9 unchanged sentences
Inventories 61,799 54,085
−Removed: Refundable federal income taxes 3,919 15,054
+Added: Federal income tax receivable 23,046 15,054
Prepaid insurance 4,249 2,016
38 unchanged sentences
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
−Removed: THREE MONTHS ENDED SIX MONTHS ENDED
−Removed: JUNE 30 JUNE 30
+Added: THREE MONTHS ENDED NINE MONTHS ENDED
+Added: SEPTEMBER 30 SEPTEMBER 30
2022 2021 2022 2021
10 unchanged sentences
2 ( 10 ) ( 2,451 ) 17
+Added: Asset impairment charges 3,939 — 3,939 —
22,598 14,722 52,675 43,283
5 unchanged sentences
Loss (gain) on equity securities 316 ( 445 ) 1,676 ( 2,530 )
+Added: Income from equity method investee ( 2,156 ) — ( 2,156 ) —
Other contract termination settlements — — ( 16,882 ) —
13 unchanged sentences
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
−Removed: THREE MONTHS ENDED SIX MONTHS ENDED
−Removed: JUNE 30 JUNE 30
+Added: THREE MONTHS ENDED NINE MONTHS ENDED
+Added: SEPTEMBER 30 SEPTEMBER 30
2022 2021 2022 2021
1 unchanged sentence
Net income $ 10,614 $ 24,837 $ 60,376 $ 40,303
−Removed: Reclassification of pension and postretirement adjustments into earnings, net of $ 32 and $ 67 tax benefit in the three and six months ended June 30, 2022, respectively, and net of $ 42 and $ 85 tax benefit in the three and six months ended June 30, 2021, respectively.
+Added: Reclassification of pension and postretirement adjustments into earnings, net of $ 38 and $ 105 tax benefit in the three and nine months ended September 30, 2022, respectively, and net of $ 42 and $ 127 tax benefit in the three and nine months ended September 30, 2021, respectively.
118 143 354 429
5 unchanged sentences
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: SIX MONTHS ENDED
+Added: NINE MONTHS ENDED
(In thousands)
40 unchanged sentences
Balance, June 30, 2021 $ 5,595 $ 1,567 $ 12,928 $ 306,950 $ ( 11,313 ) $ 315,727
+Added: Stock-based compensation 12 — 1,614 — — 1,626
+Added: Net income — — — 24,837 — 24,837
+Added: Cash dividends on Class A and Class B common stock:
+Added: $ 0.1975 per share
+Added: — — — ( 1,414 ) — ( 1,414 )
+Added: Reclassification adjustment to net income, net of tax — — — — 143 143
+Added: Balance, September 30, 2021 $ 5,607 $ 1,567 $ 14,542 $ 330,373 $ ( 11,170 ) $ 340,919
Balance, January 1, 2022 $ 5,616 $ 1,567 $ 16,331 $ 336,778 $ ( 8,176 ) $ 352,116
16 unchanged sentences
Balance, June 30, 2022 $ 5,769 $ 1,566 $ 19,634 $ 383,574 $ ( 7,940 ) $ 402,603
+Added: Stock-based compensation 7 — 3,601 — — 3,608
+Added: Net income — — — 10,614 — 10,614
+Added: Cash dividends on Class A and Class B common stock:
+Added: $ 0.2075 per share
+Added: — — — ( 1,522 ) — ( 1,522 )
+Added: Reclassification adjustment to net income, net of tax — — — — 118 118
+Added: Balance, September 30, 2022 $ 5,776 $ 1,566 $ 23,235 $ 392,666 $ ( 7,822 ) $ 415,421
See notes to Unaudited Condensed Consolidated Financial Statements.
2 unchanged sentences
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
−Removed: JUNE 30, 2022
+Added: SEPTEMBER 30, 2022
(In thousands, except as noted and per share amounts)
6 unchanged sentences
The Coal Mining segment operates surface coal mines for power generation companies.
−Removed: The NAMining segment is a trusted mining partner for producers of aggregates, coal, lithium and other industrial minerals.
+Added: The NAMining segment is a trusted mining partner for producers of aggregates, activated carbon, lithium and other industrial minerals.
The Minerals Management segment, which includes the Catapult Mineral Partners business, acquires and promotes the development of mineral interests.
4 unchanged sentences
As a result, the Company retrospectively changed its computation of segment operating profit to reclassify the results of Caddo Creek Resources Company, LLC (“Caddo Creek”) and Demery Resources Company, LLC ("Demery") from the Coal Mining segment into the NAMining segment as these operations provide mining solutions for producers of industrial minerals, rather than for power generation.
−Removed: The Coal Mining segment now includes only mines that deliver coal for power generation.
+Added: The Coal Mining segment now includes only mines that deliver coal to power generation companies.
This segment reporting change has no impact on consolidated operating results.
5 unchanged sentences
Lignite coal is surface mined in North Dakota, Texas and Mississippi.
−Removed: Each mine is fully integrated with its customer's operations and is the exclusive supplier of coal to its customers' facilities.
−Removed: During the three and six months ended June 30, 2022, the Coal Mining segment's operating coal mines were:
+Added: Each mine is fully integrated with its customer's operations and is the exclusive supplier of coal to its customer's facilities.
+Added: During the three and nine months ended September 30, 2022, the Coal Mining segment's operating coal mines were:
The Coteau Properties Company (“Coteau”), Coyote Creek Mining Company, LLC (“Coyote Creek”), The Falkirk Mining Company (“Falkirk”), Mississippi Lignite Mining Company (“MLMC”) and The Sabine Mining Company (“Sabine”).
4 unchanged sentences
On May 2, 2022, Great River Energy (“GRE”) completed the sale of Coal Creek Station and the adjacent high-voltage direct current transmission line to Rainbow Energy Center, LLC (“Rainbow Energy”) and its affiliates.
−Removed: As a result of the completion of the sale of Coal Creek Station, the existing Coal Sales Agreement, the existing Mortgage and Security Agreement and the existing Option Agreement between GRE and Falkirk were terminated.
+Added: As a result of the completion of the sale of Coal Creek Station, the Coal Sales Agreement, the Mortgage and Security Agreement and the Option Agreement between GRE and Falkirk were terminated.
The Company recognized a gain of $ 30.9 million within the accompanying Unaudited Condensed Consolidated Statements of Operations during the second quarter of 2022 as GRE paid NACoal $ 14.0 million in cash, as well as transferred ownership of an office building with an estimated fair value of $ 4.1 million, and conveyed membership units in a privately-held company involved in the ethanol industry with an estimated fair value of $ 12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
−Removed: Prior to receiving the membership units from GRE, the Company held a $ 5.0 million investment in the same privately-held company carried at cost, less impairment.
−Removed: Subsequent to the receipt of the additional membership units on May 2, 2022, the Company will prospectively account for the investment under the equity method of accounting.
−Removed: Due to a lag in financial reporting of the privately-held company, the Company has not recorded its share of earnings or losses in the three or six months ended June 30, 2022.
−Removed: On a go-forward basis, earnings or losses from this investment will be recorded on a one quarter lag.
See Note 5 for further discussion on fair value.
+Added: Prior to receiving the membership units from GRE, the Company held a $ 5.0 million investment in the same privately-held company carried at cost, less impairment.
+Added: Subsequent to the receipt of the additional membership units on May 2, 2022, the Company began to account for the investment under the equity method of accounting subject to a one quarter reporting lag.
The new Coal Sales Agreement (“CSA”) between Falkirk and Rainbow Energy became effective upon the closing of the transaction.
−Removed: Falkirk will continue to supply all coal requirements of Coal Creek Station.
−Removed: Falkirk will be paid a management fee and Rainbow Energy will be responsible for funding all mine operating costs, including mine reclamation, and directly or indirectly providing all of the capital required to operate the mine.
−Removed: The initial production period is expected to run ten years from the effective date of the CSA, but the CSA may be extended or terminated early under certain circumstances.
+Added: Falkirk continues to supply all coal requirements of Coal Creek Station and is paid a management fee per ton of coal delivered.
To support the transfer to new ownership, Falkirk has agreed to a reduction in the current per ton management fee from the effective date of the new CSA through May 31, 2024.
After May 31, 2024, the per ton management fee increases to a higher base in line with 2021 fee levels, and thereafter adjusts annually according to an index which tracks broad measures of U.S.
−Removed: During the three and six months ended June 30, 2021, the Coal Mining segment's operating coal mines also included Bisti Fuels Company, LLC (“Bisti”).
+Added: Rainbow Energy is responsible for funding all mine operating costs, including mine reclamation, and directly or indirectly providing all of the capital required to operate the mine.
+Added: The initial production period is expected to run ten years from the effective date of the CSA, but the CSA may be extended or terminated early under certain circumstances.
+Added: During the three and nine months ended September 30, 2021, the Coal Mining segment's operating coal mines also included Bisti Fuels Company, LLC (“Bisti”).
Effective September 30, 2021, the contract mining agreement between Bisti and its customer, Navajo Transitional Energy Company ("NTEC"), was terminated.
35 unchanged sentences
Under all of the Unconsolidated Subsidiaries’ contracts, the customer has the obligation to fund final mine reclamation activities.
−Removed: Under certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation activities.
+Added: Under certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation
To the extent the Unconsolidated Subsidiary performs such final reclamation, it is compensated for providing those services in addition to receiving reimbursement from customers for costs incurred.
