NACCO Industries (NC) 4 May 232023 Q1 Earnings call transcript

Good morning, and welcome to the NACCO Industries 2023 First Quarter Earnings Call. My name is Brika, and I'll be your event specialist running today's call. [Operator Instructions] I would now like to hand the conference over to Christina Kmetko.

So Christina, you may proceed.

Thank you. welcome First and Earnings everyone, morning, to Quarter XXXX Call. Good morning. for joining you us Thank this I'm I'm Kmetko, Christina and NACCO Relations Industries. at responsible for Investor

later Executive on This Vice is The today afternoon and for quarter we Today's this XXXX me are call filed Butler, also our available first and Joining webcast approximately our on and XX-Q. website. J.C. published our webcast. Elizabeth is available will and President months. Chief Loveman, website results Controller. information be Yesterday, being and President XX Officer; our

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

first, discussing I'll evaluating discuss we'll be our opening results remarks. Reconciliations moment, non-GAAP me we addition, President the useful our for the that let earnings But and in turn to some in J.C. found J.C.? our be Butler, In these non-GAAP is our CEO, on the a website. In believe performance. operating call can company's information for measures release over quarter. and for

everyone. Thank good you, morning, and Christy,

a XXXX coal gas contracts. expected explained prices call due We our mining our of the our area. that to earnings of Company as those XXXX that income is go last mine first we to the to played new termination results those what Mississippi strong factors be as will moves Lignite in and provide expected. XXXX benefited as XXXX, first, significantly prior thoughts about the quarter a results expectations. first few decrease in Mining reduction That quarter earnings natural on provide quarter. Christy from well quarters as me and But let quarterly and a outlook more an on into first in overview early higher minute. X a in results we've of our into detail Our not the Results reported significantly by as in was it of but quarter were and future our generated out

costs at our our described Minerals As operating we results both release, a bit and mine about in Lignite decrease the our Mississippi Coal in reasons Management talked the substantial lower segments years Mining drove Company's results. in That decrease the significantly the into segment's is mine operating profit. of Red Mining over area. quarter few moving a the for Hills last earnings We've Mining primary quite first new one these but Coal -- when the fully of year inefficiencies moving At costs we mine the XXXX, of end higher new costs could in we're to the much Red area. existing with the through are mine moderate significant final continue the to operational mine at expected and mining we're incurring new also dealing Hills while should associated complete are inefficiencies by operational area, area. These we with as

last we emphasizing significant underlying masking which as that don't area, You EBITDA To of why few be Mississippi a tells this pace Company. to replacement in investing Mining the new have increased recall same is story invested mine will open me, capital since depreciation better keep that performance to at expense we've Lignite capital years. been the the we've

was affect report the mentioned did This on first to by to the reclamation Texas not power that retire in the end I'm I X. mine owner plan we March, the commenced that activities plant power action call, plant. served and of quarterly our disappointed of at mine plant our April quarter. retired the last our Pirkey During Sabine

oil receiving In first providing years. first years. for income from mine much prices [indiscernible] versus than fact, -- than the quarter that The Prices a final income X during in We combination services, much and to reclamation gas received QX the benefited gas were Minerals with tonnes Sabine last X but be quarter. of annual production last rose results compared mining. Shifting wells is natural XXXX. XXXX led will decline first expected XXXX the significant much XXXX in the the at Mineral a natural compensation and Management. of to less over Management's in quarter lot than prices higher over and active lower significantly existing lower decrease Sabine oil

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

Our XXXX forecast averages. in gas with to moderate XXXX line prices levels and oil assumes market

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

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

year-over-year. declined the On operating surface, profit

reclamation first prior remove in with These activities reason Caddo, an completed. Once operations final our you largely demand the mine is had of Creek customer first in aggregates our results. were XXXX at boosted However, the earnings which the activities in year quarter, quarter. are full Caddo for increase the main effect compared because the decline swing and

initiatives exclusive build efforts results. drive those we've That our improvements mentioned initiatives, narrowed a current on but incur consistent at soon I'm quarter the Mining. Sawtooth until business of of America's optimistic North that It quarter Thacker these upon said, Mining. earnings Lithium the for which can changes improvements is project American to profit contract expected American are Pass is the is in lithium the basis, part is in miner during North development Mining, implementing Mining we begin future be projected to Lithium forward Pass to is Thacker at production Nevada. important of financial and I quarterly Construction should Phase full the segment, step XXXX. too our North call, at effect Northern what production. results XXXX an that the American domestic to commenced for During second judge half project first X a is key in last This

