NACCO Industries (NYSE: NC) hit by $12M solar impairment and MLMC risks
NACCO Industries, Inc. reported second-quarter 2026 revenues of $72.3 million, up slightly year over year, but recorded a net loss of $0.9 million or $(0.13) per diluted share, driven mainly by $12.0 million of impairment charges on solar development projects within ReGen Resources.
For the first six months of 2026, revenue was $135.1 million and net income was $7.9 million, modestly below 2025. Operating profit rose sharply in Utility Coal Mining, Contract Mining and Minerals and Royalties, but these gains were offset by the solar impairments and higher unallocated costs. Operating cash flow improved to $20.7 million, while capital expenditures and mineral acquisitions reached $41.9 million, largely for draglines and Mitigation Resources land, funded partly by increased revolver borrowings of $95.0 million.
Management highlights customer risk at MLMC, where the Red Hills Power Plant’s operational issues reduced coal demand and left $7.2 million of past‑due receivables as of June 30, 2026, with expected inventory write‑downs. The company expects 2026 Consolidated Adjusted EBITDA to exceed 2025, but full‑year operating profit and net income to be significantly lower due to the solar impairment, potential additional solar curtailment costs of about $7 million, and MLMC-related charges.
Positive
- $20.7 million operating cash flow in 1H 2026 versus a prior-year use of cash, reflecting stronger working-capital management and underlying operations.
- Contract Mining operating profit rose to $7.8 million in 1H 2026 from $3.0 million, supported by new dragline contracts and improved quarry margins.
- Utility Coal Mining operating profit increased to $13.7 million in 1H 2026 from $5.0 million, aided by higher pricing and lower costs at MLMC.
- Management expects 2026 Consolidated Adjusted EBITDA to improve year over year, excluding solar impairments and the prior-year pension settlement.
Negative
- A $12.0 million impairment on solar development projects in 2Q 2026 drove the quarter’s net loss.
- MLMC had $12.5 million of receivables outstanding at June 30, 2026, including $7.2 million past due, after its customer delayed payments.
- Management expects 2026 operating profit and net income to be significantly lower than 2025 due to solar charges and anticipated MLMC inventory write-downs.
- If planned monetization efforts fail, solar project curtailment costs could approximate an additional $7 million beyond the impairment already recorded.
Key Figures
Q2 2026 Revenue: $72,310 thousand
Q2 2026 Net (Loss) Income: $(963) thousand
1H 2026 Net Income: $7,873 thousand
+5 more
8 metrics
Q2 2026 Revenue
$72,310 thousand
Consolidated revenues for the three months ended June 30, 2026
Q2 2026 Net (Loss) Income
$(963) thousand
Net loss for the three months ended June 30, 2026
1H 2026 Net Income
$7,873 thousand
Net income for the six months ended June 30, 2026
Solar Impairment Charges
$11,984 thousand
Asset impairment charges in 2Q 2026 related to solar development projects
Operating Cash Flow 1H 2026
$20,673 thousand
Net cash provided by operating activities for the six months ended June 30, 2026
Revolver Borrowings
$95,000 thousand
Borrowings outstanding under the $200.0 million credit facility at June 30, 2026
Past-Due MLMC Receivables
$7,200 thousand
Portion of MLMC’s $12.5 million trade receivables that was past due at June 30, 2026
Debt to Total Capitalization
22%
Consolidated debt to total capitalization at June 30, 2026
Key Terms
Variable interest entity, Units-of-production method, Mitigation banking, Overriding royalty interest, +1 more
5 terms
Variable interest entity financial
"Coteau, Coyote Creek, Falkirk and Sabine each meet the definition of a variable interest entity (VIE)."
A variable interest entity (VIE) is a company structure where one party controls another company’s operations and economic outcomes through contracts or special arrangements instead of owning a majority of its voting shares. For investors, VIEs matter because the controlling party’s financial results, debts and risks can appear in the controller’s reports even though ownership looks separate, so understanding VIEs helps assess true exposure, governance limits and transparency—like spotting a puppet controlled by strings rather than direct ownership.
Units-of-production method financial
"the Contract Mining segment changed its depreciation method ... to the units-of-production method."
Mitigation banking technical
"Mitigation Resources also generates and sells stream and wetland mitigation credits (known as mitigation banking)."
Mitigation banking is a system where land is restored, created, or preserved to compensate for environmental damage elsewhere, generating saleable credits that developers buy to meet legal requirements. Think of it like restoring a public park and selling admission tickets to builders who must offset the harm their projects cause. Investors care because it creates regulated, long-term revenue streams and asset values tied to regulatory demand and land management performance.
Overriding royalty interest financial
"Overriding Royalty Interest (ORRI). ORRIs are created by carving out the right to receive royalties"
An overriding royalty interest is a contractual right to receive a fixed percentage of production revenue from an oil, gas, or mineral lease without paying operating or development costs. Think of it like owning a slice of a bakery’s daily sales — you get a steady cut of revenue but don’t own the oven or pay the bills. For investors, it means predictable cash flow exposure to commodity prices and production levels with lower operational risk but limited upside from cost reductions.
Asset retirement obligations financial
"Asset retirement obligations | 34,544 | 39,516 Retirement benefit plans"
Asset retirement obligations are a company’s recorded promise to pay for dismantling, cleaning up, or restoring property when a long-lived asset is retired — for example decommissioning a plant or removing equipment. Companies estimate the future cleanup cost today and book it as a liability (and add the cost to the asset), so it affects the balance sheet, reported profits over time, and future cash needs; investors watch it like a planned bill that can reduce cash available for returns.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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FAQ
How did NACCO (NC) perform financially in the second quarter of 2026?
NACCO posted $72.3 million in revenue and a net loss of $0.9 million or $(0.13) per diluted share in 2Q 2026. Results were heavily impacted by a $12.0 million impairment on solar development projects within ReGen Resources.
What are the key risks at MLMC highlighted in NACCO (NC)’s 10-Q?
MLMC’s customer experienced operational issues at the Red Hills Power Plant, reducing coal demand and delaying payments. As of June 30, 2026, MLMC had $12.5 million of receivables outstanding, including $7.2 million past due, and management anticipates potential inventory impairment charges.
How strong is NACCO (NC)’s liquidity and debt position as of June 30, 2026?
NACCO held $45.5 million in cash and had $95.0 million outstanding on a $200.0 million revolver, with $69.1 million of excess availability. Debt to total capitalization was 22%, and the company was in compliance with all financial covenants.
What capital investments did NACCO (NC) make in the first half of 2026?
Capital expenditures and mineral-interest acquisitions totaled $41.9 million in 1H 2026, focused on draglines and other mining equipment in Contract Mining and land at Mitigation Resources. Management plans up to $35 million of additional 2026 spending, subject to project returns.
How did NACCO (NC)’s operating segments perform in 1H 2026?
Utility Coal Mining operating profit rose to $13.7 million, Contract Mining to $7.8 million, and Minerals and Royalties to $14.5 million in 1H 2026. These gains were offset at the consolidated level by ReGen’s solar impairments recorded in Unallocated Items.
What guidance did NACCO (NC) provide for full-year 2026 results?
Management expects 2026 Consolidated Adjusted EBITDA to exceed 2025, but operating profit and net income to be significantly lower due to solar project impairment and potential curtailment costs, plus expected inventory write-downs at MLMC and the impact of its customer’s payment delays.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________________________________________________________________________________________________________________________________________________________________________________________
FORM 10-Q
| (Mark One) | |||||||||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
| For the quarterly period ended | |||||||||||
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to | ||||||||
Commission file number 1-9172
Securities registered pursuant to Section 12(b) of the Act
| (Exact name of registrant as specified in its charter) | |||||||||||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||||||||
| (Address of principal executive offices) | (Zip code) | ||||||||||||||||||||||
| (Registrant's telephone number, including area code) | |||||||||||||||||||||||
| N/A | |||||||||||||||||||||||
| (Former name, former address and former fiscal year, if changed since last report) | |||||||||||||||||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
| NYSE Texas | ||||||||||||||
Class B Common Stock is not publicly listed for trade on any exchange or market system; however, Class B Common Stock is convertible into Class A Common Stock on a share-for-share basis.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act
| Large accelerated filer | ☐ | ☑ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No þ
Number of shares of Class A Common Stock outstanding at July 31, 2026: 5,984,875
Number of shares of Class B Common Stock outstanding at July 31, 2026: 1,561,820
NACCO INDUSTRIES, INC.
TABLE OF CONTENTS
| Page Number | |||||||||||||||||
Part I. | FINANCIAL INFORMATION | ||||||||||||||||
Item 1 | Financial Statements | ||||||||||||||||
Unaudited Condensed Consolidated Balance Sheets | 2 | ||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | 3 | ||||||||||||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income | 4 | ||||||||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows | 5 | ||||||||||||||||
Unaudited Condensed Consolidated Statements of Changes in Equity | 6 | ||||||||||||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | ||||||||||||||||
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 18 | |||||||||||||||
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 29 | |||||||||||||||
Item 4 | Controls and Procedures | 29 | |||||||||||||||
Part II. | OTHER INFORMATION | ||||||||||||||||
Item 1 | Legal Proceedings | 30 | |||||||||||||||
Item 1A | Risk Factors | 30 | |||||||||||||||
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 31 | |||||||||||||||
Item 3 | Defaults Upon Senior Securities | 31 | |||||||||||||||
Item 4 | Mine Safety Disclosures | 31 | |||||||||||||||
Item 5 | Other Information | 31 | |||||||||||||||
Item 6 | Exhibits | 32 | |||||||||||||||
Exhibit Index | 32 | ||||||||||||||||
Signatures | 33 | ||||||||||||||||
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Part I
FINANCIAL INFORMATION
Item 1. Financial Statements
NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| JUNE 30 2026 | DECEMBER 31 2025 | ||||||||||
| (In thousands, except share data) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Trade accounts receivable | |||||||||||
| Oil and natural gas receivables | |||||||||||
| Accounts receivable from affiliates | |||||||||||
| Prepaid profit sharing | |||||||||||
| Inventories | |||||||||||
| Assets held for sale | |||||||||||
| Prepaid insurance | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Intangibles, net | |||||||||||
| Mining supplies inventory | |||||||||||
| Deferred income taxes | |||||||||||
| Investments in unconsolidated subsidiaries | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Equity securities | |||||||||||
Equity method investment in Eiger Resources | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accounts payable to affiliates | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Asset retirement obligations | |||||||||||
| Accrued payroll | |||||||||||
| Excess funding liability | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term revolving credit agreements | |||||||||||
| Operating lease liabilities | |||||||||||
| Asset retirement obligations | |||||||||||
| Retirement benefit plans | |||||||||||
| Deferred revenue | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders' equity | |||||||||||
| Common stock: | |||||||||||
Class A, par value $ | |||||||||||
Class B, par value $ | |||||||||||
| Capital in excess of par value | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See notes to Unaudited Condensed Consolidated Financial Statements.
