NC - Earnings call transcript Q2 2024 | NACCO Industries, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the NACCO Industries Second Quarter 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 1, 2024. I would now like to turn the conference over to Christina Kmetko. Please go ahead.

Christina Kmetko

Thank you. Good morning, everyone, and welcome to our Second Quarter 2024 Earnings Call. us joining for you this morning. Thank Kmetko, NACCO. Christina and I'm at relations investor for responsible I'm

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

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

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

John Butler

and Thank morning, you, good Christie, everyone.

I'm be about talking quarter. to year, pleased are halfway through and the We another strong

year from Our XXXX second a ago. quarter substantially increased profit operating

a out of million sale the within at gain Looking numbers, is asset. XXX%. legacy to it's reported $X.X land a that need up those results I point on

significant minute, in saw which Mining year's Mining should second at Red and earnings improvement. a and increased and pleased first, start the still the driven resolved results profit in me quarter operations. quarter. repairs overview American our by XX% fully the detail an to second with Hills quarter. by segments. Christie but and fourth I'm our operating our go operational customer Mining North last are of an was Coal our will into about issue the from gain, the report boiler segment, provide Excluding in our you This I'll outlook increase improvement more plant let update a on damaged our boiler that be progressing, biggest the power give Coal year-over-year the plant believe we over to

financials, As normal the the with customer forward to of seeing fewer X look revenues more our Coal primarily segment's Hills deliveries to operations XXXX. only during Mining We returns on lower demand, you X plant Mississippi decreased see can quarter boilers. Despite Company's due increase Red efficiently Lignite deliveries Mining as from boiler. as plant the a running coal to operated result this than mine

results. and related us mine you weather new adverse -- to area established are conditions more year-over-year were midst to new which year, If in moving area mine we of have with to year the mining conditions into a weather. and and in move both difficult recall, the last operate the we mining improved, contending efficiently, allowing to helped new This

deliveries production earnings our remain improvement normal still our high costs stay to this coal and later levels, expected historical unconsolidated also the in to until return Our mining above note like they're operations. and year. I'd to

of facilitate the provided ended, to contributed concessions the Rainbow power when we that segment recall concessions results. end XXXX, may price in At the in May, our temporary the You Energy Coal price transaction. these Station Creek help acquired plant Mining Coal increase to which

the new made Management, Florida. pleased segment second that strategic with a quarter for earnings mentioned platform. At phosphate the building Minerals team Overall, the American This are year-over-year XXXX. I improvement. strong to projects mining business a on delivered and meaningful American also North believe the on into and with XXXX XX% operating Mining as compared we I improved segment Mining profit this the North of improved Mining's gain adjusted has EBITDA year successful American such XX%, minerals, contributed I customer progress segment previously. North Our quarter increased operational second sale making towards results. very additional profit in operating into diversification because progress prior over includes increased am

has Excluding great the are Minerals team mineral our largely portfolio natural in portfolio of earnings is gain, Mineral of development, we undeveloped due growing prices. The job and XXXX. Catapult and this substantially million and were interests over more the investments Management producing of ranging down targeting diversified our up XX% Partners last expanded lower of have primarily which year-over-year, a oversees Minerals gas interests, revenues, terms by oil Management's decline mineral geographic done segment, a mineral wells to mineral diversifying Catapult team, interest $XX from mineral interests. in to years. in of and footprint operators, of few driven They stages to

business, the to were in year-over-year results change Finally, due of Resources Mitigation America North projects. mix moving down a to our of

past However, execute this existing established on reclamation it and the and over team projects years. has build several the foundation mitigation substantial to continues

mentioned Mitigation we anticipated. more advancing last is quarter, than I Resources quickly As plan its business

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

Christina Kmetko

Thank you, J.C.

then level about financial provide second individual comments our consolidated quarter segments. begin some I'll me detail Let our results, some on with high

we For pretax taxes XXXX. EBITDA in million last the This and to per $X XXXX compared gain is $X.XX included was income or consolidated sale share million per of second $X.X earlier $X.XX with these and income in income on before of $XX.X mentioned or that J.C. million million quarter, million The $X.X $X.X results. million $X.X compared net taxes of income million of reported share. $X.X before net year.

