# Natural Resource Partners LP: Form 10-Q for the period ended Sep 30, 2022

- Company: [Natural Resource Partners LP](/companies/nrp.md) (CIK 1171486)
- Form: 10-Q
- Filed: 2022-11-03
- Accepted by EDGAR: Nov 3, 2022, 15:05 ET
- Period: 2022-09-30
- Accession: 0001437749-22-025730
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1171486/000143774922025730/nrp20220930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1171486/000143774922025730/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $81.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $231.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $82.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-01 to 2022-09-30 | $234.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $5.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-01-01 to 2022-09-30 | $22.6m | us-gaap:InterestExpense |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $74.6m | us-gaap:ProfitLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $205.3m | us-gaap:ProfitLoss |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | $197.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-01-01 to 2022-09-30 | $59.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2022-09-30 | $60.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-09-30 | $96.9m | us-gaap:AssetsCurrent |
| Total assets | at 2022-09-30 | $879.0m | us-gaap:Assets |
| Current liabilities | at 2022-09-30 | $111.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-09-30 | $301.0m | us-gaap:Liabilities |
| Long-term debt | at 2022-09-30 | $148.7m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2022-09-30 | $90.0m | us-gaap:LongTermDebtCurrent |

## Management's discussion and analysis

As filed, 45,335 characters.

The following review of operations for the three and nine month periods ended September 30, 2022 and 2021 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2021.

As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes").

### INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected production levels by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.

These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See "Item 1A. Risk Factors" included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021 for important factors that could cause our actual results of operations or our actual financial condition to differ.

### NON-GAAP FINANCIAL MEASURES

### Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 8. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2021. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

### Distributable Cash Flow

Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivables; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to asses our ability to make cash distributions and repay debt.

### Free Cash Flow

Free cash flow ("FCF") represents net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

### Introduction

The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects:

- Executive Overview
- Results of Operations
- Liquidity and Capital Resources
- Off-Balance Sheet Transactions
- Related Party Transactions
- Summary of Critical Accounting Estimates
- Recent Accounting Standards

### Executive Overview

We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming, a trona ore mining and soda ash production business. Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments:

**Mineral Rights—**consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States. If combined in a single tract, our ownership would cover roughly 20,000 square miles. Our ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. We are working to strategically redefine our business as a key player in the transitional energy economy in the years to come.

**Soda Ash—**consists of our 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming. Sisecam Wyoming mines the trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.

Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment.

Our financial results by segment for the nine months ended September 30, 2022 are as follows:

*(In thousands)*

|  | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Revenues and other income | $247,871 | $44,036 | $— | $291,907 |
| Net income (loss) | $204,548 | $43,931 | $(43,205) | $205,274 |
| Adjusted EBITDA (1) | $221,987 | $33,950 | $(14,037) | $241,900 |
| Cash flow provided by (used in) continuing operations |  |  |  |  |
| Operating activities | $194,475 | $33,934 | $(30,459) | $197,950 |
| Investing activities | $1,837 | $— | $(59) | $1,778 |
| Financing activities | $(614) | $— | $(273,697) | $(274,311) |
| Distributable cash flow (1) | $196,312 | $33,934 | $(30,518) | $199,728 |
| Free cash flow (1) | $195,613 | $33,934 | $(30,518) | $199,029 |

(1) See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures.

### Current Results/Market Commentary

### Business Outlook and Quarterly Distributions

We generated $199.0 million of free cash flow during the nine months ended September 30, 2022 and ended the quarter with $190.9 million of liquidity consisting of $60.9 million of cash and cash equivalents and $130.0 million of borrowing capacity under our Opco Credit Facility. During the third quarter of 2022 we refinanced, upsized, and extended our Opco Credit Facility to $130 million due 2027. Also during the third quarter, we permanently retired an additional $60.5 million of 2025 Senior Notes, bringing our total 2025 Senior Note repurchases through the third quarter of 2022 to $178.6 million. These notes were purchased on the open market at a weighted average price of 102.436%, a discount to the redemption price at the time of 104.563%. In October 2022, we redeemed the outstanding $121.4 million 2025 Senior Notes at a redemption price of 102.281% using cash on hand and $70 million in borrowings under our Opco Credit Facility. These debt repurchases and the redemption of our outstanding 2025 Senior Notes will save approximately $27.4 million annually in interest costs. As of September 30, 2022 our leverage ratio was 0.8x.

