Highlights: HOUSTON, May 3 /PRNewswire-FirstCall/ -- Natural
Resource Partners L.P. (NYSE: NRP; NSP) today reported
distributable cash flow of $28.3 million, down from the $34.3
million reported for the first quarter 2006. Net income decreased
to $21.9 million, or $0.28 per unit, for the first quarter of 2007,
compared to $28.5 million, or $0.51 per unit, for the first quarter
of 2006. Net income in the first quarter 2006 included a $2.2
million gain from the sale of timber assets. Although revenues were
up 8%, the issuance of equity in the first quarter of 2007 for the
Cline and Dingess-Rum acquisitions accounts for a significant
portion of the difference in the net income per unit. "NRP
anticipated that the first quarter would be its weakest quarter of
the year due to the start-up of the Cline operations in the
Illinois Basin and Northern Appalachia. However, our results for
this quarter were less than expected due to slower than anticipated
development at Cline, together with tough operating conditions at a
longwall mine on the Dingess-Rum property," said Nick Carter,
President and Chief Operating Officer. "We believe that the
operations we recently acquired will be significant contributors to
NRP's future and we are reaffirming our current 2007 guidance for
net income of $1.42 to $1.58 per unit. We will continue to monitor
our lessees' production and sales prices during the second quarter
and update our annual guidance if necessary." Highlights 1Q07 4Q06
1Q06 (in thousands except per ton and per unit) Coal Production:
13,510 11,905 14,015 Coal Royalty Revenues: $40,973 $35,213 $39,110
Average coal royalty revenue per ton: $3.03 $2.96 $2.79 Total
revenues: $50,207 $41,672 $46,528 Net income: $21,881 $23,248
$28,524 Average units outstanding in quarter: 63,295 50,681 50,681
Net income per unit: $0.28 $0.38 $0.51 Distributable cash flow:
$28,343 $33,749 $34,300 First Quarter 2007 Compared to First
Quarter 2006 Total revenues increased 8% to $50.2 million for the
first quarter of 2007, compared to $46.5 million reported for the
same period last year. First quarter 2007 coal royalty revenues
increased 5% to $41.0 million from $39.1 million last year as the
partnership continued to experience increased coal royalty revenues
per ton in all regions. Coal royalty revenues increased due to a 9%
improvement in the average coal royalty revenue per ton to $3.03 in
the first quarter 2007 from $2.79 for the same period last year.
These increases in price more than offset the 4% decrease in
production volumes from last year's comparable quarter. Total
production for the partnership was 13.5 million tons compared to
14.0 million tons last year. Central Appalachia increased due to
acquisitions, while production in all other regions was down. In
the first quarter, the properties acquired in the Cline acquisition
experienced delays while ramping up to full production. Similarly,
one of the longwall mines acquired in the Dingess-Rum acquisition
encountered difficult operating conditions in the first quarter,
which contributed to lower than expected production. NRP
anticipates that this mine will return to full operation. NRP
remains confident that these projects will be large positive
contributors to revenues through the rest of the year. Aggregate
royalties, coal processing fees, and transportation fees, all new
lines of business for NRP, generated approximately $3.1 million in
the first quarter of 2007. Coal processing and transportation
revenues are expected to increase over the remainder of the year as
additional production is forecasted, particularly from the Cline
properties. Oil and gas revenues decreased from $1.7 million in the
first quarter 2006 to $1.3 million in 2007, predominantly due to
lease bonus payments received in the first quarter of 2006 on
several new leases. Other revenues also decreased year-over-year
due to a $2.2 million gain on the sale of timber properties
reported during the comparable 2006 period. Total expenses
increased 46% to $21.8 million from $14.9 million for the first
quarter 2006. General and administrative expenses increased to $6.6
million from $4.1 million due predominantly to accruals on long
term incentive plans and additional staff added to handle NRP's
latest acquisitions. Property, franchise and other taxes increased
$0.9 million mainly due to taxes on properties acquired since last
year, a significant portion of which are offset by reimbursements
from our lessees which are recorded in revenues. Depreciation,
depletion and amortization, a non-cash item, accounted for $3.9
million of the increase in total expenses. Interest expense
increased $3.7 million over last year to $7.3 million due to
additional borrowings associated with acquisitions completed during
the last year. Acquisitions and Capital Structure During the first
quarter of 2007, NRP issued an additional 13,710,072 units and paid
$12.7 million for property acquisitions. This increase in the
number of units has had a dilutive effect on the first quarter 2007
results, but will become accretive as those properties increase
production. NRP anticipates that these acquisitions will provide
significant long-term growth potential. Also during the quarter,
NRP completed a private placement of $225 million of senior
unsecured notes with a 10-year average life that fixed interest
rates at 5.82% until 2024. Proceeds from the private placement were
used to repay the revolving credit facility. With the issuance of
new units in the first quarter, NRP has lowered its debt to total
capitalization to 38% from 51% at December 31, 2006, rebalancing
its debt to equity and strengthening its balance sheet. Market
Outlook Coal royalty revenues from our Appalachian properties
represented 90% of NRP's total coal royalty revenues for the
quarter ended March 31, 2007, and thus a significant portion of
NRP's total revenue is correlated with Appalachian coal prices.
