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What changed in NACCO INDUSTRIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NACCO INDUSTRIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+655 added−702 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-06)

Top changes in NACCO INDUSTRIES INC's 2024 10-K

655 paragraphs added · 702 removed · 482 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

166 edited+72 added−97 removed53 unchanged
Biggest changeThe Sabine Mining Company (“Sabine”) operates the Sabine Mine in Texas. All production from Sabine was delivered to Southwestern Electric Power Company's (“SWEPCO”) Henry W. Pirkey Plant (the “Pirkey Plant”). SWEPCO is an American Electric Power (“AEP”) company. As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries and final reclamation began on April 1, 2023.
Biggest changeWe recognized income of $13.6 million in 2024 related to business interruption insurance recoveries that partially offset losses as a result of the boiler outage. The Sabine Mining Company (Sabine) operates the Sabine Mine in Texas. All production from Sabine was delivered to Southwestern Electric Power Company's (SWEPCO) Henry W. Pirkey Plant (the Pirkey Plant).
Fish and Wildlife Service (“USFWS”) was required to determine whether over 250 species required listing as threatened or endangered under the ESA. USFWS has not yet completed its review, but the potential remains for new species to be listed under the ESA.
Fish and Wildlife Service (USFWS) was required to determine whether over 250 species required listing as threatened or endangered under the ESA. USFWS has not yet completed its review, but the potential remains for new species to be listed under the ESA.
The Minerals Management segment owns royalty interests, mineral interests, non-participating royalty interests and overriding royalty interests. • Royalty Interest. Royalty interests generally result when the owner of a mineral interest leases the underlying minerals to an exploration and production company pursuant to an oil and gas lease.
The Minerals Management segment owns royalty interests, mineral interests, non-participating royalty interests and overriding royalty interests (collectively mineral and royalty interests). • Royalty Interest. Royalty interests generally result when the owner of a mineral interest leases the underlying minerals to an exploration and production company pursuant to an oil and gas lease.
In addition to the natural production decline curve, royalty income can fluctuate favorably or unfavorably in response to a number of factors outside of the Company's control, including the number of wells being operated by third parties, fluctuations in commodity prices (primarily oil and natural gas), fluctuations in production rates associated with operator decisions, regulatory risks, the Company's lessees' willingness and ability to incur well-development and other operating costs, and changes in the availability and continuing development of infrastructure.
In addition to the natural production decline curve, royalty income can fluctuate favorably or unfavorably in response to a number of factors outside of our control, including the number of wells being operated by third parties, fluctuations in commodity prices (primarily oil and natural gas), fluctuations in production rates associated with operator decisions, regulatory risks, our lessees' willingness and ability to incur well-development and other operating costs, and changes in the availability and continuing development of infrastructure.
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. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of Coyote Creek's guarantees.
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 us. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of Coyote Creek's guarantees.
Among the factors that affect competition are the price and availability of oil and natural gas, environmental and related political considerations, the time and expenditures required to develop new energy sources, the cost of transportation, the cost of compliance with governmental regulations, the impact of federal and state energy policies, the impact of subsidies on pricing of renewable energy and the Company's customers' dispatch decisions, which may also take into account carbon dioxide emissions.
Among the factors that affect competition are the price and availability of oil and natural gas, environmental and related political considerations, the time and expenditures required to develop new energy sources, the cost of transportation, the cost of compliance with governmental regulations, the impact of federal and state energy policies, the impact of subsidies on pricing of renewable energy and our customers' dispatch decisions, which may also take into account carbon dioxide emissions.
The Builder Act includes amendments to NEPA which codify past regulatory reforms, including narrowing what qualifies as a “major federal action,” limiting the scope of NEPA review to “reasonably foreseeable environmental effects,” narrowing consideration of cumulative effects, directing agencies to only consider technically and economically feasible reasonable alternatives and providing page limits and timelines for environmental impact statements and environmental assessments.
The Builder Act includes amendments to NEPA which codify past regulatory reforms, including narrowing what qualifies as a major federal action, limiting the scope of NEPA review to “reasonably foreseeable environmental effects,” narrowing consideration of cumulative effects, directing agencies to only consider technically and economically feasible reasonable alternatives and providing page limits and timelines for environmental impact statements and environmental assessments.
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 TVA under a long-term power purchase agreement. MLMC’s contract with its customer runs through April 1, 2032.
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. MLMC's customer operates the Red Hills Power Plant, which supplies electricity to TVA under a long-term power purchase agreement. MLMC’s contract with its customer runs through April 1, 2032.
In January 2023, the White House Council on Environmental Quality ("CEQ") issued interim guidance that instructs federal agencies to quantify GHG emissions and use the social cost of greenhouse gases to calculate a monetary metric associated with the proposed actions’ climate effects. The NEPA and interim guidance could adversely affect the Company’s ability to secure necessary permits.
In January 2023, the White House Council on Environmental Quality (CEQ) issued interim guidance that instructs federal agencies to quantify GHG emissions and use the social cost of greenhouse gases to calculate a monetary metric associated with the proposed actions’ climate effects. The NEPA and interim guidance could adversely affect our ability to secure necessary permits.
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.
Minerals Management Segment 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 NPRI owner does; however, typically receive royalty payments. • Overriding Royalty Interest (“ORRIs”). ORRIs are created by carving out the right to receive royalties from a working interest.
The NPRI owner does; however, typically receive royalty payments. • Overriding Royalty Interest (ORRIs). ORRIs are created by carving out the right to receive royalties from a working interest.
The Florida construction industry can be affected by the cyclicality of the economy, seasonal weather conditions and pandemics, all of which can result in variations in demand for aggregates. In the Minerals Management segment, oil and natural gas wells have high initial production rates and follow a natural decline before settling into relatively stable, long-term production.
The Florida construction industry can be affected by the cyclicality of the economy, seasonal weather conditions, significant weather events, and pandemics, all of which can result in variations in demand for aggregates. In the Minerals Management segment, oil and natural gas wells have high initial production rates and follow a natural decline before settling into relatively stable, long-term production.
The Company's coal mining operations and power generation customers may be directly affected when the revisions to the SIPs are made and incorporate new NAAQS for sulfur dioxide, nitrogen oxides, ozone and particulate matter. In March 2019, the EPA published a final rule that retains the current primary (health-based) NAAQS for sulfur oxides ("SOx") without revision.
Our coal mining operations and power generation customers may be directly affected when the revisions to the SIPs are made and incorporate new NAAQS for sulfur dioxide, nitrogen oxides, ozone and particulate matter. In March 2019, the EPA published a final rule that retains the current primary (health-based) NAAQS for sulfur oxides (SOx) without revision.
Any such closure of the Company's mines could have a material adverse effect on the Company’s business, financial condition and results of operations. In compliance with these regulations, the owner of the Coal Creek Station power plant, Falkirk’s customer, submitted a CCR Part B application to the EPA in 2020 asserting a unit complied with the CCR rules.
Any such closure of our mines could have a material adverse effect on our business, financial condition and results of operations. In compliance with these regulations, Falkirk's customer, the owner of the Coal Creek Station power plant, submitted a CCR Part B application to the EPA in 2020 asserting a unit complied with the CCR rules.
Competition Coteau, Coyote Creek, Falkirk and MLMC each have only one customer for which they extract and deliver coal. The Company's coal mines are directly adjacent to the customer’s property, with economical delivery methods that include conveyor belt delivery systems linked to the customer’s facilities or short-haul rail systems.
Competition Coteau, Coyote Creek, Falkirk and MLMC each have only one customer for which they extract and deliver coal. Our coal mines are directly adjacent to our customer’s property, with economical delivery methods that include conveyor belt delivery systems linked to the customer’s facilities or short-haul rail systems.
The ability of the Coal Mining segment to maintain comparable levels of coal production at existing facilities and develop its reserves will depend upon the interaction of these factors. Coal-fired electricity generating units are chosen to run primarily based on operating costs, of which fuel costs account for the largest share.
The ability of the Coal Mining segment to maintain comparable levels of coal production at existing facilities and develop our reserves will depend upon the interaction of these factors. Coal-fired electricity generating units are chosen to run primarily based on operating costs, of which fuel costs account for the largest share.
The EPA’s action to deny the SIPs was challenged in various courts, including the 5th Circuit Court of Appeals (the “Fifth Circuit”). The Fifth Circuit issued a stay of the SIP rejection in Texas, Louisiana, and Mississippi which prevents the federal implementation plan ("FIP") from going into effect pending the outcome of the litigation challenges.
The EPA’s action to deny the SIPs was challenged in various courts, including the 5th Circuit Court of Appeals (the Fifth Circuit). The Fifth Circuit issued a stay of the SIP rejection in Texas, Louisiana, and Mississippi which prevents the federal implementation plan (FIP) from going into effect pending the outcome of the litigation challenges.
In some instances, forced pooling or unitization may be implemented by third parties and may reduce the Company’s interest in the unitized properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production.
In some instances, forced pooling or unitization may be implemented by third parties and may reduce our interest in the unitized properties. In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production.
Comprehensive Environmental Response, Compensation and Liability Act CERCLA and similar state laws create liabilities for the investigation and remediation of releases of hazardous substances into the environment and for damages to natural resources. The Company must also comply with reporting requirements under the Emergency Planning and Community Right-to-Know Act and the Toxic Substances Control Act.
Comprehensive Environmental Response, Compensation and Liability Act CERCLA and similar state laws create liabilities for the investigation and remediation of releases of hazardous substances into the environment and for damages to natural resources. We must also comply with reporting requirements under the Emergency Planning and Community Right-to-Know Act and the Toxic Substances Control Act.
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.
Typically, the resulting royalty interest is a cost-free percentage of production revenues for minerals extracted from the acreage. A holder of royalty interests is generally not responsible for capital expenditures or lease operating expenses, but royalty interests may be calculated net of post-production expenses, and typically have no environmental liability.
The total volume of water used to hydraulically fracture a well must also be disclosed to the public and filed with the Texas Railroad Commission. Further, in May 2013, the Texas Railroad Commission issued a “well integrity rule,” which updates the requirements for drilling, putting pipe down, and cementing wells.
The total volume of water used to hydraulically fracture a well must also be disclosed to the public and filed with the Texas Railroad Commission. Further, in May 2013, the Texas Railroad Commission issued a well integrity rule, which updates the requirements for drilling, putting pipe down, and cementing wells.
Under certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation activities. To the extent the Unconsolidated Subsidiary performs such final reclamation, it is compensated for providing those services in addition to receiving reimbursement from customers for costs incurred. See “Item 2.
Under certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation activities. To the extent the Unconsolidated Subsidiary performs such final reclamation, it is compensated for providing those services in addition to receiving reimbursement from customers for costs incurred. See Item 2.
On July 31, 2023, the EPA promulgated an interim rule (“Interim FIP”) that addresses the various judicial orders where the SIP rejection has been stayed. The Interim FIP requires these states to return to the previously approved NOx trading program and emission caps.
On July 31, 2023, the EPA promulgated an interim rule (Interim FIP) that addresses the various judicial orders where the SIP rejection has been stayed. The Interim FIP requires these states to return to the previously approved NOx trading program and emission caps.
Any suspension of operations at Coal Creek Station would eliminate the need for lignite coal during the suspension period. Any such suspension of operations at Coal Creek Station or any of the power plants supplied by the Company's mines could have a material adverse effect on the Company’s business, financial condition and results of operations.
Any suspension of operations at Coal Creek Station would eliminate the need for lignite coal during the suspension period. Any such suspension of operations at Coal Creek Station or any of the power plants supplied by our mines could have a material adverse effect on our business, financial condition and results of operations.
In addition, hydraulic fracturing operations require the use of a significant amount of water, and the inability of the operators of the acreage underlying the Company’s mineral interests to locate sufficient amounts of water or dispose of or recycle water used in their drilling and production operations could adversely impact their operations.
In addition, hydraulic fracturing operations require the use of a significant amount of water, and the inability of the operators of the acreage underlying our mineral interests to locate sufficient amounts of water or dispose of or recycle water used in their drilling and production operations could adversely impact their operations.
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; all other coal supply contracts are requirements contracts.
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.
Federal, state and local regulations provide detailed requirements for the abandonment of wells, closure or decommissioning of production facilities and pipelines and for site restoration in areas where the operators of the acreage underlying the Company's mineral and royalty interests operate. The U.S.
Federal, state and local regulations provide detailed requirements for the abandonment of wells, closure or decommissioning of production facilities and pipelines and for site restoration in areas where the operators of the acreage underlying our mineral and royalty interests operate. The U.S.
Natural Gas Sales and Transportation Historically, federal legislation and regulatory controls have affected the price and marketing of natural gas. FERC has jurisdiction over the transportation and sale for resale of natural gas in interstate commerce by natural gas companies under the Natural Gas Act of 1938 (“NGA”) and the Natural Gas Policy Act of 1978.
Natural Gas Sales and Transportation Historically, federal legislation and regulatory controls have affected the price and marketing of natural gas. FERC has jurisdiction over the transportation and sale for resale of natural gas in interstate commerce by natural gas companies under the Natural Gas Act of 1938 (NGA) and the Natural Gas Policy Act of 1978.
The Company cannot predict whether new legislation to regulate oil and natural gas might be proposed, what proposals, if any, might be enacted by Congress or the various state legislatures, and what effect, if any, the proposals might have on the Minerals Management segment.
We cannot predict whether new legislation to regulate oil and natural gas might be proposed, what proposals, if any, might be enacted by Congress or the various state legislatures, and what effect, if any, the proposals might have on the Minerals Management segment.
The effect of such future regulations may be to limit the amounts of oil and natural gas that may be produced from the Company’s mineral interests, negatively affect the economics of production from these wells or limit the number of locations operators can drill.
The effect of such future regulations may be to limit the amounts of oil and natural gas that may be produced from our mineral interests, negatively affect the economics of production from these wells or limit the number of locations operators can drill.
The content of the Company's website is not incorporated by reference into this Form 10-K or in any other report or document filed with the SEC, and any reference to the Company's website is intended to be an inactive textual reference only.
The content of our website is not incorporated by reference into this Form 10-K or in any other report or document filed with the SEC, and any reference to our website is intended to be an inactive textual reference only.
The interstate transportation of oil and natural gas and the sale or resale of natural gas is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”).
The interstate transportation of oil and natural gas and the sale or resale of natural gas is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (FERC).
Sales of crude oil, condensate and natural gas liquids ("NGLs") are not currently regulated and are made at market prices. 14 Table of Contents Environmental Matters Oil and natural gas exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to protection of the environment or occupational health and safety.
Sales of crude oil, condensate and natural gas liquids (NGLs) are not currently regulated and are made at market prices. Environmental Matters Oil and natural gas exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to protection of the environment or occupational health and safety.
These laws and regulations may limit the amount of oil and natural gas that the lessees of the Company’s mineral interests can produce from existing wells or limit the number of wells or the locations at which operators can drill.
These laws and regulations may limit the amount of oil and natural gas that the lessees of our mineral interests can produce from existing wells or limit the number of wells or the locations at which operators can drill.
Like royalty interests, ORRIs do not confer an obligation to make capital expenditures or pay for lease operating expenses and have limited environmental liability; however, ORRIs may be calculated net of post-production expenses, depending on how the ORRI is structured.
Like royalty interests, ORRIs do not confer an obligation to make capital expenditures or pay for lease 4 Table of Contents operating expenses and have limited environmental liability; however, ORRIs may be calculated net of post-production expenses, depending on how the ORRI is structured.
There has been increasing public controversy regarding hydraulic fracturing with regard to the use of fracturing fluids, impacts on drinking water supplies, use of water and the potential for impacts to surface water, groundwater and the environment generally. A number of lawsuits and enforcement actions have been initiated across the country implicating hydraulic fracturing practices.
There has been increasing public controversy regarding hydraulic fracturing with regard to the use of fracturing fluids, impacts on drinking water supplies, use of water and the potential for impacts to surface water, groundwater and the environment generally. A number of lawsuits and enforcement actions have been initiated across the country implicating hydraulic fracturing 15 Table of Contents practices.
The states, and some counties and municipalities, in which the Company has mineral interests also regulate one or more of the following: • the location of wells; • the method of drilling and casing wells; • the timing of construction or drilling activities, including seasonal wildlife closures; • the rates of production; • the surface use and restoration of properties upon which wells are drilled; • the plugging and abandoning of wells; and • notice to, and consultation with, surface owners and other third parties.
The states, and some counties and municipalities, in which we have mineral interests also regulate one or more of the following: • the location of wells; • the method of drilling and casing wells; • the timing of construction or drilling activities, including seasonal wildlife closures; • the rates of production; • the surface use and restoration of properties upon which wells are drilled; • the plugging and abandoning of wells; and • notice to, and consultation with, surface owners and other third parties.
The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company and other issuers that file electronically with the SEC.
The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding us and other issuers that file electronically with the SEC.
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. This allows customers to focus on their areas of expertise: materials handling and processing, product sales and distribution. As of December 31, 2023, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.
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: materials handling and processing, product sales and distribution. As of December 31, 2024, NAMining operates in Florida, Texas, Arkansas, Virginia and Nebraska.
Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad 3 Table of Contents measures of U.S. inflation. The 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.
Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad measures of U.S. inflation. 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.
The listing of either of these species, or any others, in areas where the Company holds mineral interests could cause lessees to incur increased costs arising from species protection measures, delay the completion of exploration and production activities, and/or result in limitations on operating activities that could have an adverse impact the Minerals Management segment.
The listing of either of these species, or any others, in areas where we hold mineral interests could cause lessees to incur increased costs arising from species protection measures, delay the completion of exploration and production activities, and/or result in limitations on operating activities that could have an adverse impact the Minerals Management segment.
There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was selected. EXECUTIVE OFFICERS OF THE COMPANY Name Age Current Position J.C. Butler, Jr. 63 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NACCO Natural Resources Corporation ("NNRC") (from prior to 2018) Elizabeth I.
There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was selected. EXECUTIVE OFFICERS OF THE COMPANY Name Age Current Position J.C. Butler, Jr. 64 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NACCO Natural Resources Corporation (NNRC) (from prior to 2019) Elizabeth I.
The Company has ongoing training, compliance and permitting programs to ensure compliance with such environmental laws. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage, transport, disposal or cleanup requirements could materially adversely affect the Coal Mining segment.
We have ongoing training, compliance and permitting programs to ensure compliance with such environmental laws. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage, transport, disposal or cleanup requirements could materially adversely affect the Coal Mining segment.
Changes in the availability or price of oil and natural gas or other forms of energy, as well as business conditions, conservation, legislation, regulations, and the ability to convert to alternate fuels and other forms of energy may affect the demand for oil and natural gas.
Changes in the availability or price of oil and natural gas or other forms of energy, as well as business 6 Table of Contents conditions, conservation, legislation, regulations, and the ability to convert to alternate fuels and other forms of energy may affect the demand for oil and natural gas.
The CAA requires the EPA to review national ambient air quality standards (“NAAQS”) every five years to determine whether revisions to current standards are appropriate.
The CAA requires the EPA to review national ambient air quality standards (NAAQS) every five years to determine whether revisions to current standards are appropriate.
The strict, joint and several liability nature of such laws and regulations could impose liability upon the operators on the Company’s mineral interests, regardless of fault.
The strict, joint and several liability nature of such laws and regulations could impose liability upon the operators on our mineral interests, regardless of fault.
NPRI is an interest in oil and gas production which is created from the mineral estate. The NPRI is expense-free, bearing no operational costs of production. The term “non-participating” indicates that the interest owner does not share in the bonus, rentals from a lease, nor the right to participate in the execution of oil and gas leases.
NPRI is an interest in oil and gas production which is created from the mineral estate. The NPRI is expense-free, bearing no operational costs of production. The term non-participating indicates that the interest owner does not share in the bonus, rentals from a lease, nor the right to participate in the execution of oil and gas leases.
In addition, states are required to submit to the EPA revisions to their state implementation plans ("SIPs") that demonstrate the manner in which the states will attain NAAQS every time a NAAQS is issued or revised by the EPA. The EPA has adopted NAAQS for several pollutants, which continue to be reviewed periodically for revisions.
In addition, states are required to submit to the EPA revisions to their state implementation plans (SIPs) that demonstrate the manner in which the states will attain NAAQS every time a NAAQS is issued or revised by the EPA. The EPA has adopted NAAQS for several pollutants, which continue to be reviewed periodically for 10 Table of Contents revisions.
Properties" on page 31 in this Form 10-K for discussion of the Company's mineral resources and mineral reserves. NAMining Segment 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.
