10-Q 1 a2018form10-q2ndquarter.htm 10-Q Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________________________
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-31465
  ______________________________________________________
image0a48.gif
NATURAL RESOURCE PARTNERS L.P.
(Exact name of registrant as specified in its charter)
  ______________________________________________________
Delaware
 
35-2164875
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1201 Louisiana Street, Suite 3400
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(713) 751-7507
(Registrant’s telephone number, including area code) 
  ______________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
¨
Accelerated Filer
 
ý
Non-accelerated Filer
¨  (Do not check if a smaller reporting company)
Smaller Reporting Company
 
¨
 
 
Emerging Growth Company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At August 6, 2018 there were 12,245,920 Common Units outstanding.
 







NATURAL RESOURCE PARTNERS, L.P.
TABLE OF CONTENTS





i






PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
 
June 30,
 
December 31,
(In thousands, except unit data)
2018
 
2017
ASSETS
(Unaudited)
 
 
Current assets
 
 
 
Cash and cash equivalents
$
52,975

 
$
29,827

Accounts receivable, net
59,312

 
47,026

Accounts receivable—affiliates
140

 
161

Inventory
8,048

 
7,553

Prepaid expenses and other
4,391

 
5,838

Current assets of discontinued operations
988

 
991

Total current assets
125,854

 
91,396

Land
24,809

 
25,247

Plant and equipment, net
47,917

 
46,170

Mineral rights, net
873,716

 
883,885

Intangible assets, net
47,924

 
49,554

Equity in unconsolidated investment
245,524

 
245,433

Long-term contracts receivable
39,878

 
40,776

Other assets
6,184

 
6,547

Other assets—affiliate

 
156

Total assets
$
1,411,806

 
$
1,389,164

LIABILITIES AND CAPITAL
 
 
 
Current liabilities
 
 
 
Accounts payable
$
7,801

 
$
6,957

Accounts payable—affiliates
1,453

 
562

Accrued liabilities
12,848

 
16,890

Accrued liabilities—affiliates

 
515

Accrued interest
14,609

 
15,484

Current portion of deferred revenue
2,732

 

Current portion of long-term debt, net
75,188

 
79,740

Current liabilities of discontinued operations

 
401

Total current liabilities
114,631

 
120,549

Deferred revenue
17,136

 
100,605

Long-term debt, net
723,147

 
729,608

Other non-current liabilities
2,385

 
2,808

Other non-current liabilities—affiliate

 
346

Total liabilities
857,299

 
953,916

Commitments and contingencies (see Note 15)
 
 
 
Class A Convertible Preferred Units (250,000 and 258,844 units issued and outstanding at June 30, 2018 and December 31, 2017, respectively, at $1,000 par value per unit; liquidation preference of $1,500 per unit)
164,587

 
173,431

Partners’ capital
 
 
 
Common unitholders’ interest (12,245,920 and 12,232,006 units issued and outstanding at June 30, 2018 and December 31, 2017, respectively)
326,125

 
199,851

General partner’s interest
4,427

 
1,857

Warrant holders’ interest
66,816

 
66,816

Accumulated other comprehensive loss
(4,872
)
 
(3,313
)
Total partners’ capital
392,496

 
265,211

Non-controlling interest
(2,576
)
 
(3,394
)
Total capital
389,920

 
261,817

Total liabilities and capital
$
1,411,806


$
1,389,164

The accompanying notes are an integral part of these consolidated financial statements.

1


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)


 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2017
Revenues and other income
 
 
 
 
 
 
 
Coal royalty and other
$
48,711

 
$
32,768

 
$
94,684

 
$
67,762

Coal royalty and other—affiliates
188

 
11,338

 
425

 
22,843

Transportation and processing services
5,002

 
4,146

 
10,385

 
4,146

Transportation and processing services—affiliate

 
1,374

 

 
6,013

Construction aggregates
34,233

 
27,363

 
60,657

 
52,846

Road construction and asphalt paving services
6,176

 
6,192

 
6,904

 
7,930

Equity in earnings of Ciner Wyoming
16,529

 
8,389

 
26,150

 
18,683

Gain on asset sales, net
210

 
3,361

 
870

 
3,405

Total revenues and other income
$
111,049

 
$
94,931

 
$
200,075


$
183,628

Operating expenses
 
 
 
 
 
 
 
Operating and maintenance expenses
$
38,301

 
$
31,020

 
$
68,269

 
$
60,648

Operating and maintenance expenses—affiliates
4,065

 
2,219

 
6,530

 
4,774

Depreciation, depletion and amortization
8,563

 
8,165

 
16,520

 
17,889

Amortization expense—affiliate

 
240

 

 
1,008

General and administrative
2,414

 
2,031

 
5,819

 
8,109

General and administrative—affiliates
849

 
852

 
1,780

 
1,976

Asset impairments

 

 
242

 
1,778

Total operating expenses
$
54,192


$
44,527


$
99,160

 
$
96,182

 
 
 
 
 
 
 
 
Income from operations
$
56,857


$
50,404


$
100,915

 
$
87,446

Other income (expense)
 
 
 
 
 
 
 
Interest expense, net
$
(17,734
)
 
$
(20,308
)
 
$
(35,704
)
 
$
(43,432
)
Debt modification expense

 
(132
)
 

 
(7,939
)
Loss on extinguishment of debt

 
(4,107
)
 

 
(4,107
)
Other expense, net
$
(17,734
)

$
(24,547
)

$
(35,704
)
 
$
(55,478
)
 
 
 
 
 
 
 
 
Net income from continuing operations
$
39,123


$
25,857


$
65,211

 
$
31,968

Income (loss) from discontinued operations
(34
)
 
