Exhibit 99.1
Natural Resource Partners L.P.
601 Jefferson St., Suite 3600, Houston, TX 77002 |  | |||
NEWS RELEASE
Natural Resource Partners L.P.
Reports Second Quarter 2014 Results
| • | Revenues of $90.6 million |
| • | Net income per unit of $0.28 |
| • | Before considering an impairment, net income per unit of $0.33 |
| • | Distributable cash flow of $64.9 million |
| • | EBITDA of $77.2 million |
| • | Distribution of $0.35 per unit |
HOUSTON, August 6, 2014 –Natural Resource Partners L.P. (NYSE:NRP)today reported revenues of $90.6 million for the second quarter of 2014 compared to $86.8 million for the second quarter of 2013, and distributable cash flow, a non-GAAP measure, of $64.9 million compared to $90.7 million for the second quarter of 2013. Net income per unit was $0.28 in the second quarter of 2014 versus $0.37 per unit in the second quarter of 2013. Before considering an asset impairment expense of $5.6 million for an intangible asset related to an aggregates property, net income per unit for the second quarter 2014 was $0.33. NRP reported EBITDA, a non-GAAP measure, of $77.2 million in the second quarter 2014 compared to $76.1 million for the second quarter 2013. Reconciliations of the non-GAAP measures of distributable cash flow and EBITDA are included in the tables at the end of this release.
“Strong performances in the first half of the year from our oil and gas, soda ash and Illinois coal businesses offset the challenges that we continue to face in the Appalachian coalfields,” said Nick Carter, President and COO. “Our diversification efforts have provided significant benefits to NRP and consequently our combined operating results for the first six months were in line with our expectations.”
At the end of the second quarter, NRP had approximately $373 million in liquidity, consisting of $70 million in cash and $303 million available under its revolving credit facilities. During the second quarter of 2014, NRP reduced its debt by $12.3 million bringing the total net reduction for the first half of the year to $51.5 million.
“Following through on our stated goal earlier this year, we have used the excess cash generated by our substantial distribution coverage to reduce our leverage,” said Dwight Dunlap, Chief Financial Officer. “We intend to continue to pay down our debt over the remainder of the year and use our liquidity and improved credit to fund the growth and continued diversification of NRP.”
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 2 of 17 |
Reaffirmed Guidance and Market Outlook
Excluding a $5.6 million impairment charge taken in the second quarter, NRP is reaffirming its initial guidance for 2014. While NRP anticipates that coal related revenues may be lower than the initial guidance, revenues from other sources are expected to increase, offsetting those declines.
“We are pleased that our first half results matched our expectations, and anticipate continued strong performance in the second half of the year from our soda ash, oil and gas and Illinois Basin coal operations,” said Wyatt Hogan, Executive Vice President.
NRP’s Williston Basin assets are benefitting from strong oil markets and production growth from new wells coming on line in the Bakken/Three Forks play. In addition, NRP’s soda ash business continues to perform well, and is on pace to distribute approximately $46 million to NRP in 2014. The domestic soda ash market remains steady, while the international market for soda ash continues to improve, as global production capacity for high-cost synthetic soda ash continues to be reduced.
While the thermal coal market was starting to show signs of recovery earlier this year aided by the cold winter and higher natural gas prices, the cooler than anticipated summer so far has dampened some of the optimism around thermal coal prices. The global metallurgical coal market continues to suffer from oversupply in addition to reduced demand from China, and NRP does not anticipate metallurgical coal prices recovering in 2014. NRP has exposure to three mines included in Alpha’s recent WARN notice issued in West Virginia, but even if these mines are ultimately idled, it would not have a material impact on NRP’s 2014 forecast as the mines are projected to continue full operations through the third quarter. While other lessees have also announced potential idling of mines through WARN notices, NRP does not anticipate a material impact on its 2014 results. In contrast, NRP believes that thermal coal production from its low-cost Illinois Basin properties will continue to remain strong.
