NACCO Industries, Inc.

Thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the Global Indemnity Group second quarter 2025 earnings call. I'm sorry, NACO industry second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. It is now my pleasure to turn the call over to Christina Kempko, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us on today's second quarter of 2025 earnings call. I'm Christina Kometko, and I oversee investor relations here at NACO. I'm joined by our president and CEO, J.C. Butler, and our senior vice president and controller, Elizabeth Lovman. Yesterday evening, we released our second quarter results and filed our 10-Q with the SEC. Both are available on the website if you haven't had a chance to review them. Before we dive in, let me remind you that today's discussion will include forward-looking statements. As always, actual outcomes could differ materially due to various risks and uncertainties, which are outlined in our earnings release, 10Q, and other filings. We don't plan to update these statements until our next call. We'll also be referencing some non-GAAP metrics to give you a clearer picture of how we think about our businesses. Reconciliations to GAAP can be found in the materials we posted online. We mentioned in our earnings release during the quarter we changed our reportable segment names to make it easier for our stakeholders to associate the business activities with each segment. Coal mining was renamed utility coal mining. North American mining is now referred to as contract mining. And minerals management was renamed minerals and royalties. The composition and historical reporting of each segment remained the same. With the housekeeping out of the way, I'll hand things over to JC for his opening comments. JC.

Thank you, Christy, and good morning, everyone. I want to open today by giving you a sense of how we see our business developing, where our momentum is most visible, and how we're navigating what we believe are temporary challenges. The operational challenges we mentioned occurred primarily at our utility coal mining and contract mining segments. These temporary disruptions affected our second quarter results, but my confidence in our business remains strong. We're also comparing these results against a particularly strong prior year quarter, where earnings a year ago were boosted by a sizable gain on the sale of legacy land. We experienced strong revenue growth, specifically in the utility coal mining segment, but it wasn't enough to overcome operational disruptions in the utility coal and contract mining segments, as well as higher unallocated costs. Within the utility coal mining segment, challenges at Mississippi Lignite Mining Company primarily drove the lower segment results. MLMC's customer has and continues to experience inefficiencies at its power plant. This in turn affects our ability to efficiently mine coal. Our team continues to respond to these unfavorable conditions with agility, but the operating inefficiencies tied to the power plant and lower pricing did weigh on our results. Disruptions at the contract mining segment due to temporary mechanical issues at certain quarries resulted in fewer trends delivered and higher operating costs. That said, parts sales helped offset some of this, and we expect stronger results in the back half of the year as benefits from additional part sales and several new and extended contracts kick in. The second new M-TECH drag line was commissioned early in the third quarter in an existing customer quarry, joining one commissioned at the end of the first quarter at a different quarry. These new M-TECH drag lines are great additions to the fleet. Their design simplifies maintenance, which allows increased uptime and greater efficiency. Amid these temporary bumps, our underlying growth drivers are performing well. Within contract mining, Saw Truth Mining is continuing to provide support for the Thacker Press project in Nevada, which is now under construction. This operation generates stable income today and is expected to provide enhanced income and lasting cash flow as the project transitions to full-scale lithium production in late 2027. We are now providing contract mining services for several of the top 10 US producers of aggregates and our expanding pipeline of potential new deals is strong. We believe that our continued engagement with current and potential customers positions North American mining and the contract mining segment is a key pillar for future growth. Turning to our minerals and royalties segment, In July, Catapult completed a $4.2 million strategic acquisition that expanded our minerals interest within the Midland Basin. This deal included 10,500 gross acres and approximately 400 net royalty acres and includes a mix of producing wells as well as additional upside opportunities through future development with existing operators in the area. Switching gears, We're also seeing growth at mitigation resources. We had expected mitigation resources to achieve full year profitability in 2025. However, temporary delays in federal permitting have pushed out that expectation. Mitigation resources is now expected to achieve full year profitability in 2026 and move toward more consistent results over time. The pace of growth at mitigation resources is building as this key team continues to secure new projects, which build on results from projects that are currently underway. Despite the current quarter challenges, we're well positioned to achieve meaningful growth going forward. Our fundamental business model is built on a strong collection of long-term contracts and investments that produce relatively strong and steady earnings and cash flows over time. Each year, we add to this business model by securing more long-term projects and making investments that will contribute to future results, creating a compounding effect. Many of these opportunities are built on a fee-for-service model where we have little or no capital exposure, while others might require us to invest capital up front. Regardless of the model, very few of our businesses require significant amounts of maintenance capex. Our goal is to keep adding layers that will provide something approaching annuity like returns and cash generation over time. All of this is underpinned by a business model purposefully built for durability and compounding growth. We've been pursuing this approach for 10 years and it's really gaining momentum. This is why I remain confident in our ability to deliver what we believe will be improving results in the second half of the year and continuing into future years. Before wrapping up my comments, I'd like to note that I believe our new segment names do a much better job of describing what we do in each of our businesses. We made this change as part of a larger effort to enhance our communications with shareholders and others who might be interested in our company. With that, I'll turn the call over to Liz for a closer look at the financials. Liz?

