NACCO INDUSTRIES ANNOUNCES FIRST QUARTER 2024 RESULTS
Consolidated Q1 2024 Highlights:
-
Consolidated operating profit of
$4.8 million increased 162% over Q1 2023 -
Consolidated income before taxes of
$5.6 million up 28% from Q1 2023 - Income tax expense compared with income tax benefit in Q1 2023 due to shift in mix of earnings
-
Consolidated net income of
$4.6 million , or$0.61 /share versus$5.7 million , or$0.76 /share, in Q1 2023 -
EBITDA of
$11.2 million up 4% from Q1 2023
|
Three Months Ended |
||||
($ in thousands, except per share amounts) |
|
|
|
|
% Change |
Operating Profit |
|
|
|
|
162.2 % |
Income before taxes |
|
|
|
|
27.6 % |
Income tax provision (benefit) |
|
|
|
|
n.m. |
Net Income |
|
|
|
|
(19.7) % |
Diluted Earnings/share |
|
|
|
|
(19.7) % |
EBITDA* |
|
|
|
|
4.4 % |
|
*Non-GAAP financial measures are defined and reconciled on pages 8 and 9. |
The substantial increase in the Company's 2024 first-quarter operating profit was primarily due to a significant improvement in earnings at the Minerals Management and North American Mining segments. While operating profit improved, net income decreased due to higher income tax expense, attributable to a shift in the mix of earnings and lower other income.
At
Detailed Discussion of Results
Coal Mining Results
|
2024 |
|
2023 |
Tons of coal delivered |
(in thousands) |
||
Unconsolidated operations |
5,480 |
|
6,192 |
Consolidated operations |
455 |
|
711 |
Total deliveries |
5,935 |
|
6,903 |
|
|
|
|
|
2024 |
|
2023 |
|
(in thousands) |
||
Revenues |
$ 15,545 |
|
$ 20,653 |
Earnings of unconsolidated operations |
$ 12,007 |
|
$ 12,466 |
Operating expenses(1) |
$ 7,026 |
|
$ 6,928 |
Operating profit (loss) |
$ (417) |
|
$ 313 |
Segment Adjusted EBITDA(2) |
$ 1,797 |
|
$ 4,553 |
|
(1) Operating expenses consist of Selling, general and administrative expenses, Amortization of intangible assets and (Gain) loss on sale of assets. |
(2) Segment Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP. See non-GAAP explanation and the related reconciliations to GAAP on page 9. |
First-quarter 2024 revenues decreased primarily due to fewer tons delivered at
While revenues decreased, the decline in Coal Mining operating results was mainly due to lower earnings of unconsolidated operations. The decrease in earnings of unconsolidated operations was primarily attributable to reduced customer requirements at Coteau.
Coal Mining Outlook
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
Strong operating profit compared with a significant 2023 operating loss, which included a
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
2024 capital expenditures are expected to total approximately
North American
|
2024 |
|
2023 |
|
(in thousands) |
||
Tons delivered |
15,173 |
|
14,829 |
|
|
|
|
|
2024 |
|
2023 |
|
(in thousands) |
||
Revenues |
$ 24,483 |
|
$ 20,633 |
Operating profit |
$ 2,355 |
|
$ 830 |
Segment Adjusted EBITDA(1) |
$ 4,611 |
|
$ 2,716 |
|
(1) Segment Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP. See non-GAAP explanation and the related reconciliations to GAAP on page 9. |
North American Mining® revenues grew 19%, operating profit improved 184% and Segment Adjusted EBITDA rose 70% in first-quarter 2024 compared with 2023. These increases were primarily due to favorable pricing and delivery mix, as well as improved margins at the limestone quarries resulting from mutually beneficial contract amendments.
North American
In 2023, North American Mining executed a 15-year contract to mine phosphate at a quarry in central
Sawtooth Mining has exclusive responsibility for mining and mine closure services at
In 2024, capital expenditures are expected to be approximately
Minerals Management Results
|
2024 |
|
2023 |
|
(in thousands) |
||
Revenues |
$ 10,401 |
|
$ 8,285 |
Operating profit |
$ 7,930 |
|
$ 6,044 |
Segment Adjusted EBITDA(1) |
$ 8,923 |
|
$ 6,855 |
|
(1) Segment Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP. See non-GAAP explanation and the related reconciliations to GAAP on page 9. |
Minerals Management revenue, operating profit and Segment Adjusted EBITDA increased significantly over the 2023 first quarter due to higher production volumes by third-party lessees.
Minerals Management Outlook
The Minerals Management segment derives income primarily from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil, natural gas liquids and coal, extracted primarily by third parties. As an owner of royalty and mineral interests, the Company's access to information concerning activity and operations with respect to its interests is limited. The Company's expectations are based on the best information currently available. Changing prices of natural gas and oil could have a significant impact on Minerals Management's operating profit.
In
In 2024, operating profit and Segment Adjusted EBITDA are expected to decrease moderately compared with the prior year, excluding the 2023 impairment charge of
Development of additional wells on existing interests in excess of current expectations, or acquisitions of additional interests, could be accretive to future results.
