Natural Resource Partners LP (NRP) 2023 Q3 法說會逐字稿

Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Natural Resource Partners L.P. Third Quarter 2023 Earnings Conference Call. (Operator Instructions). I would now like to turn the call over to Tiffany Sammis, Manager of Investor Relations. Please go ahead.

謝謝你的支持。我叫艾瑞克，今天我將擔任你們的會議操作員。現在，我歡迎大家參加 Natural Resource Partners L.P. 2023 年第三季財報電話會議。 （操作員說明）。我現在想將電話轉給投資者關係經理蒂芙尼·薩米斯 (Tiffany Sammis)。請繼續。

Thank you. Good morning and welcome to the Natural Resource Partners Third Quarter 2023 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.

謝謝。早上好，歡迎參加自然資源合作夥伴 2023 年第三季電話會議。今天的電話會議正在網路直播，我們的網站上將提供重播。今天加入我的是總裁兼營運長克雷格‧努涅斯 (Craig Nunez)；克里斯‧佐拉斯，財務長；和執行副總裁凱文·克雷格。

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 third 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 coal lessee or detailed market fundamentals.

我們今天的一些評論可能包括反映 NRP 對未來事件的看法的前瞻性陳述。這些事項涉及風險和不確定性，可能導致我們的實際結果與我們的前瞻性陳述有重大差異。 NRP 的 10-K 表格和其他證券交易委員會文件中討論了這些風險。我們不承擔以任何理由公開修改或更新任何前瞻性陳述的義務。我們今天的評論還包括非公認會計準則財務指標。我們的第三季新聞稿中包含了與最直接可比較的 GAAP 衡量標準的更多詳細資訊和調節，您可以在我們的網站上找到新聞稿。我想提醒大家的是，我們無意討論任何特定煤炭承租人的營運或前景或詳細的市場基本面。

Now I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

現在我想將電話轉給我們的總裁兼營運長 Craig Nunez。

Thank you, Tiffany and good morning, everyone. NRP generated $80 million of free cash flow in the third quarter and $304 million of free cash flow over the last 12 months. We continue to utilize this cash to aggressively retire debt, preferred equity and warrants. During the third quarter, we permanently retired $50 million of our 12.5% preferred equity, increasing our total preferred equity retirement for the year to $178 million and lowering our outstanding balance of preferred equity to $72 million.

謝謝蒂芙尼，大家早安。 NRP 在第三季產生了 8,000 萬美元的自由現金流，在過去 12 個月中產生了 3.04 億美元的自由現金流。我們繼續利用這筆現金積極償還債務、優先股和認股權證。第三季度，我們永久註銷了 12.5% 優先股中的 5,000 萬美元，將全年優先股註銷總額增加至 1.78 億美元，並將優先股未償餘額降至 7,200 萬美元。

We also repurchased 1.46 million warrants, which included 812,500 warrants in the third quarter and 650,000 warrants in October for a total of $52 million -- $56 million in cash. After these transactions, we only have 1.54 million warrants outstanding with a strike price of $34. As of today, our total obligations, which includes debt, preferred equity and warrants, are around $325 million. We continue to believe that aggressive retirement of debt, preferred equity and settlement of warrants, while maintaining common unit distributions is the right strategy to maximize long-term common unitholder value.

我們還回購了 146 萬張認股權證，其中包括第三季的 812,500 張認股權證和 10 月的 65 萬張認股權證，總金額為 5,200 萬美元，即 5,600 萬美元現金。這些交易之後，我們只剩下 154 萬張未到期認股權證，執行價格為 34 美元。截至目前，我們的總債務（包括債務、優先股和認股權證）約為 3.25 億美元。我們仍然認為，積極償還債務、優先股和認股權證結算，同時維持普通單位分配是實現長期普通單位持有人價值最大化的正確策略。

Our Mineral Rights business generated $62 million of free cash flow during the third quarter. Metallurgical coal prices improved during the quarter but remained below the record levels seen in 2022. The global supply-demand balance for met coal remains well supported and we believe it will remain so for the foreseeable future due to solid long-term demand trends and somewhat muted investment in new met supply.

我們的礦業權業務第三季產生了 6,200 萬美元的自由現金流。冶金煤價格在本季有所改善，但仍低於2022 年的歷史最高水準。仍將保持這種平衡。

Thermal coal prices stabilized in the third quarter after mild winter weather and decreased utility burn drove prices down in the first half of the year. While we believe domestic thermal coal burn will continue to face near-term headwinds and continue its long-term secular decline, we have seen an increase year-over-year in thermal coal export demand, which has provided support for pricing. We continue to believe underinvestment in new sources of thermal coal production, coupled with continued international thermal coal demand, will likely provide price support at levels that are relatively strong when compared to historical norms.

