Natural Resource Partners L.P. (NYSE:NRP) Q4 2025 Earnings Call Transcript

Natural Resource Partners L.P. (NYSE:NRP) Q4 2025 Earnings Call Transcript February 27, 2026

Tiffany Sammis: Forward-looking statements for any reason. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP measures are included in our fourth quarter press release, which can be found on our website. I would like to remind everyone that we do not intend to discuss the operations or outlook for any particular coal lessee or detailed market fundamentals. I will now turn the call over to Craig Nunez, our President and Chief Operating Officer.

Craig Nunez: Thank you, Tiffany, and good morning, everyone. Natural Resource Partners L.P. generated $46 million of free cash flow in the fourth quarter and $169 million of free cash flow in the full year 2025. All three of our key commodities—metallurgical coal, thermal coal, and soda ash—continue to struggle with sales prices that are near or below our operators’ marginal cost of production. Metallurgical and thermal sales prices are at cyclically low levels, and soda ash prices are at generational lows. We do not yet see any catalyst on the horizon that is likely to change this outlook in the foreseeable future. In 2025, softening global economic activity and subdued demand for steel weighed on metallurgical coal pricing, while low natural gas prices and mild weather pressured thermal coal.

While sentiment toward thermal coal is benefiting from the rise in electricity demand from data centers, we have yet to see any material market improvement. Until we see clear evidence of a structural market shift, we remain disciplined in managing the partnership under the assumption that demand for North American thermal coal remains in long-term secular decline. As we said over the course of last year, 2025 was a very challenging time for the global soda ash industry. We believe 2026 will be worse. While we were early to warn about the potential for excess capacity hitting the market, the extent and potential duration of the downturn is exceeding even our expectations. International prices are currently below the cost of production for most producers.

We believe supply rationalization is not a question of if, but when. However, we also believe rebalancing global supply and demand will take time, and we expect it could be several years before a healthy bid returns to the market and prices return to historical levels. We anticipate further pressure on Sisecam Wyoming’s financial performance. We have not received distributions from the joint venture for the last two quarters, and we do not expect distributions to resume for the foreseeable future. Our managing partner is retaining cash to support investments in safety, operational integrity, and to shore up the capital structure. Additionally, earlier this month, we agreed with our partner to invest capital in the venture to reduce outstanding amounts under its bank credit facility and better position it to compete in the current environment.

Natural Resource Partners L.P.’s share of this investment is $39 million, and we evaluated it as we would any other capital allocation decision, with the goal of maximizing Natural Resource Partners L.P.’s intrinsic value per unit. Regarding carbon-neutral initiatives, leasing interest for underground carbon sequestration remains lackluster, as political, regulatory, and market uncertainties pose significant hurdles for developers contemplating large capital investments for these types of projects. We continue to work on multiple geothermal, solar, and lithium opportunities, and we are making small-scale progress on several initiatives, but have nothing material to report. In conclusion, coal prices remain at cyclical lows and global soda ash prices are at generational lows.

Our coal lessees are operating at or near their cost of production, and our soda ash investment—one of the world’s lowest cost producers—is managing through what may be the worst bear market in its sixty-plus-year history. Despite this, Natural Resource Partners L.P. continues to generate robust free cash flow and make progress toward our goal of retiring all outstanding debt. We retired $109 million of debt in 2025 and finished the year with $33 million of debt and no other financial obligations outstanding. Our timeline has been to retire all debt and significantly increase unitholder distributions in August, although we have cautioned that extended bear markets for all three of our key commodities would increase the likelihood that some event would occur that could push that timing back.

The $39 million investment in Sisecam Wyoming is one such event and will push the distribution increase we had expected to occur in August back to a subsequent quarter. I will now turn the call over to Christopher J. Zolas for more details.

Christopher J. Zolas: Thank you, Craig. In 2025, Natural Resource Partners L.P. generated $31 million of net income, $45 million of operating cash flow, and $46 million of free cash flow. For the full year 2025, Natural Resource Partners L.P. generated $136 million of net income, $166 million of operating cash flow, and $169 million of free cash flow. Of these consolidated amounts, our Mineral Rights segment generated $40 million of net income, $49 million of operating cash flow, and $50 million of free cash flow in the fourth quarter, and $166 million of net income, $182 million of operating cash flow, and $185 million of free cash flow in the full year 2025. When compared to the prior-year fourth quarter, our Mineral Rights segment net income, operating cash flow, and free cash flow each decreased $13 million.

When compared to the full year, our Mineral Rights segment net income declined $41 million, while operating and free cash flow each decreased $60 million. These decreases were primarily due to weaker metallurgical coal markets resulting in lower sales prices and volumes. Regarding our metallurgical/thermal coal royalty mix, metallurgical coal made up approximately 70% of our coal royalty revenues and 45% of coal royalty sales volumes for the fourth quarter, and 65% of our coal royalty revenues and 45% of our coal royalty sales volumes for the full year 2025. For our soda ash segment, net income for the fourth quarter and full year of 2025 decreased $3 million and $15 million, respectively, when compared to the prior-year periods. Operating and free cash flow for the fourth quarter and full year of 2025 each decreased by $11 million and $31 million, respectively, as compared to the prior-year periods.

