NACCO Industries, Inc. Annual Report 2022

FY2022 Annual Report · NACCO Industries, Inc.

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Bringing Natural Resources to Life

ANNUAL REPORT

2022

NACCO Industries®NACCO Industries®

With a broad portfolio of natural
resources businesses, we are
well positioned to capitalize on
our core strengths and achieve
long-term growth.

CONTENTS

Our Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Selected Financial & Operating Data . . . . . . . . . . . . . 2

Letter to Our Stockholders . . . . . . . . . . . . . . . . . . . . . . 4

Corporate Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . 9

Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Directors and Leadership . . . . . . . . . . . . . . . . . . . . . . 144

Corporate Information . . . . . . . . . .

Inside Back Cover

ABOUT THE COVER

NACCO’s 110 years of growth and success are founded on
three foundational elements — our people, our operational
excellence and our environmental stewardship.

The cover highlights these foundational elements. From
left to right: The top image includes employees from North
American Mining in Florida, representing our commitment
to our people and their commitment to each other. The
middle image represents our coal mining legacy and 100+
years of operational excellence. The lower image, of a stream
mitigation site, reflects our dedication to environmental
stewardship.

NACCO Industries®

OUR OPERATIONS

NACCO Industries, Inc.® brings natural resources to life by delivering aggregates,
minerals, reliable fuels and environmental solutions through its robust portfolio of
NACCO Natural Resources businesses. The Company operates under three business
segments: Coal Mining, North American Mining and Minerals Management. The Coal
Mining segment operates surface coal mines for power generation companies. The
North American Mining segment is a trusted mining partner for producers of aggregates,
activated carbon, lithium and other industrial minerals. The Minerals Management
segment, which includes the Catapult Mineral Partners business, acquires and promotes
the development of mineral interests. Mitigation Resources of North America® provides
stream and wetland mitigation solutions.

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SELECTED FINANCIAL
& OPERATING DATA

NACCO Industries, Inc. and Subsidiaries

Year Ended December 31

2022(1)(2)

2021(1)

2020 (2)

(In thousands, except per share data)

Operating Statement Data:
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 241,719
$ 69,986
$ 74,158
10.14
$
10.06
$

Per Share and Share Data:
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual shares outstanding at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . . .

$ 0.8200
38.00
$
58.10
$
7,349
7,312
7,373

$ 191,846
$ 55,410
$ 48,125
6 .73
$
6 .69
$

$ 0 .7850
36 .29
$
49 .02
$
7,183
7,146
7,190

$ 128,432
$ 13,448
$ 14,793
2 .11
$
2 .10
$

$ 0 .7675
26 .30
$
42 .59
$
7,058
7,026
7,057

(1) During 2022 and 2021, the Company received cash contract termination settlements of $14 .0 million and $10 .3 million, respectively . In addition, in 2022,

the Company recorded non-cash termination settlements of $16 .9 million .

(2) During 2022 and 2020, the Company recorded non-cash impairment charges of $3 .9 million and $8 .4 million, respectively .

Our strong 2022 results were made
possible by our dedicated employees.

2022(1)(2)

Year Ended December 31
2021(1)
(In thousands, except employee data)

2020(2)

Balance Sheet Data at December 31:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 110,748
$ 568,072
$ 16,019
$ 426,966

$ 86,005
$ 507,220
$ 18,183
$ 352,116

88,450
$
$ 476,179
$
24,353
$ 300,624

Cash Flow Data:
Provided by (used for) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flow before financing activities (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 67,735
$ (33,152)
$ 34,583

$ 74,875
(44,147)
$
$ 30,728

$
$
$

(2,486)
(45,984)
(48,470)

Provided by (used for) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9,840)

(33,173)

14,028

Other Data:
Total employees at December 31(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,600

2,000

(3) Cash Flow before financing activities is equal to net cash provided by (used for) operating activities less net cash used for investing activities .
(4) Includes employees from the unconsolidated mines for all years presented .

2022(1)(2)

Year Ended December 31
2021(1)
(In thousands)

2020(2)

Calculation of Adjusted EBITDA(5)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract termination settlements(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairment charges(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, depletion and amortization expense . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 74,158
(30,882)
3,939
13,565
2,034
(1,449)
26,816
$ 88,181

48,125
(10,333)
–)
8,725
1,719
(449)
23,085
70,872

$ 14,793
–)

8,359
(535)
1,354
(1,200)
18,114
$ 40,885

(5) 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 as an indicator of operating performance . NACCO defines
Adjusted EBITDA as net income before contract termination settlements, asset 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 .

NACCO Industries®

LETTER TO OUR
STOCKHOLDERS

NACCO Industries had a strong and
productive 2022. We executed on our
plans to “Bring Natural Resources to Life”
through our growth and diversification
strategy while also continuing to protect
our core coal business. Highlights from
2022 include:

• Our Falkirk Mine gained a new

customer following Rainbow Energy’s
purchase of Coal Creek Station, North
Dakota’s largest power plant, from
Great River Energy,

• Catapult Mineral Partners acquired
additional mineral interests and
oversaw increased production in
legacy interests, all contributing to a
100% increase in operating profit at
our Minerals Management segment
year-over-year, and

• Mitigation Resources of North

America established two new stream
mitigation banks near Dallas and
Nashville and made significant
progress on its goal to become
a top ten provider of stream and
wetland mitigation services in the
southeastern United States.

