Third Quarter Highlights: - Distributable cash flow of $34.0
million, up 10% over 3Q06 - Record revenues of $56.4 million, up
36% - Net income attributable to limited partners of $22.9 million,
up 7% - Net income per unit decreases 17% to $0.35 - Distribution
increases for seventeenth consecutive quarter to $0.475 per unit -
Guidance reaffirmed for 2007 HOUSTON, Nov. 1 /PRNewswire-FirstCall/
-- Natural Resource Partners L.P. (NYSE: NRP; NSP) today reported
distributable cash flow, a non-GAAP measure, of $34.0 million, up
10% from the $31.0 million reported for the third quarter 2006. Net
income attributable to the limited partners increased to $22.9
million for the third quarter of 2007, compared to $21.5 million
for the third quarter of 2006. Net income per unit decreased from
$0.42 for the third quarter 2006 to $0.35 per unit in the third
quarter 2007. Highlights 3Q07 2Q07 3Q06 (in thousands except per
ton and per unit) Coal Production: 14,708 13,573 12,798 Coal
Royalty Revenues: $44,378 $40,733 $36,902 Average coal royalty
revenue per ton: $3.02 $3.00 $2.88 Total revenues: $56,366 $51,097
$41,491 Net income to limited partners: $22,902 $18,145 $21,483
Average units outstanding in quarter: 64,891 64,886 50,681 Net
income per unit: $0.35 $0.28 $0.42 Distributable cash flow: $34,045
$43,511 $31,034 "Our third quarter results demonstrated improvement
over our second quarter performance, largely due to the
strengthening price environment for both metallurgical and steam
coal," said Nick Carter, President and Chief Operating Officer. "We
are pleased with the operating performance of our lessees in the
third quarter, and as a whole they have met our expectations for
the quarter." "Distributable cash flow for the third quarter was
down from second quarter due to changes in working capital and the
allocation of $1.9 million to our quarterly debt service reserve in
recognition of additional scheduled principal payments on another
series of senior notes that will begin amortizing in July 2008,"
said Dwight Dunlap, Chief Financial Officer. Third Quarter and Nine
Month Results Revenues Third Quarter Total revenues increased 36%
to a record $56.4 million for the third quarter of 2007, compared
to $41.5 million reported for the same period last year. Third
quarter 2007 coal royalty revenues increased 20% to $44.4 million
from $36.9 million last year as the partnership continued to
experience increased coal royalty revenues per ton in all regions,
with an overall average coal royalty revenue per ton of $3.02.
Total production for the partnership in the third quarter was 14.7
million tons compared to 12.8 million tons in 2006. Aggregate
royalties, coal processing fees and transportation fees generated
approximately $4.5 million in the third quarter of 2007 versus $0.2
million in the same period last year, the first quarter for these
operations. Nine Months Total revenues improved to $157.7 million,
or 22% over the first nine months of 2006, while distributable cash
flow increased 11% to $105.9 million over the same period. Coal
royalty revenues increased 12% to $126.1 million, largely the
result of improved pricing. Average royalty revenue per ton
increased to $3.02 from $2.80, or 8%, while NRP's total production
increased approximately 4% to 41.8 million tons over the nine month
comparative period. Aggregate royalties, coal processing fees and
transportation fees, generated approximately $11.5 million for the
first nine months of 2007 versus $0.2 million in the same period
last year. Expenses Third Quarter Total expenses increased $8.2
million to $21.1 million in the third quarter. Depreciation,
depletion and amortization, a non-cash item, accounted for $6.0
million, or approximately 73% of the increase, primarily as a
result of acquisitions over the last year. Property, franchise and
other taxes nearly doubled to $4.0 million mainly due to taxes on
acquisitions acquired since last year, of which the majority of the
property taxes are offset by reimbursements from our lessees, which
are recorded in revenues. The remainder is due to additional
franchise taxes. Interest expense increased $3.1 million over the
third quarter last year to $7.1 million due to additional
borrowings associated with acquisitions completed during the last
year. Nine Months For the nine month period, total expenses
increased $24.1 million to $64.9 million, $15.2 million of which
was associated with depreciation, depletion and amortization and
$4.1 million was associated with property, franchise and other
taxes, both due to the same reasons discussed earlier. In addition,
general and administrative expenses increased $4.9 million mainly
due to increases in personnel, salaries, and incentive compensation
accruals; increased costs associated with reporting partners' tax
information; and increases in the allowance for doubtful accounts.
