NACCO INDUSTRIES, INC.
NORTH AMERICAN COAL CORPORATION
2018 ANNUAL REPORT
TRUSTED PARTNERS.
INTEGRATED SOLUTIONS.
Operating in the early morning sunshine, the Marion 8400 dragline at North American Coal’s Coyote Creek
Mine near Beulah, North Dakota, removes overburden before the coal below is mined for delivery to the Coyote
Station power plant.
Contents
North American Coal Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Selected Financial and Operating Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Letter to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover
OUR OPERATIONS
We operate 9 surface coal mines and 18 aggregates quarries . We delivered
38 .5 million tons of coal and 35 .4 million cubic yards of limestone in 2018 . We
operate more draglines than anyone else in the U .S . (over 40), and we have
recently launched Mitigation Resources of North America to create and sell stream,
wetland and species habitat credits .
Cover, clockwise from top left:
A Wirtgen© surface miner is used to extract coal at Camino Real Fuels’ Eagle Pass mine in Texas. u North American Mining operates
a Bucyrus-Erie 8200 dragline for White Rock Quarries in Miami-Dade County, Florida, to extract limestone aggregates for Florida
construction projects. u North American Coal Royalty Company leases Ohio Utica reserves to Ascent Resources, which uses a drill rig
to extract natural gas and oil. u Mature hardwoods flourish along a tributary of the Big Black River at Mitigation Resources of North
America’s Tobaksákola mitigation site in Webster County, Mississippi.
1
NACCO Industries, Inc.. SELECTED FINANCIAL AND OPERATING DATA
NACCO Industries, Inc. and Subsidiaries
2018
Year Ended December 31
2016(1)
(In thousands, except per share data and share amounts)
2017(1)
2015
2014(1)
Operating Statement Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 135,375
$ 43,624
$ 104,778
$ 32,814
$ 111,081
(1,659)
$
$ 147,998
$ (3,727)
$ 172,702
$ (94,486)
Income (loss) from continuing operations . . . . . . . . . .
Discontinued operations, net-of-tax(2) . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 34,785
–
$ 34,785
$ 28,463
1,874
$ 30,337
$
2,956
26,651
$ 29,607
$
2,273
19,711
$ 21,984
$ (56,850)
18,732
$ (38,118)
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 . . . . . . . . . . . . . . . . . .
Per Share and Share Data:
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value at December 31(3) . . . . . . . . . . . . . . . . . . .
Stockholders’ equity at December 31 . . . . . . . . . . . . .
Actual shares outstanding at December 31(4) . . . . . . . .
Basic weighted average shares outstanding(4) . . . . . . .
Diluted weighted average shares outstanding(4) . . . . .
$
$
$
$
5.02
–
5.02
5.00
–
5.00
$ 0.6600
$ 33.90
$ 36.22
6.921
6.924
6.960
$
$
$
$
4 .17
0 .27
4 .44
4 .14
0 .27
4 .41
$ 0 .9775
37 .65
$
32 .03
$
6 .852
6 .830
6 .873
$
$
$
$
0 .43
3 .91
4 .34
0 .43
3 .89
4 .32
$ 1 .0650
90 .55
$
32 .50
$
6 .779
6 .818
6 .854
$
$
$
$
0 .32
2 .82
3 .14
0 .32
2 .81
3 .13
$ 1 .0450
42 .20
$
29 .42
$
6 .837
7 .001
7 .022
$
$
$
$
(7 .42)
2 .40
(5 .02)
(7 .42)
2 .40
(5 .02)
$ 1 .0225
59 .36
$
29 .23
$
7 .236
7 .590
7 .590
(1) During 2014, North American Coal recorded a non-cash, asset impairment charge of $105 .1 million . During 2016 and 2017, North American Coal recorded additional
non-cash impairment charges of $17 .4 million and $1 .0 million, respectively .
(2) On September 29, 2017, the Company spun off Hamilton Beach Brands Holding Company (HBBHC), a former wholly owned subsidiary . The results of operations of
HBBHC are reflected as discontinued operations in the table above.
(3) The 2017 values reflect the effect of the spin-off of HBBHC as a separate public company.
(4) Share amounts in millions .
2
SELECTED FINANCIAL AND OPERATING DATA
2018
2017(1)
Year Ended December 31
2016(1)
(In thousands, except employee data)
2015
2014(1)
Balance Sheet Data at December 31:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 85,257
$ 376,991
6,367
$
$ 250,704
$ 101,600
$ 389,552
$ 42,021
$ 219,448
$ 69,308
$ 668,021
$ 94,295
$ 220,293
$ 35,701
$ 655,408
$ 110,113
$ 201,138
$ 54,148
$ 770,520
$ 137,978
$ 211,474
Cash Flow Data:
Provided by operating activities(5) . . . . . . . . . . . . . . . . .
Used for investing activities(5) . . . . . . . . . . . . . . . . . . . . .
Consolidated Cash Flow before
financing activities (5)(6) . . . . . . . . . . . . . . . . . . . . . . . . .
$ 54,622
$ (18,387)
$ 41,305
$ (15,005)
$ 93,935
(9,817)
$
$ 108,002
(8,291)
$
$ 19,799
$ (74,934)
$ 36,235
$ 26,300
$ 84,118
$ 99,711
$ (55,135)
Provided by (used for) financing activities(5) . . . . . . . .
