Q3 2025 Hallador Energy Co Earnings Call

November 10, 2025

Listen only mode. Following our prepared remarks, we will conduct a question and answer session and instructions will follow at that time.

Only mode. Following our prepared remarks, we will conduct a question and answer session and instructions will follow at that time.

Jake Ferkelski: Hey, guys. Thanks for taking the question.

As a reminder, this call will be recorded.

Brent Bilsland: Yeah, no problem.

Jake Ferkelski: Just on the M&A front, you mentioned you're always looking. I'm just curious if you're seeing plug-and-play type capacity additions out there, or are you more so looking at assets that have been starved of capital and in need of investment? I guess any color if you have a preference between the two.

I would now like to turn the conference over to Sean Mansouri the comfort.

I will now like to turn the conference over to Sean Mansouri the comfort.

And I R. Please go ahead Sean.

Please go ahead Sean.

Thank you and good afternoon, everyone. We appreciate you joining us to discuss our third quarter 2025 results.

Thank you and good afternoon, everyone. We appreciate you joining us to discuss our third quarter 2025 results with me today are president and CEO, Brent build land and CFO Todd to less.

Brent Bilsland: Well, I think typically you're probably going to find us play in the coal space. That seems to be our niche, our expertise. Traditionally, there's been less competition there, so that's typically where we like to focus our attention. That said, those types of transactions are very bespoke, and they take more time. I come back to the MARAM purchase. I mean, that took us NDA to closing. Signing the NDA to closing was 33 months, so it wasn't a small amount of work. That said, it ended up being a tremendous value to the company. Those are the type of circumstances that we're looking for. I don't think we'll find a purchase price that low again, but the revenue to offset that has increased, and we just have to take the opportunities as they come.

With me today are president and CEO, Brent build land and CFO Todd to less.

This afternoon, we released our third quarter 2025 financial and operating results in a press release that is now on the <unk> 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.

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 <unk>.

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 todays press release.

Speaker #1: Following our prepared remarks, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call will be recorded.

<unk> 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.

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.

Speaker #1: I would now like to turn the conference over to Sean Mansouri, the company's NIR, please go ahead, Sean.

Speaker #2: Thank you, and good afternoon, everyone. We appreciate you joining us to discuss our third quarter 2025 results. With me today are President and CEO Brent Bilsland, and CFO Todd Telez.

Brent Bilsland: We are encouraged by some of the conversations that we're having, and we'll see if they develop.

In providing these remarks <unk> has no obligation to publicly update or revise any forward looking statements.

Jake Ferkelski: Got it. Okay, that's helpful. That's all for me. Congrats on the quarter.

Whether as a result of new information future events or otherwise unless required by law to do so and.

As a result of new information future events or otherwise unless required by law to do so.

Brent Bilsland: Thank you, Jake.

Speaker #2: This afternoon, we released our third quarter 2025 financial and operating results in a press release that is now on the HALLADOR Investor Relations website.

Operator: Thank you. Our next question comes from the line of Nick Giles, B. Riley Securities. Your line is open, Nick.

With the preliminaries out of the way I'll turn the call over to President and CEO Brent Lang.

And with the preliminaries out of the way I'll turn the call over to President and CEO Brent Lang.

Thanks, Sean and thank you everyone for joining us this afternoon.

Nick Giles: Hey, thanks, Operator. Good evening, everyone. Guys, congrats on a really nice quarter here. Brent, in your prepared remarks, you noted advanced discussions with multiple parties. Would you look to re-enter into exclusivity? Would you really be focused on just announcing a definitive agreement at this point? Last quarter, you spoke to utilities entering the mix. Curious for any updated commentary around that, if a utility might be your preference or if you're still kind of in the mix with Hallador as well. Thanks.

Speaker #2: 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.

We are very pleased with our strong third quarter results.

Which reflects the continued momentum of our strategy and the operational resilience of our vertically integrated platform.

Speaker #2: 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.

During the quarter, we delivered significant third quarter year over year gains across key.