Interest expense for the nine month period increased by $10.3
million due to increased borrowings associated with acquisitions.
Net Income Third quarter While total revenues for the third quarter
increased by $14.9 million over third quarter 2006, net income
attributable to the limited partners only increased $1.4 million to
$22.9 million. The increase in revenues was largely offset by
increases in expenses primarily due to increases in depreciation,
depletion and amortization as well as interest on debt incurred to
finance NRP's recent acquisitions. Net income per unit decreased
$0.07 to $0.35 per unit mainly due to approximately 14.2 million
additional units that have been issued for acquisitions, some of
which are under development and not yet generating significant
revenues, since the third quarter 2006. Nine months For the nine
month period, net income attributable to the limited partners
decreased $10.1 million to $58.8 million, or $0.91 per unit for the
reasons discussed previously. Distributable Cash Flow Third quarter
Distributable cash flow increased $3.0 million, or 10%, over the
same quarter last year predominantly due to increases in net
income. In the third quarter 2007, NRP reserved $1.9 million for
one quarter of the debt payment due in July 2008. Nine months For
the nine month period distributable cash flow increased $10.4
million, or 11%, predominantly due to increases in deferred revenue
and depreciation, depletion and amortization, offset by a decline
in net income. Update on Acquired Properties and Outlook The
Gatling WV property has continued to experience operational issues
while ramping up to full production but the mining conditions and
operating results are steadily improving. The Williamson operation
in Illinois is currently at full production during the development
phase of the longwall. The longwall is expected to be operational
sometime in the first quarter of 2008. Coal is currently being
shipped and the stockpile is also being reduced, which will
generate increased coal royalty revenues and transportation fees
for NRP in the fourth quarter. We anticipate those revenue streams
will significantly increase in 2008 as longwall production
commences. While the properties acquired in the Dingess-Rum
acquisition have contributed significantly to NRP's 2007 coal
royalty revenues, the properties continue to substantially
underperform expectations as a result of continued geological and
operational issues. However, recent mine plan changes at one of the
operations should improve production over current levels. Because
NRP's other lessees are collectively producing and selling coal as
forecasted and prices are improving, NRP is reaffirming the
guidance issued in August 2007 and anticipates issuing next year's
guidance in January 2008. Current Market "This quarter we have seen
improvements in prices in all regions over the second quarter of
this year. These increases more than offset some modest declines in
sales in Northern and Southern Appalachia as some of our lessees
have coal ready for export and awaiting ships. We are seeing
significantly stronger export markets for both metallurgical coal
as well as steam coal, which will bode well for improved pricing
going into 2008," said Nick Carter. "We continue to believe that
our concentration in metallurgical coal, with approximately 25% of
our reserves and 23% of our current production, could benefit us
significantly in the future." Distributions As reported on October
17, the Board of Directors of NRP's general partner declared a
quarterly distribution of $0.475 per unit, an increase of $0.01 per
unit, for both the common units traded under the symbol NRP and the
subordinated units traded as NSP. This made the seventeenth
consecutive increase in the quarterly distribution and represented
a 2.2% increase over the second quarter distribution and an 11.8%
increase over the third quarter last year. Capital Structure
Following the payment of the third quarter distribution, all
financial conditions precedent to the conversion of the
subordinated units into common units required by the partnership
agreement, will have been satisfied. After the close of trading on
November 14, all outstanding subordinated units will convert, in a
tax free conversion, on a one-for-one basis into common units.