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 3 of 17 |
Second Quarter 2014 compared to Second Quarter 2013
| Highlights | Quarter Ended | For the Six Months Ended | ||||||||||||||||||||||||
| June | June | % | June | June | % | |||||||||||||||||||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||||
| (in thousands except per unit and per ton) | (in thousands except per unit and per ton) | |||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Total revenues and other income | $ | 90,561 | $ | 86,804 | 4 | % | $ | 170,870 | $ | 181,136 | -6 | % | ||||||||||||||
Coal production (tons) | 11,851 | 14,894 | -20 | % | 24,103 | 28,727 | -16 | % | ||||||||||||||||||
Average coal royalty revenue per ton | $ | 3.86 | $ | 3.91 | -1 | % | $ | 3.70 | $ | 3.92 | -6 | % | ||||||||||||||
Coal royalty revenues | $ | 45,763 | $ | 58,210 | -21 | % | $ | 89,298 | $ | 112,652 | -21 | % | ||||||||||||||
Other coal related revenue | $ | 9,598 | $ | 9,197 | 4 | % | $ | 18,436 | $ | 32,598 | -43 | % | ||||||||||||||
Total coal related revenues | $ | 55,361 | $ | 67,407 | -18 | % | $ | 107,734 | $ | 145,250 | -26 | % | ||||||||||||||
Aggregates and industrial minerals related revenue(1) | $ | 12,964 | $ | 10,781 | 20 | % | $ | 26,139 | $ | 20,785 | 26 | % | ||||||||||||||
Oil and gas related revenue | $ | 17,822 | $ | 4,093 | 335 | % | $ | 27,880 | $ | 5,856 | 376 | % | ||||||||||||||
Operating Expenses | $ | 40,158 | $ | 31,472 | 28 | % | $ | 68,028 | $ | 63,276 | 8 | % | ||||||||||||||
Net income | ||||||||||||||||||||||||||
Net income to limited partners | $ | 30,779 | $ | 40,244 | -24 | % | $ | 62,732 | $ | 87,192 | -28 | % | ||||||||||||||
Net income per unit | $ | 0.28 | $ | 0.37 | -24 | % | $ | 0.57 | $ | 0.80 | -29 | % | ||||||||||||||
Average units outstanding | 110,403 | 109,812 | 1 | % | 110,127 | 109,352 | 1 | % | ||||||||||||||||||
Net income before considering the impairment(1) | ||||||||||||||||||||||||||
Net income to limited partners | 36,290 | 40,678 | -11 | % | 68,243 | 87,911 | -22 | % | ||||||||||||||||||
Net income per unit | $ | 0.33 | $ | 0.37 | -11 | % | $ | 0.62 | $ | 0.80 | -23 | % | ||||||||||||||
Distributable cash flow(2) | $ | 64,944 | $ | 90,650 | -28 | % | $ | 103,871 | $ | 135,135 | -23 | % | ||||||||||||||
EBITDA(2) | $ | 77,178 | $ | 76,068 | 1 | % | 148,898 | 156,683 | -5 | % | ||||||||||||||||
EBITDA margin(2) | 85 | % | 88 | % | -3 | % | 87 | % | 87 | % | 0 | % | ||||||||||||||
| (1) | Aggregates and industrial minerals include the equity and other unconsolidated investment income associated with the OCI Wyoming soda ash business. |
| (2) | See “Non-GAAP Financial Measures” and reconciliation tables at the end of the release. |
Revenues and other income
Second quarter 2014 total revenues and other income increased 4% from the same period of 2013. NRP benefitted from its diversification into other asset classes, as revenues other than coal related revenues more than offset the declines experienced in coal related revenues. Coal production volumes decreased 20% to 11.9 million tons, while average coal royalty revenue per ton decreased 1% to $3.86 per ton, which led to a 21% reduction in coal royalty revenues to $45.8 million from the second quarter 2013. The reductions in production and price realizations were primarily related to NRP’s Appalachian properties.
Metallurgical coal accounted for 36% of NRP’s coal production and 43% of its coal royalty revenues for the second quarter of 2014 compared to 28% of production and 40% of coal royalty revenues in the second quarter of 2013.
Revenues other than coal related revenues nearly doubled from the second quarter 2013 primarily due to increased oil and gas revenues and our investment in the soda ash business.
Oil and gas revenues increased nearly six-fold over the second quarter of 2013 to $10.1 million, primarily due to the revenues generated by NRP’s Williston Basin properties acquired in the second half of 2013. NRP also recognized a 19% increase in the equity income associated with NRP’s investment in the soda ash business due to both an increase in net income for the business as well as 23 additional days of income in 2014 over 2013.
Operating expenses
Total operating expenses for the second quarter 2014 rose $8.7 million to $40.2 million from the second quarter 2013. The increase was mainly due to $2.3 million of operating expenses associated with NRP’s Williston Basin oil and gas properties acquired in the second half of 2013, and a $5.6 million asset impairment expense recorded in 2014.
Net income attributable to the limited partners
Net income attributable to the limited partners and net income per unit decreased in the second quarter of 2014 compared to the 2013 period to $30.8 million, or $0.28 per unit, from $40.2 million or $0.37 per unit. Approximately half of the decrease was associated with the non-cash impairment charge. Before considering the impairment, net income attributable to the limited partners and net income per unit were $36.3 million and $0.33 per unit, respectively.
Distributable cash flow
Distributable cash flow decreased by 28% to $64.9 from $90.7 million mainly due to $12.1 million less in distributions from OCI and increased interest expense.
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 4 of 17 |
EBITDA
EBITDA for the second quarter 2014 remained relatively flat at $77.2 million compared to the EBITDA generated in the second quarter 2013 of $76.1 million.
