Hallador Energy Reports 2019 3rd Quarter Financial And Operating Results

TERRE HAUTE, Ind., Nov. 4, 2019 /PRNewswire/ -- Hallador Energy Company (Nasdaq: HNRG) reports financial and operating results for the quarter ended September 30, 2019. Hallador filed its Form 10-Q after the markets closed today.

Brent Bilsland, President and Chief Executive Officer, commented, "I am pleased that we are still on pace for record shipments for the year and that we experienced record production in October ending the higher cost issues that plagued us in the third quarter. We are entering our sales season in a position of strength with 75% sold for the next 3 years."

    --  STRONG SHIPMENTS IN Q3   - 2.1 million tons of coal were shipped in the
        3rd quarter and we anticipate shipping 2.0 million tons in Q4. Thus,
        Sunrise Coal is on pace to ship a record 8 million tons in 2019.










    --  Q3 2019 NET LOSS OF $3.7 MILLION, ($0.12) PER SHARE, CAUSED BY INCREASED
        COSTS DUE TO THREE TEMPORARY EVENTS   - First, Oaktown 2 experienced
        challenging mining conditions during the quarter, but was able to
        overcome and improve production by early October.    - Second, Carlisle
        has been working hard to reduce its cost structure since re-opening in
        July 2018. In October, units were relocated, and both production and
        recovery have improved dramatically. The Carlisle Mine experienced
        record production, up 40%, in the month of October.   - Lastly, at our
        Ace in the Hole Mine, a planned new box cut development in a new mining
        area led to low production in the quarter.     The confluence of these
        three temporary events increased our costs $3.86/ton during the quarter.
        We believe these events to be isolated to the 3(rd) quarter as we
        experienced record production in the month of October, thus we
        anticipate our cost structure returning to our historical sub $30/ton
        cost structure.






    --  75% SOLD THROUGH 2022 = GREAT CASH FLOW VISIBILITY   - When looking at
        the remainder of 2019 through 2022, 19.6 million tons are sold. Thus, we
        have ~75% of our sales contracted over the next three plus years at an
        8.0 million-ton annualized pace.   - Our Sunrise coal subsidiary grew
        from 9 customers in 3 states in 2018 to a peak of 17 customers in 7
        states in 2019. We continue to see opportunities to add customers in
        future years.


    --  NEW CREDIT FACILITY IN PLACE FOR NEXT FOUR YEARS   - Once our banking
        partners reviewed our solid sales position, and could clearly see our
        future cash flows, they agreed to extend our credit facility to
        September 2023 and reduce our interest rate by 50 basis points. We have
        improved our low-cost capital structure at a time when others in the
        industry only have access to capital at exorbitant prices.

The table below represents some of our critical metrics (in thousands except for per ton data):


                                               Nine Months Ended                   Three Months Ended
                                                        September 30,                            September 30,


                                          2019                                2018        2019                         2018




     Net Income (loss)             $
        (67)                         $
       5,023     (3,723)                  $
       2,914



     Total Revenues             $
        244,719                        $
       203,829      83,096                  $
       79,722



     Tons Sold                          6,055                               5,146       2,118                        1,962



     Average Price per Ton        $
        39.51                          $
       39.40       39.13                   $
       40.29



     Bank Debt                  $
        172,000                        $
       199,975     172,000                 $
       199,975



     Operating Cash Flow         $
        36,323                         $
       30,295      12,612                  $
       14,419



     Adjusted EBITDA*            $
        52,109                         $
       55,363      10,451                  $
       18,239



     Adjusted Free Cash Flow **  $
        21,695                         $
       28,200       1,100                   $
       9,267




               *Defined as EBITDA plus stock-based
                compensation and ARO accretion, less the
                effects of our equity method investments
                and Hourglass Sands.




               **Defined as net income plus deferred
                income taxes, DD&A, ARO accretion, 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).


                                                Nine Months Ended                      Three Months Ended
                                                           September 30,                                 September 30,


                                           2019                            2018           2019                                 2018



      Net income (loss)              $
        (67)                      $
      5,023  $
        (3,723)                          $
       2,914


      Income tax benefit                (3,318)                          (546)       (3,473)                               (589)


      Loss from Hourglass
       Sands                                438                             871             47                                  314


      Loss from equity
       method investments                   350                             198            184                                   42



     DD&A                               35,598                          32,759         11,774                               10,810


      ARO accretion                         943                             866            320                                  293


      Loss (gain) on
       impairment &
       disposal of assets                  (99)                            576              1                                    4


      Loss (gain) on
       marketable
       securities                         (334)                             60             14                                (134)


      Interest Expense                   13,546                          10,284          3,558                                3,261


      Other amortization                  3,614                           2,517          1,323                                  935


      Stock-based
       compensation                       1,438                           2,755            426                                  389



                   Adjusted EBITDA $
        52,109                      $
      55,363   $
        10,451                          $
       18,239

Reconciliation of GAAP "net income" to non-GAAP "adjusted free cash flow" (in thousands).


                                                    Nine Months Ended                          Three Months Ended
                                                               September 30,                                     September 30,


                                               2019                               2018            2019                                    2018



      Net income (loss)                 $
         (67)                      $
         5,023  $
         (3,723)                          $
          2,914


      Loss from equity
       method investments                       350                                198             184                                      42


      Deferred income tax
       benefit                              (2,741)                             (120)        (3,047)                                  (385)



     DD&A                                   35,612                             32,764          11,778                                  10,815


      ARO accretion                             943                                866             320                                     293


      Deferred financing
       costs amortization                     1,628                              1,482             543                                     542


      Change in fair value
       of interest rate
       swaps                                  3,018                                136             162                                   (708)


      Loss (gain) on
       impairment &
       disposal of assets                      (99)                               576               1                                       4


      Maintenance capex                    (18,373)                          (15,469)        (5,537)                                (4,639)


      Stock-based
       compensation less
       taxes paid                             1,424                              2,744             419                                     389



                   Adjusted Free Cash
                    Flow              $
         21,695                      $
         28,200    $
         1,100                           $
          9,267

Conference Call

As previously announced our earnings conference call for financial analysts and investors will be held on Tuesday, November 5, 2019, 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 10130751.

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.

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SOURCE Hallador Energy Company