NACCO Industries (NC) 16 Mar 232022 Q4 Earnings call transcript

Hello, and welcome to the NACCO Industries Q4 2022 Earnings Conference Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions]

I will now hand you over to your host, Christina Kmetko to begin. Christina, please go ahead.

you. Thank and call. XXXX everyone, full quarter to earnings year welcome morning, fourth our and Good for us you Thank joining this morning. I am am Industries. responsible I for Investor Christina Relations at Kmetko, and NACCO

J.C. are today me Joining

Elizabeth President Loveman, Butler, Executive Chief Officer; Vice and Controller. and President and

approximately our quarter and being Yesterday, full months. and will webcast. XX information available The year This available Today's website. on and on we webcast XX-K. XXXX our our website call results afternoon our is published for later fourth this filed is be also

Our your statements. remarks answers could questions, to that follow, including contain forward-looking

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

for release addition, non-GAAP found In be discussing non-GAAP Reconciliations useful in will for can information measures In a and earnings discuss evaluating on the I we our in quarter. operating moment, performance. we our believe be company's results the that will is these website. our

opening turn over J.C.? our J.C. to some me for President call let the CEO, first, remarks. But Butler, and

in me an good fourth once year. about and net much fourth and our quarter year. go more and profit, let outlook minute. provide the the into Christy, I'm higher provide pleased fourth our company will generating EBITDA year again and than some highlights in quarter the Christy of you, a Thank for first, results, quarter our in everyone. full XXXX But earnings XXXX and adjusted full overview income report strong very to morning, delivered that operating detail

Management results and segment, our operating from its were which more led EBITDA year doubled Minerals operating profit by than adjusted full strong Our XXXX.

prices gas more recently natural acquired These volume improvements substantially oil were well driven from production legacy as production higher and and as mineral increased interest mineral interest. by from

Catapult Our expand XXXX. Partners million also royalty and and The our $XX look through interest existing mineral and portfolio interest royalty promoting additional of to investments to for our team while in of acquired opportunities XXXX acquisitions, development at mineral $XX team to of Mineral of continues million in is targeting interests. up additional approximately

in market averages. for Management assumes to moderate the levels with XXXX prices prices Our Minerals line segment XXXX -- forecast and oil gas

commodity adjustments gas However, witnessed volatile our as XXXX, could we in and changes to prices result prices oil in natural forecast. are current inherently and in

results. reserves On to the existing future the development forecast be our of on beyond additional our could accretive acquisitions future upside, or wells

Energy's Mining highlight Coal segment, Energy. At Rainbow our was of in a Coal XXXX from purchase Creek Station big River Great

the enthusiastic Falkirk AgEnergy settlement our of a we very our received This an are cash and AgEnergy transaction, of million, payment in settlement ownership units membership acquired $XX.X cash termination was and of of building payment Rainbow. $XX.X of a a December, relationship new recognized with this million pretax position. we party Midwest Group. transfer million office in third conveyance for the by Midwest about income. a customer, and Mine contract included We of gained $XX new With our ownership

the that providing plant short just X, our will for plant. served will Mine mining. transfer receive our services, Coal made final final delivering the stop be by commence. will Creek active decision mine coal income segment, than weeks during of -- positive the but that few reclamation April so East our the Texas power Sabine away owner If less income encouraging. very as a is another customer will happens, Station for plant was Sabine The of Coal Mining While annual mine fleet in compensation of to by not we reclamation retire a and retire

planned ongoing to continue believe the electricity for will faces, coal future. and in challenges the plant political Despite of source the the mining as industry of and regulatory power the for reliable United the closure coal fuel Sabine's we use foreseeable continue a States

full Mining did on support our return meet designed to profitability. to year initiatives expectations. our North Shifting American We're to segment, profit not working our the operating

American thorough expectations. quarry not a are to North meeting operation During areas of review XXXX, that identify mining we conducted each

We are implementing improvements that changes should drive in results. financial future

business the efforts. Thacker Lithium positive North make narrowed project. Pass continues improves, Mining has development Until note, to On Americas a American its on profit progress

subsidiary Our Sawtooth major as exclusive American part segment. project U.S. contract Sawtooth and for North our this lithium Mining of is Mining miner

announced In Americas Pass XXXX. a major begin milestone is General Phase It's they started. X of Motors in to will in January, acquiring And this Thacker invest construction production the half that projected is fact, to $XXX announced second We agreement XXXX. towards plan for Pass in in project. on million that production. X, that project understanding our this has Lithium with begin GM Thacker moving and March equipment

of in continues established is project on result a progress and X stream recently expected established Resources new key project lithium the advance on is becoming expected a domestic to Mitigation stream and its goal the in abandoned production. towards Resources Resources to XX of production Nashville of isn't this in projects States. Southeastern this a Mitigation the named existing Mitigation an services important XXXX team years. over Dallas mitigation forward significant wetland mitigation of in is past America work state making until top land designated step provider of and was provider While to in and for strong mitigation be North substantial foundation United near Texas. generation banks income several are mine commences, The what a restoration build

advancing coal their including strategies, to businesses Overall, these our protect are I'm pleased business. the with of way very efforts all mining

that business continues Christy, recognize to results possible grateful to to tremendous 'XX employees. such our forward, be remain the our for Their Before and our very like team. work team working I'd propel by great to us hard passion but fantastic call I'm a with of strong I turn back

turn over Christy? results more call to to the With our quarter back I'll in that, the for Christy detail. cover

you, Thank J.C.

