What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-07 · 135 added, 209 removed, 413 unchanged (45% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

Current assets:

Cash and cash equivalents

$ 6,446 $ 2,842

Restricted cash

Accounts receivable

19,098 19,937

32,595 23,075

Parts and supplies

39,459 38,877

Prepaid expenses

Assets held-for-sale

Total current assets

103,907 91,274

Property, plant and equipment:

Land and mineral rights

115,486 115,486

Buildings and equipment

531,413 537,131

Mine development

164,475 158,642

Finance lease right-of-use assets

19,869 12,346

Total property, plant and equipment

831,243 823,605

Less - accumulated depreciation, depletion and amortization

( 349,462 ) ( 334,971 )

Total property, plant and equipment, net

481,781 488,634

Investment in Sunrise Energy

$ 595,169 $ 589,780

LIABILITIES AND STOCKHOLDERS' EQUITY

1 unchanged sentence

Current portion of bank debt, net

$ 17,938 $ 24,438

Accounts payable and accrued liabilities

45,890 62,908

Current portion of lease financing

Deferred revenue

84,772 23,062

Contract liability - power purchase agreement and capacity payment reduction

40,735 43,254

Total current liabilities

195,539 157,595

Long-term liabilities:

Bank debt, net

24,734 63,453

Convertible notes payable

3 unchanged sentences

Asset retirement obligations

15,335 14,538

Contract liability - power purchase agreement

25,076 47,425

Total long-term liabilities

83,460 163,597

Total liabilities

278,999 321,192

Commitments and contingencies

2 unchanged sentences

Common stock, $ .01 par value, 100,000 shares authorized;

42,599 and 34,052 issued and outstanding, as of June 30, 2024 and December 31, 2023, respectively

42,599 and 34,052 issued and outstanding, as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

186,945 127,548

Retained earnings

128,799 140,699

Total stockholders’ equity

316,170 268,588

Total liabilities and stockholders’ equity

$ 595,169 $ 589,780

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

SALES AND OPERATING REVENUES:

3 unchanged sentences

Other operating and maintenance costs

Cost of purchased power

Depreciation, depletion and amortization

3 unchanged sentences

Total operating expenses

INCOME (LOSS) FROM OPERATIONS

INCOME FROM OPERATIONS

Interest expense (1)

18 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

32 unchanged sentences

Taxes paid on vesting of RSUs

Net cash used in financing activities

Increase (decrease) in cash, cash equivalents, and restricted cash

Net cash provided by (used in) financing activities

Increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

14 unchanged sentences

Stockholders’

Balance, March 31, 2024

Stock-based compensation

Stock issued on vesting of RSUs

Taxes paid on vesting of RSUs

Stock issued on redemption of convertible notes

Stock issued in ATM offering

Balance, June 30, 2024

Stock-based compensation

Balance, September 30, 2024

Balance, December 31, 2023

4 unchanged sentences

Stock issued in ATM offering

Balance, June 30, 2024

Balance, September 30, 2024

Common Stock Issued

Stockholders’

Balance, March 31, 2023

Stock-based compensation

Balance, June 30, 2023

Stock-based compensation

Stock issued on vesting of RSUs

Taxes paid on vesting of RSUs

Balance, September 30, 2023

Balance, December 31, 2022

2 unchanged sentences

Taxes paid on vesting of RSUs

Balance, June 30, 2023

Balance, September 30, 2023

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

The condensed consolidated financial statements include the accounts of Hallador Energy Company (hereinafter known as “we, us, or our”) and its wholly owned subsidiaries Sunrise Coal, LLC (“Sunrise”), Hallador Power Company, LLC (“Hallador Power”), as well as Sunrise and Hallador Power’s wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated.

Certain reclassifications have been made to the Company’s prior period condensed consolidated financial information to conform to the current period presentation.

These presentation changes did not impact the Company’s condensed consolidated net income (loss), consolidated cash flows, total assets, total liabilities or total stockholders’ equity.

We strategically view and manage our operations through two reportable segments:

Electric Operations and Coal Operations.

The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other and Eliminations" and primarily are comprised of unallocated corporate costs and activities, the elimination of coal sales from coal operations to electric operations, a 50 % interest in Sunrise Energy, LLC, a private gas exploration company with operations in Indiana, which we account for using the equity method, and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

The Electric Operations reportable segment includes electric power generation facilities of the Merom Power Plant.

2 unchanged sentences

For further information, see “Note 16 – Organizational Restructuring” below.

The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as “Corporate and Other and Eliminations” and primarily are comprised of unallocated corporate costs and activities, the elimination of coal sales from coal operations to electric operations, a 50 % interest in Sunrise Energy, LLC, a private gas exploration company with operations in Indiana, which we account for using the equity method, and our wholly-owned subsidiary Summit Terminal LLC (“Summit”), a logistics transport facility located on the Ohio River.

