Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (September 2017)
33 slides from Nacco Industries's investor presentation, Sep 18, 2017
Slide 1: Investor Presentation September 2017
Investor Presentation September 2017 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: Creating Two Industry-Focused Public Companies
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 High-return, low-volatility business model supported by long-term contracts structured to eliminate market fluctuations in coal prices Largest
Slide 5: Rationale for Spin-off
Rationale for Spin-off Two strong, focused operating companies Leaders in their respective industries Unique growth opportunities positioned to drive value Attractive returns on invested capital Equity incentives drive long-term focus Reinforce management’s focus on market and customer needs Indepen
Slide 6: Experienced Management Team
Experienced Management Team Alfred M. Rankin, Jr. J.C. Butler, Jr. Senior Vice President – Finance, Treasurer and Chief Administrative Officer of NACCO President and Chief Executive Officer of NACoal President and Chief Executive Officer of NACCO Pre-Spin Post-Spin Non-Executive Chairman of NACCO Pr
Slide 7: 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 8: North American Coal Overview
North American Coal Overview
Slide 9: North American Coal (NACoal) Overview
North American Coal (“NACoal”) Overview Surface mining of coal primarily for use in power generation and provider of value-added services to natural resource companies Longstanding excellent record of employee safety and environmental responsibility Unique “service business” coal-mining model with l
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 2012 – 2016 National Mining Association Top 20 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 work
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 Exclusive supplier – Each mine’s production goes to its respective customer’s power plants or coal processing facilities All of NACoal’s mines operate under long-term cost-plus contracts excluding one NACoal is responsible for all mine operations Customer pays 100% of
Slide 15: Surface Coal Mining Operations – Mississippi Lignite Mining Company
Surface Coal Mining Operations – Mississippi Lignite Mining Company Mississippi Lignite Mining Company (“MLMC”) supplies coal under a long-term contract that extends through 2032 MLMC is the exclusive supplier of coal to its customer’s power plant, adjacent to mine Contractually agreed-upon price ad
Slide 16: Coal Mining Operations Overview
Liberty Fuels Company Strong Earnings Driven by Long-Term Contracts with High-Quality Customers Coal Mining Operations Overview _____________________ Certain reserves are owned and controlled by the customer and therefore not listed on the table. Although the term of the existing coal sales agreemen
Slide 17: North American Mining
North American Mining Maintains and operates draglines for extraction of limerock at customer-owned limerock quarries Customers pay all operating costs plus an agreed profit per cubic yard excavated or limerock yards delivered Operates 20 draglines for 5 customers at 14 quarries as of August 31, 201
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 profitability of all existing mining operations & achieve income growth and sound returns on capital 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
Slide 20: NACoal Operational Highlights
NACoal Operational Highlights (millions of tons) (millions of cubic yards) Tons of Coal Sold(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: NACoal Financial Highlights (cont.)
NACoal Financial Highlights (cont.) ___________________ NACCO defines Adjusted EBITDA as income (loss) before asset impairment charges and income tax provision (benefit), plus net interest expense and depreciation, depletion and amortization expense. Adjusted EBITDA is not a measurement under U.S. G
Slide 24: Outlook: NACCO and NACoal
Excluding Centennial, H2 2017 expected to be significantly lower than H1 2017 due to a substantial decrease in MLMC results and the non-recurrence of gains realized in H1 2017 at Centennial. Excluding Centennial, expected increase in income before tax in H2 2017 compared to H2 2016 due to the start
Slide 25: 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 26: 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 spin-off will provide NACCO stockholders with a more focused investment option NACoal is expected to continue to benefit from its high-return, low-
Slide 27: Appendix
Appendix 7 ae
Slide 28: Risk Factors
Risk Factors The risks and uncertainties with respect to each subsidiary’s operations as referenced on page 1 of this document include, without limitation: North American Coal: (1) the potential closure of the Liberty Mine in Mississippi, (2) changes in tax laws or regulatory requirements, including
Slide 29: Risk Factors (cont.)
Risk Factors (cont.) The risks and uncertainties with respect to each subsidiary’s operations as referenced on page 1 of this document include, without limitation: Hamilton Beach Brands, Inc.: (1) changes in the sales prices, product mix or levels of consumer purchases of small electric and specialt
Slide 30: 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 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations NACoal Adjusted income (loss) before income tax reconciliation ($ in millions) _____________________ Note: 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) Be
Slide 32: Non-GAAP Reconciliations (cont.)
Non-GAAP Reconciliations (cont.) ($ in millions) Adjusted EBITDA reconciliation _____________________ Note: NACCO defines Adjusted EBITDA as income (loss) before asset impairment charges and income tax expense (benefit), plus net interest expense and depreciation, depletion and amortization expense.
Slide 33: Non-GAAP Reconciliations (cont.) Cash Flow Before Financing
Non-GAAP Reconciliations (cont.) 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 Centennial mining o
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