EX-99.1 2 exhibit991q32016pressrelea.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

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Natural Resource Partners L.P.
1201 Louisiana St., Suite 3400, Houston, TX 77002

NEWS RELEASE

Natural Resource Partners L.P.
Announces 2016 Third Quarter Results

2016 Third Quarter Highlights
•
Net income from continuing operations attributable to the limited partners of $16.2 million, or $1.32 per unit
•
Net cash provided by operating activities of continuing operations of $35.9 million
•
Adjusted EBITDA of $58.9 million

HOUSTON, – November 7, 2016 - Natural Resource Partners L.P. (NYSE:NRP) today reported net income from continuing operations attributable to the limited partners for the three months ended September 30, 2016 of $16.2 million, or $1.32 per unit, an increase of $338.3 million, from a loss of $322.1 million, or $(26.34) per unit, a year earlier. Net cash provided by operating activities from continuing operations was $35.9 million in the third quarter of 2016, a decrease of $11.3 million compared to the prior year. Adjusted EBITDA, a non-GAAP measure, was $58.9 million for the three months ended September 30, 2016, a decrease of $11.5 million compared to the same period in 2015. Excluding impairments and gains on sale of assets in both years, net income from continuing operations attributable to the limited partners was $15.4 million for the quarter ended September 30, 2016 compared to $30.5 million for the same quarter last year. In addition, NRP received $109.9 million in net cash proceeds from the sale of its Williston Basin oil and gas properties (classified as discontinued operations). NRP ended the quarter with $92.4 million in cash. Reconciliations for all non-GAAP items are shown in tables at the end of the release.
 
“Towards the end of the third quarter we began to see the benefits from higher coal prices as a result of the rapidly improving coal market,” said Wyatt Hogan, President and Chief Operating Officer. “Our large exposure to metallurgical coal should benefit NRP as the benchmark metallurgical coal prices have increased over 100% in recent months. In addition, our soda ash and construction aggregates businesses continue to perform in line with our expectations, and provide a steady source of diversified income.”




1

Business Results and Outlook

The table below presents NRP's business results by segment for the three months ended September 30, 2016 and 2015:
 
 
Operating Business Segments
 
 
 
 
 
Coal Royalty and Other (1)
 
 
 
 
 
Corporate and Financing
 
 
 
 
 
Soda Ash
 
VantaCore
 
 
Total
 
 
(In thousands)
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Total revenues and other income
 
$
55,363

 
$
10,753

 
$
31,758

 
$
—

 
$
97,874

Total operating expenses excluding impairments (2)
 
$
17,461

 
$
—

 
$
30,674

 
$
5,135

 
$
53,270

Asset impairments
 
$
5,697

 
$
—

 
$
—

 
$
—

 
$
5,697

Net income (loss) from continuing operations
 
$
32,250

 
$
10,753

 
$
1,039

 
$
(27,623
)
 
$
16,419

Adjusted EBITDA (2)
 
$
47,017

 
$
12,250

 
$
4,800

 
$
(5,132
)
 
$
58,935

Net cash provided by (used in) operating activities of continuing operations
 
$
34,997

 
$
12,250

 
$
4,357

 
$
(15,703
)
 
$
35,901

Net cash provided by (used in) investing activities of continuing operations
 
$
10,691

 
$
—

 
$
(434
)
 
$
—

 
$
10,257

Net cash provided by (used in) financing activities of continuing operations
 
$
—

 
$
—

 
$
—

 
$
24,843

 
$
24,843

Distributable Cash Flow (2)
 
$
45,683

 
$
12,250

 
$
4,093

 
$
(15,703
)
 
$
156,212

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Total revenues and other income
 
$
62,222

 
$
12,617

 
$
39,193

 
$
—

 
$
114,032

Total operating expenses excluding impairments (2)
 
$
19,491

 
$
—

 
$
36,436

 
$
4,233

 
$
60,160

Asset impairments
 
$
361,703

 
$
—

 
$
—

 
$
—

 
$
361,703

Net income (loss) from continuing operations
 
$
(318,972
)
 
$
12,617

 
$
2,757

 
$
(27,138
)
 
$
(330,736
)
Adjusted EBITDA (2)
 
$
55,390

 
$
12,740

 
$
6,535

 
$
(4,233
)
 
$
70,432

Net cash provided by (used in) operating activities of continuing operations
 
$
40,389

 
$
12,762

 
$
5,841

 
$
(11,818
)
 
$
47,174

Net cash provided by (used in) investing activities of continuing operations
 
$
8,422

 
$
—

 
$
(3,057
)
 
$
—

 
$
5,365

Net cash provided by (used in) financing activities of continuing operations
 
$
—

 
$
—

 
$
—

 
$
(11,678
)
 
$
(11,678
)
Distributable Cash Flow (2)
 
$
48,932

 
$
12,762

 
$
4,331

 
$
(11,818
)
 
$
54,207

 
 
 
 
 
(1)
As a result of the sale of our non-operated oil and gas working interest assets in the third quarter of 2016, the Partnership transitioned management responsibilities and reporting of its oil and gas royalty assets into the Coal Royalty and Other operating segment. The Partnership has adjusted the corresponding items of segment information for prior periods to reflect this change and eliminated its oil and gas segment.

