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Ciner Resources LP Announces Second Quarter 2018 Financial Results

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Ciner Resources LP (NYSE:CINR) today reported its financial and
operating results for the second quarter ended June 30, 2018.

Second Quarter 2018 Financial Highlights:

  • Net sales of $109.9 million decreased 8.2% over the prior-year second
    quarter; year-to-date net sales of $231.1 million decreased 6.2% over
    the prior-year.
  • Net income of $34.5 million, including a $25.9 million net litigation
    settlement, increased 97.1% over the prior-year second quarter;
    year-to-date net income of $55.4 million increased 38.8% over the
    prior-year.
  • Adjusted EBITDA of $42.9 million, including a $25.9 million net
    litigation settlement, increased 67.6% over the prior-year second
    quarter; year-to-date adjusted EBITDA of $71.7 million increased 28.0%
    over the prior-year.
  • Earnings per unit of $0.830 for the quarter increased 102.4% over the
    prior-year second quarter of $0.410; year-to-date of $1.340 increased
    41.1% over the prior-year
  • Quarterly distribution declared per unit of $0.567 remained flat
    compared to the prior-year second quarter as well as first quarter of
    2018.
  • Net cash provided by operating activities of $19.9 million increased
    33.6% over prior-year second quarter; year-to-date net cash provided
    by operating activities of $57.2 million increased by 122.6% over the
    prior-year.
  • Distributable cash flow of $19.6 million was up 81.5% compared to the
    prior-year second quarter. The distribution coverage ratio was 1.70:
    1.00 and 0.94: 1.00 for the three months ended June 30, 2018 and 2017,
    respectively; and 1.43: 1.00 and 1.06: 1.00 for the six months ended
    June 30, 2018 and 2017.

Kirk Milling, CEO, commented: "Distributable cash flow was up over 80%
in the quarter primarily driven from the settlement of our royalty rate
litigation. Stripping out the impact of the settlement, production
levels and operating results were both adversely impacted by unexpected
repairs to one of our calcining furnaces encountered during a regularly
scheduled outage in May. The negative impact to our operating results
from this lost production more than offset the positive benefit we
experienced from international prices rising 5.5% above 2017 levels.

"For the rest of 2018, we maintain a positive outlook for soda ash
prices as supply and demand balances remain tight around the world.
Combined with higher production levels and continued strength in our
domestic business, we are poised to see positive improvement in our
operating results over the 2nd half of the year."

2018 Outlook:

  • We expect our total volume sold to be down 1% to 3% compared to the
    previous estimate of flat to up 2%.
  • We expect domestic volume to increase by 125,000 to 150,000 short tons.
  • We expect domestic pricing to be down 1% to 3%.
  • We expect international prices to be up 2% to 4% compared to the
    previous estimate of up 1% to 3%.**
  • Maintenance of business capital expenditures are planned to be in the
    range of $15 to $17 million compared to the previous estimate of $13
    to $15 million.
  • Expansion capital expenditures are planned to be in the range of $55
    to $65 million.

** Excluding the change related to freight from CIDT sales in 2017.

   
Financial Highlights Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in millions, except per unit amounts) 2018   2017   % Change 2018   2017   % Change
 
Soda ash volume produced (millions of short tons) 0.579 0.643 (10.0 )% 1.248 1.295 (3.6 )%
Soda ash volume sold (millions of short tons) 0.585 0.651 (10.2 )% 1.252 1.322 (5.3 )%
Net sales $ 109.9 $ 119.7 (8.2 )% $ 231.1 $ 246.3 (6.2 )%
Net income $ 34.5 $ 17.5 97.1 % $ 55.4 $ 39.9 38.8 %
Net income attributable to Ciner Resources LP $ 16.8 $ 8.2 104.9 % $ 26.9 $ 19.1 40.8 %
Earnings per Limited Partner Unit $ 0.83 $ 0.41 102.4 % $ 1.34 $ 0.95 41.1 %
Adjusted EBITDA (1) $ 42.9 $ 25.6 67.6 % $ 71.7 $ 56.0 28.0 %
Adjusted EBITDA attributable to Ciner Resources LP(1) $ 21.5 $ 12.6 70.6 % $ 35.8 $ 27.7 29.2 %
Net cash provided by operating activities $ 19.9 $ 14.9 33.6 % $ 57.2 $ 25.7 122.6 %
Distributable cash flow attributable to Ciner Resources LP(1) $ 19.6 $ 10.8 81.5 % $ 32.7 $ 24.2 35.1 %
Distribution coverage ratio (1) 1.70 0.94 80.9 % 1.43 1.06 34.9 %
(1)See non-GAAP reconciliations
 