$ (52,578)
$
(2,306)
$ (55,710)
$ (108,301)
$ 20,979
Other Data:
Total employees at December 31(7) . . . . . . . . . . . . . . . .
2,400
2,300
3,600
3,600
4,000
(5) Includes both continuing operations and discontinued operations for all years presented .
(6) Cash Flow before financing activities is equal to net cash provided by operating activities less net cash used for investing activities.
(7) Includes employees from HBBHC from 2014 to 2016, Centennial Natural Resources for 2014 and the unconsolidated mines for all years presented .
2018
2017(1)
Year Ended December 31
2016(1)
(In thousands)
2015
2014(1)
Calculation of Adjusted EBITDA from
continuing operations(8)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net of tax . . . . . . . . . . . . . . . .
Centennial long-lived asset impairment charge . . . . .
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, depletion and amortization expense
Adjusted EBITDA from continuing operations(8) . . . . .
$ 34,785
–
–
7,378
1,998
(865)
14,683
$ 57,979
$ 30,337
(1,874)
982
639
3,440
(222)
12,767
$ 46,069
$ 29,607
(26,651)
17,443
(9,649)
4,318
(196)
13,050
$ 27,922
$ 21,984
(19,711)
–
(9,510)
4,962
(418)
17,372
$ 14,679
$ (38,118)
(18,732)
105,119
(45,199)
6,062
(827)
22,329
$ 30,634
(8) Adjusted EBITDA from continuing operations is provided solely as a supplemental disclosure with respect to operating results . Adjusted EBITDA from continuing
operations does not represent net income, as defined by U.S. GAAP and should not be considered as a substitute for net income, or as an indicator of operating
performance. NACCO defines Adjusted EBITDA from continuing operations as income from continuing operations before long-lived asset impairment charges and
income taxes plus net interest expense and depreciation, depletion and amortization expense . Adjusted EBITDA from continuing operations is not a measurement
under U.S. GAAP and is not necessarily comparable with similarly titled measures of other companies.
3
NACCO Industries, Inc..
TO OUR STOCKHOLDERS
NACCO Industries, Inc ., the public parent company of The North American
Coal Corporation, delivered solid profitability in 2018 of $34.8 million in income
from continuing operations, a 22% increase over the prior year income of $28 .5
million . In September 2017, NACCO completed the spin-off of its housewares-
related businesses . Since that time, we have been focused on preserving North
American Coal’s existing long-term customer relationships and pursuing growth
opportunities that leverage North American Coal’s core competencies . We are
proud of our long-term customer relationships and our unique business model
that provide customers with low-cost coal and aggregates while providing us with
steady cash flow generation.
North American Coal is not a typical mining company . It operates more like
a service business . Most customer contracts are based on a “management fee”
approach, whereby compensation includes reimbursement of all operating costs,
plus a comparatively small but consistent fee based primarily on deliveries . Since
we only receive fee compensation when customers
take deliveries, the business model aligns our
focus with customer objectives, helping customers
achieve their desired results through reduced costs,
improved quality and/or other specific objectives.
Our unique business model forms partnerships with
We are proud of our long-term
customer relationships and
our unique business model
our customers that can last for decades . As an example, North American Coal’s
Falkirk Mine began delivering coal to its customer in 1978, and Falkirk’s contract
does not expire until 2045 .
As highlighted by our new North American Coal website, www .nacoal .com,
launched in 2018, a key focus of our business model is to provide Integrated
Solutions for our customers . North American Coal operates coal mines that are
exclusively dedicated to providing fuel for customer power plants or activated
carbon facilities . North American Mining maintains and operates draglines that
are an integral part of aggregate production at customer quarries . In recent
years, we have expanded our scope of services to existing customers to include
ash haulage and coal drying services, among others . Because our operations are
4
TO OUR STOCKHOLDERS
adjacent to and integrated into our customers’ operations, the services we provide
are integral to our customers’ success .
Safety is our number-one priority at every mine site, every day and with every
employee in mind . The National Mining Association ranks North American Coal
as an industry leader in safety. We believe safety, efficiency and productivity form
the basis for creating value for our customers . North American Coal designs
and follows operating procedures that strengthen safety, empower employees
and ensure full compliance with local, state and federal regulations . The result:
customers have peace of mind knowing that North American Coal consistently
runs a safe, cost-efficient operation.
Surface Coal Mining
North American Coal operates nine surface coal mines . These mines delivered
38 .5 million tons of coal in 2018, primarily under long-term contracts that generate
predictable earnings and strong cash flow. Coal is surface mined in North Dakota,
Texas, Mississippi, Louisiana and on the Navajo Nation in New Mexico .
North American Coal’s mines supply coal primarily to power generation
companies and, to a lesser extent, activated carbon facilities . Each mine delivers
coal to its customer’s adjacent, or nearby, power plant, synfuels plant or activated
carbon facility and is the exclusive supplier to its customer’s facility, with the
exception of Camino Real Fuels Company (“Camino Real”) . Camino Real’s
customer takes all coal produced by the mine, but also purchases additional
coal from other suppliers .
