hnrg20220331

hnrg20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended March 31, 2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:001-34743

“COAL KEEPS YOUR LIGHTS ON”

HALLADOR ENERGY COMPANY

(www.halladorenergy.com)

Colorado

(State of incorporation)

84-1014610

(IRS Employer Identification No.)

1183 East Canvasback Drive, Terre Haute, Indiana

(Address of principal executive offices)

47802

(Zip Code)

Registrant’s telephone number, including area code: 812.299.2800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Shares, $.01 par value	HNRG	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☑		Smaller reporting company ☑
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May 20, 2022, we had 30,785,067 shares of common stock outstanding.

PART I - FINANCIAL INFORMATION	3

ITEM 1. FINANCIAL STATEMENTS (Unaudited)	3

Condensed Consolidated Balance Sheets	3

Condensed Consolidated Statements of Operations	4

Condensed Consolidated Statements of Cash Flows	5

Condensed Consolidated Statements of Stockholders’ Equity	6

Notes to Condensed Consolidated Financial Statements	7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21

ITEM 4. CONTROLS AND PROCEDURES	21

PART II - OTHER INFORMATION	21

ITEM 4. MINE SAFETY DISCLOSURES	21

ITEM 5. OTHER INFORMATION	22

ITEM 6. EXHIBITS	23

SIGNATURES	24

	*March 31,*			*December 31,*
	*2022*			*2021*
ASSETS
Current assets:
Cash and cash equivalents	$	4,289		$	2,546
Restricted cash		3,288			3,283
Accounts receivable		15,407			13,584
Inventory		8,775			7,699
Parts and supplies		11,470			10,015
Prepaid expenses		1,195			2,112
Total current assets		44,424			39,239
Property, plant and equipment:
Land and mineral rights		115,839			115,837
Buildings and equipment		346,932			342,782
Mine development		116,198			112,575
Total property, plant and equipment		578,969			571,194
Less - accumulated depreciation, depletion and amortization		(277,545	)		(268,370	)
Total property, plant and equipment, net		301,424			302,824
Investment in Sunrise Energy		3,695			3,545
Other assets		8,333			8,372
Total Assets	$	357,876		$	353,980
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of bank debt, net	$	116,178		$	23,098
Accounts payable and accrued liabilities		47,726			41,528
Total current liabilities		163,904			64,626
Long-term liabilities:
Bank debt, net		—			84,667
Deferred income taxes		2,673			2,850
Asset retirement obligations		13,668			14,025
Other		1,475			1,577
Total long-term liabilities		17,816			103,119
Total liabilities		181,720			167,745
Redeemable noncontrolling interests		4,000			4,000
Stockholders' equity:
Preferred stock, $.10 par value, 10,000 shares authorized; none issued and outstanding		—			—
Common stock, $.01 par value, 100,000 shares authorized; 30,785 issued and outstanding		308			308
Additional paid-in capital		104,181			104,126
Retained earnings		67,667			77,801
Total stockholders’ equity		172,156			182,235
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity	$	357,876		$	353,980

	*Three Months Ended March 31,*
	*2022*			*2021*
SALES AND OPERATING REVENUES:
Coal sales	$	57,010		$	45,879
Other revenues		1,897			816
Total revenue		58,907			46,695
EXPENSES:
Operating expenses		54,601			34,009
Depreciation, depletion and amortization		9,531			10,307
Asset retirement obligations accretion		246			363
Exploration costs		57			58
General and administrative		3,149			2,821
Total operating expenses		67,584			47,558

LOSS FROM OPERATIONS		(8,677	)		(863	)

Interest expense (1)		(1,784	)		(1,898	)
Equity method investment income		150			—
LOSS BEFORE INCOME TAXES		(10,311	)		(2,761	)

INCOME TAX BENEFIT:
Current		—			—
Deferred		(177	)		(1,729	)
Total income tax benefit		(177	)		(1,729	)

NET LOSS	$	(10,134	)	$	(1,032	)

NET LOSS PER SHARE:
Basic and diluted	$	(0.33	)	$	(0.03	)

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted		30,785			30,611


(1) Interest Expense:
Bank interest		1,710			2,135
Non-cash interest:
Change in interest rate swap valuation		(617	)		(848	)
Amortization of debt issuance costs		691			611
Total non-cash interest		74			(237	)
Total interest expense	$	1,784		$	1,898

					*Additional*					*Total*
	*Common Stock Issued*				*Paid-in*		*Retained*			*Stockholders'*
	*Shares*		*Amount*		*Capital*		*Earnings*			*Equity*
Balance, December 31, 2021		30,785	$	308	$	104,126	$	77,801		$	182,235
Stock-based compensation		—		—		55		—			55
Net loss		—		—		—		(10,134	)		(10,134	)
Balance, March 31, 2022		30,785	$	308	$	104,181	$	67,667		$	172,156

Fiscal Periods Ending		*Ratio*
March 31, 2022		3.50 to 1.00
June 30, 2022		6.00 to 1.00
September 30, 2022		3.00 to 1.00
December 31, 2022 and each fiscal quarter thereafter		2.50 to 1.00

Non-vested grants at December 31, 2021	183,000
Awarded - price $2.42	10,000
Vested	—
Forfeited	(4,500	)
Non-vested grants at March 31, 2022	188,500

Year	*Amount*
	(In thousands)
2022	$	156
2023		174
2024		59
Total minimum lease payments	$	389
Less imputed interest		(13	)

Total operating lease liability	$	376

As reflected on balance sheet:
Accounts payable and accrued liabilities	$	207
Other long-term liabilities		169

Total operating lease liability	$	376

	*Level 1*		*Level 2*		*Level 3*		*Total*
December 31, 2021
Liabilities:
Interest rate swaps	$	—	$	—	$	867	$	867

March 31, 2022
Liabilities:
Interest rate swaps	$	—	$	—	$	250	$	250

Ending balance, December 31, 2021	$	(867	)
Change in estimated fair value		617
Ending balance, March 31, 2022*	$	(250	)

	Contracted		Estimated
	tons		price
Year	(millions)*		per ton
2022 (Q2-Q4)		5.7		41.30
2023 (annual)		5.6		45.10
2024-2027 (total)		6.8		**
		18.1

Vesting Year		*RSUs Vesting*
2023			188,500

	*Three Months Ended March 31,*
	*2022*			*2021*
Operating lease information:
Operating cash outflows from operating leases	$	58		$	47
Weighted average remaining lease term in years		1.97			2.94
Weighted average discount rate		6.0	%		6.0	%

Oaktown – maintenance capex	$	4.5
Oaktown – investment		3.7
Other		0.9
Capex per the Condensed Consolidated Statements of Cash Flows	$	9.1

All Mines	2nd 2021			3rd 2021			4th 2021			1st 2022			T4Qs
Tons produced		1,292			1,440			1,447			1,397			5,576
Tons sold		1,403			2,042			1,554			1,377			6,376
Coal sales	$	54,600		$	79,036		$	64,388		$	57,010		$	255,034
Average price/ton	$	38.92		$	38.71		$	41.43		$	41.40		$	40.00
Wash plant recovery in %		69	%		73	%		70	%		67	%
Operating costs	$	42,364		$	67,694		$	54,583		$	54,443		$	219,084
Average cost/ton	$	30.20		$	33.15		$	35.12		$	39.54		$	34.36
Margin	$	12,236		$	11,342		$	9,805		$	2,567		$	35,950
Margin/ton	$	8.72		$	5.55		$	6.31		$	1.86		$	5.64
Capex	$	5,117		$	7,238		$	9,975		$	9,082		$	31,412
Maintenance capex	$	1,049		$	2,324		$	3,302		$	4,481		$	11,156
Maintenance capex/ton	$	0.75		$	1.14		$	2.12		$	3.25		$	1.75

All Mines	2nd 2020			3rd 2020			4th 2020			1st 2021			T4Qs
Tons produced		1,468			1,234			1,233			1,592			5,527
Tons sold		1,244			1,585			1,613			1,174			5,616
Coal sales	$	50,473		$	64,754		$	64,925		$	45,879		$	226,031
Average price/ton	$	40.57		$	40.85		$	40.25		$	39.08		$	40.25
Wash plant recovery in %		76	%		71	%		68	%		74	%
Operating costs	$	36,001		$	46,444		$	54,640		$	33,907		$	170,992
Average cost/ton	$	28.94		$	29.30		$	33.87		$	28.88		$	30.45
Margin	$	14,472		$	18,310		$	10,285		$	11,972		$	55,039
Margin/ton	$	11.63		$	11.55		$	6.38		$	10.20		$	9.80
Capex	$	4,006		$	3,995		$	6,661		$	5,720		$	20,382
Maintenance capex	$	2,578		$	1,365		$	2,342		$	2,343		$	8,628
Maintenance capex/ton	$	2.07		$	0.86		$	1.45		$	2.00		$	1.54

10.1*		Seventh Amendment to the Third Amended and Restated Credit Agreement dated May 20, 2022
10.2*		Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - NextG Partners, LLC
10.3*		Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - Hallador Alternative Asset Fund, LLC
10.4*		Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - Lubar Opportunities Fund I, LLC
10.5*		Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - Murchison Capital Partners, LP
31.1 *		SOX 302 Certification - Chairman, President and Chief Executive Officer
31.2 *		SOX 302 Certification - Chief Financial Officer
31.3 *		SOX 302 Certification - Chief Accounting Officer
32*		SOX 906 Certification
95.1*		Mine Safety Disclosures
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Schema Document
101.CAL*		Inline XBRL Calculation Linkbase Document.
101.LAB*		Inline XBRL Labels Linkbase Document.
101.PRE*		Inline XBRL Presentation Linkbase Document.
101.DEF*		Inline XBRL Definition Linkbase Document.
104*		Cover Page Interactive Data File (embedded with the Inline XBRL document)
*Filed Herewith

		HALLADOR ENERGY COMPANY



Date: May 23, 2022		/S/ LAWRENCE D. MARTIN
		Lawrence D. Martin, CFO



Date: May 23, 2022		/S/ R. TODD DAVIS
		R. Todd Davis, CAO

SEC Form 10-Q filed by Hallador Energy Company