HNRG - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Hallador Energy Company Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. turn over to of Becky like Relations. Investor now the to conference Palumbo I'd ahead. go Please

Becky Palumbo

quarter outlook. Jason, posted results you, on time Yesterday our metrics. discuss a us the you, financial certain containing website. to today. and conditions financial second market Today, press filed will release we documents Thank perspective afternoon, thank our join and and are our everyone, Both XX-Q and issued on Form for taking we

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

As some forward-looking our of today statements contained time remarks that and variety SEC. from in uncertainties a a to of reminder, the may time our filings are include subject risks, with assumptions to

of any With statements And these forward-looking required materialize out are to underlying prove In if publicly update we uncertainties based assumptions have forward-looking our revise or remarks, or do expected. Martin, CEO; or obligation teas, CFO. those of actual providing Larry materially to new required by While the Larry Brent law whether overview. or from so. result future and more events of these financial information, vary today our risks President we results these projected may incorrect, the currently Larry? otherwise or information available on are if our or one Bilsland, and begin as preliminaries way, can with us statements a the no

Larry Martin

taxes, deferred on the amortization, depreciation, obligations I change reclamation going to way. investments of effects good taxes, equity cash of I'm of value results. value fair review afternoon, in and Hourglass to earnings in on income and reclamation of in of plus before our hedges, Becky, our our the before depletion income investments. equity compensation, accretion define as everyone. effects couple net free define adjusted CapEx and definitions get less hedges obligation, maintenance Sands. And want over method EBITDA method you, amortization stock our changes compensation, depreciation, and accretion do, plus flow the go operating We income Thank We and stock and less interest as of a I of out fair the our

the Our and $X.XX for million quarter or or $XX.X $X.X million a quarter year-to-date for a had flow and $X share is million loss the net free of was million $X.XX loss share. the We for net year-to-date. cash $X

for quarter, X adjusted Our decreased second our $XX.X $XX.X $X.X ended. quarter for the million the year. the million by months for EBITDA was for bank We million the and $X.X by million debt

XX June at debt bank Our was $XXX.X million.

debt net leverage call year. our operating million. X.XXx. was was Bilsland the over results rest Our $XXX.X Brent turn of I to our talk to debt-to-EBITDA will the now the about And and ratio

Brent Bilsland

for one of markets known as will in XXXX you. most dramatic Thank decades. be coal turnarounds the

declined. and inventory first we coal the elevated also quarter an sell Shipment shipment the the able production to we delays improved as XXX,XXX brought point cold inventory into both quarter experienced quarter, customers' first our second well during weeks additional mines. the at shipments the delays. tons as were During to quarter, weather-related inventories In the significantly Throughout for several slowed weather power continued to pricing our levels we and the quarter. levels demand, improve, saw due our July, in but

you where produce period you if sell We it, can can entering are of time currently a it.

at may diligently output, to increase increase working the labor maximum production. tight we velocity are which delay but production to We our markets

X.X improved the shipments to QX, During in ton annualized annualized quarter. from pace million a a pace million X.X first

first half increased X to ship run last in $X.X a reduced versus X of per expect million did half up of XX% production tons Oaktown's was a the during slowed of QX million in excess XXXX. Coal in pace. increase shipments. inventory Slow last by the the only the second versus ton, $XX.XX production annualized in to shipments. million $XX.XX a QX $X.XX ton Thus, more shipments result were representing elevate increase expect XXXX. tons as to over XXXX for of half, XXXX slightly costs QX's quarter quarter for of the the We and and at $XX.XX of production per we of 'XX cost

debt cash to $X.X increased on our said, flow, and million, million an debt flow shipments we continue expected later down use paid of will we bank generated inventory our which this will operating reduce to generate Larry As cash strong by and our drawdown $X.X year load.

was During $X.X million reduce debt in the liquidity. and to able $XX.X bank million by Hallador quarter, maintain

be to of at decreased thereon. July company's from recognized the X.XXx approved period. during an a XX the the PPP in will loan entire $XX September end interest notification ending quarter received we third that in Our leverage the million, loan reduction XX, lender liabilities of and the with On SBA PPP our the together fiscal of increase slightly PPP ratio forgiveness loan as income. for our The application balance accrued net a forgiveness

the gas dramatically Looking X decades. And to lowest average increased. markets, prices competitor we a talked coal and XXXX at is in gas averaged in have previously the that $X.XX, over

saw gas XX, As $X.XX. prices we average of April

export the seen same We've witnessed it in in even improve As of the to price we've $X.XX. market. August, increases further

balance By per metric to per Same was April API $XXX August of $XX a XX, for metric improved shipments for to X balance year had As marker, X, August XX, ton. April the the of By year ton. ton. the the improved the $XX $XXX X, shipments X, third a XXXX the of ton. quarter had of at API third was marker quarter Asian

