UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-31465 NATURAL RESOURCE PARTNERS L.P. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 35-21648 ...

Natural Resource Partners L.P. (NYSE:NRP) Q1 2020 Results Earnings Conference Call May 11, 2020 9:00 AM ET Company Participants Tiffany Sammis - Manager of Investor Relations Craig Nunez - President, Chief Operating Officer Chris Zolas - Chief Financial Officer, Treasurer Kevin Craig - Executive Vice President of Coal Conference Call Participants Mark Levin - Benchmark Company Operator Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Natural Resource Partners L.P. first quart ...

PART I [Business and Properties](index=4&type=section&id=Items%201.%20and%202.%20Business%20and%20Properties) Natural Resource Partners L.P. manages diversified mineral properties and a 49% equity interest in a soda ash business, operating through two segments - Natural Resource Partners L.P., formed in 2002, is a publicly traded Delaware limited partnership owning, managing, and leasing a diversified portfolio of mineral properties (coal, other natural resources) and a **49% non-controlling interest** in Ciner Wyoming LLC (trona ore mining and soda ash production)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) Segment Revenue (2019, In thousands) | Segment | Amount (In thousands) | % of Total | | :-------------------- | :-------------------- | :--------- | | Coal Royalty and Other | $216,846 | 82% | | Soda Ash | $47,089 | 18% | | **Total** | **$263,935** | **100%** | - The Coal Royalty and Other segment leases reserves to experienced mine operators under long-term leases, with royalty payments based on a percentage of sale price or fixed rate per ton, often including minimum payments, limiting direct exposure to environmental, permitting, and labor risks[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) Coal Reserves by Region (as of Dec 31, 2019, Tons in thousands) | Region | Underground (Tons in thousands) | Surface (Tons in thousands) | Total (Tons in thousands) | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Appalachia Basin | 1,080,001 | 265,204 | 1,345,205 | | Illinois Basin | 299,818 | 5,074 | 304,892 | | Northern Powder River Basin | — | 163,555 | 163,555 | | Gulf Coast | — | 1,957 | 1,957 | | **Total** | **1,379,819** | **435,790** | **1,815,609** | Coal Sales Volumes by Region (Year Ended Dec 31, 2019, Tons in thousands) | Region | Thermal (Tons in thousands) | Metallurgical (Tons in thousands) | Total (Tons in thousands) | | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Appalachia Basin | 6,368 | 12,139 | 18,507 | | Illinois Basin | 2,201 | — | 2,201 | | Northern Powder River Basin | 3,036 | — | 3,036 | | **Total** | **11,605** | **12,139** | **23,744** | - The Soda Ash segment's **49% equity interest** in Ciner Wyoming, a trona ore mining and soda ash production business, makes it one of the largest and lowest-cost producers globally[63](index=63&type=chunk)[64](index=64&type=chunk) - Ciner Wyoming is undertaking a significant capacity expansion project to increase production to **3.5 million tons/year**, which will be partly funded by reinvesting cash, leading to reduced distributions to partners (expected **$25 million to $28 million annually**) until the project is funded[74](index=74&type=chunk) - The company faces significant customer concentration, with Foresight Energy and its subsidiaries accounting for **$58.9 million** and Contura Energy for **$40.7 million** in total revenues in 2019[75](index=75&type=chunk) - Operations are subject to extensive federal, state, and local environmental, health, and safety regulations, including those related to air emissions (Clean Air Act, GHG emissions), water discharges (Clean Water Act), and mine safety[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[91](index=91&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk) - Compliance costs are significant, and new regulations or legal challenges could adversely impact coal demand and operational costs[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[91](index=91&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The partnership faces significant risks from volatile commodity prices, high leverage, operational challenges, environmental regulations, and structural issues - Cash distributions are not guaranteed and may fluctuate, with debt agreements and the partnership agreement restricting the ability to increase distributions[104](index=104&type=chunk)[105](index=105&type=chunk) - The company's significant leverage (**$524.1 million** total indebtedness as of December 31, 2019) and debt service obligations could adversely affect its financial condition and limit operational flexibility[107](index=107&type=chunk) - Prices for both metallurgical and thermal coal are volatile and depend on factors beyond the company's control, including supply/demand, regulations, and alternative fuels, with declines potentially leading to asset impairments[109](index=109&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - The company derives a large percentage of revenues from a small number of coal lessees (e.g., Foresight Energy, Contura Energy), making it vulnerable to interruptions in their ability to make royalty payments or to their bankruptcies and mine closures[115](index=115&type=chunk)[116](index=116&type=chunk) - Mining operations are subject to various operating risks (e.g., permitting delays, equipment failures, transportation disruptions, adverse weather, labor issues, safety incidents) that could result in lower revenues, while increased regulatory compliance costs, insurance, and permitting expenses also impact profitability[117](index=117&type=chunk)[119](index=119&type=chunk) - Climate change legislation and regulations, including those restricting greenhouse gas emissions, have led to and will continue to lead to changes in fuel consumption patterns by electric power generators, reducing coal demand and related revenues[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Concerns about environmental impacts also affect lending and investment policies, potentially limiting capital access and increasing insurance costs[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Prices for soda ash are volatile, directly affecting Ciner Wyoming's profitability, and high natural gas prices increase production costs, impacting competitiveness[126](index=126&type=chunk)[131](index=131&type=chunk) - The planned termination of ANSAC membership could adversely affect Ciner Wyoming's ability to compete internationally and increase sales costs[126](index=126&type=chunk)[131](index=131&type=chunk) - Significant delays or higher-than-expected costs associated with Ciner Wyoming's capacity expansion project could adversely affect its profitability and ability to make distributions, with the depletion of deca stockpiles by **2023** further impacting production rates without this expansion[132](index=132&type=chunk) - Unitholders have limited ability to remove the general partner due to high voting thresholds and substantial ownership by the general partner and preferred unitholders[143](index=143&type=chunk)[144](index=144&type=chunk) - The preferred units are senior in distributions and liquidation, and their conversion could result in substantial dilution of common unitholders' ownership interests[146](index=146&type=chunk)[147](index=147&type=chunk) - The company's tax treatment as a partnership for U.S. federal income tax purposes is critical; if treated as a corporation, cash available for distribution would be substantially reduced[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Unitholders are required to pay taxes on their share of income even if they receive no cash distributions, and certain transactions to reduce indebtedness may generate taxable income without corresponding cash distributions[165](index=165&type=chunk)[167](index=167&type=chunk) [Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments are reported - No unresolved staff comments[183](index=183&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with a significant 2017 Anadarko lawsuit concluding in its favor in 2019 with no liability - The company is involved in various legal proceedings in the ordinary course of business, which management believes will not have a material effect on its financial position, liquidity, or operations[185](index=185&type=chunk) - A lawsuit filed by Anadarko in July 2017 alleged that a 2013 internal restructuring triggered an acceleration of a contingent consideration payment obligation (up to **$50 million**) related to the acquisition of an interest in OCI Wyoming, L.P[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - In November 2019, the trial court ruled in the company's favor, concluding the case with no liability[190](index=190&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures are reported - No mine safety disclosures[191](index=191&type=chunk) PART II [Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Unitholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NRP common units trade on the NYSE, with 13,180 holders and 613,018 units available under the 2017 Long-Term Incentive Plan - Common units are listed and traded on the NYSE under the symbol "NRP" As of February 10, 2020, there were approximately **13,180 beneficial and registered holders**[194](index=194&type=chunk) Securities Authorized for Issuance under Equity Compensation Plans (as of Dec 31, 2019) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------- | :-------------------------------------------------------------------- | :-------------------------------------------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | — | — | 613,018 | | Equity compensation plans not approved by security holders | n/a | n/a | n/a | | **Total** | **—** | **—** | **613,018** | - As of December 31, 2019, **157,789 phantom units** were outstanding under the 2017 Long-Term Incentive Plan, each representing the right to receive one common unit[196](index=196&type=chunk) [Selected Financial Data](index=42&type=section&id=Item%206.%20Selected%20Financial%20Data) This section summarizes five-year financial data and reconciles non-GAAP measures, showing a net loss and decreased cash flow in 2019 Selected Historical Financial Data (2015-2019, In thousands, except per unit data) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :---------------------------------------- | :----- | :----- | :----- | :----- | :----- | | Total revenues and other income | $263,935 | $278,512 | $246,325 | $279,244 | $300,635 | | Asset impairments | $148,214 | $18,280 | $2,967 | $15,861 | $378,327 | | Income (loss) from operations | $51,321 | $192,538 | $176,559 | $181,157 | $(170,699) | | Net income (loss) from continuing operations | $(25,414) | $122,360 | $82,485 | $90,626 | $(260,443) | | Net income (loss) | $(24,458) | $140,047 | $88,667 | $96,892 | $(571,720) | | Basic Net income (loss) per common unit | $(4.35) | $8.77 | $5.06 | $7.78 | $(45.75) | | Diluted Net income (loss) per common unit | $(4.35) | $6.76 | $3.96 | $7.78 | $(45.75) | | Distributions paid per common unit | $2.65 | $1.80 | $1.80 | $1.80 | $2.70 | | Net cash provided by operating activities of continuing operations | $137,319 | $178,282 | $112,151 | $80,243 | $144,907 | | Total assets | $1,085,907 | $1,341,647 | $1,389,164 | $1,448,649 | $1,674,865 | | Total debt, net | $516,198 | $672,758 | $809,348 | $1,130,271 | $1,211,441 | - The company uses non-GAAP financial measures such as Distributable Cash Flow (DCF), Free Cash Flow (FCF), and Adjusted EBITDA to assess its ability to make cash distributions, repay debt, and evaluate financial performance[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[206](index=206&type=chunk) Reconciliation of Net Cash Provided by Operating Activities to DCF, FCF, and Cash Flow Cushion (2015-2019, In thousands) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :------------------------------------------------ | :----- | :----- | :----- | :----- | :----- | | Net cash provided by operating activities of continuing operations | $137,319 | $178,282 | $112,151 | $80,243 | $144,907 | | **Distributable cash flow** | **$144,933** | **$383,980** | **$121,958** | **$255,172** | **$157,815** | | **Free cash flow** | **$139,040** | **$183,440** | **$121,324** | **$75,970** | **$144,210** | | **Cash flow cushion** | **$7,762** | **$16,080** | **$9,248** | **$(29,444)** | **$(8,339)** | Reconciliation of Net Income (Loss) from Continuing Operations to Adjusted EBITDA (2015-2019, In thousands) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :------------------------------------------------ | :----- | :----- | :----- | :----- | :----- | | Net income (loss) from continuing operations | $(25,414) | $122,360 | $82,485 | $90,626 | $(260,443) | | **Adjusted EBITDA** | **$199,228** | **$230,241** | **$211,483** | **$235,273** | **$240,553** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2019 financial performance, highlighting a 5% revenue decrease, increased operating expenses, and reduced cash flow, while prioritizing balance sheet strength - The company's executive overview highlights its diversified natural resource portfolio and **49% non-controlling interest** in Ciner Wyoming, with a key objective of strengthening the balance sheet and maintaining liquidity amidst commodity price volatility[210](index=210&type=chunk)[213](index=213&type=chunk) 2019 Financial Results by Segment (In thousands) | Metric | Coal Royalty and Other | Soda Ash | Corporate and Financing | Total | | :------------------------------------------------ | :--------------------- | :------- | :---------------------- | :------ | | Revenues and other income | $216,846 | $47,089 | $— | $263,935 | | Net income (loss) from continuing operations | $21,211 | $46,840 | $(93,465) | $(25,414) | | Asset impairments | 148,214 | — | — | 148,214 | | Adjusted EBITDA | $184,357 | $31,601 | $(16,730) | $199,228 | | Distributable cash flow | $187,106 | $31,601 | $(73,145) | $144,933 | | Free cash flow | $180,584 | $31,601 | $(73,145) | $139,040 | | Cash flow cushion | N/A | N/A | N/A | $7,762 | - The Coal Royalty and Other segment experienced weakened coal markets and lower activity in the second half of 2019, with sales volumes decreasing **12% year-over-year**[215](index=215&type=chunk)[216](index=216&type=chunk) - Four lessees filed for bankruptcy in 2019, and Foresight Energy (the largest lessee) is evaluating restructuring options, posing ongoing challenges[217](index=217&type=chunk)[223](index=223&type=chunk) - The Soda Ash segment's performance is stable, but Ciner Wyoming's significant capacity expansion project will reduce cash distributions to partners (expected **$25 million to $28 million annually**) until funded, impacting near-term cash flow[218](index=218&type=chunk)[219](index=219&type=chunk) - Total revenues and other income decreased by **$14.6 million (5%)** in 2019 compared to 2018, driven by a **$19.7 million** decrease in coal royalty revenues and the absence of a **$25.0 million** litigation settlement gain from 2018[221](index=221&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - This decrease was partially offset by a **$31.9 million** increase in other revenues, primarily from production lease minimums and minimum lease straight-line revenues[228](index=228&type=chunk) - Total operating expenses increased by **$126.6 million (147%)** in 2019, primarily due to a **$129.9 million** increase in asset impairments, reflecting deterioration in thermal coal markets and lessee capital constraints[229](index=229&type=chunk)[230](index=230&type=chunk) - Interest expense, net, decreased by **$22.7 million (32%)** due to lower debt balances[229](index=229&type=chunk)[230](index=230&type=chunk] - Distributable Cash Flow (DCF) and Free Cash Flow (FCF) decreased by **$239.0 million** and **$44.4 million**, respectively, in 2019, largely due to lower cash distributions from Ciner Wyoming and the absence of a one-time litigation settlement payment received in 2018[235](index=235&type=chunk)[237](index=237&type=chunk) - Cash flow cushion decreased by **$8.3 million**[235](index=235&type=chunk)[237](index=237&type=chunk) - As of December 31, 2019, total liquidity was **$198.3 million** (**$98.3 million** cash and **$100.0 million** borrowing capacity)[239](index=239&type=chunk)[240](index=240&type=chunk) - Cash flows from operating activities decreased **$51.6 million**, while cash flows used in financing activities increased **$49.3 million**, primarily due to the redemption of 2022 Senior Notes and issuance of 2025 Senior Notes[242](index=242&type=chunk) Long-Term Contractual Obligations (as of Dec 31, 2019, In thousands) | Contractual Obligations | Total | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | | :------------------------------------------------ | :----- | :----- | :----- | :----- | :----- | :----- | :--------- | | NRP: Long-term debt principal payments | $300,000 | $— | $— | $— | $— | $— | $300,000 | | NRP: Long-term debt interest payments | $150,563 | $27,375 | $27,375 | $27,375 | $27,375 | $27,375 | $13,688 | | Opco: Long-term debt principal payments | $224,056 | $46,176 | $39,396 | $39,396 | $39,396 | $31,028 | $28,664 | | Opco: Long-term debt interest payments | $39,865 | $12,447 | $9,868 | $7,631 | $5,020 | $2,724 | $2,175 | | Rental leases | $14,012 | $483 | $483 | $483 | $483 | $483 | $11,597 | | **Total** | **$728,496** | **$86,481** | **$77,122** | **$74,885** | **$72,274** | **$61,610** | **$356,124** | [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from volatile coal and soda ash prices, impacting revenues and profitability, and interest rate fluctuations on variable-rate borrowings - The company's revenues and financial results are substantially dependent on prevailing commodity prices, particularly for coal, which has historically been volatile, with depressed prices potentially reducing revenues or triggering asset impairments or debt covenant violations[268](index=268&type=chunk) - The market price of soda ash and energy costs directly affect the profitability of Ciner Wyoming's operations, which are also subject to historical and future volatility[270](index=270&type=chunk) - Interest rate risk primarily stems from variable-rate borrowings under the Opco Credit Facility, which is based on LIBOR, though no outstanding borrowings existed as of December 31, 2019[271](index=271&type=chunk) Fair Value of Debt and Contract Receivable (as of Dec 31, 2019, In thousands) | Metric | Fair Value Hierarchy Level | Carrying Value | Estimated Fair Value | | :-------------------------- | :------------------------- | :------------- | :------------------- | | **Debt:** | | | | | NRP 2025 Senior Notes | 1 | $294,084 | $269,250 | | Opco Senior Notes | 3 | $222,114 | $201,090 | | **Assets:** | | | | | Contract receivable (current and long-term) | 3 | $38,945 | $33,460 | [Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section provides audited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes, along with independent auditor reports - Ernst & Young LLP issued an unqualified opinion on the company's consolidated financial statements and internal control over financial reporting for the period ended December 31, 2019[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - Deloitte & Touche LLP also issued an unqualified opinion on the financial statements of Ciner Wyoming LLC[285](index=285&type=chunk) Consolidated Balance Sheets (as of Dec 31, In thousands) | Metric | 2019 | 2018 | | :-------------------------------- | :----- | :----- | | Total current assets | $132,084 | $242,543 | | Mineral rights, net | $605,096 | $743,112 | | Equity in unconsolidated investment | $263,080 | $247,051 | | Total assets | $1,085,907 | $1,341,647 | | Total current liabilities | $62,708 | $148,746 | | Long-term debt, net | $470,422 | $557,574 | | Total liabilities | $585,292 | $756,514 | | Class A Convertible Preferred Units | $164,587 | $164,587 | | Total partners' capital | $338,963 | $423,481 | | Total liabilities and capital | $1,085,907 | $1,341,647 | Consolidated Statements of Comprehensive Income (Loss) (Years Ended Dec 31, In thousands) | Metric | 2019 | 2018 | 2017 | | :------------------------------------------------ | :----- | :----- | :----- | | Total revenues and other income | $263,935 | $278,512 | $246,325 | | Total operating expenses | $212,614 | $85,974 | $69,766 | | Income from operations | $51,321 | $192,538 | $176,559 | | Net income (loss) from continuing operations | $(25,414) | $122,360 | $82,485 | | Net income (loss) | $(24,458) | $140,047 | $88,667 | | Basic net income (loss) per common unit | $(4.35) | $8.77 | $5.06 | | Diluted net income (loss) per common unit | $(4.35) | $6.76 | $3.96 | Consolidated Statements of Cash Flows (Years Ended Dec 31, In thousands) | Metric | 2019 | 2018 | 2017 | | :------------------------------------------------ | :----- | :----- | :----- | | Net cash provided by operating activities of continuing operations | $137,319 | $178,282 | $112,151 | | Net cash provided by investing activities of continuing operations | $8,221 | $7,607 | $9,807 | | Net cash used in financing activities of continuing operations | $(253,305) | $(6,839) | $(134,149) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(107,765) | $176,203 | $(10,544) | | Cash, cash equivalents and restricted cash at end of period | $98,265 | $206,030 | $29,827 | - The company adopted ASC 606 (Revenue from Contracts with Customers) effective January 1, 2018, changing revenue recognition for royalty lease arrangements, and ASC 842 (Leases) effective January 1, 2019, which had no material impact[281](index=281&type=chunk)[337](index=337&type=chunk)[340](index=340&type=chunk) - It expects a **$5 million** reduction in financial assets upon adopting ASU No. 2016-13 (Credit Losses) on January 1, 2020[281](index=281&type=chunk)[337](index=337&type=chunk)[340](index=340&type=chunk) - The company recorded **$125.9 million** in asset impairments in 2019, primarily related to coal properties and intangible assets, driven by deterioration in thermal coal markets, lessee capital constraints, and reduced cash flow expectations[398](index=398&type=chunk)[401](index=401&type=chunk) - In April 2019, the company issued **$300 million** of **9.125% senior notes** due 2025 and used the proceeds, along with cash on hand, to redeem its 2022 Senior Notes, incurring a **$29.3 million** loss on extinguishment of debt[406](index=406&type=chunk)[410](index=410&type=chunk) - Foresight Energy and Contura Energy were major customers in 2019, accounting for **22.9%** and **15.8%** of total revenues, respectively, highlighting customer concentration risk[445](index=445&type=chunk) [Changes In and Disagreements with Accountants on Accounting and Financial Disclosure](index=101&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure are reported - No changes in or disagreements with accountants on accounting and financial disclosure[476](index=476&type=chunk) [Controls and Procedures](index=101&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019 - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were effective as of December 31, 2019, at a reasonable assurance level[477](index=477&type=chunk) - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2019, based on the COSO 2013 framework, and concluded it was effective at a reasonable assurance level[478](index=478&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2019[479](index=479&type=chunk)[483](index=483&type=chunk) [Other Information](index=103&type=section&id=Item%209B.%20Other%20Information) No other information is reported in this section - No other information to report[491](index=491&type=chunk) PART III [Directors and Executive Officers of the Managing General Partner and Corporate Governance](index=110&type=section&id=Item%2010.%20Directors%20and%20Executive%20Officers%20of%20the%20Managing%20General%20Partner%20and%20Corporate%20Governance) This section details the managing general partner's directors and executive officers, their experience, and the company's corporate governance structure - The company's management is provided by executive officers and directors of GP Natural Resource Partners LLC, the managing general partner, who are employees of affiliated private companies and reimbursed by NRP[494](index=494&type=chunk)[526](index=526&type=chunk) - Key executive officers include Corbin J. Robertson, Jr. (Chairman & CEO), Craig W. Nunez (President & COO), Christopher J. Zolas (CFO & Treasurer), Kathryn S. Wilson (VP, General Counsel & Secretary), and Kevin J. Craig (EVP, Coal)[495](index=495&type=chunk)[496](index=496&type=chunk)[497](index=497&type=chunk)[498](index=498&type=chunk)[499](index=499&type=chunk) - The Board of Directors includes **five independent directors** (Messrs. Claro, Gordy, Navarre, Smith, Vecellio) as per NYSE standards[511](index=511&type=chunk)[512](index=512&type=chunk) - The Audit Committee and Compensation, Nominating and Governance (CNG) Committee are staffed solely by independent directors[520](index=520&type=chunk) - The Audit Committee, composed of Mr. Smith (Chairman), Mr. Claro, and Mr. Navarre (two of whom are Audit Committee Financial Experts), met **seven times in 2019** to oversee financial reporting and independent auditors[512](index=512&type=chunk)[513](index=513&type=chunk)[514](index=514&type=chunk)[515](index=515&type=chunk)[516](index=516&type=chunk)[517](index=517&type=chunk)[518](index=518&type=chunk)[519](index=519&type=chunk) - The CNG Committee, chaired by Mr. Vecellio, met **four times** to review and approve executive and director compensation[520](index=520&type=chunk) [Executive Compensation](index=110&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation, including base salaries, short-term cash incentives, and long-term equity awards, is detailed, with the CNG Committee aligning incentives with performance - Executive officers are employed by affiliates and reimbursed by NRP based on time allocated, with a compensation strategy aiming to retain qualified management and preserve long-term equity value, tying incentive compensation to performance[526](index=526&type=chunk)[527](index=527&type=chunk) - The CNG Committee, with input from Longnecker & Associates (L&A), found that while base salaries and short-term incentives were generally in line with peers, long-term incentive compensation was well below the peer group median, with future recommendations aiming to align long-term incentives with the peer group[531](index=531&type=chunk) - 2019 compensation for executive officers included base salaries, discretionary short-term cash incentives (based on a percentage of base salary), and long-term equity incentive awards in the form of phantom units under the 2017 Plan, vesting in February 2022 and accruing Distribution Equivalent Rights (DERs)[529](index=529&type=chunk)[535](index=535&type=chunk)[536](index=536&type=chunk) Summary Compensation Table (2019, In thousands) | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | | :---------------------------------------- | :--- | :--------- | :-------- | :--------------- | :------------------------- | :-------- | | Corbin J. Robertson, Jr.