NACCO Industries, Inc. Reports Quarterly Results for the Period Ended March 31, 2025

NACCO Industries Delivers Solid First Quarter Results, Sees Continued Growth Ahead

NACCO Industries, a leading provider of natural resources and mining services, has reported its financial results for the first quarter of 2025. The company’s diverse business segments, including Coal Mining, North American Mining (NAMining), and Minerals Management, have all contributed to a strong start to the year.

Financial Highlights

In the first quarter of 2025, NACCO’s total revenue increased by 23.1% to $65.6 million compared to the same period in 2024. This growth was driven by higher customer demand and improved performance across the company’s business units.

Operating profit also saw a significant improvement, rising to $7.7 million in the first quarter of 2025, up from $4.8 million in the same period last year. This 61.5% increase was primarily due to a decrease in gross losses and higher earnings from the company’s unconsolidated operations.

Net income for the quarter was $4.9 million, up from $4.6 million in the first quarter of 2024. The effective income tax rate for the quarter was 4.4%, down from 18.0% in the prior-year period, reflecting the company’s continued benefit from percentage depletion.

Segment Performance

The Coal Mining segment, which operates surface coal mines for power generation companies, saw a 23.8% increase in revenue to $19.2 million in the first quarter of 2025. This was driven by higher customer requirements at the MLMC operation, which had been impacted by a boiler issue at the customer’s Red Hills Power Plant in the prior-year period.

Operating profit for the Coal Mining segment improved significantly, reaching $3.8 million in the first quarter of 2025 compared to a loss of $0.4 million in the same period of 2024. This was primarily due to a decrease in the gross loss, excluding inventory impairment charges, and an increase in earnings from the company’s unconsolidated operations, such as Falkirk and Coteau.

The NAMining segment, which provides mining services for producers of aggregates, activated carbon, lithium, and other industrial minerals, reported a 28.8% increase in total revenue to $31.5 million. However, operating profit for the segment decreased by $0.4 million to $2.0 million, primarily due to a decline in earnings from unconsolidated operations and higher selling, general, and administrative expenses.

The Minerals Management segment, which includes the Catapult Mineral Partners business, saw a 4.8% increase in revenue to $10.9 million in the first quarter of 2025. Operating profit for the segment was relatively flat at $7.9 million, as a decrease in gross profit and higher selling, general, and administrative expenses were offset by an increase in earnings from unconsolidated operations, particularly the additional investment in Eiger, LLC.

Liquidity and Capital Resources

NACCO’s cash flow from operating activities improved significantly in the first quarter of 2025, increasing by $14.8 million compared to the same period in 2024. This was primarily due to favorable changes in working capital, including a decrease in trade accounts receivable and the timing of insurance payments.

The company’s capital expenditures for the first three months of 2025 were $8.8 million, primarily for equipment in the NAMining segment. Planned expenditures for the remainder of 2025 are expected to be approximately $55 million, to be funded from internally generated funds and/or bank borrowings.

NACCO’s consolidated capital structure remains strong, with a debt-to-total-capitalization ratio of 19% as of March 31, 2025, down from 20% at the end of 2024. The company’s secured revolving line of credit was amended in September 2024 to increase the revolving credit commitments to $200 million and extend the maturity to September 2028.

Outlook and Growth Strategies

NACCO is optimistic about its business prospects for 2025 and beyond, as it continues to benefit from favorable macroeconomic trends and a more favorable regulatory environment, particularly for the fossil fuel industry.

In the Coal Mining segment, the company expects solid customer demand and a modest increase in deliveries compared to 2024. However, an anticipated reduction in the contractually determined per-ton sales price is expected to offset improvements, leading to a moderate year-over-year decrease in operating profit for this segment.

The NAMining segment is expected to generate increasing levels of operating profit over time as it benefits from new and extended contracts. The segment is also expected to see profitability improvements driven by operational efficiencies and an increased focus on part sales.

The Minerals Management segment, through its Catapult business, is expected to see a significant improvement in second-half earnings in 2025 due to anticipated trends in oil and natural gas prices and projected volumes. The segment continues to build its portfolio of mineral interests, providing long-term stable cash flow generation.

Mitigation Resources, NACCO’s environmental solutions business, is expected to achieve full-year profitability in 2025 and increase profitability over time as the business matures. The company’s newly established ReGen Resources business is also pursuing opportunities in the rapidly increasing demand for additional power generation sources in the United States.

Overall, NACCO is committed to maintaining a conservative capital structure as it continues to grow and diversify its business. The company believes its strategic diversification will generate cash that can be reinvested to strengthen and expand the businesses or distributed to investors in the form of share repurchases or dividends.

Conclusion

NACCO’s solid first-quarter performance and positive outlook for the remainder of 2025 demonstrate the company’s ability to navigate the evolving natural resources and mining landscape. By leveraging its core competencies, strategic diversification, and focus on operational excellence, NACCO is well-positioned to continue delivering value to its customers and shareholders in the years ahead.