Natural Resource Partners Q4 Earnings Call Highlights

Key Points

• Commodity prices are deeply depressed: metallurgical and thermal coal are at "cyclically low" levels and soda ash at "generational lows," with management saying it sees no near-term catalysts and is running the business assuming long-term secular decline in North American thermal coal demand.
• Strong cash generation and deleveraging despite the cycle: NRP reported $46 million of free cash flow in Q4 and $169 million for 2025, retired $109 million of debt to finish the year with $33 million of debt, but now expects a meaningful distribution increase likely pushed to November (from an earlier August target).
• Sisecam Wyoming JV stress and capital injection: NRP has not received distributions from the soda ash JV for two quarters, agreed to invest $39 million to reduce the JV's bank facility (which will still leave > $50 million of debt), and does not expect distributions to resume until soda ash demand or supply rebalancing improves.

Natural Resource Partners NYSE: NRP reported fourth-quarter and full-year 2025 results marked by continued strong free cash flow generation despite what management described as exceptionally weak pricing across its key commodities: metallurgical coal, thermal coal, and soda ash.

Commodity backdrop remains challenging

President and Chief Operating Officer Craig Nunez said all three commodities “continue to struggle with sales prices that are near or below” operators’ marginal costs of production. He characterized metallurgical and thermal coal prices as “cyclically low,” while soda ash prices were described as “generational lows.” Management said it does not see near-term catalysts likely to improve the outlook.

Nunez said softer global economic activity and subdued steel demand weighed on metallurgical coal pricing in 2025, while low natural gas prices and mild weather pressured thermal coal. While he noted sentiment toward thermal coal has been supported by projected electricity demand growth from data centers, he said NRP has not yet seen “any material market improvement” and will continue to manage the business under the assumption that North American thermal coal demand is in “long-term secular decline” absent evidence of a structural shift.

On soda ash, Nunez said 2025 was “a very challenging time” for the global industry and that the partnership believes 2026 “will be worse.” He said international prices are currently below the cost of production for most producers and that supply rationalization is “not a question of if, but when,” while also cautioning that rebalancing could take years before prices return to historical levels.

Fourth-quarter and full-year results

Chief Financial Officer Chris Zolas reported that NRP generated $31 million of net income, $45 million of operating cash flow, and $46 million of free cash flow in the fourth quarter of 2025. For the full year 2025, the partnership generated $136 million of net income, $166 million of operating cash flow, and $169 million of free cash flow.

Zolas said the Mineral Rights segment delivered $40 million of net income, $49 million of operating cash flow, and $50 million of free cash flow in the fourth quarter, and $166 million of net income, $182 million of operating cash flow, and $185 million of free cash flow for the full year.

Compared with the prior-year period, Zolas said the Mineral Rights segment’s fourth-quarter net income, operating cash flow, and free cash flow each decreased by $13 million. For the full year, segment net income declined $41 million and operating and free cash flow each decreased $60 million, which he attributed primarily to weaker metallurgical coal markets that led to lower prices and volumes.

Zolas also provided the partnership’s coal royalty mix, noting that metallurgical coal represented about 70% of coal royalty revenues and 45% of coal royalty sales volumes in the fourth quarter. For the full year 2025, he said metallurgical coal accounted for about 65% of coal royalty revenues and 45% of coal royalty sales volumes.

For the Soda Ash segment, Zolas said net income declined $3 million in the fourth quarter and $15 million for the full year compared to the prior-year periods. Operating and free cash flow fell $11 million in the fourth quarter and $31 million for the full year, driven primarily by lower international prices, which he said were influenced by new natural soda ash supply from China, as well as weak glass demand from construction and automotive markets.

Sisecam Wyoming: distributions paused and capital investment planned

Management highlighted ongoing pressure at Sisecam Wyoming, the partnership’s soda ash joint venture. Nunez said NRP has not received distributions from the venture for the last two quarters and does not expect distributions to resume “for the foreseeable future,” as the managing partner retains cash for safety, operational integrity, and capital structure support.

Earlier in the month, Nunez said NRP agreed to invest capital in the venture to reduce outstanding amounts under its bank credit facility and improve competitiveness in the current market. NRP’s share of that investment is $39 million.

During the question-and-answer session, management said the joint venture is not debt-free following the contribution and will have more than $50 million of debt remaining afterward. Nunez said additional contributions are “not our plan right now,” though he added that if market conditions worsen, there could be situations where NRP would elect to contribute more capital. He also clarified the contribution was NRP’s “election,” not a requirement.

Zolas reiterated that the partnership has not received a distribution from Sisecam Wyoming since the second quarter of 2025 and said distributions are not expected to resume until soda ash demand rebounds or a significant supply response occurs, “most likely from higher cost synthetic production.”

Deleveraging progress and distribution update

Despite the difficult commodity environment, Nunez emphasized progress toward the partnership’s long-standing goal of retiring all debt. He said NRP retired $109 million of debt during 2025 and ended the year with $33 million of debt and “no other financial obligations outstanding.” Zolas said the Corporate and Financing segment improved versus prior periods due to lower interest costs from significantly reduced debt balances.

Nunez said the partnership had targeted retiring all debt and “significantly” increasing unitholder distributions in August 2026, but cautioned previously that prolonged bear markets could delay that timing. He said the $39 million Sisecam investment is one such event and will push the expected distribution increase into a subsequent quarter.

On the call, Nunez told an investor that the partnership does not anticipate being in a position to substantially increase distributions in the May quarter. Based on the partnership’s free cash flow run-rate and the timing of the Sisecam contribution, he said the timing “is probably in November,” while reiterating that a longer bear market could still push that timing back.

Zolas said NRP paid a $0.75 per common unit distribution for the third quarter of 2025 in November and paid another $0.75 per common unit distribution related to the fourth quarter of 2025 in February. He also said the partnership announced a special distribution of $0.12 per common unit to help cover unitholder tax liabilities associated with owning NRP common units in 2025.

Capital allocation and other initiatives

In response to a question about not bidding in a mineral rights auction related to Warrior mines, Nunez said auctions are typically not places where NRP finds attractive opportunities for mineral-type assets, and he emphasized the partnership’s ongoing focus on deleveraging and then returning capital to unitholders.

Elsewhere, Nunez said interest in leasing for underground carbon sequestration remains “lackluster” due to political, regulatory, and market uncertainties. He added that NRP continues to work on geothermal, solar, and lithium opportunities, with “small-scale progress” but nothing material to report.

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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