Properties on page 29 in this Form 10-K for discussion of our mineral resources and mineral reserves. NAMining Segment The NAMining segment provides value-added contract mining and other services for producers of industrial minerals. The segment is a platform for our growth and diversification of mining activities outside of the thermal coal industry.
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. inflation rates. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
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. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
The Company is committed to strict compliance with applicable laws and regulations regarding workplace safety and provides on-going safety training, education and communication. The National Mining Association ranks NACCO as an industry leader in safety, and the Company's incident rate is consistently below the national average for comparable mines, based on Mine Safety and Health Administration data.
We are committed to strict compliance with applicable laws and regulations regarding workplace safety and provides on-going safety training, education and communication. The National Mining Association ranks NACCO as an industry leader in safety, and our incident rate is consistently below the national average for comparable mines, based on Mine Safety and Health Administration data.
Although the regulatory burden on the oil and natural gas industry increases the cost of doing business, these burdens generally do not affect the Company any differently or to any greater or lesser extent than they affect other companies in the industry with similar assets. The availability, terms and cost of transportation significantly affect sales of oil and natural gas.
Although the regulatory burden on the oil and natural gas industry increases the cost of doing business, these burdens generally do not affect us any differently or to any greater or lesser extent than they affect other companies in the industry with similar assets. 13 Table of Contents The availability, terms and cost of transportation significantly affect sales of oil and natural gas.
To minimize any impact to operations, Coal Creek Station is moving forward with plans to dry CCR materials produced by the plant, reducing the need to utilize the lined area in question. Falkirk is the sole supplier of lignite coal to Coal Creek Station.
To minimize any impact to operations, Coal Creek Station continues to work with the EPA and is moving forward with plans to dry CCR materials produced by the plant, reducing the need to utilize the lined area in question. Falkirk is the sole supplier of lignite coal to Coal Creek Station.
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.
Certain coal supply contracts can be terminated early, which would result in a reduction to future earnings. 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.
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. Under all of the Unconsolidated Subsidiaries’ contracts, the customer has the obligation to fund final mine reclamation activities.
See Note 16 to the Consolidated Financial Statements in this Form 10-K for further information on the Unconsolidated Subsidiaries. We perform contemporaneous reclamation activities at each mine in the normal course of operations. Under all of the Unconsolidated Subsidiaries’ contracts, our customer has the obligation to fund final mine reclamation activities.
The North Dakota Department of Environmental Quality (“NDDEQ”) finalized its state implementation plan and submitted it to the EPA for approval in August 2022. The NDDEQ determined that visibility progress was being made and did not require significant emissions controls at Coyote Station power plant.
The North Dakota Department of Environmental Quality (NDDEQ) finalized its state implementation plan and submitted it to the EPA for approval in August 2022. The NDDEQ determined that visibility progress was being made and did not require significant emissions controls at the North Dakota power plants.
Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, the Company believes that the regulation of oil transportation rates will not affect its operations in any materially different way than such regulation will affect the operations of competitors. Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis.
Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any materially different way than such regulation will affect the operations of competitors. Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis.
In the Minerals Management segment, the oil and gas industry is intensely competitive; the Company primarily competes with companies and investors for the acquisition of oil and gas properties, some of which have greater resources and may be able to pay more for productive oil and natural gas properties or to define, evaluate, bid for and purchase a greater number of properties than the Company’s financial resources permit.
In the Minerals Management segment, the oil and gas industry is intensely competitive; we primarily compete with companies and investors for the acquisition of oil and gas properties, some of which have greater resources and may be able to pay more for productive oil and natural gas properties or to define, evaluate, bid for and purchase a greater number of properties than our financial resources permit.
In addition, the electric power generation industry is subject to extensive regulation regarding the environmental impact of its power generation activities that could affect demand for coal from the Company's Coal Mining segment. Numerous governmental permits and approvals are required for coal mining operations.
In addition, the electric power generation industry is subject to extensive regulation regarding the environmental impact of its power generation activities that could affect demand for coal from our Coal Mining segment. Numerous federal, state and local governmental permits and approvals are required for coal mining operations.
When a NEPA action is required, the Company provides the required information to the appropriate federal agency to enable it to complete the required study. Historically, this process has been lengthy and may take several years to complete.
When a NEPA action is required, we provide the required information to the appropriate federal agency to enable it to complete the required study. Historically, this process has been lengthy and may take several years to complete.
As a result, the Company may incur material liabilities or costs related to environmental matters in the future, and such environmental liabilities or costs could materially and adversely affect the Company’s results of operations and financial condition.
As a result, we may incur material liabilities or costs related to environmental matters in the future, and such environmental liabilities or costs could materially and adversely affect our results of operations and financial condition.
At the coal mining operations where the Company's subsidiaries hold the permits, the Company is required to prepare and present to federal, state or local governmental authorities data pertaining to the effect or impact that any proposed exploration for or production of coal may have upon the environment and public and employee health and safety.
At the coal mining operations where our subsidiaries hold the permits, we are required to prepare and present to federal, state or local governmental authorities data pertaining to the effect or impact that any proposed exploration for or production of coal may have upon the environment and public and employee health and safety.
These new rules may raise the cost of fossil fuel generated energy, making coal-fired power plants less competitive, and/or result in early closure which could have an adverse impact on demand for coal and ultimately result in the early closure of the mines servicing these plants, including closure of the Company's coal mines.
These new rules may raise the cost of fossil fuel generated energy, making coal-fired power plants less competitive, and/or result in early closure of the coal-fired EGU's operated by our customers which could have an adverse impact on demand for coal and ultimately result in the early closure of the mines servicing these plants, including closure of our coal mines.
Future orders or regulations addressing concerns about seismic activity from well injection could affect operations on the acreage underlying the Company’s mineral interests. Endangered Species Act The Endangered Species Act (“ESA”) and analogous state laws restrict activities that may affect endangered or threatened species or their habitats. Pursuant to a settlement with environmental groups, the U.S.
Future orders or regulations addressing concerns about seismic activity from well injection could affect operations on the acreage underlying our mineral interests or our equity method investment. Endangered Species Act The Endangered Species Act (ESA) and analogous state laws restrict activities that may affect endangered or threatened species or their habitats. Pursuant to a settlement with environmental groups, the U.S.
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).
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 estimated commercial operation date for this generation facility is 2027. Operations Coal Mining Segment The Coal Mining segment, operating as North American Coal, LLC, 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.
The estimated commercial operation date for this generation facility is late 2027. Operations Coal Mining Segment 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 our customer's operations.
Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety. The Company believes communication related to “near misses,” safety incidents and protocols is essential to continuously developing and maintaining best-practices related to safety and enables identification and correction of operational practices that might impair employee safety or health.
Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety. We believe communication related to near misses, safety incidents and protocols is essential to continuously developing and maintaining best-practices related to safety and enables identification and correction of operational practices that might impair employee safety or health.
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. tax return; therefore, the Income tax provision line on the Consolidated Statements of Operations includes income taxes related to these entities.
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. tax return; therefore, the Income tax benefit line on the Consolidated Statements of Operations includes income taxes related to these entities.
As of December 31, 2023, the Coal Mining segment's operating coal mines were: The Coteau Properties Company (“Coteau”), Coyote Creek Mining Company, LLC (“Coyote Creek”), Falkirk and 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.
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 MLMC. 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.
The holder of a mineral interest has the right to lease the minerals to an exploration and production company. Upon the execution of an oil and gas lease, the lessee (the 4 Table of Contents exploration and production company) becomes the working interest owner and the lessor (the mineral interest owner) has a royalty interest. • Non-Participating Royalty Interest (“NPRIs”).
The holder of a mineral interest has the right to lease the minerals to an exploration and production company. Upon the execution of an oil and gas lease, the lessee (the exploration and production company) becomes the working interest owner and the lessor (the mineral interest owner) has a royalty interest. • Non-Participating Royalty Interest (NPRIs).
Over the longer term, the Company continues to believe that customer demand will remain pressured by regulations mandating or incentivizing the purchase of power from subsidized renewable energy sources, particularly wind and solar. See “Item 1. Business — Government Regulation" on page 8 in this Form 10-K for further discussion.
Over the longer term, we continue to believe that customer demand will remain pressured by regulations mandating or incentivizing the purchase of power from subsidized renewable energy sources, particularly wind and solar. See Item 1. Business — Government Regulation on page 9 in this Form 10-K for further discussion.
Maxwell 46 Senior Vice President - Financial Planning and Analysis and Treasurer (from prior to 2018) PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES Name Age Current Position J.C. Butler, Jr. 63 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NNRC (from prior to 2018) Carroll L.
Maxwell 47 Senior Vice President - Financial Planning and Analysis and Treasurer (from prior to 2019) PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES Name Age Current Position J.C. Butler, Jr. 64 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NNRC (from prior to 2019) Carroll L.
In these states, the legal challenge to the rule will resume. In the meantime, securing CWA permits may be more challenging since the agencies in the states where a stay has been issued have less guidance to rely on to determine whether certain features are considered WOTUS.
In the meantime, securing CWA permits may be more challenging since the agencies in the states where a stay has been issued have less guidance to rely on to determine whether certain features are considered WOTUS.
The Company has earned more than 100 safety awards at the state and national levels. NACCO strives to have zero safety incidents or injuries. The Company's operations have onsite safety personnel who train employees in safe work practices, review safety-related incidents and recommend improvements when appropriate.
We have earned more than 100 safety awards at the state and national levels since the 1980s. NACCO strives to have zero safety incidents or injuries. Our operations have onsite safety personnel who train employees in safe work practices, review safety-related incidents and recommend improvements when appropriate.
Seasonality The Company has experienced limited variability in its results due to the effect of seasonality; however, variations in coal demand can occur as a result of the timing and duration of planned or unplanned outages at customers' facilities.
Seasonality We have experienced limited variability in our results due to the effect of seasonality; however, variations in coal demand can occur as a result of the timing and duration of planned or unplanned outages at our customers' facilities.
Available Information The Company makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports available through its website, www.nacco.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Available Information We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports available through our website, www.nacco.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (SEC).
The Company's subsidiaries hold or will hold the necessary permits at all of its lignite coal mining operations.
Our subsidiaries hold or will hold the necessary permits at all of our lignite coal mining operations.
In December 2023, the Company entered into a power purchase agreement with the Tennessee Valley Authority (“TVA”) for the energy generated from a proposed 67.5 MW solar photovoltaic electric generation facility to be developed on reclaimed land at the Company’s Red Hills Mine.
Other Items In December 2023, we entered into a power purchase agreement with the Tennessee Valley Authority (TVA) for the energy generated from a proposed 67.5 MW solar photovoltaic electric generation facility to be developed on reclaimed land at our Red Hills Mine.
The Company believes in hiring, engaging, developing and promoting people who are fully able to meet the demands of each position, regardless of race, color, religion, gender, sexual orientation, gender identity, national origin, age, veteran status or disability. 7 Table of Contents Safety: Employee safety in the workplace is one of the Company’s core values.
We believe in hiring, engaging, developing and promoting people who are fully able to meet the demands of each position, regardless of race, color, religion, gender, sexual orientation, gender identity, national origin, age, veteran status or disability. Safety: Employee safety in the workplace is one of our core values.
Such legislative or regulatory changes could cause operators of the operation on the acreage underlying the Company’s mineral interests to incur substantial compliance costs, and compliance or the consequences of any failure to comply by operators could have a material adverse effect on the Minerals Management segment.
Such legislative or regulatory changes could cause operators of the operation on the acreage underlying our mineral interests, including those held by our equity method investee, to incur substantial compliance costs, and compliance or the consequences of any failure to comply by operators could have a material adverse effect on the Minerals Management segment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, reduced coal usage by customers for any reason, including, but not limited to, fluctuations in demand due to unanticipated weather conditions, scheduled and unscheduled outages at the Coal Mining segment's customers' facilities, unplanned equipment failures including U.S. power grid reliability issues, economic conditions or governmental regulations or comparable policies which may promote dispatch of power generated by renewable energy sources, such as wind or solar, and the realignment of customers' power generation portfolios that reduce the electric power generated from coal could have a material adverse effect on the Company's results of operations.
Biggest changeAs a result, reduced coal usage by customers for any reason, including, but not limited to, reduced availability of the customer’s power plant, dispatch of power generated by other energy sources, fluctuations in demand due to unanticipated weather conditions, planned and unplanned outages at the Coal Mining segment's customers' facilities, economic conditions and governmental regulations could have a material adverse effect on our results of operations.
The profitability of MLMC is subject to the risk of loss of investment in this operation, increases in the cost of mining, changes in customer demand, growing competition from alternative power generation that competes with coal-fired generation and the emergence of adverse mining conditions. At MLMC, the costs of mining operations are not reimbursed by MLMC's customer.
The profitability of MLMC is subject to the risk of loss of investment in this operation, increases in the cost of mining, changes in customer demand, adverse mining conditions and growing competition from alternative power generation that competes with coal-fired generation. At MLMC, the costs of mining operations are not reimbursed by MLMC's customer.
Government entities in certain states have brought similar claims seeking to hold a wide variety of companies that produce fossil fuels liable for the alleged impacts of the GHG emissions attributable to those fuels or for other grounds related to climate change, such as improper disclosure of climate change risks.
Government entities in certain states have brought similar claims seeking to hold a wide variety of companies that produce fossil fuels liable for the alleged impacts of emissions attributable to those fuels or for other grounds related to climate change, such as improper disclosure of climate change risks.
Any delay or reduction in making capital expenditures to maintain or upgrade coal-fired power plants by the Coal Segment's customers, principally electric utilities, could result in an increase in outage days and a corresponding decrease in coal consumption.
Any delay or reduction in making capital expenditures to maintain or upgrade coal-fired power plants by the Coal Mining segment's customers, principally electric utilities, could result in an increase in outage days and a corresponding decrease in coal consumption.
Accordingly, holders of NACCO's common stock should not rely on past payments of dividends in a particular amount as an indication of the amount of dividends that will be paid in the future. The price of NACCO's securities may be volatile.
Accordingly, holders of our common stock should not rely on past payments of dividends in a particular amount as an indication of the amount of dividends that will be paid in the future. The price of NACCO's securities may be volatile.
The price of the Company's common stock may fluctuate due to a variety of market and industry factors that may materially reduce the market price of NACCO's common stock regardless of operating performance, including, among others: (i) actual or anticipated fluctuations in the Company's quarterly and annual results and those of other public companies in the industry; (ii) industry cycles and trends; (iii) changes in government regulation; (iv) potential or actual military conflicts or acts of terrorism; (v) announcements concerning NACCO, its customers or its competitors; (vi) lack of trading liquidity as a result of low trading volumes could make it difficult for investors to sell shares; and (vii) the general state of the securities market.
The price of our common stock may fluctuate due to a variety of market and industry factors that may materially reduce the market price of NACCO's common stock regardless of operating performance, including, among others: (i) actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in the industry; (ii) industry cycles and trends; (iii) changes in government regulation; (iv) potential or actual military conflicts or acts of terrorism; (v) announcements concerning NACCO, our customers or competitors; (vi) lack of trading liquidity as a result of low trading volumes could make it difficult for investors to sell shares; and (vii) the general state of the securities market.
Current and future capital and credit market conditions could adversely affect the Company’s ability to obtain bank financing on reasonable terms. Certain financial institutions have acted to limit available financing for companies in the fossil fuel industry, including coal mining, which could result in increases in costs of borrowing or in the Company’s ability to maintain financing at current levels.
Current and future capital and credit market conditions could adversely affect our ability to obtain bank financing on reasonable terms. Certain financial institutions have acted to limit available financing for companies in the fossil fuel industry, including coal mining, which could result in increases in costs of borrowing or in our ability to maintain financing at current levels.
The reserve and resource estimates as to both quantity and quality are updated from time to time to reflect, among other matters, production of minerals, new mining or other data received. There are numerous uncertainties inherent in estimating quantities and qualities of minerals and costs to mine recoverable reserves and resources, including many factors beyond the Company's control.
The reserve and resource estimates as to both quantity and quality are updated from time to time to reflect, among other matters, production of minerals, new mining or other data received. There are numerous uncertainties inherent in estimating quantities and qualities of minerals and costs to mine recoverable reserves and resources, including many factors beyond our control.
These provisions could limit the price that certain investors might be willing to pay in the future for shares of NACCO's common stock and may have the effect of delaying or preventing a change in control. The Company’s stock repurchase program could affect the price of NACCO’s common stock and increase volatility and may not enhance long-term shareholder value.
These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock and may have the effect of delaying or preventing a change in control. Our stock repurchase program could affect the price of NACCO’s common stock and increase volatility and may not enhance long-term shareholder value.
Difficulty in acquiring surety bonds, or additional collateral requirements, would increase the Company’s costs and likely require greater use of alternative sources of funding for this purpose, which would reduce the Company’s liquidity. Insurance coverage is increasingly expensive, contains more stringent terms and may be difficult to obtain in the future.
Difficulty in acquiring surety bonds, or additional collateral requirements, would increase our costs and likely require greater use of alternative sources of funding for this purpose, which would reduce our liquidity. Insurance coverage is increasingly expensive, contains more stringent terms and may be difficult to obtain in the future.
Additionally, reserve and resource estimates may be adversely affected in the future by interpretations of, or changes to, the SEC’s property disclosure requirements for mining companies. A defect in title or the loss of a leasehold interest in certain property could limit the Company's ability to mine coal reserves or result in significant unanticipated costs.
Additionally, reserve and resource estimates may be adversely affected in the future by interpretations of, or changes to, the SEC’s property disclosure requirements for mining companies. A defect in title or the loss of a leasehold interest in certain property could limit our ability to mine coal reserves or result in significant unanticipated costs.
In addition, as a result of increasing credit pressures on the coal industry, it is possible that surety bond providers could demand other forms of collateral as a condition to providing or maintaining surety bonds. Any such demands, could have a material adverse impact on the Company’s liquidity and financial position.
In addition, as a result of increasing credit pressures on the coal industry, it is possible that surety bond providers could demand other forms of collateral as a condition to providing or maintaining surety bonds. Any such demands, could have a material adverse impact on our liquidity and financial position.
That failure could result from a variety of factors, including lack of availability, higher expense or unfavorable market terms, the exercise by third-party surety bond issuers of their right to refuse to renew the surety and restrictions on availability of collateral for current and future third-party surety bond issuers under the terms of the Company's financing arrangements.
That failure could result from a variety of factors, including lack of availability, higher expense or unfavorable market terms, the exercise by third-party surety bond issuers of their right to refuse to renew the surety and restrictions on availability of collateral for current and future third-party surety bond issuers under the terms of our financing arrangements.
A security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive or confidential information could give rise to unwanted media attention, materially damage customer relationships and the Company's reputation, and result in fines, fees, or liabilities, which may not be covered by insurance policies.
A security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive or confidential information could give rise to unwanted media attention, materially damage customer relationships and our reputation, and result in fines, fees, or liabilities, which may not be covered by insurance policies.
Security breaches, cyber incidents or cyber attacks could include, among other things, computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing and impersonation), hacking, denial of service attacks and other attacks. Cybersecurity threats to, and incidents involving, vendors and other third-parties who support the Company's activities could impact the business.
Security breaches, cyber incidents or cyber attacks could include, among other things, computer viruses, malicious or destructive code, ransomware, social engineering attacks (including phishing and impersonation), hacking, denial of service attacks and other attacks. Cybersecurity threats to, and incidents involving, vendors and other third-parties who support our activities could impact the business.
Future results of operations could be affected by changes in the Company’s effective income tax rate as a result of an increase in the statutory tax rate or the reduction or elimination of percentage depletion as well as changes in the mix of earnings between entities that benefit from percentage depletion and those that do not .
Future results of operations could be affected by changes in our effective income tax rate as a result of an increase in the statutory tax rate or the reduction or elimination of percentage depletion as well as changes in the mix of earnings between entities that benefit from percentage depletion and those that do not .
NAMining operations are currently geographically concentrated and therefore subject to regional economic risk, regulatory conditions, natural disasters, severe weather events or other circumstances affecting Florida. As of December 31, 2023, over 75% of the quarries NAMining operates are located in Florida.
NAMining operations are currently geographically concentrated and therefore subject to regional economic risk, regulatory conditions, natural disasters, severe weather events or other circumstances affecting Florida. As of December 31, 2024, over 75% of the quarries NAMining operates are located in Florida.
The future cash flow and results of operations of the Minerals Management segment are highly dependent on third-party operators’ success in developing the Company’s current and future mineral and royalty interests. These operators may not have access to the capital needed to develop the Company's mineral interests.