Thank you, JC. Let's get into the results for the quarter, and I'll try to keep it as straightforward as possible. Consolidated revenues were $68 million, up 30% year over year. That's really being driven by the utility coal mining segment, as Mississippi Lignite Mining Company's customer returned to more normal operations after running at reduced capacity for much of last year. Both an increase in other income and a favorable change in income taxes helped to partly counterbalance the impact from operational disruptions. This combination resulted in consolidated net income of $3.3 million, down from $6 million in the prior year. Diluted earnings per share decreased 46% year on year, again, reflecting those operational headwinds and last year's unusually strong comparison. EBITDA was $9.3 million versus $13.5 million in the same period last year. Here's a little more color at the segment level. At the utility coal mining segment, the decline in operating profit and segment adjusted EBITDA was primarily driven by unfavorable results at Mississippi Lignite Mining Company. Although the cost per ton of coal delivered improved, the lower contract pricing more than offset that improvement. Looking ahead, we expect improvement in the second half of 2025 compared with the first half of the year. Still, the current formula-based contract pricing remains a headwind compared to the second half of last year. which also benefited from business interruption insurance income. Anticipated improvements in both sales price and cost per ton delivered are expected to result in a return to profitability at Mississippi Lignite Mining Company in 2026. Assuming the customer's power plant operations and demand stabilize and formula-based pricing improves as expected. At North American Mining, revenues net of reimbursed costs rose 3%, driven by increased part sales. However, this upside was offset by fewer tons delivered due to customer operational delays plus higher operating costs, including unexpected repairs and maintenance expenses. This resulted in a decrease in the current quarter profit and segment-adjusted EBITDA. With operational efficiencies expected to improve and a growing focus on part sales, we expect the contract mining segment profits to strengthen in the back half of the year with the momentum continuing into 2026. At the minerals and royalties segment, last year's results included a large one-time gain. Excluding that, this year's operating profit and EBITDA actually increased, thanks primarily to a 30% rise in revenues, largely due to higher natural gas prices. As JC mentioned, Catapult completed a new acquisition in July, expanding our mineral interest portfolio. Both this new acquisition and Catapult's equity investment should contribute more meaningfully to results starting in the second half of 2025. Adding everything together for the remainder of the year, we anticipate a substantial increase in consolidated 2025 operating profit over the first half, but full-year operating profit will still fall short of last year, which included a large gain on sale. We will complete the termination of our pension plan by the end of this year. While this will trigger a non-cash settlement charge, the plan is overfunded, and the move will simplify our financial structure going forward. Nonetheless, the pension settlement charge and lower operating profit are expected to lead to a substantial year-over-year decrease in net income and EBITDA compared with the 2024 second half and full year. From a liquidity standpoint, at June 30th, we had total debt outstanding of $95.5 million. Our total liquidity was $139.9 million, which consisted of $49.4 million of cash and $90.5 million of availability under our revolving credit facility. During the quarter, we paid $1.9 million in dividends, and as of June 30, 2025, we had $7.8 million remaining under our $20 million share repurchase program that expires at the end of this year. We are forecasting up to $86 million in capital spending this year, which is higher than we projected at the end of last quarter. Most of this is earmarked for new business development. As our returns from previous investments start to materialize, we expect cash flows to improve over the prior year and continue to increase steadily next year. With that, I'll hand it back to Jay Z for closing remarks.

