NACCO Industries (NC) 31 Oct 242024 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the NACCO Industries Third Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, October 31, 2024. I would now like to turn the conference over to our Investor Relations, Mrs. Christina Kmetko. Please go ahead.

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

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

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

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

to morning and listening. Christy, those you, good Thank

XXXX much end helped the Lignite that to we the the relation quarter third income power Mining outage us. by another was strong from along customer XXXX boiler demand of in was July. very million for a Company Our Mississippi mid-December reduced interruption plant of until quarter $XX.X at of recorded insurance customers' business It

I'm pleased segments. strong, our the without our Coal were to very say Management Mining even Minerals and However, insurance specifically in results recovery,

my Coal our segment, year-over-year of third will quarter remarks quarter Excluding after about from an the our consolidated income and overview year's which more positive over XXX% provide with operational I'll improvement operations. increased Mining third operating start delivered loss. Christy at last the outlook insurance, the profit quarter. our on for detail the the third our news biggest

might to segment's completed from boiler demand, with quarter. mentioned the both Company's declined resolution to an significantly [ operational area Coal damaged the Red established in XXXX last to earnings new contending In revenues have at mining improved in insurance to during May. previous in Station with was efficiently due plant repairs deliveries place ago. conditions new the move difficult contributed and still were to to mining we XXXX, mine and to this move weather. mine the improved. mining to and conditions the related This a finalizing improved We're our now Rainbow quarter in results coal mine quarter. And Creek I I'd ended this temporary of for acquisition put unconsolidated note operations. facilitate like at concessions Energy's the price also help Red improved Red in Falkirk power area plant That was Mining the Despite Hills factor The when primarily than surmised The of Hills have As entire results. Coal mine power the mining said, only you the my for fewer plant operated issue quarter Hills Mining as recovery Mississippi the the this a Lignite small ] Coal the year lower customer more quarter. at this compared X comment, this

investments that contributed quarter in benefits. in pricing, pleased Minerals of results. At the the reflect new Our mineral we've segment are which Coal report to our the higher Management, to third assets making been a quarter delivering full results I'm increase Mining

acquired from due to over late increased higher production profit quarter the assets operating XXXX last Third for in largely volumes segment XXXX. this year,

our footprint this the of pleased We segment. in of portfolio team, [ oversees oil Mineral mineral diversified Catapult our are and more they've which terms by expanded we the with Partners ], interests ] Catapult done of work very Mining opportunities. Shifting greater [ the a are And review of a operations, continues various segment. and additional undeveloped and stages interest. team mineral American range mineral to gas to producing North development wider investment mix, geographic wells ranging to from

First, effect the of third the year-over-year due Mining's limestone still did let significant customer substantial. as North me to Despite deliveries. say, American hurricanes and are favorable excluding quarter our thankful all affect operations our lower we to quarries. well of pricing in delivery revenue mix our employees from customer was Florida are Florida increased planned reimbursable outages at demand not XX% this costs, safe recent the that and as and The impact the rain

Looking phosphate for results. business mining third in we temporarily Florida. that in American begun as operating ceased quarter, Mining's Last a it mentioned operations had the through customer at North challenges. customer quarter This works new I

progress the Nevada. significant Lithium Thacker the Department from loan in Lithium North loss Earlier resolved. of to American this modest We Pass Energy, of compared closing $XXX,XXX a of Mining operating third established the generated as of like be their Thacker XXXX Pass project. are hopeful project on finance that operating in Primarily prior will We construction a can these result a challenges week, a the make note continues quarter to with the reserve the which Americas receivable. also charge, year this the profit. I'd against Northern help they announced

customer development reached that latest are for this project. has means We important and milestone our this this thrilled what

include by work quarter clay And the fourth construction in the support is production of XXXX. in X commences. and continue to lithium transportation agreed tailings addition, to production Phase with lithium Lithium We the certain estimated of expand XXXX, in services. we begin Americas to once of our assisting to project scope