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NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||||||||||
| JUNE 30 | JUNE 30 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Earnings of unconsolidated operations | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Loss (gain) on sale of assets | ( | ( | |||||||||||||||||||||
| Asset impairment charges | |||||||||||||||||||||||
| Operating (loss) profit | ( | ( | |||||||||||||||||||||
| Other expense (income) | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Interest income | ( | ( | ( | ( | |||||||||||||||||||
| Closed mine obligations | |||||||||||||||||||||||
| (Gain) loss on equity securities | ( | ( | ( | ||||||||||||||||||||
| Gain on settlement of excess funding liability | ( | ( | |||||||||||||||||||||
| Other, net | |||||||||||||||||||||||
| ( | |||||||||||||||||||||||
| (Loss) income before income tax benefit | ( | ||||||||||||||||||||||
| Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
| Net (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
| (Loss) earnings per share: | |||||||||||||||||||||||
| Basic (loss) earnings per share | $ | ( | $ | $ | $ | ||||||||||||||||||
| Diluted (loss) earnings per share | $ | ( | $ | $ | $ | ||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Diluted weighted average shares outstanding | |||||||||||||||||||||||
See notes to Unaudited Condensed Consolidated Financial Statements.
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NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||||||||||
| JUNE 30 | JUNE 30 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Net (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
Reclassification of pension and postretirement adjustments into earnings, net of $ | |||||||||||||||||||||||
| Total other comprehensive income | |||||||||||||||||||||||
| Comprehensive (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
See notes to Unaudited Condensed Consolidated Financial Statements.
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NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| SIX MONTHS ENDED | |||||||||||
| JUNE 30 | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
| Operating activities | |||||||||||
| Net cash provided by (used for) operating activities | $ | $ | ( | ||||||||
| Investing activities | |||||||||||
| Expenditures for property, plant and equipment and acquisition of mineral interests | ( | ( | |||||||||
| Proceeds from the sale of assets | |||||||||||
| Contributions to equity method investment | ( | ||||||||||
| Return of equity method investments | |||||||||||
| Other | ( | ||||||||||
| Net cash used for investing activities | ( | ( | |||||||||
| Financing activities | |||||||||||
| Net additions (reductions) to revolving credit agreement | ( | ||||||||||
| Reductions to long-term debt | ( | ( | |||||||||
| Additions to note payable to affiliate | |||||||||||
| Cash dividends paid | ( | ( | |||||||||
| Purchase of treasury shares | ( | ||||||||||
| Net cash provided by (used for) financing activities | ( | ||||||||||
| Cash and cash equivalents | |||||||||||
| Total decrease for the period | ( | ( | |||||||||
| Balance at the beginning of the period | |||||||||||
| Balance at the end of the period | $ | $ | |||||||||
See notes to Unaudited Condensed Consolidated Financial Statements.
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NACCO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Class A Common Stock | Class B Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||
| Purchase of treasury shares | ( | — | — | ( | — | ( | ||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||
Cash dividends on Class A and Class B common stock: $ | — | — | — | ( | — | ( | ||||||||||||||||||||
| Reclassification adjustment to net income, net of tax | — | — | — | — | ||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | |||||||||||||||||||||||
| Conversion of Class B to Class A shares | ( | — | — | — | ||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||
Cash dividends on Class A and Class B common stock: $ | — | — | — | ( | — | ( | ||||||||||||||||||||
Reclassification adjustment to net income, net of tax | — | — | — | — | ||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||
Cash dividends on Class A and Class B common stock: $ | — | — | — | ( | — | ( | ||||||||||||||||||||
| Reclassification adjustment to net income, net of tax | — | — | — | — | ||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | |||||||||||||||||||||||
| Conversion of Class B to Class A shares | ( | |||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | ||||||||||||||||||||
Cash dividends on Class A and Class B common stock: $ | — | — | — | ( | — | ( | ||||||||||||||||||||
Reclassification adjustment to net income, net of tax | — | — | — | — | ||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
See notes to Unaudited Condensed Consolidated Financial Statements.
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NACCO INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026
(In thousands, except as noted and per share amounts)
NOTE 1—Nature of Operations and Basis of Presentation
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of NACCO Industries, Inc.® (NACCO) and its wholly owned subsidiary, NACCO Natural Resources Corporation® (NACCO Natural Resources and with NACCO collectively, the Company, we, our or us). NACCO Natural Resources brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through our robust portfolio of businesses. We operate under three
In addition to the reportable segments discussed above, we also operate other businesses that are not currently reported as separate segments. These businesses complement our existing operations and support our long-term growth strategic objectives. Mitigation Resources of North America® (Mitigation Resources) provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. ReGen Resources is pursuing the advancement and monetization of power generation projects.
We also have items not directly attributable to an operating segment. These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, the financial results of developing businesses and Bellaire Corporation (Bellaire). Bellaire manages long-term liabilities related to former Eastern U.S. underground mining activities.
See Note 8 for further discussion of segment reporting. Our reportable segments are further described below:
Utility Coal Mining Segment
The Utility Coal Mining segment operates surface coal mines under exclusive, long-term contracts to supply 100 % of the fuel requirements for adjacent power plants and a synfuels plant. Each mine is fully integrated with the operation of these facilities.
During the six months ended June 30, 2026, the Utility Coal Mining segment's operating coal mines were: The Coteau Properties Company (Coteau), Coyote Creek Mining Company, LLC (Coyote Creek), The Falkirk Mining Company (Falkirk) and Mississippi Lignite Mining Company (MLMC). Coteau, Falkirk and Coyote Creek are in North Dakota and MLMC is in Mississippi. Each of these mines produce lignite coal. MLMC’s coal supply contract contains a take or pay provision; however, the customer's financial condition has adversely affected the collectability of such claims, and there can be no assurance that such amounts will be collected in the future. All other coal supply contracts are requirements contracts. Certain coal supply contracts can be terminated early, which would result in a reduction to future earnings.
The MLMC contract is the only coal supply contract in which we are responsible for all operating costs, capital requirements and final mine reclamation; therefore, MLMC is consolidated within our financial statements. MLMC sells coal to its customer at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S. inflation rates and includes adjustments for coal quality and certain reimbursable costs. Profitability at MLMC is affected by customer demand for coal, changes in the contractually determined sales price and actual costs incurred. MLMC's customer operates the Red Hills Power Plant, which supplies electricity to the Tennessee Valley Authority (TVA) under a long-term power purchase agreement. MLMC’s contract with its customer runs through April 1, 2032. Current mine area reserves are sufficient to meet contractual requirements through the 2032 contract term. TVA’s power portfolio includes coal, nuclear, hydroelectric, natural gas and renewables. The decision regarding which power plants to dispatch is determined by TVA. As a significant portion of MLMC’s costs are fixed, reduction in dispatch, reduced mechanical availability or other operational issues at the Red Hills Power Plant could adversely affect coal demand, customer liquidity and the collectability of amounts due under the contract and materially reduce operating results at MLMC.
The Sabine Mining Company (Sabine) operates the Sabine Mine in Texas. All production from Sabine was delivered to Southwestern Electric Power Company's (SWEPCo) Henry W. Pirkey Plant until its retirement in 2023. Sabine’s post-production operations primarily consist of reclamation and other land-related activities. Under the provisions of the lignite
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mining agreement, SWEPCo is required to pay an amount equal to Sabine’s operating costs plus a management fee and SWEPCo holds an option agreement to purchase Sabine, which SWEPCo exercised in 2023. As a result, SWEPCo will take direct control over reclamation activities in October 2026.
At Coteau, Coyote Creek and Falkirk, we are paid a management fee per ton of coal or heating unit (MMBtu) delivered. Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad measures of U.S. inflation. Our customers are responsible for funding all mine operating costs, including final mine reclamation, and directly or indirectly providing all of the capital required to build and operate the mine. This contract structure eliminates exposure to spot coal market price fluctuations while providing predictable income and cash flow with minimal capital investment. Other than at Coyote Creek, debt financing provided by or supported by the customers is without recourse to us. See Note 6 for further discussion of Coyote Creek's guarantees.
Coteau, Coyote Creek, Falkirk and Sabine each meet the definition of a variable interest entity (VIE). In each case, NACCO is not the primary beneficiary of the VIE as we do not exercise financial control; therefore, we do not consolidate the results of these operations within our financial statements. Instead, these contracts are accounted for as equity method investments. We regularly evaluate if there are reconsideration events which could change our conclusion as to whether these entities meet the definition of a VIE and the determination of the primary beneficiary. The income before income taxes associated with these VIEs is reported as Earnings of unconsolidated operations on the Unaudited Condensed Consolidated Statements of Operations and our investment is reported on the line Investments in unconsolidated subsidiaries in the Unaudited Condensed Consolidated Balance Sheets. The mines that meet the definition of a VIE are referred to collectively as the Unconsolidated Subsidiaries. For tax purposes, the Unconsolidated Subsidiaries are included within our consolidated U.S. tax return; therefore, the Income tax provision line on the Unaudited Condensed Consolidated Statements of Operations includes income taxes related to these entities. See Note 6 for further information on the Unconsolidated Subsidiaries.
We perform contemporaneous reclamation activities at each mine in the normal course of operations. Under all of the Unconsolidated Subsidiaries’ contracts, the customer has the obligation to fund final mine reclamation activities. Under certain contracts, the Unconsolidated Subsidiary holds the mine permit and is therefore responsible for final mine reclamation activities. To the extent the Unconsolidated Subsidiary performs such final reclamation, it is compensated for providing those services in addition to receiving reimbursement from customers for costs incurred.
Contract Mining Segment
The Contract Mining segment provides value-added contract mining and other services for producers of industrial minerals and products and other customers. The segment is a platform for our growth and diversification of mining activities outside of the thermal coal industry. Contract Mining provides contract mining services for independently owned mines, quarries and construction projects, creating value for our customers by performing the mining aspects of our customers’ operations. This allows customers to focus on their areas of expertise: materials handling and processing, product sales and distribution. As of June 30, 2026, the segment operates at quarries in Florida, Arkansas and Nebraska and is expected to begin operations at a quarry in Arizona during the fourth quarter of 2026. During the six months ended June 30, 2026, the segment began providing dragline services as part of a U.S. Army Corps of Engineers construction project in Palm Beach County, Florida.
Also, Contract Mining's subsidiary, Sawtooth, is the exclusive provider of comprehensive mining services for the Thacker Pass lithium project in Humboldt County, Nevada. Thacker Pass is owned by a joint venture between Lithium Americas Corp. and General Motors Holdings LLC. The U.S. Department of Energy holds warrants to purchase five percent non-voting, non-transferable equity in this joint venture. Thacker Pass is targeting initial lithium production in late 2027. The contract requires reimbursement for costs of mining, capital expenditures and mine closure. Sawtooth will recognize a contractually agreed upon production fee once the mine is operating. In addition to providing comprehensive mining services, Sawtooth is currently assisting with certain construction services and will transport clay tailings once lithium production commences.
Minerals and Royalties Segment
The Minerals and Royalties segment derives income primarily by leasing our royalty and mineral interests to third-party exploration and production companies, and, to a lesser extent, other mining companies, granting them the rights to explore, develop, mine, produce, market and sell gas, oil, and coal in exchange for royalty payments based on the lessees' sales of those minerals.
