Second Quarter 2006 Highlights: HOUSTON, Aug. 3
/PRNewswire-FirstCall/ -- Natural Resource Partners L.P.
(NYSE:NRPNYSE:andNYSE:NYSE:NYSE:NSP) today reported net income of
$25.0 million for the second quarter 2006, equaling the $25.0
million reported for the same period in 2005. While net income was
the same over the two periods, net income per unit slightly
decreased from $0.92 in the 2005 period to $0.86 for the second
quarter 2006 as a result of NRP allocating more income to the
general partner and the holders of the incentive distribution
rights. Distributable cash flow for the second quarter this year
rose 4% to $30.2 million, up from $29.1 million a year ago. For the
first six months of 2006, NRP reported net income of $53.6 million,
an 18% increase over the $45.4 million reported for the same period
last year, while net income per unit rose 11% to $1.87 per unit
from $1.69 per unit for the six month periods. Distributable cash
flow rose 22% to $64.5 million from $52.8 million in 2005.
"Following an exceptional first quarter, our lessees performed as
expected this quarter," said Chief Operating Officer Nick Carter.
"These variations from quarter to quarter are typical as our
lessees move on and off of our property. In addition, as we have
stated in previous announcements, we don't expect to see the full
impact of some our recent acquisitions until 2007." Second Quarter
2006 Financial Results As forecasted, second quarter revenues
decreased slightly to $41.0 million from $41.7 million for the same
period last year. Production decreased by 0.7 million tons to 13.4
million tons from the same period last year due to several of our
lessees producing a larger percentage of coal from adjacent
properties rather than NRP properties. Average coal royalty
revenues per ton increased slightly to $2.73 from $2.69, partially
offsetting the decreased production. Coal royalty revenues
decreased $1.5 million to $36.5 million over the second quarter
2005. Other revenues increased by $0.7 million to $1.6 million
including $0.5 million, or $0.02 per unit, associated with the gain
on the sale of some timber assets. Total second quarter 2006
expenses decreased approximately 10% to $13.0 million from the
$14.5 million reported in the second quarter last year.
Depreciation, depletion and amortization was $1.4 million lower
primarily due to lower production. Year-to-date Financial Results
NRP's total revenues increased 12% to $87.5 million for the first
six months from $77.9 million for 2005. Year-to-date 2006 coal
royalty revenues rose 7% to $75.6 million compared to $70.5 million
in 2005. This increase results from both a 5% increase in average
per ton royalty revenue to $2.76 and a slight increase in
production to 27.4 million tons. Appalachian production decreased
1%, while Illinois Basin and Northern Powder River Basin production
increased approximately 31% and 11%, respectively. For the first
six months of 2006, approximately 28% of NRP's coal royalty
revenues and 22% of its production were from metallurgical coal,
which is normally priced higher than steam coal. Other revenue rose
$4.4 million, or 59%, to $11.9 million primarily due to gains on
two timber sales totaling $2.6 million, or $0.09 per unit, and a
$1.6 million, or 136%, increase in oil and gas income due to
increased production. Total expenses were essentially flat with
2005 at $27.9 million for 2006 versus $28.1 million. Depreciation,
depletion and amortization decreased 8% as a result of lower
production and lower depletion rates. General and administrative
expenses increased 15% or $1.0 million over last year primarily due
to increased costs associated with managing a larger number of
properties and incentive compensation accruals. Property, franchise
and other taxes increased $0.5 million due to franchise taxes in
additional states in which the partnership now operates.
Distributions; Expected Conversion of NSP Units On July 19, 2006,
NRP announced its twelfth consecutive increase in its quarterly
distribution, raising the distribution to $0.82 per unit, or $3.28
per unit on an annualized basis, for both NRP and NSP. This
represents a 15% increase in Natural Resource Partners'
distributions compared to the second quarter of 2005. This
distribution will be paid on August 14 to holders of record on
August 1. Following the payment of the next distribution in
November with respect to the third quarter, NRP expects that
approximately one-third of the currently outstanding subordinated
units that trade under the ticker symbol "NSP" will convert into
common units and begin trading under the "NRP" ticker symbol.
