NACCO Industries, Inc.

Our host for today is Christina Kometko, Investor Relations. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host, Christina Kometko. You may begin.

Good morning, everyone, and welcome to our first quarter 2024 earnings call. Thank you for joining us this morning. I'm Christina Kometko. I'm responsible for Investor Relations at NANCO. Joining me today are J.C. Butler, President and Chief Executive Officer, and Elizabeth Lubman, Senior Vice President and Controller. Yesterday, we published our 2024 first quarter results and filed our 10-Q. This information is available on our website. Today's call is also being webcast. The webcast will be on our website later this afternoon and available for approximately 12 months. Our remarks that follow, including answers to your questions, contain forward-looking statements. These statements are subject to several risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements made here today. These risks include, among others, matters that we've described in our earnings release, 10-Q, and other SEC filings. We may not update these forward-looking statements until our next quarterly earnings conference call. We'll also be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures can be found in our earnings release and on our website. With the formalities out of the way, I'll turn the call over to JC for some opening remarks. JC.

Thank you, Christine. Good morning, everyone. I'm glad to be on the call this morning since we have a lot of good news to report. I mentioned during our year-end call that I am optimistic about our 2024 outlook as we move past a tough 2023. We expected unfavorable 2023 comparisons would turn favorable in 2024, so I'm pleased to report that our first quarter operating results were in line with those expectations. Our consolidated operating profit increased 162% over the prior year, driven by significantly improved earnings at our minerals management and North American mining segments. Christy will go into more detail about our first quarter earnings and provide an overview of our outlook in a minute, But first, let me give you an update on our operations. I'll start with some positive operational news about our coal mining segment. I'm pleased to report the repairs to the damaged boiler at the Red Hills Power Plant are expected to be completed during the second half of 2024. As you can see from our financials, the coal mining segment's revenues decreased primarily due to fewer coal deliveries as a result of this issue. While the Red Hills Power Plant is still only operating on one boiler, It is helpful to have greater visibility on our customers' timeline for resolution. As we've discussed for several quarters, Mississippi lignite mining companies Red Hills Mine completed the move to a new mine area in 2023. This move sets us up nicely for the future, and we expect production costs at MLMC to decline significantly in 2024-2023 levels. These costs, however, are expected to remain above historical levels through 2024 until the boiler issue at the power plant is resolved, deliveries return to normal, and a pit extension is completed later this year. Before I move to our other segments, I want to comment on the Environmental Protection Agency's recent announcement of new rules for coal-fired power plants. On April 25th, the EPA issued a pre-publication version of the final rules for mercury air toxic standards and greenhouse gas emissions, which require compliance as early as 2027 and 2030. These rules are ultimately enforced as drafted. The way will be applicable to the power plants that we serve. While we are still in the process of analyzing these new rules, I'd like to note that similar previous efforts by the EPA were met with extensive litigation and we're anticipating a similar response to these rules. As you can imagine, this is a very high priority for us. It's worth noting that the United States is experiencing strong overall growth in the demand for electricity. MLMC supplies coal to the Red Hills Power Plant, which supplies electricity to TVA. TVA just announced in their 10Q filing earlier this week that they experienced an all-time record high peak power demand during Q1. These EPA rules go into effect as written. It's hard to see how the country adequately replaces the energy generated by these power plants. Shifting to our other segments, I mentioned earlier that our minerals management and North American mining segments generated improved operating results in the first quarter. At minerals management, the higher first quarter income was the result of higher production volumes and included earnings from the large acquisition of mineral interest that closed in December. The Catapult Mineral Partners team, which oversees this segment, has done a great job of growing and diversifying our portfolio of mineral interests over the last few years. We now own a larger portfolio of mineral interests. We are more diversified in terms of operations, geographic footprint, and stages of mineral development, ranging from producing wells to undeveloped mineral interests. Catapult team is again targeting mineral interests of up to $20 million in 2024. Our North American mining segment also delivered strong year-over-year earnings improvement. North American mining's operating profit improved 184%, and segment-adjusted EBITDA increased 70% compared with 2023. I am proud of the significant progress the North American mining team has made on operational and strategic projects. that contributed to the improved 2024 first quarter results. Our Sawtooth Mining operation is the exclusive miner for the Packer Pass Lithium project owned by Lithium Americas Corporation. Sawtooth Mining is contributing moderate income to North American mining segment during the current construction phase of that contract and is expected to continue to do so until we enter the production phase, which is expected to occur in the 2027-2028 timeframe. More information about this project is available on the Lithium Americas website. The North American mining team continues to evaluate and pursue new business opportunities, including diversification into additional minerals, as we did in 2023 with a new contract to mine phosphate for a customer in Florida. Overall, I believe we're making meaningful progress towards building this segment into a very successful business platform. Finally, moving to our mitigation resources of North America business, this team continues to advance existing mitigation projects and build on the substantial foundation it has established over the past several years. Mitigation Resources added a new project in the first quarter by acquiring an attractive piece of land near a high growth area in Central Florida. We anticipate that Mitigation Resources will further expand its business model in 2024 with a focus on generating a modest operating profit in 2025 and achieving sustainable profitability in future years. Overall, I continue to be very optimistic about our outlook in 2024 and beyond. I have a lot of confidence in our team, and I'm pleased with the way all of these businesses continue to advance their strategies, including efforts to protect our coal mining business. With that, I'll turn the call back over to Christy to cover our results for the quarter and our outlook in more detail. Christy?