NACCO INDUSTRIES, INC. NORTH AMERICAN COAL CORPORATION

2018 ANNUAL REPORT TRUSTED PARTNERS. INTEGRATED SOLUTIONS.

Operating in the early morning sunshine, the Marion 8400 dragline at North American Coal’s Coyote Creek Mine near Beulah, North Dakota, removes overburden before the coal below is mined for delivery to the Coyote Station power plant.

Contents North American Coal Operations...... 1 Selected Financial and Operating Data...... 2 Letter to Stockholders...... 4 Form 10-K...... 11 Directors and Officers...... 106 Corporate Information ...... Inside Back Cover NACCO Industries, Inc..

OUR OPERATIONS

We operate 9 surface coal mines and 18 aggregates quarries . We delivered 38 .5 million tons of coal and 35 .4 million cubic yards of limestone in 2018 . We operate more draglines than anyone else in the U .S . (over 40), and we have recently launched Mitigation Resources of North America to create and sell stream, wetland and species habitat credits .

Cover, clockwise from top left: A Wirtgen© surface miner is used to extract coal at Camino Real Fuels’ Eagle Pass mine in Texas. u North American Mining operates a Bucyrus-Erie 8200 dragline for White Rock Quarries in Miami-Dade County, Florida, to extract limestone aggregates for Florida construction projects. u North American Coal Royalty Company leases Ohio Utica reserves to Ascent Resources, which uses a drill rig to extract natural gas and oil. u Mature hardwoods flourish along a tributary of the Big Black River at Mitigation Resources of North America’s Tobaksákola mitigation site in Webster County, Mississippi.

1 SELECTED FINANCIAL AND OPERATING DATA NACCO Industries, Inc. and Subsidiaries

Year Ended December 31 2018 2017(1) 2016(1) 2015 2014(1) (In thousands, except per share data and share amounts)

Operating Statement Data: Revenues...... $ 135,375 $ 104,778 $ 111,081 $ 147,998 $ 172,702 Operating profit (loss)...... $ 43,624 $ 32,814 $ (1,659) $ (3,727) $ (94,486)

Income (loss) from continuing operations ...... $ 34,785 $ 28,463 $ 2,956 $ 2,273 $ (56,850) Discontinued operations, net-of-tax(2)...... – 1,874 26,651 19,711 18,732 Net income (loss)...... $ 34,785 $ 30,337 $ 29,607 $ 21,984 $ (38,118)

Basic Earnings (Loss) per Share: Income (loss) from continuing operations...... $ 5.02 $ 4 .17 $ 0 .43 $ 0 .32 $ (7 .42) Discontinued operations, net-of-tax(2) ...... – 0 .27 3 .91 2 .82 2 .40 Basic earnings (loss) per share...... $ 5.02 $ 4 .44 $ 4 .34 $ 3 .14 $ (5 .02)

Diluted Earnings (Loss) per Share: Income (loss) from continuing operations ...... $ 5.00 $ 4 .14 $ 0 .43 $ 0 .32 $ (7 .42) Discontinued operations, net-of-tax(2)...... – 0 .27 3 .89 2 .81 2 .40 Diluted earnings (loss) per share...... $ 5.00 $ 4 .41 $ 4 .32 $ 3 .13 $ (5 .02)

Per Share and Share Data: Cash dividends ...... $ 0.6600 $ 0 .9775 $ 1 .0650 $ 1 .0450 $ 1 .0225 Market value at December 31(3)...... $ 33.90 $ 37 .65 $ 90 .55 $ 42 .20 $ 59 .36 Stockholders’ equity at December 31 ...... $ 36.22 $ 32 .03 $ 32 .50 $ 29 .42 $ 29 .23 Actual shares outstanding at December 31(4). . . . 6.921 6 .852 6 .779 6 .837 7 .236 Basic weighted average shares outstanding(4)...... 6.924 6 .830 6 .818 7 .001 7 .590 Diluted weighted average shares outstanding(4). . . . . 6.960 6 .873 6 .854 7 .022 7 .590

(1) During 2014, North American Coal recorded a non-cash, asset impairment charge of $105 .1 million . During 2016 and 2017, North American Coal recorded additional non-cash impairment charges of $17 .4 million and $1 .0 million, respectively . (2) On September 29, 2017, the Company spun off Hamilton Beach Brands Holding Company (HBBHC), a former wholly owned subsidiary . The results of operations of HBBHC are reflected as discontinued operations in the table above. (3) The 2017 values reflect the effect of the spin-off of HBBHC as a separate public company. (4) Share amounts in millions .