In November 2022, the Board of Directors declared a cash distribution of $0.75 per common unit of NRP with respect to the third quarter of 2022. The Board of Directors also declared a $7.5 million cash distribution on the preferred units with respect to the third quarter. Future distributions on our common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.

### Mineral Rights Business Segment

Metallurgical and thermal coal prices remain supported by ongoing tightness in the supply-demand balance for coal. Many operators are limited in their ability to increase production due to ongoing labor shortages, global supply chain interruptions, and access to capital. Thermal coal prices are further supported by the European Union's ban on Russian coal due to the war in Ukraine, as well as increased natural gas prices and demand for electricity. While metallurgical markets are seeing weakened demand for steel, and thermal markets continue to face ongoing environmental and political pressures, supply constraints should provide continued support for metallurgical and thermal coal prices for the foreseeable future. Our lessees sold 24.2 million tons of coal from our properties in the first nine months of 2022, and we derived approximately 75% of our coal royalty revenues and approximately 45% of our coal royalty sales volumes from metallurgical coal during the same period.

We continue to identify alternative revenue sources across our large portfolio of land and mineral assets. We own the rights to sequester carbon dioxide ("CO2") on approximately 3.5 million acres of pore space in the southern United States. As announced previously, in the first quarter of 2022 we executed our first subsurface CO2 sequestration lease on 75,000 acres of underground pore space we own in southwest Alabama with the potential to store over 300 million metric tons of CO2. In October of 2022, we announced our second subsurface CO2 transaction with the execution of a lease for approximately 65,000 acres of pore space we control near southeast Texas with estimated storage capacity of at least 500 million metric tons of CO2. In total, we have approximately 140,000 acres of pore space under lease for carbon sequestration with estimated CO2 storage capacity of 800 million metric tons. While the timing and likelihood of additional cash flows being realized from these activities is uncertain, we believe our large ownership footprint throughout the United States will provide additional opportunities to create value in this regard and position us as a key beneficiary of the transitional energy economy with minimal capital investment.

### Soda Ash Business Segment

Revenues and other income in the first nine months of 2022 were higher by $32.8 million compared to the prior year period primarily as a result of increased international sales prices. Free cash flow in the first nine months of 2022 increased $30.1 million as compared to the prior year period due to Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021.

Supply interruptions in China and input cost inflation which significantly increased the global marginal cost of soda ash production led to historically high soda ash prices in the third quarter of 2022. Though soda ash demand weakened in many parts of the world during the third quarter due to slowing global economic growth and lower construction activity in China, Sisecam Wyoming remained sold-out as it took advantage of its low-cost position to profitably export soda ash. Consequently, Sisecam Wyoming delivered strong financial results in the third quarter of 2022.

### Results of Operations

### Third Quarter of 2022 and 2021 Compared

### Revenues and Other Income

The following table includes our revenues and other income by operating segment:

| Operating Segment (In thousands) | For the Three Months Ended September 30, 2022 | 2021 | Increase | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Mineral Rights | $87,702 | $50,123 | $37,579 | 75% |
| Soda Ash | 14,556 | 6,672 | 7,884 | 118% |
| Total | $102,258 | $56,795 | $45,463 | 80% |

The changes in revenues and other income are discussed for each of the operating segments below:

### Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

*(In thousands, except per ton data)*

| Coal sales volumes (tons) Appalachia | For the Three Months Ended September 30, 2022 | 2021 | Increase (Decrease) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Northern | 440 | 422 | 18 | 4% |
| Central | 3,503 | 3,199 | 304 | 10% |
| Southern | 498 | 642 | (144) | (22)% |
| Total Appalachia | 4,441 | 4,263 | 178 | 4% |
| Illinois Basin | 3,490 | 2,689 | 801 | 30% |
| Northern Powder River Basin | 835 | 1,047 | (212) | (20)% |
| Gulf Coast | 188 | 13 | 175 | 1346% |
| Total coal sales volumes | 8,954 | 8,012 | 942 | 12% |
| Coal royalty revenue per ton |  |  |  |  |
| Appalachia |  |  |  |  |
| Northern | $6.74 | $7.18 | $(0.44) | (6)% |
| Central | 9.04 | 5.74 | 3.30 | 57% |
| Southern | 9.78 | 11.61 | (1.83) | (16)% |
| Illinois Basin | 2.57 | 2.33 | 0.24 | 10% |
| Northern Powder River Basin | 4.56 | 3.71 | 0.85 | 23% |
| Gulf Coast | 0.59 | 0.54 | 0.05 | 9% |
| Combined average coal royalty revenue per ton | 5.85 | 4.87 | 0.98 | 20% |
| Coal royalty revenues |  |  |  |  |
| Appalachia |  |  |  |  |
| Northern | $2,965 | $3,031 | $(66) | (2)% |
| Central | 31,680 | 18,357 | 13,323 | 73% |
| Southern | 4,872 | 7,452 | (2,580) | (35)% |
| Total Appalachia | 39,517 | 28,840 | 10,677 | 37% |
| Illinois Basin | 8,967 | 6,261 | 2,706 | 43% |
| Northern Powder River Basin | 3,805 | 3,881 | (76) | (2)% |
| Gulf Coast | 111 | 7 | 104 | 1486% |
| Unadjusted coal royalty revenues | 52,400 | 38,989 | 13,411 | 34% |
| Coal royalty adjustment for minimum leases | (19) | (6,557) | 6,538 | 100% |
| Total coal royalty revenues | $52,381 | $32,432 | $19,949 | 62% |
| Other revenues |  |  |  |  |
| Production lease minimum revenues | $1,885 | $3,235 | $(1,350) | (42)% |
| Minimum lease straight-line revenues | 4,778 | 4,808 | (30) | (1)% |
| Carbon neutral initiative revenues | 8,600 | — | 8,600 | 100% |
| Wheelage revenues | 2,977 | 1,964 | 1,013 | 52% |
| Property tax revenues | 1,360 | 1,466 | (106) | (7)% |
| Coal overriding royalty revenues | 1,367 | 757 | 610 | 81% |
| Lease amendment revenues | 759 | 1,519 | (760) | (50)% |
| Aggregates royalty revenues | 884 | 429 | 455 | 106% |
| Oil and gas royalty revenues | 6,170 | 1,154 | 5,016 | 435% |
| Other revenues | 218 | 120 | 98 | 82% |
| Total other revenues | $28,998 | $15,452 | $13,546 | 88% |
| Royalty and other mineral rights | $81,379 | $47,884 | $33,495 | 70% |
| Transportation and processing services revenues | 5,969 | 2,171 | 3,798 | 175% |
| Gain on asset sales and disposals | 354 | 68 | 286 | 421% |
| Total Mineral Rights segment revenues and other income | $87,702 | $50,123 | $37,579 | 75% |

19

#### Coal Royalty Revenues

Approximately 65% of coal royalty revenues and approximately 40% of coal royalty sales volumes were derived from metallurgical coal during the three months ended September 30, 2022. Total coal royalty revenues increased $19.9 million as compared to the prior year quarter. The discussion by region is as follows:

- Appalachia: Coal royalty revenues increased $10.7 million primarily due to increased coal sales prices and volumes in Central Appalachia during the three months ended September 30, 2022, as compared to the prior year quarter.
- Illinois Basin: Coal royalty revenues increased $2.7 million primarily due to increased sales volumes and prices during the three months ended September 30, 2022 as compared to the prior year quarter. Revenues recognized from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments.
- Northern Powder River Basin: Coal royalty revenues decreased $0.1 million primarily due to decreased sales volumes as our lessee mined less on our property during the third quarter of 2022 as compared to the prior year quarter in accordance with its mine plan.

#### Other Revenues

Total other revenues increased $13.5 million during the three months September 30, 2022 as compared to the prior year quarter primarily due to an $8.6 million increase in carbon neutral initiatives and a $5.0 million increase in oil and gas royalty revenues. The increase in carbon neutral initiatives is due to the recognition of revenue related to carbon neutral transactions including subsurface CO2 storage and geothermal. The increase in oil and gas royalty revenues is primarily related to new wells and increased natural gas prices as compared to the prior year period.

