NATURAL RESOURCE PARTNERS L.P. The following review of operations for the three month periods endedMarch 31, 2020 and 2019 should be read in conjunction with our consolidated financial statements and the notes to consolidated financial statements included in this Form 10-Q and with the consolidated financial statements, notes to consolidated financial statements and management's discussion and analysis included in theNatural Resource Partners L.P. Annual Report on Form 10-K for the year endedDecember 31, 2019 . As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer toNatural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners " refer toNatural Resource Partners L.P. only, and not toNRP (Operating) LLC or any ofNatural Resource Partners L.P.'s subsidiaries. References to "Opco" refer toNRP (Operating) LLC , a wholly owned subsidiary of NRP, and its subsidiaries.NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes"). INFORMATION REGARDING FORWARD-LOOKING STATEMENTS Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected production levels by our lessees;Ciner Wyoming LLC's ("Ciner Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global andU.S. economic conditions. These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See "Item 1A. Risk Factors" included in this Form 10-Q and in our Annual Report on Form 10-K for the year endedDecember 31, 2019 for important factors that could cause our actual results of operations or our actual financial condition to differ. NON-GAAP FINANCIAL MEASURES Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net income from continuing operations less equity earnings from unconsolidated investment, net income attributable to non-controlling interest and gain on reserve swap; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income (loss), the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 8. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data-Note 12. Debt, Net" in our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis. 19
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Distributable Cash Flow
Distributable cash flow ("DCF") represents net cash provided by (used in)
operating activities of continuing operations plus distributions from
unconsolidated investment in excess of cumulative earnings, proceeds from asset
sales and disposals, including sales of discontinued operations, and return of
long-term contract receivables; less maintenance capital expenditures and
distributions to non-controlling interest. DCF is not a measure of financial
performance under GAAP and should not be considered as an alternative to cash
flows from operating, investing or financing activities. DCF may not be
calculated the same for us as for other companies. In addition, DCF presented
below is not calculated or presented on the same basis as distributable cash
flow as defined in our partnership agreement, which is used as a metric to
determine whether we are able to increase quarterly distributions to our common
unitholders. DCF is a supplemental liquidity measure used by our management and
by external users of our financial statements, such as investors, commercial
banks, research analysts and others to asses our ability to make cash
distributions and repay debt.
Free Cash Flow
Free cash flow ("FCF") represents net cash provided by (used in) operating
activities of continuing operations plus distributions from unconsolidated
investment in excess of cumulative earnings and return of long-term contract
receivables; less maintenance and expansion capital expenditures, cash flow used
in acquisition costs classified as financing activities and distributions to
non-controlling interest. FCF is calculated before mandatory debt repayments.
FCF is not a measure of financial performance under GAAP and should not be
considered as an alternative to cash flows from operating, investing or
financing activities. FCF may not be calculated the same for us as for other
companies. FCF is a supplemental liquidity measure used by our management and by
external users of our financial statements, such as investors, commercial banks,
research analysts and others to assess our ability to make cash distributions
and repay debt.
