Natural Resource Partners LP

Hello, everyone. Thank you for joining us and welcome to Natural Resource Partners' first quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Tiffany Sammis, investor relations. Tiffany, please go ahead.

Thank you. Good morning, and welcome to the National Resource Partners First Quarter 2026 Conference Call. Today's call is being webcast, and a replay will be available on our website. Joining me today are Craig Nunes, 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 for those directly comparable GAAP measures are included in our first We tend to discuss the operations or outlook for any particular policy or detailed market fundamentals. 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. I would like to start off by apologizing in advance for my voice. I'm a little under the weather today, and I will do my best to speak clearly so you'll be able to understand me. NRP generated $34 million of free cash flow in the first quarter of 2026 and $167 million of free cash flow over the last 12 months, before accounting for the $39 million capital investment we made into our soda ash business during the quarter. Metallurgical and thermal coal producers continue to operate in challenging conditions, while soda ash producers are struggling amid what is arguably the most significant global supply glut in a generation. To date, we have not experienced any material impact on our mineral rights segment from the war in Iran. However, the closure of the Strait of Hormuz has caused some European countries to look at delaying coal plant phase-outs to ensure power security, similar to ongoing discussions in the United States. U.S. metallurgical coal prices are realizing a modest benefit from increased demand for safe-haven domestically produced steel. At the same time, sharply higher diesel and shipping costs are compressing producer margins, and any slowdown in global industrial activity resulting from elevated energy prices could put downward pressure on steel demand and metallurgical coal pricing. There is another second-order effect worth noting. Higher oil prices may also lead to increased U.S. oil production and greater volumes of associated natural gas. Given the limits of LNG export capacity, A portion of this gas may become stranded domestically, placing downward pressure on North American natural gas prices and, in turn, on thermal coal demand and pricing. Commodity markets have a way of solving one problem by creating another. In the sodash market, higher energy and transportation costs, combined with war-related slowdowns in construction activity, particularly across Asia, have worsened conditions for an industry already burdened by oversupply. While lower-cost U.S. producers may ultimately gain market share as higher-cost competitors struggle, we have not yet seen clear evidence of this shift. In short, the war in Iran has taken an already difficult outlook for Sodash and made it worse. Despite these headwinds, NRP continues to generate substantial cash flow and remains on track with our deleveraging strategy. Although outstanding debt increased to $73 million during the quarter as we funded the $39 million investment in Shishajam, Wyoming, we subsequently reduced debt to $60 million by quarter end and have paid it down to $45 million as of today. Our objective is straightforward, pay off debt so that more cash can ultimately flow to unit holders. Before the conflict in Iran, both metallurgical and thermal coal markets were showing early signs of stabilizations. While we cannot say with confidence that coal prices have reached a cyclical bottom, there are indications that the worst may be behind us. Looking ahead, my primary concern remains our soda ash business. Despite being one of the lowest cost producers globally, Shishijamoyomi is currently struggling to generate positive free cash flow. While we were early to call for a soda ash downturn, I underestimated both its severity and durations. Our prior stress testing did not envision the decline of this magnitude. Had you asked me a year ago whether we would be making a capital infusion earlier this year, I would have said no. We are reevaluating our assumptions regarding global soda ash markets in general and Shishajam, Wyoming in particular. Recent events have demonstrated that even low-cost producers, like us, are not immune to prolonged adverse conditions. Since acquiring our interest in Sister Jim Wyoming 13 years ago, NRP has received half of a billion dollars in distributions so far. Annual distributions have ranged widely from a low of negative 39 million to a high of 81 million, averaging roughly 38 million dollars per year. As of today, those distributions already received have already delivered to NRP an 11% compound annualized return, and a 1.6 to 1 multiple on our investment. Those calculations assign zero residual value for our interest in Shishajam, Wyoming. In reality, the reserve information filed with our Form 10-K indicates that at current production levels, Shishajam, Wyoming has approximately 50 years of remaining reserves. Simply extrapolating historical average distributions over the 50-year remaining reserve life, would equate to roughly $1.9 billion of potential future distributions to NRP, an unusually long runway for a natural resource asset and an important component of NRP's intrinsic value. While our internal evaluation of our interest in Sister Jam Wyoming is more detailed than that, incorporating projected pricing, costs, capital expenditures, and the time value of money through discounted cash flow and internal rate of return calculations, These high-level numbers give you an idea of our view of the economic characteristics of that investment. Before turning it over to Chris to cover the financial results, I'd like to leave you with three key takeaways. Number one, NRP's financial health is not dependent on the success of Sister Jam Wyoming. Our balance sheet is strong, liquidity is ample, and free cash flow generation is exceptionally robust at this stage in the commodity price cycle. Preserving this hard-earned financial strength is our top priority. Number two, we remain on track to increase NRP unit holder distributions this year, but continue to caution that challenging environments for all three of our key commodities, particularly SONASH, increase the likelihood that some event or combination of events could push that timing back. I expect we will increase distributions in November, but will not be surprised if something happens to cause that to be delayed. We will continue to update you each quarter with our latest thinking. And number three, decisions to invest additional capital in Shishitam, Wyoming will be evaluated through the same lens we would apply to all investments, maximizing NRP's intrinsic value per unit while maintaining a conservative bias and an appropriate margin of safety. Put simply, every dollar invested is a dollar that cannot be distributed to NRP unit holders today. And that tradeoff must be justified by compelling returns on capital and the expectation of higher unit holder distributions in the future. For those of you who are new to NRP, I refer you to the unit holder letters in our annual reports for more information on our investment philosophy and approach to capital allocation. With that, I'll turn it over to Chris now to cover the financials.