Exhibit 99.1
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Natural Resource Partners L.P. 601 Jefferson St., Suite 3600, Houston, TX 77002 | |  |
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NEWS RELEASE
Natural Resource Partners L.P.
Reports Third Quarter 2012 Results
Third Quarter 2012 Highlights:
| | • | | Total revenues of $94.2 million |
| | • | | Net income per unit of $0.48 |
| | • | | Distributable cash flow of $65.1 million |
| | • | | Distribution of $0.55 per unit |
| | • | | Metallurgical production accounted for 33% of production and 44% of coal royalty revenues for the first nine months |
HOUSTON, November 5, 2012 –Natural Resource Partners L.P. (NYSE:NRP)today reported revenues of $94.2 million, and net income per unit of $0.48 for the third quarter 2012. In addition, NRP reported distributable cash flow, a non-GAAP measure, of $65.1 million.
“In spite of a weak coal market, compared to the second quarter 2012, production from NRP’s lessees increased in the third quarter by 11% and coal royalty revenues by 12%, as we exceeded our expectations,” said Nick Carter, President and Chief Operating Officer.
Third Quarter 2012 Compared to Second Quarter 2012
| | | | | | | | | | | | |
| | | 3Q12 | | | 2Q12 | | | | |
Highlights | | (in thousands, except per ton
and per unit) | | | %Change | |
Total revenues | | $ | 94,175 | | | $ | 90,664 | | | | 4 | % |
Coal production | | | 13,340 | | | | 11,982 | | | | 11 | % |
Coal royalty revenues | | $ | 70,259 | | | $ | 62,878 | | | | 12 | % |
Average coal royalty revenue per ton | | $ | 5.27 | | | $ | 5.25 | | | | 0 | % |
Revenues other than coal royalty | | $ | 23,916 | | | $ | 27,786 | | | | -14 | % |
Net income to limited partners | | $ | 50,961 | | | $ | 48,939 | | | | 4 | % |
Net income per unit | | $ | 0.48 | | | $ | 0.46 | | | | 4 | % |
Average units outstanding | | | 106,028 | | | | 106,028 | | | | 0 | % |
Distributable cash flow(1) | | $ | 65,063 | | | $ | 70,653 | | | | -8 | % |
| (1) | See Non-GAAP reconciliation |
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| NRP Reports 3Q12 Results | | Page 2 of 13 |
Revenues
Total revenues for the third quarter increased 4% over the second quarter 2012 to $94.2 million, driven by an 11% increase in coal production. Coal royalty revenues increased $7.4 million, or 12%, while average coal royalty revenue per ton remained virtually flat. In the third quarter, NRP saw increases in production in every region but the Illinois Basin, which was flat. Increases in metallurgical coal production in Southern Appalachia more than offset the declines in both Central and Northern Appalachia metallurgical coal production, and metallurgical prices in Southern Appalachia were significantly higher than Northern and Central Appalachia. In addition to the more than $1.2 million increase in metallurgical coal revenues, steam coal revenues increased $6.2 million with increases in every region except Northern Appalachia. NRP experienced significantly higher production and revenues in the Northern Powder River Basin due to more coal being shipped from NRP properties as well as a periodic sales price adjustment with our lessee’s customer. With respect to revenues other than coal royalty, NRP saw decreases in infrastructure fees of $1.7 million, $1.4 million of which was related to a preparation plant sold in July, and a $2.8 million decrease in oil and gas royalties mainly due to three lease bonus payments, received in the second quarter, on oil and gas totaling $2.6 million.
Operating Expenses
Total operating costs and expenses for the third quarter of 2012 increased $1.4 million to $28.5 million over the second quarter mainly due to increased general and administrative costs and higher property and franchise taxes.
Net income
Net income to the limited partners for the third quarter 2012 totaled $51.0 million, or $0.48 per unit, compared to the second quarter 2012 net income of $48.9 million or $0.46 per unit.
Distributable cash flow
Distributable cash flow decreased $5.6 million, or 8%, to $65.1 million mainly due to working capital changes. In the second quarter NRP received more advance minimums and had higher collections of accounts receivable.