The future cash flow and results of operations of the Minerals Management segment are highly dependent on third-party operators’ success in developing our current and future mineral and royalty interests. These operators may not have access to the capital needed to develop our mineral interests.
Substantially all of the Minerals Management segment’s revenues are derived from royalty payments that are based on the price at which oil and natural gas produced from the acreage underlying the Company’s interests are sold. Prices of oil and natural gas are volatile due to factors beyond the Company’s control.
Substantially all of the Minerals Management segment’s revenues are derived from royalty payments that are based on the price at which oil and natural gas produced from the acreage underlying our interests are sold. Prices of oil and natural gas are volatile due to factors beyond our control.
In addition, the stock market in general has experienced significant volatility that often has been unrelated to the operating performance of companies whose shares are traded. These market fluctuations could adversely affect the trading price of the Company's common stock, regardless of NACCO's actual operating performance.
In addition, the stock market in general has experienced significant volatility that often has been unrelated to the operating performance of companies whose shares are traded. These market fluctuations could adversely affect the trading price of our common stock, regardless of NACCO's actual operating performance.
Risks related to the Coal Mining segment Termination of or default under long-term mining contracts could adversely affect the Company's business, financial condition, results of operation and cash flows. Substantially all of the Coal Mining segment's profits are derived from long-term mining contracts.
Risks related to the Coal Mining segment Termination of or default under long-term mining contracts could adversely affect our business, financial condition, results of operation and cash flows. Substantially all of the Coal Mining segment's profits are derived from long-term mining contracts.
Earnings from the Coal Mining segment's customers may fluctuate from time to time based on numerous factors, including market conditions and the realignment of customers' power generation portfolios that reduce the electric power generated from coal, which may be outside of the Company's control.
Earnings from the Coal Mining segment's customers may fluctuate from time to time based on numerous factors, including market conditions and the realignment of customers' power generation portfolios that reduce the electric power generated from coal, which may be outside of our control.
NACCO cannot predict whether investors will find the Company's common stock less attractive because of these exemptions. If some investors find NACCO's common stock less attractive as a result, there may be a less active trading market for the Company's common stock and the stock price may be more volatile.
NACCO cannot predict whether investors will find our common stock less attractive because of these exemptions. If some investors find NACCO's common stock less attractive as a result, there may be a less active trading market for our common stock and the stock price may be more volatile.
If any of the Coal Mining segment's customers experience declining demand due to market, economic, regulatory or competitive conditions, it could have an adverse effect on the Company's profitability, cash flows and financial position.
If any of the Coal Mining segment's customers experience declining demand due to market, economic, regulatory or competitive conditions, it could have an adverse effect on our profitability, cash flows and financial position.
An inability to obtain bank financing, or refinance with terms that are as favorable as the existing terms of such indebtedness, could have a material adverse effect on the Company's operating results and financial condition.
An inability to obtain bank financing, or refinance with terms that are as favorable as the existing terms of such indebtedness, could have a material adverse effect on our operating results and financial condition.
Changes in the utility industry that affect NACCO's customers could also adversely affect the Company. The increased availability of renewable energy sources has contributed to a reduction in demand for coal-fired electric power generation.
Changes in the utility industry that affect NACCO's customers could also adversely affect us. The increased availability of renewable energy sources has contributed to a reduction in demand for coal-fired electric power generation.
The public, including non-governmental organizations, opposition groups and individuals, have statutory rights to comment upon and submit objections to requested permits and approvals and to legally challenge certain permits subsequent to their issuance. Compliance with these requirements is costly and time-consuming and may delay commencement or continuation of development or production.
The public, including non-governmental organizations, opposition groups and individuals, have statutory rights to comment upon and submit objections to requested permits and 18 Table of Contents approvals and to legally challenge certain permits subsequent to their issuance. Compliance with these requirements is costly and time-consuming and may delay commencement or continuation of development or production.
The coal mining industry is subject to ongoing complex governmental regulations and legislation that could adversely impact the Company’s long-term mining contracts and the Company’s results of operations, liquidity, financial condition and cash flow.
The coal mining industry is subject to ongoing complex governmental regulations and legislation that could adversely impact our long-term mining contracts and our results of operations, liquidity, financial condition and cash flow.
The existence of a stock repurchase program could cause the price of the Company's Class A common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for the Company’s Class A common stock.
The existence of a stock repurchase program could cause the price of our Class A common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our Class A common stock.
The following risk factors are not an exhaustive list of the risks associated with the Company’s business. New factors may emerge or changes to these risks could occur that could materially affect the Company’s business.
The following risk factors are not an exhaustive list of the risks associated with our business. New factors may emerge or changes to these risks could occur that could materially affect our business.
Federal and state laws require the Company to provide financial assurance or financial security to secure performance or payment of certain long-term obligations, such as mine closure or reclamation costs, federal and state workers’ compensation and black lung benefit costs, leases, transmission interconnection construction costs, power purchase agreement delivery obligations and other obligations.
Federal and state laws require us to provide financial assurance or financial security to secure performance or payment of certain long-term obligations, such as mine closure or reclamation costs, federal and state workers’ compensation and black lung benefit costs, leases, transmission interconnection construction costs, power purchase agreement delivery obligations and other obligations.
As a result of all of these factors, investors in the Company's common stock may not be able to resell their stock at or above the price they paid or at all.
As a result of all of these factors, investors in our common stock may not be able to resell their stock at or above the price they paid or at all.
The decision to pursue development and operation of oil and gas wells is made by third-party operators, not by the Company, and depends on a number of factors outside of the Company's control, including fluctuations in commodity prices (primarily natural gas), regulatory risk, the Company's lessees' willingness and ability to incur well-development and other operating costs, the rate of production of the reserves and changes in the availability and continuing development of infrastructure.
The decision to pursue development and operation of oil and gas wells is made by third-party operators, not by us, and depends on a number of factors outside of our control, including fluctuations in commodity prices (primarily natural gas), regulatory risk, our lessees' willingness and ability to incur well-development and other operating costs, the rate of production of the reserves and changes in the availability and continuing development of infrastructure.
These projects are subject to significant risks, including delays or reductions in making capital expenditures by NAMining's customers, extreme weather events, unexpected increases in the cost of required materials, and disputes with third party providers of materials, equipment or services, and a completed project may not yield the anticipated operational or financial benefit, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
These projects are subject to significant risks, including delays or reductions in making capital expenditures by NAMining's customers, timely regulatory approvals, extreme weather events, unexpected increases in the cost of required materials, and disputes with third party providers of materials, equipment or services, and a completed project may not yield the anticipated operational or financial benefit, any of which could have a material adverse effect on our business, financial condition and results of operations.
Future federal and state laws and regulations, regional transmission organizations and power purchase agreement customers may require higher amounts of financial security, including as a result of changes to certain factors used to calculate the bonding or security amounts.
Future federal and state laws and regulations, regional transmission organizations and power purchase agreement customers may require higher amounts of financial security, including as a result of changes to certain factors used 25 Table of Contents to calculate the bonding or security amounts.
Information concerning the Company's mining operations in "Item 2 - Properties" on page 31 has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K. A mineral is economically recoverable when the price at which it can be sold exceeds the costs and expenses of mining, processing and selling the mineral.
Information concerning our mining operations in Item 2 - Properties on page 29 has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K. A mineral is economically recoverable when the price at which it can be sold exceeds the costs and expenses of mining, processing and selling the mineral.
The stock repurchase program does not require the Company to acquire any specific number of shares and may be modified, suspended, extended or terminated without prior notice and may be executed through open market purchases, privately negotiated transactions or otherwise. Repurchases under the stock repurchase program could affect the price of the Company's Class A common stock.
The stock repurchase program does not require us to acquire any specific number of shares and may be modified, suspended, extended or terminated without prior notice and may be executed through open market purchases, privately negotiated transactions or otherwise. Repurchases under the stock repurchase program could affect the price of our Class A common stock.
Federal and state mandates for increased use of electricity derived from renewable energy sources 21 Table of Contents have also adversely affected demand for coal-fired electric power generation. Such mandates make alternative fuel sources more competitive with coal-fired electric power generation.
Federal and state mandates for increased use of electricity derived from renewable energy sources have also adversely affected demand for coal-fired electric power generation. Such mandates make alternative fuel sources more competitive with coal-fired electric power generation.
Limited, or an inability to obtain, insurance coverage, significant increases in the premiums or deductibles of insurance, or losses in excess of its liability insurance coverage limits, could have a material adverse effect on the Company's operating results and financial condition.
Limited, or an inability to obtain, insurance coverage, significant increases in the premiums or deductibles of insurance, or losses in excess of our liability insurance coverage limits, could have a material adverse effect on our operating results and financial condition.
Legislation mandating certain benefits for current and retired coal miners also affects the industry. Mining operations require numerous governmental and regulatory permits and approvals. The Company is required to prepare and present to federal, state or local authorities data pertaining to the impact the production and combustion of coal may have upon the environment.
Legislation mandating certain benefits for current and retired coal miners also affects the industry. Mining operations require numerous governmental and regulatory permits and approvals. We are required to prepare and present to federal, state or local authorities data pertaining to the impact the production and combustion of coal may have upon the environment.
As the Company is required by state and federal law to have bonds or other acceptable security in place before mining can commence or for certain projects to move forward, the failure to maintain surety bonds, letters of credit or other guarantees or security arrangements would materially and adversely affect NACCO's ability to mine.
As we are required by state and federal law to have bonds or other acceptable security in place before mining can commence or for certain projects to move forward, the failure to maintain surety bonds, letters of credit or other guarantees or security arrangements would materially and adversely affect NACCO's ability to mine.
The Company anticipates that it will continue to incur costs and capital expenditures associated with future growth prior to realizing the full measure of anticipated long-term benefits, and the return on these investments may be lower, may develop more slowly than expected or may never be realized.
We anticipate that it will continue to incur costs and capital expenditures associated with future growth prior to realizing the full measure of anticipated long-term benefits, and the return on these investments may be lower, may develop more slowly than expected or may never be realized.
The Company is subject to income taxes in the United States and the effective income tax rate is impacted by certain U.S. federal income tax benefits currently available to coal mining and oil and gas exploration and development companies.
We are subject to income taxes in the United States and the effective income tax rate is impacted by certain U.S. federal income tax benefits currently available to coal mining and oil and gas exploration and development companies.
Future royalty-based income is dependent on the number of oil and gas wells being developed and operated on the Company’s mineral acreage.
Future royalty-based income is dependent on the number of oil and gas wells being developed and operated on our mineral acreage.
In addition, if a lessee were to experience financial difficulty, the lessee might not be able to pay its royalty payments or continue operations. A failure on the part of the lessee to make royalty payments may give the Company the right to terminate the lease, repossess the property and enforce payment obligations under the lease.
In addition, if a lessee were to experience financial difficulty, the lessee might not be able to pay our royalty payments or continue operations. A failure on the part of the lessee to make royalty payments may give us the right to terminate the lease, repossess the property and enforce payment obligations under the lease.
The fees earned adjust over time in line with various indices which reflect general U.S. inflation rates. During the production stage, the Unconsolidated Subsidiaries' customers pay the Company its agreed upon fee only for the coal delivered to them for consumption or use.
The fees earned adjust over time in line with various indices which reflect general U.S. inflation rates. During the production stage, the Unconsolidated Subsidiaries' customers pay us our agreed upon fee only for the coal delivered to them for consumption or use.
As a result, actual tonnage recovered, estimated revenues, expenditures and cash flows with respect to reserves and resources may vary materially from estimates. Thus, these estimates may not accurately reflect the Company’s actual reserves and resources.
As a result, actual tonnage recovered, estimated revenues, expenditures and cash flows with respect to reserves and resources may vary materially from estimates. Thus, these estimates may not accurately reflect our actual reserves and resources.
Any material inaccuracy in estimates related to the Company's reserves or resources could result in lower than expected revenues, higher than expected costs or decreased profitability and changes in future cash flow, which could materially and adversely affect the Company business, results of operations, financial position and cash flows.
Any material inaccuracy in estimates related to our reserves or resources could result in lower than expected revenues, higher than expected costs or decreased profitability and changes in future cash flow, which could materially and adversely affect our business, results of operations, financial position and cash flows.
Business — Business Developments" on page 2 in this Form 10-K for further discussion. 20 Table of Contents MLMC is subject to risks associated with its capital investment, operating and equipment costs, growing use of alternative generation that competes with coal-fired generation, changes in customer demand and inflationary adjustments.
Business — Business Developments on page 2 in this Form 10-K for further discussion. MLMC is subject to risks associated with our capital investment, operating and equipment costs, growing use of alternative generation that competes with coal-fired generation, changes in customer demand and inflationary adjustments.
The Company may not be able to acquire or find sufficient additional mineral and royalty interests to replace third-party operators' current and future production. Further, the decline curve the Company uses to project future royalty income is subject to numerous assumptions and limitations.
We may not be able to acquire or find sufficient additional mineral and royalty interests to replace third-party operators' current and future production. Further, the decline curve we use to project future royalty income is subject to numerous assumptions and limitations.
The Company may be subject to litigation seeking to hold energy companies accountable for the effects of climate change.
We may be subject to litigation seeking to hold energy companies accountable for the effects of climate change.
General Risk Factors The Company’s effective income tax rate could be volatile and materially change as a result of changes in tax laws, mix of earnings and other factors.
General Risk Factors Our effective income tax rate could be volatile and materially change as a result of changes in tax laws, mix of earnings and other factors.
In the event that new federal or state restrictions related to the hydraulic fracturing process are adopted in areas where the Company owns mineral and royalty interests, the Company’s lessees may incur additional costs or permitting requirements to comply with such requirements that may be significant and could result in added restrictions, delays or curtailments in the pursuit of exploration, development, or production activities.
In the event that new federal or state restrictions related to the hydraulic fracturing process are adopted in areas where we own mineral and royalty interests, our lessees may incur additional costs or permitting requirements to comply with such requirements that may be significant and could result in added restrictions, delays or curtailments in the pursuit of exploration, development, or production activities.
Federal and state statutes require the Company to restore mine property in accordance with specified standards and an approved reclamation plan, and require that the Company obtain and periodically renew permits for mining operations. Regulations require the Company to incur the cost of reclaiming current mine disturbance at operations where the Company holds the mining permit.
Federal and state statutes require us to restore mine property in accordance with specified standards and an approved reclamation plan, and require that we obtain and periodically renew permits for mining operations. Regulations require us to incur the cost of reclaiming current mine disturbance at operations where we hold the mining permit.
Although the Company has long-term contracts, numerous regulatory authorities, along with well-funded political and environmental activist groups, are devoting substantial resources to anti-coal activities to minimize or eliminate the use of coal as a source of electricity generation. Any customer's premature facility closure could have a material adverse effect on the Company’s business, financial condition and results of operations.
Although we have long-term contracts, numerous regulatory authorities, along with well-funded political and environmental activist groups, are devoting substantial resources to anti-coal activities to minimize or eliminate the use of coal as a source of electricity generation. Any customer's premature facility closure or contract default could have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that any stock repurchases will enhance shareholder value because the market price of the Company’s Class A common stock may decline below the levels at which the Company repurchased the shares.
There can be no assurance that any stock repurchases will enhance shareholder value because the market price of our Class A common stock may decline below the levels at which we repurchased the shares.
Loss, unauthorized access to, or misuse of confidential or personal information could disrupt the Company’s operations, damage the Company’s reputation, and expose the Company to claims from customers, financial institutions, regulators, employees and other persons, any of which could have an adverse effect on the Company’s business, financial condition and results of operations.
Loss, unauthorized access to, or misuse of confidential or personal information could disrupt our operations, damage our reputation, and expose us to claims from customers, financial institutions, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition and results of operations.
Natural gas wells have high initial production rates and follow a natural decline before settling into relatively stable, long-term production. Decline rates can vary due to 24 Table of Contents factors like well depth, well length, formation pressure, and facility design. Any of these risks could materially reduce the Company’s expected royalty income and the Company’s profitability.
Natural gas wells have high initial production rates and follow a natural decline before settling into relatively stable, long-term production. Decline rates can vary due to factors like well depth, well length, formation pressure, and facility design. Any of these risks could materially reduce our expected royalty income and profitability.
Additionally, methods to obtain unauthorized access to confidential information change frequently and may be difficult to detect, which can impact the Company’s ability to respond appropriately. The Company could be subject to liability for failure to comply with privacy and information security laws, for failing to protect personal information or for failing to respond appropriately.
Additionally, methods to obtain unauthorized access to confidential information change frequently and may be difficult to detect, which can impact our ability to respond appropriately. We could be subject to liability for failure to comply with privacy and information security laws, for failing to protect personal information or for failing to respond appropriately.
The Company’s operations are subject to disruption from natural or human causes beyond its control, including physical risks from hurricanes, severe storms, floods and other forms of severe weather, accidents, fires, earthquakes, terrorist acts and epidemic or pandemic diseases such as the coronavirus, any of which could result in suspension of operations or harm to people or the environment.
Our operations are subject to disruption from natural or human causes beyond our control, including physical risks from hurricanes, severe storms, floods and other forms of severe weather, accidents, fires, earthquakes, terrorist acts and epidemic or pandemic diseases, any of which could result in suspension of operations or harm to people or the environment.
Any of these risks could result in a decrease in coal consumption by the Company’s customers and could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is subject to burdensome federal and state mining regulations and the assumptions underlying the Company's reclamation and mine closure obligations could be materially inaccurate.
Any of these risks could result in a decrease in coal consumption by our customers and could have a material adverse effect on our business, financial condition and results of operations. We are subject to burdensome federal and state mining regulations and the assumptions underlying our reclamation and mine closure obligations could be materially inaccurate.
If the Company is unable to manage this growth and the associated expenses effectively, the Company may not be able to take advantage of market opportunities or remain competitive. The Company may also fail to execute on its business plan or respond to competitive pressures, any of which could adversely affect the NAMining business, operating results and financial condition.
If we are unable to manage this growth and the associated expenses effectively, we may not be able to take advantage of market opportunities or remain competitive. We may also fail to execute on our business plan or respond to competitive pressures, any of which could adversely affect the NAMining business, operating results and financial condition.
Item 1A. RISK FACTORS The Company operates in a rapidly changing environment that involves a number of risks. The following discussion highlights some of these risks and others are discussed elsewhere in this report. These and other risks could materially and adversely affect the Company’s business, financial condition, operating results or cash flows.
Item 1A. RISK FACTORS We operate in a rapidly changing environment that involves a number of risks. The following discussion highlights some of these risks and others are discussed elsewhere in this report. These and other risks could materially and adversely affect our business, financial condition, operating results or cash flows.
The Company may not commit to develop property or coal reserves until the Company has obtained necessary permits and completed exploration. As such, the title to property that the Company intends to lease or mine may contain defects prohibiting the ability to conduct mining operations. Similarly, leasehold interests may be subject to superior property rights of third parties.
We may not commit to develop property or coal reserves until we have obtained necessary permits and completed exploration. As such, the title to property that we intend to lease or mine may contain defects prohibiting the ability to conduct mining operations. Similarly, leasehold interests may be subject to superior property rights of third parties.
While all of the Company’s operations are located in the United States, the Company participates in a global supply chain, and if governments regulate or restrict the flow of labor or products or impede the travel of Company personnel, the Company’s ability to conduct normal business operations could be impacted which could adversely affect the Company’s results of operations and liquidity.
While all of our operations are located in the United States, we participate in a global supply chain, and if governments regulate or restrict the flow of labor or products or impede the travel of our personnel, our ability to conduct normal business operations could be impacted which could adversely affect our results of operations and liquidity.
Competition from natural gas-fired plants that are relatively more efficient, less expensive to construct and less difficult to permit than coal-fired plants has the most potential to continue to displace a significant amount of coal-fired electric power generation in the near term.
Competition from natural gas-fired plants that are relatively more efficient, less expensive to construct and less difficult to permit than coal-fired plants have the most potential to continue to displace a significant amount of coal-fired electric power generation.
Estimates of the Company's total reclamation and mine closing liabilities are based upon permit requirements and the Company's engineering expertise related to these requirements.
Estimates of our total reclamation and mine closing liabilities are based upon permit requirements and our engineering expertise related to these requirements.
Further, NACCO could 25 Table of Contents be the subject of securities class action litigation due to any such stock price volatility, which could divert management’s attention and have a material adverse effect on the Company's operating results. NACCO's certificate of incorporation and by-laws include provisions that may discourage a takeover attempt.
Further, we could be the subject of securities class action litigation due to any such stock price volatility, which could divert management’s attention and have a material adverse effect on our operating results. NACCO's certificate of incorporation and by-laws include provisions that may discourage a takeover attempt.
