NACCO Industries (NC) 3 Aug 232023 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to NACCO Industries Q2 2023 Earnings Conference Call. [Operator Instructions] Thank you. Christina Kmetko, Investor Relations, you may begin your conference.

Thank you. Good morning, everyone, and welcome to our 2023 second quarter earnings call. us joining for you this morning. Thank Kmetko, NACCO Industries. Christina and I'm at Relations Investor for responsible I'm

Joining are and and Elizabeth me Executive Loveman, Chief today Senior J.C. Butler, Vice President Controller. and President Officer;

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

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

discussing the in be release also be non-GAAP found on is our we performance. believe non-GAAP can these website. our operating We'll for and company's in measures that evaluating earnings information useful Reconciliations

of out formalities opening the I'll J.C.? way, J.C. for the With some call over remarks. turn to the

the second will and an a Thank good and morning, about everyone. quarter our first, let and overview But minute. future few earnings into you, on more a detail Christy our thoughts of our Christy, in expectations. quarter provide go outlook provide me

lower were and clear as last It's year-end. discussed well quarter as much but than quarter at that second results XXXX as last that year, was expected our

termination Falkirk's $XX.X received was Energy. River a the million contract because included with surprise. results So A of the Great the significant decrease as income decline of from pretax of shouldn't XXXX come portion

was by termination for The payments, only business I'll decrease. not absence reason of business. discuss our results these the XXXX earnings our however,

the mentioned first struggled of and these North part XXXX. it's to encouraging our improved changes results, I this see segment, and were we The segment of Mining quarter year-over-year during quarter that to aggregates last XXXX. on implementing over substantially in profit drive American operating financial increased the mining improvements. future First,

we a and soon still to profit said, momentum. We constant is full to initiatives. this good are build a That improvements in is incurring can this want American effect this start. North but it upon of judge But see basis, still I'm on too early these the Mining process, optimistic

The is income business. decrease partly aggregates the Creek at in reclamation in North American improvement offsetting results Mining Caddo

work. Creek in Creek interest We are where XXXX, purchased the Caddo no longer March Caddo at recognizing income had we Marshall the performing because been mine reclamation Mine membership at reclamation

We are considering development of location. a utility-scale this solar project at

and is us comments, quarter, for XXXX. lithium up production lithium in project customer of Wrapping last quickly exclusive at Sawtooth Lithium my Thacker in American to Construction second Phase that miner Pass North the Mining, mention commenced Americas, which expect they Thacker the me Nevada. Mining Pass half let Northern tells begin contract our X

levels of XXXX. production We're project higher when We acquiring customer income to income equipment income this earlier this recognizing project expected to related to recognize for through XXXX starts moderate continue also year. and in began currently expect the with our

year-over-year results the a in to Resources North Mitigation that of sales XXXX second $X.X - credit with associated income advance the recognized to years. this included earnings within sorry, which past on X.X build that a increase Resources million team of has Moving our quarter, unallocated Mitigation mitigation projects contributed pleased were existing substantial to Mitigation America results. I'm business. quarter. established Resources This report to and continues foundation over several

ago. started first prospects. X it we'd faster very and years, when years is I'm achieved expected growing pleased Mitigation very than pleased has growth their I'm with success few achieving with the Resources level business we its This of real just and a in

quarter just increases Mining large in in XXXX. and XXXX were to Management Minerals earnings our second in The to segment not Coal the the enough we offset I compared experienced decrease discussed

During our calls, we last two earnings significantly. to we've results discussed expected that XXXX decrease

first being to segment. operational and mining Coal significant at impacted higher Mining efficiencies increased Hills fully the the incurring the a also Company, Mississippi address complete year, At rainfall during of during MLMC's has expected the we're mine production area. new final costs experiencing quarter, to to significant the associated in inefficiencies we we're moderate with but Mining as Lignite the and has third operational mine fourth costs. area, area. mine had when costs we new mine then moving continue first the with contend anticipate These which into half to begin are quarter I'll also existing Red

remainder You'll recall new contract term. area, of to for open in investments over we've coal the to which the continue the mine have up necessary is that contract significant that expense of capital term. depreciation will capital resulted the invested access needed this These increased remainder

our the contract operating we from better affect since are remaining contract the capital through MLMC XXXX. depreciation this areas which The expenditures additional expect a from reported to mine EBITDA, is part open but will moderate end don't at development think look of business profit, we effects of added excluded those should XXXX in the term. way through Mine to

with and the Management. results quarter oil a decrease significant prices to second XXXX second Shifting in gas Substantially led quarter. lower Minerals the compared XXXX natural to

prices and You remember the natural XXXX. were gas high very in oil

for prices natural levels. market to prices, below oil remain and forecast which XXXX gas projects utilized We

are forecast. prices gas and in our commodity volatile natural changes oil and in result course, Of could current prices to inherently adjustments

