Consolidated Highlights:
- Consolidated net loss of $3.8
million, or $0.51/share
compared with net income of $10.6
million, or $1.45/share, in Q3
2022
- Modest Q4 2023 income before tax and net income expected,
with projections for significant full-year 2024 income improvement
compared with 2023
CLEVELAND, Nov. 1, 2023
/PRNewswire/ -- NACCO Industries® (NYSE: NC) today
announced the following consolidated results for the three and nine
months ended September 30, 2023.
Comparisons in this news release are to the three months ended
September 30, 2022, unless otherwise
noted.
|
Three Months
Ended
|
Nine Months
Ended
|
($ in thousands,
except per share amounts)
|
9/30/2023
|
|
9/30/2022
|
|
%
Change
|
|
9/30/2023
|
|
9/30/2022
|
|
%
Change
|
Operating Profit
(Loss)
|
$(6,267)
|
|
$9,818
|
|
(163.8) %
|
|
$(2,703)
|
|
$54,445
|
|
(105.0) %
|
Other (income) expense,
net
|
$(417)
|
|
$(1,662)
|
|
(74.9) %
|
|
$(4,478)
|
|
$(17,052)
|
|
(73.7) %
|
Income (loss) before
taxes
|
$(5,850)
|
|
$11,480
|
|
(151.0) %
|
|
$1,775
|
|
$71,497
|
|
(97.5) %
|
Income tax provision
(benefit)
|
$(2,018)
|
|
$866
|
|
n.m.
|
|
$(2,605)
|
|
$11,121
|
|
n.m.
|
Net Income
(Loss)
|
$(3,832)
|
|
$10,614
|
|
(136.1) %
|
|
$4,380
|
|
$60,376
|
|
(92.7) %
|
Diluted Earnings
(loss)/share
|
$(0.51)
|
|
$1.45
|
|
(135.2) %
|
|
$0.58
|
|
$8.24
|
|
(93.0) %
|
Adjusted
EBITDA*
|
$423
|
|
$22,122
|
|
(98.1) %
|
|
$20,405
|
|
$64,541
|
|
(68.4) %
|
|
*Non-GAAP financial
measures are defined and reconciled on pages 10 to 12.
|
The substantial decreases in the Company's 2023 third-quarter
results compared with the prior year were primarily due to a
significant decrease in earnings in the Coal Mining and Minerals
Management segments.
At September 30, 2023, the Company had consolidated cash of
$128.2 million and debt of
$22.5 million with availability of
$122.0 million under its $150.0 million revolving credit facility. The
Company repurchased approximately 24,800 shares for $0.8 million during the three months ended
September 30, 2023, consistent with
its capital allocation priorities and under an existing authorized
share repurchase program. 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. These initiatives 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
third quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
Tons of coal
delivered
|
(in
thousands)
|
Unconsolidated operations
|
5,105
|
|
7,210
|
Consolidated operations
|
628
|
|
750
|
Total deliveries
|
5,733
|
|
7,960
|
|
Key financial results
for the third quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Revenues
|
$
18,665
|
|
$
22,599
|
Gross profit
(loss)
|
$
(8,154)
|
|
$
1,666
|
Earnings of
unconsolidated operations
|
$
11,259
|
|
$
13,300
|
Operating
expenses(1)
|
$
7,802
|
|
$
8,877
|
Operating profit
(loss)
|
$
(4,697)
|
|
$
6,089
|
Segment Adjusted
EBITDA(2)
|
$
(361)
|
|
$
10,346
|
|
(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 11.
|
Lower customer requirements at Mississippi Lignite Mining
Company contributed to a 17% decrease in Coal Mining third-quarter
2023 revenues compared with 2022.
Operating results and Segment Adjusted EBITDA also decreased
significantly compared with the prior year quarter. These decreases
were primarily due to a substantial decline in Mississippi Lignite
Mining Company results and lower earnings at the unconsolidated
operations primarily due to lower customer requirements at Coteau
Properties Company. A 12% reduction in operating expenses, mainly
attributable to a decrease in employee-related expenses, partly
offset these declines.
Mississippi Lignite Mining Company results decreased
significantly year-over-year due to a substantial increase in the
cost per ton delivered. The cost per ton delivered rose because of
temporary operational inefficiencies related to transitioning to a
new mine area and short-term adverse mining conditions caused by
increased rainfall. These unfavorable conditions resulted in a
reduction in tons severed and contributed to a $2.4 million write down of coal inventory to net
realizable value.
