Revenue and Production - Total revenues for 2023 amounted to $370,009,000, with the Mineral Rights segment contributing 80% ($296,612,000) and the Soda Ash segment contributing 20% ($73,397,000)[30]. - The company’s coal production for 2023 included 16,397,000 tons of thermal coal and 15,530,000 tons of metallurgical coal, totaling 31,927,000 tons[40]. - The majority of revenues from the Mineral Rights segment are derived from coal royalties, primarily from properties in the Appalachia Basin, Illinois Basin, and Northern Powder River Basin[32]. - In 2023, the company recorded $14.9 million in revenue from coal transportation and processing assets[57]. - The company received $7.4 million in oil and gas royalty revenues and $2.9 million in aggregates royalty revenues during 2023[59]. - Sisecam Wyoming generated total revenues of $86.1 million in 2023 from significant customer Alpha and $60.5 million from Foresight and its subsidiaries[77]. Assets and Liabilities - As of December 31, 2023, the Partnership's mineral rights, net totaled $394 million[274]. - The Partnership's investment in Sisecam Wyoming is stated at $277 million as of December 31, 2023, down from $306 million in 2022[268]. - Total assets decreased from $877,131,000 in 2022 to $797,876,000 in 2023, a decline of approximately 9.0%[294]. - Cash and cash equivalents dropped significantly from $39,091,000 in 2022 to $11,989,000 in 2023, representing a decrease of about 69.3%[294]. - Total current liabilities reduced from $60,229,000 in 2022 to $49,840,000 in 2023, a decrease of approximately 17.3%[294]. - Total liabilities decreased from $235,087,000 in 2022 to $219,641,000 in 2023, a decline of approximately 6.5%[294]. - Long-term debt net decreased from $129,205,000 in 2022 to $124,273,000 in 2023, a decline of approximately 3.7%[294]. Properties and Investments - The Alpha-CAPP (VA) property, a significant asset, had a book value of $46.3 million as of December 31, 2023, and is leased to Alpha Metallurgical Resources Inc.[43]. - The Williamson property, located in Illinois, had a book value of $37.0 million as of December 31, 2023, and is leased to Foresight Energy Resources LLC[49]. - The Hillsboro property, also in Illinois, had a book value of $209.3 million as of December 31, 2023, and is under lease to Hillsboro Energy, a subsidiary of Foresight[52]. - The company has approximately 140,000 acres of pore space under lease for carbon sequestration with an estimated storage capacity of 800 million metric tons of CO2[63]. Regulatory and Compliance Issues - Compliance with environmental regulations has significantly increased the cost of coal mining for domestic producers, impacting overall profitability[83]. - The Clean Air Act and related regulations impose permitting requirements that could increase operational costs for coal-fired power plants, affecting demand for coal[86]. - The company’s coal lessees are contractually obligated to comply with all federal, state, and local laws, including the Surface Mining Control and Reclamation Act[102]. - The company may incur substantial compliance costs or fines due to ongoing lawsuits related to discharges of pollutants from reclaimed mining sites[98]. - The company is subject to stringent health and safety standards imposed by federal legislation, which have resulted in increased operating costs[100]. Financial Performance and Debt - As of December 31, 2023, the company and its subsidiaries had approximately $155.5 million in total indebtedness[110]. - The partnership agreement requires a consolidated leverage ratio of less than 3.25x to make quarterly distributions on common units exceeding $0.45 per unit[109]. - Cash distributions are not guaranteed and may fluctuate based on performance and financial reserves[109]. - The company has significant debt service obligations and obligations to pay cash distributions on preferred units[109]. - The company faces increased competition from natural gas and renewable energy sources, impacting thermal coal prices[115]. Market and Competitive Landscape - Significant competition exists in the coal industry, affecting pricing and market share due to various regional producers[78]. - The company faces competition from larger soda ash producers in the U.S., Europe, and Asia, which may have greater financial and production resources[79]. - The company is exposed to market risks, including commodity price volatility, which could negatively impact future financial results[255]. - The company anticipates that future regulations on emissions could further reduce coal consumption and adversely affect coal-related revenues[124]. Environmental Initiatives - The company is involved in carbon neutral initiatives, including the sale of carbon offset credits and potential geothermal energy generation[32]. - The company executed its first carbon neutral project in Q4 2021, selling 1.1 million carbon offset credits for $13.8 million[61]. - In 2023, the company executed a new solar lease as part of its renewable energy initiatives[64]. Operational Risks - The company anticipates a continued decline in thermal coal production due to a shift towards natural gas and alternative energy sources, while metallurgical coal remains a strong revenue driver[39]. - Transportation costs significantly impact the competitiveness of coal and minerals, with disruptions potentially leading to decreased royalty revenues[138]. - Lessees' failure to manage operations effectively could lead to decreased production volumes and royalty revenues[133]. Tax and Financial Reporting - Tax treatment as a partnership is crucial; if treated as a corporation, cash available for distribution to unitholders would be substantially reduced[159]. - Proposed changes to U.S. federal income tax laws could eliminate key tax preferences related to coal exploration and development, impacting taxable income for unitholders[164]. - Audit adjustments by the IRS could lead to substantial tax liabilities, further reducing cash available for unitholders[169].

Financial Performance - Natural Resource Partners L.P. reported a record free cash flow of $313 million for the full year 2023, driven by increased distributions from the soda ash business and strong metallurgical coal prices[3]. - Net income for 2023 was $278,435, compared to $268,492 in 2022, indicating an increase of about 3.5%[40]. - Adjusted EBITDA for 2023 was $319,664, slightly up from $317,247 in 2022, reflecting a growth of approximately 0.8%[40]. - Total revenues and other income for Q4 2023 were $93.163 million, a decrease of 4% from $97.055 million in Q4 2022[28]. - Net income for Q4 2023 was $64.980 million, compared to $63.218 million in Q4 2022, reflecting a growth of 2.8%[28]. - Net income attributable to common unitholders for the year ended 2023 was $196.771 million, down from $233.722 million in 2022, representing a decline of 15.8%[28]. - Cash flows from operating activities for Q4 2023 were $77.786 million, an increase of 12.5% from $68.888 million in Q4 2022[30]. - The company reported a comprehensive income of $59.613 million in Q4 2023, compared to $79.903 million in Q4 2022, reflecting a decrease of 25.4%[28]. - For the year ended December 31, 2023, total revenues and other income reached $370,009, a decrease from $388,962 in 2022, representing a decline of approximately 4.5%[40]. - Distributable cash flow for the year ended December 31, 2023, was $316,394,000, compared to $269,526,000 in 2022, indicating a significant increase[52]. Cash Flow and Liquidity - The company's liquidity stood at $71.2 million as of December 31, 2023, consisting of $12 million in cash and $59.2 million in available borrowing capacity[3]. - Cash flow from operating activities for 2023 was $310,978, compared to $266,838 in 2022, marking an increase of about 16.6%[40]. - Free cash flow for 2023 was $313,431, up from $268,443 in 2022, indicating a growth of approximately 16.7%[40]. - The company reported net cash used in financing activities of $86.843 million for Q4 2023, compared to $91.644 million in Q4 2022, indicating a decrease of 5.5%[30]. - The total cash flow provided by financing activities in 2023 was $(343,496), compared to $(365,955) in 2022, showing an improvement of approximately 6.2%[40]. - Free cash flow for the three months ended December 31, 2023, was $78,419,000, an increase from $69,414,000 in the same period of 2022[49]. Segment Performance - Mineral Rights segment net income for the full year 2023 decreased by $21.9 million compared to the prior year, primarily due to lower metallurgical coal pricing and oil and gas royalty revenues[7]. - Soda Ash segment net income increased by $13.5 million for the full year 2023, attributed to higher sales prices driven by strong domestic demand[10]. - Revenues for the mineral rights segment were $76,398,000 in Q4 2023, a decrease of 5.7% from $80,913,000 in Q4 2022[38]. - Total coal royalty revenues for 2023 were $218,011, a decrease from $226,956 in 2022, representing a decline of approximately 3.9%[43]. Debt and Equity - NRP redeemed $178 million of preferred units at par and repurchased 1.46 million warrants for $56.1 million in cash during 2023[5]. - The company reported a total partners' capital of $531,054,000 as of December 31, 2023, up from $477,457,000 in 2022, an increase of 11.2%[34]. - The current portion of long-term debt decreased to $30,785,000 in 2023 from $39,076,000 in 2022, a reduction of 21.0%[32]. - The leverage ratio as of December 31, 2023, was 0.5x, unchanged from the previous year[54]. Special Distributions and Future Outlook - The company declared a special cash distribution of $2.44 per common unit to be paid on March 26, 2024, to help cover unitholder tax liabilities for 2023[4]. - NRP continues to explore carbon neutral revenue sources, including carbon sequestration and renewable energy activities, leveraging its extensive asset portfolio[9]. - Metallurgical and thermal coal prices showed variability in 2023 but are expected to remain supported in 2024 due to labor shortages and inflationary pressures[8].

