Hallador Energy (HNRG) 10-Q 8 May 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 08, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	HALLADOR ENERGY COMPANY
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		29,498,506
Amendment Flag	false
Entity Central Index Key	788,965
Entity Filer Category	Accelerated Filer
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	HNRG

Consolidated Balance Sheet

Consolidated Balance Sheet - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 13,762	$ 9,788
Restricted cash (Note 5)	3,084	2,817
Certificates of deposit	5,380	7,315
Marketable securities	1,779	1,763
Accounts receivable	16,008	22,307
Coal inventory	19,890	10,100
Parts and supply inventory	10,295	10,091
Purchased coal contracts	6,845	8,922
Prepaid expenses	12,980	9,647
Total current assets	90,023	82,750
Coal properties, at cost:
Land and mineral rights	126,313	126,303
Buildings and equipment	339,396	339,999
Mine development	128,814	126,037
Total coal properities, at cost	594,523	592,339
Less - accumulated DD&A	(178,123)	(169,579)
Total coal properties, net	416,400	422,760
Other assets (Note 4)	14,298	14,114
Total assets	532,651	531,323
Current liabilities:
Current portion of bank debt, net	30,984	28,796
Accounts payable and accrued liabilities	19,201	19,773
Total current liabilities	50,185	48,569
Long-term liabilities:
Bank debt, net	196,651	204,944
Deferred income taxes	45,806	45,174
Asset retirement obligations (ARO)	13,429	13,260
Other	2,655	2,486
Total long-term liabilities	258,541	265,864
Total liabilities	308,726	314,433
Stockholders' equity:
Preferred stock, $.10 par value, 10,000 shares authorized; none issued
Common stock, $.01 par value, 100,000 shares authorized; 29,413 and 29,413 shares outstanding, respectively	294	294
Additional paid-in capital	94,597	93,816
Retained earnings	128,260	122,052
Accumulated other comprehensive income	774	728
Total stockholders' equity	223,925	216,890
Total liabilities and stockholders' equity	532,651	531,323
Savoy [Member]
Coal properties, at cost:
Investment in subsidiaries (Note 3)	7,789	7,577
Sunrise Energy [Member]
Coal properties, at cost:
Investment in subsidiaries (Note 3)	$ 4,141	$ 4,122

Consolidated Balance Sheet (Par

Consolidated Balance Sheet (Parentheticals) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, authorized	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, issued	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock,par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, outstanding	29,413,000	29,413,000

Consolidated Statement of Opera

Consolidated Statement of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Revenue:
Coal sales		$ 62,555	$ 75,795
Other income		767	490
Total revenue		63,553	75,885
Costs and expenses:
Operating costs and expenses		39,692	49,777
DD&A		9,703	9,182
ARO accretion		207	249
Coal exploration costs		139	419
SG&A		2,658	2,762
Interest	[1]	3,091	5,596
Total costs and expenses		55,490	67,985
Income before income taxes		8,063	7,900
Less income taxes:
Current		17	768
Deferred		632	970
Total income taxes		649	1,738
Net income	[2]	$ 7,414	$ 6,162
Net income per share(Note 6):
Basic and diluted (in Dollars per share)		$ 0.25	$ 0.21
Weighted average shares outstanding:
Basic and diluted (in Shares)		29,413	29,251
Net change in the estimated fair value of interest rate swap		$ (420)	$ 1,499
Savoy [Member]
Revenue:
Equity income (loss)		212	(325)
Sunrise Energy [Member]
Revenue:
Equity income (loss)		$ 19	$ (75)
[1]	Interest expense for 2017 and 2016 includes $(420) and $1,499, respectively, for the net change in the estimated fair value of our interest rate swaps.
[2]	There is no material difference between net income and comprehensive income.

Condensed Consolidated Statemen

Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities:
Cash provided by operating activities	$ 12,576	$ 19,113
Investing activities:
Capital expenditures	(3,093)	(6,053)
Proceeds from sale of equipment	325
Proceeds from maturities of certificates of deposit	1,935
Purchase of mining assets		(18,000)
Other		(589)
Cash used in investing activities	(833)	(24,642)
Financing activities:
Payments on bank debt	(6,563)	(8,366)
Bank borrowings		15,000
Debt issuance cost		(2,090)
Dividends	(1,206)	(1,194)
Cash provided by (used in) financing activities	(7,769)	3,350
Increase (decrease) in cash and cash equivalents	3,974	(2,179)
Cash and cash equivalents, beginning of period	9,788	15,930
Cash and cash equivalents, end of period	$ 13,762	$ 13,751

Consolidated Statement of Stock

Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2017 - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	[1]	Total
Balance at Dec. 31, 2016	$ 294	$ 93,816	$ 122,052	$ 728		$ 216,890
Balance (in Shares) at Dec. 31, 2016	29,413
Stock-based compensation		781				781
Dividends			(1,206)			(1,206)
Net income			7,414			7,414	[2]
Other				46		46
Balance at Mar. 31, 2017	$ 294	$ 94,597	$ 128,260	$ 774		$ 223,925
Balance (in Shares) at Mar. 31, 2017	29,413
[1]	Accumulated Other Comprehensive Income
[2]	There is no material difference between net income and comprehensive income.

General Business

General Business	3 Months Ended
	Mar. 31, 2017
General Business [Abstract]
General Business	(1) General Business  The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The financial statements included herein have been prepared pursuant to the SEC’s rules and regulations; accordingly, certain information and footnote disclosures normally included in GAAP financial statements have been condensed or omitted .  The results of operations and cash flows for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for future quarters or for t he year ending December 31, 2017 . To maintain consistency and comparability, certain 2016 amounts have been reclassified to conform to the 2017 presentation.  Our organization and business, the accounting policies we follow and other information, are contained in the notes to our consolidated financial stat ements filed as part of our 2016 Form 10-K. This quarterly report should be read in conjunction with such 10-K.  The consolidated financial statements include the accounts of Hallador Energy Compa ny (the Company) and its wholly- owned subsidiary Sunrise Coal, LLC (Sunrise) and Sunrise’s wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. We are engaged in the production of steam coal from mines located in western Indiana.  New Accounting Standards Issued and Adopted  In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory ("ASU 2015-11"). ASU 2015-11 simplifies the subsequent measurement of inventory. It replaces the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new standard will be applied prospectively and is effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods, with early adoption permitted. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial statements.  New Accounting Standards Issued and Not Yet Adopted  In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company’s primary source of revenue is from the sale of coal through both short-term and long-term contracts with utility companies whereby revenue is currently recognized when risk of loss has passed to the customer. Upon adoption of this new standard, the Company believes that the timing of revenue recognition related to our coal sales will remain consistent with our current practice. The Company is currently evaluating other revenue streams to determine the potential impact related to the adoption of the standard, as well as potential disclosures required by the standard. Because we do not anticipate a change in our pattern of revenue recognition, we anticipate that neither method will have a material impact on our consolidated financial statements.  In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 increases transparency and comparability among organizations by requiring lessees to record right-to-use assets and corresponding lease liabilities on the balance sheet and disclosing key information about lease arrangements. The new guidance will classify leases as either finance or operating (similar to current standard’s “capital” or “operating” classification), with classification affecting the pattern of income recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We are currently in the process of accumulating all contractual lease arrangements in order to determine the impact on our financial statements and do not believe we have significant amounts of off-balance sheet leases; accordingly, we do not expect the adoption of ASU 2016-02 to have a material impact on our consolidated financial statements. 

Bank Debt

Bank Debt	3 Months Ended
	Mar. 31, 2017
Bank Debt [Abstract]
Bank Debt	(2) Bank Debt  On March 18, 2016, we executed an amendment to our credit agreement with PNC, as administrative agent for our lenders, for the primary purpose of increasing liquidity and maintain ing compliance through the maturity of the agreement in August 2019 . The revolver was reduced from $250 million to $200 million , and the term loan remains the same. Our debt at March 31, 2017, was $232 million (term- $95 million , revolver- $137 million ). Bank fees and other costs incurred in connection with the initial facility and the amendment were $9.1 million, which were deferred and are being amortized over five years. The credit facility is collateralized by substantially all of Sunrise’s assets , and we are the guarantor. The amended credit facility increased the maximum leverage ratio (Sunrise total funded debt/ trailing 12 months adjusted EBITDA) to those listed below:  Fiscal Periods Ended/Ending Ratio  March 31, 2017 4.50X  June 30, 2017 through March 31, 2018 4.25X  June 30, 2018 and September 30, 2018 4.00X  December 31, 2018 3.75X  March 31, 2019 and June 30, 2019 3.50X  The amended credit facility also requires a debt service coverage ratio minimum of 1.25X through the maturity of the credit facility. The amendment defines the debt service coverage as Sunrise trailing 12 months adjusted EB ITDA/annual debt service. As of March 31, 2017 , we had additional borrowing capacity of $63 million and total liquidity of $84 million.  At March 31, 2017 , our maximum leverage ratio was 2.83, and our debt service coverage ratio was 2.15 . Therefore, we were in compliance with those two ratios.  The interest rate on the facility ranges from LIBOR plus 2.25% to LIBOR plus 4% , de pending on our leverage ratio. We entered into swap agreements to fix the LIBOR component of the interest rate to achieve an effective fixed rate of ~5% on the original term loan balance and on $100 million of the revolver. The revolver swap step down 10% each quarter commencing March 31, 2016.  At March 31, 2017 , we were paying LIBOR at . 79 % plus 3.50% for a total interest rate of 4.29% .  Bank debt less debt issuance costs are presented below (in thousands):   March 31, December 31,  2017 2016  Current debt $ 32,813 $ 30,625  Less debt issuance costs (1,829 ) (1,829 )  Net current portion $ 30,984 $ 28,796   Long-term debt $ 199,242 $ 207,992  Less debt issuance costs (2,591 ) (3,048 )  Net long-term portion $ 196,651 $ 204,944 

Equity Method Investments

Equity Method Investments	3 Months Ended
	Mar. 31, 2017
Equity Method Investments [Abstract]
Equity Method Investment	 (3) Equity Method Investments  We own a 30.6% interest in Savoy Energy, L.P., a private company engaged in the oil and gas business primarily in the S tate of Michigan.  We also own a 50% interest in Sunrise Energy, LLC, which owns gas reserves and gathering equipment with plans to develop and operate such reserves. Sunrise Energy also plans to develop and explore for oil, gas and coal-bed methane gas reserves on or near our underground coal reserves . 

Other Long-Term Assets

Other Long-Term Assets	3 Months Ended
	Mar. 31, 2017
Other Long-Term Assets [Abstract]
Other Long-Term Assets	(4 ) Other Long-Term Assets (in thousands)     March 31, December 31,  2017 2016  Long-term assets:  Advanced coal royalties $ 9,462 $ 9,296  Marketable equity securities available for sale, at fair value (restricted)* 2,093 2,036  Other 2,743 2,782 Total long-term assets $ 14,298 $ 14,114  ____________________ * Held by Sunrise Indemnity, Inc., our wholly owned captive insurance company .

Self Insurance

Self Insurance	3 Months Ended
	Mar. 31, 2017
Self Insurance [Abstract]
Self Insurance	(5) Self-Insurance  We self-insure our underground mining equipment. Such equipment is allocated among ten mining units spread out over 18 miles. The historical cost of such equipment is approximately $247 million.  Restricted cash of $3.1 million represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.

Net Income per Share

Net Income per Share	3 Months Ended
	Mar. 31, 2017
Net Income per Share [Abstract]
Net Income per Share	  (6) Net Income per Share  We compute net income per share using the two-class method, which is an allocation formula that determines net income per share for common stock and participating securities, which for us are our outstanding RSUs. The following table sets forth the computation of net income per share for three months ended March 31 (in thousands):  .   2017 2016  Numerator:  Net income $ 7,414 $ 6,162  Less earnings allocated to RSUs (179 ) (125 )  Net income allocated to common shareholders $ 7,235 $ 6,037  

Asset Impairment

Asset Impairment	3 Months Ended
	Mar. 31, 2017
Asset Impairment [Abstract]
Asset Impairment	(7 ) Asset Impairment Review In December 2016, the deterioration of the North End of the Carlisle Mine (the North End), coupled with lower coal prices led us to determine that the North End could no longer be mined safely and profitably. The sealing of the North End was completed in March 2017.  With the Carlisle Mine remaining in hot idle status, we conducted a review of the Carlisle Mine assets as of March 31, 2017, based on estimated future net cash flows, and determined that no impairment was necessary.  The Carlisle Mine assets had an aggregate carrying value of $115 million at March 31, 2017. If in future periods, we reduce our estimate of the future net cash flows attributable to the Carlisle Mine, it may result in future impairment of such assets and such charges could be significant. None of our other assets are considered impaired. 

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Taxes [Abstract]
Income Taxes	(8) Income Taxes  Our effective tax rate (ETR) for 2017 was estimated at 8% and 22% as of March 31, 2017 and 2016, respectively. Assuming no changes in our expected results of operations, we expect our ETR for the remainder of 2017 to be about the same as the first quarter of 2017. Our ETR differs from the statutory rate due primarily to statutory depletion in excess of tax basis, which is a permanent difference.

Bank Debt (Tables)

Bank Debt (Tables)	3 Months Ended
	Mar. 31, 2017
Bank Debt [Abstract]
Amended Credit Facility Maximum Leverage Ratio	The amended credit facility increased the maximum leverage ratio (Sunrise total funded debt/ trailing 12 months adjusted EBITDA) to those listed below:  Fiscal Periods Ended/Ending Ratio  March 31, 2017 4.50X  June 30, 2017 through March 31, 2018 4.25X  June 30, 2018 and September 30, 2018 4.00X  December 31, 2018 3.75X  March 31, 2019 and June 30, 2019 3.50X 
Schedule of Debt	Bank debt less debt issuance costs are presented below (in thousands):   March 31, December 31,  2017 2016  Current debt $ 32,813 $ 30,625  Less debt issuance costs (1,829 ) (1,829 )  Net current portion $ 30,984 $ 28,796   Long-term debt $ 199,242 $ 207,992  Less debt issuance costs (2,591 ) (3,048 )  Net long-term portion $ 196,651 $ 204,944 

Other Long-Term Assets (Tables)

Other Long-Term Assets (Tables)	3 Months Ended
	Mar. 31, 2017
Other Long-Term Assets [Abstract]
Schedule of Long-Term Assets	Other Long-Term Assets (in thousands)     March 31, December 31,  2017 2016  Long-term assets:  Advanced coal royalties $ 9,462 $ 9,296  Marketable equity securities available for sale, at fair value (restricted)* 2,093 2,036  Other 2,743 2,782 Total long-term assets $ 14,298 $ 14,114  ____________________ * Held by Sunrise Indemnity, Inc., our wholly owned captive insurance company

Net Income per Share (Tables)

Net Income per Share (Tables)	3 Months Ended
	Mar. 31, 2017
Net Income per Share [Abstract]
Computation of Earnings per Share	 The following table sets forth the computation of net income per share for three months ended March 31 (in thousands):  .   2017 2016  Numerator:  Net income $ 7,414 $ 6,162  Less earnings allocated to RSUs (179 ) (125 )  Net income allocated to common shareholders $ 7,235 $ 6,037  

Bank Debt (Narrative) (Details)

Bank Debt (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 18, 2016	Mar. 17, 2016
Debt Instrument [Line Items]
Closing costs of debt	$ 9.1
Loan initiation amortization period	5 years
Credit agreement, amount outstanding	$ 232
Credit facility, maximum borrowing capacity		$ 200	$ 250
Debt, unused borrowing capacity	63
Liquidity	$ 84
Maximum leverage ratio	283.00%
Debt service coverage ratio	215.00%
Minimum [Member]
Debt Instrument [Line Items]
Fixed charge coverage ratio	125.00%
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt, interest rate spread on variable rate	3.50%
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt, interest rate spread on variable rate	2.25%
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt, interest rate spread on variable rate	4.00%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Credit agreement, amount outstanding	$ 137
Credit Agreement [Member]
Debt Instrument [Line Items]
Debt maturity date	Aug. 1, 2019
Debt instrument, interest rate, effective percentage	4.29%
Term Loan [Member]
Debt Instrument [Line Items]
Credit agreement, amount outstanding	$ 95
Sunrise Coal [Member] | PNC Bank [Member]
Debt Instrument [Line Items]
Percentage decrease in amount of debt with maximum interest rate per quarter after commencement date	10.00%
Sunrise Coal [Member] | Maximum [Member] | PNC Bank [Member]
Debt Instrument [Line Items]
Interest rate maximum	5.00%
Sunrise Coal [Member] | Revolving Credit Facility [Member] | PNC Bank [Member]
Debt Instrument [Line Items]
Amount of debt with maximum interest rate	$ 100

Bank Debt (Amended Credit Facil

Bank Debt (Amended Credit Facility Maximum Leverage Ratio) (Details) - Maximum [Member]	Mar. 31, 2017
March 31, 2017 [Member]
Line of Credit Facility [Line Items]
Leverage Ratio	450.00%
June 30, 2017 through March 31, 2018 [Member]
Line of Credit Facility [Line Items]
Leverage Ratio	425.00%
June 30, 2018 and September 30, 2018 [Member]
Line of Credit Facility [Line Items]
Leverage Ratio	400.00%
December 31, 2018 [Member]
Line of Credit Facility [Line Items]
Leverage Ratio	375.00%
March 31, 2019 and June 30, 2019 [Member]
Line of Credit Facility [Line Items]
Leverage Ratio	350.00%

Bank Debt (Schedule of Debt) (D

Bank Debt (Schedule of Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Bank Debt [Abstract]
Current debt	$ 32,813	$ 30,625
Less debt issuance cost, current	(1,829)	(1,829)
Current portion of bank debt, net	30,984	28,796
Long-term debt	199,242	207,992
Less debt issuance cost, long-term	(2,591)	(3,048)
Net long-term portion	$ 196,651	$ 204,944

Equity Method Investments (Narr

Equity Method Investments (Narrative) (Details)	Mar. 31, 2017
Sunrise Energy [Member]
Equity method investment ownership percentage	50.00%
Savoy [Member]
Equity method investment ownership percentage	30.60%

Other Long-Term Assets (Schedul

Other Long-Term Assets (Schedule of Other Long-Term Assets) (Details) - USD ($) $ in Thousands		Mar. 31, 2017	Dec. 31, 2016
Long-term assets:
Advance coal royalties		$ 9,462	$ 9,296
Marketable equity securities available for sale, at fair value (restricted)	[1]	2,093	2,036
Other		2,743	2,782
Long-term assets		$ 14,298	$ 14,114
[1]	Held by Sunrise Indemnity, Inc., our wholly owned captive insurance company.

Self Insurance (Details)

Self Insurance (Details) $ in Thousands	Mar. 31, 2017USD ($)sitemi	Dec. 31, 2016USD ($)	Aug. 31, 2010USD ($)
Self Insurance [Abstract]
Number of mining units with self-insured equipment | site	10
Area of self-insured mining units | mi	18
Mining equipment at historical cost			$ 247,000
Restricted cash	$ 3,084	$ 2,817

Net Income per Share (Details)

Net Income per Share (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Net Income per Share [Abstract]
Net income	[1]	$ 7,414	$ 6,162
Less earnings allocated to RSUs		(179)	(125)
Net income available to common shareholders		$ 7,235	$ 6,037
[1]	There is no material difference between net income and comprehensive income.

Asset Realization (Narrative) (

Asset Realization (Narrative) (Details) - Carlisle Assets [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Impairment Effects on Earnings Per Share [Line Items]
Mine carring value	$ 115,000
Asset impairment charge	$ 0

Income Taxes (Narrative) (Detai

Income Taxes (Narrative) (Details)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Taxes [Abstract]
Effective tax rate	8.00%	22.00%