Natural Resource Q1 2025 Earnings Misses Targets as Net Income Falls 28.4%

Natural Resource (NRP) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The total revenue of Natural Resource decreased by 20.8% to $60.54 million in 2025 Q1, down from $76.41 million in 2024 Q1, with specific segment revenue listed as follow: Royalty and other mineral rights: $51.26 million, Transportation and processing services: $4.42 million, Equity in earnings of Sisecam Wyoming: $4.61 million, Gain on asset sales and disposals: $247000 and Total revenues and other income: $60.54 million.

Natural Resource's EPS declined 27.1% to $3.01 in 2025 Q1 from $4.13 in 2024 Q1. Meanwhile, the company's net income declined to $40.25 million in 2025 Q1, down 28.4% from $56.21 million reported in 2024 Q1. The Company has sustained profitability for 19 years over the corresponding fiscal quarter, reflecting stable business performance. The EPS performance indicates challenges due to weaker commodity prices.

The strategy of buying Natural Resource (NRP) shares after a revenue drop quarter-over-quarter and holding for 30 days delivered strong returns over the past five years. The strategy achieved an overall return of 78.82%, surpassing the benchmark return of 49.40% by 29.42%. Although the strategy had a maximum drawdown of -12.82% and a Sharpe ratio of 1.03, indicating some risk and moderate returns, the 13.02% volatility suggests that the strategy's returns were not overly reliant on any single factor.

CEO Commentary
"NRP generated $35 million of free cash flow in the first quarter of 2025 and $214 million of free cash flow over the last twelve months," said Craig Nunez, President and Chief Operating Officer of NRP. "We expect prices for metallurgical coal, thermal coal, and soda ash to remain relatively weak for the foreseeable future. Our capital structure is solid, and we continue to generate robust free cash flow. We have only $139 million of debt remaining with the prospect of freeing up cash for significant increases in unitholder distributions as debt is paid off next year."

Guidance
NRP expects pricing in 2025 to remain muted for both metallurgical and thermal coal due to soft global steel demand and high domestic thermal coal inventory levels. The soda ash market is anticipated to continue facing weak pricing into 2026 unless there is a significant reduction in high-cost production or a rebound in demand for flat glass. Distributions from Sisecam Wyoming are expected to remain at lower levels for the foreseeable future.

Additional News
Natural Resource Partners L.P. (NRP) recently announced a first-quarter 2025 distribution of $0.75 per common unit, payable on May 27, 2025, to unitholders of record on May 20, 2025. This follows a special cash distribution of $1.21 per common unit in March 2025 aimed at covering unitholder tax liabilities. In strategic developments, NRP is exploring carbon-neutral revenue opportunities, including carbon sequestration and renewable energy projects, leveraging its extensive mineral and surface assets. The company aims to capitalize on its vast ownership footprint in the U.S. to create value with minimal capital investment. NRP sees potential in these initiatives despite current market challenges and remains focused on maintaining a robust cash flow and a healthy financial position.