NACCO Industries reported net income

of $74.2 million for the 2022 full year,
including $30.9 million of settlement
income related to the termination of the
contract between Falkirk and Great River
Energy. We ended the year with a strong
balance sheet, highlighted by $110.7
million of cash and only $19.7 million
of debt. Cash flow before financing

activities of $34.6 million allowed us to
make investments in our businesses and
return cash to stockholders through the
payment of dividends totaling $0.82 per
share in 2022.

Our strong results were made possible
by our dedicated employees. Their hard
work and tremendous passion for our
business propel us forward. Our culture
and values run deep and permeate
every aspect of our day-to-day business.
Our employees work tirelessly to drive
success in each of our businesses and
allow us to distinguish ourselves by being
great partners to our existing customers.
We remain steadfastly committed to
our long-term strategies to Protect the
Core and Grow and Diversify. Execution

The foundation of our
approach to growth begins
with our strong balance sheet.
We actively pursue accretive
growth while maintaining
financial discipline. Strategic
diversification will generate
cash that can be reinvested
to strengthen and expand the
businesses, delivering long-
term value to our stockholders.
Our legacy business, North

American Coal, partners
with its customers to provide
integrated, efficient and cost-
effective contract coal mining
services for mine-mouth
power generators. We believe

Strategic diversification will generate cash
that can be reinvested to strengthen and
expand the businesses, delivering long-term
value to our stockholders.

of these strategies over the last several
years has dramatically changed the
makeup of NACCO Industries. Today
we have a broad portfolio of natural
resources businesses that positions us
well to capitalize on our core strengths
and achieve long-term growth. We
have built momentum that will carry us
forward as we continue to execute on
these two key strategies.

our mine-mouth operations
provide cost advantages to our
customers. A key component
of our Protect the Core strategy
is managing coal production
costs to help customers with
management fee contracts
be more competitive, since
fuel cost is a significant driver
of power plant dispatch. This

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NACCO Industries®

Our employees work to ensure that
we maintain a safe work site, as shown
by these employees participating in
our Safe Work Area Task Force.

relentless focus on managing costs is
even more important in the current
inflationary environment, although our
cost-plus contract structure tempers
the impact. An increase in power plant
dispatch results in increased demand for
coal by our customers – a win for both
them and us.

We acted as a key petitioner in a
big win in the fight against regulatory
overreach when the U.S. Supreme
Court issued its June 2022 ruling in
West Virginia v. EPA. This ruling makes it
clear that, without clear Congressional
direction, the EPA does not have
authority to use CO2 regulation to
regulate coal plants out of existence
and thereby transform how the United
States generates electricity.

While we realize the coal mining
industry faces political and regulatory
challenges and demand for coal is
projected to decline over the longer term,
we believe coal will be an essential part

of the energy mix in the United States for
the foreseeable future. Carbon capture
and storage (CCS) technologies can be
an important component of reducing
emissions during energy generation. We
are supporting work in process at the
Energy & Environmental Research Center
at the University of North Dakota, which
is focused on furthering the advancement
of CCS. We are proud to support this
program as they work to advance CCS
technologies and develop solutions
to other energy and environmental
challenges.

We operate the Sabine Mine in Texas,
providing all fuel for the Henry W. Pirkey
Power Plant. The owner of the plant
intends to retire the facility in 2023 even
though electric-grid operators warn that
power-generating capacity is struggling
to keep up with demand during peak
periods. We are proud to have delivered
more than 133 million tons of coal from
this mine since 1984, which allowed our

customer to provide low-cost reliable
power to its customers in Arkansas,
Louisiana and Texas.

The contract structure used by North
American Coal eliminates our exposure
to spot coal market price fluctuations.
However, fluctuations in natural gas
prices and the availability of renewable
generation, particularly wind, can
contribute to changes in power plant
dispatch and demand for coal. The Russia-
Ukraine war resulted in a recalibration of
supply and demand that led to a sharp
increase in natural gas prices during
2022. These elevated natural gas prices
contributed to an increase in our customers’
power plant dispatch, which resulted in
increased coal deliveries and another year
of strong operating results in our Coal
Mining segment. Natural gas prices have
moderated in the first two months of 2023
and, if this trend continues, it could lead
to a reduction in dispatch at the plants
we serve during 2023.

North American Coal, our legacy business, partners
with its customers to provide integrated, efficient
and cost-effective contract coal mining services for
mine-mouth power generators.