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 5 of 17 |
Second Quarter 2014 compared to First Quarter 2014
| Highlights | Quarter Ended | |||||||||||
| June 2014 | March 2014 | % Change | ||||||||||
| (in thousands, except per ton and per unit) | ||||||||||||
Revenues and other income | ||||||||||||
Total revenues and other income | $ | 90,561 | $ | 80,309 | 13 | % | ||||||
Coal production (tons) | 11,851 | 12,252 | -3 | % | ||||||||
Average coal royalty revenue per ton | $ | 3.86 | $ | 3.55 | 9 | % | ||||||
Coal royalty revenues | $ | 45,763 | $ | 43,536 | 5 | % | ||||||
Other coal related revenue | $ | 9,598 | $ | 8,837 | 9 | % | ||||||
Total coal related revenue | $ | 55,361 | $ | 52,373 | 6 | % | ||||||
Aggregates and industrial minerals related revenue(1) | $ | 12,964 | $ | 13,175 | -2 | % | ||||||
Oil and gas related revenue | $ | 17,822 | $ | 10,058 | 77 | % | ||||||
Operating expenses | $ | 40,158 | $ | 27,870 | 44 | % | ||||||
Net income | ||||||||||||
Net income to limited partners | $ | 30,779 | $ | 31,953 | -4 | % | ||||||
Net income to the limited partners, before considering the impairment(1) | $ | 36,290 | $ | 31,953 | 14 | % | ||||||
Net income per unit | $ | 0.28 | $ | 0.29 | -4 | % | ||||||
Net income per unit, before considering the impairment(1) | $ | 0.33 | $ | 0.29 | 13 | % | ||||||
Average units outstanding | 110,403 | 109,848 | 1 | % | ||||||||
Distributable cash flow(2) | $ | 64,944 | $ | 38,927 | 67 | % | ||||||
EBITDA(2) | $ | 77,178 | $ | 71,720 | 8 | % | ||||||
EBITDA margin(2) | 85 | % | 89 | % | -5 | % | ||||||
| (1) | Aggregates and industrial minerals include the equity and other unconsolidated investment income associated with the OCI Wyoming soda ash business. |
| (2) | See “Non-GAAP Financial Measures” and reconciliation tables at the end of the release. |
Revenues and other income
Total revenues and other income for the second quarter increased $10.3 million or 13% from the first quarter, predominantly due to a $3.0 million increase in coal related revenues and a $7.8 million increase in oil and gas revenues. In the second quarter, NRP realized increased coal royalty revenues due to increased average realizations per ton of coal, relative to the first quarter, and increased oil and gas revenue due to increased oil and gas activity. The increased realizations were mainly due to the mix of coal properties.
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 6 of 17 |
Operating expenses
Operating expenses increased $12.3 million over the previous quarter predominantly due to the following:
| • | Increased depreciation, depletion and amortization (non-cash) of $1.7 million due to production from higher cost properties in this quarter versus the previous quarter |
| • | Impairment charge (non-cash) of $5.6 million |
| • | Increased general and administrative expenses of $3.2 million were mainly due to a negative accrual for the long term incentive plan in the first quarter due to the drop in unit price. The second quarter reflects more of a normal accrual. |
| • | Increased property, franchise and other taxes of $1.3 million predominantly due to severance taxes on oil and gas income |
Net income attributable to the limited partners
Net income attributable to the limited partners and net income per unit decreased in the second quarter from the previous quarter by $1.2 million and $0.01 per unit, respectively. Before considering the non-cash impairment charge taken in the second quarter, net income attributable to the limited partners would have increased by $4.3 million to $36.3 million while net income per unit would have increased by $0.04 to $0.33 per unit.
Distributable cash flow
Distributable cash flow increased to $64.9 million, up from $38.9 million reported in the first quarter mainly due to changes in the balance sheet included in net cash provided by operating activities, as well as additional distributions received from OCI in the second quarter.
EBITDA
EBITDA for the second quarter 2014 increased over the first quarter by $5.5 million due to increased revenues.
Distributions
As reported on July 22, 2014, the Board of Directors of NRP’s general partner declared a quarterly distribution of $0.35 per unit for the second quarter 2014.
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 owns interests in coal, aggregates and industrial minerals and oil and gas across the United States that generate royalty and other income for the partnership. In addition, NRP owns an equity investment in OCI Wyoming, a trona/soda ash operation, and owns non-operated working interests in oil and gas properties.
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 7 of 17 |
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.
Non-GAAP Financial Measures
“Distributable cash flow” represents cash flow from operations plus any proceeds 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 make quarterly cash distributions 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.