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| NRP Reports 3Q12 Results | | Page 3 of 13 |
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| | | Quarter Ended | | | Nine Months Ended | |
| | | September | | | September | | | % | | | September | | | September | | | % | |
Highlights | | 2012 | | | 2011 | | | Change | | | 2012 | | | 2011 | | | Change | |
| | | (in thousands except per unit, per ton and %) | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
Total revenues | | $ | 94,175 | | | $ | 103,164 | | | | -9 | % | | $ | 276,711 | | | $ | 284,548 | | | | -3 | % |
Coal production | | | 13,340 | | | | 13,135 | | | | 2 | % | | | 37,437 | | | | 37,109 | | | | 1 | % |
Coal royalty revenues | | $ | 70,259 | | | $ | 74,976 | | | | -6 | % | | $ | 193,053 | | | $ | 211,583 | | | | -9 | % |
Average coal royalty revenue per ton | | $ | 5.27 | | | $ | 5.71 | | | | -8 | % | | $ | 5.16 | | | $ | 5.70 | | | | -9 | % |
Revenues other than coal royalties | | $ | 23,916 | | | $ | 28,188 | | | | -15 | % | | $ | 83,658 | | | $ | 72,965 | | | | 15 | % |
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Net income (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) to limited partners | | $ | 50,961 | | | $ | (29,948 | ) | | | NM | | | $ | 150,183 | | | $ | 69,510 | | | | 116 | % |
Net income (loss) per unit | | $ | 0.48 | | | $ | (0.28 | ) | | | NM | | | $ | 1.42 | | | $ | 0.66 | | | | 115 | % |
Average units outstanding | | | 106,028 | | | | 106,028 | | | | 0 | % | | | 106,028 | | | | 106,028 | | | | 0 | % |
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Net income before considering the impairment (1) | | | | | | | | | | | | | | | | | | | | | | | | |
Net income to limited partners | | | 50,961 | | | | 59,166 | | | | -14 | % | | | 150,183 | | | | 158,624 | | | | -5 | % |
Net income per unit | | $ | 0.48 | | | $ | 0.56 | | | | -14 | % | | $ | 1.42 | | | $ | 1.50 | | | | -5 | % |
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Distributable cash flow(1) | | $ | 65,063 | | | $ | 76,442 | | | | -15 | % | | $ | 172,143 | | | $ | 200,363 | | | | -14 | % |
| (1) | See Non-GAAP reconciliation |
Revenues
Third Quarter
Total revenues for the third quarter of $94.2 million decreased 9%, or $9.0 million from the third quarter 2011 mainly due to decreases in coal royalty revenue and oil and gas royalties.
Coal royalty revenue decreased $4.7 million, while production rose modestly from the third quarter 2011. This decline in revenues reflects the $0.44 per ton decrease realized in the combined average royalty revenue per ton. Most of the change relates to reductions in both price and production in Central Appalachia, where production declined 816,000 tons and prices realized per ton decreased $0.85. These declines were partially offset by the significant increase in both production and price in Southern Appalachia, where sales from the Oak Grove metallurgical mine resumed after damage to the preparation plant last year.
Revenues other than coal royalty decreased $4.3 million mainly due to decreases in oil and gas revenues and coal processing fees, partially offset by increases in other revenue. Coal processing fees decreased $2.3 million due to reduced throughput and prices in Central Appalachia, as well as a small portion due to the sale of a preparation plant in the third quarter of 2012. Oil and gas revenues decreased $3.8 million mainly due to lower gas production and significantly lower natural gas prices. Other revenue increased $3.6 million primarily due to a gain on the sale of a preparation plant.
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| NRP Reports 3Q12 Results | | Page 4 of 13 |
Nine Months
Total revenues for the first nine months decreased 3% over the 2011 period to $276.7 million. While coal royalty revenues declined approximately 9%, or $18.5 million, due to $0.54 per ton lower coal royalty realizations; other revenues increased $10.7 million, which helped partially offset that decline. The lower realizations per ton resulted from lower prices received in Appalachia on both thermal and metallurgical coal, as well as new production in Northern Appalachia from an older lease that has a much lower royalty rate. Metallurgical coal accounted for 33% of NRP’s production and 44% of its coal royalty revenues for the first nine months of 2012 compared to 35% of production and 45% of coal royalty revenues in 2011.
