Hallador Energy Company Reports Second Quarter 2020 Financial and Operating Results
04 August 2020 - 7:03AM
Hallador Energy Company (NASDAQ – HNRG) today reported income
of $0.25 million, $0.01 per share and adjusted
EBITDA of $13.2 million.
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, a 9%
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 RelationsPhone – (812)
299-2800
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