NACCO INDUSTRIES INC

Previous wording

We have items not directly attributable to a reportable segment, which are therefore excluded from the financial results of the operating segment. These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, and the financial results of Bellaire Corporation (Bellaire), Mitigation Resources, ReGen Resources and other developing businesses. Bellaire manages our long-term liabilities related to former Eastern U.S. underground mining activities.

Current wording

We have items not directly attributable to a reportable segment, which are therefore excluded from the financial results of the operating segment. These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, and the financial results of Bellaire Corporation (Bellaire), Mitigation Resources, ReGen Resources and other developing businesses. Bellaire manages its long-term liabilities related to former Eastern U.S. underground mining activities.

Previous wording

During the second quarter of 2025, we updated the names of our reportable segments to make it easier for our stakeholders to understand the business models within each segment. The Utility Coal Mining, Contract Mining and Minerals and Royalties segments were formerly the Coal Mining, North American Mining and Minerals Management segments, respectively. There were no changes to the composition of each segment and therefore no changes to historical segment reporting.

Current wording

During 2025, we changed the names of our reportable segments to make it easier for our stakeholders to understand the business activities within each segment. The Utility Coal Mining, Contract Mining and Minerals and Royalties segments were formerly the Coal Mining, North American Mining and Minerals Management segments, respectively. There were no changes to the composition of each segment and therefore no changes to historical segment reporting.

Previous wording

Government Regulation Update: There have been no material changes to the Government Regulation previously disclosed on pages 9 through 17 in our Annual Report on Form 10-K for the year ended December 31, 2024, except as follows:

Current wording

Government Regulation Update: There have been no material changes to the Government Regulation Update previously disclosed on pages 9 through 17 in our Annual Report on Form 10-K for the year ended December 31, 2024, except as follows:

Previous wording

In June 2025, the EPA announced plans to repeal regulations on power plants (Clean Power Plan 2.0) and Mercury and Air Toxics Standards (MATS).

Current wording

In June 2025, the EPA announced plans to repeal regulations on power plants (Clean Power Plan 2.0) and Mercury and Air Toxics Standards (MATS). Litigation over the previously adopted Clean Power Plan 2.0 and MATS rules continues to be held in abeyance while the EPA conducts new rulemaking to repeal the rules.

Previous wording

In May 2025, the EPA granted an administrative petition for reconsideration of the portion of the Clean Air Act’s regional haze rule which disapproved North Dakota's state implementation plan. The EPA is required to submit status reports every 120 days, with the first report due October 2, 2025.

Current wording

In May 2025, the EPA granted an administrative petition for reconsideration of the portion of the Clean Air Act’s regional haze rule which disapproved North Dakota's state implementation plan. The EPA is required to submit status reports every 120 days and submitted its first status report on September 30, 2025. This case continues to be held in abeyance while the EPA reconsiders the rule.

Previous wording

In March 2025, the Trump Administration announced that the EPA will undertake historic actions of deregulation, as discussed above, but also including:

Current wording

Since March 2025, the Trump Administration announced that the EPA will undertake historic actions of deregulation, as discussed above, but also including:

Previous wording

•Reconsideration of the 2009 Endangerment Finding and regulations and actions that rely on that Finding;

Current wording

•Rescinding the 2009 Carbon Dioxide Endangerment Finding and regulations and actions that rely on that Finding;

Previous wording

In April 2025, President Trump signed four executive orders designed to boost the U.S. coal industry, outlining steps to protect coal-fired power plants and expedite leases for coal mining on U.S. land.

Current wording

In April 2025, President Trump signed four executive orders designed to boost the U.S. coal industry, outlining steps to protect coal-fired power plants and expedite leases for coal mining on U.S. land. We enter into leases of federally owned coal for a small portion of the coal mined at certain of our North Dakota mines. In October 2025, the Company's two federal coal lease applications were issued by the Department of Interior’s Bureau of Land Management.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA includes changes to U.S. tax law including provisions for bonus depreciation, current expensing of research expenditures and changes to the interest deductibility threshold. The changes resulting from the tax provisions in OBBBA are not expected to have a material impact on our results of operations.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA includes changes to U.S. tax law including provisions for bonus depreciation, current expensing of research expenditures and changes to the interest deductibility threshold. The changes resulting from the tax provisions in OBBBA did not have a material impact on our results of operations.

