NACCO Industries (NC) 8 May 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the NACCO Industries Q1 2020 Earnings Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Christina Kmetko. Thank you. Please begin.

you. Thank and XXXX everyone, call. quarter to welcome morning, first our earnings Good am am NACCO I Kmetko, for I and at responsible Christina Investor Relations Industries. joining for this you Thank us morning. are you healthy your hope families I and and safe. all

business your a providing open of results I be will outlook, call brief then for I and the our overview quarterly and questions. up will

Elizabeth Officer Controller. and North NACCO Joining are Butler, J.C. both and me President President Coal, of Loveman, and today Vice and Chief Executive NACCO's American

results XXXX available and our Yesterday, we quarter published release are first of Copies XX-Q earnings on filed our our XX-Q. website. and our

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

follow, that statements. in answers statements contain could a issued statements, among our updated last including today. our subject to filings cause obligation questions, your night earnings may materially disclaim These to next These forward-looking expressed risks the differ of to are from that risks uncertainties forward-looking number to be our those we conference actual forward-looking Our earnings and which that here at others, quarterly if all. release statements update with any not in and other remarks these XX-Q in made until and have include, call, matters SEC. the We described results

call turn some I'll moment, to for the me a discuss President In over let and results, our quarter J.C.? J.C. first our first remarks. opening Butler, CEO, but

want particularly care in that's global us like to start who all everyone. Good extend to first our pandemic, to been community those morning, safe, of thank by everyone responders. keeping Christy. those affected you, health we'd sincerely are this the and To and we Thank sympathies off,

are deserve they appreciation. really of what doing, job all our incredible an Just

are with appreciate how through employees couldn't this situation are and limestone well also would working pleased our recognize and unprecedented customers. We be their truly to employees' adapting deliver We safe. our our our to keep also managing workforce supporting to continuing I'd environment. recognize and everyone to to to while supervisors more -- commitment diligently changed who work We like customers coal our

keeping been with and imagine, the health our with accordance since those coal highest and and we the also promote priority, can reducing practices customers authorities a limestone been spread infrastructure reporting continue weeks. our exposure schedules majority several We're at you access. from to distancing. to of safe areas areas. of We're to are hygiene coronavirus adjusting everyone to work and both have we're industries. protect A common and these our As in requirements promoting have critical responsibility work safeguards to has regulatory supply recommended and employees guidance but and And sanitation shift workplace implemented of social equipment, cleaning to work We've limiting limit enhancing their COVID-XX. last

invaluable for investments that scalable these these we our we've who to they Of performing shifted finding and our IT have to can resources are investments as processes and from the The work be years to of made to have and have several we largely course, systems are lot and support the sure but or We huge made us. paying through remotely. upgrade we of our growth, more investments support a dividends make tools our so, been to doing that employees any home productive. processes made over last work systems

not with pandemic. materially have and in demand far thus we vendors. affected how issues by Customer From with I'm way, is not has of been I standpoint, business this incredibly fortunate a that we've had pleased all think a very not the affected working. we're material suppliers or been

forward on us going company the none a both impacts predict. and of can COVID-XX factors, lot of which to will present that extent depend the course, future, Of

take retire discuss XXXX. in like second our Station XXXX I'd results, Coal moment a power it Before to to the intends of quarter yesterday's the Christy Creek River half announcement first plant reviews to Energy by that Great

Falkirk Mine lignite coal is the Creek Our of largest is to sole mine. Coal second our supplier and station

Falkirk we $XX in contributed XXXX. operating As noted the million our release, to approximately in profit

