What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-04 · 219 added, 66 removed, 243 unchanged (54% of the section changed)

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.

The following review of operations for the three and six month periods ended June 30, 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.

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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:

Our financial results by segment for the six months ended June 30, 2023 are as follows:

Operating Segments

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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.

We generated $154.3 million of operating cash flow and $155.4 million of free cash flow during the six months ended June 30, 2023, and ended the quarter with $62.7 million of liquidity consisting of $10.7 million of cash and cash equivalents and $52.0 million of borrowing capacity under our Opco Credit Facility.

As of June 30, 2023 our leverage ratio was 0.6 x.

In May 2023, we declared and paid a cash distribution of $0.75 per common unit of NRP with respect to the first quarter of 2023 as well as a $6.1 million cash distribution on the preferred units with respect to the first quarter of 2023.

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.

In February 2023, we received a notice from holders of the 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. In May 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 35,834 Class A Preferred Units.

We chose to redeem the preferred units for $35.8 million in cash rather than issuing common units.

In June 2023, we executed a negotiated transaction with holders of our Class A Preferred Units pursuant to which we repurchased and retired an aggregate of 45,000 Class A Preferred Units for $45.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 121,667 Class A Preferred Units remain outstanding.

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. 

Revenues and other income in the first six months of 2023 decreased $15.9  million, or 10% , as compared to the prior year period primarily due to decreased metallurgical coal sales prices.

 Cash provided by operating activities and free cash flow increased $10.4 million and $11.0 million, respectively, compared to the prior year period primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily due to lower met coal sales prices. 

While metallurgical and thermal coal prices have decreased from the beginning of the year and decreased significantly from the record highs seen in 2022, they both remain strong relative to historical norms.

Transportation and logistics challenges, limited access to capital, and qualified labor shortages limit operators' ability to increase production and sales which should provide continued price support at current levels.

 We continue to explore opportunities for carbon neutral revenue 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.

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.

Revenues and other income in the first six m onths of 

2023increased  

$16.8  million, or 57%, as compared to the prior year period driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes. 

Cash provided by operating activities and free cash flow in the first six months of 2023increased  

$19.3  million as compared to the prior year period 

due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

After starting the year at historically high levels, global soda ash prices have fallen throughout the first half of the year. New supply from China entering the market in the second half of the year is expected to continue to put downward pressure on international soda ash pricing.

However, we expect Sisecam Wyoming's domestic soda ash sales prices to remain strong in the second half of the year as a result of negotiated 2023 domestic sales contracts entered into at the end of 2022.

Results of Operations

First Quarter of 2023 and 2022 Compared

Second 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,

For the Three Months Ended June 30,

Operating Segment (In thousands)

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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,

For the Three Months Ended June 30,

(In thousands, except per ton data)

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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.

Approximately 70% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended June 30, 2023.

Total coal royalty revenues decreased $15.0 million as compared to the prior year quarter.

The discussion by region is as follows:

 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. 

 Coal royalty revenues decreased $14.0 mi llion primarily due to decreased metallurgical coal sales prices during the three months ended June 30, 2023, as compared to the prior year quarter.

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.

 Coal royalty revenues decreased $1.9 million primarily due to decreased sales volumes during the three months ended June 30, 2023, as compared to the prior year quarter.

This decrease in sales volumes is primarily a result of a temporary relocation off of NRP's coal reserves.

However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property.

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.

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,

Total other revenues decreased $3.3 million during the three months ended June 30, 2023, as compared to the prior year quarter primarily due a $1.7 million decrease in oil and gas royalty revenues and a $1.1 million decrease in wheelage revenues as compared to the prior year period.

Oil and gas royalty revenues decreased primarily as a result of decreased natural gas prices as compared to the prior year quarter and wheelage revenues decreased primarily due to lower met coal sales prices resulting in a lower wheelage revenue received per ton of coal transported. 

Transportation and Processing Services Revenues

Transportation and processing services revenues decreased $2.3 million during the three months ended June 30, 2023, as compared to the prior year quarter primarily due to a temporary relocation of certain production off of NRP's coal reserves.

The fee per ton associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal. 

Revenues and other income related to our Soda Ash segment increased $12.3 million compared to the prior year quarter primarily due to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.

Operating and Other Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

For the Three Months Ended June 30,

(In thousands)

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Total operating expenses

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.

Other expenses, net

Interest expense, net

Interest expense, net decreased $6.5 million as a result of less debt outstanding as compared to the prior year quarter. 

Loss on extinguishment of debt

Total other expenses, net

Total operating expenses decreased $3.5 million as compared to the prior year quarter primarily due to a $2.1 million decrease in operating and maintenance expenses and a $2.1 million decrease in depreciation, depletion and amortization.

