Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (April 2024)
36 slides from Nacco Industries's investor presentation, Apr 1, 2024
Slide 1: 2023 Investor Presentation
2023 Investor Presentation 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
Slide 3: Company Overview
Company Overview NACCO Industries® brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through its robust portfolio of NACCO Natural Resources businesses
Slide 4: Charting Our Future Through Two Key Strategies
…while maintaining a conservative balance sheet that allows us to invest in initiatives to drive growth Charting Our Future Through Two Key Strategies… 4 Partners with power generation customers to maintain cost- effective energy solutions Provides a broad range of contract mining services for produ
Slide 5: NACCO Industries at a Glance
(1) 2023 results include a long-lived asset impairment charge of $65.9 million, or $50.7 million, after taxes of $15.2 million, using the 23% statutory tax rate. (2) Consolidated Adjusted EBITDA and Net Cash are non-GAAP measures and should not be considered in isolation or as substitutes for GAAP m
Slide 6: North American Coal Mining Segment
North American’ ror amencan _. Coal Mining Seqment
Slide 7: North American Coal Service-Based Business Model
7 Power Plant Operation & Maintenance Electricity Sales Regulatory Matters Load & Haul Coal Handling Reclamation Bond Release North American Coal operates surface coal mines under long-term contracts pursuant to a service-based business model Customer Operations • More than 110 years of experience •
Slide 8: Unique Business Model Closely Aligned with Customers
▪ Coteau, Falkirk and Coyote Creek operate under contracts that align our goals with customer objectives ➢ Management fee earned per ton of coal delivered ➢ Customers are responsible for funding all operating costs and capital ➢ Provides steady income and cash flow with minimal capital investment ➢
Slide 9: Mississippi Lignite Mining Company (MLMC)
Mississippi Lignite Mining Company (MLMC) ▪ Delivers 100% of the coal to supply the Red Hills Power Plant ➢ Power plant supplies electricity to Tennessee Valley Authority (TVA) ➢ Contract ends in 2032 ▪ We are responsible for all operating costs, capital requirements and final mine reclamation ▪ Con
Slide 10: Coal Industry Outlook
Coal Industry Outlook ▪ The coal mining industry continues to face political and regulatory challenges, while demand for electricity rises ▪ Despite challenges, we believe coal must remain an essential part of the energy mix in the United States for the foreseeable future ➢ Emerging carbon capture a
Slide 11: Minerals Management Segment
Minerals Management Segment
Slide 12: Business Model
Business Model ▪Minerals Management owns and derives income primarily from mineral and royalty interests that are leased to third-party lessees ➢ Lessees make payments to us based on their production and sale of natural gas, oil, natural gas liquids and, to a lesser extent, coal ➢ Benefit from the c
Slide 13: Minerals Management reserve locations as of 12/31/23
Minerals Management reserve locations as of 12/31/23 ▪ Total mineral and royalty interests included 184,700 gross acres and 63,300 net royalty acres at December 31, 2023 ▪ Current portfolio includes mineral and royalty interests in premier U.S. oil and gas producing regions ▪ Goals: ➢ Construct a di
Slide 14: Minerals Management Portfolio Overview
Appalachia Gulf Coast Permian Rockies Williston Totals 2023 Gross Acres 34,661 27,932 120,636 326 1,194 184,749 2023 Net Royalty Acres 36,199 20,105 4,556 72 2,388 63,320 2023 Production (BOE) 704,584 570,801 144,594 2,262 0 1,422,241 Production Mix By Revenue(1) Undeveloped Gross/Net Well Count 179
Slide 15: Executing Growth
▪ Catapult Mineral Partners is successfully executing its proven business model to increase its mineral and royalty interests ➢ Acquisitions totaling $68 million since 2020 ➢ Targeting additional investments of up to $20 million in 2024 ▪ Disciplined acquisition approach that: ➢ Aligns with our long
Slide 16: North American Mining Segment
North American Mining Segment
Slide 17: North American Mining contract mining services
17 North American Mining provides a broad range of contract mining services for producers of industrial minerals Customer Operations ▪ Primary platform for growth and diversification of our mining activities ▪ We believe NAMining is the largest operator of draglines in the U.S. ▪ Focused on operatio
Slide 18: NAMining – Locations and Projects
