Natural Resource Partners L.P.
) reported second quarter 2013 earnings of 37 cents per unit,
down 19.6% year over year. Earnings also fell short of the Zacks
Consensus Estimate by 9.8%. The lackluster performance stemmed
from weak metallurgical (met) coal fundamentals and lower
receipts from coal royalties.
Natural Resource Partners' revenue declined 4% year over year
to $86.8 million mainly due to a drop in coal royalty revenues.
The decrease was partially offset by favorable returns from the
partnership's investment in OCI Wyoming.
The reported quarter revenue trailed the Zacks Consensus
Estimate by 6.7%.
Coal royalty revenue slipped 7% to $58.2 million from the
prior-year quarter. This happened due to lower realizations from
met coal operations. Average coal royalty per ton also declined
26% year over year.
Revenues other than coal royalty surged 3% year over year to
$28.6 million in the reported quarter.
Coal production during the quarter rose sharply by 24% from
the year-ago quarter to 14.9 million tons. Metallurgical coal
contributed 28% to the overall production, lower than the
year-ago share of 35%. This was primarily due to the met coal
Natural Resource Partners' production in the Appalachian
region grew 17% year over year. This was supported by substantial
expansion in production across the Illinois, Northern River
Powder and Gulf coast basins. Central Appalachia continued to
drag down production levels while Northern and Southern
Appalachia consistently provided upsides.
Total operating expenses were $31.5 million, up 16% from the
prior-year quarter. A 14.8% and 26.3% respective increase in
depreciation, depletion and amortization as well as general and
administrative expenses led to the cost upswing.
Interest expenses climbed to $14.4 million from $13.6 million
in the year-ago quarter.
Cash from operating activities during the quarter was $79.7
million versus $82.5 million in the prior-year quarter.
In the second quarter, distributable cash flow was $90.7
million, up 8% from the year-ago period on account of increased
cash distributions from Natural Resource Partners' interest in
Cash and cash equivalents as of Jun 30, 2013, were $105.2
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
Long-term debt as of Jun 30, 2013, was $1.1 billion versus
$0.9 billion as of Dec 31, 2012.
Natural Resources Partners lowered its 2013 earnings guidance
to the range $1.40 to $1.60 per unit from the prior $1.60 to
$1.80 per unit. The partnership trimmed its revenue guidance to
the range of $330 million to $360 million from the previous
$330-$375 million. The conservative outlook reflects rising
depreciation, depletion and amortization owing to mining
The distributable cash flow guidance has been moved up by $40
million to the range of $290 million to $320 million for 2013
chiefly due to the partnership's share in OCI Wyoming. The
partnership's lessees are still waiting for encouraging signs
from the coal market, which would drive royalty payments but
until then Natural Resources Partners is taking a cautious stance
on its full year earnings.
Other Coal Company Releases
Alpha Natural Resources Inc.
) reported a loss of 59 cents per share for the second quarter of
2013, narrower than the Zacks Consensus Estimate of a loss of 60
Walter Energy Inc.
) posted an operating loss per share in the second quarter of
2013 of 55 cents, much narrower than the Zacks Consensus Estimate
of a loss of 64 cents.
Arch Coal Inc.
) reported second-quarter 2013 pro forma loss of 29 cents per
share, narrower than the Zacks Consensus Estimate of a loss of 32
Natural Resource Partners delivered dull earnings and revenue
results in the second quarter 2013 lagging our expectations. The
partnership's profitability will be affected by the tepid met
coal market, which is expected to persist in the upcoming quarter
before gaining traction by 2013 end. Unless the partnership comes
up with effective cost abatement measures, it is likely to face
margin pressure thus hampering returns. The partnership currently
retains a Zacks Rank #4 (Sell).
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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