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Hallador Energy pany(HNRG) - 2021 Q4 - Annual Report
2022-03-28 21:00
PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) Hallador Energy Company primarily engages in coal mining in the Illinois Basin through its subsidiary, Sunrise Coal, LLC, serving the electric power generation industry - The company's main business is coal mining in Indiana through its wholly-owned subsidiary, Sunrise Coal, LLC, primarily supplying the electric power generation industry[166](index=166&type=chunk) - The coal mining industry is heavily regulated in areas such as employee health and safety, environmental standards (air and water quality), and mine permitting, which significantly impacts operating costs[14](index=14&type=chunk)[17](index=17&type=chunk) - As of December 31, 2021, the company employed **805 full-time employees** and temporary miners, with the entire workforce being union-free[81](index=81&type=chunk) - The company competes with major producers like Peabody Energy Corporation and Alliance Resource Partners, primarily within the Illinois Basin (ILB)[76](index=76&type=chunk)[80](index=80&type=chunk) [Regulation and Laws](index=4&type=section&id=Regulation%20and%20Laws) The company is subject to extensive and costly federal, state, and local regulations covering environmental protection, mine safety, and employee health - The company is subject to extensive regulations from authorities like the Mine Safety and Health Administration (MSHA) and the Environmental Protection Agency (EPA), which impose significant compliance costs[14](index=14&type=chunk)[15](index=15&type=chunk) - The Surface Mining Control and Reclamation Act (SMCRA) requires the company to meet comprehensive environmental protection and reclamation standards, including restoring land to its approximate original contours[38](index=38&type=chunk)[39](index=39&type=chunk) - Regulations on air emissions, such as the Clean Air Act (CAA), and greenhouse gas (GHG) emissions directly and indirectly impact operations by regulating coal-fired power plants, potentially reducing demand for coal[45](index=45&type=chunk)[48](index=48&type=chunk) - The company must secure surety bonds for reclamation obligations, which have become increasingly difficult and costly to obtain, posing a potential risk to operations[44](index=44&type=chunk) [Human Capital](index=15&type=section&id=Human%20Capital) The company maintains a union-free workforce, emphasizing a strong safety culture and comprehensive employee benefits - As of December 31, 2021, Hallador Energy and its subsidiaries employed **805 full-time employees** and temporary miners, with **760 directly involved** in coal mining or washing processes[81](index=81&type=chunk) - The company maintains a robust safety program, with standards exceeding mandated guidelines, and operates its own private mine rescue team, achieving safety metrics at or below national averages in 2021[82](index=82&type=chunk) - To mitigate the spread of COVID-19, the company has implemented policies aligned with CDC guidelines and offers cash incentives to employees who provide proof of vaccination[85](index=85&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business and the broader coal industry, including market volatility, regulatory burdens, and competition [Risks Related to our Business](index=16&type=section&id=Risks%20Related%20to%20our%20Business) Business-specific risks include pandemic impacts, customer concentration, restrictive covenants, and challenges in accessing capital markets due to ESG focus - The COVID-19 pandemic has created significant volatility and uncertainty, impacting global economic activity, coal demand, and operational continuity[87](index=87&type=chunk) - In 2021, **95% of revenue** was derived from five customers, making the loss of any significant customer a material risk to the business[94](index=94&type=chunk) - The company's credit agreement contains restrictive covenants, including a Minimum Debt Service Coverage Ratio and a Maximum Leverage Ratio, which if breached, could lead to default[102](index=102&type=chunk) - Increased investor and lender focus on Environmental, Social, and Governance (ESG) matters may negatively impact the company's reputation, stock price, and access to capital[106](index=106&type=chunk)[107](index=107&type=chunk) [Risks Related to our Industry](index=20&type=section&id=Risks%20Related%20to%20our%20Industry) Industry-wide risks include coal price volatility, intense competition from alternative fuels, and extensive environmental regulations that could reduce long-term coal demand - The