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(Amounts in thousands, except as noted and per share data) Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in these forward-looking statements are set forth below under the heading Forward-Looking Statements. Management's Discussion and Analysis of Financial Condition and Results of Operations include NACCO Industries, Inc.® (NACCO) and its wholly owned subsidiary, NACCO Natural Resources Corporation® (NACCO Natural Resources and with NACCO collectively, the Company, we, our or us). NACCO Natural Resources brings natural resources to life by delivering aggregates, minerals, reliable fuels and environmental solutions through our robust portfolio of businesses. We operate under three reportable business segments: Utility Coal Mining, Contract Mining and Minerals and Royalties. The Utility Coal Mining segment, operated by North American Coal®, manages surface coal mines that are exclusive, long-term fuel providers for power generation companies. The Contract Mining segment, operated by North American Mining®, is a leading provider of a broad range of specialized, long-term contract mining services. The Minerals and Royalties segment, which includes the Catapult Mineral Partners® (Catapult) business, acquires and promotes the development of mineral and royalty interests and other related investments. In addition to the reportable segments discussed above, we also operate other businesses that are not currently reported as separate segments. These businesses complement our existing operations and support our long-term growth strategic objectives. Mitigation Resources of North America® (Mitigation Resources) provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. ReGen Resources is pursuing the advancement and monetization of power generation projects. See Note 1 to the Unaudited Condensed Consolidated Financial Statements within this Form 10-Q for further discussion of our reportable segments. We also have items not directly attributable to an operating segment. These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, the financial results of developing businesses and Bellaire Corporation (Bellaire). Bellaire manages long-term liabilities related to former Eastern U.S. underground mining activities. All financial statement line items below operating profit (other expense, including interest expense and interest income, the provision for income taxes and net income) are presented and discussed within this Form 10-Q on a consolidated basis. Government Regulation and Environmental Matters: Refer to the discussion of Government Regulation and Environmental Matters as disclosed on pages 9 through 14 in our Annual Report on Form 10-K for the year ended December 31, 2025. The Government Regulation and Environmental Matters have not materially changed since December 31, 2025. Critical Accounting Policies and Estimates: Refer to the discussion of our Critical Accounting Policies and Estimates as disclosed on pages 46 through 47 in our Annual Report on Form 10-K for the year ended December 31, 2025. Our Critical Accounting Policies and Estimates have not materially changed since December 31, 2025. 18 Table of Contents CONSOLIDATED FINANCIAL SUMMARY Our results of operations were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Revenues: Utility Coal Mining $ 21,477 $ 28,626 $ 38,168 $ 47,865 Contract Mining 36,919 30,723 69,558 62,249 Minerals and Royalties 10,617 7,268 20,163 18,170 Unallocated Items 4,433 2,223 9,264 6,623 Eliminations (1,136) (605) (2,068) (1,101) Total revenue $ 72,310 $ 68,235 $ 135,085 $ 133,806 Operating (loss) profit: Utility Coal Mining $ 6,280 $ 1,222 $ 13,704 $ 5,013 Contract Mining 3,765 1,010 7,753 2,980 Minerals and Royalties 6,748 5,205 14,484 13,112 Unallocated Items (19,058) (7,491) (27,201) (13,493) Eliminations (2) 3 9 19 Total operating (loss) profit (2,267) (51) 8,749 7,631 Interest expense 1,620 1,944 3,278 3,718 Interest income (633) (770) (1,228) (1,635) Closed mine obligations 445 503 934 976 (Gain) loss on equity securities (858) (349) (1,313) 521 Gain on settlement of excess funding liability — (3,590) — (3,590) Other, net 332 217 424 520 Other expense (income), net 906 (2,045) 2,095 510 (Loss) income before income tax benefit (3,173) 1,994 6,654 7,121 Income tax benefit (2,210) (1,266) (1,219) (1,039) Net (loss) income $ (963) $ 3,260 $ 7,873 $ 8,160 Effective income tax rate 69.7 % (63.5) % (18.3 %) (14.6) % The components of the change in revenues and operating (loss) profit are discussed below in Segment Results. Second Quarter of 2026 Compared with Second Quarter of 2025, and First Six Months Ended June 30, 2026 Compared with First Six Months Ended June 30, 2025 Other expense (income), net Interest expense decreased in the second quarter of 2026 and the first six months of 2026 compared