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Natural Resource Partners L.P. Reports First Quarter 2020 Results

05/11/2020

HOUSTON--(BUSINESS WIRE)-- Natural Resource Partners L.P. (NYSE:NRP) today reported first quarter 2020 results as follows:

 

For the Three Months Ended

 

Last Twelve
Months

 

 

March 31,

 

March 31,

(In thousands) (Unaudited)

 

2020

 

2019

 

2020

Net income (loss) from continuing operations

 

$

18,779

 

 

$

35,765

 

 

$

(42,400

)

Asset impairments

 

 

 

 

 

148,214

 

Net income from continuing operations excluding asset impairments

 

$

18,779

 

 

$

35,765

 

 

$

105,814

 

Adjusted EBITDA (1)

 

31,932

 

 

52,449

 

 

178,711

 

Cash flow provided by (used in) continuing operations:

 

 

 

 

 

 

Operating activities

 

30,155

 

 

22,832

 

 

144,642

 

Investing activities

 

272

 

 

697

 

 

7,796

 

Financing activities

 

(28,186

)

 

(99,852

)

 

(181,639

)

Distributable cash flow (1)

 

30,361

 

 

23,139

 

 

152,155

 

Free cash flow (1)

 

30,427

 

 

23,273

 

 

146,194

 

Cash flow cushion (last twelve months) (1)

 

 

 

 

 

35,367

 

__________________

(1)

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

"NRP continues to employ remote work protocols and is conducting business as usual despite the COVID-19 pandemic. Our people are safe and leadership succession plans and delegations of authorities are in place if needed," said Craig Nunez, NRP's President and Chief Operating Officer. "While the COVID-19 pandemic did not have a material impact on our first quarter results, we are starting to see the effects of the declining demand for steel, electricity and soda ash on our business. We expect reduced demand will continue and that our results will be negatively impacted in the coming months. Although we are unable to predict the severity or duration of the impact on our business, we believe our $200 million liquidity buffer and continued free cash flow generation will provide us with the financial flexibility and margin of safety necessary to manage through the downturn.”

Segment Performance

Coal Royalty and Other

Revenues and other income in the first quarter of 2020 were lower by $21.4 million and distributable cash flow and free cash flow were $12.8 million and $12.5 million lower, respectively, as compared to the prior year period. This decrease is primarily a result of a weakened market for metallurgical coal as compared to the prior year period due to a decline in global steel demand. As a result, both sales volumes and prices for metallurgical coal sold were lower in the first quarter of 2020 compared to the prior year period. Approximately 65% of coal royalty revenues and approximately 60% of coal royalty sales volumes were derived from metallurgical coal during the three months ended March 31, 2020. In addition, weaker domestic and export thermal coal markets compared to the prior year period resulted in lower revenue from our thermal coal properties. Domestic and export thermal coal markets remained challenged by lower utility demand, continued low natural gas prices and the secular shift to renewable energy.

A number of mines on NRP's properties have been temporarily idled as coal lessees face not only reduced demand but workforce safety concerns and supply chain disruptions due to the COVID-19 pandemic. NRP believes that lessees who have idled mines will continue to sell coal from inventory, which should result in continued royalty payments to NRP over the near term. However, the pandemic has compounded already weak coal pricing and demand, and even those lessees who continue to operate are seeing significant negative impacts on their businesses.

Additionally, NRP's largest lessee, Foresight Energy, filed for bankruptcy in March 2020, and has continued to operate since the filing. Foresight entered into agreements with its pre-petition lenders to support its restructuring plan process. In addition, Foresight reached agreement with certain of its other key contract counterparties, including NRP, to enter into amendments to the counterparties’ agreements such that Foresight will be able to implement its restructuring plan.

Soda Ash

Ciner Wyoming started to see the impact of the COVID-19 pandemic on its operations towards the end of the first quarter in the form of slowing global demand and downward pricing pressure, and while Ciner Wyoming believes this did not have a material adverse effect on its first quarter results it will have a negative impact on subsequent quarters. Revenues and other income in the first quarter of 2020 were lower by $5.4 million compared to the prior year quarter primarily due to lower international demand that resulted in lower international soda ash pricing and volumes sold. Distributions received from Ciner Wyoming were $7.1 million in the first quarter of 2020 as compared to $9.8 million in the first quarter of 2019. The managing partner of Ciner Wyoming has reduced distributions to fund a multi-year capacity expansion project scheduled to begin later this year. Prior to COVID-19, plans were for NRP to receive approximately $25 million to $28 million of annual cash distributions from Ciner Wyoming until the project is completed. However, NRP is unable to predict the ultimate impact the COVID-19 pandemic may have on future distributions.

The extent and duration to which COVID-19 will impact demand is highly uncertain and cannot be predicted with confidence at this time. Ciner Wyoming has focused on safety during this pandemic and is actively managing the business to maintain cash flow and believes it has enough liquidity to meet its anticipated liquidity requirements.