Three Months Ended June 30, 2018 compared to Three Months Ended
June 30, 2017

The following table sets forth a summary of net sales, sales volumes and
average sales price, and the percentage change between the periods.

  Three Months Ended
June 30,
 

Percent
Increase/
(Decrease)

Net sales (Dollars in millions): 2018   2017
Domestic $ 60.3 $ 48.1 25.4%
International $ 49.6   $ 71.6   (30.7)%
Total net sales $ 109.9   $ 119.7   (8.2)%
Sales volumes (thousands of short tons):
Domestic 271.9 216.5 25.6%
International 312.7   434.8   (28.1)%
Total soda ash volume sold 584.6   651.3   (10.2)%
Average sales price (per short ton):
Domestic $ 221.77 $ 222.17 (0.2)%
International $ 158.62 $ 164.67 (3.7)%
Average $ 187.99 $ 183.79 2.3%
Percent of net sales:
Domestic sales 54.9 % 40.2 % 36.6%
International sales 45.1 % 59.8 % (24.6)%
Total percent of net sales 100.0 % 100.0 %
Percent of sales volumes:
Domestic volume 46.5 % 33.2 % 40.1%
International volume 53.5 % 66.8 % (19.9)%
Total percent of volume sold 100.0 % 100.0 %
 

Consolidated Results

Net sales. Net sales decreased by 8.2% to $109.9 million for the
three months ended June 30, 2018 from $119.7 million for the three
months ended June 30, 2017, driven by a decrease in soda ash volumes
sold of 10.2% primarily as a result of unexpected repairs to one of our
calcining furnaces encountered during a regularly scheduled outage in
May. The unit was successfully repaired and returned to operation. The
decrease in volumes sold was partially offset by an increase in average
sales prices of 2.3%. The increase in averages sales prices is primarily
driven by a shift in our sales mix between domestic and international
sales volumes compared to the prior year second quarter.

Cost of products sold. Cost of products sold, including
depreciation, depletion and amortization expense remained relatively
flat at $96.0 million for the three months ended June 30, 2018 compared
to $95.5 million for the three months ended June 30, 2017. Our cost of
products sold was primarily driven by a decrease in freight costs of
11.4% to $32.0 million for three months ended June 30, 2018, compared to
$36.1 million for the three months ended June 30, 2017 due to a decrease
in volumes sold, partially offset by an increase in employee
compensation, medical claims, as well as higher professional fees, for
the three months ended June 30, 2018 compared to the prior year second
quarter.

Selling, general and administrative expenses. Our selling,
general and administrative expenses increased 10.3% to $6.4 million for
the three months ended June 30, 2018, compared to $5.8 million for the
three months ended June 30, 2017. The increase was primarily driven by a
higher expenses related to our Enterprise Resource Planning ("ERP")
implementation project.

Litigation settlement. During the three months ended June 30,
2018, we recognized $27.5 million ($25.9 million net of associated
expenses) related to the settlement of an action initially filed against
Rock Springs Royalty Company LLC ("RSRC") in 2016, related to royalty
overpayment under Ciner Wyoming's mineral exploration license with RSRC.
The case was settled on June 28, 2018.

Operating income. As a result of the foregoing and primarily the
litigation settlement, operating income increased by 90.2% to $35.0
million for the three months ended June 30, 2018, compared to $18.4
million for the three months ended June 30, 2017.