(2)
See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.


2

The table below presents NRP's business results by segment for the nine months ended September 30, 2016 and 2015:
 
 
Operating Business Segments
 
 
 
 
 
Coal Royalty and Other (1)
 
 
 
 
 
Corporate and Financing
 
 
 
 
 
Soda Ash
 
VantaCore
 
 
Total
 
 
(In thousands)
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Total revenues and other income
 
$
193,114

 
$
30,742

 
$
88,091

 
$
—

 
$
311,947

Total operating expenses excluding impairments (2)
 
$
47,728

 
$
—

 
$
84,553

 
$
13,346

 
$
145,627

Asset impairments
 
$
7,681

 
$
—

 
$
—

 
$
—

 
$
7,681

Net income (loss) from continuing operations
 
$
137,802

 
$
30,742

 
$
3,441

 
$
(80,582
)
 
$
91,403

Adjusted EBITDA (2)
 
$
168,979

 
$
34,300

 
$
14,454

 
$
(13,317
)
 
$
204,416

Net cash provided by (used in) operating activities of continuing operations
 
$
91,372

 
$
34,300

 
$
16,680

 
$
(67,805
)
 
$
74,547

Net cash provided by (used in) investing activities of continuing operations
 
$
57,834

 
$
—

 
$
(4,324
)
 
$
—

 
$
53,510

Net cash provided by (used in) financing activities of continuing operations
 
$
—

 
$
(7,229
)
 
$
(1,593
)
 
$
(68,047
)
 
$
(76,869
)
Distributable Cash Flow (2)
 
$
149,206

 
$
34,300

 
$
13,111

 
$
(67,805
)
 
$
238,701

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Total revenues and other income
 
$
190,004

 
$
36,739

 
$
107,034

 
$
—

 
$
333,777

Total operating expenses excluding impairments (2)
 
$
58,301

 
$
—

 
$
103,155

 
$
9,823

 
$
171,279

Asset impairments
 
$
365,506

 
$
—

 
$
—

 
$
—

 
$
365,506

Net income (loss) from continuing operations
 
$
(233,803
)
 
$
36,739

 
$
3,879

 
$
(76,783
)
 
$
(269,968
)
Adjusted EBITDA (2)
 
$
156,942

 
$
34,545

 
$
16,378

 
$
(9,807
)
 
$
198,058

Net cash provided by (used in) operating activities of continuing operations
 
$
149,841

 
$
30,778

 
$
19,783

 
$
(68,211
)
 
$
132,191

Net cash provided by (used in) investing activities of continuing operations
 
$
15,546

 
$
—

 
$
(7,417
)
 
$
—

 
$
8,129

Net cash provided by (used in) financing activities of continuing operations
 
$
(2,744
)
 
$
—

 
$
—

 
$
(136,882
)
 
$
(139,626
)
Distributable Cash Flow (2)
 
$
162,972

 
$
30,778

 
$
16,940

 
$
(68,211
)
 
$
142,479

 
 
 
 
 
(1)
As a result of the sale of our non-operated oil and gas working interest assets in the third quarter of 2016, the Partnership transitioned management responsibilities and reporting of its oil and gas royalty assets into the Coal Royalty and Other operating segment. The Partnership has adjusted the corresponding items of segment information for prior periods to reflect this change and eliminated its oil and gas segment.

(2)
See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.









3

Coal Royalty and Other

NRP stands to benefit from recent improvements in both the thermal and metallurgical coal markets. The metallurgical coal markets in particular have improved significantly over the last few months, with global contract and spot prices in excess of $200/ton due to supply shortages caused by China’s recent production cutbacks, operational disruptions in Australia, and the significant number of mine closures in the United States. As a result of the increased pricing, some of the higher-quality coal from our properties that is typically sold into the thermal market is now being sold by our lessees into the metallurgical markets, which command a higher price per ton than the thermal markets. We expect this trend to continue to the extent the metallurgical markets show sustained improvements. We derived approximately 32% of our coal royalty revenues and 37% of the related production from metallurgical coal during the nine months ended September 30, 2016. The domestic thermal coal markets have also shown modest improvements, as production cuts over the last year have rationalized coal stockpiles. Higher recent natural gas prices have also caused thermal coal to be more competitive for electricity generation.
Revenues and other income decreased $6.8 million, or 11%, from $62.2 million in the three months ended September 30, 2015 to $55.4 million in the three months ended September 30, 2016. An $10.9 million reduction in total coal royalty revenues was caused by a 4.0 million ton reduction in sales and a $0.32 per ton decrease in combined average coal royalty revenue per ton. While all regions except the Northern Powder River experienced reduced revenue, the largest decrease occurred in Central Appalachia, which continues to face challenges with respect to thermal coal production.

Net income from continuing operations increased $351.3 million, from a loss of $319.0 million in the three months ended September 30, 2015 to income of $32.3 million in the three months ended September 30, 2016. This increase is primarily related to $361.7 million of impairments taken in the third quarter of 2015.
    
