Second Quarter 2006 Highlights:
* Net income of $25.0 million, or $0.86 per unit
* Coal royalty revenues of $36.5 million
* Distributable cash flow of $30.2 million
* Increased distribution to $0.82 per unit
HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- Natural Resource Partners L.P.
(NYSE: NRP and NYSE: NSP) today reported net income of $25.0 million for the
second quarter 2006, equaling the $25.0 million reported for the same period
in 2005. While net income was the same over the two periods, net income per
unit slightly decreased from $0.92 in the 2005 period to $0.86 for the second
quarter 2006 as a result of NRP allocating more income to the general partner
and the holders of the incentive distribution rights. Distributable cash flow
for the second quarter this year rose 4% to $30.2 million, up from $29.1
million a year ago.
For the first six months of 2006, NRP reported net income of $53.6
million, an 18% increase over the $45.4 million reported for the same period
last year, while net income per unit rose 11% to $1.87 per unit from $1.69 per
unit for the six month periods. Distributable cash flow rose 22% to $64.5
million from $52.8 million in 2005.
"Following an exceptional first quarter, our lessees performed as expected
this quarter," said Chief Operating Officer Nick Carter. "These variations
from quarter to quarter are typical as our lessees move on and off of our
property. In addition, as we have stated in previous announcements, we don't
expect to see the full impact of some our recent acquisitions until 2007."
Second Quarter 2006 Financial Results
As forecasted, second quarter revenues decreased slightly to $41.0 million
from $41.7 million for the same period last year. Production decreased by 0.7
million tons to 13.4 million tons from the same period last year due to
several of our lessees producing a larger percentage of coal from adjacent
properties rather than NRP properties. Average coal royalty revenues per ton
increased slightly to $2.73 from $2.69, partially offsetting the decreased
production. Coal royalty revenues decreased $1.5 million to $36.5 million
over the second quarter 2005. Other revenues increased by $0.7 million to
$1.6 million including $0.5 million, or $0.02 per unit, associated with the
gain on the sale of some timber assets.
Total second quarter 2006 expenses decreased approximately 10% to $13.0
million from the $14.5 million reported in the second quarter last year.
Depreciation, depletion and amortization was $1.4 million lower primarily due
to lower production.
Year-to-date Financial Results
NRP's total revenues increased 12% to $87.5 million for the first six
months from $77.9 million for 2005. Year-to-date 2006 coal royalty revenues
rose 7% to $75.6 million compared to $70.5 million in 2005. This increase
results from both a 5% increase in average per ton royalty revenue to $2.76
and a slight increase in production to 27.4 million tons. Appalachian
production decreased 1%, while Illinois Basin and Northern Powder River Basin
production increased approximately 31% and 11%, respectively. For the first
six months of 2006, approximately 28% of NRP's coal royalty revenues and 22%
of its production were from metallurgical coal, which is normally priced
higher than steam coal. Other revenue rose $4.4 million, or 59%, to $11.9
million primarily due to gains on two timber sales totaling $2.6 million, or
$0.09 per unit, and a $1.6 million, or 136%, increase in oil and gas income
due to increased production.
Total expenses were essentially flat with 2005 at $27.9 million for 2006
versus $28.1 million. Depreciation, depletion and amortization decreased 8%
as a result of lower production and lower depletion rates. General and
administrative expenses increased 15% or $1.0 million over last year primarily
due to increased costs associated with managing a larger number of properties
and incentive compensation accruals. Property, franchise and other taxes
increased $0.5 million due to franchise taxes in additional states in which
the partnership now operates.
Distributions; Expected Conversion of NSP Units
On July 19, 2006, NRP announced its twelfth consecutive increase in its
quarterly distribution, raising the distribution to $0.82 per unit, or $3.28
per unit on an annualized basis, for both NRP and NSP. This represents a 15%
increase in Natural Resource Partners' distributions compared to the second
quarter of 2005. This distribution will be paid on August 14 to holders of
record on August 1. Following the payment of the next distribution in
November with respect to the third quarter, NRP expects that approximately
one-third of the currently outstanding subordinated units that trade under the
ticker symbol "NSP" will convert into common units and begin trading under the
"NRP" ticker symbol.
Strong Balance Sheet
During the second quarter, NRP further strengthened its balance sheet.
NRP paid $13.65 million of scheduled principal and interest payments, $16.44
million for acquisitions, $22.3 million in distributions and still has a cash
balance of approximately $53 million and a debt to total capitalization ratio
of 36%.
2006 Guidance
With six months of actual results, NRP is reiterating its overall 2006
guidance. NRP anticipates announcing full year results within the framework
of the previously announced ranges. While NRP is forecasting production to be
at the lower end of its previously announced range, revenues, net income and
distributable cash flow are anticipated to be at the upper end of the ranges
announced on January 19.
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 .
Forward Looking Statements
This press release may include "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. Such
statements include comments regarding growth of the partnership and increases
in distributions. 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.
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.
Operating Statistics
(In thousands except per ton data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Coal royalty revenues:
Appalachia
Northern $2,730 $2,105 $6,038 $4,569
Central 24,543 25,894 50,385 48,072
Southern 5,133 6,346 10,617 11,357
Total Appalachia $32,406 $ 34,345 $67,040 $63,998
Illinois Basin 1,704 1,093 3,656 2,400
Northern Powder
River Basin 2,417 2,519 4,941 4,089
Total $36,527 $ 37,957 $75,637 $70,487
Coal royalty production
(tons):
Appalachia
Northern 1,482 1,108 3,214 2,416
Central 7,982 8,958 16,176 17,197
Southern 1,436 1,675 2,862 2,999
Total Appalachia 10,900 11,741 22,252 22,612
Illinois Basin 977 707 2,140 1,574
Northern Powder
River Basin 1,497 1,665 2,998 2,697
Total 13,374 14,113 27,390 26,883
Average royalty
revenue per ton:
Appalachia
Northern $1.84 $1.90 $1.88 $1.89
Central 3.07 2.89 3.11 2.80
Southern 3.58 3.79 3.71 3.79
Total Appalachia 2.97 2.93 3.01 2.83
Illinois Basin 1.74 1.55 1.71 1.52
Northern Powder
River Basin 1.61 1.51 1.65 1.52
Total $2.73 $2.69 $2.76 $2.62
Natural Resource Partners L.P.
Consolidated Statements of Income
(In thousands, except per unit data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Coal royalties $36,527 $37,957 $75,637 $ 70,487
Oil and gas
royalties 928 610 2,647 1,070
Property taxes 1,546 1,547 3,295 2,981
Minimums recognized
as revenue 250 481 621 934
Override royalties 181 209 484 824
Other 1,550 893 4,826 1,648
Total revenues 40,982 41,697 87,510 77,944
Operating costs and
expenses:
Depreciation,
depletion and
amortization 7,236 8,625 15,089 16,504
General and
administrative 3,420 3,162 7,535 6,474
Property, franchise
and other taxes 2,099 1,954 4,344 3,784
Coal royalty and
override payments 263 745 954 1,298
Total operating
costs and
expenses 13,018 14,486 27,922 28,060
Income from
operations 27,964 27,211 59,588 49,884
Other income (expense)
Interest expense (3,675) (2,570) (7,293) (5,027)
Interest income 755 331 1,273 562
Net income $25,044 $24,972 $53,568 $ 45,419
Net income
attributable to: (A)
General partner $2,253 $1,155 $4,348 $1,985
Holders of incentive
distribution rights $943 $353 $1,764 $580
Limited partners $21,848 $23,464 $ 47,456 $ 42,854
Basic and diluted net
income per limited
partner unit:
Common $0.86 $0.92 $1.87 $1.69
Subordinated $0.86 $0.92 $1.87 $1.69
Weighted average number
of units outstanding:
Common 16,825 13,987 16,825 13,987
Subordinated 8,515 11,354 8,515 11,354
(A) Net income is allocated among the limited partners, the general
partner and holders of the incentive distribution rights (IDRs) based
upon their pro rata share of distributions. The IDRs are allocated
65% to the general partner and the remaining 35% to affiliates of the
general partner. The IDRs allocated to the general partner are
included in the net income attributable to the general partner.
Natural Resource Partners L.P.
Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Cash flows from
operating activities:
Net income $25,044 $24,972 $53,568 $45,419
Adjustments to
reconcile net
income to net
cash provided by
operating activities:
Depreciation,
depletion
and amortization 7,236 8,625 15,089 16,504
Non-cash interest
charge 91 54 191 125
Gain from sale of
assets (458) --- (2,634) ---
Change in operating
assets and liabilities:
Accounts receivable (103) (979) (107) (3,369)
Other assets (25) 351 243 601
Accounts payable (57) 161 (20) (124)
Accrued interest (689) (2,078) 1,217 169
Deferred revenue 1,040 (176) 408 (2,331)
Accrued incentive
plan expenses 1,139 1,219 1,510 1,224
Property, franchise
and other taxes
payable (708) (771) (305) (770)
Net cash provided
by operating
activities 32,510 31,378 69,160 57,448
Cash flows from
investing activities:
Acquisition of land,
plant and equipment,
coal and other
mineral rights (16,438) --- (51,438) (21,544)
Proceeds from sale
of assets 829 --- 4,761 ---
Net cash used in
investing
activities (15,609) --- (46,677) (21,544)
Cash flows from
financing activities:
Proceeds from loans --- --- 50,000 18,000
Repayments of loans (9,350) (9,350) (24,350) (9,350)
Distributions to
partners (22,299) (18,371) (43,204) (35,897)
Net cash used in
financing
activities (31,649) (27,721) (17,554) (27,247)
Net (decrease) or
increase in cash and
cash equivalents (14,748) 3,657 4,929 8,657
Cash and cash
equivalents at
beginning of period 67,368 47,103 47,691 42,103
Cash and cash
equivalents at end
of period $52,620 $50,760 $52,620 $50,670
SUPPLEMENTAL
INFORMATION:
Cash paid during the
period for interest $4,261 $4,575 $5,861 $4,712
Natural Resource Partners L.P.
Consolidated Balance Sheets
(In thousands, except for unit information)
ASSETS
June 30, Dec. 31,
2006 2005
(Unaudited)
Current assets:
Cash and cash equivalents $52,620 $47,691
Accounts receivable 22,051 21,946
Accounts receivable - affiliate 8 6
Other 590 833
Total current assets 75,269 70,476
Land 12,436 14,123
Plant and equipment, net 5,760 5,924
Coal and other mineral rights, net 626,858 590,459
Loan financing costs, net 2,266 2,431
Other assets, net 1,257 1,583
Total assets $723,846 $684,996
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $659 $677
Accounts payable - affiliate 86 88
Current portion of long-term debt 9,350 9,350
Accrued incentive plan expenses -
current portion 4,763 1,105
Property, franchise and other taxes
payable 3,833 4,138
Accrued interest 2,751 1,534
Total current liabilities 21,442 16,892
Deferred revenue 15,259 14,851
Accrued incentive plan expenses 3,247 5,395
Long-term debt 247,600 221,950
Partners' capital:
Common units (outstanding: 16,825,307) 298,190 292,990
Subordinated units (outstanding:
8,515,228) 126,029 123,114
General partner's interest 11,559 10,024
Holders of incentive distribution rights 1,296 582
Accumulated other comprehensive loss (776) (802)
Total partners' capital 436,298 425,908
Total liabilities and partners' capital $723,846 $684,996
Natural Resource Partners L.P.
Reconciliation of GAAP "Net cash provided by operating activities"
To Non-GAAP "Distributable cash flow"
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
Cash flow from
operations $32,510 $31,378 $69,160 $57,448
Less scheduled
principal payments (9,350) (9,350) (9,350) (9,350)
Less reserves for
future principal
payments (2,350) (2,350) (4,700) (4,700)
Add reserves used
for scheduled
principal payments 9,400 9,400 9,400 9,400
Distributable cash
flow $30,210 $29,078 $64,510 $52,798
SOURCE Natural Resource Partners L.P.
CONTACT:
Kathy Hager of Natural Resource Partners L.P.,
+1-713-751-7555
or khager@nrplp.com
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