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Operator: Thank you for standing by. My name is Pam and I will be your conference operator today. At this time, I would like to welcome everyone to the Natural Resource Partners L.P. First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Tiffany Sammis, Manager of Investor Relations. You may begin.

Tiffany Sammis: Thank you. Good morning and welcome to the Natural Resource Partners first quarter 2024 conference call. Today’s call is being webcast and a replay will be available on our website. Joining me today are Craig Nunez, President and Chief Operating Officer, Chris Zolas, Chief Financial Officer and Kevin Craig, Executive Vice President. Some of our comments today may include forward-looking statements reflecting NRP’s views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward looking statements. These risks are discussed in NRP’s Form 10-K and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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

Craig Nunez: Thank you Tiffany and good morning everyone. NRP generated $72 million of free cash flow in the first quarter and $312 million of free cash flow over the last 12 months. This robust cash generation has allowed us to make noteworthy progress toward our goal of eliminating all financial obligations. As of today, our total remaining obligations, which include debt and preferred equity, stand at approximately $240 million, a 45% decrease from just one year ago. Since embarking on our de risking strategy in 2015, we have settled 100% of the outstanding warrants, paid off nearly 90% of our debt, and redeemed more than 70% of the preferred equity. We stand firm in our belief that this is the best strategy to maximize the intrinsic value of our business, which should in turn maximize long term unitholder returns.

The primary drivers of our recent strong performance were historically high prices for both metallurgical coal and soda ash, which have declined from record highs and will likely remain volatile for the foreseeable future. We believe that muted investment in new met coal supply will provide support for prices, but not at the record high levels seen in recent years. Soda ash prices are also under pressure from a significant increase in global capacity from new projects in China, Turkey, and the United States. We believe it will take several years for the market to absorb these new supplies. While we expect the partnership’s free cash flow to decline from 2022s record level due to these factors, our capital structure is solid and improving, and we anticipate the business will continue to generate robust levels of free cash flow for the foreseeable future.

We expect to remain on track to pay off all debt and preferred stock while paying common unit distributions to help cover unitholder tax liabilities associated with owning NRP common units. Our mineral rights business generated $70 million of free cash flow during the first quarter of 2024. Metallurgical coal prices declined in Q1 versus 2023 but remain generally at or above historical norms. While we expect met prices to remain volatile, global supply and demand remains in reasonable balance, and we believe it will stay that way for the foreseeable future due to long term demand trends and continued modest investment in new met supply. Thermal coal prices experienced significant volatility during the quarter as high inventory levels driven by mild weather and low priced natural gas put downward pressure on US domestic demand.

While we do not believe thermal coal prices will rebound to the record high levels seen in recent years, underinvestment in new sources of thermal coal production and solid international demand should provide price support for the foreseeable future at levels that are competitive when compared to historical norms. Longer term, we believe the domestic thermal market will continue its long term secular decline. Moving to soda ash, we received a $14 million cash distribution from Sisecam [ph] Wyoming, in the first quarter of 2024. This quarterly distribution was paid in connection with the fourth quarter 2023 performance when soda ash prices were much higher than they were during the first quarter. The soda ash market continues to remain oversupplied, putting downward pressure on prices, a trend that began in the second half of last year as new supply flooded the market.

Our lower first quarter net income compared to prior quarters reflects this weaker price environment, and we expect future distributions from Sisecam Wyoming, to adjust accordingly. Despite the present challenging soda ash market, our long term outlook for our investment in Sisecam Wyoming, remains positive. We are one of the world’s lowest cost producers of a product that has favorable long term fundamentals driven by urbanization, the megatrends for renewable energy, and the electrification of the global auto fleet. Our soda ash business remains a key asset in generating value for NRP unitholders today and in the long run. We continue to explore opportunities to lease our mineral and surface assets for permanent underground CO2 sequestration, forest sequestration, lithium production and the generation of electricity using geothermal, wind and solar energy.

