NACCO Industries
Annual Report 2014

Plain-text annual report

NACCO Industries, Inc. 2014 Annual Report Strategic Update NACCO Industries, Inc. at a Glance Principal Businesses 2014 Financial Results Market Positions MINING * ** North American Coal (“NACoal”) Headquarters: Dallas, Texas North American Coal mines and markets steam and metallurgical coal for use in power generation and steel production and provides selected value-added mining services for other natural resources companies. North American Coal operates eight surface coal mining operations and has two additional coal mines under development. The company also provides dragline mining services operating under the name “North American Mining Company” for independently owned limerock quarries in Florida. Hamilton Beach Brands (“HBB”) Headquarters: Richmond, Virginia HBB is a leading designer, marketer and distributor of small electric household and specialty housewares appliances, as well as commercial products for restaurants, bars and hotels. HBB has a broad portfolio of some of the most recognized and respected brands in the small electric appliance industry, including Hamilton Beach®, Proctor Silex®, Hamilton Beach® Commercial and Weston®. HBB also sells products under licensed brands such as Jamba® and Wolf Gourmet®. Kitchen Collection Headquarters: Chillicothe, Ohio Kitchen Collection is a national specialty retailer of kitchenware in outlet and traditional malls throughout the United States. NACoal: North American Coal is among the ten largest coal producers in the United States. Coal is delivered from developed mines in North Dakota, Texas, Mississippi, Louisiana and Alabama, primarily to adjacent or nearby power plants. HBB: HBB is a leading company in retail and commercial small appliances, with strong share positions in many of the categories in which it competes. HBB products are prima- rily distributed through mass merchants, national department stores, wholesale distributors and other retail sales outlets. Kitchen Collection: Kitchen Collection is the nation’s leading specialty retailer of kitchen and related products in factory outlet malls with 248 stores throughout the United States at December 31, 2014. NACoal: Revenues: $172.7 million Operating loss: $89.0 million Net loss: $51.0 million Adjusted income:(1) $15.5 million Equity: $103.1 million Return on Equity:(1) (36.5%) Return on Capital Employed:(1) (15.0%) HBB: Revenues: $559.7 million Operating profit: $35.8 million Net income: $23.1 million Equity: $49.6 million Return on Equity:(1) 43.2% Return on Capital Employed:(1) 28.7% Kitchen Collection: Revenues: $168.5 million Operating loss: $7.1 million Net loss: $4.6 million Equity: $32.2 million Return on Equity:(1) (14.3%) Return on Capital Employed:(1) (11.4%) (1) This Annual Report contains references to non-GAAP financial measures. Presentations of, and quantitative reconciliations to, the most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) appear on page 14. * Jamba® is a registered trademark of the Jamba Juice Company. ** Wolf Gourmet® is a registered trademark of the Sub-Zero Group, Inc. NACCO Industries, Inc. is an operating holding company with subsidiaries in the following principal industries: mining, small appliances and specialty retail. Competitive Advantages Financial Objectives Strategic Initiatives NACoal: • Actively pursue domestic opportunities for new coal mining projects • Expand capabilities in the non-coal mining market NACoal: • Coal mines provide steady income and cash flow before financing activities • Steam coal contracts are structured to minimize exposure to market fluctua- tions of coal prices • 2.0 billion tons of lignite coal reserves, of which approximately 1.1 billion tons are committed to current customers • Outstanding operational and techno- logical mining skills • Highly efficient heavy equipment utilization • Excellent record of environmental responsibility and employee safety NACoal: Earn a minimum return on capital employed of 13 percent, attain positive Economic Value Income from all existing consoli- dated mining operations and any new projects, maintain or increase the profitability of all existing unconsolidated mining operations and achieve substantial income growth from development of new mining ventures HBB: • Strong heritage brands with leading market shares • Strong relationships with leading retailers • Highly professional and experienced management team • Successful track record of product line expansion and new product innovation • Industry-leading working capital management HBB: Achieve $750 million in sales and a minimum operating profit margin target of 10 percent HBB: • Enhance placements in the North American consumer business • Achieve a leadership position in internet sales by providing best-in-class retailer support and increased consumer content and engagement • Enter the “only-the-best” market with strong brands and broad product line • Expand internationally in emerging Asian and Latin American markets • Achieve further penetration of the global Commercial market through an enhanced global product line Kitchen Collection: • Highly analytical merchandising skills and disciplined operating controls • A leading Kitchen Collection® store format in outlet malls Kitchen Collection: Achieve a minimum operating profit margin target of 5 percent Kitchen Collection: • Create a solid core store portfolio and increase comparable store sales – Enhance sales volume and profitability through refinement of store formats and specific product offerings – Improve inventory efficiency and store inventory controls – Selectively increase the number of Kitchen Collection® stores in strong outlet malls in well-positioned locations 1 Selected Financial and Operating Data NACCO Industries, Inc. and Subsidiaries Year Ended December 31 2014(1) 2013 2012(2) 2011(2)(3) 2010(2)(3) (In millions, except per share data) Operating Statement Data : Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . $ 896.8 $ (66.3) $ 932.7 $ 61.3 Income (loss) from continuing operations . . . . . . . Discontinued operations, net-of-tax(2). . . . . . . . . . . Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (38.1) – $ (38.1) $ 44.5 – $ 44.5 $ 873.4 $ 67.6 $ 42.2 66.5 $ 108.7 $ 790.5 $ 64.1 $ 79.5 82.6 $ 162.1 $ 885.6 $ 94.2 $ 47.1 32.4 $ 79.5 Basic Earnings (Loss) per Share: Income (loss) from continuing operations . . . . . . . Discontinued operations, net-of-tax(2) . . . . . . . . . . . Basic earnings (loss) per share . . . . . . . . . . . . . . . . . Diluted Earnings (Loss) per Share: Income (loss) from continuing operations . . . . . . . Discontinued operations, net-of-tax(2) . . . . . . . . . . . Diluted earnings (loss) per share . . . . . . . . . . . . . . . $ (5.02) – $ (5.02) $ 5.48 – $ 5.48 $ 5.04 7.93 $ 12.97 $ 9.49 9.85 $ 19.34 $ 5.66 3.89 $ 9.55 $ (5.02) – $ (5.02) $ 5.47 – $ 5.47 $ 5.02 7.90 $ 12.92 $ 9.46 9.82 $ 19.28 $ 5.65 3.88 $ 9.53 Per Share and Share Data: Cash dividends(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market value at December 31. . . . . . . . . . . . . . . . . . Stockholders’ equity at December 31 . . . . . . . . . . . $ 1.023 $ 59.36 $ 29.23 Actual shares outstanding at December 31 . . . . . . Basic weighted average shares outstanding . . . . . Diluted weighted average shares outstanding . . . 