What changed in this filing

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Item 9A. Controls and Procedures

2025-03-05 compared with 2024-03-06 · 479 added, 457 removed, 1215 unchanged (44% of the section changed)

1 unchanged sentence

Evaluation of disclosure controls and procedures:

An evaluation was carried out under the supervision and with the participation of the Company's management, including the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report.

Based on that evaluation, these officers have concluded that the Company's disclosure controls and procedures are effective.

An evaluation was carried out under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.

Based on that evaluation, these officers have concluded that our disclosure controls and procedures are effective.

Management's report on internal control over financial reporting:

Management is responsible for establishing and maintaining adequate internal control over financial reporting.

Under the supervision and with the participation of management, including the principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on this evaluation under the framework, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2023.

The Company's effectiveness of internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which is included in Item 15 of this Form 10-K and incorporated herein by reference.

Under the supervision and with the participation of management, including the principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on this evaluation under the framework, management concluded that our internal control over financial reporting was effective as of December 31, 2024.

Our effectiveness of internal control over financial reporting as of December 31, 2024 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included in Item 15 of this Form 10-K and incorporated herein by reference.

Changes in internal control:

There have been no changes in the Company's internal control over financial reporting, that occurred during the fourth quarter of 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

There have been no changes in our internal control over financial reporting, that occurred during the fourth quarter of 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

During the fourth quarter of 2024, none of our directors or executive officers adopted or terminated a Rule 10b5-1 Trading Plan, or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to Directors of the Company will be set forth in the 2024 Proxy Statement under the subheadings “Part III — Proposals To Be Voted On At The 2024 Annual Meeting — Proposal 1 — Election of Directors,” which information is incorporated herein by reference.

Information with respect to our Directors will be set forth in the 2025 Proxy Statement under the subheadings Part III — Proposals To Be Voted On At The 2025 Annual Meeting — Proposal 1 — Election of Directors which information is incorporated herein by reference.

Information with respect to the audit review committee and the audit review committee financial expert will be set forth in the 2025 Proxy Statement under the subheading Part I — Corporate Governance Information — Directors' Meetings and Committees, which information is incorporated herein by reference.

Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 by the Company's Directors, executive officers and holders of more than ten percent of the Company's equity securities will be set forth in the 2024 Proxy Statement under the subheading “Part IV — Other Important Information,” which information is incorporated herein by reference.

The Company has adopted a code of business conduct and ethics applicable to all Company personnel, including the principal executive officer, principal financial officer, principal accounting officer or controller, or other persons performing similar functions.

The code of business conduct and ethics, entitled the “Code of Corporate Conduct,” is posted on the Company's website at www.nacco.com under “Corporate Governance.” If the Company makes any amendments to or grants any waivers from the code of business conduct and ethics which are required to be disclosed pursuant to the Securities and Exchange Act of 1934, the Company will make such disclosure on the NACCO website.

Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 by our Directors, executive officers and holders of more than ten percent of our equity securities will be set forth in the 2025 Proxy Statement under the subheading Part IV — Other Important Information, which information is incorporated herein by reference.

We have adopted a code of business conduct and ethics applicable to all Company personnel, including the principal executive officer, principal financial officer, principal accounting officer or controller, or other persons performing similar functions.

The code of business conduct and ethics, entitled the Code of Corporate Conduct, is posted on our website at www.nacco.com under Corporate Governance.

If we make any amendments to or grant any waivers from the code of business conduct and ethics which are required to be disclosed pursuant to the Securities and Exchange Act of 1934, we will make such disclosure on the NACCO website.

We have adopted an insider trading policy that governs the purchase, sale and other disposition of our securities by our directors, officers and employees that is designated to promote compliance with insider trading laws, rules, regulations and applicable listing standards.

A copy of our insider trading policy is filed as Exhibit 19 to this Annual Report on Form 10-K for the year ended December 31, 2024.

EXECUTIVE COMPENSATION

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3.1(i) Restated Certificate of Incorporation of the Company is incorporated herein by reference to Exhibit 3(i) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Commission File Number 1-9172.

3.1(ii) Amended and Restated By-laws of the Company are incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed by the Company on December 18, 2014, Commission File Number 1-9172.

3.1(ii) Certificate of Ame ndment of the Restated Certificate of Incorporation of the Comp any, dated July 23, 2024, is incorporated herein by referen ce to Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q, filed by the Company on July 31, 2024, Commis s ion File Number 1-9172.

3.1(iii) Amended and Restated By-laws of the Company are incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed by the Company on December 18, 2014, Commission File Number 1-9172.

(4) Instruments defining the rights of security holders, including indentures.

6 unchanged sentences

4.7 Fifth Amendment to Amended and Restated Stockholders' Agreement, dated as of February 9, 2024, by and among the Depository, NACCO Industries, Inc., the new Participating Stockholders identified on the signature pages thereto and the Participating Stockholders under the Amended and Restated Stockholders' Agreement, dated as of September 29, 2017, as amended, is incorporated by reference to Exhibit 99.69 of the Company's General statement of acquisition of beneficial ownership on Form SC 13D, filed on February 12, 2024, Commission File Number 1-9172.

4.8 Description of Securities is incorporated herein by reference to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Commission File Number 1-9172.

Exhibit Number Exhibit Description

Sixth Amendment to Amended and Restated Stockholders’ Agreement, dated as of December 16, 2024, by and among the Depository, NACCO Industries, Inc., the new Participating Stockholders identified on the signature pages thereto and the Participating Stockholders under the Amended and Restated Stockholders' Agreement, dated as of September 29, 2017, as amended, is incorporated by reference to Exhibit 99.71 of the Company's General statement of acquisition of beneficial ownership on Form SC 13D, filed on December 17, 2024, Commission File Number 1-9172.

Description of Securities is incorporated herein by reference to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Commission File Number 1-9172.

(10) Material contracts

3 unchanged sentences

Executive Long-Term Incentive Compensation Plan (Amended and Restated March 1, 2023) is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed by the Company on May 16, 2023, Commission File Number 1-9172.

10.3* NACCO Industries, Inc.

Amendment No.

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10.5* Amendment No.

1 to N ACCO Industries, Inc.

Non-Employee Directors' Equity Compensation Plan (Amended and Restated May 19, 2021) , dated as of February 20, 2024, is incorporated herein by reference to Exhibit 10.

1 to the Company's Current Report on Form 8-K, filed by the Company on February 22, 2024 , Commission File Number 1-9172.

1 to NACCO Industries, Inc.

Non-Employee Directors' Equity Compensation Plan (Amended and Restated May 19, 2021), dated as of February 20, 2024, is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed by the Company on February 22, 2024, Commission File Number 1-9172.

10.6* Form of Award Agreement for the NACCO Industries, Inc.

1 unchanged sentence

10.7* Form of Cashless Exercise Award Agreement for the NACCO Industries, Inc.

Executive Long-Term Incentive Compensation Plan is incorporated herein by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Commission File Number 1-9172.

Executive Long-Term Incentive Compensation Plan is incorporated herein by reference to Exhibit 10.

1 to the Company's Quarterly Report on Form 10- Q, filed by the Company on May 1, 2024 , Commission File Number 1-9172.

10.8* Form of Non-Cashless Exercise Award Agreement for the NACCO Industries, Inc.

12 unchanged sentences

Rankin, Jr., is incorporated by reference to Exhibit 10.1 of NACCO Industries, Inc.'s Current Report on Form 8-K, filed on December 19, 2023, Commission File Number 1-9172.

Amendment to Consulting Agreement, dated as of December 19, 202 4 , between NACCO Industries, Inc.

and Alfred M.

Rankin, Jr., is incorporated by reference to Exhibit 10.1 of NACCO Industries, Inc.'s Current Report on Form 8-K, filed on December 23 , 202 4 , Commission File Number 1-9172.

10.14* NACCO Industries, Inc.

1 unchanged sentence

10.15* The North American Coal Corporation Supplemental Retirement Benefit Plan (Amended and Restated as of January 1, 2008) is incorporated herein by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed by the Company on December 19, 2007, Commission File Number 1-9172.

Exhibit Number Exhibit Description

10.16* Amendment No.

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2 to The North American Coal Corporation Supplemental Retirement Benefit Plan (Amended and Restated as of January 1, 2008) is incorporated herein by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, Commission File Number 1-9172.

Exhibit Number Exhibit Description

10.19 Coteau Lignite Sales Agreement by and between The Coteau Properties Company and Dakota Coal Company, dated as of January 1, 1990, is incorporated herein by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q/A, filed by the Company on March 20, 2013, Commission File Number 1-9172.+

15 unchanged sentences

1 to Termination Agreement and Release, by and between The Falkirk Mining Company, NoDak Energy Investments Corporation and Great River Energy, dated as of December 28, 2021, is incorporated herein by reference to Exhibit 10.36 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, Commission File Number 1-9172.

Exhibit Number Exhibit Description

Coal Sales Agreement, by and between The Falkirk Mining Company and Rainbow Energy Center, LLC, dated June 30, 2021, is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed by the Company on August 4, 2021, Commission File Number 1-9172.

1 unchanged sentence

Second Amendment to Coal Sales Agreement, by and between the Falkirk Mining Company and Rainbow Energy Center, LLC, dated August 5, 2022, is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed by the Company on November 2, 2022, Commission File Number 1-9172.

Exhibit Number Exhibit Description

Guaranty by REMC Assets, LP, dated June 17, 2021, is incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed by the Company on August 4, 2021, Commission File Number 1-9172.

21 unchanged sentences

The North American Coal Corporation Excess Retirement Plan (Amended and Restated Effective January 1, 2020) is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed by the Company on December 18, 2019, Commission File Number 1-9172.

Exhibit Number Exhibit Description

The NACCO Natural Resources Excess Retirement Plan (Effective January 1, 2025) is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed by the Company on December 17, 2024, Commission File Number 1-9172.

10.49 Amended and Restated Credit Agreement by and among The North American Coal Corporation and the Guarantors party thereto and the Lenders party thereto and KeyBank National Association as Syndication Agent, PNC Bank National Association as Administrative Agent and KeyBanc Capital Markets Inc.

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Commission File Number 1-9172.

Exhibit Number Exhibit Description

First Amendment to Amended and Restated Credit Agreement, dated as of September 17, 2024, among NACCO Natural Resources Corporation, the guarantors party thereto, the lenders party thereto and PNC Bank, National Association, as administrative agent, is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed by the Company on September 19, 2024, Commission File Number 1-9172.

NACCO Industries, Inc.

Insider Trading Policy

Subsidiaries.

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and Elizabeth I.

(95)** Mine Safety Disclosure Exhibit is attached hereto as Exhibit 95.

96.1 Technical Report Summary relating to the Mississippi Lignite Mining Company, effective date as of December 31, 2022, is incorporated herein by reference to Exhibit 96.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, Commission File Number I-9172.

(95)** Mine Safety Disclosure Exhibit.

Technical Report Summary relating to the Mississippi Lignite Mining Company, effective date as of December 31, 2024.

NACCO Industries, Inc.

1 unchanged sentence

(99.1**) Reserve Report of Catapult Mineral Partners.

(99.2**) Supplemental Figures Attachment.

101.INS Inline XBRL Instance Document

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* Elizabeth I.

Loveman, by signing her name hereto, does hereby sign this Form 10-K on behalf of each of the above named and designated directors of the Company pursuant to a Power of Attorney executed by such persons and filed with the Securities and Exchange Commission.

Loveman, by signing her name hereto, does hereby sign this Form 10-K on behalf of each of the above named and designated directors pursuant to a Power of Attorney executed by such persons and filed with the Securities and Exchange Commission.

/s/ Elizabeth I.

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The following consolidated financial statements of NACCO Industries, Inc.

and Subsidiaries and the reports of the Company's independent registered public accounting firm (PCAOB ID:

and Subsidiaries and the reports of our independent registered public accounting firm (PCAOB ID:

42 ) are incorporated by reference in Item 8:

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit review committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit review committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Unconsolidated subsidiaries – accounting for variable interest entities

Description of the Matter As discussed in Note 1 and 16 to the consolidated financial statements, certain of the operating coal mines and entities within the NAMining segment, collectively referred to as the “Unconsolidated Subsidiaries,” are variable interest entities (VIEs) and are accounted for under the equity method.

Description of the Matter

As discussed in Note 1 and 16 to the consolidated financial statements, certain of the operating coal mines and entities within the NAMining segment, collectively referred to as the “Unconsolidated Subsidiaries,” are variable interest entities (VIEs) and are accounted for under the equity method.

In each case, NACCO is not the primary beneficiary of the VIE as it does not exercise financial control.

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These procedures included, among others, reading board minutes, inquiring of management about transactions or events that could require a reconsideration of previous consolidation conclusions and obtaining direct confirmation of the total annual support provided in accordance with the contractual arrangements from the customers.

MLMC Long-Lived Asset Impairment

Description of the Matter As discussed in Notes 2 and 9 of the consolidated financial statements, the Company evaluates if there are indicators of impairment for long-lived assets in accordance with ASC 360, Property, Plant, and Equipment .

The Company’s first step is to determine whether indicators of impairment exist in its long-lived assets at the lowest level at which individual cash flows can be identified.