Coal Mining Outlook
The Company expects fourth-quarter 2023 Coal Mining operating
results and Segment Adjusted EBITDA to improve significantly
compared with the 2023 third quarter but decline substantially from
the 2022 fourth quarter.
The improvement in fourth-quarter 2023 over third-quarter 2023
results is primarily due to anticipated lower production costs from
completion of the move to a new mine area at Mississippi Lignite
Mining Company partially offset by anticipated higher Coal Mining
operating expenses due to higher professional fees and outside
services. While production costs at Mississippi Lignite Mining
Company are anticipated to decline significantly from recent
levels, production costs are expected to remain above historical
levels through 2024 when a pit extension in the new mine area is
complete. All production costs are capitalized into inventory at
this mine. Beginning in the 2023 fourth quarter, Mississippi
Lignite Mining Company expects to increase the number of tons
severed, which is anticipated to lead to an increase in coal
inventory levels. Higher inventory levels will allow costs to be
spread over more tons, which is expected to result in a lower cost
per ton sold and improved profitability beginning with the fourth
quarter and going forward.
The fourth-quarter 2023 results at Mississippi Lignite Mining
Company are expected to be below fourth-quarter 2022 despite the
improvement in results over the previous 2023 quarters. An
anticipated increase in operating expenses is also expected to
contribute to the lower fourth-quarter 2023 results.
Mississippi Lignite Mining Company does not anticipate opening
additional mine areas through the remaining contract term. 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.
Capital expenditures are expected to be approximately
$5 million in the fourth quarter of
2023, $10 million for the 2023 full
year, and $10 million in 2024.
Coal Mining Outlook - 2024
In 2024, the Company expects coal deliveries to increase
moderately from 2023 levels. Higher Coteau and Falkirk deliveries
are expected to be partly offset by the unfavorable effect of the
Pirkey power plant retirement and resulting March 31, 2023 cessation of coal deliveries from
the Company's Sabine Mine.
Strong operating profit and significantly higher Segment
Adjusted EBITDA are expected in 2024 compared with 2023. These
increases are primarily the result of significant improvements in
results at Mississippi Lignite Mining Company due to the
anticipated reduction in cost per ton sold and an increase in
earnings of unconsolidated operations. Improvements are expected to
be higher in the second half of 2024 as comparisons are made to
much lower second-half 2023 results.
The anticipated higher earnings at the unconsolidated coal
mining operations are expected to be driven primarily by increased
customer requirements at Coteau and Falkirk, as well as a higher
per ton management fee at Falkirk beginning in June 2024 when temporary price concessions
end.
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 and
2024, as well as over the longer term.
North American Mining Results
Deliveries for the
third quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Tons
delivered
|
15,410
|
|
13,421
|
|
|
|
Key financial results
for the third quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Revenues
|
$
21,722
|
|
$
22,962
|
Operating profit
(loss)
|
$
866
|
|
$
(210)
|
Segment Adjusted
EBITDA(1)
|
$
2,924
|
|
$
1,375
|
|
(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 11.
|
North American Mining revenues decreased moderately in
third-quarter 2023 compared with 2022. This decline was primarily
due to a reduction in reimbursed costs, which have an offsetting
amount in cost of goods sold and therefore no impact on operating
profit, and a decrease in mine reclamation revenue at Caddo Creek.
Higher tons delivered from increased customer requirements
partially offset these decreases.
Third-quarter 2023 operating profit and Segment Adjusted EBITDA
increased significantly over 2022 primarily due to lower
employee-related expenses, including a prior-year expense of
$0.8 million for a voluntary
retirement program. Improvements at the aggregates quarries and
Sawtooth were partially offset by reduced income from Caddo
Creek.
North American Mining Outlook
North American Mining expects fourth-quarter 2023 tons delivered
to decrease modestly from 2022, while full-year 2023 tons delivered
are expected to increase year-over-year as a result of the
increased deliveries in the first nine months of 2023.
Operating profit and Segment Adjusted EBITDA are anticipated to
increase significantly in both the 2023 fourth quarter and full
year over the respective prior year periods. These increases are
primarily due to anticipated earnings improvement under existing
contracts, including Sawtooth Mining, partially offset by the
completion of services at Caddo Creek.