7.236 7.590 7.590 Balance Sheet Data at December 31: Cash(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61.1 $ 770.5 $ 191.4 $ 211.5 $ 1.000 $ 62.19 $ 37.83 7.872 8.105 8.124 $ 95.4 $ 810.0 $ 152.4 $ 297.8 $ 5.378 $ 60.69 $ 33.68 8.353 8.384 8.414 $ 139.9 $ 776.3 $ 135.4 $ 281.3 $ 2.120 $ 89.22 $ 68.81 8.374 8.383 8.408 $ 153.8 $ 1,808.8 $ 74.5 $ 576.2 $ 2.085 $ 108.37 $ 53.69 8.333 8.328 8.344 $ 92.4 $ 1,670.9 $ 139.8 $ 447.4 (1) During the fourth quarter of 2014, NACoal determined that indicators of impairment existed at its Reed Minerals mining operations and as a result reviewed the Reed Minerals’ long-lived assets for impairment. NACoal recorded a non-cash, asset impairment charge of $105.1 million for the Reed Minerals’ long-lived asset group. (2) During 2012, NACCO spun off Hyster-Yale, a former subsidiary. The results of operations of Hyster-Yale for all periods shown have been reclassified to reflect Hyster-Yale’s operating results as discontinued operations. (3) In 2006, NACCO initiated litigation in the Delaware Chancery Court against Applica Incorporated (“Applica”) and individuals and entities affiliated with Applica’s shareholder, Harbinger Capital Partners Master Fund, Ltd. The litigation alleged a number of contract and tort claims against the defendants related to the failed transaction with Applica, which had been previously announced. On February 14, 2011, the parties to this litigation entered into a settlement agreement. The settlement agreement provided for, among other things, the payment of $60 million to NACCO and dismissal of the lawsuit with prejudice. The payment was received in February 2011. Litigation costs related to this matter were $2.8 million and $18.8 million in 2011 and 2010, respectively. (4) Cash dividends in 2012 include a one-time special cash dividend of $3.50 per share. The $0.25 dividend paid in the fourth quarter of 2012 was the first regular quarterly dividend following the spin-off of Hyster-Yale. This Annual Report contains references to non-GAAP financial measures. Presentations of, and quantitative reconciliations to, the most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) appear on page 3 and page 14. For certain pre-tax disclosures included in the “Discussion of 2014 Results” on page 4, the resulting after-tax amount and the related income tax amount have been included and reconciled on page 14. Certain after-tax amounts are considered non-GAAP measures in accordance with Regulation G. Management believes that after-tax information is useful in analyzing the Company’s net income. 2  Year Ended December 31 2014(1) 2013 2012(2) 2011(2)(3) 2010(2)(3) (In millions, except employee data) Cash Flow Data: Operating Activities North American Coal Corporation . . . . . . . . . . . . Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . . NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . . Provided by operating activities from continuing operations . . . . . . . . . . . . . . . . . . $ (6.1) 18.6 7.1 0.2 $ 29.5 40.8 (10.1) (7.1) $ 50.2 27.4 3.8 (7.1) $ 31.7 24.2 4.9 39.8 $ 25.9 15.0 6.3 (31.6) $ 100.6 $ 74.3 $ 53.1 $ 15.6 $ 19.8 Investing Activities North American Coal Corporation . . . . . . . . . . . . Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . . NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . . Used for investing activities from continuing operations . . . . . . . . . . . . . . . . . . Cash Flow before Financing Activities(5) North American Coal Corporation . . . . . . . . . . . . Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . . NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Cash Flow before Financing Activities from continuing operations(5) . . . . . . . . . . . . . . . . . . Provided by (used for) financing activities from continuing operations . . . . . . . . . . . . . . . . . . Other Data: Adjusted EBITDA(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total employees at December 31(7) . . . . . . . . . . . . . $ (44.1) (29.5) (0.8) (0.5) $ (56.2) (2.3) (2.1) (0.1) $ (56.3) (3.2) (3.9) (0.4) $ (10.7) (3.7) (2.3) (0.1) $ 6.9 (2.2) (2.7) 0.7 $ (74.9) $ (60.7) $ (63.8) $ (16.8) $ (2.7) $ (50.2) (10.9) 6.3 (0.3) $ (26.7) 38.5 (12.2) (7.2) $ (6.1) 24.2 (0.1) (7.5) $ 21.0 20.5 2.6 39.7 $ 32.8 12.8 3.6 (30.9) $ (55.1) $ (7.6) $ 10.5 $ 83.8 $ 18.3 $ 21.0 $ (36.8) $ (24.5) $ (22.4) $ (18.9) $ 63.4 $ 88.8 $ 81.9 $ 80.0 $ 110.3 4,000 4,100 4,300 4,000 3,900 (5) Cash Flow before Financing Activities is equal to net cash provided by operating activities less net cash used for investing activities. (6) Adjusted EBITDA is provided solely as a supplemental disclosure with respect to operating results. Adjusted EBITDA does not represent net income, as defined by U.S. GAAP and should not be considered as a substitute for net income or net loss, or as an indicator of our operating performance. NACCO defines Adjusted EBITDA as income before discontinued operations, Applica settlement and litigation charges, long-lived asset and goodwill impairment charges and income taxes plus net interest expense and depreciation, depletion and amortization expense. Adjusted EBITDA is not a measurement under U.S. GAAP and is not necessarily comparable with similarly titled measures of other companies. (7) Includes employees of Weston Brands starting in 2014, Reed Minerals starting in 2012 and the unconsolidated mines for all years presented. Excludes employees of Hyster-Yale for all years presented. Year Ended December 31 2014(1) 2013 2012(2) 2011(2)(3) 2010(2)(3) (In millions) Calculation of Adjusted EBITDA(6) Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations, net of tax . . . . . . . . . . . . . Applica settlement and litigation costs . . . . . . . . . . Reed Minerals long-lived asset impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . Reed Minerals goodwill impairment charge . . . . . . Income tax provision (benefit) . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation, depletion and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.1 — (38.5) 7.6 (0.8) — 4.0 11.3 4.8 (0.3) — — 15.8 6.1 (0.2) — — 32.8 8.8 (0.3) — — 15.6 10.8 (0.3) $ 162.1 (82.6) (57.1) $ (38.1) — — $ 44.5 — — $ 108.7 (66.5) — $ 79.5 (32.4) 18.8 16.3 $ 80.0 24.5 $ 88.8 18.3 $ 110.3 18.0 $ 81.9 28.1 $ 63.4 3 Discussion of 2014 Results NACCO Industries, Inc. and its subsidiaries operate in the mining, small appliances and specialty retail industries – all industries that experienced their own set of difficulties in 2014. While the overall economy improved during 2014, the middle-market mass consumer, the target consumer for the Company’s Hamilton Beach Brands (“HBB”) and Kitchen Collection businesses, continued to struggle with financial and economic concerns, leading to weak retail market conditions for small appliances and other kitchen products. In addition, customer visits to stores, particularly at traditional and outlet malls, continued to decline. North American Coal (“NACoal”) performed as expected in 2014 with the exception of the Reed Minerals operations, where decreased demand and depressed coal prices, particularly in the metallurgical coal market, caused significant losses. Given these conditions, 