These decreases were primarily due to lower international sales prices driven by new natural soda ash supply from China, as well as weak glass demand from the construction and automobile markets. We have not received a distribution from Sisecam Wyoming since 2025 and do not expect distributions from Sisecam Wyoming to resume until soda ash demand rebounds or there is a significant supply response to this weakened market, most likely from higher-cost synthetic production. Moving to our Corporate and Financing segment, Q4 2025 net income, operating cash flow, and free cash flow each improved $3 million as compared to the prior-year period. Full-year net income improved by $9 million, while operating and free cash flow each improved $8 million as compared to the prior-year period.

These improvements to the Corporate and Financing segment were due to significantly less debt outstanding, resulting in lower interest costs and less cash paid for interest. We used the free cash flow generated from our business segments in 2025 to repay $109 million of debt. Even including the impact of our planned $39 million capital investment into Sisecam Wyoming, we remain on track to accomplish our deleveraging goal this year. Regarding our quarterly distributions, in November 2025, we paid the third-quarter distribution of $0.75 per common unit. In February, we paid a distribution of $0.75 related to 2025. In addition, today, we announced a special distribution of $0.12 per common unit to help cover unitholder tax liabilities associated with owning Natural Resource Partners L.P.’s common units in 2025.

I will now turn the call over to the operator for questions.

Q&A Session

Operator: We will now begin the question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, and if muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from David Spier with Nytor Capital Management. Your line is open. Please go ahead.

David Spier: Hi. How are you? Just to better understand the capital contribution to the soda ash JV, is there any way to provide how much bank debt was outstanding and whether the JV is now debt-free following the contribution?

Craig Nunez: The JV is not debt-free. The JV has $50-plus million of debt remaining after the contribution.

David Spier: So is there any plan or intention to continue making contributions to pay down the remaining debt? Is that on the table?

Craig Nunez: We do not have that—that is not our plan right now. What I will say is that this is a very difficult soda ash market. We were early, and we were right on the downturn, but we have been wrong on the extent, the depth, and the duration of the downturn now that we are in it. If things get worse, there could be situations where we would elect to put more capital into the soda ash venture. That is always a possibility, but that is not what we are planning at the moment.

David Spier: And just lastly, was this a requirement, or was it your election—an option?

Craig Nunez: It was our election.

David Spier: Got it. Okay. I appreciate the color. Thank you.

Craig Nunez: You bet. Thanks.

Operator: Our next question comes from Dan Adler. Your line is open. Please go ahead. Please unmute yourself locally so we can hear your question.

Dan Adler: My question was related to the capital investment as well. I had lowered my hand, but not in time.

Operator: Thank you. Our next question comes from Philip Kramer with BATS Wireless. Your line is open. Please go ahead.

Philip Kramer: Yes. Congratulations on the foresight and great moves by significantly deleveraging the partnership over the last years. Do you anticipate that we will be in a position to substantially increase distributions in the May quarter?

Craig Nunez: No. Not in May. If you do the math, you take our run rates that we are generating in free cash, you take into account the $39 million contribution we are making to the Sisecam Wyoming joint venture, the timing would say it is probably in November.

Philip Kramer: Thanks for the clarification.

Craig Nunez: You bet. I want to say what we have said before, though, in prior calls, and that is that the longer the bear market continues for all three of our key commodities, the greater the likelihood something happens that pushes that timing back. But that is what the timing looks like right now.

Operator: If you would like to ask a question, please press 1. Our next question comes from Alberto Vedilla with Fruit Tree Capital. Your line is open. Please go ahead.

Alberto Vedilla: Good morning. I attended the Pure Land Management sales auction of mineral rights for two of Warrior’s lines, and I was just curious why you guys did not bid. Thank you.

Craig Nunez: Good question. Let me just tell you that the opportunities to acquire passive interests in natural resource assets at attractive prices—which are what we try to do—do not come along often. Auctions are typically not places where you come away with attractive opportunities for mineral-type assets, so you are not likely to see us participate in auctions. Furthermore, I will tell you, we are still on our path to delever, and our goal is to essentially pay off all of our debt and then focus primarily on returning capital to unitholders in the form of distributions. So those are the reasons we were not there.

Alberto Vedilla: Thanks a lot.

Operator: There are no further questions at this time. I will now turn the call back to Craig Nunez for closing remarks.

Craig Nunez: Thank you, operator, and thank you, everyone, for participating in this call, and thank you, all of you, for your support of Natural Resource Partners L.P. Have a good day.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.