NACCO INDUSTRIES INC
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
NC$33.99+2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0000789933-24-000035
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0000789933-24-000046
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 155 current paragraphs.
68 unchanged; 52 reworded; 31 added; 9 removed; 5 previous and 4 current paragraphs rearranged.
Tables are not compared: 15 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
State coalitions have filed lawsuits challenging both of these rules. Several other entities, including electric generators and industry groups, have joined the lawsuits. Stay motions are pending in both lawsuits.
Current report
The EPA promulgated a regional haze program designed to protect and to improve visibility at and around Class I Areas, which are generally National Parks, National Wilderness Areas and International Parks. State implementation of the EPA’s Regional Haze Rule could require Coyote Creek’s customers to incur significant new costs at the Coyote Station power plant, which could result in the premature closure of the power plant and the Coyote Creek mine. The North Dakota Department of Environmental Quality (“NDDEQ”) finalized its state implementation plan and submitted it to the EPA for approval in August 2022. The NDDEQ determined that visibility progress was being made and did not require significant emissions controls at Coyote Station power plant. Notwithstanding NDDEQ’s determination, the EPA may require additional costly emission controls and it may not be economically feasible for Coyote Creek's customers to invest in such equipment, which could result in early retirement of Coyote Station and the Coyote Creek mine. In July 2024, the EPA issued a proposed partial denial of the state implementation plan. The Company plans to submit comments to the EPA on the proposed partial denial.
Current report
Second Quarter of 2024 Compared with Second Quarter of 2023, and First Six Months of 2024 Compared with First Six Months of 2023
Current report
Other expense (income), net
Current report
Interest income decreased in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods due to lower earnings on reduced cash balances.
Current report
•An increase in Other current assets during the first six months of 2024 compared with a modest increase in the first six months of 2023. The change in Other current assets was mainly due to an increase in vendor deposits.
Current report
•An increase in Inventory during the first six months of 2024 compared with a decrease in the first six months of 2023, primarily due to an increase in mining supplies.
Current report
•A reduction in the Federal income tax receivable during the first six months of 2023 that did not reoccur in the first six months of 2024.
Current report
These unfavorable changes were partially offset by a decrease in Trade accounts receivable and Accounts receivable from affiliates during the first six months of 2024 compared with increases in the first six months of 2023. The 2023 increase in Trade accounts receivable was due to a delay in payments by a customer. The change in Accounts receivable from affiliates is primarily attributable to the amount and timing of payments from unconsolidated subsidiaries.
Current report
Cash held by 1031 exchange facilitator
Current report
The Company has cash proceeds from the sale of assets held by a qualified intermediary to facilitate tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code. In May 2024, the Company sold land for $7.0 million and recognized a $4.5 million gain in the Minerals Management segment. The Company structured this transaction in a manner that qualified as like-kind exchange pursuant to Section 1031 of the Internal Revenue Code. The net proceeds are being held in escrow until replacement property is purchased. A $0.3 million property related to this like-kind exchange was acquired in June 2024. The Company had $6.7 million and $0.0 million of restricted cash at June 30, 2024 and December 31, 2023, respectively, which is reported on the line Cash held by 1031 exchange facilitator in the Unaudited Condensed Consolidated Balance Sheets. The Company is evaluating other acquisitions which, if executed, could utilize some or all of the remaining restricted cash.
Current report
months ended June 30, 2024, the average borrowing under the Facility was $23.0 million and $18.2 million, respectively,
Current report
and the weighted-average annual interest rate was 9.73% during both periods.
Current report
Second Quarter of 2024 Compared with Second Quarter of 2023
Current report
The following table identifies the components of change in Operating profit (loss) for the second quarter of 2024 compared with the second quarter of 2023:
Current report
The increase in earnings of unconsolidated operations was primarily due to an increase in customer demand at Falkirk as well as a higher per ton management fee beginning in June 2024 when temporary price concessions ended. Improved results at Sabine also contributed to the increase in earnings of unconsolidated operations.
Current report
First Six Months of 2024 Compared with First Six Months of 2023
Current report
The following table identifies the components of change in Operating profit (loss) for the first six months of 2024 compared with the first six months of 2023:
Current report
Operating profit (loss) changed favorably by $6.7 million in the first six months of 2024 compared with the first six months of 2023 primarily due to a decrease in gross loss and an increase in earnings of unconsolidated operations. These favorable changes were partially offset by an increase in selling, general and administrative expenses primarily due to higher employee-related costs.
