Exhibit 99.1
Natural Resource Partners L.P. 601 Jefferson St., Suite 3600, Houston, TX 77002 |  | |
NEWS RELEASE |
Natural Resource Partners L.P.
Reports First Quarter 2011 Results
Reports First Quarter 2011 Results
Highlights:
| • | Record revenues of $84.9 million, up 34% from 1Q2010 | ||
| • | Net income attributable to limited partners of $44.4 million, up 163% from 1Q2010 | ||
| • | Net income per unit of $0.42, up 75% from 1Q2010 | ||
| • | Metallurgical coal accounts for 34% of coal production and 42% of coal royalty revenues | ||
| • | Distributable cash flow of $39.0 million, up 15% from 1Q2010 | ||
| • | Distribution of $0.54 per unit, held constant |
HOUSTON, May 4, 2011—Natural Resource Partners L.P. (NYSE:NRP)today reported record revenues of $84.9 million in the first quarter, a 34% increase over the first quarter 2010. Net income attributable to the limited partners increased 163% to $44.4 million for the first quarter of 2011, compared to $16.9 million for the first quarter of 2010. This represents a 75% increase, or $0.18 in earnings per unit, to $0.42 in the first quarter 2011 compared to $0.24 in the first quarter of 2010. Distributable cash flow, a non-GAAP measure, of $39.0 million, improved 15% from the $33.8 million reported for the first quarter of 2010.
“This quarter continues the trend established in 2010 of increasing revenues and net income. As we slowly climb out of the economic downturn of 2008 and 2009, we are seeing steady improvement in our business aided by our measured, forward-looking acquisition program that continues to add new diversification to our revenue and asset base” said Nick Carter, President and Chief Operating Officer.
Market Outlook
The coal markets continue to improve as the country gradually climbs out of the recent economic downturn. Metallurgical coal markets have recovered more rapidly than steam coal markets due to the global nature of the steel business and the growing demand for both metallurgical coal and coke by developing countries. Adding to the strength of the metallurgical market are the continuing supply disruptions caused by weather issues and other factors in some of the competing supply basins around the world. The increased
| NRP Reports 1st Quarter 2011 Results | Page 2 of 10 |
demand for seaborne metallurgical coal together with these other factors impeding supply have pushed prices to near record levels and increased the demand for U.S. metallurgical coal. As a result, we may see a record level of exports of coal, mostly metallurgical, in 2011. On the other hand, the thermal market in the United States continues to improve at a slower pace than the metallurgical market. Utilities are faced with dual issues of the continuing (but slowly improving from a coal supplier perspective) high stockpile levels and low natural gas prices that make that fuel competitive with coal for the generation of electricity. Thus, while we might otherwise be seeing a burn down of the utility stockpiles due to the slowly improving economy, that burn is not occurring at the same pace as the economic recovery largely due to fuel switching.
First Quarter 2011 versus First Quarter 2010
| 1Q11 | 1Q10 | % Change | ||||||||||
Total revenues: | $ | 84,852 | $ | 63,519 | 34 | % | ||||||
Coal production: | 11,946 | 10,802 | 11 | % | ||||||||
Coal royalty revenues: | $ | 65,365 | $ | 47,161 | 39 | % | ||||||
Average coal royalty revenue per ton: | $ | 5.47 | $ | 4.37 | 25 | % | ||||||
Revenues other than coal royalty: | $ | 19,487 | 16,358 | 19 | % | |||||||
Distributable cash flow: | $ | 38,975 | $ | 33,822 | 15 | % | ||||||
Net income to limited partners: | $ | 44,376 | $ | 16,864 | 163 | % | ||||||
Net income per unit: | $ | 0.42 | $ | 0.24 | 75 | % | ||||||
Total revenues improved 34% to $84.9 million for the first quarter of 2011, compared to $63.5 million reported for the same period last year. NRP saw increases in nearly every revenue category.