#### Transportation and Processing Services Revenues

Transportation and processing services revenues increased $3.8 million during the three months ended September 30, 2022 as compared to the prior year period primarily due to the lease amendment with Foresight whereas transportation and processing revenues were based on the recognition of a fixed amount in 2021. Revenues from Foresight in 2022 represent traditional royalty and minimum payments and were greater than the fixed revenue from 2021.

### Soda Ash

Revenues and other income related to our Soda Ash segment increased $7.9 million compared to the prior year quarter primarily as a result of increased international sales prices.

### Operating and Other Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

*(In thousands)*

| Operating expenses | For the Three Months Ended September 30, 2022 | 2021 | Increase (Decrease) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Operating and maintenance expenses | $7,898 | $8,354 | $(456) | (5)% |
| Depreciation, depletion and amortization | 6,850 | 5,182 | 1,668 | 32% |
| General and administrative expenses | 4,518 | 4,052 | 466 | 12% |
| Asset impairments | 812 | 57 | 755 | 1325% |
| Total operating expenses | $20,078 | $17,645 | $2,433 | 14% |
| Other expenses, net |  |  |  |  |
| Interest expense, net | $5,141 | $9,652 | $(4,511) | (47)% |
| Loss on extinguishment of debt | 2,484 | — | 2,484 | 100% |
| Total other expenses, net | $7,625 | $9,652 | $(2,027) | (21)% |

Total operating expenses increased $2.4 million primarily due to increased depreciation, depletion and amortization expense as a result of higher Illinois Basin coal royalty sales volumes during the three months ended September 30, 2022, as compared to the prior year period.

Total other expenses, net decreased $2.0 million primarily due to a $4.5 million decrease in interest expense, net as a result of less debt outstanding as compared to the prior year period, partially offset by a $2.5 million loss on early extinguishment of debt related to the premiums and fees incurred and write-off of debt issuance costs associated with the retirement of the 2025 Senior Notes during the three months ended September 30, 2022.

### Adjusted EBITDA (Non-GAAP Financial Measure)

The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:

| For the Three Months Ended (In thousands) September 30, 2022 | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $72,173 | $14,525 | $(12,143) | $74,555 |
| Less: equity earnings from unconsolidated investment | — | (14,556) | — | (14,556) |
| Add: total distributions from unconsolidated investment | — | 10,339 | — | 10,339 |
| Add: interest expense, net | — | — | 5,141 | 5,141 |
| Add: loss on extinguishment of debt | — | — | 2,484 | 2,484 |
| Add: depreciation, depletion and amortization | 6,850 | — | — | 6,850 |
| Add: asset impairments | 812 | — | — | 812 |
| Adjusted EBITDA | $79,835 | $10,308 | $(4,518) | $85,625 |
| September 30, 2021 |  |  |  |  |
| Net income (loss) | $36,606 | $6,596 | $(13,704) | $29,498 |
| Less: equity earnings from unconsolidated investment | — | (6,672) | — | (6,672) |
| Add: total distributions from unconsolidated investment | — | — | — | — |
| Add: interest expense, net | — | — | 9,652 | 9,652 |
| Add: loss on extinguishment of debt | — | — | — | — |
| Add: depreciation, depletion and amortization | 5,182 | — | — | 5,182 |
| Add: asset impairments | 57 | — | — | 57 |
| Adjusted EBITDA | $41,845 | $(76) | $(4,052) | $37,717 |

Adjusted EBITDA increased $47.9 million primarily due to a $38.0 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income as discussed above, in addition to a $10.4 million increase in Adjusted EBITDA within our Soda Ash segment due to Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021 as discussed above.

### Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

The following table presents the three major categories of the statement of cash flows by business segment:

| For the Three Months Ended (In thousands) September 30, 2022 Cash flow provided by (used in) continuing operations | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Operating activities | $75,948 | $10,309 | $(3,761) | $82,496 |
| Investing activities | 928 | — | (59) | 869 |
| Financing activities | — | — | (81,784) | (81,784) |
| September 30, 2021 |  |  |  |  |
| Cash flow provided by (used in) continuing operations |  |  |  |  |
| Operating activities | $33,968 | $(36) | $(3,873) | $30,059 |
| Investing activities | 614 | — | — | 614 |
| Financing activities | — | — | (9,592) | (9,592) |

