Company: NC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0000789933-25-000041
Chunk: 47

Company: NACCO INDUSTRIES INC
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 47
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 growth, with its data-driven approach to portfolio expansion and disciplined capital deployment providing a distinct competitive advantage in the U.S. market. 

In July 2025, Catapult completed a $4.2 million acquisition of mineral interests within the Midland Basin which included 10,500 gross acres and approximately 400 net royalty acres. The acquisition includes a mix of producing wells, as well as additional upside opportunities through future development with existing operators in the area. This business also has an investment in a company that holds non-operated working interests in oil and natural gas assets. These investments are expected to contribute to the anticipated improvement in second-half operating profit compared with both the first half of 2025 and second half of 2024. Improvements in operating profit are expected to continue into 2026. 

Mitigation Resources provides stream and wetland mitigation solutions, as well as comprehensive reclamation and restoration construction services. Mitigation Resources, underpinned by a strong reputation and clear competitive strengths, is an avenue for continued expansion into new markets. This business, while currently variable in performance due to permit and project timing, is expected to achieve key milestones in profitability in 2026 and move toward more consistent results over time as new projects are layered on top of existing projects. 

We continue to invest in our businesses to drive future growth. Based on the current project pipeline, we anticipate capital expenditures of up to a total of $86 million in 2025, with the majority earmarked for future business development— the kind of prudent reinvestment that generates exponential, long-term value creation. We project a substantially lower use of cash for the 2025 full year compared with 2024 as we begin to harvest returns from prior investments and expect a steady increase in annual cash flow generation beginning in 2026. 

Our conservative approach to maintaining a strong capital structure and operating discipline minimizes risk, while the compounding effect of layered long-term contracts and deliberate growth investments create a robust foundation for cash flow growth. With a perspective that spans decades, we are methodically building a strong, stable business that is expected to deliver annuity-like returns. This long-term view allows us to leverage our core skills for strategic, measured expansion and pursue opportunities with longer-term horizons and higher returns, that others with shorter time horizons might overlook. Our commitment is to generate increasing cash flows and return value to stockholders, whether through reinvestment for growth or direct returns such as share repurchases and payment of dividends. We remain confident in our ability to drive