To wrap up, I am confident in our future. We are operating in a very favorable environment. There is strong growing demand for the products and services that we provide and rapidly growing demand for energy. Recent government support is also further boostering all of our businesses. Short-term disruptions aside, I believe the building blocks for durable compounding growth at NACO are firmly in place. Our team remains focused on execution, operational discipline, and driving long-term returns for shareholders. We're optimistic about what the rest of the year holds, and even more so about our prospects for 2026 and beyond. With that, we will now turn to any questions you may have.

At this time, I would like to remind everyone, in order to ask a question, press star 1 on your telephone keypad. And we will pause for just a moment to compile the Q&A roster. Our first question comes from the line of Douglas Weiss with DSW Investment. Please go ahead.

Hey, good morning. Good morning.

Starting with the coal segment, so on your unconsolidated businesses, the volumes were a little bit lighter than they've been over the last couple of years. Could you say why that happened?

You know, it was really a collection of minor things at a number of places. There's nothing there that I would specifically call out, and there's nothing that I really think is a problem going forward. It's really just kind of, you know, single quarter noise going on that has been the main problem.

Okay, so you would see that, I mean, it dropped from... Yeah, there's nothing in there that's, you know, reason for concern. Okay. You can see it kind of returning to trend line there. Yeah. And then when you say MMLC will return or you expect it to return to profit next year, are you talking about gross profit?

Yes.

Okay.

Yeah.

Well, you can look at the combination. If you think the formula pricing is going to improve, you know, based on, you know, what we know about the formula and how we can look at where we think inflation will go in the future, as well as, you know, we're expecting that the plants can operate more consistently, which allows us to operate more consistently and drive down our costs.

Right. And that formula, is it redetermined based on year-end pricings?

No, it's reset, Liz, monthly or quarterly?

Monthly. I think it's monthly. Oh, okay. It includes a quarterly look back.

Yeah.

A monthly and a five-year look back.

And so it's a contractually agreed formula that they came up with back in the mid-1990s that takes a one-year look back as well as a five-year look back at published, you know, nationally published indices that reflect general inputs in mining and power production.

I see. But is it resetting every quarter? Did I understand you? Yeah. Okay. So you could actually see better pricing over the next couple quarters, depending on the inputs?

Yeah. Well, you know, based on the way we're forecasting the coming quarters, yes. Okay.

It's really in 2026 that we see the substantial improvement in the sales price.

Okay.

Okay. There's going to be some noise going through the pricing formula, which isn't surprising. I mentioned earlier that it's, you know, a one-year look back. So what is, you know, a stated index for something today versus a year ago and also today versus five years ago? When you think about five years ago, the economy was going through the roller coaster of COVID when prices of lots of things dropped a lot early on and then spiked up. So as you're doing a one-year look back, I mean, there's not a lot of noise there. But as you're doing a five-year look back, there's some noise five years ago. And that's messing with the formula right now. But we expect that's going to stabilize as we move into 2026.

Okay. And, you know, MMLC had the boiler problem, and it sounds like they're having some more operational problems. Is that coincidental, or is it just a really old facility that you think may have ongoing issues?

