Accessibility StatementSkip Navigation Existing long-term customer relationship leads to expansion of aggregates mining portfolio FT. MYERS, Fla., Sept. 25, 2025 /PRNewswire/ -- North American Mining has secured a new 10-year contract to provide limestone mining services in Ft. Myers, Florida, expanding North American Mining's presence to 19 mining operations statewide. This new project, representing the third quarry for the same customer, reflects North American Mining's strong track record of operational ...

Company Overview - NACCO Industries, Inc. (NYSE:NC) is involved in coal mining, contract mining services for minerals and aggregates, and coal, oil, and gas royalty leasing [3] - The company is recognized as one of the Best Coal Stocks to buy according to hedge funds [1][3] Dividend Announcement - NACCO announced a quarterly dividend of $0.2525 per share, payable on September 15, 2025, to shareholders of record as of September 2 [2] - The company has a strong track record with six consecutive years of dividend increases and 55 years of uninterrupted payments, reflecting its commitment to shareholder returns [2] - The announced dividend represents a yield of 2.81%, with an 11% dividend growth rate over the past 12 months [2]

NACCO Industries (NC) FY Conference Summary Company Overview - NACCO Industries is a diversified natural resources platform with a legacy in coal mining, established in 1913, transitioning from underground mining to surface mining and integrated services for power plants [2][4] - The company aims to leverage its historical strengths to expand into new business areas while maintaining strong cash flows from its legacy operations [3][5] Business Model and Strategy - NACCO's business model focuses on long-term relationships with customers, generating stable income through contracts that provide visibility into earnings and cash flows [6][7] - The company emphasizes a "mining as a service" approach, where customers own the power plants, and NACCO provides coal mining services under long-term contracts [55][56] - NACCO has diversified into contract mining for industrial minerals and is expanding into lithium mining, with a project in Northern Nevada [10][15] Financial Performance and Projections - The company targets an EBITDA of $150 million, with a current recurring EBITDA of approximately $50 million from legacy businesses [35][39] - New projects signed in 2024 are expected to contribute an additional $11 million in annual EBITDA starting in 2026 [40] - NACCO has invested $94 million in mineral reserves, focusing on long-term value and low competition for future development opportunities [20][43] Environmental and Mitigation Business - NACCO has a strong environmental record and is developing a mitigation business that restores damaged streams and wetlands, generating credits that can be sold to developers [22][26] - The mitigation business is expected to achieve profitability by 2026, with a focus on long-term contracts and low maintenance capital expenditures [44][45] Market Position and Competitive Advantage - NACCO positions itself as a stable investment in the natural resources sector, not driven by short-term trends or cycles, but by fundamental growth in infrastructure and resource needs [46][47] - The company’s dual-class stock structure allows for long-term strategic planning without the pressure of quarterly earnings expectations [51][52] Risks and Considerations - Quarterly income variations can occur due to customer maintenance schedules, weather conditions, and natural gas prices affecting coal demand [59][60] - The company does not own the power plants, which means its revenue is dependent on the operational efficiency and demand from its utility customers [55][63] Conclusion - NACCO Industries presents a unique investment opportunity in the natural resources sector, with a focus on long-term growth, stable cash flows, and a commitment to environmental stewardship [46][48]

Group 1 - NACCO Industries will participate in the 16th Annual Midwest Ideas Investor Conference on August 26-27, 2025, in Chicago, IL [1] - The presentation is scheduled for August 26, 2025, at 3:00 pm Eastern Time and will be available via webcast [2] - NACCO Industries focuses on delivering aggregates, minerals, reliable fuels, and environmental solutions through its portfolio of businesses [3]

Financial Data and Key Metrics Changes - Consolidated revenues increased to $68 million, up 30% year over year, primarily driven by the utility coal mining segment [15] - Consolidated net income decreased to $3.3 million from $6 million in the prior year, with diluted earnings per share down 46% year on year [16] - EBITDA was reported at $9.3 million compared to $13.5 million in the same period last year [16] Business Line Data and Key Metrics Changes - Utility Coal Mining segment faced operational disruptions, leading to a decline in operating profit and segment adjusted EBITDA, primarily due to challenges at Mississippi Lignite Mining Company [16][18] - North American Mining revenues net of reimbursed costs rose 3%, driven by increased parts sales, but were offset by fewer tons delivered and higher operating costs [18] - Minerals and Royalties segment saw a 30% rise in revenues, largely due to higher natural gas prices, with operating profit and EBITDA increasing when excluding last year's one-time gain [18][19] Market Data and Key Metrics Changes - The utility coal mining segment's challenges were linked to customer inefficiencies at power plants, affecting coal mining operations [8] - The contract mining segment experienced fewer trends delivered due to temporary mechanical issues, but parts sales helped offset some losses [9] - The company anticipates stronger results in the latter half of the year as new contracts and parts sales contribute positively [9] Company Strategy and Development Direction - The company is focused on long-term contracts and investments that produce steady earnings and cash flows, aiming for a compounding growth model [12][13] - New segment names were introduced to enhance communication with stakeholders, reflecting a strategic effort to clarify business activities [5][14] - The company is optimistic about future growth, particularly in the contract mining segment, and is actively pursuing new long-term projects [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate temporary challenges and expects improving results in the second half of the year [7][22] - The operational discipline and focus on long-term returns for shareholders remain a priority, with optimism about prospects for 2026 and beyond [22] - Management acknowledged the favorable environment for energy demand and government support, which is expected to benefit all business segments [22] Other Important Information - The company plans to terminate its pension plan by the end of the year, which will trigger a non-cash settlement charge but simplify its financial structure [20] - Total debt outstanding as of June 30 was $95.5 million, with total liquidity at $139.9 million [20] - The company is forecasting up to $86 million in capital spending for the year, primarily for new business development [21] Q&A Session Summary Question: Why were volumes lighter in the coal segment? - Management indicated it was a collection of minor issues and not a cause for concern going forward [25][27] Question: Will MMLC return to profit next year? - Management confirmed expectations for MMLC to return to gross profit, contingent on improved pricing and consistent operations [28][29] Question: Why did North American Mining volumes drop? - The drop was attributed to reduced customer demand and mechanical issues with equipment, but repairs have been successful [41][42] Question: What is the allocation of the increased CapEx? - Most of the CapEx is related to growth initiatives and securing new contracts, with a focus on long-term projects [43][45] Question: How does the company view its leverage post CapEx cycle? - Management aims for less leverage over time, maintaining a conservative balance sheet to mitigate risks [75][76] Question: Can you elaborate on the parts business in contract mining? - The parts business is an evolution of the model to better serve customers by stocking hard-to-find components on-site [80] Question: Are draglines moved from coal mines to new quarries? - Draglines used in contract mining are separate from those in coal mining, and new quarries may utilize existing equipment or new acquisitions [82][83]

