Good morning, ladies and gentlemen, and welcome to the Natural Resource Partners LP Third Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference, Tiffany Sammis, Natural Resource Partners, Head of Investor Relations. Ms. Sammis, you may begin.

Good morning, and welcome to the Natural Resource Partners Third Quarter 2019 Conference Call. Today's call is being webcast and a replay will be available on our website. Joining me today are Craig Nunez, President and Chief Operating Officer; and Chris Zolas, Chief Financial Officer. Some of our comments today may include forward-looking statements reflecting NRP's views about future events. These matters involve risks 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 reason. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP measures are included in our third quarter 2019 press release, which can be found on our website. I would like to remind everyone that we do not intend to discuss the operations or outlook for any particular coal lessee or get into detailed market fundamentals. In addition, I refer you to Ciner Resources' public disclosures and commentaries for specific questions regarding our soda ash business segment. Now, I would like to turn the call over to Craig Nunez, our President and Chief Operating Officer.

Thank you, Tiffany and welcome everyone to our quarterly call. I'm pleased to announce that NRP continues to generate significant amounts of cash, and earn attractive returns on capital, which allowed us to add $81 million to common unitholders equity and pay out nearly $33 million of common unitholder distributions over the last year. Excluding discontinued operations and the one-time payment received last year to satellite legal dispute, we recorded $175 million of free cash flow over the last 12 months. And our consolidated return on capital employed over the same period was 16.4%. With the coal segment coming in at 17% and soda ash delivering almost 21%. Our cash flow cushion which is the free cash flow remaining after mandatory debt repayments of our private placement notes, payments of preferred dividends and the current common unit distribution was $40 million over the same period. While we have posted solid results over the last year, it has not been for lack of challenges. Falling coal prices in particular prices for metallurgical coal are putting increasing pressure on our lessees. Four of our lessees, Blackjewel, Black Hawk, Cambrian Emory have declared bankruptcy this year. In foresight our largest lessee representing roughly 25% of our coal segment revenues has recently entered into a forbearance agreement with its lenders. Falling coal prices have not yet had a significant direct impact on our results, but we believe that's about to change as contracts entered into last year by our lessees expire and are replaced with new contracts and what we believe will be lower prices. While we do not have the same visibility into this process as do our lessees, we anticipate our coal revenues to be significantly lower in the months ahead than we’ve experienced in the recent past. When combined with the 40% plus distribution cut to finance capacity expansion at our soda ash joint venture announced last quarter, we expect our cash flow cushion to shrink considerably. Despite this negative sentiment, we are confident however that the progress made in recent years to reduce debt, the old liquidity and streamline cost positions us well to ride out this storm. We are in a much better position than during the 2015-2016 downturn. We believe we will continue to have ample cash flow and liquidity to run our business, pay our obligations and make distributions to our common and preferred unitholders. We also expect to continue our multi-year trend of reducing debt, albeit at a slower pace than we've delivered in recent years. With $112 million of cash, a four year bank facility with $100 million of available borrowing capacity and no parent company bond maturities for over five years, I'm confident we have the financial strength to weather the storm, while continuing to build common unitholder equity. With that, I’ll turn it over to Chris to cover our financial performance.

Thank you, Craig, and good morning everyone. During the third quarter, we generated $42 million of operating and free cash flow and $39 million of net income. Basic and diluted earnings per common unit for the third quarter were $2.53 per unit and $1.66 per unit, respectively. Our coal royalty segment generated $41 million of operating cash flow, $42 million of free cash flow and $40 million of net income during the third quarter of 2019. Despite weakened coal markets overall results from our coal royalty segment were relatively flat compared to the prior year quarter as increases in certain areas were offset by reduced coal royalty realizations at other properties. Specifically $11 million of total increases from gains on asset sales and disposals, additional minimum lease revenue and additional lease amendment fee revenue were offset by $9 million of total decreases in coal royalty processing and transportation revenues driven by the weakened coal markets, the temporary idling of certain properties due to lessee bankruptcies and the idling of our Pinnacle property since the fourth quarter of 2018. In total, our lessees sold 5 million tons of our coal during the third quarter of 2019. And we saw our coal sales prices begin to decline as a result of the weakened coal markets. In terms of our coal royalty sales mix, metallurgical coal made up approximately 55% of our total coal royalty sales volumes and approximately 60% of our coal royalty revenues during the third quarter. Moving on to our second business segment, our soda ash segment generated $14 million of net income and $6 million of free cash flow during the third quarter of 2019. Net income increased $5 million compared to the prior year quarter as a result of increased production and sales volumes and increased domestic and…

Thank you. [Operator Instructions] Your first question comes from Mark Levin from Seaport Global. Your line is open.