The significant increase in natural
gas benchmark prices during 2022 also
helped drive strong financial performance
in the Minerals Management segment.
Minerals Management derives income
from royalty-based leases under which
lessees make payments to us based on
their production and sale of natural
gas, oil, natural gas liquids and coal.
Catapult Mineral Partners, the Company’s
business unit focused on managing as
well as expanding our portfolio of oil and
gas mineral and royalty interests, has
developed a proven business model and
a strong network to source and secure
new acquisitions.

During 2022, Catapult acquired mineral

and royalty interests of approximately
$12 million, building on acquisitions
totaling approximately $19 million in
2021 and 2020. We feel confident in
this business model and opportunity
for resilient future cash flows. As a
result, Catapult is targeting additional
investments in mineral and royalty
interests of up to $20 million in 2023.
Future investments are targeted at
continuing to diversify our mineral
holdings by adding quality positions in
major U.S. basins with high levels of
current and anticipated future activity
from the top operators in the industry.
The Catapult management team uses
a disciplined approach to target potential
acquisitions that align with our strategy
and objectives to construct a high-quality
diversified portfolio of oil and gas mineral
and royalty interests in the United
States that deliver near-term cash flow
yields and long-term projected growth.
In addition, our acquisitions target
an extended geographic footprint to
diversify across multiple basins, with an
initial focus on the more oil-rich Permian
basin and a secondary focus on other
basins, to increase regional exposure and
avoid concentration risk.

Minerals Management’s business

model benefits from continued
development of its mineral properties
without additional capital investment,
as development costs are borne entirely
by third-party producers who lease the
minerals. We believe this business model
can deliver higher average operating
margins over the life of a reserve than
traditional oil and gas companies that
bear the cost of exploration, production
and/or development.

We value our employees as individuals
and know that they fuel our success.

In 2022, we executed
on our plans to bring
natural resources to life
through our growth and
diversification strategy
while also continuing
to protect our core coal
business.

NACCO Industries®

Future investments are expected to

be accretive, but each investment’s
contribution to near-term earnings is
dependent on the characteristics of
that investment, including the size and
type of interests acquired and the stage
and timing of mineral development.
The contribution of each investment
could also vary due to commodity price
changes. Future growth could also come
from investments in working interests,
but we expect that type of investment
to be limited in the near future. As it
matures, we expect this business will
provide unlevered after-tax returns on
invested capital in the mid-teens.

Mitigation Resources creates and sells

stream and wetland mitigation credits
and provides services to those engaged
in permittee-responsible mitigation
and environmental restoration. We
believe this business offers an excellent
opportunity for growth and diversification
in an industry where we have substantial
knowledge and expertise and a strong
reputation. Mitigation Resources allows
us to deploy our legacy mining skills in
areas such as land acquisition, permitting,
stream design and land reclamation to
create profitable mitigation banks in
regions of high growth and high stream
and wetland credit demand.

Mitigation Resources is making

strong progress toward becoming a top
ten provider of stream and wetland
mitigation services in the southeastern
United States. Completed and current
projects include the restoration of more
than 420,000 feet of streams and 830
acres of wetlands. During 2022, the
Mitigation Resources team continued
to build on the substantial foundation
established over the past several years
and ended the year with eight mitigation
banks and four permittee-responsible

mitigation projects located in Tennessee,
Mississippi, Alabama and Texas. In 2022,
Mitigation Resources was named a
designated provider of abandoned mine
land restoration by the state of Texas,
and during 2023, it plans to provide
ecological restoration services for a
number of abandoned mines, as well
as pursue additional environmental
restoration projects.

Early in 2023, Mitigation Resources
started working on its first project in
Pennsylvania, the Brandywine Battlefield
mitigation bank. This project will help
restore the streams and wetlands of the
Brinton Run Preserve, part of the historic
Brandywine Battlefield that was the site

Although North American Mining’s
2022 financial results did not meet
our expectations, we are working on
initiatives designed to support a return
to profitability. In the spirit of continuous
improvement, we conducted a thorough
review of each North American Mining
quarry operation in 2022, with a
particular focus on addressing issues
at quarries that are not meeting
expectations. We implemented changes
that should drive improvements in
financial results. North American Mining
is investing in innovation as well, with the
deployment of a new type of dragline at
a quarry in Florida and a Wirtgen surface
miner at a quarry in Nebraska. If these

Mitigation Resources is advancing its business plan
and achieving scale faster than we anticipated
when we started this business in 2017.

of an important Revolutionary War battle.
Once restored, this land is expected to
become a public recreation area featuring
educational information on the historic
battle that signified a turning point in the
American Revolution.

Mitigation Resources is advancing its
business plan and achieving scale faster
than we anticipated when we started
this business in 2017. We are confident
about the outlook for this business and
optimistic about the potential for further
growth. We believe Mitigation Resources
can provide solid rates of return as this
business matures.

Our North American Mining segment

provides value-added contract mining
and other services for producers of
industrial minerals and continues to be
the primary platform for growth and
diversification of our mining activities.

new mining tools continue to operate as
anticipated, we expect them to provide
operational efficiencies and competitive
advantages that should contribute to
improved financial results.

