Hallador Energy Company (NASDAQ:HNRG) Q1 2019 Earnings Conference Call Transcript

May 07, 2019 • 02:00 pm ET


Hallador Energy Company (NASDAQ:HNRG) Q1 2019 Earnings Conference Call Transcript


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Good day, and welcome to the Hallador Energy First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Becky Palumbo, Director of Investor Relations. Please go ahead.

Becky Palumbo

Thank you, Allison. Thank you, everybody, for taking the time to join us today to discuss our first quarter 2019 results. As a reminder, this event is being webcast live and you will be able to access a replay of this call on our website. We filed our first quarter Form 10-Q yesterday afternoon and it is now posted on our website.

Participating on today's call are Brent Bilsland, our President and CEO; and Larry Martin, our CFO. Larry will begin with a brief financial overview of the quarter, followed by Brent with comments on operations. After management completes their opening remarks, we will open the line up for Q&A. Our remarks will include forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially, for example, our estimates of mining costs, future coal sales and regulations relating to the Clean Air Act and other environmental initiatives. We do not undertake to update our forward-looking statements whether as a result of new information, future events or otherwise except as may be required by law.

Now with that, I will turn the call over to Larry.

Larry Martin

Thank you, Becky, and good afternoon, everybody. Before I get started, I'd like to explain a couple definitions. We define free cash flow as net income plus deferred income taxes, depreciation, depletion and amortization, ARO accretion and stock compensation, less maintenance CapEx and the effects of our equity method investments. We define adjusted EBITDA as EBITDA plus stock compensation and ARO accretion less the effects of our equity method investments in Hourglass Sands.

We had, for the first quarter of 2019, we had net income of $7 million, $0.23 a share. This resulted in our free cash flow of $14.7 million. We had adjusted EBITDA of $25.2 million. We paid down debt of $20 million and we paid dividends of $1.2 million or $0.04 a share. Our bank debt as of March 31, 2019 is now $168.5 million. Our net debt after cash, CDs and marketable securities was $157.2 million. We target our debt for the end of this year to be $150 million to $155 million. And our leverage ratio for our bank covenant on our credit agreement was 2.12x.

Now I'll turn over the call to our CEO, Brent Bilsland.

Brent Bilsland

Thank you, Larry. We had an excellent quarter thanks to the management team and operations teams for executing our game plan perfectly. I think the numbers speak for themselves when comparing Q1 2019 results to Q1 2018 results. Our net income increased by 228%. Our adjusted EBITDA increased by 28%. Our free cash flow was up 37% and cash provided by operations was up 58%. These results highlight