Current report
The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a decrease in gross loss during the first six months of 2024 compared with the first six months of 2023. The reduction in cost of goods sold was primarily attributable to increased operating efficiencies due to the completion of the move to a new mine area in 2023 and improved mining conditions in the first six months of 2024 compared to the prior period. Changes in the level of coal inventory and costs capitalized into inventory also contributed to the improvement as the decrease in demand resulted in an increase in the coal stockpile and an increase in costs capitalized into inventory during the first six months of 2024. Cost of sales in the first six months of 2023 was higher as the coal stockpile was reduced during the move to a new mine area and prior period production costs were recognized into income. In addition, gross loss in the first six months of 2024 and 2023 included $3.1 million and $4.2 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.
Current report
The increase in earnings of unconsolidated operations was primarily due to an increase in customer demand at Falkirk as well as a higher per ton management fee beginning in June 2024 when temporary price concessions ended. Improved results at Sabine also contributed to the increase in earnings of unconsolidated operations.
Current report
Second Quarter of 2024 Compared with Second Quarter of 2023
Current report
First Six Months of 2024 Compared with First Six Months of 2023
Current report
Revenues and gross profit decreased in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods, primarily due to substantially lower natural gas and oil prices and changes in pricing estimates. The second quarter of 2023 included $1.4 million of settlement income related to the Company’s ownership interest in certain mineral rights.
Current report
Operating profit increased in the second quarter of 2024 and the first six months of 2024, as the Company recognized a $4.5 million gain on the sale of land related to legacy operations.
Current report
Coal deliveries in the second half of 2024 are expected to increase over 2023 levels as higher deliveries at Coteau and Falkirk are partly offset by fewer deliveries at MLMC. The decrease in MLMC deliveries is due to the previously mentioned boiler issue. Coal Mining segment full-year 2024 deliveries are expected to be comparable to 2023.
Current report
Second-half 2024 results are also expected to increase significantly over the first half primarily due to higher earnings at Falkirk and improved results at MLMC based on current expectations that the boiler issue will be resolved and the plant will be fully operational by the fourth quarter of 2024.
Current report
Capital expenditures in 2024 are expected to be approximately $13 million, with $9 million expended in the second half of 2024.
Current report
NAMining expects operating profit and Segment Adjusted EBITDA to increase in both the 2024 second half and full year over the respective 2023 periods but decrease from the 2024 first half. The year-over-year improvements are primarily due to the late 2023 amendment of limestone contracts to more mutually advantageous contract terms, a scope of work expansion with another customer and the second-quarter 2024 commencement of a new 15-year contract to mine phosphate at a quarry in central Florida. Earnings in the second half are expected to moderate from the first half of 2024 due to anticipated lower customer requirements.
Current report
Result for the second half of 2023 included a $65.9 million pre-tax impairment charge. Comparisons in the remainder of this section exclude the effect of this charge.
Current report
The Company also expects consolidated net income in the 2024 second half and full year to increase compared with the respective 2023 periods. This improvement is anticipated to be partly offset by an increase in net interest expense as a result of additional borrowings and lower cash levels and higher income tax expense.
Removed paragraphs (9)
Previous report
First Quarter of 2024 Compared with First Quarter of 2023
Previous report
Other (income) expense, net
Previous report
The decrease in the earnings of unconsolidated operations was primarily due to a reduction in customer requirements at Coteau.
Previous report
Revenues and operating profit increased in the first quarter of 2024 compared with the respective 2023 period, primarily due to an increase in production volumes.
Previous report
In 2024, the Company expects overall coal deliveries to increase modestly from 2023 levels primarily due to anticipated higher deliveries at Coteau and Falkirk. These improvements are expected to be partly offset by reduced deliveries at MLMC, due to an ongoing boiler issue, and the cessation of coal deliveries at the Company's Sabine Mine in April 2023.
Previous report
MLMC expects to incur a loss in 2024, albeit significantly less than in 2023, mainly as a result of fewer tons delivered. While total production costs at MLMC are anticipated to decrease substantially from 2023 levels, they are expected to remain above historical levels throughout 2024 until deliveries return to normal and a pit extension is completed later this year. In addition, the effect of the impairment charge taken in 2023 will result in lower depreciation and amortization expense and contribute to the lower production costs.
