What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-30 compared with 2024-07-31 · 292 added, 266 removed, 806 unchanged (41% of the section changed)

9 unchanged sentences

Cash held by 1031 exchange facilitator 5,310 —

Business interruption insurance receivable 13,612 —

Inventories 94,436 77,000

18 unchanged sentences

Deferred revenue 723 878

Federal income tax payable 4,310 —

Other current liabilities 9,452 7,118

1 unchanged sentence

Long-term debt 28,818 22,003

Long-term revolving credit agreements 37,221 —

Operating lease liabilities 7,652 8,782

17 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30 SEPTEMBER 30

2024 2023 2024 2023

2 unchanged sentences

Cost of sales 54,412 48,720 146,010 150,447

Gross profit 7,018 6,407 14,036 9,764

Gross profit (loss) 7,244 ( 2,174 ) 21,280 7,590

Earnings of unconsolidated operations 15,155 12,754 42,054 37,662

Business interruption insurance recoveries 13,612 — 13,612 —

Operating expenses

4 unchanged sentences

16,312 16,847 45,124 47,955

Operating profit 7,366 1,750 12,123 3,564

Operating profit (loss) 19,699 ( 6,267 ) 31,822 ( 2,703 )

Other expense (income)

2 unchanged sentences

Closed mine obligations 463 394 1,389 1,236

Loss (gain) on equity securities 264 ( 421 ) ( 777 ) ( 1,049 )

(Gain) loss on equity securities

( 442 ) 551 ( 1,219 ) ( 498 )

Other, net 244 ( 315 ) 160 ( 2,417 )

567 ( 417 ) 889 ( 4,478 )

Income before income tax provision (benefit) 6,228 3,257 11,801 7,625

Income (loss) before income tax provision (benefit) 19,132 ( 5,850 ) 30,933 1,775

Income tax provision (benefit) 3,497 ( 2,018 ) 4,756 ( 2,605 )

Net income $ 5,972 $ 2,520 $ 10,542 $ 8,212

Net income (loss) $ 15,635 $ ( 3,832 ) $ 26,177 $ 4,380

Earnings per share:

Basic earnings per share $ 0.81 $ 0.34 $ 1.42 $ 1.10

Diluted earnings per share $ 0.81 $ 0.34 $ 1.42 $ 1.09

Basic earnings (loss) per share $ 2.14 $ ( 0.51 ) $ 3.55 $ 0.59

Diluted earnings (loss) per share $ 2.14 $ ( 0.51 ) $ 3.54 $ 0.58

Basic weighted average shares outstanding 7,312 7,517 7,383 7,480

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30 SEPTEMBER 30

2024 2023 2024 2023

(In thousands)

Net income $ 5,972 $ 2,520 $ 10,542 $ 8,212

Reclassification of pension and postretirement adjustments into earnings, net of $ 25 and $ 48 tax benefit in the three and six months ended June 30, 2024, respectively, and net of $ 6 and $ 12 tax benefit in the three and six months ended June 30, 2023, respectively.

Net income (loss) $ 15,635 $ ( 3,832 ) $ 26,177 $ 4,380

Reclassification of pension and postretirement adjustments into earnings, net of $ 20 and $ 68 tax benefit in the three and nine months ended September 30, 2024, respectively, and net of $ 6 and $ 18 tax benefit in the three and nine months ended September 30, 2023, respectively.

Total other comprehensive income 78 20 231 59

Comprehensive income $ 6,049 $ 2,538 $ 10,695 $ 8,251

Comprehensive income (loss)

$ 15,713 $ ( 3,812 ) $ 26,408 $ 4,439

See notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED

NINE MONTHS ENDED

(In thousands)

41 unchanged sentences

Balance, June 30, 2023 $ 5,954 $ 1,566 $ 24,906 $ 409,946 $ ( 8,974 ) $ 433,398

Stock-based compensation 10 — 1,309 — — 1,319

Purchase of treasury shares ( 24 ) — ( 800 ) — — ( 824 )

Net loss — — — ( 3,832 ) — ( 3,832 )

Cash dividends on Class A and Class B common stock:

$ 0.2175 per share

— — — ( 1,636 ) — ( 1,636 )

Reclassification adjustment to net income, net of tax — — — — 20 20

Balance, September 30, 2023 $ 5,940 $ 1,566 $ 25,415 $ 404,478 $ ( 8,954 ) $ 428,445

Balance, January 1, 2024 $ 5,883 $ 1,566 $ 28,672 $ 355,873 $ ( 9,654 ) $ 382,340

18 unchanged sentences

Balance, June 30, 2024 $ 5,788 $ 1,566 $ 30,451 $ 355,786 $ ( 9,501 ) $ 384,090

Stock-based compensation 12 — 1,170 — — 1,182

Purchase of treasury shares ( 68 ) — — ( 1,949 ) — ( 2,017 )

Net income — — — 15,635 — 15,635

Cash dividends on Class A and Class B common stock:

$ 0.2275 per share

— — — ( 1,658 ) — ( 1,658 )

Reclassification adjustment to net income, net of tax — — — — 78 78

Balance, September 30, 2024 $ 5,732 $ 1,566 $ 31,621 $ 367,814 $ ( 9,423 ) $ 397,310

See notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

SEPTEMBER 30, 2024

(In thousands, except as noted and per share amounts)

1 unchanged sentence

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of NACCO Industries, Inc.

® (“NACCO”) and its wholly owned subsidiary, NACCO Natural Resources ® (collectively, the “Company”).

® (“NACCO”) and its wholly owned subsidiary, NACCO Natural Resources Corporation ® (“NACCO Natural Resources” and with NACCO collectively, the “Company”).

NACCO Natural Resources brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through its robust business portfolio.

16 unchanged sentences

Each mine is fully integrated with its customer's operations.

During the three and six months ended June 30, 2024, the Coal Mining segment's operating coal mines were:

During the three and nine months ended September 30, 2024, 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”) and Mississippi Lignite Mining Company (“MLMC”).

14 unchanged sentences

Reduction in dispatch of the Red Hills Power Plant will result in reduced earnings at MLMC.

On December 18, 2023, MLMC received notice from its customer related to an issue that began on December 15, 2023 and impacted one of two boilers at the Red Hills Power Plant.

This issue resulted in a reduction in customer demand which had a significant impact on the Company's results of operations during the first six months of 2024.

Based on current expectations, repairs to the boiler will be resolved and the plant will be fully operational by fourth quarter 2024.

On December 18, 2023, MLMC received notice from its customer related to a mechanical issue that began on December 15, 2023 and impacted one of two boilers at the Red Hills Power Plant.

While this issue has been resolved, it resulted in a reduction in customer demand which had a significant impact on the Company's results of operations during the first nine months of 2024.

The Company recognized income of $ 13.6 million in the third quarter of 2024 related to business interruption insurance recoveries to partially offset losses related to the boiler outage.

The Sabine Mining Company (“Sabine”) operates the Sabine Mine in Texas.

2 unchanged sentences

SWEPCO is an American Electric Power (“AEP”) company.

As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries and final

reclamation began on April 1, 2023.

As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries and commenced final reclamation on April 1, 2023.

Funding for mine reclamation is the responsibility of SWEPCO, and Sabine receives compensation for providing mine reclamation services.

26 unchanged sentences

materials handling and processing, product sales and distribution.

As of June 30, 2024, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.

As of September 30, 2024, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.

In addition, Sawtooth Mining, LLC ("Sawtooth") has exclusive responsibility for mining and mine closure services for the Thacker Pass lithium project in northern Nevada, including mine design, construction, operation and maintenance.

6 unchanged sentences

Royalty interests generally result when the owner of a mineral interest leases the underlying minerals to an exploration and production company pursuant to an oil and gas lease.

Typically, the resulting royalty interest is a cost-free percentage of production revenues for minerals extracted from the acreage.

A holder of royalty interests is generally not responsible for capital expenditures or lease operating expenses, but royalty interests may be calculated

net of post-production expenses, and typically have no environmental liability.

Typically, the resulting royalty interest is a

cost-free percentage of production revenues for minerals extracted from the acreage.

A holder of royalty interests is generally not responsible for capital expenditures or lease operating expenses, but royalty interests may be calculated net of post-production expenses, and typically have no environmental liability.

Royalty interests leased to producers expire upon the expiration of the oil and gas lease and revert to the mineral owner.

27 unchanged sentences

In May 2024, the Company sold land and recognized a $ 4.5 million gain in the Minerals Management segment.

The Company structured this transaction in a manner that qualified as like-kind exchange pursuant to Section 1031 of the Internal Revenue Code.

The net proceeds are being held in escrow until replacement property is purchased.

A $ 0.3 million property related to this like-kind exchange was acquired in June 2024.

The Company had $ 6.7 million and $ 0.0 million of cash at June 30, 2024 and December 31, 2023, respectively, which is reported on the line Cash held by 1031 exchange facilitator in the Unaudited Condensed Consolidated Balance Sheets.

The Company structured this transaction in a manner that qualified as a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code.

The net proceeds of the sale are currently held in escrow by a qualified intermediary until the Company purchases replacement property.