Revenues other than coal royalty revenues increased $10.7 million from the first nine months of 2011 to $83.7 million mainly due to the following:
| | • | | $9.6 million minimum recognized as revenue in the first quarter on the Gatling Ohio property, |
| | • | | $4.6 million increase in gains on property sales , |
| | • | | $1.8 million increase in transportation fees associated with Illinois Basin production, |
| | • | | $3.3 million decrease in coal processing fees from lower throughput in Central Appalachia as well as the lost volumes associated with the plant sold, |
| | • | | $3.3 million decrease in oil and gas royalties mainly due to lower natural gas price realizations and slightly lower production. |
Operating Expenses
Third Quarter
Total operating costs and expenses for the third quarter 2012 totaled $28.5 million compared to the $121.0 million reported in the 2011 quarter. The third quarter 2011 costs and expenses included an impairment charge of $90.9 million. Excluding the impairment, costs and expenses declined $1.5 million between quarters. The decrease was associated with $5.3 million lower depreciation, depletion and amortization due to production in 2012 on properties with lower basis, and the third quarter 2011 included $2.8 million associated with assets that have either been sold or impaired, partially offset by a $2.7 million increase in general and administrative expenses.
Nine Months
Total operating costs and expenses for the first nine months of 2012 were $82.8 million, down $4.1 million from 2011, after excluding the $90.9 million impairment. Lower depreciation, depletion and amortization partially offset by higher property, franchise and other taxes and slightly higher general and administrative expense accounted for the decrease.
Net income
Third Quarter
Net income to the limited partners totaled $51.0 million compared to the loss of $29.9 million shown in the third quarter 2011, which included the impairment. Excluding the impairment, net income to the limited partners was down $8.2 million from the 2011 third quarter, primarily due to lower coal royalty revenues.
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| NRP Reports 3Q12 Results | | Page 5 of 13 |
Net income per unit was $0.48 compared to a loss of $0.28 per unit reported in 2011. Excluding the impairment in 2011, the net income per unit for the third quarter 2011 was $0.56.
Nine Months
Net income attributable to the limited partners for the first nine months of 2012 was $150.2 million, or $1.42 per unit, compared with $0.66 per unit reported in the third quarter 2011, or $1.50 per unit excluding the impairment.
Distributable cash flow
Third Quarter
Third quarter distributable cash flow of $65.1 million was $11.4 million lower than the third quarter of 2011, mainly due to lower revenues and a $5.4 million increase in the reserve for future principal payments on NRP’s senior notes.
Nine Months
Distributable cash flow for the first nine months of 2012 decreased $28.2 million to $172.1 million from 2011, primarily due to an increase in the reserve for future principal payments on NRP’s senior notes of $15.7 million and increased interest payments of $6.0 million due to increased borrowings in addition to the decreased revenues.
Market Outlook
“Both the metallurgical and thermal coal markets appear to have hit bottom. Margins are slim or non-existent for much of Central Appalachian thermal production, and metallurgical coal demand seems to be increasing globally. That having been said, we do not expect a quick recovery of either market and would expect that metallurgical coal demand will increase slowly over the next 12 months as steel production grows globally and restocking occurs,” said Nick Carter.
“Additionally we expect that 2013 will be a hard year for thermal coal producers in Central Appalachia where current large stockpiles will need to be reduced, and the situation is further exacerbated by a large number of rollover contracts for deferred coal deliveries that resulted from the weak market in 2012. While we have recently seen an increase in natural gas prices and some reversal of coal to gas switching for coal produced in the Powder River Basin and to some extent the Illinois Basin, we still expect there to continue to be some fuel switching from coal to natural gas into 2013 and beyond for Appalachian coal unless there are further increases in natural gas prices.”
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| NRP Reports 3Q12 Results | | Page 6 of 13 |
Acquisitions and Liquidity
As previously announced, in the third quarter 2012 NRP completed the final $40.0 million acquisition of the Deer Run coal reserves located in the Illinois Basin.
As of September 30, 2012, NRP had $197 million in available capacity under its credit facility and approximately $122 million in cash.
