I get them on E*Trade's site. I think they are also available on TD Ameritrade, maybe others.
And to the other poster (Fred), I don't think CS missed big time on ALDW. I don't think anyone saw the huge drop, but CS (which only covers ALDW peripherally) has been bearish for quite a long time on ALDW and ALJ (which they cover more closely). They were certainly the first one that I saw that predicted no distribution, and said the problems would last for at least 2 quarters.
But you're right (to Fred, again)- you have to take all analysts' opinions with a huge grain of salt. Many of them are so lost in the details that they miss the big picture, especially turning points. And I'm not convinced that the analyst projections and ratings aren't affected by the investment banking work their firms do for the companies. And refiners in particular are really hard to model. NTI reports tonight, and I really have no feel at all for what they will report. It won't be good, certainly, but even a "not so bad" Q will probably be seen as an accomplishment. But maybe it will be a disaster. I'm not expecting that, but nothing would surprise me.
Credit Suisse's guess is 30 cents, and I suspect they're pretty close. I just hope management says something/anything nice about how Q4 is going.
CS came out with a note this AM on ALDW/ALJ, also mentioning NTI, CVRR and CLMT.
They actually said some semi-nice things about ALDW. Although they project no distributions for the next 2 quarters, in addition to the distribution ALDW just omitted, they project quarterly distributions in the 38 - 46 cents range for Qs 2 through 4 of 2014, which would equal a yield of about 15% on today's price. They think the selling in ALDW is overdone.
I don't think anyone can really project 2014 earnings or distributions with any accuracy. There are too many variables. But CS was bearish on ALDW before most of the other analysts, and said that the distribution would likely be passed for Q3 and Q4 while others weren't quite so bearish, so coming from that perspective, their comments and projections are encouraging.
BTW, they project NTI's Q4 distribution at 90 cents, triple the Q3 distribution. Part of the Q3 problem was a shutdown which (hopefully) won't recur in Q4, but the projection sounds pretty optimistic. They have CVRR's Q4 distribution essentially equal to Q3, which wasn't all that great, to say the least.
I'd have to check, but this also might just mean that CS was involved in NTI's IPO and secondaries, but not in ALDW's or CVRR's. (Joke)
So either NRP is just getting bigger deposits from its lessees (this could be true with regard to Deer Run/Colt, but I would think it's not true in general) or else NRP is sitting on a bunch of cash where the operator has stopped or cut back production. If the latter is true, then NRP will probably be recognizing a bunch of GAAP income over the next few years as the time for recouping the minimums expires. But NRP includes the deposits in DCF when they are received, so this won't help DCF in the future. I think the growth in deferred revenue is a bad sign, but I can't be sure. Any thoughts?
And I forgot - your posts reminded me of one of the problems with matching NRP up with the miners. Most of the larger miners don't give the same level of detail that NRP does. So ANR might refer to Eastern steam coal, but its mines may be in CAPP, NAPP or IB. Clearly, NRP is betting its future on the Illinois Basin, not CAPP. And BTW, I once found an excel spreadsheet on EIA.gov that showed coal production by mine with great detail, but again the names didn't match up with NRP's names. And the information was historical only - no future guidance.
But it's cool to read someone trying to match up the operators with NRP. Thanks.
I thought I was the only 1 crazy enough to make an excel spreadsheet of NRP's mines and annual production. I did it to try to compare what NRP says about each mine to what the operator says. The problem is that it's really hard to match up mines because often the operator calls the mines by different names than NRP uses. And sometimes, the operator shows different production than NRP shows, I assume because sometimes NRP only owns 1 mine in an overall complex that an operator has. So I thought the information was somewhat limited.
But 2 points, 1 of which I really don't understand. First, Cline should be a much bigger percentage part of the business this year because of the Deer Run/Colt mine that started operations in 2012. Since NRP paid so much for the Colt reserves, I assume the production will be correspondingly high.
Now the confusing part. NRP's leases with the operators require the operators to make minimum quarterly or annual payments to NRP. NRP records these payments as deferred revenue on the balance sheet (debit cash, credit deferred revenue). Then, as coal is mined, the operator gets credit for the minimum payments it has made, reducing the deferred revenue amount. Once the operator has made the deposit, it has up to 3 years (maybe more) to get credit for the prepayment. So if an operator leases a mine and makes a deposit of $ 1 million to NRP but doesn't operate the mine at all, the money just sits with NRP with no income recognition until the period where the operator might get credit has expired.
I would have thought that as mining has slowed or flattened over the past few years, the deferred revenue balance would have declined. Fewer lessees, fewer leases, fewer deposits that NRP receives. But this is entirely wrong - from 12/31/09 through 9/30/13, the deferred revenue balance has doubled - from $ 67 million at the end of 2009 to $ 136 million this past September.
More in the next message, I'm running out of space.
You may already know what I'm about to say. If so, sorry. It seems to me that CAPP coal has a problem that is unique to CAPP. CAPP steam coal is relatively clean (sulfur content), and it always sold for a premium price to NAPP and especially IB because they had much higher sulfur content (maybe other impurities as well, for all I know). CAPP coal more expensive to produce - mostly unionized work force and the nature of the mines makes it much more expensive to produce than in other areas.