In 2024, North American Mining expects full-year operating
profit and Segment Adjusted EBITDA to increase significantly over
2023 due to improved earnings under certain existing contracts,
including Sawtooth Mining, and an anticipated reduction in
operating expenses. Any new contracts should be accretive to North
American Mining's future results.
Sawtooth Mining has an exclusive agreement to provide
comprehensive mining services 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. In March 2023, Lithium
Americas commenced construction at Thacker Pass. With construction
beginning, Sawtooth Mining started acquiring mining equipment in
the 2023 second quarter. Sawtooth has acquired $23.1 million of equipment to-date. While Lithium
Americas will reimburse Sawtooth for these capital expenditures
over a five-year period, Sawtooth will recognize the associated
revenue over the estimated useful life of the asset. In addition,
during the construction period, Sawtooth will be reimbursed for all
costs of construction and will recognize a contractually agreed
construction fee. The Company expects to continue to recognize
moderate income prior to the expected commencement of Phase 1
lithium production in the second half of 2026.
North American Mining expects full-year 2023 capital
expenditures to be approximately $34
million, with approximately $4
million expended in the fourth quarter. In 2024, capital
expenditures are expected to be approximately $8 million, primarily for the acquisition of
dragline parts and other equipment.
Minerals Management Results
Key financial results
for the third quarter of 2023 and 2022 were as follows:
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Revenues
|
$
5,747
|
|
$
16,172
|
Operating
profit
|
$
3,610
|
|
$
10,616
|
Segment Adjusted
EBITDA(1)
|
$
4,378
|
|
$
15,215
|
|
(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 11.
|
Minerals Management revenue, operating profit and Segment
Adjusted EBITDA decreased significantly from the 2022 third quarter
due to a 68% decline in natural gas prices from 2022 as measured by
the Henry Hub Average Natural Gas Spot Price and a 12% decrease in
oil prices, as measured by the West Texas Intermediate Average
Crude Oil Spot Price. Third-quarter 2022 operating profit included
a $3.9 million write-off of legacy
coal-related assets and reserves. This write-off is excluded from
Segment Adjusted EBITDA.
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.
In the 2023 fourth quarter and full year, operating profit and
Segment Adjusted EBITDA are expected to continue to decrease
significantly compared with the respective prior year periods.
These decreases are primarily driven by current market expectations
for natural gas and oil prices.
In 2024, operating profit and Segment Adjusted EBITDA are
expected to increase moderately compared with 2023 primarily driven
by current market expectations for natural gas and oil prices and
limited forecasted development of additional new wells by
third-party lessees. Lower operating expenses are also expected to
contribute to the profit growth.
The Company's forecast is based on current market assumptions
for natural gas and oil market prices, as well as currently owned
reserves. Commodity prices are inherently volatile. 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. The Company is
closely monitoring the Israel/Gaza
conflict and its potential impact on OPEC countries and
international oil and gas production and demand. The actions of
OPEC, inventory levels of natural gas and oil and the uncertainty
associated with demand, as well as other factors, have the
potential to impact future oil and gas prices. Current merger and
acquisition activity within the oil and gas industry is also a
focus as the Company works to understand its potential impact on
development plans by third-party lessees.
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, or acquisitions of
additional interests, could be accretive to future results.
In 2023, Minerals Management expects capital expenditures of
approximately $39 million, which
includes the anticipated acquisition of approximately $37 million of mineral and royalty interests
expected to close during the fourth quarter that will provide
additional diversification into the oil-rich Permian basin. The
anticipated fourth quarter acquisition exceeds the previously
announced capital expenditure projection as management believes it
offers an attractive investment profile and aligns with the
Company's strategy to establish a diversified portfolio of mineral
and royalty interests. In 2024, Minerals Management is targeting
additional investments of up to $20
million. 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.
Mitigation Resources of North America®
Mitigation Resources of North
America® continues to build on the substantial
foundation it established over the past several years. Mitigation
Resources currently has nine mitigation banks and four
permittee-responsible mitigation projects located in Tennessee, Mississippi, Alabama and Texas. In addition, Mitigation Resources is
providing ecological restoration services for abandoned surface
mines, as well as pursuing additional environmental restoration
projects. It was named a designated provider of abandoned mine land
restoration by the State of Texas.
Mitigation Resources plans to continue to expand its business
during the remainder of 2023 and in 2024, and expects to achieve
near break-even earnings in 2024 and sustainable profitability in
future years.