21

The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:

| For the Three Months Ended (In thousands) September 30, 2022 | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities of continuing operations | $75,948 | $10,309 | $(3,761) | $82,496 |
| Add: proceeds from asset sales and disposals | 353 | — | — | 353 |
| Add: return of long-term contract receivable | 575 | — | — | 575 |
| Less: maintenance capital expenditures | — | — | (59) | (59) |
| Distributable cash flow | $76,876 | $10,309 | $(3,820) | $83,365 |
| Less: proceeds from asset sales and disposals | (353) | — | — | (353) |
| Free cash flow | $76,523 | $10,309 | $(3,820) | $83,012 |
| September 30, 2021 |  |  |  |  |
| Net cash provided by (used in) operating activities of continuing operations | $33,968 | $(36) | $(3,873) | $30,059 |
| Add: proceeds from asset sales and disposals | 74 | — | — | 74 |
| Add: return of long-term contract receivable | 540 | — | — | 540 |
| Distributable cash flow | $34,582 | $(36) | $(3,873) | $30,673 |
| Less: proceeds from asset sales and disposals | (74) | — | — | (74) |
| Free cash flow | $34,508 | $(36) | $(3,873) | $30,599 |

DCF and FCF increased $52.7 million and $52.4 million, respectively, primarily due to the following:

- Mineral Rights Segment
- DCF and FCF increased $42.3 million and $42.0 million, respectively, primarily due to the segment's increase in revenues and other income as discussed above.
- Soda Ash Segment
- DCF and FCF increased $10.3 million as a result of Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021 as discussed above.

### Results of Operations

### First Nine Months of 2022 and 2021 Compared

### Revenues and Other Income

The following table includes our revenues and other income by operating segment:

| Operating Segment (In thousands) | For the Nine Months Ended September 30, 2022 | 2021 | Increase | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Mineral Rights | $247,871 | $121,210 | $126,661 | 104% |
| Soda Ash | 44,036 | 11,246 | 32,790 | 292% |
| Total | $291,907 | $132,456 | $159,451 | 120% |

The changes in revenues and other income are discussed for each of the operating segments below:

### Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

*(In thousands, except per ton data)*

| Coal sales volumes (tons) Appalachia | For the Nine Months Ended September 30, 2022 | 2021 | Increase (Decrease) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Northern | 1,260 | 947 | 313 | 33% |
| Central | 10,238 | 8,824 | 1,414 | 16% |
| Southern | 1,171 | 1,058 | 113 | 11% |
| Total Appalachia | 12,669 | 10,829 | 1,840 | 17% |
| Illinois Basin | 8,395 | 7,987 | 408 | 5% |
| Northern Powder River Basin | 2,772 | 2,291 | 481 | 21% |
| Gulf Coast | 324 | 13 | 311 | 2392% |
| Total coal sales volumes | 24,160 | 21,120 | 3,040 | 14% |
| Coal royalty revenue per ton |  |  |  |  |
| Appalachia |  |  |  |  |
| Northern | $9.48 | $5.57 | $3.91 | 70% |
| Central | 10.85 | 4.91 | 5.94 | 121% |
| Southern | 14.28 | 9.82 | 4.46 | 45% |
| Illinois Basin | 2.30 | 2.13 | 0.17 | 8% |
| Northern Powder River Basin | 4.24 | 3.59 | 0.65 | 18% |
| Gulf Coast | 0.58 | 0.54 | 0.04 | 7% |
| Combined average coal royalty revenue per ton | 7.08 | 3.99 | 3.09 | 77% |
| Coal royalty revenues |  |  |  |  |
| Appalachia |  |  |  |  |
| Northern | $11,946 | $5,272 | $6,674 | 127% |
| Central | 111,121 | 43,308 | 67,813 | 157% |
| Southern | 16,725 | 10,390 | 6,335 | 61% |
| Total Appalachia | 139,792 | 58,970 | 80,822 | 137% |
| Illinois Basin | 19,331 | 17,044 | 2,287 | 13% |
| Northern Powder River Basin | 11,751 | 8,222 | 3,529 | 43% |
| Gulf Coast | 187 | 7 | 180 | 2571% |
| Unadjusted coal royalty revenues | 171,061 | 84,243 | 86,818 | 103% |
| Coal royalty adjustment for minimum leases | (286) | (18,148) | 17,862 | 98% |
| Total coal royalty revenues | $170,775 | $66,095 | $104,680 | 158% |
| Other revenues |  |  |  |  |
| Production lease minimum revenues | $3,542 | $10,241 | $(6,699) | (65)% |
| Minimum lease straight-line revenues | 14,235 | 15,773 | (1,538) | (10)% |
| Carbon neutral initiative revenues | 8,600 | — | 8,600 | 100% |
| Wheelage revenues | 11,073 | 5,589 | 5,484 | 98% |
| Property tax revenues | 4,527 | 4,522 | 5 | 0% |
| Coal overriding royalty revenues | 2,307 | 3,592 | (1,285) | (36)% |
| Lease amendment revenues | 2,450 | 3,159 | (709) | (22)% |
| Aggregates royalty revenues | 2,691 | 1,339 | 1,352 | 101% |
| Oil and gas royalty revenues | 10,890 | 3,420 | 7,470 | 218% |
| Other revenues | 705 | 692 | 13 | 2% |
| Total other revenues | $61,020 | $48,327 | $12,693 | 26% |
| Royalty and other mineral rights | $231,795 | $114,422 | $117,373 | 103% |
| Transportation and processing services revenues | 15,377 | 6,545 | 8,832 | 135% |
| Gain on asset sales and disposals | 699 | 243 | 456 | 188% |
| Total Mineral Rights segment revenues and other income | $247,871 | $121,210 | $126,661 | 104% |

