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Natural Resource Partners L.P. Reports Record First Quarter 2005 Earnings

05/04/2005
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 million

HOUSTON, 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

http://www.prnewswire.com

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