Natural resource partners l.p. reports second quarter 2019 results
Houston--(business wire)--natural resource partners l.p. (nyse:nrp) today reported second quarter 2019 results as follows: three months ended last twelve months june 30, june 30, (in thousands) (unaudited) 2019 2018 2019 net income from continuing operations $ 19,106 $ 35,129 $ 115,816 adjusted ebitda (1) 62,791 53,091 240,183 cash flow provided by (used in) continuing operations: operating activities 53,359 53,893 183,166 investing activities 698 699 5,063 financing activities (97,989 ) (24,053 ) (153,783 ) distributable cash flow (1) 54,013 54,592 385,886 free cash flow (1) 53,810 54,422 186,103 cash flow cushion (last twelve months) (1) 26,137 (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. "nrp continued to generate a steady stream of cash flow during the second quarter," stated craig nunez, nrp's president and chief operating officer. "in addition, we further strengthened our balance sheet during the quarter by extending our $100 million revolving credit facility from 2020 to 2023 and by redeeming all of our $346 million of 10.50% bonds due 2022 through the issuance of $300 million of 9.125% bonds due 2025. during the first six months of 2019, we lowered our debt by $134 million and we continue to remain focused on free cash flow generation, return on capital employed and further de-leveraging and de-risking the partnership.” nrp's liquidity was $185.8 million at june 30, 2019, consisting of $70.9 million of cash, $14.9 million of cash restricted for debt repayment and $100.0 million of borrowing capacity available under its revolving credit facility. at june 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's cash flow cushion for the last twelve months ended june 30, 2019, was $26.1 million. cash flow cushion represents the amount of free cash flow left over after payment of mandatory debt amortizations and preferred and common unit distributions. nrp remains focused on this metric to preserve financial flexibility needed to weather changes in market conditions while continuing to service its debt obligations and make distributions to unitholders. nrp declared a cash distribution of $0.45 per common unit and a cash distribution of $7.5 million on nrp’s preferred units for the second quarter of 2019. second quarter segment results operating business segments coal royalty and other soda ash corporate and financing total (in thousands) (unaudited) three months ended june 30, 2019 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 three months ended june 30, 2018 net income (loss) from continuing operations $ 39,597 $ 16,529 $ (20,997 ) $ 35,129 adjusted ebitda (1) 44,104 12,250 (3,263 ) 53,091 cash flow provided by (used in) continuing operations: operating activities 51,725 12,250 (10,082 ) 53,893 investing activities 699 — — 699 financing activities — — (24,053 ) (24,053 ) distributable cash flow (1) 52,424 12,250 (10,082 ) 54,592 free cash flow (1) 52,254 12,250 (10,082 ) 54,422 (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 increases in second quarter performance compared to the prior year quarter were primarily due to: $13.9 million increased production lease minimum revenues primarily as a result of increased lessee forfeitures of recoupable balances from minimums paid in prior periods. $4.4 million of lease amendment revenues during the second quarter of 2019. $3.3 million 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. these increases were partially offset by a $4.1 million decrease in coal royalty revenues driven by lower sales volumes from the idling of the pinnacle mine in the fourth quarter of 2018, logistical issues in the illinois basin caused by flooding and high water throughout the river systems and the timing of mining on nrp's northern powder river basin property. in addition, operating and maintenance expenses within the segment increased $4.3 million primarily due to bad debt expense recognized in the second quarter of 2019 related to certain receivables. nrp continued to see solid pricing for metallurgical coal due to sustained global steel demand, as well as steady pricing for thermal coal as a result of nrp lessees locking-in favorable pricing for the first half of 2019. approximately 70% of nrp's coal royalty revenues and approximately 50% of its coal royalty sales volumes was derived from metallurgical coal during the three months ended june 30, 2019. soda ash net income decreased due to ciner wyoming's litigation settlement of a royalty dispute that resulted in $12.7 million of income in the second quarter of 2018. excluding the impact of this litigation settlement, net income increased $7.5 million compared to the prior year quarter driven by increased production and sales volumes and increased domestic and international sales prices. adjusted ebitda, distributable cash flow and free cash flow decreased $2.9 million due to lower second quarter cash distributions received from ciner wyoming. the managing partner of nrp's ciner wyoming joint venture has announced plans for a major capacity expansion project and a multi-year reduction in cash distributions, with the cash retained at the jv used to fund a portion of the expansion capital cost. the cash distributions nrp has received from ciner wyoming over the last two years have averaged $45 million annually. starting this month, nrp expects for the cash distributions it receives from ciner wyoming to decrease to approximately $25 million to $28 million per year and be held at such levels for the next two to three years. this expansion project is intended to provide significant increases in production capacity, free cash flow and cash distributions to nrp over the long term. corporate and financing corporate and financing costs increased as compared to the prior year quarter primarily driven by the refinancing and extension of both nrp's bonds and revolving credit facility in the second quarter of 2019 that resulted in a $29.3 million loss on extinguishment of debt. additionally, cash flow used in financing activities increased primarily as a result of the use of cash on hand to reduce the principal of nrp’s bonds by $46 million and to pay financing costs that included an $18 million call option premium related to the redemption of the $346 million bonds. conference call a conference call will be held today at 10:00 a.m. et. to join the conference call, dial (844) 379-6938 and provide the conference code 55454893. investors may also listen to the call via the investor relations section of the nrp website at www.nrplp.com. to access the replay, please visit the investor relations section of nrp’s website. company profile natural resource partners l.p., a master limited partnership headquartered in houston, tx, is a diversified natural resource company that owns, manages and leases a diversified portfolio of mineral properties in the united states including interests in coal, industrial minerals and other natural resources. a large percentage of nrp's revenues are generated from royalties and other passive income. in addition, nrp owns an equity investment in ciner wyoming 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, net income attributable to non-controlling interest and gain on reserve swap; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. adjusted ebitda should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with gaap as measures of operating performance, liquidity or ability to service debt obligations. there are significant limitations to using adjusted ebitda as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income (loss), the lack of comparability of results of operations of different companies and the different methods of calculating adjusted ebitda reported by different companies. in addition, adjusted ebitda presented below is not calculated or presented on the same basis as consolidated ebitda as defined in our partnership agreement or consolidated ebitdda as defined in opco's debt agreements. adjusted ebitda is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis. “distributable cash flow” or "dcf" is a non-gaap financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from sales of assets, including sales of discontinued operations, and return of long-term contract receivables (including affiliate); less maintenance capital expenditures and distributions to non-controlling interest. dcf is not a measure of financial performance under gaap and should not be considered as an alternative to cash flows from operating, investing or financing activities. dcf may not be calculated the same for us as for other companies. in addition, distributable cash flow is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. distributable cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt. “free cash flow” or "fcf" is a non-gaap financial measure that we define as net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables (including affiliate); less maintenance and expansion capital expenditures, cash flow used in acquisition costs classified as financing activities and distributions to non-controlling interest. fcf is calculated before mandatory debt repayments. free cash flow is not a measure of financial performance under gaap and should not be considered as an alternative to cash flows from operating, investing or financing activities. free cash flow may not be calculated the same for us as for other companies. free cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt. “free cash flow excluding discontinued operations and one-time beneficial items” is a non-gaap financial measure that we define as free cash flow excluding discontinued operations and one-time beneficial items. free cash flow excluding discontinued operations and one-time beneficial items is not a measure of financial performance under gaap and should not be considered as an alternative to cash flows from operating, investing or financing activities. free cash flow excluding discontinued operations and one-time beneficial items may not be calculated the same for us as for other companies. free cash flow excluding discontinued operations and one-time beneficial items is a supplemental liquidity measure used by our management to assess our ability to make cash distributions and repay debt. "cash flow cushion" is a non-gaap financial measure that we define as free cash flow less one-time beneficial items, mandatory opco debt amortization payments, preferred unit distributions and common unit distributions. cash flow cushion is not a measure of financial performance under gaap and should not be considered as an alternative to cash flows from operating, investing or financing activities. cash flow cushion is a supplemental liquidity measure used by our management to assess the partnership's ability to make or raise cash distributions to our common and preferred unitholders and our general partner and repay debt or redeem preferred units. "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 six months ended june 30, march 31, june 30, (in thousands, except per unit data) 2019 2018 2019 2019 2018 revenues and other income coal royalty and other $ 64,616 $ 47,920 $ 49,502 $ 114,118 $ 92,394 transportation and processing services 5,274 5,002 5,601 10,875 10,385 equity in earnings of ciner wyoming 11,333 16,529 11,682 23,015 26,150 gain on asset sales 246 168 256 502 819 total revenues and other income $ 81,469 $ 69,619 $ 67,041 $ 148,510 $ 129,748 operating expenses operating and maintenance expenses $ 12,459 $ 8,117 $ 8,360 $ 20,819 $ 14,332 depreciation, depletion and amortization 3,970 5,376 4,392 8,362 10,476 general and administrative expenses 4,196 3,263 4,350 8,546 7,599 asset impairments — — — — 242 total operating expenses $ 20,625 $ 16,756 $ 17,102 $ 37,727 $ 32,649 income from operations $ 60,844 $ 52,863 $ 49,939 $ 110,783 $ 97,099 other expenses, net interest expense, net $ (12,456 ) $ (17,734 ) $ (14,174 ) $ (26,630 ) $ (35,684 ) loss on extinguishment of debt (29,282 ) — — (29,282 ) — total other expenses, net $ (41,738 ) $ (17,734 ) $ (14,174 ) $ (55,912 ) $ (35,684 ) net income from continuing operations $ 19,106 $ 35,129 $ 35,765 $ 54,871 $ 61,415 income (loss) from discontinued operations 245 2,981 (46 ) 199 1,033 net income $ 19,351 $ 38,110 $ 35,719 $ 55,070 $ 62,448 net income attributable to non-controlling interest — (869 ) — — (869 ) net income attributable to nrp $ 19,351 $ 37,241 $ 35,719 $ 55,070 $ 61,579 less: income attributable to preferred unitholders (7,500 ) (7,500 ) (7,500 ) (15,000 ) (15,000 ) net income attributable to common unitholders and general partner $ 11,851 $ 29,741 $ 28,219 $ 40,070 $ 46,579 