NRP - Earnings call transcript Q1 2019 | Natural Resource Partners L.P.

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Operator

Good morning and welcome to the Natural Resource Partners First Quarter 2019 Earnings Conference Call. My name is Lori and I will be facilitating the audio portion of today's interactive broadcast. All lines have been placed on mute to prevent any background noise. [Operator Instructions] And as a reminder, this call is being recorded. At this time, I would like to turn the show over to Tiffany Sammis, Manager of Investor Relations. Ms. begin. may you Sammis,

Tiffany Sammis

welcome call. Natural webcast Today's be website. replay and quarter and Partners XXXX will our on conference call available to morning Resource the first a Good is being

Craig me Financial Coal. Chief Kevin Nunez, Joining and are President Chief Chris Officer; President Operating Vice Executive and Craig, Zolas, Officer; of today

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

include financial non-GAAP also measures. comments Our today

directly to to GAAP on we fundamentals. our everyone most get particular which details in included coal press into like reconciliations lessee found or do can intend or quarter discuss market be are would remind any Additional first I and the for measures XXXX detailed operations our to outlook that not website. release, comparable the

In questions Ciner ash our disclosures Resources' segment. addition, business regarding soda commentary for refer I you and to specific public

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

Craig Nunez

maturity. bonds last we Thank million in our maturity. $XXX completed four-year $XXX once conference I everyone X.XXX facility new call. again we thereafter you, of Tiffany, early on significant six-year to credit placement to a since and In a call. am of with announce of Shortly a pleased coupon welcome our quarterly million milestones, the closed bank achievement private a with April,

redeem almost strategy. of and a outstanding increase bond produce reduce safety the million of We financial transactions flexibility cash working the the hand of will Combined, interest of and margin substantially our debt and with us and a proceeds million on $XXX runway $X bolster along to use portion will longer our $XX the these financial the of by capital, annual savings, XX.X% our million liquidity for bonds. amount by offering deleveraging from extend providing partnership's to outstanding execute

As we from effect an when management X.X to have sheet. leverage debt And million element approximately to $XXX call, it currently capacity. of transactions, operations last successful comprised times, $XX million in de-risking borrowing of down these of beneficial Giving on we strides we believe timing The $XXX ratio after the liquidity, is cash these essential our the of of transactions even comes maturities of stated that excluding one-time of of culmination a committed peak X.X represents times significant discontinued our regard. is balance million to and items. and the

solidly view the for companies derive process While from we revenues are the pleased confirmed portion these experience that of results transactions, our and of that bank markets a coal-related our bond refinancing previously the expressed sources. navigating with are challenging substantial

strengthening will as also debt our companies we plan to provide balance over of obtain a become increasingly the for for financing continue future. difficult and it unexpected events. more liquidity believe NRP such to time We sufficient sheet safety maintaining in Therefore, margin to

returns significant attractive cash to earn of continue on capital. amounts We and generate

over our with million of delivering was the one-time flow last consolidated discontinued the XX.X% recorded And segment Excluding operations period items, ash beneficial in coal we at the on XX.X%, XX.X%. XX same return and soda $XXX months. over and free employed coming cash capital

in the markets last coal many metallurgical weakened our sales our While sales of remain benchmark thermal and late prices year. in export prices lessee believe quarter, locked stable, as first for we prices lessees

over common remaining increase is stock our of private the $XX dividends our of of pay placement The notes, and preferred business same off which flow find the a million distributions. debt, period. the cash business, flow calculation and cash cash Page preferred of cushion mandatory is common you'll our important amount payments the distribution, amortizations evaluate press cushion, after for flow Our debt to cash was available on in redeem invest additional flow It's our release. unit XX margin safety to an the or unit of metric

XX%, of our our have light approach weakening in primary volatility the upward equity has million is coal relatively benchmark unitholders debt coal as prices, in last In flow cash over and paying to the cash $XX over our still us allowed internally balances historical of debt segment out ratio small While relatively it cash cushion cash is debt our has fact of cushion that down the modest our to generated trended of fallen, focus flows. still light to flow and common distributions with common the pay remains capital million add $XXX months. XX near This our flow. nearly recent

the to I'll the is derisking our path this financial quarter performance. structure quickest that, of of believe turn, manner the turn capital in to and, market continue intrinsic maximizing over We first to to common Chris specifics the in the the delevering With units. and value call value that our review