“EBITDA” is a non-GAAP financial measure that we define as earnings before interest, taxes, depreciation, depletion and amortization and asset impairment. “EBITDA,” as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDA provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax positions. EBITDA does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital and other commitments and obligations. Our management team believes EBITDA is useful in evaluating our financial performance because this measure is widely used by analysts and investors for comparative purposes. EBITDA is a financial measure widely used by investors in the high-yield bond market. There are significant limitations to using EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating EBITDA reported by different companies.
“EBITDA margin” represents NRP’s EBITDA as a percentage of total revenues and other income.
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, oil and gas, and aggregates and industrial minerals, including trona/soda ash; 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.
| 14-10 | -Financial statements follow- |
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 8 of 17 |
Natural Resource Partners L.P.
Operating Statistics - Coal Related Revenue
(in thousands except per ton data)
| Quarter Ended | For the Six Months Ended | |||||||||||||||
| June | June | June | June | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Coal Royalties: | ||||||||||||||||
Coal royalty production (tons): | ||||||||||||||||
Appalachia | ||||||||||||||||
Northern | 1,826 | 3,531 | 4,477 | 7,272 | ||||||||||||
Central | 5,288 | 5,826 | 9,664 | 10,946 | ||||||||||||
Southern | 949 | 1,163 | 1,933 | 2,267 | ||||||||||||
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Total Appalachia | 8,063 | 10,520 | 16,074 | 20,485 | ||||||||||||
Illinois Basin | 3,416 | 3,012 | 6,538 | 5,906 | ||||||||||||
Northern Powder River Basin | 173 | 969 | 1,052 | 1,764 | ||||||||||||
Gulf Coast | 199 | 393 | 439 | 572 | ||||||||||||
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Total | 11,851 | 14,894 | 24,103 | 28,727 | ||||||||||||
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Average royalty revenue per ton: | ||||||||||||||||
Appalachia | ||||||||||||||||
Northern | $ | 1.07 | $ | 1.20 | $ | 0.91 | $ | 1.25 | ||||||||
Central | 4.50 | 5.18 | 4.53 | 5.17 | ||||||||||||
Southern | 5.14 | 6.32 | 5.35 | 6.64 | ||||||||||||
Total Appalachia | 3.80 | 3.97 | 3.62 | 3.94 | ||||||||||||
Illinois Basin | 4.12 | 4.26 | 4.06 | 4.32 | ||||||||||||
Northern Powder River Basin | 2.09 | 2.37 | 2.83 | 2.51 | ||||||||||||
Gulf Coast | 3.54 | 3.29 | 3.46 | 3.42 | ||||||||||||
Combined average royalty revenue per ton | $ | 3.86 | $ | 3.91 | $ | 3.70 | $ | 3.92 | ||||||||
Coal royalty revenues: | ||||||||||||||||
Appalachia | ||||||||||||||||
Northern | $ | 1,958 | $ | 4,242 | $ | 4,096 | $ | 9,126 | ||||||||
Central | 23,781 | 30,185 | 43,818 | 56,591 | ||||||||||||
Southern | 4,875 | 7,352 | 10,339 | 15,052 | ||||||||||||
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Total Appalachia | $ | 30,614 | $ | 41,779 | $ | 58,253 | $ | 80,769 | ||||||||
Illinois Basin | 14,083 | 12,843 | 26,553 | 25,500 | ||||||||||||
Northern Powder River Basin | 362 | 2,295 | 2,972 | 4,424 | ||||||||||||
Gulf Coast | 704 | 1,293 | 1,520 | 1,959 | ||||||||||||
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Total | $ | 45,763 | $ | 58,210 | $ | 89,298 | $ | 112,652 | ||||||||
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Other coal related revenues: | ||||||||||||||||
Override revenue | 1,402 | 2,582 | 2,746 | 6,444 | ||||||||||||
Transportation and processing fees | 5,996 | 5,030 | 11,093 | 11,005 | ||||||||||||
Minimums recognized as revenue | 1,338 | 549 | 2,808 | 5,005 | ||||||||||||
Reserve swap | — | — | — | 8,149 | ||||||||||||
Wheelage | 862 | 1,036 | 1,789 | 1,995 | ||||||||||||
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Total other coal related revenues | $ | 9,598 | $ | 9,197 | $ | 18,436 | $ | 32,598 | ||||||||
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Total coal revenues | $ | 55,361 | $ | 67,407 | $ | 107,734 | $ | 145,250 | ||||||||
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| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 9 of 17 |
Natural Resource Partners L.P.