While Appalachian spot coal prices declined during 2006 with a
relatively mild summer and higher utility stockpiles, NRP has not
seen any negative impact on the royalty per ton that it received
from its Appalachian properties in the first quarter due to the
longer term sales contract structures of NRP's lessees. "We have
seen signs that the price environment in Appalachia has firmed up
and will continue to move in a positive direction over the
remainder of 2007. While year over year production was down, we saw
a 13% increase in production this quarter from the fourth quarter
2006 and a $0.07 per ton increase in the average royalty revenue
per ton," said Nick Carter. "There has been some curtailment in
production in Central Appalachia and some planned moves of
production from our properties to adjacent property owned by other
parties, but this has more than been offset by our recent
acquisitions. Over the course of the year, we do anticipate
production increases on the Cline properties. " A recent federal
court decision in West Virginia has created some regulatory
uncertainty in the coal industry in that state. Although one of the
revoked permits related to an operation mining on reserves that NRP
acquired in the Dingess-Rum acquisition, the federal court has
ruled that NRP's lessee can continue to operate under its existing
permits pending the reconsideration of these permits by the Corps
of Engineers. Distributions On April 19, the partnership announced
its fifteenth consecutive increase in its quarterly distribution to
$0.455 per unit or $1.82 on an annualized basis, a 15% increase
over the first quarter distribution last year. The distribution
will be paid on May 14, 2007 to unitholders of record on May 1,
2007. Corbin J. Robertson, Jr., Chairman and Chief Executive
Officer said, "This distribution reflects our positive forward view
of the underlying fundamentals of our revenue base and our
expectations for continued growth across our portfolio." 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, and coal handling and transportation
infrastructure in the three major coal producing regions of the
United States: Appalachia, the Illinois Basin and the Powder River
Basin. In addition, the partnership also manages aggregate
reserves, oil and gas properties and timber assets across the
United States. The common units are traded on the New York Stock
Exchange (NYSE) under the symbol NRP and the subordinated units are
traded on the NYSE under the symbol NSP. 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/. 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. Forward Looking Statements This
press release may include "forward-looking statements" as defined
by the Securities and Exchange Commission. Such statements include
the 2007 outlook. 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) For the three months ended March
31, 2007 2006 (Unaudited) Coal: Coal royalty revenues: Appalachia
Northern $2,588 $3,307 Central 30,429 25,842 Southern 4,039 5,484
Total Appalachia $37,056 $34,633 Illinois Basin 1,114 1,953
Northern Powder River Basin 2,803 2,524 Total $40,973 $39,110 Sales
volumes (tons): Appalachia Northern 1,283 1,732 Central 9,291 8,195
Southern 1,033 1,426 Total Appalachia 11,607 11,353 Illinois Basin
502 1,162 Northern Powder River Basin 1,401 1,500 Total 13,510
14,015 Average royalty revenue per ton: Appalachia Northern $2.02
$1.91 Central 3.28 3.15 Southern 3.91 3.85 Total Appalachia $3.19
$3.05 Illinois Basin 2.22 1.68 Northern Powder River Basin 2.00
1.68 Total $3.03 $2.79 Aggregates: Production: 1,341 -- Average
base royalty per ton: $1.18 -- NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit
data) For the three months ended March 31, 2007 2006 (Unaudited)
Revenues: Coal royalties $40,973 $39,110 Aggregate royalties 1,745
-- Coal processing fees 918 -- Transportation fees 461 -- Oil and
gas royalties 1,258 1,719 Property taxes 2,228 1,749 Minimums
recognized as revenue 454 371 Override royalties 1,018 303 Other
1,152 3,276 Total revenues 50,207 46,528 Operating costs and
expenses: Depreciation, depletion and amortization 11,752 7,853
General and administrative 6,634 4,115 Property, franchise and
other taxes 3,101 2,245 Transportation costs 43 -- Coal royalty and
override payments 286 691 Total operating costs and expenses 21,816
14,904 Income from operations 28,391 31,624 Other income (expense)
Interest expense (7,327) (3,618) Interest income 817 518 Net income
$21,881 $28,524 Net income attributable to: General partner(1)
$2,819 $2,095 Other holders of incentive distribution rights(1)
$1,283 $821 Limited partners $17,779 $25,608 Basic and diluted net
income per limited partner unit: Common $0.28 $0.51 Subordinated
$0.28 $0.51 Class B $0.28 $ -- Weighted average number of units
outstanding: Common 50,893 33,651 Subordinated 11,354 17,030 Class
B 1,048 -- (1) Other holders of the incentive distribution rights
(IDRs) include the WPP Group at 25% and NRP Investment LP at (10%).
