Natural Resource Partners LP

Good morning. My name is Charlie and I will be your conference operator today. At this time, I would like to welcome everyone to the Natural Resource Partners LP first quarter 2021 earnings 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. If you would like to ask a question, please press start followed by one. Thank you. Tiffany Sammis, Manager of Investor Relations, you may begin your conference.

Good morning and welcome to the National Resource Partners First Quarter 2021 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 NRPs, 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 coalesce or detailed market fundamentals. In addition, I refer you to general resources, public disclosures, and commentary for specific questions regarding our soda ash business segment. Now I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

Thank you, Tiffany, and good morning all. NRP continues to operate under CDC guidelines, government-imposed rules, and company remote work protocols. Our people are safe and the partnership is conducting business as usual. Thank you. We are quite pleased with the partnership's demonstrated ability to generate free cash flow, continue paying down debt, and maintain strong liquidity throughout the crisis. And we expect these trends to continue. Over the last 12 months, a period that captures the depths of the pandemic, we generated a noteworthy $82 million of free cash flow and paid off $46 million of debt. Even 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 held up well during the depths of the pandemic, falling negative by only $3.7 million. We continue to focus on and maintain robust liquidity and ended the quarter with $197 million of total liquidity consisting of $97 million of cash and 100 million of unused borrowing capacity. Metallurgical and thermal coal markets continue to recover from the impact of the COVID-19 pandemic, and we expect this will benefit our lessees going forward. The ongoing trade dispute between China and Australia appears to have benefited U.S. met producers as Chinese manufacturers realign supply chains to procure met coal from other regions. Thermal coal demand continues to stabilize as the economy recovers and has also been supported by cooler winter temperatures in the first quarter. As we have discussed previously, we do not have significant sensitivity to thermal coal prices this year, since the substantial majority of our thermal cash flows are fixed pursuant to a contract with Foresight Energy that went into effect as they emerged from bankruptcy last year. The outlook for our soda ash investment continues to improve as well. Jenner, Wyoming is now operating near capacity, and the U.S. Geological Survey reports that U.S. soda ash production is now near normal levels, and the U.S. industry's export volumes have returned to historical norms. International soda ash prices are improving, particularly in Asia, which provides additional confirmation that the U.S. industry is well on its way to normality. However, demand risks are still elevated as several regions of the world are still experiencing pandemic-related difficulties, including increasing infection rates and subsequent economic lockdowns. Regarding cash distributions from Jenner, we received a special $4 million distribution from Jenner Wyoming during the quarter, but we do not expect Jenner management to resume regular cash distributions from Jenner Wyoming until they have greater visibility and confidence in the sustainability of the continuing improvement in global sodash demand. As mentioned on our last two earning calls, we continue working to identify alternative revenue sources across our large portfolio of land, mineral and timber assets. The types of opportunities we are exploring include the sequestration of carbon dioxide underground and in standing timber, and the generation of electricity using geothermal, wind, and solar energy. While we do not expect these activities to generate significant cash flow in the immediate future, we believe our large ownership footprint throughout the United States will provide opportunities to create value in this regard with minimal capital investment by NRP. The partnership's ability to continue generating free cash flow, reduce debt, and pay unit holder distributions during the COVID-19 downturn demonstrates that we have the right strategy in place to create unit holder value. Since 2015, when we embarked on our strategy of delevering and de-risking the partnership, NRP has paid down over $900 million of debt, paid over $115 million of common unit holder distributions, and worked to solidify our capital structure and ensure strong liquidity. We remain steadfast in our commitment to focus on maximizing unit holder value by continuing these efforts. And with that, I'll turn the call over to Chris to cover our financial results.