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Item 1A. Risk Factors

2022-03-02 compared with 2021-03-03 · 128 added, 97 removed, 232 unchanged (49% of the section changed)

The Company operates in a rapidly changing environment that involves a number of risks.

The following discussion highlights some of these risks and others are discussed elsewhere in this report.

These and other risks could materially and adversely affect the Company’s business, financial condition, operating results or cash flows.

The following risk factors are not an exhaustive list of the risks associated with the Company’s business.

New factors may emerge or changes to these risks could occur that could materially affect the Company’s business.

Risks related to the Coal Mining segment

Termination of or default under long-term mining contracts could materially reduce the Company's profitability.

Termination of or default under long-term mining contracts could adversely affect the Company's business, financial condition, results of operation and cash flows.

Substantially all of the Coal Mining segment's profits are derived from long-term mining contracts.

Although the Company has long-term contracts, numerous regulatory authorities, along with well-funded political and environmental activist groups, are devoting substantial resources to anti-coal activities to minimize or eliminate the use of coal as a source of electricity generation.

As a result of such activities, the Coal Mining segment's customers could prematurely retire certain coal-fired generating units.

Any customer's premature facility closure could have a material adverse effect on the Company’s business, financial condition and results of operations.

On May 7, 2020, Great River Energy ("GRE"), Falkirk Mine's customer, and the Company's second largest customer, announced its intent to retire the Coal Creek Station power plant in the second half of 2022 and modify the Spiritwood Station power plant to be fueled by natural gas.

On November 5, 2020, American Electric Power announced its affiliate, Southwestern Electric Power Company's (“SWEPCO”), intends to retire the Henry W.

Pirkey Plant (the “Pirkey Plant”) in 2023.

The Sabine Mining Company, (“Sabine”) operates the Sabine Mine in Texas and all production from Sabine is delivered to SWEPCO's Pirkey Plant.

Business — Business Developments" on page 2 in this Form 10-K for further discussion.

State implementation of the EPA’s Regional Haze Rule (“RHR”) could require Coyote Creek’s customers to incur significant new costs at the Coyote Station power plant, which could, dependent on determinations by state regulatory commissions on approval to recover such costs from the customers of Coyote Creek’s customer, negatively impact Coyote Creek’s customers’ net income, financial position and cash flows.

Any customer's premature facility closure, including as discussed in “Item 1.

Business — Business Developments" on page 2 or a result of GRE’s failure to complete the sale of Coal Creek Station and the adjacent high-voltage direct current transmission line to Rainbow Energy and its affiliates currently anticipated to close in the second quarter of 2022, could have a material adverse effect on the Company’s business, financial condition and results of operations.

State implementation of the EPA’s Regional Haze Rule (“RHR”) could require Coyote Creek’s customers to incur significant new costs at the Coyote Station power plant, which could, dependent on determinations by state regulatory commissions regarding approval to recover such costs from the customers of Coyote Creek’s customer, negatively impact Coyote Creek’s customers’ net income, financial position and cash flows.

The Company understands that the North Dakota Department of Environmental Quality (“NDDEQ”) could require sources subject to RHR Round 2 reasonable progress determinations, including Coyote Station, to undertake emissions control measures.

If NDDEQ requires significant emissions controls at Coyote Station by December 31, 2028, it may not be economically feasible for Coyote Creek's customers to invest in such equipment and an early retirement of Coyote Station and the Coyote Creek mine could be necessary.

NDDEQ’s state implementation plan is due to be submitted to the EPA by July 2021.

Preliminary modeling favors minimal additional emissions control measures for all North Dakota sources.

The Company expects NDDEQ to further evaluate additional preliminary control scenarios for regional visibility modeling in the first quarter of 2021 and prepare a draft state implementation plan available for public comment the first half of 2021.

The emissions modeling conducted for the combined western state agencies affected by the RHR was delayed and has subsequently delayed the NDDEQ state implementation plan process.

Therefore, the NDDEQ's state implementation plan, which was due to the EPA by July 2021, is anticipated to be submitted to EPA early in 2022.

If NDDEQ requires significant emissions controls at Coyote Station power plant by December 31, 2028, it may not be economically feasible for Coyote Creek's customers to invest in such equipment and an early retirement of Coyote Station and the Coyote Creek mine could be necessary.

The Company could be negatively impacted by the decisions of Coyote Creek's customers.

In September 2021, one of Coyote Creek's customers, Otter Tail Power Company, filed its 2022 Integrated Resource Plan in Minnesota and North Dakota which included its intent to start the process of withdrawal from its 35 percent ownership interest in Coyote Station power plant with an anticipated exit from the plant by December 31, 2028.