The timing and amount of any repurchases under the 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.
Our Board of Directors has authorized a stock repurchase program. The timing and amount of any repurchases under the 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.
Unless the Company replaces existing mineral and royalty interests with new mineral and royalty interests and third-party lessees develop those mineral and royalty interests, the Company’s reserves and royalty income will decline. Producing oil and natural gas reservoirs are generally characterized by declining production rates that vary depending upon reservoir characteristics and other factors.
Unless we replace existing mineral and royalty interests with new mineral and royalty interests and third-party lessees develop those mineral and royalty interests, our reserves and royalty income will decline. Producing oil and natural gas reservoirs are generally characterized by declining production rates that vary depending upon reservoir characteristics and other factors.
The Company is continuously installing new and upgrading existing information technology systems. The Company uses employee awareness training around phishing, malware, and other cyber risks. The Company believes these incidents are likely to continue and is unable to predict the direct or indirect impact of future attacks or breaches to business operations.
We are continuously installing new and upgrading existing information technology systems. We use employee awareness training around phishing, malware, and other cyber risks. We believe these incidents are likely to continue and are unable to predict the direct or indirect impact of future attacks or breaches to business operations.
In addition, if the Company is able to enter into a new lease with a new lessee, the replacement lessee may not achieve the same levels of production or sales prices as the lessee it replaced. Any of these risks could materially reduce the Company’s expected royalty income and the Company’s profitability. Minerals are a depleting asset.
In addition, if we are able to enter into a new 22 Table of Contents lease with a new lessee, the replacement lessee may not achieve the same levels of production or sales prices as the lessee it replaced. Any of these risks could materially reduce our expected royalty income and profitability. Minerals are a depleting asset.
Although there is no voting agreement among such extended family members, in writing or otherwise, if they were to act in concert, they could control the outcome of director elections and other stockholder votes on significant corporate actions, such as certain amendments to the Company's certificate of incorporation and sales of the Company or substantially all of its assets.
Although there is no voting agreement among such extended family members, in writing or otherwise, if they were to act in concert, they could control the outcome of director elections and other stockholder votes on significant corporate actions, such as certain amendments to our certificate of incorporation and our sale or the sale of our assets.
Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond the Company's control; market expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports and U.S. exports of oil and natural gas; the level of U.S. domestic production; political and economic conditions in oil producing regions; the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; trading in oil and natural gas derivative contracts; the level of consumer product demand; weather conditions and natural disasters; technological advances affecting energy consumption, energy storage and energy supply; domestic and foreign governmental regulations and taxes; the continued threat of terrorism and the impact of military and other action, including the ongoing conflict between Israel and Hamas, the conflict between Russia and Ukraine and associated oil and natural gas import bans as well as U.S. military operations in the Middle East and economic sanctions such as those imposed by the U.S. on oil and gas exports from Iran; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; the price and availability of alternative fuels; and overall domestic and global economic conditions.
Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in: supply and demand, including if energy supply exceeds demand; market uncertainty and a variety of additional factors that are beyond our control; market expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports and U.S. exports of oil and natural gas; the level of U.S. domestic production; political and economic conditions in oil producing regions; the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; trading in oil and natural gas derivative contracts; the level of consumer product demand; weather conditions and natural disasters; technological advances affecting energy consumption, energy storage and energy supply; domestic and foreign governmental regulations and taxes; the continued threat of terrorism and the impact of military and other action, including ongoing conflicts in foreign nations and associated oil and natural gas import bans as well as economic sanctions such as those imposed by the U.S. on oil and gas exports from Iran; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; the price and availability of alternative fuels; volatility in the political, legal and regulatory environments due to the U.S. presidential election; and overall domestic and global economic conditions.
Certain members of the Company's extended founding family own a substantial amount of its Class A and Class B common stock and, if they were to act in concert, could control the outcome of director elections and other stockholder votes on significant corporate actions.
Certain members of our extended founding family own a substantial amount of our Class A and Class B common stock and, if they were to act in concert, could control the outcome of director elections and other stockholder votes on significant corporate actions. We have two classes of common stock: Class A common stock and Class B common stock.
In addition, if any customers were to significantly reduce or eliminate their purchases of coal from us or if the Company is unable to renew expiring long-term sales agreements with existing customers or enter into new supply agreements, the Company's business, financial condition, results of operations and cash flows could be adversely affected. See “Item 1.
In addition, if any customers were to significantly reduce or eliminate their purchases of coal from us or if we are unable to renew expiring long-term sales agreements with existing customers or enter into new supply agreements, our business, financial condition, results of operations and cash flows could be adversely affected. See Item 1.
If the Company is unable to meet collateral requirements and cannot otherwise obtain or retain required surety bonds, it may be unable to satisfy legal requirements necessary to conduct mining operations.
If we are unable to meet collateral requirements and cannot otherwise obtain or retain required surety bonds, it may be unable to satisfy legal requirements necessary to conduct mining operations.
The Company is currently a “smaller reporting company” as defined in the Securities Exchange Act of 1934, and thus allowed to provide simplified executive compensation disclosures and other decreased disclosure in SEC filings. The reduced disclosures may make it more difficult to compare the Company's performance with other public companies.
We are currently a smaller reporting company as defined in the Securities Exchange Act of 1934, and thus allowed to provide simplified executive compensation disclosures and other decreased disclosure in SEC filings. The reduced disclosures may make it more difficult to compare our performance with other public companies.
Such changes could have a material adverse effect on the Company’s business and could significantly reduce its profitability. The Coal Mining segment's customers' operations require significant capital expenditures. Maintaining and installing environmental controls on power plants requires significant capital expenditures.
Such changes could have a material adverse effect on our business and could significantly reduce our profitability. 20 Table of Contents The Coal Mining segment's customers' operations require significant capital expenditures. Maintaining and installing environmental controls on power plants requires significant capital expenditures.
These factors and assumptions include: 22 Table of Contents • Geologic and mining conditions, including the Company's ability to access certain mineral deposits as a result of the nature of the geologic formations of coal deposits or other factors, which may not be fully identified by available exploration data and may differ from past experience; • Demand for the Company's minerals; • Contractual arrangements, operating costs and capital expenditures; • Development and reclamation costs; • Mining technology and processing improvements; • The effects of regulation by governmental agencies; • The ability to obtain, maintain and renew all required permits; • Employee health and safety; and • NACCO's ability to convert all or any part of mineral resources to economically extractable mineral reserves.
These factors and assumptions include: • Geologic and mining conditions, including our ability to access certain mineral deposits as a result of the nature of the geologic formations of coal deposits or other factors, which may not be fully identified by available exploration data and may differ from past experience; • Demand for our minerals; • Contractual arrangements, operating costs and capital expenditures; • Development and reclamation costs; • Mining technology and processing improvements; • The effects of regulation by governmental agencies, including volatility in the political, legal and regulatory environments due to the U.S. presidential administration; • The ability to obtain, maintain and renew all required permits; • Employee health and safety; and • Our ability to convert all or any part of mineral resources to economically extractable mineral reserves.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese include, but are not limited to, internal reporting mechanisms, monitoring and detection tools, threat intelligence, and general and role-based training. The Company also maintains third party management processes to identify and manage the cybersecurity risks 29 Table of Contents associated with third party service providers.
Biggest changeThese include, but are not limited to, internal reporting mechanisms, monitoring and detection tools, threat intelligence, and general and role-based training. NACCO's commitment to cybersecurity emphasizes cultivating a security-minded culture through education and training that reflect best practices and improved cybersecurity awareness.
The full Board regularly reviews information provided by management to oversee risk identification, risk management and risk mitigation strategies. The Audit Review Committee assists the Board with cybersecurity risk oversight.
Our full Board regularly reviews information provided by management to oversee risk identification, risk management and risk mitigation strategies. The Audit Review Committee assists the Board with cybersecurity risk oversight.
The Audit Review Committee is responsible for regularly reviewing and discussing with management risk exposure relating to cybersecurity, which includes reviewing the state of the Company's cybersecurity program and emerging cybersecurity developments and threats, as well as the steps management has taken to monitor and mitigate such exposure.
The Audit Review Committee is responsible for regularly reviewing and discussing with management risk exposure relating to cybersecurity, which includes reviewing the state of our cybersecurity program and emerging cybersecurity developments and threats, as well as the steps management has taken to monitor and mitigate such exposure.
Depending on the nature and severity of an incident, this process provides for escalation procedures upon discovery of material cybersecurity risks, including notification to the Company’s executive management and/or Board.
Depending on the nature and severity of an incident, this process provides for escalation procedures upon discovery of material cybersecurity risks, including notification to our executive management and/or Board.
As of the date of this filing, the Company’s business strategy, results of operations, and financial condition have not been materially impacted as a result of any previously identified cybersecurity incidents; however, we cannot provide assurance that they will not be materially impacted in the future by such risks or any future material incidents.
As of the date of this filing, our business strategy, results of operations, and financial condition have not been materially impacted as a result of any previously identified cybersecurity incidents; however, NACCO cannot provide assurance that we will not be materially impacted in the future by such risks or any future material incidents.
The Company has implemented and invested in, and will continue to implement and invest in, controls, technologies, and resources (both internal and external) that are designed to identify, protect against, detect, respond to and mitigate cybersecurity risks, in alignment with frameworks established by the National Institute of Standards and Technology.
We have implemented and invested in, and will continue to implement and invest in, controls, technologies, and resources (both internal and external) that are designed to identify, protect against, detect, respond to and mitigate cybersecurity risks, in alignment with frameworks established by the National Institute of Standards and Technology.
The CISO is informed of cybersecurity incidents by the cybersecurity team, which is generally responsible for monitoring the prevention, detection, mitigation, and remediation of cybersecurity incidents. The Company has an established process governing its assessment, response and internal and external notifications upon the occurrence of a cybersecurity incident, including evaluation of the potential impacts of cybersecurity incidents to determine materiality.
The CISO is informed of cybersecurity incidents by the cybersecurity team, which is generally responsible for monitoring the prevention, detection, mitigation, and remediation of cybersecurity incidents. We have an established process governing our assessment, response and internal and external notifications upon the occurrence of a cybersecurity incident, including evaluation of the potential impacts of cybersecurity incidents to determine materiality.
In 2023, the Board and the Audit Review Committee received periodic updates throughout the year on cybersecurity matters and these updates are part of their standing agendas. The Company’s Chief Information Security Officer ("CISO") leads the Company’s cybersecurity program and is responsible for the management of its cybersecurity risks.
In 2024, our Board and the Audit Review Committee received periodic updates throughout the year on cybersecurity matters and these updates are part of their standing agendas. Our Chief Information Security Officer (CISO) leads NACCO's cybersecurity program and is responsible for the management of our cybersecurity risks.
Additionally, the Company has a Cybersecurity Task Force in place that is comprised of individuals across various departments within the organization including information systems, legal, finance, human resources and internal audit which meets regularly to further advance the Company’s cybersecurity strategy. The Board of Directors (the “Board”) oversees NACCO's risk management.
Additionally, we have a Cybersecurity Task Force in place that is comprised of individuals across various departments within our organization including information systems, legal, finance, human resources and internal audit which meets regularly to further advance our cybersecurity strategy. Our Board of Directors (Board) oversees NACCO's risk management.
Additionally, the CISO is currently enrolled in an Executive course through Northwestern’s Kellogg School of Management focused on artificial intelligence (“AI”). The CISO reports directly to the President and Chief Executive Officer. The CISO manages a team of internal and external resources that have expertise and experience in cybersecurity.
Additionally, the CISO successfully completed an Executive course through Northwestern’s Kellogg School of Management focused on artificial intelligence during 2024. The CISO reports directly to the President and Chief Executive Officer. The CISO manages a team of internal and external resources that have expertise and experience in cybersecurity.
Item 1C. CYBERSECURITY The Company maintains a cybersecurity program that is aligned with its business and has established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, which have been integrated into its overall risk management processes and governance structure.
Item 1C. CYBERSECURITY Cybersecurity continues to be a key governance priority for us. NACCO maintains a cybersecurity program that is aligned with our business and has established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, which have been integrated into our overall risk management processes and governance structure.
The Company periodically evaluates its cybersecurity program internally and by engaging with consultants to conduct reviews and assessments of the program. Such reviews and assessments may include penetration testing, maturity assessments as well as table-top and other exercises with subsequent remediation of key findings.
Such reviews and assessments may include penetration testing, maturity assessments as well as table-top and other exercises with subsequent remediation of key findings.
For additional information regarding the Company’s cybersecurity risks, please refer to "Item 1A - “Risk Factors” on page 19. 30 Table of Contents
For additional information regarding our cybersecurity risks, please refer to Item 1A - Risk Factors on page 18. 28 Table of Contents
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We also maintain third party management processes to identify and manage the cybersecurity risks associated with third party service providers. We periodically evaluate our cybersecurity program internally and by engaging with consultants to conduct reviews and assessments of the program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDakota Coal Company then sells the coal to the Synfuels Plant, Antelope Valley Station and Leland Olds Station, all of which are operated by affiliates of Basin Electric. The Synfuels Plant is a coal gasification plant that manufactures synthetic natural gas and produces fertilizers, solvents, phenol, carbon dioxide, and other chemical products for sale.
Biggest changeThe Synfuels Plant is a coal gasification plant that manufactures synthetic natural gas and produces fertilizers, solvents, phenol, carbon dioxide, and other chemical products for sale. In March 2025, the term of the existing lignite sales agreement was extended until 2032. The term may be extended for an additional five year period, or until 2037, at the option of Coteau.
The facilities and equipment are maintained to allow for safe and efficient operation. The equipment is well maintained, in good physical condition and is either updated or replaced periodically with newer models or upgrades available to keep up with modern technology.
The facilities and equipment are maintained to allow for safe and efficient operation. The equipment is well maintained, in good physical condition and is either updated or replaced periodically with newer models or upgrades available to keep up with modern technology.
Risks inherent in overestimated reserves can impact financial performance when revealed, such as changes in amortizations that are based on life of mine estimates. 4.0 Customer-owned Properties South Hallsville No. 1 Mine — The Sabine Mining Company The Sabine Mining Company (“Sabine”) operated the Sabine Mine in Texas.
Risks inherent in overestimated reserves can impact financial performance when revealed, such as changes in amortizations that are based on life of mine estimates. 4.0 Customer-owned Properties South Hallsville No. 1 Mine — The Sabine Mining Company The Sabine Mining Company (Sabine) operated the Sabine Mine in Texas.
Geological modeling and mine planning efforts serve as a base assumption for resource estimates at MLMC. These outputs have been prepared and reviewed by Company personnel. Mine planning decisions are determined and agreed upon by Company management.
Geological modeling and mine planning efforts serve as a base assumption for resource estimates at MLMC. These outputs have been prepared and reviewed by Company personnel. Mine planning decisions are determined and agreed upon by our management.
The Minerals Management Segment’s Vice President of Engineering and Finance is the technical person primarily responsible for overseeing the preparation of the internal reserve estimates and for coordinating with Haas Engineering in the preparation of the third-party reserve report.
The Minerals Management Segment’s Vice President of Engineering and Finance is the technical person primarily responsible for overseeing the preparation of the internal reserve estimates and for coordinating with Haas & Cobb in the preparation of the third-party reserve report.
There are some instances where the stripping ratio for a single year could exceed 14:1, but the average for the entire area evaluated is less than 14:1. – Historical coal recovery rates at Red Hills Mine have been applied to generate the Mineral Reserve tonnages. – Mineral Reserves are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the Qualified person ("QP").
There are some instances where the stripping ratio for a single year could exceed 14:1, but the average for the entire area evaluated is less than 14:1. – Historical coal recovery rates at Red Hills Mine have been applied to generate the Mineral Reserve tonnages. – Mineral Reserves are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the QP.
In addition, Coyote Creek Mine owns in fee 160 acres of surface interests and has four easements to conduct coal mining operations on approximately 352 acres. 41 Table of Contents Figure 2.4 – Coyote Creek Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Coyote Creek Mine and provide a vast supply and employment base.
In addition, Coyote Creek Mine owns in fee 160 acres of surface interests and has four easements to conduct coal mining operations on approximately 352 acres. 39 Table of Contents Figure 2.4 – Coyote Creek Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Coyote Creek Mine and provide a vast supply and employment base.
The information regarding MLMC was reviewed by employees of the Company that are qualified persons as defined by subpart 1300 of Regulation S-K. Coteau, Falkirk, Coyote Creek and MLMC, each wholly-owned subsidiaries of NACCO, operate surface coal mines under long-term contracts with power generation companies pursuant to a service-based business model.
The information regarding MLMC was reviewed by our employees that are qualified persons as defined by subpart 1300 of Regulation S-K. Coteau, Falkirk, Coyote Creek and MLMC, each wholly-owned subsidiaries of NACCO, operate surface coal mines under long-term contracts with power generation companies pursuant to a service-based business model.
The customers are responsible for funding all mine operating cost, including final mine reclamation, and directly or indirectly providing all of the capital required to build and operate the mine. This contract structure eliminates the Company's exposure to spot coal market price fluctuations. Coteau, Coyote Creek and Falkirk each have only one customer for which they extract and deliver coal.
The customers are responsible for funding all mine operating cost, including final mine reclamation, and directly or indirectly providing all of the capital required to build and operate the mine. This contract structure eliminates our exposure to spot coal market price fluctuations. Coteau, Coyote Creek and Falkirk each have only one customer for which they extract and deliver coal.
North Dakota’s freight rail service is largely provided by Burlington Northern Santa Fe Railway and Canadian Pacific Railway. 42 Table of Contents The coal tonnages are located in Mercer County, North Dakota, starting approximately six miles southwest of Beulah, North Dakota. The formations of sedimentary origin were deposited in the Williston Basin, the dominant structural feature of western North Dakota.
North Dakota’s freight rail service is largely provided by Burlington Northern Santa Fe Railway and Canadian Pacific Railway. 40 Table of Contents The coal tonnages are located in Mercer County, North Dakota, starting approximately six miles southwest of Beulah, North Dakota. The formations of sedimentary origin were deposited in the Williston Basin, the dominant structural feature of western North Dakota.
MLMC currently has all permits in place for the Red Hills Mine to operate and adhere to a mine plan projected through April 1, 2032. No mineral processing occurs at the Red Hills Mine. 33 Table of Contents The geology encountered at the Red Hills Mine is stratigraphic in nature with depositional sequences of sands, silts, clays, and lignite.
MLMC currently has all permits in place for the Red Hills Mine to operate and adhere to a mine plan projected through April 1, 2032. No mineral processing occurs at the Red Hills Mine. 31 Table of Contents The geology encountered at the Red Hills Mine is stratigraphic in nature with depositional sequences of sands, silts, clays, and lignite.
The accuracy of the estimates of the Company’s reserves is a function of: • the quality and quantity of available data and the engineering and geological interpretation of that data; • estimates regarding the amount and timing of future operating costs, development costs and workovers, all of which may vary considerably from actual results; • future prices of oil, natural gas and NGLs, which may vary considerably from those estimated; and • the judgment of the persons preparing the estimates.
The accuracy of the estimates of our reserves is a function of: • the quality and quantity of available data and the engineering and geological interpretation of that data; • estimates regarding the amount and timing of future operating costs, development costs and workovers, all of which may vary considerably from actual results; • future prices of oil, natural gas and NGLs, which may vary considerably from those estimated; and • the judgment of the persons preparing the estimates.
Location of the Freedom Mine. Travel to the Freedom Mine by air is possible by means of the Bismarck Municipal Airport, Bismarck, ND, which is approximately 90 miles southeast of the mine.
Travel to the Freedom Mine by air is possible by means of the Bismarck Municipal Airport, Bismarck, ND, which is approximately 90 miles southeast of the mine.
MLMC has a history of partnership with MSU as well as the local community colleges for science, technology, engineering, and mathematics (STEM) research and skilled trades training. The Red Hills Mine sources power for mine office facilities and operations from 4-County Electric Power Association, and water for the mine office facilities from the Choctaw Water Association.
MLMC has a history of partnership with MSU as well as the local community colleges for science, technology, engineering, and mathematics (STEM) research and skilled trades training. The Red Hills Mine sources power for mine office facilities and operations from 4-County Electric Power Association, and water for the mine office facilities from the Reform Water Association.
The Mineral Resources as of December 31, 2023 presented in Table 2.2 below have been estimated by applying a series of geologic and physical limits as well as high-level mining and economic constraints. The mining and economic constraints were limited to a level sufficient to support reasonable prospect for future economic extraction of the estimated Mineral Resources.