Financial Performance - For the nine months ended September 30, 2023, total revenues and other income were $276.8 million, with mineral rights generating $218.2 million and soda ash contributing $58.6 million[114]. - Net income for the same period was $213.5 million, with mineral rights net income at $182.4 million and soda ash at $58.4 million, while corporate financing incurred a loss of $27.4 million[114]. - Adjusted EBITDA for the nine months was $243.7 million, with mineral rights contributing $195.0 million and soda ash $65.9 million[114]. - Total revenues for the third quarter of 2023 decreased by 16% to $86,367,000 compared to $102,258,000 in the same period of 2022[124]. - Net income for the nine months ended September 30, 2023, was $213.5 million, a decrease of $8.2 million compared to the prior year period, primarily due to lower revenues and other income[142]. - Adjusted EBITDA for the same period was $243.7 million, a decrease of $1.8 million, driven by a $27.0 million decrease in the Mineral Rights segment[142]. Cash Flow and Liquidity - Operating cash flow for the nine months was $233.2 million, and free cash flow was $235.0 million, with liquidity at $45.4 million as of September 30, 2023[115]. - Distributable cash flow for the nine months was $236.0 million, reflecting strong operational performance despite a decrease in revenues from mineral rights[114][119]. - Operating cash flow increased by $35.2 million to $233.2 million, primarily due to increased cash flow in the Soda Ash and Corporate and Financing segments[148]. - Distributable Cash Flow (DCF) for the nine months ended September 30, 2023, was $235.973 million, an increase of $36.2 million compared to the prior year[144]. - Free Cash Flow (FCF) for the same period was $235.012 million, reflecting an increase of $36.0 million year-over-year[144]. - Total liquidity as of September 30, 2023, was $45.4 million, consisting of $18.4 million in cash and cash equivalents and $27.0 million in borrowing capacity[145]. Revenue Segments - Revenues from the mineral rights segment decreased by $29.7 million, or 12%, primarily due to lower metallurgical coal sales prices and reduced oil and gas royalties[119]. - Soda ash revenues increased by $14.6 million, or 33%, driven by higher sales prices despite lower production and sales volumes[122]. - The Mineral Rights segment reported a revenue decline of $29.7 million, or 12%, primarily due to lower natural gas production and prices, as well as decreased cash flow from carbon neutral initiatives[134]. - The Soda Ash segment experienced a revenue increase of $14.6 million, or 33%, driven by higher sales prices due to strong demand in both domestic and international markets[137]. - The Soda Ash segment saw an increase in operating cash flow of $32.0 million due to higher distributions from Sisecam Wyoming[146]. Operating Expenses and Financial Ratios - Operating expenses decreased by 7% to $18,684,000, driven by a reduction in depreciation, depletion, and amortization expenses[128]. - Interest expense decreased by 25% to $3,837,000, reflecting a reduction in outstanding debt[128]. - Total debt as of September 30, 2023, was $207.5 million, an increase from $168.3 million as of December 31, 2022[149]. - The leverage ratio as of September 30, 2023, was 0.7x, indicating a strong capacity to service debt[115]. - The leverage ratio as of September 30, 2023, was 0.7x, indicating a stable financial position[147]. Market Conditions and Risks - Company revenues, operating results, and financial condition are significantly dependent on prevailing commodity prices, particularly coal, which has historically been volatile[156]. - Substantially lower coal prices could lead to reduced revenues and potential impairment of coal properties or violations of financial debt covenants[156]. - The effective marketing of coal by lessees is crucial, as difficulties in extending contracts may adversely affect lessees' operations and future financial results[157]. - The market price of soda ash and energy costs directly impacts the profitability of Sisecam Wyoming's operations, with historical volatility expected to continue[158]. - A 1% increase in interest rates would result in an approximate $1.3 million increase in annual interest expense, assuming the same principal amount remains outstanding[159].