Adjusted EBITDA decreased $8.4 million, or 15%, from $55.4 million in the three months ended September 30, 2015 to $47.0 million in the three months ended September 30, 2016. This decrease was primarily the result of lower revenues from Central Appalachian coal.

Operating cash provided by continuing operations decreased $5.4 million, or 13%, from $40.4 million in the three months ended September 30, 2015 to $35.0 million in the three months ended September 30, 2016.

Soda Ash

Revenues and other income related to our Soda Ash segment decreased $1.8 million, or 14%, from $12.6 million in the three months ended September 30, 2015 to $10.8 million in the three months ended September 30, 2016. This decrease is primarily related to lower international prices compared to the prior year, in addition to higher royalty and G&A costs. These decreases were partially offset by higher production compared to the prior year. For the three months ended September 30, 2016, we received $12.3 million in cash distributions from Ciner Wyoming and for the three months ended September 30, 2015, we received $12.7 million in cash distributions.

VantaCore

VantaCore's construction aggregates mining business is largely dependent on the strength of the local markets that it serves and is seasonal. The largest component, approximately half, of the VantaCore segment is the Laurel operation in southwestern Pennsylvania, that serves producers and service companies operating in the Marcellus and Utica Shales. Low natural gas prices have led to a slowing pace of exploration and development in those areas and impacted Laurel's revenues. This decline has been offset both by increased construction revenue at Laurel and reduced costs across all of the VantaCore operations.

Revenues and other income related to our VantaCore segment decreased $7.4 million, or 19%, from $39.2 million in the three months ended September 30, 2015 to $31.8 million in the three months ended September 30, 2016. While VantaCore's production and revenues have declined in 2016 compared to 2015, it's cost management efforts have enabled the business to maintain its profitability. Tonnage sold declined 14% or 0.3 million tons quarter-over-quarter to 1.8 million tons.

Discontinued Operations

In July 2016, NRP Oil and Gas sold its non-operated oil and gas working interest assets in the Williston Basin and repaid the reserve-based revolving credit facility in full. The net proceeds of $109.9 million from the sale is included in the calculation of distributable cash flow and included in net cash provided by investing activities of discontinued operations on the Consolidated Statement of Cash Flows.

4


Corporate and Financing

Corporate and financing general and administrative expense (including affiliates) includes corporate headquarters, financing and centralized treasury and accounting. These costs increased $0.9 million, or 21% from $4.2 million in the three months ended September 30, 2015 to $5.1 million in the three months ended September 30, 2016 primarily due to increased legal and advisory fees related to the implementation of our long-term plan to strengthen our balance sheet, reduce debt and enhance liquidity. Interest expense, net was essentially flat from $22.9 million in the three months ended September 30, 2015 to $22.5 million in the three months ended September 30, 2016.

In the third quarter, NRP repaid $82.7 million of debt, with $7.7 million in amortization payments on the NRP Operating senior notes and $75.0 million to repay the NRP Oil and Gas revolving credit facility in full.

Subsequent Events

On October 26, 2016, the Board of Directors of GP Natural Resource Partners LLC declared a distribution of $0.45 per unit to be paid on November 14, 2016 to unitholders of record on November 7, 2016.

On November 3, NRP sold its mineral fee interests in Grant County, Oklahoma for $7.5 million in gross cash proceeds.

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 an equity investment in Ciner Wyoming, a trona/soda ash operation, and owns VantaCore, making NRP one of the top 25 aggregates producers in the United States.

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.


5

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, gain on reserve swaps and income to non-controlling interest; plus distributions from equity earnings in unconsolidated investment, interest expense, 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. 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” is a non-GAAP financial measure that we define as net cash provided by operating activities of continuing operations, plus returns of unconsolidated equity investments, proceeds from sales of assets, and returns of long-term contract receivables—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. DCF 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 unitholders and our general partner and repay debt.

“Operating expenses excluding impairments” is a non-GAAP financial measure that we define as total operating expenses less asset impairments. “Operating expenses excluding impairments,” as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Operating expenses excluding impairments should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Operating expenses excluding impairments provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax positions. Operating expenses excluding impairments does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital and other commitments and obligations. Our management team believes Operating expenses excluding impairments is useful in evaluating our financial performance because asset impairments are one-time non-cash charges and excluding these from total operating expenses allows us to better compare results period-over-period. A reconciliation of Operating expenses excluding impairments to total operating expenses is included in the tables attached to this release.

“Net income excluding impairments” is a non-GAAP financial measure that we define as net income (loss) plus asset impairments. Net income excluding impairments, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Net income excluding impairments 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 net income excluding impairments is useful in evaluating our financial performance because asset impairments are irregular non-cash charges and excluding these from net income allows us to better compare results period-over-period. A reconciliation of Net income excluding impairments to net income is included in the tables attached to this release.