net income attributable to common unitholders $ 11,614 $ 29,146 $ 27,655 $ 39,269 $ 45,647 net income attributable to the general partner 237 595 564 801 932 income from continuing operations per common unit basic $ 0.93 $ 2.14 $ 2.26 $ 3.19 $ 3.65 diluted 0.85 1.57 1.75 2.58 2.78 net income per common unit basic $ 0.95 $ 2.38 $ 2.26 $ 3.20 $ 3.73 diluted 0.87 1.71 1.75 2.59 2.83 net income $ 19,351 $ 38,110 $ 35,719 $ 55,070 $ 62,448 comprehensive income (loss) from unconsolidated investment and other (825 ) (434 ) 1,005 180 (1,559 ) comprehensive income $ 18,526 $ 37,676 $ 36,724 $ 55,250 $ 60,889 comprehensive income attributable to non-controlling interest — (869 ) — — (869 ) comprehensive income attributable to nrp $ 18,526 $ 36,807 $ 36,724 $ 55,250 $ 60,020 natural resource partners l.p. financial tables (unaudited) consolidated statements of cash flows three months ended six months ended june 30, march 31, june 30, (in thousands) 2019 2018 2019 2019 2018 cash flows from operating activities net income $ 19,351 $ 38,110 $ 35,719 $ 55,070 $ 62,448 adjustments to reconcile net income to net cash provided by operating activities of continuing operations: depreciation, depletion and amortization 3,970 5,376 4,392 8,362 10,476 distributions from unconsolidated investment 9,310 12,250 9,800 19,110 22,403 equity earnings from unconsolidated investment (11,333 ) (16,529 ) (11,682 ) (23,015 ) (26,150 ) gain on asset sales (246 ) (168 ) (256 ) (502 ) (819 ) loss on extinguishment of debt 29,282 — — 29,282 — (income) loss from discontinued operations (245 ) (2,981 ) 46 (199 ) (1,033 ) asset impairments — — — — 242 unit-based compensation expense 475 303 901 1,376 990 amortization of debt issuance costs and other 355 1,661 1,796 2,151 2,815 change in operating assets and liabilities: accounts receivable 8,511 2,984 (4,927 ) 3,584 (7,043 ) accounts payable (561 ) (6 ) (616 ) (1,177 ) 863 accrued liabilities 642 1,755 (6,164 ) (5,522 ) (3,287 ) accrued interest 2,889 8,902 (10,033 ) (7,144 ) (875 ) deferred revenue (7,218 ) 3,645 4,534 (2,684 ) 9,006 other items, net (1,823 ) (1,409 ) (678 ) (2,501 ) 1,271 net cash provided by operating activities of continuing operations $ 53,359 $ 53,893 $ 22,832 $ 76,191 $ 71,307 net cash provided by operating activities of discontinued operations 234 451 121 355 2,836 net cash provided by operating activities $ 53,593 $ 54,344 $ 22,953 $ 76,546 $ 74,143 cash flows from investing activities distributions from unconsolidated investment in excess of cumulative earnings $ — $ — $ — $ — $ 2,097 proceeds from sale of assets 247 170 256 503 826 return of long-term contract receivable 451 529 441 892 1,016 net cash provided by investing activities of continuing operations $ 698 $ 699 $ 697 $ 1,395 $ 3,939 net cash used in investing activities of discontinued operations (44 ) (2,359 ) (390 ) (434 ) (5,772 ) net cash provided by (used in) investing activities $ 654 $ (1,660 ) $ 307 $ 961 $ (1,833 ) cash flows from financing activities debt borrowings 300,000 — — 300,000 35,000 debt repayments (348,002 ) (7,272 ) (86,468 ) (434,470 ) (48,072 ) redemption of preferred units paid-in-kind — — — — (8,844 ) distributions to common unitholders and general partner (16,265 ) (5,623 ) (5,625 ) (21,890 ) (11,240 ) distributions to preferred unitholders (7,500 ) (7,500 ) (7,500 ) (15,000 ) (15,265 ) contributions from (to) discontinued operations 190 (3,658 ) (269 ) (79 ) (2,250 ) debt issuance costs and other (26,412 ) — 10 (26,402 ) (226 ) net cash used in financing activities of continuing operations $ (97,989 ) $ (24,053 ) $ (99,852 ) $ (197,841 ) $ (50,897 ) net cash provided by (used in) financing activities of discontinued operations (190 ) 3,192 269 79 1,735 net cash used in financing activities $ (98,179 ) $ (20,861 ) $ (99,583 ) $ (197,762 ) $ (49,162 ) net increase (decrease) in cash, cash equivalents and restricted cash $ (43,932 ) $ 31,823 $ (76,323 ) $ (120,255 ) $ 23,148 cash, cash equivalents and restricted cash of continuing operations at beginning of period $ 129,707 $ 20,790 $ 206,030 $ 206,030 $ 26,980 cash and cash equivalents of discontinued operations at beginning of period — 362 — — 2,847 cash, cash equivalents and restricted cash at beginning of period $ 129,707 $ 21,152 $ 206,030 $ 206,030 $ 29,827 cash, cash equivalents and restricted cash at end of period $ 85,775 $ 52,975 $ 129,707 $ 85,775 $ 52,975 less: cash and cash equivalents of discontinued operations at end of period — (1,646 ) — — (1,646 ) cash, cash equivalents and restricted cash of continuing operations at end of period $ 85,775 $ 51,329 $ 129,707 $ 85,775 $ 51,329 supplemental cash flow information: cash paid during the period for interest of continuing operations $ 9,623 $ 7,132 $ 23,422 $ 33,045 $ 33,155 natural resource partners l.p. financial tables (unaudited) consolidated balance sheets june 30, december 31, (in thousands, except unit data) 2019 2018 assets current assets cash and cash equivalents $ 70,850 $ 101,839 restricted cash 14,925 104,191 accounts receivable, net 28,553 32,058 prepaid expenses and other 5,963 3,462 current assets of discontinued operations 984 993 total current assets $ 121,275 $ 242,543 land 24,008 24,008 plant and equipment, net 825 984 mineral rights, net 736,413 743,112 intangible assets, net 41,008 42,513 equity in unconsolidated investment 251,135 247,051 long-term contracts receivable 37,973 38,945 other assets 6,806 2,491 total assets $ 1,219,443 $ 1,341,647 liabilities and capital current liabilities accounts payable $ 1,211 $ 2,414 accrued liabilities 6,856 12,347 accrued interest 7,201 14,345 current portion of deferred revenue 6,579 3,509 current portion of long-term debt, net 46,040 115,184 current liabilities of discontinued operations 658 947 total current liabilities $ 68,545 $ 148,746 deferred revenue 43,290 49,044 long-term debt, net 498,029 557,574 other non-current liabilities 4,731 1,150 total liabilities $ 614,595 $ 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 june 30, 2019 and december 31, 2018, respectively) $ 374,275 $ 355,113 general partner’s interest 5,387 5,014 warrant holders' interest 66,816 66,816 accumulated other comprehensive loss (3,282 ) (3,462 ) total partners’ capital 443,196 423,481 non-controlling interest (2,935 ) (2,935 ) total capital 440,261 420,546 total liabilities and capital $ 1,219,443 $ 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 (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 ________________ (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 june 30, 2019 and 2018 and march 31, 2019: operating business segments coal royalty and other corporate and financing (in thousands) soda ash total three months ended june 30, 2019 revenues $ 69,890 $ 11,333 $ — $ 81,223 gain on asset sales 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 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 three months ended june 30, 2018 revenues $ 52,922 $ 16,529 $ — $ 69,451 gain on asset sales, net 168 — — 168 total revenues and other income $ 53,090 $ 16,529 $ — $ 69,619 asset impairments $ — $ — $ — $ — net income (loss) from continuing operations $ 39,597 $ 16,529 $ (20,997 ) $ 35,129 adjusted ebitda (1) $ 44,104 $ 12,250 $ (3,263 ) $ 53,091 distributable cash flow (1) $ 52,424 $ 12,250 $ (10,082 ) $ 54,592 free cash flow (1) $ 52,254 $ 12,250 $ (10,082 ) $ 54,422 three months ended march 31, 2019 revenues $ 55,103 $ 11,682 $ — $ 66,785 gain on asset sales 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 ________________ (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) the following tables present nrp's unaudited business results by segment for the six months ended june 30, 2019 and 2018: operating business segments coal royalty and other corporate and financing (in thousands) soda ash total six months ended june 30, 2019 revenues $ 124,993 $ 23,015 $ — $ 148,008 gain on asset sales 502 — — 502 total revenues and other income $ 125,495 $ 23,015 $ — $ 148,510 asset impairments $ — $ — $ — $ — net income (loss) from continuing operations $ 96,314 $ 23,015 $ (64,458 ) $ 54,871 adjusted ebitda (1) $ 104,676 $ 19,110 $ (8,546 ) $ 115,240 cash flow provided by (used in) continuing operations: operating activities $ 98,727 $ 19,110 $ (41,646 ) $ 76,191 investing activities $ 1,395 $ — $ — $ 1,395 financing activities $ — $ — $ (197,841 ) $ (197,841 ) distributable cash flow (1) (2) $ 100,122 $ 19,110 $ (41,646 ) $ 77,152 free cash flow (1) $ 99,619 $ 19,110 $ (41,646 ) $ 77,083 six months ended june 30, 2018 revenues $ 102,779 $ 26,150 $ — $ 128,929 gain on asset sales 819 — — 819 total revenues and other income $ 103,598 $ 26,150 $ — $ 129,748 asset impairments $ 242 $ — $ — $ 242 net income (loss) from continuing operations $ 78,548 $ 26,150 $ (43,283 ) $ 61,415 adjusted ebitda (1) $ 88,397 $ 24,500 $ (7,599 ) $ 105,298 cash flow provided by (used in) continuing operations: operating activities $ 90,518 $ 22,403 $ (41,614 ) $ 71,307 investing activities $ 1,842 $ 2,097 $ — $ 3,939 financing activities $ — $ — $ (50,897 ) $ (50,897 ) distributable cash flow (1) $ 92,360 $ 24,500 $ (41,614 ) $ 75,246 free cash flow (1) $ 91,534 $ 24,500 $ (41,614 ) $ 74,420 ________________ (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 six months ended june 30, march 31, june 30, (in thousands, except per ton data) 2019 2018 2019 2019 2018 coal sales volumes (tons) appalachia northern (1) 1,625 916 859 2,484 1,141 central 3,825 4,163 3,422 7,247 7,709 southern 386 396 348 734 942 total appalachia 5,836 5,475 4,629 10,465 9,792 illinois basin 535 739 560 1,095 1,482 northern powder river basin 591 808 856 1,447 2,041 total coal sales volumes 6,962 7,022 6,045 13,007 13,315 coal royalty revenue per ton appalachia northern (1) $ 0.86 $ 3.52 $ 4.71 $ 2.19 $ 3.76 central 6.03 5.65 6.03 6.03 5.68 southern 6.69 6.85 8.61 7.60 7.03 illinois basin 4.51 4.72 4.77 4.64 4.43 northern powder river basin 2.75 2.25 2.61 2.66 2.24 combined average coal royalty revenue per ton 4.46 4.95 5.39 4.89 4.94 coal royalty revenues appalachia northern (1) $ 1,393 $ 3,230 $ 4,045 $ 5,438 $ 4,296 central 23,055 23,520 20,644 43,699 43,752 southern 2,581 2,712 2,997 5,578 6,626 total appalachia 27,029 29,462 27,686 54,715 54,674 illinois basin 2,411 3,485 2,670 5,081 6,560 northern powder river basin 1,624 1,815 2,231 3,855 4,580 unadjusted coal royalty revenues 31,064 34,762 32,587 $ 63,651 $ 65,814 coal royalty adjustment for minimum leases (361 ) — (456 ) (817 ) (50 ) total coal royalty revenues $ 30,703 $ 34,762 $ 32,131 $ 62,834 $ 65,764 other revenues production lease minimum revenues $ 15,879 $ 2,006 $ 2,700 $ 18,579 $ 4,541 minimum lease straight-line revenues 3,854 569 3,316 7,170 1,172 property tax revenues 1,377 1,523 1,433 2,810 2,705 wheelage revenues 1,945 1,609 1,415 3,360 3,583 coal overriding royalty revenues 3,999 3,702 3,975 7,974 6,574 lease amendment revenues 4,414 — 771 5,185 — aggregates royalty revenues 1,237 1,572 1,464 2,701 2,663 oil and gas royalty revenues 482 1,354 1,719 2,201 4,252 other 726 823 578 1,304 1,140 total other revenues $ 33,913 $ 13,158 $ 17,371 $ 51,284 $ 26,630 coal royalty and other $ 64,616 $ 47,920 $ 49,502 $ 114,118 $ 92,394 transportation and processing services 5,274 5,002 5,601 10,875 10,385 gain on asset sales 246 168 256 502 819 total coal royalty and other segment revenues and other income $ 70,136 $ 53,090 $ 55,359 $ 125,495 $ 103,598 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 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 three months ended june 30, 2018 net income (loss) from continuing operations $ 39,597 $ 16,529 $ (20,997 ) $ 35,129 less: equity earnings from unconsolidated investment — (16,529 ) — (16,529 ) less: net income attributable to non-controlling interest (869 ) — — (869 ) add: total distributions from unconsolidated investment — 12,250 — 12,250 add: interest expense, net — — 17,734 17,734 add: loss on extinguishment of debt — — — — add: depreciation, depletion and amortization 5,376 — — 5,376 add: asset impairments — — — — adjusted ebitda $ 44,104 $ 12,250 $ (3,263 ) $ 53,091 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 ) less: net income attributable to non-controlling interest — — — — add: total distributions from unconsolidated investment — 9,800 — 9,800 add: interest expense, net — — 14,174 14,174 add: loss on extinguishment of debt — — — — add: depreciation, depletion and amortization 4,392 — — 4,392 add: asset impairments — — — — adjusted ebitda $ 46,999 $ 9,800 $ (4,350 ) $ 52,449 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 six months ended june 30, 2019 net income (loss) from continuing operations $ 96,314 $ 23,015 $ (64,458 ) $ 54,871 less: equity earnings from unconsolidated investment — (23,015 ) — (23,015 ) less: net income attributable to non-controlling interest — — — — add: total distributions from unconsolidated investment — 19,110 — 19,110 add: interest expense, net — — 26,630 26,630 add: loss on extinguishment of debt — — 29,282 29,282 add: depreciation, depletion and amortization 8,362 — — 8,362 add: asset impairments — — — — adjusted ebitda $ 104,676 $ 19,110 $ (8,546 ) $ 115,240 six months ended june 30, 2018 net income (loss) from continuing operations $ 78,548 $ 26,150 $ (43,283 ) $ 61,415 less: equity earnings from unconsolidated investment — (26,150 ) — (26,150 ) less: net income attributable to non-controlling interest (869 ) — — (869 ) add: total distributions from unconsolidated investment — 24,500 — 24,500 add: interest expense, net — — 35,684 35,684 add: loss on extinguishment of debt — — — — add: depreciation, depletion and amortization 10,476 — — 10,476 add: asset impairments 242 — — 242 adjusted ebitda $ 88,397 $ 24,500 $ (7,599 ) $ 105,298 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 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 sale of assets 247 — — 247 add: proceeds from sale of discontinued operations — — — (44 ) add: return of long-term contract receivables 451 — — 451 distributable cash flow $ 56,509 $ 9,310 $ (11,762 ) $ 54,013 less: proceeds from sale of assets (247 ) — — (247 ) less: proceeds from sale of discontinued operations — — — 44 free cash flow $ 56,262 $ 9,310 $ (11,762 ) $ 53,810 three months ended june 30, 2018 net cash provided by (used in) operating activities of continuing operations $ 51,725 $ 12,250 $ (10,082 ) $ 53,893 add: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from sale of assets 170 — — 170 add: proceeds from sale of discontinued operations — — — — add: return of long-term contract receivables 529 — — 529 distributable cash flow $ 52,424 $ 12,250 $ (10,082 ) $ 54,592 less: proceeds from sale of assets (170 ) — — (170 ) less: proceeds from sale of discontinued operations — — — — free cash flow $ 52,254 $ 12,250 $ (10,082 ) $ 54,422 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: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from sale of assets 256 — — 256 add: proceeds from sale of discontinued operations — — — (390 ) add: return of long-term contract receivables 441 — — 441 distributable cash flow $ 43,613 $ 9,800 $ (29,884 ) $ 23,139 less: proceeds from sale of assets (256 ) — — (256 ) less: proceeds from sale of discontinued operations — — — 390 free cash flow $ 43,357 $ 9,800 $ (29,884 ) $ 23,273 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 six months ended june 30, 2019 net cash provided by (used in) operating activities of continuing operations $ 98,727 $ 19,110 $ (41,646 ) $ 76,191 add: distributions from unconsolidated investment in excess of cumulative earnings — — — — add: proceeds from sale of assets 503 — — 503 add: proceeds from sale of discontinued operations — — — (434 ) add: return of long-term contract receivables 892 — — 892 distributable cash flow $ 100,122 $ 19,110 $ (41,646 ) $ 77,152 less: proceeds from sale of assets (503 ) — — (503 ) less: proceeds from sale of discontinued operations — — — 434 free cash flow $ 99,619 $ 19,110 $ (41,646 ) $ 77,083 six months ended june 30, 2018 net cash provided by (used in) operating activities of continuing operations $ 90,518 $ 22,403 $ (41,614 ) $ 71,307 add: distributions from unconsolidated investment in excess of cumulative earnings — 2,097 — 2,097 add: proceeds from sale of assets 826 — — 826 add: proceeds from sale of discontinued operations — — — — add: return of long-term contract receivables 1,016 — — 1,016 distributable cash flow $ 92,360 $ 24,500 $ (41,614 ) $ 75,246 less: proceeds from sale of assets (826 ) — — (826 ) less: proceeds from sale of discontinued operations — — — — free cash flow $ 91,534 $ 24,500 $ (41,614 ) $ 74,420 natural resource partners l.p. reconciliation of non-gaap measures (unaudited) ltm free cash flow and cash flow cushion three months ended (in thousands) september 30, 2018 december 31, 2018 march 31, 2019 june 30, 2019 last 12 months net cash provided by (used in) operating activities of continuing operations $ 26,486 $ 80,489 $ 22,832 $ 53,359 $ 183,166 add: proceeds from sale of assets — 1,623 256 247 2,126 add: proceeds from sale of discontinued operations — 198,091 (390 ) (44 ) 197,657 add: return of long-term contract receivables 1,590 455 441 451 2,937 distributable cash flow $ 28,076 $ 280,658 $ 23,139 $ 54,013 $ 385,886 less: proceeds from sale of assets — (1,623 ) (256 ) (247 ) (2,126 ) less: proceeds from sale of discontinued operations — (198,091 ) 390 44 (197,657 ) free cash flow $ 28,076 $ 80,944 $ 23,273 $ 53,810 $ 186,103 add: free cash flow provided by discontinued operations 2,871 125 121 234 3,351 free cash flow including discontinued operations $ 30,947 $ 81,069 $ 23,394 $ 54,044 $ 189,454 less: free cash flow provided by discontinued operations (2,871 ) (125 ) (121 ) (234 ) (3,351 ) less: cash flow from one-time hillsboro litigation settlement — (25,000 ) — — (25,000 ) free cash flow excluding discontinued operations and one-time beneficial items $ 28,076 $ 55,944 $ 23,273 $ 53,810 $ 161,103 less: mandatory opco debt amortizations (7,648 ) (24,665 ) (37,152 ) (2,365 ) (71,830 ) less: preferred unit distributions (7,500 ) (7,500 ) (7,500 ) (7,500 ) (30,000 ) less: common unit distributions (5,623 ) (5,623 ) (5,625 ) (16,265 ) (33,136 ) cash flow cushion $ 7,305 $ 18,156 $ (27,004 ) $ 27,680 $ 26,137 natural resource partners l.p. reconciliation of non-gaap measures (unaudited) leverage ratio three months ended (in thousands) september 30, 2018 december 31, 2018 march 31, 2019 june 30, 2019 last 12 months net income from continuing operations $ 25,853 $ 35,092 $ 35,765 $ 19,106 $ 115,816 less: equity earnings from unconsolidated investment (8,836 ) (13,320 ) (11,682 ) (11,333 ) (45,171 ) add: net loss attributable to non-controlling interest 359 — — — 359 add: total distributions from unconsolidated investment 12,250 9,800 9,800 9,310 41,160 add: interest expense, net 17,493 17,001 14,174 12,456 61,124 add: loss on extinguishment of debt — — — 29,282 29,282 add: depreciation, depletion and amortization 4,888 6,325 4,392 3,970 19,575 add: asset impairments — 18,038 — — 18,038 adjusted ebitda $ 52,007 $ 72,936 $ 52,449 $ 62,791 $ 240,183 less: one-time hillsboro litigation settlement (25,000 ) adjusted ebitda less one-time hillsboro litigation settlement $ 215,183 debt—at june 30, 2019 $ 552,667 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 june 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 june 30, 2019 divided by the last twelve months' adjusted ebitda less one-time hillsboro litigation settlement. 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 june 30, 2019 net income (loss) from continuing operations $ 178,494 $ 45,171 $ (107,849 ) $ 115,816 financing costs — — 92,703 92,703 return $ 178,494 $ 45,171 $ (15,146 ) $ 208,519 as of june 30, 2018 total assets of continuing operations $ 967,356 $ 245,524 $ 3,946 $ 1,216,826 less: total current liabilities of continuing operations excluding current debt (10,575 ) — (17,086 ) (27,661 ) less: total long-term liabilities of continuing operations excluding long-term debt (40,256 ) — (110 ) (40,366 ) capital employed excluding discontinued operations $ 916,525 $ 245,524 $ (13,250 ) $ 1,148,799 total partners' capital (1) $ 919,970 $ 245,524 $ (976,172 ) $ 370,864 less: non-controlling interest (3,445 ) — — (3,445 ) less: partners' capital from discontinued operations — — — (181,542 ) total partners' capital excluding discontinued operations $ 916,525 $ 245,524 $ (976,172 ) $ 185,877 class a convertible preferred units — — 164,587 164,587 debt — — 798,335 798,335 capital employed excluding discontinued operations $ 916,525 $ 245,524 $ (13,250 ) $ 1,148,799 roce excluding discontinued operations 19.5 % 18.4 % n/a 18.2 % excluding one-time beneficial items: return $ 178,494 $ 45,171 $ (15,146 ) $ 208,519 less: income from hillsboro litigation settlement (25,000 ) — — (25,000 ) return excluding discontinued operations and one-time beneficial items $ 153,494 $ 45,171 $ (15,146 ) $ 183,519 roce excluding discontinued operations and one-time beneficial items 16.7 % 18.4 % n/a 16.0% ________________ (1) total partners' capital includes $181.5 million from discontinued operations.
