Nacco Industries Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 31 August 2026: press release. The quarter’s numbers.

Read the filing

Key takeaways

• Gross profit rose 123 percent: Gross profit reached $15.2 million, up 123 percent, on a 6 percent revenue increase to $72.3 million.
• Solar impairment produced operating loss: Operating loss was $2.3 million, including $12.0 million of asset impairment charges on solar projects in ReGen Resources.
• Net loss and per-share result: Net loss was $1.0 million, or $0.13 per diluted share, compared with net income of $3.3 million, or $0.44 per share, a year earlier.
• Contract Mining revenue up 34 percent: Contract Mining revenue, net of reimbursed costs, rose to $16.4 million, and operating profit reached $3.8 million, against $1.0 million.
• Second-half operating profit to fall: Lower second-half operating profit is mainly attributed to possible further solar curtailment costs and expected inventory write-downs at Mississippi Lignite.
• Liquidity of $114.6 million: At June 30, 2026, debt was $120.1 million and total liquidity $114.6 million, made up of $45.5 million cash and $69.1 million revolver availability.
• Free cash flow directed to debt reduction: Free cash flow is being prioritized to enhance liquidity and reduce debt, while funding high-return investments.

“NACCO delivered significant year-over-year improvement in both gross profit and Adjusted EBITDA”

J.C. Butler, NACCO President and Chief Executive Officer

Guidance

What changed from last quarter

• Guidance withdrawn: Solar development revenue was removed from expectations after market and regulatory changes reduced the expected return. Source
• Guidance lowered: Expectations for Mississippi Lignite recovery to historical operating levels moved to more cautious, citing plant availability and price mechanics. Source
• Guidance lowered: Slower regulatory approvals moved mitigation credit sales into later years, deferring revenue rather than eliminating it. Source
• New: Capital allocation was rebalanced from heavy growth deployment toward strengthening the balance sheet and a more selective set of investments. Source
• New: New end markets were identified, and the dragline and Arizona quarry contracts have commenced. Source

Quarter results and headline figures

• Gross profit rose 123 percent: Gross profit reached $15.2 million, up 123 percent, on a 6 percent revenue increase to $72.3 million.
• Solar impairment produced operating loss: Operating loss was $2.3 million, including $12.0 million of asset impairment charges on solar projects in ReGen Resources.
• Net loss and per-share result: Net loss was $1.0 million, or $0.13 per diluted share, compared with net income of $3.3 million, or $0.44 per share, a year earlier.
• Quarterly Adjusted EBITDA up year over year: Consolidated Adjusted EBITDA was $15.9 million, up 72 percent from a year earlier and down 3 percent from the first quarter of 2026.
• Trailing twelve-month Adjusted EBITDA higher: Trailing twelve-month Consolidated Adjusted EBITDA was $59,144 thousand, against $56,767 thousand a year earlier. Source

Utility coal and contract mining

• Utility coal profit rose on lower revenue: Utility Coal Mining revenue fell 25 percent to $21.5 million, while operating profit rose to $6.3 million from $1.2 million.
• Mississippi plant issues cut deliveries: Consolidated tons delivered fell because of operational issues at the customer's power plant, while crews worked planned reclamation during outages.
• Unconsolidated mines earned more: Earnings of unconsolidated operations rose on higher customer requirements at Coteau and Coyote Creek.
• Contract Mining revenue up 34 percent: Contract Mining revenue, net of reimbursed costs, rose to $16.4 million, and operating profit reached $3.8 million, against $1.0 million.
• Dragline contract began ramping: A new dragline services contract began and ramped up in the quarter, as part of continued expansion of the Contract Mining business model.

“While consolidated results included asset impairment charges related to solar projects, underlying momentum across our segments during the first half of 2026 remained strong.”

J.C. Butler, NACCO President and Chief Executive Officer

Minerals, royalties and unallocated

• Royalty revenue up 46 percent: Minerals and Royalties revenue reached $10.6 million, with royalty revenue up 46 percent on higher oil prices and a prior-period pricing adjustment.
• Equity investment earnings came in lower: Earnings from an equity investment, which the release places in Eiger Resources, were below expectations and partly offset the revenue growth.
• Solar impairments widened Unallocated loss: The Unallocated operating loss rose to $19.1 million on $12 million of solar impairments at ReGen Resources; excluding them, it improved moderately.
• Mitigation restoration revenue increased: Unallocated revenue rose on higher restoration and reclamation service revenue at Mitigation Resources of North America.