company's results are highly dependent on coal prices, which are influenced by factors beyond its control, including supply and demand, weather, and governmental regulations[110](index=110&type=chunk) - Competition from other fuels, particularly natural gas, has the potential to displace a significant amount of coal-fired electric power generation[115](index=115&type=chunk) - Extensive and evolving environmental laws, especially those targeting greenhouse gas emissions and climate change, could increase operating costs and reduce demand for coal[118](index=118&type=chunk)[119](index=119&type=chunk) - Obtaining and renewing necessary governmental permits for mining operations is a complex and lengthy process that can be subject to delays and public challenges, potentially reducing production[133](index=133&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) This section refers to Item 7, Management's Discussion and Analysis, for a detailed discussion of the company's mining properties - A detailed discussion of the company's properties is provided in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations"[155](index=155&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company emphasizes that safety is a core value and directs stakeholders to Exhibit 95 of the Form 10-K for a detailed listing of its mine safety violations - A comprehensive list of the company's mine safety violations is available in Exhibit 95 to this Form 10-K[157](index=157&type=chunk) PART II [Market for Registrant's Common Equity and Related Matters](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Hallador Energy's common stock is traded on the NASDAQ Capital Market under the symbol HNRG, with officers, directors, and their affiliates holding 30.7% of the outstanding shares as of March 23, 2022 - The company's common stock trades on the NASDAQ Capital Market under the symbol **HNRG**[159](index=159&type=chunk) - As of March 23, 2022, there were **30,785,067 shares outstanding**, with officers, directors, and their affiliates holding **30.7%**[6](index=6&type=chunk)[159](index=159&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=29&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, Hallador Energy reported a net loss of **$3.8 million**, an improvement from 2020, with increased coal sales volume and a strategic acquisition of the Merom Generating Station expected to significantly boost future earnings - The company announced the acquisition of Hoosier Energy's **1-Gigawatt Merom Generating Station**, a transaction expected to close in mid-July 2022 and significantly increase future earnings[167](index=167&type=chunk)[171](index=171&type=chunk) - For 2021, the company reported a net loss of **$3.8 million**, an improvement from the **$6.2 million net loss** in 2020[214](index=214&type=chunk)[249](index=249&type=chunk) - Operating cash flow was **$48.0 million** in 2021, which was used to pay down bank debt by **$26.0 million**, and the company's **$10 million PPP loan** was fully forgiven[206](index=206&type=chunk)[214](index=214&type=chunk) - The company is increasing production to **7 million tons annually** starting in 2022 to meet rising demand, driven by favorable market conditions including high natural gas prices and strong export markets[202](index=202&type=chunk)[225](index=225&type=chunk) [Mining Properties](index=30&type=section&id=Mining%20Properties) The Oaktown Mining Complex, consisting of two active underground mines in Indiana and Illinois, represents the company's individually material property Summary of Mineral Reserves as of December 31, 2021 | Mine/Complex | Proven (million tons) | Probable (million tons) | Total (million tons) | | :--- | :--- | :--- | :--- | | **Oaktown Mining Complex** | | | | | Oaktown Fuels No. 1 Mine | 40.1 | 0.4 | 40.5 | | Oaktown Fuels No. 2 Mine | 29.7 | 1.2 | 30.9 | | **Total** | **69.8** | **1.6** | **71.4** | - The Oaktown Mining Complex is the company's individually material property, consisting of two active underground mines, Oaktown Fuels No. 1 and No. 2, located in Indiana and Illinois[175](index=175&type=chunk)[179](index=179&type=chunk) Oaktown Mining Complex Historical Production (Million Tons) | Mine | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Oaktown Fuels No. 1 Mine | 3.5 | 3.4 | 4.2 | | Oaktown Fuels No. 2 Mine | 2.1 | 1.8 | 2.3 | | **Total** | **5.6** | **5.2** | **6.5** | [Our Coal Contracts](index=34&type=section&id=Our%20Coal%20Contracts) In 2021, **95% of revenue** came from five key customers, with future contracted volumes extending through 2027 and the Merom Power Plant acquisition expected to significantly