Hallador Energy Company Reports Second Quarter 2020 Financial and Operating Results
Hallador Energy Company (HNRG) reported a net income of $0.25 million for Q2 2020, translating to $0.01 per share. Adjusted EBITDA was $13.2 million, despite challenges from the pandemic. Production costs decreased by 9% to $28.94 per ton, though sales volumes dropped due to shipment delays. The company reduced bank debt by $19 million, with operating cash flow reported at $17.2 million. Liquidity stood at $52.6 million, maintaining a leverage ratio below 3.0X. Sales guidance is suspended, but contracted sales through 2022 remain strong, totaling 14.2 million tons at set prices.
- Achieved a net income of $0.25 million, a notable recovery from a net loss of $3.34 million in the previous year.
- Adjusted EBITDA for Q2 2020 improved to $13.2 million, indicating operational resilience.
- Production costs fell by 9%, enhancing efficiency with a cost of $28.94 per ton.
- Reduced bank debt by $19 million, strengthening financial position.
- Operating cash flow rose to $17.2 million, reflecting better cash management.
- Sales volumes decreased due to shipment delays, impacting revenue.
- Total revenues fell by 28% year-over-year, highlighting ongoing market challenges.
TERRE HAUTE, Ind., Aug. 03, 2020 (GLOBE NEWSWIRE) -- Hallador Energy Company (NASDAQ – HNRG) today reported income of
Brent Bilsland, President and Chief Executive Officer, stated, "Hallador was profitable, despite the pandemic which wreaked havoc on energy markets. We further lowered our cost structure and debt levels, while focusing on helping customers manage inventory levels. We are cautiously optimistic as coal shipments, energy markets and hopefully the world have begun a recovery."
- During Q2 2020, production costs fell to
$28.94 per ton, a9% reduction over the prior quarter, even as shipment delays resulted in lower sales volumes. - In the first half of 2020, bank debt was reduced by
$19 million , and operating cash flow was$17.2 million , in spite of coal inventories increasing by$13.8 million . We anticipate shipments to improve in the second half of the year and inventory levels to decline, improving operating cash flow. - As of June 30, 2020, our liquidity was
$52.6 million and our leverage ratio remained below 3.0X, which is comfortably within our covenant of 4.0X.
Solid Sales Position Through 2022
° Due to the impacts and economic uncertainty of COVID-19, the Company is suspending sales guidance but still carries a strong contracted sales position through 2022.
| Contracted | Estimated | |||||||
| Tons | Priced | |||||||
| Year | (millions)* | per ton | ||||||
| 2020 (Q3 – Q4) | 3.7 | $ | 40.10 | |||||
| 2021 | 5.2 | $ | 40.10 | |||||
| 2022 | 5.3 | $ | 40.60 | |||||
| 14.2 | ||||||||
_____________
* Contracted tons are subject to adjustment due to the exercise of customer options to either take additional tons or reduce tonnage if such options exist in the customer contract.
The table below represents some of our critical metrics (in thousands except for per ton data):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net Income (loss) | $ | 254 | $ | (3,344 | ) | $ | (3,406 | ) | $ | 3,656 | ||||||
| Total Revenues | $ | 52,081 | $ | 72,310 | $ | 114,619 | $ | 161,623 | ||||||||
| Tons Sold | 1,244 | 1,807 | 2,770 | 3,937 | ||||||||||||
| Average Price per Ton | $ | 40.57 | $ | 39.35 | $ | 40.58 | $ | 39.71 | ||||||||
| Bank Debt | $ | 161,113 | $ | 173,100 | $ | 161,113 | $ | 173,100 | ||||||||
| Operating Cash Flow | $ | 918 | $ | 2,864 | $ | 17,174 | $ | 23,711 | ||||||||
| Adjusted EBITDA* | $ | 13,175 | $ | 16,423 | $ | 27,074 | $ | 41,658 | ||||||||
| Adjusted Free Cash Flow ** | $ | 6,281 | $ | 5,943 | $ | 13,094 | $ | 20,595 | ||||||||
*Defined as EBITDA plus stock-based compensation, ARO accretion, change in fair value of fuel hedges, less the effects of our equity method investments and Hourglass Sands.