The Minerals and Royalties segment owns royalty interests, mineral interests, non-participating royalty interests and overriding royalty interests (collectively mineral and royalty interests).
•Royalty Interest. Royalty interests generally result when the owner of a mineral interest leases the underlying minerals to an exploration and production company pursuant to an oil and gas lease. Typically, the resulting royalty interest is a
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cost-free percentage of production revenues for minerals extracted from the acreage. A holder of royalty interests is generally not responsible for capital expenditures or lease operating expenses, but royalty interests may be calculated net of post-production expenses. Royalty interests leased to producers expire upon the expiration of the oil and gas lease and revert to the mineral owner.
•Mineral Interest. Mineral interests are perpetual rights of the owner to explore, develop, exploit, mine and/or produce any or all of the minerals lying below the surface of the property. The holder of a mineral interest has the right to lease the minerals to an exploration and production company. Upon the execution of an oil and gas lease, the lessee (the exploration and production company) becomes the working interest owner and the lessor (the mineral interest owner) has a royalty interest.
•Non-Participating Royalty Interest (NPRI). NPRI is an interest in oil and gas production which is created from the mineral estate. The NPRI is expense-free, bearing no operational costs of production. The term non-participating indicates that the interest owner does not share in the bonus, rentals from a lease, nor the right to participate in the execution of oil and gas leases. The NPRI owner does, however, typically receive royalty payments.
•Overriding Royalty Interest (ORRI). ORRIs are created by carving out the right to receive royalties from a working interest. Like royalty interests, ORRIs do not confer an obligation to make capital expenditures or pay for lease operating expenses and have limited environmental liability; however, ORRIs may be calculated net of post-production expenses, depending on how the ORRI is structured. ORRIs that are carved out of working interests are linked to the same underlying oil and gas lease that created the working interest, and therefore, such ORRIs are typically subject to expiration upon the expiration or termination of the oil and gas lease.
We may own more than one type of mineral and royalty interest in the same tract of land. For example, where we own an ORRI in a lease on the same tract of land in which we own a mineral interest, the ORRI in that tract will relate to the same gross acres as the mineral interest in that tract.
We also maintain equity investments in Eiger Resources, a private company that holds operated and non-operated working interests in oil and natural gas assets in the Kansas and the Oklahoma portion of the Hugoton basin. See Note 7 for further information on Eiger Resources.
Other Items: Effective January 1, 2026, the Company’s Contract Mining segment changed its depreciation method for certain assets (primarily draglines and other large mining equipment) from the straight-line method to the units-of-production method. The units-of-production method is based on the total tons expected to be mined by these assets over their estimated useful lives. Management believes the new method is preferable as it more closely matches the pattern in which the assets’ future economic benefits are expected to be consumed. The Company determined that the change in depreciation method is considered a change in accounting estimate affected by a change in accounting principle. Accordingly, this change was applied prospectively.
The effect of the change to the units of production method resulted in a reduction of $0.7 million and $1.6 million in depreciation expense during the three and six months ended June 30, 2026, respectively. The Contract Mining segment’s total cost basis of machinery subject to the units of production method was $103.9 million as of June 30, 2026. Straight-line depreciation continues to be applied to other classes of assets where usage is time-based rather than activity-based.
As of June 30, 2026 and December 31, 2025, we had $19.9 million and $12.8 million, respectively, classified as Assets held for sale on the Unaudited Condensed Consolidated Balance Sheets. As of June 30, 2026, Assets held for sale consists of two draglines not in use in the Contract Mining segment as well as an office building in North Dakota and land in Texas within Unallocated Items.
Accounting Standards Not Yet Adopted: In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03), which requires entities to disclose disaggregated information about certain income statement expense line items in the notes to their financial statements on an annual and interim basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently in the process of evaluating the impact of this ASU on our Financial Statements and related disclosures.
In May 2026, the FASB issued Accounting Standards Update ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) (ASU 2026-02), which establishes recognition, measurement, presentation and disclosure requirements for environmental credits and related environmental credit obligations. The guidance is effective for public business entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those
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annual reporting periods, with early adoption permitted. We are currently in the process of evaluating the impact of this ASU on our Financial Statements and related disclosures.
Basis of Presentation: These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of our financial position at June 30, 2026, the results of our operations, comprehensive income, cash flows and changes in equity for the six months ended June 30, 2026 and 2025 have been included. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.
The balance sheet at December 31, 2025 has been derived from the audited financial statements at that date but does not include all of the information or notes required by U.S. GAAP for complete financial statements.
Certain reclassifications have been made to the prior periods’ Unaudited Condensed Consolidated Financial Statements to conform to the current period's presentation.
NOTE 2—Revenue Recognition
Nature of Performance Obligations: At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promised good or service that is distinct. To identify the performance obligations, we consider all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.
Each mine or mine area has a contract with our respective customer that represents a contract under ASC 606. For our consolidated entities, our performance obligations vary by contract and consist of the following:
At MLMC, each MMBtu delivered during the production period is considered a separate performance obligation. Revenue is recognized at the point in time that control of each MMBtu of lignite transfers to the customer. Fluctuations in revenue from period to period generally result from changes in customer demand.
In the Contract Mining segment, the management service to oversee the operation of the equipment, and delivery of aggregates or other minerals is the performance obligation accounted for as a series. Performance momentarily creates an asset that the customer simultaneously receives and consumes; therefore, control is transferred to the customer over time. Consistent with the conclusion that the customer simultaneously receives and consumes the benefits provided, an input-based measure of progress is appropriate. As each month of service is completed, revenue is recognized for the amount of actual costs incurred, plus the management fee or fixed fee and the general and administrative fee (as applicable). Fluctuations in revenue from period to period result from changes in customer demand primarily due to increases and decreases in activity levels on individual contracts and variances in reimbursable costs. Revenue from equipment sales and part sales is recognized upon transfer of control to the customer.
The Minerals and Royalties segment enters into contracts which grant the right to explore, develop, produce and sell minerals controlled by us. These arrangements result in the transfer of mineral rights for a period of time; however, no rights to the actual land are granted other than access for purposes of exploration, development, production and sales. The mineral rights revert back to us at the expiration of the contract.
Under these contracts, granting exclusive right, title, and interest in and to minerals, if any, is the performance obligation. The performance obligation under these contracts represents a series of distinct goods or services whereby each day of access that is provided is distinct. The transaction price consists of a variable sales-based royalty and, in certain arrangements, a fixed component in the form of an up-front lease bonus payment. As the amount of consideration we will ultimately be entitled to is entirely susceptible to factors outside of our control, the entire amount of variable consideration is constrained at contract inception. We believe that the pricing provisions of royalty contracts are customary in the industry.
Mitigation Resources provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. For restoration and reclamation services, the service contracts are generally structured as an agreement under which Mitigation Resources is reimbursed for all costs incurred plus a fixed fee. The services provided represent the performance obligation and are accounted for as a series. Performance momentarily creates an asset that the customer simultaneously receives and consumes; therefore, control is transferred to the customer as work is completed. Consistent with the conclusion
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that the customer simultaneously receives and consumes the benefits provided, an input-based measure of progress is appropriate. As each month of service is completed, revenue is recognized for the amount of actual costs incurred, plus the fixed fee. Fluctuations in revenue from period to period result from increases and decreases in activity levels of individual contracts and variances in reimbursable costs.
Mitigation Resources also generates and sells stream and wetland mitigation credits (known as mitigation banking). In mitigation banking, each mitigation credit sale is considered a separate performance obligation. Mitigation banks are regulated and approved by the U.S. Army Corps of Engineers and other federal, state and local agencies. Mitigation credits are released in phases over the life of the mitigation bank. Revenue is recognized at the point in time that control of each mitigation credit transfers to the customer. Fluctuations in revenue from period to period generally result from changes in timing of mitigation credit releases and/or customer demand.
Significant Judgments: The contracts with our customers in the Utility Coal Mining and Contract Mining segments contain different types of variable consideration including, but not limited to, management fees that adjust based on volumes or MMBtu delivered. However, the terms of these variable payments relate specifically to our efforts to satisfy one or more, but not all, of the performance obligations (or to a specific outcome from satisfying the performance obligations) in the contract. Therefore, we allocate each variable payment (and subsequent changes to that payment) entirely to the specific performance obligation to which it relates. Management fees, as well as general and administrative fees, are also adjusted based on changes in specified indices (e.g., CPI) to compensate for general inflation changes. Index adjustments, if applicable, are effective prospectively.
In the Minerals and Royalties segment, we have the right to receive revenues from the sale of oil and natural gas through sales of the third-party lessees in which we own a mineral or royalty interest. Revenue is recognized at the point control of the product is transferred from the operator to the purchaser. Those purchasers remit payment to the operator and the operator, in turn, remits payment to us. Receivables from third-party lessees for which we did not receive actual production information, either due to timing delays or due to the unavailability of data at the time when revenues are recognized, are estimated using expected sales volumes and estimated prices. The difference between our estimates and the actual amounts received is recorded in the month that payment is received from the third-party lessee. We typically receive payment for oil and natural gas sales within 90 days of the month of delivery. For the three months ended June 30, 2026, the difference between our prior period estimates and the actual amounts received from operators resulted in a favorable adjustment of $1.6 million. For the six months ended June 30, 2026 and the three and six months ended June 30, 2025, differences between our estimates and the actual amounts received from operators were immaterial
Cost Reimbursement: Certain contracts include reimbursement from customers of actual costs incurred for the purchase of supplies, equipment and services in accordance with contractual terms. Such reimbursable revenue is variable and subject to uncertainty, as the amounts received and timing thereof is highly dependent on factors outside of our control. Accordingly, reimbursable revenue is fully constrained and not recognized until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of a customer. We are considered a principal in such transactions and record the associated revenue at the gross amount billed to the customer with the related costs recorded as an expense within cost of sales.
At the Thacker Pass lithium project, in addition to management fee income, the customer will reimburse Sawtooth for certain capital expenditures. Sawtooth will recognize revenue over the estimated useful life of the asset on a straight-line basis as the performance obligation is satisfied over time. In prior years, the customer received a $3.5 million advance from Sawtooth, which is included in the long-term contract asset. The customer will pay a $4.7 million success fee to Sawtooth if commercial mining milestones are met, at which time Sawtooth will recognize the revenue for the difference between the success fee and the amount advanced. If commercial mining milestones are not met, the customer will only repay the $3.5 million advance.
Prior Period Performance Obligations: As discussed above, we record royalty income in the month production is delivered to the purchaser. The expected sales volumes and estimated prices for these properties are estimated and recorded in Oil and natural gas receivable in the Unaudited Condensed Consolidated Balance Sheets. During the three and six months ended June 30, 2026 and the three months ended June 30, 2025, royalty income recognized in the reporting period relating to production satisfied in prior periods was immaterial 1.5 million.
