Natural Resource Tops Earnings, Down Y/Y - Analyst Blog
May 07 2013 - 9:18AM
Zacks
Natural Resource Partners L.P. (NRP) reported
first quarter 2013 earnings of 43 cents per unit, down 8.5% from
the year-ago earnings.
Earnings, however, surpassed the Zacks Consensus Estimate by
4.9%. GAAP and pro forma earnings were identical owing to the
absence of one-time items.
Total Revenue
Natural Resource Partners’ revenue recorded a 3% upsurge
totaling $94.3 million driven by rise in revenues other than coal
royalty partially offset by a decline in coal royalty revenue.
The reported quarter revenue topped the Zacks Consensus Estimate
by 6.0%.
Natural Resource Partners Production Update
Coal production during the quarter rose sharply by 14% from the
year-ago quarter to 13.8 million tons. Metallurgical coal
contributed 27% to the overall production, lower than the year-ago
share of 30%.
Natural Resource Partners production in the Appalachian region
grew 5% year over year. This was further supported by expansion in
production across the Illinois, Northern River Powder and Gulf
coast basins.
Coal royalty revenue slipped 9% to $54.4 million from the
prior-year quarter. This happened due to lower realizations from
the Central Appalachian operations. Average coal royalty per ton
also declined 20% year over year.
Revenues other than coal royalty, surged 25% to $39.9 million in
the reported quarter.
Operational Highlights
Total operating costs and expenses of Natural Resource Partners
during the quarter totaled $31.8 million, up 17.6% from the
prior-year quarter. A 19% and 29.5% increase in depreciation,
depletion and amortization as well as general and administrative
expenses led to the cost upturn.
Interest expenses rose to $14.6 million from $13.6 million in
the year-ago quarter.
Financial Screening
Cash from operating activities during the quarter was $43.9
million versus $49.5 million in the prior-year quarter.
In the first quarter, distributable cash flow was $44.5 million,
down 10.1% from the year-ago period. This was due to lower revenues
from coal royalty.
Cash and cash equivalents as of Mar 31, 2013 were $76.2 million
versus $149.4 million as of Dec 31, 2012. The substantial decrease
in Natural Resource Partners' cash balance from the year-ago
quarter was due to acquisitions, and principal and interest
payments.
Long-term debt as of Mar 31, 2013 was $1.1 billion versus $0.9
billion as of Dec 31, 2012.
Outlook
With natural gas price on the rise, Natural Resource Partners
anticipates improvement in the U.S. steam coal market. The
partnership’s leeses are ready to welcome any encouraging signs in
the market but are in no hurry to reopen mines and are waiting a
little before going for an increase in production level.
Other Coal Company Releases
Alpha Natural Resources (ANR) reported a loss
of 47 cents per share for the first quarter of 2013, narrower than
the Zacks Consensus Estimate of a loss of 58 cents.
Walter Energy Inc. (WLT) posted operating loss
per share in the first quarter of 2013 of 64 cents, much narrower
than the Zacks Consensus Estimate of a loss of 88 cents.
Arch Coal Inc. (ACI) reported first-quarter
2013 pro forma loss of 34 cents per share, marginally wider than
the Zacks Consensus Estimate of a loss of 32 cents.
Our View
Natural Resource Partners delivered promising results in the
first quarter 2013 with both earnings and revenue beating our
expectations. The partnership’s diversified asset basket lends
constancy to its revenue stream. The acquisition of stake in OCI
Wyoming is expected to provide significant upside given the
increasing demand for soda ash in Asia.
Moreover, Natural Resource Partners is expected to gain from
higher metallurgical coal demand on the back of thriving steel
markets in India, China and South America.
On the other hand, transportation cost pressure and expiration
of contract with a Clint Group affiliate would pose challenges to
Natural Resource Partners.
The partnership currently retains a Zacks Rank #3 (Hold).
Headquartered in Houston, Texas, Natural Resource Partners L.P.
engages in the business of owning and managing mineral reserve
properties. It primarily owns coal, oil and gas reserves across the
US, generating royalty income for the partnership.
ARCH COAL INC (ACI): Free Stock Analysis Report
ALPHA NATRL RES (ANR): Free Stock Analysis Report
NATURAL RSRC LP (NRP): Free Stock Analysis Report
WALTER ENERGY (WLT): Free Stock Analysis Report
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