North American Mining continues to
work with Lithium Americas to develop
the Thacker Pass Project in northern
Nevada, one of the largest lithium
projects in the United States. North
American Mining is providing mine
design and consulting services as Lithium
Americas moves closer to development of
this project. Recent announcements that
General Motors entered into a binding
supply agreement and will invest $650
million in this project, and that Lithium
Americas’ application for a Department
of Energy loan is advancing through the
approval process, indicate the strength
and national importance of this project.

As the Thacker Pass Project moves into
construction and begins operations,
North American Mining will provide
comprehensive mining services, with
responsibility for all operational aspects
of the lithium mine under a long-term
management fee contract.

As trusted mining partners for
producers of aggregates, lithium and
other minerals, we remain committed to
expanding our North American Mining
business while improving operating
efficiencies and scalability. We remain
resolutely focused on addressing the
challenges at North American Mining
and making improvements for the future
by building on our solid foundation of
over 110 years in the mining industry.
Our strategy at North American Mining
continues to focus on growing this

those of our stockholders and foster an
“ownership” mentality that incentivizes
them to make decisions that enhance
stockholder value over the long term.
We also continue to seek ways to
create additional value by utilizing our
core mining competencies, which include
reclamation and permitting. One way
we may be able to utilize these skills is
through development of utility-scale solar
projects on reclaimed mining properties,
which offer large tracts of land that could
be well suited for solar and other energy-
related projects. These projects could
be developed on our own or through
joint ventures that include partners with
expertise in energy development projects.
In all of our business endeavors, our
employees maintain the highest levels
of customer service and operational

As we reflect on our 110th anniversary, we note
a long history of protecting our core coal mining
business, while pursuing strategic opportunities
to grow and diversify.

business to be a substantial contributor
to operating profit over time. The pace
of achieving that objective will depend
on the mix and scale of new projects and
the successful implementation of our
projects to return North American Mining
to profitability.

We remain focused on long-term

stockholder value rather than on
quarterly earnings or short-term stock
price movements. We encourage our
employees to think like stockholders,
and reinforce this by providing our
senior leaders the benefit of equity
ownership in the Company through
incentive compensation partly paid in
fully vested restricted stock. We believe
the restrictions, which limit the ability to
sell the stock for up to a ten-year period,
align the senior leaders’ interests with

excellence, with an unwavering focus
on safety, environmental stewardship
and the communities where they live
and work. Our rich history spans more
than a century, and we have hundreds
of dedicated employees who devote
countless hours to serving our customers.

I want to thank our employees for
their many contributions throughout the
past year, as well as their commitment
to our future. I would also like to thank
our customers and vendors, as well as
NACCO’s Board of Directors and long-
term stockholders, for their continuing
support.

I also want to acknowledge Richard

(“Dick”) de J. Osborne, who will be
retiring from the Board of Directors at the
2023 Annual Meeting. When Dick joined
the Board in 1998, NACCO Industries

owned industry-leading lift truck and
housewares companies, as well as the
legacy North American Coal business.
During Dick’s tenure on the Board, we
spun off Hyster-Yale Materials Handling
(NYSE: HY) in 2012 and Hamilton Beach
Brands (NYSE: HBB) in 2017, creating
substantial stockholder value. Also,
during the last 25 years, the coal business
grew significantly, and we have leveraged
our core skills and strengths to create
three new businesses – North American
Mining, Catapult Mineral Partners and
Mitigation Resources. We benefited
greatly during this period from Dick’s
insights and contributions as a trusted
advisor and his many years of service
as chair of our Audit Review Committee
and a member of our Nominating and
Corporate Governance Committee. Dick’s
previous experience as the Chairman and
CEO of ASARCO Incorporated, a leading
producer of non-ferrous metals, provided
us with a comprehensive perspective
for developing corporate strategies and
managing the risks of a publicly traded
corporation. I would like to thank Dick
for his contributions and 25 years of
dedicated service through a period of
tremendous growth and diversification
that has transformed the Company.

As we reflect on the 110th anniversary
of our Company’s founding, we observe
a long history of protecting our core
coal mining business, while pursuing
strategically appropriate opportunities
to grow and diversify. We have a great
track record and strong momentum to
propel us forward. As always, we will face
challenges, but we are confident in our
long-term prospects. We look forward
to bringing America’s natural resources
to life in 2023 and for many decades
to come.

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

Our Falkirk Mine gained a new customer
following Rainbow Energy’s purchase of
Coal Creek Station, North Dakota’s largest
power plant, from Great River Energy.

CARING FOR OUR PEOPLE,
LAND & COMMUNITY

Our team is committed to

maintaining sound environmental,
social and governance practices.
We are also intensely focused
on safe operations, responsible
environmental stewardship,
employee well-being and engaged
community relations. Everything
we do to advance our two key
strategies – Protect the Core and
Grow and Diversify – incorporates
these fundamental principles.
To us, Corporate Responsibility
reflects our value system, which
guides everything that we do.