23 unchanged sentences
The Minerals Management segment derives income primarily by leasing its royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil, and coal in exchange for royalty payments based on the lessees' sales of those minerals.
−Removed: During 2021 and 2020, the Minerals Management segment acquired mineral interests, primarily in the Eagle Ford and Permian Basins in Texas.
−Removed: During the first six months of 2022, the Minerals Management segment had capital expenditures of $ 1.0 million, primarily for mineral interests in the New Mexico portion of the Permian Basin.
+Added: During the first nine months ended September 30, 2022, the Minerals Management segment had capital expenditures totaling $ 12.3 million, primarily related to the $ 11.4 million acquisition of mineral interests in the Texas portion of the Permian Basin and the Wyoming portion of the Powder River Basin during the third quarter of 2022.
+Added: During the first nine months of 2022, the Minerals Management segment also acquired mineral interests in the New Mexico portion of the Permian Basin.
The Minerals Management segment intends to make future acquisitions of mineral and royalty interests that meet the Company’s acquisition criteria as part of its growth strategy.
14 unchanged sentences
GAAP for complete financial statements.
−Removed: In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company at June 30, 2022, the results of its operations, comprehensive income, cash flows and changes in equity for the six months ended June 30, 2022 and 2021 have been included.
+Added: In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position of the Company at September 30, 2022, the results of its operations, comprehensive income, cash flows and changes in equity for the nine months ended September 30, 2022 and 2021 have been included.
These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
30 unchanged sentences
The performance obligation under these contracts represents a series of distinct goods or services whereby each day of access that is provided is distinct.
−Removed: The transaction price consists of a variable sales-based royalty and, in certain arrangements, a fixed
−Removed: component in the form of an up-front lease bonus payment.
+Added: The transaction price consists of a variable sales-based royalty and, in certain arrangements, a fixed component in the form of an up-front lease bonus payment.
As the amount of consideration the Company will ultimately be entitled to is entirely susceptible to factors outside its control, the entire amount of variable consideration is constrained at contract inception.
22 unchanged sentences
The difference between the Company’s estimates and the actual amounts received is recorded in the month that payment is received from the third-party lessee.
−Removed: For the three months ended June 30, 2022, royalty income recognized in the reporting periods related to performance obligations satisfied in prior reporting periods was immaterial.
−Removed: For the six months ended June 30, 2022, royalty income of $ 2.1 million was recognized for a settlement related to the Company’s ownership interest in certain mineral rights.
−Removed: For the three and six months ended June 30, 2021, royalty income recognized in the reporting periods related to performance obligations satisfied in prior reporting periods was immaterial.
+Added: For the three months ended September 30, 2022, royalty income recognized in the reporting periods related to performance obligations satisfied in prior reporting periods was immaterial.
+Added: For the nine months ended September 30, 2022, royalty income of $ 2.1 million was recognized for a settlement related to the Company’s ownership interest in certain mineral rights.
+Added: For the three and nine months ended September 30, 2021, the Company recognized $ 1.8 million of variable consideration that was previously constrained due to uncertainty of collectability.
Disaggregation of Revenue
3 unchanged sentences
See Note 8 to the Unaudited Condensed Consolidated Financial Statements for further discussion of segment reporting.
−Removed: THREE MONTHS ENDED SIX MONTHS ENDED
−Removed: JUNE 30 JUNE 30
+Added: THREE MONTHS ENDED NINE MONTHS ENDED
+Added: SEPTEMBER 30 SEPTEMBER 30
2022 2021 2022 2021
6 unchanged sentences
Contract balances
−Removed: Trade accounts receivable, net Contract asset
+Added: Trade accounts receivable Contract asset
(long-term) Contract liability (current) Contract liability (long-term)
Balance, January 1, 2022 $ 25,667 $ 5,985 $ 4,082 $ 1,453
−Removed: Balance, June 30, 2022 32,143 5,985 1,803 1,239
+Added: Balance, September 30, 2022 23,603 5,985 1,334 1,860
Increase (decrease) $ ( 2,064 ) $ — $ ( 2,748 ) $ 407
3 unchanged sentences
Therefore, at the time any such up-front payment is received, a contract liability is recorded which represents deferred revenue.
−Removed: The amount of royalty revenue recognized in both of the three months ended June 30, 2022 and 2021 that was included in the opening contract liability was $ 0.3 million.
−Removed: The amount of royalty revenue recognized in both of the six months ended June 30, 2022 and 2021 that was included in the opening contract liability was $ 0.5 million.
+Added: The amount of royalty revenue recognized in both of the three months ended September 30, 2022 and 2021 that was included in the opening contract liability was $ 0.2 million.
+Added: The amount of royalty revenue recognized in both of the nine months ended September 30, 2022 and 2021 that was included in the opening contract liability was $ 0.7 million.
This revenue consists of up-front lease bonus payments received under royalty contracts that are recognized over the primary term of the royalty contracts, which are generally five years .
−Removed: The Company expects to recognize an additional $ 1.6 million in the remainder of 2022, $ 1.3 million in 2023, $ 0.1 million in 2024, and de minimis amounts in 2025 and 2026 related to the contract liability remaining at June 30, 2022.
+Added: The Company expects to recognize an additional $ 0.8 million in the remainder of 2022, $ 1.7 million in 2023, $ 0.5 million in 2024, $ 0.2 million in 2025 and a de minimis amount in 2026 related to the contract liability remaining at September 30, 2022.
The difference between the opening and closing balances of the Company’s contract balances results from the timing difference between the Company’s performance and the customer’s payment.
13 unchanged sentences
All or part of the repurchases under the 2021 Stock Repurchase Program may be implemented under a Rule 10b5-1 trading plan, which would allow repurchases under pre-set terms at times when the Company might otherwise be restricted from doing so under applicable securities laws.
−Removed: The Company has not repurchased any shares of common stock under the 2021 Stock Repurchase Program through June 30, 2022.
+Added: The Company has not repurchased any shares of common stock under the 2021 Stock Repurchase Program through September 30, 2022.
NOTE 5—Fair Value Disclosure
5 unchanged sentences
Description Date (Level 1) (Level 2) (Level 3)
−Removed: June 30, 2022
+Added: September 30, 2022
Equity securities $ 14,084 $ 14,084 $ — $ —
8 unchanged sentences
therefore, they are classified as Level 1 within the fair value hierarchy.
−Removed: The Company recognized a loss of $ 1.5 million and $ 2.1 million during the three and six months ended June 30, 2022, respectively, and a gain of $ 0.7 million and $ 1.0 million during the three and six months ended June 30, 2021, respectively, related to the Mine Water Treatment Trust.
+Added: The Company recognized a loss of $ 0.5 million and $ 2.7 million during the three and nine months ended September 30, 2022, respectively, and a gain of less than $ 0.1 million and $ 1.0 million during the three and nine months ended September 30, 2021, respectively, related to the Mine Water Treatment Trust.
Prior to 2021, the Company invested $ 2.0 million in equity securities of a public company with a diversified portfolio of royalty producing mineral interests.
1 unchanged sentence
therefore, it is classified as Level 1 within the fair value hierarchy.
−Removed: The Company recognized a loss of $ 0.4 million and a gain of $ 0.8 million during the three and six months ended June 30, 2022, respectively, and a gain of $ 0.6 million and $ 1.1 million during the three and six months ended June 30, 2021, respectively, related to the investment in these equity securities.
+Added: The Company recognized a gain of $ 0.2 million and $ 1.0 million during the three and nine months ended September 30, 2022, respectively, and a gain of $ 0.4 million and $ 1.6 million during the three and nine months ended September 30, 2021, respectively, related to the investment in these equity securities.
The gains and losses related to equity securities are reported on the line Loss (gain) on equity securities in the Other (income) expense section of the Unaudited Condensed Consolidated Statements of Operations.
14 unchanged sentences
As such, the Company will add the fair value of the additional membership units of $ 12.8 million to the $ 5.0 million historical cost basis of the existing membership units, the total of which is the initial measurement of the Company’s equity method investment.
+Added: Subsequent to the receipt of the additional membership units on May 2, 2022, the Company began to account for the investment under the equity method of accounting subject to a one quarter reporting lag.
+Added: The Company recorded $ 2.2 million, which represents its share of the privately-held company's second quarter earnings and immaterial basis difference adjustments, during the third quarter of 2022 on the "Income from equity method investee" line within the accompanying Unaudited Condensed Consolidated Statements of Operations.
The office building is included in Property, plant and equipment, net and the investment in the privately-held company is included in Investment in private company equity units within the accompanying Unaudited Condensed Consolidated Balance Sheets.
−Removed: There were no transfers into or out of Levels 1, 2 or 3 during the six months ended June 30, 2022 and 2021.
+Added: The Company regularly performs reviews of potential future development projects and identified certain legacy assets where future development is unlikely.
+Added: As a result, the Company estimated the fair value of the assets using unobservable inputs, which are classified as Level 3 inputs.
+Added: The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off to zero in the third quarter of 2022 and resulted in non-cash asset impairment charges of $ 3.9 million in the Minerals Management segment.
+Added: The impairment charges are reported on the line "Asset impairment charges" in the Unaudited Condensed Consolidated Statements of Operations.
+Added: There were no transfers into or out of Levels 1, 2 or 3 during the nine months ended September 30, 2022 and 2021.
NOTE 6— Unconsolidated Subsidiaries
5 unchanged sentences
See Note 1 for a discussion of these entities.
