Natural Resource Partners LP

Good morning, ladies and gentlemen. Thank you for standing by and welcome to the Natural Resource Partners LP first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the conference over to your speaker today, Tiffany Sammis, Investor Relations. Please go ahead.

Good morning and welcome to the Natural Resource Partners first quarter 2020 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 of POLL. 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 gap 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 COLA fee or detailed market fundamentals. In addition, I refer you to general resources, public disclosures, and commentary for specific questions regarding our SODASH business segment. Now, I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

Thank you, Tiffany. Good morning, all. I hope you and your loved ones are safe and healthy. COVID-19 has changed the way we live, work, and interact with others. It has familiarized us with telecommuting, contact tracing, and Zooming. It has reminded us of the importance of the people and industries essential to our way of life, and the difficulties that result when those people and activities are threatened. Most importantly, it reminded us that we're all in this together. I hope that in the years to come, everyone will look back with pride in how they responded to this challenge, and those who come after us will say that this generation of Americans, our generation, was as strong as any to come before or since. I'm pleased to announce that we at NRP are doing our part. We continue to operate under CDC guidelines, government-imposed rules, and company remote work protocols. Our employees are safe, and the partnership is conducting business as usual. Our succession management plans and delegation of authorities are in place should we need them. Our conservative financial approach, the hard work of our team, and the support of our banks, debt, and equity holders in recent years are now paying off We have robust liquidity consisting of $107 million of cash and $100 million of available borrowing capacity. We continue to generate significant free cash flow, and our parent company bonds do not mature until 2025, all of which provides us with a great deal of financial flexibility to manage through this pandemic. We recorded $146 million of free cash flow over the last 12 months, paid off $93 million of debt, added $41 million to common unit holders' equity before non-cash accounting impairments, and paid out $32 million of common unit holder distributions. Our cash flow cushion, which is the free cash flow remaining after paying our private placement debt amortizations and distributions on our common and preferred units, was $35 million over the same period. While the COVID-19 pandemic did not have a material impact on our first quarter results, we believe that declining demand for steel, electricity, and glass will negatively impact our cash flow in the months ahead. Falling prices for metallurgical and thermal crow are approaching operators' cost of production. Nine of our lessees have idled operations on various NRP properties over the last month. While these idlings have been characterized as temporary and most have already resumed operations, it's fair to say that our lessees are having a tough time. The soda ash market has been hit by a significant drop in demand for flat glass, specifically glass used in automobile manufacturing. and global soda ash prices have declined approximately 20% since the fall. While we cannot predict the extent to which our company will be impacted by these events, we do expect our cash flow cushion to go negative in the months ahead compared to the 35 million positive cushion realized over the last 12 months. Despite that, we believe that our significant liquidity buffer and continued free cash flow generation will provide us with the financial flexibility and the margin of safety necessary to continue operating business as usual, which includes paying our amortizing debt when due. As you're aware, we announced two weeks ago that we are not going to pay the common unit distribution that would have been paid this month. That decision is consistent with the financial strategy we've employed in recent years to delever and de-risk the partnerships. It is my hope that we will feel comfortable reinstating the distribution in August, but we must wait to see how the COVID-19 situation plays out over the coming months before making that decision. In many respects, we now face the most uncertain business environment in a generation, but I am pleased and confident that the numerous transformative actions completed in recent years to right-size our business, solidify our capital structure, and Bill Liquidity have positioned NRP well to weather this storm and continue executing on our multi-year plan to enhance unit holder value by delevering and de-risking our capital structure. And with that, I'll turn the call over to Chris to cover our financial results.