Operating Statistics - Aggregates and Industrial Minerals
(in thousands except per ton data)
| Quarter Ended | For the Six Months Ended | |||||||||||||||
| June | June | June | June | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Aggregate royalty revenues and production | ||||||||||||||||
Tonnage | 927 | 1,463 | 2,142 | 2,746 | ||||||||||||
Average royalty per ton | $ | 0.69 | $ | 1.20 | $ | 0.99 | $ | 1.20 | ||||||||
Total aggregate royalty revenues | $ | 644 | $ | 1,751 | $ | 2,125 | $ | 3,303 | ||||||||
Other aggregate related revenue | $ | 2,919 | $ | 1,148 | $ | 4,834 | $ | 2,552 | ||||||||
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Total aggregate related revenues | $ | 3,563 | $ | 2,899 | $ | 6,959 | $ | 5,855 | ||||||||
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Equity and other unconsolidated investment earnings | $ | 9,401 | $ | 7,882 | $ | 19,180 | $ | 14,930 | ||||||||
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Total aggregates and industrial minerals related revenue | $ | 12,964 | $ | 10,781 | $ | 26,139 | $ | 20,785 | ||||||||
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Cash distributions received from OCI Wyoming | $ | 13,923 | $ | 26,702 | $ | 25,568 | $ | 26,939 | ||||||||
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 10 of 17 |
Natural Resource Partners L.P.
Operating Statistics - Oil and Gas
(in thousands except per unit data)
| Quarter Ended | Six Months Ended | |||||||||||||||
| June | June | June | June | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Williston Basin non-operated working interests | ||||||||||||||||
Production volumes | ||||||||||||||||
Oil (MBbls) | 139 | N/A | 207 | N/A | ||||||||||||
Natural gas (Mcf) | 97 | N/A | 112 | N/A | ||||||||||||
NGL (MBoe) | 10 | N/A | 12 | N/A | ||||||||||||
Average sales price per unit | ||||||||||||||||
Oil ($/Bbl) | $ | 93.40 | N/A | $ | 95.86 | N/A | ||||||||||
Natural gas ($/Mcf) | $ | 5.71 | N/A | $ | 7.54 | N/A | ||||||||||
NGL ($/Boe) | $ | 35.40 | N/A | $ | 48.50 | N/A | ||||||||||
Revenues | ||||||||||||||||
Oil | $ | 12,982 | N/A | $ | 19,842 | N/A | ||||||||||
Natural gas | $ | 554 | N/A | $ | 844 | N/A | ||||||||||
NGL | $ | 354 | N/A | $ | 582 | N/A | ||||||||||
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Total | $ | 13,890 | N/A | $ | 21,268 | N/A | ||||||||||
Other oil and gas related revenues | $ | 3,932 | $ | 4,093 | $ | 6,612 | $ | 5,856 | ||||||||
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Total oil and gas revenues | $ | 17,822 | $ | 4,093 | $ | 27,880 | $ | 5,856 | ||||||||
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| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 11 of 17 |
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 | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenues and other income: | ||||||||||||||||
Coal related revenues | $ | 55,361 | $ | 67,407 | $ | 107,734 | $ | 145,250 | ||||||||
Aggregate related revenues | 3,563 | 2,899 | 6,959 | 5,855 | ||||||||||||
Oil and gas related revenues | 17,822 | 4,093 | 27,880 | 5,856 | ||||||||||||
Equity and other unconsolidated investment income | 9,401 | 7,882 | 19,180 | 14,930 | ||||||||||||
Property taxes | 3,378 | 3,849 | 7,345 | 7,796 | ||||||||||||
Other | 1,036 | 674 | 1,772 | 1,449 | ||||||||||||
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Total revenues and other income | 90,561 | 86,804 | 170,870 | 181,136 | ||||||||||||
Operating expenses: | ||||||||||||||||
Depreciation, depletion and amortization | 16,350 | 17,411 | 30,997 | 32,173 | ||||||||||||
Asset impairments | 5,624 | 443 | 5,624 | 734 | ||||||||||||
General and administrative | 9,029 | 8,878 | 14,886 | 20,464 | ||||||||||||
Property, franchise and other taxes | 6,201 | 4,225 | 11,069 | 8,576 | ||||||||||||
Oil and gas lease operating expenses | 2,291 | — | 4,212 | — | ||||||||||||
Transportation costs | 462 | 328 | 884 | 787 | ||||||||||||
Royalty payments | 201 | 187 | 356 | 542 | ||||||||||||
|
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|
|
|
|
|
| |||||||||
Total operating expenses | 40,158 | 31,472 | 68,028 | 63,276 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income from operations | 50,403 | 55,332 | 102,842 | 117,860 | ||||||||||||
Other income (expense) | — | |||||||||||||||
Interest expense | (19,037 | ) | (14,440 | ) | (38,897 | ) | (29,103 | ) | ||||||||
Interest income | 41 | 173 | 67 | 214 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income before non-controlling interest | $ | 31,407 | $ | 41,065 | $ | 64,012 | $ | 88,971 | ||||||||
Non-controlling interest | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 31,407 | $ | 41,065 | $ | 64,012 | $ | 88,971 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income attributable to: | ||||||||||||||||