worth due of higher debt value interest directly even after an While operating excluding $X.X can't levels for more are by increase securities. net our offset a income This well lower neither noting improvement. changes as to net levels the year-over-year other EBITDA, It tied the profit said in before operating than that expense gain, in to the unfavorable taxes, as was expense be same operations. million of change changes cash income the and profit increased those in market unfavorable change unfavorable driven equity is and

lower on employee-related primarily American Minerals to Mining and partly due in Mining Resources improvements grew gross earnings operating J.C. unallocated already unfavorable at our Management the sale, as These significant expenses. profit offset were Coal increase segments. gain items Excluding and in profits, Mitigation discussed, North and by an

at and $X.X results. segment segment of $X.X million million of generally for segment would below I million. of contributed XXXX. reclamation loss million and Coal $X.X compared million higher Mississippi operating profit of in the note favorable Sabine also EBITDA pricing, increase Mining reported just to customer the fall Coal well earnings higher unconsolidated EBITDA Our year. and adjusted $X.X reasons discussed with profit EBITDA Company as to an addition $X.X operating Lignite the in that North segment the breakeven increased improvement. At Mining higher compares J.C. generated last to requirements results and in This operating significantly profit adjusted of as an American Mining operations Mining, the

amendments delivery increase and customer improved mix, to phosphate The factors: the several requirements, commencement and at new favorable second mine pricing resulting beneficial an mentioned. the quarter contract improvements XX-year in that were limestone J.C. of quarries due mutually to margins contract from

XXXX. in Higher operating increase charge, earnings million the These as with in mining XXXX at the Looking impairment results Mining which for adjusted the second half anticipated the coal primarily also the due full an are we segment earnings half expected year operations. The unconsolidated Mississippi and This second occurs excludes taken operations both forward, respective with due profit Falkirk is without increase our impairment the Lignite and unconsolidated Mining to expect Coal mining higher projected higher compared charge periods. price primarily period. EBITDA, XXXX XXXX fee or at significantly Falkirk improvement $XX.X to the to concessions. segment customer both quarter driven at projected increases management for a at at is per and improvement expectation coal in temporary ton substantial of Company requirements by increased cessation an as well Coteau fourth in

first the increase significantly and be Mississippi to of customer's expected the that XXXX the quarter fully XXXX. due expectations by also over issue operational at are the to results resolved, be plant will boiler fourth Company's Lignite current half Mining will XXXX plant half Second

to Mining. North American Turning

of respective scope work The adjusted the quarter Earnings the first phosphate the requirements. half the EBITDA segment in second full lower the XXXX to at and customer of primarily decreased moderate commencement XXXX are with half periods and XXXX half and both from advantageous mine. that expansion are a year-over-year over improvements We year year from mutually increase customer expect profit second half. another the anticipated new first mining of due the expected amendments, to operating limestone to contract the due to second in XXXX

improvements Based as impairment the prices XXXX are million second Finally, fourth first XXXX is EBITDA the Minerals periods, in charge adjusted in sale currently full quarter. half, the expectations, and expectations segment assumptions operating respective to of with increase and recognized second reserves. half for year increase the expect primarily development compared on driven $X.X the on and half the by at million. market moderately production owned natural profit XXXX of Management, oil profit market and quarter gain expected These on gas to as operating we over well current current excluding second excluding $X.X

results consolidated about exclude of $XX.X effect our comments As upcoming pretax included our the impairment I've XXXX expected million. this charge. charge second mentioned, half My a totaling results

operating half growth American increases to Mining second profit Mining improvement profitability with consolidated Coal of increase compared XXXX. our expect due first of primarily are initiatives. from profit the improvements at to and half XXXX contributions and half and These the anticipated in second segment both We North

quarter, of expect also partly increase be This because net anticipated borrowings offset in and we half pension that cash to interest is taking anticipate the consolidated full the to income by in year second defined to the fourth charge income to half second We operating non-cash expense improvement improvement benefit terminate net additional the result tax with increase XXXX in higher and partly XXXX settlement plan. expense profit. in an respective in XXXX and periods. steps compared expected lower a the the termination We will said, is levels. All offset which our are

the year. decrease net are consolidated and of first EBITDA a adjusted half that the income of As XXXX second we projecting with result, the will half compared in

anticipates While of prior third quarter, company will to mainly the quarter net lower quarter. a as fourth both result than second significantly year net the income is the over quarter Fourth substantially that income non-cash the quarter settlement anticipated pension charge. expected improve and be third