The decrease in operating and maintenance expenses was primarily driven by lower overriding royalty expense from an agreement with WPPLP in the second quarter of 2023 as compared to second quarter of 2022.

This overriding royalty expense is fully offset by coal royalty revenue we receive from this property.

The decrease in depreciation, depletion and amortization was primarily driven by lower Illinois Basin coal sales volumes during the second quarter of 2023 as compared to the second quarter of 2022 as explained in the coal royalty revenues section above.

Other expenses, net decreased $8.7 million as a result of less debt outstanding as compared to the prior year quarter, in addition to the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the second quarter of 2022.

Adjusted EBITDA (Non-GAAP Financial Measure)

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Corporate and Financing

March 31, 2023

June 30, 2023

Net income (loss)

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Adjusted EBITDA

March 31, 2022

June 30, 2022

Net income (loss)

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interest expense, net

loss on extinguishment of debt

depreciation, depletion and amortization

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Adjusted EBITDA

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.

Net income increased $3.5 million primarily due to the decrease in operating and other expenses, partially offset by the decrease in revenues and other income, all discussed above. Adjusted EBITDA increased $2.4 million as compared to the prior year quarter primarily due to a $21.9 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

This increase in Adjusted EBITDA was partially offset by an $18.9 million decrease in Adjusted EBITDA within our Mineral Rights segment primarily as a result of lower revenues and other income as discussed above.

Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

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Corporate and Financing

March 31, 2023

June 30, 2023

Cash flow provided by (used in)

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Financing activities

March 31, 2022

June 30, 2022

Cash flow provided by (used in)

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Corporate and Financing

March 31, 2023

June 30, 2023

Net cash provided by (used in) operating activities

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Free cash flow

March 31, 2022

June 30, 2022

Net cash provided by (used in) operating activities

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Free cash flow

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.

Operating cash flow, DCF and FCF increased $18.2 million, $17.9 million and $18.3 million, respectively, primarily due to an increase in cash flow within our Soda Ash and Corporate and Financing segments, partially offset by a decrease in cash flow within our Mineral Rights segment.

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. 

Operating cash flow, DCF and FCF decreased $15.3 million, $15.6 million and $15.3 million, respectively, primarily due to lower revenues and other income as discussed above primarily driven by lower met coal sales prices. 

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. 

Operating cash flow, DCF and FCF increased $21.9 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

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. 

Operating cash flow, DCF and FCF increased $11.6 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022.

First Six Months of 2023 and 2022 Compared

Revenues and Other Income

The following table includes our revenues and other income by operating segment:

For the Six Months Ended June 30,

Operating Segment (In thousands)

Mineral Rights

The changes in revenues and other income are discussed for each of the operating segments below:

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 Six Months Ended June 30,

(In thousands, except per ton data)

Coal sales volumes (tons)

Total Appalachia

Illinois Basin

Northern Powder River Basin

Total coal sales volumes

Coal royalty revenue per ton

Illinois Basin

Northern Powder River Basin

Combined average coal royalty revenue per ton

Coal royalty revenues

Total Appalachia

Illinois Basin

Northern Powder River Basin

Unadjusted coal royalty revenues

Coal royalty adjustment for minimum leases

Total coal royalty revenues

Other revenues

Production lease minimum revenues

Minimum lease straight-line revenues

Carbon neutral initiative revenues

Wheelage revenues

Property tax revenues

Coal overriding royalty revenues

Lease amendment revenues

Aggregates royalty revenues

Oil and gas royalty revenues

Other revenues

Total other revenues

Royalty and other mineral rights

Transportation and processing services revenues

Gain on asset sales and disposals

Total Mineral Rights segment revenues and other income

Coal Royalty Revenues

Approximately 70% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the six months ended June 30, 2023.

Total coal royalty revenues decreased $12.4 million as compared to the prior year period.

The discussion by region is as follows:

 Coal royalty revenues decreased $13.4 mi llion p rimarily due to decreased metallurgical coal sales prices during the six months ended June 30, 2023, as compared to the prior year quarter.

Illinois Basin:

 Coal royalty revenues decreased $0.5 million primarily due to decreased sales volumes during the six months ended June 30, 2023, as compared to the prior year period. This decrease in sales volumes is primarily a result of a temporary relocation of certain production off of NRP's coal reserves.

However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property.

Transportation and Processing Services Revenues

Transportation and processing services revenues decreased $2.5 million during the six months ended June 30, 2023, as compared to the prior year period primarily due to a temporary relocation of certain production off of NRP's coal reserves.

The fee per ton on associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal. 