Net income. As a result of the foregoing, net income increased by
97.1% to $34.5 million for the three months ended June 30, 2018,
compared to $17.5 million for the three months ended June 30, 2017.

Six Months Ended June 30, 2018 compared to Six Months Ended June
30, 2017

The following table sets forth a summary of net sales, sales volumes and
average sales price, and the percentage change between the periods.

   
Six Months Ended
June 30,

Percent
Increase/
(Decrease)

Net sales (Dollars in millions): 2018   2017
Domestic $ 115.6 $ 97.2 18.9%
International 115.5   149.1   (22.5)%
Total net sales $ 231.1   $ 246.3   (6.2)%
Sales volumes (thousands of short tons):
Domestic 528.9 442.2 19.6%
International 723.3   879.9   (17.8)%
Total soda ash volume sold 1,252.2   1,322.1   (5.3)%
Average sales price (per short ton):
Domestic $ 218.57 $ 219.81 (0.6)%
International $ 159.68 $ 169.45 (5.8)%
Average $ 184.56 $ 186.29 (0.9)%
Percent of net sales:
Domestic sales 50.0 % 39.5 % 26.6%
International sales 50.0 % 60.5 % (17.4)%
Total percent of net sales 100.0 % 100.0 %
Percent of sales volumes:
Domestic volume 42.2 % 33.4 % 26.3%
International volume 57.8 % 66.6 % (13.2)%
Total percent of volume sold 100.0 % 100.0 %
 

Consolidated Results

Net sales. Net sales decreased by 6.2% to $231.1 million for the
six months ended June 30, 2018 from $246.3 million for the six months
ended June 30, 2017, driven by a decrease in soda ash volumes sold of
5.3% primarily as a result of unexpected repairs to one of our calcining
furnaces encountered during a regularly scheduled outage in May. The
unit was successfully repaired and returned to operation. The decrease
in international sales prices was primarily driven by the absence of
international sales to CIDT in 2018. During 2017, international average
sales prices reflected the increase in freight costs driven by export
sales volume to CIDT.

Cost of products sold. Cost of products sold, including
depreciation, depletion and amortization expense and freight costs,
decreased by 2.3% to $189.2 million for the six months ended June 30,
2018 from $193.6 million for the six months ended June 30, 2017,
primarily due to a decrease in freight costs of 12.5% to $66.4 million
for the six months ended June 30, 2018, compared to $75.9 million for
the six months ended June 30, 2017. The decrease in freight costs was
driven by no export sales volumes to CIDT during the six months ended
June 30, 2018 compared to the prior year. The decrease in freight costs
were partially offset by an increase in employee compensation, medical
claims, as well as higher professional fees, for the six months ended
June 30, 2018 compared to the prior year.

Selling, general and administrative expenses. Our selling,
general and administrative expenses increased 17.4% to $12.8 million for
the six months ended June 30, 2018, compared to $10.9 million for the
six months ended June 30, 2017. The two primary drivers for the increase
were higher selling and administrative fees relating to our affiliate,
ANSAC, which directly correlates with the volume we sell to ANSAC, and
higher expenses from our ERP implementation project.

Litigation settlement. During the six months ended June 30, 2018
we recognized $27.5 million ($25.9 million net of associated expenses)
related to the settlement of an action initially filed against Rock
Springs Royalty Company LLC ("RSRC") in 2016, related to royalty
overpayment under Ciner Wyoming's mineral exploration license with RSRC.
The case was settled on June 28, 2018.

Operating income. As a result of the foregoing and primarily the
litigation settlement, operating income increased by 35.4% to $56.6
million for the six months ended June 30, 2018, compared to $41.8
million for the six months ended June 30, 2017.

Net income. As a result of the foregoing, net income increased by
38.8% to $55.4 million for the six months ended June 30, 2018, compared
to $39.9 million primarily for the six months ended June 30, 2017.