Previous wording

The OBBBA includes substantial changes to U.S. solar energy tax policy which could have a material impact on the solar projects being developed by ReGen Resources. Our investments in solar and other energy projects are dependent, in part, upon current state regulatory incentives and federal tax credits in order for the projects to be economically viable. We have approximately $4.5 million of capitalized assets associated with our solar projects. We have incurred, and will continue to incur, costs in connection with these projects and the results of operations and/or return on investment could be lower than anticipated.

Current wording

The OBBBA includes substantial changes to U.S. solar energy tax policy which could have a material impact on the solar projects being developed by ReGen Resources. Our investments in solar projects are dependent, in part, upon current state regulatory incentives and federal tax credits in order for the projects to be economically viable. To mitigate the impacts of evolving regulations, we are focused on safe-harboring certain projects by establishing the beginning of construction through physical work of a significant nature to retain federal investment tax credits. We have approximately $7.2 million of capitalized assets associated with our solar projects. We have incurred, and will continue to incur, costs in connection with these projects and the results of operations and/or return on investment could be lower than anticipated.

Previous wording

Our results of operations were as follows for the three and six months ended June 30:

Current wording

Our results of operations were as follows for the three and nine months ended September 30:

Previous wording

Second Quarter of 2025 Compared with Second Quarter of 2024, and First Six Months Ended June 30, 2025 Compared with First Six Months Ended June 30, 2024

Current wording

Third Quarter of 2025 Compared with Third Quarter of 2024, and First Nine Months Ended September 30, 2025 Compared with First Nine Months Ended September 30, 2024

Previous wording

Interest expense increased in the second quarter of 2025 and the first six months of 2025 compared with the respective 2024 periods due to higher average borrowings, partially offset by lower average interest rates.

Current wording

Interest expense decreased in the third quarter of 2025 compared with the respective 2024 period due to an increase in capitalized interest as well as lower average interest rates. Interest expense increased in the first nine months of 2025 compared with the respective 2024 period due to higher average borrowings, partially offset by an increase in capitalized interest and lower average interest rates.

Previous wording

Interest income decreased in the second quarter of 2025 and the first six months of 2025 compared with the respective 2024 periods due to lower earnings on reduced invested cash balances.

Current wording

Interest income decreased in the third quarter of 2025 and the first nine months of 2025 compared with the respective 2024 periods due to lower earnings on reduced invested cash balances.

Previous wording

(Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value. The change in the second quarter of 2025 and the first six months of 2025 compared with the respective 2024 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.

Current wording

(Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value. The change in the third quarter of 2025 and the first nine months of 2025 compared with the respective 2024 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

During the first quarter of 2025, $14.5 million of excess funds from the terminated Falkirk pension plan were directly transferred to the NACCO 401(k) plan. The NACCO 401(k) plan is a qualified replacement plan; therefore, these funds will be utilized to offset future profit sharing contributions to 401(k) plan participants. During the second quarter of 2025, NACCO and

Current wording

During the first nine months of 2025, $14.5 million of excess funds from the terminated Falkirk pension plan were directly transferred to the NACCO 401(k) plan. The NACCO 401(k) plan is a qualified replacement plan; therefore, these funds will be utilized to offset future profit sharing contributions to 401(k) plan participants. During the first nine months of 2025, NACCO and Falkirk’s former customer agreed to settle the corresponding liability for $10.9 million, resulting in a $3.6 million Gain on settlement of excess funding liability.

Previous wording

We evaluate and update our estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Historically, our actual effective tax rates have differed from the statutory effective tax rate primarily due to the benefit received from percentage depletion. The effective rate benefit from percentage depletion varies 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, and as such 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. This contributed to the income tax benefit recorded for the three and six months ended June 30, 2025. Each quarter, we update our estimate of the annual effective tax rate, and the cumulative impact of the change in the estimated annual tax rate is recorded, which can make quarterly comparisons not meaningful.

Current wording

We evaluate and update our estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Historically, our actual effective tax rates have differed from the statutory effective tax rate primarily due to the benefit received from percentage depletion. The effective rate benefit from percentage depletion varies 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, and as such 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, as a result of the reduction in 2025 income before income tax compared with 2024, the proportional effect of the benefit from percentage depletion on the effective income tax rate results in a negative forecasted effective tax rate for 2025. This contributed to the income tax benefit recorded for the three and nine months ended September 30, 2025. Each quarter, we update our estimate of the annual effective tax rate, and the cumulative impact of the change in the estimated annual tax rate is recorded, which can make quarterly comparisons not meaningful.

