Natural Resource Partners L.P. Announces Second Quarter 2017 Results
HOUSTON, Aug. 8, 2017 /PRNewswire/ --
Second Quarter 2017 Highlights
-- Net income and net income attributable to the common unitholders and
general partner of $50.0 million and $42.4 million, respectively
-- Basic and diluted net income per common unit of $3.39 and $1.13,((1))
respectively
-- Net cash provided by operating activities of $34.9 million
-- Adjusted EBITDA of $62.7 million ((2))
-- Net debt reduction of $98.1 million
Natural Resource Partners L.P. (NYSE:NRP) today reported second quarter of 2017 net income of $50.0 million, net income attributable to the common unitholders and general partner of $42.4 million, net cash from operating activities of $34.9 million, and adjusted EBITDA of $62.7 million. These results were impacted by a fair value adjustment on warrant liability, costs associated with recapitalization expenses, gains on asset sales and non-cash revenue from lease modifications and terminations as illustrated in the tables included in this release. Adjusting for these items, net income attributable to the common unitholders and general partner for the second quarter of 2017 was $18.4 million((2)).
Three Months Ended
June 30, March 31,
---------
2017 2016 2017
---- ---- ----
(In thousands)
Net income $49,950 $46,446 $16,764
Less: income attributable to
preferred unitholders (7,538) - (2,500)
------ --- ------
Net income attributable to
common unitholders and
general partner $42,412 $46,446 $14,264
Less: Fair value adjustments
for warrant liabilities (23,960) - (16,569)
Plus: Recapitalization
transaction expenses 4,239 - 17,363
Plus: Asset impairments - 91 1,778
Less: Non-cash revenue from
lease modifications and
terminations (972) (35,451) (290)
Less: (Gain) loss on asset
sales (3,361) 1,071 (44)
------ ----- ---
Adjusted net income
attributable to the common
unitholders and general
partner $18,358 $12,157 $16,502
Net cash provided by
operating activities $34,858 $17,801 $20,205
(1) Diluted net income per common unit
assumes the conversion of NRP's
preferred units into common units and
net settlement of warrants in exchange
for common units even though NRP has
the ability to redeem the Preferred
Units and net settle the Warrants for
cash.
(2) Reconciliations for all non-GAAP items
are shown in the table above or in the
tables at the end of this release.
During the second quarter, we continued to execute on our deleveraging strategy, reducing our total outstanding debt by an additional $98.1 million, bringing our total debt reduction since December 31, 2016 to $244.1 million. Continued strong metallurgical coal markets, steady distributions from our soda ash business, and improved sequential performance from our construction aggregates segment all combined to generate improved cash flow for NRP.
Segment Information and Outlook
Coal Royalty and Other
NRP derived approximately 60% of the coal royalty revenues and approximately 45% of the related production from metallurgical coal during the six months ended June 30, 2017. NRP continued to benefit from higher metallurgical coal prices compared to 2016, with substantially increased price realizations in Central and Southern Appalachia. While metallurgical coal prices have retreated in 2017 from the peaks reached in the fourth quarter of 2016 and early in the second quarter of 2017, they remained significantly higher than in the comparable period in 2016. Notably, very few tons were sold at the peak of the market, as buyers generally elected to stay out of the market anticipating a short-term price spike. Most recently, met coal prices have increased approximately $20 per metric ton since mid-June as a result of global supply disruptions and increased imports into China.
Thermal coal prices have also improved over the prior year as inventories have come down significantly, in part due to production cuts over the last two years. Normal summer weather and natural gas prices that continue to remain around $3/mcf have combined to reduce inventories at the end of May to approximately 100 days of supply, down from over 130 days of supply at the end of May 2016.
Coal royalty and other revenue for the second quarter 2017 was $52.8 million and coal royalty and other operating income was $42.1 million, representing sequential increases of 3% and 20% respectively. Compared to the same period of 2016, coal royalty and other revenue and coal royalty and other operating income both declined 31%. After adjusting for impairment charges, gains on asset sales and the $35.5 million of non-cash revenues related to lease modifications and terminations recognized in the second quarter of 2016, coal royalty and other revenue increased $6.6 million, or 16%, and coal royalty and other operating income increased $11.1 million, or 41%.
Soda Ash
During the second quarter, international prices for soda ash, particularly in Asia, continued to be strong, and domestic prices have improved slightly over last year. Revenues and other income related to our equity investment in Ciner Wyoming decreased $1.8 million, or 18%, from $10.2 million in the three months ended June 30, 2016 to $8.4 million in the three months ended June 30, 2017. This variance was primarily driven by lower production output and higher maintenance expenses compared to the prior period. NRP received $12.25 million in cash distributions from Ciner Wyoming in the second quarter of 2017 compared to $9.8 million in 2016.
Construction Aggregates
Revenues and net income for the second quarter 2017 increased significantly over the first quarter of 2017, due to increased activity at all locations as weather conditions improved. Second quarter 2017 revenue and other income rose $2.1 million over the second quarter 2016 to $33.7 million while net income declined $0.8 million to $2.6 million. Although production and revenues increased on a consolidated basis compared to the same period in 2016, weaker pricing due to diminished natural gas drilling in the Marcellus and the lack of infrastructure spending in West Virginia, as well as cutbacks in military spending in the Clarksville market, resulted in lower margins and earnings at those operations. In addition, the Southern Aggregates operation experienced significant rainfall in the second quarter, but the Louisiana market has improved significantly over the course of the summer.
