HNRG - Earnings call transcript Q4 2021

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Operator

Hello, and welcome to the Hallador Energy Company Fourth Quarter 2021 Earnings Call. My name is [Elliot] and I'll be coordinating your call today [Operator Instructions]. And I’d like to hand over to our host, Becky Palumbo, Investor Relations. Please go ahead when you are ready.

Becky Palumbo

Thank you, Elliot. taking to for us everybody you the join time today. Thank

are Yesterday we being on reminder, our and today. followed XX-K, on will results our perspective which discuss conditions press our this operating on and a our certain financial webcast quarter Web financial we XXXX release fourth the event later Form posted on containing As results Web available is live and released will the site market outlook. afternoon, a metrics, by now site. Today, and replay

business to the This that the Following future this our remarks, call and prepared related futures statements statements may will not statements financial open forward-looking performance. forward-looking up events. And address context questions. contain past to call often are expected

on incorrect, available or are vary results us, risks While to one of prove statements materialize materially or those or projected uncertainties these assumptions actual forward-looking information underlying currently or more expected. these we may from our based if if

example, initiatives. forward-looking For clean result other or to any mining and update sales, as cost whether future remarks, act air relating such future environmental and publicly cost, regulations maybe of as required providing have legislation new as no to these revise we or obligation estimates a information, events statements In our of otherwise by law.

time factors from that our future with affect described may results, file SEC. time discussion a uncertainties reports see those some of the should and For the in we risk risk of you the to

over turn Larry. CFO. And of preliminaries and have Bilsland, President our and today's to the the CEO; Larry out on we Martin, the So call Brent call way, I today with our

Larry Martin

and Becky you, good everybody. Thank afternoon,

of our interest as effects We method loan of plus investments bank income of get less expense wanted plus plus effects subsidiaries I adjusted plus tax capital flows current and of other [period] amortization. on gain working EBITDA changes cash a to First, extinguishment certain the less equity the operating the PPP out way. definition define

net So ended X.X for year million or the December a a XXXX, $X.XX we loss of had XX, share.

million EBITDA At Our we million XX.X debt. the bank 'XX, debt of was had decrease adjusted XX our XXX.X and end million. was of bank

on XXX.X our net which was sheet X.XX debt Bilsland, our our debt million. I'll balance to the And cash to leverage is call was Brent our with times. ratio now turn CEO. Our over EBITDA

Brent Bilsland

Thank you.

integration to on will reopened. was As and year economy station. look and be to Hallador we following the ramp the have the we and XXXX for forward be near XXXX XXXX be beyond, feel power potential XXXX to acquired soon appear shareholders. the fantastic of year our years year and generation the to the reflect up of last the The

during business three to million year first production focusing have XX% not X.X X.X a increasing tons production in to X.X coal time. our the the that new those on of sales shipped XX%. headcount we markets tons QX the the increase. sales So of X.X tons X.X produced totaling from wore our of at XXXX, and being dramatically. year. make XXXX. by with we tons was over began for delivered strengthened million, participate million our years. To improved through XXXX next million million making ramping quarter and on of X increased target as tons But terrible fourth in Pricing let's In to date million review forward as We market We the for chose we years chose new

been Our productivity increases have challenging.

life mine this difficutl through of is additional historical we extensive costs. flow, underground a The enable reserve new take a mining higher operating we production. for resulting point, put bank mined $XX consideration than result units turnover require higher new As out of It of of reduced handful our adjusted near setting At in we which were lower costs, had employees to whole into pit, mine a areas X.X lot up reaching few training. the costs. by million and will will of XX a Despite cash million we our EBITDA in and million. able debt months we will to generate

of covenant our ratios leverage within debt XX.X of was XX, December bringing times Xx. As and to XXXX, million our our X.XX our XXX.X bank to liquidity million,

X to Turning anticipating our million tons. attention [totaling] producing we XXXX, and

but Our are the pace. production still not increased X million at volumes have ton

more back we of the in first the So shipments expect in half. half 'XX than

and full expect year roughly to price for than XXXX. per sales [XX%] higher we Our average ton those $XX count is XXXX total average the

operations we in margins CapEx million XXXX. is slightly expected XX for more better expect coal our be to XXXX. in on So tons

environmental was big announced agreement mid X.X The purchase includes made X financial responsibility. XX power will Indiana government gigawatt February a Our scheduled news Merom Power upon new certain on subsidiary, required assuming and recently costs Generating as public located wholly-owned to that’s Hallador in acquire its Company Energy’s transaction year obtaining Hoosier Sullivan return in County, approvals. for Hallador Station close July decommissioning

