NACCO Industries Q1 Earnings Call Highlights

Key Points

• NACCO Industries posted a strong first quarter, with operating profit up 43% year over year and net income rising 80% to $8.8 million. Revenue fell 4% to $62.8 million, but gross profit, operating profit, and adjusted EBITDA all improved significantly.
• Utility coal mining and contract mining were the main growth drivers. Utility coal profit jumped on better Mississippi Lignite performance and efficiency actions, while contract mining benefited from a new multi-year Florida dragline project and higher customer demand.
• Management remains bullish on 2026, but spending and segment trends will vary. NACCO expects meaningful full-year improvement, though capital expenditures and debt are rising, and the Minerals and Royalties segment faces natural gas-related headwinds even as Mitigation Resources expands in Tennessee.

NACCO Industries NYSE: NC reported a stronger first quarter of 2026, with management citing gains in its utility coal mining and contract mining segments as the main drivers of improved profitability.

President and Chief Executive Officer J.C. Butler said the company “delivered a strong start to 2026,” with first-quarter operating profit up 43% from the prior year and 45% sequentially. He said the year-over-year improvement was driven by “meaningful growth” in utility coal and contract mining, while sequential growth was led by contract mining, primarily from the start of a new construction project in Florida.

Senior Vice President and Controller Elizabeth Loveman said consolidated gross profit rose 48% year over year to $14.3 million, even as revenue declined 4% to $62.8 million. Consolidated operating profit increased to $11 million from $7.7 million in the prior-year period. Net income rose 80% to $8.8 million, or $1.17 per share, compared with $4.9 million, or $0.66 per share, in the first quarter of 2025. Consolidated adjusted EBITDA increased 28% to $16.4 million from $12.8 million.

Utility Coal Mining Improves on Mississippi Lignite Performance

Butler said NACCO’s utility coal mining segment remains “the foundation” of the business, with Mississippi Lignite Mining Company among the main contributors to the quarter’s operating profit increase. He said the company responded to a customer power plant outage that began in mid-February by redeploying crews to planned reclamation activities.

That work reduced the company’s asset retirement obligation rather than being recorded as an expense, which Butler said helped limit the impact on first-quarter earnings. Lower cost per ton also helped offset reduced deliveries during the outage.

Loveman said the utility coal mining segment reported operating profit of $7.4 million, up from $3.8 million in the first quarter of 2025. Segment adjusted EBITDA increased to $9.7 million from $5.8 million. She said the improvement reflected efficiency actions and reclamation progress at Mississippi Lignite Mining Company, as well as comparison against a prior-year period that included a $3 million inventory impairment charge.

For 2026, Loveman said NACCO expects a meaningful increase in utility coal mining operating profit compared with 2025, primarily in the first half of the year. Improvements at Mississippi Lignite Mining Company are expected to come from an increase in the contractually determined per-ton sales price and lower cost per ton delivered, partly offset by lower earnings at unconsolidated mining operations. She said lower second-half earnings at unconsolidated operations are expected due to reduced income from The Sabine Mining Company tied to the wind down of reclamation services.

In response to a question from Doug Weiss of DSW Investment, Butler said the earlier outage at the Mississippi Lignite customer’s plant had been completed and that the plant was “running pretty well.” He said steady mining rates allow NACCO to operate most efficiently.

Contract Mining Gains From Florida Project

Butler described contract mining as NACCO’s primary mining growth platform. He said first-quarter operating profit in the segment reflected benefits from strategic initiatives to expand the business.

During the quarter, NACCO began work under a multi-year dragline services contract tied to a U.S. Army Corps of Engineers construction project in Palm Beach County, Florida. Butler said the project advances the company’s expansion into large-scale infrastructure work and demonstrates the efficiency and environmental advantages of NACCO’s electric-drive MTECK draglines. The company had two MTECK draglines on site during the call and planned to add a third later in the year.