Chris Zolas

Thank you, everyone. Craig, and morning good

the having unit $XX debt were compared up million During first from was continuing the cash strong coal royalty diluted collections segment cash prior was we our income per our over move I'll and the segment, $X.XX first Net quarter. $X.XX year interest for respectively. next million quarter. steady cash $XX to results the by operating $X $X prior to and from free million paying results. flow quarter up million and free lower of generated and were less net driven the year cash of These operations. and Basic and and quarter, flow common and for income performance earnings

our coal have a we ash. segments; and business aggregates business construction As after of soda December in reminder, sale two the royalty XXXX,

results operating continued stable and $XX free perform with properties were producing of Global coal generating These Our cash segment our million net coal quarter first royalty by from well, the continues of and income, flow of thermal driven for make during our strong our million production, during lessees approximately performance coal to of in XXXX. royalty XXXX. coal total metallurgical our $XX tons royalty and of metallurgical first first revenue quarter. and million up to remained the our from demand X continue XX% approximately XX% coal properties the of of quarter steel coal and

and quarter overall Additionally, coal stable pricing our our volume steady thermal performance sales thermal coal resulted lessees in first properties. from from

first consistent non-recoupable following to our overall continued the settlement this us $XX revenue the to of fourth XXXX we $X.X to properties, our the in amount our addition million owed with from of of Foresight from coal royalty in recorded performance Hillsboro quarter related property annual minimum litigation quarter million the of In XXXX.

and year $XX volumes, to of soda We quarter international sales production the business with XXXX, and quarter lower $XX the increased prior Ciner quarter and during the domestic first quarter free consistent million received and in XXXX. of $X.X improved sales of net million the but million $XX XXXX. Our first to the flow of generated pricing. income increased from Net due cash compared of Wyoming distributions quarter million first prior income cash $X ash million than

the prior over million, the $XX to and we've is due corporate decrease quarter million lower the of XX repaid year primarily interest financing costs is quarter. $XXX debt were segment Our XX% last to down resulting This which first the months. in from compared expense

have Opco repaid of first and date construction XXXX, from $XX a from sale the aggregates $XXX proceeds the of quarter this remaining we debt amortize they use of sale business. Senior repay to million the repaid our During million of that of using $XX later will year. as proceeds we to using We our total Notes debt million

As bonds million reduce date from maturity debt and of and our the date has extended another our credit XXXX, $XX XXXX. from both by Craig credit XXXX mentioned refinancings facility XXXX recent to of extended bonds our earlier, and maturity of bank our the to facility will bank the

In estimate interest NRP these save will going forward. expense of addition, $X almost annual we million refinancings

unitholders to XXXX. a In $X.XX of $X.X the we to to declared unit unitholders distribution April, per distribution a our unit quarter for of and preferred $X.X quarter. distribution the our cash our preferred first per paid cash common $X.XX cash of common during we our a and first distributions, of unitholders Regarding million million

declared business. for With aggregates of common common liability per $X.XX to turn tax cover addition, our unit I'll of questions. one-time we unitholders' the call distribution construction a the sale that special back operator cash resulting In to the from the over

Operator

[Operator Instructions] We your of have a from Levin Seaport question Please the line Global. question. from ask Mark

Mark Levin

another this me let vein, the refinancing time congratulations all for two In activity. Hey, morning and good quarter the questions. on thank and ask that you

for sense you an business has cash to think with – there Is mentioned flow a or regard given level you makes that what cash first volatility, do metric. cetera? be with a cushion where flow Craig, level, the there et the cushion to level, optimal is The to the just and that

Craig Nunez

Good morning, needs set Mark. has but the to over been the have cushion to be higher don't it be million XX a needs last on what materially $XX that No, that cash we target than months. flow

revenues that at total, and last in instance. are say, instance, over years volatility If top at you five you the look segment line our for they just around of coal million let's look $XXX for

than variability free You'll greater impact easily cash that on million see of flow. could $XX our the much that have a

it just out $XX something therefore sense makes really ways have is We're to – what to number so the where be cushion it. not that that And than going is from a yet at still to we're significantly because point greater define million.

Mark Levin

three is it there guess either you target? an times – backdrop, or more three you a going you're forward? there something heard you referenced think I at leverage better makes that debt-to-cap reference new is target than think times. target, leverage debt-to-EBITDA to that updated And before, X.X your exceeded which but that as at XX% haven't leverage sense debt-to-cap you're but you've relates leverage Is or again I I to or times

Craig Nunez

the times that. correct three be we remind in And a just moment, had was never set me let to three was want we times, three The that at times goal that a three we below out the below times. that are target. Well, you're

paying, current I – – continue which that necessary they to our cushion, focus think changing is currently distribution now private or pay have cash a we that cash is distributions, with to placement on flow think for amortizations we investors notes, to taxes common stay to to instance, flow have minimum now this without to at our with we're we're our compensate the because or that the for cash the cushion pay. necessary preferred don't focus

focus it's as is primarily much or goal cushion not setting the on for leverage cash now a another our ratio. target and flow So