During the nine months ended September 30, 2024, the Company had capital expenditures totaling $ 1.7 million related to this like-kind exchange.

The Company had $ 5.3 million and $ 0.0 million of cash at September 30, 2024 and December 31, 2023, respectively, which is

reported on the line Cash held by 1031 exchange facilitator in the Unaudited Condensed Consolidated Balance Sheets.

The Company is evaluating other acquisitions which, if executed, could utilize some or all of the remaining cash.

5 unchanged sentences

GAAP for complete financial statements.

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, 2024, the results of its operations, comprehensive income, cash flows and changes in equity for the six months ended June 30, 2024 and 2023 have been included.

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, 2024, the results of its operations, comprehensive income, cash flows and changes in equity for the nine months ended September 30, 2024 and 2023 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, 2023.

31 unchanged sentences

Fluctuations in revenue from period to period generally result from changes in customer demand.

Under the permittee-responsible stream and wetland mitigation model, the contracts are generally structured as a management fee agreement under which Mitigation Resources is reimbursed for all costs incurred in performing the required mitigation plus an

agreed profit percentage or a fixed fee.

permittee-responsible stream and wetland mitigation model, the contracts are generally structured as a management fee agreement under which Mitigation Resources is reimbursed for all costs incurred in performing the required mitigation plus an agreed profit percentage or a fixed fee.

The mitigation services provided is the performance obligation and is accounted for as a series.

5 unchanged sentences

Significant Judgments

The Company’s contracts with its customers in the Coal Mining and NAMining segments contain different types of variable consideration including, but not limited to, management fees that adjust based on volumes or MMBtu delivered however, the terms of these variable payments relate specifically to the Company's efforts to satisfy one or more, but not all of, the performance obligations (or to a specific outcome from satisfying the performance obligations) in the contract.

However, the terms of these variable payments relate specifically to the Company's efforts to satisfy one or more, but not all, of the performance obligations (or to a specific outcome from satisfying the performance obligations) in the contract.

Therefore, the Company allocates each variable payment (and subsequent changes to that payment) entirely to the specific performance obligation to which it relates.

7 unchanged sentences

The Company typically receives payment for oil and natural gas sales within 90 days of the month of delivery.

For the three months ended June 30, 2024, differences between the Company’s first quarter pricing estimates and the actual amounts received from operators in the second quarter resulted in a $ 2.3 million change in estimate.

For the six months ended June 30, 2024, change in estimates was immaterial .

For the three and six months ended June 30, 2023, change in estimates was immaterial .

For the three and nine months ended September 30, 2024, differences between the Company’s pricing estimates and the actual amounts received from operators were immaterial .

For the three and nine months ended September 30, 2023, any changes in estimates were immaterial .

Cost Reimbursement

3 unchanged sentences

The Company is considered a principal in such transactions and records the associated revenue at the gross amount billed to the customer with the related costs recorded as an expense within cost of sales.

At the Thacker Pass lithium project, in addition to management fee income, the customer will reimburse Sawtooth for up to $ 50 million of capital expenditures.

At the Thacker Pass lithium project, in addition to management fee income, the customer will reimburse Sawtooth for certain capital expenditures.

Sawtooth will recognize revenue over the estimated useful life of the asset on a straight-line basis as the performance obligation is satisfied over time.

Sawtooth recognized $ 2.2 million and $ 1.0 million in revenue for reimbursable costs during the three months ended June 30, 2024 and 2023, respectively.

Sawtooth recognized $ 3.6 million and $ 1.1 million in revenue for reimbursable costs during the six months ended June 30, 2024 and 2023, respectively.

In prior years, the customer received a $ 3.5 million advance from Sawtooth, which is included in the long-term contract asset.

The customer will pay a $ 4.7 million success fee to Sawtooth upon achieving commercial mining milestones or repay the $ 3.5 million advance if such commercial mining milestones are not met.

The customer will either pay a $ 4.7 million success fee to Sawtooth upon achieving commercial mining milestones or repay the $ 3.5 million advance if such commercial mining milestones are not met.

Prior Period Performance Obligations

2 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.

For the three and six months ended June 30, 2024, royalty income recognized in the reporting period related to production satisfied in prior reporting periods was immaterial .

For the three and six months ended June 30, 2023, royalty income recognized in the reporting period related to production satisfied in prior reporting periods was $ 1.4 million.

For the three and nine months ended September 30, 2024, royalty income recognized in the reporting period related to production satisfied in prior reporting periods was immaterial .

For the three and nine months ended September 30, 2023, royalty income recognized in the reporting period related to production satisfied in prior reporting periods was immaterial and $ 1.4 million, respectively.

Disaggregation of Revenue

3 unchanged sentences

See Note 8 to the Unaudited Condensed Consolidated Financial Statements for further discussion of segment reporting.

The following table disaggregates revenue by major sources as of June 30:

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

The following table disaggregates revenue by major sources as of September 30:

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30 SEPTEMBER 30

2024 2023 2024 2023

9 unchanged sentences

Balance, January 1, 2024 $ 37,429 $ — $ 3,712 $ 878 $ 1,470

Balance, June 30, 2024 36,635 2,283 3,500 843 3,100

Balance, September 30, 2024 39,098 106 3,500 723 4,074

Increase (decrease) $ 1,669 $ 106 $ ( 212 ) $ ( 155 ) $ 2,604

3 unchanged sentences

Therefore, at the time any such up-front payment is received, a contract liability is recorded which represents deferred revenue.

The amount of royalty revenue recognized in both of the three months ended June 30, 2024 and 2023 included in the opening contract liability was $ 0.2 million.

The amount of royalty revenue recognized in both of the six months ended June 30, 2024 and 2023 included in the opening contract liability was $ 0.4 million.

The amount of royalty revenue recognized in the three months ended September 30, 2024 and 2023 included in the opening contract liability was $ 0.1 million and $ 0.3 million, respectively.

The amount of royalty revenue recognized in the nine months ended September 30, 2024 and 2023 included in the opening contract liability was $ 0.5 million and $ 0.7 million, respectively.

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 three to five years .

The Company expects to recognize an additional $ 0.8 million in the remainder of 2024, $ 1.1 million in 2025, $ 0.1 million in 2026 and 2027 and $ 1.9 million in the years after 2027 related to the contract liability remaining at June 30, 2024.

The Company expects to recognize an additional $ 0.4 million in the remainder of 2024 and 2025, $ 1.1 million in 2026, less than $ 0.1 million in 2027 and $ 2.9 million in the years after 2028 related to the contract liability remaining at September 30, 2024.

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.

6 unchanged sentences

Total inventories $ 94,436 $ 77,000

During the three and six months ended June 30, 2024, the Company recorded a $ 0.7 million and $ 3.1 million inventory impairment charge, respectively.

During the three and six months ended June 30, 2023, the Company recorded a $ 1.8 million and $ 4.2 million inventory impairment charge, respectively.

The inventory impairment charges are in the line “Cost of sales” in the accompanying Unaudited Condensed Consolidated Statements of Operations as the cost-basis of coal inventory exceeded its net realizable value at MLMC.

During the three and nine months ended September 30, 2024, the Company recorded a $ 1.0 million and $ 4.1 million inventory impairment charge, respectively.

During the three and nine months ended September 30, 2023, the Company recorded a $ 2.4 million and $ 6.6 million inventory impairment charge, respectively.

The inventory impairment charges are included in the line “Cost of sales” in the accompanying Unaudited Condensed Consolidated Statements of Operations as the cost-basis of coal inventory exceeded its net realizable value at MLMC.

NOTE 4— Stockholders' Equity

1 unchanged sentence

On November 7, 2023, the Company's Board of Directors approved a stock repurchase program ("2023 Stock Repurchase Program") providing for the purchase of up to $ 20.0 million of the Company’s outstanding Class A Common stock through December 31, 2025.

NACCO's previous repurchase program would have expired on December 31, 2023 but was terminated and replaced by the 2023 Stock Repurchase Program.

During the three and six months ended June 30, 2024, the Company repurchased 108,371 and 236,058 shares, respectively, of Class A Common Stock under the 2023 Stock Repurchase Program for an aggregate purchase price of $ 3.3 million and $ 7.6 million, respectively.

NACCO's previous repurchase program ("2021 Stock Repurchase Program") would have expired on December 31, 2023 but was terminated and replaced by the 2023 Stock Repurchase Program.

During the three and nine months ended September 30, 2024, the Company repurchased 68,282 and 304,340 shares, respectively, of Class A Common Stock under the 2023 Stock Repurchase Program for an aggregate purchase price of $ 2.0 million and $ 9.6 million, respectively.

During both the three and nine months ended September 30, 2023, the Company repurchased 24,762 shares of Class A Common Stock under the 2021 Stock Repurchase Program for an aggregate purchase price of $ 0.8 million.

The timing and amount of any repurchases under the 2023 Stock Repurchase Program are determined at the discretion of the Company's management based on a number of factors, including the availability of capital, other capital allocation alternatives, market conditions for the Company's Class A Common Stock and other legal and contractual restrictions.

