Natural Resource Partners L.P. Reports First Quarter 2021 Results and Declares First Quarter 2021 Distributions

Natural Resource Partners L.P. (NYSE:NRP) today reported first quarter 2021 results as follows:

"Growing demand for steel, glass and electricity continues to drive the rebound in our business segments from the negative impact of the COVID-19 pandemic. The Partnership’s demonstrated ability to generate free cash flow, reduce debt and maintain strong liquidity throughout the crisis has been noteworthy, and we expect these trends to continue," stated Craig Nunez, NRP's President and Chief Operating Officer.

NRP's liquidity was $196.8 million at March 31, 2021, consisting of $96.8 million of cash and $100.0 million of borrowing capacity available under its revolving credit facility.

NRP announced today that the Board of Directors of its general partner declared a first quarter 2021 cash distribution of $0.45 per common unit of NRP to be paid on May 24, 2021 to unitholders of record on May 17, 2021. In addition, the Board declared a $7.7 million distribution on the preferred units, which will be paid one-half in cash and one-half in kind through the issuance of additional preferred units. The preferred unit distribution includes interest on previously paid-in-kind units and will be paid one-half in cash and one-half in kind through the issuance of additional preferred units.

Segment Performance

Coal Royalty and Other

In the first quarter of 2021 net income decreased $6.3 million as compared to the prior year period primarily due to a $4.0 million non-cash asset impairment in the first quarter of 2021 related to an idled thermal coal property, as well as a $3.1 million increase in depletion expense due to increased coal production at certain properties. Free cash flow was $4.3 million lower in the first quarter of 2021 as compared to the prior year period primarily as a result of lease amendment fee payments received in the first quarter of 2020. Approximately 50% of coal royalty revenues and approximately 40% of coal royalty sales volumes were derived from metallurgical coal in the first quarter of 2021.

Metallurgical coal markets remain challenged by the uncertainties around the COVID-19 pandemic, however prices have rebounded from the lows seen in the second quarter of 2020 and the outlook continues to strengthen. Domestic and export thermal coal markets continue to stabilize, but still face ongoing negative effects of the COVID-19 pandemic and the long-term challenges of lower utility demand, low natural gas prices, and the secular shift to renewable energy. However, NRP does not have significant sensitivity to thermal coal price movements this year since the substantial majority of NRP's thermal cash flows are fixed pursuant to a contract with Foresight Energy that went into effect as they emerged from bankruptcy last year.

Soda Ash

Net income in the first quarter of 2021 was lower by $4.3 million as compared to the prior year period primarily as a result of lower sales prices due to demand disruptions caused by the COVID-19 pandemic. NRP received $3.9 million in cash distributions from Ciner Wyoming in the first quarter of 2021 as compared to $7.1 million in cash distributions in the prior year period. As previously stated, in August of 2020, Ciner Wyoming decided to suspend its quarterly distributions in an effort to achieve greater financial and liquidity flexibility as a result of COVID-19. While NRP did receive a special $3.9 million distribution from Ciner Wyoming during the quarter, NRP does not expect Ciner Wyoming to resume regular cash distributions until they have greater visibility and confidence in the sustainability of the continuing improvement in global soda ash demand. Ciner Wyoming’s ability to pay future quarterly distributions will be dependent in part on its cash reserves, liquidity, total debt levels and anticipated capital expenditures.

NRP believes Ciner Wyoming's facility is competitively positioned as one of the lowest cost producers of soda ash in the world, however, NRP expects the market to remain volatile as a result of ongoing uncertainties with COVID-19.

Corporate and Financing

Corporate and financing costs in the first quarter of 2021 were relatively flat as compared to the prior year period as increases in certain costs, such as insurance, were offset by a reduction in controllable costs as a result of NRP's cost saving initiatives. Free cash flow improved $0.8 million in the first quarter of 2021 as compared to the prior year period primarily due to lower cash paid for interest as a result of less debt outstanding in 2021.

As noted earlier, NRP declared a first quarter 2021 preferred unit distribution of $7.7 million which will be paid one-half in cash and one-half in kind. The indenture governing the 2025 parent company notes restricts NRP from paying more than one-half of the quarterly distribution on the preferred units in cash if NRP's consolidated leverage ratio exceeds 3.75x, and as of March 31, 2021, NRP's leverage ratio was 4.5x. NRP expects its leverage ratio to continue to rise through the second quarter of 2021 and then begin a sustained long-term decline as NRP continues to pay down debt. Under the terms of the partnership agreement, if NRP’s consolidated leverage ratio remains above 3.75x into 2022 and NRP remains unable to redeem any outstanding paid-in-kind preferred units, NRP would be required to temporarily suspend distributions on its common units until the leverage ratio drops below 3.75x and the outstanding paid-in-kind preferred units are redeemed. Future distributions on NRP's 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.

Conference Call

A conference call will be held today at 9:00 a.m. ET. To register for the conference call, please use this link https://www.incommglobalevents.com/registration/client/7437/natural-resource-partners-lp-first-quarter-2021-earnings-call/ . After registering a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, however, to ensure you are connected for the full call we suggest registering at least 10 minutes prior to the start of the call. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com . To access the replay, please visit the Investor Relations section of NRP’s website.

Withholding Information for Foreign Investors

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of NRP's distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, NRP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable rate.

Company Profile

Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns, manages and leases a diversified portfolio of mineral properties in the United States including interests in coal, industrial minerals and other natural resources. In addition, NRP owns an equity investment in Ciner Wyoming LLC, a trona ore mining and soda ash production business.

For additional information, please contact Tiffany Sammis at 713-751-7515 or tsammis@nrplp.com . Further information about NRP is available on the Partnership’s website at http://www.nrplp.com .

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership. These risks include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on the Partnership’s common and preferred units; the Partnership's business strategy; its liquidity and access to capital and financing sources; its financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by the Partnership's lessees, including Foresight Energy; Ciner Wyoming LLC’s trona mining and soda ash refinery operations; distributions from the soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving the Partnership, and of scheduled or potential regulatory or legal changes; global and U.S. economic conditions; and other factors detailed in Natural Resource Partners’ Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment, net income attributable to non-controlling interest and gain on reserve swap; 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 or loss, 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. 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” or "DCF" is a non-GAAP financial measure that we define as 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 receivable; less maintenance capital expenditures and distributions to non-controlling interest. 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, distributable cash flow 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. Distributable cash flow 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.

“Free cash flow” or "FCF" is a non-GAAP financial measure that we define as 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 receivable; less maintenance and expansion capital expenditures, cash flow used in acquisition costs classified as investing or financing activities and distributions to non-controlling interest. FCF is calculated before mandatory debt repayments. Free cash flow 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. Free cash flow may not be calculated the same for us as for other companies. Free cash flow 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.

"Cash flow cushion" is a non-GAAP financial measure that we define as free cash flow less one-time beneficial items, mandatory Opco debt repayments, preferred unit distributions and common unit distributions. Cash flow cushion 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. Cash flow cushion is a supplemental liquidity measure used by our management to assess the Partnership's ability to make or raise cash distributions to our common and preferred unitholders and our general partner and repay debt or redeem preferred units.

"Return on capital employed" or "ROCE" is a non-GAAP financial measure that we define as net income (loss) operations plus financing costs (interest expense plus loss on extinguishment of debt) divided by the sum of equity excluding equity of discontinued operations, and debt. Return on capital employed should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, 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. Return on capital employed is a supplemental performance measure used by our management team that measures our profitability and efficiency with which our capital is employed. The measure provides an indication of operating performance before the impact of leverage in the capital structure.

-Financial Tables and Reconciliation of Non-GAAP Measures Follow-