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| 8-K - 8-K - NATURAL RESOURCE PARTNERS LP | a2018form8kvantacoreproforma.htm |
Exhibit 99.1
NATURAL RESOURCE PARTNERS L.P.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 11, 2018, NRP (Operating) LLC (“NRP Operating”), a wholly owned subsidiary of Natural Resource Partners L.P. (the “Partnership”), sold all of the outstanding equity interests in VantaCore Partners LLC (“VantaCore”), the Partnership's construction aggregates segment, to VantaCore Intermediate Holding, LLC, an affiliate of Sun Capital Partners, Inc. (the “Buyer”), for $197 million of estimated net proceeds after purchase price adjustments and transaction expenses.
The unaudited condensed consolidated pro forma financial statements presented in this exhibit are based on the Partnership's historical financial statements and are being presented to give effect to this sale of assets to the Buyer. The Unaudited Pro Forma Consolidated Balance Sheet reflects the sale as if it occurred on September 30, 2018. The Unaudited Pro Forma Condensed Consolidated Statements of Income give effect to the sale as if it occurred on January 1, 2015, the beginning of the earliest period presented.
The unaudited pro forma condensed consolidated financial statements, including notes thereto, should be read in conjunction with the Partnership's audited consolidated financial statements and notes thereto for the year ended December 31, 2017, 2016 and 2015 contained in its most recent Annual Report on Form 10-K, as well as in conjunction with the Partnership's unaudited consolidated financial statements and notes thereto for the three and nine months ended September 30, 2018 contained in its most recent Quarterly Report on Form 10-Q.
The pro forma adjustments, described in the related notes, are based upon presently available information and assumptions that management believes are reasonable under the circumstances as of the date of this filing. Actual adjustments may differ materially from the information presented. The unaudited pro forma condensed consolidated financial information presented is for informational purposes only and do not reflect what the Partnership's financial position and results of operations would have been had the sale occurred on the dates indicated and these statements are not indicative of the Partnership's future financial position and future results of operations.
NATURAL RESOURCE PARTNERS L.P.
TABLE OF CONTENTS
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NATURAL RESOURCE PARTNERS L.P.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2018
(In thousands, except unit data) | Historical | Pro Forma Adjustments (1) | Pro Forma | ||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 63,387 | $ | (4,780 | ) | (a) | $ | 58,607 | |||
Restricted cash | — | 102,029 | (b) | 102,029 | |||||||
Accounts receivable, net | 55,734 | (23,558 | ) | (a) | 32,176 | ||||||
Accounts receivable—affiliates | 22 | — | 22 | ||||||||
Inventory | 9,572 | (9,572 | ) | (a) | — | ||||||
Prepaid expenses and other | 4,665 | (1,746 | ) | (a) | 2,919 | ||||||
Current assets of discontinued operations | 988 | — | 988 | ||||||||
Total current assets | 134,368 | 62,373 | 196,741 | ||||||||
Land | 24,809 | (801 | ) | (a) | 24,008 | ||||||
Plant and equipment, net | 48,148 | (47,073 | ) | (a) | 1,075 | ||||||
Mineral rights, net | 869,106 | (103,690 | ) | (a) | 765,416 | ||||||
Intangible assets, net | 46,998 | (2,515 | ) | (a) | 44,483 | ||||||
Equity in unconsolidated investment | 242,901 | — | 242,901 | ||||||||
Long-term contracts receivable | 39,416 | — | 39,416 | ||||||||
Other assets | 6,188 | (5,391 | ) | (a) (c) | 797 | ||||||
Total assets | $ | 1,411,934 | $ | (97,097 | ) | $ | 1,314,837 | ||||
