NACCO Industries (NC) 7 Mar 242023 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the NACCO Industries' Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, March 7, 2024. I would now like to turn the conference over to Christina Kmetko, Investor Relations. Please go ahead.

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

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

These is Our contain to remarks that matters uncertainties XX-K are earnings several your those made update not that that conference also follow, We on be in risks be and discussing described results including we've today. the next our non-GAAP and found materially company's differ measures for answers these subject include, earnings our can these and forward-looking to questions, in among forward-looking believe that risks in actual statements filings. other expressed statements information others, statements. quarterly release, until cause our our from could These operating performance. forward-looking call. We'll to here useful in may non-GAAP website. Reconciliations release evaluating the SEC statements we

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

and Thank morning, you, good Christy, everyone.

pleased looking to forward be us, to we put XXXX I'm behind As XXXX.

being make position. we XXXX more entering believe We expected us very we definitely than up I are challenging, a strong XXXX and that difficult ended in be That it stronger, said, to expected. and challenges what are

XXXX grow foundation we from lead future. strategies growth. to improvement experienced the Our unfavorable for X comparisons XXXX favorable XXXX to with continuing teams and have core key our in solid turn and emerge should on future throughout we and The in a protect and diversify, delivered the

impairment dedicated and am Company. put and new affecting every notice I honored quarter notice forth Mining the us of our continue ways our to some day an during efficiently the proud new into They say hard charge item just to to demand a plant. power was expected into company. Without they in the fourth plant is the quarter a Hills This worked for while unit the the Coal face. lower an motivated quarter get and let fourth net with on the talented, power work make our and operating results fourth taking them X support and Management I company fourth Mississippi and any noncash consolidated X such I'm result exciting extremely and resulted Christy a Minerals of in contributions customer and the individuals during XXXX to substantially talk I'll growing significant anticipated operations Lignite for of at time is future. to to notable all about demand during decline strengthen functioning will highlights, alongside accounting at contributed of the secure for to is combination challenges Mining substantial outstanding to today X a charge minute, is way the about each that in outlook noncash unit. me of not result many details, issue first, opportunities uncertain. This still our like may employees. in our start getting segment. while and resolution of Coal each line impairment have the and these In it our I that overview an provide go I'd quarter. The from majeure our team. The customers was year. run Before more MLMC $XX.X at recognize the losses to they full I'll mid-December, for this Mining thank this most into find work in this accomplishments and running diversifying Red want just its despite force our amazing segments detail This the customer. issue of and our received operating the earnings X is of reduction but boilers existing impairment our million to XXXX quarter year.

multiyear and conditions a from that mine XXXXs. mine area mine move XXXX, prior last the new be to was would required known in to the the We've a During to was built new to back completed late the MLMC mining the remove a remaining mine a area successfully move area. overcame new area coal project. mine unfavorable move since This a

was area. of mine to no get the it new is to this the the highway have equipment across we in so not surprise. The the the new economics hauling state just mine prior change area, But a meaningful from So way. did area will mine coal

photo the You'll dragline walking state report. our annual in see upcoming a highway across of the

area, the new costs improved MLMC's quarter. anticipated, which to third the after improve As fourth began quarter to mine contributed results move to the compared to

was and up it expensive, While sets challenging nicely us future. move for this the

to as however, has extension mineral issue oil Basin. This team, natural negotiated in of successfully costs expected date. above We're across pit $XX also basins We historical great until the of have new undeveloped to power area on We from XXXX in interest portfolio still is from the the the The these XXXX, and improve future closed beyond mineral Catapult the acquisition profitability. to few to far, wells on at progress and included in our the done a done forecast well. projects current Minerals now Mining country and of American as profit owned interest over in and acquisition interests as million additional Management. them, of Catapult's in development last future and Minerals legacy Basin, more our resolved and expect XXXX, Midland major gas of through decline on focused job we strategic Management production owning a existing but investments XXXX, boiler the to significant diversifying other would team related Future Appalachian to Mineral oversees reducing mine gas. thus largely for from gas the own plant is investments reserves oil interest. development wells and operators section this gas which now to XXXX based $XX accretive complete. Shifting well our and largest oil new well of interest continue significantly and recent segment, results. In ranging positioned on North is We Permian made work stages years. Prior was income in to those is targeting to concentrated to the on invest. In growing well business our highly diversified to mineral acquisition MLMC -- we levels. mineral of Catapult costs, up and think levels in The are of at These management be Minerals is Partners operational the producing terms remain the interests million.

XX% operating year, compared full While results prior were up operating the from was profit year its down with quarter XXXX. fourth

successful team making sign a to that Mining I business progress American for grow. positive think the toward this continues meaningful American in improvement very platform is results a North Mining building is us. North very into

lithium mining succeeded a American largest Pass up for XX-year with a project to minerals. Wrapping equipment mine commenced Mining, extension that, $XX X-year and into exclusive Americas goal have North customer comments, additional Our me on the in Construction in of its phosphate, secured Sawtooth Nevada. mining Thacker bid contract began contract North winning and acquiring first my is acquired American which for mention Thacker a team million new at the XXXX contract in to quarter. project With Lithium diversify Northern the building its for to equipment date. let miner Pass we

We moderate to lithium income prior the recognize to Phase commencement production. of X expect continue to

Moving North very enthusiastic it the substantial about pleased growth build to the of years and has existing on Resources ago, very X of projects with their starting over past prospects. continues to and several level This since our Mitigation team mitigation America first advance I'm the years. achieved business. established has foundation I'm Mitigation Resources

business that XXXX to make markets will business data even in model to this Resources anticipate with analytics a develop on sustainable in and future more about XXXX decisions Mitigation which target. profitability and focus We profit a XXXX, informed During by generating people its operating further in invested years. expand and modest achieving

at our look land business. With core Christy the their in create mining value reclaim XXXX, cover doing way turn additional of we the over look Mississippi such of outlook protect continue back In team past Christy? outlook our permitting. Among with utilizing and mining formed detail. Company. I be a our strategies, competencies, more solar to and a pursue the I Mining coal and projects including for through very these as on by to we properties. solar the that, optimistic ReGen I'll continues XXXX. are to our of continue in pleased including the farm Our reclaimed on including Resources utility-scale mining development potential development Lignite of to ways that reclamation ways is projects, for to we results businesses lot efforts advance confidence to all call our quarter our I'm team, to about have to

and high-level compared comments then consolidated million share fourth detail on a income on segments. We I'll a per our $X.XX financial J.C. per some $X.XX or year. Thank or reported add loss $XX.X with share you, net consolidated of quarter results million last start individual our of $XX net with loss,

quarter segment in asset $XX.X included Minerals were in because relates EBITDA the business. We due significant while $X.X million were solely Mississippi Coal decreases EBITDA our generated note adjusted Management As included Lignite impairment lower Adjusted in the Mining results fourth million assets million, within land J.C. $XX.X Management charge. charge. Company, These million $XX.X pretax of recorded to XXXX. impairment that certain we that compared consolidated Mining at mentioned, the I'd and our Coal to earnings. Minerals primarily results and with million $X.X excludes impairment

which reported million was of EBITDA segment $XX.X decline million, due $XX.X as of $XXX,XXX the XXXX. contributed Our charge This million fewer the well adjusted the lower expenses tons this segment operations employee-related of million. Lignite Company an write-down in $X.X decrease EBITDA delivered million primarily to Coal in third power to unconsolidated also the results, Company The earnings We at Mining decrease to results in to XXXX, $X.X in sold to year. The operating Higher substantial $X.X of segment in last as in Mining in primarily impairment Mississippi decrease adjusted compares loss value. was quarter, increase coal affecting of ton of profit loss quarter plant. the million compared a $X.X generated fourth to Lignite decline. Decrease a customer and includes of a quarter operating issue the an result Mining the part requirements. per due to our tons in inventory because and Mississippi delivered, past in cost of realizable net contributed

significantly by sale X% Mining, a substantial of Crude impairment, from on by oil decreased average active earnings measured natural the to Texas of reason Oil XXXX and as completion Management's the by context, behind outside costs American in results the prices, this primary put XXXX Mining's spot impact gas prior the gas North and oil services fourth Caddo XXXX. in quarry natural in Minerals decline the at Creek price XXXX, from offset American the as year. At related development Price, more dragline, Excluding activities, with declined Hub prices gas at quarter $XXX,XXX prices. To higher natural of the Spot measured service the Sawtooth Average and compared the is Intermediate current more West were XX% business $XXX,XXX of loss improved than lower and North Henry

quarter As the the $XXX,XXX XXXX when operating because the fourth mining expense EBITDA of excluded. of a depreciation to result, the improved impact results higher XXXX increased despite over adjusted North prior loss operations of American and year. Segment comparable was positive was Mining's loss operating

strong Company expect EBITDA. adjusted the Mining XXXX These earnings an loss forward, higher our segment profit Falkirk improvement results significant in primarily due compared to and Mining with Lignite increases and substantially at Coal are operating Looking we higher and at anticipated Coteau. at segment, XXXX Mississippi

We be expected in expecting loss less it in to significantly incur is XXXX. but are a XXXX, than to MLMC

are anticipating we production mentioned, J.C. costs. As lower

plant after remain depreciable extended delay the costs they production results. as complete. Lower impairment lower above extension while power the fee XXXX assets as from customer Red expectation Mining decline at MLMC's in levels by Falkirk, the increase XXXX June primarily and repairs the pit to recent when contribute is XXXX depreciation concessions in temporary for significantly expense operations outlook. An XXXX could projected result to at an the levels, anticipated through to and higher at of the An value expected the are a in to Coal However, management earnings affect a Falkirk company's driven unconsolidated well mine to ton a are is improved significantly of in area new is amortization end. profit price historical beginning expected as when increased Coteau requirements per Hills

concessions expect compared due at of Coal at to June profit end price with the half in be increased 'XX. Mining to anticipated second operations, We operating MLMC, and in 'XX the improvements the of half higher the first Falkirk demand of the unconsolidated

and achieve contracts growth significantly improved XXXX, profit modified a to we result adjusted over the EBITDA consecutive to 'XX. impact American J.C. expect full results mentioned, quarterly As of North operating the Mining segment in year in leading new and of

improvements current the in expected consolidated Finally, in and expectations primarily EBITDA at XXXX. the in from and Mississippi XXXX to Management, prices additional year. expect a modest compared to oil by the Adjusted operating expenses increased generate we higher net 'XX natural level, is to are adjusted expect primarily increase Lignite third-party impairment new due in excluding income. profitability also lessees. at Coteau. improved Growth gas XXXX Lower expected of EBITDA American by decrease the we net and development offset loss. expected Company, also decline. Overall, segment wells segment for significantly to expectation over driven the Minerals profit forecasted income is partially profit moderately reduction results net Mining anticipated The These prior operating Mining Coal and versus to is market Mining at 'XX for charge. Falkirk to with profitability North contribute are the 'XX to

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

approximately shares financing cash million XX,XXX use be During for under a 'XX, the repurchased repurchase quarter, flow of share expect we In before existing $X.X cash. activities moderate fourth program. to we an

turn now any We may to you will questions have.

question comes Investments. Weiss [Operator line the DSW Instructions] of first Your from Doug from

Is work coal it mine? the how the quarter you're doing on of costs on Mississippi the for possible the sort say additional coal to much -- are per Lignite

question. not I'm Doug, sure I understand the

the of words, drop much other equipment dual so in out of process you're So operating and once and that quarters? moving as completed, forth, sort mines is how just cost the will

a this think. Liz, give I'll see and what you shot

full new were I'm So dollar I would doubled that to But these We'd additional you where to I mean, think delivering to -- into was when levels. sort and mining they volumes are amount. return going we is cost is costs incurring going fair? our But running costs, say costs to that give historical I Liz, to it on again, volumes prior move once this. obviously area. to and us not we less efficient the are doing mine an return up exact of and established plant were we'll think up get I full over there while the

extension. say, I We're I the pit would we mine at not mine areas. area. would new working agree. previous to We've the operating the at over mentioned area. mine operating you were on already We're X moved also

statement now an clarify, balance in to reclamation exercise mine call more we've cover when of reserves which Just is X, the reclamation exercise, because area. reclamation in income a area, costs of is prior accumulated than sheet we're Mine we that Area mine the it really is to and

we of that really out costs, reserve. just come as those So expend

extended all at length costs it operations area. pit X just the we're new really because the to rate mine plant are normal expect at efficiency So this at point, getting not we're levels attributable we -- want the running mining initial on only in the is the it to unit, power we because to They're delivering be. half this we're and

have have up? -- you second that do any on Okay. you boiler will visibility Then come when

as from guys all the our our would control. up entirely are, I professionally. are are Our in expect the regular thing certainly say, running they're I really And are time site during discussing line. the they going this this everything in can think very customers' in operations. plant, at going of dates and to mine get I we tell, power not It's I'm any handling typical with back put year. But out there. communication the They But to

it's our about to think But decide XXXX. up to expected it's to be going course customer that I if the to really during of publicly. they're talk

does the is in your all or In income into about SG&A think to coal it the division, do just words, it Coal applied SG&A expense, income And Or operations? your -- being off operations statement? that's -- consolidated I already all the or the include that that other Okay. unconsolidated statement? should coal does flow

a it's segment, which a With the work, the combination Well, contracts in of to kind respect receive we our some -- costs to unconsolidated the fees Coal compensation that incur. do Mining we really of we the is of cover majority some is way the X. overhead mines,

the SG&A of are because just directly segment. targeted of split You fee. see that -- fees that But in that really all costs receive can't towards we we a that those out part are some it's the incur

that. so And those covers that is of can't see internally, -- you lot there's externally, But see can that a we expenses. netting there a really

our segment as consolidated of operations at some well. related to the Red Now Hills SG&A Coal is

costs that SG&A of So and think of just it and a are all to I'd it have those unit, a really think the as spread segment. of segment Coal across to say kind attributable business, you as

We're a providing we're backbone, G&A platforms HR that. cover IT we're those by like contract. fee and of work, doing getting some to and are and However, benefits the

Makes just And off-line, like the already is Okay. do those they're about operating while Is you -- it it because volume how boilers of the in sense. looked think in other terms quarters? sub-capacity.

So is already is it or at than it XX% a full capacity? they that were not actually reduction less because

-- mean the -- of a I the Well, same kind units they're and proposition. it's right? similar are It's size, X XX-XX

it it -- if boilers it's Because plant I be be level to if the at dispatched, operating. know, XX% think of the fully. to is probably that not. is going dispatched, going that both if be to probably the operating plant dispatch were And I it's well, operating going not they're would

I it's proposition. the a for it's part I kind -- of think So most think XX-XX

Okay. Got it.

So Is congratulations on some that new large that -- could contract. on phosphate the of give sense possible it to be? how

It is growth our not a a major important think it's of very in but that contract, step business. I

mined underwater, lime years of the underwater that's digging course, using For rock lime we the was draglines rock in Florida surface. above draglines, -- dragline,

expanded So we've lithium. into

phosphate that's and into for our on sights development mining I very outside is Florida. a other and an yet that for we us. another long nice sand minerals. other we us gravel to a really mineral. think in had We're production. trying think time, phosphate exciting expanded years We've doing mining. We're And Florida of things. We, a several the get mining into huge making, opportunity discovered to was gives entry a global that contributor

a exciting I course, dragline a new dry. So get sometime we're contract year. that started this us. start up think but -- one operation, up pretty And to it's this of pleased is very It's for

CapEx that for you've disclosures your this year? of is much the Pass in How Great. given Okay. Thacker

Liz? that. I don't know

the call was out when Pass, did material. not year for last XXXX Thacker specifically we but did We it

amount can a year. that, material you it's this think from I that not So deduce

it for spending. always present out how a our defer but to ways a add XXXX CapEx We're do is from much, part that part less I'm always CapEx. your the that capital later good I'd or not sense. looking CapEx value we you spend there It's either smart to On that spend just Sorry. is standpoint, is of thing CapEx from spent. XXXX question, there a if can wasn't to that makes of figure going how say can a capital

So XXXX. there's that's a XXXX carryover CapEx a piece our of from

for the is that's -- you. planning Thacker kind there Okay. my to you work how you're you're And scope How of work that? you of capabilities operational On doing? doing add do the Got new Pass, of you're operational sort risks is do for? do sense kind need from How of are it. think that the the -- work dragline different there it you

the equipment. very, are that to Thacker a we the the I doing same very to the similar, mean other operating disciplines for to a our of -- structure. Pass work similar us. specialized very, We're we At related operations no where going operating There's very do. of project, all work work run use in Coal types very, risk it's our identical of lime the really operating pieces very, that of as Coal rock thing. business do is it's virtually more we're to We're -- the specific do we a sort contract apply equipment there's equipment. our at is very It's mining. It almost same We kind it of really Mining in that We Mining the similar operations. to we full operations. similar fleet very

really another operation So we this exciting. at which is all, see it's reason why operational don't risk in so any

keep completed? reimbursed I Do that capital equipment you the And project Right. is you're the then equipment. after for know

We do.

-- of $X-plus headline where Then million. break between million you and what is that numbers? follow your just bookkeeping it's I just you you slightly report plug if on EBITDA the Okay. not sub-table sort a $X-plus in The results than really easy one. question. EBITDA of quick too, your different an X say up around out what can those it's Could is

We're looking.

in to is I the you're the think Is million EBITDA. adjusted number that the... referring $X.X segment

Yes.

XX is adjusted that's EBITDA. million release, the on consolidated $X.X of The Page

Page reference different adjusted release. and stops traditional profit, have at One is The adjusted consolidated metrics. adjusted of the operating whereas is of more So is on we XX million EBITDA segment EBITDA. segment X our the for the a $X.X

recovery no related There's the majeure? insurance to any Okay. -- you do force get just last And question.

Mining? Hills the Mississippi Lignite mine? At Red

Yes.

a disclose I we're to on we have of don't mean, think right we're -- not now. that's team that what certainly and very we to tell focused business will want got I recoveries, are people I receive we we we've that that respect interruption be obviously but insurance, have with determined. to people that we -- point a covered going the you So team that. a on are to working at of

All the you right. Great. for talk right. Well, all to soon. All answers, and thank you

appreciate Doug, the and I really for calling. Thanks your the in company. questions interest

Instructions] [Operator

we're think more going don't to questions. have any I

thank just So a you, online later will available on everybody, when a be reminders. A morning. for becomes also our replay dialing in. few this with available. We'll We'll close transcript our call of post it website

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

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

Christy. concludes Thank you, gentlemen, and you Thank conference Ladies call. today's this for participating.

now You may disconnect.