NACCO Industries, Inc.

Good morning, ladies and gentlemen, and welcome to the NACO Industries third quarter 2024 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session, and if at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, October 31st, 2024. I would now like to turn the conference over to our investor relations. Mrs. Christina Kometko, please go ahead.

Thank you. Good morning, everyone, and welcome to our third quarter 2024 earnings call. Thank you for joining us this morning. I'm Christina Kometko, and I'm responsible for investor relations at NACO. Joining me today are J.C. Butler, President and Chief Executive Officer, and Elizabeth Lovman, Senior Vice President and Controller. Yesterday we published our 2024 third 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 to those listening. Our 2024 third quarter was another strong quarter for us. It was very much helped along by the $13.6 million of business interruption insurance income we recorded at Mississippi Lignite Mining Company in relation to a boiler outage at the customer's power plant It reduced customer demand from mid-December 2023 until the end of July. However, even without the insurance recovery, I'm pleased to say our results were very strong, specifically in our coal mining and minerals management segments. Excluding the insurance, our consolidated operating profit increased over 197% from last year's third quarter loss. Christy will provide more detail about our third quarter income and an overview of our outlook after my remarks on the operations. I'll start with the positive operational news on our coal mining segment, which delivered the biggest year-over-year improvement for the third quarter. As you might have surmised from my previous insurance recovery comment, the Red Hills Power Plant completed the repairs to the damaged boiler during the quarter. That said, the resolution of this issue was only a small factor in the coal mining segment's improved results. Coal mining revenues declined primarily due to fewer deliveries at the Red Hills Power Plant as compared with 2023 when the plant was operational for an entire quarter. Despite this lower customer demand, Mississippi Lignite Mining Company's Red Hills mine operated more efficiently this quarter than a year ago. In 2023, we were still finalizing the move to a new mine area and contending with difficult mining conditions related both to the move and to weather. We're now established in this new mine area and mining conditions have improved. This contributed significantly to the improved results at this mine for the quarter. And I'd also like to note the improved earnings on our unconsolidated coal mining operations. I mentioned last quarter the temporary price concessions put in place at Falkirk to help facilitate Rainbow Energy's acquisition of Coal Creek Station ended in May. Our third quarter results reflect a full quarter of the higher pricing, which contributed to the increase in our coal mining segment results. At Minerals Management, I'm pleased to report that the investments we've been making in new mineral assets are delivering benefits. Third quarter 2024 operating profit for this segment increased over last year, largely due to higher production volumes from the assets acquired in late 2023. We are very pleased with the work done by the Catapult Mineral Partners team, which oversees this segment. They've expanded our portfolio of mineral interests, and we are more diversified in terms of our oil-gas mix, a wider range of operations, a greater geographic footprint, and various stages of mineral development, ranging from producing wells to undeveloped mineral interests. Catapult team continues to review additional investment opportunities. Shifting to the North American mining segment, first let me say we are thankful that all of our Florida employees are safe and the impact to our operations from the recent hurricanes was not substantial. The significant rain in Florida, as well as planned customer outages, did affect our third quarter deliveries. Despite this lower customer demand and excluding the effect of reimbursable costs, North American mining's revenues still increased 24% year over year due to favorable pricing and delivery mix at the limestone quarries. Looking at North American mining's operating results, last quarter I mentioned that we had begun mining phosphate for a new customer in Florida. This customer temporarily ceased operations in the third quarter as it works through business challenges. Where hopefully these challenges can be resolved, we established a $900,000 reserve against their receivable. Primarily as a result of this charge, North American mining generated a modest operating loss in the 2024 third quarter compared with a prior year operating profit. I'd also like to note that Lithium Americas continues to make progress on the Thacker Pass project. Earlier this week, they announced the closing of a significant loan from the Department of Energy which will help finance the construction of the Packer Pass lithium project in Northern Nevada. We're thrilled that our customer has reached this important milestone and what this latest development means for this project. We continue to support the project by assisting with certain construction services. And in addition, in the fourth quarter of 2024, we and Lithium Americas agreed to expand the scope of our work to include transportation of clay tailings once lithium production commences. Phase one lithium production is estimated to begin in 2027. Finally, moving to mitigation resources of North America, results for this business continue to fluctuate based on the mix of outstanding projects. However, this team continues to execute existing mitigation and reclamation projects and build on the substantial foundation it has established over the past several years. Based on current expectations for new projects, as well as timing of permit approvals and mitigation credit releases, this part of our business anticipates achieving a full year profit in 2025. As this business matures, we believe it can provide solid rates of return on capital employed. Overall, I continue to be very optimistic about our business. I have a lot of confidence in our trajectory and the 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 quarterly results and outlook in more detail. Christy?