If indicators of impairment are identified, the Company evaluates if the projected undiscounted cash flows to be generated by those assets are less than their carrying amounts.

When this is the case, the Company compares the estimated fair value to the carrying value of the asset group.

If fair value is less than carrying value, an impairment loss is recorded for the difference.

The Company determined that indicators of impairment existed at MLMC during the fourth quarter of 2023 and, as a result, MLMC's long-lived assets were reviewed for impairment.

The Company assessed the recoverability of the MLMC asset group and determined that the assets were not fully recoverable.

The Company estimated the fair value of the asset group.

The impairment charge was allocated to the long-lived assets of the asset group on a pro rata basis using the relative carrying amount of those assets.

For the year ended December 31, 2023, the Company recorded a long-lived asset impairment of $65.9 million.

Auditing the Company’s MLMC long-lived asset impairment was complex and involved a high degree of subjectivity due to the significant estimation required by management to determine the fair value of the long-lived asset group.

The Company measured the fair value of the asset group using observable and unobservable inputs.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process over the determination of the fair values of the MLMC asset group and measurement of the impairment charge.

These controls include, among others, management’s review of the selection of the valuation model, the determination and review of the fair value estimates, and management’s testing of the completeness and accuracy of the underlying data utilized to estimate the fair value of the asset group.

Our audit procedures included, among others, procedures to evaluate the selection of the valuation methodology used by management to determine the fair value of the asset group and to corroborate the fair value measurement of the long-lived assets using our specialists.

Further, we evaluated the Company’s disclosures related to the impairment of long-lived assets.

/s/ Ernst & Young LLP

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Earnings of unconsolidated operations 57,476 49,994

Contract termination settlement — 14,000

Business interruption insurance recoveries 13,612 —

Operating expenses

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Amortization of intangible assets 531 2,998

Loss (gain) on sale of assets 221 ( 2,463 )

(Gain) loss on sale of assets

( 5,146 ) 221

Long-lived asset impairment charge — 65,887

65,139 134,722

Operating (loss) profit ( 70,137 ) 69,986

Other (income) expense

Operating profit (loss)

35,705 ( 70,137 )

Other expense (income)

Interest expense 5,566 2,460

1 unchanged sentence

Closed mine obligations 2,381 3,585

(Gain) loss on equity securities ( 1,958 ) 283

Other contract termination settlements — ( 16,882 )

Gain on equity securities

( 1,805 ) ( 1,958 )

Other, net 345 ( 3,985 )

2,059 ( 5,979 )

(Loss) income before income tax (benefit) provision ( 64,158 ) 87,723

Income tax (benefit) provision ( 24,571 ) 13,565

Net (loss) income $ ( 39,587 ) $ 74,158

(Loss) earnings per share:

Basic (loss) earnings per share $ ( 5.29 ) $ 10.14

Diluted (loss) earnings per share $ ( 5.29 ) $ 10.06

Income (loss) before income tax benefit

33,646 ( 64,158 )

Income tax benefit

( 95 ) ( 24,571 )

Net income (loss)

$ 33,741 $ ( 39,587 )

Earnings (loss) per share:

Basic earnings (loss) per share

$ 4.58 $ ( 5.29 )

Diluted earnings (loss) per share

$ 4.55 $ ( 5.29 )

Basic weighted average shares outstanding 7,363 7,478

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(In thousands)

Net (loss) income $ ( 39,587 ) $ 74,158

Net income (loss)

$ 33,741 $ ( 39,587 )

Other comprehensive (loss) income

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Total other comprehensive loss ( 398 ) ( 641 )

Comprehensive (loss) income $ ( 40,228 ) $ 73,321

Comprehensive income (loss)

$ 33,343 $ ( 40,228 )

See notes to the Consolidated Financial Statements.

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Assets held for sale 14,159 6,466

Federal income tax receivable 845 15,687

Prepaid insurance 1,790 1,999

Other current assets 27,639 18,134

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Operating lease right-of-use assets 9,661 8,667

Equity securities

18,663 17,208

Equity method investment in Eiger, LLC

Other non-current assets 25,768 21,675

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Accrued payroll 22,663 17,317

Deferred revenue 878 833

Other current liabilities 8,752 7,996

1 unchanged sentence

Long-term debt 25,335 22,003

Long-term revolving credit agreement

Operating lease liabilities 9,042 8,782

1 unchanged sentence

Pension and other postretirement obligations 4,787 5,183

Deferred income taxes — 6,122

Liability for uncertain tax positions 794 5,795

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Operating Activities

Net (loss) income $ ( 39,587 ) $ 74,158

Net income (loss)

$ 33,741 $ ( 39,587 )

Adjustments to reconcile net income to net cash provided by operating activities:

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Stock-based compensation 5,832 5,157

Loss (gain) on sale of assets 221 ( 2,463 )

Inventory impairment charge 7,514 —

Other contract termination settlements — ( 15,552 )

(Gain) loss on sale of assets

( 5,146 ) 221

Inventory impairment charges

Long-lived asset impairment charge — 65,887

1 unchanged sentence

Working capital changes:

Affiliates receivable/payable

Accounts receivable ( 11,725 ) 2,519

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Financing Activities

Net additions (reductions) to revolving credit agreement 10,000 ( 4,000 )

Net additions to revolving credit agreement

60,000 10,000

Additions to long-term debt 624 5,232

Reductions to long-term debt ( 4,914 ) ( 4,209 )

Debt issuance costs

Cash dividends paid ( 6,624 ) ( 6,452 )

Purchase of treasury shares ( 9,944 ) ( 3,103 )

Net cash provided by (used for) financing activities 1,468 ( 9,840 )

Net cash provided by financing activities

Cash and Cash Equivalents

Total (decrease) increase for the year ( 25,639 ) 24,743

Total decrease for the year

( 12,276 ) ( 25,639 )

Balance at the beginning of the year 85,109 110,748

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Stock-based compensation 191 — 4,966 — — 5,157

Conversion of Class B to Class A shares 1 ( 1 ) — — — —

Net income — — — 74,158 — 74,158

Purchase of treasury shares ( 91 ) — — ( 3,012 ) — ( 3,103 )

Net loss — — — ( 39,587 ) — ( 39,587 )

Cash dividends on Class A and Class B common stock:

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Current period other comprehensive income, net of tax — — — — ( 2,118 ) ( 2,118 )

Pension settlement, net of tax — — — — 1,398 1,398

Reclassification adjustment to net income, net of tax — — — — 79 79

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Current period other comprehensive income, net of tax — — — — ( 706 ) ( 706 )

Pension settlement, net of tax — — — — 1,398 1,398

Reclassification adjustment to net income, net of tax — — — — 308 308

6 unchanged sentences

NOTE 1— Principles of Consolidation and Nature of Operations

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

® (“NACCO”) and its wholly owned subsidiaries (collectively, the “Company”).

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

The Company operates under three business segments:

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

® (NACCO) and its wholly owned subsidiary, NACCO Natural Resources Corporation ® (NACCO Natural Resources and with NACCO collectively, the Company, we, our or us).

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

We operate under three business segments:

Coal Mining, North American Mining ® (NAMining) and Minerals Management.

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The Minerals Management segment, which includes the Catapult Mineral Partners (Catapult) business, acquires and promotes the development of mineral interests.

Mitigation Resources of North America ® (“Mitigation Resources”) provides stream and wetland mitigation solutions.

The Company has items not directly attributable to a reportable segment that are not included in the reported financial results of the operating segment.

These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, and the financial results of Bellaire Corporation ("Bellaire"), Mitigation Resources and other developing businesses.

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

Mitigation Resources of North America ® (Mitigation Resources) provides stream and wetland mitigation solutions as well as comprehensive reclamation and restoration construction services.

In addition, ReGen Resources is pursuing opportunities to develop new power generation resources.

We have items not directly attributable to a reportable segment that are not included in the reported financial results of the operating segment.

These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, and the financial results of Bellaire Corporation (Bellaire), Mitigation Resources, ReGen Resources and other developing businesses.

Bellaire manages our long-term liabilities related to former Eastern U.S.

underground mining activities.

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See Note 15 to the Consolidated Financial Statements for further discussion of segment reporting.

The Company’s operating segments are further described below:

Our operating segments are further described below:

Coal Mining Segment

The Coal Mining segment, operating as North American Coal, LLC ("NACoal"), operates surface coal mines under long-term contracts with power generation companies pursuant to a service-based business model.

The Coal Mining segment operates surface coal mines under long-term contracts with power generation companies pursuant to a service-based business model.

Coal is surface mined in North Dakota and Mississippi.

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

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

As of December 31, 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).

Each of these mines supply lignite coal for power generation and delivers its coal production to an adjacent power plant or synfuels plant under a long-term supply contract.

MLMC’s coal supply contract contains a take or pay provision but contains a force majeure provision that allows for the temporary suspension of the take or pay provision during the duration of certain specified events beyond the control of either party;

Each of these mines supply lignite coal for power generation and delivers our coal production to an adjacent power plant or synfuels plant under a long-term supply contract.

While MLMC’s coal supply contract contains a take or pay provision, the contract contains a force majeure provision that allows for the temporary suspension of the take or pay provision during the duration of certain specified events beyond the control of either party;

all other coal supply contracts are requirements contracts.

Certain coal supply contracts can be terminated early, which would result in a reduction to future earnings.

The MLMC contract is the only operating coal contract in which the Company is responsible for all operating costs, capital requirements and final mine reclamation;

therefore, MLMC is consolidated within NACCO’s financial statements.

MLMC sells coal to its customer's Red Hills Power Plant at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S.

The MLMC contract is the only coal supply contract in which we are responsible for all operating costs, capital requirements and final mine reclamation;

therefore, MLMC is consolidated within our financial statements.

MLMC sells coal to its customer at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S.

inflation rates.

1 unchanged sentence

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

The Red Hills Power Plant supplies electricity to the Tennessee Valley Authority (“TVA”) under a long-term power purchase agreement.

MLMC's customer operates the Red Hills Power Plant, which supplies electricity to the Tennessee Valley Authority (TVA) under a long-term power purchase agreement.

MLMC’s contract with its customer runs through April 1, 2032.

2 unchanged sentences

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

During 2023, MLMC completed mining in its original mine area and began mining in a new mine area.

The move to the new mine area resulted in increased costs during 2023.

MLMC does not anticipate opening additional mine areas through the remaining contract term unless doing so would result in improved economic returns.

On December 18, 2023, MLMC received a force majeure event 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.

The notice did not provide a timeline for resolution of the issue.

As of March 6, 2024, the impacted boiler is still not operational.

The prolonged mechanical issue is expected to result in a reduction in customer demand and will have a significant impact on the Company's results of operations during 2024.

The Company determined the anticipated reduction in customer demand caused by this issue was an indicator of

During 2023, MLMC received notice from our customer related to a boiler issue at the Red Hills Power Plant that began on December 15, 2023.

We assessed MLMC's long-lived assets for impairment and recorded a $ 65.9 million impairment charge in 2023.

See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the long-lived asset impairment charge.

While this issue has been resolved, it resulted in a reduction in customer demand which had a significant impact on our results of operations during 2024.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

potential impairment.

The Company reviewed MLMC's long-lived assets for impairment as of December 31, 2023 and determined the carrying amount of its long-lived assets were not recoverable.

As a result, the Company recorded a non-cash, long-lived asset impairment charge of $ 65.9 million in 2023.

See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the impairment analysis.

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

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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.

Sabine will provide mine reclamation services through September 30, 2026.

On October 1, 2026, SWEPCO will acquire all of the capital stock of Sabine and complete the remaining mine reclamation.

At Coteau, Coyote Creek and Falkirk, the Company is paid a management fee per ton of coal or heating unit (MMBtu) delivered.

As of October 1, 2026, SWEPCO has an obligation to acquire all of the capital stock of Sabine and complete the remaining mine reclamation.

At Coteau, Coyote Creek and Falkirk, we are paid a management fee per ton of coal or heating unit (MMBtu) delivered.

Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad

measures of U.S.

The customers are responsible for funding all mine operating costs, including final mine

Our customers are responsible for funding all mine operating costs, including final mine

reclamation, and directly or indirectly providing all of the capital required to build and operate the mine.

This contract structure eliminates exposure to spot coal market price fluctuations while providing income and cash flow with minimal capital investment.

Other than at Coyote Creek, debt financing provided by or supported by the customers is without recourse to the Company.

Other than at Coyote Creek, debt financing provided by or supported by the customers is without recourse to us.

See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of Coyote Creek's guarantees.

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In each case, NACCO

is not the primary beneficiary of the VIE as it does not exercise financial control;

therefore, NACCO does not consolidate the

results of these operations within its financial statements.

Instead, these contracts are accounted for as equity method

The Company regularly evaluates if there are reconsideration events which could change the Company's conclusion as to whether these entities meet the definition of a VIE and the determination of the primary beneficiary.

The income before income taxes associated with these VIEs is reported as Earnings of unconsolidated operations on the Consolidated Statements of Operations and the Company’s investment is reported on the line Investments in unconsolidated subsidiaries in the Consolidated Balance Sheets.