Introduction
The following discussion and analysis presents management's view of our
business, financial condition and overall performance. Our discussion and
analysis consists of the following subjects:
•Executive Overview
•Results of Operations
•Liquidity and Capital Resources
•Off-Balance Sheet Transactions
•Related Party Transactions
•Summary of Critical Accounting Estimates
•Recent Accounting Standards
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Table of Contents Executive Overview We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties inthe United States , including interests in coal and other natural resources and own a non-controlling 49% interest inCiner Wyoming LLC ("CinerWyoming "), a trona ore mining and soda ash production business. Our common units trade on theNew York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments: Coal Royalty and Other-consists primarily of coal royalty properties and coal-related transportation and processing assets. Other assets include industrial mineral royalty properties, aggregates royalty properties, oil and gas royalty properties and timber. Our coal reserves are primarily located in Appalachia, theIllinois Basin and theNorthern Powder River Basin inthe United States . Our industrial minerals and aggregates properties are located in various states acrossthe United States , our oil and gas royalty assets are primarily located inLouisiana and our timber assets are primarily located inWest Virginia . Soda Ash-consists of our 49% non-controlling equity interest inCiner Wyoming , a trona ore mining and soda ash production business located in theGreen River Basin ofWyoming . Ciner Resources LP, our operating partner, mines the trona, processes it into soda ash, and distributes the soda ash both domestically and internationally into the glass and chemicals industries. 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, legal and accounting and other corporate-level activity not specifically allocated to a segment. The global COVID-19 pandemic continues to affect businesses across the world. We continue to employ remote work protocols and are conducting business as usual despite the pandemic. While the COVID-19 pandemic did not have a material impact on our first quarter results, we are starting to see the effects of the declining demand for steel, electricity and soda ash on our business. We expect reduced demand will continue and that our results will be negatively impacted in the coming months. Although we are unable to predict the severity or duration of the impact on our business, we currently have approximately$200 million of liquidity. In addition, our$300 million of parent company notes does not mature until 2025. Accordingly, we believe we are well-positioned to manage through the downturn. Our financial results by segment for the three months endedMarch 31, 2020 are as follows: Operating Segments Coal Royalty and Corporate and (In thousands) Other Soda Ash Financing Total Revenues and other income$ 33,942 $ 6,272 $ -$ 40,214 Net income (loss) from continuing operations$ 26,744 $ 6,256 $ (14,221 ) $ 18,779 Adjusted EBITDA (1)$ 28,756 $ 7,089 $ (3,913 ) $ 31,932 Cash flow provided by (used in) continuing operations Operating activities$ 30,556 $ 7,089 $ (7,490 ) $ 30,155 Investing activities $ 272 $ - $ -$ 272 Financing activities $ - $ -$ (28,186 ) $ (28,186 ) Distributable cash flow (1)$ 30,828 $ 7,089 $ (7,490 ) $ 30,361 Free cash flow (1)$ 30,828 $ 7,089 $ (7,490 ) $ 30,427
(1) See "-Results of Operations" below for reconciliations to the most comparable
GAAP financial measures.
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Table of Contents Current Results/Market Commentary Coal Royalty and Other Business Segment Our lessees sold 4.5 million tons of coal from our properties in the first quarter of 2020 and we derived approximately 65% of our coal royalty revenues and approximately 60% of our coal royalty sales volumes from metallurgical coal during the three months endedMarch 31, 2020 . Revenues and other income in the first quarter of 2020 were lower by$21.4 million and distributable cash flow and free cash flow were$12.8 million and$12.5 million lower, respectively, as compared to the prior year period. This decrease is primarily a result of a weakened market for metallurgical coal as compared to the prior year period due to a decline in global steel demand. As a result, both sales volumes and prices for metallurgical coal sold were lower in the first quarter of 2020 compared to the prior year period. In addition, weaker domestic and export thermal coal markets compared to the prior year period resulted in lower revenue from our thermal coal