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News Release
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Natural Resource Partners L.P. Reports Second Quarter Results and Updates 2013 Guidance
- Revenues of $86.8 million and net income per unit of $0.37
- Distributable cash flow of $90.7 million, including $26.7 million received from OCI
- Distribution of $0.55 per unit
- Increased 2013 distributable cash flow guidance by $40 million
- Reduced 2013 net income per unit guidance by $0.20

HOUSTON, Aug. 7, 2013 /PRNewswire/ --Natural Resource Partners L.P. (NYSE:NRP) today reported revenues of $86.8 million for the second quarter of 2013 compared to $90.7 million for the second quarter of 2012 and distributable cash flow, a non-GAAP measure, of $90.7 million compared to $83.7 million for the second quarter of 2012.  Net income per unit was $0.37 in the second quarter of 2013 versus $0.46 per unit in the second quarter of 2012.  Reconciliations of all non-GAAP measures are included in the tables at the end of the release.

(Logo:  http://photos.prnewswire.com/prnh/20060109/NRPLOGO)

"Our lessees continue to perform much better than the industry average.  Production by lessees from NRP's properties increased 19% for the first six months of 2013 over the first six months of 2012, compared to a nationwide production decrease of over 4% for the industry for the same period. From an operating perspective, our first six months were virtually in line with our projections," said Nick Carter, President and Chief Operating Officer.

Highlights

Quarter Ended


For the Six Months Ended


June

June

%


June

June

%


2013

2012

Change


2013

2012

Change


(in thousands except per unit and per ton)






Revenues








Total revenues

$ 86,804

$ 90,664

-4%


$ 181,136

$ 182,536

-1%

Coal production (tons)

14,894

11,982

24%


28,727

24,097

19%

Coal royalty revenues

$ 58,210

$ 62,878

-7%


$ 112,652

$ 122,794

-8%

Average coal royalty revenue per ton

$     3.91

$     5.25

-26%


$       3.92

$       5.10

-23%

Revenues other than coal royalties

$ 28,594

$ 27,786

3%


$   68,484

$   59,742

15%









Operating Expenses

$ 31,472

$ 27,172

16%


$   63,276

$   54,220

17%









Net income 








Net income to limited partners

$ 40,244

$ 48,939

-18%


$   87,192

$   99,222

-12%

Net income per unit

$     0.37

$     0.46

-20%


$       0.80

$       0.94

-15%

Average units outstanding

109,812

106,028

4%


109,352

106,028

3%









Distributable cash flow(1)

$ 90,650

$ 83,711

8%


$ 135,135

$ 133,196

1%

(1) See Non-GAAP reconciliation







Second Quarter 2013 compared to Second Quarter 2012

Revenues
Second quarter 2013 total revenues decreased from the same period of 2012 due to a decrease in coal royalty revenues.  Coal royalty revenues decreased 7% from 2012 to $58.2 million due primarily to decreases in realizations for metallurgical coal. Metallurgical coal accounted for 28% of NRP's production and 40% of its coal royalty revenues for the second quarter of 2013 compared to 35% of production and 45% of coal royalty revenues in the second quarter of 2012.

Coal production volumes increased 24% to 14.9 million tons, while average coal royalty revenue per ton decreased 26% to $3.91 per ton.  NRP benefitted during the quarter from the diversity of its coal assets, with an increase in production from all regions other than Central Appalachia as compared to the second quarter of 2012.  In Southern Appalachia, the increased production was mainly due to sales that were idled for much of 2012 due to the destruction of a preparation plant. In Northern Appalachia, the increased production was due to a longwall that has moved onto NRP property.  In the Northern Powder River Basin, the increase was due to the checkerboard nature of our holdings in the mine.

NRP also benefitted from its diversification into other asset classes, as revenues other than coal royalty revenues increased primarily due to revenues associated with the investment in OCI Wyoming in January 2013.

Operating Expenses
Total operating expenses increased mainly due to increased depreciation, depletion and amortization resulting from a reserve swap made in the first quarter of 2013 and increased general and administrative expense relating to new employees. 