The mines that meet the definition of a VIE are referred to collectively as the “Unconsolidated Subsidiaries.” For tax purposes, the Unconsolidated Subsidiaries are included within the NACCO consolidated U.S.

therefore, the Income tax (benefit) provision line on the Consolidated Statements of Operations includes income taxes related to these entities.

is not the primary beneficiary of the VIE as we do not exercise financial control;

therefore, we do not consolidate the results of these operations within our financial statements.

Instead, these contracts are accounted for as equity method investments.

We regularly evaluate if there are reconsideration events which could change our conclusion as to whether these entities meet the definition of a VIE and the determination of the primary beneficiary.

The income before income taxes associated with these VIEs is reported as Earnings of unconsolidated operations on the Consolidated Statements of Operations and our investment is reported on the line Investments in unconsolidated subsidiaries in the Consolidated Balance Sheets.

The mines that meet the definition of a VIE are referred to collectively as the Unconsolidated Subsidiaries.

For tax purposes, the Unconsolidated Subsidiaries are included within our consolidated U.S.

therefore, the Income tax benefit line on the Consolidated Statements of Operations includes income taxes related to these entities.

See Note 16 to the Consolidated Financial Statements in this Form 10-K for further information on the Unconsolidated Subsidiaries.

The Company performs contemporaneous reclamation activities at each mine in the normal course of operations.

We perform contemporaneous reclamation activities at each mine in the normal course of operations.

Under all of the Unconsolidated Subsidiaries’ contracts, the customer has the obligation to fund final mine reclamation activities.

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The NAMining segment provides value-added contract mining and other services for producers of industrial minerals.

The segment is a platform for the Company’s growth and diversification of mining activities outside of the thermal coal industry.

NAMining provides contract mining services for independently owned mines and quarries, creating value for its customers by performing the mining aspects of its customers’ operations.

The segment is a platform for our growth and diversification of mining activities outside of the thermal coal industry.

NAMining provides contract mining services for independently owned mines and quarries, creating value for our customers by performing the mining aspects of our customers’ operations.

This allows customers to focus on their areas of expertise:

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As of December 31, 2024, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.

In addition, Sawtooth Mining, LLC ("Sawtooth") provides mining design, consulting and will be the exclusive contract miner for the Thacker Pass lithium project in northern Nevada.

During December 2023, NAMining executed a 15-year contract to mine phosphate at a quarry in central Florida.

Production is expected to commence in the first half of 2024 once relocation and commissioning of a dragline is complete.

NAMining also amended and extended existing limestone contracts with two customers and expanded the scope of work with another customer.

In addition, Sawtooth Mining, LLC (Sawtooth) will be the exclusive provider of comprehensive mining services for the Thacker Pass lithium project in Humboldt County, Nevada.

Thacker Pass is owned by a joint venture between Lithium Americas Corp.

(TSX:LAC) (NYSE:

LAC) and General Motors Holdings LLC.

Thacker Pass commenced construction in 2023 and is targeting initial production in 2027.

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 is currently assisting with certain construction services and will transport clay tailings once lithium production commences

During 2024 and 2023, NAMining amended and extended existing limestone contracts with two customers and expanded the scope of work with several other customers.

New contracts signed in 2024 are expected to be accretive to earnings starting in 2026.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Certain of the entities within the NAMining segment are VIEs and are accounted for under the equity method as Unconsolidated Subsidiaries.

See Note 16 to the Consolidated Financial Statements in this Form 10-K for further information on the Unconsolidated Subsidiaries.

Minerals Management Segment

The Minerals Management segment derives income primarily by leasing its royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil, and coal in exchange for royalty payments based on the lessees' sales of those minerals.

The Minerals Management segment owns royalty interests, mineral interests, non-participating royalty interests and overriding royalty interests.

The Minerals Management segment derives income primarily by leasing our royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil, and coal in exchange for royalty payments based on the lessees' sales of those minerals.

The Minerals Management segment owns royalty interests, mineral interests, non-participating royalty interests and overriding royalty interests (collectively mineral and royalty interests).

• Royalty Interest.

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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 has no environmental liability.

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

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ORRIs that are carved out of working interests are linked to the same underlying oil and gas lease that created the working interest, and therefore, such ORRIs are typically subject to expiration upon the expiration or termination of the oil and gas lease.

The Company may own more than one type of mineral and royalty interest in the same tract of land.

For example, where the Company owns an ORRI in a lease on the same tract of land in which it owns a mineral interest, the ORRI in that tract will relate to the same gross acres as the mineral interest in that tract.

The Minerals Management segment will benefit from the continued development of its mineral properties without the need for investment of additional capital once mineral and royalty interests have been acquired.

The Minerals Management segment does not currently have any material investments under which it would be required to bear the cost of exploration, production or development.

During 2023, Minerals Management completed an acquisition of $ 36.7 million of mineral and royalty interests in the Texas portion of the Permian Basin.

During 2022, Minerals Management acquired $ 11.4 million of mineral and royalty interests in the Texas portion of the Permian Basin and the Wyoming portion of the Powder River Basin as well as a small acquisition of mineral interests in the New Mexico portion of the Permian Basin.

We may own more than one type of mineral and royalty interest in the same tract of land.

For example, where we own an ORRI in a lease on the same tract of land in which we own a mineral interest, the ORRI in that tract will relate to the same gross acres as the mineral interest in that tract.

The Minerals Management segment does not currently have any material investments under which we would be required to bear the cost of exploration, production or development.

The Minerals Management segment will benefit from the continued

development of our mineral properties without the need for investment of additional capital once mineral and royalty interests

have been acquired as the capital costs or lease operating expenses are born entirely by the operators or working interest

During 2024 and 2023, Minerals Management invested a total of $ 19.1 million, including $ 15.7 million in the fourth quarter of

2024, in Eiger, LLC (Eiger), which holds non-operated working interests in oil and natural gas assets in the Kansas and the Oklahoma portion of the Hugoton basin.

This entity meets the definition of a VIE.

NACCO is not the primary beneficiary of the VIE as it does not exercise financial control;

therefore, we do not consolidate the results of these operations within our financial statements.

Instead, this contract is accounted for as an equity method investment.

During 2024, we recorded $ 0.6 million, which represented our share of earnings, as Earnings of unconsolidated operations on the Consolidated Statements of Operations.

Our investment is reported on the line Equity method investment in Eiger, LLC in the Consolidated Balance Sheets.

Due to a lag in Eiger's financial reporting, earnings or losses from this investment will be recorded on a one quarter lag.

Excluding the Eiger investment described above, total consideration for acquisitions of mineral and royalty interests was $ 0.7 million and $ 36.7 million, in 2024 and 2023, respectively.

The 2024 acquisitions include 13.7 thousand gross acres and 0.6 thousand net royalty acres.

The 2023 acquisitions included 43.4 thousand gross acres and 2.5 thousand net royalty acres.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Total consideration for the 2023 and 2022 acquisitions of mineral and royalty interests was $ 36.7 million and $ 11.9 million, respectively.

The 2023 acquisition includes 43.4 thousand gross acres and 2.5 thousand net royalty acres.

The 2022 acquisitions included 13.6 thousand gross acres and 880 net royalty acres.

Total mineral and royalty interests include approximately 184.7 thousand gross acres and 63.3 thousand net royalty acres at December 31, 2023.

Net royalty acres are calculated based on the Company’s ownership and royalty rate, normalized to a standard 1/8 th royalty lease, and assumes a 1/4 th royalty rate for unleased acres.

We also manage legacy royalty and mineral interests located in Ohio (Utica and Marcellus shale natural gas), Louisiana (Haynesville shale and Cotton Valley formation natural gas), Texas (Cotton Valley and Austin Chalk formation natural gas), Mississippi (coal), Pennsylvania (coal, coalbed methane and Marcellus shale natural gas), Alabama (coal, coalbed methane and natural gas) and North Dakota (coal, oil and natural gas).

The majority of our legacy reserves were acquired as part of our historical coal mining operations.

Total oil and gas mineral and royalty interests include approximately 198.4 thousand gross acres and 63.9 thousand net royalty acres at December 31, 2024.

Net royalty acres are calculated based on our ownership and royalty rate, normalized to a standard 1/8 th royalty lease, and assumes a 1/4 th royalty rate for unleased acres.

See Note 17 for further discussion of Minerals Management.

The Company's acquisition criteria for building a blended portfolio of mineral and royalty interests includes (i) new wells anticipated to come online within one to two years of investment, (ii) areas with forecasted future development within five years after acquisition and (iii) existing producing wells further along the decline curve that will generate stable cash flow.

In addition, acquisitions should extend the geographic footprint to diversify across multiple basins with a preliminary focus on the more oil-rich Permian basin and a secondary focus on other diversifying basins to increase regional exposure.

While the current focus is on the acquisition of mineral and royalty interests, the Company would also consider investments in ORRIs, NPRIs or non-operating working interests under certain circumstances.

The current acquisition strategy does not contemplate any near-term working interest investments in which the Company would act as the operator.

The Company also manages legacy royalty and mineral interests located in Ohio (Utica and Marcellus shale natural gas), Louisiana (Haynesville shale and Cotton Valley formation natural gas), Texas (Cotton Valley and Austin Chalk formation natural gas), Mississippi (coal), Pennsylvania (coal, coalbed methane and Marcellus shale natural gas), Alabama (coal, coalbed methane and natural gas) and North Dakota (coal, oil and natural gas).

The majority of the Company’s legacy reserves were acquired as part of its historical coal mining operations.

During 2023, the Board of Directors of the Company approved the termination of the Combined Defined Benefit Plan for NACCO and its subsidiaries (the “Combined Plan”) and Combined Plan participants were offered lump-sum distributions as part of the termination process.

As a result of the lump-sum distributions, the Company recognized a non-cash, pension settlement charge of $ 1.8 million on the line " Other, net " within the accompanying Consolidated Statements of Operations.

The $ 1.8 million charge represents a pro rata portion of the unrecognized net loss recorded in Accumulated other comprehensive loss.

At December 31, 2024 and 2023, we had $ 14.2 million and $ 6.5 million classified as Assets held for sale, primarily for draglines at NAMining and a building, respectively.

During 2024, we had 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, we sold land for $ 7.0 million and recognized a $ 4.5 million gain in the Minerals Management segment, which is included on the line (Gain) loss on sale of assets within the accompanying Consolidated Statements of Operations.

We structured this transaction in a manner that qualified as a like-kind exchange pursuant to Section 1031 of the Internal Revenue Code and used all of the net proceeds from the sale during the year ended December 31, 2024.

During 2023, our Board of Directors approved the termination of the Combined Defined Benefit Plan (Combined Plan) and participants were offered lump-sum distributions as part of the termination process.

As a result of the lump-sum distributions, we recognized a non-cash, pension settlement charge of $ 1.8 million in 2023 on the line Other, net within the accompanying Consolidated Statements of Operations.

See Note 14 to the Consolidated Financial Statements in this Form 10-K for further information on the Combined Plan.

On May 2, 2022, Great River Energy ("GRE") completed the sale of Coal Creek Station and the adjacent high-voltage direct current transmission line to Rainbow Energy Center, LLC (“Rainbow Energy”) and its affiliates.

The Coal Sales Agreement (“CSA”) between Falkirk and Rainbow Energy became effective upon the closing of the transaction.

Falkirk continues to supply all coal requirements of Coal Creek Station and is paid a management fee per ton of coal delivered.

To support the transfer to new ownership, Falkirk agreed to a reduction in the current per ton management fee from the effective date of the CSA through May 31, 2024.

After May 31, 2024, the per ton management fee increases to a higher base in line with 2021 fee levels, and thereafter adjusts annually according to an index which tracks broad measures of U.S.

Rainbow Energy is responsible for funding all mine operating costs, including mine reclamation, and directly or indirectly providing all of the capital required to operate the mine.

The initial production period is expected to run through May 1, 2032, but the CSA may be extended or terminated early under certain circumstances.

The Company recognized a gain of $ 30.9 million within the accompanying Consolidated Statements of Operations during 2022 as GRE paid $ 14.0 million in cash, as well as transferred ownership of an office building with an estimated fair value of $ 4.1 million, and conveyed membership units in Midwest AgEnergy Group, LLC (“MAG”), a North Dakota-based ethanol business, with an estimated fair value of $ 12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.

The office building is included in assets held for sale at December 31, 2023.

Prior to receiving the membership units from GRE, the Company held a $ 5.0 million investment in MAG carried at cost, less impairment.

Subsequent to the receipt of the additional membership units, the Company began to account for the investment under the equity method of accounting.

During 2022, the Company recorded $ 2.2 million, which represented its share of MAG's earnings on the "Other, net" line within the accompanying Consolidated Statements of Operations.

On December 1, 2022, HLCP Ethanol Holdco, LLC (“HLCP”) completed its acquisition of MAG.

Upon closing of the transaction, NACCO transferred its ownership interest in MAG to HLCP and received a cash payment of $ 18.6 million and recognized a $ 1.3 million loss in 2022 on the line "Other, net" within the accompanying Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

The Company received additional payments totaling $ 3.6 million during 2023 in connection with a post-closing purchase price adjustment and the release of amounts held in escrow recorded on the "Other, net" line within the accompanying Consolidated Statements of Operations.

On December 1, 2022, we transferred our ownership interest in Midwest AgEnergy Group, LLC (MAG) to HLCP Ethanol Holdco, LLC.

