NACCO Industries Q4 Earnings Call Highlights

Key Points

• Despite improved operating momentum — Q4 revenue of $66.8 million, consolidated gross profit up 42% and adjusted EBITDA +59% to $14.3 million — NACCO reported a Q4 net loss of $3.8 million largely driven by a $7.8 million non‑cash pension settlement charge and a year‑end tax "true up."
• All three segments showed improvement: utility coal rebounded (Mississippi Lignite returned to gross profit and expects higher per‑ton prices in 2026), contract mining is ramping with a multi‑year Army Corps dragline project and a new Arizona quarry (but incurred a $1.1M loss contingency tied to a Florida fatality), and minerals & royalties benefited from higher natural‑gas royalties though management forecasts segment EBITDA pressure in 2026 absent commodity changes.
• Management plans significant, selective 2026 capital spending (including a $20 million minerals budget if suitable projects are found), expects Mitigation Resources to become profitable in H2 2026, and exited 2025 with stronger liquidity and cash generation — $50.9 million cash from operations and $124.2 million total liquidity versus $100.9 million of debt.

NACCO Industries NYSE: NC executives said the company finished 2025 with improved operating momentum across its three reportable segments, while a pension plan termination charge and a tax expense adjustment pushed reported fourth-quarter results into a loss.

Management opens with safety incident update

President and CEO J.C. Butler began the call by addressing a “tragic incident” at one of the company’s Florida operations in December that resulted in the deaths of two employees. Butler said employee safety remains a cornerstone value, and that NACCO is reinforcing safety expectations across the organization.

Fourth-quarter results: operating improvement, but net loss due to pension and taxes

Senior Vice President and Controller Elizabeth Loveman said NACCO generated fourth-quarter revenue of $66.8 million, up 5% year over year, and consolidated gross profit of $12.0 million, an increase of 42% from the prior-year period. Consolidated operating profit rose to $7.6 million from $3.9 million in the fourth quarter of 2024, driven by improvements in all three reportable segments, partly offset by higher unallocated expenses.

Adjusted EBITDA increased 59% year over year to $14.3 million, compared with $9.0 million in the year-ago quarter. Butler added that adjusted EBITDA rose 14% sequentially, and characterized the second half of 2025 as overcoming operational challenges experienced in the first half.

Despite the improved operating performance, Loveman said NACCO reported a fourth-quarter net loss of $3.8 million, or $0.52 per share, versus net income of $7.6 million, or $1.02 per share, in the fourth quarter of 2024. Management attributed the quarterly loss primarily to two items:

• A $7.8 million non-cash pension settlement charge associated with terminating the company’s pension plan (about $6 million after tax).
• A “true up” of tax expense to the full-year effective tax rate.

Butler said the company has successfully settled all future pension obligations and described the pension-related and tax items as “transactional anomalies,” while expressing confidence in what he called the underlying operating results.

Segment performance: utility coal rebounds; contract mining positions for growth; royalties supported by natural gas

Utility coal mining showed the largest year-over-year improvement. Loveman said the segment posted operating profit of $7.2 million in the fourth quarter of 2025, up from $2.0 million in the year-ago period, while segment adjusted EBITDA rose to $9.7 million from $4.2 million. Butler said the segment reported a gross profit after “a number of quarters of losses,” led by better performance at Mississippi Lignite Mining Company.

Butler said Mississippi Lignite has faced unfavorable contract mechanics that reduced the per-ton sales price, but the team improved efficiency and controlled costs. In the quarter, the mine produced and sold more tons, lowering the cost per ton sold. Production also outpaced deliveries, resulting in certain production costs being capitalized into inventory. Butler contrasted the quarter’s improvement with the prior year, when results were affected by a significant inventory write-down.

Looking ahead, Butler said the customer’s power plant began a maintenance outage in mid-February, reducing first-quarter demand, and is expected to resume operations in mid-March. He said NACCO expects year-over-year improvements at Mississippi Lignite in 2026 due to an anticipated increase in the contractually determined price per ton, while cautioning that delays, changes in demand or dispatch, or reduced mechanical availability at the plant could change expectations.

Loveman said NACCO expects utility coal mining operating profit to increase in 2026 versus 2025. She said expected improvements at Mississippi Lignite, driven by a higher contractually determined per-ton price, are expected to be partly offset by lower earnings at unconsolidated mining operations. Specifically, she cited reduced income at Sabine Mining Company associated with winding down reclamation services.

Contract mining also improved year over year, with Butler citing progress on operational and strategic initiatives. Loveman said contract mining revenue, net of reimbursed costs, rose 9% versus the prior-year quarter, driven primarily by higher parts sales and partly offset by increased volumes of lower-priced tons. Segment operating profit was $0.9 million and segment adjusted EBITDA was $3.3 million, both comparable to the prior-year quarter.

Loveman said improved margins and higher parts sales were offset by a $1.1 million loss contingency and lower employee-related expenses. She said the loss contingency was related to costs associated with the Florida incident discussed earlier in the call.

Butler highlighted a multi-year dragline services contract for a U.S. Army Corps of Engineers dam construction project in Palm Beach County, Florida, which he said is beginning to ramp up. In the Q&A, he described it as a significant contract and noted it is structured around moving a defined amount of material, which management said limits exposure to market forces. Loveman said the project will ramp throughout 2026, and Butler noted the company expects it to become a three-dragline project, with some additional capital still to be spent. Butler also said NACCO anticipates commencing operations at a new limestone quarry in Arizona in 2026.

Minerals and royalties

For 2026, Loveman said newer investments are expected to contribute favorably, but commodity price forecasts and development and production assumptions are expected to result in an overall year-over-year decrease in operating profit and segment adjusted EBITDA, particularly in the second half. She added that the company’s forecast was developed prior to recent developments in the Middle East, and that significant changes in commodity prices or production tied to the conflict could change expectations.

Capital spending, Mitigation Resources trajectory, and liquidity

Butler said NACCO expects to make “significant capital investments” in 2026, with the majority related to business development opportunities, and reiterated that investments will be made only if projects meet the company’s criteria. In the Q&A, Butler said the company budgets $20 million of investment capital for its minerals business but emphasized it will not necessarily spend the full amount if it does not find suitable projects. He also said 2026 contract mining capital spending includes amounts related to the Army Corps project.

Butler discussed Mitigation Resources, saying profitability is expected to increase over time from mitigation credit sales and from expanding reclamation and restoration services. He said results can be variable due to permit and project timing. Earlier in the call, he said Mitigation Resources is expected to generate a profit in the second half of 2026 and move toward more consistent results as the business scales. In the Q&A, Butler outlined the mitigation banking model as an “invest and then harvest” process, noting a multi-year permitting and credit-release timeline and emphasizing that demand depends on customer project timing and permitting.

On liquidity, Loveman said NACCO generated cash from operations of $50.9 million in 2025, up from $22.3 million in 2024. At year-end, the company had debt of $100.9 million, compared with $99.5 million a year earlier. Total liquidity was $124.2 million, including $49.7 million in cash and $74.5 million available under its revolving credit facility. Loveman said the company expects a greater use of cash before financing in 2026 due to anticipated capital investments.

Closing the call, Butler said he remains confident in the company’s trajectory and long-term opportunities, pointing to what he described as strengthening natural resource fundamentals and an improving regulatory environment. He also noted the reestablishment of the National Coal Council as an advisory committee to the U.S. Secretary of Energy, which he said is focused on grid reliability and sustaining coal plant operations.

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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