TERRE HAUTE, Ind., May 06, 2024 (GLOBE NEWSWIRE) -- Hallador Energy Company (NASDAQ – HNRG) reported a net loss of $1.7 million, $(0.05) basic earnings per share, operating cash flow of $16.4 million, and adjusted EBITDA of $6.8 million for the quarter ended March 31, 2024.

Brent Bilsland, President and Chief Executive Officer, stated, "Throughout the first quarter, we continued our progress on transitioning the focus of Hallador from a coal production company to an independent power producer. During the first three months of 2024, our Electric Operation's revenue exceeded that of our Coal Operation's revenue. Additionally, we were successful in adding approximately $138.0 million in forward energy and capacity sales, growing our Electric Operation's forward sales book to approximately $657.0 million and total contracted forward sales capacity, energy and coal through 2029 to $1.5 billion (on a segment basis). In support of our expectation that Hallador Power sales will continue to exceed our traditional Sunrise Coal subsidiary, we anticipate changing Hallador's SIC code to 4911 (electric services) from 1220 (bituminous coal producer) in the future."

Below are highlights for the first quarter of 2024:

  • The Company Generated $16.4 Million in Operating Cash Flow Which We Utilized to Pay Down Bank Debt by $14.5 million.
    • As of March 31, 2024, our bank debt was $77.0 million, bringing our liquidity to $39.5 million and our leverage ratio to 1.58X, within our covenant of 2.25X.
  • We Continued to Make Progress in our Transition from a Coal Production Company to an Independent Power Producer.
    • Our Electric Operation's revenue exceeded our Coal Operation's revenue for the first three months of 2024.
    • Since January 1, 2024, we secured approximately $138.0 million in new long-term capacity and energy contracts.
  • We Restructured Our Coal Division to Increase Margins and Adjust to Current Market Conditions.
    • As previously announced, the restructuring should reduce capital expenditures at the Oaktown Mining Complex by $10.0 million.
    • Maintains up to 4.5 million tons of annual production of our highest margin coal. Mining costs for the quarter were $53.38 per ton. However, at Oaktown, we saw mining costs in March decrease into the $30's on a per ton basis.
    • Reduced employee headcount by 110.
    • Idled production at our highest cost surface mines.
  • We Launched a Targeted Request for Proposals for Power Demand Supporting New Development at our Merom Power Plant. Proposals are Due in Mid-May.
    • Allows us to potentially capture additional margins above our traditional wholesale energy markets.
    • Allows us to market industrial users of power, such as data centers, AI providers and power dense manufacturers, to the Merom property.
    • We believe utilizing our power plant to help supply these large users of energy with reliable, resilient electricity, should allow us to operate more efficiently in a volatile power environment, generate increased margins and support the fragile power grid as it navigates the challenges of transition to new sources of energy in the coming decades.

Solid Forward Sales Position – Segment Basis, Before Intercompany Eliminations (unaudited):

  2024  2025  2026  2027  2028  2029  Total 
Power                            
Energy                            
Contracted MWh (in millions)  1.60   1.90   1.83   1.78   1.09   0.27   8.47 
Contracted price per MWh $37.02  $36.06  $55.37  $54.65  $52.98  $51.00     
Contracted revenue (in millions) $59.23  $68.51  $101.33  $97.28  $57.75  $13.77  $397.87 
% Energy Sold*  27%  32%  31%  30%  18%  5%    
                             
Capacity                            
Average monthly contracted capacity  818   801   744   623   454   100     
% Capacity Contracted**  106%  82%  77%  64%  47%  10%    
Average contracted capacity price per MWd $209  $198  $230  $226  $225  $230     
Contracted capacity revenue (in millions) $47.01  $57.89  $62.46  $51.39  $37.39  $3.47  $259.61 
                             
Total Energy & Capacity Revenue                            
Contracted Power Revenue (in millions) $106.24  $126.40  $163.79  $148.67  $95.14  $17.24  $657.48 
Contracted Power Revenue per MWh* $44.39  $47.76  $68.96  $68.00  $66.31  $56.62     
                             
2024 average cost per MWh was $31.88 for the three months ended March 31, 2024 ($30.41 assuming intercompany sales of coal were sold at cost)                            
                             