We received cash payments totaling $ 3.6 million during 2023 in connection with MAG and recognized the gain on the line Other, net within the accompanying Consolidated Statements of Operations.

NOTE 2— Significant Accounting Policies

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Depreciation, depletion and amortization are provided in amounts sufficient to amortize the cost of the assets, including assets recorded under finance leases, over their estimated useful lives using the straight-line method or the units-of-production method.

Buildings and building improvements are depreciated over the life of the mine, which is generally 30 years.

Estimated lives for machinery and equipment range from three to 15 years.

Buildings and building improvements are depreciated over the life of the asset, which is generally 30 years.

Estimated lives for machinery and equipment generally range from three to 15 years.

The units-of-production method is used to amortize certain assets based on estimated recoverable tonnages.

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Royalty Interests in Oil and Natural Gas Properties:

The Company follows the successful efforts method of accounting for its royalty and mineral interests.

We follow the successful efforts method of accounting for royalty and mineral interests.

Under this method, costs to acquire mineral and royalty interests in oil and natural gas properties are capitalized when incurred.

Acquisitions of royalty interests of oil and natural gas properties are considered asset acquisitions and are recorded at cost.

As an owner of mineral and royalty interests and not working interests, the Company is not required to make capital expenditures and did not make capital expenditures to convert proved undeveloped reserves from undeveloped to developed.

As an owner of mineral and royalty interests and not working interests, we are not required to make capital expenditures and did not make capital expenditures to convert proved undeveloped reserves from undeveloped to developed.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Acquisition costs of proved royalty and mineral interests are amortized using the units of production method over the life of the property, which is estimated using proved reserves.

For purposes of amortization, interests in oil and natural gas properties are grouped in a reasonable aggregation of properties with common geological structural features or stratigraphic condition.

The Company reviews and evaluates its royalty interests in oil and natural gas properties for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

We review and evaluate our royalty interests in oil and natural gas properties for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

Proved oil and gas properties are reviewed for impairment when events and circumstances indicate a potential decline in the fair value of such properties below the carrying value, such as a downward revision of the reserve estimates or lower commodity prices.

When such events or changes in circumstances occur, the Company estimates the undiscounted future cash flows expected in connection with the properties and compares such future cash flows to the carrying amounts of the properties to determine if the carrying amounts are recoverable.

When such events or changes in circumstances occur, we estimate the undiscounted future cash flows expected in connection with the properties and compare such future cash flows to the carrying amounts of the properties to determine if the carrying amounts are recoverable.

If the carrying value of the properties is determined to not be recoverable based on the undiscounted cash flows, an impairment charge is recognized by comparing the carrying value to the estimated fair value of the properties.

See Note 18 for further discussion of the Company's royalty and mineral interests.

See Note 17 for further discussion of our royalty and mineral interests.

Long-Lived Assets:

The Company periodically evaluates long-lived assets for impairment when changes in circumstances or the occurrence of certain events indicate the carrying amount of an asset or asset group may not be recoverable.

Upon identification of indicators of impairment, the Company evaluates the carrying value of the asset by comparing the estimated future undiscounted cash flows generated from the use of the asset or asset group and its eventual disposition with the asset's net carrying value.

We periodically evaluate long-lived assets for impairment when changes in circumstances or the occurrence of certain events indicate the carrying amount of an asset or asset group may not be recoverable.

Upon identification of indicators of impairment, we evaluate the carrying value of the asset by comparing the estimated future undiscounted cash flows generated from the use of the asset or asset group and its eventual disposition with the asset's net carrying value.

If the carrying value of an asset is considered impaired, an impairment charge is recorded for the amount that the carrying value of the long-lived asset or asset group exceeds its fair value.

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

A reduction in customer demand at MLMC, including reductions related to reduced mechanical availability of the customer’s power plant, could adversely affect

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

the Company's operating results.

The costs of mining operations are not reimbursed by MLMC's customer.

As such, increased costs at MLMC could materially reduce the Company's profitability.

The Company determined that indicators of impairment existed at MLMC during the fourth quarter of 2023 and, as a result, MLMC's long-lived assets were reviewed for impairment.

The Company assessed the recoverability of the MLMC asset group and determined that the assets were not fully recoverable when compared to the remaining future undiscounted cash flows from these assets.

As a result, the Company estimated the fair value of the asset group which resulted in a non-cash, long-lived asset impairment charge of $ 65.9 million in 2023.

See Note 9 for further discussion of the Company's impairment analysis.

We determined that indicators of impairment existed at MLMC during the fourth quarter of 2023 and, as a result, MLMC's long-lived assets were reviewed for impairment.

We assessed the recoverability of the MLMC asset group and determined that the assets were not fully recoverable when compared to the remaining future undiscounted cash flows from these assets.

As a result, we estimated the fair value of the asset group which resulted in a non-cash, long-lived asset impairment charge of $ 65.9 million in 2023.

See Note 9 for further discussion of our impairment analysis.

Self-insurance Liabilities:

The Company is generally self-insured for medical claims, certain workers’ compensation claims and certain closed mine liabilities.

We are generally self-insured for medical claims, certain workers’ compensation claims and certain closed mine liabilities.

An estimated provision for claims reported and for claims incurred but not yet reported under the self-insurance programs is recorded and revised periodically based on industry trends, historical experience and management judgment.

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Revenue Recognition:

See Note 3 to the Consolidated Financial Statements for discussion of revenue recognition.

See Note 3 to the Consolidated Financial Statements for discussion of our revenue recognition.

Stock Compensation:

The Company maintains long-term incentive programs that allow for the grant of shares of Class A common stock, subject to restrictions, as a means of retaining and rewarding selected employees for long-term performance and to increase ownership in the Company.

We maintain a long-term incentive program that allow for the grant of shares of Class A common stock, subject to restrictions, as a means of retaining and rewarding selected employees for long-term performance and to increase their ownership in NACCO.

Shares awarded under the plans are fully vested and entitle the stockholder to all rights of common stock ownership except that shares may not be assigned, pledged or otherwise transferred during the restriction period.

In general, for shares awarded for years ended December 31, 2024 and December 31, 2023, the restriction period ends at the earliest of (i) three years after the participant's retirement date, (ii) three , five or ten years from the award date, or (iii) the participant's death or permanent disability.

Pursuant to the plans, the Company issued 120,649 and 165,574 shares related to the years ended December 31, 2023 and 2022, respectively.

Pursuant to the plans, we issued 162,670 and 120,649 shares related to the years ended December 31, 2024 and 2023, respectively.

After the issuance of these shares, there were 616,681 shares of Class A common stock available for issuance under these plans.

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Compensation expense represents fair value based on the market price of the shares of Class A common stock at the grant date.

The Company also has a stock compensation plan for non-employee directors of the Company under which a portion of the annual retainer for each non-employee director is paid in restricted shares of Class A common stock.

We also have a stock compensation plan for non-employee directors under which a portion of the annual retainer for each non-employee director is paid in restricted shares of Class A common stock.

For the year ended December 31, 2024 and 2023, $ 110,000 ($ 150,000 for the Chairman) of the non-employee director's annual retainer of $ 175,000 ($ 250,000 for the Chairman) was paid in restricted shares of Class A common stock.

Shares awarded under the plan are fully vested and entitle the stockholder to all rights of common stock ownership except that shares may not be assigned, pledged, hypothecated or otherwise transferred during the restriction period.

In general, the restriction period ends at the earliest of (i) ten years from the award date, (ii) the date of the director's death or permanent disability, (iii) five years (or earlier with the approval of the Board of Directors) after the director's date of retirement from the Board of Directors, (iv) the date the director has both retired from the Board of Directors and has reached age 70 , or (v) at such other time as determined by the Board of Directors in its sole and absolute discretion.

Pursuant to this plan, the Company issued 35,965 and 30,034 shares related to the years ended December 31, 2023 and 2022, respectively.

Shares awarded under the plan are fully vested and entitle the stockholder to all rights of common stock ownership except that shares may not be assigned, pledged, hypothecated or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

otherwise transferred during the restriction period.

Pursuant to this plan, we issued 44,731 and 35,965 shares related to the years ended December 31, 2024 and 2023, respectively.

In addition to the mandatory retainer fee received in restricted stock, directors may elect to receive shares of Class A common stock in lieu of cash for up to 100 % of the balance of their annual retainer, committee retainer and any committee chairman's fees.

These voluntary shares are not subject to any restrictions.

Total shares issued under voluntary elections were 1,603 in 2023 and 480 in 2022.

There were no shares issued under voluntary elections in 2024.

Total shares issued under voluntary elections were 1,603 in 2023.

After the issuance of these shares, there were 53,748 shares of Class A common stock available for issuance under this plan.

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Financial Instruments:

Financial instruments held by the Company include cash and cash equivalents, accounts receivable, equity securities, accounts payable, revolving credit agreements and long-term debt.

Financial instruments held by us include cash and cash equivalents, accounts receivable, equity securities, accounts payable, revolving credit agreements and long-term debt.

Fair Value Measurements:

The Company accounts for the fair value measurement of its financial assets and liabilities in accordance with U.S.

We account for the fair value measurement of our financial assets and liabilities in accordance with U.S.

generally accepted accounting principles, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Described below are the three levels of inputs that may be used to measure fair value:

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See Note 9 for further discussion of fair value measurements.

Recently Issued Accounting Standards

Accounting Standards Adopted in 2024:

Effective for the year ended December 31, 2024, we adopted ASU No.

2023-07, Segment Reporting (Topic 280), (ASU 2023-07), which enhances reportable segment disclosure requirements in part by requiring entities to disclose significant expenses related to their reportable segments.

ASU 2023-07 also requires disclosure of the title and position of the company’s Chief Operating Decision Maker (CODM) and how the CODM uses financial reporting to assess segment performance and allocate resources.

The adoption of this standard only impacts disclosures and did not have a material impact on our Financial Statements.

Accounting Standards Not Yet Adopted:

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which requires entities to disclose more detailed information about their effective tax rate reconciliation as well as information on income taxes paid.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

The adoption of this standard only impacts disclosures and is not expected to have a material impact on our Financial Statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03), which requires entities to disclose disaggregated information about certain income statement expense line items in the notes to their financial statements on an annual and interim basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently in the process of evaluating the impact of this ASU on our Financial Statements and related disclosures.

Reclassification:

Certain reclassifications have been made to the prior periods’ Consolidated Financial Statements to conform to the current period's presentation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

NOTE 3— Revenue Recognition

Nature of Performance Obligations

At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promised good or service that is distinct.

To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Each mine or mine area has a contract with its respective customer that represents a contract under ASC 606.

For its consolidated entities, the Company’s performance obligations vary by contract and consist of the following:

At contract inception, we assess the goods and services promised in our contracts with customers and identifies a performance obligation for each promised good or service that is distinct.

To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Each mine or mine area has a contract with our respective customer that represents a contract under ASC 606.

For our consolidated entities, our performance obligations vary by contract and consist of the following:

At MLMC, each MMBtu delivered during the production period is considered a separate performance obligation.

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Revenue from part sales is recognized upon transfer of control of the parts to the customer.

The Minerals Management segment enters into contracts which grant the right to explore, develop, produce and sell minerals controlled by the Company.

The Minerals Management segment enters into contracts which grant the right to explore, develop, produce and sell minerals controlled by us.

These arrangements result in the transfer of mineral rights for a period of time;

however, no rights to the actual land are granted other than access for purposes of exploration, development, production and sales.

The mineral rights revert back to the Company at the expiration of the contract.

The mineral rights revert back to us at the expiration of the contract.

Under these contracts, granting exclusive right, title, and interest in and to minerals, if any, is the performance obligation.

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The transaction price consists of a variable sales-based royalty and, in certain arrangements, a fixed component in the form of an up-front lease bonus payment.

As the amount of consideration the Company will ultimately be entitled to is entirely susceptible to factors outside its control, the entire amount of variable consideration is constrained at contract inception.

The Company believes that the pricing provisions of royalty contracts are customary in the industry.

As the amount of consideration we will ultimately be entitled to is entirely susceptible to factors outside of our control, the entire amount of variable consideration is constrained at contract inception.

We believe that the pricing provisions of royalty contracts are customary in the industry.

Up-front lease bonus payments represent the fixed portion of the transaction price and are recognized over the primary term of the contract, which is generally three to five years .

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Performance momentarily creates an asset that the customer simultaneously receives and consumes;

therefore, control is

therefore, control is transferred to the customer as work is completed.

Consistent with the conclusion that the customer simultaneously receives and consumes the benefits provided, an input-based measure of progress is appropriate.

As each month of service is completed, revenue is recognized for the amount of actual costs incurred, plus the management fee or fixed fee.

Fluctuations in revenue from period to period result from changes in customer demand primarily due to increases and decreases in activity levels of individual contracts and variances in reimbursable costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

transferred to the customer as work is completed.

Consistent with the conclusion that the customer simultaneously receives and consumes the benefits provided, an input-based measure of progress is appropriate.

As each month of service is completed, revenue is recognized for the amount of actual costs incurred, plus the management fee or fixed fee.

Significant Judgments

The Company’s contracts with its customers 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.