Disaggregation of Revenue: In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers into major goods and service lines and timing of transfer of goods and services. We determined that disaggregating revenue into these categories achieves the disclosure objective of depicting how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Our business consists of the Utility Coal Mining, Contract Mining and Minerals and Royalties segments as well as Unallocated Items. Revenue included in Unallocated Items is primarily related to Mitigation Resources. See Note 8 for further discussion of segment reporting.
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The following table disaggregates revenue by major sources as of June 30:
| THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||||||||||
| JUNE 30 | JUNE 30 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Timing of Revenue Recognition | |||||||||||||||||||||||
Transferred at a point in time | $ | $ | $ | $ | |||||||||||||||||||
Transferred over time | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Contract Balances: The opening and closing balances of our current and long-term contract assets and liabilities and receivables are as follows:
| Contract balances | |||||||||||||||||||||||||||||
| Trade accounts receivable | Contract asset (current) | Contract asset (long-term) | Contract liability (current) | Contract liability (long-term) | |||||||||||||||||||||||||
Balance at January 1, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Balance at June 30, 2026 | |||||||||||||||||||||||||||||
| Increase (decrease) | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||
We expect to recognize $0.6 million in the remainder of 2026, $1.4 million in 2027, $1.2 million in 2028, $0.2 10.8 million thereafter related to the contract liability remaining at June 30, 2026. The difference between the opening and closing amounts of our contract balances results from the timing difference between our performance and the customer’s payment.
We have no contract assets recognized from the costs to obtain or fulfill a contract with a customer.
NOTE 3—Inventories
Inventories are summarized as follows:
| JUNE 30 2026 | DECEMBER 31 2025 | ||||||||||
Coal | $ | $ | |||||||||
| Mining supplies | |||||||||||
| Total inventories | $ | $ | |||||||||
We recorded inventory impairment charges of $1.3 million and $4.3 million during the three and six months ended June 30, 2025, respectively. The inventory impairment charges are in the Cost of sales line in the accompanying Unaudited Condensed Consolidated Statements of Operations as mining costs exceeded the net realizable value of coal inventory at MLMC.
Mining supplies inventory consists primarily of critical spare parts to support Contract Mining’s dragline operations and other general supplies used on day-to-day operations. Mining supplies inventory not expected to be utilized within the next 12 months is classified as long-term on the Unaudited Condensed Consolidated Balance Sheets.
NOTE 4—Stockholders' Equity
Stock Repurchase Program: On November 18, 2025, our Board of Directors approved a stock purchase program (2025 Stock Repurchase Program) providing for the purchase of up to $20.0 million of our outstanding Class A common stock through December 31, 2027. NACCO's previous repurchase program would have expired on December 31, 2025 but was terminated and replaced by the 2025 Stock Repurchase Program. During the three months ended June 30, 2026 and 2025, and the six months ended June 30, 2026, there were no 22,198 shares of Class A common stock for an aggregate purchase price of $0.7 million.
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NOTE 5—Fair Value Disclosure
Recurring Fair Value Measurements: The following table presents our assets accounted for at fair value on a recurring basis:
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||||||||
| Quoted Prices in | Significant | |||||||||||||||||||||||||
| Active Markets for | Significant Other | Unobservable | ||||||||||||||||||||||||
| Identical Assets | Observable Inputs | Inputs | ||||||||||||||||||||||||
| Description | Date | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | ||||||||||||||||||||||
Money market funds | ||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | ||||||||||||||||||||||
Money market funds | ||||||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
In a previous period, Bellaire established a $5.0 million Mine Water Treatment Trust, which is legally restricted for purposes of settling the Bellaire asset retirement obligation, to assure the long-term treatment of post-mining discharges. Bellaire's Mine Water Treatment Trust invests in equity securities that are reported at fair value based upon quoted market prices in active markets for identical assets; therefore, they are classified as Level 1 within the fair value hierarchy. The fair value of the Mine Water Treatment Trust was $14.3 million and $13.5 million at June 30, 2026 and December 31, 2025, respectively, and is recognized as a component of Equity securities in the Unaudited Condensed Consolidated Balance Sheets. We recognized gains of $1.2 million and $0.8 million during the three and six months ended June 30, 2026, respectively, and gains of $0.8 million and $0.5 million during the three and six months ended June 30, 2025, respectively, related to the Mine Water Treatment Trust.
In a previous period, we invested $2.0 million in equity securities of a public company with a diversified portfolio of royalty producing mineral interests. The investment is reported at fair value based upon quoted market prices in active markets for identical assets; therefore, it is classified as Level 1 within the fair value hierarchy. The fair value of this investment was $4.8 million and $4.2 million at June 30, 2026 and December 31, 2025, respectively, and is recognized as a component of Equity securities in the Unaudited Condensed Consolidated Balance Sheets. We recognized a loss of $0.4 million and a gain of $0.5 million during the three and six months ended June 30, 2026, respectively, and losses of $0.4 million and $1.0 million during the three and six months ended June 30, 2025, respectively, related to the investment in these equity securities.
The change in fair value of equity securities is reported on the line (Gain) loss on equity securities in the Other expense (income) section of the Unaudited Condensed Consolidated Statements of Operations.
During 2025, excess funds from the terminated Combined Defined Benefit Plan and the Falkirk Defined Benefit Plan were invested in a money market fund. These funds are recorded on the line Prepaid profit sharing in the Unaudited Condensed Consolidated Balance Sheets and are being utilized to fund profit sharing contributions to eligible 401(k) plan participants. The money market investment is reported at fair value based upon quoted market prices in active markets for identical assets; therefore, it is classified as Level 1 within the fair value hierarchy. During the second quarter of 2025, the Company and Falkirk’s former customer agreed to settle the corresponding liability for $10.9 million, resulting in a gain of $3.6 million on the
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Unaudited Condensed Consolidated Statement of Operations. The remaining $5.4 million liability recorded on the line Excess funding liability on the Unaudited Condensed Consolidated Balance Sheet at December 31, 2025 was paid to the former customer in the second quarter of 2026.
There were no transfers into or out of Levels 1, 2 or 3 during the six months ended June 30, 2026 and 2025.
Nonrecurring Fair Value Measurements: During the second quarter of 2026, the Company recognized impairment charges related to certain solar development projects within ReGen Resources. The carrying value of these projects primarily consisted of an equity method investment, transformer deposits, site development costs and other project-related capitalized expenditures.
Management identified events and circumstances indicating that the carrying amounts of certain solar development projects may not be recoverable, including changing market conditions, lower-than-expected projected monetization values, contractual pricing considerations and increased development and execution risks. Management concluded that the fair values of certain project assets and investments were below their carrying amounts. As a result, the Company recorded total asset impairment charges of $12.0 million in Unallocated Items. The impairment charges are reported on the line Asset impairment charges in the Unaudited Condensed Consolidated Statements of Operations. As of June 30, 2026, we have approximately $4.2 million of capitalized assets associated with solar development projects.
NOTE 6—Unconsolidated Subsidiaries
Each of our wholly owned Unconsolidated Subsidiaries, within the Utility Coal Mining and Contract Mining segments, meet the definition of a VIE. The Unconsolidated Subsidiaries are capitalized primarily with debt financing provided by or supported by their respective customers, and generally without recourse to us. Although we own 100 % of the equity and manage the daily operations of the Unconsolidated Subsidiaries, we have determined that the equity capital provided by us is not sufficient to adequately finance the ongoing activities or absorb any expected losses without additional support from the customers. The customers have a controlling financial interest and have the power to direct the activities that most significantly affect the economic performance of the entities. As a result, we are not the primary beneficiary and therefore do not consolidate these entities' financial positions or results of operations. See Note 1 for a discussion of these entities.
The Investment in the unconsolidated subsidiaries and related tax positions totaled $14.8 5.4 million and $6.7 million at June 30, 2026 and December 31, 2025, respectively. Earnings of Unconsolidated Subsidiaries were $15.2 million and $30.8 million during the three and six months ended June 30, 2026, respectively, and $12.9 million and $28.3 million during the three and six months ended June 30, 2025, respectively.
NACCO Natural Resources is a party to certain guarantees related to Coyote Creek. Under certain circumstances of default or termination of Coyote Creek’s Lignite Sales Agreement (LSA), NACCO Natural Resources would be obligated to pay a make-whole amount to Coyote Creek’s third-party lenders. The make-whole amount is based on the excess, if any, of the discounted value of the remaining scheduled debt payments over the principal amount. In addition, in the event Coyote Creek’s LSA is terminated by Coyote Creek’s customers, NACCO Natural Resources is obligated to purchase Coyote Creek’s dragline and rolling stock for the then net book value of those assets. To date, no payments have been required from NACCO Natural Resources since the inception of these guarantees. We believe that the likelihood NACCO Natural Resources would be required to perform under the guarantees is remote, and no amounts related to these guarantees have been recorded.
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NOTE 7—Eiger Resources
As of June 30, 2026 and December 31, 2025, the Minerals and Royalties segment holds an equity investment of $29.3 million and $33.7 million, respectively, in Eiger Resources, which holds operated and non-operated working interests in oil and natural gas assets in the Kansas and the Oklahoma portion of the Hugoton basin. Eiger Resources meets the definition of a VIE. As we own less than 20 %, NACCO does not exercise financial control and is not the primary beneficiary of the VIE; therefore, we do not consolidate the results of these operations within our financial statements. Instead, this contract is accounted for as an equity method investment. Our investment is reported on the line Equity method investment in Eiger Resources in the Unaudited Condensed Consolidated Balance Sheets. The Minerals and Royalties segment records its share of earnings as Earnings of unconsolidated operations on the Unaudited Condensed Consolidated Statements of Operations. We recorded our share of losses of $1.1 million and $0.1 million during the three and six months ended June 30, 2026, respectively, and earnings of $0.3 million and $0.8 million during the three and six months ended June 30, 2025, respectively. Due to the timing and availability of financial information, earnings or losses from this investment are recorded on a one quarter lag.
Changes in the Eiger Resources equity method investment balance are summarized as follows:
Balance at January 1, 2026 | $ | ||||||||||
| Share of losses | ( | ||||||||||
Distributions received | ( | ||||||||||
Balance at June 30, 2026 | $ | ||||||||||
NOTE 8—Business Segments
Our operating segments are: (i) Utility Coal Mining, (ii) Contract Mining and (iii) Minerals and Royalties. We determine our reportable segments by first identifying our operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. Our President and Chief Executive Officer, who is the Chief Operating Decision Maker (CODM), utilizes Operating profit (loss) to evaluate segment performance and allocate resources. Our CODM considers actual, budgeted and forecasted Operating profit (loss) from operations on a monthly basis for evaluating the performance of each segment and making decisions about allocating capital and other resources to each segment.
All financial statement line items below operating profit (other income, including interest expense and interest income, the provision (benefit) for income taxes and net income) are presented and discussed within this Form 10-Q on a consolidated basis.
See Note 1 for a discussion of our reportable segments. All current operations reside in the U.S.