The table below presents NRP's business results by segment for the three months ended June 30, 2017 and June 30, 2016:
Operating Business Segments
Coal Royalty Construction Corporate and
and Other Aggregates Financing
------------- ------------- --------------
Soda Ash Total
-------- -----
($ In thousands)
Three Months Ended June
30, 2017
Revenues and other
income $49,626 $8,389 $33,555 $ - $91,570
Gains on asset sales 3,184 - 177 - 3,361
----- --- --- --- -----
Total revenues and
other income 52,810 8,389 33,732 - 94,931
Net income (loss) from
continuing operations 42,084 8,389 2,636 (3,292) 49,817
Adjusted EBITDA (1) 47,459 12,250 5,844 (2,814) 62,739
Net cash provided by
(used in) operating
activities of
continuing operations 38,537 9,862 5,476 (18,770) 35,105
Net cash provided by
(used in) investing
activities of
continuing operations 2,888 2,388 (2,539) - 2,737
Net cash provided by
(used in) financing
activities of
continuing operations 17 - (1,000) (109,021) (110,004)
Distributable Cash Flow
(1) 41,426 12,250 3,424 (18,770) 38,330
Three Months Ended June
30, 2016
Revenues and other
income $77,487 $10,188 $31,642 $ - $119,317
Gain (loss) on asset
sales (1,080) - 9 - (1,071)
------ --- --- --- ------
Total revenues and
other income 76,407 10,188 31,651 - 118,246
Asset impairments 91 - - - 91
Net income (loss) from
continuing operations 61,153 10,188 3,439 (26,147) 48,633
Adjusted EBITDA (1) 68,730 9,800 7,129 (4,032) 81,627
Net cash provided by
(used in) operating
activities of
continuing operations 34,814 9,800 6,210 (34,866) 15,958
Net cash provided by
(used in) investing
activities of
continuing operations 4,184 - (2,472) - 1,712
Net cash used in
financing activities
of continuing
operations - - (793) (46,105) (46,898)
Distributable Cash Flow
(1) 39,003 9,800 4,152 (34,866) 18,089
Three Months Ended
March 31, 2017
Revenues and other
income $51,138 $10,294 $27,221 $ - $88,653
Gains on asset sales 29 - 15 - 44
--- --- --- --- ---
Total revenues and
other income 51,167 10,294 27,236 - 88,697
Asset impairments 1,778 - - - 1,778
Net income (loss) from
continuing operations 35,094 10,294 (1,539) (26,878) 16,971
Adjusted EBITDA (1) 43,845 12,250 2,375 (7,185) 51,285
Net cash provided by
(used in) operating
activities of
continuing operations 37,932 12,250 4,046 (33,739) 20,489
Net cash provided by
(used in) investing
activities of
continuing operations 6 - (2,074) - (2,068)
Net cash provided by
(used in) financing
activities of
continuing operations 16 - (96) 54,233 54,153
Distributable Cash Flow
(1) 37,937 12,250 2,099 (33,739) 18,547
(1) See "Non-GAAP Financial Measures"
and reconciliation tables at the
end of this release.
Debt Reduction and Liquidity
In the first quarter of 2017, NRP completed several recapitalization transactions that improved NRP's balance sheet and strengthened its financial credit position. During the three months ended June 30, 2017, NRP redeemed $90.0 million in principal of its 9.125% senior notes and paid off $7.3 million of Opco's senior notes. In addition, through the sale of one of its assets, Opco's $0.8 million utility local improvement obligation was transfered to the purchaser. At the end of the second quarter NRP had $220.8 million of liquidity, consisting of $180 million available under the Opco credit facility and $40.8 million in cash. NRP's consolidated debt to Adjusted EBITDA ratio stands at 4.0x, down from 4.5x at year-end 2016 and 5.3x at year-end 2015. NRP remains focused on further reducing its debt and repositioning the partnership for long-term growth.
Second Quarter 2017 Distributions
On July 27, 2017, the Board of Directors of GP Natural Resource Partners LLC declared a distribution of $0.45 per unit to be paid by the Partnership on August 14, 2017 to common unitholders of record on August 7, 2017. In addition, the Board declared a distribution on NRP's 12.0% Class A Convertible Preferred Units. One-half of the distribution on the preferred units will be paid-in-kind through the issuance of 3,769 additional preferred units.
Conference Call
A conference call will be held today at 10:00 a.m. ET. To join the conference call, dial (844) 379-6938 and provide the conference code 54804730. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com.
Audio replays of the conference call will be available for approximately one week. To access the replay, dial (855) 859-2056 and provide the conference code 54804730 or visit the Investor Relations section of NRP's website.
Company Profile
Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns interests in coal, aggregates and industrial minerals across the United States. A large percentage of NRP's revenues are generated from royalties and other passive income. In addition, NRP owns an equity investment in Ciner Wyoming, a trona/soda ash operation, and a construction aggregates company.
For additional information, please contact Kathy H. Roberts at 713-751-7555 or kroberts@nrplp.com. Further information about NRP is available on the partnership's website at http://www.nrplp.com.
Non-GAAP Financial Measures
"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment, gain on reserve swap, fair value adjustments for warrant liabilities and income to non-controlling interest; plus distributions from unconsolidated investment, interest expense, debt modification expense, loss on extinguishment of debt, warrant issuance expense, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income (loss), the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.