2024 Power Capex Budget (in millions) excluding ELG requirements $18.00                         
                             
Coal                            
Priced tons – 3rd party (in millions)  2.48   1.78   0.50   0.50   —   —   5.26 
Average price per ton – 3rd party $50.65  $50.04  $55.50  $55.50  $—  $—     
Priced tons (in millions) – Hallador Power  1.20   2.30   2.30   2.30   2.30   —   10.40 
Average price per ton – Hallador Power $51.00  $51.00  $51.00  $51.00  $51.00  $—     
Contracted coal revenue (in millions) $186.81  $206.37  $145.05  $145.05  $117.30  $—  $800.58 
% Priced  82%  91%  62%  62%  51%  0%    
                             
Committed & unpriced tons (in millions) – 3rd party  —   1.00   1.00   1.00   —   —   3.00 
Committed & unpriced tons (in millions) – Hallador Power  —   —   —   —   —   —   — 
Total contracted tons (in millions)  3.68   5.08   3.80   3.80   2.30   —   18.66 
                             
% Coal Sold*  82%  113%  84%  84%  51%  0%    
                             
Average cost per ton of coal was $53.38 for the three months ended March 31, 2024                            
                             
2024 Coal Capex Budget (in millions) $25.00                         
                             
TOTAL CONTRACTED REVENUE (IN MILLIONS) $293.05  $332.77  $308.84  $293.72  $212.44  $17.24  $1,458.06 
 
*Based on coal production of 4.5 million tons and 6.0 million MWh annually.
 
**Based on a MISO accreditation of 769 MW per day through 2024, up to 971 MW per day for 2025. Accreditations are adjusted annually based on 3-year rolling performance metrics.
 

The unaudited table below represents some of our critical metrics (in thousands, except for per-ton data):

  Three Months Ended 
  March 31, 
  2024  2023 
Net income (loss) $(1,696) $22,051 
Total Revenues $109,672  $188,334 
Tons Sold (after elimination)  892   1,693 
Average Price per Ton (after elimination) $55.64  $55.88 
Tons Sold (before elimination)  1,214   1,693 
Average Price per Ton (before elimination) $54.40  $55.88 
Bank Debt $77,000  $75,200 
Operating Cash Flow $16,369  $26,112 
Adjusted EBITDA* $6,823  $34,015 
_______________
* Non-GAAP financial measure, defined as operating cash flowsless effects of certain subsidiary and equity method investment activity, plus bankinterest, less effects of working capital period changes, plus other amortization
 

Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Our method of computing Adjusted EBITDA may not be the same method used to compute similar measures reported by other companies.

Management believes the non-GAAP financial measure, Adjusted EBITDA, is an important measure in analyzing our liquidity and is a key component of certain material covenants contained within our Credit Agreement, specifically a maximum leverage ratio and a debt service coverage ratio. Noncompliance with the leverage ratio or debt service coverage ratio covenants could result in our lenders requiring the Company to immediately repay all amounts borrowed. If we cannot satisfy these financial covenants, we would be prohibited under our Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted EBITDA is critical to the assessment of our liquidity. The required amount of Adjusted EBITDA is a variable based on our debt outstanding and/or required debt payments at the time of the quarterly calculation based on a rolling prior 12-month period.

Reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to cash provided by operating activities, the most comparable GAAP measure, is as follows (in thousands) for the quarters ended March 31, 2024 and 2023, respectively.

Reconciliation of GAAP "Cash provided by (used in) operating activities" to non-GAAP "Adjusted EBITDA" (in thousands; unaudited)

  Three Months Ended 
  March 31, 
  2024  2023 
Cash provided by (used in) operating activities $16,369  $26,112 
Current income tax expense  —   432 
Loss from Hourglass Sands  1   1 
Loss from Sunrise Indemnity  6   — 
Distribution from Sunrise Energy  —   (625)
Bank and convertible note interest expense  3,533   2,687 
Working capital period changes  (13,175)  4,812 
Other long-term asset and liability changes  (937)  (451)
Cash paid on asset retirement obligation reclamation  639   365 
ASC 606 Capacity Adjustment  (1,248)  — 
Other amortization  1,635   682 
Adjusted EBITDA  6,823   34,015 
         
Cash used in investing activities  (14,850)  (13,467)
         
Cash used in financing activities  (2,270)  (12,722)
         

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as "expects," "believes," "intends," "anticipates," "plans," "estimates," "guidance," "target," "potential," "possible," or "probable" or statements that certain actions, events or results "may," "will," "should," or "could" be taken, occur or be achieved. Forward-looking statements are based on current expectations and assumptions and analyses made by Hallador and its management in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in Hallador's annual report on Form 10-K for the year ended December 31, 2023, and other Securities and Exchange Commission filings. Hallador undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.

