This article first appeared on GuruFocus .
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Revenue:$72.3 million, up 6% from $68.2 million in the prior year quarter.
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Gross Profit:$15.2 million, up 123% from $6.8 million last year.
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Operating Loss:$2.3 million, compared with an operating loss of less than $100,000 in the prior year quarter.
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Net Loss:$1 million, or $0.13 per diluted share, compared with net income of $3.3 million, or $0.44 per diluted share in the 2025 second quarter.
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Adjusted EBITDA:$15.9 million, up 72% from $9.3 million last year.
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Utility Coal Mining Operating Profit:$6.3 million, up from $1.2 million in the prior year quarter.
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Utility Coal Mining Adjusted EBITDA:$8.7 million, up from $3.4 million.
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Contract Mining Revenue (net of reimbursed costs):Increased 34% year-over-year.
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Contract Mining Operating Profit:$3.8 million, up from $1 million.
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Contract Mining Adjusted EBITDA:$6.3 million, up from $3.9 million.
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Minerals and Royalties Operating Profit:$6.7 million, up from $5.2 million.
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Minerals and Royalties Adjusted EBITDA:$7.7 million, up from $6.1 million.
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Royalty Revenues:Increased 46% driven by higher oil prices and a favorable adjustment to prior period pricing estimates.
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Impairment Charges:$12 million related to two solar development projects within ReGen Resources.
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Outstanding Debt:$120.1 million at June 30, 2026.
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Total Liquidity:$114.6 million, consisting of $45.5 million of cash and $69.1 million of availability under the revolving credit facility.
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Consolidated Adjusted EBITDA increased 72% year-over-year to $15.9 million, driven by strong performance across all reportable segments.
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Utility coal mining operating profit surged to $6.3 million from $1.2 million, aided by a nimble shift to reclamation activities that reduced asset retirement obligations.
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Contract mining revenues rose 34% and operating profit jumped to $3.8 million from $1.0 million, with the Palm Beach County dragline contract ramping up and new limestone operations starting in Arizona.
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Minerals and royalties operating profit increased to $6.7 million from $5.2 million, supported by a 46% rise in royalty revenues due to higher oil prices.
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Management is actively pursuing monetization alternatives for solar projects, including asset sales and contract amendments, to preserve value and limit future exposure.
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The company expects full-year 2026 consolidated Adjusted EBITDA to improve year-over-year, with continued growth anticipated into 2027.
Negative Points
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The company recorded $12 million in impairment charges related to two solar development projects, leading to a consolidated operating and net loss for the quarter.
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Solar projects face significant headwinds from tax law changes (One Big Beautiful Bill Act), grid connection delays, and cost increases from tariffs and equipment demand.
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Mississippi Lignite Mining Company faces reduced customer demand, higher diesel fuel costs, and an anticipated inventory impairment charge in the second half of 2026.
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There are delayed payments from the MLMC customer, and the company is evaluating contractual rights and potential legal actions if payment delays continue.
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Minerals and royalties segment profits are expected to moderate in the second half due to production declines and a slower pace of domestic development activity.
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Cash flow before financing is projected to remain a use of cash in 2026, reflecting planned investment activity, and second-half operating profit and net income are expected to be lower than 2025.
Q & A Highlights
Q: Can you provide more clarity on the factors impacting Mississippi Lignite Mining Company (MLMC), particularly the reduced demand for its generation? A: J.C. Butler, President and CEO, explained that three factors are at play: planned and unplanned outages at the customer's power plant, and dispatch decisions by TVA. During the second quarter, a significant unplanned outage occurred, prompting NACCO to shift resources to reclamation activities, which are charged to the balance sheet rather than the income statement. Additionally, TVA may choose not to dispatch the plant during periods of excess electricity supply, sometimes due to tax credits favoring renewables. The company's outlook is based on general indications from the customer and TVA, which can change frequently.
Q: What recourse does NACCO have regarding the delayed payments from the MLMC customer, and does it have more leverage than a typical unsecured creditor? A: J.C. Butler declined to comment on specific legal strategies but stated that the company has a clear understanding of its contractual rights and other points of leverage in the relationship. He emphasized that NACCO is actively evaluating these options and will enforce the economic protections in the contract if payment delays continue.