9 unchanged sentences

Description Date (Level 1) (Level 2) (Level 3)

June 30, 2024

September 30, 2024

Equity securities $ 17,987 $ 17,987 $ — $ —

5 unchanged sentences

underground coal mining operations.

Prior to 2023, Bellaire contributed $ 5.0 million

to establish a mine water treatment trust (the "Mine Water Treatment Trust") to assure the long-term treatment of post-mining discharge.

Prior to 2023, Bellaire contributed $ 5.0 million to establish a mine water treatment trust (the "Mine Water Treatment Trust") to assure the long-term treatment of post-mining discharge.

Bellaire's Mine Water Treatment Trust invests in equity securities that are reported at fair value based upon quoted market prices in active markets for identical assets;

therefore, they are classified as Level 1 within the fair value hierarchy.

The fair value of the Mine Water Treatment Trust was $ 12.2 million and $ 11.2 million at June 30, 2024 and December 31, 2023, respectively, and is included in Other non-current assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The Company recognized a gain of $ 0.3 million and $ 1.0 million during the three and six months ended June 30, 2024, respectively, and a gain of $ 0.5 million and $ 1.0 million during the three and six months ended June 30, 2023, respectively, related to the Mine Water Treatment Trust.

The fair value of the Mine Water Treatment Trust was $ 12.3 million and $ 11.2 million at September 30, 2024 and December 31, 2023, respectively, and is included in Other non-current assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The Company recognized a gain of $ 0.6 million and $ 1.5 million during the three and nine months ended September 30, 2024, respectively, and a loss of $ 0.4 million and a gain of $ 0.7 million during the three and nine months ended September 30, 2023, respectively, related to the Mine Water Treatment Trust.

Prior to 2023, 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.

The fair value of this investment was $ 5.8 million and $ 6.0 million at June 30, 2024 and December 31, 2023, respectively, and is included in Other non-current assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The Company recognized a loss of $ 0.5 million and $ 0.2 million during the three and six months ended June 30, 2024, respectively, and a loss of $ 0.1 million and a de minimis gain during the three and six months ended June 30, 2023, respectively, related to the investment in these equity securities.

The change in fair value of equity securities is reported on the line Loss (gain) on equity securities in the Other (income) expense section of the Unaudited Condensed Consolidated Statements of Operations.

There were no transfers into or out of Levels 1, 2 or 3 during the six months ended June 30, 2024 and 2023.

The fair value of this investment was $ 5.7 million and $ 6.0 million at September 30, 2024 and December 31, 2023, respectively, and is included in Other non-current assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The Company recognized a loss of $ 0.1 million and $ 0.3 million during the three and nine months ended September 30, 2024, respectively, and a loss of $ 0.2 million during both the three and nine months ended September 30, 2023 related to the investment in these equity securities.

The change in fair value of equity securities is reported on the line (Gain) loss on equity securities in the Other expense (income) section of the Unaudited Condensed Consolidated Statements of Operations.

There were no transfers into or out of Levels 1, 2 or 3 during the nine months ended September 30, 2024 and 2023.

NOTE 6— Unconsolidated Subsidiaries

5 unchanged sentences

See Note 1 for a discussion of these entities.

The Investment in the unconsolidated subsidiaries and related tax positions totaled $ 15.4 million and $ 12.4 million at June 30, 2024 and December 31, 2023, respectively.

The Company's maximum risk of loss relating to these entities is limited to its invested capital, which was $ 5.1 million and $ 5.0 million at June 30, 2024 and December 31, 2023, respectively.

Earnings of unconsolidated operations were $ 13.6 million and $ 26.9 million during the three and six months ended June 30, 2024, respectively, and $ 11.1 million and $ 24.9 million during the three and six months ended June 30, 2023, respectively.

The Investment in the unconsolidated subsidiaries and related tax positions totaled $ 16.7 million and $ 12.4 million at September 30, 2024 and December 31, 2023, respectively.

The Company's maximum risk of loss relating to these entities is limited to its invested capital, which was $ 4.7 million and $ 5.0 million at September 30, 2024 and December 31, 2023, respectively.

Earnings of unconsolidated operations were $ 15.2 million and $ 42.1 million during the three and nine months ended September 30, 2024, respectively, and $ 12.8 million and $ 37.7 million during the three and nine months ended September 30, 2023, respectively.

NACCO Natural Resources Corporation ("NACCO Natural Resources"), a wholly-owned subsidiary of NACCO, is a party to certain guarantees related to Coyote Creek.

8 unchanged sentences

Management believes that it has meritorious defenses and will vigorously defend the Company in these actions.

Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated.

Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable

and the amount can be reasonably estimated.

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.

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.

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.

8 unchanged sentences

These items primarily include administrative costs related to public company reporting requirements at the parent company and the financial results of Mitigation Resources and Bellaire.

Mitigation Resources generates and sells stream and wetland mitigation credits (known as mitigation banking) and provides services to those engaged in permittee-responsible stream and wetland mitigation.

Mitigation Resources provides stream and wetland mitigation solutions as well as comprehensive reclamation and restoration construction services.

Bellaire manages the Company’s long-term liabilities related to former Eastern U.S.

2 unchanged sentences

The following table presents Revenues, Cost of sales, Earnings of unconsolidated operations, Operating expenses, Operating profit (loss), Expenditures for property, plant and equipment and acquisition of mineral interests and Depreciation, depletion and amortization expense:

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30 SEPTEMBER 30

2024 2023 2024 2023

16 unchanged sentences

Minerals Management 213 — 286 —

Unallocated Items ( 1 ) — ( 1 ) —

Total $ 15,155 $ 12,754 $ 42,054 $ 37,662

13 unchanged sentences

*Operating expenses (income) consist of Selling, general and administrative expenses, Amortization of intangible assets and (Gain) loss on sale of assets.

THREE MONTHS ENDED SIX MONTHS ENDED

JUNE 30 JUNE 30

THREE MONTHS ENDED NINE MONTHS ENDED

SEPTEMBER 30 SEPTEMBER 30

2024 2023 2024 2023

18 unchanged sentences

Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc.

® (“NACCO”) and its wholly owned subsidiary, NACCO Natural Resources ® (collectively, the “Company”).

® (“NACCO”) and its wholly owned subsidiary, NACCO Natural Resources Corporation ® (“NACCO Natural Resources”).

NACCO Natural Resources brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through its robust business portfolio.

15 unchanged sentences

Each mine is fully integrated with its customer's operations.

During the three and six months ended June 30, 2024, the Coal Mining segment's operating coal mines were:

During the three and nine months ended September 30, 2024, 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”) and Mississippi Lignite Mining Company (“MLMC”).

14 unchanged sentences

Reduction in dispatch of the Red Hills Power Plant will result in reduced earnings at MLMC.

On December 18, 2023, MLMC received notice from its customer related to an issue that began on December 15, 2023 and impacted one of two boilers at the Red Hills Power Plant.

This issue resulted in a reduction in customer demand which had a

significant impact on the Company's results of operations during the first six months of 2024.

Based on current expectations, repairs to the boiler will be resolved and the plant will be fully operational by fourth quarter 2024.

On December 18, 2023, MLMC received notice from its customer related to a mechanical issue that began on December 15, 2023 and impacted one of two boilers at the Red Hills Power Plant.

While this issue has been resolved, it resulted in a reduction

in customer demand which had a significant impact on the Company's results of operations during the first nine months of 2024.

The Company recognized income of $13.6 million in the third quarter of 2024 related to business interruption insurance recoveries to partially offset losses related to the boiler outage.

The Sabine Mining Company (“Sabine”) operates the Sabine Mine in Texas.

2 unchanged sentences

SWEPCO is an American Electric Power (“AEP”) company.

As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries and final reclamation began on April 1, 2023.

As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries and commenced final reclamation on April 1, 2023.

Funding for mine reclamation is the responsibility of SWEPCO, and Sabine receives compensation for providing mine reclamation services.

26 unchanged sentences

materials handling and processing, product sales and distribution.

As of June 30, 2024, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.

As of September 30, 2024, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.

40 unchanged sentences

Several other entities, including electric generators and industry groups, have joined the lawsuits.

Stay motions are pending in both lawsuits.

Review of the newly established emission guidelines for carbon dioxide emissions from existing coal-fired, steam generating electric generating units ("EGUs") indicate that the compliance deadline for coal-fired plants planning to install carbon capture and sequestration/storage technology has been extended to January 1, 2032 in order to operate beyond 2039.

In July 2024 and October 2024, stay motions for the GHG and MATS rules were denied by the U.S.

Court of Appeals for the District of Columbia Circuit (the “D.C.

Circuit Court”), respectively.

Following the D.C.

Circuit Court denial, emergency stay motions were filed for the GHG and MATS rules with the Supreme Court of the United States ("SCOTUS”).

In October 2024, the SCOTUS denied the stay applications for the GHG and MATS rules.

The GHG and MATS cases will continue through the normal procedures in the D.C.

Circuit Court without stays in place.

The Company cannot predict the full impact of the MATS and GHG rules on the operations of the coal-fired generation facilities operated by its customers.