In 2024, Minerals Management is targeting additional investments of up to
Mitigation Resources of North America Outlook
Consolidated Outlook
Overall, the Company expects to generate net income in 2024 compared with the substantial 2023 consolidated net loss, which included a
The Company is taking steps to terminate its defined benefit pension plan in 2024. In connection with this action, NACCO is anticipating a non-cash settlement charge in the second half of the year, which is expected to partly offset the improved 2024 operating results.
Consolidated capital expenditures are expected to total approximately
Long-term Growth and Diversification
Management is focused on transforming NACCO into a broad-based natural resources company and is optimistic about the Company's long-term business outlook. NACCO's businesses provide critical inputs for electricity generation, construction and development, and the production of industrial minerals and chemicals. Increasing demand for electricity, on-shoring and current federal policies are creating favorable macroeconomic trends within these industries. The Company believes its businesses have competitive advantages that provide value to customers and create long-term value for stockholders. The Company is pursuing growth and diversification by strategically leveraging its core mining and natural resources management skills to build a strong portfolio of affiliated businesses. Opportunities for growth remain strong. Acquisitions of additional mineral interests and improvements in the outlook for Coal Mining segment customers, as well as new contracts at Mitigation Resources and North American Mining should be accretive to the Company's outlook.
The Minerals Management segment continues to pursue acquisitions of mineral and royalty interests in
North American Mining is focused on continuing to evaluate new business opportunities and drive profitable growth in line with refined strategic objectives. After pausing on business development in early 2023, North American Mining has better identified how to enhance operational excellence, where to focus and scale, and how to drive profitable growth. New contracts and contract extensions are central to the business' organic growth strategy, and the Company expects North American Mining to be a substantial contributor to operating profit over time.
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.
NACCO also continues to pursue activities which can strengthen the resiliency of its existing coal mining operations. The Company remains focused on managing coal production costs and maximizing efficiencies and operating capacity at mine locations to help customers with management fee contracts be more competitive. These activities benefit both customers and the Company's Coal Mining segment, as fuel cost is a significant driver for power plant dispatch. Increased power plant dispatch results in increased demand for coal by the Coal Mining segment's customers. Fluctuating natural gas prices, weather and availability of renewable energy sources, such as wind and solar, could affect the amount of electricity dispatched from coal-fired power plants. While the Company realizes the coal mining industry faces political and regulatory challenges and demand for coal is projected to decline over the longer-term, the Company believes coal should be an essential part of the energy mix in
The Company continues to look for ways to create additional value by utilizing its core mining competencies which include reclamation and permitting. The Company is working to utilize these skills through development of utility-scale solar projects on reclaimed mining properties. Reclaimed mining properties offer large tracts of land that could be well-suited for solar and other energy-related projects. These projects could be developed by the Company itself or through joint ventures that include partners with expertise in energy development projects. In 2023, NACCO formed ReGen Resources to pursue such projects, including the development of a solar farm on reclaimed land at
NACCO is committed to maintaining a conservative capital structure as it continues to grow and diversify, while avoiding unnecessary risk. The Company believes strategic diversification will generate cash that can be re-invested to strengthen and expand the businesses. The Company also continues to maintain the highest levels of customer service and operational excellence with an unwavering focus on safety and environmental stewardship.
****
Conference Call
In conjunction with this news release, the management of
Non-GAAP and Other Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the
Forward-looking Statements Disclaimer