Creek the the of continued decision, the While local we employees in is and GRE's long-term and our asset. facility The certainly that willingness could, attractive exploration of Coal Station. economy operation Great to allow consider are an in if And more efficient, or to Station parties. a actively opportunities third disappointed of Energy's power clearly well. in generation best believe plant ownership are for we the interest Coal to successful, of and announcement we economic sell that for engaged state the as one River indicated options Creek of transfer is

can that don't find to clear can't will. be with I to and have a any working assure we to statement plant us committed we XXXX, plan keep that all gives half time want the the you we mine and I are solution. open. don't But solution guarantees says to that they which close stakeholders try the here, I pursue plant to the a second of power until GRE's to to options

our over quarter. the cover the turn call Christy Now for Christy? let back results to me to

million wells XXXX. a during the of XXXX decrease settling into year. million rates our to decline and or the $X.X J.C. XXXX before the of the in large income from per quarter in follow first first of lower early per of quarter of substantially the earnings benefited On largest Because into $X.XX relatively production, production consolidated earnings than management number stable was as The long-term segment a quarter $XX a significant basis, new natural put share gas consolidated initial wells XXXX. driver reduction share decreased or were minerals from first Thanks, new a have high XXXX commission $X.XX net and last

at the the net in tons was the increase prior due a increase minerals decrease income. first cost decline American to of customer driven and in Lignite an the contributed significant in profit in the result in to North segment's offset results in to year Company, Mining in delivered, The A primarily tons improvement due per existing Our Mining operations quarter primarily in as new mining to operating Coal expenses. changes reduction ton lower increase in unconsolidated delivered profit and in a Coal delivered operating customers at demand, a partly by Mississippi profit than Mining segment operating also management. reduced operating an substantially in and coal contracts, an

response COVID-XX pandemic annual explain the is the of contains taxes. me estimated income let enacted changes net regarding The temporary with what happening Now in losses. utilization The CARES operating Act a provisions to includes effective XXXX the benefit benefit Act CARES income resulted despite in tax of quarter utilizing first having rate the income. for and tax the pretax for XXXX of

that approximate full X. the year, anticipate effective the we tax will For

first quarter the are affecting factors significant results. Those

Now the comparable our outlook. XXXX. let me and turn Coal to profit we to segment, Mining be In deliveries anticipate to operating coal

million a to and unfavorable mine operating The profit Centennial be to decrease year Mississippi Company adjustment as a lower from the reclamation to prior of at an expenses. results. last liabilities expected is expected operating operating in is Lignite year in profit in Natural first the improvement an increase decrease Mining result anticipated Excluding $X.X expected partly results Resources, offset by quarter XXXX

renewable particularly would natural prices could demand, customer affect business. COVID-XX gas pandemic, the generation, and increase historically outlook evolving continued low wind, the the reduce for unfavorably However, XXXX this in which

generated new American over North full increase by XXXX year from primarily deliveries to to limestone improve Mining earnings expects contracts. significantly limestone in operating results mining

term portion of year income lower of be expected As first gas the decline previously, rates in high decrease have this royalty before commission in to new results number this long income of natural during wells significant large Because put a are income into into as half in I curve stable to expected XXXX production, XXXX. settling XXXX royalty early noted XXXX. and first comparisons new levels, by half decrease wells and XXXX the prior and XXXX a in initial significant levels historically with production follow included substantially high of made than generated is

I call $XX.X uncertainty $XX.X million the Due the million. of we questions, consolidated surrounding our flow cash with We pandemic, quickly open sheet quarter and let some cash the for COVID-XX Before and share in repurchase debt me suspended of balance up March. to the information. provide ended activity

compensation in in financing cash and to made to quarter a liabilities. first the -- use activities a flow related of expenditures capital cash XXXX deferred increase before payroll expect other be payments significant We cash to a in and due

That concludes questions. the will prepared our now call up for open your remarks. I

Instructions]. [Operator

question comes Kuhn. first of Andrew line the Your from

however, call, for said economic the you Creek the that a in and is Station, beginning the and that, efficient, generation in of asset. "We're attractive price. about he And you the not had an River release your Creek Coal Great selling So interview, talking earnings material Coal reiterated Energy at CEO it said of

