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Natural Resource Partners L.P. Announces Second Quarter 2017 Results

08/08/2017

HOUSTON, Aug. 8, 2017 /PRNewswire/ -- 

Natural Resource Partners LP logo. (PRNewsFoto/Natural Resource Partners LP)

Second Quarter 2017 Highlights

  • Net income and net income attributable to the common unitholders and general partner of $50.0 million and $42.4 million, respectively
  • Basic and diluted net income per common unit of $3.39 and $1.13,(1) respectively
  • Net cash provided by operating activities of $34.9 million
  • Adjusted EBITDA of $62.7 million(2)
  • Net debt reduction of $98.1 million

Natural Resource Partners L.P. (NYSE:NRP) today reported second quarter of 2017 net income of $50.0 million, net income attributable to the common unitholders and general partner of $42.4 million, net cash from operating activities of $34.9 million, and adjusted EBITDA of $62.7 million.  These results were impacted by a fair value adjustment on warrant liability, costs associated with recapitalization expenses, gains on asset sales and non-cash revenue from lease modifications and terminations as illustrated in the tables included in this release.  Adjusting for these items, net income attributable to the common unitholders and general partner for the second quarter of 2017 was $18.4 million(2).



Three Months Ended



June 30,


March 31,



2017


2016


2017



(In thousands)

Net income


$

49,950



$

46,446



$

16,764


Less: income attributable to preferred unitholders


(7,538)





(2,500)


Net income attributable to common unitholders and general partner


$

42,412



$

46,446



$

14,264


Less: Fair value adjustments for warrant liabilities


(23,960)





(16,569)


Plus: Recapitalization transaction expenses


4,239





17,363


Plus: Asset impairments




91



1,778


 Less: Non-cash revenue from lease modifications and terminations


(972)



(35,451)



(290)


Less: (Gain) loss on asset sales


(3,361)



1,071



(44)


Adjusted net income attributable to the common unitholders and general partner


$

18,358



$

12,157



$

16,502









Net cash provided by operating activities


$

34,858



$

17,801



$

20,205







(1)

Diluted net income per common unit assumes the conversion of NRP's preferred units into common units and net settlement of warrants in exchange for common units even though NRP has the ability to redeem the Preferred Units and net settle the Warrants for cash.

(2)

Reconciliations for all non-GAAP items are shown in the table above or in the tables at the end of this release.

During the second quarter, we continued to execute on our deleveraging strategy, reducing our total outstanding debt by an additional $98.1 million, bringing our total debt reduction since December 31, 2016 to $244.1 million.  Continued strong metallurgical coal markets, steady distributions from our soda ash business, and improved sequential performance from our construction aggregates segment all combined to generate improved cash flow for NRP.

Segment Information and Outlook

Coal Royalty and Other

NRP derived approximately 60% of the coal royalty revenues and approximately 45% of the related production from metallurgical coal during the six months ended June 30, 2017.  NRP continued to benefit from higher metallurgical coal prices compared to 2016, with substantially increased price realizations in Central and Southern Appalachia. While metallurgical coal prices have retreated in 2017 from the peaks reached in the fourth quarter of 2016 and early in the second quarter of 2017, they remained significantly higher than in the comparable period in 2016.  Notably, very few tons were sold at the peak of the market, as buyers generally elected to stay out of the market anticipating a short-term price spike.  Most recently, met coal prices have increased approximately $20 per metric ton since mid-June as a result of global supply disruptions and increased imports into China.

Thermal coal prices have also improved over the prior year as inventories have come down significantly, in part due to production cuts over the last two years.  Normal summer weather and natural gas prices that continue to remain around $3/mcf have combined to reduce inventories at the end of May to approximately 100 days of supply, down from over 130 days of supply at the end of May 2016.

Coal royalty and other revenue for the second quarter 2017 was $52.8 million and coal royalty and other operating income was $42.1 million, representing sequential increases of 3% and 20% respectively.  Compared to the same period of 2016, coal royalty and other revenue and coal royalty and other operating income both declined 31%.  After adjusting for impairment charges, gains on asset sales and the $35.5 million of non-cash revenues related to lease modifications and terminations recognized in the second quarter of 2016, coal royalty and other revenue increased $6.6 million, or 16%, and coal royalty and other operating income increased $11.1 million, or 41%.