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

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

to will you questions turn may have. We now any

Operator

question DSW [Operator Douglas Weiss Instructions] comes Investment. from Your from first

Douglas Weiss

you're prospects you're like with terms Just for the sounds of existing where customers, could both wondered in first American just new bit completely add question to North optimistic a customers. product growth about that little about expanding business. It lines talk greatest And on whether see you you opportunities I business the and or customers if Mining.

John Butler

X have we It's years with several new But a lot the We've this X as we customers. would a good, years over lot started as considerable we operating were relationships to doesn't we About excellent geography. years in where it that's of Florida." a dragline, customers. equipment increased doesn't of and customers a added got ago, Florida. At have lime well. had mine to time, lot be added on in operate say range with for ever really success. that That's to with this the ago, we've it pushing really happened have just been growing We've focused be of have we also be a new business. of question. the we limestone doesn't expanding our business. And And since growing said, to quite I rock we've frequently draglines existing success last underwater it "Gosh,

see with growth of that see A operating to and you're good is operate. which happen customers, think existing we're adding to going currently range new expect new example the to what like rock expanding a with what customers, got that the equipment, think equipment, highways, miner, equipment it's a that on I we contracts, going but but expertise So they're think that you is currently lime piece lot is we're piece we also surface great I to opportunities and we've -- be of there's a lot much particular larger. think using a of machines we operating tricky mine with and that's and a that asphalt there. in planing We're we of of customer success,

truck-to-truck Again, shovel we've example, continue to we the got of an As piece And skills dragline too. operating. of specialized, expand will our particular at piece business. operations, equipment course of operate operating a we complicated

to pretty aren't in segment have we Nevada. the that lithium the profit Northern yet. board. I significant add in delivering stage. substantial It's think I'd example for the across of few great that years. are customer have been stage I operation we development a relationships guess That's really development And in a opportunities is in that, currently So that the that

few really producing lithium that should and a few earning and substantially next years ramp up to money expect the years, over more now. be from We we there

some So Is of that stages future under is contract. various Others growth are the development. helpful? already in of

Douglas Weiss

Yes, that's great.

it's is it business because tasks for you it just one do do So happening? themselves? if when like than what's have at they your better customers to -- them with of feel that is aggregate expanding those and you're particular you, Is that cheaper

John Butler

producers do. Yes. we Yes. I been aggregates. but a large It's is of with years ago, having dinner this I couple of one what mean very, of remember the very

regional is on not said, out and expertise He capitalize guys leadership figuring we and need that. need "We we've we markets instance, all business. And said to are their we've the the need products We've sure at products and to we every We think productivity. we improved when of in and expertise improved customers senior the Some we we in make cost and and are we be help their understanding our the team positioning. great need this we how And quantities the need your got successful in, our qualities miners. of come need identifying I them." in

Douglas Weiss

phosphate the phosphate more you seeing Do an to opportunity on you -- on are side, bring customers?

John Butler

guy I who's sorts will for of in Well, into time, for looking a tell right? world. mining services We're I at the will absolutely, start number spent you, long I business mean as that development providing a of the years say looking worked we've to a of right all additional part mining customers. But opportunity

very very there's So find But sure, no new this really and is we phosphates. more for fresh couldn't reason us.