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The following table provides segment financial information and a reconciliation of segment results to consolidated results:
| THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||||||||||
| JUNE 30 | JUNE 30 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
| Unallocated Items | |||||||||||||||||||||||
| Eliminations | ( | ( | ( | ( | |||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
| Unallocated Items | |||||||||||||||||||||||
| Eliminations | ( | ( | ( | ( | |||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Earnings (losses) of unconsolidated operations | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | ( | ( | |||||||||||||||||||||
| Unallocated Items | ( | ( | |||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Operating expenses (income)* | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
| Unallocated Items | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Operating (loss) profit | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
| Unallocated Items | ( | ( | ( | ( | |||||||||||||||||||
| Eliminations | ( | ||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | $ | |||||||||||||||||
*Operating expenses (income) consist of Selling, general and administrative expenses, Amortization of intangible assets, Loss (gain) on sale of assets and Asset impairment charges.
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| THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||||||||||
| JUNE 30 | JUNE 30 | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Expenditures for property, plant and equipment and acquisition of mineral interests | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
| Unallocated Items | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation, depletion and amortization | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | $ | $ | |||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
| Unallocated Items | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| JUNE 30 2026 | DECEMBER 31 2025 | ||||||||||||||||||||||
Total assets | |||||||||||||||||||||||
| Utility Coal Mining | $ | $ | |||||||||||||||||||||
| Contract Mining | |||||||||||||||||||||||
| Minerals and Royalties | |||||||||||||||||||||||
Unallocated Items** | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
**Unallocated Items consist primarily of Cash and cash equivalents, assets of growth businesses, Deferred income taxes and Investments in unconsolidated subsidiaries.
NOTE 9—Contingencies
Various legal and regulatory proceedings and claims have been or may be asserted against NACCO and certain subsidiaries relating to the conduct of their businesses. These proceedings and claims are incidental to the ordinary course of our business. Management believes that it has meritorious defenses and will vigorously defend us in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, we disclose the nature of the contingency and, in some circumstances, an estimate of the possible loss.
These matters are subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of an adverse impact on our financial position, results of operations and cash flows of the period in which the ruling occurs, or in future periods.
NOTE 10—Subsequent Events
Subsequent to June 30, 2026, management began evaluating additional strategic activities to monetize its solar development projects. Such activities include project sale opportunities, contract amendments, the disposition of project assets and other actions. If these activities are not successful, management estimates that curtailment costs could approximate $7 million based on information currently available.
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Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Amounts in thousands, except as noted and per share data)
Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in these forward-looking statements are set forth below under the heading Forward-Looking Statements.
Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc.® (NACCO) and its wholly owned subsidiary, NACCO Natural Resources Corporation® (NACCO Natural Resources and with NACCO collectively, the Company, we, our or us). NACCO Natural Resources brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through our robust portfolio of businesses. We operate under three reportable business segments: Utility Coal Mining, Contract Mining and Minerals and Royalties. The Utility Coal Mining segment, operated by North American Coal®, manages surface coal mines that are exclusive, long-term fuel providers for power generation companies. The Contract Mining segment, operated by North American Mining®, is a leading provider of a broad range of specialized, long-term contract mining services. The Minerals and Royalties segment, which includes the Catapult Mineral Partners® (Catapult) business, acquires and promotes the development of mineral and royalty interests and other related investments.
In addition to the reportable segments discussed above, we also operate other businesses that are not currently reported as separate segments. These businesses complement our existing operations and support our long-term growth strategic objectives. Mitigation Resources of North America® (Mitigation Resources) provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. ReGen Resources is pursuing the advancement and monetization of power generation projects. See Note 1 to the Unaudited Condensed Consolidated Financial Statements within this Form 10-Q for further discussion of our reportable segments.
We also have items not directly attributable to an operating segment. These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, the financial results of developing businesses and Bellaire Corporation (Bellaire). Bellaire manages long-term liabilities related to former Eastern U.S. underground mining activities.
All financial statement line items below operating profit (other expense, including interest expense and interest income, the provision for income taxes and net income) are presented and discussed within this Form 10-Q on a consolidated basis.
Government Regulation and Environmental Matters: Refer to the discussion of Government Regulation and Environmental Matters as disclosed on pages 9 through 14 in our Annual Report on Form 10-K for the year ended December 31, 2025. The Government Regulation and Environmental Matters have not materially changed since December 31, 2025.
Critical Accounting Policies and Estimates: Refer to the discussion of our Critical Accounting Policies and Estimates as disclosed on pages 46 through 47 in our Annual Report on Form 10-K for the year ended December 31, 2025. Our Critical Accounting Policies and Estimates have not materially changed since December 31, 2025.
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CONSOLIDATED FINANCIAL SUMMARY
Our results of operations were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Utility Coal Mining | $ | 21,477 | $ | 28,626 | $ | 38,168 | $ | 47,865 | |||||||||||||||
| Contract Mining | 36,919 | 30,723 | 69,558 | 62,249 | |||||||||||||||||||
| Minerals and Royalties | 10,617 | 7,268 | 20,163 | 18,170 | |||||||||||||||||||
| Unallocated Items | 4,433 | 2,223 | 9,264 | 6,623 | |||||||||||||||||||
| Eliminations | (1,136) | (605) | (2,068) | (1,101) | |||||||||||||||||||
| Total revenue | $ | 72,310 | $ | 68,235 | $ | 135,085 | $ | 133,806 | |||||||||||||||
| Operating (loss) profit: | |||||||||||||||||||||||
| Utility Coal Mining | $ | 6,280 | $ | 1,222 | $ | 13,704 | $ | 5,013 | |||||||||||||||
| Contract Mining | 3,765 | 1,010 | 7,753 | 2,980 | |||||||||||||||||||
| Minerals and Royalties | 6,748 | 5,205 | 14,484 | 13,112 | |||||||||||||||||||
| Unallocated Items | (19,058) | (7,491) | (27,201) | (13,493) | |||||||||||||||||||
| Eliminations | (2) | 3 | 9 | 19 | |||||||||||||||||||
| Total operating (loss) profit | (2,267) | (51) | 8,749 | 7,631 | |||||||||||||||||||
| Interest expense | 1,620 | 1,944 | 3,278 | 3,718 | |||||||||||||||||||
| Interest income | (633) | (770) | (1,228) | (1,635) | |||||||||||||||||||
| Closed mine obligations | 445 | 503 | 934 | 976 | |||||||||||||||||||
(Gain) loss on equity securities | (858) | (349) | (1,313) | 521 | |||||||||||||||||||
Gain on settlement of excess funding liability | — | (3,590) | — | (3,590) | |||||||||||||||||||
| Other, net | 332 | 217 | 424 | 520 | |||||||||||||||||||
| Other expense (income), net | 906 | (2,045) | 2,095 | 510 | |||||||||||||||||||
| (Loss) income before income tax benefit | (3,173) | 1,994 | 6,654 | 7,121 | |||||||||||||||||||
| Income tax benefit | (2,210) | (1,266) | (1,219) | (1,039) | |||||||||||||||||||
| Net (loss) income | $ | (963) | $ | 3,260 | $ | 7,873 | $ | 8,160 | |||||||||||||||
| Effective income tax rate | 69.7 | % | (63.5) | % | (18.3 | %) | (14.6) | % | |||||||||||||||
The components of the change in revenues and operating (loss) profit are discussed below in Segment Results.
Second Quarter of 2026 Compared with Second Quarter of 2025, and First Six Months Ended June 30, 2026 Compared with First Six Months Ended June 30, 2025
Other expense (income), net
Interest expense decreased in the second quarter of 2026 and the first six months of 2026 compared with the respective 2025 periods due to an increase in capitalized interest and lower average interest rates, partially offset by higher average borrowings.
Interest income decreased in the second quarter of 2026 and the first six months of 2026 compared with the respective 2025 periods due to lower earnings on reduced invested cash balances.
(Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value. The favorable change in the second quarter of 2026 and the first six months of 2026 compared with the respective 2025 periods is due to fluctuations in the market prices of the exchange-traded equity securities. See Note 5 to the Unaudited Condensed Consolidated Financial Statements for further discussion of equity securities.
During 2025, $14.5 million of excess funds from the terminated Falkirk pension plan were directly transferred to the NACCO 401(k) plan. The NACCO 401(k) plan is a qualified replacement plan; therefore, these funds will be utilized to offset future profit sharing contributions to 401(k) plan participants. During the second quarter of 2025, NACCO and Falkirk’s former
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customer agreed to settle the corresponding liability for $10.9 million, resulting in a $3.6 million Gain on settlement of excess funding liability.
Income Taxes
We evaluate and update our estimated annual effective income tax rate based on current and forecasted operating results and tax laws. Historically, our actual effective tax rates have differed from the statutory effective tax rate primarily due to the benefit received from percentage depletion. The effective rate benefit from percentage depletion varies based upon the mix and timing of actual earnings compared to projections of earnings between entities that benefit from percentage depletion and those that do not, and as such the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The benefit of percentage depletion is not directly related to the amount of consolidated pre-tax income recorded in a period. When income tax expense is recorded, the benefit from percentage depletion decreases the effective income tax rate, while the effect is to increase the effective income tax rate when a benefit for income taxes is recorded. Each quarter, we update our estimate of the annual effective tax rate, and the cumulative impact of the change in the estimated annual effective tax rate is recorded, which can make quarterly comparisons not meaningful.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following tables detail the changes in cash flow for the six months ended June 30:
| 2026 | 2025 | Change | |||||||||||||||
| Operating activities: | |||||||||||||||||
| Net cash provided by (used for) operating activities | $ | 20,673 | $ | (2,753) | $ | 23,426 | |||||||||||
| Investing activities: | |||||||||||||||||
| Expenditures for property, plant and equipment and acquisition of mineral interests | (41,921) | (11,950) | (29,971) | ||||||||||||||
| Other | 1,722 | 915 | 807 | ||||||||||||||
| Net cash used for investing activities | (40,199) | (11,035) | (29,164) | ||||||||||||||
| Cash flow before financing activities | $ | (19,526) | $ | (13,788) | $ | (5,738) | |||||||||||
The $23.4 million improvement in net cash provided by (used for) operating activities was primarily due to favorable changes in operating assets and liabilities during the first six months of 2026 compared with the prior-year period. The improvement in operating assets and liabilities was mainly attributable to decreases in Prepaid profit sharing and Prepaid insurance and lower cash requirements associated with vendor deposits.
| 2026 | 2025 | Change | |||||||||||||||
| Financing activities: | |||||||||||||||||
Net additions (reductions) to long-term debt and revolving credit agreements | $ | 19,223 | $ | (5,378) | $ | 24,601 | |||||||||||
| Cash dividends paid | (3,882) | (3,570) | (312) | ||||||||||||||
| Purchase of treasury shares | — | (695) | 695 | ||||||||||||||
Net cash provided by (used for) financing activities | $ | 15,341 | $ | (9,643) | $ | 24,984 | |||||||||||
The change in net cash provided by (used for) financing activities was primarily due to additions in debt borrowings during the first six months of 2026 compared with reductions during the first six months of 2025 and the absence of share repurchases during the first six months of 2026.
Financing Activities
NACCO Natural Resources has a $200.0 million secured revolving line of credit (Facility) that matures in September 2028. Borrowings outstanding under the Facility were $95.0 million at June 30, 2026. At June 30, 2026, the excess availability under the Facility was $69.1 million, which reflects a reduction for outstanding letters of credit of $35.9 million.