LIABILITIES AND CAPITAL | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 7,467 | $ | (6,700 | ) | (a) | $ | 767 | |||
Accounts payable—affiliates | 608 | (10 | ) | (a) | 598 | ||||||
Accrued liabilities | 14,005 | (4,906 | ) | (a) | 9,099 | ||||||
Accrued liabilities—affiliates | — | — | — | ||||||||
Accrued interest | 5,540 | (233 | ) | (d) | 5,307 | ||||||
Current portion of deferred revenue | 1,403 | — | 1,403 | ||||||||
Current portion of long-term debt, net | 75,201 | — | 75,201 | ||||||||
Total current liabilities | 104,224 | (11,849 | ) | 92,375 | |||||||
Deferred revenue | 40,885 | — | 40,885 | ||||||||
Long-term debt, net | 716,514 | (95,000 | ) | (e) | 621,514 | ||||||
Other non-current liabilities | 1,958 | (1,854 | ) | (a) | 104 | ||||||
Total liabilities | 863,581 | (108,703 | ) | 754,878 | |||||||
Commitments and contingencies (see Note 15) | |||||||||||
Class A Convertible Preferred Units (250,000 and 258,844 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively, at $1,000 par value per unit; liquidation preference of $1,500 per unit) | 164,587 | — | 164,587 | ||||||||
Partners’ capital | |||||||||||
Common unitholders’ interest (12,251,773 (f) and 12,232,006 units issued and outstanding at September 30, 2018 and December 31, 2017, respectively) | 319,673 | 11,374 | (g) | 331,047 | |||||||
General partner’s interest | 4,293 | 232 | (g) | 4,525 | |||||||
Warrant holders’ interest | 66,816 | — | 66,816 | ||||||||
Accumulated other comprehensive loss | (4,081 | ) | — | (4,081 | ) | ||||||
Total partners’ capital | 386,701 | 11,606 | 398,307 | ||||||||
Non-controlling interest | (2,935 | ) | — | (2,935 | ) | ||||||
Total capital | 383,766 | 11,606 | 395,372 | ||||||||
Total liabilities and capital | $ | 1,411,934 | $ | (97,097 | ) | $ | 1,314,837 | ||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
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NATURAL RESOURCE PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2018
(In thousands, except per unit data) | Historical | Pro Forma Adjustments (1) | Pro Forma | ||||||||
Revenues and other income | |||||||||||
Coal royalty and other | $ | 134,428 | $ | — | $ | 134,428 | |||||
Coal royalty and other—affiliates | 484 | — | 484 | ||||||||
Transportation and processing services | 17,238 | — | 17,238 | ||||||||
Construction aggregates | 91,055 | 91,055 | (h) | — | |||||||
Road construction and asphalt paving services | 13,154 | 13,154 | (h) | — | |||||||
Equity in earnings of Ciner Wyoming | 34,986 | — | 34,986 | ||||||||
Gain on asset sales, net | 1,033 | 214 | (h) | 819 | |||||||
Total revenues and other income | $ | 292,378 | $ | 104,423 | $ | 187,955 | |||||
Operating expenses | |||||||||||
Operating and maintenance expenses | $ | 103,403 | $ | 90,450 | (h) | $ | 12,953 | ||||
Operating and maintenance expenses—affiliates | 8,944 | 775 | (h) | 8,169 | |||||||
Depreciation, depletion and amortization | 24,741 | 9,377 | (h) | 15,364 | |||||||
General and administrative | 8,068 | — | 8,068 | ||||||||
General and administrative—affiliates | 2,714 | — | 2,714 | ||||||||
Asset impairments | 242 | — | 242 | ||||||||
Total operating expenses | $ | 148,112 | $ | 100,602 | $ | 47,510 | |||||
Income from operations | $ | 144,266 | $ | 3,821 | $ | 140,445 | |||||
Other expense, net | |||||||||||
Interest expense, net | $ | (53,205 | ) | $ | (2,218 | ) | (h) (i) | $ | (50,987 | ) | |
Total other expense, net | $ | (53,205 | ) | $ | (2,218 | ) | $ | (50,987 | ) | ||
Net income from continuing operations | $ | 91,061 | $ | 1,603 | $ | 89,458 | |||||
Income from continuing operations per common unit | |||||||||||
Basic | $ | 5.45 | $ | 5.32 | |||||||
Diluted | $ | 4.06 | $ | 3.99 | |||||||
Weighted average common units—basic | 12,243 | 12,243 | |||||||||
