Natural Resource Partners 2024 Q4 Earnings: Revenue and Income Declines
Shares of Natural Resource Partners L.P. (NRP) have risen 4.1% since announcing their fourth-quarter 2024 results. In contrast, the S&P 500 index experienced a decline of 1.4% during the same period. Over the past month, NRP’s stock has increased by 1.3%, while the S&P 500 has fallen by 4.7%.
Earnings Overview
For the fourth quarter of 2024, Natural Resource Partners reported diluted earnings per share of $3.15, representing a 27% decrease from $4.31 in the same quarter last year.
Quarterly revenues were $65.7 million, which marks a decline of 29.5% from $93.2 million in the fourth quarter of 2023. Yearly revenue also fell by 27.5%, dropping to $268 million from $370 million the previous year. The revenue decrease was significantly influenced by lower coal and soda ash prices, although it was partially offset by one-time carbon-neutral revenues and lease amendment fees.
The net income for the fourth quarter stood at $42.8 million, down 34.2% from $65 million in the prior-year quarter. Operating cash flow decreased to $66.2 million, compared to $77.8 million a year ago. Likewise, free cash flow slipped to $66.9 million from $78.4 million in the same quarter of the previous year.
Price, Consensus, and EPS Surprise
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Key Business Metrics
Mineral Rights Segment
The Mineral Rights segment, which encompasses coal royalties, reported a decline in financial performance. Net income for the quarter fell 17% to $52.4 million, down from $63.1 million a year prior. Operating cash flow decreased by $7.6 million, while free cash flow also declined by $7.5 million.
For the entire year, net income from this segment dropped 15.9% to $206.4 million. Operating and free cash flows decreased by $17.8 million and $17.6 million, respectively. The decreases are linked to lower pricing for metallurgical and thermal coal, as well as reduced sales volumes.
Importantly, about 80% of NRP’s fourth-quarter coal royalty revenues derived from metallurgical coal, with 75% for the entire year. The segment also generated $12 million in carbon-neutral revenues and lease amendment fees in the fourth quarter, which helped mitigate some of the losses due to lower coal prices.
Soda Ash Segment
The Soda Ash segment faced challenges from sluggish global demand and increased production capacity. In the fourth quarter, net income fell 94.1% to $0.9 million from $14.7 million a year ago. For the full year, net income also dropped 75.4% to $18 million, down from $73.1 million.
In 2024, Natural Resource Partners received $39 million in cash distributions from Sisecam Wyoming, reflecting a significant decline of $43 million from the previous year. This decrease was attributed to a nearly 60% fall in soda ash prices, driven by an oversupply in the global market and reduced demand from the construction sector, notably in China. Management anticipates that the challenging pricing environment could continue for several years.
Management Commentary
During the earnings call, President and COO Craig Nunez highlighted NRP’s ongoing efforts to enhance its balance sheet. Over the last decade, the company has reduced its financial obligations by over $1.3 billion, with only $142 million in debt remaining at the end of 2024.
Additionally, Natural Resource Partners increased its credit facility by $45 million to a total of $200 million, with a maturity extension to 2029. The company aims to enhance its financial flexibility while ensuring robust free cash flow generation.
On commodity markets, management noted that both metallurgical and thermal coal prices remain depressed and are unlikely to recover soon due to soft global steel demand, abundant natural gas supplies, and high coal inventory levels. However, executives believe that limited investments in coal supply, rising production costs, and labor shortages could set a higher long-term price floor than historical averages.
Soda ash pricing is expected to remain low as the market adjusts to surplus supply. Nonetheless, Natural Resource Partners is confident that its competitive position in the Sisecam Wyoming operation provides durability in these tough times.
Guidance & Outlook
Management has indicated that 2025 is likely to be a challenging year due to ongoing price pressures across key commodities. Despite this, NRP maintains confidence in its potential to produce significant free cash flow, particularly as debt obligations further decrease.
The company also underscored its commitment to carbon-neutral initiatives, such as forest carbon sequestration, lithium production, and renewable energy projects. However, progress in the carbon sequestration market has been slower than expected. Moreover, Exxon recently chose not to renew its lease for NRP’s underground carbon dioxide storage facility in Baldwin County, AL.
Recent Developments
Natural Resource Partners remains dedicated to returning value to shareholders, distributing $5.44 per common unit in 2024. This included quarterly distributions of 75 cents per unit, along with a special distribution of $2.44 to address unitholder tax liabilities from 2023. In February 2025, the company announced a fourth-quarter distribution of 75 cents per unit and an additional special distribution of $1.21 per unit to accommodate 2024 tax liabilities.
Furthermore, Natural Resource Partners fully redeemed its remaining preferred units at par, retired all outstanding warrants, and completed its capital restructuring efforts. As a result, the company has eliminated any remaining preferred equity or warrant obligations, enhancing its financial simplicity.
Conclusion
NRP’s fourth-quarter results illustrate the difficulties posed by declining commodity prices, especially in its mineral rights and soda ash sectors. Although free cash flow remains robust, lower prices continue to negatively influence earnings.
Despite these challenges, the company’s disciplined approach to debt reduction, combined with a commitment to shareholder returns, positions it well for long-term value creation. Investors will be attentive to how NRP manages ongoing market pressures while pursuing its carbon-neutral initiatives and maintaining financial flexibility.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