Costs, impairments and margins

• Solar alternatives under review: In early July the company began a range of alternatives for solar investments, including asset sales and contract amendments, to reduce exposure.
• Second-half operating profit to fall: Lower second-half operating profit is mainly attributed to possible further solar curtailment costs and expected inventory write-downs at Mississippi Lignite.
• Mississippi Lignite third-quarter decline: Mississippi Lignite results are expected to fall from the first half, particularly in the third quarter, as demand, diesel costs and an inventory charge weigh.
• Higher contract price offsets demand: A higher contractually determined per-ton sales price is expected to mitigate lower Mississippi Lignite demand.
• Prior-year pension charge excluded: Consolidated Adjusted EBITDA excludes the solar impairment charges and a $7.8 million pre-tax pension settlement charge recorded in 2025.

“We expect operating performance to moderate in the second half, but the growth opportunities underway and our disciplined capital criteria give us confidence in our trajectory as we move into 2027.”

J.C. Butler, NACCO President and Chief Executive Officer

Demand and customers

• Coal demand expected to be comparable: Full-year Utility Coal customer demand is expected to be comparable, with second-half demand declining modestly if the plant operates as planned.
• Contract Mining demand dips in fourth quarter: Second-half Contract Mining demand is projected to decline, mainly in the fourth quarter, from strong first-half levels.
• Results tied to power plant performance: Mississippi Lignite results vary by quarter because they depend on the customer's power plant performance and TVA dispatch. Source
• Plant commitment runs through 2032: MLMC and the Red Hills Power Plant are committed through April 2032, with the plant supplying the Tennessee Valley Authority. Source

Capital, cash and liquidity

• Liquidity of $114.6 million: At June 30, 2026, debt was $120.1 million and total liquidity $114.6 million, made up of $45.5 million cash and $69.1 million revolver availability.
• Free cash flow directed to debt reduction: Free cash flow is being prioritized to enhance liquidity and reduce debt, while funding high-return investments.
• Cash flow before financing negative in 2026: Cash flow before financing is projected to remain a use of cash in 2026, reflecting planned investment activity.
• Dividend raised 4 percent for 2026: The company raised its dividend 4 percent in 2026, and has paid dividends since 1956, about 33 percent higher over five years. Source

Strategy and portfolio

• Long-term projects compound recurring cash flow: Each year's long-term projects add layers of recurring cash flow, and the company says it has added over $165 million of NPV since 2019. Source
• Underwriting standards described as unchanged: The presentation lists the compounding effect and underwriting standards and return hurdles among elements it says have not changed. Source
• Minerals investments screened closely: The company describes a disciplined approach, having closed on less than 1 percent of the minerals opportunities it screened. Source
• Contract Mining project criteria set: New projects are assessed against criteria covering long-term contracts, investments, minimal maintenance capital and fee-based services. Source

Policy, people and safety

• National Coal Council re-established: Management cites the re-established National Coal Council as evidence of coal's strategic role in grid reliability and national security.
• Baseload demand growth cited: Management says growing demand for reliable energy reinforces the importance of dependable baseload generation.
• Safety named highest priority: The company calls safety its highest priority and reports about $1 million of community donations in 2025. Source

Coming up, as management said on 31 August 2026

• Sabine reclamation ends September 30: Reclamation services at the Sabine Mining Company are set to conclude, reducing earnings at the unconsolidated mining operations.
• New deals and Arizona quarry in 2027: Management cites Arizona quarry operations and potential new deals in the pipeline as sources of Contract Mining growth.
• Thacker Pass ramp targeted for 2028: Sawtooth supplies lithium-bearing ore to the Thacker Pass facility, with full production targeted for 2028.
• Minerals profit to moderate in 2027: Minerals and Royalties is expected to keep generating earnings and cash flow in 2027, with operating profit moderating on production declines.

Figures management reported

Risks management discussed

• Financial: Further solar curtailment costs could be incurred, depending on the outcome of the monetization activities.
• Operational: Mississippi Lignite results vary by quarter because they depend on the customer's power plant performance. Source
• External: Diesel fuel costs are expected to rise in the third quarter and are cited as a driver of lower Mississippi Lignite results.
• External: Commodity prices and production assumptions, including the Middle East conflict, could change current expectations for Minerals and Royalties.
• Regulatory: Permit delays have deferred mitigation credit releases, and the company is concentrating capital on larger funded banks. Source
• Demand: Contract Mining customer demand is projected to decline in the second half, mainly in the fourth quarter.
• Financial: Earnings from an equity investment in Minerals and Royalties came in below what was anticipated.

Earlier plans management reported on

• Not stated: Texas reclamation work was planned to end in the third quarter of 2026; the presentation describes it as substantially complete. Source
• Delayed: Mitigation credit sales were pushed into later years by slower regulatory approvals, deferring the revenue. Source
• Not stated: Mitigation Resources is expected to generate a profit in 2027, with variable performance due to permit and project timing.
• Not stated: The earlier plan was to start operations at the Arizona quarry in fourth-quarter 2026; the presentation says those contracts have commenced.

Other quarters

• Q3 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 results
• Q3 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.