increase internal consumption - In 2021, **95% of revenue** came from five customers operating 10 power plants, including Vectren, Orlando Utility Commission, Alcoa, Indianapolis Power & Light, and Duke Energy[198](index=198&type=chunk)[199](index=199&type=chunk) Contracted Coal Sales Volume and Pricing | Year | Contracted Tons (millions) | Estimated Price per Ton | | :--- | :--- | :--- | | 2022 | 6.8 | $39.81 | | 2023 | 5.3 | $43.10 | | 2024 - 2027 | 6.3 | Unpriced/Partially Priced | | **Total** | **18.4** | | - Following the acquisition of the Merom Power Plant, Hallador Power Company is expected to consume **45% of Sunrise Coal's production** by 2024[202](index=202&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company generated **$48.0 million** in operating cash flow in 2021, with a 2022 capital expenditure budget of **$25 million**, and amended its bank agreement in March 2022 to provide covenant relief Cash Flow and Capital Expenditure Summary | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Cash Provided by Operations | $48.0 million | $52.6 million | | 2022 Capital Expenditure Budget | $25 million | N/A | - The 2022 capital expenditure budget is **$25 million**, with **$15 million** allocated for maintenance capex, and scheduled long-term debt payments for 2022 total **$25.7 million**[207](index=207&type=chunk) - The company amended its bank agreement in March 2022 to provide covenant relief after experiencing lower-than-expected EBITDA in Q4 2021 due to elevated costs[208](index=208&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) In 2021, coal sales volume increased to **6.17 million tons**, but average price per ton decreased, and operating costs rose due to mining challenges and workforce expansion Annual Operational Performance Comparison | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Tons Sold (millions) | 6.17 | 5.97 | | Average Price/Ton | $39.51 | $40.56 | | Average Cost/Ton | $32.16 | $31.07 | | Margin/Ton | $7.35 | $9.49 | - Operating costs per ton increased in 2021 to **$32.16** from **$31.07** in 2020, primarily due to mining challenges at the Ace in the Hole Mine and costs associated with hiring and training a larger workforce at Oaktown[220](index=220&type=chunk) - General and administrative expenses rose by **$3.2 million** in 2021, driven by legal and financing costs related to the Merom Power Plant acquisition[222](index=222&type=chunk) - The workforce increased to **797 employees and contractors** at year-end 2021 from **682** at year-end 2020 to support a production increase to over **7 million tons annually**[223](index=223&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements for 2021 and 2020, audited by Plante & Moran, PLLC, show a net loss of **$3.8 million** in 2021, with decreases in total assets and liabilities, and initial going concern doubt alleviated by a March 2022 credit agreement amendment Key Financial Data (in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenue | $247,666 | $244,241 | | Income (Loss) from Operations | $(6,044) | $3,098 | | Net Loss | $(3,754) | $(6,220) | | Net Loss Per Share | $(0.12) | $(0.20) | | Total Assets | $353,980 | $384,130 | | Total Liabilities | $167,745 | $194,870 | | Total Stockholders' Equity | $182,235 | $185,260 | [Notes to Consolidated Financial Statements](index=50&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail the alleviation of going concern doubt, asset impairments, bank debt compliance, PPP loan forgiveness, and remaining performance obligations - Management identified substantial doubt about the company's ability to continue as a going concern due to likely financial covenant violations, but this doubt was alleviated by a credit agreement amendment executed in March 2022 (Note 1)[261](index=261&type=chunk)[264](index=264&type=chunk) - The company recorded a **$1.6 million impairment** on assets at the idled Prosperity Mine in 2021 and a **$1.8 million impairment** on its Hourglass Sands frac sand operation in 2020 (Note 2)[289](index=289&type=chunk)[290](index=290&type=chunk) - As of December 31, 2021, total bank debt was **$111.7 million**, and the company was in compliance with its leverage ratio (**2.34** vs. **3.00** limit) and debt service coverage ratio (**1.11** vs. **1.05** limit) covenants (Note 5)[296](index=296&type=chunk)[300](index=300&type=chunk)[302](index=302&type=chunk) - The company's **$10 million Paycheck Protection Program (PPP) loan** was fully forgiven by the SBA in July 2021, resulting in a **$10 million gain** on extinguishment of debt (Note 5)[307](index=307&type=chunk) - As of December 31, 2021, the company had