Previous report
In 2023, NAMining executed a 15-year contract to mine phosphate at a quarry in central Florida. Production is expected to commence in the second quarter of 2024 once commissioning of a dragline is complete. The business also amended and extended existing limestone contracts in late 2023 that contain mutually advantageous contract terms and expanded the scope of work with another customer. As a result of these new and modified contracts, as well as improvements at existing operations, NAMining expects substantial quarterly growth in operating profit and Segment Adjusted EBITDA in each remaining 2024 quarter, leading to significantly improved full-year results over 2023.
Previous report
In December 2023, Minerals Management completed a significant acquisition of mineral interests within the Midland Basin, the eastern sub-basin of the oil-rich Permian Basin, which included 43.4 thousand gross acres and 2.5 thousand net royalty acres. This acquisition is expected to continue to be accretive to 2024 earnings and provide opportunities for longer-term growth.
Previous report
Mitigation Resources Outlook
Reworded paragraphs (52)
Previous wording
Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc.®(“NACCO”) and its wholly owned subsidiaries (collectively, the “Company”). NACCO brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through its robust portfolio of NACCO Natural Resources® businesses. The Company operates under three business segments: Coal Mining, North American Mining®("NAMining") and Minerals Management. The Coal Mining segment operates surface coal mines for power generation companies. The NAMining segment is a trusted mining partner for producers of aggregates, activated carbon, lithium and other industrial minerals. The Minerals Management segment, which includes the Catapult Mineral Partners ("Catapult") business, acquires and promotes the development of mineral interests. Mitigation Resources of North America® ("Mitigation Resources") provides stream and wetland mitigation solutions.
Current wording
Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc.® (“NACCO”) and its wholly owned subsidiary, NACCO Natural Resources® (collectively, the “Company”). NACCO Natural Resources brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through its robust business portfolio. The Company operates under three business segments: Coal Mining, North American Mining®("NAMining") and Minerals Management. The Coal Mining segment operates surface coal mines for power generation companies. The NAMining segment is a trusted mining partner for producers of aggregates, activated carbon, lithium and other industrial minerals. The Minerals Management segment, which includes the Catapult Mineral Partners ("Catapult") business, acquires and promotes the development of mineral interests. Mitigation Resources of North America® ("Mitigation Resources") provides stream and wetland mitigation solutions as well as comprehensive reclamation and restoration construction services.
Previous wording
During the three months ended March 31, 2024, the Coal Mining segment's operating coal mines were: The Coteau Properties Company (“Coteau”), Coyote Creek Mining Company, LLC (“Coyote Creek”), The Falkirk Mining Company (“Falkirk”) and Mississippi Lignite Mining Company (“MLMC”). Each of these mines supply lignite coal for power generation and delivers its coal production to an adjacent power plant or synfuels plant under a long-term supply contract. While MLMC’s coal supply contract contains a take or pay provision, the contract contains a force majeure provision that allows for the temporary suspension of the take or pay provision during the duration of certain specified events beyond the control of either party; all other coal supply contracts are requirements contracts. Certain coal supply contracts can be terminated early, which would result in a reduction to future earnings.
Current wording
During the three and six months ended June 30, 2024, the Coal Mining segment's operating coal mines were: The Coteau Properties Company (“Coteau”), Coyote Creek Mining Company, LLC (“Coyote Creek”), The Falkirk Mining Company (“Falkirk”) and Mississippi Lignite Mining Company (“MLMC”). Each of these mines supply lignite coal for power generation and delivers its coal production to an adjacent power plant or synfuels plant under a long-term supply contract. While MLMC’s coal supply contract contains a take or pay provision, the contract contains a force majeure provision that allows for the temporary suspension of the take or pay provision during the duration of certain specified events beyond the control of either party; all other coal supply contracts are requirements contracts. Certain coal supply contracts can be terminated early, which would result in a reduction to future earnings.
Previous wording
On December 18, 2023, MLMC received notice from its customer related to an issue that began on December 15, 2023 as a result of an issue that impacted one of two boilers at the Red Hills Power Plant. This issue has resulted in a reduction in customer demand which will have a significant impact on the Company's 2024 results of operations. Repairs to the boiler are expected to be completed during the second half of 2024.
