The head of Natural Resource Partners LP's general partner has announced his resignation, after the coal producer reported a slight dip in attributable net income year over year in the second quarter.
"I've a spent significant amount of time considering the best path forward for me and the company," said Wyatt Hogan, outgoing president and COO of GP Natural Resource Partners LLC, in an Aug. 8 earnings call. "Following another good quarter, NRP is well-positioned for the future, and I feel like now is the right time to resign from my leadership positions at NRP."
Craig Nunez, who served as CFO and treasurer of NRP's general partner since January 2015, will assume the role of president and COO in Hogan's place, effective Aug. 8. Christopher Zolas, who was previously the chief accounting officer of the general partner, will assume Nunez's old titles.
Hogan will continue to be employed by Quintana Minerals Corp., a company controlled by NRP Chairman and CEO Corbin Robertson Jr. As part of an agreement with Quintana, Hogan will continue to provide services to NRP for up to two years to help with the transition of his duties and will receive a salary of $500,000 per year, a 2017 bonus equal to $250,000 payable in the first quarter of 2018 and the same health benefits he currently receives, all of which will be paid by NRP.
NRP reported a net income attributable to the common unitholders and general partner of $42.4 million in the recent quarter, a drop from the $46.4 million net income attributable to the common unitholders and general partner reported in the second quarter of 2016.
On the earnings call, Nunez said NRP's coal royalty business and contributions from its soda ash and construction businesses are helping them reduce their debt.
"We continued to delever our capital structure and improve operational performance," he said.
Metallurgical coal pricing also favored NRP as Chinese demand has increased. Nunez said the revenue per ton that NRP has received in its southern and central Appalachia sectors has increased significantly.
Meanwhile, thermal coal utility stockpiles have dropped year over year, he said.
Zolas said that since NRP completed a recapitalization transaction in the first quarter and is now enjoying a more stable environment for its coal segment, "the second quarter was the first time in a long time in which we came close to what I'll call normalized results."
Kevin Craig, executive vice president, coal of the general partner, said NRP is working to stay on top of recent rail issues from CSX Corp. mentioned by an analyst.
"I think you've heard a number of coal companies comment on the need for improved rail service and certainly we feel the same way. It certainly could be an issue," Craig said.
He added that it was one of the major concerns of NRP's lessees moving forward, particularly with regards to accessing East Coast export terminals.
Moody's recently noted that coal producers like NRP are among those with excessive leverage for an industry in decline.
Coal magnate Chris Cline sold his stake in NRP's general partner earlier this year.