NACCO Industries — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated revenue for the three months ended September 30, 2026, was $80.494 million, an 11% increase from $72.310 million in the second quarter and a 5% increase from $76.614 million in the prior-year quarter.
• Gross profit was $11.783 million, an 18% year-over-year increase and a 22% sequential decrease from $15.202 million.
• Operating profit was $9.257 million, a 37% year-over-year increase from $6.777 million, including $3.375 million in solar curtailment costs.
• Income before taxes was $12.536 million, a 110% year-over-year increase from $5.957 million, driven by a $4.5 million gain on the settlement of excess pension funding liabilities.
• Net income was $10.908 million, an 18% decrease from $13.254 million in the prior-year quarter due to higher income tax expense.
• Diluted earnings per share were $1.44, down from $1.78 in the prior-year quarter.
• Consolidated Adjusted EBITDA was $20.374 million, a 63% year-over-year increase and a 28% sequential increase from $15.908 million.
• Outstanding debt was $124.8 million as of September 30, 2026.
• Total liquidity was $115.2 million, consisting of $56.5 million in cash and $58.7 million available under the revolving credit facility.

Guidance and Future Outlook:

• Full-year 2026 consolidated operating profit is expected to be comparable to the prior year, including approximately $15 million of solar-related impairment and curtailment costs.
• Full-year consolidated Adjusted EBITDA is expected to show a substantial year-over-year increase, excluding solar impairment charges and a $7.8 million pension settlement charge recorded in Q4 2025.
• Income before income taxes and net income are expected to increase year-over-year for the full year 2026.
• Fourth-quarter 2026 net income is expected to increase year-over-year, primarily due to the absence of the pension settlement charge.
• Fourth-quarter 2026 consolidated operating profit and Adjusted EBITDA could be lower than the prior-year quarter depending on the timing of solar project curtailment costs.
• Full-year 2026 Utility Coal Mining operating profit is expected to increase over 2025, though fourth-quarter results are expected to be lower due to reduced customer demand and higher diesel fuel costs.
• Earnings at unconsolidated mining operations are expected to decline in the fourth quarter due to Sabine Mining Company's owner assuming reclamation activities effective October 1, 2026.
• Overall customer demand for coal is expected to remain consistent with 2026 in 2027, with profitability expected to improve.
• Full-year 2026 Contract Mining operating profit and Segment Adjusted EBITDA are anticipated to show substantial year-over-year growth, with continued growth expected in 2027.
• Fourth-quarter and full-year 2026 operating profit and Segment Adjusted EBITDA at Minerals and Royalties are expected to decline from prior-year periods, primarily due to lower anticipated royalty income.
• 2027 operating profit at Minerals and Royalties is expected to moderate from 2026 levels.
• Mitigation Resources is expected to generate a profit in the fourth quarter of 2026 and in 2027, with results expected to become more consistent and improving over time.
• Capital investment is anticipated to be up to $32 million for the remainder of 2026 and up to $56 million in 2027.
• Cash flow before financing is projected to remain a use of cash in 2026 but is expected to improve modestly over 2025, with further improvement expected in 2027.

Business Segments and Product Lines:

• Utility Coal Mining: Operating profit increased to $6.607 million from $4.987 million year-over-year, driven by improved contractual pricing and lower inventory impairment charges at Mississippi Lignite Mining Company. Total coal deliveries were 6,216 thousand tons.
• Contract Mining: Operating profit increased to $4.912 million from $1.929 million year-over-year. Revenues excluding reimbursable costs increased 75% year-over-year to $22.151 million, driven by the ramp-up of a new dragline services contract in Palm Beach County, Florida. A new limestone quarry contract in Arizona commenced operations in early October 2026. Sawtooth Mining provides services for the Thacker Pass lithium processing facility under a 20-year agreement, with mechanical completion targeted for late 2027.
• Minerals and Royalties: Operating profit was $7.675 million, comparable to the prior year. Earnings were supported by an increase in equity earnings from an investment in Eiger Resources, which offset lower royalty revenues driven by reduced natural gas production and pricing.
• Unallocated: Reported an operating loss of $9.937 million, including $3.375 million in solar curtailment costs. Revenues increased to $5.341 million from $2.036 million year-over-year due to higher restoration, reclamation, and credit sales at Mitigation Resources.

Market and Competitive Landscape:

• Recent policy developments, including the re-establishment of the National Coal Council, highlight coal's strategic role in grid reliability and national security.
• The company leverages a portfolio of long-term contracts and relationships to create a "layering effect" for compounding returns.
• The company maintains a conservative approach to capital structure and operating discipline to minimize risk.

Risks and Challenges:

• Solar development projects face changing market conditions, regulatory developments, and project-specific challenges, leading to curtailment costs and ongoing evaluation of strategic alternatives.
• Future costs associated with solar projects may be incurred in the fourth quarter of 2026 and future years, depending on discussions with counterparties.
• Potential risks include significant reductions in customer demand, customer liquidity constraints, changes in hydrocarbon prices, contract terminations, and regulatory changes affecting fossil fuels.

Management Commentary and Tone:

• J.C. Butler, President and CEO, stated that results reflect continued progress in strengthening business performance, with strong improvements in operating profitability and Adjusted EBITDA despite solar curtailment costs.
• Management expressed confidence in delivering compounding returns and expanding investor value over the long term, citing the durability of the business model and the "layering effect" of new contracts.
• The company remains steadfastly committed to generating increasing cash flows and returning value to shareholders through reinvestment, share repurchases, or dividends.

Other Key Points:

• The company recognized a $4.5 million gain associated with the settlement of an excess pension funding liability in the third quarter.
• A $7.8 million pension settlement charge was recorded in the fourth quarter of 2025.
• The company expects to incur additional costs in the fourth quarter of 2026 related to solar project curtailment.
• Sawtooth Mining's Thacker Pass project is expected to contribute increased income and long-term cash flows as lithium production commences and ramps up to full production through 2028.
• The 2027 capital investment estimate includes approximately $16 million related to Sawtooth that will be recovered from the customer over a five-year period.
• A conference call to discuss results was scheduled for November 5, 2026, at 8:30 a.m. Eastern Time.