Under certain circumstances of default or termination of Coyote Creek’s Lignite Sales Agreement (“LSA”), the Company would be obligated for payment of a "make-whole" amount to Coyote Creek’s third-party lenders.

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Any decision by Coyote Creek’s customers to reduce operations or prematurely close the Coyote Creek mine would have a material adverse effect on the Company’s results of operations, financial position and cash flows.

The loss of, or significant reduction in, purchases by our coal customers could adversely affect our business, financial condition, results of operation and cash flows.

For the year ended December 31, 2020, the Coal Mining segment derived approximately 60% of earnings of unconsolidated operations from two customers, Basin Electric Power Cooperative and GRE.

GRE announced its intent to close Coal Creek station in 2022.

The loss of, or significant reduction in, purchases by NACCO's coal customers could adversely affect the Company's business, financial condition, results of operation and cash flows.

For the year ended December 31, 2021, the Coal Mining segment derived approximately 68% of earnings of unconsolidated operations from two customers, Basin Electric and GRE.

There are inherent risks whenever a significant percentage of total earnings are concentrated with a limited number of customers.

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In addition, if any customers were to significantly reduce or eliminate their purchases of coal from us or if the Company is unable to renew expiring long-term sales agreements with existing customers or enter into new supply agreements, the Company's business, financial condition, results of operations and cash flows could be adversely affected.

Business — Business Developments" on page 2 in this Form 10-K for further discussion.

Further, in large part as a result of increasing and frequently changing regulation and the realignment of customers' power generation portfolios that reduce the electric power generated from coal, electric power generators may be less willing to enter into long-term coal supply contracts.

Any shift away from long-term supply contracts could adversely affect the Company's profitability, cash flows and financial position.

Mississippi Lignite Mining Company ("MLMC") is subject to risks associated with its capital investment, operating and equipment costs, growing use of alternative generation that competes with coal fired generation, changes in customer demand and inflationary adjustments.

Business — Business

Developments" on page 2 in this Form 10-K for further discussion.

MLMC is subject to risks associated with its capital investment, operating and equipment costs, growing use of alternative generation that competes with coal fired generation, changes in customer demand and inflationary adjustments.

The profitability of MLMC is subject to the risk of loss of investment in this operation, increases in the cost of mining, changes in customer demand, growing competition from alternative power generation that competes with coal-fired generation and the emergence of adverse mining conditions.

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Any reduction in customer demand at MLMC, including reductions related to reduced mechanical availability of the customer’s power plant, would adversely affect the Company's operating results and could result in significant impairments.

MLMC has approximately $135 million of long-lived assets, including property, plant and equipment and its coal supply agreement intangible asset, which are subject to periodic impairment analysis and review.

MLMC has approximately $136 million of long-lived assets, including property, plant and equipment and a coal supply agreement intangible asset, which are subject to periodic impairment analysis and review.

Identifying and assessing whether impairment indicators exist, or if events or changes in circumstances have occurred, including assumptions about future power plant dispatch levels, changes in operating costs and other factors that impact anticipated revenue and customer demand, requires significant judgment.

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MLMC sells lignite at contractually agreed upon prices which are subject to changes in the level of established indices over time.

The price of diesel fuel is heavily-weighted among these indices.

As such, a substantial decline in diesel prices could materially reduce MLMC's profitability, as the decline in revenue will only be partially offset by the effect of lower diesel prices on production costs.

As diesel fuel is heavily weighted among the indices used to determine the coal sales price, fluctuations in diesel fuel prices can result in significant fluctuations in earnings at MLMC.

MLMC delivers coal to the Red Hills Power Plant in Ackerman, Mississippi.

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TVA’s power portfolio includes coal, nuclear, hydroelectric, natural gas and renewables.

In 2019, TVA published its updated Integrated Resource Plan ("IRP").

The IRP indicates TVA plans to increase its reliance on solar power.

In 2019, TVA published its updated Integrated Resource Plan, which indicates plans to increase its reliance on solar power.

A decrease in the number of days TVA dispatches the Red Hills Power Plant would reduce MLMC's customer's demand for coal.

The decision of which power plants to dispatch is determined by TVA.

TVA has dispatched Red Hills Power Plant at a lower rate in 2019 and 2020 than in previous years.

Choctaw Generation Limited Partnership ("CGLP") leases the Red Hills Power Plant from a Southern Company subsidiary pursuant to a leveraged lease arrangement.

CGLP's ability to make required payments to the Southern Company subsidiary is dependent on the operational performance of the Red Hills Power Plant.

Southern Company recently publicly disclosed that while all CGLP lease payments have been paid in full through December 31, 2020, operational and other risks have resulted in cash liquidity challenges at the Red Hills Power Plant, and based on current forecasts of energy prices in the years following the expiration of the PPA in 2032, concerns exist regarding the lessee's ability to make the remaining semi-annual lease payments through the end of the lease term in 2047.