Part I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201%20Financial%20Statements) This section presents NACCO Industries, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, cash flows, and changes in equity, along with detailed notes explaining the nature of operations, revenue recognition, inventory, stockholders' equity, fair value measurements, unconsolidated subsidiaries, business segments, and contingencies [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Unaudited Condensed Consolidated Balance Sheets (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | **ASSETS** | | | | Cash and cash equivalents | $49,402 | $72,833 | | Total current assets | 227,308 | 264,738 | | Property, plant and equipment, net | 256,762 | 259,457 | | Total assets | $631,312 | $631,687 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | 58,194 | 64,888 | | Total liabilities | 218,192 | 226,740 | | Total stockholders' equity | 413,120 | 404,947 | | Total liabilities and equity | $631,312 | $631,687 | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $68,235 | $52,345 | $133,806 | $105,634 | | Gross profit | 6,820 | 7,018 | 16,474 | 14,036 | | Operating (loss) profit | (51) | 7,366 | 7,631 | 12,123 | | Net income | $3,260 | $5,972 | $8,160 | $10,542 | | Basic earnings per share | $0.44 | $0.81 | $1.10 | $1.42 | | Diluted earnings per share | $0.44 | $0.81 | $1.10 | $1.42 | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Unaudited Condensed Consolidated Statements of Comprehensive Income (In thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $3,260 | $5,972 | $8,160 | $10,542 | | Total other comprehensive income | 108 | 77 | 217 | 153 | | Comprehensive income | $3,368 | $6,049 | $8,377 | $10,695 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Unaudited Condensed Consolidated Statements of Cash Flows (In thousands, Six Months Ended June 30) | Activity | 2025 | 2024 | | :------------------------------------------ | :----------- | :----------- | | Net cash used for operating activities | $(2,753) | $(5,698) | | Net cash used for investing activities | (11,035) | (23,275) | | Net cash (used for) provided by financing activities | (9,643) | 6,225 | | Total decrease for the period | (23,431) | (22,748) | | Balance at the beginning of the period | 72,833 | 85,109 | | Balance at the end of the period | $49,402 | $62,361 | [Unaudited Condensed Consolidated Statements of Changes in Equity](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Unaudited Condensed Consolidated Statements of Changes in Equity (In thousands, except per share data) | Item | Balance, January 1, 2025 | Balance, June 30, 2025 | | :-------------------------------- | :----------------------- | :--------------------- | | Class A Common Stock | $5,730 | $5,888 | | Class B Common Stock | $1,566 | $1,564 | | Capital in Excess of Par Value | $34,340 | $38,223 | | Retained Earnings | $373,363 | $377,280 | | Accumulated Other Comprehensive Loss | $(10,052) | $(9,835) | | **Total Stockholders' Equity** | **$404,947** | **$413,120** | - Stock-based compensation contributed **$1,547k** in Q1 2025 and **$2,514k** in Q2 2025 to equity. Cash dividends paid were **$1,691k** in Q1 2025 and **$1,879k** in Q2 2025[14](index=14&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1—Nature of Operations and Basis of Presentation](index=10&type=section&id=NOTE%201%E2%80%94Nature%20of%20Operations%20and%20Basis%20of%20Presentation) This note describes NACCO's business segments: Utility Coal Mining, Contract Mining, and Minerals and Royalties, along with other developing businesses, highlighting segment name changes in Q2 2025, operational models, accounting treatment for unconsolidated variable interest entities (VIEs), and key financial events like the Falkirk pension plan settlement and assets held for sale - Segment Name Changes (Q2 2025): Utility Coal Mining (formerly Coal Mining), Contract Mining (formerly North American Mining), and Minerals and Royalties (formerly Minerals Management). No changes to segment composition or historical reporting[17](index=17&type=chunk) - Falkirk Pension Plan Settlement: **$14,500 thousand** of excess funds from the terminated Falkirk pension plan were transferred to the NACCO 401(k) plan in Q1 2025. A **$10,900 thousand** liability settlement with the former customer in Q2 2025 resulted in a **$3,600 thousand** gain on the Consolidated Statement of Operations[31](index=31&type=chunk) Assets Held for Sale (In thousands) | Date | Amount | | :--- | :----- | | June 30, 2025 | $17,022 | | December 31, 2024 | $14,159 | [NOTE 2—Revenue Recognition](index=14&type=section&id=NOTE%202%E2%80%94Revenue%20Recognition) This note details NACCO's revenue recognition policies, outlining performance obligations for its various contracts, including coal delivery, contract mining services, and mineral rights leasing, explaining the treatment of variable consideration, such as sales-based royalties and index adjustments, and providing disaggregated revenue data by timing of transfer and contract balances Disaggregated Revenue by Timing of Recognition (In thousands) | Timing of Revenue Recognition | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transferred at a point in time | $29,472 | $14,498 | $50,326 | $29,606 | | Transferred over time | 38,763 | 37,847 | 83,480 | 76,028 | | **Total revenues** | **$68,235** | **$52,345** | **$133,806** | **$105,634** | Contract Balances (In thousands) | Contract Balance | January 1, 2025 | June 30, 2025 | Change | | :----------------------- | :-------------- | :------------ | :----- | | Trade accounts receivable | $49,706 | $38,861 | $(10,845) | | Contract asset (current) | 313 | 388 | 75 | | Contract asset (long-term) | 3,500 | 3,500 | — | | Contract liability (current) | 484 | 1,450 | 966 | | Contract liability (long-term) | 5,119 | 8,435 | 3,316 | [NOTE 3—Inventories](index=16&type=section&id=NOTE%203%E2%80%94Inventories) This note provides a summary of the company's inventory composition, including coal, aggregates, and mining supplies, and reports the inventory impairment charges recognized during the three and six months ended June 30, 2025 and 2024 Inventories (In thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :------------------ | | Coal and aggregates | $19,912 | $27,076 | | Mining supplies | 72,331 | 67,532 | | **Total inventories** | **$92,243** | **$94,608** | Inventory Impairment Charges (In thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Three months ended June 30 | $1,300 | $700 | | Six months ended June 30 | $4,300 | $3,100 | [NOTE 4—Stockholders' Equity](index=17&type=section&id=NOTE%204%E2%80%94Stockholders%27%20Equity) This note outlines the company's 2023 Stock Repurchase Program, approved for up to $20.0 million of Class A Common Stock through December 31, 2025, and details the number of shares repurchased and the aggregate purchase price for the three and six months ended June 30, 2025 and 2024 - 2023 Stock Repurchase Program: Approved for up to **$20,000 thousand** of Class A Common Stock through December 31, 2025[55](index=55&type=chunk) Class A Common Stock Repurchases under 2023 Program | Period | Shares Repurchased | Aggregate Purchase Price | | :------------------------- | :----------------- | :----------------------- | | Three months ended June 30, 2025 | 0 | $0 | | Six months ended June 30, 2025 | 22,198 | $0.7 million | | Three months ended June 30, 2024 | 108,371 | $3.3 million | | Six months ended June 30, 2024 | 236,058 | $7.6 million | [NOTE 5—Fair Value Disclosure](index=17&type=section&id=NOTE%205%E2%80%94Fair%20Value%20Disclosure) This note presents the company's recurring fair value measurements, specifically for equity securities held in a Mine Water Treatment Trust and an investment in a public company, both classified as Level 1 within the fair value hierarchy, and details the gains and losses recognized from these investments Fair Value Measurements of Equity Securities (In thousands, Level 1) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $17,769 | | December 31, 2024 | $18,663 | - Mine Water Treatment Trust: Fair value was **$12,500 thousand** at June 30, 2025 (vs. **$12,300 thousand** at Dec 31, 2024). Recognized a gain of **$800 thousand** in Q2 2025 and **$500 thousand** in 6M 2025[57](index=57&type=chunk) - Investment in Public Company: Fair value was **$5,300 thousand** at June 30, 2025 (vs. **$6,300 thousand** at Dec 31, 2024). Recognized a loss of **$400 thousand** in Q2 2025 and **$1,000 thousand** in 6M 2025[58](index=58&type=chunk) [NOTE 6—Unconsolidated Subsidiaries](index=18&type=section&id=NOTE%206%E2%80%94Unconsolidated%20Subsidiaries) This note explains that NACCO's wholly-owned unconsolidated subsidiaries in the Utility Coal Mining and Contract Mining segments are Variable Interest Entities (VIEs) where NACCO is not the primary beneficiary, thus not consolidating their financial results, detailing the investment in these entities, NACCO's limited risk of loss, earnings generated, and specific guarantees related to Coyote Creek Investment in Unconsolidated Subsidiaries (In thousands) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $16,100 | | December 31, 2024 | $14,100 | Earnings of Unconsolidated Subsidiaries (In thousands) | Period | 2025 | 2024 | | :------------------------- | :----- | :----- | | Three months ended June 30 | $12,900 | $13,500 | | Six months ended June 30 | $28,300 | $26,800 | - NACCO Natural Resources has guarantees related to Coyote Creek, including make-whole payments or asset purchases