2014 was a challenging year. Consolidated revenues decreased to $896.8 million in 2014 from $932.7 million in 2013 primarily due to reduced sales at Kitchen Collection from closing underperforming stores and fewer customer visits at comparable stores, and lower royalty income and reduced deliveries at NACoal. However, HBB’s revenues increased slightly as a result of an increase in sales of new products with higher price points. The Company faces a very difficult situation with its Reed Minerals operation. When this business was acquired in 2012, NACoal believed the metallurgical coal market was at a relative low point. However, that has not proven to be the case as demand for metallurgical coal has fallen significantly and the price of metallurgical coal has deteriorated far beyond the Company’s expectations. Since the acquisition in 2012, NACoal has made significant investments to improve productivity and reduce operating costs at Reed Minerals. In January 2015, Reed Minerals’ largest thermal coal customer clarified the plan it will adopt to comply with the U.S. Environmental Protection Agency’s new Mercury and Air Toxics Standards (“MATS”) beginning in the fourth quarter of 2015. This plan includes more stringent coal quality requirements than previously anticipated and is expected to contribute to an overall increase in coal processing costs at Reed Minerals beginning in late 2015 without an increase in selling price. Revisions made early in 2015 to the Reed Minerals’ 2015 operating plan and long-range outlook reflected this new information about MATS compliance, decreased demand and depressed coal prices and the lack of any reliable indicators of a recovery in coal demand or price. As a result of these factors, NACoal recorded a non-cash impairment charge of $105.1 million, or $66.4 million after tax, for 2014 related to the long-lived assets of its Reed Minerals mining operations. In 2013, NACoal determined that the $4.0 million, or $2.6 million after tax, of goodwill related to the 2012 acquisition of Reed Minerals was fully impaired. Including these impairment charges, NACoal’s net loss was $51.0 million in 2014 compared with net income of $31.9 million in 2013, while NACCO incurred a consolidated net loss of $38.1 million, or $5.02 per diluted share, in 2014, compared with net income of $44.5 million, or $5.47 per diluted share, in 2013. Excluding these impairments, NACoal reported adjusted income of $15.5 million in 2014 compared with adjusted income of $34.5 million in 2013. “Adjusted income or loss” refers to net income or net loss results that exclude long-lived asset and goodwill impairment charges. (For reconciliations from GAAP results to the adjusted non-GAAP results, see page 14.) Improved results at the unconsolidated mining operations were offset by a reduction in profitability at the consolidated mines and a significant reduction in royalty and other income in 2014. Adjusted income for 2014 was negatively affected by the consolidated mines due to increased operating costs at Reed Minerals and a reduction in lignite tons sold at Mississippi Lignite Mining Company as a result of an increase in planned and unplanned outage days at the customer’s power plant during the year. While HBB’s revenues and gross profit improved during 2014 from increased sales of new products with higher price points and higher margins, net income declined to $23.1 million in 2014 from $25.1 million in 2013 as selling, general and administrative expenses increased and foreign currency movements negatively affected results. Finally, Kitchen Collection made significant improvements in its operations during 2014. Although revenues decreased substantially from the closure of unprofitable stores, a reduction in operating expenses and a shift in sales mix to higher-margin products helped Kitchen Collection achieve a lower net loss of $4.6 million in 2014 compared with a net loss of $6.9 million in 2013. Consolidated adjusted income for the year ended December 31, 2014 was $28.3 million, or $3.72 per diluted share, compared with adjusted income in 2013 of $47.0 million, or $5.79 per diluted share. Additional discussion of these results, the Reed Minerals long-lived asset impairment and the 2015 outlook for each of the Company’s businesses can be found starting on page 15 of this Annual Report on Form 10-K or is available on the Company’s website. 4 Coal Lake and the surrounding grasslands, a pristine wildlife habitat area benefiting farmers, ranchers and hunters, was donated by North American Coal and The Falkirk Mining Company’s customer as part of an environmental project to donate certain reclaimed land to the North Dakota Department of Transportation. Coal Lake was formed from one of the mining pits at the Falkirk Mine, which can be seen mining a new area in the distance. To Our Stockholders Introduction NACCO Industries, Inc., headquartered in selected value-added mining services for other Cleveland, Ohio, is an operating holding company natural resources companies. with a long-term objective of increasing stock- Hamilton Beach Brands, Inc., headquartered holder wealth, with a particular focus on taxable in Richmond, Virginia, is a leading designer, investors. The business of NACCO Industries marketer and distributor of small electric is conducted through three separate and household and specialty housewares appliances, independently managed subsidiaries, with a as well as commercial products for restaurants, small core of people performing public company bars and hotels. activities at the corporate headquarters. The Kitchen Collection, LLC, headquartered The North American Coal Corporation, in Chillicothe, Ohio, is a national specialty retailer headquartered in Dallas, Texas, mines and markets steam and metallurgical coal for use in power generation and steel production and provides of kitchenware operating under the Kitchen Collection® store name in outlet and traditional malls throughout the United States. 5 North American Coal Unconsolidated Mines more traditional business model, where NACoal provides the capital for the mine and sells coal North American Coal (“NACoal”) employs a produced to customers. These mines are referred different business model than most other coal to as the “consolidated mines” because they are industry participants. A large majority of NACoal’s consolidated in the Company’s financial state- mines operate under contracts to supply coal to ments. At Mississippi Lignite Mining Company an individual customer’s power plant for a long (“MLMC”), coal is delivered to a single power plant period of time, often for decades. The mines which is adjacent to the mine. MLMC’s coal and the customer facilities are in close proximity, prices are fixed, but they escalate pursuant often adjacent to one another. These contracts to established indices over time and are not include “cost-plus” pricing terms under which subject to spot coal market fluctuations. MLMC’s NACoal’s compensation includes all operating contract expires in 2032. costs, plus a comparatively small but consistent The Centennial Natural Resources coal amount of agreed profit on tons or heating mining business in Alabama, formerly known as units (btu) delivered. All but two of NACoal’s coal Reed Minerals until the beginning of 2015, was mining operations operate pursuant to cost-plus acquired in August 2012 as the foundation of contracts. This contractual approach also applies what was expected to become a metallurgical to NACoal’s value-added service operations, such coal platform for NACoal. Key to this acquisition as its Florida dragline mining operations, where was an existing multi-year contract to sell a NACoal personnel operate and maintain draglines majority of the coal produced as steam coal for for extraction of limerock at customer-owned use by a significant U.S.