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NACCO Industries, Inc. Announces Second Quarter 2016 Results

08/02/2016

CLEVELAND, Aug. 2, 2016 /PRNewswire/ -- NACCO Industries, Inc. (NYSE: NC) today announced consolidated net income of $3.1 million, or $0.45 per diluted share, and revenues of $178.0 million for the second quarter of 2016 compared with a consolidated net loss of $0.3 million, or $0.04 per diluted share, and revenues of $196.5 million for the second quarter of 2015.

The Company reported net income for the six months ended June 30, 2016 of $5.9 million, or $0.86 per diluted share, and revenues of $351.4 million compared with net income of $0.8 million, or $0.11 per diluted share, and revenues of $390.2 million for the first six months of 2015.

Consolidated EBITDA for the second quarter of 2016 and the trailing twelve months ended June 30, 2016 was $7.6 million and $56.0 million, respectively. EBITDA in this press release is provided solely as a supplemental non-GAAP disclosure of operating results. For a reconciliation of GAAP results to EBITDA, see page 11.

The Company ceased mining operations at North American Coal's Centennial Natural Resources mine in Alabama at the end of 2015.  However, certain wind-down and reclamation activities are continuing.  Because Centennial is no longer an active mine, management believes adjusting the 2016 and 2015 reported U.S. GAAP financial results to exclude Centennial's results will assist investors' understanding of the performance of the active operations of both NACCO Industries, Inc. and North American Coal.  "Adjusted revenues" and "Adjusted income" in this press release refer to revenues and net income adjusted to exclude Centennial's results.  For reconciliations from U.S. GAAP results to these adjusted non-GAAP financial results, see pages 13 and 14.

Excluding Centennial, NACCO's 2016 second quarter consolidated Adjusted income was $4.3 million, or $0.63 per diluted share, on Adjusted revenues of $177.7 million, compared with consolidated Adjusted income of $3.8 million, or $0.54 per diluted share, on Adjusted revenues of $184.6 million for the second quarter of 2015.  NACCO's consolidated Adjusted income for the six months ended June 30, 2016 was $9.0 million, or $1.32 per diluted share, on Adjusted revenues of $350.8 million, compared with consolidated Adjusted income of $8.2 million, or $1.15 per diluted share, on Adjusted revenues of $368.9 million for the second quarter of 2015.

The Company's cash position was $34.3 million as of June 30, 2016 compared with $52.5 million as of December 31, 2015 and $19.3 million as of June 30, 2015.  Debt as of June 30, 2016 was $151.2 million compared with $170.0 million as of December 31, 2015 and $179.1 million as of June 30, 2015.

NACCO repurchased approximately 70,500 shares for an aggregate purchase price of $3.8 million during the three months ended June 30, 2016 as part of the stock repurchase program the Company announced in May 2016, which permits the repurchase of up to $50 million of the Company's outstanding Class A common stock.  


Detailed Discussion of Results
North American Coal - Second Quarter Results

 

Coal tons and limerock yards sold at North American Coal for the second quarter of 2016 and 2015 were as follows:


2016


2015

Coal tons sold

(in millions)

        Unconsolidated mines

6.7


6.5

        Consolidated mines*

0.6


0.9

                        Total coal deliveries

7.3


7.4

Limerock deliveries (cubic yards)

7.1


5.1

   *Consolidated mines' tons sold include 0.2 million tons sold at Centennial in the second quarter of 2015.

 

North American Coal reported operating profit of $4.8 million, net income of $3.3 million and revenues of $23.1 million in the second quarter of 2016, compared with operating profit of $2.4 million, net income of $4.2 million and revenues of $37.9 million in the second quarter of 2015.

North American Coal's Centennial operations had an operating loss of $1.9 million and revenues of $0.3 million in the second quarter of 2016 compared with an operating loss of $6.5 million and revenues of $11.9 million in the second quarter of 2015.  The reduction in Centennial's revenue was primarily the result of significantly reduced tons sold due to the cessation of mining activities on December 31, 2015.  Centennial's operating loss declined as substantially lower operating costs were required to conduct the remaining day-to-day operations of selling equipment, maintaining permits and completing mine reclamation.  These reduced operating costs were partially offset by a net loss on the sale of assets in the second quarter of 2016 and the absence of a net gain on the sale of assets in the second quarter of 2015.

Excluding Centennial, North American Coal reported Adjusted operating profit of $6.7 million and Adjusted revenues of $22.8 million for the second quarter of 2016 compared with Adjusted operating profit of $8.9 million and Adjusted revenues of $26.0 million for the second quarter of 2015.

The decrease in North American Coal's Adjusted revenues was primarily due to reductions in tons sold and the selling price per ton at the Mississippi Lignite Mining Company in the second quarter of 2016 compared with 2015, as well as a decrease in royalty and other income.  Tons sold at Mississippi Lignite Mining Company were lower as a result of an increase in outage days at the customer's power plant, and the selling price per ton was lower due to the decline in diesel prices during 2015 and 2016 that resulted in a lower index-based coal sales price.  The decline in revenues was partially offset by higher revenues at the limerock mining operations due to a substantial increase in limerock yards delivered.