See “Note 20 – Assets Held-for-Sale” for further discussion on Summit.

All significant intercompany accounts and transactions have been eliminated.

Certain reclassifications have been made to the Company’s prior period condensed consolidated financial information to conform to the current period presentation.

These presentation changes did not impact the Company’s condensed consolidated net income (loss), consolidated cash flows, total assets, total liabilities or total stockholders’ equity.

The interim financial data is unaudited;

2 unchanged sentences

accordingly, certain information and footnote disclosures normally included in generally accepted accounting principles (“GAAP”) financial statements have been condensed or omitted.

The results of operations and cash flows for the three and six months ended June 30, 2024 , are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2024 .

The results of operations and cash flows for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2024.

Our organization and business, the accounting policies we follow, and other information are contained in the notes to our consolidated financial statements filed as part of our 2023 Annual Report on Form 10-K .

13 unchanged sentences

Long-lived assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable.

For the three and six -month periods ended June 30, 2024 and June 30, 2023, no impairment charges were recorded for long-lived assets.

For the three and nine months ended September 30, 2024 and 2023, no impairment charges were recorded for long-lived assets.

Inventory is valued at a lower of cost or net realizable value (NRV).

As of June 30, 2024 , and December 31, 2023 , coal inventory includes NRV adjustments of $ 0.9 million and $ 2.0 million, respectively.

At June 30, 2024, the Company had term debt of $ 45.5 million.

As of September 30, 2024, and December 31, 2023, coal inventory includes NRV adjustments of $ 1.8 million and $ 2.0 million, respectively.

On September 27, 2024, the Company executed the First Amendment (“First Amendment”) to the Fourth Amended and Restated Credit Agreement, dated as of August 2, 2023 (as amended, the “Credit Agreement”), with PNC Bank, National Association (in its capacity as administrative agent, "PNC"), which was accounted for as a debt modification.

The primary purpose of the First Amendment was to provide the Company with short-term covenant relief to pursue additional liquidity.

The First Amendment provides for additional flexibility for the Company to enter into prepaid forward power sale contracts, provided that the Company repays outstanding term loans under the Credit Agreement (“Term Loan”) with proceeds received from certain eligible power purchase agreements, up to a maximum of $ 20.0 million.

These required prepaid forward power sale Term Loan repayments, if any, will take the place of the $ 6.5 million quarterly Term Loan payments.

Furthermore, the First Amendment defines certain administrative changes which include, among other things, added requirements related to reporting, third party financial advisors, and appraisals on coal and power assets.

Bank debt was reduced by $ 21.5 million during the nine months ended September 30, 2024.

Bank debt is comprised of our Term Loan ( $ 45.5 million as of September 30, 2024) and a $ 75.0 million revolver ( $ 24.5 million borrowed as of September 30, 2024) under the Credit Agreement.

The term debt required quarterly payments of $ 6.5 million starting in April 2024 through maturity.

Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

Bank debt was reduced by $ 46.0 million during the six months ended June 30, 2024.

As of June 30, 2024 , we had additional borrowing capacity of $ 54.4 million and total liquidity of $ 60.7 million.

Our additional borrowing capacity utilizes our $ 75.0 million revolver availability and reduces it by $ 20.6 million for outstanding letters of credit that we were required to maintain for surety bonds.

As of September 30, 2024, we had additional borrowing capacity of $ 31.1 million under the revolver and total liquidity of $ 34.9 million.

Our additional borrowing capacity is net of $ 19.4 million in outstanding letters of credit that we were required to maintain for surety bonds and $ 24.5 million drawn on the revolver at September 30, 2024.

Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

Unamortized bank fees related to our term debt as of June 30, 2024 , and December 31, 2023 , were $ 2.8 million and $ 3.6 million, respectively.

Unamortized bank fees and other costs incurred in connection with our initial facility totaled $ 4.3 million.

Additional costs incurred with the First Amendment totaled $ 0.6 million .

These unamortized bank fees were deferred and are being amortized over the term of the loan.

Unamortized bank fees as of September 30, 2024, and December 31, 2023, were $ 3.0 million and $ 3.6 million, respectively.

Bank debt, less debt issuance costs, is presented below (in thousands):

September 30,

Current bank debt

$ 19,500 $ 26,000

Less unamortized debt issuance cost

( 1,562 ) ( 1,562 )

Net current portion

$ 17,938 $ 24,438

Long-term bank debt

$ 26,000 $ 65,500

Less unamortized debt issuance cost

( 1,266 ) ( 2,047 )

Net long-term portion

$ 24,734 $ 63,453

Total bank debt

$ 45,500 $ 91,500

Less total unamortized debt issuance cost

( 2,828 ) ( 3,609 )

Net bank debt

$ 42,672 $ 87,891

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 2.25 to 1.00.

