NACCO Industries (NC) 2 Nov 232023 Q3 Earnings call transcript

Thank you for standing by. My name is Deb, and I will be your conference operator today. At this time, I would like to welcome everyone to the NACCO Industries conference call. [Operator Instructions] I would now like to turn the call over to Christina Kmetko. Please go ahead.

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

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

including risks Our remarks several to that could differ the forward-looking contain described during that statements. These remainder earnings also next uncertainties and those and as XXXX that is statements we'll others, note XXXX on made about conference update preliminary. may follow, XX-Q company's release, is cause that to useful the that for in answers in we subject website. I'd as be our information here view our and from your in earnings like be results expectations. our a believe earnings to you in of materially these remarks, ask questions, SEC forward-looking include, the are to information We we've filings. of found also provide high-level today's well the XXXX other We quarterly these our actual remember that that performance. Reconciliations release These not operating information evaluating discussing expressed risks forward-looking today. matters among until our statements statements call. We'll measures non-GAAP can non-GAAP

annual in operating still the reviewing are process plan. our We of

earnings XXXX our part definitive of fourth as quarter release. XXXX We will provide more information

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

everyone. morning, you, good and Christy, Thank

the best Mining quarter, XXXX understand in last talk expected results, were the inefficiencies of Company and it's outlook mining but back operational to increased about third was before our of with increased some last talked which rainfall, first area Our We year, line short-term Last for segment. do also contending costs. conditions This turning our I'll MLMC third business-by-business. with production recent decline and provided same from quarter new quarter. than transitioning much Lignite costs expect continued a mine the Mining significantly Coal our and To to in caused adverse to the and expectations quarter situation that call about production into lower to Christy. I'll reduced related I results by the Mississippi to quarter as the over XXXX the at discuss both our future temporary levels. reasons. address we

some was not to area ago. area costs XX us. to now The our to known behind the mine surprise. to over requirements, need This area started a we delivery run meet mine years coal new move move which a when reserves production mine are XXXX. related We've XXXX mine expected a new largely in we to provide above had late Mine depleted to Area the because We remain area However, are background, a is historical costs this complete. To where through mining pit the open extension since XXXXs. new area we've coal been to moved the in levels were new new additional since we'd that mine X, reserves to mining contractual with a and

further the results We quarter, XXXX. fourth improvement improving in with in modest expect to see

normalize. XXXX However, new mine will the in in biggest years occur favorable future operations area as impact this in

added we the because Mississippi affect at but look excluded think contract Company remaining better to to invested profit, a our is which term. significant we've this this depreciation investments EBITDA, is term. to depreciation business remainder the the will reported develop resulted areas way will capital mine that area. expense The have capital that Lignite mine These recall contract over in depreciation You'll open additional increased continue expect through we of don't part Mining from this of operating

of results oil at high the provide decrease Partners the lower will fourth finalizing is Permian of Natural compared $XX fourth additional are beyond to to XXXX during with prices well diversification reserves year. as new lower forecast gas of wells included operating anticipated Minerals XXXX prices close expected future In team prices than owned to would Minerals Mineral Management significantly XXXX. XXXX. The are as Catapult Shifting in to decrease the basin. These and Management's very with the compared the accretive is into a in quarter oil-rich remain additional prior in million. to XXXX up minerals investments to experienced have significant development natural oil quarter to in levels, a gas the third existing on below that quarter those management, prices investments and continue be in resulting a million XXXX, profit $XX targeting acquisition in led our These results. significant

momentum is in North results American improvements I'm but reclamation at again moderate optimistic The in with Mining part are of the income the partly change upon mining but North year can struggled operating generated off, the to aggregates the challenges to operations. Our results Caddo paying segment Creek continue -- a we this prior in small drive in sorry, American profitability during quarter. compared American XXXX, third loss decrease quarter Mining's improved North this changes we implemented implemented profit the a aggregates that's future. A build in this show the financial encouraging. offsetting and future Mining and -- segment improvements