As then we segments. had I'll strong our J.C. high-level fourth some individual comments a detail mentioned, fourth financial consolidated quarter. and our on on start results with quarter add

to million, Consolidated last EBITDA million. basis, adjusted fourth to $X.X improvements per $X.XX of were increased Mining up up its $XX.X million gas driven our prior operating impact to million production natural On and adjusted from the Consolidated offset XXXX XX% oil These substantially diluted higher or a XX% income partly operating almost which Significantly profit increased EBITDA share, and more by $XX.X consolidated net Management, Coal per segment Minerals or increased the increased XXXX. versus $X.XX the $XX.X Minerals quarter prices. lower quarter in year. earnings. diluted than Management due over the year and doubled earnings share higher to both profit

per significant Mississippi fourth profit Mining to substantial decrease adjusted the Mississippi from was earnings EBITDA Lignite in Conversely, Coal plant ton Company unconsolidated in Mining power at quarter significantly. XXXX due operations. in a the Coal a over operating and XX% dispatch at increase lower higher decreased due Lignite This Company. Mining sales Mining a higher price ton the delivered increase revenues and demand per of customer cost segment increased and and coal to

through earnings May earnings decrease Falkirk XXXX mainly fee as management operations The a was Mine offset price the the from was reduction Coteau in upon at in a temporary in consolidated result partly by This May contractual escalation. increase at to of due ton an per XXXX.

was lower that stem EBITDA in program improved employee-related American increase from segment in the fourth prior the implemented the depreciation The year. loss quarter primarily of to North due of a Mining's voluntary the costs operating outpaced in an expense. improvement the quarter from adjusted because company in year-over-year increase The XXXX. third results improvement retirement

profit in of Looking and decline ton driven XXXX. year-over-year. the to in million expected reduction Mississippi expected the coal decrease of Lignite primarily per in at are The earnings $XX GRE the the by Mining Coal delivered. a termination is segment's reduction EBITDA segment forward, adjusted operating in and received payment significant profit significantly XXXX, including excluding result Mining Company

the reduction X XX of in the We expect of operations also to ton Sabine unconsolidated contribute to profit. to at XXXX deliveries per earnings months operating in with The cessation due and fee X. decrease decrease in a a the XXXX as at April moderate full compared in the months are earnings for management of lower expected Falkirk in

increase in by from In underlying mine XXXX. versus EBITDA to increase versus 'XX expect because reclamation operating operations at because Creek year improvements in were adjusted to segment significant being expense full expect in Conversely, prior masked substantially at Coteau activities a XXXX, we XXXX. North Mining's are decrease completed final year significantly we the American the XXXX profit depreciation

Minerals Finally, in wells companies. This operating Management and new additional as gas of limited from decrease decrease prices we forecasted by significantly anticipated EBITDA driven XXXX. production 'XX to at our wells for development volumes by decline natural and anticipated primarily profit market segment follow exploration is and oil expect and segment, production expectations current and reduction third-party adjusted their existing natural

J.C. results. could prices current in XXXX and oil expectations changes mentioned, As affect natural gas from

termination to net income million during recognized income the expect 'XX 'XX. largely on basis, contract consolidated consolidated summarize, significantly, To we a full pretax year due increase $XX.X of to

Excluding lower to the lower are is segment. to expected income tax earnings expected Management this offset the settlement income These segment net expense. royalty in Minerals decrease substantially by Coal Mining and reduced significantly income, income partially from be reductions in

and Lignite remain in and improvements Coal which strengthen Looking outlook. our can continue expects Mining due part resiliency to our Company, we Mississippi of coal beyond to increased long-term XXXX, the Falkirk segment Mining at we mining to activities continue about operations. The pursue optimistic profitability

As Resources in growth Minerals mentioned, for and the Management remain strong businesses. J.C. previously opportunities Mitigation

and In to North at committed remain encouraged we American developments recent by Mining are Pass. Thacker addition,

million. liquidity standpoint, a of of we $XXX.X from consolidated the debt and cash quarter $XX.X Lastly, ended million with

of facility. under our revolving In addition, had we $XXX.X million credit availability

activities full of positive, flow Sawtooth. the anticipated but 'XX high For the than because significantly before XXXX primarily be year, expect for cash financing capital remain we lower expenditures to

turn have. will any to may now We questions you

[Operator Instructions] comes from Kuhn Our Compounding. Andrew question first Focused from

return results difference are capital Like this you Is expectations first we've North Can your business issues your meet when had of expense growing on results driven expectations Is American of what and has the intensity? type factors the talk contract between these so Mining, for the management? the about started didn't capital economics? year. this it So far? you it

that that expand great. be way can on would you Any

Thanks question. for the

quarries. we're with it want we the release respect are generating of a to operations of X point done I think going would that that what the to well. of at working very review I'd the about say expected We of business do the out be. to that we've talk the in where majority the profits that things I quarries, each -- at is on initiatives we've a getting those. We're the mentioned

There not are which of gets we're into the some whole meeting our business. mix quarries the expectations, where thrown

So working not We're we our we're improvements. on customer. the we're work productivity where quarries and quarry. operated our -- American with entire the business efficiency how mining In quarries, looking running North the at coordinate we the and

So of our effort our coordinated it's really a customers and sort work between work.

more more to in that administrative focusing efficient. get we we're earnings areas efficient. our so where sync think are well, that sides be some we're trying described as And we've better as releases on we both So can in

we like So it in where some collection can think of progress things, meaningful be. this we that to we'd business getting whole towards make

an And one is been solar power scale exploring there first developing the it. Or other that reason internally day possibly a ahead. you've XX-K in reclaim mentioned that you idea this XX-K? while? think mining Is is utility included this then Got year's is some I for where

It's We've a exploring an while. been idea. for

a not it's think I unique idea.

of a got it we on as we've doing we disclosures. decided start working about our think been companies and in potential well. You're enough it's that that this, number should public that talking seeing it we

investments in bank your in and equivalents that less. consist highly then disclosure liquid of you months with standard X and or used original cash cash of maturities a And XX-K, cash

any it Given bank months that been a depositor there's uninsured about in and large I'm more bank discussion curious less you being under do business would investment X at deposit? and be natural and with, any just if

don't checked sure mean placed? our double have just A I X-month I'm So Where to we like just of exposed lots investments in are of types regular lot much that. We that's were? right? deposits. of with paper, respect like people, they this of where all is things And very --

question? your answer that Does

that's No, fine. Yes.

Donovan from Energy. from Instructions] [Operator question Nachy next comes Our Kanfer

Nachy, knocking the all morning. like actually on door. insights the this appreciate I

we've follow a conversations in Just couple questions. earnings of previous from calls. had Actually, ups

Lignite. Mississippi about First,

while I of asked case. any team Kafka And still I'm if [ph] there, if wondering maybe concern the had customer answer A management generation. about a the no. year was out that's ago, creditworthiness has your back, about your the

a ultimately, I Well, the is think government is, customer essentially entity. right, which TVA,

I plant in the intend a So pretty to interest say publicly, TVA this -- think it's the you plant operate to when the safe reliability that look standpoint plant resiliency to electricity take at and described way this think they they've and I intend for future. from foreseeable from

to But but is here. out them, work really however, back I way is the comfortable with Southern chain, TVA how and value think that's customer trying We situations you work way acknowledge, really that them. put we the bondholders ultimately, do So feel between between through your if some end this Company the that's are pretty the all together.

Got it. helpful. That's

perspective, risk sales there's coal sales at -- So at [ revenue generation, that no coal ] revenue coal to default from Kafka a NACCO's customer? or material

Well, through themselves us from think is of I I think plant the way energy. supplying the you mind. taking it's the coal a TVA anybody And way only I'll operate coal TVA, mean, right? got out gets our recovery Everybody's back that chain operating coming plant. to investment contracts of on go the work own any all I And their can't without by --

continue in So to operate. best interest everybody's to

about what the B I residuals Coal Part give My would in Part wanted handling -- And you Combustion things. ask what anything wondering kind ash contract EPA-proposed coal it. expense Creek's a under proposing can -- a and Coal sense of handle then upgrade terms of me if understanding Got work is Coal if have which EPA else? you at and [rule]. do a deny that is on of application Creek's on other does to B Residuals capital -- is. to Don't expense or significant action Rainbow, capital to result in application, that EPS I'm

thinking we about are How that?

comment for them. I these the I'm Good But we don't think discussions we to obvious competitive very that helpful our And disclosed those. going going Creek's one is or it's to profits right for answers individual at have me that with unfortunately, EPA negotiations question. to X to mines that on of make never reasons. you. between Coal give any aren't be you,

a that can like And I risk but... new attorney, -- not I describe thinking how declares are I'm force you an Well, on majeure. Understood. is Coal that there guess majeure so Creek about maybe not brand your risk? force there? renegotiated contract mean, you

this. that's well, coming well, me. threw majeure what this like, how Yes, I'm to force

that there risk of Is agreement? a early to sales coal termination termination, that there's an some sort a

significant a as right? a it an see. risk. don't anything is view we asteroid, there that but we possibility by can I mean, that Not mean, can happen. I look, happen, get So remote hit that things could

hand no to back Kmetko further Christina remarks. you have We over questions. for closing I'll now

few just replay Relations A post close We'll online the call available when final We'll it Investor also our will morning. you. available. reminders. later with of becomes website be this transcript a a Thank on

any you me. reach questions, If please to have out

back can reach day, I now the the phone the at your rest and enjoy to call. press on You you operator me conclude our number release. to the hope of

for you joining Thank us. This call. concludes today's

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