Q: Are you seeing better returns in contract mining, oil and gas, or mitigation resources, and where is the most fruitful place to reinvest capital? A: J.C. Butler stated that NACCO is refining business models across all core businesses to capture efficiencies and enhance margins. He highlighted the synergies between the businesses, noting that mining and mitigation benefit from coal mining operations and vice versa. He emphasized the importance of diversification to create a stable, long-term platform, especially given the current energy renaissance in fossil fuels and the need to hedge against potential political shifts.
Q: How much of a priority is it to broaden the customer mix in the contract mining segment, given the current skew towards Cameco? A: J.C. Butler explained that NACCO already has relationships with some of the largest players in aggregate and cement production. Growth often comes from existing customers asking NACCO to expand to new sites, as seen with the upcoming Phoenix, Arizona dragline project. The company is also expanding geographically and exploring new applications for its skills, such as the Palm Beach County project, which involves mining aggregates for infrastructure development rather than for sale as construction materials.
Q: How likely are the proposed pipeline projects in North Dakota to go forward, and would they introduce new gas-fired competition? A: J.C. Butler noted that NACCO is not a party to those pipeline discussions, making it difficult to comment on their likelihood. However, he emphasized that North Dakota is an energy-rich state with significant coal, oil, and natural gas reserves. He does not view these projects as real competition, as there is substantial demand for generation in the upper Midwest, and ongoing transmission development will help deliver electrons to markets.
Q: Can you elaborate on the impairment charges related to the solar development projects and the decision to take them? A: J.C. Butler explained that the impairments, totaling $12 million, were driven by a "perfect storm" of factors: tax law changes from the One Big Beautiful Bill Act, intense short-term demand for generating equipment and EPC services, and price increases linked to tariffs. These developments caused two projects to veer off their anticipated path. NACCO is pursuing alternatives such as asset sales and contract amendments to monetize investments and reduce future exposure, though additional curtailment charges are possible.
Q: What is the outlook for the minerals and royalties segment for the remainder of 2026 and into 2027? A: Elizabeth Loveman, Principal Financial Officer, stated that while second quarter results were strong, the company expects profits to moderate in the second half of 2026 due to normal production declines on existing wells and the current pace of domestic development activity, particularly in natural gas. For 2027, the segment is expected to continue generating meaningful earnings and cash flow, though operating profit is projected to moderate due to similar factors.
Q: Can you provide more detail on the expected financial performance for the second half of 2026 and full year? A: Elizabeth Loveman noted that the strong first-half performance is expected to drive year-over-year improvements in full-year 2026 consolidated Adjusted EBITDA, which excludes the solar impairment charges and a $7.8 million pre-tax pension settlement charge from 2025. However, due to the impairment charges and potential additional curtailments, second-half and full-year operating profit and net income are expected to be lower than 2025. Cash flow before financing is projected to improve modestly over 2025, with continued improvement into 2027.
Q: What is the company's capital allocation strategy and investment outlook for the remainder of the year? A: J.C. Butler stated that NACCO remains focused on strengthening its balance sheet, prioritizing free cash flow to enhance liquidity and reduce debt. The company anticipates investing up to $35 million in the remainder of 2026, primarily for business development opportunities, but only if they meet strict capital investment criteria. Recent developments have reinforced the need for heightened scrutiny on investments outside established operating platforms.
Q: How is the Palm Beach County Dragline Services contract performing, and what is the outlook for contract mining? A: J.C. Butler reported that the Palm Beach County project is ramping up well, with two draglines operating, a third being commissioned, and a fourth expected to be operational later this year. This project is unique as it involves mining aggregates for a major infrastructure project related to Lake Okeechobee and the Everglades, rather than for sale as construction materials. The company expects substantial year-over-year growth in contract mining operating profit and Adjusted EBITDA for the second half and full year of 2026, with further improvement in 2027 driven by a full year of contributions from this contract and potential new deals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