We are equipments for project in acquiring XXXX. this

restoration with to way am is protect year our expect and startup. Overall, to of team reasons I level to planned for for I years recently the provider was efforts and be more their Resources in income X the with substantial quarter Mitigation mining mitigation Resources on this, to Despite America mine continues of our optimistic of over income mitigation projects has restoration mine completed existing be at XXXX. The X recognize has all very quarter projects to business. With additional designated and recently within we advance XXXX comparisons XXXX a Mitigation now for build first have confidence state. the higher Resources mitigation Mitigation permittee-responsible its continue I I'm levels the The Mitigation team, first back opening which North of growth XXXX businesses I'm the land coal Mississippi, expect established when -- to pleased mitigation and in We results projects in in as XXXX. past the of several its also the of years. our starts a resources mitigation still it and mitigation production, Christy with detail. expected Resources unfavorable pleased banks pursuing achieved abandoned located with outlook selected the look our of that, to advance Texas including in work past banks moderate banks remarks. turn of for call the ended surface discussed customer our during of I as few the cover foundation and very my XXXX. first I'll of hard a Texas. Alabama lot project these by team Tennessee, over abandoned to strategies, about and of State is

high-level on then results quarter Thank comments you, on financial I'll our detail segments. and start with individual some J.C. add our consolidated first

results compared income segment with per of earnings other profit to EBITDA million ton drove unconsolidated as our an last quarter. operating operating from as first and year, of segment profit in $XX.X mentioned, XXXX results compared reduction tax income the XXXX $X.XX AgEnergy first with XXXX $X.XX lower On to results. offset a sold coal by significantly almost of our were decreased $X.X increase significantly decrease from and last year $X.X in than Mining in XXXX operations. decrease. Coal Mississippi mining of or consolidated Minerals the roughly Consolidated decreased declines $X.X million. substantial and the per the primarily higher quarter cost expense the transaction decrease of related expenses. a purchase lower million These the and earnings income, Lignite Mining significant J.C. significant adjustment These half $XX.X a or decreases year. Coal decreased A operating $XX.X Mining lower Midwest million share basis, EBITDA year interest Mississippi post-closing were offset profit profit decreased price income of quarter. well million, partly XXXX to the substantial in to EBITDA first in first were partly first quarter in net primarily Company operating million Management prior prior with significantly As due to to per the adjusted $XX million quarter due operating the lower income share net

as significant per increase inefficiencies mining value incurred due first cost reasons the lower As results costs net in and of already North in A Management's the J.C. new contributed decreases Mineral the in primary behind $X.X profit. realizable well to area. million lower his Mining's also the to the discussed quarter as the ton increase per write-down cost explained was additional the operating American ton. J.C. inventory to establish to remarks,

X segment First North in XXXX let me periods. excludes substantial expense expense. this to capital depreciation Once results American So growth see Quarter over support is profit the of is EBITDA operating expenditures Segment depreciation to comparable the in effect achieved on A due focus you increase historical excluded, adjusted EBITDA. operations included adjusted the underlying unfavorable elevated the variance. initiatives Mining's can operating

area. significant well as capital the mining as new business area increased forward, million at XXXX. decline primarily payment higher with decrease operations establishing to or significantly with is we Mining operating EBITDA and mine profit expense result develop the this GRE XXXX, reduction expenditures adjusted to expected expected in Lignite new to $XX a year-over-year an without associated the Looking The Mississippi coal in in depreciation received segment are at Company recent costs from earnings of related in termination

the mentioned, areas J.C. term. this additional remaining the of and As continue the Mining moderate and through then are quarter quarter to Lignite mine contract Company anticipated project expected We ongoing expect in into don't XXXX. fourth of to Mississippi the inefficiencies XXXX open third through

development through to contract the a cessation the XXXX Falkirk of mining X. Shifting as As Sabine American and a in decline the moderate at also months to X coal result, the North in Mining. profit. year operations at mine for all months unconsolidated XXXX. decrease of is capital management should the April with in last deliveries per is XX compared end result operating contribute XXXX expected the to Earnings This ton expenditures from and fee of of reduction of in

the at masked mine We to the operations to year being Despite aggregates segment full operations in profit improved XXXX. because due improvements of this for decrease over North by year results is the remaining significant in XXXX. aggregates Conversely, the at last a Caddo operating reclamation prior continuation improve expected income-generating the XXXX. EBITDA activities increase a Creek quarters expect we Mining's depreciation substantial in expense versus of completion American expect underlying to year, adjusted at moderately of versus 'XX improvement, are

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

contract the could termination current As from J.C. as and year. investments income natural full to XXXX pretax well expectations of consolidated results. To in basis, additional mentioned, reserves prices income new or decrease we year mineral to well as million changes expect XXXX on a recognized due part development oil $XX.X consolidated our significantly gas net in in affect summarize, last

the is Excluding reduced as in income income by expected result partially lower royalty earnings in to the significantly offset reductions Coal These the and settlement are of segment. net lower Management expense. income, tax Mining segment to be decline Minerals expected a income

Looking improvements at long-term outlook. continue in remain we price optimistic about to Mining Mining in their end beyond segment The part Mississippi XXXX, temporary Lignite increased profitability concessions expects to Falkirk our Coal Company. due once

will we the operations. resiliency coal can strengthen to our activities addition, mining which In continue pursue of

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

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

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

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

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

you any may We will turn now have. to questions

Instructions] [Operator

that close with later will questions. be post see few reminders. We'll this our it our Relations website I morning. the replay think I since I'll final transcript when of Well, becomes any on Investor available Q&A available. also a A concludes don't call online a

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

I the me call phone press to conclude I'll now rest the your day. of enjoy reach at the call. the can you And on the Brika hope You turn number to back release.

until code call. X-XXX-XXX-XXXX today's XXXXXX. be the Thursday, a will available access Please XX. dial concludes Please This and replay note, May enter

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