Natural resource partners l.p. reports third quarter 2019 results
Houston--(business wire)--natural resource partners l.p. (nyse:nrp) today reported third quarter 2019 results as follows: three months ended last twelve months september 30, september 30, (in thousands) (unaudited) 2019 2018 2019 net income from continuing operations $ 39,163 $ 25,853 $ 129,126 adjusted ebitda (1) 46,014 52,007 234,190 cash flow provided by (used in) continuing operations: operating activities 41,734 26,486 198,414 investing activities 6,567 1,590 10,040 financing activities (21,913 ) (20,798 ) (154,898 ) distributable cash flow (1) 48,179 28,076 405,989 free cash flow (1) 42,193 28,076 200,220 cash flow cushion (last twelve months) (1) 39,619 (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. "we posted a solid quarter of financial results despite challenging coal markets," said craig nunez, nrp's president and chief operating officer. "we continue to generate significant free cash flow, maintain robust liquidity and remain focused on de-levering and de-risking the partnership.” nrp's liquidity was $212.2 million at september 30, 2019, consisting of $99.6 million of cash, $12.5 million of cash restricted for debt repayment and $100.0 million of borrowing capacity available under its revolving credit facility. at september 30, 2019, nrp's consolidated debt-to-adjusted ebitda ratio, excluding the one-time beneficial hillsboro settlement in the fourth quarter of 2018, 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 third quarter of 2019. third quarter segment results operating business segments coal royalty and other soda ash corporate and financing total (in thousands) (unaudited) three months ended september 30, 2019 net income (loss) from continuing operations $ 40,252 $ 13,595 $ (14,684 ) $ 39,163 adjusted ebitda (1) 44,120 6,147 (4,253 ) 46,014 cash flow provided by (used in) continuing operations: operating activities 41,094 6,147 (5,507 ) 41,734 investing activities 6,567 — — 6,567 financing activities — — (21,913 ) (21,913 ) distributable cash flow (1) (2) 47,661 6,147 (5,507 ) 48,179 free cash flow (1) 41,553 6,147 (5,507 ) 42,193 three months ended september 30, 2018 net income (loss) from continuing operations $ 37,693 $ 8,836 $ (20,676 ) $ 25,853 adjusted ebitda (1) 42,940 12,250 (3,183 ) 52,007 cash flow provided by (used in) continuing operations: operating activities 41,604 12,250 (27,368 ) 26,486 investing activities 1,590 — — 1,590 financing activities — — (20,798 ) (20,798 ) distributable cash flow (1) 43,194 12,250 (27,368 ) 28,076 free cash flow (1) 43,194 12,250 (27,368 ) 28,076 (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. (2) includes adjustments of net proceeds from the sale of the construction aggregates business which are classified as investing cash flow from discontinued operations. coal royalty and other overall results in the third quarter of 2019 were relatively flat compared to the prior year quarter as increases in certain areas were offset by reduced coal royalty realizations at certain properties as follows: increased performance from: $6.1 million of gain on asset sales and disposals. $3.4 million of increased minimum lease straight-line revenues primarily related to the hillsboro property that nrp began to recognize in 2019 after completion of the hillsboro litigation settlement with foresight. $1.5 million of increased lease amendment revenues during the third quarter of 2019. $6.1 million of gain on asset sales and disposals. $3.4 million of increased minimum lease straight-line revenues primarily related to the hillsboro property that nrp began to recognize in 2019 after completion of the hillsboro litigation settlement with foresight. $1.5 million of increased lease amendment revenues during the third quarter of 2019. offset by decreased performance from: $6.0 million of lower coal royalty revenues driven by weakened coal markets, the temporary idling of certain properties due to lessee bankruptcies and the idling of the pinnacle mine since the fourth quarter of 2018. $3.0 million of lower transportation and processing services revenues due to weakened demand for illinois basin coal. $6.0 million of lower coal royalty revenues driven by weakened coal markets, the temporary idling of certain properties due to lessee bankruptcies and the idling of the pinnacle mine since the fourth quarter of 2018. $3.0 million of lower transportation and processing services revenues due to weakened demand for illinois basin coal. the market for metallurgical coal weakened primarily due to a decline in global economic growth. the domestic market for thermal coal remained challenged by continued low natural gas prices and growing stockpiles at domestic utilities. in addition, the export market for thermal coal weakened due to a combination of lower demand from european utilities, competition from international producers and oversupply of lng. approximately 60% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended september 30, 2019. soda ash net income increased $4.8 million compared to the prior year quarter driven primarily by increased production and sales volumes and increased domestic and international sales prices. adjusted ebitda, distributable cash flow and free cash flow decreased $6.1 million due to ciner wyoming's distribution reduction in order to fund a capacity expansion project that is expected to improve performance of that business over the long term resulting in increased cash distributions to nrp. nrp expects to receive approximately $25 million to $28 million of annual cash distributions from ciner wyoming for the next two to three years. corporate and financing net loss decreased $6.0 million primarily due to lower interest expense as a result of debt repayment. distributable cash flow and free cash flow increased $21.9 million primarily due to the timing of interest payments on our 2022 senior notes in 2018 compared to the timing of interest payments on our 2025 senior notes in 2019, in addition to lower interest payments on our opco senior notes as a result of lower debt balances during the third quarter of 2019. business outlook despite solid operating performance and strong liquidity, declining coal prices, lessee bankruptcies, and the distribution reduction at the partnership's ciner wyoming soda ash joint venture announced earlier in the year are expected to put downward pressure on nrp's performance in the coming months. the partnership expects all key performance metrics, including net income, free cash flow and cash flow cushion to be negatively impacted. however, management believes the progress made to strengthen the financial profile in recent years positions the partnership well to operate through a sustained downturn and continue to reduce debt and make distributions to its unitholders. conference call a conference call will be held today at 10:00 a.m. et. to join the conference call, dial (844) 583-4546 and provide the conference id 9089977. 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 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, plus (minus) net loss (income) attributable to non-controlling interest; plus gain on reserve swap, 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 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. “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 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 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, 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 and reconciliation of non-gaap measures follow- natural resource partners l.p. financial tables (unaudited) consolidated statements of comprehensive income three months ended nine months ended september 30, june 30, september 30, (in thousands, except per unit data) 2019 2018 2019 2019 2018 revenues and other income coal royalty and other $ 39,919 $ 42,518 $ 64,616 $ 154,037 $ 134,912 transportation and processing services 3,865 6,853 5,274 14,740 17,238 equity in earnings of ciner wyoming 13,818 8,836 11,333 36,833 34,986 gain on asset sales and disposals 6,107 — 246 6,609 819 total revenues and other income $ 63,709 $ 58,207 $ 81,469 $ 212,219 $ 187,955 operating expenses operating and maintenance expenses $ 5,994 $ 6,790 $ 12,459 $ 26,813 $ 21,122 depreciation, depletion and amortization 3,384 4,888 3,970 11,746 15,364 general and administrative expenses 4,253 3,183 4,196 12,799 10,782 asset impairments 484 — — 484 242 total operating expenses $ 14,115 $ 14,861 $ 20,625 $ 51,842 $ 47,510 income from operations $ 49,594 $ 43,346 $ 60,844 $ 160,377 $ 140,445 other expenses, net interest expense, net $ (10,431 ) $ (17,493 ) $ (12,456 ) $ (37,061 ) $ (53,177 ) loss on extinguishment of debt — — (29,282 ) (29,282 ) — total other expenses, net $ (10,431 ) $ (17,493 ) $ (41,738 ) $ (66,343 ) $ (53,177 ) net income from continuing operations $ 39,163 $ 25,853 $ 19,106 $ 94,034 $ 87,268 income from discontinued operations 7 2,688 245 206 3,721 net income $ 39,170 $ 28,541 $ 19,351 $ 94,240 $ 90,989 net loss (income) attributable to non-controlling interest — 359 — — (510 ) net income attributable to nrp $ 39,170 $ 28,900 $ 19,351 $ 94,240 $ 90,479 less: income attributable to preferred unitholders (7,500 ) (7,500 ) (7,500 ) (22,500 ) (22,500 ) net income attributable to common unitholders and general partner $ 31,670 $ 21,400 $ 11,851 $ 71,740 $ 67,979 net income attributable to common unitholders $ 31,036 $ 20,972 $ 11,614 $ 70,305 $ 66,619 net income attributable to the general partner 634 428 237 1,435 1,360 income from continuing operations per common unit basic $ 2.53 $ 1.50 $ 0.93 $ 5.72 $ 5.14 diluted 1.66 1.18 0.85 3.91 3.89 net income per common unit basic $ 2.53 $ 1.71 $ 0.95 $ 5.73 $ 5.44 diluted 1.66 1.30 0.87 3.92 4.06 net income $ 39,170 $ 28,541 $ 19,351 $ 94,240 $ 90,989 comprehensive income (loss) from unconsolidated investment and other (520 ) 791 (825 ) (340 ) (768 ) comprehensive income $ 38,650 $ 29,332 $ 18,526 $ 93,900 $ 90,221 comprehensive loss (income) attributable to non-controlling interest — 359 — — (510 ) comprehensive income attributable to nrp $ 38,650 $ 29,691 $ 18,526 $ 93,900 $ 89,711 natural resource partners l.p. financial tables (unaudited) consolidated statements of cash flows three months ended nine months ended september 30, june 30, september 30, (in thousands) 2019 2018 2019 2019 2018 cash flows from operating activities net income $ 39,170 $ 28,541 $ 19,351 $ 94,240 $ 90,989 adjustments to reconcile net income to net cash provided by operating activities of continuing operations: depreciation, depletion and amortization 3,384 4,888 3,970 11,746 15,364 distributions from unconsolidated investment 6,370 12,250 9,310 25,480 34,653 equity earnings from unconsolidated investment (13,818 ) (8,836 ) (11,333 ) (36,833 ) (34,986 ) gain on asset sales and disposals (6,107 ) — (246 ) (6,609 ) (819 ) loss on extinguishment of debt — — 29,282 29,282 — income from discontinued operations (7 ) (2,688 ) (245 ) (206 ) (3,721 ) asset impairments 484 — — 484 242 unit-based compensation expense 466 154 475 1,842 1,144 amortization of debt issuance costs and other 1,072 1,206 355 3,223 4,021 change in operating assets and liabilities: accounts receivable 1,147 760 8,511 4,731 (6,283 ) accounts payable 355 (773 ) (561 ) (822 ) 90 accrued liabilities 439 94 642 (5,083 ) (3,193 ) accrued interest 7,163 (9,069 ) 2,889 19 (9,944 ) deferred revenue (1,236 ) 194 (7,218 ) (3,920 ) 9,200 other items, net 2,852 (235 ) (1,823 ) 351 1,036 net cash provided by operating activities of continuing operations $ 41,734 $ 26,486 $ 53,359 $ 117,925 $ 97,793 net cash provided by (used in) operating activities of discontinued operations (359 ) 6,919 234 (4 ) 9,755 net cash provided by operating activities $ 41,375 $ 33,405 $ 53,593 $ 117,921 $ 107,548 cash flows from investing activities distributions from unconsolidated investment in excess of cumulative earnings $ — $ — $ — $ — $ 2,097 proceeds from asset sales and disposals 6,108 — 247 6,611 826 return of long-term contract receivable 459 1,590 451 1,351 2,606 net cash provided by investing activities of continuing operations $ 6,567 $ 1,590 $ 698 $ 7,962 $ 5,529 net cash provided by (used in) investing activities of discontinued operations (122 ) (3,571 ) (44 ) (556 ) (9,343 ) net cash provided by (used in) investing activities $ 6,445 $ (1,981 ) $ 654 $ 7,406 $ (3,814 ) cash flows from financing activities debt borrowings — — 300,000 300,000 35,000 debt repayments (8,277 ) (7,648 ) (348,002 ) (442,747 ) (55,720 ) redemption of preferred units paid-in-kind — — — — (8,844 ) distributions to common unitholders and general partner (5,630 ) (5,623 ) (16,265 ) (27,520 ) (16,863 ) distributions to preferred unitholders (7,500 ) (7,500 ) (7,500 ) (22,500 ) (22,765 ) contributions from (to) discontinued operations (481 ) (25 ) 190 (560 ) (2,275 ) debt issuance costs and other (25 ) (2 ) (26,412 ) (26,427 ) (228 ) net cash used in financing activities of continuing operations $ (21,913 ) $ (20,798 ) $ (97,989 ) $ (219,754 ) $ (71,695 ) net cash provided by (used in) financing activities of discontinued operations 481 (214 ) (190 ) 560 1,521 net cash used in financing activities $ (21,432 ) $ (21,012 ) $ (98,179 ) $ (219,194 ) $ (70,174 ) net increase (decrease) in cash, cash equivalents and restricted cash $ 26,388 $ 10,412 $ (43,932 ) $ (93,867 ) $ 33,560 cash, cash equivalents and restricted cash of continuing operations at beginning of period $ 85,775 $ 51,329 $ 129,707 $ 206,030 $ 26,980 cash and cash equivalents of discontinued operations at beginning of period — 1,646 — — 2,847 cash, cash equivalents and restricted cash at beginning of period $ 85,775 $ 52,975 $ 129,707 $ 206,030 $ 29,827 cash, cash equivalents and restricted cash at end of period $ 112,163 $ 63,387 $ 85,775 $ 112,163 $ 63,387 less: cash and cash equivalents of discontinued operations at end of period — (4,780 ) — — (4,780 ) cash, cash equivalents and restricted cash of continuing operations at end of period $ 112,163 $ 58,607 $ 85,775 $ 112,163 $ 58,607 supplemental cash flow information: cash paid during the period for interest of continuing operations $ 3,225 $ 24,998 $ 9,623 $ 36,270 $ 58,153 natural resource partners l.p. financial tables (unaudited) consolidated balance sheets september 30, december 31, (in thousands, except unit data) 2019 2018 assets current assets cash and cash equivalents $ 99,636 $ 101,839 restricted cash 12,527 104,191 accounts receivable, net 27,447 32,058 prepaid expenses and other 3,111 3,462 current assets of discontinued operations 988 993 total current assets $ 143,709 $ 242,543 land 24,008 24,008 plant and equipment, net 762 984 mineral rights, net 733,154 743,112 intangible assets, net 40,461 42,513 equity in unconsolidated investment 258,063 247,051 long-term contract receivable 37,473 38,945 other assets 6,274 2,491 total assets $ 1,243,904 $ 1,341,647 liabilities and capital current liabilities accounts payable $ 1,591 $ 2,414 accrued liabilities 7,290 12,347 accrued interest 14,364 14,345 current portion of deferred revenue 5,047 3,509 current portion of long-term debt, net 45,789 115,184 current liabilities of discontinued operations 174 947 total current liabilities $ 74,255 $ 148,746 deferred revenue 43,587 49,044 long-term debt, net 490,378 557,574 other non-current liabilities 4,843 1,150 total liabilities $ 613,063 $ 756,514 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 and 12,249,469 units issued and outstanding at september 30, 2019 and december 31, 2018, respectively) $ 400,266 $ 355,113 general partner’s interest 5,909 5,014 warrant holders' interest 66,816 66,816 accumulated other comprehensive loss (3,802 ) (3,462 ) total partners’ capital $ 469,189 $ 423,481 non-controlling interest (2,935 ) (2,935 ) total capital $ 466,254 $ 420,546 total liabilities and capital $ 1,243,904 $ 1,341,647 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, 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 net income (1) — 18,964 387 — — 19,351 — 19,351 distributions to common unitholders and general partner — (15,939 ) (326 ) — — (16,265 ) — (16,265 ) distributions to preferred unitholders — (7,350 ) (150 ) — — (7,500 ) — (7,500 ) unit-based awards amortization and vesting — 460 — — — 460 — 460 comprehensive loss from unconsolidated investment and other — — — — (825 ) (825 ) — (825 ) balance at june 30, 2019 12,261 $ 374,275 $ 5,387 $ 66,816 $ (3,282 ) $ 443,196 $ (2,935 ) $ 440,261 net income (1) — 38,386 784 — — 39,170 — 39,170 distributions to common unitholders and general partner — (5,518 ) (112 ) — — (5,630 ) — (5,630 ) distributions to preferred unitholders — (7,350 ) (150 ) — — (7,500 ) — (7,500 ) unit-based awards amortization and vesting — 473 — — — 473 — 473 comprehensive loss from unconsolidated investment and other — — — — (520 ) (520 ) — (520 ) balance at september 30, 2019 12,261 $ 400,266 $ 5,909 $ 66,816 $ (3,802 ) $ 469,189 $ (2,935 ) $ 466,254 (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) 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, 2017 12,232 $ 199,851 $ 1,857 $ 66,816 $ (3,313 ) $ 265,211 $ (3,394 ) $ 261,817 cumulative effect of adoption of accounting standard — 69,057 1,409 — — 70,466 — 70,466 net income (1) — 23,851 487 — — 24,338 — 24,338 distributions to common unitholders and general partner — (5,505 ) (112 ) — — (5,617 ) — (5,617 ) distributions to preferred unitholders — (7,610 ) (155 ) — — (7,765 ) — (7,765 ) issuance of unit-based awards 14 410 — — — 410 — 410 unit-based awards amortization and vesting — 197 — — — 197 — 197 comprehensive income (loss) from unconsolidated investment and other — — 8 — (1,125 ) (1,117 ) — (1,117 ) balance at march 31, 2018 12,246 $ 280,251 $ 3,494 $ 66,816 $ (4,438 ) $ 346,123 $ (3,394 ) $ 342,729 net income (1) — 36,496 745 — — 37,241 869 38,110 distributions to common unitholders and general partner — (5,510 ) (113 ) — — (5,623 ) — (5,623 ) distributions to preferred unitholders — (7,350 ) (150 ) — — (7,500 ) — (7,500 ) unit-based awards amortization and vesting — 136 — — — 136 — 136 comprehensive income (loss) from unconsolidated investment and other — 50 1 — (434 ) (383 ) (51 ) (434 ) balance at june 30, 2018 12,246 $ 304,073 $ 3,977 $ 66,816 $ (4,872 ) $ 369,994 $ (2,576 ) $ 367,418 net income (loss) (1) — 28,322 578 — — 28,900 (359 ) 28,541 distributions to common unitholders and general partner — (5,511 ) (112 ) — — (5,623 ) — (5,623 ) distributions to preferred unitholders — (7,350 ) (150 ) — — (7,500 ) — (7,500 ) unit-based awards amortization and vesting — 139 — — — 139 — 139 comprehensive income from unconsolidated investment and other — — — — 791 791 — 791 balance at september 30, 2018 12,246 $ 319,673 $ 4,293 $ 66,816 $ (4,081 ) $ 386,701 $ (2,935 ) $ 383,766 (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 september 30, 2019 and 2018 and june 30, 2019: operating business segments coal royalty and other corporate and financing (in thousands) soda ash total three months ended september 30, 2019 revenues $ 43,784 $ 13,818 $ — $ 57,602 gain on asset sales and disposals 6,107 — — 6,107 total revenues and other income $ 49,891 $ 13,818 $ — $ 63,709 asset impairments $ 484 $ — $ — $ 484 net income (loss) from continuing operations $ 40,252 $ 13,595 $ (14,684 ) $ 39,163 adjusted ebitda (1) $ 44,120 $ 6,147 $ (4,253 ) $ 46,014 distributable cash flow (1) (2) $ 47,661 $ 6,147 $ (5,507 ) $ 48,179 free cash flow (1) $ 41,553 $ 6,147 $ (5,507 ) $ 42,193 three months ended september 30, 2018 revenues $ 49,371 $ 8,836 $ — $ 58,207 gain on asset sales and disposals — — — — total revenues and other income $ 49,371 $ 8,836 $ — $ 58,207 asset impairments $ — $ — $ — $ — net income (loss) from continuing operations $ 37,693 $ 8,836 $ (20,676 ) $ 25,853 adjusted ebitda (1) $ 42,940 $ 12,250 $ (3,183 ) $ 52,007 distributable cash flow (1) $ 43,194 $ 12,250 $ (27,368 ) $ 28,076 free cash flow (1) $ 43,194 $ 12,250 $ (27,368 ) $ 28,076 three months ended june 30, 2019 revenues $ 69,890 $ 11,333 $ — $ 81,223 gain on asset sales and disposals 246 — — 246 total revenues and other income $ 70,136 $ 11,333 $ — $ 81,469 asset impairments $ — $ — $ — $ — net income (loss) from continuing operations $ 53,707 $ 11,333 $ (45,934 ) $ 19,106 adjusted ebitda (1) $ 57,677 $ 9,310 $ (4,196 ) $ 62,791 cash flow provided by (used in) continuing operations: operating activities $ 55,811 $ 9,310 $ (11,762 ) $ 53,359 investing activities $ 698 $ — $ — $ 698 financing activities $ — $ — $ (97,989 ) $ (97,989 ) distributable cash flow (1) (2) $ 56,509 $ 9,310 $ (11,762 ) $ 54,013 free cash flow (1) $ 56,262 $ 9,310 $ (11,762 ) $ 53,810 (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. (2) includes adjustments of net proceeds from the sale of the construction aggregates business which are classified as investing cash flow from discontinued operations. financial tables (unaudited) the following tables present nrp's unaudited business results by segment for the nine months ended september 30, 2019 and 2018: operating business segments coal royalty and other corporate and financing (in thousands) soda ash total nine months ended september 30, 2019 revenues $ 168,777 $ 36,833 $ — $ 205,610 gain on asset sales and disposals 6,609 — — 6,609 total revenues and other income $ 175,386 $ 36,833 $ — $ 212,219 asset impairments $ 484 $ — $ — $ 484 net income (loss) from continuing operations $ 136,566 $ 36,610 $ (79,142 ) $ 94,034 adjusted ebitda (1) $ 148,796 $ 25,257 $ (12,799 ) $ 161,254 cash flow provided by (used in) continuing operations: operating activities $ 139,821 $ 25,257 $ (47,153 ) $ 117,925 investing activities $ 7,962 $ — $ — $ 7,962 financing activities $ — $ — $ (219,754 ) $ (219,754 ) distributable cash flow (1) (2) $ 147,783 $ 25,257 $ (47,153 ) $ 125,331 free cash flow (1) $ 141,172 $ 25,257 $ (47,153 ) $ 119,276 nine months ended september 30, 2018 revenues $ 152,150 $ 34,986 $ — $ 187,136 gain on asset sales and disposals 819 — — 819 total revenues and other income $ 152,969 $ 34,986 $ — $ 187,955 asset impairments $ 242 $ — $ — $ 242 net income (loss) from continuing operations $ 116,241 $ 34,986 $ (63,959 ) $ 87,268 adjusted ebitda (1) $ 131,337 $ 36,750 $ (10,782 ) $ 157,305 cash flow provided by (used in) continuing operations: operating activities $ 132,122 $ 34,653 $ (68,982 ) $ 97,793 investing activities $ 3,432 $ 2,097 $ — $ 5,529 financing activities $ — $ — $ (71,695 ) $ (71,695 ) distributable cash flow (1) $ 135,554 $ 36,750 $ (68,982 ) $ 103,322 free cash flow (1) $ 134,728 $ 36,750 $ (68,982 ) $ 102,496 (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. (2) includes adjustments of 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 three months ended nine months ended september 30, june 30, september 30, (in thousands, except per ton data) 2019 2018 2019 2019 2018 coal sales volumes (tons) appalachia northern (1) 290 349 1,625 2,774 1,490 central 3,222 3,873 3,825 10,469 11,582 southern 438 346 386 1,172 1,288 total appalachia 3,950 4,568 5,836 14,415 14,360 illinois basin 551 609 535 1,646 2,091 northern powder river basin 532 855 591 1,979 2,896 total coal sales volumes 5,033 6,032 6,962 18,040 19,347 coal royalty revenue per ton appalachia northern (1) $ 2.54 $ 4.01 $ 0.86 $ 2.23 $ 3.82 central 5.25 5.37 6.03 5.79 5.57 southern 5.99 6.82 6.69 7.00 6.98 illinois basin 4.82 4.89 4.51 4.70 4.56 northern powder river basin 4.69 3.79 2.75 3.21 2.70 combined average coal royalty revenue per ton 5.05 5.10 4.46 4.94 4.99 coal royalty revenues appalachia northern (1) $ 735 $ 1,402 $ 1,393 $ 6,173 $ 5,698 central 16,929 20,786 23,055 60,628 64,538 southern 2,626 2,359 2,581 8,204 8,985 total appalachia 20,290 24,547 27,029 75,005 79,221 illinois basin 2,658 2,973 2,411 7,739 9,533 northern powder river basin 2,492 3,237 1,624 6,347 7,817 unadjusted coal royalty revenues 25,440 30,757 31,064 89,091 96,571 coal royalty adjustment for minimum leases (713 ) (48 ) (361 ) (1,530 ) (98 ) total coal royalty revenues $ 24,727 $ 30,709 $ 30,703 $ 87,561 $ 96,473 other revenues production lease minimum revenues $ 2,752 $ 1,769 $ 15,879 $ 21,331 $ 6,310 minimum lease straight-line revenues 3,982 567 3,854 11,152 1,739 property tax revenues 1,606 1,263 1,377 4,416 3,968 wheelage revenues 1,675 1,572 1,945 5,035 5,155 coal overriding royalty revenues 2,189 3,918 3,999 10,163 10,492 lease amendment revenues 1,535 — 4,414 6,720 — aggregates royalty revenues 954 888 1,237 3,655 3,551 oil and gas royalty revenues 374 1,427 482 2,575 5,679 other revenues 125 405 726 1,429 1,545 total other revenues $ 15,192 $ 11,809 $ 33,913 $ 66,476 $ 38,439 coal royalty and other $ 39,919 $ 42,518 $ 64,616 $ 154,037 $ 134,912 transportation and processing services revenues 3,865 6,853 5,274 14,740 17,238 gain on asset sales and disposals 6,107 — 246 6,609 819 total coal royalty and other segment revenues and other income $ 49,891 $ 49,371 $ 70,136 $ 175,386 $ 152,969 (1) northern appalachia includes nrp's hibbs run property that has significant sales volumes, but a low fixed rate per ton. reconciliation of non-gaap measures (unaudited) adjusted ebitda coal royalty and other corporate and financing (in thousands) soda ash total three months ended september 30, 2019 net income (loss) from continuing operations $ 40,252 $ 13,595 $ (14,684 ) $ 39,163 less: equity earnings from unconsolidated investment — (13,818 ) — (13,818 ) add: net loss attributable to non-controlling interest — — — — add: total distributions from unconsolidated investment — 6,370 — 6,370 add: interest expense, net — — 10,431 10,431 add: loss on extinguishment of debt — — — — add: depreciation, depletion and amortization 3,384 — — 3,384 add: asset impairments 484 — — 484 adjusted ebitda $ 44,120 $ 6,147 $ (4,253 ) $ 46,014 three months ended september 30, 2018 net income (loss) from continuing operations $ 37,693 $ 8,836 $ (20,676 ) $ 25,853 less: equity earnings from unconsolidated investment — (8,836 ) — (8,836 ) add: net loss attributable to non-controlling interest 359 — — 359 add: total distributions from unconsolidated investment — 12,250 — 12,250 add: interest expense, net — — 17,493 17,493 add: loss on extinguishment of debt — — — — add: depreciation, depletion and amortization 4,888 — — 4,888 add: asset impairments — — — — adjusted ebitda $ 42,940 $ 12,250 $ (3,183 ) $ 52,007 three months ended june 30, 2019 net income (loss) from continuing operations $ 53,707 $ 11,333 $ (45,934 ) $ 19,106 less: equity earnings from unconsolidated investment — (11,333 ) — (11,333 ) add: net loss attributable to non-controlling interest — — — — add: total distributions from unconsolidated investment — 9,310 — 9,310 add: interest expense, net — — 12,456 12,456 add: loss on extinguishment of debt — — 29,282 29,282 add: depreciation, depletion and amortization 3,970 — — 3,970 add: asset impairments — — — — adjusted ebitda $ 57,677 $ 9,310 $ (4,196 ) $ 62,791 reconciliation of non-gaap measures (unaudited) adjusted ebitda coal royalty and other corporate and financing (in thousands) soda ash total nine months ended september 30, 2019 net income (loss) from continuing operations $ 136,566 $ 36,610 $ (79,142 ) $ 94,034 less: equity earnings from unconsolidated investment — (36,833 ) — (36,833 ) less: net income attributable to non-controlling interest — — — — add: total distributions from unconsolidated investment — 25,480 — 25,480 add: interest expense, net — — 37,061 37,061 add: loss on extinguishment of debt — — 29,282 29,282 add: depreciation, depletion and amortization 11,746 — — 11,746 add: asset impairments 484 — — 484 adjusted ebitda $ 148,796 $ 25,257 $ (12,799 ) $ 161,254 nine months ended september 30, 2018 net income (loss) from continuing operations $ 116,241 $ 34,986 $ (63,959 ) $ 87,268 less: equity earnings from unconsolidated investment — (34,986 ) — (34,986 ) less: net income attributable to non-controlling interest (510 ) — — (510 ) add: total distributions from unconsolidated investment — 36,750 — 36,750 add: interest expense, net — — 53,177 53,177 add: loss on extinguishment of debt — — — — add: depreciation, depletion and amortization 15,364 — — 15,364 add: asset impairments 242 — — 242 adjusted ebitda $ 131,337 $ 36,750 $ (10,782 ) $ 157,305 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 three months ended september 30, 2019 net cash provided by (used in) operating activities of continuing operations $ 41,094 $ 6,147 $ (5,507 ) 41,734 add: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from asset sales and disposals 6,108 — — 6,108 add: proceeds from sale of discontinued operations — — — (122 ) add: return of long-term contract receivable 459 — — 459 distributable cash flow $ 47,661 $ 6,147 $ (5,507 ) $ 48,179 less: proceeds from asset sales and disposals (6,108 ) — — (6,108 ) less: proceeds from sale of discontinued operations — — — 122 free cash flow $ 41,553 $ 6,147 $ (5,507 ) $ 42,193 three months ended september 30, 2018 net cash provided by (used in) operating activities of continuing operations $ 41,604 $ 12,250 $ (27,368 ) $ 26,486 add: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from asset sales and disposals — — — — add: proceeds from sale of discontinued operations — — — — add: return of long-term contract receivable 1,590 — — 1,590 distributable cash flow $ 43,194 $ 12,250 $ (27,368 ) $ 28,076 less: proceeds from asset sales and disposals — — — — less: proceeds from sale of discontinued operations — — — — free cash flow $ 43,194 $ 12,250 $ (27,368 ) $ 28,076 three months ended june 30, 2019 net cash provided by (used in) operating activities of continuing operations $ 55,811 $ 9,310 $ (11,762 ) $ 53,359 add: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from asset sales and disposals 247 — — 247 add: proceeds from sale of discontinued operations — — — (44 ) add: return of long-term contract receivable 451 — — 451 distributable cash flow $ 56,509 $ 9,310 $ (11,762 ) $ 54,013 less: proceeds from asset sales and disposals (247 ) — — (247 ) less: proceeds from sale of discontinued operations — — — 44 free cash flow $ 56,262 $ 9,310 $ (11,762 ) $ 53,810 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 nine months ended september 30, 2019 net cash provided by (used in) operating activities of continuing operations $ 139,821 $ 25,257 $ (47,153 ) $ 117,925 add: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from asset sales and disposals 6,611 — — 6,611 add: proceeds from sale of discontinued operations — — — (556 ) add: return of long-term contract receivable 1,351 — — 1,351 distributable cash flow $ 147,783 $ 25,257 $ (47,153 ) $ 125,331 less: proceeds from asset sales and disposals (6,611 ) — — (6,611 ) less: proceeds from sale of discontinued operations — — — 556 free cash flow $ 141,172 $ 25,257 $ (47,153 ) $ 119,276 nine months ended september 30, 2018 net cash provided by (used in) operating activities of continuing operations $ 132,122 $ 34,653 $ (68,982 ) $ 97,793 add: distributions from unconsolidated investment in excess of cumulative earnings — 2,097 — 2,097 add: proceeds from asset sales and disposals 826 — — 826 add: proceeds from sale of discontinued operations — — — — add: return of long-term contract receivable 2,606 — — 2,606 distributable cash flow $ 135,554 $ 36,750 $ (68,982 ) $ 103,322 less: proceeds from asset sales and disposals (826 ) — — (826 ) less: proceeds from sale of discontinued operations — — — — free cash flow $ 134,728 $ 36,750 $ (68,982 ) $ 102,496 reconciliation of non-gaap measures (unaudited) ltm free cash flow and cash flow cushion three months ended (in thousands) december 31, 2018 march 31, 2019 june 30, 2019 september 