Previous wording

The following tables detail the changes in cash flow for the six months ended June 30:

Current wording

The following tables detail the changes in cash flow for the nine months ended September 30:

Previous wording

The $2.9 million change in net cash used for operating activities was primarily due to a favorable change in non-cash items. The Company’s non-cash items primarily include Gain on sale of assets, deferred income taxes, depreciation, depletion and amortization and stock-based compensation.

Current wording

The $42.4 million change in net cash provided by (used for) operating activities was primarily due to a favorable change in the adjustments to reconcile net income to net cash provided by operating activities. The Company’s adjustments primarily include the business interruption insurance recoveries at MLMC in 2024, Gain on sale of assets, deferred income taxes, depreciation, depletion and amortization and stock-based compensation.

Previous wording

The change in net cash (used for) provided by financing activities was primarily due to reductions in debt borrowings during the first six months of 2025 compared with additions during the first six months of 2024, partially offset by a decrease in share repurchases during the first six months of 2025.

Current wording

The change in net cash (used for) provided by financing activities was primarily due to reductions in debt borrowings during the first nine months of 2025 compared with additions during the first nine months of 2024, partially offset by a decrease in share repurchases during the first nine months of 2025.

Previous wording

In September 2024, NACCO Natural Resources amended its secured revolving line of credit (Facility) to increase the revolving credit commitments to $200.0 million and extend the maturity to September 2028. Borrowings outstanding under the Facility were $65.0 million at June 30, 2025. At June 30, 2025, the excess availability under the Facility was $90.5 million, which reflects a reduction for outstanding letters of credit of $44.5 million.

Current wording

In September 2024, NACCO Natural Resources amended its secured revolving line of credit (Facility) to increase the revolving credit commitments to $200.0 million and extend the maturity to September 2028. Borrowings outstanding under the Facility were $50.0 million at September 30, 2025. At September 30, 2025, the excess availability under the Facility was $99.3 million, which reflects a reduction for outstanding letters of credit of $50.7 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 June 30, 2025, for base rate and Term Secured Overnight Financing Rate loans were 1.75% and 2.75%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.45% on the unused commitment at June 30, 2025. During the three and six months ended June 30, 2025, the average borrowing under the Facility was $66.0 million and $62.7 million, respectively, and the weighted-average annual interest rate was 7.05% and 7.00%, respectively.

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 September 30, 2025, for base rate and Term Secured Overnight Financing Rate loans were 1.50% and 2.50%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.40% on the unused commitment at September 30, 2025. During the three and nine months ended September 30, 2025, the average borrowing under the Facility was $47.1 million and $57.5 million, respectively, and the weighted-average annual interest rate was 8.53% and 7.41%, respectively.

Previous wording

Expenditures for property, plant and equipment were $12.0 million during the first six months of 2025, primarily for equipment in the Contract Mining segment. Planned expenditures for the remainder of 2025 are expected to be approximately $74 million. This amount includes $11 million in the Utility Coal Mining segment, $31 million in the Contract Mining segment, $20 million in the Minerals and Royalties segment and $12 million in growth businesses included in Unallocated Items. Expenditures are expected to be funded from internally generated funds and/or bank borrowings.

Current wording

Planned expenditures for the remainder of 2025 are expected to be approximately $44 million. This amount includes $7 million in the Utility Coal Mining segment, $19 million in the Contract Mining segment, $16 million in the Minerals and Royalties segment and $2 million in growth businesses included in Unallocated Items. Planned expenditures in 2026 are expected to be approximately $70 million.

Previous wording

The increase in other net tangible assets at June 30, 2025 compared with December 31, 2024 was mainly the result of:

Current wording

The increase in other net tangible assets at September 30, 2025 compared with December 31, 2024 was mainly the result of increases in Property, plant and equipment and tax assets. These increases were partially offset by a decrease in Trade accounts receivable during the first nine months of 2025 primarily due to the timing of payments.

