• Net Income (Q4 2024): $7.6 million
• Net Income (Full Year 2024): $33.7 million
• Adjusted EBITDA (Q4 2024): $9 million, up 27% from Q4 2023
• Adjusted EBITDA (Full Year 2024): $59.4 million, up 116% year-over-year
• Coal Mining Segment Adjusted EBITDA: More than quadrupled from 2023
• North American Mining Segment Adjusted EBITDA: Increased 35%
• Minerals Management Segment Adjusted EBITDA: Increased 21%
• Operating Profit (Q4 2024): $3.9 million
• Operating Profit (North American Mining Q4 2024): $800,000
• Operating Profit (Minerals Management Q4 2024): $7.2 million
• Cash (End of 2024): Approximately $73 million
• Debt (End of 2024): $99.5 million
• Dividends Paid (2024): $6.6 million
• Share Repurchase (2024): Approximately 317,000 shares for $9.9 million

• Warning! GuruFocus has detected 8 Warning Signs with NC.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NACCO Industries Inc (NYSE:NC) reported a robust 2024 fourth quarter net income of $7.6 million and full year net income of $33.7 million.
• Fourth quarter adjusted EBITDA increased by almost 27% over the fourth quarter of 2023, and full year adjusted EBITDA increased by 116% year-over-year.
• The coal mining segment's adjusted EBITDA more than quadrupled from 2023, with significant improvements at Mississippi Lignite Mining Company.
• North American Mining executed two new contracts and amended an existing contract, expected to deliver NPV of after-tax cash flows of approximately $20 million over contract terms.
• Minerals Management's 2024 adjusted EBITDA improvement was primarily due to a $4.5 million gain on the sale of assets, and the segment is expected to continue delivering solid financial results.

Negative Points

• North American Mining experienced lower profitability in the second half of 2024 due to an overall reduction in demand partly attributable to the effects of three hurricanes in Florida.
• Mississippi Lignite Mining Company faced reduced customer demand, and an anticipated reduction in the 2025 contractually determined per ton sales price is expected to offset improvements.
• The coal mining segment anticipates a modest year-over-year decrease in operating profit due to increased operating expenses and lower results at Mississippi Lignite Mining Company.
• A significant non-cash settlement charge is anticipated upon the termination of the defined benefit pension plan, despite it being currently overfunded.
• Working capital was a significant use of cash in 2024, with receivables and inventory contributing to the cash flow challenges.

Q & A Highlights

Q: On the coal business, there was a $6 million inventory write-down. Is it reasonable to add that back to EBITDA for a baseline next year? A: Christina Kmetko, Investor Relations Consultant, explained that while they have taken inventory write-downs, they have not added it back to EBITDA because it has been recurring over the past year. John Butler, CEO, added that everyone can do their own analysis if they want to add that back.

Q: With the second boiler at MLMC back online, volumes are still light. Do you expect them to strengthen next year? A: John Butler, CEO, noted that the plant was down for half the year and had an outage later. He suggested not to read too much into last year's volumes compared to future expectations.

Q: Can you provide more clarity on what normal MLMC gross profit looks like, considering stronger volumes and price reductions? A: John Butler, CEO, explained that the price at Redhills is determined by a contractual formula based on indices reflecting mining costs. He noted that the current price decrease is an aberration and expects it to return to a more normal pattern. He also mentioned that depreciation is elevated due to recent capital expenditures.

Q: Are the economics or margins similar for dragline work versus surface mining work? A: John Butler, CEO, stated that margins are generally similar because they are tempered by how a quarry operator could do it themselves. He explained that if they put in capital upfront, they generate nice returns over the contract's life.

Q: Regarding Thacker Pass, do you think the project will proceed despite the drop in lithium prices? A: John Butler, CEO, expressed confidence in the project, noting its low-cost approach and significant lithium reserves. He mentioned that the project is competitive and well-positioned to withstand price decreases.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.