Good day ladies and gentlemen and welcome to the first quarter 2010 NACCO Industries Earnings Call. My name is Regina and I will be your operator for today. At this time all participants are in listen-only mode. Later we will be conducting a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Ms. Christina Kmetko. Ms. Kmetko, you may begin.

Thank you. Good morning everyone and thank you for joining us today. Yesterday, a press release was distributed outlining NACCO’s results for the first quarter ended March 31, 2010. If anyone has not received a copy of this earnings release or would like a copy of the Q, please call me at 440-449-9669 and I will be happy to send you this information. You may also obtain copies of these items on the NACCO website at nacco.com. Our conference call today will be hosted by Al Rankin, Chairman, President, and Chief Executive Officer of NACCO Industries. Also in attendance representing NACCO Industries is Ken Schilling, Vice President and Controller. Al will provide an overview of the quarter and full year then open up the call to your questions. Before we begin, I would like to remind participants that this conference call may contain forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements made here today. Additional information regarding these risks and uncertainties was set forth in the earnings release and in the 10-Q. I'll now turn the call over to Mr. Rankin.

Good morning. NACCO announced last evening a consolidated net income of $11.7 million or $1.40 a share for the first quarter of 2010 and that was on revenues of $558 million and compares with a net loss for the first quarter of 2009 of $9.1 million or $1.10 per share on revenues that were quite similar, $555 million. If you look at the highlights by subsidiary, NACCO Materials Handling Group profits improved to $26.5 million, net income in 2010 was $8 million compared with a net loss of $18.5 million in previous year. Hamilton Beach's net income was $2 million better at $3.4 million in the first quarter compared with of $1.4 million a year ago. Kitchen Collection had an improvement of $1 million with a smaller net loss at a low seasonal first quarter of $1.8 million compared with a net loss of $2.8 million the year before. North American Coal's net income declined $2.7 million. Net income was a very strong $8.1 million compared with $10.8 million. NACCO and Other, which includes parent company operations have a net loss of $3.0 million compared with a $1.5 million a year ago, which is an increase of $1.5 million. And NACCO recorded a $3.1 million interim tax provision in eliminations in the first quarter of 2010 and that compares with an actual interim tax benefit in 2009. So now I will turn to more detailed discussion of the results of each subsidiary. NACCO Materials Handling Group, as I indicated, had improved income of $8 million compared to $18.5 million loss in the previous year. Sales went down to $375 million from $389 million. Operating profit improve to $10.3 million from a loss of $12.6 million in the previous year. In the first quarter of 2010, worldwide new unit shipments increased…

(Operator Instructions) Your first question today comes from the line of Schon Williams with BB&T Capital Markets. Schon Williams - BB&T Capital Markets: I just wanted to go through a couple of questions. First, it looks like there are a number of one-time items within the Material Handling segment for the quarter. I just want to make sure I am absolutely clear on exactly what we should be adjusting out. I am coming up with something closer to breakeven for Q1 after stripping out the restructuring reversal and the profit, some of the other items. Does that look reasonable to you guys?

We had marginally positive operating profits if you exclude the 1.9 million restructuring, the product liability of $4.4 million and effectively the 2010 portion of the $4.2 million, it's listed in the Q as other and that's about $3 million. So that brings you down to about $1 million of operating profit from $7.3 million. Schon Williams - BB&T Capital Markets: Okay. I guess was there a LIFO adjustment as well in Q1?

No. LIFO was really an issue in the prior year first quarter. In the Q, you will see LIFO moved $1 million during the quarter. During the quarter, we only had a $1 million difference in LIFO.

(Operator Instructions). You have a question from the line of [James Holly with Haltheon].

You had mentioned in some of the prepare commentary that you're monitoring commodity costs and considering options to mitigate potential unfavorable effects. What exactly on those lines are you considering, have you announced any price increases?

Could you repeat the question, again?

Sure. For the Materials Handling Group, you had mentioned that you are monitoring commodity costs and they may potentially have unfavorable effects that you're looking to offset. Could you talk about what steps you are --?

First of all, we have contracts that extend in various durations for certain products and so, as commodity costs go up, it doesn't affect us immediately. We always have further discussions with our suppliers on how to reduce costs on their side to overcome any cost increases. In addition, we have our own value improvement projects that we're constantly implementing and our hope is that we can keep our costs relatively stable and I think there are some signs it will increase modestly in the later part of the year. And we have enough visibility that we always try to address any net cost increases through price increases. So those are all tools that we would expect to use as we look forward.

Okay. So you wouldn't necessarily expect an impact from Q2 but potentially you will need to work to offset the impact from the second half of the year?

No, I think, that’s probably correct, but I think we've got a lot of improvement programs that also mature in the second part of the year. So all of that comes together and we have reasonable clarity for the year at this point.

Okay. Just in terms of you mentioned you've seen some improvements in a lot of your end market in terms of volumes for (inaudible) as well. Does that continue through April?

Yeah, I think so far as so good. I think we are encouraged by what we were seeing. On the other hand, we will be moderate about the pace at which we increase our factory production for two reasons; one, we want to make sure that the volume gains are sustainable and that they reflect not just some pent-up demand, but an ongoing level of demand. And secondly, we want to be vey careful to make sure that our suppliers can keep pace with any upturn that we have in our production levels so that we minimize the risk of component shortages from our supply base. So it’s a careful process.