Current wording
On December 18, 2023, MLMC received notice from its customer related to an issue that began on December 15, 2023 and impacted one of two boilers at the Red Hills Power Plant. This issue resulted in a reduction in customer demand which had a significant impact on the Company's results of operations during the first six months of 2024. Based on current expectations, repairs to the boiler will be resolved and the plant will be fully operational by fourth quarter 2024.
Previous wording
On April 25, 2024, the Environmental Protection Agency (“EPA”) issued a pre-publication version of the final rules for Greenhouse Gas (“GHG”) emissions and Mercury Air Toxics Standards (“MATS”). The final MATS and GHG rules will require compliance as early as 2027 and 2030, respectively. The Company is in the process of determining the implications of these rules. Previous efforts by the EPA were met with extensive litigation and the Company anticipates a similar response to the new GHG and MATS rules.
Current wording
In May 2024, the Environmental Protection Agency (“EPA”) published the final rules for Greenhouse Gas (“GHG”) emissions and Mercury Air Toxics Standards (“MATS”) in the Federal Register. The final MATS and GHG rules will require compliance as early as 2027 and 2032, respectively. The Company is in the process of determining the implications of these rules. Previous efforts by the EPA were met with extensive litigation and there has been a similar response to the new GHG and MATS rules.
Previous wording
Preliminary review of the GHG rules indicate that the compliance deadline for coal-fired plants planning to install carbon capture and sequestration/storage technology has been extended to January 1, 2032. If a coal-fired plant intends to close prior to 2032, no controls will be required and if a plant plans to close between 2032 and 2039, they must begin co-firing with natural gas by January 1, 2030.
Current wording
Review of the newly established emission guidelines for carbon dioxide emissions from existing coal-fired, steam generating electric generating units ("EGUs") indicate that the compliance deadline for coal-fired plants planning to install carbon capture and sequestration/storage technology has been extended to January 1, 2032 in order to operate beyond 2039. If a coal-fired plant intends to close prior to 2032, no controls will be required and if a plant plans to close between 2032 and 2039, they must begin co-firing with natural gas by January 1, 2030.
Previous wording
Preliminary review of the final MATS rules indicate that the EPA significantly reduced the fine particulate matter emission standard for all existing coal-fired electric generating units and will require continuous monitoring equipment to demonstrate compliance. Furthermore, the EPA elected to remove the lignite subcategory for mercury limits and will require lignite-fired electric generating units to meet the same standard as other types of coal.
Current wording
The MATS rules finalize changes for the filterable particulate matter surrogate emission standard for non-mercury metal hazardous air pollutants for existing coal-fired EGUs, the filterable particulate matter emission standard compliance demonstration requirements, and the mercury emission standard for lignite-fired EGUs. Review of the MATS rules indicate that the EPA significantly reduced the fine particulate matter emission standard for all existing coal-fired EGUs and will require continuous monitoring equipment to demonstrate compliance. Furthermore, the EPA elected to remove the lignite subcategory for mercury limits and will require lignite-fired EGUs to meet the same standard as other types of coal.
Previous wording
The results of operations for NACCO were as follows for the three months ended March 31:
Current wording
The results of operations for NACCO were as follows for the three and six months ended June 30:
Previous wording
Interest expense increased in the first quarter of 2024 compared with the respective 2023 period due to higher average borrowings as well as an increase in interest rates.
Current wording
Interest expense increased in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods due to higher average borrowings as well as an increase in interest rates.
Previous wording
Gain on equity securities represents changes in the market price of invested assets reported at fair value. The change in the first quarter of 2024 compared with the respective 2023 period was due to fluctuations in the market prices of the exchange-traded equity securities. See Note 5 to the Unaudited Condensed Consolidated Financial Statements forfurther discussion of equity securities.
Current wording
Loss (gain) on equity securities represents changes in the market price of invested assets reported at fair value. The change in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods was due to fluctuations in the market prices of the exchange-traded equity securities. See Note 5 to the Unaudited Condensed Consolidated Financial Statements forfurther discussion of equity securities.
Previous wording
The Company evaluates and updates its estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of actual earnings compared to projections of earnings between entities that benefit from percentage depletion and those that do not, the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The benefit of percentage depletion is not directly related to the amount of consolidated pre-tax income recorded in a period. Accordingly, in periods where income before tax is relatively small, the proportional effect of the benefit from percentage depletion on the effective tax rate may be significant. In addition, as a result of the forecasted loss before income tax as of March 31, 2023, the effect of the benefit from percentage depletion resulted in a negative forecasted effective tax rate. Each quarter, the Company updates its estimate of the annual effective tax rate and the cumulative impact of the change in the estimated annual tax rate is recorded, which can additionally make quarterly comparisons not meaningful.
