• Hallador Energy Company Reports Record Net Income and Adjusted EBITDA for 2023; Signs MOU to attract data centers to Merom Power Plant

    ソース: Nasdaq GlobeNewswire / 13 3 2024 17:05:21   America/New_York

    TERRE HAUTE, Ind., March 13, 2024 (GLOBE NEWSWIRE) -- Hallador Energy Company (NASDAQ – HNRG) reports full year 2023 net income of $44.8 million, $1.35 basic earnings per share, operating cash flow of $59.4 million, and adjusted EBITDA of $107 million, all respectively.

    Brent Bilsland, President and Chief Executive Officer, stated, “Hallador had a solid year as a company. Our coal division had near record margins for the full year, the continued integration of Hallador Power shows tremendous promise for future sales of energy and capacity and our recent MOU with Hoosier Energy and WIN REMC will allow us to market our Merom site to data centers, AI providers and other high-density power users to more efficiently operate the plant and drive increased margins to what we are seeing today. While the fourth quarter presented challenges in all sectors, we believe that our recent restructuring in our coal division, agreements like the MOU and the momentum that we are seeing in forward power sales will all continue to improve the long-term outlook for the company.”

    Below are highlights for the full year results of 2023:

    • We increased Net Income, Operating Cash Flow and Adjusted EBITDA for the Year
      • Net income increased by approximately $27 million to $45 million for 2023.    
      • Operating Cash Flow increased by approximately $5 million to $59.4 million for 2023.  
      • Adjusted EBITDA* improved to $107 million for the year, an increase of approximately $51 million.
    • Since January 1, 2023, We Secured Nearly $500 Million in New Long-Term Capacity and Energy Contracts
      • We have secured approximately $225 million in new capacity deals through 2028.  
      • We have secured approximately $275 million in new energy deals through 2028.
    • We Restructured our Coal Division to Increase Margins and Adjust to Current Market Conditions
      • The restructuring will reduce capital expenditure at the Oaktown Mining Complex by $10 million.  
      • Maintains 4.5 million tons of annual production of our highest margin coal.  
      • Reduced employee headcount by 110.  
      • Idled highest cost surface mines.
    • We Raised Approximately $19 Million Through ATM and Unsecured Notes to Support Liquidity
      • ATM raised $7.3 million in December and $6.6 million in January.  
      • Raised $5 million in unsecured one-year notes from members of the Board of Directors in March 2024.  
      • Capital used to support liquidity and accelerate strategic initiatives.
    • We Signed Memorandum of Understanding (MOU) with Hoosier Energy and WIN REMC to Provide Opportunities for Non-Traditional Energy Sales at the Merom Site
      • Allows us to potentially capture additional margins above our traditional wholesale energy markets.  
      • Allows us to market industrial users of power, such as data centers, AI providers and power dense manufacturers, to the Merom property.  
      • We believe utilizing our plant to help supply these large users of energy with reliable, resilient electricity should allow us to operate more efficiently in a volatile power environment, generate increased margins and support the fragile power grid as it navigates the challenges of transition to new sources of energy in the coming decades.
                     
     2024  2025  2026  2027  2028  Total
    Coal                      
    Priced tons - 3rd party (in millions) 3.4   1.8   0.5   0.5   -   6.2
    Average price per ton - 3rd party$51.82  $50.57  $56.09  $56.09  $-    
    Priced tons (in millions) - Merom 1.5   2.3   2.3   2.3   2.3   10.7
    Average price per ton - Merom$51.00  $51.00  $51.00  $51.00  $51.00    
    Contracted coal revenue (in millions)$252.69  $208.33  $145.35  $145.35  $117.30  $869.02
    % Priced 109%  91%  62%  62%  51%   
                           
    Committed & unpriced tons (in millions) - 3rd party -   1.0   1.0   1.0   -   3.0
    Committed & unpriced tons (in millions) - Merom -   -   -   -   -   -
    Total contracted tons (in millions) 4.9   5.1   3.8   3.8   2.3   19.9
                           
    % Coal Sold* 109%  113%  84%  84%  51%   
                           
    Average cost per ton of coal sold was $33.67 for the year ended December 31, 2023 ($26.98 after eliminating for intercompany sales to Merom)                      
                           
    2024 Coal Capex Budget (in millions)$25.00                    
                           
    Power                      
    Energy                      
    Contracted MWh (in millions) 1.87   1.90   1.83   1.78   1.09   8.47
    Average contracted price per MWh$35.23  $36.06  $55.37  $54.65  $52.98    
    Contracted revenue (in millions)$65.88  $68.51  $101.33  $97.28  $57.75  $390.75
    % Energy Sold* 31%  32%  31%  30%  18%   
                           