under certain default/termination scenarios, but the likelihood of performance is deemed remote[63](index=63&type=chunk) [NOTE 7—Business Segments](index=18&type=section&id=NOTE%207%E2%80%94Business%20Segments) This note outlines NACCO's three reportable segments: Utility Coal Mining, Contract Mining, and Minerals and Royalties, explaining how segment performance is evaluated by the Chief Operating Decision Maker (CODM) using Operating profit (loss), and provides detailed financial information for each segment, including revenues, cost of sales, earnings of unconsolidated operations, operating expenses, and operating profit Segment Revenues (In thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Utility Coal Mining | $28,626 | $14,996 | $47,865 | $30,541 | | Contract Mining | 30,723 | 27,920 | 62,249 | 52,403 | | Minerals and Royalties | 7,268 | 5,593 | 18,170 | 15,994 | | Unallocated Items | 2,223 | 4,566 | 6,623 | 7,828 | | Eliminations | (605) | (730) | (1,101) | (1,132) | | **Total** | **$68,235** | **$52,345** | **$133,806** | **$105,634** | Segment Operating (Loss) Profit (In thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Utility Coal Mining | $1,222 | $2,767 | $5,013 | $2,350 | | Contract Mining | 1,010 | 3,085 | 2,980 | 5,440 | | Minerals and Royalties | 5,205 | 7,591 | 13,112 | 15,521 | | Unallocated Items | (7,491) | (6,080) | (13,493) | (11,208) | | Eliminations | 3 | 3 | 19 | 20 | | **Total** | **$(51)** | **$7,366** | **$7,631** | **$12,123** | Total Assets by Segment (In thousands) | Segment | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Utility Coal Mining | $117,201 | $125,301 | | Contract Mining | 212,254 | 204,889 | | Minerals and Royalties | 96,247 | 99,905 | | Unallocated Items | 205,610 | 201,592 | | **Total** | **$631,312** | **$631,687** | [NOTE 8—Contingencies](index=20&type=section&id=NOTE%208%E2%80%94Contingencies) This note addresses various legal and regulatory proceedings and claims against NACCO and its subsidiaries, stating that management believes it has meritorious defenses and accrues liabilities when they are probable and reasonably estimable, also noting the inherent uncertainties and potential adverse impacts of unfavorable rulings - Legal and Regulatory Proceedings: Incidental to ordinary course of business; management believes it has meritorious defenses and will vigorously defend the company[69](index=69&type=chunk) - Accrual Policy: Costs are accrued when liability is probable and the amount can be reasonably estimated. If a range is estimable, the minimum amount is accrued[69](index=69&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of NACCO's financial condition and results of operations, covering recent government regulation updates, critical accounting policies, a consolidated financial summary, liquidity and capital resources, and detailed segment results, also including the company's outlook and a cautionary statement regarding forward-looking information [Government Regulation Update](index=21&type=section&id=Government%20Regulation%20Update) This section provides updates on recent government regulations, including EPA actions on coal combustion residuals, power plant regulations, and regional haze rules, also covering federal coal leasing executive orders and the impact of the One Big Beautiful Bill Act (OBBBA) on tax law and solar energy projects - EPA Actions: Extended compliance deadlines for coal combustion residual (CCR) management units (July 2025); announced plans to repeal Clean Power Plan 2.0 and Mercury and Air Toxics Standards (MATS) (June 2025); proposed approval of North Dakota's CCR program application (May 2025)[75](index=75&type=chunk)[76](index=76&type=chunk) - Federal Coal Leasing: President Trump signed four executive orders in April 2025 to boost the U.S. coal industry and expedite federal coal leases, with draft Environmental Assessments published for two lease applications in April and June 2025[78](index=78&type=chunk)[79](index=79&type=chunk) - One Big Beautiful Bill Act (OBBBA): Signed July 4, 2025, includes changes to U.S. tax law (bonus depreciation, research expensing, interest deductibility) and substantial changes to U.S. solar energy tax policy, which could materially impact ReGen Resources' solar projects[80](index=80&type=chunk)[81](index=81&type=chunk) [Critical Accounting Policies and Estimates](index=22&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that there have been no material changes to the company's critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended December 31, 2024 - No Material Changes: Critical Accounting Policies and Estimates have not materially changed since December 31, 2024[83](index=83&type=chunk) [Consolidated Financial Summary](index=23&type=section&id=Consolidated%20Financial%20Summary) This section provides a consolidated overview of NACCO's financial performance for the three and six months ended June 30, 2025, compared to 2024, highlighting changes in revenues, operating profit, net income, and the effective income tax rate, along with specific factors influencing other income/expense items, such as interest, equity securities, and the Falkirk pension plan settlement Consolidated Financial Performance (In thousands, except percentages) | Metric | Q2 2025 | Q2 2024 | Change ($k) | Change (%) | 6M 2025 | 6M 2024 | Change ($k) | Change (%) | | :-------------------------------- | :------ | :------ | :---------- | :--------- | :------ | :------ | :---------- | :--------- | | Total Revenue | $68,235 | $52,345 | $15,890 | **30.4%** | $133,806 | $105,634 | $28,172 | **26.7%** | | Total Operating (loss) profit | $(51) | $7,366 | $(7,417) | **(100.7%)** | $7,631 | $12,123 | $(4,492) | **(37.0%)** | | Net income | $3,260 | $5,972 | $(2,712) | **(45.4%)** | $8,160 | $10,542 | $(2,382) | **(22.6%)** | | Effective income tax rate | **(63.5%)** | **4.1%** | **(67.6)** pp | - | **(14.6%)** | **10.7%** | **(25.3)** pp | - | - Gain on Settlement of Excess Funding Liability: A **$3,600 thousand** gain was recognized in Q2 2025 from the settlement of the Falkirk pension plan liability[90](index=90&type=chunk) - Income Tax Benefit: The income tax benefit recorded for the three and six months ended June 30, 2025, was primarily due to the significant proportional effect of percentage depletion on relatively small income before tax[91](index=91&type=chunk) [Liquidity and Capital Resources of NACCO](index=24&type=section&id=Liquidity%20and%20Capital%20Resources%20of%20NACCO) This section analyzes NACCO's cash flows from operating, investing, and financing activities, detailing changes in debt, share repurchases, and capital expenditures, also providing information on the secured revolving line of credit, including its terms, covenants, and current availability, concluding that the company has sufficient liquidity to meet its operational needs Cash Flow Summary (In thousands, Six Months Ended June 30) | Activity | 2025 | 2024 | Change | | :------------------------------------------ | :----------- | :----------- | :------- | | Net cash used for operating activities | $(2,753) | $(5,698) | $2,945 | | Net cash used for investing activities | (11,035) | (23,275) | $12,240 | | Net cash (used for) provided by financing activities | (9,643) | 6,225 | $(15,868) | | **Total decrease for the period** | **$(23,431)** | **$(22,748)** | **$(683)** | | Cash and cash equivalents, end of period | $49,402 | $62,361 | $(12,959) | - Financing Activities Change: Primarily due to net reductions in debt borrowings during the first six months of 2025 compared with net additions during the first six months of 2024, partially offset by a decrease in share repurchases[93](index=93&type=chunk) - Secured Revolving Line of Credit: Commitments increased to **$200,000 thousand**, and maturity extended to September 2028. Borrowings outstanding were **$65,000 thousand** at June 30, 2025, with **$90,500 thousand** excess availability. The weighted-average annual interest rate was **7.05%** for Q2 2025 and **7.00%** for 6M 2025. NACCO Natural Resources was in compliance with all financial covenants[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - Capital Expenditures: **$12,000 thousand** in the first six months of 2025, primarily for Contract Mining equipment. Planned expenditures for the remainder of 2025 are approximately **$74,000 thousand**, to be funded from internally generated funds and/or bank borrowings[100](index=100&type=chunk) Capital Structure (In thousands, except percentages) | Item | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :------------------ | :----- | | Cash and cash equivalents | $49,402 | $72,833 | $(23,431) | | Total debt | $(95,506) | $(99,514) | $4,008 | | Total equity | $413,120 | $404,947 | $8,173 | | Debt to total capitalization | **19%** | **20%** | **(1%)** | [Segment Results](index=26&type=section&id=Segment%20Results) This section provides a detailed review of the financial performance for each of NACCO's operating segments: Utility Coal Mining, Contract Mining, and