Second Quarter 2023 NACCO Consolidated
Highlights:
- Consolidated income before taxes of $3.3 million versus $45.1
million in Q2 2022
-
- Q2 2022 operating profit and other income included
$14.0 million and $16.9 million, respectively, of income from
contract termination settlements
- Consolidated net income decreased to $2.5 million, or $0.34/share, from $37.2
million, or $5.07/share, in Q2
2022
- Adjusted EBITDA decreased to $9.2
million from $21.0 million in
Q2 2022
CLEVELAND, Aug. 2, 2023
/PRNewswire/ -- NACCO Industries® (NYSE: NC) today
announced the following consolidated results for the three and six
months ended June 30, 2023.
Comparisons in this news release are to the three months ended
June 30, 2022, unless otherwise
noted.
|
Three Months
Ended
|
Six Months
Ended
|
($ in thousands
except per share amounts)
|
6/30/2023
|
|
6/30/2022
|
|
%
Change
|
|
6/30/2023
|
|
6/30/2022
|
|
%
Change
|
Operating
Profit
|
$1,750
|
|
$29,683
|
|
(94.1) %
|
|
$3,564
|
|
$44,627
|
|
(92.0) %
|
Other (income) expense,
net
|
$(1,507)
|
|
$(15,390)
|
|
(90.2) %
|
|
$(4,061)
|
|
$(15,390)
|
|
(73.6) %
|
Income before
taxes
|
$3,257
|
|
$45,073
|
|
(92.8) %
|
|
$7,625
|
|
$60,017
|
|
(87.3) %
|
Income tax provision
(benefit)
|
$737
|
|
$7,893
|
|
n.m
|
|
$(587)
|
|
$10,255
|
|
n.m
|
Net Income
|
$2,520
|
|
$37,180
|
|
(93.2) %
|
|
$8,212
|
|
$49,762
|
|
(83.5) %
|
Diluted
Earnings/share
|
$0.34
|
|
$5.07
|
|
(93.3) %
|
|
$1.09
|
|
$6.79
|
|
(83.9) %
|
Adjusted
EBITDA*
|
$9,205
|
|
$20,980
|
|
(56.1) %
|
|
$19,982
|
|
$42,419
|
|
(52.9) %
|
|
*Non-GAAP financial
measures are defined and reconciled on pages 9 to 11.
|
In May 2022, Great River Energy
("GRE") terminated its existing agreements with the Company's
subsidiary, Falkirk Mining Company. As a result, GRE paid the
Company $14.0 million, and
transferred other assets totaling $16.9
million to NACCO. The 2022 results include the contract
termination settlement assets received from GRE.
Adjusted EBITDA, which excludes the $30.9
million of contract termination settlements, decreased in
the second quarter of 2023 compared with the prior year second
quarter primarily due to significantly lower results in the Coal
Mining and Minerals Management segments, partly offset by
$2.4 million of improved earnings at
Mitigation Resources, lower unallocated employee-related expenses,
an increase in the North American Mining segment earnings and
higher other investment income.
At June 30, 2023, the Company had consolidated cash of
$117.0 million and debt of
$23.7 million with availability of
$117.2 million under its $150.0 million revolving credit facility. The
Company believes that maintaining a conservative capital structure
and adequate liquidity are important given evolving trends in
energy markets and the Company's strategic initiatives to grow and
diversify, which are discussed further in the Long-Term Growth and
Diversification section of this release.
Detailed Discussion of Results
Coal
Mining Results
Coal deliveries for the
second quarter of 2023 and 2022 were as follows:
|
|
|
2023
|
|
2022
|
Tons of coal
delivered
|
(in
thousands)
|
Unconsolidated operations
|
4,602
|
|
5,534
|
Consolidated operations
|
906
|
|
915
|
Total deliveries
|
5,508
|
|
6,449
|
|
Key financial results
for the second quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Revenues
|
$
26,343
|
|
$
26,602
|
Gross profit
(loss)
|
$
(6,926)
|
|
$
1,964
|
Earnings of
unconsolidated operations
|
$
9,962
|
|
$
13,460
|
Contract termination
settlement
|
$
—
|
|
$
14,000
|
Operating
expenses(1)
|
$
7,711
|
|
$
8,249
|
Operating profit
(loss)
|
$
(4,675)
|
|
$
21,175
|
Segment Adjusted
EBITDA(2)
|
$
(327)
|
|
$
11,563
|
|
|
|
|
(1)
|
Operating expenses
consist of Selling, general and administrative expenses,
Amortization of intangible assets and (Gain) loss on sale of
assets.
|
(2)
|
Segment Adjusted EBITDA
is a non-GAAP measure and should not be considered in isolation or
as a substitute for GAAP. See non-GAAP explanation and the
related
reconciliations to GAAP on page 10.
|
Operating results at the Coal Mining segment decreased
significantly in the second quarter of 2023 compared with 2022.
