Exhibit 99.1
Natural Resource Partners L.P. 601 Jefferson St., Suite 3600, Houston, TX 77002 |  |
NEWS RELEASE
Natural Resource Partners L.P.
Reports Record
First Quarter 2005 Earnings
Highlights:
| • | Net income increases 83% to record $20.4 million or $0.77 per unit | |||
| • | Revenues increase 37% to record $36.2 million | |||
| • | Distributable cash flow increases 43% to $23.7 million | |||
HOUSTON, May 4, 2005–Natural Resource Partners L.P. (NYSE: NRP)today reported an 83% increase in net income to a record $20.4 million or $0.77 per unit for the first quarter 2005 compared to $11.2 million for the 2004 first quarter. Distributable cash flow, a “non-GAAP financial measure,” grew to $23.7 million, which reflects a 43% increase over the first quarter 2004 distributable cash flow of $16.6 million. A reconciliation of distributable cash flow can be found in the tables attached to this release.
“NRP’s results exceeded our expectations for the quarter due to significantly improved coal prices realized by our lessees in each of our regions,” said Nick Carter, President and Chief Operating Officer. “However, production was slightly lower than expected as our lessees continue to experience a number of constraints, including a shortage of labor, permitting issues and rail transportation problems.”
First Quarter 2005
Total revenues increased 37% to a record $36.2 million for the first quarter 2005 over $26.4 million reported for the same period last year.
First quarter 2005 coal royalty revenues increased 42% to $32.5 million from $22.8 million last year as the partnership experienced increased prices and production in all three regions. Coal royalty revenues were bolstered by a 29% improvement in the average coal royalty revenue per ton to $2.55 in the first quarter 2005 from $1.97 for the same period last year. Production by our lessees grew 10% to 12.8 million tons over the 11.6 million tons reported for the same period last year. Metallurgical coal accounted for
| NRP Reports 1st Quarter 2005 Results | Page 2 of 9 |
approximately 31% of the first quarter 2005 revenue and 27% of production, slightly in excess of NRP’s expectations.
Other revenues also increased 58% to $1.2 million primarily due to increased wheelage revenues, oil & gas revenues and timber sales.
Total expenses increased 15% to $13.6 million from $11.8 million for the first quarter 2004. The majority of the increase in expenses is due to increases in depletion and amortization and general and administrative expenses. Depletion and amortization increased 11% to $7.9 million due to increased production volumes, while general and administrative expenses increased 22% to $3.3 million due to increased staff required to manage the properties acquired as well as accruals under the long-term incentive compensation plans due to the increase in NRP’s unit price.
2005 Outlook
“With only one quarter of performance from our lessees, we are reaffirming our previously issued guidance for 2005 earnings of $2.60 to $2.95 per unit”, said Dwight L. Dunlap, Chief Financial Officer. “Further details are included in the table attached.”
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.
Natural Resource Partners L.P. is headquartered in Houston, TX, with its operations headquarters in Huntington, WV. NRP is a master limited partnership that is principally engaged in the business of owning and managing coal properties in the three major coal producing regions of the United States: Appalachia, the Illinois Basin and the Powder River Basin.
For additional information, please contact Kathy Hager at 713-751-7555 orkhager@nrplp.com. Further information about NRP is available on the partnership’s website athttp://www.nrplp.com.
| NRP Reports 1st Quarter 2005 Results | Page 3 of 9 |
This press release may include “forward-looking statements” as defined by the Securities and Exchange Commission. Such statements include the 2005 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.
05-08
- financials follow-
| NRP Reports 1st Quarter 2005 Results | Page 4 of 9 |
NATURAL RESOURCE PARTNERS L.P.