—CEO | 2019 | — | 938,868 | 1,306,222 | — | 2,245,090 | | Craig W. Nunez—President and COO | 2019 | 500,000 | 408,204 | 653,111 | 16,800 | 1,578,115 | | Christopher J. Zolas—CFO | 2019 | 355,000 | 284,000 | 492,581 | 16,800 | 1,148,381 | | Kathryn S. Wilson—VP, General Counsel & Secretary | 2019 | 340,271 | 272,217 | 507,178 | 16,128 | 1,135,794 | | Kevin J. Craig—EVP, Coal | 2019 | 310,500 | 248,400 | 434,854 | 15,120 | 1,008,874 | Grants of Plan-Based Awards in 2019 (2017 Plan Phantom Units) | Named Executive Officer | Grant Date | Number of Units | Grant Date Fair Value | | :-------------------------- | :--------- | :-------------- | :-------------------- | | Corbin J. Robertson, Jr. | 2/14/2019 | 31,498 | $1,306,222 | | Craig W. Nunez | 2/14/2019 | 15,749 | $653,111 | | Christopher J. Zolas | 2/14/2019 | 11,878 | $492,581 | | Kathryn S. Wilson | 2/14/2019 | 12,230 | $507,178 | | Kevin J. Craig | 2/14/2019 | 10,486 | $434,854 | Outstanding Equity Awards at December 31, 2019 (2017 Plan Phantom Units) | Named Executive Officer | Unvested Phantom Units | Market Value of Unvested Phantom Units | | :-------------------------- | :--------------------- | :------------------------------------- | | Corbin J. Robertson, Jr. | 45,891 | $922,868 | | Craig W. Nunez | 22,946 | $461,444 | | Christopher J. Zolas | 17,635 | $354,640 | | Kathryn S. Wilson | 17,028 | $342,433 | | Kevin J. Craig | 15,476 | $311,222 | - Upon a change in control, 2017 Plan Phantom Units held by named executive officers would immediately vest, with estimated total potential payments for these awards, including accumulated DERs, ranging from **$354,251 to $1,049,736 per executive** as of December 31, 2019[556](index=556&type=chunk)[557](index=557&type=chunk) - Directors' compensation in 2019 included a **$75,000 cash retainer** and 2017 Plan common unit awards, with committee members receiving additional fees[558](index=558&type=chunk)[559](index=559&type=chunk) - The ratio of CEO total compensation to the median service provider's total compensation in 2019 was **20:1**[566](index=566&type=chunk) [Security Ownership of Certain Beneficial Owners and Management](index=118&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management) This section details beneficial ownership of common and preferred units, highlighting major holders like Corbin J. Robertson, Jr. (19.7% common) and The Blackstone Group Inc. (57% preferred) Common Unit Ownership (as of Feb 24, 2020) | Name of Beneficial Owner | Common Units | Percentage of Common Units | | :-------------------------------- | :----------- | :------------------------- | | Corbin J. Robertson, Jr. | 2,411,395 | 19.7% | | Western Pocahontas Corporation | 1,739,007 | 14.2% | | Western Pocahontas Properties Limited Partnership | 1,727,986 | 14.1% | | JPMorgan Chase & Co. | 1,050,335 | 8.6% | | The Goldman Sachs Group, Inc. | 835,403 | 6.8% | | Directors and Officers as a Group | 3,302,305 | 26.9% | Preferred Unit Ownership (as of Feb 24, 2020) | Name of Beneficial Owner | Preferred Units | Percentage of Preferred Units | | :-------------------------------- | :-------------- | :-------------------------- | | The Blackstone Group Inc. | 142,500 | 57% | | GoldenTree Asset Management, LP | 107,500 | 43% | [Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) This section outlines related party transactions, potential conflicts of interest governed by agreements like the Omnibus Agreement, and reaffirms director independence - The Omnibus Agreement restricts GP affiliates (WPP Group and entities controlled by Corbin J. Robertson, Jr.) from engaging in certain "restricted businesses" and outlines procedures for offering such opportunities to NRP, with a total fair market value limit of **$75 million** for new restricted businesses[574](index=574&type=chunk)[575](index=575&type=chunk)[576](index=576&type=chunk)[577](index=577&type=chunk)[578](index=578&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk)[581](index=581&type=chunk)[582](index=582&type=chunk)[583](index=583&type=chunk) - The Board Representation and Observation Rights Agreement grants Blackstone the right to appoint one director and one observer, with GoldenTree having a contingent right to appoint a director or observer if Blackstone's ownership falls below a certain threshold[584](index=584&type=chunk) - A formal conflicts policy governs investment opportunities between NRP and Quintana Capital (controlled by Corbin J. Robertson, Jr.), categorizing them into "NRP Businesses," "Shared Businesses," and "Non-NRP Businesses," with specific offer procedures for each[585](index=585&type=chunk)[586](index=586&type=chunk)[587](index=587&type=chunk)[588](index=588&type=chunk) - Related party transactions in 2019 included **$0.2 million** in coal royalty revenues from Quinwood Coal Partners LP (controlled by Corbin J. Robertson, III), **$1.7 million** in coal royalty and wheelage revenues from Industrial Minerals Group LLC (minority owned by Corbin J. Robertson, III), and approximately **$0.8 million** paid for an office building lease from Western Pocahontas Properties Limited Partnership[589](index=589&type=chunk)[590](index=590&type=chunk)[591](index=591&type=chunk) - Conflicts of interest may arise between the general partner/affiliates and the partnership/limited partners, with the partnership agreement allowing the general partner to resolve these conflicts if the resolution is deemed "fair and reasonable," considering various factors, and may not always involve separate counsel for common unitholders[593](index=593&type=chunk)[594](index=594&type=chunk)[595](index=595&type=chunk)[596](index=596&type=chunk)[597](index=597&type=chunk)[598](index=598&type=chunk)[599](index=599&type=chunk)[600](index=600&type=chunk)[601](index=601&type=chunk)[602](index=602&type=chunk)[603](index=603&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk)[607](index=607&type=chunk)[608](index=608&type=chunk) [Principal Accountant Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to Ernst & Young LLP for audit and tax services, and outlines the Audit Committee's pre-approval policy to ensure auditor independence Fees for Professional Services by Ernst & Young LLP (In thousands) | Fee Type | 2019 | 2018 | | :--------------- | :----- | :----- | | Audit Fees | $1,070 | $957 | | Tax Fees | $533 | $501 | - Audit fees include services related to the annual integrated audit, subsidiary audits, quarterly reviews, SEC filings, and acquisition work[618](index=618&type=chunk) - Tax fees cover assistance with tax planning, compliance, and return preparation[618](index=618&type=chunk) - The Audit Committee has an Audit and Non-Audit Services Pre-Approval Policy to ensure auditor independence, allowing for both general and specific pre-approval of services, and considering consistency with SEC rules, efficiency, and the overall relationship of fees[614](index=614&type=chunk)[615](index=615&type=chunk)[616](index=616&type=chunk)[617](index=617&type=chunk)[618](index=618&type=chunk) - The Audit Committee Chairman, Stephen P. Smith, has delegated authority for certain pre-approvals, with decisions reported to the full committee, and the policy outlines specific types of audit, audit-related, and tax services that may receive general pre-approval, setting annual fee levels[620](index=620&type=chunk)[621](index=621&type=chunk)[622](index=622&type=chunk)[623](index=623&type=chunk)[624](index=624&type=chunk)[625](index=625&type=chunk)[626](index=626&type=chunk)[627](index=627&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=136&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules, including Ciner Wyoming LLC financials, various agreements, and CEO/CFO certifications - The section includes references to the company's financial statements and schedules, as well as the financial statements of Ciner Wyoming LLC (Exhibit 99.1)[630](index=630&type=chunk) - A comprehensive list of exhibits is provided, including various agreements (e.g., Purchase Agreement, Partnership Agreements, Note Purchase Agreements, Credit Agreements, Registration Rights Agreements, Board Representation and Observation Rights Agreement) and forms related to equity compensation plans[631](index=631&type=chunk)[632](index=632&type=chunk)[633](index=633&type=chunk) - Other exhibits include a list of subsidiaries, consents from independent auditors (Ernst & Young LLP and Deloitte & Touche LLP), CEO and CFO certifications (pursuant to Sections 302 and 1350 of Sarbanes-Oxley), and XBRL (eXtensible Business Reporting Language) documents[633](index=633&type=chunk) [Signatures](index=139&type=section&id=Signatures) This section contains the required signatures for the Annual Report on Form 10-K from the CEO, CFO, and other directors - The Annual Report on Form 10-K is signed by Corbin J. Robertson, Jr. (Chairman of the Board, Director, and Chief Executive Officer) and Christopher J. Zolas (Chief Financial Officer and Treasurer) on behalf of Natural Resource Partners L.P. on February 27, 2020[635](index=635&type=chunk)[636](index=636&type=chunk) - Additional directors, including Galdino J. Claro, Russell D. Gordy, Alexander D. Greene, S. Reed Morian, Paul B. Murphy, Jr., Richard A. Navarre, Corbin J. Robertson III, Stephen P. Smith, and Leo A. Vecellio, Jr., also signed the report[638](index=638&type=chunk)[639](index=639&type=chunk)

Natural Resource Partners L.P. (NYSE:NRP) Q4 2019 Earnings Conference Call February 27, 2020 9:00 AM ET Company Participants Tiffany Sammis - Manager of Investor Relations Craig Nunez - President and Chief Operating Officer Chris Zolas - Chief Financial Officer Conference Call Participants Mark Levin - Benchmark Company Nick Jarmoszuk - Stifel Operator Good morning, ladies and gentlemen, and welcome to the Natural Resource Partners LP Fourth Quarter 2019 Earnings Conference Call. As a reminder, this confere ...

Financial Data and Key Metrics Changes - The company generated $42 million of operating and free cash flow and $39 million of net income during Q3 2019 [11] - Basic and diluted earnings per common unit for the third quarter were $2.53 per unit and $1.66 per unit, respectively [11] - The consolidated return on capital employed was 16.4%, with the coal segment at 17% and soda ash at almost 21% [6] Business Line Data and Key Metrics Changes - The coal royalty segment generated $41 million of operating cash flow, $42 million of free cash flow, and $40 million of net income during Q3 2019 [12] - The soda ash segment generated $14 million of net income and $6 million of free cash flow, with net income increasing by $5 million compared to the prior year quarter due to increased production and sales volumes [14] Market Data and Key Metrics Changes - Lessees sold 5 million tons of coal during Q3 2019, with metallurgical coal making up approximately 55% of total coal royalty sales volumes and about 60% of coal royalty revenues [13] - The company anticipates coal revenues to be significantly lower in the coming months due to expiring contracts and lower prices [8] Company Strategy and Development Direction - The company plans to continue reducing debt, albeit at a slower pace, and aims to maintain cash flow and liquidity to support operations and distributions [9] - A 40% distribution cut was announced to finance capacity expansion at the soda ash joint venture [8] Management's Comments on Operating Environment and Future Outlook - Management noted challenges from falling coal prices, particularly for metallurgical coal, which have led to bankruptcies among lessees [7] - Despite the negative sentiment, management expressed confidence in the company's ability to weather the current challenges due to improved financial strength and liquidity [9] Other Important Information - The company paid a quarterly distribution of $0.45 per unit to common unitholders and $7.5 million to preferred unitholders in August, with another similar distribution declared in October [15] Q&A Session Summary Question: Repeatability of asset sales and increased minimum revenues - Management indicated that the $6 million gain on asset sales is not planned for future quarters, while the increased minimum revenues from Hillsboro are expected to continue [20] Question: Future coal sales volumes given market conditions - Management acknowledged a lack of visibility into future coal sales volumes due to uncertainty in the market and lessee decision-making [22] Question: Comparison to previous coal market downturns - Management stated that if a downturn similar to 2015-2016 occurs, they expect to maintain a positive cash flow cushion, although it may decrease substantially [24]

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=Part%20I.%20Financial%20Information) This section presents Natural Resource Partners L.P.'s unaudited consolidated financial statements, including balance sheets, income, capital, and cash flow statements, with detailed notes on accounting policies, segments, and debt [ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This item presents the Partnership's unaudited consolidated financial statements, including balance sheets, income, capital, and cash flow statements, detailing financial position, performance, and liquidity, with explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Presents the Partnership's financial position, showing assets, liabilities, and capital at specific dates **Consolidated Balance Sheet Highlights (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | Change | | :-------------------------------- | :----------- | :----------- | :------- | | Total current assets | $143,709 | $242,543 | $(98,834) | | Total assets | $1,243,904 | $1,341,647 | $(97,743) | | Total current liabilities | $74,255 | $148,746 | $(74,491) | | Total liabilities | $613,063 | $756,514 | $(143,451) | | Total capital | $466,254 | $420,546 | $45,708 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Details the Partnership's financial performance, including revenues, expenses, and net income for the reporting periods **Consolidated Statements of Comprehensive Income Highlights (In thousands):** | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Total revenues and other income | $63,709 | $58,207 | $5,502 | $212,219 | $187,955 | $24,264 | | Total operating expenses | $14,115 | $14,861 | $(746) | $51,842 | $47,510 | $4,332 | | Income from operations | $49,594 | $43,346 | $6,248 | $160,377 | $140,445 | $19,932 | | Net income from continuing operations | $39,163 | $25,853 | $13,310 | $94,034 | $87,268 | $6,766 | | Net income | $39,170 | $28,541 | $10,629 | $94,240 | $90,989 | $3,251 | | Basic Net income per common unit | $2.53 | $1.71 | $0.82 | $5.73 | $5.44 | $0.29 | | Diluted Net income per common unit | $1.66 | $1.30 | $0.36 | $3.92 | $4.06 | $(0.14) | [Consolidated Statements of Partners' Capital](index=7&type=section&id=Consolidated%20Statements%20of%20Partners%27%20Capital) Outlines changes in the Partnership's equity, reflecting net income, distributions, and other capital adjustments **Partners' Capital Changes (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | Change | | :------------------------------------------ | :----------- | :----------- | :------- | | Balance at beginning of period (Dec 31, 2018) | $423,481 | $420,546 | $2,935 | | Net income (9 months) | $94,240 | $90,989 | $3,251 | | Distributions to common unitholders & GP | $(27,087) | $(16,863) | $(10,224) | | Distributions to preferred unitholders | $(22,500) | $(22,765) | $265 | | Balance at end of period (Sep 30, 2019) | $466,254 | $383,766 | $82,488 | - Net income attributable to preferred unitholders was **$7.5 million** for both the three and nine months ended September 30, 2019 and 2018[19](index=19&type=chunk)[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities, indicating liquidity changes **Consolidated Statements of Cash Flows Highlights (In thousands):** | Metric | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----- | | Net cash provided by operating activities | $117,921 | $107,548 | $10,373 | | Net cash provided by (used in) investing activities | $7,406 | $(3,814) | $11,220 | | Net cash used in financing activities | $(219,194) | $(70,174) | $(149,020) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(93,867) | $33,560 | $(127,427) | | Cash, cash equivalents and restricted cash at end of period | $112,163 | $63,387 | $48,776 | - Cash paid for interest of continuing operations decreased from **$58.153 million** in 2018 to **$36.270 million** in 2019 for the nine months ended September 30[27](index=27&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations for the consolidated financial statements, covering accounting policies, segment information, debt, fair value, related parties, and other significant financial disclosures [Note 1. Basis of Presentation](index=12&type=section&id=Note%201.%20Basis%20of%20Presentation) Explains the Partnership's business, accounting principles, and significant reclassifications and standard adoptions - The Partnership's primary business involves owning, managing, and leasing a diversified portfolio of mineral properties in the United States, including coal and other natural resources, and a **49% non-controlling interest** in Ciner Wyoming LLC (trona ore mining and soda ash production)[30](index=30&type=chunk) - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information and Rule 10-01 of Regulation S-X, and should be read in conjunction with the 2018 Annual Report on Form 10-K[31](index=31&type=chunk) - Prior period information for the construction aggregates business and non-operated oil and gas working interest assets has been reclassified as discontinued operations[32](index=32&type=chunk) - Restricted cash of **$12.5 million** (Sep 30, 2019) and **$104.2 million** (Dec 31, 2018) is designated for debt repayment, acquisitions, or capital expenditures, with **$97.1 million** used in the first nine months of 2019 to repay Opco Senior Notes[33](index=33&type=chunk) - The Partnership adopted ASC 842, Leases, on January 1, 2019, using a modified retrospective approach, which did not materially impact the consolidated financial statements[34](index=34&type=chunk)[35](index=35&type=chunk) - The Partnership is continuing to evaluate ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), effective after December 15, 2019, but does not expect a material effect on its consolidated financial statements[38](index=38&type=chunk) [Note 2. Revenues from Contracts with Customers](index=13&type=section&id=Note%202.%20Revenues%20from%20Contracts%20with%20Customers) Details the sources and recognition of revenue from customer contracts, including coal royalties and other services **Coal Royalty and Other Segment Revenues (In thousands):** | Revenue Source | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Coal royalty revenues | $24,727 | $30,709 | $(5,982) | $87,561 | $96,473 | $(8,912) | | Production lease minimum revenues | $2,752 | $1,769 | $983 | $21,331 | $6,310 | $15,021 | | Minimum lease straight-line revenues | $3,982 | $567 | $3,415 | $11,152 | $1,739 | $9,413 | | Lease amendment revenues | $1,535 | $— | $1,535 | $6,720 | $— | $6,720 | | Oil and gas royalty revenues | $374 | $1,427 | $(1,053) | $2,575 | $5,679 | $(3,104) | | Total Coal royalty and other revenues | $39,919 | $42,518 | $(2,599) | $154,037 | $134,912 | $19,125 | | Transportation and processing services | $3,865 | $6,853 | $(2,988) | $14,740 | $17,238 | $(2,498) | **Receivables and Contract Liabilities (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------- | :----------- | :----------- | | Accounts receivable, net | $24,758 | $29,001 | | Current portion of deferred revenue | $5,047 | $3,509 | | Deferred revenue | $43,587 | $49,044 | - Deferred revenue balance at September 30, 2019, was **$48.634 million**, with an increase of **$37.315 million** due to minimums and lease amendment fees and recognition of **$41.234 million** of previously deferred revenue during the nine months ended September 30, 2019[43](index=43&type=chunk) - The Partnership has non-cancelable annual minimum payments due under coal and aggregates royalty leases totaling **$68.602 million**, with a weighted average remaining lease term of **9.6 years**[43](index=43&type=chunk) [Note 3. Discontinued Operations](index=15&type=section&id=Note%203.%20Discontinued%20Operations) Provides information on reclassified business segments, including their assets, liabilities, and income - The Partnership reclassified its construction aggregates business and non-operated oil and gas working interest assets as discontinued operations following their sales in December 2018 and July 2016, respectively[47](index=47&type=chunk) - Total assets of discontinued operations were **$988 thousand** as of September 30, 2019, and **$993 thousand** as of December 31, 2018, while total liabilities were **$174 thousand** and **$947 thousand**, respectively[48](index=48&type=chunk) **Income from Discontinued Operations (In thousands):** | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenues and other income | $7 | $36,810 | $245 | $104,420 | | Total operating expenses | $0 | $34,114 | $39 | $100,671 | | Income (loss) from discontinued operations | $7 | $2,688 | $206 | $3,721 | - Capital expenditures related to discontinued operations were **$9.7 million** during the nine months ended September 30, 2018[50](index=50&type=chunk) [Note 4. Common and Preferred Unit Distributions](index=17&type=section&id=Note%204.%20Common%20and%20Preferred%20Unit%20Distributions) Outlines the Partnership's policies and amounts for quarterly cash distributions to common and preferred unitholders - The Partnership makes quarterly cash distributions to common and preferred unitholders, with the general partner receiving **2%** of common unit distributions[51](index=51&type=chunk)[52](index=52&type=chunk) - Net income attributable to common unitholders and the general partner is reduced by **$7.5 million** for preferred unit distributions for both the three and nine months ended September 30, 2019 and 2018[53](index=53&type=chunk) **Distributions Declared and Paid (In thousands, except per unit data):** | Period Covered | Common Unit Distribution per Unit | Total Common Unit Distribution | Preferred Unit Distribution per Unit | Total Preferred Unit Distribution | | :-------------------------------- | :------------------------------ | :----------------------------- | :--------------------------------- | :-------------------------------- | | Oct 1 - Dec 31, 2018 | $0.45 | $5,625 | $30.00 | $7,500 | | Jan 1 - Mar 31, 2019 | $0.45 | $5,630 | $30.00 | $7,500 | | Special Distribution (May 2019) | $0.85 | $10,635 | $— | $— | | Apr 1 - Jun 30, 2019 | $0.45 | $5,630 | $30.00 | $7,500 | - A special distribution of **$0.85 per common unit** was made in May 2019 to cover common unitholders' tax liability from the sale of the construction aggregates business[57](index=57&type=chunk) [Note 5. Net Income Per Common Unit](index=18&type=section&id=Note%205.%20Net%20Income%20Per%20Common%20Unit) Explains the calculation of basic and diluted net income per common unit, including dilutive effects - Basic net income per common unit is calculated by dividing net income (after non-controlling interest, preferred unitholders, and general partner interest) by the weighted average common units outstanding[58](index=58&type=chunk) - Diluted net income per common unit includes the dilutive effect of preferred units (if-converted method), warrants (treasury stock method), and unvested unit-based awards[59](index=59&type=chunk)[60](index=60&type=chunk) **Net Income Per Common Unit (In thousands, except per unit data):** | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to common unitholders | $31,036 | $20,972 | $70,305 | $66,619 | | Weighted average common units—basic | 12,261 | 12,246 | 12,259 | 12,243 | | Basic net income per common unit | $2.53 | $1.71 | $5.73 | $5.44 | | Weighted average common units—diluted | 23,157 | 21,840 | 23,584 | 21,841 | | Diluted net income attributable to common unitholders | $38,386 | $28,322 | $92,355 | $88,669 | | Diluted net income per common unit | $1.66 | $1.30 | $3.92 | $4.06 | [Note 6. Segment Information](index=20&type=section&id=Note%206.%20Segment%20Information) Presents financial data for the Partnership's operating segments: Coal Royalty and Other, and Soda Ash - The Partnership operates in two segments - Coal Royalty and Other (coal, industrial mineral, aggregates, oil & gas royalties, timber) and Soda Ash (**49% non-controlling equity interest** in Ciner Wyoming)[65](index=65&type=chunk)[66](index=66&type=chunk) - The construction aggregates business was sold in December 2018 to reduce debt and focus on core segments[67](index=67&type=chunk) - Corporate and Financing segment includes unallocated corporate overhead, interest, and financing costs[71](index=71&type=chunk) **Segment Revenues and Net Income (Loss) from Continuing Operations (In thousands):** | Metric | Coal Royalty and Other (3M Sep 2019) | Soda Ash (3M Sep 2019) | Corporate and Financing (3M Sep 2019) | Total (3M Sep 2019) | Coal Royalty and Other (9M Sep 2019) | Soda Ash (9M Sep 2019) | Corporate and Financing (9M Sep 2019) | Total (9M Sep 2019) | | :------------------------------------------ | :----------------------------------- | :--------------------- | :------------------------------------ | :------------------ | :----------------------------------- | :--------------------- | :------------------------------------ | :------------------ | | Revenues | $43,784 | $13,818 | $— | $57,602 | $168,777 | $36,833 | $— | $205,610 | | Net income (loss) from continuing operations | $40,252 | $13,595 | $(14,684) | $39,163 | $136,566 | $36,610 | $(79,142) | $94,034 | **Segment Total Assets of Continuing Operations (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------------- | :----------- | :----------- | | Coal Royalty and Other | $969,425 | $986,680 | | Soda Ash | $258,063 | $247,051 | | Corporate and Financing | $15,428 | $106,923 | | Total assets of continuing operations | $1,242,916 | $1,340,654 | [Note 7. Equity Investment](index=23&type=section&id=Note%207.%20Equity%20Investment) Details the Partnership's 49% equity investment in Ciner Wyoming, including income allocation and distributions - The Partnership accounts for its **49% investment** in Ciner Wyoming using the equity method[75](index=75&type=chunk) **Equity Investment in Ciner Wyoming (In thousands):** | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Balance at beginning of period | $251,135 | $245,524 | $247,051 | $245,433 | | Income allocation to NRP's equity interests | $15,068 | $10,036 | $40,511 | $38,525 | | Distribution | $(6,370) | $(12,250) | $(25,480) | $(36,750) | | Balance at end of period | $258,063 | $242,901 | $258,063 | $242,901 | **Ciner Wyoming Summarized Financial Information (In thousands):** | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Sales | $137,148 | $123,366 | $397,378 | $354,467 | | Net income | $30,750 | $20,481 | $82,675 | $78,623 | [Note 8. Mineral Rights, Net](index=24&type=section&id=Note%208.%20Mineral%20Rights%2C%20Net) Provides a breakdown of mineral rights by type, including cost, net book value, and depletion expense **Mineral Rights, Net (In thousands):** | Mineral Type | Sep 30, 2019 Cost | Sep 30, 2019 Net Book Value | Dec 31, 2018 Cost | Dec 31, 2018 Net Book Value | | :-------------------------- | :---------------- | :-------------------------- | :---------------- | :-------------------------- | | Coal properties | $1,147,692 | $688,570 | $1,164,845 | $713,635 | | Aggregates properties | $41,589 | $28,457 | $24,920 | $13,106 | | Oil and gas royalty properties | $12,395 | $4,572 | $12,395 | $4,763 | | Other | $13,156 | $11,555 | $13,158 | $11,608 | | Total mineral rights, net | $1,214,832 | $733,154 | $1,215,318 | $743,112 | - Depletion expense for mineral rights was **$2.8 million** (Q3 2019) and **$9.5 million** (9M 2019), a decrease from **$3.9 million** (Q3 2018) and **$12.8 million** (9M 2018)[77](index=77&type=chunk) - A gain of **$6.1 million** (Q3 2019) and **$6.6 million** (9M 2019) was recorded from the disposal of certain coal mineral rights[78](index=78&type=chunk) [Note 9. Intangible Assets, Net](index=24&type=section&id=Note%209.%20Intangible%20Assets%2C%20Net) Details the Partnership's intangible assets, primarily coal royalty and transportation contracts, and their amortization - Intangible assets primarily consist of above-market coal royalty and transportation contracts with Foresight Energy LP[79](index=79&type=chunk) **Intangible Assets, Net (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------- | :----------- | :----------- | | Intangible assets at cost | $81,109 | $81,109 | | Less: accumulated amortization | $(40,648) | $(38,596) | | Total intangible assets, net | $40,461 | $42,513 | - Amortization expense for intangible assets was **$0.5 million** (Q3 2019) and **$2.1 million** (9M 2019), a decrease from **$0.9 million** (Q3 2018) and **$2.3 million** (9M 2018)[79](index=79&type=chunk) [Note 10. Debt, Net](index=25&type=section&id=Note%2010.%20Debt%2C%20Net) Outlines the Partnership's debt structure, including senior notes, credit facilities, and related financing transactions **Debt Outstanding (In thousands):** | Debt Type | Sep 30, 2019 | Dec 31, 2018 | Change | | :------------------------------------------ | :----------- | :----------- | :------- | | NRP LP debt: 2025 Senior Notes | $300,000 | $— | $300,000 | | NRP LP debt: 2022 Senior Notes | $— | $345,638 | $(345,638) | | Total Opco Senior Notes | $244,390 | $341,500 | $(97,110) | | Total debt at face value | $544,390 | $687,138 | $(142,748) | | Total debt, net | $536,167 | $672,758 | $(136,591) | | Current portion of long-term debt, net | $45,789 | $115,184 | $(69,395) | | Total long-term debt, net | $490,378 | $557,574 | $(67,196) | - In April 2019, NRP issued **$300 million** of **9.125% Senior Notes** due June 2025 and used the proceeds, along with **$76 million** cash, to redeem the 2022 Senior Notes[83](index=83&type=chunk) - The early redemption of the 2022 Senior Notes resulted in an **$18.1 million** call premium and a **$10.4 million** write-off of unamortized debt issuance costs and discount, totaling **$29.3 million** loss on extinguishment of debt[87](index=87&type=chunk) - The Opco Credit Facility term was extended to April 2023, with **$100 million** available borrowing capacity and no outstanding borrowings as of September 30, 2019[89](index=89&type=chunk) - Opco made mandatory principal payments of **$97.1 million** on its Senior Notes during the nine months ended September 30, 2019, including a **$49.3 million** prepayment from the construction aggregates business sale[93](index=93&type=chunk) - The Partnership was in compliance with all financial covenants of its debt agreements as of September 30, 2019[88](index=88&type=chunk)[196](index=196&type=chunk) [Note 11. Fair Value Measurements](index=27&type=section&id=Note%2011.%20Fair%20Value%20Measurements) Describes the fair value of financial instruments, including debt and contract receivables, and their valuation hierarchy - The carrying amounts of cash, cash equivalents, and restricted cash approximate fair value due to their short-term nature[95](index=95&type=chunk) **Fair Value of Debt and Contract Receivable (In thousands):** | Metric | Fair Value Hierarchy Level | Sep 30, 2019 Carrying Value | Sep 30, 2019 Estimated Fair Value | Dec 31, 2018 Carrying Value | Dec 31, 2018 Estimated Fair Value | | :------------------------------------------ | :------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | NRP 2025 Senior Notes | 1 | $293,824 | $287,250 | $— | $— | | NRP 2022 Senior Notes | 1 | $— | $— | $334,024 | $356,871 | | Opco Senior Notes | 3 | $242,343 | $234,003 | $338,734 | $352,599 | | Contract receivable (current and long-term) | 3 | $39,416 | $33,784 | $40,776 | $34,704 | - Embedded derivatives in preferred units, related to conversion options, redemption features, and change of control, had zero value as of September 30, 2019, and December 31, 2018[96](index=96&type=chunk) [Note 12. Related Party Transactions](index=28&type=section&id=Note%2012.%20Related%20Party%20Transactions) Details transactions with affiliated entities, including management services, overhead costs, and royalty revenues - The Partnership reimburses affiliates of its General Partner (QMC and WPPLP) for employee management services and overhead costs, included in operating and maintenance expenses and general and administrative expenses[98](index=98&type=chunk) **Direct G&A Expenses Charged by QMC and WPPLP (In thousands):** | Expense Type | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating and maintenance expenses | $1,598 | $1,560 | $4,806 | $4,694 | | General and administrative expenses | $855 | $934 | $2,704 | $2,714 | - Coal royalty revenues from Industrial Minerals Group LLC, a related party, totaled **$0.4 million** (Q3 2019) and **$0.9 million** (9M 2019)[102](index=102&type=chunk) [Note 13. Major Customers](index=29&type=section&id=Note%2013.%20Major%20Customers) Identifies key customers and their contribution to the Partnership's revenues, primarily in the Coal Royalty segment **Revenues from Major Customers (In thousands):** | Customer | 3 Months Ended Sep 30, 2019 Revenues | 3 Months Ended Sep 30, 2019 Percent | 3 Months Ended Sep 30, 2018 Revenues | 3 Months Ended Sep 30, 2018 Percent | 9 Months Ended Sep 30, 2019 Revenues | 9 Months Ended Sep 30, 2019 Percent | 9 Months Ended Sep 30, 2018 Revenues | 9 Months Ended Sep 30, 2018 Percent | | :---------------- | :----------------------------------- | :---------------------------------- | :----------------------------------- | :---------------------------------- | :----------------------------------- | :---------------------------------- | :----------------------------------- | :---------------------------------- | | Foresight Energy | $12,375 | 21% | $15,035 | 26% | $44,604 | 22% | $40,456 | 22% | | Contura Energy | $9,190 | 16% | $4,709 | 8% | $32,915 | 16% | $16,091 | 9% | - Revenues from Foresight Energy and Contura Energy are included within the Coal Royalty and Other segment[104](index=104&type=chunk) - Contura Energy's revenues for 2019 include the combined company after its merger with Alpha Natural Resources in Q4 2018[105](index=105&type=chunk) [Note 14. Commitments and Contingencies](index=29&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) Discloses legal proceedings and other commitments that could potentially impact the Partnership's financial position - The Partnership is involved in various legal proceedings, which management believes will not have a material effect on its financial position, liquidity, or operations[106](index=106&type=chunk)[212](index=212&type=chunk) - A lawsuit filed by Anadarko in July 2017 alleges an acceleration of NRP's obligation to pay up to **$50 million** in contingent consideration related to a 2013 acquisition of an interest in OCI Wyoming[107](index=107&type=chunk)[110](index=110&type=chunk) - The Partnership estimates a possible range of loss for the Anadarko lawsuit between **$0** (if it prevails) and approximately **$40 million** plus interest, court costs, and attorneys' fees (if Anadarko prevails), with a ruling pending after a trial in October 2019[110](index=110&type=chunk) [Note 15. Unit-Based Compensation](index=30&type=section&id=Note%2015.%20Unit-Based%20Compensation) Provides information on unit-based awards, their valuation, compensation expense, and unvested outstanding awards - Unit-based awards granted in 2019 and 2018 were valued using the closing price of NRP's units as of the grant date[112](index=112&type=chunk) - Total unit-based compensation expense was **$0.5 million** (Q3 2019) and **$1.8 million** (9M 2019), an increase from **$0.2 million** (Q3 2018) and **$0.9 million** (9M 2018)[112](index=112&type=chunk) - The unamortized cost for unvested outstanding awards was **$4.0 million** as of September 30, 2019, to be recognized over a weighted average period of **2.2 years**[112](index=112&type=chunk) **Unit Activity in Outstanding Grants (In thousands, except exercise price):** | Metric | Common Units | Weighted Average Exercise Price | | :-------------------------- | :----------- | :------------------------------ | | Outstanding at January 1, 2019 | 55 | $29.10 | | Granted | 129 | $41.41 | | Fully vested and issued | (12) | $41.47 | | Forfeitures | (15) | $37.33 | | Outstanding at September 30, 2019 | 157 | $37.48 | [Note 16. Financing Transaction](index=30&type=section&id=Note%2016.%20Financing%20Transaction) Describes the accounting treatment for the Sugar Camp lease, classified as a financing transaction, and related amounts - The Partnership's lease of rail loadout and infrastructure at the Sugar Camp mine to a Foresight Energy subsidiary is accounted for as a financing transaction (Sugar Camp lease)[114](index=114&type=chunk) - The Sugar Camp lease expires in 2032 with renewal options, providing minimum payments of **$5.0 million per year** and variable throughput fees[114](index=114&type=chunk) **Sugar Camp Lease Related Amounts (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------- | :----------- | :----------- | | Accounts receivable | $347 | $661 | | Contract receivable (current and long-term) | $39,416 | $40,776 | | Unearned income | $22,667 | $25,058 | | Projected remaining payments | $62,430 | $66,495 | [Note 17. Leases](index=30&type=section&id=Note%2017.%20Leases) Details the Partnership's operating lease for an office building and other lease arrangements, including liabilities and expenses - As of September 30, 2019, the Partnership had one operating lease for an office building owned by WPPLP, with a five-year base term and five additional five-year renewal options, capitalized as a right-of-use asset and lease liability of **$3.5 million**[116](index=116&type=chunk) - Total operating lease expenses were **$0.1 million** (Q3 2019) and **$0.4 million** (9M 2019)[116](index=116&type=chunk) **Operating Lease Liability Maturity Analysis (In thousands):** | Year | Remaining Annual Lease Payments | | :--------- | :------------------------------ | | 2019 | $121 | | 2020 | $483 | | 2021 | $483 | | 2022 | $483 | | 2023 | $483 | | After 2023 | $12,079 | | Total lease payments | $14,132 | | Less: present value adjustment | $(10,623) | | Total operating lease liability | $3,509 | - The Partnership leases infrastructure at its Macoupin property to a Foresight Energy subsidiary, accounted for as an operating lease, generating variable throughput fees of **$1.1 million** (Q3 2019) and **$3.6 million** (9M 2019)[119](index=119&type=chunk) [Note 18. Subsequent Events](index=31&type=section&id=Note%2018.%20Subsequent%20Events) Reports significant events occurring after the balance sheet date, such as declared distributions - In October 2019, the Board of Directors declared a distribution of **$0.45 per common unit** and **$7.5 million** for preferred units for the third quarter of 2019[120](index=120&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Partnership's financial condition and performance, covering business overview, segment results, liquidity, capital resources, market risks, and non-GAAP financial measures [INFORMATION REGARDING FORWARD-LOOKING STATEMENTS](index=32&type=section&id=INFORMATION%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Highlights that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements about business strategy, liquidity, capital, commodity prices, revenues, expenses, Ciner Wyoming operations, distributions, governmental policies, and economic conditions[125](index=125&type=chunk) - Forward-looking statements are not guarantees, and actual results may differ materially due to risks and uncertainties detailed in "Item 1A. Risk Factors" in this 10-Q and the Annual Report on Form 10-K[126](index=126&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=32&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) Defines and explains non-GAAP financial measures like Adjusted EBITDA, Distributable Cash Flow (DCF), and Free Cash Flow (FCF), used to assess performance and liquidity [Adjusted EBITDA](index=32&type=section&id=Adjusted%20EBITDA) Defines Adjusted EBITDA as a non-GAAP measure for assessing financial performance, adjusted for specific non-operating items - Adjusted EBITDA is a non-GAAP measure defined as net income (loss) from continuing operations adjusted for specific items like equity earnings, distributions from unconsolidated investment, interest expense, DDA, and asset impairments[127](index=127&type=chunk) - Adjusted EBITDA is used by management and external users to assess financial performance, but it has limitations and should not be considered an alternative to GAAP measures like net income or cash flows from operating activities[127](index=127&type=chunk) [Distributable Cash Flow](index=34&type=section&id=Distributable%20Cash%20Flow) Defines Distributable Cash Flow (DCF) as a non-GAAP liquidity measure for assessing the ability to make distributions and repay debt - Distributable Cash Flow (DCF) is a non-GAAP liquidity measure calculated from net cash provided by operating activities of continuing operations, adjusted for distributions from unconsolidated investment, asset sales, and return of long-term contract receivable, less maintenance capital expenditures and non-controlling interest distributions[129](index=129&type=chunk) - DCF is used by management and external users to assess the Partnership's ability to make cash distributions and repay debt, but it is not a GAAP measure and may not be comparable to other companies' calculations[129](index=129&type=chunk) [Free Cash Flow](index=34&type=section&id=Free%20Cash%20Flow) Defines Free Cash Flow (FCF) as a non-GAAP liquidity measure for assessing the ability to make distributions and repay debt before mandatory repayments - Free Cash Flow (FCF) is a non-GAAP liquidity measure, calculated before mandatory debt repayments, derived from net cash provided by operating activities of continuing operations, adjusted for distributions from unconsolidated investment and return of long-term contract receivable, less maintenance and expansion capital expenditures and non-controlling interest distributions[130](index=130&type=chunk) - FCF is used by management and external users to assess the Partnership's ability to make cash distributions and repay debt, but it is not a GAAP measure and may not be comparable to other companies' calculations[130](index=130&type=chunk) [Introduction](index=34&type=section&id=Introduction) Outlines the scope of management's discussion, covering business, financial condition, operations, and accounting estimates - The discussion and analysis covers the Partnership's business, financial condition, and performance, including an executive overview, results of operations, liquidity, capital resources, off-balance sheet transactions, related party transactions, critical accounting estimates, and recent accounting standards[131](index=131&type=chunk) [Executive Overview](index=35&type=section&id=Executive%20Overview) Provides a high-level summary of the Partnership's diversified natural resource business and key strategic objectives - The Partnership is a diversified natural resource company primarily engaged in owning, managing, and leasing mineral properties (coal and other natural resources) and holds a **49% non-controlling interest** in Ciner Wyoming (soda ash production)[133](index=133&type=chunk)[134](index=134&type=chunk) - Key objectives include strengthening the balance sheet, maintaining sufficient liquidity to manage commodity price volatility, servicing debt, and making distributions to unitholders[136](index=136&type=chunk) **Executive Overview - 9 Months Ended Sep 30, 2019 (In thousands):** | Metric | Coal Royalty and Other | Soda Ash | Corporate and Financing | Total | | :------------------------------------------ | :--------------------- | :------- | :---------------------- | :------ | | Revenues and other income | $175,386 | $36,833 | $— | $212,219 | | Net income (loss) from continuing operations | $136,566 | $36,610 | $(79,142) | $94,034 | | Adjusted EBITDA | $148,796 | $25,257 | $(12,799) | $161,254 | | Distributable cash flow | $147,783 | $25,257 | $(47,153) | $125,331 | | Free cash flow | $141,172 | $25,257 | $(47,153) | $119,276 | [Current Results/Market Commentary](index=36&type=section&id=Current%20Results%2FMarket%20Commentary) Reviews current market conditions and their impact on the Coal Royalty and Other and Soda Ash segments, including price pressures, demand trends, and strategic outlook [Coal Royalty and Other Business Segment](index=36&type=section&id=Coal%20Royalty%20and%20Other%20Business%20Segment) Discusses market conditions for coal, including price trends, sales volumes, and the impact of lessee bankruptcies - Coal Royalty and Other segment results were stable in H1 2019 but saw reduced realizations in Q3 due to weakened market demand and lower activity[139](index=139&type=chunk) - Approximately **65%** of coal royalty revenues and **55%** of coal royalty sales volumes were from metallurgical coal during the nine months ended September 30, 2019[139](index=139&type=chunk) - Metallurgical coal prices and sales volumes declined in Q3 2019 due to global economic slowdown and lessees moving off properties[140](index=140&type=chunk) - The domestic thermal coal market is challenged by low natural gas prices and growing stockpiles, while the export market is weakened by lower demand, international competition, and LNG oversupply[141](index=141&type=chunk) - Four lessees filed for bankruptcy in the last six months, and Foresight Energy (largest lessee) is evaluating restructuring options, posing risks to future performance[142](index=142&type=chunk) [Soda Ash Business Segment](index=36&type=section&id=Soda%20Ash%20Business%20Segment) Examines the global soda ash market, Ciner Wyoming's performance, and planned capacity expansion impacts on distributions - Ciner Wyoming's results are affected by global soda ash supply and demand, with stable domestic demand driven by glass-making industries and growing international demand influenced by global GDP[143](index=143&type=chunk) - Ciner Wyoming plans a significant capacity expansion, funded partly by reinvesting cash, which will decrease cash distributions to the Partnership to **$25-$28 million per year** for the next two to three years[144](index=144&type=chunk) - The Partnership expects long-term benefits from increased productivity and cash distributions after the capital project's completion[144](index=144&type=chunk) [Business Outlook](index=36&type=section&id=Business%20Outlook) Presents the Partnership's expectations for future performance, acknowledging market challenges and financial resilience - The Partnership expects market challenges to adversely impact future results compared to recent performance[145](index=145&type=chunk) - The Partnership believes its strengthened financial profile will help navigate a sustained downturn[145](index=145&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Provides a comparative analysis of financial performance for the three and nine months ended September 30, 2019 and 2018, detailing revenues, expenses, and key financial metrics [Third Quarter of 2019 and 2018 Compared](index=37&type=section&id=Third%20Quarter%20of%202019%20and%202018%20Compared) Compares the Partnership's financial results for Q3 2019 versus Q3 2018, analyzing changes in revenues, expenses, and non-GAAP financial measures [Revenues and Other Income](index=37&type=section&id=Revenues%20and%20Other%20Income) Analyzes the changes in total revenues and other income, broken down by operating segment for the quarter **Revenues and Other Income by Operating Segment (In thousands):** | Operating Segment | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Increase (Decrease) | Percentage Change | | :---------------- | :-------------------------- | :-------------------------- | :------------------ | :---------------- | | Coal Royalty and Other | $49,891 | $49,371 | $520 | 1% | | Soda Ash | $13,818 | $8,836 | $4,982 | 56% | | Total | $63,709 | $58,207 | $5,502 | 9% | [Coal Royalty Revenues](index=40&type=section&id=Coal%20Royalty%20Revenues) Examines the changes in coal royalty revenues, including sales volumes and their impact on regional performance **Coal Sales Volumes and Royalty Revenue (Q3 2019 vs Q3 2018):** | Region | Sales Volumes (tons, in thousands) 2019 | Sales Volumes (tons, in thousands) 2018 | Change % | Royalty Revenue (in thousands) 2019 | Royalty Revenue (in thousands) 2018 | Change % | | :-------------------------- | :-------------------------------------- | :-------------------------------------- | :------- | :---------------------------------- | :---------------------------------- | :------- | | Appalachia | 3,950 | 4,568 | (14)% | $20,290 | $24,547 | (17)% | | Illinois Basin | 551 | 609 | (10)% | $2,658 | $2,973 | (11)% | | Northern Powder River Basin | 532 | 855 | (38)% | $2,492 | $3,237 | (23)% | | Total | 5,033 | 6,032 | (17)% | $24,727 | $30,709 | (19)% | - The decrease in coal royalty revenues was driven by lower coal sales volumes due to weakened coal markets, temporary idling of properties from lessee bankruptcies, and the idling of the Pinnacle mine[153](index=153&type=chunk)[157](index=157&type=chunk) [Other Revenues](index=40&type=section&id=Other%20Revenues) Details the factors contributing to changes in other revenues, such as lease minimums and oil and gas royalties - Other revenues increased by **$3.4 million**, mainly due to **$3.4 million** in minimum lease straight-line revenues from the Hillsboro property and **$1.5 million** in lease amendment revenues[153](index=153&type=chunk) - These increases were partially offset by lower coal overriding royalty revenues (due to reduced sales volumes) and lower oil and gas royalty revenues (due to lower natural gas prices)[153](index=153&type=chunk) [Transportation and Processing Services Revenues](index=40&type=section&id=Transportation%20and%20Processing%20Services%20Revenues) Discusses the decrease in transportation and processing services revenues due to weakened coal demand - Transportation and processing services revenues decreased by **$3.0 million** (**44%**) due to weakened demand for Illinois Basin coal, leading to fewer tons transported[154](index=154&type=chunk) [Gain on Asset Sales and Disposals](index=40&type=section&id=Gain%20on%20Asset%20Sales%20and%20Disposals) Reports the increase in gain from asset sales and disposals, primarily from mineral right assets - Gain on asset sales and disposals increased by **$6.1 million**, primarily from the disposal of certain mineral right assets[155](index=155&type=chunk) [Soda Ash](index=40&type=section&id=Soda%20Ash) Analyzes the increase in Soda Ash segment revenues and other income driven by higher production and prices - Soda Ash segment revenues and other income increased by **$5.0 million** (**56%**) due to higher production and sales volumes and increased domestic and international sales prices[156](index=156&type=chunk) [Operating Expenses](index=41&type=section&id=Operating%20Expenses) Details the changes in consolidated operating expenses, including operating, maintenance, DDA, and G&A costs **Consolidated Operating Expenses (In thousands):** | Expense Category | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Increase (Decrease) | Percentage Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------ | :---------------- | | Operating and maintenance expenses | $5,994 | $6,790 | $(796) | (12)% | | Depreciation, depletion and amortization | $3,384 | $4,888 | $(1,504) | (31)% | | General and administrative expenses | $4,253 | $3,183 | $1,070 | 34% | | Asset impairments | $484 | $— | $484 | 100% | | Total operating expenses | $14,115 | $14,861 | $(746) | (5)% | - Operating and maintenance expenses decreased by **$0.8 million** due to lower legal costs[159](index=159&type=chunk) - Depreciation, depletion, and amortization decreased by **$1.5 million** due to lower coal sales volumes[159](index=159&type=chunk) - General and administrative expenses increased by **$1.1 million** due to higher legal costs[159](index=159&type=chunk) [Interest Expense, Net](index=41&type=section&id=Interest%20Expense%2C%20Net) Explains the decrease in net interest expense due to lower debt balances from repayments - Interest expense, net, decreased by **$7.1 million** primarily due to lower debt balances from debt repayments[159](index=159&type=chunk) [Income from Discontinued Operations](index=41&type=section&id=Income%20from%20Discontinued%20Operations) Reports the decrease in income from discontinued operations following the sale of the aggregates business - Income from discontinued operations decreased by **$2.7 million** due to the sale of the construction aggregates business in Q4 2018[160](index=160&type=chunk) [Adjusted EBITDA (Non-GAAP Financial Measure)](index=41&type=section&id=Adjusted%20EBITDA%20%28Non-GAAP%20Financial%20Measure%29) Analyzes the change in Adjusted EBITDA by segment, highlighting the impact of Ciner Wyoming distributions **Adjusted EBITDA by Segment (In thousands):** | Operating Segment | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Coal Royalty and Other | $44,120 | $42,940 | $1,180 | | Soda Ash | $6,147 | $12,250 | $(6,103) | | Corporate and Financing | $(4,253) | $(3,183) | $(1,070) | | Total Adjusted EBITDA | $46,014 | $52,007 | $(5,993) | - Adjusted EBITDA decreased by **$6.0 million**, primarily due to lower cash distributions from Ciner Wyoming[161](index=161&type=chunk) [Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)](index=43&type=section&id=Distributable%20Cash%20Flow%20%28%22DCF%22%29%20and%20Free%20Cash%20Flow%20%28%22FCF%22%29%20%28Non-GAAP%20Financial%20Measures%29) Examines the changes in DCF and FCF, driven by asset disposals, interest payments, and Ciner Wyoming distributions **DCF and FCF by Segment (In thousands):** | Operating Segment | 3 Months Ended Sep 30, 2019 DCF | 3 Months Ended Sep 30, 2019 FCF | 3 Months Ended Sep 30, 2018 DCF & FCF | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------------------------------ | | Coal Royalty and Other | $47,661 | $41,553 | $43,194 | | Soda Ash | $6,147 | $6,147 | $12,250 | | Corporate and Financing | $(5,507) | $(5,507) | $(27,368) | | Total | $48,179 | $42,193 | $28,076 | - DCF increased by **$20.1 million** and FCF by **$14.1 million**, primarily due to proceeds from asset disposals and lower interest payments in the Corporate and Financing segment[166](index=166&type=chunk) - The increase was partially offset by lower cash distributions from Ciner Wyoming and reduced coal royalty revenues[166](index=166&type=chunk) [First Nine Months of 2019 and 2018 Compared](index=44&type=section&id=First%20Nine%20Months%20of%202019%20and%202018%20Compared) Compares the Partnership's financial results for the first nine months of 2019 versus 2018, analyzing revenues, expenses, and non-GAAP financial measures [Revenues and Other Income](index=44&type=section&id=Revenues%20and%20Other%20Income) Analyzes the changes in total revenues and other income, broken down by operating segment for the nine-month period **Revenues and Other Income by Operating Segment (In thousands):** | Operating Segment | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Increase (Decrease) | Percentage Change | | :---------------- | :-------------------------- | :-------------------------- | :------------------ | :---------------- | | Coal Royalty and Other | $175,386 | $152,969 | $22,417 | 15% | | Soda Ash | $36,833 | $34,986 | $1,847 | 5% | | Total | $212,219 | $187,955 | $24,264 | 13% | [Coal Royalty Revenues](index=47&type=section&id=Coal%20Royalty%20Revenues) Examines the changes in coal royalty revenues, including sales volumes and their impact on regional performance for the nine months **Coal Sales Volumes and Royalty Revenue (9M 2019 vs 9M 2018):** | Region | Sales Volumes (tons, in thousands) 2019 | Sales Volumes (tons, in thousands) 2018 | Change % | Royalty Revenue (in thousands) 2019 | Royalty Revenue (in thousands) 2018 | Change % | | :-------------------------- | :-------------------------------------- | :-------------------------------------- | :------- | :---------------------------------- | :---------------------------------- | :------- | | Appalachia | 14,415 | 14,360 | 0.4% | $75,005 | $79,221 | (5)% | | Illinois Basin | 1,646 | 2,091 | (21)% | $7,739 | $9,533 | (19)% | | Northern Powder River Basin | 1,979 | 2,896 | (32)% | $6,347 | $7,817 | (19)% | | Total | 18,040 | 19,347 | (7)% | $87,561 | $96,473 | (9)% | - Appalachia revenues decreased by **$4.2 million** (**5%**) despite flat sales volumes, primarily due to weakened coal markets, temporary idling of properties, and the Pinnacle mine[174](index=174&type=chunk) - Illinois Basin sales volumes decreased **21%** and revenues decreased **$1.8 million** due to flooding, transportation logistics issues, and weakened thermal export/domestic demand[174](index=174&type=chunk) - Northern Powder River Basin sales volumes decreased **32%** and revenues decreased **$1.5 million** as the lessee mined off the property[174](index=174&type=chunk) [Other Revenues](index=47&type=section&id=Other%20Revenues) Details the factors contributing to changes in other revenues, such as production lease minimums and lease amendment fees - Other revenues increased by **$28.0 million**, primarily due to **$15.0 million** in production lease minimum revenues, **$9.4 million** in minimum lease straight-line revenues (Hillsboro property), and **$6.7 million** in lease amendment revenues[174](index=174&type=chunk) - These increases were partially offset by **$3.1 million** in lower oil and gas royalty revenues due to lower natural gas prices[174](index=174&type=chunk) [Transportation and Processing Services Revenues](index=47&type=section&id=Transportation%20and%20Processing%20Services%20Revenues) Discusses the decrease in transportation and processing services revenues due to weakened coal demand for the nine months - Transportation and processing services revenues decreased by **$2.5 million** (**14%**) due to weakened demand for Illinois Basin coal[175](index=175&type=chunk) [Gain on Asset Sales and Disposals](index=47&type=section&id=Gain%20on%20Asset%20Sales%20and%20Disposals) Reports the increase in gain from asset sales and disposals, primarily from mineral right assets in Q3 2019 - Gain on asset sales and disposals increased by **$5.8 million**, primarily from the disposal of certain mineral right assets in Q3 2019[176](index=176&type=chunk) [Soda Ash](index=47&type=section&id=Soda%20Ash) Analyzes the increase in Soda Ash segment revenues and other income, offset by a prior year royalty dispute settlement - Soda Ash segment revenues and other income increased by **$1.8 million** (**5%**) due to higher production and sales volumes and increased domestic and international sales prices[177](index=177&type=chunk) - The increase was partially offset by a **$12.7 million** income from a royalty dispute settlement in Q2 2018[177](index=177&type=chunk) [Operating and Other Expenses](index=48&type=section&id=Operating%20and%20Other%20Expenses) Details the changes in consolidated operating and other expenses, including O&M, DDA, G&A, interest, and debt extinguishment loss **Consolidated Operating and Other Expenses (In thousands):** | Expense Category | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Increase (Decrease) | Percentage Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------ | :---------------- | | Operating and maintenance expenses | $26,813 | $21,122 | $5,691 | 27% | | Depreciation, depletion and amortization | $11,746 | $15,364 | $(3,618) | (24)% | | General and administrative expenses | $12,799 | $10,782 | $2,017 | 19% | | Asset impairments | $484 | $242 | $242 | 100% | | Total operating expenses | $51,842 | $47,510 | $4,332 | 9% | | Interest expense, net | $37,061 | $53,177 | $(16,116) | (30)% | | Loss on extinguishment of debt | $29,282 | $— | $29,282 | 100% | | Total other expenses, net | $66,343 | $53,177 | $13,166 | 25% | - Operating and maintenance expenses increased by **$5.7 million** due to bad debt expense in Q2 2019[180](index=180&type=chunk) - Depreciation, depletion, and amortization decreased by **$3.6 million** due to lower coal sales volumes[180](index=180&type=chunk) - General and administrative expenses increased by **$2.0 million** due to higher legal and consulting costs[180](index=180&type=chunk) - Interest expense, net, decreased by **$16.1 million** due to lower debt balances[180](index=180&type=chunk) - Loss on extinguishment of debt was **$29.3 million**, related to the premium paid and write-off of costs for redeeming the 2022 Senior Notes[180](index=180&type=chunk) [Income from Discontinued Operations](index=48&type=section&id=Income%20from%20Discontinued%20Operations) Reports the decrease in income from discontinued operations following the sale of the construction aggregates business - Income from discontinued operations decreased by **$3.5 million** due to the sale of the construction aggregates business in Q4 2018[180](index=180&type=chunk) [Adjusted EBITDA (Non-GAAP Financial Measure)](index=49&type=section&id=Adjusted%20EBITDA%20%28Non-GAAP%20Financial%20Measure%29) Analyzes the change in Adjusted EBITDA by segment, highlighting the impact of Coal Royalty and Soda Ash performance **Adjusted EBITDA by Segment (In thousands):** | Operating Segment | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :----- | | Coal Royalty and Other | $148,796 | $131,337 | $17,459 | | Soda Ash | $25,257 | $36,750 | $(11,493) | | Corporate and Financing | $(12,799) | $(10,782) | $(2,017) | | Total Adjusted EBITDA | $161,254 | $157,305 | $3,949 | - Adjusted EBITDA increased by **$3.9 million**, driven by a **$17.5 million** increase in the Coal Royalty and Other segment (higher revenues, offset by O&M) and an **$11.5 million** decrease in the Soda Ash segment (lower cash distributions)[183](index=183&type=chunk) [Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)](index=51&type=section&id=Distributable%20Cash%20Flow%20%28%22DCF%22%29%20and%20Free%20Cash%20Flow%20%28%22FCF%22%29%20%28Non-GAAP%20Financial%20Measures%29) Examines the changes in DCF and FCF, driven by lease fees, interest payments, and Ciner Wyoming distributions **DCF and FCF by Segment (In thousands):** | Operating Segment | 9 Months Ended Sep 30, 2019 DCF | 9 Months Ended Sep 30, 2019 FCF | 9 Months Ended Sep 30, 2018 DCF | 9 Months Ended Sep 30, 2018 FCF | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Coal Royalty and Other | $147,783 | $141,172 | $135,554 | $134,728 | | Soda Ash | $25,257 | $25,257 | $36,750 | $36,750 | | Corporate and Financing | $(47,153) | $(47,153) | $(68,982) | $(68,982) | | Total | $125,331 | $119,276 | $103,322 | $102,496 | - DCF and FCF increased by **$22.0 million** and **$16.8 million**, respectively, driven by increased lease amendment fees and Hillsboro minimum payments in the Coal Royalty and Other segment, and lower cash paid for interest in the Corporate and Financing segment[188](index=188&type=chunk) - These increases were partially offset by an **$11.5 million** decrease in cash distributions from Ciner Wyoming in the Soda Ash segment[188](index=188&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the Partnership's liquidity, cash flow movements, capital resources, debt obligations, and compliance with financial covenants [Current Liquidity](index=52&type=section&id=Current%20Liquidity) Details the Partnership's total liquidity, including cash, restricted cash, and available borrowing capacity - Total liquidity as of September 30, 2019, was **$212.2 million**, consisting of **$99.6 million** in cash and cash equivalents, **$12.5 million** in restricted cash, and **$100.0 million** in available borrowing capacity under the Opco Credit Facility[190](index=190&type=chunk) - The **$12.5 million** restricted cash is designated for debt repayment, acquisitions, or capital expenditures, with plans to use it for Opco Senior Notes principal payments in 2019[190](index=190&type=chunk) [Cash Flows](index=52&type=section&id=Cash%20Flows) Analyzes changes in cash flows from operating, investing, and financing activities and their primary drivers - Cash flows from operating activities increased by **$10.4 million**, driven by timing of interest payments, lower interest on Opco Senior Notes, and collection of lease amendment fees and Hillsboro minimum payment, partially offset by lower cash distributions from Ciner Wyoming and reduced coal royalty revenues[191](index=191&type=chunk) - Cash flows provided by investing activities increased by **$11.2 million**, primarily due to lower capital expenditures from discontinued operations in 2019 and a **$5.8 million** increase in proceeds from asset sales[192](index=192&type=chunk) - Cash flows used in financing activities increased by **$149.0 million**, mainly due to the redemption of 2022 Senior Notes (**$345.6 million**), increased Opco Senior Notes payments (**$41.4 million**), and higher debt issuance costs (**$26.2 million**), partially offset by **$300 million** from 2025 Senior Notes issuance[193](index=193&type=chunk)[194](index=194&type=chunk) [Capital Resources and Obligations](index=53&type=section&id=Capital%20Resources%20and%20Obligations) Outlines the Partnership's debt outstanding and confirms compliance with financial covenants **Debt Outstanding (In thousands):** | Metric | Sep 30, 2019 | Dec 31, 2018 | Change | | :------------------------------------------ | :----------- | :----------- | :------- | | Current portion of long-term debt, net | $45,789 | $115,184 | $(69,395) | | Long-term debt, net | $490,378 | $557,574 | $(67,196) | | Total debt, net | $536,167 | $672,758 | $(136,591) | - The Partnership was in compliance with the terms of the financial covenants contained in its debt agreements as of September 30, 2019[196](index=196&type=chunk) [Off-Balance Sheet Transactions](index=53&type=section&id=Off-Balance%20Sheet%20Transactions) Confirms the absence of off-balance sheet arrangements that could pose risks to liquidity or capital resources - The Partnership has no off-balance sheet arrangements with unconsolidated entities or related parties, and therefore no off-balance sheet risks to liquidity and capital resources[197](index=197&type=chunk) [Related Party Transactions](index=53&type=section&id=Related%20Party%20Transactions) Refers to Note 12 for detailed information on transactions with related parties - Information on related party transactions is incorporated by reference from Note 12 to the consolidated financial statements[198](index=198&type=chunk) [Summary of Critical Accounting Estimates](index=53&type=section&id=Summary%20of%20Critical%20Accounting%20Estimates) States that there have been no significant changes to critical accounting estimates since the prior annual report - There have been no significant changes to critical accounting estimates from those disclosed in the 2018 Annual Report on Form 10-K[199](index=199&type=chunk) [Recent Accounting Standards](index=53&type=section&id=Recent%20Accounting%20Standards) Refers to Note 1 for information regarding the adoption and evaluation of recent accounting standards - Information on recent accounting standards is incorporated by reference from Note 1 to the consolidated financial statements[200](index=200&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the Partnership's exposure to market risks, including commodity price volatility for coal and soda ash, and interest rate risk from variable rate borrowings [Commodity Price Risk](index=53&type=section&id=Commodity%20Price%20Risk) Highlights the Partnership's significant exposure to volatile commodity prices for coal and soda ash, impacting revenues and profitability - The Partnership's revenues, operating results, and financial condition are substantially dependent on prevailing commodity prices, especially coal, which has historically been volatile[201](index=201&type=chunk) - Depressed coal prices could significantly reduce revenues and potentially trigger asset impairments or debt covenant violations[201](index=201&type=chunk) - Lessees' ability to secure long-term coal contracts is challenging, and increased spot market sales could lead to more volatile coal royalty revenues[202](index=202&type=chunk) - The market price of soda ash and energy costs directly affect Ciner Wyoming's profitability, and global market volatility for soda ash is expected to continue[205](index=205&type=chunk) [Interest Rate Risk](index=55&type=section&id=Interest%20Rate%20Risk) Addresses interest rate risk primarily from variable rate borrowings under the Opco Credit Facility - Interest rate risk primarily arises from variable interest rate borrowings under the Opco Credit Facility, which is based on LIBOR[206](index=206&type=chunk) - As of September 30, 2019, there were no outstanding borrowings under the Opco Credit Facility, limiting immediate interest rate exposure[206](index=206&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Reports on the effectiveness of disclosure controls and procedures and confirms no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=55&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures as of September 30, 2019, ensuring timely and accurate reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2019, ensuring timely and accurate reporting of information required under the Exchange Act[207](index=207&type=chunk) [Changes in the Partnership's Internal Control Over Financial Reporting](index=55&type=section&id=Changes%20in%20the%20Partnership%27s%20Internal%20Control%20Over%20Financial%20Reporting) States that no material changes occurred in internal control over financial reporting during the first nine months of 2019 - No material changes occurred in the Partnership's internal control over financial reporting during the first nine months of 2019[208](index=208&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=Part%20II.%20Other%20Information) Contains additional information including legal proceedings, risk factors, equity sales, senior security defaults, mine safety, and a list of exhibits [ITEM 1. LEGAL PROCEEDINGS](index=56&type=section&id=Item%201.%20Legal%20Proceedings) Details the Partnership's involvement in legal proceedings, with management assessing no material financial impact - The Partnership is involved in various ordinary course legal proceedings, which management believes will not have a material effect on its financial position, liquidity, or operations[212](index=212&type=chunk) - More information on legal proceedings, including the Anadarko lawsuit, is incorporated by reference from Note 14 and the 2018 Annual Report on Form 10-K[213](index=213&type=chunk) [ITEM 1A. RISK FACTORS](index=56&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to previously disclosed risk factors during the reporting period - No material changes to risk factors were disclosed during the period, other than those previously reported in the 2018 Annual Report on Form 10-K and Q2 2019 Quarterly Report on Form 10-Q[214](index=214&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[215](index=215&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that there were no defaults upon senior securities to report during the period - No defaults upon senior securities to report[216](index=216&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Confirms no mine safety disclosures to report for the current period - No mine safety disclosures to report[217](index=217&type=chunk) [ITEM 5. OTHER INFORMATION](index=56&type=section&id=Item%205.%20Other%20Information) Indicates that there is no other information to report in this section - No other information to report[218](index=218&type=chunk) [ITEM 6. EXHIBITS](index=57&type=section&id=Item%206.%20Exhibits) Lists various agreements, certifications, and XBRL documents filed as exhibits to the report - The exhibits include various agreements (Purchase, Partnership, Indenture), certifications (CEO, CFO), and XBRL documents[221](index=221&type=chunk) [Signatures](index=58&type=section&id=