Douglas Weiss

Great. Okay.

inventory a And -- a mineral to about what but just capital on of I your little to grow thought asked is, moving if I the do inventory, of to quarter the would bit you or of a the asking inventory reserve So you replenish drilled the be? that base. management. have last sense similar were sense that not the goal cost way the another is question depleted

John Butler

answer. short a We're the is pace, that is on is pace, $XX growing reinvestment year a No, which and the a business. million

going that to it's than I be. don't $XX million, would a less what So number number know but be

Douglas Weiss

was surprised little oil last to you're made down that term. if more don't any a on of was the I provide production short investments given you able color granular see on level I just to sort a And know there. Okay. the whether year.

John Butler

investors to that are years because equity trying I that private the as or other it's longer. of to to machine, for doing their XX we're of number X X wells sponsor might satisfy We're whether is would and long this they're years, a backed leverage, well buy a produce doing buying feed mineral as or need they're in -- lot very part happy active unlike those really a things with needs. that any yield of -- things term, co primarily who No, years, producing them debt they guys this the are service or their of question. or say good a because this producing

to estimates we value acquisitions. necessarily that the we going assign show of look and not When all how about might because you when bottom think pay. We things that's assume line. a immediately them So sort a developed, at at producing to to that's looking did these going shouldn't approach, But get making are kind the offered, detailed range NPV that willing immediately there, acquisition of results significant line. bottom being what assess we value drop wells that's whole it's the that assets the very a we're we're values to and package of to in on we

Douglas Weiss

sense. Okay. Makes

capital And On little some the the limiting were had prior projected half is spend going I on for commented the operation, in spend capital than your higher assets. coal a to be you second half. that your first coal calls, you think

was is a things just just change need curious or one-time spend in you some I whether that bit to on? there's that So of a whether approach

John Butler

Well, so I I'd to -- say clarify. want just

lot to to optimize guys, you to only and not don't efficient when we as going affect want adversely find word right that's limit spend to would We -- to used our effective tell affect the ability as would You looking tell efficiency. half we're capital. -- is about operating going exact you to adversely much tool invest their these the be And what because can gee, operate. to we job need, have to the to We do It's and their ability I thinking our spend capital. folks want I time the and mean limiting. engineers mean, of certainly I overinvest. efficient with way obviously, a most that you you

the balance over now are we very of the through Mining between X only development Red or operating some business, shift that is overall probably we've the focused out quarters and the between to investments things. only the spend CapEx at and there, of coal related of The really the in is we shift first pays part expect at think the place those or other expected And significantly is the mining to our part off off really MLMC. the we've CapEx in the as We MLMC carefully. What that of time. to fully But of last year really we more to next customer the what Coal where timing capital structure the the over contracts one-time because been. years of really it's drop Hills CapEx come CapEx. over the year where of compared So doing, going mine drop Area segment which several we is Mine

Douglas Weiss

an Okay. And whether outage. you the you then recovery the insurance that? I had in year thought on have you get any more visibility asked would boiler Do you on earlier

John Butler

I here. out the of statement but that. just answer I think the might is other have think mean I'll would I'm give be. me part we on to -- to we throw I'm you -- that have for team what are a a people of I not that, more premature not any work it to be very continuing kind Yes, mixed number. make to that answer prepared a visibility it's about of

Douglas Weiss

later does working that reverse year the catch this looks it Is you drag capital that so I that said the made I at was to a that cash a so free of on comment think in -- effect. that flow, something the year, far been cash remarks free didn't there the operating line? generate On on it. Got presented has Or -- end -- cash.

John Butler

got? Liz or have you Christie,

Christina Kmetko

in of that we to We expect a use disclosure did our include have XXXX. in cash

Douglas Weiss

--? The operating line or cash flow

Christina Kmetko

We that's flow before financing, cash just which said our -- is operating cash CapEx. minus

Douglas Weiss

Right.

Okay.

John Butler

manufacturing anything. Inventory us, or if you We levels. and typical days don't for receivables looking manufacturing or constantly are businesses, company it's outstanding, payables we about capital our not come Working up think inventory like not that's will whether -- really we're at go down. a

we're that. If getting to we an if those -- tackle doing very dragline on bring give just example do bring project that, I'm ready out day when -- of that now. probably we'll a we're we're we I'll is So and capital anticipation to project. specific more right This in a of them getting not more ready But example. it'll parts then we North a will you go that a saying in other mitigation because in And a in affect in flow us America somewhere, a parts it with that normal take will need over be dragline probably and for through Mitigation significant as capital normalizes the thing time. It's credits. inventory capital cycle. affects very we your we're create through put into Similarly, at that we you would issues quarter-to-quarter. see the goes not like -- built in that business Resources of dealing all and things kind working But working where from supply much manufacturing chain will order dragline

Douglas Weiss

Right. That makes sense.

