Earnings call transcript Q4 2022

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Operator

Hello, and welcome to the Hallador Fourth Quarter 2022 Earnings Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions]

I'd now like to hand over to Becky Palumbo, the floor is yours.

Becky Palumbo

Thank you, Elliot, and thank you, everybody, for joining us today. our XX-K, XXXX on which released results and our we Form on is afternoon, full financial year operating website. Yesterday now posted our Larry today and me on call Brent With this CEO; our Martin, Bilsland, and CFO. is President open After call your up the the we to remarks, prepared will questions.

and contain forward-looking expected to Before past future, please may events. the performance, statements that our statements financial In discussion that begin, forward-looking business are context, often these not future address we today this note certain while statements forward-looking based one those our from results are materialize risks on statements actual to information materially if us. or or we currently projected If understanding or these incorrect, vary available assumptions or prove more expected. of may related uncertainties

of In required may costs, and new result no estimates legislation information, any or have we a events mining providing that remarks, to statements, or sales, regulations. be publicly obligation update of by future forward-looking law. revise future For example, as these whether our otherwise,

a For results. of uncertainties and our risks may those affect that future of discussion some

to should time factors the in the with risk SEC. described from we review the reports You file time

this As being call recorded. conference is a reminder,

ask and live the Hallador's question, questions And into access code call the webcast member archived also available a you are on to dial is you if XXXXXX. will toll-free to conference would on In of to during and is a website. addition, like you and encourage Q&A. need We earnings ask that our (XXX)-XXX-XXXX, webcast the

turn I'll over with Larry. the to call that, And

Larry Martin

afternoon, everyone. Thanks, good Becky, and

plus We less equity want paid amortization. certain had on the reclamation I other method operating cash effects and changes activity, EBITDA. interest, of ARO, cash capital effect into defined adjusted plus investment flows, I our operating get working period Before of define less results, plus of review this subsidiary bank as to

earnings per converted debt we share is basic year earnings Diluted share share the diluted per ended XXXX the equity. $X.XX per was income for ended was earned converted million or/and to XX.X net or $X.XX. our for with us So, of if

for adjusted the million. EBITDA $XX.X Our year is

debt $XX decrease end at bank of was of layers credit million. and bank debt Our our $XX.X $XX.X million, the of the was excluding year million,

$XX million of million So, $XX of we letters borrowed credit. of debt, had

Our at $XX.X and is end the year of to net EBITDA bank adjusted our million, EBITDA debt X.XXx. -- ratio, the was was adjusted debt which leverage

I'll beyond. the and turn Bilsland his over of now call Brent the to for review year

Brent Bilsland

the investor you, the Thank Hallador. Larry. from upon transformational full for comments my call, third quarter XXXX was Building year

opportunities highs, capture price were market through deliver at to all-time coal price million coal continue in tons XXXX. average small X.X these will to contracted the for in with of longer-term significant percentage able XXXX contracted a we sales are approached tons ton. per majority more XXXX We an delivered $XXX As market and through the of of forward than deliveries

XXXX. units pit new near fulfill XXXX we as in surface We in obligations, production Oaktown X adding annually approximately expanded our To coal expand Mining capacity and tons at to million from small profitable headcount both million a X.X growth by these quickly operations in capacity our much Complex, Freelandville to as production coal mine opening invested more Indiana. tons substantially

Volumes surface moving be expected began production mine as Petersburg are QX pits to prosperity these our production a in cost. to Asean-hole small from Prosperity. known and higher And XXXX. Freelandville pit Indiana new near of

operational balance. these will determine the the We of conditions continue connection productivity evaluate in market appropriate with to to mines

operational Various per our training new including production of impacted ton price margins. in factors, increased per coal and ton approximately inflation, average challenges per $XX.XX to in sales and from will be and $XX.XX XXXX ton hire XXXX cost XXXX. and Our in onboarding $XX.X

and full ton. of ton with year the with $X.XX margins closed $X.XX ton compared per we However, year quarter XXXX per $XX.XX margins per fourth of of margins

increasing are most and costs, produce. rest we cost world, the at the experienced of Looking like to experiencing

Our fourth as from experience and start efficiencies costs average in costs, gold cost $XX our fewer increased with expect quarter to we production -- in out $XX.XX or additional ton we headcount per above to just realize XX.XX levelize per XXXX. production, from throughout gain, continues XXXX to ton to the increased added challenges XXXX, these improve