NACCO has not guaranteed any borrowings of NACCO Natural Resources. The Facility allows for the payment to NACCO of dividends and advances under certain circumstances. Dividends (to the extent permitted by the Facility) and management fees are the primary sources of cash for NACCO and enable us to pay dividends to stockholders and repurchase shares.
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The Facility has performance-based pricing, which sets interest rates based upon NACCO Natural Resources achieving various levels of debt to EBITDA ratios, as defined in the Facility. Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved. The applicable margins, effective June 30, 2026, for base rate and Term Secured Overnight Financing Rate loans were 1.75% and 2.75%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.45% on the unused commitment at June 30, 2026. During the three and six months ended June 30, 2026, the average borrowing under the Facility was $102.8 million and $93.8 million, respectively, and the weighted-average annual interest rate was 6.42% and 6.36%, respectively.
The Facility contains restrictive covenants, which require, among other things, NACCO Natural Resources to maintain a maximum net debt to EBITDA ratio of 2.75 to 1.00 and an interest coverage ratio of not less than 4.00 to 1.00. The Facility provides the ability to make loans, dividends and advances to NACCO, with some restrictions based on maintaining a maximum debt to EBITDA ratio of 1.50 to 1.00, or if greater than 1.50 to 1.00, a Fixed Charge Coverage Ratio of 1.10 to 1.00. At June 30, 2026, NACCO Natural Resources was in compliance with all financial covenants in the Facility.
The obligations under the Facility are guaranteed by certain of NACCO Natural Resources' direct and indirect, existing and future domestic subsidiaries, and is secured by certain assets of NACCO Natural Resources and the guarantors, subject to customary exceptions and limitations.
We believe funds available from cash on hand, the Facility and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments arising during the next twelve months and until the expiration of the Facility in September 2028.
Expenditures for property, plant and equipment and mineral interests
Actual expenditures were $41.9 million during the first six months of 2026, primarily for land in Tennessee at Mitigation Resources and draglines in the Contract Mining segment.
Planned expenditures for the remainder of 2026 are expected to be approximately $35 million. This amount includes $3 million in the Utility Coal Mining segment, $10 million in the Contract Mining segment, $20 million in the Minerals and Royalties segment and $2 million in growth businesses included in Unallocated Items. The majority of these expenditures relate to business development opportunities and will only be made if the projects meet our growth investment criteria. Expenditures are expected to be funded from internally generated funds and/or bank borrowings.
Other items
In July 2026, MLMC's customer notified MLMC that payment of coal invoices would be delayed due to operational issues at the Red Hills Power Plant that reduced the customer's cash receipts and liquidity. As of June 30, 2026, MLMC had $12.5 million in Trade accounts receivable outstanding, of which $7.2 million was past due. Management is actively monitoring collectability and the potential impact on MLMC's liquidity and working capital requirements. See Item 1A Risk Factors on page 30 within this Form 10-Q for further discussion of MLMC.
Capital Structure
NACCO's consolidated capital structure is presented below:
| JUNE 30 2026 | DECEMBER 31 2025 | Change | |||||||||||||||
| Cash and cash equivalents | $ | 45,523 | $ | 49,708 | $ | (4,185) | |||||||||||
| Other net tangible assets | 531,157 | 500,411 | 30,746 | ||||||||||||||
| Intangible assets, net | 4,378 | 4,725 | (347) | ||||||||||||||
| Net assets | 581,058 | 554,844 | 26,214 | ||||||||||||||
| Total debt | (120,118) | (100,895) | (19,223) | ||||||||||||||
| Bellaire closed mine obligations | (24,802) | (24,706) | (96) | ||||||||||||||
| Total equity | $ | 436,138 | $ | 429,243 | $ | 6,895 | |||||||||||
| Debt to total capitalization | 22% | 19% | 3% | ||||||||||||||
The change in other net tangible assets at June 30, 2026 compared with December 31, 2025 was mainly the result of increases in Property, plant and equipment and inventory during the first six months of 2026. Property, plant and equipment increased primarily due to investments in Contract Mining and Mitigation Resources supporting the Company’s growth initiatives.
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Inventory increased mainly as the result of higher coal and mining supplies inventory, including growth associated with the Contract Mining segment's expansion.
Contractual Obligations, Contingent Liabilities and Commitments
Since December 31, 2025, other than the changes identified above, there have been no significant changes in the total amount of NACCO's contractual obligations, contingent liabilities or commercial commitments, or the timing of cash flows in accordance with those obligations as reported on page 52 in our Annual Report on Form 10-K for the year ended December 31, 2025. See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of certain guarantees related to Coyote Creek.
SEGMENT RESULTS
UTILITY COAL MINING SEGMENT
FINANCIAL REVIEW
Tons of coal delivered by the Utility Coal Mining segment were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Unconsolidated operations | 4,920 | 3,736 | 10,434 | 9,352 | |||||||||||||||||||
| Consolidated operations | 633 | 890 | 1,124 | 1,481 | |||||||||||||||||||
| Total tons delivered | 5,553 | 4,626 | 11,558 | 10,833 | |||||||||||||||||||
The results of operations for the Utility Coal Mining segment were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues | $ | 21,477 | $ | 28,626 | $ | 38,168 | $ | 47,865 | |||||||||||||||
| Cost of sales | 21,104 | 30,327 | 37,054 | 52,897 | |||||||||||||||||||
Gross profit (loss) | 373 | (1,701) | 1,114 | (5,032) | |||||||||||||||||||
Earnings of unconsolidated operations(a) | 13,646 | 11,656 | 27,754 | 26,119 | |||||||||||||||||||
| Selling, general and administrative expenses | 7,421 | 8,502 | 14,695 | 15,753 | |||||||||||||||||||
| Amortization of intangible assets | 196 | 245 | 347 | 407 | |||||||||||||||||||
| Loss (gain) on sale of assets | 122 | (14) | 122 | (86) | |||||||||||||||||||
| Operating profit | $ | 6,280 | $ | 1,222 | $ | 13,704 | $ | 5,013 | |||||||||||||||
(a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of our unconsolidated subsidiaries.
During the 2026 periods, MLMC's customer's power plant experienced unplanned outages and maintenance issues which resulted in lower customer requirements. As a result, revenues decreased 25.0% and 20.3% in the second quarter of 2026 and the first six months of 2026, respectively, compared with the 2025 periods. This decrease was partially offset by an increase in the contractually determined per ton sales price.
The following table identifies the components of change in Operating profit for the second quarter of 2026 compared with the second quarter of 2025:
| Operating Profit | |||||
| 2025 | $ | 1,222 | |||
| Increase (decrease) from: | |||||
Gross profit (loss) | 2,074 | ||||
| Earnings of unconsolidated operations | 1,990 | ||||
| Selling, general and administrative expenses | 1,081 | ||||
| Amortization of intangibles | 49 | ||||
| Net change on sale of assets | (136) | ||||
| 2026 | $ | 6,280 | |||
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The following table identifies the components of change in Operating profit for the first six months of 2026 compared with the first six months of 2025:
| Operating Profit | |||||
| 2025 | $ | 5,013 | |||
| Increase (decrease) from: | |||||
Gross profit (loss) | 6,146 | ||||
| Earnings of unconsolidated operations | 1,635 | ||||
| Selling, general and administrative expenses | 1,058 | ||||
| Amortization of intangibles | 60 | ||||
| Net change on sale of assets | (208) | ||||
| 2026 | $ | 13,704 | |||
Operating profit increased by $5.1 million and $8.7 million in the second quarter of 2026 and the first six months of 2026, respectively, compared with the 2025 periods. These improvements were primarily due to favorable changes in gross profit (loss), earnings of unconsolidated operations and selling, general and administrative expenses.
The improvements in gross profit (loss) were primarily due to a reduction in cost per ton delivered and an increase in the contractually determined sales price at MLMC. Lower customer demand resulting from outages and maintenance issues at the Red Hills Power Plant resulted in a shift of certain costs from inventory and cost of sales to reduce MLMC’s asset retirement obligation, which favorably impacted 2026 results. In addition, the second quarter of 2025 and the first six months of 2025 included a $1.3 million and a $4.3 million inventory impairment charge, respectively, to write down MLMC's coal inventory to its net realizable value.
The increase in earnings of unconsolidated operations was primarily due to higher customer demand at Coteau and Coyote Creek, partially offset by a lower management fee at Sabine during the 2026 periods.
The decrease in selling, general and administrative expenses during the 2026 periods was mainly attributable to lower contributions expense, as the 2025 periods included costs associated with a multi-year charitable pledge.
CONTRACT MINING SEGMENT
FINANCIAL REVIEW
Tons delivered by the Contract Mining segment were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total tons delivered | 16,013 | 13,947 | 30,973 | 26,800 | |||||||||||||||||||
The results of operations for the Contract Mining segment were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total revenues | $ | 36,919 | $ | 30,723 | $ | 69,558 | $ | 62,249 | |||||||||||||||
| Reimbursable costs | 20,480 | 18,503 | 37,344 | 38,050 | |||||||||||||||||||
| Revenues excluding reimbursable costs | $ | 16,439 | $ | 12,220 | $ | 32,214 | $ | 24,199 | |||||||||||||||
| Total revenues | $ | 36,919 | $ | 30,723 | $ | 69,558 | $ | 62,249 | |||||||||||||||
| Cost of sales | 32,045 | 28,659 | 59,789 | 57,037 | |||||||||||||||||||
| Gross profit | 4,874 | 2,064 | 9,769 | 5,212 | |||||||||||||||||||
Earnings of unconsolidated operations(a) | 1,579 | 1,232 | 3,081 | 2,201 | |||||||||||||||||||
| Selling, general and administrative expenses | 2,583 | 2,286 | 4,997 | 4,433 | |||||||||||||||||||
| Loss on sale of assets | 105 | — | 100 | — | |||||||||||||||||||
Operating profit | $ | 3,765 | $ | 1,010 | $ | 7,753 | $ | 2,980 | |||||||||||||||
(a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of our unconsolidated subsidiaries.
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Revenues excluding reimbursable costs increased 34.5% and 33.1% in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods, primarily due to the commencement and ramp up of a new dragline mining services contract during 2026 as well as higher customer requirements at the consolidated limestone quarries. Reimbursable costs have an offsetting amount in cost of sales and have no impact on gross profit.
