Natural Resource Partners (NYSE:NRP) said it continued to generate cash despite weaker coal volumes and a severe downturn in soda ash markets, while management reiterated that deleveraging remains the partnership’s central capital allocation priority.
On the partnership’s first-quarter 2026 earnings call, President and Chief Operating Officer Craig Nunez said NRP generated $34 million of free cash flow in the quarter before accounting for a $39 million capital investment in its soda ash business, Sisecam Wyoming. Over the last 12 months, NRP generated $167 million of free cash flow before that investment, he said.
Including the capital contribution to Sisecam Wyoming, NRP’s first-quarter free cash flow was negative $5 million. The partnership reported $20 million of net income and $33 million of operating cash flow for the quarter.
Management Highlights Commodity Headwinds
Nunez said metallurgical and thermal coal producers continue to face challenging market conditions, while soda ash producers are dealing with “what is arguably the most significant global supply glut in a generation.”
He said NRP has not experienced a material impact on its mineral rights segment from the war in Iran. However, he noted that the closure of the Strait of Hormuz has led some European countries to consider delaying coal plant phase-outs to ensure power security, similar to discussions taking place in the United States.
Nunez said U.S. metallurgical coal prices are receiving a modest benefit from increased demand for domestically produced steel viewed as a safe haven. At the same time, he said higher diesel and shipping costs are pressuring producer margins, and any slowdown in global industrial activity tied to higher energy prices could weigh on steel demand and metallurgical coal pricing.
He also pointed to a potential second-order effect from higher oil prices: increased U.S. oil production could create greater volumes of associated natural gas. If LNG export capacity remains limited, some of that gas could be stranded domestically, pressuring North American natural gas prices and, in turn, thermal coal demand and pricing.
Soda Ash Business Remains Under Pressure
Nunez said soda ash remains his “primary concern.” Despite Sisecam Wyoming being among the lowest-cost producers globally, he said it is currently struggling to generate positive free cash flow.
“While we were early to call for a soda ash downturn, I underestimated both its severity and duration,” Nunez said. He added that prior stress testing did not contemplate a decline of the current magnitude and said NRP is re-evaluating its assumptions about global soda ash markets and Sisecam Wyoming specifically.
NRP’s soda ash segment posted a $12 million decline in first-quarter net income compared with the prior-year quarter, driven by lower sales prices and volumes amid an oversupplied international market and weaker demand for flat glass. Operating cash flow fell $3 million, while free cash flow declined $42 million from the prior-year period. The decrease reflected the absence of a distribution from Sisecam Wyoming in the first quarter of 2026, compared with a $3 million distribution in the first quarter of 2025, as well as the $39 million capital investment.
The company said it does not expect distributions from Sisecam Wyoming to resume until soda ash demand rebounds or there is a significant supply response to the weakened market.
In response to an analyst question, Nunez said the soda ash joint venture had $60 million of debt following the capital contribution. Asked about the company’s reassessment of the business, he said NRP is “going back to the drawing board” because current market conditions are worse than the partnership had considered realistically possible in its stress testing.
Nunez said NRP still views Sisecam Wyoming as a “world-class asset” with a long life and significant cash-generating potential, but he said management is examining whether the asset’s future investment characteristics may be materially different from its past.
Mineral Rights Segment Generates Cash Despite Lower Volumes
NRP’s mineral rights segment generated $34 million of net income, $42 million of operating cash flow and $43 million of free cash flow in the first quarter. Compared with the prior-year quarter, segment net income fell $12 million, while operating cash flow and free cash flow each declined $1 million.
The company said the decline in net income was primarily due to lower metallurgical and thermal coal sales volumes and higher depletion rates at certain thermal properties. Metallurgical coal represented about 65% of coal royalty revenue and 45% of coal royalty sales volumes during the quarter.
During the question-and-answer session, Yellow Gate Investment Management analyst Steven Balsam asked about a roughly 20% to 21% decline in coal sales volumes from the prior year. Nunez said the decrease in Illinois Basin production was not the result of a systemic issue, but reflected mining on adjacent land where NRP did not own the minerals. He said volumes can move materially from period to period as operators move on and off NRP-owned mineral properties.
Debt Reduction and Distributions Remain Focus
Nunez said NRP remains on track with its deleveraging strategy. Debt rose to $73 million during the quarter as the partnership funded its $39 million investment in Sisecam Wyoming, but was reduced to $60 million by quarter-end and to $45 million as of the call.
“Our objective is straightforward: pay off debt so that more cash can ultimately flow to unitholders,” Nunez said.
NRP paid a fourth-quarter distribution of $0.75 per common unit in February and a special cash distribution of $0.12 per common unit in March to help cover unitholder tax liabilities associated with owning NRP units in 2025. The partnership also announced a first-quarter distribution of $0.75 per common unit to be paid later in the month.
Nunez said NRP remains on track to increase unitholder distributions this year, but cautioned that difficult market conditions across coal and soda ash could delay the timing. He said he expects an increase in November, while acknowledging that adverse developments could push it back.
He said any further investment in Sisecam Wyoming will be evaluated with the same framework NRP applies to all capital decisions: maximizing intrinsic value per unit while maintaining a conservative approach and a margin of safety.
About Natural Resource Partners (NYSE:NRP)
Natural Resource Partners LP (NYSE: NRP) is a master limited partnership that acquires and manages royalty and other mineral interests in coal and other natural resources across North America and Australia. The partnership was formed in 2010 as a spin-out from a major U.S. coal producer and is headquartered in Fairmont, West Virginia. Its core business model centers on owning gross proceeds interests, gross royalty proceeds interests and fee minerals, which provide the right to receive a portion of revenues from mining and mineral production without operating the mines directly.
NRP's U.S.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
The article "Natural Resource Partners Q1 Earnings Call Highlights" first appeared on MarketBeat.