OPERATING STATISTICS
(In thousands, except per ton data)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
| Coal royalty revenues: | ||||||||
| Appalachia | $ | 29,653 | $ | 21,283 | ||||
| Illinois Basin | 1,307 | 715 | ||||||
| Northern Powder River Basin | 1,570 | 850 | ||||||
| Total | $ | 32,530 | $ | 22,848 | ||||
| Sales volumes (tons): | ||||||||
| Appalachia | 10,871 | 10,331 | ||||||
| Illinois Basin | 867 | 605 | ||||||
| Northern Powder River Basin | 1,032 | 686 | ||||||
| Total | 12,770 | 11,622 | ||||||
| Average royalty revenue per ton: | ||||||||
| Appalachia | $ | 2.73 | $ | 2.06 | ||||
| Illinois Basin | 1.51 | 1.18 | ||||||
| Northern Powder River Basin | 1.52 | 1.24 | ||||||
| Total | $ | 2.55 | $ | 1.97 | ||||
| NRP Reports 1st Quarter 2005 Results | Page 5 of 9 |
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit data)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
| Revenues: | ||||||||
| Coal royalties | $ | 32,530 | $ | 22,848 | ||||
| Property taxes | 1,434 | 1,306 | ||||||
| Minimums recognized as revenue | 453 | 763 | ||||||
| Override royalties | 615 | 677 | ||||||
| Other | 1,215 | 768 | ||||||
| Total revenues | 36,247 | 26,362 | ||||||
| Operating costs and expenses: | ||||||||
| Depletion and amortization | 7,879 | 7,069 | ||||||
| General and administrative | 3,312 | 2,711 | ||||||
| Taxes other than income | 1,830 | 1,657 | ||||||
| Coal royalty and override payments | 553 | 388 | ||||||
| Total operating costs and expenses | 13,574 | 11,825 | ||||||
| Income from operations | 22,673 | 14,537 | ||||||
| Other income (expense) | ||||||||
| Interest expense | (2,457 | ) | (3,415 | ) | ||||
| Interest income | 231 | 52 | ||||||
| Net income | $ | 20,447 | $ | 11,174 | ||||
| Net income attributable to: | ||||||||
General partner(1) | $ | 830 | $ | 247 | ||||
Holders of incentive distribution rights(1) | $ | 227 | $ | 12 | ||||
| Limited partners | $ | 19,390 | $ | 10,915 | ||||
| Basic and diluted net income per limited partner unit: | ||||||||
| Common | $ | .77 | $ | .47 | ||||
| Subordinated | $ | .77 | $ | .47 | ||||
| Weighted average number of units outstanding: | ||||||||
| Common | 13,987 | 11,816 | ||||||
| Subordinated | 11,354 | 11,354 | ||||||
| (1) | Holders of the incentive distribution rights (IDRs) include the general partner at 65%, the WPP Group at 25% and NRP Investment LP at 10%. The general partner’s portion of the IDR’s is shown with the net income allocated to the general partner. |
| NRP Reports 1st Quarter 2005 Results | Page 6 of 9 |
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 20,447 | $ | 11,174 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depletion and amortization | 7,879 | 7,069 | ||||||
| Non-cash interest charge | 71 | 293 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,390 | ) | (1,943 | ) | ||||
| Other assets | 250 | 309 | ||||||
| Accounts payable | (285 | ) | (204 | ) | ||||
| Accrued interest | 2,247 | 2,016 | ||||||
| Deferred revenue | (2,155 | ) | 68 | |||||
| Accrued incentive plan expenses | 5 | (171 | ) | |||||
| Property and franchise taxes payable | 1 | 310 | ||||||
| Net cash provided by operating activities | 26,070 | 18,921 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of land, coal and other mineral rights | (21,544 | ) | (75,659 | ) | ||||
| Net cash used in investing activities | (21,544 | ) | (75,659 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans | 18,000 | 75,500 | ||||||
| Repayment of loans | — | (102,500 | ) | |||||
| Distributions to partners | (17,526 | ) | (13,033 | ) | ||||
| Contributions by general partner | — | 2,147 | ||||||
| Proceeds from sale of 5,250,000 common units, net of transaction costs | — | 200,421 | ||||||
| Redemption of 2,616,752 common units from Arch Coal, Inc., net of transaction costs | — | (100,121 | ) | |||||
| Net cash provided by financing activities | 474 | 62,414 | ||||||
| Net increase in cash and cash equivalents | 5,000 | 5,676 | ||||||
| Cash and cash equivalents at beginning of period | 42,103 | 24,320 | ||||||
| Cash and cash equivalents at end of period | $ | 47,103 | $ | 29,996 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the period for interest | $ | 137 | $ | 1,106 | ||||
| NRP Reports 1st Quarter 2005 Results | Page 7 of 9 |