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

unfavorable of investments Overall, of comparisons our year reasons On beyond to be new to owned or wells the XXXX discussed. be new for existing I on accretive the future the development a I upside, forecast could reserves results. expect

move a to continue lot have their mining of including I Despite this, in beyond strategies, of our as I'm business. our coal XXXX. protect all our advance confidence the with pleased and still efforts to I'm outlook very optimistic team, these we about way businesses

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

some income from on start to XXXX. the million net you, $XX from to I'll or second Consolidated EBITDA or our year. decreased segments. Thank $X.X per $X.X $X.XX high-level share of per quarter million with decreased share net consolidated On decreased and $XX.X tax prior income last on in million compared with $XX.X individual comments year. income detail basis, million in our J.C. financial $X.XX $X.X add to a results consolidated then million million before

of These the Mining's primarily were These Coal Management contract decreases as well earnings, as North the were employee-related Minerals income. Resources lower as Mining and due results lower and expenses to higher partly discussed, settlement. Mitigation by American termination lower J.C. XXXX unallocated offset the earnings and in significantly and investment improvements absence other

quarter employee-related earnings results and The as Coal compared primarily profit significantly as quarter XXXX by partly unconsolidated second lower decreased costs. with Mining XXXX, Mississippi substantial declines second adjusted lower were EBITDA well Mining operations. at These due Lignite the Company the segment decrease the operating offset in to

incurred the coal in a A decrease mentioned, sold area the to the was on-site to by also the driven a to ton. of value cost in $X.X in increase Company J.C. realizable additional mine Mississippi significant per establish significant inefficiencies due write-down cost million contributed ton Mining costs increase new results to per inventory Lignite and the net

customer decreased and March Coteau lower to decrease on operations activities X. A the earnings reclamation lower XXXX. on mine number ton compared fee XX Falkirk with the pricing, and due and unconsolidated deliveries Sabine earnings of of April decreased coal a factors due earnings and requirements earnings contributed lower in volumes because per to to ceased management declined commenced

increased lower results These offset were Creek requirements. to due partly by Coyote earnings customer at improved

results reason primary prices. behind significantly already lower J.C. As is management's discussed, decline mineral in the the

To from put prices, from Oil XX% Hub year. decreased XXXX Price Average oil context, current this prior natural Gas Intermediate the Texas by Spot Price the declined Natural Spot prices, and measured measured as gas the XX% as Henry Crude in by West more

North American expenses. parts sales primarily employee-related profit an respectively. increase to improvement adjusted XXXX XX% due and and improved XX%, operating Mining and lower segment in over second quarter This EBITDA was

results the anticipated offset in fourth second quarter improvement by third the already the improving of XXXX, decline. The than earnings in to half will before quarter in lower to the results the discussed. XXXX expected half of driven are quarter. the decrease second and the not consolidated are XXXX third we've continue to of be in year Overall, Therefore, expected fourth primarily items half first the quarter both

services, is the active at the of Coteau at operations. reclamation mine operating primarily the than rate decline profit. mining. operations receiving earnings responsibility to for earnings and a addition, to earnings decrease compensation mine due and the expected contribute early Power to providing expect decrease of is but to retirement core Falkirk the customer. final in reclamation lower also lower In Sabine contribute the in Plant. of unconsolidated A unconsolidated is for during This mining is we Sabine's Pirkey to the of Funding

Shifting to North American Mining.

adjusted year compared XXXX continuation We the operating the remainder expect as EBITDA full a a year results for and with prior -- as of of segment continued well improved for periods. the

voluntary second second XXXX for included an is half retirement $XXX,XXX the of half a increase primarily because charge The program.

the from of XXXX. are results expected these first However, decrease half to

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

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

Mining from improved at addition, XXXX more also to and when are Pass in XXXX. In in significantly commences to and production expected XXXX project earnings Lithium Thacker Sawtooth results contribute the

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

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

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

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