Weighted average common units—diluted | 21,841 | 21,841 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
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NATURAL RESOURCE PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2017
(In thousands, except per unit data) | Historical | Pro Forma Adjustments (1) | Pro Forma | ||||||||
Revenues and other income | |||||||||||
Coal royalty and other | $ | 158,399 | $ | — | $ | 158,399 | |||||
Coal royalty and other—affiliates | 23,402 | — | 23,402 | ||||||||
Transportation and processing services | 14,510 | — | 14,510 | ||||||||
Transportation and processing services—affiliate | 6,012 | — | 6,012 | ||||||||
Construction aggregates | 112,970 | 112,970 | (h) | — | |||||||
Road construction and asphalt paving services | 18,411 | 18,411 | (h) | — | |||||||
Equity in earnings of Ciner Wyoming | 40,457 | — | 40,457 | ||||||||
Gain on asset sales, net | 3,856 | 311 | (h) | 3,545 | |||||||
Total revenues and other income | $ | 378,017 | $ | 131,692 | $ | 246,325 | |||||
Operating expenses | |||||||||||
Operating and maintenance expenses | $ | 126,982 | $ | 110,211 | (h) | $ | 16,771 | ||||
Operating and maintenance expenses—affiliates | 9,534 | 1,422 | (h) | 8,112 | |||||||
Depreciation, depletion and amortization | 34,985 | 12,579 | (h) | 22,406 | |||||||
Amortization expense—affiliate | 1,008 | — | 1,008 | ||||||||
General and administrative | 13,513 | — | 13,513 | ||||||||
General and administrative—affiliates | 4,989 | — | 4,989 | ||||||||
Asset impairments | 3,031 | 64 | (h) | 2,967 | |||||||
Total operating expenses | $ | 194,042 | $ | 124,276 | $ | 69,766 | |||||
Income from operations | $ | 183,975 | $ | 7,416 | $ | 176,559 | |||||
Other expense, net | |||||||||||
Interest expense, net | $ | (82,721 | ) | $ | (4,849 | ) | (h) (i) (j) | $ | (77,872 | ) | |
Debt modification expense | (7,939 | ) | — | (7,939 | ) | ||||||
Loss on extinguishment of debt | (4,107 | ) | — | (4,107 | ) | ||||||
Total other expense, net | $ | (94,767 | ) | $ | (4,849 | ) | $ | (89,918 | ) | ||
Net income from continuing operations | $ | 89,208 | $ | 2,567 | $ | 86,641 | |||||
Income from continuing operations per common unit | |||||||||||
Basic | $ | 5.11 | $ | 4.90 | |||||||
Diluted | $ | 3.98 | $ | 3.87 | |||||||
Weighted average common units—basic | 12,232 | 12,232 | |||||||||
Weighted average common units—diluted | 21,950 | 21,950 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
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NATURAL RESOURCE PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2016
(In thousands, except per unit data) | Historical | Pro Forma Adjustments (1) | Pro Forma | ||||||||
Revenues and other income | |||||||||||
Coal royalty and other | $ | 144,520 | $ | — | $ | 144,520 | |||||
Coal royalty and other—affiliates | 46,259 | — | 46,259 | ||||||||
Transportation and processing services—affiliate | 19,336 | — | 19,336 | ||||||||
Construction aggregates | 103,755 | 103,755 | (h) | — | |||||||
Road construction and asphalt paving services | 17,047 | 17,047 | (h) | — | |||||||
Equity in earnings of Ciner Wyoming | 40,061 | — | 40,061 | ||||||||
Gain on asset sales, net | 29,081 | 13 | (h) | 29,068 | |||||||
Total revenues and other income | $ | 400,059 | $ | 120,815 | $ | 279,244 | |||||
Operating expenses | |||||||||||
Operating and maintenance expenses | $ | 119,621 | $ | 98,884 | (h) | $ | 20,737 | ||||
Operating and maintenance expenses—affiliates | 10,925 | 1,772 | (h) | 9,153 | |||||||
Depreciation, depletion and amortization | 43,087 | 14,506 | (h) | 28,581 | |||||||
Amortization expense—affiliate | 3,185 | — | 3,185 | ||||||||
General and administrative | 16,979 | — | 16,979 | ||||||||
General and administrative—affiliates | 3,591 | — | 3,591 | ||||||||