Minerals and Royalties, as well as Unallocated Items and Eliminations, highlighting key revenue and operating profit changes, along with the primary drivers for these fluctuations in the three and six months ended June 30, 2025, compared to the prior year [UTILITY COAL MINING SEGMENT](index=26&type=section&id=UTILITY%20COAL%20MINING%20SEGMENT) The Utility Coal Mining segment experienced a significant revenue increase in Q2 and 6M 2025 due to higher customer requirements at MLMC, following a boiler issue in 2024, however, operating profit decreased in Q2 due to an unfavorable gross loss and higher SG&A, while increasing for the six-month period due to improved earnings from unconsolidated operations and a reduced gross loss Utility Coal Mining Tons Delivered (In thousands) | Period | 2025 | 2024 | Change (%) | | :----- | :--- | :--- | :--------- | | Three months ended June 30 | 4,626 | 5,353 | **(13.6%)** | | Six months ended June 30 | 10,833 | 11,288 | **(4.0%)** | Utility Coal Mining Financial Performance (In thousands) | Metric | Q2 2025 | Q2 2024 | Change ($k) | Change (%) | 6M 2025 | 6M 2024 | Change ($k) | Change (%) | | :-------------------------------- | :------ | :------ | :---------- | :--------- | :------ | :------ | :---------- | :--------- | | Revenues | $28,626 | $14,996 | $13,630 | **90.9%** | $47,865 | $30,541 | $17,324 | **56.7%** | | Operating profit | $1,222 | $2,767 | $(1,545) | **(55.8%)** | $5,013 | $2,350 | $2,663 | **113.3%** | | Earnings of unconsolidated operations | $11,656 | $12,006 | $(350) | **(2.9%)** | $26,119 | $24,013 | $2,106 | **8.8%** | - Q2 2025 Operating Profit Decrease: Primarily due to an increase in gross loss (contractual sales price per ton decreased at MLMC, tons sold exceeded tons mined), higher selling, general and administrative expenses, and a decrease in earnings of unconsolidated operations (lower customer demand at Coteau, Coyote, and Falkirk)[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - 6M 2025 Operating Profit Increase: Primarily due to an increase in earnings of unconsolidated operations (higher per ton management fees from temporary price concessions ending at Falkirk) and a decrease in gross loss at MLMC (reduction in cost per ton delivered due to increased tons sold), partially offset by higher selling, general and administrative expenses[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [CONTRACT MINING SEGMENT](index=27&type=section&id=CONTRACT%20MINING%20SEGMENT) The Contract Mining segment saw an increase in total revenues for both Q2 and 6M 2025, mainly driven by higher reimbursable costs, however, operating profit decreased significantly due to lower gross profit (fewer tons delivered, higher operating costs, unexpected equipment repairs), increased selling, general and administrative expenses, and reduced earnings from unconsolidated operations Contract Mining Tons Delivered (In thousands) | Period | 2025 | 2024 | Change (%) | | :----- | :--- | :--- | :--------- | | Three months ended June 30 | 13,947 | 16,000 | **(12.8%)** | | Six months ended June 30 | 26,800 | 31,173 | **(14.1%)** | Contract Mining Financial Performance (In thousands) | Metric | Q2 2025 | Q2 2024 | Change ($k) | Change (%) | 6M 2025 | 6M 2024 | Change ($k) | Change (%) | | :-------------------------------- | :------ | :------ | :---------- | :--------- | :------ | :------ | :---------- | :--------- | | Total revenues | $30,723 | $27,920 | $2,803 | **10.0%** | $62,249 | $52,403 | $9,846 | **18.8%** | | Revenues excluding reimbursable costs | $12,220 | $11,877 | $343 | **2.9%** | $24,199 | $23,505 | $694 | **3.0%** | | Operating profit | $1,010 | $3,085 | $(2,075) | **(67.3%)** | $2,980 | $5,440 | $(2,460) | **(45.2%)** | | Earnings of unconsolidated operations | $1,232 | $1,448 | $(216) | **(14.9%)** | $2,201 | $2,813 | $(612) | **(21.8%)** | - Operating Profit Decrease (Q2 and 6M YoY): Primarily due to a decrease in gross profit (fewer tons delivered, higher operating costs including unexpected equipment repairs and maintenance), an increase in selling, general and administrative expenses (higher employee-related costs), and a decrease in earnings of unconsolidated operations (reduction in tons delivered)[117](index=117&type=chunk)[119](index=119&type=chunk) [MINERALS AND ROYALTIES SEGMENT](index=29&type=section&id=MINERALS%20AND%20ROYALTIES%20SEGMENT) The Minerals and Royalties segment reported increased revenues in Q2 and 6M 2025, primarily driven by higher natural gas prices, despite decreased production volumes, however, operating profit decreased due to the absence of a significant prior-year gain on asset sales, partially offset by improvements in gross profit Productive Wells | Well Type | June 30, 2025 | June 30, 2024 | | :-------- | :------------ | :------------ | | Gross | 2,377 | 1,986 | | Net | **23.3** | **22.2** | Average Commodity Prices | Commodity | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | West Texas Intermediate Average Crude Oil Price | **$81.71** | **$68.23** | **$79.64** | **$64.63** | | Henry Hub Average Natural Gas Price | **$2.08** | **$3.67** | **$2.11** | **$3.19** | Minerals and Royalties Financial Performance (In thousands) | Metric | Q2 2025 | Q2 2024 | Change ($k) | Change (%) | 6M 2025 | 6M 2024 | Change ($k) | Change (%) | | :-------------------------------- | :------ | :------ | :---------- | :--------- | :------ | :------ | :---------- | :--------- | | Total Revenues | $7,268 | $5,593 | $1,675 | **29.9%** | $18,170 | $15,994 | $2,176 | **13.6%** | | Operating profit | $5,205 | $7,591 | $(2,386) | **(31.4%)** | $13,112 | $15,521 | $(2,409) | **(15.5%)** | | Gain on sale of assets | $0 | $(4,512) | $4,512 | - | $0 | $(4,512) | $4,512 | - | - Operating Profit Decrease (Q2 and 6M YoY): Primarily due to the absence of a **$4,500 thousand** prior-year gain on the sale of land, partially offset by improvements in gross profit driven by higher natural gas prices[124](index=124&type=chunk) [UNALLOCATED ITEMS AND ELIMINATIONS](index=31&type=section&id=UNALLOCATED%20ITEMS%20AND%20ELIMINATIONS) The Unallocated Items and Eliminations section reported an increased operating loss for both the three and six months ended June 30, 2025, compared to the prior year periods, primarily attributed to higher employee-related costs and increased outside service costs, particularly for developing businesses Unallocated Items and Eliminations Operating Loss (In thousands) | Period | 2025 | 2024 | Change | | :------------------------- | :--------- | :--------- | :------- | | Three months ended June 30 | $(7,488) | $(6,077) | $(1,411) | | Six months ended June 30 | $(13,474) | $(11,188) | $(2,286) | - Operating Loss Increase: Primarily due to higher employee-related and outside service costs, with the increase in outside services mainly attributable to developing businesses[125](index=125&type=chunk) [NACCO Industries, Inc. Outlook](index=31&type=section&id=NACCO%20Industries,%20Inc.%20Outlook) NACCO anticipates a substantial increase in consolidated operating profit in the second half of 2025, though full-year results will be lower than 2024 due to prior-year business interruption insurance income and an expected pension settlement charge, projecting improving profitability for Utility Coal Mining in 2026, continued growth in Contract Mining with new long-term contracts and the Thacker Pass lithium project, and improved operating profit in Minerals and Royalties from portfolio expansion, with overall lower cash use in 2025 and increasing cash flow generation from 2026, driven by disciplined capital allocation and strategic growth investments - H2 2025 Outlook: Anticipates a substantial increase in consolidated operating profit compared to H1 2025, but full-year results will be lower than 2024 due to **$13,600 thousand** of business interruption insurance income recognized in Q3 2024[128](index=128&type=chunk) - Pension Plan Termination: Intends to terminate its defined benefit pension plan in Q4 2025, expecting a significant non-cash settlement charge[128](index=128&type=chunk) - Utility Coal Mining Segment Outlook: Customer demand expected to remain steady at unconsolidated operations. MLMC results expected to improve in H2 2025 over H1, but 2025 full-year segment results are anticipated to decline from 2024 due to a reduction in contractual per-ton sales price and prior-year insurance income. Improving profitability is expected in 2026[129](index=129&type=chunk) - Contract Mining Segment Outlook: Positioned for growth with new long-term contracts (e.g., three new/amended contracts in 2024 projected to generate **$20,000 thousand** in after-tax net present value cash flows). Sawtooth (Thacker Pass lithium project) will contribute enhanced income and long-term cash flows starting late 2027. Near-term profitability improvements in H2 2025 and full year are expected from operational efficiencies and increased parts sales[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) - Minerals and Royalties Segment Outlook: Completed a **$4,200 