NPR(NRP) - 2021 Q2 - Quarterly Report

Part I. Financial Information Item 1. Consolidated Financial Statements Presents unaudited consolidated financial statements for Natural Resource Partners L.P., including balance sheets, income, capital, and cash flow statements, with detailed notes Consolidated Balance Sheets Total assets decreased slightly to $910.2 million as of June 30, 2021, driven by lower mineral rights and debt balances Consolidated Balance Sheet Highlights (Unaudited, In thousands) | (In thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $910,205 | $921,877 | | Cash and cash equivalents | $97,908 | $99,790 | | Mineral rights, net | $447,155 | $460,373 | | Equity in unconsolidated investment | $266,433 | $262,514 | | Total Liabilities | $528,526 | $549,016 | | Current portion of long-term debt, net | $39,060 | $39,055 | | Long-term debt, net | $414,099 | $432,444 | | Total partners' capital | $205,673 | $204,524 | Consolidated Statements of Comprehensive Income (Loss) The Partnership reported net income of $15.4 million for Q2 2021, a significant turnaround from a $125.5 million net loss in Q2 2020 Financial Performance Summary (Unaudited, In thousands, except per unit data) | (In thousands, except per unit data) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues and other income | $38,510 | $31,011 | $75,661 | $71,225 | | Income (loss) from operations | $25,065 | $(115,172) | $43,419 | $(86,085) | | Net income (loss) | $15,382 | $(125,501) | $23,763 | $(106,722) | | Net income (loss) attributable to common unitholders | $7,389 | $(130,452) | $8,030 | $(119,398) | | Diluted net income (loss) per common unit | $0.56 | $(10.64) | $0.65 | $(9.74) | Consolidated Statements of Partners' Capital Total partners' capital increased to $205.7 million at June 30, 2021, driven by net income offset by distributions - For the six months ended June 30, 2021, total partners' capital was impacted by net income of $8.4 million, distributions to common and general partners of $11.3 million, and distributions to preferred unitholders of $15.3 million (split between cash and paid-in-kind)[17] Consolidated Statements of Cash Flows Net cash from operating activities decreased to $36.6 million for the first half of 2021, primarily due to lower distributions from Ciner Wyoming Cash Flow Summary (Unaudited, In thousands) | (In thousands) | For the Six Months Ended June 30, 2021 | For the Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,584 | $51,796 | | Net cash provided by investing activities | $1,257 | $571 | | Net cash used in financing activities | $(39,723) | $(39,804) | | Net (decrease) increase in cash | $(1,882) | $12,563 | | Cash and cash equivalents at end of period | $97,908 | $110,828 | Notes to Consolidated Financial Statements Detailed notes explain accounting policies, business segments, revenue breakdown, debt structure, and major customer concentrations - The Partnership's business consists of owning, managing, and leasing a diversified portfolio of mineral properties, including coal, and a 49% non-controlling interest in Ciner Wyoming, a trona ore mining and soda ash production business[27] - Foresight Energy Resources LLC and Alpha Metallurgical Resources, Inc. are major customers, accounting for 22% and 23% of total revenues, respectively, for the three months ended June 30, 2021[77] - Subsequent to the quarter end, in August 2021, the Board declared a $0.45 per common unit distribution and a preferred unit distribution to be paid half in cash ($3.92 million) and half in-kind (3,921 additional preferred units)[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, and liquidity, highlighting market rebound and the impact of the leverage ratio on distributions Executive Overview The company operates Coal Royalty and Soda Ash segments, actively exploring alternative revenue sources like carbon sequestration and renewable energy - The company is exploring alternative revenue opportunities such as carbon sequestration (underground and in forests) and renewable energy generation (geothermal, solar, wind) to leverage its large land, mineral, and timber asset footprint[104] Current Results/Market Commentary Coal and soda ash markets are rebounding, but the 4.6x leverage ratio restricts cash distributions on preferred units and may impact common unit distributions - The company's consolidated leverage ratio was 4.6x at June 30, 2021, exceeding the 3.75x covenant threshold, which restricts cash payments for preferred unit distributions and may require a temporary suspension of common unit distributions if the ratio remains elevated[110] - Metallurgical coal markets have rebounded strongly, while thermal coal markets have improved but face long-term challenges, with a contract with Foresight Energy providing fixed thermal cash flows through 2021[112] - Ciner Wyoming's soda ash business is recovering, but market volatility persists due to the pandemic, leading Ciner Wyoming to suspend its regular quarterly distributions in Q3 2020 to preserve financial flexibility, which have not yet resumed[114][116] Results of Operations Detailed comparison of financial results for Q2 and H1 2021 vs 2020, analyzing segment performance and non-GAAP measures Adjusted EBITDA by Segment (Non-GAAP, In thousands) | For the Six Months Ended June 30 (In thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Coal Royalty and Other | $60,420 | $54,637 | | Soda Ash | $3,865 | $14,165 | | Corporate and Financing | $(7,498) | $(7,534) | | Total Adjusted EBITDA | $56,787 | $61,268 | Distributable Cash Flow (DCF) by Segment (Non-GAAP, In thousands) | For the Six Months Ended June 30 (In thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Coal Royalty and Other | $59,247 | $64,146 | | Soda Ash | $3,853 | $14,166 | | Corporate and Financing | $(25,259) | $(26,585) | | Total DCF | $37,841 | $51,661 | Liquidity and Capital Resources Total liquidity was $197.9 million as of June 30, 2021, with operating cash flow decreasing due to lower Ciner Wyoming distributions - Total liquidity was $197.9 million as of June 30, 2021, consisting of $97.9 million in cash and $100.0 million in borrowing capacity[150] - Cash flow from operations decreased by $15.2 million year-over-year for the first six months, primarily due to a $10.3 million reduction in cash distributions from Ciner Wyoming[154] Debt Summary (In thousands) | (In thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Current portion of long-term debt, net | $39,060 | $39,055 | | Long-term debt, net | $414,099 | $432,444 | | Total debt, net | $453,159 | $471,499 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, NRP is not required to provide market risk disclosures in its Form 10-Q - As a smaller reporting company, NRP is not required to include disclosures about market risk in its quarterly report[161] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures are effective in providing reasonable assurance for timely and accurate reporting[162] - No material changes were made to the Partnership's internal control over financial reporting during the first six months of 2021[163] Part II. Other Information Item 1. Legal Proceedings Legal proceedings in the ordinary course of business are not expected to materially impact financial position or operations - The company states that legal proceedings arising from the ordinary course of business are not expected to have a material impact[167] Item 1A. Risk Factors No material changes to risk factors were reported from the prior Annual Report on Form 10-K - No material changes to risk factors were reported during the period[168] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[169] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - None[170] Item 4. Mine Safety Disclosures No mine safety disclosures were reported for the period - None[171] Item 5. Other Information No other information was reported for the period - None[172] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including partnership agreements and CEO/CFO certifications - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906 (18 U.S.C. § 1350), and Inline XBRL documents[175]