Merom gigawatt QX of to new just limited the the Generation X opportunities impact we of in Additionally, The our for Merom of generation adding completed revenue acquiring acquisition transformational is Station. business. XXXX, not

support by energy help add and of we While to drive flexibility to coal to coal value business expect our up and energy Merom coal greatest the for production XX% capacity markets. capture growth, providing sales will between our the both of to

our segments. we Starting of annually tons in up will of approximately to about at the coal shipping selling to close anticipate million we million X anticipate that business tons MISO plant anticipate mines our market. the hours Moreover, we should energy X additional directly enables wholesale for real-time X.X Merom. promote Merom, XXXX, the both adjustments coal miles, to is that from megawatt of proximity into produce efficiencies mines million XX The

the utilize We capacity the plant. to annualized fixed significant cover from the sales a expect of portion to funds annual third-party cost accreditation of Merom of of

market option fluctuate current terms coal energy. in highest a integration vertical low-cost over of how when market capacity to While true we the coal our believe time, our at will we prices, optionality Merom production. and that and value for also sell access provides The provides the capacity

instances, remain make Merom In either to may the open and if prices it In increase wholesale the market. to some market. coal is energy it that Hallador flexibility acquisition. key not to situations, other to energy have from in our a Merom additional sell the shipments sense may high, away and make did prior case, coal benefit sense In divert into coal

believe of on incorporates potential that day of increased. while potential downside also we the a but the Due us into station. offers power generation limiting power profit of capture also prices, to significantly the Utilizing be that the significant a coal-fired operating recognize will ahead earnings our this whole markets allows We risk. strategy the lumpy, portion to our challenges has volatility

operate Additionally, the markets for XXXX margins power state Based required of to events, could of present the the frequency end environmental markets, we Merom $XX remain the of us in on investment that the be energy XXXX, beyond in grid reserve of million. elevated. will there exceed controls grid to emergency increasing to and capacity expect decline prior

of volatility. XXXX, Demand be periods. of one profit the course a into great is much higher experience volatile these company but transitioning the periods Over will of downside likely potential, with long-term we'll which risk

bank $XX.X by bank debt was balance of XXXX, bringing reduced at million. the to on end focus to XXXX debt. continue reducing fiscal In $XX.X million, We the

outstanding at amendment and credit As to our $XX.X of leverage with executed X.XXx. dramatically capacity to which with on $XX of year-end, XXXX. the we revolver improved our XX, had term million stood May to extended payment ratio XX, $XX of our December XXXX, to XXXX, an March the final million facility, due remaining in March Subsequent converted and of revolver million, liquidity debt XX, maturity XXXX

with is $XX is expenditure million, our which roughly is coal other Looking power. associated $XX and million with $XX capital of XXXX associated CapEx, the the half maintenance million budget of at half CapEx,

Merom call flip with acquisition. the through to over purchase going everyone the Martin, the Larry I'm walk and CFO, accounting our to ask associated to back Now him

Larry Martin

Brent. Thanks,

principles. as Although plant this million We roughly consisted transaction million tile. $X of million, ash the liabilities of an consideration disposal acquisition accounting required accepted assumed reclamation $X million the only by was costs for power accounted inventory, for as $XX of paid and which Hallador the of $X for asset generally

purchase into purchase time agreement were energy between in in in below entered -- both volatile the the PPA signing of and and contract the the October market. transaction XXXX inventory this were period. during was February XXXX. and The closing the on and PPA market coal closing, Hoosier the We below closed Energy with Thus, XX, the markets coal

So under PPA contract accounting for This adjustment asset the in and $XXX generally million this the a a we inventory. $XX principles, below-market liability accounting. for and adjustment a contract purchase accounted coal resulted purchase as for accepted million

These in $XX $XX was of $XXX and resulted million along in smaller adjustments to XXXX, revenue revenue million the recorded remaining liability given the $XX is contract of this of million PPA with some consideration to our liability, of million million the million on liabilities two balance recorded in be in current $XXX XXXX. XX% $XXX by Of be the will under accounting. purchase large XX. adjustments consideration GAAP will and sheet GAAP May

was the recorded to be purchase coal XXXX. asset with million The expense $X.X XXXX. as a contract, million million is remaining expense reversed the XX, will and $XX current in included Of May as by $XX associated

EBITDA, GAAP be these covenants reporting, earnings XXXX income will approximately our while So taxable million free adjustments. flow, result accounting unaffected this treatment, $XX cash and will from noncash by of debt

now turn to call Brent back for the closing over will I comments.

Brent Bilsland

-- I'd prepared that our Well, our comments, up any open I'd investors. like ends open to and from like call the questions to to up

Operator

first Our question Riley from Pipes from Lucas today comes Securities. Instructions] B. [Operator

is Your line open.