As of June 30, 2024 , our Leverage Ratio of 2.12 was in compliance with the requirements of the credit agreement.

The credit facility also requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.25 to 1.00 through the credit facility's maturity.

As of June 30, 2024, our Debt Service Coverage Ratio of 1.56 was in compliance with the requirements of the credit agreement.

As of June 30, 2024, we were in compliance with all other covenants defined in the credit agreement.

Future Maturities (in thousands):

The First Amendment, among other things, provided the Company with short-term covenant relief to pursue additional liquidity.

The First Amendment waived the Company’s Leverage Ratio requirement for the third and fourth quarters of 2024, increased the threshold to 5.50 to 1.00 for the first quarter of 2025, and decreased the threshold back to 2.25 to 1.00 for each fiscal quarter thereafter.

Additionally, the Debt Service Coverage Ratio requirement ( 1.25 to 1.00) was waived from third quarter of 2024 through the first quarter of 2025.

The First Amendment also added additional financial covenants which include:

(i) a maximum First Lien Leverage Ratio for the first quarter of 2025, calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 3.50 to 1.00;

(ii) a minimum liquidity requirement of $ 10.0 million, beginning on the First Amendment execution date and ending when the second quarter of 2025 compliance certificate is received;

and (iii) a minimum quarterly EBITDA requirement, as defined in the First Amendment, of $ 5.0 million for the third quarter of 2024 through the first quarter of 2025.

As of September 30, 2024, our liquidity of $ 34.9 million and quarterly EBITDA of $ 9.6 million were in compliance with the requirements of the Credit Agreement.

As of September 30, 2024, we were in compliance with all other covenants defined in the Credit Agreement.

Interest Rate

The interest rate on the facility ranges from SOFR plus 4.00 % to SOFR plus 5.00 %, depending on our Leverage Ratio.

As of June 30, 2024 , we were paying SOFR plus 5.00 % on the outstanding bank debt which equates to an all-in rate of 10.49 %.

Future Maturities (in thousands):

As of September 30, 2024, we were paying SOFR plus 5.00 % on the outstanding bank debt which equates to an all-in rate of 9.76 %.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following for the indicated dates (in thousands):

September 30,

Accounts payable

$ 29,151 $ 43,636

Accrued property taxes

4 unchanged sentences

Total accounts payable and accrued liabilities

$ 45,890 $ 62,908

Revenue from Contracts with Customers

23 unchanged sentences

Electric operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Delivered energy (including contract liability amortization)

$ 39,973 $ 53,862 $ 86,955 $ 130,284

16,873 17,155 28,646 33,125

Total Electric Operations sales

$ 56,846 $ 71,017 $ 115,601 $ 163,409

Coal operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Outside third-party Indiana customers

$ 15,048 $ 34,214 $ 33,152 $ 83,650

Customers in Florida, North Carolina, Alabama and Georgia

17,753 54,360 49,279 99,526

Total Coal Operations sales

$ 32,801 $ 88,574 $ 82,431 $ 183,176

Performance Obligations

3 unchanged sentences

During 2022, we entered into an Asset Purchase Agreement (“APA”) with Hoosier (“Hoosier APA”) in which Hallador Power shall sell, and Hoosier shall buy, delivered energy quantities through 2025 at the contract price, which is $ 34.00 per MWh.

We have remaining delivered energy obligations to Hoosier on the APA totaling $ 83.9 million through 2025 as of June 30, 2024 .

We have remaining delivered energy obligations to Hoosier on the APA totaling $ 70.1 million through 2025 as of September 30, 2024 .

The agreement was amended August 31, 2023, to extend through 2028 .

The amendment included additional obligations to Hoosier of $ 186.6 million, or $ 56.00 per MWh, as of June 30, 2024 .

The amendment included additional obligations to Hoosier of $ 186.6 million, or $ 56.00 per MWh, as of September 30, 2024 .

In addition to delivered energy, under the Hoosier APA, Hallador Power shall provide a stand-ready obligation to provide electricity to MISO, also known as contract capacity.

1 unchanged sentence

Hoosier shall pay Hallador Power the capacity price of $ 5.80 per kilowatt month for the contract capacity.

We have remaining capacity obligations to Hoosier through 2025 totaling $ 30.0 million as of June 30, 2024 .

The agreement was amended August 31, 2023, to extend through 2028, with additional capacity obligations to Hoosier of $ 60.9 million as of June 30, 2024, at a price of $ 7.02 per kilowatt month for the contract capacity.