remaining performance obligations of approximately **$588 million** for fixed-price contracts and **$166 million** for contracts with price reopeners (Note 7)[318](index=318&type=chunk)[319](index=319&type=chunk) [Controls and Procedures](index=64&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and its internal control over financial reporting (ICFR) were effective as of December 31, 2021, with no significant changes in ICFR during Q4 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[359](index=359&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting (ICFR) was effective as of December 31, 2021[361](index=361&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of the financial statements included in Item 8 and lists all exhibits filed with the Form 10-K, including credit agreements, compensation plans, certifications, and mine safety disclosures - This section contains an index of all exhibits filed with the annual report, including key agreements, certifications, and other required disclosures[371](index=371&type=chunk)[372](index=372&type=chunk)
Hallador Energy pany(HNRG) - 2021 Q3 - Earnings Call Transcript
2021-11-09 22:12
Financial Data and Key Metrics Changes - Hallador Energy Company reported a net income of $8 million for Q3 2021, translating to $0.26 per share, and a year-to-date net income of $4 million or $0.13 per share [8] - Free cash flow for Q3 was $14.6 million, with a total of $26.4 million for the nine months [8] - Adjusted EBITDA was $20.5 million for Q3 and $43.2 million for the nine months [8] - Bank debt was reduced by $15.2 million in Q3, totaling $115 million in bank debt and $110 million in net debt as of September 30 [9] Business Line Data and Key Metrics Changes - Total shipments for the year are expected to reach approximately 6.2 million tons, with Q3 revenue increasing by 22% and shipments up by 29% year-over-year [12] - Production costs in Q3 were elevated at $33.15 per ton, which is $2.95 higher than the previous quarter and $3.85 higher than Q3 2020 [14] - The Ace In The Hole Mine is nearing the end of its reserve life, contributing to elevated costs, but a new pit is expected to open in 2022 [16] Market Data and Key Metrics Changes - Natural gas prices have significantly increased, with NYMEX gas prices rising from an average of $3 in April 2021 to $4.43 in November 2021 [18] - Coal export prices also saw a rise, with API4 prices increasing from $86 per ton in Q3 2021 to $108 per ton in October [19] - The market for coal is expected to remain strong, with Hallador anticipating higher prices in Q4 2021 and increased shipments in 2022 [20] Company Strategy and Development Direction - Hallador plans to ramp up production to 7 million tons for 2022 and 2023, focusing on hiring additional employees to support this growth [12][13] - The company aims to be debt-free in the near future, emphasizing the importance of reducing debt to capitalize on future opportunities [61] - Hallador is also exploring investments in renewable energy, with plans to develop solar and battery projects alongside its coal operations [62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong finish for 2021, with expectations of improved margins and higher shipments in 2022 and 2023 [20][22] - The company believes that coal will continue to play a significant role in energy generation, especially in light of potential capacity shortages in the electricity grid [23][24] - Management noted that the current market conditions are the strongest seen in years, with limited new supply expected to come online [50][81] Other Important Information - Hallador added 94 employees in October and plans to hire another 110 in the coming months to support production increases [13] - The company is facing supply chain disruptions that have led to increased costs, but these are expected to normalize in 2022 [15] Q&A Session Summary Question: Can you talk about today's market price and customer contract extensions? - Management indicated that market prices are significantly higher for new business and expressed confidence in securing contracts despite ongoing negotiations [27][28] Question: What led to the pricing dynamics for Q1 2022? - Management explained that a higher concentration of higher prices is expected in Q4 due to shipping schedules, with a mix of carryover tons affecting Q1 pricing [41] Question: How many tons are left to sell for 2022? - Management stated that they are targeting 7 million tons for 2022, with ongoing negotiations affecting the final sales volume [42][44] Question: What is the outlook for pricing in 2023? - Management expects significant price and margin improvements in 2023, with a sales book likely to reach 7 million tons [78] Question: Is there any visibility into competitors' pricing? - Management confirmed they do not have visibility into competitors' negotiations or pricing, emphasizing their focus on their own contracts [90] Question: Can you clarify the renewable business acquisition? - Management explained that the rights to plug into the grid were obtained through a joint venture, not a legacy asset, and no upfront payment was made [93][96]
