Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________________________
FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 9, 2018
  ______________________________________________________
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12540993&doc=4
NATURAL RESOURCE PARTNERS L.P.
(Exact name of registrant as specified in its charter)
  ______________________________________________________
Delaware
(State or other jurisdiction
of incorporation or organization)
001-31465
(Commission File
Number)
35-2164875
(I.R.S. Employer
Identification No.)
 
 
 
1201 Louisiana St., Suite 3400 Houston, Texas
(Address of principal executive offices)
 

77002
(Zip code)

Registrant’s telephone number, including area code: (713) 751-7507
 ______________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company
o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
 






Item 2.02.
Results of Operations and Financial Condition

In accordance with General Instruction B.2. of Form 8-K, the following information and the exhibit referenced therein are being furnished pursuant to Item 2.02 of Form 8-K and are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, are not subject to the liabilities of that section and are not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
 
On November 9, 2018, Natural Resource Partners L.P. announced via press release its earnings and operating results for the third quarter of 2018. A copy of NRP’s press release is attached hereto as Exhibit 99.1.

Item 9.01.
Financial Statements and Exhibits
(d)
Exhibits.
 
 






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
NATURAL RESOURCE PARTNERS L.P.
 
(Registrant)
 
 
 
 
 
By:
 
NRP (GP) LP
 
 
 
its General Partner
 
 
 
 
 
By:
 
GP Natural Resource Partners LLC
 
 
 
its General Partner
 
 
 
 
Date: November 9, 2018
 
 
/s/ Kathryn S. Wilson    
 
 
 
Kathryn S. Wilson
 
 
 
Vice President and General Counsel



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.
Reports Third Quarter 2018 Results

HOUSTON, November 9, 2018 - Natural Resource Partners L.P. (NYSE:NRP) today reported third quarter of 2018 results as follows:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(In thousands, except per unit data)
 
2018
 
2017
 
2018
 
2017
Net income from continuing operations (1)
 
$
28,565

 
$
26,499

 
$
91,061

 
$
58,467

Adjusted EBITDA (2)
 
58,060

 
58,094

 
170,503

 
172,032

Cash flow provided by (used in) continuing operations:
 
 
 
 
 
 
 
 
Operating activities
 
33,427

 
25,800

 
108,017

 
81,394

Investing activities
 
(1,981
)
 
2,771

 
(3,814
)
 
3,440

Financing activities
 
(21,034
)
 
51,890

 
(70,643
)
 
(3,961
)
Distributable cash flow (2)
 
33,782

 
28,883

 
109,373

 
85,760

Free cash flow (2)
 
30,969

 
28,420

 
102,300

 
82,319

 
 
 
 
 
(1)
Net income from continuing operations during the nine months ended September 30, 2018 included income of $12.7 from a royalty dispute settlement in our Soda Ash business segment.
(2)
See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.
  
"NRP delivered another solid quarter of operating results as we continued to see strong demand for metallurgical and thermal coal,” remarked NRP’s President and Chief Operating Officer, Craig Nunez. “I would also like to highlight the favorable litigation settlement with Foresight Energy in October, which resulted in NRP receiving an initial payment of $25 million and a commitment from Foresight to pay us $11 million annually for 15 years beginning in 2019. We are pleased with this mutually beneficial outcome and look forward to continuing our long-term partnership with Foresight. These additional cash flows will assist in our commitment to strengthening our balance sheet."
 
NRP improved its liquidity since the end of the second quarter of 2018 by $10.4 million to $118.4 million at September 30, 2018, consisting of $63.4 million of cash and $55.0 million of borrowing capacity available under its credit facility. NRP's consolidated Debt-to-Adjusted EBITDA ratio at September 30, 2018 was 3.5x.

With respect to the third quarter of 2018, NRP declared a cash distribution of $0.45 per common unit and a cash distribution of $7.5 million on NRP’s preferred units. NRP's distribution coverage ratio over the last twelve months was 6.9x before taking into account the $30 million annual distribution on NRP's preferred units, and 5.6x after taking into account this preferred unit distribution.