Prior year results included the $14.0
million termination payment from GRE. Excluding this income,
the decrease was primarily due to a substantial decline in
Mississippi Lignite Mining Company results and significantly lower
earnings at the unconsolidated operations. Lower employee-related
costs partly offset the decline in results at the Coal Mining
operations.
Results decreased at Mississippi Lignite Mining Company due to a
significant increase in the cost per ton delivered attributable to
costs incurred to establish a new mine area, adverse mining
conditions caused by increased rainfall and operational
inefficiencies related to final mining activities at the existing
mine area. A $1.8 million write down
of coal inventory to net realizable value also contributed to the
significant increase in the cost per ton.
The reduction in earnings of unconsolidated operations was the
result of a number of factors:
- a decrease in Coteau earnings due to lower volumes and
pricing,
- a decline in Falkirk earnings due to lower customer
requirements and a decrease in the per ton management fee effective
May 2022 through May 2024 to support the transition of the Coal
Creek Station Power Plant to Rainbow Energy, and
- lower Sabine earnings because coal deliveries ceased on
March 31, 2023 and mine reclamation
activities commenced on April 1,
2023.
These decreases were partly offset by improved results at Coyote
Creek due to increased customer requirements.
Coal Mining Outlook
Coal deliveries for second-half and full-year 2023 are expected
to decrease from 2022 levels. The owner of the power plant served
by the Company's Sabine Mine in Texas retired the Pirkey power plant, and as a
result Sabine ceased deliveries March 31,
2023. This is the primary driver for the year-over-year
declines in coal deliveries.
Coal Mining operating profit and Segment Adjusted EBITDA are
also expected to decrease significantly in both the 2023 second
half and full year compared with the respective 2022 periods,
including and excluding the contract termination payment received
in 2022. The expected reduction in operating profit for the
remainder of 2023 is primarily the result of reduced earnings at
both the consolidated and unconsolidated Coal Mining
operations.
Results at the consolidated mining operations are projected to
decrease significantly in the second half of 2023 from the
comparable 2022 period. This expected decrease is mainly due to an
expected substantial decline in earnings at Mississippi Lignite
Mining Company from decreased customer demand and increased costs
associated with establishing operations in a new mine area. The
year-over-year decrease in second-half 2023 results is expected to
be lower than the decrease experienced in the first half of 2023
because the anticipated inefficiencies of this project are expected
to continue through the third quarter and then moderate beginning
in the fourth quarter of 2023 and into 2024. Mississippi Lignite
Mining Company does not anticipate opening additional mine areas
through the remaining contract term. As a result, mine development
capital expenditures are expected to moderate from 2024 through
2032. While increased depreciation from capital expenditures
related to the new mine area will affect future results, the
Company anticipates Mississippi Lignite Mining Company should
contribute favorably to Segment Adjusted EBITDA in future years. In
2023, capital expenditures are expected to be $11 million, with $7
million expended in the second half of 2023, primarily for
mine development and equipment replacement.
The anticipated reduction in earnings at the unconsolidated Coal
Mining operations for the second half of 2023 from second half of
2022 is primarily due to the early retirement of the Pirkey power
plant and commencement of final reclamation at the Sabine Mine,
which began April 1, 2023. Sabine is
receiving compensation for providing final mine reclamation
services, but at a lower rate than during active mining. Funding
for Sabine's mine reclamation is the responsibility of the
customer. A decrease in earnings at Falkirk and Coteau is also
expected to contribute to the lower earnings of unconsolidated
operations.
The Company's contract structure at each of its coal mining
operations eliminates exposure to spot coal market price
fluctuations. However, fluctuations in natural gas prices, weather
and the availability of renewable power generation, particularly
wind, can contribute to changes in power plant dispatch and
customer demand for coal. Changes to customer power plant dispatch
would affect the Company's outlook for the remainder of 2023, as
well as over the longer term.
North American Mining Results
Deliveries for the
second quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Tons
delivered
|
13,939
|
|
13,373
|
|
|
|
|
Key financial results
for the second quarter of 2023 and 2022 were as
follows:
|
|
|
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Revenues
|
$
21,716
|
|
$
22,814
|
Operating
profit
|
$
2,214
|
|
$
1,257
|
Segment Adjusted
EBITDA(1)
|
$
4,069
|
|
$
2,750
|
|
|
|
|
(1)
|
Segment Adjusted EBITDA
is a non-GAAP measure and should not be considered in isolation or
as a substitute for GAAP. See non-GAAP explanation and the
related
reconciliations to GAAP on page 10.
|
Second-quarter 2023 revenues decreased from 2022 mainly due to a
decline in mine reclamation revenue at Caddo Creek.