6

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, trona and soda ash, construction aggregates, crude oil and natural gas, frac sand and other natural resources; changes in operating conditions and costs; production cuts by our lessees; the pace of development of our oil and natural gas properties; unanticipated geologic problems; our liquidity, leverage and access to capital and financing sources; changes in the legislative or regulatory environment, our ability to consummate planned asset sales and execute on our long-term strategic plan 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 Tables Follow-


7



Natural Resource Partners L.P.
Financial Tables
Consolidated Statements of Comprehensive Income
(in thousands, except per unit data)
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
Revenues and other income:
 
 
 
 
 
 
 
Coal royalty and other
$
27,504

 
$
40,431

 
$
116,336

 
$
112,139

Coal royalty and other—affiliates
21,434

 
19,535

 
49,508

 
70,938

VantaCore
31,757

 
39,616

 
88,081

 
107,058

Equity in earnings of Ciner Wyoming
10,753

 
12,617

 
30,742

 
36,739

Gain on asset sales, net
6,426

 
1,833

 
27,280

 
6,903

Total revenues and other income
97,874

 
114,032

 
311,947

 
333,777

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Operating and maintenance expenses
31,242

 
37,746

 
87,824

 
106,338

Operating and maintenance expenses—affiliates, net
4,062

 
1,744

 
9,948

 
8,090

Depreciation, depletion and amortization
11,929

 
15,666

 
32,181

 
44,512

Amortization expense—affiliate
902

 
771

 
2,328

 
2,516

General and administrative
4,268

 
1,809

 
10,676

 
6,014

General and administrative—affiliates
867

 
2,424

 
2,670

 
3,809

Asset impairments
5,697

 
361,703

 
7,681

 
365,506

Total operating expenses
58,967

 
421,863

 
153,308

 
536,785

 
 
 
 
 
 
 
 
Income (loss) from operations
38,907

 
(307,831
)
 
158,639

 
(203,008
)
 
 
 
 
 
 
 
 
Other income (expense)
 
 
 
 
 
 
 
Interest expense
(22,491
)
 
(22,441
)
 
(66,742
)
 
(65,588
)
Interest expense—affiliate
—

 
(464
)
 
(523
)
 
(1,388
)
Interest income
3

 
—

 
29

 
16

Other expense, net
(22,488
)
 
(22,905
)
 
(67,236
)
 
(66,960
)
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
16,419

 
(330,736
)
 
91,403

 
(269,968
)
Income (loss) from discontinued operations
7,112

 
(269,265
)
 
2,001

 
(279,966
)
Net income (loss)
23,531

 
(600,001
)
 
93,404

 
(549,934
)
Less: net loss attributable to non-controlling interest
—

 
1,244

 
—

 
—

Net income (loss) attributable to NRP
$
23,531

 
$
(598,757
)
 
$
93,404

 
$
(549,934
)
 
 
 
 
 
 
 
 
Net income (loss) attributable to limited partners:
 
 
 
 
 
 
 
Continuing operations
$
16,155

 
$
(322,133
)
 
$
89,771

 
$
(263,799
)
Discontinued operations
6,970

 
(263,880
)
 
1,961

 
(274,367
)
Total
23,125

 
(586,013
)
 
91,732

 
(538,166
)
 
 
 
 
 
 
 
 
Net income (loss) attributable to the general partner:
 
 
 
 
 
 
 
Continuing operations
$
264

 
$
(7,359
)
 
$
1,632

 
$
(6,169
)
Discontinued operations
142

 
(5,385
)
 
40

 
(5,599
)
Total
$
406

 
$
(12,744
)
 
$
1,672

 
$
(11,768
)
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per common unit:
 
 
 
 
 
 
 
Continuing operations
$
1.32

 
$
(26.34
)
 
$
7.34

 
$
(21.57
)
Discontinued operations
0.57

 
(21.57
)
 
0.16

 
(22.43
)
Total
$
1.89

 
$
(47.91
)
 
$
7.50

 
$
(44.00
)
 
 
 
 
 
 
 
 
Weighted average number of common units outstanding
12,232

 
12,232

 
12,232

 
12,232

 
 
 
 
 
 
 
 
Net income (loss)
$
23,531

 
$
(600,001
)
 
$
93,404

 
$
(549,934
)
Add: comprehensive loss from unconsolidated investment and other
(609
)
 
(1,136
)
 
(692
)
 
(1,891
)
Less: comprehensive loss attributable to non-controlling interest
—

 
1,244

 
—

 
—

Comprehensive income (loss) attributable to NRP
$
22,922

 
$
(599,893
)
 
$
92,712

 
$
(551,825
)


8



Natural Resource Partners L.P.
Financial Tables
Consolidated Statements of Cash Flows
(in thousands)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
23,531

 
$
(600,001
)
 
$
93,404

 
$
(549,934
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities of continuing operations:
 
 
 
 
 
 
 
Depreciation, depletion and amortization
11,929

 
15,666

 
32,181

 
44,512

Amortization expense—affiliates
902

 
771

 
2,328

 
2,516

Distributions from equity earnings from unconsolidated investment
12,250

 
12,740

 
34,300

 
34,545

Equity earnings from unconsolidated investment
(10,753
)
 
(12,617
)
 
(30,742
)
 
(36,739
)
Gain on asset sales, net
(6,426
)
 
(1,833
)
 
(27,280
)
 
(6,903
)
(Income) loss from discontinued operations
(7,112
)
 
