News Releases Details

Fourth Quarter 2017 Highlights

• Net income of $30.7 million
• Net income attributable to the common unitholders and general partner of $22.9 million
• Adjusted EBITDA of $59.4 million ⁽¹⁾
• Basic and diluted net income per common unit of $1.84 and $1.26, respectively

Year Ended 2017 Highlights

• Net income of $88.7 million
• Net income attributable to the common unitholders and general partner of $63.2 million
• Adjusted EBITDA of $231.5 million ⁽¹⁾
• Basic and diluted net income per common unit of $5.06 and $3.96, respectively
• Generated operating cash flow from continuing operations of $127.8 million, up 27% from 2016
• Reduced debt by $311.1 million

HOUSTON--(BUSINESS WIRE)--Mar. 1, 2018-- Natural Resource Partners L.P. (NYSE:NRP) today reported fourth quarter and full year 2017 results.

Craig Nunez, President and Chief Operating Officer, commented: "A successful fourth quarter capped a year of significant achievement for NRP. We continue to generate substantial amounts of cash from operations and our fourth quarter results have considerably improved compared to prior year levels. Compared to the prior quarter, our results reflect improved performances from our Coal Royalty, Soda Ash and Construction Aggregates business segments. In addition, we continue to strengthen our balance sheet and have reduced debt $311.1 million during 2017. We enter 2018 with a stronger balance sheet, lower interest expense and improved operating performance."

At the end of the fourth quarter of 2017, NRP had liquidity of $119.8 million, consisting of $29.8 million in cash and $90.0 million of borrowing capacity available under its credit facility. NRP's consolidated Debt-to-Adjusted EBITDA ratio at year-end 2017 was 3.6x, down from 4.5x at year-end 2016 and 5.3x at year-end 2015.

NRP continues to focus on reducing its debt while maintaining sufficient liquidity to operate its business. NRP's goal is to achieve a leverage ratio, defined as Debt-to-Adjusted EBITDA, of less than 3.0x, while maintaining minimum liquidity of $100 million, which may consist of a combination of cash and/or available borrowing capacity.

With respect to the fourth quarter of 2017, NRP paid a cash distribution of $0.45 per common unit and paid a distribution on NRP’s 12.0% Class A Convertible Preferred Units in February 2018. NRP also redeemed all outstanding paid-in-kind Preferred Units in February 2018 at par.

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⁽¹⁾ See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

Segment Information

Coal Royalty and Other

Operating income for the quarter was $39.7 million and Adjusted EBITDA was $46.7 million. For the quarter, net cash provided by operating and investing activities were $45.6 million and $0.6 million, respectively, and DCF was $46.1 million. NRP's Q4 2017 results represent a substantial improvement from Q4 2016 and a modest increase compared to Q3 2017. Adjusted coal royalty and other operating income compared to Q4 2016 increased 34%, DCF adjusted for proceeds from the sale of assets increased 6% and Adjusted EBITDA excluding gains on sale of assets increased 20%. Variances in Q4 2017 compared to Q4 2016 by our major coal producing regions follow:

• Appalachia: Coal royalty revenue increased $2.9 million in this region primarily as a result of increased metallurgical coal prices and production.
• Illinois Basin: Lower production in this region led to a $4.1 million decrease in coal royalty revenue, despite increases in thermal coal prices and our royalty revenue per ton in the region. The decreased production in this region was primarily a result of the temporary relocation of certain production off of NRP's coal reserves. However, this decrease in coal royalty revenue was partially offset by a $3.5 million increase in overriding royalty revenue and wheelage in this region.
• Northern Powder River Basin: Higher prices and production in this region led to the $1.5 million increase in coal royalty revenue. The higher production was a result of increased mining on our acreage in this region, which has a checkerboard coal reserve ownership pattern.