significant of expects later Electric in new of we tons generation of in for Cooperative Hoosier energy expect in Station XXXX markets to improvement 'XX. approximately beyond purchase to agreements develop -- Hallador position with renewable in and On us will at to Rural the megawatts As Indiana, and we Hallador significantly we to this develop be of Merom battery, Energy for power Hoosier to transaction. XXX through Hoosier calls during generation and storage up contracted Energy add XXX,XXX seek May Hoosier the for solar from better mentioned, remaining Merom Hoosier our add me, The the joined Sullivan, excuse year tons in which Generation customers XXXX. megawatts excuse pricing. The to quarter, plan The allowed me, megawatts XXX the capacity X, in located Coal under develop power. at retire near announced future years. we will other -- to X,XXX June with to

the Hallador in it At the as to customers declined come. Hallador free until for activity earnings our from today, platform invest will to producers take the of to ourselves renewable come over grid by for excited decades run, these Over decades of of value opportunity of XXXX towards to we short to which ESG-related the enterprise multiples greening transition power quarterly of have the retires, of half in long of multiple flow trend $X Station we the Merom Coal XXx be time, the there will thrilled of make years are companies of And platform this we the investments less Generation now in little trading to last to how financial act transition Xx enterprise and investment, X.Xx coal to renewable greener cash expected renewable value, which from are is and this platform this at -- as to longer call, is our and trades In at politicians angst EBITDA, interconnection for enterprise over the trade space energy finance discussing an to large up the We to Hallador's projects will and provides opportunity the run, billion until EV, Hallador not transition. and battery $X part we equity than EBITDA solar a In time developer although EBITDA. customers had sponsors an are the electric supporting targeting, XX while as sources capable some continue values forward. because bring such our in from estimate come. investment. believe projects plans of the Merom they to spent than roughly billion additional of Today, move XXXX. as project of much our that in investor grid. an

coming So in root for as we see add the that, for over platform With the I'll take value years. shareholders great questions. in the open call Energy, potential the our Hallador of renewable up investments

Operator

Instructions]. [Operator

from Capital]. from Our Berger first [Ross question comes Turnaround

Unidentified Analyst

margins your quarter sell half? margins in I last incremental could would the what less Because quarter. in was discuss if wondering have this planning producing tons be declined anticipated you're your second the to can EBITDA I because you're on see the additional versus you

stock I guess, disappointed So what market the XX% down, obviously, the in today. -- earnings is the with

you maybe give So what margins. like the to future assurance could as with EBITDA looks some

Larry Martin

used So are the production. to $XX the our $XX deliver that to need the with return when to half, the getting X.X sales tons should plus million we'll our to margin production, in range $X second we're million

Brent Bilsland

seeing be I wide us, as multiple Yes, right? as people. things. That's annualized can million-ton production third excess excellent of quarter hire us We're for shipments open should pace. -- X running We're a fast our for we think doing in

per So more tons cost means drops. our ton

that in regard. out widen margins -- widens So

Wall about dramatic second is July, Journal first market is in in up talk the is I the the a really very quarter. read that saw pricing is Street move slow half such this that of didn't What others improvement lot third quarter, we've -- improvement price we saw headlines pricing and has which really quarter, most we second kind of probably up. about, the of just think has is not dramatic We why which the seen. everyone shipments saying to remember the a till the

kind and come were That's our shipments So as and down, of pick up happy of the seeing with. inventory had we inventory improved, has quarter pulling really down, the levels, dramatically. shipping year which inventory we first we're increased in has

been expected the -- more more of as improvement price late. than expected half year. the back much stronger We much we and sales in of They've

So from high. because quarter perspective, slowing a we pretty inventory only got you slow legacy if contracts, at levels production look second it shipping shipments on are

pedal began up as to now come inventory so down production and ramping the we those back and metal. saw shipments And we improve, levels

can If produce sell it. you can it, you

so causing pricing. And an that's increase in

will picked the the of back half And some up in of year. that be

be that year. next will picked of all up in of Some

Unidentified Analyst

of per the Can idea historically few quarters? give guess the you're that I is past selling above you're $XX an the talking about at you over price us increases because it ton

Brent Bilsland

Yes.

one saw good to and pricing. so moving is stronger. really probably domestic out so get right appreciation again, to higher. materially in was because, we've it's this the just something these -- a are for would of say, I've in been things the may hadn't just almost a much price more. the something pricing for customers And really to has export third still of continues So But March next We're It's in XX% in gauge in quickly may price early about for to this approach with really market it's seen from happened. time we've -- XXs and doing things seen so improved, July. years, are We be to that, mid-XXs and now hockey March, low this figure how improved periods the I tight, reacted the has trying XX get it stick hard until that have where to time year year,

we've relatively So been. I the is many any I think really now headlines retirement some occurrence, coming -- there's much this read production but new retirements, And paid market coal to the attention no back occurrence how or -- is should it's to say. how a about And recent that coal something plant industry. is one's

comes and leaning on And it industry tries was is coal, than an smaller before. market lean so that's now to as on the much

at So longer here year here Indiana tons no a we think that production if now. we alone, is of was ago look XX million

on handle less and to that's great We're to rise. is from going how and where do same think the to get trying I so higher a high prices. And is how trying market fast everybody this a thing. supply, And

Larry Martin

are a except our about priced into hundred of Realize before because the these we hedge talking for were we in all tons and June most and large are of beyond top July. price increases that thousand few market tons we tons came our and 'XX

Unidentified Analyst

unhedged from or that at incremental benefit the tons These be selling, these make get are still you you're you do that hedged But you additional to hedged -- selling, you're should $XX that's tons able additional where make the tons? if you're right, at. money

Brent Bilsland

what I will and move going be at XXs much is think all going pretty think much into range is that to what we're saying that average for pricing XXXX, that point $XX is, We see pretty in out to we're for that we is the this average. sold up XXXX, tons. price we're

Unidentified Analyst

in to to that the is what able achieve what is you're market this in you're talking you'll that the market about depreciation market XXXX? something mid-XXs, Closer If XX% the price in be the saying? is

Brent Bilsland

saying year, X we million upon labor. million XXXX. we're sold can No. million, got The to if are That's next X to going is, we've What figure X.X we market going produce we're to demand. be trying support tons in tons going produce to dependent for are that out

million the is X and tons. move our X X.X set already So to our much average will to how pricing price. that higher on million pricing out trying We're tons million on figure the what remaining is

Operator

from The Corp.] [Andrew Investment next question comes Lo Hallmark from

Unidentified Analyst

you advance pressure some on enlightenment us the the of infrastructure going and possible and technological capture for for I I does guess, has area? the that prospects for that from and of give relief noticed bill environmental current $XX give downward research Could billion -- that And us considerations carbon sequestration? impact some Yes. got forward?

Brent Bilsland

Yes.

done reduced years, you've world generation important seen for by brand-new today, United without it's think on got reducing can't gigawatts. we carbon, very States gigawatts, still some building India really all I you've We've X as on plants last XXX China governments focus carbon and coal-fired are be U.S. the because that the capture as the scale the power coal-fired build and of global and the under XXX seen a government plants, construction speak. rest in they

up, has gone So down perspective. from coal a demand not global

the got money figure the in States, and So put to into technology some carbon eventually. get well, this to gosh, of buy capture the out United into world we're to saying, this we've rest

projects little So States. where. United the we in think a you'll see several say carbon to It's capture hard

think of Duke one a money yet very speculate is and the that early the our right carbon of industry good which on Energy's what haven't bills a and could candidate meaningful. Edwardsport exact them, that very I helpful certainly, that, are. like towards little it's to But ramifications would plant for in be capture to is passed backyard. be But

Operator

from The question from comes Securities. B. next Pipes Instructions]. Riley [Operator Lucas

Matthew Key

question Lucas. Key actually for here is This Matt asking a

material experiencing Just And a half quick of one to related second your to in increased any labor that for operations impact kind me expect today. prices cost or kind so, of the inflation Are raw higher of in you XXXX? costs? how do you

Brent Bilsland

Yes, it's a great question.

We have get got September that in the steel -- And doesn't are bolts see funds. point extended. people, tight. roof mean being unemployment taking We're bit degree, up. to things costs, assuming in we happens. the -- yet for seeing, which time, We've with like is to have little been funds labor it hiring some federal the on young of seen We've we and what at those expiring that is inflation I to are market additional people same a challenging, really X, looking see funds prices we're

they say, XX all interviewing Now to right, we out, as for maybe we're ought days jobs. start

We hard they're temporary, of a steel prices is, don't And we're to can the near So saying, a well, is start shortage transportation and little there’s stay getting little employment we're what people accepted we there's back look it's where I a permanent end so activity pressure, into me at. is When seeing issues, think the have reopening? for see time inflationary to more is What [phones] hey, at those it’s who right? from decipher what something. realm.

that but materially -- now, long-term view So is a our right more hire to want price The don't to don't trick increase. we we labor to affect as people, we want costs.

careful be we So our structure. to installing we're change trying as as permanent into can add quickly cost to without

sales short appear in beyond term So, we've be that said, most going like the the We'll And mean, by I to if seeing increases more so seen months. here extends I something the on be X-month in last see than that. of gains think far, the cost it's that that we're the X huge side. think increases to realm. in nature, I seen price we've we offset

really in All days. it XX last the came of

that. advantage trying we're So to take of

year think to And debt. I pay to the deleveraging half see flow the significant going much, of than cash that back We're our should of you stronger much in use year. was going is in to the be first our company. half of down it the

XXXX. that's from So you're see going trend kind to in the us of

Operator

would our There the are for conference concludes [Operator Bilsland question-and-answer This to any questions to the in Brent over I session. remarks. no queue. like turn back closing Instructions]. more

Brent Bilsland

just join very strong want thank back time the to we our to of XXXX. I taking forward half Well, Thank call today. everyone for you. look a to And

Operator

for has The attending conference now concluded. you Thank today's presentation.

You disconnect. may now

Hallador Energy (HNRG) 10 Aug 212021 Q2 Earnings call transcript