News Releases Details

HOUSTON--(BUSINESS WIRE)--Mar. 7, 2019-- Natural Resource Partners L.P. (NYSE:NRP) today reported fourth quarter and full year 2018 results as follows:

"NRP ended the year delivering another robust quarter of financial results, highlighted by the favorable Hillsboro settlement and the successful sale of our construction aggregates business," stated NRP’s President and Chief Operating Officer, Craig Nunez. “We generated significant amounts of cash from operations as we continued to see strong demand for our metallurgical and thermal coal throughout 2018. Additionally, the sale of our construction aggregates business for $205 million accelerated the de-levering and de-risking of our capital structure as we used the net cash proceeds to repay $143 million of debt to date, and plan to use the remaining proceeds to repay our Opco notes as they amortize in 2019, all at par value. This has been a transformative year for NRP and we are focused on continuing to position the company for a more secure future.”

NRP's liquidity was $306.0 million at December 31, 2018, consisting of $101.8 million of cash, $104.2 million of cash restricted for debt repayment ($49 million of which was used to repay Opco notes in January 2019) and $100.0 million of borrowing capacity available under its credit facility. NRP's consolidated Debt-to-Adjusted EBITDA ratio at December 31, 2018 was 3.0x, down over 15% from 2017 and down over 40% from the high of 5.3x at year-end 2015.

NRP declared a cash distribution of $0.45 per common unit and a cash distribution of $7.5 million on NRP’s preferred units for the fourth quarter of 2018. NRP's distribution coverage ratio over the last twelve months, excluding proceeds from sale of assets included in discontinued operations, was 8.4x before taking into account the $30 million annual distribution on NRP's preferred units, and 7.1x after taking into account the preferred unit distribution.

Fourth Quarter Segment Results (Unaudited)

Coal Royalty and Other

Total coal production and the average coal royalty revenue per ton remained stable compared to the prior year quarter as NRP continued to see strong coal pricing driven by solid export demand and stable domestic markets for metallurgical and thermal coal. Approximately 65% of NRP's coal royalty revenues and approximately 45% of its coal royalty production was derived from metallurgical coal during the three months ended December 31, 2018.

Net income and Adjusted EBITDA increased compared to the prior year quarter primarily as a result of the $25 millionHillsboro litigation settlement; Net income was partially offset by a $16.8 million increase in non-cash asset impairments.

Distributable cash flow and Free cash flow increased compared to the prior year quarter primarily as a result of the $25 millionHillsboro litigation settlement and increased cash receipts from higher metallurgical prices and production.

Soda Ash

Soda Ash segment operating performance was consistent with the prior year quarter as improved international sales pricing during the fourth quarter of 2018 was partially offset by increased freight costs.

Adjusted EBITDA, Distributable cash flow and Free cash flow decreased $2.5 million due to lower fourth quarter cash distributions received from Ciner Wyoming.

Corporate and Finance

Corporate and Finance segment Net income, Free cash flow and Distributable cash flow results improved compared to the prior year quarter primarily due to lower interest as a result of continued repayment of debt.

Full Year Segment Results (Unaudited)

Coal Royalty and Other

Full year 2018 total coal production remained stable and the average coal royalty revenue per ton increased as a result of higher metallurgical and thermal coal prices and higher metallurgical coal production driven by solid export demand and stable domestic markets for metallurgical and thermal coal, partially offset by lower thermal coal production as a result of capital constraints and declining overall demand for certain of our lessees, as well as temporary relocation of certain production off of NRP's coal reserves in the Illinois Basin. Approximately 65% of NRP's coal royalty revenues and approximately 55% of its coal royalty production was derived from metallurgical coal during the year ended December 31, 2018.

Net income and Adjusted EBITDA increased compared to the prior year primarily as a result of the $25 millionHillsboro litigation settlement; Net income was partially offset by a $15.3 million increase in non-cash asset impairments.

Distributable cash flow and Free cash flow increased compared to the prior year primarily as a result of the $25 millionHillsboro litigation settlement in addition to increased cash receipts from higher metallurgical prices and production and increased cash from other revenues.

