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