Fourth Quarter Highlights:
- Record distributable cash flow of $48.9 million, up 45% over 4Q06
- Record revenues of $57.3 million, up 37%
- Net income attributable to limited partners of $22.1 million, up 15%
- Net income per unit decreases 8% to $0.35
- Distribution increases for eighteenth consecutive quarter to $0.485
per unit
2007 Full Year Highlights:
- Record distributable cash flow of $154.8 million, up 20% over 2006
- Record revenues of $215 million, up 26%
- Net income attributable to limited partners of $81.0 million, down 8%
- Net income per unit decreases 28% to $1.26
HOUSTON, Feb. 14 /PRNewswire-FirstCall/ -- Natural Resource Partners L.P.
(NYSE: NRP) today reported distributable cash flow, a non-GAAP measure, of
$48.9 million, up 45% from the $33.7 million reported for the fourth quarter
2006. Net income attributable to the limited partners increased 15% to
$22.1 million for the fourth quarter of 2007, compared to $19.3 million for
the fourth quarter of 2006. Net income per unit decreased from $0.38 for the
fourth quarter 2006 to $0.35 per unit in the fourth quarter 2007.
Highlights
4Q07 3Q07 4Q06
(in thousands except per ton and per unit)
Coal Production: 15,442 14,708 11,905
Coal Royalty Revenues: $45,259 $44,378 $35,213
Average coal royalty revenue per ton: $2.93 $3.02 $2.96
Total revenues: $57,315 $56,366 $41,672
Net income to limited partners: $22,142 $22,902 $19,301
Average units outstanding in quarter: 64,891 64,891 50,682
Net income per unit: $0.35 $0.35 $0.38
Distributable cash flow: $48,916 $34,045 $33,749
"For NRP, 2007 was a year of growth and integration," said Nick Carter,
President and Chief Operating Officer. "We are a much larger business today,
having completed approximately $1.1 billion of acquisitions since becoming a
public company five years ago, with nearly $600 million in deals closing since
December 2006. We also have a more diverse and therefore more stable cash
flow, which has allowed us to continue increasing distributions."
"We achieved record revenues and record distributable cash flow, the
metric on which we are focused. We enter 2008 with a very strong coal market
and all of our new operations on track to contribute their share of our
guidance."
Fourth Quarter and Full Year Results
Revenues
Fourth Quarter
Total revenues increased 37% to a record $57.3 million for the fourth
quarter of 2007, compared to $41.7 million reported for the same period last
year. Fourth quarter 2007 coal royalty revenues increased 29% to $45.3 million
from $35.2 million last year. Total production for the partnership in the
fourth quarter was a record 15.4 million tons, up 29% compared to the
11.9 million tons produced in the fourth quarter 2006. Aggregate royalties,
coal processing fees and transportation fees generated approximately
$4.7 million in the fourth quarter of 2007 versus $1.8 million in the same
period last year. Aggregate royalties for 2006 included only one month of
operations and no transportation fees were included in 2006 as these assets
were acquired in 2007.
Full Year
Total revenues improved to a record $215.0 million, or 26% over 2006,
while distributable cash flow increased 20% to $154.8 million over the same
period. Coal royalty revenues increased 16% to $171.3 million, due to both
increased production and improved pricing. Average royalty revenue per ton
increased to $2.99 from $2.84, or 5%, while NRP's total production increased
approximately 10% to 57.2 million tons over 2006 production. In 2007,
approximately 23% of coal production and 29% of coal royalty revenues were
generated from metallurgical coal used to make steel. Aggregate royalties,
coal processing fees and transportation fees, generated approximately
$16.2 million for 2007 versus $2.0 million in the same period last year.
These increases are due to the same reasons discussed above.
Expenses
Fourth Quarter
Total expenses increased $7.7 million, or 55% to $21.8 million in the
fourth quarter 2007. Depreciation, depletion and amortization, a non-cash
item, accounted for $6.5 million, or approximately 84% of the increase,
primarily as a result of acquisitions during the last year. Property,
franchise and other taxes nearly doubled to $3.0 million mainly due to taxes
on newly acquired property. The majority of the property taxes are offset by
reimbursements from our lessees, which are reported in revenues.
Interest expense increased $1.9 million over the fourth quarter last year
to $7.1 million due to additional borrowings associated with acquisitions
completed in late 2006 and 2007.
Full Year
For the full year 2007, total expenses increased $31.8 million to
$86.7 million, $21.7 million of which was associated with depreciation,
depletion and amortization and $5.5 million was associated with property,
franchise and other taxes, both due to the same reasons discussed earlier. In
addition, general and administrative expenses increased $4.5 million mainly
due to increases in personnel, salaries, and incentive compensation accruals
and increased costs associated with reporting unitholders' tax information.
Interest expense for 2007 increased by $12.3 million due to increased
borrowings associated with acquisitions.
Net Income Attributable to the Limited Partners
Fourth Quarter
While total revenues for the fourth quarter increased by $15.6 million
over fourth quarter 2006, net income attributable to the limited partners only
increased $2.8 million to $22.1 million. The increase in revenues was largely
offset by increases in expenses primarily due to increases in depreciation,
depletion and amortization as well as interest on debt incurred to finance
NRP's recent acquisitions. Net income per unit decreased $0.03 to $0.35 per
unit mainly due to the issuance of approximately 14.2 million additional units
for acquisitions, and the increased allocation of net income to the general
partner and the holders of incentive distribution rights. In addition, some of
the properties we acquired were under development and did not generate their
expected revenues.
Full Year
For the full year 2007, net income attributable to the limited partners
decreased $7.2 million to $81.0 million. Net income per unit decreased
$0.48 per unit to $1.26 from $1.74 reported in 2006 for the reasons discussed
above.
Distributable Cash Flow
Fourth Quarter
Distributable cash flow increased $15.2 million, or 45%, over the same
quarter last year predominantly due to increases in net income, depreciation,
depletion and amortization as well as positive changes in working capital.
Fourth quarter 2007 reflects an additional reserve of $1.9 million for one
quarter of the debt payment due in July 2008.
Full Year
For the full year 2007, distributable cash flow increased $25.5 million,
or 20%, to a record $154.8 million predominantly due to increased revenues and
non-cash expenses as well as increased minimums received from NRP's lessees,
offset by $3.8 million of additional reserves for debt payments due in July
2008.
Current Market
Prices of metallurgical coal have been substantially higher than steam
coal over the past few years, and NRP expects them to remain at high levels
for the next several years. The current pricing environment for U.S.
metallurgical coal is robust in both the domestic and export markets. Coal
prices for both steam and metallurgical coal in Appalachia began to move in a
positive direction during the second half of 2007, and the price movement
accelerated at the end of 2007 and into 2008. The U.S. coal market,
especially for coal from Appalachia and to a more limited extent the Illinois
Basin, is being dramatically impacted by events in China, Australia and South
Africa that are impacting world coal supply and demand. Many observers
believe that the growing demand for coal worldwide may lead to an increasingly
favorable pricing structure for all U.S. coal.
Distributions
As reported on January 16, the Board of Directors of NRP's general partner
declared a quarterly distribution of $0.485 per unit, an increase of $0.01 per
unit. This made the eighteenth consecutive increase in the quarterly
distribution.
Acquisitions
In December, NRP completed two acquisitions for approximately
$33.9 million. These acquisitions included the purchase of an overriding
royalty interest on low-vol metallurgical coal reserves from Massey Energy for
$6.6 million and the previously announced acquisition of approximately
17.5 million tons of low-vol metallurgical coal for $27.2 million from
National Resources. In addition, NRP paid approximately $900 thousand on the
construction contract for a previously announced coal preparation plant. NRP
borrowed approximately $23.0 million under its credit facility and utilized
excess cash for the remainder.
Borrowing Capacity and Capital Structure
The partnership has drawn $48.0 million on its existing credit facility of
$300 million. The facility allows NRP to increase the borrowing capacity up
to $450 million under the same terms. "With a debt to market capitalization
of approximately 40%, NRP has significant borrowing capacity for future
acquisitions without having to access the equity markets," said Dwight Dunlap,
Chief Financial Officer.
Company Profile
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, and coal handling and transportation infrastructure in the
three major coal producing regions of the United States: Appalachia, the
Illinois Basin and the Powder River Basin. In addition, the partnership also
manages aggregate reserves, oil and gas properties and timber assets across
the United States.
For additional information, please contact Kathy H. Roberts at
713-751-7555 or kroberts@nrplp.com. Further information about NRP is
available on the partnership's website at http://www.nrplp.com.
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.
Forward-Looking Statements
This press release may include "forward-looking statements" as defined by
the Securities and Exchange Commission. Such statements include the current
coal market conditions and borrowing capacity. 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.
-Financial statements follow-
Natural Resource Partners L.P.
Operating Statistics
(In thousands except per ton data)
Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(unaudited) (unaudited)
Coal Royalties:
Coal royalty revenues:
Appalachia
Northern $5,600 $1,900 $16,664 $10,231
Central 29,571 25,534 117,820 100,487
Southern 4,156 4,382 17,832 20,469
Total
Appalachia $39,327 $31,816 $152,316 $131,187
Illinois Basin 3,022 861 7,963 5,325
Northern Powder
River Basin 2,910 2,536 11,064 11,240
Total $45,259 $35,213 $171,343 $147,752
Coal royalty production
(tons):
Appalachia
Northern 2,395 938 7,270 5,329
Central 8,813 7,942 35,835 31,991
Southern 1,089 1,091 4,603 5,347
Total
Appalachia 12,297 9,971 47,708 42,667
Illinois Basin 1,402 369 3,709 2,877
Northern Powder
River Basin 1,743 1,565 5,815 6,548
Total 15,442 11,905 57,232 52,092
Average royalty revenue
per ton:
Appalachia
Northern $2.34 $2.03 $2.29 $1.92
Central 3.36 3.22 3.29 3.14
Southern 3.82 4.02 3.87 3.83
Total
Appalachia 3.20 3.19 3.19 3.07
Illinois Basin 2.16 2.33 2.15 1.85
Northern Powder
River Basin 1.67 1.62 1.90 1.72
Combined average royalty
revenue per ton $2.93 $2.96 $2.99 $2.84
Aggregates:
Royalty revenues $1,649 $538 $7,434 $538
Production: 1,242 412 5,698 412
Average royalty revenue
per ton: $1.33 $1.31 $1.30 $1.31
Natural Resource Partners L.P.
Consolidated Statements of Income
(In thousands, except per unit data)
Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Revenues:
Coal royalties $45,259 $35,213 $171,343 $147,752
Aggregate royalties 1,649 538 7,434 538
Coal processing fees 1,420 1,249 4,824 1,452
Transportation fees 1,678 - 3,984 -
Oil and gas royalties 1,006 720 4,930 4,220
Property taxes 2,449 1,144 10,285 5,971
Minimums recognized as revenue 253 828 1,951 2,082
Override royalties 800 190 3,794 957
Other 2,801 1,790 6,440 7,701
Total revenues 57,315 41,672 214,985 170,673
Operating costs and expenses:
Depreciation, depletion and
amortization 14,067 7,597 51,391 29,695
General and administrative 4,168 4,510 20,048 15,520
Property, franchise and other
taxes 2,995 1,626 13,613 8,122
Transportation costs 149 - 298 -
Coal royalty and override
payments 422 320 1,336 1,560
Total operating costs
and expenses 21,801 14,053 86,686 54,897
Income from operations 35,514 27,619 128,299 115,776
Other income (expense)
Interest expense (7,106) (5,170) (28,690) (16,423)
Interest income 651 799 2,890 2,737
Net income $29,059 $23,248 $102,499 $102,090
Net income attributable to:
General partner $4,303 $2,728 $14,315 $9,717
Holders of incentive
distribution rights $2,614 $1,219 $7,216 $4,133
Limited partners $22,142 $19,301 $80,968 $88,240
Basic and diluted net income
per limited partner unit:
Common $0.35 $0.38 $1.26 $1.74
Subordinated $0.35 $0.38 $1.26 $1.74
Weighted average number of
units outstanding:
Common 59,214 36,490 54,582 34,366
Subordinated 5,677 14,192 9,923 16,316
Natural Resource Partners L.P.
Statements of Cash Flows
(In thousands)
Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Cash flows from operating
activities:
Net income $29,059 $23,248 $102,499 $102,090
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion and
amortization 14,067 7,597 51,391 29,695
Non-cash interest charge 117 61 443 349
Gain from sale of assets (1,236) (837) (1,236) (3,471)
Change in operating assets and
liabilities:
Accounts receivable 2,364 1,013 (5,270) (1,426)
Other assets (705) (1,104) 178 (579)
Accounts payable and accrued
liabilities (247) 146 (464) 381
Accrued interest 2,596 75 2,430 2,312
Deferred revenue 4,825 4,770 15,632 5,803
Accrued incentive plan
expenses 603 991 465 3,497
Property, franchise and
other taxes payable 1,781 339 2,085 192
Net cash provided by
operating activities 53,224 36,299 168,153 138,843
Cash flows from investing
activities:
Acquisition of land, coal and
other mineral rights (33,881) (154,096) (58,124) (240,517)
Acquisition of plant and
equipment (870) (4,830) (16,695) (24,248)
Proceeds from sale of timber
assets 1,425 2,290 1,425 7,051
Cash placed in restricted account - - (6,240) -
Net cash used in investing
activities (33,326) (156,636) (79,634) (257,714)
Cash flows from financing
activities:
Proceeds from loans 23,000 151,000 285,400 254,000
Deferred financing costs - (64) (1,292) (64)
Repayments of loans - - (235,942) (24,350)
Distributions to partners (38,934) (25,339) (147,033) (92,362)
Contributions by general partner - - 2,645 -
Net cash (used in) provided
by financing activities (15,934) 125,597 (96,222) 137,224
Net increase or (decrease) in
cash and cash equivalents 3,964 5,260 (7,703) 18,353
Cash and cash equivalents at
beginning of period 54,377 60,784 66,044 47,691
Cash and cash equivalents at end
of period $58,341 $66,044 $58,341 $66,044
SUPPLEMENTAL INFORMATION:
Cash paid during the period
for interest $4,392 $5,032 $25,771 $13,734
Non-cash investing activities:
Equity issued for business
combinations $- $- $330,064 $-
Assets contributed by
general partner in business
combination - - 4,422 -
Liability assumed in
business combination - - 1,989 -
Equity issued for assets
purchased - - 16,255 -
Utility improvement
obligation acquired - 2,883 - 2,883
Natural Resource Partners L.P.
Consolidated Balance Sheets
(In thousands, except for unit information)
ASSETS
December 31, December 31,
2007 2006
(unaudited)
Current assets:
Cash and cash equivalents $58,341 $66,044
Restricted cash 6,240 -
Accounts receivable, net of allowance for
doubtful accounts 27,643 23,357
Accounts receivable - affiliate 1,005 21
Other 1,009 1,411
Total current assets 94,238 90,833
Land 24,343 17,781
Plant and equipment, net 61,441 29,615
Coal and other mineral rights, net 1,030,088 798,135
Intangible assets 106,222 -
Loan financing costs, net 3,098 2,197
Other assets, net 601 932
Total assets $1,320,031 $939,493
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities $2,567 $1,041
Accounts payable - affiliate 104 105
Current portion of long-term debt 17,234 9,542
Accrued incentive plan expenses - current
portion 3,993 5,418
Property, franchise and other taxes payable 6,415 4,330
Accrued interest 6,276 3,846
Total current liabilities 36,589 24,282
Deferred revenue 36,286 20,654
Asset retirement obligation 39 -
Accrued incentive plan expenses 6,469 4,579
Long-term debt 496,057 454,291
Partners' capital:
Common units (outstanding: 64,891,136
in 2007, 39,327,430 in 2006) 731,113 338,912
Subordinated units (outstanding: 11,353,634
in 2006) - 83,772
General partner's interest 14,177 12,138
Holders of incentive distribution rights - 1,616
Accumulated other comprehensive loss (699) (751)
Total partners' capital 744,591 435,687
Total liabilities and partners' capital $1,320,031 $939,493
Natural Resource Partners L.P.
Reconciliation of GAAP "Net cash provided by operating activities"
To Non-GAAP "Distributable cash flow"
(In thousands)
Three Months Ended For the Year Ended
December 31, December 31,
2007 2006 2007 2006
(unaudited) (unaudited)
Net cash provided by operating
activities $53,224 $36,299 $168,153 $138,843
Less scheduled principal payments - - (9,350) (9,350)
Less reserves for future principal
payments (4,308) (2,550) (13,388) (9,600)
Add reserves used for scheduled
principal payments - - 9,400 9,400
Distributable cash flow $48,916 $33,749 $154,815 $129,293
SOURCE
Natural Resource Partners L.P.
CONTACT:
Kathy H. Roberts of Natural Resource Partners L.P.,
+1-713-751-7555, kroberts@nrplp.com