"Distributable Cash Flow" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations, plus returns of equity from unconsolidated investment, proceeds from sales of assets, including those included in discontinued operations, and return on long-term contract receivables (including affiliate); less maintenance capital expenditures and distributions to non-controlling interest. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the Partnership's ability to make cash distributions to our common and preferred unitholders and our general partner and repay debt.
"Adjusted Net Income" is a non-GAAP financial measure that we define as Net income attributable to common unitholders and general partner, plus recapitalization transaction expenses and asset impairments; less gains on asset sales, non-cash revenue from lease modifications and terminations and fair value adjustments for warrant liabilities. Adjusted net income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted net income is useful in evaluating our financial performance because restructuring transaction expenses are one time charges, gains on asset sales are not related to the operations of our business and asset impairments and fair value adjustments for warrant liabilities are non-cash charges and excluding these from net income allows us to better compare results period-over-period. Reconciliations of Net income attributable to common unitholders and general partner to Adjusted net income are included in the table on the first page of this release.
"Adjusted Coal Royalty and Other Revenue" is a non-GAAP financial measure that we define as Coal royalty and other revenues less gains on asset sales and non-cash revenue associated with lease modifications and terminations. Adjusted coal royalty and other revenue should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted coal royalty and other revenue useful in evaluating our financial performance because gains on asset sales are not related to the operations of our business and excluding these from Coal royalty and other revenue allows us to better compare results period-over-period. Reconciliations of Coal royalty and other revenue to Adjusted coal royalty and other revenue are included in the tables attached to this release.
"Adjusted Coal Royalty and Other Operating Income" is a non-GAAP financial measure that we define as Coal royalty and other operating income plus asset impairments less gains on asset sales and non-cash revenue associated with lease modifications and terminations. Adjusted coal royalty and other operating income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted coal royalty and other operating income is useful in evaluating our financial performance because gains on asset sales are not related to the operations of our business and asset impairments and non-cash revenue associated with lease modifications and forfeitures are non-cash charges and excluding these from Coal royalty and other operating income allows us to better compare results period-over-period. Reconciliations of Coal royalty and other operating income to Adjusted coal royalty and other operating income are included in the tables attached to this release.
"Adjusted Revenue and Other Income" is a non-GAAP financial measure that we define as Revenue and other income less gains on asset sales and non-cash revenue associated with lease modifications and terminations. Adjusted revenue and other income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted revenue and other income is useful in evaluating our financial performance because gains on asset sales are not related to the operations of our business and non-cash revenue associated with lease modifications and forfeitures and excluding these from revenues and other income allows us to better compare results period-over-period. Reconciliations of Revenue and other income to Adjusted revenue and other income are included in the tables attached to this release.
"Adjusted Corporate and Financing Costs" is a non-GAAP financial measure that we define as Corporate and financing net loss from continuing operations plus debt modification expense, loss on extinguishment of debt, warrant issuance expense and performance based incentive compensation expense less fair value adjustments for warrant liabilities. Adjusted corporate and financing costs should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted corporate and financing costs is useful in evaluating our financial performance because debt modification expense, loss on extinguishment of debt, warrant issuance expense and performance based incentive compensation expense are one time charges and fair value adjustments for warrant liabilities are non-cash charges and excluding these from net loss allows us to better compare results period-over-period. Reconciliations of Corporate and financing net loss from continuing operations to Adjusted corporate and financing costs are included in the tables attached to this release.
Forward-Looking Statements
This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the partnership. These risks include, but are not limited to, commodity prices; decreases in demand for coal, aggregates and industrial minerals, including trona/soda ash; changes in operating conditions and costs; production cuts by our lessees; unanticipated geologic problems; our liquidity, leverage and access to capital and financing sources; changes in the legislative or regulatory environment, and other factors detailed in Natural Resource Partners' Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
-Financial Tables Follow-
Natural Resource Partners L.P.
Financial Tables
Consolidated Statements of Comprehensive Income
(In thousands, except per unit data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30,
2017 2016 2017 2017 2016
---- ---- ---- ----
Revenues and other income:
Coal royalty and other $36,914 $59,983 $34,994 $71,908 $88,832
Coal royalty and other-
affiliates 12,712 17,504 16,144 28,856 28,074
Construction aggregates 33,555 31,642 27,221 60,776 56,324
Equity in earnings of Ciner
Wyoming 8,389 10,188 10,294 18,683 19,989
Gain (loss) on asset sales,
net 3,361 (1,071) 44 3,405 20,854
----- ------ --- ----- ------
Total revenues and other
income 94,931 118,246 88,697 183,628 214,073
Operating expenses:
Operating and maintenance
expenses 31,020 29,797 29,628 60,648 56,582
Operating and maintenance
expenses-affiliates, net 2,219 2,402 2,555 4,774 5,886
Depreciation, depletion and
amortization 8,165 10,472 9,724 17,889 20,252
Amortization expense-affiliate 240 704 768 1,008 1,426
General and administrative 2,031 3,173 6,078 8,109 6,408
General and administrative-
affiliates 852 866 1,124 1,976 1,803
Asset impairments - 91 1,778 1,778 1,984
--- --- ----- ----- -----
Total operating expenses 44,527 47,505 51,655 96,182 94,341
Income from operations 50,404 70,741 37,042 87,446 119,732
Other income (expense)
Interest expense (20,377) (22,054) (23,141) (43,518) (44,251)
Interest expense-affiliate - (61) - - (523)
Debt modification expense (132) - (7,807) (7,939) -
Loss on extinguishment of debt (4,107) - - (4,107) -
Warrant issuance expense - - (5,709) (5,709) -
Fair value adjustments for
warrant liabilities 23,960 - 16,569 40,529 -
Interest income 69 7 17 86 26
--- --- --- --- ---
Other expense, net (587) (22,108) (20,071) (20,658) (44,748)
Net income from continuing
operations 49,817 48,633 16,971 66,788 74,984
Income (loss) from
discontinued operations 133 (2,187) (207) (74) (5,111)
--- ------ ---- --- ------
Net income $49,950 $46,446 $16,764 $66,714 $69,873
Less: income attributable to
preferred unitholders (7,538) - (2,500) (10,038) -
------ --- ------ ------- ---
Net income attributable to
common unitholders and
general partner $42,412 $46,446 $14,264 $56,676 $69,873
Income from continuing operations per common
unit
Basic $3.38 $3.90 $1.17 $4.55 $6.02
Diluted 1.13 3.90 0.03 1.35 6.02
Net income per common unit
Basic $3.39 $3.73 $1.15 $4.54 $5.61
Diluted 1.13 3.73 0.02 1.34 5.61
Net income $49,950 $46,446 $16,764 $66,714 $69,873
Add: comprehensive income
(loss) from unconsolidated
investment and other (13) 462 (1,132) (1,145) (83)
Comprehensive income $49,937 $46,908 $15,632 $65,569 $69,790
======= ======= ======= ======= =======
Natural Resource Partners L.P.