the reclamation income project. XXXX the recognizing American miner in March Creek million $XX.X been me membership in that, interest to Mine of first Sawtooth is at Marshall Mining, comments, in reclamation performing in acquiring the are at contract longer the since Thacker commenced Caddo mining no had work. Wrapping we We've which Construction we Caddo With North date. Creek my project acquired Lithium quarter. Pass equipment for We the exclusive began Nevada. Lithium Americas Pass for where up equipment Northern purchased mention let mine Thacker

recognize moderate We income which levels anticipated second commences expect of production, when currently in lithium XXXX. continue income our to half XXXX with expected customer the of higher is to Phase through X to begin

with resources the And mitigation America. X in but bank resources the and of continues I'm continue quarter. to I existing is the to This foundation team additional that profitability build Moving their third an several to North earnings with even report and very achieve has as the I'm achieved substantial years mitigation growth excited to during of added Mitigation increasing They about I'm refer look more what over expect advance to for pleased pleased ago. years. level the in longer additional over startup on I established to still they've projects mitigation and prospects. phase, breakeven since the term. starting near XXXX projects past

say protect continued and look of optimistic I to we our cover unfavorable temporary Christy? I'm for a we last and we pleased to the quarter detail. expected comparisons with as that, reasons of turn have said business. With call about very this XXXX. to results [indiscernible] in and be quarter I'm a our to it as specific a the our I'll I'll team, the including our again, of few expected. beyond year for still Coal lot very businesses I our outlook this, XXXX Christy efforts to outlook in advance these Mining all back more their strategies, confidence way over Despite

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

and of per $X.XX lower We $XXX,XXX net million with with consolidated our million approximately EBITDA income per XXXX. loss Minerals Management a year. earnings. Coal were reported net generated of compared $XX.X or We in $XX.X or share share modest million in decreases $X.X to of primarily significant loss last due These results $X.XX approximately compared Mining

lower XXXX. behind as by last American to prices, oil mentioned. context, per individual Hub Mining segment Lignite compared employee-related and the average decreases EBITDA XX% these segments, had segment the due of Lower third J.C. segment ton. earnings the to EBITDA moving the natural as the in Lignite spot intermediate the a cost Mining's driven year. A $XXX,XXX. Texas primarily in discussed, gas partly from spot of significantly due Coal at operations to the the of due price, current substantial adjusted Mississippi write-down the on-site results XX% adjusted realizable increase was negative is requirements the This primarily Management's to Looking prices. To Company increase loss customer decline Mining operating at well the million by gas reporting improved from due significantly primary -- And Henry put as lower quarter with offset to as the over in quarter decreased lower our decrease to significant Mississippi results. The third were J.C. measured prior crude at in XXXX, the Company prices, mine operating Also, year. North also profit price, net and an a sold by results unconsolidated more $X.X measured These million ton was lower Minerals costs. coal average oil reason to our associated XXXX as lower West results Coteau. declined per with natural cost results reduced in that to Mining costs employee-related area improvement inefficiencies this area $X.X inventory costs significant decline mine additional and in contributed new value

and included These partly Mining improved in improved reduced for Caddo retirement income. As Creek quarries by program. North $XXX,XXX earnings aggregates, realized also Sawtooth. XXXX, operating a at voluntary were American earnings offset its at expenses

our compared segment expect Coal but fourth adjusted and declined we from the to XXXX quarter fourth EBITDA results improve XXXX the substantially XXXX at forward, significantly Looking segment, quarter. quarter, operating with third Mining

Mining mentioned, are costs J.C. Company. production As lower Lignite Mississippi we at anticipating

pit expected from above levels are costs However, when XXXX extension expected to area is they while are production mine historical new recent the remain to complete. through the new levels, in decline

increase year year full expect of segment American and we contracts, American under primarily tons certain in These periods. XXXX. At and and continuing services in at offset significantly is expected by as improvement anticipating year the Mining's compared to EBITDA requirements profit per as Sawtooth a XXXX. to in are versus adjusted in operations. in with of and increase a I'm Mining, into higher increase and and adjusted prior also Caddo are Mining, the in operating XXXX significant -- driven an contracts profit at also improved sorry, year Creek. Full 'XX Any result North the the including earnings beginning anticipated We to in reduction future Falkirk higher fourth operating expect increases to XXXX XXXX. In earnings Sawtooth earnings anticipated management unconsolidated segment XXXX, unconsolidated increased cost we to moderately Falkirk and operating improved operating XXXX anticipated completion are ton last contracts, should beginning at EBITDA due increases The -- existing of at profit MLMC the or increase over deliveries profitability over operations an by due Coteau the segment sold are per improvements be and improvements June new significantly are reduction be with accretive in These quarter coal EBITDA will significantly North Strong severed, at adjusted contribute to Mining MLMC expenses. anticipated results. existing which customer fee primarily well both to including 'XX. from the partially and increase quarter fourth under an to ton