Consolidated Outlook
Overall, the Company expects that fourth-quarter 2023
improvements will produce operating profit and net income compared
with consolidated third-quarter losses. However, fourth-quarter and
full-year 2023 consolidated operating results and Adjusted EBITDA
are expected to be down significantly from the respective
prior-year periods due to substantial decreases at the Coal Mining
and Minerals Management segments. These reductions are expected to
be partially offset by favorable changes in income taxes leading to
modest net income for the 2023 full year.
In 2024, the Company expects a significant increase in
consolidated net income and EBITDA over 2023. These improvements
are primarily due to increased profitability at the Coal Mining
segment from improved results at Mississippi Lignite Mining
Company, Falkirk and Coteau. Growth at North American Mining
and Mitigation Resources is also expected to contribute to the
higher 2024 net income. The Company expects an effective income tax
rate between 10% and 13% in 2024. Additional contracts for North
American Mining or Mitigation Resources, or the acquisition of
additional mineral interests at Minerals Management, including the
$37 million investment expected to
close in the 2023 fourth quarter, could be accretive to the current
forecast.
Consolidated capital expenditures are expected to total
approximately $84 million in 2023,
which includes approximately $39
million at Minerals Management and $24 million related to the Thacker Pass lithium
project. 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 a moderate use of
cash. In 2024, the Company expects capital expenditures of
approximately $39 million, including
up to $20 million of investments at
Minerals Management. Cash flow before financing activities in 2024
is expected to be positive but not to the level generated in
2022.
Long-term Growth and Diversification
Management continues to view the long-term business outlook for
NACCO positively. 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. 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. 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 as
these costs are borne entirely by third-party exploration and
development companies that lease the minerals.
The Company remains committed to expanding the North American
Mining business while working to improve profitability. North
American Mining intends to be a substantial contributor to
operating profit over time, specifically in its Sawtooth Mining
subsidiary when production commences at Thacker Pass, which is
projected to occur 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.
The pace of achieving substantially improved results at North
American Mining 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 already delivering improved financial results.
Mitigation Resources continues to expand its business, which
creates and sells stream and wetland mitigation credits, provides
services to those engaged in permittee-responsible mitigation and
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. The Company is working to utilize these
skills 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.
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, November 2, 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
November 9, 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
|
|
NINE MONTHS
ENDED
|
|
SEPTEMBER 30
|
|
SEPTEMBER 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(In thousands, except
per share data)
|
Revenues
|
$
46,546
|
|
$
61,793
|
|
$
158,037
|
|
$
178,185
|
Cost of
sales
|
48,720
|
|
43,965
|
|
150,447
|
|
128,867
|
Gross profit