Distributions
As reported on October 17, 2012, the Board of Directors of NRP’s general partner declared a quarterly distribution of $0.55 per unit to be paid on November 14, 2012 to unitholders of record as of November 5, 2012.
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 orkroberts@nrplp.com. Further information about NRP is available on the partnership’s website athttp://www.nrplp.com.
Disclosure of Non-GAAP Financial Measures
Distributable cash flow represents cash flow from operations and proceeds from assets sales and returns on direct financing leases and contractual overrides 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 current coal market condition, borrowing capacity and any references to future guidance. 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
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| NRP Reports 3Q12 Results | | Page 7 of 13 |
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.
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| 12-18 | | -Financial statements follow- | | |
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| NRP Reports 3Q12 Results | | Page 8 of 13 |
Natural Resource Partners L.P.
Operating Statistics
(in thousands except per ton data)
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| | | Quarter Ended | | | Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
| | | | | | (restated) | | | | | | (restated) | |
Coal Royalties: | | | | | | | | | | | | | | | | |
Coal royalty revenues: | | | | | | | | | | | | | | | | |
Appalachia | | | | | | | | | | | | | | | | |
Northern | | $ | 3,300 | | | $ | 4,731 | | | $ | 10,996 | | | $ | 14,592 | |
Central | | | 39,404 | | | | 50,595 | | | | 119,880 | | | | 151,156 | |
Southern | | | 9,672 | | | | 1,554 | | | | 20,694 | | | | 9,742 | |
| | | | | | | | | | | | | | | | |
Total Appalachia | | $ | 52,376 | | | $ | 56,880 | | | $ | 151,570 | | | $ | 175,490 | |
Illinois Basin | | | 13,205 | | | | 14,313 | | | | 34,886 | | | | 29,598 | |
Northern Powder River Basin | | | 4,493 | | | | 3,622 | | | | 6,264 | | | | 6,135 | |
Gulf Coast Lignite | | | 185 | | | | 161 | | | | 333 | | | | 360 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 70,259 | | | $ | 74,976 | | | $ | 193,053 | | | $ | 211,583 | |
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Coal royalty production (tons): | | | | | | | | | | | | | | | | |
Appalachia | | | | | | | | | | | | | | | | |
Northern | | | 1,814 | | | | 1,156 | | | | 5,866 | | | | 3,530 | |
Central | | | 6,590 | | | | 7,406 | | | | 19,632 | | | | 22,756 | |
Southern | | | 1,159 | | | | 290 | | | | 2,547 | | | | 1,410 | |
| | | | | | | | | | | | | | | | |
Total Appalachia | | | 9,563 | | | | 8,852 | | | | 28,045 | | | | 27,696 | |
Illinois Basin | | | 2,907 | | | | 3,084 | | | | 7,908 | | | | 7,118 | |
Northern Powder River Basin | | | 853 | | | | 1,119 | | | | 1,447 | | | | 2,024 | |
Gulf Coast Lignite | | | 17 | | | | 80 | | | | 37 | | | | 271 | |
| | | | | | | | | | | | | | | | |
Total | | | 13,340 | | | | 13,135 | | | | 37,437 | | | | 37,109 | |
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Average royalty revenue per ton: | | | | | | | | | | | | | | | | |
Appalachia | | | | | | | | | | | | | | | | |
Northern | | $ | 1.82 | | | $ | 4.09 | | | $ | 1.87 | | | $ | 4.13 | |
Central | | | 5.98 | | | | 6.83 | | | | 6.11 | | | | 6.64 | |
Southern | | | 8.35 | | | | 5.36 | | | | 8.12 | | | | 6.91 | |
Total Appalachia | | | 5.48 | | | | 6.43 | | | | 5.40 | | | | 6.34 | |
Illinois Basin | | | 4.54 | | | | 4.64 | | | | 4.41 | | | | 4.16 | |
Northern Powder River Basin | | | 5.27 | | | | 3.24 | | | | 4.33 | | | | 3.03 | |
Gulf Coast Lignite | | | 10.88 | | | | 2.01 | | | | 9.00 | | | | 1.33 | |
Combined average royalty revenue per ton | | $ | 5.27 | | | $ | 5.71 | | | $ | 5.16 | | | $ | 5.70 | |
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Aggregates: | | | | | | | | | | | | | | | | |
Royalty revenues | | $ | 1,643 | | | $ | 2,099 | | | $ | 5,061 | | | $ | 5,030 | |
Aggregate royalty bonus | | | — | | | | — | | | | — | | | | 94 | |
Production | | | 1,239 | | | | 1,682 | | | | 4,053 | | | | 4,618 | |
Average base royalty per ton | | $ | 1.33 | | | $ | 1.25 | | | $ | 1.25 | | | $ | 1.09 | |
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Oil and gas: | | | | | | | | | | | | | | | | |
Royalty revenues | | $ | 1,246 | | | $ | 5,059 | | | $ | 6,712 | | | $ | 10,047 | |
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| NRP Reports 3Q12 Results | | Page 9 of 13 |
Natural Resource Partners L.P.