While we believe the carbon neutral industry is still decades from full development, the potential upside from our carbon neutral initiatives could be significant, all while requiring no capital investment by NRP. And with that, I’ll turn the call over to Chris to cover the financial results.

Chris Zolas: Thank you, Craig. In the first quarter of 2024, NRP generated $71 million of operating cash flow and $56 million of net income despite weakening in both coal and soda ash markets. Moving to our segment results, our mineral rights segment generated $70 million of operating cash flow and $61 million of net income during the first quarter of 2024. When compared to the prior year, our mineral rights segment’s net income and operating cash flow decreased $8 million and $4 million, respectively, primarily due to lower metallurgical coal prices. Regarding our met thermal coal royalty mix, metallurgical coal made up approximately 75% of our coal royalty revenues and 50% of sales volumes in the first quarter of 2024. Shifting to our soda ash business segment, net income in the first quarter of 2024 decreased $14 million as compared to the prior year quarter due to increased supply from China that resulted in significantly lower international sales prices, slightly lower domestic sales prices, and lower sales volumes compared to the prior year quarter.

Operating cash flow from this segment increased $4 million as compared to the prior year quarter. As Craig mentioned earlier, the distribution we received in Q1 of 2024 was paid in connection with the fourth quarter of 2023 performance, a period with higher international and domestic sales prices. Moving to our corporate and financing segment, first quarter 2024, net income and operating cash flow decreased $1 million, primarily due to higher interest expense and cash paid for interest because of increased borrowings outstanding on the credit facility that were used to settle warrants. In the first quarter of 2024, we settled 1.2 million warrants with a combination of $56 million of cash and issuing a bit less than 200,000 NRP common units, and in April we settled the remaining 0.3 million of our outstanding warrants with $10 million of cash in issuing a bit over 89,000 common units.

After this April settlement, no warrants remain outstanding. In the first quarter of 2024, we utilized the accordion feature on our existing credit facility and added $45 million of borrowing capacity to reach the full 200 million amount available to us. This represents an increase in borrowing capacity of 54% from just one year ago. We’ve used this credit facility, along with our free cash flow, to permanently retire preferred equity and warrants, and will continue doing so to redeem the remaining 72 million of preferred equity. As Craig mentioned earlier, we’ve made significant progress on our long term goal to eliminate our obligations, and we remain laser focused on eliminating our remaining obligations made up of debt and preferred equity.

I’d like to point out that the potentially dilutive effect of preferred equity and warrants has been significantly reduced by a redemption of 178 million of the original 250 million of preferred equity in the settlement of warrants. As evidence, the diluted weighted average number of common units in Q1 2024 decreased almost 20% compared to the prior year quarter. Consequently, our Q1 2024 diluted net income per common unit increased 11% compared to the prior year quarter, even though our basic EPU was down 6% compared to the prior year quarter. Finally, regarding our quarterly distributions, in February of 2024, we paid a fourth quarter distribution of $0.75 per common unit and a $2 million cash distribution to our preferred unitholders. In March of 2024, we announced and paid a special distribution of $2.44 per common unit to help cover unitholder tax liabilities associated with owning NRP’s common units in 2023.

And today we announced our first quarter distribution of $0.75 per common unit and a $2 million cash distribution to our preferred unitholders. And with that, I’ll turn the call back over to our operator for questions.

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Nat Stewart of N.A.S. Capital LLC. Please go ahead.

Nat Stewart: Hi, good morning. I just had one question. Is there any update on anything going on with the existing agreements for the carbon storage? Is there any updates on a permitting process or any information you might have on what’s going on there?

Craig Nunez: Unfortunately, we do not.

Nat Stewart: Okay. All right. Well, that’s my question. Thanks.

Craig Nunez: Thank you.

Operator: There are no questions. I will now turn the conference back over to Craig Nunez for closing remarks.

Craig Nunez: Thank you, operator. And thank everyone for participating on our call. And thank you for your continued support of NRP. Have a great day. Bye.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.+