Lucas Pipes

basis. When amount an afternoon, of is Brent, the question business about my think much, everyone. ongoing Thank very to operator. regards on first Good you you in the liquidity. needs of kind liquidity

have So So up? that until maturity how you frame the you not would XXXX.

keep generation how then cash could EBITDA So healthy up much should that. on debt the towards balance would how to expect maybe you'd XXXX. you your I of and But frame you would on versus I time perspective cash generate if of lots there, appreciate like in to much sheet? go

Brent Bilsland

Lucas. you, Thank Yes.

can much liquidity. think is have never you our goal too I

of credit to on code facility in debt Our game sheet around that plan ZIP is the hopefully end balance have the of quarter $XXX and is then to this million. of net And free XXXX. company cash a get our try sometime first

over to months, So, XX our today. do we the with what think that's company I next roughly from look

that And and contracts year, coal our of our of from percentage hand that minimal XXXX, it a I in the are that looks then taking division be plant. us with the the providing plant coal much then to our think earnings power this in we to we'll greater earnings. have majority And with

will into time. profitability the of the plant So, at that come focus

question. that -- your So, I I think answers that answers hope

Lucas Pipes

That's very helpful.

sorry, everything And catch didn't there. I if

that? that power right? XXXX, from of Did I expand plant. be on in contribution it You said that the will much could Or you a hear

Brent Bilsland

Yes.

of of output of plant this So May the look sold if plant, output of to the year. PPA reduces majority have through business, the so of our about the the that most XX% to And the of thereafter. primarily plant seller the at of power you then we

of will we some up division coal majority come coal of the our in will to from begin plant. shipments So XXXX. to the ramp our the profitability But

X convert and of judging that into -- When hour as day, at coal up we the we at every forward power as looks to electrons. much by that million today, and but do. to change think hopefully every curves tons XXXX, big be possible the so into we're Merom today, that taking thing anticipate coal get looking the power prices to We curves that looking profitable most to

So, the if not the that signals cost we're the are what today. that's the plant. cover robust tried materially and most, that is to should today capacity markets outline seeing we've And of all, fixed

chose back see to, why more went So, in We of considerably with brings. markets profitable chose of electrons, sell We'll we be the them high kind to sales quickly to a to change the either plant to XXXX, to we into is essentially the which option very as it do percentage coal convert prior to a saw low-cost market calls, tons we parties. view what looks to the and such we or take market, our tons which very affected we've have done, which those our if to third our traditionally you what party Merom why third take today.

And part closed because plant we yet. didn't was that of the on

some -- challenges we on we always there the close a not percent that. plant. XXX So was could There's certain were to

ourselves. on -- tons market whereas sell made will and most basis, a to it outside XXXX, today more would the today and will contractually it the adjusted signals third sense was to XXXX that sell risk it appears less to change that parties by So the strategy

Lucas Pipes

this the is market power XXXX for for price forward today? What for

Brent Bilsland

Yes, that's number. a proprietary

that. So, disclosing not we're

Lucas Pipes

to I just the the through Merom helpful. come did to of because tried in in? it me, where EBITDA And the wasn't immediately that and quarter, obvious That's XX-K apologies, look fourth to if but contribution

Brent Bilsland

number? million the It was exact later. X was roughly Larry

Larry Martin

for like was million It Merom, the for XXXX. $X.X

adjusted Lucas, So, $X.X that the we million EBITDA like of plant. $XX.X from and had was power about

Lucas Pipes

have is much X.X think your then respectively, much very I I year, And last you then do XXXX, is it I'll X.X, and it share you for for thank one turn Merom? possible, and the million the you over. through XXXX for contract X.X earmarked I When and how million look this. X.X tons. book tons one of this at Can

Brent Bilsland

some our to fuel I that have is Xx may take goal think XX market. is the to much right? market coal happened because our of as year things small again, out of best last of merit into last should converting think be unique Well, XX electrons value-add, as It for There a that were been that out year window one we possible a time.

So we advantage chose to that. take of

think But said, we'll up million our to forward certainly of Xx in X of I I to tons Merom. are of to curves tons that try million support take X today. And production like

day-ahead position in about the of sell not a our in lot XX% sell market. balance, in of are a the the currently market to We have curve And this chosen forward production. to moment, as we

looking still at... we're So

Larry Martin

Let me add there.

that your sales That and in Lucas, sales question on the zero parties. third-party and the to So is Merom there. to X.X X.X there's table, in third all beyond,

Operator

from from Management. Our next question comes Kevin Asset Oberon Tracey

Your open. line is

Kevin Tracey

Great.

one tons the out on first obligation XX-K in XX-K, I The put for is this haven't performance But price price beyond price your footnote position note two the is you XXXX. XXXX. disclosed to $XXX price next there's past a latest the In the that years guess, for XX-Ks, related tons, you million. the you where in coal

ton, price down the an use is big you XXXX quick step what $XX expect I if beyond from pretty I'm So, that X.X some a price obviously at coming are year. of math, roughly to a million average are this tons which

right received parties low next I'm comment you are a is you given awfully on to natural fair and step gas from could it's year So, that math to expect if if prices down? coal hoping take today, third price the

