NPR(US:NRP)2019-11-06 19:02Financial Data and Key Metrics Changes - The company generated $42 million of operating and free cash flow and $39 million of net income during Q3 2019 [11] - Basic and diluted earnings per common unit for the third quarter were $2.53 per unit and $1.66 per unit, respectively [11] - The consolidated return on capital employed was 16.4%, with the coal segment at 17% and soda ash at almost 21% [6] Business Line Data and Key Metrics Changes - The coal royalty segment generated $41 million of operating cash flow, $42 million of free cash flow, and $40 million of net income during Q3 2019 [12] - The soda ash segment generated $14 million of net income and $6 million of free cash flow, with net income increasing by $5 million compared to the prior year quarter due to increased production and sales volumes [14] Market Data and Key Metrics Changes - Lessees sold 5 million tons of coal during Q3 2019, with metallurgical coal making up approximately 55% of total coal royalty sales volumes and about 60% of coal royalty revenues [13] - The company anticipates coal revenues to be significantly lower in the coming months due to expiring contracts and lower prices [8] Company Strategy and Development Direction - The company plans to continue reducing debt, albeit at a slower pace, and aims to maintain cash flow and liquidity to support operations and distributions [9] - A 40% distribution cut was announced to finance capacity expansion at the soda ash joint venture [8] Management's Comments on Operating Environment and Future Outlook - Management noted challenges from falling coal prices, particularly for metallurgical coal, which have led to bankruptcies among lessees [7] - Despite the negative sentiment, management expressed confidence in the company's ability to weather the current challenges due to improved financial strength and liquidity [9] Other Important Information - The company paid a quarterly distribution of $0.45 per unit to common unitholders and $7.5 million to preferred unitholders in August, with another similar distribution declared in October [15] Q&A Session Summary Question: Repeatability of asset sales and increased minimum revenues - Management indicated that the $6 million gain on asset sales is not planned for future quarters, while the increased minimum revenues from Hillsboro are expected to continue [20] Question: Future coal sales volumes given market conditions - Management acknowledged a lack of visibility into future coal sales volumes due to uncertainty in the market and lessee decision-making [22] Question: Comparison to previous coal market downturns - Management stated that if a downturn similar to 2015-2016 occurs, they expect to maintain a positive cash flow cushion, although it may decrease substantially [24]