Good morning, ladies and gentlemen. Welcome to the Natural Resource Partners L.P. Fourth Quarter 2017 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Kathy Roberts, Natural Resource Partners' Vice President of Investor Relations. Ms. Roberts, you may begin.

Thank you, Teresa. Good morning, and welcome to the Natural Resource Partners' fourth quarter 2017 conference call. Today's call is being webcast and a replay will be available on our website for seven days. Joining me today are Craig Nunez, President and Chief Operating Officer; Chris Zolas, Chief Financial Officer; and Kevin Craig, our Executive Vice President of our Coal Division. Some of our comments today may include forward-looking statements reflecting NRP's views about future events. These matters involve risk and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in NRP's Form 10-K and other Securities and Exchange Commission filings. We undertake no obligation to revise or update publicly any forward-looking statements for any reasons. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP measures are included in our fourth quarter 2017 press release, which can be found on our website. Now, I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

Thank you, Kathy, and welcome everyone to our quarterly call. I'm pleased to report that NRP continues to produce substantial amounts of cash, our balance sheet continues to improve, and our liquidity is strong. We generated $232 million of EBITDA in 2017, and $132 million of distributable cash flow. We ended the year with $828 million of debt, which is down $311 million for the full-year, and down $634 million or almost 40% or over 40% since we announced plans to delever the partnership back in 2015. We ended 2017 with $30 million of cash and $90 million of available borrowing capacity, which is more than sufficient to manage the working capital needs of our business. Our leverage ratio defined as debt divided by EBITDA, currently stands at 3.6 times down from a peak of 5.3 times. We have continued to pay a common unit distribution of $1.80 per unit per year and our distribution coverage ratio is 5.9 times. Even after adjusting for the 12% coupon on our preferred units, our distribution coverage ratio is a robust 4.5 times. At our recent trading price of just over $28 bucks per unit, our partnership's enterprise value is $1.4 billion, and our common equity market capitalization is just under $350 million. At those levels, our enterprise value to EBITDA multiple is only 6.2 times and our common units are trading at only 3.4 times on our distributable cash flow. Our Coal segment continues to post solid results on the back of strong demand for metallurgical coal, which is used to make steel, and a stable market for thermal coal used in electricity generation. Our metallurgical coal assets are located in Appalachia and accounted for 58% of our coal royalty related revenues in 2017. Unlike thermal coal, metallurgical coal does not face…

Thank you, Craig, and good morning, everyone. Let's start with a summary of our consolidated fourth quarter results. We generated $46 million of operating cash flow during the quarter. Net income attributable to common unitholders and the general partner was $23 million, representing an increase compared sequentially to the third quarter of 25%. This increase was primarily driven by higher sales prices of both metallurgical coal and international Soda Ash. Basic and diluted earnings per common unit for the quarter were $1.84 and $1.26 respectively. Moving to our segment results, our Coal Royalty segment generated $46 million of operating cash flow during the fourth quarter. Operating income was $40 million, representing a sequential increase of 5% compared to the third quarter. This increase was primarily a result of higher sales prices and production from our metallurgical coal properties in Appalachia and due to increases in thermal coal production from our property in the Northern Powder River Basin. In regards to our coal mix and realizations, metallurgical coal made up 67% of our production and 74% of our revenue in the Appalachian region during the fourth quarter and we expect demand of our met coal in this region to remain strong. While our coal in the Illinois and Northern Powder River Basin is just [ph] thermal coal, we believe it's well positioned to remain profitable for many years to come due to its low cost structure, high heat content and strategic locations. Our Soda Ash segment generated $12 million of cash flow during the fourth quarter, which is unchanged from the previous quarter. Operating income was $13 million, representing a sequential increase of 42% compared to the third quarter. The improved performance was primarily a result of higher international sales prices, increased Soda Ash sales volumes, improved operational efficiency from the…

[Operator Instructions] And your first question comes from Mark Levin with Seaport Global.

Hey, good morning, everyone, congratulations on a -- another very good quarter. Couple of very quick questions, I know you guys have shied away from giving guidance in the -- guidance in the past, but maybe just some general thoughts on the met side and what we should be thinking in terms of what production from your lessees look like in '17 versus what it could look like in '18, I don't want to -- obviously, not holding you the guidance, but is it reasonable to assume that it will be at least flat and maybe up a little bit?

