Natural Resource Partners L.P. Reports Second Quarter 2018 Results

HOUSTON--()--Natural Resource Partners L.P. (NYSE:NRP) today reported second quarter of 2018 results as follows:

         
Three Months Ended Six Months Ended
June 30,     March 31, June 30,

(In thousands, except per unit data)

2018     2017 2018 2018     2017
Net income from continuing operations (1) $ 39,123 $ 25,857 $ 26,088 $ 65,211 $ 31,968
Adjusted EBITDA (2) 60,272 62,670 54,886 115,158 113,938
 
Diluted net income per common unit $ 1.75 $ 1.13 $ 1.15 $ 2.95 $ 1.64
 
Net cash from operating activities of continuing operations $ 54,379 $ 35,105 $ 20,211 $ 74,590 $ 55,594
Net cash from investing activities of continuing operations (1,660 ) 2,737 (173 ) (1,833 ) 669
Net cash from financing activities of continuing operations (20,896 ) (110,004 ) (28,713 ) (49,609 ) (55,851 )
Distributable cash flow (2) 52,841 38,330 20,845 73,686 56,877
Free cash flow (2) 52,029 35,187 19,302 71,331 53,899

___________________________________

   

(1)

 

Net income from continuing operations during the three and six months ended June 30, 2018 included income of $12.7 from a royalty dispute settlement in our Soda Ash business segment.

(2)

See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 

"Strong metallurgical and thermal coal export demand and stable domestic coal prices provided the foundation for another solid quarter of operating results. We remain steadfast on maximizing free cash flow and strengthening our balance sheet by reducing debt and improving our liquidity," said NRP President and Chief Operating Officer, Craig Nunez.

NRP improved its liquidity since the end of the first quarter of 2018 by $31.8 million to $108.0 million at June 30, 2018, consisting of $53.0 million of cash and $55.0 million of borrowing capacity available under its credit facility. NRP's consolidated Debt-to-Adjusted EBITDA ratio at June 30, 2018 was 3.5x.

With respect to the second quarter of 2018, NRP declared a cash distribution of $0.45 per common unit and a cash distribution of $7.5 million on NRP’s preferred units. NRP's distribution coverage ratio over the last twelve months was 6.6x before taking into account the $30 million annual distribution on NRP's preferred units, and 5.3x after taking into account this preferred unit distribution.

 

Segment Information

 

Coal Royalty and Other

       
Three Months Ended Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Net income $ 40,650 $ 42,084 $ 40,728 $ 81,378 $ 77,178
Adjusted EBITDA (1) 45,157 47,459 46,070 91,227 91,304
 
Net cash from operating activities of continuing operations $ 51,725 $ 38,537 $ 38,793 $ 90,518 $ 76,469
Net cash from investing activities of continuing operations 699 2,888 1,143 1,842 2,894
Net cash from financing activities of continuing operations 17 33
Distributable cash flow (1) 52,424 41,426 39,936 92,360 79,363
Free cash flow (1) 52,254 40,134 39,280 91,534 78,480

___________________________________

(1) See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 

Net income and Adjusted EBITDA for the three and six months ended June 30, 2018 remained steady compared to the prior year periods and the prior quarter. These consistent results are reflective of the strong export demand and steady domestic markets for metallurgical and thermal coal over the last twelve months. Approximately 67% of NRP's coal royalty revenues and approximately 54% of its coal royalty production was derived from metallurgical coal during the six months ended June 30, 2018.

Net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased during the three and six months ended June 30, 2018 as compared to the prior year periods and the prior quarter primarily as a result of the timing of cash receipts from both coal royalty production and minimums and property tax reimbursements.

       

Soda Ash

 
Three Months Ended Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Net income $ 16,529 $ 8,389 $ 9,621 $ 26,150 $ 18,683
Adjusted EBITDA (1) 12,250 12,250 12,250 24,500 24,500
 
Net cash from operating activities of continuing operations $ 12,250 $ 9,862 $ 10,153 $ 22,403 $ 22,112
Net cash from investing activities of continuing operations 2,388 2,097 2,097 2,388
Distributable cash flow (1) 12,250 12,250 12,250 24,500 24,500
Free cash flow (1) 12,250 12,250 12,250 24,500 24,500

___________________________________

(1) See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 

Net income increased during the three and six months ended June 30, 2018 as compared to the prior year periods and the prior quarter primarily as a result of Ciner Wyoming's litigation settlement of its royalty dispute that resulted in $12.7 million of net income in the second quarter of 2018. This increase was partially offset by unexpected repairs during a scheduled outage in May 2018 that resulted in lower production and sales compared to prior year periods and the prior quarter. This repair was successfully completed and operations resumed prior to the end of the quarter.