During the quarter, we delivered significant third quarter year over year gains across.

Key financial metrics.

Including revenue, which increased 40%.

Net income increased <unk>.

Speaker #2: 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.

<unk> thousand 14 times.

Brent Bilsland: Well, we're talking to both parties. I agree what's changed is the utility interest has increased. Quite frankly, everybody's interest has increased. I think that's due in large part, particularly on the developer side, as their projects start to get through permitting. Once they can get the land permitted and projects zoned for data center buildouts, they start focusing their attention on the next step, which is energy. We're seeing several of those projects kind of make it through those stages and now turn their attentions on Hallador because, again, as we've said before, we think we're one of the few places to get accredited capacity in the state of Indiana or MISO Zone 6, said another way. That's what's transpired. It's definitely piqued the interest here in the last several months.

<unk> thousand 14 times.

And adjusted EBITDA, a non-GAAP measure increased one six times.

The current market signals for our product offerings are strong and we believe that the robust interest.

And the types of long term arrangements that we are currently evaluating.

And the types of long term arrangements that were currently evaluating.

Speaker #2: In providing these remarks, Hallador 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.

Justifies attempting to increased generation at our <unk> site.

Justifies attempting to increase generation at our <unk> site.

In connection with these strong signals are.

In connection with these strong signals.

On November <unk>, we took a meaningful step in our strategy to grow our generation portfolio.

Speaker #2: And with the preliminaries out of the way, I'll turn the call over to President and CEO Brent Bilsland.

By submitting an application to the MISO expedited Resource addition study or eras program.

Speaker #1: Thanks, Sean. And thank you, everyone, for joining us this afternoon. We are very pleased with our strong third-quarter results, which reflect the continued momentum of our strategy and the operational resilience of our vertically integrated platform.

Seeking to add an additional 525 megawatts of gas generation at our <unk> site.

While the application is only a first step.

And our growth process and.

Brent Bilsland: Far more than interest, I mean, we are negotiating with several parties, and we're trying to get to a definitive agreement with all of those. They're on probably more of a time constraint than we are. They're trying to get a project to the point where it can be developed as quickly as possible. I think we're in a good spot. We're very encouraged by the process, how it's going, and what we see. So much so that that led us ultimately to the decision to try to grow our generation by 50% through the ERIS process.

And does not guarantee that we will be able to add the <unk> or any additional generation as part of Arrow's, we're excited to participate in the opportunity.

And does not guarantee that we will be able to add the full load or any additional generation.

Speaker #1: During the quarter, we delivered significant third quarter year-over-year gains across key financial metrics. Including revenue, which increased 40%, net income increased 14 times, and adjusted EBITDA, a non-GAAP measure, increased 1.6 times.

Part of areas, we're excited to participate in the opportunity.

And for what it could mean to the future of <unk>.

Favorable summer weather patterns, coupled with higher energy demand and elevated natural gas prices create.

Favorable summer weather patterns coupled.

Coupled with higher energy demand and elevated natural gas prices.

Created a supportive energy pricing environment.

Speaker #1: The current market signals for our product offerings are strong, and we believe that the robust interest in the types of long-term arrangements that we are currently evaluating justifies attempting to increase generation at our Meram site.

That drove strong revenue more than 29% year over year increase for or how it or power subsidiary.

That drove strong revenue more than 29% year over year increase for Howard or power subsidiary.

Following the completion of unit two's annual maintenance outage in early July.

Nick Giles: Brent, that's helpful. Maybe switching gears, you executed a five-month prepaid forward for $20 million in the quarter. How much more room do you have in your forward book until you feel like you need to preserve the remaining capacity for a long-term agreement? Just curious on that in the quarters ahead.

Speaker #1: In connection with these strong signals, on November 3rd, we took a meaningful step in our strategy to grow our generation portfolio by submitting an application to the MISO Expedited Resource Edition study.

Both units operated very well through the quarter.

Resulting in higher dispatch levels and improved reliability across the system.

These conditions also provided a tailwind for our coal operations.

We're solid production up 18%.

