Hallador Energy Company

Good afternoon, and thank you for attending Halador Energy's fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. Following our prepared remarks, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. And I would like to turn the conference over to Sean Mansouri, the company's investor relations advisor for Elevate IR. Please go ahead, Sean.

Thank you, and good afternoon, everyone. We appreciate you joining us to discuss our fourth quarter and full year 2025 results. With me today are President and CEO Brent Vilsland and CFO Todd Tellez. This afternoon, we released our fourth quarter and full year 2025 financial and operating results in a press release that is now on the Halidor 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 may 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, HALADOR 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, Brett Vilsland.

Thank you, Sean. And thank you, everyone, for joining us this afternoon. Palidore delivered strong financial performance in 2025. as we continued advancing our transformation into a vertically integrated independent power producer. For the full year, total revenue increased 16% year-over-year to $469.5 million. Net income improved materially to $41.9 million. Adjusted EBITDA increased approximately threefold to $56 million. and operating cash flow increased 23% to $81.1 million. These results reflect both improving power market conditions and the operating leverage embedded in our business model. Electric sales were the primary driver of revenue growth during the year, increasing approximately 19% to $310.7 million compared to 2024. Coal sales also increased 8% year-over-year to $148.7 million, as Sunrise Coal continued to support both internal fuel needs at Merrim and third-party customers. Together, these segments highlight the advantages of our integrated platform, where our coal operations provide a secure, price-certain fuel supply for our generation assets, while also allowing us to participate opportunistically in third-party coal markets. Operationally, our Merrim power plant performed well through most of the year. In the fourth quarter, however, we experienced operational challenges, which continued into Q1 and reduced availability of the units. Due to this availability issue, we now expect consolidated first quarter of 2026 results to be similar to fourth quarter of 2025. Maintaining high levels of reliability remains a top priority for our team, particularly as MISO increasingly depends on dispatchable resources during periods of peak demand, which is highest in the summer. As such, the generating units in question will receive a major maintenance outage beginning in May. which once complete should significantly improve performance. Sunrise Coal also delivered consistent performance throughout the year. Production optimization initiatives and discipline cost management help improve the operating performance across the mining complex. As part of our vertically integrated platform, Sunrise Coal provides a reliable fuel foundation for our generation assets while helping optimize our overall cost structure. Across the broader marketing environment, we continue to see strong demand for reliable dispatchable generation across the MISO region. Electricity demand growth combined with the prior retirement of dispatchable assets is tightening supply conditions across the system. Increasing the value of accredited capacity as utilities and load-serving entities attempt to secure reliable resources throughout the Midwest. Against that backdrop, we have made progress towards selling energy and capacity at elevated prices. We have also recently received additional competitive offers to acquire our accredited capacity for over a decade in length. We are excited by what we are seeing in the market. The company is in a strong, long-accredited capacity position, which appears to be getting better with time. We hope to make more announcements on this topic very soon. These robust market conditions led us to file an application in MISO's Expedited Resource Adequacy Study, or ERAS, program. During the month of December, we were awarded one of the coveted 50 ERAS slots In conjunction with our application's acceptance, we funded approximately $14 million of required refundable deposits to support the potential addition of up to 515 megawatts of natural gas generation. The ERAS program was designed to accelerate the development of new generation resources that can help address reliability needs across the MISO system. Currently, we expect MISO to complete the study of our application in the third quarter of this year. Additionally, we are in negotiations with multiple counterparties for equipment for the project. As the project develops, we plan to share more details around the cost and potential economics of the project. If successful in our development plans, we would target the plant coming online around third quarter of 2029. This expansion would significantly increase our accredited generating capacity at the company, leveraging infrastructure that is already in place at our MARAM site. Compared with Greenfield developments, the MARAM interconnection offers both speed to market and certain cost advantages. Turning briefly to capital allocation, we maintained a disciplined approach throughout 2025. Capital expenditures were focused primarily on planned maintenance at the Mirim facility and operational improvements across our mining operations. Along with early stage work supporting potential generation expansion at the Mirim site under the ERAS program. We currently expect capital expenditures in 2026 to increase modestly compared to 2025 levels. excluding potential errors development looking ahead we will continue to focus on maintaining operational reliability at merrill executing efficiently across our coal operations and advancing the strategic initiatives that we believe can drive long-term growth for halidor at the same time we remain disciplined and how we approach new opportunities and will continue to focus on projects and commercial arrangements that we believe will most meaningfully enhance shareholder value for the long term. Before handing it over to Todd, I'd like to briefly highlight two recent additions to our board that strengthen our leadership during the next phase of Halidor's growth. In January, we welcomed Barbara Sugg, to our board of directors following the retirement of longtime director David Hardy, whose more than three decades of service and support to Halador we sincerely appreciate. Barbara previously served as president and CEO of Southwest Power Pool, where she led regional reliability and wholesale market operations across a 14-state footprint. Her industry leadership across grid operations Transmission development and resource integration will be valuable as we continue positioning our Miriam facility to support growing demand for reliable capacity. Further, last week we appointed Daniel Hudson to the board, expanding the board to seven members. Daniel brings deep expertise in natural gas generation, capital markets, and power asset transactions. having led or advised on more than $35 billion in strategic energy investments. As we pursue opportunities to expand generation at Miriam and evaluate additional assets that can scale our power platform, we believe Daniel's background in gas, fire, and power development and energy infrastructure optimization will provide meaningful strategic guidance for our teams. With that, I will now pass the call over to our Chief Financial Officer, Todd Tellez, to take you through our financial results. Todd?