Financial Tables
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
----------------
June 30, March 31, June 30,
--------- --------
2017 2016 2017 2017 2016
---- ---- ---- ---- ----
Cash flows from operating activities:
Net income $49,950 $46,446 $16,764 $66,714 $69,873
Adjustments to reconcile net income to net
cash provided by operating activities of
continuing operations:
Depreciation, depletion and amortization 8,165 10,472 9,724 17,889 20,252
Amortization expense-affiliates 240 704 768 1,008 1,426
Return on earnings from unconsolidated
investment 9,862 9,800 12,250 22,112 22,050
Equity earnings from unconsolidated
investment (8,389) (10,188) (10,294) (18,683) (19,989)
(Gain) loss on asset sales, net (3,361) 1,071 (44) (3,405) (20,854)
Fair value adjustments for warrant
liabilities (23,960) - (16,569) (40,529) -
Debt modification expense 132 - 7,807 7,939 -
Loss on extinguishment of debt 4,107 - - 4,107 -
Warrant issuance expense - - 5,709 5,709 -
(Income) loss from discontinued operations (133) 2,187 207 74 5,111
Asset impairments - 91 1,778 1,778 1,984
Other, net 1,332 1,828 1,090 2,422 4,094
Other, net-affiliates (999) (1,571) 887 (112) 212
Change in operating assets and liabilities:
Accounts receivable (2,336) (33) (1,267) (3,603) 3,922
Accounts receivable-affiliates 121 (1,201) (947) (826) (2,271)
Accounts payable (940) (130) 986 46 150
Accounts payable-affiliates (254) (250) 256 2 (25)
Accrued liabilities 4,182 (4,405) (8,080) (3,898) (3,131)
Accrued liabilities-affiliates - (913) - - (456)
Deferred revenue 3,412 (34,141) 1,077 4,489 (38,204)
Deferred revenue-affiliates (7,269) (3,075) (2,897) (10,166) (4,060)
Other items, net 1,243 (1,341) 1,284 2,527 (2,045)
Other items, net-affiliates - 607 - - 607
--- --- ---
Net cash provided by operating activities of
continuing operations 35,105 15,958 20,489 55,594 38,646
Net cash provided by (used in) operating
activities of discontinued operations (247) 1,843 (284) (531) 5,815
----- ---- ---- -----
Net cash provided by operating activities 34,858 17,801 20,205 55,063 44,461
Cash flows from investing activities:
Return of equity from unconsolidated
investment 2,388 - - 2,388 -
Proceeds from sale of oil and gas royalty
properties 4 1,499 (548) (544) 34,347
Proceeds from sale of coal and aggregates
royalty properties 1,288 - 139 1,427 9,802
Return of long-term contract receivables 1,207 - - 1,207 -
Return of long-term contract receivables-
affiliate 390 1,871 414 804 2,180
Proceeds from sale of plant and equipment
and other 363 840 22 385 843
Acquisition of plant and equipment and other (2,903) (2,498) (2,095) (4,998) (3,919)
------ ------ ------
Net cash provided by (used in) investing
activities of continuing operations 2,737 1,712 (2,068) 669 43,253
Net cash provided by (used in) investing
activities of discontinued operations 173 (1,089) 29 202 (3,814)
--- ------ --- --- ------
Net cash provided by (used in) investing
activities 2,910 623 (2,039) 871 39,439
Cash flows from financing activities:
Proceeds from issuance of Convertible
Preferred Units and Warrants, net - - 242,100 242,100 -
Proceeds from issuance of 2022 Senior Notes,
net - - 103,688 103,688 -
Proceeds from loans - 20,000 - - 20,000
Repayments of loans (97,282) (57,316) (251,010) (348,292) (98,482)
Distributions to common unitholders and
general partner (5,619) (5,616) (5,615) (11,234) (11,232)
Distributions to preferred unitholders (1,250) - - (1,250) -
Contributions to discontinued operations (74) - (255) (329) -
Debt issue costs and other (5,779) (3,966) (34,755) (40,534) (11,998)
------ ------ ------- ------- -------
Net cash provided by (used in) financing
activities of continuing operations (110,004) (46,898) 54,153 (55,851) (101,712)
Net cash provided by (used in) financing
activities of discontinued operations 74 (232) 255 329 (10,570)
--- ---- --- --- -------
Net cash provided by (used in) financing
activities (109,930) (47,130) 54,408 (55,522) (112,282)
Net increase (decrease) in cash and cash
equivalents (72,162) (28,706) 72,574 412 (28,382)
Cash and cash equivalents of continuing
operations at beginning of period 112,945 50,619 40,371 40,371 41,204
Cash and cash equivalents of discontinued
operations at beginning of period - 1,478 - - 10,569
--- ----- --- --- ------
Cash and cash equivalents at beginning of
period 112,945 52,097 40,371 40,371 51,773
Cash and cash equivalents at end of period 40,783 23,391 112,945 40,783 23,391
Less: cash and cash equivalents of
discontinued operations at end of period - 2,000 - - 2,000
--- ----- --- --- -----
Cash and cash equivalents of continuing
operations at end of period $40,783 $21,391 $112,945 $40,783 $21,391
Supplemental cash flow information:
Cash paid during the period for interest $15,029 $29,490 $19,851 $34,880 $42,671
Non-cash financing activities:
Issuance of 2022 Senior Notes in exchange
for 2018 Senior Notes $ - $ - $240,638 $240,638 $ -
Natural Resource Partners L.P.