Well, I mean, it's not a terribly old facility. This thing started up in 2020. which in the scheme of U.S. power plants is pretty – or coal-fired power plants is pretty new. Obviously, the boiler issue a year ago, more than a year ago, was a very substantial one-time issue that took out half the plant for half the year. That's clearly a very – You would only expect that to happen at most once in the life of a power plant over many decades. The things that are going on now are more sort of minor things. Power plants are big, complicated machines. They do, from time to time, have things like tube leaks and other mechanical issues. The ones that are going through right now are not extraordinary in any way. They just happen to be happening at a period of time that's affected the second quarter results.

Okay, okay. For North American mining, volume was... I haven't memorized your new headings, by the way, but I will for next quarter. The volume was light.

Why was that? Did you say why was that? Yeah.

Yeah, why did volume drop off?

Yeah, so it was a combination of some reduction in customer demand, which might be some general softness in their customer demand but I don't think any of it's really significant. There were some minor, you know, issues with, I think, with some of their facilities, although nothing major. And we had some mechanical issues with some of our equipment, primarily drag lines, that, you know, made it unable for us to deliver. It's one of the reasons that customers keep inventory stockpiles on site. It creates a buffer for them and for us with respect to deliveries. The repairs that we have made have been successful and we don't see a problem with any of that going forward.

Okay. In terms of the CapEx it's back end weighted. Is most of that, how is that allocated at this point? Is a lot of that for the contract mining or?

So a vast majority of it is related to growth initiatives. It's money that we're spending in order to secure new, you know, new contracts, new projects. And, you know, you'll remember that our business model is And where we can, we'd like to have a service model where we don't have any capital up front and we just collect a fee going forward. But in some instances, particularly at North American mining, but also at Catapult, we'll invest capital up front that will, in Catapult's case, buy mineral and royalty interests or make other investments that will then have very long-term returns with no further investment on our part. Or when you look at contract mining, at North American mining, it might be a drag line that will buy up front. And the maintenance capex on those things is a fraction of the depreciation over time. So a majority of that capex, which is later in the year, is tied to growth, tied to new contracts and new investments.

Mm-hmm.

And which, you know, to me, sorry to interrupt, but to me, the really attractive thing about that in our business model is we don't really have a lot of ongoing CapEx unless we see opportunities for growth that, you know, meet a very well-developed and I think robust and proven set of investment criteria that we have for new projects. So, you know, we got low CapEx unless we see opportunities to grow in these long-term multi-year contracts. And in that case, you know, we're going to increase our CapEx spend because it's an opportunity to grow the business.

Right. And it sounds like you continue to sign new projects in the contract mining segment.

Yeah, certainly in the contract mining segment, but I would say that's true across the entire company. We, over the last number of years, have built an incredibly effective business development machine that is continuing to add new long-term multi-year projects and contracts and investments on top of those that are already in place. Kind of the fundamental base of our business is the long-term contracts in our coal mining segment, utility coal mining segment, as well as the income that we generate out of our natural gas reserves in Appalachian that we've owned for decades. Those long-term platforms have really fueled the success over the last 10 years that we've added more and more long-term contracts. And as we continue to exercise that business development muscle, we're getting better and better at it. I'd say in the beginning, we were hitting a lot of singles, which I was very happy with. We've more recently started hitting more doubles and triples and even some home runs with respect to these long-term projects, contracts, and investments. And as we add those, We're fortunate that we've got a balance sheet and stable cash flows that allow us to keep adding those to the portfolio that we already have. So it really has very much a compounding effect as we think about the growth trajectory that we're on.

When you say triples and home runs, can you give some specific examples? Are you thinking within the contract mining segment or catapults?

It's really kind of across the board. We've found some opportunities in each of our businesses to find projects that are increasingly attractive to us, both in terms of their size, in terms of the profit opportunities that they offer us, in terms of the length of the contract. And I would also say we're finding ways to branch out really just kind of on the edges of what we do. A great example of that I would point out is our lithium project. We signed that in 2019. We've been working with the customer to develop that project ever since. And we're making a modest amount of money right now, but we're supporting them in development. But as we get to 2027 and beyond, when we start delivering lithium to them, that thing's a very substantial, meaningful project for us. So, you know, it's one example of something that we've already signed. We have others in other parts of our business that I have similar feelings about those. And we've got a number in the pipeline that I think are equally as excited.