The decrease in Adjusted operating profit during the second quarter of 2016 compared with 2015 was primarily attributable to higher selling, general and administrative expenses resulting from higher employee-related costs and professional fees, a reduction in royalty and other income and lower operating results at the consolidated mining operations.  This decrease was partially offset by an increase in operating profit at the unconsolidated mining operations as newer mining operations began or increased production.  Operating results declined at the consolidated mining operations due to lower operating results at the Mississippi Lignite Mining Company, partially offset by improved operating results at the limerock mining operations from an increase in yards delivered.  Operating results at the Mississippi Lignite Mining Company were lower due to the decrease in revenue, partially offset by a reduction in cost of sales.  Cost of sales includes both production costs and changes in inventory.  The reduction in cost of sales was due to a decrease in total production costs, as well as the capitalization of more production costs into coal inventory in the second quarter of 2016 compared with 2015.

North American Coal reported income before income tax of $1.7 million and net income of $3.3 million in the second quarter of 2016.  The 2016 income before income tax includes $2.2 million of other expense recognized in the second quarter of 2016 related to the reversal of an indemnification receivable associated with an uncertain tax position recorded as part of the Centennial acquisition.  This other expense was offset by a corresponding income tax benefit of $2.3 million, also recorded in the second quarter of 2016, due to the reversal of the uncertain tax position.  This income tax benefit more than offset the tax expense associated with the current period earnings resulting in the company recording an income tax benefit on pre-tax earnings.

For the six months ended June 30, 2016, North American Coal reported net income of $11.6 million and revenues of $53.4 million compared with net income of $8.7 million and revenues of $79.3 million for the six months ended June 30, 2015.  Excluding Centennial, North American Coal reported Adjusted income of $14.7 million and Adjusted revenues of $52.7 million for the six months ended June 30, 2016 compared with Adjusted income of $16.2 million and Adjusted revenues of $57.9 million for the six months ended June 30, 2015.

North American Coal - Outlook

North American Coal expects an increase in tons sold in the second half of 2016 compared with the second half of 2015.  Despite this overall increase in tons, and excluding Centennial's results in both 2016 and 2015, North American Coal expects a decrease in income before income taxes in the second half of 2016 compared with the same period in 2015, primarily due to an expected decrease in income at Mississippi Lignite Mining CompanyMississippi Lignite Mining Company expects a significant decrease in operating results due to an increase in cost of sales.  Cost of sales includes both production costs and changes in inventory.  Mississippi Lignite Mining Company expects an increase in total production costs and increased costs related to the recognition of a portion of production costs previously capitalized into inventory as more tons are sold than produced as part of a planned reduction in inventory levels during the second half of 2016.

Royalty and other income and results at the limerock mining operations are also expected to decrease in the second half of 2016 compared with the second half of 2015.  These decreases are expected to be partially offset by additional income from the unconsolidated mining operations as newer mines begin or increase production in 2016.

Production levels are expected to increase in 2016 over 2015 levels at Camino Real, which anticipates a full year of coal deliveries in 2016 after commencing deliveries in October 2015.  Camino Real expects to mine approximately 2.5 million to 2.7 million tons of coal annually when at full production.  Coyote Creek Mining Company began delivering coal in the second quarter of 2016 and expects to deliver approximately 2.5 million tons of coal annually when at full production.  Liberty Fuels began delivering coal to its customer in July 2016 for facility testing and commissioning.  Production levels at Liberty Fuels are expected to increase gradually and build to full production of approximately 4.5 million tons of coal annually beginning in 2022, although the timing of future deliveries will be affected by when the Kemper County Energy Facility will reach full generation capacity.

Bisti Fuels commenced its transition into the contract miner role at the Navajo Mine on the Navajo Nation in New Mexico on January 1, 2016.  The production period is scheduled to begin when the customer completes a pending commercial transaction with the existing contract miner, which is expected to occur by December 31, 2016.  Production levels are expected to be approximately 5.0 to 6.0 million tons of coal per year.  While Bisti Fuels is recognizing income during the transition period, it will not receive cash payments until the production period begins.

Over the longer-term, North American Coal's goal continues to be to increase earnings of its unconsolidated mines by approximately 50% from the 2012 level of $45.2 million through the development and maturation of its newer mines and normal escalation of contractual compensation at its existing mines.  Income related to a full year of deliveries at the Camino Real mine, the commencement of deliveries at the Coyote Creek and Liberty Fuels mines and income at Bisti Fuels will contribute to this goal in 2016 and beyond.  However, generally low U.S. inflation rates, as reflected in typical market indices, such as the Consumer Price Index and the Producer Price Index, will determine the extent to which contractual compensation at the unconsolidated mines will change year by year.  Achievement of the goal to increase earnings of the unconsolidated mines by 50% is currently expected to occur in 2017 or 2018, but timing will depend on future inflation rates and customer demand.

