EX-99.1 2 h33009exv99w1.htm PRESS RELEASE DATED FEBRUARY 14, 2006 exv99w1
 

     
Natural Resource Partners L.P.
   (NRP LOGO)
601 Jefferson St., Suite 3600, Houston, TX 77002
   
NEWS RELEASE
Natural Resource Partners L.P.
Reports Record 2005 and
Strong Fourth Quarter Results
Record 2005 Results:
  •   Net income increases 56% over 2004 to a record $91.8 million or $3.39 per unit
 
  •   Coal royalty revenues increase 33% over 2004 to a record $142.1 million
 
  •   Distributable cash flow increases 38% over 2004 to a record $112.3 million
Fourth Quarter Highlights:
  •   Net income increases 87% over 4Q 2004 to $25.0 million or $0.91 per unit
 
  •   Coal royalty revenues increase 38% over 4Q 2004 to $37.4 million
 
  •   Distributable cash flow increases 29% over 4Q 2004 to $27.4 million
 
  •   Distribution per unit increases 15% over 4Q 2004 to $0.7625
HOUSTON, February 14, 2006 – Natural Resource Partners L.P. (NYSE:NRP and NYSE:NSP) today reported record net income of $91.8 million for 2005, a 56% increase over the $59.0 million reported for 2004. Net income per unit rose 48% to $3.39 per unit. Distributable cash flow for 2005 rose 38% to a record $112.3 million from $81.5 million last year.
For the fourth quarter 2005, NRP reported that net income improved by 87% to $25.0 million from $13.3 million for the same period last year, while distributable cash flow rose 29% to $27.4 million from $21.2 million in 2004. Net income per unit rose 82% to $0.91 per unit from $0.50 per unit for the quarter.
“Increased production from our properties together with higher prices realized by our lessees combined to produce a record year for NRP and our unitholders,” said Chief Operating Officer Nick Carter. “We are particularly excited about the acquisitions we made during 2005, which have performed exceptionally well. They give us more diversity in our cash flow and provide a strong foundation for our future. As a result of the continued strong coal market, we were able to use $30 million of our cash to help fund these acquisitions while continuing to regularly increase our quarterly distributions to our unitholders.”

 

 

     
NRP Reports Record 2005 Results
  Page 2 of 8
“We now own in excess of two billion tons of coal, giving us a current reserve life of approximately 37 years and we are constantly looking for opportunities to increase those reserves through accretive acquisitions.”
“As we look to the future, our goal is to continue to grow the partnership through acquisitions and by actively managing and developing our current assets. Consistent growth will permit us to continue to increase our distributions to our partners,” said Corbin J. Robertson, Jr., Chairman and Chief Executive Officer.
2005 Financial Results
NRP’s total revenues increased 31% to a record $159.1 million in 2005 from $121.4 million for 2004. Coal royalty revenues for 2005 rose 33% to $142.1 million compared to $106.5 million last year. This increase results from both a 20% increase in average per ton royalty revenue to $2.65 and an 11% increase in production to 53.6 million tons. Appalachian production increased 7%, the Illinois Basin production decreased 11% and Northern Powder River Basin production increased approximately 85%. For 2005, approximately 31% of NRP’s coal royalty revenues and 27% of its production were from metallurgical coal, which is normally priced higher than steam coal. Other revenue rose 41% to $6.5 million primarily due to significant increases in both wheelage income and oil and gas income.
Total expenses increased to $57.6 million, or 14% over 2004. Depreciation, depletion and amortization increased 12% as a result of higher production. General and administrative expenses increased 7% or $0.8 million over last year due to increased costs associated with managing a larger number of properties. Property, franchise and other taxes increased $1.3 million due to franchise taxes in additional states in which the partnership now operates. Coal royalty and override payments increased $1.3 million mainly due to increased override payments reflecting increased coal prices.
Fourth Quarter 2005 Financial Results
Fourth quarter revenues grew 35% to $42.4 million compared to $31.4 million for the same period last year. Production increases of 21% or 2.4 million tons predominantly in Northern Appalachia and the Northern Powder River Basin together with increases in average coal royalty revenues per ton of 14% to $2.66 from $2.33 helped raise coal royalty revenues by 38% to $37.4 million over the fourth quarter 2004.
Fourth quarter 2005 total expenses were basically flat at $14.8 million when compared with last year at $14.7 million. However, there were significant changes both in depreciation, depletion and amortization and general and administrative expenses. Depreciation, depletion and amortization grew by $1.0 million to $9.0 million due to higher depletion on properties recently acquired. General and administrative expenses decreased by $1.5 million for the fourth quarter compared to last year mainly due to decreases in the incentive compensation accrual. Property, franchise and other taxes increased by $0.4 million largely as a result of properties acquired.

