Hallador Energy pany(US:HNRG)2022-03-29 20:59Financial Data and Key Metrics Changes - For the year ended December 31, 2021, the company reported a net loss of $3.8 million or $0.12 per share, with adjusted EBITDA of $50.3 million and a reduction in bank debt by $26 million, bringing total bank debt to $111.7 million [5][9] - The leverage ratio, defined as debt to EBITDA, was reported at 2.34 times, remaining within the covenant limit of 3x [9][12] Business Line Data and Key Metrics Changes - The company shipped 6.2 million tons and produced 5.8 million tons of coal in 2021, with a target production increase to 7 million tons, representing a 21% increase [7][9] - Operating cash flow for the year was $48 million, with adjusted EBITDA of $6.3 million in the fourth quarter [9][10] Market Data and Key Metrics Changes - The average sales price for coal in 2022 is expected to be approximately $31 per ton, which is 37% higher than in 2021 [10][22] - The company has forward sales totaling 5.8 million tons for the years 2022 through 2026, with 4.5 million tons to be delivered over the next three years [8][10] Company Strategy and Development Direction - The company announced the acquisition of Hoosier Energy's 1 gigawatt Merom Generating Station, which is expected to significantly enhance future earnings and contribute to a doubling of adjusted EBITDA starting next year [10][11] - The strategy includes increasing liquidity to support working capital and forward power sales, with a focus on transitioning to renewable energy while maintaining grid reliability [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, indicating that 2023 and beyond could be very beneficial for shareholders, with expectations of moving to double-digit adjusted EBITDA [12][13] - The ongoing geopolitical situation, particularly the impact of Russia's invasion of Ukraine, has shifted global energy dynamics, leading to increased demand for coal and higher power prices [12][20] Other Important Information - The company is facing inflationary pressures affecting input costs, but management believes productivity improvements are underway, with expectations for better performance in 2022 compared to 2021 [22][23] - Maintenance capital expenditures for Hallador Power in 2023 are expected to be $16 million, with additional investments required for environmental controls to extend the plant's operational life [13] Q&A Session Summary Question: What happens after the initial 3.5-year term of the power plant contract? - Management clarified that the contract includes a step-down in capacity and energy sales, with evaluations ongoing regarding environmental upgrades needed to extend the plant's operational life beyond 2025 [16][17] Question: How does the company view refinancing opportunities? - The company is looking to increase liquidity and renegotiate terms as part of the transaction, with ongoing discussions with the bank group [19][21] Question: What is the guidance for cash costs amid inflationary pressures? - Management acknowledged rising costs due to inflation but remains optimistic about productivity improvements and expects the average cost to be around $31 per ton for the year [22][23]