133

 
(48
)
 
(74
)
Net income
$
39,089


$
25,990


$
65,163

 
$
31,894

Less: net income attributable to non-controlling interest
(869
)
 

 
(869
)
 

Net income attributable to NRP
$
38,220

 
$
25,990

 
$
64,294

 
$
31,894

Less: income attributable to preferred unitholders
(7,500
)
 
(7,538
)
 
(15,000
)
 
(10,038
)
Net income attributable to common unitholders and general partner
$
30,720


$
18,452


$
49,294

 
$
21,856

 
 
 
 
 
 
 
 
Net income attributable to common unitholders
$
30,105

 
$
18,015

 
$
48,308

 
$
21,419

Net income attributable to the general partner
$
615

 
$
437

 
$
986

 
$
437

 
 
 
 
 
 
 
 
Income from continuing operations per common unit (see Note 5)
 
 
 
 
 
 
 
Basic
$
2.46

 
$
1.46

 
$
3.95

 
$
1.76

Diluted
$
1.75

 
$
1.13

 
2.96

 
1.64

Net income per common unit (see Note 5)
 
 
 
 
 
 
 
Basic
$
2.46

 
$
1.47

 
$
3.95

 
$
1.75

Diluted
$
1.75

 
$
1.13

 
2.95

 
1.64

 
 
 
 
 
 
 
 
Net income
$
39,089


$
25,990


$
65,163

 
$
31,894

Add: comprehensive loss from unconsolidated investment and other
(434
)
 
(13
)
 
(1,559
)
 
(1,145
)
Comprehensive income
$
38,655

 
$
25,977

 
$
63,604

 
$
30,749

Less: comprehensive income attributable to non-controlling interest
(869
)
 

 
(869
)
 

Comprehensive income attributable to NRP
$
37,786


$
25,977


$
62,735

 
$
30,749

The accompanying notes are an integral part of these consolidated financial statements.

2


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(Unaudited)


 
Common Unitholders
 
General Partner
 
Warrant Holders
 
Accumulated
Other
Comprehensive
Loss
 
Partners' Capital Excluding Non-Controlling Interest
 
Non-Controlling Interest
 
Total Capital
 
(In thousands)
Units
 
Amounts
 
Balance at December 31, 2017
12,232

 
$
199,851

 
$
1,857

 
$
66,816

 
$
(3,313
)
 
$
265,211

 
$
(3,394
)
 
$
261,817

Cumulative effect of adoption of accounting standard (See Note 2)

 
88,448

 
1,805

 

 

 
90,253

 

 
90,253

Net income (1)

 
63,008

 
1,286

 

 

 
64,294

 
869

 
65,163

Distributions to common unitholders and general partner

 
(11,015
)
 
(225
)
 

 

 
(11,240
)
 

 
(11,240
)
Distributions to preferred unitholders

 
(14,960
)
 
(305
)
 

 

 
(15,265
)
 

 
(15,265
)
Issuance of unit-based awards
14

 
410

 

 

 

 
410

 

 
410

Unit-based awards amortization and vesting

 
333

 

 

 

 
333

 

 
333

Comprehensive loss from unconsolidated investment and other

 
50

 
9

 

 
(1,559
)
 
(1,500
)
 
(51
)
 
(1,551
)
Balance at June 30, 2018
12,246

 
$
326,125

 
$
4,427

 
$
66,816

 
$
(4,872
)
 
$
392,496

 
$
(2,576
)
 
$
389,920

 
 
 
 
 
(1)
Net income includes $15.0 million attributable to Preferred Unitholders that accumulated during the period, of which $14.7 million is allocated to the common unitholders and $0.3 million is allocated to the general partner.
The accompanying notes are an integral part of these consolidated financial statements.

3


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



 
Six Months Ended June 30,
(In thousands)
2018
 
2017
Cash flows from operating activities
 
 
 
Net income
$
65,163

 
$
31,894

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
 
 
 
Depreciation, depletion and amortization
16,520

 
17,889

Amortization expense—affiliate

 
1,008

Distributions from unconsolidated investment
22,403

 
22,112

Equity earnings from unconsolidated investment
(26,150
)
 
(18,683
)
Gain on asset sales, net
(870
)
 
(3,405
)
Debt modification expense

 
7,939

Loss on extinguishment of debt

 
4,107

Loss from discontinued operations
48

 
74

Asset impairments
242

 
1,778

Unit-based compensation expense
1,073

 
3

Amortization of debt issuance costs and other
1,973

 
3,344

Other—affiliates
(190
)
 
(1,173
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable
(8,926
)
 
(4,530
)
Accounts receivable—affiliates
21

 
236

Accounts payable
175

 
46

Accounts payable—affiliates
890

 
2

Accrued liabilities
(3,381
)
 
(7,302
)
Accrued liabilities—affiliates
(515
)
 

Accrued interest
(875
)
 
3,405

Deferred revenue
6,037

 
4,489

Deferred revenue—affiliates

 
(10,166
)
Other items, net
952

 
2,527

Net cash provided by operating activities of continuing operations
$
74,590

 
$
55,594

Net cash used in operating activities of discontinued operations
(447
)
 
(531
)
Net cash provided by operating activities
$
74,143

 
$
55,063

 
 
 
 
Cash flows from investing activities
 
 
 
Distributions from unconsolidated investment in excess of cumulative earnings
$
2,097

 
$
2,388

Proceeds from sale of assets
911

 
1,268

Return of long-term contract receivable
1,016

 
1,207

Return of long-term contract receivable—affiliate

 
804

Acquisition of plant and equipment and other
(5,857
)
 