Soda Ash

Soda Ash segment operating performance increased compared to the prior year primarily as a result of Ciner Wyoming's litigation settlement of a royalty dispute that resulted in $12.7 million of income. This increase was partially offset by a $4.9 million decrease in income primarily due to lower production and sales resulting from unexpected repairs during scheduled outages and ore grade degradation.

Adjusted EBITDA, Distributable cash flow and Free cash flow decreased $2.5 million compared to the prior year as a result of lower cash distributions received from Ciner Wyoming in the fourth quarter of 2018.

Corporate and Finance

Corporate and Finance segment results improved compared to the prior year primarily due to lower interest as a result of continued repayment of debt and lower employee-related costs.

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 55454891. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com. To access the replay, please 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, manages and leases a diversified portfolio of mineral properties in the United States including interests in coal, industrial minerals and other natural resources. 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.

For additional information, please contact Tiffany Sammis at 713-751-7515 or tsammis@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, litigation risk, 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

"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment, net income attributable to non-controlling interest and gain on reserve swap; plus total 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.

“Distributable cash flow” or "DCF" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from sales of assets, including sales of 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, Distributable cash flow 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. Distributable cash flow 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 our ability to make cash distributions and repay debt.

“Free cash flow” or "FCF" is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables (including affiliate); less maintenance and expansion capital expenditures, cash flow used in acquisition costs classified as financing activities and distributions to non-controlling interest. FCF is calculated before mandatory debt repayments. Free 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. Free cash flow may not be calculated the same for us as for other companies. Free cash flow 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 our ability to make cash distributions and repay debt.

“Free cash flow excluding discontinued operations and one-time beneficial items” is a non-GAAP financial measure that we define as Free cash flow excluding discontinued operations and one-time beneficial items.Free cash flow excluding discontinued operations and one-time beneficial items 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. Free cash flow excluding discontinued operations and one-time beneficial items may not be calculated the same for us as for other companies. Free cash flow excluding discontinued operations and one-time beneficial items is a supplemental liquidity measure used by our management to assess our ability to make cash distributions and repay debt.

"Cash flow cushion" is a non-GAAP financial measure that we define as Free cash flow excluding discontinued operations and one-time beneficial items less mandatory Opco debt amortization payments, preferred unit distributions and common unit distributions. Cash flow cushion 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. Cash flow cushion is a supplemental liquidity measure used by our management to assess the Partnership's ability to make or raise cash distributions to our common and preferred unitholders and our general partner and repay debt or redeem preferred units.

“Net income attributable to common unitholders excluding discontinued operations and one-time beneficial items” is a non-GAAP financial measure that we define as Net income attributable to NRP less gain on litigation settlements, income from discontinued operations, income attributable to preferred unitholders and Net income attributable to the general partner excluding discontinued operations and one-time beneficial items. Net income attributable to common unitholders excluding discontinued operations and one-time beneficial items 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 Net income attributable to common unitholders excluding discontinued operations and one-time beneficial items is useful in evaluating our financial performance because litigation settlements are one-time charges, gains on asset sales are not related to the operations of our business and income attributable to preferred unitholders and the general partner are unrelated to common unitholders. Excluding these from net income allows us to better compare results from ongoing operations attributable to common unitholders period-over-period.

"Return on capital employed" or "ROCE" is a non-GAAP financial measure that we define as Net income from continuing operations plus interest expense divided by the sum of equity excluding equity of discontinued operations, and debt. Return on capital employed 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. Return on capital employed is a supplemental performance measure used by our management team that measures our profitability and efficiency with which our capital is employed. The measure provides an indication of operating performance before the impact of leverage in the capital structure.

"Return on capital employed excluding discontinued operations and one-time beneficial items" is a non-GAAP financial measure that we define as Return on capital employed excluding one-time beneficial items. Return on capital employed excluding discontinued operations and one-time beneficial items 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. Return on capital employed excluding discontinued operations and one-time beneficial items is a supplemental performance measure used by our management team that measures our profitability and efficiency with which our capital is employed excluding the impact of one-time beneficial items. The measure provides an indication of operating performance before the impact of leverage in the capital structure and excluding the impact of one-time beneficial items.

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