All of effectively have hands? giving Energy Coal believe other worthless? on the think just been can and plant Great economically I'm we've statement curious no viable So in our about you do had is convinced takers." really of somebody, and discussions And some you it's based River Creek kind to why if that, basically that be if owners' a so,

plant very high to rate we has, into I is above and dispatched get a think I is got believe efficient me for disagreement at power XX% let order -- at about a plant. with pretty so, this. dispatch to believe of to that its to over the plant. plant's so In it be level, which economic last level. mean This an years, in customer, power competitive dispatch been don't public pretty a do power a capacity extremely want I several that order

of there's to its So ability past we some compete. think evidence

off renewables them the natural views. about with there different owned are you nuclear this. different in also turn so cycle for respect There And there's read risk. you intermittent, need dispatchable do coal, about industry, views carbon gas like things think generation considered as can are if can the choose. you combined research, in the generation I dispatchable on utility industry are you and different views to And are some

of widely differing there importance the a that are have so respect are the views among importance need can having the those drive power to with And dispatchable like reasons vary And fleet. of about available, industry to -- plant utilities. in this between in think dispatchable the the those views I and your having views generation different

peak with but of I'd value of thing energy least And at it some out, markets. I'm also differing to spend the we have a of guy, we is sort We're other there's as got right? time point to to the both add access I've be to an miners, energy look, can. energy in needs and are different there The required excess capacity lot views an capacity regards market, capacity. learn electricity to of are demand. and as much In trying to Generators not

capacity and taken are, So there dispatchable capacity. selling markets right, are increase I taken the energy for dispatchable in increasing to power as growing for or are more more off-load value. plants. is that we'll think, There And value and in market selling is continue views there generation closing markets for off-line,

you concerned and of because growing There's capacity others, dispatchable see about they're of and to you're like their starting energy award -- to the SPP some market. or to operators in renewables MISO -- credit available give the the for amount talking capacity going there's and less dispatchable the credit decreasing to fact them -- about that more see

or utilities between market. future So the that's views answer sort differing about cost your value question? of that on the open buying of Does future capacity driving

a sure. the it. there in is, Yes. in -- the then slide March and investor X only Yes. I of one Got presentation, Yes, more have next you them And have acres? that owns disclose was showing curious of number and was of just kind exact gas And interest. your gross that the decision NACCO XX,XXX of oil behind I'm acres what to

mean it's we we that decided put from royalty disclosures out as owning time that other sure of interests, to sort a seen. some a a actively And business sense decided just we've companies' that It's our interest. of I of part sole -- indication could get made have you've -- some we number And is so question -- number a actually mineral people their is that growing it's people. own. for companies there, what studying it spent received we business Well, I'm of it

-- about on of what That I'd our mineral is different our royalty -- out number. this acre net of other percentage things. acreage, point doesn't a it that's a there necessarily the But inquiries out based of it's gross decision and really reserve to get which the size to represent was number put that responding sort we base.

a purchases Do way made time? as is another industry I'm to of you you And the someone hold is on of actually almost stocks then the think a Catapult the of do sort stock a managing this actively long-term, my how will And decision makes Catapult at the stock NACCO who Catapult? be buy Catapult. level? permanent will decision be energy these portfolio the think over company Partners. investment curious Catapult of at diversifying made it. on Is final at by being like should buy final about buy of decision Got and made question basis? quarter-by-quarter Or think Mineral stake? in Or just stock Like we kind then level? at parent

trading setting are a up not floor, not. absolutely We

an make Catapult just as you jointly. know And have company, any to sure or of imagine. decisions kind can question flat are made, made possibly organization flat mean Your want where about you between you're differentiating we I parent that incredibly that structure, like as I decisions and

very I decision. was involved in So actively that

that stocks. think mix into minerals, new other of additional mineral so. is a -- And going with a It's buying mineral managing and of business the to to business expand acquiring to really mineral is primary -- owning primary portfolio that first. we viable the described And not interest interest, focus business Management really thing diversifying this the diversifying of for a basins, Their we've interest diverse that be us. gas here Catapult and as is our focus Minerals new respect we a then oil own, doing piece through there's

period and -- Your question folks. floor. long-term when made pretty long I think public trading mean we're about and a I said in our we're consistent at interest. I somewhat short look of these company. investment term, of small is a at you in have that of portfolio is you the own it's sort investment, read at a is they do of we're We going diverse of think, we're you mean crushed. to when term, mineral develop a been a what this not if I Because material a it unique if just some have to information a unique, values trying I exactly what time companies they Catapult own, Yet