Corporate and Financing

Corporate and financing costs were $4.3 million lower in the first quarter of 2020 compared to the prior year quarter primarily due to lower interest expense as a result of less debt outstanding. Distributable cash flow and free cash flow were $22.4 million higher compared to the prior year quarter primarily due to the timing of interest payments on the parent company bonds that were refinanced in the second quarter of 2019. Interest payments are due in June and December on the new 9.125% Notes, compared to March and September on the previous 10.5% Notes.

For the first quarter of 2020, the Board of Directors of NRP's general partner decided to suspend the common unit distribution and pay-in-kind one-half of the preferred unit distribution in order to bolster cash reserves.

Conference Call

A conference call will be held today at 9:00 a.m. ET. To join the conference call, dial (844) 583-4546 and provide the conference ID 2146846. 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. In addition, NRP owns an equity investment in Ciner Wyoming LLC, a trona ore mining and soda ash production business.

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, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on the Partnership’s common and preferred units; the Partnership's business strategy; its liquidity and access to capital and financing sources; its financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by the Partnership's lessees, including Foresight Energy; Ciner Wyoming LLC’s trona mining and soda ash refinery operations; distributions from the soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving the Partnership, and of scheduled or potential regulatory or legal changes; global and U.S. economic conditions; 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 or loss, 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 asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; 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 receivable; 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.

"Cash flow cushion" is a non-GAAP financial measure that we define as free cash flow less one-time beneficial items, mandatory Opco debt repayments, 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.

"Return on capital employed" or "ROCE" is a non-GAAP financial measure that we define as net income (loss) from continuing operations plus financing costs (interest expense plus loss on extinguishment of debt) 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 or loss, 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.

-Financial Tables and Reconciliation of Non-GAAP Measures Follow-

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

 

Consolidated Statements of Comprehensive Income (Loss)

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

December 31,

(In thousands, except per unit data)

 

2020

 

2019

 

2019

Revenues and other income

 

 

 

 

 

 

Coal royalty and other

 

$

31,433

 

 

$

49,502

 

 

$

37,032

 

Transportation and processing services

 

2,509

 

 

5,601

 

 

4,539

 

Equity in earnings of Ciner Wyoming

 

6,272

 

 

11,682

 

 

10,256

 

Gain (loss) on asset sales and disposals

 

 

 

256

 

 

(111

)

Total revenues and other income

 

$

40,214

 

 

$

67,041

 

 

$

51,716

 

Operating expenses

 

 

 

 

 

 

Operating and maintenance expenses

 

$

5,202

 

 

$

8,360

 

 

$

5,925

 

Depreciation, depletion and amortization

 

2,012

 

 

4,392

 

 

3,186

 

General and administrative expenses

 

3,913

 

 

4,350

 

 

3,931

 

Asset impairments

 

 

 

 

 

147,730

 

Total operating expenses

 

$

11,127

 

 

$

17,102

 

 

$

160,772

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

29,087

 

 

$

49,939

 

 

$

(109,056

)

 

 

 

 

 

 

 

Interest expense, net

 

$

(10,308

)

 

$

(14,174

)

 

$

(10,392

)

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

18,779

 

 

$

35,765

 

 

$

(119,448

)

Income (loss) from discontinued operations

 

 

 

(46

)

 

750

 

Net income (loss)

 

$

18,779

 

 

$

35,719

 

 

$

(118,698

)

Less: income attributable to preferred unitholders

 

(7,500

)

 

(7,500

)

 

(7,500

)

Net income (loss) attributable to common unitholders and general partner

 

$

11,279

 

 

$

28,219

 

 

$

(126,198

)

 

 

 

 

 

 

 

Net income (loss) attributable to common unitholders

 

$

11,053

 

 

$

27,655

 

 

$

(123,674

)

Net income (loss) attributable to the general partner

 

226

 

 

564

 

 

(2,524

)

Income (loss) from continuing operations per common unit

 

 

 

 

 

 

Basic

 

$

0.90

 

 

$

2.26

 

 

$

(10.15

)

Diluted

 

0.52

 

 

1.75

 

 

(10.15

)

Net income (loss) per common unit

 

 

 

 

 

 

Basic

 

$

0.90

 

 

$

2.26

 

 

$

(10.09

)

Diluted

 

0.52

 

 

1.75

 

 

(10.09

)

 

 

 

 

 

 

 

Net income (loss)

 

$

18,779

 

 

$

35,719

 

 

$

(118,698

)

Comprehensive income (loss) from unconsolidated investment and other

 

(1,023

)

 

1,005

 

 

1,208

 

Comprehensive income (loss)

 

$

17,756

 

 

$

36,724

 

 

$

(117,490

)

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

 

Consolidated Statements of Cash Flows

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

December 31,

(In thousands)

 

2020

 

2019

 

2019

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

18,779

 

 

$

35,719

 

 

$

(118,698

)

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

 

 

 

 

 

 

Depreciation, depletion and amortization

 

2,012

 

 

4,392

 

 

3,186

 

Distributions from unconsolidated investment

 

7,105

 

 

9,800

 

 

6,370

 

Equity earnings from unconsolidated investment

 