All but one of our coal mining locations operate pursuant to “management
fee” contracts . Under these contracts, North American Coal is responsible for all
mine operations while the customer is responsible for funding all mine operating
costs and provides, or provides support for, all of the capital required to build
and operate the mine . Because of the way these contracts are structured, NACCO
does not consolidate the results of these operations in its financial statements.
Instead, we report the pre-tax profits earned under these “management fee”
contracts as “Earnings of unconsolidated mines” on the income statement . While
we do not consolidate these entities, the selling, general and administrative
Left: A Kress coal truck at
the Falkirk Mine in North
Dakota delivers 200 tons
of coal to its customer’s
power plant. The coal will
be delivered to the plant
via the newly constructed
silo feed conveyor pictured
in the background. Right:
A P&H 2800XP shovel and
a fleet of trucks work into
the evening at The Coteau
Properties Company’s
Freedom Mine in North
Dakota.
5
NACCO Industries, Inc.. expenses reported on the income statement include expenses to support both
the consolidated and unconsolidated operations .
North American Coal is 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. This contract structure eliminates exposure to spot coal market price
fluctuations. North American Coal’s customers that operate under “management
fee” contracts have the obligation to fund final mine reclamation activities. Under
certain contracts, North American Coal holds the mine permit and is responsible
for final mine reclamation activities and, to the extent North American Coal
performs such final reclamation, it receives fee income for its services.
North American Coal and its customers are committed to excellence in
environmental stewardship . Our permitting, mining and reclamation activities
utilize state-of-the-art technology to ensure that activities comply with, or exceed,
legal requirements . Reclamation work is performed concurrent with mining, with
a commitment to excellence to return disturbed land to a productive natural state
that is often better than pre-mining conditions .
Mississippi Lignite Mining Company (“MLMC”) delivers coal to a power plant
adjacent to the mine under a contract that runs through 2032 . The MLMC contract
North American Coal’s manage-
ment fee contract structure
eliminates exposure to spot coal
market price fluctuations
is the Company’s only coal contract in which North
American Coal is responsible for all operating costs,
capital requirements and final mine reclamation.
Mining is a capital-intensive industry, and MLMC
requires capital spending that can be significant in
certain years to open new mine areas, secure land
and coal for future mining and acquire replacement
equipment . The contractual price received for coal sales adjusts monthly primarily
based on changes in the level of established indices, which reflect general
U.S. inflation rates, including cost components such as labor and diesel fuel.
Profitability at MLMC is affected by three key components – customer demand for
coal, changes in the indices that determine sales price and actual costs incurred .
A continuous focus on driving down production costs and maximizing
efficiency and operating capacity at mine locations benefits both customers and
North American Coal, as fuel cost is the major driver for power plant dispatch .
Increased power plant dispatch drives increased demand for coal by North
American Coal’s customers .
A Bucyrus-Erie 2570W
dragline at The Coteau
Properties Company’s
Freedom Mine is shown
moving to a new mine area
adjacent to Basin Electric
Power Cooperative’s
Antelope Valley Power
Station and Dakota
Gasification Company’s
Great Plains Synfuels Plant.
6
We believe that the power plants we supply are generally younger and
more efficient, with better environmental controls than most power plants
that have closed in recent years . Many of our customers continue to invest in
efficiency and environmental upgrades to their facilities. Because these power
plants are competitive suppliers of electricity in their respective dispatch areas,
we consider our surface coal mining operations to be well positioned relative
to competitors, despite the challenges facing both the coal mining and electric
generation industries .
Securing new coal mining opportunities is a strategic priority . During the last
10 years, North American Coal built five new coal mines and assumed operation of
an existing mine for a new customer; a significant accomplishment in an industry in
transition . A substantial percentage of the 2018 earnings of unconsolidated mines
was derived from these mines . While
the development of new coal-fired
power plants is likely to be limited, we
continue to pursue opportunities to
assume operation of existing mines
for new customers . We believe that
the United States should adopt a
domestic energy policy that balances
affordability, energy needs and
environmental responsibility . Coal
must remain an integral part of the
nation’s total energy mix for the
foreseeable future to allow the United States to remain competitive in the global
economy. New domestic coal-fired power plants and greenfield coal mining
opportunities for power generation are unlikely to occur without the adoption of a
balanced energy policy in which coal continues to play a key role .
GROWTH OUTSIDE THE COAL INDUSTRY
North American Mining
North American Coal’s North American Mining division serves as a platform
for growth outside the coal industry by leveraging core mining capabilities that
can be applied to the aggregates industry . North American Mining maintains
and operates draglines and other equipment for sellers of aggregates under
long-term contracts . By focusing on the mining aspects of customers’ quarry
operations, North American Mining creates value for its customers by improving
mining productivity and efficiencies, allowing customers to focus on areas where
they can add the most value — final processing and product sales.
North American Mining’s current contracts primarily relate to maintaining and
operating draglines and other equipment, providing a much more focused service
to its customers than managing the operations of an entire coal mine . Since
2015, North American Mining has grown from serving two customers with seven
quarries utilizing 10 draglines, to serving eight customers with 18 quarries utilizing
24 draglines and a rope shovel as of December 31, 2018. By the end of the first
quarter of 2019, North American Mining is expected to expand its operations to
28 draglines .