thousand** acquisition of mineral interests in the Midland Basin in July 2025. These investments are expected to contribute to improved H2 2025 operating profit and continued improvements into 2026[135](index=135&type=chunk) - Capital Expenditures: Anticipates up to **$86,000 thousand** in 2025, with the majority earmarked for future business development. Projects a substantially lower use of cash for the 2025 full year compared with 2024, with a steady increase in annual cash flow generation beginning in 2026[137](index=137&type=chunk) [FORWARD-LOOKING STATEMENTS](index=32&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section serves as a cautionary statement regarding forward-looking statements made in the Form 10-Q, outlining numerous factors that could cause actual results to differ materially from current expectations, including changes in customer demand, contract terms, hydrocarbon prices, regulatory actions, operational costs, and various external disruptions - Risk Factors: Factors that could cause actual results to differ materially include significant reduction in customer demand, weather conditions, power plant outages, changes to or termination of contracts, changes in hydrocarbon prices, changes in development plans by third-party lessees, premature facility closures, federal and state legislative and regulatory actions affecting fossil fuels, supply chain disruptions, changes in tax laws, impairment charges, changes in operational costs, equipment problems, changes in reclamation costs, costs for new business development, ability to evaluate investments, natural or human causes of disruption, and ability to attract/retain workforce[139](index=139&type=chunk)[140](index=140&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, NACCO Industries, Inc. is not required to provide quantitative and qualitative disclosures about market risk - Exemption: As a smaller reporting company, NACCO is not required to provide quantitative and qualitative disclosures about market risk[141](index=141&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204%20Controls%20and%20Procedures) This section confirms that management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and concluded they were effective, also stating that there have been no material changes in internal control over financial reporting during the second quarter of 2025 - Disclosure Controls and Procedures: Management concluded that disclosure controls and procedures were effective as of June 30, 2025[142](index=142&type=chunk) - Internal Control Over Financial Reporting: No material changes in internal control over financial reporting occurred during the second quarter of 2025[143](index=143&type=chunk) Part II. OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=Item%201%20Legal%20Proceedings) This section states that there are no legal proceedings to report for the period - No Legal Proceedings: None to report[146](index=146&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A%20Risk%20Factors) This section confirms that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No Material Changes: No material changes to risk factors since the Annual Report on Form 10-K for the year ended December 31, 2024[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that no shares were repurchased under the 2023 Stock Repurchase Program during the second quarter of 2025, and $7.8 million remains authorized for future repurchases - No Repurchases in Q2 2025: No shares were purchased under the 2023 Stock Repurchase Program during April, May, or June 2025[148](index=148&type=chunk) - Remaining Authorization: **$7,846 thousand** maximum dollar value of shares may yet be purchased under the 2023 Stock Repurchase Program[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities to report for the period - No Defaults: None to report[149](index=149&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This section indicates that information concerning mine safety violations or other regulatory matters is included in Exhibit 95 filed with this Quarterly Report on Form 10-Q - Mine Safety Disclosures: Information concerning mine safety violations or other regulatory matters is included in Exhibit 95[150](index=150&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205%20Other%20Information) This section reports that no directors or executive officers adopted or terminated a Rule 10b5-1 Trading Plan or a non-Rule 10b5-1 trading arrangement during the second quarter of 2025 - No 10b5-1 Plan Changes: No directors or executive officers adopted or terminated a Rule 10b5-1 Trading Plan or a non-Rule 10b5-1 trading arrangement during the second quarter of 2025[151](index=151&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including the Non-Employee Directors' Equity Compensation Plan, various certifications, the Mine Safety Disclosure Exhibit, and Inline XBRL documents - Exhibits List: Includes Non-Employee Directors' Equity Compensation Plan, Certifications (31(i)(1), 31(i)(2), 32), Mine Safety Disclosure Exhibit (95), and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[152](index=152&type=chunk) [Signatures](index=37&type=section&id=Signatures) This section contains the official signature block for NACCO Industries, Inc.'s Quarterly Report on Form 10-Q, signed by Elizabeth I. Loveman, Senior Vice President and Controller, on August 6, 2025 - Signed By: Elizabeth I. Loveman, Senior Vice President and Controller (principal financial and accounting officer)[155](index=155&type=chunk) - Date: August 6, 2025[155](index=155&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Company Announcement & CEO Statement](index=1&type=section&id=Company%20Announcement%20%26%20CEO%20Statement) NACCO Industries announced its consolidated results for Q2 2025, acknowledging short-term operational challenges that temporarily impacted expectations for increasing operating results. Despite these setbacks, the CEO expressed confidence in the businesses' positioning for meaningful future growth - NACCO Industries experienced short-term operational challenges in Q2 2025, leading to a temporary setback in expected operating results[2](index=2&type=chunk) - The CEO, J.C. Butler, remains confident in the businesses and their potential for meaningful growth, despite the Q2 results being compared against a strong prior-year period[2](index=2&type=chunk) [Summary Financial Results](index=1&type=section&id=Summary%20Financial%20Results) For Q2 2025, NACCO reported a 30% increase in revenues to $68.2 million, but operating profit turned into a loss of $(51) thousand, down significantly from $7.4 million in Q2 2024. Net income decreased to $3.3 million from $6.0 million, and diluted EPS fell to $0.44 from $0.81. Consolidated EBITDA also declined to $9.3 million from $13.5 million | ($ in thousands, except per share amounts) | 6/30/2025 | 6/30/2024 | Fav/(Unfav) $ Change | | :--- | :--- | :--- | :--- | | Revenues | $68,235 | $52,345 | $15,890 | | Operating profit (loss) | $(51) | $7,366 | $(7,417) | | Other (income) expense, net | $(2,045) | $1,138 | $3,183 | | Income tax (benefit) provision | $(1,266) | $256 | $1,522 | | Net Income | $3,260 | $5,972 | $(2,712) | | Diluted EPS | $0.44 | $0.81 | $(0.37) | | Consolidated EBITDA* | $9,259 | $13,508 | $(4,249) | [Consolidated Second Quarter 2025 Performance Overview](index=1&type=section&id=Consolidated%20Second%20Quarter%202025%20Performance%20Overview) Despite strong revenue growth of 30% to $68.2 million, NACCO's Q2 2025 operating results were near break-even due to short-term operational disruptions in both Utility Coal and Contract Mining segments and higher unallocated costs. These disruptions included unfavorable pricing, mining inefficiencies, unexpected repairs, and quarry delays. Increased other income and lower tax expense partially mitigated the decline in net income and diluted EPS - Revenues increased **30%** over Q2 2024, reaching **$68.2 million**[4](index=4&type=chunk) - Short-term operational disruptions in Utility Coal and Contract Mining segments, along with higher unallocated costs, led to break-even operating results[4](index=4&type=chunk) - Net income decreased to **$3.3 million** (from $6.0 million in Q2 2024) and Diluted EPS to **$0.44** (from $0.81 in Q2 2024), partly offset by increased other income and lower tax expense[4](index=4&type=chunk)[5](index=5&type=chunk) [Liquidity](index=2&type=section&id=Liquidity) As of June 30, 2025, NACCO Industries maintained total liquidity of $139.9 million, comprising $49.4 million in cash and $90.5 million available under its revolving credit facility. The company had $95.5 million in total debt outstanding and paid $1.9 million in dividends during Q2 2025. A $7.8 million balance remains on its $20 million share repurchase program expiring at year-end | Metric | Amount (as of June 30, 2025) | | :--- | :--- | | Total debt outstanding | $95.5 million | | Total liquidity | $139.9 million | | Cash | $49.4 million | | Availability under revolving credit facility | $90.5 