Second-quarter 2023 operating profit and Segment Adjusted EBITDA
at North American Mining increased over 76% and 48%, respectively,
primarily due to an increase in parts sales and lower
employee-related expenses.
North American Mining Outlook
North American Mining expects operating profit and Segment
Adjusted EBITDA to increase in both the 2023 second half and full
year over the respective 2022 periods but decrease from the 2023
first half. The second-half increase over 2022 is primarily because
the second half of 2022 included a $0.8
million charge related to a voluntary retirement program. A
reduction in Caddo Creek earnings is expected to be offset by
improvements at other North American Mining operations. This
anticipated improvement is due in part to profit improvement
initiatives underway, as well as contributions from mining
operations commencing at an additional quarry during the fourth
quarter of 2022.
In 2023, North American Mining capital expenditures are expected
to be $35 million, with $26 million expended in the second half of 2023,
primarily for the acquisition of equipment to support the Thacker
Pass lithium project.
Minerals Management Results
Key financial results
for the second quarter of 2023 and 2022 were as follows:
|
|
|
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Revenues
|
$
9,171
|
|
$
11,962
|
Operating
profit
|
$
7,289
|
|
$
13,073
|
Segment Adjusted
EBITDA(1)
|
$
8,038
|
|
$
13,616
|
|
|
|
|
(1)
|
Segment Adjusted EBITDA
is a non-GAAP measure and should not be considered in isolation or
as a substitute for GAAP. See non-GAAP explanation and the
related
reconciliations to GAAP on page 10.
|
Minerals Management revenue, operating profit and Segment
Adjusted EBITDA decreased significantly from the 2022 second
quarter due to a 71% decline in natural gas prices from 2022 as
measured by the Henry Hub Natural Gas Spot Price and a 32% decrease
in oil prices, as measured by the West Texas Intermediate Average
Crude Oil Spot Price.
Minerals Management Outlook
The Minerals Management segment derives income from
royalty-based leases under which lessees make payments to the
Company based on their sale of natural gas, oil, natural gas
liquids and coal, extracted primarily by third parties. Changing
prices of natural gas and oil could have a significant impact on
Minerals Management's operating profit.
Operating profit and Segment Adjusted EBITDA for the 2023 second
half and full year are expected to decrease significantly compared
with the respective 2022 periods. These decreases are primarily
driven by current market expectations for natural gas and oil
prices. Based on current market expectations, operating profit in
the second half is expected to decline moderately from the first
half of 2023.
The Company's forecast is based on current market assumptions
for natural gas and oil market prices; however, commodity prices
are inherently volatile. Growing economic uncertainty continues to
drive commodity price volatility and any change in natural gas and
oil prices from current expectations will result in adjustments to
the Company's outlook.
As an owner of royalty and mineral interests, the Company's
access to information concerning activity and operations with
respect to its interests is limited. The Company's expectations are
based on the best information currently available and could vary
positively or negatively as a result of adjustments made by
operators, additional leasing and development and/or changes to
commodity prices. Development of additional wells on existing
interests in excess of current expectations could be accretive to
future results.
In 2023, Minerals Management expects capital expenditures of
approximately $21 million, which
includes up to $20 million of
additional investments during the second half of 2023 that align
with the Company's strategy and objectives to establish a
diversified portfolio of mineral and royalty interests. Future
investments are expected to be accretive, but each investment's
contribution to near-term earnings is dependent on the details of
that investment, including the size and type of interests acquired
and the stage and timing of mineral development.
Consolidated Outlook
Overall, the Company expects consolidated results to continue to
decrease in the third quarter before improving in the fourth
quarter. The improvement in fourth quarter 2023 results will not
offset the anticipated third quarter decline. Therefore, earnings
in the second half of 2023 are expected to be lower than both the
first half of 2023 and the second half of 2022, primarily driven by
activity at the Minerals Management and Coal Mining segments. At
Minerals Management, the decrease in the second half of 2023 is
primarily driven by the expected continued reduction in commodity
prices from 2022 price levels. At the Coal Mining segment, a higher
cost per ton at Mississippi Lignite Mining Company is expected to
reduce earnings in the second half of 2023, particularly the third
quarter. In addition, a reduction in earnings from the
unconsolidated mines is expected to contribute to the decrease.