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, | December 31, | |||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 47,103 | $ | 42,103 | ||||
| Accounts receivable | 17,473 | 15,058 | ||||||
| Accounts receivable – affiliate | — | 25 | ||||||
| Other | 536 | 786 | ||||||
| Total current assets | 65,112 | 57,972 | ||||||
| Land | 14,110 | 13,721 | ||||||
| Coal and other mineral rights, net | 539,380 | 523,844 | ||||||
| Loan financing costs, net | 1,778 | 1,837 | ||||||
| Other assets, net | 2,310 | 2,552 | ||||||
| Total assets | $ | 622,690 | $ | 599,926 | ||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 304 | $ | 576 | ||||
| Accounts payable – affiliate | 92 | 105 | ||||||
| Current portion of long-term debt | 9,350 | 9,350 | ||||||
| Accrued incentive plan expenses – current portion | 1,420 | 1,559 | ||||||
| Property and franchise taxes payable | 3,461 | 3,460 | ||||||
| Accrued interest | 2,513 | 266 | ||||||
| Total current liabilities | 17,140 | 15,316 | ||||||
| Deferred revenue | 15,710 | 15,847 | ||||||
| Accrued incentive plan expenses | 3,415 | 3,271 | ||||||
| Long-term debt | 174,300 | 156,300 | ||||||
| Partners’ capital: | ||||||||
| Common units (outstanding: 13,986,906) | 245,213 | 243,814 | ||||||
| Subordinated units (outstanding: 11,353,658) | 158,527 | 157,324 | ||||||
| General partners’ interest | 9,030 | 8,802 | ||||||
| Holders of incentive distribution rights | 196 | 105 | ||||||
| Accumulated other comprehensive loss | (841 | ) | (853 | ) | ||||
| Total partners’ capital | 412,125 | 409,192 | ||||||
| Total liabilities and partners’ capital | $ | 622,690 | $ | 599,926 | ||||
| NRP Reports 1st Quarter 2005 Results | Page 8 of 9 |
NATURAL RESOURCE PARTNERS L.P.
RECONCILIATION OF UNAUDITED GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(In thousands)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2005 | 2004 | |||||||
| (Unaudited) | ||||||||
| Cash flow from operations | $ | 26,070 | $ | 18,921 | ||||
| Less reserves for future principal payments | (2,350 | ) | (2,350 | ) | ||||
| Distributable cash flow | $ | 23,720 | $ | 16,571 | ||||
| NRP Reports 1st Quarter 2005 Results | Page 9 of 9 |
Natural Resource Partners L.P.
Guidance
(dollars and tons in millions except per unit amounts)
| Full Year 2005 | ||||||||||||
| (Range) | ||||||||||||
| Coal royalty production (tons) | ||||||||||||
| Appalachia | 42.5 | — | 44.5 | |||||||||
| Illinois Basin | 2.0 | — | 2.5 | |||||||||
| Northern Powder River Basin | 5.0 | — | 6.0 | |||||||||
| Total | 49.5 | — | 53.0 | |||||||||
| Coal royalty revenues | ||||||||||||
| Appalachia | $ | 105.0 | — | $ | 114.0 | |||||||
| Illinois Basin | 2.5 | — | 3.5 | |||||||||
| Northern Powder River Basin | 6.5 | — | 7.5 | |||||||||
| Total | $ | 115.0 | — | $ | 125.0 | |||||||
| Revenues | ||||||||||||
| Coal royalty revenues | $ | 115.0 | — | 125.0 | ||||||||
| Other revenues (1) | 11.0 | — | 13.0 | |||||||||
| Expenses | ||||||||||||
| Depletion and amortization | $ | 30.0 | — | $ | 35.0 | |||||||
| General and administrative | 10.0 | — | 12.0 | |||||||||
| Other expenses (2) | 7.0 | — | 9.0 | |||||||||
| Other expenses | ||||||||||||
| Interest expense (net) | $ | 8.0 | — | $ | 9.0 | |||||||
| Net income | $ | 68.0 | $ | 78.0 | ||||||||
| Net income per unit | $ | 2.60 | — | $ | 2.95 | |||||||
| Scheduled principal payments | $ | 9.4 | — | $ | 9.4 | |||||||
| Distributable cash flow (3) | $ | 91.0 | — | $ | 101.0 | |||||||
| (1) | Other revenues consist of property taxes, minimums, oil & gas, timber, overrides, wheelage and rentals. | |
| (2) | Other expenses include taxes other than income, override payments, coal royalty payments, and non-participating royalty interests. | |
| (3) | Distributable cash flow represents net income plus depletion and amortization minus scheduled principal payments on NRP 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. We believe that “net cash provided by operating activities” would be the most comparable financial measure to distributable cash. However, due to the substantial uncertainties associated with forecasting future changes to operating assets and liabilities, we cannot provide guidance on forward-looking net cash provided by operating activities or provide reconciliations of distributable cash flow to that measure. |
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