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Signature Sponsor
March 5, 2026 -
FY Highlights:
NACCO Industries® (NYSE: NC) has announced financial results for the three months and year ended December 31, 2025. Fourth-quarter 2025 operating profit increased over the prior year, reflecting improved results across all three reportable segments, led by Utility Coal Mining. Higher unallocated expenses partly offset these improvements. During the 2025 fourth quarter, the Company recorded a $7.8 million pension settlement charge, $6.0 million after tax, associated with the planned termination of its pension plan. This charge and a significant unfavorable tax effect, primarily due to the true-up of tax expense to the annual effective tax rate, resulted in a net loss for the quarter. "We delivered a strong close to 2025 as our fourth-quarter operating profit built upon the improving profitability and growth we experienced in the third quarter," said J.C. Butler, NACCO President and Chief Executive Officer. "While reported earnings were impacted by the pension settlement charge, our underlying results reflect a business delivering on its potential. We enter 2026 with clear opportunities to build on this momentum as we execute our growth strategy and create long-term value for our shareholders." Liquidity At December 31, 2025, NACCO had outstanding debt of $100.9 million. Total liquidity was $124.2 million, which consisted of $49.7 million of cash and $74.5 million of availability under our revolving credit facility. For the 2025 full year, we generated cash from operations of $50.9 million compared with $22.3 million in 2024. Detailed Discussion of 2025 Fourth Quarter Compared to 2024 Fourth Quarter Utility Coal Mining Segment The year–over–year operating profit and Segment Adjusted EBITDA improvement primarily reflects stronger operating performance at Mississippi Lignite Mining Company. Mississippi Lignite Mining Company produced and sold more tons during the quarter and, as a result, benefited from higher production efficiency and a lower cost per ton sold. In addition, production outpaced deliveries in the period, resulting in certain production costs being capitalized into inventory. These factors drove a meaningful improvement in results compared with the prior year, when earnings were affected by a significant inventory write down. Lower general and administrative employee-related expenses also contributed to the improvement in the segment operating profit. Contract Mining Segment The year–over–year revenue decline is primarily due to lower reimbursed costs, which have a corresponding offset in cost of goods sold. Revenues, net of reimbursed costs, grew 9% over the prior year, primarily driven by higher parts sales partly offset by increased volumes of lower-priced tons. Contract Mining continues to benefit from ongoing progress on operational and strategic initiatives designed to enhance profitability. Improved margins at the operations and higher parts sales were offset by a $1.1 million loss contingency recognized during the quarter and increased employee-related expenses, resulting in operating profit in line with the prior year. Minerals and Royalties Segment Revenues, operating profit and Segment Adjusted EBITDA grew year over year primarily due to increased royalty revenues driven by improved natural gas pricing and increased production volumes. These benefits were partly offset by decreased oil revenues resulting from reduced oil prices and production volumes. Lower employee-related expenses and higher earnings from an equity investment also contributed to the year-over-year profit improvement. Unallocated primarily includes public company administrative costs and the financial results of Bellaire Corporation, Mitigation Resources of North America®, ReGen Resources and other developing businesses that are not directly attributable to our reportable segments. While fourth-quarter unallocated employee-related costs decreased year over year, fewer credit sales and higher operating expenses at Mitigation Resources and an increase in outside services at other developing businesses drove the significant increase in the Unallocated operating loss. Outlook NACCO Industries is a growing diversified natural resources company with a unique business model strategically positioned to deliver stable and growing financial returns over the long term. Our business model is purposely built for durability and resilience with an expanding portfolio of long-term contracts, relationships and investments that leverage our proven operational expertise, disciplined capital allocation and an entrepreneurial yet patient approach. We have methodically built unique capabilities and clear competitive advantages that allow us to pursue a wide range of growth opportunities, often completely integrated into customers' operations in partnership-based relationships. We have multiple vectors for value creation, and we are steadfastly committed to delivering compounding returns and expanding investor value over the long term. Our foundation rests on a stable base of long-term coal-mining contracts and legacy mineral and royalty assets, which generate dependable recurring cash flows. As new long-term contracts and investments are added across the Company, these new multi-year agreements create a "layering" effect as their contributions compound. This provides cash flow stability. The momentum our operations experienced in 2025, particularly in the second half, is expected to continue into 2026, with meaningful year-over-year improvements in consolidated operating profit, net income and EBITDA. At our Utility Coal Mining segment, operated by North American Coal®, we expect an increase in operating profit compared with 2025. Improvements at Mississippi Lignite Mining Company as a result of an increase in the contractually determined per ton sales price are expected to be partly offset by lower earnings at the unconsolidated mining operations due to reduced income associated with the wind down of reclamation services at the Sabine Mining Company. While we expect modest year-over-year improvements at Mississippi Lignite Mining Company, the customer's power plant began a maintenance outage in mid-February 2026. The power plant is expected to resume operations in mid-March. Any delay or further changes in demand, dispatch and/or reduced mechanical availability at the power plant could decrease current expectations. The Contract Mining