General partner | $ | 628 | $ | 821 | $ | 1,280 | $ | 1,779 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Limited partners | $ | 30,779 | $ | 40,244 | $ | 62,732 | $ | 87,192 | ||||||||
|
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|
|
|
|
|
| |||||||||
Basic and diluted net income per limited partner unit: | $ | 0.28 | $ | 0.37 | $ | 0.57 | $ | 0.80 | ||||||||
|
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|
|
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|
| |||||||||
Weighted average number of units outstanding: | 110,403 | 109,812 | 110,127 | 109,352 | ||||||||||||
|
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|
|
|
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|
| |||||||||
Comprehensive income | $ | 31,243 | $ | 41,116 | $ | 63,748 | $ | 89,076 | ||||||||
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| |||||||||
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 12 of 17 |
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 | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 31,407 | $ | 41,065 | $ | 64,012 | $ | 88,971 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation, depletion and amortization | 16,350 | 17,411 | 30,997 | 32,173 | ||||||||||||
Gain on reserve swap | — | — | — | (8,149 | ) | |||||||||||
Equity and other unconsolidated investment income | (9,401 | ) | (7,882 | ) | (19,180 | ) | (14,930 | ) | ||||||||
Distributions of earnings from unconsolidated investments | 10,290 | 15,925 | 21,935 | 16,162 | ||||||||||||
Non-cash interest charge, net | 721 | 279 | 1,468 | 555 | ||||||||||||
Gain on sale of assets | — | — | — | (150 | ) | |||||||||||
Asset impairment | 5,624 | 443 | 5,624 | 734 | ||||||||||||
Change in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 3,375 | 4,781 | (3,685 | ) | 4,250 | |||||||||||
Other assets | 336 | (3,251 | ) | 318 | (2,985 | ) | ||||||||||
Accounts payable and accrued liabilities | 1,257 | 1,094 | (413 | ) | 221 | |||||||||||
Accrued interest | (6,145 | ) | 1,349 | (1,772 | ) | (576 | ) | |||||||||
Deferred revenue | 3,357 | 5,445 | 7,099 | 9,951 | ||||||||||||
Accrued incentive plan expenses | 2,149 | 2,036 | (5,916 | ) | (1,219 | ) | ||||||||||
Property, franchise and other taxes payable | 1,688 | 1,041 | (849 | ) | (1,359 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash provided by operating activities: | 61,008 | 79,736 | 99,638 | 123,649 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flows from investing activities: | ||||||||||||||||
Oil and gas capital expenditures | (6,319 | ) | — | (8,123 | ) | |||||||||||
Acquisition of land, coal, other mineral rights, and related intangibles | (768 | ) | — | (768 | ) | — | ||||||||||
Acquisition or construction of plant and equipment | (135 | ) | — | (135 | ) | — | ||||||||||
Acquisition of equity interests | — | (40 | ) | — | (292,979 | ) | ||||||||||
Distributions from unconsolidated investments | 3,633 | 10,777 | 3,633 | 10,777 | ||||||||||||
Proceeds from sale of assets | — | — | — | 154 | ||||||||||||
Return on direct financing lease and contractual override | 303 | 137 | 600 | 555 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash used in investing activities | (3,286 | ) | 10,874 | (4,793 | ) | (281,493 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from loans | — | 43,000 | 2,000 | 243,000 | ||||||||||||
Repayment of loans | (12,317 | ) | (42,916 | ) | (53,483 | ) | (79,538 | ) | ||||||||
Deferred financing costs | — | — | — | (1,621 | ) | |||||||||||
Proceeds from issuance of common units | 9,329 | — | 13,842 | 75,000 | ||||||||||||
Capital contribution by general partner | 255 | — | 347 | 1,531 | ||||||||||||
Costs associated with equity transactions | (381 | ) | (13 | ) | (438 | ) | (60 | ) | ||||||||
Distributions to partners | (39,421 | ) | (61,630 | ) | (79,613 | ) | (124,688 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net cash provided by (used in) financing activities | (42,535 | ) | (61,559 | ) | (117,345 | ) | 113,624 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net (decrease) in cash and cash equivalents | 15,187 | 29,051 | (22,500 | ) | (44,220 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 54,826 | 76,153 | 92,513 | 149,424 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash and cash equivalents at end of period | $ | 70,013 | $ | 105,204 | $ | 70,013 | $ | 105,204 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Supplemental cash flow information: | ||||||||||||||||
Cash paid during the period for interest | $ | 24,432 | $ | 12,784 | $ | 39,135 | $ | 29,085 | ||||||||
|
|
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|
|
|
|
| |||||||||
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 13 of 17 |
Natural Resource Partners L.P.