Financial Data and Key Metrics Changes - The company generated $81 million of operating cash flow and $70 million of net income during the second quarter of 2023 [8] - Free cash flow for the second quarter was $82 million, with a total of $308 million over the last year [33] - The total obligations, including debt, preferred equity, and warrants, decreased over 10% since the last earnings call, down to about $385 million [14] Business Segment Data and Key Metrics Changes - The Mineral Rights segment generated $55 million in operating cash flow, $56 million in free cash flow, and $53 million in net income for Q2 2023, with net income and free cash flow decreasing by $17 million and $15 million respectively compared to the prior year due to lower metallurgical sales prices [37] - The Soda Ash business segment reported net income of $27 million in Q2 2023, up from $15 million in the prior year, driven by strong demand and higher sales prices [9] - The Corporate and Financing segment saw costs decrease to $9 million from $17 million in the prior year, primarily due to lower interest expenses [19] Market Data and Key Metrics Changes - Metallurgical coal prices declined during the second quarter but remained relatively strong compared to historical norms, with metallurgical coal making up 70% of coal royalty revenues [18] - Thermal coal prices weakened due to mild winter weather and increased inventories at coal-fired power stations, with expectations of continued long-term decline [34] Company Strategy and Development Direction - The company is focused on deleveraging and derisking its balance sheet to maximize future free cash flow available for common unitholders [26] - There is an ongoing exploration of carbon-neutral initiatives, including CO2 sequestration and renewable energy projects, which could provide significant long-term cash flows without requiring capital investment [7] Management's Comments on Operating Environment and Future Outlook - Management believes the supply-demand balance for metallurgical coal will remain supported due to long-term demand trends and lack of new supply investment [5] - The company acknowledges near-term pricing pressures in the soda ash market due to softening demand and new capacity from China but maintains a favorable long-term outlook for the industry [16] Other Important Information - The company permanently retired $81 million of its preferred equity in Q2 2023, bringing total preferred equity redemptions for the year to $128 million [14] - The second quarter distribution of $0.75 per common unit was announced, consistent with the previous quarter [10] Q&A Session Summary Question: What are the priorities for paying down preferred securities? - The company intends to continue paying down preferred and debt as rapidly as possible, especially if it can borrow at a lower cost than the 12% on preferreds [23] Question: Can you explain the non-cash charge related to the paydown of preferred securities? - The non-cash charge reflects the difference between the par value paid for preferred units and their book value, with no impact on the income statement [43] Question: Is there a reason why the company can't reinstate a more full payout ratio in early 2024? - The company plans to clean up its capital structure before evaluating capital deployment strategies, indicating that early 2024 is too soon for reinstating a full payout ratio [53] Question: What is the expected revenue from CO2 sequestration deals? - The company cannot provide specific guidance on potential revenue from CO2 sequestration as it depends on the industry's development [70]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) [ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the Partnership's unaudited consolidated financial statements, including balance sheets, income, capital, and cash flow statements, with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$820.3 million** from **$877.1 million**, mainly due to reduced cash and mineral rights, with liabilities rising and partners' capital increasing | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $820,259 | $877,131 | $(56,872) | | Cash and cash equivalents | $10,730 | $39,091 | $(28,361) | | Mineral rights, net | $404,741 | $412,312 | $(7,571) | | Total Liabilities | $240,400 | $235,087 | $5,313 | | Total Partners' Capital | $499,760 | $477,457 | $22,303 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 revenues decreased **8.7%** while net income rose **5.2%**; six-month revenues were stable with net income up **14.4%** | Metric (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Total Revenues & Other Income | $91,260 | $99,933 | (8.7%) | $190,479 | $189,649 | 0.4% | | Total Operating Expenses | $17,434 | $20,957 | (16.8%) | $34,525 | $37,387 | (7.6%) | | Net Income | $70,334 | $66,820 | 5.2% | $149,609 | $130,719 | 14.4% | | Basic Net Income per Common Unit | $2.93 | $4.65 | (37.0%) | $7.32 | $9.10 | (19.6%) | | Diluted Net Income per Common Unit | $2.49 | $3.29 | (24.3%) | $5.96 | $6.50 | (8.3%) | [Consolidated Statements of Partners' Capital](index=6&type=section&id=Consolidated%20Statements%20of%20Partners%27%20Capital) Partners' capital increased from **$477.5 million** to **$499.8 million**, driven by net income, partially offset by distributions and preferred unit redemptions | Metric (in thousands) | Balance at Dec 31, 2022 | Balance at June 30, 2023 | Change | | :-------------------- | :---------------------- | :----------------------- | :----- | | Common Unitholders | $404,799 | $444,838 | $40,039 | | General Partner | $5,977 | $6,913 | $936 | | Warrant Holders | $47,964 | $47,964 | $0 | | Accumulated Other Comprehensive Income (Loss) | $18,717 | $45 | $(18,672) | | Total Partners' Capital | $477,457 | $499,760 | $22,303 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities rose significantly to **$154.3 million**, offset by increased cash used in financing for preferred unit redemptions and distributions | Metric (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | | Net Cash Provided by Operating Activities | $154,250 | $115,454 | $38,796 | | Net Cash Provided by Investing Activities | $1,304 | $909 | $395 | | Net Cash Used in Financing Activities | $(183,915) | $(192,527) | $8,612 | | Net Decrease in Cash and Cash Equivalents | $(28,361) | $(76,164) | $47,803 | | Cash and Cash Equivalents at End of Period | $10,730 | $59,356 | $(48,626) | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, segment performance, debt, and other financial disclosures, providing crucial context to the statements [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) The Partnership operates in mineral rights and soda ash segments, with financial statements prepared under GAAP for interim reporting, adopting ASU 2020-06 with no material impact - The Partnership's business includes owning, managing, and leasing diversified mineral properties in the U.S., and a **49% non-controlling interest** in Sisecam Wyoming, a trona ore mining and soda ash production business[23](index=23&type=chunk) - Financial statements are prepared in accordance with **GAAP** for interim financial information and Rule 10-01 of Regulation S-X[24](index=24&type=chunk) - Adopted **ASU 2020-06** on January 1, 2023, which did not have a material impact on the Consolidated Financial Statements[25](index=25&type=chunk) [Note 2. Revenues from Contracts with Customers](index=10&type=section&id=Note%202.%20Revenues%20from%20Contracts%20with%20Customers) Mineral Rights segment revenues decreased for both three and six months ended June 30, 2023, primarily due to lower coal royalty revenues | Revenue Source (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | | :---------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Coal royalty revenues | $47,960 | $62,945 | (23.8%) | $105,983 | $118,394 | (10.5%) | | Royalty & other mineral rights revenues | $61,007 | $79,333 | (23.1%) | $137,278 | $150,416 | (8.7%) | | Transportation & processing services | $3,270 | $5,612 | (41.7%) | $6,868 | $9,408 | (27.0%) | | Total Mineral Rights segment revenues | $64,277 | $84,945 | (24.3%) | $144,146 | $159,824 | (9.8%) | | Deferred Revenue Activity (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | $46,437 | $61,862 | | Increase due to minimums & lease amendment fees | $10,810 | $7,997 | | Recognition of previously deferred revenue | $(13,609) | $(17,573) | | Balance at end of period | $43,638 | $52,286 | [Note 3. Class A Convertible Preferred Units and Warrants](index=12&type=section&id=Note%203.