Strong Balance Sheet During the second quarter, NRP further
strengthened its balance sheet. NRP paid $13.65 million of
scheduled principal and interest payments, $16.44 million for
acquisitions, $22.3 million in distributions and still has a cash
balance of approximately $53 million and a debt to total
capitalization ratio of 36%. 2006 Guidance With six months of
actual results, NRP is reiterating its overall 2006 guidance. NRP
anticipates announcing full year results within the framework of
the previously announced ranges. While NRP is forecasting
production to be at the lower end of its previously announced
range, revenues, net income and distributable cash flow are
anticipated to be at the upper end of the ranges announced on
January 19. Natural Resource Partners L.P. is headquartered in
Houston, TX, with its operations headquarters in Huntington, WV.
NRP is a master limited partnership that is principally engaged in
the business of owning and managing coal properties in the three
major coal producing regions of the United States: Appalachia, the
Illinois Basin and the Powder River Basin. For additional
information, please contact Kathy Hager at 713-751-7555 or .
Further information about NRP is available on the partnership's
website at http://www.nrplp.com/ . 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. Such statements include
comments regarding growth of the partnership and increases in
distributions. 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. Disclosure of Non-GAAP
Financial Measures Distributable cash flow represents cash flow
from operations less actual principal payments and cash reserves
set aside for scheduled principal payments on the senior notes.
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. Natural Resource Partners L.P.
Operating Statistics (In thousands except per ton data) (Unaudited)
Three months ended Six months ended June 30, June 30, 2006 2005
2006 2005 Coal royalty revenues: Appalachia Northern $2,730 $2,105
$6,038 $4,569 Central 24,543 25,894 50,385 48,072 Southern 5,133
6,346 10,617 11,357 Total Appalachia $32,406 $ 34,345 $67,040
$63,998 Illinois Basin 1,704 1,093 3,656 2,400 Northern Powder
River Basin 2,417 2,519 4,941 4,089 Total $36,527 $ 37,957 $75,637
$70,487 Coal royalty production (tons): Appalachia Northern 1,482
1,108 3,214 2,416 Central 7,982 8,958 16,176 17,197 Southern 1,436
1,675 2,862 2,999 Total Appalachia 10,900 11,741 22,252 22,612
Illinois Basin 977 707 2,140 1,574 Northern Powder River Basin
1,497 1,665 2,998 2,697 Total 13,374 14,113 27,390 26,883 Average
royalty revenue per ton: Appalachia Northern $1.84 $1.90 $1.88
$1.89 Central 3.07 2.89 3.11 2.80 Southern 3.58 3.79 3.71 3.79
Total Appalachia 2.97 2.93 3.01 2.83 Illinois Basin 1.74 1.55 1.71
1.52 Northern Powder River Basin 1.61 1.51 1.65 1.52 Total $2.73
$2.69 $2.76 $2.62 Natural Resource Partners L.P. Consolidated
Statements of Income (In thousands, except per unit data)
(Unaudited) Three months ended Six months ended June 30, June 30,
2006 2005 2006 2005 Revenues: Coal royalties $36,527 $37,957
$75,637 $ 70,487 Oil and gas royalties 928 610 2,647 1,070 Property
taxes 1,546 1,547 3,295 2,981 Minimums recognized as revenue 250
481 621 934 Override royalties 181 209 484 824 Other 1,550 893
4,826 1,648 Total revenues 40,982 41,697 87,510 77,944 Operating
costs and expenses: Depreciation, depletion and amortization 7,236
8,625 15,089 16,504 General and administrative 3,420 3,162 7,535
6,474 Property, franchise and other taxes 2,099 1,954 4,344 3,784
Coal royalty and override payments 263 745 954 1,298 Total
operating costs and expenses 13,018 14,486 27,922 28,060 Income
from operations 27,964 27,211 59,588 49,884 Other income (expense)
Interest expense (3,675) (2,570) (7,293) (5,027) Interest income
755 331 1,273 562 Net income $25,044 $24,972 $53,568 $ 45,419 Net
income attributable to: (A) General partner $2,253 $1,155 $4,348
$1,985 Holders of incentive distribution rights $943 $353 $1,764
$580 Limited partners $21,848 $23,464 $ 47,456 $ 42,854 Basic and
diluted net income per limited partner unit: Common $0.86 $0.92
$1.87 $1.69 Subordinated $0.86 $0.92 $1.87 $1.69 Weighted average
number of units outstanding: Common 16,825 13,987 16,825 13,987
Subordinated 8,515 11,354 8,515 11,354 (A) Net income is allocated
among the limited partners, the general partner and holders of the
incentive distribution rights (IDRs) based upon their pro rata
share of distributions. The IDRs are allocated 65% to the general
partner and the remaining 35% to affiliates of the general partner.