First quarter 2011 coal royalty revenues increased 39% to a record $65.4 million from $47.2 million last year due to both increased production and increased realizations for coal royalty revenue per ton. Coal production increased 11% to 11.9 million tons, with significant increases in Central Appalachia and in the Illinois Basin more than offsetting declines in the other regions. Average coal royalty revenue per ton increased 25% from the first quarter of 2010 to a record $5.47 per ton. The most dramatic increase was seen in Central Appalachia, where realizations reached $6.20 per ton mainly due to the significant metallurgical coal production on NRP’s properties. Metallurgical coal production accounted for 34% of this quarter’s production and 42% of coal royalty revenue.
In addition to coal royalty revenues, NRP generated $19.5 million, or approximately 23% of its first quarter revenues from other sources, compared to $16.4 million or 26% for the same period in 2010. These other sources include: aggregate royalties; coal processing and transportation fees; minimums recognized as revenues, rentals; royalties on oil and gas; overriding royalties; and wheelage payments.
Total expenses increased $6.4 million, or 28% over the first quarter of 2010 to $29.0 million. Expenses increased both due to increases in depreciation, depletion and
| NRP Reports 1st Quarter 2011 Results | Page 3 of 10 |
amortization as well as increased general and administrative expenses. Depreciation and depletion increased due to increased production and general and administrative expenses increased due to an increase in the number of employees allocated to NRP as a result of the 2010 BRP acquisition. Interest expense held flat with the same period last year.
Distributable cash flow increased 15% to $39.0 million from $33.8 million generated in the first quarter of 2010 due to improved revenues.
Net income attributable to the limited partners increased 163% to $44.4 million over the first quarter of 2010 due to improved revenues and the elimination of the incentive distribution rights in September 2010. Net income per unit increased 75% to $0.42 per unit from $0.24 per unit primarily due to the improved revenues. The increase was offset somewhat by the additional units outstanding in 2011 versus 2010 due to the units issued in exchange for the elimination of the incentive distribution rights.
First Quarter 2011 versus Fourth Quarter 2010
| 1Q11 | 4Q10 | % Change | ||||||||||
Total revenues: | $ | 84,852 | $ | 77,543 | 9 | % | ||||||
Coal production: | 11,946 | 12,113 | (1 | %) | ||||||||
Coal royalty revenues: | $ | 65,365 | $ | 56,626 | 15 | % | ||||||
Average coal royalty revenue per ton: | $ | 5.47 | $ | 4.67 | 17 | % | ||||||
Revenues other than coal royalties: | 19,487 | $ | 20,917 | (7 | %) | |||||||
Distributable cash flow: | $ | 38,975 | $ | 75,154 | (48 | %) | ||||||
Net income to limited partners: | $ | 44,376 | $ | 41,656 | 7 | % | ||||||
Net income per unit: | $ | 0.42 | $ | 0.39 | 8 | % | ||||||
Total revenues for the first quarter 2011 continued to climb over the fourth quarter 2010 to $84.9 million, mainly due to increased average coal royalty revenues per ton. While production was down approximately 167 thousand tons, realizations increased by $0.80 to $5.47 per ton. In the first quarter, revenues other than coal royalties decreased $1.4 million or approximately 7%. This was due to minimums recognized as revenue that decreased by $3.1 million due to a non-recoupable minimum recognized on the Deer Run property in the fourth quarter 2010. This quarterly minimum is still being received but is now recoupable and will be shown as deferred revenue until production commences on the property.
As in the first quarter of every year, NRP had a significant decline in distributable cash flow as compared to the fourth quarter due to annually recurring changes in working capital. Distributable cash flow decreased in the first quarter 2011 by $36.2 million to $39.0 million from the fourth quarter 2010. The main factors were recurring interest payments on the senior notes, long-term incentive plan payments and annual property tax payments. The majority of the property tax payments will be reimbursed by NRP’s lessees in future quarters.
| NRP Reports 1st Quarter 2011 Results | Page 4 of 10 |
Net income to the limited partners increased seven percent to $44.4 million over the fourth quarter of 2010 of $41.7 million. Net income per unit increased $0.03 per unit to $0.42 per unit over the fourth quarter 2010.