(loss)
|
(2,174)
|
|
17,828
|
|
7,590
|
|
49,318
|
Earnings of
unconsolidated operations
|
12,754
|
|
14,588
|
|
37,662
|
|
43,802
|
Contract termination
settlement
|
—
|
|
—
|
|
—
|
|
14,000
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
16,118
|
|
17,790
|
|
45,740
|
|
48,415
|
Amortization of
intangible assets
|
642
|
|
867
|
|
2,296
|
|
2,772
|
(Gain) loss on sale of
assets
|
87
|
|
2
|
|
(81)
|
|
(2,451)
|
Asset impairment
charges
|
—
|
|
3,939
|
|
—
|
|
3,939
|
|
16,847
|
|
22,598
|
|
47,955
|
|
52,675
|
Operating profit
(loss)
|
(6,267)
|
|
9,818
|
|
(2,703)
|
|
54,445
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest
expense
|
632
|
|
486
|
|
1,749
|
|
1,495
|
Interest
income
|
(1,679)
|
|
(352)
|
|
(4,548)
|
|
(692)
|
Closed mine
obligations
|
394
|
|
398
|
|
1,236
|
|
1,155
|
Loss (gain) on equity
securities
|
551
|
|
316
|
|
(498)
|
|
1,676
|
Income from equity
method investee
|
—
|
|
(2,156)
|
|
—
|
|
(2,156)
|
Other contract
termination settlements
|
—
|
|
—
|
|
—
|
|
(16,882)
|
Other, net
|
(315)
|
|
(354)
|
|
(2,417)
|
|
(1,648)
|
|
(417)
|
|
(1,662)
|
|
(4,478)
|
|
(17,052)
|
Income (loss) before
income tax provision (benefit)
|
(5,850)
|
|
11,480
|
|
1,775
|
|
71,497
|
Income tax provision
(benefit)
|
(2,018)
|
|
866
|
|
(2,605)
|
|
11,121
|
Net income
(loss)
|
$
(3,832)
|
|
$
10,614
|
|
$
4,380
|
|
$
60,376
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share
|
$
(0.51)
|
|
$
1.45
|
|
$
0.59
|
|
$
8.27
|
Diluted earnings
(loss) per share
|
$
(0.51)
|
|
$
1.45
|
|
$
0.58
|
|
$
8.24
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
7,517
|
|
7,337
|
|
7,480
|
|
7,302
|
Diluted weighted
average shares outstanding
|
7,517
|
|
7,337
|
|
7,515
|
|
7,329
|
ADJUSTED EBITDA
RECONCILIATION (UNAUDITED)
|
|
THREE MONTHS
ENDED
|
|
NINE MONTHS
ENDED
|
|
SEPTEMBER 30
|
|
SEPTEMBER 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in
thousands)
|
Net income
(loss)
|
$
(3,832)
|
|
$
10,614
|
|
$
4,380
|
|
$
60,376
|
Contract termination
settlements
|
—
|
|
—
|
|
—
|
|
(30,882)
|
Asset impairment
charges
|
—
|
|
3,939
|
|
—
|
|
3,939
|
Income tax provision
(benefit)
|
(2,018)
|
|
866
|
|
(2,605)
|
|
11,121
|
Interest
expense
|
632
|
|
486
|
|
1,749
|
|
1,495
|
Interest
income
|
(1,679)
|
|
(352)
|
|
(4,548)
|
|
(692)
|
Depreciation, depletion
and amortization expense
|
7,320
|
|
6,569
|
|
21,429
|
|
19,184
|
Adjusted
EBITDA*
|
$
423
|
|
$
22,122
|
|
$
20,405
|
|
$
64,541
|
|
*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 (loss) before contract termination
settlements, asset impairment charges and income taxes, plus 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
September 30, 2023
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
18,665
|
|
$
21,722
|
|
$
5,747
|
|
$
966
|
|
$
(554)
|
|
$
46,546
|
Cost of
sales
|
26,819
|
|
20,286
|
|
1,064
|
|
1,086
|
|
(535)
|
|
48,720
|
Gross profit
(loss)
|
(8,154)
|
|
1,436
|
|
4,683
|
|
(120)
|
|
(19)
|
|
(2,174)
|
Earnings of
unconsolidated
operations
|
11,259
|
|
1,495
|
|
—
|
|
—
|
|
—
|
|
12,754
|
Operating
expenses*
|
7,802
|
|
2,065
|
|
1,073
|
|
5,907
|
|
—
|
|
16,847
|
Operating profit
(loss)
|
$
(4,697)
|
|
$
866
|
|
$
3,610
|
|
$
(6,027)
|
|
$
(19)
|
|
$
(6,267)
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
(4,697)
|
|
$
866
|
|
$
3,610
|
|
$
(6,027)
|
|
$
(19)
|
|
$
(6,267)
|
Depreciation, depletion
and
amortization
|
4,336
|
|
2,058
|
|
768
|
|
158
|
|
—
|
|
7,320
|
Segment Adjusted
EBITDA**
|
$
(361)
|
|
$
2,924
|
|
$
4,378
|
|
$
(5,869)
|
|
$
(19)
|
|
$
1,053
|
|
|
Three Months Ended
September 30, 2022
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
22,599
|
|
$
22,962
|
|
$
16,172