These reductions are expected to be partially offset by lower
income tax expense. The Company expects a negative effective income
tax rate between 5% and 10% for the 2023 full year.
Management continues to view the long-term business outlook for
NACCO positively, despite an expected significant decrease in
full-year 2023 consolidated net income compared with 2022. In 2024
and beyond, the Coal Mining segment expects increased profitability
compared with anticipated full-year 2023 results due in part to
improvements at Falkirk and Mississippi Lignite Mining Company. At
Falkirk, the temporary price concessions end in June 2024. At Mississippi Lignite Mining Company,
the cost per ton delivered is expected to moderate once the move to
the new mine area is complete in the second half of 2023. In
addition, certain costs incurred at Mississippi Lignite Mining
Company in 2023 will be passed through to the customer and included
in revenues in 2024. Earnings from the Sawtooth Mining lithium
project are also expected to contribute to improved results in 2024
and 2025 and more significantly when production commences at
Thacker Pass in 2026.
Mitigation Resources of North
America® continues to build on the substantial
foundation established over the past several years and currently
has eight mitigation banks and four permittee-responsible
mitigation projects located in Tennessee, Mississippi, Alabama and Texas. Mitigation Resources was named a
designated provider of abandoned mine land restoration by the
State of Texas. It plans to
provide ecological restoration services for abandoned surface mines
as well as pursue additional environmental restoration projects
during the remainder of 2023.
In 2023, the Company expects capital expenditures of
approximately $68 million, which
includes up to $20 million of
investments at Minerals Management. As a result of the forecasted
capital expenditures and anticipated substantial decrease in net
income, cash flow before financing activities in 2023 is expected
to be positive but decline significantly from 2022.
Long-term Growth and Diversification
The Company is pursuing growth and diversification by
strategically leveraging its core mining and natural resources
management skills to build a strong portfolio of affiliated
businesses. Management continues to be optimistic about the
long-term outlook. In the Minerals Management segment, as well as
in the Company's Mitigation Resources of North America® business,
opportunities for growth remain strong. Acquisitions of additional
mineral interests, an improvement in the outlook for the Company's
largest Coal Mining segment customers and securing contracts for
Mitigation Resources and new North American Mining projects could
be accretive to the Company's outlook.
The Minerals Management segment continues to pursue acquisitions
of mineral and royalty interests in the
United States. The Minerals Management segment expects to
benefit from the continued development of its mineral properties
without additional capital investment, as development costs are
borne entirely by third-party exploration and development companies
that lease the minerals. This business model can deliver higher
average operating margins over the life of a reserve than
traditional oil and gas companies that bear the cost of
exploration, production and/or development. Catapult Mineral
Partners, the Company's business unit focused on managing and
expanding the Company's portfolio of oil and gas mineral and
royalty interests, has developed a strong network to source and
secure new acquisitions. The goal is to construct a high-quality
diversified portfolio of oil and gas mineral and royalty interests
in the United States that delivers
near-term cash flow yields and long-term projected growth. The
Company believes this business will provide unlevered after-tax
returns on invested capital in the mid-teens as this business model
matures.
The Company remains committed to expanding the North American
Mining business while improving profitability. North American
Mining intends to be a substantial contributor to operating profit
over time. The pace of achieving that objective will depend on the
execution and successful implementation of profit improvement
initiatives in the aggregates operations, and the mix and scale of
new projects. A number of initiatives are underway or in the
planning stages that are expected to support the continuing
improvement of financial results at these mining operations over
time. Until profit improves at existing operations, North American
Mining has narrowed its business development efforts.
Sawtooth Mining has a mining services agreement to provide
comprehensive mining services as the exclusive contract miner for
the Thacker Pass lithium project in northern Nevada, owned by Lithium Nevada Corp., a
subsidiary of Lithium Americas Corp. (TSX: LAC) (NYSE: LAC).
Lithium Americas controls the lithium reserves at Thacker
Pass. On March 2, 2023, Lithium
Americas announced that construction had commenced. Phase 1
production of lithium is projected to begin in the second half of
2026. Sawtooth Mining began acquiring mining equipment for this
project in the second quarter of 2023. Under the terms of the
contract mining agreement, Lithium Americas will reimburse Sawtooth
for these capital expenditures over a five-year period from the
equipment acquisition date. Sawtooth will be reimbursed for all
costs of mine construction plus a construction fee. The Company
expects to continue to recognize moderate income prior to
commencement of production in 2026. Once production commences,
Sawtooth will receive a management fee per metric ton of lithium
delivered. At maturity, this contract is expected to deliver fee
income similar to a mid-sized management fee coal mine.