1


Segment Results
 
 
Operating Business Segments
 
 
 
 
 
Coal Royalty and Other
 
Soda Ash
 
Construction Aggregates
 
Corporate and Financing
 
Total
(In thousands)
 
 
 
 
 
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
37,751

 
$
8,836

 
$
2,654

 
$
(20,676
)
 
$
28,565

Adjusted EBITDA (1)
 
42,998

 
12,250

 
5,995

 
(3,183
)
 
58,060

Cash flow provided by (used in) continuing operations:
 
 
 
 
 
 
 
 
 
 
Operating activities
 
41,604

 
12,250

 
6,941

 
(27,368
)
 
33,427

Investing activities
 
1,590

 

 
(3,571
)
 

 
(1,981
)
Financing activities
 

 

 
(239
)
 
(20,795
)
 
(21,034
)
Distributable cash flow (1)
 
43,194

 
12,250

 
5,706

 
(27,368
)
 
33,782

Free cash flow (1)
 
43,194

 
12,250

 
2,893

 
(27,368
)
 
30,969

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations
 
$
37,992

 
$
8,993

 
$
3,342

 
$
(23,828
)
 
$
26,499

Adjusted EBITDA (1)
 
43,297

 
12,250

 
6,402

 
(3,855
)
 
58,094

Cash flow provided by (used in) continuing operations:
 
 
 
 
 
 
 
 
 
 
Operating activities
 
44,119

 
8,992

 
2,155

 
(29,466
)
 
25,800

Investing activities
 
676

 
3,258

 
(1,163
)
 

 
2,771

Financing activities
 
484

 

 

 
51,406

 
51,890

Distributable cash flow (1)
 
44,795

 
12,250

 
1,304

 
(29,466
)
 
28,883

Free cash flow (1)
 
44,719

 
12,250

 
917

 
(29,466
)
 
28,420

 
 
 
 
 
(1)
See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.
Coal Royalty and Other
During the third quarter of 2018, we continued to see strong coal pricing driven by robust export demand and stable domestic markets for metallurgical and thermal coal. While total coal production remained steady, our average coal royalty revenue per ton increased 12% driven primarily by a strong global demand for metallurgical coal. Approximately 67% of NRP's coal royalty revenues and approximately 61% of its coal royalty production was derived from metallurgical coal during the three months ended September 30, 2018. Net income and Adjusted EBITDA were consistent with prior year.
Free cash flow decreased slightly in the third quarter of 2018 compared to the third quarter of 2017 primarily as a result of the timing of payments.
Soda Ash
Soda Ash segment results were consistent with prior year.
Construction Aggregates
Net income and Adjusted EBITDA results decreased slightly primarily due to higher operating expenses. Free cash flow increased primarily due to the timing of certain operating payments, partially offset by increased capital expenditures.
Corporate and Finance
Corporate and Finance segment results improved for the third quarter of 2018, primarily due to lower interest as a result of continued repayment of debt.

2


Conference Call
A conference call will be held today at 10:00 a.m. ET. To join the conference call, dial (844) 379-6938 and provide the conference code 55454890. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com. To access the replay, please visit the Investor Relations section of NRP’s website.
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 a construction aggregates company and an equity investment in Ciner Wyoming, a trona/soda ash operation.

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.

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, aggregates and industrial minerals, including trona/soda ash; changes in operating conditions and costs; production cuts by our lessees; unanticipated geologic problems; our liquidity, leverage and access to capital and financing sources; changes in the legislative or regulatory environment, litigation risk, 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.
        
Non-GAAP Financial Measures

“Distributable cash flow” is a non-GAAP financial measure that we define as net cash provided by operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from sales of assets, including those included in discontinued operations, and return of long-term contract receivables (including affiliate); less maintenance capital expenditures and distributions to non-controlling interest. 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. Distributable cash flow may not be calculated the same for us as for other companies. In addition, Distributable cash flow presented below is not calculated or presented on the same basis as Distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. Distributable cash flow 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 common and preferred unitholders and our general partner and repay debt.
“Free cash flow” is a non-GAAP financial measure that we define as net cash provided by operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables (including affiliate); less maintenance and expansion capital expenditures, cash flow used in mitigation payments and acquisition costs classified as financing activities and distributions to non-controlling interest. Free cash flow is calculated before mandatory debt repayments. Free 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. Free cash flow may not be calculated the same for us as for other companies. Free cash flow 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 common and preferred unitholders and our general partner and repay debt.