CAPEX AND ORE TO ASH RATIO

The following table below summarizes our capital expenditures, on an
accrual basis, and ore to ash ratio:

   
Three Months Ended
June 30,
  Six Months Ended
June 30,
(Dollars in millions) 2018   2017 2018   2017
Capital Expenditures
Maintenance $ 2.1 $ 2.3 $ 4.9 $ 5.0
Expansion 10.7 4.7 15.4 6.4
Total $ 12.8 $ 7.0 $ 20.3 $ 11.4
Operating and Other Data:
Ore to ash ratio(1) 1.55: 1.0 1.45: 1.0 1.55: 1.0 1.48: 1.0
(1)Ore to ash ratio expresses the number of short tons of
trona ore needed to produce one short ton of soda ash and includes
our deca rehydration recovery process. In general, a lower ore to
ash ratio results in lower costs and improved efficiency.
 

FINANCIAL POSITION AND LIQUIDITY

As of June 30, 2018, we had cash and cash equivalents of $20.9 million.
In addition, we have approximately $79.4 million ($225.0 million, less
$134.0 million outstanding and less standby letters of credit of $11.6
million) of remaining capacity under our revolving credit facilities. As
of June 30, 2018, our leverage and interest coverage ratios, as
calculated per the Ciner Wyoming Credit Facility, were 1.03: 1.0 and
27.87: 1.0, respectively.

CASH FLOWS AND QUARTERLY CASH DISTRIBUTION

Cash Flows

Cash provided by operating activities increased to $57.2 million during
the six months ended June 30, 2018 compared to $25.7 million of cash
provided during six months ended June 30, 2017, primarily driven by
$13.9 million of working capital provided by operating activities during
the six months ended June 30, 2018, compared to $28.3 million of working
capital used in operating activities during the six months ended
June 30, 2017. The $42.2 million increase in working capital provided by
operating activities was primarily due to the $49.5 million decrease in
due-from affiliates.

Cash provided by operating activities during the six months ended
June 30, 2018 were offset by cash used in investing activities of $14.9
million for capital expenditures and cash used in financing activities
during the six month period of $51.6 million. The cash used in financing
activities during the six months ended June 30, 2018 was due to
distributions paid of $47.3 million and net repayments of long-term debt
of $4.0 million during the six months ended June 30, 2018 compared to
the $31 million in net borrowings during the six months ended June 30,
2017.

Quarterly Distribution

On July 26, 2018, the Partnership declared its second quarter 2018
quarterly distribution of $0.567 per unit. This is consistent with the
distribution declared during the second quarter of 2017. The quarterly
cash distribution is payable on August 20, 2018 to unitholders of record
on August 6, 2018.

RELATED COMMUNICATIONS

Ciner Resources LP will host a conference call tomorrow, August 7, 2018
at 8:30 a.m. ET. Participants can listen in by dialing 1-866-550-6980
(Domestic) or 1-804-977-2644 (International) and referencing
confirmation 5889599. Please log in or dial in at least 10 minutes prior
to the start time to ensure a connection. A telephonic replay of the
call will be available approximately two hours after the call's
completion by calling 1-800-585-8367 or 404-537-3406 and referencing
confirmation 5889599, and will remain available for the following seven
days. This conference call will be webcast live and archived for replay
on Ciner Resources' website at www.ciner.us.com.

ABOUT CINER RESOURCES LP

Ciner Resources LP, a master limited partnership, operates the trona ore
mining and soda ash production business of Ciner Wyoming LLC ("Ciner
Wyoming"), one of the largest and lowest cost producers of natural soda
ash in the world, serving a global market from its facility in the Green
River Basin of Wyoming. The facility has been in operation for more than
50 years.