Cash flow before financing activities in the second half of 2016 is expected to be comparable to the second half of 2015.  Capital expenditures during the remainder of 2016 are estimated to be $9.7 million.

Centennial expects to incur moderate but substantially lower losses in the remainder of 2016 than in the same period of 2015, excluding the effect of any potential future asset sales, as it manages mine reclamation obligations and disposes of certain assets.  Centennial will continue to evaluate strategies to maximize cash flow, including through the sale of mineral reserves, equipment and parts inventory.  The company is evaluating a range of strategies for its Alabama mineral reserves, including holding reserves with substantial unmined coal tons for sale or contract mining when conditions in Alabama and global coal markets improve.  As Centennial continues to execute its wind-down and asset disposal programs, changes in circumstances or the occurrence of certain future events may indicate the carrying amount of Centennial's remaining assets may not be recoverable, resulting in potential future impairment charges.  Total assets associated with Centennial, excluding intercompany balances and deferred taxes, are $28.7 million at June 30, 2016 compared with $31.5 million at March 31, 2016 and $45.5 million at December 31, 2015.  Cash expenditures related to mine reclamation will continue until reclamation is complete or ownership of the mines is transferred.

North American Coal expects to continue its efforts to develop new mining projects and is pursuing opportunities for new or expanded coal mining projects, although future opportunities are likely to be very limited.  In addition, North American Coal continues to pursue additional non-coal mining opportunities, principally in aggregates.


Hamilton Beach - Second Quarter Results

Hamilton Beach reported net income of $2.9 million and revenues of $127.1 million for the second quarter of 2016 compared with net income of $1.6 million and revenues of $129.5 million for the second quarter of 2015.  For the second quarter of 2016 operating profit was $4.7 million compared with $2.9 million in the second quarter of 2015.

Revenues decreased in the second quarter of 2016 compared with the second quarter of 2015 primarily due to unfavorable foreign currency movements as both the Mexican peso and Canadian dollar continued to weaken against the U.S. dollar, as well as reduced sales volumes in the U.S. consumer retail market.  The revenue decline was partially offset by an increase in sales of new and higher-priced products.

Despite the decrease in revenues, both operating profit and net income increased substantially in the second quarter of 2016 compared with the prior year.  These increases were primarily due to an improvement in gross profit as a result of a shift in sales mix to higher-priced, higher-margin products and lower selling, general and administrative expenses, partially offset by unfavorable foreign currency movements.

For the six months ended June 30, 2016, Hamilton Beach reported net income of $2.7 million and revenues of $242.8 million compared with net income of $2.2 million and revenues of $252.8 million for the six months ended June 30, 2015.

Hamilton Beach - Outlook

Overall consumer confidence and financial pressures experienced by the middle-market consumer continue to create uncertainty about the overall growth prospects for the U.S. retail market for small appliances, including growth prospects for both in-store and internet sales. As a result, second half 2016 volumes in the market in which Hamilton Beach's core brands participate are projected to be comparable or down slightly compared with the same period in 2015.  The Canadian retail market is also expected to be difficult as the Canadian economy continues to struggle.  However, the international and commercial markets in which Hamilton Beach participates are expected to grow moderately in the second half of 2016, but at a slower pace than in the first half of 2016.

In spite of current market conditions, Hamilton Beach expects its consolidated sales volumes in the second half of 2016 to increase moderately compared with the second half of 2015 due to increased placements of higher-priced products in its core small kitchen appliance business.  Hamilton Beach's international and commercial product sales volumes are expected to increase in the remainder of 2016 compared with the same period in 2015 as a result of the continued execution of its strategic initiatives.

Hamilton Beach continues to focus on strengthening the consumer market position of its various product lines through product innovation, promotions, increased placements and branding programs.  The company will continue to introduce new innovative products, as well as upgrades to certain existing products across a wide range of brands, price points and categories in both the retail and commercial marketplaces, leveraging its strong brand portfolio.  Hamilton Beach also expects its growing global commercial business to benefit from broader distribution of several newer products.  The company continues to pursue other opportunities to create or add product lines and new brands that can be distributed in high-end or specialty stores and on the Internet, including the introduction of the Hamilton Beach® Professional premium line of counter-top kitchen appliances, which is expected to be available in the second half of 2016.  As a result of anticipated increases in 2016 sales volumes from new product introductions, new distribution channels and execution of its strategic initiatives, both domestically and internationally, Hamilton Beach expects an increase in revenues in the second half of 2016 compared with the second half of 2015, provided consumer spending is at expected levels.

Overall, Hamilton Beach expects net income in the second half of 2016 to increase substantially compared with the second half of 2015.  The anticipated increase in unit volumes and revenues, resulting from increased distribution and continued implementation and execution of Hamilton Beach's strategic initiatives, as well as reduced product costs, are expected to be partially offset by higher selling, general and administrative expenses.  Hamilton Beach continues to monitor currency effects, as well as commodity and other input costs, closely and intends to continue to adjust product prices and product placements, as market conditions permit.