Net Income
Net income and net income per unit decreased in the second quarter of 2013 compared to the 2012 period. In addition to the lower revenues and higher expenses which were predominantly non-cash, a small portion of the decrease was due to an increase in the number of units outstanding in 2013 versus the same quarter in 2012. 

Distributable Cash Flow
Distributable cash flow increased mainly due to cash distributions received from OCI Wyoming, which offset other declines. 

Highlights

Quarter Ended


June 2013

March 2013

% Change


(in thousands, except per ton and per unit)


Total revenues

$   86,804

$      94,332

-8%

Coal production (tons)

14,894

13,833

8%

Coal royalty revenues

$   58,210

$      54,442

7%

Average coal royalty revenue per ton

$       3.91

$          3.94

-1%

Revenues other than coal royalty

$   28,594

$      39,890

-28%

Operating expenses

$   31,472

$      31,804

-1%

Net income to limited partners

$   40,244

$      46,948

-14%

Net income per unit

$       0.37

$          0.43

-14%

Average units outstanding

109,812

108,887

1%

Distributable cash flow(1)

$   90,650

$      44,485

104%

(1)See Non-GAAP reconciliation




Second Quarter 2013 compared to First Quarter 2013

Revenues
Total revenues for the second quarter decreased from the first quarter, predominantly due to an $8.1 million gain on a reserve swap that was recorded in the first quarter. In the second quarter, NRP realized increased coal royalty revenues due to increased production relative to the first quarter and increased oil and gas revenue due to increased oil and gas activity.  These increases were offset by lower minimums recognized as revenue and decreased overriding royalties and transportation fees. 

Operating Expenses
Operating expenses were virtually flat with the first quarter.  Increased depreciation, depletion and amortization offset the decrease in general and administrative expenses.

Net Income
Net income and net income per unit decreased in the second quarter from the previous quarter due to lower revenues. 

Distributable Cash Flow
Distributable cash flow more than doubled to $90.7 million from $44.5 million in the first quarter mainly due to working capital changes, including the distributions received from OCI in the second quarter of $26.7 million.

Acquisitions and Liquidity

In 2013, NRP has invested $293 million in acquisitions and has committed to pay approximately $35 million to acquire oil and gas assets in the Bakken/Three Forks play, all in an effort to diversify its revenues.  The equity investment in OCI Wyoming in the first quarter has helped soften the decline in the coal-related revenues in the first half of the year.  Through the second quarter, NRP received distributions of $26.9 million from OCI Wyoming.  In addition, in July, NRP received $46.0 million in dividends and distributions, including a $44.8 million special distribution associated with a restructuring of OCI Wyoming.  The special distribution is being used to pay for the previously announced acquisition of non-operated working interests in oil and gas assets located in the Bakken/Three Forks play that is scheduled to close early August and to reduce debt.

At the end of the second quarter, NRP had approximately $214 million in liquidity, consisting of $105 million in cash and $109 million available under its credit facility. 

Distributions

As reported on July 23, 2013, the Board of Directors of NRP's general partner declared a quarterly distribution of $0.55 per unit for the second quarter 2013.  

Updated 2013 Guidance

NRP is providing updated guidance for 2013.  Expected coal royalty revenues have decreased by 4%, resulting in an expected decrease in total 2013 revenues of 2%.  The decrease in revenues, together with an increase in operating expenses primarily due to increased depreciation, depletion and amortization relating to a reserve swap made in the first quarter of 2013, result in a $0.20 per unit decrease in expected net income for 2013.  Distributable cash flow for 2013 has been increased by $40 million, primarily due to NRP's investment in OCI Wyoming.

"Due to our continued diversification, including the investment in OCI Wyoming, we are raising our distributable cash flow forecast.  In addition, even after considering the weakness in the coal markets, our lessees indicate that they are seeing the beginnings of a better market for their coal.  However, until expected market improvements materialize into increased royalty payments to us, we have chosen to lower our 2013 guidance for coal royalty revenues," said Carter.  "These revenue revisions coupled with higher depreciation, depletion and amortization expenses, because of where our lessees are mining, and general and administrative expense result in a decrease in our guidance on net income per unit."

Following is a table containing the 2013 guidance update.