the profit Minerals adjusted last decrease full oil market and to current quarter are significantly Future to over XXXX XXXX, expectation. contribute moderately third-party at current Management, expectations wells primarily increase profit expected year accretive market natural to million to forecasted also continue EBITDA and with gas driven Finally, segment are price year. the expect the new of to primarily end of to XXXX, and development growth. investment operating the including EBITDA we investments, anticipated to operating be adjusted lessees. before segment and are due These are by for decreases fourth expected close XXXX, the anticipated In current to $XX compared Lower additional profit limited expenses operating to by forecast. and

EBITDA, Minerals and from consolidated operating this down results and that a Fourth segments. will quarter. improvements expected profit the at adjusted to the XXXX to incurred however, versus XXXX we full year consolidated Mining income and substantial respective Management Overall, produce quarter level, fourth expected year quarter the decreases losses are operating and at due periods net prior Coal the expect be

by this offset improvements expect for XXXX, These partially in reductions we full a changes EBITDA over to to these XXXX results the income. increase at income are significant Falkirk expect contribute is mitigation We income improved American and and leading favorable to XXXX primarily MLMC, modest and profitability Growth in resources be consolidated net net income year. In taxes, expected year. from the to at due at Mining Coal increased Mining to higher North segment Coteau. the also

Lastly, with $XXX cash of of and million. standpoint, consolidated from million million availability ended We liquidity debt the of under revolving a $XX.X our credit facility. quarter we had $XXX

During the we repurchased share existing quarter, under for shares approximately program. $XXX,XXX XX,XXX an repurchase

positive, we we flow use be expect to flow cash to activities not cash of generated to expect financing financing For in the just XXXX, a before level full But moderate the activities before XXXX. be year, in cash.

have. may you questions any to turn now will We

Focused the question Instructions] comes Compounding. with [Operator first Kuhn line of Andrew Your from

question which with. guys what So is buybacks, is ended your on section you first my actually

in So a under plan did you ago. your And traded a you price in at repurchase approved and it you was stock bought at back did stock X has September, years before. that $XXX,XXX it

So now to that feel do fund I'm this. efforts you going give -- buybacks this you just diversification cash buybacks sheet maintain conservative have be Is about Any to more enough and thinking on forward? cash a should be balance how color that expected the we here Should they we sense? can afford flows change you great. enough make still expect would when curious on

Well, certainly have we enough cash.

that I enough the bulletproof having of of believers combination lot we're cash and a long us think in a of And watching been debt sheet. pile know balance a not big reinforces You've to that. big

are stock. question now for around We've your think why this we really a is had I timing, right? of program buying couple years,

year. the headed, got gone we I'm and know. we're that on we what sort than knew so reasons positive we've future a the a we're on we to XXXX feel -- more this stock. a think we're about the ago, of We going at eve I into sure expected outlook, good point when be signaled and that XXXX of was We going for we've years. And where so difficult year literally through you a bought

Got Got it. it.

in sounds something the stock mean more we like So it I potentially future, buybacks? maybe could expect

I'm on just that. not going to comment

And Sure. Lignite to Company. Mining moving then Mississippi

time X again variations. think some be year XXXX. XXXX So for for I and MLMC $XX million expected CapEx year there and is to or over then is year-to-year million so? But you in $XX a million know be $XX full will in the a do inflation years average next over CapEx realistic long-term

years going actually, I tell I mean, mine is be the what opened it's the that over if million to last this it's data don't think I $XX near average I will been right have to the we've you nowhere number. several as you area. tell new

needed. And to Going large. forward, it's may be extraordinarily those should be going just equipment really that none be replacements regular of

data be to But tell what front don't the in going right number, years. a I of Is sure. have next for is it's over you the it enough X to actually million $XX modest number? me