Conference Call

The call will be on Tuesday, May 7, 2024, at 2:00 pm Eastern time and will be webcast live on our website at www.halladorenergy.com under events and will be available for a limited time.

PARTICIPANT INFORMATION
United States (Local): +1 404 975 4839
United States (Toll-Free): +1 833 470 1428
Access Code: 749324

Hallador is headquartered in Terre Haute, Indiana, and through its wholly-owned subsidiaries, Sunrise Coal, LLC and Hallador Power, LLC, produces coal and electricity in the Illinois Basin for the electric power generation industry. To learn more about Hallador, visit our website at www.halladorenergy.com.

CONTACT:INVESTOR RELATIONS
PHONE:(303) 839-5504

 

Hallador Energy Company
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
(unaudited)
 
  March 31,  December 31, 
  2024  2023 
ASSETS        
Current assets:        
Cash and cash equivalents $1,635  $2,842 
Restricted cash  4,737   4,281 
Accounts receivable  14,228   19,937 
Inventory  29,688   23,075 
Parts and supplies  40,360   38,877 
Prepaid expenses  2,614   2,262 
Total current assets  93,262   91,274 
Property, plant and equipment:        
Land and mineral rights  115,486   115,486 
Buildings and equipment  537,921   537,131 
Mine development  161,669   158,642 
Finance lease right-of-use assets  16,178   12,346 
Total property, plant and equipment  831,254   823,605 
Less - accumulated depreciation, depletion and amortization  (348,783)  (334,971)
Total property, plant and equipment, net  482,471   488,634 
Investment in Sunrise Energy  2,562   2,811 
Other assets  7,125   7,061 
Total assets $585,420  $589,780 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Current portion of bank debt, net $24,438  $24,438 
Notes payable – related party  5,000   — 
Accounts payable and accrued liabilities  47,125   62,908 
Current portion of lease financing  4,958   3,933 
Deferred revenue  41,242   23,062 
Contract liability – power purchase agreement and capacity payment reduction  41,662   43,254 
Total current liabilities  164,425   157,595 
Long-term liabilities:        
Bank debt, net  49,343   63,453 
Convertible notes payable  10,000   10,000 
Convertible notes payable – related party  1,000   9,000 
Long-term lease financing  9,701   8,157 
Deferred revenue  5,434   — 
Deferred income taxes  8,625   9,235 
Asset retirement obligations  14,934   14,538 
Contract liability – power purchase agreement  36,229   47,425 
Other  1,871   1,789 
Total long-term liabilities  137,137   163,597 
Total liabilities  301,562   321,192 
Commitments and contingencies        
Stockholders' equity:        
Preferred stock, $.10 par value, 10,000 shares authorized; none issued  —   — 
Common stock, $.01 par value, 100,000 shares authorized; 36,534 and 34,052 issued and outstanding, as of March 31, 2024 and December 31, 2023, respectively  365   341 
Additional paid-in capital  144,490   127,548 
Retained earnings  139,003   140,699 
Total stockholders' equity  283,858   268,588 
Total liabilities and stockholders' equity $585,420  $589,780 


Hallador Energy Company
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended March 31, 
  2024  2023 
SALES AND OPERATING REVENUES:        
Electric sales $58,755  $92,392 
Coal sales  49,630   94,602 
Other revenues  1,287   1,340 
Total sales and operating revenues  109,672   188,334 
EXPENSES:        
Operating expenses  85,083   133,521 
Depreciation, depletion and amortization  15,443   17,976 
Asset retirement obligations accretion  399   451 
Exploration costs  70   206 
General and administrative  5,944   6,947 
Total operating expenses  106,939   159,101 
         
INCOME FROM OPERATIONS  2,733   29,233 
         
Interest expense (1)  (3,937)  (3,899)
Loss on extinguishment of debt  (853)  — 
Equity method investment (loss) income  (249)  69 
NET INCOME (LOSS) BEFORE INCOME TAXES  (2,306)  25,403 
         
INCOME TAX EXPENSE (BENEFIT):        
Current  —   432 
Deferred  (610)  2,920 
Total income tax expense (benefit)  (610)  3,352 
         
NET INCOME (LOSS) $(1,696) $22,051 
         
NET INCOME (LOSS) PER SHARE:        
Basic $(0.05) $0.67 
Diluted $(0.05) $0.61 
         
WEIGHTED AVERAGE SHARES OUTSTANDING        
Basic  34,816   32,983 
Diluted  34,816   36,740 
         
(1) Interest Expense:        
Interest on bank debt $2,805  $2,255 
Other interest  728   432 
Amortization:        
Amortization of debt issuance costs  404   1,212 
Total amortization  404   1,212 
Total interest expense $3,937  $3,899 


Hallador Energy Company
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
  Three Months Ended March 31, 
  2024  2023 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) $(1,696) $22,051 
Adjustments to reconcile net income to net cash provided by operating activities:        
Deferred income taxes  (610)  2,920 
Equity loss (income) – Sunrise Energy  249   (69)
Cash distribution – Sunrise Energy  —   625 
Depreciation, depletion, and amortization  15,443   17,976 
Loss on extinguishment of debt  853   — 
Loss (gain) on sale of assets  (24)  21 
Amortization of debt issuance costs  404   1,212 
Asset retirement obligations accretion  399   451 
Cash paid on asset retirement obligation reclamation  (639)  (365)
Stock-based compensation  666   1,220 
Amortization of contract asset and contract liabilities  (12,788)  (15,569)
Other  937   451 
Change in operating assets and liabilities:        
Accounts receivable  5,709   (3,269)
Inventory  (6,613)  (4,004)
Parts and supplies  (1,483)  (2,926)
Prepaid expenses  (37)  389 
Accounts payable and accrued liabilities  (8,015)  2,009 
Deferred revenue  23,614   2,989 
Net cash provided by operating activities  16,369   26,112 
CASH FLOWS FROM INVESTING ACTIVITIES:        
Capital expenditures  (14,874)  (13,482)
Proceeds from sale of equipment  24   15 
Net cash used in investing activities  (14,850)  (13,467)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Payments on bank debt  (26,500)  (27,013)
Payments on lease financing  (1,238)  — 
Borrowings of bank debt  12,000   17,000 
Proceeds from sale and leaseback arrangement  1,927   — 
Issuance of related party notes payable  5,000   — 
Debt issuance costs  (38)  (1,600)
ATM offering  6,580   — 
Taxes paid on vesting of RSUs  (1)  (1,109)
Net cash used in financing activities  (2,270)  (12,722)
Decrease in cash, cash equivalents, and restricted cash  (751)  (77)
Cash, cash equivalents, and restricted cash, beginning of period  7,123   6,426 
Cash, cash equivalents, and restricted cash, end of period $6,372  $6,349 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:        
Cash and cash equivalents $1,635  $2,441 
Restricted cash  4,737   3,908 
  $6,372  $6,349 
SUPPLEMENTAL CASH FLOW INFORMATION:        
Cash paid for interest $3,083  $3,116 
SUPPLEMENTAL NON-CASH FLOW INFORMATION:        
Change in capital expenditures included in accounts payable and prepaid expense $(5,290) $120 
Stock issued on redemption of convertible notes and interest $9,721  $— 

 

Hallador Energy Company
Condensed Consolidated Statements of Stockholders'Equity
(in thousands)
(unaudited)
 
          Additional      Total 
  Common Stock Issued  Paid-in  Retained  Stockholders' 
  Shares  Amount  Capital  Earnings  Equity 
Balance, December 31, 2023  34,052  $341  $127,548  $140,699  $268,588 
Stock-based compensation  —   —   666   —   666 
Stock issued on vesting of RSUs  321   3   (3)  —   — 
Taxes paid on vesting of RSUs  (132)  (1)  —   —   (1)
Stock issued on redemption of convertible notes  1,582   15   9,706   —   9,721 
Stock issued in ATM offering  711   7   6,573   —   6,580 
Net loss  —   —   —   (1,696)  (1,696)
Balance, March 31, 2024  36,534  $365  $144,490  $139,003  $283,858 


          Additional      Total 
  Common Stock Issued  Paid-in  Retained  Stockholders' 
  Shares  Amount  Capital  Earnings  Equity 
Balance, December 31, 2022  32,983  $330  $118,788  $95,906  $215,024 
Stock-based compensation  —   —   1,220   —   1,220 
Stock issued on vesting of RSUs  275   3   (3)  —   — 
Taxes paid on vesting of RSUs  (121)  (1)  (1,108)  —   (1,109)
Net income  —   —   —   22,051   22,051 
Balance, March 31, 2023  33,137  $332  $118,897  $117,957  $237,186 

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Source: Hallador Energy Company

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