Consolidated Statements of Income
(in thousands, except per unit data)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
| | | | | | (restated) | | | | | | (restated) | |
Revenues: | | | | | | | | | | | | | | | | |
Coal royalties | | $ | 70,259 | | | $ | 74,976 | | | $ | 193,053 | | | $ | 211,583 | |
Aggregate royalties | | | 1,643 | | | | 2,099 | | | | 5,061 | | | | 5,124 | |
Processing fees | | | 1,641 | | | | 3,967 | | | | 6,905 | | | | 10,229 | |
Transportation fees | | | 5,007 | | | | 4,765 | | | | 14,361 | | | | 12,608 | |
Oil and gas royalties | | | 1,246 | | | | 5,059 | | | | 6,712 | | | | 10,047 | |
Property taxes | | | 3,602 | | | | 2,974 | | | | 11,421 | | | | 9,563 | |
Minimums recognized as revenue | | | 1,096 | | | | 2,429 | | | | 13,748 | | | | 5,456 | |
Override royalties | | | 3,359 | | | | 4,131 | | | | 11,998 | | | | 10,666 | |
Other | | | 6,322 | | | | 2,764 | | | | 13,452 | | | | 9,272 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 94,175 | | | | 103,164 | | | | 276,711 | | | | 284,548 | |
Operating costs and expenses: | | | | | | | | | | | | | | | | |
Depreciation, depletion and amortization | | | 14,485 | | | | 19,819 | | | | 42,066 | | | | 51,576 | |
Asset impairments | | | — | | | | 90,932 | | | | — | | | | 90,932 | |
General and administrative | | | 8,225 | | | | 5,521 | | | | 24,204 | | | | 22,156 | |
Property, franchise and other taxes | | | 4,853 | | | | 3,915 | | | | 13,640 | | | | 10,918 | |
Transportation costs | | | 446 | | | | 540 | | | | 1,446 | | | | 1,531 | |
Coal royalty and override payments | | | 523 | | | | 233 | | | | 1,396 | | | | 700 | |
| | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | 28,532 | | | | 120,960 | | | | 82,752 | | | | 177,813 | |
| | | | | | | | | | | | | | | | |
Income (loss) from operations | | | 65,643 | | | | (17,796 | ) | | | 193,959 | | | | 106,735 | |
Other income (expense) | | | | | | | | | | | | | | | | |
Interest expense | | | (13,677 | ) | | | (12,779 | ) | | | (40,815 | ) | | | (35,795 | ) |
Interest income | | | 35 | | | | 16 | | | | 104 | | | | 40 | |
| | | | | | | | | | | | | | | | |
Income (loss) before non-controlling interest | | $ | 52,001 | | | $ | (30,559 | ) | | $ | 153,248 | | | $ | 70,980 | |
| | | | | | | | | | | | | | | | |
Less non-controlling interest | | | — | | | | — | | | | — | | | | 51 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 52,001 | | | $ | (30,559 | ) | | $ | 153,248 | | | $ | 70,929 | |
| | | | | | | | | | | | | | | | |
Net income (loss) attributable to: | | | | | | | | | | | | | | | | |
General partner | | $ | 1,040 | | | $ | (611 | ) | | $ | 3,065 | | | $ | 1,419 | |
| | | | | | | | | | | | | | | | |
Limited partners | | $ | 50,961 | | | $ | (29,948 | ) | | $ | 150,183 | | | $ | 69,510 | |
| | | | | | | | | | | | | | | | |
Basic and diluted net income (loss) per limited partner unit: | | $ | 0.48 | | | $ | (0.28 | ) | | $ | 1.42 | | | $ | 0.66 | |
| | | | | | | | | | | | | | | | |
Weighted average number of units outstanding: | | | 106,028 | | | | 106,028 | | | | 106,028 | | | | 106,028 | |
| | | | | | | | | | | | | | | | |
Comprehensive income (loss) | | $ | 52,015 | | | $ | (30,545 | ) | | $ | 153,285 | | | $ | 70,968 | |
| | | | | | | | | | | | | | | | |
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| NRP Reports 3Q12 Results | | Page 10 of 13 |
Natural Resource Partners L.P.