Speaker #1: Our ERIS program is seeking to add an additional 525 megawatts of gas generation at our Meram site. While the application is only a first step in our growth process and does not guarantee that we will be able to add the full load, or any additional generation as part of ERIS, we're excited to participate in the opportunity and for what it could mean to the future of Hallador.

Increased shipments.

Brent Bilsland: Well, that was energy, right? Primarily, what the market is really sending the strongest signals for is accredited capacity. You see a lot of articles about the world running out of energy. I disagree with that. The world has run out of accredited capacity. The sale we really made was for the 2027 timeframe, which we hadn't done much out there, and it was really for a relatively small volume.

And consistent operating costs contributed to our strong results, which demonstrated the operating leverage inherent in our coal operations.

The favorable power markets led to higher dispatch at both Merrill and our customer plants.

Which boosted coal shipments and.

Which boosted coal shipments.

Helped reduce steel inventories at both our power plant and coal mine.

And helped reduce steel inventories at both our power plant and coal mine.

During the quarter, we also executed a $20 million prepaid.

Speaker #1: Favorable summer weather patterns coupled with higher energy demand and elevated natural gas prices created a supportive energy pricing environment that drove strong revenue more than 29% year-over-year increase for our HALLADOR power subsidiary.

Nick Giles: Got it. Maybe just one more if I could. Is it fair to assume that this 525MW expansion could be a part of any long-term agreement? Or maybe if not initially, could you see that potential customer having a rofer on the capacity, or where does this ultimately fit in, if at all?

<unk> power sales contract.

With deliveries scheduled through the first half of 2027.

With delivery scheduled through the first half of 2027.

As we have stated in the past. These types of sales are a key component of our commercial strategy, providing immediate liquidity, while monetizing forward pricing.

Speaker #1: Following the completion of Unit 2's annual maintenance outage in early July, both units operated very well through the quarter. Resulting in higher dispatch levels and improved reliability across the system.

The prepaid proceeds are being used to support ongoing operations and capital investment across the business.

Brent Bilsland: Well, it'll be interesting to see. I mean, we just went public about the project an hour ago. It's not something we've discussed with other parties. I mean, we just made the filing a week ago. This is all relatively new, and that's part of the reason we wanted to publicly announce it. When you make a filing like that, you're never really quite sure when that will become public. We wanted to tell the market at the same time. I think it will be part of our conversations going forward, and we'll see where that leads.

As the quarter progressed, we saw accelerating interest that our capacity and energy offerings for both data center developers and load serving entities seeking.

Speaker #1: These conditions also provided a tailwind for our coal operations, where solid production up 18%, increased shipments, and consistent operating costs contributed to our strong results which demonstrated the operating leverage inherent in our coal operations.

Seeking access to the limited inventory of large scale <unk> energy available in the coming decade.

Seeking access to the limited inventory of large scale.

<unk> energy available in the coming decade.

We are in advanced discussions on multiple fronts.

And remain encouraged about achieving positive progress towards an agreement by early 2026.

Speaker #1: The favorable power markets led to higher dispatch at both Meram and our customer plants, which boosted coal shipments and helped reduce fuel inventories at both our power plant and coal mine.

Each potential counterparty brings unique value creation opportunities and challenges.

Nick Giles: Got it. Well, Brent and team, appreciate the update and continued best of luck.

But all share a recognition of the importance of securing reliable accredited capacity.

Brent Bilsland: Thank you, Nick.

Speaker #1: During the quarter, we also executed a $20 million prepaid forward power sales contract with delivery scheduled through the first half of 2027. As we have stated in the past, these types of sales are a key component of our commercial strategy providing immediate liquidity while monetizing forward pricing.

Operator: Thank you. I would now like to turn the conference back to Brent Bilsland for closing remarks. Sir.

Many of the opportunities that we are evaluating our long duration, meaning a decade or more in length.

Brent Bilsland: Yes, I want to thank everybody for joining us today and your continued interest in Hallador, and just hope that we've been able to articulate and express our high level of excitement as we've had a great quarter, and we're excited about the opportunities that are in front of us. Thank you.

And would likely consume the majority of the plants energy output and a credit capacity.

And would likely consume the majority of the plants energy output and our credit capacity.

Favorable prices.

Okay.

The evolving energy landscape.

Driven by rapid datacenter growth rising demand from load serving entities.

Driven by rapid data center growth rising demand from load serving entities.

Speaker #1: used to support ongoing operations and capital investment across the business. As the quarter progressed, we saw accelerating interest in our capacity and energy offerings from both data center developers and load-serving entities seeking access to the limited inventory of large-scale dispatchable energy available in the coming decade. The prepaid proceeds are being.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

And a more supportive regulatory environment is creating opportunities that.

Simply did not exist when we began our RFP process last year.

We recognize that these opportunities are time sensitive.

And our team remains focused on securing an agreement.

Maximizes value for <unk> and our shareholders.

Maximizes value for Howard or at our shareholders.

Speaker #1: We are in advanced discussions on multiple fronts and remain encouraged about achieving positive progress towards an agreement by early 2026. Each potential counterparty brings unique value creation opportunities and challenges.

While we continue to view an agreement with a load serving entity.

While we continue to view an agreement with a load serving entity as the more straightforward and faster path to execution.

The more straightforward and faster path to execution.

We're also seeing meaningful process on the datacenter side.

Particularly with developers that are proactively secured critical infrastructure, such as step down Transformers switchgear and.

Particularly with developers that have proactively secured critical infrastructure, such as step down Transformers switch gear and.

Speaker #1: But all share a recognition of the importance of securing reliable, accredited capacity. Many of the opportunities that we are evaluating are long-duration. Meaning a decade or more in length.

And other site level equipment.

Okay.

From a broader market perspective, we continue to see the structural imbalance created by the ongoing retirement of dispatch will generators like coal.

Speaker #1: And would likely consume the majority of the plant's energy output and accredited capacity at favorable prices. The evolving energy landscape driven by rapid data center growth, rising demand from load-serving entities, and a more supportive regulatory environment is creating opportunities that simply did not exist when we began our RFP process last year.

In favor of intermittent renewables, such as wind and solar.

This ship has increased the scarcity and value of reliable Baseload generation.

This ship has increased the scarcity and value of reliable base load generation.

We believe this environment enhances the long term value of our <unk> power plant.

We believe this environment enhances the long term value of our Marin power plan.

It's leverages <unk> infrastructure.

<unk> Leverages <unk> infrastructure.

And the critical role that the site plays in supporting grid stability.

Speaker #1: We recognize that these opportunities are time-sensitive and our team remains focused on securing an agreement that maximizes value for HALLADOR and our shareholders. While we continue to view an agreement with a load-serving entity, as the more straightforward and faster path to execution, we're also seeing meaningful process on the data center side, particularly with developers that have proactively secured critical infrastructure such as step-down transformers, switchgear, and other site-level equipment.

As a result.

In addition to our efforts to participate in the <unk> program.

We continue to evaluate strategic opportunities to acquire additional dispatch of generation assets and infrastructure.

We continue to evaluate strategic opportunities to acquire additional dispatch of thermal generation assets and infrastructure.

That could help diversify our portfolio.

Add scale and enhance our growth trajectory.

We also continue to assess the potential to add natural gas co firing capabilities, our existing generation facilities at Merrill.

We also continue to assess the potential to add natural gas co firing capabilities, our existing generation facilities at Maryland.

A dual fuel configuration could enhance resiliency during periods of limited gas availability.

A dual fuel consumed configuration could enhance resiliency during periods of limited gas availability.

Speaker #1: From a broader market perspective, we continue to see the structural imbalance created by the ongoing retirement of dispatchable generators like coal, in favor of intermittent renewables such as wind and solar.

Allowing us to continue leveraging the competitive advantage of our own fuel supply to Sunrise coal.

Allowing us to continue leveraging the competitive advantage of our own fuel supply through Sunrise coal.

We are proceeding thoughtfully, given the regulatory and consumer considerations that will determine the ultimate structure and timing of this type of opportunity.

Speaker #1: This shift has increased the scarcity and value of reliable, base-load generation. We believe this environment enhances the long-term value of our Meram power plant.

Operationally, how it or power delivered.

Operationally, how it or power delivered $1 6 million megawatt hours during the third quarter of 2025.

Speaker #1: Its leverageable infrastructure and the critical role that the site plays in supporting grid stability. As a result, in addition to our efforts to participate in the ERIS program, we continue to evaluate strategic opportunities to acquire additional dispatchable generation assets and infrastructure that could help diversify our portfolio at scale and enhance our growth trajectory.

One 6 million megawatt hours during the third quarter of 2025 add.

At an average sales price of $49 29 per megawatt hour.

Compared to $1 2 million megawatt hours at $47 55 per megawatt hour during the same period in 2024.

As indicated in our forward sales position.

We are transitioning into a period of higher energy and capacity pricing.

Above our historical rates as.

Speaker #1: We also continue to assess the potential to add natural gas co-firing capabilities at our existing generation facilities at Meram. A dual-fuel configuration could enhance resiliency during periods of limited gas availability while allowing us to continue leveraging the competitive advantage of our own fuel supply through Sunrise Coal.

As demand for reliable base load power continues to grow.

As demand for reliable Baseload power continues to grow.

On the coal side of our business operational consistency and increased shipments.

Helped to reduce inventories.

While maintaining adequate fuel supply to support higher potential dispatch levels during the upcoming winter season.

As of now we expect to produce approximately $3 8 million tons of coal in 2025.

As of now we expect to produce approximately three 8 million tons of coal in 2025.

Speaker #1: We are proceeding thoughtfully given the regulatory and consumer considerations that will determine the ultimate structure and timing of this type of opportunity. Operationally, HALLADOR power delivered 1.6 million megawatt-hours during the third quarter of 2025.

Having produced $3 1 million tons through the first nine months from our Oak town mining complex.

We also continue to strategically supplement our internal coal production with low cost third party purchases, providing flexibility to respond quickly to shifts in demand and pricing.

We also.

Continue to strategically supplement our internal coal production.

With low cost third party purchases.

Speaker #1: At an average sales price of $49.29 per megawatt-hour. Compared to 1.2 million megawatt-hours at $47.55 per megawatt-hour, during the same period in 2024. As indicated in our forward sales position, we are transitioning into a period of higher energy and capacity pricing.

Providing flexibility to respond quickly to shifts in demand and pricing.

This balanced approach enables us to optimize fuel costs at Maryland.

This balanced approach enables us to optimize fuel cost at Merrill Lynch.

While maintaining optionality.

To capture upside and coal markets.

The transformation of how it or from a commodity focused co producer.

The transformation of how to or from a commodity focused co producer.

To a vertically integrated independent power producer is evident in our results.

Speaker #1: Above our historical rates, as demand for reliable, base-load power continues to grow. On the coal side of our business, operational consistency and increased shipments helped reduce inventories while maintaining adequate fuel supply to support higher potential dispatch levels during the upcoming winter season.

We are leveraging the energy transition to capture the expanding margins of the power markets.

And the growing demand for reliable electricity.

If we are able to successfully navigate the associated challenges with building new generation.

We believe that the ear is program provides an opportunity for meaningful organic growth.

Speaker #1: As of now, we expect to produce approximately 3.8 million tons of coal in 2025, having produced 3.1 million tons through the first nine months from our Oaktown mining complex.

In a relatively accelerated timeframe as compared with traditional builds.

With the potential to add roughly 50% of additional generation capacity to the Howard or fleet. We are excited.

With the potential to add roughly 50% of additional generation capacity to the Howard or fleet. We are excited by.

Speaker #1: We also continue to strategically supplement our internal coal production with low-cost third-party purchases. Providing flexibility to respond quickly to shifts in demand and pricing.

By the unique opportunity. This presents the continued influx of interest from data centers and load serving entities underscores the value of our platform.

And we believe how <unk> is well positioned to take advantage of these opportunities for step function growth.

And we believe <unk> is well positioned to take advantage of these opportunities for step function growth.

Speaker #1: This balanced approach enables us to optimize fuel costs at Meram while maintaining optionality to capture upside in coal markets. The transformation of HALLADOR from a commodity-focused coal producer to a vertically integrated, independent power producer is evident in our results.

And cash flow generation in the years to come.

I will now pass the call over to our Chief Financial Officer, Todd to less to take you through our financial results.

Todd.

Thank you Brent and good afternoon, everyone jumps.

Thank you, Brian and good afternoon, everyone jumps.

Speaker #1: We are leveraging the energy transition to capture the expanding margins of the power markets and the growing demand for reliable electricity. If we are able to successfully navigate the associated challenges with building new generation, we believe that the ERIS program provides an opportunity for meaningful organic growth in a relatively accelerated timeframe as compared with traditional builds.

Jumping right into our third quarter results on a segment basis electric sales for the third quarter increased 29% to $93 $2 million.

Jumping right into our third quarter results on.

On a segment basis electric sales for the third quarter increased 29% to $93 2 million compared to $72 1 million in the prior year period.

Compared to $72 1 million in the prior year period.

Core sales increased 42% to $68 8 million for the third quarter compared to $48 $3 million in the prior year period.

<unk> sales increased 42% to $68 8 million for the third quarter compared to $48 $3 million in the prior year period.

Electric sales in Q3 benefited from traditional summer weather patterns increased energy demand and higher natural gas prices.

Speaker #1: With the potential to add roughly 50% of additional generation capacity to the HALLADOR fleet, we are excited by the unique opportunity this presents: the continued influx of interest from data centers and load-serving entities underscores the value of our platform, and we believe HALLADOR is well-positioned to take advantage of these opportunities for step-function growth and cash flow generation in the years to come.

Which together create a supportive energy pricing environment.

The increase in coal sales during the third quarter was driven by increased shipments to customers supported by favorable power markets that led to higher dispatch levels at both Merrill and our customers' power plants.

On a consolidated basis total operating revenue increased 40% to $146 $8 million for the third quarter compared to $105 2 million in the prior year period.

On a consolidated basis total operating revenue increased 40% to $146 8 million for the third quarter compared to $105 2 million in the prior year period.

Speaker #1: I will now pass the call over to our Chief Financial Officer, Todd Telez, to take you through our financial results. Todd?

Net income for the third quarter increased substantially to $23 $9 million compared to $1 6 million in the prior year period.

Net income for the third quarter increased substantially to $23 9 million.

Compared to $1 6 million in the prior year period.

Speaker #2: Thank you, Brent, and good afternoon, everyone. Jumping right into our third quarter results. On a segment basis, electric sales for the third quarter increased 29% to $93.2 million, compared to $72.1 million in the prior year period.

Yeah.

Operating cash flow for the third quarter increased to $23 2 million compared.

Operating cash flow for the third quarter increased to $23 2 million compared to cash used of $12 9 million in the prior year period with.

Compared to cash used of $12 9 million in the prior year period.

With the increase primarily driven by the aforementioned favorable energy pricing environment.

Improved coal production efficiencies.

Speaker #2: While coal sales increased 42% to $68.8 million for the third quarter, compared to $48.3 million in the prior-year period, electric sales in Q3 benefited from traditional summer weather patterns, increased energy demand, and higher natural gas prices.

Improved coal production efficiencies.

And the $20 million prepaid forward power sales contracts executed in Q3 2025.

Adjusted EBITDA.

A non-GAAP measure, which is reconciled in our earnings press release issued earlier today increased one six times to $24 9 million for the third quarter compared to $9 6 million in the prior year period.

Speaker #2: Which together create a supportive energy pricing environment. The increase in coal sales during the third quarter was driven by increased shipments to customers, supported by favorable power markets that led to higher dispatch levels at both Meram and our customers' power plants.