%20Class%20A%20Convertible%20Preferred%20Units%20and%20Warrants) NRP redeemed **128,333 preferred units** for **$128.3 million** in cash during H1 2023, reducing outstanding preferred units to **121,667**, with **3.0 million** warrants remaining - In February, May, and June 2023, NRP redeemed a total of **128,333 Class A Preferred Units** for **$128.3 million** in cash[47](index=47&type=chunk) - As of June 30, 2023, **121,667 Class A Preferred Units** remain outstanding, down from **250,000** at December 31, 2022[47](index=47&type=chunk)[48](index=48&type=chunk) - **3.0 million warrants** to purchase common units remain outstanding with a carrying value of **$48.0 million**[49](index=49&type=chunk) [Note 4. Common and Preferred Unit Distributions](index=15&type=section&id=Note%204.%20Common%20and%20Preferred%20Unit%20Distributions) The Partnership declared common unit distributions of **$0.75** per unit and a special distribution of **$2.43** per unit, alongside preferred unit distributions, impacting net income | Distribution Type | Period Covered | Distribution per Unit | Total Distribution (in thousands) | | :---------------- | :------------- | :-------------------- | :-------------------------------- | | Common Units | Oct 1 - Dec 31, 2022 | $0.75 | $9,571 | | Common Units | Special Distribution | $2.43 | $31,329 | | Common Units | Jan 1 - Mar 31, 2023 | $0.75 | $9,669 | | Preferred Units | Oct 1 - Dec 31, 2022 | $30.00 | $7,500 | | Preferred Units | Jan 1 - Feb 8, 2023 | $12.33 | $586 | | Preferred Units | Jan 1 - Mar 31, 2023 | $30.00 | $6,075 | | Preferred Units | April 1 - May 5, 2023 | $11.33 | $406 | | Preferred Units | April 1 - June 2, 2023 | $20.33 | $915 | - Net income available to common unitholders and the general partner was reduced by **$27.6 million** and **$43.8 million** during the three and six months ended June 30, 2023, respectively, due to preferred unit redemptions[53](index=53&type=chunk) [Note 5. Net Income Per Common Unit](index=16&type=section&id=Note%205.%20Net%20Income%20Per%20Common%20Unit) Basic net income per common unit decreased to **$2.93** for Q2 2023 and **$7.32** for the six months, with diluted EPS also declining due to preferred unit redemptions | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Basic Net Income per Common Unit | $2.93 | $4.65 | (37.0%) | $7.32 | $9.10 | (19.6%) | | Diluted Net Income per Common Unit | $2.49 | $3.29 | (24.3%) | $5.96 | $6.50 | (8.3%) | | Weighted Average Common Units—Basic | 12,635 | 12,506 | 1.0% | 12,603 | 12,461 | 1.1% | | Weighted Average Common Units—Diluted | 16,316 | 19,913 | (18.1%) | 17,064 | 19,696 | (13.4%) | - The calculation of diluted net income per common unit for the three and six months ended June 30, 2023, includes the assumed conversion of remaining preferred units, but excludes redeemed units as their inclusion would be anti-dilutive[58](index=58&type=chunk) [Note 6. Segment Information](index=17&type=section&id=Note%206.%20Segment%20Information) The Partnership's Mineral Rights segment saw decreased revenues and net income, while the Soda Ash segment experienced significant revenue and net income growth for both periods - Mineral Rights segment focuses on owning, managing, and leasing mineral properties, including coal and other natural resources, with a strategic shift towards carbon sequestration and renewable energy[61](index=61&type=chunk) - Soda Ash segment consists of a **49% non-controlling equity interest** in Sisecam Wyoming, a trona ore mining and soda ash production business[62](index=62&type=chunk) | Segment Financials (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Mineral Rights Revenues | $64,277 | $84,945 | (24.3%) | $144,146 | $159,824 | (9.8%) | | Mineral Rights Net Income (Loss) | $52,510 | $69,408 | (24.4%) | $121,391 | $132,375 | (8.3%) | | Soda Ash Revenues | $26,978 | $14,643 | 84.2% | $46,232 | $29,480 | 56.8% | | Soda Ash Net Income (Loss) | $26,964 | $14,620 | 84.4% | $46,060 | $29,406 | 56.6% | [Note 7. Equity Investment](index=19&type=section&id=Note%207.%20Equity%20Investment) The Partnership's **49%** equity investment in Sisecam Wyoming decreased to **$290.9 million** from **$306.5 million**, reflecting income allocation, amortization, and distributions, despite Sisecam Wyoming's strong sales and income growth | Sisecam Wyoming Financials (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | YoY Change | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | YoY Change | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Net Sales | $201,365 | $189,068 | 6.5% | $408,493 | $352,505 | 15.9% | | Gross Profit | $64,554 | $40,279 | 60.3% | $113,609 | $80,044 | 41.9% | | Net Income | $57,574 | $32,253 | 78.5% | $99,134 | $65,039 | 52.4% | | Equity Investment Activity (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | $306,470 | $276,004 | | Income allocation to NRP's equity interests | $48,576 | $31,869 | | Distribution | $(43,130) | $(23,716) | | Balance at end of period | $290,900 | $280,300 | [Note 8. Mineral Rights, Net](index=19&type=section&id=Note%208.%20Mineral%20Rights%2C%20Net) The net book value of mineral rights decreased slightly to **$404.7 million** from **$412.3 million**, primarily due to depletion expense, with immaterial impairment expenses recorded | Mineral Rights (in thousands) | June 30, 2023 Net Book Value | December 31, 2022 Net Book Value | Change | | :---------------------------- | :--------------------------- | :------------------------------- | :----- | | Coal properties | $385,658 | $392,775 | $(7,117) | | Aggregates properties | $5,037 | $5,245 | $(208) | | Oil and gas royalty properties | $2,513 | $2,754 | $(241) | | Other | $11,533 | $11,538 | $(5) | | Total mineral rights, net | $404,741 | $412,312 | $(7,571) | - Depletion expense related to mineral rights totaled **$3.6 million** and **$5.4 million** for the three months ended June 30, 2023 and 2022, respectively, and **$7.5 million** and **$9.1 million** for the six months ended June 30, 2023 and 2022, respectively[69](index=69&type=chunk) [Note 9. Debt, Net](index=20&type=section&id=Note%209.%20Debt%2C%20Net) Total debt, net, increased to **$182.4 million** from **$168.3 million**, driven by increased Opco Credit Facility borrowings, partially offset by Opco Senior Notes payments, with the Partnership remaining compliant with covenants | Debt (in thousands) | June 30, 2023 | December 31, 2022 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Opco Credit Facility | $103,034 | $70,000 | $33,034 | | Total Opco Senior Notes | $80,025 | $99,087 | $(19,062) | | Total debt at face value | $183,059 | $169,087 | $13,972 | | Total debt, net | $182,436 | $168,281 | $14,155 | - In May 2023, the Opco Credit Facility was amended, increasing lender commitments from **$130.0 million** to **$155.0 million**[73](index=73&type=chunk) - The Partnership borrowed **$165.0 million** and repaid **$132.0 million** under the Opco Credit Facility during the six months ended June 30, 2023, resulting in **$103.0 million** outstanding[73](index=73&type=chunk) [Note 10. Fair Value Measurements](index=22&type=section&id=Note%2010.%20Fair%20Value%20Measurements) The Partnership measures financial assets and liabilities at fair value, with Opco Senior Notes estimated by present value replacement and Opco Credit Facility approximating carrying value; embedded derivatives had zero value | Financial Instrument (in thousands) | June 30, 2023 Carrying Value | June 30, 2023 Estimated Fair Value | December 31, 2022 Carrying Value | December 31, 2022 Estimated Fair Value | | :---------------------------------- | :--------------------------- | :--------------------------------- | :------------------------------- | :------------------------------------- | | Opco Senior Notes | $79,402 | $75,848 | $98,281 | $96,060 | | Opco Credit Facility | $103,034 | $103,034 | $70,000 | $70,000 | | Contract receivable, net | $30,182 | $25,254 | $31,371 | $24,833 | - Embedded derivatives in the preferred units related to conversion options, redemption features, and change of control provisions had **zero value** as of June 30, 2023, and December 31, 2022[80](index=80&type=chunk) [Note 11. Related Party Transactions](index=22&type=section&id=Note%2011.