And my it. is around then Got Minerals Management, outlook. last question Great. your

earnings line the your in million that on says currently company's also And in have say based you Permian the you're reserves. the release, forecast a $XX fourth on is anticipating you in purchase owned a quarter. closing So

include don't from any expected mean that, for this purchase? for cash that now, estimates XXXX does your So flows

correct. That's

line Your of comes Weiss second Douglas Investment, LLC. the DSW question from with

and Just results. the on I first a questions. few guess Minerals Mining

the bit being Is and actually just replaced? down that why Or I to was up from second if bit prices you quite from are that the down yet a know last don't wells sequential are quarter. from talk they're could ago, was So not that I year there but quarter a understand a revenue a decline.

coming a month-to-month, the in Marcellus for the related in long a Utica. stake had decline to from got -- had and that really very that in is fact Appalachia, mean very quarter-over-quarter it largely those we've And largely we've the the I we've quarter-to-quarter, -- curve, decline wells and it large had that that I what time, natural a we very, the business wells It's about into would assets we've producing. that that concerned the manage don't a really gets very decline new production In that that things are on is the way quarter-to-quarter in say just business the and how curves honesty, compare to does to really is term. on long we're trying too over moves. all build

Sure.

wells again? prices increase to reasonable wells so mean, waiting for the then people prices gas I number -- low, that just drilling infer aren't is will better So of those as until it and much with are

that. of Liz I it's the... combination a Well, you've -- Liz, think got got

we in the second income settlement year. did some this have quarter Yes, of

impacted also quarter-over-quarter results. the that So

If have about Minerals some we you that look in in the segment. discussion Management XX-Q, the

like in did looked some didn't I of look No, mean, that, see the Yes. was that of that like but it I small that. relatively the day-to-day. scheme

Yes. [indiscernible]

So...

Sure. Yes. Go ahead.

-- it's diversify this with mean, gas are to we We're on point, what's not we going portfolio, to this than more I we're at there balanced but yet. more natural right? Yes. with oil are a sensitive certainly into working

happening anything which workovers world, heavily the that are than So with going increase wells production, in are reserves company we're to developed oil-weighted. that another that's to or be that on new natural being rate it's the gas more or existing to on prices done be wells being our whether minerals sensitive might

going than us at So to well oil more point. natural disproportionately is gas affect this

of royalty but standpoint, in just an the then a division, it accounting from you goods Okay. cost position. that And recognize is

of just million that quarter sold of goods is sort what curious there? I a So cost was $X

of off some related that deductions the income. -- the the to of paying It's that royalty costs we're we

Okay.

I on mean, later, up follow too. that Okay. I can

you Are Okay. there? still

Yes.

Yes.

Okay.

Can some the talked you're kind on capital there? on how you bit. anticipating? So of much you give returns that think of to allocate a what about solar projects I you can ballpark moving little And kind you've guess

us. Well, this is for a very new thing

capital to, how premature. I allocate think, is might to we So speculate on much

I we returns We're measure that think be. that returns high we're still and exploring return as might XXs, teens, very the total in The what nice. seeing return not on we're equity. seeing that are on capital, low

attractive these So think are we pretty projects.

means. said Thacker about projection equivalent is should guess, mid-sized a purposes, project. On -- as that coal -- exactly what mid-sized be sure context really that think know a that at you've I'm a what you not what -- or to terms that I coal I should that you think about Pass, that that Yes, how in of you for I little production? Can full earning give attractive. Can for would

with currently with the some some, it to with relatively be roughly get Thacker a of plant Pass to out and My operation involved call, those. respect I income court to to say Sabine Yes. I have that as mean a getting not our the more respect nice of will we imagine, we're operation. I advice volumes divide to by at a development. respect tons processing when we've you for is going We're Coteau of with earning and of years, our dirt to been it's never come them segment information what several to in the kind work activities with Coyote some be This mines. would as we're this lot sort to had is Lithium going of the project be averages. a Falkirk, be that disclosed over for performing look sort of to project. to This we're that's be that gains you last like -- at Obviously, out performing small look modest -- we've that Americas, work the going going Creek, granular coal respect construction can income. you what

relationship think we're for the current future. partnership, can we ways help we so it's and in expand And a not that looking and that how we the them good scope under only might

