Natural Resource Partners LP (NRP) 2024 Q2 法說會逐字稿

Good morning, and welcome to the Natural Resource Partners LP second-quarter 2024 earnings conference call. My name is Emma, and I will be your conference manager. (Operator Instructions)

早安，歡迎參加 Natural Resource Partners LP 2024 年第二季財報電話會議。我叫艾瑪，我將成為你們的會議經理。（操作員說明）

At this time, I would like to turn the conference over to Tiffany Sammis, Manager of Investor Relations. You may begin.

現在，我想把會議交給投資者關係經理蒂芙尼·薩米斯(Tiffany Sammis)。你可以開始了。

Thank you. Good morning, and welcome to the Natural Resource Partners' second-quarter 2024 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.

謝謝。早上好，歡迎參加自然資源合作夥伴 2024 年第二季電話會議。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。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。

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.

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。

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.

我們今天的評論還包括非公認會計準則財務指標。我們的第二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。

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 $57 million of free cash flow in the second quarter and $287 million of free cash flow over the last 12 months. While we began to experience the negative impacts of lower metallurgical coal and soda ash prices in the first half of the year, we continue to generate robust free cash flow and make steady progress toward our goal of eliminating all financial obligations.

謝謝蒂芙尼，大家早安。NRP 在第二季度產生了 5,700 萬美元的自由現金流，在過去 12 個月中產生了 2.87 億美元的自由現金流。儘管我們在上半年開始受到冶金煤和純鹼價格下跌的負面影響，但我們繼續產生強勁的自由現金流，並在消除所有財務義務的目標方面取得穩步進展。

As of today, our total remaining obligations, which include debt and preferred equity, stand at approximately $240 million, a decrease of 35% from one year ago. While we believe lower prices for coal and soda ash will be with us for the foreseeable future, we expect to continue generating sufficient cash to achieve our goal of paying off all financial obligations.

截至今天，我們的剩餘債務總額（包括債務和優先股）約為 2.4 億美元，比一年前減少了 35%。雖然我們相信在可預見的未來，煤炭和純鹼的價格將會下降，但我們預計將繼續產生足夠的現金，以實現償還所有財務義務的目標。

In the second quarter of 2024, we eliminated the final tranche of warrants and redeemed $40 million of preferred equity, leaving only $32 million of preferreds remaining. We paid off the warrants and preferreds with a combination of internally generated cash and lower cost revolver borrowings.

2024 年第二季度，我們取消了最後一批認股權證並贖回了 4,000 萬美元的優先股，只剩下 3,200 萬美元的優先股。我們透過內部產生的現金和較低成本的循環借款相結合來償還認股權證和優先股。

We expect to generate sufficient cash to pay down the revolver borrowings well in advance of the revolver's maturity date. We remain steadfast in our belief that this is the best strategy to maximize the intrinsic value of the partnership.

我們預計將在循環貸款到期日之前產生足夠的現金來償還循環貸款。我們始終堅信，這是最大化合作關係內在價值的最佳策略。

Metallurgical coal prices drifted lower during the quarter as slowing global economic growth led to softening demand for steel. Despite recent weakness, metallurgical prices remain above historical norms, and we believe that long-term demand trends for steel, industry labor shortages and limited investment in new metallurgical coal supply will provide reasonable support for metallurgical prices for the foreseeable future.

由於全球經濟成長放緩導致鋼鐵需求疲軟，冶金煤價格在本季走低。儘管近期疲軟，但冶金價格仍高於歷史正常水平，我們認為鋼鐵的長期需求趨勢、行業勞動力短缺以及新冶金煤供應投資有限將為在可預見的未來為冶金價格提供合理支撐。

Thermal coal prices improved in the second quarter, driven by above-average summer heat in the United States and an uptick in international demand. These positives continue to be partially offset by low-priced North American natural gas and the continued long-term secular decline in US demand for thermal coal.

由於美國夏季高溫和國際需求上升，動力煤價格在第二季有所改善。這些正面因素繼續被北美天然氣低價和美國動力煤需求長期持續下降所抵消。

Turning to our soda ash investment, we received an $8 million cash distribution from Sisecam, Wyoming, in the second quarter of 2024 that was paid in connection with the first quarter 2024 performance. This distribution reflects the significant decline in soda ash prices experienced in recent months, resulting from the flood of new production that has come online over the past year.

