Company: NC
Filing Date: 2025-03-05
Form Type: 10-K
Source: 0000789933-25-000006
Chunk: 134

Company: NACCO INDUSTRIES INC
Filing Date: 2025-03-05
Form: 10-K
Item: Item 7
Chunk 134
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612 Gross loss, excluding inventory impairment charges14,710 Earnings of unconsolidated operations7,188 Amortization of intangibles2,467 Inventory impairment charges(2,129)Selling, general and administrative expenses(973)Net change on sale of assets(54)2024$24,311 

Operating profit (loss) changed favorably by $95.7 million in 2024 compared with 2023. The change in Operating profit (loss) was primarily due to:

•The absence of a long-lived asset impairment charge; 

•Business interruption insurance recoveries for the boiler issue at the Red Hills Power Plant;

•A decrease in gross loss, excluding inventory impairment charges;

•An increase in the earnings of unconsolidated operations; and

•A decrease in the amortization of intangibles.

During 2023, MLMC received notice from its customer related to a boiler issue at the Red Hills Power Plant that began on December 15, 2023. We assessed for impairment and recorded a non-cash, long-lived asset impairment charge of $65.9 million in 2023. The $65.9 million relates exclusively to MLMC; however, $60.8 million and $5.1 million were recorded on the Coal Mining segment and the Minerals Management segment, respectively, as certain MLMC land assets were recorded within the Minerals Management segment. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the 2023 impairment. While this issue has been resolved, it resulted in a reduction in customer demand which had a significant impact on our 2024 results of operations. We recognized income of $13.6 million in 2024 related to business interruption insurance recoveries that partially offset losses as a result of the boiler outage.

The reduction in revenues at MLMC was offset by lower cost of goods sold, resulting in a decrease in the gross loss during 2024 compared with 2023. The reduction in cost of goods sold was primarily attributable to changes in the level of coal inventory and costs capitalized into inventory as the decrease in demand resulted in an increase in the coal stockpile during 2024. In addition, the gross loss in 2024 and 2023 included $9.6 million and $7.5 million of inventory impairment charges, respectively, to write down MLMC's coal inventory to its net realizable value.

The increase in earnings of unconsolid