3


"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) from continuing operations less equity earnings from unconsolidated investment; plus (minus) net loss (income) attributable to non-controlling interest; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, 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. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. 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.
“Adjusted net income attributable to NRP” is a non-GAAP financial measure that we define as Net income attributable to NRP plus restructuring transaction expenses that include debt modification expense, loss on extinguishment of debt and restructuring-related incentive compensation expense, asset impairments and income (loss) from discontinued operations; less gain on sale of assets. Adjusted net income 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 Adjusted net income is useful in evaluating our financial performance because restructuring transaction expenses are one time charges, gains on asset sales are not related to the operations of our business and asset impairments are non-cash charges. Excluding these from net income allows us to better compare results from ongoing operations period-over-period.
"Return on capital employed" is a non-GAAP financial measure that we define as Net income from continuing operations plus interest expense divided by the sum of equity and debt. Return on capital employed 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. Return on capital employed is a supplemental performance measure used by our management team that measures our profitability and efficiency with which our capital is employed. The measure provides an indication of operating performance before the impact of leverage in the capital structure.
Revision of Previously Issued First Quarter and Second Quarter 2018 Financial Statements
During the three months ended September 30, 2018, NRP identified an error related to the modified retrospective adoption of ASC 606 on January 1, 2018 for certain coal royalty leases that impacted its financial statements as of and for the three-months ended March 31, 2018 and as of and for the three and six-months ended June 30, 2018. Management concluded that the impact of the error was not material to the previously issued financial statements. In order to properly reflect the application of ASC 606 retrospectively, financial information for the three months ended March 31, 2018 and for the three and six months ended June 30, 2018 in the following financial tables and Reconciliation of Non-GAAP Measures and Recap of Metrics have been revised to reflect the correction of this error. See Note 2. Revenue from Contracts with Customers of the Partnership's Third Quarter 2018 Form 10-Q for additional information.


-Financial Tables, Reconciliation of Non-GAAP Measures and Recap of Metrics Follow-


4


Natural Resource Partners L.P.
Financial Tables


Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2018
 
2017
Revenues and other income
 
 
 
 
 
 
 
 
 
Coal royalty and other
$
42,459

 
$
43,507

 
$
47,732

 
$
134,428

 
$
111,269

Coal royalty and other—affiliates
59

 
335

 
188

 
484

 
23,178

Transportation and processing services
6,853

 
5,571

 
5,002

 
17,238

 
9,717

Transportation and processing services—affiliates

 

 

 

 
6,013

Construction aggregates
30,398

 
29,553

 
34,233

 
91,055

 
82,399

Road construction and asphalt paving services
6,250

 
5,157

 
6,176

 
13,154

 
13,087

Equity in earnings of Ciner Wyoming
8,836

 
8,993

 
16,529

 
34,986

 
27,676

Gain on asset sales, net
163

 
171

 
210

 
1,033

 
3,576

Total revenues and other income
$
95,018

 
$
93,287

 
$
110,070

 
$
292,378

 
$
276,915

Operating expenses
 
 
 
 
 
 
 
 
 
Operating and maintenance expenses
$
35,134

 
$
32,441

 
$
38,301

 
$
103,403

 
$
93,089

Operating and maintenance expenses—affiliates
2,414

 
2,154

 
4,065

 
8,944

 
6,928

Depreciation, depletion and amortization
8,221

 
8,306

 
8,563

 
24,741

 
26,195

Amortization expense—affiliate

 

 

 

 
1,008

General and administrative
2,249

 
2,648

 
2,414

 
8,068

 
10,757

General and administrative—affiliates
934

 
1,207

 
849

 
2,714

 
3,183

Asset impairments

 

 

 
242

 
1,778

Total operating expenses
$
48,952

 
$
46,756

 
$
54,192

 
$
148,112

 
$
142,938

Income from operations
$
46,066

 
$
46,531

 
$
55,878

 
$
144,266

 
$
133,977

Other expense, net
 
 
 
 
 
 
 
 
 
Interest expense, net
$
(17,501
)
 
$
(20,032
)
 
$
(17,734
)
 
$
(53,205
)
 
$
(63,464
)
Debt modification expense

 

 

 

 
(7,939
)
Loss on extinguishment of debt

 

 

 

 
(4,107
)
Total other expense, net
$
(17,501
)
 
$
(20,032
)
 
$
(17,734
)
 
$
(53,205
)
 
$
(75,510
)
Net income from continuing operations
$
28,565

 
$
26,499

 
$
38,144

 
$
91,061

 
$
58,467

Loss from discontinued operations
(24
)
 
