HNRG - Earnings call transcript Q3 2017

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Operator

Good afternoon, and welcome to Hallador Energy's Third Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note, today's event is also being recorded. I would now like to turn the conference call over to Ms. Relations. Investor Palumbo, Rebecca ahead. go please Ma'am,

Becky Palumbo

opportunity and Thank you, joining quarter able which thank was our for our had everyone, replay this results. to third the access Good morning filed live, webcast on today's website. afternoon, XX-Q, is on the all us have third hope and review event discussion our the This being Form I and quarter release you you Jamie. to of this with XXXX earnings SEC. our you'll be of

As that a actual risks that forward-looking reminder, our remarks cause will and are include statements results could materially. certain subject differ to to uncertainties

We Martin, CEO; call are With estimates by statements operating Brent future regulations mining today Clean may take events and result Larry the by of the by as do example, future coal review with results, as be Larry. With to required initiatives. law. a information, Act me Larry of Brent. President followed update our our not relating Larry our afterwards. whether of I prepared that, undertake Bilsland, forward-looking and will to your or sales and new Air except For environmental otherwise, costs, other and to will a remarks turn begin and our over Brent our questions CFO.

Larry Martin

which months. a was million, review or operating results. $XX.X year-to-date for our $X.X of Net share had of in Becky. you, the share. net the to I income the Today, third for over Thank nine million $X.XX $X.XX We quarter go want income a resulted

plus less amortization ARO net Our maintenance defined accretion income and free depreciation, cash income as is compensation taxes plus which CapEx. stock plus and depletion flow, deferred

and $XX.X million cash $XX.X flow quarter free Our million the for year-to-date. was

compensation accretion, We we million the $XX.X $X.XX a the in million paid $X.X plus paid reduced adjusted August which $XX.X or of stock and months. for And the $X.XX EBITDA $XX.X $XX.X $X.X share. year-to-date. nine million quarter by year-to-date, million is defined was in for quarter, million million, ARO EBITDA, We a plus Our as debt dividends share.

bank Our of XX million. $XXX.X was debt as September

$XXX.X debt million. net Our was

a target debt-to-EBITDA debt. is the ratio bank Sunrise-only is I'd of general which results at -- to turn to $XXX year our over the X.XX rest our Bilsland, required our was bank And million to calculation, CEO. and the times for debt of ratio, the September. for Our leverage end over $XXX like the to statements go now and is Brent of our million

Brent Bilsland

have to us for structure Hallador months months we nine months that versus million we you and Hallador everyone, reductions report generate costs free for million lowered enabled third yet successfully respectable first the flow has in XXXX of cash quarter. another happy company-wide structure X%. I'm thank $XX.X XXXX, Hi, have compare and our $XX.X by for These first posted today. our of the When joining our cost cash the in cost for nine to first X the quarter.

our balance utilized invest our have to our business. We and cash sheet delever in

X $XX.X first lowered now we our by of debt-to-EBITDA the paid million, months, $XX.X million to our In bank delevering. the X.XXx. ratio which as have we quarter. discuss this let's First, important is down reduced This was debt

step-down LIBOR savings LIBOR to million $X equates points. ratio we leverage to As long basis The reduced the XXX is basis as a in year's plus plus our remains time. rate XXX interest X.Xx, interest versus rate pay below over points roughly

free your believe, either business by this, either And at not. our a you're we our increase in on we Hallador growing or liquidity and million business. cash in balance Additionally, the investing the of mean dying. in to were we've the We you're to able investing end at you're focusing Hallador, $XX our September. And or healthy been quarter, then flow, of you're

If our X plant, Oaktown purchased we our our the and our mine, mine. at just the efficient. which cost we Fuels. In it in 'XX, XXXX, have battery will which of unit's Last of back elevator purchased help new a ton delivery invested Vectren We making Oaktown further cars lower history costs. from completed labor at our in contracts more competitors. reduce our per wash in In week, few reserves we weeks, you a worth look at XXXX, we help anticipate will

the the coal. Princeton enable as is low-cost production trains limited to announce to to we Sunrise's by Loop, primarily Hallador has and facility as For worked cost of to XXX be the years, of over facility, located utility to about we The coal-loading and market in XXXX. the sales substantial unload blend will refer access the been have to once new X served Loop which facility Railway customers. This completed better ground in We're serve a coal that load markets our on has production, ability our and weak excited Southern plant that XX% development invested volume of roughly it spring rail hours lower have million will Princeton continue tons near challenged several our that XXX-car broken by to we store facility trucks, we excited include rail serve Thus, but new Norfolk of the to of are Indiana. and coals, the capacity. will unit Princeton, truck

Princeton addition much our end we are we expect XXXX, of XXXX than we $X.X million. potentially more priced. and of XXXX XXXX fully X.X As approximately prospects. the for are in sales the sell our with million tons, of sales sales Current as optimistic Loop, very near to And the

Our based several factors. is on optimism

of shortlist contract utility discussions. the engaged and on currently are sales We in RFPs

soon. maybe decisions expect longer to We relatively term for be XXXX made and

Natural between stable $X.XX coal the their MMBtu, in prices also have strategies. procurement and sales utility months. gas This which execute seen to decline provide for to our provides coming utilities and range burns XXXX opportunities markets. continue coal stockpiles per additional We spot will continue in stay-short in $X.XX

a the basins XXXX strong all been have market Additionally, market. are export and projections export strong for lately, for our coal very current

not helps indirectly. may Coal, While directly this benefit it Sunrise certainly

announcements. the These Hallador's Friday, I that will me, I to the very this Hallador's success are which from CFO of and our be role part as announced Sunrise said, will to the that Tryon Larry have growth. Director. CFO from continue big and assume company to will are of Coal, period to and assume of changes changes Additional well. been because have as remains, continue I and several President, Heather Sunrise's Heather, They will management in Martin they individuals These company CEO open choose to company's largest On organization. With be not of instrumental outstanding adding questions. a our is as the continue to off Larry. be recognizing Larry will our Larry years. of growth for depth President our team that and far, about better in earned Sunrise's will our both call our in performance we Hallador's by remain for a company investment. preparing promotion, up involved organization and role

Operator

from session. [Operator Ladies this Riley Please B. begin the ahead comes FBR. Lucas with your And instructions] Pipes question at today and go gentlemen, we'll from question-and-answer question. first our time

Lucas Pipes

to on promotion. see. congrats, Larry, That's Good awesome Hey. deserved. That's everybody the well and afternoon,

Larry Martin

Lucas. you, Thank

Lucas Pipes

So, bit your regarding I to, a wanted on little up commentary follow growth. Brent,

tapping industry see that's more very growth know maybe the into specific? load-out something that this opportunity. on. course, dynamics to the investment is about could wondered very changes little couple not a that around could Basin? you're that, accustomed in you working the thermal is You in I we i.e., in And in if then, the intrigued And coal you rail specifically level, I'm if where the us what just coal by hearing the bit you the are investments industry. in this the from facility. give in Hallador a Is more high market, a share Or Illinois numbers of

it then it terms the on associated you said be prices, expect of may higher missed could what it. I and you in your if have But higher I from realized or appreciate perspective may And returns, also would it. share volumes CapEx with that. You

Brent Bilsland

Okay.

on the touching growth. First,

believers have companies the in that we invested, camp just there coal sucked out of that are in big that feel about the are we of have talked think and coal the cash all their we that We companies are that. I business.

make a at have struggling. we we the And higher And we've think, that look that of our them. will. us are Starting good of only for cost next weak NS or at the see produced continued demand are view they production who that see to invest rail the our a which away, cost are regardless those We've the just From in returns by Loop, business advantage changes, market. The of as have to in railroad. we being We that can in see to and to budgeting the year, whether produced them continue a coal -- offline. have there's that two never companies $XX which day, fundamentally lot reduce spring of is the come of go been And from feel pricing. we I think in that buys market access tons we as I be regardless us lot structure. than standpoint, less -- our continue a facility, into of accessed mean, to an facility, we game-changer continued looked the that end had puts assets we we past. million there's Princeton to we that we And

whole call as to. our to to production a customer So and gives sell that low-cost try new group upon

because customers that and from coal plans well, we if a a that are way, the have the This the NS have keep do that blocks be that, at it feel us careful to some NS, on have I CSX I can of not and my both larger only to always on access take and I comfortable where business customers you we and are a are from want have CSX to the well, the to some plant coal have know only have buy can the us, served. plant, Secondly, more say NS problem be. CSX I CSX we to to they that position of we buying plans lot

a what's is is, long said I that, we're in operating time we've capacity. for unique with that's XX% that of Hallador about a about So, company think

hopeful utilize going of of more capacity facility us rail the will that our We help addition forward. are the

Lucas Pipes

That's little a than Can they're quarter, very higher costs a in the third switch the just I perspective. helpful Your year-to-date topics? figures.

you recall somewhere for the numbers, two quarter correctly. also think fourth I I between the gave that in was guidance So, if

think you and to is a about and positioned that the Oaktown how for think just coal? alluded XXXX what you improvements is on curve model the our as Oaktown do number you in good So, put to, cost

Larry Martin

you've Well, sales in, for for year, do a seen about were million. at we $XX cost -- Lucas, yes, the but our Oaktown below mean, -- first XX million I $XX we're you're give contracts that -- quarter, it's I'll coming where on if depending next level, the million the the -- in more were they year. you structure X.X in costs the to X.X for At talked coal, Brent X-million-ton

Brent Bilsland

third we but to a shipments. slowed just inventory to just decent, needed was much our Shipments didn't produce the In do coal decision down. quarter, we levels. were adjust It's as production

we that's costs. an why saw increase in So

Lucas Pipes

call with color that high a the Larry additional cost on coal there whole versus main X think, end regarding you that will what of be it of you driver the us the do What lot or will is mentioned, at to that depend low performance the so, million the range? low volumes. And tons share -- plus -- range any just Brent, could volumes X going Is the end million high to of be tons? end

Brent Bilsland

cost. comment shutdown the of quarter, in holiday, have which we Also third July One week. a is the on more Fourth

our costs also So that in that higher helped drive time period.

is been XX staying in and the fairly the XX, the than I consistently, going lot App in overall range. that in export. in today in consistent $X.XX we for really think higher to been I at we much biggest feel has have couple year continued a of or $X.XX is exporting and our the of feel X, that anticipated. sales ago. stronger the years But sales, coal. last stronger is Coal that the the in here, at haven't others kind end that development was coal, X.X probably be lower mine prices. the run fairly we range we've Indiana the of range? last that prices to have those range Gas of be the end What's have have think than will of market it And As a weeks, the Central we been exports to

Some the going to export. been NAP's

that export, that of going in haven't and hit well created don't years -- lot Some a it's been to the are Illinois Basin river gone that now. past just coals going export there of to the have tons

than we play factor our middle us, certainly So there's probability that be again, a doors we're in opening to 'XX. we're to of we it seen, remains rail -- think right And sales it's is high will but 'XX in of in But certainly period. appears tons for in did more in ship our a will we how much that the negotiation loop that our something us.

Lucas Pipes

thank luck appreciate all color. hear. And of and best to you. great That's the Really

Brent Bilsland

you. Thank

Operator

from Our next Capital. comes instructions] ANC Calavritinos Arthur [Operator from question

Arthur Calavritinos

you. questions question Hey guys. -- the Thank actually. on One two

a right, higher you while debt, sure other it cost facility price and I'm this And assume I'm have, did price -- in great the a fixed guys a at at going down. you're looking priced job of at to because much they income paying and for you market, capital. On coal the keep I a companies'

if not right. not you could on I'm act be out think of might matures. if it? I'm If extend but sure a when sure keep that's there paper And So, comments this we thing get Are does, this it that. I 'XX, of piece couple and to it going

Brent Bilsland

in credit currently, Well, expires of August XXXX. facility our

don't to we've aggressively sheet, us. made we proud think X.X very to times. our it that What and to on do when balance that, to will we that we try delever I down worked yet. decide determination know very there's as pressure have I'm We far got that I as refinance don't

Arthur Calavritinos

there's piece coal look I'm pressure I market think great out saying all. it's for other the of But just that's when in there they're I yield paper don't high the know, cost capital I agree. a I at at of paper. issuing companies,

thinking when have same to fixed going on what So, income rate, I'm I all. Or of just same that's higher it be the -- will at get cost of probably That's saying. is, you'd plan what's a is out look the on it lot side. type the Because all extended? I'm the of there, game there's whatever capital at

Brent Bilsland

we'll some down get is. have I what sit and at Yes. discussions with as our into plan think year that And we about those bankers next the point time, game in certainly right

runway, We haven't bed of of worked I get to we those types on position refinancing to to kind sales date we as have we think have put our would discussions. plenty and of want that before

Arthur Calavritinos

gas... And Okay. the then on

Brent Bilsland

you. But I agree with

our I think debt. we bank good a on deal have

Arthur Calavritinos

in as How 'XX. $X.XX side. And talking work say -- get but seeing How Okay. then Is it if it. mechanism or of it delay can go or Dec more coal that gas -- prices the Jan I'm moving follows? just me I'm first, on could we Feb. then $X.XX, about gas the volumes on you're through Let's here, and I walk understand for And Jan so $X better. I price that's nat number was up? the company. so a you switching transmission about does cap

Brent Bilsland

Well, coal. coal pricing coal market nationwide I against and big will competes determines gas think that the market how then the be natural

below. a time of inventory where much the months of in the has now, inventory we've the see currently, appreciation? traditionally welcome. a period price We certainly When have that -- so of suppliers been Export coal above issue XX gas year standpoint. with the a a most most I open five-year in is been been from have And past right from now markets they natural we lot have. being the natural right spent a standpoint, market oversupplied, average. but will we've gas position think they're larger very inventory seen correction And levels coal than

our be of has we coal have the a think look we cost the we when the that and will where customers, purchased, our up we offer know of think rise be rise be. think that structure, x to flexibility quality we we transportation at starts because amount to up that handle than players. all now sales ship, then will to because going you coal and to roughly and fewer Now it's been it's locked I in a the as on you're of capacity market, get Once positions much I think move how going faster years just past pricing there's

question. your hope that I answers So,

Arthur Calavritinos

No, volume it let's have no. gas. What now have a demand, past, like It was when is X like. and price price-driven volume-driven. stable, that's get it can overreliance I'm And when capacity we was it seems left coal demand if plus, and we'll say like have the because really we years is from up and like in may get went and gas in situation -- times the saying ago from it seems on you up-cycle an that volume it you

versus may the that just more might but or... be With years got we -- it we lag, ago, five volume. be accurate Would with have

Brent Bilsland

four think certainly it eye -- ago I tide, in equals it's the the dramatically hasn't the supply positions, seen this move years ships of because it yet. in we're it where will we pretty the think API yet on again, of of rising couple was mean, month. have rise prices Basin months demand. has Well, was a -- two, a returned has And think direction think that think price the But by Northern fairly keeping because I seeing of I App -- we've moving to prices in three dramatic last last now, Illinois Central seen App last from is it soon. levels the and increase fairly of an larger I ago, improved all I Right pricing lot but And all pricing open X driven aggressively I the move be And months. with month. this in the

Arthur Calavritinos

right. Got Thank it. All Okay. you.

Operator

instructions] back questions. over to turn [Operator I'm additional ladies And to management any at I'd and like closing this no call showing time, the conference for gentlemen, remarks.

Brent Bilsland

no Well, us we Thank our joining for I hey what I and future look the everyone to remarks, further you joining but today. forward brings. call appreciate have

Operator

that does thank for and you presentation. We do today's gentlemen, conference Ladies call. today's joining conclude

You may now lines. your disconnect

Hallador Energy (HNRG) 12 Nov 172017 Q3 Earnings call transcript