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HE

HALLADOR ENERGY CO (HNRG)·Q3 2025 Earnings Summary

Executive Summary

  • Hallador delivered a decisive beat: revenue rose 40% YoY to $146.8M and diluted EPS was $0.55, far ahead of S&P Global consensus of $110.9M revenue and $0.06 EPS; Adjusted EBITDA increased to $24.9M. Drivers were stronger summer power pricing, higher dispatch after maintenance, and increased coal shipments . Q3 2025 consensus values marked with asterisks are from S&P Global estimates: revenue $110.9M*, EPS $0.06*, EBITDA $9.5M* (see Estimates Context below).
  • Management filed an application under MISO’s Expedited Resource Addition Study (ERAS) to add 525 MW of gas generation at Merom (target online 4Q28), citing accelerating demand for accredited capacity from data centers and utilities as a multi‑year growth catalyst .
  • Liquidity improved to $46.4M and bank debt was stable at $44.0M; operating cash flow was $23.2M, helping fund $19.5M of Q3 capex; contracted third‑party forward sales totaled $921.7M through 2029, with contracted power revenue of $571.7M (energy + capacity) at quarter‑end .
  • Near‑term caution: management tempered expectations, indicating Q4 should resemble Q4 2024 unless extreme cold boosts demand; focus remains on securing one or more long‑term agreements, evaluating M&A, and progressing refinancing ahead of 2026 maturities .

What Went Well and What Went Wrong

  • What Went Well

    • Strong operational quarter: “significant gains across all key financial metrics,” with revenue up 40% YoY to $146.8M, net income of $23.9M, and Adjusted EBITDA of $24.9M; OCF was $23.2M .
    • Power market tailwinds and execution: warmer summer, higher energy demand, and stronger natural gas prices supported pricing; both Merom units operated efficiently post‑maintenance, boosting dispatch and reducing inventories .
    • Strategic pipeline advances: ERAS filing for 525 MW at Merom plus “advanced discussions” with multiple counterparties (utilities and data center developers), with CEO citing accelerating demand for accredited capacity .

  • What Went Wrong

    • Seasonality and outlook caution: management flagged that Q4 likely resembles Q4 2024 unless extreme cold emerges, implying Q3 strength may not repeat near‑term .
    • Transcript discrepancy on coal sales: the CFO remarks referenced $68.8M coal sales YoY increase, while the 8‑K shows Q3 third‑party coal sales at $51.3M; we anchor on the filed 8‑K/press release for accuracy .
    • Financing still pending: while discussions to refinance the credit facility are progressing, maturities cluster in 2026; timing and terms are not finalized, introducing some execution risk .

Financial Results

Headline financials across periods (oldest → newest)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)105.2 117.8 102.9 146.8
Net Income ($M)1.6 10.0 8.2 23.9
Diluted EPS ($)0.04 0.23 0.19 0.55
Operating Income ($M)4.7 13.9 11.9 29.1
EBITDA ($M)18.3 28.7 17.6 38.0
Adjusted EBITDA ($M)9.6 19.3 3.4 24.9
Operating Cash Flow ($M)(12.9) 38.4 11.4 23.2

Q3 2025 vs Wall Street consensus (S&P Global)

MetricQ3 2025 ActualQ3 2025 Consensus
Revenue ($M)146.8 110.9*
Diluted EPS ($)0.55 0.06*
EBITDA ($M)38.0 (EBITDA) 9.5*
  • Values marked with * retrieved from S&P Global. All S&P Global consensus values are subject to change and may reflect differing definitions (e.g., EBITDA vs Adjusted EBITDA).