Financial Tables
Consolidated Balance Sheets
(In thousands, except unit data)
June 30, December 31,
2017 2016
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $40,783 $40,371
Accounts receivable, net 53,997 43,202
Accounts receivable-
affiliates, net 292 6,658
Inventory 7,841 6,893
Prepaid expenses and other 3,192 6,137
Current assets of
discontinued operations 991 991
Total current assets 107,096 104,252
Land 25,272 25,252
Plant and equipment, net 48,822 49,443
Mineral rights, net 895,642 908,192
Intangible assets, net 51,226 3,236
Intangible assets, net-
affiliate - 49,811
Equity in unconsolidated
investment 248,919 255,901
Long-term contracts
receivable 41,638 -
Long-term contracts
receivable-affiliate - 43,785
Other assets 9,172 3,791
Other assets-affiliate 1,265 1,018
----- -----
Total assets $1,429,052 $1,444,681
========== ==========
LIABILITIES AND CAPITAL
Current liabilities:
Accounts payable $5,257 $6,234
Accounts payable-affiliates 942 940
Accrued liabilities 37,213 41,587
Current portion of long-
term debt, net 173,901 138,903
Current liabilities of
discontinued operations 98 353
--- ---
Total current liabilities 217,411 188,017
Deferred revenue 110,885 44,931
Deferred revenue-affiliates - 71,632
Long-term debt, net 700,252 987,400
Warrant liabilities 37,457 -
Other non-current
liabilities 2,699 4,565
----- -----
Total liabilities 1,068,704 1,296,545
Commitments and contingencies
Convertible Preferred Units
(251,250 units issued and
outstanding at $1,000 par
value per unit; liquidation
preference of $1,500 per
unit) 160,377 -
Partners' capital:
Common unitholders' interest
(12,232,006 units issued
and outstanding) 204,230 152,309
General partner's interest 1,946 887
Accumulated other
comprehensive loss (2,811) (1,666)
Total partners' capital 203,365 151,530
Non-controlling interest (3,394) (3,394)
------ ------
Total capital 199,971 148,136
------- -------
Total liabilities and
capital $1,429,052 $1,444,681
========== ==========
The table below presents NRP's business results by segment for the six months ended June 30, 2017 and June 30, 2016:
Operating Business Segments
Coal Construction Corporate
Royalty Aggregates and
and Other Financing
--------- ---------
Soda Ash Total
-------- -----
($ In thousands)
Six Months Ended June
30, 2017
Revenues and other
income $100,764 $18,683 $60,776 $ - $180,223
Gains on asset sales 3,213 - 192 - 3,405
----- --- --- --- -----
Total revenues and
other income 103,977 18,683 60,968 - 183,628
Asset impairments 1,778 - - - 1,778
Net income (loss) from
continuing operations 77,178 18,683 1,097 (30,170) 66,788
Adjusted EBITDA (1) 91,304 24,500 8,219 (9,999) 114,024
Net cash provided by
(used in) operating
activities of
continuing operations 76,469 22,112 9,522 (52,509) 55,594
Net cash provided by
(used in) investing
activities of
continuing operations 2,894 2,388 (4,613) - 669
Net cash provided by
(used in) financing
activities of
continuing operations 33 - (1,096) (54,788) (55,851)
Distributable Cash Flow
(1) 79,363 24,500 5,523 (52,509) 56,877
Six Months Ended June
30, 2016
Revenues and other
income $116,906 $19,989 $56,324 $ - $193,219
Gains on asset sales 20,845 - 9 - 20,854
------ --- --- --- ------
Total revenues and
other income 137,751 19,989 56,333 - 214,073
Asset impairments 1,984 - - - 1,984
Net income (loss) from
continuing operations 105,552 19,989 2,402 (52,959) 74,984
Adjusted EBITDA (1) 121,962 22,050 9,654 (8,185) 145,481
Net cash provided by
(used in) operating
activities of
continuing operations 56,375 22,050 12,323 (52,102) 38,646
Net cash provided by
(used in) investing
activities of
continuing operations 47,143 - (3,890) - 43,253
Net cash used in
financing activities
of continuing
operations - (7,232) (1,593) (92,887) (101,712)
Distributable Cash Flow
(1) 103,523 22,050 9,018 (52,102) 82,489
(1) See "Non-GAAP Financial Measures"
and reconciliation tables at the
end of this release.
