NC - Earnings call transcript Q1 2019 | NACCO Industries, Inc.

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Operator

Good morning. My name is Denise. And I'll be your conference operator, today. At this time I would like to welcome everyone to the NACCO Industries Q1 2019 Earnings Conference call [Operator instructions]. I'd like to turn the call over to Christina Kmetko. ahead. go Please

Christina Kmetko

be morning, I quarter Good I'm welcome our for business I to for our questions. overview Thank results your open quarterly call. everyone. up I first and will Industry. NACCO earnings Relations And and a am XXXX brief Investor of then you. outlook. at And providing will Christina responsible call Kmetko, the

and and XXXX Elizabeth our and today NACCO's Chief Butler, Executive and North available our are American Copies both, of first filed XX-Q me and Coal Joining President on release XX-Q. President website. NACCO Loveman, published Vice our Controller. results J. Officer we earnings of are our C. Yesterday, and quarter

call, our version be XX For webcast will later an website months. this anyone available is today's archived able who of for on not afternoon to this and listen approximately entire to

the begin, As in risks actual certain differ following forward-looking may like this disclaim contain until session. all. next here statements participants obligation remind may our from results statements, to we number any call subject These question-and-answer I conference expressed could those cause would forward-looking are materially uncertainties that update a quarterly to statements. these that We call, not forward-looking to or to statements during be in if at prepared which either remarks made updated conference the our and today, of

forth was our in uncertainties Additional release these XX-Q. set in and information risks regarding our earnings and

let reporting. of change segment the about Before overview quarter, in the me give we an you talk our

both we've model coal Mining unconsolidated. other segment reported The American mines Mining, NACCO and Coal minerals, services surface contract consolidated to aggregate contracts. includes North operations, draglines producers Previously, business Mining Mining under segment coal and reporting value-added North Management. equipment. for maintaining a pursuant and other primarily are our three legacy and The now We operating Coal mining Minerals other. provides North long-term American and This of mining segments. segment surface American operates and service-state Coal and

income, North of royalty have promotes never been business discussed parties. There business and but operations. oil, coal that the represents has the reserves, have gas American Mining segment consolidated the its the unconsolidated in previously, Management We American The third income, reported also past. royalty-based from generates North It also Minerals Mining separately. financial have the we lease discussed our that generating primarily from development payments are and results being information under XXXX, include mitigation unallocated and our mitigation directly release. and the these one Delaware the related X costs North We've are year provided to of items company banking business, as our segments. well structure financial quarters America resources the earnings new administrative not for corporation. of segment in to attributable a of items unallocated full three that public primarily certain in the These new results

disclosing below consolidated the is to our only of line. results or sheet flows operating profit are basis. segment We on to relation operating discussion profit balance cash a in and And anything

then and first first year's Now in cover our segment. a basis, our million for On let from quarter. to quarter. million increased consolidated our last first profit results the provide me I'll XXXX $XX.X discuss highlights $X.X consolidated each operating

share $X.XX per net million or for to last consolidated $X.XX quarter, million share $X.X $XX or up Our increased per XXXX income from the first year.

profit primary At to operating million segment The those increase coal offset of increase significant our unconsolidated North which Mining of selling, Management the in development Mining operating wells Ohio was American Those profit In items. asset-retirement North to first rate Coal our increased in favorable results. segment our year last general adjustment gas increase included operated and due by recorded operating because our operations in natural our $X the expenses. the year. obligation, general XX.X% partly The of Minerals was of the number consolidated both with additional in American profit third increase and substantial An with parties in Management tax from driver to and Our compared are affecting Minerals partially administrative profit the offset lower expenses, of which Centennial's the to primarily first administrative segments. the an due decreased operating earnings results reserves. by Mining increase selling, extract a and was at quarter segment, Coal the improvement costs. Mining in the business quarter mineral factors absence effective an in at decreased income the X% prior

and we let a to result mine of favorable me $X.X in the moderately segment, expect Now decrease year reclamation Operating overall XXXX profit full also our decrease prior Mining expected for Coal adjustments At deliveries from in contractual of to as XXXX. million settlement to outlook. the favorable is liabilities million the the $X turn recognized the year. to absence

operations to we new these this with comparable by Excluding in offset compared expect due XXXX Improved expected by from for in to to items, are operating business of higher operating to Mississippi last the are to decrease attributable tons offset expenses quarter's remaining reduced at development to the operations income expected rate. improved results comparable results requirements contracts decrease customer North the run be Company unconsolidated to be part deliveries to coal profit customer be expenses, operating to to Operating Mining is as year quarters increased activity. expected also and XXXX. XXXX fewer year. Lignite to mining XXXX modestly compared unconsolidated be prior at In Mining expect resulting favorable we delivered. Operating profit are American XXXX, expected

I as Finally, the Minerals previously, increased mentioned first profit Management segment's operating during our quarter. significantly

expect a the XXXX royalty comparable we at rate to income but For the remainder first than over realized XXXX, increase of period we lower the in quarter.

