Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (March 2020)
40 slides from Nacco Industries's investor presentation, Mar 23, 2020
Slide 1: Investor Presentation March 2020
TRUSTED PARTNERS. INTEGRATED SOLUTIONS. POWERFUL RESULTS. INVESTOR PRESENTATION March 2020 Exhibit 99
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 NAC
Slide 3: Company Overview
Company Overview h NACCO Industries, Inc”
Slide 4: NACCO Industries
NACCO Industries NACCO Industries, Inc.® is the public holding company for The North American Coal Corporation®. The Company and its affiliates operate in the mining and natural resources industries through three operating segments: Coal Mining Operates surface coal mines under long-term contracts w
Slide 5: NACCO Industries At a Glance
NACCO Industries At a Glance _____________________ EBITDA and Net Cash (Debt) are non-GAAP measures and should not be considered in isolation or as substitutes for GAAP measures. See non-GAAP explanations and the related reconciliations to GAAP measures beginning on page 39. Net Cash (Debt) at Decem
Slide 6: Our Operations
Our Operations In 2019, NACCO continued to focus on building long-term shareholder value by executing on its strategies to grow and diversify; adding new locations to an already diverse geographic footprint.
Slide 7: It's About People: Trusted Partners
It’s About People: Trusted Partners While our core competency is mining, our business is about people –our customers, our employees and our communities Our customers: Long-term relationships help us understand our customer’s business objectives and allow us to deliver results that strengthen their b
Slide 8: Trusted Partners - Excellent Safety Record
Trusted Partners - Excellent Safety Record 2014 – 2018 National Mining Association Top 25 U.S. Coal Producers Ranked by Average Incident Rate
Slide 9: Trusted Partners - Environmental Stewardship
Trusted Partners - Environmental Stewardship 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 Min
Slide 10: Coal Mining
Coal Mining Wnxcco Industries, Inc”
Slide 11: Coal Mining segment provides integrated solutions for power generation companies
Power Plant Operation & Maintenance Electricity Sales Regulatory Matters Mining Land Acquisition Reserve Acquisition Permitting Mine Planning Load & Haul Coal Handling Reclamation Bond Release The Coal Mining segment provides integrated solutions for power generation companies Customer Operations
Slide 12: Coal Mining
Coal Mining 107 year history of mining coal Nine surface coal mines Delivered 34.6 million tons of coal in 2019 Mines deliver coal produced to adjacent or nearby power plants, synfuels plants or activated carbon facilities All but one mine is the exclusive supplier to its customer’s facility Camino
Slide 13: Unique Business Model
Unique Business Model Eight of nine coal mining locations operate pursuant to “management fee” contracts Contract structure aligns our focus with customer objectives Under “management fee” contracts, we are responsible for all mine operations Receive management fee per ton or MMBtu of coal delivered
Slide 14: Mississippi Lignite Mining Company (MLMC)
Mississippi Lignite Mining Company (MLMC) 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 fuel for the Red Hills power plant ML
Slide 15: Results Driven by Long-Term Contracts with High-Quality Customers
Results Driven by Long-Term Contracts with High-Quality Customers 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 of Coteau. During the first quarter of 2020, Great River Ener
Slide 16: No direct exposure to coal market price
No direct exposure to coal market price Focus to drive down production costs and maximize efficiency and operating capacity at each mine Benefits both customers and the Company as fuel cost is a major driver for power plant dispatch Power plant dispatch drives demand for coal Customers continue to i
Slide 17: Well-Positioned in Light of Challenging Environment
Well-Positioned in Light of Challenging Environment We believe the power plants we supply are generally younger and more efficient, with better environmental controls than most that have closed in recent years During the past 10 years, North American Coal built five new coal mines and assumed operat
Slide 18: North American Mining
North American Mining Wnxcco Industries, Inc?