But over the past 20 years, all coal power plants have been required to install scrubbers to clean the impurities from the exhaust. So the cleaner coal was no longer such an advantage - it wasn't clean enough that scrubbers weren't needed, and once scrubbers were installed, plant operators could shift to dirtier (and much cheaper) coal from NAPP and IB. One operator that I just checked, ARLP (pure steam coal this year) YTD is getting $ 52/ton for its IB steam coal, and $ 81.50/ton for its CAPP steam coal. ARLP's CAPP production has been dropped every year with IB production increasing.
Apparently the price differential is frequently enough to cover additional transportation costs, even if the power plant operator is closer to CAPP coal. So CAPP starts with the same problem that all coal has (everyone in authority hates it and wants it gone), but it has the added drawback of being higher cost and higher price and plants don't need its cleaner coal.
I really don't know what CAPP operators can do to compete. I am aware of several new IB mines (NRP's Colt properties operated by Cline and ARLP's White Oak and Deer Run mines come to mind) that the competition for CAPP will only get worse.
But to be honest, I'm an accountant who doesn't know all that much about coal - only what I read, and most of what I read comes from NRP and ARLP. And I haven't seen anything from either of these companies to recommend CAPP.
I was surprised to see the very high income tax rate reported by GLP. I knew they always had some small income tax provision, but this Q, the tax rate was 58%, which is astronomical. They disclose that 1 of their subsidiaries, GMG or Global Montello Group Corp, is a taxable corporation and pays regular Federal and state taxes. But the size of the tax provision makes it clear that GMG had a profit that was greater than the GLP group as a whole. That is, GMG made money in Q3, and the rest of GLP lost money.
Does anyone know what GMG does? Which of GLP's businesses does it operate? I took a quick look through the 10-K and couldn't find the answer. Any help would be appreciated.
Today's drop in OCIR's price is probably a buying opportunity. Even with the terrible results, OCIR still had enough DCF/EBITDA to cover the distribution. (Pro forma, obviously; the IPO only happened in mid-September.) There are 9.8 million common units held by the public, and an equal number of subordinated units owned by OCI. The subordinated units don't get their distribution unless the common units are paid the 50 cents per Q. Even in Q3, the company had between $ 10 million and $ 12 million of EBITDA, depending on whether you count or ignore the adjustments the company lists, so the common unit distribution would have been covered. This doesn't last forever; the definition of the subordination period is confusing. But for the next year or 2, I think the common unit distribution is safe even in bad quarters. And if the company is right about pricing, you have the opportunity for growth in the distribution.
There is a risk in relying too much on subordinated units; just look at OXF, another coal MLP. But most of the time, the subordinated units do provide cushion, and I think this is 1 of those times.
Seems like a strange announcement to me. I figured out that the lubricant is for food processing machinery, and not to be added to the food itself. But the Kosher certification really has me puzzled. I wouldn't have thought that a petroleum based product could get Kosher certification. And the idea that machinery oil needs to be food grade isn't all that appetizing either.
Learn something new every day.
Interesting. I was off on GAAP earnings by about $ 6 or $ 7 million, depending on what amount NRP wrote off when it refinanced its debt in the Q. So not so good, and mostly on thermal coal volume. My guess on thermal coal royalty rate was off by 4 cents, not too bad. Met coal volume was better than I expected but pricing was far worse. It was the thermal coal volume that was the killer, though. Even though Illinois Basin royalties improved from Q2, CAPP was a disaster; it just keeps getting worse on both volume and pricing.
But my DCF guess was spot on - I said $ 65 million plus whatever OCIW threw off. The actual number was somewhere between $ 65 million and $ 66 million.
So, Mr. Ayscuew, you get to keep the Russell Stover stuff and send me a Tootsie Roll, if they are still around.
My biggest concern from tonight's release, though, was some language/warning that I don't ever recall NRP using before. "The thermal coal market continues to be weak. NRP believes that over the next quarter it will be getting some clarity for 2014 and beyond as current contracts roll over or off." "Roll off"? I don't think they have been this specific before in their warnings. They have never disclosed the date of their contracts or how many expire at any given time; I always assumed they tried not to have too many contracts expiring at the same time, so the pain was spread out. Now they are getting more specific in their warnings. Not a good sign. Maybe the contract expirations might be material?
And OCIR should have mentioned that they had a shutdown in September when it was going on. But that's a story for the OCIR board, if it is ever established.
OK, so here's my regular quarterly guess. My last 2 Q's guesses haven't been great, but that's not going to stop me.
I think thermal coal tonnage will increase slightly from Q2 to about 11 - 11.5 million tons, with met coal tonnage down very slightly from Q2 at about 4 million tons. I think the thermal coal royalty will be about $ 3.35/ton and the met coal royalty rate will be about $ 5.75/ton. I estimate net income of about $ 43 million, before any effect of writing off the previous deferred financing costs that will need to be written down. So the final number will be a million of 2 lower. I don't foresee any noncash asset write downs, but who knows about that?
