Natural Resource Partners L.P.
) reported third quarter 2013 earnings of 32 cents per unit, down
33.3% year over year. Earnings also fell short of the Zacks
Consensus Estimate by 13.5%.
The lackluster performance reflects persistent weakness in
metallurgical (met) and steam coal markets and lower receipts
from coal royalties.
Natural Resource Partners' revenue declined 13% year over year
to $82.2 million mainly due to a 26% drop in coal royalty
revenues. The decrease was partially offset by favorable returns
from the partnership's investment in OCI Wyoming as well as
increase in oil and gas revenues.
The reported quarter revenue also trailed the Zacks Consensus
Estimate by 9.7%.
Coal royalty revenue slipped to $52.3 million from $70.3
million in the prior-year quarter. This happened due to sluggish
met and steam coal market prices. Average coal royalty per ton
also dwindled 26% year over year.
Revenues other than coal royalty surged 25% year over year to
$29.9 million in the reported quarter.
Coal production during the quarter saw a minuscule increase of
1% from the year-ago quarter to 13,476 tons. Production upsurge
in the Illinois basin was partially offset by lower production in
Appalachia and Northern Powder River Basin.
Natural Resource Partners' coal royalty production in the
Appalachian region slipped 7.8% year over year to 8,816 tons.
Central and Southern Appalachia dragged down production levels
while Northern Appalachia operations provided a consistent
Total operating expenses were $30.6 million, up 7.3% from the
prior-year quarter. A 23.3% increase in depreciation, depletion
and amortization due to production in high-cost properties led to
Interest expenses climbed to $15.5 million from $13.7 million
in the year-ago quarter.
In the third quarter, distributable cash flow was $104.6
million, up 34% from the year-ago period on account of increased
cash distributions from Natural Resource Partners' interest in
Cash and cash equivalents as of Sep 30, 2013, were $99.7
million versus $149.4 million as of Dec 31, 2012. The sharp
decline in the cash balance was due to $330 million utilized for
acquisitions, and principal and interest payments.
Long-term debt as of Sep 30, 2013, was $1,088.9 million versus
$897.0 million as of Dec 31, 2012.
Natural Resource Partners retained its 2013 earnings guidance
in the range $1.40 to $1.60 per unit. The partnership expects the
steam coal market to remain soft in the fourth quarter as
Natural Resource believes the met coal market will turn around
eventually and its met coal operation will stand to gain from the
bullish global steel market trends expected in the upcoming
Alpha Natural Resources Inc.
) reported a loss of 61 cents per share for the third quarter of
2013, narrower than the Zacks Consensus Estimate of a loss of 76
Walter Energy Inc.
) reported an operating loss of $1.68 per share in the third
quarter of 2013, wider than the Zacks Consensus Estimate of a
loss of $1.01.
Arch Coal Inc.
) reported third-quarter 2013 loss of 1 cent per share, much
narrower than the Zacks Consensus Estimate of a loss of 30
Natural Resource Partners posted disappointing top- and
bottom-line results as both metrics failed to meet our
expectations. The coal market challenges continue to cast its
shadow on coal players like Natural Resource.
However, the partnership's business diversification efforts
will continue to help counter the struggling coal market
dynamics. Natural Resource will benefit from the steady rise in
demand for met coal given the World Steel Association's
projection of a 3.2% increase in steel utilization worldwide in
The partnership currently retains a Zacks Rank #3 (Hold).
ARCH COAL INC (ACI): Free Stock Analysis
ALPHA NATRL RES (ANR): Free Stock Analysis
NATURAL RSRC LP (NRP): Free Stock Analysis
WALTER ENERGY (WLT): Free Stock Analysis
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