2 NACCO Industries, Inc..

SELECTED FINANCIAL AND OPERATING DATA

Year Ended December 31 2018 2017(1) 2016(1) 2015 2014(1) (In thousands, except employee data)

Balance Sheet Data at December 31: Cash...... $ 85,257 $ 101,600 $ 69,308 $ 35,701 $ 54,148 Total assets(3)...... $ 376,991 $ 389,552 $ 668,021 $ 655,408 $ 770,520 Long-term debt...... $ 6,367 $ 42,021 $ 94,295 $ 110,113 $ 137,978 Stockholders’ equity...... $ 250,704 $ 219,448 $ 220,293 $ 201,138 $ 211,474

Cash Flow Data: Provided by operating activities(5)...... $ 54,622 $ 41,305 $ 93,935 $ 108,002 $ 19,799 Used for investing activities(5)...... $ (18,387) $ (15,005) $ (9,817) $ (8,291) $ (74,934) Consolidated Cash Flow before financing activities(5)(6)...... $ 36,235 $ 26,300 $ 84,118 $ 99,711 $ (55,135)

Provided by (used for) financing activities(5)...... $ (52,578) $ (2,306) $ (55,710) $ (108,301) $ 20,979

Other Data: Total employees at December 31(7)...... 2,400 2,300 3,600 3,600 4,000

(5) Includes both continuing operations and discontinued operations for all years presented . (6) Cash Flow before financing activities is equal to net cash provided by operating activities less net cash used for investing activities. (7) Includes employees from HBBHC from 2014 to 2016, Centennial Natural Resources for 2014 and the unconsolidated mines for all years presented .

Year Ended December 31 2018 2017(1) 2016(1) 2015 2014(1) (In thousands)

Calculation of Adjusted EBITDA from continuing operations(8) Net income (loss)...... $ 34,785 $ 30,337 $ 29,607 $ 21,984 $ (38,118) Discontinued operations, net of tax...... – (1,874) (26,651) (19,711) (18,732) Centennial long-lived asset impairment charge. . . . . – 982 17,443 – 105,119 Income tax provision (benefit)...... 7,378 639 (9,649) (9,510) (45,199) Interest expense...... 1,998 3,440 4,318 4,962 6,062 Interest income...... (865) (222) (196) (418) (827) Depreciation, depletion and amortization expense 14,683 12,767 13,050 17,372 22,329 Adjusted EBITDA from continuing operations(8) . . . . . $ 57,979 $ 46,069 $ 27,922 $ 14,679 $ 30,634

(8) Adjusted EBITDA from continuing operations is provided solely as a supplemental disclosure with respect to operating results . Adjusted EBITDA from continuing operations does not represent net income, as defined by U.S. GAAP and should not be considered as a substitute for net income, or as an indicator of operating performance. NACCO defines Adjusted EBITDA from continuing operations as income from continuing operations before long-lived asset impairment charges and income taxes plus net interest expense and depreciation, depletion and amortization expense . Adjusted EBITDA from continuing operations is not a measurement under U.S. GAAP and is not necessarily comparable with similarly titled measures of other companies.

3 TO OUR STOCKHOLDERS

NACCO Industries, Inc ., the public parent company of The North American Coal Corporation, delivered solid profitability in 2018 of $34.8 million in income from continuing operations, a 22% increase over the prior year income of $28 .5 million . In September 2017, NACCO completed the spin-off of its housewares- related businesses . Since that time, we have been focused on preserving North American Coal’s existing long-term customer relationships and pursuing growth opportunities that leverage North American Coal’s core competencies . We are proud of our long-term customer relationships and our unique business model that provide customers with low-cost coal and aggregates while providing us with steady cash flow generation.

North American Coal is not a typical mining company . It operates more like a service business . Most customer contracts are based on a “management fee” approach, whereby compensation includes reimbursement of all operating costs, plus a comparatively small but consistent fee based primarily on deliveries . Since we only receive fee compensation when customers take deliveries, the business model aligns our We are proud of our long-term focus with customer objectives, helping customers customer relationships and achieve their desired results through reduced costs, our unique business model improved quality and/or other specific objectives. Our unique business model forms partnerships with our customers that can last for decades . As an example, North American Coal’s Falkirk Mine began delivering coal to its customer in 1978, and Falkirk’s contract does not expire until 2045 . As highlighted by our new North American Coal website, www .nacoal .com, launched in 2018, a key focus of our business model is to provide Integrated Solutions for our customers . North American Coal operates coal mines that are exclusively dedicated to providing fuel for customer power plants or activated carbon facilities . North American Mining maintains and operates draglines that are an integral part of aggregate production at customer quarries . In recent years, we have expanded our scope of services to existing customers to include ash haulage and coal drying services, among others . Because our operations are

4 NACCO Industries, Inc..

TO OUR STOCKHOLDERS

adjacent to and integrated into our customers’ operations, the services we provide are integral to our customers’ success . Safety is our number-one priority at every mine site, every day and with every employee in mind . The National Mining Association ranks North American Coal as an industry leader in safety. We believe safety, efficiency and productivity form the basis for creating value for our customers . North American Coal designs and follows operating procedures that strengthen safety, empower employees and ensure full compliance with local, state and federal regulations . The result: customers have peace of mind knowing that North American Coal consistently runs a safe, cost-efficient operation.