Good morning, Mark, this is Craig. Yes, thank you for acknowledging that we are not giving guidance here. But I do think it -- our view is that, we hope that we have achieved over the last several quarters what I refer to as a more normalized run rate with respect to our coal operation, both on the -- in particular, on the met side. So that's why we're talking about the results that we have delivered in 2017, and in particular, in the third and fourth quarter, which we think are reflective of -- more reflective of what we would expect in the future than what we had prior to those period.

Got it, and that makes sense. And when you think Craig about -- when you think about the quality of the met coals that your lessees are producing, obviously, they price very differently, the high-vol [ph] market is very tight now, the mid-vol [ph] market is very tight now. And -- and so, I'm just wondering maybe you could -- whether it's on a -- just on a percentage basis of the whole of your met portfolio, how much of that is maybe coming from A, how much is coming from mid-vol, low-vol, anyway you can kind of break that out for us so that we can understand the quality differences?

Sure, Mark, this is Kevin Craig. As you think about our portfolio of coals and specifically, met coals, I tell you, we have a good mix across the portfolio, low, high-vol A, high-vol B and other coals that can cross over into it, and relatively a good make-up of each of those. So on a specific percentage basis, we can't break that down for you right now, is it -- it can change due to the demand, right. So production fixed demand, but we have a well-diversified portfolio in the met business.

Got it. No, I appreciate that, and then I'll just ask one final question, again, I know you guys are not going to comment on the specifics around the dispute with Foresight, so I won't ask you to, but what I'm wondering is, is the timetable or the timeline of what's going on with that dispute?

We don't have any comment that we can make on that, Mark, sorry about that, we're in the midst of litigation, and of course, there are public filings out there that, that can be reviewed, but we can't give any comment on that at this time.

All right, fair enough. Congrats on a good quarter and we'll talk to you soon.

Thank you, Mark.

And your next question comes from the line of Amer Tiwana with Cowen.

Hi, guys, I wanted to sort of try to get a sense of -- you've sort of provided a target leverage level that you think the -- your balance sheet should be at. Any sense of rough timeline as to when you expect to get there given that you are producing meaningful free cash flow and you can pay down debt?

Well, thanks for your question, and good morning. We're not giving guidance as to that matter either looking forward, however, I do think that it's -- you can straightforward -- in a rather straightforward manner you can look at our cash generation that we're currently demonstrating and that math can be worked out fairly straightforward.

Great. Any idea of what your -- you said it's relatively straightforward, but working capital and other cash items have been difficult to project. Can you talk about those as we go through 2018 as to if there are any meaningful items in that, that we should be aware of?

Not any meaningful items that are any different than what we've experienced over the last 12 months, no. Generally speaking, we don't have dramatic swings in working capital quarter-to-quarter with the exception of the recap transactions that we had over the last year. And so I think what you've seen with respect to our working capital balances and movements in working capital over the last couple of quarters is reflective of what you likely see going forward.

Understood. Thank you.

Thank you.

And your next question comes from the line of Xavier Majic with Maple Rock Capital Partners.

Hey, guys, another good quarter, thanks.

Good morning.

It feel like you -- good morning. It feel like you guys are executing very well reducing leverage and doing all the things that shareholder would want and I'm wondering, if there is five or six of us on this call. So do you plan on going on the road ever and telling people about your story and do you have any plans on an IR standpoint?

You will see us on the road a few times this year, this calendar year, yes, Xavier.

Okay. Thank you.

Thank you.

And your next question comes from the line of Bill Hyler with WBH [ph] Capital.

Yes, hi, good morning. Thanks for the call. I had a couple of questions -- couple of one financial and then some operational. First of all, Is there any flexibility to call or refinance or maybe your high interest debt, that 8% to 11% over the next year or two, I think one of the big -- the big bond issuances is callable at '19? That's one question, if you can answer.

Yes, you bet, this is Chris.

Yes, Chris.

You bet. This is Chris. We do have [Technical Difficulty] to repay our current company bonds early. There is a pretty steep penalty if we were to do that prior to March of 2019. So that, that goes down after 2000 -- March of 2019. So if you look in our disclosure in our footnotes we go into a little bit more detail about those -- this different early repayment terms.