Revised 2013 Guidance


 Original 2013 Guidance


(Range)


(Range)


(in millions except per unit)


(in millions except per unit)

Coal royalty revenues

$ 205.0

-

$ 220.0


$ 210.0

-

$ 235.0

Coal production tonnage (mm tons)

50.0

-

56.0


48.0

-

56.0

Total revenues

$ 330.0

-

$ 360.0


$ 330.0

-

$ 375.0

Distributable cash flow

$ 290.0

-

$ 320.0


$ 250.0

-

$ 280.0

Net income per unit

$   1.40

-

$   1.60


$   1.60

-

$   1.80

Average units outstanding

109.6

-

109.6


109.6

-

109.6

Company Profile

Natural Resource Partners L.P. is a master limited partnership headquartered in Houston, TX, with its operations headquarters in Huntington, WV.  NRP is principally engaged in the business of owning and managing mineral reserve properties.  NRP primarily owns coal, aggregate and oil and gas reserves across the United States that generate royalty income for the partnership.

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.

Disclosure of Non-GAAP Financial Measures
Distributable cash flow represents cash flow from operations plus any poceeds from the sale of assets plus the return on direct financing lease and contractual overrides shown in the cash flows from investing activities section of the cash flow statement.  Distributable cash flow is a "non-GAAP financial measure" that is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is a significant liquidity metric that is an indicator of NRP's ability to generate cash flows at a level that can sustain or support an increase in quarterly cash distributions paid to its partners. Distributable cash flow is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships. 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. A reconciliation of distributable cash flow to net cash provided by operating activities is included in the tables attached to this release.  Distributable cash flow may not be calculated the same for NRP as other companies.

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, decreases in demand for coal; changes in operating conditions and costs; production cuts by our lessees; commodity prices; unanticipated geologic problems; 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 statements follow-

 

Natural Resource Partners L.P.

Operating Statistics

(in thousands except per ton data)






Quarter Ended


For the Six Months Ended






June


June


June


June






2013


2012


2013


2012






(unaudited)


(unaudited)













Coal Royalties:









Coal royalty revenues:










Appalachia











Northern


$   4,242


$   4,689


$     9,126


$     7,697



Central


30,185


38,403


56,591


80,475



Southern


7,352


6,718


15,052


11,021




Total Appalachia

$ 41,779


$ 49,810


$   80,769


$   99,193


Illinois Basin


12,843


12,912


25,500


21,681


Northern Powder River Basin

2,295


310


4,424


1,772


Gulf Coast Lignite


1,293


(154)


1,959


148

Total




$ 58,210


$ 62,878


$ 112,652


$ 122,794

Coal royalty production (tons):









Appalachia











Northern


3,531


1,651


7,272


4,052



Central


5,826


6,507


10,946


13,041



Southern


1,163


835


2,267


1,388




Total Appalachia

10,520


8,993


20,485


18,481


Illinois Basin


3,012


2,910


5,906


5,001


Northern Powder River Basin

969


126


1,764


595


Gulf Coast Lignite


393


(47)


572


20

Total




14,894


11,982


28,727


24,097

Average royalty revenue per ton:









Appalachia











Northern


$     1.20


$     2.84


$       1.25


$       1.90



Central


5.18


5.90


5.17


6.17



Southern


6.32


8.05


6.64


7.94




Total Appalachia

3.97


5.54


3.94


5.37


Illinois Basin


4.26


4.44


4.32


4.34


Northern Powder River Basin

2.37


2.46


2.51


2.98


Gulf Coast Lignite


3.29


3.28


3.42


7.40

Combined average royalty 









revenue per ton


$     3.91


$     5.25


$       3.92


$       5.10













Aggregates:









Royalty revenues


$   1,751


$   1,702


$     3,303


$     3,418

Production


1,463


1,447


2,746


2,814

Average base royalty per ton

$     1.20


$     1.18


$       1.20


$       1.21













Oil and gas:









Revenues



$   4,093


$   4,078


$     5,856


$     5,466

 

 

Natural Resource Partners L.P.