(433
)
 
(34
)
 
(72
)
 
(507
)
Net income
$
28,541

 
$
26,066

 
$
38,110

 
$
90,989

 
$
57,960

Net loss (income) attributable to non-controlling interest
359

 

 
(869
)
 
(510
)
 

Net income attributable to NRP
$
28,900

 
$
26,066

 
$
37,241

 
$
90,479

 
$
57,960

Less: income attributable to preferred unitholders
(7,500
)
 
(7,650
)
 
(7,500
)
 
(22,500
)
 
(17,688
)
Net income attributable to common unitholders and general partner
$
21,400

 
$
18,416

 
$
29,741

 
$
67,979

 
$
40,272

Net income attributable to common unitholders
$
20,972

 
$
18,046

 
$
29,146

 
$
66,619

 
$
39,466

Net income attributable to the general partner
$
428

 
$
370

 
$
595

 
$
1,360

 
$
806

Income from continuing operations per common unit
 
 
 
 
 
 
 
 
 
Basic
$
1.71

 
$
1.51

 
$
2.38

 
$
5.45

 
$
3.27

Diluted
$
1.30

 
$
1.08

 
$
1.71

 
$
4.06

 
$
2.67

Net income per common unit
 
 
 
 
 
 
 
 
 
Basic
$
1.71

 
$
1.48

 
$
2.38

 
$
5.44

 
$
3.23

Diluted
$
1.30

 
$
1.07

 
$
1.71

 
$
4.06

 
$
2.65

Net income
$
28,541

 
$
26,066

 
$
38,110

 
$
90,989

 
$
57,960

Comprehensive income (loss) from unconsolidated investment and other
791

 
(268
)
 
(434
)
 
(768
)
 
(1,413
)
Comprehensive income
$
29,332

 
$
25,798

 
$
37,676

 
$
90,221

 
$
56,547

Comprehensive loss (income) attributable to non-controlling interest
359

 

 
(869
)
 
(510
)
 

Comprehensive income attributable to NRP
$
29,691

 
$
25,798

 
$
36,807

 
$
89,711

 
$
56,547


5


Natural Resource Partners L.P.
Financial Tables

Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
June 30,
 
September 30,
(In thousands)
 
2018
 
2017
 
2018
 
2018
 
2017
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
 
Net income
 
$
28,541

 
$
26,066

 
$
38,110

 
$
90,989

 
$
57,960

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
 
 
 
 
 
 
 
Depreciation, depletion and amortization
 
8,221

 
8,306

 
8,563

 
24,741

 
26,195

Amortization expense—affiliates
 

 

 

 

 
1,008

Distributions from unconsolidated investment
 
12,250

 
8,992

 
12,250

 
34,653

 
31,104

Equity earnings from unconsolidated investment
 
(8,836
)
 
(8,993
)
 
(16,529
)
 
(34,986
)
 
(27,676
)
Gain on asset sales, net
 
(163
)
 
(171
)
 
(210
)
 
(1,033
)
 
(3,576
)
Debt modification expense
 

 

 

 

 
7,939

Loss on extinguishment of debt
 

 

 

 

 
4,107

Income (loss) from discontinued operations
 
24

 
433

 
34

 
72

 
507

Asset impairments
 

 

 

 
242

 
1,778

Unit-based compensation expense
 
153

 
(26
)
 
281

 
1,226

 
(23
)
Amortization of debt issuance costs and other
 
568

 
3,203

 
1,202

 
2,541

 
6,547

Other—affiliates
 

 
199

 

 
(190
)
 
(974
)
Change in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
2,177

 
5,038

 
(2,712
)
 
(7,004
)
 
508

Accounts receivable—affiliates
 
118

 
49

 
(46
)
 
139

 
285

Accounts payable
 
495

 
684

 
1,020

 
670

 
730

Accounts payable—affiliates
 
(844
)
 
(272
)
 
(641
)
 
46

 
(270
)
Accrued liabilities
 
1,397

 
206

 
1,788

 
(1,984
)
 
(7,096
)
Accrued liabilities—affiliates
 

 

 

 
(515
)
 

Accrued interest
 
(9,069
)
 
(8,727
)
 
8,902

 
(9,944
)
 
(5,322
)
Deferred revenue
 
193

 
(4,494
)
 
3,645

 
9,200

 
(5
)
Deferred revenue—affiliates
 

 