Okay, great. In terms of the cash flow statement, it looks like you still haven't received the cash from your investments in working capital over the last couple of years. Do you expect that later in the year?

So, we did say we expect, you know, more favorable cash flows this year than last year. If you look at our balance sheet, you can see we have deposits with vendors of $16.3 million as current, so we anticipate the collection of that. You know, last year we, in 23, 24, you know, we were building up inventory in the contract mining business that, you know, we don't anticipate significant increases in that going forward. So, that's, I guess, a little bit of color around that.

Okay. Yeah, you said you expected to generate cash this year. I think on a net basis. Is that right? You said... Net of capex. That's just what I recall the guidance being earlier in the year.

Could be off on that.

But we This quarter we said it would be an improvement in cash flow, but it was still a use of cash. But yes, you're correct. A previous, we had previously initially said we thought it was going to be an increase in cash flow. Yep.

The change is partly related to these additional CapEx opportunities. I really, I very much think of them as CapEx opportunities. to secure some new projects.

I see. So has your expectation for operating cash flow changed or is it just you're spending more?

Well, I'd say that they have changed to the extent that the second quarter didn't play out like we thought it would. If you neutralize for the second quarter, we still feel pretty good about where we're at. The second quarter is really the driver in the slight change in sentiment. It's not an ongoing change of view. It's really a second quarter impact view.

And going into 2026 is when we really anticipate a more steady increase in annual cash flow generation.

But remember, if we find some great opportunities, to enter into some great new projects that do require some capex up front. We're probably going to pursue those. But I would think as an investor, that's a good thing.

Yeah. No, no, absolutely. On the pension settlement, it sounds like that's non-cash. And correct me if I'm wrong on that. But in terms of the overfunding, what happens to the overfunding there?

Similar to what happened with, if you see we have a prepaid profit sharing amount on our balance sheet at the end of the quarter, we can use that to fund other qualified planned funding requirements.

I see.

It's money that's sitting on the balance sheet that we, look, we can't use it for capped acts, but we can certainly use that money that's sitting in that account to fund qualified plan contributions, 401k kind of stuff. So if you think of money as fungible, that's sitting in an account that can be used for a specific purpose. We otherwise would have been using general funds for that. And you're correct that the pension charge is a non-cash charge. Look, it's going to hit the income statement. It's going to make it look bad. but I view it as a good thing. We're going to get out of the pension business. We've been out of pensions for a long, long time. This is finally terminating it and getting it out of our financial staples.

Yes, our plan has been frozen for 25 years.

Maybe not 25, but it's substantial amount of time.

Yeah, right. Okay, last question for me is, you know, there's been a fair amount of press coverage about activity in the Appalachia region with data centers and, you know, off the grid natural gas contracts. Presumably that could be beneficial for gas prices, but does it have any other implications for your reserves in that region?

I would say indirectly, yes. Directly, we just own the minerals. We really can't enter into a contract for our minerals to go into a power plant than serving a data farm. But I would say, you know, when you think about basis, if you're familiar with basis, it's really the transportation costs to get from where something is produced to, you know, the central markets. I'd say it's helpful for natural gas pricing in the Appalachian region. The closer you bring demand to the product, that's always a good thing.

Mm-hmm. Okay. All right, great. We'll always appreciate the answers and look forward to talking to you next quarter.

Just one other thing on your last question. You know, the other thing it can do is, you know, as you try to move oil and gas around the country, people are always looking at pipeline capacity. And to the extent that you bring demand nearby, it probably – expands the offtake ability out of that basin, which helps, right? It encourages more production. It encourages people to come in and, you know, focus more on a given basin because you're not trying to put every, you know, bit of production through the existing pipelines. The last thing I got to add, sorry. Yeah.