(4,998
)
Net cash provided by (used in) investing activities of continuing operations
$
(1,833
)
 
$
669

Net cash provided by investing activities of discontinued operations

 
202

Net cash provided by (used in) investing activities
$
(1,833
)
 
$
871

 
 
 
 

4


NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



 
Six Months Ended June 30,
(In thousands)
2018
 
2017
Cash flows from financing activities
 
 
 
Proceeds from issuance of preferred units and warrants, net
$

 
$
242,100

Proceeds from issuance of 2022 Senior Notes, net

 
103,688

Borrowings on credit facility
35,000

 

Repayments of loans
(48,072
)
 
(348,292
)
Redemption of preferred units paid-in-kind
(8,844
)
 

Distributions to common unitholders and general partner
(11,240
)
 
(11,234
)
Distributions to preferred unitholders
(15,265
)
 
(1,250
)
Contributions to discontinued operations
(447
)
 
(329
)
Debt issuance costs and other
(741
)
 
(40,534
)
Net cash used in financing activities of continuing operations
$
(49,609
)
 
$
(55,851
)
Net cash provided by financing activities of discontinued operations
447

 
329

Net cash used in financing activities
$
(49,162
)
 
$
(55,522
)
 
 
 
 
Net increase in cash and cash equivalents
$
23,148

 
$
412

Cash and cash equivalents at beginning of period
29,827

 
40,371

Cash and cash equivalents at end of period
$
52,975

 
$
40,783

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid during the period for interest from continuing operations
$
33,155

 
$
34,880

Non-cash investing and financing activities:
 
 
 
Plant, equipment and mineral rights funded with accounts payable or accrued liabilities
$
894

 
$

Issuance of 2022 Senior Notes in exchange for 2018 Senior Notes
$

 
$
240,638

The accompanying notes are an integral part of these consolidated financial statements.

5


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



1.    Basis of Presentation
Nature of Business
Natural Resource Partners L.P. (the "Partnership") engages principally in the business of owning, operating, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal, natural soda ash from trona, construction aggregates and other natural resources. As used in these Notes to Consolidated Financial Statements, the terms "NRP," "we," "us" and "our" refer to Natural Resource Partners L.P. and its subsidiaries, unless otherwise stated or indicated by context.
Principles of Consolidation and Reporting
The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management's opinion, all necessary adjustments to fairly present the Partnership's results of operations, financial position and cash flows for the periods presented have been made and all such adjustments were of a normal and recurring nature. Certain reclassifications have been made to prior period amounts on the Statements of Comprehensive Income and Statements of Cash Flows to conform with current period presentation. These reclassifications had no impact on previously reported net income or cash flows from operating, investing or financing activities.
Recently Adopted Accounting Standards
Revenue Recognition. On January 1, 2018, NRP adopted accounting standard ASC 606, Revenue from Contracts with Customers, and all the related amendments (the “new revenue standard” and "ASC 606") to all open contracts using the modified retrospective method. The adoption of the new revenue standard impacted royalty revenue from NRP's coal and aggregates royalty leases as further described below. NRP recognized a $90.3 million cumulative effect of adoption adjustment in the opening balance of partners' capital on January 1, 2018. Prior year information has not been restated and continues to be reported under the accounting standards in effect for those periods. The new revenue standard had no impact on revenues from NRP's Construction Aggregates or Soda Ash operating segments.
A majority of NRP’s coal and aggregates royalty revenue continues to be recognized over the lease term based on production. For coal and aggregates royalty leases for which NRP expects consideration from minimum payments to be greater than consideration from production over the lease term, royalty revenue is now recognized straight-line over the lease term based on the minimum payment consideration.
The cumulative effects of the changes made to our Consolidated Balance Sheet at January 1, 2018 for the adoption of the new revenue standard were as follows:
(In thousands)
Balance at
December 31, 2017
 
Adjustments due to
ASC 606
 
Balance at
January 1, 2018
Assets
 
 
 
 
 
Accounts receivable, net
$
47,026

 
$
3,479

 
$
50,505

 
 
 
 
 


Liabilities
 
 
 
 


Current portion of deferred revenue
$

 
$
1,973

 
$
1,973

Deferred revenue
100,605

 
(88,747
)
 
11,858

 
 
 
 
 
 
Partners’ capital
 
 
 
 
 
Common unitholders’ interest
$
199,851

 
$
88,448

 
$
288,299

General partner’s interest
1,857

 
1,805

 
3,662

Total partners’ capital
265,211

 
90,253

 
355,464




6


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


The impact of adoption of the new revenue standard on NRP’s Consolidated Balance Sheet and Consolidated Statements of Comprehensive Income was as follows:
 
As of June 30, 2018
(In thousands)
As Reported
 
Balances without Adoption of ASC 606
 
Effect of Change
Assets
 
 
 
 
 
Accounts receivable, net
$
59,312

 
$
55,325

 
$
3,987

Total assets
1,411,806

 
1,407,819

 
3,987

 
 
 
 
 
 
Liabilities and capital
 
 
 
 
 
Current portion of deferred revenue
$
2,732

 
$

 
$
2,732

Deferred revenue
17,136

 
102,244

 
(85,108
)
Total liabilities
857,299

 
939,675

 
(82,376
)
Partners’ capital
 
 
 
 
 
Common unitholders’ interest
326,125

 
241,489

 
84,636

General partner’s interest
4,427

 
2,700

 
1,727

Total partners’ capital
392,496

 
306,133

 
86,363

Total liabilities and capital
1,411,806

 
1,407,819

 
3,987

 
For the Three Months Ended June 30, 2018
(In thousands)
As Reported
 
Amounts without Adoption of ASC 606
 
Effect of Change
Coal royalty and other revenues
$
48,711

 
$
50,710

 
$
(1,999
)
Net income from continuing operations
39,123

 
41,315

 
(2,192
)
Net income
39,089

 
41,281

 
(2,192
)
Net income per common unit (basic)
2.46

 
2.64

 
(0.18
)
Net income per common unit (diluted)
1.75

 
1.85

 
(0.10
)
 