Left: A Kress coal truck at the Falkirk Mine in North Dakota delivers 200 tons of coal to its customer’s power plant. The coal will be delivered to the plant via the newly constructed silo feed conveyor pictured in the background. Right: A P&H 2800XP shovel and a fleet of trucks work into the evening at The Coteau Properties Company’s Freedom Mine in North Dakota.

Surface Coal Mining North American Coal operates nine surface coal mines . These mines delivered 38 .5 million tons of coal in 2018, primarily under long-term contracts that generate predictable earnings and strong cash flow. Coal is surface mined in North Dakota, Texas, Mississippi, Louisiana and on the Navajo Nation in New Mexico . North American Coal’s mines supply coal primarily to power generation companies and, to a lesser extent, activated carbon facilities . Each mine delivers coal to its customer’s adjacent, or nearby, power plant, synfuels plant or activated carbon facility and is the exclusive supplier to its customer’s facility, with the exception of Camino Real Fuels Company (“Camino Real”) . Camino Real’s customer takes all coal produced by the mine, but also purchases additional coal from other suppliers . All but one of our coal mining locations operate pursuant to “management fee” contracts . Under these contracts, North American Coal is responsible for all mine operations while the customer is responsible for funding all mine operating costs and provides, or provides support for, all of the capital required to build and operate the mine . Because of the way these contracts are structured, NACCO does not consolidate the results of these operations in its financial statements. Instead, we report the pre-tax profits earned under these “management fee” contracts as “Earnings of unconsolidated mines” on the income statement . While we do not consolidate these entities, the selling, general and administrative

5 expenses reported on the income statement include expenses to support both the consolidated and unconsolidated operations . North American Coal is paid a “management fee” per ton of coal or heating unit (MMBtu) delivered. Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad measures of U .S . inflation. This contract structure eliminates exposure to spot coal market price fluctuations. North American Coal’s customers that operate under “management fee” contracts have the obligation to fund final mine reclamation activities. Under certain contracts, North American Coal holds the mine permit and is responsible for final mine reclamation activities and, to the extent North American Coal performs such final reclamation, it receives fee income for its services. North American Coal and its customers are committed to excellence in environmental stewardship . Our permitting, mining and reclamation activities utilize state-of-the-art technology to ensure that activities comply with, or exceed, legal requirements . Reclamation work is performed concurrent with mining, with a commitment to excellence to return disturbed land to a productive natural state that is often better than pre-mining conditions . Mississippi Lignite Mining Company (“MLMC”) delivers coal to a power plant adjacent to the mine under a contract that runs through 2032 . The MLMC contract is the Company’s only coal contract in which North North American Coal’s manage- American Coal is responsible for all operating costs, capital requirements and final mine reclamation. ment fee contract structure Mining is a capital-intensive industry, and MLMC eliminates exposure to spot coal requires capital spending that can be significant in market price fluctuations certain years to open new mine areas, secure land and coal for future mining and acquire replacement equipment . The contractual price received for coal sales adjusts monthly primarily based on changes in the level of established indices, which reflect general U.S. inflation rates, including cost components such as labor and diesel fuel. Profitability at MLMC is affected by three key components – customer demand for coal, changes in the indices that determine sales price and actual costs incurred . A continuous focus on driving down production costs and maximizing efficiency and operating capacity at mine locations benefits both customers and North American Coal, as fuel cost is the major driver for power plant dispatch . Increased power plant dispatch drives increased demand for coal by North American Coal’s customers .

A Bucyrus-Erie 2570W dragline at The Coteau Properties Company’s Freedom Mine is shown moving to a new mine area adjacent to Basin Electric Power Cooperative’s Antelope Valley Power Station and Dakota Gasification Company’s Great Plains Synfuels Plant.