Mitigation Resources continues to expand its business, which
creates and sells stream and wetland mitigation credits and
provides services to those engaged in permittee-responsible
mitigation as well as provides other environmental restoration
services. This business offers an opportunity for growth and
diversification in an industry where the Company has substantial
knowledge and expertise and a strong reputation. Mitigation
Resources is making strong progress toward its goal of becoming a
top ten provider of stream and wetland mitigation services in the
southeastern United States. The
Company believes that Mitigation Resources can provide solid rates
of return on capital employed as this business matures.
The Company also continues to pursue activities which can
strengthen the resiliency of its existing coal mining operations.
The Company remains focused on managing coal production costs and
maximizing efficiencies and operating capacity at mine locations to
help customers with management fee contracts be more competitive.
These activities benefit both customers and the Company's Coal
Mining segment, as fuel cost is a significant driver for power
plant dispatch. Increased power plant dispatch results in increased
demand for coal by the Coal Mining segment's customers. Fluctuating
natural gas prices, weather and availability of renewable energy
sources, such as wind and solar, could affect the amount of
electricity dispatched from coal-fired power plants. While the
Company realizes the coal mining industry faces political and
regulatory challenges and demand for coal is projected to decline
over the longer-term, the Company believes coal should be an
essential part of the energy mix in the
United States for the foreseeable future.
The Company continues to look for ways to create additional
value by utilizing its core mining competencies which include
reclamation and permitting. One such way the Company may be able to
utilize these skills is through development of utility-scale solar
projects on reclaimed mining properties. Reclaimed mining
properties offer large tracts of land that could be well-suited for
solar and other energy-related projects. These projects could be
developed by the Company itself or through joint ventures that
include partners with expertise in energy development projects. In
March 2023, the Company acquired 100%
of the membership interests in the Marshall Mine, where Caddo Creek
had been performing mine reclamation work. The Company is
considering development of a utility-scale solar project at this
location.
The Company is committed to maintaining a conservative capital
structure as it continues to grow and diversify, while avoiding
unnecessary risk. Strategic diversification will generate cash that
can be re-invested to strengthen and expand the businesses. The
Company also continues to maintain the highest levels of customer
service and operational excellence with an unwavering focus on
safety and environmental stewardship.
****
Conference Call
In conjunction with this news release, the management of NACCO
Industries will host a conference call on Thursday, August 3, 2023 at 8:30 a.m. Eastern Time. To participate in the
live call, please register more than 15 minutes in advance at
https://conferencingportals.com/event/BzfGzlJS to obtain the
dial-in information and conference call access codes. For those not
planning to ask a question of management, the Company recommends
listening to the call via the online webcast, which can be accessed
through the NACCO Industries' website at ir.nacco.com/home. Please
allow 15 minutes to register, download and install any necessary
audio software required to listen to the webcast. A replay of the
call will be available shortly after the call ends through
August 10, 2023. An archive of the
webcast will also be available on the Company's website two hours
after the live call ends.
Non-GAAP and Other Measures
This release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and
Exchange Commission. Included in this release are reconciliations
of these non-GAAP financial measures to the most directly
comparable financial measures calculated in accordance with U.S.
generally accepted accounting principles ("GAAP"). Adjusted EBITDA
and Segment Adjusted EBITDA are provided solely as supplemental
non-GAAP disclosures of operating results. Management believes that
Adjusted EBITDA and Segment Adjusted EBITDA assist investors in
understanding the results of operations of NACCO Industries. In
addition, management evaluates results using these non-GAAP
measures.
