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 NACo Industries 2025 Fourth Quarter and Full Year 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. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. It is now my pleasure to turn the call over to Christina Kometko, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us for today's 2025 Fourth Quarter and Full Year Earnings Call. I'm Christina Kometko, and I'm responsible for Investor Relations at NACO. I'm joined today by NACO's President and CEO, J.C. Butler, and Senior Vice President and Controller, Elizabeth Lovman. Yesterday evening, we announced our fourth quarter and four-year results and filed our 10-K with the SEC. Both documents are on our website for your reference. We'll refer today to several non-GAAP metrics to give you a clearer picture of how we think about our business. Reconciliations to GAAP can also be found on our website. Before beginning our discussion, Let me remind you that today's remarks will include forward-looking statements. As always, actual outcomes may differ materially due to various risks and uncertainties, which are described in our earnings release, 10-K, and other filings. We undertake no obligation to update these statements. With those quick notes out of the way, I'll turn the call over to JC for his opening remarks. JC.

Thanks, Christy, and good morning, everyone. Before I begin, I'd like to take a moment to discuss an incident that happened at one of our Florida operations. The safety and well-being of our employees has always been a cornerstone of our company's values. Despite this focus, a tragic incident in December resulted in the loss of two employees. This loss deeply affected us and we extend our heartfelt condolences to the family, friends, and colleagues of these two individuals. This is a solemn reminder of the importance we place on protecting the well-being of our people every day. In the aftermath of this tragedy, we are actively reinforcing our safety expectations across the organization. Our employees are the nucleus of our success, and their safety will always come before all else. I'll now discuss our operating performance. We delivered a strong close to 2025. Our fourth quarter operating profit rose 95% over last year and almost 12% sequentially. All three of our reportable segments reported improved year-over-year results, led by a significant increase in the utility coal mining segment. Overall, we continue to build upon the improving profitability and growth we experienced in the third quarter. highlighting a second half that overcame operational challenges experienced during the first half of the year. We disclosed over the past several quarters that we were terminating our pension plan during the fourth quarter, and I'm happy to report that we have now successfully settled all future pension obligations. As a result of completing this process, we recognized an after-tax termination charge of $6 million. Discharge and an increase in tax expense, which Liz will explain in more detail, contributed to our reported fourth quarter net loss of $3.8 million. These transactional anomalies aside, I feel good about our underlying operating results, which contributed to the 59% year over year and 14% sequential increases in adjusted EBITDA. I believe these results represent a business delivering on its potential. Our utility coal mining segment, which features long-term mining contracts, remains the foundation of our business. I'm pleased to say that our utility coal mining segment reported a gross profit this quarter after a number of quarters of losses. For more than a year, I've discussed Mississippi Lignite's unfavorable contract mechanics that resulted in a lower per ton sales price that unfavorably affected results. The team at Mississippi Lignite Mining Company has worked diligently to mine efficiently and control costs. In this quarter, the mine produced and sold more tons, and as a result, benefited from higher production efficiency and a lower cost per ton sold. Production also outpaced deliveries in the period, leading to certain production costs to be capitalized into inventory. These factors drove the current quarter gross profit compared with the prior year loss when results were affected by a significant inventory write-down. I'd like to be able to say the results at Mississippi Lignite Mining Company are moving in the right direction now, especially with an anticipated increase in the contractually determined price per ton. However, the customer's power plant began a maintenance outage in mid-February, which is affecting first quarter demand. The power plant is expected to resume operations in mid-March. We are expecting year-over-year improvements at Mississippi Lignite Mining Company in 2026. but any delay or further changes in demand or dispatch or any reduced power plant mechanical availability could alter our expectations. Our contract mining segment continues to benefit from ongoing progress on operational and strategic initiatives designed to enhance profitability. Improved margins driven largely by contracts executed in recent years and other growth initiatives led to an increase in this segment's year-over-year operating performance. This segment remains our growth platform for mining. Through continued geographic and mineral expansion, we are building a growing portfolio of long-term contracts that strengthen the foundation for sustained profitability. As I mentioned during our Q3 earnings call, we secured a multi-year dragline services contract as part of a U.S. Army Corps of Engineers dam construction project in Palm Beach County, Florida. This project is already starting to ramp up. We're excited about this opportunity as it advances our growth into large-scale infrastructure projects. This project also provides an opportunity to showcase the efficiency and environmental advantages of the new electric drive M-TEC drag lines. We also anticipate commencing operations in a new limestone quarry in Arizona in 2026. Turning to minerals and royalties, this segment grew year over year. Royalties from our legacy natural gas assets benefited from higher prices and production, more than offsetting the impact of lower oil prices and production. The Catapult team continues to actively pursue additional investment opportunities to support future growth in earnings. At Mitigation Resources, we expect increasing profitability over time from the sale of mitigation credits and as reclamation and restoration services expand. While performance is currently variable due to permit and project timing, mitigation resources is expected to generate a profit in the second half of 2026 and move toward more consistent results over time as the business expands. We continue to invest in our businesses to drive future growth. Again in 2026, we anticipate making significant capital investments. The majority of these planned expenditures relate to business development opportunities, and we will only make those investments if the projects meet our strict investment criteria. Overall, I continue to believe we're well positioned for meaningful growth. We are entering 2026 with clear opportunities to build on our 2025 momentum as we execute our growth strategies and create long-term values for our shareholders. Our approach is rooted in long-term contracts and investments, which continue to deliver strong earnings and steady cash flow for compounding annuity-like returns. We executed on this strategy over the past decade and momentum continues to build. I remain confident in our businesses and in our ability to deliver strong 2026 results and continued progress in the years to come. Before I turn the call over to Liz, I'd like to say thank you to all of our employees. Our team delivered strong 2025 fourth quarter and full year earnings, and their hard work and commitment will enable us to continue to deliver in the future. We have an incredibly strong team across the company, and I am proud of the work that they do. With that, I'll turn the call over to Liz to provide a more detailed view of our financial results and outlook. Liz?