       

Construction Aggregates

 
Three Months Ended Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Net Income (loss) $ 2,941 $ 2,636 $ (1,975 ) $ 966 $ 1,097
Adjusted EBITDA (1) 6,128 5,844 902 7,030 8,219
 
Net cash from operating activities of continuing operations $ 486 $ 5,476 $ 2,797 $ 3,283 $ 9,522
Net cash from investing activities of continuing operations (2,359 ) (2,539 ) (3,413 ) (5,772 ) (4,613 )
Net cash from financing activities of continuing operations (466 ) (1,000 ) (49 ) (515 ) (1,096 )
Distributable cash flow (1) (1,751 ) 3,424 191 (1,560 ) 5,523
Free cash flow (1) (2,393 ) 1,573 (696 ) (3,089 ) 3,428

___________________________________

(1) See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 

The Construction Aggregates segment continues to perform consistently compared to prior year periods as demonstrated by the steady net income and Adjusted EBITDA. Net income and Adjusted EBITDA for the three months ended June 30, 2018 increased compared to the prior quarter as a result of the seasonality of the construction aggregates business. Production and sales are typically lower in the first quarter of each year due to the winter weather.

Net cash from operating activities of continuing operations, distributable cash flow and free cash flow decreased compared to the prior year comparable periods and the prior quarter primarily due to the timing of certain operating payments. We expect strong cash collections in the second half of 2018.

       

Corporate and Finance

 
Three Months Ended Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Net loss $ (20,997 ) $ (27,252 ) $ (22,286 ) $ (43,283 ) $ (64,990 )
Adjusted EBITDA (1) (3,263 ) (2,883 ) (4,336 ) (7,599 ) (10,085 )
 
Net cash from operating activities of continuing operations $ (10,082 ) $ (18,770 ) $ (31,532 ) $ (41,614 ) $ (52,509 )
Net cash from financing activities of continuing operations (20,430 ) (109,021 ) (28,664 ) (49,094 ) (54,788 )
Distributable cash flow (1) (10,082 ) (18,770 ) (31,532 ) (41,614 ) (52,509 )
Free cash flow (1) (10,082 ) (18,770 ) (31,532 ) (41,614 ) (52,509 )

___________________________________

(1) See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 

Net loss decreased $6.3 million during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 primarily due to a $4.1 million loss on the early extinguishment of debt in 2017, and $2.4 million lower net interest expense due to lower debt. Net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased $8.7 million during the period primarily as a result of interest payments made in 2017 on NRP's 9.125% Senior Notes that were fully repaid in the fourth quarter of 2017.

Net loss decreased $1.3 million during the three months ended June 30, 2018 as compared to the three months ended March 31, 2018 primarily due to timing of certain general and administrative costs and lower interest expense. Net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased $21.5 million during the period primarily due to the timing of interest payments.

Net loss decreased $21.7 million during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 primarily due to $12.0 million of debt modification and early extinguishment costs in connection with the 2017 recapitalization transaction and $7.2 million of lower net interest expense due to lower debt. Net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased $10.9 million during the period primarily as a result of lower cash paid for interest due to lower debt and lower general and administrative costs due to performance awards paid in 2017 in connection with the recapitalization transaction.

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 55454889. 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 55454889 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 a construction aggregates company and an equity investment in Ciner Wyoming, a trona/soda ash operation.

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.

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, litigation risk, 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.

Non-GAAP Financial Measures

“Distributable cash flow” is a non-GAAP financial measure that we define as net cash provided by operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from sales of assets, including those included in discontinued operations, and return of long-term contract receivables (including affiliate); less maintenance capital expenditures and distributions to non-controlling interest. Distributable cash flow 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. Distributable cash flow may not be calculated the same for us as for other companies. In addition, Distributable cash flow presented below is not calculated or presented on the same basis as Distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. Distributable cash flow 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.

“Free cash flow” is a non-GAAP financial measure that we define as net cash provided by operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables (including affiliate); less maintenance and expansion capital expenditures, cash flow used in mitigation payments and acquisition costs classified as financing activities and distributions to non-controlling interest. Free cash flow is calculated before mandatory debt repayments. Free cash flow 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. Free cash flow may not be calculated the same for us as for other companies. Free cash flow 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 EBITDA" is a non-GAAP financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment and net income attributable to non-controlling interest; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, 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 or Consolidated EBITDDA as defined in Opco's debt agreements. 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.

“Adjusted net income attributable to NRP” is a non-GAAP financial measure that we define as Net income attributable to NRP plus restructuring transaction expenses that include debt modification expense, loss on extinguishment of debt and restructuring-related incentive compensation expense, asset impairments and income (loss) from discontinued operations; less gain on sale of assets. 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 are non-cash charges. Excluding these from net income allows us to better compare results from ongoing operations period-over-period.

"Return on capital employed" is a non-GAAP financial measure that we define as Net income from continuing operations plus interest expense divided by the sum of equity and debt. Return on capital employed 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. Return on capital employed is a supplemental performance measure used by our management team that measures our profitability and efficiency with which our capital is employed. The measure provides an indication of operating performance before the impact of leverage in the capital structure.

-Financial Tables, Reconciliation of Non-GAAP Measures and Recap of Metrics Follow-

 

Natural Resource Partners L.P.