Soda Ash

During the second quarter, international prices for soda ash, particularly in Asia, continued to be strong, and domestic prices have improved slightly over last year.  Revenues and other income related to our equity investment in Ciner Wyoming decreased $1.8 million, or 18%, from $10.2 million in the three months ended June 30, 2016 to $8.4 million in the three months ended June 30, 2017.  This variance was primarily driven by lower production output and higher maintenance expenses compared to the prior period.  NRP received $12.25 million in cash distributions from Ciner Wyoming in the second quarter of 2017 compared to $9.8 million in 2016.

Construction Aggregates

Revenues and net income for the second quarter 2017 increased significantly over the first quarter of 2017, due to increased activity at all locations as weather conditions improved. Second quarter 2017 revenue and other income rose $2.1 million over the second quarter 2016 to $33.7 million while net income declined $0.8 million  to $2.6 million.  Although production and revenues increased on a consolidated basis compared to the same period in 2016, weaker pricing due to diminished natural gas drilling in the Marcellus and the lack of infrastructure spending in West Virginia, as well as cutbacks in military spending in the Clarksville market, resulted in lower margins and earnings at those operations.  In addition, the Southern Aggregates operation experienced significant rainfall in the second quarter, but the Louisiana market has improved significantly over the course of the summer.

The table below presents NRP's business results by segment for the three months ended June 30, 2017 and June 30, 2016:



Operating Business Segments






Coal Royalty    and Other




Construction Aggregates


Corporate and Financing






Soda Ash




Total



($ In thousands)

Three Months Ended June 30, 2017











Revenues and other income


$

49,626



$

8,389



$

33,555



$



$

91,570


Gains on asset sales


3,184





177





3,361


Total revenues and other income


52,810



8,389



33,732





94,931


Net income (loss) from continuing operations


42,084



8,389



2,636



(3,292)



49,817


Adjusted EBITDA (1)


47,459



12,250



5,844



(2,814)



62,739


Net cash provided by (used in) operating activities of continuing operations


38,537



9,862



5,476



(18,770)



35,105


Net cash provided by (used in) investing activities of continuing operations


2,888



2,388



(2,539)





2,737


Net cash provided by (used in) financing activities of continuing operations


17





(1,000)



(109,021)



(110,004)


Distributable Cash Flow (1)


41,426



12,250



3,424



(18,770)



38,330













Three Months Ended June 30, 2016











Revenues and other income


$

77,487



$

10,188



$

31,642



$



$

119,317


Gain (loss) on asset sales


(1,080)





9





(1,071)


Total revenues and other income


76,407



10,188



31,651





118,246


Asset impairments


91









91


Net income (loss) from continuing operations


61,153



10,188



3,439



(26,147)



48,633


Adjusted EBITDA (1)


68,730



9,800



7,129



(4,032)



81,627


Net cash provided by (used in) operating activities of continuing operations


34,814



9,800



6,210



(34,866)



15,958


Net cash provided by (used in) investing activities of continuing operations


4,184





(2,472)





1,712


Net cash used in financing activities of continuing operations






(793)



(46,105)



(46,898)


Distributable Cash Flow (1)


39,003



9,800



4,152



(34,866)



18,089













Three Months Ended March 31, 2017











Revenues and other income


$

51,138



$

10,294



$

27,221



$



$

88,653


Gains on asset sales


29





15





44


Total revenues and other income


51,167



10,294



27,236





88,697


Asset impairments


1,778









1,778


Net income (loss) from continuing operations


35,094



10,294



(1,539)



(26,878)



16,971


Adjusted EBITDA (1)


43,845



12,250



2,375



(7,185)



51,285


Net cash provided by (used in) operating activities of continuing operations


37,932



12,250



4,046



(33,739)



20,489


Net cash provided by (used in) investing activities of continuing operations


6





(2,074)





(2,068)


Net cash provided by (used in) financing activities of continuing operations


16





(96)



54,233



54,153


Distributable Cash Flow (1)


37,937



12,250



2,099



(33,739)



18,547







(1)

See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

Debt Reduction and Liquidity

In the first quarter of 2017, NRP completed several recapitalization transactions that improved NRP's balance sheet and strengthened its financial credit position.  During the three months ended June 30, 2017, NRP redeemed $90.0 million in principal of its 9.125% senior notes and paid off $7.3 million of Opco's senior notes.  In addition, through the sale of one of its assets,  Opco's $0.8 million utility local improvement obligation was transfered to the purchaser. At the end of the second quarter NRP had $220.8 million of liquidity, consisting of $180 million available under the Opco credit facility and $40.8 million in cash.  NRP's consolidated debt to Adjusted EBITDA ratio stands at 4.0x, down from 4.5x at year-end 2016 and 5.3x at year-end 2015.  NRP remains focused on further reducing its debt and repositioning the partnership for long-term growth.

