Sign in

You're signed outSign in or to get full access.

NI

NACCO INDUSTRIES INC (NC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid sequential improvement: revenue $76.6M (+12% QoQ), operating profit $6.8M (from break-even in Q2), EBITDA $12.5M (+35% QoQ), and diluted EPS $1.78, while YoY comparisons were pressured by a $13.6M insurance recovery in Q3 2024 .
  • Contract Mining and Minerals & Royalties posted substantial YoY operating profit gains; Utility Coal Mining was impacted by Mississippi Lignite’s contractual pricing mechanics, reducing per‑ton sales price in 2025 .
  • Outlook: Q4 2025 operating profit expected comparable to prior-year; full-year net income and EBITDA to decline substantially YoY due to lower operating profit and a non‑cash pension settlement charge upon plan termination; momentum expected to build in 2026 .
  • Catalysts: New multi-year Everglades civil project (dragline services) and 10‑year limestone contract expand Contract Mining’s portfolio; Board authorized a new $20M repurchase program through 2027 post-quarter, reinforcing capital returns discipline .

What Went Well and What Went Wrong

  • What Went Well

    • Contract Mining: Tons delivered +20% YoY to 14.385M, with improved margins and higher parts sales driving operating profit to $1.9M and Segment Adjusted EBITDA to $4.7M .
    • Minerals & Royalties: Operating profit $8.0M (+29% YoY) on higher natural gas prices and equity income; Segment Adjusted EBITDA $8.9M .
    • Management tone and growth strategy: “Our Q3 operating profit of almost $7 million…demonstrates solid progress…momentum continues to build” and long‑term target of $150M annual EBITDA in 5–7 years .

  • What Went Wrong

    • Utility Coal Mining: Underlying Mississippi Lignite Mining Company (MLMC) results pressured by contract formula pricing, lowering per‑ton price despite operational efficiencies; segment operating profit fell YoY given the prior-year insurance benefit .
    • Unallocated expense increased due to higher medical costs, share‑based comp tied to share price, and business development spending, weighing consolidated operating profit vs Q3 2024 .
    • Reported YoY comparisons: Q3 2025 operating profit $6.8M vs $19.7M in Q3 2024, with the prior year boosted by $13.6M business interruption insurance income .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$61.7 $68.2 $76.6
Gross Profit ($USD Millions)$7.2 $6.8 $10.0
Net Income ($USD Millions)$15.6 $3.3 $13.3
Diluted EPS ($USD)$2.14 $0.44 $1.78
EBITDA ($USD Millions)$25.7 $9.3 $12.5
Gross Profit Margin %11.8% 10.0% 13.0%
Net Income Margin %25.4% 4.8% 17.3%
EBITDA Margin %41.7% 13.6% 16.4%

Segment breakdown (Q3 2025 vs Q3 2024):

SegmentQ3 2024 Revenue ($M)Q3 2025 Revenue ($M)Q3 2024 Op Profit ($M)Q3 2025 Op Profit ($M)Q3 2024 Segment Adj. EBITDA ($M)Q3 2025 Segment Adj. EBITDA ($M)
Utility Coal Mining$17.7 $19.7 $19.9 $5.0 $22.1 $7.1
Contract Mining$32.3 $45.6 $(0.5) $1.9 $2.2 $4.7
Minerals & Royalties$8.8 $9.3 $6.2 $8.0 $7.3 $8.9

KPIs:

KPIQ3 2024Q3 2025
Utility Coal – Unconsolidated tons delivered (000s)5,335 5,469
Utility Coal – Consolidated tons delivered (000s)474 609
Utility Coal – Total deliveries (000s)5,809 6,078
Contract Mining – Tons delivered (000s)12,005 14,385