269,265

 
(2,001
)
 
279,966

Asset impairments
5,697

 
361,703

 
7,681

 
365,506

Gain on reserve swap
—

 
—

 
—

 
(9,290
)
Other, net
2,600

 
2,275

 
6,694

 
(7,774
)
Other, net—affiliates
636

 
(1,787
)
 
848

 
(2,139
)
Change in assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(4,263
)
 
(3,117
)
 
(341
)
 
3,503

Accounts receivable—affiliates
1,559

 
742

 
(712
)
 
2,044

Accounts payable
485

 
(2,849
)
 
635

 
(2,163
)
Accounts payable—affiliates
54

 
1,604

 
29

 
1,563

Accrued liabilities
10,418

 
8,422

 
7,287

 
8,485

Accrued liabilities—affiliates
—

 
457

 
(456
)
 
457

Deferred revenue
(2,558
)
 
(1,464
)
 
(40,762
)
 
6,035

Deferred revenue—affiliates
(4,130
)
 
(3,462
)
 
(8,190
)
 
(3,399
)
Other items, net
1,689

 
659

 
(356
)
 
1,400

Other items, net—affiliates
(607
)
 
—

 
—

 
—

Net cash provided by operating activities of continuing operations
35,901


47,174

 
74,547

 
132,191

Net cash provided by operating activities of discontinued operations
2,358

 
8,066

 
8,173

 
29,159

Net cash provided by operating activities
38,259

 
55,240

 
82,720

 
161,350

Cash flows from investing activities:
 
 
 
 
 
 
 
Proceeds from sale of oil and gas royalty properties
1,617

 
—

 
35,964

 
—

Proceeds from sale of coal and hard mineral royalty properties
8,412

 
1,660

 
18,214

 
3,505

Return of long-term contract receivables—affiliate
397

 
984

 
2,577

 
2,121

Proceeds from sale of plant and equipment and other
343

 
6,229

 
1,186

 
11,484

Acquisition of plant and equipment and other
(512
)
 
(3,508
)
 
(4,431
)
 
(8,581
)
Acquisition of mineral rights
—

 
—

 
—

 
(400
)
Net cash provided by investing activities of continuing operations
10,257

 
5,365

 
53,510

 
8,129

Net cash provided by (used in) investing activities of discontinued operations
110,635

 
(7,296
)
 
106,821

 
(32,581
)
Net cash provided by (used in) investing activities
120,892

 
(1,931
)
 
160,331

 
(24,452
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from loans
—

 
75,000

 
20,000

 
100,000

Repayments of loans
(7,692
)
 
(82,692
)
 
(106,174
)
 
(141,175
)
Distributions to partners
(5,617
)
 
(11,232
)
 
(16,849
)
 
(66,142
)
Distributions to non-controlling interest
—

 
—

 
—

 
(2,744
)
Contributions from (to) discontinued operations
40,226

 
8,000

 
40,226

 
(23,725
)
Debt issue costs and other
(2,074
)
 
(754
)
 
(14,072
)
 
(5,840
)
Net cash used in financing activities of continuing operations
24,843

 
(11,678
)
 
(76,869
)
 
(139,626
)
Net cash provided by (used in) financing activities of discontinued operations
(114,994
)
 
(8,000
)
 
(125,564
)
 
13,808

Net cash used in financing activities
(90,151
)
 
(19,678
)
 
(202,433
)
 
(125,818
)

9



Net increase in cash and cash equivalents
69,000

 
33,631

 
40,618

 
11,080

Cash and cash equivalents of continuing operations at beginning of period
21,391

 
8,804

 
41,204

 
48,971

Cash and cash equivalents of discontinued operations at beginning of period
2,000

 
18,721

 
10,569

 
1,105

Cash and cash equivalents at beginning of period
23,391

 
27,525

 
51,773

 
50,076

Cash and cash equivalents at end of period
92,391

 
61,156

 
92,391

 
61,156

Less: cash and cash equivalents of discontinued operations at end of period
—

 
11,491

 
—

 
11,491

Cash and cash equivalents of continuing operations at end of period
$
92,391

 
$
49,665

 
$
92,391

 
$
49,665

 
 
 
 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
 
 
 
Cash paid for interest
$
12,078

 
$
13,022

 
$
54,749

 
$
55,761

Plant, equipment and mineral rights funded with accounts payable or accrued liabilities
—

 
13

 
—

 
4,465





10



Natural Resource Partners L.P.
Financial Tables
Consolidated Balance Sheets
(in thousands, except unit data)
 
September 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
92,391

 
$
41,204

Accounts receivable, net
44,139

 
43,633

Accounts receivable—affiliates, net
7,057

 
6,345

Inventory
7,160

 
7,835

Prepaid expenses and other
3,707

 
4,268

Current assets held for sale
5,520

 
—

Current assets of discontinued operations
991

 
17,844

Total current assets
160,965

 
121,129

Land
25,020

 
25,022

Plant and equipment, net
52,516

 
60,675

Mineral rights, net
924,181

 
984,522

Intangible assets, net
3,239

 
3,930

Intangible assets, net—affiliate
50,668

 
52,997

Equity in unconsolidated investment
257,661

 
261,942

Long-term contracts receivable—affiliate
44,224

 
47,359

Other assets
1,898

 
1,173

Other assets—affiliate
1,034

 
1,124

Non-current assets of discontinued operations
—

 
110,162

Total assets
$
1,521,406

 
$
1,670,035

LIABILITIES AND CAPITAL
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
6,223

