NACCO Industries (NYSE:NC) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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Summary
NACCO Industries Inc reported a strong start to 2026 with a 43% increase in operating profit over the previous year and a 28% increase in adjusted EBITDA.
The company’s utility coal mining segment, particularly the Mississippi Lignite Mining Company, was a significant contributor to the operating profit increase due to effective pivoting during a power plant outage.
Strategic growth in the contract mining segment was driven by new projects, including a U.S. Army Corps of Engineers project in Florida and an upcoming limestone quarry operation in Arizona.
The minerals and royalties segment saw comparable year-over-year operating profit, but the expectation is a decrease in 2026 due to anticipated production declines in natural gas assets.
Mitigation Resources acquired 958 acres in Tennessee, marking significant expansion, with mitigation credits expected to be available by 2029.
NACCO Industries Inc made capital expenditures of $33 million in the first quarter, primarily for the dragline project in Florida and land acquisition for Mitigation Resources.
The company expects meaningful year-over-year improvements in consolidated operating profit, net income, and adjusted EBITDA for 2026, excluding a 2025 pension settlement charge.
Full Transcript
Christina Kametko (Investor Relations)
Thank you. Good morning everyone and thank you for joining us for our 2026 first quarter earnings call. I’m Christina Kametko and I’m responsible for investor relations at NACCO. Joining me today are J.C. Butler, NACCO’s president and CEO, and Elizabeth Loveman, our Senior Vice President and Controller. Yesterday we released our first quarter results and filed our 10-Q with the SEC (Securities and Exchange Commission). Both documents are available on our website. During today’s call we will reference several non-GAAP measures which we believe provide additional insight into how we manage our business. Reconciliations to the most directly comparable GAAP measures are also available on our website. Before we begin, let me remind you that today’s remarks include forward looking statements. Actual results may differ materially from those indicated due to a variety of risks and uncertainties which are described in Our earnings release 10-Q and other SEC (Securities and Exchange Commission) filings. We undertake no obligation to update these statements. With that, I’ll turn the call over to JC for his opening remarks.
J.C. Butler (President and CEO)
Thanks, Christina and good morning everyone. I’m pleased to say that we delivered a Strong start to 2026 reporting significant growth and profitability. First quarter operating profit increased 43% over last year and 45% sequentially. Meaningful growth in our utility, coal and contract mining segments drove the year over year improvement while contract mining led the sequential growth primarily due to the commencement of a new construction project in Florida. These operating results contributed to the 28% year over year and 15% sequential increases in adjusted EBITDA. These results reflect the business executing well and delivering as expected. Let me walk through each of our businesses in more detail. Our utility coal mining segment remains the foundation of our business and this quarter Mississippi Lignite Mining Company was one of the main drivers of our operating profit increase. During our year end earnings call, I discussed the customer’s power plant outage that began in mid February. During the outage we pivoted effectively and redeployed crews to work on planned reclamation activities. This reduced our asset retirement obligation rather than being recognized as an expense which would have impacted first quarter earnings. Lower cost per ton helped minimize the effect of reduced deliveries in the first quarter. I’m confident that as long as the customer’s power plant operates as planned, the team will continue to mine effectively and control costs, driving improvement in year over year results. At Mississippi Lignite Mining Co. Our contract mining segment is our primary growth platform for mining and its strong first quarter operating profit reflects the benefits of our strategic initiatives to expand this business. During the quarter, we commenced activities under a multi year dragline services contract as part of a U.S. Army Corps of Engineers construction project in Palm Beach County, Florida. We’re excited about this opportunity because it advances our growth into large scale infrastructure projects and it showcases the efficiency and environmental advantages of our new electric drive M-Tech draglines. We have 2M tech draglines on site and plan to add a third to this project later this year. We’re encouraged by the early project on progress on this project. In addition to the Florida project, we expect to commence operations during the second half of 2026 on a limestone quarry in Arizona where we will be operating a dragline for an existing customer. This is a great opportunity that expands our footprint into a new region of the United States. Contract Mining continues to build a growing portfolio of long term contracts through great geographic and mineral expansion which is expected to lead to increasing profitability in this segment. Turning to minerals and royalties, this segment reported comparable year over year operating profit while first quarter results exceeded our forecast. We continue to expect year over year decrease in operating profit and segment adjusted EBITDA in 2026. Despite higher prices, Natural gas remains the primary driver of our near term results, so higher oil prices certainly contribute to our results, but they do not have the same level of impact. That said, there’s a lot of uncertainty in the oil and gas market, so we’ll have to see how the situation in the Middle east plays out. At Mitigation Resources, we expect increasing profitability over time from the sale of mitigation credits and as reclamation and restoration services expand. While performance is currently variable due to permit and project timing, Mitigation Resources is expected to generate profit in the second half of 2026 and move toward more consistent results as the business expands. In mid April, mitigation resources acquired 958 acres in Wilson County, Tennessee which is east of Nashville. This marks an important step in their growth strategy, representing significant expansion into an area experiencing steady economic growth. The project is expected to deliver a new mitigation bank with high quality stream and wetland mitigation credits with availability anticipated in 2029. These credits will support continued residential, industrial and infrastructural development in a 14 county area around Greater Nashville. We are very excited about this project because it allows us to serve twice the typical service range for similar mitigation projects and we will be serving an area that has experienced steady economic growth across the board. We continue invest in our businesses to drive future growth. We made capital expenditures of $33 million during the first quarter and we anticipate making additional capital investments through the remainder of 2026 primarily in business development opportunities that meet our strict investment criteria. Overall, I continue to believe we are well positioned for meaningful growth. We entered 2026 with clear opportunities to build on our 2025 momentum and we are executing.
J.C. Butler (President and CEO)
I remain confident in our businesses and our ability to deliver strong 2026 results as we continue to execute our growth strategies and and create long term value for our shareholders through long term relationships, long term contracts and investment in long term assets. With that, I’ll turn the call over to Liz to provide a more detailed view of our financial results and outlook.
Elizabeth Loveman (Senior Vice President and Controller)
Thank you, J.C. I’ll start with some high level comments about our consolidated first quarter 2026 results. Compared to the 2025 first quarter, we generated consolidated gross profit of $14.3 million, an increase of 48% over year despite first quarter revenues of $62.8 million decreasing 4%. Consolidated operating profit of $11 million increased from $7.7 million in 2025 driven by improvements in both our utility coal mining and contract mining segments.
Elizabeth Loveman (Senior Vice President and Controller)
These favorable results were partly offset by higher unallocated expenses. These strong operating profit results, combined with an improvement in other investment income resulted in net income of $8.8 million or $1.18 per share. This was an 80% increase over first quarter 2025 net income of $4.9 million or 66 cents per share. Consolidated adjusted EBITDA increased 28% to $16.4 million versus $12.8 million for the same period last year. Turning to the segments, the utility coal mining segment reported operating …
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