NATURE OF OPERATIONS

Ciner Resources LP owns a controlling interest comprised of a 51%
membership interest in Ciner Wyoming. Natural Resource Partners L.P.
("NRP") owns a non-controlling interest consisting of a 49% membership
interest in Ciner Wyoming.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. Statements other
than statements of historical facts included in this press release that
address activities, events or developments that the Partnership expects,
believes or anticipates will or may occur in the future are
forward-looking statements. These statements contain words such as
"possible," "believe," "should," "could," "would," "predict," "plan,"
"estimate," "intend," "may," "anticipate," "will," "if," "expect" or
similar expressions. Such statements are based only on the Partnership's
current beliefs, expectations and assumptions regarding the future of
the Partnership's business, projections, anticipated events and trends,
the economy and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to
predict and many of which are outside of the Partnership's control. The
Partnership's actual results and financial condition may differ
materially from those implied or expressed by these forward-looking
statements. Consequently, you are cautioned not to place undue reliance
on any forward-looking statement because no forward-looking statement
can be guaranteed. Factors that could cause the Partnership's actual
results to differ materially from the results contemplated by such
forward-looking statements include: changes in general economic
conditions, the Partnership's ability to meet its expected quarterly
distributions, changes in the Partnership's relationships with its
customers, including American Natural Soda Ash Corporation ("ANSAC") and
Ciner Ic ve Dis Ticaret Anonim Sirket ("CIDT"), the demand for soda ash
and the opportunities for the Partnership to increase its volume sold,
the development of glass and glass making product alternatives, changes
in soda ash prices, operating hazards, unplanned maintenance outages at
the Partnership's production facilities, construction costs or capital
expenditures exceeding estimated or budgeted costs or expenditures, the
effects of government regulation, tax position, and other risks
incidental to the mining, processing, and shipment of trona ore and soda
ash, as well as the other factors discussed in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 2017, and subsequent
reports filed with the Securities and Exchange Commission. All
forward-looking statements included in this press release are expressly
qualified in their entirety by such cautionary statements. Unless
required by law, the Partnership undertakes no duty and does not intend
to update the forward-looking statements made herein to reflect new
information or events or circumstances occurring after this press
release. All forward-looking statements speak only as of the date made.

Supplemental Information

   

CINER RESOURCES LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME

(Unaudited)

 
Three Months Ended
June 30,
Six Months Ended
June 30,

(In millions, except per unit data)

2018   2017 2018   2017
Net sales:
Sales—affiliates $ 49.6 $ 71.6 $ 115.5 $ 149.1
Sales—others 60.3   48.1   115.6   97.2  
Net sales $ 109.9   $ 119.7   $ 231.1   $ 246.3  
Operating costs and expenses:
Cost of products sold, including freight costs 88.7 89.0 175.1 180.4
Depreciation, depletion and amortization expense 7.3 6.5 14.1 13.2
Selling, general and administrative expenses—affiliates 4.3 4.1 9.2 8.1
Selling, general and administrative expenses—others 2.1 1.7 3.6 2.8
Litigation settlement (27.5 )   (27.5 )  
Total operating costs and expenses 74.9   101.3   174.5   204.5  
Operating income 35.0 18.4 56.6 41.8
Other income/(expenses):
Interest income 0.8 1.4
Interest expense, net (1.2 ) (0.8 ) (2.5 ) (1.7 )
Other, net (0.1 ) (0.1 ) (0.1 ) (0.2 )
Total other expense, net (0.5 ) (0.9 ) (1.2 ) (1.9 )
Net income $ 34.5   $ 17.5   $ 55.4   $ 39.9  
Net income attributable to non-controlling interest 17.7   9.3   28.5   20.8  
Net income attributable to Ciner Resources LP $ 16.8   $ 8.2   $ 26.9   $ 19.1  
Other comprehensive loss:
Loss on derivative financial instruments (1.0 ) (0.1 ) (3.2 ) (2.4 )
Comprehensive income 33.5 17.4 52.2 37.5
Comprehensive income attributable to non-controlling interest 17.2   9.2   26.9   19.6  
Comprehensive income attributable to Ciner Resources LP $ 16.3   $ 8.2   $ 25.3   $ 17.9  
 
Net income per limited partner unit:
Net income per limited partner units (basic and diluted) $ 0.83 $ 0.41 $ 1.34 $ 0.95
Weighted average limited partner units outstanding:
Weighted average limited partner units outstanding (basic and
diluted)
19.7 19.7 19.7 19.7
Cash distribution declared per unit $ 0.567 $ 0.567 $ 1.134 $ 1.134
 