The Mineral Resources as of December 31, 2024 presented in Table 2.2 below have been estimated by applying a series of geologic and physical limits as well as high-level mining and economic constraints. The mining and economic constraints were limited to a level sufficient to support reasonable prospect for future economic extraction of the estimated Mineral Resources.
Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred. 32 Table of Contents A summary of coal production at MLMC for the past three years has been tabulated and is presented on Table 2.1 Production Summary.
Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred. 30 Table of Contents A summary of coal production at MLMC for the past three years has been tabulated and is presented on Table 2.1 Production Summary.
Net wells are calculated based on the Company's net royalty interest, factoring in both ownership percentage of gross wells and royalty rate. The majority of the Company’s producing mineral and royalty interest acreage now, or in the future, can be pooled with third-party acreage to form pooled units.
Net wells are calculated based on our net royalty interest, factoring in both ownership percentage of gross wells and royalty rate. The majority of our producing mineral and royalty interest acreage now, or in the future, can be pooled with third-party acreage to form pooled units.
The Vice President of Engineering and Finance has over 15 years of industry experience with positions of increasing responsibility and reports directly to the President of Catapult Mineral Partners, the Company’s business unit focused on managing and expanding the Company’s portfolio of oil and gas mineral and royalty interests.
The Vice President of Engineering and Finance has over 15 years of industry experience with positions of increasing responsibility and reports directly to the President of Catapult Mineral Partners, our business unit focused on managing and expanding our portfolio of oil and gas mineral and royalty interests.
The development of such resources and reserves estimates, including related assumptions, was a collaborative effort between the QPs and Company staff. This section summarizes the internal control considerations for the Company’s development of estimations, including assumptions, used in resource and reserve analysis and modeling.
The development of such resources and reserves estimates, including related assumptions, was a collaborative effort between the QPs and Company staff. This section summarizes the internal control considerations for our development of estimations, including assumptions, used in resource and reserve analysis and modeling.
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 investments.
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 our financial statements. Instead, these contracts are accounted for as equity method investments.
Item 2. PROPERTIES Coal Mining Segment - Operations NACCO-owned Properties 1.0 INTRODUCTION Information concerning the Company’s mining properties in this Form 10-K have been prepared in accordance with the requirements of subpart 1300 of Regulation S-K.
Item 2. PROPERTIES Coal Mining Segment - Operations NACCO-owned Properties 1.0 INTRODUCTION Information concerning our mining properties in this Form 10-K have been prepared in accordance with the requirements of subpart 1300 of Regulation S-K.
The technologies and economic data used in the estimation of the Company’s proved reserves include, but are not limited to, well logs, geologic maps, seismic data, well test data, production data, historical price and cost information and property ownership interests.
The technologies and economic data used in the estimation of our proved reserves include, but are not limited to, well logs, geologic maps, seismic data, well test data, production data, historical price and cost information and property ownership interests.
No mineral processing occurs at the Falkirk Mine. 40 Table of Contents Figure 2.3 – Falkirk Mine Location Coyote Creek The Coyote Creek Mine generally produces between 1.5 million and 2.0 million tons of lignite annually.
No mineral processing occurs at the Falkirk Mine. 38 Table of Contents Figure 2.3 – Falkirk Mine Location Coyote Creek The Coyote Creek Mine generally produces between 1.5 million and 2.0 million tons of lignite annually.
The following mines were operational during 2023: Location Name Aggregate Location State Customer Year NACCO Started Operations White Rock — North Limestone Miami FL WRQ 1995 Krome Limestone Miami FL Cemex 2003 Alico Limestone Ft.
The following mines were operational during 2024: Location Name Aggregate Location State Customer Year NACCO Started Operations White Rock — North Limestone Miami FL WRQ 1995 Krome Limestone Miami FL Cemex 2003 Alico Limestone Ft.
Summation errors due to rounding may exist. Table 2.3 Mineral Reserves Summary as of December 31, 2023 Table 2.4 describes the difference between the Mineral Reserves and Mineral Resources reported as of December 31, 2022 and December 31, 2023.
Summation errors due to rounding may exist. Table 2.3 Mineral Reserves Summary as of December 31, 2024 Table 2.4 describes the difference between the Mineral Reserves and Mineral Resources reported as of December 31, 2023 and December 31, 2024.
The QPs and Company management agree on the reasonableness of the criteria for the purposes of estimating resources and reserves. Calculations using these criteria are reviewed and validated by the QPs. Estimations and assumptions were developed independently for each significant mineral location. All estimates require a combination of historical data and key assumptions and parameters.
The QPs and our management team agree on the reasonableness of the criteria for the purposes of estimating resources and reserves. Calculations using these criteria are reviewed and validated by the QPs. Estimations and assumptions were developed independently for each significant mineral location. All estimates require a combination of historical data and key assumptions and parameters.
Assumptions include a maximum cumulative stripping ratio of 18:1 based on an assumed lignite sales price of $29.66 per ton. A further description of the verified drilling data used to model the lignite deposit for estimation of Mineral Resources is provided in Section 7.2 Drilling Exploration, 8.0 Sample Preparation, Analyses, and Security, and Section 9.0 Data Verification.
Assumptions include a maximum cumulative stripping ratio of 18:1 based on an assumed lignite sales price of $34.02 per ton. A further description of the verified drilling data used to model the lignite deposit for estimation of Mineral Resources is provided in Section 7.2 Drilling Exploration, 8.0 Sample Preparation, Analyses, and Security, and Section 9.0 Data Verification.
As equipment wears out, Coteau evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $116.2 million. The Freedom Mine currently has no significant encumbrances to the property.
As equipment wears out, Coteau evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2024 is $162.2 million. The Freedom Mine currently has no significant encumbrances to the property.
No mineral processing occurs at the Coyote Creek Mine. 3.0 Internal Control Disclosure Over Mineral Resources and Reserves The modeling and analysis of the Company’s resources and reserves has been developed by Company mine personnel and reviewed by several levels of internal management, including the QPs.
No mineral processing occurs at the Coyote Creek Mine. 3.0 Internal Control Disclosure Over Mineral Resources and Reserves The modeling and analysis of our resources and reserves has been developed by our mine personnel and reviewed by several levels of internal management, including the QPs.
Under subpart 1300 of Regulation S-K, mineral resources may not be classified as “mineral reserves” unless the determination has been made by a qualified person that the mineral resources can be the basis of an economically viable project.
Under subpart 1300 of Regulation S-K, mineral resources may not be classified as mineral reserves unless the determination has been made by a qualified person that the mineral resources can be the basis of an economically viable project.
Tons (in millions) 2021 2022 2023 The Coteau Properties Company 12.5 13.4 11.4 The Falkirk Mining Company 7.9 7.6 6.6 Coyote Creek Mining Company 2.0 1.8 2.2 Mississippi Lignite Mining Company 3.0 3.2 2.7 Totals 25.4 26.0 22.9 Table 1.1 Production Summary 2.0 MINING PROPERTIES SUBJECT TO SUBPART 1300 OF REGULATION S-K REPORTING 2.1 Red Hills Mine — Mississippi Lignite Mining Company MLMC is the owner and operator of the Red Hills Mine.
Tons (in millions) 2022 2023 2024 The Coteau Properties Company 13.4 11.4 11.9 The Falkirk Mining Company 7.6 6.6 7.5 Coyote Creek Mining Company 1.8 2.2 1.9 Mississippi Lignite Mining Company 3.2 2.7 1.9 Totals 26.0 22.9 23.2 Table 1.1 Production Summary 2.0 MINING PROPERTIES SUBJECT TO SUBPART 1300 OF REGULATION S-K REPORTING 2.1 Red Hills Mine — Mississippi Lignite Mining Company MLMC is the owner and operator of the Red Hills Mine.
At Coteau, Coyote Creek and Falkirk, the Company is 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. inflation.
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. inflation.
The total cost of the property and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $52.8 million. The Red Hills Mine currently has no significant encumbrances to the property. No mining permit violations have been issued at the Red Hills Mine in the past ten years.
The total cost of the property and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2024 is $52.5 million. The Red Hills Mine currently has no significant encumbrances to the property. No mining permit violations have been issued at the Red Hills Mine in the past ten years.
Summation errors due to rounding may exist. Table 2.2 Mineral Resources Summary as of December 31, 2023 35 Table of Contents The Mineral Reserves as of December 31, 2023 presented in Table 2.3 below were determined to be the economically mineable portion of the measured and indicated Mineral Resources after the consideration of modifying factors related to the mining process.
Summation errors due to rounding may exist. 33 Table of Contents Table 2.2 Mineral Resources Summary as of December 31, 2024 The Mineral Reserves as of December 31, 2024 presented in Table 2.3 below were determined to be the economically mineable portion of the measured and indicated Mineral Resources after the consideration of modifying factors related to the mining process.
The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $58.4 million. The Falkirk Mine currently has no significant encumbrances to the property. No Notice of Violations (NOVs) have been issued at the Falkirk Mine in the past three years.
The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2024 is $58.7 million. The Falkirk Mine currently has no significant encumbrances to the property. No Notice of Violations (NOVs) have been issued at the Falkirk Mine in the past three years.
Locations of the properties subject to SEC Section 1300 reporting are shown in Figure 1.1 Surface Coal Mines Operational During 2023 Subject to SEC Section 1300 Reporting. 31 Table of Contents Figure 1.1 Surface Coal Mines Operational During 2023 Subject to SEC Section 1300 Reporting A summary of coal production at the Mines subject to SEC Section 1300 Reporting for the past three years has been tabulated and is presented on Table 1.1 Production Summary.
Locations of the properties subject to SEC Section 1300 reporting are shown in Figure 1.1 Surface Coal Mines Operational During 2024 Subject to SEC Section 1300 Reporting. 29 Table of Contents Figure 1.1 Surface Coal Mines Operational During 2024 Subject to SEC Section 1300 Reporting A summary of coal production at the Mines subject to SEC Section 1300 Reporting for the past three years has been tabulated and is presented on Table 1.1 Production Summary.
NAMining mined de minimis amounts at this location during the 2023 and 2022 periods. NAMining's customers control all of the limestone and sand reserves within their respective mines. NAMining has no title, claim, lease or option to acquire any of the reserves at any of the mines where it provides services.
NAMining mined de minimis amounts at this location during 2024. NAMining's customers control all of the limestone and sand reserves within their respective mines. NAMining has no title, claim, lease or option to acquire any of the reserves at any of the mines where it provides services.
The information that follows is derived, for the most part, from, and in some instances is an extract from, the technical report summary (“TRS”) prepared in compliance with the Item 601(b)(96) and subpart 1300 of Regulation S-K. The TRS was prepared by employees of the Company.
The information that follows is derived, for the most part, from, and in some instances is an extract from, the technical report summary (TRS) prepared in compliance with the Item 601(b)(96) and subpart 1300 of Regulation S-K. The TRS was prepared by certain of our employees.
The term “reasonable certainty” implies a high degree of confidence that the quantities of oil, natural gas and/or NGLs actually recovered will equal or exceed the estimate. To achieve reasonable certainty, the Company employed technologies that have been demonstrated to yield results with consistency and repeatability.
The term reasonable certainty implies a high degree of confidence that the quantities of oil, natural gas and/or NGLs actually recovered will equal or exceed the estimate. To achieve reasonable certainty, we employed technologies that have been demonstrated to yield results with consistency and repeatability.
Access to the Mid Coast Aggregates mine is by means of a paved road from State Road 50. Access to the West Florida Aggregates mine is by means of a paved road from Cortez Boulevard. 45 Table of Contents Access to the St. Catherine mine is by means of a paved road from County Road 673.
Access to the Mid Coast Aggregates mine is by means of a paved road from State Road 50. Access to the West Florida Aggregates mine is by means of a paved road from Cortez Boulevard. Access to the St. Catherine mine is by means of a paved road from County Road 673.
Access to the Palm Beach Aggregates mine is by means of a paved road from State Road 80. Access to the Perry mine is by means of paved road from Nutall Rise Road. Access to the SDI Aggregates mine is by means of paved road from SW 167 th AVE.
Access to the Palm Beach Aggregates mine is by means of a paved road from State Road 80. 43 Table of Contents Access to the Perry mine is by means of paved road from Nutall Rise Road. Access to the SDI Aggregates mine is by means of paved road from SW 167 th AVE.
The Company does not have information that would be available to a company with oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests. Consequently, the exact number of wells producing from or drilling on the Company’s mineral interests at a given point in time is not determinable.
We do not have information that would be available to a company with oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests. Consequently, the exact number of wells producing from or drilling on our mineral interests at a given point in time is not determinable.
The Red Hills Mine is a lignite surface mine in production. Prior to MLMC, there were no previous mining operations on the Red Hills Mine property. 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.
The Red Hills Mine is a lignite surface mine in production. Prior to MLMC, there were no previous mining operations on the Red Hills Mine property. The MLMC contract is the only operating coal contract in which we are responsible for all operating costs, capital requirements and final mine reclamation; therefore, MLMC is consolidated within our financial statements.
Ongoing mining of the mineral deposit, coupled with product quality validation pursuant to Company and customer expectations, provides further empirical evidence as to the homogeneity, continuity and characteristics of the deposit. Geologic modeling assumptions are evaluated to historic mining 43 Table of Contents results and are adjusted if necessary to better reflect actual mining results.
Ongoing mining of the mineral deposit, coupled with product quality validation pursuant to our and our customer expectations, provides further empirical evidence as to the homogeneity, continuity and characteristics of the deposit. Geologic modeling assumptions are evaluated to historic mining results and are adjusted if necessary to better reflect actual mining results.
Internal technical team members met with independent reserve engineers periodically during the period covered by the reserves report to discuss the assumptions and methods used in the proved reserve estimation process. The preparation of the Company's proved reserve estimates is completed in accordance with internal control procedures.
Internal technical team members met with independent reserve engineers periodically during the period covered by the reserves report to discuss the assumptions and methods used in the proved reserve estimation process. 46 Table of Contents The preparation of our proved reserve estimates is completed in accordance with internal control procedures.
Total net proved reserves are defined as those natural gas and hydrocarbon liquid reserves to the Company's interests after deducting all royalties, overriding royalties, and reversionary interests owned by outside parties that become effective upon payout of specified monetary balances.
Total net proved reserves are defined as our natural gas and hydrocarbon liquid reserves after deducting all royalties, overriding royalties, and reversionary interests owned by outside parties that become effective upon payout of specified monetary balances.
As equipment wears out, Coyote Creek evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $114.6 million.
As equipment wears out, Coyote Creek evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2024 is $105.9 million.
All production from Sabine was delivered to Southwestern Electric Power Company's (“SWEPCO”) Henry W. Pirkey Plant (the “Pirkey Plant”). SWEPCO is an American Electric Power (“AEP”) company. As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries in the first quarter of 2023 and final reclamation began on April 1, 2023.
All production from Sabine was delivered to Southwestern Electric Power Company's (SWEPCO) Henry W. Pirkey Plant (the Pirkey Plant). SWEPCO is an American Electric Power (AEP) company. As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries in the first quarter of 2023 and commenced final reclamation on April 1, 2023.
Fuel for equipment is supplied by Dickerson Petroleum located in Kosciusko. The Red Hills Mine has, or is currently constructing, all supporting infrastructure for mining operations. Local access to the Red Hills Mine is by way of Highway 9 between Ackerman, Mississippi and Eupora, Mississippi which connects to Pensacola Road that leads to the Red Hills Mine paved access road.
Fuel for equipment is supplied by a local vendor. The Red Hills Mine has, or is currently constructing, all supporting infrastructure for mining operations. Local access to the Red Hills Mine is by way of Highway 9 between Ackerman, Mississippi and Eupora, Mississippi which connects to Pensacola Road that leads to the Red Hills Mine paved access road.
Ongoing quality validation of production also provides a means to monitor for any potential changes in quality.
Ongoing quality validation of production also provides a means to monitor for 41 Table of Contents any potential changes in quality.
Material assumptions and criteria used in the determination of Mineral Resource and Mineral Reserves reported herein are provided within the filed TRS for the Mississippi Lignite Mining Company – Red Hills Mine dated December 31, 2022. Section 11.0 of the TRS describes the key assumptions, parameters, and methods used for the estimation of Mineral Resources.
Material assumptions and criteria used in the determination of Mineral Resource and Mineral Reserves reported herein are provided within the filed TRS for the MLMC – Red Hills Mine dated December 31, 2024. Section 11.0 of the TRS describes the key assumptions, parameters, and methods used for the estimation of Mineral Resources.
Likewise, readers are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted to mineral reserves. See "Item 1A - “Risk Factors” on page 19.
Likewise, readers are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted to mineral reserves. See Item 1A - Risk Factors on page 18.
As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing, and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered.
In addition, the results of drilling, testing, and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered.
No other market exists for the lignite at Coteau, Coyote Creek and Falkirk as the cost of transportation makes sales to any entity other than the current mine-mouth operator unprofitable. Coteau, Coyote Creek and Falkirk meet the definition of a variable interest entity (“VIE”).
No other market exists for the lignite at Coteau, Coyote Creek and Falkirk as the cost of transportation makes sales to any entity other than the current mine-mouth operator unprofitable. 35 Table of Contents Coteau, Coyote Creek and Falkirk meet the definition of a VIE.
Access to Ash Grove Louisville Quarry is by means of a paved road from HWY 50. Minerals Management - Operations 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.
Access to Ash Grove Louisville Quarry is by means of a paved road from HWY 50. Access to MDL Quarry is by means of Noralyn Mine Road. Minerals Management - Operations As an owner of royalty and mineral interests, our access to information concerning activity and operations of our royalty and mineral interests is limited.
These procedures, which are intended to ensure reliability of reserve estimations, include the following: • Review and verification of historical production data, which data is based on actual production as reported by third-party producers who lease the Company’s royalty and mineral interests; • Preparation of reserve estimates by Haas Engineering under the direct supervision of internal staff; • Verification of property ownership by the Company's land department; and • No employee’s compensation is tied to the amount of reserves booked.
These procedures, which are intended to ensure reliability of reserve estimations, include the following: • Review and verification of historical production data, which data is based on actual production as reported by third-party producers who lease our royalty and mineral interests; • Preparation of reserve estimates by Haas & Cobb under the direct supervision of internal staff; and • Verification of property ownership by our land department.
MLMC holds leases granting the right to mine approximately 5,490 acres of coal interests and the right to utilize approximately 4,956 acres of surface interests. MLMC holds subleases under which it has the right to mine approximately 1,663 acres of coal interest.
MLMC holds leases granting the right to mine approximately 5,423 acres of coal interests and the right to utilize approximately 4,890 acres of surface interests. MLMC holds subleases under which it has the right to mine approximately 1,683 acres of coal interest.
The mining method and total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is set forth in the chart below: Location Mining Method Total Historical Cost of Mine Property, Plant and Equipment (excluding Coal Land, Real Estate and Construction in Progress), Net of Applicable Accumulated Amortization, Depreciation and Impairment Unconsolidated Mining Operations (in millions) Freedom Mine — The Coteau Properties Company Dragline operation with 3 draglines $ 116.2 Falkirk Mine — The Falkirk Mining Company Dragline operation with 4 draglines $ 58.4 Coyote Creek Mine — Coyote Creek Mining Company, LLC Dragline operation with 1 dragline $ 114.6 Consolidated Mining Operations Red Hills Mine — Mississippi Lignite Mining Company Dragline operation with 1 dragline $ 52.8 44 Table of Contents NAMining Segment - Operations NAMining provides contract mining services for independently owned mines and quarries, primarily operating and maintaining draglines at limestone quarries and utilizing other mining equipment at sand and gravel quarries.
The mining method and total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2024 is set forth in the chart below: Location Mining Method Total Historical Cost of Mine Property, Plant and Equipment, Net of Applicable Accumulated Amortization, Depreciation and Impairment Unconsolidated Mining Operations (in millions) Freedom Mine — The Coteau Properties Company Dragline operation with 3 draglines $ 162.2 Falkirk Mine — The Falkirk Mining Company Dragline operation with 4 draglines $ 58.7 Coyote Creek Mine — Coyote Creek Mining Company, LLC Dragline operation with 1 dragline $ 105.9 Consolidated Mining Operations Red Hills Mine — Mississippi Lignite Mining Company Dragline operation with 1 dragline $ 52.5 NAMining Segment - Operations NAMining provides contract mining services for independently owned mines and quarries, primarily operating and maintaining draglines at limestone quarries and utilizing other mining equipment at sand and gravel quarries.
Permitting requirements are discussed in Section 17.0 of the TRS. Figure 2.1 – Red Hills Mine Location 34 Table of Contents Mineral Resources and Reserves have been summarized from the December 31, 2022 TRS for MLMC and have been modified from mining depletion.
