The Plano, Texas-based subsidiary of NACCO operates surface mines in North Dakota, Alabama, Mississippi, Texas and Louisiana. The company produces a variety of coals, including metallurgical, lignite and bituminous, primarily for power generation and steel production.

In the January-March period, NA Coal sold 7.8 million tons of coal, down from 7.9 million tons a year ago. Coal sales revenue increased, however, to $41.3 million from $39.9 million in the first quarter of 2014. Net income totaled $4.5 million, compared with $5.7 million a year earlier.

Alfred Rankin Jr., NACCO chairman, president and CEO, told analysts during an early May conference call that the company’s Centennial Natural Resources subsidiary in northern Alabama continues to have cash flow problems and “will not be cash flow positive in 2015.”

Centennial, formerly known as Reed Minerals, operates several steam coal surface mines that are feeling the heat of reduced demand from electric utilities and stricter environmental regulations.

As a result, Centennial is being managed in line with conservative volume estimates, the company said, with mine plans altered and less expensive processing methods identified and implemented.

During the second half of 2015, Centennial’s mining areas are expected to decrease from three to a single mine area.

Rankin said NA Coal’s higher revenue in the first quarter was due mainly to an increase in tons sold at its Mississippi Lignite subsidiary, as its customer’s power plant did not have a planned outage in early 2015 like it did in the first quarter of 2014.

However, the sales increase at Mississippi Lignite largely was offset by a decrease in tons sold at Centennial because of reduced coal requirements at a customer’s power plant, in part as a result of a significant outage during the first quarter.

Gross profit at Centennial, which the company defines as revenue less the cost of goods sold, including all mine operating costs, was a loss of $5.4 million in the first quarter. That compared with a loss of $2 million a year ago.