The statements contained in this news release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure or extended project development delay, (3) regulatory actions, including the
About
*****
NACCO INDUSTRIES, INC. AND SUBSIDIARIES |
|||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
|
|||
|
THREE MONTHS ENDED |
||
|
|
||
|
2024 |
|
2023 |
|
(In thousands, except per share data) |
||
Revenues |
$ 53,289 |
|
$ 50,141 |
Cost of sales |
46,271 |
|
46,784 |
Gross profit |
7,018 |
|
3,357 |
Earnings of unconsolidated operations |
13,307 |
|
13,824 |
Operating expenses |
|
|
|
Selling, general and administrative expenses |
15,453 |
|
14,876 |
Amortization of intangible assets |
126 |
|
727 |
Gain on sale of assets |
(11) |
|
(236) |
|
15,568 |
|
15,367 |
Operating profit |
4,757 |
|
1,814 |
Other (income) expense |
|
|
|
Interest expense |
1,111 |
|
545 |
Interest income |
(1,127) |
|
(1,155) |
Closed mine obligations |
455 |
|
409 |
Gain on equity securities |
(1,041) |
|
(628) |
Other, net |
(214) |
|
(1,725) |
|
(816) |
|
(2,554) |
Income before income tax provision (benefit) |
5,573 |
|
4,368 |
Income tax provision (benefit) |
1,003 |
|
(1,324) |
Net income |
$ 4,570 |
|
$ 5,692 |
|
|
|
|
Earnings per share: |
|
|
|
Basic earnings per share |
$ 0.61 |
|
$ 0.77 |
Diluted earnings per share |
$ 0.61 |
|
$ 0.76 |
|
|
|
|
Basic weighted average shares outstanding |
7,452 |
|
7,428 |
Diluted weighted average shares outstanding |
7,515 |
|
7,515 |
EBITDA RECONCILIATION (UNAUDITED) |
|||
|
|||
|
THREE MONTHS ENDED |
||
|
|
||
|
2024 |
|
2023 |
|
(in thousands) |
||
Net income |
$ 4,570 |
|
$ 5,692 |
Income tax provision (benefit) |
1,003 |
|
(1,324) |
Interest expense |
1,111 |
|
545 |
Interest income |
(1,127) |
|
(1,155) |
Depreciation, depletion and amortization expense |
5,692 |
|
7,019 |
Consolidated EBITDA* |
$ 11,249 |
|
$ 10,777 |
|
|||
*EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures. NACCO defines EBITDA as net income before income taxes, net interest expense and depreciation, depletion and amortization expense. EBITDA is not a measure under |
NACCO INDUSTRIES, INC. AND SUBSIDIARIES |
|||||||||||
FINANCIAL SEGMENT HIGHLIGHTS AND SEGMENT ADJUSTED EBITDA RECONCILIATIONS (UNAUDITED) |
|||||||||||
|
|||||||||||
|
Three Months Ended |
||||||||||
|
Coal Mining |
|
North |
|
Minerals |
|
Unallocated |
|
Eliminations |
|
Total |
|
(In thousands) |
||||||||||
Revenues |
$ 15,545 |
|
$ 24,483 |
|
$ 10,401 |
|
$ 3,262 |
|
$ (402) |
|
$ 53,289 |
Cost of sales |
20,943 |
|
21,671 |
|
1,364 |
|
2,712 |
|
(419) |
|
46,271 |
Gross profit (loss) |
(5,398) |
|
2,812 |
|
9,037 |
|
550 |
|
17 |
|
7,018 |
Earnings of unconsolidated operations |
12,007 |
|
1,365 |
|
(65) |
|
— |
|
— |
|
13,307 |
Operating expenses* |
7,026 |
|
1,822 |
|
1,042 |
|
5,678 |
|
— |
|
15,568 |
Operating profit (loss) |
$ (417) |
|
$ 2,355 |
|
$ 7,930 |
|
$ (5,128) |
|
$ 17 |
|
$ 4,757 |
Segment Adjusted EBITDA** |
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
$ (417) |
|
$ 2,355 |
|
$ 7,930 |
|
$ (5,128) |
|
$ 17 |
|
$ 4,757 |
Depreciation, depletion and amortization |
2,214 |
|
2,256 |
|
993 |
|
229 |
|
— |
|
5,692 |
Segment Adjusted EBITDA** |
$ 1,797 |
|
$ 4,611 |
|
$ 8,923 |
|
$ (4,899) |
|
$ 17 |
|
$ 10,449 |
|
Three Months Ended |
||||||||||
|
Coal Mining |
|
North |
|
Minerals |
|
Unallocated |
|
Eliminations |
|
Total |
|
(In thousands) |
||||||||||
Revenues |
$ 20,653 |
|
$ 20,633 |
|
$ 8,285 |
|
$ 1,191 |
|
$ (621) |
|
$ 50,141 |
Cost of sales |
25,878 |
|
19,241 |
|
1,052 |
|
1,214 |
|
(601) |
|
46,784 |
Gross profit (loss) |
(5,225) |
|
1,392 |
|
7,233 |
|
(23) |
|
(20) |
|
3,357 |
Earnings of unconsolidated operations |
12,466 |
|
1,358 |
|
— |
|
— |
|
— |
|
13,824 |
Operating expenses* |
6,928 |
|
1,920 |
|
1,189 |
|
5,330 |
|
— |
|
15,367 |
Operating profit (loss) |
$ 313 |
|
$ 830 |
|
$ 6,044 |
|
$ (5,353) |
|
$ (20) |
|
$ 1,814 |
Segment Adjusted EBITDA** |
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
$ 313 |
|
$ 830 |
|
$ 6,044 |
|
$ (5,353) |
|
$ (20) |
|
$ 1,814 |
Depreciation, depletion and amortization |
4,240 |
|
1,886 |
|
811 |
|
82 |
|
— |
|
7,019 |
Segment Adjusted EBITDA** |
$ 4,553 |
|
$ 2,716 |
|
$ 6,855 |
|
$ (5,271) |
|
$ (20) |
|
$ 8,833 |
|
|||||||||||
*Operating expenses consist of Selling, general and administrative expenses, Amortization of intangible assets and (Gain) loss on sale of assets. |
|||||||||||
**Segment Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures. NACCO defines Segment Adjusted EBITDA as operating profit (loss) plus depreciation, depletion and amortization expense. Segment Adjusted EBITDA is not a measure under |
View original content to download multimedia:https://www.prnewswire.com/news-releases/nacco-industries-announces-first-quarter-2024-results-302133709.html
SOURCE