The following table identifies the components of change in Operating profit for the second quarter of 2026 compared with the second quarter of 2025:
Operating Profit | |||||
| 2025 | $ | 1,010 | |||
| Increase (decrease) from: | |||||
| Gross profit | 2,810 | ||||
| Earnings of unconsolidated operations | 347 | ||||
| Selling, general and administrative expenses | (297) | ||||
Net change on sale of assets | (105) | ||||
| 2026 | $ | 3,765 | |||
The following table identifies the components of change in Operating profit for the first six months of 2026 compared with the first six months of 2025:
Operating Profit | |||||
| 2025 | $ | 2,980 | |||
| Increase (decrease) from: | |||||
| Gross profit | 4,557 | ||||
| Earnings of unconsolidated operations | 880 | ||||
| Selling, general and administrative expenses | (564) | ||||
Net change on sale of assets | (100) | ||||
| 2026 | $ | 7,753 | |||
Operating profit increased $2.8 million and $4.8 million in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods. These improvements were primarily due to increases in gross profit and earnings of unconsolidated operations. The favorable change in gross profit was mainly the result of contributions from a new dragline mining services contract and improved margins at limestone quarries. The increase in earnings of unconsolidated operations was primarily due to higher customer requirements as a result of an additional dragline operating at a new quarry pursuant to an existing contract. The improvements in operating profit were partially offset by increases in selling, general and administrative expenses mainly due to higher employee-related costs.
The improved margins were partially due to lower depreciation expense in the 2026 periods. Effective January 1, 2026, the Company’s Contract Mining segment changed its depreciation method for certain assets (primarily draglines and other large mining equipment) from the straight-line method to the units-of-production method. See Note 1 to the Unaudited Condensed Consolidated Financial Statements for further discussion of this change.
MINERALS AND ROYALTIES SEGMENT
FINANCIAL REVIEW
The following table sets forth our estimate of the number of gross and net productive wells:
| June 30, 2026 | June 30, 2025 | ||||||||||||||||||||||
| Gross | Net | Gross | Net | ||||||||||||||||||||
Oil and Natural Gas Wells | 2,451 | 21.6 | 2,377 | 23.3 | |||||||||||||||||||
Gross wells are the total wells in which an interest is owned. Net wells are calculated based on our net royalty interest, factoring in both ownership percentage of gross wells and royalty rate.
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Oil and natural gas prices have been historically volatile and may continue to be volatile in the future. The table below shows the average prices as reported by the United States Energy Information Administration for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| West Texas Intermediate Average Crude Oil Price | $ | 95.99 | $ | 64.63 | $ | 83.98 | $ | 68.23 | |||||||||||||||
| Henry Hub Average Natural Gas Price | $ | 2.95 | $ | 3.19 | $ | 3.87 | $ | 3.67 | |||||||||||||||
These indicated prices do not necessarily reflect the contract terms for our mineral and royalty interests.
As an owner of royalty and mineral interests, our access to information concerning activity and operations of our royalty and mineral interests is limited. We do not have information that would be available to a company with working interests in oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests.
The results of operations for the Minerals and Royalties segment were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Oil and natural gas revenues | $ | 8,484 | $ | 5,981 | $ | 16,311 | $ | 15,098 | |||||||||||||||
Other revenues | 2,133 | 1,287 | 3,852 | 3,072 | |||||||||||||||||||
| Total Revenues | $ | 10,617 | $ | 7,268 | $ | 20,163 | $ | 18,170 | |||||||||||||||
| Total Revenues | $ | 10,617 | $ | 7,268 | $ | 20,163 | $ | 18,170 | |||||||||||||||
| Cost of sales | 1,278 | 986 | 2,399 | 3,230 | |||||||||||||||||||
| Gross profit | 9,339 | 6,282 | 17,764 | 14,940 | |||||||||||||||||||
| (Losses) earnings from unconsolidated operations | (1,061) | 251 | (100) | 805 | |||||||||||||||||||
| Selling, general and administrative expenses | 1,530 | 1,328 | 3,181 | 2,633 | |||||||||||||||||||
Gain on sale of assets | — | — | (1) | — | |||||||||||||||||||
| Operating profit | $ | 6,748 | $ | 5,205 | $ | 14,484 | $ | 13,112 | |||||||||||||||
Revenues increased 46.1% and 11.0% in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods, primarily due to higher oil and gas revenues as well as increased coal revenues. The higher revenues were mainly attributable to increased commodity prices.
Receivables from third-party lessees for which we did not receive actual production information, either due to timing delays or due to the unavailability of data at the time when revenues are recognized, are estimated using expected sales volumes and estimated prices. The difference between our estimates and the actual amounts received is recorded in the period that payment is received from the third-party lessee. Revenue in the second quarter of 2026 included a $1.6 million favorable adjustment primarily related to first quarter 2026 pricing estimates. Revenue in the six months ended June 30, 2025 included a $1.5 million favorable adjustment.
The following table identifies the components of change in Operating profit for the second quarter of 2026 compared with the second quarter of 2025:
| Operating Profit | |||||
| 2025 | $ | 5,205 | |||
| Increase (decrease) from: | |||||
| Gross profit | 3,057 | ||||
| (Losses) earnings from unconsolidated operations | (1,312) | ||||
| Selling, general and administrative expenses | (202) | ||||
| 2026 | $ | 6,748 | |||
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The following table identifies the components of change in Operating profit for the first six months of 2026 compared with the first six months of 2025:
| Operating Profit | |||||
| 2025 | $ | 13,112 | |||
| Increase (decrease) from: | |||||
| Gross profit | 2,824 | ||||
| (Losses) earnings from unconsolidated operations | (905) | ||||
Selling, general and administrative expenses, including Gain on sale of assets | (547) | ||||
| 2026 | $ | 14,484 | |||
Operating profit increased by $1.5 million and $1.4 million in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods, primarily due to higher gross profit mainly attributable to favorable commodity prices. These improvements were partially offset by losses from unconsolidated operations related to an investment in Eiger Resources. The unfavorable change in Eiger's results was primarily attributable to commodity hedge positions rather than underlying production. Due to the timing and availability of financial information, earnings or losses from this investment are recorded on a one quarter lag. In addition, selling, general and administrative expenses increased primarily due to higher employee-related costs.
UNALLOCATED ITEMS AND ELIMINATIONS
FINANCIAL REVIEW
Unallocated Items and Eliminations were as follows for the three and six months ended June 30:
| THREE MONTHS | SIX MONTHS | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues | $ | 3,297 | $ | 1,618 | $ | 7,196 | $ | 5,522 | |||||||||||||||
| Operating loss | $ | (19,060) | $ | (7,488) | $ | (27,192) | $ | (13,474) | |||||||||||||||
Revenues increased in the second quarter and the first six months of 2026 compared to the 2025 periods, primarily due to higher restoration and reclamation service revenue at Mitigation Resources.
The operating loss increased in the second quarter and the first six months of 2026 compared to the 2025 periods, primarily due to $12.0 million of impairment charges related to certain solar development projects within ReGen Resources. See Note 5 to the Unaudited Condensed Consolidated Financial Statements and Item 1A Risk Factors on page 30 within this Form 10-Q for further discussion of the impairment charges and ReGen Resources, respectively.
NACCO Industries, Inc. Outlook
NACCO Industries is a diversified natural resources company with a unique business model strategically positioned to deliver stable and growing financial returns over the long term. Our business model is purposefully built for durability and resilience with an expanding portfolio of long-term contracts, relationships and investments that leverage our proven operational expertise, disciplined capital allocation and an entrepreneurial yet patient approach. We have methodically built unique capabilities and clear competitive advantages that allow us to pursue a wide range of growth opportunities, often completely integrated into customers’ operations in partnership-based relationships. We have multiple vectors for value creation, and we are steadfastly committed to delivering compounding returns and expanding investor value over the long term.
Our foundation rests on a stable base of long-term coal mining contracts and legacy mineral and royalty assets, which generate dependable recurring cash flows. As new long-term contracts and investments are added across the Company, these new multi-year agreements create a “layering effect" as their contributions compound over time.
While these long-term agreements and investments are intended to strengthen our earnings base over time, we continually evaluate whether individual projects or initiatives remain aligned with our strategic and financial objectives. As part of this process, changing market conditions, regulatory developments and project-specific challenges led us to reassess certain solar investments during the 2026 second quarter. In early July, we began pursuing a range of alternatives, including potential asset
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sales, contract amendments and other strategic actions, to monetize these investments and reduce our exposure. Depending on the outcome of these activities, additional curtailment costs could be incurred.
Strong first-half 2026 operating performance across our reportable segments is expected to drive year‑over‑year improvements in full-year 2026 Consolidated Adjusted EBITDA, which excludes the solar impairment charges and a $7.8 million pre-tax pension settlement charge recorded in 2025. While we expect Consolidated Adjusted EBITDA to remain strong in the second half of 2026, growth is expected to moderate relative to both the first half of 2026 and prior-year periods.
We also expect second-half consolidated operating profit and net income to decline from first-half 2026 and prior-year levels. Expectations for lower second-half operating profit are primarily driven by potential additional solar project curtailment costs and expected inventory write-downs at MLMC. Given the effect of the realized and anticipated 2026 charges, we expect full-year operating profit and net income will be significantly lower than in 2025. Comparisons to prior-year net income also reflect a $6.0 million after-tax pension settlement charge recognized in the second half of 2025.
At our Utility Coal Mining segment, operated by North American Coal, full-year customer demand is expected to be comparable and operating profit is expected to increase year over year due to a shift in focus to reclamation activities in the first half of 2026. During the second half of 2026, customer demand is expected to decline modestly compared with the prior-year period, provided MLMC's customer's power plant operates as currently planned. Operating results at MLMC are expected to decline from the first half of 2026, particularly in the third quarter, due to lower customer demand, higher diesel fuel costs and an anticipated inventory impairment charge. A higher contractually determined per ton sales price is anticipated to mitigate the lower demand. Earnings at the unconsolidated mining operations are also expected to decline primarily due to reclamation services at Sabine concluding as of September 30, 2026.
Looking ahead to 2027, overall customer demand for coal is expected to remain consistent with 2026, while profitability is expected to improve. This increase is driven by anticipated improvements at MLMC if the customer's power plant is able to operate more consistently, as well as continued stable earnings at our unconsolidated operations. Anticipated improved results at the remaining unconsolidated mining locations should mostly offset the absence of reclamation income at Sabine.
The Contract Mining segment, operated by North American Mining, serves as our mining growth platform. We are building a growing portfolio of long-term contracts through geographic and mineral expansion that are expected to strengthen the foundation for sustained profitability in this segment. In early 2026, we commenced activities under a new dragline services contract as part of a U.S. Army Corps of Engineers construction project in Palm Beach County, Florida. We also anticipate commencing operations at a new limestone quarry in Arizona during fourth-quarter 2026.
Sawtooth, a North American Mining subsidiary, provides exclusive comprehensive mining services at Thacker Pass, which is owned by a joint venture led by Lithium Americas Corp. Sawtooth will supply all of the lithium-bearing ore requirements for our customer's Thacker Pass lithium processing facility, which is currently under construction. This project is providing stable income during construction and is expected to contribute increased income and long-term cash flows as lithium production commences and ramps up to full production, which is targeted for 2028.
As a result of earnings contributions from new contracts, we anticipate substantial year-over-year growth in Contract Mining operating profit and Segment Adjusted EBITDA for both the second half and full year of 2026. Second-half results are expected to moderate from the strong first-half levels as customer demand is projected to decline, primarily in the fourth quarter.
We expect significant operating profit improvement in the Contract Mining segment in 2027. This growth is driven by a full year of the dragline services contract in Palm Beach County, Florida, and contributions from operations at the Arizona quarry as well as potential new deals in the pipeline.
