Hallador Energy pany(US:HNRG)2021-05-09 18:39Financial Data and Key Metrics Changes - The company reported a net loss of $1 million or $0.03 per share for Q1 2021 [6] - Free cash flow generated was $5.4 million, with adjusted EBITDA at $11.4 million [6] - Bank debt decreased by $1.7 million, totaling $136.1 million at the end of the quarter, with net debt at $132.2 million and a leverage ratio of 2.78 times [6][12] Business Line Data and Key Metrics Changes - Production costs for Q1 were $28.88 per ton, down approximately $5 per ton from the previous quarter and significantly lower than $31.67 in Q1 2020 [10] - Total shipments for the quarter were 1.2 million tons, with an expected increase of 400,000 tons for the year due to improved market conditions [9][11] Market Data and Key Metrics Changes - Nymex gas prices increased from an average of $1.99 in 2020 to $2.99, positively impacting coal demand [13] - Coal export prices improved, with API 4 at $86 per metric ton for Q3 2021, up 26% year-over-year, and API 2 at $74 per metric ton, up 24% year-over-year [14] Company Strategy and Development Direction - The company aims to maintain a strong balance sheet to adapt to market changes and potential investments in different asset types [53] - There is a focus on long-term contracts as utilities seek reliable suppliers amid market consolidation [35][42] Management's Comments on Operating Environment and Future Outlook - Management noted that the energy market is recovering, with increased gas prices and improved coal market conditions [13][14] - The transition to renewable energy is expected to take longer than anticipated, with a potential alleviation of risk premiums in the coal sector [41][42] Other Important Information - The company is awaiting the forgiveness of a $10 million Paycheck Protection Program loan, which would significantly improve liquidity [12] - Inflationary pressures are being observed, particularly in steel prices, but labor costs have not yet become a significant issue [46] Q&A Session All Questions and Answers Question: Current market environment and pricing in the Illinois basin - Management indicated that utilities are looking to secure longer-term contracts due to improved demand and market conditions [35] Question: Implications of rising interest rates on renewable energy transition - Rising interest rates could increase the cost of new construction, affecting the renewable energy sector, while the coal sector may face less risk due to existing high interest rates [39][40] Question: Observations on inflationary pressures - Management confirmed that steel prices are rising, but labor costs have not yet become a significant concern [46] Question: Consideration of reinstating dividends - The company will consider reinstating dividends when the debt-to-EBITDA ratio is below 2x, prioritizing balance sheet preservation [53]