23

#### Coal Royalty Revenues

Total coal royalty revenues increased $104.7 million during the nine months ended September 30, 2022, as compared to the prior year period. The discussion by region is as follows:

- Appalachia: Coal royalty revenues increased $80.8 million primarily due to increased coal sales prices and volumes during the nine months ended September 30, 2022, as compared to the prior year period.
- Illinois Basin: Coal royalty revenues increased $2.3 million primarily due to higher sales volumes and increased sales prices during the nine months ended September 30, 2022, as compared to the prior year period. Revenues recognized from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments.
- Northern Powder River Basin: Coal royalty revenues increased $3.5 million primarily due to increased sales volumes as our lessee mined more on our property during the nine months ended September 30, 2022 as compared to the prior year period in accordance with its mine plan.

#### Other Revenues

Other revenues increased $12.7 million during the nine months ended September 30, 2022 as compared to the prior year period primarily due to the following:

- An $8.6 million increase in carbon neutral initiatives due to the recognition of revenue related to carbon neutral transactions including subsurface CO2 storage and geothermal.
- A $7.5 million increase in oil and gas royalty revenues primarily due to new wells and increased natural gas prices.
- A $5.5 million increase in wheelage revenues as a result of higher production in 2022 from the properties that pay us a wheelage fee as compared to the prior year period.

These increases were partially offset by a $6.7 million decrease in production lease minimum revenues primarily as a result of breakage revenues recognized in the first nine months of 2021.

#### Transportation and Processing Services Revenues

Transportation and processing services revenues increased $8.8 million during the nine months ended September 30, 2022 as compared to the prior year period primarily due to the lease amendment with Foresight whereas transportation and processing revenues were based on the recognition of a fixed amount in 2021. Revenues from Foresight in 2022 represent traditional royalty and minimum payments and were greater than the fixed revenue from 2021.

### Soda Ash

Revenues and other income related to our Soda Ash segment increased $32.8 million primarily as a result of increased international sales prices.

### Operating and Other Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

*(In thousands)*

| Operating expenses | For the Nine Months Ended September 30, 2022 | 2021 | Increase (Decrease) | Percentage Change |
| --- | ---: | ---: | ---: | ---: |
| Operating and maintenance expenses | $25,989 | $19,076 | $6,913 | 36% |
| Depreciation, depletion and amortization | 16,565 | 15,145 | 1,420 | 9% |
| General and administrative expenses | 14,037 | 11,550 | 2,487 | 22% |
| Asset impairments | 874 | 4,116 | (3,242) | (79)% |
| Total operating expenses | $57,465 | $49,887 | $7,578 | 15% |
| Other expenses, net |  |  |  |  |
| Interest expense, net | $22,636 | $29,308 | $(6,672) | (23)% |
| Loss on extinguishment of debt | 6,532 | — | 6,532 | 100% |
| Total other expenses, net | $29,168 | $29,308 | $(140) | (0)% |

