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Natural Resource Partners Q2 Earnings Dip Y/Y on Weaker Coal, Soda Ash
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Shares of Natural Resource Partners L.P. (NRP - Free Report) have risen 1.2% since reporting results for second-quarter 2025 on Aug. 6. Over the same period, the S&P 500 has gained 0.8%. In the past month, the stock has advanced 5.7%, outperforming the S&P 500’s 1.8% growth.
In the second quarter of 2025, NRP posted net income of $34.2 million, down 25.7% from $46.1 million a year earlier. Total revenues and other income fell 23.6% year over year to $50.1 million. The decline was reflected in weaker metallurgical and thermal coal prices, as well as lower soda ash sales prices. Diluted earnings per common unit came in at $2.52 compared with $2.29 in the prior-year quarter. The operating cash flow was $45.6 million, down from $56.6 million. The free cash flow totaled $46.3 million, a drop from $57.3 million in the same period last year.
Natural Resource Partners LP Price, Consensus and EPS Surprise
The Mineral Rights segment, the largest contributor, saw its net income decline by $13 million year over year to $39.7 million, with both operating and free cash flow decreasing by $10.7 million. Approximately 70% of coal royalty revenues and 55% of coal royalty volumes came from metallurgical coal in the quarter. Coal royalty revenues per ton averaged $5.17, down from $5.98 a year ago.
The Soda Ash segment recorded net income of $2.5 million, down $1.1 million due to lower sales prices on global oversupply and subdued demand from glass, construction, automobile and solar panel markets. Operating and free cash flows for the segment both decreased by $2.7 million.
Corporate and Financing posted an improvement of $2.3 million in net income, the operating cash flow and the free cash flow compared with last year, thanks to lower interest expenses and reduced cash paid for interest following debt repayments.
Management Commentary
President and COO Craig Nunez highlighted that despite coal and soda ash prices hovering near operators’ cost of production, the company generated robust free cash flow — $46 million in the quarter and $203 million over the last 12 months. Nunez attributed this resilience to a decade-long deleveraging strategy aimed at building a cost and capital structure capable of producing substantial cash flow through commodity cycles.
Management expects to pay off substantially all debt by mid-2026 and begin materially increasing unitholder distributions by August 2026. While coal markets face excess supply, soft steel demand and cheap natural gas, Nunez noted operators are generally in better financial shape than in past downturns. Soda ash markets remain oversupplied, with prices below production costs for many producers.
Factors Influencing the Headline Numbers
The year-over-year revenue and profit declines were led by weaker metallurgical and thermal coal prices, lower volumes, and depressed soda ash pricing amid global oversupply. Stagnant steel demand and high thermal coal inventories weighed on coal royalties, while soda ash demand was hit by sluggish construction activity and reduced demand for automobiles and solar panels.
From a cost perspective, reduced interest expenses provided some offset, stemming from debt reduction initiatives. NRP’s leverage ratio stood at 0.5X as of June 30, 2025, with $157.5 million in liquidity, including $30.3 million in cash and $127.1 million in borrowing capacity under its revolving credit facility.
Guidance
Nunez indicated that, based on current free cash flow run rates, NRP is on track to eliminate nearly all debt by mid-2026. This would allow the partnership to significantly increase distributions beginning in August 2026. The board will continue to set quarterly distribution levels based on cash flow, debt service needs, market conditions, and tax considerations.
Management also expects metallurgical and thermal coal pricing to remain muted through year-end, with soda ash markets unlikely to recover until supply rationalization or demand growth materializes. Distributions from the Sisecam Wyoming joint venture are projected to stay below historical norms.
Other Developments
NRP declared a second-quarter 2025 cash distribution of 75 cents per common unit, payable Aug. 26, 2025, to unitholders of record as of Aug. 19. This follows the same payout for the first quarter of 2025. Management stated there had been no significant progress in its carbon-neutral initiatives, such as carbon dioxide sequestration, lithium production, or renewable energy development, during the period. However, they continue to see long-term opportunities for these activities given the partnership’s extensive U.S. land holdings.
Overall, NRP’s second-quarter performance underscores the benefits of its long-term financial strategy, which has enabled robust free cash generation in a weak pricing environment. While near-term market conditions for coal and soda ash remain challenging, the company’s disciplined debt reduction and capital allocation priorities set the stage for potentially higher returns to unitholders once leverage targets are met.