Natural Resource Partners L.P. (NYSE:NRP) Q2 2019 Earnings Conference Call August 8, 2019 10:00 AM ET Company Participants Tiffany Sammis - IR Craig Nunez - President and Chief Operating Officer Chris Zolas - Chief Financial Officer Kevin Craig - Executive Vice President of Coal Conference Call Participants Mark Levin - Seaport Global Operator Good morning and welcome to the Natural Resource Partners Quarterly Earnings Conference Call. My name is Nora and I will be facilitating the audio portion of today's ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Natural Resource Partners L.P.'s unaudited consolidated financial statements for the quarter ended June 30, 2019, covering balance sheets, income, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheet as of June 30, 2019, shows total assets of $1.22 billion, a decrease from $1.34 billion at December 31, 2018, primarily due to debt repayments Consolidated Balance Sheet Highlights (in thousands) | | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total Current Assets** | $121,275 | $242,543 | | **Total Assets** | $1,219,443 | $1,341,647 | | **Total Current Liabilities** | $68,545 | $148,746 | | **Total Liabilities** | $614,595 | $756,514 | | **Total Partners' Capital** | $443,196 | $423,481 | | **Total Liabilities and Capital** | $1,219,443 | $1,341,647 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Net income for the three months ended June 30, 2019, was $19.4 million, down from $38.1 million in 2018, primarily due to a $29.3 million loss on debt extinguishment Statement of Comprehensive Income Highlights (in thousands) | | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues and Other Income** | $81,469 | $69,619 | $148,510 | $129,748 | | **Income from Operations** | $60,844 | $52,863 | $110,783 | $97,099 | | **Net Income** | $19,351 | $38,110 | $55,070 | $62,448 | | **Net Income Attributable to Common Unitholders** | $11,614 | $29,146 | $39,269 | $45,647 | | **Diluted Net Income per Common Unit** | $0.87 | $1.71 | $2.59 | $2.83 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities for the six months ended June 30, 2019, was $76.5 million, while net cash used in financing activities significantly increased to $197.8 million due to debt redemption Cash Flow Summary (in thousands) | | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $76,546 | $74,143 | | **Net Cash Provided by (Used in) Investing Activities** | $961 | $(1,833) | | **Net Cash Used in Financing Activities** | $(197,762) | $(49,162) | | **Net (Decrease) Increase in Cash** | $(120,255) | $23,148 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, business segments, debt refinancing, and a significant contingent consideration dispute with Anadarko - The Partnership's business consists of owning, managing, and leasing a diversified portfolio of mineral properties (coal, other resources) and a **49% non-controlling interest** in **Ciner Wyoming**, a **trona ore mining** and **soda ash production business**[30](index=30&type=chunk) - The construction aggregates business, sold in December 2018, has been classified as a **discontinued operation**, with its results presented separately for all periods[46](index=46&type=chunk) - In April 2019, NRP issued **$300 million** of **9.125% Senior Notes due 2025** and used the proceeds, along with cash on hand, to redeem its **10.500% Senior Notes due 2022**, resulting in a **$29.3 million loss on extinguishment of debt**[82](index=82&type=chunk)[86](index=86&type=chunk) - NRP is in a legal dispute with **Anadarko** over a **contingent consideration payment** related to the 2013 OCI Wyoming acquisition, with a potential loss ranging from **$0 to approximately $40 million** plus fees[111](index=111&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance across Coal Royalty and Soda Ash segments, highlighting debt refinancing, credit facility extension, and future capital expenditure impacts on soda ash distributions - NRP's business is organized into two operating segments: **Coal Royalty and Other**, and **Soda Ash** (**49% interest in Ciner Wyoming**)[134](index=134&type=chunk)[135](index=135&type=chunk) - In **Q2 2019**, NRP extended its **credit facility maturity to April 2023** and issued **$300 million** of **9.125% senior notes due 2025** to redeem its **10.50% senior notes due 2022**[138](index=138&type=chunk) - Management expects cash distributions from the **Soda Ash segment** (**Ciner Wyoming**) to **decrease to approximately $25-28 million per year** for the next **two to three years** to fund a significant **capacity expansion project**[148](index=148&type=chunk) [Results of Operations - Second Quarter of 2019 and 2018 Compared](index=39&type=section&id=Results%20of%20Operations%20-%20Second%20Quarter%20of%202019%20and%202018%20Compared) For Q2 2019, total revenues increased by 17% to $81.5 million, driven by the Coal Royalty and Other segment, but net income decreased to $19.1 million due to a $29.3 million loss on debt extinguishment Q2 Revenue by Segment (in thousands) | Operating Segment | Q2 2019 | Q2 2018 | Increase (Decrease) | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | **Coal Royalty and Other** | $70,136 | $53,090 | $17,046 | 32% | | **Soda Ash** | $11,333 | $16,529 | $(5,196) | (31)% | | **Total** | $81,469 | $69,619 | $11,850 | 17% | - The increase in **Coal Royalty and Other revenue** was primarily driven by a **$13.9 million increase** in **production lease minimum revenues** and **$4.4 million** in **lease amendment revenues**[156](index=156&type=chunk) - A **loss on extinguishment of debt** of **$29.3 million** was recognized in **Q2 2019** related to the **redemption of the 2022 Senior Notes**[161](index=161&type=chunk) Q2 Adjusted EBITDA by Segment (in thousands) | Segment | Q2 2019 | Q2 2018 | | :--- | :--- | :--- | | **Coal Royalty and Other** | $57,677 | $44,081 | | **Soda Ash** | $9,310 | $12,250 | | **Corporate and Financing** | $(4,196) | $(3,263) | | **Total Adjusted EBITDA** | $62,791 | $53,068 | [Results of Operations - First Six Months of 2019 and 2018 Compared](index=47&type=section&id=Results%20of%20Operations%20-%20First%20Six%20Months%20of%202019%20and%202018%20Compared) For the first six months of 2019, total revenues increased 14% to $148.5 million, but net income decreased to $54.9 million due to the $29.3 million loss on debt extinguishment Six-Month Revenue by Segment (in thousands) | Operating Segment | H1 2019 | H1 2018 | Increase (Decrease) | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | **Coal Royalty and Other** | $125,495 | $103,598 | $21,897 | 21% | | **Soda Ash** | $23,015 | $26,150 | $(3,135) | (12)% | | **Total** | $148,510 | $129,748 | $18,762 | 14% | - Total other revenues in the **Coal Royalty segment** increased by **$24.7 million**, driven by a **$14.0 million increase** in **production lease minimum revenues** and a **$6.0 million increase** in **minimum lease straight-line revenues**[177](index=177&type=chunk) Six-Month Adjusted EBITDA by Segment (in thousands) | Segment | H1 2019 | H1 2018 | | :--- | :--- | :--- | | **Coal Royalty and Other** | $104,676 | $88,397 | | **Soda Ash** | $19,110 | $24,500 | | **Corporate and Financing** | $(8,546) | $(7,599) | | **Total Adjusted EBITDA** | $115,240 | $105,298 | [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, NRP had total liquidity of $185.8 million and successfully refinanced its debt, with significant cash used in financing activities for senior notes redemption - **Total liquidity** as of **June 30, 2019** was **$185.8 million**, including **$70.9 million of cash**, **$14.9 million of restricted cash**, and **$100 million of borrowing capacity**[195](index=195&type=chunk) - Cash flows used in **financing activities** **increased by $148.6 million** year-over-year, primarily due to the **$345.6 million redemption of the 2022 Senior Notes**, partially offset by **$300 million in proceeds from the new 2025 Senior Notes**[199](index=199&type=chunk) Total Debt, Net (in thousands) | | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Current portion of long-term debt, net** | $46,040 | $115,184 | | **Long-term debt, net** | $498,029 | $557,574 | | **Total debt, net** | $544,069 | $672,758 | [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are commodity price volatility for coal and soda ash, and interest rate changes related to its variable-rate Opco Credit Facility - The company is exposed to **commodity price risk**, as its revenues and financial condition depend substantially on prevailing prices for **coal and soda ash**, which have been and are likely to continue to be **volatile**[206](index=206&type=chunk)[210](index=210&type=chunk) - **Interest rate risk** is linked to the **Opco Credit Facility**, which has **variable rates based on LIBOR**, though there were **no borrowings outstanding** as of June 30, 2019[211](index=211&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the first six months of 2019 - Management, including the CEO and CFO, concluded that **disclosure controls and procedures are effective** in providing reasonable assurance for timely and accurate reporting[212](index=212&type=chunk) - **No material changes** in the Partnership's **internal control over financial reporting** occurred during the first six months of 2019[213](index=213&type=chunk) [Part II. Other Information](index=60&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings not expected to have a material effect, with specific reference to the Anadarko lawsuit detailed in Note 14 of the financial statements - The company states that ongoing legal proceedings are **not expected to have a material impact** on its financial position, liquidity, or operations[217](index=217&type=chunk) - Specific information regarding the **Anadarko lawsuit** is incorporated by reference from **Note 14** of the consolidated financial statements[218](index=218&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, highlighting potential legislative, judicial, or administrative changes to the U.S. federal income tax treatment of publicly traded partnerships, which could negatively impact unit value - A key risk is that the **U.S. federal income tax treatment** of **publicly traded partnerships** could be **modified** by legislative, judicial, or administrative changes, potentially on a **retroactive basis**[220](index=220&type=chunk) - Proposed legislation like the **'Clean Energy for America Act'** could **repeal the section of the tax code** that allows NRP to be treated as a partnership, which would **negatively impact the value of its units**[220](index=220&type=chunk)[222](index=222&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds were reported[223](index=223&type=chunk) [Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[224](index=224&type=chunk) [Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were provided for the period - No mine safety disclosures were provided[225](index=225&type=chunk) [Other Information](index=60&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - No other information was reported[226](index=226&type=chunk) [Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements such as the Indenture for the 2025 Senior Notes, amendments to credit agreements, and certifications - Key exhibits filed include the **Indenture for the 2025 Senior Notes**, the **Fourth Amendment to the Opco Credit Facility**, and **Sarbanes-Oxley certifications**[229](index=229&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-31465 NATURAL RESOURCE PARTNERS L.P. (Exact name of registrant as specified in its charter) Delaware 35-2164875 (State or other jurisdiction of incorporation or organizatio ...

Natural Resource Partners LP (NYSE:NRP) Q1 2019 Earnings Conference Call May 8, 2019 10:00 AM ET Company Participants Tiffany Sammis ??? Manager-Investor Relations Craig Nunez ??? President and Chief Operating Officer Chris Zolas ??? Chief Financial Officer Conference Call Participants Mark Levin ??? Seaport Global Patrick Malayter ??? CPA Growth Partners Operator Good morning and welcome to the Natural Resource Partners First Quarter 2019 Earnings Conference Call. My name is Lori and I will be facilitating ...