Company: NC
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0000789933-25-000102
Chunk: 109

Company: NACCO INDUSTRIES INC
Filing Date: 2025-11-05
Form: 10-Q
Item: Part I, Item 2
Chunk 109
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 expected to be driven by operational efficiencies partly offset by elevated operating expenses. Momentum from the strong full-year 2025 results and operational efficiencies is expected to accelerate in 2026. These factors, combined with earnings from the new contract signed in October 2025 are expected to lead to a significant increase in year-over-year results. 

The Minerals and Royalties segment, led by Catapult, has constructed a high-quality, diversified portfolio of oil and gas mineral and royalty interests in the United States. The Catapult team is expanding its portfolio by leveraging a data-driven approach to capital deployment that incorporates a longer-term view of production and development. We believe this provides a competitive advantage in the U.S. market. 

Minerals and Royalties' operating profit and Segment Adjusted EBITDA for the 2025 fourth quarter are expected to decrease compared with 2024 primarily driven by current market expectations for natural gas and oil prices, as well as development and production assumptions on currently owned reserves. While fourth-quarter 2025 results are projected to decline, full-year operating profit is expected to increase over 2024, excluding the $4.5 million gain on sale recognized in the 2024 second quarter. This increase is due in part to recent investments made by Catapult.

In July 2025, Catapult completed a $4.2 million acquisition of mineral interests within the Midland Basin. The acquisition includes a mix of producing wells, as well as additional upside opportunities through future development with existing operators in the area. This segment also has an investment in a company that holds non-operated working interests in oil and natural gas assets. While these investments are expected to contribute to 2026 profits, reductions in earnings from legacy assets are expected to mostly offset these improvements resulting in a modest operating profit increase compared with 2025.

Mitigation Resources provides stream and wetland mitigation solutions, as well as comprehensive reclamation and restoration construction services. Mitigation Resources has a strong reputation and clear competitive strengths, which are supporting continued expansion into new markets. This business, while currently variable in performance due to permit and project timing, is expected to achieve a key milestone in profitability in 2026 and move toward more consistent results over time as the business expands. 

We continue to invest in our businesses to drive future growth. Based on the current project pipeline, we anticipate capital expenditures of approximately $44 million in the remainder of 2025, and up to $70 million in 2026, with the majority earmarked for future business development — the