North American Mining is also focused on expanding the scope of work it
does for its customers, with the ability to offer a full range of Integrated Solutions
related to mining . North American Coal is skilled in permitting, land and mineral
acquisition, overburden removal, drilling and blasting, load and haul and operating
In Sumter County, Florida, a
Bucyrus-Erie 770B dragline
operated and maintained
by North American Mining
excavates limestone at the
Center Hill quarry owned
by CEMEX.
7
NACCO Industries, Inc.. other mining equipment, such as excavators, shovels, motor graders, conveyors
and material handling systems . We believe our current and prospective customers
could benefit from allowing North American Mining to leverage the skills obtained
from the coal business to operate the majority of mining and extraction activities so
they can focus on their strengths in processing and selling mined products .
While North American Mining currently operates primarily in Florida, it is
focused on expanding its footprint outside Florida and into mining materials other
than limestone . North American Mining recently signed a contract to operate a
dragline at a small sand and gravel operation near Richmond, Virginia, beginning
in 2019, and continues to pursue other opportunities outside Florida .
North American Mining operates under both “management fee” contracts and
contracts that reflect a more traditional business model.
North American Coal Royalty Company
North American Coal Royalty Company derives income primarily from
royalty-based lease payments under which the lessee makes payments based
on its sales of natural gas and, to a lesser extent, oil and coal, extracted by third
parties. Royalty income can fluctuate in response to a number of factors outside
the Company’s control, including fluctuations in commodity prices and the
availability of infrastructure, and the lessees’ willingness and ability to incur well-
development and other operating costs. We experienced significant increases
in royalty income in both 2017 and 2018 compared with prior years . We believe
royalty income could increase in 2019, based on the number of gas wells being
developed and operated by lessees to extract Ohio Utica shale oil and gas assets,
and the expected continuing development of infrastructure in this area . Whether
or not these increased levels of income continue depends on the factors noted
above . North American Coal Royalty Company will continue to look for future
opportunities to grow royalty income through expanded leasing of its oil and
gas assets to third parties .
Mitigation Resources of North America
North American Coal is widely recognized for the quality of its work to
remediate streams, wetlands and habitats disturbed by mining, often returning
these areas to a condition better than pre-mining conditions . Through these
environmental activities, North American Coal has gained substantial knowledge
8
and skills that are well suited for restoration projects . In our pursuit of growth
and to further leverage North American Coal’s core competencies, we formed
Mitigation Resources of North America to offer tailored solutions to customers
whose activities disturb streams, wetlands or species habitats .
Mitigation Resources of North America creates and sells mitigation credits
(known as mitigation banking) and provides services to those engaged in
permittee-responsible mitigation . As a mitigation banker, Mitigation Resources
of North America obtains sites with impaired streams, wetlands or species
habitats and restores, enhances or preserves them, which results in the creation
of mitigation credits that can be sold to offset disturbances of nearby ecologically
From left to right: Chief Ironside, a Marion 8750 dragline
at The Falkirk Mining Company’s Falkirk Mine in North
Dakota works through the snow to remove overburden
from the coal seam below. u The early morning sun
shines through the bald cypress along the Yockanookany
River, preserved at Mitigation Resources of North
America’s Yockanookany Mitigation Bank near Kosciusko,
Mississippi. u The Sabine Mining Company won the
2019 Texas Reclamation Award from The Railroad
Commission of Texas Surface Mining & Reclamation
Division for its “Go Native” reclamation project that
reclaimed land back to its natural grassy state.
similar streams, wetlands and/or habitats . In addition, permittee-responsible
mitigation projects will allow Mitigation Resources of North America to utilize the
Company’s “management fee” model to provide mitigation services to developers
for individual mitigation projects . This business is in its early stages, but we believe
there is a lot of opportunity for growth and success in this industry .
We are widely recognized for the
quality of our work to remediate
streams, wetlands and habitats
Other Value-Added Services
As part of our focus on providing Integrated
Solutions and expanding the scope of our services,
North American Coal provides a number of other
value-added services for its customers . For example,
Camino Real Fuels operates and maintains a coal handling and train load-out
facility . Bisti Fuels operates and maintains a sophisticated coal blending and
handling facility, including an approximately 15-mile rail operation with two
locomotives used to transport coal from the mine to the power plant . NoDak
Energy Services, LLC operates and maintains a coal drying system, which improves
the customer’s plant efficiency. A North American Coal affiliate is constructing,
and will operate, a small solar power generation facility, selling the power to its
customer, and several mines provide ash handling and ash management services
for their customers. Further diversification can come from expanding the scope of
services and providing services to additional customers .
Liquidity
During 2018, we continued to maintain a strong balance sheet, ending the
year with $85 .3 million of cash and $11 .0 million of debt . Due in part to our strong
9
NACCO Industries, Inc.. financial position, North American Coal received a credit rating upgrade in 2018
from DBRS Limited, achieving an investment grade rating of BBB (low) with a
stable trend .
