NACCO Industries Swings to Q2 Loss on Solar Impairment

NACCO Industries swung to a net loss in the second quarter after taking $12 million in impairment charges on two solar development projects, the company said Thursday. Revenue rose 6% to $72.3 million. Adjusted EBITDA jumped 72% to $15.9 million. The solar charges pushed the company to a $1 million net loss, or $0.13 per share, compared with a $3.3 million profit a year earlier.

President and CEO J.C. Butler said the impairments followed a reassessment of project economics after the company received updated information on rising costs and delays in connecting generation facilities to the power grid. He cited tax-law changes tied to the One Big Beautiful Bill Act, demand for generating equipment and engineering services, higher costs for grid-connection equipment, and tariff-related price increases. The developments created “a perfect storm” for renewable projects that had been initiated before the law’s enactment, Butler said.

“We are not treating this as business as usual,” Butler said. The company is evaluating alternatives to monetize the investments and limit additional capital needs, including potential asset sales, contract amendments, and other strategic actions. Further curtailment charges could occur depending on the outcomes, he said.

Utility coal mining operating profit rose to $6.3 million from $1.2 million, driven primarily by improved performance at Mississippi Lignite Mining Company, or MLMC. The operation faced lower production requirements after operational issues at its customer’s power plant. Butler said the mining operation shifted resources to planned reclamation work during the outage. The move reduced the company’s asset retirement obligation rather than recording those costs as an expense. NACCO remains engaged with the customer regarding delayed payments disclosed in the company’s 10-Q. The contract has been in place since 1995 and runs through 2032.

For the full year, NACCO expects utility coal mining operating profit to increase from 2025 because of its strong first-half performance. MLMC results in the second half are expected to decline from the first half amid lower customer demand, higher diesel costs, and an anticipated inventory impairment charge. Earnings from unconsolidated mining operations are also expected to decline following the planned completion of reclamation services at Sibanye Mining Company on Sept. 30, 2026.

Contract mining delivered substantial gains as NACCO began and ramped up its Palm Beach County Dragline Services contract and served higher customer requirements at its limestone mining operations. Segment operating profit increased to $3.8 million from $1 million. Revenue, net of reimbursed costs, rose 34%. The company expects substantial growth in contract mining operating profit and Adjusted EBITDA for both the second half and full year. Second-half results are expected to moderate from the first half because of lower anticipated customer demand. NACCO is also preparing to begin operations at a new limestone quarry in Arizona later this year.

Butler said the Palm Beach County project is expanding to four draglines. Two are already operating. A third is being commissioned, and a fourth is expected to begin later in 2026. He described the project as an opportunity to apply NACCO’s mining capabilities to infrastructure work related to Lake Okeechobee and the Everglades.

In minerals and royalties, operating profit increased to $6.7 million from $5.2 million. Adjusted EBITDA rose to $7.7 million from $6.1 million. Royalty revenue increased 46%, supported by higher oil prices and a favorable adjustment to prior-period pricing estimates. Lower earnings from NACCO’s Eiger investment partly offset those gains. Management expects the segment’s results to decline in the remainder of 2026 compared with the first half, the second half of 2025, and full-year 2025. Increased Eiger income and higher oil prices are expected to be more than offset by production declines and changes in development activity.

As of June 30, NACCO had $120.1 million in outstanding debt and total liquidity of $114.6 million, including $45.5 million of cash and $69.1 million available under its revolving credit facility. The company said it plans to prioritize free cash flow toward liquidity improvement and debt reduction while selectively funding investments that meet its return criteria. NACCO expects to invest up to $35 million during the remainder of 2026, primarily in business-development opportunities.