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

Our contracts with our 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 our 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, we allocate each variable payment (and subsequent changes to that payment) entirely to the specific performance obligation to which it relates.

Management fees, as well as general and administrative fees, are also adjusted based on changes in specified indices (e.g., CPI) to compensate for general inflation changes.

Index adjustments, if applicable, are effective prospectively.

In the Minerals Management segment, we have the right to receive revenues from the sale of oil and natural gas through sales of the third-party lessees in which we own a mineral or royalty interest.

Revenue is recognized at the point control of the product is transferred from the operator to the purchaser.

Those purchasers remit payment to the operator and the operator, in turn, remits payment to us.

Receivables from third-party lessees for which we did not receive actual production information, either due to timing delays or due to the unavailability of data at the time when revenues are recognized, are estimated using expected sales volumes and estimated prices.

The difference between our estimates and the actual amounts received is recorded in the month that payment is received from the third-party lessee.

We typically receive payment for oil and natural gas sales within 90 days of the month of delivery.

For the years ended December 31, 2024 and 2023, differences between our estimates and the actual amounts received from operators were immaterial .

For the years ended December 31, 2024 and 2023, any changes in estimates were immaterial .

Cost Reimbursement

Certain contracts include reimbursement from customers of actual costs incurred for the purchase of supplies, equipment and services in accordance with contractual terms.

Such reimbursable revenue is variable and subject to uncertainty, as the amounts received and timing thereof is highly dependent on factors outside of the Company’s control.

Such reimbursable revenue is variable and subject to uncertainty, as the amounts received and timing thereof is highly dependent on factors outside of our control.

Accordingly, reimbursable revenue is fully constrained and not recognized until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of a customer.

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.

The amount is variable until the equipment is acquired.

At the time the equipment is acquired, the variability is resolved as the compensation is fixed.

We are 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 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 acquired $ 23.3 million of equipment for this project during 2023.

In addition, Sawtooth recognized $ 4.9 million in revenue for reimbursable costs during the year ended December 31, 2023.

In accordance with the Thacker Pass agreement, 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 advance if such commercial mining milestones are not met.

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 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

The Company records royalty income in the month production is delivered to the purchaser.

As a mineral owner, the Company has limited visibility into when new wells start producing and production statements may not be received for 30 to 90 days or more after the date production is delivered.

As a result, the Company is required to estimate the amount of production delivered to the purchaser of the product and the price that will be received for the sale of the product.

As discussed above, we record royalty income in the month production is delivered to the purchaser.

The expected sales volumes and prices for these properties are estimated and recorded in Trade accounts receivable in the accompanying Consolidated Balance Sheets.

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.

During 2023, royalty income recognized in the reporting period related to performance obligations satisfied in prior reporting periods was $ 1.4 million.

During 2022, royalty income of $ 2.1 million was recognized for a settlement related to the Company's ownership interest in certain mineral rights.

The difference between our estimates and the actual amounts received is recorded in the month that payment is received from the third-party lessee.

During the years ended December 31, 2024 and 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

In accordance with ASC 606-10-50, the Company disaggregates revenue from contracts with customers into major goods and service lines and timing of transfer of goods and services.

The Company determined that disaggregating revenue into these categories achieves the disclosure objective of depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s business consists of the Coal Mining, NAMining and Minerals Management segments as well as Unallocated Items.

In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers into major goods and service lines and timing of transfer of goods and services.

We determined that disaggregating revenue into these categories achieves the disclosure objective of depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Our business consists of the Coal Mining, NAMining and Minerals Management segments as well as Unallocated Items.

Revenue included in Unallocated Items is primarily related to Mitigation Resources.

See Note 15 to the Consolidated Financial Statements for further discussion of segment reporting.

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Contract Balances

The opening and closing balances of the Company’s current and long-term contract assets and liabilities and receivables are as follows:

The opening and closing balances of our current and long-term contract assets and liabilities and receivables are as follows:

Contract balances

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Increase (decrease) $ 12,277 $ 313 $ ( 212 ) $ ( 394 ) $ 3,649

As described above, the Company enters into royalty contracts that grant exclusive right, title, and interest in and to minerals.

As described above, we enter into royalty contracts that grant exclusive right, title, and interest in and to minerals.

The transaction price consists of a variable sales-based royalty and, in certain arrangements, a fixed component in the form of

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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 $ 0.9 million in 2024, $ 1.3 million in 2025, $ 0.1 million in 2026, and less than $ 0.1 million in 2027 related to the contract liability remaining at December 31, 2023.

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.

The Company has no contract assets recognized from the costs to obtain or fulfill a contract with a customer.

We expect to recognize $ 0.5 million in 2025, $ 0.1 million in 2026 and 2027, $ 1.0 million in 2028, $ 2.4 million in 2029 and $ 1.5 million thereafter related to the contract liability remaining at December 31, 2024.

The difference between the opening and closing balances of our contract balances results from the timing difference between our performance and the customer’s payment.

We have no contract assets recognized from the costs to obtain or fulfill a contract with a customer.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The weighted average method is used for inventory valuation.

During 2023, the Company recorded a $ 7.5 million inventory impairment charge in the line “Cost of sales” in the accompanying Consolidated Statements of Operations as mining costs exceeded net realizable value at MLMC.

During the year ended December 31, 2024 and 2023, we recorded $ 9.6 million and $ 7.5 million of inventory impairment charges, respectively, in the line Cost of sales in the accompanying Consolidated Statements of Operations as mining costs exceeded net realizable value of coal inventory at MLMC.

NOTE 5— Property, Plant and Equipment, Net

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Total depreciation, depletion and amortization expense on property, plant and equipment was $ 24.1 million and $ 26.4 million during 2024 and 2023, respectively.

During the fourth quarter of 2023, the Company recorded a non-cash, long-lived asset impairment charge of $ 65.9 million.

During 2023, we recorded a non-cash, long-lived asset impairment charge of $ 65.9 million.

See Note 9 for further discussion of the impairment charge.

NOTE 6— Intangible Assets

The Company has a coal supply agreement intangible asset which is subject to amortization based on units of production over the term of the lignite sales agreement which expires in 2032.

We have a coal supply agreement intangible asset which is subject to amortization based on units of production over the term of the lignite sales agreement which expires in 2032.

The gross and net balances are set forth in the following table:

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Amortization expense for intangible assets was $ 0.5 million and $ 3.0 million in 2024 and 2023, respectively.

During the fourth quarter of 2023,the Company recorded a non-cash, long-lived asset impairment charge of $ 65.9 million.

During 2023, we recorded a non-cash, long-lived asset impairment charge of $ 65.9 million.

See Note 9 for further discussion of the impairment charge.

NOTE 7— Asset Retirement Obligations

The Company’s obligations associated with the retirement of long-lived assets are recognized at fair value at the time the legal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

obligations are incurred.

Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying

value of the related long-lived asset and is depreciated either by the straight-line method or the units-of-production method.

liability is accreted each period until the liability is settled, at which time the liability is removed.

NOTE 7— Asset Retirement Obligations

Our obligations associated with the retirement of long-lived assets are recognized at fair value at the time the legal obligations are incurred.

Upon initial recognition of a liability, a corresponding amount is capitalized as part of the carrying value of the related long-lived asset and is depreciated either by the straight-line method or the units-of-production method.

The liability is accreted each period until the liability is settled, at which time the liability is removed.

If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.

The Company's asset retirement obligations are principally for costs to close its surface mines and reclaim the land it has disturbed as a result of its normal mining activities as well as for costs to dismantle certain mining equipment at the end of the life of the mine.

Our asset retirement obligations are principally for costs to close our consolidated surface mines and reclaim the land as a result of our normal mining activities.

Management’s estimate involves a high degree of subjectivity.

In particular, the obligation’s fair value is determined using a discounted cash flow technique and is based upon mining permit requirements and various assumptions including credit adjusted risk-free-rates, estimates of disturbed acreage, life of the mine, estimated reclamation costs, the application of various environmental laws and regulations and assumptions regarding equipment productivity.

The Company reviews its asset retirement obligations at each mine site at least annually and makes necessary adjustments for permit changes and for revisions of estimates of the timing and extent of reclamation activities and cost estimates.

We review our asset retirement obligations at each mine site at least annually and makes necessary adjustments for permit changes and for revisions of estimates of the timing and extent of reclamation activities and cost estimates.

The accretion of the liability is being recognized over the estimated life of each individual asset retirement obligation and is recorded in the line Cost of sales in the accompanying Consolidated Statements of Operations.

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The depreciation of the asset is recorded in the line Cost of sales in the accompanying Consolidated Statements of Operations.

A reconciliation of the Company's beginning and ending aggregate carrying amount of the asset retirement obligations are as follows:

A reconciliation of our beginning and ending aggregate carrying amount of the asset retirement obligations are as follows:

Coal Mining Unallocated Items NACCO

Balance at January 1, 2023 $ 28,460 $ 17,542 $ 46,002

Liabilities incurred during the period 1,920 — 1,920

Liabilities settled during the period ( 852 ) ( 1,048 ) ( 1,900 )

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Balance at December 31, 2023 $ 33,044 $ 19,569 $ 52,613

Liabilities incurred during the period 1,920 — 1,920

Liabilities settled during the period ( 6,115 ) ( 960 ) ( 7,075 )

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Balance at December 31, 2024 $ 29,538 $ 19,989 $ 49,527

During 2023, the Company’s wholly-owned subsidiary, Caddo Creek Resources Company (“Caddo Creek”), acquired 100 % of the membership interests in the Marshall Mine.

Prior to the acquisition, Caddo Creek was performing mine reclamation under a fixed price contract with a customer.

The Company received $ 2.2 million of cash, assumed the asset retirement obligation estimated to be approximately $ 1.9 million and recognized a gain of approximately $ 0.3 million in the line "Other, net” in the accompanying Consolidated Statements of Operations.

During 2023, we acquired 100 % of the membership interests in the Marshall Mine.

We received $ 2.2 million of cash, assumed the asset retirement obligation estimated to be approximately $ 1.9 million and recognized a gain of approximately $ 0.3 million in the line Other, net in the accompanying Consolidated Statements of Operations.

The asset retirement obligation’s fair value was determined using a discounted cash flow technique and is based upon permit requirements and various estimates and assumptions that would be used by market participants, including estimates of disturbed acreage, reclamation costs and assumptions regarding equipment productivity.

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Prior to 2023, Bellaire established a $ 5.0 million Mine Water Treatment Trust to provide a financial assurance mechanism in order to assure the long-term treatment of post-mining discharges.

The fair value of Bellaire's Mine Water Treatment assets, which are recognized as a component of Other non-current assets on the Consolidated Balance Sheets, are $ 11.2 million and $ 9.9 million at December 31, 2023 and December 31, 2022, respectively, and are legally restricted for purposes of settling the Bellaire asset retirement obligation.

The fair value of Bellaire's Mine Water Treatment assets, which are recognized as a component of Equity securities on the Consolidated Balance Sheets, are $ 12.3 million and $ 11.2 million at December 31, 2024 and December 31, 2023, respectively, and are legally restricted for purposes of settling the Bellaire asset retirement obligation.

See Note 9 for further discussion of the Mine Water Treatment Trust.

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Financing arrangements are obtained and maintained at the subsidiary level.

NACCO has not guaranteed any borrowings of its subsidiaries.

The following table summarizes the Company's available and outstanding borrowings:

NACCO has not guaranteed any borrowings of our subsidiaries.

The following table summarizes our available and outstanding borrowings:

Total outstanding borrowings:

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Interest paid on total debt was $ 5.3 million and $ 2.4 million during 2024 and 2023, respectively.

The Company has a secured revolving line of credit of up to $ 150.0 million (the “Facility”) that expires in November 2025.

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

Borrowings outstanding under the Facility were $ 70.0 million at December 31, 2024.

At December 31, 2024, the excess availability under the Facility was $ 99.1 million, which reflects a reduction for outstanding letters of credit of $ 30.9 million.

The Facility has performance-based pricing, which sets interest rates based upon achieving various levels of debt to EBITDA ratios, as defined in the Facility.

The Facility has performance-based pricing, which sets interest rates based upon NACCO Natural Resources achieving various levels of debt to EBITDA ratios, as defined in the Facility.

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

The applicable margins, effective December 31, 2023, for base rate and Secured Overnight Financing Rate loans were 1.23 % and 2.23 %, respectively.

The applicable margins, effective December 31, 2024, for base rate and Term Secured Overnight Financing Rate loans were 1.50 % and 2.50 %, respectively.

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

The commitment fee was 0.40 % on the unused commitment at December 31, 2024.

During the year ended December 31, 2023, the average borrowing under the Facility was $ 6.2 million.

The weighted-average annual interest rate, including the floating rate margin, was 6.06 % and 2.54 % at December 31, 2023 and December 31, 2022, respectively.

The Facility contains restrictive covenants, which require, among other things, maintaining 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 subsidiaries 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 December 31, 2023, the Company was in compliance with all financial covenants in the Facility.

During the year ended December 31, 2024 and December 31, 2023, the average borrowing under the Facility was $ 27.2 million and $ 6.2 million, respectively, and the weighted-average annual interest rate, including the floating rate margin, was 8.83 % and 6.06 %, 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.