Second Quarter 2017 Distributions

On July 27, 2017, the Board of Directors of GP Natural Resource Partners LLC declared a distribution of $0.45 per unit to be paid by the Partnership on August 14, 2017 to common unitholders of record on August 7, 2017. In addition, the Board declared a distribution on NRP's 12.0% Class A Convertible Preferred Units.  One-half of the distribution on the preferred units will be paid-in-kind through the issuance of 3,769 additional preferred units.

Conference Call

A conference call will be held today at 10:00 a.m. ET.  To join the conference call, dial (844) 379-6938 and provide the conference code 54804730.  Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com.

Audio replays of the conference call will be available for approximately one week.  To access the replay, dial (855) 859-2056 and provide the conference code 54804730 or visit the Investor Relations section of NRP's website.

Company Profile

Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns interests in coal, aggregates and industrial minerals across the United States.  A large percentage of NRP's revenues are generated from royalties and other passive income.  In addition, NRP owns an equity investment in Ciner Wyoming, a trona/soda ash operation, and a construction aggregates company.

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.

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment, gain on reserve swap, fair value adjustments for warrant liabilities and income to non-controlling interest; plus distributions from unconsolidated investment, interest expense, debt modification expense, loss on extinguishment of debt, warrant issuance expense, depreciation, depletion and amortization and asset impairments.  Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income (loss), the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

"Distributable Cash Flow" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations, plus returns of equity from unconsolidated investment, proceeds from sales of assets, including those included in discontinued operations, and return on long-term contract receivables (including affiliate); less maintenance capital expenditures and distributions to non-controlling interest. DCF 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. DCF may not be calculated the same for us as for other companies. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the Partnership's ability to make cash distributions to our common and preferred unitholders and our general partner and repay debt.

"Adjusted Net Income" is a non-GAAP financial measure that we define as Net income attributable to common unitholders and general partner, plus recapitalization transaction expenses and asset impairments; less gains on asset sales, non-cash revenue from lease modifications and terminations and fair value adjustments for warrant liabilities. Adjusted net income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted net income is useful in evaluating our financial performance because restructuring transaction expenses are one time charges, gains on asset sales are not related to the operations of our business and asset impairments and fair value adjustments for warrant liabilities are non-cash charges and excluding these from net income allows us to better compare results period-over-period. Reconciliations of Net income attributable to common unitholders and general partner to Adjusted net income are included in the table on the first page of this release.

"Adjusted Coal Royalty and Other Revenue" is a non-GAAP financial measure that we define as Coal royalty and other revenues less gains on asset sales and non-cash revenue associated with lease modifications and terminations. Adjusted coal royalty and other revenue should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted coal royalty and other revenue useful in evaluating our financial performance because gains on asset sales are not related to the operations of our business and excluding these from Coal royalty and other revenue allows us to better compare results period-over-period. Reconciliations of Coal royalty and other revenue to Adjusted coal royalty and other revenue are included in the tables attached to this release.

"Adjusted Coal Royalty and Other Operating Income" is a non-GAAP financial measure that we define as Coal royalty and other operating income plus asset impairments less gains on asset sales and non-cash revenue associated with lease modifications and terminations. Adjusted coal royalty and other operating income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted coal royalty and other operating income is useful in evaluating our financial performance because gains on asset sales are not related to the operations of our business and asset impairments and non-cash revenue associated with lease modifications and forfeitures are non-cash charges and excluding these from Coal royalty and other operating income allows us to better compare results period-over-period. Reconciliations of Coal royalty and other operating income to Adjusted coal royalty and other operating income are included in the tables attached to this release.

"Adjusted Revenue and Other Income" is a non-GAAP financial measure that we define as Revenue and other income less gains on asset sales and non-cash revenue associated with lease modifications and terminations. Adjusted revenue and other income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted revenue and other income is useful in evaluating our financial performance because gains on asset sales are not related to the operations of our business and non-cash revenue associated with lease modifications and forfeitures  and excluding these from revenues and other income allows us to better compare results period-over-period. Reconciliations of Revenue and other income  to Adjusted revenue and other income are included in the tables attached to this release.