Forward-looking Statements Disclaimer
The statements contained in this news release that are not
historical facts are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking
statements are made subject to certain risks and uncertainties,
which could cause actual results to differ materially from those
presented. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date hereof. Among the factors that could
cause plans, actions and results to differ materially from current
expectations are, without limitation: (1) changes to or termination
of customer or other third-party contracts, or a customer or other
third party default under a contract, (2) any customer's premature
facility closure, (3) regulatory actions, including the United
States Environmental Protection Agency's 2023 proposed rules
relating to mercury and greenhouse gas emissions for coal-fired
power plants, changes in mining permit requirements or delays in
obtaining mining permits that could affect deliveries to customers,
(4) a significant reduction in purchases by the Company's
customers, including as a result of changes in coal consumption
patterns of U.S. electric power generators, or changes in the power
industry that would affect demand for the Company's coal and other
mineral reserves, (5) changes in the prices of hydrocarbons,
particularly diesel fuel, natural gas, natural gas liquids and oil,
(6) failure or delays by the Company's lessees in achieving
expected production of natural gas and other hydrocarbons; the
availability and cost of transportation and processing services in
the areas where the Company's oil and gas reserves are located;
federal and state legislative and regulatory initiatives relating
to hydraulic fracturing; and the ability of lessees to obtain
capital or financing needed for well-development operations and
leasing and development of oil and gas reserves on federal lands,
(7) failure to obtain adequate insurance coverages at reasonable
rates, (8) supply chain disruptions, including price increases and
shortages of parts and materials, (9) changes in tax laws or
regulatory requirements, including the elimination of, or reduction
in, the percentage depletion tax deduction, changes in mining or
power plant emission regulations and health, safety or
environmental legislation, (10) the ability of the Company to
access credit in the current economic environment, or obtain
financing at reasonable rates, or at all, and to maintain surety
bonds for mine reclamation as a result of current market sentiment
for fossil fuels, (11) impairment charges, (12) the effects of
investors' and other stakeholders' increasing attention to
environmental, social and governance matters, (13) changes in costs
related to geological and geotechnical conditions, repairs and
maintenance, new equipment and replacement parts, fuel or other
similar items, (14) weather conditions, extended power plant
outages, liquidity events or other events that would change the
level of customers' coal or aggregates requirements, (15) weather
or equipment problems that could affect deliveries to customers,
(16) changes in the costs to reclaim mining areas, (17) costs to
pursue and develop new mining, mitigation, oil and gas and solar
development opportunities and other value-added service
opportunities, (18) delays or reductions in coal or aggregates
deliveries, (19) the ability to successfully evaluate investments
and achieve intended financial results in new business and growth
initiatives, (20) disruptions from natural or human causes,
including severe weather, accidents, fires, earthquakes and
terrorist acts, any of which could result in suspension of
operations or harm to people or the environment, and (21) the
ability to attract, retain, and replace workforce and
administrative employees.
About NACCO Industries
NACCO Industries® brings natural resources to life by
delivering aggregates, minerals, reliable fuels and environmental
solutions through its robust portfolio of NACCO Natural Resources
businesses. Learn more about our companies at nacco.com, or get
investor information at ir.nacco.com.
*****
NACCO INDUSTRIES,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
SIX MONTHS
ENDED
|
|
JUNE 30
|
|
JUNE 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(In thousands, except
per share data)
|
Revenues
|
$
61,350
|
|
$
61,369
|
|
$
111,491
|
|
$
116,392
|
Cost of
sales
|
54,943
|
|
45,726
|
|
101,727
|
|
84,902
|
Gross
profit
|
6,407
|
|
15,643
|
|
9,764
|
|
31,490
|
Earnings of
unconsolidated operations
|
11,084
|
|
14,622
|
|
24,908
|
|
29,214
|
Contract termination
settlement
|
—
|
|
14,000
|
|
—
|
|
14,000
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
14,746
|
|
15,841
|
|
29,622
|
|
30,625
|