We believe good corporate

governance underpins our
value system. It promotes well-
informed decision making, drives
continuous improvement and
fosters a culture of partnership
and trust. We operate with
honesty, accountability and
transparency, building and
nurturing relationships with our
employees, customers, suppliers
and communities.

Doing the right thing is in our

corporate DNA.

Our employees maintain the highest
levels of customer service and operational
excellence, with an unwavering focus on
safety, environmental stewardship and the
communities where they live and work.

NACCO Industries®

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Doing the right
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corporate DNA.

OUR PEOPLE FUEL
OUR SUCCESS.

We value our employees as individuals
and know that they fuel our success. We
believe that everyone should be treated
fairly, with dignity and respect, and we
include this commitment in our Code of
Corporate Conduct, onboarding materials,
employee meetings and training.

We are committed to providing a fair

and living wage to all employees and
compensation that is competitive and
consistent with employee positions,
skill levels, experience, knowledge
and geographic location. We provide a
comprehensive and competitive benefits
package that supports the physical and
mental health and financial wellness of
our employees. As a result, we enjoy
high employee retention. In 2022, 14
employees celebrated 40 years or more
with the Company, and we have 220
employees, or 14%, who have at least
20 years of service. Our average tenure
is 11 years of service.

We invest in our employees because we
believe training is a critical component of
employee well-being and growth. Training
ranges from equipment-specific task
training and enhanced safety procedures
to leadership and management training,
ethics training and role-specific training.
Employees are encouraged to pursue
continued professional development,
skills training and other educational
opportunities. In addition, qualified
employees are eligible to participate
in a tuition reimbursement program to
advance their formal education.

We offer competitive medical plan
options with competitive premiums. For

employees who participate
in two of our high-deductible
health plans, we help fund
their health savings accounts.
We offer a comprehensive
wellness program, aided by
the use of a mobile app in
both English and Spanish,
and supported with wellness
incentives employees can earn
based on preventive health
screenings, monthly activity
challenges and completion of
health-related training modules.
Wellness incentives are paid
in cash or contributed to
health savings accounts at the
employees’ option. In addition,
monthly wellness topics are
promoted through Company
communication channels.

We offer a highly competitive

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401(k) plan, with 97% of all employees
participating and an average deferral
rate of 9.9%. We offer a 100% matching
contribution up to 5% of compensation
and a 6% profit-sharing contribution
for all of our full-time and part-time
employees. We work to educate our
employees on the benefits of using a
401(k) plan to invest for retirement,
and we are proud that our participation
and savings rates exceed average rates
published by Vanguard.

We believe that healthy, safe and
financially secure employees are likely
to be happy employees as well. Our long
average tenure tells us we are on the
right track.

We provide a comprehensive and competitive benefits
package that supports the physical and mental health
and financial wellness of our employees. As a result, we
enjoy high employee retention.

1,600
Total Employees

14% or 220
Employees
with 20 Years or
More of Service

14 of 220
Employees
have 40+ Years
of Service

A 16-year Company veteran
participates in an environmental
and safety evaluation.

NACCO Industries®

SAFETY FIRST.
SAFETY ALWAYS.

At NACCO, we hold each other to the highest safety standards. We

maintain a culture committed to safety excellence – our employees
work safely and look out for each other. We commit to our employees
that we will provide a safe working environment, and in return we
ask every employee to commit to working in a manner that ensures
everyone goes home safely at the end of each day.

Our goal is to have zero incidents and injuries. Our operations have

onsite safety personnel who train employees in safe work practices,
review safety-related incidents and recommend improvements when
appropriate. We prioritize investigations of near-miss events to identify
opportunities to improve employee awareness and incorporate policy
or procedural changes or training as appropriate. We believe that
workplace incidents and injuries can be prevented through a focus on
continuous improvement and personal responsibility.

We are proud that the National Mining Association ranks us as an
industry leader in safety, and our incident rate is consistently below
the national average for comparable mines, based on Mine Safety and
Health Administration data.

Our Health and Safety Principles, which can be found on our website,

provide examples of how we promote a safety-first culture:

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• We provide ongoing safety training,
education and communication to
ensure employees understand and
comply with all applicable safety
laws and regulations, and everyone
is committed to keeping themselves
and their co-workers safe.

• We provide technical training to

employees on the use, maintenance
and repair of equipment to ensure
all employees can perform their
jobs in a safe and healthy manner,
and we provide personal protective
equipment to protect employees
from risks and injuries.

• Key personnel participate in

company-wide safety summits
to discuss safety successes and
opportunities for improvement,
including best practices and the
latest developments with respect to
safety rules, laws and regulations.
• We established a company-wide,
cross-functional Safe Work Area
Task Force that participates in
industry-wide efforts to share
best practices.