Consolidated Statements of Comprehensive Income

(in thousands, except per unit data)


















Quarter Ended


For the Six Months Ended






June


June


June


June






2013


2012


2013


2012






(unaudited)


(unaudited)













Revenues:











Coal royalties



$ 58,210


$ 62,878


$ 112,652


$ 122,794


Equity and other unconsolidated investment income, net

7,882


-


14,930


-


Aggregate royalties



1,751


1,702


3,303


3,418


Processing fees



1,329


3,138


2,509


5,264


Transportation fees



3,832


5,246


8,757


9,354


Oil and gas royalties



4,093


4,078


5,856


5,466


Property taxes



3,849


3,331


7,796


7,819


Minimums recognized as revenue


836


938


5,427


12,652


Override royalties



3,179


3,497


8,084


8,639


Other



1,843


5,856


11,822


7,130



Total revenues



86,804


90,664


181,136


182,536

Operating expenses:











Depreciation, depletion and amortization

17,411


15,172


32,173


27,581


Asset impairments



443


-


734


-


General and administrative



8,878


7,029


20,464


15,979


Property, franchise and other taxes


4,225


3,771


8,576


8,787


Transportation costs



328


527


787


1,000


Coal royalty and override payments


187


673


542


873



Total operating expenses


31,472


27,172


63,276


54,220

Income from operations



55,332


63,492


117,860


128,316

Other income (expense)









-


Interest expense



(14,440)


(13,578)


(29,103)


(27,138)


Interest income



173


24


214


69

Income before non-controlling interest


$ 41,065


$ 49,938


$   88,971


$ 101,247


Non-controlling interest



-


-


-


-

Net income 



$ 41,065


$ 49,938


$   88,971


$ 101,247

Net income attributable to:











General partner



$      821


$      999


$     1,779


$     2,025


Limited partners



$ 40,244


$ 48,939


$   87,192


$   99,222













Basic and diluted net income per










limited partner unit:



$     0.37


$     0.46


$       0.80


$       0.94













Weighted average number of units outstanding:

109,812


106,028


109,352


106,028













Comprehensive income 



$ 41,116


$ 49,951


$   89,076


$ 101,270

 

 

 

Natural Resource Partners L.P.

Consolidated Statements of Cash Flow

(in thousands, except per unit data)





Quarter Ended


For the Six Months Ended





June


June


June


June





2013


2012


2013


2012





(unaudited)


(unaudited)

Cash flows from operating activities:









Net income 

$   41,065


$   49,938


$   88,971


$ 101,247


Adjustments to reconcile net income to 










net cash provided by operating activities:










Depreciation, depletion and amortization

17,411


15,172


32,173


27,581



Gain on reserve swap

-


-


(8,149)


-



Equity and other unconsolidated investment income, net

(7,882)


-


(14,930)


-



Distributions from unconsolidated investments

15,925


-


16,162


-



Non-cash interest charge, net

279


151


555


300



Gain on sale of assets

-


(4,108)


(150)


(4,108)



Asset impairment

443


-


734


-


Change in operating assets and liabilities:










Accounts receivable

4,781


7,088


4,250


5,851



Other assets

(3,251)


(176)


(2,985)


24



Accounts payable and accrued liabilities

1,094


(521)


221


562



Accrued interest

1,349


2,737


(576)


(158)



Deferred revenue

5,445


9,000


9,951


6,551



Accrued incentive plan expenses

2,036


1,331


(1,219)


(5,261)



Property, franchise and other taxes payable

1,041


1,910


(1,359)


(582)




Net cash provided by operating activities:

79,736


82,522


123,649


132,007

Cash flows from investing activities:










Acquisition of land and mineral rights

-


(26,727)


-


(94,453)



Acquisition or construction of plant and equipment

-


(492)


-


(492)



Acquisition of equity interests

(40)


-


(292,979)


-



Distributions from unconsolidated investments

10,777


-


10,777


-



Proceeds from sale of assets

-


285


154


285



Return on direct financing lease and contractual override

137


904


555


904



Investment in direct financing lease

-


-


-


(59,009)




Net cash used in investing activities

10,874


(26,030)


(281,493)


(152,765)

