Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (March 2021)
44 slides from Nacco Industries's investor presentation, Mar 31, 2021
Slide 1: NACCO Industries' FY 2020 Investor Presentation
NACCO Industries’ FY 2020 Investor Presentation Leading Into The Future
Slide 2: Safe Harbor Statement and Disclosure
Safe Harbor Statement and Disclosure • This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). • Refer to
Slide 3: Company Overview
Company Overview a NACCO Industries’
Slide 4: Company Overview
Company Overview NACCO (NYSE: NC) • NACCO Industries,® through a portfolio of mining and natural resources businesses, operates three business segments: • Coal Mining • Operates surface coal mines under long-term contracts with power generation companies and an activated carbon producer pursuant to
Slide 5: NACCO Industries – At a Glance
NACCO Industries – At a Glance FY 2020 Operating Profit (Loss) (1) Key Metrics FY 12/31/20 $25,436 $1,872 $3,493 $13,448 In thousands Consolidated Operating Profit (1) $13,448 $(17,353) Income before Income taxes (1) $14,258 Coal NAMining Minerals Mgmt. Unallocated Items* Cons. Net income $14,793 FY
Slide 6: Key Strategic Initiative - Grow and Diversify
Key Strategic Initiative - Grow and Diversify For more than 100 years, NACCO has repeatedly demonstrated its ability to adapt to change • Diversification from coal into mining limestone, aggregates and lithium demonstrates ability to develop a diversified mining services business and provide value-a
Slide 7: Grow and Diversify
Grow and Diversify • Minerals Management acquired $14.2 million of mineral and royalty interests in the Permian Basin in Texas in 2020 • Represents the first step in a disciplined acquisition plan to: • Expand geographic footprint of mineral and royalty interests We are • Diversify into a more balan
Slide 8: Key Strategic Initiative - Protect the Core
Key Strategic Initiative - Protect the Core We remain engaged in activities that support our coal customers • Focused on driving down coal production costs and maximizing efficiencies and operating capacity • Helps customers with management fee contracts improve their competitiveness • Benefits cust
Slide 9: Corporate Responsibility
Corporate Responsibility • Good corporate governance and long-term success are inextricably linked • A clear, reasoned approach to corporate governance allows management to focus on running the Company, and doing what is right, with a long-term perspective • Believe that short-term perspectives fall
Slide 10: Leading Into The Future
Leading Into The Future NACCO Industries”
Slide 11: Coal Mining – Operations
Coal Mining — Operations © Surface Coal Mining Operations Leading Into The Future u NACCO Industries”
Slide 12: Coal Mining Segment – Operations
The Coal Mining segment provides integrated solutions Customer Coal Mining Segment – Operations for power generation companies Operations Land Acquisition Mining Load & Haul Reclamation Power Plant Operation Reserve Acquisition Coal Handling Bond Release & Maintenance Permitting Electricity Sales Mi
Slide 13: Coal Mining
Coal Mining • Over 100 years of coal mining experience • Our coal mines deliver coal produced to adjacent or nearby power plants, a synfuels plant and an activated carbon facility • Each mine is the exclusive supplier to its customer’s facility • As of December 31, 2020, we operated seven surface co
Slide 14: Unique Business Model
Unique Business Model • All, but one, active coal mining locations operate pursuant to “management fee” contracts • Contract structure aligns our goals with customer objectives • Under “management fee” contracts, we are responsible for all mine operations • Receive management fee per ton or MMBtu of
Slide 15: Mississippi Lignite Mining Company (MLMC)
Mississippi Lignite Mining Company (MLMC) • Delivers coal to the adjacent Red Hills power plant under a contract that runs through 2032 • The Red Hills Power Plant supplies electricity to TVA under a long-term power purchase agreement. • MLMC provides 100% of the coal for the Red Hills power plant •
Slide 16: Protect the Core in a Challenging Environment
Protect the Core in a Challenging Environment • Low natural gas prices and growth in renewable energy sources, such as wind and solar, are likely to continue to unfavorably affect the amount of electricity dispatched from coal-fired power plants. Despite this: • We continue to believe that coal repr
Slide 17: North American Mining
North American Mining NACCO Industries”
Slide 18: NAMining Integrated Solutions for Aggregates Companies
NAMining can provide Integrated Solutions for Customer Coal Mining Segment – Operations aggregates companies Operations Land Acquisition Dragline Operation & Rope Shovels Maintenance Crushing Reserve Acquisition Excavators Sizing Permitting Trucks Marketing Blasting Conveyors Sales Overburden Remova
Slide 19: NAMining – Current Operating Locations
NAMining – Current Operating Locations 45.9 million tons of limestone delivered in 2020 compared with 27.2 million tons of limestone delivered in 2015 32 draglines and an electric rope shovel operated at the end of 2020 compared with 10 draglines at the end of 2015 10 customers at the end of 2020 co
Slide 20: NAMining Growth
NAMining Growth • Well positioned for growth • The COVID-19 pandemic slowed business development initiatives in 2020, but outlook for growth in 2021, including growth outside Florida, is strong • Focused on: • Pursuit of growth opportunities in dragline operations, as well as more comprehensive mini
Slide 21: NAMining – Sawtooth/Thacker Pass Project (in development)
NAMining – Sawtooth/Thacker Pass Project (in development) • NAMining’s subsidiary, Sawtooth Mining, will serve as exclusive contract miner for the Thacker Pass lithium project under a “management fee” mining agreement • Located in northern Nevada • 20 year contract term • The Thacker Pass Project is
Slide 22: Minerals Management
Minerals Management NACCO Industries”
Slide 23: Minerals Management