"Adjusted Corporate and Financing Costs" is a non-GAAP financial measure that we define as Corporate and financing net loss from continuing operations plus debt modification expense, loss on extinguishment of debt, warrant issuance expense and performance based incentive compensation expense less  fair value adjustments for warrant liabilities. Adjusted corporate and financing costs should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with GAAP. Our management team believes Adjusted corporate and financing costs is useful in evaluating our financial performance because debt modification expense, loss on extinguishment of debt, warrant issuance expense and performance based incentive compensation expense are one time charges and fair value adjustments for warrant liabilities are non-cash charges and excluding these from net loss allows us to better compare results period-over-period. Reconciliations of Corporate and financing net loss from continuing operations to Adjusted corporate and financing costs are included in the tables attached to this release.

Forward-Looking Statements

This press release includes "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.  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, commodity prices; decreases in demand for coal, aggregates and industrial minerals, including trona/soda ash; changes in operating conditions and costs; production cuts by our lessees; unanticipated geologic problems; our liquidity, leverage and access to capital and financing sources; 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 Tables Follow-

 

Natural Resource Partners L.P.

Financial Tables


Consolidated Statements of Comprehensive Income

(In thousands, except per unit data)

(Unaudited)


Three Months Ended


Six Months Ended


June 30,


March 31,


June 30,


2017


2016


2017


2017


2016

Revenues and other income:










Coal royalty and other

$

36,914



$

59,983



$

34,994



$

71,908



$

88,832


Coal royalty and other—affiliates

12,712



17,504



16,144



28,856



28,074


Construction aggregates

33,555



31,642



27,221



60,776



56,324


Equity in earnings of Ciner Wyoming

8,389



10,188



10,294



18,683



19,989


Gain (loss) on asset sales, net

3,361



(1,071)



44



3,405



20,854


Total revenues and other income

94,931



118,246



88,697



183,628



214,073












Operating expenses:










Operating and maintenance expenses

31,020



29,797



29,628



60,648



56,582


Operating and maintenance expenses—affiliates, net

2,219



2,402



2,555



4,774



5,886


Depreciation, depletion and amortization

8,165



10,472



9,724



17,889



20,252


Amortization expense—affiliate

240



704



768



1,008



1,426


General and administrative

2,031



3,173



6,078



8,109



6,408


General and administrative—affiliates

852



866



1,124



1,976



1,803


Asset impairments



91



1,778



1,778



1,984


Total operating expenses

44,527



47,505



51,655



96,182



94,341












Income from operations

50,404



70,741



37,042



87,446



119,732












Other income (expense)










Interest expense

(20,377)



(22,054)



(23,141)



(43,518)



(44,251)


Interest expense—affiliate



(61)







(523)


Debt modification expense

(132)





(7,807)



(7,939)




Loss on extinguishment of debt

(4,107)







(4,107)




Warrant issuance expense





(5,709)



(5,709)




Fair value adjustments for warrant liabilities

23,960





16,569



40,529




Interest income

69



7



17



86



26


Other expense, net

(587)



(22,108)



(20,071)



(20,658)



(44,748)












Net income from continuing operations

49,817



48,633



16,971



66,788



74,984


Income (loss) from discontinued operations

133



(2,187)



(207)



(74)



(5,111)


Net income

$

49,950



$

46,446



$

16,764



$

66,714



$

69,873


Less: income attributable to preferred unitholders

(7,538)





(2,500)



(10,038)




Net income attributable to common unitholders and general partner

$

42,412



$

46,446



$

14,264



$

56,676



$

69,873












Income from continuing operations per common unit










Basic

$

3.38



$

3.90



$

1.17



$

4.55



$

6.02


Diluted

1.13



3.90



0.03



1.35



6.02












Net income per common unit










Basic

$

3.39



$

3.73



$

1.15



$

4.54



$

5.61


Diluted

1.13



3.73



0.02



1.34



5.61












Net income

$

49,950



$

46,446



$

16,764



$

66,714



$

69,873


Add: comprehensive income (loss) from unconsolidated investment and other

(13)



462



(1,132)



(1,145)



(83)


Comprehensive income

$

49,937



$

46,908



$

15,632



$

65,569



$

69,790


 

Natural Resource Partners L.P.