with the respective 2025 periods due to an increase in capitalized interest and lower average interest rates, partially offset by higher average borrowings. Interest income decreased in the second quarter of 2026 and the first six months of 2026 compared with the respective 2025 periods due to lower earnings on reduced invested cash balances. (Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value. The favorable change in the second quarter of 2026 and the first six months of 2026 compared with the respective 2025 periods is due to fluctuations in the market prices of the exchange-traded equity securities. See Note 5 to the Unaudited Condensed Consolidated Financial Statements for further discussion of equity securities. During 2025, $14.5 million of excess funds from the terminated Falkirk pension plan were directly transferred to the NACCO 401(k) plan. The NACCO 401(k) plan is a qualified replacement plan; therefore, these funds will be utilized to offset future profit sharing contributions to 401(k) plan participants. During the second quarter of 2025, NACCO and Falkirk’s former 19 Table of Contents customer agreed to settle the corresponding liability for $10.9 million, resulting in a $3.6 million Gain on settlement of excess funding liability. Income Taxes We evaluate and update our estimated annual effective income tax rate based on current and forecasted operating results and tax laws. Historically, our actual effective tax rates have differed from the statutory effective tax rate primarily due to the benefit received from percentage depletion. The effective rate benefit from percentage depletion varies based upon the mix and timing of actual earnings compared to projections of earnings between entities that benefit from percentage depletion and those that do not, and as such the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The benefit of percentage depletion is not directly related to the amount of consolidated pre-tax income recorded in a period. When income tax expense is recorded, the benefit from percentage depletion decreases the effective income tax rate, while the effect is to increase the effective income tax rate when a benefit for income taxes is recorded. Each quarter, we update our estimate of the annual effective tax rate, and the cumulative impact of the change in the estimated annual effective tax rate is recorded, which can make quarterly comparisons not meaningful. LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the changes in cash flow for the six months ended June 30: 2026 2025 Change Operating activities: Net cash provided by (used for) operating activities $ 20,673 $ (2,753) $ 23,426 Investing activities: Expenditures for property, plant and equipment and acquisition of mineral interests (41,921) (11,950) (29,971) Other 1,722 915 807 Net cash used for investing activities (40,199) (11,035) (29,164) Cash flow before financing activities $ (19,526) $ (13,788) $ (5,738) The $23.4 million improvement in net cash provided by (used for) operating activities was primarily due to favorable changes in operating assets and liabilities during the first six months of 2026 compared with the prior-year period. The improvement in operating assets and liabilities was mainly attributable to decreases in Prepaid profit sharing and Prepaid insurance and lower cash requirements associated with vendor deposits. 2026 2025 Change Financing activities: Net additions (reductions) to long-term debt and revolving credit agreements $ 19,223 $ (5,378) $ 24,601 Cash dividends paid (3,882) (3,570) (312) Purchase of treasury shares — (695) 695 Net cash provided by (used for) financing activities $ 15,341 $ (9,643) $ 24,984 The change in net cash provided by (used for) financing activities was primarily due to additions in debt borrowings during the first six months of 2026 compared with reductions during the first six months of 2025 and the absence of share repurchases during the first six months of 2026. Financing Activities NACCO Natural Resources has a $200.0 million secured revolving line of credit (Facility) that matures in September 2028. Borrowings outstanding under the Facility were $95.0 million at June 30, 2026. At June 30, 2026, the excess availability under the Facility was $69.1 million, which reflects a reduction for outstanding letters of credit of $35.9 million. NACCO has not guaranteed any borrowings of NACCO Natural Resources. The Facility allows for the payment to NACCO of dividends and advances under certain circumstances. Dividends (to the extent permitted by the Facility) and management fees are the primary sources of cash for NACCO and enable us to pay dividends to stockholders and repurchase shares. 20 Table of Contents The Facility has performance-based pricing, which sets interest rates based upon NACCO Natural Resources achieving various levels of debt to EBITDA ratios, as defined in the Facility. Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved. The applicable margins, effective June 30, 2026, for base rate and Term Secured Overnight Financing Rate loans were 1.75% and 2.75%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.45% on the unused commitment at June 30, 2026. During the three and six months ended June 30, 2026, the average borrowing under the Facility was $102.8 million and $93.8 million, respectively, and the weighted-average annual interest rate was 6.42% and 6.36%, respectively. The Facility contains restrictive covenants, which require, among other things, NACCO Natural Resources to maintain a maximum net debt to EBITDA ratio of 2.75 to 1.00 and an interest coverage ratio of not less than 4.00 to 1.00. The Facility provides the ability to make loans, dividends and advances to NACCO, with some restrictions based on maintaining a maximum debt to EBITDA ratio of 1.50 to 1.00, or if greater than 1.50 to 1.00, a Fixed Charge Coverage Ratio of 1.10 to 1.00. At June 30, 2026, NACCO Natural Resources was in compliance with all financial covenants in the Facility. The obligations under the Facility are guaranteed by certain of NACCO Natural Resources' direct and indirect, existing and future domestic subsidiaries, and is secured by certain assets of NACCO Natural Resources and the guarantors, subject to customary exceptions and limitations. We believe funds available from cash on hand, the Facility and operating cash flows will provide sufficient liquidity to meet our operating needs and commitments arising during the next twelve months and until the expiration of the Facility in September 2028. Expenditures for property, plant and equipment and mineral interests Actual expenditures were $41.9 million during the first six months of 2026, primarily for land in Tennessee at Mitigation Resources and draglines in the Contract Mining segment. Planned expenditures for the remainder of 2026 are expected to be approximately $35 million. This amount includes $3 million in the Utility Coal Mining segment, $10 million in the Contract Mining segment, $20 million in the Minerals and Royalties segment and $2 million in growth businesses included in Unallocated Items. The majority of these expenditures relate to business development opportunities and will only be made if the projects meet our growth investment criteria. Expenditures are expected to be funded from internally generated funds and/or bank borrowings. Other items In July 2026, MLMC's customer notified MLMC that payment of coal invoices would be delayed due to operational issues at the Red Hills Power Plant that reduced the customer's cash receipts and liquidity. As of June 30, 2026, MLMC had $12.5 million in Trade accounts receivable outstanding, of which $7.2 million was past due. Management is actively monitoring collectability and the potential impact on MLMC's liquidity and working capital requirements. See Item 1A Risk Factors on page 30 within this Form 10-Q for further discussion of MLMC. Capital Structure NACCO's consolidated capital structure is presented below: JUNE 30 2026 DECEMBER 31 2025 Change Cash and cash equivalents $ 45,523 $ 49,708 $ (4,185) Other net tangible assets 531,157 500,411 30,746 Intangible assets, net 4,378 4,725 (347) Net assets 581,058 554,844 26,214 Total debt (120,118) (100,895) (19,223) Bellaire closed mine obligations (24,802) (24,706) (96) Total equity $ 436,138 $ 429,243 $ 6,895 Debt to total capitalization 22% 19% 3% The change in other net tangible assets at June 30, 2026 compared with December 31, 2025 was mainly the result of increases in Property, plant and equipment and inventory during the first six months of 2026. Property, plant and equipment increased primarily due to investments in Contract Mining and Mitigation Resources supporting the Company’s growth initiatives. 21 Table of Contents Inventory increased mainly as the result of higher coal and mining supplies inventory, including growth associated with the Contract Mining segment's expansion. Contractual Obligations, Contingent Liabilities and Commitments Since December 31, 2025, other than the changes identified above, there have been no significant changes in the total amount of NACCO's contractual obligations, contingent liabilities or commercial commitments, or the timing of cash flows in accordance with those obligations as reported on page 52 in our Annual Report on Form 10-K for the year ended December 31, 2025. See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of certain guarantees related to Coyote Creek. SEGMENT RESULTS UTILITY COAL MINING SEGMENT FINANCIAL REVIEW Tons of coal delivered by the Utility Coal Mining segment were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Unconsolidated operations 4,920 3,736 10,434 9,352 Consolidated