Nacco Industries, Inc. · NYSE:NC
Nacco Industries — Investor Presentation (May 2019)
39 slides from Nacco Industries's investor presentation, May 15, 2019
Slide 1: Trusted Partners. Integrated Solutions. Investor Presentation May 2019
TRUSTED PARTNERS. INTEGRATED SOLUTIONS. INVESTOR PRESENTATION May 2019 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 Wwacco Industries, Inc.
Slide 4: NACCO Industries
NACCO Industries NACCO Industries, Inc. is the public holding company for The North American Coal Corporation (NACoal). The Company and its affiliates operate in the mining and natural resources industries through three operating segments: Coal Mining Operates surface coal mines pursuant to a servic
Slide 5: NACCO Industries At a Glance
NACCO Industries At a Glance _____________________ Adjusted 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 38. Net Cash (Debt)
Slide 6: Excellent Safety Record
Excellent Safety Record 2013 – 2017 National Mining Association Top 25 U.S. Coal Producers Ranked by Average Incident Rate
Slide 7: Environmental Stewardship
Environmental Stewardship North American Coal has received 88 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 T
Slide 8: Coal Mining
Coal Mining lh NACCO Industries, Inc.
Slide 9: Coal Mining
Coal Mining Nine surface coal mines that delivered 38.5 million tons of coal in 2018, primarily under long-term contracts Mines supply and 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 custom
Slide 10: Coal Mining Locations
[coal Mining Locations Properties Company ‘The Falkirk Mining Company i Mining Company | 10 th NACCO Industries, Inc. (© Surface Coal Mining Operations. New Operation Since 2010
Slide 11: Unique Business Model
Unique Business Model Business model promotes long-term customer relationships All but one coal mining location operate pursuant to “management fee” contracts Contract structure aligns our focus with customer objectives Under “management fee” contracts, NACoal is responsible for all mine operations;
Slide 12: North American Coal 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 North American Coal provides integrated solutions for power generation companies Customer Operations
Slide 13: Mississippi Lignite Mining Company (MLMC)
Mississippi Lignite Mining Company (MLMC) MLMC delivers coal to a power plant adjacent to the mine under a contract that runs through 2032 MLMC is the exclusive supplier of coal to its customer’s power plant MLMC contract is the only coal contract in which NACoal is responsible for all operating cos
Slide 14: Strong Earnings Driven by Long-Term Contracts with High-Quality Customers
Strong Earnings 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. Camino Real’s contract mining agreement wi
Slide 15: 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 Because our customers’ power plants are competitive suppliers of electricity in their resp
Slide 16: Growth Opportunities - Coal
Growth Opportunities - Coal Existing operations Focus on minimizing production costs while maximizing efficiency and operating capacity Benefits both customers and North American Coal as fuel cost is a major driver for power plant dispatch Increased power plant dispatch drives increased demand for c
Slide 17: North American Mining
North American Mining th NACCO Industries, Inc.
Slide 18: North American Mining (NAMining) Segment
North American Mining (NAMining) Segment Currently operate and maintain draglines and other equipment at customer-owned quarries Focus on the mining aspects of the customer’s quarry operations Create value by improving mining productivity and efficiency, allowing customers to focus on their value-ad
Slide 19: NAMining – Recent Expansion
NAMining – Recent Expansion draglines and an electric rope shovel at the end of 2018 compared with 10 draglines at the end of 2015 customers at the end of 2018 compared with 2 customers at the end of 2015 quarries at the end of 2018 compared with 7 quarries at the end of 2015 24 8 18
Slide 20: Platform for Growth Outside Coal
Platform for Growth Outside Coal Expand scope of work – ability to offer a full range of Integrated Solutions related to mining Leverage skills honed in the Company’s core coal mining operations Geography Currently operate primarily in Florida Focus on expanding footprint outside of Florida Mining o
Slide 21: 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 22: Minerals Management
Minerals Management th NACCO Industries, Inc.
Slide 23: Minerals Management Segment
Minerals Management Segment We receive royalty-based lease payments based on sales of natural gas, and to a lesser extent, oil and coal, extracted by lessees Majority of reserves acquired as part of the Company’s historical coal mining operations Focused on capturing the full value of existing oil,
Slide 24: Minerals Management Segment
Minerals Management Segment Minerals Management income grew significantly in 2018 and in Q1 2019 compared with the prior year periods, primarily due to the number of gas wells operated by third parties In the remainder of 2019, royalty income is expected to increase over the comparable 2018 period,
Slide 25: Other Growth & Diversification
Other Growth & Diversification
Slide 26: Leverage Core Competencies to Diversify
Leverage Core Competencies to Diversify North American Coal is widely recognized for the quality of its work to remediate streams, wetlands and wildlife habitats Mitigation Resources of North America (MRNA) was established to leverage these core competencies MRNA obtains sites with impaired streams,
Slide 27: Further Diversification Opportunities
Further Diversification Opportunities Potential to expand scope of services and provide services to additional customers Currently providing other value-added services for existing customers NoDak Energy Services, LLC operates and maintains a coal drying system Bisti Fuels operates and maintains a c
Slide 28: Capacity for Growth
Strong cash flow generation: Net cash provided before financing activities of $36.2 million Conservative leverage: Unsecured $150 million revolver $144.5 million available and unused at December 31, 2018 Credit rating upgrade in 2018 from DBRS Limited BBB(low) with a stable trend Expect continued st
Slide 29: Return Capital to Shareholders
Return Capital to Shareholders Strong history of paying dividends – NACCO has paid dividends since 1956 Established a new dividend level after the spin-off of Hamilton Beach Brands Holding Company in Q3 2017 Quarterly cash dividend of $0.165 per share since Q4 2017, which is equal to an annual divid
Slide 30: Summary
Summary lh NACCO Industries, Inc.
Slide 31: Leverage core capabilities to diversify into related businesses
Leverage core capabilities to diversify into related businesses High return, low volatility business model supported by long-term contracts Rapidly growing contract miner in aggregates and minerals industry Expand income streams from royalties earned on gas and coal reserves extracted by others Coal
Slide 32: Why Invest in NACCO?
Why Invest in NACCO? 100 years of success in mining provides the foundation for continued growth Well suited to serve as a contract miner in both coal and non-coal mining operations Continue pursuit of non-coal mining opportunities principally through the North American Mining segment Pursue growth
Slide 33: Financial Information
Financial Information hh NACCO Industries, Inc.
Slide 34: Historical Operating Results
Historical Operating Results Tons of Coal Delivered(1) Cubic Yards of Limestone Delivered Consolidated Adjusted EBITDA(2)(3) Consolidated Net Income (Loss)(2)(4) ($ in millions) ($ in millions) _____ (1) Excludes Centennial as the Company ceased mining operations at this mine in 2015. (2) On Septemb
Slide 35: NACCO Industries FY 2018 vs FY 2017 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 36: NACCO Industries Q1 2019 vs Q1 2018 Results
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 on page 38. NACCO
Slide 37: Appendix
Appendix lh NACCO Industries, Inc.
Slide 38: 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 39: 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