繼上半年溫和的冬季天氣和公用事業燃燒減少推動價格下跌後，動力煤價格在第三季趨於穩定。雖然我們認為國內動力煤燃燒近期將繼續面臨阻力並繼續長期下降，但我們看到動力煤出口需求年增，這為定價提供了支撐。我們仍然認為，對新動力煤生產來源的投資不足，加上國際動力煤需求的持續增長，可能會在與歷史正常水平相比相對強勁的水平上提供價格支撐。

Turning to Soda Ash, we have received $66 million of cash distributions from Sisecam Wyoming so far in 2023, which is the highest level of regular distributions we've ever received for the first 3 quarters of a year. We believe the distribution policy at Sisecam Wyoming has shifted since our 51% managing partner, Sisecam Resources, completed its conversion from a publicly traded master limit partnership to a private company earlier this year.

說到純鹼，2023 年迄今為止，我們已從懷俄明州 Sisecam 收到了 6600 萬美元的現金分配，這是我們在今年前三個季度收到的最高水平的定期分配。我們相信，自今年早些時候我們持股 51% 的管理合夥人 Sisecam Resources 完成從公開交易的主有限合夥企業向私營公司的轉變以來，Sisecam 懷俄明州的分銷政策已經發生了變化。

Previously, distributions were paid relatively evenly throughout the year, smoothing quarter-over-quarter variances consistent with the public MLP model. Going forward, we believe quarterly distributions will be more closely tied to actual cash generated by Sisecam Wyoming. This will introduce greater volatility to cash distributions but it will bring future distributions more in line with the actual operating performance of the business.

此前，全年的分配相對均勻，平滑了季度與季度之間的差異，與公共 MLP 模型一致。展望未來，我們相信季度分配將與 Sisecam Wyoming 產生的實際現金更加緊密地聯繫在一起。這將為現金分配帶來更大的波動性，但將使未來的分配更符合企業的實際經營績效。

We saw significantly lower soda ash export prices in the third quarter of 2023 compared to the first half of the year, primarily due to new supply from China. We believe this unfavorable price trend will persist in the coming years until the market absorbs the additional supply. However, our long-term view has not changed. We believe the long-term fundamentals of the soda ash industry remain favorable, driven in part by the ongoing increase in renewable energy, the electrification of the global auto fleet and urbanization. We continue to evaluate opportunities to expand our carbon-neutral portfolio with the goal of monetizing our mineral and surface assets for permanent underground CO2 sequestration, forest sequestration and the generation of electricity using geothermal, wind and solar energy. While the carbon neutral economy is in an early stage of development and requires significant investment and further development to become viable, we believe the potential upside for our carbon-neutral initiatives could be significant, all while requiring no capital investment by NRP.

與上半年相比，我們看到 2023 年第三季純鹼出口價格顯著下降，這主要是由於中國的新增供應。我們認為，這種不利的價格趨勢將在未來幾年持續存在，直到市場吸收額外的供應。然而，我們的長期觀點並沒有改變。我們認為，純鹼產業的長期基本面仍然有利，部分原因是再生能源的持續成長、全球汽車的電氣化和城市化。我們繼續評估擴大碳中和投資組合的機會，目標是將我們的礦物和地表資產貨幣化，用於永久地下二氧化碳封存、森林封存以及利用地熱、風能和太陽能發電。雖然碳中和經濟正處於發展的早期階段，需要大量投資和進一步發展才能變得可行，但我們相信，我們的碳中和計劃的潛在上行空間可能是巨大的，同時不需要 NRP 進行資本投資。

Both our Mineral Rights and Soda Ash businesses have witnessed significant price volatility over the last year. We expect this volatility to continue for the foreseeable future. However, we are confident that the strides taken to delever and derisk our business in recent years position us well to generate robust free cash flow in the months and years ahead.

去年，我們的礦權和純鹼業務都經歷了巨大的價格波動。我們預計這種波動在可預見的未來仍將持續。然而，我們相信，近年來我們在去槓桿化和消除業務風險方面所取得的進展使我們能夠在未來幾個月和幾年內產生強勁的自由現金流。

And with that, I'll turn the call over to Chris to cover the financials.

接下來，我會將電話轉給克里斯，以了解財務狀況。

Thank you, Craig and good morning, everyone. During the third quarter, we generated $79 million of operating cash flow and $64 million of net income. Our Mineral Rights segment generated net income and operating cash flow of $61 million and free cash flow of $62 million this quarter. When compared to the prior year third quarter, segment net income and free cash flow decreased $11 million and $15 million, respectively, primarily due to carbon-neutral initiative transactions entered into during the prior year third quarter and higher oil and gas royalty revenues driven by higher natural gas prices and sales volumes last year.