million | | Dividends paid in Q2 2025 | $1.9 million | | Remaining share repurchase program | $7.8 million (out of $20 million, expires end of 2025) | [Detailed Segment Performance Analysis](index=2&type=section&id=Detailed%20Segment%20Performance%20Analysis) [Segment Name Changes](index=2&type=section&id=Segment%20Name%20Changes) NACCO Industries changed its reportable segment names in Q2 2025 to better align business activities with segment identities. The former Coal Mining, North American Mining, and Minerals Management segments are now Utility Coal Mining, Contract Mining, and Minerals and Royalties, respectively, with no change to their composition or historical reporting - Reportable segment names were changed in Q2 2025 for clearer association of business activities[8](index=8&type=chunk) - New segment names: **Utility Coal Mining** (formerly Coal Mining), **Contract Mining** (formerly North American Mining), and **Minerals and Royalties** (formerly Minerals Management)[8](index=8&type=chunk) [Utility Coal Mining Results](index=2&type=section&id=Utility%20Coal%20Mining%20Results) The Utility Coal Mining segment saw revenues increase 91% to $28.6 million in Q2 2025, primarily due to higher tons delivered at Mississippi Lignite Mining Company, which had been constrained in the prior year. However, operating profit decreased to $1.2 million from $2.8 million, and Segment Adjusted EBITDA fell to $3.4 million from $5.7 million, mainly due to lower operating results at Mississippi Lignite, increased operating expenses (employee-related costs), and a modest decrease in earnings from unconsolidated operations | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | | Revenues | $28,626 | $14,996 | | Earnings of unconsolidated operations | $11,656 | $12,006 | | Operating expenses | $8,733 | $8,097 | | Operating profit | $1,222 | $2,767 | | Segment Adjusted EBITDA | $3,354 | $5,663 | - Q2 2025 revenues rose **91%** due to increased tons delivered at Mississippi Lignite Mining Company, which was previously constrained by power plant operations[10](index=10&type=chunk) - Operating profit and Segment Adjusted EBITDA decreased year-over-year due to lower operating results at Mississippi Lignite, increased employee-related costs, and a modest decrease in earnings from unconsolidated operations[11](index=11&type=chunk) - Mining inefficiencies at Mississippi Lignite, coupled with a decreased contractual sales price per ton and the realization of elevated inventory costs from prior periods, contributed to the decline[12](index=12&type=chunk)[13](index=13&type=chunk) [Contract Mining Results](index=3&type=section&id=Contract%20Mining%20Results) The Contract Mining segment's revenues increased to $30.7 million in Q2 2025, primarily driven by higher reimbursed costs and a 3% growth in revenues net of reimbursed costs, mainly from parts sales. However, operating profit decreased to $1.0 million from $3.1 million, and Segment Adjusted EBITDA fell to $3.9 million from $5.5 million. This decline was attributed to lower mined tons delivered due to reduced customer requirements and operational delays, higher operating costs including unexpected equipment repairs, and increased employee-related costs, which offset the profits from increased parts sales | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | | Tons delivered | 13,947 | 16,000 | | Revenues | $30,723 | $27,920 | | Operating profit | $1,010 | $3,085 | | Segment Adjusted EBITDA | $3,927 | $5,519 | - Revenues rose due to increased reimbursed costs and a **3%** growth in revenues net of reimbursed costs, mainly from parts sales[16](index=16&type=chunk) - Operating profit and Segment Adjusted EBITDA decreased due to lower mined tons delivered, higher operating costs (including unexpected equipment repairs and maintenance), and increased employee-related costs[17](index=17&type=chunk) [Minerals and Royalties Results](index=3&type=section&id=Minerals%20and%20Royalties%20Results) The Minerals and Royalties segment reported revenues of $7.3 million in Q2 2025, up from $5.6 million in Q2 2024. Operating profit decreased to $5.2 million from $7.6 million, and Segment Adjusted EBITDA fell to $6.1 million from $8.9 million. Excluding a $4.5 million gain on land sale in Q2 2024, both operating profit and Segment Adjusted EBITDA increased year-over-year, primarily driven by a 30% increase in revenues due to higher natural gas prices | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | | Revenues | $7,268 | $5,593 | | Operating profit | $5,205 | $7,591 | | Segment Adjusted EBITDA | $6,050 | $8,914 | - Prior-year Q2 2024 operating profit and Segment Adjusted EBITDA included a **$4.5 million** gain on sale of land[19](index=19&type=chunk) - Excluding the land sale gain, 2025 operating profit and Segment Adjusted EBITDA increased year-over-year, driven by a **30%** revenue increase primarily from higher natural gas prices[19](index=19&type=chunk) [Outlook](index=3&type=section&id=Outlook) [Overall Business Strategy & Macroeconomic Trends](index=3&type=section&id=Overall%20Business%20Strategy%20%26%20Macroeconomic%20Trends) NACCO Industries positions itself as a diversified natural resource company focused on consistent financial returns, operating exclusively in the U.S. and providing critical inputs for electricity, construction, and industrial minerals. Favorable macroeconomic trends, including increasing electricity demand, on-shoring, and federal policies, are expected to drive longer-term growth. The company emphasizes disciplined capital allocation, operational expertise, and a cautious, entrepreneurial approach to capture growth opportunities, aiming for compounding returns and expanding investor value - NACCO is a diversified natural resource company operating exclusively in the U.S., providing critical inputs for electricity generation, construction, and industrial minerals[21](index=21&type=chunk) - Favorable macroeconomic trends (increasing electricity demand, on-shoring, federal policies) are creating growth opportunities[21](index=21&type=chunk) - The company's strategy involves disciplined capital allocation, operational expertise, and an entrepreneurial yet cautious approach to growth, aiming for compounding returns and long-term investor value[22](index=22&type=chunk) [Financial Expectations (H2 2025, Full Year 2025, 2026)](index=4&type=section&id=Financial%20Expectations%20(H2%202025%2C%20Full%20Year%202025%2C%202026)) NACCO anticipates a substantial increase in consolidated operating profit in H2 2025 compared to H1, with momentum building into 2026. However, full-year 2025 results are expected to be lower than the prior year, partly due to a $13.6 million business interruption insurance income recognized in Q3 2024. The planned termination of its defined benefit pension plan in Q4 2025 is expected to result in a significant non-cash settlement charge, leading to a substantial year-over-year decrease in net income and EBITDA for H2 and full-year 2025 - Anticipates a substantial increase in consolidated operating profit in H2 2025 compared to H1, with momentum into 2026[23](index=23&type=chunk)[24](index=24&type=chunk) - Full-year 2025 results are expected to be lower than prior year, partly due to **$13.6 million** business interruption insurance income in Q3 2024[24](index=24&type=chunk) - Planned termination of defined benefit pension plan in Q4 2025 is expected to result in a significant non-cash settlement charge, leading to a substantial year-over-year decrease in net income and EBITDA for H2 and full-year 2025[24](index=24&type=chunk) [Segment-Specific Outlook](index=4&type=section&id=Segment-Specific%20Outlook) [Utility Coal Mining Outlook](index=4&type=section&id=Utility%20Coal%20Mining%20Outlook) The Utility Coal Mining segment expects steady customer demand at unconsolidated operations in H2 2025 and 2026. Mississippi Lignite Mining Company's H2 2025 results are projected to improve over H1, but a reduction in the 2025 contractual per-ton sales price compared to 2024 will likely offset cost efficiency improvements, leading to a decline in H2 and full-year 2025 results from prior-year levels. Profitability is expected to improve in 2026, driven by stable earnings from unconsolidated operations and anticipated improvements at Mississippi Lignite in sales price and cost per ton, especially with more consistent power plant operations - Customer demand at unconsolidated mining operations is anticipated to remain steady in H2 2025 and throughout 2026[25](index=25&type=chunk) - Mississippi Lignite Mining Company's H2 2025 results are expected to improve over H1 2025, but a lower contractual sales price per ton in 2025 compared to 2024 will likely cause H2 and full-year results to decline from prior-year levels[25](index=25&type=chunk) - Improving profitability is expected for this segment in 2026, driven by stable earnings from unconsolidated operations and anticipated improvements at Mississippi Lignite in both sales price and cost per ton[25](index=25&type=chunk) [Contract