Natural Resource Partners LP

Thank you for joining the Natural Resources Partners LP's second quarter 2022 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. If you'd like to ask a question during this time, press star 1 on your telephone keypad. If you'd like to withdraw your line, press star 1 again. As a reminder, today's call is being recorded. I will now hand today's call over to Tiffany Sammis.

manager of investor relations please go ahead thank you good morning and welcome to the natural resource partner second 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 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 second 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 outlooks 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 Nunes, our President and Chief Operating Officer.

Thank you, Tiffany, and good morning, everyone. NRP generated $64 million of free cash flow in the second quarter, which when combined with the $52 million generated in Q1, resulted in the best start to a year in the history of the partnership. Performance over the last 12 months has been equally impressive, with our business generating $202 million of free cash flow. While inflationary pressures, weakening demand in China, the war in Ukraine, and slowing global economic growth pose increasing risks to our business, we believe the supply-demand balance for Metcold, thermal coal, and soda ash will remain well-supported relative to historical norms for the foreseeable future. We expect continued strong performance for the partnership in the second half of the year. In line with our long-term strategy, we are taking advantage of this opportunity to make significant progress toward our goal of becoming debt-free and redeeming our preferred stock, which will in turn maximize future free cash flow available for common unit holders. With the retirement of $118 million of debt in the second quarter, our leverage ratio ended Q2 at 1.2 times, a dramatic improvement from 4.6 times just 12 months ago. We remain committed to delevering and de-risking the partnership in the months ahead and have already retired an additional $39 million of debt so far in the third quarter. Metallurgical coal prices remain high by historical standards, and have been quite volatile in recent months, with benchmark prices down from record highs set earlier in the year. Slower global economic growth and falling demand for steel, particularly from China, are the key drivers behind the decline, with trade flow disruptions from the war in Ukraine and the ongoing Chinese import ban of Australian coals injecting additional uncertainty and volatility in the global market. After years of underinvestment and new capacity, MET producers continue to have difficulty bringing additional supplies online to replace maturing operations, and historically high thermal coal prices are pulling lower-quality MET coal into the thermal market, providing additional support to MET coal pricing. We believe the supply-demand balance for MET coal will remain well-supported for the foreseeable future, albeit with continued price volatility. Thermal coal markets continue to benefit from strong electric power demand and constrained growth in thermal coal supplies. Operators continue to struggle with labor shortages, supply chain disruptions, logistical challenges, and pressure from governments, regulators, activists, and financial institutions limiting their ability to increase thermal production to meet demand. The war in Ukraine and boycott of Russian coal exports are forcing European buyers to source coal from other regions. providing further support for U.S. thermal producers. We expect these factors to keep thermal prices and demand elevated for the foreseeable future. Our investment in Tsitsijam, Wyoming continues to benefit from historically high export soda ash prices. Though global soda ash demand has weakened modestly over the last month in response to slowing global economic growth, the industry remains supply constrained due to primarily to lingering COVID effects in China, a force majeure event at a competitor in Green River, Wyoming, and ongoing delays with shipping and logistics. Higher soda ash prices have more than offset cost inflation, resulting in higher margins and cash flow. We continue to believe the long-term outlook for SysAjam remains favorable given secular trends of renewable energy, the electrification of the global auto fleet, and urbanization. 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 forest CO2 sequestration transaction in the fourth quarter of last year and our first subsurface CO2 sequestration lease in the first quarter of this year. Consistent with our royalty business model, we anticipate little no capital investment will be required of NRP related to these opportunities. And with that, I'll turn the call over to Chris to cover our financial results.