Operating income for the year was $154.9 million and Adjusted EBITDA was $181.3 million. Net cash provided by operating, investing and financing activities were $166.1 million, $4.2 million and $0.5 million, respectively, and DCF was $170.3 million. Adjusted Coal Royalty and Other Operating Income compared to 2016 increased 40% and DCF adjusted for proceeds from the sale of assets increased 23% and Adjusted EBITDA excluding gains on sale of assets decreased 1%. The decrease in Adjusted EBITDA year-over-year was impacted by $40.5 million of revenue resulting from one-time lease modifications in 2016. Variances in year-ended 2017 compared to year-ended 2016 by our major coal producing regions follow:

• Appalachia: Coal royalty revenue increased $30.7 million in this region primarily as a result of increased metallurgical coal prices and production.
• Illinois Basin: Lower production in this region led to a $12.7 million decrease in coal royalty revenue, despite increases in thermal coal prices and our royalty revenue per ton in the region. The decreased production in this region was primarily a result of the temporary relocation of certain production off of NRP's coal reserves. However, this decrease in coal royalty revenue was partially offset by a $7.5 million increase in overriding royalty revenue and wheelage in this region.
• Northern Powder River Basin: Higher production in this region led to the $1.0 million increase in coal royalty revenue despite a relatively small decrease in prices year-over-year. The higher production was a result of increased mining on our acreage in this region, which has a checkerboard coal reserve ownership pattern.

Soda Ash

During Q4 2017, international prices for soda ash, particularly in Asia, continued to be strong, and domestic prices improved slightly over 2016. NRP received $12.3 million of cash distributions from its 49% investment in Ciner Wyoming during the period, which was unchanged from the previous quarter and from Q4 2016. NRP's equity in earnings from CinerWyoming of $12.8 million increased 37% in Q4 2017, compared to Q4 2016 due to higher production levels along with higher international prices. The higher production levels were primarily the result of production initiatives that were undertaken earlier in 2017 to improve reliability and increase utilization of production units.

During the year, NRP received $49.0 million in cash distributions from Ciner Wyoming and recorded equity in earnings from Ciner Wyoming of $40.5 million.

Construction Aggregates

Operating income for the quarter was $2.0 million and Adjusted EBITDA was $5.1 million. Performance increased compared to the prior quarter and Q4 2016 as a result of increased production and sales volumes, higher margins on road construction and asphalt paving projects and increased marine terminal activity. For the quarter, net cash provided by (used in) operating, investing and financing activities were $4.0 million, $(0.7) million and $(0.2) million, respectively, and DCF was $3.4 million. DCF increased compared to Q4 2016 and the prior quarter as a result of the improved operating performance.

Operating income for the year was $6.4 million and Adjusted EBITDA was $19.8 million. These amounts improved compared to the prior year primarily due to a higher production and sales of crushed stone, gravel and sand, higher delivery and haul income and increased road construction and asphalt paving projects. Net cash provided by (used in) operating, investing activities and financing activities were $15.7 million. $(6.5) million and $(1.3) million, respectively, and DCF was $10.2 million.

Corporate and Finance

Total costs in Q4 2017 were $23.8 million, which includes $19.2 million of interest expense. While these amounts were in line with the previous quarter, total corporate and financing costs decreased 22% compared to the same period last year due to lower interest expense and the LTIP awards expensed in Q4 2016 in connection with NRP's recapitalization transactions.

Total costs in 2017 were $112.6, which includes $82.2 million of interest expense, $7.9 million of debt modification expense and $4.1 million loss on extinguishment of debt.

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 55454887. 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 55454887 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 a construction aggregates company and an equity investment in CinerWyoming, a trona/soda ash operation.

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.

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.

Non-GAAP Financial Measures

“Distributable Cash Flow” is a non-GAAP financial measure that we define as net cash provided by 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 of 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. In addition, DCF presented below is not calculated or presented on the same basis as Distributable Cash Flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. 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 EBITDA" is a non-GAAP financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment and gain on reserve swap; plus distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, 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 or Consolidated EBITDDA as defined in Opco's debt agreements. 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.

“Adjusted Net Income” is a non-GAAP financial measure that we define as Net income attributable to common unitholders and general partner plus restructuring transaction expenses that include debt modification expense, loss on extinguishment of debt and restructuring-related incentive compensation expense, asset impairments and income (loss) from discontinued operations; less gain on sale of assets and non-cash revenue associated with lease modifications or terminations. 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 are non-cash charges. Excluding these from net income allows us to better compare results from ongoing operations period-over-period.

“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. Excluding these from Coal royalty and other operating income allows us to better compare results from ongoing operations period-over-period.

-Financial Tables, Reconciliation of Non-GAAP Measures and Recap of Metrics Follow-