Great. A couple of quick questions, one related to the some of the items that you called out, the $6.1 million gain on asset sales and disposals and then roughly $3.5 million of increased minimum revenues related to Hillsboro. Can you talk maybe about the repeatability of those, as we kind of model out Q4 and into 2020? Or this is just discrete onetime items or should we be thinking about additional asset sales and disposals and also how to think about the increased minimum straight line revenue from Hillsboro going forward?

Sure. Thank you, Mark. This is Chris. The gain on asset sales, we had about $6 million this quarter and those primarily related to an asset sale disposal similar to other transactions we've had in the past like eminent domain transactions are right-of-way easement type of transactions. That's something that's -- that does happen to in our business, but we don't plan on that, those types of transactions. The other Hillsboro, that is something that we do expect to be ongoing, going forward.

Okay, great. And then you referenced, this quarter, I think you had your lessee sell about 5 million tons of coal. And then during Craig's comments obviously referenced a number of the lessees that it gone bankrupt and clearly there is a lot of weakness in the met coal market with people idling tons. I realize you don't give guidance, other than to say that you expect it to be materially weaker. Can you from what you're seeing, I mean, and as we kind of think ahead, I assume $5 million is not the proper run rate to use going forward. But any way to think about how to model volumes going forward, given all of the things that we're seeing in the market right now?

Hi, Mark. This is Craig. We don't have that visibility, unfortunately. And this is budget season for 2020 with our lessees and with us. And what we observe is that, the greater the level of uncertainty as to what the market is going to look like in the coming months. The later, the budget cycle tends to conclude. So we just don't have good visibility from our lessees yet, and I think it's because they really haven't made their decisions and put their contracts in place yet either.

That's a fair point. I think, Craig, you'd referenced once before that you would look at the 2015, 2016 collapse in met prices when seaborne premium level met prices went below $100 a metric ton and stayed there for quite a while. I think you had referenced maybe was at our conference or in another venue that you had stress tested the cash flow against that type of a market. Maybe you could refresh us that it doesn't seem like things are going to get that bad, but of course the met prices out of everybody’s control and it’s very macro-driven. But maybe you can give us some color about what you learned if you took that 2015, 2016 mortgage and overlaid it with what 2020 could bring?

Yes, what we’ve said before is that we felt we would still have a positive cash flow cushion, albeit a modest one. If we were to go through a 2015-2016 environment again, which I think in many respects, we can argue that we’re in some portion of have some similarities to where we are today to that period then. As far as what that means to us, we still think that if that were to happen again, we’re going to be our cash flow cushion is going to decrease substantially. We still think we’ll be have sufficient kind of cash flow cushion to do what we need to do. Could it go negative for a quarter or two or potentially, yeah. But I think on a sustainable basis year-over-year, I think we still have the ability to do things we said earlier to continue to run our business, pay our debt and continue to pay down debt.

And that obviously takes into account or into consideration lower cash distributions from Ciner Wyoming?

Ciner, yes it does.

Ciner. Okay. And then the last question I was going to ask just has to do with all the bankruptcies that you had referenced in your prepared remarks, maybe again you can sort of refresh us, with you went through a previous round of bankruptcies through the coal industry several years ago during that last sort of met coal price wash out. Can you maybe remind us how the cohorts treated some of your lease contracts or what was the eventual results of what you learned from going through that process and how that may relate to what you’re going through now or what or maybe even it was different this time around, if anything?

What I would like to comment on with that market is just the principle underlying economic driver, I think it is really the key factor that determines the outcome of our assets in our leases in any bankruptcy. I think it falls back on one fundamental premise and that is, if the underlying operation is actually profitable, it’s economically viable over the long term. Then it will emerge from bankruptcy and continue operating. There may be some temporary idling during the bankruptcy process. There maybe a delay in cash receipts and cash from that asset for us, while the bankruptcy proceedings are taking place. But in the end if an operator can make money with that property for the long term that property invariably emerges from the bankruptcy process operating. And we tend to not have any material change in our cash flows on our contract structure to the negative. On the other hand, if you, if the asset which you’ve leased to an operator is not profitable if it’s marginal, it is losing money, if it has excess of liabilities for the operator associated with it, that make it a bad economic proposition for that operator, for another operator. The chances are that the contract structure we have won’t protect us. We’ve been fortunate, I would say through the vast majority of bankruptcies that we endured from 2015 to now that we have not, we’ve not had significant amounts of properties that were not viable in the bankruptcy process, is not economically viable. So they've survived the bankruptcy process and our contract structure for the most part has remained intact. But it's all, it's a case-by-case basis, and it depends on the quality -- quality of the assets.

Great. Thank you very much for your color. Thanks.

[Operator Instructions] We have no further questions, I turn the call back over back to the presenters for closing remarks.

Thank you everyone for joining us on this call, and we appreciate you follow in NRP, and your investment in NRP. We look forward to talking to you soon. Have a good day. Bye.

Ladies and gentleman this concludes today's conference call. Thank you for your participation. You may now all disconnect.