Review of the newly established carbon dioxide emission guidelines for existing coal-fired, steam generating electric generating units ("EGUs") indicate that the compliance deadline for coal-fired plants planning to install carbon capture and sequestration/storage technology has been extended to January 1, 2032 in order to operate beyond 2039.

If a coal-fired plant intends to close prior to 2032, no controls will be required and if a plant plans to close between 2032 and 2039, they must begin co-firing with natural gas by January 1, 2030.

3 unchanged sentences

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

These new rules may raise the cost of fossil fuel generated energy, making coal-fired power plants less competitive, and/or result in early closure which could have an adverse impact on demand for coal and ultimately result in the early closure of the mines servicing these plants, including closure of the Company's coal mines.

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

These new rules may raise the cost of fossil fuel generated energy, making coal-fired power plants less competitive, and/or result in early closure of the coal-fired EGU's operated by the Company's customers which could have an adverse impact on demand for coal and ultimately result in the early closure of the mines servicing these plants, including closure of the Company's coal mines.

The Company cannot predict the full impact of the MATS and GHG rules on the operations of the coal-fired EGUs operated by its customers and any early closure of the Company's mines could have a material adverse effect on the Company’s business, financial condition and results of operations.

The EPA promulgated a regional haze program designed to protect and to improve visibility at and around Class I Areas, which are generally National Parks, National Wilderness Areas and International Parks.

4 unchanged sentences

In July 2024, the EPA issued a proposed partial denial of the state implementation plan.

The Company plans to submit comments to the EPA on the proposed partial denial.

The Company submitted comments to the EPA on the proposed partial denial during the third quarter of 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

2 unchanged sentences

CONSOLIDATED FINANCIAL SUMMARY

The results of operations for NACCO were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

The results of operations for NACCO were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

11 unchanged sentences

Eliminations (41) (19) (21) (52)

Total operating profit

7,366 1,750 12,123 3,564

Total operating profit (loss) 19,699 (6,267) 31,822 (2,703)

Interest expense 1,386 632 3,808 1,749

1 unchanged sentence

Closed mine obligations 463 394 1,389 1,236

Loss (gain) on equity securities 264 (421) (777) (1,049)

(Gain) loss on equity securities (442) 551 (1,219) (498)

Other, net 244 (315) 160 (2,417)

Other expense (income), net 567 (417) 889 (4,478)

Income before income tax provision (benefit)

6,228 3,257 11,801 7,625

Income (loss) before income tax provision (benefit) 19,132 (5,850) 30,933 1,775

Income tax provision (benefit)

3,497 (2,018) 4,756 (2,605)

$ 5,972 $ 2,520 $ 10,542 $ 8,212

Net income (loss) $ 15,635 $ (3,832) $ 26,177 $ 4,380

Effective income tax rate 18.3 % 34.5 % 15.4 % (146.8) %

The components of the change in revenues and operating profit are discussed below in "Segment Results."

Second Quarter of 2024 Compared with Second Quarter of 2023, and First Six Months of 2024 Compared with First Six Months of 2023

Third Quarter of 2024 Compared with Third Quarter of 2023, and First Nine Months of 2024 Compared with First Nine Months of 2023

Other expense (income), net

Interest expense increased in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods due to higher average borrowings as well as an increase in interest rates.

Interest income decreased in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods due to lower earnings on reduced cash balances.

Loss (gain) on equity securities represents changes in the market price of invested assets reported at fair value.

The change in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods was due to fluctuations in the market prices of the exchange-traded equity securities.

Interest expense increased in the third quarter of 2024 and the first nine months of 2024 compared with the respective 2023 periods due to higher average borrowings as well as an increase in interest rates.

Interest income decreased in the third quarter of 2024 and the first nine months of 2024 compared with the respective 2023 periods due to lower earnings on reduced cash balances.

(Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value.

The change in the third quarter of 2024 and the first nine months of 2024 compared with the respective 2023 periods was due to fluctuations in the market prices of the exchange-traded equity securities.

See Note 5 to the Unaudited Condensed Consolidated Financial Statements for further discussion of equity securities.

5 unchanged sentences

Accordingly, in periods where income before tax is relatively small, the proportional effect of the benefit from percentage depletion on the effective tax rate may be significant.

In addition, as a result of a forecasted full-year 2023 loss before income tax as of June 30, 2023, the effect of the benefit from percentage depletion resulted in a negative forecasted effective tax rate.

Each quarter, the Company updates its estimate of the annual effective tax rate and the cumulative impact of the change in the estimated annual tax rate is recorded, which can additionally make quarterly comparisons not meaningful.

In addition, as a result of a forecasted full-year 2023 loss before income tax as of September 30, 2023, the effect of the benefit from percentage depletion resulted in a negative forecasted effective tax rate.

Each quarter, the Company updates its estimate of the annual effective tax rate, and the cumulative impact of the change in the estimated annual tax rate is recorded, which can make quarterly comparisons not meaningful.

LIQUIDITY AND CAPITAL RESOURCES OF NACCO

The following tables detail NACCO's changes in cash flow for the six months ended June 30:

The following tables detail NACCO's changes in cash flow for the nine months ended September 30:

2024 2023 Change

7 unchanged sentences

Cash flow before financing activities $ (33,934) $ 25,465 $ (59,399)

The $29.0 million change in net cash (used for) provided by operating activities was primarily due to a net unfavorable change in working capital, which was mainly the result of:

• An increase in Other current assets during the first six months of 2024 compared with a modest increase in the first six months of 2023.

The $65.9 million change in net cash (used for) provided by operating activities was primarily due to a net unfavorable change in working capital as well as a decrease in net income adjusted for non-cash items, primarily the $13.6 million receivable related to business interruption insurance recoveries at MLMC.

The unfavorable change in working capital was mainly the result of:

• An increase in Other current assets during the first nine months of 2024 compared with a modest increase in the first nine months of 2023.

The change in Other current assets was mainly due to an increase in vendor deposits.

• An increase in Inventory during the first six months of 2024 compared with a decrease in the first six months of 2023, primarily due to an increase in mining supplies.

• A reduction in the Federal income tax receivable during the first six months of 2023 that did not reoccur in the first six months of 2024.

These unfavorable changes were partially offset by a decrease in Trade accounts receivable and Accounts receivable from affiliates during the first six months of 2024 compared with increases in the first six months of 2023.

The 2023 increase in Trade accounts receivable was due to a delay in payments by a customer.

The change in Accounts receivable from affiliates is primarily attributable to the amount and timing of payments from unconsolidated subsidiaries.

• An increase in coal and mining supplies inventory during the first nine months of 2024 compared with a decrease in the first nine months of 2023.

• A modest increase in Trade accounts receivable during the first nine months of 2024 compared with a decrease in the first nine months of 2023.

The 2023 decrease in Trade accounts receivable was due to a delay in payments by a customer from December 31, 2022.

• A modest decrease in Accounts payable during the first nine months of 2024 compared with an increase in the first nine months of 2023.

The increase in 2023 accounts payable was primarily due to equipment acquired for the Thacker Pass lithium project.

In addition, the Company entered into an Accounts Receivable Financing Program with a third-party banking institution on March 14, 2024 for the sale of certain accounts receivables.

Accounts receivable sold under the Accounts Receivable Financing Program for the three and six months ended June 30, 2024 were $11.0 million and $17.1 million, respectively.

Accounts receivable sold under the Accounts Receivable Financing Program for the three and nine months ended September 30, 2024 were $16.6 million and $33.7 million, respectively.

The net proceeds received were included in Net cash (used for) provided by operating activities in the Unaudited Condensed Consolidated Statements of Cash Flows.

1 unchanged sentence

Financing activities:

Net additions (reductions) to long-term debt and revolving credit agreement $ 17,090 $ (1,130) $ 18,220

Net additions (reductions) to long-term debt and revolving credit agreements

$ 26,417 $ (2,396) $ 28,813

Cash dividends paid (4,964) (4,826) (138)

2 unchanged sentences

$ 11,877 $ (8,046) $ 19,923

The change in net cash provided by (used for) financing activities was primarily due to additions in debt borrowings during the first six months of 2024 compared with reductions during the first six months of 2023, partially offset by share repurchases during the first six months of 2024.

The change in net cash provided by (used for) financing activities was primarily due to additions in debt borrowings during the first nine months of 2024 compared with reductions during the first nine months of 2023, partially offset by an increase in share repurchases during the first nine months of 2024.

Cash held by 1031 exchange facilitator

The Company has cash proceeds from the sale of assets held by a qualified intermediary to facilitate tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code.

In May 2024, the Company sold land for $7.0 million and recognized a $4.5 million gain in the Minerals Management segment.

The Company structured this transaction in a manner that qualified as like-kind exchange pursuant to Section 1031 of the Internal Revenue Code.

The net proceeds are being held in escrow until replacement property is purchased.

A $0.3 million property related to this like-kind exchange was acquired in June 2024.