Okay.

interested not mean, in that would that's sort Could there. was XXXX, is buyers secondary mine, think in contract is end when there Mississippi of the it's be still explain just curious, I you get -- But On that would the coal, that of I encourage which I I the -- impression production? ends the the continued you just operation quickly?

the runs the mid, started Well, that in future. the XXXX. There XXXXs and could coal area XXXX. beyond are have used plant current goes through contractual certainly The that power reserves life certainly the late be in in should relationship

how we're one are the might that in we power that very respect with ways what looking the plant and life the mine. of things the interested extend be of -- the for plant that end. able So to to works working number be be would things determined. power to what yet location that that on of in and might other are But further on interested to happen is doing extending a things we that are and Who certainly

reserves? last of to very putting into business capital aggregate aggregates expertise the royalty my But have if attractive I on direct this you of moment. which question, side. and mineral be at was And curious the lot Okay. mining you've in seems so ownership mining, to the you're particularly given a any thought but areas,

Well, that of okay, I'm reserves, to is aggregates you mean and the One guessing so you also questions. with as I'm processing sales to respect going X aggregates. the but interpret said

Yes.

we have a -- we're history in long mining. So

we're what do. think at really, really good I we

by That to aggregates, a or does improve not products deciding our have translate we great expertise. the the you're utilizing customers to economics for going market. mining those what think processing selling our the manufacture I into ability into

experience We have there. no

could, just skills no but have rather the off let's big we're have question than skills. There's in, the We that different. always sort decide you go completely we those? believers can acquire And go to of something of, build we

and reach well in States. X big are an The is of the aggregates considered not say, of a vast for two or depth, So that thought and in it, reserves types, there we to might where We've all us. those. When our a vertically focused and difference you something right? everywhere, we're us. we've And owning as operations sort that sales, between thought are, into about. reserves. lignite just almost lignite, integrating limestone about history in the we our the into owning So and reserves they're think experts on as the United very those processing or is coal the it get that's it's sand knew whether and reserves, and well-defined are I interesting done be production trying amount respect that could of to sales but With tremendous to how gravel there minerals for harder thing which out we've aggregates far invest and future. that over see I'd of -- a themselves of decide We've ones in how for would that doing in opportunity leverage economic would amount the into we and justification we the It's those increased that. by

backwards the into So expanding into into getting you look processing at forwards in reserves sales. or buying

can some fleets, is we mine. lithium lots minerals, minor, we're draglines. a There's Historically, operating of all draglines. pursuing minerals great example mine We're there other in shovel use used it's truck kind our operating focused is at we've aggregates right, as time, piece and And not and The we've way, huge the said equipment. out opportunities the that. and we we're just in that surface really lots this in think project back long of say, operating limestone. and it's You where to mining, can mining of it's a for market. just we're just expertise a -- and and -- not point. By of the is not we come that's a it's also Today, think we limestone

of the question Andrew comes Focused Kuhn Your line with Compounding. from next

X, No, I in I jump was to the queue. Star -- it when was click back

So no further questions me. from

Great.

this to closing We for have further turn at point. will I Christina the Kmetko no back questions over remarks. now call

further Q&A call our also will Investor transcript will We'll With available. have morning. replay no we post this becomes available of Relations A website and conclude on it when our be later you. that, session, Thank I comments. the a

over If conclude is reach call the turn the out phone I my questions, to of to and on me, I'll Deb enjoy back the release. rest have hope call. you your day. you any And the do to please number

Encore that (XXX) Ladies replay after X conference number A completion. the be hours date conference call's digital To recording dial-in dial-in November and XXX-XXXX. gentlemen, XXXX, up of until concludes is ID Toll-free call. XX.XX today's you call for your (XXX) for use access available will X recording, ET. XXXX, joining. XXXXX. X replay all XXX-XXXX. November X, number X, Thank Toll-free the

disconnect. now may You