    Capacity                      
    Average daily contracted capacity 810   748   743   623   454    
    % Capacity Contracted** 94%  87%  86%  72%  53%   
    Average contracted capacity price per MWd$200  $210  $230  $226  $224    
    Contracted capacity revenue (in millions)$59.13  $57.33  $62.37  $51.39  $37.12  $267.34
                           
    Total Energy & Capacity Revenue                      
    Contracted Power Revenue (in millions)$125.01  $125.84  $163.70  $148.67  $94.87  $658.09
    Contracted Power Revenue per MWh*$45.69  $47.05  $67.40  $66.47  $64.70    
                           
    2023 average cost per MWh sold was $33.67 for the year ended December 31, 2023 ($26.98 assuming intercompany sales of coal were sold at cost)                      
                           
    2024 Power Capex Budget (in millions)$18.00                    
                           
    TOTAL CONTRACTED REVENUE (IN MILLIONS)$377.70  $334.17  $309.05  $294.02  $212.17  $1,527.11


    *Based on coal production of 4.5 million tons and 6.0 million MWh annually.
    **Based on a MISO accreditation of 860MW per day.  Accreditations are adjusted annually based on 3-year rolling performance metrics.
      

    The table below represents some of our critical metrics (in thousands, except for per ton data):

     December 31, 
     2023  2022 
    Net income$44,793  $18,105 
    Total revenues$634,480  $361,991 
    Tons sold (consolidated basis, after eliminations) 5,595   6,341 
    Average price per ton (consolidated basis, after eliminations)$60.97  $45.64 
    Tons sold (before elimination) 6,922   6,341 
    Average price per ton (segment basis, before eliminations)$62.54  $45.64 
    Bank debt$91,500  $85,213 
    Operating cash flow$59,414  $54,169 
    Adjusted EBITDA*$107,376  $56,233 

    --------------------------------

    *Non-GAAP financial measure, defined as operating cash flows less effects of certain subsidiary and equity method investment activity, plus bank interest, less effects of working capital period changes, plus other amortization
     

    Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP.  Our method of computing Adjusted EBITDA may not be the same method used to compute similar measures reported by other companies.

    Management believes the non-GAAP financial measure, Adjusted EBITDA, is an important measure in analyzing our liquidity and is a key component of certain material covenants contained within our Credit Agreement, specifically a maximum leverage ratio and a debt service coverage ratio.  Noncompliance with the leverage ratio or debt service coverage ratio covenants could result in our lenders requiring the Company to immediately repay all amounts borrowed.  If we cannot satisfy these financial covenants, we would be prohibited under our Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets.  Consequently, Adjusted EBITDA is critical to the assessment of our liquidity.  The required amount of Adjusted EBITDA is a variable based on our debt outstanding and/or required debt payments at the time of the quarterly calculation based on a rolling prior 12-month period.

    Reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to cash provided by operating activities, the most comparable GAAP measure, is as follows (in thousands) for the years ended December 31, 2023 and 2022, respectively.

    Reconciliation of GAAP "Cash provided by operating activities" to non-GAAP "Adjusted EBITDA" (in thousands)

     Twelve Months Ended 
     December 31, 
     2023  2022 
    Cash provided by operating activities$59,414  $54,169 
    Current income tax benefit (164)  - 
    W/O of deferred financing costs 1,541   - 
    Loss from Hourglass Sands & Sunrise Indemnity 10   8 
    Distribution from Sunrise Energy (625)  - 
    Bank and other interest expense 10,478   8,278 
    Working capital period changes 21,998   (5,861)
    Other long-term asset and liability changes -   - 
    Cash paid on asset retirement obligation reclamation 3,384   3,162 
    Market adjustments - Merom acquisition -   (9,009)
    ASC 606 Capacity Adjustment 3,703   - 
    Other amortization 7,637   5,486 
    Adjusted EBITDA$107,376  $56,233 
            
    Cash used in investing activities$(75,290) $(53,365)
            
    Cash used in financing activities$16,573  $(207)
            

    Forward-Looking Statements

    This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).  Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as expects,” “believes,” “intends,” “anticipates,” “plans,” “estimates,” “guidance,” “target,” “potential,” “possible, or probable or statements that certain actions, events or results may,” “will,” “should, or could be taken, occur or be achieved.  Forward-looking statements are based on current expectations and assumptions and analyses made by Hallador and its management in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements.  These risks include, but are not limited to, those set forth in Hallador's annual report on Form 10-K for the year ended December 31, 2022 and other Securities and Exchange Commission filings. Hallador undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.

    Conference Call

    As previously announced, the Company will host a live conference call on Thursday, March 14, 2024 at 2:00 p.m. Eastern Time. For US callers dial (833)-470-1428 and use access code 135892.

    A replay of the conference call will be available for seven days.  For US callers to listen to the replay, dial (866) 813-9403 and use access code 573916.

    The conference call will also be available via a live listen-only webcast on the Company’s website at www.halladorenergy.com.

    Hallador is headquartered in Terre Haute, Indiana and through its wholly-owned subsidiaries, Sunrise Coal, LLC and Hallador Power, LLC, produces coal and electricity in the Illinois Basin for the electric power generation industry. To learn more about Hallador, visit our website at www.halladorenergy.com.

    Contact:Investor Relations
    Phone:(303) 839-5504
      


    Hallador Energy Company
    Consolidated Balance Sheets
    As of December 31,
    (in thousands)
    (Unaudited)
     2023  2022 
    ASSETS       
    Current assets:       
    Cash and cash equivalents$2,842  $3,009 
    Restricted cash 4,281   3,417 
    Accounts receivable 19,937   29,889 
    Inventory 23,075   49,796 
    Parts and supplies 38,877   28,295 
    Contract asset - coal purchase agreement    19,567 
    Prepaid expenses 2,262   4,546 
    Total current assets 91,274   138,519 
    Property, plant and equipment:       
    Land and mineral rights 115,486   115,595 
    Buildings and equipment 537,131   534,129 
    Mine development 158,642   140,108 
    Finance lease right-of-use assets 12,346    
    Total property, plant and equipment 823,605   789,832 
    Less - accumulated depreciation, depletion and amortization (334,971)  (309,370)
    Total property, plant and equipment, net 488,634   480,462 
    Investment in Sunrise Energy 2,811   3,988 
    Other assets 7,061   7,585 
    Total assets$589,780  $630,554 
            
    LIABILITIES AND STOCKHOLDERS' EQUITY       
    Current liabilities:       
    Current portion of bank debt, net 24,438  $33,031 
    Accounts payable and accrued liabilities 62,908   82,972 
    Current portion of lease financing 3,933    
    Deferred revenue 23,062   35,485 
    Contract liability - power purchase agreement and capacity payment reduction 43,254   88,114 
    Total current liabilities 157,595   239,602 
    Long-term liabilities:       
    Bank debt, net 63,453   49,713 
    Convertible notes payable 10,000   10,000 
    Convertible notes payable - related party 9,000   9,000 
    Long-term Lease Financing 8,157    
    Deferred income taxes 9,235   4,606 
    Asset retirement obligations 14,538   17,254 
    Contract liability - power purchase agreement 47,425   84,096 
    Other 1,789   1,259 
    Total long-term liabilities 163,597   175,928 
    Total liabilities 321,192   415,530 
    Commitments and contingencies       
    Stockholders' equity:       
    Preferred stock, $.10 par value, 10,000 shares authorized; none issued     
    Common stock, $.01 par value, 100,000 shares authorized; 34,052 and 32,983 issued and outstanding, respectively 341   330 
    Additional paid-in capital 127,548   118,788 
    Retained earnings 140,699   95,906 
    Total stockholders’ equity 268,588   215,024 
    Total liabilities and stockholders equity$589,780  $630,554 
            


    Hallador Energy Company
    Consolidated Statements of Operations
    For the years ended December 31,
    (in thousands, except per share data)
    (Unaudited)
     2023  2022 
    SALES AND OPERATING REVENUES:       
    Coal sales$361,926  $289,376 
    Electric sales 267,927   66,252 
    Other revenues 4,627   6,363 
    Total sales and operating revenues 634,480   361,991 
    OPERATING EXPENSES:       
    Operating expenses 473,390   266,608 
    Depreciation, depletion and amortization 67,211   46,875 
    Asset retirement obligations accretion 1,804   1,010 
    Exploration costs 904   651 
    General and administrative 26,159   16,417 
    Total operating expenses 569,468   331,561 
            
    INCOME FROM OPERATIONS 65,012   30,430 
            
    Interest expense (1) (13,711)  (11,012)
    Loss on extinguishment of debt (1,491)   
    Equity method investment (loss) income (552)  443 
    INCOME BEFORE INCOME TAXES 49,258   19,861 
            
    INCOME TAX EXPENSE (BENEFIT):       
    Current (164)   
    Deferred 4,629   1,756 
    Total income tax expense 4,465   1,756 
            
    NET INCOME$44,793  $18,105 
            
    NET INCOME PER SHARE:       
    Basic$1.35  $0.57 
    Diluted$1.25  $0.55 
            
    WEIGHTED AVERAGE SHARES OUTSTANDING:       
    Basic 33,133   32,043 
    Diluted 36,827   33,649 
            
    ____________       
            
    (1) Interest Expense:       
    Interest on bank debt$8,636  $7,563 
    Other interest 1,842   715 
    Amortization and swap related interest:       
    Payments on interest rate swap, net of changes in value    (867)
    Amortization of debt issuance costs 3,233   3,601 
    Total amortization and swap related interest 3,233   2,734 
    Total interest expense$13,711  $11,012 
            


    Hallador Energy Company
    Consolidated Statements of Cash Flows
    For the years ended December 31,
    (in thousands)
    (Unaudited)
     2023  2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:       
    Net income$44,793  $18,105 
    Adjustments to reconcile net income to net cash provided by operating activities:       
    Deferred income taxes 4,629   1,756 
    Equity income (loss) – Sunrise Energy 552   (443)
    Cash distribution - Sunrise Energy 625    
    Depreciation, depletion and amortization 67,211   46,875 
    Loss on extinguishment of debt 1,491    
    Loss (gain) on sale of assets 398   (264)
    Payments on interest rate swap, net of changes in value    (867)
    Amortization of debt issuance costs 3,233   3,601 
    Asset retirement obligations accretion 1,804   1,010 
    Cash paid on asset retirement obligation reclamation (3,384)  (3,162)
    Stock-based compensation 3,554   1,269 
    Provision for loss on customer contracts    159 
    Amortization of contract asset and contract liabilities (39,791)  (19,731)
    Change in current assets and liabilities:       
    Accounts receivable 9,952   (16,305)
    Inventory 15,548   (25,863)
    Parts and supplies (10,582)  (6,271)
    Prepaid expenses 1,186   (5,941)
    Accounts payable and accrued liabilities (18,992)  24,037 
    Deferred revenue (23,423)  35,485 
    Other 610   719 
    Net cash provided by operating activities$59,414  $54,169 
            


    Hallador Energy Company
    Consolidated Statements of Cash Flows
    For the years ended December 31,
    (in thousands)
    (Unaudited)
    (continued)
     2023  2022 
    CASH FLOWS FROM INVESTING ACTIVITIES:       
    Capital expenditures$(75,352) $(54,020)
    Proceeds from sale of equipment 62   655 
    Net cash used in investing activities (75,290)  (53,365)
            
    CASH FLOWS FROM FINANCING ACTIVITIES:       
    Payments on bank debt (59,713)  (78,225)
    Borrowings of bank debt 66,000   51,700 
    Proceeds from sale and leaseback arrangement 11,082    
    Issuance of convertible notes payable    11,000 
    Issuance of related party convertible notes payable    18,000 
    Debt issuance costs (6,013)  (2,097)
    Distributions to redeemable noncontrolling interests    (585)
    ATM Offering 7,318    
    Taxes paid on vesting of RSUs (2,101)   
    Net cash provided by (used in) financing activities 16,573   (207)
    Increase in cash, cash equivalents, and restricted cash 697   597 
    Cash, cash equivalents, and restricted cash, beginning of year 6,426   5,829 
    Cash, cash equivalents, and restricted cash, end of year$7,123  $6,426 
            
    CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:       
    Cash and cash equivalents$2,842  $3,009 
    Restricted cash 4,281   3,417 
     $7,123  $6,426 
            
    SUPPLEMENTAL CASH FLOW INFORMATION:       
    Cash paid for interest$9,966  $8,123 
            
    SUPPLEMENTAL NON-CASH FLOW INFORMATION:       
    Change in capital expenditures included in accounts payable and finance lease$1,882  $3,440 
            


    Hallador Energy Company
    Consolidated Statement of Stockholders' Equity
    (in thousands)
    (Unaudited)
     
             Additional      Total 
     Common Stock Issued  Paid-in  Retained  Stockholders' 
     Shares  Amount  Capital  Earnings  Equity 
    BALANCE, DECEMBER 31, 2021 30,785  $308  $104,126  $77,801   182,235 
    Stock-based compensation       1,269      1,269 
    Cancellation of redeemable noncontrolling interests       3,415      3,415 
    Stock issued on redemption of convertible note 232   2   998      1,000 
    Stock issued on redemption of related party convertible notes 1,966   20   8,980      9,000 
    Net income          18,105   18,105 
    BALANCE, DECEMBER 31, 2022 32,983   330   118,788   95,906   215,024 
    Stock-based compensation       3,554      3,554 
    Stock issued on vesting of RSUs 473   5   (5)      
    Taxes paid on vesting of RSUs (198)  (2)  (2,099)     (2,101)
    Stock issued in ATM offering 794   8   7,310      7,318 
    Net income          44,793   44,793 
    BALANCE, DECEMBER 31, 2023 34,052   341   127,548   140,699   268,588 


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