Natural Resource Partners L.P. (NYSE:NRP) today reported fourth quarter and full year 2023 results as follows:

2023 Highlights:

• Generated record full year free cash flow of $313 million
• Paid regular quarterly distributions of $0.75 per common unit and a special cash distribution of $2.43 per common unit to cover unitholder tax liabilities associated with owning NRP's common units during 2022
• Redeemed $178 million of preferred units at par with cash; $72 million of the original $250 million preferred units remain outstanding
• Repurchased 1.46 million warrants with $56.1 million cash
• Increased credit facility borrowing capacity from $130 million to $155 million

Early 2024 Highlights:

• Repurchased 1.22 million warrants with $55.7 million of cash and 198,767 of common units; 0.32 million of the original 4 million warrants remain outstanding with a current settlement value of approximately $20 million
• Increased credit facility borrowing capacity from $155 million to $200 million
• Declared special cash distribution of $2.44 per common unit to cover unitholder tax liabilities associated with owning NRP's common units during 2023

Craig Nunez, NRP's president & chief operating officer said, "NRP generated a record $313 million of free cash flow in 2023 driven by increased distributions received from our soda ash business and ongoing strength in metallurgical coal prices. We have now been able to permanently redeem 71% of our preferred units at par and settle 92% of our warrants."

Mr. Nunez continued, "In 2015 we laid out a strategy to de-lever and de-risk the partnership in order to maximize long-term common unitholder value. I'm proud of the significant progress we have made and continue to make. We stand firm in our belief that the best approach to maximizing the intrinsic value of our business is to continue to aggressively pay off all permanent debt, redeem all preferred units, and settle all remaining warrants."

NRP's liquidity was $71.2 million at December 31, 2023, consisting of $12.0 million of cash and $59.2 million of borrowing capacity available under its revolving credit facility.

NRP also announced today that the board of directors of its general partner declared a special cash distribution of $2.44 per common unit to be paid on March 26, 2024 to unitholders of record on March 19, 2024. This special distribution is to help cover unitholder tax liabilities associated with owning NRP's common units during 2023. Future distributions on NRP's common and preferred units will be determined on a quarterly basis by the board of directors. The board of directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the board determines is necessary for future operating and capital needs.

Segment Performance

Mineral Rights

Mineral Rights net income in the fourth quarter and full year of 2023 increased $0.2 million and decreased $21.9 million, respectively, as compared to the prior year periods. Operating cash flow in the fourth quarter and full year of 2023 increased $1.8 million and decreased $2.8 million, respectively, as compared to the prior year periods. Free cash flow in the fourth quarter and full year of 2023 increased $1.9 million and decreased $2.1 million, respectively, as compared to the prior year periods. The decrease in net income for the full year of 2023 was primarily due to lower metallurgical coal pricing, lower oil and gas royalty revenues, lower transportation and processing revenues, and lower carbon neutral initiative revenues as compared to the prior year. Approximately 70% of coal royalty revenues and approximately 45% of coal royalty sales volumes were derived from metallurgical coal in the fourth quarter of 2023, and approximately 70% of coal royalty revenues and approximately 50% of coal royalty sales volumes were derived from metallurgical coal in the full year of 2023.

Metallurgical and thermal coal prices saw significant variability in 2023, and were off the record highs seen in 2022, but finished the year strong relative to historical norms. NRP believes limitations from ongoing labor shortages, access to capital, and inflationary pressures should provide continued price support for metallurgical and thermal coal in 2024, despite headwinds from lower steel demand and the long-term secular decline in thermal energy production.

NRP continues to explore and identify carbon neutral revenue sources across its large portfolio of surface, mineral, and timber assets, including the permanent sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar, and wind energy, as well as lithium production. While the timing and likelihood of additional cash flows being realized from these activities is uncertain, NRP believes its large ownership footprint throughout the United States provides additional opportunities to create value in this regard with minimal capital investment by NRP.

Soda Ash

Soda Ash net income in the fourth quarter and full year of 2023 decreased $1.0 million and increased $13.5 million, respectively, as compared to the prior year periods. The increase in net income for the full year of 2023 was primarily due to higher sales prices driven by strong demand domestically, partially offset by lower soda ash production and sales volumes. Operating cash flow and free cash flow in the fourth quarter and full year of 2023 increased $4.6 million and $36.5 million, respectively, as compared to the prior year periods primarily due to increased distributions received from Sisecam Wyoming.

Strong sales prices at Sisecam Wyoming for the year ended December 31, 2023 more than offset input cost inflation, supply chain difficulties, and the influx of supply from China in the latter part of the year. However, NRP believes this increase in global soda ash production will result in an oversupplied market and a decline in soda ash prices in 2024.

