Nacco Industries, Inc. · NYSE:NC
Nacco Industries — FY2017 Earnings Presentation
31 slides from Nacco Industries's earnings presentation, Apr 6, 2018
Slide 1: Full Year 2017 Investor Presentation
Full Year 2017 Investor Presentation Exhibit 99
Slide 2: Safe Harbor Statement
Safe Harbor Statement The statements contained in this presentation that are not historical facts are "forward-looking statements" within the meaning of Section 27 A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. These forward-looking statements are made subje
Slide 3: NACCO Industries, Inc. / North American Coal
¥/) NACCO Industries, Inc. NortHAMERICAN COAL
Slide 4: NACCO Industries Overview
Coal and Aggregate Mining and Value-Added Services 100+ years of success in mining, delivering a strong foundation for NACCO’s growth over the past 30 years Surface mining of coal primarily for use in power generation and provider of value-added services to natural resource companies High-return, lo
Slide 5: Experienced Management Team
Experienced Management Team Alfred M. Rankin, Jr. J.C. Butler, Jr. Non-Executive Chairman of NACCO President and Chief Executive Officer of NACCO and NACoal John Neumann Vice President, General Counsel and Secretary of NACCO and NACoal Previously M&A lawyer at Jones Day Joined NACCO in 2009 Elizabet
Slide 6: NACCO's Priorities for Use of Cash
NACCO’s Priorities for Use of Cash Support strategic initiatives focused on continued growth of existing businesses Pursue growth opportunities that leverage Company skills and strengths Ensure business is appropriately leveraged Historically, consistent dividend plus opportunistic share buyback pro
Slide 7: North American Coal Overview
North American Coal Overview
Slide 8: North American Coal (NACoal) Overview
North American Coal (“NACoal”) Overview Longstanding excellent record of employee safety and environmental responsibility North American Coal’s largest mine was awarded the Sentinels of Safety Award in 2017, recognizing that Coteau’s Freedom Mine was the safest, large-surface coal mine in the nation
Slide 9: NACoal Overview: North American Mining
North American Coal (“NACoal”) Overview North American Mining North American Mining provides value-added services for independently owned limerock quarries and is reimbursed by its customers based on actual costs plus a management fee per unit of limerock delivered. Significant growth in recent year
Slide 10: Attractive Mix of Operations
Attractive Mix of Operations Surface Coal Mining North American Mining Value-Added Services
Slide 11: Excellent Safety Record
Excellent Safety Record 2013 – 2017 National Mining Association Top 25 U.S. Coal Producers Ranked by Average Incident Rate ___________________ OSHA (Occupational Safety and Healthy Administration) Incident Rate = Total number of injuries and illnesses multiplied by 200,000 divided by number of hours
Slide 12: Environmental Responsibility
Environmental Responsibility Environmental Protection Agency Environmental Excellence Award The Department of Interior Office of Surface Mining Best of the Best Award The Department of Interior Office of Surface Mining Director’s Award The Department of Interior Office of Surface Mining Good Neighbo
Slide 13: NACoal Operations
NACoal Operations Mississippi Lignite Mining Company The Coteau Properties Company Coyote Creek Mining Company The Falkirk Mining Company NoDak Energy Services LLC Bisti Fuels Company Camino Real Fuels Caddo Creek Resource Company The Sabine Mining Company Demery Resources Company North American Min
Slide 14: Surface Coal Mining Operations
Surface Coal Mining Operations Each mine is the exclusive supplier to its customers' facilities, with the exception of Camino Real Each mine’s production goes to its respective customer’s power plants or coal processing facilities Camino Real’s customer takes all coal produced by the mine All of NAC
Slide 15: Surface Coal Mining Operations – Mississippi Lignite Mining Company
Surface Coal Mining Operations – Mississippi Lignite Mining Company Mississippi Lignite Mining Company (“MLMC”) delivers coal to a power plant adjacent to the mine under a long-term contract that extends through 2032 MLMC is the exclusive supplier of coal to its customer’s power plant Contractually
Slide 16: Strong Earnings Driven by Long-Term Contracts with High-Quality Customers