for to this business mix America. the moving continue of Results outstanding North Mitigation fluctuate on Resources based to Finally, projects. of

timing credit achieving part and established our permit year on a substantial team as the this several has the well of business new projects XXXX. this and it existing for projects profit anticipates to as However, mitigation current full reclamation past in build years. and of continues mitigation foundation execute over approvals on Based expectations releases,

with As be our it including to all continue these very lot of strategies, detail. outlook to our of employed. Overall, I'll rates protect confidence coal I'm we and the call about way I team, business. efforts and to business. With to cover our quarterly can believe a that, pleased mining continue and their results business this Christy? I provide of Christy over advance have optimistic businesses in to trajectory return matures, in more the capital solid back the turn our on

level, some profit and of per results, of the equated results $X.XX of to net J.C. you, $XX.X reported $XX.X with financial high-level Thank million, comments I'll start our we discuss income operating our million then the segments. third At consolidated quarter I'll consolidated share. about which individual

million million of in loss million For last we quarter, to from of or third XXXX. of $X.XX loss increased $X.X and an loss net reported $XXX,XXX EBITDA a year's $XX.X per a operating $X.X share.

include these mentioned, recovery $XX.X J.C. million recorded Mining results financial Coal As insurance of our in results. income segment

Falkirk addition to XX% at the of profit Coal Mining of segment also XXXX Segment that close already of EBITDA Management of generated segment reported million. our the million Coteau, quarter EBITDA note one and operating breakeven of revenues $XXX,XXX at our to Management's Minerals improvement. Since $XXX,XXX higher $X.X last drivers revenues Looking North operating provided up primary in pricing, year. million higher XX% of another just million $X.X Mining -- XXXX. generally segment, XXXX third to the will results. adjusted results profit adjusted million, in to was American discussed segment J.C. segment American loss the North improved in XXXX. and $X.X the for contributed profit an improved of $XX.X the of I ago. Operating to EBITDA increased reported and million reasons the $X.X an approximately Mining that Coal down quarter. J.C. results $X.X from mention $X.X of million year versus would Minerals $X.X This compared and results, unconsolidated favorable financial a and in numbers. adjusted $XX.X operating approximately million third MLMC from the to million profit loss I mines, compares Mining

impairment and Looking taken which or periods. This forward, without Coal with the impairment operating prior in million of periods. These our XXXX expect Higher anticipated are both increases quarter due segment Mining the the ton increase Lignite reduction mining we to for results as management year primarily at increased adjusted Mississippi with fourth segment occurs the improvement expected projected increase year earnings full index-based profit is increase quarter an in fourth that unconsolidated coal Mining $XX.X well both excludes mining EBITDA, XXXX. in the partly primarily for higher demand. both sales the to to charge projected improvement higher was charge, at also by as fourth per an earnings XXXX a operations the by price, Falkirk. Company at at unconsolidated and requirements The customer expectation in quarter due coal operations fee is driven customer in offset an in the compared

North to Mining. Turning American

and and took the past improvements quarter this of effect scope segment We advantageous mainly year. amendments increase improve expansion quarter. another expect the XXXX are both to EBITDA work Fourth quarter full also contract earlier mutually results year are and that due year-over-year. adjusted operating fourth to over profit limestone customer this with anticipated to These

impairment natural well the gain periods, which the EBITDA on year second expectations profit by the in for development are as Finally, excluding decrease year comparison. as affects of primarily full as gas $X.X reserves. charge at current full the XXXX the and recognized year fourth and quarter, expect sale operating XXXX million oil Minerals Management, production owned and and prices driven to million the assumptions on declines currently XXXX adjusted in quarter segment market These well with as quarter we fourth compared prior $X.X