6 NACCO Industries, Inc..

We believe that the power plants we supply are generally younger and more efficient, with better environmental controls than most power plants that have closed in recent years . Many of our customers continue to invest in efficiency and environmental upgrades to their facilities. Because these power plants are competitive suppliers of electricity in their respective dispatch areas, we consider our surface coal mining operations to be well positioned relative to competitors, despite the challenges facing both the coal mining and electric generation industries . Securing new coal mining opportunities is a strategic priority . During the last 10 years, North American Coal built five new coal mines and assumed operation of an existing mine for a new customer; a significant accomplishment in an industry in transition . A substantial percentage of the 2018 earnings of unconsolidated mines was derived from these mines . While the development of new coal-fired power plants is likely to be limited, we In Sumter County, Florida, a continue to pursue opportunities to Bucyrus-Erie 770B dragline assume operation of existing mines operated and maintained for new customers . We believe that by North American Mining excavates limestone at the the United States should adopt a Center Hill quarry owned domestic energy policy that balances by CEMEX. affordability, energy needs and environmental responsibility . Coal must remain an integral part of the nation’s total energy mix for the foreseeable future to allow the United States to remain competitive in the global economy. New domestic coal-fired power plants and greenfield coal mining opportunities for power generation are unlikely to occur without the adoption of a balanced energy policy in which coal continues to play a key role .

GROWTH OUTSIDE THE COAL INDUSTRY North American Mining North American Coal’s North American Mining division serves as a platform for growth outside the coal industry by leveraging core mining capabilities that can be applied to the aggregates industry . North American Mining maintains and operates draglines and other equipment for sellers of aggregates under long-term contracts . By focusing on the mining aspects of customers’ quarry operations, North American Mining creates value for its customers by improving mining productivity and efficiencies, allowing customers to focus on areas where they can add the most value — final processing and product sales. North American Mining’s current contracts primarily relate to maintaining and operating draglines and other equipment, providing a much more focused service to its customers than managing the operations of an entire coal mine . Since 2015, North American Mining has grown from serving two customers with seven quarries utilizing 10 draglines, to serving eight customers with 18 quarries utilizing 24 draglines and a rope shovel as of December 31, 2018. By the end of the first quarter of 2019, North American Mining is expected to expand its operations to 28 draglines . North American Mining is also focused on expanding the scope of work it does for its customers, with the ability to offer a full range of Integrated Solutions related to mining . North American Coal is skilled in permitting, land and mineral acquisition, overburden removal, drilling and blasting, load and haul and operating

7 other mining equipment, such as excavators, shovels, motor graders, conveyors and material handling systems . We believe our current and prospective customers could benefit from allowing North American Mining to leverage the skills obtained from the coal business to operate the majority of mining and extraction activities so they can focus on their strengths in processing and selling mined products . While North American Mining currently operates primarily in Florida, it is focused on expanding its footprint outside Florida and into mining materials other than limestone . North American Mining recently signed a contract to operate a dragline at a small sand and gravel operation near Richmond, Virginia, beginning in 2019, and continues to pursue other opportunities outside Florida .

North American Mining operates under both “management fee” contracts and contracts that reflect a more traditional business model.

North American Coal Royalty Company North American Coal Royalty Company derives income primarily from royalty-based lease payments under which the lessee makes payments based on its sales of natural gas and, to a lesser extent, oil and coal, extracted by third parties. Royalty income can fluctuate in response to a number of factors outside the Company’s control, including fluctuations in commodity prices and the availability of infrastructure, and the lessees’ willingness and ability to incur well- development and other operating costs. We experienced significant increases in royalty income in both 2017 and 2018 compared with prior years . We believe royalty income could increase in 2019, based on the number of gas wells being developed and operated by lessees to extract Ohio Utica shale oil and gas assets, and the expected continuing development of infrastructure in this area . Whether or not these increased levels of income continue depends on the factors noted above . North American Coal Royalty Company will continue to look for future opportunities to grow royalty income through expanded leasing of its oil and gas assets to third parties .

Mitigation Resources of North America North American Coal is widely recognized for the quality of its work to remediate streams, wetlands and habitats disturbed by mining, often returning these areas to a condition better than pre-mining conditions . Through these environmental activities, North American Coal has gained substantial knowledge

8 NACCO Industries, Inc..

and skills that are well suited for restoration projects . In our pursuit of growth and to further leverage North American Coal’s core competencies, we formed Mitigation Resources of North America to offer tailored solutions to customers whose activities disturb streams, wetlands or species habitats . Mitigation Resources of North America creates and sells mitigation credits (known as mitigation banking) and provides services to those engaged in permittee-responsible mitigation . As a mitigation banker, Mitigation Resources of North America obtains sites with impaired streams, wetlands or species habitats and restores, enhances or preserves them, which results in the creation of mitigation credits that can be sold to offset disturbances of nearby ecologically

From left to right: Chief Ironside, a Marion 8750 dragline at The Falkirk Mining Company’s Falkirk Mine in North Dakota works through the snow to remove overburden from the coal seam below. u The early morning sun shines through the bald cypress along the Yockanookany River, preserved at Mitigation Resources of North America’s Yockanookany Mitigation Bank near Kosciusko, Mississippi. u The Sabine Mining Company won the 2019 Texas Reclamation Award from The Railroad Commission of Texas Surface Mining & Reclamation Division for its “Go Native” reclamation project that reclaimed land back to its natural grassy state.

similar streams, wetlands and/or habitats . In addition, permittee-responsible mitigation projects will allow Mitigation Resources of North America to utilize the Company’s “management fee” model to provide mitigation services to developers for individual mitigation projects . This business is in its early stages, but we believe there is a lot of opportunity for growth and success in this industry .