Natural Resource Partners L.P.
Financial Tables
Operating Statistics - Coal Royalty and Other
(in thousands except per ton data)
(Unaudited)
Three Months Ended Six Months Ended
----------------
June 30, March 31, June 30,
---------
2017 2016 2017 2017 2016
---- ---- ---- ---- ----
Coal production (tons)
Appalachia
Northern (1) 247 (138) 1,206 1,454 1,292
Central 3,897 3,470 3,699 7,597 6,698
Southern 690 773 562 1,253 1,518
--- --- --- ----- -----
Total Appalachia 4,834 4,105 5,467 10,304 9,508
Illinois Basin 734 1,909 2,017 2,751 3,637
Northern Powder River Basin 910 442 950 1,859 1,416
----- -----
Total coal production 6,478 6,456 8,434 14,914 14,561
----- ----- ----- ------ ------
Coal royalty revenue per ton
Appalachia
Northern (1) $3.78 $2.08 $0.50 $1.06 $1.27
Central 5.05 3.13 5.46 5.25 3.19
Southern 5.69 3.36 6.46 6.03 3.16
Illinois Basin 4.06 3.76 3.30 3.50 3.54
Northern Powder River Basin 2.62 3.05 2.63 2.63 2.82
Coal royalty revenues
Appalachia
Northern (1) $933 $463 $607 $1,540 $1,635
Central 19,691 10,864 20,184 39,875 21,337
Southern 3,927 2,598 3,632 7,559 4,800
----- ----- ----- ----- -----
Total Appalachia 24,551 13,925 24,423 48,974 27,772
Illinois Basin 2,978 7,181 6,646 9,624 12,867
Northern Powder River Basin 2,384 1,348 2,498 4,882 4,000
----- ----- -----
Total coal royalty revenue $29,913 $22,454 $33,567 $63,480 $44,639
------- ------- ------- ------- -------
Other revenues
Minimums recognized as revenue $7,547 $43,527 $5,196 $12,743 $50,492
Transportation and processing fees 5,520 5,302 4,639 10,159 9,536
Property tax revenue 1,100 3,027 2,698 3,798 6,332
Wheelage 1,025 465 1,267 2,292 878
Coal override revenue 1,885 657 824 2,709 867
Hard mineral royalty revenues 1,452 603 1,244 2,696 1,494
Oil and gas royalty revenues 924 1,091 1,491 2,415 1,464
Other 260 361 212 472 1,204
--- --- --- --- -----
Total other revenues $19,713 $55,033 $17,571 $37,284 $72,267
------- ------- ------- ------- -------
Coal royalty and other income 49,626 77,487 51,138 100,764 116,906
Gain (loss) on coal royalty and other
segment asset sales 3,184 (1,080) 29 3,213 20,845
----- ------ ----- ------
Total coal royalty and other segment
revenues and other income $52,810 $76,407 $51,167 $103,977 $137,751
======= ======= ======= ======== ========
(1) During the three months ended
June 30, 2016, Northern
Appalachia was impacted by a
prior period adjustment of 0.4
million tons and less than
$0.1 million in royalty
revenue related to the Hibbs
Run mine that temporarily
ceased production during 2016.
Absent this adjustment,
production in the Northern
Appalachia region was 0.2
million tons with revenue of
$0.4 million. Coal royalty
revenue per ton removes the
impact of the Hibbs Run prior
period adjustment.
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Six Months Ended
June 30,
2017 2016
---- ----
(In thousands)
Net income $66,714 $69,873
Less: income attributable to preferred
unitholders (10,038) -
------- ---
Net income attributable to common
unitholders and general partner $56,676 $69,873
Plus: Recapitalization transaction
expenses 21,602 -
Plus: Asset impairments 1,778 1,984
Less: Non-cash revenue associated
with lease modifications and
forfeitures (1,262) (36,788)
Less: Fair value adjustments for
warrant liabilities (40,529) -
Less: Gains on asset sales (3,405) (20,854)
Adjusted net income attributable to
common unitholders and general
partner $34,860 - $14,215
======= =======
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Distributable Cash Flow
(In thousands)
Coal Construction Corporate
Royalty Aggregates and
and Other Financing
--------- ---------
Soda Ash Total
-------- -----
(Unaudited)
Three Months Ended June 30, 2017
Net cash provided by (used in)
operating activities of continuing
operations $38,537 $9,862 $5,476 $(18,770) $35,105
Add: return of equity from
unconsolidated investment - 2,388 - - 2,388
Add: proceeds from sale of PP&E - - 363 - 363
Add: proceeds from sale of mineral
rights 1,292 - - - 1,292
Add: return on long-term contract
receivables (including affiliate) 1,597 - - - 1,597
Less: maintenance capital
expenditures - - (2,415) - (2,415)
Distributable cash flow $41,426 $12,250 $3,424 $(18,770) $38,330
------- ------- ------ -------- -------
Three Months Ended June 30, 2016
Net cash provided by (used in)
operating activities of continuing
operations $34,814 $9,800 $6,210 $(34,866) $15,958
Add: proceeds from sale of PP&E 819 - 21 - 840
Add: proceeds from sale of mineral
rights 1,499 - - - 1,499
Add: return on long-term contract
receivables-affiliate 1,871 - - - 1,871
Less: maintenance capital
expenditures - - (2,079) - (2,079)
--- --- ------ ---
Distributable cash flow $39,003 $9,800 $4,152 $(34,866) $18,089
======= ====== ====== ======== =======
Three Months Ended March 31, 2017