Financial Tables


Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,



2017


2016


2017


2017


2016

Cash flows from operating activities:











Net income


$

49,950



$

46,446



$

16,764



$

66,714



$

69,873


Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:











Depreciation, depletion and amortization


8,165



10,472



9,724



17,889



20,252


Amortization expense—affiliates


240



704



768



1,008



1,426


Return on earnings from unconsolidated investment


9,862



9,800



12,250



22,112



22,050


Equity earnings from unconsolidated investment


(8,389)



(10,188)



(10,294)



(18,683)



(19,989)


(Gain) loss on asset sales, net


(3,361)



1,071



(44)



(3,405)



(20,854)


Fair value adjustments for warrant liabilities


(23,960)





(16,569)



(40,529)




Debt modification expense


132





7,807



7,939




Loss on extinguishment of debt


4,107







4,107




Warrant issuance expense






5,709



5,709




(Income) loss from discontinued operations


(133)



2,187



207



74



5,111


Asset impairments




91



1,778



1,778



1,984


Other, net


1,332



1,828



1,090



2,422



4,094


Other, net—affiliates


(999)



(1,571)



887



(112)



212


Change in operating assets and liabilities:











Accounts receivable


(2,336)



(33)



(1,267)



(3,603)



3,922


Accounts receivable—affiliates


121



(1,201)



(947)



(826)



(2,271)


Accounts payable


(940)



(130)



986



46



150


Accounts payable—affiliates


(254)



(250)



256



2



(25)


Accrued liabilities


4,182



(4,405)



(8,080)



(3,898)



(3,131)


Accrued liabilities—affiliates




(913)







(456)


Deferred revenue


3,412



(34,141)



1,077



4,489



(38,204)


Deferred revenue—affiliates


(7,269)



(3,075)



(2,897)



(10,166)



(4,060)


Other items, net


1,243



(1,341)



1,284



2,527



(2,045)


Other items, net—affiliates




607







607


Net cash provided by operating activities of continuing operations


35,105



15,958



20,489



55,594



38,646


Net cash provided by (used in) operating activities of discontinued operations


(247)



1,843



(284)



(531)



5,815


Net cash provided by operating activities


34,858



17,801



20,205



55,063



44,461













Cash flows from investing activities:











Return of equity from unconsolidated investment


2,388







2,388




Proceeds from sale of oil and gas royalty properties


4



1,499



(548)



(544)



34,347


Proceeds from sale of coal and aggregates royalty properties


1,288





139



1,427



9,802


Return of long-term contract receivables


1,207







1,207




Return of long-term contract receivables—affiliate


390



1,871



414



804



2,180


Proceeds from sale of plant and equipment and other


363



840



22



385



843


Acquisition of plant and equipment and other


(2,903)



(2,498)



(2,095)



(4,998)



(3,919)


Net cash provided by (used in) investing activities of continuing operations


2,737



1,712



(2,068)



669



43,253


Net cash provided by (used in) investing activities of discontinued operations


173



(1,089)



29



202



(3,814)


Net cash provided by (used in) investing activities


2,910



623



(2,039)



871



39,439













Cash flows from financing activities:











Proceeds from issuance of Convertible Preferred Units and Warrants, net






242,100



242,100




Proceeds from issuance of 2022 Senior Notes, net






103,688



103,688




Proceeds from loans




20,000







20,000


Repayments of loans


(97,282)



(57,316)



(251,010)



(348,292)



(98,482)


Distributions to common unitholders and general partner


(5,619)



(5,616)



(5,615)



(11,234)



(11,232)


Distributions to preferred unitholders


(1,250)







(1,250)




Contributions to discontinued operations


(74)





(255)



(329)




Debt issue costs and other


(5,779)



(3,966)



(34,755)



(40,534)



(11,998)


Net cash provided by (used in) financing activities of continuing operations


(110,004)



(46,898)



54,153



(55,851)



(101,712)


Net cash provided by (used in) financing activities of discontinued operations


74



(232)



255



329



(10,570)


Net cash provided by (used in) financing activities


(109,930)



(47,130)



54,408



(55,522)



(112,282)













Net increase (decrease) in cash and cash equivalents


(72,162)



(28,706)



72,574



412



(28,382)