Okay.

of So X mitigation look you're your there's segments into last higher of the kind But you question, more and at that you broad to some versus of offering is lines well money the that as say this you -- invest do doing, you one point ROIs kind desire work as would segment if one feel at business one. disclosed a you others?

John Butler

that going go I a inside and would think segment. you our if you mean I -- I'm about to tell

in If and very, on you invested return Super they capital have unconsolidated went to not coal have little mining high sense. things operations, an invest fee, those, a returns, traditional There's very our opportunity that. inside in substantial generate capital really those in management growing very, -- very we total right?

see if it us?" us and short you I would don't a We I term. in Mining sure a with build the do contract new say, up contracts power have guys fee call Will to want coal-fired have "Hey, the And plant. the management I'd Coal happening somebody But love segment. that we in

in XX that gas all the bought and legacy on Southern we of decades those total those our Ohio, total our than years highest highest our return is ago. return second would ago. Appalachia, returns we earn more assets of decades bought on decades natural probably capital that's I and guess say because So off capital. I'd were

we have extremely We've time. them for low cost so long And owned just basis. a

piece our investments pipelines the business, invest investment are I our You and to we're end down capital mean, to we into with and tremendous on inside coming Want Management area. in that -- Minerals up think horizontal fine. generates but actually grow. making But fracking the returns. return total that that that's continue blending

now capital So direct your businesses I would say the the I one is more other? question we're money pleased really allocation, tell of think. of Is portfolio to we that it to very we want also segment than have. with that I'd one continuing about the those we're new bent. investing all in that ahead. of we We're going we'll be good to that more creating years I have right them. about entrepreneurial to in -- you And businesses talking are think feel an

one any and are with our to significant of good generating have returns of a in think that overall any I objective portfolio businesses us create all don't here area. kind risk is

think there's a -- essentially of in bunch coal to really. for generation, and you risk, tied If back were risk ago, we a Political lot mining that. power XX years

having for also including for and think believe business this give in of total this got capital, to a on will make I avenues time them cash many substantial Because grow and deliver to bigger substantially So diversified we've that growth feels of the now, going it's company business. development, give like that growth think us of to That's kind so the overall. thing allow the lots forward ones in future. more all diversified do flows us over portfolio of for me avenues going I good returns us going we to businesses, to a right very

to causing us now, into like them. in we businesses the feel continue money like, we're is pick invest and choose, to we have in to business potential, the other great put right and and I to all going ones? think maybe want So these that gee, not favorite

it's our are a we only contract with The the fit projects criteria meet attractive business. when be that good successful It's us. course, can we where a is find an believe the Of terms to and fit. for good we so cultural customer opportunity doing

Douglas Weiss

Right. got. Well, all appreciate quarter. I the and I That talk to you right. that's sense. makes next All time

John Butler

I makes think makes appreciate I'm to because sense sense it you glad it to questions. your we us.

we and feedback. your So appreciate questions your

Operator

Christina [Operator questions I there time. the no closing turn remarks. to back will are for Instructions] And call over further this at

Christina Kmetko

Q&A Okay. before that, a session. this would call it morning. our we like available website becomes available. A reminders to post be provide we few conclude the the also will With transcript I later our end will of on a We'll when call. replay

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

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

Operator

followed by pound you. dialing A the with playback August XXXXX, you. conference be the this of Thank (XXX) replay key. Thank gentlemen, call. concludes will call available XX:XX p.m. by passcode this Ladies until today's Thursday, X, and XXXX XXX-XXXX at

now Thank You may disconnect. you.

NACCO Industries (NC) 1 Aug 242024 Q2 Earnings call transcript