The Company had $6.7 million and $0.0 million of restricted cash at June 30, 2024 and December 31, 2023, respectively, which is reported on the line Cash held by 1031 exchange facilitator in the Unaudited Condensed Consolidated Balance Sheets.

In the first nine months of 2024, the Company sold land for $7.0 million and recognized a $4.5 million gain in the Minerals Management segment.

The Company structured this transaction in a manner that qualified as a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code.

The net proceeds are being held in escrow by a third-party intermediary until the Company purchases replacement property.

A total of $1.7 million in property related to this like-kind exchange was acquired during the first nine months of 2024.

The Company had $5.3 million and $0.0 million of restricted cash at September 30, 2024 and December 31, 2023, respectively, which is reported on the line Cash held by 1031 exchange facilitator in the Unaudited Condensed Consolidated Balance Sheets.

The Company is evaluating other acquisitions which, if executed, could utilize some or all of the remaining restricted cash.

Financing Activities

NACCO Natural Resources Corporation (“NACCO Natural Resources”), maintains a secured revolving line of credit of up to $150.0 million (the “Facility”) that expires in November 2025.

Borrowings outstanding under the Facility were $27.5 million at June 30, 2024.

At June 30, 2024, the excess availability under the Facility was $89.4 million, which reflects a reduction for outstanding letters of credit of $33.1 million.

In September 2024, NACCO Natural Resources amended its secured revolving line of credit to increase the revolving credit commitments to $200.0 million (the “Facility”) and extend the maturity to September 2028.

Borrowings outstanding under the Facility were $37.2 million at September 30, 2024.

At September 30, 2024, the excess availability under the Facility was $130.9 million, which reflects a reduction for outstanding letters of credit of $31.9 million.

NACCO has not guaranteed any borrowings of NACCO Natural Resources.

3 unchanged sentences

Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved.

The applicable margins, effective June 30, 2024, for base rate and SOFR loans were 1.23% and 2.23%, respectively.

The applicable margins, effective September 30, 2024, for base rate and Term SOFR loans were 1.75% and 2.75%, respectively.

The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios.

The commitment fee was 0.34% on the unused commitment at June 30, 2024.

During the three and six

months ended June 30, 2024, the average borrowing under the Facility was $23.0 million and $18.2 million, respectively,

and the weighted-average annual interest rate was 9.73% during both periods.

The commitment fee was 0.45% on the unused commitment at September 30, 2024.

During the three and nine months ended September 30, 2024, the average borrowing under the Facility was $28.2 million and $21.5 million, respectively, and the weighted-average annual interest rate was 8.63% and 9.27%, respectively.

The Facility contains restrictive covenants, which require, among other things, NACCO Natural Resources 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.

The Facility provides the ability to make loans, dividends and advances to NACCO, with some restrictions based on maintaining a maximum debt to 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 Facility, of $15.0 million.

At June 30, 2024, NACCO Natural Resources was in compliance with all financial covenants in the Facility.

At September 30, 2024, NACCO Natural Resources was in compliance with all financial covenants in the Facility.

The obligations under the Facility are guaranteed by certain of NACCO Natural Resources' direct and indirect, existing and future domestic subsidiaries, and is secured by certain assets of NACCO Natural Resources and the guarantors, subject to customary exceptions and limitations.

The Company believes funds available from cash on hand, the Facility and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments arising during the next twelve months and until the expiration of the Facility in November 2025.

Expenditures for property, plant and equipment and mineral interests

Expenditures for property, plant and equipment and mineral interests were $22.4 million during the first six months of 2024, primarily for the acquisition of land at Mitigation Resources and equipment at NAMining.

Expenditures for property, plant and equipment and mineral interests were $30.7 million during the first nine months of 2024, primarily for equipment at the NAMining and Coal Mining segments as well as land at Mitigation Resources.

Planned expenditures for the remainder of 2024 are expected to be approximately $4 million in the Coal Mining segment, $12 million in the NAMining segment, $20 million in the Minerals Management segment and $2 million in Unallocated Items.

Planned expenditures in 2025 are expected to be approximately $48 million.

Expenditures are expected to be funded from internally generated funds and/or bank borrowings.

10 unchanged sentences

Debt to total capitalization 15% 9% 6%

The increase in other net tangible assets at June 30, 2024 compared with December 31, 2023 was mainly the result of increases in Property, plant and equipment, Other current assets and Prepaid insurance during the first six months of 2024.

The increase in other current assets is primarily due to $6.7 million of cash held by a qualified intermediary to facilitate tax-deferred exchange transactions under Section 1031 of the Internal Revenue Code and $5.7 million in vendor deposits.

The increase in other net tangible assets at September 30, 2024 compared with December 31, 2023 was mainly the result of increases in Property, plant and equipment, Inventory and Other current assets during the first nine months of 2024.

The increase in Inventory was mainly due to higher coal and mining supplies inventory.

The increase in Other current assets is primarily due to $7.8 million in vendor deposits.

The $13.6 million receivable related to business interruption insurance recoveries at MLMC also contributed to the change in other net tangible assets.

Contractual Obligations, Contingent Liabilities and Commitments

4 unchanged sentences

FINANCIAL REVIEW

Tons of coal delivered by the Coal Mining segment were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

Tons of coal delivered by the Coal Mining segment were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

2 unchanged sentences

Total tons delivered 5,809 5,733 17,097 18,144

The results of operations for the Coal Mining segment were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

The results of operations for the Coal Mining segment were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

1 unchanged sentence

Cost of sales 18,054 26,819 55,135 85,966

Gross loss (1,142) (6,926) (6,540) (12,151)

(348) (8,154) (6,888) (20,305)

Earnings of unconsolidated operations (a)

13,821 11,259 37,834 33,687

Business interruption insurance recoveries 13,612 — 13,612 —

Selling, general and administrative expenses 7,014 7,160 21,984 20,313

Amortization of intangible assets 131 642 373 2,296

(Gain) loss on sale of assets (79) 68 (89) (168)

Loss (gain) on sale of assets 2 — (87) (168)

Operating profit (loss) $ 19,938 $ (4,697) $ 22,288 $ (9,059)

(a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information.

Second Quarter of 2024 Compared with Second Quarter of 2023

Revenues decreased 43.1% in the second quarter of 2024 compared with the second quarter of 2023 primarily due to a reduction in customer requirements at MLMC as a result of an ongoing issue that impacted one of two boilers at the Red Hills Power Plant.

The following table identifies the components of change in Operating profit (loss) for the second quarter of 2024 compared with the second quarter of 2023:

Third Quarter of 2024 Compared with Third Quarter of 2023

Revenues decreased 5.1% in the third quarter of 2024 compared with the third quarter of 2023 primarily due to a reduction in customer requirements at MLMC as a result of a mechanical issue that impacted one of two boilers at the Red Hills Power Plant.

The following table identifies the components of change in Operating profit (loss) for the third quarter of 2024 compared with the third quarter of 2023:

Operating Profit (Loss)

1 unchanged sentence

Increase (decrease) from:

Gross loss 5,784

Business interruption insurance recoveries 13,612

Earnings of unconsolidated operations 2,562

Amortization of intangibles 511

Gain on sale of assets 147

Selling, general and administrative expenses 146

Operating profit (loss) changed favorably by $7.4 million in the second quarter of 2024 compared with the second quarter of 2023 primarily due to a decrease in gross loss and an increase in earnings of unconsolidated operations.

These favorable changes were partially offset by an increase in selling, general and administrative expenses primarily due to higher employee-related costs.

The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a decrease in gross loss during the second quarter of 2024 compared with the second quarter of 2023.

The reduction in cost of goods sold was primarily attributable to increased operating efficiencies due to the completion of the move to a new mine area in 2023 and improved mining conditions in the second quarter of 2024 compared to the prior period.

Changes in the level of coal inventory and costs capitalized into inventory also contributed to the improvement as the decrease in demand resulted in an increase in the coal stockpile and an increase in costs capitalized into inventory during the second quarter of 2024.

Cost of sales in the second quarter of 2023 was higher as the coal stockpile was reduced during the move to a new mine area and prior period production costs were recognized into income.

In addition, gross loss in the second quarter of 2024 and 2023 included $0.7 million and $1.8 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.

The increase in earnings of unconsolidated operations was primarily due to an increase in customer demand at Falkirk as well as a higher per ton management fee beginning in June 2024 when temporary price concessions ended.

Improved results at Sabine also contributed to the increase in earnings of unconsolidated operations.

First Six Months of 2024 Compared with First Six Months of 2023

Revenues decreased 35.0% in the first six months of 2024 compared with the first six months of 2023 primarily due to a reduction in customer requirements at MLMC as a result of an ongoing issue that impacted one of two boilers at the Red Hills Power Plant.

The following table identifies the components of change in Operating profit (loss) for the first six months of 2024 compared with the first six months of 2023:

Loss on sale of assets (2)

2024 $ 19,938

Operating profit (loss) improved by $24.6 million in the third quarter of 2024 compared with the third quarter of 2023 primarily due to MLMC's business interruption insurance recoveries for the issue at the Red Hills Power Plant, a decrease in the gross loss and an increase in earnings of unconsolidated operations.