Previous wording

Since December 31, 2024, 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 pages 56 and 57 in our Annual Report on Form 10-K for the year ended

Current wording

Since December 31, 2024, 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 pages 56 and 57 in our Annual Report on Form 10-K for the year ended December 31, 2024. 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 Utility Coal Mining segment were as follows for the three and six months ended June 30:

Current wording

Tons of coal delivered by the Utility Coal Mining segment were as follows for the three and nine months ended September 30:

Previous wording

Revenues increased 90.9% in the second quarter of 2025 compared with the second quarter of 2024 primarily due to an increase in customer requirements at MLMC. A boiler issue at the customer's Red Hills Power Plant reduced customer requirements in 2024.

Current wording

Revenues increased 11.0% in the third quarter of 2025 compared with the third quarter of 2024 primarily due to an increase in customer requirements at MLMC. A boiler issue at the customer's Red Hills Power Plant reduced customer requirements in 2024.

Previous wording

Gross loss was unfavorable at MLMC during the second quarter of 2025 compared with the 2024 period. Although the cost per ton delivered improved during the second quarter of 2025, the contractual sales price per ton decreased. In addition, the number of tons sold exceeded tons mined resulting in the recognition of costs previously capitalized into inventory. In comparison, during the second quarter of 2024, inefficiencies at the customer's power plant created mining inefficiencies, and thus higher mining costs. The tons mined exceeded tons sold resulting in a portion of production costs being capitalized into inventory during the 2024 period.

Current wording

Gross loss was unfavorable at MLMC during the third quarter of 2025 compared with the 2024 period, primarily due to a decrease in the contractual sales price per ton.

Previous wording

Revenues increased 56.7% in the first six months of 2025 compared with the first six months of 2024 primarily due to an increase in customer requirements at MLMC. A boiler issue at the customer's Red Hills Power Plant reduced customer requirements in 2024.

Current wording

Revenues increased 39.9% in the first nine months of 2025 compared with the first nine months of 2024 primarily due to an increase in customer requirements at MLMC. A boiler issue at the customer's Red Hills Power Plant reduced customer requirements in 2024.

Previous wording

Tons delivered by the Contract Mining segment were as follows for the three and six months ended June 30:

Current wording

Tons delivered by the Contract Mining segment were as follows for the three and nine months ended September 30:

Previous wording

Total revenues increased in the second quarter of 2025 compared with the second quarter of 2024, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on gross profit. Revenues excluding reimbursable costs increased 2.9% in the second quarter of 2025 compared with the 2024 period, as an increase in part sales was partially offset by fewer tons delivered due to reduced customer requirements, in part due to operational delays at several quarries.

Current wording

Total revenues increased in the third quarter of 2025 compared with the third quarter of 2024, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on gross profit. Revenues excluding reimbursable costs increased 21.6% in the third quarter of 2025 compared with the 2024 period, mainly the result of more tons delivered due to higher customer requirements and an increase in part sales. The increase in tons delivered is partially due to an increase in planned customer outages and significant rain events in Florida during the third quarter of 2024 that did not recur in the 2025 period.

Previous wording

Total revenues increased in the first six months of 2025 compared with the first six months of 2024, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on gross profit. Revenues excluding reimbursable costs increased 3.0% in the first six months of 2025 compared with the 2024 period, as an increase in part sales was partially offset by fewer tons delivered due to reduced customer requirements, in part due to operational delays at several quarries.

Current wording

Total revenues increased in the first nine months of 2025 compared with the first nine months of 2024, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on gross profit. Revenues excluding reimbursable costs increased 8.7% in the first nine months of 2025 compared with the 2024 period primarily due to an increase in part sales.

Previous wording

Operating profit decreased $2.5 million in the first six months of 2025 compared with the first six months of 2024. The change in Operating profit was primarily due to a decrease in gross profit, a decrease in earnings of unconsolidated operations and an increase in selling, general and administrative expenses. The reduction in gross profit was mainly the result of a decrease in tons delivered and higher operating costs, including unexpected repairs and maintenance costs, partially offset by an increase in part sales. The decrease in earnings of unconsolidated operations was primarily due to a reduction in tons delivered. The increase in selling, general and administrative expenses was mainly the result of higher employee-related costs.

Current wording

Operating profit in the first nine months of 2025 was comparable to the 2024 period. An increase in gross profit was largely offset by a decrease in earnings of unconsolidated operations. The improvement in gross profit was mainly the result of an increase in part sales, partially offset by a decrease in tons delivered and higher operating costs, including unexpected repairs and maintenance costs. The decrease in earnings of unconsolidated operations was primarily due to a reduction in tons delivered.

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 and shows the average prices as reported by the United States Energy Information Administration for the three and six months ended June 30:

Current 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 and shows the average prices as reported by the United States Energy Information Administration for the three and nine months ended September 30:

Previous wording

The results of operations for the Minerals and Royalties segment were as follows for the three and six months ended June 30:

Current wording

The results of operations for the Minerals and Royalties segment were as follows for the three and nine months ended September 30:

Previous wording

Revenues increased 29.9% and 13.6% in the second quarter and the first six months of 2025, respectively, compared with the 2024 periods, primarily due to an increase in natural gas revenue as a result of higher natural gas prices, partially offset by decreased production volumes.

Current wording

Revenues increased 5.2% and 10.6% in the third quarter and the first nine months of 2025, respectively, compared with the 2024 periods, primarily due to an increase in natural gas revenue as a result of higher natural gas prices, partially offset by a decrease in oil revenue as a result of lower oil prices.

Previous wording

Operating profit decreased $2.4 million in both the second quarter and the first six months of 2025 compared with 2024 periods, primarily due to the absence of a $4.5 million prior year gain on sale of land. These decreases were partially offset by improvements in gross profit due to higher natural gas prices.

Current wording

Operating profit decreased by $0.6 million in the first nine months of 2025 compared with the 2024 period, primarily due to the absence of a $4.5 million prior year gain on sale of land. This decrease was partially offset by improvements in gross profit and earnings of unconsolidated operations. The increase in gross profit was mainly due to higher natural gas prices. The increase in earnings of unconsolidated operations was primarily related to an additional investment in Eiger Resources during the fourth quarter of 2024.

Previous wording

Unallocated Items and Eliminations were as follows for the three and six months ended June 30:

Current wording

Unallocated Items and Eliminations were as follows for the three and nine months ended September 30:

Previous wording

NACCO is a growing diversified natural resource company, strategically positioned to deliver consistent financial returns. Our businesses operate exclusively in the U.S. and provide critical inputs for electricity generation, construction and development, and the production of industrial minerals and products. Increasing demand for electricity, on-shoring and current federal policies are creating favorable macroeconomic trends within these industries. We continue to capitalize on these tailwinds, pursuing longer-term growth opportunities. Through disciplined capital allocation, operational expertise and an entrepreneurial yet cautious approach to growth, we have unique capabilities and clear competitive advantages that enable us to capture a wide range of attractive growth opportunities. Our platform is supported by multiple vectors for value creation, and we are steadfastly committed to delivering compounding returns and expanding investor value over the long term.

Current wording

NACCO is a growing diversified natural resource company, strategically positioned to deliver consistent financial returns over the long term. Our businesses operate exclusively in the U.S. and provide critical inputs for electricity generation, construction and development, and the production of industrial minerals and products. Increasing demand for electricity, on-shoring and current federal policies are creating favorable macroeconomic trends within these industries. We continue to capitalize on these tailwinds, pursuing longer-term growth opportunities. Through disciplined capital allocation, operational expertise and an entrepreneurial yet cautious approach to growth, we have unique capabilities and clear competitive advantages that enable us to capture a wide range of attractive growth opportunities. Our platform is supported by multiple vectors for value creation, and we are steadfastly committed to delivering compounding returns and expanding investor value over the long term.

Previous wording

While the current quarter presented some unexpected operational challenges, our business model is purposely built for durability and resilience. Our foundation rests on a stable base of long-term coal-mining contracts, generating dependable recurring cash flows. As new long-term contracts are added each year in our other businesses, these multi-year agreements create a “layering” effect as their contributions compound. This, combined with income generated by our Mineral and Royalty assets, provide cash flow stability. We remain confident in our ability to deliver improving results during the second half of 2025, with momentum building as we move into 2026.

Current wording

Our business model is purposely built for durability and resilience. Our foundation rests on a stable base of long-term coal-mining contracts, generating dependable recurring cash flows. As new long-term contracts are added each year in our other businesses, these multi-year agreements create a “layering” effect as their contributions compound. This, combined with income generated by our mineral and royalty assets, provide cash flow stability. We remain confident in our ability to deliver sound fourth-quarter 2025 operating results, with momentum building as we move into 2026.