in to We fuel little as power expect in profit limited, XXXX meaning to enough to it in many have plant under Hallador contribute procure XXXX. fuel hours doesn't Power

double believe to have as begin plant. Hallador fuel which time, to acquisition year will Energy’s the EBITDA. this additional significant we is However to put we Hallador to Power adjusted starting begin next At

end capacity to for to transaction to grid Additionally, makes PPA path to plant’s is renewable life, expects at and of near-term creating while in a renewables, its very site. This finalize the Hallador reliability, help the maintain PPA the renewable example through a to the future. unique to how of can it Hoosier at providing the critical allow a useful development as energy transition Hallador an in Hallador them customers

our sales. and to capital power allow forward liquidity We are to increased for working increase enable working

acquisition adding we mid-July. in to our more As anticipate prior anticipated covenant such, to We balance of XXth, leverage to facilities Merom an liquidity Xx. executed on March sheet our credit amendment our our to maintain at

these XXXX up actions beyond of special very and for are be Hallador. to setting All

price our X.X $X.XX than First, of per is have ton XXXX. million sales in sold outside the tons higher parties we average in XXXX,

X and prices, for plant the Russia. as a of June energy other XXXX. Additionally, experiencing have tons the decades removes independence capacity of This This supply coal of fuel invasion open starting has procuring position plant. million changed of the prices the and at we to way we the power higher Russian's fundamentally much both than from Merom beyond focus [APUs] energy Ukraine of next all are Merom. few power power from well With sell million limitation energy large $X.X to on and world's have forms higher

XXXX on we be double-digit previous expected XX spend Hallador money As adjusted stated, put in CapEx required Hallador to order we XXXX. position have this In million. in to Power be we some believe the to in move for EBITDA run will environmental plant XXXX, to is to controls. past Maintenance

best a We evaluating company. fundamentally meet are In larger currently requirements. those Energy how is to becoming summary, Hallador

Sunrise than its Our Hallador our Power production over forward. will greater wholly-owned EBITDA by generate to Coal. And going XX% new or subsidiary adjusted equals Sunrise increase subsidiary Coal will wholly owned

up very shareholders. With for bright of points our and mic I'll for future that, the open question. All to lasting this a

Operator

[Operator Instructions].

securities. Our first Lucas B. from from Riley question comes Pipes

Lucas Pipes

the this when operating transaction, X.X the retired and Is able would I that question initial or that just year when plant -- of coal sure switch is or to years? power term. want to first happens I plant X.X understand is to would make those on extend is My after be you proposed life what beyond

Brent Bilsland

continue way will and some that but trigger it year. we're of have the We energy. capacity comply the all with are of of evaluating still roughly contracted cost coming prices sell the to then not all Hoosier XX% best any structures 'XX to over and upgrades of ‘XX, months. XX% sometimes that to we'll to the of current beyond market sense and decision make spend the down December is we have XXXX. to we that do what pull make and with run environmental At And XX to next the we steps through XX are. capacity investments, We of through evaluate the those ELGs absolutely what XX% So May the that and through money to plant energy or to it on think on

Lucas Pipes

you if of the would life investments, what be operating those plant? And make the

Brent Bilsland

not That's reach They I X. really have They have stated takes. mean the MISO I if declared grid don't largely there's simply X, based long is to January on they that just enough reserve economics. their the knows by down -- anybody on. emergency not X, XX% really saying, capacity, significantly. how come a this grid read -- you rated transition MISO capacity renewables in of think margins publicly Right XXXX. now, think what could markets state the was lights are the I keep operator, think

for saying. I excess the of all determine think it's are in plant, take going to it MISO The have headlines calling I'll our capacity X strong saying is hours have market capacity saying, transaction but the supplier seen have. than one our from the will mid-February. And since announcing capacity demand this how in needs we take we longer announcement you long what

with MISO's utilities game XX%. have from down the meeting that's of is to that have that has the built. To generation How planning main -- capacity take? an about capacity say, and be So they overbuild you have a a a you the long enormous to to and capacity shut same all replace all transition, say, of rated especially lower you but do decade to generation issue -- issue, the that can't and transmission utilities they of public then play typically rated lines. rated build all and that, has want take plan, amount rated does projects of, transmission XX% have to the permit

is long transition So to to up, pace yet I see we've to that how last. FERC doing will but think be try some that

point, know it's long how to ahead by of looks, be plant from got long every We a market. going Clearly, last? it. life it's don't the vantage determined to the this But day. It answer supply that. change will like markets So

economics our so XXXX. costs environmental studying the would the of And that. I'm we're optimistic. But what us life to takes And are plant be we extend the to confident beyond