−Removed: The Investment in the unconsolidated subsidiaries and related tax positions totaled $ 15.4 million and $ 19.1 million at June 30, 2022 and December 31, 2021, respectively.
−Removed: The Company's maximum risk of loss relating to these entities is limited to its invested capital, which was $ 4.9 million and $ 7.6 million at June 30, 2022 and December 31, 2021, respectively.
−Removed: Earnings of unconsolidated operations were $ 14.6 million and $ 29.2 million during the three and six months ended June 30, 2022, respectively, and $ 13.5 million and $ 28.9 million during the three and six months ended June 30, 2021.
+Added: The Investment in the unconsolidated subsidiaries and related tax positions totaled $ 9.9 million and $ 19.1 million at September 30, 2022 and December 31, 2021, respectively.
+Added: The Company's maximum risk of loss relating to these entities is limited to its invested capital, which was $ 4.7 million and $ 7.6 million at September 30, 2022 and December 31, 2021, respectively.
+Added: Earnings of unconsolidated operations were $ 14.6 million and $ 43.8 million during the three and nine months ended September 30, 2022, respectively, and $ 17.7 million and $ 46.5 million during the three and nine months ended September 30, 2021.
The contract mining agreement between Bisti and NTEC was terminated effective September 30, 2021.
3 unchanged sentences
The “make-whole” amount is based on the excess, if any, of the discounted value of the remaining scheduled debt payments over the principal amount.
−Removed: In addition, in the event Coyote Creek’s LSA is terminated on or after January 1, 2024 by Coyote Creek’s customers, NACoal is obligated to purchase Coyote Creek’s dragline and rolling stock for the then net book value of those assets.
+Added: In addition, in the event Coyote Creek’s LSA is terminated on
+Added: or after January 1, 2024 by Coyote Creek’s customers, NACoal is obligated to purchase Coyote Creek’s dragline and rolling stock for the then net book value of those assets.
To date, no payments have been required from NACoal since the inception of these guarantees.
6 unchanged sentences
If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued.
−Removed: The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or
−Removed: when the liability is believed to be only reasonably possible or remote.
+Added: The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote.
For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss.
13 unchanged sentences
See Note 1 for additional discussion of the Company's reportable segments.
−Removed: The following tables present revenue, operating profit, depreciation expense and capital expenditures:
−Removed: THREE MONTHS ENDED SIX MONTHS ENDED
−Removed: JUNE 30 JUNE 30
+Added: The following tables present revenue, operating profit, capital expenditures and depreciation expense:
+Added: THREE MONTHS ENDED NINE MONTHS ENDED
+Added: SEPTEMBER 30 SEPTEMBER 30
2022 2021 2022 2021
12 unchanged sentences
Total $ 9,818 $ 27,592 $ 54,445 $ 44,592
−Removed: THREE MONTHS ENDED SIX MONTHS ENDED
−Removed: JUNE 30 JUNE 30
−Removed: 2022 2021 2022 2021
Expenditures for property, plant and equipment and acquisition of mineral interests
21 unchanged sentences
The Coal Mining segment operates surface coal mines for power generation companies.
−Removed: The NAMining segment is a trusted mining partner for producers of aggregates, coal, lithium and other industrial minerals.
+Added: The NAMining segment is a trusted mining partner for producers of aggregates, activated carbon, lithium and other industrial minerals.
The Minerals Management segment, which includes the Catapult Mineral Partners business, acquires and promotes the development of mineral interests.
5 unchanged sentences
As a result, the Company retrospectively changed its computation of segment operating profit to reclassify the results of Caddo Creek Resources Company, LLC (“Caddo Creek”) and Demery Resources Company, LLC ("Demery") from the Coal Mining segment into the NAMining segment as these operations provide mining solutions for producers of industrial minerals, rather than for power generation.
−Removed: The Coal Mining segment now includes only mines that deliver coal for power generation.
+Added: The Coal Mining segment now includes only mines that deliver coal to power generation companies.
This segment reporting change has no impact on consolidated operating results.
6 unchanged sentences
Each mine is fully integrated with its customer's operations and is the exclusive supplier of coal to its customer's facilities.
−Removed: During the three and six months ended June 30, 2022, the Coal Mining segment's operating coal mines were:
+Added: During the three and nine months ended September 30, 2022, the Coal Mining segment's operating coal mines were:
The Coteau Properties Company (“Coteau”), Coyote Creek Mining Company, LLC (“Coyote Creek”), The Falkirk Mining Company (“Falkirk”), Mississippi Lignite Mining Company (“MLMC”) and The Sabine Mining Company (“Sabine”).
4 unchanged sentences
On May 2, 2022, Great River Energy (“GRE”) completed the sale of Coal Creek Station and the adjacent high-voltage direct current transmission line to Rainbow Energy Center, LLC (“Rainbow Energy”) and its affiliates.
−Removed: As a result of the completion of the sale of Coal Creek Station, the existing Coal Sales Agreement, the existing Mortgage and Security Agreement and the existing Option Agreement between GRE and Falkirk were terminated.
−Removed: The Company recognized a gain of $30.9 million within the accompanying Unaudited Condensed Consolidated Statements of Operations during the second quarter of 2022 as GRE paid NACoal $14.0 million in cash, as well as transferred ownership of an office building with an estimated fair value of $4.1 million, and conveyed membership units in a privately-held company involved in the ethanol industry with an estimated fair value of $12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
−Removed: receiving the membership units from GRE, the Company held a $5.0 million investment in the same privately-held company carried at cost, less impairment.
−Removed: Subsequent to the receipt of the additional membership units on May 2, 2022, the Company will prospectively account for the investment under the equity method of accounting.
−Removed: Due to a lag in financial reporting of the privately-held company, the Company has not recorded its share of earnings or losses in the three or six months ended June 30, 2022.
−Removed: On a go-forward basis, earnings or losses from this investment will be recorded on a one quarter lag.
+Added: As a result of the completion of the sale of Coal Creek Station, the Coal Sales Agreement, the Mortgage and Security Agreement and the Option Agreement between GRE and Falkirk were terminated.
+Added: The Company recognized a gain of $30.9 million within the accompanying Unaudited Condensed Consolidated Statements of Operations during the second quarter of 2022 as GRE paid NACoal $14.0 million in cash, as well as transferred ownership of an office building with an estimated fair value of $4.1 million, and conveyed membership units in a privately-held company involved in the ethanol industry with an estimated fair value of $12.8
+Added: million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
See Note 5 for further discussion on fair value.
+Added: Prior to receiving the membership units from GRE, the Company held a $5.0 million investment in the same privately-held company carried at cost, less impairment.
+Added: Subsequent to the receipt of the additional membership units on May 2, 2022, the Company began to account for the investment under the equity method of accounting subject to a one quarter reporting lag.
The new Coal Sales Agreement (“CSA”) between Falkirk and Rainbow Energy became effective upon the closing of the transaction.
−Removed: Falkirk will continue to supply all coal requirements of Coal Creek Station.
−Removed: Falkirk will be paid a management fee and Rainbow Energy will be responsible for funding all mine operating costs, including mine reclamation, and directly or indirectly providing all of the capital required to operate the mine.
−Removed: The initial production period is expected to run ten years from the effective date of the CSA, but the CSA may be extended or terminated early under certain circumstances.
+Added: Falkirk continues to supply all coal requirements of Coal Creek Station and is paid a management fee per ton of coal delivered.
To support the transfer to new ownership, Falkirk has agreed to a reduction in the current per ton management fee from the effective date of the new CSA through May 31, 2024.
After May 31, 2024, the per ton management fee increases to a higher base in line with 2021 fee levels, and thereafter adjusts annually according to an index which tracks broad measures of U.S.
−Removed: During the three and six months ended June 30, 2021, the Coal Mining segment's operating coal mines also included Bisti Fuels Company, LLC (“Bisti”).
+Added: Rainbow Energy is responsible for funding all mine operating costs, including mine reclamation, and directly or indirectly providing all of the capital required to operate the mine.
+Added: The initial production period is expected to run ten years from the effective date of the CSA, but the CSA may be extended or terminated early under certain circumstances.
+Added: During the three and nine months ended September 30, 2021, the Coal Mining segment's operating coal mines also included Bisti Fuels Company, LLC (“Bisti”).
Effective September 30, 2021, the contract mining agreement between Bisti and its customer, Navajo Transitional Energy Company ("NTEC"), was terminated.
32 unchanged sentences
Under all of the Unconsolidated Subsidiaries’ contracts, the customer has the obligation to fund final mine reclamation activities.
−Removed: certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation activities.
+Added: Under certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation
To the extent the Unconsolidated Subsidiary performs such final reclamation, it is compensated for providing those services in addition to receiving reimbursement from customers for costs incurred.
23 unchanged sentences
The Minerals Management segment derives income primarily by leasing its royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil, and coal in exchange for royalty payments based on the lessees' sales of those minerals.
−Removed: During 2021 and 2020, the Minerals Management segment acquired mineral interests, primarily in the Eagle Ford and Permian Basins in Texas.
−Removed: During the first six months of 2022, the Minerals Management segment had capital expenditures of $1.0 million, primarily for mineral interests in the New Mexico portion of the Permian Basin.
+Added: During the first nine months ended September 30, 2022, the Minerals Management segment had capital expenditures totaling $12.3 million, primarily related to the $11.4 million acquisition of mineral interests in the Texas portion of the Permian Basin and the Wyoming portion of the Powder River Basin during the third quarter of 2022.