The net income allocated to the general partner includes the
general partner's portion of the IDRs (65%). NATURAL RESOURCE
PARTNERS L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the three months ended March 31, 2007 2006 (Unaudited) Cash
flows from operating activities: Net income $21,881 $28,524
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation, depletion and amortization
11,752 7,853 Non-cash interest charge 94 100 Gain from sale of
timber assets -- (2,176) Change in operating assets and
liabilities: Accounts receivable (4,072) (4) Other assets 221 268
Accounts payable and accrued liabilities 198 37 Accrued interest
(434) 1,906 Deferred revenue 3,901 (632) Accrued incentive plan
expenses (3,195) 371 Property, franchise and taxes payable 397 403
Net cash provided by operating activities 30,743 36,650 Cash flows
from investing activities: Acquisition of land, plant and
equipment, coal and other mineral rights (13,972) (35,000) Current
payable assumed in business combination 1,154 -- Proceeds from sale
of timber assets -- 3,932 Cash placed in restricted accounts
(6,242) -- Net cash used in investing activities (19,060) (31,068)
Cash flows from financing activities: Proceeds from loans 237,000
50,000 Deferred financing costs (1,107) -- Repayment of loans
(226,192) (15,000) Distributions to partners (34,126) (20,905)
Contribution by general partner 2,315 -- Net cash provided by (used
in) financing activities (22,110) 14,095 Net increase (decrease) in
cash and cash equivalents (10,427) 19,677 Cash and cash equivalents
at beginning of period 66,044 47,691 Cash and cash equivalents at
end of period $55,617 $67,368 Supplemental cash flow information:
Cash paid during the period for interest $7,648 $1,600 Non-cash
investing activities: Units issued in business combinations
$343,622 $ -- Liability assumed in business combination 1,950
NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED BALANCE SHEETS (In
thousands) ASSETS March 31, December 31, 2007 2006 (Unaudited)
Current assets: Cash and cash equivalents $55,617 $66,044
Restricted cash 6,242 -- Accounts receivable, net of allowance for
doubtful accounts 27,113 23,357 Accounts receivable -- affiliate
337 21 Other 791 1,411 Total current assets 90,100 90,833 Land
24,522 17,781 Plant and equipment, net 49,069 29,615 Coal and other
mineral rights, net 1,012,948 798,135 Intangible assets, net
107,027 -- Loan financing costs, net 3,223 2,197 Other assets, net
1,207 932 Total assets $1,288,096 $939,493 LIABILITIES AND
PARTNERS' CAPITAL Current liabilities: Accounts payable and accrued
liabilities $3,837 $1,041 Accounts payable -- affiliate 691 105
Current portion of long-term debt 9,542 9,542 Accrued incentive
plan expenses -- current portion 3,224 5,418 Property, franchise
and other taxes payable 4,727 4,330 Accrued interest 3,412 3,846
Total current liabilities 25,433 24,282 Deferred revenue 24,555
20,654 Asset retirement obligation 39 -- Accrued incentive plan
expenses 3,578 4,579 Long-term debt 465,099 454,291 Partners'
capital: Common units 641,357 338,912 Subordinated units 81,965
83,772 Class B units 27,825 -- General partner's interest 17,873
12,138 Holders of incentive distribution rights 1,110 1,616
Accumulated other comprehensive loss (738) (751) Total partners'
capital 769,392 435,687 Total liabilities and partners' capital
$1,288,096 $939,493 NATURAL RESOURCE PARTNERS L.P. RECONCILIATION
OF UNAUDITED GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(In thousands) For the three months ended March 31, 2007 2006
(Unaudited) Cash flow from operations $30,743 $36,650 Less reserves
for future principal payments (2,400) (2,350) Distributable cash
flow $28,343 $34,300
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, Web site: http://www.nrplp.com/
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