Industry Overview - Utility service providers are benefiting from increased electricity tariffs, accretive acquisitions, cost reductions, and energy-efficiency initiatives [1] - The power industry is also seeing improvements in electric infrastructure resilience against adverse weather and a transition to renewable energy sources [1] Capital Expenditures - Maintenance and improvement of utilities' infrastructure rely heavily on capital expenditures for updating and modernizing assets [2] - Utility providers are investing in output enhancement to meet the growing demand for data centers [2] Transition to Renewable Energy - U.S. electric utilities are evolving beyond revenue generation due to climate measures and federal incentives, positioning them for gradual growth in the clean energy sector [3] Investment Opportunities - Companies like PPL Corporation and FirstEnergy are becoming attractive investment options due to strategic investments in grid infrastructure upgrades [4] - PPL is focusing on infrastructure projects to reduce outages and enhance service resilience [5] - FirstEnergy has expanded its regulated activities and is benefiting from improved economic conditions and increased demand [7] Data Center Demand - In Pennsylvania, potential data center demand has increased to 14.4 GW, with a projected capital investment of $0.75-$1.25 billion [6] - FirstEnergy's long-term data center load demand has grown over 80% since February 2025, totaling 11.1 GW [8] Earnings Estimates - The Zacks Consensus Estimate for PPL's 2025 and 2026 earnings per share indicates increases of 7.69% and 8.33%, respectively [9] - FirstEnergy's projected earnings show a decrease of 3.8% for 2025 but an increase of 6.72% for 2026 [11] Return on Equity - PPL's current return on equity (ROE) is 8.81%, while FirstEnergy's is 11.31%, outperforming the industry average of 10.14% [13] Strategic Investment Plans - PPL plans $20 billion in regulated capital investments from 2025 to 2028 [14] - FirstEnergy has planned investments of $28 billion between 2025 and 2029 [15] Dividend Yield - PPL's dividend yield is 2.97%, compared to FirstEnergy's 4.09% [16] Debt Position - PPL has a debt-to-capital ratio of 55.47%, while FirstEnergy's is 64.56%, both compared to the industry's 59.75% [17] - Both companies maintain a times interest earned (TIE) ratio above 1, indicating financial flexibility [18] Investment Recommendation - PPL is currently favored over FirstEnergy due to better debt management and growth in earnings estimates, with both stocks holding a Zacks Rank 3 (Hold) [19]

Financial Data and Key Metrics Changes - In Q4 2024, consolidated revenue was $94.8 million, down from $104.8 million in Q3 and $119.2 million in the prior year period [19] - The net loss for Q4 was $215.8 million, compared to a net income of $1.6 million in Q3 and a net loss of $10.2 million in the prior year period, primarily due to a non-cash impairment charge of approximately $215 million related to the Sunrise coal subsidiary [20] - Operating cash flow increased to $38.9 million in Q4 from an operating cash used of $12.9 million in Q3 [20] - Adjusted EBITDA for Q4 was $6.2 million, down from $9.6 million in Q3 [20] Business Line Data and Key Metrics Changes - Electric sales in Q4 were $69.7 million, down from $71.7 million in Q3 and up from $37.1 million in the prior year period [19] - Coal sales were $23.4 million in Q4, down from $31.7 million in Q3 and $91.7 million in the prior year period, reflecting a strategic reduction in coal production [19] - Hallador Power generated 1,160,000 megawatt hours in Q4, a 5% increase from 1,100,000 megawatt hours in Q3 [17] Market Data and Key Metrics Changes - The forward energy and capacity sales position increased to $685.7 million as of December 31, 2024, compared to $616.9 million at the end of Q3 [21] - Total forward sales book as of December 31, 2024, was $1.6 billion, up from $1.4 billion at the end of Q3 [21] Company Strategy and Development Direction - The company is transitioning from a traditional coal producer to a vertically integrated power producer, aligning with market trends favoring the IPP model [6] - Strategic partnerships are being pursued, including a non-binding term sheet with a global data center developer, which is expected to drive long-term value [6][7] - The company is actively evaluating additional strategic transactions to expand electric operations and enhance scale [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted the ongoing trend of retiring dispatchable generation in favor of non-dispatchable resources, which could enhance the value of Hallador Power [8] - The company anticipates favorable pricing trends for power sales in 2025 and beyond, driven by data center development efforts [10][12] - Management expressed optimism about capturing higher prices and energy volumes in the future, despite current market volatility [13] Other Important Information - The company completed its annual impairment analysis, resulting in a non-cash long-lived asset impairment charge of $215.1 million [9] - Capital expenditures for 2024 totaled $53.4 million, with expectations of approximately $66 million for 2025 [20][21] Q&A Session Summary Question: Regulatory and review process with the grid operator - Management highlighted multiple access requests from developers, indicating a favorable environment for potential sales [24][25] Question: Remaining items before a definitive agreement - Management indicated that while progress has been made, a deal is not finalized until signed, with an exclusivity agreement in place until June [27] Question: Co-firing requirements and capital intensity - Current laws require coal-fired plants to co-fire with natural gas by 2032, and feasibility studies are underway [29] Question: Acquisition of generating assets - Management is exploring opportunities across various states, emphasizing a case-by-case evaluation of potential acquisitions [33][44] Question: Pricing expectations for deals - Management expects to maintain a premium to forward curves due to increasing demand from data centers and hyperscalers [51] Question: Capacity payments in long-term agreements - Capacity payments are expected to cover fixed costs of the plant, estimated at around $60 million [62]