Cash and cash equivalents of continuing operations at beginning of period


112,945



50,619



40,371



40,371



41,204


Cash and cash equivalents of discontinued operations at beginning of period




1,478







10,569


Cash and cash equivalents at beginning of period


112,945



52,097



40,371



40,371



51,773













Cash and cash equivalents at end of period


40,783



23,391



112,945



40,783



23,391


Less: cash and cash equivalents of discontinued operations at end of period




2,000







2,000


Cash and cash equivalents of continuing operations at end of period


$

40,783



$

21,391



$

112,945



$

40,783



$

21,391













Supplemental cash flow information:











Cash paid during the period for interest


$

15,029



$

29,490



$

19,851



$

34,880



$

42,671


Non-cash financing activities:











Issuance of 2022 Senior Notes in exchange for 2018 Senior Notes


$



$



$

240,638



$

240,638



$


 

Natural Resource Partners L.P.

Financial Tables


Consolidated Balance Sheets

(In thousands, except unit data)


June 30,


December 31,


2017


2016


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

40,783



$

40,371


Accounts receivable, net

53,997



43,202


Accounts receivable—affiliates, net

292



6,658


Inventory

7,841



6,893


Prepaid expenses and other

3,192



6,137


Current assets of discontinued operations

991



991


Total current assets

107,096



104,252


Land

25,272



25,252


Plant and equipment, net

48,822



49,443


Mineral rights, net

895,642



908,192


Intangible assets, net

51,226



3,236


Intangible assets, net—affiliate



49,811


Equity in unconsolidated investment

248,919



255,901


Long-term contracts receivable

41,638




Long-term contracts receivable—affiliate



43,785


Other assets

9,172



3,791


Other assets—affiliate

1,265



1,018


Total assets

$

1,429,052



$

1,444,681


LIABILITIES AND CAPITAL




Current liabilities:




Accounts payable

$

5,257



$

6,234


Accounts payable—affiliates

942



940


Accrued liabilities

37,213



41,587


Current portion of long-term debt, net

173,901



138,903


Current liabilities of discontinued operations

98



353


Total current liabilities

217,411



188,017


Deferred revenue

110,885



44,931


Deferred revenueaffiliates



71,632


Long-term debt, net

700,252



987,400


Warrant liabilities

37,457




Other non-current liabilities

2,699



4,565


Total liabilities

1,068,704



1,296,545


Commitments and contingencies




Convertible Preferred Units (251,250 units issued and outstanding at $1,000 par value per unit; liquidation preference of $1,500 per unit)

160,377




Partners' capital:




Common unitholders' interest (12,232,006 units issued and outstanding)

204,230



152,309


General partner's interest

1,946



887


Accumulated other comprehensive loss

(2,811)



(1,666)


Total partners' capital

203,365



151,530


Non-controlling interest

(3,394)



(3,394)


Total capital

199,971



148,136


Total liabilities and capital

$

1,429,052



$

1,444,681


The table below presents NRP's business results by segment for the six months ended June 30, 2017 and June 30, 2016:



Operating Business Segments






Coal
Royalty
and Other




Construction
Aggregates


Corporate
and
Financing






Soda Ash




Total



($ In thousands)

Six Months Ended June 30, 2017











Revenues and other income


$

100,764



$

18,683



$

60,776



$



$

180,223


Gains on asset sales


3,213





192





3,405


Total revenues and other income


103,977



18,683



60,968





183,628


Asset impairments


1,778









1,778


Net income (loss) from continuing operations


77,178



18,683



1,097



(30,170)



66,788


Adjusted EBITDA (1)


91,304



24,500



8,219



(9,999)



114,024


Net cash provided by (used in) operating activities of continuing operations


76,469



22,112



9,522



(52,509)



55,594


Net cash provided by (used in) investing activities of continuing operations


2,894



2,388



(4,613)





669


Net cash provided by (used in) financing activities of continuing operations


33





(1,096)



(54,788)



(55,851)


Distributable Cash Flow (1)


79,363



24,500



5,523



(52,509)



56,877













Six Months Ended June 30, 2016











Revenues and other income


$

116,906



$

19,989



$

56,324



$



$

193,219


Gains on asset sales


20,845





9





20,854


Total revenues and other income


137,751



19,989



56,333





214,073


Asset impairments


1,984









1,984


Net income (loss) from continuing operations


105,552



19,989



2,402



(52,959)



74,984


Adjusted EBITDA (1)


121,962



22,050



9,654



(8,185)



145,481


Net cash provided by (used in) operating activities of continuing operations


56,375



22,050



12,323



(52,102)



38,646


Net cash provided by (used in) investing activities of continuing operations


47,143





(3,890)





43,253


Net cash used in financing activities of continuing operations




(7,232)



(1,593)



(92,887)



(101,712)


Distributable Cash Flow (1)


103,523



22,050



9,018



(52,102)



82,489







(1)

See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

 

Natural Resource Partners L.P.