At December 31, 2024, NACCO Natural Resources was in compliance with all financial covenants in the Facility.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

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

The Company has a demand note payable to Coteau, one of the unconsolidated subsidiaries, which bears interest based on the applicable quarterly federal short-term interest rate as announced from time to time by the IRS.

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.

We have a demand note payable to Coteau, one of the unconsolidated subsidiaries, which bears interest based on the applicable quarterly federal short-term interest rate as announced from time to time by the IRS.

At December 31, 2024 and 2023, the balance of the note was $ 7.7 million and $ 7.0 million and the interest rate was 4.15 % and 5.12 %, respectively.

The Company has eleven notes payable that are secured by sixteen specified units of equipment, bear interest at a weighted average rate of 5.42 %, and expire at various dates through 2029.

We have ten notes payable that are secured by thirteen specified units of equipment, bear interest at a weighted average rate of 5.50 %, and expire at various dates through 2030.

One note includes a principal payment of $ 4.4 million at the end of the term on December 15, 2026.

At December 31, 2023 and 2022, the outstanding balances of the notes were $ 18.8 million and $ 13.2 million, respectively.

At December 31, 2024 and 2023, the outstanding balances of the notes payable were $ 21.8 million and $ 18.8 million, respectively.

NOTE 9— Fair Value Disclosure

Recurring Fair Value Measurements :

The following table presents the Company's assets accounted for at fair value on a recurring basis:

The following table presents our assets accounted for at fair value on a recurring basis:

Fair Value Measurements at Reporting Date Using

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

The Mine Water Treatment Trust realized a gain of $ 1.6 million and a loss of $ 2.2 million in the years ended December 31, 2023 and 2022, respectively.

The Mine Water Treatment Trust realized a gain of $ 1.5 million and $ 1.6 million in the years ended December 31, 2024 and 2023, respectively.

See Note 7 for further discussion of Bellaire's Mine Water Treatment Trust.

Prior to 2022, the Company invested $ 2.0 million in equity securities of a public company with a diversified portfolio of royalty producing mineral interests.

Prior to 2023, we invested $ 2.0 million in equity securities of a public company with a diversified portfolio of royalty producing mineral interests.

The investment is reported at fair value based upon quoted market prices in active markets for identical assets;

therefore, it is classified as Level 1 within the fair value hierarchy.

The Company recognized a gain of $ 0.4 million and $ 1.9 million in the years ended December 31, 2023 and 2022, respectively, 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 (income) expense section of the Consolidated Statements of Operations.

We recognized a gain of $ 0.3 million and $ 0.4 million in the years ended December 31, 2024 and 2023, respectively, related to the investment in these equity securities.

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

There were no transfers into or out of Levels 1, 2 or 3 during the year ended December 31, 2024.

Nonrecurring Fair Value Measurements:

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

The notice did not provide a timeline for resolution of the issue.

As of March 6, 2024, the impacted boiler is still not

On December 18, 2023, MLMC received notice from its customer related to a boiler issue at the Red Hills Power Plant that began on December 15, 2023.

We determined the reduction in customer demand

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

The prolonged mechanical issue is expected to result in a reduction in customer demand and will have a significant impact on the Company's results of operations during 2024.

The Company determined the anticipated reduction in customer demand caused by this issue was an indicator that potential impairment existed as of December 31, 2023 and, as a result, reviewed MLMC's long-lived assets for impairment.

As a result, the Company estimated the fair value of the asset group which resulted in a non-cash, long-lived asset impairment charge of $ 65.9 million.

caused by this issue was an indicator of potential impairment as of December 31, 2023 and, as a result, reviewed MLMC's long-lived assets for impairment.

We assessed the recoverability of the MLMC asset group and determined that the assets were not fully recoverable when compared to the remaining future undiscounted cash flows from the asset group.

As a result, we estimated the fair value of the asset group which resulted in a non-cash, long-lived asset impairment charge of $ 65.9 million.

The asset impairment charge was recorded as Long-lived asset impairment charge in the Consolidated Statement of Operations for the year ended December 31, 2023.

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The analysis of certain other long-term assets was calculated using unobservable inputs with little or no market data, which are classified as Level 3 inputs.

The Company regularly performs reviews of potential future development projects and in 2022 identified certain legacy assets where future development is unlikely.

As a result, the Company estimated the fair value of the assets using unobservable inputs, which are classified as Level 3 inputs.

The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off to zero during 2022 and resulted in non-cash asset impairment charges of $ 3.9 million in the Minerals Management segment.

The impairment charge is reported on the line Long-lived asset impairment charge in the Consolidated Statements of Operations.

While the boiler issue at the customer's Red Hills Power Plant has been resolved, it resulted in a reduction in customer demand which had a significant impact on our results of operations during 2024.

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

Other Fair Value Measurement Disclosures:

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The fair value and the book value of revolving credit agreements and long-term debt, excluding finance leases, was $ 97.9 million and $ 99.4 million, respectively, at December 31, 2024 and $ 35.3 million and $ 35.8 million, respectively, at December 31, 2023.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable.

Under its mining contracts, the Company recognizes revenue and a related receivable as coal or other aggregates are delivered or predevelopment services are provided.

Financial instruments that potentially subject us to concentration of credit risk consist principally of accounts receivable.

Under our mining contracts, we recognize revenue and a related receivable as coal or other aggregates are delivered or predevelopment services are provided.

These mining contracts provide for monthly settlements.

The Company's significant credit concentration is uncollateralized;

Our significant credit concentration is uncollateralized;

however, historically minimal credit losses have been incurred.

To further reduce credit risk associated with accounts receivable, the Company performs periodic credit evaluations of its customers, but does not generally require advance payments or collateral.

To further reduce credit risk associated with accounts receivable, we perform periodic credit evaluations of our customers, but do not generally require advance payments or collateral.

NOTE 10— Leases

The Company recognizes right-of-use assets (“ROU assets”) and lease liabilities for operating leases of real estate, mining and other equipment that expire at various dates through 2033.

The majority of the Company's leases are operating leases.

We recognize right-of-use assets (ROU assets) and lease liabilities for operating leases of real estate, mining and other equipment that expire at various dates through 2036.

The majority of our leases are operating leases.

NACCO does not recognize leases with a term of 12 months or less on the balance sheet.

Instead, the Company recognizes the related lease expense on a straight-line basis over the lease term.

The Company accounts for lease and non-lease components as a single lease component.

The Company's lease agreements do not contain lease payments that depend on an index or a rate, as such, minimum lease payments do not include variable lease payments.

Instead, we recognize the related lease expense on a straight-line basis over the lease term.

We account for lease and non-lease components as a single lease component.

Our lease agreements do not contain lease payments that depend on an index or a rate, as such, minimum lease payments do not include variable lease payments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Finance Long-term debt 57 84

(a) Finance leased assets are recorded net of accumulated amortization of less than $ 0.1 million and $ 0.2 million as of December 31, 2023 and December 31, 2022, respectively.

(a) Finance leased assets are recorded net of accumulated amortization of less than $ 0.1 million as of December 31, 2024 and December 31, 2023.

The components of lease expense for the years ended December 31 are as follows:

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

As most of the Company's leases do not provide an implicit rate, the Company determines the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

The Company considers its credit rating and the current economic environment in determining this collateralized rate.

As most of our leases do not provide an implicit rate, we determine the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

We consider our credit rating and the current economic environment in determining this collateralized rate.

The assumptions used in accounting for ASC 842 for the years ended December 31 are as follows:

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Various legal and regulatory proceedings and claims have been or may be asserted against NACCO and certain subsidiaries relating to the conduct of their businesses.

These proceedings and claims are incidental to the ordinary course of business of the Company.

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

These proceedings and claims are incidental to the ordinary course of our business.

Management believes that it has meritorious defenses and will vigorously defend us 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.

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.

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.

We do 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, we disclose the nature of the contingency and, in some circumstances, an estimate of the possible loss.

These matters are subject to inherent uncertainties, and unfavorable rulings could occur.

If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on the Company’s financial position, results of operations and cash flows of the period in which the ruling occurs, or in future periods.

If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on our financial position, results of operations and cash flows of the period in which the ruling occurs, or in future periods.

NOTE 12— Stockholders' Equity and Earnings Per Share

NACCO Industries, Inc.

Class A common stock is traded on the New York Stock Exchange under the ticker symbol “NC.” Because of transfer restrictions on Class B common stock, no trading market has developed, or is expected to develop, for the Company's Class B common stock.

Class A common stock is traded on the New York Stock Exchange under the ticker symbol NC.

Because of transfer restrictions on Class B common stock, no trading market has developed, or is expected to develop, for our Class B common stock.

The Class B common stock is convertible into Class A common stock on a one-for-one basis at any time at the request of the holder.

The Company's Class A common stock and Class B common stock have the same cash dividend rights per share.

Our Class A common stock and Class B common stock have the same cash dividend rights per share.

As the liquidation and dividend rights are identical, any distribution of earnings would be allocated to Class A and Class B stockholders on a proportionate basis, and accordingly the net income per share for each class of common stock is identical.

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Stock Repurchase Program:

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

On November 7, 2023, our Board of Directors approved a stock purchase program (2023 Stock Repurchase Program) providing for the purchase of up to $ 20.0 million of our outstanding Class A common stock through

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

common stock through December 31, 2025.

December 31, 2025.

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 2023, the Company repurchased 47,095 shares of Class A Common Stock under the 2021 Stock Repurchase Program for an aggregate purchase price of $ 1.6 million and 43,872 shares of Class A Common Stock under the 2023 Stock Repurchase Program for an aggregate purchase price of $ 1.5 million.

There were no stock repurchases in 2022.

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.

The 2023 Stock Repurchase Program does not require the Company to acquire any specific number of shares and may be modified, suspended, extended or terminated by the Company without prior notice and may be executed through open market purchases, privately negotiated transactions or otherwise.

All or part of the repurchases under the 2023 Stock Repurchase Program may be implemented under a Rule 10b5-1 trading plan, which would allow repurchases under pre-set terms at times when the Company might otherwise be restricted from doing so under applicable securities laws.

During 2024, we repurchased 316,950 shares of Class A Common Stock under the 2023 Stock Repurchase Program for an aggregate purchase price of $ 9.9 million.

During 2023, we repurchased 47,095 shares of Class A Common Stock under the 2021 Stock Repurchase Program for an aggregate purchase price of $ 1.6 million and 43,872 shares of Class A Common Stock under the 2023 Stock Repurchase Program for an aggregate purchase price of $ 1.5 million.

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

The 2023 Stock Repurchase Program does not require us to acquire any specific number of shares and may be modified, suspended, extended or terminated by us without prior notice and may be executed through open market purchases, privately negotiated transactions or otherwise.

All or part of the repurchases under the 2023 Stock Repurchase Program may be implemented under a Rule 10b5-1 trading plan, which would allow repurchases under pre-set terms at times when we might otherwise be restricted from doing so under applicable securities laws.

Stock Compensation:

See Note 2 for a discussion of the Company's restricted stock awards.

See Note 2 for a discussion of our restricted stock awards.

Earnings per Share:

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Diluted weighted average shares outstanding 7,411 7,478

Basic (loss) earnings per share $ ( 5.29 ) $ 10.14

Diluted (loss) earnings per share $ ( 5.29 ) $ 10.06

Basic earnings (loss) per share

$ 4.58 $ ( 5.29 )

Diluted earnings (loss) per share

$ 4.55 $ ( 5.29 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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NOTE 13— Income Taxes

The Company provides for income taxes and the related accounts under the asset and liability method.

We provide for income taxes and the related accounts under the asset and liability method.

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect during the year in which the basis differences reverse.

Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

The components of (Loss) income before income tax (benefit) provision and the Income tax (benefit) provision for the years ended December 31 are as follows:

(Loss) income before income tax (benefit) provision

The components of Income (loss) before income tax benefit and the Income tax benefit for the years ended December 31 are as follows:

Income (loss) before income tax benefit

Domestic $ 33,637 $ ( 64,077 )

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$ 33,646 $ ( 64,158 )

Income tax (benefit) provision

Current income tax (benefit) provision:

Income tax benefit

Current income tax provision (benefit):

Federal $ ( 2,520 ) $ ( 3,405 )

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Total current ( 1,612 ) ( 3,457 )

Deferred income tax (benefit) provision:

Deferred income tax provision (benefit):

Federal 1,373 ( 16,467 )

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$ ( 95 ) $ ( 24,571 )

The Company made income tax payments of $ 1.4 million and $ 23.4 million during 2023 and 2022, respectively.

We made income tax payments of $ 5.2 million and $ 1.4 million during 2024 and 2023, respectively.

During the same periods, income tax refunds totaled $ 1.0 million and $ 14.9 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before the provision for income taxes.

A reconciliation of the federal statutory and effective income tax rate for the years ended December 31 is as follows:

(Loss) income before income tax (benefit) provision $ ( 64,158 ) $ 87,723

Income (loss) before income tax benefit

$ 33,646 $ ( 64,158 )

Statutory taxes at 21.0% $ 7,066 $ ( 13,473 )

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Other, net ( 892 ) ( 701 )

Income tax (benefit) provision $ ( 24,571 ) $ 13,565

Income tax benefit

$ ( 95 ) $ ( 24,571 )

Effective income tax rate ( 0.3 ) % 38.3 %

The Company recorded an income tax benefit of $ 24.6 million for the year ended December 31, 2023 on loss before income tax of $ 64.2 million, or 38.3 %, compared to income tax expense of $ 13.6 million on income before income tax of $ 87.7 million, or 15.5 %, for the year ended December 31, 2022.