For the Six Months Ended June 30, 2018
(In thousands)
As Reported
 
Amounts without Adoption of ASC 606
 
Effect of Change
Coal royalty and other revenues
$
94,684

 
$
98,381

 
$
(3,697
)
Net income from continuing operations
65,211

 
69,101

 
(3,890
)
Net income
65,163

 
69,053

 
(3,890
)
Net income per common unit (basic)
3.95

 
4.26

 
(0.31
)
Net income per common unit (diluted)
2.95

 
3.13

 
(0.18
)
Recently Issued Accounting Standards
Leases. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires a lessee to recognize assets and liabilities on the balance sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months. This standard does not apply to leases that explore for or use minerals, oil, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained. The guidance also requires disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows arising from leases. The guidance is effective for annual and interim periods beginning after December 31, 2018 and is to be adopted using a modified retrospective approach. The Partnership is currently evaluating the impact of the provisions of this guidance on its consolidated financial statements.


7


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


2.    Revenue from Contracts with Customers
Coal Royalty and Other Segment
The following table represents the Partnership's Coal Royalty and Other segment revenues (including affiliates) by major source:
 
 
Three Months Ended
 
Six Months Ended
(In thousands)
 
June 30, 2018
Coal royalty revenue
 
$
31,407

 
$
60,098

Production lease minimum revenue
 
102

 
527

Minimum lease straight-line revenue
 
6,769

 
13,529

Wheelage revenue
 
1,641

 
3,615

Coal overriding royalty revenue
 
3,702

 
6,574

Aggregates royalty revenue
 
1,572

 
2,663

Oil and gas royalty revenue
 
1,354

 
4,252

Property tax revenue
 
1,523

 
2,705

Other revenue
 
829

 
1,146

Coal royalty and other revenues (1)
 
$
48,899

 
$
95,109

Transportation and processing services revenue (2)
 
5,002

 
10,385

Total Coal royalty and other segment revenues
 
$
53,901

 
$
105,494

 
 
 
 
 
(1)
Represents revenue from contracts with customers as defined under ASC 606.
(2)
Revenue from contracts with customers as defined under ASC 606 was $3.1 million and $6.1 million for the three and six months ended June 30, 2018, respectively. The remaining transportation and processing services revenue of $1.9 million and $4.3 million for the three and six months ended June 30, 2018, respectively, relates to other NRP-owned infrastructure leased to and operated by third party operators accounted for under ASC 840, Leases.
Coal Royalty and Other segment revenues
Royalty-based leases. Approximately two-thirds of our royalty-based leases have initial terms of five to 40 years, with many lessees having the option to extend the lease for additional terms. For these types of leases, the lessees generally make payments to NRP based on the greater of a percentage of the gross sales price or a fixed price per ton of mineral they mine or sell. Most of NRP’s coal and aggregates royalty leases require the lessee to pay annual or quarterly minimum amounts, either made in advance or arrears, which are generally recoupable through actual royalty production over certain time periods that generally range from three to five years.
In accordance with previous accounting standards in effect prior to January 1, 2018, NRP recognized all coal and aggregates royalty revenue over the lease term based on coal or aggregates production. The recognition of revenue from minimum payments was deferred until either recoupment occurred or the recoupment period expired. Upon expiration, unrecouped minimums were recognized as revenue.
Under the new revenue recognition standard, management has defined NRP's coal and aggregates royalty lease performance obligation as providing the lessee the right to mine and sell NRP's coal or aggregates over the lease term. The Partnership then evaluated the likelihood that consideration NRP received from its coal and aggregates lessees resulting from production would exceed consideration received from minimum payments over the lease term.


8


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


As a result of this evaluation, revenue recognition from the Partnership's royalty-based leases is based on either production or minimum payments as follows:
Production Leases: Leases for which the Partnership expects that consideration from production will be greater than consideration from minimums over the lease term. Revenue recognition for these leases is recognized as Coal royalty revenue or Aggregates royalty revenue, as applicable, over time based on production. Deferred revenue, resulting from minimum consideration received, is recognized as royalty revenue either when recoupment occurs or as Production lease minimum revenue when either the recoupment period expires or when NRP determines that recoupment is remote (breakage).
Minimum Leases: Leases for which the Partnership expects that consideration from minimums will be greater than consideration from production over the lease term. Revenue recognition for these leases is recognized straight-line over the lease term based on the minimum consideration amount and is recognized in Minimum lease straight-line revenue.
Additionally, minimum payments contractually due are accrued and recognized in Accounts receivable, net, with an offset to Deferred revenue, and minimum payments received are recorded as Deferred revenue on NRP 's Consolidated Balance Sheets.
The Partnership also has overriding royalty revenue interests in certain oil and gas wells and coal reserves. Revenue from these interests is recognized over time based on when the respective commodities are sold.
Wheelage. Revenue related to fees collected per ton to transport foreign coal across property owned by the Partnership that is recognized over time as transportation across our property occurs.
Other revenue. Other revenue consists primarily of rental payments and surface damage fees related to certain land owned by the Partnership and is recognized straight-line over time as it is earned. Other revenues also include and property tax revenues, the majority of which are reimbursable by the lessee. Property taxes incurred on the Partnership's properties are recognized on a gross basis over time.
Transportation and processing services revenue. The Partnership owns transportation and processing infrastructure that is leased to third parties and collects throughput fees for which it recognizes revenue over time based on the coal tons transported over the beltlines or processed through the facilities.
Contract modifications
Contract modifications that impact the overall economics of the lease's potential future cash flows are evaluated in accordance with ASC 606. A majority of our contract modifications pertain to our coal and aggregates royalty contracts and include, but are not limited to, extending the lease term, changes to royalty rates, floor prices or minimum payments, assignment of the contract or termination due to the exhaustion of merchantable and mineable reserves. In accordance with the contract modification guidance in paragraphs 606-10-25-12 and 25-13, revenues from contracts that were modified before January 1, 2018 were not retrospectively restated for those modifications and instead reflected the aggregate effect of those modifications when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligation.