During the fourth quarter of 2019, Southern Company concluded that it was no longer probable that all of the payments would be received over the term of the lease and therefore recognized an impairment charge to reduce the value of the lease investment.

During the second quarter of 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease which resulted in a full impairment of the lease investment.

During 2020, Southern Company revised the estimated cash flows to be received under the leveraged lease which resulted in a full impairment of the lease investment.

If any future lease payment is not paid in full, the Southern Company subsidiary may be unable to make its corresponding payment to the holders of the underlying non-recourse debt related to the Red Hills Power Plant.

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A foreclosure of the Red Hills Power Plant could have a material adverse effect on MLMC's financial condition, results of operations and cash flows.

Southern Company publicly disclosed that all required lease payments have been paid in full through December 31, 2021

Similar to the Company's unconsolidated mines, all production costs at MLMC are capitalized into inventory and recognized in cost of sales as tons are delivered.

In periods of limited or no deliveries, MLMC may be required to reduce its inventory carrying value using the lower of cost or net realizable value approach, which could adversely affect MLMC’s results of operations.

In periods of limited or no deliveries, MLMC may be required to reduce its inventory carrying value using the lower of cost and net realizable value approach, which could adversely affect MLMC’s results of operations.

Changes in customer demand for any reason, including, but not limited to, reduced mechanical availability of the customer’s power plant, dispatch of power generated by other energy sources ahead of coal, fluctuations in demand due to unanticipated weather conditions, regulations or comparable policies which may promote planned and unplanned outages at the Red Hills Power Plant, economic conditions, including an economic slowdown and a corresponding decline in the use of electricity, governmental regulations and inflationary adjustments could have a material adverse effect on MLMC's financial condition, results of operations and cash flows.

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inflation rates.

During the production stage, the Unconsolidated Subsidiaries' customers pay the Company its agreed upon fee only for the coal delivered to them for consumption or use.

During the production stage, the

Unconsolidated Subsidiaries' customers pay the Company its agreed upon fee only for the coal delivered to them for consumption or use.

As a result, reduced coal usage by customers for any reason, including, but not limited to, fluctuations in demand due to unanticipated weather conditions, scheduled and unscheduled outages at the Coal Mining segment's customers' facilities, unplanned equipment failures, economic conditions or governmental regulations or comparable policies which may promote dispatch of power generated by renewables, such as wind or solar, and the realignment of customers' power generation portfolios that reduce the electric power generated from coal could have a material adverse effect on the Company's results of operations.

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and energy conservation efforts and related governmental policies.

Changes in the utility and coal mining industry that affect our customers could also adversely affect the Company.

Lower natural gas prices and increased availability of renewables have contributed to a reduction in demand for coal-fired electric power generation.

Changes in the utility industry that affect NACCO's customers could also adversely affect the Company.

The increased availability of renewable energy sources has contributed to a reduction in demand for coal-fired electric power generation.

Competition from natural gas-fired plants that are relatively more efficient, less expensive to construct and less difficult to permit than coal-fired plants has the most potential to continue to displace a significant amount of coal-fired electric power generation in the near term.

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Legislation mandating certain benefits for current and retired coal miners also affects the industry.

Mining operations require numerous governmental permits and approvals.

Mining operations require numerous governmental and regulatory permits and approvals.

The Company is required to prepare and present to federal, state or local authorities data pertaining to the impact the production and combustion of coal may have upon the environment.

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Compliance with these requirements is costly and time-consuming and may delay commencement or continuation of development or production.

New legislation and/or

regulations and orders may materially adversely affect the Company's mining operations or its cost structure, or its customers.

New legislation and/or regulations and orders may materially adversely affect the Company's mining operations or its cost structure, or its customers.

All of these factors could significantly reduce the Company's profitability.

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Such changes could have a material adverse effect on the Company’s business and could significantly reduce its profitability.

The Clean Air Act ("CAA") and the Affordable Clean Energy ("ACE") Rule could reduce the demand for coal.

The Clean Air Act ("CAA") could reduce the demand for coal.

The process of burning coal can cause many compounds and impurities in the coal to be released into the air, including carbon dioxide, sulfur dioxide, nitrogen oxides, mercury, particulates and other matter.

The CAA, ACE and the corresponding state laws that extensively regulate the emissions of materials into the air affect coal mining operations both directly and indirectly.

Direct impacts on coal mining operations occur through CAA permitting requirements and/or ACE emission control requirements relating to air contaminants, especially particulate matter.

The CAA and the corresponding state laws that extensively regulate the emissions of materials into the air affect coal mining operations both directly and indirectly.