Lucas Pipes

sheet. terms of your in then balance And

that out free sufficient my flow generate cash. would essentially this numbers, maturity pay to just off now of it on appears and you cash So between

opportunities, kind considering how me with about time? of you're of share you here at refinancing you sort this could think what So options

Brent Bilsland

we closing transfers is what -- approvals. looking and financial permit subject we're is to So say at so

permission Hallador enough end want pass] of to our towards position. of the have this facility increase the credit give into At right allow to current we our the on we same -- to hedge goes that our we have can to plant we our working gives liquidity we bank want appropriate, time, we that more as to sure the the us take think So And is those LCs liquidity opportunities And point in market Merom collateral take we up group that advantage from put the year. Power the [to we capital. so opportunities. to can make that if valuation

rising. mean, is secret the it's exporter. So power largest world's are Ukraine. gas prices Russia keep when the China changed invaded Again, prices I that don't Russia I I any mean world energy up. --

I think the we And number roughly two touch where exporter XX% can't coal equal world the the US they're exporter they're Russian coal world, three world, coal. in production. number the third says, coal of in of suddenly, exports and the oil

as the pushing has States we we is dramatically or it we So do time, feel well. and So continue now want is we we Btus more The still prices power advantage it this well that electrons, power looking market are want though much some to makes to generate do to we'll tons those the coal home? increased but stay pricing makes plant or have tons up to the think have pricing, those sense here decide Europe evaluate. choice. sell now that is has and do even which is think coal has overseas We still that go the electrons, sense something profitable, they to higher. as generate At Do United Hallador put to it's obligations elsewhere? because to to we plant put

place return think We unique So us Hallador shareholders. evaluating. decide to the such our in best to to is able where just the be a for the tons those are put we're puts the of things that position it

coming becoming to is So the we I Like effect we're with bigger, Power. company what ecstatic years. about tremendous the see. on coal Hallador the and now on have this share a in both said, our is And price side going

Lucas Pipes

this that transaction? And part way about maturity so is this think being is to of renegotiated the here as

Brent Bilsland

for it term being it. looking are liquidity is a conversations It our to now. feel ongoing package, Correct. renegotiated. we and those good we're But about collateral as allow increased With extension,

Lucas Pipes

we the But And have do the I and cost pressures all last your then affecting costs. about my cash What's feel I know for mean, how question, inflationary missed guidance you may pressures. it. your operations? think

Brent Bilsland

all as various inflationary now pressures and glue I supply to you such fight We seeing are have pressures. right inputs things. to get parts mean, and and

point have I suppliers all our stretched time. as Interest throughout electricity rising, all will prices prices, read a slowing upper are year. dissipate some effect their think in the end are the rates are all that will economy prices, food everything on says, lasts? How the towards limits think, well. well at I that of this you higher, fuel

structure. we of $XX ton are thought an for increase year. cost the we what our year, showing see would we think this average in balance is, We for I a

we again, people. have added So

Our fast come productivity hasn't day. are gains up we would But It as coming is up. we every as seeing like.

are the tunnel. We of seeing light at end

We of get to production of everybody time time people seven. effort in the That are -- people X.X to take get lot set a a location, from getting the get mine to get right units to up, hired, and to spending takes trained. we're

happening. that that's is happening, So

and patience be XXXX So in for we matter, just year we costs the think I potential what 'XX last fourth appreciate and absolutely we coming, in the of direction. mean, And that I we see think on 'XX, quarter. than were right everybody's it’s should great this better fantastic. are headed that.

be the $XXX the somewhere the million, will be company of return for type a when capital has think at out look on coming north shareholder has I that of to we So market we that think investment of the potential today capital of outstanding. a

Operator

for Brent [Operator I'll Bilsland to further now have Instructions] closing the questions. no We hand remarks. back

Brent Bilsland

just we time us. your appreciate you. And of to the what opportunities your want in thank how coming see the interest reiterate I and today excited interest. Again, front about around company. the and we I continued we corner are for Thank you in

Operator

call. participation. This thank like for concludes to today's you your We'd

You disconnect your lines. now may

Hallador Energy (HNRG) 29 Mar 222021 Q4 Earnings call transcript