The IDRs allocated to the general partner are included in the net
income attributable to the general partner. Natural Resource
Partners L.P. Statements of Cash Flows (In thousands) (Unaudited)
Three months ended Six months ended June 30, June 30, 2006 2005
2006 2005 Cash flows from operating activities: Net income $25,044
$24,972 $53,568 $45,419 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation, depletion and
amortization 7,236 8,625 15,089 16,504 Non-cash interest charge 91
54 191 125 Gain from sale of assets (458) --- (2,634) --- Change in
operating assets and liabilities: Accounts receivable (103) (979)
(107) (3,369) Other assets (25) 351 243 601 Accounts payable (57)
161 (20) (124) Accrued interest (689) (2,078) 1,217 169 Deferred
revenue 1,040 (176) 408 (2,331) Accrued incentive plan expenses
1,139 1,219 1,510 1,224 Property, franchise and other taxes payable
(708) (771) (305) (770) Net cash provided by operating activities
32,510 31,378 69,160 57,448 Cash flows from investing activities:
Acquisition of land, plant and equipment, coal and other mineral
rights (16,438) --- (51,438) (21,544) Proceeds from sale of assets
829 --- 4,761 --- Net cash used in investing activities (15,609)
--- (46,677) (21,544) Cash flows from financing activities:
Proceeds from loans --- --- 50,000 18,000 Repayments of loans
(9,350) (9,350) (24,350) (9,350) Distributions to partners (22,299)
(18,371) (43,204) (35,897) Net cash used in financing activities
(31,649) (27,721) (17,554) (27,247) Net (decrease) or increase in
cash and cash equivalents (14,748) 3,657 4,929 8,657 Cash and cash
equivalents at beginning of period 67,368 47,103 47,691 42,103 Cash
and cash equivalents at end of period $52,620 $50,760 $52,620
$50,670 SUPPLEMENTAL INFORMATION: Cash paid during the period for
interest $4,261 $4,575 $5,861 $4,712 Natural Resource Partners L.P.
Consolidated Balance Sheets (In thousands, except for unit
information) ASSETS June 30, Dec. 31, 2006 2005 (Unaudited) Current
assets: Cash and cash equivalents $52,620 $47,691 Accounts
receivable 22,051 21,946 Accounts receivable - affiliate 8 6 Other
590 833 Total current assets 75,269 70,476 Land 12,436 14,123 Plant
and equipment, net 5,760 5,924 Coal and other mineral rights, net
626,858 590,459 Loan financing costs, net 2,266 2,431 Other assets,
net 1,257 1,583 Total assets $723,846 $684,996 LIABILITIES AND
PARTNERS' CAPITAL Current liabilities: Accounts payable $659 $677
Accounts payable - affiliate 86 88 Current portion of long-term
debt 9,350 9,350 Accrued incentive plan expenses - current portion
4,763 1,105 Property, franchise and other taxes payable 3,833 4,138
Accrued interest 2,751 1,534 Total current liabilities 21,442
16,892 Deferred revenue 15,259 14,851 Accrued incentive plan
expenses 3,247 5,395 Long-term debt 247,600 221,950 Partners'
capital: Common units (outstanding: 16,825,307) 298,190 292,990
Subordinated units (outstanding: 8,515,228) 126,029 123,114 General
partner's interest 11,559 10,024 Holders of incentive distribution
rights 1,296 582 Accumulated other comprehensive loss (776) (802)
Total partners' capital 436,298 425,908 Total liabilities and
partners' capital $723,846 $684,996 Natural Resource Partners L.P.
Reconciliation of GAAP "Net cash provided by operating activities"
To Non-GAAP "Distributable cash flow" (In thousands) (Unaudited)
Three months ended Six months ended June 30, June 30, 2006 2005
2006 2005 Cash flow from operations $32,510 $31,378 $69,160 $57,448
Less scheduled principal payments (9,350) (9,350) (9,350) (9,350)
Less reserves for future principal payments (2,350) (2,350) (4,700)
(4,700) Add reserves used for scheduled principal payments 9,400
9,400 9,400 9,400 Distributable cash flow $30,210 $29,078 $64,510
$52,798 http://www.newscom.com/cgi-bin/prnh/20060109/NRPLOGO
http://photoarchive.ap.org/ DATASOURCE: Natural Resource Partners
L.P. CONTACT: Kathy Hager of Natural Resource Partners L.P.,
+1-713-751-7555, or Web site: http://www.nrplp.com/
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