9


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Contract Assets and Liabilities
The following table details the Partnership's Coal Royalty and Other segment receivables from contracts with customers and contract liabilities:
 
 
June 30,
 
January 1,
(In thousands)
 
2018
 
2018
Receivables
 
 
 
 
Total accounts receivable, net (including affiliates)
 
$
30,448

 
$
24,047

Prepaid expenses and other (1)
 
2,163

 
2,830

 
 
 
 
 
Contract liabilities
 
 
 
 
Current portion of deferred revenue
 
$
2,732

 
$
1,973

Deferred revenue
 
17,136

 
11,858

 
 
 
 
 
(1)
Prepaid expenses and other includes notes receivable from contracts with customers.
The following table shows the activity related to the Partnership's Coal Royalty and Other segment deferred revenue:
(In thousands)
Six Months Ended June 30, 2018
Balance at December 31, 2017
$
100,605

Cumulative adjustment for change in accounting principle recognized in partners' capital
(86,774
)
Balance at January 1, 2018 (current and non-current)
$
13,831

Production leases - revenue impact
 
Recoupments recognized in Coal and aggregates royalty revenue
(4,630
)
Production lease minimum revenue
(393
)
Minimum leases - revenue impact
 
Minimum lease amortization recognized in Minimum lease straight-line revenue
(1,958
)
Contractual minimums due
956

Cash received for minimum payments
12,062

Balance at June 30, 2018 (current and non-current)
$
19,868


The following table shows the Partnership's Coal Royalty and Other segment revenue recognized during the three months ended June 30, 2018 that was included in the deferred revenue balance at the beginning of the period:
(In thousands)
 
Production leases - revenue impact
 
Recoupments recognized in Coal and aggregates royalty revenue
(2,365
)
Production lease minimum revenue
(21
)
Minimum leases - revenue impact
 
Minimum lease amortization recognized in Minimum lease straight-line revenue
(1,005
)

10


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Remaining Performance Obligations
The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows:
 
 
Weighted Average Remaining Years as of June 30, 2018
 
Annual Minimum Payments
(In thousands)
Lease Term (1)
 
 
1 - 5 years
 
0.2
 
$
7,888

6 - 10 years
 
2.4
 
27,439

10+ years
 
8.2
 
44,166

 
 
 
 
 
(1)
The Partnership applied the practical expedient for disclosing remaining performance obligations for contracts with an expected duration of one year or less, and have excluded those contracts from this disclosure.
The Partnership's non-cancelable annual minimum payments on its coal and aggregates royalty leases are recognized as revenue as discussed above. In addition, the Partnership's non-cancelable annual minimum payments due under terms of its coal and aggregates overriding royalty agreements include a $1.8 million annual minimum that expires in 2023 and a $1.0 million minimum that expires upon exhaustion of the mineable and recoverable coal reserves, respectively.
Construction Aggregates Segment
The Partnership's Construction Aggregates segment revenues from contracts with customers by major source are as follows:
 
Three Months Ended
 
Six Months Ended
(In thousands)
June 30, 2018
Crushed stone, sand and gravel
$
18,070

 
$
31,809

Delivery and fuel income
11,678

 
21,761

Other revenues
4,485

 
7,087

Total construction aggregates revenues
$
34,233


$
60,657

Road construction and asphalt paving services
6,176

 
6,904

Total construction aggregates segment revenues
$
40,409

 
$
67,561

Construction Aggregates segment revenues
The majority of the Construction Aggregates segment revenues is recognized at a point in time with the exception of revenue related to construction contracts recognized on the percentage-of-completion method as discussed below. The majority of the Partnership's construction contracts have an original expected duration of one year or less. As such, the Partnership has elected to apply the practical expedient and not disclose remaining performance obligations for contracts with an original expected duration of one year or less. Additional discussion of the Partnership's major sources of Construction Aggregates segment revenue are as follows:
Crushed stone, sand and gravel and other revenues. Revenue from the sale of crushed stone, sand, gravel and asphalt is recognized based on a fixed price when title is transferred to the buyer and collectibility of the sales proceeds is reasonably assured (typically occurs when products are picked up or delivered to the customer). Other revenues consist of brokered stone sales and barge and service revenues. Brokered stone sales include aggregates purchases from third party quarries, which are then sold and transported to customers and recorded as revenue at the time of delivery. The purchase price of the aggregates from the third party quarries are recorded as expenses. Barge and service revenues relate to loading and unloading services at marine terminals and are recorded as revenue at the time the service is performed.
Delivery and fuel income. Revenue related to pass through delivery and fuel costs the Partnership incurs to deliver its products is recognized on a gross basis and is subsequently reimbursed by the customer. The related costs are recognized when incurred and are included in Operating and maintenance expenses on the Consolidated Statements of Comprehensive Income.

