Company: NC
Filing Date: 2025-04-07
Form Type: ARS
Source: 0000789933-25-000013
Chunk: 18

Company: NACCO INDUSTRIES INC
Filing Date: 2025-04-07
Form: ARS
Chunk 18
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 We are not obligated to fund drilling and completion costs, lease operating expenses or plugging and abandonment costs at the end of a well’s productive life. The current portfolio provides a strong foundation of well-positioned assets that are expected to continue to deliver solid financial results. This business model can deliver higher average operating margins over the life of a reserve than traditional oil and gas companies that bear the full cost of exploration, production and/or development. We intend to continue these activities, while at the same time evaluating investments in non-operated working interests that we believe can reliably increase cash flow and enhance overall returns. As a non-operator, we seek to diversify our investment and operational risk through participation in oil and gas wells with multiple operators across multiple basins. While the timing of returns could vary, we maintain a long-term perspective and believes the Minerals Management segment will provide unlevered after-tax returns on invested capital in the mid-teens as the business matures. Mitigation Resources, which provides stream and wetland mitigation solutions as well as comprehensive reclamation and restoration construction services, continues to build on the substantial foundation it has established over the past several years. Our Mitigation Resources business offers an opportunity for growth and diversification in an industry where we have a strong 1

reputation as well as substantial knowledge and expertise. In addition, Mitigation Resources is providing ecological restoration services for abandoned surface mines and was named a designated provider of abandoned mine land restoration by the State of Texas. Mitigation Resources is working to develop a protected habitat for toads in Texas, as well as pursuing additional environmental restoration projects. We believe that Mitigation Resources can provide solid rates of return on capital employed as this business matures. As of December 31, 2024, we have 11 mitigation banks and other mitigation projects located in Alabama, Florida, Georgia, Mississippi, Pennsylvania, Tennessee and Texas. We believe our businesses have competitive advantages that provide value to customers and continuing to invest in our businesses can create long-term value for stockholders. We have strategically leveraged our core mining and natural resources management skills to build a robust portfolio of affiliated businesses and opportunities for additional growth remain strong. Acquisitions of additional mineral interests and improvements in the outlook for Coal Mining segment customers, as well as new contracts at Mitigation Resources and NAMining and development of other business opportunities should be accretive to our longer-term outlook. NACCO also continues to pursue activities which can strengthen the resiliency of our existing coal mining operations. We remain focused on managing coal production costs and