segment, operated by North American Mining®, serves as our primary mining growth platform. Through continued geographic and mineral expansion, we are building a growing portfolio of long-term contracts that strengthen the foundation for sustained profitability. In October 2025, we secured a multi-year dragline services contract as part of a U.S. Army Corps of Engineers construction project in Palm Beach County, Florida. We also anticipate commencing operations at a new limestone quarry in Arizona in 2026. We expect the segment to deliver a significant year-over-year increase in operating profit and Segment Adjusted EBITDA as a result of higher customer demand, earnings contributions from new contracts and continued momentum from 2025 activities. Sawtooth Mining, a North American Mining subsidiary, provides exclusive comprehensive mining services at Thacker Pass, which is owned by a joint venture led by Lithium Americas Corp. (TSX: LAC; NYSE: LAC). Sawtooth will supply all of the lithium-bearing ore requirements for our customer's Thacker Pass lithium processing facility, which is currently under construction. This project is providing stable income during construction and is expected to contribute increased income and long-term cash flows once lithium production commences, which is targeted for late 2027. The Minerals and Royalties segment, managed by Catapult Mineral Partners®, has constructed a high-quality, diversified portfolio of oil and gas mineral and royalty interests in the United States. The Catapult team is expanding its portfolio by leveraging a data-driven approach to capital deployment that incorporates a longer-term view of production and development. We believe this provides a competitive advantage in the U.S. market. In July 2025, Catapult completed a $4.2 million acquisition of mineral interests within the Permian Basin. The acquisition includes a mix of producing wells, as well as additional development opportunities with existing operators in the area. This segment also has an investment in a company that holds operated and non-operated working interests in oil and natural gas assets. While these investments are expected to contribute favorably to 2026, commodity price forecasts as well as development and production assumptions are expected to result in an overall year-over-year decrease in Minerals and Royalties' operating profit and Segment Adjusted EBITDA, particularly in the second half of the year. Our forecast was developed prior to recent events in the Middle East. Any changes in commodity prices or production as a result of this conflict could alter current expectations. Mitigation Resources of North America® provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. Mitigation Resources is successfully leveraging its strong reputation and clear competitive strengths to expand into additional mitigation, restoration and reclamation markets. Mitigation Resources is expected to deliver increasing profitability over time from the sale of mitigation credits and as reclamation and restoration services expand. This business, while currently variable in performance due to permit and project timing, is expected to generate a profit in the second half of 2026 and move toward more consistent results over time as the business expands. We continue to invest in our businesses to drive future growth. In 2026, we anticipate total capital expenditures of up to $89 million. The majority of these expenditures relate to business development opportunities and will only be made if the projects meet our growth investment criteria. These anticipated capital investments are expected to result in a use of cash before financing greater than in 2025. Our businesses provide critical inputs for electricity generation, construction and development, and the production of industrial minerals and chemicals. As the need for uninterrupted energy grows, industry fundamentals for natural resources are expected to continue to strengthen, reinforcing the critical need to keep existing, reliable baseload resources online. In 2026, the National Coal Council, an advisory committee to the U.S. Secretary of Energy, was re-established. This council is focused on advising the Department of Energy on reinforcing coal's strategic role in U.S. energy policy and providing actionable advice on sustaining coal plant operations and prioritizing coal to support grid reliability to support our country's economic competitiveness and national security. The re-establishment of this council and the underlying improving regulatory environment reinforce our confidence in our prospects for 2026, our overall business trajectory and longer-term growth opportunities. Our conservative approach to maintaining a strong capital structure and operating discipline minimizes risk, while the compounding effect of a growing portfolio of long-term contracts and deliberate growth investments create a robust foundation for cash flow growth. With a perspective that spans decades, we are methodically building a strong, stable business that is expected to deliver annuity-like returns. This long-term view allows us to leverage our core skills for strategic, measured expansion and pursue opportunities with longer-term horizons and higher returns. We pursue opportunities that other companies with shorter time horizons might overlook. Our commitment is to generate increasing cash flows and return value to stockholders, whether through reinvestment for growth or direct returns such as share repurchases and payment of dividends. We remain confident in our ability to drive growth, expand our capabilities and reward shareholders over the long run. Conference Call In conjunction with this news release, the management of NACCO Industries will host a conference call on Thursday, March 5, 2026 at 8:30 a.m. Eastern Time. The call may be accessed by dialing (888) 880-3330 (North America Toll Free) or (646) 357-8766 (International), Conference ID: 5565879, or over the Internet through NACCO Industries' website at ir.nacco.com/home. For those not planning to ask a question of management, the Company recommends listening to the call via the online webcast. 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 March 12, 2026. An archive of the webcast will also be available on the Company's website approximately two hours after the live call ends. To see the full results with financial figures included, click here. |
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