Natural Resource Partners L.P. Q2 FY2025 earnings call

• NRP generated $46 million of free cash flow in Q2 2025 and $203 million over 12 months with key commodities trading near operators' cost of production. • Deleveraging strategy established 10 years ago is showing success in generating cash flow through commodity cycles. • Coal markets under pressure due to soft demand, cheap natural gas, and high inventories; soda ash oversupplied with prices below production costs. • Free cash flow used to pay down debt; goal to be debt free mid-2026 and increase distributions next August. • Corporate and Financing segment improved due to less debt and lower interest costs.

In the second quarter of 2025, NRP generated $46 million of free cash flow. The Mineral Rights segment generated $40 million of net income and $46 million of operating and free cash flow. Metallurgical coal made up approximately 70% of coal royalty revenues and 55% of coal royalty sales volumes. The Soda Ash segment had $3 million of net income and $5 million of operating free cash flow. The Corporate and Financing segment had $2 million of net income, operating cash flow, and free cash flow due to less debt outstanding resulting in lower interest costs.

• Based on current free cash flow run rate, expect to pay off substantially all debt by mid-2026 and significantly increase unitholder distributions starting August 2026. • Once debt free, priorities are unitholder distributions, unit repurchases at material discounts, and opportunistic investments in assets within circle of confidence at bargain prices.

• Commodity price cycles and market fluctuations affecting coal and soda ash segments. • Soft demand for steel impacting metallurgical coal and weak glass demand affecting soda ash. • Oversupply in coal and soda ash markets leading to low prices. • Political, regulatory, and market uncertainties posing hurdles for carbon-neutral initiatives.

Q: Given the weakness in various areas, at debt free, are there opportunities to pick up additional royalty or soda ash assets?

A: Craig Nunez said the mineral rights market is fragmented with one-off transactions, but there are possibilities, and once at a fortress balance sheet, priorities include unitholder distributions, unit repurchases, and opportunistic investments.

Q: Regarding debt repayment timing and focus, how are you thinking about it?

A: Craig Nunez confirmed focus on paying off debt, with priorities as mentioned after debt free.