Net cash provided by (used in)
operating activities of continuing
operations $37,932 $12,250 $4,046 $(33,739) $20,489
Add: proceeds from sale of PP&E - - 22 - 22
Add: proceeds from sale of mineral
rights (409) - - - (409)
Add: return on long-term contract
receivables-affiliate 414 - - - 414
Less: maintenance capital
expenditures - - (1,969) - (1,969)
Distributable cash flow $37,937 $12,250 $2,099 $(33,739) $18,547
------- ------- ------ -------- -------
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Distributable Cash Flow
(In thousands)
Coal Construction Corporate
Royalty and Aggregates and
Other Financing
----- ---------
Soda Ash Total
-------- -----
(Unaudited)
Six Months Ended June 30, 2017
Net cash provided by (used in)
operating activities of continuing
operations $76,469 $22,112 $9,522 $(52,509) $55,594
Add: return of equity from
unconsolidated investment - 2,388 - - 2,388
Add: proceeds from sale of PP&E - - 385 - 385
Add: proceeds from sale of mineral
rights 883 - - - 883
Add: return on long-term contract
receivables (including affiliate) 2,011 - - - 2,011
Less: maintenance capital
expenditures - - (4,384) - (4,384)
Distributable cash flow $79,363 $24,500 $5,523 $(52,509) $56,877
Six Months Ended June 30, 2016
Net cash provided by (used in)
operating activities of continuing
operations $56,375 $22,050 $12,323 $(52,102) $38,646
Add: proceeds from sale of PP&E 819 - 24 - 843
Add: proceeds from sale of mineral
rights 44,149 - - - 44,149
Add: return on long-term contract
receivables-affiliate 2,180 - - - 2,180
Less: maintenance capital
expenditures - - (3,329) - (3,329)
Distributable cash flow $103,523 $22,050 $9,018 $(52,102) $82,489
-------- ------- ------ -------- -------
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Adjusted EBITDA
(In thousands)
Coal Construction Corporate
Royalty and Aggregates and
Other Financing
----- ---------
Soda Ash Total
-------- -----
(Unaudited)
Three Months Ended June 30, 2017
Net income (loss) from continuing
operations $42,084 $8,389 $2,636 $(3,292) $49,817
Less: equity earnings from
unconsolidated investment - (8,389) - - (8,389)
Less: fair value adjustments for
warrant liabilities - - - (23,960) (23,960)
Add: distributions from
unconsolidated investment - 12,250 - - 12,250
Add: interest expense - - 178 20,199 20,377
Add: debt modification expense - - - 132 132
Add: loss on extinguishment of debt - - - 4,107 4,107
Add: depreciation, depletion and
amortization 5,375 - 3,030 - 8,405
Add: asset impairments - - - - -
--- --- --- ---
Adjusted EBITDA $47,459 $12,250 $5,844 $(2,814) $62,739
======= ======= ====== ======= =======
Three Months Ended June 30, 2016
Net income (loss) from continuing
operations $61,153 $10,188 $3,439 $(26,147) $48,633
Less: equity earnings from
unconsolidated investment - (10,188) - - (10,188)
Add: distributions from
unconsolidated investment - 9,800 - - 9,800
Add: interest expense - - - 22,115 22,115
Add: depreciation, depletion and
amortization 7,486 - 3,690 - 11,176
Add: asset impairments 91 - - - 91
--- --- --- ---
Adjusted EBITDA $68,730 $9,800 $7,129 $(4,032) $81,627
======= ====== ====== ======= =======
Three Months Ended March 31, 2017
Net income (loss) from continuing
operations $35,094 $10,294 $(1,539) $(26,878) $16,971
Less: equity earnings from
unconsolidated investment - (10,294) - - (10,294)
Less: fair value adjustments for
warrant liabilities - - - (16,569) (16,569)
Add: distributions from
unconsolidated investment - 12,250 - - 12,250
Add: interest expense - - 395 22,746 23,141
Add: debt modification expense - - - 7,807 7,807
Add: warrant issuance expense - - - 5,709 5,709
Add: depreciation, depletion and
amortization 6,973 - 3,519 - 10,492
Add: asset impairments 1,778 - - - 1,778
----- --- --- ---
Adjusted EBITDA $43,845 $12,250 $2,375 $(7,185) $51,285
======= ======= ====== ======= =======
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Adjusted EBITDA
(In thousands)
Coal Construction Corporate
Royalty and Aggregates and
Other Financing
----- ---------
Soda Ash Total
-------- -----
(Unaudited)
Six Months Ended June 30, 2017
Net income (loss) from continuing
operations $77,178 $18,683 $1,097 $(30,170) $66,788
Less: equity earnings from
unconsolidated investment - (18,683) - - (18,683)
Less: fair value adjustments for
warrant liabilities - - - (40,529) (40,529)
Add: distributions from
unconsolidated investment - 24,500 - - 24,500
Add: interest expense - - 573 42,945 43,518
Add: debt modification expense - - - 7,939 7,939
Add: loss on extinguishment of debt - - - 4,107 4,107
Add: warrant issuance expense - - - 5,709 5,709
Add: depreciation, depletion and
amortization 12,348 - 6,549 - 18,897
Add: asset impairments 1,778 - - - 1,778
----- --- --- ---
Adjusted EBITDA $91,304 $24,500 $8,219 $(9,999) $114,024
