Natural Resource Partners L.P. NRP reported second-quarter 2015 earnings of 28 cents per unit, beating the Zacks Consensus Estimate of 18 cents by a wide margin of 55.6%. Quarterly earnings, however, declined 15.2% year over year from 33 cents per unit due to surging operational expenses.

GAAP earnings were 25 cents per unit in the quarter versus 28 cents per unit in the second quarter of 2014. The difference between GAAP and adjusted earnings was due to non-cash charges for impairments of certain assets.

The better-than-expected results led to a 22.2% rise in unit prices to $2.75 at the end of yesterday’s closing session.
 

Total Revenues

In the quarter under review, Natural Resource Partners’ revenues of $137.6 million exceeded the Zacks Consensus Estimate of $125 million by 10.1%. The top line also soared 52% year over year.

The year-over-year improvement in total revenue was mainly driven by $40.6 million in revenues related to VantaCore operations acquired in Oct 2014, higher earnings associated with the soda ash business, and a small asset sale in the second quarter of 2015.

Highlights of the Release

Coal-related revenues rose 10.0% year over year to $60.9 million due to a non-cash reserve swap of $9.3 million and an increase in minimums recognized as revenue of $3.4 million. These offset a decline of $7.3 million in coal royalty revenues resulting from further declines in both prices and production in Central Appalachia and the Illinois Basin.

Metallurgical coal represented 29% of coal production and 43% of coal royalty revenues for the second quarter of 2015.

Aggregates-related revenues rose significantly to $42.9 million from $3.6 million in second-quarter 2014. However, oil and gas related revenues dipped 16.7% to $14.8 million from the year-ago quarter due to a fall in oil and gas prices.

Total operating expenses shot up 103.5% to $81.7 million. The increase was driven by $32.8 million in additional operating expenses associated with VantaCore’s operations as well as increased depreciation, depletion and amortization associated with the VantaCore and Sanish Field acquisitions.

Interest expenses during the quarter rose 22.6% to $23.3 million due to a rise in outstanding debt associated with the acquisitions in the fourth quarter of 2014.

Financial Condition

Natural Resource Partners had cash and cash equivalents of $27.5 million as of Jun 30, 2015, down from $50.1 million as of Dec 31, 2014. Long-term debt was $1,256.2 million as of Jun 30, 2015, down from $1,374.3 million as of Dec 31, 2014.

In the first six months of 2015, cash from operating activities was $106.1 million, up 6.5% from $99.6 million in the prior-year quarter.

In the reported quarter, distributable cash flow declined 27.4% year over year to $47.2 million due to declines in coal royalty revenues of $7.3 million and the provision for maintenance capital expenditures of $6.8 million in 2015.

Guidance

Natural Resource Partners lowered its 2015 revenue guidance to the range of $460 to $505 million from the prior range of $490 to $535 million.

Coal-related revenue guidance has been lowered to $192–$205 million from the prior range of $207–$221 million due to lower coal royalty revenues from both Central Appalachia and the Illinois Basin.

Aggregates and industrial minerals revenue guidance has been lowered to $152–$168 million from the prior range of $163–$179 million.

Oil and gas-related revenue guidance has been lowered to $52 million to $61 million from the prior range of $56 million to $66 million due to lower expected production volumes as a result of the reduced pace of development drilling.

For 2015, distributable cash flow guidance has been lowered to $145 million to $170 million from the prior range of $175 to $200 million.

Other Coal Company Releases

Diversified fuel producer CONSOL Energy Inc. CNX reported an adjusted loss of 37 cents per share for the second quarter of 2015 which compared unfavorably with the Zacks Consensus Estimate of earnings of a penny.

Arch Coal Inc. ACI reported second-quarter 2015 adjusted loss of 73 cents per share, wider than the Zacks Consensus Estimate of a loss of 59 cents and the year-ago loss of 46 cents per share.

Peabody Energy BTU reported a loss of 58 cents per share in second-quarter 2015, marginally narrower than the Zacks Consensus Estimate of a loss of 59 cents.

Zacks Rank

Natural Resource Partners currently has a Zacks Rank #3 (Hold).

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