Good day and thank you for standing by. Welcome to NACCO Industries Q1 2022 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Christina Kmetko. The floor is yours.

Thank you. Good morning, everyone and welcome to our 2022 first quarter earnings call. Thank you for joining us this morning. I am Christina Kmetko and I’m responsible for Investor Relations at NACCO Industries. Joining me today are J.C. Butler, President and Chief Executive Officer and Elizabeth Loveman, Vice President and Controller. Yesterday, we published our first quarter 2022 results and filed our 10-Q. This information is available on our website. Today’s call is also being webcast. The webcast will be on our website later this afternoon and available for approximately 12 months. Our remarks that follow, including answers to your questions, could 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. These risks include, among others, matters that we have described in our earnings release issued last night and in our 10-Q and other filings with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. In addition, we will be discussing non-GAAP information that we believe is useful in evaluating the company’s operating performance. Reconciliations for these non-GAAP measures can be found in our earnings release and on our website. Before I turn the call over to J.C. for his opening remarks, I want to mention the change we made in our segment reporting. Effective at the beginning of this year, we changed the composition of our reportable segments to reclassify the results of Caddo Creek and Demery Resources from our Coal Mining segment into the North American Mining segment. The Coal Mining segment now includes only mines that deliver coal for power generation. This segment reporting change has no impact on our consolidated operating results but all prior period segment information mentioned in the following discussion follows the new reporting instruction. We have also included the reclassified segment financial information for all four quarters and full year 2021 at the end of our earnings release. In a moment, I will discuss our results for the quarter. But first, let me turn the call over to our President and CEO, J.C. Butler for some opening remarks. J.C.?

Thank you, Christy and good morning everyone. I am very glad to be on the call this morning since we have a lot of good news to report. I mentioned in our year-end call that I was optimistic about our long-term outlook because I have a lot of confidence in our strategies to protect the core and grow and diversify. I am very excited to start with some great news associated with our Protect the Core strategy. This past Monday, May 2, Rainbow Energy finalized the purchase of the Coal Creek Station power plant in North Dakota and the adjacent high-voltage direct current transmission line. As a result of this sale, the existing agreements between Great River Energy and Falkirk terminated and the new coal sales agreement between Falkirk and Rainbow Energy became effective. Falkirk will continue supplying all coal requirements of Coal Creek Station. GRE paid us $14 million, transferred ownership of its office building in Bismarck, North Dakota and conveyed membership units in Midwest AgEnergy to NACCO. This is a great outcome, and we are enthusiastic about this new relationship with Rainbow Energy as our new customer. As independently – as independent privately held energy marketers, I think they have a real understanding of the value of the power plants and its potential in the future. In addition to this exciting news, I am pleased to report strong ‘22 first quarter earnings, driven primarily by improved results in our Minerals Management segment. Minerals Management had another outstanding quarter, mainly due to significantly higher natural gas and oil prices as well as $2.1 million of settlement income recognized this quarter. Our team at Catapult Mineral Partners continues to look for opportunities to expand our portfolio of mineral and royalty interest through acquisitions, while also promoting development of our existing…

Thanks, J.C. I will start with the consolidated quarter results and then provide additional detail at the segment level, not already covered by J.C. On a consolidated basis, our first quarter operating profit rose significantly, increasing to $14.9 million from $8.3 million in 2021. Consolidated net income also increased, rising to $12.6 million or $1.72 per share from $9 million or $1.25 per share last year. Our first quarter consolidated EBITDA increased to $21.4 million, up 48% from $14.5 million last year. The increase in EBITDA was driven primarily by the improved results in our Minerals Management and North American Mining segments and higher depreciation, depletion and amortization expense. At our Coal Mining segment, operating profit and segment EBITDA decreased due to reduction in earnings of unconsolidated operations as well as higher operating expenses. The decrease in earnings of unconsolidated operations was primarily the result of the termination of the Bisti Fuels contract on September 30, 2021, a reduction in fees earned at Liberty as the scope of final mine reclamation activities continues to decline and lower customer requirements at Sabine. These decreases were partly offset by an increase in earnings at Coteau resulting from contractual price escalation. J.C. already discussed the primary drivers of the increase in North American Mining’s first quarter operating profit, so let me just focus on North American Mining’s first quarter 2022 segment EBITDA. Segment EBITDA increased significantly as a result of the increase in the operating profit and by substantially higher depreciation expense resulting from the acquisition of additional equipment to support newer contracts. Finally, Minerals Management’s first quarter 2022 operating profit and segment adjusted EBITDA more than doubled from the prior year results. As J.C. said, the significant improvement was driven by higher natural gas and oil prices and settlement income related to…

Thank you. [Operator Instructions] Your first question is from Andrew Kuhn of Focused Compounding. Your line is open.

Good morning, everyone. Great quarter.

Good morning. Thanks.

So I only have one question today. And that’s that you added a new line in your report saying that the same higher natural gas prices could continue to result in increased demand for coal and that changes through expectations for customer power plant dispatch could affect the company’s outlook for 2022 and over the long-term. So as you sit here today, natural gas is up something like 50% since the end of Q1. And we know that Minerals Management will benefit from this. But I am curious if you are also now seeing more demand for your coal business given where natural gas prices are, maybe even since the end of Q1?

I will speak generally about the relationship. On the energy side, energy gets dispatched. Power plants get dispatched generally based on economics. There is other things that come into play, like is the transmission congestion and things like that, that will come into play. But for the most part, it’s on economics. And when you see natural gas prices as high as they are and the grid needs baseload generation, they are going to turn to lower cost resources. And generally, especially when you look at the relationships that we have with our customer power plants where it’s not the typical relationship as power plants are buying coal on the market, they might contract for a year or 2 years. And generally, relationship that we have is that they are buying the coal at a contracted price in all instances, except one, with our customers, it’s a – it’s cost plus a management fee. So, it’s a very low predictable and known amount. And those are – every one of those is very, very competitive on the grid versus high natural gas prices at this point in time.

Got it. Thanks. I will jump back into queue.

Yes. Thank you.

[Operator Instructions] We have a follow-up question from Andrew Kuhn, Focused Compounding. Your line is open.

No. I was just jumping back into queue. I apologize for that.

Thank you. [Operator Instructions]

Well, that appears to conclude our Q&A session for today. So J.C., did you have any final closing remarks?

Thanks to Andrew for the question.

Alright. Well, just a few reminders. A replay of our call will be available online later this morning. We will also post a transcript on the Investor Relations website when it becomes available. If you have any questions, please reach out to me. My phone number is at the top of the press release. I hope you enjoy the rest of your day and I will turn the call back to the operator to conclude.

Thank you. As a reminder, this call is recorded and will be available for Encore replay 2 hours after the call has ended until May 13, 2022. You may dial 800-585-8367 or 855-859-2056 and enter the conference ID 7747766 to listen. Thank you. This concludes today’s conference call. Thank you all for joining. You may now disconnect.