NACCO has paid dividends since 1956 and in 2018 paid a quarterly dividend
of $0 .165 per share, which is equal to an annual rate of $0 .66 per share . In
February 2018, NACCO’s Board of Directors approved a stock repurchase
program that allows for the repurchase of up to $25 million of the Company’s
outstanding Class A common stock . During 2018, we repurchased approximately
39,000 shares of our outstanding Class A common stock for $1 .3 million . Under
previous repurchase programs, we repurchased approximately 1 .9 million shares
of outstanding Class A common stock for $101 .7 million from 2011 through 2017 .
Cash flow before financing activities was $36.2 million in 2018. We expect
continued strong cash generation in 2019 and beyond. We will first focus on
utilizing cash to support growth initiatives for both existing businesses and
diversification opportunities that leverage core competencies, as well as to
fund capital expenditures . Cash will also be used to maintain a conservative
leverage ratio as high leverage introduces risks that are not consistent with our
long-term strategy .
We remain focused on increasing long-term shareholder value rather than on
quarterly earnings or short-term stock price movement . We take a long-term view
of our business, just as we believe in building long-term customer relationships .
We take a long-term view
of our business and remain
focused on increasing long-term
shareholder value
Our strong balance sheet, our stable cash flows from
our long-term management-fee contracts, and our
long-term shareholder base leave us well situated to
pursue growth opportunities through a disciplined
approach . While we will continue to pursue
opportunities to add new coal mining operations,
we believe the scale of that growth could be limited .
North American Mining will continue to serve as a platform for pursuing non-coal
mining projects, whether in aggregates or other minerals . Mitigation Resources of
North America allows for growth outside mining, while our North American Coal
Royalty Company also has potential for future growth .
As I look forward to 2019 and beyond, I am excited about the great
relationships we have built with existing customers and the potential to grow
the business by further leveraging our strengths . I would like to thank all of our
customers and vendors, as well as NACCO’s long-term stockholders for their
continued trust and support . I would also like to thank all of the hard-working and
committed employees who support our customers and growth initiatives . I remain
confident in our ability to create shareholder value for many years to come.
J.C. Butler, Jr.
President and Chief Executive Officer,
NACCO Industries, Inc. and
The North American Coal Corporation
This annual report to stockholders contains forward-looking statements. For a discussion of the factors
that may cause the Company’s actual results to differ from these forward-looking statements, refer to
page 39 in the attached Form 10-K.
10
DIRECTORS AND OFFICERS
NACCO Industries, Inc.
North American Coal Corporation
Directors:
Officers:
Officers:
J.C. Butler, Jr.
President and Chief Executive Officer
J. C. Butler, Jr.
President and Chief Executive Officer
Elizabeth I. Loveman
Vice President and Controller
Thomas A. Maxwell
Vice President – Financial Planning and
Analysis and Treasurer
John D. Neumann
Vice President, General Counsel and
Secretary
Sarah E. Fry
Associate General Counsel and
Assistant Secretary
Miles B. Haberer
Associate General Counsel
Jesse L. Adkins
Associate Counsel and Assistant Secretary
Carroll L. Dewing
Vice President – Operations
LaVern K. Lund
Vice President – Business Development
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
Eric A. Dale
Treasurer and Senior Director,
Financial Planning and Analysis
John R. Pokorny
Controller
Sarah E. Fry
Associate General Counsel and
Assistant Secretary
Miles B. Haberer
Associate General Counsel,
Assistant Secretary and President,
North American Coal Royalty Company
Jesse L. Adkins
Associate Counsel and Assistant Secretary
Andrew B. Hart
Assistant Controller
J.C. Butler, Jr.
President and Chief Executive Officer,
NACCO Industries, Inc.
President and Chief Executive Officer,
The North American Coal Corporation
John S. Dalrymple
Former Governor of the State of
North Dakota
John P. Jumper
Retired Chief of Staff,
United States Air Force
Dennis W. LaBarre
Retired Partner,
Jones Day
Timothy K. Light
Retired Senior Vice President,
American Electric Power Service
Corporation
Michael S. Miller
Retired Managing Director,
The Vanguard Group
Richard de J. Osborne
Retired Chairman and
Chief Executive Officer,
ASARCO Incorporated
Alfred M. Rankin, Jr.
Non-Executive Chairman,
NACCO Industries, Inc.
Chairman, President and
Chief Executive Officer,
Hyster-Yale Materials Handling, Inc.
Non-Executive Chairman,
Hamilton Beach Holdings Company
Matthew M. Rankin
President and Chief Executive Officer,
Carlisle Residential Properties
Britton T. Taplin
Self employed
(personal investments)
David B. H. Williams
Partner, Williams, Bax & Saltzman, P.C.
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NACCO Industries, Inc. at a Glance
NACCO Industries, Inc. at a Glance
Principal Businesses
Principal Businesses
2016
Financial Results
2016
Financial Results
Market Positions
Market Positions
North American Coal (“NACoal”)
Headquarters: Dallas, Texas
North American Coal (“NACoal”)
North American Coal Operations
Revenues:
NACoal:
Headquarters: Dallas, Texas
North American Coal mines coal primarily
Revenues:
$111.1 million
NACoal:
NACoal:
NACoal:
North American Coal is
North American Coal is
among the ten largest
North American Coal mines coal primarily
for use in power generation and provides
for use in power generation and provides
value-added services for natural resource
value-added services for natural resource
companies.
companies.