 
$
5,022

Accounts payable—affiliates
829

 
801

Accrued liabilities
44,816

 
44,997

Accrued liabilities—affiliates
—

 
456

Current portion of long-term debt, net
158,597

 
80,745

Current liabilities of discontinued operations
835

 
4,388

Total current liabilities
211,300

 
136,409

Deferred revenue
40,050

 
80,812

Deferred revenue—affiliates
74,663

 
82,853

Long-term debt, net
1,041,984

 
1,186,681

Long-term debt, net—affiliate
—

 
19,930

Other non-current liabilities
4,404

 
5,171

Non-current liabilities of discontinued operations
—

 
85,237

Commitments and contingencies
 
 
 
Partners’ capital:
 
 
 
Common unitholders’ interest (12,232,006 units outstanding)
154,315

 
79,094

General partner’s interest
928

 
(606
)
Accumulated other comprehensive loss
(2,844
)
 
(2,152
)
Total partners’ capital
152,399

 
76,336

Non-controlling interest
(3,394
)
 
(3,394
)
Total capital
149,005

 
72,942

Total liabilities and capital
$
1,521,406

 
$
1,670,035



11



Natural Resource Partners L.P.
Financial Tables
Operating Statistics - Coal Royalty and Other
(in thousands except per ton data)
 
 
 
 
 
For the Three Months Ended
September 30,
 
For the Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
Coal production (tons)
 
 
 
 
 
 
 
Appalachia
 
 
 
 
 
 
 
Northern (1)
(356
)
 
1,518

 
479

 
7,581

Central
3,348

 
4,642

 
10,046

 
13,402

Southern
683

 
851

 
2,201

 
3,000

Total Appalachia
3,675

 
7,011

 
12,726

 
23,983

Illinois Basin
2,411

 
2,722

 
6,056

 
8,265

Northern Powder River Basin
1,318

 
1,301

 
2,734

 
3,497

Gulf Coast
—

 
361

 
—

 
778

Total coal production
7,404

 
11,395

 
21,516

 
36,523

 
 
 
 
 
 
 
 
Coal royalty revenue per ton
 
 
 
 
 
 
 
Appalachia
 
 
 
 
 
 
 
Northern
N/A (1)

 
$
0.50

 
$
4.19

 
$
0.28

Central
3.28

 
3.76

 
3.22

 
3.93

Southern
3.83

 
4.18

 
3.37

 
4.55

Illinois Basin
3.63

 
4.05

 
3.57

 
4.00

Northern Powder River Basin
3.27

 
2.80

 
3.04

 
2.64

Gulf Coast
—

 
4.26

 
—

 
3.85

 
 
 
 
 
 
 
 
Coal royalty revenues
 
 
 
 
 
 
 
Appalachia
 
 
 
 
 
 
 
Northern (1)
$
370

 
$
763

 
$
2,005

 
$
2,105

Central
10,994

 
17,440

 
32,331

 
52,616

Southern
2,618

 
3,561

 
7,419

 
13,646

Total Appalachia
13,982

 
21,764

 
41,755

 
68,367

Illinois Basin
8,745

 
11,015

 
21,611

 
33,020

Northern Powder River Basin
4,314

 
3,641

 
8,314

 
9,219

Gulf Coast
—

 
1,537

 
—

 
2,996

Total coal royalty revenue
$
27,041

 
$
37,957

 
$
71,680

 
$
113,602

 
 
 
 
 
 
 
 
Other revenues
 
 
 
 
 
 
 
Override revenue
$
615

 
$
433

 
$
1,482

 
$
2,195

Transportation and processing fees
6,127

 
5,338

 
15,663

 
16,400

Minimums recognized as revenue
9,755

 
3,234

 
60,455

 
12,480

Lease assignment fee
—

 
6,000

 
—

 
6,000

Gain on reserve swap
—

 
—

 
—

 
9,290

Wheelage
919

 
401

 
1,797

 
2,117

Hard mineral royalty revenues
700

 
3,118

 
2,194

 
7,552

Oil and gas royalty revenues
1,283

 
969

 
2,538

 
3,476

Property tax revenue
2,567

 
2,528

 
8,899

 
8,602

Other
(69
)
 
(12
)
 
1,136

 
1,363

Total other revenues
$
21,897

 
$
22,009

 
$
94,164

 
$
69,475

Coal royalty and other income
48,938

 
59,966

 
165,844

 
183,077

Gain on coal royalty and other segment asset sales
6,425

 
2,256

 
27,270

 
6,927

Total coal royalty and other segment revenues and other income
$
55,363

 
$
62,222

 
$
193,114

 
$
190,004

 
 
 
 
 
(1) Northern Appalachia was impacted by a prior period adjustment of 0.5 million tons and less than $0.1 million in royalty revenue primarily related to the Hibbs Run mine that ceased production during 2016. Absent this adjustment, production in the Northern Appalachia region was 0.2 million tons, average revenue per ton was $1.97 and revenue was $0.4 million.