Acquisitions
During the first quarter of 2011, NRP completed three acquisitions totaling $90.7 million, of which $84.9 million was funded during the quarter. NRP completed the next acquisition related to the Deer Run property in Illinois, announced in 2009, for $70 million, and anticipates completing additional acquisitions on the Deer Run property during the next twelve months for approximately $80 million. In addition, NRP closed two aggregate reserve acquisitions in Tennessee and Kentucky. These acquisitions were funded through the partnership’s credit facility.
Liquidity and Capital Resources
At the end of the first quarter, NRP had approximately $69 million in cash, down approximately $26 million from the cash available at year end. This reduction in cash was mainly due to principal and interest payments made in the first quarter. During the first quarter, NRP made scheduled principal payments of $15.2 million, and interest payments of $17.5 million.
On April 20, NRP completed a debt private placement of four series of senior notes. The four tranches of senior notes are to be funded throughout the year with $200 million received on April 20 and the remaining $100 million to be funded in two $50 million tranches in June and October. The weighted average interest rate on the four series of senior notes is 4.98%. Proceeds from the initial $200 million were used to repay the outstanding balance on the credit facility, with excess funds to be used for future acquisitions. Following the transaction, NRP has the full $300 million available on its credit facility in addition to the additional $100 million that will be received on the two remaining tranches.
Distributions
On April 21, the partnership announced the first quarter distribution of $0.54 per unit, held constant with the previous quarter. The distribution will be paid on May 13, 2011 to unitholders of record on May 5, 2011.
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.
| NRP Reports 1st Quarter 2011 Results | Page 5 of 10 |
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 less actual principal payments and cash reserves set aside for scheduled principal payments on the senior notes. 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 may include “forward-looking statements” as defined by the Securities and Exchange Commission. Such statements include the outlook. 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.
11-11
-Financial statements follow-
| NRP Reports 1st Quarter 2011 Results | Page 6 of 10 |
Natural Resource Partners L.P.
Operating Statistics
(In thousands except per ton data)
Operating Statistics
(In thousands except per ton data)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
Coal: | ||||||||
| Coal royalty revenues: | ||||||||
| Appalachia | ||||||||
| Northern | $ | 4,681 | $ | 4,417 | ||||
| Central | 45,442 | 31,808 | ||||||
| Southern | 4,741 | 4,200 | ||||||
| Total Appalachia | $ | 54,864 | $ | 40,425 | ||||
| Illinois Basin | 9,060 | 4,210 | ||||||
| Northern Powder River Basin | 1,393 | 2,526 | ||||||
| Gulf Coast Lignite | 48 | — | ||||||
| Total | $ | 65,365 | $ | 47,161 | ||||
| Production volumes (tons): | ||||||||
| Appalachia | ||||||||
| Northern | 1,175 | 1,247 | ||||||
| Central | 7,327 | 6,396 | ||||||
| Southern | 648 | 701 | ||||||
| Total Appalachia | 9,150 | 8,344 | ||||||
| Illinois Basin | 2,276 | 1,147 | ||||||
| Northern Powder River Basin | 480 | 1,311 | ||||||
| Gulf Coast Lignite | 40 | — | ||||||
| Total | 11,946 | 10,802 | ||||||
| Average gross royalty per ton: | ||||||||
| Appalachia | ||||||||
| Northern | $ | 3.98 | $ | 3.54 | ||||
| Central | 6.20 | 4.97 | ||||||
| Southern | 7.32 | 5.99 | ||||||
| Total Appalachia | $ | 6.00 | $ | 4.84 | ||||
| Illinois Basin | 3.98 | 3.67 | ||||||
| Northern Powder River Basin | 2.90 | 1.93 | ||||||
| Gulf Coast Lignite | 1.20 | — | ||||||
| Combined average gross royalty per ton | $ | 5.47 | $ | 4.37 | ||||
Aggregates: | ||||||||
| Royalty revenues | $ | 1,194 | $ | 816 | ||||
| Aggregate royalty bonus | $ | — | $ | 75 | ||||
| Production | 1,265 | 605 | ||||||
| Average base royalty per ton | $ | 0.94 | $ | 1.35 | ||||
| NRP Reports 1st Quarter 2011 Results | Page 7 of 10 |
Natural Resource Partners L.P.