Consolidated Balance Sheets
(in thousands, except for unit information)
| June | December 31, | |||||||
| 2014 | 2013 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 70,013 | $ | 92,513 | ||||
Accounts receivable, net of allowance for doubtful accounts | 34,718 | 33,737 | ||||||
Accounts receivable - affiliates | 9,018 | 7,666 | ||||||
Other | 1,291 | 1,691 | ||||||
|
|
|
| |||||
Total current assets | 115,040 | 135,607 | ||||||
Land | 24,340 | 24,340 | ||||||
Plant and equipment, net | 24,035 | 26,435 | ||||||
Mineral rights, net | 1,391,439 | 1,405,455 | ||||||
Intangible assets, net | 59,549 | 66,950 | ||||||
Equity and other unconsolidated investments | 262,661 | 269,338 | ||||||
Loan financing costs, net | 10,357 | 11,502 | ||||||
Long-term contracts receivable - affiliate | 50,787 | 51,732 | ||||||
Other assets, net | 600 | 497 | ||||||
|
|
|
| |||||
Total assets | $ | 1,938,808 | $ | 1,991,856 | ||||
|
|
|
| |||||
| LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 11,765 | $ | 8,659 | ||||
Accounts payable - affiliates | 445 | 391 | ||||||
Current portion of long-term debt | 80,983 | 80,983 | ||||||
Accrued incentive plan expenses - current portion | 6,880 | 8,341 | ||||||
Property, franchise and other taxes payable | 6,981 | 7,830 | ||||||
Accrued interest | 15,412 | 17,184 | ||||||
|
|
|
| |||||
Total current liabilities | 122,466 | 123,388 | ||||||
Deferred revenue | 149,685 | 142,586 | ||||||
Accrued incentive plan expenses | 6,071 | 10,526 | ||||||
Other non-current liabilities | 9,712 | 14,341 | ||||||
Long-term debt | 1,033,041 | 1,084,226 | ||||||
Partners’ capital: | ||||||||
Common units outstanding ( 110,869,513 and 109,812,408) | 609,001 | 606,774 | ||||||
General partner’s interest | 10,124 | 10,069 | ||||||
Non-controlling interest | (650 | ) | 324 | |||||
Accumulated other comprehensive loss | (642 | ) | (378 | ) | ||||
|
|
|
| |||||
Total partners’ capital | 617,833 | 616,789 | ||||||
|
|
|
| |||||
Total liabilities and partners’ capital | $ | 1,938,808 | $ | 1,991,856 | ||||
|
|
|
| |||||
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 14 of 17 |
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 | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net cash provided by operating activities | $ | 61,008 | $ | 79,736 | $ | 99,638 | $ | 123,649 | ||||||||
Return on direct financing lease and contractual override | 303 | 137 | 600 | 555 | ||||||||||||
Distributions from unconsolidated investments(1) | 3,633 | 10,777 | 3,633 | 10,777 | ||||||||||||
Proceeds from sale of assets | — | — | — | 154 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Distributable cash flow | $ | 64,944 | $ | 90,650 | $ | 103,871 | $ | 135,135 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Reconciliation of GAAP “Net cash provided by operating activities”
to Non-GAAP “Distributable cash flow”
| Quarter Ended | ||||||||
| June | March | |||||||
| 2014 | 2013 | |||||||
(unaudited) | ||||||||
Net cash provided by operating activities | $ | 61,008 | $ | 38,630 | ||||
Return on direct financing lease and contractual override | 303 | 297 | ||||||
Distributions from unconsolidated investments(1) | 3,633 | — | ||||||
Proceeds from sale of assets | — | — | ||||||
|
|
|
| |||||
Distributable cash flow | $ | 64,944 | $ | 38,927 | ||||
|
|
|
| |||||
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 15 of 17 |
Natural Resource Partners L.P.