12



Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Distributable Cash Flow
(in thousands)
 
 
 
 
 
Coal Royalty and Other
 
 
 
 
 
Corporate and Financing
 
 
 
 
 
Soda Ash
 
VantaCore
 
 
Total
 
 
(Unaudited)
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities of continuing operations
 
$
34,997

 
$
12,250

 
$
4,357

 
$
(15,703
)
 
$
35,901

Add: return on long-term contract receivables—affiliate
 
397

 
—

 
—

 
—

 
397

Add: proceeds from sale of PP&E
 
265

 
—

 
78

 
—

 
343

Add: proceeds from sale of mineral rights
 
10,029

 
—

 
—

 
—

 
10,029

Add: proceeds from sale of assets included in discontinued operations
 
—

 
—

 
—

 
—

 
109,889

Less: maintenance capital expenditures
 
(5
)
 
—

 
(342
)
 
—

 
(347
)
DCF
 
$
45,683


$
12,250


$
4,093


$
(15,703
)

$
156,212

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities of continuing operations
 
$
40,389

 
$
12,762

 
$
5,841

 
$
(11,818
)
 
$
47,174

Add: return on long-term contract receivables—affiliate
 
984

 
—

 
—

 
—

 
984

Add: proceeds from sale of PP&E
 
6,228

 
—

 
1

 
—

 
6,229

Add: proceeds from sale of mineral rights
 
1,660

 
—

 
—

 
—

 
1,660

Less: maintenance capital expenditures
 
(329
)
 
—

 
(1,511
)
 
—

 
(1,840
)
DCF
 
$
48,932

 
$
12,762

 
$
4,331

 
$
(11,818
)
 
$
54,207

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities of continuing operations
 
$
91,372

 
$
34,300

 
$
16,680

 
$
(67,805
)
 
$
74,547

Add: return on long-term contract receivables—affiliate
 
2,577

 
—

 
—

 
—

 
2,577

Add: proceeds from sale of PP&E
 
1,084

 
—

 
102

 
—

 
1,186

Add: proceeds from sale of mineral rights
 
54,178

 
—

 
—

 
—

 
54,178

Add: proceeds from sale of assets included in discontinued operations
 
—

 
—

 
—

 
—

 
109,889

Less: maintenance capital expenditures
 
(5
)
 
—

 
(3,671
)
 
—

 
(3,676
)
DCF
 
$
149,206

 
$
34,300

 
$
13,111

 
$
(67,805
)
 
$
238,701

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities of continuing operations
 
$
149,841

 
$
30,778

 
$
19,783

 
$
(68,211
)
 
$
132,191

Add: return on long-term contract receivables—affiliate
 
2,121

 
—

 
—

 
—

 
2,121

Add: proceeds from sale of PP&E
 
10,578

 
—

 
906

 
—

 
11,484

Add: proceeds from sale of mineral rights
 
3,505

 
—

 
—

 
—

 
3,505

Less: maintenance capital expenditures
 
(329
)
 
—

 
(3,749
)
 
—

 
(4,078
)
Less: distributions to non-controlling interest
 
(2,744
)
 
—

 
—

 
—

 
(2,744
)
DCF
 
$
162,972

 
$
30,778

 
$
16,940

 
$
(68,211
)
 
$
142,479


13



Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Adjusted EBITDA
(in thousands)
 
 
 
 
 
Coal Royalty and Other
 
 
 
 
 
Corporate and Financing
 
 
 
 
 
Soda Ash
 
VantaCore
 
 
Total
 
 
(Unaudited)
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
32,250

 
$
10,753

 
$
1,039

 
$
(27,623
)
 
$
16,419

Less: equity earnings from unconsolidated investment
 
—

 
(10,753
)
 
—

 
—

 
(10,753
)
Add: distributions from unconsolidated investment
 
—

 
12,250

 
—

 
—

 
12,250

Add: depreciation, depletion and amortization
 
9,070

 
—

 
3,761

 
—

 
12,831

Add: asset impairments
 
5,697

 
—

 
—

 
—

 
5,697

Add: interest expense
 
—

 
—

 
—

 
22,491

 
22,491

Adjusted EBITDA

$
47,017


$
12,250


$
4,800


$
(5,132
)

$
58,935

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
(318,972
)
 
$
12,617

 
$
2,757

 
$
(27,138
)
 
$
(330,736
)
Less: equity earnings from unconsolidated investment
 
—

 
(12,617
)
 
—

 
—

 
(12,617
)
Add: distributions from unconsolidated investment
 
—

 
12,740

 
—

 
—

 
12,740

Add: depreciation, depletion and amortization
 
12,659

 
—

 
3,778

 
—

 
16,437

Add: asset impairments
 
361,703

 
—

 
—

 
—

 
361,703

Add: interest expense
 
—

 
—

 
—

 
22,905

 
22,905

Adjusted EBITDA
 
$
55,390

 
$
12,740

 
$
6,535

 
$
(4,233
)
 