======= ======= ====== ======= ========
Six Months Ended June 30, 2016
Net income (loss) from continuing
operations $105,552 $19,989 $2,402 $(52,959) $74,984
Less: equity earnings from
unconsolidated investment - (19,989) - - (19,989)
Add: distributions from
unconsolidated investment - 22,050 - - 22,050
Add: interest expense - - - 44,774 44,774
Add: depreciation, depletion and
amortization 14,426 - 7,252 - 21,678
Add: asset impairments 1,984 - - - 1,984
----- --- --- ---
Adjusted EBITDA $121,962 $22,050 $9,654 $(8,185) $145,481
======== ======= ====== ======= ========
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Adjusted Coal Royalty and Other Revenue
(In thousands)
Three Months Ended Six Months Ended
----------------
June 30, March 31, June 30,
---------
2017 2016 2017 2017 2016
---- ---- ---- ---- ----
(Unaudited)
Coal royalty and other
revenue $52,810 $76,407 $51,167 $103,977 $137,751
Less: Non-cash revenue
associated with lease
modifications and
terminations (972) (35,451) (290) (1,262) (36,788)
Less: (gain) loss on asset
sales (3,184) 1,080 (29) (3,213) (20,845)
------ ----- --- ------ -------
Adjusted coal royalty and
other revenue $48,654 $42,036 $50,848 99,502 80,118
Adjusted Coal Royalty and Other Operating Income
(In thousands)
Three Months Ended Six Months Ended
----------------
June 30, March 31, June 30,
---------
2017 2016 2017 2017 2016
---- ---- ---- ---- ----
(Unaudited)
Coal royalty and
other operating
income $42,084 $61,153 $35,094 $77,178 $105,552
Add: asset
impairments - 91 1,778 1,778 1,984
Less: Non-cash
revenue associated
with lease
modifications and
terminations (972) (35,451) (290) (1,262) (36,788)
Less: gains on
asset sales (3,184) 1,080 (29) (3,213) (20,845)
------ ----- --- ------ -------
Adjusted coal
royalty and other
operating income $37,928 $26,873 $36,553 74,481 49,903
Adjusted Revenue and Other Income
(In thousands)
Three Months Ended Six Months Ended
----------------
June 30, March 31, June 30,
---------
2017 2016 2017 2017 2016
---- ---- ---- ---- ----
(Unaudited)
Revenue and other
income $94,931 $118,246 88,697 $183,628 $214,073
Less: Non-cash
revenue associated
with lease
modifications and
terminations (972) (35,451) (290) (1,262) (36,788)
Less: gains on
asset sales (3,361) 1,071 (44) (3,405) (20,854)
------ ----- --- ------ -------
Adjusted revenue
and other income $90,598 $83,866 $88,363 $178,961 $156,431
Adjusted Corporate & Financing Costs
(In thousands)
Three Months Ended Six Months Ended
----------------
June 30, March 31, June 30,
---------
2017 2016 2017 2017 2016
---- ---- ---- ---- ----
(Unaudited)
Net income (loss) from
continuing operations $(3,292) $(26,147) $(26,878) (30,170) $(52,959)
Add: debt modification
expense 132 - 7,807 7,939
Add: loss on
extinguishment of debt 4,107 - 4,107
Add: warrant issuance
expense - - 5,709 5,709
Add: performance based
incentive compensation
expense - - 3,847 3,847
Less: fair value
adjustments for
warrant liabilities (23,960) - (16,569) (40,529)
------- --- -------
Adjusted corporate and
financing costs $(23,013) $(26,147) $(26,084) $(49,097) $(52,959)
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Consolidated Debt-to-Adjusted EBITDA Ratios
(In thousands, except ratios)
Last Twelve Months Ended June 30, 2017
Net income from continuing operations $87,018
Less: equity earnings from unconsolidated
investment (38,755)
Less: fair value adjustments for warrant
liabilities (40,529)
Add: distributions from unconsolidated
investment 49,000
Add: interest expense 89,314
Add: debt modification expense 7,939
Add: warrant issuance expense 5,709
Add: loss on early extinguishment of debt 4,107
Add: depreciation, depletion and
amortization 43,491
Add: asset impairments 16,720
Adjusted EBITDA $224,014
Debt at June 30, 2017, at face value $894,871
Debt-to-Adjusted EBITDA ratio 4.0
Twelve Months Ended December 31, 2016
Net income from continuing operations $95,214
Less: equity earnings from unconsolidated
investment (40,061)
Add: distributions from unconsolidated
investment 46,550
Add: interest expense 90,570
Add: depreciation, depletion and
amortization 46,272
Add: asset impairments 16,926
Adjusted EBITDA $255,471
Debt at December 31, 2016, at face value $1,138,932
Debt-to-Adjusted EBITDA ratio 4.5
Twelve Months Ended December 31, 2015
Net loss from continuing operations $(260,171)
Less: equity earnings from unconsolidated
investment (49,918)
Less: gain on reserve swap (9,290)
Add: distributions from unconsolidated
investment 46,795
Add: interest expense 89,762
Add: depreciation, depletion and
amortization 60,916
Add: asset impairments 384,545
Adjusted EBITDA $262,639
Debt at December 31, 2015, at face value $1,387,073
Debt-to-Adjusted EBITDA ratio 5.3
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SOURCE Natural Resource Partners L.P.
