Hallador Energy Company Q4 FY2025 earnings call

• Merrim power plant had operational challenges in Q4 2025 and Q1 2026, leading to expected similar Q1 2026 results to Q4 2025. Major maintenance outage for generating units starts in May 2026 to improve performance.
• Sunrise Coal delivered consistent performance with production optimization and cost management improving operating performance. It provides reliable fuel for generation assets and optimizes cost structure.
• Strong demand for reliable dispatchable generation in MISO region. Halador made progress in selling energy and capacity at elevated prices and received offers for accredited capacity. Filed application in MISO's ERAS program and was awarded an ERAS slot, funding $14 million in refundable deposits for potential natural gas generation expansion.
• Maintained disciplined capital allocation in 2025, focusing on maintenance and operational improvements. Expect capital expenditures in 2026 to modestly increase excluding ERAS project.
• Recently added board members Barbara Sugg and Daniel Hudson, with their expertise valuable for Halidor's growth.

For the full year, total revenue increased 16% year-over-year to $469.5 million. Electric sales increased approximately 19% to $310.7 million compared to 2024. Coal sales also increased 8% year-over-year to $148.7 million. Electric sales were the primary driver of revenue growth. Coal sales supported internal fuel needs at Merrim and third-party customers. Together, these segments highlight the advantages of the integrated platform where coal operations provide secure fuel for generation assets and participate in third-party markets.

• Expect consolidated first quarter of 2026 results to be similar to fourth quarter of 2025.
• 2026 capital expenditures are expected to modestly increase compared to 2025 levels, excluding potential ERAS project developments.
• Target plant coming online around third quarter of 2029 if successful in ERAS project development.

• Operational challenges at Merrim power plant in Q4 2025 and Q1 2026 impacting availability and performance.
• Uncertainties related to the ERAS program process and ability to line up all elements of the project deal.
• Market changes and competition that could affect the ability to secure favorable PPAs and project economics.

Q: With respect to this longer-term PPA opportunity, what are the main gating items to getting a deal done at this point?

A: Exchanged draft contracts with multiple parties, pricing pressure moving things higher, and interest level increasing. Encouraged by competition and getting closer to deals.

Q: For my followup, the issues at Merrim, should we be expecting this to impact performance until this planned outage in May?

A: Had equipment failures in Q4 and Q1, plant running but with limitations, then rolling into a 60-day major outage starting in May to improve reliability.

Q: What are the big determinant factors that dictates you hit in or miss in the target date for the NatGas expansion?

A: Securing equipment in right timeframe, price point for economic project, lining up PPAs, and negotiating with counterparties; site has speed to market and cost advantage over some projects.

Q: Impact of EPA easing mass requirements for power plants?

A: Most plans already mass compliant, ongoing costs and reporting requirements, makes operating easier but economic impact more on longevity.

Q: Given that you're talking to multiple parties, is there a scenario where you might announce the long-term PPAs in several tranches?

A: Thinking of announcements in several tranches, not just one grand slam.

Q: Rough guardrails that you could point us to from a price perspective?

A: Price improvement in accredited capacity, MISO auction on 26th, and sales likely before then to see pricing.

Q: Clarify CapEx being modestly higher, excluding ARIS developments?

A: Modestly higher than 2025 due to CapEx pushed from 2025 to 2026 and investment in ELG project, excluding ERAS project.

Q: Next developments in the context of ERIS?

A: MISO will review application, public notification, 90-day study, then negotiation and decision on GIA or proceeding traditionally.

Q: How thinking about Sunrise Coal and its position in the broader portfolio going forward?

A: Sunrise Coal has good results, cost structure down, performing well, no material changes in near future as still need fuel for Merham Power Plant; Merham is a good site for gas expansion with existing infrastructure.

Q: Are you still evaluating things on the M&A front?

A: Always look at things, active and take opportunities as they come