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Natural Resource Partners (NRP) Reports Weak Results in Q2
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Natural Resource Partners L.P. (NRP - Free Report) has reported its second-quarter 2024 financial results, revealing mixed performances across its segments.
While NRP faced considerable headwinds in the reported quarter due to declining coal and soda ash prices, the partnership's strategic focus on deleveraging and exploring revenue opportunities positions it to weather ongoing market volatility.
Natural Resource Partners LP Price, Consensus and EPS Surprise
Here is a detailed breakdown of the key metrics and management commentary that investors should consider.
Q2 Results
Natural Resource Partners reported second-quarter 2024 earnings per share of $2.29, declining 8% from the $2.49 reported in the year-ago quarter.
Total revenues and other income for the quarter fell 28.3% to $65.5 million from $91.3 million in the prior-year quarter.
Weak quarterly earnings resulted from declining coal and soda ash prices. A significant reduction in equity earnings from the soda ash joint venture, Sisecam Wyoming, also affected the quarterly performance.
Segmental Performance
Mineral Rights Segment:The Mineral Rights segment generated $61.9 million in revenues and other income, down from $64.3 million in second-quarter 2023. The segment’s net income was $52.7 million compared with $52.5 million in the prior-year period.
Lower coal prices and volumes significantly impacted the segment. The decline was partly mitigated by a $4.6 million gain on asset sales primarily related to a coal property condemnation and a $2.1-million transaction under NRP's carbon neutral initiative.
Coal sales volumes fell to 6.6 million tons from 7.1 million tons a year earlier, with average coal royalty revenue per ton dropping to $5.98 from $6.77.
Soda Ash Segment: The segment generated $3.6 million in revenues and other income, down from $27 million in second-quarter 2023.
The Soda Ash segment’s performance was significantly weaker in second-quarter 2024. Net income was $3.6 million, a sharp decline from $27 million in the same period of 2023. This dip was primarily led by lower global soda ash prices, which were impacted by an influx of new supplies from China.
Profitability
NRP reported a net income of $46.1 million for second-quarter 2024, a significant decrease from $70.3 million in the prior-year quarter. This decline was primarily led by lower revenues.
The most substantial drop in revenues was seen in the Soda Ash segment, wherein equity earnings from the Sisecam Wyoming joint venture fell sharply by $23.3 million due to lower global soda ash prices caused by new supply from China.
The operating cash flow for the quarter was $56.6 million, down from $81.4 million in the prior-year period. The free cash flow, a critical metric for evaluating the partnership's financial health, also declined to $57.3 million from $82 million in second-quarter 2023.
Additionally, the partnership’s adjusted EBITDA for the quarter was $57.7 million, a significant drop from $83.1 million in second-quarter 2023, reflecting the impacts of lower revenues and higher interest expenses.
Expenses
NRP's total operating expenses in second-quarter 2024 were $15.1 million, a decrease from $17.4 million in second-quarter 2023. This reduction was mainly caused by lower operating and maintenance expenses. The partnership also saw a slight decrease in depreciation, depletion and amortization expenses to $3.3 million from $3.8 million in second-quarter 2023.
General and administrative expenses rose slightly to $5.9 million from $5.6 million in the previous year, reflecting increased costs associated with managing the business in a challenging market environment.
Interest expenses increased to $4.3 million from $3.5 million in second-quarter 2023, driven by higher borrowings under the credit facility. These borrowings were part of NRP's broader strategy to retire preferred units and settle outstanding warrants, which led to an overall increase in financing costs for the quarter.
Cash & Debt
As of Jun 30, 2024, NRP reported available liquidity of $64.7 million, comprising $32.3 million in cash and an equal amount available under its revolving credit facility. The partnership has made significant strides in reducing its financial obligations, with total debt standing at $210.7 million. NRP’s consolidated leverage ratio was 0.7X at the end of the quarter, reflecting its ongoing efforts to reduce debt and preferred equity.
Other Developments
In second-quarter 2024, NRP continued to explore opportunities within its large asset portfolio, focusing on carbon-neutral revenue streams. While the financial impacts of these initiatives are uncertain, the partnership remains optimistic about their potential. NRP’s activities include carbon dioxide sequestration, renewable energy generation and lithium production, all of which could offer new revenue streams with minimal capital investment.
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Natural Resource Partners (NRP) Reports Weak Results in Q2
Natural Resource Partners L.P. (NRP - Free Report) has reported its second-quarter 2024 financial results, revealing mixed performances across its segments.
While NRP faced considerable headwinds in the reported quarter due to declining coal and soda ash prices, the partnership's strategic focus on deleveraging and exploring revenue opportunities positions it to weather ongoing market volatility.
Natural Resource Partners LP Price, Consensus and EPS Surprise
Natural Resource Partners LP price-consensus-eps-surprise-chart | Natural Resource Partners LP Quote
Here is a detailed breakdown of the key metrics and management commentary that investors should consider.
Q2 Results
Natural Resource Partners reported second-quarter 2024 earnings per share of $2.29, declining 8% from the $2.49 reported in the year-ago quarter.
Total revenues and other income for the quarter fell 28.3% to $65.5 million from $91.3 million in the prior-year quarter.
Weak quarterly earnings resulted from declining coal and soda ash prices. A significant reduction in equity earnings from the soda ash joint venture, Sisecam Wyoming, also affected the quarterly performance.
Segmental Performance
Mineral Rights Segment:The Mineral Rights segment generated $61.9 million in revenues and other income, down from $64.3 million in second-quarter 2023. The segment’s net income was $52.7 million compared with $52.5 million in the prior-year period.
Lower coal prices and volumes significantly impacted the segment. The decline was partly mitigated by a $4.6 million gain on asset sales primarily related to a coal property condemnation and a $2.1-million transaction under NRP's carbon neutral initiative.
Coal sales volumes fell to 6.6 million tons from 7.1 million tons a year earlier, with average coal royalty revenue per ton dropping to $5.98 from $6.77.
Soda Ash Segment: The segment generated $3.6 million in revenues and other income, down from $27 million in second-quarter 2023.
The Soda Ash segment’s performance was significantly weaker in second-quarter 2024. Net income was $3.6 million, a sharp decline from $27 million in the same period of 2023. This dip was primarily led by lower global soda ash prices, which were impacted by an influx of new supplies from China.
Profitability
NRP reported a net income of $46.1 million for second-quarter 2024, a significant decrease from $70.3 million in the prior-year quarter. This decline was primarily led by lower revenues.
The most substantial drop in revenues was seen in the Soda Ash segment, wherein equity earnings from the Sisecam Wyoming joint venture fell sharply by $23.3 million due to lower global soda ash prices caused by new supply from China.
The operating cash flow for the quarter was $56.6 million, down from $81.4 million in the prior-year period. The free cash flow, a critical metric for evaluating the partnership's financial health, also declined to $57.3 million from $82 million in second-quarter 2023.
Additionally, the partnership’s adjusted EBITDA for the quarter was $57.7 million, a significant drop from $83.1 million in second-quarter 2023, reflecting the impacts of lower revenues and higher interest expenses.
Expenses
NRP's total operating expenses in second-quarter 2024 were $15.1 million, a decrease from $17.4 million in second-quarter 2023. This reduction was mainly caused by lower operating and maintenance expenses. The partnership also saw a slight decrease in depreciation, depletion and amortization expenses to $3.3 million from $3.8 million in second-quarter 2023.
General and administrative expenses rose slightly to $5.9 million from $5.6 million in the previous year, reflecting increased costs associated with managing the business in a challenging market environment.
Interest expenses increased to $4.3 million from $3.5 million in second-quarter 2023, driven by higher borrowings under the credit facility. These borrowings were part of NRP's broader strategy to retire preferred units and settle outstanding warrants, which led to an overall increase in financing costs for the quarter.
Cash & Debt
As of Jun 30, 2024, NRP reported available liquidity of $64.7 million, comprising $32.3 million in cash and an equal amount available under its revolving credit facility. The partnership has made significant strides in reducing its financial obligations, with total debt standing at $210.7 million. NRP’s consolidated leverage ratio was 0.7X at the end of the quarter, reflecting its ongoing efforts to reduce debt and preferred equity.
Other Developments
In second-quarter 2024, NRP continued to explore opportunities within its large asset portfolio, focusing on carbon-neutral revenue streams. While the financial impacts of these initiatives are uncertain, the partnership remains optimistic about their potential. NRP’s activities include carbon dioxide sequestration, renewable energy generation and lithium production, all of which could offer new revenue streams with minimal capital investment.