Slide 19: NAMining provides Integrated Solutions for aggregates companies
NAMining provides Integrated Solutions for aggregates companies Rope Shovels Excavators Trucks Conveyors Dozers Graders Land Acquisition Reserve Acquisition Permitting Blasting Over Burden Removal Dragline Operation & Maintenance Crushing Sizing Marketing Sales We have core competencies to expand sc
Slide 20: NAMining – Current Operating Locations
NAMining – Current Operating Locations draglines and an electric rope shovel at the end of 2019 compared with 10 draglines at the end of 2015 customers at the end of 2019 compared with 2 customers at the end of 2015 quarries at the end of 2019 compared with 7 quarries at the end of 2015 30 10 20 new
Slide 21: NAMining Segment
NAMining Segment Serviced-based business model to create value Focused on: Mining materials other than coal Primarily limestone as well as sand and in the future, lithium Mining services where our core skills can provide value Long-term customer relationships Entered into a 20-year limestone mining
Slide 22: Platform for Growth Outside Coal
Platform for Growth Outside Coal Geography Focus on expanding footprint beyond the southeastern United States Contract mining services provide: Dependable production Optimized quality of delivered material Controlled costs Expand scope of work – ability to offer a full range of comprehensive mining
Slide 23: Sawtooth Mining
Sawtooth Mining In 2019, NAMining, through its subsidiary, Sawtooth Mining, entered into a new mining agreement Will serve as exclusive contract miner for the Thacker Pass lithium project Located in northern Nevada 20 year contract term The Thacker Pass Project is 100% owned by Lithium Nevada Corp.
Slide 24: Minerals Management
Minerals Management Wwacco Industries, Inc”
Slide 25: Minerals Management Segment
Minerals Management Segment We receive royalty-based lease payments based on sales of natural gas, and to a lesser extent, oil, natural gas liquids and coal, extracted by third parties 44,860 gross acres of oil and gas mineral interests Majority of reserves acquired as part of the Company’s historic
Slide 26: Minerals Management Segment
Minerals Management Segment Minerals Management income grew significantly in 2019 compared with 2018, primarily due to an increase in the number and productivity of gas wells operated by third parties Production from newly developed natural gas wells can decrease quickly due to the natural productio
Slide 27: Other Growth & Diversification
Other Growth & Diversification
Slide 28: Mitigation Resources of North America
Mitigation Resources of North America ®
Slide 29: Leverage Core Competencies to Grow and Diversify
Leverage Core Competencies to Grow and Diversify North American Coal is widely recognized for the quality of its environmental work and effective reclamation plans Mitigation Resources of North America (“Mitigation Resources”) was established to leverage these core competencies Mitigation Resources
Slide 30: Summary
Summary Wnxcco Industries, Inc’
Slide 31: Leverage core capabilities to diversify into related businesses
Leverage core capabilities to diversify into related businesses High return, low volatility business model supported by long-term contracts Rapidly growing contract miner in aggregates and minerals industry Expand income streams from royalties earned on gas and coal reserves extracted by others Coal
Slide 32: Why Invest in NACCO?
Why Invest in NACCO? 100 years of success in mining provides the foundation for continued growth Well suited to serve as a contract miner in both coal and non-coal mining operations Continue pursuit of non-coal mining opportunities principally through the North American Mining segment Pursue growth
Slide 33: Capacity for Growth
Strong cash flow generation: Net cash provided before financing activities of $32.5 million Conservative leverage: Unsecured $150 million revolver $132.6 million available and unused at December 31, 2019 BBB(low) with a stable trend credit rating from DBRS Limited Utilize cash to support growth init
Slide 34: Return Capital to Shareholders
Return Capital to Shareholders Strong history of paying dividends – NACCO has paid dividends since 1956 $122.9 million of cash and $24.9 million of debt at 12/31/2019 Quarterly cash dividend increased to $0.19 per share as of Q2 2019, which is equal to an annual dividend rate of $0.76 per share $ mi
Slide 35: Financial Results
inancial Results F Wnxcco Industries, Inc’
Slide 36: Historical Operating Results
Historical Operating Results Tons of Coal Delivered(1) Tons of Limestone Delivered Consolidated Adjusted EBITDA(2)(3) Consolidated Net Income (2) ($ in millions) ($ in millions) _____ (1) Excludes Centennial as the Company ceased mining operations at this mine in 2015. (2) On September 27, 2017, the
Slide 37: NACCO Industries FY 2019 vs FY 2018 Results
($ in thousands) Results for FY 2018 and Q1 2019 vs. Q1 2018 _____ (1) EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures. Segment EBITDA is defined as Operating Profit plus Depreciation, Depletion and Amortization. See non-GAAP explanations o
Slide 38: Appendix
Appendix Wnxcco Industries, Inc’
Slide 39: 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 40: Non-GAAP Reconciliation – Adjusted EBITDA
Non-GAAP Reconciliation – Adjusted EBITDA _____________________ Note: NACCO defines Adjusted EBITDA from continuing operations as income (loss) from continuing operations before long-lived asset impairment charges and income taxes, plus net interest expense and depreciation, depletion and amortizati
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