The year ended December 31, 2023 included $ 4.0 million of discrete tax benefits, primarily from the reversal of uncertain tax provisions and the impact of U.S.

federal provision to return adjustments.

Excluding the $ 4.0 million of discrete tax benefit, the effective income tax rate in 2023 was 32.0 %.

The income tax provision for the year ended December 31, 2022 includes $ 1.5 million of discrete tax benefits, primarily from the reversal of uncertain tax positions as a result of the conclusion of the IRS examination of the Company’s 2013, 2014, 2015 and 2016 federal income tax returns.

Excluding the $ 1.5 million of discrete tax benefits, the effective income tax rate in 2022 was 17.1 %.

The change in the effective income tax rate for 2023 compared to 2022, excluding the impact of the long-lived asset impairment charge and discrete items, is primarily due to a decrease in earnings at entities that qualify for percentage depletion.

The benefit from percentage depletion is not directly related to the amount of pre-tax income recorded in a period.

We recorded an income tax benefit of $ 0.1 million for the year ended December 31, 2024 on income before income tax of $ 33.6 million, or 0.3 %, compared to an income tax benefit of $ 24.6 million on loss before income tax of $ 64.2 million, or 38.3 %, for the year ended December 31, 2023.

The years ended December 31, 2024 and 2023 both included $ 4.0 million of discrete tax benefits, primarily from the reversal of uncertain tax provisions.

Excluding the $ 4.0 million of discrete tax benefits in each year, the effective income tax rate in 2024 and 2023 was 11.5 % and 32.0 %, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

A detailed summary of the total deferred tax assets and liabilities in the Company's Consolidated Balance Sheets resulting from differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes is as follows:

The change in the effective income tax rate for 2024 compared to 2023, excluding the impact of the long-lived asset impairment charge and discrete items, is primarily due to an increase in earnings at entities that do not qualify for percentage depletion.

The benefit from percentage depletion is not directly related to the amount of pre-tax income recorded in a period.

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

When income tax expense is recorded, the benefit from percentage depletion decreases the effective income tax rate, while the effect is to increase the effective income tax rate when a benefit for income taxes is recorded.

A detailed summary of the total deferred tax assets and liabilities in our Consolidated Balance Sheets resulting from differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes is as follows:

Deferred tax assets

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Depreciation and depletion 23,731 23,607

Partnership investment - development costs — 6,069

Accrued pension benefits 10,633 10,047

Total deferred tax liabilities 35,573 41,083

Net deferred asset (liability) $ 15,081 $ ( 6,122 )

The following table summarizes the tax carryforwards and associated carryforward periods and related valuation allowances where the Company has determined that realization is uncertain:

Net deferred asset

$ 14,641 $ 15,081

The following table summarizes the tax carryforwards and associated carryforward periods and related valuation allowances where we have determined that realization is uncertain:

December 31, 2024

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State net operating loss $ 16,526 $ 14,757 2024-2043

The Company has a valuation allowance for certain state and foreign deferred tax assets.

Based upon the review of historical earnings and the relevant expiration of carryforwards, including utilization limitations in the various state taxing jurisdictions, the Company believes the valuation allowances are appropriate and does not expect to release valuation allowances within the next twelve months that would have a significant effect on the Company's financial position or results of operations.

Since 2021, the Company has participated in a voluntary program with the IRS called Compliance Assurance Process (“CAP”).

The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most issues prior to the filing of the tax return.

In general, the Company operates in taxing jurisdictions that provide a statute of limitations period ranging from three to five years for the taxing authorities to review the applicable tax filings.

The tax returns of the Company and certain of its subsidiaries are under routine examination by various taxing authorities.

The Company has not been informed of any material assessment for which an accrual has not been previously provided and the Company would

We have a valuation allowance for certain state and foreign deferred tax assets.

Based upon the review of historical earnings and the relevant expiration of carryforwards, including utilization limitations in the various state taxing jurisdictions, we believe the valuation allowances are appropriate and do not expect to release valuation allowances within the next twelve months that would have a significant effect on our financial position or results of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

vigorously contest any material assessment.

Management believes any potential adjustment would not materially affect the Company's financial condition or results of operations.

The following is a reconciliation of the Company's total gross unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the financial statements for the years ended December 31, 2023 and 2022.

Since 2021, we have participated in a voluntary program with the IRS called Compliance Assurance Process (CAP).

The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most issues prior to the filing of the tax return.

In general, we operate in taxing jurisdictions that provide a statute of limitations period ranging from three to five years for the taxing authorities to review the applicable tax filings.

Our tax returns are under routine examination by various taxing authorities.

We have not been informed of any material assessment for which an accrual has not been previously provided and would vigorously contest any material assessment.

Management believes any potential adjustment would not materially affect our financial condition or results of operations.

The following is a reconciliation of our total gross unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the financial statements for the years ended December 31, 2024 and 2023.

Approximately $ 0.6 million and $ 2.8 million of the gross unrecognized tax benefits as of December 31, 2024 and 2023, respectively, relate to permanent items that, if recognized, would impact the effective income tax rate.

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Balance at January 1 $ 6,148 $ 9,626

Decreases based on settlements with tax authorities — ( 928 )

Decreases based on lapse of applicable statute of limitations ( 5,396 ) ( 3,478 )

Balance at December 31 $ 752 $ 6,148

The Company records interest and penalties on uncertain tax positions as a component of the income tax provision.

The Company recognized net benefit of less than $ 0.1 million and net expense of less than $ 0.1 million in interest and penalties related to uncertain tax positions during 2023 and 2022, respectively.

The total amount of interest and penalties accrued was $ 0.2 million and $ 0.3 million as of December 31, 2023 and 2022, respectively.

The Company expects the amount of unrecognized tax benefits will change within the next 12 months;

however, the change in unrecognized tax benefits, which is reasonably possible within the next 12 months, is not expected to have a significant effect on the Company's financial position, results of operations or cash flows.

We record interest and penalties on uncertain tax positions as a component of the income tax provision.

We recognized a net benefit of less than $ 0.1 million in interest and penalties related to uncertain tax positions during 2024 and 2023.

The total amount of interest and penalties accrued was $ 0.2 million as of December 31, 2024 and 2023.

We expect the amount of unrecognized tax benefits will change within the next 12 months;

however, the change is not expected to have a significant effect on our financial position, results of operations or cash flows.

NOTE 14— Retirement Benefit Plans

Defined Benefit Plans:

The Company maintains defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods.

Prior to 2022, the Company amended Combined Plan to freeze pension benefits for all employees.

The Company also amended the Supplemental Retirement Benefit Plan (the “SERP”) to freeze all pension benefits.

All eligible employees of the Company, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans.

During 2023, the Board of Directors of the Company approved the termination of the Combined Plan and participants were offered lump-sum distributions as part of the termination process.

As a result of the lump-sum distributions, the Company recognized a non-cash, pension settlement charge of $ 1.8 million on the "Other, net" line within the accompanying Consolidated Statements of Operations.

We maintain defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods.

Prior to 2023, we amended the Combined Plan to freeze pension benefits for all employees.

We also amended the Supplemental Retirement Benefit Plan (SERP) to freeze all pension benefits.

All of our eligible employees, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans.

During 2023, our Board of Directors approved the termination of the Combined Plan and participants were offered lump-sum distributions as part of the termination process.

As a result of the lump-sum distributions, we recognized a non-cash, pension settlement charge of $ 1.8 million on the Other, net line within the accompanying Consolidated Statements of Operations.

The $ 1.8 million charge represents a pro rata portion of the unrecognized net loss recorded in Accumulated other comprehensive loss.

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Set forth below is detail of the net periodic pension expense (income) for the defined benefit plans for the years ended December 31:

Set forth below is detail of the net periodic pension expense for the defined benefit plans for the years ended December 31:

Interest cost $ 1,360 $ 1,639

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Settlements — 1,815

Net periodic pension expense (income) $ 812 $ ( 1,001 )

Net periodic pension expense

Set forth below is detail of other changes in plan assets and benefit obligations recognized in other comprehensive loss for the years ended December 31:

Current year actuarial (gain) loss $ 2,560 $ 1,717

Current year actuarial loss

$ 960 $ 2,560

Amortization of actuarial loss ( 270 ) ( 51 )

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Interest cost 1,360 1,639

Actuarial loss (gain) 2,261 ( 8,396 )

Actuarial (gain) loss

( 427 ) 2,261

Benefits paid ( 2,610 ) ( 2,614 )

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$ 9,731 $ 9,241

The Company recognizes as a component of benefit (income) cost, as of the measurement date, any unrecognized actuarial net gains or losses that exceed 10% of the larger of the projected benefit obligations or the plan assets, defined as the "corridor." Amounts outside the corridor are amortized over the average expected remaining service of active participants expected to benefit under the retiree medical plans or over the average expected remaining lifetime of inactive participants for the pension plans.

We recognize as a component of benefit (income) cost, as of the measurement date, any unrecognized actuarial net gains or losses that exceed 10% of the larger of the projected benefit obligations or the plan assets, defined as the corridor.

Amounts outside the corridor are amortized over the average expected remaining service of active participants expected to benefit under the retiree medical plans or over the average expected remaining lifetime of inactive participants for the pension plans.

The (gain) loss amounts recognized in AOCI are not expected to be fully recognized until the plan is terminated or as settlements occur, which would trigger accelerated recognition.

Prior service costs resulting from plan changes are also in AOCI.

The Company's policy is to make contributions to fund its pension plans within the range allowed by applicable regulations.

The Company maintains one supplemental defined benefit plan that pays monthly benefits to participants directly out of corporate funds.

Our policy is to make contributions to fund our pension plans within the range allowed by applicable regulations.

We maintain one supplemental defined benefit plan that pays monthly benefits to participants directly out of corporate funds.

All other pension benefit payments are made from assets of the pension plans.

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The expected long-term rate of return on defined benefit plan assets reflects management's expectations of long-term rates of return on funds invested to provide for benefits included in the projected benefit obligations.

In establishing the expected long-term rate of return assumption for plan assets, the Company considers the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans as well as a forward-looking rate of return.

The historical and forward-looking rates of return for each of the asset classes used to determine the Company's estimated rate of return assumption were based upon the rates of return earned or expected to be earned by investments in the equivalent benchmark market indices for each of the asset classes.

In establishing the expected long-term rate of return assumption for plan assets, we consider the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans as well as a forward-looking rate of return.

The historical and forward-looking rates of return for each of the asset classes used to determine our estimated rate of return assumption were based upon the rates of return earned or expected to be earned by investments in the equivalent benchmark market indices for each of the asset classes.

Expected returns for pension plans are based on a calculated market-related value for pension plan assets.

Under this methodology, asset gains and losses resulting from actual returns that differ from the Company's expected returns are recognized in the market-related value of assets ratably over three years.

Under this methodology, asset gains and losses resulting from actual returns that differ from our expected returns are recognized in the market-related value of assets ratably over three years.

The pension plans maintain investment policies that, among other things, establish a portfolio asset allocation methodology with percentage allocation bands for individual asset classes.

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Fixed income securities 99.2 % 99.1 % 90.0 % - 100.0 %

Cash equivalents 0.3 % — % — % - 5.0 %

Money market funds 0.8 % 0.6 % 0.0 % - 10.0 %

equity securities — % 44.9 % 0.0 % - 0.0 %

equity securities — % 20.5 % 0.0 % - 0.0 %

The 2023 asset allocation reflects the move into fixed income securities to mitigate volatility prior to the termination of the Combined Plan.

Cash equivalents — % 0.3 % 0.0 %

The asset allocation reflects the move into fixed income securities to mitigate volatility prior to the termination of the Combined Plan, currently expected to occur in 2025.

The defined benefit pension plans do not have any direct ownership of NACCO common stock.

The fair value of each major category of the Company's pension plan assets are valued using quoted market prices in active markets for identical assets, or Level 1 in the fair value hierarchy.

The fair value of each major category of our pension plan assets are valued using quoted market prices in active markets for identical assets, or Level 1 in the fair value hierarchy.

Following are the values as of December 31:

Fixed income securities $ 28,028 $ 29,866

Cash equivalents 81 —

Money market funds 223 181

equity securities — 15,499

equity securities — 7,055

Cash equivalents — 81

Total $ 28,251 $ 30,128

Postretirement Health Care:

We also maintain health care plans which provide benefits to grandfathered eligible retired employees.

All of our health care plans have a cap on our share of the costs.

The health care plans have network provided benefits which result in cost savings for us.

These plans have no assets.

Under our current policy, plan benefits are funded at the time they are due to participants.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Postretirement Health Care:

The Company also maintains health care plans which provide benefits to grandfathered eligible retired employees.

All health care plans of the Company have a cap on the Company's share of the costs.

The health care plans have network provided benefits which result in cost savings for the Company.

These plans have no assets.

Under the Company's current policy, plan benefits are funded at the time they are due to participants.