Loveman said the Florida contract, combined with increased customer requirements and deliveries at limestone mining operations, led to a 32% increase in revenues net of reimbursed costs for the contract mining segment and “substantial” year-over-year increases in operating profit and segment adjusted EBITDA.

She also noted that contract mining changed its depreciation method for draglines and other large mining equipment from straight line to units of production, which added about $900,000 to first-quarter operating profit. As activity increases, including in Florida and at a limestone quarry in Arizona expected to begin operations in the second half of 2026, depreciation expense is expected to rise. Loveman said full-year depreciation is expected to be generally in line with 2025.

Butler said the Arizona project will involve operating a dragline for an existing customer and will expand NACCO’s footprint into a new U.S. region. He said the segment is building a growing portfolio of long-term contracts through geographic and mineral expansion.

Minerals and Royalties Faces Natural Gas Headwinds

NACCO’s Minerals and Royalties segment produced operating profit comparable with the prior year. Butler said first-quarter results exceeded the company’s forecast, but management still expects a year-over-year decline in operating profit and segment adjusted EBITDA for 2026.

Loveman said higher earnings from NACCO’s Eiger equity investment largely offset lower natural gas revenue in the quarter. For the full year, she said increased income from the equity holding and higher oil prices are expected to be more than offset by anticipated production declines in natural gas assets and a changing mix of production and development activity.

Butler said natural gas remains the primary driver of near-term results for the segment. While higher oil prices help, he said they do not have the same level of impact. In the question-and-answer session, Butler said producers appear cautious about increasing drilling activity despite higher oil prices, adding that sustained higher prices could eventually lead to increased development.

Mitigation Resources Expands in Tennessee

Butler said NACCO expects Mitigation Resources to generate increasing profitability over time from mitigation credit sales and expanded reclamation and restoration services. He said results can be variable due to permit and project timing, but the business is expected to generate profit in the second half of 2026 and move toward more consistent performance as it expands.

In mid-April, Mitigation Resources acquired 958 acres in Wilson County, Tennessee, east of Nashville. Butler said the project represents an expansion into an area experiencing steady economic growth and is expected to create a mitigation bank with stream and wetland mitigation credits. Credit availability is anticipated in 2029, serving residential, industrial and infrastructure development in a 14-county area around Greater Nashville.

During the Q&A session, Butler said Mitigation Resources initially contracted out dirt work but later brought that work in-house to better control costs and schedules. He said the business also performs restoration and reclamation projects for third parties.

Capital Spending and Outlook

NACCO made $33 million of capital expenditures in the first quarter. Butler and Loveman said the spending primarily reflected the Tennessee land acquisition and dragline expenditures tied to the Florida project, along with other items.

Loveman said NACCO had $126.4 million of outstanding debt at March 31, up from $100.9 million at Dec. 31, 2025. Total liquidity was $102.7 million, consisting of $53.2 million in cash and $49.5 million of availability under the company’s revolving credit facility. She said NACCO expects a greater use of cash before financing in 2026 than in 2025 due to anticipated capital investments.

At the consolidated level, Loveman said NACCO anticipates meaningful year-over-year improvements in operating profit, net income and adjusted EBITDA in 2026. Excluding the effect of a $6 million after-tax pension settlement charge in 2025, she said growth is expected to moderate in the second half as results are compared against stronger prior-year operational performance.

Butler said NACCO entered 2026 with “clear opportunities” to build on 2025 momentum and remains focused on long-term relationships, long-term contracts and investment in long-term assets.

About NACCO Industries NYSE: NC

NACCO Industries, Inc is a Cleveland, Ohio–based diversified holding company with a history spanning more than a century. Through its principal subsidiaries, the company operates in two primary business areas: coal mining and material-handling system design and manufacturing. Originally incorporated in 1913, NACCO has maintained a presence on the New York Stock Exchange under the ticker symbol NC since the 1920s, evolving its portfolio to meet changing market demands while preserving its core expertise in bulk commodities and industrial services.

The North American Coal Corporation, NACCO's coal mining segment, is among the largest producers of lignite coal in the United States.

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