properties. Domestic and export thermal coal markets remained challenged by lower utility demand, continued low natural gas prices and the secular shift to renewable energy. A number of mines on NRP's properties have been temporarily idled as our coal lessees face not only reduced demand but workforce safety concerns and supply chain disruptions due to the COVID-19 pandemic. NRP believes that lessees who have idled mines will continue to sell coal from inventory, which should result in continued royalty payments to NRP over the near term. However, the pandemic has compounded already weak coal pricing and demand, and even those lessees who continue to operate are seeing significant negative impacts on their businesses. Additionally, NRP's largest lessee, Foresight Energy, filed for bankruptcy inMarch 2020 and has continued to operate since the filing. In its bankruptcy filings, Foresight disclosed that it intends to restructure its finances in a plan process. Foresight entered into agreements with its pre-petition lenders to support its restructuring plan process. In addition, Foresight reached agreement with certain of its other key contract counterparties, including NRP, to enter into amendments to the counterparties' agreements such that Foresight will be able to implement its restructuring plan. In its bankruptcy filings, Foresight announced its intention to continue to operate the Sugar Camp,Williamson , andHillsboro mining complexes. While Foresight's filings announced the idling of theMacoupin mine, Foresight recommenced longwall production at its lower-costHillsboro mine during the first quarter. NRP expects that any adverse impacts from the idling of theMacoupin mine will be partially offset by benefits from the increased production at theHillsboro mine. Foresight's ability to operate profitably and emerge from bankruptcy will continue to be impacted by weakened demand for thermal coal and the global COVID-19 pandemic. Soda Ash Business SegmentCiner Wyoming's results are primarily affected by the global supply of and demand for soda ash, which in turn directly impacts the pricesCiner Wyoming and other producers charge for its products. Demand for soda ash inthe United States is driven in a large part by economic growth and activity levels in the end markets that the glass-making industry serve, such as the automotive and construction industries. Becausethe United States is a well-developed market for soda ash, we expect that domestic supply of and demand for soda ash will remain stable for the near future. Soda ash demand in international markets has continued to grow in conjunction with GDP. We expect that future global economic growth will positively influence global demand and pricing, which will likely result in increased exports, primarily fromthe United States ,Turkey and to a limited extent, fromChina , the largest suppliers of soda ash to international markets.
Revenues and other income in the first quarter of 2020 were lower by
Ciner Wyoming started to see the impact of COVID-19 on its operations towards the end of the first quarter in the form of slowing global demand and downward pricing pressure, and whileCiner Wyoming believes this did not have a material adverse effect on its first quarter results it will have a negative impact on subsequent quarters. The extent and duration to which COVID-19 will impact demand is highly uncertain and cannot be predicted with confidence at this time.Ciner Wyoming has focused on safety during this pandemic and is actively managing the business to maintain cash flow and believes it has enough liquidity to meet its anticipated liquidity requirements.Ciner Wyoming has announced that it will commence a significant capacity expansion capital project soon that it intends to fund in part by reinvesting cash that would otherwise be distributed to its partners. Prior to COVID-19, plans were for NRP to receive approximately$25 million to$28 million of annual cash distributions fromCiner Wyoming until the project is completed. However, due to the COVID-19 pandemic we are unable to predict the ultimate impact that it may have on future distributions we receive. We believe that we will benefit over the long-term from increased productivity and cash distributions fromCiner Wyoming's operations following completion of this capital project. 22
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Business Outlook
We expect the challenges described above to continue to negatively impact our
results. NRP continues to maintain strong cash balances and liquidity, and
efforts to de-lever and de-risk the Partnership over the past five years have
prepared NRP to operate through this downturn.
