HNRG - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the Hallador Energy’s 2018 Full-year Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Investor of Director Palumbo, Relations. Becky Please go ahead.

Becky Palumbo

Andrea. out today you, discuss fourth XXXX Thank today's you, time your our earnings. full-year and taking for quarter to to everybody, call Thank join for us

Participating call are our to time for and issued Larry financial me along be today's after CEO; today. available their replay we remarks, and with will are the This management had President haven’t on Bilsland, is they this our the you review and opening Brent Form transcript we webcast with earnings yesterday, Brent our XX-K with on on by posted website will Larry CFO. overview up being will Q&A. operations on completes with our later line comments open both call our release Martin, and website week. followed a If begin and the

are that Air press differ events not future measures that you we whether be would certain otherwise, like issued example, of coal non-GAAP our financial update remarks other Statements as that to which reconciliation release the website. to our mining of costs, yesterday, posted new Clean regulations risks will on sales to we law. to We discussed Also, a result morning information, except may remind initiatives. environmental statements results by and again subject as or required I undertake our have is in a this actual future and uncertainties that regarding and materially, estimates forward-looking cause of the Forward-Looking include Act our Our do for could

highlights. over to that, I with will So over the call Larry. Larry go to our turn

Lawrence Martin

for quarter I Good operating the year-to-date. the Becky. afternoon will review you, Thank fourth and everyone. results

$X.X quarter, fourth $X.XX. year million, share For million, the was a net $X.X for $X.XX the income

method our DD&A and cash the ARO compensation, effects year. for taxes quarter million for of maintenance free income was flow accretion CapEx less deferred Free as the is cash and investments. plus net $X.X defined which equity plus the plus plus million flow, Our stock $XX.X income

EBITDA $XX.X decreased quarter, the our accretion of defined Sands. equity share $XX.X the our for We EBITDA adjusted was debt for stock year. million for which the effects million in method the the dividends in plus fourth Hourglass million $X.XX We and or decrease share $X.X quarter of for investments million a fourth by plus was paid quarter $X.XX million $XX.X ARO the Our in $XX.X our year. million as Adjusted is compensation $X.X total EBITDA less year-to-date. a

million the at Our end of was of the and end bank debt was debt year. year $XXX.X the at $XXX.X our million net the

of of owed debt the to Our EBITDA. year end times debt leverage to $XXX adjusted XXXX ratio for the our at target million $XXX the the X.XX end was million that and bank is is

Now, the I to CEO, turn will our over call Brent Bilsland.

Brent Bilsland

million XXXX Larry. Hallador In calls, subsidiary, have previous happy on about coal the XX we a tons our report initiatives have Thank spoken XXXX, time deal you, paid I'm and of Sunrise Coal to for Well grow to those additional periods. sale off. wholly-owned sales or contracted XXXX, that great positioning

a million As X.X tons from previously. XXXX raising tons million sales annually we guidance to result, X.X are our

years production pace, for the repeat million I Additionally, timeframe. have sold sales at that. tons our to of we eight eight are want million we the tons XX% an for forecasting annually of Currently XXXX, four XXXX next

producer know of the We I another do at production in have tons that next million that years. for sold eight is XX% hedged four industry the the not four next well years pace. for our

each making We we million tons. million XX estimated our a customers XXXX forward. We XXXX tons. we demand power for customer total states. demand in nine of in sold XXXX was average co-consumption X.X sold served we When clients from represent roughly XX.X customer demand in X.X eight million estimated million of versus we million the XX%, look nine states, doubled plants providing These new The roughly of opportunities future. tons nearly sales, XXXX, supply. today of customer Additionally, ability in of roughly different customers X% us with states XX become our in plants number our serve the A sales we eight of power much located to at an larger for tons XXXX but XX XX.X to tons concentration, XX% in going thus XX customers which In have is supply. increase XXX% exciting base. have served made our XX% the new our in plants of tons million customers customers estimated three

Southern coal Norfolk coal has Sunrise So from the the a allowed reduced going Loop Railroad first for in and by is to markets demand new A contracts. three access The customers Princeton greater to us contracting customers result with of Sunrise export this that market a that supply. led market, addition new percentage changes new This lastly, in and tightening mines and of time. served supply. to is Indiana to a purchase increase the has the Illinois under and Basin our of is have increased coal our industrial customer decided fundamental has long-term close largest

supply supply enough that about the for exports been closed we in mostly reports debate that Now world, to four the meet [indiscernible] Illinois be Basin do will three in and XXX annually generation, announced sustainability that their U.S. power some sentiment needed some in certainly Glencore built from comments growth coal tons and world generation the steam think comments coal same has I something, they other every has cap see as they future the of of see there grow to the exports. new in executives not power BHO. by this Illinois is production coal of this BHP that throughout in producers a such will seen fill the the is the in they to from the seek is have Basin or and new sentiment. demand largest market stated and echoed being industry mostly megawatts coal-fired will no the production being world Europe, At in echoing coal-fired Glencore must and Asia. in coal the recently coming online time, is million not we IHS

will these changes allow So annually we going are all fundamental three to eight believe Sunrise million sustainable ship are of and forward. tons that

below had summer a We sales for fantastic they the additional is taking contracting will be from likely still utility additional ripe the five analytics, a front sales. but to On XX% stocks inventories a plant below natural breather gas gas According have are environment average. are see average. XX% until and coal season whether five natural year the brings, the - customers year what

to certainly if itself we sales think So opportunities the make weather are additional somewhere is present. presents any

years. at for and in the Looking employees those cost slightly three and it $XX.XX. it our transferring This our increase In was and structure, equipment was to retraining a the cost second due of less half primarily half first to of idle Oaktown structure reopening $XX.XX. XXXX remained than Carlisle, mine year the was from employees

all unit production of with nearly only very of inefficient. is XXXX which operated one second For we half Carlisle of

in unit us Carlisle enough we per southeast second range had thus comfortable Carlisle, desirable, the a provides different ton the dramatic that late seen a quality at $XX are sold justify Carlisle by and Our that slightly be with structure mine production adding December, our $XX reduction coal of Thus mine. in wide cost to Company is especially to of we in very have that we will projecting XXXX. costs

Looking the inventories by due well. a flow Princeton at $XX.X at inventories Carlisle, previously Opening backup. such on for and to for increasing mentioned. the cash inventories provided was as locations at as flow, cash as compared Town XXXX. XXXX reopening there we was inventory operations million decrease cash Loop, The and $XX.X generation Also of new in cash Oak increased building front we large by million our to base getting

that associated generation. in changing We see costs on cash as Carlisle. Mine increased at reopened Our flow and with second we margins brought unit tighter resulted the Carlisle have trend lower

in of the locally to produced In complete we second test produced towards to year. we Colorado, being Sands, completed frac switching wells expect and have this Basin Hourglass part remainder sands of work quarter to the For sands - one continue by DJ outside the trends three miles of versus anticipated XXXX Basin. industry an roughly

investment As and criteria, is in We future. our contribute can in do believe frac our not to I be though have sand believe competency, profitable stated before, the we Hallador to expect well exceeds core it XXXX. meaningfully mine we it within

our of XXXX, $XX.X by quarter, previously year-over-year. at end reduction million is reduced Larry our of sheet the the which was debt Looking fourth mentioned a we balance million as $XXX.X million, at in our $XX.X debt

well leverage X.XX our times decreased times from within times X.XX and X.XX covenant. ratio Our to the during quarter

also liquidity by Our quarter liquidity. $XX to the a million improved in million of healthy $X

increased eight Our we of Hallador position success of . were for contract customers million by and years. four forward, great is for new to CapEx for XXXX sales adding pace able $XX CapEx tons budget annual our which we million eight to annually, our summary, XX% $XX million roughly XXXX our sales decreased In next the for is concentration going maintenance we market

value like that flow open the for this With All for and questions. of up I creates visibility call great cash Hallador said, shareholder.

Operator

question the question answer and B instructions] ahead. begin Please, first comes session. now [Operator go Riley our Lucas will from FBR. We of Pipes And

Lucas Pipes

Good gentlemen. Hey. afternoon

Brent Bilsland

afternoon, Good Lucas.

Lucas Pipes

bit It things bit things follow however tightening recent up weeks. to wanted I the Brent, a been and market. softening have domestic seems seaborne the a like on little side the over maybe on little

prices positioned buy point would are the what you. positioned Thank perspective coal this utilities of appreciate is they in market, at is in do mix your your of much need on sense the that. in then And that? to how course, how for Hallador domestic especially very time more Now,

Brent Bilsland

seen and need more some to will months. believe done, a decreased and their report that coal that peek coal utilities utilities inventories buy levels see have but We do over the what we weather has winter several the take

has on others, seeing utility every And we couple surprises frankly a that some they will that so have now and early. jump but RFPs than are so quite strategy, big their that were earlier

there coal. by that needed So several are that we utilities that domestic think

Lucas Pipes

on Or top That a off is and see to they contracts do short-term well? you more things basis? hear good as longer do term

Brent Bilsland

in We contracts the to year four two were several that range. signed

saw to a several definitely haven't seen term return we contracts for years. that So

Lucas Pipes

more Great. How to you. bit us provide at restart hear. has been And progressing? issues? operation Thank going the good you a would you you update unexpected costs then on would can maybe think about little color forward on this appreciate Any how situation? Very Carlisle that of

Brent Bilsland

a were we late that there July, at mine. There or unit a in was that sometime in shutdown restarted production of so period we Well, restarted Oaktown. July, is time

Some say, market minor to of certainly mine have unit between maybe sales we mine this And later any over that like developed. numbers for to single and production actually those is to And progress that if at equipment $XX commented time to production hadn't, those Carlisle, cost three unit have potential is X.X well move retrained, mean, I most a been run continue There they they I we and people there couple ran but and money develop, the unit. there market a restarted delay a of people structure. the X.X like we tons almost XXth, were because bring XX-day the work window. cost they one December in again we maybe but is the general that added from And, help we have be three correct million is the month lot done think the is set this in we Hallador's what sales improvement Certainly to coal any think structure. $XX, somewhere years. since moved up that part there helps and the have traditionally mine for year. think development we I surprised unit is today, which from last inventories, have export to tons we we added dramatic mean and now think a at And But mine a conditions. thought we second it the there would I for certainly mostly that - back there into statement. - are anytime export we market by, we thought looked is But years. pleasantly in in we a million will is and the think forecasting not always going X.X might, can cost year, run would

it that and to come pretty So in when movement. buy, wants decides fast is the market export

beneficiary constructed. the of of we that, think large. of XX, with in U.S., addition of being percentage year. the the is new customer what outside because that Coal of that Loop, look that that And the the up lot is of improving market. huge all pick we have the is that and had these coal are there nine of of quite allowed a been macro to of that, outside at have we mean, suppliers power customers that variety the this eight some that to are plants of a increased we of Carlisle world of our the lot from on And to with the us growing so the part and to improving certainly of the the I U.S. going customers selling going viewpoint addition logistics for can sell seeing all coals is

there So add-on going think the road. we is to tons down be

we in we plant. a have traditionally plant, volumes They So a their may have we once up get not down, we stay a to tendency or have tendency to in but a there. stay vary -

at together has this a this everything We So to and we get year and into I are ago. in we of position position worked think long the I a trying kind dramatic were dramatically right better been a came this time of XXXX, of than think end change. time

Lucas Pipes

congratulations progress. I sand that on on the Any to Hourglass? and great on all want update to touch hear is quickly This side.

Brent Bilsland

this could are still not place are late that open and customers. contracting in to our We be It's That we something talking now working our said, potentially to at year. in to this where get still permits position goal we to moment. being

We there. to are get working

that still market like are liked we business. to going and that work So it we day. We on still still every

Lucas Pipes

But I the really over it turn good now. color for Great. Got will job. it. and appreciate all

Brent Bilsland

Lucas. you Thank

Lawrence Martin

Thanks Lucas.

Operator

go our [Operator And Park ahead. Instructions] of next will Ethan Please Capital. from come question Extract

Ethan Park

Brent XXXX. on and is the Hi, Congratulations sales Larry. for great. guidance That increased

Brent Bilsland

Thanks Ethan.

Ethan Park

your kind that question, let upside related I the but last mean further for sales about to the is ask of maybe number. me

in to can ramp-up your be guidance that comment to coal XX.X costs even? be on tons, may I So was more you will that capacity at XXXX Can And that sell you also, a noticed on the if X.X or on production how elaborate per XXXX. million you XX-K little me? those annual what X.X so more in can much million ton ramp-up helpful and XX.X or associated be if ton XX.X the XX.X for cost may from

Lawrence Martin

units, XX.X Ethan, always [indiscernible] of have we before, have sales talked this we we Well, have mines. at our extra the of all units about

unit we happens keep something move to from if and idled that going. So production can unit

it major very have but minimal we nothing that up So things structure seven to where invest do, that XX.X we operated There come it last Oaktown few get have to with up year. to a do XX.X million is cost be the we The sure, down to set would get ramping over with are that - capital for we to can to tons. million to out investment. would

business XX.X I to I XX that we think have going your if lowest mean, will below are operating structure. for at range with cost you any be I are So share down sold. per tons capacity, mean our cost XX full that million come to structure you

Ethan Park

Yes.

Okay, thank you.

Brent Bilsland

Thank you.

Operator

and Brent any over I like turn to session. conference Bilsland for to question our closing concludes This would remarks. the answer back

Brent Bilsland

taking that, Company will our we holds we for for our what Thank conclude call. shareholders time about and very you. with us, the for today everyone you and today’s are Thank XXXX join to excited

Operator

has The today’s may now you now you Thank attending for conference disconnect. presentation, concluded.

Hallador Energy (HNRG) 12 Mar 192018 Q4 Earnings call transcript