Cash flow before financing activities in the second half of 2016 is expected to be lower than in the second half of 2015.  Capital expenditures during the remainder of 2016 are estimated to be $4.8 million.

Longer term, Hamilton Beach will work to improve return on sales through economies of scale derived from market growth and its five strategic revenue growth initiatives: (1) enhancing its placements in the North American consumer business through consumer-driven innovative products and strong sales and marketing support, (2) enhancing internet sales by providing best-in-class retailer support and increased consumer content and engagement, (3) participating in the "only-the-best" market with a strong brand and broad product line, including investing in new products to be sold under the Jamba®, Wolf Gourmet®, Weston® and Hamilton Beach® Professional brand names, (4) expanding internationally in the emerging Asian and Latin American markets by increasing product offerings and expanding its distribution channels and sales and marketing capabilities, and (5) achieving global commercial market leadership through a commitment to an enhanced global product line for chains and distributors serving the global food service and hospitality markets.

Kitchen Collection - Second Quarter Results

Kitchen Collection reported a net loss of $2.0 million and revenues of $28.6 million for the second quarter of 2016 compared with net loss of $1.8 million and revenues of $29.8 million for the second quarter of 2015.  At June 30, 2016, Kitchen Collection operated 220 stores compared with 225 stores at June 30, 2015.  At December 31, 2015, Kitchen Collection operated 229 stores.

The decrease in revenues was primarily the result of sales lost from closing 15 unprofitable stores since June 30, 2015 and a decline in comparable store sales.  The decrease in comparable store sales was mainly attributable to fewer customer visits and a decline in the number of store transactions, partially offset by improvements in the average sales transaction value.  Sales at newly opened Kitchen Collection® stores also partially offset the revenue decrease.

Despite benefits realized from the closure of unprofitable stores and lower selling, general and administrative expenses, Kitchen Collection's net loss increased modestly.  The increased net loss was primarily due to fewer sales transactions and reduced gross margins resulting from an increase in promotional markdowns during the second quarter, as well as a lower effective income tax rate that resulted in a lower tax benefit on Kitchen Collection's pre-tax loss.

For the six months ended June 30, 2016, Kitchen Collection reported a net loss of $3.8 million and revenues of $57.0 million compared with a net loss of $3.7 million and revenues of $59.7 million for the six months ended June 30, 2015.

Kitchen Collection - Outlook

Changing consumer habits have led to declining consumer traffic to physical retail locations as consumers buy more over the Internet or utilize the Internet for comparison shopping.  Financial pressures on middle-market consumers interested in housewares and small appliances have also adversely affected sales trends in these categories over the last few years, while the recent strengthening of the U.S. dollar has adversely affected sales trends at retail locations near the Mexican and Canadian borders, as well as at stores in areas with high international tourism.  All of these factors are expected to continue to limit Kitchen Collection's target consumers' spending on housewares and small appliances.  Given this market environment, Kitchen Collection has realigned its business over the past two years around a smaller number of core Kitchen Collection® outlet stores.

As a result of ongoing market weakness and fewer stores, Kitchen Collection anticipates revenues and results in the second half of 2016 to decline slightly compared with the second half of 2015.  However, as a result of the business realignment, Kitchen Collection believes its smaller core store portfolio is well positioned to allow it to perform at improved operating levels, take advantage of any future market rebound and optimize its operating performance over time.  Cash flow before financing activities is expected to be positive in 2016 but substantially lower than 2015.  Capital expenditures during the remainder of 2016 are estimated to be $1.5 million.

Kitchen Collection's continued focus on increasing the average sale per transaction, the average closure rate and increasing the number of items per transaction through continued refinement of its format and improved customer interactions to enhance customers' store experience, is expected to generate comparable store sales growth over time.  Additionally, improved product offerings, a focus on sales of higher-margin products, merchandise mix and displays, new store profitability, closure of underperforming stores and optimizing the expense structure is expected to generate improved operating profit over time.


****

Conference Call

In conjunction with this news release, the management of NACCO Industries, Inc. will host a conference call on Wednesday, August 3, 2016 at 9:30 a.m. eastern time.  The call may be accessed by dialing (877) 201-0168 (Toll Free) or (647) 788-4901 (International), Conference ID: 28584079, or over the Internet through NACCO Industries' website at www.nacco.com.  Please allow 15 minutes to register, download and install any necessary audio software required to listen to the broadcast.  A replay of the call will be available shortly after the end of the conference call through August 10, 2016.  The online archive of the broadcast will be available on the NACCO website.

Non-GAAP and Other Measures

This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this release are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  Adjusted revenue, Adjusted operating profit, Adjusted income before income tax, Adjusted income and Adjusted income per diluted share are measures of revenue, operating profit (loss), income (loss) before tax, income and earnings per diluted share that differ from financial results measured in accordance with GAAP.  The adjusted financial measures are U.S. GAAP financial measures adjusted for Centennial's operating losses.  EBITDA and the adjusted financial measures in this press release are provided solely as supplemental non-GAAP disclosures of operating results. Management believes that Adjusted revenue, Adjusted operating profit, Adjusted income before income tax, Adjusted income, Adjusted income per diluted share and EBITDA assist investors in understanding the results of operations of NACCO Industries, Inc. and its subsidiaries.  In addition, management evaluates results using these non-GAAP measures.