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Natural Resource Partners Q2 Earnings Dip Y/Y on Weaker Coal, Soda Ash
Shares of Natural Resource Partners L.P. (NRP - Free Report) have risen 1.2% since reporting results for second-quarter 2025 on Aug. 6. Over the same period, the S&P 500 has gained 0.8%. In the past month, the stock has advanced 5.7%, outperforming the S&P 500’s 1.8% growth.
In the second quarter of 2025, NRP posted net income of $34.2 million, down 25.7% from $46.1 million a year earlier. Total revenues and other income fell 23.6% year over year to $50.1 million. The decline was reflected in weaker metallurgical and thermal coal prices, as well as lower soda ash sales prices. Diluted earnings per common unit came in at $2.52 compared with $2.29 in the prior-year quarter. The operating cash flow was $45.6 million, down from $56.6 million. The free cash flow totaled $46.3 million, a drop from $57.3 million in the same period last year.
Natural Resource Partners LP Price, Consensus and EPS Surprise
Natural Resource Partners LP price-consensus-eps-surprise-chart | Natural Resource Partners LP Quote
Other Key Business Metrics
The Mineral Rights segment, the largest contributor, saw its net income decline by $13 million year over year to $39.7 million, with both operating and free cash flow decreasing by $10.7 million. Approximately 70% of coal royalty revenues and 55% of coal royalty volumes came from metallurgical coal in the quarter. Coal royalty revenues per ton averaged $5.17, down from $5.98 a year ago.
The Soda Ash segment recorded net income of $2.5 million, down $1.1 million due to lower sales prices on global oversupply and subdued demand from glass, construction, automobile and solar panel markets. Operating and free cash flows for the segment both decreased by $2.7 million.
Corporate and Financing posted an improvement of $2.3 million in net income, the operating cash flow and the free cash flow compared with last year, thanks to lower interest expenses and reduced cash paid for interest following debt repayments.
Management Commentary
President and COO Craig Nunez highlighted that despite coal and soda ash prices hovering near operators’ cost of production, the company generated robust free cash flow — $46 million in the quarter and $203 million over the last 12 months. Nunez attributed this resilience to a decade-long deleveraging strategy aimed at building a cost and capital structure capable of producing substantial cash flow through commodity cycles.
Management expects to pay off substantially all debt by mid-2026 and begin materially increasing unitholder distributions by August 2026. While coal markets face excess supply, soft steel demand and cheap natural gas, Nunez noted operators are generally in better financial shape than in past downturns. Soda ash markets remain oversupplied, with prices below production costs for many producers.
Factors Influencing the Headline Numbers
The year-over-year revenue and profit declines were led by weaker metallurgical and thermal coal prices, lower volumes, and depressed soda ash pricing amid global oversupply. Stagnant steel demand and high thermal coal inventories weighed on coal royalties, while soda ash demand was hit by sluggish construction activity and reduced demand for automobiles and solar panels.
From a cost perspective, reduced interest expenses provided some offset, stemming from debt reduction initiatives. NRP’s leverage ratio stood at 0.5X as of June 30, 2025, with $157.5 million in liquidity, including $30.3 million in cash and $127.1 million in borrowing capacity under its revolving credit facility.
Guidance
Nunez indicated that, based on current free cash flow run rates, NRP is on track to eliminate nearly all debt by mid-2026. This would allow the partnership to significantly increase distributions beginning in August 2026. The board will continue to set quarterly distribution levels based on cash flow, debt service needs, market conditions, and tax considerations.
Management also expects metallurgical and thermal coal pricing to remain muted through year-end, with soda ash markets unlikely to recover until supply rationalization or demand growth materializes. Distributions from the Sisecam Wyoming joint venture are projected to stay below historical norms.
Other Developments
NRP declared a second-quarter 2025 cash distribution of 75 cents per common unit, payable Aug. 26, 2025, to unitholders of record as of Aug. 19. This follows the same payout for the first quarter of 2025. Management stated there had been no significant progress in its carbon-neutral initiatives, such as carbon dioxide sequestration, lithium production, or renewable energy development, during the period. However, they continue to see long-term opportunities for these activities given the partnership’s extensive U.S. land holdings.
Overall, NRP’s second-quarter performance underscores the benefits of its long-term financial strategy, which has enabled robust free cash generation in a weak pricing environment. While near-term market conditions for coal and soda ash remain challenging, the company’s disciplined debt reduction and capital allocation priorities set the stage for potentially higher returns to unitholders once leverage targets are met.