(6,272

)

 

(11,682

)

 

(10,256

)

Loss (gain) on asset sales and disposals

 

 

 

(256

)

 

111

 

Loss (income) from discontinued operations

 

 

 

46

 

 

(750

)

Asset impairments

 

 

 

 

 

147,730

 

Bad debt expense

 

(190

)

 

10

 

 

620

 

Unit-based compensation expense

 

729

 

 

901

 

 

519

 

Amortization of debt issuance costs and other

 

448

 

 

1,796

 

 

464

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

(5,073

)

 

(4,937

)

 

(3,924

)

Accounts payable

 

93

 

 

(616

)

 

(412

)

Accrued liabilities

 

(2,861

)

 

(6,164

)

 

1,427

 

Accrued interest

 

7,060

 

 

(10,033

)

 

(12,048

)

Deferred revenue

 

8,265

 

 

4,534

 

 

3,188

 

Other items, net

 

60

 

 

(678

)

 

1,867

 

Net cash provided by operating activities of continuing operations

 

$

30,155

 

 

$

22,832

 

 

$

19,394

 

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

 

1,706

 

 

121

 

 

(4

)

Net cash provided by operating activities

 

$

31,861

 

 

$

22,953

 

 

$

19,390

 

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from asset sales and disposals

 

$

 

 

$

256

 

 

$

(111

)

Return of long-term contract receivable

 

272

 

 

441

 

 

392

 

Acquisition of mineral rights

 

 

 

 

 

(22

)

Net cash provided by investing activities of continuing operations

 

$

272

 

 

$

697

 

 

$

259

 

Net cash used in investing activities of discontinued operations

 

(66

)

 

(390

)

 

(73

)

Net cash provided by investing activities

 

$

206

 

 

$

307

 

 

$

186

 

 

Cash flows from financing activities

 

 

 

 

 

 

Debt repayments

 

$

(16,696

)

 

$

(86,468

)

 

$

(20,335

)

Distributions to common unitholders and general partner

 

(5,630

)

 

(5,625

)

 

(5,630

)

Distributions to preferred unitholders

 

(7,500

)

 

(7,500

)

 

(7,500

)

Contributions from (to) discontinued operations

 

1,640

 

 

(269

)

 

(77

)

Debt issuance costs and other

 

 

 

10

 

 

(9

)

Net cash used in financing activities of continuing operations

 

$

(28,186

)

 

$

(99,852

)

 

$

(33,551

)

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

 

(1,640

)

 

269

 

 

77

 

Net cash used in financing activities

 

$

(29,826

)

 

$

(99,583

)

 

$

(33,474

)

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

$

2,241

 

 

$

(76,323

)

 

$

(13,898

)

Cash and cash equivalents at beginning of period

 

98,265

 

 

206,030

 

 

112,163

 

Cash and cash equivalents at end of period

 

$

100,506

 

 

$

129,707

 

 

$

98,265

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

3,039

 

 

$

23,422

 

 

$

22,327

 

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

 

Consolidated Balance Sheets

 

 

March 31,

 

December 31,

(In thousands, except unit data)

2020

 

2019

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

100,506

 

 

$

98,265

 

Accounts receivable, net

34,113

 

 

30,869

 

Prepaid expenses and other, net

1,166

 

 

1,244

 

Current assets of discontinued operations

 

 

1,706

 

Total current assets

$

135,785

 

 

$

132,084

 

Land

24,008

 

 

24,008

 

Mineral rights, net

603,208

 

 

605,096

 

Intangible assets, net

17,607

 

 

17,687

 

Equity in unconsolidated investment

261,224

 

 

263,080

 

Long-term contract receivable, net

34,816

 

 

36,963

 

Other assets, net

6,774

 

 

6,989

 

Total assets

$

1,083,422

 

 

$

1,085,907

 

LIABILITIES AND CAPITAL

 

 

 

Current liabilities

 

 

 

Accounts payable

$

1,272

 

 

$

1,179

 

Accrued liabilities

6,004

 

 

8,764

 

Accrued interest

9,376

 

 

2,316

 

Current portion of deferred revenue

6,021

 

 

4,608

 

Current portion of long-term debt, net

45,767

 

 

45,776

 

Current liabilities of discontinued operations

 

 

65

 

Total current liabilities

$

68,440

 

 

$

62,708

 

Deferred revenue

54,065

 

 

47,213

 

Long-term debt, net

454,110

 

 

470,422

 

Other non-current liabilities

4,804

 

 

4,949

 

Total liabilities

$

581,419

 

 

$

585,292

 

Commitments and contingencies

 

 

 

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

$

164,587

 

 

$

164,587

 

Partners’ capital:

 

 

 

Common unitholders’ interest (12,261,199 units issued and outstanding at March 31, 2020 and December 31, 2019)

$

273,847

 

 

$

271,471

 

General partner’s interest

3,305

 

 

3,270

 

Warrant holders' interest

66,816

 

 

66,816

 

Accumulated other comprehensive loss

(3,617

)

 

(2,594

)

Total partners’ capital

$

340,351

 

 

$

338,963

 

Non-controlling interest

(2,935

)

 

(2,935

)

Total capital

$

337,416

 

 

$

336,028

 

Total liabilities and capital

$

1,083,422

 

 

$

1,085,907

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

 

Consolidated Statements of Partners' Capital

 

Common Unitholders

 

General Partner

 

Warrant Holders

 

Accumulated
Other
Comprehensive Loss

 

Partners'
Capital
Excluding
Non-Controlling Interest

 

Non-Controlling Interest

 

Total Capital

 

(In thousands)

Units

 

Amounts

 

Balance at December 31, 2019

12,261

 

 

$

271,471

 

 

$

3,270

 

 

$

66,816

 

 

$

(2,594

)

 

$

338,963

 

 

$

(2,935

)

 

$

336,028

 

Cumulative effect of adoption of accounting standard

 

 

(3,833

)

 

(78

)

 

 

 

 

 

(3,911

)

 

 

 

(3,911

)

Net income (1)

 

 

18,403

 

 

376

 

 

 

 

 

 

18,779

 

 

 

 

18,779

 

Distributions to common unitholders and general partner

 

 

(5,517

)

 

(113

)

 

 

 

 

 

(5,630

)

 

 

 

(5,630

)

Distributions to preferred unitholders

 

 

(7,350

)

 

(150

)

 

 

 

 

 

(7,500

)

 

 

 

(7,500

)

Issuance of unit-based awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit-based awards amortization and vesting

 

 

673

 

 

 

 

 

 

 

 

673

 

 

 

 

673

 

Comprehensive loss from unconsolidated investment and other

 

 

 

 

 

 

 

 

(1,023

)

 

(1,023

)

 

 

 

(1,023

)

Balance at March 31, 2020

12,261

 

 

$

273,847

 

 

$

3,305

 

 

$

66,816

 

 

$

(3,617

)

 

$

340,351

 

 

$

(2,935

)

 

$

337,416

 

__________________

(1)

Net income includes $7.5 million attributable to preferred unitholders that accumulated during the period of which $7.35 million is allocated to the common unitholders and $0.15 million is allocated to the general partner.

 

Common Unitholders

 

General Partner

 

Warrant Holders

 

Accumulated
Other
Comprehensive
Loss

 

Partners'
Capital
Excluding
Non-Controlling Interest

 

Non-Controlling Interest

 

Total Capital

 

(In thousands)

Units

 

Amounts

 

Balance at December 31, 2018

12,249

 

 

$

355,113

 

 

$

5,014

 

 

$

66,816

 

 

$

(3,462

)

 

$

423,481

 

 

$

(2,935

)

 

$

420,546

 

Net income (1)

 

 

35,005

 

 

714

 

 

 

 

 

 

35,719

 

 

 

 

35,719

 

Distributions to common unitholders and general partner

 

 

(5,513

)

 

(112

)

 

 

 

 

 

(5,625

)

 

 

 

(5,625

)

Distributions to preferred unitholders

 

 

(7,350

)

 

(150

)

 

 

 

 

 

(7,500

)

 

 

 

(7,500

)

Issuance of unit-based awards

12

 

 

486

 

 

 

 

 

 

 

 

486

 

 

 

 

486

 

Unit-based awards amortization and vesting

 

 

399

 

 

 

 

 

 

 

 

399

 

 

 

 

399

 

Comprehensive income from unconsolidated investment and other

 

 

 

 

10

 

 

 

 

1,005

 

 

1,015

 

 

 

 

1,015

 

Balance at March 31, 2019

12,261

 

 

$

378,140

 

 

$

5,476

 

 

$

66,816

 

 

$

(2,457

)

 

$

447,975

 

 

$

(2,935

)

 

$

445,040

 

__________________

(1)

 

Net income includes $7.5 million attributable to preferred unitholders that accumulated during the period, of which $7.35 million is allocated to the common unitholders and $0.15 million is allocated to the general partner.

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

 

The following tables present NRP's unaudited business results by segment for the three months ended March 31, 2020 and 2019 and December 31, 2019:

 

 

 

Operating Segments

 

 

 

 

 

 

Coal Royalty
and Other

 

 

 

Corporate and Financing

 

 

(In thousands)

 

 

Soda Ash

 

 

Total

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

Revenues

 

$

33,942

 

 

$

6,272

 

 

$

 

 

$

40,214

 

Gain on asset sales and disposals

 

 

 

 

 

 

 

 

Total revenues and other income

 

$

33,942

 

 

$

6,272

 

 

$

 

 

$

40,214

 

Asset impairments

 

$

 

 

$

 

 

$

 

 

$

 

Net income (loss) from continuing operations

 

$

26,744

 

 

$

6,256

 

 

$

(14,221

)

 

$

18,779

 

Adjusted EBITDA (1)

 

$

28,756

 

 

$

7,089

 

 

$

(3,913

)

 

$

31,932

 

Cash flow provided by (used in) continuing operations:

 

 

 

 

 

 

 

 

Operating activities

 