談到我們的純鹼投資，我們在 2024 年第二季度從懷俄明州西塞卡姆收到了 800 萬美元的現金分配，這筆現金分配與 2024 年第一季的業績有關。這種分佈反映了近幾個月來純鹼價格的大幅下跌，這是由於過去一年新生產的大量投產造成的。

We expect soda ash prices and distributions from our soda ash investment to remain under pressure for the foreseeable future as we believe it will take several years for the global market to fully absorb this new capacity. These near-term challenges do not, however, impact our positive long-term outlook for our soda ash business.

我們預計純鹼價格和純鹼投資的分配在可預見的未來仍將面臨壓力，因為我們相信全球市場需要幾年時間才能完全吸收這一新產能。然而，這些近期挑戰不會影響我們純鹼業務的正面長期前景。

We are one of the world's lowest-cost producers of a product that has favorable long-term fundamentals, driven by urbanization, the megatrends for renewable energy, and the electrification of the global auto fleet. Our soda ash business remains a key asset in generating value for NRP unitholders today and in the long run.

在城市化、再生能源大趨勢以及全球汽車電氣化的推動下，我們是世界上成本最低的產品生產商之一，該產品具有良好的長期基本面。我們的純鹼業務仍然是當今和長期為 NRP 單位持有者創造價值的關鍵資產。

We continue to explore opportunities to lease our mineral and surface assets for permanent underground carbon dioxide sequestration, forest sequestration, lithium production, and the generation of electricity using geothermal, wind and solar energy -- activities that we collectively call carbon-neutral initiatives or CNI, for short. Activity has slowed in the CNI space over the course of 2024 as project developers have grown more cautious of making large capital commitments in light of an uncertain regulatory and political environment.

我們繼續探索租賃我們的礦物和地表資產的機會，用於永久地下二氧化碳封存、森林封存、鋰生產以及利用地熱、風能和太陽能發電——我們統稱為碳中和倡議或 CNI 的活動，簡稱。2024 年，CNI 領域的活動有所放緩，因為鑑於監管和政治環境的不確定性，專案開發商對做出巨額資本承諾變得更加謹慎。

While we believe the potential upside from our CNI assets is significant, while requiring no capital expenditures by NRP, these industries are still decades away from full development, as you know.

雖然我們相信我們的 CNI 資產的潛在上漲空間很大，並且不需要 NRP 進行資本支出，但如您所知，這些行業距離全面發展仍需要數十年的時間。

And with that, I will now turn the call over to Chris to cover our financial results.

現在，我將把電話轉給克里斯，介紹我們的財務表現。

Wonderful. Thank you, Craig. In the second quarter of 2024, NRP generated $46 million of net income and $57 million of operating and free cash flow.

精彩的。謝謝你，克雷格。2024 年第二季度，NRP 產生 4,600 萬美元的淨利潤以及 5,700 萬美元的營運現金流和自由現金流。

Moving to our mineral rights segment results. It generated $53 million of net income, $56 million of operating cash flow, and $57 million of free cash flow during the second quarter of 2024.

轉向我們的礦權部門的結果。2024 年第二季度，它產生了 5,300 萬美元的淨利潤、5,600 萬美元的營運現金流和 5,700 萬美元的自由現金流。

When compared to the prior year period, our mineral rights segment's net income was relatively flat as the decrease in coal royalty revenue primarily due to weakened steel demand was offset by nonrecurring items, which included a $5 million gain on asset sales and the receipt of $2 million from a carbon neutral initiative transaction.

與去年同期相比，我們的礦權部門的淨利潤相對持平，因為主要由於鋼鐵需求疲軟而導致的煤炭特許權收入的減少被非經常性項目所抵消，其中包括資產銷售的500 萬美元收益和2 美元的收入來自碳中和倡議交易的百萬美元。

Mineral rights segment's operating cash flow and free cash flow increased $1 million despite the decrease in coal sales volumes and pricing, primarily due to the timing of cash payments and the payment from the carbon neutral initiative transaction. Regarding our second-quarter 2024 net thermal coal royalty mix, metallurgical coal made up approximately 75% of our coal royalty revenues and 60% of our sales volumes.

儘管煤炭銷售和定價下降，但礦權部門的營運現金流和自由現金流增加了 100 萬美元，這主要是由於現金支付的時間和碳中和倡議交易的付款。就我們 2024 年第二季淨動力煤特許權使用費組成而言，冶金煤約占我們煤炭特許權使用費收入的 75% 和銷售量的 60%。

Shifting to our soda ash segment. Net income in the second quarter of 2024 was $4 million, a decrease of $23 million as compared to the prior year quarter. This decrease was due to the lower sales prices, primarily driven by the significant increased supply from China.