We have remaining capacity obligations to Hoosier through 2025 totaling $ 25.0 million as of September 30, 2024 .

The agreement was amended August 31, 2023, to extend through 2028 , with additional capacity obligations to Hoosier of $ 60.9 million as of September 30, 2024, at a price of $ 7.02 per kilowatt month for the contract capacity.

During the second quarter 2024, the Company entered into an 11-month, $ 45.0 million prepaid physically delivered power contract in which Hallador will provide a total of 1,302,480 MWh.

We have energy and capacity obligations to customers, excluding Hoosier, through 2029 totaling $ 152.0 million and $ 151.1 million, respectively, as of June 30, 2024 .

We have $ 45.0 million and $ 39.8 million of deferred revenue as of June 30, 2024 , related to the prepaid physically delivered power contract and other capacity obligations outside of the Hoosier APA, respectively.

We have energy and capacity obligations to customers, excluding the Hoosier APA, through 2029 totaling $ 134.1 million and $ 140.2 million, respectively, as of September 30, 2024 .

We have $ 32.6 million and $ 24.7 million of deferred revenue as of September 30, 2024 , related to the prepaid physically delivered power contract and other capacity obligations outside of the Hoosier APA, respectively.

Coal operations

6 unchanged sentences

This is also the point at which physical possession of the coal transfers to the customer, as well as the right to receive substantially all benefits and the risk of loss in ownership of the coal.

We have remaining coal sales performance obligations relating to fixed priced contracts to third -party customers of approximately $ 207.7 million, which represents the average fixed prices on our committed contracts as of June 30, 2024.

We have remaining coal sales performance obligations relating to fixed priced contracts to third-party customers of approximately $ 320.28 million, which represents the average fixed prices on our committed contracts as of September 30, 2024.

We expect to recognize approximately 9.9 % of this coal sales revenue in 2024 , with the remainder recognized through 2028 .

We have remaining performance obligations relating to coal sales contracts with price reopeners of approximately $ 154.5 million, which represents our estimate of the expected reopener price on committed contracts as of June 30, 2024.

We expect to recognize all of this coal sales revenue 2025 through 2027.

We have remaining volume performance obligations relating to coal contracts with price reopeners of 3.0 million tons ( 1.0 million tons in 2025, 2026 and 2027 ) as of September 30, 2024.

The coal tons used to determine the remaining performance obligations are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such an option exists in the customer contract.

6 unchanged sentences

As of January 1, 2023, accounts receivable for coal sales billed to customers was $ 16.3 million.

For the six months ended June 30, 2024 and 2023, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items, and statutory rates in states in which we operate.

The effective tax rate for the six months ended June 30, 2024 and 2023, was ~23% and ~11%, respectively.

For the nine months ended September 30, 2024 and 2023, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income (loss), forecasted permanent tax differences, discrete items, and statutory rates in states in which we operate.

The effective tax rate for the nine months ended September 30, 2024 and 2023, was ~ 24 % and ~ 13 %, respectively.

Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion in excess of tax basis.

4 unchanged sentences

Vested - weighted average share price on vested date was $ 5.30

Non-vested grants as of June 30, 2024

For the three and six months ended June 30, 2024 our stock compensation was $ 1.6 million and $ 2.2 million, respectively.

For the three and six months ended June 30, 2023, our stock compensation was $ 0.8 million and $ 2.0 million, respectively.

Non-vested grants as of September 30, 2024

For the three and nine months ended September 30, 2024, our stock compensation was $ 1.1 million and $ 3.3 million, respectively.

For the three and nine months ended September 30, 2023, our stock compensation was $ 0.8 million and $ 2.8 million, respectively.

Non-vested RSU grants will vest as follows:

The outstanding RSUs have a value of $ 8.1 million based on the June 28, 2024 closing stock price of $ 7.77 .

As of June 30, 2024, unrecognized stock compensation expense is $ 5.7 million, and we had 48,761 RSUs available for future issuance.

The outstanding RSUs have a value of $ 9.8 million based on the September 30, 2024 closing stock price of $ 9.43 .

As of September 30, 2024, unrecognized stock compensation expense is $ 3.8 million, and we had 53,761 RSUs available for future issuance.

RSUs are not allocated earnings and losses as they are considered non-participating securities.

We have operating leases for office space and processing facilities with remaining lease terms ranging from 1 month to 8 years.

We have operating leases for office space with remaining lease terms ranging from 1 month to 8 years.

As most of the leases do not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date.

Imputed interest on our operating leases were $ 0.3 million and $ 0.3 million for the three and six months ended June 30, 2024.

six months ended

June 30, 2024, we entered into

four finance leases that were accounted for as failed sale-leaseback transactions.