Financial Tables

 
Consolidated Statements of Comprehensive Income
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30,     March 31, June 30,

(In thousands, except per unit data)

2018     2017 2018 2018     2017
Revenues and other income
Coal royalty and other $ 48,711 $ 32,768 $ 45,973 $ 94,684 $ 67,762
Coal royalty and other—affiliates 188 11,338 237 425 22,843
Transportation and processing services 5,002 4,146 5,383 10,385 4,146
Transportation and processing services—affiliates 1,374 6,013
Construction aggregates 34,233 27,363 26,424 60,657 52,846
Road construction and asphalt paving services 6,176 6,192 728 6,904 7,930
Equity in earnings of Ciner Wyoming 16,529 8,389 9,621 26,150 18,683
Gain on asset sales, net 210   3,361   660   870   3,405  
Total revenues and other income $ 111,049 $ 94,931 $ 89,026 $ 200,075 $ 183,628
Operating expenses

Operating and maintenance expenses

$ 38,301 $ 31,020 $ 29,968 $ 68,269 $ 60,648
Operating and maintenance expenses—affiliates 4,065 2,219 2,465 6,530 4,774
Depreciation, depletion and amortization 8,563 8,165 7,957 16,520 17,889
Amortization expense—affiliate 240 1,008
General and administrative 2,414 2,031 3,405 5,819 8,109
General and administrative—affiliates 849 852 931 1,780 1,976
Asset impairments     242   242   1,778  
Total operating expenses $ 54,192 $ 44,527 $ 44,968 $ 99,160 $ 96,182
 
Income from operations $ 56,857 $ 50,404 $ 44,058 $ 100,915 $ 87,446
Other income (expense)
Interest expense, net $ (17,734 ) $ (20,308 ) $ (17,970 ) $ (35,704 ) $ (43,432 )
Debt modification expense (132 ) (7,939 )
Loss on extinguishment of debt   (4,107 )     (4,107 )

Other expense, net

$ (17,734 ) $ (24,547 ) $ (17,970 ) $ (35,704 ) $ (55,478 )
 
Net income from continuing operations $ 39,123 $ 25,857 $ 26,088 $ 65,211 $ 31,968
Income (loss) from discontinued operations (34 ) 133   (14 ) (48 ) (74 )
Net income $ 39,089 $ 25,990 $ 26,074 $ 65,163 $ 31,894
Less: net income attributable to non-controlling interest (869 )     (869 )  
Net income attributable to NRP $ 38,220 $ 25,990 $ 26,074 $ 64,294 $ 31,894
Less: income attributable to preferred unitholders (7,500 ) (7,538 ) (7,500 ) (15,000 ) (10,038 )
Net income attributable to common unitholders and general partner $ 30,720 $ 18,452 $ 18,574 $ 49,294 $ 21,856
 
Net income attributable to common unitholders $ 30,105 $ 18,015 $ 18,203 $ 48,308 $ 21,419
Net income attributable to the general partner $ 615 $ 437 $ 371 $ 986 $ 437
 
Income from continuing operations per common unit
Basic $ 2.46 $ 1.46 $ 1.49 $ 3.95 $ 1.76
Diluted $ 1.75 $ 1.13 $ 1.16 $ 2.96 $ 1.64
Net income per common unit
Basic $ 2.46 $ 1.47 $ 1.49 $ 3.95 $ 1.75
Diluted $ 1.75 $ 1.13 $ 1.15 $ 2.95 $ 1.64
 
Net income $ 39,089 $ 25,990 $ 26,074 $ 65,163 $ 31,894
Add: comprehensive loss from unconsolidated investment and other (434 ) (13 ) (1,125 ) (1,559 ) (1,145 )
Comprehensive income $ 38,655 $ 25,977 $ 24,949 $ 63,604 $ 30,749
Less: comprehensive income attributable to non-controlling interest (869 )     (869 )  
Comprehensive income attributable to NRP $ 37,786   $ 25,977   $ 24,949   $ 62,735   $ 30,749  
 

Natural Resource Partners L.P.

Financial Tables

 
Consolidated Statements of Cash Flows
(Unaudited)
 
    Three Months Ended     Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Cash flows from operating activities
Net income $ 39,089 $ 25,990 $ 26,074 $ 65,163 $ 31,894
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Depreciation, depletion and amortization 8,563 8,165 7,957 16,520 17,889
Amortization expense—affiliates 240 1,008
Distributions from unconsolidated investment 12,250 9,862 10,153 22,403 22,112
Equity earnings from unconsolidated investment (16,529 ) (8,389 ) (9,621 ) (26,150 ) (18,683 )
Gain on asset sales, net (210 ) (3,361 ) (660 ) (870 ) (3,405 )
Debt modification expense 132 7,939
Loss on extinguishment of debt 4,107 4,107
Income (loss) from discontinued operations 34 (133 ) 14 48 74
Asset impairments 242 242 1,778
Unit-based compensation expense 281 (254 ) 792 1,073 3
Amortization of debt issuance costs and other 1,202 2,371 771 1,973 3,344
Other—affiliates (1,308 ) (190 ) (190 ) (1,173 )
Change in operating assets and liabilities:
Accounts receivable (3,737 ) (3,263 ) (5,189 ) (8,926 ) (4,530 )
Accounts receivable—affiliates (46 ) 432 67 21 236
Accounts payable 1,020 (940 ) (845 ) 175 46
Accounts payable—affiliates (641 ) (254 ) 1,531 890 2
Accrued liabilities 1,788 646 (5,169 ) (3,381 ) (7,302 )
Accrued liabilities—affiliates (515 ) (515 )
Accrued interest 8,902 3,676 (9,777 ) (875 ) 3,405
Deferred revenue 3,691 3,412 2,346 6,037 4,489
Deferred revenue—affiliates (7,269 ) (10,166 )
Other items, net (1,278 ) 1,243   2,230   952   2,527  
Net cash provided by operating activities of continuing operations $ 54,379 $ 35,105 $ 20,211 $ 74,590 $ 55,594
Net cash used in operating activities of discontinued operations (35 ) (247 ) (412 ) (447 ) (531 )
Net cash provided by operating activities $ 54,344 $ 34,858 $ 19,799 $ 74,143 $ 55,063
Cash flows from investing activities
Distributions from unconsolidated investment in excess of cumulative earnings $ $ 2,388 $ 2,097 $ 2,097 $ 2,388
Proceeds from sale of assets 224 1,655 687 911 1,268
Return of long-term contract receivables 529 1,207 487 1,016 1,207
Return of long-term contract receivables—affiliate 390 804
Acquisition of plant and equipment and other (2,413 ) (2,903 ) (3,444 ) (5,857 ) (4,998 )
Net cash provided by (used in) investing activities of continuing operations $ (1,660 ) $ 2,737 $ (173 ) $ (1,833 ) $ 669
Net cash provided by investing activities of discontinued operations   173       202  
Net cash provided by (used in) investing activities $ (1,660 ) $ 2,910 $ (173 ) $ (1,833 ) $ 871
 
Consolidated Statements of Cash Flows—Continued
(Unaudited)
       
Three Months Ended Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Cash flows from financing activities
Proceeds from issuance of preferred units and warrants, net $ $ $ $ $ 242,100
Proceeds from issuance of 2022 Senior Notes, net 103,688
Borrowings on credit facility 35,000 35,000
Repayments of loans (7,272 ) (97,282 ) (40,800 ) (48,072 ) (348,292 )
Redemption of preferred units paid-in-kind (8,844 ) (8,844 )

Distributions to common unitholders and general partner

(5,623 ) (5,619 ) (5,617 ) (11,240 ) (11,234 )
Distributions to preferred unitholders (7,500 ) (1,250 ) (7,765 ) (15,265 ) (1,250 )
Contributions to discontinued operations (35 ) (74 ) (412 ) (447 ) (329 )
Debt issuance costs and other (466 ) (5,779 )   (275 ) (741 ) (40,534 )
Net cash used in financing activities of continuing operations $ (20,896 ) $ (110,004 ) $ (28,713 ) $ (49,609 ) $ (55,851 )
Net cash provided by financing activities of discontinued operations 35   74     412   447   329  
Net cash used in financing activities $ (20,861 ) $ (109,930 ) $ (28,301 ) $ (49,162 ) $ (55,522 )
 
Net increase (decrease) in cash and cash equivalents $ 31,823 $ (72,162 ) $ (8,675 ) $ 23,148 $ 412
Cash and cash equivalents at beginning of period $ 21,152   $ 112,945   $ 29,827   29,827   40,371  
Cash and cash equivalents at end of period $ 52,975 $ 40,783 $ 21,152 $ 52,975 $ 40,783
 
Supplemental cash flow information:
Cash paid during the period for interest from continuing operations $ 7,132 $ 15,029 $ 26,023 $ 33,155 $ 34,880
Non-cash investing and financing activities:
Plant, equipment and mineral rights funded with accounts payable or accrued liabilities $ 870 $ $ 24 $ 894 $
Issuance of 2022 Senior Notes in exchange for 2018 Senior Notes $ $ $ $ $ 240,638
 

Natural Resource Partners L.P.

Financial Tables

 
Consolidated Balance Sheets
      June 30,       December 31,
2018 2017

(In thousands, except unit data)

(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 52,975 $ 29,827
Accounts receivable, net 59,312 47,026
Accounts receivable—affiliates 140 161
Inventory 8,048 7,553
Prepaid expenses and other 4,391 5,838
Current assets of discontinued operations 988   991  
Total current assets 125,854 91,396
Land 24,809 25,247
Plant and equipment, net 47,917 46,170
Mineral rights, net 873,716 883,885
Intangible assets, net 47,924 49,554
Equity in unconsolidated investment 245,524 245,433
Long-term contracts receivable 39,878 40,776
Other assets 6,184 6,547
Other assets—affiliate   156  
Total assets $ 1,411,806   $ 1,389,164  
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable $ 7,801 $ 6,957
Accounts payable—affiliates 1,453 562
Accrued liabilities 12,848 16,890
Accrued liabilities—affiliates 515
Accrued interest 14,609 15,484
Current portion of deferred revenue 2,732
Current portion of long-term debt, net 75,188 79,740
Current liabilities of discontinued operations   401  
Total current liabilities 114,631 120,549
Deferred revenue 17,136 100,605
Long-term debt, net 723,147 729,608
Other non-current liabilities 2,385 2,808
Other non-current liabilities—affiliate     346  
Total liabilities 857,299 953,916
Commitments and contingencies
Class A Convertible Preferred Units (250,000 and 258,844 units issued and outstanding at June 30, 2018 and December 31, 2017, respectively, at $1,000 par value per unit; liquidation preference of $1,500 per unit) 164,587 173,431
Partners’ capital:
Common unitholders’ interest (12,245,920 and 12,232,006 units issued and outstanding at June 30, 2018 and December 31, 2017, respectively) 326,125 199,851
General partner’s interest 4,427 1,857
Warrant holders' interest 66,816 66,816
Accumulated other comprehensive loss (4,872 ) (3,313 )
Total partners’ capital 392,496 265,211
Non-controlling interest (2,576 ) (3,394 )
Total capital 389,920   261,817  
Total liabilities and capital $ 1,411,806   $ 1,389,164  
   

Natural Resource Partners L.P.

