NATURAL RESOURCE PARTNERS LP 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   The following review of operations for the three month periods ended March 31, 2023 and 2022 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2022.   As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and was a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes").   INFORMATION REGARDING FORWARD-LOOKING STATEMENTS   Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.   These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See " Item 1A. Risk Factors " included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022 for important factors that could cause our actual results of operations or our actual financial condition to differ.   NON-GAAP FINANCIAL MEASURES   Adjusted EBITDA   Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 9. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2022. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.   Distributable Cash Flow   Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.   Free Cash Flow   Free cash flow ("FCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.   Leverage Ratio   Leverage ratio represents the outstanding principal of our debt at the end of the period divided by the last twelve months' Adjusted EBITDA as defined above. We believe that leverage ratio is a useful measure to management and investors to evaluate and monitor our indebtedness relative to our ability to generate income to service such debt and in understanding trends in our overall financial condition. Leverage ratio may not be calculated the same for us as for other companies and is not a substitute for, and should not be used in conjunction with, GAAP financial ratios.      17 Table of Contents   Introduction   The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects: •    Executive Overview •    Results of Operations •    Liquidity and Capital Resources •    Off-Balance Sheet Transactions •    Related Party Transactions •    Summary of Critical Accounting Estimates •    Recent Accounting Standards   Executive Overview   We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming, a trona ore mining and soda ash production business. Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments:   Mineral Rights —consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States. If combined in a single tract, our ownership would cover roughly 20,000 square miles. Our ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. We are working to strategically redefine our business as a key player in the transitional energy economy in the years to come.   Soda Ash —consists of our 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming. Sisecam Wyoming mines the trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.   Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment.   Our financial results by segment for the three months ended March 31, 2023 are as follows:       Operating Segments                   (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   Revenues and other income   $ 79,965     $ 19,254     $ —     $ 99,219   Net income (loss)   $ 68,881     $ 19,096     $ (8,702 )   $ 79,275   Adjusted EBITDA (1)   $ 72,960     $ 10,622     $ (5,845 )   $ 77,737                                     Cash flow provided by (used in) continuing operations                                 Operating activities   $ 73,858     $ 10,617     $ (11,575 )   $ 72,900   Investing activities   $ 699     $ —     $ (2 )   $ 697   Financing activities   $ (583 )   $ —     $ (94,450 )   $ (95,033 ) Distributable cash flow (1)   $ 74,557     $ 10,617     $ (11,577 )   $ 73,597   Free cash flow (1)   $ 74,456     $ 10,617     $ (11,577 )   $ 73,496             (1) See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures.   Current Results/Market Commentary   Financial Results and Quarterly Distributions   We generated $72.9 million of operating cash flow and $73.5 million of free cash flow during the three months ended March 31, 2023, and ended the quarter with $56.5 million of liquidity consisting of $17.7 million of cash and cash equivalents and $38.8 million of borrowing capacity under our Opco Credit Facility. As of March 31, 2023 our leverage ratio was 0.5 x.   In February 2023, we declared and paid a cash distribution of $0.75 per common unit of NRP with respect to the fourth quarter of 2022 as well as a $7.5 million cash distribution on the preferred units with respect to the fourth quarter of 2022. In March 2023, we declared and paid a special cash distribution of $2.43 per common unit to help cover unitholder tax liabilities associated with owning NRP's common units during 2022. Future distributions on our common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.    In February 2023, we received a notice from holders of our Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. We chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. Of the originally issued 250,000 Class A Preferred Units, 202,501 Class A Preferred Units remain outstanding.     18 Table of Contents   Mineral Rights Business Segment   Revenues and other income in the first quarter of 2023 increased $5.1 million, or 7%, as compared to the prior year period primarily due to increased metallurgical coal sales volumes and revenue from carbon neutral initiatives. Cash provided by operating activities and free cash flow increased $25.7 million and $26.3 million, respectively, compared to the prior year quarter primarily due to the timing of minimum and royalty payments and prior year recoupments.     Metallurgical coal prices remain strong relative to historical norms, although pricing has declined from the record highs seen in 2022. Continued support for pricing is expected as operators are limited in their ability to increase production due to ongoing labor shortages, transportation and logistics challenges, difficulty of new mine permitting, and limited access to capital. While metallurgical prices have pulled back from the peaks reached last year, we continue to believe met prices will remain well-supported for the foreseeable future.    