operations 633 890 1,124 1,481 Total tons delivered 5,553 4,626 11,558 10,833 The results of operations for the Utility Coal Mining segment were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Revenues $ 21,477 $ 28,626 $ 38,168 $ 47,865 Cost of sales 21,104 30,327 37,054 52,897 Gross profit (loss) 373 (1,701) 1,114 (5,032) Earnings of unconsolidated operations(a) 13,646 11,656 27,754 26,119 Selling, general and administrative expenses 7,421 8,502 14,695 15,753 Amortization of intangible assets 196 245 347 407 Loss (gain) on sale of assets 122 (14) 122 (86) Operating profit $ 6,280 $ 1,222 $ 13,704 $ 5,013 (a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of our unconsolidated subsidiaries. During the 2026 periods, MLMC's customer's power plant experienced unplanned outages and maintenance issues which resulted in lower customer requirements. As a result, revenues decreased 25.0% and 20.3% in the second quarter of 2026 and the first six months of 2026, respectively, compared with the 2025 periods. This decrease was partially offset by an increase in the contractually determined per ton sales price. The following table identifies the components of change in Operating profit for the second quarter of 2026 compared with the second quarter of 2025: Operating Profit 2025 $ 1,222 Increase (decrease) from: Gross profit (loss) 2,074 Earnings of unconsolidated operations 1,990 Selling, general and administrative expenses 1,081 Amortization of intangibles 49 Net change on sale of assets (136) 2026 $ 6,280 22 Table of Contents The following table identifies the components of change in Operating profit for the first six months of 2026 compared with the first six months of 2025: Operating Profit 2025 $ 5,013 Increase (decrease) from: Gross profit (loss) 6,146 Earnings of unconsolidated operations 1,635 Selling, general and administrative expenses 1,058 Amortization of intangibles 60 Net change on sale of assets (208) 2026 $ 13,704 Operating profit increased by $5.1 million and $8.7 million in the second quarter of 2026 and the first six months of 2026, respectively, compared with the 2025 periods. These improvements were primarily due to favorable changes in gross profit (loss), earnings of unconsolidated operations and selling, general and administrative expenses. The improvements in gross profit (loss) were primarily due to a reduction in cost per ton delivered and an increase in the contractually determined sales price at MLMC. Lower customer demand resulting from outages and maintenance issues at the Red Hills Power Plant resulted in a shift of certain costs from inventory and cost of sales to reduce MLMC’s asset retirement obligation, which favorably impacted 2026 results. In addition, the second quarter of 2025 and the first six months of 2025 included a $1.3 million and a $4.3 million inventory impairment charge, respectively, to write down MLMC's coal inventory to its net realizable value. The increase in earnings of unconsolidated operations was primarily due to higher customer demand at Coteau and Coyote Creek, partially offset by a lower management fee at Sabine during the 2026 periods. The decrease in selling, general and administrative expenses during the 2026 periods was mainly attributable to lower contributions expense, as the 2025 periods included costs associated with a multi-year charitable pledge. CONTRACT MINING SEGMENT FINANCIAL REVIEW Tons delivered by the Contract Mining segment were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Total tons delivered 16,013 13,947 30,973 26,800 The results of operations for the Contract Mining segment were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Total revenues $ 36,919 $ 30,723 $ 69,558 $ 62,249 Reimbursable costs 20,480 18,503 37,344 38,050 Revenues excluding reimbursable costs $ 16,439 $ 12,220 $ 32,214 $ 24,199 Total revenues $ 36,919 $ 30,723 $ 69,558 $ 62,249 Cost of sales 32,045 28,659 59,789 57,037 Gross profit 4,874 2,064 9,769 5,212 Earnings of unconsolidated operations(a) 1,579 1,232 3,081 2,201 Selling, general and administrative expenses 2,583 2,286 4,997 4,433 Loss on sale of assets 105 — 100 — Operating profit $ 3,765 $ 1,010 $ 7,753 $ 2,980 (a) See Note 6 to the Unaudited Condensed Consolidated Financial Statements for a discussion of our unconsolidated subsidiaries. 