We are proud that we have earned more than 100 safety awards at the state and
national levels. In 2022, the Coteau Properties Company received the Lignite Energy
Council’s Safety Excellence Award for its work at the Freedom Mine. The honor
recognized the achievement of the lowest overall accident incident rate in the North
Dakota lignite industry in 2021. Additionally, the Coyote Creek and Falkirk mines were
recognized with Distinguished Safety awards for achieving incident rates lower than
the national average. Finally, Demery Resources celebrated 10 years with zero lost-
time accidents at the Five Forks Mine.

100+

Safety Awards

ENVIRONMENTAL
EXCELLENCE

We demonstrate our commitment
to the environment through excellence
in reclamation, biodiversity, historic
preservation, waste management and
compliance. Our approach reflects our
commitment to protect and nurture
the environment.

At our core, we are conservationists.

We insist that all aspects of our work
be accomplished in an environmentally
responsible manner, and our
environmental professionals monitor
environmental trends to address
stakeholder priorities and identify best
practices. We have received many awards
for our environmental excellence, as
well as innovations in this area. Our
Environmental Policy, which can be found

contemporaneous reclamation at our
coal mining operations. Reclamation is
designed to return the land to productive
use and promote biodiversity. The
Coteau Properties Company received
the Excellence in Surface Coal Mining
and Reclamation Award from the North
Dakota Public Service Commission in
2022, and the Caddo Creek Resources
Company earned the 2022 Texas Coal
Mining Reclamation Award from the
Surface Mining and Reclamation Division
of the Texas Railroad Commission for
its reclamation activities at the
Marshall Mine.

Prior to initiating mining activities, we
conduct exhaustive biological studies to
assess local ecosystems. These studies

We are committed to protecting and nurturing the
environment. At our core, we are conservationists.

on our website, emphasizes our strong
legacy of environmental stewardship
as part of our long-held commitment
to being a good corporate citizen. Our
work is designed to promote biodiversity,
as demonstrated through our habitat
preservation and reclamation practices.
We strive to minimize the impacts of

surface disturbance, and we practice

provide an important base so our
reclamation experts can achieve our goal
of returning the mined areas to an equal
or better state than before they were
mined. Our native grass programs at
our North Dakota, Texas and Mississippi
operations exemplify our commitment
to going above and beyond technical
requirements for reclamation. Hundreds

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of acres of native grasses have
been successfully planted,
resulting in healthy native
bird and animal populations
in reclaimed areas, including
bald eagles, deer, turkeys and
moose. At the Sabine Mine in
Texas, many acres of native
grass were planted, which
successfully facilitated the
return of bobwhite quail to
the area. In North Dakota,
our reclamation work has
re-established habitats for
sharp-tailed grouse at two of
our operations. At the Red
Hills Mine in Mississippi, the
quail population benefited
from planting more than 220
acres of native grasses and
leaving hedgerows and other habitat
features in place to provide natural
cover. Notably, the Arbor Day Grove at
Red Hills is on reclaimed land, hosting
a variety of trees planted by local
elementary students as part of Arbor
Day celebrations over the past ten
years. Since 1978, we have planted
more than 10 million trees as part of
our reclamation efforts.

We work to preserve cultural sites

that are important to local areas.
Pre-mining studies result in mine

NACCO Industries®

plans that protect cultural areas, and
employees receive training on what
to do if an incidental find is made. Our
work has led to discoveries that provided
valuable, irreplaceable information
about historic and prehistoric activities.
This documented information is made
available to researchers, archaeological
professionals, students, historians and
archaeology hobbyists. Over the last
several years, we adjusted our mine
plan to preserve a Turtle Effigy at the
Coteau Mine, and worked to ensure
that indigenous people had access to
the Turtle Effigy before, during and
after mining.

Our operations employ waste

management practices that minimize
overall waste products and maximize
recycling and reuse opportunities
before proper disposal. For example,
we conduct research and studies that

allow our operations to enhance fuel
efficiency and extend the life of various
oil products used in our equipment. By
rebuilding equipment components onsite,
our operations prevented the shipping,
disposal and replacement of many tons

Complying with environmental
regulations is our minimum standard,
and we maintain a commitment to meet
or exceed all applicable environmental
laws and regulations. Going beyond
the minimum is embedded in our

As a result of our commitment, we have received
more than 97 awards for successful and innovative
reclamation projects since 1978.

of parts. We monitor materials, packaging
and waste to identify hazardous materials
and conduct periodic audits of the vendors
involved in removing waste from our
mine sites. Each of our mining operations
is classified by regulators as a very small
quantity generator of hazardous waste, an
important designation that demonstrates
our good work.

culture and allows us to build trust
with our stakeholders. As a result of
our commitment, we have received
more than 97 awards for successful
and innovative reclamation projects
since 1978.

Our Environmental Policy articulates

our commitment to be thoughtful
stewards of the land.

Going beyond the minimum is
embedded in our culture and allows
us to build trust with our stakeholders.
Each year, environmental professionals
from across the Company meet to share
best practices. In October 2022, they
met at our Smoky Run Mitigation Bank
in Tennessee, shown below.

CORPORATE
GOVERNANCE

perspectives and backgrounds. The
Board maintains a balance between
longer-tenured directors with in-depth
knowledge of the Company and newer
directors who bring a fresh perspective.
To ensure NACCO benefits from a broad
set of views, the Board’s Nominating
and Corporate Governance Committee
carefully considers the importance
of diverse perspectives, backgrounds
and experiences when selecting future
director nominees. The Board seeks to
ensure that it is composed of members
whose particular expertise, qualifications,
attributes and skills, when taken together,
allow the Board to satisfy its oversight
responsibilities effectively.

purpose and responsibilities,
and each committee conducts
an annual evaluation of its
performance based on the
responsibilities set forth in its
respective charter.

Cybersecurity continues to
be a key governance priority
for companies and is among
our Board’s oversight respon-
sibilities. Our commitment
to cybersecurity emphasizes
cultivating a security-minded
culture through education and
training initiatives that reflect
best practices and improve
our employees’ cybersecurity

We are committed to operating with honesty,
accountability and transparency.

The Board has established the following
standing committees: The Compensation
and Human Capital Committee, the Audit
Review Committee and the Nominating
and Corporate Governance Committee.
Independence is an important component
of our Board’s oversight and these
committees are composed entirely of
independent directors. Each committee
has a written charter that describes its

awareness. We continue to focus
on strengthening risk mitigation
in this area through several
measures, including retention
of third-party cybersecurity
firms for penetration testing and
assessments. The Audit Review
Committee and the full Board
each receive regular briefings on
our cybersecurity program.

Good corporate governance, with a

long-term perspective, is an integral
part of our value system. NACCO was
founded in 1913, and descendants of
Frank Taplin, our founder, continue to
own a substantial portion of our stock.
Five generations of stock ownership
demonstrate long-term dedication and
commitment to NACCO’s success. We
believe that our ownership structure
provides a strategic advantage, helping
to mitigate certain short-term pressures
faced by widely held companies while
allowing management and the Board of
Directors to focus on long-term objectives
that benefit all stockholders.

An effective Board of Directors is

critical to effective corporate governance.
As of December 31, 2022, there were
12 directors on our Board, a majority of
whom were independent directors not
related to the founding family. Our Board
maintains strong governance practices,
providing long-term strategic guidance
and oversight of management to help
the Company fulfill its responsibility to
stockholders. The Board sets the tone
for our Company by upholding strong
governance practices designed to ensure
accountability, fiscal responsibility and
the highest levels of ethical conduct.

Our Board members have a broad range

of skills, expertise, industry knowledge,

A lake at the Red Hills Mine
provides a recreational area
for the community.

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NACCO is committed to maintaining
the highest standards of professional
and personal conduct. Our Code of
Conduct, Insider Trading Policy and
Anti-Corruption Policy require Board
members and employees to comply
with applicable laws and regulations,
maintain high ethical standards and
report situations of actual or potential
noncompliance. We also maintain an
ethics-related hotline, managed by
a third party, so that individuals can
anonymously raise concerns or ask
questions about business behavior.
We believe strong corporate

governance and corporate responsibility
promote well-informed decision making,
drive continued growth and allow NACCO
to remain a trusted business partner. We
are committed to operating with honesty,
accountability and transparency.

We operate with integrity and build

and nurture relationships with our
employees, customers and suppliers,
as well as with the communities
where we operate. Strong corporate
governance ensures NACCO continues
to be a well-run Company. Our Board
and management team are focused
on delivering long-term value, with a
particular focus on taxable stockholders.
Doing the right thing is a core part of
our value system.

NACCO Industries®

We commit to our employees
that we will provide a safe
working environment, and in
return we ask every employee
to commit to working in a
manner that ensures everyone
goes home safely at the end of
each day. Regular equipment
inspections, such as the one
in the picture, help keep our
employees safe.

NACCO Industries®

COMMUNITY
ENGAGEMENT

Local communities are important to
our employees, and to us, and we believe
in making long-term investments in the
areas where we operate. We support
numerous charitable efforts where our
employees live and work, including
educational, arts and community
organizations. In 2022, we directed
more than $400,000 of corporate
donations to organizations that serve our
communities. We also support employee
cash donations to qualified organizations
through our matching gift program
whereby NACCO will match eligible
employee donations up to $5,000 per
year, per employee.

Together with our employees, in 2022,

we contributed more than $35,000 to
support literacy programs. We hosted
events where our employees learned
about local literacy efforts, and from
these events, we contributed more
than $25,000 to the East Texas Literacy
Council, the Hallsville Independent
School District and the Beulah, North
Dakota public library. We are proud to
contribute funding and time in support
of these very worthwhile programs.