Mining Outlook](index=4&type=section&id=Contract%20Mining%20Outlook) The Contract Mining segment is positioned as a growth platform, benefiting from geographic and mineral expansion and new long-term contracts, which are expected to create a compounding effect on cash flows. For example, three new/amended contracts in 2024 are projected to generate $20 million in after-tax net present value cash flows over 6-20 years. Sawtooth Mining, a subsidiary, is the exclusive provider for the Thacker Pass lithium project, expected to contribute stable income during construction and enhanced income upon lithium production (Phase 1 estimated late 2027). Near-term profitability improvements in H2 2025 and full year are expected from operational efficiencies and increased parts sales, continuing into 2026 - Contract Mining is a growth platform, benefiting from geographic/mineral expansion and new long-term contracts, creating a compounding effect on cash flows[25](index=25&type=chunk) - In 2024, three new/amended contracts are projected to generate approximately **$20 million** in after-tax net present value cash flows over **6 to 20 years**[25](index=25&type=chunk) - Sawtooth Mining is the exclusive provider for the Thacker Pass lithium project, expected to provide stable income during construction and enhanced income upon lithium production (Phase 1 estimated late 2027)[25](index=25&type=chunk)[26](index=26&type=chunk) - Near-term profitability improvements in H2 2025 and full year are expected from operational efficiencies and increased parts sales, continuing into 2026[26](index=26&type=chunk) [Minerals and Royalties Outlook](index=5&type=section&id=Minerals%20and%20Royalties%20Outlook) The Minerals and Royalties segment, led by Catapult Minerals Partners, has built a diversified portfolio of oil and gas mineral and royalty interests in the U.S., leveraging a data-driven approach for portfolio expansion. In July 2025, Catapult acquired $4.2 million in mineral interests in the Midland Basin, including producing wells and future development opportunities. These investments, along with existing non-operated working interests, are expected to contribute to improved operating profit in H2 2025 compared to both H1 2025 and H2 2024, with improvements continuing into 2026 - Catapult Minerals Partners has a high-quality, diversified portfolio of oil and gas mineral and royalty interests in the U.S., with a data-driven approach to expansion[27](index=27&type=chunk) - In July 2025, Catapult completed a **$4.2 million** acquisition of mineral interests in the Midland Basin, including **10,500 gross acres** and approximately **400 net royalty acres**[28](index=28&type=chunk) - These investments are expected to contribute to anticipated improvements in H2 2025 operating profit compared to H1 2025 and H2 2024, continuing into 2026[28](index=28&type=chunk) [Mitigation Resources of North America Outlook](index=5&type=section&id=Mitigation%20Resources%20of%20North%20America%20Outlook) Mitigation Resources of North America, which provides stream and wetland mitigation solutions and reclamation services, is expected to achieve key profitability milestones in 2026. While its performance is currently variable due to permit and project timing, the business aims for more consistent results over time as new projects are added - Mitigation Resources of North America provides stream and wetland mitigation solutions and reclamation/restoration construction services[29](index=29&type=chunk) - The business, currently variable in performance due to permit and project timing, is expected to achieve key profitability milestones in 2026 and move toward more consistent results[29](index=29&type=chunk) [Capital Allocation & Long-Term Value Creation](index=5&type=section&id=Capital%20Allocation%20%26%20Long-Term%20Value%20Creation) NACCO plans capital expenditures of up to $86 million in 2025, primarily for future business development, reflecting a prudent reinvestment strategy for long-term value. The company projects substantially lower cash use for full-year 2025 compared to 2024, anticipating a steady increase in annual cash flow generation starting in 2026 as returns from prior investments are harvested. The long-term strategy focuses on a strong capital structure, operating discipline, compounding long-term contracts, and deliberate growth investments to deliver annuity-like returns and increasing cash flows to stockholders through reinvestment, share repurchases, and dividends - Anticipates capital expenditures of up to **$86 million** in 2025, with the majority earmarked for future business development[29](index=29&type=chunk) - Projects substantially lower use of cash for full-year 2025 compared with 2024, with a steady increase in annual cash flow generation beginning in 2026[29](index=29&type=chunk) - Long-term strategy emphasizes a strong capital structure, operating discipline, compounding long-term contracts, and deliberate growth investments to deliver annuity-like returns and increasing cash flows to stockholders[30](index=30&type=chunk) [Additional Information](index=5&type=section&id=Additional%20Information) [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) NACCO Industries will host a conference call on Thursday, August 7, 2025, at 8:30 a.m. Eastern Time to discuss the Q2 2025 results. Participants can access the call via phone or webcast through the company's investor relations website. A replay and webcast archive will be available after the call - Conference call to discuss results scheduled for Thursday, August 7, 2025, at **8:30 a.m. Eastern Time**[31](index=31&type=chunk) - Access available via phone (**888-880-3330 / 646-357-8766**, Conference ID: **6790172**) or webcast at ir.nacco.com/overview[31](index=31&type=chunk) [Non-GAAP and Other Measures](index=6&type=section&id=Non-GAAP%20and%20Other%20Measures) This release includes non-GAAP financial measures, specifically EBITDA and Segment Adjusted EBITDA, which are reconciled to the most directly comparable GAAP measures. Management provides these as supplemental disclosures to help investors understand operating results and uses them for internal evaluation - The release contains non-GAAP financial measures (**EBITDA** and **Segment Adjusted EBITDA**) reconciled to GAAP measures[33](index=33&type=chunk) - These non-GAAP measures are provided as supplemental disclosures to assist investors and are used by management for evaluating results[33](index=33&type=chunk) [Forward-looking Statements Disclaimer](index=6&type=section&id=Forward-looking%20Statements%20Disclaimer) The news release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially. Readers are cautioned against undue reliance on these statements, which are valid only as of the release date. The company disclaims any obligation to publicly revise these statements. Key risk factors include changes in customer demand, weather, contract changes, hydrocarbon prices, development plans, regulatory actions, supply chain disruptions, and operational costs - Statements in the release that are not historical facts are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially[34](index=34&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of the release, and the Company undertakes no obligation to revise them[34](index=34&type=chunk) - Factors that could cause differences include changes in customer demand, weather, contract changes, hydrocarbon prices, regulatory actions, supply chain disruptions, and operational costs[34](index=34&type=chunk)[35](index=35&type=chunk) [About NACCO Industries](index=7&type=section&id=About%20NACCO%20Industries) NACCO Industries is a company that brings natural resources to life by delivering aggregates, minerals, reliable fuels, and environmental solutions through its NACCO Natural Resources businesses. More information is available on their corporate and investor relations websites - NACCO Industries delivers aggregates, minerals, reliable fuels, and environmental solutions through its NACCO Natural Resources businesses[36](index=36&type=chunk) [Financial Statements and Reconciliations](index=8&type=section&id=Financial%20Statements%20and%20Reconciliations) [Unaudited Condensed Consolidated Statements of Operations](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited condensed consolidated statements of operations provide detailed financial performance for the three and six months ended June 30, 2025, and 2024. Key figures include revenues, cost of sales, gross profit, earnings of unconsolidated operations, operating expenses, operating profit (loss), other income/expense, income before tax, income tax, and net income, along with basic and diluted EPS | | THREE MONTHS ENDED | | SIX MONTHS ENDED | | :--- | :--- | :--- | :--- | | | JUNE 30 2025 | JUNE 30 2024 | JUNE 30 2025 | JUNE 30 2024 | | Revenues | $68,235 | $52,345 | $133,806 | $105,634 | | Cost of sales | 61,415 | 45,327 | 117,332 | 91,598 | | Gross profit | 6,820 | 7,018 | 16,474 | 14,036 | | Earnings of