23 Table of Contents Revenues excluding reimbursable costs increased 34.5% and 33.1% in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods, primarily due to the commencement and ramp up of a new dragline mining services contract during 2026 as well as higher customer requirements at the consolidated limestone quarries. Reimbursable costs have an offsetting amount in cost of sales and have no impact on gross profit. The following table identifies the components of change in Operating profit for the second quarter of 2026 compared with the second quarter of 2025: Operating Profit 2025 $ 1,010 Increase (decrease) from: Gross profit 2,810 Earnings of unconsolidated operations 347 Selling, general and administrative expenses (297) Net change on sale of assets (105) 2026 $ 3,765 The following table identifies the components of change in Operating profit for the first six months of 2026 compared with the first six months of 2025: Operating Profit 2025 $ 2,980 Increase (decrease) from: Gross profit 4,557 Earnings of unconsolidated operations 880 Selling, general and administrative expenses (564) Net change on sale of assets (100) 2026 $ 7,753 Operating profit increased $2.8 million and $4.8 million in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods. These improvements were primarily due to increases in gross profit and earnings of unconsolidated operations. The favorable change in gross profit was mainly the result of contributions from a new dragline mining services contract and improved margins at limestone quarries. The increase in earnings of unconsolidated operations was primarily due to higher customer requirements as a result of an additional dragline operating at a new quarry pursuant to an existing contract. The improvements in operating profit were partially offset by increases in selling, general and administrative expenses mainly due to higher employee-related costs. The improved margins were partially due to lower depreciation expense in the 2026 periods. Effective January 1, 2026, the Company’s Contract Mining segment changed its depreciation method for certain assets (primarily draglines and other large mining equipment) from the straight-line method to the units-of-production method. See Note 1 to the Unaudited Condensed Consolidated Financial Statements for further discussion of this change. MINERALS AND ROYALTIES SEGMENT FINANCIAL REVIEW The following table sets forth our estimate of the number of gross and net productive wells: June 30, 2026 June 30, 2025 Gross Net Gross Net Oil and Natural Gas Wells 2,451 21.6 2,377 23.3 Gross wells are the total wells in which an interest is owned. Net wells are calculated based on our net royalty interest, factoring in both ownership percentage of gross wells and royalty rate. 24 Table of Contents Oil and natural gas prices have been historically volatile and may continue to be volatile in the future. The table below shows the average prices as reported by the United States Energy Information Administration for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 West Texas Intermediate Average Crude Oil Price $ 95.99 $ 64.63 $ 83.98 $ 68.23 Henry Hub Average Natural Gas Price $ 2.95 $ 3.19 $ 3.87 $ 3.67 These indicated prices do not necessarily reflect the contract terms for our mineral and royalty interests. As an owner of royalty and mineral interests, our access to information concerning activity and operations of our royalty and mineral interests is limited. We do not have information that would be available to a company with working interests in oil and natural gas operations because detailed information is not generally available to owners of royalty and mineral interests. The results of operations for the Minerals and Royalties segment were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Oil and natural gas revenues $ 8,484 $ 5,981 $ 16,311 $ 15,098 Other revenues 2,133 1,287 3,852 3,072 Total Revenues $ 10,617 $ 7,268 $ 20,163 $ 18,170 Total Revenues $ 10,617 $ 7,268 $ 20,163 $ 18,170 Cost of sales 1,278 986 2,399 3,230 Gross profit 9,339 6,282 17,764 14,940 (Losses) earnings from unconsolidated operations (1,061) 251 (100) 805 Selling, general and administrative expenses 1,530 1,328 3,181 2,633 Gain on sale of assets — — (1) — Operating profit $ 6,748 $ 5,205 $ 14,484 $ 13,112 Revenues increased 46.1% and 11.0% in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods, primarily due to higher oil and gas revenues as well as increased coal revenues. The higher revenues were mainly attributable to increased commodity prices. Receivables from third-party lessees for which we did not receive actual production information, either due to timing delays or due to the unavailability of data at the time when revenues are recognized, are estimated using expected sales volumes and estimated prices. The difference between our estimates and the actual amounts received is recorded in the period that payment is received from the third-party lessee. Revenue in the second quarter of 2026 included a $1.6 million favorable adjustment primarily related to first quarter 2026 pricing estimates. Revenue in the six months ended June 30, 2025 included a $1.5 million favorable adjustment. The following table identifies the components of change in Operating profit for the second quarter of 2026 compared with the second quarter of 2025: Operating Profit 2025 $ 5,205 Increase (decrease) from: Gross profit 3,057 (Losses) earnings from unconsolidated operations (1,312) Selling, general and administrative expenses (202) 2026 $ 6,748 25 Table of Contents The following table identifies the components of change in Operating profit for the first six months of 2026 compared with the first six months of 2025: Operating Profit 2025 $ 13,112 Increase (decrease) from: Gross profit 2,824 (Losses) earnings from unconsolidated operations (905) Selling, general and administrative expenses, including Gain on sale of assets (547) 2026 $ 14,484 Operating profit increased by $1.5 million and $1.4 million in the second quarter and the first six months of 2026, respectively, compared with the 2025 periods, primarily due to higher gross profit mainly attributable to favorable commodity prices. These improvements were partially offset by losses from unconsolidated operations related to an investment in Eiger Resources. The unfavorable change in Eiger's results was primarily attributable to commodity hedge positions rather than underlying production. Due to the timing and availability of financial information, earnings or losses from this investment are recorded on a one quarter lag. In addition, selling, general and administrative expenses increased primarily due to higher employee-related costs. UNALLOCATED ITEMS AND ELIMINATIONS FINANCIAL REVIEW Unallocated Items and Eliminations were as follows for the three and six months ended June 30: THREE MONTHS SIX MONTHS 2026 2025 2026 2025 Revenues $ 3,297 $ 1,618 $ 7,196 $ 5,522 Operating loss $ (19,060) $ (7,488) $ (27,192) $ (13,474) Revenues increased in the second quarter and the first six months of 2026 compared to the 2025 periods, primarily due to higher restoration and reclamation service revenue at Mitigation Resources. The operating loss increased in the second quarter and the first six months of 2026 compared to the 2025 periods, primarily due to $12.0 million of impairment charges related to certain solar development projects within ReGen Resources. See Note 5 to the Unaudited Condensed Consolidated Financial Statements and Item 1A Risk Factors on page 30 within this Form 10-Q for further discussion of the impairment charges and ReGen Resources, respectively. NACCO Industries, Inc. Outlook NACCO Industries is a diversified natural resources company with a unique business model strategically positioned to deliver stable and growing financial returns over the long term. Our business model is purposefully built for durability and resilience with an expanding portfolio of long-term contracts, relationships and investments that leverage our proven operational expertise, disciplined capital allocation and an entrepreneurial yet patient approach. We have methodically built unique capabilities and clear competitive advantages that allow us to pursue a wide range of growth opportunities, often completely integrated into customers’ operations in partnership-based relationships. We have multiple vectors for value creation, and we are steadfastly committed to delivering compounding returns and expanding investor value over the long term. Our foundation rests on a stable base of long-term coal mining contracts and legacy mineral and royalty assets, which generate dependable recurring cash flows. As new long-term contracts and investments are added across the Company, these new multi-year agreements create a “layering effect" as their contributions compound over time. While these long-term agreements and investments are intended to strengthen our earnings base over time, we continually evaluate whether individual projects or initiatives remain aligned with our strategic and financial objectives. As part of this process, changing market conditions, regulatory developments and project-specific challenges led us to reassess certain solar investments during the 2026 second quarter. In early July, we began pursuing a range of alternatives, including potential asset 26 Table of Contents sales, contract amendments and other strategic actions, to monetize these investments and reduce our exposure. Depending on the outcome of these activities, additional curtailment costs could be incurred. Strong first-half 2026 operating performance across our reportable segments is expected to drive year‑over‑year improvements in full-year 2026 Consolidated Adjusted EBITDA, which excludes the solar impairment charges and a $7.8 million pre-tax pension settlement charge recorded in 2025. While we expect Consolidated Adjusted EBITDA to remain strong in the second half of 2026, growth is expected to moderate relative to both the first half of 2026 and prior-year periods. We also expect second-half consolidated operating profit and net income to decline from first-half 2026 and prior-year levels. Expectations for lower second-half operating profit are primarily