Results of Operations
First Three Months of 2020 and 2019 Compared
Revenues and Other Income
The following table includes our revenues and other income by operating segment:
For the Three Months Ended
March 31, Percentage
Operating Segment (In thousands) 2020 2019 Decrease Change
Coal Royalty and Other $ 33,942 $ 55,359 $ (21,417 ) (39 )%
Soda Ash 6,272 11,682 (5,410 ) (46 )%
Total $ 40,214 $ 67,041 $ (26,827 ) (40 )%
The changes in revenues and other income is discussed for each of the operating segments below:
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Table of Contents
Coal Royalty and Other
The following table presents coal sales volumes, coal royalty revenue per ton
and coal royalty revenues by major coal producing region, the significant
categories of other revenues and other income:
For the Three Months Ended March 31, Increase Percentage
(In thousands, except per ton data) 2020 2019 (Decrease) Change
Coal sales volumes (tons)
Appalachia
Northern 327 859 (532 ) (62 )%
Central 2,933 3,422 (489 ) (14 )%
Southern 222 348 (126 ) (36 )%
Total Appalachia 3,482 4,629 (1,147 ) (25 )%
Illinois Basin 505 560 (55 ) (10 )%
Northern Powder River Basin 527 856 (329 ) (38 )%
Total coal sales volumes 4,514 6,045 (1,531 ) (25 )%
Coal royalty revenue per ton Appalachia Northern $ 1.81 $ 4.71$ (2.90 ) (62 )% Central 4.83 6.03 (1.20 ) (20 )% Southern 4.16 8.61 (4.45 ) (52 )% Illinois Basin 4.35 4.77 (0.42 ) (9 )% Northern Powder River Basin 4.13 2.61 1.52 58 % Combined average coal royalty revenue per ton 4.44 5.39 (0.95 ) (18 )% Coal royalty revenues Appalachia Northern $ 593 $ 4,045$ (3,452 ) (85 )% Central 14,173 20,644 (6,471 ) (31 )% Southern 923 2,997 (2,074 ) (69 )% Total Appalachia 15,689 27,686 (11,997 ) (43 )% Illinois Basin 2,199 2,670 (471 ) (18 )% Northern Powder River Basin 2,177 2,231 (54 ) (2 )% Unadjusted coal royalty revenues 20,065 32,587 (12,522 ) (38 )% Coal royalty adjustment for minimum leases (963 ) (456 ) (507 ) (111 )% Total coal royalty revenues $ 19,102 $ 32,131$ (13,029 ) (41 )% Other revenues Production lease minimum revenues $ 802 $ 2,700$ (1,898 ) (70 )% Minimum lease straight-line revenues 3,809 3,316 493 15 % Property tax revenues 1,599 1,433 166 12 % Wheelage revenues 2,204 1,415 789 56 % Coal overriding royalty revenues 1,322 3,975 (2,653 ) (67 )% Lease amendment revenues 843 771 72 9 % Aggregates royalty revenues 576 1,464 (888 ) (61 )% Oil and gas royalty revenues 1,103 1,719 (616 ) (36 )% Other revenues 73 578 (505 ) (87 )% Total other revenues $ 12,331 $ 17,371$ (5,040 ) (29 )% Coal royalty and other $ 31,433 $ 49,502$ (18,069 ) (37 )% Transportation and processing services (3,092 ) (55 )% revenues 2,509
5,601
Gain on asset sales and disposals - 256 (256 ) (100 )% Total Coal Royalty and Other segment revenues and other income $ 33,942 $ 55,359$ (21,417 ) (39 )% 24
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Table of Contents Coal Royalty Revenues Total coal royalty revenues decreased$13.0 million from 2019 to 2020 primarily driven by weakened coal markets that resulted in lower coal sales volume. The discussion of these decreases by region is as follows: • Appalachia: Sales volumes decreased 25% and revenues decreased$12.0 million primarily as a result of weakened met coal markets.
•
decreased $0.5 million primarily due to weakening of the thermal coal
export market and lower domestic thermal coal demand in 2020.
•
revenues decreased
our property in accordance with its mine plan in 2020, partially offset by
a 58% increase in sales prices as compared to the prior year quarter.
Other Revenues Other revenues decreased$5.0 million primarily due to a$2.7 million decrease in coal overriding royalty revenues driven by lower activity at ourWilliamson property in theIllinois Basin during the three months endedMarch 31, 2010 as compared to the prior year quarter. Transportation and Processing Services Revenues Transportation and processing services revenues decreased$3.1 million primarily due to weakened demand forIllinois Basin coal that resulted in fewer tons being transported out of ourIllinois Basin transportation and processing assets during the three months endedMarch 31, 2020 as compared to the prior year quarter. Soda Ash Revenues and other income related to our Soda Ash segment decreased$5.4 million compared to the prior year quarter primarily due to lower international demand that resulted in lower international soda ash pricing and volumes sold.
