Hallador Energy pany(US:HNRG)2023-03-17 21:48Financial Data and Key Metrics Changes - The adjusted EBITDA for the year was $56.2 million, with a net income of $18.1 million, translating to $0.57 per basic share and $0.55 per diluted share [4][14] - Bank debt decreased by $26.5 million, ending the year at $85.2 million, with a leverage ratio of 2.05x [4][19] Business Line Data and Key Metrics Changes - The average coal sales price increased from $39.51 per ton in 2021 to $45.64 per ton in 2022, with expectations of approximately $58.7 per ton in 2023 [6] - Full-year margins improved to $8.35 per ton in 2022 from $7.35 per ton in 2021, with fourth-quarter margins at $10.41 per ton [6] Market Data and Key Metrics Changes - The company anticipates shipping up to 3 million tons of coal annually from its mines directly to Merom starting in 2024, which is expected to produce approximately 6.5 million megawatt hours for sale in the MISO wholesale energy market [7][8] - The liquidity at the end of 2022 stood at $32.1 million, indicating a strong financial position [19] Company Strategy and Development Direction - The acquisition of the Merom Generation Station is seen as transformational, providing new revenue opportunities and flexibility in coal production [17][18] - The company plans to focus on reducing bank debt and aims to be net debt-free by the end of Q1 2024, with a target cash balance of around $100 million [26][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the power markets remaining elevated due to declining capacity reserve margins and increasing grid emergency events [8] - The company expects to experience periods of volatility in earnings due to market conditions but believes in the long-term profit potential of its operations [44][124] Other Important Information - The 2023 capital expenditure budget is set at $69 million, with $35 million allocated for maintenance CapEx [9] - The company is required to invest over $45 million in environmental controls to operate Merom beyond 2025 [8][72] Q&A Session Summary Question: How does the company frame its ongoing liquidity needs? - The company aims to achieve net debt-free status by Q1 2024 and maintain a cash balance around $100 million [26] Question: What is the expected contribution of Merom to EBITDA? - The Merom plant contributed approximately $5.5 million to the adjusted EBITDA of $56.2 million for 2022 [30] Question: How much coal is earmarked for Merom in the upcoming years? - The company plans to take as much coal as possible to Merom, with expectations of converting up to 3 million tons into electricity [27] Question: What are the expectations for costs in 2023? - The company anticipates a decrease in production costs due to easing commodity prices and improved operational efficiencies [112][113] Question: Will the company consider acquiring more power plants? - The company is open to evaluating additional power plant acquisitions as opportunities arise, especially given the expected retirement of a significant portion of the U.S. coal fleet [94]