Natural Resource Partners Q2 Earnings Call Highlights

Key Points

• NRP reported solid second-quarter cash generation, with $25 million in net income, $41 million in operating cash flow and $42 million in free cash flow. The mineral rights segment remained the primary contributor, producing $45 million in operating and free cash flow.
• Soda ash performance weakened as global oversupply and softer flat-glass demand reduced prices and eliminated a $5 million Sisecam Wyoming distribution. Management expects domestic soda ash prices to decline as 2027 contracts are negotiated, although capacity closures could help rebalance supply.
• Debt reduction is expected to support a significant distribution increase. NRP repaid its credit facility and now has only a $14 million senior-notes payment due in December; management said distributions are likely to rise substantially with the November payment.

Natural Resource Partners NYSE: NRP reported second-quarter 2026 net income of $25 million, operating cash flow of $41 million and free cash flow of $42 million, as its mineral rights business continued to provide cash generation despite challenges in coal and soda ash markets.

President and Chief Operating Officer Craig Nunez said the partnership generated $163 million of free cash flow over the trailing 12 months before accounting for the $39 million invested in its soda ash business during the first quarter. He also said NRP repaid its bank revolver in July and now has $14 million of debt remaining.

“Barring something unforeseen, we intend to raise distributions significantly in November,” Nunez said.

Mineral Rights Segment Remains Primary Cash Generator

NRP’s mineral rights segment generated $36 million of net income and $45 million in both operating cash flow and free cash flow during the second quarter. Segment net income declined $3 million from the prior-year quarter, largely reflecting higher depreciation, depletion and amortization expense following revised mine plans at certain longwall thermal coal mines, which increased per-ton depletion rates.

The decline was partly offset by higher revenue from increased metallurgical and thermal coal volumes and pricing at certain properties, Chief Financial Officer Chris Zolas said.

Operating cash flow and free cash flow in the mineral rights segment each declined $1 million year over year. Zolas attributed the change primarily to higher recoupments during the quarter, partly offset by increased cash received from minimum payments.

Metallurgical coal represented about 70% of NRP’s coal royalty revenue and 45% of coal royalty sales volumes in the second quarter, according to Zolas.

Nunez said both metallurgical and thermal coal markets had stabilized and improved modestly from recent lows, though he declined to predict commodity-price movements. He emphasized that the mineral rights segment has consistently produced cash through coal cycles.

On thermal coal, Nunez said higher oil prices can encourage associated natural gas production, potentially pressuring North American thermal coal prices. He also cited increasingly competitive renewable energy as a long-term headwind for thermal coal.

Soda Ash Results Pressured by Oversupply

NRP’s soda ash segment generated $7 million of net income during the quarter, down from the prior-year period as international soda ash oversupply reduced selling prices and demand for flat glass weakened.

Operating cash flow and free cash flow for the soda ash segment each fell $5 million from a year earlier. The decline reflected the absence of a distribution from Sisecam Wyoming in the second quarter, compared with a $5 million distribution received in the same quarter last year.

Zolas said NRP does not expect distributions from Sisecam Wyoming to resume until soda ash demand improves or the market sees a significant supply response.

Nunez said international soda ash prices appear to have found a floor after a prolonged decline, but he noted that prices remain below the cost of production for many producers. He said domestic prices have remained at an unusually large premium to international pricing because U.S. contracts are generally set annually while international prices respond more quickly to spot-market changes.

As 2027 domestic contracts are negotiated this year, Nunez said NRP expects the pricing gap to narrow, resulting in lower domestic prices. He pointed to recent announcements of extended closures representing roughly 4% of global soda ash capacity as an early indication that supply could begin to adjust.

Debt Reduction Supports Distribution Outlook

NRP paid a first-quarter distribution of $0.75 per common unit in May and announced a second-quarter distribution of $0.75 per common unit, payable later in August.

The partnership has fully repaid its OpCo credit facility and has one remaining $14 million scheduled payment on its OpCo senior notes due in December, Zolas said. Corporate and financing net income improved by $2 million from the prior-year quarter, while operating and free cash flow each improved by $1 million, reflecting lower debt balances, reduced interest expense and less cash paid for interest.

With the credit facility repaid and only the final senior note payment outstanding, management said it expects to significantly increase unit holder distributions with the next quarterly payment scheduled for November.

About Natural Resource Partners (NYSE:NRP)

Natural Resource Partners LP NYSE: NRP is a master limited partnership that acquires and manages royalty and other mineral interests in coal and other natural resources across North America and Australia. The partnership was formed in 2010 as a spin-out from a major U.S. coal producer and is headquartered in Fairmont, West Virginia. Its core business model centers on owning gross proceeds interests, gross royalty proceeds interests and fee minerals, which provide the right to receive a portion of revenues from mining and mineral production without operating the mines directly.

NRP's U.S.

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