Cash flows from financing activities:










Proceeds from loans

43,000


26,000


243,000


73,000



Repayment of loans

(42,916)


(7,917)


(79,538)


(23,108)



Deferred financing costs

-


-


(1,621)


-



Proceeds from issuance of common units

-


-


75,000


-



Capital contribution by general partner

-


-


1,531


-



Costs associated with equity transactions

(13)


-


(60)


-



Repayment of obligation related to acquisitions

-


(500)




(500)



Distributions to partners

(61,630)


(59,505)


(124,688)


(121,582)




Net cash provided by (used in) financing activities

(61,559)


(41,922)


113,624


(72,190)

Net (decrease)  in cash and cash equivalents

29,051


14,570


(44,220)


(92,948)

Cash and cash equivalents at beginning of period

76,153


107,404


149,424


214,922

Cash and cash equivalents at end of period

$ 105,204


$ 121,974


$ 105,204


$ 121,974

Supplemental cash flow information:










Cash paid during the period for interest

$   12,784


$   10,684


$   29,085


$   26,976

 

 

Natural Resource Partners L.P.

Consolidated Balance Sheets

(in thousands, except for unit information)











ASSETS








June 30,


December 31,








2013


2012








(unaudited)



Current assets:








Cash and cash equivalents




$    105,204


$       149,424


Accounts receivable, net of allowance for doubtful accounts

29,995


35,116


Accounts receivable - affiliates



13,597


10,613


Other





4,097


1,042



Total current assets




152,893


196,195

Land






24,340


24,340

Plant and equipment, net




29,268


32,401

Mineral rights, net




1,360,386


1,380,473

Intangible assets, net




69,064


70,766

Equity and other unconsolidated investments



279,877


-

Loan financing costs, net




5,383


4,291

Long-term contracts receivable - affiliate



54,080


55,576

Other assets, net




560


630



Total assets




$ 1,975,851


$    1,764,672











LIABILITIES AND PARTNERS' CAPITAL











Current liabilities:








Accounts payable and accrued liabilities



$        3,399


$           3,693


Accounts payable - affiliates




1,472


957


Current portion of long-term debt



59,175


87,230


Accrued incentive plan expenses - current portion


7,056


7,718


Property, franchise and other taxes payable


6,593


7,952


Accrued interest




9,689


10,265



Total current liabilities




87,384


117,815

Deferred revenue




133,297


123,506

Accrued incentive plan expenses




8,308


8,865

Long-term debt




1,088,556


897,039

Partners' capital:








Common units outstanding (109,812,408 and 106,027,836)

646,356


605,019


General partner's interest




10,872


10,026


Non-controlling interest




1,416


2,845


Accumulated other comprehensive loss



(338)


(443)



Total partners' capital




658,306


617,447



Total liabilities and partners' capital



$ 1,975,851


$    1,764,672

 

 

Natural Resource Partners L.P.

Reconciliation of GAAP Financial Measures

to Non-GAAP Financial Measures

(in thousands)

Reconciliation of GAAP "Net cash provided by operating activities"

to Non-GAAP "Distributable cash flow"





Quarter Ended


For the Six Months Ended





June 


June


June 


June





2013


2012


2013


2012





(unaudited)


(unaudited)












Net cash provided by operating activities




$ 79,736


$ 82,522


$ 123,649


$ 132,007

Distributions from unconsolidated investments




$ 10,777


$         -


$   10,777


$           -

Return on direct financing lease and contractual override




137


904


555


904

Proceeds from sale of assets




-


285


154


285

Distributable cash flow




$ 90,650


$ 83,711


$ 135,135


$ 133,196
























































Reconciliation of GAAP "Net cash provided by operating activities"

to Non-GAAP "Distributable cash flow"
















Quarter Ended







June


March









2013


2013









(unaudited)














Net cash provided by operating activities




$ 79,736


$ 43,913





Distributions from unconsolidated investments




$ 10,777


$         -





Return on direct financing lease and contractual override




137


418





Proceeds from sale of assets




-


154





Distributable cash flow




$ 90,650


$ 44,485





 

SOURCE Natural Resource Partners L.P.

 
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