Consolidated Statements of Cash Flow
(in thousands, except per unit data)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
Cash flows from operating activities: | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 52,001 | | | $ | (30,559 | ) | | $ | 153,248 | | | $ | 70,929 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation, depletion and amortization | | | 14,485 | | | | 19,819 | | | | 42,066 | | | | 51,576 | |
Asset Impairments | | | — | | | | 90,932 | | | | — | | | | 90,932 | |
Gain on sale of assets | | | (4,715 | ) | | | (1,058 | ) | | | (8,823 | ) | | | (1,058 | ) |
Gain on reserve swap | | | — | | | | | | | | — | | | | (2,990 | ) |
Non-cash interest charge, net | | | 153 | | | | 225 | | | | 453 | | | | 493 | |
Non-controlling interest | | | — | | | | | | | | — | | | | 51 | |
Change in operating assets and liabilities: | | | | | | | | | | | | | | | | |
Accounts receivable | | | (5,185 | ) | | | (8,985 | ) | | | 666 | | | | (12,770 | ) |
Other assets | | | 345 | | | | 24 | | | | 369 | | | | 556 | |
Accounts payable and accrued liabilities | | | 493 | | | | 698 | | | | 1,055 | | | | 213 | |
Accrued interest | | | (2,613 | ) | | | (3,578 | ) | | | (2,771 | ) | | | (1,710 | ) |
Deferred revenue | | | 5,316 | | | | 12,022 | | | | 11,867 | | | | 24,541 | |
Accrued incentive plan expenses | | | 1,717 | | | | 1,116 | | | | (3,544 | ) | | | (14 | ) |
Property, franchise and other taxes payable | | | (132 | ) | | | (1,014 | ) | | | (714 | ) | | | (2,427 | ) |
| | | | | | | | | | | | | | | | |
Net cash provided by operating activities: | | | 61,865 | | | | 79,642 | | | | 193,872 | | | | 218,322 | |
| | | | | | | | | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | |
Acquisition of land, coal and other mineral rights | | | (40,010 | ) | | | (8,241 | ) | | | (134,463 | ) | | | (107,509 | ) |
Acquisition or construction of plant and equipment | | | (189 | ) | | | | | | | (681 | ) | | | (325 | ) |
Proceeds from sale of assets | | | 14,762 | | | | 4,500 | | | | 15,047 | | | | 5,500 | |
Return on direct financing lease and contractual override | | | 1,495 | | | | — | | | | 2,399 | | | | — | |
Acquisition of contracts | | | — | | | | — | | | | (59,009 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | (23,942 | ) | | | (3,741 | ) | | | (176,707 | ) | | | (102,334 | ) |
| | | | | | | | | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | | | | | | | | |
Proceeds from loans | | | 30,000 | | | | — | | | | 103,000 | | | | 335,000 | |
Repayment of loans | | | (7,692 | ) | | | (7,693 | ) | | | (30,800 | ) | | | (210,519 | ) |
Deferred financing costs | | | — | | | | (1,722 | ) | | | — | | | | (2,774 | ) |
Payment of obligation related to acquisitions | | | — | | | | (3,600 | ) | | | (500 | ) | | | (7,625 | ) |
Costs associated with equity transactions | | | (59 | ) | | | (1 | ) | | | (59 | ) | | | (141 | ) |
Distributions to partners | | | (59,727 | ) | | | (58,478 | ) | | | (181,309 | ) | | | (175,323 | ) |
| | | | | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | (37,478 | ) | | | (71,494 | ) | | | (109,668 | ) | | | (61,382 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 445 | | | | 4,407 | | | | (92,503 | ) | | | 54,606 | |