Amortization of
intangible assets
|
927
|
|
1,058
|
|
1,654
|
|
1,905
|
Loss (gain) on sale of
assets
|
68
|
|
(2,317)
|
|
(168)
|
|
(2,453)
|
|
15,741
|
|
14,582
|
|
31,108
|
|
30,077
|
Operating
profit
|
1,750
|
|
29,683
|
|
3,564
|
|
44,627
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest
expense
|
572
|
|
496
|
|
1,117
|
|
1,009
|
Interest
income
|
(1,714)
|
|
(195)
|
|
(2,869)
|
|
(340)
|
Closed mine
obligations
|
433
|
|
377
|
|
842
|
|
757
|
(Gain) loss on equity
securities
|
(421)
|
|
1,878
|
|
(1,049)
|
|
1,360
|
Other contract
termination settlements
|
—
|
|
(16,882)
|
|
—
|
|
(16,882)
|
Other, net
|
(377)
|
|
(1,064)
|
|
(2,102)
|
|
(1,294)
|
|
(1,507)
|
|
(15,390)
|
|
(4,061)
|
|
(15,390)
|
Income before income
tax provision (benefit)
|
3,257
|
|
45,073
|
|
7,625
|
|
60,017
|
Income tax provision
(benefit)
|
737
|
|
7,893
|
|
(587)
|
|
10,255
|
Net
income
|
$
2,520
|
|
$
37,180
|
|
$
8,212
|
|
$
49,762
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.34
|
|
$
5.07
|
|
$
1.10
|
|
$
6.83
|
Diluted earnings per
share
|
$
0.34
|
|
$
5.07
|
|
$
1.09
|
|
$
6.79
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
7,513
|
|
7,330
|
|
7,465
|
|
7,286
|
Diluted weighted
average shares outstanding
|
7,513
|
|
7,330
|
|
7,515
|
|
7,325
|
ADJUSTED EBITDA
RECONCILIATION (UNAUDITED)
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
SIX MONTHS
ENDED
|
|
JUNE 30
|
|
JUNE 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Net income
|
$
2,520
|
|
$
37,180
|
|
$
8,212
|
|
$
49,762
|
Contract termination
settlements
|
—
|
|
(30,882)
|
|
—
|
|
(30,882)
|
Income tax provision
(benefit)
|
737
|
|
7,893
|
|
(587)
|
|
10,255
|
Interest
expense
|
572
|
|
496
|
|
1,117
|
|
1,009
|
Interest
income
|
(1,714)
|
|
(195)
|
|
(2,869)
|
|
(340)
|
Depreciation, depletion
and amortization expense
|
7,090
|
|
6,488
|
|
14,109
|
|
12,615
|
Adjusted
EBITDA*
|
$
9,205
|
|
$
20,980
|
|
$
19,982
|
|
$
42,419
|
|
*Adjusted EBITDA is a
non-GAAP measure and should not be considered in isolation or as a
substitute for GAAP measures. NACCO defines
Adjusted EBITDA as net income before contract termination
settlements and income taxes, net interest expense and
depreciation, depletion
and amortization expense. Adjusted EBITDA is not a measure under
U.S. GAAP and is not necessarily comparable to similarly titled
measures
of other companies.
|
NACCO INDUSTRIES,
INC. AND SUBSIDIARIES FINANCIAL SEGMENT HIGHLIGHTS AND
SEGMENT ADJUSTED EBITDA RECONCILIATIONS (UNAUDITED)
|
|
|
|
Three Months Ended
June 30, 2023
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
26,343
|
|
$
21,716
|
|
$
9,171
|
|
$
4,628
|
|
$
(508)
|
|
$
61,350
|
Cost of
sales
|
33,269
|
|
18,884
|
|
910
|
|
2,375
|
|
(495)
|
|
54,943
|
Gross profit
(loss)
|
(6,926)
|
|
2,832
|
|
8,261
|
|
2,253
|
|
(13)
|
|
6,407
|
Earnings of
unconsolidated operations
|
9,962
|
|
1,122
|
|
—
|
|
—
|
|
—
|
|
11,084
|
Operating
expenses*
|
7,711
|
|
1,740
|
|
972
|
|
5,318
|
|
—
|
|
15,741
|
Operating profit
(loss)
|
$
(4,675)
|
|
$
2,214
|
|
$
7,289
|
|
$
(3,065)
|
|
$
(13)
|
|
$
1,750
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
(4,675)
|
|
$
2,214
|
|
$
7,289
|
|
$
(3,065)
|
|
$
(13)
|
|
$
1,750
|
Depreciation, depletion
and amortization
|
4,348
|
|
1,855
|
|
749
|
|
138
|
|
—
|
|
7,090
|
Segment Adjusted
EBITDA**
|
$
(327)
|
|
$
4,069
|
|
$
8,038
|
|
$
(2,927)
|
|
$
(13)
|
|
$
8,840
|
|
|
Three Months Ended
June 30, 2022
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
26,602
|
|
$
22,814
|
|
$
11,962
|
|
$
617
|
|
$
(626)
|
|
$
61,369
|
Cost of
sales
|
24,638
|
|
20,583
|
|
733
|
|
528
|
|
(756)
|
|
45,726
|
Gross profit
|
1,964
|
|
2,231
|
|
11,229
|
|
89
|
|
130
|
|
15,643
|
Earnings of
unconsolidated operations
|
13,460
|
|
1,162
|
|
—
|
|
—
|
|
—
|
|
14,622
|
Contract termination
settlement
|
14,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14,000
|
Operating
expenses*
|
8,249
|
|
2,136
|
|
(1,844)
|
|
6,041
|
|
—
|
|
14,582
|
Operating profit
(loss)
|
$
21,175
|
|
$
1,257
|
|
$
13,073
|
|
$
(5,952)
|
|
$
130
|
|
$
29,683
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
21,175
|
|
$
1,257
|
|
$
13,073
|
|
$
(5,952)
|
|
$
130
|
|
$
29,683
|
Contract termination
settlement
|
(14,000)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14,000)
|
Depreciation, depletion
and amortization
|
4,388
|
|
1,493
|
|
543
|
|
64
|
|
—
|
|
6,488
|
Segment Adjusted
EBITDA**
|
$
11,563
|
|
$
2,750
|
|
$
13,616
|
|
$
(5,888)
|
|
$
130
|
|
$
22,171
|
|
*Operating expenses
consist of Selling, general and administrative expenses,
Amortization of intangible assets and (Gain) loss on sale of
assets.
|
**Segment Adjusted
EBITDA is a non-GAAP measure and should not be considered in
isolation or as a substitute for GAAP measures.
