NRP - Earnings call transcript Q2 2018 | Natural Resource Partners L.P.

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Operator

Good morning, ladies and gentlemen and welcome to the Natural Resource Partners LP Second Quarter 2018 Earnings Conference Call.

As a reminder this conference call is being recorded. I would like to introduce your host for today's conference. Kathy Roberts, Natural Resource Partners, Vice President of Investor Relations. Ms. begin. may you Roberts,

Kathy Roberts

on Good second and Today's quarter and be being Nora. seven Natural call to Resource webcast available will replay Partners' XXXX a website morning you, for welcome days. one the is our Thank conference call.

today our President are and Operating and Nunez, Financial Chief Zolas, Officer. Craig me Chief Officer Joining Chris

our materially of comments obligation publicly any today update and NRP's from events. future for about involve statements. our are may risk reason. reflecting statements These to other undertake or Some forward-looking discussed Form These that commission uncertainties actual our forward-looking cause in no could views We revise filings. differ XX-K include forward-looking results SEC matters risks to statements and our any

financial measures. non-GAAP include also today comments Our

the construction for the we to comparable included directly discuss or discuss we those will and sales respect with everyone Additional intend outlook or be GAAP XXXX release, to like reasons. to Nor details or our our do operations competitive in to on which reconciliations production get detailed are would remind are found I and fundamentals. press can pricing quarter second to operations that not aggregate website. measures into market for our most [indiscernible]

In commentary general our addition I regarding resources refer you and specific for to questions public disclosures soda business. ash

to our President Nunez, Craig and like over Officer. Now, call would Operating the I turn to Chief

Craig Nunez

everyone. Thank and morning you, good Kathy,

foreseeable we full likely a recapitalized appears and our since trend partnership cash, the five generating future. continue is completed of is quarters for to have amounts We stabilized the business substantial and that

flow and pay standard. a common attributable million $XX common beneficial million recorded allowed XX% in resulting distributions before unit $XXX a our holders equity, $XX of new increase unit This accounting in to million of to strong of XX of of retain months, million the free earnings, of to $XX million impact the income we EBITDA, last us holders. performance common net $XXX and cash Over

with As stable comfortable plan we're for maintaining last on less sustainable maybe delevering balance previously becoming stated achieve goal leverage $XXX than to the quarter times passing on debt of use our of that margin in we can corresponding results prudent along ratio past to that the to maintaining of maximize turn liquidity equity the a and liquidity value million. common cash growth while structure our provide and robust strengthening defined while of de-risking of to common performance intend reiterate increasingly substantial overtime said we rate sheet this future. believe to market of is in call, this units. a capital intrinsic as our business generation run to sufficient the with our each safety our of quickest a continue We the the We minimum path operations. indicative for EBITDA strong value three We

of with consisting currently Our X.X available times liquidity of leverage working borrowing million and cash And of at ratio capital sufficient stands million to we down which business. peak of than our million from quarter manage ended the $XX a needs more $XX capacity, is of the X.X $XXX times.

into units X.X before after taking and account distribution coupon is times unit our on robust account. coverage coupon the into common taking the Our ratio times preferred X.X a

and having soda that of coal, our continues our a contributor soda relatively world's results business the from ash investment consolidated coal of small free coming to as pay our to our benefits and steady is two to And Our direct cost a coal With approximately operations. generate way all other metallurgical cash associated continues each to it income coal sell from quarter General aggregates Wyoming ash is one mining construction mine in distributions the solid of lowest year. owning segment cost thirds revenues liabilities. stable royalty

and In to focus on increasing we sheet, employed balance the our maximizing productivity business. are flow strengthening in our free our cash addition of capital

over stripping gain last on months capital our out the was XX of For of suit XX% one-time soda after benefit reference, our the the law on a segment. return employed at settlement

So the Chris I'll quarter turn that, to performance. to call review specifics second financial of with over the Zolas our

Chris Zolas

everyone. Craig Thank you morning, and good

was a paid over steady strong cash Our from by results. performance operating lower quarter and million and operations coal second $X interest cash quarter collections during segment of $XX financial quarter performance the favorably impacted Operating million from of of million up as cash result year. generated by flow for represents royalty less million $XX cash from balance. our $XX debt another the We prior quarter solid

net quarter in income $XX includes from was million Second settlement. which million litigation segment our a $XX soda ash gain

$X.XX year gains demonstrating impact Excluding this gain the prior coal met per with our year properties and $X.XX and of asset on construction earnings adjusted soda and assets. the respectively. for prior thermal our unit portfolio the second net diversified and benefits owned restructuring unit the with of NRP's and sales, of of income debt was consistent quarter were cost and common aggregate our diluted Basic ash per second

segment onto our Moving results.