$

30,556

 

 

$

7,089

 

 

$

(7,490

)

 

$

30,155

 

Investing activities

 

$

272

 

 

$

 

 

$

 

 

$

272

 

Financing activities

 

$

 

 

$

 

 

$

(28,186

)

 

$

(28,186

)

Distributable cash flow (1) (2)

 

$

30,828

 

 

$

7,089

 

 

$

(7,490

)

 

$

30,361

 

Free cash flow (1)

 

$

30,828

 

 

$

7,089

 

 

$

(7,490

)

 

$

30,427

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

Revenues

 

$

55,103

 

 

$

11,682

 

 

$

 

 

$

66,785

 

Gain on asset sales and disposals

 

256

 

 

 

 

 

 

256

 

Total revenues and other income

 

$

55,359

 

 

$

11,682

 

 

$

 

 

$

67,041

 

Asset impairments

 

$

 

 

$

 

 

$

 

 

$

 

Net income (loss) from continuing operations

 

$

42,607

 

 

$

11,682

 

 

$

(18,524

)

 

$

35,765

 

Adjusted EBITDA (1)

 

$

46,999

 

 

$

9,800

 

 

$

(4,350

)

 

$

52,449

 

Cash flow provided by (used in) continuing operations:

 

 

 

 

 

 

 

 

Operating activities

 

$

42,916

 

 

$

9,800

 

 

$

(29,884

)

 

$

22,832

 

Investing activities

 

$

697

 

 

$

 

 

$

 

 

$

697

 

Financing activities

 

$

 

 

$

 

 

$

(99,852

)

 

$

(99,852

)

Distributable cash flow (1) (2)

 

$

43,613

 

 

$

9,800

 

 

$

(29,884

)

 

$

23,139

 

Free cash flow (1)

 

$

43,357

 

 

$

9,800

 

 

$

(29,884

)

 

$

23,273

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

Revenues

 

$

41,571

 

 

$

10,256

 

 

$

 

 

$

51,827

 

Loss on asset sales and disposals

 

(111

)

 

 

 

 

 

(111

)

Total revenues and other income

 

$

41,460

 

 

$

10,256

 

 

$

 

 

$

51,716

 

Asset impairments

 

$

147,730

 

 

$

 

 

$

 

 

$

147,730

 

Net income (loss) from continuing operations

 

$

(115,355

)

 

$

10,230

 

 

$

(14,323

)

 

$

(119,448

)

Adjusted EBITDA (1)

 

$

35,561

 

 

$

6,344

 

 

$

(3,931

)

 

$

37,974

 

Cash flow provided by (used in) continuing operations:

 

 

 

 

 

 

 

 

Operating activities

 

$

39,042

 

 

$

6,344

 

 

$

(25,992

)

 

$

19,394

 

Investing activities

 

$

259

 

 

$

 

 

$

 

 

$

259

 

Financing activities

 

$

 

 

$

 

 

$

(33,551

)

 

$

(33,551

)

Distributable cash flow (1) (2)

 

$

39,323

 

 

$

6,344

 

 

$

(25,992

)

 

$

19,602

 

Free cash flow (1)

 

$

39,412

 

 

$

6,344

 

 

$

(25,992

)

 

$

19,764

 

__________________

(1)

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

(2)

Includes net proceeds from the sale of the construction aggregates business which are classified as investing cash flow from discontinued operations.

Natural Resource Partners L.P.

Financial Tables

(Unaudited)

 

Operating Statistics - Coal Royalty and Other

 

 

For the Three Months Ended

 

 

March 31,

 

December 31,

(In thousands, except per ton data)

 

2020

 

2019

 

2019

Coal sales volumes (tons)

 

 

 

 

 

 

Appalachia

 

 

 

 

 

 

Northern (1)

 

327

 

 

859

 

 

686

 

Central

 

2,933

 

 

3,422

 

 

2,908

 

Southern

 

222

 

 

348

 

 

498

 

Total Appalachia

 

3,482

 

 

4,629

 

 

4,092

 

Illinois Basin

 

505

 

 

560

 

 

555

 

Northern Powder River Basin

 

527

 

 

856

 

 

1,057

 

Total coal sales volumes

 

4,514

 

 

6,045

 

 

5,704

 

Coal royalty revenue per ton

 

 

 

 

 

 

Appalachia

 

 

 

 

 

 

Northern (1)

 

$

1.81

 

 

$

4.71

 

 

$

0.88

 

Central

 

4.83

 

 

6.03

 

 

4.58

 

Southern

 

4.16

 

 

8.61

 

 

5.96

 

Illinois Basin

 

4.35

 

 

4.77

 

 

4.53

 

Northern Powder River Basin

 

4.13

 

 

2.61

 

 

2.33

 

Combined average coal royalty revenue per ton

 

4.44

 

 

5.39

 

 

3.84

 

Coal royalty revenues

 

 

 

 

 

 

Appalachia

 

 

 

 

 

 

Northern (1)

 

$

593

 

 

$

4,045

 

 

$

602

 

Central

 

14,173

 

