NACCO Industries (NC) 6 May 182018 Q1 Earnings call transcript

Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the NACCO Industries First Quarter 2018 Earnings Analyst Conference Call. [Operator Instructions] I would now like to turn the conference over to Christina Kmetko. Please go ahead.

you. Thank and XXXX everyone, call. quarter to welcome morning, first our earnings Good Christina for responsible and Relations I'm I'm Industries. Investor Kmetko, at NACCO be for your overview brief business I providing quarterly questions. open will will call and then outlook, of the up results and I our a

NACCO XX-Q. NACCO's our today both our Vice and of Controller. we J.C. published President quarter release are Officer are Coal; XXXX and filed American me website available President and and North Joining Executive our earnings on and first results Chief at Copies Butler, of and Elizabeth Loveman, XX-Q nacco.com. Yesterday, our

For XX of listen to this months. anyone, and website today's version be able will afternoon archived our on an who is webcast later not approximately entire for to this call, available

begin, made could that like number to contain actual we are I these the may update call following next These call, all. that participants the a differ subject forward-looking We until during remarks may be from forward-looking to session. expressed to conference obligation updated if here prepared uncertainties our cause remind certain and statements conference not to any our in disclaim statements, question-and-answer this statements. or which forward-looking of those results materially risks statements quarterly either in would at As today

our these and in regarding XX-Q. in and uncertainties risks release information our Additional was set earnings forth

last we quarter. reported continuing first million compares per from first This I formalities $X.XX of quarter income about income the quarter. done, share consolidated $X.XX have consolidated per from XXXX. that Yesterday, operations talk to of Now the for or million $X.X of year's let's continuing for share or operations $X.X the

decreased within we year, X.X the of X.X operations. tons At Our to our XXXX quarter primarily quarter at for deliveries from million Coal American was rate year-end. effective business, in tons at first the coal unconsolidated income the range X%, our North million provided tax last

a favorable at Division Mining profit yards comparable our yards operations. North three, result first compensation deliveries X.X was deliveries of limestone million the the The the limestone increased unconsolidated earnings one, in American in of between factors: $XX.X fewer of Fuels two, previously; several from tons primarily by million Operating operations. to However, delivered. and at the at XXXX, limestone unconsolidated X.X at were mentioned the million. of at development These the expenses the mines additional an years fully was result unconsolidated and mine business higher the despite operations because employee-related quarter higher over items increase year, moderately during Bisti And adjustment in Liberty increase a to We unconsolidated in unconsolidated I earnings mine the increased other $X at professional fees. expenses, reclamation costs increased decrease a of operation earnings in liability. prior X% the mining favorable offset our recorded reclamation million period; as higher increase Centennial results operating of

increase earnings ton also at Lignite delivered. a Company an cost in decrease from resulting per We had Mining in Mississippi

quarter first XXXX were results North other was last $XX.X between from million comparable and increased million Our expense. comparable of operating interest because periods. $XX.X first operating Its primarily XXXX. pretax XXXX Coal's profit quarter lower American income NACCO to to year,

effective expect income of in continue forward, Looking we to consolidated X% range XX%. the to tax the rate

of last pretax XXXX sales consolidated year $X.X XXXX our on expect of assets. decrease with income gains to million We included modestly as compared

modestly an are operating partly in expected income demand. be and from full decrease customer limestone operations income XXXX increase the and Lignite higher unconsolidated in expected Mississippi by higher year to in Mining's part income, compensation American of offset XXXX Excluding of in at at as in These in Income result these and expenses, a increases anticipated reduction as Fuels at with other Company. Mining Liberty North gains, operations primarily interest due in we and increased our be decrease unconsolidated XXXX; a expense. and a income improved a to expect result new unconsolidated operations XXXX to to substantial royalty signed reduced is pretax contracts compared improvements

environmental the to Bisti an decrease is Company's increase Mining Overall, the as consistently expected the level profitability. ton decrease the Our increase are first ton over more experiencing explain, is XXXX half pretax half primarily per the of ton from increase as cost to to plant spreading affected of reduced to have because half power cost a operations, last fluctuating in cost slower delivered, be second is substantially last serves tons in and we periods of operation in unconsolidated cost deliveries Fuels' a owners installed first Mississippi resulting Historically, plant. the result the an coal lowest year, delivered plant income when an in high to delivered. then of requires power consolidated full Lignite the expected is it Bisti's or in better per year a adversely offset expect year, per in of deliveries tons. To delivered half. of Mississippi the pretax reduced the At in income comparable the year from we start Lignite while income the the the first at income XXXX additional controls