NACoal Operations
MINING
MINING
The Coteau Properties Company
Coyote Creek Mining Company
Operating profit:
$111.1 million
Operating profit:
$5.6 million
Net income:
$5.6 million
Net income:
$8.2 million
Adjusted income:(1)
$8.2 million
Adjusted income:(1)
$25.4 million
Equity:
$25.4 million
Equity:
$105.6 million
Return on Equity:(1)
$105.6 million
Return on Equity:(1)
The Falkirk Mining Company
7.5%
Return on Capital
7.5%
NoDak Energy Services LLC
Return on Capital
Employed:(1)
Employed:(1)
5.2%
5.2%
among the ten largest
coal producers in the
coal producers in the
United States.
United States.
Coal is delivered from
Coal is delivered from
developed mines in North
developed mines in North
Dakota, Texas, Mississippi,
Dakota, Texas, Mississippi,
Louisiana, and within the
Louisiana, and within the
Navajo Nation in New
Navajo Nation in New
Mexico to adjacent or
Mexico to adjacent or
nearby power plants or
nearby power plants or
coal processing facilities.
coal processing facilities.
Hamilton Beach Brands (“HBB”)
Hamilton Beach Brands (“HBB”)
Headquarters: Richmond, Virginia
Headquarters: Richmond, Virginia
HBB is a leading designer, marketer and
Bisti Fuels Company
HBB is a leading designer, marketer and
distributor of small electric household and
distributor of small electric household and
specialty housewares appliances, as well as
specialty housewares appliances, as well as
commercial products for restaurants, bars
Corporate Office
commercial products for restaurants, bars
and hotels.
and hotels.
HBB has a broad portfolio of some of the
HBB has a broad portfolio of some of the
most recognized and respected brands in
most recognized and respected brands in
the small electric appliance industry, including
the small electric appliance industry, including
Hamilton Beach®, Proctor Silex®, Hamilton
Hamilton Beach®, Proctor Silex®, Hamilton
Beach® Commercial and Weston®. HBB also
Beach® Commercial and Weston®. HBB also
sells products under licensed brands such
sells products under licensed brands such
as Wolf Gourmet® and CHI®**.
as Wolf Gourmet® and CHI®**.
Caddo Creek Resource Company
HBB:
HBB:
The Sabine Mining Company
HBB:
Revenues:
Mississippi Lignite Mining Company
Revenues:
$605.2 million
Operating profit:
$605.2 million
Operating profit:
$43.0 million
★
Net income:
$43.0 million
Net income:
$26.6 million
Equity:
$26.6 million
Demery Resources Company
Equity:
$44.1 million
Return on Equity:(1)
$44.1 million
Return on Equity:(1)
51.1%
North American Mining
Return on Capital
51.1%
Camino Real Fuels
Return on Capital
Employed:(1)
Employed:(1)
30.5%
30.5%
HBB:
HBB is a leading company
HBB is a leading company
in retail and commercial
in retail and commercial
small appliances, with
small appliances, with
strong share positions in
Liberty Fuels Company
strong share positions in
many of the categories
many of the categories
in which it competes.
in which it competes.
HBB products are primarily
HBB products are primarily
distributed through mass
distributed through mass
merchants, national
merchants, national
department stores, whole-
department stores, whole-
sale distributors, other
sale distributors, other
retail sales outlets and
retail sales outlets and
the Internet.
the Internet.
Surface Coal Mining Operations
North American Mining
Value-Added Services
New Operation Since 2010
*
*
Form 10-K
(440) 229-5130
Computershare
P.O. Box 30170
Computershare
Legal Counsel
Accounting Firm
Kitchen Collection
Kitchen Collection
Headquarters: Chillicothe, Ohio
Headquarters: Chillicothe, Ohio
Kitchen Collection is a national specialty
Kitchen Collection is a national specialty
retailer of kitchenware in outlet malls
retailer of kitchenware in outlet malls
throughout the United States.
throughout the United States.
For 2016 Large Surface
Coal Mines Awarded to
The Freedom Mine
The North American
Coal Corporation
Kitchen Collection:
Kitchen Collection:
Revenues:
Contents
Revenues:
$144.4 million
Operating profit:
$144.4 million
Kitchen Collection:
Kitchen Collection:
Kitchen Collection is
Kitchen Collection is
a leading specialty
a leading specialty
retailer of kitchen
Discussion of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Operating profit:
$0.4 million
Selected Financial and Operating Data . . . . . . . . . . . . .2
retailer of kitchen
and related products
Net loss:
$0.4 million
Letter to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . .4
and related products
in outlet malls with
Net loss:
$0.4 million
Equity:
$0.4 million
Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
in outlet malls with
223 stores throughout
223 stores throughout
the United States at
Equity:
$21.4 million
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . 118
the United States at
December 31, 2016.
Return on Equity:(1)
$21.4 million
Corporate Information . . . . . . . . . . . . Inside Back Cover
December 31, 2016.