Forward-looking Statements Disclaimer

The statements contained in this news release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Such risks and uncertainties with respect to each subsidiary's operations include, without limitation:

North American Coal: (1) changes in tax laws or regulatory requirements, including changes in mining or power plant emission regulations and health, safety or environmental legislation, (2) changes in costs related to geological conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (3) regulatory actions, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (4) weather conditions, extended power plant outages or other events that would change the level of customers' coal or limerock requirements, (5) weather or equipment problems that could affect deliveries to customers, (6) changes in the power industry that would affect demand for North American Coal's reserves, (7) changes in the costs to reclaim North American Coal mining areas, (8) costs to pursue and develop new mining opportunities, (9) changes or termination of a long-term mining contract, or a customer default under a contract, (10) the timing and pricing of transactions to dispose of assets at the Centennial operations, (11) delays or reductions in coal deliveries at North American Coal's newer mines, and (12) increased competition, including consolidation within the industry.

Hamilton Beach: (1) changes in the sales prices, product mix or levels of consumer purchases of small electric and specialty housewares appliances, (2) changes in consumer retail and credit markets, (3) bankruptcy of or loss of major retail customers or suppliers, (4) changes in costs, including transportation costs, of sourced products, (5) delays in delivery of sourced products, (6) changes in or unavailability of quality or cost effective suppliers, (7) exchange rate fluctuations, changes in the foreign import tariffs and monetary policies and other changes in the regulatory climate in the foreign countries in which Hamilton Beach buys, operates and/or sells products, (8) product liability, regulatory actions or other litigation, warranty claims or returns of products, (9) customer acceptance of, changes in costs of, or delays in the development of new products, (10) increased competition, including consolidation within the industry and (11) changes mandated by federal, state and other regulation, including health, safety or environmental legislation.

Kitchen Collection: (1) changes in consumer buying habits, gasoline prices, weather conditions, the level of consumer confidence and disposable income as a result of economic conditions, unemployment rates or other events or conditions that may adversely affect the number of customers visiting Kitchen Collection® stores, (2) changes in the sales prices, product mix or levels of consumer purchases of kitchenware, small electric appliances and gourmet foods, (3) changes in costs, including transportation costs, of inventory, (4) delays in delivery or the unavailability of inventory, (5) customer acceptance of new products, (6) the anticipated impact of the opening of new stores, the ability to renegotiate existing leases and effectively and efficiently close under-performing stores and (7) increased competition.

About NACCO Industries, Inc.

NACCO Industries, Inc., headquartered in Cleveland, Ohio, is an operating holding company with subsidiaries in the following principal industries: mining, small appliances and specialty retail. The North American Coal Corporation mines coal primarily for use in power generation and provides selected value-added mining services for other natural resources companies.  Hamilton Beach Brands, Inc. is a leading designer, marketer and distributor of small electric household and specialty housewares appliances, as well as commercial products for restaurants, bars and hotels.  The Kitchen Collection, LLC is a national specialty retailer of kitchenware in outlet and traditional malls throughout the United States.  For more information about NACCO, visit the Company's website at www.nacco.com.

 

*****


 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS






Three Months Ended


Six Months Ended


June 30


June 30


2016


2015


2016


2015


(In thousands, except per share data)









Revenues

$

178,007



$

196,500



$

351,428



$

390,234


Cost of sales

137,478



161,119



270,894



316,664


Gross profit

40,529



35,381



80,534



73,570


Earnings of unconsolidated mines

13,035



12,076



25,683



24,629


Operating expenses








  Selling, general and administrative expenses

47,528



45,219



93,787



91,635


     Amortization of intangible assets

826



950



1,808



2,035



48,354



46,169



95,595



93,670


Operating profit

5,210



1,288



10,622



4,529


Other (income) expense








     Interest expense

1,470



1,661



2,975



3,786


     Income from other unconsolidated affiliates

(303)



(300)



(606)



(1,472)


     Closed mine obligations

349



425



725



827


     Other, net, including interest income

2,017



(167)



2,070



312



3,533



1,619



5,164



3,453


Income (loss) before income tax provision (benefit)

1,677



(331)



5,458



1,076


Income tax provision (benefit)

(1,439)



(56)



(460)



324


Net income (loss)

$

3,116



$

(275)



$

5,918



$

752










Basic earnings (loss) per share

$

0.45



$

(0.04)



$

0.86



$

0.11


Diluted earnings (loss) per share

$

0.45



$

(0.04)



$

0.86



$

0.11










Dividends per share

$

0.2675



$

0.2625



$

0.5300



$

0.5200










Basic Weighted Average Shares Outstanding

6,856



7,048



6,853



7,114


Diluted Weighted Average Shares Outstanding

6,874



7,048



6,878



7,129










 

