Hallador Energy Company

Good afternoon. Thank you for attending Holidor Energy's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this call may be recorded. I'd now like to turn the conference over to Sean Mazurek. the company's investor relations advisor with Elevate IR. Please go ahead, Sean.

Thank you, and good afternoon, everyone. We appreciate you joining us to discuss our first quarter 2025 results. With me today are President and CEO Brent Bilsland and CFO Margie Hargrave. This afternoon, we released our first quarter 2025 financial and operating results, in a press release that is now on the HALADOR Investor Relations website. Today, we will discuss those results as well as our perspective on current market conditions and our outlook. Following prepared remarks, we will open the call to answer your questions. Before we begin, a reminder that some of our remarks today include forward-looking statements subject to a variety of risks, uncertainties, and assumptions contained in our filings from time to time with the SEC and are also reflected in today's press release. While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, Alidor has no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law to do so. And with the preliminaries out of the way, I'll turn the call over to President and CEO, Brent Vilsland.

Thanks, Sean, and thank you, everyone, for joining us this afternoon. We're pleased with our first quarter performance as we return to top line growth and saw material improvements in our bottom line and cash flow generation, underscoring the strength of our strategic shift to a vertically integrated independent power producer. January and February offered a strong backdrop as a combination of colder weather and higher energy pricing enabled us to benefit from increased dispatch volume. We also saw improvement in our coal production through the first three months of the year as our 2024 restructuring efforts continue to take hold. During the quarter, we leveraged our strong counterparty relationships to strategically deploy targeted firm energy sales, helping to offset price volatility and weather-related demand fluctuations. This enabled us to maximize the value of our Miriam Power Plant in a way that balances challenging periods while also gives us flexibility to capture upside opportunities in periods of elevated pricing, like what we saw in January and February. Before diving into our first quarter operational highlights, I'd like to provide an update on our ongoing negotiations with the leading global data center developers. We're making meaningful progress in our negotiations for the long-term supply of capacity and energy from our facility. We understand that our partner has demonstrated their commitment to the opportunity through significant investment around land, transmission capacity and equipment, as well as the previously announced exclusivity agreement with us that runs through early June of 2025. Given the inherent complexity of these multi-party agreements, at this time it is uncertain whether we will execute definitive agreements before the current exclusivity period expires. We are actively evaluating whether to agree to our counterparty's request for an additional exclusivity period. In the event the current exclusivity period expires without definitive agreements, or an additional exclusivity period, we would continue negotiations on a non-exclusive basis while evaluating proposals from interested third parties. During the last several months, we have received multiple unsolicited third party inquiries with respect to the availability of our future energy and capacity. Ultimately, we remain well positioned to execute a strategic transaction that delivers long-term value to our shareholders. Stepping back to the broader market, we continue to believe that the prevailing industry trend of retiring dispatchable generators, such as coal, in favor of non-dispatchable resources like wind and solar, will lead to an unbalanced energy equation and extended volatility in the energy markets. We believe this volatility makes our subsidiary, Howard or Power, much more valuable due to the enhanced reliability we provide versus non-dispatchable generators. To further capitalize on these dynamics, we are actively exploring opportunities to acquire additional dispatchable assets that would enhance our scale and diversify our revenue streams while reinforcing our position in the evolving energy market. Howdor is uniquely positioned to transform underperforming or retiring assets to serve high-growth end users such as data centers and onshore manufacturing with limited impact to retail customers. This model for growth is enabling us to continue our shift away from the discounted pricing related to our 2022 plant acquisition to higher wholesale market pricing next year, and ultimately to premium pricing associated with supporting data centers and other large load end users. Notably, the positive momentum that we are seeing from the current administration on both the federal and state levels should make transactions of this sort more feasible than they would have been under prior administration. We are also currently evaluating the addition of natural gas co-firing at Merrim. While we are still in the evaluation process, by adding the capability to co-fire with gas and or coal, we believe it will provide fuel flexibility to our counterparty while also providing Halador with the ability to capitalize on the best fuel cost scenario and better control our operating expenses. Additionally, we believe that the ability to co-fire with natural gas and or coal will also provide increased resiliency in times where gas availability is limited, as we have seen in various winter storms across the last several years. Moreover, leveraging coal supply from our own operations at Sunrise could help manage input costs by providing what is essentially an at-cost fuel supply, providing a release valve if third-party fuel pricing gets out of control while also supporting our local workforce. From a pricing standpoint, forward indicators continue to trend positively. The forward power curves indicate that the margins earned on energy produced at Merham and the value of accredited capacity sales assigned to the plant continue to increase. As we saw in the most recent MISO auction, where accredited capacity sold at prices in excess of $600 per megawatt day in the highest demand summer season. We are seeing strong indications for both energy and capacity prices in 2025 and beyond, and we're encouraged by our negotiations related to supporting the data center development within the state of Indiana for many years to come. Subsequent to quarter end, we completed scheduled maintenance on one of our units at the plant. Our second unit is currently undergoing scheduled maintenance and is expected to return online July 2nd. We typically schedule these outages during shoulder seasons when pricing tends to be lower, and we generally limit our firm electricity sales during these periods to guard against any unforeseen forced outages. Despite these outages, we've already contracted approximately 3 million megawatt hours for the balance of 2025 at an average price of $37.20, and 3.4 million megawatt hours for 2026 at an average price of $44.43, reflecting strong market demand and pricing momentum. Following 2026, we are optimistic that we can sell energy at higher prices in support of data center development and or to traditional wholesale customers. Shifting to our coal operations, we continue to see improvements from the restructuring of our Sunrise Coal Division announced in early 2024. We spent the majority of last year optimizing production, headcount, and strategy to best support our electric operations and our existing third-party contracts. Looking ahead, this restructuring should provide us with greater flexibility to quickly scale if we see coal prices increase to a point that justifies restarting production at our more expensive units. With renewed support at both the federal and state levels for coal mining and coal-fired power generation, as well as improving market dynamics, we believe that we are well positioned to pursue growth and or expansion opportunities, including the potential to increase our coal production in the back half of 2025 or 2026 if the market supports doing so. In the meantime, we expect to produce approximately 3.8 million tons of coal this year, having delivered 1.1 million tons in the first quarter to Merham and other customers. We supplement our own coal production with low-cost third-party purchases to diversify supply, enhance sales flexibility, and optimize fuel costs and margins at Merrill. Looking ahead, we continue to see growing demand for reliable power, particularly as grid volatility grows with the retirement of dispatchable generation and the demand growth environment. This demand, paired with supportive regulatory sentiment and Haldor's ability to deliver dependable energy, positions us well for sustained growth. Our pursuit of dual fuel capabilities and potential acquisition of other dispatchable generation assets reflects our confidence in the long-term economics and viability of our platform. With a robust contracted sales book, strengthening fundamentals, and ongoing interest from high-demand end users, we believe we are well-positioned to materially strengthen our opportunities for growth and cash flow generation for many years to come. I will now hand the call over to our CFO, Margie Hargrave, to take you through our financial results. Margie?