The assumptions used in accounting for the postretirement health care plans are set forth below for the years ended December 31:

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Health care cost trend rate assumed for next year 6.50 %

Rate to which the cost trend rate is assumed to decline (ultimate trend rate) 4.75 %

6.25 % - 6.50 %

Rate to which the cost trend rate is assumed to decline (ultimate trend rate) 4.75 %

Year that the rate reaches the ultimate trend rate 2033

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Net periodic benefit expense $ 152 $ 78

Set forth below is detail of other changes in plan assets and benefit obligations recognized in other comprehensive loss (income) for the years ended December 31:

Current year actuarial loss (gain) $ 173 $ ( 44 )

Set forth below is detail of other changes in benefit obligations recognized in other comprehensive (income) loss for the years ended December 31:

Current year actuarial (gain) loss

$ ( 49 ) $ 173

Amortization of actuarial loss ( 75 ) ( 44 )

Amortization of prior service credit 6 50

Total recognized in other comprehensive loss (income) $ 179 $ ( 56 )

Total recognized in other comprehensive (income) loss

$ ( 118 ) $ 179

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

The following sets forth the changes in benefit obligations during the year and the funded status of the postretirement health care at December 31:

The following sets forth the changes in benefit obligations during the year and the funded status of the postretirement health care plans at December 31:

Change in benefit obligation

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Interest cost 75 77

Actuarial loss (gain) 173 ( 44 )

Actuarial (gain) loss

Benefits paid ( 195 ) ( 229 )

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Defined Contribution Plans:

NACCO and its subsidiaries maintain a defined contribution (401(k)) plan for substantially all employees and provide employer matching contributions based on plan provisions.

We maintain a defined contribution (401(k)) plan for substantially all employees and provide employer matching contributions based on plan provisions.

The plan also provides for a minimum employer contribution.

Total costs, including Company contributions, for these plans were $ 3.6 million and $ 3.3 million in 2023 and 2022, respectively.

Our matching contributions for these plans were $ 3.6 million and $ 3.6 million in 2024 and 2023, respectively.

NOTE 15— Business Segments

The Company’s operating segments are:

Our operating segments are:

(i) Coal Mining, (ii) NAMining and (iii) Minerals Management.

The Company determines its reportable segments by first identifying its operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component.

The Company’s Chief Operating Decision Maker utilizes operating profit to evaluate segment performance and allocate resources.

We determine our reportable segments by first identifying our operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component.

Our President and Chief Executive Officer, who is the CODM, utilizes Operating profit (loss) to evaluate segment performance and allocate resources.

Our CODM considers actual, budgeted and forecasted Operating profit (loss) from operations on a monthly basis for evaluating the performance of each segment and making decisions about allocating capital and other resources to each segment.

All financial statement line items below operating profit (other income including interest expense and interest income, the provision for income taxes and net income) are presented and discussed within this Form 10-K on a consolidated basis.

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

See Note 1 for additional discussion of the Company's reportable segments.

See Note 1 for additional discussion of our reportable segments.

All current operations reside in the U.S.

The accounting policies of the reportable segments are described in Note 2 and Note 18.

In 2023 and 2022, two customers individually accounted for more than 10% of consolidated revenue.

The accounting policies of the reportable segments are described in Note 2.

In 2024 and 2023, three customers and two customers, respectively, accounted for more than 10% of consolidated revenue.

The following represents the revenue attributable to each of these entities as a percentage of consolidated revenue for those years:

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NAMining customer 24 % 22 %

The following tables present revenue, operating profit, depreciation expense and capital expenditures for the years ended December 31:

NAMining customer 11 % 7 %

The following tables provide segment financial information and a reconciliation of segment results to consolidated results for the years ended December 31:

Coal Mining $ 68,611 $ 85,415

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Total $ 237,708 $ 214,794

Operating (loss) profit

Cost of sales

Coal Mining $ 79,375 $ 108,760

4 unchanged sentences

Total $ 207,952 $ 200,203

Expenditures for property, plant and equipment and acquisition of mineral interests

Earnings of unconsolidated operations

Coal Mining $ 51,821 $ 44,633

3 unchanged sentences

Total $ 57,476 $ 49,994

Depreciation, depletion and amortization

Operating expenses*

Coal Mining $ 30,358 $ 92,630

3 unchanged sentences

Total $ 65,139 $ 134,722

Asset information by segment is not discretely maintained for internal reporting or used in evaluating performance.

*Operating expenses consist of Selling, general and administrative expenses, Amortization of intangible assets, (Gain) loss on sale of assets and Long-lived asset impairment charges.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Operating profit (loss)

Coal Mining $ 24,311 $ ( 71,342 )

NAMining 5,772 3,348

Minerals Management 28,927 19,418

Unallocated Items ( 23,317 ) ( 21,461 )

Eliminations 12 ( 100 )

Total $ 35,705 $ ( 70,137 )

Expenditures for property, plant and equipment and acquisition of mineral interests

Coal Mining $ 8,292 $ 6,609

NAMining 30,556 36,073

Minerals Management 1,079 38,881

Unallocated Items 15,492 559

Total $ 55,419 $ 82,122

Depreciation, depletion and amortization

Coal Mining $ 9,476 $ 17,569

NAMining 9,811 8,172

Minerals Management 4,273 3,067

Unallocated Items 1,092 579

Total $ 24,652 $ 29,387

Asset information by segment is not discretely maintained for internal reporting or used in evaluating performance.

NOTE 16— Unconsolidated Subsidiaries

Each of the Company's wholly owned Unconsolidated Subsidiaries, within the Coal Mining and NAMining segments, meet the definition of a VIE.

The Unconsolidated Subsidiaries are capitalized primarily with debt financing provided by or supported by their respective customers, and generally without recourse to NACCO and NACoal.

Although NACoal owns 100% of the equity and manages the daily operations of the Unconsolidated Subsidiaries, the Company has determined that the equity capital provided by NACoal is not sufficient to adequately finance the ongoing activities or absorb any expected losses without additional support from the customers.

Each of our wholly owned Unconsolidated Subsidiaries, within the Coal Mining and NAMining segments, meet the definition of a VIE.

The Unconsolidated Subsidiaries are capitalized primarily with debt financing provided by or supported by their respective customers, and generally without recourse to us.

Although we own 100 % of the equity and manages the daily operations of the Unconsolidated Subsidiaries, we have determined that the equity capital provided by us is not sufficient to adequately finance the ongoing activities or absorb any expected losses without additional support from the customers.

The customers have a controlling financial interest and have the power to direct the activities that most significantly affect the economic performance of the entities.

As a result, the Company is not the primary beneficiary and therefore does not consolidate these entities' financial positions or results of operations.

As a result, we are not the primary beneficiary and therefore do not consolidate these entities' financial positions or results of operations.

See Note 1 for a discussion of these entities.

The Investment in the unconsolidated subsidiaries and related tax positions totaled $ 14.1 million and $ 12.4 million at December 31, 2024 and 2023, respectively.

The Company's risk of loss relating to these entities is limited to its invested capital, which was $ 5.0 million and $ 7.1 million at December 31, 2023 and 2022, respectively.

NACoal is a party to certain guarantees related to Coyote Creek.

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

Our risk of loss relating to these entities is limited to our invested capital, which was $ 5.5 million and $ 5.0 million at December 31, 2024 and 2023, respectively.

NACCO Natural Resources is a party to certain guarantees related to Coyote Creek.

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

The make-whole amount is based on the excess, if any, of the discounted value of the remaining scheduled debt payments over the principal amount.

In addition, in the event Coyote Creek’s LSA is terminated on or after January 1, 2024 by Coyote Creek’s customers, NACoal is obligated to purchase Coyote Creek’s dragline and rolling stock for the then net book value of those assets.

To date, no payments have been required from NACoal since the inception of these guarantees.

The Company believes that the likelihood NACoal would be required to perform under the guarantees is remote, and no amounts related to these guarantees have been recorded.

In addition, in the event Coyote Creek’s LSA is terminated by Coyote Creek’s customers, NACCO Natural Resources is obligated to purchase Coyote Creek’s dragline and rolling stock for the then net book value of those assets.

To date, no payments have been required from NACCO Natural Resources since the inception of these guarantees.

We believe that the likelihood NACCO Natural Resources would be required to perform under the guarantees is remote, and no amounts related to these guarantees have been recorded.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Summarized financial information for the unconsolidated subsidiaries is as follows:

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Reimbursed costs have offsetting expenses and have no impact on income before income taxes.

Income before income taxes represents the Earnings of the unconsolidated operations.

The Company received dividends of $ 45.8 million and $ 49.0 million from the Unconsolidated Subsidiaries in 2023 and 2022, respectively.

NOTE 17— Related Party Transactions

One of the Company's directors is a retired Jones Day partner.

Legal services rendered by Jones Day approximated $ 0.8 million and $ 1.0 million for the years ended December 31, 2023 and 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

serves as the Chairman of the Board of Directors of NACCO and supports the President and Chief Executive Officer of NACCO upon request under the terms of a consulting agreement.

Fees for consulting services rendered by Mr.

Rankin approximated $ 0.3 million for both of the years ended December 31, 2023 and 2022.

Hyster-Yale Materials Handling, Inc.

("Hyster-Yale") is a former subsidiary of the Company that was spun-off to stockholders in 2012.

Rankin is Executive Chairman of Hyster-Yale.

In the ordinary course of business, the Company leases or buys Hyster-Yale lift trucks.

The terms may not be comparable to terms that would be obtained in a transaction between unaffiliated parties.

Income before income taxes represents the Earnings of the unconsolidated operations within the Coal Mining and NAMining segments.

We received dividends of $ 48.8 million and $ 45.8 million from the Unconsolidated Subsidiaries in 2024 and 2023, respectively.

NOTE 17— Supplemental Oil and Gas Disclosures (Unaudited)

The Minerals Management segment derives income primarily by leasing its royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil and coal in exchange for royalty payments based on the lessees' sales of those minerals.

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

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 Minerals Management segment derives income primarily by leasing our royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil and coal in exchange for royalty payments based on the lessees' sales of those minerals.

As an owner of royalty and mineral interests, our access to information concerning activity and operations of our royalty and mineral interests is limited.

We do 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.

See Note 1, Note 2 and Note 15 for additional discussion of the Minerals Management segment.

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Reserves have been estimated using deterministic and probabilistic methods.

All reserves estimates have been prepared using standard engineering practices generally accepted by the petroleum industry and conform to guidelines developed and adopted by the SEC.

The following table presents the Company's estimated net proved oil and natural gas reserves as of December 31 based on the reserve report prepared by Haas Engineering, the Company’s independent petroleum engineering firm.

All of the Company’s reserves are located in the United States.

All reserves estimates have

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

been prepared using standard engineering practices generally accepted by the petroleum industry and conform to guidelines developed and adopted by the SEC.

The following table presents our estimated net proved oil and natural gas reserves as of December 31 based on the reserve report prepared by Haas & Cobb Petroleum Consultants, our independent petroleum engineering firm.

All of our reserves are located in the United States.

Net reserves as of December 31, 2024

5 unchanged sentences

Total 695,190 473,930 27,627,670

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

Net reserves as of December 31, 2023

37 unchanged sentences

gallons liquid volume.

One thousand cubic feet of natural gas at the contractual pressure and temperature bases.

(3) Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors.

As an owner of mineral and royalty interests, the Company generally does not have evidence of approval of operators’ development plans.

As a result, proved undeveloped reserve estimates are limited to those relatively few locations for which drilling permits have been publicly filed.

As of December 31, 2023, PUD reserves consists of 45 wells in various stages of drilling or completions.

As of December 31, 2023, less than 1 % of the Company's total proved reserves were classified as PUDs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

One thousand cubic feet of natural gas at the contractual pressure and temperature bases.

(3) Revisions of previous estimates include technical revisions due to changes in commodity prices, historical and projected performance and other factors.

As an owner of mineral and royalty interests, we generally do not have evidence of approval of operators’ development plans.

As a result, proved undeveloped reserve estimates are limited to those relatively few locations for which drilling permits have been publicly filed.

As of December 31, 2024, PUD reserves consists of 89 wells in various stages of drilling or completions.

As of December 31, 2024, less than 1 % of our total proved reserves were classified as PUDs.

Standardized Measure of Discounted Future Net Cash Flows

3 unchanged sentences

Federal income tax expenses are deducted from future production revenues in the calculation of the standardized measure using the statutory tax rate.

The Company is subject to certain state-based taxes;

We are subject to certain state-based taxes;

however, these amounts are not material.

The projections should not be viewed as realistic estimates of future cash flows, nor should the “standardized measure” be interpreted as representing current value to the Company.

The projections should not be viewed as realistic estimates of future cash flows, nor should the standardized measure be interpreted as representing current value to us.

Material revisions to estimates of proved reserves may occur in the future;

16 unchanged sentences

Standardized measure of discounted cash flows $ 61,278 21 % 48,410

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NACCO INDUSTRIES, INC.

AND SUBSIDIARIES

(Tabular Amounts in Thousands, Except Per Share, Percentage Data and Oil and Gas Disclosures)

The following summarizes the principal sources of change in the standardized measure of discounted future net cash flows during 2024:

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

What changed 10-K

Item 9A. Controls and Procedures