Financial Tables


Operating Statistics - Coal Royalty and Other

(in thousands except per ton data)

(Unaudited)



Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,



2017


2016


2017


2017


2016

Coal production (tons)











Appalachia











Northern (1)


247



(138)



1,206



1,454



1,292


Central


3,897



3,470



3,699



7,597



6,698


Southern


690



773



562



1,253



1,518


Total Appalachia


4,834



4,105



5,467



10,304



9,508


Illinois Basin


734



1,909



2,017



2,751



3,637


Northern Powder River Basin


910



442



950



1,859



1,416


Total coal production


6,478



6,456



8,434



14,914



14,561













Coal royalty revenue per ton











Appalachia











Northern (1)


$

3.78



$

2.08



$

0.50



$

1.06



$

1.27


Central


5.05



3.13



5.46



5.25



3.19


Southern


5.69



3.36



6.46



6.03



3.16


Illinois Basin


4.06



3.76



3.30



3.50



3.54


Northern Powder River Basin


2.62



3.05



2.63



2.63



2.82













Coal royalty revenues











Appalachia











Northern (1)


$

933



$

463



$

607



$

1,540



$

1,635


Central


19,691



10,864



20,184



39,875



21,337


Southern


3,927



2,598



3,632



7,559



4,800


Total Appalachia


24,551



13,925



24,423



48,974



27,772


Illinois Basin


2,978



7,181



6,646



9,624



12,867


Northern Powder River Basin


2,384



1,348



2,498



4,882



4,000


Total coal royalty revenue


$

29,913



$

22,454



$

33,567



$

63,480



$

44,639













Other revenues











Minimums recognized as revenue


$

7,547



$

43,527



$

5,196



$

12,743



$

50,492


Transportation and processing fees


5,520



5,302



4,639



10,159



9,536


Property tax revenue


1,100



3,027



2,698



3,798



6,332


Wheelage


1,025



465



1,267



2,292



878


Coal override revenue


1,885



657



824



2,709



867


Hard mineral royalty revenues


1,452



603



1,244



2,696



1,494


Oil and gas royalty revenues


924



1,091



1,491



2,415



1,464


Other


260



361



212



472



1,204


Total other revenues


$

19,713



$

55,033



$

17,571



$

37,284



$

72,267


Coal royalty and other income


49,626



77,487



51,138



100,764



116,906


Gain (loss) on coal royalty and other segment asset sales


3,184



(1,080)



29



3,213



20,845


Total coal royalty and other segment revenues and other income


$

52,810



$

76,407



$

51,167



$

103,977



$

137,751







(1)

During the three months ended June 30, 2016, Northern Appalachia was impacted by a prior period adjustment of 0.4 million tons and less than $0.1 million in royalty revenue related to the Hibbs Run mine that temporarily ceased production during 2016. Absent this adjustment, production in the Northern Appalachia region was 0.2 million tons with revenue of $0.4 million. Coal royalty revenue per ton removes the impact of the Hibbs Run prior period adjustment.

 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures




Six Months Ended



June 30,



2017


2016



(In thousands)

Net income


$

66,714



$

69,873


Less: income attributable to preferred unitholders


(10,038)




Net income attributable to common unitholders and general partner


$

56,676



$

69,873


Plus: Recapitalization transaction expenses


21,602




Plus: Asset impairments


1,778



1,984


Less: Non-cash revenue associated with lease modifications and forfeitures


(1,262)



(36,788)


Less: Fair value adjustments for warrant liabilities


(40,529)




Less: Gains on asset sales


(3,405)



(20,854)


Adjusted net income attributable to common unitholders and general partner


$

34,860



$

14,215












 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures


Distributable Cash Flow

(In thousands)






Coal
Royalty
and Other




Construction
Aggregates


Corporate
and
Financing






Soda Ash