Margins (calculated from reported figures; see sources)

MarginQ3 2024Q1 2025Q2 2025Q3 2025
Operating Margin (%)4.5% (4.712/105.155) 11.8% (13.938/117.787) 11.5% (11.870/102.889) 19.8% (29.059/146.846)
Net Income Margin (%)1.5% (1.554/105.155) 8.5% (9.979/117.787) 8.0% (8.248/102.889) 16.3% (23.884/146.846)
EBITDA Margin (%)17.4% (18.316/105.155) 24.3% (28.679/117.787) 17.1% (17.609/102.889) 25.9% (37.953/146.846)
Adj. EBITDA Margin (%)9.1% (9.557/105.155) 16.4% (19.310/117.787) 3.3% (3.398/102.889) 16.9% (24.866/146.846)

Segment revenue mix (oldest → newest)

Segment ($M)Q3 2024Q1 2025Q2 2025Q3 2025
Electric Sales72.1 85.9 60.0 93.2
Coal Sales (3rd party)31.7 30.2 38.1 51.3
Other Revenue1.4 1.7 4.8 2.3
Total105.2 117.8 102.9 146.8

KPIs and contracted position

  • Power KPIs: 1.6M MWh delivered in Q3 2025 at $49.29/MWh vs 1.2M MWh at $47.55/MWh in Q3 2024 .
  • Contracted position (3rd‑party): total forward energy, capacity and coal sales to third parties of $921.7M through 2029 at 9/30/25; contracted power revenue (energy+capacity) $571.7M; coal 3rd‑party $350.0M .
  • Balance sheet/liquidity: bank debt $44.0M; total liquidity $46.4M at 9/30/25 .

Non‑GAAP note: Adjusted EBITDA excludes the significant non‑cash amortization of the Hoosier PPA and other items; Q3 2025 EBITDA $38.0M vs Adjusted EBITDA $24.9M (see reconciliation) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Coal production (tons)FY 2025~3.7M (as of Q2 call) ~3.8M; 3.1M tons produced YTD through 9M25 Raised
Q4 performance cadenceQ4 2025N/AExpect Q4 2025 to resemble Q4 2024 unless extreme cold drives demand Qualitative outlook
ERAS gas expansionLT ProjectNot previously filed525 MW ERAS application at Merom; target online 4Q28 New (LT growth)
Credit facility2026 maturitiesQ2: explore refinancing over 2026 Progressing discussions; aim to refinance ahead of maturities; terms not finalized Maintained trajectory

No formal revenue/EPS margin guidance ranges were provided this quarter; management continues to emphasize forward contracted sales, long‑term offtake negotiations, and project milestones .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Long‑term PPA(s) with data centers/utilitiesQ1: Exclusivity with a global data center developer through early June; meaningful progress expected but timing uncertain . Q2: Exclusivity ended; multiple bids; utilities more aggressive; aim to avoid exclusivity and secure best value .Advanced discussions with multiple parties; utilities and developers both active; target to secure agreement(s), with counterparty urgency noted .Broader, more competitive negotiations; utilities’ interest rising.
Accredited capacity scarcityQ1: Emphasis on dispatchable power value, dual‑fuel evaluation . Q2: Utilities “much more aggressive”; market “running out of accredited capacity” .CEO reiterates scarcity; strong demand from data centers and LSEs; supports ERAS filing .Intensifying scarcity supports pricing and contracting.
ERAS 525 MW expansionQ1/Q2: Evaluating scale additions and dual‑fuel options; no filing yet .ERAS application filed (525 MW gas); process timing and selection mechanics outlined; target online 4Q28 .New concrete step; long‑term capacity growth path.
Dual‑fuel (gas co‑fire)Q1/Q2: Under evaluation; economics depend on PPA structure and timing .Still under consideration; economics not disclosed; driven by offtake structure .Maintained optionality.
Coal operationsQ1: Restructuring benefits; inventory positioning; expect ~3.7M tons 2025 .Shipments strong; expect ~3.8M tons in 2025; 3.1M tons produced YTD .Slight upward revision to FY production.
Liquidity/refinancingQ1/Q2: Prepaid sales; amend credit agreement to improve flexibility; plan to refinance by/through 2026 .Liquidity $46.4M; bank debt $44.0M; progressing refinancing discussions; maturities in 2026 .Steady progress; timelines unchanged.
Macro/power pricingQ1/Q2: Seasonality and outages impacted Q2; step‑up in 2026 pricing expected .Q3 benefited from summer weather and gas prices; management cautious on Q4 seasonality .Positive Q3 tailwinds; normalized Q4 expected.

