Natural Resource Partners L.P.
) reported second quarter 2014 earnings of 33 cents per unit, down
10.8% year over year. Earnings surpassed the Zacks Consensus
Estimate of 30 cents by 10%.
Natural Resource Partners L P - Earnings
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GAAP earnings per unit were 28 cents versus 37 cents per unit in
the year-ago quarter. The difference between the GAAP and
operating numbers was due to an asset impairment expense of 5
Natural Resource Partners' revenues improved 4.4% year over year to
$90.6 million. The company benefited from its strategy to diversify
its business into other asset classes. In the quarter under review,
other-than-coal revenues more than offset the declines in revenues
Coal royalty revenues declined 21% to $45.8 million from the
prior-year quarter. This happened due to a 20% decline in coal
production volumes and a 1% decline in average coal royalty revenue
per ton to $3.86.
Revenues in the reported quarter surpassed the Zacks Consensus
Estimate of $79 million by 14.7%.
Highlights of the Release
Revenues derived from other than coal nearly doubled year over year
primarily due to higher oil and gas revenues and the partnership's
investment in its soda ash business.
Total operating expenses rose 27.6% to $40.2 million from the
second quarter 2013. The increase was primarily due to $2.3 million
of operating expenses associated with NRP's Williston Basin oil and
gas properties acquired in the second half of 2013.
Coal production during the quarter fell sharply by 20% from the
year-ago quarter to 11.8 million tons. This is largely attributed
to a production downturn in the Appalachian operations.
Metallurgical coal contributed 36% to the overall coal production
mix, above the year-ago share of 28%.
Interest expenses rose to nearly $19.1 million from $14.4 million
in the year-ago quarter.
Cash from operating activities during the quarter was $61 million
versus $79.7 million in the prior-year quarter.
In the reported quarter, distributable cash flow was $64.9 million,
down 28% from the year-ago period. This was due to higher interest
expenses and lower distributions received from its investments in
Cash and cash equivalents as of Jun 30, 2014 were $70 million
versus $92.5 million as of Dec 31, 2013.
Long-term debt as of Jun 30, 2014 was nearly $1,033.1 million
versus $1,084.2 million as of Dec 31, 2013.
Other Coal Company Releases
Peabody Energy Corporation
) reported a loss per share of 28 cents in the second quarter 2014,
marginally wider than the Zacks Consensus Estimate of a loss of 27
Arch Coal Inc.
) reported second-quarter 2014 adjusted loss of 46 cents per share,
narrower than the Zacks Consensus Estimate of a loss of 48 cents.
Alliance Resource Partners LP
) reported second-quarter 2014 earnings of $1.37 per unit,
surpassing the Zacks Consensus Estimate of 98 cents.
Natural Resource Partners reported a modest earnings and revenue
beat in the second quarter 2014 primarily due to improved
contributions from its oil and gas business. Since recovery in
domestic thermal and international met coal demand is lower than
expected this year, the partnership will have to depend on its
other revenue-generating sources to post strong results.
The 3.1% predicted growth in global steel usage in 2014 by the
World Steel Association was supposed to act as a demand catalyst
for metallurgical coal. However, the supply glut in the
international markets due to higher production in Australia and
lower imports from China is causing a demand-supply imbalance and
keeping prices at depressed levels in the near term. This has led
the lessees to reduce their metallurgical coal production outlook
and will likely lead to lower coal royalty revenues for the
partnership going forward.
The partnership currently holds a Zacks Rank #3 (Hold).
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