 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED FINANCIAL HIGHLIGHTS










Three Months Ended


Six Months Ended


June 30


June 30


2016


2015


2016


2015


(In thousands)

Revenues








   North American Coal

$

23,089



$

37,942



$

53,376



$

79,261


   Hamilton Beach

127,054



129,498



242,794



252,791


   Kitchen Collection

28,634



29,782



57,017



59,749


   Eliminations

(770)



(722)



(1,759)



(1,567)


        Total

$

178,007



$

196,500



$

351,428



$

390,234










Operating profit (loss)








   North American Coal

$

4,823



$

2,382



$

14,565



$

7,589


   Hamilton Beach

4,696



2,880



4,763



5,068


   Kitchen Collection

(3,011)



(2,972)



(5,901)



(6,017)


   NACCO and Other

(1,297)



(836)



(2,738)



(2,125)


   Eliminations

(1)



(166)



(67)



14


        Total

$

5,210



$

1,288



$

10,622



$

4,529










Income (loss) before income tax provision (benefit)








   North American Coal

$

1,729



$

1,461



$

10,645



$

6,472


   Hamilton Beach

4,620



2,561



4,218



3,497


   Kitchen Collection

(3,079)



(3,017)



(6,016)



(6,109)


   NACCO and Other

(1,592)



(1,170)



(3,322)



(2,798)


   Eliminations

(1)



(166)



(67)



14


        Total

$

1,677



$

(331)



$

5,458



$

1,076










Net income (loss)








   North American Coal

$

3,324



$

4,199



$

11,577



$

8,746


   Hamilton Beach

2,934



1,618



2,673



2,236


   Kitchen Collection

(1,954)



(1,847)



(3,822)



(3,740)


   NACCO and Other

(1,118)



(697)



(2,185)



(1,936)


   Eliminations

(70)



(3,548)



(2,325)



(4,554)


        Total

$

3,116



$

(275)



$

5,918



$

752


















 

 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED EBITDA RECONCILIATION






Quarter Ended




9/30/2015


12/31/2015


3/31/2016


6/30/2016


6/30/2016

Trailing 12 Months


(In thousands)

Net income

$

3,141



$

18,091



$

2,802



$

3,116



$

27,150


Income tax provision (benefit)

134



2,357



979



(1,439)



2,031


Interest expense

1,597



1,541



1,505



1,470



6,113


Interest income

(74)



(20)



(31)



(43)



(168)


Depreciation, depletion and amortization expense

5,778



6,343



4,192



4,516



20,829


EBITDA*

$

10,576



$

28,312



$

9,447



$

7,620



$

55,955




























* EBITDA in this press release is provided solely as a supplemental disclosure with respect to operating results. 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 EBITDA as income before income tax provision (benefit), plus net interest expense and depreciation, depletion and amortization expense. EBITDA is not a measurement under U.S. GAAP and is not necessarily comparable with similarly titled measures of other companies.


 

 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED SUPPLEMENTAL NORTH AMERICAN COAL INFORMATION


ADJUSTED NORTH AMERICAN COAL INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT)


Three Months Ended


Six Months Ended


June 30


June 30


2016


2015


2016


2015


(In thousands)

Gross profit (loss) - Centennial

$

(1,056)



$

(7,238)



$

(3,885)



$

(12,644)


Gross profit - other consolidated mines

2,697



3,568



9,066



8,394


Gross profit - royalty and other

648



1,365



3,136



3,098


Total gross profit (loss)

2,289



(2,305)



8,317



(1,152)


Earnings of unconsolidated mines

13,035



12,076



25,683



24,629


Operating expenses








    Selling, general and administrative expenses

10,020



6,785



18,317



14,544


    Amortization of intangibles

481



604



1,118



1,344


Operating profit

4,823



2,382



14,565



7,589


Other expense

3,094



921



3,920



1,117


Income before income tax provision (benefit)

1,729



1,461



10,645



6,472


Elimination of Centennial:








   Gross profit - Centennial

1,056



7,238



3,885



12,644


   Other Centennial adjustments

849



(694)



1,158



(632)


Total Centennial adjustments

1,905



6,544



5,043



12,012










Adjusted North American Coal income before income tax provision (benefit) (1)

$

3,634



$

8,005



$

15,688



$

18,484










(1) Adjusted North American Coal Income Before Income Tax is a measure of income that differs from Income Before Income Tax measured in accordance with GAAP.  Adjusted North American Coal Income Before Income Tax is adjusted to exclude Centennial's loss before income taxes.  Management believes that Adjusted North American Coal Income Before Income Tax will assist the investor in understanding the results of operations of North American Coal.  In addition, management evaluates results using these non-GAAP financial measures.  See page 13 for a complete reconciliation from US. GAAP financial results to non-GAAP financial results.


ROLLFORWARD OF CENTENNIAL ASSET RETIREMENT OBLIGATION (2)


Three Months Ended


Six Months Ended


June 30


June 30


2016


2015


2016


2015


(In thousands)

Balance at beginning of period

$

19,437



$

17,018



$

19,084



$

17,693


Liabilities settled during the period

(303)



(1,324)



(1,056)



(2,196)


Accretion expense

283



196



565



393


Revision of estimated cash flows





824




Balance at end of period

$

19,417



$

15,890



$

19,417



$

15,890










(2) The rollforward of Centennial's asset retirement obligation in this press release is provided solely as a supplemental disclosure with respect to the changes to the obligation including cash expenditures for mine reclamation.  Liabilities settled during the period represent cash payments.









 

 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED SUPPLEMENTAL NORTH AMERICAN COAL INFORMATION

Reconciliation of North American Coal Financial and Operating Highlights "As Reported" to North American Coal Adjusted Financial and Operating Highlights Excluding "Centennial Natural Resources"






Three Months Ended June 30, 2016


Six Months Ended June 30, 2016


As Reported

Under GAAP


Adjustments to eliminate Centennial


Adjusted Non-GAAP Financial Measures


As Reported

Under GAAP


Adjustments to eliminate Centennial


Adjusted Non-GAAP Financial Measures


(In thousands)

North American Coal Revenues

$

23,089



$

(322)



$

22,767



$

53,376



$

(655)



$

52,721














North American Coal Gross profit

$

2,289



$

1,056



$

3,345



$

8,317



$

3,885



$

12,202














North American Coal Operating profit

$

4,823



$

1,866



$

6,689



$

14,565



$

4,964



$

19,529



North American Coal Other expense

3,094



(39)



3,055



3,920



(79)



3,841


North American Coal Income before income tax provision (benefit)

1,729



1,905



3,634



10,645



5,043



15,688


North American Coal Income tax provision (benefit) (1)

(1,595)



724



(871)



(932)



1,916



984


North American Coal Net income

$

3,324



$

1,181



$

4,505



$

11,577



$

3,127



$

14,704














(1) To calculate the non-GAAP consolidated net income, the Company applied its target effective income tax rate of 38% to Centennial's pre-tax loss from operations to determine the corresponding tax provision.













 


Three Months Ended June 30, 2015


Six Months Ended June 30, 2015


As Reported

Under GAAP


Adjustments to eliminate Centennial


Adjusted Non-GAAP Financial Measures


As Reported

Under GAAP


Adjustments to eliminate Centennial


Adjusted Non-GAAP Financial Measures


(In thousands)













North American Coal Revenues

$

37,942



$

(11,919)



$

26,023



$

79,261



$

(21,353)



$

57,908














North American Coal Gross profit

$

(2,305)



$

7,238



$

4,933



$

(1,152)



$

12,644



$

11,492














North American Coal Operating profit

$

2,382



$

6,500



$

8,882



$

7,589



$

11,922



$

19,511



North American Coal Other expense

921



(44)



877



1,117



(90)



1,027


North American Coal Income before income tax provision (benefit)

1,461



6,544



8,005



6,472



12,012



18,484


North American Coal Income tax provision (benefit)(1)

(2,738)



2,487



(251)



(2,274)



4,565



2,291


North American Coal Net income

$

4,199



$

4,057



$

8,256



$

8,746



$

7,447



$

16,193



























(1) To calculate the non-GAAP consolidated net income, the Company applied its target effective income tax rate of 38% to Centennial's pre-tax loss from operations to determine the corresponding tax provision.













Adjusted Financial and Operating Highlights are measures of income that differ from Financial and Operating Highlights measured in accordance with GAAP.  Adjusted Financial and Operating Highlights are adjusted to exclude Centennial.  Management believes that Adjusted Financial and Operating Highlights all assist the investor in understanding the results of operations of North American Coal.  In addition, management evaluates results using these non-GAAP financial measures.

 

 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED SUPPLEMENTAL DATA

Reconciliation of NACCO Consolidated Financial and Operating Highlights "As Reported" to NACCO Consolidated Adjusted Financial and Operating Highlights Excluding "Centennial Natural Resources"






Three Months Ended June 30, 2016


Six Months Ended June 30, 2016


As Reported Under GAAP


Adjustments to eliminate Centennial


Adjusted
Non-GAAP Financial Measures


As Reported Under GAAP


Adjustments to eliminate Centennial


Adjusted
Non-GAAP Financial Measures


(In thousands, except per share data)

Revenues

$

178,007



$

(322)



$

177,685



$

351,428



$

(655)



$

350,773














Operating profit

$

5,210



$

1,866



$

7,076



$

10,622



$

4,964



$

15,586



Other expense

3,533



(39)



3,494



5,164



(79)



5,085


Income before income tax provision (benefit)

1,677



1,905



3,582



5,458



5,043



10,501


Income tax provision (benefit)(1)

(1,439)



724



(715)



(460)



1,916



1,456


Net income

$

3,116



$

1,181



$

4,297



$

5,918



$

3,127



$

9,045














Basic earnings per share

$

0.45





$

0.63



$

0.86





$

1.32


Diluted earnings per share

$

0.45





$

0.63



$

0.86





$

1.32














Basic Weighted Average Shares Outstanding

6,856





6,856



6,853





6,853


Diluted Weighted Average Shares Outstanding

6,874





6,874



6,878





6,878














(1) To calculate the non-GAAP consolidated net income, the Company applied its target effective income tax rate of 38% to Centennial's pre-tax loss from operations to determine the corresponding tax provision.

 


Three Months Ended June 30, 2015


Six Months Ended June 30, 2015


As Reported Under GAAP


Adjustments to eliminate Centennial


Adjusted
Non-GAAP Financial Measures


As Reported Under GAAP


Adjustments to eliminate Centennial


Adjusted
Non-GAAP Financial Measures


(In thousands, except per share data)

Revenues

$

196,500



$

(11,919)



$

184,581



$

390,234



$

(21,353)



$

368,881














Operating profit

$

1,288



$

6,500



$

7,788



$

4,529



$

11,922



$

16,451



Other expense

1,619



(44)



1,575



3,453



(90)



3,363


Income (loss) before income tax provision (benefit)

(331)



6,544



6,213



1,076



12,012



13,088


Income tax provision (benefit)(1)

(56)



2,487



2,431



324



4,565



4,889


Net income (loss)

$

(275)



$

4,057



$

3,782



$

752



$

7,447



$

8,199














Basic earnings per share

$

(0.04)





$

0.54



$

0.11





$

1.15


Diluted earnings per share

$

(0.04)





$

0.54



$

0.11





$

1.15














Basic Weighted Average Shares Outstanding

7,048





7,048



7,114





7,114


Diluted Weighted Average Shares Outstanding

7,048





7,055



7,129





7,129















(1) To calculate the non-GAAP consolidated net income, the Company applied its target effective income tax rate of 38% to Centennial's pre-tax loss from operations to determine the corresponding tax provision.













Adjusted Financial and Operating Highlights are measures of income that differ from Financial and Operating Highlights measured in accordance with GAAP.  Adjusted Financial and Operating Highlights are adjusted to exclude Centennial.  Management believes that Adjusted Financial and Operating Highlights all assist the investor in understanding the results of operations of NACCO Industries, Inc.  In addition, management evaluates results using these non-GAAP financial measures.

 

 

NACCO INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED SUPPLEMENTAL DATA

Adjusted Consolidated Financial and Operating Highlights Excluding "Centennial Natural Resources"











Three Months Ended


Six Months Ended



June 30


June 30



2016 Adjusted


2015 Adjusted


2016 Adjusted


2015 Adjusted



(In thousands)


Revenues









   North American Coal

$

22,767



$

26,023



$

52,721



$

57,908



   Hamilton Beach

127,054



129,498



242,794



252,791



   Kitchen Collection

28,634



29,782



57,017



59,749



   Eliminations

(770)



(722)



(1,759)



(1,567)



        Total

$

177,685



$

184,581



$

350,773



$

368,881












Operating profit (loss)









   North American Coal

$

6,689



$

8,882



$

19,529



$

19,511



   Hamilton Beach

4,696



2,880



4,763



5,068



   Kitchen Collection

(3,011)



(2,972)



(5,901)



(6,017)



   NACCO and Other

(1,297)



(836)



(2,738)



(2,125)



   Eliminations

(1)



(166)



(67)



14



        Total

$

7,076



$

7,788



$

15,586



$

16,451












Income (loss) before income tax provision (benefit)









   North American Coal

$

3,634



$

8,005



$

15,688



$

18,484



   Hamilton Beach

4,620



2,561



4,218



3,497



   Kitchen Collection

(3,079)



(3,017)



(6,016)



(6,109)



   NACCO and Other

(1,592)



(1,170)



(3,322)



(2,798)



   Eliminations

(1)



(166)



(67)



14



        Total

$

3,582



$

6,213



$

10,501



$

13,088












Net income (loss)









   North American Coal

$

4,505



$

8,256



$

14,704



$

16,193



   Hamilton Beach

2,934



1,618



2,673



2,236



   Kitchen Collection

(1,954)



(1,847)



(3,822)



(3,740)



   NACCO and Other

(1,118)



(697)



(2,185)



(1,936)



   Eliminations

(70)



(3,548)



(2,325)



(4,554)



        Total

$

4,297



$

3,782



$

9,045



$

8,199












Adjusted Financial and Operating Highlights are measures of income that differ from Financial and Operating Highlights measured in accordance with GAAP.  Adjusted Financial and Operating Highlights are adjusted to exclude Centennial.  Management believes that Adjusted Financial and Operating Highlights all assist the investor in understanding the results of operations of NACCO Industries, Inc. and North American Coal.  In addition, management evaluates results using these non-GAAP financial measures.





 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nacco-industries-inc-announces-second-quarter-2016-results-300308068.html

SOURCE NACCO Industries, Inc.

Christina Kmetko, (440) 229-5130
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Disclaimer

The summary data (including definitions) presented is provided by Q4's partner Virtua a supplier of financial information to the financial community. NACCO Industries, Inc. neither represents nor warrants that the data accumulated and published by Virtua is accurate.

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