Natural Resource Partners LP

Good day and thank you for standing by. Welcome to the Natural Resource Partners LP First Quarter 2022 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, Tiffany Sammons, Manager of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to the Natural Resource Partners first quarter 2022 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 Dolis, 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 coalesce or detailed market fundamentals. In addition, I refer you to CISAJAM 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, everyone. We generated $52 million of free cash flow in the first quarter, which is one of the best quarterly performances in the history of the partnership. And as representative of the run rate, we expect our consolidated business to deliver for the foreseeable future. We plan to take advantage of the improved financial performance we anticipate this year to accelerate our deleveraging and return additional cash to common unit holders. As a result, we announced today a 67% increase in our quarterly distribution from 45 cents per unit to 75 cents. Strong demand for steel and a relatively muted supply response for coking coal have driven global metallurgical coal prices to historically high levels. Despite rebounding significantly over the last year, U.S. met production has yet to reach pre-pandemic levels, and the same can be said for met exports from Australia and Canada. While the impact of COVID-19 lockdowns in China is starting to negatively impact steel production, We expect the supply-demand balance for met coal to remain tight for the foreseeable future, providing further support for prices. Thermal coal markets are benefiting from increasing electric power generation and restricted growth in thermal coal supplies. Labor shortages, supply chain disruptions, and pressure from governments, regulators, activists, and financial institutions are limiting the ability of operators to increase thermal production to meet demand. The war in Ukraine and corresponding boycott on Russian coal exports is further exacerbating market tightness, and strong demand for natural gas and LNG are providing additional support for thermal pricing. We expect these factors to keep thermal prices at elevated levels for the near term. Our investment in SysAjam Wyoming is also benefiting from historically high soda ash prices. Our average soda ash net realization has increased by more than 50% in the first quarter of 2022 compared to the previous year. Export prices in particular have been very strong, more than doubling on a year-over-year basis due to improving global demand and constrained supply. We believe the long-term outlook for Sysgem Wyoming remains favorable given the secular trends of renewable energy, the electrification of the global auto fleet, and urbanization. Our interest in CISAJAM Wyoming generated $13 million of free cash flow in the first quarter. You'll recall that CISAJAM had ceased paying distributions during the pandemic. They resumed distributions in November and we received $7 million at that time and $13 million in February. We continue working to identify opportunities on our large acreage footprint to capitalize on the transitional energy economy. As you'll recall, we announced our first timber CO2 sequestration transaction in the fourth quarter of last year and our first subsurface CO2 sequestration lease in the first quarter of this year. So, in summary, NRP generated $152 million of free cash flow over the last 12 months. 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, is rising significantly. While COVID-19 lockdowns in China and the war in Ukraine pose a risk to the global economy and our business lines, we are optimistic that the strong performance realized in recent quarters will continue for the foreseeable future. We remain committed to paying down debt, solidifying our capital structure, and paying common unit distributions. And with that, I'll turn the call over to Chris to cover the financial results.