Direct impacts on coal mining operations occur through CAA permitting requirements and/or emission control requirements relating to air contaminants, especially particulate matter.

Indirect impacts on coal mining operations occur through regulation of the air emissions of carbon dioxide, sulfur dioxide, nitrogen oxides, mercury, particulate matter and other compounds emitted by coal-fired power plants.

The EPA has promulgated or proposed regulations that impose tighter emission restrictions on a number of these compounds, some of which are currently subject to litigation.

The EPA has discussed issuing or issued regulations that impose tighter emission restrictions on a number of these compounds, some of which are currently subject to litigation.

The general effect of tighter restrictions is to reduce demand for coal.

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Many conditions beyond the Company's control can decrease the delivery, and therefore the use, of coal to the Company's customers.

These conditions include weather, pandemics, adverse mining conditions, unexpected maintenance problems and shortages of replacement parts, which could significantly reduce the Company's profitability.

Estimates of the Company's recoverable coal reserves involve uncertainties, and inaccuracies in these estimates could result in lower than expected revenues, higher than expected costs, decreased profitability and asset impairments.

The Company estimates recoverable coal reserves based on engineering and geological data assembled and analyzed by internal and, less frequently, external engineers and geologists.

The Company's estimates as to the quantity and quality of the coal in its reserves are updated annually to reflect production of coal from the reserves and new drilling, engineering or other data.

These estimates depend upon a variety of factors and assumptions, many of which involve uncertainties and factors beyond the Company's control, such as geological and mining conditions that may not be fully identified by available exploration data or that may differ from experience in current operations.

For these reasons, estimates of the recoverable quantities and qualities attributable to any particular group of properties, classifications of reserves based on risk of recovery and estimates of net cash flows expected from particular reserves may vary substantially.

In addition, coal tonnage recovered from identified reserve areas or properties and revenues and expenditures with respect to the Company's reserves may vary materially from estimates.

Accordingly, the Company's estimates may vary from

the actual reserves.

Any inaccuracy in the reserve estimates could result in lower than expected revenues, higher than expected costs, decreased profitability and asset impairments.

These conditions include weather, pandemics, adverse mining conditions, unexpected maintenance problems and shortages of replacement parts, any of which could significantly reduce the Company's profitability.

The Company faces numerous uncertainties in estimating economically recoverable reserves and resources, and inaccuracies in estimates could result in lower than expected revenues, higher than expected costs and decreased profitability.

Information concerning the Company's mining operations in "Item 2 - Properties on page 31" has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K, which first became applicable to us for the fiscal year ended December 31, 2021.

A mineral is economically recoverable when the price at which it can be sold exceeds the costs and expenses of mining, processing and selling the mineral.

Forecasts of NACCO's future performance are based on, among other things, estimates of mineral reserves and resources.

Mineral reserve and resource estimates of the remaining tons of coal in the Company's operational mines and other mining properties are based on many factors, including engineering, economic and geological data assembled and analyzed by internal staff and third parties, which includes various engineers and geologists, the area and volume covered by mining rights, assumptions regarding extraction rates and duration of mining operations, and the quality of in-place reserves and resources.

The reserve and resource estimates as to both quantity and quality are updated from time to time to reflect, among other matters, production of minerals from the Company's mining properties and new mining or other data received.

There are numerous uncertainties inherent in estimating quantities and qualities of minerals and costs to mine recoverable reserves and resources, including many factors beyond the Company's control.

Estimates of mineral reserves and resources necessarily depend upon a number of variable factors and assumptions, any one of which may, if incorrect, result in an estimate that varies considerably from actual results.

These factors and assumptions include:

• Geologic and mining conditions, including the Company's ability to access certain mineral deposits as a result of the nature of the geologic formations of coal deposits or other factors, which may not be fully identified by available exploration data and may differ from past experience;

• Demand for the Company's minerals;

• Contractual arrangements, operating costs and capital expenditures;

• Development and reclamation costs;

• Mining technology and processing improvements;

• The effects of regulation by governmental agencies;

• The ability to obtain, maintain and renew all required permits;

• Employee health and safety;

• NACCO's ability to convert all or any part of mineral resources to economically extractable mineral reserves.

As a result, actual tonnage recovered from identified mining properties and estimated revenues, expenditures and cash flows with respect to reserves and resources may vary materially from estimates.

Thus, these estimates may not accurately reflect the Company’s actual reserves and resources.

Any material inaccuracy in estimates related to the Company's reserves or resources could result in lower than expected revenues, higher than expected costs or decreased profitability and changes in future cash flow, which could materially and adversely affect the Company business, results of operations, financial position and cash flows.