Corporate and Financing

Corporate and Financing costs in the fourth quarter and full year of 2023 decreased $2.5 million and $18.4 million, respectively, as compared to the prior year periods primarily due to the loss on early extinguishment of debt recognized in 2022 related to the retirement of the 2025 Senior Notes. Full year 2023 results were also impacted by lower interest expense as a result of less debt outstanding for the full year of 2023. Operating cash flow in the fourth quarter and full year of 2023 improved $2.5 million and $10.4 million, respectively, as compared to the prior year periods. Free cash flow in the fourth quarter and full year of 2023 improved $2.6 million and $10.5 million, respectively, as compared to the prior year periods. These improvements were primarily due to lower cash paid for interest as a result of less debt outstanding in 2023.

NRP continues to make great strides in de-levering and de-risking the partnership. In 2023, NRP redeemed $178 million of its Class A Preferred Units at par with cash, repurchased 1.46 million of its warrants with $56.1 million cash, and upsized its revolving credit facility borrowing capacity by $25 million to $155 million. In 2024, NRP repurchased 1.22 million warrants with $55.7 million of cash and 198,767 of common units and increased its revolving credit facility borrowing capacity an additional $45 million to $200 million.

Of the originally issued 250,000 Class A Preferred Units, 71,666 Class A Preferred Units remain outstanding. Of the originally issued 4 million warrants, 0.32 million warrants remain outstanding.

NRP's consolidated leverage ratio was 0.5x at December 31, 2023.

In February 2023, NRP declared and paid a fourth quarter 2023 cash distribution of $0.75 per common unit and a $2.15 million cash distribution on the preferred units. As previously mentioned, today NRP declared a special distribution of $2.44 per common unit to help cover unitholder tax liabilities associated with owning NRP's common units during 2023.

Conference Call

A conference call will be held today at 9:00 a.m. ET. To register for the conference call, please use this link: https://registrations.events/direct/Q4I5055640. After registering a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, however, to ensure you are connected for the full conference call we suggest registering at minimum 10 minutes prior to the start of the call. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com. To access the replay, please visit the Investor Relations section of NRP’s website.

Withholding Information for Foreign Investors

Concurrent with this announcement, we are providing qualified notice to brokers and nominees that hold NRP units on behalf of non-U.S. investors under Treasury Regulation Section 1.1446-4(b) and (d) and Treasury Regulation Section 1.1446(f)-4(c)(2)(iii). Brokers and nominees should treat one hundred percent (100%) of NRP's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. In addition, brokers and nominees should treat one hundred percent (100%) of the distribution as being in excess of cumulative net income for purposes of determining the amount to withhold. Accordingly, NRP's distributions to non-U.S. investors are subject to federal income tax withholding at a rate equal to the sum of the highest applicable rate plus ten percent (10%).

Company Profile

Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns, manages and leases a diversified portfolio of properties in the United States including coal, industrial minerals and other natural resources, as well as rights to conduct carbon sequestration and renewable energy activities. NRP also owns an equity investment in Sisecam Wyoming LLC, one of the world’s lowest-cost producers of soda ash.

For additional information, please contact Tiffany Sammis at 713-751-7515 or tsammis@nrplp.com. Further information about NRP is available on the Partnership’s website at http://www.nrplp.com.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership. These risks include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on the Partnership’s common and preferred units; the Partnership's business strategy; its liquidity and access to capital and financing sources; its financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by the Partnership's lessees; Sisecam Wyoming LLC’s trona mining and soda ash refinery operations; distributions from the soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving the Partnership, and of scheduled or potential regulatory or legal changes; global and U.S. economic conditions; and other factors detailed in Natural Resource Partners’ Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment, net income attributable to non-controlling interest and gain on reserve swap; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

“Distributable cash flow” or "DCF" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; less maintenance capital expenditures and distributions to non-controlling interest. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, distributable cash flow is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. Distributable cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

“Free cash flow” or "FCF" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures, cash flow used in acquisition costs classified as investing or financing activities and distributions to non-controlling interest. FCF is calculated before mandatory debt repayments. Free cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. Free cash flow may not be calculated the same for us as for other companies. Free cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

"Leverage ratio" represents the outstanding principal of NRP's debt at the end of the period divided by the last twelve months' Adjusted EBITDA as defined above. NRP believes that leverage ratio is a useful measure to management and investors to evaluate and monitor the indebtedness of NRP relative to its ability to generate income to service such debt and in understanding trends in NRP’s overall financial condition. Leverage ratio may not be calculated the same for us as for other companies and is not a substitute for, and should not be used in conjunction with, GAAP financial ratios.

-Financial Tables and Reconciliation of Non-GAAP Measures Follow-

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

Natural Resource Partners L.P.

Financial Tables

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Natural Resource Partners L.P.

Financial Tables

Natural Resource Partners L.P.

Financial Tables

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Natural Resource Partners L.P.

Financial Tables

(Unaudited)

The following tables present NRP's unaudited business results by segment for the three months ended December 31, 2023 and 2022 and September 30, 2023: