Good morning. My name is Charlie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Natural Resource Partners LP First Quarter twenty twenty one Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. Tiffany Samus, Manager of Investor Relations, you may begin your conference.
Good morning, and welcome to the Natural Resource Partners first quarter twenty twenty one 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 Trent Zolas, Chief Financial Officer and Kevin Craig, Executive Vice President. 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 ks 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 first quarter 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 detailed market fundamentals.
In addition, I refer you to General Resources' public disclosures and commentary 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 good morning all. NRP continues to operate under CDC guidelines, government imposed rules and company remote work protocols. Our people are safe and the partnership is conducting business as usual. We continue to be pleased with the performance of our business segments as they emerge from the negative impact of the COVID-nineteen pandemic. Demand for metallurgical coal and soda ash is growing, providing support for our cash flow.
While we expect COVID-nineteen factors to remain a major wildcard for the global economy for the foreseeable future, we remain cautiously optimistic that the worst for our business lines is behind Furthermore, we are quite pleased with the partnership's demonstrated ability to generate free cash flow, continue paying down debt and maintain strong liquidity throughout the crisis, and we expect these trends to continue. Over the last twelve months, a period that captures the depths of the pandemic, we generated a noteworthy $82,000,000 of free cash flow and paid off $46,000,000 of debt. Even our cash flow cushion, which is the free cash flow remaining after paying our private placement debt amortizations and distributions on our common and preferred units held up well during the depths of the pandemic, falling negative by only $3,700,000 We continue to focus on and maintain robust liquidity and ended the quarter with $197,000,000 of total liquidity consisting of $97,000,000 of cash and $100,000,000 of unused borrowing capacity. Metallurgical and thermal coal markets continue to recover from the impact of the COVID-nineteen pandemic and we expect this will benefit our lessees going forward. The ongoing trade dispute between China and Australia appears to have benefited U.
S. Met producers as Chinese manufacturers realign supply chains to procure met coal from other regions. Thermal coal demand continues to stabilize as the economy recovers and has also been supported by cooler winter temperatures in the first quarter. As we have discussed previously, we do not have significant sensitivity to thermal coal prices this year since the substantial majority of our thermal cash flows are fixed pursuant to a contract with Foresight Energy that went into effect as they emerged from bankruptcy last year. The outlook for our soda ash investment continues to improve as well.
Ciner Wyoming is now operating near capacity and the U. S. Geological Survey reports that U. S. Soda ash production is now near normal levels and The U.
S. Industry's export volumes have returned to historical norms. International soda ash prices are improving, particularly in Asia, which provides additional confirmation that industry is well on its way to normality. However, demand risks are still elevated as several regions of the world are still experiencing pandemic related difficulties, including increasing infection rates and subsequent economic lockdowns. Regarding cash distributions from Ciner, we received a special $4,000,000 distribution from Ciner Wyoming during the quarter, but we do not expect Ciner management to resume regular cash distributions from Ciner Wyoming until they have greater visibility and confidence in the sustainability of the continuing improvement in global soda ash demand.
As mentioned on our last two earnings calls, we continue working to identify alternative revenue sources across our large portfolio of land, mineral and timber assets. The types of opportunities we are exploring include the sequestration of carbon dioxide underground and timber and the generation of electricity using geothermal, wind and solar energy. While we do not expect these activities to generate significant cash flow in the immediate future, we believe our large ownership footprint throughout The United States will provide opportunities to create value in this regard with minimal capital investment by NRP. The partnership's ability to continue generating free cash flow, reduce debt and pay unitholder distributions during the COVID-nineteen downturn demonstrates that we have the right strategy in place to create unitholder value. Since 2015, when we embarked on our strategy of delevering and derisking the partnership, NRP has paid down over $900,000,000 of debt, paid over $115,000,000 of common unitholder distributions and worked to solidify our capital structure and ensure strong liquidity.
We remain steadfast in our commitment to focus on maximizing unitholder value by continuing these efforts. And with that, I'll turn the call over to Chris to cover our financial results.
Thank you, Craig, and good morning, everyone. During the first quarter of twenty twenty one, we generated $23,000,000 of operating cash flow and $8,000,000 of net income. Moving to our segment results. Our Core Royalty and Other segment generated $26,000,000 of Q1 operating cash flow and $20,000,000 of first quarter net income. Operating cash flow was $4,000,000 lower compared to the prior year quarter, primarily as a result of certain lease amendment fee payments we received in the first quarter of twenty twenty.
Excluding the impact from these lease amendment fees we received last year, total segment operating cash flow was consistent with the prior year quarter. Our first quarter net income was $6,000,000 lower compared to the prior year quarter, primarily as a result of increased non cash expenses that included $4,000,000 asset impairment expense due to lease termination and $3,000,000 increased depletion expense due to increased coal production sales at certain properties with a higher depletion rate. Total remaining segment costs remained relatively flat compared to the prior year quarter as increases in certain costs such as bad debt expense, transportation and processing and insurance were offset by controllable cost reductions implemented from our 2020 cost savings initiatives. Metallurgical coal made up approximately 40% of our total coal royalty sales volumes and approximately 50% of our coal royalty revenue during the first quarter of twenty twenty one. Moving to soda ash, our second business segment.