NACCO defines Segment Adjusted EBITDA as operating profit (loss)
before contract termination settlements and depreciation,
depletion
and amortization expense. Segment Adjusted EBITDA is not a measure
under U.S. GAAP and is not necessarily comparable with
similarly
titled measures of other companies.
|
NACCO INDUSTRIES,
INC. AND SUBSIDIARIES FINANCIAL SEGMENT HIGHLIGHTS AND
SEGMENT ADJUSTED EBITDA RECONCILIATIONS (UNAUDITED)
|
|
|
|
Six Months Ended
June 30, 2023
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
46,996
|
|
$
42,349
|
|
$
17,456
|
|
$
5,819
|
|
$
(1,129)
|
|
$
111,491
|
Cost of
sales
|
59,147
|
|
38,125
|
|
1,962
|
|
3,589
|
|
(1,096)
|
|
101,727
|
Gross profit
(loss)
|
(12,151)
|
|
4,224
|
|
15,494
|
|
2,230
|
|
(33)
|
|
9,764
|
Earnings of
unconsolidated operations
|
22,428
|
|
2,480
|
|
—
|
|
—
|
|
—
|
|
24,908
|
Operating
expenses*
|
14,639
|
|
3,660
|
|
2,161
|
|
10,648
|
|
—
|
|
31,108
|
Operating profit
(loss)
|
$
(4,362)
|
|
$
3,044
|
|
$
13,333
|
|
$
(8,418)
|
|
$
(33)
|
|
$
3,564
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
(4,362)
|
|
$
3,044
|
|
$
13,333
|
|
$
(8,418)
|
|
$
(33)
|
|
$
3,564
|
Depreciation, depletion
and amortization
|
8,588
|
|
3,741
|
|
1,560
|
|
220
|
|
—
|
|
14,109
|
Segment Adjusted
EBITDA**
|
$
4,226
|
|
$
6,785
|
|
$
14,893
|
|
$
(8,198)
|
|
$
(33)
|
|
$
17,673
|
|
|
Six Months Ended June 30, 2022
|
|
Coal
Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
47,564
|
|
$
44,218
|
|
$
24,716
|
|
$
809
|
|
$
(915)
|
|
$ 116,392
|
Cost of
sales
|
43,488
|
|
40,233
|
|
1,481
|
|
877
|
|
(1,177)
|
|
84,902
|
Gross profit
(loss)
|
4,076
|
|
3,985
|
|
23,235
|
|
(68)
|
|
262
|
|
31,490
|
Earnings of
unconsolidated operations
|
26,786
|
|
2,428
|
|
—
|
|
—
|
|
—
|
|
29,214
|
Contract termination
settlement
|
14,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14,000
|
Operating
expenses*
|
16,335
|
|
3,885
|
|
(1,466)
|
|
11,323
|
|
—
|
|
30,077
|
Operating profit
(loss)
|
$
28,527
|
|
$
2,528
|
|
$
24,701
|
|
$ (11,391)
|
|
$
262
|
|
$
44,627
|
Segment Adjusted EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
28,527
|
|
$
2,528
|
|
$
24,701
|
|
$ (11,391)
|
|
$
262
|
|
$
44,627
|
Contract termination
settlement
|
(14,000)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14,000)
|
Depreciation, depletion
and amortization
|
8,426
|
|
2,960
|
|
1,121
|
|
108
|
|
—
|
|
12,615
|
Segment Adjusted
EBITDA**
|
$
22,953
|
|
$
5,488
|
|
$
25,822
|
|
$ (11,283)
|
|
$
262
|
|
$
43,242
|
|
*Operating expenses
consist of Selling, general and administrative expenses,
Amortization of intangible assets and (Gain) loss on sale of
assets.
|
**Segment Adjusted
EBITDA is a non-GAAP measure and should not be considered in
isolation or as a substitute for GAAP measures.
NACCO defines Segment Adjusted EBITDA as operating profit (loss)
before contract termination settlements and depreciation,
depletion
and amortization expense. Segment Adjusted EBITDA is not a measure
under U.S. GAAP and is not necessarily comparable with
similarly
titled measures of other companies.
|
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SOURCE NACCO Industries