Financial Tables


Consolidated Statement of Partners' Capital
(Unaudited)
Common Unitholders    

General
Partner

   

Warrant
Holders

   

Accumulated
Other
Comprehensive
Loss

   

Partners'
Capital
Excluding
Non-Controlling
Interest

   

Non-Controlling
Interest

   

Total
Capital

(In thousands)

Units     Amounts
Balance at December 31, 2017 12,232 $ 199,851 $ 1,857 $ 66,816 $ (3,313 ) $ 265,211 $ (3,394 ) $ 261,817
Cumulative effect of adoption of accounting standard 88,448 1,805 90,253 90,253
Net income (1) 63,008 1,286 64,294 869 65,163
Distributions to common unitholders and general partner (11,015 ) (225 ) (11,240 ) (11,240 )
Distributions to preferred unitholders (14,960 ) (305 ) (15,265 ) (15,265 )
Issuance of unit-based awards 14 410 410 410
Unit-based awards amortization and vesting 333 333 333
Comprehensive loss from unconsolidated investment and other   50   9     (1,559 ) (1,500 ) (51 ) (1,551 )
Balance at June 30, 2018 12,246   $ 326,125   $ 4,427   $ 66,816   $ (4,872 ) $ 392,496   $ (2,576 ) $ 389,920  

___________________________________

(1)   Net income includes $15.0 million attributable to Preferred Unitholders that accumulated during the period, of which $14.7 million is allocated to the common unitholders and $0.3 million is allocated to the general partner.
         

Natural Resource Partners L.P.

Financial Tables (Unaudited)

 

The tables below presents NRP's unaudited business results by segment for the three and six months ended June 30, 2018 and 2017 and the three months ended March 31, 2018:

 
Operating Business Segments

Coal
Royalty
and Other

       

Construction
Aggregates

 

Corporate
and
Financing

(In thousands)

Soda Ash Total
Three Months Ended June 30, 2018
Revenues and other income $ 53,901 $ 16,529 $ 40,409 $ $ 110,839
Gains on asset sales, net 168     42     210
Total revenues and other income $ 54,069 $ 16,529 $ 40,451 $ $ 111,049
Net income (loss) from continuing operations $ 40,650 $ 16,529 $ 2,941 $ (20,997 ) $ 39,123
Adjusted EBITDA (1) $ 45,157 $ 12,250 $ 6,128 $ (3,263 ) $ 60,272
Distributable cash flow (1) $ 52,424 $ 12,250 $ (1,751 ) $ (10,082 ) $ 52,841
Free cash flow (1) $ 52,254 $ 12,250 $ (2,393 ) $ (10,082 ) $ 52,029
 
Three Months Ended June 30, 2017
Revenues and other income $ 49,626 $ 8,389 $ 33,555 $ $ 91,570
Gains on asset sales, net 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 $ (27,252 ) $ 25,857
Adjusted EBITDA (1) $ 47,459 $ 12,250 $ 5,844 $ (2,883 ) $ 62,670
Distributable cash flow (1) $ 41,426 $ 12,250 $ 3,424 $ (18,770 ) $ 38,330
Free cash flow (1) $ 40,134 $ 12,250 $ 1,573 $ (18,770 ) $ 35,187
 
Three Months Ended March 31, 2018
Revenues and other income $ 51,593 $ 9,621 $ 27,152 $ $ 88,366
Gains on asset sales, net 651     9     660
Total revenues and other income $ 52,244 $ 9,621 $ 27,161 $ $ 89,026
Asset impairments $ 242 $ $ $ $ 242
Net income (loss) from continuing operations $ 40,728 $ 9,621 $ (1,975 ) $ (22,286 ) $ 26,088
Adjusted EBITDA (1) $ 46,070 $ 12,250 $ 902 $ (4,336 ) $ 54,886
Distributable cash flow (1) $ 39,936 $ 12,250 $ 191 $ (31,532 ) $ 20,845
Free cash flow (1) $ 39,280 $ 12,250 $ (696 ) $ (31,532 ) $ 19,302

___________________________________

(1) See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

         

Natural Resource Partners L.P.

Financial Tables (Unaudited)

 
Operating Business Segments

Coal
Royalty
and Other

       

Construction
Aggregates

 

Corporate
and
Financing

(In thousands)

Soda Ash Total
Six Months Ended June 30, 2018
Revenues and other income $ 105,494 $ 26,150 $ 67,561 $ $ 199,205
Gains on asset sales, net 819     51     870
Total revenues and other income $ 106,313 $ 26,150 $ 67,612 $ $ 200,075
Asset impairments $ 242 $ $ $ $ 242
Net income (loss) from continuing operations $ 81,378 $ 26,150 $ 966 $ (43,283 ) $ 65,211
Adjusted EBITDA (1) $ 91,227 $ 24,500 $ 7,030 $ (7,599 ) $ 115,158
Distributable cash flow (1) $ 92,360 $ 24,500 $ (1,560 ) $ (41,614 ) $ 73,686
Free cash flow (1) $ 91,534 $ 24,500 $ (3,089 ) $ (41,614 ) $ 71,331
 