The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a favorable change to the gross loss during the third quarter of 2024 compared with the third quarter of 2023.

The reduction in cost of goods sold was primarily attributable to increased operating efficiencies due to the completion of the move to a new mine area in 2023 and improved mining conditions in the third quarter of 2024 compared to the prior period.

Changes in the level of coal inventory and costs capitalized into inventory also contributed to the improvement as the decrease in demand resulted in an increase in the coal stockpile and more costs capitalized into inventory during the third quarter of 2024.

In addition, the gross loss in the third quarter of 2024 and 2023 included $1.0 million and $2.4 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.

The increase in earnings of unconsolidated operations was primarily due to a higher per ton management fee beginning in June 2024 when temporary price concessions ended at Falkirk.

Improved results at Coteau also contributed to the increase in earnings of unconsolidated operations.

First Nine Months of 2024 Compared with First Nine Months of 2023

Revenues decreased 26.5% in the first nine months of 2024 compared with the first nine months of 2023 primarily due to a reduction in customer requirements at MLMC as a result of a mechanical issue that impacted one of two boilers at the Red Hills Power Plant.

The following table identifies the components of change in Operating profit (loss) for the first nine months of 2024 compared with the first nine months of 2023:

Operating Profit (Loss)

1 unchanged sentence

Increase (decrease) from:

Business interruption insurance recoveries 13,612

Gross loss 13,417

3 unchanged sentences

Gain on sale of assets (81)

Operating profit (loss) changed favorably by $6.7 million in the first six months of 2024 compared with the first six months of 2023 primarily due to a decrease in gross loss and an increase in earnings of unconsolidated operations.

2024 $ 22,288

Operating profit (loss) improved by $31.3 million in the first nine months of 2024 compared with the first nine months of 2023 primarily due to MLMC's business interruption insurance recoveries for the issue at the Red Hills Power Plant, a decrease in the gross loss, an increase in earnings of unconsolidated operations and a decrease in amortization of intangibles.

These favorable changes were partially offset by an increase in selling, general and administrative expenses primarily due to higher employee-related costs.

The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a decrease in gross loss during the first six months of 2024 compared with the first six months of 2023.

The reduction in cost of goods sold was primarily attributable to increased operating efficiencies due to the completion of the move to a new mine area in 2023 and improved mining conditions in the first six months of 2024 compared to the prior period.

Cost of sales in the first six months of 2023 was higher as the coal stockpile was reduced during the move to a new mine area and prior period production costs were recognized into income.

In addition, gross loss in the first six months of 2024 and 2023 included $3.1 million and $4.2 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.

Improved results at Sabine also contributed to the increase in earnings of unconsolidated operations.

The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a decrease in the gross loss during the first nine months of 2024 compared with the first nine months of 2023.

The reduction in cost of goods sold was primarily attributable to increased operating efficiencies due to the completion of the move to a new mine area in 2023 and improved mining conditions in the first nine months of 2024 compared to the prior period.

Changes in the level of coal inventory and costs capitalized into inventory also contributed to the improvement as the decrease in demand resulted in an increase in the coal stockpile and more costs capitalized into inventory during the first nine months of 2024.

In addition, the gross loss in the first nine months of 2024 and 2023 included $4.1 million and $6.6 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.

The increase in earnings of unconsolidated operations was primarily due to a higher per ton management fee beginning in June 2024 when temporary price concessions ended and an increase in customer demand at Falkirk.

Improved results at Coteau also contributed to the increase in earnings of unconsolidated operations.

NORTH AMERICAN MINING ("NAMining") SEGMENT

FINANCIAL REVIEW

Tons delivered by the NAMining segment were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

Tons delivered by the NAMining segment were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

Total tons delivered 12,005 15,410 43,178 44,178

The results of operations for the NAMining segment were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

The results of operations for the NAMining segment were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

9 unchanged sentences

Gain on sale of assets (300) — (302) —

Operating profit $ 3,085 $ 2,214 $ 5,440 $ 3,044

Operating (loss) profit $ (474) $ 866 $ 4,966 $ 3,910

(a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information.

Second Quarter of 2024 Compared with Second Quarter of 2023

Total revenues increased 28.6% in the second quarter of 2024 compared with the second quarter of 2023, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit.

An increase in demand at the consolidated quarries also contributed to the improvement in total revenues.

The following table identifies the components of change in Operating profit for the second quarter of 2024 compared with the second quarter of 2023:

Operating Profit

Third Quarter of 2024 Compared with Third Quarter of 2023

Total revenues increased 48.8% in the third quarter of 2024 compared with the third quarter of 2023, primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on gross profit.

Revenues excluding reimbursable costs increased 24.1% mainly due to favorable pricing and delivery mix at the consolidated limestone quarries.

This increase was partially offset by a reduction in tons delivered primarily due to an increase in planned customer outages and significant rain events in Florida during the third quarter of 2024.

The following table identifies the components of change in Operating (loss) profit for the third quarter of 2024 compared with the third quarter of 2023:

Operating (Loss) Profit

Increase (decrease) from:

Selling, general and administrative expenses (778)

Gross profit (489)

1 unchanged sentence

Gain on sale of assets 300

Selling, general and administrative expenses (290)

Operating profit increased $0.9 million in the second quarter of 2024 compared with the second quarter of 2023 primarily due to an increase in gross profit.

This improvement was mainly the result of favorable pricing and improved margins at the limestone quarries resulting from mutually beneficial contract amendments.

A new 15-year contract to mine phosphate at a quarry in central Florida also contributed to the increase in gross profit.

These improvements were partially offset by higher employee-related costs.

First Six Months of 2024 Compared with First Six Months of 2023

Total revenues increased 23.7% in the first six months of 2024 compared with the first six months of 2023 primarily due to an increase in demand at the consolidated quarries.

An increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit, also contributed to the improvement in total revenues.

The following table identifies the components of change in Operating profit for the first six months of 2024 compared with the first six months of 2023:

Operating (loss) profit decreased $1.3 million in the third quarter of 2024 compared with the third quarter of 2023 primarily due to an increase in selling, general and administrative expenses and a decrease in gross profit.

The increase in selling, general and administrative expenses was the result of a $0.9 million charge to establish an allowance against a receivable from one of NAMining's customers.

The decrease in gross profit was primarily due to higher supply expenses and labor-related costs.

First Nine Months of 2024 Compared with First Nine Months of 2023

Total revenues increased 32.2% in the first nine months of 2024 compared with the first nine months of 2023 primarily due to an increase in reimbursable costs, which have an offsetting amount in cost of sales and have no impact on gross profit.

Revenues excluding reimbursable costs increased 30.5% mainly due to favorable pricing at the consolidated limestone quarries and an increase in the scope of work at Sawtooth.

The following table identifies the components of change in Operating profit for the first nine months of 2024 compared with the first nine months of 2023:

Operating Profit

1 unchanged sentence

Gross profit 1,765

Earnings of unconsolidated operations 333

Gain on sale of assets 302

Selling, general and administrative expenses (971)

Operating profit increased $2.4 million in the first six months of 2024 compared with the first six months of 2023 primarily due to an increase in gross profit.

This improvement was mainly the result of favorable pricing and improved margins at the limestone quarries resulting from mutually beneficial contract amendments.

A new phosphate contract also contributed to the increase in gross profit.

These improvements were partially offset by higher employee-related costs.

Earnings of unconsolidated operations (40)

Operating profit increased $1.1 million in the first nine months of 2024 compared with the first nine months of 2023 primarily due to an increase in gross profit.

This improvement was mainly the result of an increase in the scope of work at Sawtooth and favorable pricing and improved margins at the consolidated limestone quarries.

These improvements were partially offset by an increase in selling, general and administrative expenses as a result of a $0.9 million charge to establish an allowance against a receivable from one of NAMining's customers.

MINERALS MANAGEMENT SEGMENT

1 unchanged sentence

The following table sets forth the Company’s estimate of the number of gross and net productive wells:

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Gross Net Gross Net

5 unchanged sentences

Oil and natural gas prices have been historically volatile and may continue to be volatile in the future.

The table below demonstrates volatility with the average prices as reported by the United States Energy Information Administration for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

The table below demonstrates volatility with the average prices as reported by the United States Energy Information Administration for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

4 unchanged sentences

The Company does not have information that would be available to a company with working interests in oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests.

The following table sets forth the estimated oil and natural gas production data related to the Company’s mineral and royalty interests as well as certain price and cost information for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

The following table sets forth the estimated oil and natural gas production data related to the Company’s mineral and royalty interests for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

Production data:

7 unchanged sentences

421,224 288,661 1,272,257 967,224

Average realized prices:

Oil (bbl) (1)

$ 80.83 $ 56.76 $ 77.16 $ 62.67

NGL (bbl) (1)

$ 23.02 $ 20.57 $ 23.99 $ 22.22

Residue gas (Mcf) (2)

$ 1.84 $ 1.89 $ 1.98 $ 2.53

Average unit cost

$ 1.85 $ 3.91 $ 2.59 $ 3.86

One stock tank barrel, or 42 U.S.