Other Value-Added Services As part of our focus on providing Integrated We are widely recognized for the Solutions and expanding the scope of our services, quality of our work to remediate North American Coal provides a number of other streams, wetlands and habitats value-added services for its customers . For example, Camino Real Fuels operates and maintains a coal handling and train load-out facility . Bisti Fuels operates and maintains a sophisticated coal blending and handling facility, including an approximately 15-mile rail operation with two locomotives used to transport coal from the mine to the power plant . NoDak Energy Services, LLC operates and maintains a coal drying system, which improves the customer’s plant efficiency. A North American Coal affiliate is constructing, and will operate, a small solar power generation facility, selling the power to its customer, and several mines provide ash handling and ash management services for their customers. Further diversification can come from expanding the scope of services and providing services to additional customers .

Liquidity During 2018, we continued to maintain a strong balance sheet, ending the year with $85 .3 million of cash and $11 .0 million of debt . Due in part to our strong

9 financial position, North American Coal received a credit rating upgrade in 2018 from DBRS Limited, achieving an investment grade rating of BBB (low) with a stable trend . NACCO has paid dividends since 1956 and in 2018 paid a quarterly dividend of $0 .165 per share, which is equal to an annual rate of $0 .66 per share . In February 2018, NACCO’s Board of Directors approved a stock repurchase program that allows for the repurchase of up to $25 million of the Company’s outstanding Class A common stock . During 2018, we repurchased approximately 39,000 shares of our outstanding Class A common stock for $1 .3 million . Under previous repurchase programs, we repurchased approximately 1 .9 million shares of outstanding Class A common stock for $101 .7 million from 2011 through 2017 . Cash flow before financing activities was $36.2 million in 2018. We expect continued strong cash generation in 2019 and beyond. We will first focus on utilizing cash to support growth initiatives for both existing businesses and diversification opportunities that leverage core competencies, as well as to fund capital expenditures . Cash will also be used to maintain a conservative leverage ratio as high leverage introduces risks that are not consistent with our long-term strategy . We remain focused on increasing long-term shareholder value rather than on quarterly earnings or short-term stock price movement . We take a long-term view of our business, just as we believe in building long-term customer relationships . Our strong balance sheet, our stable cash flows from We take a long-term view our long-term management-fee contracts, and our of our business and remain long-term shareholder base leave us well situated to pursue growth opportunities through a disciplined focused on increasing long-term approach . While we will continue to pursue shareholder value opportunities to add new coal mining operations, we believe the scale of that growth could be limited . North American Mining will continue to serve as a platform for pursuing non-coal mining projects, whether in aggregates or other minerals . Mitigation Resources of North America allows for growth outside mining, while our North American Coal Royalty Company also has potential for future growth . As I look forward to 2019 and beyond, I am excited about the great relationships we have built with existing customers and the potential to grow the business by further leveraging our strengths . I would like to thank all of our customers and vendors, as well as NACCO’s long-term stockholders for their continued trust and support . I would also like to thank all of the hard-working and committed employees who support our customers and growth initiatives . I remain confident in our ability to create shareholder value for many years to come.

J.C. Butler, Jr. President and Chief Executive Officer, NACCO Industries, Inc. and The North American Coal Corporation

This annual report to stockholders contains forward-looking statements. For a discussion of the factors that may cause the Company’s actual results to differ from these forward-looking statements, refer to page 39 in the attached Form 10-K.

10 DIRECTORS AND OFFICERS

NACCO Industries, Inc. North American Coal Corporation

Directors: Officers: Officers: J.C. Butler, Jr. J.C. Butler, Jr. J. C. Butler, Jr. President and Chief Executive Officer, President and Chief Executive Officer President and Chief Executive Officer NACCO Industries, Inc. Elizabeth I. Loveman Carroll L. Dewing President and Chief Executive Officer, Vice President – Operations The North American Coal Corporation Vice President and Controller Thomas A. Maxwell LaVern K. Lund John S. Dalrymple Vice President – Business Development Former Governor of the State of Vice President – Financial Planning and Analysis and Treasurer North Dakota John D. Neumann John D. Neumann Vice President, General Counsel and John P. Jumper Secretary Retired Chief of Staff, Vice President, General Counsel and Secretary United States Air Force J. Patrick Sullivan, Jr. Vice President and Chief Financial Officer Dennis W. LaBarre Sarah E. Fry Associate General Counsel and Retired Partner, Harry B. Tipton, III Jones Day Assistant Secretary Vice President – Engineering