Six Months Ended June 30, 2017
Revenues and other income $ 100,764 $ 18,683 $ 60,776 $ $ 180,223
Gains on asset sales, net 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 $ (64,990 ) $ 31,968
Adjusted EBITDA (1) $ 91,304 $ 24,500 $ 8,219 $ (10,085 ) $ 113,938
Distributable cash flow (1) $ 79,363 $ 24,500 $ 5,523 $ (52,509 ) $ 56,877
Free cash flow (1) $ 78,480 $ 24,500 $ 3,428 $ (52,509 ) $ 53,899

___________________________________

(1) See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 
Natural Resource Partners L.P.
Financial Tables (Unaudited)
 
Operating Statistics - Coal Royalty and Other
 
          Three Months Ended     Six Months Ended
June 30,     March 31, June 30,

(In thousands, except per ton data)

2018     2017 2018 2018     2017
Coal production (tons)
Appalachia
Northern 916 247 225 1,141 1,454
Central 4,163 3,897 3,545 7,709 7,597
Southern 396   690   546   942   1,253
Total Appalachia 5,475 4,834 4,316 9,792 10,304
Illinois Basin 739 734 743 1,482 2,751
Northern Powder River Basin 808   910   1,233   2,041   1,859
Total coal production 7,022   6,478   6,292   13,315   14,914
 
Coal royalty revenue per ton
Appalachia
Northern $ 3.52 $ 3.78 $ 4.73 $ 3.76 $ 1.06
Central 5.65 5.05 5.71 5.68 5.25
Southern 6.85 5.69 7.16 7.03 6.03
Illinois Basin 4.72 4.06 4.14 4.43 3.50
Northern Powder River Basin 2.25 2.62 2.24 2.24 2.63
Combined average coal royalty revenue per ton 4.95 4.62 4.93 4.94 4.26
 
Coal royalty revenues
Appalachia
Northern $ 3,230 $ 933 $ 1,066 $ 4,296 $ 1,540
Central 23,520 19,691 20,232 43,752 39,875
Southern 2,712   3,927   3,914   6,626   7,559
Total Appalachia 29,462 24,551 25,212 54,674 48,974
Illinois Basin 3,485 2,978 3,075 6,560 9,624
Northern Powder River Basin 1,815   2,384   2,765   4,580   4,882
Unadjusted coal royalty revenue 34,762 29,913 31,052 $ 65,814 $ 63,480
Coal royalty adjustment for minimum leases (3,355 )   (2,361 ) (5,716 )
Total coal royalty revenue $ 31,407   $ 29,913   $ 28,691   $ 60,098   $ 63,480
 
Other revenues
Production lease minimum revenue $ 102 $ 7,547 $ 425 $ 527 $ 12,743
Minimum lease straight line revenue 6,769 6,760 13,529
Property tax revenue 1,523 1,100 1,182 2,705 3,798
Wheelage 1,641 1,025 1,974 3,615 2,292
Coal overriding royalty revenue 3,702 1,885 2,872 6,574 2,709
Aggregates royalty revenue 1,572 1,452 1,091 2,663 2,696
Oil and gas royalty revenues 1,354 924 2,898 4,252 2,415
Other 829   260   317   1,146   472
Total other revenues 17,492   14,193   17,519   35,011   27,125
Coal royalty and other 48,899 44,106 46,210 95,109 90,605
Transportation and processing services 5,002 5,520 5,383 10,385 10,159
Gain on asset sales, net 168   3,184   651   819   3,213
Total coal royalty and other segment revenues and other income $ 54,069   $ 52,810   $ 52,244   $ 106,313   $ 103,977
 
 
Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

 
Distributable Cash Flow and Free Cash Flow
(Unaudited)
         

Coal

Royalty and

Other

       

Construction

Aggregates

   

Corporate

and

Financing

   

(In thousands)

Soda Ash Total
Three Months Ended June 30, 2018

Net cash provided by (used in) operating activities of

continuing operations

$ 51,725 $ 12,250 $ 486 $ (10,082 ) $ 54,379
Add: proceeds from the sale of assets 170 54 224
Add: return of long-term contract receivables 529 529
Less: maintenance capital expenditures     (2,291 )   (2,291 )
Distributable cash flow $ 52,424 $ 12,250 $ (1,751 ) $ (10,082 ) $ 52,841
Less: proceeds from the sale of assets (170 ) (54 ) (224 )
Less: expansion capital expenditures (122 ) (122 )

Less: mitigation payments and acquisition costs classified as

financing activities

    (466 )   (466 )
Free cash flow $ 52,254   $ 12,250   $ (2,393 ) $ (10,082 ) $ 52,029  
 
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: distributions from unconsolidated investment in excess

of cumulative earnings

2,388 2,388
Add: proceeds from the sale of assets 1,292 363 1,655

Add: return of 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  
Less: proceeds from the sale of assets (1,292 ) (363 ) (1,655 )
Less: expansion capital expenditures (488 ) (488 )

Less: mitigation payments and acquisition costs classified as

financing activities

    (1,000 )   (1,000 )
Free cash flow $ 40,134   $ 12,250   $ 1,573   $ (18,770 ) $ 35,187  
 