 

 

 
(10,166
)
Other items, net
 
(1,798
)
 
(4,693
)
 
(1,278
)
 
(846
)
 
(2,166
)
Net cash provided by operating activities of continuing operations
 
$
33,427


$
25,800

 
$
54,379

 
$
108,017

 
$
81,394

Net cash used in operating activities of discontinued operations
 
(22
)
 
(76
)
 
(35
)
 
(469
)
 
(607
)
Net cash provided by operating activities
 
$
33,405

 
$
25,724

 
$
54,344

 
$
107,548

 
$
80,787

Cash flows from investing activities
 
 
 
 
 
 
 
 
 
 
Distributions from unconsolidated investment in excess of cumulative earnings
 
$

 
$
3,258

 
$

 
$
2,097

 
$
5,646

Proceeds from sale of assets
 
238

 
151

 
224

 
1,149

 
1,419

Return of long-term contract receivables
 
1,590

 
600

 
529

 
2,606

 
1,807

Return of long-term contract receivables—affiliate
 

 

 

 

 
804

Acquisition of plant and equipment and other
 
(3,809
)
 
(1,238
)
 
(2,413
)
 
(9,666
)
 
(6,236
)
Net cash provided by (used in) investing activities of continuing operations
 
$
(1,981
)
 
$
2,771

 
$
(1,660
)
 
$
(3,814
)
 
$
3,440

Net cash provided by investing activities of discontinued operations
 

 
4

 

 

 
206

Net cash provided by (used in) investing activities
 
$
(1,981
)
 
$
2,775

 
$
(1,660
)
 
$
(3,814
)
 
$
3,646


6


Natural Resource Partners L.P.
Financial Tables

Consolidated Statements of Cash Flows—Continued
(Unaudited)
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
June 30,
 
September 30,
(In thousands)
 
2018
 
2017
 
2018
 
2018
 
2017
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of preferred units and warrants, net
 
$

 
$

 
$

 
$

 
$
242,100

Proceeds from issuance of 2022 Senior Notes, net
 

 

 

 

 
103,688

Borrowings on credit facility
 

 
69,000

 

 
35,000

 
69,000

Repayments of loans
 
(7,648
)
 
(8,000
)
 
(7,272
)
 
(55,720
)
 
(356,292
)
Redemption of preferred units paid-in-kind
 

 

 

 
(8,844
)
 

Distributions to common unitholders and general partner
 
(5,623
)
 
(5,616
)
 
(5,623
)
 
(16,863
)
 
(16,850
)
Distributions to preferred unitholders
 
(7,500
)
 
(3,769
)
 
(7,500
)
 
(22,765
)
 
(5,019
)
Contributions to discontinued operations
 
(22
)
 
(72
)
 
(35
)
 
(469
)
 
(401
)
Debt issuance costs and other
 
(241
)
 
347

 
(466
)
 
(982
)
 
(40,187
)
Net cash provided by (used in) financing activities of continuing operations
 
$
(21,034
)
 
$
51,890

 
$
(20,896
)
 
$
(70,643
)
 
$
(3,961
)
Net cash provided by financing activities of discontinued operations
 
22

 
72

 
35

 
469

 
401

Net cash provided by (used in) financing activities
 
$
(21,012
)
 
$
51,962

 
$
(20,861
)
 
$
(70,174
)
 
$
(3,560
)
 
 
 
 
 
 
 
 
 
 
 
Net increase in cash and cash equivalents
 
$
10,412

 
$
80,461

 
$
31,823

 
$
33,560

 
$
80,873

Cash and cash equivalents at beginning of period
 
52,975

 
40,783

 
21,152

 
29,827

 
40,371

Cash and cash equivalents at end of period
 
$
63,387

 
$
121,244

 
$
52,975

 
$
63,387

 
$
121,244

 
 
 
 
 
 
 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
 
 
 
 
 
 
Cash paid during the period for interest from continuing operations
 
$
24,998

 
$
26,977

 
$
7,132

 
$
58,153

 
$
61,857

Non-cash investing and financing activities:
 
 
 
 
 
 
 
 
 
 
Plant, equipment and mineral rights funded with accounts payable or accrued liabilities
 