quarter. $XX that second during Our markets thermal both continued by perform million continues coal results million well, and segment the for driven of markets. helped coal royalty generating operations of to the cash These and net export were $XX strong tighten revenue from domestic

produced our and the Our sales coal on approximately strong. tons properties second met lessees of quarter million in remain prices X

In pricing the of resulted our met coal steady in in region result coal in demand production second our prosperities from thermal coal up Appalachian performance. quarter. of and QX XX% coal coal continued our strength performance thermal a As to of this XX% revenue regards made during royalty

prior of up from million year property year. to and Illinois received approximately $XX the lessees half royalty X lessees with Operating Powder our cash River remain cash X from result and second $XX expect we produced timing coal quarter In and of received of second million the produced In the to ash a in we coal during total, generated and properties consistent of of in and the over was quarter cash segment, our Our of tax last Basin royalty revenue the tons Basin. million General our the as and on coal thermal soda second of thermal in coal year. payments Appalachia, Wyoming segment coal tons quarter from met we quarter million what markets reimbursements. quarter XX royalty production coal second now distributions the minimum the regards the receipts Northern second the flow prior for million the and in steady in and of primarily our

earlier, $XX.X second General million As our settlement Wyoming benefited net gain. noted from income quarter recognizing litigation at

income Excluding to scheduled resulted QX, year lower was second $X.X the production to during outage impact the repairs resumed ash prior completed the in in segment and unexpected down were end soda our quarter. as of of net million compared the sales. successfully that repairs a The a result primarily this gain prior plan of operations

quarter construction down we segment for primarily flow which is $X million second net income the cash $XXX,XXX our the for $X year million Our delivering which by will quarter of the customers. to in in get the compared year QX, generate due of the consistent prior during haul reimbursed aggregate our payment to Operating [ph] cost with prior was quarter. timing second quarter

lower XXXX. $X compared the year expense in cost by segment financing as on due interest and million primarily million, lower early the quarter of $X prior second quarter corporate $XX in $X to million million in were our extinguishment lower and of prior balance to result a of debt Our a debt loss year this

second the common will of million distributions cash a With common unit as call of a the second distribution our During holders I'll questions. quarter receive operator $XX turn to quarter, over unit cash month. the this and and will $X.X holders recently $X.XX of total $X.XX the for that announced for preferred receive we preferred per unit later million back to $X.X to paid holders of cash unit flow and million holders. Distributable unit our per

Operator

of Global. question line ask [Operator Instructions] question. the Mark Please your Levin Seaport from first your of comes

Mark Levin

Great, good congrats the particularly out business. quarter, and thanks of on another coal

Unidentified Company Representative

Thank you.

Mark Levin

would to flow free free quarter very QX. was thoughts you're in the QX it in how might cash not free free some and on better for guidance QX some half front the what versus way that than the cash maybe welcome. of on and cash but the a was question Maybe flow. trend a looks. tenor QX much thoughts big year My change Yes, anything there perspective of looking versus year relates flow just to in QX, very the the clear, specific back from cash Obviously half the of are it be

Craig Nunez

Mark, answer it this is would this way. I Craig.

of sometimes especially the of taxes sometimes into from these to and our play we couple variations quarter have it's the from pay timing free over. have lag control of cash and between timing cross make issues. amounts of so There's quarter-to-quarter to we we the time, have of uncommon that on get side a and not cash We that that reimbursement lot and that are that can on result receipts the that those payment material didn't see have don't property quarter-to-quarter factors also property a taxes free and flow a coal sometimes we in the as we boundaries the reimbursed reimbursement and

we we may business, pay lag cost get that times are on type one second reimbursables reimbursed customers also such thing, [ph] of cost a up are ramps business we have that there that cost, as pay and We him as don't till period and period. the that our then aggregates for some delivery haul fuel construction we

out, going to good trailing now, in in of of best to the results. four quarters can you think quarters proxy forward last future. So the that we for right foreseeable is back as tell look and encourage order I'd what going results see to I pretty you're that four at smooth

Mark Levin

moving? kind prices there there robust steady. the reason the could at - and you very and say I guess last as look been the role Have any to but been That's coal play this, And it's remained is their steady. Appreciated. EBITDA great. a in met thing, reason have less the they business helpful. met of then quarters. any forward prices like mean believe of looks four or there to EBITDA obviously is prices would quarter levels XXs anything five has there relatively they've that, mean believe that sort from thinking - sort be coal should yet we but pretty about. were done particular Is the And next business I over have down over kind very or in met been deviate several more quarter-over-quarter rate of mid remained I of we obviously That's massively