 

20,644

 

 

13,332

 

Southern

 

923

 

 

2,997

 

 

2,965

 

Total Appalachia

 

15,689

 

 

27,686

 

 

16,899

 

Illinois Basin

 

2,199

 

 

2,670

 

 

2,516

 

Northern Powder River Basin

 

2,177

 

 

2,231

 

 

2,462

 

Unadjusted coal royalty revenues

 

20,065

 

 

32,587

 

 

$

21,877

 

Coal royalty adjustment for minimum leases

 

(963

)

 

(456

)

 

174

 

Total coal royalty revenues

 

$

19,102

 

 

$

32,131

 

 

$

22,051

 

Other revenues

 

 

 

 

 

 

Production lease minimum revenues

 

$

802

 

 

$

2,700

 

 

$

2,737

 

Minimum lease straight-line revenues

 

3,809

 

 

3,316

 

 

3,758

 

Property tax revenues

 

1,599

 

 

1,433

 

 

1,871

 

Wheelage revenues

 

2,204

 

 

1,415

 

 

845

 

Coal overriding royalty revenues

 

1,322

 

 

3,975

 

 

3,333

 

Lease amendment revenues

 

843

 

 

771

 

 

1,271

 

Aggregates royalty revenues

 

576

 

 

1,464

 

 

610

 

Oil and gas royalty revenues

 

1,103

 

 

1,719

 

 

456

 

Other revenues

 

73

 

 

578

 

 

100

 

Total other revenues

 

$

12,331

 

 

$

17,371

 

 

$

14,981

 

Coal royalty and other

 

$

31,433

 

 

$

49,502

 

 

$

37,032

 

Transportation and processing services revenues

 

2,509

 

 

5,601

 

 

4,539

 

Gain (loss) on asset sales and disposals

 

 

 

256

 

 

(111

)

Total Coal Royalty and Other segment revenues and other income

 

$

33,942

 

 

$

55,359

 

 

$

41,460

 

__________________

(1)

Northern Appalachia includes NRP's Hibbs Run property that has significant sales volumes but a low fixed rate per ton.
Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

(Unaudited)

 

Adjusted EBITDA

 

 

 

 

 

Coal Royalty and Other

 

 

 

Corporate and Financing

 

 

(In thousands)

 

 

Soda Ash

 

 

Total

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

26,744

 

 

$

6,256

 

 

$

(14,221

)

 

$

18,779

 

Less: equity earnings from unconsolidated investment

 

 

 

(6,272

)

 

 

 

(6,272

)

Add: total distributions from unconsolidated investment

 

 

 

7,105

 

 

 

 

7,105

 

Add: interest expense, net

 

 

 

 

 

10,308

 

 

10,308

 

Add: depreciation, depletion and amortization

 

2,012

 

 

 

 

 

 

2,012

 

Add: asset impairments

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

28,756

 

 

$

7,089

 

 

$

(3,913

)

 

$

31,932

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

42,607

 

 

$

11,682

 

 

$

(18,524

)

 

$

35,765

 

Less: equity earnings from unconsolidated investment

 

 

 

(11,682

)

 

 

 

(11,682

)

Add: total distributions from unconsolidated investment

 

 

 

9,800

 

 

 

 

9,800

 

Add: interest expense, net

 

 

 

 

 

14,174

 

 

14,174

 

Add: depreciation, depletion and amortization

 

4,392

 

 

 

 

 

 

4,392

 

Add: asset impairments

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

46,999

 

 

$

9,800

 

 

$

(4,350

)

 

$

52,449

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(115,355

)

 

$

10,230

 

 

$

(14,323

)

 

$

(119,448

)

Less: equity earnings from unconsolidated investment

 

 

 

(10,256

)

 

 

 

(10,256

)

Add: total distributions from unconsolidated investment

 

 

 

6,370

 

 

 

 

6,370

 

Add: interest expense, net

 

 

 

 

 

10,392

 

 

10,392

 

Add: depreciation, depletion and amortization

 

3,186

 

 

 

 

 

 

3,186

 

Add: asset impairments

 

147,730

 

 

 

 

 

 

147,730

 

Adjusted EBITDA

 

$

35,561

 

 

$

6,344

 

 

$

(3,931

)

 

$

37,974

 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

(Unaudited)

 

Distributable Cash Flow and Free Cash Flow

 

 

 

Coal Royalty
and Other

 

 

 

Corporate and Financing

 

 

(In thousands)

 

 

Soda Ash

 

 

Total

For the Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

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

 

$

30,556

 

 

$

7,089

 

 

$

(7,490

)

 

30,155

 

Add: proceeds from asset sales and disposals

 

 

 

 

 

 

 

 

Add: proceeds from sale of discontinued operations

 

 

 

 

 

 

 

(66

)

Add: return of long-term contract receivable

 

272

 

 

 

 

 

 

272

 

Distributable cash flow

 

$

30,828

 

 

$

7,089

 

 

$

(7,490

)

 

$

30,361

 

Less: proceeds from asset sales and disposals

 

 

 

 

 

 

 

 

Less: proceeds from sale of discontinued operations

 

 

 

 

 

 

 

66

 

Less: expansion capital expenditures

 

 

 

 

 

 

 

 

Free cash flow

 

$

30,828

 

 

$

7,089

 

 

$

(7,490

)

 

$

30,427

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

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

 

$

42,916

 

 

$

9,800

 

 

$

(29,884

)

 

$

22,832

 

Add: proceeds from asset sales and disposals

 

256

 

 

 

 

 

 

256

 

Add: proceeds from sale of discontinued operations

 

 

 

 

 

 

 

(390

)

Add: return of long-term contract receivable

 

441

 

 

 

 

 

 

441

 

Distributable cash flow

 

$

43,613

 

 

$

9,800

 

 

$

(29,884

)

 

$

23,139

 

Less: proceeds from asset sales and disposals

 

(256

)

 

 

 

 

 

(256

)

Less: proceeds from sale of discontinued operations

 

 

 

 

 

 

 

390

 

Less: expansion capital expenditures

 

 

 

 

 

 

 

 

Free cash flow

 

$

43,357

 

 

$

9,800

 

 

$

(29,884

)

 

$

23,273

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

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

 

$

39,042

 

 

$

6,344

 

 

$

(25,992

)

 

$

19,394

 

Add: proceeds from asset sales and disposals

 

(111

)

 

 

 

 

 

(111

)

Add: proceeds from sale of discontinued operations

 

 

 

 

 

 

 

(73

)

Add: return of long-term contract receivable

 

392

 

 

 

 

 

 

392

 

Distributable cash flow

 

$

39,323

 

 

$

6,344

 

 

$

(25,992

)

 

$

19,602

 

Less: proceeds from asset sales and disposals

 

111

 

 

 

 

 

 

111

 

Less: proceeds from sale of discontinued operations

 

 

 

 

 

 

 

73

 

Less: expansion capital expenditures

 

(22

)

 

 

 

 

 

(22

)

Free cash flow

 

$

39,412

 

 

$

6,344

 

 

$

(25,992

)

 

$

19,764

 

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

(Unaudited)

 

LTM Free Cash Flow and Cash Flow Cushion

 

 

 

 

 

 

 

For the Three Months Ended

 

 

(In thousands)

 

June 30,
2019

 

September 30,
2019

 

December 31, 2019

 

March 31, 2020

 

Last 12 Months

Net cash provided by operating activities of continuing operations

 

$

53,359

 

 

$

41,734

 

 

$

19,394

 

 

$

30,155

 

 

$

144,642

 

Add: proceeds from asset sales and disposals

 

247

 

 

6,108

 

 

(111

)

 

 

 

6,244

 

Add: proceeds from sale of discontinued operations

 

(44

)

 

(122

)

 

(73

)

 

(66

)

 

(305

)

Add: return of long-term contract receivable

 

451

 

 

459

 

 

392

 

 

272

 

 

1,574

 

Distributable cash flow

 

$

54,013

 

 

$

48,179

 

 

$

19,602

 

 

$

30,361

 

 

$

152,155

 

Less: proceeds from asset sales and disposals

 

(247

)

 

(6,108

)

 

111

 

 

 

 

(6,244

)

Less: proceeds from sale of discontinued operations

 

44

 

 

122

 

 

73

 

 

66

 

 

305

 

Less: expansion capital expenditures

 

 

 

 

 

(22

)

 

 

 

(22

)

Free cash flow

 

$

53,810

 

 

$

42,193

 

 

$

19,764

 

 

$

30,427

 

 

$

146,194

 

Add (less): free cash flow provided by (used by) discontinued operations

 

234

 

 

(359

)

 

(4

)

 

1,706

 

 

1,577

 

Free cash flow including discontinued operations

 

$

54,044

 

 

$

41,834

 

 

$

19,760

 

 

$

32,133

 

 

$

147,771

 

Add (less): free cash flow used by (provided by) discontinued operations

 

(234

)

 

359

 

 

4

 

 

(1,706

)

 

(1,577

)

Free cash flow excluding discontinued operations

 

$

53,810

 

 

$

42,193

 

 

$

19,764

 

 

$

30,427

 

 

$

146,194

 

Less: mandatory Opco debt repayments

 

(2,365

)

 

(8,276

)

 

(20,335

)

 

(16,696

)

 

(47,672

)

Less: preferred unit distributions

 

(7,500

)

 

(7,500

)

 

(7,500

)

 

(7,500

)

 

(30,000

)

Less: common unit distributions

 

(16,265

)

 

(5,630

)

 

(5,630

)

 

(5,630

)

 

(33,155

)

Cash flow cushion

$

27,680

 

 

$

20,787

 

 

$

(13,701

)

 

$

601

 

 

$

35,367

 

Leverage Ratio

 

 

 

For the Three Months Ended

 

 

(In thousands)

 

June 30,
2019

 

September 30,
2019

 

December 31, 2019

 

March 31, 2020

 

Last 12 Months

Net income (loss) from continuing operations

 