driven by potential additional solar project curtailment costs and expected inventory write-downs at MLMC. Given the effect of the realized and anticipated 2026 charges, we expect full-year operating profit and net income will be significantly lower than in 2025. Comparisons to prior-year net income also reflect a $6.0 million after-tax pension settlement charge recognized in the second half of 2025. At our Utility Coal Mining segment, operated by North American Coal, full-year customer demand is expected to be comparable and operating profit is expected to increase year over year due to a shift in focus to reclamation activities in the first half of 2026. During the second half of 2026, customer demand is expected to decline modestly compared with the prior-year period, provided MLMC's customer's power plant operates as currently planned. Operating results at MLMC are expected to decline from the first half of 2026, particularly in the third quarter, due to lower customer demand, higher diesel fuel costs and an anticipated inventory impairment charge. A higher contractually determined per ton sales price is anticipated to mitigate the lower demand. Earnings at the unconsolidated mining operations are also expected to decline primarily due to reclamation services at Sabine concluding as of September 30, 2026. Looking ahead to 2027, overall customer demand for coal is expected to remain consistent with 2026, while profitability is expected to improve. This increase is driven by anticipated improvements at MLMC if the customer's power plant is able to operate more consistently, as well as continued stable earnings at our unconsolidated operations. Anticipated improved results at the remaining unconsolidated mining locations should mostly offset the absence of reclamation income at Sabine. The Contract Mining segment, operated by North American Mining, serves as our mining growth platform. We are building a growing portfolio of long-term contracts through geographic and mineral expansion that are expected to strengthen the foundation for sustained profitability in this segment. In early 2026, we commenced activities under a new dragline services contract as part of a U.S. Army Corps of Engineers construction project in Palm Beach County, Florida. We also anticipate commencing operations at a new limestone quarry in Arizona during fourth-quarter 2026. Sawtooth, a North American Mining subsidiary, provides exclusive comprehensive mining services at Thacker Pass, which is owned by a joint venture led by Lithium Americas Corp. Sawtooth will supply all of the lithium-bearing ore requirements for our customer's Thacker Pass lithium processing facility, which is currently under construction. This project is providing stable income during construction and is expected to contribute increased income and long-term cash flows as lithium production commences and ramps up to full production, which is targeted for 2028. As a result of earnings contributions from new contracts, we anticipate substantial year-over-year growth in Contract Mining operating profit and Segment Adjusted EBITDA for both the second half and full year of 2026. Second-half results are expected to moderate from the strong first-half levels as customer demand is projected to decline, primarily in the fourth quarter. We expect significant operating profit improvement in the Contract Mining segment in 2027. This growth is driven by a full year of the dragline services contract in Palm Beach County, Florida, and contributions from operations at the Arizona quarry as well as potential new deals in the pipeline. The Minerals and Royalties segment, managed 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. This segment also holds a meaningful equity investment in Eiger Resources that has working interests in oil and natural gas assets. Anticipated increases in income from Eiger Resources and the benefit of higher oil prices are projected to be more than offset by anticipated production declines and a changing mix of production and development activity. As a result, operating profit and Segment Adjusted EBITDA are expected to decline compared with the first half of 2026 as well as the second-half and full-year 2025. The Minerals and Royalties segment is projected to continue generating meaningful earnings and cash flow in 2027, while operating profit is expected to moderate primarily due to normal production declines and a continuation of the current moderate 27 Table of Contents pace of domestic development activity. Changes in commodity prices or production and development assumptions, including effects of the ongoing Middle East conflict, could alter current expectations. Mitigation Resources provides natural resource restoration and reclamation services that include stream and wetland mitigation solutions. Mitigation Resources is