$
75

 
$

 
$
894

 
$
75

 
$

Issuance of 2022 Senior Notes in exchange for 2018 Senior Notes
 
$

 
$

 
$

 
$

 
$
240,638





7


Natural Resource Partners L.P.
Financial Tables

Consolidated Balance Sheets
 
September 30,
 
December 31,
 
2018
 
2017
(In thousands, except unit data)
(Unaudited)
 
 
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
63,387

 
$
29,827

Accounts receivable, net
55,734

 
47,026

Accounts receivable—affiliates
22

 
161

Inventory
9,572

 
7,553

Prepaid expenses and other
4,665

 
5,838

Current assets of discontinued operations
988

 
991

Total current assets
134,368

 
91,396

Land
24,809

 
25,247

Plant and equipment, net
48,148

 
46,170

Mineral rights, net
869,106

 
883,885

Intangible assets, net
46,998

 
49,554

Equity in unconsolidated investment
242,901

 
245,433

Long-term contracts receivable
39,416

 
40,776

Other assets
6,188

 
6,547

Other assets—affiliate

 
156

Total assets
$
1,411,934

 
$
1,389,164

LIABILITIES AND CAPITAL
 
 
 
Current liabilities
 
 
 
Accounts payable
$
7,467

 
$
6,957

Accounts payable—affiliates
608

 
562

Accrued liabilities
14,005

 
16,890

Accrued liabilities—affiliates

 
515

Accrued interest
5,540

 
15,484

Current portion of deferred revenue
1,403

 

Current portion of long-term debt, net
75,201

 
79,740

Current liabilities of discontinued operations

 
401

Total current liabilities
104,224

 
120,549

Deferred revenue
40,885

 
100,605

Long-term debt, net
716,514

 
729,608

Other non-current liabilities
1,958

 
2,808

Other non-current liabilities—affiliate

 
346

Total liabilities
863,581

 
953,916

Commitments and contingencies

 
 
Class A Convertible Preferred Units (250,000 and 258,844 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively, at $1,000 par value per unit; liquidation preference of $1,500 per unit)
164,587

 
173,431

Partners’ capital:
 
 
 
Common unitholders’ interest (12,245,920 and 12,232,006 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively)
319,673

 
199,851

General partner’s interest
4,293

 
1,857

Warrant holders' interest
66,816

 
66,816

Accumulated other comprehensive loss
(4,081
)
 
(3,313
)
Total partners’ capital
386,701

 
265,211

Non-controlling interest
(2,935
)
 
(3,394
)
Total capital
383,766

 
261,817

Total liabilities and capital
$
1,411,934

 
$
1,389,164


8


Natural Resource Partners L.P.
Financial Tables

Consolidated Statement of Partners' Capital
(Unaudited)
 
Common Unitholders
 
General Partner
 
Warrant Holders
 
Accumulated
Other
Comprehensive
Loss
 
Partners' Capital Excluding Non-Controlling Interest
 
Non-Controlling Interest
 
Total Capital
 
(In thousands)
Units
 
Amounts
 
Balance at December 31, 2017
12,232

 
$
199,851

 
$
1,857

 
$
66,816

 
$
(3,313
)
 
$
265,211

 
$
(3,394
)
 
$
261,817

Cumulative effect of adoption of accounting standard

 
69,057

 
1,409

 

 

 
70,466

 

 
70,466

Net income (1)

 
88,669

 
1,810

 

 

 
90,479

 
510

 
90,989

Distributions to common unitholders and general partner

 
(16,526
)
 
(337
)
 

 

 
(16,863
)
 

 
(16,863
)
Distributions to preferred unitholders

 
(22,310
)
 
(455
)
 

 

 
(22,765
)
 

 
(22,765
)
Issuance of unit-based awards
14

 
410

 

 

 

 
410

 

 
410

Unit-based awards amortization and vesting

 
472

 

 

 

 
472

 

 
472

Comprehensive income (loss) from unconsolidated investment and other

 
50

 
9

 

 
(768
)
 
(709
)
 
(51
)
 
(760
)
Balance at September 30, 2018
12,246

 
$
319,673

 
$
4,293

 
$
66,816

 
$
(4,081
)
 
$
386,701

 
$
(2,935
)
 
$
383,766

 
 
 
 
 
(1)
Net income includes $22.5 million attributable to Preferred Unitholders that accumulated during the period, of which $22.1 million is allocated to the common unitholders and $0.5 million is allocated to the general partner.





9


Natural Resource Partners L.P.
Financial Tables

The tables below presents NRP's unaudited business results by segment for the three and nine months ended September 30, 2018 and 2017 and the three months ended June 30, 2018:
 
 
Operating Business Segments
 
 
 
 
 
Coal Royalty and Other
 
 
 
Construction Aggregates
 
Corporate and Financing
 
 
(In thousands)
 
 
Soda Ash
 
 
 
Total
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
Revenues and other income
 
$
49,371

 
$
8,836

 
$
36,648

 
$

 
$
94,855

Gains on asset sales, net
 

 

 
163

 

 
163

Total revenues and other income
 
$
49,371

 
$
8,836

 
$
36,811

 
$

 
$
95,018

Net income (loss) from continuing operations
 
$
37,751

 
$
8,836

 
$
2,654

 
$
(20,676
)
 
$
28,565

Adjusted EBITDA (1)
 
$
42,998

 
$
12,250

 
$
5,995

 
$
(3,183
)
 
$
58,060

Distributable cash flow (1)
 
$
43,194

 
$
12,250

 
$
5,706

 
$
(27,368
)
 
$
33,782

Free cash flow (1)
 
$
43,194

 
$
12,250

 
$
2,893

 
$
(27,368
)
 
$
30,969

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
Revenues and other income
 
$
49,413

 
$
8,993

 
$
34,710

 
$

 
$
93,116

Gains on asset sales, net
 
154

 

 
17

 

 
171

Total revenues and other income
 
$
49,567

 
$
8,993

 
$
34,727

 
$

 
$
93,287

Net income (loss) from continuing operations
 
$
37,992

 
$
8,993

 
$
3,342

 
$
(23,828
)
 
$
26,499

Adjusted EBITDA (1)
 
$
43,297

 
$
12,250

 
$
6,402

 
$
(3,855
)
 
$
58,094

Distributable cash flow (1)
 
$
44,795

 
$
12,250

 
$
1,304

 
$
(29,466
)
 
$
28,883

Free cash flow (1)
 
$
44,719

 
$
12,250

 
$
917

 
$
(29,466
)
 
$
28,420

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
Revenues and other income
 
$
52,922

 
$
16,529

 
$
40,409

 
$

 
$
109,860

Gains on asset sales, net
 
168

 

 
42

 

 
210

Total revenues and other income
 
$
53,090

 
$
16,529

 
$
40,451

 
$

 
$
110,070

Net income (loss) from continuing operations
 
$
39,671

 
$
16,529

 
$
2,941

 
$
(20,997
)
 
$
38,144

Adjusted EBITDA (1)
 
$
44,178

 
$
12,250

 
$
6,128

 
$
(3,263
)
 
$
59,293

Distributable cash flow (1)
 
$
52,424

 
$
12,250

 
$
(614
)
 
$
(10,082
)
 
$
53,978

Free cash flow (1)
 
$
52,254

 
$
12,250

 
$
(2,393
)
 
$
(10,082
)
 
$
52,029

 
 
 
 
 
(1)
See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.

10


Natural Resource Partners L.P.
Financial Tables

Natural Resource Partners L.P.
Financial Tables (Unaudited)
 
 
Operating Business Segments
 
 
 
 
 
Coal Royalty and Other
 
 
 
Construction Aggregates
 
Corporate and Financing
 
 
(In thousands)
 
 
Soda Ash
 
 
 
Total
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
Revenues and other income
 
$
152,150

 
$
34,986

 
$
104,209

 
$

 
$
291,345

Gains on asset sales, net
 
819

 

 
214

 

 
1,033

Total revenues and other income
 
$
152,969

 
$
34,986

 
$
104,423

 
$

 
$
292,378

Asset impairments
 
$
242

 
$

 
$

 
$

 
$
242

Net income (loss) from continuing operations
 
$
116,414

 
$
34,986

 
$
3,620

 
$
(63,959
)
 
$
91,061

Adjusted EBITDA (1)
 
$
131,510

 
$
36,750

 
$
13,025

 
$
(10,782
)
 
$
170,503

Distributable cash flow (1)
 
$
135,554

 
$
36,750

 
$
6,051

 
$
(68,982
)
 
$
109,373

Free cash flow (1)
 
$
134,728

 
$
36,750

 
$
(196
)
 
$
(68,982
)
 
$
102,300

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
Revenues and other income
 
$
150,177

 
$
27,676

 
$
95,486

 
$

 
$
273,339

Gains on asset sales, net
 
3,367

 

 
209

 

 
3,576

Total revenues and other income
 
$
153,544

 
$
27,676

 
$
95,695

 
$

 
$
276,915

Asset impairments
 
$
1,778

 
$

 
$

 
$

 
$
1,778

Net income (loss) from continuing operations
 
$
115,170

 
$
27,676

 
$
4,439

 
$
(88,818
)
 
$
58,467

Adjusted EBITDA (1)
 
$
134,601

 
$
36,750

 
$
14,621

 
$
(13,940
)
 
$
172,032

Distributable cash flow (1)
 
$
124,158

 
$
36,750

 
$
6,827

 
$
(81,975
)
 
$
85,760

Free cash flow (1)
 
$
123,199

 
$
36,750

 
$
4,345

 
$
(81,975
)
 
$
82,319

 
 
 
 
 
(1)
See "Non-GAAP Financial Measures" and reconciliation tables at the end of this release.


11


Natural Resource Partners L.P.
Financial Tables

Operating Statistics - Coal Royalty and Other
(Unaudited)
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
June 30,
 
September 30,
(In thousands, except per ton data)
 
2018
 
2017
 
2018
 
2018
 
2017
Coal production (tons)
 
 
 
 
 
 
 
 
 
 
Appalachia
 
 
 
 
 
 
 
 
 
 
Northern
 
349

 
226

 
916

 
1,490

 
1,672

Central
 
3,873

 
3,596

 
4,163

 
11,582

 
11,193

Southern
 
346

 
468

 
396

 
1,288

 
1,721

Total Appalachia
 
4,568

 
4,290

 
5,475

 
14,360

 
14,586

Illinois Basin
 
609

 
794

 
739

 
2,091

 
3,545

Northern Powder River Basin
 
855

 
849

 
808

 
2,896

 
2,708

Total coal production
 
6,032

 
5,933

 
7,022

 
19,347

 
20,839

 
 
 
 
 
 
 
 
 
 
 
Coal royalty revenue per ton
 
 
 
 
 
 
 
 
 
 
Appalachia
 
 
 
 
 
 
 
 
 
 
Northern
 
$
4.01

 
$
3.26

 
$
3.52

 
$
3.82

 
$
1.36

Central
 
5.37

 
4.77

 
5.65

 
5.57

 
5.09

Southern
 
6.82

 
5.73

 
6.85

 
6.98

 
5.95

Illinois Basin
 
4.89

 
4.32

 
4.72

 
4.56

 
3.68

Northern Powder River Basin
 
3.79

 
3.47

 
2.25

 
2.70

 
2.89

Combined average coal royalty revenue per ton
 
5.10

 
4.54

 
4.95

 
4.99

 
4.34

 
 
 
 
 
 
 
 
 
 
 
Coal royalty revenues
 
 
 
 
 
 
 
 
 
 
Appalachia
 
 
 
 
 
 
 
 
 
 
Northern
 
$
1,402

 
$
737

 
$
3,230

 
$
5,698

 
$
2,279

Central
 
20,786

 
17,154

 
23,520

 
64,538

 
57,027

Southern
 
2,359

 
2,683

 
2,712

 
8,985

 
10,242

Total Appalachia
 
24,547

 
20,574

 
29,462

 
79,221

 
69,548

Illinois Basin
 
2,973

 
3,431

 
3,485

 
9,533

 
13,055

Northern Powder River Basin
 
3,237

 
2,945

 
1,815

 
7,817

 
7,827

Unadjusted coal royalty revenue
 
30,757


26,950


34,762

 
$
96,571

 
$
90,430

Coal royalty adjustment for minimum leases
 
(48
)
 

 

 
(98
)
 

Total coal royalty revenue
 
$
30,709

 
$
26,950

 
$
34,762

 
$
96,473

 
$
90,430

 
 
 
 
 
 
 
 
 
 
 
Other revenues
 
 
 
 
 
 
 
 
 
 
Production lease minimum revenue
 
$
1,769

 
$
9,812

 
$
2,006

 
$
6,310

 
$
22,556

Minimum lease straight line revenue
 
567

 

 
569

 
1,739

 

Property tax revenue
 
1,263

 
513

 
1,523

 
3,968

 
4,311

Wheelage
 
1,572

 
1,219