Thermal coal prices also reached record highs in 2022, but have declined significantly in recent months due to unusually warm weather in Europe and North America as well as lower natural gas prices. While we do not expect to see thermal prices rebound to last year’s levels, many of the factors that provided support to prices over the last year still exist. Boycotts of Russian coal continue to force European buyers to source coal from other regions, including the U.S. Operators will continue to be burdened by labor shortages, pressure from governments, regulators, activists, and capital providers, which will limit ability to increase thermal production to meet demand. China appears to be relaxing its three-year ban on Australian coal imports with the recent approvals for several Chinese companies to buy Australian coal. Additional demand from a Chinese economy emerging from a zero-COVID policy should provide additional support for prices. We expect these factors to keep thermal prices elevated relative to historical levels for the foreseeable future.    We continue to explore and identify carbon neutral revenue opportunities across our large portfolio of land, mineral, and timber assets, including the sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar, and wind energy. In the first quarter of 2023, we executed a new solar lease.    Soda Ash Business Segment   Revenues and other income in the first quarter of 2023 increased $4.4 million, or 30%, as compared to the prior year period primarily due to increased sales prices. Cash provided by operating activities and free cash flow in the first quarter of 2023 decreased $2.6 million as compared to the prior year period as Sisecam Wyoming paid a higher regular quarterly distribution in the first quarter of 2022 as compared to the first quarter of 2023.    International prices remained strong in the first quarter of 2023 reflecting a continued supply constrained market for soda ash. Domestic soda ash prices were also strong during the first quarter of 2023 versus the prior year quarter due to negotiated 2023 domestic prices converging to international soda ash prices.   Results of Operations   First Quarter of 2023 and 2022 Compared   Revenues and Other Income   The following table includes our revenues and other income by operating segment:       For the Three Months Ended March 31,             Percentage   Operating Segment (In thousands)   2023     2022     Increase     Change   Mineral Rights   $ 79,965     $ 74,879     $ 5,086       7 % Soda Ash     19,254       14,837       4,417       30 % Total   $ 99,219     $ 89,716     $ 9,503       11 %   The changes in revenues and other income are discussed for each of the operating segments below:     19 Table of Contents   Mineral Rights   The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:       For the Three Months Ended March 31,     Increase     Percentage   (In thousands, except per ton data)   2023     2022     (Decrease)     Change   Coal sales volumes (tons)                                 Appalachia                                 Northern     379       428       (49 )     (11 )% Central     3,609       3,251       358       11 % Southern     582       361       221       61 % Total Appalachia     4,570       4,040       530       13 % Illinois Basin     1,310       1,502       (192 )     (13 )% Northern Powder River Basin     1,085       1,238       (153 )     (12 )% Gulf Coast     58       69       (11 )     (16 )% Total coal sales volumes     7,023       6,849       174       3 %                                   Coal royalty revenue per ton                                 Appalachia                                 Northern   $ 9.86     $ 10.14     $ (0.28 )     (3 )% Central     9.92       11.37       (1.45 )     (13 )% Southern     14.94       17.56       (2.62 )     (15 )% Illinois Basin     3.57       2.20       1.37       62 % Northern Powder River Basin     4.68       3.74       0.94       25 % Gulf Coast     0.57       0.55       0.02       4 % Combined average coal royalty revenue per ton     8.26       8.12       0.14       2 %                                   Coal royalty revenues                                 Appalachia                                 Northern   $ 3,737     $ 4,341     $ (604 )     (14 )% Central     35,806       36,980       (1,174 )     (3 )% Southern     8,697       6,340       2,357       37 % Total Appalachia     48,240       47,661       579       1 % Illinois Basin     4,675       3,303       1,372       42 % Northern Powder River Basin     5,075       4,632       443       10 % Gulf Coast     33       38       (5 )     (13 )% Unadjusted coal royalty revenues     58,023       55,634       2,389       4 % Coal royalty adjustment for minimum leases     —       (185 )     185       100 % Total coal royalty revenues   $ 58,023     $ 55,449     $ 2,574       5 %                                   Other revenues                                 Production lease minimum revenues   $ 613     $ 1,592     $ (979 )     (61 )% Minimum lease straight-line revenues     4,503       4,783       (280 )     (6 )% Carbon neutral initiative revenues     2,118       —       2,118       100 % Wheelage revenues     3,869       3,717       152       4 % Property tax revenues     1,470       1,472       (2 )     (0 )% Coal overriding royalty revenues     188       258       (70 )     (27 )% Lease amendment revenues     851       880       (29 )     (3 )% Aggregates royalty revenues     753       770       (17 )     (2 )% Oil and gas royalty revenues     3,588       1,814       1,774       98 % Other revenues     295       348       (53 )     (15 )% Total other revenues   $ 18,248     $ 15,634     $ 2,614       17 % Royalty and other mineral rights   $ 76,271     $ 71,083     $ 5,188       7 % Transportation and processing services revenues     3,598       3,796       (198 )     (5 )% Gain on asset sales and disposals     96       —       96       100 % Total Mineral Rights segment revenues and other income   $ 79,965     $ 74,879     $ 5,086       7 %     20 Table of Contents   Coal Royalty Revenues   Approximately 75% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended March 31, 2023. Total coal royalty revenues increased $2.6 million as compared to the prior year quarter. The discussion by region is as follows:   • Appalachia:  Coal royalty revenues were essentially flat period-over-period as increased sales volumes more than offset the decrease in sales prices in the Southern Appalachia region.    • Illinois Basin:  Coal royalty revenues increased $1.4 million primarily due to increased sales prices during the three months ended March 31, 2023, as compared to the prior year quarter.   Other Revenues   Total other revenues increased $2.6 million during the three months ended March 31, 2023, as compared to the prior year quarter primarily due to a $2.1 million increase in carbon neutral initiative revenues. Carbon neutral initiative revenues recognized in 2023 primarily related to a subsurface CO 2 storage transaction.   Soda Ash   Revenues and other income related to our Soda Ash segment increased $4.4 million compared to the prior year quarter primarily as a result of increased sales prices compared to the prior year quarter.   Operating Expenses   The following table presents the significant categories of our consolidated operating expenses:       For the Three Months Ended March 31,     Increase     Percentage   (In thousands)   2023     2022     (Decrease)     Change   Operating expenses                                 Operating and maintenance expenses   $ 7,163     $ 8,076     $ (913 )     (11 )% Depreciation, depletion and amortization     4,083       3,868       215       6 % General and administrative expenses     5,845       4,467       1,378       31 % Asset impairments     —       19       (19 )     (100 )% Total operating expenses   $ 17,091     $ 16,430     $ 661       4 %   Total operating expenses were essentially flat period-over-period. The $1.4 million increase in general and administrative expenses, primarily related to increased incentive compensation expense, was partially offset by a $0.9 million decrease in operating and maintenance expenses, primarily driven by a decrease in bad debt expense.   Interest Expense, Net   Interest expense, net decreased $6.5 million as a result of less debt outstanding as compared to the prior year quarter.      21 Table of Contents   Adjusted EBITDA (Non-GAAP Financial Measure)   The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:       Operating Segments                   For the Three Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   March 31, 2023                                 Net income (loss)   $ 68,881     $ 19,096     $ (8,702 )   $ 79,275   Less: equity earnings from unconsolidated investment     —       (19,254 )     —       (19,254 ) Add: total distributions from unconsolidated investment     —       10,780       —       10,780   Add: interest expense, net     —       —       2,853       2,853   Add: depreciation, depletion and amortization     4,079       —       4       4,083   Add: asset impairments     —       —       —       —   Adjusted EBITDA   $ 72,960     $ 10,622     $ (5,845 )   $ 77,737                                     March 31, 2022                                 Net income (loss)   $ 62,967     $ 14,786     $ (13,854 )   $ 63,899   Less: equity earnings from unconsolidated investment     —       (14,837 )     —       (14,837 ) Add: total distributions from unconsolidated investment     —       13,230       —       13,230   Add: interest expense, net     —       —       9,387       9,387   Add: depreciation, depletion and amortization     3,868       —       —       3,868   Add: asset impairments     19       —       —       19   Adjusted EBITDA   $ 66,854     $ 13,179     $ (4,467 )   $ 75,566     Net income increased $15.4 million primarily due to the decrease in interest expense, net and increase in revenues and other income, both discussed above. Adjusted EBITDA increased $2.2 million as compared to the prior year quarter primarily due to a $6.1 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income and lower operating and maintenance expenses, both discussed above. The increase in Adjusted EBITDA within our Mineral Rights segment was partially offset by a $2.6 million decrease in Adjusted EBITDA within our Soda Ash segment primarily due to Sisecam Wyoming paying a higher quarterly distribution in the first quarter of 2022 as discussed above and a $1.4 decrease in Adjusted EBITDA within our Corporate and Financing segment due to higher general and administrative expenses as discussed above.   Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)   The following table presents the three major categories of the statement of cash flows by business segment:       Operating Segments                   For the Three Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   March 31, 2023                                 Cash flow provided by (used in)                                 Operating activities   $ 73,858     $ 10,617     $ (11,575 )   $ 72,900   Investing activities     699       —       (2 )     697   Financing activities     (583 )     —       (94,450 )     (95,033 )                                   March 31, 2022                                 Cash flow provided by (used in)                                 Operating activities   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331   Investing activities     —       —       —       —   Financing activities     (614 )     —       (51,647 )     (52,261 )     22 Table of Contents   The following table reconciles net cash provided by (used in) operating activities (the most comparable GAAP financial measure) by business segment to DCF and FCF:       Operating Segments                   For the Three Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   March 31, 2023                                 Net cash provided by (used in) operating