%20Related%20Party%20Transactions) The Partnership reimburses general partner affiliates for employee management and overhead, recorded as operating and maintenance, and general and administrative expenses, with overriding royalty expense also impacting operations | Related Party Expense (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating and maintenance expenses | $1,712 | $1,698 | $3,431 | $3,357 | | General and administrative expenses | $1,253 | $1,225 | $2,573 | $2,465 | - Overriding royalty expense related to an agreement with WPPLP was **$2.0 million** and **$2.7 million** for the three months ended June 30, 2023 and 2022, respectively, and **$4.0 million** and **$4.3 million** for the six months ended June 30, 2023 and 2022, respectively[84](index=84&type=chunk) [Note 12. Major Customers](index=24&type=section&id=Note%2012.%20Major%20Customers) Alpha Metallurgical Resources, Inc. and Foresight Energy Resources LLC were major customers, contributing significant portions of total revenues within the Mineral Rights segment | Major Customer | 3 Months Ended June 30, 2023 Revenues (in thousands) | 3 Months Ended June 30, 2023 Percent | 6 Months Ended June 30, 2023 Revenues (in thousands) | 6 Months Ended June 30, 2023 Percent | | :------------- | :--------------------------------------------------- | :----------------------------------- | :--------------------------------------------------- | :----------------------------------- | | Alpha Metallurgical Resources, Inc. | $19,685 | 22% | $43,903 | 23% | | Foresight Energy Resources LLC | $12,324 | 14% | $24,853 | 13% | [Note 13. Commitments and Contingencies](index=24&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) Management believes current legal proceedings will not materially affect the Partnership's financial position, liquidity, or operations - Management believes that current legal proceedings will not materially affect the Partnership's financial position, liquidity, or operations[87](index=87&type=chunk) [Note 14. Unit-Based Compensation](index=24&type=section&id=Note%2014.%20Unit-Based%20Compensation) Total unit-based compensation expense increased to **$2.6 million** for Q2 2023 and **$5.1 million** for the six months, with **$18.2 million** in unamortized cost remaining | Unit-Based Compensation Expense (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total unit-based compensation expense | $2,600 | $1,300 | $5,100 | $2,800 | - The unamortized cost associated with unvested outstanding awards as of June 30, 2023, is **$18.2 million**, to be recognized over a weighted average period of **2.3 years**[88](index=88&type=chunk) [Note 15. Financing Transaction](index=25&type=section&id=Note%2015.%20Financing%20Transaction) The Partnership leases rail loadout and infrastructure at the Sugar Camp mine, accounted for as a financing transaction, with the lease expiring in 2032 and including minimum annual payments of **$5.0 million** - The Sugar Camp lease, accounted for as a financing transaction, expires in **2032** with renewal options for up to **80 additional years**[90](index=90&type=chunk) - Minimum payments are **$5.0 million** per year, plus variable throughput fees based on coal transported and processed[90](index=90&type=chunk) [Note 16. Credit Losses](index=25&type=section&id=Note%2016.%20Credit%20Losses) The Partnership maintains a CECL allowance for receivables, recording a **$0.2 million** reversal in operating and maintenance expenses for Q2 2023 | CECL Allowance (in thousands) | June 30, 2023 Gross | June 30, 2023 Allowance | June 30, 2023 Net | December 31, 2022 Gross | December 31, 2022 Allowance | December 31, 2022 Net | | :---------------------------- | :------------------ | :-------------------- | :---------------- | :---------------------- | :-------------------------- | :-------------------- | | Receivables | $42,974 | $(3,699) | $39,275 | $47,237 | $(4,461) | $42,776 | | Long-term contract receivable | $28,652 | $(993) | $27,659 | $29,984 | $(1,038) | $28,946 | | Total | $71,626 | $(4,692) | $66,934 | $77,221 | $(5,499) | $71,722 | - NRP recorded a reversal of **$0.2 million** in operating and maintenance expenses related to the change in the CECL allowance for the three months ended June 30, 2023[92](index=92&type=chunk) [Note 17. Subsequent Events](index=25&type=section&id=Note%2017.%20Subsequent%20Events) In August 2023, the Board declared a common unit distribution of **$0.75** per unit for Q2 2023 and a **$3.7 million** cash distribution on preferred units - In August 2023, the Board of Directors declared a distribution of **$0.75** per common unit for Q2 2023[94](index=94&type=chunk) - A **$3.7 million** cash distribution on outstanding preferred units was also declared for Q2 2023[94](index=94&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Partnership's financial performance, liquidity, and capital resources, including segment results and non-GAAP measures [Introduction](index=26&type=section&id=Introduction) This section provides management's discussion and analysis of the Partnership's financial condition and results of operations, to be read with the consolidated financial statements - The discussion covers the three and six month periods ended June 30, 2023 and 2022, and should be read with the Consolidated Financial Statements and Notes[95](index=95&type=chunk) [Information Regarding Forward-Looking Statements](index=26&type=section&id=Information%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements about future distributions, business strategy, and commodity prices, subject to risks that could cause actual results to differ materially - Forward-looking statements include those regarding future distributions, business strategy, liquidity, commodity prices, and regulatory changes[97](index=97&type=chunk) - Actual results could differ materially from forward-looking statements due to various risks and uncertainties[98](index=98&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the Partnership's non-GAAP financial measures, including Adjusted EBITDA, DCF, FCF, and Leverage Ratio, highlighting their supplemental nature - **Adjusted EBITDA** is defined as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments[99](index=99&type=chunk) - **Distributable Cash Flow (DCF)** represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, and return of long-term contract receivable; less maintenance capital expenditures[100](index=100&type=chunk) - **Free Cash Flow (FCF)** represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs[102](index=102&type=chunk) - **Leverage ratio** represents the outstanding principal of debt at the end of the period divided by the last twelve months' Adjusted EBITDA[103](index=103&type=chunk) [Executive Overview](index=28&type=section&id=Executive%20Overview) The Partnership is a diversified natural resource company with two operating segments: Mineral Rights and Soda Ash, with this overview summarizing financial results and market commentary - The Partnership's business is organized into two operating segments: **Mineral Rights** and **Soda Ash**[105](index=105&type=chunk) - Mineral Rights segment includes approximately **13 million acres** of mineral interests, with a strategic focus on carbon sequestration and renewable energy[105](index=105&type=chunk) - Soda Ash segment consists of a **49% non-controlling equity interest** in Sisecam Wyoming, a trona ore mining and soda ash production business[106](index=106&type=chunk) [Current Results/Market Commentary](index=28&type=section&id=Current%20Results%2FMarket%20Commentary) The Partnership generated strong operating and free cash flow for H1 2023, maintained a low leverage ratio, redeemed significant Class A Preferred Units, and declared quarterly distributions - Generated **$154.3 million** of operating cash flow and **$155.4 million** of free cash flow during the six months ended June 30, 2023[109](index=109&type=chunk) - Ended the quarter with **$62.7 million** of liquidity, including **$10.7 million** of cash and **$52.0 million** of borrowing capacity, and a leverage ratio of **0.6x**[109](index=109&type=chunk) - Redeemed **128,333 Class A Preferred Units** for **$128.3 million** in cash during the first half of 2023, leaving **121,667 units** outstanding[112](index=112&type=chunk) [Mineral Rights Business Segment](index=30&type=section&id=Mineral%20Rights%20Business%20Segment) Revenues for the Mineral Rights segment decreased by **10%** in H1 2023 due to lower coal prices, yet cash flow increased due to payment timing, as the segment explores carbon neutral opportunities - Revenues and other income decreased **$15.9 million (10%)** in the first six months of 2023, primarily due to decreased metallurgical coal sales