轉向純鹼領域。2024年第二季淨利為400萬美元，較去年同期減少2,300萬美元。這一下降是由於銷售價格下降所致，而銷售價格下降主要是由於中國供應量大幅增加所致。

Free cash flow from this segment was $8 million in the second quarter of 2024, a decrease of $25 million as compared to the prior year quarter. As we've been communicating, soda ash pricing has dramatically declined from the record highs seen last year and until the market is able to absorb the additional supply from China, we expect prices to remain muted in our distributions received from Sisecam to reflect the business' performance.

2024 年第二季度，該部門的自由現金流為 800 萬美元，比去年同期減少 2,500 萬美元。正如我們一直在溝通的那樣，純鹼價格已從去年的歷史高位大幅下降，在市場能夠吸收來自中國的額外供應之前，我們預計從 Sisecam 收到的分配價格將保持低迷，以反映業務情況' 表現。

Changing over to our corporate and financing segment, in the second quarter of 2024, we continue to make steady progress towards our goal of eliminating our financial obligations. We settled the remaining 0.3 million of our outstanding warrants with $10 million of cash and issuing a bit over 89,000 common units, and we retired $40 million of preferred units at par with cash.

轉向我們的企業和融資部門，2024 年第二季度，我們繼續朝著消除財務義務的目標穩步前進。我們用 1,000 萬美元現金結算了剩餘的 30 萬美元未償還認股權證，並發行了略多於 89,000 份的普通單位，並按面值退還了 4,000 萬美元的優先單位。

During 2024, in total, we've permanently retired 1.5 million warrants using $66 million of cash and issuing just under 288,000 common units and we permanently retired $40 million of preferred units at par with cash. As a result, at the end of the second quarter, we had just over $240 million of remaining financial obligations, made up of $211 million of debt and just under $32 million of preferred units.

2024 年期間，我們總共使用 6,600 萬美元的現金永久註銷了 150 萬張認股權證，並發行了近 288,000 個普通單位，並以現金等值永久註銷了 4,000 萬美元的優先單位。因此，到第二季末，我們的剩餘財務債務略高於 2.4 億美元，其中包括 2.11 億美元的債務和略低於 3,200 萬美元的優先單位。

For the corporate and financing segment's financial results, net income and free cash flow decreased $1 million during the second quarter of 2024 compared to the prior year quarter, primarily due to higher interest expense and cash paid for interest because of increased borrowings outstanding on our credit facility in 2024 that were used to settle the preferred units and the remaining warrants.

對於企業和融資部門的財務業績，與去年同期相比，2024 年第二季的淨利潤和自由現金流減少了100 萬美元，這主要是由於我們的信用貸款未償還借款增加導致利息支出和利息支付的現金增加2024 年的融資用於結算優先單位和剩餘認股權證。

Lastly, regarding our quarterly distributions, in May of 2024, we declared and paid a first-quarter distribution of $0.75 per common unit and a $2.15 million cash distribution to our preferred unitholders. And today, we announced our second quarter distribution of $0.75 per common unit and a $1 million cash distribution to our preferred unitholders to be paid later this month.

最後，關於我們的季度分配，2024 年 5 月，我們宣布並向優先單位持有人支付了每普通單位 0.75 美元的第一季分配和 215 萬美元的現金分配。今天，我們宣布第二季每個普通單位分配 0.75 美元，並向優先單位持有人分配 100 萬美元現金，將於本月稍後支付。

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

然後，我會將電話轉回艾瑪詢問問題。

(Operator Instructions)

（操作員說明）

At this time, we have no questions. Craig Nunez, I turn the call back over to you for closing remarks.

此時，我們沒有任何疑問。克雷格·努涅斯（Craig Nunez），我將電話轉回給您進行結束語。

Thank you, operator, and I'd like to thank everyone for joining us today and for your interest in NRP. We have a good year ahead of us, I believe, and I look forward to going on the journey with you. Have a good day, and goodbye.

謝謝您，運營商，我要感謝大家今天加入我們以及對 NRP 的興趣。我相信，我們將迎來美好的一年，我期待與您一起踏上旅程。祝你有美好的一天，再見。

And this concludes today's conference call. Thank you for attending. You may now disconnect.

今天的電話會議到此結束。感謝您的出席。您現在可以斷開連線。