us in the sort removed, acquisition. small really of And just our so Catapult allowed oil I'll admit, buying a ourself. diversification making to public a single interests and us lot get small as acquisition of step those into mineral to but accelerate by interest opposed company in this to diversification gas more one It a diversify mix allowed a basins and buying

disciplined a And -- pretty that time business. think mean, we they approach got So long-term We in They a can we to lot do of they, of of view approach view they've pretty a a they've what very we have their tell, company. spent we a studying conservative a similar got capital that take structure. view overhead. from I

this a gas. way was on was what things kind something were those question? the of diversification in the answer just our decided different fit until good Does -- us, basins screen but have and of our was thing, in we a really and your Catapult, our diversifying same oil that mix pretty to well this that and we decided we with had happening not saw of radar All market,

Yes, it absolutely does.

of Your the next [ph]. line question comes Trey from Henninger

draglines. the first the expansion ask just acquisition business is I regarding of limestone wanted in draglines. about of to A the lot

on average you cost that life be would expected about per the provide some and each of acquire? to So detail willing the dragline dragline

Sure.

now somewhat expertise American unique rock draglines lime really underwater. operating kind mine where business of lime is have dragline, Mining to is and one we is. the in underwater. clear, rock North industry-leading be developed So to The right inside The not

in we are yards. of the operate Now that up And very draglines have very pick there's yards. business up size buckets coal draglines our a can some bucket mean XXX that can a dragline, that maybe cubic small -- draglines X have that cubic I pick

$XXX of So excess the from a few average concept dollars in of an of million price a million. to is dragline

don't that lower majority are the in bucket largest really draglines the used business. the used range, of sort Now ones of X so XX to they're that in lime And a in yard end. cubic fact the rock are get at

a we I will operate instances, tell dragline. don't There customer you of that of own plenty are we that number in the dragline. the where the quarries owns

that's way. a where own We dragline. the costs for there's where there's of we we fee a traditional have collect and some more pay the contracts a in either And customer or could some dragline we fee the And own we those, the management the a work fee make get all profits where fixed done. and in just could

in every not do So instance own the dragline. we

dragline by we're return are have every success in a We draglines have dragline, to a to customer's we're a have as business acquire that able these invested margin would to nice a turning contract a it into available we towards expanding and buying put that in and profitable venture new capital, time got from putting be have an contract. application. dragline and that turn We that attractive it eye years, with we've on time profit them any just a delivers fit deliver used ownership, capital in a sort well. a into that on be direct them our In because the for that found either lead an an might sense for recent do draglines good a instance, -- into going a on maybe having good or or of maybe option inventory

go I'm million to for of mean I million $XX million going kind dragline, a from we're of the it cost $XX to what talking. $X average would the to So say

a money range though the cost very draglines a transporting might updating reassembling million quarry and the amount then larger described, $XX stuff. technology of it that inexpensive to then it the And just taking the apart that you spend and I be dragline. and and a all significant and it For

a cheap to It's them helpful? the cost another Is and it's -- think the way? relocation So relocate me I you maybe that is when -- that you rebuild can and them. to expensive want dragline, in about ones. the dragline expensive not elaborate of Or is for smaller

helpful. very that's No,

a I limestone I that's cost, XX-year think have to is idea when the focused about information for to -- piece to just trying an was you the draglines. how thinking And long-term an talked These that idea the are. of trying at I'm replace about we get you how have business, we're on them? quickly do great lot what but -- have

So in -- operating have business, our obviously XX than where that's business. dragline we right, draglines that operate operating been the longer we have for we've rock and we some been A years. coal lime in

whether use a piece a you have shop. the any or We our it you parts that important you excavation tool the to tools hand They're want that of a dragline, of equipment, factory, it's tools. mechanic way. philosophy that think truck, that in if of They're use

absolutely are our about meticulous practices we maintenance, so And and quite methods. obsessive about maintenance

a might So equipment, of like be preventative be that proper watchful the to weakness. look should they're with the It repairs expensive. it's piece mean, I anything care proper of a of maintenance taken needed,

I mean an different than it's automobile. no on

them they're them to and shot. not should If run you you probably just brake until replace hear squeak, the start

per typically run to more draglines larger done lime your you with replacing The draglines and because business. respect Larger so can They bucket, is more wear more dragline especially dragline a It's to than really so better a capacity don't them, concept dragline to it change support they decades. don't more about means respect can if with larger for capacity in So out. -- they changing meet produce a the maintain -- is a rock wanting dragline, done wear can hour. which It's out. needs. of you

question? maintain going to replace Does some in address much it. expensive, draglines just to your been up end If brought replacing you in that And worn it's draglines you're don't more instances, and have we that's them, out.

very that's helpful. Yes,

to QX. that's appears able long-term XX-Qs -- was question. be but what $XX.X when yes, very on to $XX back Would I helpful. willing trace payroll incentive in around liabilities? missing the long-term give million-ish One million of was the the I'm additional flow outstanding the million and comp about other I cash on you incentive the detail tracing So $XX to comp, XXXX spending be to the

was employee So I normal that those wondering something give you that just lines? Is along Is liability, that was additional on maybe detail what focused executive if liability could comp? on? compensation, payable pension accounts just

Yes.

hand all is But are going you off -- that table so Ohio, for Liz. these at If mind, not I'm together. We on sitting calls. in remote which to these don't the to we're same typically in work, we're still

to off hand to I'm going Liz. So that

Thanks, J.C.

also question, So $X.X paid XX you see sheet, look December you approximately million the I accrued payroll that went deferred And from the to the think was -- if $XX.X or comp, in out. your million million we see of today. as balance can can payment you the at $XX.X

And the normal talk what There's else answering was cash Or question? movement of another remainder nothing not really -- Is to you're have for? your am flow. you about. did just I looking material that so

that a basis flow? flow repeat wondering for a we something should this Or that an does annual on is cash more an expect question this lines? I think the is in reason expense basis along is those really expense is it of or onetime? Or on cash if the terms X-year

be onetime. would this more No,

comp deferred a that liability. the several was expensed of years ago, that and settlement So was just

Understood.

So then the payroll...

thing long-term says with thing. long It pay. term. the the was Yes. which it Same a payout of was long-term And It plan. same the

current. -- it's was of do a -- piece it So we our

piece, the current onetime some nature was be majority of more always a but this item. of will there So

Okay.

So cash to cash was it the due just the for offset payment? you Or that it based is on time had just some it in so payment? cash was available,

No, it was...

It's in due for the correct. cash payment,

terminated this say And pay around decided was to plans. had the it did cash XXXX, do terms. sitting -- sort that plans not. out. to I incentive We This time of is spin-off we we that This what pay the I we I of let's out." we it payout because It per Yes. heard and we -- of was comp as and because gee you is of And Beach mean at. into was some had decided, this wasn't related about deferred plans the decided think as paid in "Oh per long-term new some XXXX, wasn't these this to something these created those beginning termination plans the their we Hamilton

And if you look about back, you could long see we before to was due. term it moved months that current from XX

-- we a So It payment. planned was it planned. was

been up Okay. just that trace current, back the show Yes. I've able to step the transfer. queue. the into I'll in missed but

at There Instructions]. no further the over call turn will time. to questions the [Operator are back this I presenters.

everybody any do you final sign J.C., off? very comments joining We want us you much. today. to Thank before make we did appreciate

Christy, No, just for their to callers thank the questions.

Yes. thank you. Again,

and that Thank is If release. have safe. and the number follow-up at reach great earnings you do day our any on can have me you, questions, stay a you

number call. gentlemen, a replay later of this concludes This be ID replay and May and Ladies entering XXXX. available conference XX will available by Ladies dialing today gentlemen, this and until will midnight conference be today's XXX-XXX-XXXX XXXXXXX. event

disconnect. now may You