Current wording
The Company evaluates and updates its estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of actual earnings compared to projections of earnings between entities that benefit from percentage depletion and those that do not, the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The benefit of percentage depletion is not directly related to the amount of consolidated pre-tax income recorded in a period. Accordingly, in periods where income before tax is relatively small, the proportional effect of the benefit from percentage depletion on the effective tax rate may be significant. In addition, as a result of a forecasted full-year 2023 loss before income tax as of June 30, 2023, the effect of the benefit from percentage depletion resulted in a negative forecasted effective tax rate. Each quarter, the Company updates its estimate of the annual effective tax rate and the cumulative impact of the change in the estimated annual tax rate is recorded, which can additionally make quarterly comparisons not meaningful.
Previous wording
The following tables detail NACCO's changes in cash flow for the three months ended March 31:
Current wording
The following tables detail NACCO's changes in cash flow for the six months ended June 30:
Previous wording
The $16.0 million change in net cash (used for) provided by operating activities was primarily due to an unfavorable change in working capital, which was mainly the result of increases in Other current assets and Accounts receivable from affiliates during the first quarter of 2024 compared with significant decreases in the first quarter of 2023. The change in Other current assets was primarily due to changes in accrued royalties. The change in Accounts receivable from affiliates is primarily attributable to the amount and timing of payments from unconsolidated subsidiaries.
Current wording
The $29.0 million change in net cash (used for) provided by operating activities was primarily due to a net unfavorable change in working capital, which was mainly the result of:
Previous wording
In addition, the Company entered into an Accounts Receivable Financing Program with a third party banking institution on March 14, 2024 for the sale of certain accounts receivables. Accounts receivable sold under the Accounts Receivable Financing Program for the quarter ended March 31, 2024 were $6.1 million. The net proceeds received were included in Net cash (used for) provided by operating activities in the Unaudited Consolidated Statement of Cash Flows.
Current wording
In addition, the Company entered into an Accounts Receivable Financing Program with a third-party banking institution on March 14, 2024 for the sale of certain accounts receivables. Accounts receivable sold under the Accounts Receivable Financing Program for the three and six months ended June 30, 2024 were $11.0 million and $17.1 million, respectively. The net proceeds received were included in Net cash (used for) provided by operating activities in the Unaudited Condensed Consolidated Statements of Cash Flows.
Previous wording
The change in net cash provided by (used for) financing activities was primarily due to an increase in debt borrowings during the first three months of 2024 compared with the first three months of 2023, partially offset by share repurchases during the first quarter of 2024.
Current wording
The change in net cash provided by (used for) financing activities was primarily due to additions in debt borrowings during the first six months of 2024 compared with reductions during the first six months of 2023, partially offset by share repurchases during the first six months of 2024.
Previous wording
NACCO Natural Resources Corporation (“NACCO Natural Resources”), maintains a secured revolving line of credit of up to $150.0 million (the “Facility”) that expires in November 2025. Borrowings outstanding under the Facility were $17.0 million at
Current wording
NACCO Natural Resources Corporation (“NACCO Natural Resources”), maintains a secured revolving line of credit of up to $150.0 million (the “Facility”) that expires in November 2025. Borrowings outstanding under the Facility were $27.5 million at June 30, 2024. At June 30, 2024, the excess availability under the Facility was $89.4 million, which reflects a reduction for outstanding letters of credit of $33.1 million.
Previous wording
The Facility has performance-based pricing, which sets interest rates based upon NACCO Natural Resources achieving various levels of debt to EBITDA ratios, as defined in the Facility. Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved. The applicable margins, effective March 31, 2024, for base rate and SOFR loans were 1.23% and 2.23%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.34% on the unused commitment at March 31, 2024.
Current wording
The Facility has performance-based pricing, which sets interest rates based upon NACCO Natural Resources achieving various levels of debt to EBITDA ratios, as defined in the Facility. Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved. The applicable margins, effective June 30, 2024, for base rate and SOFR loans were 1.23% and 2.23%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.34% on the unused commitment at June 30, 2024. During the three and six
Previous wording
Expenditures for property, plant and equipment and mineral interests were $14.5 million during the first three months of 2024, primarily for the acquisition of land at Mitigation Resources and equipment at NAMining. Planned expenditures for the remainder of 2024 are expected to be approximately $11 million in the Coal Mining segment, $27 million in the NAMining segment, $20 million in the Minerals Management segment and $3 million in Unallocated Items.