We second of the fully decrease is to are in but expecting pretax improvement expected the improve XXXX, the the from this year half compared first of offset not the income with half half. to second

to compared to reduced if demand second income the of As higher with significantly. expect in XXXX we is But half it levels unfavorably due affect continue low, and a the return future plant outage year. could result, prior Company's year to expected Mississippi dates. decrease Mining XXXX remains earnings to Lignite full demand Customer to

up, let with sheet provide Before cash some and balance information. wrap you flow I me

program with in hand of capital to expenditures Also We in resulting Board our of This consolidated of concludes cash questions. XXXX. position purchase stock. stock increase authorized our call open not million, will in activities shares quarter decrease February prepared XXXX, at now $XX common for to and the an to first due expect ended my December Directors We We million. outstanding purchase cash on million million did during flow expire up Coal. before XXXX, of of XX, in remarks. That any North $XX.X cash of in American a net Class program on $XX.X will $XX.X financing up the to the A first I debt XXXX. your quarter buyback the substantially part

comes of line question the first Lolley Global from Our Instructions] Mitchell Goshawk from Investments. [Operator

is mining year? I about renewal believe one this contracts that coming the for Hi, there. Can you talk of

talking Real be must the You about contract? Camino

Yes, one. the that's

Yes, fee we use so we their sell that We them. the power for a on a we contract that management plant. coal is that coal coal - are coal it's sell for to - It's arrangement. mining them in with they a customer, and mine

So negotiation on contract and a not they're customer. of. when be we're with and selling if plant. their part to That's extended extended It's we to them contract is that - contract else somebody their our in selling that power runs hands. are will That the really their

it's future, if We into on continue with going but can comment because their our it's operate it's to I customer's are today mean, really further. the operating we negotiation something customer, the not as don't - mine we to

a is quarter. I business Okay. Limestone American similar on was bright wondering of operation was The the limestone profile margin margin spot in the And to your you kind North coal side the the of get Mining on business?

and soup cost mining really - North price companies draglines we're other then that's services land the business development, it and a But business our whole - same service in that's operates through our collect business, other We Well, not because American mine we bit. a permitting, our reclamation, margin to from think operate mine Everything We we shovel. mining typically they mining businesses at like whole coal one business. concept operation, a Florida maintain they recently at and operating acquisition had At traditional is in sell a nuts. and fees and of mine are for provided mining, the operation two. margin the collect at the way. the they them, our between coal the you

business. scope services So it's a of in much that that providing we're narrower

limestone Okay. as out consistently. a example business? statements price I when - and you revenue But don't at profit understand way of pretax Does look I net exposure. have in that financial for when X% at percentage kind the business, pretty unconsolidated the same the of I But about in just look it's it

statements Are at? looking you're XX-K? you financial part Is that about the of the we file unconsolidated talking what as

Yes, yes.

statements unconsolidated those the again, are - Yes. customer plus costs those can't - I that among mining the look the mines to operations because fee. incurred mean, cost. pays at at Revenues of that revenues on XXX% really financial our are so XXX% the of are equal the you on

Okay.

really mean, collecting of parts a in fee. just just us And the fee. our instances, collecting our paying for at cost the paying operations, limerock a and we I and - are they repairs like items. the cost people for But maintenance both are we're they're

Although coal doing in the Mining, scale limerock operation. at operations, North and the at a business operating American just dragline. Where maintaining the mining a something mining We're very we're - specific. that's at it's larger much

you. You mean really at - look that you this have can't X% another way, really at said and can't look to margin anything

already be, you to get seems business. and wondering especially it more I of versus other years a at just Okay. was could I is ago, growth where the guess And trying now aspect to expect more what kind a limestone side? that aggregates is continue on of like I'm of your material few if

will the Well, I letter, I annual I a been put successful. we've wonderful as mean, thing. very It's report in tell certainly you

our of we've we've in our where built substantially. Over over New we Mexico sixth We successful took grown coal limerock been a business mines, eight coal and incredibly or last pretty seven operation growing the business. five coal new years, mine

your tell in hard in working I of well last - several future guess, will I something performance no like growth is on this you done And years. performance, pretty indication past lots I of are areas. mean, the is, but we've that pretty out of feel we industry, we So

in continuing we're pretty mean, business statements; work the quickly. those. most businesses grown Certainly, I economy to recently limerock on We've the to lot - that obvious a of ways I you, the operations. are tell in booming. So and of construction we've business. couple of lot is on, years so it looking customers of a added reading business quarries, from is going will new if helps There's our expand this infrastructure their new lots for last limerock

there very the But again, a think we is potential specific industry. as we provide limerock service inside So there well.

Really it. think limerock them, doing and doing sell business. business and reserves them, part sort about the back where of then in business, mining, what we're you And mine part wash the is are we're limerock the of value-added sizing, you of that now Florida reserves, really and just with sorting, we size then end they their are their the the crush that it If the right them, Florida, you start producers washing it's mining - parts crushing, selling. and doing

we for Got second. could you. the move balance a sheet to If

You're the cash in do obviously sitting a net position. on in you cash How your strong future? plan very using

Yes, in I the investor I in our think this letter it Maybe as presentation. report well. annual is - was know

We're can Our to businesses sure think to to model, we business We we existing in very priority that. required. in do everything have course, we invest want our is a preserve make - of growth. I is, and strong investing exist as

we of You earnings mean, business because that opportunities if to We're beyond very we of debt of of we we have one were a leverage. like certainly shareholders. to before we We intend have to recently, for lot then business XX maintain very, to Most operating I've around money that, programs that is long announced expenses activities. for We've at geez, investing up will. in development. our reasons the We've and don't NACCO development the And a very, - February. last place fact had for North a invest, cash dividends And in the Industries, time the in conservative back. returning I prudently NACCO in saw release Coal Industries American paid been XXXX. years. shares number been buy - and we've we've one very since

order. are are those really I priorities our those in - So, mean,

support steadiness of model, business to you looks I dividend mid-single-digit large I'm dividend it why current headroom you price plenty even don't choose the on Okay. And like a the stock because easily pay could a wondering for guess, and have growth still given initiatives? your of yield

plant contract their lot from in and to of know they I County years mining something And in what going think predict - We was we've out to about the up to XXXX. place Mine, to we be in supply expected we build I might companies be the need those. the to what, issues it's was think generate mean, mining future. prepared seen We facility. we are other a it didn't want that southern model, pan the Well, and Well, I out. sure different down that we over to to might business for want have that - a the future. Liberty operated. to facility, shut seen a cash other come. we we albeit income which that's We with make impossible dry to expect have want prudent. for certainly mean, XX-year powder come signed - didn't what you work don't and that And we companies till Kemper

have people want just we advantages one about whether at as we how not. you business. When look We very XX, to is stable. we're XX, know we cautious be our that don't we stable. growth about year XX, fact are worry XX-year growth or want of that People are to about our signing XX, So be you're next think here to is contract, a to pretty going think the

Does you acquisition something you imply that be what even? like making said it all retaining could for capital just an

- impossible it's I mean, the future. like it's said, to predict I

who knows. You just -

over questions turn to call Kmetko at will remarks. now time. the And I closing for back there are Christina further no this

want All right. you us you add? have for today. Well, Do anything thank to joining you

No. Thank you.

All much. Thank right. very you

any do so further have day. me. Thanks you can on number much, have a If questions, reach release. is you great the My and earnings

Thank you for joining.

be to today's call, you'd it Eastern concludes of replay XXX-XXXX, If A.M. XX:XX Standard like This available please - conference dial will at ask access (XXX) the Time. and call. the

disconnect. now may You