NATURAL RESOURCE PARTNERS LP Q1 FY2025 earnings call

• NRP generated $35M free cash flow in Q1 2025 and $214M over last 12 months. Prices for metallurgical coal, thermal coal, and soda ash declined, impacting results.
• Metallurgical and thermal coal prices near production costs with no near-term catalysts to rise. Soda ash prices at decades-low, in early innings of bear market.
• Carbon-neutral initiatives: slowdown in general CNI market, but activity in geothermal, solar, lithium; vast ownership footprint offers CNI cash flow opportunities with minimal investment.

NRP generated $35 million of free cash flow in Q1 2025. Mineral rights segment generated $44 million free cash flow in Q1 2025. Net income for mineral rights in Q1 2025 was $45 million; compared to prior year, net income decreased $15 million, operating and free cash flow decreased $27 million and $26 million respectively. Net coal made up approximately 55% of coal royalty revenues and 40% of coal royalty sales volumes in Q1 2025, vs 75% and 50% in prior year first quarter. Soda ash segment received $3 million in cash distributions in Q1 2025, an 80% drop from prior year; net income decreased $1 million, operating and free cash flow decreased $11 million. Corporate and financing segment performance flat vs prior year; operating cash flow and free cash flow each improved $1 million due to lower interest payments.

• No anticipation of dividend one year from this quarter at present.
• Distributions are a cash flow priority once debt is paid off next year.
• Prioritization of uses of cash: first liquidity/balance sheet strength, then distributions, then unit repurchases, then opportunistic acquisitions.

• Weak commodity prices persisting, negatively impacting performance.
• Uncertainty in soda ash market recovery duration, with prices likely to remain low in near term.
• Political, regulatory, and market uncertainties hindering CNI activities, especially underground carbon sequestration.

Q: Do you have any anticipation of what the dividend may be one year from this quarter?

A: No, at this point, don't have an anticipation. Distributions will be a cash flow priority if cash not needed internally.

Q: Congratulations on debt reduction strategy. Prioritize share buybacks or dividends?

A: Prioritization: first liquidity/balance sheet strength, then distributions, then unit repurchases if at material discounts to intrinsic value.

Q: Anticipation of dividend one year from now, and M&A vs dividends?

A: No anticipation of dividend one year from now. M&A is bottom of cash use priorities after liquidity, distributions, repurchases.

Q: Uptick in Illinois Basin volume, will it persist? Impact of MET index pricing on MET producers?

A: Illinois Basin volume within expected range. Prices at or below marginal cost for many operators, idling of production possible but no material change in volumes anticipated yet.

Q: New administration support for met coal, impact on business?

A: Monitor legislative/executive orders impacting business, but no identified material impact; not changing business plans due to it.