Minerals Management Location of Significant Reserves OH PA ND TX LA Gas Oil Coal • Derives income primarily by leasing its royalty and mineral interests to third-party exploration and production companies, and to a lesser extent other mining companies, granting them the rights to
Slide 24: Minerals Management
Minerals Management • We own royalty interests, mineral interests, nonparticipating royalty interests, and overriding royalty interests • Segment will benefit from the continued development of its mineral properties without the need for investment of additional capital once mineral and royalty inter
Slide 25: Minerals Management
Minerals Management • Efforts to grow and diversify include acquiring additional oil and gas interests or similar investments in the oil and gas industry • Established Catapult Mineral Partners, with small but experienced staff, to lead acquisition efforts and manage legacy oil and gas interests • A
Slide 26: Mitigation Resources of North America
Mitigation Resources of North America’ Se a yy. adie r Se ee — Pb gading Into The Futureggagaeeee™ NACCO Industries
Slide 27: Mitigation Resources of North America Bank Locations
Mitigation Resources of North America Bank Locations 27
Slide 28: Leverage Core Competencies to Grow and Diversify
Leverage Core Competencies to Grow and Diversify • Mitigation Resources • Offers opportunity for growth and diversification built upon our decades of experience providing high-quality environmental work at our mining operations • Goal is to grow into one of the ten largest U.S. providers of mitigati
Slide 29: Corporate Responsibility
Corporate Responsibility Leading4ntethe Future NACCO Industries”
Slide 30: Corporate Responsibility
Corporate Responsibility • NACCO has long believed that good corporate governance is key to enhancing long-term value for our shareholders – underlying areas of focus are: Corporate Governance Environmental COVID-19 Safety People Community Stewardship Response COVID-19 Response added in 2020 - mobil
Slide 31: Corporate Responsibility - Safety
Corporate Responsibility - Safety • Continuous emphasis on the importance of safety at all operations • We have earned more than 100 safety awards at the state and national levels • During 2020: Demery Resources celebrated eight years without a lost-time accident Bisti Fuels celebrated three years w
Slide 32: Corporate Responsibility - People
Corporate Responsibility - People • Our people are our greatest asset • We provide competitive compensation and benefits, as well as training and educational assistance programs, to attract and retain the best people • We believe in open communication at all levels of the company and insist that eve
Slide 33: Corporate Responsibility - Environmental Stewardship
Corporate Responsibility - Environmental Stewardship • We aim to leave the land better than we found it • Natural resource reclamation process includes planting and maintaining thousands of trees, acres of native grasses and other flora • Planted over 8.8 million trees since 1978 as part of reclamat
Slide 34: Environmental Stewardship
Environmental Stewardship We have received over 90 federal and state awards for successful and innovative reclamation projects over the last 30 years • Environmental Protection Agency Environmental Excellence Award • The Department of Interior Office of Surface Mining Best of the Best Award • The De
Slide 35: Corporate Responsibility - Community
Corporate Responsibility - Community • Actively engaged in the local communities where our employees live and work • Support employee volunteer activities • Long-standing support of literacy programs • Provide support to various educational, community and arts organizations • We also provide a compa
Slide 36: Leading Into The Future
“Leading Inf The Ei “ : NACCO Industries*
Slide 37: Segment Priorities and Strategies
Coal Mining North American Minerals Mitigation Resources Conservative Mining Management Balance Sheet Protect existing customer Focus on growth to become a Acquire interests in high- Grow Mitigation Resources into Priorities for capital contracts through leading diversified mining services quality o
Slide 38: Why Invest in NACCO?
Why Invest in NACCO? Focus on growing Minerals 100+ years of success in mining provides the foundation for growth Management by acquiring high- Two Key Strategies – Protect the Core Strong balance quality oil and gas and Grow and Diversify provide the interests at right balance as we chart our futur
Slide 39: Capacity for Growth
Capacity for Growth 2020 • $88.5 million of cash at December 31, 2020 2021+ • Priorities for cash: • Unsecured $150 million revolving line of credit • Invest in initiatives to drive future growth • $117 million available and unused at • Fund capital expenditures for existing December 31, 2020 busine
Slide 40: Financial Results and Non-GAAP Reconciliation
Financial Results and Non-GAAP Reconciliation
Slide 41: Historical Operating Results
Historical Operating Results Tons of Coal Delivered Tons of Limestone Delivered (in millions) (in millions) 50.0 46.5 38.5 46.0 45.9 40.0 34.6 46.0 31.0 30.0 45.5 20.0 45.0 44.7 10.0 44.5 0.0 44.0 2018 2019 2020 2018 2019 2020 Consolidated Adjusted EBITDA(1) Consolidated Net Income (in millions) (in
Slide 42: 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 43: NACCO Industries FY 2020 Results and Non-GAAP Reconciliation
NACCO Industries FY 2020 Results and Non-GAAP Reconciliation Coal Minerals NAMining Unallocated Elims Consol. Mining Mgmt. Revenue $72,088 $42,392 $14,721 $2,133 ($2,902) $128,432 Gross Profit $1,636 $3,126 $12,379 ($72) ($100) $16,969 Earnings of Unconsolidated Operations 56,584 3,619 - - - 60,203
Slide 44: NACCO Industries FY 2019 Results and Non-GAAP Reconciliation
NACCO Industries FY 2019 Results and Non-GAAP Reconciliation Coal Minerals NAMining Unallocated Elims Consol. Mining Mgmt. Revenue $68,701 $42,823 $30,119 $790 ($1,443) $140,990 Gross Profit $3,271 $1,125 $26,654 ($165) $243 $31,128 Earnings of Unconsolidated Operations 60,678 3,205 - - - 63,883 (1)
NACCO Industries — Investor Presentation (March 2021) on 6ix