The Minerals and Royalties segment, managed by Catapult, has constructed a high-quality, diversified portfolio of oil and gas mineral and royalty interests in the United States. The Catapult team is expanding its portfolio by leveraging a data-driven approach to capital deployment that incorporates a longer-term view of production and development. This segment also holds a meaningful equity investment in Eiger Resources that has working interests in oil and natural gas assets. Anticipated increases in income from Eiger Resources and the benefit of higher oil prices are projected to be more than offset by anticipated production declines and a changing mix of production and development activity. As a result, operating profit and Segment Adjusted EBITDA are expected to decline compared with the first half of 2026 as well as the second-half and full-year 2025. The Minerals and Royalties segment is projected to continue generating meaningful earnings and cash flow in 2027, while operating profit is expected to moderate primarily due to normal production declines and a continuation of the current moderate
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pace of domestic development activity. Changes in commodity prices or production and development assumptions, including effects of the ongoing Middle East conflict, could alter current expectations.
Mitigation Resources provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. Mitigation Resources is successfully leveraging its strong reputation and clear competitive strengths to expand into additional mitigation, restoration and reclamation markets. Mitigation Resources is expected to deliver increasing profitability over time from the sale of mitigation credits and as reclamation and restoration services expand. This business, while currently variable in performance due to permit and project timing, is expected to generate a profit in 2027 and move toward more consistent and improving results over time as the business expands and its portfolio of mitigation projects matures.
We continue to invest in our businesses to support future growth. Based on the current project pipeline, we anticipate investing up to $35 million in the remainder of the year, primarily for business development opportunities. These expenditures will be made only if projects meet our disciplined capital investment criteria. While we anticipate a moderate year-over-year increase in cash generated from operations, cash flow before financing is projected to remain a use of cash in 2026, reflecting our planned investment activity. We expect full-year 2026 cash flow before financing to improve modestly over 2025, and continue to improve into 2027.
We remain confident in our ability to deliver improving results and increasing cash flow over time. Earnings are expected to benefit from continued expansion in Contract Mining and Mitigation Resources, along with improved operating performance across our other businesses. Looking ahead, as our recent investments mature, they are expected to support sustained earnings growth and stronger cash flow.
Our businesses provide essential inputs for electricity generation, construction and development, and industrial production. As demand for reliable uninterrupted energy continues to grow, natural resources fundamentals remain strong, reinforcing the importance of dependable baseload generation. Recent policy developments, including the re-establishment of the National Coal Council, highlight coal’s ongoing strategic role in supporting grid reliability, economic competitiveness and national security. This development, along with a favorable regulatory environment, reinforces our confidence in our near-term outlook and long-term growth trajectory.
Our conservative approach to maintaining a strong capital structure and operating discipline minimizes risk, while the compounding effect of a growing portfolio of long-term contracts and strategic growth investments create a robust foundation for cash flow growth. With a perspective that spans decades, we are methodically building a strong, stable business that is expected to deliver annuity-like returns. This long-term view allows us to leverage our core skills for strategic, measured expansion and pursue opportunities with longer-term horizons and higher returns. We pursue opportunities that other companies with shorter time horizons might overlook. Our commitment is to generate increasing cash flows and return value to stockholders, whether through reinvestment for growth or direct returns such as share repurchases and payment of dividends. We remain confident in our ability to drive growth, expand our capabilities and reward shareholders over the long run.
FORWARD-LOOKING STATEMENTS
The statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) a significant reduction in demand by the Company's customers from extended power plant outages, weather conditions or other events that would change the level of customers' coal or aggregates requirements, (2) customer liquidity constraints that could increase exposure to customer credit risk, (3) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil as a result of factors such as OPEC and/or government actions, geopolitical developments, economic conditions and regulatory changes, as well as supply and demand dynamics, (4) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (5) costs to pursue and develop new mining, mitigation, oil and gas and power generation development opportunities and other value-added service opportunities, (6) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (7) changes in development plans by third-party lessees of the Company's mineral interests, (8) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons; the availability and cost of transportation and processing services in the areas where the Company's oil and gas reserves are located; and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (9) any customer's premature facility closure or extended project development delay, (10)
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federal and state legislative and regulatory actions affecting fossil fuels, (11) supply chain disruptions, including price increases and shortages of parts and materials, inclusive of tariff effects, (12) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (13) impairment charges, (14) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (15) equipment problems that could affect deliveries to customers, (16) changes in the costs to reclaim mining areas, (17) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (18) the ability to attract, retain, and replace workforce.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, we are not required to provide this information.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures: An evaluation was carried out under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, these officers have concluded that our disclosure controls and procedures are effective.
Changes in internal control over financial reporting: During the second quarter of 2026, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
OTHER INFORMATION
Item 1 Legal Proceedings
None.
Item 1A Risk Factors
During the quarter ended June 30, 2026, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, except as follows:
MLMC is subject to risks associated with our capital investment, operating and equipment costs, changes in customer demand and inflationary adjustments.
Profitability at MLMC is affected by customer demand for coal, changes in the contractually determined sales price and actual costs incurred. The MLMC contract is the only coal supply contract in which we are responsible for all operating costs, capital requirements and final mine reclamation. As such, increased costs or decreased revenues could materially reduce our profitability. As a significant portion of MLMC’s costs are fixed, reduction in dispatch, reduced mechanical availability or other operational issues at the Red Hills Power Plant could adversely affect coal demand, customer liquidity and the collectability of amounts due under the contract and materially reduce operating results at MLMC.
During the first half of 2026, unplanned outages and maintenance issues at the Red Hills Power Plant reduced plant availability and generation. Continued operational disruptions may result in sustained reductions in coal deliveries, reduced revenues, impairment charges, operating losses and lower operating cash flows during 2026. In response to reduced customer demand, MLMC has curtailed certain mining activities and increased its focus on reclamation activities. While reclamation work may reduce MLMC's asset retirement obligation, such activities require the expenditure of cash and may not offset the adverse effects of reduced customer demand, lower revenues and decreased operating cash flows.
In July 2026, MLMC's customer notified MLMC that payment of coal invoices would be delayed due to operational issues at the Red Hills Power Plant that reduced the customer's cash receipts and liquidity. As of June 30, 2026, MLMC had $12.5 million in Trade accounts receivable outstanding, of which $7.2 million was past due. The customer was unable to provide an estimate regarding when it expects to become current on its payment obligations. Although the customer has indicated that payment is expected following restoration of plant operations, there can be no assurance regarding the timing of payment or the customer's future ability to satisfy its obligations when due. If plant outages, reduced generation levels or related liquidity constraints continue, additional customer receivables could accumulate and payment delays could extend beyond currently outstanding amounts, which could increase MLMC's working capital requirements, adversely affect liquidity and cash flows and increase exposure to customer credit risk.
Our investments in mitigation solutions, comprehensive reclamation and restoration construction services and solar-related development projects are subject to substantial risks and uncertainties.
There are risks associated with NACCO's ability to execute on our long-term growth strategy, including our investments in mitigation solutions, comprehensive reclamation and restoration construction services at Mitigation Resources and solar-related development projects at ReGen Resources, as well as our ability to develop and manage such projects profitably.
Changes to U.S. energy policy including modifications to tax incentives and other regulatory programs, may adversely affect the economics of solar development projects being pursued by ReGen Resources. As of June 30, 2026, we have approximately $4.2 million of capitalized assets associated with solar development projects. Although the Company recognized impairment charges related to certain solar-related development projects during the second quarter of 2026, future changes in project economics, development timelines, financing availability, tax-credit qualification, buyer demand or transaction terms could adversely affect the recoverability or returns associated with remaining project assets and investments. We may incur additional development costs in connection with current projects. If project assumptions are not realized or expected returns are lower than anticipated, we could incur additional expenses or impairment charges, which could adversely affect our operating results, financial condition and cash flows.
Mitigation solutions, comprehensive reclamation and restoration construction services and solar-related development projects require significant upfront investments before project viability is fully established. If project economics deteriorate, development projects schedules are delayed, financing is unavailable, anticipated tax incentives are reduced or unavailable, interconnection arrangements become less favorable or buyers cannot be identified on
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acceptable terms, the Company may be unable to recover all or a portion of these investments. The assumptions used in evaluating project economics and asset recoverability involve significant judgment, including assumptions related to project timing, tax-credit qualification, financing availability, customer and buyer demand, equipment commitments and expected project returns.
Future changes in project economics, transaction terms, buyer interest, financing availability, tax-credit qualification, project cost estimates or development timelines could result in reduced expected returns, additional expense or impairment charges in future periods. We have incurred, and expect to continue to incur, costs in connection with these projects and the results of operations and/or return on investment could be lower than anticipated. In addition, state regulatory programs and tax laws may expire or be adversely modified in a manner that affects project economics, which could have a material adverse effect on our operating results, financial condition and cash flows.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (1) | |||||||||||||||||||||||
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of the Publicly Announced Program | (d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (1) | |||||||||||||||||||
| Month #1 (April 1 to 30, 2026) | — | $ | — | — | $ | 18,162,075 | |||||||||||||||||
| Month #2 (May 1 to 31, 2026) | — | $ | — | — | $ | 18,162,075 | |||||||||||||||||
| Month #3 (June 1 to 30, 2026) | — | $ | — | — | $ | 18,162,075 | |||||||||||||||||
| Total | — | $ | — | — | $ | 18,162,075 | |||||||||||||||||
(1) During 2025, our Board of Directors approved a stock purchase program providing for the purchase of up to $20.0 million of our outstanding Class A common stock through December 31, 2027. See Note 4 to the Unaudited Condensed Consolidated Financial Statements for further discussion of our stock repurchase programs.
Item 3 Defaults Upon Senior Securities
None.
Item 4 Mine Safety Disclosures
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 filed with this Quarterly Report on Form 10-Q for the period ended June 30, 2026.
Item 5 Other Information
During the second quarter of 2026, none of our directors or executive officers adopted terminated
Trading Plan, or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
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Item 6 Exhibits
| Exhibit | ||||||||
| Number* | Description of Exhibits | |||||||
| 10.1 | NACCO Industries, Inc. Executive Long-Term Incentive Compensation Plan (Amended and Restated March 1, 2026) is incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed by the Company on May 18, 2026, Commission File Number 1-9172. | |||||||
| 31(i)(1) | Certification of J.C. Butler, Jr. pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act | |||||||
| 31(i)(2) | Certification of Elizabeth I. Loveman pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act | |||||||
| 32 | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by J.C. Butler, Jr. and Elizabeth I. Loveman | |||||||
| 95 | Mine Safety Disclosure Exhibit | |||||||
| 101.INS | Inline XBRL Instance Document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* Numbered in accordance with Item 601 of Regulation S-K.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NACCO Industries, Inc. (Registrant) | |||||||||||
| Date: | August 5, 2026 | /s/ Elizabeth I. Loveman | |||||||||
| Elizabeth I. Loveman | |||||||||||
| Senior Vice President and Controller (principal financial and accounting officer) | |||||||||||
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