Hallador Energy Company Reports Record Net Income and Adjusted EBITDA for First Half of 2023; Leverage Ratio moves below 1.0X
07 Agosto 2023 - 7:35PM
Hallador Energy Company (NASDAQ – HNRG) reports first half 2023 and
second quarter net income of $39.0 million and $16.9 million,
basic earnings per share of $1.18 and $0.51, operating cash
flow of $44.2 million and $18.1 million, and adjusted EBITDA
of $69.3 million and $35.3 million, all
respectively.
Brent Bilsland, President and Chief Executive Officer, stated,
"Record profitability and continued debt reduction has helped
de-lever our balance sheet to less than 1.0 times EBITDA, which is
a top priority for Hallador. Our team was also successful in
closing a $140 million credit agreement, increasing our liquidity
to $56.9 million as of June 30, 2023. Hallador Power
completed its obligation of selling 100% of its output to Merom’s
original owner and is now available to sell power to other
markets."
Below are highlights for the second quarter of 2023:
- The Company reported net income of $16.9 million and
operating cash flow of $18.1 million on the continued strength of
shipments of higher-priced coal contracts and another full quarter
of operations at the Merom Generating Station.
- Coal Q2 2023 margins improved to $23.92 per ton,
which represents an increase of $6.85 per ton over
Q1 2023 and an increase of $15.53 per ton over
Q2 2022. Margins for the quarter were $20.96 per ton
after eliminations for coal sold to the Merom Power
Plant.
- The Company shipped 1.7 million tons for the quarter, with
approximately 0.3 million tons shipped to the Merom Power
Plant.
- The Company closed on a $140 million credit facility on
August 2, 2023 extending the maturity to 2026.
- Bank Debt was reduced by $1 million during the quarter,
bringing our outstanding balance to $74.2 million in addition to
$11.2 million in Letters of Credit as of June 30, 2023.
- The continued efforts to reduce debt, coupled with the higher
adjusted EBITDA, resulted in our debt-to-adjusted EBITDA ratio
falling to 0.94X as of June 30, 2023, and our liquidity growing to
$56.9 million as of June 30, 2023 under the terms of the
August 2, 2023 amendment.
- The Merom Generating Station continues to show positive
results and increased interest from customers.
- The Company continues to be well-positioned with
contracted coal tons and electric generation.
|
|
2023 (Q3/Q4) |
|
|
2024 |
|
|
2025 |
|
Coal |
|
|
|
|
|
|
|
|
|
|
|
|
Priced tons (in millions) |
|
|
4.0 |
|
|
|
3.4 |
|
|
|
1.3 |
|
Average price per ton |
|
$ |
57.60 |
|
|
$ |
51.40 |
|
|
$ |
50.00 |
|
Contracted coal revenue (in
millions) |
|
$ |
230.40 |
|
|
$ |
174.76 |
|
|
$ |
65.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committed & unpriced tons
(in millions) |
|
|
- |
|
|
|
3.0 |
|
|
|
4.0 |
|
Total contracted tons (in
millions) |
|
|
4.0 |
|
|
|
6.4 |
|
|
|
5.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Coal Sold |
|
|
100 |
% |
|
|
91 |
% |
|
|
76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy |
|
|
|
|
|
|
|
|
|
|
|
|
Contracted MWh (in
millions) |
|
|
0.8 |
|
|
|
1.6 |
|
|
|
1.7 |
|
Contracted price per MWh |
|
$ |
34.00 |
|
|
$ |
34.00 |
|
|
$ |
34.00 |
|
Contracted MWh revenue (in
millions) |
|
$ |
27.20 |
|
|
$ |
54.40 |
|
|
$ |
57.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capacity |
|
|
|
|
|
|
|
|
|
|
|
|
Average monthly capacity
accreditation |
|
|
846 |
|
|
|
860 |
|
|
|
860 |
|
Average monthly contracted
capacity |
|
|
846 |
|
|
|
539 |
|
|
|
300 |
|
Average contracted capacity
price per MWd |
|
$ |
185 |
|
|
$ |
169 |
|
|
$ |
191 |
|
Contracted capacity (in
millions) |
|
$ |
28.56 |
|
|
$ |
33.25 |
|
|
$ |
20.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent Capacity Sold |
|
|
100 |
% |
|
|
63 |
% |
|
|
35 |
% |
|
Committed and unpriced tons assume 3.0 million tons will be shipped
to the Merom Power Plant in both 2024 and 2025. |
|
Capacity accreditation in 2024 and 2025 is projected to be 860
MW. |
The table below represents some of our critical metrics (in
thousands except for per ton data):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
|
$ |
16,915 |
|
|
$ |
(3,386 |
) |
|
$ |
38,966 |
|
|
$ |
(13,520 |
) |
Total Revenues |
|
$ |
161,194 |
|
|
$ |
65,929 |
|
|
$ |
349,528 |
|
|
$ |
124,836 |
|
Tons Sold (after
elimination) |
|
|
1,400 |
|
|
|
1,595 |
|
|
|
3,093 |
|
|
|
2,972 |
|
Average Price per Ton (after
elimination) |
|
$ |
63.27 |
|
|
$ |
40.23 |
|
|
$ |
59.22 |
|
|
$ |
40.77 |
|
Tons Sold (before
elimination) |
|
|
1,714 |
|
|
|
1,595 |
|
|
|
3,407 |
|
|
|
2,972 |
|
Average Price per Ton (before
elimination) |
|
$ |
65.44 |
|
|
$ |
40.23 |
|
|
$ |
60.69 |
|
|
$ |
40.77 |
|
Bank Debt |
|
$ |
74,200 |
|
|
$ |
130,738 |
|
|
$ |
74,200 |
|
|
$ |
130,738 |
|
Operating Cash Flow |
|
$ |
18,131 |
|
|
$ |
(2,698 |
) |
|
$ |
44,243 |
|
|
$ |
279 |
|
Adjusted EBITDA* |
|
$ |
35,297 |
|
|
$ |
11,502 |
|
|
$ |
69,312 |
|
|
$ |
14,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
——————— |
* Defined as
operating cash flows plus current income tax expense, less effects
of certain subsidiary and equity method investment activity, plus
bank interest, less effects of working capital and other long-term
asset and liability period changes, plus cash paid on asset
retirement obligation reclamation, 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 three
and six months ended June 30, 2023, and 2022, respectively.
Reconciliation of GAAP "Cash provided by (used in)
operating activities" to non-GAAP "Adjusted EBITDA" (in
thousands).
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Cash provided by (used in) operating activities |
|
$ |
18,131 |
|
|
$ |
(2,698 |
) |
|
$ |
44,243 |
|
|
$ |
279 |
|
Current income tax
expense |
|
|
61 |
|
|
|
— |
|
|
|
493 |
|
|
|
|
|
Loss from Hourglass Sands |
|
|
1 |
|
|
|
5 |
|
|
|
2 |
|
|
|
6 |
|
Distribution from Sunrise
Energy |
|
|
— |
|
|
|
— |
|
|
|
(625 |
) |
|
|
|
|
Bank and convertible note
interest expense |
|
|
2,517 |
|
|
|
1,770 |
|
|
|
5,204 |
|
|
|
3,480 |
|
Working capital period
changes |
|
|
12,546 |
|
|
|
10,674 |
|
|
|
16,390 |
|
|
|
6,655 |
|
Other long-term asset and
liability changes |
|
|
(253 |
) |
|
|
— |
|
|
|
(704 |
) |
|
|
|
|
Cash paid on asset retirement
obligation reclamation |
|
|
566 |
|
|
|
481 |
|
|
|
931 |
|
|
|
1,184 |
|
Other amortization |
|
|
1,728 |
|
|
|
1,270 |
|
|
|
3,378 |
|
|
|
2,529 |
|
Adjusted
EBITDA |
|
|
35,297 |
|
|
|
11,502 |
|
|
|
69,312 |
|
|
|
14,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (used in)
provided by investing activities |
|
|
(17,081 |
) |
|
|
13,194 |
|
|
|
30,548 |
|
|
|
22,145 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
Cash (used in)
provided by financing activities |
|
|
(1,029 |
) |
|
|
20,688 |
|
|
|
(13,751 |
) |
|
|
28,410 |
|
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
The call will be webcast live on our website at
www.halladorenergy.com under events and will be available for a
limited time.
Joining by
TelephoneUnited States (Local): +1 404 975 4839United
States (Toll-Free): +1 833 470 1428Access Code:
813157
Webcast Attendee
URL:
https://events.q4inc.com/attendee/232346032
Telephone
Replay available through Tuesday, August 15,
2023UK (Local): 0204 525 0658US (Local): 1 929 458 6194US
Toll-Free: 1 866 813 9403Canada: 1 226 828 7578All other locations:
+44 204 525 0658Access Code: 916946
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 |
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