Revenues and other income related to our Soda Ash segment increased $16.8 million compared to the prior year period primarily due to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.

Operating Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

For the Six Months Ended June 30,

(In thousands)

Operating expenses

Operating and maintenance expenses

Depreciation, depletion and amortization

General and administrative expenses

Asset impairments

Total operating expenses

Other expenses, net

Interest expense, net

Loss on extinguishment of debt

Total other expenses, net

Total operating expenses decreased $2.9 million primarily due to a $3.0 million decrease in operating and maintenance expenses, primarily driven by lower overriding royalty expense from an agreement with WPPLP as discussed above.

Total other expenses, net decreased $15.2 million as a result of less debt outstanding as compared to the prior year period, in addition to the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the second quarter of 2022.

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 Six Months Ended (In thousands)

Mineral Rights

Corporate and Financing

June 30, 2023

Net income (loss)

equity earnings from unconsolidated investment

total distributions from unconsolidated investment

interest expense, net

depreciation, depletion and amortization

asset impairments

Adjusted EBITDA

June 30, 2022

Net income (loss)

equity earnings from unconsolidated investment

total distributions from unconsolidated investment

interest expense, net

loss on extinguishment of debt

depreciation, depletion and amortization

asset impairments

Adjusted EBITDA

Net income increased $18.9 million primarily due to the decrease in operating and other expenses as discussed above.

Adjusted EBITDA increased $4.5 million as compared to the prior year period primarily due to a $19.3 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

This increase in Adjusted EBITDA was partially offset by a $12.8 million decrease in Adjusted EBITDA within our Mineral Rights segment as a result of lower revenues and other income 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 Six Months Ended (In thousands)

Mineral Rights

Corporate and Financing

June 30, 2023

Cash flow provided by (used in)

Operating activities

Investing activities

Financing activities

June 30, 2022

Cash flow provided by (used in)

Operating activities

Investing activities

Financing activities

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 Six Months Ended (In thousands)

Mineral Rights

Corporate and Financing

June 30, 2023

Net cash provided by (used in) operating activities

proceeds from asset sales and disposals

return of long-term contract receivable

maintenance capital expenditures

Distributable cash flow

proceeds from asset sales and disposals

Free cash flow

June 30, 2022

Net cash provided by (used in) operating activities

proceeds from asset sales and disposals

return of long-term contract receivable

Distributable cash flow

proceeds from asset sales and disposals

Free cash flow

Operating cash flow, DCF and FCF increased $38.8 million, $39.2 million and $39.4 million, respectively, as compared to the prior year period due to increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments.

The discussion by segment is as follows:

Mineral Rights Segment

Operating cash flow, DCF and FCF increased $10.4 million, $10.8 million and $11.0 million, respectively, primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily driven by lower met coal sales prices. 

Soda Ash Segment

Operating cash flow, DCF and FCF increased  $19.3 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

Corporate and Financing Segment 

Operating cash flow, DCF and FCF increased $9.1 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022.

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: 

As of June 30, 2023, we had total liquidity of $62.7 million, consisting of $10.7 million of cash and cash equivalents and $52.0 million of borrowing capacity under our Opco Credit Facility.

We have debt service obligations, including approximately $20 million of principal repayments on Opco’s senior notes, throughout the remainder of 2023.

The following table calculates our leverage ratio as of June 30, 2023: 

For the Three Months Ended

(In thousands)

June 30, 2022

September 30, 2022

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March 31, 2023

June 30, 2023

Last 12 Months

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Adjusted EBITDA

Debt—at March 31, 2023

Debt—at June 30, 2023

Leverage Ratio

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;

$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. 

Cash flows provided by operating activities increased $38.8  million, from $115.5  million in the 

six months ended June 30, 2022 to $154.3  million in the six months ended June 30, 2023 , due to an increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments, all discussed above.

Cash used in financing activities decreased $8.6 million, from $192.5 million used in the six months ended June 30, 2022 to $183.9 million used in the six months ended June 30, 2023, primarily due to the following:

$165.0 million of borrowings on the Opco Credit Facility in 2023;

$118.1 million of cash used to retire a portion of the 2025 Senior Notes in the second quarter of 2022;

$19.3 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022.

These decreases in cash flow used were partially offset by the following:

$132.0 million of cash used to repay a portion of the Opco Credit Facility in 2023;

$128.3 million of cash used to redeem the preferred units in 2023;

$35.3 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.

Capital Resources and Obligations

We had the following debt outstanding as of March 31, 2023 and December 31, 2022:

We had the following debt outstanding as of June 30, 2023 and December 31, 2022:

(In thousands)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis