Natural Resource Partners L.P. Reports First Quarter 2013 Results

      Natural Resource Partners L.P. Reports First Quarter 2013 Results

First Quarter 2013 Highlights:

- Revenues of $94.3 million, a 3% increase over 1Q2012

- Net income per unit of $0.43, down from $0.47 in 1Q2012

- Distributable cash flow of $44.5 million, a 10% decrease from 1Q2012

- Distribution of $0.55 per unit

PR Newswire

HOUSTON, May 6, 2013

HOUSTON, May 6, 2013 /PRNewswire/ -- Natural Resource Partners L.P. (NYSE:NRP)
today reported revenues of $94.3 million and distributable cash flow, a
non-GAAP measure, of $44.5 million for the first quarter 2013. Net income per
unit was $0.43 in the first quarter 2013 versus $0.47 per unit in the first
quarter of 2012. Reconciliations of all non-GAAP numbers are included in the
tables at the end of the release.

(Logo: http://photos.prnewswire.com/prnh/20060109/NRPLOGO)

"Our first quarter results were in line with our expectations. As we entered
2013, we anticipated that our efforts to diversify through our investments in
OCI Wyoming's trona mining operation and in the Illinois Basin would help
mitigate the soft Appalachian coal market in early 2013," said Nick Carter,
President and Chief Operating Officer. "We anticipate slight improvements in
the coal markets occurring in the second half of the year."

Highlights                        Quarter Ended
                                  March              March              %
                                  2013               2012               Change
                                  (in thousands except per unit and per
                                  ton)
Revenues
Total revenues                    $ 94,332           $ 91,872           3%
Coal production (tons)            13,833             12,115             14%
Coal royalty revenues             $ 54,442           $ 59,916           -9%
Average coal royalty revenue per  $   3.94         $   4.95         -20%
ton
Revenues other than coal          $ 39,890           $ 31,956           25%
royalties
Operating Expense                 $ 31,804           $ 27,048           18%
Net income
Net income to limited partners    $ 46,948           $ 50,283           -7%
Net income per unit               $   0.43         $   0.47         -9%
Average units outstanding         108,887            106,028            3%
Distributable cash flow^(1)       $ 44,485           $ 49,485           -10%
(1) See Non-GAAP reconciliation

Revenues
Total revenues rose 3% to $94.3 million in the first quarter 2013. Revenues
other than coal royalty revenues continued to drive the improvement in total
revenues over the prior year, rising 25% to $39.9 million versus $32.0 million
reported in the first quarter 2012. The significant increase was primarily
due to $7.0 million in revenues attributable to OCI, as well as an $8.1
million gain associated with a swap of coal reserves, partially offset by a
decrease of $7.1 million in minimums recognized as revenue.

While coal production increased 14% to 13.8 million tons in the first quarter
2013 versus the same quarter last year, coal royalty revenues decreased 9% to
$54.4 million due to a 20% decrease in average coal royalty revenue per ton.
The decrease is mainly associated with lower realizations in Central
Appalachia for both metallurgical coal and steam coal. In addition, while
production increases in all other regions except Central Appalachia more than
offset the production decline in Central Appalachia, average coal royalty
revenue per ton is lower in all other regions except for Northern Appalachia
and the Illinois Basin. Metallurgical coal accounted for 27% of NRP's
production and 39% of its coal royalty revenues in the first quarter 2013
compared to 30% of production and 45% of coal royalty revenues in the first
quarter 2012.

Operating Expenses
Total operating expenses for the first quarter totaled $31.8 million, an
increase of $4.8 million over the first quarter of 2012. The increase was
primarily due to increased depreciation, depletion and amortization as a
result of higher production and $2.6 million in additional general and
administrative expenses mainly associated with the partnership's long term
incentive plan.

Net income
Net income to the limited partners totaled $46.9 million for the first quarter
2013, a decrease of $3.3 million from the first quarter 2012. Net income per
unit for the first quarter 2013 was $0.43 compared to $0.47 in 2012.
Increased units outstanding during the period accounted for $0.01 of the
change.

Distributable cash flow
Distributable cash flow declined $5.0 million from the first quarter 2012 to
$44.5 million mainly due to lower coal royalty revenues.

First Quarter 2013 compared to Fourth Quarter 2012

Highlights                          Quarter Ended
                                    March 2013       December 2012    % Change
                                    (in thousands, except per ton and
                                    per unit)
Total revenues                      $   94,332    $            -8%
                                                     102,436
Coal production (tons)              13,833           17,012           -19%
Coal royalty revenues               $   54,442    $           -20%
                                                     67,681
Average coal royalty revenue per    $     3.94  $         -1%
ton                                                  3.98
Revenues other than coal royalty    $   39,890    $           15%
                                                     34,755
Operating expenses                  $   31,804    $           9%
                                                     29,230
Net income to limited partners      $   46,948    $           -20%
                                                     58,905
Net income to the limited partners,                  $     
before considering the              $   47,233    61,422          -23%
impairment^(1)
Net income per unit                 $     0.43  $         -23%
                                                     0.56
Net income per unit, before         $     0.43  $         -26%
considering the impairment^(1)                       0.58
Average units outstanding           108,887          106,028          3%
Distributable cash flow^(1)         $   44,485    $           -49%
                                                     87,581
^(1)See Non-GAAP reconciliation

Revenues
Total revenues for the first quarter decreased 8% from the prior quarter to
$94.3 million, predominantly due to a $13.2 million decrease in coal royalty
revenues. Coal royalty revenues decreased 20% to $54.4 million due to lower
production in all regions, particularly Appalachia, where production declined
2.3 million tons. This decrease was partially offset by a $5.1 million
increase in revenues other than coal royalty revenues, in part due to the $7.0
million recognized on the equity investment in OCI.

Operating Expenses
Total operating expenses rose $2.6 million from the fourth quarter mainly due
to increases in general and administrative expenses offset by lower
depreciation, depletion and amortization as a result of decreased production
in the first quarter.

Net income
Net income to the limited partner decreased $12.0 million in the first quarter
from the previous quarter due to decreased coal royalty revenues. Net income
per unit was $0.43 for the first quarter of 2013 compared to $0.56 per unit
for the fourth quarter, which included an impairment of $2.6 million or $0.02
per unit.

Distributable cash flow
As occurs in the first quarter of every year, NRP had a significant decline in
distributable cash flow as compared to the fourth quarter mainly due to
annually recurring changes in working capital. Distributable cash flow
decreased in the first quarter 2013 by $43.1 million to $44.5 million from the
fourth quarter 2012. The main factors were:

  o$13.2 million decrease in coal royalty revenues
  o$9.8 million in proceeds from right-of-way condemnation in the fourth
    quarter
  o$5.6 million in interest payments on the senior notes
  o$6.6 million paid in the first quarter under our incentive compensation
    plan
  o$5.4 million paid for property taxes, much of which will be reimbursed by
    lessees in future periods.

Acquisitions and Liquidity

In January 2013, NRP announced the acquisition of (1) a 48.51% general partner
interest in OCI Wyoming L.P. and (2) 20% of the common shares and all of the
preferred shares of OCI Wyoming Co. from subsidiaries of Anadarko Petroleum
Corporation (NYSE:APC). NRP paid $292.5 million for the interests. The
agreement also contains an earn-out provision, which would require NRP to pay
Anadarko up to $50 million, on a net present value basis, over a three-year
period if OCI Wyoming L.P. achieves specified revenue targets during that
period. The acquisition was funded through a $200 million term loan, the
issuance of $76.5 million in equity, including a general partner capital
contribution of $1.5 million, and $16 million in cash. After the associated
equity issuance, NRP now has 109,812,408 common units outstanding. NRP
recognized $7.0 million in revenue associated with this acquisition in the
first quarter and has received $20.6 million in distributions from OCI since
the end of the quarter.

During the first quarter, NRP used its cash to pay $36.6 million in principal
payments on its senior notes, an increase of $21.4 million over the first
quarter of 2012.

At the end of the first quarter, NRP had approximately $228 million in
liquidity, consisting of $76 million in cash and $152 million available under
its credit facility.

Market Outlook

"Many of our lessees have indicated that they are beginning to see a slight
improvement in the steam coal market due to recent increases in natural gas
prices and longer than usual winter weather conditions in some parts of the
country. Our Central Appalachian steam coal will be the last to benefit from
rising natural gas prices but the Powder River Basin and Illinois Basin coals
are already in the money at many power plants where they had been displaced by
cheap gas just a few months ago. Certainly none of our lessees are rushing to
reopen mines at today's prices but any movement in the market is encouraging,"
said Nick Carter.

Distributions

As reported on April 23, 2013, the Board of Directors of NRP's general partner
declared a quarterly distribution of $0.55 per unit for the first quarter
2013. 

Company Profile

Natural Resource Partners L.P. is a master limited partnership headquartered
in Houston, TX, with its operations headquarters in Huntington, WV. NRP is
principally engaged in the business of owning and managing mineral reserve
properties. NRP primarily owns coal, aggregate and oil and gas reserves
across the United States that generate royalty income for the partnership.

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.

Disclosure of Non-GAAP Financial Measures
Distributable cash flow represents cash flow from operations, return on direct
financing lease and contractual override and proceeds received from sales of
assets. Distributable cash flow is a "non-GAAP financial measure" that is
presented because management believes it is a useful adjunct to net cash
provided by operating activities under GAAP. Distributable cash flow is a
significant liquidity metric that is an indicator of NRP's ability to generate
cash flows at a level that can sustain or support an increase in quarterly
cash distributions paid to its partners. Distributable cash flow is also the
quantitative standard used throughout the investment community with respect to
publicly traded partnerships. 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. A
reconciliation of distributable cash flow to net cash provided by operating
activities is included in the tables attached to this release. Distributable
cash flow may not be calculated the same for NRP as other companies.

Forward-Looking Statements
This press release may include "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, decreases in demand
for coal; changes in operating conditions and costs; production cuts by our
lessees; commodity prices; unanticipated geologic problems; changes in the
legislative or regulatory environment 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.

-Financial statements follow-





Natural Resource Partners L.P.
Operating Statistics
(in thousands except per ton data)
                                     Quarter Ended
                                     March       March
                                     2013        2012
                                     (unaudited)
Coal Royalties:
Coal royalty revenues:
     Appalachia
          Northern                   $  4,884   $  3,007
          Central                    26,406      42,072
          Southern                   7,700       4,304
                Total Appalachia     $ 38,990    $ 49,383
     Illinois Basin                  12,657      8,769
     Northern Powder River Basin     2,129       1,462
     Gulf Coast Lignite              666         302
Total                                $ 54,442    $ 59,916
Coal royalty production (tons):
     Appalachia
          Northern                   3,741       2,401
          Central                    5,120       6,535
          Southern                   1,104       553
                Total Appalachia     9,965       9,489
     Illinois Basin                  2,894       2,091
     Northern Powder River Basin     795         468
     Gulf Coast Lignite              179         67
Total                                13,833      12,115
Average royalty revenue per ton:
     Appalachia
          Northern                   $   1.31  $   1.25
          Central                    5.16        6.44
          Southern                   6.97        7.78
                Total Appalachia     3.91        5.20
     Illinois Basin                  4.37        4.19
     Northern Powder River Basin     2.68        3.12
     Gulf Coast Lignite              3.72        4.51
Combined average royalty
     revenue per ton                 $   3.94  $   4.95
Aggregates:
Royalty revenues                     $  1,552   $  1,716
Production                           1,283       1,367
Average base royalty per ton         $   1.21  $   1.26
Oil and gas:
Revenues                             $  1,763   $  1,388





Natural Resource Partners L.P.
Consolidated Statements of Comprehensive Income
(in thousands, except per unit data)
                                                        Quarter Ended
                                                        March      March
                                                        2013        2012
                                                        (unaudited)
Revenues:
 Coal royalties                                         $ 54,442    $ 59,916
 Equity and other unconsolidated investment income,     7,048       -
 net
 Aggregate royalties                                    1,552       1,716
 Processing fees                                        1,180       2,126
 Transportation fees                                    4,925       4,108
 Oil and gas royalties                                  1,763       1,388
 Property taxes                                         3,947       4,488
 Minimums recognized as revenue                         4,591       11,714
 Override royalties                                     4,905       5,142
 Other                                                  9,979       1,274
               Total revenues                           94,332      91,872
Operating expenses:
 Depreciation, depletion and amortization               14,762      12,409
 Asset impairments                                      291         -
 General and administrative                             11,586      8,950
 Property, franchise and other taxes                    4,351       5,016
 Transportation costs                                   459         473
 Coal royalty and override payments                     355         200
               Total operating expenses                 31,804      27,048
Income from operations                                  62,528      64,824
Other income (expense)
 Interest expense                                       (14,663)    (13,560)
 Interest income                                        41          45
Income before non-controlling interest                  $ 47,906    $ 51,309
 Non-controlling interest                               -           -
Net income                                             $ 47,906    $ 51,309
Net income attributable to:
 General partner                                        $   958  $  1,026
 Limited partners                                       $ 46,948    $ 50,283
Basic and diluted net income per
 limited partner unit:                                  $   0.43  $   0.47
Weighted average number of units outstanding:           108,887     106,028
Comprehensive income                                   $ 47,960    $ 51,319





Natural Resource Partners L.P.
Consolidated Statements of Cash Flow
(in thousands, except per unit data)
                                                         Quarter Ended
                                                         March     March
                                                         2013       2012
                                                         (unaudited)
Cash flows from operating activities:
 Net income                                             $ 47,906  $  51,309
 Adjustments to reconcile net income to
  net cash provided by operating activities:
  Depreciation, depletion and amortization               14,762     12,409
  Gain on reserve swap                                   (8,149)    -
  Equity and other unconsolidated investment income,     (7,048)    -
  net
  Distributions from unconsolidated investments          237        -
  Non-cash interest charge, net                          276        149
  Gain on sale of assets                                 (150)      -
  Asset impairment                                       291        -
 Change in operating assets and liabilities:
  Accounts receivable                                    (531)      (1,237)
  Other assets                                           266        200
  Accounts payable and accrued liabilities               (873)      1,083
  Accrued interest                                       (1,925)    (2,895)
  Deferred revenue                                       4,506      (2,449)
  Accrued incentive plan expenses                        (3,255)    (6,592)
  Property, franchise and other taxes payable            (2,400)    (2,492)
       Net cash provided by operating activities:        43,913     49,485
Cash flows from investing activities:
  Acquisition of land and mineral rights                 -          (67,726)
  Acquisition of equity interests                        (292,939)  -
  Proceeds from sale of assets                           154        -
  Return on direct financing lease and contractual       418        -
  override
  Investment in direct financing lease                   -          (59,009)
       Net cash used in investing activities             (292,367)  (126,735)
Cash flows from financing activities:
  Proceeds from loans                                    200,000    47,000
  Repayment of loans                                     (36,622)   (15,191)
  Deferred financing costs                               (1,621)    -
  Proceeds from issuance of common units                 75,000     -
  Capital contribution by general partner                1,531      -
  Costs associated with equity transactions              (47)       -
  Distributions to partners                              (63,058)   (62,077)
       Net cash provided by (used in) financing          175,183    (30,268)
       activities
Net (decrease) in cash and cash equivalents             (73,271)   (107,518)
Cash and cash equivalents at beginning of period         149,424    214,922
Cash and cash equivalents at end of period               $ 76,153  $ 107,404
Supplemental cash flow information:
  Cash paid during the period for interest               $ 16,301  $  16,292





Natural Resource Partners L.P.
Consolidated Balance Sheets
(in thousands, except for unit information)
ASSETS
                                               March 31,       December 31,
                                               2013            2012
                                               (unaudited)
Current assets:
   Cash and cash equivalents                   $   76,153   $    149,424
   Accounts receivable, net of allowance for   34,591          35,116
   doubtful accounts
   Accounts receivable - affiliates            12,978          10,613
   Other                                       802             1,042
            Total current assets               124,524         196,195
Land                                           24,340          24,340
Plant and equipment, net                       30,834          32,401
Mineral rights, net                            1,375,972       1,380,428
Intangible assets, net                         69,808          70,811
Equity and other unconsolidated                298,620         -
investments
Loan financing costs, net                      5,648           4,291
Long-term contracts receivable - affiliate     55,021          55,576
Other assets, net                              604             630
            Total assets                       $ 1,985,371     $  1,764,672
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
   Accounts payable and accrued                $    3,345  $     
   liabilities                                                 3,693
   Accounts payable - affiliates               432             957
   Current portion of long-term debt           58,858          87,230
   Accrued incentive plan expenses -           6,237           7,718
   current portion
   Property, franchise and other taxes         5,552           7,952
   payable
   Accrued interest                            8,340           10,265
            Total current liabilities          82,764          117,815
Deferred revenue                               127,894         123,506
Accrued incentive plan expenses                7,091           8,865
Long-term debt                                 1,088,789       897,039
Partners' capital:
   Common units outstanding (109,812,408 and   666,523         605,019
   106,027,836)
   General partner's interest                  11,283          10,026
   Non-controlling interest                    1,416           2,845
   Accumulated other comprehensive loss        (389)           (443)
            Total partners' capital            678,833         617,447
            Total liabilities and partners'    $ 1,985,371     $  1,764,672
            capital





Natural Resource Partners L.P.
Reconciliation of GAAP Financial Measurements
to Non-GAAP Financial Measurements
(in thousands)
Reconciliation of GAAP "Net cash provided by operating activities"
to Non-GAAP "Distributable cash flow"
                                                          Quarter Ended
                                                          March     March
                                                          2013      2012
                                                          (unaudited)
Net cash provided by operating activities                 $ 43,913  $  49,485
Return on direct financing lease and contractual          418       -
override
Proceeds from sale of assets                              154       -
Distributable cash flow                                   $ 44,485  $  49,485
Reconciliation of GAAP "Net cash provided by operating activities"
to Non-GAAP "Distributable cash flow"
                                                          Quarter Ended
                                                          March     December
                                                          2013      2012
                                                          (unaudited)
Net cash provided by operating activities                 $ 43,913  $  77,536
Return on direct financing lease and contractual          418       270
override
Proceeds from sale of assets                              154       9,775
Distributable cash flow                                   $ 44,485  $  87,581



Reconciliation of GAAP "Net income attributable to the limited partners"
to Non-GAAP "Net income attributable to the limited partners before
considering the impairment"
                                                     Quarter Ended
                                                     March        December
                                                     2013         2012
                                                     (unaudited)
Net income attributable to the limited partners
Net income as reported                               $ 47,906     $  60,107
Impairments                                          $    291  $   2,568
Net income before considering the impairment         $ 48,197     $  62,675
Net income, before considering the impairment,
attributable to:
 General partner                                    $    964  $   1,254
 Limited partners                                   $ 47,233     $  61,422
Reconciliation of GAAP "Basic and diluted net income per unit"
to Non-GAAP "Net income per unit before considering the impairment"
                                                     Quarter Ended
                                                     March        December
                                                     2013         2012
                                                     (unaudited)
Net income per unit
Net income per unit as reported                      $   0.43   $    0.56
Adjustment for impairments                           $   0.00   $    0.02
Net income per limited partner unit, before          $   0.43   $    0.58
considering the impairment
Weighted number of units outstanding                 108,887      106,028
* Numbers may not add due to rounding

SOURCE Natural Resource Partners L.P.

Website: http://www.nrplp.com
 
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