+Added: During the first nine months of 2022, the Minerals Management segment also acquired mineral interests in the New Mexico portion of the Permian Basin.
The Minerals Management segment intends to make future acquisitions of mineral and royalty interests that meet the Company’s acquisition criteria as part of its growth strategy.
12 unchanged sentences
CONSOLIDATED FINANCIAL SUMMARY
−Removed: The results of operations for NACCO were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: The results of operations for NACCO were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
16 unchanged sentences
Loss (gain) on equity securities 316 (445) 1,676 (2,530)
+Added: Income from equity method investee (2,156) — (2,156) —
Other contract termination settlements — — (16,882) —
Other, net (354) (161) (1,648) (418)
−Removed: Other income, net (15,390) (766) (15,390) (1,100)
+Added: Other (income) expense, net (1,662) 158 (17,052) (942)
Income before income tax provision 11,480 27,434 71,497 45,534
3 unchanged sentences
The components of the change in revenues and operating profit are discussed below in "Segment Results."
−Removed: Second Quarter of 2022 Compared with Second Quarter of 2021, and First Six Months of 2022 Compared with First Six Months of 2021
+Added: Third Quarter of 2022 Compared with Third Quarter of 2021, and First Nine Months of 2022 Compared with First Nine Months of 2021
Other income, net
−Removed: During the second quarter of 2022, GRE transferred ownership of an office building with an estimated fair value of $4.1 million and conveyed membership units in a privately-held company with an estimated fair value of $12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
−Removed: The Company recognized a gain of $16.9 million on
−Removed: the "Other contract termination settlements" line within the accompanying Unaudited Condensed Consolidated Statements of Operations during the second quarter of 2022 as a result of the transactions with GRE.
+Added: During the second quarter of 2022, GRE transferred ownership of an office building with an estimated fair value of $4.1 million and conveyed membership units in a privately-held company with an estimated fair value of $12.8 million, as agreed to under
+Added: the termination and release of claims agreement between Falkirk and GRE.
+Added: The Company recognized a gain of $16.9 million on the "Other contract termination settlements" line within the accompanying Unaudited Condensed Consolidated Statements of Operations during the second quarter of 2022 as a result of the transactions with GRE.
+Added: Subsequent to the receipt of the additional membership units on May 2, 2022, the Company began to account for the investment under the equity method of accounting subject to a one quarter reporting lag.
+Added: The Company recorded $2.2 million, which represents its share of the privately-held company's second quarter earnings and immaterial basis difference adjustments, during the third quarter of 2022 on the "Income from equity method investee" line within the accompanying Unaudited Condensed Consolidated Statements of Operations.
Loss (gain) on equity securities represents changes in the market price of invested assets reported at fair value.
−Removed: The change in the second quarter of 2022 and the first six months of 2022 compared with the respective 2021 periods was due to fluctuations in the market prices of the exchange-traded equity securities.
−Removed: During the second quarter of 2022, the Company’s investment held at cost, less impairment, made a distribution to its owners, including the Company.
−Removed: As a result, the Company recognized a gain of $0.7 million, included in Other, net within the accompanying Unaudited Condensed Consolidated Statements of Operations in the three and six months ended June 30, 2022.
−Removed: See Note 5 to the Unaudited Condensed Consolidated Financial Statements for further discussion of the Other contract termination settlements and equity securities.
+Added: The change in the third quarter of 2022 and the first nine months of 2022 compared with the respective 2021 periods was due to fluctuations in the market prices of the exchange-traded equity securities.
+Added: See Note 5 to the Unaudited Condensed Consolidated Financial Statements for further discussion of the Other contract termination settlements, equity method investment and equity securities.
+Added: The Company files income tax returns in the U.S.
+Added: federal jurisdiction, and in various state and foreign jurisdictions.
+Added: Since 2021, the Company has participated in a voluntary program with the IRS called Compliance Assurance Process (“CAP”).
+Added: The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return.
+Added: The Company recognized a $1.2 million discrete tax benefit during the third quarter of 2022, primarily due to the IRS concluding its examination of tax years 2013-2016.
The Company evaluates and updates its estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws.
3 unchanged sentences
Changes in the estimated annual effective tax rate result in a cumulative adjustment.
−Removed: The increase in the effective income tax rate for the six months ended June 30, 2022 compared with the 2021 period reflects the impact of a higher forecast of full-year pre-tax income in 2022 compared with the prior year, including the $30.9 million gain recognized as a result of the settlement under the termination and release of claims agreement with GRE.
−Removed: The enactment of tax reform legislation could adversely impact the Company’s financial position and results of operations.
+Added: The increase in the effective income tax rate for the nine months ended September 30, 2022 compared with the 2021 period reflects the impact of a higher forecast of full-year pre-tax income in 2022 compared with the prior year, including the $30.9 million gain recognized as a result of the settlement under the termination and release of claims agreement with GRE.
+Added: The Inflation Reduction Act of 2022 (the “Act”) was signed into U.S.
+Added: law on August 16, 2022.
+Added: The Act includes various tax provisions, including an excise tax on stock repurchases and a corporate alternative minimum tax that generally applies to U.S.
+Added: corporations with average adjusted financial statement income over a three-year period in excess of $1 billion.
+Added: The Company does not expect the Act to materially impact its financial statements.
+Added: The enactment of additional tax reform legislation could adversely impact the Company’s financial position and results of operations.
Legislation or other changes in U.S.
−Removed: tax law could increase the Company’s tax liability and adversely affect its after-tax profitability.
−Removed: The Biden administration has proposed to increase the U.S.
−Removed: corporate income tax rate to 28% from 21% and eliminate certain U.S.
−Removed: federal income tax benefits currently available to coal mining and oil and gas exploration and development companies.
−Removed: Such proposed changes could have a significant impact on the Company’s effective income tax rate, cash tax expenses and deferred taxes in future periods.
+Added: tax law, including the elimination of certain U.S.
+Added: federal income tax benefits currently available to coal mining and oil and gas exploration and development companies, could increase the Company’s tax liability and adversely affect its after-tax profitability.
LIQUIDITY AND CAPITAL RESOURCES OF NACCO
−Removed: The following tables detail NACCO's changes in cash flow for the six months ended June 30:
+Added: The following tables detail NACCO's changes in cash flow for the nine months ended September 30:
2022 2021 Change
6 unchanged sentences
Cash flow before financing activities $ 15,691 $ 32,755 $ (17,064)
−Removed: The $11.2 million change in net cash provided by operating activities was primarily due to a $34.3 million increase in net income that includes a pre-tax gain of $30.9 million related to the termination and release of claims agreement between Falkirk and GRE.
−Removed: The increase in net income was partially offset by $19.4 million of non-cash items recognized during the first six months of 2022, including the gain related to the receipt of membership units in a privately-held company and the transfer of the office building, as well as a $2.5 million gain on a sale of fixed assets.
+Added: The $12.9 million change in net cash provided by operating activities was primarily due to a net unfavorable change in working capital, mainly attributable to an increase in Federal income tax receivable in the first nine months of 2022 compared with a decrease in the first nine months of 2021.
+Added: The $20.1 million increase in net income was offset by non-cash adjustments recognized during the first nine months of 2022, including $16.9 million related to the termination and release of claims agreement between Falkirk and GRE.
2022 2021 Change
3 unchanged sentences
Net cash used for financing activities $ (8,942) $ (33,698) $ 24,756
−Removed: The change in net cash used for financing activities was primarily due to fewer repayments as a result of a reduction in borrowings under the Company’s revolving line of credit during the first six months of 2022 compared with the first six months of 2021.
+Added: The change in net cash used for financing activities was primarily due to fewer repayments as a result of a reduction in borrowings under the Company’s revolving line of credit during the first nine months of 2022 compared with the first nine months of 2021.
Financing Activities
1 unchanged sentence
NACoal has a secured revolving line of credit of up to $150.0 million (the “NACoal Facility”) that expires in November 2025.
−Removed: There were no borrowings outstanding under the NACoal Facility at June 30, 2022.
−Removed: At June 30, 2022, the excess availability under the NACoal Facility was $119.9 million, which reflects a reduction for outstanding letters of credit of $30.1 million.
+Added: There were no borrowings outstanding under the NACoal Facility at September 30, 2022.
+Added: At September 30, 2022, the excess availability under the NACoal Facility was $119.3 million, which reflects a reduction for outstanding letters of credit of $30.7 million.
NACCO has not guaranteed any borrowings of NACoal.
3 unchanged sentences
Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved.
−Removed: The applicable margins, effective June 30, 2022, for base rate and LIBOR loans were 1.25% and 2.25%, respectively.
+Added: The applicable margins, effective September 30, 2022, for base rate and LIBOR loans were 1.25% and 2.25%, respectively.
The NACoal Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios.
−Removed: The commitment fee was 0.35% on the unused commitment at June 30, 2022.
−Removed: During the three and six months ended June 30, 2022, the average borrowing under the NACoal Facility was $2.2 million and $3.9 million, respectively, and the weighted-average annual interest rate was 2.5% in both periods.
+Added: The commitment fee was 0.35% on the unused commitment at September 30, 2022.
+Added: During the nine months ended September 30, 2022, the average borrowing under the NACoal Facility was $2.6 million and the weighted-average annual interest rate was 3.8%.