NRP's real cash flow before any OCIW distributions will be about $ 65 million. OCIW paid at least $ 40 million early in the Q due to the refi, and I have no idea if OCIW made any other distributions, so reported DCF should be around $ 105 million, maybe more if OCIW made another distribution.
Quarterly DCF is always affected by working capital adjustments. They added $ 20 million to Q2 DCF. I plugged in $ 10 million for Q3, but that's just another guess based on history. Could be a good deal higher, but I don't think it will be much lower.
So, a bit worse than Q2 all around (except for the $ 40 million from OCIW), but not terrible, considering the industry.
FWIW. If I'm way off as usual, I claim the right not to read this board tomorrow, and forget that I ever posted this.
Earnings weren't so bad. The only source I have for any detailed sales and EPS projections is Value Line; not the best, I know, but it's all I've seen. They had CRD-B at sales of $ 275 MM for the Q, and EPS of 25 cents. Sales came in above this, and EPS was 24 cents/25 cents, depending on which class of stock you're looking at. (BTW, CRD should really merge the 2 classes of stock to simplify things.) This wasn't like Q2 when EPS was way over projections, but it wasn't bad. Cash flow from operations for the Q was$ 5.6 million, compared to a deficit of $ 16.1 million for Q3 2012. It's a small company, and quarterly variations don't mean much. So I bought a few more shares this afternoon. FWIW.
I think most/all of the wood that the article discussed was scrap. It's hard for coal to compete with free. Except the energy content is less (I think the article said 70% of the energy content of coal, but that's sloppy reporting - 70% of what kind of coal?), and I've got to believe the emission problems are the same. I also wonder if the scrubbers used to clean coal emissions also work on wood, or do they have to be adjusted?
Anyway, I can't see wood as any alternative to coal or nat gas or anything else. Like I said, I thought the article was a joke at first.
Today's NY Times has an article that sounds like a joke, but apparently it's serious. It seems some coal-fired power plants are substituting waste wood (like from trees) for coal. The only benefit I could figure out is the use of wood clears forests for new tree growth, and those new trees will absorb carbon dioxide. Like I said, it sounds like a joke. But they say that several utilities are actively using wood to supplement coal usage. It cited Minnesota Power as using a lot (no idea what "a lot" means) of wood.
While the article may be serious, if anyone thinks that burning wood is somehow going to reduce pollution, I think they're desperate for anything but coal.
BTW, the article says the EPA is on a "listening tour" around the country to find ways to reduce power plant emissions.
You wouldn't say I'm the sharpest knife in the drawer if you saw my investments in some refiner MLPs in recent months. I dodged the coal bullet only to get hit by the refining spread train wreck. Of course maybe you weren't referring to me.
But 2 points - I can't see NRP cutting or (god forbid) eliminating the distribution this year. It needs $ 230 MM DCF to cover the annual distribution. Even if you ignore the refinancing dividend from OCI Wyoming, NRP continues to project a coverage ratio of almost 110% for the year. It was at $ 135 MM at June 30, and OCI Wyoming should throw off $ 30 million DCF in the second half, money that wasn't there last year, which should cover some of the coal weakness. NRP has no debt maturities remaining in 2013, and not a terrible amount due in 2014. And while we can't be sure from the outside, it seems to be in safe compliance with all the major debt covenants, with some room to spare. So I really can't see a cut in the distribution at least in the next 6 - 9 months, unless coal really tanks again, or if one of the larger lessees has a disaster at amine on NRP property.
And my $ 17 price wasn't a target. I just figured the bottom to be somewhere around $ 18, and I wanted a little cushion. Actually, I would have been smarter to buy at $ 19 a while back, and let the quarterly distributions take my cost down to $ 17 and change.
I don't think NRP is a great investment; coal is just too ugly still. But there are signs that it may be bottoming; as an outsider, it's hard to tell the difference between a bottom and a temporary plateau. And of course, there's always the chance that NRP might announce all sorts of "transformative" deals outside of coal that no one expects which could drive the price.
FWIW. Tuesday will be interesting. Both NRP and OCIR will announce Q3 results.
Sorry, my mistake from trying to match up CNX's mine map with NRP's CAPP and NAPP maps in the 10-K. NRP's NAPP reserves are all thermal, similar to the CNX mines, and the royalty rate is lower. The rate has been really low for the past 18 months because CNX activated a mine with a very old, very low, fixed royalty rate. Excluding that 1 mine, it would seem like NRP's royalty rate is around $ 3 - $ 3.50/ton, but fairly low production.
And NRP's NAPP reserves are only 15% of the total, not the 55% that is attributable to CAPP.
Not that it matter to NRP a whole lot, but the CNX call described the cash flow from the mines that it sold, and I'm still surprised that the Murray offer was the best offer they got. The mines have good, long-term contracts and are currently quite profitable on an EBITDA basis. I was confused about whether the legacy cash costs are included in the EBITDA number, which would change things, but the price still seems really low.