Craig Nunez

market don't you coal we we lessee, lessor as as coals. Mark do a know, a not not of Well mines operate and royalties and

every So market not with customers. out we're in the interacting day directly

same that So forward and don't coal the do. have we visibility mine the to operators markets are lessee

respect forecast we don't visibility have with and So just this cannot to pricing. as much accurately

We with now of and you've that that visibility also plants seen this actual is take see have the level our what going going from respect of in With that with said have. these year. right all to the to materially mining that place over operators don't that caveat, future same in mine foreseeable the don't to we results anything change last the the

Mark Levin

I like to But it of workers believe that's Pinnacle laid if question know, Mine know anyway. lessee want you're it, what it you're punt so, would I'm guess I to terribly a is just they've is going do off I for I it Pinnacle great. me to some I'm willing I'm [ph] ask NRP, Got material. not, lessee but going and a confirm going and still? - to look the the to doesn't

Craig Nunez

is lessee I'll Yes, Pinnacle of a that confirm NRP.

Mark Levin

it ask litigation issues. in litigation, Okay, you it for maybe And just - turn not this Timing the the around side but point, not calendar was don't the anyway. how just out as question, asking final it at again it and I'll but to was a to then may four answer around want or knowing results interested and perfect. that this I question

Craig Nunez

we know, set date litigation, will for the can tell a can't trial comment [indiscernible] but issue. of October specifically for you on back there is of half not course you I the as I

Mark Levin

that That's well came Great. cash perfect congratulations the quarter. in again particularly this free on

Craig Nunez

Thanks Mark.

Operator

of next comes the from question Wang of Your line Citigroup. George

Your open. is line

George Wang

questions. few like Just

you just are thoughts to benchmark think any of wanted or criteria I [indiscernible] potential to on times, pay about I balancing delevering guys Firstly, before increase. distribution deleveraging goal distribution sort looking maintaining just before three liquidity in you debt increase. distribution. of levels you latest for, talk the guys guys terms the versus mean about for you strong increase below down get

Craig Nunez

actually in to that absolutely the idea very we growing out Thanks set It spring want sure was want of we have our do we we mind north it we the that, a goal share when leverage don't publicly. and George. willing achieve, sure, ratio. though ratio, times not no going here. to that's that audacious we the goal. set, confusion want of weren't down three time to three and we is we was this to times No leverage at had goal that said point, leverage to to and we're want times times tackle. we we a in at were goal reiterate We've I actually de-lever - how situations is were not is we that that said that actually there to that, I in financial three goal precarious to try and no back our to make set five XXXX target anything

Now it our appropriate being that to the is decide optimal of not that's cyclicality that maybe goal, are we're reach It be goal to what to given commodity forward determine that uncertainties of we something of structure, that structure our a exposed will may the we going south volatility. that, business just is coal ratio determine times. capital assess the, that and reach three business and Once price leverage approaching our the commodity be the still thermal capital going target we mission we're we going and then for our business business what that to it.

So after I three market capital we're three plans be times taken outlook to of that going going the send target once the goal our don't we into and we're that times out tell we've our reassess, and reach distribution, after what raising at start and are we're time. will that and come the the time our want performance the reach signal is of help? at the what times going three to to the long-term to structure then identify business consideration Does targeted that we the

George Wang

Yes, that helps. definitely

looking Central full quarter. production screen stronger Secondly coal just Appalachia of different The geographies second full higher production. kind at

performance on performance and If higher Central of any you the have guys thoughts sort driver in sequentially Appalachia. or

Craig Nunez

up. as most Well Appalachian strong pricing production there volumes result, demand of met for is strong a is and and that are met and

George Wang

at non-core guys Got standpoint? de-leveraging of - income rationalization [indiscernible] you further with anything maybe you. of [indiscernible] And to also terms just you in assets. just looking sort help have guys Do disposal the from asset

Craig Nunez

of looking productivity more that as producing assets if XXXX know, as do And and more the to from going number lower we're on they our since to be that you we've sell we're assets capital to than actually our at others returns beginning prepared and conducted those those we are to And over George significant be years, except in a our those we're asset been last continuing remarks, we're things I each several going find of the our we've they would us of the in others focus business to us. and can than mentioned if identify that to reviewing come are soda than think to worth so, those more something. ash. actively portfolio and sales we'll to we are buyers, terminate that that and segments continuing we're and worth are deployed

George Wang

thanks you. so the Cool, quarter. Got on congrats once again

Craig Nunez

your Thanks questions. George, appreciate

Operator

[Operator presenters. this are Please no further Instructions] there at time. questions proceed

Craig Nunez

we speaking quarter. thank next day. in a for our your you with look everyone NRP you interest to great Have Appreciate forward joining and Well call. again

Operator

conference today's call. This concludes

now may disconnect. You

Natural Resource Partners (NRP) 9 Aug 182018 Q2 Earnings call transcript