The NACoal Facility contains restrictive covenants, which require, among other things, NACoal to maintain a maximum net debt to EBITDA ratio of 2.75 to 1.00 and an interest coverage ratio of not less than 4.00 to 1.00.
1 unchanged sentence
EBITDA ratio of 1.50 to 1.00, or if greater than 1.50 to 1.00, a Fixed Charge Coverage Ratio of 1.10 to 1.00, in conjunction with maintaining unused availability thresholds of borrowing capacity, as defined in the NACoal Facility, of $15.0 million.
−Removed: At June 30, 2022, NACoal was in compliance with all financial covenants in the NACoal Facility.
+Added: At September 30, 2022, NACoal was in compliance with all financial covenants in the NACoal Facility.
The obligations under the NACoal Facility are guaranteed by certain of NACoal's direct and indirect, existing and future
2 unchanged sentences
Expenditures for property, plant and equipment and mineral interests
−Removed: Expenditures for property, plant and equipment and mineral interests were $24.9 million during the first six months of 2022.
−Removed: Planned expenditures for the remainder of 2022 are expected to be approximately $15 million in the Coal Mining segment, $5 million in the NAMining segment, $12 million in the Minerals Management segment and $4 million at Mitigation Resources.
+Added: Expenditures for property, plant and equipment and mineral interests were $42.0 million during the first nine months of 2022.
+Added: Planned expenditures for the remainder of 2022 are expected to be approximately $14 million in the Coal Mining segment, $3 million in the NAMining segment and $2 million at Mitigation Resources.
+Added: Planned expenditures for 2023 are expected to be approximately $10 million in the Coal Mining segment, $29 million in the NAMining segment and $10 million in the Minerals Management segment.
In the Coal Mining segment, elevated levels of expected capital expenditures through 2022 are primarily related to spending at MLMC as it develops a new mine area.
12 unchanged sentences
Debt to total capitalization 4% 6% (2)%
−Removed: The increase in other net tangible assets at June 30, 2022 compared with December 31, 2021 was primarily due to receipt of the membership units in a privately-held company and office building that were transferred from GRE with a fair value of $12.8 million and $4.1 million, respectively.
−Removed: Additionally, the increase is due to:
−Removed: • An increase in Property, plant and equipment due in part to land purchased by Mitigation Resources;
−Removed: • An increase in Trade accounts receivable due to higher revenue in the second quarter of 2022 compared with the fourth quarter of 2021.
+Added: The increase in other net tangible assets at September 30, 2022 compared with December 31, 2021 was primarily due to an increase in Property, plant and equipment, the receipt of the membership units in a privately-held company and office building that were transferred from GRE with a fair value of $12.8 million and $4.1 million, respectively, and an increase in Federal income tax receivable.
Contractual Obligations, Contingent Liabilities and Commitments
4 unchanged sentences
FINANCIAL REVIEW
−Removed: Tons of coal delivered by the Coal Mining segment were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: Tons of coal delivered by the Coal Mining segment were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
2 unchanged sentences
Total tons delivered 7,960 8,974 21,458 24,111
−Removed: The results of operations for the Coal Mining segment were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: The results of operations for the Coal Mining segment were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
7 unchanged sentences
Amortization of intangible assets 867 902 2,772 2,795
−Removed: (Gain) loss on sale of assets (1) 6 (1) (33)
+Added: Loss (gain) on sale of assets 2 (5) 1 (38)
Operating profit $ 6,089 $ 21,985 $ 34,616 $ 37,769
(a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information.
−Removed: Second Quarter of 2022 Compared with Second Quarter of 2021
−Removed: Revenues increased 28.6% in the second quarter of 2022 compared with the second quarter of 2021 due to an increase in tons delivered as a result of increased customer requirements and a higher per ton sales price at MLMC.
−Removed: The following table identifies the components of change in operating profit for the second quarter of 2022 compared with the second quarter of 2021:
+Added: Third Quarter of 2022 Compared with Third Quarter of 2021
+Added: Revenues increased 7.9% in the third quarter of 2022 compared with the third quarter of 2021 primarily due to a higher per ton sales price at MLMC.
+Added: The following table identifies the components of change in operating profit for the third quarter of 2022 compared with the third quarter of 2021:
Operating Profit
+Added: 2021 $ 21,985
Increase (decrease) from:
−Removed: Contract termination settlement 14,000
+Added: Contract termination settlement received in 2021 (10,333)
Earnings of unconsolidated operations (3,080)
−Removed: Gain on sale of assets 7
−Removed: Selling, general and administrative expenses (914)
Gross profit (1,463)
+Added: Selling, general and administrative expenses (1,048)
+Added: Gain on sale of assets (7)
Amortization of intangibles 35
−Removed: 2022 $ 21,175
−Removed: Operating profit increased $13.5 million in the second quarter of 2022 compared with the second quarter of 2021 due to the $14.0 million contract termination settlement from GRE recognized during the second quarter of 2022.
−Removed: Excluding the $14.0 million from GRE, operating profit decreased $0.5 million mainly due to an increase in selling, general and administrative expenses and a decrease in gross profit, partially offset by an increase in the earnings of unconsolidated operations.
+Added: Operating profit decreased $15.9 million in the third quarter of 2022 compared with the third quarter of 2021 due to the $10.3 million payment related to the Bisti contract termination recognized during the third quarter of 2021, a decrease in the earnings of unconsolidated operations, a decrease in gross profit and an increase in selling, general and administrative expenses.
+Added: The decrease in earnings of unconsolidated operations was primarily due to a reduction in the per ton management fee at Falkirk as well as the Bisti contract termination as of September 30, 2021.
+Added: These decreases were partially offset by an increase in customer requirements at Coteau.
+Added: The decrease in gross profit was primarily due to an increase in the cost per ton delivered at MLMC, due in part to an increase in the costs of diesel fuel as well as repairs and maintenance expense.
The increase in selling, general and administrative expenses was primarily due to higher employee-related costs.
−Removed: The decrease in gross profit was primarily due to an increase in the cost per ton delivered at MLMC, due in part to an increase in the cost of diesel fuel.
−Removed: The increase in earnings of unconsolidated operations was primarily due to contractual price escalation and an increase in customer requirements at Coteau as well as higher customer requirements at Sabine.
−Removed: These increases were partially offset by a reduction in earnings as a result of the Bisti contract termination as of September 30, 2021, reduced customer demand at Falkirk and Coyote Creek and a reduction in the per ton management fee at Falkirk.
−Removed: First Six Months of 2022 Compared with First Six Months of 2021
−Removed: Revenues increased 11.6% in the first six months of 2022 compared with the first six months of 2021 due to a higher per ton sales price and an increase in tons delivered at MLMC.
−Removed: The following table identifies the components of change in operating profit for the first six months of 2022 compared with the first six months of 2021:
+Added: First Nine Months of 2022 Compared with First Nine Months of 2021
+Added: Revenues increased 10.4% in the first nine months of 2022 compared with the first nine months of 2021 primarily due to a higher per ton sales price at MLMC.
+Added: The following table identifies the components of change in operating profit for the first nine months of 2022 compared with the first nine months of 2021:
Operating Profit
1 unchanged sentence
Increase (decrease) from:
−Removed: Contract termination settlement 14,000
Earnings of unconsolidated operations (2,632)
2 unchanged sentences
Gain on sale of assets (39)
+Added: Contract termination settlements in 2022 and 2021, net 3,667
Amortization of intangibles 23
2022 $ 34,616
−Removed: Operating profit increased $12.7 million in the first six months of 2022 compared with the first six months of 2021 due to the $14.0 million contract termination settlement from GRE recognized during the second quarter of 2022.
−Removed: Excluding the $14.0 million from GRE, operating profit decreased $1.3 million primarily due to an increase in selling, general and administrative expenses mainly due to an increase in employee-related costs and higher professional service expenses.
−Removed: In addition, an increase in earnings of unconsolidated operations was primarily due to contractual price escalation and an increase in customer requirements at Coteau, partially offset by a reduction in earnings from the Bisti contract termination as of September 30, 2021.
+Added: Operating profit decreased $3.2 million in the first nine months of 2022 compared with the first nine months of 2021 primarily due to a decrease in the earnings of unconsolidated operations, an increase in selling, general and administrative expenses and a decrease in gross profit.
+Added: The decrease in earnings of unconsolidated operations was primarily due to a reduction in earnings as a result of the Bisti contract termination as of September 30, 2021 as well as a reduction in the per ton management fee at Falkirk.
+Added: These decreases were partially offset by a contractual price escalation and an increase in customer requirements at Coteau.
+Added: The increase in selling, general and administrative expenses was primarily due to higher employee-related costs and professional service expenses.
+Added: The decrease in gross profit was primarily due to an increase in the cost per ton delivered at MLMC, due in part to an increase in the cost of diesel fuel.
+Added: The decreases in operating profit were partially offset by an increase in contract termination settlements.
+Added: The $14.0 million contract termination settlement from GRE recognized during the second quarter of 2022 was partially offset by the $10.3 million payment related to the Bisti contract termination recognized during the third quarter of 2021.