 

 

     
NRP Reports Record 2005 Results
  Page 3 of 8
Distributions
On January 19, 2005, NRP announced its tenth consecutive increase in its quarterly distribution, raising the distribution to $0.7625 per unit, or $3.05 per unit on an annualized basis. This represents a 15% increase in Natural Resource Partners’ distributions compared to the fourth quarter of 2004.
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 khager@nrplp.com. 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.
06-04
- financials follow -

 

 

     
NRP Reports Record 2005 Results
  Page 4 of 8
Natural Resource Partners L.P.
Operating Statistics
(In thousands except per ton data)
(Unaudited)
                                 
    Three months ended     Year ended  
    December 31,     December 31,  
    2005     2004     2005     2004  
Coal royalty revenues:
                                
Appalachia
                               
Northern
   $ 4,539     $ 2,045     $ 11,306     $ 7,084  
Central
     22,986       19,263       93,008       76,583  
Southern
     6,634       3,623       25,089       14,874  
 
                        
Total Appalachia
   $ 34,159     $ 24,931     $ 129,403     $ 98,541  
Illinois Basin
     932       1,240       4,288       3,852  
Northern Powder River Basin
     2,292       943       8,446       4,063  
 
                        
 
                                
Total
   $ 37,383     $ 27,114     $ 142,137     $ 106,456  
 
                        
 
                                
Coal Royalty Production (tons):
                                
Appalachia
                               
Northern
     2,400       1,252       5,977       4,179  
Central
     7,801       7,430       32,790       32,702  
Southern
     1,597       1,179       6,263       5,208  
 
                        
Total Appalachia
     11,798       9,861       45,030       42,089  
Illinois Basin
     583       898       2,781       3,138  
Northern Powder River Basin
     1,651       881       5,795       3,130  
 
                        
 
                                
Total
     14,032       11,640       53,606       48,357  
 
                        
 
                                
Average royalty revenue per ton:
                                
Appalachia
                               
Northern
   $ 1.89     $ 1.63     $ 1.89     $ 1.70  
Central
     2.95       2.59       2.84       2.34  
Southern
     4.15       3.07       4.01       2.86  
 
                        
Total Appalachia
     2.90       2.53       2.87       2.34  
Illinois Basin
     1.60       1.38       1.54       1.23  
Northern Powder River Basin
     1.39       1.07       1.46       1.30  
 
                        
 
                                
Total
   $ 2.66     $ 2.33     $ 2.65     $ 2.20  
 
                        

 

 

     
NRP Reports Record 2005 Results
  Page 5 of 8
Natural Resource Partners L.P.
Consolidated Statements of Income
(In thousands, except per unit data)
                                 
    Three months ended     Year ended  
    December 31,     December 31,  
    2005     2004     2005     2004  
 
   (unaudited)   (unaudited)   (unaudited)        
Revenues:
                                
Coal royalties
   $ 37,383     $ 27,114     $ 142,137     $ 106,456  
Property taxes
     1,983       1,388       6,516       5,349  
Minimums recognized as revenue
     344       483       1,709       1,763  
Override royalties
     833       832       2,144       3,222  
Other
     1,831       1,535       6,547       4,642  
 