We invested $19 6 million in capital expenditures during the third quarter of 2025 compared to $11 6 million in the year ago period.

We invested $19 6 million in capital expenditures during the third quarter of 2025% compared to $11 $6 million in the year ago period.

Speaker #2: On a consolidated basis, total operating revenue increased 40% to $146.8 million for the third quarter, compared to $105.2 million in the prior year period.

Bringing our total 2025 year to date Capex to $44 3 million.

As of September 32025 are forward energy and capacity sales position was $571 7 million compared to $619 $7 million at the end of Q2.

As of September 32025 are forward energy and capacity sales position was $571 7 million compared to $619 7 million at the end of Q2.

Speaker #2: Net income for the third quarter increased substantially to $23.9 million, compared to $1.6 million in the prior year period. Operating cash flow for the third quarter increased to $23.2 million compared to cash used of $12.9 million in the prior year period.

$685 7 million at December 31, 2024.

And $685 7 million at December 31, 2024.

When combined with our third party <unk> coal sales of $350 million.

When combined with our third party <unk> coal sales of $350 million as well as intercompany sales to mirror.

As well as intercompany sales to marry.

Speaker #2: With the increased primarily driven by the aforementioned favorable energy pricing environment, improved coal production efficiencies, and the $20 million prepaid forward power sales contract executed in Q3 2025.

Our total forward sales book as of September 32025 was approximately $1 3 billion.

Our total bank debt remains relatively unchanged.

Was $44 million at September 32025, compared to $45 million at June 32025, and $44 million at December 31, 2024.

Speaker #2: Adjusted EBITDA: a non-GAAP measure, which is reconciled in our earnings press release issued earlier today, increased 1.6 times to $24.9 million for the third quarter, compared to $9.6 million in the prior year period.

Total liquidity at September 32025 was $46 4 million.

Total liquidity at September 32025 was $46 4 million compared to $42 million at June 32025, and $37 8 million at December 31 2024.

Compared to $42 million at June 32025, and $37 8 million at December 31, 2024.

Speaker #2: We invested $19.6 million in capital expenditures during the third quarter of 2025, compared to $11.6 million in the year-ago period. Bringing our total 2025 year-to-date CAPEX to $44.3 million.

We are currently in discussions with members of our existing bank group and other potential lenders to refinance our credit agreement.

We are currently in discussions with members of our existing bank group and other potential lenders to refinance our credit agreement on our revolving credit facility matures in August 2026, and our term loan matures in March 2026, with the remaining balance is scheduled for repayment in the first quarter of that year easing restricted cash.

Our revolving credit facility matures in August 2026, and our term loan matures in March 2026, with the remaining balances scheduled for repayment in the first quarter of that year using restricted cash.

Speaker #2: As of September 30, 2025, our forward energy and capacity sales position was $571.7 million, compared to $619.7 million at the end of Q2, and $685.7 million at December 31, 2024.

While we have not yet finalized terms, we are making progress towards a refinancing on market based terms and conditions consistent with our existing facility.

Of course as with any financing there can be no assurance of timing or final terms and conditions, but we remain confident in our ability to secure an arrangement that supports our ongoing liquidity and growth initiatives.

Speaker #2: When combined with our third-party forward coal sales of $350 million, as well as intercompany sales to Meram, our total forward sales book as of September 30, 2025, was approximately $1.3 billion.

This concludes our prepared remarks, we will now open up from questions from those participating on the call.

This concludes our prepared remarks, we will now open up for questions from those participating on the call.

Speaker #2: Our total bank debt remains relatively unchanged, and was $44 million at September 30, 2025, compared to $45 million at June 30, 2025, and $44 million at December 31, 2024.

Operator back to you.

Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. You May press Star one again, please standby, while we compile the Q&A roster.

Thank you as a reminder to ask a question you will need to press star one on your telephone to remove yourself from the queue. You May press Star one again, please standby, while we compile the Q&A roster.