unconsolidated operations | 13,138 | 13,592 | 29,124 | 26,899 | | Operating expenses | 20,009 | 13,244 | 37,967 | 28,812 | | Operating (loss) profit | (51) | 7,366 | 7,631 | 12,123 | | Other (income) expense | (2,045) | 1,138 | 510 | 322 | | Income before income tax (benefit) provision | 1,994 | 6,228 | 7,121 | 11,801 | | Income tax (benefit) provision | (1,266) | 256 | (1,039) | 1,259 | | Net income | $3,260 | $5,972 | $8,160 | $10,542 | | Diluted earnings per share | $0.44 | $0.81 | $1.10 | $1.42 | [Consolidated EBITDA Reconciliation](index=8&type=section&id=Consolidated%20EBITDA%20Reconciliation) The consolidated EBITDA reconciliation provides a non-GAAP measure, defining EBITDA as net income before income taxes, net interest expense, and depreciation, depletion, and amortization expense. For Q2 2025, consolidated EBITDA was $9.3 million, down from $13.5 million in Q2 2024. For the six months ended June 30, 2025, it was $22.1 million, compared to $24.8 million in the prior year | | THREE MONTHS ENDED | | SIX MONTHS ENDED | | :--- | :--- | :--- | :--- | | | JUNE 30 2025 | JUNE 30 2024 | JUNE 30 2025 | JUNE 30 2024 | | Net income | $3,260 | $5,972 | $8,160 | $10,542 | | Income tax (benefit) provision | (1,266) | 256 | (1,039) | 1,259 | | Interest expense | 1,944 | 1,311 | 3,718 | 2,422 | | Interest income | (770) | (1,038) | (1,635) | (2,165) | | Depreciation, depletion and amortization expense | 6,091 | 7,007 | 12,884 | 12,699 | | Consolidated EBITDA* | $9,259 | $13,508 | $22,088 | $24,757 | - Consolidated EBITDA is defined as net income before income taxes, net interest expense, and depreciation, depletion, and amortization expense[38](index=38&type=chunk) [Financial Segment Highlights and Segment Adjusted EBITDA Reconciliations (Three Months Ended June 30)](index=9&type=section&id=Financial%20Segment%20Highlights%20and%20Segment%20Adjusted%20EBITDA%20Reconciliations%20(Three%20Months%20Ended%20June%2030)) This section provides detailed financial highlights and Segment Adjusted EBITDA reconciliations for each reportable segment (Utility Coal Mining, Contract Mining, Minerals and Royalties) for the three months ended June 30, 2025, and 2024. Segment Adjusted EBITDA, a non-GAAP measure, is defined as operating profit (loss) before depreciation, depletion, and amortization expense, offering insight into segment-specific operational performance | | Utility Coal Mining | Contract Mining | Minerals and Royalties | Unallocated Items | Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Q2 2025 (in thousands)** | | | | | | | | Revenues | $28,626 | $30,723 | $7,268 | $2,223 | $(605) | $68,235 | | Operating (loss) profit | $1,222 | $1,010 | $5,205 | $(7,491) | $3 | $(51) | | Depreciation, depletion and amortization | 2,132 | 2,917 | 845 | 197 | — | 6,091 | | Segment Adjusted EBITDA | $3,354 | $3,927 | $6,050 | $(7,294) | $3 | $6,040 | | **Q2 2024 (in thousands)** | | | | | | | | Revenues | $14,996 | $27,920 | $5,593 | $4,566 | $(730) | $52,345 | | Operating profit (loss) | $2,767 | $3,085 | $7,591 | $(6,080) | $3 | $7,366 | | Depreciation, depletion and amortization | 2,896 | 2,434 | 1,323 | 354 | — | 7,007 | | Segment Adjusted EBITDA | $5,663 | $5,519 | $8,914 | $(5,726) | $3 | $14,373 | - Segment Adjusted EBITDA is a non-GAAP measure defined as operating profit (loss) before depreciation, depletion, and amortization expense[40](index=40&type=chunk) [Financial Segment Highlights and Segment Adjusted EBITDA Reconciliations (Six Months Ended June 30)](index=10&type=section&id=Financial%20Segment%20Highlights%20and%20Segment%20Adjusted%20EBITDA%20Reconciliations%20(Six%20Months%20Ended%20June%2030)) This section presents financial highlights and Segment Adjusted EBITDA reconciliations for each reportable segment for the six months ended June 30, 2025, and 2024. It provides a half-year view of segment performance, detailing revenues, operating profit (loss), and Segment Adjusted EBITDA, which is a non-GAAP measure used to assess operational results before non-cash charges | | Utility Coal Mining | Contract Mining | Minerals and Royalties | Unallocated Items | Eliminations | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **6 Months 2025 (in thousands)** | | | | | | | | Revenues | $47,865 | $62,249 | $18,170 | $6,623 | $(1,101) | $133,806 | | Operating profit (loss) | $5,013 | $2,980 | $13,112 | $(13,493) | $19 | $7,631 | | Depreciation, depletion and amortization | 4,150 | 5,619 | 2,753 | 362 | — | 12,884 | | Segment Adjusted EBITDA | $9,163 | $8,599 | $15,865 | $(13,131) | $19 | $20,515 | | **6 Months 2024 (in thousands)** | | | | | | | | Revenues | $30,541 | $52,403 | $15,994 | $7,828 | $(1,132) | $105,634 | | Operating profit (loss) | $2,350 | $5,440 | $15,521 | $(11,208) | $20 | $12,123 | | Depreciation, depletion and amortization | 5,110 | 4,690 | 2,316 | 583 | — | 12,699 | | Segment Adjusted EBITDA | $7,460 | $10,130 | $17,837 | $(10,625) | $20 | $24,822 | - Segment Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures[42](index=42&type=chunk)

Core Insights - NACCO Industries reported consolidated revenues of $68.2 million for Q2 2025, a 30% increase compared to Q2 2024, but faced operational challenges leading to a decline in net income and operating profit [2][7][20] - The company anticipates improved profitability in the second half of 2025, despite lower expected full-year results compared to 2024 due to prior year business interruption insurance income [20][21] Financial Performance - Revenues for Q2 2025 were $68,235 thousand, up from $52,345 thousand in Q2 2024, marking a $15,890 thousand increase [2][34] - Operating profit decreased to $(51) thousand in Q2 2025 from $7,366 thousand in Q2 2024, a decline of $7,417 thousand [2][34] - Net income fell to $3,260 thousand in Q2 2025 from $5,972 thousand in Q2 2024, a decrease of $2,712 thousand [2][34] - Diluted EPS decreased to $0.44 in Q2 2025 from $0.81 in Q2 2024 [2][34] - Consolidated EBITDA for Q2 2025 was $9,259 thousand, down from $13,508 thousand in Q2 2024, a decline of $4,249 thousand [2][34] Segment Performance - Utility Coal Mining segment revenues increased to $28,626 thousand in Q2 2025 from $14,996 thousand in Q2 2024, while operating profit decreased to $(1,701) thousand from $(1,142) thousand [6][36] - Contract Mining segment revenues rose to $30,723 thousand in Q2 2025 from $27,920 thousand in Q2 2024, but operating profit fell to $1,010 thousand from $3,085 thousand [13][36] - Minerals and Royalties segment revenues increased to $7,268 thousand in Q2 2025 from $5,593 thousand in Q2 2024, with operating profit decreasing to $5,205 thousand from $7,591 thousand [16][36] Liquidity and Capital Structure - As of June 30, 2025, total debt outstanding was $95.5 million, with total liquidity of $139.9 million, including $49.4 million in cash [4] - The company paid $1.9 million in dividends during Q2 2025 and had $7.8 million remaining under its $20 million share repurchase program [4] Strategic Outlook - NACCO is positioned for growth, focusing on long-term contracts and operational efficiencies to enhance profitability [18][19] - The company plans to invest up to $86 million in capital expenditures in 2025, primarily for business development [28] - The Minerals and Royalties segment is expected to benefit from a recent acquisition of mineral interests valued at $4.2 million, enhancing future cash flows [26]

Group 1 - NACCO Industries will release its 2025 Second Quarter financial results on August 6, 2025, after market close [1] - A conference call to discuss the financial results will be held on August 7, 2025, at 8:30 a.m. Eastern Time [1] - The conference call can be accessed via telephone or webcast, with a replay available until August 14, 2025 [1] Group 2 - NACCO Industries specializes in delivering aggregates, minerals, reliable fuels, and environmental solutions through its portfolio of natural resources businesses [2] - Additional information about NACCO Industries can be found on their website [2]

Core Points - NACCO Industries announced a quarterly cash dividend of 25.25 cents per share, marking an 11% increase from the previous rate of 22.75 cents per share [1] - The new dividend translates to an annual rate of $1.01 per share, up from the prior annual rate of $0.91 per share, representing the seventh consecutive annual dividend increase since the reset in September 2017 [1] - The dividend will be paid on June 16, 2025, to stockholders of record as of May 30, 2025 [1] Company Insights - J.C. Butler, President and CEO, emphasized the confidence in NACCO's long-term outlook and capital management discipline, indicating that 2025 is expected to be a pivotal year for the company [2] - The company anticipates benefits from multi-year projects, favorable market trends, and strategic positioning in key sectors of the American economy [2] Company Overview - NACCO Industries operates in the natural resources sector, providing aggregates, minerals, reliable fuels, and environmental solutions through its portfolio of businesses [3]