Brent Bilsland

try in Well, that. there. to right. are dissect There several All I'll questions

robust, of to that convert pricing yet. is that math at price we but the coal the generator, your level ZIP that done the the But have we curve have is we into XX% And may what's our not I code. that we caveat right? is electrons production if very day to think we in looks and and ahead right generally that, the a do take Merom we today

for the -- sale on say, a one obligated well, be that for seeing penalties profitability on performing. much of risk. home without the you it, are make So on things and way haven't trigger one significant not sale at the the some reasons to we that, perform the we've we trying maximizing we appropriate that we there's can of right? a got in sure hand, And but downside look and we're that that pulled to in There's for you're if and taking -- there so plant forward too do an make we're that that power,

and power in if saw And several who producers what megawatt we're Texas, that of megawatt hit you forced storm outage XXXX $X,XXX quickly. Texas were you at was the hour bankrupted February by $XX I produce storm mean when so to per a and by at is, sold, had market, cover looked the five-day they couldn't Yuri, pretty we're that and say, in in power had

But plant caught you we're in Texas of that on the bankrupt while those slower. that the time, event downside we if perform the is ERCOT, same profit were the in point some precise hour, wouldn't event, we're the max would the at is at plant our a risk lock in limiting which that ways so you legal can't can moment. potential or that in the Now for megawatt market, limit means the limited go MISO working in in $X,XXX is --

options is basically prematurely seeing the generation that nuclear, we're either one the being the an and that is with of on-site at trends solar are doesn't would going gas. replacing three fuel, argue doesn't what has switch. you industry is market if or with. on-site that's generation look Those coal, generation natural that in Wind have I And -- the an replaced on on switch. And is have fuel, on

or margins they is back is to generators another a that high saying to why fixed when generation way of capacity could is the gone, zero this of the reserve got payments plant of what capacity prior we're Maxgen cover of those now to had seeing finding all excess XXXX, plant. of they go to are MISO excess right? demand events, capacity to They high. Well, which now significant portion the cost enough you if is, the And we're had turn

these just back power in So happening trend zero out And last high And super greater this where hitting a the events tries 'XX, everyone these events saw in we've we there's it's numbers, these XX prices -- XX. are months, to where Maxgen frequency. right? as events balance seen are to price the astronomical grid figure are with

Though say, you during sold $XX-some up prices to or we're go hour ramped power your hundreds per hour at, and are thousands in less ahead better these the megawatt of margins and ready have megawatt where better to lock generator megawatt $XX or hour. or per events dollars you in per seeing even sometimes Maxgen to

we to So really that's trying And lumpy, on our we be gosh, think we sold why right? what say, the earnings we're are could if side, power less that's balance.

Kevin Tracey

Understood.

Brent Bilsland

Yes.

that's we're So what trying about.

question. your I So hope answers that

Kevin Tracey

Or Okay. that auction able be in still participate the starts I up the things, X. June months think And coming fully on auction that's of right? the capacity do to XX side to you expect shortly,

Brent Bilsland

auction... the So,

Kevin Tracey

talking don't who that related you that shortly. that's to the of bid guess, I'm are need able I fully into sell to capacity to the you happening XX% auction

Brent Bilsland

or confused any hour capacity power seasonal of MISO in-house from from like there capacity. not utility to year, the to year. buy energy, out a this party either with They by us gigawatt a the of any given rated went grid a if have let's wants a of given so gigawatt at all, third time, first purchasing Well, So construct. And a of right? to supply

So of And so be the is week significant what -- right? to portion somebody of for you announced essentially summer, XX. amounts Whatever thereafter. sell sell our plants we that in go third accreditations has didn't fall. the sold accredited winter, that will results party, parties. small spring, a third which And will auction, capacity we a typically isn't sell or the MISO there, then March to various buy will And

and been is thing -- reduced accreditation is the has lot something extreme -- hasn't the where capacity in in in well gas that the we're that solar renewables, winter in of the -- cold a performed and summer. performed They particularly now the But because not wind summer well been performing And these events. performed events on well has well haven't hasn't seeing right? is

of come the is and are seen Clair extreme -- their two the any events, don't winter and regards is two lines, recommending plants the is now And have be be they have not his mean MISO, gas last MISO, I two PJM Officer is Chief transmission shouldn't hey, we so say, events now monitors don't we that right? out capacity. who we've it two, comment think for of lines, unless Moeller zero Operating accredited market in to transmission should President the gas

that fixed our So improves those change tight the that be using that markets we're which to could capacity which costs. could pricing, cover are, how substantially

PPA electron in and the not your sell the the first not a capacity look, the sold MISO all, energy MISO contract MISO be turbine. from to The has side we with the -- you auction, you have a side, is for in do electron typically be energy agreement of you're the knowledge, like either on electronic has purchased of buy MISO, auction it's sold Now every can can with to every where going say, that my seller plant but or to we auction. letter side, or that's essentially region to

to adding… other with sell electronics to each but true we're to MISO, So, we're our going going up

[Technical Difficulty]

PPA Because October, I market lower, much was with closer back to is underwater. in prices natural imagine PPA Today, the the gas prices. much

thinking in Hoosier? price So am through the the what fixed that? -- I And could you share the maybe price what price XXXX? is And for is PPA in right that