11


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Road construction and asphalt paving services revenue. Revenue related to construction contracts is recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract.
The Partnership had $24.7 million and $23.0 million in receivables from Construction Aggregates segment related contracts with customers included in Accounts receivable, net on its Consolidated Balance Sheets as of June 30, 2018 and January 1, 2018, respectively.
3.    Class A Convertible Preferred Units
On March 2, 2017, NRP issued $250 million of Class A Convertible Preferred Units representing limited partner interests in NRP (the "Preferred Units") to certain entities controlled by funds affiliated with The Blackstone Group, L.P. (collectively referred to as "Blackstone") and certain affiliates of GoldenTree Asset Management LP (collectively referred to as "GoldenTree") (together the "Preferred Purchasers") pursuant to a Preferred Unit and Warrant Purchase Agreement. NRP issued 250,000 Preferred Units to the Preferred Purchasers at a price of $1,000 per Preferred Unit (the "Per Unit Purchase Price"), less a 2.5% structuring and origination fee. The Preferred Units entitle the Preferred Purchasers to receive cumulative distributions at a rate of 12% per year, up to one half of which NRP may pay in additional Preferred Units (such additional Preferred Units, the "paid-in-kind units" or "PIK Units"), subject to approval by the Board of Directors.
During the six months ended June 30, 2018, the Partnership redeemed all of the outstanding PIK Units, which resulted in an $8.8 million cash payment during the period.
Activity related to the Preferred Units is as follows from December 31, 2017 to June 30, 2018:
(In thousands, except unit data)
 
Units Outstanding
 
Financial Position
Balance at December 31, 2017
 
258,844

 
$
173,431

Redemption of PIK Units
 
(8,844
)
 
(8,844
)
Balance at June 30, 2018
 
250,000

 
$
164,587

4.    Common and Preferred Unit Distributions
The Partnership makes cash distributions to common unitholders on a quarterly basis, subject to approval by the Board of Directors. As discussed in Note 3 above, the Partnership also makes distributions to the preferred unitholders.
Common Unit Distributions
Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive 2% of such distributions. The following table shows the distributions declared and paid to common unitholders during the six months ended June 30, 2018 and 2017, respectively:
 
 
 
 
 
 
Total Distributions (in thousands)
Date Paid
 
Period Covered by Distribution
 
Distribution per Common Unit
 
Common Units
 
GP Interest
 
Total
2018
 
 
 
 
 
 
 
 
 
 
February 14, 2018
 
October 1 - December 31, 2017
 
$
0.45

 
$
5,505

 
$
112

 
$
5,617

May 14, 2018
 
January 1 - March 31, 2018
 
$
0.45

 
$
5,510

 
$
113

 
$
5,623

 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
February 14, 2017
 
October 1 - December 31, 2016
 
$
0.45

 
$
5,503

 
$
112

 
$
5,615

May 12, 2017
 
January 1 - March 31, 2017
 
$
0.45

 
$
5,506

 
$
113

 
$
5,619


12


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Preferred Unit Distributions
The following table shows the distributions declared and paid to Preferred Unitholders during the six months ended June 30, 2018 and 2017, respectively:
Date Paid
 
Period Covered by Distribution
 
Distribution per Preferred Unit
 
Total Distribution Declared
(in thousands)
2018
 
 
 
 
 
 
February 7, 2018
 
October 1 - December 31, 2017
 
$
30.00

 
$
7,765

May 14, 2018
 
January 1 - March 31, 2018
 
$
30.00

 
$
7,500

 
 
 
 
 
 
 
2017
 
 
 
 
 
 
May 30, 2017
 
March 2 - March 31, 2017
 
$
5.00

 
$
2,500

Income available to common unitholders and the general partner is reduced by Preferred Unit distributions that accumulated during the period. During the three and six months ended June 30, 2018, NRP reduced net income attributable to common unitholders and the general partner by $7.5 million and $15.0 million, respectively, as a result of accumulated Preferred Unit distributions earned during the period. The $7.5 million Preferred Unit distribution earned during the three months ended June 30, 2018 will be paid on August 14, 2018.
5.    Net Income Per Common Unit
Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's Preferred Units and Warrants, if the inclusion of these items is dilutive.
The dilutive effect of the Preferred Units is calculated using the if-converted method. Under the if-converted method, the Preferred Units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income per unit calculation for the period being presented. Distributions declared in the period and undeclared distributions on the Preferred Units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation.
The dilutive effect of the Warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period. The calculation of the dilutive effect of the Warrants for the three and six months ended June 30, 2018 and 2017 did not include the net settlement of Warrants to purchase 2.25 million common units with a strike price of $34.00 because the impact would have been anti-dilutive.

13


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


The following table reconciles the numerators and denominators of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2017
Allocation of net income:
 
 
 
 
 
 
 
Net income from continuing operations
$
39,123

 
$
25,857

 
$
65,211

 
$
31,968

Less: net income attributable to non-controlling interest
(869
)
 

 
(869
)
 

Less: income attributable to preferred unitholders
(7,500
)
 
(7,538
)
 
(15,000
)
 
(10,038
)
Net income from continuing operations attributable to common unitholders and general partner
$
30,754

 
$
18,319

 
$
49,342

 
$
21,930

Less: net income from continuing operations attributable to the general partner
(616
)
 
(434
)
 
(987
)
 
(438
)
Net income from continuing operations attributable to common unitholders
$
30,138


$
17,885


$
48,355


$
21,492

 
 
 
 
 
 
 
 
Net income (loss) from discontinued operations
$
(34
)
 
$
133

 
$
(48
)
 
$
(74
)
Less: net income (loss) from discontinued operations attributable to the general partner
1

 
(3
)
 
1

 
1

Net income (loss) from discontinued operations attributable to common unitholders
$
(33
)

