Continues to explore carbon neutral initiatives, with slowdown in CO2 sequestration leasing but increased activity for lithium, solar, and geothermal. - Redeemed all preferred units and settled warrants in Corporate & Financing segment.

In the third quarter of 2024, NRP generated $39 million of net income, $54 million of operating cash flow, and $55 million of free cash flow. The Mineral Rights segment generated $41 million of net income and $54 million of both operating and free cash flow. Metallurgical coal made up approximately 75% of coal royalty revenues and 55% of coal royalty sales volumes in the third quarter met thermal coal royalty mix. The Soda Ash business segment had net income of $8 million in Q3 2024, a decrease of $4 million from the prior year quarter, with free cash flow of $6 million, a decrease of $17 million. The Corporate & Financing segment redeemed the final $32 million of outstanding preferred units and settled the final tranche of outstanding warrants.

• Current market softness for key commodities expected to persist, leading to material drop in free cash flow compared to last 12 months. - Continue to pay down debt with internally generated cash. - Extended bank credit facility maturity to October 2029, providing greater financial flexibility.

• Uncertain regulatory and political environment affecting carbon neutral initiatives. - Market softness for metallurgical, thermal coal, and soda ash persisting in the near-term.

Q: How are you doing to be unconstrained in paying dividends?

A: Goal is to eliminate all liabilities ($181 million debt) before considering other uses of free cash.

Q: Is goal to get debt to zero?

A: Yes, but could be close to zero.

Q: What's payout policy after debt elimination?

A: Not decided in advance, will approach similarly to past distributions.

Q: How strict is plan to eliminate debt before returning to capital?

A: Common sense approach, pay off highest cost debt first.

Q: Thought on repurchasing common units?

A: Yes, consider repurchasing if units trade at material discounts to intrinsic value, new credit agreement loosens handcuffs for such actions