Asset impairments | 16,926 | 1,065 | (h) | 15,861 | |||||||
Total operating expenses | $ | 214,314 | $ | 116,227 | $ | 98,087 | |||||
Income from operations | $ | 185,745 | $ | 4,588 | $ | 181,157 | |||||
Other expense, net | |||||||||||
Interest expense, net | $ | (90,008 | ) | $ | — | $ | (90,008 | ) | |||
Interest expense—affiliate | (523 | ) | — | (523 | ) | ||||||
Total other expense, net | $ | (90,531 | ) | $ | — | $ | (90,531 | ) | |||
Net income from continuing operations | $ | 95,214 | $ | 4,588 | $ | 90,626 | |||||
Income from continuing operations per common unit | |||||||||||
Basic | $ | 7.65 | $ | 7.28 | |||||||
Diluted | $ | 7.65 | $ | 7.28 | |||||||
Weighted average common units—basic | 12,232 | 12,232 | |||||||||
Weighted average common units—diluted | 12,232 | 12,232 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
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NATURAL RESOURCE PARTNERS L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF LOSS
YEAR ENDED DECEMBER 31, 2015
(In thousands, except per unit data) | Historical | Pro Forma Adjustments (1) | Pro Forma | ||||||||
Revenues and other income | |||||||||||
Coal royalty and other | $ | 154,066 | $ | — | $ | 154,066 | |||||
Coal royalty and other—affiliates | 67,682 | — | 67,682 | ||||||||
Transportation and processing services—affiliate | 22,033 | — | 22,033 | ||||||||
Construction aggregates | 124,085 | 124,085 | (h) | — | |||||||
Road construction and asphalt paving services | 14,964 | 14,964 | (h) | — | |||||||
Equity in earnings of Ciner Wyoming | 49,918 | — | 49,918 | ||||||||
Gain on asset sales, net | 6,900 | (36 | ) | (h) | 6,936 | ||||||
Total revenues and other income | $ | 439,648 | $ | 139,013 | $ | 300,635 | |||||
Operating expenses | |||||||||||
Operating and maintenance expenses | $ | 136,943 | $ | 115,643 | (h) | $ | 21,300 | ||||
Operating and maintenance expenses—affiliates | 15,323 | 1,302 | (h) | 14,021 | |||||||
Depreciation, depletion and amortization | 57,295 | 15,578 | (h) | 41,717 | |||||||
Amortization expense—affiliate | 3,621 | — | 3,621 | ||||||||
General and administrative | 7,036 | — | 7,036 | ||||||||
General and administrative—affiliates | 5,312 | — | 5,312 | ||||||||
Asset impairments | 384,545 | 6,218 | (h) | 378,327 | |||||||
Total operating expenses | $ | 610,075 | $ | 138,741 | $ | 471,334 | |||||
Income (loss) from operations | $ | (170,427 | ) | $ | 272 | $ | (170,699 | ) | |||
Other expense, net | |||||||||||
Interest expense, net | $ | (87,893 | ) | $ | — | $ | (87,893 | ) | |||
Interest expense—affiliate | (1,851 | ) | — | (1,851 | ) | ||||||
Total other expense, net | $ | (89,744 | ) | $ | — | $ | (89,744 | ) | |||
Net income (loss) continuing operations | $ | (260,171 | ) | $ | 272 | $ | (260,443 | ) | |||
Loss from continuing operations per common unit | |||||||||||
Basic | $ | (20.78 | ) | $ | (20.80 | ) | |||||
Diluted | $ | (20.78 | ) | $ | (20.80 | ) | |||||
Weighted average common units—basic | 12,232 | 12,232 | |||||||||
Weighted average common units—diluted | 12,232 | 12,232 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
5
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The historical information for the Partnership is derived from the historical financial statements of the Partnership. The Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2018 is presented to illustrate the estimated effects of selling VantaCore to the Buyer as if the transaction had occurred on September 30, 2018. The Unaudited Pro Forma Condensed Consolidated Statements of Income are presented for the nine months ended September 30, 2018 and the years ended December 31, 2017, 2016 and 2015 as if the sale transaction had occurred at January 1, 2015, the beginning of the earliest period presented.