successfully leveraging its strong reputation and clear competitive strengths to expand into additional mitigation, restoration and reclamation markets. Mitigation Resources is expected to deliver increasing profitability over time from the sale of mitigation credits and as reclamation and restoration services expand. This business, while currently variable in performance due to permit and project timing, is expected to generate a profit in 2027 and move toward more consistent and improving results over time as the business expands and its portfolio of mitigation projects matures. We continue to invest in our businesses to support future growth. Based on the current project pipeline, we anticipate investing up to $35 million in the remainder of the year, primarily for business development opportunities. These expenditures will be made only if projects meet our disciplined capital investment criteria. While we anticipate a moderate year-over-year increase in cash generated from operations, cash flow before financing is projected to remain a use of cash in 2026, reflecting our planned investment activity. We expect full-year 2026 cash flow before financing to improve modestly over 2025, and continue to improve into 2027. We remain confident in our ability to deliver improving results and increasing cash flow over time. Earnings are expected to benefit from continued expansion in Contract Mining and Mitigation Resources, along with improved operating performance across our other businesses. Looking ahead, as our recent investments mature, they are expected to support sustained earnings growth and stronger cash flow. Our businesses provide essential inputs for electricity generation, construction and development, and industrial production. As demand for reliable uninterrupted energy continues to grow, natural resources fundamentals remain strong, reinforcing the importance of dependable baseload generation. Recent policy developments, including the re-establishment of the National Coal Council, highlight coal’s ongoing strategic role in supporting grid reliability, economic competitiveness and national security. This development, along with a favorable regulatory environment, reinforces our confidence in our near-term outlook and long-term growth trajectory. Our conservative approach to maintaining a strong capital structure and operating discipline minimizes risk, while the compounding effect of a growing portfolio of long-term contracts and strategic 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. We pursue opportunities that other companies 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 growth, expand our capabilities and reward shareholders over the long run. FORWARD-LOOKING STATEMENTS The statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made subject to certain risks and uncertainties, which could cause actual results to differ materially from those presented. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Among the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) a significant reduction in demand by the Company's customers from extended power plant outages, weather conditions or other events that would change the level of customers' coal or aggregates requirements, (2) customer liquidity constraints that could increase exposure to customer credit risk, (3) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil as a result of factors such as OPEC and/or government actions, geopolitical developments, economic conditions and regulatory changes, as well as supply and demand dynamics, (4) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (5) costs to pursue and develop new mining, mitigation, oil and gas and power generation development opportunities and other value-added service opportunities, (6) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (7) changes in development plans by third-party lessees of the Company's mineral interests, (8) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons; the availability and cost of transportation and processing services in the areas where the Company's oil and gas reserves are located; and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (9) any customer's premature facility closure or extended project development delay, (10) 28 Table of Contents federal and state legislative and regulatory actions affecting fossil fuels, (11) supply chain disruptions, including price increases and shortages of parts and materials, inclusive of tariff effects, (12) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (13) impairment charges, (14) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (15) equipment problems that could affect deliveries to customers, (16) changes in the costs to reclaim mining areas, (17) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (18) the ability to attract, retain, and replace workforce.