Imputed interest on our operating leases was $ 0.3 million as of September 30, 2024.

During the nine months ended September 30, 2024, we entered into four finance leases that were accounted for as failed sale-leaseback transactions.

Finance lease assets are included in finance lease right-of-use assets on the condensed consolidated balance sheets and the associated finance lease liabilities are reflected within current portion of lease financing and long-term lease financing on the condensed consolidated balance sheets, as applicable.

Depreciation on our finance lease assets was

$ 1.1 million and

$ 2.2 million for the

six months ended

June 30, 2024

Imputed interest on our finance leases was

$ 0.1 million and

$ 2.0 million for the

six months ended

June 30, 2024

We deferred financing fees of

$ 0.1 million at

June 30, 2024 and

December 31, 2023, respectively, in connection with entry into the finance leases.

Depreciation on our finance lease assets was $ 1.5 million and $ 3.7 million for the three and nine months ended September 30, 2024 .

Interest expense on our finance lease liability was $ 0.4 million and $ 1.1 million during the three and nine months ended September 30, 2024, respectively.

Imputed interest on our future remaining finance lease liability was $ 1.8 million as of September 30, 2024 .

We had deferred financing fees of $ 0.2 and $ 0.1 million at September 30, 2024 and December 31, 2023, respectively, in connection with entry into the finance leases.

These deferred financing fees will be amortized on a straight-line basis over the term of the finance leases.

not have finance leases during the

six months ended

June 30, 2023.

We did no t have finance leases during the three and nine months ended September 30, 2023.

The following information relates to our leases (dollar amounts in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease information:

Operating cash outflows from operating leases

$ 52 $ 52 $ 104 $ 104

Weighted average remaining lease term in years

7.6 0.95 7.6 0.95

Weighted average discount rate

10.5 % 6.0 % 10.5 % 6.0 %

Finance lease information:

Financing cash outflows from finance leases

$ 1,427 — $ 2,665 —

Proceeds from sale and leaseback arrangement

$ 1,856 — $ 3,783 —

Weighted average remaining lease term in years

2.64 — 2.64 —

Weighted average discount rate

8.5 % — 8.5 % —

Future minimum lease payments under non-cancellable leases as of June 30, 2024, were as follows:

Future minimum lease payments under non-cancellable leases as of September 30, 2024, were as follows:

Operating Leases

Finance Leases

(In thousands)

Total minimum lease payments

$ 985 $ 19,074

Less imputed interest and deferred finance fees

( 347 ) ( 2,171 )

Total lease liability

$ 638 $ 16,903

The following are reflected within the indicated condensed consolidated balance sheet line items:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

For the Year Ended December 31,

10 unchanged sentences

Finance lease right-of-use assets

$ 19,869 $ 12,346

Finance lease liabilities:

1 unchanged sentence

Current portion of lease financing

$ 6,204 $ 3,933

Non-current finance lease liabilities

1 unchanged sentence

Total finance lease liabilities

$ 16,903 $ 12,090

SELF-INSURANCE

We self-insure our non-leased underground mining equipment.

Such equipment was allocated among four mining units dispersed over seven miles and seven mining units dispersed over eleven miles, at June 30, 2024 and December 31, 2023, respectively.

The historical cost of such equipment was approximately $ 250.4 million and $ 262.0 million as of June 30, 2024 , and December 31, 2023 .

Such equipment was allocated among four mining units dispersed over seven miles and seven mining units dispersed over eleven miles, at September 30, 2024 and December 31, 2023, respectively.

The historical cost of such equipment was approximately $ 247.3 million and $ 262.0 million as of September 30, 2024, and December 31, 2023.

We also self-insure for workers’ compensation claims.

Restricted cash of $ 4.3 million as of June 30, 2024 , and December 31, 2023 , represents cash held and controlled by a third party and is restricted primarily for future workers’ compensation claim payments.

Restricted cash of $ 5.8 million and $ 4.3 million as of September 30, 2024, and December 31, 2023, represents cash held and controlled by a third party and is restricted primarily for future workers’ compensation claim payments.

FAIR VALUE MEASUREMENTS

11 unchanged sentences

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, and restricted cash.

The Company’s cash and cash equivalent and restricted cash balances on deposit with financial institutions total $ 10.7 million and $ 7.1 million as of June 30, 2024 and December 31, 2023, respectively, which exceeded FDIC insured limits.

The Company’s cash and cash equivalent and restricted cash balances on deposit with financial institutions total $ 9.6 million and $ 7.1 million as of September 30, 2024 and December 31, 2023, respectively, which exceeded FDIC insured limits.

The Company regularly monitors these institutions’ financial condition.

2 unchanged sentences

EQUITY METHOD INVESTMENTS

We own a 50 % i nterest in Sunrise Energy, LLC, which owns gas reserves and gathering equipment with plans to develop and operate such reserves.

We own a 50 % interest in Sunrise Energy, LLC, which owns gas reserves and gathering equipment with plans to develop and operate such reserves.

Sunrise Energy, LLC, also plans to develop and explore for oil, natural gas, and coal-bed methane gas reserves on or near our underground coal reserves.

The carrying value of the investment included in our condensed consolidated balance sheets as of June 30, 2024 , and December 31, 2023 , was $ 2.3 million and $ 2.8 million, respectively.

The carrying value of the investment included in our condensed consolidated balance sheets as of September 30, 2024, and December 31, 2023, was $ 2.1 million and $ 2.8 million, respectively.

CONVERTIBLE NOTES

On July 29, 2022, we issued a $ 5.0 million senior unsecured convertible note (the “July 29 th Note”) to a related party affiliated with an independent member of our board of directors.

The July 29 th Note carries an interest rate of 8 % per annum with a maturity date of December 29, 2028.

For the period August 18, 2022, through August 17, 2024, the holder has the option to convert the July 29 th Note into shares of the Company's common stock at a conversion price of $ 6.254 .

The July 29 th Note carried an interest rate of 8 % per annum with a maturity date of December 29, 2028.

For the period August 18, 2022, through August 17, 2024, the holder had the option to convert the July 29 th Note into shares of the Company’s common stock at a conversion price of $ 6.254 .

During the first quarter of 2024, the holders of the July 29 th Note converted them into 799,488 shares of common stock of the Company, and in connection with such early conversion, we elected to pay interest through August 2025 with 112,570 shares of common stock on the conversion date.

We recorded a loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 0.6 million six months ended June 30, 2024.

As of June 30, 2024, the entire July 29 th Note had been converted to shares of common stock of the Company.

We recorded a loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 0.6 million during the three months ended March 31, 2024.

As of September 30, 2024, the entire July 29 th Note had been converted to shares of common stock of the Company.

On August 8, 2022, we issued an additional $ 4.0 million of senior unsecured convertible notes (the “August 8 th Notes”) to related parties affiliated with independent members of our board of directors.

The August 8 th Notes carry an interest rate of 8 % per annum with a maturity date of December 29, 2028.

For the period August 18, 2022, through August 17, 2024, the holder has the option to convert the Notes into shares of the Company's common stock at a conversion price of $ 6.254 .

Beginning August 8, 2025, we may elect to redeem the August 8 th Notes and the holder shall be obligated to surrender them at 100% of the outstanding principal balance together with any accrued unpaid interest.

Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.

The August 8 th Notes carried an interest rate of 8 % per annum with a maturity date of December 29, 2028.

For the period August 18, 2022, through August 17, 2024, the holder had the option to convert the Notes into shares of the Company’s common stock at a conversion price of $ 6.254 .

Beginning August 8, 2025, we could elect to redeem the August 8 th Notes and the holder was obligated to surrender them at 100% of the outstanding principal balance together with any accrued unpaid interest.

Upon receipt of the redemption notice from the Company, the holder could have elected to convert the principal balance and accrued interest into the Company’s common stock.

During the first quarter of 2024, the holders converted $ 3.0 million of the August 8 th Notes into 479,693 shares of common stock of the Company, and in connection with such early conversion, we elected to pay interest through August 2025 with 67,542 shares of common stock on the conversion date.

3 unchanged sentences

We recorded a loss on extinguishment of debt during the second quarter of 2024 in the condensed consolidated statements of operations in the amount of $ 0.2 million.

As of June 30, 2024, the entire August 8 th Note had been converted to shares of common stock of the Company.

As of September 30, 2024, the entire August 8 th Note had been converted to shares of common stock of the Company.

On August 12, 2022, we issued an additional $ 10.0 million senior unsecured convertible note (the “August 12 th Note”) to an unrelated party.

The August 12 th Note carries an interest rate of 8 % per annum with a maturity date of December 31, 2026.

For the period August 18, 2022, through the maturity date, the holder has the option to convert the August 12 th Note into shares of the Company's common stock at a conversion price of $ 6.15 .

Beginning August 12, 2025, we may elect to redeem the August 12 th Note and the holder shall be obligated to surrender at 100% of the outstanding principal balance together with any accrued unpaid interest.

Upon receipt of the redemption notice from the Company, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.

The August 12 th Note carried an interest rate of 8 % per annum with a maturity date of December 31, 2026.