Additionally, reserve and resource estimates may be adversely affected in the future by interpretations of, or changes to, the SEC’s property disclosure requirements for mining companies.

A defect in title or the loss of a leasehold interest in certain property could limit the Company's ability to mine coal reserves or result in significant unanticipated costs.

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The Company has expanded its overall NAMining business, operations and headcount in recent periods.

NAMining’s operating expenses may continue to increase as the Company scales the NAMining business, including growth outside of Florida and providing general and administrative resources to support NAMining’s growth.

NAMining’s operating expenses may continue to increase as the Company scales the NAMining business, including growth outside of Florida, and provides general and administrative resources to support NAMining’s growth.

As NACCO continues to grow the NAMining business, the Company must effectively integrate, develop and motivate new employees, as well as existing employees who are promoted or moved into new roles, while maintaining the effectiveness of its business execution.

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The Company anticipates that it will continue to incur costs and capital expenditures associated with future growth prior to realizing the full measure of anticipated long-term benefits, and the return on these investments may be lower, may develop more slowly than expected or may never be realized.

If the Company is unable to manage this growth effectively, the Company may not be able to take advantage of market opportunities.

If the Company is unable to manage this growth and the associated expenses effectively, the Company may not be able to take advantage of market opportunities or remain competitive.

The Company may also fail to execute on its business plan or respond to competitive pressures, any of which could adversely affect the NAMining business, operating results and financial condition.

The Company is subject to the high costs and risks involved in the development of new mining projects.

From time to time, the Company seeks to develop new mining projects, including the Thacker Pass project.

The costs and risks associated with such projects can be substantial.

New mining projects can take up to several years to complete, are complex and require significant capital expenditures.

These projects are subject to significant risks, including delays, extreme weather events, unexpected increases in the cost of required materials, and disputes with third party providers of materials, equipment or services, and a completed project may not yield the anticipated operational or financial benefit, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

NAMining faces competition from aggregates producers that choose to self-perform mining operations and from other mining companies.

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NAMining cannot be certain that its existing customers will continue to outsource these services to NAMining in the future, which could adversely affect the NAMining business, operating results and financial condition.

The Company is subject to risks involved in the development of new mining projects.

From time to time, the Company seeks to develop new mining projects, including the Thacker Pass project.

The risks associated with such projects can be substantial.

New mining projects can take up to several years to complete, are complex and require significant capital expenditures.

NAMining operations are currently geographically concentrated and therefore subject to regional economic risk, regulatory conditions, natural disasters, severe weather events or other circumstances affecting Florida.

As of December 31, 2021, over 80% of the quarries NAMining operates are located in Florida.

A prolonged economic downturn or adverse change in regulatory conditions in the Florida mining or construction industry could result in a significant reduction in demand for NAMining’s services.

The occurrence of one or more natural disasters, severe weather events, terrorist attacks, or disruptive political events in Florida could adversely affect the NAMining business.

Risks related to the Minerals Management segment

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The Company derives income from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil and coal.

In recent years, a significant portion of the Minerals Management segment's income has been derived from lease signing bonus and production payments associated with

assets in the Utica Shale in Ohio.

During 2020, the Company acquired additional mineral interests in the Permian Basin in Texas.

Future royalty-based income is dependent on the number of oil and gas wells being developed and operated on the Company’s mineral acreage in Ohio and Texas.

As discussed in “Item 1.

Business — Business Developments" on page 2, the Company acquired additional mineral and royalty interests during 2021 and 2020 and plans to continue to pursue acquisitions of additional mineral and royalty interests.

Future royalty-based income is dependent on the number of oil and gas wells being developed and operated on the Company’s mineral acreage.

The decision to pursue development and operation of oil and gas wells is made by third-party operators, not by the Company, and depends on a number of factors outside of the Company's control, including fluctuations in commodity prices (primarily natural gas), regulatory risk, the Company's lessees' willingness and ability to incur well-development and other operating costs, the rate of production of the reserves and changes in the availability and continuing development of infrastructure.

Lower commodity prices may reduce the amount of oil and natural gas that third-party operators can produce economically.

In the event that new federal or state restrictions relating to the hydraulic fracturing process are adopted in areas where the Company owns mineral and royalty interests, the Company’s lessees’ may incur additional costs or permitting requirements to comply with such federal requirements that may be significant and could result in added restrictions, delays or curtailments in the pursuit of exploration, development, or production activities.

In the event that new federal or state restrictions related to the hydraulic fracturing process are adopted in areas where the Company owns mineral and royalty interests, the Company’s lessees may incur additional costs or permitting requirements to comply with such requirements that may be significant and could result in added restrictions, delays or curtailments in the pursuit of exploration, development, or production activities.

In addition, if a lessee were to experience financial difficulty, the lessee might not be able to pay its royalty payments or continue operations.