3 unchanged sentences

(4) As an owner of mineral and royalty interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited.

As a result, the Company estimated May and June 2024 data with volumes projected from prior well production and pricing based on public pricing data adjusted for expense information.

The results of operations for the Minerals Management segment were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

As a result, the Company estimated August and September 2024 data with volumes projected from prior well production.

The results of operations for the Minerals Management segment were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

Revenues $ 5,593 $ 9,171 $ 15,994 $ 17,456

Oil and natural gas revenues $ 7,116 $ 3,383 $ 19,347 $ 15,892

Other revenues

1,733 2,364 5,496 7,311

Total Revenues $ 8,849 $ 5,747 $ 24,843 $ 23,203

Cost of sales 1,286 1,064 4,151 3,026

2 unchanged sentences

Selling, general and administrative expenses 1,588 986 3,781 3,147

Gain on sale of assets (4,512) — (4,512) —

(Gain) loss on sale of assets — 87 (4,512) 87

Operating profit $ 6,188 $ 3,610 $ 21,709 $ 16,943

Revenues and gross profit decreased in the second quarter of 2024 and the first six months of 2024 compared with the respective 2023 periods, primarily due to substantially lower natural gas and oil prices and changes in pricing estimates.

The second quarter of 2023 included $1.4 million of settlement income related to the Company’s ownership interest in certain mineral rights.

Operating profit increased in the second quarter of 2024 and the first six months of 2024, as the Company recognized a $4.5 million gain on the sale of land related to legacy operations.

Revenues and operating profit increased in the third quarter of 2024 and the first nine months of 2024 compared with the respective 2023 periods, primarily due to an increase in oil and natural gas revenue as a result of higher production volumes.

Increased oil production volumes are mainly related to an acquisition that closed during the fourth quarter of 2023.

These improvements were partially offset by a reduction in other revenues, primarily coal royalty income.

In addition, revenues during the first nine months of 2023 included $1.4 million of settlement income.

Operating profit in the first nine months of 2024 included a $4.5 million gain on the sale of land related to legacy operations.

UNALLOCATED ITEMS AND ELIMINATIONS

FINANCIAL REVIEW

Unallocated Items and Eliminations were as follows for the three and six months ended June 30:

THREE MONTHS SIX MONTHS

Unallocated Items and Eliminations were as follows for the three and nine months ended September 30:

THREE MONTHS NINE MONTHS

2024 2023 2024 2023

Operating loss $ (5,953) $ (6,046) $ (17,141) $ (14,497)

The operating loss in the second quarter and first six months of 2024 increased compared with the respective 2023 periods due to higher operating expenses at Mitigation Resources and higher employee-related costs.

The operating loss in the third quarter of 2024 was comparable to the third quarter of 2023.

The operating loss in the first nine months of 2024 increased compared with the respective 2023 period due to higher operating expenses at Mitigation Resources.

NACCO Industries, Inc.

Coal Mining Outlook

Coal deliveries in the second half of 2024 are expected to increase over 2023 levels as higher deliveries at Coteau and Falkirk are partly offset by fewer deliveries at MLMC.

The decrease in MLMC deliveries is due to the previously mentioned boiler issue.

Coal Mining segment full-year 2024 deliveries are expected to be comparable to 2023.

Excluding the $60.8 million impairment charge taken in fourth-quarter 2023, Coal Mining operating profit and Segment Adjusted EBITDA are expected to increase significantly in both the 2024 second half and full year compared with the respective 2023 periods.

These anticipated increases are primarily due to an expected substantial improvement in results at MLMC and higher earnings at the unconsolidated coal mining operations.

The anticipated second-half 2024 increase in earnings at the unconsolidated coal mining operations compared with 2023 is driven primarily by an expectation for increased deliveries, as well as the cessation of temporary price concessions at Falkirk.

Second-half 2024 results are also expected to increase significantly over the first half primarily due to higher earnings at Falkirk and improved results at MLMC based on current expectations that the boiler issue will be resolved and the plant will be fully operational by the fourth quarter of 2024.

Capital expenditures in 2024 are expected to be approximately $13 million, with $9 million expended in the second half of 2024.

The prior-year fourth-quarter results included a $60.8 million pre-tax impairment charge.

Comparisons in this section exclude the effect of this charge.

The Company anticipates significant year-over-year increases in Coal Mining operating profit and Segment Adjusted EBITDA in the 2024 fourth quarter.

This anticipated improvement is primarily due to higher earnings at the unconsolidated coal mining operations driven primarily by an expectation for increased deliveries, as well as a higher per ton management fee at Falkirk.

An anticipated improvement in results at MLMC due to an increase in the index-based sales price partly offset by a reduction in customer demand is also expected to contribute to the profit improvement.

Full-year 2024 results are also expected to increase compared with 2023.

Capital expenditures are expected to be approximately $4 million in the fourth quarter of 2024 and $12 million for the 2024 full year.

NAMining Outlook

NAMining expects operating profit and Segment Adjusted EBITDA to increase in both the 2024 second half and full year over

the respective 2023 periods but decrease from the 2024 first half.

The year-over-year improvements are primarily due to the late 2023 amendment of limestone contracts to more mutually advantageous contract terms, a scope of work expansion with another customer and the second-quarter 2024 commencement of a new 15-year contract to mine phosphate at a quarry in central Florida.

Earnings in the second half are expected to moderate from the first half of 2024 due to anticipated lower customer requirements.

Sawtooth is the exclusive provider of comprehensive mining services at Thacker Pass, including mine design, construction, operation, maintenance and reclamation.

Thacker Pass is owned by Lithium Americas Corp.

Thacker Pass will supply all of Lithium Americas' lithium-bearing ore requirements.

In March 2023, Lithium Americas commenced construction at Thacker Pass.

Sawtooth will be reimbursed for costs of mining, capital expenditures and mine closure and will recognize a contractually agreed upon production fee.

The Company expects to continue to recognize moderate income prior to the commencement of Phase 1 lithium production, estimated to begin in 2027/2028.

Capital expenditures in 2024 are expected to be approximately $23 million, with $12 million expended in the second half of the year, primarily for the acquisition of draglines and dragline parts, as well as other equipment to support existing contracts.

NAMining expects the 2024 fourth quarter and full-year operating profit and Segment Adjusted EBITDA to increase year-over-year.

The fourth quarter results are also anticipated to improve over the 2024 third quarter.

These improvements are primarily due to the late 2023 amendment of limestone contracts to more mutually advantageous contract terms and a scope of work expansion with another customer.

Sawtooth is the exclusive provider of comprehensive mining services at Thacker Pass, which is owned by Lithium Americas Corp.

Sawtooth will supply all of the lithium-bearing ore requirements for Thacker Pass, which is currently under construction.

Sawtooth will be reimbursed for costs of mining, capital expenditures and mine closure and will recognize a contractually agreed upon production fee once the mine is operating.

In addition to providing comprehensive mining services, Sawtooth Mining is currently assisting with certain construction services and will transport clay tailings once lithium production commences.

Phase 1 lithium production is estimated to begin in 2027.

Prior to that time, the Company expects to continue to recognize moderate income.

NAMining expects full-year 2024 capital expenditures to be approximately $26 million, with approximately $12 million expended in the fourth quarter.

Minerals Management Outlook

Operating profit and Segment Adjusted EBITDA for the 2024 second half and full year are expected to increase compared with the respective 2023 periods, excluding the fourth-quarter 2023 impairment charge of $5.1 million.

These improvements are primarily driven by current market expectations for natural gas and oil prices, as well as development and production assumptions on currently owned reserves.

Based on current market expectations, operating profit in the second half of 2024 is expected to increase moderately compared with the first half, excluding the $4.5 million gain on sale recognized in the second quarter.

Operating profit and Segment Adjusted EBITDA for the 2024 fourth quarter and full year are expected to decrease compared with the respective 2023 periods, excluding the fourth-quarter 2023 impairment charge of $5.1 million and a $4.5 million gain on sale recognized in the 2024 second quarter.

These declines are primarily driven by current market expectations for natural gas and oil prices, as well as development and production assumptions on currently owned reserves.

The Minerals Management segment derives income primarily from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil, natural gas liquids and coal, extracted primarily by third parties.

3 unchanged sentences

Development of additional wells on existing interests in excess of current expectations, or acquisitions of additional interests, could be accretive to future results.

Minerals Management is targeting investments of up to $20 million in the second half of 2024.

Minerals Management is targeting investments of up to $20 million in the 2024 fourth quarter.

Future investments are expected to be accretive, but each investment's contribution to near-term 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.

Consolidated Outlook

Result for the second half of 2023 included a $65.9 million pre-tax impairment charge.

Comparisons in the remainder of this section exclude the effect of this charge.

Consolidated second-half operating profit is expected to increase compared with both the first half of 2024 and second half of 2023.

Fourth-quarter 2023 results included a $65.9 million pre-tax impairment charge.

Comparisons in this section exclude the effect of this charge.

Overall, fourth-quarter and full-year 2024 consolidated operating profit and Adjusted EBITDA are expected to increase significantly year-over-year.