Brent Bilsland

at And obvious. agreements time, choose confidentialities cannot price. more aggregate to of that have where once disclosing would this not have those too those, we this at Maybe be may in that. we're time. it we we Yes, we But

So, So was the right? I frankly, a to for set signing, set you're XX. around we closed October some Valentine's you It contract time. absolutely quite quite price announced even right, prior price, right right? was that was Day, mean, negotiated

invasion -- We time. it trigger some had So Ukraine, crisis. of trigger only every has energy think is I quite has you said energy in particularly and said, purchase the and happened Europe, their an building we for kind the somebody out say the the energy BTU crisis. which saw don't would get in did meantime, saw right? of that revealed We it that of the hands when crisis been Ukraine, governments think on, invasion you really thing so The changed. come they could

LNG. now you've countries I'm was I gosh, LNG. other afford had did they wrong, natural seen it import Malaysia gas that they the well, -- the LNG, on Pakistan, Europe plants Pakistan, heavily couldn't relied saying And that up that think say,

plants you to single see to going power concentrated in coal-fired gigawatts get they and now XX of not position. again Pakistan So look, because fuel that allow put building ourselves we're ourselves say,

because I shortage very bought summer and Europe a was heading They much degrees still then out would winter summer bailed here above were very on. Europe going weather that they XX winter. say into energy got an crisis normal had this aggressively patterns has created last

cooling a on prices prices. short And then show put and energy they so term and power here And demand that's didn't effect out up. overbought

we're world Well, about still and in budget second exporter hit the XX% exporter means on term, with largest energy produce the by that the the the world sanctioning exporter largest the these markets. of Russia oil in think its now that third sanctions But last largest that BTU stat that economics night long the seeing I to saying are all gas in world, they a declined the has Russia. in we Russia coal significantly. in has been the had that And

I got to And leave U.S. energy S. back replaced. to will turn U. companies Western country, come there be see companies the permanently you'll energy And that markets off probably think production as and that's those

a I here transactions people there's downturn in So, coal think coal, no markets on market. now of temporary what's coal be markets. those in fair happening To the really right the price ask, the there's

advantages us very That's having electricity market every and one of a the of the day power plant is It volumes. is market. big trades the liquid

So of the revenue it by we've improved asset. having of stream the definitely -- liquidity the our company Merom

a we what is will way the best our risk-weighted evaluate put fashion price in shareholders that we at to don't So to so risk. electrons continue

QX. our something to the defense sheet X.X that the very quarter quarter was of quarter the the from of is end next first off going much we and on and replaced XX And we to XXXX. with our one that balance of third at the play of XXXX At to ways at the delever X.XX QX We which we of our over end already you're end like -- lousy, drop see QX, replaced months. went

that pay and expect balance we deleverage our down as to We debt. continue significantly further sheet to

in. to to have a and defense we're one get of debt that's ourselves balance our little play is trying the ways on So very position to sheet, that's that

Kevin Tracey

plant can fourth period going was of of the the us you sense and question, capacity you what during quarter last in what the Merom which the you forward? a there expect factor give own And Okay. the

Brent Bilsland

the we some So scheduled in fourth quarter. had outage

again, are we about. So don't Merom. statistic. I leading that, that And now, would year, are both at Right units months a know talking this be what running very

what and -- if much profitable. kind operating in this last would seen. will we're and had heat been will this have to see incredibly it later in happen really we plant It July August to be August, we remains year comes July So down year of how

see market we'll So brings. the what

Kevin Tracey

very Thank much. Yes. you

Brent Bilsland

you. thank Yes,

Operator

a Private comes Investor. from question Moore, next Our John

open. is line Your

Unidentified Analyst

there is you they're And be in And the plants Merom considering Great. this going number of to made plants? Power are you power is, of remarkable are Are my acquisition a acquisitions down. Indiana, of I here question you guess a shut more power plant.

Brent Bilsland

Yes, always we think consider plants. -- would power would I we always additional take

each significant So one that those decade. to being I said, we'll the portion next just retire come. evaluate fleet have coal over That of will of think the as a opportunities they there's U.S.

be look And think at I can't that but to we when when you Merom there and we'll opportunities transactions I tell evaluate they to you so have will those the more similar come. where can't to just transaction, tell

Unidentified Analyst

XX% power important question to the 'XX of the the that of Great. numbers. here that? power had agreed to able been sort that is -- going understood an was the sell I that in up you XXXX. the I reconcile see agreed last expires And then to I sell to the a be of that XXXX. to haven't agreement it capacity drop down you purchase in had was disclosure [Dufour]. read to And a I these of thought misread I May in I Did percentage had

Brent Bilsland

You that. misread

May 'XX through it sell of June of from down drops 'XX. of December then piece of So to of of through starting there chose the it. plant we to plant of XX% ELGs have to power XXX% the And We seller. the sold environmental we want we output to the not 'XX energy comply the in the with is which beyond because run if have energy

to that money we to will XXXX. to of we beyond up environmental run the want plant if have expense $XX that million So invest

decision we will mean handful years. doesn't of we won't investment be rules the And in environmental are compliance do what good with come a Now if that we standpoint. plant environmental the rules that -- make all feel in that from feel that then so, exist to that over is the shape that plant change, would today, but

disclosing. So is things one that of we're the

Unidentified Analyst

-- I XXXX million was worth in I read $XX difference an the accounting of difference operations that $XX contracts? you million recorded $X.X and was in disclosed you of million assume -- the income, And $XX your the you revenue, but in that electric sold then the breakout that that and of just you worth had between of million

Larry Martin

the liabilities explained the adjustments to and accounting in had was was and included were million EBITDA. The That that in GAAP treatments result of EBITDA, I purchase assets do the $X.X on for we those the not the power plant. accounting

Operator

comes next question Mike Hall. from Our from Rybak Butler

open. is line Your

Mike Rybak

So in question, just yes, I more guess dig little the power my to I on plant. wanted a

five, guys if then, was in associated rate a the of sort And flow 'XX, $X that's I if multiply cash it's 'XX? of $XX CapEx, to to by for good What $XX negative like that's I quarter. cash $XX did free million. million it of take be going you that? million like So, in to free to million mean doing right, of guess, step $XX with tune looks further, the a EBITDA it you're the million four, run taking flow

Brent Bilsland

what fair of means be the XXXX, sold at think entire plant it look We're and right? we've it's generate a quarter. partial a own quarter, didn't got full so telling not don't for quarter, power I in the -- that you that We at which the price did and we that agreed materially then those to So, outages quarter in price will performance through we get based significant upon plant's XXX% months. to the upon of open when is plant the up, May of scheduled

they CapEx the of the in announced spending were and do -- We to that had for heavily on XXXX we are going realize both plant. seller plan the have January maintenance close

And has be done to so maintenance that with catch-up that plan. there's some

year up, a in we anticipate on -- basis, is range. the think caught the once our being going-forward maintenance million I CapEx $XX a we somewhere maintenance

of this And there to to comply the year that environmental plant. will ELG life spent extend the with regulation money be

begin to so XXXX. by have structures building that they're in of the of We XXXX, place XXXX, in end some those

view we're power kind of is So because we it what are portion on that year? spending flow plant the the we the yes, negative more price determined as, be to be plant. unsold spending of will the determined cash will by this That's be

quarter I indicative the So, EBITDA at EBITDA future is don't fourth of plan. think that looking of

Mike Rybak

Okay. That's helpful.

how the being future in it cash stands today? of, if right? a curve about $XX factoring But million you it I I normalized I just plant that of curve I up, year. environment, normalized, cited, obviously, in talked down. XXXX forward of think sort as -- or curve could the change today But think future in the to to XXXX of today, have front we you go and if on the more of can it's So me. do when about the about guess, The contribution subject plant think normalized sort generation free think CapEx based today, we about don't go a flow stands mean, you 'XX as

Brent Bilsland

Yes.

don't quite have a I our number. because for be. put we would you a don't haven't have sales number to So guidance I what bed position

in which think way the committed of up that invest is we're are our a million that to have I To me, options. to to that, we saying is all that a ELG, that you commitment. $XX look, fact signaling what

we're what the cash and power Our don't investment, decision. flow it make see open investment, close a we market. right? we And coal of It's where the investment make XXXX options the see wouldn't the supports that at at fully or going where that positive are is on today, we saying power prices prices is sell plant end

the the price at power where these should can that's wants math that's market at extreme this is the easy and gas and gosh, What an And events, no be. really this in the look it's if be tricky is problem a extreme one price to caught gas and to produce the well, events. say, is thing plant short electronic

to -- looking data. just in because the so the events caught with past we're these at frequency, more just happening on extreme punitive elevated it's pricing that's power an be which are So but market us, to seeing price putting

the renewables not assets there. the is you fleet But from attributes. on-site can't because the on-site. on-site going power of good. retire looking events coal on doesn't of all missing at to that's we've fundamental look have the going to being its when that that not is of right? seen years, generators storage, XX the has that store half that's think And and fuel performance is turn storm States those fuel market everything and the And within the is suddenly built that's change United fuel a one generation different lot of And next the that of to fabric gas the we be new You

assets each makes an over see up that to time, go with us we higher will, retirement believe, the of the pay see So our continue value amounts additional that we we market think because or today. that amount we equal the for attributes

going per number. right, XX for amount haven't statement. that little not in, willing we that we're I a that we're next the of we're frustrating money so it's make years Because just x to quarter So make at this saying, that not locked to ALL get

is to a company a What we think versus lumpier, in seeing spot earnings more for month season we're be summer going are or the saying in shoulder sell and potential right, the winter dramatic price going the megawatt but market, much we're month, for to is because a higher because dramatically we're our differences hour month. our

we're Now curves afraid so the market hold Winter because what I and Storm limit. of Elliott in legal this winter pricing Storm Winter seen to because is but be power Uri, we seeing was the mild, up we've thought paid than got better where think short

ours So market real-time such start all eight a plant. in megawatt potential out MISO revenue December such see hour mean plant of or you you a can the a zones, per XXX-megawatt on in megawatts when realistically power $X,XXX right? at as take to hours that puts XX, I hour,

say say we're and that be that on we not saying the we'll and comfortable are in guidance. the so we plant strategy guidance many forward only of develop can come. we're more about what as can to that's hope we plant the continue But forward sales to I So additional years investing give today. it give positions, are we our today, and profitability for here that to to in position a convinced better