Our soda ash segment's net income in the first quarter of twenty twenty one was lower by $4,000,000 as compared to the previous year quarter, primarily driven by lower sales prices. As Craig mentioned earlier, while the quarterly distribution from General Wyoming remains suspended in order to provide greater financial flexibility as a result of the impacts of COVID-nineteen, in March of twenty twenty one, General Wyoming approved a special distribution and as a result, we received $4,000,000 of cash. General Wyoming continues to evaluate on a quarterly basis whether to reinstate the quarterly distribution. While we were unable to predict the ultimate impact that COVID-nineteen may have on our soda ash business, we remain encouraged by General Wyoming's ability to continue to operate its business safely and effectively, and we also remain confident in the long term earnings power of our soda ash business. Moving to our final segment.
Our Corporate and Financing segment costs were relatively flat in Q1 twenty twenty one as increases in certain costs such as insurance were offset by controllable cost reductions implemented with our 2020 cost savings initiatives. Cash used in operations was $1,000,000 lower in the first quarter of twenty twenty one compared to the prior year quarter, primarily due to lower cash paid for interest as a result of less debt outstanding in 2021. Regarding distributions, in February, we paid a quarterly $0.45 per common unit distribution and a quarterly distribution of $7,600,000 to our preferred unitholders, one half of which was in cash and one half in kind. Additionally, this morning we announced a quarterly distribution of $0.45 per common unit and a quarterly distribution of $7,700,000 to our preferred unitholders to be paid one half in cash and one half in kind as required by our bond indenture. These preferred unit distributions include interest on previously paid in kind units, which will also be paid one half in cash and one half in kind.
I'd like to provide a little more color on our distribution restrictions. The indenture governing our bond restricts us from paying more than one half of the quarterly distribution on our preferred units in cash or to redeem any outstanding paid in kind preferred units if our consolidated leverage ratio exceeds 3.75x. And as of 03/31/2021, our consolidated leverage ratio was 4.5x. We expect our leverage ratio to continue to rise through the second quarter of this year and then begin a sustained long term decline as we continue to pay down debt. In addition, under the terms of our partnership agreement, if our consolidated leverage ratio remains above 3.75 times into 2022 and were unable to redeem all outstanding paid in kind preferred units, it would be required to temporarily suspend distributions on our common units until the leverage ratio drops below 3.75 times and the outstanding paid in kind preferred units are redeemed.
And with that, I'll turn the call back over to the operator for questions.
Our first question comes from Amir Twain of Imperial Capital. Your line is open. Please go ahead.
Hi, guys. How are you? Good morning. Good morning. So the question I have is big picture.
I know you guys don't really control the assets in these instances. So what is your sort of sense of how 2021 would play out? I think you guys said near term leverage is going to go up a little bit, but then should start to decline going forward. I'm trying to get a sense of if I look historically, you were generating close to $200,000,000 of EBITDA and pretty significant free cash flow generation at that level. In order to get back to those levels, I mean, we get to that run rate by the end of the year?
Or just trying to get a sense of how the business is going to continue to improve? What kind of trajectory should we expect?
This is Craig. I'll take a first stab at that. Of course, we don't give guidance, so I'll have to stay shy of that, but I can give you the big picture overview. We had $82,000,000 of free cash flow over the preceding twelve months ending March 31. That included, as you know, all of the bad quarters of the pandemic, the depths of the pandemic.
I would expect that it's going to take a while, if you look on a twelve month rolling basis for those depths of the pandemic to roll through this rolling twelve month period. And we think that both the soda ash business and the coal business, met and thermal are going to do better in 2021 or continue to do better in 2021. So I think you're going to continue to see that run rate grow. I can't give you guidance as to specifically what it's going to be at what particular point in time in the future. But I do think we'll continue to see that the run rate that we're generating cash grow.
Chris, do you have any comments on that? I agree with that, Craig.
The next question I have is, you have a substantial amount of cash on your books and obviously the liquidity is pretty good as well. Do you prefer to keep cash on the books? I mean, can we pay down some debt with it? I mean, just trying to gauge how the use of cash and how much cash do you want to keep on the book?
We are always looking for opportunities to deploy the cash in productive ways. And in our case with our primary focus on delevering and derisking the business for the last five years. That has involved paying down debt. We're sensitive though as we pay down debt about two things. Number one, and most importantly, we want to make sure that we have adequate liquidity to take into account any unexpected urgent needs that come about.
The pandemic was a great example. We were quite happy we entered into the pandemic with the liquidity and the cash balance that we had. Also along those lines, when we're contemplating the use of the cash we have, we have to take into account the ability that we may have to access capital if we end up using all of our cash. And there is quite a we are we've talked previously in calls about our concerns about our ability to access capital from the credit or equity markets. So we're going to on the side of caution with respect to our liquidity.
The second factor that we consider when we think about paying down debt is the cost of it. Is there a call premium we have to pay? Is there a make whole premium we have to pay or can we buy at a discount. And when we feel that we have adequate liquidity and we feel that we can buy debt back at an attractive price, we'll do it.
Got it. Thank you. That's all I have.
Thank you.
There are no further questions at this stage. So I hand the call back over to Craig.
Well, thank you very much, Charlie. And I'd like to thank everyone for participating in our call. And thank you for your continued support of NRP. And have a great day. This call is ended.
Take care.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may
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