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Any of these risks could materially reduce the Company’s expected royalty income and the Company’s profitability.

The Company’s producing mineral and royalty interests are located predominantly in the Utica Shale Basin in Ohio and the Permian Basin in Texas, making the Company vulnerable to risks associated with operating in limited geographic areas.

The majority of the Company's producing mineral and royalty interests are located predominantly in the Utica Shale Basin in Ohio and the Permian Basin in Texas.

As a result of this concentration, the Company may be disproportionately exposed to the impact of regional supply and demand factors, pricing differentials, delays or interruptions of production from wells in these areas caused by governmental regulation, processing or transportation capacity constraints, availability of equipment, facilities, personnel or services market limitations or interruption of the processing or transportation of crude oil, natural gas or natural gas liquids.

This concentration could result in a relatively greater impact on results of operations than on other companies that have a more diversified portfolio of mineral and royalty interests.

Such impacts could have a material adverse effect on the Company’s expected royalty income and the Company’s profitability.

Minerals are a depleting asset.

Unless the Company replaces existing mineral and royalty interests with new mineral and royalty interests and third-party lessees develop those mineral and royalty interests, the Company’s reserves and royalty income will decline.

Producing oil and natural gas reservoirs are generally characterized by declining production rates that vary depending upon reservoir characteristics and other factors.

Unless the Company’s third-party lessees conduct successful ongoing well development activities or the Company continually acquires mineral and royalty interests, the Company’s mineral and royalty interests will decline as those reserves are produced.

The future cash flow and results of operations of the Minerals Management segment are highly dependent on third-party operators’ success in developing the Company’s current and future mineral and royalty interests.

Unless the Company’s third-party lessees conduct successful ongoing well development activities or the Company continually acquires mineral and royalty interests, production and income related to the Company’s mineral and royalty interests will decline as those reserves are depleted.

The future cash flow and results of operations of the Minerals Management segment are highly dependent on third-party operators’ success in developing the

Company’s current and future mineral and royalty interests.

These operators may not have access to the capital needed to develop the Company's mineral interests.

The Company may not be able to acquire or find sufficient additional mineral and royalty interests to replace third-party operators' current and future production.

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The Minerals Management segment’s revenues and operating results depend significantly upon the prevailing prices for oil and natural gas.

Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control;

market expectations about future prices of oil and natural gas;

the level of oil and natural gas exploration and production;

the level of global oil and natural gas exploration and production;

the cost of exploring for, developing, producing and delivering oil and natural gas;

the price and quantity of foreign imports and U.S.

exports of oil and

exports of oil and natural gas;

the level of U.S.

domestic production;

political and economic conditions in oil producing regions, including the Middle East, Africa, South America and Russia;

political and economic conditions in oil producing regions;

the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;

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The timing and amount of any repurchases under the stock repurchase program are determined at the discretion of the Company's management based on a number of factors, including the availability of capital, other capital allocation alternatives, market conditions for the Company's Class A common stock and other legal and contractual restrictions.

The stock repurchase program does not require the Company to acquire any specific number of shares and may be modified, suspended, extended or terminated by the Company without prior notice and may be executed through open market purchases, privately negotiated transactions or otherwise.

The stock repurchase program does not require the Company to acquire any specific number of shares and may be modified, suspended, extended or terminated without prior notice and may be executed through open market purchases, privately negotiated transactions or otherwise.

Repurchases under the stock repurchase program could affect the price of the Company's Class A common stock.

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(iv) potential or actual military conflicts or acts of terrorism;

(v) announcements concerning NACCO or its competitors;

(vi) lack of trading liquidity;

(v) announcements concerning NACCO, its customers or its competitors;

(vi) lack of trading liquidity as a result of low trading volumes could make it difficult for investors to sell shares;

and (vii) the general state of the securities market.

In addition, the stock market in general has experienced significant volatility that often has been unrelated to the operating performance of companies whose shares are traded.

These market fluctuations could adversely affect the trading price of our common stock, regardless of NACCO's actual operating performance.

These market fluctuations could adversely affect the trading price of the Company's common stock, regardless of NACCO's actual operating performance.

As a result of all of these factors, investors in the Company's common stock may not be able to resell their stock at or above the price they paid or at all.

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The Board of Directors has the power to determine the amount and frequency of the payment of dividends.

Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital and future expense requirements, financial conditions, contractual limitations and other factors the Board of Directors may consider.

Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital and future expense requirements, financial conditions and other factors the Board of Directors may consider.

Accordingly, holders of NACCO's common stock should not rely on past payments of dividends in a particular amount as an indication of the amount of dividends that will be paid in the future.

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The reduced disclosures may make it more difficult to compare the Company's performance with other public companies.