NORTH AMERICAN MINING ("NAMining") SEGMENT
FINANCIAL REVIEW
−Removed: Tons delivered by the NAMining segment were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: Tons delivered by the NAMining segment were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
−Removed: Unconsolidated operations 2,280 2,734 4,809 5,003
−Removed: Consolidated operations 11,093 10,836 22,526 21,242
Total tons delivered 13,421 14,215 40,756 40,460
−Removed: The results of operations for the NAMining segment were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: The results of operations for the NAMining segment were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
8 unchanged sentences
Selling, general and administrative expenses 2,607 1,372 6,417 4,510
−Removed: Loss on sale of assets 80 62 75 60
−Removed: Operating profit $ 1,257 $ 1,698 $ 2,528 $ 2,355
+Added: Loss (gain) on sale of assets — (5) 75 55
+Added: Operating profit (loss) $ (210) $ 1,448 $ 2,318 $ 3,803
(a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information.
−Removed: Second Quarter of 2022 Compared with Second Quarter of 2021
−Removed: Total revenues increased 14.9% in the second quarter of 2022 compared with the second quarter of 2021 primarily due to an increase in customer requirements and tons delivered at the consolidated operations as well as an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit.
−Removed: The following table identifies the components of change in operating profit for the second quarter of 2022 compared with the second quarter of 2021:
−Removed: Operating Profit
+Added: Third Quarter of 2022 Compared with Third Quarter of 2021
+Added: Total revenues increased 12.4% in the third quarter of 2022 compared with the third quarter of 2021 primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit, as well as a higher average per ton sales price at the consolidated operations.
+Added: These improvements were partially offset by a reduction in revenue at Caddo Creek as the scope of final reclamation activities declined.
+Added: The following table identifies the components of change in operating profit (loss) for the third quarter of 2022 compared with the third quarter of 2021:
+Added: Operating Profit (Loss)
Increase (decrease) from:
Selling, general and administrative expenses (1,000)
−Removed: Earnings of unconsolidated operations (204)
−Removed: Loss on sale of assets (18)
+Added: Voluntary retirement program charge (769)
+Added: Gain on sale of assets (5)
Gross profit 100
−Removed: Operating profit decreased $0.4 million in the second quarter of 2022 compared with the second quarter of 2021 primarily due to an increase in selling, general and administrative expenses.
+Added: Earnings of unconsolidated operations 16
+Added: Operating profit decreased $1.7 million in the third quarter of 2022 compared with the third quarter of 2021 primarily due to an increase in selling, general and administrative expenses and a voluntary retirement charge.
+Added: During the third quarter of 2022, the Company implemented a voluntary retirement program for employees who met certain age and service requirements to reduce overall headcount.
+Added: As a result of this program, the third quarter 2022 operating loss includes a charge of $0.8 million related to one-time termination benefits.
The increase in selling, general and administrative expenses was mainly due to higher employee-related costs.
−Removed: First Six Months of 2022 Compared with First Six Months of 2021
−Removed: Total revenues increased 17.0% in the first six months of 2022 compared with the first six months of 2021 primarily due to an increase in customer requirements and tons delivered at the consolidated operations, as well as an increase in revenue related to reclamation at Caddo Creek.
−Removed: The following table identifies the components of change in operating profit for the first six months of 2022 compared with the first six months of 2021:
+Added: The increase in gross profit was due to higher earnings at consolidated quarries, partially offset by a reduction in earnings at Caddo Creek as the scope of final mine reclamation activities declined.
+Added: First Nine Months of 2022 Compared with First Nine Months of 2021
+Added: Total revenues increased 15.4% in the first nine months of 2022 compared with the first nine months of 2021 primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit, as well as an increase in customer requirements and tons delivered at the consolidated operations.
+Added: The following table identifies the components of change in operating profit for the first nine months of 2022 compared with the first nine months of 2021:
Operating Profit
Increase (decrease) from:
−Removed: Gross profit 978
Selling, general and administrative expenses (1,672)
+Added: Voluntary retirement program charge (769)
Earnings of unconsolidated operations (102)
Loss on sale of assets (20)
−Removed: Operating profit increased $0.2 million in the first six months of 2022 compared with the first six months of 2021 primarily due to an increase in gross profit, partially offset by an increase in selling, general and administrative expenses.
−Removed: The increase in gross profit was primarily attributable to the earnings associated with the reclamation contract at Caddo Creek, partially offset by a decrease in gross profit from the active operations mainly due to an increase in employee-related costs.
+Added: Gross profit 1,078
+Added: Operating profit decreased $1.5 million in the first nine months of 2022 compared with the first nine months of 2021 primarily due to an increase in selling, general and administrative expenses and a voluntary retirement charge, partially offset by an increase in gross profit.
+Added: During the third quarter of 2022, the Company implemented a voluntary retirement program for employees who met certain age and service requirements to reduce overall headcount.
+Added: As a result of this program, the third quarter 2022 operating loss includes a charge of $0.8 million related to one-time termination benefits.
The increase in selling, general and administrative expenses was primarily due to higher employee-related costs.
+Added: The increase in gross profit was primarily attributable to the earnings associated with the reclamation contract and water sales at Caddo Creek, partially offset by a decrease in gross profit from the active operations mainly due to an increase in employee-related costs.
MINERALS MANAGEMENT SEGMENT
FINANCIAL REVIEW
−Removed: The results of operations for the Minerals Management segment were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: The results of operations for the Minerals Management segment were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
4 unchanged sentences
Gain on sale of assets — — (2,527) —
+Added: Asset impairment charges 3,939 — 3,939 —
Operating profit $ 10,616 $ 9,454 $ 35,317 $ 17,862
−Removed: Revenues and operating profit increased significantly in the three and six months ended June 30, 2022 compared with the respective 2021 periods primarily due to favorable changes in natural gas and oil prices and $2.1 million of settlement income recognized during the first quarter of 2022.
−Removed: The settlement relates to the Company’s ownership interest in certain mineral rights.
−Removed: In addition, operating profit increased due to a $2.4 million gain on the sale of land related to legacy operations during the second quarter of 2022.
−Removed: During the three and six months ended June 30, 2022, the oil and natural gas industry experienced continued improvement in commodity prices compared with the respective 2021 periods, primarily due to:
+Added: During the three and nine months ended September 30, 2022, the oil and natural gas industry experienced continued improvement in commodity prices compared with the respective 2021 periods, primarily due to:
• Higher demand as the impact from COVID-19 abates;
2 unchanged sentences
Oil and natural gas prices have been historically volatile and may continue to be volatile in the future.
−Removed: The table below demonstrates such volatility with the average price as reported by the United States Energy Information Administration for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: The table below demonstrates such volatility with the average price as reported by the United States Energy Information Administration for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
1 unchanged sentence
Henry Hub Average Natural Gas Price $ 7.99 $ 4.36 $ 6.71 $ 3.62
+Added: Revenues and operating profit increased significantly in the three and nine months ended September 30, 2022 compared with the respective 2021 periods.
+Added: The increase is primarily due to substantially higher natural gas and oil prices, increased production due in part to income generated from newly developed wells on Company leases during 2022 as well as $2.1 million of settlement income recognized during the first quarter of 2022.
+Added: The settlement relates to the Company’s ownership interest in certain mineral rights.
+Added: In addition, operating profit increased due to a $2.4 million gain on the sale of land related to legacy operations during the second quarter of 2022.
+Added: The Company regularly performs reviews of potential future development projects and identified certain legacy coal assets where future development is unlikely.
+Added: The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off in the third quarter of 2022 and resulted in non-cash asset impairment charges of $3.9 million.
UNALLOCATED ITEMS AND ELIMINATIONS
FINANCIAL REVIEW
−Removed: Unallocated Items and Eliminations were as follows for the three and six months ended June 30:
−Removed: THREE MONTHS SIX MONTHS
+Added: Unallocated Items and Eliminations were as follows for the three and nine months ended September 30:
+Added: THREE MONTHS NINE MONTHS
2022 2021 2022 2021
Operating loss $ (6,677) $ (5,295) $ (17,806) $ (14,842)
−Removed: The operating loss increased $1.0 million and $1.6 million in the three and six months ended June 30, 2022, respectively, compared with the respective 2021 periods primarily due to higher employee-related costs.
+Added: The operating loss increased $1.4 million and $3.0 million in the three and nine months ended September 30, 2022, respectively, compared with the respective 2021 periods primarily due to higher employee-related costs.
NACCO Industries, Inc.
Coal Mining Outlook - 2022
−Removed: Coal Mining operating profit in both the second half and for the full year of 2022 is expected to decrease significantly compared with the respective 2021 periods, both including and excluding the contract termination payments received in 2022 and 2021.
−Removed: The expected reduction in operating profit is primarily the result of reduced earnings at both consolidated and unconsolidated Coal Mining operations as well as an anticipated increase in operating expenses.
−Removed: The increase in operating expenses is primarily due to expected higher employee-related costs, professional fees and outside services.
−Removed: Results at the consolidated mining operations are expected to decrease significantly in the second half of 2022 from the comparable 2021 period and the first half of 2022.
−Removed: This expected decrease is primarily due to an expected substantial decline in earnings at MLMC driven by an anticipated reduction in customer demand from higher than average levels in the second half of the prior year.
−Removed: Lower customer demand, expected cost inflation in the latter half of 2022 on diesel fuel, repairs and supplies, and higher depreciation expense related to recent capital expenditures to develop a new mine area are expected to contribute to an increase in the cost per ton in the second half of 2022.
−Removed: In general, cost per ton delivered is lowest when the power plant requires a consistently high level of coal deliveries, primarily because costs are spread over more tons.