Reconciliation of GAAP Financial Measures
to Non-GAAP Financial Measures
(in thousands)
Reconciliation of GAAP “Net income”
to Non-GAAP “EBITDA”
| Quarter Ended | For the Six Months Ended | |||||||||||||||
| June | June | June | June | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net income | $ | 31,407 | $ | 41,065 | $ | 64,012 | $ | 88,971 | ||||||||
Add depreciation, depletion and amortization | 16,350 | 17,411 | 30,997 | 32,173 | ||||||||||||
Add asset impairments | 5,624 | 443 | 5,624 | 734 | ||||||||||||
Add interest expense, gross | 19,037 | 14,440 | 38,897 | 29,103 | ||||||||||||
Add depreciation, depletion and amortization and interest relating to OCI Wyoming | 4,760 | 2,709 | 9,368 | 5,702 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
EBITDA | $ | 77,178 | $ | 76,068 | $ | 148,898 | $ | 156,683 | ||||||||
|
|
|
|
|
|
|
| |||||||||
EBITDA margin | ||||||||||||||||
EBITDA | $ | 77,178 | $ | 76,068 | $ | 148,898 | $ | 156,683 | ||||||||
Total revenues | $ | 90,561 | $ | 86,804 | $ | 170,870 | $ | 181,136 | ||||||||
EBITDA margin | 85 | % | 88 | % | 87 | % | 87 | % | ||||||||
Reconciliation of GAAP “Net income”
to Non-GAAP “EBITDA”
| Quarter Ended | ||||||||
| June | March | |||||||
| 2014 | 2014 | |||||||
(unaudited) | ||||||||
Net income | $ | 31,407 | $ | 32,605 | ||||
Add depreciation, depletion and amortization | 16,350 | 14,647 | ||||||
Add asset impairments | 5,624 | — | ||||||
Add interest expense, gross | 19,037 | 19,860 | ||||||
Add depreciation, depletion and amortization and interest relating to OCI Wyoming | 4,760 | 4,608 | ||||||
|
|
|
| |||||
EBITDA | $ | 77,178 | $ | 71,720 | ||||
|
|
|
| |||||
EBITDA margin | ||||||||
EBITDA | $ | 77,178 | $ | 71,720 | ||||
Total revenues | $ | 90,561 | $ | 80,309 | ||||
EBITDA margin | 85 | % | 89 | % | ||||
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 16 of 17 |
Reconciliation of GAAP “Total operating costs and expenses”
to Non-GAAP “Total operating expenses before considering the impairment”
| Quarter Ended | ||||||||
| June | June | |||||||
| 2014 | 2013 | |||||||
(unaudited) | ||||||||
Operating expenses | ||||||||
Total operating expenses as reported | $ | 40,158 | $ | 31,472 | ||||
Impairments | $ | (5,624 | ) | $ | (443 | ) | ||
Total operating costs before considering the impairment | $ | 34,534 | $ | 31,029 | ||||
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 | ||||||||
| June | June | |||||||
| 2014 | 2013 | |||||||
(unaudited) | ||||||||
Net income attributable to the limited partners | ||||||||
Net income as reported | $ | 31,407 | $ | 41,065 | ||||
Impairments | 5,624 | 443 | ||||||
Net income before considering the impairment | $ | 37,031 | $ | 41,508 | ||||
Net income, before considering the impairment, attributable to: | ||||||||
General partner | $ | 741 | $ | 830 | ||||
Limited partners | $ | 36,290 | $ | 40,678 | ||||
Reconciliation of GAAP “Basic and diluted net income per unit”
to Non-GAAP “Net income per unit before considering the impairment”
| Quarter Ended | ||||||||
| June | June | |||||||
| 2014 | 2013 | |||||||
(unaudited) | ||||||||
Net income per unit | ||||||||
Net income per unit as reported | $ | 0.28 | $ | 0.37 | ||||
Adjustment for impairments | 0.05 | 0.00 | ||||||
Net income per limited partner unit, before considering the impairment | $ | 0.33 | $ | 0.37 | ||||
Weighted number of units outstanding | 110,403 | 109,812 | ||||||
| * | Numbers may not add due to rounding |
| NRP Reports 2Q 2014 Results and Confirms 2014 Guidance | Page 17 of 17 |
Reconciliation of GAAP “Total operating costs and expenses”
to Non-GAAP “Total operating expenses before considering the impairment”
| Quarter Ended | ||||||||
| June | March | |||||||
| 2014 | 2014 | |||||||
(unaudited) | ||||||||
Operating expenses | ||||||||
Total operating expenses as reported | $ | 40,158 | $ | 27,870 | ||||
Impairments | (5,624 | ) | — | |||||
Total operating costs before considering the impairment | $ | 34,534 | $ | 27,870 | ||||
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 | ||||||||
| June | March | |||||||
| 2014 | 2014 | |||||||
(unaudited) | ||||||||
Net income attributable to the limited partners | ||||||||
Net income as reported | $ | 31,407 | $ | 32,605 | ||||
Impairments | 5,624 | — | ||||||
Net income before considering the impairment | $ | 37,031 | $ | 32,605 | ||||
Net income, before considering the impairment, attributable to: | ||||||||
General partner | $ | 741 | $ | 652 | ||||
Limited partners | $ | 36,290 | $ | 31,953 | ||||
Reconciliation of GAAP “Basic and diluted net income per unit”
to Non-GAAP “Net income per unit before considering the impairment”
| Quarter Ended | ||||||||
| June | March | |||||||
| 2014 | 2014 | |||||||
(unaudited) | ||||||||
Net income per unit | ||||||||
Net income per unit as reported | $ | 0.28 | $ | 0.29 | ||||
Adjustment for impairments | 0.05 | — | ||||||
Net income per limited partner unit, before considering the impairment | $ | 0.33 | $ | 0.29 | ||||
Weighted number of units outstanding | 110,403 | 109,848 | ||||||
| * | Numbers may not add due to rounding |
-end-