 

CINER RESOURCES LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
As of

(In millions)

June 30,
2018
  December 31,
2017
 
ASSETS
Current assets:
Cash and cash equivalents $ 20.9 $ 30.2
Accounts receivable—affiliates 75.5 98.3
Accounts receivable, net 42.1 34.2
Litigation settlement receivable 27.5
Inventory 20.8 19.8
Other current assets 2.0   1.8  
Total current assets 188.8 184.3
Property, plant and equipment, net 255.4 249.3
Other non-current assets 20.0   19.6  
Total assets $ 464.2   $ 453.2  
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 11.4 $ 11.4
Accounts payable 19.0 14.5
Due to affiliates 4.1 3.0
Accrued expenses 29.1   27.7  
Total current liabilities 63.6 56.6
Long-term debt 134.0 138.0
Other non-current liabilities 13.0   10.4  
Total liabilities 210.6   205.0  
Commitments and Contingencies
Equity:
Common unitholders - Public and Ciner Holdings (19.8 and 19.7 units
issued and outstanding at June 30, 2018 and December 31, 2017)
152.9 148.3
General partner unitholders - Ciner Resource Partners LLC (0.4 units
issued and outstanding at June 30, 2018 and December 31, 2017)
3.8 3.8
Accumulated other comprehensive loss (5.3 ) (3.7 )
Partners' capital attributable to Ciner Resources LP 151.4 148.4
Non-controlling interest 102.2   99.8  
Total equity 253.6   248.2  
Total liabilities and partners' equity $ 464.2   $ 453.2  
 
 

CINER RESOURCES LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
Six Months Ended
June 30,
(In millions) 2018   2017
 
Cash flows from operating activities:
Net income $ 55.4 $ 39.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization expense 14.3 13.4
Litigation settlement (27.5 )
Equity-based compensation expense 1.0 0.5
Other non-cash items 0.1 0.2
Changes in operating assets and liabilities:
(Increase)/decrease in:
Accounts receivable - affiliates 22.8 (26.7 )
Accounts receivable, net (7.9 ) (1.3 )
Inventory (1.5 ) 0.8
Other current and other non-current assets (0.1 ) (0.3 )
Increase/(decrease) in:
Accounts payable (0.6 ) 1.7
Due to affiliates 1.0
Accrued expenses and other liabilities 0.2   (2.5 )
Net cash provided by operating activities 57.2   25.7  
Cash flows from investing activities:
Capital expenditures (14.9 ) (13.3 )
Net cash used in investing activities (14.9 ) (13.3 )
Cash flows from financing activities:
Borrowings on Ciner Wyoming credit facility 55.0 45.0
Repayments on Ciner Wyoming credit facility (59.0 ) (14.0 )
Common units surrendered for taxes (0.3 )
Distributions to common unitholders (22.3 ) (22.3 )
Distributions to general partner (0.5 ) (0.5 )
Distributions to non-controlling interest (24.5 ) (24.5 )
Net cash used in financing activities (51.6 ) (16.3 )
Net decrease in cash and cash equivalents (9.3 ) (3.9 )
Cash and cash equivalents at beginning of period 30.2   19.7  
Cash and cash equivalents at end of period $ 20.9   $ 15.8  
 

Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted
accounting principles in the United States ("GAAP"). We also present the
non-GAAP financial measures of:

  • Adjusted EBITDA;
  • Distributable cash flow; and
  • Distribution coverage ratio.