$
130


$
(47
)
 
$
(73
)
 
 
 
 
 
 
 
 
Net income
$
39,089


$
25,990


$
65,163

 
$
31,894

Less: net income attributable to non-controlling interest
(869
)
 

 
(869
)
 

Less: income attributable to preferred unitholders
(7,500
)
 
(7,538
)
 
(15,000
)
 
(10,038
)
Net income attributable to common unitholders and general partner
$
30,720

 
$
18,452

 
$
49,294

 
$
21,856

Less: net income attributable to the general partner
(615
)

(437
)

(986
)
 
(437
)
Net income attributable to common unitholders
$
30,105


$
18,015


$
48,308


$
21,419

 
 
 
 
 
 
 
 
Basic income (loss) per common unit:
 
 
 
 
 
 
 
Weighted average common units—basic
12,246

 
12,232

 
12,242

 
12,232

Basic net income from continuing operations per common unit
$
2.46


$
1.46


$
3.95

 
$
1.76

Basic net income (loss) from discontinued operations per common unit
$


$
0.01


$

 
$
(0.01
)
Basic net income per common unit
$
2.46


$
1.47


$
3.95

 
$
1.75


14


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(In thousands, except per unit data)
2018
 
2017
 
2018
 
2017
Diluted income (loss) per common unit:
 
 
 
 
 
 
 
Weighted average common units—basic
12,246

 
12,232

 
12,242

 
12,232

Plus: dilutive effect of Warrants
522

 
467

 
476

 
361

Plus: dilutive effect of Preferred Units
8,615

 
9,760

 
8,615

 
6,517

Weighted average common units—diluted
21,383


22,459


21,333

 
19,110

 
 
 
 
 
 
 
 
Net income from continuing operations
$
39,123


$
25,857


$
65,211

 
$
31,968

Less: net income attributable to non-controlling interest
(869
)
 

 
(869
)
 

Diluted net income from continuing operations attributable to common unitholders and general partner
$
38,254

 
$
25,857

 
$
64,342

 
$
31,968

Less: diluted net income from continuing operations attributable to the general partner
(766
)
 
(586
)
 
(1,287
)
 
(639
)
Diluted net income from continuing operations attributable to common unitholders
$
37,488


$
25,271


$
63,055

 
$
31,329

 
 
 
 
 
 
 
 
Diluted net income (loss) from discontinued operations attributable to common unitholders
$
(33
)

$
130


$
(47
)
 
$
(73
)
 
 
 
 
 
 
 
 
Net income
$
39,089


$
25,990


$
65,163

 
$
31,894

Less: net income attributable to non-controlling interest
(869
)
 

 
(869
)
 

Diluted net income attributable to common unitholders and general partner
$
38,220

 
$
25,990

 
$
64,294

 
$
31,894

Less: diluted net income attributable to the general partner
(765
)
 
(589
)
 
(1,286
)
 
(638
)
Diluted net income attributable to common unitholders
$
37,455


$
25,401


$
63,008

 
$
31,256

 
 
 
 
 
 
 
 
Diluted net income from continuing operations per common unit
$
1.75


$
1.13


$
2.96

 
$
1.64

Diluted net income (loss) from discontinued operations per common unit
$


$


$

 
$

Diluted net income per common unit
$
1.75


$
1.13


$
2.95

 
$
1.64

6.    Segment Information
The Partnership's operating segments are strategic business units that offer distinct products and services to different customers in different geographies within the U.S. that are managed accordingly. NRP has the following three operating segments:
Coal Royalty and Other—consists primarily of coal royalty and coal-related transportation and processing assets. Other assets include aggregates royalty, industrial mineral royalty, oil and gas royalty and timber. The Partnership's coal reserves are primarily located in Appalachia, the Illinois Basin and the western United States. The Partnership's aggregates and industrial minerals properties are located in a number of states across the United States. The Partnership's oil and gas royalty assets are primarily located in Louisiana and Pennsylvania.
Soda Ash—consists of the Partnership's 49% non-controlling equity interest in Ciner Wyoming, a trona ore mining operation and soda ash refinery in the Green River Basin of Wyoming. Ciner Resources LP, the Partnership's operating partner, mines the trona, processes it into soda ash, and distributes the soda ash both domestically and internationally to the glass and chemicals industries. The Partnership receives regular quarterly distributions from Ciner Wyoming.
Construction Aggregates—consists of the Partnership's construction aggregates materials business that operates hard rock quarries, an underground limestone mine, sand and gravel plants, asphalt plants and marine terminals. Construction Aggregates operates in Pennsylvania, West Virginia, Tennessee, Kentucky and Louisiana.

15


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


Direct segment costs and certain other costs incurred at the corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments accordingly. These allocated costs generally include: insurance, taxes, legal, information technology and shared facilities services and are included in Operating and maintenance expenses and Operating and maintenance expenses—affiliates on the Consolidated Statements of Comprehensive Income. Intersegment sales are at prices that approximate market and are eliminated on the Partnership's Consolidated Statements of Comprehensive Income.
Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury and accounting and other corporate-level activity not specifically allocated to a segment and are included in General and administrative expenses and General and administrative expenses—affiliates on the Consolidated Statements of Comprehensive Income.
The following table summarizes certain financial information for each of the Partnership's operating segments:
 
 
Operating Segments
 
 
 
 
(In thousands)
 
Coal Royalty and Other
 
Soda Ash
 
Construction Aggregates
 
Corporate and Financing
 
Total
Three Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
Revenues (including affiliates)
 
$
53,901

 
$
16,529

 
$
40,409

 
$

 
$
110,839

Intersegment revenues (expenses)
 
