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Natural Resource Partners Lags Q1 Earnings, Shares Dip - Analyst Blog

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Natural Resource Partners L.P. NRP reported first-quarter 2015 earnings of 14 cents per unit, falling short of the Zacks Consensus Estimate of 18 cents by 22.2%. Quarterly earnings also plummeted 51.7% year over year due to surging operational costs.

Natural Resource Partners LP - Earnings Surprise | FindTheCompany

The lower-than-expected results led to a 2.6% decline in unit prices to $4.83 per unit on May 7. The prices remained unchanged on May 8.

Total Revenues

In the quarter under review, Natural Resource Partners' revenues of $109.7 million lagged the Zacks Consensus Estimate of $128 million by 14.3%. Revenues however improved about 36.6% year over year.

The year-over-year improvement in total revenues was driven by increased aggregates related revenues and oil and gas related revenues as a result of the VantaCore construction aggregates and Sanish Field oil and gas acquisitions completed in the fourth quarter of 2014.

Highlights of the Release

Natural Resource Partners' long-term plan to diversify its revenue stream has helped the partnership to register strong revenues in the first quarter. Aggregates related revenues went up by an astounding 752%, while oil and gas related revenues increased 51% from the year-ago quarter.

Coal related revenues decreased 6% to $49.5 million due to declines in coal production volumes by NRP's lessees (9%) as well as lower average coal royalty revenue per ton (6%). Metallurgical coal represented 33% of coal production and 40% of coal royalty revenues for the first quarter of 2015.

Total operating expenses shot up 148.5% to $69.3 million. The increase was primarily due to $25.1 million of expenses associated with the VantaCore acquisition and a $10.7 million increase in depreciation and amortization expenses due to recent acquisitions.

Interest expenses during the quarter rose 15.5% to $22.9 million from $19.8 million in the year-ago quarter due to a rise in outstanding debt.

Financial Highlights

Cash from operating activities during the quarter was $55.5 million compared with $38.6 million in the prior-year quarter.

In the reported quarter, distributable cash flow declined 37% year over year to $53.3 million. This was primarily due to the timing of cash payments received from its aggregates related business and nearly $5.2 million related to the sale of some minerals rights and assets.

Long-term debt as of Mar 31, 2015 was nearly $1,303.2 million, down from $1,394.2 million as of Dec 31, 2014.

Other Coal Company Releases

Diversified fuel producer CONSOL Energy Inc. CNX reported pro forma earnings of 37 cents per share for the first quarter of 2015, beating the Zacks Consensus Estimate of 11 cents by 236.4%.

Arch Coal Inc. ACI reported first-quarter 2015 adjusted loss of 54 cents per share, wider than the Zacks Consensus Estimate of a loss of 48 cents.

Peabody Energy BTU reported a loss of 62 cents per share in first-quarter 2015, much wider than the Zacks Consensus Estimate of a loss of 33 cents, resulting in a negative surprise of 87.9%.

Our View

Natural Resource Partners' long-term plan to diversify its revenue stream has helped the partnership to boost its top line. However, like the previous quarter, its spiraling costs pulled down the bottom line in spite of the benefits accrued from its business diversification efforts.

The partnership's efforts to expand its non-core operations, primarily the oil and gas business, besides maintaining its presence in coal, will allow it to boost its revenue stream going forward.

Natural Resource Partners currently holds a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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