Total operating expenses increased $7.6 million primarily due to a $6.9 million increase in operating and maintenance expenses as compared to the prior year period primarily as a result of higher costs related to an overriding royalty agreement with WPPLP, partially offset by a decrease in bad debt expense. The coal royalty expense we pay to WPPLP is fully offset by the coal royalty revenue we receive from this property. Total operating expenses also increased as a result of a $2.5 million increase in general and administrative expenses primarily due to increased long-term incentive expense incurred during the nine months ended September 30, 2022. These increases were partially offset by a $3.2 million decrease in asset impairments as compared to the prior year period. Asset impairments in 2021 primarily related to a lease termination that resulted in the full impairment of a coal property.

Total other expenses, net was essentially flat year-over-year. The $6.7 million decrease in interest expense, net resulting from less debt outstanding was partially offset by a $6.5 million loss on early extinguishment of debt related to the premiums and fees incurred and write-off of debt issuance costs associated with the retirement of the 2025 Senior Notes during the nine months ended September 30, 2022.

### Adjusted EBITDA (Non-GAAP Financial Measure)

The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:

| For the Nine Months Ended (In thousands) September 30, 2022 | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $204,548 | $43,931 | $(43,205) | $205,274 |
| Less: equity earnings from unconsolidated investment | — | (44,036) | — | (44,036) |
| Add: total distributions from unconsolidated investment | — | 34,055 | — | 34,055 |
| Add: interest expense, net | — | — | 22,636 | 22,636 |
| Add: loss on extinguishment of debt | — | — | 6,532 | 6,532 |
| Add: depreciation, depletion and amortization | 16,565 | — | — | 16,565 |
| Add: asset impairments | 874 | — | — | 874 |
| Adjusted EBITDA | $221,987 | $33,950 | $(14,037) | $241,900 |
| September 30, 2021 |  |  |  |  |
| Net income (loss) | $82,980 | $11,115 | $(40,834) | $53,261 |
| Less: equity earnings from unconsolidated investment | — | (11,246) | — | (11,246) |
| Add: total distributions from unconsolidated investment | — | 3,920 | — | 3,920 |
| Add: interest expense, net | 24 | — | 29,284 | 29,308 |
| Add: depreciation, depletion and amortization | 15,145 | — | — | 15,145 |
| Add: asset impairments | 4,116 | — | — | 4,116 |
| Adjusted EBITDA | $102,265 | $3,789 | $(11,550) | $94,504 |

Adjusted EBITDA increased $147.4 million primarily due to a $119.7 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income as discussed above, in addition to a $30.2 million increase in Adjusted EBITDA within our Soda Ash segment as a result of higher distributions received from Sisecam Wyoming in the first nine months of 2022 as compared to the prior year period as discussed above.

### Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

The following table presents the three major categories of the statement of cash flows by business segment:

| For the Nine Months Ended (In thousands) September 30, 2022 Cash flow provided by (used in) continuing operations | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Operating activities | $194,475 | $33,934 | $(30,459) | $197,950 |
| Investing activities | 1,837 | — | (59) | 1,778 |
| Financing activities | (614) | — | (273,697) | (274,311) |
| September 30, 2021 |  |  |  |  |
| Cash flow provided by (used in) continuing operations |  |  |  |  |
| Operating activities | $91,958 | $3,817 | $(29,132) | $66,643 |
| Investing activities | 1,871 | — | — | 1,871 |
| Financing activities | (1,132) | — | (48,183) | (49,315) |

25

The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:

| For the Nine Months Ended (In thousands) September 30, 2022 | Operating Segments Mineral Rights | Soda Ash | Corporate and Financing | Total |
| --- | ---: | ---: | ---: | ---: |
| Net cash provided by (used in) operating activities of continuing operations | $194,475 | $33,934 | $(30,459) | $197,950 |
| Add: proceeds from asset sales and disposals | 699 | — | — | 699 |
| Add: return of long-term contract receivable | 1,138 | — | — | 1,138 |
| Less: maintenance capital expenditures | — | — | (59) | (59) |
| Distributable cash flow | $196,312 | $33,934 | $(30,518) | $199,728 |
| Less: proceeds from asset sales and disposals | (699) | — | — | (699) |
| Free cash flow | $195,613 | $33,934 | $(30,518) | $199,029 |
| September 30, 2021 |  |  |  |  |
| Net cash provided by (used in) operating activities of continuing operations | $91,958 | $3,817 | $(29,132) | $66,643 |
| Add: proceeds from asset sales and disposals | 249 | — | — | 249 |
| Add: return of long-term contract receivable | 1,622 | — | — | 1,622 |
| Distributable cash flow | $93,829 | $3,817 | $(29,132) | $68,514 |
| Less: proceeds from asset sales and disposals | (249) | — | — | (249) |
| Less: acquisition costs | (1,000) | — | — | (1,000) |
| Free cash flow | $92,580 | $3,817 | $(29,132) | $67,265 |