We define Adjusted EBITDA as net income (loss) plus net interest
expense, income tax, depreciation, depletion and amortization,
equity-based compensation expense and certain other expenses that are
non-cash charges or that we consider not to be indicative of ongoing
operations. Distributable cash flow is defined as Adjusted EBITDA less
net cash paid for interest, maintenance capital expenditures and income
taxes, each as attributable to Ciner Resources LP. The Partnership may
fund expansion-related capital expenditures with borrowings under
existing credit facilities such that expansion-related capital
expenditures will have no impact on cash on hand or the calculation of
cash available for distribution. In certain instances, the timing of the
Partnership's borrowings and/or its cash management practices will
result in a mismatch between the period of the borrowing and the period
of the capital expenditure. In those instances, the Partnership adjusts
designated reserves (as provided in the partnership agreement) to take
account of the timing difference. Accordingly, expansion-related capital
expenditures have been excluded from the presentation of cash available
for distribution. Distributable cash flow will not reflect changes in
working capital balances. We define distribution coverage ratio as the
ratio of distributable cash flow as of the end of the period to cash
distributions payable with respect to such period.

Adjusted EBITDA, distributable cash flow and distribution coverage ratio
are non-GAAP supplemental financial measures that management and
external users of our consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies, may use to
assess:

  • our operating performance as compared to other publicly traded
    partnerships in our industry, without regard to historical cost basis
    or, in the case of Adjusted EBITDA, financing methods;
  • the ability of our assets to generate sufficient cash flow to make
    distributions to our unitholders;
  • our ability to incur and service debt and fund capital expenditures;
    and
  • the viability of capital expenditure projects and the returns on
    investment of various investment opportunities.

We believe that the presentation of Adjusted EBITDA, distributable cash
flow and distribution coverage ratio provide useful information to
investors in assessing our financial condition and results of
operations. The GAAP measures most directly comparable to Adjusted
EBITDA and distributable cash flow are net income and net cash provided
by operating activities. Our non-GAAP financial measures of Adjusted
EBITDA, distributable cash flow and distribution coverage ratio should
not be considered as alternatives to GAAP net income, operating income,
net cash provided by operating activities, or any other measure of
financial performance or liquidity presented in accordance with GAAP.
Adjusted EBITDA and distributable cash flow have important limitations
as analytical tools because they exclude some, but not all items that
affect net income and net cash provided by operating activities.
Investors should not consider Adjusted EBITDA, distributable cash flow
and distribution coverage ratio in isolation or as a substitute for
analysis of our results as reported under GAAP. Because Adjusted EBITDA,
distributable cash flow and distribution coverage ratio may be defined
differently by other companies, including those in our industry, our
definition of Adjusted EBITDA, distributable cash flow and distribution
coverage ratio may not be comparable to similarly titled measures of
other companies, thereby diminishing its utility.

The table below presents a reconciliation of the non-GAAP financial
measures of Adjusted EBITDA and distributable cash flow to the GAAP
financial measures of net income and net cash provided by operating
activities:

   
Three Months Ended
June 30,
Six Months Ended
June 30,

(Dollars in millions, except per unit
data)

2018   2017 2018   2017
Reconciliation of Adjusted EBITDA to net income:
Net income $ 34.5 $ 17.5 $ 55.4 $ 39.9
Add backs:
Depreciation, depletion and amortization expense 7.3 6.5 14.1 13.2
Interest expense, net 0.4 0.8 1.1 1.7
Restructuring charges and other, net (included in selling, general
and administrative expenses)
0.1 0.3 0.1 0.7
Equity-based compensation expense 0.6   0.5   1.0   0.5  
Adjusted EBITDA $ 42.9 $ 25.6 $ 71.7 $ 56.0
Less: Adjusted EBITDA attributable to non-controlling interest 21.4   13.0   35.9   28.3  
Adjusted EBITDA attributable to Ciner Resources LP $ 21.5   $ 12.6   $ 35.8   $ 27.7  
 
Reconciliation of distributable cash flow to Adjusted EBITDA
attributable to Ciner Resources LP:
Adjusted EBITDA attributable to Ciner Resources LP $ 21.5 $ 12.6 $ 35.8 $ 27.7
Less: Cash interest expense, net attributable to Ciner Resources LP 0.5 0.5 0.8 0.9
Less: Maintenance capital expenditures attributable to Ciner
Resources LP
1.4   1.3   2.3   2.6  
Distributable cash flow attributable to Ciner Resources LP $ 19.6   $ 10.8   $ 32.7   $ 24.2  
 
Cash distribution declared per unit $ 0.567 $ 0.567 $ 1.134 $ 1.134
Total distributions to unitholders and general partner $ 11.5 $ 11.4 $ 22.9 $ 22.8
Distribution coverage ratio 1.70 0.94 1.43 1.06
 
Reconciliation of Adjusted EBITDA to net cash from operating
activities:
Net cash provided by operating activities $ 19.9 $ 14.9 $ 57.2 $ 25.7
Add/(less):
Amortization of long-term loan financing (0.1 ) (0.1 ) (0.2 ) (0.2 )
Net change in working capital (4.8 ) 9.8 (13.9 ) 28.3
Litigation settlement 27.5 27.5
Interest expense, net 0.4 0.8 1.1 1.7
Restructuring charges and other, net (included in selling, general
and administrative expenses)
0.1 0.3 0.1 0.7
Other non-cash items (0.1 ) (0.1 ) (0.1 ) (0.2 )
Adjusted EBITDA $ 42.9 $ 25.6 $ 71.7 $ 56.0
Less: Adjusted EBITDA attributable to non-controlling interest 21.4   13.0   35.9   28.3  
Adjusted EBITDA attributable to Ciner Resources LP $ 21.5 $ 12.6 $ 35.8 $ 27.7
Less: Cash interest expense, net attributable to Ciner Resources LP 0.5 0.5 0.8 0.9
Less: Maintenance capital expenditures attributable to Ciner
Resources LP
1.4   1.3   2.3   2.6  
Distributable cash flow attributable to Ciner Resources LP $ 19.6   $ 10.8   $ 32.7   $ 24.2  
 

The following table presents a reconciliation of the non-GAAP financial
measures of Adjusted EBITDA to GAAP financial measure of net income for
the periods presented:

           

(Dollars in millions, except per unit
data)

Cumulative
Four
Quarters
ended
Q2-2018

Q2-2018 Q1-2018 Q4-2017 Q3-2017 Q2-2017
Reconciliation of Adjusted EBITDA to net income:
Net income $ 101.9 $ 34.5 $ 20.9 $ 27.2 $ 19.3 $ 17.5
Add backs:
Depreciation, depletion and amortization expense 28.0 7.3 6.8 6.9 7.0 6.5
Asset impairment charges 1.6 1.6
Interest expense, net 2.3 0.4 0.7 0.3 0.9 0.8
Restructuring charges and other, net (included in selling, general
and administrative expenses)
0.2 0.1 0.1 0.3
Equity-based compensation expense 1.8   0.6   0.4   0.4   0.4   0.5
Adjusted EBITDA 135.8 42.9 28.8 34.9 29.2 25.6
Less: Adjusted EBITDA attributable to non-controlling interest 67.8   21.4   14.4   17.3   14.7   13.0
Adjusted EBITDA attributable to Ciner Resources LP $ 68.0   $ 21.5   $ 14.4   $ 17.6   $ 14.5   $ 12.6
 
Adjusted EBITDA attributable to Ciner Resources LP $ 68.0 $ 21.5 $ 14.4 $ 17.6 $ 14.5 $ 12.6
Less: Cash interest expense, net attributable to Ciner Resources LP 1.9 0.5 0.3 0.5 0.6 0.5
Less: Maintenance capital expenditures attributable to Ciner
Resources LP
5.6   1.4   0.9   2.5   0.8   1.3
Distributable cash flow attributable to Ciner Resources LP $ 60.5   $ 19.6   $ 13.2   $ 14.6   $ 13.1   $ 10.8
 
Cash distribution declared per unit $ 2.268 $ 0.567 $ 0.567 $ 0.567 $ 0.567 $ 0.567
Total distributions to unitholders and general partner $ 45.7 $ 11.5 $ 11.4 $ 11.4 $ 11.4 $ 11.4
Distribution coverage ratio 1.32 1.70 1.16 1.28 1.15 0.94
 

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