−Removed: As a result of the anticipated increase in cost per ton, the 2022 full-year results are expected to be substantially lower than the 2021 full year.
−Removed: The anticipated reduction in earnings at the unconsolidated Coal Mining operations for the second half of and full-year 2022, compared with the respective prior year periods, is expected to be driven primarily by the reduction in the per ton management fee at Falkirk from May 1, 2022 through May 31, 2024, as well as the termination of Bisti's contract as of September 30, 2021.
−Removed: These decreases are expected to be partly offset by higher earnings at Coteau.
−Removed: Segment Adjusted EBITDA, which excludes the contract termination settlement payments of $10.3 million from Bisti's customer in 2021 and $14.0 million from GRE in 2022, is expected to decrease significantly in 2022 from 2021 primarily as a result of the forecasted reduction in operating profit partially offset by a higher add back of depreciation, depletion and amortization expense which is expected to increase in 2022.
−Removed: The increase in depreciation, depletion and amortization expense is primarily due to higher capital expenditures at MLMC as a result of the development of a new mine area.
−Removed: Capital expenditures are expected to be approximately $15 million in the second half of 2022 and approximately $23 million for the full year.
−Removed: The elevated levels of capital expenditures from 2019 through 2022 relate to the necessary development of a new mine area at MLMC, which will allow continued coal deliveries through the end of the contract.
−Removed: The increase in capital expenditures associated with mine development will result in higher depreciation expense in future periods that will unfavorably affect future operating profit.
−Removed: Capital expenditures for MLMC are expected to decline significantly beginning in 2023.
+Added: In fourth-quarter 2022, the Company expects coal deliveries to increase moderately from 2021, while the Coal Mining segment operating profit is expected to be comparable to the prior year.
+Added: Lower earnings anticipated at the Falkirk Mine as a result of the reduction in the per ton management fee through May 2024, to support the transition of the Coal Creek Station Power Plant to Rainbow Energy, are expected to be offset by higher earnings at Coteau due to an increase in tons delivered and contractual price escalation.
+Added: Segment Adjusted EBITDA is expected to increase modestly primarily due to improved EBITDA at MLMC where increased depreciation expense associated with capital expenditures in recent years has negatively affected operating profit.
+Added: Coal Mining operating profit and Segment Adjusted EBITDA for the 2022 full year is expected to decrease compared with 2021, both including and excluding the contract termination payments received in 2022 and 2021.
+Added: The expected reductions are primarily the result of reduced earnings at both the consolidated and unconsolidated coal mining operations as well as higher operating expenses recognized in the first nine months of 2022.
+Added: Capital expenditures are expected to be approximately $14 million in the fourth quarter of 2022 and approximately $25 million for the 2022 full year.
The Company's contract structure at each of its coal mining operations eliminates exposure to spot coal market price fluctuations.
However, fluctuations in natural gas prices and the availability of renewable power generation, particularly wind, can contribute to changes in power plant dispatch and customer demand for coal.
−Removed: Sustained higher natural gas prices could continue to result in increased demand for coal.
−Removed: Changes to expectations for customer power plant dispatch could affect the
−Removed: Company’s outlook for 2022 and over the longer term.
−Removed: The owner of the power plant served by the Company's Sabine Mine in Texas intends to retire the power plant in the first quarter of 2023, at which time Sabine expects to begin final reclamation.
+Added: Sustained higher natural gas prices could result in increased demand for coal.
+Added: Changes to expectations for customer power plant dispatch could affect the Company’s outlook for the remainder of 2022 and 2023, as well as over the longer term.
+Added: The owner of the power plant served by the Company's Sabine Mine in Texas intends to retire the power plant in 2023.
+Added: Sabine expects deliveries to cease in the first quarter
+Added: of 2023 at which time Sabine expects to begin final reclamation.
Funding for mine reclamation is the responsibility of the customer.
+Added: Coal Mining Outlook - 2023
+Added: In 2023, the Company expects coal deliveries to decrease moderately from 2022 levels as a result of the cessation of Sabine deliveries in the 2023 first quarter and current expectations of customer requirements.
+Added: Coal Mining operating profit and Segment Adjusted EBITDA for the 2023 full year are expected to decrease significantly compared with 2022, including and excluding the $14.0 million GRE termination payment received in 2022.
+Added: The decline is primarily the result of an expected significant reduction in earnings at the consolidated operations and an anticipated modest decrease in earnings of unconsolidated operations.
+Added: Results at the consolidated mining operations are projected to decrease significantly predominantly due to an expected substantial decline in earnings at MLMC driven by an increase in the cost per ton of coal delivered in 2023 versus 2022.
+Added: Anticipated cost inflation on repairs, diesel fuel and supplies, as well as higher depreciation expense related to recent capital expenditures to develop a new mine area are expected to contribute to the higher cost per ton.
+Added: MLMC sells lignite at contractually agreed upon prices which are subject to changes in the level of established indices generally reflecting inflation over time.
+Added: The increase in production costs will not be offset by an immediate increase in the revenue generated from contractual price escalation as there is a lag in the timing of the effect of inflation on the index-based coal sales price.
+Added: The anticipated lower earnings at the unconsolidated coal mining operations is expected to be driven primarily by the reduction in the per ton management fee at Falkirk for all 12 months in 2023 compared with 7 months in 2022, as well as the cessation of Sabine deliveries starting late in the first quarter of 2023.
+Added: These decreases are expected to be partly offset by higher earnings at Coteau.
+Added: Capital expenditures are expected to be approximately $10 million in 2023.
NAMining Outlook
−Removed: NAMining expects operating profit to increase in both the second half of 2022 and for the full year over the respective 2021 periods.
−Removed: The increase in the second half is primarily due to improved fourth quarter results, principally from a shift in mix of tons delivered to operations with higher-margin contracts, partially offset by an anticipated increase in operating expenses.
−Removed: Segment Adjusted EBITDA for 2022 is expected to increase significantly compared with the prior year as a result of the improvement in operating profit from higher reclamation income at Caddo Creek in the first half of 2022 and the add back of higher depreciation expense.
−Removed: During the first quarter of 2022, NAMining agreed to commission a new dragline at an existing quarry in Florida to secure a contract extension through 2027.
−Removed: This dragline will supplement an existing dragline, resulting in an expected increase in deliveries and income over the next five years at this quarry.
+Added: NAMining expects tons delivered, operating profit and Segment Adjusted EBITDA to increase in the 2022 fourth quarter primarily because of anticipated increased earnings under existing contracts, including Sawtooth Mining.
+Added: Excluding the effect of the charge for the voluntary retirement program, full-year operating profit is expected to increase over 2021.
+Added: Segment Adjusted EBITDA for the 2022 full year is expected to increase significantly compared with the prior year, including and excluding the third quarter voluntary retirement charge.
+Added: This improvement is a result of the improvement in operating profit from higher reclamation income at Caddo Creek in the first nine months of 2022 and increased results at the active mining operations and Sawtooth Mining partially offset by an increase in operating expenses.
+Added: In 2023, NAMining expects full-year operating profit and Segment Adjusted EBITDA to increase significantly over 2022 due to increased results from active mining operations and an anticipated reduction in operating expenses, in part due to an anticipated reduction in employee-related costs from the voluntary retirement program.
NAMining continues to have a substantial pipeline of potential new projects and is pursuing a number of growth initiatives that, if successful, would be accretive to future earnings.
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Lithium Americas owns the lithium reserves at Thacker Pass and will be responsible for the processing and sale of the lithium produced.
−Removed: In July 2022, Lithium Americas provided an update on the Thacker Pass project, which noted that all key state-level permits had been issued for Thacker Pass and feasibility study results are expected in the second half of 2022.
+Added: In October 2022, Lithium Americas provided an update on the Thacker Pass project, which noted that all key state-level permits had been issued for Thacker Pass, feasibility study results are expected in the first quarter of 2023 and construction is expected to begin in 2023.
At maturity, this management fee contract is expected to deliver fee income similar to a mid-sized management fee coal mine.
−Removed: NAMining previously forecasted capital expenditures of $28 million for 2022.
−Removed: NAMining now expects full-year capital expenditures to be $13 million, with approximately $5 million expended in the second half of 2022 primarily for the acquisition, relocation and refurbishment of draglines, as well as the acquisition of other mining equipment to support the continued expansion of contract-mining services.
−Removed: The reduction in capital expenditures from the previous forecast is due to a change in the timing of the acquisition of equipment to support the Thacker Pass lithium project from 2022 to 2023.
+Added: NAMining expects full-year 2022 capital expenditures to be approximately $12 million, with approximately $3 million expended in the fourth quarter primarily for the acquisition, relocation and refurbishment of draglines, as well as the acquisition of other mining equipment to support the continued expansion of contract-mining services.
+Added: In 2023, capital expenditures are expected to be approximately $29 million primarily for the acquisition of equipment to support the Thacker Pass lithium project.
+Added: The cost of mining equipment related to Thacker Pass will be reimbursed by the customer over a five-year period from the equipment acquisition date.
Minerals Management Outlook
The Minerals Management segment derives income 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.
−Removed: Excluding settlement income of $3.3 million recognized in the 2021 third quarter, operating profit and Segment Adjusted EBITDA in the second half of 2022 are expected to be comparable to the second half of 2021 but decrease significantly compared with the first half of 2022 primarily driven by current expectations for natural gas and oil prices and an anticipated reduction in production volumes.
−Removed: As a result of the substantial earnings in the first half of 2022, the Company expects a significant increase in full-year 2022 operating profit over 2021.
−Removed: Commodity prices are inherently volatile and 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.
−Removed: The Company's expectations are based on the best information currently available and could vary positively or negatively as a result of adjustments made by operators and/or changes to commodity prices.
−Removed: In the first quarter of 2022, Minerals Management completed a small acquisition of mineral interests in the New Mexico portion of the Permian basin for $0.7 million.
−Removed: Minerals Management is targeting additional investments in mineral and royalty interests of approximately $12 million in the second half of 2022.
−Removed: These investments are expected to be accretive, but each investment's contribution to earnings is dependent on the details of that investment, including the size and type of interests acquired and the stage and timing of mineral development.
−Removed: The contribution of each investment could also vary due to commodity price changes.
−Removed: These acquired interests are expected to align with the Company’s strategy of selectively acquiring mineral and royalty interests with a balance of near-term cash-flow yields and long-term growth potential, in high-quality reservoirs offering diversification from the Company’s legacy mineral interests.
+Added: Changing prices of natural gas and oil have a significant impact on Minerals Management’s operating profit.
+Added: In the 2022 fourth quarter and full year, operating profit and Segment Adjusted EBITDA are expected to continue to increase significantly over the respective prior year periods primarily driven by current expectations for natural gas and oil prices and increases in production volumes.
+Added: In 2023, operating profit and Segment Adjusted EBITDA are expected to decrease significantly compared with 2022 primarily driven by current market expectations for natural gas and oil prices, an anticipated reduction in volumes as existing wells follow their natural production decline and limited forecasted development of additional new wells by third-party lessees.
+Added: Based on market expectations, the Company's forecast assumes oil and gas market prices moderate in 2023 to levels in line with 2021 averages;
+Added: however, commodity prices are inherently volatile.
+Added: The actions of OPEC, the Russia-Ukraine conflict, inventory levels of natural gas and oil and the uncertainty associated with demand, as well as other factors, have the potential to impact future oil and gas prices.
+Added: An increase in natural gas and oil prices above current expectations could result in improvements to the 2023 forecast.
+Added: 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.
+Added: The Company's expectations are based on the best information currently available and could vary positively or negatively as a result of adjustments made by operators, additional leasing and development and/or changes to commodity prices.
+Added: The production decline is particularly pronounced in new wells, such as those that began production in the fourth quarter of 2021 and early in 2022 on Company leases.
+Added: Development of new wells on existing interests could be accretive to future results.
+Added: In the third quarter of 2022, Minerals Management completed an $11.4 million acquisition of mineral interests in the Texas portion of the Permian Basin and the Wyoming portion of the Powder River Basin.
+Added: Minerals Management is targeting additional investments in mineral and royalty interests of up to $10 million in 2023.
+Added: Potential future acquisitions could be accretive to 2023 results
Consolidated Outlook
−Removed: Overall for the 2022 full year, excluding the settlements associated with the GRE/Rainbow Energy transaction and the Bisti termination fee recognized in 2021, NACCO expects consolidated operating profit and net income to decline moderately from 2021.
−Removed: Lower operating profit in the Coal Mining segment is expected to be partially offset by a significant increase in earnings
−Removed: at the Minerals Management segment primarily from the substantial increase in Minerals Management's earnings in the first half of 2022.
−Removed: In addition, income realized in 2021 on exchange-traded equity securities held by the Company is not expected to reoccur due to a deterioration in public equity markets during 2022.
+Added: NACCO expects a significant increase in consolidated operating profit, net income and Consolidated Adjusted EBITDA in the fourth quarter of 2022 due to anticipated higher results at the Minerals Management and NAMining segments, as well as income from an equity interest in a North Dakota-based ethanol business.
+Added: For the 2022 full year, excluding the settlements associated with the GRE/Rainbow Energy transaction recognized in 2022 and the Bisti termination fee recognized in 2021, NACCO expects consolidated operating profit, net income and Consolidated Adjusted EBITDA to improve significantly over 2021.
+Added: Substantially higher earnings in the Minerals Management segment, as well as income from an equity interest in a North Dakota-based ethanol business, are expected to be partially offset by significantly lower operating profit from the Coal Mining segment and an increase in unallocated employee-related expenses.
+Added: In addition, income recognized in 2021 on exchange-traded equity securities held by the Company is not expected to reoccur due to a deterioration in public equity markets during 2022.
The effective income tax rate, including the settlements associated with the GRE/Rainbow Energy transaction, is expected to be between 15% and 17%.
−Removed: In 2022, Consolidated Adjusted EBITDA, which excludes the termination and settlement payments, is expected to be comparable to 2021.
−Removed: Consolidated capital expenditures are expected to be approximately $61 million in 2022 and include approximately $12 million for expenditures at Mitigation Resources.
−Removed: In 2022, cash flow before financing activities is expected to be significantly lower than in 2021 as a result of the anticipated increase in capital expenditures in 2022.
+Added: In 2023, NACCO expects consolidated net income to decrease significantly from 2022 largely due to $30.9 million of pre-tax contract termination income recognized during 2022.
+Added: Excluding the effect of the contract termination settlements, net income is expected to decrease substantially due to significantly reduced royalty income at the Minerals Management segment and lower earnings in the Coal Mining segment, as well as an anticipated reduction in income from an equity interest in a North Dakota-based ethanol business.
+Added: These reductions are expected to be partially offset by lower income tax expense and improved results in the NAMining segment.
+Added: The Company expects an effective income tax rate between 2% and 5% in 2023.
+Added: Securing contracts for new mining projects and acquisitions of additional mineral interests could be accretive to the current forecast.
+Added: Consolidated capital expenditures are expected to total approximately $61 million in 2022, including approximately $12 million for expenditures at Mitigation Resources of North America ® .
+Added: The Company expects cash flow before financing activities in 2022 to be significantly lower than in 2021 primarily due to increased capital expenditures.
+Added: In 2023, the Company expects capital expenditures of approximately $39 million, excluding Minerals Management.
+Added: Minerals Management is targeting investments of up $10 million.
+Added: Future investments at Mineral Management are expected to continue to align with the Company’s strategy of selectively acquiring mineral and royalty interests with a balance of near-term cash-flow yields and
+Added: long-term growth potential.
+Added: As a result of the forecasted capital expenditures and anticipated substantial decrease in net income, cash flow before financing activities in 2023 is expected to return to a significant use of cash.
+Added: As of September 30, 2022, the Company held an investment in Midwest AgEnergy, a North Dakota-based ethanol business.
+Added: This investment is accounted for under the equity method.
+Added: On October 26, 2022, Midwest AgEnergy announced that it has finalized an agreement under which the equity holders of Midwest AgEnergy, including NACCO, would sell their equity interests for cash.
+Added: The transaction is expected to close before the end of 2022, however there can be no assurance that the transaction will be finalized in the anticipated timeframe or at all.
+Added: The amount and timing of NACCO’s cash proceeds will be dependent on the terms of the transaction.
+Added: The transaction is not expected to have a material impact on 2022 results of operations based on current estimates.
Growth and Diversification
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NAMining is pursuing growth and diversification by expanding the scope of its business development activities to include potential customers who require a broad range of minerals and materials and by leveraging the Company’s core mining skills to expand the range of contract mining services it provides.
−Removed: NAMining continues to pursue additional opportunities to provide comprehensive mining services to operate entire mines, as it expects to do at the lithium project in Nevada.
The goal is to build NAMining into a leading provider of contract mining services for customers that produce a wide variety of minerals and materials.
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This business model can deliver higher average operating margins over the life of a reserve than traditional oil and gas companies that bear the cost of exploration, production and/or development.
−Removed: Catapult Mineral Partners, the Company’s business unit focused on managing and expanding the Company’s portfolio of oil and gas mineral and royalty interests, has developed a strong network to source and secure new acquisitions, and has several potential acquisitions under review.
+Added: Catapult Mineral Partners, the Company’s business unit focused on managing and expanding the Company’s portfolio of oil and gas mineral and royalty interests, has developed a strong network to source and secure new acquisitions.
The goal is to construct a high-quality diversified portfolio of oil and gas mineral and royalty interests in the United States that deliver near-term cash flow yields and long-term projected growth.
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This business offers an opportunity for growth and diversification in an industry where the Company has substantial knowledge and expertise and a strong reputation.
−Removed: During the first half of 2022, Mitigation Resources purchased property to establish a new mitigation bank north of Dallas/Fort Worth and established a joint venture to provide mitigation services for the Lake Ralph Hall project in Northern Texas.
−Removed: With these new 2022 projects, Mitigation Resources is involved in over 10 mitigation banks and permittee-responsible mitigation projects in Tennessee, Alabama, Mississippi and Texas and is making strong progress toward its goal to be a top ten U.S.
−Removed: provider of stream and wetland mitigation services.
+Added: During the first nine months of 2022, Mitigation Resources purchased property to establish a new mitigation bank north of Dallas/Fort Worth and established a joint venture to provide mitigation services for the Lake Ralph Hall project in Northern Texas.
+Added: With these new 2022 projects, Mitigation Resources is involved in over 10 mitigation banks and permittee-responsible mitigation projects in Tennessee, Alabama, Mississippi and Texas and is making strong progress toward its goal to be a top ten provider of stream and wetland mitigation services in the Southeast United States.
The Company believes that Mitigation Resources can provide solid rates of return as this business matures.
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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.