Hallador Energy pany(HNRG) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q3 2024, consolidated revenue was $105 million, up from$93.5 million in Q2 and down from $165.8 million in the prior year period [18] - Net income for the quarter was$1.6 million, compared to a net loss of $10.2 million in Q2 and net income of$16.1 million in the prior year period [18] - Adjusted EBITDA was $9.6 million for Q3, compared to a negative$5.8 million in Q2 and $35.9 million in the prior year period [19] - Operating cash used was$12.9 million, down from operating cash flow of $23.5 million in Q2 and$35.3 million in the prior year period [18] - Total liquidity at September 30, 2024, was $34.9 million, increasing to$53.8 million by the end of October [21] Business Line Data and Key Metrics Changes - Hallador Power generated 1.1 million megawatt hours in Q3, up from 800,000 megawatt hours in Q2 [12] - Electric sales for the quarter were $71.7 million, compared to$59.4 million in Q2 and $67.4 million in the prior year period [17] - Coal sales were$48.3 million for the quarter, compared to $45.7 million in Q2 and$134.4 million in the prior year period, reflecting a strategic reduction in coal production [17] Market Data and Key Metrics Changes - The supply response from the accredited capacity market remains restricted, with MISO reducing capacity accreditation for intermittent resources like wind and solar [9] - The company holds a considerable portion of the remaining unsold accredited capacity in MISO Zone 6, where demand continues to grow [8] Company Strategy and Development Direction - The company signed a non-binding term sheet with a leading global data center developer, aiming to secure long-term contracts for a substantial portion of its plant's energy and capacity [6][7] - The restructuring of the Sunrise Coal division is ongoing, with improvements aimed at increasing efficiency and reducing operational costs [14] - The company is optimistic about the surge in demand from data centers and industrial users, viewing it as a meaningful opportunity for long-term financial transformation [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about finalizing long-term agreements with data center partners, citing Indiana's favorable business climate [8] - The company believes that the credit capacity it holds will remain valuable due to regulatory challenges faced by other energy sources [10][11] - Management noted that the energy environment remains challenging but is encouraged by improvements in pricing and dispatch rates [12] Other Important Information - The company executed a $60 million prepaid power purchase agreement (PPA) after the quarter, following a$45 million PPA signed in Q2 [13] - Total forward energy and capacity sales position was $616.9 million, down from$664.1 million at the end of Q2 but up from 516 million as of September 30, 2023 [19] Q&A Session Summary Question: Can you quantify the magnitude of the non-binding term sheet agreement? - Management indicated it would cover the majority of the plant's output, significant but did not provide specific percentages [23][25] Question: What is the pricing structure for the agreement? - Management stated that pricing would be above the curve, but specifics were complex due to various factors involved [24][25] Question: What is the magnitude and coverage of the recent PPA? - The 60 million PPA covers power sold in 2025 and 2026 [29] Question: What were the coal production costs per ton during the quarter? - Management noted that costs were elevated but expected improvements in tons per man hour and cost structure [30][31] Question: What is the outlook for coal production and sales? - Management indicated a significant reduction in coal volumes, focusing on the power side of the business while still selling coal to third parties [32][33]