NACCO cannot predict whether investors will find our common stock less attractive because of these exemptions.

NACCO cannot predict whether investors will find the Company's common stock less attractive because of these exemptions.

If some investors find NACCO's common stock less attractive as a result, there may be a less active trading market for the Company's common stock and the stock price may be more volatile.

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Current and future capital and credit market conditions could adversely affect the Company’s ability to obtain bank financing on reasonable terms.

Certain financial institutions have acted to limit available financing for companies in the fossil fuel industry, including coal mining, which could result in increases in costs of borrowing or in the Company’s ability to maintain financing at current levels.

The Company may be unable to obtain financing on reasonable terms.

Historically, the Company has addressed its liquidity needs (including funds required to pay dividends and fund working capital and planned capital expenditures) with operating cash flow and borrowings under credit facilities.

The Company’s wholly-owned subsidiary, NACoal, has an unsecured revolving line of credit of up to $150.0 million that expires in August 2022.

The Company’s ability to access the capital markets and the costs and terms of available financing depends on many factors, including perceived credit risks of companies with coal and/or oil and gas exposure.

The volatility in the energy industry combined with recent bankruptcies and additional perceived credit risks of companies with coal and/or oil and gas exposure has resulted in traditional bank lenders seeking to

reduce or eliminate their lending exposure to these companies.

The Company’s wholly-owned subsidiary, NACoal, has a revolving line of credit of up to $150.0 million that expires in November 2025 (the "NACoal Facility").

Certain financial institutions have taken actions to limit available financing to entities that produce or use fossil fuels.

An inability to obtain bank financing, or obtaining a refinancing with terms that are not as favorable as the existing terms of such indebtedness, could have a material adverse effect on the Company's operating results and financial condition.

Failure to obtain financial assurance to secure reclamation and other long-term obligations, including surety bonds and letters of credit on acceptable terms, could affect NACCO's ability to mine.

Federal and state laws require the Company to provide financial assurance or financial security to secure performance or payment of certain long-term obligations, such as mine closure or reclamation costs, federal and state workers’ compensation and black lung benefits costs, leases and other obligations.

Future federal and state laws and regulations may require higher amounts of financial security, including as a result of changes to certain factors used to calculate the bonding or security amounts.

Bond issuers may demand higher fees or additional collateral, including cash or letters of credit or other terms less favorable upon renewals.

As the Company is required by state and federal law to have bonds or other acceptable security in place before mining can commence or continue, the failure to maintain surety bonds, letters of credit or other guarantees or security arrangements would materially and adversely affect NACCO's ability to mine.

That failure could result from a variety of factors, including lack of availability, higher expense or unfavorable market terms, the exercise by third-party surety bond issuers of their right to refuse to renew the surety and restrictions on availability of collateral for current and future third-party surety bond issuers under the terms of the Company's financing arrangements.

In addition, as a result of increasing credit pressures on the coal industry, it is possible that surety bond providers could demand cash collateral as a condition to providing or maintaining surety bonds.

Any such demands, could have a material adverse impact on the Company’s liquidity and financial position.

If the Company is unable to meet collateral requirements and cannot otherwise obtain or retain required surety bonds, it may be unable to satisfy legal requirements necessary to conduct mining operations.

Difficulty in acquiring surety bonds, or additional collateral requirements, would increase the Company’s costs and likely require greater use of alternative sources of funding for this purpose, which would reduce the Company’s liquidity.

Insurance coverage is increasingly expensive, contains more stringent terms and may be difficult to obtain in the future.

A number of global insurance companies have taken action to limit coverage for companies in the coal mining industry, which could result in significant increases in costs of insurance or in the Company’s ability to maintain insurance coverage at current levels.

A number of global insurance companies have taken steps to limit coverage for companies in the fossil fuel industry, including coal mining, which could result in significant increases in costs of insurance or in the Company’s ability to maintain insurance coverage at current levels.

The Company holds a number of insurance policies, including director and officers’ liability and property and casualty insurance coverages.

Because the Company is involved in the coal mining industry, costs of insurance may increase substantially or insurance carriers may decide not to insure the Company in the future.

In addition, if the Company makes significant insurance claims, its ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected.

An inability to obtain insurance coverage, significant increases in the premiums or deductibles of insurance the Company obtains, or losses in excess of its liability insurance coverage limits, which may go down in the future, could have a material adverse effect on the Company's operating results and financial condition.

Increasing scrutiny and changing expectations with respect to the Company’s environmental, social and governance practices may impose additional costs on the Company or expose the Company to new or additional risks.

Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social and governance (“ESG”) practices.

Because the Company is involved in coal mining, costs of insurance may increase substantially or insurance carriers may limit or decide not to insure the Company in the future.

