Natural resource partners l.p. reports second quarter 2018 results
Houston--(business wire)--natural resource partners l.p. (nyse:nrp) today reported second quarter of 2018 results as follows: (in thousands, except per unit data) ___________________________________ (1) net income from continuing operations during the three and six months ended june 30, 2018 included income of $12.7 from a royalty dispute settlement in our soda ash business segment. (2) see "non-gaap financial measures" and reconciliation tables at the end of this release. "strong metallurgical and thermal coal export demand and stable domestic coal prices provided the foundation for another solid quarter of operating results. we remain steadfast on maximizing free cash flow and strengthening our balance sheet by reducing debt and improving our liquidity," said nrp president and chief operating officer, craig nunez. nrp improved its liquidity since the end of the first quarter of 2018 by $31.8 million to $108.0 million at june 30, 2018, consisting of $53.0 million of cash and $55.0 million of borrowing capacity available under its credit facility. nrp's consolidated debt-to-adjusted ebitda ratio at june 30, 2018 was 3.5x. with respect to the second quarter of 2018, nrp declared a cash distribution of $0.45 per common unit and a cash distribution of $7.5 million on nrp’s preferred units. nrp's distribution coverage ratio over the last twelve months was 6.6x before taking into account the $30 million annual distribution on nrp's preferred units, and 5.3x after taking into account this preferred unit distribution. segment information coal royalty and other (in thousands) ___________________________________ (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. net income and adjusted ebitda for the three and six months ended june 30, 2018 remained steady compared to the prior year periods and the prior quarter. these consistent results are reflective of the strong export demand and steady domestic markets for metallurgical and thermal coal over the last twelve months. approximately 67% of nrp's coal royalty revenues and approximately 54% of its coal royalty production was derived from metallurgical coal during the six months ended june 30, 2018. net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased during the three and six months ended june 30, 2018 as compared to the prior year periods and the prior quarter primarily as a result of the timing of cash receipts from both coal royalty production and minimums and property tax reimbursements. soda ash (in thousands) ___________________________________ (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. net income increased during the three and six months ended june 30, 2018 as compared to the prior year periods and the prior quarter primarily as a result of ciner wyoming's litigation settlement of its royalty dispute that resulted in $12.7 million of net income in the second quarter of 2018. this increase was partially offset by unexpected repairs during a scheduled outage in may 2018 that resulted in lower production and sales compared to prior year periods and the prior quarter. this repair was successfully completed and operations resumed prior to the end of the quarter. construction aggregates (in thousands) ___________________________________ (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. the construction aggregates segment continues to perform consistently compared to prior year periods as demonstrated by the steady net income and adjusted ebitda. net income and adjusted ebitda for the three months ended june 30, 2018 increased compared to the prior quarter as a result of the seasonality of the construction aggregates business. production and sales are typically lower in the first quarter of each year due to the winter weather. net cash from operating activities of continuing operations, distributable cash flow and free cash flow decreased compared to the prior year comparable periods and the prior quarter primarily due to the timing of certain operating payments. we expect strong cash collections in the second half of 2018. corporate and finance (in thousands) ___________________________________ (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. net loss decreased $6.3 million during the three months ended june 30, 2018 as compared to the three months ended june 30, 2017 primarily due to a $4.1 million loss on the early extinguishment of debt in 2017, and $2.4 million lower net interest expense due to lower debt. net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased $8.7 million during the period primarily as a result of interest payments made in 2017 on nrp's 9.125% senior notes that were fully repaid in the fourth quarter of 2017. net loss decreased $1.3 million during the three months ended june 30, 2018 as compared to the three months ended march 31, 2018 primarily due to timing of certain general and administrative costs and lower interest expense. net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased $21.5 million during the period primarily due to the timing of interest payments. net loss decreased $21.7 million during the six months ended june 30, 2018 as compared to the six months ended june 30, 2017 primarily due to $12.0 million of debt modification and early extinguishment costs in connection with the 2017 recapitalization transaction and $7.2 million of lower net interest expense due to lower debt. net cash from operating activities of continuing operations, distributable cash flow and free cash flow increased $10.9 million during the period primarily as a result of lower cash paid for interest due to lower debt and lower general and administrative costs due to performance awards paid in 2017 in connection with the recapitalization transaction. 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 55454889. investors may also listen to the call via the investor relations section of the nrp website at www.nrplp.com. audio replays of the conference call will be available for approximately one week. to access the replay, dial (855) 859-2056 and provide the conference code 55454889 or 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 interests in coal, aggregates and industrial minerals across the united states. a large percentage of nrp's revenues are generated from royalties and other passive income. in addition, nrp owns a construction aggregates company and an equity investment in ciner wyoming, a trona/soda ash operation. for additional information, please contact kathy h. roberts at 713-751-7555 or kroberts@nrplp.com. further information about nrp is available on the partnership’s website at http://www.nrplp.com. forward-looking statements this press release includes “forward-looking statements” as defined by the securities and exchange commission. all statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. these statements are based on certain assumptions made by the partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the partnership. these risks include, but are not limited to, commodity prices; decreases in demand for coal, aggregates and industrial minerals, including trona/soda ash; changes in operating conditions and costs; production cuts by our lessees; unanticipated geologic problems; our liquidity, leverage and access to capital and financing sources; changes in the legislative or regulatory environment, litigation risk, and other factors detailed in natural resource partners’ securities and exchange commission filings. natural resource partners l.p. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. non-gaap financial measures “distributable cash flow” is a non-gaap financial measure that we define as net cash provided by operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from sales of assets, including those included in discontinued operations, and return of long-term contract receivables (including affiliate); less maintenance capital expenditures and distributions to non-controlling interest. distributable 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. distributable cash flow may not be calculated the same for us as for other companies. in addition, distributable cash flow presented below 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 the partnership's ability to make cash distributions to our common and preferred unitholders and our general partner and repay debt. “free cash flow” is a non-gaap financial measure that we define as net cash provided by 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 mitigation payments and acquisition costs classified as financing activities and distributions to non-controlling interest. free cash flow 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 the partnership's ability to make cash distributions to our common and preferred unitholders and our general partner and repay debt. "adjusted ebitda" is a non-gaap financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment and net income attributable to non-controlling interest; 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. “adjusted net income attributable to nrp” is a non-gaap financial measure that we define as net income attributable to nrp plus restructuring transaction expenses that include debt modification expense, loss on extinguishment of debt and restructuring-related incentive compensation expense, asset impairments and income (loss) from discontinued operations; less gain on sale of assets. adjusted net income should not be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financial activities, or other income or cash flow statement data prepared in accordance with gaap. our management team believes adjusted net income is useful in evaluating our financial performance because restructuring transaction expenses are one time charges, gains on asset sales are not related to the operations of our business and asset impairments are non-cash charges. excluding these from net income allows us to better compare results from ongoing operations period-over-period. "return on capital employed" is a non-gaap financial measure that we define as net income from continuing operations plus interest expense divided by the sum of equity 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. -financial tables, reconciliation of non-gaap measures and recap of metrics follow- natural resource partners l.p. financial tables (in thousands, except per unit data) operating and maintenance expenses other expense, net natural resource partners l.p. financial tables (in thousands) (in thousands) distributions to common unitholders and general partner natural resource partners l.p. financial tables (in thousands, except unit data) natural resource partners l.p. financial tables general partner warrant holders accumulatedother comprehensive loss partners' capital excludingnon-controlling interest non-controlling interest total capital (in thousands) ___________________________________ natural resource partners l.p. financial tables (unaudited) the tables below presents nrp's unaudited business results by segment for the three and six months ended june 30, 2018 and 2017 and the three months ended march 31, 2018: coal royalty and other construction aggregates corporate and financing (in thousands) ___________________________________ (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. natural resource partners l.p. financial tables (unaudited) coal royalty and other construction aggregates corporate and financing (in thousands) ___________________________________ (1) see "non-gaap financial measures" and reconciliation tables at the end of this release. (in thousands, except per ton data) reconciliation of non-gaap measures coal royalty and other construction aggregates corporate and financing (in thousands) net cash provided by (used in) operating activities of continuing operations less: mitigation payments and acquisition costs classified as financing activities net cash provided by (used in) operating activities of continuing operations add: distributions from unconsolidated investment in excess of cumulative earnings add: return of long-term contract receivables (including affiliate) less: mitigation payments and acquisition costs classified as financing activities net cash provided by (used in) operating activities of continuing operations add: distributions from unconsolidated investment in excess of cumulative earnings less: mitigation payments and acquisition costs classified as financing activities coal royalty and other construction aggregates corporate and financing (in thousands) net cash provided by (used in) operating activities of continuing operations add: distributions from unconsolidated investment in excess of cumulative earnings less: mitigation payments and acquisition costs classified as financing activities net cash provided by (used in) operating activities of continuing operations add: distributions from unconsolidated investment in excess of cumulative earnings add: return of long-term contract receivables (including affiliates) less: mitigation payments and acquisition costs classified as financing activities coal royalty and other construction aggregates corporate and financing (in thousands) natural resource partners l.p. reconciliation of non-gaap measures coal royalty and other construction aggregates corporate and financing (in thousands) (in thousands) natural resource partners l.p. reconciliation of non-gaap measures (in thousands) september 30, 2017 december 31, 2017 march 31, 2018 june 30, 2018 last 12 months net cash provided by operating activities of continuing operations add: distributions from unconsolidated investment in excess of cumulative earnings less: mitigation payments and acquisition costs classified as financing activities ___________________________________ distribution coverage ratio is calculated as last twelve months' dcf divided by annual common unit distributions times number of common units and general partner units outstanding. natural resource partners l.p. reconciliation of non-gaap measures (in thousands) september 30, 2017 december 31, 2017 march 31, 2018 june 30, 2018 last 12 months ___________________________________ natural resource partners l.p. reconciliation of non-gaap measures (in thousands)