Permitting requirements are discussed in Section 17.0 of the TRS. Figure 2.1 – Red Hills Mine Location 32 Table of Contents Mineral Resources and Reserves have been summarized from the December 31, 2024 TRS for MLMC. The Mineral Resources and Mineral Reserves as of December 31, 2024 are included as Table 2.2 and Table 2.3.
Lignite Coal Resource Classification Tonnage (Kiloton "Kt") Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Measured 4,300 5,210 44.6 12.8 0.6 Mississippi Lignite Mining Company Indicated 500 5,300 43.6 12.7 0.7 Mississippi Lignite Mining Company Measured + Indicated 4,800 5,220 44.5 12.8 0.6 Mississippi Lignite Mining Company Inferred 1,600 5,370 46.0 9.9 0.5 Note: – Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no certainty that all or any part of such Mineral Resources will be converted into Mineral Reserves. – Mineral Resources are in-situ and exclusive of 22.5 million tons (Mt) of Mineral Reserves. – Mineral Resources are reported using an economic cutoff of $29.66 per ton. – Resources are presented with a minimum 1 foot seam thickness, a maximum as received moisture basis ash content of 30%, and a minimum calorific value of 4000 BTUs on an as received moisture basis cutoff. – Resources are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the QP.
Lignite Coal Resource Classification Tonnage ( Kt) Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Measured 4,400 5,200 44.6 13.0 0.6 Mississippi Lignite Mining Company Indicated 400 5,180 44.1 13.6 0.6 Mississippi Lignite Mining Company Measured + Indicated 4,700 5,200 44.5 13.0 0.6 Mississippi Lignite Mining Company Inferred 100 5,200 45.5 12.0 0.5 Note: – Mineral Resources estimates have been prepared by a qualified person employed by NACCO Natural Resources as of December 31, 2024. – Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no certainty that all or any part of such Mineral Resources will be converted into Mineral Reserves. – Mineral Resources are in-situ and exclusive of 22.9 million tons (Mt) of Mineral Reserves. – Mineral Resources are reported using an economic cutoff of $34.02 per ton. – Resources are presented with a minimum 1 foot seam thickness, a maximum as received moisture basis ash content of 30%, and a minimum calorific value of 4000 BTU/lb on an as received moisture basis cutoff. – Resources are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the QP.
In addition, Coteau owns in fee 33,888 acres of surface interests and 4,107 acres of coal interests. Substantially all of the leases held by Coteau were acquired in the early 1970s and have been replaced with new leases or have lease terms for a period sufficient to meet Coteau’s contractual production requirements.
Substantially all of the leases held by Coteau were acquired in the early 1970s and have been replaced with new leases or have lease terms for a period sufficient to meet Coteau’s contractual production requirements.
Lignite Coal Reserve Classification Tonnage (Kt) Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Proven 15,100 5,102 43.4 14.8 0.6 Mississippi Lignite Mining Company Probable 7,400 5,120 42.5 15.2 0.7 Mississippi Lignite Mining Company Total 22,500 5,107 43.1 14.9 0.6 Note: – Mineral Reserves have been demonstrated to be economic based on a positive cash flow – Mineral Reserves are stated on a Run of Mine basis – An economic cutoff in the Life of Mine plan averaged $36.06 per ton and was used to demonstrate coal reserves – Recovery varies by coal seam and ranges from 67% to 100% – Mineral Reserves use an economic cut-off of a maximum cumulative stripping ratio of 14:1.
Lignite Coal Reserve Classification Tonnage (Kt) Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Proven 18,200 5,090 43.3 14.9 0.6 Mississippi Lignite Mining Company Probable 4,700 5,080 43.1 15.1 0.6 Mississippi Lignite Mining Company Total 22,900 5,090 43.3 14.9 0.6 Note: – Mineral Reserves Estimates have been prepared by a qualified person employed by MLMC as of December 31, 2024. – Mineral Reserves have been demonstrated to be economic based on a positive cash flow – Mineral Reserves are stated on a Run of Mine basis – An economic cutoff in the Life of Mine plan averaged $34.41 per ton and was used to demonstrate coal reserves – Recovery varies by coal seam and ranges from 67% to 100% – Mineral Reserves use an economic cut-off of a maximum cumulative stripping ratio of 14:1.
Coal Mining and Minerals Management lease corporate headquarters office space in Plano, Texas. NAMining leases office and warehouse space in Medley, Florida. Item 3. LEGAL PROCEEDINGS Neither the Company nor any of its subsidiaries is a party to any material legal proceeding other than ordinary routine litigation incidental to its respective business.
Coal Mining and Minerals Management lease corporate headquarters office space in Plano, Texas. 47 Table of Contents NAMining leases office and warehouse space in Medley, Florida. Item 3. LEGAL PROCEEDINGS We are not a party to any material legal proceeding other than ordinary routine litigation incidental to our respective business.
The Freedom Mine has, or is currently constructing, all supporting infrastructure for mining operations. 38 Table of Contents The main entrance to the Freedom Mine is accessed by traveling north of Beulah on Highway 49 for one mile, then north on County Road 21 for two miles, then west on County Road 26 for three miles, and then north on County Road 15 for two miles as shown on Figure 2.2.
The main entrance to the Freedom Mine is accessed by traveling north of Beulah on Highway 49 for one mile, then north on County Road 21 for two miles, then west on County Road 26 for three miles, and then north on County Road 15 for two miles as shown on Figure 2.2. Location of the Freedom Mine.
Additionally, MLMC delivered 2.9 million tons during 2023. 36 Table of Contents 2.2 Material Properties with no Mineral Resources or Mineral Reserves The lignite coal tonnages at Coteau, Falkirk and Coyote Creek have not been classified as “measured resources”, “indicated resources”, or “inferred resources” as defined in Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are therefore classified as an “Exploration Stage Property” pursuant to Items 1300 through 1305 of Regulation S-K.
Additionally, MLMC delivered 1.9 million tons during 2024. 2.2 Material Properties with no Mineral Resources or Mineral Reserves The lignite coal tonnages at Coteau, Falkirk and Coyote Creek have not been classified as measured resources, indicated resources, or inferred resources as defined in Items 1300 through 1305 of Regulation S-K, and as a result, do not have any proven or probable reserves under such definition and are therefore classified as an Exploration Stage Property pursuant to Items 1300 through 1305 of Regulation S-K.
One stock tank barrel, or 42 U.S. gallons liquid volume. (2) Mcf. One thousand cubic feet of natural gas at the contractual pressure and temperature bases. (3) BOE.
One stock tank barrel, or 42 U.S. gallons liquid volume. (2) Mcf. One thousand cubic feet of natural gas at the contractual pressure and temperature bases. (3) BOE. Barrel of Oil Equivalent, a conversion factor of 6 MCF of gas was used for 1 equivalent bbl of oil.
On October 1, 2026, SWEPCO will take over and complete the remaining mine reclamation services by acquiring all of the capital stock of Sabine. 5.0 Facilities and Equipment The facilities and equipment for each of the coal mines are maintained to allow for safe and efficient operation.
As of October 1, 2026, SWEPCO has an obligation to acquire all of the capital stock of Sabine and complete the remaining mine reclamation. 5.0 Facilities and Equipment The facilities and equipment for each of the coal mines are maintained to allow for safe and efficient operation.
The following table sets forth the Company’s estimate of the number of gross and net productive wells: December 31, 2023 December 31, 2022 Gross Net Gross Net Oil 1,646 6.6 1,049 3.3 Natural Gas 246 13.5 251 10.1 Total 1,892 20.1 1,300 13.4 Gross wells are the total wells in which an interest is owned.
The following table sets forth our estimate of the number of gross and net productive wells: December 31, 2024 December 31, 2023 Gross Net Gross Net Oil 1,295 4.3 1,646 6.6 Natural Gas 922 18.5 246 13.5 Total 2,217 22.8 1,892 20.1 Gross wells are the total wells in which an interest is owned.
A reserves audit is not the same as a financial audit. Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation.
Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of 45 Table of Contents engineering and geological interpretation. As a result, the estimates of different engineers often vary.
Myers FL Titan America 2017 Palm Beach Aggregates Limestone Loxahatchee FL Palm Beach Aggregates 2017 Perry Limestone Lamont FL Martin Marietta 2018 SDI Aggregates Limestone Florida City FL Blue Water Industries 2018 Queenfield Sand and gravel King William County VA King William Sand and Gravel Company, Inc. 2018 Newberry Limestone Alachua County FL Argos USA, LLC 2019 Seven Diamonds Limestone Pasco County FL Seven Diamonds, LLC 2021 Johnson County (a) Sand and gravel Johnson County IN Martin Marietta 2021 Little River Sand and gravel Ashdown AR Lehigh Hanson 2021 Rosser Sand and gravel Ennis TX Lehigh Hanson 2021 Brooksville Cement Plant Limestone Brooksville FL Cemex 2021 Ash Grove Limestone Louisville NE Ash Grove 2022 (a) The Johnson County quarry was idled during 2023.
Myers FL Titan America 2017 Palm Beach Aggregates Limestone Loxahatchee FL Palm Beach Aggregates 2017 Perry Limestone Lamont FL Martin Marietta 2018 SDI Aggregates Limestone Florida City FL Martin Marietta 2018 Queenfield Sand and gravel King William County VA Holcim Group 2018 Newberry Limestone Alachua County FL Summit Materials/Quikrete 2019 Seven Diamonds Limestone Pasco County FL Summit Materials/Quikrete 2021 Little River Sand and gravel Ashdown AR Heidelberg Materials 2021 Rosser Sand and gravel Ennis TX Heidelberg Materials 2021 Brooksville Cement Plant Limestone Brooksville FL Cemex 2021 Ash Grove Limestone Louisville NE Ash Grove, A CRH Company 2022 MDL (a) Phosphate Polk County FL Mineral Development, LLC 2024 (a) The MDL quarry was idled during 2024.
The following table presents the Company's estimated net proved oil and natural gas reserves based on the reserve report prepared by Haas Engineering, the Company’s independent petroleum engineering firm.
The following table presents our estimated net proved oil and natural gas reserves based on the reserve report prepared by Haas & Cobb, our independent petroleum engineering firm. All of our reserves are located in the United States.
Resource Classification December 31, 2022 Tonnage (Kt) December 31, 2023 Tonnage (Kt) Percent Change Measured 4,300 4,300 —% Indicated 500 500 —% Measured + Indicated 4,800 4,800 —% Inferred 1,600 1,600 —% Reserve Classification December 31, 2022 Tonnage (Kt) December 31, 2023 Tonnage (Kt) Percent Change Proven 18,000 15,100 (16)% Probable 7,400 7,400 —% Proven + Probable 25,400 22,500 (11)% Table 2.4.
Resource Classification December 31, 2023 Tonnage (Kt) December 31, 2024 Tonnage (Kt) Percent Change Measured 4,300 4,400 2% Indicated 500 400 (20)% Measured + Indicated 4,800 4,700 (2)% Inferred 1,600 100 (94)% Reserve Classification December 31, 2023 Tonnage (Kt) December 31, 2024 Tonnage (Kt) Percent Change Proven 15,100 18,200 21% Probable 7,400 4,700 (36)% Proven + Probable 22,500 22,900 2% Table 2.4.
As an owner of mineral and royalty interests, the Company generally does not have evidence or 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 an owner of mineral and royalty interests, we generally do not have evidence or 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.
Funding for mine reclamation is the responsibility of SWEPCO, and Sabine receives compensation for providing mine reclamation services. During the third quarter of 2023, Sabine and SWEPCO entered into an agreement under which Sabine will provide mine reclamation services through September 30, 2026.
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.
The entrance to the mine is by means of a paved road located approximately one mile west of Highway 9. MLMC owns in fee approximately 8,026 acres of surface interest and 5,015 acres of coal interests.
The Red Hills Mine, operated by MLMC, is located approximately 120 miles northeast of Jackson, Mississippi (Figure 2.1). The entrance to the mine is by means of a paved road located approximately one mile west of Highway 9. MLMC owns in fee approximately 8,090 acres of surface interest and 5,150 acres of coal interests.
Production and Price History The following table sets forth the estimated oil and natural gas production data related to the Company’s mineral and royalty interests as well as certain price and cost information for the years ended December 31: 2023 (4) 2022 (4) Production data: Oil (bbl) (1) 98,553 46,571 NGL (bbl) (1) 56,768 61,511 Residue gas (Mcf) (2) 7,601,521 7,329,985 Total BOE (3) 1,422,241 1,329,747 Average realized prices: Oil (bbl) (1) $ 72.19 $ 94.31 NGL (bbl) (1) $ 23.33 $ 36.81 Residue gas (Mcf) (2) $ 2.37 $ 5.87 Average unit cost BOE (3) $ 3.32 $ 4.26 (1) Bbl.
Production and Price History The following table sets forth the estimated oil and natural gas production data related to our mineral and royalty interests as well as certain price and cost information for the years ended December 31: 2024 (4) 2023 (4) Production data: Oil (bbl) (1) 149,529 98,553 NGL (bbl) (1) 65,053 56,768 Residue gas (Mcf) (2) 8,482,414 7,601,521 Total BOE (3) 1,628,318 1,422,241 Average realized prices: Oil (bbl) (1) $ 78.45 $ 72.19 NGL (bbl) (1) $ 22.94 $ 23.33 Residue gas (Mcf) (2) $ 2.08 $ 2.37 Average unit cost BOE (3) $ 2.79 $ 3.32 (1) Bbl.
The following table includes the Company's estimate of developed and undeveloped acreage based on the gross acres in a basin or region and includes mineral interests, NPRIs, and ORRIs: December 31, 2023 December 31, 2022 Developed Acreage Undeveloped Acreage Gross Acreage Developed Acreage Undeveloped Acreage Gross Acreage Appalachia 32,156 2,505 34,661 32,027 2,634 34,661 Gulf Coast 22,191 5,741 27,932 22,191 5,741 27,932 Permian 117,220 3,416 120,636 73,862 3,416 77,278 Rockies 326 — 326 326 — 326 Williston — 1,194 1,194 — 1,194 1,194 Total 171,893 12,856 184,749 128,406 12,985 141,391 Undeveloped acres are either unleased and open or are leased acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves.
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. 44 Table of Contents The following table includes our estimate of developed and undeveloped acreage based on the gross acres in a basin or region and includes mineral interests, NPRIs, and ORRIs: December 31, 2024 December 31, 2023 Developed Acreage Undeveloped Acreage Gross Acreage Developed Acreage Undeveloped Acreage Gross Acreage Appalachia 32,156 2,505 34,661 32,156 2,505 34,661 Gulf Coast 22,191 5,741 27,932 22,191 5,741 27,932 Permian 118,021 3,416 121,437 117,220 3,416 120,636 Rockies 7,696 5,537 13,233 326 — 326 Williston — 1,194 1,194 — 1,194 1,194 Total 180,064 18,393 198,457 171,893 12,856 184,749 Undeveloped acres are either unleased and open or are leased acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves.
The main entrance to the Falkirk Mine is accessed by traveling north from Bismarck on State Highway 83 for approximately 50 miles, then going west on the access road, 1st Street SW located four miles south of Underwood. The mine office is located two miles to the west.
Fuel for equipment is supplied by multiple local vendors including: Farstad Oil, Missouri Valley Petroleum, and Enerbase Cooperative Resources. The main entrance to the Falkirk Mine is accessed by traveling north from Bismarck on State Highway 83 for approximately 50 miles, then going west on the access road, 1st Street SW located four miles south of Underwood.
Figure 2.2 – Freedom Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Freedom Mine and provide a vast supply of the employment base. Employees also come from the cities of Bismarck, Minot, and Dickinson, all of which are less than 100 miles away from the mine.
Figure 2.2 – Freedom Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Freedom Mine and provide a vast supply of the employment base.
As used in this Report on Form 10-K, the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource,” “inferred mineral resource,” “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are defined and used in accordance with subpart 1300 of Regulation S-K.
As used in this Report on Form 10-K, the terms mineral resource, measured mineral resource, indicated mineral resource, inferred mineral resource, mineral reserve, proven mineral reserve and probable mineral reserve are defined and used in accordance with subpart 1300 of Regulation S-K.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS 50 Item 4. MINE SAFETY DISCLOSURES 50 PART II. Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 51 Item 6. [RESERVED] 51 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 52
Biggest changeItem 3. LEGAL PROCEEDINGS 48 Item 4. MINE SAFETY DISCLOSURES 48 PART II. Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 49 Item 6. [RESERVED] 49 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 50

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. MINE SAFETY DISCLOSURES Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of The Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 filed with this Form 10-K. 50 Table of Contents PART II
Biggest changeItem 4. MINE SAFETY DISCLOSURES Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of The Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 filed with this Form 10-K. 48 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities (1) Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of the Publicly Announced Program (d) Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Program (1) October 1 to 31, 2023 13,398 $ 34.33 13,398 $ 18,716,958 November 1 to 30, 2023 15,090 $ 34.46 15,090 $ 18,196,957 December 1 to 31, 2023 37,717 $ 34.47 37,717 $ 16,896,852 Total 66,205 $ 34.44 66,205 $ 16,896,852 (1) On November 7, 2023, the Company's Board of Directors approved a stock purchase program providing for the purchase of up to $20.0 million of the Company’s outstanding Class A common stock through December 31, 2025.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities (1) Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of the Publicly Announced Program (d) Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Program (1) October 1 to 31, 2024 — $ — — $ 8,909,786 November 1 to 30, 2024 — $ — — $ 8,909,786 December 1 to 31, 2024 12,610 $ 29.20 12,610 $ 8,541,574 Total 12,610 $ 29.20 12,610 $ 8,541,574 (1) On November 7, 2023, our Board of Directors approved a stock purchase program providing for the purchase of up to $20.0 million of our outstanding Class A common stock through December 31, 2025.
See Note 12 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's stock repurchase programs.
See Note 12 to the Consolidated Financial Statements in this Form 10-K for a discussion of our stock repurchase programs.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES NACCO's Class A common stock is traded on the New York Stock Exchange under the ticker symbol “NC.” Because of transfer restrictions, no trading market has developed, or is expected to develop, for the Company's Class B common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES NACCO's Class A common stock is traded on the New York Stock Exchange under the ticker symbol NC. Because of transfer restrictions, 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 December 31, 2023, there were 660 Class A common stockholders of record and 113 Class B common stockholders of record.
The Class B common stock is convertible into Class A common stock on a one-for-one basis. At December 31, 2024, there were 648 Class A common stockholders of record and 110 Class B common stockholders of record.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe 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.
Biggest changeThese 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.
The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities (if any).
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities (if any).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
Item 6. [RESERVED] 51 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Item 6. [RESERVED] 49 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
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: Coal Mining, North American Mining ® ("NAMining") and Minerals Management. The Coal Mining segment operates surface coal mines for power generation companies.
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. The Coal Mining segment operates surface coal mines for power generation companies.
On an ongoing basis, the Company evaluates its estimates based on historical experience, actuarial valuations and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
On an ongoing basis, we evaluate our estimates based on historical experience, actuarial valuations and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.
Business" beginning on page 1 in this Form 10-K for further discussion of NACCO's subsidiaries. Additional information relating to financial and operating data on a segment basis (including unallocated items) is set forth in Note 15 to the Consolidated Financial Statements contained in this Form 10-K.
Additional information relating to financial and operating data on a segment basis (including unallocated items) is set forth in Note 15 to the Consolidated Financial Statements contained in this Form 10-K.
The NAMining segment is a trusted mining partner for producers of aggregates, activated carbon, lithium and other industrial minerals. The Minerals Management segment, which includes the Catapult Mineral Partners (“Catapult”) business, acquires and promotes the development of mineral interests. Mitigation Resources of North America ® (“Mitigation Resources”) provides stream and wetland mitigation solutions.
The NAMining segment is a trusted mining partner for producers of aggregates, activated carbon, lithium and other industrial minerals. The Minerals Management segment, which includes the Catapult Mineral Partners (Catapult) business, acquires and promotes the development of mineral interests.
Revenue recognition: Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
Revenue recognition: Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We account for revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers.
Important factors that could cause actual results to differ materially from those described in these forward-looking statements are set forth below under the heading “Forward-Looking Statements." Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc. ® (“NACCO” or the “Company”).
Important factors that could cause actual results to differ materially from those described in these forward-looking statements are set forth below under the heading Forward-Looking Statements.
Actual results may differ from those estimates. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.
Bellaire manages the Company’s long-term liabilities related to former Eastern U.S. underground mining activities. All financial statement line items below operating loss/profit (other income, including interest expense and interest income, the benefit/provision for income taxes and net loss/income) are presented and discussed within this Form 10-K on a consolidated basis. See “Item 1.
All financial statement line items below operating profit (loss) (other income, including interest expense and interest income, the provision (benefit) for income taxes and net income (loss)) are presented and discussed within this Form 10-K on a consolidated basis. See Item 1. Business beginning on page 1 in this Form 10-K for further discussion of NACCO's subsidiaries.
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.
See Note 3 to the Consolidated Financial Statements in this Form 10-K for further discussion of our revenue recognition. Long-lived assets: 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, 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.
Upon identification of indicators of impairment, we evaluate the carrying value of the asset by comparing the estimated future 50 Table of Contents
Removed
The Company accounts for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers." See Note 3 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's revenue recognition.
Added
Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc. ® (NACCO) and its wholly owned subsidiary, NACCO Natural Resources Corporation ® (NACCO Natural Resources and with NACCO collectively, the Company, we, our or us).
Removed
If the carrying value of an asset is considered impaired, an impairment charge is recorded for the amount 52 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Added
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.
Removed
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) that the carrying value of the long-lived asset or asset group exceeds its fair value. Fair value is estimated 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.
Removed
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.
Removed
A reduction in customer demand at MLMC, including reductions related to reduced mechanical availability of the customer’s power plant, could adversely affect 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.
Removed
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.
Removed
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 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's impairment analysis.
Removed
Income taxes: The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. Tax law requires certain items to be included in the tax return at different times than the items are reflected in the financial statements.
Removed
Some of these differences are permanent, such as expenses that are not deductible for tax purposes, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities using currently enacted tax rates.
Removed
The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns.
Removed
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date.
Removed
Management is required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted laws and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities.
Removed
Changes in the calculated deferred tax assets and liabilities may occur in certain circumstances, including statutory income tax rate changes, statutory tax law changes, or changes in the structure or tax status. The Company's tax assets, liabilities, and tax expense are supported by historical earnings and losses and the Company's best estimates and assumptions of future earnings.
Removed
The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.
Removed
The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates the Company is using to manage the underlying businesses. When the Company determines, based on all available evidence, that it is more likely than not that deferred tax assets will not be realized, a valuation allowance is established.
Removed
Since significant judgment is required to assess the future tax consequences of events that have been recognized in the Company's financial statements or tax returns, the ultimate resolution of these events could result in adjustments to the Company's financial statements and such adjustments could be material.
Removed
The Company believes the current assumptions, judgments and other considerations used to estimate the current year accrued and deferred tax positions are appropriate.
Removed
If the actual outcome of future tax consequences differs from these estimates and assumptions, due to changes or future events, the resulting change to the provision for income taxes could have a material impact on the Company's results of operations and financial position.
Removed
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.
Removed
See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes. 53 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Removed
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) CONSOLIDATED FINANCIAL SUMMARY The results of operations for NACCO were as follows for the years ended December 31: 2023 2022 Revenues: Coal Mining $ 85,415 $ 95,204 NAMining 90,532 85,664 Minerals Management 32,985 60,242 Unallocated Items 8,459 2,952 Eliminations (2,597) (2,343) Total revenue $ 214,794 $ 241,719 Operating (loss) profit: Coal Mining $ (71,342) $ 38,309 NAMining 3,348 2,202 Minerals Management 19,418 52,214 Unallocated Items (21,461) (23,233) Eliminations (100) 494 Total operating profit $ (70,137) $ 69,986 Interest expense 2,460 2,034 Interest income (6,081) (1,449) Closed mine obligations 3,585 1,179 (Gain) loss on equity securities (1,958) 283 Other contract termination settlements — (16,882) Other, net (3,985) (2,902) Other income, net (5,979) (17,737) (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 Effective income tax rate 38.3 % 15.5 % The components of the change in revenues and operating profit are discussed below in "Segment Results." Other income, net 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.
Removed
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.
Removed
See Note 14 to the Consolidated Financial Statements in this Form 10-K for further information on the Combined Plan.
Removed
During 2022, GRE 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.
Removed
As a result, the Company recognized $16.9 million on the "Other contract termination settlements" line within the accompanying Consolidated Statements of Operations. 54 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Removed
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Prior to receiving the membership units from GRE, the Company held a $5.0 million investment in MAG. Subsequent to the receipt of the additional membership units, the Company began to account for the investment under the equity method of accounting.
Removed
During the third quarter of 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.
Removed
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 during the fourth quarter of 2022 on the line "Other, net" within the accompanying Consolidated Statements of Operations.
Removed
The Company received additional cash payments totaling $3.6 million during 2023 in connection with MAG's post-closing purchase price adjustment and the release of amounts held in escrow. The Company recognized the $3.6 million gain on the line "Other, net" within the accompanying Consolidated Statements of Operations.
Removed
Interest income increased $4.6 million primarily due to higher interest rates and a higher average invested cash balance during 2023 compared with 2022. (Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value.
Removed
The change during 2023 compared with 2022 was due to fluctuations in the market prices of the exchange-traded equity securities. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's invested assets reported at fair value .
Removed
Income Taxes Income tax benefit of $24.6 million for the year ended December 31, 2023 includes $4.0 million of discrete tax benefits, primarily the reversal of uncertain tax positions and the impact of U.S. federal provision to return adjustments. Excluding the $4.0 million of discrete tax benefits, the effective income tax rate in 2023 was 32.0%.
Removed
Income tax expense of $13.6 million for the year ended December 31, 2022 included $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.
Removed
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.
Removed
The benefit from percentage depletion is not directly related to the amount of pre-tax income recorded in a period. See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes. 55 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+70 added−54 removed2 unchanged
Biggest changeAND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The results of operations for the NAMining segment were as follows for the years ended December 31: 2023 2022 Total revenues $ 90,532 $ 85,664 Reimbursable costs 56,611 52,935 Revenues excluding reimbursable costs $ 33,921 $ 32,729 Revenues $ 90,532 $ 85,664 Cost of sales 83,719 79,842 Gross profit 6,813 5,822 Earnings of unconsolidated operations (a) 5,361 4,715 Selling, general and administrative expenses 8,308 8,260 Loss on sale of assets 518 75 Operating profit $ 3,348 $ 2,202 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information. 2023 Compared with 2022 Total revenues increased 5.7% in 2023 compared with 2022 primarily due to: • An increase in reimbursable costs at Sawtooth, which have an offsetting amount in cost of sales and have no impact on operating profit; • An increase in customer requirements and tons delivered at the consolidated quarries; and • Higher dragline part sales.
Biggest changeAND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) NORTH AMERICAN MINING (NAMining) SEGMENT FINANCIAL REVIEW Aggregate tons delivered by the NAMining segment were as follows for the years ended December 31: 2024 2023 Total tons delivered 54,963 56,655 The results of operations for the NAMining segment were as follows for the years ended December 31: 2024 2023 Total revenues $ 119,600 $ 90,532 Reimbursable costs 74,636 56,611 Revenues excluding reimbursable costs $ 44,964 $ 33,921 Revenues $ 119,600 $ 90,532 Cost of sales 110,821 83,719 Gross profit 8,779 6,813 Earnings of unconsolidated operations (a) 5,010 5,361 Selling, general and administrative expenses 8,365 8,308 (Gain) loss on sale of assets (348) 518 Operating profit $ 5,772 $ 3,348 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of our unconsolidated subsidiaries, including summarized financial information. 2024 Compared with 2023 Revenues excluding reimbursable costs increased 32.6% in 2024 compared with 2023, mainly due to favorable pricing and delivery mix at the consolidated limestone quarries and an increase in the scope of work at Sawtooth.
Contractual Obligations, Contingent Liabilities and Commitments Pension and postretirement funding can vary significantly each year due to plan amendments, changes in the market value of plan assets, legislation and the Company’s decisions to contribute above the minimum regulatory funding requirements.
Contractual Obligations, Contingent Liabilities and Commitments Pension and postretirement funding can vary significantly each year due to plan amendments, changes in the market value of plan assets, legislation and our decisions to contribute above the minimum regulatory funding requirements.
See Note 8 and Note 10 to the Consolidated Financial Statements in this Form 10-K for further information on the Company's other financing arrangements and leases, respectively.
See Note 8 and Note 10 to the Consolidated Financial Statements in this Form 10-K for further information on our other financing arrangements and leases, respectively.
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 Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios.
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, 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.
Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure or extended project development delay, (3) regulatory actions, including the United States EPA's 2023 proposed rules relating to mercury and greenhouse gas emissions for coal-fired power plants, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (4) a significant reduction in purchases by the Company's customers, including as a result of changes in coal consumption patterns of U.S. electric power generators, or changes in the power industry that would affect demand for the Company's coal and other mineral reserves, (5) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil, (6) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons; the availability and cost of transportation and processing services in the areas where the Company's oil and gas reserves are located; federal and state legislative and regulatory initiatives relating to hydraulic fracturing and U.S. export of natural gas; and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (7) failure to obtain adequate insurance coverages at reasonable rates, (8) supply chain disruptions, including price increases and shortages of parts and materials, (9) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (10) the ability of the Company to access credit in the current economic environment, or obtain financing at reasonable rates, or at all, and to maintain surety bonds for mine reclamation as a result of current market sentiment for fossil fuels, (11) impairment charges, (12) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (13) weather conditions, extended power plant outages, liquidity events or other events that would change the level of customers' coal or aggregates requirements, (14) weather or equipment problems that could affect deliveries to customers, (15) changes in the costs to reclaim mining areas, (16) costs to pursue and develop new mining, mitigation, oil and gas and solar development opportunities and other value-added service opportunities, (17) delays or reductions in coal or aggregates deliveries, (18) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (19) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (20) the ability to attract, retain, and replace workforce and administrative employees. 66 Table of Contents Item 7A.
Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure or extended project development delay, (3) regulatory actions, including the United States EPA's rules finalized in 2024 relating to mercury and greenhouse gas emissions for coal-fired power plants, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (4) a significant reduction in purchases by the Company's customers, including as a result of changes in coal consumption patterns of U.S. electric power generators, or changes in the power industry that would affect demand for the Company's coal and other mineral reserves, (5) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil as a result of factors such as OPEC and/or government actions, geopolitical developments, economic conditions and regulatory changes, as well as supply and demand dynamics, (6) changes in development plans by third-party lessees of the Company's mineral interests, (7) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons; the availability and cost of transportation and processing services in the areas where the Company's oil and gas reserves are located; federal and state legislative and regulatory initiatives relating to hydraulic fracturing and U.S. export of natural gas; and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (8) failure to obtain adequate insurance coverages at reasonable rates, (9) supply chain disruptions, including price increases and shortages of parts and materials, (10) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (11) impairment charges, (12) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (13) weather conditions, extended power plant outages, liquidity events or other events that would change the level of customers' coal or aggregates requirements, (14) weather or equipment problems that could affect deliveries to customers, (15) changes in the costs to reclaim mining areas, (16) costs to pursue and develop new mining, mitigation, oil and gas and solar development opportunities and other value-added service opportunities, (17) delays or reductions in coal or aggregates deliveries, (18) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (19) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (20) the ability to attract, retain, and replace workforce and administrative employees. 63 Table of Contents Item 7A.
The $65.9 million relates exclusively to MLMC; however, $60.8 million and $5.1 million were recorded on the Coal Mining segment and the Minerals Management segment, respectively, as certain MLMC land assets were recorded within the Minerals Management segment. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the long-lived asset impairment charge.
The $65.9 million relates exclusively to MLMC; however, $60.8 million and $5.1 million were recorded on the Coal Mining segment and the Minerals Management segment, respectively, as certain MLMC land assets were recorded within the Minerals Management segment. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the 2023 impairment.
RECENTLY ISSUED ACCOUNTING STANDARDS See Note 2 to the Consolidated Financial Statements in this Form 10-K for a description of recently issued accounting standards, if any, including actual and expected dates of adoption and effects to the Company's Consolidated Financial Statements.
RECENTLY ISSUED ACCOUNTING STANDARDS See Note 2 to the Consolidated Financial Statements in this Form 10-K for a description of recently issued accounting standards including actual and expected dates of adoption and effects to our Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS The statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
FORWARD-LOOKING STATEMENTS The statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
The Facility contains restrictive covenants, which require, among other things, maintaining 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 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 Company is a party to certain guarantees related to Coyote Creek. The Company believes that the likelihood of future performance under the guarantees is remote, and no amounts related to these guarantees have been recorded. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's guarantees.
We are a party to certain guarantees related to Coyote Creek. We believe that the likelihood of future performance under the guarantees is remote, and no amounts related to these guarantees have been recorded. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of our guarantees.
Dividends (to the extent permitted by the Facility) and management fees paid by NACCO subsidiaries are the primary sources of cash for NACCO and enable the Company to pay dividends to stockholders. 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.
Dividends (to the extent permitted by the Facility) and management fees are the primary sources of cash for NACCO and enable us to pay dividends to stockholders and repurchase shares. 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.
The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide this information.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, we are not required to provide this information.
The Company utilizes letters of credit to support commitments made in the ordinary course of business. As of December 31, 2023 and 2022, outstanding letters of credit totaled $34.9 million and $33.7 million, respectively. ENVIRONMENTAL MATTERS The Company is affected by the regulations of numerous agencies, particularly the Federal Office of Surface Mining, the U.S. Environmental Protection Agency, the U.S.
We utilize letters of credit to support commitments made in the ordinary course of business. As of December 31, 2024 and 2023, outstanding letters of credit totaled $30.9 million and $34.9 million, respectively. ENVIRONMENTAL MATTERS We are affected by the regulations of numerous agencies, particularly the Federal Office of Surface Mining, the U.S. Environmental Protection Agency, the U.S.
The Facility provides the ability to make loans, dividends and advances to NACCO, with some restrictions based on maintaining a maximum debt to EBITDA ratio of 1.50 to 1.00, or if greater than 1.50 to 1.00, a Fixed Charge Coverage Ratio of 1.10 to 1.00, in conjunction with maintaining unused availability thresholds of borrowing capacity, as defined in the Facility, of $15.0 million.
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.
Expenditures for property, plant and equipment and mineral interests Following is a table which summarizes actual and planned expenditures (in millions): Planned Actual Actual 2024 2023 2022 NACCO $ 69.0 $ 82.1 $ 54.4 Planned expenditures for 2024 are expected to be approximately $32 million in the NAMining segment, $20 million in the Minerals Management segment, $13 million in the Coal Mining segment and $4 million in Unallocated Items. 57 Table of Contents Item 7.
Expenditures for property, plant and equipment and mineral interests Following is a table which summarizes actual and planned expenditures (in millions): Planned Actual Actual 2025 2024 2023 NACCO $ 58.0 $ 55.4 $ 82.1 Planned expenditures for 2025 are expected to be approximately $13 million in the Coal Mining segment, $17 million in the NAMining segment, $20 million in the Minerals Management segment and $8 million in growth businesses included in Unallocated Items.
The commitment fee was 0.34% on the unused commitment at December 31, 2023. 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 commitment fee was 0.40% on the unused commitment at December 31, 2024. During the years 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 was 8.83% and 6.06%, respectively.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) UNALLOCATED ITEMS AND ELIMINATIONS FINANCIAL REVIEW Unallocated Items and Eliminations were as follows for the years ended December 31: 2023 2022 Operating loss $ (21,561) $ (22,739) 2023 Compared with 2022 The operating loss decreased during 2023 compared with 2022 primarily due to higher earnings at Mitigation Resources and lower employee-related costs.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) UNALLOCATED ITEMS AND ELIMINATIONS FINANCIAL REVIEW Unallocated Items and Eliminations were as follows for the years ended December 31: 2024 2023 Operating loss $ (23,305) $ (21,561) 2024 Compared with 2023 The operating loss increased during 2024 compared with 2023 primarily due to higher employee-related costs, partially offset by lower expenses for growth initiatives as certain costs expensed in 2023 were capitalized in 2024.
At December 31, 2023, the excess availability under the Facility was $105.1 million, which reflects a reduction for outstanding letters of credit of $34.9 million. NACCO has not guaranteed any borrowings of its subsidiaries.
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. NACCO has not guaranteed any borrowings of NACCO Natural Resources. The Facility allows for the payment to NACCO of dividends and advances under certain circumstances.
The Company believes funds available from cash on hand, the Facility and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments arising during the next twelve months and until the expiration of the Facility in November 2025.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) We believe funds available from cash on hand, the Facility and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments arising during the next twelve months and until the expiration of the Facility in September 2028.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the change in cash flow for the years ended December 31: 2023 2022 Change Operating activities: Net (loss) income $ (39,587) $ 74,158 $ (113,745) Depreciation, depletion and amortization 29,387 26,816 2,571 Deferred income taxes (21,114) (8,471) (12,643) Stock-based compensation 5,157 7,541 (2,384) Loss (gain) on sale of assets 221 (2,463) 2,684 Inventory impairment charge 7,514 — 7,514 Other contract termination settlements — (15,552) 15,552 Long-lived asset impairment charge 65,887 3,939 61,948 Other 1,473 (345) 1,818 Working capital changes 5,552 (17,888) 23,440 Net cash provided by operating activities 54,490 67,735 (13,245) Investing activities: Expenditures for property, plant and equipment and acquisition of mineral interests (82,122) (54,447) (27,675) Proceeds from the sale of assets 561 2,837 (2,276) Proceeds from the sale of private company equity units 3,574 18,628 (15,054) Equity method investment (3,464) — (3,464) Other (146) (170) 24 Net cash used for investing activities (81,597) (33,152) (48,445) Cash flow before financing activities $ (27,107) $ 34,583 $ (61,690) The $13.2 million change in net cash provided by operating activities during 2023 compared with 2022 was primarily due to a decrease in cash provided by net income adjusted for non-cash items, partially offset by a favorable change in cash provided by working capital.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the change in cash flow for the years ended December 31: 2024 2023 Change Operating activities: Net income (loss) $ 33,741 $ (39,587) $ 73,328 Depreciation, depletion and amortization 24,652 29,387 (4,735) Deferred income taxes 1,517 (21,114) 22,631 Stock-based compensation 5,832 5,157 675 (Gain) loss on sale of assets (5,146) 221 (5,367) Inventory impairment charges 9,643 7,514 2,129 Long-lived asset impairment charge — 65,887 (65,887) Other (3,352) 1,473 (4,825) Working capital changes (44,598) 5,552 (50,150) Net cash provided by operating activities 22,289 54,490 (32,201) Investing activities: Expenditures for property, plant and equipment and acquisition of mineral interests (55,419) (82,122) 26,703 Proceeds from the sale of assets 822 561 261 Proceeds from the sale of private company equity units — 3,574 (3,574) Equity method investment (16,556) (3,464) (13,092) Other (139) (146) 7 Net cash used for investing activities (71,292) (81,597) 10,305 Cash flow before financing activities $ (49,003) $ (27,107) $ (21,896) The $32.2 million unfavorable change in net cash provided by operating activities during 2024 compared with 2023 was primarily due to an unfavorable change in cash provided by working capital, partially offset by an increase in cash provided by net income adjusted for non-cash items.
Operating Profit 2022 $ 2,202 Increase (decrease) from: Voluntary retirement program charge 769 Earnings of unconsolidated operations 646 Gross profit 459 Net change on sale of assets (443) Selling, general and administrative expenses (285) 2023 $ 3,348 Operating profit increased $1.1 million in 2023 compared with 2022 primarily due to the absence of a voluntary retirement program charge, as well as increases in the earnings of unconsolidated operations and gross profit.
Operating Profit 2023 $ 3,348 Increase (decrease) from: Gross profit 1,966 Net change on sale of assets 866 Earnings of unconsolidated operations (351) Selling, general and administrative expenses (57) 2024 $ 5,772 Operating profit increased $2.4 million in 2024 compared with 2023 primarily due to an increase in gross profit and a favorable change on the sale of assets.
See Note 7 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's asset retirement obligations. NACCO has unrecognized tax benefits, including interest and penalties. See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) NACCO has unrecognized tax benefits, including interest and penalties. See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of our income taxes.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The following table identifies the components of change in operating profit for 2023 compared with 2022: Operating (Loss) Profit 2022 $ 38,309 Increase (decrease) from: Long-lived asset impairment charge (60,832) Gross profit, excluding inventory impairment charges (21,365) Contract termination settlement in 2022 (14,000) Earnings of unconsolidated operations (7,902) Inventory impairment charges (7,514) Selling, general and administrative expenses 910 Amortization of intangibles 721 Net change on sale of assets 331 2023 $ (71,342) Operating (loss) profit changed unfavorably by $109.7 million in 2023 compared with 2022.
The following table identifies the components of change in Operating profit (loss) for 2024 compared with 2023: Operating Profit (Loss) 2023 $ (71,342) Increase (decrease) from: Long-lived asset impairment charge in 2023 60,832 Business interruption insurance recoveries 13,612 Gross loss, excluding inventory impairment charges 14,710 Earnings of unconsolidated operations 7,188 Amortization of intangibles 2,467 Inventory impairment charges (2,129) Selling, general and administrative expenses (973) Net change on sale of assets (54) 2024 $ 24,311 Operating profit (loss) changed favorably by $95.7 million in 2024 compared with 2023.
The Company does not expect to contribute to its pension plan in 2024 and any settlements will be paid out of pension plan assets. NACCO maintains one supplemental retirement plan that pays monthly benefits to participants directly out of corporate funds and expects to pay benefits of approximately $0.4 million per year from 2024 through 2033.
We do not expect to contribute to our pension plan in 2025 and any settlements will be paid out of pension plan assets. NACCO maintains one supplemental retirement plan that pays monthly benefits to participants directly out of corporate funds. NACCO also expects to make payments related to our other postretirement plans.
Oil and natural gas prices have been historically volatile and may continue to be volatile in the future.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) MINERALS MANAGEMENT SEGMENT FINANCIAL REVIEW Oil and natural gas prices have been historically volatile and may continue to be volatile in the future.
During the fourth quarter of 2023, intangible assets, net, decreased by $22.0 million, primarily because the Company recorded a non-cash, long-lived asset impairment charge. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's impairment analysis.
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 to the Consolidated Financial Statements in this Form 10-K for further discussion of our impairment analysis.
In 2023, NACCO formed ReGen Resources to pursue such projects, including the development of a solar farm on reclaimed land at MLMC. The Company is committed to maintaining a conservative capital structure as it continues to grow and diversify, while avoiding unnecessary risk. Strategic diversification will generate cash that can be re-invested to strengthen and expand the businesses.
We are committed to maintaining a conservative capital structure as we continue to grow and diversify, while avoiding unnecessary risk. We believe strategic diversification will generate cash that can be re-invested to strengthen and expand the businesses or distributed to investors in the form of share repurchases or dividends.
An increase in 2024 earnings at the unconsolidated coal mining operations is driven primarily by an expectation for increased customer requirements at Coteau and Falkirk, as well as a higher per ton management fee at Falkirk beginning in June 2024 when temporary price concessions end.
The increase in earnings of unconsolidated operations was primarily due to improved results at Falkirk, primarily due to a higher per ton management fee beginning in June 2024 when temporary price concessions ended and an increase in customer demand. Improved results at Coteau also contributed to the increase in earnings of unconsolidated operations. 58 Table of Contents Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Expenditures are expected to be funded from internally generated funds and/or bank borrowings.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) undiscounted cash flows generated from the use of the asset or asset group and its eventual disposition with the asset's net carrying value.
The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off in 2022 and resulted in non-cash asset impairment charges of $3.9 million. In addition, operating profit in 2023 decreased due to a $2.4 million gain on the sale of land related to legacy operations recognized during 2022.
Operating profit increased $9.5 million in 2024 compared with 2023, primarily due to the absence of a $5.1 million long-lived asset impairment charge recognized during 2023 and a $4.5 million gain on the sale of land related to legacy operations recognized during 2024.
Tons of coal delivered by the Coal Mining segment were as follows for the years ended December 31: 2023 2022 Unconsolidated mines 20,741 25,236 Consolidated mines 2,931 3,215 Total tons delivered 23,672 28,451 The results of operations for the Coal Mining segment were as follows for the years ended December 31: 2023 2022 Revenues $ 85,415 $ 95,204 Cost of sales 108,760 89,670 Gross (loss) profit (23,345) 5,534 Earnings of unconsolidated operations (a) 44,633 52,535 Contract termination settlement — 14,000 Selling, general and administrative expenses and asset impairment charges 89,971 30,049 Amortization of intangible assets 2,998 3,719 Gain on sale of assets (339) (8) Operating (loss) profit $ (71,342) $ 38,309 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information. 2023 Compared with 2022 Revenues decreased 10.3% in 2023 compared with 2022 primarily due to a reduction in customer requirements at MLMC. 59 Table of Contents Item 7.
Tons of coal delivered by the Coal Mining segment were as follows for the years ended December 31: 2024 2023 Unconsolidated mines 21,308 20,741 Consolidated mines 1,922 2,931 Total tons delivered 23,230 23,672 The results of operations for the Coal Mining segment were as follows for the years ended December 31: 2024 2023 Revenues $ 68,611 $ 85,415 Cost of sales 79,375 108,760 Gross loss (10,764) (23,345) Earnings of unconsolidated operations (a) 51,821 44,633 Business interruption insurance recoveries 13,612 — Selling, general and administrative expenses and long-lived asset impairment charge 30,112 89,971 Amortization of intangible assets 531 2,998 Gain on sale of assets (285) (339) Operating profit (loss) $ 24,311 $ (71,342) 57 Table of Contents Item 7.
The table below demonstrates such volatility with the average price as reported by the United States Energy Information Administration for the twelve months ended December 31: 2023 2022 West Texas Intermediate Average Crude Oil Price $ 77.64 $ 94.79 Henry Hub Average Natural Gas Price $ 2.54 $ 6.42 Revenues and operating profit decreased in 2023 compared with 2022 primarily due to substantially lower natural gas and oil prices, as well as lower settlement income.
The table below shows the average price as reported by the United States Energy Information Administration for the twelve months ended December 31: 2024 2023 West Texas Intermediate Average Crude Oil Price $ 76.55 $ 77.64 Henry Hub Average Natural Gas Price $ 2.19 $ 2.54 These indicated prices do not necessarily reflect the contract terms for our sales.
At December 31, 2023, the Company was in compliance with all financial covenants in the Facility. 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 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. 55 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
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.
During 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 assessed for impairment and recorded a non-cash, long-lived asset impairment charge of $65.9 million in 2023.
It was named a designated provider of 64 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) abandoned mine land restoration by the State of Texas.
We continue to maintain the highest levels 62 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) of customer service and operational excellence with an unwavering focus on safety and environmental stewardship.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) MINERALS MANAGEMENT SEGMENT FINANCIAL REVIEW The results of operations for the Minerals Management segment were as follows for the years ended December 31: 2023 2022 Revenues $ 32,985 $ 60,242 Cost of sales 3,969 3,935 Gross profit 29,016 56,307 Selling, general and administrative expenses and asset impairment charges 9,556 6,623 Loss (gain) on sale of assets 42 (2,530) Operating profit $ 19,418 $ 52,214 During 2023, the oil and natural gas industry experienced a decline in commodity prices compared with 2022.
The results of operations for the Minerals Management segment were as follows for the years ended December 31: 2024 2023 Oil and natural gas revenues $ 27,157 $ 22,922 Other revenues 7,422 10,063 Total Revenues $ 34,579 $ 32,985 Total Revenues $ 34,579 $ 32,985 Cost of sales 5,234 3,969 Gross profit 29,345 29,016 Earnings of unconsolidated operations 647 — Selling, general and administrative expenses and asset impairment charge 5,577 9,556 (Gain) loss on sale of assets (4,512) 42 Operating profit $ 28,927 $ 19,418 Revenues increased in 2024 compared with 2023 primarily due to an increase in oil and natural gas revenues as a result of increased oil production volumes related to an acquisition that closed during the fourth quarter of 2023.
This business offers an opportunity for growth and diversification in an industry where the Company has substantial knowledge and expertise and a strong reputation. Mitigation Resources is making strong progress toward its goal of becoming a top ten provider of stream and wetland mitigation services in the southeastern United States.
Mitigation Resources provides stream and wetland mitigation solutions as well as comprehensive reclamation and restoration construction services. This business is an avenue for growth and diversification in an area where NACCO has built a strong reputation based on its substantial knowledge and expertise.
Capital Structure NACCO's consolidated capital structure is presented below: December 31 2023 2022 Change Cash and cash equivalents $ 85,109 $ 110,748 $ (25,639) Other net tangible assets 349,934 329,045 20,889 Intangible assets, net 6,006 28,055 (22,049) Net assets 441,049 467,848 (26,799) Total debt (35,956) (19,668) (16,288) Closed mine obligations (22,753) (21,214) (1,539) Total equity $ 382,340 $ 426,966 $ (44,626) Debt to total capitalization 9 % 4 % 5 % The $20.9 million increase in other net tangible assets was primarily due to a favorable change in Deferred income taxes.
Capital Structure NACCO's consolidated capital structure is presented below: December 31 2024 2023 Change Cash and cash equivalents $ 72,833 $ 85,109 $ (12,276) Other net tangible assets 451,962 349,934 102,028 Intangible assets, net 5,475 6,006 (531) Net assets 530,270 441,049 89,221 Total debt (99,514) (35,956) (63,558) Closed mine obligations (25,809) (22,753) (3,056) Total equity $ 404,947 $ 382,340 $ 22,607 Debt to total capitalization 20 % 9 % 11 % The increase in other net tangible assets was mainly the result of increases in Property, plant and equipment, Other non-current assets and Inventory during 2024.
Financing Activities Financing arrangements are obtained and maintained at the subsidiary level. The Company has a secured revolving line of credit of up to $150.0 million (the “Facility”) that expires in November 2025. Borrowings outstanding under the Facility were $10.0 million at December 31, 2023.
Financing Activities In September 2024, NACCO Natural Resources amended the 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.
Army Corps of Engineers and associated state regulatory authorities. In addition, the Company closely monitors proposed legislation and regulation concerning SMCRA, CAA, ACE, CWA, RCRA, CERCLA and other regulatory actions. 58 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Army Corps of Engineers and associated state regulatory authorities. In addition, we closely monitor proposed legislation and regulation concerning SMCRA, CAA, ACE, CWA, RCRA, CERCLA and other regulatory actions. Compliance with these increasingly stringent regulations could result in higher expenditures for both capital improvements and operating costs.
The Company will continue to monitor the progress of these initiatives and assess the potential impacts they may have on its financial condition, results of operations and disclosures. SEGMENT RESULTS COAL MINING SEGMENT FINANCIAL REVIEW See “Item 2. Properties" on page 31 in this Form 10-K for discussion of the Company's mineral resources and mineral reserves.
Our policies stress environmental responsibility and compliance with these regulations. See Item 1 and Item 1A. in Part I of this Form 10-K for further discussion of these matters. SEGMENT RESULTS COAL MINING SEGMENT FINANCIAL REVIEW See Item 2. Properties on page 29 in this Form 10-K for discussion of our mineral resources and mineral reserves.
The change in operating profit was primarily due to: • A long-lived asset impairment charge; • A decrease in gross profit; • The non-recurrence of $14.0 million recognized in 2022 related to the contract termination settlement with GRE; and • A decrease in the earnings of unconsolidated operations.
The change in Operating profit (loss) was primarily due to: • The absence of a long-lived asset impairment charge; • Business interruption insurance recoveries for the boiler issue at the Red Hills Power Plant; • A decrease in gross loss, excluding inventory impairment charges; • An increase in the earnings of unconsolidated operations; and • A decrease in the amortization of intangibles.
The Company is working to utilize these skills through development of utility-scale solar projects on reclaimed mining properties. Reclaimed mining properties offer large tracts of land that could be well-suited for solar and other energy-related projects. These projects could be developed by the Company itself or through joint ventures that include partners with expertise in energy development projects.
These projects could be developed by ReGen Resources directly or through joint ventures that include partners with expertise in energy development projects. Current projects include solar arrays, solar-gas hybrid projects and carbon capture projects on reclaimed mine land in Mississippi and Texas. Additional projects in other states are in early-stage review.
The Company’s non-cash items primarily include Long-lived asset impairment charge, Other contract termination settlements, Inventory impairment charge, Deferred income taxes, Depreciation, depletion and amortization, Stock-based compensation, and Loss (gain) on sale of assets. The favorable change in working capital was mainly the result of a decrease in Trade accounts receivable during 2023 compared with a significant increase during 2022.
Our non-cash items primarily include Long-lived asset impairment charge, Inventory impairment charges, Depreciation, depletion and amortization, Deferred income taxes, Stock-based compensation and (Gain) loss on sale of assets. 54 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Acquisitions of additional mineral interests, an improvement in the outlook for the Company's largest Coal Mining segment customers, and securing contracts for Mitigation Resources and new NAMining projects should be accretive to the Company's outlook. The Minerals Management segment continues to pursue acquisitions of mineral and royalty interests in the United States.
Opportunities for growth remain strong and are increasing amid recent successes and a significant positive change in the regulatory environment, particularly for fossil fuels. Acquisitions of additional mineral interests and improvements in the outlook for Coal Mining segment customers, as well as new contracts at Mitigation Resources and NAMining should be accretive to the longer-term outlook.
These improvements were largely offset by the absence of earnings associated with Caddo Creek reclamation activities. 61 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
While this investment, accounted for under the equity method, is expected to be accretive to earnings, 2025 operating profit is expected to be comparable to 2024. Lower first-half earnings are expected to be offset by an 61 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
The Company is pursuing growth and diversification by strategically leveraging its core mining and natural resources management skills to build a strong portfolio of affiliated businesses. Management continues to be optimistic about the long-term outlook. In the Minerals Management segment, as well as in the Company's Mitigation Resources business, opportunities for growth remain strong.
We believe that each of our businesses have competitive advantages that provide value to customers and create long-term value for stockholders. We are pursuing growth and diversification by strategically leveraging our core natural resources management skills to build a robust portfolio of affiliated businesses.
An increase in selling, general and administrative expenses, mainly due to higher employee-related costs, also contributed to the decrease in operating profit. 62 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Selling, general and administrative expenses include a $0.9 million charge to establish an allowance against a receivable from one of NAMining's customers during 2024, which was offset by a reduction in outside services. 59 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
These capital expenditures will be reimbursed by Lithium Americas over a five-year period, Sawtooth will recognize the associated revenue over the estimated useful life of the asset. In addition, during the construction period, Sawtooth will be reimbursed for all costs of construction and will recognize a contractually agreed upon construction fee.
Once the mine is operating, Sawtooth will be reimbursed for costs of mining, capital expenditures and mine closure and will recognize a contractually agreed upon production fee. In addition to providing comprehensive mining services, Sawtooth will receive a fee to transport clay tailings once lithium production commences. Phase 1 lithium production is estimated to begin in late 2027.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The change in net cash provided by (used for) financing activities was primarily due to debt borrowing during 2023 compared with debt repayments during 2022, partially offset by share repurchases during 2023.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) 2024 2023 Change Financing activities: Net additions to long-term debt and revolving credit agreements $ 55,710 $ 11,023 $ 44,687 Debt issuance costs (2,415) — $ (2,415) Cash dividends paid (6,624) (6,452) (172) Purchase of treasury shares (9,944) (3,103) (6,841) Net cash provided by financing activities $ 36,727 $ 1,468 $ 35,259 The change in net cash provided by financing activities was primarily due to higher additions in debt borrowings during 2024 compared with 2023, partially offset by increased share repurchases and debt issuance costs during 2024.
This resulted in an increase in the cost per ton sold and $7.5 million of inventory impairment charges to write down coal inventory to its net realizable value. The decrease in the earnings of unconsolidated operations was primarily due to a reduction in customer requirements at Coteau and Falkirk.
In addition, the gross loss in 2024 and 2023 included $9.6 million and $7.5 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.
Mitigation Resources Mitigation Resources continues to build on the substantial foundation it has established over the past several years. Mitigation Resources currently has nine mitigation banks and four permittee-responsible mitigation projects located in Tennessee, Mississippi, Alabama and Texas. In addition, Mitigation Resources is providing ecological restoration services for abandoned surface mines, as well as pursuing additional environmental restoration projects.
Mitigation Resources continued to expand during 2024, and now has 11 mitigation banks and other mitigation projects located in Alabama, Florida, Georgia, Mississippi, Pennsylvania, Tennessee and Texas. Mitigation Resources also provides ecological restoration services for abandoned surface mines and plans to pursue other environmental restoration projects.
Removed
In addition, a significant reduction in the Federal income tax receivable during 2023 compared with an increase during 2022 also contributed to the favorable change in working capital. 2023 2022 Change Financing activities: Net additions (reductions) to long-term debt and revolving credit agreements $ 11,023 $ (3,828) $ 14,851 Cash dividends paid (6,452) (6,012) (440) Purchase of treasury shares (3,103) — (3,103) Net cash provided by (used for) financing activities $ 1,468 $ (9,840) $ 11,308 56 Table of Contents Item 7.
Added
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.
Removed
On November 7, 2023, the Company's Board of Directors approved a stock purchase program providing for the purchase of up to $20.0 million of the Company’s outstanding Class A common stock through December 31, 2025. See Note 12 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's stock repurchase programs.
Added
Fair value is estimated 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.
Removed
Benefit payments beyond that time cannot currently be estimated. NACCO also expects to make payments related to its other postretirement plans of approximately $0.2 million per year from 2024 through 2033. Benefit payments beyond that time cannot currently be estimated. NACCO has asset retirement obligations.
Added
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.
Removed
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Compliance with these increasingly stringent regulations could result in higher expenditures for both capital improvements and operating costs. The Company’s policies stress environmental responsibility and compliance with these regulations. See Item 1 in Part I of this Form 10-K for further discussion of these matters.
Added
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.
Removed
Certain states have enacted, and others are considering enacting, mandatory clean energy standards requiring utilities to meet certain thresholds of renewable energy sources and/or carbon-free energy supply. The current presidential administration has made climate change a focus, including consideration for legislation on clean energy standards and GHG emission, and the Company expects that to continue.
Added
Income taxes: We file income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. Tax law requires certain items to be included in the tax return at different times than the items are reflected in the financial statements.
Removed
The Company believes the move to require utilities to generate a greater portion of energy from renewable energy sources could create imbalances in the existing electric grid if fossil-fuel power plants are retired faster than renewable energy sources are developed resulting in electrical grid disruptions and outages.
Added
Some of these differences are permanent, such as the benefit associated with percentage depletion (tax deductions for depletion that may exceed the tax basis in the mineral reserve) and expenses that are not deductible for tax purposes, and some differences are temporary, reversing over time, such as depreciation expense.
Removed
The Company determined the anticipated reduction in customer demand caused by this issue was an indicator of potential impairment. The Company recorded a non-cash, long-lived asset impairment charge of $65.9 million in 2023.
Added
These temporary differences create deferred tax assets and liabilities using currently enacted tax rates. The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns.
Removed
The decrease in gross profit was primarily due to an increase in the cost per ton delivered at MLMC. The increase in cost per ton delivered at MLMC is due to costs associated with establishing operations in a new mine area and a reduction in the number of tons severed.
Added
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date.
Removed
The reduction in severed tons was due to adverse mining conditions during 2023, as well as operational inefficiencies related to final mining activities at the existing mine area. Fewer tons severed caused a decrease in tons held in inventory since more tons were delivered than produced during 2023.
Added
Management is required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets and assess deferred tax liabilities based on enacted laws and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities.
Removed
A reduction in the per ton management fee at Falkirk, effective May 2022 through May 2024, to support the transition of the Coal Creek Station Power Plant to Rainbow Energy also contributed to the 2023 decrease in earnings.
Added
Changes in the calculated deferred tax assets and liabilities may occur in certain circumstances, including statutory income tax rate changes, statutory tax law changes, or changes in the structure or tax status. Our tax assets, liabilities, and tax expense are supported by historical earnings and losses and our best estimates and assumptions of future earnings.
Removed
NORTH AMERICAN MINING ("NAMining") SEGMENT FINANCIAL REVIEW Aggregate tons delivered by the NAMining segment were as follows for the years ended December 31: 2023 2022 Total tons delivered 56,655 54,223 60 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Added
We assess whether a valuation allowance should be established against our deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.
Removed
These improvements were partially offset by a reduction in mine reclamation revenue at Caddo Creek. The following table identifies the components of change in operating profit for 2023 compared with 2022.
Added
The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we use to manage the underlying businesses. When we determine, based on all available evidence, that it is more likely than not that deferred tax assets will not be realized, a valuation allowance is established.
Removed
During 2022, the Company implemented a voluntary retirement program for employees who met certain age and service requirements to reduce overall headcount. As a result of this program, operating profit in 2022 included a charge of $0.8 million related to one-time termination benefits.
Added
Since significant judgment is required to assess the future tax consequences of events that have been recognized in our financial statements or tax returns, the ultimate resolution of these events could result in adjustments to our financial statements and such adjustments could be material.

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