income mentioned are as in compared release. an earnings royalty overall In reduced well interest dependent a expectations on control, operating of as a it of and note increase decrease for as important profit investments. the our income that on with summary, significantly from as net to XXXX our interest last borrowings number expense outside anticipated consolidated we higher income factors result However, is to higher in we year expect these cash our of

are an forecasting effective income We XX%. tax the in XX% rate to of range

Lastly, be we full approximately XXXX to expenditures million expect capital for the $XX year.

before cash last even However, our over we increased flow capital significantly with activities increase the to expect expenditure, year. consolidated financing

cash repurchased for million aggregate and $XX approximately approximately a shares Since for have concludes of purchase open provide I of of This million your up of $XX.X repurchase cash $X.X consolidated of few I approximately $XX our let million. at million price the aggregate we an of the in fourth $X.X fourth $XX beginning XX,XXX shares open during questions, the That program. of price to the common A information XX,XXX end under consolidated sheet. questions. for my up ended $XX.X on call debt hand million Also of hand total of pieces We quarter, XXXX, with of compared for million. a Before of remarks. an balance repurchased final will about now purchase stock February our prepared quarter Class stock program XXXX. our call me and we the debt million the on our

Operator

comes Your Mitchell Capital. Lolley with Nixon from first question

Mitchell Lolley

laid is of me the on questions off it disclosure other quarter the your is interesting, the out than fourth extra major first, ask. the meaningful maybe makes the to out call. there you massive several bigger sounds to performing guess year, quite with not coal outlook it income, been that, And that sounds segment and like XXXX picture, with operations the are a like I think earlier So starting the business this it has American fair? is and royalty expectations line a that in but North stand about jumping Mining change

J. C. Butler

That's fair.

Mitchell Lolley

royalty in the royalty I million generated which income historically typical component, the a year. is than profit So more $XX.X operating now what of mean you've quarter, generated you first in actually addressing

questions couple that. a on just So

of this quarter? payments to front that lot was possibly huge royalty in First, up was unusual in the bonus income lease production there anything of royalty like tied or just actually the the activity drove quarter, income receipt increased spike the a

J. C. Butler

activity. This was entirely production

Elizabeth Loveman

I a of payments, we terms, earnings It lease recognized recognized was so add in see five bonus never of you payments. thing? lease that primary over the spike lease you upfront so wouldn't spike years, And over can because would For that. a as one a result see bonus

Mitchell Lolley

to And wrote on based assume that shareholder is your you in growth pursuing are royalty business? accurate opportunities it guys more you actively annual J.C., the letter, in what

J. C. Butler

and mean stream. very companies technological really optimize, developed also Ohio we Southwestern produced And we come that's royalties got engineer ways -- I these reserves a turned very into Ohio, that have are. developments The have because segment reasons development come we time. fracturing is this we of the for Southeastern we've of because a and owned hydraulic that infrastructure with income is really long of We the into to in of help that the that's particular future. the out that. something an us at benefit in reserves, It's it's substantial up that expertise look to experienced directly, comes do recently this those our not area maximize of might We've expand that that but from that strategically these petroleum out in that wells. that from income the we hired stream one

Mitchell Lolley

release earnings remaining you're to increase make that correctly, the for quarters royalty just understanding year-over-year? saying XXXX the three I'm then income of should also And sure

J. C. Butler

that so as what year-over-year. natural in to but we to lots has Every the of increase additional year-over-year. as drop, that. well, they expect increase control the also income not wells off mean I decide unique own They we've can of we're is said prices release shut much can risk decline third-party other that producers any well But how earnings happen. the could wells. much, it of of this curve. things do. develop factors should If really and could there's up Yes, gas the Exactly increased in in do its

Christina Kmetko

we was though, rate it to be at did to the in first it the the don't thing just clarify Mitch, quarter. we expect say, one that

Mitchell Lolley

we for understand limestone I what of development company, pretty maybe North about material you're move can American that could pursuing segment in overall actually to by wondering generates a see some was amount It's disclosure profit If XXXX new if I you for business. and North American business that the start the interesting of Mining. to the that. No, the Mining initiatives talking

J. C. Butler

I any about home best specifics. is North coal. Mining not provide I'm Well, the going coal that that. can the to of would it's not be business Probably in for American describe development that's a segment. I segment. business development Any is course to generally mean speak that way

We coal really producers, for that like into it a as operation or scope added I we or rock coal in of the of producer, beyond picked a we've integrated coal the largely in look North rock do mines, then expanding mine-mouth would mineral instances, a rock. beyond business which relationship, it's do maintaining Florida. We're existing produces will off or a would a at who, so ran lime added equipment sell. activated a perfect Mining, is be to And of course, a they a run model substantially what In beyond small or operating beyond We've we've the we growing couple So really entire that for a solutions for business, for that mining carbon. then American company very entire customer then really hand and off perfect we the in be expand in ways business, mineral quarry business, we'd couple also last operation product Florida. its world, is beyond the the sand, outside able In going at for run to mining to business to transformation them world, years of lime producer, up contract And our where an successful and so Florida. draglines. to operation that to Florida, pretty development been recently operator quarry the lime we hand we where for product operate produces we electricity, the draglines core the continue limestone. say draglines, at expand business whatever

So development. to focused efforts this. we've added got dedicated people lot American North specifically, on We've a Mining, business of to

people into tapping have we parent and from at that. mining with North operations we, Coal on to projects. from NACCO Industries' help come resources also time help We special And borrow to time, our American the are that to

So that's continue hopefully development to, all think have business contributed we success I seen, the we see. that to will and

Mitchell Lolley

North this of mean wondering to all? at development incremental about high you business maybe that really what Mining. how was taking using I you fuel year is are of to this activity I extent And think royalty-income advantage some American at stream, that the it and

J. C. Butler

sheet, on to last the some of It's I years. into mean, the makes has the three over available sure. balance put company for of have conservative using decided doing effort been resources the got growth allows a business for really, a a sure, ours us we including right of American We've term, of lot focus so lot when Mining the when that North to support growth to real sense. it a long this which in the very things really business focus in development. we

Mitchell Lolley

first William King the won it Virginia. this you noticed, also North outside of mining I And you has Mining I that's recently mentioned guess And Florida. that your first sand contract also with last quarter, won American contract in and was

the talk owners? CEMEX hire could why Martin service like services these decide add And quarry to Mining about So NACCO's you American some some big to Marietta value as of mining a partner? North companies of or

J. C. Butler

we or how minerals. other to I at We dynamic This staff understand mining, equipment. mean, do. is sure. experts We optimize to understand or it. whether We're the whole We aggregates mining. understand it's inside the coal how what

mining, North we Our and it, quarry rock operation thing as and and mining. same in coal and and the We on developed think rock really a power mine when it skills for crushing are and was business, we It's marketing all a as letter, businesses. quarry, mine-mouth of single Those out course, does of instance, maybe it. then it's instance but between aren't you that that And mining at the best, we what report the lime about have, a skills lime selling we the of a with their customer the plant. to company successful. we same transfer at act that feel this do -- core quarry expertise has and and operate go Mining be at the their coal customer thing. expertise We a a run experts bring annual product and so can that if the crushing on can allow to grew the the can company, mining thing allow an focus processing the selling coordination single skills, what our which these focus that American really in be sizing to the them really be to experts We a it. perfect to

Mitchell Lolley

does a And players, their later let's quarries or the in some say, for door contract once you with, at up, win Martin Marietta I or… set other you it foot wins that does of mean your larger get

J. C. Butler

is mean tell success I and future I will dependent Well, our upon that you our current success. past

lot our that the quality confidence future. of ourselves open the pretty And discipline about depends we fact bring as to that do to a do the we have We bring we business. a got we view that. mining, work that in on and quality are the we of the service the the ability I've opportunities that work additional to in

these do any So the hopeful sure. lead course, more can We're, work of we customers that opportunities. with that to of

Mitchell Lolley

Now that switching I you quarter in noticed time. just drove more a decision? topics you about back talk in the you little bought quite what Could have first some bit. stock than

J. C. Butler

a long time. for programs place We've had repurchase stock in

a buying stock I that stock if they're makes repurchase stock. there's Street good think some buy constantly strategy company when because that in believe companies Wall We always have a sense it happy they a just stock makes to buying are ROI. it

you sense stock we think broker through with shareholder makes stock. it programs spending buy it will so do XXBX we money, largely I we dealers. we're to buy when and tell So

on So it's of a playing with in and execute. then daily let not We like any place basis, a program we're, this. set it

Mitchell Lolley

lastly. then And

of $XX.X it's of generate you however to of cash million net and expecting expenditures, all before than this be than sheet. capital expenses you're a So more cash or allocate, year, million million so a you financing $XX fit, and lot that, $XX you'll sitting balance have able little more see that's the to significantly that of plus on cash flow

of So the in return current $X year, would million I some under mean something covering dividend? not like the to a like payout circumstances cash issues special that so you it's what that. you have a of shareholders is form

J. C. Butler

If always periodic pretty disciplined you had as look to returning and repurchase at company, program capital our its even and we've the we of history programs. approach when NACCO back had of Industries of reasonable Hyster-Yale many Beach dividend forms, and shareholders share part through a a Hamilton

eye only paying been We We're once I've of have, the I remember that taxable can special paying special here the run years, in shareholders a perspective. once dividend is letter and taxable a pretty our dividend. can with company we necessarily I report towards XX know term with in clear don't long an annual remember only interest a that that shareholders. out I best

Operator

the Instructions] queued [Operator this no up time, at to I'll are call turn over further questions management. back there And

Christina Kmetko

much. Thank you very

have If in feel is a release. any reach and my out, phone you, you day. great Please have to do up then. you Thank the number with follow-up earnings I will free questions, follow

Operator

XXXX Standard concludes the replay Eastern is in number Conference beginning XX This participating for available NACCO for at Time to will This replay replay through for number Earnings for call. you today's Standard conference XXX-XXXX. The a on p.m. Industries today, X, Time, call be Call. May is XX:XX the conference Eastern XXXX. Thank QX XXXX-XXX-XXXX. today's The dial

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NACCO Industries (NC) 4 May 192019 Q1 Earnings call transcript