Consolidated Statements of Income
(In thousands, except per unit data)
Consolidated Statements of Income
(In thousands, except per unit data)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
| Revenues: | ||||||||
| Coal royalties | $ | 65,365 | $ | 47,161 | ||||
| Aggregate royalties | 1,194 | 891 | ||||||
| Coal processing fees | 3,089 | 1,644 | ||||||
| Transportation fees | 4,098 | 2,775 | ||||||
| Oil and gas royalties | 2,992 | 1,099 | ||||||
| Property taxes | 3,012 | 2,651 | ||||||
| Minimums recognized as revenue | 507 | 3,374 | ||||||
| Override royalties | 3,043 | 2,967 | ||||||
| Other | 1,552 | 957 | ||||||
| Total revenues | 84,852 | 63,519 | ||||||
| Operating costs and expenses: | ||||||||
| Depreciation, depletion and amortization | 14,322 | 11,368 | ||||||
| General and administrative | 10,196 | 6,548 | ||||||
| Property, franchise and other taxes | 3,697 | 3,734 | ||||||
| Transportation costs | 468 | 265 | ||||||
| Coal royalty and override payments | 308 | 692 | ||||||
| Total operating costs and expenses | 28,991 | 22,607 | ||||||
| Income from operations | 55,861 | 40,912 | ||||||
| Other income (expense) | ||||||||
| Interest expense | (10,587 | ) | (10,729 | ) | ||||
| Interest income | 8 | 8 | ||||||
| Net income | 45,282 | 30,191 | ||||||
| Non-controlling interest | — | — | ||||||
| Net income | $ | 45,282 | $ | 30,191 | ||||
| Net income attributable to: | ||||||||
| General partner | $ | 906 | $ | 344 | ||||
| Holders of incentive distribution rights | $ | — | $ | 12,983 | ||||
| Limited partners | $ | 44,376 | $ | 16,864 | ||||
| Basic and diluted net income per limited partner unit: | $ | 0.42 | $ | 0.24 | ||||
| Weighted average number of units outstanding: | 106,028 | 69,451 | ||||||
| NRP Reports 1st Quarter 2011 Results | Page 8 of 10 |
Natural Resource Partners L.P.
Statements of Cash Flows
(In thousands)
Statements of Cash Flows
(In thousands)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 45,282 | $ | 30,191 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, depletion and amortization | 14,322 | 11,368 | ||||||
| Non-cash interest charge, net | 150 | 150 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,530 | ) | (2,119 | ) | ||||
| Other assets | 222 | 220 | ||||||
| Accounts payable and accrued liabilities | (1,147 | ) | (233 | ) | ||||
| Accrued interest | (7,034 | ) | (7,136 | ) | ||||
| Deferred revenue | 5,434 | 13,013 | ||||||
| Accrued incentive plan expenses | (2,827 | ) | (2,521 | ) | ||||
| Property, franchise and other taxes payable | (2,838 | ) | (1,052 | ) | ||||
| Net cash provided by operating activities | 47,034 | 41,881 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of land, coal and other mineral rights | (84,822 | ) | (46,150 | ) | ||||
| Acquisition or construction of plant and equipment | (162 | ) | — | |||||
| Disposition of assets | 100 | — | ||||||
| Net cash used in investing activities | (84,884 | ) | (46,150 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans | 85,000 | 46,000 | ||||||
| Repayment of loans | (15,193 | ) | (15,192 | ) | ||||
| Retirement of obligation related to purchase of coal reserves and infrastructure | — | (2,969 | ) | |||||
| Costs associated with equity transactions | (32 | ) | — | |||||
| Distributions to partners | (58,423 | ) | (43,348 | ) | ||||
| Net cash provided by (used in) financing activities | 11,352 | (15,509 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (26,498 | ) | (19,778 | ) | ||||
| Cash and cash equivalents at beginning of period | 95,506 | 82,634 | ||||||
| Cash and cash equivalents at end of period | $ | 69,008 | $ | 62,856 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the period for interest | $ | 17,459 | $ | 17,700 | ||||
| Non-cash financing activities: | ||||||||
| Obligation related to purchase of reserves and infrastructure | $ | 6,025 | $ | 4,477 | ||||
| NRP Reports 1st Quarter 2011 Results | Page 9 of 10 |
Natural Resource Partners L.P.