Strong Earnings Driven by Long-Term Contracts with High-Quality Customers Coal Mining Operations Overview _____________________ Although the term of the existing coal sales agreement terminates in 2022, the term may be extended for three additional periods of five years, or until 2037, at the option
Slide 17: North American Mining
North American Mining Operates and maintains draglines for extraction of limerock at customer-owned limerock quarries Customers pay all mining costs plus a fee per cubic yard excavated or limerock yards delivered Operates more draglines than other Florida operators, with 23 draglines and an electric
Slide 18: Value-Added Services and Other Income Sources
Value-Added Services and Other Income Sources Cost-plus contract with fee to operate a coal drying facility within a power plant operated by a major coal customer Ash handling and haulage services provided for some customers as part of mining contract or for a separate fee Ongoing royalty income fro
Slide 19: NACoal Key Strategy Overview
Increase the profits generated by existing mining operations & achieve income growth from development of new mining and services ventures NACoal Key Strategy Overview Focus on core operations Continuous effort to drive down production costs, benefiting both customers and NACoal Work with customers t
Slide 20: NACoal Operational Highlights
NACoal Operational Highlights (millions of tons) (millions of cubic yards) Tons of Coal Delivered(1) Cubic Yards of Limerock Delivered ___________________ (1) The table above excludes Centennial as the Company ceased mining operations at this mine in 2015.
Slide 21: Annual Coal Production from Current Operations
Annual Coal Production from Current Operations ___________________ Note: The table above excludes Centennial as the Company ceased mining operations at this mine in 2015. (in millions)
Slide 22: NACoal Financial Highlights
NACoal Financial Highlights ($ in millions) ($ in millions) ___________________ Adjusted Income (Loss) Before Income Tax is a measure that differs from Income (Loss) Before Income Tax measured in accordance with U.S. GAAP. Adjusted Income (Loss) Before Income Tax is adjusted to exclude the results o
Slide 23: NACCO Consolidated Financial Highlights
NACCO Consolidated Financial Highlights ___________________ NACCO defines Adjusted EBITDA from continuing operations as income (loss) from continuing operations before asset impairment charges and income tax provision (benefit), plus net interest expense and depreciation, depletion and amortization
Slide 24: Strong in a Challenging Environment
Strong in a Challenging Environment NACoal is well positioned in light of challenges facing the coal mining and electric generation industries Power plants served are younger, larger and more efficient than most that have closed in recent years Power plants served are competitive suppliers of electr
Slide 25: Why Invest in NACCO?
Why Invest in NACCO? NACoal has over 100 years of success in mining and provided the foundation for the growth of the Company over the past 30 years The completion of the HBBHC spin-off in 2017 provides NACCO stockholders with a more focused investment option NACoal is expected to continue to benefi
Slide 26: Appendix
Appendix i tan cl! ea —
Slide 27: Risk Factors
Risk Factors The statements contained in this presentation 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 certa
Slide 28: Non-GAAP Disclosure
Non-GAAP Disclosure This presentation contains non-GAAP financial measures. Included in this presentation 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").
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations NACoal Adjusted income before income tax reconciliation ($ in millions) _____________________ Note: Adjusted Income Before Income Tax is a measure that differs from Income Before Income Tax measured in accordance with U.S. GAAP. Adjusted Income Before Income Tax is adjusted
Slide 30: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) ($ in millions) Adjusted EBITDA from Continuing Operations reconciliation _____________________ Note: NACCO defines Adjusted EBITDA from continuing operations as income (loss) from continuing operations before asset impairment charges and income tax expense (benefit)
Slide 31: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) NACCO Consolidated Cash Flow Before Financing ($ in millions) _____________________ Note: Cash flow before financing is defined as net cash from operating activities plus net cash from investing activities. It includes non-cash impairment charges related to NACoal’s