Hallador Energy pany(HNRG) - 2021 Q3 - Quarterly Report
2021-11-08 21:21
Financial Performance - Q3 2021 net income was $8.0 million, with adjusted EBITDA of $20.5 million, reflecting strong operational performance [80] - Operating cash flow for Q3 was $24.1 million, with bank debt reduced by $15.2 million, resulting in a leverage ratio of 2.29X [81] - Cash provided by operations for the nine months ended September 30, 2021, was $37.0 million, up from $34.1 million in the same period of 2020 [93] - The company's interest expense decreased by approximately $4.7 million in the first nine months of 2021 compared to 2020, primarily due to a reduction in non-cash expenses from interest rate swap agreements and a declining bank debt balance [99] - The effective tax rate for the nine months ended September 30, 2021, is estimated at ~31%, down from ~69% in 2020, influenced by statutory depletion differences [104] - The company reported a basic and diluted earnings per share of $0.26 for the third quarter of 2021, compared to a loss of $(0.15) in the fourth quarter of 2020 [103] Sales and Production - During Q3 2021, the company shipped 2.04 million tons, with an average sales price of $38.71 per ton, the lowest of the year [81] - The company expects to ship 1.6 million tons in Q4 2021 at an average price of $41.40 per ton, projecting a total of 6.2 million tons for the full year [81] - In the first nine months of 2021, the company sold 4,619,000 tons at an average price of $38.86 per ton, compared to 4,355,000 tons at $40.68 per ton in the same period of 2020, reflecting a decrease in average price due to contract mix changes [96] - For the third quarter of 2021, the company sold 2,042,000 tons at an average price of $38.71 per ton, down from 1,585,000 tons at $40.85 per ton in the third quarter of 2020, attributed to contract mix changes [101] Operating Costs - Production costs in Q3 2021 were $33.15 per ton, a $2.95 increase from Q2 2021, attributed to longer travel times and supply chain disruptions [81] - Operating costs for all coal mines averaged $31.17 per ton for the nine months ended September 30, 2021, up from $30.03 per ton in 2020, exceeding prior guidance of $29-$30 per ton [97] - The average cost per ton for Oaktown was $29.17 for the first nine months of 2021, compared to $28.59 in 2020, indicating rising operational costs [97] - The company expects operating costs associated with the idled Prosperity mine to be $0.3 million for the remainder of 2021, with prior costs of $0.8 million during the nine months ended September 30, 2021 [97] Market Outlook - The company anticipates higher average sales prices for 2022 compared to 2021, supported by strong coal demand [81] - The coal market shows signs of improvement, with significant increases in gas prices and coal export prices [88] Employee and Administrative Costs - General and administrative expenses increased by $0.5 million in the first nine months of 2021 compared to 2020, mainly due to additional legal fees for development projects, with an expected G&A of approximately $3.2 million for the remainder of 2021 [98] - The total number of employees and contractors at Sunrise Coal increased to 727 as of September 30, 2021, from 658 in the same period of 2020 [100] Coal Operating Margins - Operating margins from coal decreased by $10.8 million in the first nine months of 2021 compared to the same period in 2020, with margins at $7.70 per ton [93] Renewable Energy Development - The company plans to develop up to 1000 MW of renewable power, with 200 MW from solar and battery storage expected by 2025 [89]
Hallador Energy pany(HNRG) - 2021 Q2 - Earnings Call Transcript
2021-08-10 21:04
Hallador Energy Company (NASDAQ:HNRG) Q2 2021 Results Conference Call August 10, 2021 2:00 PM ET Company Participants Becky Palumbo - Director, Investor Relations Larry Martin - Chief Financial Officer Brent Bilsland - President and Chief Executive Officer Conference Call Participants Matthew Key - B. Riley Securities Operator Good day, and welcome to the Hallador Energy Company Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentati ...
Hallador Energy pany(HNRG) - 2021 Q2 - Quarterly Report
2021-08-09 20:47
Financial Performance - Q2 2021 net loss was $3.0 million, with adjusted EBITDA of $11.3 million [79] - Operating cash flow for Q2 was $9.9 million, with bank debt reduced by $5.9 million, resulting in a leverage ratio of 2.76X [80] - Cash provided by operations was $12.9 million for the six months ended June 30, 2021, down from $17.2 million in 2020 [91] - Operating margins from coal decreased by $3.9 million in the first six months of 2021 compared to the same period in 2020, with margins at $9.39 per ton [91] - Interest expense decreased by approximately $4.5 million in the first half of 2021, attributed to a reduction in non-cash expenses from interest rate swaps and a declining bank debt balance [98] - The effective tax rate for the first half of 2021 was estimated at ~25%, down from ~45% in the same period of 2020, due to the use of a discrete period method for tax calculations [104] Production and Shipments - Shipments improved to a 5.6 million ton annualized pace in Q2 2021, with expectations of ~7.0 million tons in the last half of 2021 [80] - In the first six months of 2021, the company sold 2,577,000 tons at an average price of $38.99 per ton, compared to 2,770,000 tons at $40.58 per ton in the same period of 2020, reflecting a decrease in average price per ton due to contract mix changes [94] - In Q2 2021, the company sold 1,403,000 tons at an average price of $38.92 per ton, compared to 1,244,000 tons at $40.57 per ton in Q2 2020, indicating a continued decrease in average price per ton [100] - Contracted tons for Q3-Q4 2021 are 3.6 million at $39.00 per ton, and for 2022, 5.1 million at $39.25 per ton [83] Costs and Expenditures - Q2 production costs were $30.20 per ton, a $1.32 increase from Q1 2021 and a $1.26 increase from Q2 2020 [80] - Operating costs for all coal mines averaged $29.60 per ton in the first half of 2021, down from $30.45 per ton in 2020, and are expected to remain within the guidance of $29-$30 per ton for the remainder of 2021 [95] - Operating costs for Q2 2021 averaged $30.20 per ton, slightly above the prior guidance of $29-$30 per ton, but expected to fall below $30 for the remainder of the year [101] - Capital expenditures for the first six months of 2021 totaled $10.8 million, with $6.0 million allocated for maintenance capex [92] Revenue and Other Income - Other revenues increased by $0.9 million in the first six months of 2021, primarily due to storage income and scrap sales [96] - Coal export prices have increased, with API 4 (Asia) prices rising to ~$130/tonne by August 2, 2021 [85] Workforce and Employment - The company employed 716 individuals and contractors as of June 30, 2021, an increase from 677 in the same period of 2020 [99] Strategic Initiatives - The company plans to develop up to 1000 MW of renewable power in partnership with Hoosier Energy, with 200 MW expected from solar and battery storage by 2025 [87] Accounting Estimates - The company identified critical accounting estimates related to coal reserves, interest rate swaps, and inventory valuation, which could significantly impact financial results if materially misstated [107]
Hallador Energy pany(HNRG) - 2021 Q1 - Earnings Call Transcript
2021-05-09 18:39
Hallador Energy Company (NASDAQ:HNRG) Q1 2021 Earnings Conference Call May 4, 2021 2:00 PM ET Company Participants Becky Palumbo - Director, Investor Relations Larry Martin - Chief Financial Officer Brent Bilsland - President and Chief Executive Officer Conference Call Participants Lucas Pipes - B. Riley Securities Rob Lietzow - Lakeway Capital Operator Good day and welcome to the Hallador Energy Company First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator I ...
Hallador Energy pany(HNRG) - 2021 Q1 - Quarterly Report
2021-05-03 20:24
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number:001-34743 "COAL KEEPS YOUR LIGHTS ON" "COAL KEEPS YOUR LIGHTS ON" HALLADOR ENERGY COMPANY (www.halladorenergy.com) Colorado (State of incorporation) 84-1014610 ...
Hallador Energy pany(HNRG) - 2020 Q4 - Earnings Call Transcript
2021-03-10 00:14
Financial Data and Key Metrics Changes - Hallador Energy incurred a net loss of $4.7 million for Q4 2020, equating to a loss of $0.15 per share, and a total annual loss of $6.2 million or $0.20 per share [6] - Free cash flow for Q4 was $2.9 million, while for the year it was $27.6 million [6] - Adjusted EBITDA was $9.4 million for the quarter and $53.5 million for the year [6] - Bank debt decreased by $9.2 million in Q4 and $42.4 million for the year, with total bank debt at $137.7 million as of December 31, 2020 [6] Business Line Data and Key Metrics Changes - Shipments for the quarter were 1.6 million tons, with coal inventories reduced year-over-year by $2.8 million [10] - Cost per ton increased slightly to $31.07 in 2020 from $30.69 in 2019, while Oaktown costs rose to $29.84 from $28.35 [10] Market Data and Key Metrics Changes - The forward strip on natural gas prices increased by 44% year-over-year [12] - Illinois Basin utility inventory levels returned to 48 days of full load burn, down from the low 60s in May 2020 [12] Company Strategy and Development Direction - Hallador is focused on debt reduction, having paid down $42.4 million of bank debt, representing 24% of outstanding debt [9] - The company anticipates a return to lower operational costs in 2021, projecting costs to return to the lower end of $29 to $30 per ton [11] - The management believes coal will continue to play an important role in supporting the grid for many decades, despite the transition to carbon-free electricity [13][22] Management's Comments on Operating Environment and Future Outlook - Management noted that the global pandemic caused significant disruptions in energy markets, but Hallador demonstrated resilience with strong operating cash flow of $52.6 million [9] - The company expects coal sales to be stronger in 2022 compared to 2021, driven by customer demand and mine closures [17] - Management highlighted the importance of maintaining baseload power plants, such as coal plants, to ensure reliable electricity supply [13][22] Other Important Information - Hallador received a $10 million loan under the Paycheck Protection Program, which is expected to be forgiven [9] - The company has built a rail facility in Princeton, Indiana, designed to store coal for customers if needed [43] Q&A Session Summary Question: What is the outlook for coal burn this year and next year? - Management indicated that coal inventory levels have been declining and the market has improved, expecting stronger sales in 2022 compared to 2021 [17] Question: Is there an increased appetite for M&A in the current environment? - Management believes continued M&A efforts will occur as the market gets smaller, with a focus on consolidating high-cost production to low-cost production [18] Question: What is the analysis on natural gas prices and their impact on coal competitiveness? - Management noted that natural gas prices have risen significantly, which will likely lead to increased coal burn as coal plants become more competitive [21] Question: Can the company flex production up, and what is the marginal cost? - The company can flex production up to over 8 million tons, with incremental costs expected to be negative as costs would decrease with higher production [24] Question: Why are contracted prices lower this year despite rising natural gas prices? - Contracts for 2021 were entered into before the increase in natural gas prices, which is why they are lower [42] Question: Any updates on the storage facility in Indiana? - The facility is designed and permitted for coal storage but currently does not have any coal stored for customers [43]
Hallador Energy pany(HNRG) - 2020 Q4 - Annual Report
2021-03-09 02:03
Regulatory Environment - The coal mining industry faces extensive regulations that increase operational costs and affect profitability, with potential for significant monetary penalties and liabilities [15]. - Compliance with federal and state laws has substantially increased the cost of coal mining for domestic producers, although specific compliance costs have not been quantified [16]. - The permitting process for mining operations can extend over several years, potentially delaying or preventing the commencement of operations due to regulatory challenges [19]. - The Federal Mine Safety and Health Act imposes extensive safety and health standards, significantly affecting operating costs due to compliance requirements [21]. - Recent regulations have lowered the allowable respirable coal mine dust exposure limits, increasing operational costs related to monitoring and compliance [26]. - Federal and state laws require bonds to secure obligations for land reclamation used in mining, with increasing difficulty in securing new surety bonds without posting collateral [40]. - The Clean Air Act (CAA) imposes permitting requirements and emissions control measures on coal mining operations, potentially increasing operational costs and affecting the attractiveness of fossil fuels [41]. - Environmental advocacy groups are challenging permits for coal activities, claiming inadequate environmental analyses under the National Environmental Policy Act (NEPA) [50]. - The EPA is required to periodically re-evaluate National Ambient Air Quality Standards (NAAQS), which may impose additional emissions control requirements on coal-fired power plants [44]. - The EPA's veto power over Section 404 permits could create operational uncertainties and additional costs for coal mining operations [57]. Financial Impacts - The Black Lung Benefits Act imposes a tax of $1.10 per ton for underground-mined coal and $0.55 per ton for surface-mined coal, impacting overall operational costs [31]. - The company has accrued estimated costs for asset retirement obligations and mine closing, which could adversely affect future operating results if these accruals are insufficient [17]. - The Abandoned Mine Lands Program imposes a reclamation fee of $0.28 per ton for surface-mined coal and $0.12 per ton for underground-mined coal, which is scheduled to be in effect until September 30, 2021 [37]. - The EPA's Acid Rain Program regulates sulfur dioxide emissions from electric generating facilities, requiring affected facilities to purchase or trade emissions allowances [42]. - The Cross-State Air Pollution Rule (CSAPR) requires 28 states to reduce power plant emissions, but its relevance is decreasing due to ongoing coal plant retirements [42]. - The Mercury and Air Toxic Standards (MATS) regulate emissions of mercury and other pollutants from coal-fired power plants, leading to capital investments and potential premature retirements of older units [42]. - Future regulation of greenhouse gas (GHG) emissions could arise from new domestic legislation or EPA regulations, impacting demand and prices for fossil fuels [43]. - Future GHG emissions control initiatives may increase costs for fossil fuel production, potentially leading to customer shifts to alternative fuels [54]. - New TMDL regulations may require more costly water treatment, adversely affecting coal production [58]. Operational Aspects - Approximately 96% of the company's production capacity involves underground room and pillar mining, while 4% involves surface mining, adhering to the Surface Mining Control and Reclamation Act standards [35]. - The company has never had a permit suspended or revoked due to violations, and penalties assessed for violations have not been material [20]. - The company has obtained all necessary permits under CWA Section 404, but future mitigation requirements may increase costs and uncertainty [55]. - The Illinois Basin (ILB) has over 50,000 square miles of coal mining operations, centrally located near major coal-consuming regions [68]. Workforce and Safety - Hallador Energy employs 690 full-time employees, with a focus on competitive wages and comprehensive health benefits [73]. - The company maintains a robust safety program, with performance metrics at or below national averages in safety categories [74]. - Hallador Energy invests in employee education and training, covering all continuing education costs and offering tuition reimbursement [76]. - The company has no significant patents or trademarks, focusing on coal mining operations [78].
Hallador Energy pany(HNRG) - 2020 Q3 - Earnings Call Transcript
2020-11-04 04:38
Hallador Energy Company (NASDAQ:HNRG) Q3 2020 Results Earnings Conference Call November 3, 2020 2:00 PM ET Company Participants Becky Palumbo - Director, Investor Relations Brent Bilsland - President and CEO Larry Martin - Chief Financial Officer Conference Call Participants Lucas Pipes - B. Riley Securities Mark Kaufman - MLK Investment Management Eric Fredback - Pacific Value Operator Good day. And welcome to Hallador Energy Third Quarter 2020 Earnings Conference Call. All participants will be in listen-o ...