Natural Resource Partners L.P. Reports Fourth Quarter and Full Year 2019 Results

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

“Despite a weakened coal market, we generated $139 million of free cash flow and repaid $163 million of debt in 2019,” said Craig Nunez, NRP’s President and Chief Operating Officer. “We continue to maintain strong cash balances and liquidity, and our efforts to de-lever and de-risk the Partnership over the past five years have prepared us to operate through this downturn.”

NRP’s liquidity was $198.3 million at December 31, 2019, consisting of $98.3 million of cash and $100.0 million of borrowing capacity available under its revolving credit facility. At December 31, 2019, NRP’s consolidated Debt-to-Adjusted EBITDA ratio was 2.6x.

NRP declared a cash distribution of $0.45 per common unit and a cash distribution of $7.5 million on its preferred units for the fourth quarter of 2019.

Segment Results

Coal Royalty and Other

NRP’s Coal Royalty and Other segment revenues and other income in the fourth quarter and full year 2019 was lower by $35.8 million and $13.4 million, respectively, as compared to the prior year periods primarily due to weakened metallurgical and thermal coal markets in 2019 and the $25 million one-time payment from the Hillsboro litigation settlement in the fourth quarter of 2018. These decreases were partially offset by increased minimum lease straight-line revenues primarily related to the Hillsboro property that we began to recognize in 2019 after the completion of the Hillsboro litigation settlement with Foresight. Additionally, full year 2019 results benefited from a $15.9 million increase in revenues primarily related to lessee forfeitures of recoupable balances from minimums paid in prior periods. While a number of NRP’s lessees went through the bankruptcy process in 2019, there was minimal impact to NRP as bankrupt lessees bad debt expense was offset by increased lease amendment fees associated with bankruptcies.

NRP also recorded $147.7 million and $148.2 million in non-cash asset impairment expense in the fourth quarter and full year 2019, respectively, primarily as a result of the deterioration in thermal coal markets, lessee capital constraints and the termination of certain thermal coal leases.

Approximately 60% and 65% of coal royalty revenues and approximately 45% and 50% of coal royalty sales volumes were derived from metallurgical coal during the three months and year ended December 31, 2019, respectively.

Soda Ash

Distributions received from Ciner Wyoming were $6.4 million and $31.9 million in the fourth quarter and full year 2019, respectively, as compared to $9.8 million and $46.6 million in the fourth quarter and full year 2018, respectively. The managing partner of Ciner Wyoming decided to reduce distributions during the year to fund a multi-year capacity expansion project that is expected to result in higher earnings and distributions. NRP expects to receive approximately $25 million to $28 million of annual cash distributions from Ciner Wyoming until the project is funded.

Corporate and Financing

Corporate and financing costs declined $8.4 million in the fourth quarter of 2019 compared to the prior year quarter primarily due to lower interest expense as a result of less debt outstanding. Cash paid for interest in the fourth quarter of 2019 increased $15.5 million as compared to the prior year quarter as a result of the timing of interest payments on the parent company bonds that were refinanced in the second quarter of 2019. NRP paid interest on the new 9.125% Notes in the fourth quarter of 2019, compared to interest payments made on the previous 10.5% Notes in the third quarter of 2018.

Corporate and financing costs increased $6.8 million in 2019 as compared to the prior year primarily driven by the refinancing of NRP’s bonds and revolving credit facility in the second quarter of 2019 which reduced interest costs, extended maturities and significantly improved the partnership’s liquidity and financial flexibility. The refinancings resulted in a $29.3 million loss on extinguishment of debt, which was partially offset by $22.7 million decreased interest expense, net of interest income.

Anadarko Litigation Update

In November 2019, the trial court ruled in NRP’s favor in the contingent purchase price consideration payment lawsuit brought against NRP by Anadarko. Anadarko did not appeal the trial court’s ruling. Accordingly, this case is now concluded with no liability incurred by NRP.

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 1465967. 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 [email protected]. 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 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 production levels by the Partnership’s lessees; 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-

Contacts

Tiffany Sammis, 713-751-7515

[email protected]

Read full story here