▪ Sawtooth Mining (NAMining subsidiary) to serve as exclusive contract miner for Thacker Pass lithium project, which is 100% owned by Lithium Americas Corp.* ➢ Will provide comprehensive mining services ➢ Currently providing mine design and consulting services ➢ Began acquiring equipment in 2023 • R
Slide 19: Mitigation Resources
Mitigation Resources OF NORTH AMERICA min bigs Mitigation Resources
Slide 20: Mitigation Resources stream and wetland mitigation
▪ Creates and sells stream and wetland mitigation credits and provides services to those engaged in permittee-responsible mitigation and environmental restoration, which include providing restoration services for abandoned mine lands ▪ On track to become a top ten provider of stream and wetland miti
Slide 21: Mitigation Resources Growth
Mitigation Resources Growth ▪ Awarded 5 restoration projects during 2023 ▪ Expanded into Florida market in early 2024 with Pomona mitigation bank ▪ Expanded scope of business to include reclamation of abandoned mine land formerly mined by others ➢ Selected by State of Texas to restore abandoned mine
Slide 22: Projects in High-Demand U.S. Markets
18 Projects in High-Demand U.S. Markets 22
Slide 23: ReGen Resources
ReGen Resources
Slide 24: ReGen Resources
▪ XXX ReGen Resources 24 ❖ Formed in 2023 to address opportunities to develop energy infrastructure on mitigated properties ▪ Federal incentives available for redevelopment of reclaimed mine land ➢ Early-stage project with TVA to develop up to 450MW of solar energy on reclaimed MLMC land ➢ Evaluatin
Slide 25: Stewardship
ios Stewardsh
Slide 26: Doing the right thing is in our corporate DNA
▪ NACCO’s 110 years of growth and success are founded on our fundamental commitment to safety, people, community and the environment ▪ Good corporate governance with a long-term perspective is an integral part of our value system 26 Doing the right thing is in our corporate DNA People Community We a
Slide 27: Safety first, safety always
Safety first, safety always ▪ We operate in a culture committed to safety excellence ▪ Based on Mine Safety and Health Administration data, the National Mining Association ranks us as an industry leader in safety, and our MSHA lost-time incident rate is consistently below the national average for co
Slide 28: People
People 28 ▪ Employees fuel our success ▪ We encourage our employees to pursue continued professional development, skills training and other educational opportunities ➢ We enjoy high retention rates and long tenures with our employees ✓ 14% of employees have at least 20 years of service ✓ In 2023, 12
Slide 29: Environment
29 Environment ▪ At our core, we are conservationists ▪ Our native grass programs exemplify our commitment to going above and beyond technical requirements for reclamation ▪ Managing and enhancing land is one of the great benefits we offer customers ▪ From permit management to agency coordination, w
Slide 30: Why Invest in NACCO?
Why Invest in NACCO? 30 Two Key Strategies – Protect the Core and Grow and Diversify – provide the right balance as we chart our future Minerals Management’s growing portfolio of high-quality oil & gas mineral interests expected to provide strong long-term income & steady cash flow Mitigation Resour
Slide 31: Financial Results and Non-GAAP Reconciliation
Financial Results and Non-GAAP Reconciliation
Slide 32: Historical Operating Results
52.0 41.4 7.1 0 15 30 45 60 2021 2022 2023 Historical Operating Results 32 45.8 38.3 (71.3) (80) (55) (30) (5) 20 45 2021 2022 2023 Segment Operating Profit Segment Adjusted EBITDA(3) (1) During 2022 and 2023, the Company recorded non-cash impairment charges of $3.9 million and $65.9 million, respec
Slide 33: Non-GAAP Disclosure
Non-GAAP Disclosure This presentation contains non-GAAP financial measures. Included in this presentation are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").
Slide 34: Non-GAAP Reconciliation: Consolidated Adjusted EBITDA
Non-GAAP Reconciliation Consolidated Adjusted EBITDA 34 ($ in thousands) 2021(2) 2022(1)(2) 2023(1) Net income (loss) $48,125 $74,158 ($39,587) Long-lived asset impairment charges (1) - 3,939 65,887 Contract termination settlements (2) (10,333) (30,882) - Income tax provision (benefit) 8,725 13,565
Slide 35: Non-GAAP Reconciliation: Segment Adjusted EBITDA
Non-GAAP Reconciliation Segment Adjusted EBITDA ($ in thousands) Coal Mining NAMining Minerals Management Unallocated Eliminations Consolidated 2023 Operating Profit (Loss) ($71,342) $3,348 $19,418 ($21,461) ($100) ($70,137) Long-lived asset impairment charge(1) 60,832 - 5,055 - - 65,887 Depreciatio
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