NATURAL RESOURCE PARTNERS LP: Your Annual Report Snapshot

Welcome to an investor-friendly guide to NATURAL RESOURCE PARTNERS LP's (NRP) latest annual report. As a Master Limited Partnership (MLP), NRP specializes in owning and managing mineral rights, primarily in the coal and aggregates sectors. The company generates revenue through royalties and other resource-related activities. This summary breaks down NRP's financial performance, strategic moves, and key considerations for you as a unitholder.

Business Overview & Operational Performance

NRP's core business centers on its Mineral Rights segment, which primarily earns revenue from royalties on the production and sale of coal and aggregates. This segment consistently drives the partnership's financial results. The Corporate & Financing segment manages NRP's capital structure and administrative functions.

Unitholder Returns & Distributions

NRP clearly commits to returning capital to unitholders through its distribution policy. In 2025, NRP allocated $16.7 million of income to preferred unitholders, then distributed $16.4 million to common unitholders and $0.3 million to the general partner. This marks a significant increase from 2024, when NRP allocated $4.2 million to preferred unitholders, with $4.2 million going to common unitholders and $0.1 million to the general partner. This shift suggests either a larger overall income base or a change in the preferred unit structure.

Strong cash flow from operations typically supports distributions, with the partnership generally maintaining a distribution coverage ratio above 1.0x (meaning cash flow covers distributions by more than 100%), ensuring sustainability.

Investors should note that as an MLP, NRP issues K-1 tax forms, which can have unique tax implications, including potential Unrelated Business Taxable Income (UBTI) for certain investors.

Strategic Growth & Acquisitions

NRP actively seeks opportunities to expand its asset base. A notable move occurred in August 2024 when Alabama Kanu Holdings, LLC, a key revenue generator within NRP's Mineral Rights segment, acquired Hatfield Metallurgical Holdings, LLC. This strategically important acquisition, estimated at $75 million, was financed using a combination of cash on hand and existing credit facilities. Hatfield is expected to contribute an additional $10 million to $15 million in annual Adjusted EBITDA, enhancing NRP's presence and royalty streams in the metallurgical coal sector. This acquisition aligns with NRP's strategy to grow its portfolio of high-quality mineral assets.

Financial Health & Capital Structure

The partnership's financial health benefits from its net interest income, which has steadily increased: $0.3 million in 2023, $0.7 million in 2024, and $0.9 million in 2025. While a smaller component of overall income, this growth reflects prudent cash management and potentially higher interest rates on cash balances or short-term investments.

NRP maintains a balanced capital structure, using a mix of debt and equity. The partnership manages its debt levels to support growth initiatives while ensuring financial flexibility.

Risk Management

NRP employs a comprehensive approach to risk management, overseen by its Board of Directors and Audit Committee. While cybersecurity remains a key focus, with regular updates and briefings from IT leaders and external experts, the partnership also actively manages other significant risks inherent to its business. These include:

• Commodity Price Risk: Fluctuations in coal and aggregates prices directly impact royalty revenues.
• Regulatory & Environmental Risk: Changes in environmental regulations or permitting processes can affect operations and costs.
• Operational Risk: Risks associated with the production activities of their lessees, including safety incidents or production disruptions.
• Concentration Risk: Dependence on a limited number of key lessees or geographic regions.

The Audit Committee regularly engages with management on these potential risks, ensuring that appropriate mitigation strategies are in place and reported to the full Board.

Competitive Position

NATURAL RESOURCE PARTNERS LP operates in a specialized and often fragmented market for mineral and royalty interests. Its competitive position stems primarily from its extensive and diversified portfolio of long-life mineral assets, particularly in the coal and aggregates sectors. The partnership benefits from established relationships with a broad base of operators and a proven track record in identifying and acquiring high-quality royalty streams.

Competition for new mineral and royalty acquisitions can be intense, involving other MLPs, private equity funds, and individual investors. NRP's key competitive advantages include its financial flexibility, deep industry expertise, and efficient operational structure, which allow it to evaluate and execute strategic acquisitions effectively. The long-term nature of its royalty interests and the essential demand for the underlying commodities also contribute to its stable competitive standing.

Management Discussion (MD&A Highlights)

The preceding sections—Business Overview, Financial Performance, Strategic Growth, Financial Health, and Risk Management—collectively highlight key aspects of the partnership's operations, financial condition, and liquidity. Management emphasizes consistent growth in revenue and profitability, driven by strong demand for its mineral resources and strategic acquisitions. The partnership's focus on maintaining a robust capital structure and disciplined approach to distributions underscores its commitment to unitholder value. Key operational achievements, such as the Hatfield acquisition, are central to the partnership's growth narrative and future prospects.

Long-term Incentive Compensation

To align management and employee interests with unitholder value, NRP uses a long-term incentive compensation plan. In 2025, the Mineral Rights segment awarded $1.3 million in equity and $0.6 million in cash incentives. The Corporate & Financing segment had higher incentives, with $9.0 million in equity and $0.3 million in cash. These figures are consistent with prior years, demonstrating stable compensation practices:

• 2024: Mineral Rights: $1.2 million equity, $0.5 million cash. Corporate: $8.5 million equity, $0.25 million cash.
• 2023: Mineral Rights: $1.1 million equity, $0.4 million cash. Corporate: $8.0 million equity, $0.2 million cash.

These incentives typically tie to performance metrics such as Adjusted EBITDA, cash flow generation, and total unitholder return, encouraging long-term strategic execution.

Other Financial Adjustments (Comprehensive Income)

Beyond net income, "other comprehensive income/loss" also influences the partnership's overall financial picture. These accounting adjustments bypass the income statement but affect total equity. For NRP, these adjustments positively impacted reported income by $3.4 million in 2025 and $6.0 million in 2024. This marks a favorable shift from 2023, when these adjustments reduced income by $17.9 million. These fluctuations often relate to changes in the fair value of certain financial instruments or other non-cash, non-operating items.

Future Outlook

Looking ahead, NATURAL RESOURCE PARTNERS LP aims to continue its strategy of acquiring high-quality mineral and royalty interests, optimizing its existing portfolio, and maintaining a strong balance sheet to support consistent distributions to unitholders. The partnership anticipates continued stable demand for its core commodities, though it remains vigilant regarding market volatility and regulatory changes. NRP's focus remains on disciplined capital allocation and enhancing unitholder value through both organic growth and strategic acquisitions.

Investor Takeaway

NATURAL RESOURCE PARTNERS LP positions itself as a stable MLP focused on mineral and royalty interests, offering consistent distributions and demonstrating growth through strategic acquisitions. Investors should consider the partnership's strong operational performance, disciplined capital allocation, and the specific tax implications of MLP investments when evaluating NRP for their portfolio.