Operating Expenses
The following table presents the significant categories of our consolidated
operating expenses:
For the Three Months Ended
March 31, Percentage
(In thousands) 2020 2019 Decrease Change
Operating expenses
Operating and maintenance expenses $ 5,202 $ 8,360 $ (3,158 ) (38 )%
Depreciation, depletion and amortization 2,012 4,392 (2,380 ) (54 )%
General and administrative expenses 3,913 4,350 (437 ) (10 )%
Total operating expenses $ 11,127 $ 17,102 $ (5,975 ) (35 )%
Total operating expenses decreased
Royalty and Other and Soda Ash business segments and primarily consist of
royalty, tax, employee-related and legal costs and bad debt expense. These
costs decreased
to an overriding royalty agreement with
Limited Partnership ("WPPLP"). As a result, the coal royalty expense NRP
pays to WPPLP is fully offset by the coal royalty revenue NRP receives
from this property.
• Depreciation, depletion and amortization expense decreased
due to lower coal sales volumes at certain properties.
Interest Expense, Net Interest expense, net decreased$3.9 million primarily due to lower debt balances during the first three months of 2020 as a result of debt repayments made over the past twelve months. 25
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Adjusted EBITDA (Non-GAAP Financial Measure)
The following table reconciles net income (loss) from continuing operations (the
most comparable GAAP financial measure) to Adjusted EBITDA by business segment:
Operating Segments
For the Three Months Ended (In Coal Royalty and Corporate and
thousands) Other Soda Ash Financing Total
March 31, 2020
Net income (loss) from continuing
operations $ 26,744 $ 6,256 $ (14,221 ) $ 18,779
Less: equity earnings from
unconsolidated investment - (6,272 ) - (6,272 )
Add: total distributions from
unconsolidated investment - 7,105 - 7,105
Add: interest expense, net - - 10,308 10,308
Add: depreciation, depletion and
amortization 2,012 - - 2,012
Adjusted EBITDA $ 28,756 $ 7,089 $ (3,913 ) $ 31,932
March 31, 2019
Net income (loss) from continuing
operations $ 42,607 $ 11,682 $ (18,524 ) $ 35,765
Less: equity earnings from
unconsolidated investment - (11,682 ) - (11,682 )
Add: total distributions from
unconsolidated investment - 9,800 - 9,800
Add: interest expense, net - - 14,174 14,174
Add: depreciation, depletion and
amortization 4,392 - - 4,392
Adjusted EBITDA $ 46,999 $ 9,800 $ (4,350 ) $ 52,449 Adjusted EBITDA decreased
• Adjusted EBITDA decreased$18.2 million primarily as a
result of the
decrease in revenues and other income driven by the weakened coal
markets in the first three months of 2020.
• Soda Ash Segment
• Adjusted EBITDA decreased$2.7 million as a result of lower cash distributions received from Ciner Wyoming in the first three months of 2020. Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures) The following table presents the three major categories of the statement of cash flows by business segment: Operating Segments For the Three Months Ended (In Coal Royalty and Corporate and thousands) Other Soda Ash Financing Total March 31, 2020 Cash flow provided by (used in) continuing operations Operating activities $ 30,556$ 7,089 $ (7,490 ) $ 30,155 Investing activities 272 - - 272 Financing activities - - (28,186 ) (28,186 ) March 31, 2019 Cash flow provided by (used in) continuing operations Operating activities $ 42,916$ 9,800 $ (29,884 ) $ 22,832 Investing activities 697 - - 697 Financing activities - - (99,852 ) (99,852 ) 26
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The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:
Operating Segments
For the Three Months Ended (In Coal Royalty and Corporate and
thousands) Other Soda Ash Financing Total
March 31, 2020
Net cash provided by (used in)
operating activities of continuing
operations $ 30,556 $ 7,089 $ (7,490 ) $ 30,155
Add: proceeds from sale of
discontinued operations - - - (66 )
Add: return of long-term contract
receivable 272 - - 272
Distributable cash flow $ 30,828 $ 7,089 $ (7,490 ) $ 30,361
Less: proceeds from sale of
discontinued operations - - - 66
Free cash flow $ 30,828 $ 7,089 $ (7,490 ) $ 30,427
March 31, 2019
Net cash provided by (used in)
operating activities of continuing
operations $ 42,916 $ 9,800 $ (29,884 ) $ 22,832
Add: proceeds from asset sales and
disposals 256 - - 256
Add: proceeds from sale of
discontinued operations - - - (390 )
Add: return of long-term contract
receivable 441 - - 441
Distributable cash flow $ 43,613 $ 9,800 $ (29,884 ) $ 23,139
Less: proceeds from asset sales and
disposals (256 ) - - (256 )
Less: proceeds from sale of
discontinued operations - - - 390
Free cash flow $ 43,357 $ 9,800 $ (29,884 ) $ 23,273 DCF and FCF increased
• DCF and FCF increased$22.4 million primarily due to the timing of interest payments on our parent company bonds that were refinanced in the second quarter of 2019. Interest is due in June and December on the new 9.125% Notes, compared to March and September on the previous 10.5% Notes.