Current wording
Expenditures for property, plant and equipment and mineral interests were $22.4 million during the first six months of 2024, primarily for the acquisition of land at Mitigation Resources and equipment at NAMining. Planned expenditures for the remainder of 2024 are expected to be approximately $9 million in the Coal Mining segment, $12 million in the NAMining segment, $20 million in the Minerals Management segment and $3 million in Unallocated Items.
Previous wording
The increase in other net tangible assets at March 31, 2024 compared with December 31, 2023 was mainly the result of increases in Property, plant and equipment and Prepaid insurance during the first quarter of 2024.
Current wording
The increase in other net tangible assets at June 30, 2024 compared with December 31, 2023 was mainly the result of increases in Property, plant and equipment, Other current assets and Prepaid insurance during the first six months of 2024. The increase in other current assets is primarily due to $6.7 million of cash held by a qualified intermediary to facilitate tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code and $5.7 million in vendor deposits.
Previous wording
Since December 31, 2023, there have been no significant changes in the total amount of NACCO's contractual obligations, contingent liabilities or commercial commitments, or the timing of cash flows in accordance with those obligations as reported on page 58 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of certain guarantees related to Coyote Creek.
Current wording
Since December 31, 2023, other than the changes identified above, there have been no significant changes in the total amount of NACCO's contractual obligations, contingent liabilities or commercial commitments, or the timing of cash flows in accordance with those obligations as reported on page 58 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of certain guarantees related to Coyote Creek.
Previous wording
Tons of coal delivered by the Coal Mining segment were as follows for the three months ended March 31:
Current wording
Tons of coal delivered by the Coal Mining segment were as follows for the three and six months ended June 30:
Previous wording
The results of operations for the Coal Mining segment were as follows for the three months ended March 31:
Current wording
The results of operations for the Coal Mining segment were as follows for the three and six months ended June 30:
Previous wording
Revenues decreased 24.7% in the first quarter of 2024 compared with the first quarter of 2023 primarily due to a reduction in customer requirements at MLMC as a result of an ongoing issue that impacts one of two boilers at the Red Hills Power Plant. Repairs to the boiler are expected to be completed during the second half of 2024.
Current wording
Revenues decreased 43.1% in the second quarter of 2024 compared with the second quarter of 2023 primarily due to a reduction in customer requirements at MLMC as a result of an ongoing issue that impacted one of two boilers at the Red Hills Power Plant.
Previous wording
Operating (loss) profit decreased $0.7 million in the first quarter of 2024 compared with the first quarter of 2023 primarily due to an increase in selling, general and administrative expenses and a decrease in the earnings of unconsolidated operations.
Current wording
Operating profit (loss) changed favorably by $7.4 million in the second quarter of 2024 compared with the second quarter of 2023 primarily due to a decrease in gross loss and an increase in earnings of unconsolidated operations. These favorable changes were partially offset by an increase in selling, general and administrative expenses primarily due to higher employee-related costs.
Previous wording
The reduction in revenues at MLMC was offset by a reduction in cost of goods sold, resulting in a comparable gross loss in both the first quarter of 2024 and 2023. Gross loss in the first quarter of 2024 and the first quarter of 2023 included a $2.5 million and $2.4 million inventory impairment charge, respectively, to write down MLMC's coal inventory to its net realizable value.
Current wording
The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a decrease in gross loss during the second quarter of 2024 compared with the second quarter of 2023. The reduction in cost of goods sold was primarily attributable to increased operating efficiencies due to the completion of the move to a new mine area in 2023 and improved mining conditions in the second quarter of 2024 compared to the prior period. Changes in the level of coal inventory and costs capitalized into inventory also contributed to the improvement as the decrease in demand resulted in an increase in the coal stockpile and an increase in costs capitalized into inventory during the second quarter of 2024. Cost of sales in the second quarter of 2023 was higher as the coal stockpile was reduced during the move to a new mine area and prior period production costs were recognized into income. In addition, gross loss in the second quarter of 2024 and 2023 included $0.7 million and $1.8 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.