In addition, if the Company makes significant insurance claims under the Company’s insurance policies, such claims may have a material adverse effect on its ability to obtain future insurance coverage at commercially reasonable rates.

Limited, or an inability to obtain, insurance coverage, significant increases in the premiums or deductibles of insurance, or losses in excess of its liability insurance coverage limits, could have a material adverse effect on the Company's operating results and financial condition.

Increasing emphasis and changing expectations with respect to environmental, social and governance matters may impose additional costs on the Company or expose the Company to new or additional risks.

Expectations relating to environmental, social and governance (“ESG”) matters have been rapidly evolving and increasing.

Government organizations are enhancing or advancing legal and regulatory requirements specific to ESG matters.

The heightened focus on ESG issues requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements.

Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices.

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Additionally, the Company may face reputational challenges in the event its ESG practices are inconsistent with the third party views of acceptable ESG practices.

Companies which do not adapt to or comply with investor or stakeholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

Companies which do not adapt to or comply with regulatory, investor or stakeholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

The Company may be subject to litigation seeking to hold energy companies accountable for the effects of climate change.

Increasing attention to climate change risk has also resulted in a recent trend of governmental investigations and private litigation by local and state governmental agencies as well as private plaintiffs in an effort to hold energy companies accountable for the effects of climate change.

Other public nuisance lawsuits have been brought in the past against power, coal, oil and gas companies alleging that their operations are contributing to climate change.

The plaintiffs in these suits sought various remedies, including punitive and compensatory damages and injunctive relief.

While the U.S.

Supreme Court held that any federal common law had been displaced by the CAA and thus dismissed the public nuisance claims against the defendants in those cases, tort-type liabilities remain a possibility and a source of concern.

We could incur substantial legal costs associated with defending such lawsuits in the future.

Government entities in certain states have brought similar claims seeking to hold a wide variety of companies that produce fossil fuels liable for the alleged impacts of the GHG emissions attributable to those fuels or for other grounds related to climate change, such as improper disclosure of climate change risks.

Those lawsuits allege damages as a result of climate change and the plaintiffs are seeking unspecified damages and abatement under various tort theories.

We have not been made a party to these suits, but it is possible that we could be included in similar future lawsuits initiated by state and local governments as well as private claimants.

The Company’s business could suffer if NACCO’s information technology systems are disrupted, cease to operate effectively or if the Company experiences a security breach, a cyber incident or cyber attack.

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purchase supplies;

provide services;

deliver inventory on a timely basis;

and maintain cost-efficient operations.

Despite the Company's efforts, the Company’s information technology systems may be vulnerable, from time to time, to damage or interruption from computer viruses, power outages, third-party intrusions and other technical malfunctions.

and maintain cost-efficient

Despite the Company's efforts, the Company’s information technology systems may be vulnerable, from time to time, to damage or interruption from user error, computer viruses, power outages, third-party intrusions and other technical malfunctions.

Through the Company’s business operations, the Company collects and stores confidential information from its customers and vendors and personal information and other confidential information from its employees.

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Cybersecurity threats to, and incidents involving, vendors and other third-parties who support the Company's activities could impact us.

For example, although the Company has not experienced any material impacts from the SolarWinds Orion cybersecurity breach that was widely publicized in December 2020, similar future events could have a material impact to the Company.

The Company is continuously installing new and upgrading existing information technology systems.

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The Company’s results of operations, financial condition, cash flows and stock price could be adversely affected by pandemics, epidemics or other public health emergencies, such as the global outbreak of COVID-19.

The COVID-19 pandemic resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, "shelter in place" and "stay at home" orders, travel restrictions, business curtailments, school closures, and other measures.

Throughout the pandemic, the Company has continued to operate as an essential business because it supports critical infrastructure industries, as defined by the U.S.

Department of Homeland Security.

The COVID-19 pandemic resulted in governments around the world implementing stringent measures to help control the spread of the virus.

Although the Company has continued to operate facilities consistent with federal guidelines and state and local orders, the ongoing COVID-19 pandemic and the preventive or protective actions taken by governmental authorities may have a material adverse effect on the Company’s operations, work force, supply chain or customers, including business shutdowns or disruptions.

The extent to which COVID-19 may adversely impact the Company's businesses depends on future developments, which are highly uncertain and unpredictable, including the extent of new outbreaks, the extent to which additional actions to mitigate the COVID-19 pandemic may be needed, the nature of government public health guidelines and the public's adherence to those guidelines, and the timing for proven treatments and availability of vaccines for COVID-19.

Any resulting financial impact cannot reasonably be estimated at this time, but could have a material adverse effect on the Company’s financial condition, cash flows and results of operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors