On November 5, 2024, Natural Resources Partners LP (NRP, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. The company, a diversified natural resource entity, is engaged in owning, managing, and leasing a portfolio of mineral properties across the United States, with significant interests in coal, trona, soda ash, and other natural resources. NRP operates primarily through its Mineral Rights and Soda Ash segments, with the majority of revenue generated from the Mineral Rights segment.
Performance and Challenges
NRP reported a net income of $38.6 million for the third quarter of 2024, a decrease from the previous year, reflecting ongoing challenges in the coal and soda ash markets. The company generated $54.8 million in free cash flow during the quarter, which was used to redeem $31.7 million of preferred units, leaving no outstanding preferred units from the original $250 million issuance. Despite weak pricing for coal and soda ash, NRP continues to focus on deleveraging, with less than $200 million of debt remaining.
Financial Achievements
The company executed a five-year $200 million credit facility in October 2024, maturing in 2029, providing greater financial flexibility. NRP declared a third quarter distribution of $0.75 per common unit, consistent with the previous quarter. These financial maneuvers are crucial for maintaining liquidity and supporting the company's strategy to maximize intrinsic value by reducing financial obligations.
Income Statement Highlights
NRP's total revenues for the third quarter were $60.3 million, down from $86.4 million in the same period last year. The decline was primarily due to lower coal sales prices and volumes. Operating expenses decreased slightly to $17.5 million, resulting in an income from operations of $42.8 million. The net income attributable to common unitholders was $26.6 million, translating to a basic net income per common unit of $2.04.
Balance Sheet and Cash Flow
As of September 30, 2024, NRP reported total assets of $789.9 million and total liabilities of $272.7 million. The company's cash and cash equivalents stood at $30.9 million, with a consolidated leverage ratio of 0.8x. Operating cash flow for the quarter was $54.1 million, while net cash used in financing activities was $56.3 million, reflecting debt repayments and distributions.
Segment Performance
In the Mineral Rights segment, net income decreased by $20.4 million compared to the prior year, driven by lower coal prices and volumes. Approximately 75% of coal royalty revenues were derived from metallurgical coal. The Soda Ash segment also faced challenges, with net income decreasing by $4.3 million due to lower sales prices and demand.
NRP generated $55 million of free cash flow in the third quarter of 2024 and $263 million of free cash flow over the last twelve months," said Craig Nunez, NRP's president and chief operating officer. "While pricing for coal and soda ash remain weak, we continue to make progress toward our goal of paying off all financial obligations."
Analysis
NRP's performance in the third quarter of 2024 highlights the ongoing challenges in the coal and soda ash markets, primarily due to global economic conditions and increased production capacity. Despite these challenges, the company's focus on deleveraging and maintaining liquidity positions it well for future stability. The execution of a new credit facility and the redemption of preferred units are positive steps towards financial resilience.
Explore the complete 8-K earnings release (here) from Natural Resources Partners LP for further details.