improved this Mining's quarter about the fourth Mining income Also, Coal are expect Company, exclude improved $XX.X year expected adjusted Mississippi to due profit significantly initiatives is anticipated My expected results EBITDA net increases earnings. increase XXXX Lignite Full the pre-tax anticipated year As growth full increase profit we've -- upcoming to American and Coteau. XXXX over quarter mentioned, primarily our consolidated charge from included totaling we contribute million. Falkirk effect results and profitability in XXXX. improvement and charge. Overall, comments at improvements are These our at significantly results to to the Mining of and to operating North a consolidated fourth year-over-year. XXXX impairment results

benefit these at policies Falkirk. the electricity industries. for XXXX, the toward within Federal businesses the will current favorable inputs price electricity, minerals looking and solid trends are and demand customer creating mining and operations and chemicals. at from -- Increasing forward absence onshoring production of for provide We concessions coal construction macroeconomic XXXX industrial company's critical generation, Looking in anticipate and development temporary of our demand

to expansion momentum anticipated is expects XXXX Mining new in Mining diversified affect Mississippi from opportunities deliver results Management's to well-positioned inflation improved to contracts of demand. Mineral year-over-year results. high-quality generate improved American business Lignite deliver strong to a results for cost further build are Benefits amended results. North However, on and to and provides its on portfolio expected XXXX. expectations foundation XXXX new continue XXXX financial Company's that current to assets expected solid are comparable customer current

However, oil decline a and gas natural production given we and trends in prices volumes, anticipate moderate current XXXX. in projected

benefit terminate under to addition, plan changes plan, be Once defined provider. In our insurance a obligations obligation. volatility the we complete, from future will the transferred to which in eliminate are third-party taking pension actions terminated will pension

is anticipating termination. noncash settlement plan currently the Although XXXX upon charge is in a NACCO overfunded,

cash about million over our of questions, close turn with information and We some million. the ended debt of flow. I the approximately cash call Before and $XX let to balance quarter $XX sheet me consolidated with

$XXX quarter, September increase facility repurchase existing XXXX. to credit share and We during under Availability for third to million amended extend program. revolving maturity to also the $XXX at the September was purchased the $X XX, approximately revolver shares XX,XXX the we revolving XXXX. commitments credit During an under QX approximately our million million

We financing flow a XXXX. use of activities year to the before expect cash cash full for be

turn to We you questions will any now may have.

line Our Instructions] of Investment. Weiss first the Doug from DSW from question [Operator comes

what so doing stop with financial and customer, on? what happens the And facing starting then to a guess is the equipment happens difficulties? I Do So when work? you potash customer

if the our to reduce mean, a place the and is handle cost, on about any it's of situations, the where we these it costs, well. pull if Well, pull it's we'll we that as generally, equipment, things might other going I a away, up. completely paying costs, costs, do make situation, can not assessment right? people incurring what button all specifically there situation paying secure employees it's depends away it equipment, need we'll that we'll In do, then an a be to customer We're the the our contract we're actually where to If we're so circumstances.

really it's and contract specific. very, very very, situation-specific -- So it's

how that contract able to many you say is? Are tons

I've No. we anyway a more segment, I diversify you more will of really one been the start within -- thinking about tons that of American into to Mining different that it North also minerals things statistic. tell and useful kinds as is, the is

when it's predominantly While -- limestone -- sense. it's makes

mixing start a and to other we'd in and lithium other that less it like the you like potash becomes meaningful As mine number. in things future, things

Okay. And by misspoke. I way, I think the

I think as right? I it's potash, described but it phosphate,

Yes.

sorry, I'm Sorry, phosphate.