Cash and cash equivalents at beginning of period | | | 121,974 | | | | 145,705 | | | | 214,922 | | | | 95,506 | |
| | | | | | | | | | | | | | | | |
Cash and cash equivalents at end of period | | $ | 122,419 | | | $ | 150,112 | | | $ | 122,419 | | | $ | 150,112 | |
| | | | | | | | | | | | | | | | |
SUPPLEMENTAL INFORMATION: | | | | | | | | | | | | | | | | |
Cash paid during the period for interest | | $ | 16,137 | | | $ | 16,215 | | | $ | 43,113 | | | $ | 37,074 | |
| | | | | | | | | | | | | | | | |
Non-cash activities: | | | | | | | | | | | | | | | | |
Non-controlling interest | | $ | — | | | $ | — | | | $ | — | | | $ | 373 | |
Obligation related to purchase of reserves and infrastructure | | $ | — | | | $ | — | | | $ | — | | | $ | 4,100 | |
Notes receivable related to sale of asset | | $ | 1,808 | | | | | | | $ | 1,808 | | | | | |
| | |
| NRP Reports 3Q12 Results | | Page 11 of 13 |
Natural Resource Partners L.P.
Consolidated Balance Sheets
(in thousands, except for unit information)
| | | | | | | | |
| | | September 30, | | | December 31, | |
| | | 2012 | | | 2011 | |
| | | (unaudited) | | | (audited) | |
| ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 122,419 | | | $ | 214,922 | |
Accounts receivable, net of allowance for doubtful accounts | | | 36,761 | | | | 30,923 | |
Accounts receivable - affiliates | | | 10,077 | | | | 10,138 | |
Other | | | 218 | | | | 832 | |
| | | | | | | | |
Total current assets | | | 169,475 | | | | 256,815 | |
Land | | | 24,515 | | | | 24,534 | |
Plant and equipment, net | | | 33,968 | | | | 46,185 | |
Coal and other mineral rights, net | | | 1,352,800 | | | | 1,257,501 | |
Intangible assets, net | | | 71,900 | | | | 75,164 | |
Loan financing costs, net | | | 4,430 | | | | 4,846 | |
Long-term contracts receivable - affiliates | | | 55,741 | | | | — | |
Other assets, net | | | 849 | | | | 604 | |
| | | | | | | | |
Total assets | | $ | 1,713,678 | | | $ | 1,665,649 | |
| | | | | | | | |
| LIABILITIES AND PARTNERS’ CAPITAL | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 3,223 | | | $ | 2,366 | |
Accounts payable - affiliates | | | 573 | | | | 375 | |
Obligation related to acquisitions | | | — | | | | 500 | |
Current portion of long-term debt | | | 87,230 | | | | 30,801 | |
Accrued incentive plan expenses - current portion | | | 7,585 | | | | 8,374 | |
Property, franchise and other taxes payable | | | 5,602 | | | | 6,316 | |
Accrued interest | | | 7,990 | | | | 10,761 | |
| | | | | | | | |
Total current liabilities | | | 112,203 | | | | 59,493 | |
Deferred revenue | | | 123,689 | | | | 113,303 | |
Accrued incentive plan expenses | | | 8,915 | | | | 11,670 | |
Long-term debt | | | 852,039 | | | | 836,268 | |
Partners’ capital: | | | | | | | | |
Common units outstanding (106,027,836) | | | 604,430 | | | | 629,253 | |
General partner’s interest | | | 10,013 | | | | 10,517 | |
Non-controlling interest | | | 2,845 | | | | 5,638 | |
Accumulated other comprehensive loss | | | (456 | ) | | | (493 | ) |
| | | | | | | | |
Total partners’ capital | | | 616,832 | | | | 644,915 | |
| | | | | | | | |
Total liabilities and partners’ capital | | $ | 1,713,678 | | | $ | 1,665,649 | |
| | | | | | | | |
| | |
| NRP Reports 3Q12 Results | | Page 12 of 13 |
Natural Resource Partners L.P.