These improvements are primarily due to anticipated increases in profitability at the Coal Mining segment from improved results at MLMC, Falkirk and Coteau.

Contributions from NAMining's growth and profit improvement initiatives are also expected to contribute to improved second-half results.

The Company also expects consolidated net income in the 2024 second half and full year to increase compared with the respective 2023 periods.

This improvement is anticipated to be partly offset by an increase in net interest expense as a result of additional borrowings and lower cash levels and higher income tax expense.

The Company is taking steps to terminate its defined benefit pension plan, which will eliminate future volatility from changes in the pension obligation.

In connection with this action, obligations under this plan will be transferred to a third-party insurance provider.

The Company expects to utilize surplus assets to fund a qualified replacement plan, reducing future cash funding requirements.

Although the plan is currently over funded, NACCO is anticipating a non-cash settlement charge in the 2024 fourth quarter, which is expected to partly offset improvements in 2024 second-half operating profit.

As a result, the Company anticipates that consolidated net income and Adjusted EBITDA will decrease in the second half of 2024 compared with the first half of the year.

While the Company anticipates that third-quarter net income will improve significantly over the second quarter, fourth-quarter net income is expected to be substantially lower than both the third quarter and prior year fourth quarter primarily as a result of the anticipated non-cash pension settlement charge.

Consolidated capital expenditures are expected to total approximately $66 million in 2024, which includes approximately $11 million for Unallocated capital expenditures, primarily at Mitigation Resources.

NAMining's growth and profit improvement initiatives are also expected to contribute to the improved earnings.

Full-year 2024 net income is expected to increase significantly over 2023.

Full-year 2024 consolidated capital expenditures are expected to total approximately $69 million, which includes approximately $11 million for Unallocated capital expenditures, primarily at Mitigation Resources.

During the 2024 fourth quarter, the Company expects to expend up to $38 million, including $20 million related to Minerals Management.

In 2024, cash flow before financing activities is expected to be a use of cash.

Long-term Growth and Diversification

Management is transforming NACCO into a broad-based natural resources company and is optimistic about the Company's long-term business outlook.

2025 Perspectives & Long-term Growth and Diversification

NACCO's businesses provide critical inputs for electricity generation, construction and development, and the production of industrial minerals and chemicals.

Increasing demand for electricity, on-shoring and current federal policies are creating favorable macroeconomic trends within these industries.

The Company believes its businesses have competitive advantages that provide value to customers and create long-term value for stockholders.

The Company is pursuing growth and diversification by strategically leveraging its core mining and natural resources management skills to build a robust portfolio of affiliated businesses.

Opportunities for growth remain strong.

Acquisitions of additional mineral interests and improvements in the outlook for Coal Mining segment customers, as well as new contracts at Mitigation Resources and NAMining should be accretive to the Company's outlook.

The Minerals Management segment continues to pursue acquisitions of mineral and royalty interests in the United States.

Catapult, 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 delivers near-term cash flow yields and long-term projected growth.

The Company believes this business will provide unlevered after-tax returns on invested capital in the mid-teens as it matures.

This business model has the potential to 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 as these costs are borne entirely by third-party exploration and development companies that lease the minerals.

NAMining continues to evaluate new business opportunities and drive profitable growth in line with refined strategic objectives.

Management is confident in the Company's trajectory and business prospects as it prepares for 2025 and longer-term growth opportunities.

While the Company realizes the coal mining industry faces political and regulatory challenges and overall demand for coal is projected to decline over the longer-term, management believes coal should be an essential part of the energy mix in the United States for the foreseeable future.

The Company anticipates continued solid customer demand at its coal mining operations in 2025 and will benefit from the absence of temporary price concessions at Falkirk.

Cost inflation is anticipated to affect MLMC's 2025 results.

NAMining expects to build on its current 2024 momentum to deliver further improved results in 2025.

Benefits from new and amended contracts, and new business expansion opportunities, are expected to generate improved 2025 results on expectations for comparable year-over-year customer demand.

New contracts and contract extensions are central to the business' organic growth strategy, and the Company expects NAMining to be a substantial contributor to operating profit over time.

The Minerals Management segment, through its Catapult business, is constructing a high-quality, diversified portfolio of oil and gas mineral and royalty interests in the United States that are expected to deliver near-term cash flow yields and long-term projected growth.

The current portfolio provides a strong foundation of well-positioned assets that are expected to continue to deliver solid financial results.

While the timing of returns could vary, the Company maintains a long-term perspective.

Given current trends in oil and natural gas prices and projected volumes, the Company anticipates a moderate production decline in 2025.

The Company believes the Minerals Management business will provide unlevered after-tax returns on invested capital in the mid-teens as it matures.

Mitigation Resources, which provides stream and wetland mitigation solutions as well as comprehensive reclamation and restoration construction services, continues to build on the substantial foundation it has established over the past several years.

This business offers an opportunity for growth and diversification in an industry where the Company has substantial knowledge and expertise and a strong reputation.

Mitigation Resources business offers an opportunity for growth and diversification in an industry where the Company has substantial knowledge and expertise and a strong reputation.

It currently has ten mitigation banks and four permittee-responsible mitigation projects located in Tennessee, Mississippi, Alabama, Texas, Florida and Pennsylvania.

2 unchanged sentences

The Company believes that Mitigation Resources can provide solid rates of return on capital employed as this business matures.

Mitigation Resources expects to achieve profitability beginning in 2025 based on current expectations for new projects, as well as timing of permit approvals and mitigation credit releases.

The Company is taking actions to terminate its defined benefit pension plan, which will eliminate future volatility from changes in the pension obligation.

Once complete, obligations under the terminated plan will be transferred to a third-party insurance provider.

The Company expects to utilize surplus assets to fund a qualified replacement plan, reducing future cash funding requirements.

Although the plan is currently over funded, NACCO is anticipating a non-cash settlement charge in 2025 upon termination.

The Company believes its businesses have competitive advantages that provide value to customers and create long-term value for stockholders.

The Company is pursuing growth and diversification by strategically leveraging its core mining and natural resources management skills to build a robust portfolio of affiliated businesses.

Opportunities for growth remain strong.

NACCO also continues to pursue activities which can strengthen the resiliency of its existing coal mining operations.

3 unchanged sentences

Fluctuating natural gas prices, weather and availability of renewable energy sources, such as wind and solar, could affect the amount of electricity dispatched from coal-fired power plants.

While the Company realizes the coal mining industry faces political and regulatory challenges and demand for coal is projected to decline over the longer-term, the Company believes coal should be an essential part of the energy mix in the United States for the foreseeable future.

The Company continues to look for ways to create additional value by utilizing its core mining competencies which include reclamation and permitting.

11 unchanged sentences

Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation:

(1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure or extended project development delay, (3) regulatory actions, including the United States EPA's rules finalized in 2024 relating to mercury and greenhouse gas emissions for coal-fired power plants, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (4) a significant reduction in purchases by the Company's customers, including as a result of changes in coal consumption patterns of U.S.

(1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure or extended project development delay, (3) regulatory actions, including the EPA's rules finalized in 2024 relating to mercury and greenhouse gas emissions for coal-fired power plants, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (4) a significant reduction in purchases by the Company's customers, including as a result of changes in coal consumption patterns of U.S.

electric power generators, or changes in the power industry that would affect demand for the Company's coal and other mineral reserves, (5) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil as result of factors such as OPEC and/or government actions, geopolitical developments, economic conditions and regulatory changes, as well as supply and demand dynamics, (6) changes in development plans by third-party lessees of the Company's mineral interests, (7) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons;

2 unchanged sentences

export of natural gas;

and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (8) failure to obtain adequate insurance coverages at reasonable rates, (9) supply chain disruptions, including price increases and shortages of parts and materials, (10) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (11) the ability of the Company to access credit in the current economic environment, or obtain financing at reasonable rates, or at all, and to maintain surety bonds for mine reclamation as a result of current market sentiment for fossil fuels, (12) impairment charges, (13) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (14) weather conditions, extended power plant outages, liquidity events or other events that would change the level of customers' coal or aggregates requirements, (15) weather or equipment problems that could affect deliveries to customers, (16) changes in the costs to reclaim mining areas, (17) costs to pursue and develop new mining, mitigation, oil and gas and solar development opportunities and other value-added service opportunities, (18) delays or reductions in coal or aggregates deliveries, (19) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (20) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (21) the ability to attract, retain, and replace workforce and administrative employees.

and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (8) failure to obtain adequate insurance coverages at reasonable rates, (9) supply chain disruptions, including price increases and shortages of parts and materials, (10) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (11) impairment charges, (12) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (13) weather conditions, extended power plant outages, liquidity events or other events that would change the level of customers' coal or aggregates requirements, (14) weather or equipment problems that could affect deliveries to customers, (15) changes in the costs to reclaim mining areas, (16) costs to pursue and develop new mining, mitigation, oil and gas and solar development opportunities and other value-added service opportunities, (17) delays or reductions in coal or aggregates deliveries, (18) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (19) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (20) the ability to attract, retain, and replace workforce and administrative employees.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements