Hallador Energy (HNRG) 14 Mar 242023 Q4 Earnings call transcript

Hello, and welcome to the Hallador Energy Company's Announces Fourth Quarter 2023 Earnings Call. My name is Harry, and I'll be your coordinator today. [Operator Instructions] Now I'd now like to turn the call over to Becky Palumbo, Investor Relations, to begin. Please go ahead.

Thank you, Harry. for Full Energy's Year thanks Fourth for and and Quarter XXXX morning, joining call Hallador the Good results. CFO. With our me our President Bilsland, and CEO; today and Larry are Brent Martin, and afternoon, full press Yesterday its released fourth release. year financial in Hallador XXXX a quarter will as well discuss current perspective as XXXX. results outlook and conditions for those we our on Today, market

our questions. prepared answer to your remarks, Following we call will open the

uncertainties may and reminder and that also contained with variety some include today forward-looking release. press a remarks a time statements in beginning, reflected filings Before of Exchange our our risks, assumptions in to are from to subject of yesterday's Commission time and Securities the

While In those otherwise, statements, any remarks, these Hallador or has incorrect, us, or vary as uncertainties these currently revise materialize information, information or whether results actual materially projected are a our new risks from available on obligation underlying assumptions or forward-looking or publicly [indiscernible]. results of if future if forward-looking we may prove to update expected. more statements to based no one of these unless result or

Lastly, will Hallador over the Form will Larry. week. sometime to turn call said, that file And with this a I XX-K

afternoon, Good Thanks, Becky. everyone.

paid a started, effects of of flows working capital Before like we asset bank changes operating the obligation less on equity cash plus retirement other interest subsidiary amortizations. definition I of method as to and less get EBITDA make certain reclamations adjusted effects would cash the investment plus plus activity period

per of share $X.XX basic per fourth quarter, and $XX.X net Hallador earnings million, diluted the incurred $X.XX loss For a for earnings share.

and year. per for for earnings net $XX.X million XX, EBITDA for year. by million per we We diluted increased per $X.X $X.X had the income ended We the share December or $XX.X quarter had the quarter and the bank $X.XX for XX, million million for year of our share. million $XXX.X adjusted earnings the and of basic $X.XX For

as the XX was debt million. of bank end December $XX.X Our funded of

of Our $XX.X million. letters were credit

bank Our debt net funded was million. $XX.X

adjusted to over was will end Brent now the Our of year. call Bilsland, the EBITDA our the at X.Xx to leverage debt ratio I CEO. for turn

Thank you, Larry.

to solid on our First, for the for company. and a finishing like thank their Hallador dedication year work hard I'd team

While and we highlighted power company. those revenues, of some a operational year quarter the episodic had positive challenges nature as that fourth don't the overshadow challenges I the our to want

full record highest In addition record to in our year, sales continued revenues coal our and our near of Power as grow is portfolio integration capacity net and on the income, energy division ever a demand to that to continues -- and springboard the margins $X.X our into future Hallador for increase. for the with billion approaching book

success that, also seeing in future And on prepare expenditures are are in plant to the energy excellent capital selling we light years. at prices. contracted We of support in contingent to focusing those contracts

margins wholesale help to our environment plan in -- allow market. and supply very also achieve plant users member, as we in providers a efficiently the can power to structure to our large are property. signed the users dense excited Energy leveraging generate to volatile us REMC believe about us win, agreement of of We that allow operate energy attract and our data centers, should more their increased Merom distribution in with and industrial such the should what and or power, manufacturers traditional Hoosier We AI these power above recently at

and the long-term of of additional in years we and providing offering. earnings this We electricity moves excitement our around margin succeed customer through If type to chain, structure, are attracting seeing it prospect demand already to up for the high-powered increased this interest stability value Hallador sustainable the the a of profitable types Ford our in power responsible, we volume to our assets with platform opportunities coal both increased Power sales, these improve provide believe a company and and for Combined will outlook leverage to manner. and stable of come. continue

simply downside We we power to contracts unexpected market. exposure to way our structuring firm that takes have an outages unplanned protects challenges and us this more in Negotiating planned deals extremely and for very other bilateral these limit in time power but which additional matter, significantly volatile that expect risk. to accepting bespoke and been sales from deliberate is also risk process, contracts to increasingly in than what agreeing be

market. of The we factors electrical offshoot our weather more while sales we to spot other demand. specifically, this power And to methodically build the short-term of the whims is book, and subject the that are impacting

we winter, the the several up in out get and get would XX we throughout days window, last -- when the months, typical and where plant have see, XX-degree thrown end to saw situation As in prices, the dispatch. does expect you a not energy you simply

these our of The all exacerbated prices results impacted fourth continued by quarter depression were natural and of this factors. issue gas

CapEx really importance The to support the place, an to price in sales. ready of as pricing Just for in $XX average and gas highlights XXXX. drove in at the winter longer-term Merom put contracts pricing around especially as continue spot the to was price we while continue spot energy low the to down to those example, the the that mild market $XX we average XXXX, spend plant about

Since $XXX have in the of occurring January 'XX. with and we contracted higher XXXX in nearly Many million deals. future energy and extend 'XX 'XX, deals prices contracted XXXX, through of these capacity

operational our couple addition of markets fourth of years. the the of In largely elevated quarter retreat coal alongside pressure division the last in also at continued Merom, the the from continue against pricing fight challenges to coal to and inflationary we geology, challenges

sold $X.X took steps in statement and any support of stock Hallador an stock XXX,XXX approximately to of and additional of XXX,XXX in January additional our tool an shares of raised December, existing so offering to Hallador shares 'XX or We shelf Under efficiency at-the-market these program we to December and operations. raised events, a short-term ATM, of $X.X an XXXX the registration equity. we response of the implemented changing sold we approximately In million. increase to million liquidity needs. as In our under financing fund

in of unsecured liquidity In several addition, through members bolstered further notes our X-year $X our February, million. totaling Board

revenue sheet as ways in, themselves. the other We see starting the combination and discussed, which, in improve to give also items to position come acquisitions capacity our optionality liquidity add hedging, with are I like us just balance present additional or strategic to opportunities will

near-term improve outlook. also In Our in our restructured opportunities add our market coal to efficiency we take in our will a done manner changing advantage or furtherance designed of margins our operations and February, coal an long-term initiative events and of create strategic higher be to to prudent to segment. to respond in liquidity operations actions to and

in of by million. to where XXXX. These coal production at late $XX approximately this $XX coal finish we reclamation Prosperity approximately capital we part at moves second reduce initiative, million to our for quarter mine Freelandville higher-cost reducing mine idle $XX of thus million, expect As from should division production and in idled substantially XXXX the the production our CapEx reinvestment our for

our lowest equipment cost We X our also on at of units focusing Oaktown. production underground X of units are

to creating reduced we expect warrant in our As this expires once the we savings of quarter. OpEx employees, initiative, workforce the period approximately start part which XXX by second

that of to on and the on right our operational will believe quickly. personal relatively do for By focusing was difficult level, decision While this a company, the we a thing improve it efficiency was historical it our we to tons most coal higher-margin coal, and Oaktown X complex. tons compared million mining X.X efficient margin million produce about highest mining the production as to expect of annually at

our Merom. portfolio. coal supplemental prices. from with obtain favorable we in from in costs while This commodity maximize optimizing diversify third Additionally, risk or capturing for self-production fuel internally third-party while flexibility secured to provides low-cost in us supply markets suppliers and swings either us XXXX, The to allows electricity parties, have margins at should tons and optionality coal additional sales at further upward

As we could prices spring, traditionally electricity the weak. enter mild remain seasonal

the to We industry significant in. the sustainable a of advantage integrated a However, capture take transition opportunity from producer margins coal commodity-focused that power this been provides have Hallador transformation a for energy excited have traditionally about we increased -- markets step the the demand the chain to future-proofed we we which electricity more believe traditionally to producer. operated and to which of of vertically independent in of up of that and that, soaring value remain

evidenced our and the build by long-term electricity movement our that As sell. strengthen the into we of ongoing sales materially this sector the products deliberate book, company should

for challenging of evolution prepared concludes continued the the a line the our start remarks. despite pleased at questions. Hallador results annual As my comments, quarter, our I'm open That up company. with as a I very now of I'll and said

of Pipes question [Operator is Instructions] our B. first line Lucas today the Riley. from of And

it. first I the think liquidity to how touch wanted you and on about

bit there Do little this you or would last So were a used to minimum on cash minimum you manage late that. thoughts balance a appreciate year, ATM I earlier liquidity the balance? your notes. the unsecured year,

said, lot out have the think Well, us I power, subject can until of like which I out, meantime, RFPs we very about too or this add very a roughly front in Board sales lot weather shares. interest we there which in of of we to filling opportunities much a -- when we're -- think mean, we our enormous right? But the you are to that -- position finish we our look, to in Directors this we the book, by There's are think much, -- of prices year. XX% is never being owns but influenced have of that spot so -- liquidity, of

very the interests shareholders, are with myself. are in our because so substantial And including we much line shareholders

a balance. it's so And

do We improving the do obligations how year? prices plant mines for have think keeping tiptop we the we the our And be to need what of coal will to up much at power in liquidity shape. look fulfill

was in coal all were X a focus had to much wrong were as And on going had was units to going go our some wrong, mines, trying coal could the to get off-line. Part it decided the and planned. at parties. half lot plant equipment we units better probably we had the X as of went best right? We that of about production. that of around in finally, third from We quarter off production, of February, We moved fourth unplanned. Part in buy

that don't question. goes exact a an And target have I lot just we into think so number. that there's

looking I margins what can our in locked with think it's -- until get sales liquidity in the managing we in and that road. where are point we're contractually the we and the book at comfortable more opportunities reach

that. appreciate a bit QX turning of it. Got to And the Really outlook. kind

would to of relates QX? point it hasn't to How provide here into supportive. the of the quarter. as continued You you issues this be able insights already much mentioned kind weather What been those at

least on should point? for the coal? of more at did sort discussion that we on at what they anticipate year, the coal of sales Or to It out volume kind that side, part then side. the like power sounds in regards really around the of And filling full this the was is book? And

right. All

got So your I'm Lucas. not sure all I questions,

we right? the opportunities book, generation see supply and decade been been it a is, dispatchable these seen XX sales where And of closing replacing resources. non of the flat in look, period with power about short We've baseload is for we've On this relatively transition maybe capacity, market years. then has

reports retire capacity. if And next I shrunk they've says, that, people the mean, got has say, that assets. years in some the of accredited MISO couple And out

As margins announced, the reserve negative. go

happen. won't that So

the just it a but particularly tight become MISO. situation in So kind point of view, generation has shows how of -- from

add explosion sorts all there's that this right? industry of of just growth the Mean right? in unprecedented, in AI, now of kind And reports. And you is

to plug they believe. essentially, I But numbers are develop places trying to in. AI, So that find to companies know to don't these race really which can't

they And capacity. capacity, to be happen so we short long are

demand is different been to there's us. this But some there surprising interest happening all from from seeing utilities about have And they what's of other know We've of we talked would that manufacturing EVs. AI, show retirement Europe, everywhere, we're is this push And we going interest plants show new and also how to to from always kind up suddenly in lot out selling right? there. said, because have from date a of yes, out we're a many

the it's us, trend are So extremely long-term we from -- bullish.

high this of we The out some we But book now right in term, success the depending market in that. a and spot probability weather out. and until capacity, we major power are for feel we're short RFPs of feel have there on obtaining

to attract in to we're try our do We offer site of are to about either terms work new structure, excited high us it. win we to were on to than extremely market, REMC the feel and wholesale better this with we can that, us get get users able going because high-demand power not going look, to Hoosier to that's we or

the keep ago. But a please indications just we like and week agreement we early just this from feel in signed mind,

early we're we wholesale locating us in in we So interested positions. who's than meaningful going you're running long-term to in this year are and but see market. be hope an will both can see very see we get terms I this process And Certainly, that add the way. our to RFP better in to site a what

to it coal handful of and the a next X Sunrise And well customer you contracted we XX-K just when that contracted the kind Coal see significant hedged went if shows of the that, extremely the look, coal our On side sold, division. years, is to or business to when that, that of we're that Merom try side in and of materially next business, business. we do ourselves add ahead clarity years. release you'll more price we for the for the the of really out on set And

I can't what I remember questions. So X of was. your third answered that think the

very was This helpful.

on full the for was MOU. I do year. and the the QX one on have another third The outlook question

center, place of So to then I'll assume think construction out you. this first. how maybe have raise since data an And MOU build a this you something I'd essentially? need you you have materialize would behind-the-meter for would do see and mentioned could you'd power quickly one some that take it, the Is

So best to when kind a you of could power supply customer? case,

Yes.

for markets We're trying order the RFP in we spring, out get go to are. what see this next So demands will hopefully, month. that to of the

will fair We don't have, of I I what times know flexibility on be. the can build what amount quite a we And frankly, offer think, customers.

knock X like We've customers on construction begin without RFP an to they'd our had say some door, months. in

as I the timing But next think far those aggressive. any probably and that's early Possibly. too as along in see what really off Could something not give to around year? we conversations we're is. guidance

prices they potentially what we've seen and companies the we're and and in think really get that I throughout developments holds true, Indiana about whispered excited those that is don't large be. we're some what other if both just get Midwest, but seen do about could we've excited do what published,

then results, RFP the saw about until We're we hard our week we really Again, as first really excited as weather. far to cold an of one quarter, say. see it's just opportunity. And extreme

that of in has So performed rest the a power plants well the -- through and that in And I profitable so far both XX and had some Indiana. days been mild. XX-degree and was it's February March we've winter period, extremely time. mean,

So we don't know what that means.

be but season the traditionally here that low next month. traditionally is demand, power high winter We're shoulder That demand, proved power and hasn't to heading is case. into the

then get the reasonable month when out to to up be And today. prices extremely November, $XXX turns range got have Xs So gas -- start gas hot we'll you if again we we're October, out this a in we've and every thereafter. summer, by cheap encouraged see to

but curve so remained So power have has cheap. and prices seeing the robust short-term is that, it been far

signed. again just there And why some here opportunities on that. we're a make to And -- MOU through could eye so just are we'll the we that's manage that we very we going successful. sure close be will that liquidity And to keep with

you Yes. expect than Directionally, QX? would worse be QX to

a prepared earnings guidance QX Well, call. on to I'm not give at XX-K

over. wait those So are. and see is results not what we'll Quarter

Hoosier Why MOU? was part do the one be necessary I'll one. for to it Helpful. of last

to what that power. not, power. And industrial for customers So are data start allowed Hallador, and you wholesale when is centers attracting we, sell as only

sold that structure And win technically be Hoosier to involves their and through distributed has cooperative a that so REMC.

an we them so a time there's And opportunity for basically to of everybody. here negotiated period with say, for hey,

to Hoosier as REMC value way we I and together not have do those create and value a opportunity work we the have and create Let's for have only step win such, Hallador continue partners see real can for And think their terrific And but of success. every to been so. if customers. guys just

[Operator Instructions] for further have we It the questions in seems today. no queue

would like do just hand we question registered. to line My I Bilsland Brent remarks. back have have we on had a for from apologies, to the -- -- we here So concluding a have any And Roger Zigler. question

made coal my That's and It's Roger -- The Zigler, has Is I industry making question, power and or the and to this anybody a integrated investor. guess. individual producer transition independent -- gold in in [indiscernible]. is producer so as the one you integrated recapping else are. first -- a vertically question comment. there who

question. good a that's Well,

I Hallador has power to that company only the interest and think has is plants acquire -- acquired and public a to structure. my knowledge, coal-fired more

at And so We excited to opportunities we we're what think there to happy do are there possible about were able and other Merom. out replicate.

as And but doing private in I'm to so as structure. anyone this, but not plants doesn't know are not of doing I'm say a far industry it it exist, -- buying aware structure, public of other others we in will people just it. some unaware I it's a that the It's say, to in of

on I should simple? winter like pretty Okay. Is summer get like to And springboard is mean finally you've to following answered you're say, and the tremendous hot is net coal power that be there's Indiana second going a in get sounds the correct? -- it power how building gas, just areas and some warm just get going as the, simple but row? in markets a really if it's that maybe the a surrounding considerably, you I for it your the opportunities. think think build-out It but we outlook, XXXX about this, X-, -- for as much X-year like a

having a quick. mean bid how to have those contracted trying and so we mean spot lot a book, business speak. megawatt We're X we market a securing is And of and out we'll mean huge I weather-driven of for I power days we get prices and contracts. in move we're be going success as events. so. Yes. do $XX sales But successful are a to they're doing one those are see day later, can that to $XXX. amount we see to hour I

And we it now customers, sales XX-K gets But think next to that. I we published or if its power, out with excites see it then what margins. have we the when you and day traditional we in higher, that and MOU and Look is to the are margins what avenues, look multiple particularly XX%, range, And for our have the particularly pricing made in coal. us we at add get you in to see think continue the XX%, multiple Hallador at XX%, so. -- table, success contracting capacity in power dramatically margins the when can our for at higher

We and book fast takes haven't going you have just a our time I process out. dance It has about our because to team we're think but it's gotten filling and done as that job. they're I would bespoke a it, partners and sales up. have way very the And as filled terrific liked, out showing find willing more

warmest it the versus being what January, from market November, earnings episodic are our actually people ended February -- a up here to had winter changed so right? little in on are we December, just depending for call the And calling in next on what the was based we that curve number we our what the a handful some there history, dramatically weather were quarters, different the fact of earnings saw so completely be power going for

days. their the have If -- hot very not about don't built, wind has spring summer that know tends very tunnel. percentage the what one mills the very high for panels on It wind mills. that and it's it, little generation. a But MISO has blow to wind Like little. the hot, the We X.X% thing means of of solar been

see actually seeing peak we where theoretically, in the see we versus a So we're used wintertime. we'll to it think summertime in -- the

contract in higher So that's pulling what of customers see to some soon how can we looking discussions we're with at. We're forward. start prices these

have certainly of some what our has summer. how because And plays the see term, that's it we'll earnings dramatically would long weather, we'll think that extremely see potential be we be company helpful. so And on team out. warm excited this we're just improved. But the to will Hopefully, just working

know be we're our and public. year what investors perspective, beyond. building that from next future feel to on demonstrate that's be to and will But the that this is this sales we shareholder don't focused And they later quarter book Or starting next? on and year focused into a I early will

stay So tuned.

understatement basically you're Yes. to place To with you an spring loaded seeming be have things is say in the here.

appreciate And So luck good it. on that.

further in no the have we queue. And questions

hand So to Bilsland I'd remarks. some now for like closing to back Brent

I your the to Hallador Energy. thank today for everyone want tune into in interest it. Thank and our taking you. to time call appreciate greatly We

all This joining. call. you today's for concludes Thank

lines. disconnect may now You your