-based public utility. limerock mines. NACoal viewed this contract as providing stability While the pre-tax profits generated from against the recognized volatility in the market for these mines are included in NACoal’s income metallurgical coal, which accounted for the balance statement, these mines, which are referred to as of Centennial’s coal production. Centennial is the “unconsolidated mines,” are not consolidated the only part of NACoal’s business that has any in the Company’s financial statements. Financing exposure to fluctuations in spot coal prices. for these mines is supported by, or in some When this business was acquired in 2012, the instances, actually provided by customers to Company believed the metallurgical coal market minimize costs. NACoal and its customers believe was at a relative low point. Market analysis at the strongly that these long-term contracts fully align time of the acquisition indicated that the metal- the long-term interests of the mine and the lurgical coal market was close to bottom and customer facility in a way that assures low costs suggested that improvements in both price and for the customer over the long term. NACoal’s demand were on the horizon. That analysis was analysis of historical data supports that conclusion. proven to be incorrect as global demand for Consolidated Mines metallurgical coal has fallen significantly, including in important export markets such as China, and Two of NACoal’s coal mines, one in Mississippi the price for metallurgical coal has deteriorated and one in Alabama, operate pursuant to a far beyond what NACoal expected. Customer 6 for the fourth quarter of 2014. This non-cash accounting charge does not impact the Company’s cash flow from operations. NACoal faces a very difficult situation with the Centennial operation. Until markets improve, the Centennial business will be managed based on cash generation. The management team is right- sizing operations in line with conservative volume estimates, altering mining plans, investigating less costly coal processing methods, managing production volumes to optimize cash flow, evaluating capital employed and considering sales of non-core assets if appropriate. The Company believes that efforts to manage the business around conservative volume expectations and manage for cash will help position this business to take advantage of any rebound in the coal market that may occur over time. Safety and Environmental Excellence NACoal consistently ranks among the safest and most environmentally responsible coal mining companies in the country. In 2014, the Mine Safety and Health Administration A new dragline and surface miner were put into service in 2014 at North American Coal’s newest mine, Caddo Creek Resources Company, which commenced delivering coal in late 2014. demand and pricing for all types of coal in the (MSHA) listed NACoal as the safest large coal Alabama market have declined and remain weak. mining company in the country. Safety is at the Clearly this result is very disappointing to us and very core of NACoal’s culture, embedded deeply to our stockholders. In addition, we now believe in employee training programs, operating regulatory changes on the immediate horizon, procedures and best practices shared among including the Environmental Protection Agency’s all of NACoal’s operations. costly and controversial Mercury and Air Toxics NACoal’s permitting, mining and reclamation Standards regulation, which requires significant activities utilize state-of-the-art technology and a reductions in mercury emissions from power commitment to excellence to ensure that activities plants, will increase Centennial’s operating costs comply with, or exceed, legal requirements. Work without corresponding increases in coal selling on the mine site is performed with the greatest prices. These pricing, demand and regulatory degree of care to ensure that land is returned to pressures led to recognition of a very substantial a productive natural state. Frequently, NACoal non-cash impairment charge related to the employees and their families are farmers, ranchers Centennial mining operations’ long-lived assets and outdoorsmen who live near mining areas. 7 They care deeply about the land, water and to 2012, the outlook at Centennial is poor at this wildlife where they live and are excellent stewards. time due to low coal prices, low demand and As representative evidence of this corporate the aforementioned regulatory challenges. We and individual commitment to the environment, currently are not prepared to forecast significant MLMC received one of only three 2014 Excellence GAAP earnings at Centennial, and will not until in Surface Coal Mining Reclamation Awards from these price and demand conditions improve. the U.S. Department of the Interior’s Office of NACoal expects to continue its record of Surface Mining and Reclamation. operational excellence in safety, environmental stewardship and production at each of its mining Strategic Initiatives and Long-Term View operations and, over time, to deliver profitability NACoal’s unconsolidated operations, which that exceeds its financial objectives, with the constitute a large majority of its earnings and exception of the Centennial operations. cash flow capabilities, provide a strong core to Given the current unsupportive regulatory NACoal’s business model. NACoal has been very environment for developing new traditional fortunate to enter into six new agreements over coal-fired power plants, and based on lessons the last several years to develop new mines learned at Centennial, NACoal is taking a very or provide services to customers. Generally, disciplined approach with respect to growth. the power plants served by NACoal are among Opportunities may exist, although limited, to the lower-cost producers of electricity on their provide coal to customers for use other than as respective grids. NACoal expects to continue to a power-generation fuel, or to serve as a cost-plus be a low-cost miner of coal at existing mines and contract miner for non-coal operations, such as its mines in development, in support of customer aggregates or other minerals. Also, strategic needs. Over the longer term, NACoal’s goal is to growth could possibly come from projects based increase earnings of its unconsolidated operations on new technologies that utilize coal, such as by approximately 50 percent by 2017 over 2012 integrated gasification combined-cycle power results through the development and maturation generation, and production of alternative of its new mines in development and normal fuels made from coal, as well as other clean escalation of