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Cover Photo: The Coteau Properties Company’s Freedom Mine uses a Bucyrus-Erie 2570W dragline to remove overburden before the coal below is
mined. The Freedom Mine is North American Coal’s largest mining operation. The Freedom Mine operates three 2570 draglines, and each can remove
T
as much as 120 cubic yards of overburden in one bucket.
(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.
(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.
**Wolf Gourmet® is a registered trademark of the Sub-Zero Group, Inc.
**Wolf Gourmet® is a registered trademark of the Sub-Zero Group, Inc.
**CHI® is a registered trademark of Farouk Systems, Inc.
**CHI® is a registered trademark of Farouk Systems, Inc.
Return on Equity:(1)
(1.6%)
Return on Capital
(1.6%)
Return on Capital
Employed:(1)
Employed:(1)
(1.2%)
(1.2%)
Corporate Information
Corporate Information
Annual Meeting
Annual Meeting
Stock Exchange Listing
Stock Exchange Listing
The Annual Meeting of Stockholders of NACCO
Industries, Inc. will be held on May 9, 2017, at
2:30 p.m. at the corporate office located at:
5875 Landerbrook Drive, Cleveland, Ohio 44124
The Annual Meeting of Stockholders of NACCO
Industries, Inc. will be held on May 9, 2017, at
2:30 p.m. at the corporate office located at:
5875 Landerbrook Drive, Cleveland, Ohio 44124
CORPORATE INFORMATION
Corporate Information
The New York Stock Exchange
Symbol: NC
Investor Relations Contact
The New York Stock Exchange
Symbol: NC
Investor Relations Contact
Investor questions may be addressed to:
Investor questions may be addressed to:
Stock Transfer Agent and Registrar
Form 10-K
Stockholder Correspondence:
NACCO Industries Website
Investor Relations
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 220
Cleveland, Ohio 44124
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.
Independent Registered Public
5875 Landerbrook Drive, Suite 220
Accounting Firm
Cleveland, Ohio 44124
Ernst & Young LLP
(440) 229-5130
950 Main Ave ., Suite 1800
E-mail: ir@naccoind.com
Cleveland, Ohio 44113
Investor Relations
Additional copies of the Company’s Form 10-K filed
NACCO Industries, Inc.
with the Securities and Exchange Commission are
5875 Landerbrook Drive, Suite 220
Annual Meeting
available free of charge through NACCO Industries’
Cleveland, Ohio 44124
The Annual Meeting of Stockholders of NACCO
website (www.nacco.com) or by request to:
(440) 229-5130
Industries, Inc. will be held on May 16, 2018, at
E-mail: ir@naccoind.com
11:00 a.m. at the corporate office located at:
5875 Landerbrook Drive, Cleveland, Ohio 44124
Annual Meeting
The Annual Meeting of Stockholders of NACCO
Industries, Inc . will be held on May 8, 2019, at
11:00 a.m. at the corporate office located at:
5875 Landerbrook Drive, Cleveland, Ohio 44124
Investor Relations
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 220
Cleveland, Ohio 44124
(440) 229-5130
Form 10-K
Form 10-K
Additional copies of the Company’s Form
Additional copies of the Company’s Form 10-K filed
10-K filed with the Securities and Exchange
with the Securities and Exchange Commission are
Commission are available free of charge through
available free of charge through NACCO Industries’
Stock Transfer Agent and Registrar
NACCO Industries’ website (www.nacco.com) or
website (www.nacco.com) or by request to:
by request to:
Stockholder Correspondence:
Investor Relations
Investor Relations
Computershare
NACCO Industries, Inc.
NACCO Industries, Inc .
P.O. Box 30170
5875 Landerbrook Drive, Suite 220
5875 Landerbrook Drive, Suite 220
College Station, TX 77842-3170
Cleveland, Ohio 44124
Cleveland, Ohio 44124
(440) 229-5130
(440) 229-5130
Independent Registered Public
Accounting Firm
Ernst & Young LLP
950 Main Ave., Suite 1800
Cleveland, Ohio 44113
NACCO Industries Website
Stock Exchange Listing
Stock Exchange Listing
Additional information on NACCO Industries
Additional information on NACCO Industries
The New York Stock Exchange
The New York Stock Exchange
may be found at the corporate website,
Symbol: NC
may be found at the corporate website,
Symbol: NC
www.nacco.com. The Company considers this
www.nacco.com. The Company considers this
Investor Relations Contact
website to be one of the primary sources of
website to be one of the primary sources of
Investor Relations Contact
Investor questions may be addressed to:
information for investors and other interested
information for investors and other interested
Investor questions may be addressed to:
Investor Relations
parties.
parties.
Investor Relations
NACCO Industries, Inc .
