Natural Resource Partners L.P. Q1 FY2026 earnings call

Craig Nunes started by mentioning NRP's free cash flow in the first quarter of 2026, and provided an overview of metallurgical and thermal coal, soda ash markets, including challenges like cost pressures, market supply and demand. He also talked about NRP's cash flow generation, debt situation, concerns about soda ash business, and plans for unit holder distributions and evaluation of Shishajam Wyoming investment. Chris then covered financial results, including net income, operating cash flow, free cash flow of each segment and quarterly distribution situation.

Mineral rights segment: In the first quarter, net income was $34 million, operating cash flow was $42 million, and free cash flow was $43 million. Compared to the same period last year, net income decreased by $12 million, and operating cash flow and free cash flow each decreased by $1 million. Metallurgical coal accounted for approximately 65% of coal royalty revenues and 45% of coal royalty sales volumes in the first quarter of 2026. Soda ash segment: Net income decreased by $12 million compared to the prior year quarter. Operating cash flow decreased by $3 million and free cash flow decreased by $42 million. This was due to not receiving a distribution in the first quarter of 2026 compared to receiving $3 million in the first quarter of 2025, and also impacted by the $39 million capital investment in Syzygium Wyoming. Corporate and financing segment: Net income, operating cash flow, and free cash flow each improved by $3 million compared to the prior year period in Q1 2026, due to less debt outstanding resulting in lower interest costs and less cash paid for interest.

NRP is on track to increase unit holder distributions this year, but cautions about challenging commodity environments, especially for soda ash, which may push back distribution timing. Expect to increase distributions in November but it may be delayed, and will update each quarter.

Metallurgical and thermal coal producers face challenges with diesel and transport cost increases compressing margins, and global industrial slowdown could pressure steel demand and metallurgical coal pricing; higher oil prices may lead to lower North American natural gas prices and thermal coal demand. Soda ash market worsened by energy and transport cost increases and construction slowdowns. War in Iran hasn't materially impacted mineral rights segment yet, but closure of Strait of Hormuz affects European coal plant phase-outs.

Q: Can you discuss the minus $7.8 million loss on the equity and earnings in the Zodash segment?

A: That was proportionate share of their net income during the first quarter, including all cash and non-cash amounts, no significant one-time items.

Q: Regarding the soda ash JV, following the contribution, how much debt now remains at the JV?

A: $60 million in total.

Q: Is it possible to further elaborate on potential options for re-evaluating the soda ash business?

A: Still reevaluating everything, due to operator decisions and market competition, can't elaborate much on future scenarios yet