Mike Rybak

rather ask XXXX, very What incentivized probably Okay. you question way, obviously, is not can sort that I margin you're $XX, to contracted If different for price guys of a that which market? you can $XX difference. give know wholesale Like point indifference, actually love is than you range, to might of of but the the your just volumes in maybe a mean, is $XX, what plant coal and at is a that's that see I plant. you into go a of healthy don't that more right? of the at understand it for I kind where I'd just sell into the

Brent Bilsland

see Well, a right? will are that That forward a we we very it seeing megawatt we power might when would price curves indifferent? the well, April, willing And than coal they tell hour what different in hey, seeing to say, in and so what be price July between the the calculation you you, contract do are is a are for here people out in you changes market. in what power markets what look,

approvals. example, we Merom felt being February of on lead even high that transaction, had generator. various our And slowest we a those right, had closing time government probability we acquire in we XXXX was for to that announced it very So the would longest approvals, of though subject of the that FERC

prices tons was an XXXX saw that saw price. time, the $XXX, period coal or range to during we price the markets, multiple in X.X average So average different of primarily year. million that an in were of They we willing that pay customers

very or that, we was thought power So that that on to on day could close contract we side. we the the felt for that pricing forward value exceeded

to times amount the of parties Merom can't be no just It of set out -- we that chose it coal Plant times. tons Power at we markets in So, which the one to highest right? analysis out and don't reduce know. that of could market. plan It expect one sell in both and maybe. the XXXX. was number, was I third that there's to markets snapshot one on a in like XX look tons more that win I the to lot I time the has day, risk-adjusted particular at return coal to XX of take

argument the we to saw with Ukraine. issue things. to that again, Russian degree be Russian we ongoing markets. a with would argue Going between the -- have to that plant right? escalated? seeing We're planes but States that panic think value collision pricing So that, and some markets forward, going created drones a majority this in of invasion was I the still last panic week, earlier this U.S. of pricing, the we What mean energy could wins the power energy rattling that United be that it really here right? disruption, do yet a the I time there's escalate Could by add, would is that is because have further saber China.

hope that, as things that that down, type and disruptive would personally, a are citizen, of what very those be to call I I markets but I U.S. can energy the lead cools to don't saw time, our the pricing that the will lead happen. panic happen may that that power value markets markets. of to the exceeding coal energy just majority I our but think we of

on saw happens it that, revealed increasing more that extreme We to We, -- and crisis there for the lead demand more that we'll what invasion to was said, the not seeing see That going again, all supply events energy So and went pricing. increasing. Ukraine just that along. think the we're forward. being Europe Ukraine last summer, BTUs

-- right? the the a prices pricing, huge at at as seen it's Illinois to right? We industry Basin an production to this response think kind really look mean you haven't XX% response quadrupling. if I industry. the extreme I by Look of came production telling, up

So been there in that past. it's we that, think that response isn't -- the because like

more increased we think times We could of pricing a significant see power.

thing to significant amount generation of is have of that's going a other a amount generation. gas today, coal The happen a significant balanced you fairly and

dispatch get as coal coal. dispatch to dispatch And prices prices the in will gas of front front in gas gas high, as get of gas low, curve coal, start so in

If to somewhat time, So coal-fired being the there this when because the is generation retirement is coal gas coal price of by have retirement less me, premature switching see not right? gas to gas on removed cap prices to get have these that generation, coal over generators. going you generators you're -- no we high,

markets the rapid So have changing on. are this going transition because we

of industrial lot for the looking transfer And of home. I thing so significant a all is so puts significant sort European coming power powered and large, other by is because our cars happened Mexico, in Europe, that trade think way. a got and we're for a United that's seeing uncertain -- adds then by more the industrial moving thing a which it's prices fueled along States with that's something, electric expensive to demand portion -- base generation be gotten And power coming the and -- of is and is that further and the to have

Operator

comes Our next from from question Castleberry. [Kevin Pounds]

is line open. Your

Unidentified Analyst

Yes.