Reconciliation of GAAP Financial Measurements
to Non-GAAP Financial Measurements
(in thousands)
Reconciliation of GAAP “Net cash provided by operating activities”
to Non-GAAP “Distributable cash flow”
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
Net cash provided by operating activities | | $ | 61,865 | | | $ | 79,642 | | | $ | 193,872 | | | $ | 218,322 | |
Less scheduled principal payments | | | (7,692 | ) | | | (7,692 | ) | | | (30,800 | ) | | | (31,518 | ) |
Less reserves for future scheduled principal payments | | | (13,059 | ) | | | (7,700 | ) | | | (39,175 | ) | | | (23,459 | ) |
Add reserves used for scheduled principal payments | | | 7,692 | | | | 7,692 | | | | 30,800 | | | | 31,518 | |
Return on direct financing lease and contractual override | | | 1,495 | | | | — | | | | 2,399 | | | | — | |
Proceeds from sale of assets | | | 14,762 | | | | 4,500 | | | | 15,047 | | | | 5,500 | |
| | | | | | | | | | | | | | | | |
Distributable cash flow | | $ | 65,063 | | | $ | 76,442 | | | $ | 172,143 | | | $ | 200,363 | |
| | | | | | | | | | | | | | | | |
| | |
| NRP Reports 3Q12 Results | | Page 13 of 13 |
Reconciliation of GAAP “Total operating costs and expenses”
to Non-GAAP “Total operating costs and expenses before considering the impairment”
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | For the Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
Operating costs | | | | | | | | | | | | | | | | |
Total operating costs as reported | | $ | 28,532 | | | $ | 120,960 | | | $ | 82,752 | | | $ | 177,813 | |
Impairments | | $ | — | | | $ | (90,932 | ) | | $ | — | | | $ | (90,932 | ) |
Total operating costs before considering the impairment | | $ | 28,532 | | | $ | 30,028 | | | $ | 82,752 | | | $ | 86,881 | |
Reconciliation of GAAP “Net income attributable to the limited partners”
to Non-GAAP “Net income attributable to the limited partners before considering the impairment”
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | For the Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
Net income (loss) attributable to the limited partners | | | | | | | | | | | | | | | | |
Net income (loss) as reported | | $ | 52,001 | | | $ | (30,559 | ) | | $ | 153,248 | | | $ | 70,929 | |
Impairments | | $ | — | | | $ | 90,932 | | | $ | — | | | $ | 90,932 | |
Net income before considering the impairment | | $ | 52,001 | | | $ | 60,373 | | | $ | 153,248 | | | $ | 161,861 | |
Net income, before considering the impairment, attributable to: | | | | | | | | | | | | | | | | |
General partner | | $ | 1,040 | | | $ | 1,207 | | | $ | 3,065 | | | $ | 3,237 | |
Limited partners | | $ | 50,961 | | | $ | 59,166 | | | $ | 150,183 | | | $ | 158,624 | |
Reconciliation of GAAP “Basic and diluted net income per unit”
to Non-GAAP “Net income per unit before considering the impairment”
| | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | For the Nine Months Ended | |
| | | September | | | September | | | September | | | September | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | (unaudited) | | | (unaudited) | |
Net income (loss) per unit | | | | | | | | | | | | | | | | |
Net income (loss) per unit as reported | | $ | 0.48 | | | $ | (0.28 | ) | | $ | 1.42 | | | $ | 0.66 | |
Adjustment for impairments | | $ | — | | | $ | 0.84 | | | $ | — | | | $ | 0.84 | |
Net income per limited partner unit, before considering the impairment | | $ | 0.48 | | | $ | 0.56 | | | $ | 1.42 | | | $ | 1.50 | |
Weighted number of units outstanding | | | 106,028 | | | | 106,028 | | | | 106,028 | | | | 106,028 | |
-end-