We regularly host students, teachers
and community groups on mine tours
and other educational programs. As an
example, the Sabine Mine partnered
with the Texas Mining and Reclamation
Association to offer a free five-day
summer workshop to educators. The
workshop provided science-based
information to help educate participants

about the availability, import-
ance, development and use
of our natural resources while
protecting our environment.
Attendees toured the mine,
visited reclamation areas, heard
from industry experts and
participated in hands-on labs.
The workshop also included
demonstrations of interactive
exercises that teachers can
use in their classrooms, such
as assessing the physical
properties of soil and rock,
how to ensure water quality
meets regulatory standards
and how lignite is used to make
electricity. Each year, Boy Scout
troops will visit mines in Texas
and North Dakota, and in 2022,
the Freedom Mine hosted Air
Force personnel as part of the
North Dakota Energy Tour.

In addition, our operations
regularly participate in local
community events such as the
Choctaw Christmas Parade in
Mississippi, Christmas with
the Larks in Bismarck, North
Dakota, and a Thanksgiving food
donation drive at the Falkirk
Mine. At the Red Hills Mine,
employees support events such
as the Conservation Carnival in
Ackerman, Mississippi, and
the Arbor Day celebration at
the mine.

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In 2022, we hosted
an event where our
employees learned
about local literacy
efforts.

Local communities
are important to our
employees, and to
us, and we believe
in making long-
term investments
in the areas where
we operate.

$400,000+
To Support
Educational, Arts &
Culture and Civic
Organizations

$35,000+
To Support Literacy
Programs

16
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2022 DonationsDIRECTORS

J.C. Butler, Jr.
President and Chief Executive Officer,
NACCO Industries, Inc. and
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

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 and Chief Executive Officer,
Hyster-Yale Materials Handling, Inc.

Matthew M. Rankin
President and Chief Executive Officer,
Carlisle Residential Properties

Roger F. Rankin
Self-employed (personal investments)

Lori J. Robinson
Retired General, United States Air Force

Robert S. Shapard
Chairman and Retired Chief Executive
Officer of Oncor Electric Delivery
Company

Non-Executive Chairman,
Hamilton Beach Brands Holding Company

Britton T. Taplin
Self-employed (personal investments)

LEADERSHIP

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

Carroll L. Dewing
Vice President – Operations

John D. Neumann
Vice President, General Counsel and
Secretary

J. Patrick Sullivan, Jr.
Vice President and Chief Financial Officer,
The North American Coal Corporation

Elizabeth I. Loveman
Vice President and Controller,
NACCO Industries, Inc.

Thomas A. Maxwell
Vice President – Financial Planning
and Analysis and Treasurer,
NACCO Industries, Inc.

Vice President of Finance and Treasurer,
Mitigation Resources of North America

Andrew B. Hart
Controller, The North American Coal
Corporation

Philip N. Berry
President, North American Mining

Brian M. Larson
President, Catapult Mineral Partners

Eric S. Anderson
President, Mitigation Resources of
North America

Eric A. Dale
Treasurer and Senior Director,
Financial Planning and Analysis,
The North American Coal Corporation

Sarah E. Fry
Associate General Counsel and Assistant
Secretary

Miles B. Haberer
Associate General Counsel, Assistant
Secretary and President, North American
Coal Royalty Company

Matthew J. Dilluvio
Associate Counsel and Assistant
Secretary

CORPORATE INFORMATION

NACCO Industries®

Annual Meeting
The Annual Meeting of Stockholders of NACCO
Industries, Inc . will be held on May 16, 2023,
at 10:00 a .m . EDT located at:
5875 Landerbrook Drive
Cleveland, Ohio 44124

Stock Exchange Listing
The New York Stock Exchange Symbol: NC

Stock Transfer Agent and Registrar
Stockholder Correspondence:
Computershare Investor Services
P .O . Box 43078
Providence, Rhode Island 02940-3078

Overnight Correspondence:
Computershare Investor Services
150 Royall Street, Suite 101
Canton, Massachusetts 02021

(800) 622-6757 (U .S ., Canada and Puerto Rico)
(781) 575-4735 (International)

Legal Counsel
McDermott Will & Emery LLP
444 West Lake Street
Chicago, Illinois 60606

Independent Registered Public
Accounting Firm
Ernst & Young LLP
950 Main Ave ., Suite 1800
Cleveland, Ohio 44113

Form 10-K
Additional copies of the Company’s Form 10-K
filed with the Securities and Exchange Commission
are available through NACCO Industries’ website
(nacco.com) or by request to Investor Relations

Investor Relations Contact
Investor questions may be addressed to:
Investor Relations
NACCO Industries
5875 Landerbrook Drive, Suite 220
Cleveland, Ohio 44124
or sent through the Company’s website .

Visit Our
Websites

Watch Our
Video

NACCO Industries: nacco.com

NACCO Natural Resources: nacco.com

North American Coal: nacoal.com

North American Mining: namining.com

Mitigation Resources of North America: mitigate.pro

Catapult Mineral Partners: catapultmp.com

A key component of our Protect
the Core strategy is managing coal
production costs to help customers
with management fee contracts be
more competitive, since fuel cost is
a significant driver of power plant
dispatch.

Bringing Natural Resources to Life

5875 Landerbrook Drive, Suite 220 • Cleveland, Ohio 44124
An Equal Opportunity Employer