Oh, excellent. Yes, could that be -- that be a potential nice move. Let me also ask you a lot of your lessees are naturally much stronger financially, following emergence from bankruptcies, I'm assuming they could operate now at lower long-term pricing and still stay profitable, are you getting a sense that we've reached the kind of the end of or at least we have reduced risk of mine closures in the industry, particularly with thermal coal?

Bill, this is Kevin Craig. As you look across I would agree with you. Many of our lessees are in stronger position than they were two to three years ago and they come out of many -- from the bankruptcy process stronger. I don't see an inclination -- they're more competitive as a result, but they're looking to always maximize that coal sales price now if there were downturn in the market, I think they're in a better position to remain active and operating, especially, on the thermal side. But new capital investment certainly in the Appalachian region is focused on the metallurgical market and then to supply into the export market for both met and thermal. But without a doubt, great number of our lessees are in better financial position now than they were two years ago.

Yes, that was my sense. Last question, can you remind us where your Aggregates business is concentrated and kind of what are the key end-markets driving that, I kind of recall there was lot of energy-related exposure in Appalachia. so we need to watch if that picks up, but just maybe regionally where that business is concentrated and some of the drivers, it would be nice? Okay.

We have a facility in Laurel, West Virginia, which serves the Northern West Virginia, Southern Pennsylvania markets, a significant portion of that is -- business is attributable to activity in the exploration and production activity in the Marcellus Shale area. That represents -- we don't break this out per se in our filings, but it's a -- it is our largest operation in the Construction Aggregates segment. The next facility we have is in Clarksville, Tennessee and that is a combination of a limestone quarry along with a marine terminal operation and along with an asphalt paving business that serves the Clarksville, Tennessee area, which is North of Nashville, and the Fort Campbell Army Post there as well. And then our next major location is in -- just outside of Baton Rouge, Louisiana, it is a sand and gravel operation, the mine sand and gravel and sales to the local construction markets there in Southeast Louisiana. And that's where we are -- the -- we've had stable demand for our products both in the Clarksville, Tennessee area with our limestone quarry and with our Southern operation down in Baton Rouge, Louisiana, that's offset weakness that we've seen with E&P customers up in West Virginia and Pennsylvania, and reduced work at the Fort Campbell Army Base -- Army Post.

Okay, excellent I appreciate the insights. Thank you.

You bet.

[Operator Instructions]. Your next question comes from Paul Forward with Stifel.

Good morning, guys.

Good morning.

Just wanted to ask about around the thermal coal business, 2017 was obviously a big year for thermal coal export growth and then we had a nice dent put into utility coal stockpiles, but we are still sitting here at 270 gas, and it's not a great outlook domestically for the utility business in 2018, I was just wondering if you could talk about what are your thermal coal lessees telling you about their outlook in terms of the export versus domestic split, and is there anything you can give us as far as NRP's sensitivity now to the export business in thermal coal?

Paul, this is Kevin Craig. We're hearing from our thermal producers that the export market continues to be strong for them. It's also helped [indiscernible] the domestic pricing even in the face of 260, 270 gas. We've seen the stockpiles in the last 12 to 18 months go from 191 million tons down to 137 million tons or 140 million tons, so that continues to be a good new story for them. So the domestic market that's the pricing has remained stable there with growth year-over-year as far as improved pricing. So what we're hearing is 2018, those markets look fairly stable for thermal.

Great. And I think you had said, correct me if I'm wrong on this, but fourth quarter you had 60% of volumes, 74% of revenues in met coal. Can you talk about -- I know you're not giving guidance, but can you talk about the stability of those percentages and how you'd anticipate going forward that those numbers might change one way or the other?

As I look into the met market, the supply dynamic -- there is supply demand dynamics, I think remains in equilibrium or close to it through '18. Another way to say that is, we think prices will remain in a relatively strong range given the market dynamics. One of the constraints is demand for met increases really in the US it's -- the producers are challenged to bring on new tons to meet all the demand, in some of the roadblocks there are workforce and access to capital, and I think those constraints help keep the market where it's at.

Okay, thanks very much.

Thank you.

And there are no further questions at this time.

Hello?

There are no further questions at this time. Go ahead, moderator.

This is Craig. I'd like to thank everyone for joining us on the call today and for your interest in NRP. And if you have further questions feel free to call our Investor Relations Department, Kathy Roberts, our Vice President of Investor Relations will be happy to help you. Have a great day. Thanks.

Thank you, ladies and gentlemen for your participation. You may now disconnect.