For the period August 18, 2022, through the maturity date, the holder had the option to convert the August 12 th Note into shares of the Company’s common stock at a conversion price of $ 6.15 .

Beginning August 12, 2025, we could elect to redeem the August 12 th Note and the holder would have been obligated to surrender at 100% of the outstanding principal balance together with any accrued unpaid interest.

Upon receipt of the redemption notice from the Company, the holder could elect to convert the principal balance and accrued interest into the Company’s common stock.

During the three months ended March 31, 2024, the holder converted accrued interest into 65,041 shares of the Company’s common stock.

1 unchanged sentence

We recorded a loss on extinguishment of debt in the condensed consolidated statements of operations in the amount of $ 1.7 million during the second quarter of 2024.

As of June 30, 2024, the entire August 12 th Note had been converted to shares of common stock of the Company.

As of September 30, 2024, the entire August 12 th Note had been converted to shares of common stock of the Company.

The funds received from the issuance of the various notes described above were used to provide additional working capital to the Company.

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This step will help to advance our transition from a company primarily focused on coal production to a more resilient and diversified integrated independent power producer (“IPP”).

As part of this initiative, we substantially idled production at our higher cost surface mines, Prosperity Mine, and Freelandville Mine, with minimal production.

As part of this initiative, we substantially idled production at our higher cost surface mines, Prosperity Mine, and Freelandville Mine, with minimal ongoing production.

We also focused our seven units of underground equipment on four units of our lowest cost production at our Oaktown Mine.

In connection with the Reorganization Plan, we incurred aggregate expenses of $ 1.9 million ($ 1.1 million in the first quarter of 2024 and $ 0.8 million in the second quarter of 2024) that were included in operating expenses in the condensed consolidated statements of operations.

These charges related to compensation, tax, professional, and insurance related expenses and are considered one -time charges paid in the first six months of 2024.

These charges related to compensation, tax, professional, and insurance related expenses and are considered one-time charges paid in the nine months of 2024.

AT THE MARKET AGREEMENT

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The Agent may also terminate the Agreement, by notice to us, upon the occurrence of certain events described in the Sales Agreement.

During December 2023 , we issued 794,000 shares of Common Stock under the ATM Program for net proceeds of $ 7.3 million.

During the three and six months ended June 30, 2024 , we issued 3,943,807 and 4,654,430 shares of Common Stock, respectively, under the ATM Program for net proceeds of $ 27.9 million and $ 34.5 million, respectively.

During the nine months ended September 30, 2024, we issued 4,654,430 shares of Common Stock under the ATM Program for net proceeds of $ 34.5 million.

No shares were issued under the ATM Program during the third quarter of 2024.

SEGMENTS OF BUSINESS

As of June 30, 2024, our operations are divided into two primary reportable segments, Electric Operations and Coal Operations.

The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other and Eliminations" and primarily are comprised of unallocated corporate costs and activities, including a 50 % interest in Sunrise Energy, LLC, which the Company accounts for using the equity method and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

Three Months Ended June 30,

Six Months Ended June 30,

As of September 30, 2024, our operations are divided into two primary reportable segments, Electric Operations and Coal Operations.

The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as “Corporate and Other and Eliminations” and primarily are comprised of unallocated corporate costs and activities, including a 50 % interest in Sunrise Energy, LLC, which the Company accounts for using the equity method and our held-for-sale wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Electric operations (i)

$ 57,020 $ 71,103 $ 115,932 $ 163,597

Coal operations

46,429 113,098 113,299 208,371

Corporate and other and eliminations

( 12,535 ) ( 23,007 ) ( 28,645 ) ( 22,440 )

Consolidated operating revenues

$ 90,914 $ 161,194 $ 200,586 $ 349,528

Operating expenses

Electric operations

$ 50,232 $ 61,847 $ 93,897 $ 135,636

Coal operations

57,750 86,735 136,077 168,920

Corporate and other and eliminations

( 9,782 ) ( 9,632 ) ( 24,835 ) ( 6,505 )

Consolidated operating expenses

$ 98,200 $ 138,950 $ 205,139 $ 298,051

Income (loss) from operations

Electric operations

$ 6,788 $ 9,256 $ 22,035 $ 27,961

Coal operations

( 11,321 ) 26,363 ( 22,778 ) 39,451

Corporate and other and eliminations

( 2,753 ) ( 13,375 ) ( 3,810 ) ( 15,935 )

Consolidated income (loss) from operations

$ ( 7,286 ) $ 22,244 $ ( 4,553 ) $ 51,477

Depreciation, depletion and amortization

Electric operations

$ 4,698 $ 4,675 $ 9,395 $ 9,350

Coal operations

8,930 12,466 19,658 25,741

Corporate and other and eliminations

Consolidated depreciation, depletion and amortization

$ 13,649 $ 17,169 $ 29,092 $ 35,145

Electric operations

$ 220,511 $ 216,665 $ 220,511 $ 216,665

Coal operations

367,807 387,653 367,807 387,653

Corporate and other and eliminations

6,851 ( 4,429 ) 6,851 ( 4,429 )

