- Signs Non-Binding Term Sheet with Leading Global Data Center Developer to Supply Power for 10+ years -
- Q3 Total Revenue of $105.0 Million -
- Q3 Net Income of $1.6 Million or $0.04 Earnings per Share -
- Q3 Operating Cash Flow of ($12.9) Million -
- Q3 Adjusted EBITDA of $9.6 Million -
TERRE HAUTE, Ind., Nov. 12, 2024 (GLOBE NEWSWIRE) -- Hallador Energy Company (Nasdaq: HNRG) ("Hallador” or the "Company”), today reported its financial results for the third quarter ended September 30, 2024.
"During the quarter, we reached an important milestone in our transformation to an independent power producer as we signed a non-binding term sheet with a leading global data center developer,” said Brent Bilsland, President and Chief Executive Officer. "Our team is working diligently to finalize definitive agreements with this partner and the relevant utility that will support the delivery of our energy and capacity to the large load end user. The proposed transaction involves selling the energy and capacity to the end-user through a utility or cooperative, which would be an "in front of the meter” transaction in contrast to the "behind the meter” structures that have created recent regulatory challenges for others. If we are successful in executing definitive agreements, the proposed transaction would contract the majority of our plant's energy and capacity at prices higher than the forward curve for more than a decade to come.
"While we have not yet reached binding agreements, we are encouraged by our progress with this partner and by the strong interest we continue to see from other potential counterparties in our energy and capacity offerings, which have been bolstered by Indiana's efforts to attract datacenters and other high density power users with its business-friendly climate and favorable tax policy. We believe we hold a considerable portion of the remaining unsold accredited capacity in MISO Zone 6, covering Indiana and parts of western Kentucky and we are well positioned to take advantage of the significant demand for our capacity.”
Bilsland continued, "Additionally, we have made considerable strides in strengthening our balance sheet in recent months. Subsequent to quarter end, we executed a $60 million prepaid power purchase agreement (PPA) and utilized $20 million of the proceeds to pay down bank term debt and $34 million to pay down the revolver. At the end of October our bank debt balance was $23.5 million compared to $91.5 million outstanding at the end of 2023. Between our strengthened balance sheet and an improving environment for both coal and power sales, we are poised to exit 2024 on strong footing which should allow us to capitalize on the long-term multi-year growth opportunities ahead.”
Third Quarter 2024 Highlights
- Hallador returned to growth on both the top and bottom line compared to the second quarter.
- Total revenue increased 12% to $105 million, driven by a 21% increase in electric sales to $71.7 million. This marks a near Company record for electric sales revenue mix, as Hallador continues to emphasize electric sales as an independent power producer.
- Net income increased to $1.6 million compared to $(10.2) million in the second quarter, with adjusted EBITDA up significantly to $9.6 million compared to $(5.8) million as the Company returned to profitability through improved power pricing and lower costs per MWh at its Merom Power Plant.
- Total revenue increased 12% to $105 million, driven by a 21% increase in electric sales to $71.7 million. This marks a near Company record for electric sales revenue mix, as Hallador continues to emphasize electric sales as an independent power producer.
- The Company is now strengthening its balance sheet (post quarter-end) without equity dilution.
- Total bank debt was $70.0 million at September 30, 2024, compared to $45.5 million at June 30, 2024 and $91.5 million at December 31, 2023.
- Total liquidity was $34.9 million at September 30, 2024 compared to $60.7 million at June 30, 2024 and $26.2 million at December 31, 2023.
- Subsequent to quarter-end, the Company secured a $60 million prepaid PPA and utilized $20 million of the proceeds to pay down bank term debt and $34 million to pay down its revolver. At October 31, 2024, total bank debt was $23.5 million and total liquidity was $53.8 million.
- The Company did not utilize its ATM program in the third quarter or subsequent to quarter-end.
- Total bank debt was $70.0 million at September 30, 2024, compared to $45.5 million at June 30, 2024 and $91.5 million at December 31, 2023.
- Hallador continues to focus on forward sales to secure its energy position.
- At quarter-end, Hallador had total forward energy, capacity and coal sales to 3rd party customers of $937.2 million through 2029, up from $871.7 at the end of the second quarter.
- Hallador signed a non-binding term sheet with a leading global data center developer to support the delivery of energy and capacity to a large load end user customer for 10+ years. The completion of the proposed transaction is subject to, among other matters, the negotiation and execution of definitive agreements and there can be no assurance that definitive agreements will be entered into or that the proposed transaction will be consummated on the terms or timeframe currently contemplated, or at all.
- At quarter-end, Hallador had total forward energy, capacity and coal sales to 3rd party customers of $937.2 million through 2029, up from $871.7 at the end of the second quarter.
| Financial Summary ($ in Millions and Unaudited) | |||||||||||||||
| Q3 2023 | Q1 2024 | Q2 2024 | Q3 2024 | ||||||||||||
| Electric Sales | $ | 67.4 | $ | 58.8 | $ | 56.8 | $ | 71.7 | |||||||
| Coal Sales - 3rd Party | $ | 97.4 | $ | 49.6 | $ | 32.8 | $ | 31.7 | |||||||
| Other Revenue | $ | 1.0 | $ | 1.3 | $ | 1.3 | $ | 1.6 | |||||||
| Total Revenue | $ | 165.8 | $ | 109.7 | $ | 90.9 | $ | 105.0 | |||||||
| Net Income (Loss) | $ | 16.1 | $ | (1.7 | ) | $ | (10.2 | ) | $ | 1.6 | |||||
| Operating Cash Flow | $ | 35.3 | $ | 16.4 | $ | 23.5 | $ | (12.9 | ) | ||||||
| Adjusted EBITDA* | $ | 35.9 | $ | 6.8 | $ | (5.8 | ) | $ | 9.6 | ||||||
Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Our method of computing Adjusted EBITDA may not be the same method used to compute similar measures reported by other companies.
Management believes the non-GAAP financial measure, Adjusted EBITDA, is an important measure in analyzing our liquidity and is a key component of certain material covenants contained within our Credit Agreement, specifically the minimum quarterly EBITDA. Noncompliance with the covenants could result in our lenders requiring the Company to immediately repay all amounts borrowed. If we cannot satisfy these financial covenants, we would be prohibited under our Credit Agreement from engaging in certain activities, such as incurring additional indebtedness, making certain payments, and acquiring and disposing of assets. Consequently, Adjusted EBITDA is critical to the assessment of our liquidity. The required amount of Adjusted EBITDA is a variable based on our debt outstanding and/or required debt payments at the time of the quarterly calculation based on a rolling prior 12‑month period.
Reconciliation of the non-GAAP financial measure, Adjusted EBITDA, to cash provided by operating activities, the most comparable GAAP measure, is as follows (in thousands) for the three and nine months ended September 30, 2024 and 2023, respectively.
| Reconciliation of GAAP "Cash provided by (used in) operating activities" to non-GAAP "Adjusted EBITDA" (In $ Thousands and Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Cash provided by operating activities | $ | (12,906 | ) | $ | 35,284 | $ | 26,985 | $ | 79,527 | ||||||
| Current income tax expense | - | (178 | ) | - | 315 | ||||||||||
| Loss from Hourglass Sands | - | 1 | 1 | 3 | |||||||||||
| Loss from Sunrise Indemnity | - | - | 12 | - | |||||||||||
| Distribution from Sunrise Energy | - | - | - | (625 | ) | ||||||||||
| Bank and convertible note interest expense | 2,254 | 2,428 | 9,113 | 7,632 | |||||||||||
| Working capital period changes | 18,821 | (8,285 | ) | (24,659 | ) | 8,105 | |||||||||
| Other long-term asset and liability changes | 51 | (210 | ) | (1,352 | ) | (914 | ) | ||||||||
| ASC 606 Capacity Adjustment | - | 3,703 | (3,703 | ) | 3,703 | ||||||||||
| Cash paid on asset retirement obligation reclamation | 218 | 1,355 | 820 | 2,286 | |||||||||||
| Other amortization | 1,119 | 1,822 | 3,367 | 5,200 | |||||||||||
| Adjusted EBITDA | $ | 9,557 | $ | 35,920 | $ | 10,584 | $ | 105,232 | |||||||
| Cash (used in) provided by investing activities | $ | (10,663 | ) | $ | (18,136 | ) | $ | (36,233 | ) | $ | (48,684 | ) | |||
| Cash (used in) provided by financing activities | $ | 22,482 | $ | (16,802 | ) | $ | 11,766 | $ | (30,553 | ) | |||||
| Solid Forward Sales Position - Segment Basis, Before Intercompany Eliminations (unaudited): | |||||||||||||||||||||||||||
| 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | Total | |||||||||||||||||||||
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