Following this transaction, the subordinated units will no longer
exist and NRP will be the only remaining security that trades on
the NYSE for Natural Resource Partners L.P. Company Profile 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. 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
and current coal market conditions. 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) (Unaudited) Three Months Ended For
the Nine Months Ended September 30, September 30, 2007 2006 2007
2006 Coal Royalties: Coal royalty revenues: Appalachia Northern
$3,941 $2,292 $11,064 $8,330 Central 29,662 24,568 88,248 74,953
Southern 4,649 5,471 13,677 16,088 Total Appalachia $38,252 $32,331
$112,989 $99,371 Illinois Basin 2,462 808 4,941 4,465 Northern
Powder River Basin 3,664 3,763 8,154 8,703 Total $44,378 $36,902
$126,084 $112,539 Coal royalty production (tons): Appalachia
Northern 1,640 1,177 4,875 4,391 Central 8,927 7,873 27,022 24,050
Southern 1,184 1,395 3,514 4,256 Total Appalachia 11,751 10,445
35,411 32,697 Illinois Basin 1,147 368 2,307 2,507 Northern Powder
River Basin 1,810 1,985 4,072 4,983 Total 14,708 12,798 41,790
40,187 Average royalty revenue per ton: Appalachia Northern $2.40
$1.95 $2.27 $1.90 Central 3.32 3.12 3.27 3.12 Southern 3.93 3.92
3.89 3.78 Total Appalachia 3.26 3.10 3.19 3.04 Illinois Basin 2.15
2.20 2.14 1.78 Northern Powder River Basin 2.02 1.90 2.00 1.75
Combined average royalty revenue per ton $3.02 $2.88 $3.02 $2.80
Aggregates: Royalty revenues $2,096 - $5,785 - Production: 1,583 -
4,455 - Average base royalty per ton: $1.32 - $1.30 - Natural
Resource Partners L.P. Consolidated Statements of Income (In
thousands, except per unit data) Three Months Ended For the Nine
Months Ended September 30, September 30, 2007 2006 2007 2006
(Unaudited) (Unaudited) Revenues: Coal royalties $44,378 $36,902
$126,084 $112,539 Aggregate royalties 2,096 - 5,785 - Coal
processing fees 1,374 203 3,404 203 Transportation fees 1,000 -
2,306 - Oil and gas royalties 1,388 853 3,924 3,500 Property taxes
2,963 1,532 7,836 4,827 Minimums recognized as revenue 913 633
1,698 1,254 Override royalties 953 283 2,994 767 Other 1,301 1,085
3,639 5,911 Total revenues 56,366 41,491 157,670 129,001 Operating
costs and expenses: Depreciation, depletion and amortization 13,045
7,009 37,324 22,098 General and administrative 3,687 3,475 15,880
11,010 Property, franchise and other taxes 3,993 2,142 10,618 6,486
Transportation costs 79 - 149 - Coal royalty and override payments
246 296 914 1,250 Total operating costs and expenses 21,050 12,922
64,885 40,844 Income from operations 35,316 28,569 92,785 88,157
Other income (expense) Interest expense (7,124) (3,960) (21,584)
(11,253) Interest income 736 665 2,239 1,938 Net income $28,928
$25,274 $73,440 $78,842 Net income attributable to: (1) General
partner $4,119 $2,641 $10,012 $6,989 Holders of incentive
distribution rights $1,907 $1,150 $4,602 $2,914 Limited partners
$22,902 $21,483 $58,826 $68,939 Basic and diluted net income per
limited partner unit: Common $0.35 $0.42 $0.91 $1.36 Subordinated
$0.35 $0.42 $0.91 $1.36 Weighted average number of units
outstanding: Common 53,537 33,651 53,009 33,651 Subordinated 11,354
17,030 11,354 17,030 (1) Net income is allocated among the limited
partners, the general partner and holders of the incentive
distribution rights (IDRs) based upon their pro rata share of
distributions. The IDRs are allocated 65% to the general partner
and the remaining 35% to affiliates of the general partner. The
IDRs allocated to the general partner are included in the net
income attributable to the general partner. Natural Resource
Partners L.P. Statements of Cash Flows (In thousands) Three Months
Ended For the Nine Months Ended September 30, September 30, 2007
2006 2007 2006 (Unaudited) (Unaudited) Cash flows from operating