The pro forma adjustments are based on available information and assumptions management believes are directly attributable to the transaction, factually supportable and for income statement purposes are expected to have a continuing impact. The pro forma adjustments to reflect the sale of VantaCore to the Buyer include:
• | the associated assets, liabilities, revenue and expenses associated with the business sold to the Buyer; |
• | collection of anticipated cash proceeds in the unaudited pro forma consolidated balance sheet as if the sale had occurred on September 30, 2018, net of transaction expenses and customary purchase price adjustments. |
Note 2. Adjustments to Pro Forma Financial Statements
(1) | The following pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change: | |
(a) | Reflects the removal of the assets and liabilities of VantaCore sold to the Buyer. | |
(b) | Reflects the net cash proceeds less repayment of the outstanding principal and accrued interest on the Partnership's Opco Revolving Credit Facility (the "Revolver"). The Partnership's debt agreements stipulated that 75% of the net cash proceeds from certain asset sales be used to pay down the Revolver and 25% be offered to the holders of its Opco Senior Notes (the "Notes") on a pro-rata basis. $95 million was repaid on the Revolver, $49 million will be offered to the holders of the Notes and the remaining $53 million of net cash proceeds is restricted and expected to be used to make regular amortization payments on the Notes over the next twelve months. | |
(c) | Reflects the write-off of debt issue costs related to the Revolver. | |
(d) | Reflects accrued interest related to the Revolver paid using a portion of the proceeds from the asset sale. | |
(e) | Reflects the payment in full of the Revolver using a portion of asset sale proceeds. | |
(f) | Reflects the additional common units issued as a result of the transaction bonus paid in common units. | |
(g) | Reflects the estimated net gain on asset sale had the transaction closed on September 30, 2018 and the resulting impact of the write-off of debt issue costs related to the assumed repayment of the Revolver. | |
(h) | Reflects the removal of revenue and expenses directly associated with VantaCore. | |
(i) | Reflects the reduction in interest expense related to the repayment of the Notes in accordance with the terms of the Partnership's debt agreements at January 1, 2017, to give effect to the impact of the sale as if it had occurred on this date. At January 1, 2017, the Partnership's debt agreements stipulated that 75% of the net cash proceeds from certain asset sales be used to pay down the Revolver and 25% be offered to the holders of the Notes on a pro-rata basis. The Partnership assumed the holders of the Notes accepted the repayment offer made on January 1, 2017. | |
(j) | Reflects the reduction in interest expense related to the repayment of the Revolver in accordance with the terms of the Partnership's debt agreements at January 1, 2017, to give effect to the impact of the sale as if it had occurred on this date. At January 1, 2017, the Partnership's debt agreements stipulated that 75% of the net cash proceeds from certain asset sales be used to pay down the Revolver and 25% be offered to the holders of the Notes on a pro-rata basis. The Revolver was fully repaid in March of 2017 as part of the Partnership's recapitalization transactions; therefore, the Unaudited Pro Forma Condensed Consolidated Statements of Income for the year ended December 31, 2017 only removes approximately two months' worth of interest expense related to the Revolver. | |
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