Previous wording
Tons delivered by the NAMining segment were as follows for the three months ended March 31:
Current wording
Tons delivered by the NAMining segment were as follows for the three and six months ended June 30:
Previous wording
The results of operations for the NAMining segment were as follows for the three months ended March 31:
Current wording
The results of operations for the NAMining segment were as follows for the three and six months ended June 30:
Previous wording
Total revenues increased 18.7% in the first quarter of 2024 compared with the first quarter of 2023 primarily due to an improvement at the consolidated quarries. An increase in reimbursable costs at Sawtooth, which have an offsetting amount in cost of sales and have no impact on operating profit, also contributed to the improvement in total revenues.
Current wording
Total revenues increased 28.6% in the second quarter of 2024 compared with the second quarter of 2023, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit. An increase in demand at the consolidated quarries also contributed to the improvement in total revenues.
Previous wording
The following table identifies the components of change in Operating profit for the first quarter of 2024 compared with the first quarter of 2023:
Current wording
The following table identifies the components of change in Operating profit for the second quarter of 2024 compared with the second quarter of 2023:
Previous wording
The following table identifies the components of change in Operating (loss) profit for the first quarter of 2024 compared with the first quarter of 2023:
Current wording
The following table identifies the components of change in Operating profit for the first six months of 2024 compared with the first six months of 2023:
Previous wording
Operating profit increased $1.5 million in the first quarter of 2024 compared with the first quarter of 2023 primarily due to an increase in gross profit. This improvement was mainly the result of favorable pricing and delivery mix and improved margins at the limestone quarries resulting from mutually beneficial contract amendments.
Current wording
Operating profit increased $2.4 million in the first six months of 2024 compared with the first six months of 2023 primarily due to an increase in gross profit. This improvement was mainly the result of favorable pricing and improved margins at the limestone quarries resulting from mutually beneficial contract amendments. A new phosphate contract also contributed to the increase in gross profit. These improvements were partially offset by higher employee-related costs.
Previous wording
Oil and natural gas prices have been historically volatile and may continue to be volatile in the future. The table below demonstrates such volatility with the average price as reported by the United States Energy Information Administration for the three months ended March 31:
Current wording
Oil and natural gas prices have been historically volatile and may continue to be volatile in the future. The table below demonstrates volatility with the average prices as reported by the United States Energy Information Administration for the three and six months ended June 30:
Previous wording
As an owner of royalty and mineral interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited. The Company does not have information that would be available to a company with oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests. Consequently, the exact number of wells producing from or drilling on the Company’s mineral interests at a given point in time is not determinable. The following table sets forth the Company’s estimate of the number of gross and net productive wells:
Current wording
These indicated prices do not necessarily reflect the contract terms for the Company's sales. As an owner of royalty and mineral interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited. The Company does not have information that would be available to a company with working interests in oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests.
Previous wording
The following table sets forth the estimated oil and natural gas production data related to the Company’s mineral and royalty interests as well as certain price and cost information for the three months ended March 31:
Current wording
The following table sets forth the estimated oil and natural gas production data related to the Company’s mineral and royalty interests as well as certain price and cost information for the three and six months ended June 30:
Previous wording
(4) As an owner of mineral and royalty interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited. As a result, the Company estimated February and March 2024 data with volumes projected from prior well production and pricing based on public pricing data adjusted for expense information.
Current wording
(4) As an owner of mineral and royalty interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited. As a result, the Company estimated May and June 2024 data with volumes projected from prior well production and pricing based on public pricing data adjusted for expense information.
Previous wording
The results of operations for the Minerals Management segment were as follows for the three months ended March 31:
Current wording
The results of operations for the Minerals Management segment were as follows for the three and six months ended June 30:
Previous wording
Unallocated Items and Eliminations were as follows for the three months ended March 31:
Current wording
Unallocated Items and Eliminations were as follows for the three and six months ended June 30:
Previous wording
The operating loss in the first quarter of 2024 decreased compared with the respective 2023 period due to higher earnings at Mitigation Resources.
Current wording
The operating loss in the second quarter and first six months of 2024 increased compared with the respective 2023 periods due to higher operating expenses at Mitigation Resources and higher employee-related costs.
Previous wording
Strong operating profit compared with a significant 2023 operating loss, which included a $60.8 million impairment charge, and substantially higher Segment Adjusted EBITDA are expected in 2024. These anticipated increases are primarily due to an expected improvement in results at MLMC and higher earnings at Falkirk and Coteau in the second half of 2024.