activities: Net income $28,928 $25,274 $73,440 $78,842 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation, depletion and amortization 13,045 7,009
37,324 22,098 Non-cash interest charge 117 97 326 288 Gain from
sale of assets - - - (2,634) Change in operating assets and
liabilities: Accounts receivable (4,835) (2,332) (7,634) (2,439)
Other assets 326 282 883 525 Accounts payable and accrued
liabilities 77 255 (217) 235 Accrued interest (2,763) 1,020 (166)
2,237 Deferred revenue 2,890 625 10,807 1,033 Accrued incentive
plan expenses 495 996 (138) 2,506 Property, franchise and other
taxes payable 45 158 304 (147) Net cash provided by operating
activities 38,325 33,384 114,929 102,544 Cash flows from investing
activities: Acquisition of land, plant and equipment, coal and
other mineral rights (7,435) (54,401) (40,068)(105,839) Proceeds
from sale of timber assets - - - 4,761 Cash placed in restricted
accounts 74 - (6,240) - Net cash used in investing activities
(7,361) (54,401) (46,308)(101,078) Cash flows from financing
activities: Proceeds from loans 7,000 53,000 262,400 103,000
Deferred financing costs (6) - (1,292) - Repayments of loans (400)
- (235,942) (24,350) Distributions to partners (37,635) (23,819)
(108,099) (67,023) Contribution by general partner - - 2,645 - Net
cash used in financing activities (31,041) 29,181 (80,288) 11,627
Net (decrease) or increase in cash and cash equivalents (77) 8,164
(11,667) 13,093 Cash and cash equivalents at beginning of period
54,454 52,620 66,044 47,691 Cash and cash equivalents at end of
period $54,377 $60,784 $54,377 $60,784 SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest $9,752 $2,841 $21,379
$8,702 Non-cash investing activities: Units issued for assets and
liabilities $- $- $350,741 $- Liability assumed in business
combination 39 - 1,989 - Natural Resource Partners L.P.
Consolidated Balance Sheets (In thousands) ASSETS September 30,
December 31, 2007 2006 (Unaudited) Current assets: Cash and cash
equivalents $54,377 $66,044 Restricted cash 6,240 - Accounts
receivable, net of allowance for doubtful accounts 30,003 23,357
Accounts receivable - affiliate 1,009 21 Other 237 1,411 Total
current assets 91,866 90,833 Land 24,532 17,781 Plant and
equipment, net 61,650 29,615 Coal and other mineral rights, net
1,004,081 798,135 Intangible assets 111,179 - Loan financing costs,
net 3,202 2,197 Other assets, net 825 932 Total assets $1,297,335
$939,493 LIABILITIES AND PARTNERS' CAPITAL Current liabilities:
Accounts payable $2,550 $1,041 Accounts payable - affiliate 368 105
Current portion of long-term debt 17,234 9,542 Accrued incentive
plan expenses - current portion 4,260 5,418 Property, franchise and
other taxes payable 4,634 4,330 Accrued interest 3,680 3,846 Total
current liabilities 32,726 24,282 Deferred revenue 31,461 20,654
Asset retirement obligation 39 - Accrued incentive plan expenses
5,599 4,579 Long-term debt 473,057 454,291 Partners' capital:
Common units 661,094 338,912 Subordinated units 78,701 83,772
General partner's interest 15,418 12,138 Holders of incentive
distribution rights (48) 1,616 Accumulated other comprehensive loss
(712) (751) Total partners' capital 754,453 435,687 Total
liabilities and partners' capital $1,297,335 $939,493 Natural
Resource Partners L.P. Reconciliation of GAAP "Net cash provided by
operating activities" To Non-GAAP "Distributable cash flow" (In
thousands) (Unaudited) Three Months Ended For the Nine Months Ended
September 30, September 30, 2007 2006 2007 2006 Cash flow from
operations $38,325 $33,384 $114,929 $102,544 Less scheduled
principal payments - - (9,350) (9,350) Less reserves for future
principal payments (4,280) (2,350) (9,080) (7,050) Add reserves
used for scheduled principal payments - - 9,400 9,400 Distributable
cash flow $34,045 $31,034 $105,899 $95,544
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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