Natural Resource Partners LP — 2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report. NRP owns and leases U.S. mineral rights and holds a non-controlling 49% interest in Sisecam Wyoming, a trona mining and soda ash business.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenues and other income | $389.0 million | $216.4 million |
| Net income | $268.5 million | $108.9 million |
| Net income attributable to common unitholders | $233.7 million | $75.7 million |
| Basic / diluted net income per common unit | $18.72 / $13.39 | $6.14 / $4.81 |
| Cash from operating activities | $266.8 million | $121.8 million |
| Free cash flow (non-GAAP) | $268.4 million | $123.0 million |
| Adjusted EBITDA (non-GAAP) | $317.2 million | $161.4 million |
- Mineral Rights segment revenues and other income were $329.2 million, up 69%; Soda Ash segment amounts were $59.8 million, up 173%. The Soda Ash figure is equity earnings from NRP’s investee, not NRP’s share of Sisecam Wyoming sales.
- NRP reported $305.2 million of operating income. The filing does not provide a clearly stated margin measure.
- At year-end, cash and cash equivalents were $39.1 million; available borrowing capacity was $60 million, for total liquidity of $99.1 million. Debt was $169.1 million at face value ($168.3 million net of unamortized costs), and reported leverage was 0.5x.
- NRP’s current portion of debt was $39.1 million; management disclosed approximately $40 million of principal repayments due in 2023. The $130 million Opco revolving facility was extended to August 2027; $70 million was drawn at year-end.
- Common-unit distributions were raised to $0.75 per unit beginning in the second quarter. The Board declared a $0.75-per-unit distribution for 2022 Q4 in February 2023. NRP also announced a one-time $2.43-per-unit distribution for March 2023, described as helping cover unitholder tax liabilities.
Changes versus 2021
- Total revenues and other income rose 80%, and net income increased by $159.6 million, primarily on stronger coal royalty income and higher soda ash equity earnings.
- Coal sales volumes on NRP properties increased 19% to 32.9 million tons; average coal royalty revenue per ton rose 54% to $6.90. Total coal royalty revenues increased 118% to $227.0 million, reflecting higher prices and volumes.
- Sisecam Wyoming’s higher international sales prices drove its contribution to NRP’s results higher. NRP received $44.8 million of distributions from the investee versus $11.3 million in 2021.
- Cash from operations increased $145.0 million. Cash declined by $96.4 million during 2022, largely reflecting debt repayments, distributions and preferred-unit redemptions.
- NRP retired all $300 million of its 9.125% senior notes due 2025. The repayment generated a $10.5 million loss on extinguishment of debt, including call premiums, fees and write-off of debt issuance costs. Interest expense declined 32% to $26.3 million.
Outlook, risks and unusual items
- Management said metallurgical coal prices had eased from historic peaks but expected them to remain well-supported; it expected thermal coal prices to remain elevated relative to historical levels, while not returning to 2022 peaks. These are qualitative views, not numerical guidance.
- Sisecam Wyoming’s deca stockpiles are expected to be substantially depleted by 2024. Without investment or other initiatives to replace that production capacity, output could decline by approximately 200,000 short tons annually. NRP is a minority owner and does not control the operating or capital-spending decisions.
- NRP leased approximately 140,000 acres of subsurface pore space for carbon sequestration in 2022, with estimated combined storage capacity of 800 million metric tons of CO₂, and executed its first geothermal lease. Management said the timing and likelihood of related cash flows remain uncertain.
- Key exposures include volatile coal and soda ash prices, long-term thermal-coal demand decline, reliance on a small number of coal lessees (Alpha represented 26% and Foresight 17% of 2022 total revenues), and transportation constraints. Sisecam Wyoming shipped more than 90% of its soda ash initially over Union Pacific’s rail line; its agreement expires in 2025.
- NRP recorded $4.5 million of asset impairments in 2022. It also disclosed the risk that Sisecam Wyoming’s production could be affected by the deca depletion issue and that its planned capacity expansion was paused amid cost inflation.
- Preferred units carry a 12% annual distribution priority over common units. In February 2023, NRP elected to redeem 47,499 preferred units for $47.5 million plus accrued distributions, using cash and revolver borrowings; 202,501 units remained outstanding as of the filing date.
- Management reported no material effect from inflation on operations in 2022. Ordinary-course legal matters were not expected to materially affect financial position, liquidity or operations. The filing identifies environmental regulation, mine permitting, reclamation exposure, climate-policy and capital-access risks, and cybersecurity risk.
Important facts for investors to verify
- Whether coal prices, lessee production and royalty receipts remain strong, particularly given Alpha and Foresight concentration.
- How Sisecam Wyoming will replace deca-related capacity before the expected 2024 depletion, and whether its production, distributions and rail access remain reliable.
- Cash available after preferred distributions, common-unit distributions and scheduled debt repayments; confirm the effect of the 2023 preferred-unit redemption on liquidity and leverage.
- The durability and economics of carbon sequestration and geothermal leases, since disclosed storage capacity and project potential do not establish future revenue.
- Accounting and reporting context: total revenues and other income include $59.8 million of equity earnings from Sisecam Wyoming; DCF, FCF, Adjusted EBITDA and leverage are non-GAAP measures. The financial statements received an unqualified audit opinion, and the auditor reported effective internal control over financial reporting.