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 220
Subsidiary Company Websites
5875 Landerbrook Drive, Suite 220
Cleveland, Ohio 44124
The websites for NACCO’s subsidiaries are
Cleveland, Ohio 44124
The websites for NACCO’s subsidiaries are
(440) 229-5130
Overnight Correspondence:
(440) 229-5130
as follows:
as follows:
E-mail: ir@naccoind .com
Computershare
E-mail: ir@naccoind.com
Stock Transfer Agent and Registrar
Hamilton Beach Brands–U.S.:
Stock Transfer Agent and Registrar
Hamilton Beach Brands–U.S.:
211 Quality Circle, Suite 210
NACCO Industries Website
Stockholder Correspondence:
www.hamiltonbeach.com
Stockholder Correspondence:
www.hamiltonbeach.com
College Station, TX 77845
NACCO Industries Website
Additional information about NACCO Industries
Computershare
www.proctorsilex.com
www.proctorsilex.com
Computershare
Additional information about NACCO Industries
may be found at www.nacco.com . The Company
(800) 622-6757 (U.S., Canada and Puerto Rico)
P.O. Box 505000
www.commercial.hamiltonbeach.com
www.commercial.hamiltonbeach.com
P .O . Box 505000
may be found at www.nacco.com. The Company
considers this website to be one of the primary
(781) 575-4735 (International)
Louisville, KY 40233-5000
Hamilton Beach Brands–Mexico:
Hamilton Beach Brands–Mexico:
Louisville, KY 40233-5000
considers this website to be one of the primary
sources of information for investors and other
www.hamiltonbeach.com.mx
www.hamiltonbeach.com.mx
Overnight Correspondence:
sources of information for investors and other
Legal Counsel
Overnight Correspondence:
interested parties .
Weston Brands:
Weston Brands:
Computershare
interested parties.
McDermott Will & Emery LLP
Computershare
www.westonproducts.com
www.westonproducts.com
North American Coal Website
462 South 4th St., Suite 1600
227 West Monroe Street
462 South 4th St ., Suite 1600
North American Coal Website
Additional information about North American
Kitchen Collection:
Kitchen Collection:
Louisville, KY 40202
Chicago, Illinois 60606
Louisville, KY 40202
Additional information about North American
Coal may be found at www.nacoal.com .
www.kitchencollection.com
www.kitchencollection.com
Coal may be found at www.nacoal.com.
North American Coal:
North American Coal:
www.nacoal.com
www.nacoal.com
(800) 622-6757 (U.S., Canada and Puerto Rico)
(781) 575-4735 (International)
McDermott Will & Emery LLP
227 West Monroe Street
Chicago, Illinois 60606
(800) 622-6757 (U.S., Canada and Puerto Rico)
(800) 622-6757 (U .S ., Canada and Puerto Rico)
Independent Registered Public
(781) 575-4735 (International)
(781) 575-4735 (International)
Accounting Firm
211 Quality Circle, Suite 210
College Station, TX 77845
Subsidiary Company Websites
College Station, TX 77842-3170
Overnight Correspondence:
Independent Registered Public
Ernst & Young LLP
950 Main Ave., Suite 1800
Cleveland, Ohio 44113
Ernst & Young LLP
Legal Counsel
Legal Counsel
950 Main Ave., Suite 1800
McDermott Will & Emery LLP
McDermott Will & Emery LLP
444 West Lake Street
Cleveland, Ohio 44113
444 West Lake Street
Chicago, Illinois 60606
Chicago, Illinois 60606
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The FSC® Trademark identifies wood fibers coming from forests which have been certified
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Environmental Benefits
E
Environmental Benefits
Environmental Benefits
This Annual Report on Form 10K is printed using postconsumer waste recycled paper and vegetablebased inks.
E
E
By using this environmental paper, NACCO Industries, Inc. saved the following resources:
This Annual Report on Form 10K is printed using postconsumer waste recycled paper and vegetablebased inks.
This Annual Report on Form 10K is printed using postconsumer waste recycled paper and vegetablebased inks.
By using this environmental paper, NACCO Industries, Inc. saved the following resources:
By using this environmental paper, NACCO Industries, Inc. saved the following resources:
B
Environmental Benefits
B
E
B
B
This Annual Report on Form 10K is printed using postconsumer waste recycled paper and vegetablebased inks.
B
B
By using this environmental paper, NACCO Industries, Inc. saved the following resources:
B
B
B
B
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29 trees pre
served for the
future
83 lbs. water
borne waste
not created
pre
s
pre
11 trees pre
pre
s
pre
served for the
s
29 trees pre
11 trees pre
12,260 gal.
s
pre
future
pre
served for the
served for the
wastewater
s
s
future
future
flow saved
31 lbs. water
borne waste
83 lbs. water
31 lbs. water
not created
borne waste
borne waste
not created
not created
2,671 lbs. net
greenhouse
gases prevented
4,667 gal.
wastewater
12,260 gal.
4,667 gal.
flow saved
wastewater
wastewater
flow saved
flow saved
516 lbs.
solid waste
1,356 lbs.
516 lbs.
not generated
solid waste
solid waste
not generated
not generated
20,442,500
BTUs energy
not consumed
1,356 lbs.
solid waste
not generated
1,887 lbs. net
greenhouse
2,671 lbs. net
1,887 lbs. net
gases prevented
greenhouse
greenhouse
gases prevented
gases prevented
7,782,600
BTUs energy
20,442,500
7,782,600
not consumed
BTUs energy
BTUs energy
not consumed
not consumed
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(cid:3)
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(cid:3)
T
T
T
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
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5875 Landerbrook Drive, Suite 220 • Cleveland, Ohio 44124
An Equal Opportunity Employer