|
|
$
1,092
|
|
$
(1,032)
|
|
$
61,793
|
Cost of
sales
|
20,933
|
|
21,853
|
|
1,006
|
|
1,307
|
|
(1,134)
|
|
43,965
|
Gross profit
|
1,666
|
|
1,109
|
|
15,166
|
|
(215)
|
|
102
|
|
17,828
|
Earnings of
unconsolidated
operations
|
13,300
|
|
1,288
|
|
—
|
|
—
|
|
—
|
|
14,588
|
Asset impairment
charges
|
—
|
|
—
|
|
3,939
|
|
—
|
|
—
|
|
3,939
|
Operating
expenses*
|
8,877
|
|
2,607
|
|
611
|
|
6,565
|
|
(1)
|
|
18,659
|
Operating profit
(loss)
|
$
6,089
|
|
$
(210)
|
|
$
10,616
|
|
$
(6,780)
|
|
$
103
|
|
$
9,818
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
6,089
|
|
$
(210)
|
|
$
10,616
|
|
$
(6,780)
|
|
$
103
|
|
$
9,818
|
Asset impairment
charges
|
—
|
|
—
|
|
3,939
|
|
—
|
|
—
|
|
3,939
|
Depreciation, depletion
and
amortization
|
4,257
|
|
1,585
|
|
660
|
|
67
|
|
—
|
|
6,569
|
Segment Adjusted
EBITDA**
|
$
10,346
|
|
$
1,375
|
|
$
15,215
|
|
$
(6,713)
|
|
$
103
|
|
$
20,326
|
|
*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, asset impairment charges
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)
|
|
|
Nine Months Ended
September 30, 2023
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
65,661
|
|
$
64,071
|
|
$
23,203
|
|
$
6,785
|
|
$
(1,683)
|
|
$
158,037
|
Cost of
sales
|
85,966
|
|
58,411
|
|
3,026
|
|
4,675
|
|
(1,631)
|
|
150,447
|
Gross profit
(loss)
|
(20,305)
|
|
5,660
|
|
20,177
|
|
2,110
|
|
(52)
|
|
7,590
|
Earnings of
unconsolidated
operations
|
33,687
|
|
3,975
|
|
—
|
|
—
|
|
—
|
|
37,662
|
Operating
expenses*
|
22,441
|
|
5,725
|
|
3,234
|
|
16,555
|
|
—
|
|
47,955
|
Operating profit
(loss)
|
$
(9,059)
|
|
$
3,910
|
|
$
16,943
|
|
$
(14,445)
|
|
$
(52)
|
|
$
(2,703)
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
(9,059)
|
|
$
3,910
|
|
$
16,943
|
|
$
(14,445)
|
|
$
(52)
|
|
$
(2,703)
|
Depreciation, depletion
and
amortization
|
12,924
|
|
5,799
|
|
2,328
|
|
378
|
|
—
|
|
21,429
|
Segment Adjusted
EBITDA**
|
$
3,865
|
|
$
9,709
|
|
$
19,271
|
|
$
(14,067)
|
|
$
(52)
|
|
$
18,726
|
|
|
Nine Months Ended
September 30, 2022
|
|
Coal Mining
|
|
North
American
Mining
|
|
Minerals
Management
|
|
Unallocated
Items
|
|
Eliminations
|
|
Total
|
|
(In
thousands)
|
Revenues
|
$
70,163
|
|
$
67,180
|
|
$
40,888
|
|
$
1,901
|
|
$
(1,947)
|
|
$ 178,185
|
Cost of
sales
|
64,421
|
|
62,086
|
|
2,487
|
|
2,184
|
|
(2,311)
|
|
128,867
|
Gross profit
(loss)
|
5,742
|
|
5,094
|
|
38,401
|
|
(283)
|
|
364
|
|
49,318
|
Earnings of
unconsolidated
operations
|
40,086
|
|
3,716
|
|
—
|
|
—
|
|
—
|
|
43,802
|
Contract termination
settlement
|
14,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14,000
|
Asset impairment
charges
|
—
|
|
—
|
|
3,939
|
|
—
|
|
—
|
|
3,939
|
Operating
expenses*
|
25,212
|
|
6,492
|
|
(855)
|
|
17,888
|
|
(1)
|
|
48,736
|
Operating profit
(loss)
|
$
34,616
|
|
$
2,318
|
|
$
35,317
|
|
$ (18,171)
|
|
$
365
|
|
$
54,445
|
Segment Adjusted
EBITDA**
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss)
|
$
34,616
|
|
$
2,318
|
|
$
35,317
|
|
$ (18,171)
|
|
$
365
|
|
$
54,445
|
Contract termination
settlement
|
(14,000)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14,000)
|
Asset impairment
charges
|
—
|
|
—
|
|
3,939
|
|
—
|
|
—
|
|
3,939
|
Depreciation, depletion
and
amortization
|
12,683
|
|
4,545
|
|
1,781
|
|
175
|
|
—
|
|
19,184
|
Segment Adjusted
EBITDA**
|
$
33,299
|
|
$
6,863
|
|
$
41,037
|
|
$ (17,996)
|
|
$
365
|
|
$
63,568
|
|
*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, asset impairment charges
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.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/nacco-industries-announces-third-quarter-2023-results-301974857.html
SOURCE NACCO Industries