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated operating profitFY 2025Substantial increase in H2 vs H1; full-year lower YoY (prior-year had insurance income); pension termination to drive substantial YoY decline in net income/EBITDA Full-year operating profit lower vs 2024; pension termination in Q4 to drive substantial YoY decrease in net income and EBITDA Maintained
Consolidated operating profitQ4 2025Not specifiedQ4 operating profit expected comparable to prior-year quarter New clarity
Utility Coal (MLMC)H2/FY 2025H2 improvement vs H1, but full-year declines vs 2024 (insurance benefit in 2024 and lower per-ton price in 2025) Q4 improvement vs 2024, but full-year decline vs 2024 due to lower per‑ton price; improving profitability expected in 2026 Maintained
Contract MiningH2/FY 2025 & 2026Profitability improvements in H2 2025 driven by efficiencies and parts sales; momentum into 2026 Q4 2025 profits to improve (efficiencies offset by elevated OpEx); momentum accelerates in 2026; Everglades dragline contract accretive beginning Q2 2026 Raised near-term detail
Minerals & RoyaltiesH2/FY 2025 & 2026H2 2025 improvement vs H1 and vs H2 2024; continued improvements into 2026 Q4 2025 decline vs 2024 on commodity price expectations; FY 2025 operating profit up vs 2024 (excl. 2024 gain on sale); modest 2026 increase (new investments largely offset by legacy reductions) Mixed (lower near-term, maintained FY)
Capital ExpenditureFY 2025Up to $86M in 2025 (majority for growth) ~$44M in remainder of 2025; up to $70M in 2026 (majority for growth) Updated cadence
Pension PlanQ4 2025Termination planned in Q4 2025; significant non‑cash settlement charge Termination planned Q4 2025; significant non‑cash settlement charge Maintained
Share RepurchaseProgram$20M program expiring end of 2025; $7.8M remaining as of 9/30/25 New $20M authorization through 12/31/2027 (replaces prior program) Extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Contract Mining growthH2 improvement; parts sales focus; multiple new/extended contracts delivering ~$20M NPV over 6–20 years Tons +20% YoY; new Everglades civil project starting earnings Q2 2026; expanded limestone presence; pipeline strong Accelerating
Utility Coal pricing mechanicsMLMC price formula causing inventory impairments; normalization expected as plant operates steadily Continued per‑ton price reduction from contract formula; EBITDA seen as better metric given limited new capital; 2032 contract expiry Ongoing pressure, path to 2026 improvement
Unallocated expensesHigher employee/outside services in Q1 Higher medical costs, share‑based comp (share price impact), BD spend Elevated, manageable
Liquidity & capexCash ~$62M; debt ~$96M; vendor deposits turning in year Debt $80.2M; liquidity $152M (cash $52.7M; revolver $99.3M); capex ~$44M remainder ‘25, up to $70M in ‘26 Strengthened balance sheet; disciplined growth capex
Pension plan terminationPlanned for 2025; non‑cash settlement charge Terminates Q4 2025; substantial non‑cash charge; 2026 earnings improvement expected Simplifies structure; near-term GAAP noise
ReGen (Solar) initiativesEvaluating solar/backup, behind‑the‑meter opportunities on reclaimed mine land (MS & TX) Advancing safe harboring projects for tax credits; multiple locations under evaluation Progressing, option value
Policy/tailwindsFavorable fossil fuel regulatory tone; executive orders supportive “Operating in increasingly favorable environment” and demand strength supporting businesses Supportive macro

Management Commentary

  • “Our third quarter operating profit of almost $7 million improved sequentially…Q3 2025 EBITDA increased to $12.5 million, up from $9.3 million in Q2…demonstrates solid progress” — J.C. Butler, CEO .
  • “Strategies for achieving our long-term target of $150 million of annual EBITDA in the next five to seven years” — J.C. Butler .
  • “Contract Mining…tons delivered grew 20% year over year…and we continue to add long-term contracts to its expanding portfolio” — J.C. Butler .
  • “We anticipate consolidated operating profit for the 2025 fourth quarter to be comparable to the prior year quarter…pension termination will trigger a non‑cash settlement charge” — Elizabeth Loveman .

Q&A Highlights

  • ROIC in Contract Mining: Near‑term ROIC below mid‑teens targets reflects timing and “invest then harvest” projects (e.g., Sawtooth/Thacker Pass ramping late 2027 onward); expect strong returns as projects mature .
  • Operating models: Dragline vs full mine operations—fees structured to reflect capital provided; preference for integrated, long‑term partnerships; “one‑team” BD approach to broaden opportunities .
  • Utility Coal contract structures: Unconsolidated coal mines are fee-for-service (CPI/PPI adjusted), while MLMC uses a formula-based coal price tied to 1‑ and 5‑year index changes; EBITDA is viewed as the better metric for MLMC and segment given limited new capital and 2032 expiry .
  • Unallocated expense drivers: Higher medical expenses and incentive comp (share price impact), and increased business development expenses .
  • Solar projects: Actively safe‑harboring for tax credits; multiple sites under evaluation .

Estimates Context

  • S&P Global consensus for Q3 2025 EPS, revenue, and EBITDA was unavailable; we could not assess beat/miss versus Street for NC due to lack of published consensus coverage. Values retrieved from S&P Global.
  • Given the sequential improvement and strong segment performance, we expect estimate revisions to reflect higher Q4 Contract Mining profitability and 2026 momentum, while near‑term GAAP (Q4) may be tempered by the pension settlement .

Key Takeaways for Investors

  • Sequential inflection: After Q2’s break-even, Q3 showed broad-based improvement with revenue, operating profit, EBITDA, and EPS up QoQ; momentum expected to carry into Q4 and accelerate in 2026 .
  • Contract Mining growth vector: New Everglades civil project and expanding limestone footprint signal diversification beyond aggregates-only; expect accretive earnings from Q2 2026 with efficiencies driving near-term margins .
  • Utility Coal durability with pricing overhang: MLMC’s formula-based pricing suppresses 2025 per‑ton price; profitability seen improving in 2026 as pricing mechanics normalize and power plant consistency improves .
  • Minerals & Royalties resilience: FY 2025 operating profit up vs 2024 (ex-2024 gain), though Q4 expected lower on commodity price assumptions; modest 2026 increase as new investments offset legacy declines .
  • Balance sheet flexibility: Debt reduced to $80.2M; liquidity at $152M supports up to $70M 2026 capex for growth initiatives; disciplined capital allocation continues .
  • Capital returns: New $20M repurchase authorization through 2027 and dividend continuity offer a supportive backdrop for shareholder returns while investing for growth .
  • Trading lens: Near-term (Q4) GAAP optics likely depressed by the pension settlement; focus on underlying operating profit trajectory, Contract Mining backlog additions, and commodity price paths for Minerals to gauge 2026 EPS/EBITDA setup .