Timothy K. Light Miles B. Haberer Eric A. Dale Retired Senior Vice President, Associate General Counsel Treasurer and Senior Director, American Electric Power Service Jesse L. Adkins Financial Planning and Analysis Corporation Associate Counsel and Assistant Secretary John R. Pokorny Michael S. Miller Controller Retired Managing Director, The Vanguard Group Sarah E. Fry Associate General Counsel and Richard de J. Osborne Assistant Secretary Retired Chairman and Chief Executive Officer, Miles B. Haberer ASARCO Incorporated Associate General Counsel, Assistant Secretary and President, Alfred M. Rankin, Jr. North American Coal Royalty Company Non-Executive Chairman, NACCO Industries, Inc. Jesse L. Adkins Associate Counsel and Assistant Secretary Chairman, President and Chief Executive Officer, Andrew B. Hart Hyster-Yale Materials Handling, Inc. Assistant Controller Non-Executive Chairman, Hamilton Beach Holdings Company

Matthew M. Rankin President and Chief Executive Officer, Carlisle Residential Properties

Britton T. Taplin Self employed (personal investments) David B. H. Williams Partner, Williams, Bax & Saltzman, P.C. 3341_Cover.qxp_3341_Cov 3/8/17 3:54 PM Page 2 3341_Cover.qxp_3341_Cov 3/8/17 3:54 PM Page 2