Your next question comes from the line of Schon Williams with BB&T Capital Markets Schon Williams - BB&T Capital Markets: I want to circle back to Hamilton Beach. I don't understand the guidance there. Help me out. Q1 numbers very strong, both at the top line and at the margin, based on just normal seasonality, I find it hard to believe that revenues could actually be down in that unit this year. Is there something customer-specific that you're aware of that causes you to be conservative or is it just kind of your general out-take on the economy?

That's very hard to project third and fourth quarter volumes in that business. My best hope would be that the numbers might turn out to be better than the ones we have but at this point, I think, this is the kind of a way we see it. A lot depends on the promotional volumes that we get in the third and fourth quarter and those can vary significantly from year to year, depending on just exactly how our customers want to position themselves. So trends are encouraging, but you have to also keep in mind that you are comparing the first quarter this year with the first quarter last year, so that was a particularly weak quarter and I just wouldn’t assume that pattern continues through the rest of the year in terms of the market place Schon Williams - BB&T Capital Markets: Right. I mean I don’t doubt possibility of the growth rate moderates, but again I just find a declining revenue scenario just to be a pretty low probability at this point, but --

I think that I would just urge you to be cautious about following at a declining revenue scenario as opposed to similar sales level. Schon Williams - BB&T Capital Markets: Can we talk about the average selling price was down year-over-year in Ham Beach. Can you talk about what's causing that?

I really can't. I have to look at average selling price myself and a calculation is not one that I find particularly helpful. It really depends on the stage of the individual category markets. We have separate product categories, lenders, coffee makers, toasters, and ovens and so on and so forth. And I think we have on the order of ten of those of units and different markets respond differently at different times and the price points in all will be different. And so my focus is on the total revenues, much more than it is on units. Schon Williams - BB&T Capital Markets: But is there any pressure? Are you getting added pressure from your customers to reduce prices? Has that accelerated within the last few months or quarter or two?

It would be hard for that effort to accelerate it. That business is very competitive always and had up and ever changes in that regard. But that would not be the reason for whatever change there is that you cited. Schon Williams - BB&T Capital Markets: Moving on to coal, it looks like the Mississippi Service Commission issued a slightly unfavorable ruling on the permit for the Kemper County project. It sounds like the costs are now going to be capped that calls into question --

I wouldn't make any assumptions about what state of play is. It's the world of politics and negotiation and I am sure that there will be further discussions and negotiations and public service commissions and utility commissions are very anxious these days to demonstrate their commitment to protecting the consumer. And on the other hand, no power company is going to go forward without a viable project and deal structure. I think perhaps the encouraging thing is that they gave approval in effect under certain conditions. Now there will be a discussion about the conditions. I think that's the right way to read it for the time being. Who knows what's going to happen, but that would be my perspective at this point. Schon Williams - BB&T Capital Markets: Can we talk about Otter Creek? What is kind of your timeline? I understand the permitting is going to happen. There's public discussion now over the next month or two. If permitting goes through this summer, do you have customers already lined up for that site? Could we see that site start yielding tonnage at the latter part of this year or some time next year, what is your timeline for that?

I think the timeline is out quite a bit further than that. There could be some marginal operations on there relatively quickly depending on how we decide to develop it and go forward, but our objective has continued to be to get the permit in place and then we will be working on trying to develop more affirm complex of customers or individual customers for that project. I think that's the sequence we have used here and we will keep you posted as we learn more. But at this point, the project is on track. We are doing exactly what we expected to do by this time, but I don't think it would be appropriate to expect major coal tonnage out of that operation quickly. Any coal project, it's got a pretty long lead time if you are going to talk about major volumes. Schon Williams - BB&T Capital Markets : Then last question on coal, how should we be thinking about San Miguel? My understanding is that's one of your less profitable mine sites. What would be the EPS impact if you actually did not renew that contract? Could it actually be positive? How should we be thinking about it?

It wouldn't be positive. But I don't believe we will reveal and discuss the individual earnings from individual mines and I think what I would just say is going forward, we would hope that something will work out that would allow us to have a reasonable contract, similar to the other contracts that we have. And that's the way we will approach it and will see what happens. Schon Williams - BB&T Capital Markets: The new RFP that you put out, is that at more favorable terms or less favorable terms than your existing contract?

You mean that they put out. We didn't put it out. Schon Williams - BB&T Capital Markets: Well, your response to the RFP?

The RFPs are the starting point for outlining what you are prepared to do and what you are not. So the negotiating process starts when the RFP is issued. And how everybody responds to that will depend. So I think that all lies in the future. I guess, all I would say is that any contract that we would negotiate would meet our test of being a reasonable contract. Schon Williams - BB&T Capital Markets: Then I guess, lastly, just kind of other item, litigation costs at $2 million or $3 million in the quarter, is that a good run rate? Do you expect that number to ramp up significantly in the latter part of the year, kind of stay constant?

I really couldn't speculate as to what the numbers would be from quarter to quarter. All I would say is that litigation is a very expensive business. We feel that we have good taste for the other side, it feels the same way and that's what litigation is about. So I really can't comment more than that.

Ladies and gentlemen, this concludes the question and answer portion of the call. I would now like to turn the call back over to management for closing remarks.

Okay. Christie, do you have anything you want to add?

I just want to thank everyone for joining us and we appreciate your interest. If you do have additional questions, please call me again. The number is 440-449-9669. Have a great day.

Ladies and gentlemen, the replay of this call will be available for the next eight days. The phone number to call is 1-866-233-1854 and the replay code is 56824839. Once again we would like to thank you for joining us today. This concludes our presentation and you may now disconnect. Have a wonderful day.