謝謝你，克雷格，大家早安。第三季度，我們產生了 7,900 萬美元的營運現金流和 6,400 萬美元的淨利潤。我們的礦業權部門本季產生了 6,100 萬美元的淨利潤和營運現金流以及 6,200 萬美元的自由現金流。與去年第三季相比，該部門淨利和自由現金流分別減少了1,100 萬美元和1,500 萬美元，主要是由於去年第三季簽訂的碳中和計畫交易以及石油和天然氣特許權使用費收入增加所致去年天然氣價格及銷售量較高。

Regarding our met, thermal coal royalty mix, metallurgical coal made up approximately 60% of our coal royalty revenues and 45% of our coal royalty sales volumes for the third quarter of 2023. Moving to our Soda Ash business segment. Net income in the third quarter of 2023 was $2 million lower as compared to the prior year quarter, primarily due to lower international sales prices and an increased sales mix into the international market in the third quarter of 2023 as compared to the prior year period. Free cash flow from our Soda Ash business segment in the third quarter of 2023 increased $13 million as compared to the prior year period. This increase was due to a higher cash distribution received from Sisecam Wyoming.

就我們的冶金煤、動力煤特許權使用費組成而言，冶金煤約佔2023 年第三季我們煤炭特許權使用費收入的60% 和煤炭特許權使用費銷量的45%。業務部門。 2023 年第三季的淨利潤比去年同期減少 200 萬美元，主要是由於國際銷售價格較低以及 2023 年第三季國際市場的銷售組合與去年同期相比有所增加。 2023 年第三季我們純鹼業務部門的自由現金流比去年同期增加了 1,300 萬美元。這一增長是由於從懷俄明州 Sisecam 收到的現金分配增加所致。

Shifting to our Corporate and Financing segment. Costs for the third quarter of 2023 improved $3 million, primarily due to a loss on early extinguishment of debt recognized in 2022. Our Corporate and Financing segment free cash flow decreased $1 million as compared to the prior year period because of higher cash paid for interest on credit facility borrowings in 2023 that were used to redeem preferred units and to settle warrants.

轉向我們的企業和融資部門。 2023 年第三季的成本減少了 300 萬美元，主要是由於 2022 年確認的債務提前清償損失。 2023 年用於贖回優先單位和結算認股權證的信貸便利借款。

As Craig mentioned, our strong third quarter operating performance enabled us to make great strides in permanently retiring outstanding preferred units and warrants. In the third quarter, we redeemed $50 million of our preferred units at par with cash, bringing our total preferred unit redemptions in 2023 to $178 million and lowering the outstanding amount of preferred units to $72 million. We will save over $20 million annually in preferred unit cash distributions as a result of these redemptions.

正如克雷格所提到的，我們第三季強勁的經營業績使我們能夠在永久退役未償還的優先股和認股權證方面取得長足進步。第三季度，我們以現金等價贖回了 5,000 萬美元的優先單位，使 2023 年的優先單位贖回總額達到 1.78 億美元，並將優先單位的未償還金額降低到 7,200 萬美元。透過這些贖回，我們每年將在優先單位現金分配中節省超過 2000 萬美元。

In addition, we repurchased 1.46 million of warrants for a total of $56 million in cash, reducing our outstanding warrants to 1.54 million. Finally, regarding quarterly distributions, in August of this year, we paid a second quarter distribution of $0.75 per common unit and a $3.65 million cash distribution to our preferred unitholders. And this morning, we announced a third quarter distribution of $0.75 per common unit and a $2.15 million cash distribution to our preferred unitholders.

此外，我們以總計 5,600 萬美元的現金回購了 146 萬張認股權證，將未償還認股權證減少至 154 萬張。最後，關於季度分配，今年 8 月，我們向我們的優先單位持有人支付了每普通單位 0.75 美元的第二季度分配和 365 萬美元的現金分配。今天早上，我們宣布第三季每個普通單位分配 0.75 美元，並向我們的優先單位持有人分配 215 萬美元現金。

And with that, I'll turn the call back over to operator for questions.

然後，我會將電話轉回給接線生詢問問題。

Thank you. (Operator Instructions). Ladies and gentlemen, there are no questions at this time. I would now like to turn the call back over to Craig Nunez for closing remarks. Please go ahead.

謝謝。 （操作員說明）。女士們、先生們，目前沒有問題。現在我想將電話轉回給克雷格·努涅斯（Craig Nunez），讓其致閉幕詞。請繼續。

Thank you, operator and thank you, everyone, for joining our call and for your continued support of NRP and we look forward to talking to you next quarter.

感謝營運商和大家加入我們的電話會議以及對 NRP 的持續支持，我們期待下個季度與您交談。

Thank you. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect your lines.

謝謝。女士們、先生們，今天的電話會議到此結束。感謝大家的加入。現在您可以斷開線路。