hnrg20230829

hnrg20230829_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 September 30, 2023
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:001-34743

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 November 3, 2023, we had 33,142,403 shares of common stock outstanding.

Table of Contents

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	1

ITEM 1. FINANCIAL STATEMENTS (Unaudited)	1

Condensed Consolidated Balance Sheets	1

Condensed Consolidated Statements of Operations	2

Condensed Consolidated Statements of Cash Flows	3

Condensed Consolidated Statements of Stockholders’ Equity	4

Notes to Condensed Consolidated Financial Statements	5

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24

ITEM 4. CONTROLS AND PROCEDURES	24

PART II - OTHER INFORMATION	25

ITEM 4. MINE SAFETY DISCLOSURES	25

ITEM 6. EXHIBITS	25

SIGNATURES	26

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Hallador Energy Company

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

(unaudited)

	*September 30,*			*December 31,*
	*2023*			*2022*
ASSETS
Current assets:
Cash and cash equivalents	$	2,573		$	3,009
Restricted cash		4,143			3,417
Accounts receivable		20,692			29,889
Inventory		23,749			49,796
Parts and supplies		37,012			28,295
Contract asset - coal purchase agreement		—			19,567
Prepaid expenses		4,158			4,546
Total current assets		92,327			138,519
Property, plant and equipment:
Land and mineral rights		115,486			115,595
Buildings and equipment		572,885			534,129
Mine development		153,240			140,108
Total property, plant and equipment		841,611			789,832
Less - accumulated depreciation, depletion and amortization		(358,944	)		(309,370	)
Total property, plant and equipment, net		482,667			480,462
Investment in Sunrise Energy		3,038			3,988
Other assets		7,154			7,585
Total Assets	$	585,186		$	630,554
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of bank debt, net	$	21,188		$	33,031
Accounts payable and accrued liabilities		76,602			82,972
Deferred revenue		25,712			35,485
Contract liability - power purchase agreement and capacity payment reduction		48,087			88,114
Total current liabilities		171,589			239,602
Long-term liabilities:
Long-term bank debt, excluding current maturities, net		36,482			49,713
Convertible note payable		10,000			10,000
Convertible notes payable - related party		9,000			9,000
Deferred income taxes		12,244			4,606
Asset retirement obligations		16,348			17,254
Contract liability - power purchase agreement		55,439			84,096
Other		2,395			1,259
Total long-term liabilities		141,908			175,928
Total liabilities		313,497			415,530
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.10 par value, 10,000 shares authorized; none issued and outstanding		—			—
Common stock, $.01 par value, 100,000 shares authorized; 33,142 and 32,983 issued and outstanding, as of September 30, 2023 and December 31, 2022, respectively		332			330
Additional paid-in capital		120,410			118,788
Retained earnings		150,947			95,906
Total stockholders’ equity		271,689			215,024
Total liabilities and stockholders’ equity	$	585,186		$	630,554

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Hallador Energy Company

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2023*			*2022*			*2023*			*2022*
SALES AND OPERATING REVENUES:
Coal sales	$	97,420		$	83,562		$	280,596		$	204,733
Electric sales		67,403					$	230,812			—
Other revenues		945			1,522			3,888			5,187
Total revenue		165,768			85,084			515,296			209,920
EXPENSES:
Operating expenses		119,042			64,557			367,983			170,552
Depreciation, depletion and amortization		16,230			11,187			51,375			31,882
Asset retirement obligations accretion		468			255			1,380			751
Exploration costs		171			121			682			393
General and administrative		6,054			3,569			18,596			10,440
Total operating expenses		141,965			79,689			440,016			214,018

INCOME (LOSS) FROM OPERATIONS		23,803			5,395			75,280			(4,098	)

Interest expense (1)		(3,030	)		(3,355	)		(10,470	)		(7,476	)
Loss on extinguishment of debt		(1,491	)		—			(1,491	)		—
Equity method investment (loss) income		(177	)		168			(325	)		506
NET INCOME (LOSS) BEFORE INCOME TAXES		19,105			2,208			62,994			(11,068	)

INCOME TAX EXPENSE (BENEFIT):
Current		(178	)		—			315			—
Deferred		3,208			596			7,638			840
Total income tax expense		3,030			596			7,953			840

NET INCOME (LOSS)	$	16,075		$	1,612		$	55,041		$	(11,908	)

NET INCOME (LOSS) PER SHARE:
Basic	$	0.49		$	0.05		$	1.66		$	(0.38	)
Diluted	$	0.44		$	0.05		$	1.52		$	(0.38	)

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		33,140			32,983			33,088			31,727
Diluted		36,848			33,268			36,748			31,727

(1) Interest Expense:
Interest on bank debt	$	2,006		$	2,133		$	6,316		$	5,555
Other interest		422			227			1,316			285
Amortization and swap-related interest:
Payments on interest rate swap, net of changes in value		—			—			—			(867	)
Amortization of debt issuance costs		602			995			2,838			2,503
Total amortization and swap related interest		602			995			2,838			1,636
Total interest expense	$	3,030		$	3,355		$	10,470

SEC Form 10-Q filed by Hallador Energy Company