74

 

 
(74
)
 

 

Gain on asset sales, net
 
168

 

 
42

 

 
210

Operating and maintenance expenses
(including affiliates)
 
8,117

 

 
34,249

 

 
42,366

Depreciation, depletion and amortization
 
5,376

 

 
3,187

 

 
8,563

General and administrative (including affiliates)
 

 

 

 
3,263

 
3,263

Other expense, net
 

 

 

 
17,734

 
17,734

Net income (loss) from continuing operations
 
40,650

 
16,529

 
2,941

 
(20,997
)
 
39,123

Loss from discontinued operations
 

 

 

 

 
(34
)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
Revenues (including affiliates)
 
$
49,626

 
$
8,389

 
$
33,555

 
$

 
$
91,570

Intersegment revenues (expenses)
 
68

 

 
(68
)
 

 

Gain on asset sales, net
 
3,184

 

 
177

 

 
3,361

Operating and maintenance expenses
(including affiliates)
 
5,419

 

 
27,820

 

 
33,239

Depreciation, depletion and amortization
(including affiliates)
 
5,375

 

 
3,030

 

 
8,405

General and administrative (including affiliates)
 

 

 

 
2,883

 
2,883

Other expense, net
 

 

 
178

 
24,369

 
24,547

Net income (loss) from continuing operations
 
42,084

 
8,389

 
2,636

 
(27,252
)
 
25,857

Income from discontinued operations
 

 

 

 

 
133



16


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


 
 
Operating Segments
 
 
 
 
(In thousands)
 
Coal Royalty and Other
 
Soda Ash
 
Construction Aggregates
 
Corporate and Financing
 
Total
Six Months Ended June 30, 2018
 
 
 
 
 
 
 
 
 
 
Revenues (including affiliates)
 
$
105,494

 
$
26,150

 
$
67,561

 
$

 
$
199,205

Intersegment revenues (expenses)
 
115

 

 
(115
)
 

 

Gain on asset sales, net
 
819

 

 
51

 

 
870

Operating and maintenance expenses
(including affiliates)
 
14,332

 

 
60,467

 

 
74,799

Depreciation, depletion and amortization
 
10,476

 

 
6,044

 

 
16,520

General and administrative (including affiliates)
 

 

 

 
7,599

 
7,599

Asset impairment
 
242

 

 

 

 
242

Other expense, net
 

 

 
20

 
35,684

 
35,704

Net income (loss) from continuing operations
 
81,378

 
26,150

 
966

 
(43,283
)
 
65,211

Loss from discontinued operations
 

 

 

 

 
(48
)
 
 











 


Six Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
 
Revenues (including affiliates)
 
$
100,764

 
$
18,683

 
$
60,776

 
$

 
$
180,223

Intersegment revenues (expenses)
 
130

 

 
(130
)
 

 

Gain on asset sales, net
 
3,213

 

 
192

 

 
3,405

Operating and maintenance expenses
(including affiliates)
 
12,803

 

 
52,619

 

 
65,422

Depreciation, depletion and amortization
(including affiliates)
 
12,348

 

 
6,549

 

 
18,897

General and administrative (including affiliates)
 

 

 

 
10,085

 
10,085

Asset impairment
 
1,778

 

 

 

 
1,778

Other expense, net
 

 

 
573

 
54,905

 
55,478

Net income (loss) from continuing operations
 
77,178

 
18,683

 
1,097

 
(64,990
)
 
31,968

Loss from discontinued operations
 

 

 

 

 
(74
)
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2018
 
 
 
 
 
 
 
 
 
 
Total assets of continuing operations
 
$
967,627

 
$
245,524

 
$
193,721

 
$
3,946

 
$
1,410,818

Total assets of discontinued operations
 

 

 

 

 
988

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2017
 
 
 
 
 
 
 
 
 
 
Total assets of continuing operations
 
$
945,237

 
$
245,433

 
$
191,374

 
$
6,129

 
$
1,388,173

Total assets of discontinued operations
 

 

 

 

 
991


17


NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)


7.    Equity Investment
The Partnership accounts for its 49% investment in Ciner Wyoming using the equity method of accounting. Activity related to this investment is as follows:

Three Months Ended
June 30,
 
Six Months Ended
June 30,
(In thousands)
2018
 
2017
 
2018
 
2017
Balance at beginning of period
$
241,679

 
$
252,803

 
$
245,433

 
$
255,901

Income allocation to NRP’s equity interests
17,657

 
9,274

 
28,489

 
20,754

Amortization of basis difference
(1,128
)
 
(885
)
 
(2,339
)
 
(2,071
)
Comprehensive loss from unconsolidated investment
(434
)
 
(23
)
 
(1,559
)
 
(1,165
)
Distribution
(12,250
)
 
(12,250
)
 
(24,500
)
 
(24,500
)
Balance at end of period
$
245,524


$
248,919


$
245,524

 
$
248,919

The following table represents summarized financial information for Ciner Wyoming as derived from the respective unaudited financial statements for the three and six months ended June 30, 2018 and 2017, respectively:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(In thousands)
2018
 
2017
 
2018
 
2017
Sales
$
91,882

 
$
119,737

 
$
213,101

 
$
246,309

Gross profit
14,022

 
24,219

 
42,244

 
52,916

Net Income
36,035

 
18,926

 
58,142

 
42,354

8.    Plant and Equipment, Net
The Partnership’s plant and equipment consist of the following:
 
June 30,
 
December 31,
(In thousands)
2018
 
2017
Plant and equipment
$
89,686

 
$
84,173

Construction in process
1,383

 
803

Less accumulated depreciation
(43,152
)
 
(38,806
)