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T arehe Company cwownswid.nearsc cthoi.scom. The Company considers this available free of charge through NACCO Industries’ Investor Relations Contact Re7t.u5r%n on Capital nearbcoal pyro pocewerssin gplants facilit iores. Stock Transfer Agent and RegNACCOiSsttorcakr TIndustries’ransfer Awebsitegent a (www.nacco.comndw Reebgsitset rtoa rbe )o orne of the primarInvestory swoeubrsc ieRelationstes otof be o Contactne of the primary sources of Coyote Creek Mining Company NoDak Energy Services LLC website (www.nacco.com) or by request to: Investor questions may be addressed to: RetEumrnp loony eCda:p(1)ital coal processing facilities. Stockholder Correspondence: by requestStockho to:lder Correspondencien:formation for investors and oInvestortheinrf oinrt mquestionseraetsiotend f o mayr in vbees addressedtors and to:other interested Investor Relations Investor Relations (1) Computershare InvestorCom Relationsputershare parties. Investorparti eRelationss. E5m.2p%lo yed: NACCO Industries, Inc. NACCO Industries, Inc . P.O. Box 30170 NACCOP.O. B Industries,ox 30170 Inc . NACCO Industries, Inc. 5.2% 5875 Landerbrook Drive, Suite 220 5875 Landerbrook Drive, Suite 220 College Station, TX 77842-31705875C oLanderbrookllege Station Drive,, TX 7 7Suite84S2u -2203b1s7id0iary Company WebsitesS5875ubs Landerbrookidiary Com Drive,pan Suitey W e220bsites Cleveland, Ohio 44124 Cleveland, Ohio 44124 Cleveland, Ohio 44124 The websites for NACCO’s subsCleveland,idTiahreie ws e aOhiobresi te 44124s for NACCO’s subsidiaries are Overnight Correspondence: Overn(440)ight C229-5130orrespondence: (440) 229-5130 (440) 229-5130 (440)as 229-5130follows: Bisti Fuels Company Caddo Creek Resource Company Computershare Computershare as follows: E-mail: ir@naccoind .com Hamilton Beach Brands (“HBB”) HBB: HBB: Stock Transfer Agent and Registrar E-mail: [email protected] 211 Quality Circle, Suite 210 Stock21 1Transfer Quality Agent Circle ,and Sui tRegistrare 21H0amilton Beach Brands–U.S.: Hamilton Beach Brands–U.S.: Hamilton Beach Brands (“HBB”) The Sabine MiningH RCompanyBevBe:nues: HHBBBB: is a leading company Stockholder Correspondence: NACCO Industries Website Headquarters: Richmond, Virginia College Station, TX 77845 StockholderCollege SCorrespondence:tation, TX 77845 www.hamiltonbeach.com NACCO ww Industriesw.hami lWebsitetonbeach.com Revenues: HBB is a leading company Computershare Additional information about NACCO Industries Headquarters: Richmond, Virginia $605.2 mMississippiillion Lignite Mining iCompanyn retail and commercial Computershare www.proctorsilex.com Additional www information.proctors iaboutlex.c oNACCOm Industries HBB is a leading designer, marketer and (800) 622-6757 (U.S., Canada and (P8u0e0r)t P.O.6o2 R2 Boxi-c6o7) 50500057 (U.S., Canada and Puerto Rico) may be found at www.nacco.com . The Company Op$e6r0a5t.i2n gm pilrloiofnit: isnm reatlla ailp apnldia ncocemsm, weirtchial P .O . Box 505000 www.commercial.hamiltonmaybe a be cwh wfound.cwom.c oatm www.nacco.commercial.hami. lTheton Companybeach.c om HBBdistributor is a leading of small designer, electric mark householdeter and and (781) 575-4735 (International) (781) Louisville,575-4735 KY (I n40233-5000ternational) considers this website to be one of the primary Op$e4ra3t.0in mg pillriofnit: ssmtroanll ga pshpaliaren cpeoss, iwtioitnhs in Louisville, KY 40233-5000 Hamilton Beach Brands–MexiconsiderscoH: amil thiston website Beach to B bera noneds –ofM theex primaryico: distributorspecialty house of smallwar eselectric appliances, household as well and as Liberty Fuels Company sources of information for investors and other Ne$t4 i3n.c0o mmiell:i on smtraonnyg osfh tahre cpaotseigtioorniess i n Legal COvernightounsel Correspondence: www.hamiltonbeach.com.msourcesx ww ofw information.hamilto nforb einvestorsach.co mand.m otherx specialtycommercial house productswares appliances,for restaurants, asCorporate well bars Office as Legal Counsel Overnight Correspondence: interested parties . ★Net income: many of the categories McDeComputersharermott Will & Emery LWLPeston Brands: interestedWesto nparties. Brands: commercial products for restaurants, bars $26.6 million in which it competes. McDermott Will & Emery LLP Computershare and hotels. 227 W462es tSouth Mon r4thoe St., St rSuiteeet 1600 www.westonproducts.com North ww wAmerican.weston pCoalrod Websiteucts.com Eq$u2it6y.:6 Demery mill Resourcesion Company in which it competes. 227 West Monroe Street 462 South 4th St ., Suite 1600 North American Coal Website and hotels. Louisville, KY 40202 Kitchen Collection: KAdditionalitchen C oinformationllection: about North American Equ$i4ty4:. 1 million HBB products are primarily Chicago, Illinois 60606 Louisville,Chicag KYo, I40202llinois 60606 Additional information about North American HBB has a broad portfolio of some of the www.kitchencollection.com Coal ww mayw.k beitc foundhenco atll ewww.nacoal.comction.com . $44.1 million (1) HBB products are primarily (800) 622-6757 (U.S., Canada and Puerto Rico) Coal may be found at www.nacoal.com. Return on EquitNorthy: American Miningdistributed through mass Independent Registered Pub(l800)iIcn de 622-6757penden t(U R .Se .,g Canadaistered and NPuo Puertobrtlhic Am Rico)erican Coal: North American Coal: HmBoBs th raesc ao gbnriozaed paonrdt froelsiop eocft seodm bera onfd tsh ien (1) (781) 575-4735 (International) Ret5u1r.n1 %on Equity: distributedmerchants, thrnationalough mass Accounting Firm (781)Acc o575-4735unting F(International)irm www.nacoal.com www.nacoal.com * mtheos smallt reco electricgnized aappliancend respe cindustryted bra,n includingds in CaminoR Reale5t 1uFuels.r1n% o n Capital merdepchants,artmen tnational stores, w hole- Ernst & Young LLP Ernst Legal& Yo uCounselng LLP theHamilton small electricBeach® ,appliance Proctor Sile industryx®, Hamilton, including Legal Counsel * Return on Cap(1)ital dseaplea drtismtreibnut tsotorsre, os,t hwehrole- 950 Main Ave., Suite 1800 950 MMcDermottain Ave., S Willuit e& 1Emery800 LLP Hamilton® Beach®, Proctor Silex®, ®Hamilton Employed: McDermott Will & Emery LLP Beach Commercial and Weston . HBB also (1) Cleve444land West, Oh Lakeio 4 4Street113 ® ® E3m0.p5l%oy ed: sraetaille d isalesstribu outletstors, ot hander Cleveland, Ohio 44113 444 West Lake Street Beachsells productsCommer undercial and licensed Weston brands. HBB such also Chicago, Illinois 60606 Surface Coal Mining Operations30.5% North American Miningrtetailhe In salesterne toutlets. and Chicago, Illinois 60606 sellsas W prolfoducts Gourmet under® and licensed CHI®** .brands such the Internet. as Wolf Gourmet® and CHI®**. Value-Added Services New Operation Since 2010