You're business. entering a new

ones plant And the going competition the from have utilities, or you guess, you're be referenced plants from as to retained this would you additional Or that close, to to they run competition with on are help power that organization, facing that hired be less other question is you're pricing? efficiently? the group a staff of correct? You you second a implying it going people but make other I MISO, to deal

Brent Bilsland

So, it's the reason XX MISO one is the Independent Midwest Operator. System That's province. and Canadian states

I answered of X in your of last I'm located MISO Indiana your Zone the in was generators power part first question. sorry. question? What Our of -- the part the

Unidentified Analyst

that retained And you additional optimize costs you significant that Have its staff plant? hiring forth? are first help to made its is working and you and people was the a production we so for investment. The part

Brent Bilsland

Yes.

the seller's an we we Hoosier running desk employ acquire of at the corporate people oversee and employees that day plant all And plant. as hired had. then firm We that runs So, probably same the the at the power ahead technically, retained to the retain CAMs that office. independent people XX plant. did help We not power about contractor the they

He's make a done we sure CAMs experts experience. doing offer of is are and just United as States, over had insight Merom they the job, of the there expertise and We XX gigawatts wanted that there. of that great But the generation still to in Merom plant job. manager and run their to staff is terrific a

well, the with pleased and the that we're all and very gone really CAMs. of both has retained people performance So

Unidentified Analyst

on the looking to problems how side, et the and good about significant you're Great. with other production. with feel you're working Do had transportation increase have railroads, then And you coal smaller the cooperators cetera?

Brent Bilsland

Yes.

in transportation there a of shortage was think XXXX. I

today that was concerned is nine I transportation being think months alleviated ago. here XXXX, less so were as we six, about in

Operator

question Pipes follow-up Riley B. a from Lucas have at We Securities.

open. is line Your

Nick Giles

in is a Hallador seeing reading related Hoosier here. to price? shale quantities Or a sell Thank is else? at actually is and something XXXX was so per $XX price XX-K earlier delivered you price the confusing I believe that asked want XX% megawatt. the at this I'm This here, Hoosier contract is asking paying the buy I'm question through shale to just the least XXXX. And of clarify with Nick which for I the this I that any Am through follow-up color.

Larry Martin

sold the you're when XX% says Hoosier reading we that when 'XX Brent So XX%, to beyond. from

to we have stay that in contract. deliver to So XX% XX% of

So that's our minimum.

So it's available.

sold per makes we've if So, XX%, XX% year, I is that power XX% do believe, we to minimum have of of the sense. that available, the but if

Nick Giles

And then Larry. for believe that. How you kind and do costs come of you that? the Thank around able throughout that year? be down. that. numbers I in XXXX. said to costs Appreciate to Would remarks, prepared on some cadence one you put cost for maybe -- just of just expectations the expect clear, clarifying wanted to more, I you That's your ask

Brent Bilsland

Yes.

like numbers and I see improve. things productivity for that, other And as commodity price things we'll we've our diesel. steel seen think QX limestone I think

pricing but market, Some of that hasn't. it has come in down the

don't don't we So Our suppliers have prices down right? too, immediately. step contracts, -- those

back hedges through I as vendors off to year, off those think right, our us. eventually flow start input eventually roll or and throughout discounted price commodity through flow the prices prices see we'll to some

improved we comfortable levelized. into least production at So or feel we be believe cost of that's our XXXX that why going will

kind year price dramatic we Last where was increases. of saw crazy a time

to you to the prices, of run got bolts trying increased out bolts all, you of twofold. production out right? get to it like it glue that very First take prices A the the was all, input industry right? and in commodity of roof One, up stops was of so supplies, had and things everyone of for roof run second ramp high-margin bolts you period, or business roof difficult advantage

the item its supply as different the is which like just was have run all seemed foot every pressure a calmed taking a the lines. taken it little has right? So, off down, coal the And inventories just increased, bit there on That a industry gas off week. has

the line. supply seeing we're come So pressure off

lower to I hedges our were So at eventually us get vendors the demand through commodity to pricing their think costs which will able to their will they last as repriced be don't prices. able reduce, plus demand year, flows

a So are a think that's trending we perspective, in why direction. cost we things better think from

Nick Giles

continued that's best good Well, to hear. Appreciate and Brent. it. all the luck. Got of color

Brent Bilsland

while asked won't Thank at Lucas ongoing. the last question basketball too of Nick, is Patrick's the having much you, for I Day and St. you call through tournament on

you're So a to green later allowed have today. I hope beer

Operator

Brent Bilsland, our any concludes CEO, remarks. This back I'll for closing to Q&A. now hand

Brent Bilsland

of thank I today for and everybody continued today we interest want very are in and Hallador position that heading. came across excited the it to the I hope their it Company about where is

your And attention, time, I thank everyone's competing are basketball things particularly you for all there as such today. other for

you, talking next to to all you quarter. look So forward and thank

Operator

you Ladies and gentlemen, thank today's call concluded. for like has We'd to your participation. now

may your disconnect You lines. now

Hallador Energy (HNRG) 17 Mar 232022 Q4 Earnings call transcript