Hallador Energy pany(HNRG) - 2021 Q2 - Quarterly Report

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]