prices[114](index=114&type=chunk) - Cash provided by operating activities and free cash flow increased **$10.4 million** and **$11.0 million**, respectively, compared to the prior year period, mainly due to the timing of minimum and royalty payments and prior year recoupments[114](index=114&type=chunk) - The Partnership is exploring opportunities for carbon neutral revenue across its land, mineral, and timber assets[116](index=116&type=chunk) [Soda Ash Business Segment](index=30&type=section&id=Soda%20Ash%20Business%20Segment) The Soda Ash segment's revenues and other income increased by **57%** in H1 2023, driven by strong demand and higher sales prices, with cash flow significantly rising due to early and higher distributions - Revenues and other income increased **$16.8 million (57%)** in the first six months of 2023, driven by strong demand in domestic and international markets and higher sales prices[117](index=117&type=chunk) - Cash provided by operating activities and free cash flow increased **$19.3 million** due to early timing and higher distribution amounts from Sisecam Wyoming[117](index=117&type=chunk) - Global soda ash prices have fallen, but Sisecam Wyoming's domestic sales prices are expected to remain strong in H2 2023 due to negotiated contracts[118](index=118&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section details the Partnership's financial performance for the three and six months ended June 30, 2023, versus 2022, analyzing changes in revenues, expenses, and non-GAAP measures [Second Quarter of 2023 and 2022 Compared](index=30&type=section&id=Second%20Quarter%20of%202023%20and%202022%20Compared) For Q2 2023, total revenues decreased by **9%** year-over-year, primarily due to the Mineral Rights segment, while net income increased by **5.2%**, with Adjusted EBITDA and cash flows also rising | Operating Segment (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Increase (Decrease) | Percentage Change | | :------------------------------- | :--------------------------- | :--------------------------- | :------------------ | :---------------- | | Mineral Rights | $64,282 | $85,290 | $(21,008) | (25)% | | Soda Ash | $26,978 | $14,643 | $12,335 | 84% | | Total | $91,260 | $99,933 | $(8,673) | (9)% | - Coal royalty revenues decreased **$15.0 million (24%)** in Q2 2023, primarily due to decreased metallurgical coal sales prices in Appalachia and lower sales volumes in the Illinois Basin[122](index=122&type=chunk) - Revenues and other income for the Soda Ash segment increased **$12.3 million (84%)** in Q2 2023, primarily due to higher sales prices driven by strong demand[124](index=124&type=chunk) | Expense Category (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Increase (Decrease) | Percentage Change | | :------------------------------ | :--------------------------- | :--------------------------- | :------------------ | :---------------- | | Total Operating Expenses | $17,434 | $20,957 | $(3,523) | (17)% | | Total Other Expenses, Net | $3,492 | $12,156 | $(8,664) | (71)% | | Adjusted EBITDA (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Increase (Decrease) | Percentage Change | | :----------------------------- | :--------------------------- | :--------------------------- | :------------------ | :---------------- | | Mineral Rights | $56,366 | $75,298 | $(18,932) | (25)% | | Soda Ash | $32,336 | $10,463 | $21,873 | 209% | | Corporate and Financing | $(5,643) | $(5,052) | $(591) | (12)% | | Total Adjusted EBITDA | $83,059 | $80,709 | $2,350 | 3% | | Cash Flow Metric (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Increase (Decrease) | | :------------------------------ | :--------------------------- | :--------------------------- | :------------------ | | Operating activities | $81,350 | $63,123 | $18,227 | | Distributable cash flow | $81,957 | $64,032 | $17,925 | | Free cash flow | $81,952 | $63,686 | $18,266 | [First Six Months of 2023 and 2022 Compared](index=35&type=section&id=First%20Six%20Months%20of%202023%20and%202022%20Compared) For H1 2023, total revenues remained stable, with net income significantly increasing due to strong Soda Ash performance and reduced expenses, despite a decline in the Mineral Rights segment | Operating Segment (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Increase (Decrease) | Percentage Change | | :------------------------------- | :--------------------------- | :--------------------------- | :------------------ | :---------------- | | Mineral Rights | $144,247 | $160,169 | $(15,922) | (10)% | | Soda Ash | $46,232 | $29,480 | $16,752 | 57% | | Total | $190,479 | $189,649 | $830 | 0% | - Coal royalty revenues decreased **$12.4 million (10%)** for the six months ended June 30, 2023, primarily due to decreased metallurgical coal sales prices in Appalachia and lower sales volumes in the Illinois Basin[133](index=133&type=chunk) - Revenues and other income for the Soda Ash segment increased **$16.8 million (57%)** for the six months ended June 30, 2023, primarily due to higher sales prices driven by strong demand[134](index=134&type=chunk) | Expense Category (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Increase (Decrease) | Percentage Change | | :------------------------------ | :--------------------------- | :--------------------------- | :------------------ | :---------------- | | Total Operating Expenses | $34,525 | $37,387 | $(2,862) | (8)% | | Total Other Expenses, Net | $6,345 | $21,543 | $(15,198) | (71)% | | Adjusted EBITDA (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Increase (Decrease) | Percentage Change | | :----------------------------- | :--------------------------- | :--------------------------- | :------------------ | :---------------- | | Mineral Rights | $129,326 | $142,152 | $(12,826) | (9)% | | Soda Ash | $42,958 | $23,642 | $19,316 | 82% | | Corporate and Financing | $(11,488) | $(9,519) | $(1,969) | (21)% | | Total Adjusted EBITDA | $160,796 | $156,275 | $4,521 | 3% | | Cash Flow Metric (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Increase (Decrease) | | :------------------------------ | :--------------------------- | :--------------------------- | :------------------ | | Operating activities | $154,250 | $115,454 | $38,796 | | Distributable cash flow | $155,554 | $116,363 | $39,191 | | Free cash flow | $155,448 | $116,017 | $39,431 | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The Partnership maintained **$62.7 million** in total liquidity with a **0.6x** leverage ratio, as operating cash flows increased significantly and financing cash flows decreased due to debt management [Current Liquidity](index=39&type=section&id=Current%20Liquidity) As of June 30, 2023, the Partnership had **$62.7 million** in total liquidity, including **$10.7 million** cash and **$52.0 million** borrowing capacity, with a leverage ratio of **0.6x** - Total liquidity was **$62.7 million** as of June 30, 2023, consisting of **$10.7 million** of cash and cash equivalents and **$52.0 million** of borrowing capacity under the Opco Credit Facility[109](index=109&type=chunk) - The leverage ratio was **0.6x** as of June 30, 2023[109](index=109&type=chunk)[142](index=142&type=chunk) [Cash Flows](index=41&type=section&id=Cash%20Flows) Cash flows from operating activities increased by **$38.8 million** to **$154.3 million**, while cash used in financing decreased by **$8.6 million** due to debt repayments and preferred unit redemptions - Cash flows provided by operating activities increased **$38.8 million** to **$154.3 million** for the six months ended June 30, 2023[143](index=143&type=chunk) - Cash used in financing activities decreased **$8.6 million** to **$183.9 million**, influenced by **$165.0 million** in new borrowings, **$132.0 million** in Opco Credit Facility repayments, **$128.3 million** in preferred unit redemptions, and **$35.3 million** in increased common unitholder distributions[144](index=144&type=chunk) [Capital Resources and Obligations](index=41&type=section&id=Capital%20Resources%20and%20Obligations) Total debt, net, increased to **$182.4 million** from **$168.3 million**, with the Partnership remaining in compliance with all financial covenants in its debt agreements | Debt (in thousands) | June 30, 2023 | December 31, 2022 | Change | | :---------------------------- | :------------ | :---------------- | :----- | | Current portion of long-term debt, net | $36,743 | $39,076 | $(2,333) | | Long-term debt, net | $145,693 | $129,205 | $16,488 | | Total debt, net | $182,436 | $168,281 | $14,155 | - The Partnership has been and continues to be in compliance with the terms of the financial covenants contained in its debt agreements[144](index=144&type=chunk) [Off-Balance Sheet Transactions](index=41&type=section&id=Off-Balance%20Sheet%20Transactions) The Partnership has no off-balance sheet arrangements with unconsolidated entities or related parties, indicating no associated off-balance sheet risks - The Partnership does not have any off-balance sheet arrangements with unconsolidated entities or related parties[145](index=145&type=chunk) [Related Party Transactions](index=41&type=section&id=Related%20Party%20Transactions) Information regarding related party transactions is incorporated by reference from Note 11 to the Consolidated Financial Statements - Information on related party transactions is incorporated by reference from Note 11[146](index=146&type=chunk) [Summary of Critical Accounting Estimates](index=41&type=section&id=Summary%20of%20Critical%20Accounting%20Estimates) There have been no significant changes to the Partnership's critical accounting estimates from those disclosed in its Annual Report on Form 10-K for 2022 - No significant changes to critical accounting estimates from the Annual Report on Form 10-K for the year ended December 31, 2022[147](index=147&type=chunk) [Recent Accounting Standards](index=41&type=section&id=Recent%20Accounting%20Standards) The Partnership does not anticipate any material effect on its financial statements from recently issued, but not yet effective, accounting standards - No material effect is expected from recently issued, but not yet effective, accounting standards[148](index=148&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Partnership is exposed to market risks primarily from commodity price fluctuations in coal and soda ash, and interest rate changes on its variable-rate debt [Commodity Price Risk](index=42&type=section&id=Commodity%20Price%20Risk) The Partnership's financial results are highly dependent on volatile coal and soda ash prices, with depressed prices potentially reducing revenues and triggering asset impairment - Revenues, operating results, financial condition, and ability to borrow funds are substantially dependent on prevailing commodity prices, particularly coal[149](index=149&type=chunk) - Historically, coal and soda ash prices have been volatile, and future depressed prices could significantly reduce revenues and potentially trigger asset impairment or debt covenant violations[149](index=149&type=chunk)[151](index=151&type=chunk) [Interest Rate Risk](index=42&type=section&id=Interest%20Rate%20Risk) The Partnership is exposed to interest rate risk through its Opco Credit Facility, where a **1%** increase would raise annual interest expense by approximately **$1.0 million** - Exposure to interest rate changes results from borrowings under the Opco Credit Facility, which is subject to variable interest rates based on SOFR[152](index=152&type=chunk) - A **1%** increase in interest rates would increase annual interest expense by approximately **$1.0 million**, assuming the **$103.0 million** outstanding at June 30, 2023, remained constant[152](index=152&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Partnership's disclosure controls were effective as of June 30, 2023, with no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=42&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that the Partnership's disclosure controls and procedures were effective as of June 30, 2023, ensuring timely and accurate financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023[153](index=153&type=chunk) - These controls provide reasonable assurance that required information is recorded, processed, summarized, and reported within specified time periods[153](index=153&type=chunk) [Changes in the Partnership's Internal Control Over Financial Reporting](index=42&type=section&id=Changes%20in%20the%20Partnership%27s%20Internal%20Control%20Over%20Financial%20Reporting) There were no material changes in the Partnership's internal control over financial reporting during the first six months of 2023 - No material changes in internal control over financial reporting occurred during the first six months of 2023[154](index=154&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=Part%20II.%20Other%20Information) [ITEM 1. LEGAL PROCEEDINGS](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The Partnership is involved in various legal proceedings in the ordinary course of business, which management believes will not materially affect its financial position - The Partnership is involved in various legal proceedings arising in the ordinary course of business[156](index=156&type=chunk) - Management believes these matters will not have a material effect on the Partnership's financial position, liquidity, or operations[156](index=156&type=chunk) [ITEM 1A. RISK FACTORS](index=43&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[157](index=157&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds during the reporting period - None[158](index=158&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[159](index=159&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There were no mine safety disclosures required for the reporting period - None[160](index=160&type=chunk) [ITEM 5. OTHER INFORMATION](index=43&type=section&id=Item%205.%20Other%20Information) No other information was required to be disclosed under this item - None[161](index=161&type=chunk) [ITEM 6. EXHIBITS](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including partnership agreements, credit facility amendments, and certifications - Includes Fifth Amended and Restated Agreement of Limited Partnership, Sixth Amendment to the Third Amended and Restated Credit Agreement, and certifications of CEO and CFO[162](index=162&type=chunk)

Financial Data and Key Metrics Changes - The company generated $73 million of free cash flow in Q1 2023, marking one of the best quarterly performances in its history [3] - Over the last 12 months, the business generated $290 million of free cash flow [3] - The leverage ratio improved to 0.5x at the end of Q1 2023, down from 4.5x two years ago [15] - The company reported $79 million in net income for Q1 2023 [32] Business Line Data and Key Metrics Changes - The Soda Ash business segment's net income increased to $19 million in Q1 2023 from $15 million in the prior year, driven by strong demand and higher sales prices [24] - Free cash flow from the Soda Ash segment decreased to $11 million in Q1 2023 from $13 million in the prior year [12] - The Mineral Rights segment generated operating cash flow of $74 million and net income of $69 million in Q1 2023 [32] Market Data and Key Metrics Changes - Demand for soda ash continued to exceed new capacity, keeping international prices near record levels [4] - Metallurgical coal prices remained volatile but were strong relative to historical levels, although they have declined from record highs [22] - Thermal coal prices have weakened due to warm weather impacting electricity demand, but the supply-demand balance is expected to support pricing at relatively high levels [31] Company Strategy and Development Direction - The company aims to become debt-free and redeem all preferred equity to maximize future free cash flow for common unitholders [3] - There is a commitment to address climate change by utilizing land and mineral assets for carbon reduction initiatives, including new solar leases and CO2 sequestration projects [16] - The company is focused on identifying opportunities on its acreage to provide environmental benefits and capitalize on the transitional energy economy [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the Soda Ash business due to its low-cost position and positive demand characteristics [4] - The supply-demand balance for metallurgical coal is expected to remain well supported due to a lack of industry investment in new supply [22] - Management acknowledged the volatility in thermal coal demand but believes constraints on supply will support pricing [31] Other Important Information - The company redeemed $47.5 million of its preferred equity in February 2023, reducing annual distributions by $6 million [18] - A cash distribution of $0.75 per common unit was announced for Q1 2023, along with a $6.1 million distribution to preferred unitholders [13][25] Q&A Session Summary - There were no questions during the Q&A session [26]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Natural Resource Partners L.P.'s unaudited consolidated financial statements for Q1 2023, including balance sheets, income, and cash flow [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets were $835.7 million, a decrease from $877.1 million at the end of 2022, primarily due to a reduction in cash and cash equivalents Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$835,668** | **$877,131** | | Cash and cash equivalents | $17,655 | $39,091 | | Mineral rights, net | $408,371 | $412,312 | | Equity in unconsolidated investment | $295,361 | $306,470 | | **Total Liabilities** | **$231,453** | **$235,087** | | Current portion of long-term debt, net | $39,055 | $39,076 | | Long-term debt, net | $133,821 | $129,205 | | **Total Partners' Capital** | **$470,899** | **$477,457** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For Q1 2023, net income significantly increased to $79.3 million from $63.9 million in Q1 2022, driven by higher revenues and lower interest expense Q1 Performance Comparison (in thousands, except per unit data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Royalty and other mineral rights | $76,271 | $71,083 | | Total revenues and other income | $99,219 | $89,716 | | Income from operations | $82,128 | $73,286 | | Interest expense, net | $(2,853) | $(9,387) | | **Net income** | **$79,275** | **$63,899** | | Net income attributable to common unitholders | $55,258 | $55,271 | | Basic net income per common unit | $4.40 | $4.45 | | Diluted net income per common unit | $3.44 | $3.11 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to $72.9 million in Q1 2023, while net cash used in financing activities rose sharply to $95.0 million due to distributions, debt repayments, and preferred unit redemption Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $72,900 | $52,331 | | Net cash provided by investing activities | $697 | $0 | | Net cash used in financing activities | $(95,033) | $(52,261) | | **Net (decrease) increase in cash** | **$(21,436)** | **$70** | - Key financing activities in Q1 2023 included **$94.2 million** in debt borrowings, **$89.7 million** in debt repayments, **$40.9 million** in distributions to common unitholders, and **$48.1 million** for the redemption of preferred units[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information supporting the financial statements, including business nature, revenue recognition, preferred units, and subsequent events - The Partnership's business consists of owning, managing, and leasing a diversified portfolio of mineral properties and a **49% non-controlling interest** in Sisecam Wyoming, a soda ash production business[22](index=22&type=chunk) - In February 2023, the Partnership redeemed **47,499 Class A Preferred Units** for **$47.5 million** in cash, leaving **202,501 units** outstanding[45](index=45&type=chunk) - In May 2023, subsequent to the quarter end, the Board of Directors declared a common unit distribution of **$0.75 per unit** and a **$6.1 million** cash distribution on preferred units for Q1 2023[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial results, covering segment performance, liquidity, capital resources, and non-GAAP measures [Executive Overview and Current Results](index=26&type=section&id=Executive%20Overview%20and%20Current%20Results) The company generated $72.9 million in operating cash flow and ended Q1 2023 with $56.5 million in liquidity, achieving a 0.5x leverage ratio Q1 2023 Financial Highlights | Metric | Value | | :--- | :--- | | Operating Cash Flow | $72.9 million | | Free Cash Flow | $73.5 million | | Quarter-End Liquidity | $56.5 million | | Leverage Ratio | 0.5x | - In March 2023, a special cash distribution of **$2.43 per common unit** was paid to help cover unitholder tax liabilities associated with 2022 performance[110](index=110&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Total revenues increased 11% year-over-year to $99.2 million in Q1 2023, with net income rising to $79.3 million primarily due to lower interest expense Segment Revenue and Other Income (in thousands) | Operating Segment | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Mineral Rights | $79,965 | $74,879 | 7% | | Soda Ash | $19,254 | $14,837 | 30% | | **Total** | **$99,219** | **$89,716** | **11%** | - Approximately **75%** of coal royalty revenues were derived from metallurgical coal in Q1 2023[121](index=121&type=chunk) - Carbon neutral initiative revenues were **$2.1 million** in Q1 2023, primarily from a subsurface CO2 storage transaction[121](index=121&type=chunk) - Adjusted EBITDA increased to **$77.7 million** in Q1 2023 from **$75.6 million** in Q1 2022[126](index=126&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, the Partnership had $56.5 million in liquidity and a 0.5x leverage ratio, with cash flow from operations increasing by $20.6 million year-over-year Leverage Ratio Calculation (as of March 31, 2023) | Metric | Value (in thousands) | | :--- | :--- | | Debt at March 31, 2023 | $173,591 | | Last 12 Months Adjusted EBITDA | $319,418 | | **Leverage Ratio** | **0.5x** | - Cash flows used in financing activities increased by **$42.8 million** year-over-year, primarily due to a **$73.0 million** repayment on the Opco Credit Facility, a **$48.1 million** redemption of preferred units, and a **$35.2 million** increase in common unit distributions[133](index=133&type=chunk)[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include commodity price volatility for coal and soda ash, and interest rate risk on its variable-rate debt - The company's revenues and financial condition depend substantially on prevailing commodity prices for coal and soda ash, which have been historically volatile[139](index=139&type=chunk)[141](index=141&type=chunk) - The company is exposed to interest rate risk through its Opco Credit Facility; a hypothetical **1% increase** in interest rates would raise annual interest expense by about **$0.9 million** on the **$91.2 million** outstanding balance as of March 31, 2023[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures are effective in providing reasonable assurance that required information is recorded, processed, and reported in a timely manner[143](index=143&type=chunk) - There were no material changes in the Partnership's internal control over financial reporting during the first quarter of 2023[144](index=144&type=chunk) [Part II. Other Information](index=36&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings that management does not believe will materially affect its financial position, liquidity, or operations - The company is involved in ordinary course legal proceedings that are not expected to have a material impact[146](index=146&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K were reported - No material changes from the risk factors disclosed in the 2022 Form 10-K were reported[147](index=147&type=chunk) [Other Items (Items 2, 3, 4, 5)](index=36&type=section&id=Other%20Items) The report indicates no unregistered sales of equity securities, no defaults upon senior securities, no mine safety disclosures, and no other information to report - The company reported 'None' for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, CEO and CFO certifications, and interactive data files

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K For the fiscal year ended December 31, 2022 or | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Units representing limited partner interests | NRP | New York Stock Exchange | ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ...

Natural Resource Partners L.P. (NYSE:NRP) Q4 2022 Earnings Conference Call March 2, 2023 9:00 AM ET Company Participants Tiffany Sammis - IR Craig Nunez - President and COO Chris Zolas - CFO Conference Call Participants Operator Good morning. My name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Natural Resource Partners L.P. Fourth Quarter and Full Year 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. ...

Natural Resource Partners L.P. (NYSE:NRP) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Tiffany Sammis - Investor Relations Craig Nunez - President and Chief Operating Officer Christopher Zolas - Chief Financial Officer Kevin Craig - Executive Vice President Conference Call Participants George Burmann - CL Securities Mark Zand - Wexford Capital Operator Good morning. My name is Gina, I will be your conference operator today. At this time, I would like to welcome everyone ...