30, 2019 last 12 months net cash provided by (used in) operating activities of continuing operations $ 80,489 $ 22,832 $ 53,359 $ 41,734 $ 198,414 add: proceeds from asset sales and disposals 1,623 256 247 6,108 8,234 add: proceeds from sale of discontinued operations 198,091 (390 ) (44 ) (122 ) 197,535 add: return of long-term contract receivable 455 441 451 459 1,806 distributable cash flow $ 280,658 $ 23,139 $ 54,013 $ 48,179 $ 405,989 less: proceeds from asset sales and disposals (1,623 ) (256 ) (247 ) (6,108 ) (8,234 ) less: proceeds from sale of discontinued operations (198,091 ) 390 44 122 (197,535 ) free cash flow $ 80,944 $ 23,273 $ 53,810 $ 42,193 $ 200,220 add (less): free cash flow provided by (used in) discontinued operations 125 121 234 (359 ) 121 free cash flow including discontinued operations $ 81,069 $ 23,394 $ 54,044 $ 41,834 $ 200,341 add (less): free cash flow used in (provided by) discontinued operations (125 ) (121 ) (234 ) 359 (121 ) less: cash flow from one-time hillsboro litigation settlement (25,000 ) — — — (25,000 ) free cash flow excluding discontinued operations and one-time beneficial items $ 55,944 $ 23,273 $ 53,810 $ 42,193 $ 175,220 less: mandatory opco debt repayments (24,665 ) (37,152 ) (2,365 ) (8,276 ) (72,458 ) less: preferred unit distributions (7,500 ) (7,500 ) (7,500 ) (7,500 ) (30,000 ) less: common unit distributions (5,623 ) (5,625 ) (16,265 ) (5,630 ) (33,143 ) cash flow cushion $ 18,156 $ (27,004 ) $ 27,680 $ 20,787 $ 39,619 reconciliation of non-gaap measures (unaudited) leverage ratio three months ended (in thousands) december 31, 2018 march 31, 2019 june 30, 2019 september 30, 2019 last 12 months net income from continuing operations $ 35,092 $ 35,765 $ 19,106 $ 39,163 $ 129,126 less: equity earnings from unconsolidated investment (13,320 ) (11,682 ) (11,333 ) (13,818 ) (50,153 ) add: total distributions from unconsolidated investment 9,800 9,800 9,310 6,370 35,280 add: interest expense, net 17,001 14,174 12,456 10,431 54,062 add: loss on extinguishment of debt — — 29,282 — 29,282 add: depreciation, depletion and amortization 6,325 4,392 3,970 3,384 18,071 add: asset impairments 18,038 — — 484 18,522 adjusted ebitda $ 72,936 $ 52,449 $ 62,791 $ 46,014 $ 234,190 less: one-time hillsboro litigation settlement (25,000 ) adjusted ebitda less one-time hillsboro litigation settlement $ 209,190 debt—at september 30, 2019 $ 544,390 leverage ratio (1) 2.3 x leverage ratio less one-time hillsboro litigation settlement (2) 2.6 x (1) leverage ratio is calculated as the outstanding principal of nrp's debt as of september 30, 2019 divided by the last twelve months' adjusted ebitda. (2) leverage ratio less one-time hillsboro litigation settlement is calculated as the outstanding principal of nrp's debt as of september 30, 2019 divided by the last twelve months' adjusted ebitda less one-time hillsboro litigation settlement. 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 september 30, 2019 net income (loss) from continuing operations $ 181,053 $ 49,930 $ (101,857 ) $ 129,126 financing costs — — 85,942 85,942 return $ 181,053 $ 49,930 $ (15,915 ) $ 215,068 as of september 30, 2018 total assets of continuing operations $ 968,310 $ 242,901 $ 3,051 $ 1,214,262 less: total current liabilities of continuing operations excluding current debt (8,991 ) — (8,415 ) (17,406 ) less: total long-term liabilities of continuing operations excluding long-term debt (40,938 ) — (51 ) (40,989 ) capital employed excluding discontinued operations $ 918,381 $ 242,901 $ (5,415 ) $ 1,155,867 total partners' capital (1) $ 921,316 $ 242,901 $ (961,717 ) $ 386,701 less: non-controlling interest (2,935 ) — — (2,935 ) less: partners' capital from discontinued operations — — — (184,201 ) total partners' capital excluding discontinued operations $ 918,381 $ 242,901 $ (961,717 ) $ 199,565 class a convertible preferred units — — 164,587 164,587 debt — — 791,715 791,715 capital employed excluding discontinued operations $ 918,381 $ 242,901 $ (5,415 ) $ 1,155,867 roce excluding discontinued operations 19.7% 20.6% n/a 18.6% excluding one-time beneficial items: return $ 181,053 $ 49,930 $ (15,915 ) $ 215,068 less: income from hillsboro litigation settlement (25,000 ) — — (25,000 ) return excluding discontinued operations and one-time beneficial items $ 156,053 $ 49,930 $ (15,915 ) $ 190,068 roce excluding discontinued operations and one-time beneficial items 17.0% 20.6% n/a 16.4% (1) total partners' capital includes $184.2 million from discontinued operations.