All right. Real quick. The pension plan was frozen in 2020. You were right. It's 25 years ago. And MLMC actually started deliveries in 2020 or 2002, not 2000. Just clarifying.

It's a long time ago.

Yes. Both of them are a long time ago.

Got it. Okay. All right. Well, thanks again.

Thanks, Ted.

Yeah, thanks.

And our final question. Our final question comes from the line of Daniel Borey with AWCL. Please go ahead.

Good morning.

We have moved from, I don't know, 80 or 100 million in net cash to 46 in net debt. Can you talk about kind of philosophically where you want to be after this large capex cycle cash flow cycle changes? Is there a period of deleveraging you see? Where are we going?

We are headed towards less leverage rather than more. I'm not saying that's going to happen in the next quarter, but our objective is to have less leverage than we do. Although we operate in an incredibly attractive political environment right now, I do recognize, we recognize that there's political risk. particularly on our coal business. And we have some entrepreneurial startup risk, although today I think our businesses are much more mature than they were a few years ago. So my philosophy and our philosophy is if we've got political risk on a core part of our business and we have entrepreneurial startup risk in other parts of our business, we should have no risk on our balance sheet. And that's why, you know, internally, we talk about maintaining a bulletproof balance sheet. And that's what we strive to have. You know, what we mean by bulletproof balance sheet is very low levels of debt and a substantial amount of cash. And look, You know, I described to you the philosophies from, you know, assessing risk. The other reason I think very, very conservative balance sheet is important because as we meet with customers, potential customers, and represent to them that we're going to start a set of services for them that are completely integrated into their business. whether that's running the coal mine that supplies a power plant, 100% of the fuel for a power plant, or if we're doing all of the mining with respects to an aggregates quarry or a cement plant, if we're going to sit down with them and sign a 20-year contract, we need to be able to look them in the eye and assure them that we're going to be here. If we are taking financial risk, The one thing that can get in the way of that long-term approach is a balance sheet that starts making decisions for the business. As long as the balance sheet is bulletproof, we will never get in that situation, and we can assure our partners that we're going to be an integrated, important part of their business for decades to come. Our largest, our longest... Customer relationship is 46, I think going on 47 years in North Dakota at one of our coal mines. That's the kind of relationship we want to have with many of our customers. So in order to do that, we need to make sure that we can tell them that we're going to be here. We've been here 111 years right now and 112 years. And, you know, we're shooting for the next hundreds.

It's a remarkable run.

This parts business at contract mining, is it a new business model? Are you trying to run down inventory? Is that part of the change in contracts there? Can you talk more about what the change is from the past? It seems over the last couple of quarters, we've started talking much more about the parts business.

Yeah, I mean, I would say it's an evolution in the business model. We have stocked parts in inventory for a very long time, servicing our drag lines that we operate, the equipment that we operate in these integrated operations with our customers. As that business, the fundamental contract mining business, really led by North American Mining has grown over time. We have, you know, expanded the range of equipment that we operate, which has caused us to expand the inventory that we carry. And as we have looked at that business, you know, what we see is that, you know, one, we've been incurring costs to carry those and manage those. And we had a minimum should get reimbursed for those. But we also find there are instances where many of these pieces of equipment, some of these drag lines haven't been manufactured for decades, and the parts and components are getting harder and harder to find. So we've concluded that really the right decision for us and for our customers is for us to stock those parts particularly those more difficult to find components and parts on site. And essentially, rather than searching the country for those when we might need them, we're going to stock them ourselves and then really operate as a parts distributor, both internally and externally. So it's really kind of an evolution of the business as we think about how we can best serve our customers in this space.

That helps a lot. Thank you.

And on North American mining or the contract business, when we start up a new, add a new quarry, are we moving drag lines from closed North American coal mines over, is that a major portion of this business? And if so, is that a kind of limiting factor on the growth of contract mining or are those completely separate?