Consolidated Balance Sheets
(In thousands except unit data)
Consolidated Balance Sheets
(In thousands except unit data)
| March 31, | December 31, | |||||||||||||||
| 2011 | 2010 | |||||||||||||||
| (Unaudited) | ||||||||||||||||
ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 69,008 | $ | 95,506 | ||||||||||||
| Accounts receivable, net of allowance for doubtful accounts | 32,041 | 26,195 | ||||||||||||||
| Accounts receivable — affiliate | 6,599 | 7,915 | ||||||||||||||
| Other | 743 | 910 | ||||||||||||||
| Total current assets | 108,391 | 130,526 | ||||||||||||||
| Land | 24,543 | 24,543 | ||||||||||||||
| Plant and equipment, net | 60,429 | 62,348 | ||||||||||||||
| Coal and other mineral rights, net | 1,362,768 | 1,281,636 | ||||||||||||||
| Intangible assets, net | 159,281 | 161,931 | ||||||||||||||
| Loan financing costs, net | 2,322 | 2,436 | ||||||||||||||
| Other assets, net | 561 | 616 | ||||||||||||||
| Total assets | $ | 1,718,295 | $ | 1,664,036 | ||||||||||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | 740 | $ | 1,388 | ||||||||||||
| Accounts payable — affiliates | — | 499 | ||||||||||||||
| Obligation related to an acquisition | 6,025 | — | ||||||||||||||
| Current portion of long-term debt | 31,518 | 31,518 | ||||||||||||||
| Accrued incentive plan expenses — current portion | 5,885 | 6,788 | ||||||||||||||
| Property, franchise and other taxes payable | 4,088 | 6,926 | ||||||||||||||
| Accrued interest | 2,777 | 9,811 | ||||||||||||||
| Total current liabilities | 51,033 | 56,930 | ||||||||||||||
| Deferred revenue | 114,943 | 109,509 | ||||||||||||||
| Accrued incentive plan expenses | 9,423 | 11,347 | ||||||||||||||
| Long-term debt | 730,877 | 661,070 | ||||||||||||||
| Partners’ capital: | ||||||||||||||||
| Common units outstanding: (106,027,836) | 793,620 | 806,529 | ||||||||||||||
| General partner’s interest | 13,868 | 14,132 | ||||||||||||||
| Non-controlling interest | 5,065 | 5,065 | ||||||||||||||
| Accumulated other comprehensive loss | (534 | ) | (546 | ) | ||||||||||||
| Total partners’ capital | 812,019 | 825,180 | ||||||||||||||
| Total liabilities and partners’ capital | $ | 1,718,295 | $ | 1,664,036 | ||||||||||||
| NRP Reports 1st Quarter 2011 Results | Page 10 of 10 |
Natural Resource Partners L.P.
Reconciliation of GAAP “Net cash provided by operating activities”
To Non-GAAP “Distributable cash flow”
Reconciliation of GAAP “Net cash provided by operating activities”
To Non-GAAP “Distributable cash flow”
(In thousands)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
| Net cash provided by operating activities | $ | 47,034 | $ | 41,881 | ||||
| Less scheduled principal payments | (15,193 | ) | (15,192 | ) | ||||
| Less reserves for future principal payments | (8,059 | ) | (8,059 | ) | ||||
| Add reserves used for scheduled principal payments | 15,193 | 15,192 | ||||||
| Distributable cash flow | $ | 38,975 | $ | 33,822 | ||||
-end-