Three Months Ended March 31, 2018

Net cash provided by (used in) operating activities of

continuing operations

$ 38,793 $ 10,153 $ 2,797 $ (31,532 ) $ 20,211

Add: distributions from unconsolidated investment in excess

of cumulative earnings

2,097 2,097
Add: proceeds from sale of assets 656 31 687
Add: return of long-term contract receivable 487 487
Less: maintenance capital expenditures     (2,637 )   (2,637 )
Distributable cash flow $ 39,936   $ 12,250   $ 191   $ (31,532 ) $ 20,845  
Less: proceeds from the sale of assets (656 ) (31 ) (687 )
Less: expansion capital expenditures (807 ) (807 )

Less: mitigation payments and acquisition costs classified as

financing activities

    (49 )   (49 )
Free cash flow $ 39,280   $ 12,250   $ (696 ) $ (31,532 ) $ 19,302  
 
 
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
 
Distributable Cash Flow and Free Cash Flow
(Unaudited)
         

Coal

Royalty and

Other

       

Construction

Aggregates

   

Corporate

and

Financing

   

(In thousands)

Soda Ash Total
Six Months Ended June 30, 2018

Net cash provided by (used in) operating activities of

continuing operations

$ 90,518 $ 22,403 $ 3,283 $ (41,614 ) $ 74,590

Add: distributions from unconsolidated investment in excess

of cumulative earnings

2,097 2,097
Add: proceeds from the sale of assets 826 85 911
Add: return of long-term contract receivables 1,016 1,016
Less: maintenance capital expenditures     (4,928 )   (4,928 )
Distributable cash flow $ 92,360   $ 24,500   $ (1,560 ) $ (41,614 ) $ 73,686  
Less: proceeds from the sale of assets (826 ) (85 ) (911 )
Less: expansion capital expenditures (929 ) (929 )

Less: mitigation payments and acquisition costs classified as

financing activities

    (515 )   (515 )
Free cash flow $ 91,534   $ 24,500   $ (3,089 ) $ (41,614 ) $ 71,331  
 
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: distributions from unconsolidated investment in excess

of cumulative earnings

2,388 2,388
Add: proceeds from the sale of assets 883 385 1,268

Add: return of long-term contract receivables (including

affiliates)

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  
Less: proceeds from the sale of assets (883 ) (385 ) (1,268 )
Less: expansion capital expenditures (614 ) (614 )

Less: mitigation payments and acquisition costs classified as

financing activities

    (1,096 )   (1,096 )
Free cash flow $ 78,480   $ 24,500   $ 3,428   $ (52,509 ) $ 53,899  
 
 
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
 
Adjusted EBITDA
(Unaudited)
 
         

Coal

Royalty and

Other

       

Construction

Aggregates

   

Corporate

and

Financing

   

(In thousands)

Soda Ash Total
Three Months Ended June 30, 2018
Net income (loss) from continuing operations $ 40,650 $ 16,529 $ 2,941 $ (20,997 ) $ 39,123
Less: equity earnings from unconsolidated investment (16,529 ) (16,529 )
Less: net income attributable to non-controlling interest (869 ) (869 )
Add: total distributions from unconsolidated investment 12,250 12,250
Add: interest expense, net 17,734 17,734
Add: depreciation, depletion and amortization 5,376     3,187     8,563  
Adjusted EBITDA $ 45,157   $ 12,250   $ 6,128   $ (3,263 ) $ 60,272  
 
Three Months Ended June 30, 2017
Net income (loss) from continuing operations $ 42,084 $ 8,389 $ 2,636 $ (27,252 ) $ 25,857
Less: equity earnings from unconsolidated investment (8,389 ) (8,389 )
Add: total distributions from unconsolidated investment 12,250 12,250
Add: interest expense, net 178 20,130 20,308
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  
Adjusted EBITDA $ 47,459   $ 12,250   $ 5,844   $ (2,883 ) $ 62,670  
 
Three Months Ended March 31, 2018
Net income (loss) from continuing operations $ 40,728 $ 9,621 $ (1,975 ) $ (22,286 ) $ 26,088
Less: equity earnings from unconsolidated investment (9,621 ) (9,621 )
Add: total distributions from unconsolidated investment 12,250 12,250
Add: interest expense, net 20 17,950 17,970
Add: depreciation, depletion and amortization 5,100 2,857 7,957
Add: asset impairments 242         242  
Adjusted EBITDA $ 46,070   $ 12,250   $ 902   $ (4,336 ) $ 54,886  
 
 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

 
Adjusted EBITDA
(Unaudited)
 
         

Coal

Royalty and

Other

       

Construction

Aggregates

   

Corporate

and

Financing

   

(In thousands)

Soda Ash Total
Six Months Ended June 30, 2018
Net income (loss) from continuing operations 81,378 $ 26,150 $ 966 $ (43,283 ) $ 65,211
Less: equity earnings from unconsolidated investment (26,150 ) (26,150 )
Less: net income attributable to non-controlling interest (869 ) (869 )
Add: total distributions from unconsolidated investment 24,500 24,500
Add: interest expense, net 20 35,684 35,704
Add: depreciation, depletion and amortization 10,476 6,044 16,520
Add: asset impairments 242         242  
Adjusted EBITDA $ 91,227   $ 24,500   $ 7,030   $ (7,599 ) $ 115,158  
 
Six Months Ended June 30, 2017
Net income (loss) from continuing operations $ 77,178 $ 18,683 $ 1,097 $ (64,990 ) $ 31,968
Less: equity earnings from unconsolidated investment (18,683 ) (18,683 )
Add: total distributions from unconsolidated investment 24,500 24,500
Add: interest expense, net 573 42,859 43,432
Add: debt modification expense 7,939 7,939
Add: loss on extinguishment of debt 4,107 4,107
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   $ (10,085 ) $ 113,938  
 
 
Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
 
Adjusted Net Income Attributable to NRP
(Unaudited)
 
          Three Months Ended     Six Months Ended
June 30,     March 31, June 30,

(In thousands)

2018     2017 2018 2018     2017
Net income attributable to NRP $ 38,220 $ 25,990 $ 26,074 $ 64,294 $ 31,894
Add: debt modification expense 132 7,939
Add: loss on extinguishment of debt 4,107 4,107
Add: restructuring-related incentive compensation expense 3,847
Less: income from Ciner Wyoming's royalty dispute settlement (12,678 )     (12,678 )
Adjusted net income attributable to NRP $ 25,542   $ 30,229   $ 26,074   $ 51,616   $ 47,787
 
 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

 
Last Twelve Months Distributable Cash Flow and Free Cash Flow
(Unaudited)
 
          Three Months Ended    

(In thousands)

September 30,

2017

   

December 31,

2017

   

March 31,

2018

   

June 30,

2018

Last 12

Months

Net cash provided by operating activities of continuing

operations

$ 25,800 $ 46,444 $ 20,211 $ 54,379 $ 146,834

Add: distributions from unconsolidated investment in

excess of cumulative earnings

3,258 2,097 5,355
Add: proceeds from the sale of assets 151 563 687 224 1,625
Add: return on long-term contract receivables 600 399 487 529 2,015
Less: maintenance capital expenditures (926 ) (1,025 ) (2,637 ) (2,291 ) (6,879 )
Distributable cash flow $ 28,883   $ 46,381   $ 20,845   $ 52,841   $ 148,950  
Less: proceeds from the sale of assets (151 ) (563 ) (687 ) (224 ) (1,625 )
Less: expansion capital expenditures (311 ) (39 ) (807 ) (122 ) (1,279 )

Less: mitigation payments and acquisition costs

classified as financing activities

  (197 ) (49 ) (466 ) (712 )
Free cash flow $ 28,421   $ 45,582   $ 19,302   $ 52,029   $ 145,334  
 
 
 
Common Unit Distribution $ 0.45 $ 0.45 $ 0.45 $ 0.45 $ 1.80
 
Distribution Coverage Ratio (1) 6.6 x
 
Less: Preferred Distributions $ (30,000 )
 
Distributable cash flow after Preferred Distributions $ 118,950
 
Distribution Coverage Ratio after Preferred Distributions (2) 5.3 x
 

___________________________________

(1)  

Distribution Coverage Ratio is calculated as last twelve months' DCF divided by annual common unit distributions times number of common units and general partner units outstanding.

 
(2) Distribution Coverage Ratio is calculated as last twelve months' DCF less preferred distributions divided by annual common unit distributions times number of common units and general partner units outstanding.
 
 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

 
Last Twelve Months Adjusted EBITDA
(Unaudited)
         
Three Months Ended    

(In thousands)

September 30,

2017

   

December 31,

2017

   

March 31,

2018

   

June 30,

2018

Last 12

Months

Net income from continuing operations $ 26,499 $ 30,741 $ 26,088 $ 39,123 $ 122,451
Less: equity earnings from unconsolidated investment (8,993 ) (12,781 ) (9,621 ) (16,529 ) (47,924 )
Less: net income attributable to non-controlling interest (869 ) (869 )
Add: total distributions from unconsolidated investment 12,250 12,250 12,250 12,250 49,000
Add: interest expense, net 20,080 19,123 17,970 17,734 74,907
Add: depreciation, depletion and amortization 8,306 8,790 7,957 8,563 33,616
Add: asset impairments   1,253   242     1,495  
Adjusted EBITDA $ 58,142   $ 59,376   $ 54,886   $ 60,272   $ 232,676  
 
Debt—at June 30, 2018 $ 814,772
Leverage Ratio (1) 3.5 x

___________________________________

(1)   Leverage Ratio is calculated as last twelve months' Adjusted EBITDA divided by the outstanding principal value of our debt as of June 30, 2018.
 
 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

 
Return on Capital Employed
(Unaudited)
       

(In thousands)

Last 12 Months Ended June 30, 2018
Net income from continuing operations $ 122,451
Interest expense, net 74,907
 
As of June 30, 2018
Total capital $ 389,920
Debt 814,772
 
ROCE 16 %
 
Income from Ciner Wyoming's royalty dispute settlement 12,678
ROCE excluding income from Ciner Wyoming's royalty dispute settlement 15 %
 

Contacts

Natural Resource Partners L.P.
Kathy H. Roberts, 713-751-7555
kroberts@nrplp.com

Contacts

Natural Resource Partners L.P.
Kathy H. Roberts, 713-751-7555
kroberts@nrplp.com