It's a great question. They're completely separate. A majority of the drag lines that we operate in our coal mining business are absolutely huge machines. much larger than you would ever operate at any kind of a quarry. So you don't have to worry about that being a limiting factor. The process for starting up a new quarry for an aggregates customer, I guess I would start with saying in some instances, we'll go in and take over operation of the equipment that they already have on site. So there's really not a transition and there's not a concern about where the equipment's coming from. In other instances, if it's an operating quarry, we may move in a drag line that is more efficient or that we think is better suited for the operating quarry that would all have been part of the negotiations with that customer. with respect to the equipment we're going to use and how we're going to serve them. If it's a greenfield quarry, then we and the customer are going to work together to determine what equipment, what drag lines would be needed for that particular operation. And we will either source it out of drag lines that we already have in our contract mining fleet that might be available, Or, you know, given that we operate more drag lines than anybody in the country by a substantial amount, we've got tremendous knowledge about where drag lines are and what might be available and what repairs they might need. And so if it's a green field, we'll either take one that we already own or we'll get one from somebody else and we'll move it into that facility and put it to work. So it's really a whole combination of things. But we are not moving them out of our coal mining operation. Hopefully that's helpful. That's very helpful. I guess I would just add one other piece to that. I talked a lot about old drag lines. In the last few years, we have developed a relationship with a company in the Netherlands called Emtek Cranes. And they're primarily... vast majority of their business is manufacturing cranes, which are similar technology, but not identical to a drag line. And we have worked with them so that they are now manufacturing an electric drag line. The older drag lines tend to be driven by diesel, their mechanical machines, whereas the M-tech machines are much more modern technology. We've been deploying those drag lines. In fact, we're the only operator of M-TEC drag lines in the United States. And we're the exclusive dealer for M-TEC drag lines in 48 of 50 states. And we're the exclusive dealer for M-TEC drag line parts in the United States. So this kind of fits with your earlier question about parts. It also fits with a question that you had about where do we get our drag lines from. These new electric drag lines for the right operations, right-sized operations, are incredibly effective machines in terms of their operating efficiencies, their maintenance, their uptime. We're really excited about the opportunities that we think lie ahead because of this relationship we have with EmTech.

Yeah, thanks for that.

The last one, I think, Iger is a business we've invested somewhere around $20 million in. Are they themselves fully invested? Is this kind of $300,000 sort of run rate earnings from them? And then could you talk about what their capital allocation plan is? Is that a growth business? Is it kind of a yield thing? What are we doing there?

And so Iger is a, I mean, to begin with, Iger's got its own website. It's a very modest website, but it sort of describes what they do. It's a private business. We made an investment in them because we think that they have a very interesting business model with respect to both the basin where they're invested and the way they're investing. For us, we look at it as a non-op investment. We are not operating any of the mines, any of the mines, sorry, any of the wells. And quite honestly, right now, they aren't either. But their business model is very focused on expanding the productivity of wells that they have in their control. And we think that it is a business model that is very similar to ours and very complementary to ours, which is why we made the investment. But to us, it's essentially a non-op working interest, meaning we're not operating... We're not responsible for operating. Somebody else is taking care of all that. So for us, it's another investment in the portfolio. As to what's the run rate for income, I think we are optimistic about their business model. Our investments are relatively recent. And I would say I think they're building momentum in what they're doing. But I'm not going to make any specific outlook comments about where we think they're headed. But we do think overall this is going to be an attractive investment for us.

All right. I appreciate you taking my questions. No, we really appreciate your interest and we appreciate your call.

And with no further questions in queue, I will hand the call back to Christina for closing remarks.

Okay. Thank you so much. Before we conclude, I'd like to provide a few reminders. A replay of our call will be available online later this morning. We'll also post a transcript on the Investor Relations website when it becomes available. If you have any follow-up questions, please reach out to me. You can reach me at the phone number on the release. I hope you enjoy the rest of your day, and I'll turn it back to Tina to conclude the call.

To access the replay of today's call, dial toll-free 800- 7702030. Playback ID is 6790172, followed by the pound key. This does conclude today's conference call. You may now disconnect.