Mark Levin

Got it.

to return perspective? focused you from that some or want risk and realize – see question – could I you see free Are – focused? attractive a improve that likely provide growth there third into look of just out bit the the then internally Are there flow improving opportunities you you or or cushion to topic is the but – a things when there see off was could And I the coal there adjusted mean, remainder that – at deleveraging on which see some XXXX or I are be could that the whole – are that M&A reserve you that talk completely XXXX can Okay. you not internally the out it you more actually little XXXX growth. opportunities about cash we side more

Craig Nunez

yourself. end Well, think it the at of I question, as your answering you've sort you're said of

focused. XXXX on a that is of think will for out not We It's coalfield. royalty-type acquisitions market. a market very likely in see coal the completely oil comment gas basis and lot more we and inwardly a the regular opportunities vibrant I marketplace. pipeline don't be oil that royalty, royalties, of around say, the to robust I is those robust which see gas coming there's a unlike,

continue do, any currently focus. is And we be to against with scenarios we do growth difficult objective make has acquisitions with to have, deleveraging meaningful where of the Secondly, would primary would our cash deleveraging, flow our cushion our which that any could and imagine we it's acquisitions focus. we balanced minimal

Mark Levin

and guys you give know Got then sense. guidance. it. No, just that I finally, makes And don't

should change quarter be XXX I'll relatively the at for to of we've time. a we while now. prices Is that you two? next several way hanging there this XXX, should at So look that they've would stability be that get might or try that that period for over Anything or recently? the so above to net doesn't of the that are in been you of necessarily the an there of QX, that. anything phrase extended anything The QX, that that around be aware business we Is far tenor has – modeling quarters next kind a stable look QX seen and still in aware been over coal of

Craig Nunez

and Two things about think to talked are important I things. two we've that note are we

weakness key, through think I our those all. on X potentially in not could horizon. We've First be the clouds that the at API come financials is yet storm seen

through fact, the the pike. them many the ash capital as very again of very, and late prices expenditure suspect opposite, are that requirements quarter good last that business, this be been soda we partner up lessees disclosed our with are with market again, fourth just increased QX. our we're In that we to say last we've there disclosing likely has our quarter strong down had telling would have coming back quarter, portion of XXXX pricing year. I in But, for a locked

could on distributions investments the an same good could of theory, soda should, so course, growth road. in investment, there And expansion that down of impact there the have token reap out ash be that by those rewards

Mark Levin

Hey, if tons is there goes Craig, and much did anyone. me into how Any I'll let off of get for total then steam last a the your someone ask or export and XXXX? lessee in else market question idea question

Craig Nunez

Gas Yes. XX%. is

Mark Levin

the of together, but the steam just market? all export XX% total your not So tons tons steam plus of everything XX% the met, into went steam of lessee

Craig Nunez

our XX% believe... we steam of tons,

Mark Levin

total tons, your your combined. of not steam not XX% okay, Of the tons, it. Got met, the steam

great. Okay,

Craig Nunez

Yes.

not the efforts to marketing directly we time, lessees. think, privy we're this of our have – don't I

Mark Levin

totally Craig. Thanks Appreciate again, Absolutely, it. understand.

Craig Nunez

Thank you, Mark.

Operator

the Growth Partners. question question. from of We ask line Please have Patrick from a Malayter CPA your

Patrick Malayter

publicly-traded or would analyzing that? conversion to impact a the C are morning of quarter. of and least partnerships Good Yes. that congratulations at good on contemplating curious I'm a Are evaluating you number corporation. a be what folks

Craig Nunez

that. contemplating not are We

for when the past. each We addition actually upfront eventually gets a convert to the before though, limited partners, as the taxable that a fact it And year. that that generate The many have C our evaluated majority a in past, of higher if in our is would were reform in to be in unlike hit income to publicly-traded structure. tax taxed double do recent we twice dramatically the have even level unitholders of corporation, partnerships, of bear, one-time result current limited our to been of there rates than tax recent would that tax under lowered it with also a level corporate taxation. partner have results And the taxation it's would partnership still it we to

Patrick Malayter

Thank you so much.

Craig Nunez

bet. You

Operator

no There may time. Instructions] [Operator are at questions this further continue. Speaker, you

Craig Nunez

Thank with to this And and have quarter again quarter. for look you our we joining day. speaking great next call you forward everyone a

Operator

conference today's Thank participation. concludes call. you for everyone This your

You may now disconnect.

Natural Resource Partners (NRP) 8 May 192019 Q1 Earnings call transcript