This increase in DCF and FCF was partially offset by: • Coal Royalty and Other Segment
• DCF and FCF decreased$12.8 million and$12.5 million ,
respectively,
primarily as a result of the decrease in coal royalty revenues
driven by the weakened coal markets in the first three months of
2020.
• Soda Ash Segment
• DCF and FCF decreased $2.7 million as a result of lower cash
distributions received from Ciner Wyoming in the first three months
of 2020.
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Table of Contents Liquidity and Capital Resources Current Liquidity As ofMarch 31, 2020 , we had total liquidity of$200.5 million , consisting of$100.5 million of cash and cash equivalents and$100.0 million of borrowing capacity under our Opco Credit Facility. Cash Flows Cash flows provided by operating activities increased$8.9 million , from$23.0 million in the three months endedMarch 31, 2019 to$31.9 million in the three months endedMarch 31, 2020 primarily related to the timing of interest payments on our parent company bonds that were refinanced in the second quarter of 2019 and lower cash paid for interest on our Opco Senior Notes as a result of debt repayments made over the past twelve months. This increase was partially offset by lower operating cash flow as a result of the decrease in coal royalty revenues driven by the weakened coal markets in addition to lower cash distributions received fromCiner Wyoming the first three months of 2020. Cash flows used in financing activities decreased$69.8 million , from$99.6 million in the three months endedMarch 31, 2019 to$29.8 million in the three months endedMarch 31, 2020 primarily due to lower principal payments made on our Opco Senior Notes in the first quarter of 2020 as a result of the$49.3 million pre-payment in the first quarter of 2019 related to the sale of our construction aggregates business. Capital Resources and Obligations Debt, Net We had the following debt outstanding as ofMarch 31, 2020 andDecember 31, 2019 : March 31, December 31, (In thousands) 2020 2019
Current portion of long-term debt, net
454,110 470,422
Total debt, net $ 499,877 $ 516,198
We have been and continue to be in compliance with the terms of the financial
covenants contained in our debt agreements. For additional information regarding
our debt and the agreements governing our debt, including the covenants
contained therein, see Note 8. Debt, Net to the Consolidated Financial
Statements included elsewhere in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Transactions
We do not have any off-balance sheet arrangements with unconsolidated entities
or related parties and accordingly, there are no off-balance sheet risks to our
liquidity and capital resources from unconsolidated entities.
Related Party Transactions
The information required set forth under Note 10. Related Party Transactions
to the Consolidated Financial Statements is incorporated herein by reference.
Summary of Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles in the United States of America
requires management to make certain estimates and assumptions that affect the
amounts reported in the Consolidated Financial Statements and the accompanying
notes. There have been no significant changes to our critical accounting
estimates from those disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2019 .
Recent Accounting Standards
The information set forth under Note 1. Basis of Presentation to the
Consolidated Financial Statements is incorporated herein by reference.
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