You got too. me doing it,

in that head. I your planted

Okay. the don't this want to customer is where you the is a -- And covering I whether So guess contract characterize cost?

a any take concerns -- charge. know we I all, look, mean, [indiscernible] you right? need got If works, you we mean, that charge to you've at how I took thought a

statement this moving couple and the are going get quarters that guys going I these was that is resolved here to be hopeful of in to our think we're next forward.

here where But our it's as plays close headed. we're it. staying overall we service in So provider, and not we're pretty good They're with transparent to we're have we very now. feel how going situation that's a to very position see obviously and control, out. and this stand We're and us, to the about being right

the then in rain Mining XX-Q tonnage and quarter quarter quarter to the the as the to expect in the for forward? second kind due mentioned that you fourth back maintenance. on levels tonnage Would and Okay. American the North And bounce was in customer going decline of that largely to still

Yes.

just lot and of just there, where So projects cleaned After go Milton, get quarries and a and we've recedes part ]. In piles lot of of of operate happens deliver to and customers it's television, hurricanes side stuff trees a were newspaper and things Florida. substantial in that by to aggregates a Florida are them of and that the we of that operations, the And a in all in addition, to and that really one-two seen videos, these ] would. and are for for aggregates going, work up. slowed not -- hauled impossible slowed in and And the a debris and of a work it's flooded of on is down Helene are X hard down those mattresses to Florida. there of trying think at in wildcard [ normally, sorts where the lot truckers. pictures [ amount the of quarries online until of or In work in And Central all, mine are hurricane, through big instances, although are our is particular, operations instances, sofas well. we've there's have these away I Florida. state all reasons. hurricane truckers The the punch -- a customer our for we The coming FEMA organizations water number in things typically we number other construction the some as everywhere. A then from both the some to after independent other what get out got

bump location And and and is exactly I'm So while, from put to hurricane. happen while of diversion municipalities a and and for up require normal, there -- time But up in they're of of for to activities there then, not aggregates, hurricane underway normal because are all the work an a state on the using of the the a other beaches after additional to or a tends return saying demand and period based projects there's the but that aggregates. are to varies in going little fixing when bridges here. the kind that that typically things that. Typically bit people that be roads to construction picks other aggregates what's that start cleaning things

out to the quarter-to-quarter. that's wanted how hurricanes. Florida flavor to how say give going in I for typically dynamics you work So to it's exactly play a hard But after

on a that capacity? normal the -- are mining to typical which And customers' to you brings another you mining when aggregate Or is period, question, helpful. that's in volume? are a Yes, your to me targeted mine,

I Yes, other some We in is if cases, we're say it's way requirements. customer they as which, it's would goes demand. only there, in But sometimes own. customer with that capacity volume. time the all their describe targeted the that's based it's the and it on we yes, own at cases some equipment --

people I the because -- to got -- right? the And there's and fixed assume a Right. got you I of fair leverage, that have to there a you have there. certain mean, So cost equipment bit

your that's that incremental margin. fixed and then, a relatively I it? about right Is lot the way spikes, are So demand think costs if assume the to more

specific. some owns receive it's a contract where and And capital. at cost a where the and covers There own pays are pay are our and our work Well, dragline, the cost the contracts all our provide customer instances very there that we of dragline all we cost some of service fee fee. the and

we contract monthly and a it We a in that's we the margin. own invested, the us middle structure related incur have the have capital that fixed operates service bit the related get of fixed the to to customer on we of another but where the equipment, the and payment that, fixed payment a gives then costs we that part

-- in this it's of a contract there's exist So that range business. a structures

see. And... I

fixed their who the them, processing really Your in equipment. cost, invested businesses the amount and they of question the mining about owns -- -- have of have pays all uses -- -- plant. the equipment, a of a is this are these fixed or it's We quarry regardless And who leveraging customers they who about with it's minerals --

volume sides, a game. it's for really So both

makes that describing No, is categorize totally what anything And unconsolidated sense. that do a the and in with division? -- that to how as businesses you Right. consolidated Or you're have issue? the does in separate

Liz great That for is Loveman. a question

is entity on the That [ That -- relies -- ] really into accounting variable interest goes it control. --

individually. on And it's we And the based if that so we or each evaluate contract of consolidated unconsolidated. contract, merits determine

I see.

situations to equipment -- more be own a you and right? that likely provider, would don't that less more Is you're the service the so So be unconsolidated. in of where

Correct.

Great. Okay.

do? opportunities the try you your outside are there If would who accelerate expand sort of to ever do people M&A there diversification? you to be business Florida, that curious of thing if same other I'm

So of pretty mean, in Northern are expanding and to and -- we Texas, Nevada. actually got rapidly continue operations I Virginia lithium out up Florida. Nebraska, in we've mine expand Arkansas, the

footprint how we this So They operating customer a -- many, how they're know in And producers know number experts expand aggressively. at And under says, of base a top not is all business their assess that XX model the it significant which with operate aggregates, core and business. have and their sell expertise. I it We we're gosh, mining, relationships to of continue don't the pretty we're the to -- we country. aggregates size experts and things. their in those but

for of we're to we this customers diversification sets us to exposure much as So also other both certainly, just we those hurricanes, out the in skill as the gives expand business. order relationships with the current -- have leveraging it's good but complementary that state. less More can and and

Right.

took -- them with Marietta, of a those could with to have if working I footprint mean, we they states? an kind like where see to like you other where start obviously opportunity just have in Martin you you national relationships So --

Yes, absolutely.

Yes.

number customers, I a done we list -- with so the I'm not to done going mean, customers. have we have of but with that And

the Mineral Okay. guess Management. I Makes sense. to moving

of out, your next think that there's of year. very prices expectation much price-dependent If change item? gas or Is forecast optimism that your around volume? plays amount would in a terms production that a I certain

coal for higher always we're mean we affect I biggest I from It's coal that would be our And business natural actually good given it's prices for I business just the think But generating competitive gas it assets output. -- power always reserves -- gas amount Management generation. us impact than that's sure. the more that's significant it's of mean own. -- aware price effect. But makes Minerals the that, also great because natural for the our will

have have of Right. you there physical Do a as -- gas? or it, you sell hedge? you know the taking thought just -- do ability forward kind ever financial is of possession you're but -- I to not

we'd So meet the have hedging like strategies that hedge we looked at, have. one, that wouldn't accounting to requirements

can funded a operating with benefits own hedging Everybody our that because we'll cost are The buying you've is prices business a We benefit if roll We more other it and don't in avoid got But we like think these cash. pressures not moves. -- out be the And think over think cost. incur but along hedging us timing a YieldCo -- can by we the our the have from don't have equity firm. or don't hedging We cost. we're short-term and We're make the focused of we if to has the on -- is a the sense of profitable. over hedging the just of And long-term, think short-term income the long-term, mineral as really on to that. hedging, of always assured streams. minerals, of we're we debt. We have we those pressures, cost private the companies that's of minerals situation, are some going has can there to hedges with we there. because had not we be

I guess, the right? kind of general would to all Okay. want you are on unconsolidated coal. is put of reserve from life that particularly those And multi-decade, focusing to are the just then is what But a impression My is those the multi-decade And on more that those moving unconsolidated reserves. the that assets, number assets? XX-K on

any I mines. of reserves unconsolidated There's don't lot Liz, our technical lots what's in there. parts coal coal documents, there's of disclosed reserves a the know of of in but the

Yes.

All right... Okay.

we each and... that in year some XX-K, look of update the detail XX-K, have we section the the front we If included in

at Okay. I'll look [indiscernible] it...

the are guess described in probably Yes. Dakota. in tell go in beyond But I area. that's you vast. the Doug, -- mines my that of mean, coal tied North to that what reserves coal the tell I Plenty permit can I would North you our will unconsolidated disclosures that Dakota And are reserves is because

So as there. Doug, expand take somebody the your doing, It's more appreciate you got there's business an happy we're in permit we're area, we see into interest call. digging to to great reserves what and that's the questions. your questions on the

this [Operator Instructions] questions no There are at continue. time. Please

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