Hallador Energy Company Q2 FY2025 earnings call

• Delivered strong second quarter with year-over-year improvements in revenue, net income, and adjusted EBITDA, along with positive cash flow from operations.
• Navigated seasonal spring softness and a generating unit outage at Merom, with remaining unit and higher market pricing in late June offsetting headwinds.
• Coal inventory levels rose due to operational enhancements and planned outage at Merom, positioning for active second half.
• Supplemented weaker pricing with select firm energy sales, including a $35 million prepaid firm energy sale in late June.
• Engaged with broader slate of potential partners for long-term power purchase agreement, including utilities with compelling proposals.
• Continued to evaluate strategic acquisitions and enhancements, including adding natural gas capabilities at Merom.
• Coal operations benefited from restructuring efforts, with improved cost performance and efficient recoveries.
• Appointed Todd Telesz as new Chief Financial Officer, bringing experience in power and utility sectors.

On a segment basis, electric sales for the second quarter were $60 million (compared to $85.9 million in Q1 2025 and $60 million in prior year period). Third-party coal sales increased to $38.1 million in Q2 2025 compared to $30.2 million in Q1 2025 and $32.8 million in prior year period. Consolidated total operating revenue for Q2 2025 was $102.9 million (compared to $117.8 million in Q1 2025 and $93.8 million in prior year period). Net income for Q2 2025 was $8.2 million (compared to $10 million in Q1 2025 and a $10.2 million loss in prior year period). Operating cash flow for Q2 2025 was $11.4 million (compared to $38.4 million in Q1 2025 and $23.5 million in prior year period). Adjusted EBITDA was $3.4 million in Q2 2025 (compared to $19.3 million in Q1 2025 and a $5.8 million loss in prior year period). Capital expenditures in Q2 2025 were $13 million (compared to $13.2 million in year ago period). Forward energy and capacity sales position as of June 30, 2025, was $619.7 million (compared to $630.4 million at end of Q1 2025 and $685.7 million at Dec 31, 2024). Total bank debt at June 30, 2025, was $45 million. Liquidity at June 30, 2025, was $42 million.

• Expected active second half of the year as both generating units return to full dispatch and coal customer shipments remain strong.
• Evaluating refinancing structures related to current credit facility using prepaid proceeds.
• Continued momentum in commercial strategy to secure long-term power purchase agreement, encouraged by engagement from new participants.
• Optimistic that conversations will culminate in long-term agreements enhancing shareholder value.
• Remain focused on unlocking full value of dispatchable generating assets and evaluating strategic acquisitions and enhancements.

• Forward-looking statements subject to variety of risks, uncertainties, and assumptions; actual results may vary materially from projections.
• Counterparty risk associated with multiple agreements and potential customer concentration.
• Market conditions and weather impacts on energy pricing and demand.
• Regulatory and policy changes that could affect strategic initiatives and coal operations.

Q: Are you more open to multiple agreements to avoid customer concentration and if new counterparties could serve different end markets?

A: Stopped exclusive discussions in May, opened to other counterparties including utilities, encouraged by utility interest, gathering multiple bids and evaluating offers.

Q: Should we expect economics wrapped around co-firing to be a core part of discussions and about acquisition inning?

A: Co-firing dependent on PPA, considering various attributes of offers; actively having conversations about acquisitions, inquiring about assets, and seeing where discussions go.

Q: About amended credit agreement and CapEx spend?

A: Amended credit agreement deferred certain covenant requirements and defeased term loan; CapEx expected to be lighter in remainder of 2025 with delay in some ELG-related capital expenditures