Management Commentary

  • CEO Brent Bilsland on Q3 performance and market setup: “This was an exceptional quarter… Favorable summer weather, increased energy demand, and stronger natural gas prices provided a supportive backdrop that drove strong revenue at Hallador Power… both generating units operated efficiently… coal operations continued to deliver solid production” .
  • On demand for capacity and ERAS filing: “We continue to see accelerating demand for accredited capacity… we… filed an application seeking to expand our generation capabilities at the Merom site by 525 MWs through MISO’s [ERAS] program… targeting an on‑line date… in the fourth quarter of 2028” .
  • On strategic pipeline and counterparties: “We are in advanced discussions on multiple fronts… encouraged about achieving positive progress towards an agreement by early 2026… many opportunities… are long duration… would likely consume the majority of the plant’s energy output… at favorable prices” .
  • CFO Todd Telesz on financials and forward book: Q3 revenue $146.8M, net income $23.9M, OCF $23.2M; Adjusted EBITDA $24.9M; forward power (energy+capacity) $571.7M; third‑party coal ~$350M; liquidity $46.4M; bank debt $44M; working to refinance maturities in 2026 .

Q&A Highlights

  • Q4 cadence: Management does not expect Q3’s exceptional performance to repeat; expects Q4 2025 similar to Q4 2024 unless extreme cold materially increases demand .
  • ERAS process/milestones: Application completeness feedback expected; selection cycles occur periodically; selection of applications for review could take ~6 months; team working to secure equipment in parallel .
  • 525 MW capex/economics: Not disclosed; economics depend on PPA structures; seeing robust market signals and competitive interest .
  • Counterparty dynamics: Utility interest has increased; negotiations underway with both utilities and data center developers; management prefers not to enter exclusivity to maximize value .
  • Liquidity management/refinancing: Potential to use additional prepays selectively and refinance with existing and/or new lenders; maturities in 2026 remain the planning anchor .

Estimates Context

  • Q3 2025 vs S&P Global consensus: revenue $146.8M vs $110.9M*; diluted EPS $0.55 vs $0.06*; EBITDA (GAAP) $38.0M vs $9.5M* — a broad‑based beat across key lines . Values marked with * retrieved from S&P Global.
  • Estimate dispersion: Only ~3 estimates for both EPS and revenue in Q3 2025*, suggesting limited sell‑side coverage and potentially larger revision moves post‑print. Values marked with * retrieved from S&P Global.
  • Implications: Expect upward revisions to near‑term revenue/EPS and improved 2026 outlook given step‑ups in contracted pricing and visibility into forward power/capacity book .

Key Takeaways for Investors

  • The quarter materially exceeded expectations on revenue and EPS; power market tailwinds and operational uptime were key, while coal shipments provided incremental leverage .
  • Structural scarcity of accredited capacity and robust demand from data centers/utilities underpin the strategic rationale for ERAS 525 MW expansion at Merom (target 4Q28), a potential step‑function growth vector .
  • Forward sales visibility remains strong with $571.7M contracted power revenue and ~$350M contracted 3rd‑party coal, supporting cash flow resiliency into 2026+ .
  • Liquidity of $46.4M and stable bank debt ($44.0M) buy time to negotiate refinancing before 2026 maturities; monitor progress and terms as a risk/moderator to equity value .
  • Management signals Q4 normalization vs Q3’s exceptional conditions; trading setups should anchor on seasonality and weather optionality .
  • Watch for potential PPA announcements (utilities vs hyperscalers); company is avoiding exclusivity to optimize value and certainty; any definitive agreement is likely a major stock catalyst .
  • Note non‑GAAP adjustments: Adjusted EBITDA strips substantial non‑cash Hoosier PPA amortization; both EBITDA and Adjusted EBITDA expanded YoY, with clear reconciliation provided .

Notes:

  • All company results and commentary are from Hallador’s Q3 2025 8‑K and earnings materials unless otherwise cited – – –.
  • S&P Global consensus values are marked with * and may reflect differing definitions (e.g., EBITDA). Values retrieved from S&P Global.