**Defined as net income plus deferred income taxes, DD&A, ARO accretion, change in fair value of fuel hedges, and stock compensation, less maintenance capex and the effects of our equity method investments.
EBITDA, adjusted EBITDA, and adjusted free cash flow should not be considered alternatives 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 EBITDA, adjusted EBITDA, and adjusted free cash flow may not be the same method used to compute similar measures reported by other companies.
Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial and analytical framework upon which management bases financial, operation, compensation, and planning decisions, and (iii) present measurements that investors, rating agencies, and debt holders have indicated are useful in assessing our results.
Reconciliation of GAAP "net income" to non-GAAP "adjusted EBITDA" (in thousands).
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income (loss) | $ | 254 | $ | (3,344 | ) | $ | (3,406 | ) | $ | 3,656 | ||||||
| Income tax expense (benefit) | (618 | ) | 191 | (2,794 | ) | 155 | ||||||||||
| Loss from Hourglass Sands | 63 | 140 | 141 | 391 | ||||||||||||
| (Income) loss from equity method investments | (1,231 | ) | 132 | (1,286 | ) | 166 | ||||||||||
| DD&A | 10,215 | 12,092 | 20,838 | 23,824 | ||||||||||||
| ARO accretion | 343 | 314 | 676 | 623 | ||||||||||||
| Gain on impairment and disposal of assets | — | (100 | ) | — | (100 | ) | ||||||||||
| Gain on marketable securities | — | (45 | ) | (14 | ) | (348 | ) | |||||||||
| Interest Expense | 2,834 | 5,369 | 8,548 | 9,988 | ||||||||||||
| Other amortization | 1,396 | 1,156 | 2,822 | 2,291 | ||||||||||||
| Change in fair value of fuel hedges | (398 | ) | - | 913 | — | |||||||||||
| Stock-based compensation | 317 | 518 | 636 | 1,012 | ||||||||||||
| Adjusted EBITDA | $ | 13,175 | $ | 16,423 | $ | 27,074 | $ | 41,658 | ||||||||
Reconciliation of GAAP "net income" to non-GAAP "adjusted free cash flow" (in thousands).
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income (loss) | $ | 254 | $ | (3,344 | ) | $ | (3,406 | ) | $ | 3,656 | ||||||
| (Income) loss from equity method investments | (1,231 | ) | 132 | (1,286 | ) | 166 | ||||||||||
| Deferred income tax benefit | (618 | ) | 113 | (2,270 | ) | 306 | ||||||||||
| DD&A | 10,217 | 12,096 | 20,844 | 23,834 | ||||||||||||
| ARO accretion | 343 | 314 | 676 | 623 | ||||||||||||
| Deferred financing costs amortization | 609 | 542 | 1,076 | 1,085 | ||||||||||||
| Change in fair value of interest rate swaps | (617 | ) | 1,843 | 1,976 | 2,856 | |||||||||||
| Change in fair value of fuel hedges | (398 | ) | — | 913 | — | |||||||||||
| Gain on sale of assets | — | (100 | ) | — | (100 | ) | ||||||||||
| Maintenance capex | (2,578 | ) | (6,164 | ) | (6,048 | ) | (12,836 | ) | ||||||||
| Stock-based compensation less taxes paid | 300 | 511 | 619 | 1,005 | ||||||||||||
| Adjusted Free Cash Flow | $ | 6,281 | $ | 5,943 | $ | 13,094 | $ | 20,595 | ||||||||
Conference Call
As previously announced, our earnings conference call for financial analysts and investors will be held on Tuesday, August 4, 2020, at 2:00 pm eastern time. Dial-in numbers for the live conference call are as follows:
Toll-free (888) 347-5317
Canadian Callers Toll-free (855) 669-9657
Conference ID #: Hallador Energy Company HNRG Call
An audio replay of the conference call will be available for one week. To access the audio replay, dial US Toll-Free (877) 344-7529; Canada Toll-Free (855) 669-9658 and request to be connected to replay access code 10138494.
Hallador is headquartered in Terre Haute, Indiana, and through its wholly owned subsidiary, Sunrise Coal, LLC, produces coal in the Illinois Basin for the electric power generation industry. To learn more about Hallador or Sunrise, visit our website at www.halladorenergy.com.
Contact – Investor Relations
Phone – (812) 299-2800
FAQ
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