contractual compensation at its coal technologies and non-traditional products existing unconsolidated mines. NACoal continues derived from coal. NACoal is working with a to anticipate it will achieve this goal. range of technical experts and potential partners NACoal also has had a goal of at least doubling who could help develop projects based on these the earnings contribution of its consolidated advanced technologies. However, any significant mining operations by 2017 from 2012 levels due growth in domestic opportunities is largely to benefits from anticipated continued operational dependent on the United States adopting a improvements at MLMC’s customer’s power plant more balanced energy policy in which coal and from the company’s execution of its long-term continues to play a key role, including through plan at the Centennial operations. While NACoal new coal technologies. continues to expect meaningful improvements NACoal believes that a large majority of of financial results at the MLMC mine compared consumers in the United States will benefit 8 from a domestic energy policy that balances Overall, NACoal’s focus on safety and affordability, energy needs and environmental environmental compliance and its unusual but responsibility. The company believes that, for the attractive business model, based largely on long- foreseeable future, coal must remain an integral term cost reimbursable contracts, provide a solid part of the nation’s total energy mix for the foundation for all of the company’s coal and United States to continue to be competitive in a limerock mining operations, as well as stable global economy. NACoal will continue to monitor cash flow before financing activities with minimal pending regulations and legislation and will take capital investment, other than at MLMC, which a leadership role to help encourage reasonable will continue to require ongoing replacement regulation by the government. Importantly, capital. NACoal will continue to pursue growth NACoal expects to address currently anticipated over the next few years mainly as the company’s changes to domestic environmental regulatory new mines currently in development reach full requirements by working collaboratively with its production and by reaching its five-year targets customers, trade associations, representatives for its consolidated and unconsolidated mines, of regulatory bodies, and government officials. other than Centennial. Hamilton Beach Brands Overview Hamilton Beach Brands’ (“HBB”) vision is to be a leading designer, marketer and distributor of small electric household, specialty housewares and commercial appliances sold worldwide under strong brand names and to achieve profitable growth from innovative solutions that improve everyday living. HBB develops and invests in several core competencies that are critical to achieving that vision. Most importantly HBB has a culture based on a foundation of Good Thinking™. Whether developing innovation to address consumers’ unmet needs, solving a challenge in the supply chain or partnering with a retail customer, HBB’s Good Thinking™ culture provides a competitive advantage. The only way to achieve that culture is by hiring and retaining talented and dedicated employees globally. In addition, HBB believes it is best in class at sourcing and logistics as well as support systems to meet the needs of retail and commercial customers. HBB pursues market and Hamilton Beach Brands’ new Wolf Gourmet® Blender, just one appliance in a line of luxury countertop appliances created through a licensing agreement with Sub-Zero Group, Inc. to enter the “only-the-best” market segment. 9 product development expertise to help ensure products delight consumers across the most desirable market opportunities. Finally, HBB maintains and invests in a strong brand portfolio to increase customer and consumer confidence that HBB’s family of products is right for them. Strategic Initiatives and Long-Term View HBB’s vision includes delivering growth above historic rates to reach sales of approximately $750 million over the next four to five years. As the company moves toward this target sales level, HBB expects to take advantage of increasing economies of scale to improve return on sales by focusing on its five key strategic initiatives. First, HBB is focused on enhancing place- ments in the North American consumer business through consumer-driven innovative products and strong sales and marketing support. The company’s product and placement track record is strong due to innovation processes centered on understanding and meeting end-user needs and focusing on quality and best-in-class customer service. In the North American consumer market, HBB believes it has a stronger and deeper portfolio of new products than its competitors. HBB expects its product pipeline in 2015 and beyond to be at or above 2014 levels, leveraging strong brands and best-in-class products. Products available from Hamilton Beach Brands’ new acquisition Weston Brands, include, clockwise from top: Weston® Fruit & Wine Press, Weston® Pro Series Meat Grinder, Weston® Professional Advantage Vacuum Sealer, Weston® Electric Pasta Machine and Weston® Cabbage Shredder In pursuit of growing placements, HBB Table segment has grown almost 10 percent over acquired the Weston Products business (now the past decade. In the Farm-to-Table segment, called Weston Brands) near the end of 2014. about one-third of the U.S. population participates Weston Brands markets and distributes appliances and accessories under the proprietary Weston® brand and private label brands for consumers who in gardening or home harvesting. As interest in home harvesting, farmers’ markets and more wholesome food choices continues to expand, this are hunters, gardeners and food enthusiasts who acquisition is expected to deliver growth at a rate have a passion for Farm-to-Table and Field-to-Table at or above HBB’s core kitchen appliance business. foods, and for knowing the origin of their food. A second area of growth opportunity is The U.S. population participating in the Field-to- through the enhancement of online sales and 10 communications. In the past few years, online growth markets of Asia and Latin America by sales of small kitchen appliances have grown increasing product offerings designed specifically significantly. During 2014, approximately 17 percent for those market needs and by expanding of small kitchen appliances were purchased distribution channels and sales and marketing online. Retailers are looking for partners that capabilities. HBB’s historical strength has been can provide not only products, but also the in the North American consumer goods market, capabilities and support for promotion, marketing with approximately 20 percent of its total sales and distribution programs appropriate for that occurring outside the United States in 2014. HBB’s channel. As consumers’ shopping habits evolve objective is to increase international sales to 35 to to rely more on the Internet, HBB is focused on 45 percent of total sales by concentrating on key providing best-in-class retailer support, increasing markets. HBB’s efforts will focus on continuing to engagement with end users, including maintaining expand its positions in Mexico, Canada, Central a website that is appropriate for mobile devices, America and South America, as well as in the and enhancing its programs designed to make emerging markets of China, India and Brazil. To HBB the preferred source for small appliances. achieve this growth, HBB is working to enhance Third, in 2014 HBB announced its entry its understanding of local consumers’ needs, into the “only-the-best” high-end small kitchen increasing sales and marketing resources allocated appliance market segment through multi-year to these markets and developing products to licensing agreements with the Sub-Zero Group, meet those needs, especially in the mid- to high- Inc. and the Jamba Juice Company. HBB and end segments of these markets. HBB began Sub–Zero Group will be launching a full line of Wolf Gourmet® branded small kitchen appliances and cooking tools in 2015 for sale in high-end selling retail products in China in 2013, and in Brazil and India in 2014. HBB expects to increase sales in these areas in 2015. retail channels, in Sub-Zero and Wolf showrooms Fifth, while HBB has a solid position in and on the Internet. This “only-the-best” segment the commercial market, it continues to focus is a strong growth opportunity area in which HBB on achieving further penetration of the global has not previously participated. This segment commercial market through a commitment to accounts for approximately one-third of the U.S. an enhanced global product line for chains and small kitchen appliance market, and its target distributors serving the global food service and consumer is financially strong. The company also hospitality markets. HBB is enhancing its global is currently working with the Jamba Juice Company commercial product line, particularly with new to create a product line focused on blending and juicing under the Jamba® brand. HBB will introduce the first Jamba® branded products in 2015. HBB is pursuing other opportunities to create additional innovative blending and mixing platforms, and strengthening its food service and hospitality offerings in order to achieve further market penetration in this segment. Over the near term, product lines that can be distributed in high-end HBB anticipates continuing to build distribution or specialty stores and on the Internet. capabilities and resources in the international Fourth, HBB is focused on expanding its food service market, where products and services retail presence internationally in the emerging will be directed at global food service chains. 11 HBB is optimistic that it will be able to build During 2014, Kitchen Collection closed a on the momentum achieved in 2014 by focusing significant number of stores early in the year and on these five strategic initiatives as a solid set of opened a smaller number of stores toward the strategies for profitable growth. HBB believes end of the year. By the end of 2014, essentially it is well-positioned to continue its leadership most of the stores with recurring poor results position in the small kitchen appliances industry. were closed or were scheduled for closure in Achieving its $750 million sales objective will help move the company toward achieving its near-term financial objective of 8 percent operating profit margin and its long-term financial early 2015. As part of this process, the remaining Le Gourmet Chef® outlet stores will be evaluated, and some may be converted to Kitchen Collection® stores. The company will also continue to evaluate objective of a minimum 10 percent operating and, as lease contracts permit, close or restructure profit margin in the years ahead. It also expects leases for underperforming stores. to continue to be a substantial generator of cash flow before financing activities, with a continued low level of capital expenditures required. Kitchen Collection Kitchen Collection’s vision is to be a leading Kitchen Collection has a strong core in its Kitchen Collection® store format in outlet malls. In the near term, Kitchen Collection expects to add stores cautiously and focus its growth on its Kitchen Collection® store format, with new stores expected to be located in sound positions specialty retailer of kitchenware in outlet malls in strong outlet malls. As the company reaches and to a lesser degree traditional malls through- a solid core store portfolio, focus will shift to out the United States. However, to achieve this comparable store sales growth. Kitchen Collection vision, Kitchen Collection must increase the expects to accomplish this by enhancing sales number of customers coming into its stores, which volume and profitability through continued is difficult in an environment in which many of its refinement of its format and ongoing review of target consumers are financially stressed. High specific product offerings, merchandise mix, store unemployment or underemployment, fewer two- displays and appearance, while continuing to income families and lower rates of household improve inventory efficiency and store inventory formation have resulted in fewer visits to many of controls. A particular focus will be on increasing the malls and outlets where Kitchen Collection has sales of higher-margin products. Nonetheless, store locations. In addition, intense competitive at current mall and store traffic levels, reaching pressure for value has resulted in additional the company’s 5 percent operating profit margin discounting and brought margins under pressure. target will be challenging. In this environment, not all malls where Kitchen Overall, Kitchen Collection is dealing with a Collection maintains stores are doing well. In the difficult environment and evolving aggressively in strong malls in which Kitchen Collection has a a constructive manner. Capital expenditures are good store position, its stores do well, but stores in expected to be modest, with generation of positive struggling malls with poor store locations are not cash flow before financing activities expected. doing well, despite improvements to the Kitchen Collection® store format over the past few years. 12 Conclusion and NACCO Outlook the stock repurchase program the Company NACCO is a strong, multi-industry company announced in November 2013, which permits the with leading businesses in the mining and small repurchase of up to $60 million of the Company’s appliances industries. The Company continues to outstanding Class A common stock. Under a believe HBB’s growth opportunities are significant. previous stock repurchase program which ran While growth opportunities also are significant from November 2011 to November 2013, the at NACoal, they are largely based on growth at Company repurchased approximately 624,000 existing mines and those in development. Both shares of Class A common stock for an aggregate HBB and NACoal will be prudent in pursuing purchase price of $35.6 million. any new opportunities. NACCO is confident that NACoal and HBB have the right strategic initiatives n n n in place to move them closer to achieving their We would like to recognize Jack Turben, who long-term growth and financial objectives. Kitchen chose to retire from the NACCO and subsidiary Collection’s long-term prospects at this time are Boards this past May, after serving for 17 years. uncertain, but its near-term prospects are positive He also served as chair of our Finance Committee. and should improve significantly. NACCO is well Jack brought unique and valuable perspectives positioned to support its individual businesses to the Board from his experiences as a real in the years ahead. Each subsidiary is benefitting pioneer and leader in the private equity arena. from programs previously put in place which, We appreciate his many contributions and wish when combined with the initiatives now being him well in retirement. implemented, should improve income and return In closing, we would like to thank all of our on total capital employed at each business over subsidiaries’ customers, retailers and suppliers, the next few years. In addition, the Company and all of NACCO’s stockholders, for their expects each business to generate significant continued support. Most importantly, we would cash flow before financing over time, which it also like to thank all employees of NACCO and its expects to use mainly to pay dividends, repurchase subsidiary companies for their continued hard stock when that is an attractive investment for work. We continue to have great confidence its stockholders, and reduce debt. in the management teams leading each of our As of December 31, 2014, NACCO had subsidiaries and the parent company, and we repurchased 680,013 shares of its Class A common are confident these teams can successfully stock for an aggregate purchase price of $36.0 implement their respective strategic initiatives million, including $35.1 million of stock purchased to enhance the Company’s sales and profits over during 2014. These purchases were made under the next few years. Alfred M. Rankin, Jr. Chairman, President and Chief Executive Officer NACCO Industries, Inc. Robert L. Benson President and Chief Executive Officer The North American Coal Corporation Gregory H. Trepp President and Chief Executive Officer Hamilton Beach Brands, Inc. Chief Executive Officer The Kitchen Collection, LLC 13 Supplemental Data Reconciliation of 2014 and 2013 Net Income (Loss) “As reported” to Adjusted Income: 2014 Net Loss, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-lived asset impairment charge, after taxes of $38,680 . . . . . . . . . . . . . . 2014 Adjusted Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (In thousands, except per share data) NACoal Consolidated Year Ended 2014 $ (50,977) 66,439 15,462 $ Year Ended 2014 $ (38,118) 66,439 28,321 $ Year Ended 2013 Year Ended 2013 Diluted earnings per share $ $ (5.02) 8.74 3.72 Diluted earnings per share 2013 Net Income, as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill impairment charge, after taxes of $1,400 . . . . . . . . . . . . . . . . . . . . . 2013 Adjusted Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ $ 31,926 2,573 34,499 $ $ 44,450 2,573 47,023 $ $ 5.47 0.32 5.79 Adjusted Income is a measure of income that differs from Net Income (Loss) measured in accordance with U.S. GAAP. The Company has reported Adjusted Income and Diluted earnings per share for the years ended December 31, 2014 and 2013 excluding the net effect of the long-lived asset and goodwill impairment charges, respectively. Management believes a discussion excluding these impairment charges is more reflective of NACCO’s and NACoal’s underlying business operations and enables investors to better understand the results of operations of the Company. Calculation of Return on Capital Employed and Return on Equity: (In millions, except percentage data) 2014 2014 Average Equity (12/31/2013 and each of 2014’s quarter ends) . . . . . . . 2014 Average Debt (12/31/2013 and at each of 2014’s quarter ends) . . . . . . 2014 Average Cash (12/31/2013 and at each of 2014’s quarter ends) . . . . . . Total 2014 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 Net income (loss), as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus: 2014 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Income taxes on 2014 interest expense at 38%* . . . . . . . . . . . . . . . . . . . . . Actual return on capital employed = actual net income (loss) before interest expense, net, after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on capital employed percentage(1) . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on equity percentage(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Calculation of Return on Capital Employed and Return on Equity: 2013 2013 Average Equity (12/31/2012 and each of 2013’s quarter ends) . . . . . . . . 2013 Average Debt (12/31/2012 and at each of 2013’s quarter ends) . . . . . . . 2013 Average Cash (12/31/2012 and at each of 2013’s quarter ends) . . . . . . . Total 2013 average capital employed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 Net income (loss), as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plus: 2013 Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: Income taxes on 2013 interest expense at 38%**. . . . . . . . . . . . . . . . . . . . Actual return on capital employed = actual net income (loss) before interest expense, net, after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on capital employed percentage(1) . . . . . . . . . . . . . . . . . . . . . . . . . . Actual return on equity percentage(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NACoal HBB Kitchen Collection $ $ $ $ $ $ $ $ 139.8 179.8 (0.1) 319.5 (51.0) 5.2 (2.0) (47.8) (15.0%) (36.5%) $ $ $ $ 53.5 32.3 (2.8) 83.0 23.1 1.1 (0.4) 23.8 28.7% 43.2% NACoal HBB 121.2 140.3 (1.2) 260.3 31.9 3.1 (1.2) 33.8 13.0% 26.3% $ $ $ $ 48.8 27.2 (1.8) 74.2 25.1 1.3 (0.5) 25.9 34.9% 51.4% $ $ $ $ $ $ $ $ 32.2 8.1 (1.7) 38.6 (4.6) 0.4 (0.2) (4.4) (11.4%) (14.3%) Kitchen Collection 38.8 7.3 (3.1) 43.0 (6.9) 0.4 (0.2) (6.7) (15.6%) (17.8%) (1) Return on capital employed is provided solely as a supplemental disclosure with respect to income generation because management believes it provides useful information with respect to earnings in a form that is comparable to the Company’s cost of capital employed, which includes both equity and debt securities, net of cash. (2) Return on equity is defined as net income divided by average equity. * Tax rate of 38% represents the Company’s target marginal tax rate compared with 2014’s effective income tax rate of 50.2%. ** Tax rate of 38% represents the Company’s target marginal tax rate compared with 2013’s effective income tax rate of 20.2%. 14 Directors and Officers NACCO Industries, Inc. Officers of Subsidiaries The North American Coal Corporation Alfred M. Rankin, Jr. Chairman Robert L. Benson President and Chief Executive Officer J.C. Butler, Jr. Senior Vice President-Project Development, Administration and Mississippi Operations Carroll L. Dewing Vice President-North Dakota, Texas and Florida Operations, Human Resources and External Affairs, President, The Coteau Properties Company Michael J. Gregory Vice President-Marketing and Special Projects Miles B. Haberer Associate General Counsel, Assistant Secretary and Director-Land Mary D. Maloney Associate General Counsel, Assistant Secretary and Senior Director- Benefits & Compensation John D. Neumann Vice President, General Counsel and Secretary J. Patrick Sullivan, Jr. Vice President and Chief Financial Officer Harry B. Tipton III Vice President-Engineering, and Alabama and Louisiana Operations Jesse L. Adkins Associate Counsel and Assistant Secretary K. Donald Grischow Treasurer, Director-Compensation and Benefits and Global Risk Management John R. Pokorny Controller Hamilton Beach Brands, Inc. Alfred M. Rankin, Jr. Chairman Gregory H. Trepp President and Chief Executive Officer Gregory E. Salyers Senior Vice President, Global Operations R. Scott Tidey Senior Vice President, North America Sales and Marketing Keith B. Burns Vice President, Engineering and Information Technology Kathleen L. Diller Vice President, General Counsel and Secretary Dana B. Sykes Associate General Counsel, Assistant Secretary and Senior Director, Human Resources James H. Taylor Vice President and Chief Financial Officer Richard E. Moss Senior Director, Finance & Treasurer J.C. Butler, Jr. Assistant Secretary John D. Neumann Assistant Secretary The Kitchen Collection, LLC Alfred M. Rankin, Jr. Chairman Gregory H. Trepp Chief Executive Officer Robert O. Strenski President Randy L. Sklenar Vice President-Field Operations and Human Resources Karen E. Cavender Controller L.J. Kennedy Secretary and Treasurer J.C. Butler, Jr. Assistant Secretary John D. Neumann Assistant Secretary Directors: Scott S. Cowen President Emeritus, Tulane University Former Professor and Dean of Weatherhead School of Management at Case Western Reserve University John P. Jumper Chairman of the Board of Leidos Holdings, Inc. Retired Chief of Staff, United States Air Force Dennis W. LaBarre Retired Partner, Jones Day Richard de J. Osborne Retired Chairman and Chief Executive Officer, ASARCO Incorporated Alfred M. Rankin, Jr. Chairman, President and Chief Executive Officer, NACCO Industries, Inc. Chairman, President and Chief Executive Officer, Hyster-Yale Materials Handling, Inc. James A. Ratner Executive Vice President of Forest City Enterprises, Inc. and Chairman and Chief Executive Officer of Forest City Commercial Group Britton T. Taplin Self employed (personal investments) David F. Taplin Self employed (tree farming) David B. H. Williams Partner of Williams, Bax & Saltzman, P.C. Officers: Alfred M. Rankin, Jr. Chairman, President and Chief Executive Officer J.C. Butler, Jr. Senior Vice President–Finance, Treasurer and Chief Administrative Officer Elizabeth I. Loveman Vice President and Controller John D. Neumann Vice President, General Counsel and Secretary Miles B. Haberer Associate General Counsel and Assistant Secretary Mary D. Maloney Associate General Counsel, Assistant Secretary and Senior Director- Benefits & Human Resources Robert L. Benson President and Chief Executive Officer – The North American Coal Corporation Gregory H. Trepp President and Chief Executive Officer – Hamilton Beach Brands, Inc. Jesse L. Adkins Associate Counsel and Assistant Secretary Corporate Information Annual Meeting The Annual Meeting of Stockholders of NACCO Industries, Inc. will be held on May 14, 2015, at 9:30 a.m. at the corporate office located at: 5875 Landerbrook Drive, Cleveland, Ohio 44124 Form 10-K Additional copies of the Company’s Form 10-K filed with the Securities and Exchange Commission are available free of charge through NACCO Industries’ website (www.nacco.com) or by request to: Investor Relations NACCO Industries, Inc. 5875 Landerbrook Drive, Suite 220 Cleveland, Ohio 44124 (440) 229-5130 Stock Transfer Agent and Registrar Stockholder Correspondence: Computershare P.O. Box 30170 College Station, TX 77842-3170 Overnight Correspondence: Computershare 211 Quality Circle, Suite 210 College Station, TX 77845 (800) 622-6757 (U.S., Canada and Puerto Rico) (781) 575-4735 (International) Legal Counsel McDermott Will & Emery LLP 227 West Monroe Street Chicago, Illinois 60606 Independent Registered Public Accounting Firm Ernst & Young LLP 950 Main Ave., Suite 1800 Cleveland, Ohio 44113 Stock Exchange Listing The New York Stock Exchange Symbol: NC Investor Relations Contact Investor questions may be addressed to: Investor Relations NACCO Industries, Inc. 5875 Landerbrook Drive, Suite 220 Cleveland, Ohio 44124 (440) 229-5130 E-mail: ir@naccoind.com NACCO Industries Website Additional information on NACCO Industries may be found at the corporate website, www.nacco.com. The Company considers this website to be one of the primary sources of information for investors and other interested parties. Subsidiary Company Websites The websites for NACCO’s subsidiaries are as follows: Hamilton Beach Brands–U.S.: www.hamiltonbeach.com www.proctorsilex.com www.commercial.hamiltonbeach.com Hamilton Beach Brands–Mexico: www.hamiltonbeach.com.mx Weston Brands: www.westonproducts.com Kitchen Collection: www.kitchencollection.com www.legourmetchef.com North American Coal: www.nacoal.com (cid:34)(cid:33)(cid:32)(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:31)(cid:34)(cid:26)(cid:25)(cid:24)(cid:32)(cid:23)(cid:25)(cid:26)(cid:22)(cid:31)(cid:21)(cid:24)(cid:32)(cid:20)(cid:19)(cid:16)(cid:32)(cid:15)(cid:31)(cid:14)(cid:13)(cid:13)(cid:24)(cid:31)(cid:16)(cid:12)(cid:32)(cid:26)(cid:15)(cid:31)(cid:11)(cid:13)(cid:23)(cid:21)(cid:20)(cid:10)(cid:31)(cid:9)(cid:26)(cid:13)(cid:23)(cid:31)(cid:9)(cid:13)(cid:26)(cid:32)(cid:15)(cid:8)(cid:15)(cid:31)(cid:14)(cid:33)(cid:21)(cid:11)(cid:33)(cid:31)(cid:33)(cid:25)(cid:7)(cid:32)(cid:31)(cid:12)(cid:32)(cid:32)(cid:20)(cid:31)(cid:11)(cid:32)(cid:26)(cid:21)(cid:19)(cid:9)(cid:32)(cid:24)(cid:31)(cid:21)(cid:20)(cid:31)(cid:25)(cid:11)(cid:11)(cid:13)(cid:26)(cid:24)(cid:25)(cid:20)(cid:11)(cid:32)(cid:31)(cid:14)(cid:21)(cid:8)(cid:33)(cid:31)(cid:8)(cid:33)(cid:32)(cid:31)(cid:26)(cid:6)(cid:5)(cid:32)(cid:15)(cid:31)(cid:13)(cid:9)(cid:31)(cid:8)(cid:33)(cid:32)(cid:31)(cid:30)(cid:13)(cid:26)(cid:32)(cid:15)(cid:8)(cid:31)(cid:29)(cid:8)(cid:32)(cid:14)(cid:25)(cid:26)(cid:24)(cid:15)(cid:33)(cid:21)(cid:4)(cid:31)(cid:28)(cid:13)(cid:6)(cid:20)(cid:11)(cid:21)(cid:5)(cid:27)(cid:3) Environmental Benefits This Annual Report on Form 10­K is printed using post­consumer waste recycled paper and vegetable­based inks. By using this environmental paper, Hyster­Yale Materials Handling, Inc. saved the following resources: 29 trees pre­ served for the future 83 lbs. water­ borne waste not created 12,260 gal. wastewater flow saved 1,356 lbs. solid waste not generated 2,671 lbs. net greenhouse gases prevented 20,442,500 BTUs energy not consumed (cid:30)(cid:29)(cid:28)(cid:31)(cid:21)(cid:15)(cid:31)(cid:20)(cid:13)(cid:8)(cid:31)(cid:26)(cid:32)(cid:15)(cid:4)(cid:13)(cid:20)(cid:15)(cid:21)(cid:12)(cid:5)(cid:32)(cid:31)(cid:9)(cid:13)(cid:26)(cid:31)(cid:8)(cid:33)(cid:32)(cid:15)(cid:32)(cid:31)(cid:11)(cid:25)(cid:5)(cid:11)(cid:6)(cid:5)(cid:25)(cid:19)(cid:13)(cid:20)(cid:15)(cid:3)(cid:31)(cid:28)(cid:25)(cid:5)(cid:11)(cid:6)(cid:5)(cid:25)(cid:19)(cid:13)(cid:20)(cid:15)(cid:31)(cid:4)(cid:32)(cid:26)(cid:31)(cid:2)(cid:13)(cid:33)(cid:25)(cid:14)(cid:22)(cid:31)(cid:1)(cid:20)(cid:7)(cid:21)(cid:26)(cid:13)(cid:20)(cid:23)(cid:32)(cid:20)(cid:8)(cid:25)(cid:5)(cid:31)(cid:28)(cid:25)(cid:5)(cid:11)(cid:6)(cid:5)(cid:25)(cid:8)(cid:13)(cid:26)(cid:3) 5875 Landerbrook Drive, Suite 220 • Cleveland, Ohio 44124 An Equal Opportunity Employer 

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