DCF and FCF increased $131.2 million and $131.8 million, respectively, primarily due to the following:

- Mineral Rights Segment
- DCF and FCF increased $102.5 million and $103.0 million, respectively, primarily due to the segment's increase in revenues and other income as discussed above.
- Soda Ash Segment
- DCF and FCF increased $30.1 million as a result of higher cash distributions received from Sisecam Wyoming in the first nine months of 2022 as compared to the prior year period as discussed above.

### Liquidity and Capital Resources

### Current Liquidity

As of September 30, 2022, we had total liquidity of $190.9 million, consisting of $60.9 million of cash and cash equivalents and $130.0 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $20 million of principal repayments on Opco’s senior notes throughout the remainder of 2022. As discussed previously, through the date of this report, we have permanently retired all of our 9.125% Senior Notes due 2025 and have $70 million drawn on our Opco Credit Facility. We believe our liquidity position provides us with the flexibility to continue paying down debt and manage our business.

### Cash Flows

Cash flows provided by operating activities increased $131.3 million, from $66.6 million in the nine months ended September 30, 2021 to $198.0 million in the nine months ended September 30, 2022, primarily related to increased revenues and other income within our Mineral Rights segment and $30.1 million of higher cash distributions received from Sisecam Wyoming in the first nine months of 2022 as compared to the prior year period.

Cash flows used in financing activities increased $225.0 million, from $49.3 million used in the nine months ended September 30, 2021 to $274.3 million used in the nine months ended September 30, 2022, primarily due to the following:

- $178.6 million of cash used to retire a portion of our 2025 Senior Notes during the nine months ended September 30, 2022;
- $19.6 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022;
- $10.9 million of increased cash used for preferred unit distributions as a result of paying all of our preferred unit distributions in cash in 2022 as compared to half in kind during the nine months ended September 30, 2021;
- $9.1 million of increased cash used for other items, net which primarily related to the premiums paid related to the repayment of the 2025 Senior Notes during the nine months ended September 30, 2022; and
- $7.8 million of increased cash used for distributions to common unitholders and the general partner as a result of increasing our common unit distribution to $0.75/unit beginning in the second quarter of 2022.

26

### Capital Resources and Obligations

### Debt, Net

We had the following debt outstanding as of September 30, 2022 and December 31, 2021:

*(In thousands)*

|  | September 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Current portion of long-term debt, net | $89,989 | $39,102 |
| Long-term debt, net | 148,734 | 394,443 |
| Total debt, net | $238,723 | $433,545 |

We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see Note 8. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

### Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities.

### Related Party Transactions

The information required set forth under Note 10. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.

### Summary of Critical Accounting Estimates

The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

### Recent Accounting Standards

We do not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

## Market risk

As filed, 146 characters.

As a smaller reporting company, we are not required to include this disclosure in our Form 10-Q for the quarterly period ended September 30, 2022.

## Controls and procedures

As filed, 1,526 characters.

### Evaluation of Disclosure Controls and Procedures

NRP carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of NRP management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the general partner of NRP. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

**Changes in the Partnership’s Internal Control Over Financial Reporting**

There were no material changes in the Partnership’s internal control over financial reporting during the first nine months of 2022 that materially affected, or were reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

## Risk factors

As filed, 216 characters.

During the period covered by this report, there were no material changes from the risk factors previously disclosed in Natural Resource Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, 2021.

Filed Nov 3, 2022.
Source: SEC EDGAR, the filing index for accession 0001437749-22-025730. Last ingested by Listed: Nov 4, 2026, 12:57 ET. No prices; not investment advice.