                        
Total revenues
     42,374       31,352       159,053       121,432  
Operating costs and expenses:
                                
Depreciation, depletion and amortization
     9,005       7,994       33,730       30,077  
General and administrative
     2,318       3,847       12,319       11,503  
Property, franchise and other taxes
     2,404       2,002       8,142       6,835  
Coal royalty and override payments
     1,023       809       3,392       2,045  
 
                        
Total operating costs and expenses
     14,750       14,652       57,583       50,460  
 
                        
Income from operations
     27,624       16,700       101,470       70,972  
Other income (expense)
                               
Interest expense
     (3,128 )     (2,400 )     (11,044 )     (11,192 )
Interest income
     459       159       1,413       349  
Loss on early extinguishment of debt
     —       (1,135 )     —       (1,135 )
 
                        
Net income
   $ 24,955     $ 13,324     $ 91,839     $ 58,994  
 
                        
Net income attributable to: (1)
                               
General partner
   $ 1,403     $ 458     $ 4,491     $ 1,705  
 
                        
Holders of incentive distribution rights
   $ 486     $ 103     $ 1,429     $ 281  
 
                        
Limited partners
   $ 23,066     $ 12,763     $ 85,919     $ 57,008  
 
                        
Basic and diluted net income per limited partner unit:
                                
Common
   $ 0.91     $ 0.50     $ 3.39     $ 2.29  
 
                        
Subordinated
   $ 0.91     $ 0.50     $ 3.39     $ 2.29  
 
                        
Weighted average number of units outstanding:
                                
Common
     15,407       13,987       14,345       13,447  
 
                        
Subordinated
     9,934       11,354       10,996       11,354  
 
                        
 
(1)   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.

 

 

     
NRP Reports Record 2005 Results
  Page 6 of 8
Natural Resource Partners L.P.
Statements of Cash Flows
(In thousands)
                                 
    Three months ended     Year ended  
    December 31,     December 31,  
    2005     2004     2005     2004  
 
   (unaudited)   (unaudited)   (unaudited)        
Cash flows from operating activities:
                                
Net income
   $ 24,955     $ 13,324     $ 91,839     $ 58,994  
Adjustments to reconcile net income to net cash provided by operating activities:
                                
Depreciation, depletion and amortization
     9,005       7,994       33,730       30,077  
Non-cash interest charge
     96       56       318       932  
Loss on early extinguishment of debt
     —       1,135       —       1,135  
Change in operating assets and liabilities:
                                
Accounts receivable
     (3,847 )     (611 )     (6,869 )     (4,093 )
Other assets
     (332 )     (847 )     (47 )     236  
Accounts payable
     6       253       84       (47 )
Accrued interest
     (1,286 )     (2,181 )     1,268       (415 )
Deferred revenue
     1,020       2,703       (996 )     793  
Accrued incentive plan expenses
     (943 )     1,229       1,670       2,574  
Property, franchise and other taxes payable
     1,060       510       678       661  
 
                        
Net cash provided by operating activities
     29,734       23,565       121,675       90,847  
 
                        
 
                                
Cash flows from investing activities:
                                
Acquisition of land, coal and other mineral rights
     (29,578 )     —       (99,683 )     (77,733 )
 
                              
Acquisition of plant and equipment
     —       —       (6,019 )     —  
 
                        
Net cash used in investing activities
     (29,578 )     —       (105,702 )     (77,733 )
 
                        
 
                                
Cash flows from financing activities:
                                
Proceeds from loans
     19,000       —       125,000       75,500  
Deferred financing costs
     (861 )     (969 )     (861 )     (969 )
Repayments of loans
     —       —       (59,350 )     (111,850 )
Distributions to partners
     (20,060 )     (16,779 )     (75,173 )     (60,393 )
Contributions by general partner
     —       —       —       2,147  
Proceeds from sale of 5,250,000 common units, net of transaction costs
     —       —       —       200,355  
Redemption of 2,616,752 common units, net
     —       —       —       (100,121 )
Redemption of fractional units upon conversion of subordinated units
     (1 )     —       (1 )     —  
 
                        
Net cash (used in) provided by financing activities
     (1,922 )     (17,748 )     (10,385 )     4,669  
 
                        
Net (decrease) or increase in cash and cash equivalents
     (1,766 )     5,817       5,588       17,783  
Cash and cash equivalents at beginning of period
     49,457       36,286       42,103       24,320  
 
                        
Cash and cash equivalents at end of period
   $ 47,691     $ 42,103     $ 47,691     $ 42,103  
 
                        
 
                                
SUPPLEMENTAL INFORMATION:
                                
Cash paid during the period for interest
   $ 4,320     $ 4,452     $ 9,459     $ 10,603  
 
                        

 

 

     
NRP Reports Record 2005 Results
  Page 7 of 8
Natural Resource Partners L.P.
Consolidated Balance Sheets
(In thousands, except for unit information)
 
                 
    December 31,     December 31,  
    2005     2004  
    (Unaudited)          
ASSETS
Current assets:
                
Cash and cash equivalents
   $ 47,691     $ 42,103  
Accounts receivable
     21,946       15,058  
Accounts receivable – affiliate
     6       25  
Other
     833       786  
 
            
Total current assets
     70,476       57,972  
Land
     14,123       13,721  
Plant and equipment, net
     5,924       —  
Coal and other mineral rights, net
     590,459       523,844  
Loan financing costs, net
     2,431       1,837  
Other assets, net
     1,583       2,552  
 
            
Total assets
   $ 684,996     $ 599,926  
 
            
 
                
LIABILITIES AND PARTNERS’ CAPITAL
 
                
Current liabilities:
                
Accounts payable
   $ 677     $ 576  
Accounts payable – affiliate
     88       105  
Current portion of long-term debt
     9,350       9,350  
Accrued incentive plan expenses – current portion
     1,105       1,559  
Property, franchise and other taxes payable
     4,138       3,460  
Accrued interest
     1,534       266  
 
            
Total current liabilities
     16,892       15,316  
Deferred revenue
     14,851       15,847  
Accrued incentive plan expenses
     5,395       3,271  
Long-term debt
     221,950       156,300  
Partners’ capital:
                
Common units (outstanding: 16,825,305 in 2005, 13,986,906 in 2004 )
     292,990       243,814  
Subordinated units (outstanding: 8,515,228 in 2005, 11,353,658 in 2004)
     123,114       157,324  
General partner’s interest
     10,024       8,802  
Holders of incentive distribution rights
     582       105  
Accumulated other comprehensive loss
     (802 )     (853 )
 
            
Total partners’ capital
     425,908       409,192  
 
            
Total liabilities and partners’ capital
   $ 684,996     $ 599,926  
 
            

 

 

     
NRP Reports Record 2005 Results
  Page 8 of 8
Natural Resource Partners L.P.
Reconciliation of GAAP “Net cash provided by operating activities”
To Non-GAAP “Distributable cash flow”
(in thousands)
                                 
    Three months ended     Year ended    
    December 31,     December 31,  
    2005     2004     2005     2004  
            (Unaudited)          
Cash flow from operations
   $ 29,734     $ 23,565     $ 121,675     $ 90,847  
Less scheduled principal payments
     —       —       (9,350 )     (9,350 )
Less reserves for future principal payments
     (2,350 )     (2,350 )     (9,400 )     (9,400 )
Add reserves used for scheduled principal payments
     —       —       9,400       9,400  
 
                        
 
                              
Distributable cash flow
   $ 27,384     $ 21,215     $ 112,325     $ 81,497  
 
                        
-end-