$

19,106

 

 

$

39,163

 

 

$

(119,448

)

 

$

18,779

 

 

$

(42,400

)

Less: equity earnings from unconsolidated investment

 

(11,333

)

 

(13,818

)

 

(10,256

)

 

(6,272

)

 

(41,679

)

Add: total distributions from unconsolidated investment

 

9,310

 

 

6,370

 

 

6,370

 

 

7,105

 

 

29,155

 

Add: interest expense, net

 

12,456

 

 

10,431

 

 

10,392

 

 

10,308

 

 

43,587

 

Add: loss on extinguishment of debt

 

29,282

 

 

 

 

 

 

 

 

29,282

 

Add: depreciation, depletion and amortization

 

3,970

 

 

3,384

 

 

3,186

 

 

2,012

 

 

12,552

 

Add: asset impairments

 

 

 

484

 

 

147,730

 

 

 

 

148,214

 

Adjusted EBITDA

 

$

62,791

 

 

$

46,014

 

 

$

37,974

 

 

$

31,932

 

 

$

178,711

 

Debt—at March 31, 2020

 

 

 

 

 

 

 

 

 

$

507,359

 

Leverage Ratio (1)

 

 

 

 

 

 

 

 

 

2.8

x

__________________

(1)

Leverage Ratio is calculated as the outstanding principal of NRP's debt as of March 31, 2020 divided by the last twelve months' Adjusted EBITDA.

Natural Resource Partners L.P.

Reconciliation of Non-GAAP Measures

(Unaudited)

 

Return on Capital Employed ("ROCE")

 

 

Coal Royalty
and Other

 

 

 

Corporate and Financing

 

 

(In thousands)

 

 

Soda Ash

 

 

Total

LTM Ended March 31, 2020

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

5,348

 

 

$

41,414

 

 

$

(89,162

)

 

$

(42,400

)

Financing costs

 

 

 

 

 

74,851

 

 

74,851

 

Return

 

$

5,348

 

 

$

41,414

 

 

$

(14,311

)

 

$

32,451

 

 

 

 

 

 

 

 

 

 

As of March 31, 2019

 

 

 

 

 

 

 

 

Total assets of continuing operations

 

$

1,001,385

 

 

$

249,936

 

 

$

19,852

 

 

$

1,271,173

 

Less: total current liabilities of continuing operations excluding current debt

 

(11,081

)

 

 

 

(5,843

)

 

(16,924

)

Less: total long-term liabilities of continuing operations excluding long-term debt

 

(56,814

)

 

 

 

(379

)

 

(57,193

)

Capital employed excluding discontinued operations

 

$

933,490

 

 

$

249,936

 

 

$

13,630

 

 

$

1,197,056

 

 

 

 

 

 

 

 

 

 

Total partners' capital (1)

 

$

936,425

 

 

$

249,936

 

 

$

(738,658

)

 

$

447,975

 

Less: non-controlling interest

 

(2,935

)

 

 

 

 

 

(2,935

)

Less: partners' capital from discontinued operations

 

 

 

 

 

 

 

(272

)

Total partners' capital excluding discontinued operations

 

$

933,490

 

 

$

249,936

 

 

$

(738,658

)

 

$

444,768

 

Class A convertible preferred units

 

 

 

 

 

164,587

 

 

164,587

 

Debt

 

 

 

 

 

587,701

 

 

587,701

 

Capital employed excluding discontinued operations

 

$

933,490

 

 

$

249,936

 

 

$

13,630

 

 

$

1,197,056

 

 

 

 

 

 

 

 

 

 

ROCE excluding discontinued operations

 

0.6%

 

16.6%

 

N/A

 

2.7%

 

 

 

 

 

 

 

 

 

Excluding asset impairments:

 

 

 

 

 

 

 

 

Return

 

$

5,348

 

 

$

41,414

 

 

$

(14,311

)

 

$

32,451

 

Add: asset impairments

 

148,214

 

 

 

 

 

 

148,214

 

Return excluding asset impairments

 

$

153,562

 

 

$

41,414

 

 

$

(14,311

)

 

$

180,665

 

 

 

 

 

 

 

 

 

 

ROCE excluding discontinued operations and asset impairments

 

16.5%

 

16.6%

 

N/A

 

15.1%

__________________

(1)

Total partners' capital includes $0.3 million from discontinued operations.

Change in Common Unitholders' Equity Excluding Asset Impairments Attributable to Common Unitholders

(In thousands)

 

 

 

Q1 2020 Common unitholders' equity

 

$

273,847

 

Q1 2019 Common unitholders' equity

 

378,140

 

LTM Change in common unitholders' equity

 

$

(104,293

)

 

 

 

LTM Asset impairments

 

$

148,214

 

LTM Asset impairments attributable to common unitholders

 

$

145,250

 

 

 

 

LTM Change in common unitholders' equity excluding asset impairments attributable to common unitholders

 

$

40,957

 

 

Tiffany Sammis
713-751-7515
tsammis@nrplp.com

Source: Natural Resource Partners L.P.

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