Current wording
Excluding the $60.8 million impairment charge taken in fourth-quarter 2023, Coal Mining operating profit and Segment Adjusted EBITDA are expected to increase significantly in both the 2024 second half and full year compared with the respective 2023 periods. These anticipated increases are primarily due to an expected substantial improvement in results at MLMC and higher earnings at the unconsolidated coal mining operations.
Previous wording
An anticipated increase in 2024 earnings at the unconsolidated coal mining operations is driven primarily by an expectation for increased deliveries at Coteau and Falkirk, as well as a higher per ton management fee at Falkirk beginning in June 2024 when temporary price concessions end.
Current wording
The anticipated second-half 2024 increase in earnings at the unconsolidated coal mining operations compared with 2023 is driven primarily by an expectation for increased deliveries, as well as the cessation of temporary price concessions at Falkirk.
Previous wording
Sawtooth has exclusive responsibility for mining and mine closure services at Thacker Pass, including mine design, construction, operation and maintenance. Thacker Pass is owned by Lithium Americas Corp. (TSX: LAC) (NYSE: LAC). Thacker Pass will supply all of Lithium Americas' lithium-bearing ore requirements. In March 2023, Lithium Americas commenced construction at Thacker Pass. With construction underway, Sawtooth acquired mining equipment totaling $23.3 million in 2023. These capital expenditures will be reimbursed by Lithium Americas over a five-year period, and Sawtooth will recognize the associated revenue over the estimated useful life of the asset. Sawtooth will be reimbursed for all costs of mining and mine closure and will recognize a contractually agreed upon production fee. The Company expects to continue to recognize moderate income prior to the commencement of Phase 1 lithium production, estimated to begin in 2027/2028.
Current wording
Sawtooth is the exclusive provider of comprehensive mining services at Thacker Pass, including mine design, construction, operation, maintenance and reclamation. Thacker Pass is owned by Lithium Americas Corp. (TSX: LAC) (NYSE: LAC). Thacker Pass will supply all of Lithium Americas' lithium-bearing ore requirements. In March 2023, Lithium Americas commenced construction at Thacker Pass. Sawtooth will be reimbursed for costs of mining, capital expenditures and mine closure and will recognize a contractually agreed upon production fee. The Company expects to continue to recognize moderate income prior to the commencement of Phase 1 lithium production, estimated to begin in 2027/2028.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Revenues decreased 35.0% in the first six months of 2024 compared with the first six months of 2023 primarily due to a reduction in customer requirements at MLMC as a result of an ongoing issue that impacted one of two boilers at the Red Hills Power Plant.
Current report — wording carried from elsewhere
Operating profit increased $0.9 million in the second quarter of 2024 compared with the second quarter of 2023 primarily due to an increase in gross profit. This improvement was mainly the result of favorable pricing and improved margins at the limestone quarries resulting from mutually beneficial contract amendments. A new 15-year contract to mine phosphate at a quarry in central Florida also contributed to the increase in gross profit. These improvements were partially offset by higher employee-related costs.
Current report — wording carried from elsewhere
Total revenues increased 23.7% in the first six months of 2024 compared with the first six months of 2023 primarily due to an increase in demand at the consolidated quarries. An increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit, also contributed to the improvement in total revenues.
Current report — wording carried from elsewhere
The following table sets forth the Company’s estimate of the number of gross and net productive wells:
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
March 31, 2024. At March 31, 2024, the excess availability under the Facility was $100.4 million, which reflects a reduction for outstanding letters of credit of $32.6 million.
Previous report — wording carried elsewhere
The increase in selling, general and administrative expenses was primarily due to higher employee-related costs.
Previous report — wording carried elsewhere
2024 capital expenditures are expected to total approximately $13 million.
Previous report — wording carried elsewhere
Development of additional wells on existing interests in excess of current expectations, or acquisitions of additional interests, could be accretive to future results.
Previous report — wording carried elsewhere
Mitigation Resources continues to expand its business, which creates and sells stream and wetland mitigation credits, provides services to those engaged in permittee-responsible mitigation and provides other environmental restoration services. This business offers an opportunity for growth and diversification in an industry where the Company has substantial knowledge and expertise and a strong reputation. The Company believes that Mitigation Resources can provide solid rates of return on capital employed as this business matures.