Consolidated assets

$ 595,169 $ 599,889 $ 595,169 $ 599,889

Capital expenditures

Electric operations

$ 5,277 $ 2,683 $ 11,519 $ 3,526

Coal operations

7,560 14,445 16,192 27,084

Corporate and other and eliminations

Consolidated capital expenditures

$ 13,170 $ 17,128 $ 28,044 $ 30,610

Electric operations revenue as of each period presented were comprised of the components noted below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating revenues:

Capacity revenue

$ 16,873 $ 17,155 $ 28,646 $ 33,125

Delivered energy

27,893 34,307 62,087 77,382

Amortization of contract liability

12,080 19,555 24,868 52,902

Other operating revenue

174 86 331 188

Total Electric Operations revenue:

$ 57,020 $ 71,103 $ 115,932 $ 163,597

NET INCOME (LOSS) PER SHARE

The following table (in thousands, except per share amounts) sets forth the computation of basic earnings (loss) per share for the periods indicated:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Basic earnings per common share:

Net income (loss) - basic

$ ( 10,204 ) $ 16,915 $ ( 11,900 ) $ 38,966

Weighted average shares outstanding - basic

37,879 33,137 37,026 33,061

Basic earnings (loss) per common share

$ ( 0.27 ) $ 0.51 $ ( 0.32 ) $ 1.18

The following table (in thousands, except per share amounts) sets forth the computation of diluted net income (loss) per share:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Diluted earnings per common share:

Net income (loss) - basic

$ ( 10,204 ) $ 16,915 $ ( 11,900 ) $ 38,966

Convertible Notes interest expense, net of tax

Net income (loss) - diluted

$ ( 10,204 ) $ 17,211 $ ( 11,900 ) $ 39,558

Weighted average shares outstanding - basic

37,879 33,137 37,026 33,061

Dilutive effects of if converted Convertible Notes

— 3,224 — 3,163

Dilutive effects of Restricted Stock Units

Weighted average shares outstanding - diluted

37,879 36,708 37,026 36,696

Diluted net income (loss) per share

$ ( 0.27 ) $ 0.47 $ ( 0.32 ) $ 1.08

(20) ASSETS HELD-FOR-SALE

During the third quarter of 2024, the Company considered strategic alternatives with respect to its wholly-owned subsidiary Summit.

Summit is included in our “Corporate and other and eliminations” segment and primarily holds property, plant and equipment.

On July 29, 2024, the Company entered into a ninety day right of first refusal (“ROFR”) with a potential buyer of Summit for $ 3.2 million.

As of July 29, 2024 Summit met the held-for-sale criteria, and its assets are included in "assets held-for-sale" in the current assets section of the condensed consolidated balance sheets.

The Company recorded the Summit assets, once held for sale, at the lower of their carrying value or their estimated fair value less cost to sell.

The Company also did not record depreciation and amortization of $ 0.1 million ($ 0.1 million after-tax) on assets held-for-sale and will continue to do so while held-for-sale criteria is met.

The Company expects the Summit sale to be executed by December 31, 2024.

Fair value is the amount at which an asset, liability or business could be bought or sold in a current transaction between willing parties and may be estimated using a number of techniques, or may be observable using quoted market prices.

The Company used a market approach consisting of the contractual ROFR sales price, subject to prorations for property taxes and utilities, to determine the fair value as of September 30, 2024, and subtracted estimated costs to sell from that calculated fair value.

The resulting net fair value of Summit's assets exceeded the carrying value of Summit’s assets, and accordingly no impairments were recorded.

The sale of Summit does not represent a strategic shift that has or will have a major effect on the Company, and as such, does not qualify for treatment as a discontinued operation.

SUBSEQUENT EVENTS

On October 23, 2024 , the Company entered into a 19-month (beginning in June of 2025) $ 60.0 million prepaid physically delivered power contract in which Hallador will provide a total of 1,918,275 MWh.

A portion of the proceeds were used to pay down $ 20.0 million on our Term Loan, which satisfies our January 2025, April 2025, July 2025 and a portion of our October 2025 required quarterly Term Loan payments.

We also paid $ 34.0 million on our revolver.

On October 23, 2024, the Company entered into a second amendment to the Fourth Amended and Restated Credit Agreement with PNC, dated as of August 2, 2023, to clarify certain provisions of the First Amendment that was entered into on September 27, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements