Executive Summary

Q2 showed strong top-line growth but weaker profitability: revenue rose 30% YoY to $68.2M, yet operating results were breakeven and EPS fell to $0.44 as short‑term disruptions at Utility Coal (MLMC) and Contract Mining outweighed gains; EBITDA declined to $9.3M .
Management now expects a substantial improvement in operating profit in 2H25 vs 1H25 but full‑year 2025 results below 2024, driven by the absence of last year’s $13.6M business interruption recovery and an anticipated non‑cash pension settlement charge in Q4; capex guidance increased to “up to $86M” to fund growth .
Segment puts and takes: Utility Coal benefited from higher volumes at MLMC but saw lower per‑ton price and realized previously deferred costs; Contract Mining revenue grew on reimbursed costs and parts sales but profitability fell on fewer delivered tons and higher repairs; Minerals & Royalties grew revenue 30% ex a $4.5M land gain last year, aided by higher gas prices .
Catalysts/risks: 2H operations normalization at MLMC, continued parts-sales ramp and new quarry wins, Minerals acquisitions (Midland Basin, July) and progress at Thacker Pass (Phase 1 targeted late 2027) could support sentiment; near-term headwinds include MLMC pricing formula and pension settlement optics .

What Went Well and What Went Wrong

What Went Well
- Revenue +30% YoY to $68.2M on stronger Utility Coal volumes; Minerals & Royalties revenues +30% ex prior land gain on higher natural gas prices .
- CEO reaffirmed confidence: “short‑term operational challenges…a temporary setback…believe we are well‑positioned to achieve meaningful growth moving forward” .
- Parts sales traction in Contract Mining and new/extended contracts support medium‑term growth; two new MTech electric draglines commissioned around quarter‑end to improve uptime/efficiency .
What Went Wrong
- Operating disruptions at MLMC (power plant inefficiencies) and at certain quarries (repairs/maintenance) drove breakeven operating results, EPS down to $0.44, EBITDA to $9.3M despite revenue growth .
- MLMC realized previously deferred high mining costs as tons sold exceeded tons mined, and contract per‑ton price decreased, pressuring segment profit and Adjusted EBITDA YoY .
- Contract Mining profit fell as parts profit couldn’t offset fewer delivered tons and higher operating/repair costs; Segment Adjusted EBITDA declined YoY .

Financial Results

Quarterly results – prior two quarters and current (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$70.4	$65.6	$68.2
Net Income ($M)	$7.6	$4.9	$3.3
Diluted EPS ($)	$1.02	$0.66	$0.44
Consolidated EBITDA ($M)	$9.0 (Adjusted)	$12.8	$9.3

Q2 YoY comparison

Metric	Q2 2024	Q2 2025
Revenue ($M)	$52.3	$68.2
Net Income ($M)	$6.0	$3.3
Diluted EPS ($)	$0.81	$0.44
Consolidated EBITDA ($M)	$13.5	$9.3

Segment performance – Q2 YoY

Segment	Revenue Q2’24 ($M)	Revenue Q2’25 ($M)	Operating Profit Q2’24 ($M)	Operating Profit Q2’25 ($M)	Segment Adj. EBITDA Q2’24 ($M)	Segment Adj. EBITDA Q2’25 ($M)
Utility Coal Mining	$15.0	$28.6	$2.8	$1.2	$5.7	$3.4
Contract Mining	$27.9	$30.7	$3.1	$1.0	$5.5	$3.9
Minerals & Royalties	$5.6	$7.3	$7.6	$5.2	$8.9	$6.1

Operating KPIs

KPI	Q2 2024	Q2 2025
Coal tons delivered – Unconsolidated (000s)	4,930	3,736
Coal tons delivered – Consolidated (000s)	423	890
Coal tons delivered – Total (000s)	5,353	4,626
Contract Mining – Tons delivered (000s)	16,000	13,947

Balance sheet and liquidity (quarter-end)

Total debt: $95.5M; liquidity: $139.9M (cash $49.4M + $90.5M revolver availability) .
Shareholder returns: $1.9M dividends paid in Q2; $7.8M authorization remaining under $20M program expiring YE25 . Quarterly dividend declared post‑quarter: $0.2525/share payable Sep 15, 2025 .

Notes: Q3 2024 included a $13.6M business interruption insurance recovery at MLMC; Q2 2024 included a $4.5M land sale gain in Minerals (year‑ago comparison impacted) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated operating profit	FY 2025	“Moderate year‑over‑year increase” expected in 2025	2H25 operating profit to be “substantially” higher than 1H25, but full‑year results lower than 2024 due to prior‑year insurance income and pension settlement	Lowered
EPS/Net income & EBITDA	2H25 and FY 2025	Not quantified	Significant non‑cash pension settlement charge in Q4 expected; net income and EBITDA to decrease substantially YoY vs 2H24/FY24	New disclosure (negative)
Utility Coal (MLMC)	2H25 & FY 2025	Demand stable; MLMC improving operations; 2025 MLMC down YoY on pricing headwind	2H25 improvement vs 1H25; full‑year Utility Coal down vs 2024 due to 2024 insurance income; outlook for 2026 improving with better pricing and costs if plant runs consistently	Maintained trajectory, clarified 2026
Contract Mining	2H25 & FY 2025	Improved 2025 results, back‑half weighted	2H25 and FY25 profitability improvements driven by efficiencies and parts sales; momentum into 2026	Maintained
Minerals & Royalties	2H25 & FY 2025	2025 profit comparable to 2024 with stronger 2H (prices/volumes)	Midland Basin acquisition ($4.2M, July) and equity investment expected to lift 2H25 vs 1H and vs 2H24; improvements continue into 2026	Raised 2H outlook
Capital Expenditures	FY 2025	~$64M (Coal $13, NAM $23, Minerals $20, ReGen/other $8)	Up to $86M, majority for growth/business development	Raised
Pension Plan	2025	Termination in 2025; significant non‑cash settlement charge expected	Plan termination in Q4 2025; significant non‑cash settlement charge reiterated	Reaffirmed timing
Dividend	Ongoing	—	Quarterly dividend of $0.2525/share declared Aug 21, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
MLMC operations & pricing	Resolution of 2023–24 boiler outage; 2025 per‑ton price headwind expected; modestly higher deliveries and cost efficiencies anticipated	Continued plant‑driven inefficiencies; realized previously deferred costs; lower contract price; expecting 2H25 improvement and 2026 profitability on pricing formula reset and stable plant operations	Near‑term headwind; medium‑term recovery
Contract Mining parts business	Late‑2023 contract amendments; growing focus on parts to support profitability	Parts sales grew but not enough to offset fewer delivered tons and higher repairs; two new MTech electric draglines commissioned to enhance uptime/efficiency	Execution building; profitability to improve 2H
Thacker Pass (lithium)	Stable construction-phase income; Phase 1 production est. 2027	Stable income during construction; Phase 1 late 2027 reiterated	On plan
Minerals & Royalties M&A/returns	Equity investment in Eiger late 2024; 2025 profit comparable with stronger 2H	$4.2M Midland Basin acquisition (10,500 gross acres, ~400 net royalty acres) in July; 2H25 > 1H25 and > 2H24; improvements into 2026	Accretive deployment
Mitigation Resources	Expected to reach profitability in 2025	Profitability shifted to 2026 due to permitting delays; pipeline building	Slower near‑term, intact LT thesis
Capital allocation & leverage	Conservative structure; plan to terminate pension in 2025; steady cash flow growth from 2025	Targeting “bulletproof balance sheet,” less leverage; capex raised to secure growth projects	De‑lever bias; invest in growth

Management Commentary

“NACCO experienced short‑term operational challenges this quarter…Despite these factors, I continue to have confidence in our businesses, and believe we are well‑positioned to achieve meaningful growth moving forward.” – J.C. Butler, CEO .
“Second quarter disruptions affected our results…within Utility Coal Mining, challenges at Mississippi Lignite Mining Company primarily drove the lower segment results…[but] parts sales helped offset some of this and we expect stronger results in the back half of the year.” – CEO prepared remarks .
“Our objective is to have less leverage…we talk about maintaining a bulletproof balance sheet…very low levels of debt and a substantial amount of cash.” – CEO on capital structure philosophy .
“MTech…now manufacturing an electric dragline…we’re the exclusive dealer for MTech dragline parts in the U.S.…these new electric draglines…allow increased uptime and greater efficiency.” – CEO on technology/operations .
“Catapult completed a $4.2 million acquisition of mineral interests within the Midland Basin…includes a mix of producing wells…additional upside opportunities.” – Outlook .

Q&A Highlights

MLMC pricing and profitability cadence: Pricing formula includes one‑year and five‑year lookbacks; management expects more substantial sales price improvement in 2026 with plant operations stabilizing, supporting a return to profitability at MLMC .
Contract Mining volumes/repairs: Lower volumes from customer demand softness and equipment issues; repairs completed; expectation for improved 2H performance with efficiencies and parts sales .
Capex and cash flow: Capex is back‑half weighted and largely growth‑oriented (draglines, Minerals acquisitions); cash flow to improve into 2026 as prior investments harvest; 2025 remains a use of cash vs earlier expectation of increase .
Leverage target: Intent to delever to support multi‑decade customer commitments and reduce balance sheet risk exposure amid political/regulatory and startup risks .
Appalachia data center demand: Indirectly supportive via gas basis and takeaway; could encourage production and improve pricing dynamics where the company has royalties .

Estimates Context

We attempted to pull S&P Global consensus for Q2’25 revenue and EPS; consensus means were unavailable in our query window (actuals only were returned). As a result, we cannot quantify beat/miss vs consensus for EPS or revenue. Values retrieved from S&P Global.*
Observations: Given revenue +30% YoY but EPS down due to operational issues, Street estimates (if available) would likely need to adjust lower for FY25 to reflect the updated full‑year outlook (lower vs 2024), pension settlement charge, and higher capex, partially offset by 2H25 operating improvement and Minerals acquisitions .

(*) S&P Global consensus retrieval returned actuals only for revenue (Q1–Q3 2025) and no EPS consensus values.

Key Takeaways for Investors

Transitory execution issues overshadowed a strong top line; the setup into 2H25 is for sequential improvement, but FY25 will be below 2024 given pension accounting and 2024’s MLMC insurance income .
MLMC is the swing factor: watch plant reliability, pricing formula resets, and cost normalization; management points to 2026 as the inflection year for sustainable profitability improvements .
Contract Mining growth thesis is intact: parts distribution, new/extended contracts, and MTech draglines should drive margin recovery; near‑term performance hinges on volumes and cost control .
Minerals & Royalties provides counter‑cyclical ballast and optionality: Midland Basin acquisition and equity holdings should lift 2H25 vs 1H and vs 2H24; pipeline remains active .
Capital deployment is opportunistic but disciplined: capex raised to up to $86M in 2025 to secure growth with a de‑levering target over time; expect cash generation to improve into 2026 .
Trading lens: near‑term stock reactions likely tied to signs of 2H execution (MLMC operations/pricing, parts sales momentum), clarity on the pension settlement magnitude/timing, and incremental contract wins or Minerals acquisitions .
Risk checks: regulatory/political coal exposure, customer operational reliability (power plants, quarries), commodity price sensitivity (natural gas/oil), and project permitting timelines (Mitigation) .

NACCO INDUSTRIES INC (NC)·Q2 2025 Earnings Summary