Kitchen Collection Kitchen Collection: Kitchen Collection: KHietacdhqeuna Crtoelrlse: cCthioillnicothe, Ohio KRietvcehneunContentse Cs:o llectio n: KKiitchenn CCoolllleecctitoionn is: Rev$e1n4u4e.4s :m illion Kai tlcehaednin Cg oslpleecctiiaolnty i s HKitcheneadqu Collectionarters: C hisi lali cnationalothe, O specialtyhio Discussion of Results ...... 1 Op$e1r4a4t.i4n gm pilrloiofnit: are letaaidleinr go fs kpietchiaeltny Kitchenretailer ofCollection kitchenwar is ae national in outlet specialty malls The FSC® Trademark identifies wood fibers coming from forests which have been certified Op$e0ra.4t iSelectedmngil lpioronf iFinancialt: andraen tOperatingadi lreerl aotfe kdi tDatapcrhoedn u. c .t s. . . . . 2 "         "                              "!    "! rthretaileroughout of kitchenwar the Unitede inStates. outlet malls $0.4 million and related products throughout the UnitedFor States. 2016 Large Surface Net losLetters: to Stockholdersin .o u. t.le .t .m .a .ll s. w. i.th . . . . 4 Environmental Benefits B E Ne$t 0lo.4s sm: illion i2n2 o3u sttleotr ems athllsr owuigthh out Coal Mines Awarded to Form 10-K ...... 11 EnvironmentalThis Annual B Report Benefits on Form 10­K is Environmental printed using post­consumer Benefits waste recycled paper and vegetable­based inks. $0.4 million 223 stores throughout E B E Equity: the United States at This Annual Report on Form 10­K is printed usingThis post­consumer Annual B Report By using waste on this Form recycled environmental 10­K ispaper printed andpaper, using vegetable­based NACCO post­consumer Industries, inks. waste Inc. saved recycled the paperfollowing and resources: vegetable­based inks. The Freedom Mine B Equ$i2ty1:. 4Directors million and OfficerstDh e .c Ue. mn.i t.be e.dr . S3 .t1a .,t 2e.0s . 1a 6.t .. . . 118 By using this environmental paper, NACCO B Industries, By using Inc. this saved environmental the following paper, resources: NACCO Industries, Inc. saved the following resources: The North American B B Re$t2u1rn.4 o mn iElliqounity:(1) December 31, 2016. pre­ Coal Corporation Corporate Information ...... Inside Back Cover s (1) pre­ Ret(1u.r6n% o)n Equity: 11 trees pre­ pre­ 31 lbs. water­ 4,667 gal. 516 lbs. 1,887 lbs. net 7,782,600 serveds for pre­ the borne waste wastewater solid waste greenhouse BTUs energy (1.6%) 29 trees pre­ 83 lbs. water­ 12,2601129s gal. trees pre­ 1,356 lbs.3183 lbs. water­ 2,671 lbs. net 12,2604,667 gal. gal.20,442,500 5161,356 lbs. lbs. 1,8872,671 lbs. net 7,782,60020,442,500 Return on Capital s future pre­ not created flow saved not generated gases prevented not consumed served for the borne waste wastewaterserved for pre­thesolid waste borne waste greenhouse wastewater BTUs energysolid waste greenhouse BTUs energy Return on Cap(1)ital s Employed: future not created flow saved future not generated not created gases prevented flow saved not consumed not generated gases prevented not consumed (1) Cover Photo: The Coteau Properties Company’s Freedom Mine uses a Bucyrus-ErieE(1m.2p%lo)y e 2570Wd: dragline to remove overburden before the coal below is T             !             !
         mined. The Freedom Mine is North American Coal’s largest mining operation. The Freedom Mine operates three 2570 draglines, and each can remove (1.2%) T      T  !                !      !  !                     !
  !           as much as 120 cubic yards of overburden in one bucket.                      (1) This Annual Report contains references to non-GAAP financial measures. Presentations of, and quantitative reconciliations to, the most directly comparable financial (1) Tmheisa Asunrneusa cl aRlecuploartte cdo anntadi npsr eresefenrteendc iens atocc noordna-GnAceA Pw fitinha Un.cSi.a gl emneearsaullrye asc. cPerpesteedn taactcioonusn otifn, ga npdri nqcuiapnletsit a(“tGivAeA rPe”c)o anpcpilieaatrio onns ptoa,g teh e1 4m. ost directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) appear on page 14. **Wolf Gourmet® is a registered trademark of the Sub-Zero Group, Inc. ****WCHolIf® Giso au rmegeist®teirse ad rtergaidsetemreadrk t roafd Feamroaurk Soyf sttheem Ssu, bIn-Zce. ro Group, Inc. **CHI® is a registered trademark of Farouk Systems, Inc. 5875 Landerbrook Drive, Suite 220 • Cleveland, Ohio 44124 An Equal Opportunity Employer