$
70,432

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
137,802

 
$
30,742

 
$
3,441

 
$
(80,582
)
 
$
91,403

Less: equity earnings from unconsolidated investment
 
—

 
(30,742
)
 
—

 
—

 
(30,742
)
Add: distributions from unconsolidated investment
 
—

 
34,300

 
—

 
—

 
34,300

Add: depreciation, depletion and amortization
 
23,496

 
—

 
11,013

 
—

 
34,509

Add: asset impairments
 
7,681

 
—

 
—

 
—

 
7,681

Add: interest expense
 
—

 
—

 
—

 
67,265

 
67,265

Adjusted EBITDA
 
$
168,979

 
$
34,300

 
$
14,454

 
$
(13,317
)
 
$
204,416

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
(233,803
)
 
$
36,739

 
$
3,879

 
$
(76,783
)
 
$
(269,968
)
Less: equity earnings from unconsolidated investment
 
—

 
(36,739
)
 
—

 
—

 
(36,739
)
Less: gain on reserve swap
 
(9,290
)
 
—

 
—

 
—

 
(9,290
)
Add: distributions from unconsolidated investment
 
—

 
34,545

 
—

 
—

 
34,545

Add: depreciation, depletion and amortization
 
34,529

 
—

 
12,499

 
—

 
47,028

Add: asset impairments
 
365,506

 
—

 
—

 
—

 
365,506

Add: interest expense
 
—

 
—

 
—

 
66,976

 
66,976

Adjusted EBITDA
 
$
156,942

 
$
34,545

 
$
16,378

 
$
(9,807
)
 
$
198,058


14



Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Operating Expenses Excluding Impairments
(in thousands)
 
 
 
 
 
Coal Royalty and Other
 
 
 
 
 
Corporate and Financing
 
 
 
 
 
Soda Ash
 
VantaCore
 
 
Total
 
 
(Unaudited)
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
23,158

 
$
—

 
$
30,674

 
$
5,135

 
$
58,967

Less: asset impairments
 
5,697

 
—

 
—

 
—


5,697

Operating expenses excluding impairments
 
$
17,461


$
—


$
30,674


$
5,135

 
$
53,270

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
381,194

 
$
—

 
$
36,436

 
$
4,233

 
$
421,863

Less: asset impairments
 
361,703

 
—

 
—

 
—

 
361,703

Operating expenses excluding impairments
 
$
19,491


$
—


$
36,436


$
4,233

 
$
60,160

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
55,409

 
—

 
84,553

 
$
13,346

 
$
153,308

Less: asset impairments
 
7,681

 
—

 
—

 
—

 
7,681

Operating expenses excluding impairments
 
$
47,728

 
$
—

 
$
84,553

 
$
13,346

 
$
145,627

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
423,807

 
$
—

 
$
103,155

 
$
9,823

 
$
536,785

Less: asset impairments
 
365,506

 
—

 
—

 
—

 
365,506

Operating expenses excluding impairments
 
$
58,301

 
$
—

 
$
103,155

 
$
9,823

 
$
171,279

Non-cash impairment charges attributable to the limited partners
(in thousands)
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
(Unaudited)
Asset impairments, as reported
 
5,697

 
361,703

 
7,681

 
365,506

Asset impairments attributable to the limited partners
 
5,583

 
354,469

 
7,527

 
358,196

Asset impairments attributable to the general partners
 
114

 
7,234

 
154

 
7,310

 
 
 
 
 
 
 
 
 
Gain on sale of assets attributable to the limited partners
(in thousands)
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
(Unaudited)
Gain on sale of assets, as reported
 
6,426

 
1,833

 
27,280

 
6,903

Gain on sale of assets attributable to the limited partners
 
6,297

 
1,796

 
26,734

 
6,765

Gain on sale of assets attributable to the general partners
 
129

 
37

 
546

 
138

 
 
 
 
 
 
 
 
 


15



Natural Resource Partners L.P.
Reconciliation of Non-GAAP Measures
Net Income from Continuing Operations and Net Income from Continuing Operations Per Unit Attributable to the Limited Partners Excluding Impairments and Asset Sales
(in thousands)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
(Unaudited)
Net income (loss) from continuing operations attributable to the limited partners, as reported
 
$
16,155

 
$
(322,133
)
 
$
89,771

 
$
(263,799
)
Gain on sale of assets attributable to the limited partners
 
(6,297
)
 
(1,796
)
 
(26,734
)
 
(6,765
)
Asset impairments attributable to the limited partners
 
5,583

 
354,469

 
7,527

 
358,196

Net income from continuing operations attributable to the limited partners excluding impairments and gain on asset sales
 
$
15,441

 
$
30,540

 
$
70,564

 
$
87,632

Weighted average number of common units outstanding:
 
12,232

 
12,232

 
12,232

 
12,232

Net income from continuing operations per unit attributable to the limited partners excluding impairments and gain on asset sales
 
$
1.26

 
$
2.50

 
$
5.77

 
$
7.16


-end-


16