activities   $ 73,858     $ 10,617     $ (11,575 )   $ 72,900   Add: proceeds from asset sales and disposals     101       —       —       101   Add: return of long-term contract receivable     598       —       —       598   Less: maintenance capital expenditures     —       —       (2 )     (2 ) Distributable cash flow   $ 74,557     $ 10,617     $ (11,577 )   $ 73,597   Less: proceeds from asset sales and disposals     (101 )     —       —       (101 ) Free cash flow   $ 74,456     $ 10,617     $ (11,577 )   $ 73,496                                     March 31, 2022                                 Net cash provided by (used in) operating activities   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331   Add: proceeds from asset sales and disposals     —       —       —       —   Add: return of long-term contract receivable     —       —       —       —   Distributable cash flow   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331   Less: proceeds from asset sales and disposals     —       —       —       —   Free cash flow   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331     Operating cash flow, DCF and FCF increased $20.6 million, $21.3 million and $21.2 million, respectively, primarily due to an increase in cash flow within our Mineral Rights segment, partially offset by a decrease in cash flow within our Soda Ash and Corporate and Financing segments. The discussion by segment is as follows:   • Mineral Rights Segment   ◦ Operating cash flow, DCF and FCF increased $25.7 million, $26.4 million and $26.3 million, respectively, primarily due to the timing of minimum and royalty payments and prior year recoupments.    • Soda Ash Segment   ◦ Operating cash flow, DCF and FCF decreased $2.6 million primarily due to Sisecam Wyoming paying a higher quarterly distribution in the first quarter of 2022 as discussed above.    • Corporate and Financing Segment    ◦ Operating cash flow, DCF and FCF decreased $2.5 million primarily due to increased cash paid for incentive compensation in the first quarter of 2023 because of the improved business performance in 2022 and higher cash paid for interest on credit facility borrowings in 2023.    Liquidity and Capital Resources   Current Liquidity   As of March 31, 2023, we had total liquidity of $56.5 million, consisting of $17.7 million of cash and cash equivalents and $38.8 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $23 million of principal repayments on Opco’s senior notes, throughout the remainder of 2023. The following table calculates our leverage ratio as of March 31, 2023:        For the Three Months Ended           (In thousands)   June 30, 2022     September 30, 2022     December 31, 2022     March 31, 2023     Last 12 Months   Net income   $ 66,820     $ 74,555     $ 63,218     $ 79,275     $ 283,868   Less: equity earnings from unconsolidated investment     (14,643 )     (14,556 )     (15,759 )     (19,254 )     (64,212 ) Add: total distributions from unconsolidated investment     10,486       10,339       10,780       10,780       42,385   Add: interest expense, net     8,108       5,141       3,638       2,853       19,740   Add: loss on extinguishment of debt     4,048       2,484       3,933       —       10,465   Add: depreciation, depletion and amortization     5,847       6,850       5,954       4,083       22,734   Add: asset impairments     43       812       3,583       —       4,438   Adjusted EBITDA   $ 80,709     $ 85,625     $ 75,347     $ 77,737     $ 319,418                                             Debt—at March 31, 2023                                   $ 173,591                                             Leverage Ratio                                   0.5 x       23 Table of Contents   Cash Flows   Cash flows provided by operating activities increased $20.6 million, from $52.3 million in the three months ended March 31, 2022 to $72.9 million in the three months ended March 31, 2023, primarily due to increased cash provided by operating activities within our Mineral Rights segment, partially offset by decreased cash provided by operating activities within our Soda Ash and Corporate and Financing segments, all discussed above.    Cash flows used in financing activities increased $42.8 million, from $52.3 million used in the three months ended March 31, 2022 to $95.0 million used in the three months ended March 31, 2023, primarily due to the following:   • $73.0 million of cash used to repay a portion of the Opco Credit Facility in the first quarter of 2023;   • $48.1 million of cash used to redeem the preferred units the first quarter of 2023; and   • $35.2 million of increased cash distributions to common unitholders and the general partner as a result of increasing our quarterly cash distribution to $0.75/unit beginning in the second quarter of 2022 in addition to the special distribution paid in the first quarter of 2023.   These increases in cash flow used were partially offset by $94.2 million of borrowings on our Opco Credit Facility in the first quarter of 2023 and $19.6 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022.  Capital Resources and Obligations   Debt, Net   We had the following debt outstanding as of March 31, 2023 and December 31, 2022:       March 31,     December 31,   (In thousands)   2023     2022   Current portion of long-term debt, net   $ 39,055     $ 39,076   Long-term debt, net     133,821       129,205   Total debt, net   $ 172,876     $ 168,281     We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see  Note 9. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.   Off-Balance Sheet Transactions   We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities.   Related Party Transactions   The information required set forth under Note 11. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.   Summary of Critical Accounting Estimates   The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.   Recent Accounting Standards   We do not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.     24 Table of Contents