Speaker #2: Total liquidity at September 30, 2025, was $46.4 million, compared to $42 million at June 30, 2025, and $37.8 million at December 31, 2024. We are currently in discussions with members of our existing bank group and other potential lenders to refinance our credit agreement.

Our first question.

Our first question comes from the line of Jeff Grant of Northland Capital markets. Your line is open Jeff.

Comes from the line.

Jeff Grant of Northland Capital markets. Your line is open Jeff.

Afternoon, guys.

Hey, Jess Brent on the.

Hey, Brent on the fifth.

Speaker #2: Our evolving credit facility matures in August 2026, and our term loan matures in March 2026. With the remaining balances scheduled for repayment in the first quarter of that year using restricted cash.

The potential capacity expansion you guys are looking at now.

The potential capacity expansion you guys are looking at now what are the main milestones or key long lead items, we should think about to track over the next.

What are the main milestones or key long lead items, we should think about to track over the next.

Speaker #2: While we have not yet finalized terms, we are making progress towards a refinancing on market-based terms and conditions consistent with our existing facility. Of course, as with any financing, there can be no assurance of timing or final terms and conditions.

A couple of quarters six to 12 months to kind of assess the progression there the potential thanks.

Yes so.

MISO created this expedited process to help generation.

Speaker #2: But we remain confident in our ability to secure an arrangement that supports our ongoing liquidity and growth initiatives. This concludes our prepared remarks. We will now open up for questions from those participating on the call.

Meet the requirements.

Which basically.

<unk>.

Okay.

Has the potential.

Our likelihood to actually be built.

Speaker #2: Operator, back to you.

Get through the <unk> process in a timely fashion versus the traditional process and so we.

Speaker #1: Thank you. As a reminder to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

We filed an application we feel complies with those timelines.

We filed an application that we feel complies with those timelines.

They will come back later this month and tell us.

Speaker #1: Please stand by while we compile the Q&A roster. Our first question: comes from the line. Of Jeff Grant, of Northland Capital Markets. Your line is open, Jeff.

Yes.

<unk>.

Our application is complete and their eyes and give us the time to cure anything that needs further clarification.

Our application is complete and their eyes and give us the time to cure or anything that needs further clarification.

Then they are at various times of the year announcing which applications. They are picking up to review the eras program only allowed for 50 total applications.

Speaker #3: Afternoon, guys.

Speaker #4: Hey, Jeff, Brent. On the potential capacity expansion you guys are looking at now, what are the main milestones or key long lead items we should think about to track over the next couple quarters, 6 to 12 months, to kind of assess the progression there, the potential?

And I think back in August they give out said they were reviewing like nine of those applications I think here in November they've come out so they are doing another.

And I think back in August thinking about said they were reviewing like nine of those applications I think here in November they've come out so they are doing another.

15 or so.

<unk> 15 or so.

And so it could be.

Six months or so before they actually pick ours up so that's something that we'll keep an eye on.

Six months or so before they actually pick ours up so that's something that we'll keep an eye on it.

Speaker #4: Thanks.

Speaker #1: Yeah, so MYSO created this expedited process to help generation that meets the requirements which basically has the potential or likelihood to actually be built get through the Q process in a timely fashion versus the traditional process.

And certainly update the market at our quarterly filings.

And then in the meantime, we are working on securing.

The equipment that we filed two built in so.

Equipment that we filed two built in so.

That's what we're working on for now.

Perfect that's really helpful.

For my follow up you guys, obviously had a super strong quarter in Q3 can you touch on what you've seen in the first 40 ish days of Q4, just trying to get a sense of if some of these dynamics have continued or how we should think about us.

For my follow up you guys, obviously had a super strong quarter in Q3.

Speaker #1: And so we filed an application that we feel complies with those timelines. They will come back later this month and tell us if our application is complete in their eyes and give us the time to cure anything that needs further clarification.

Can you touch on what you've seen in the first 40 ish days of Q4, just trying to get a sense of if some of these dynamics have continued or how we should think about us.

Our Q4 expectations as Philips to wrap up the year.

Our Q4 expectations as supposed to wrap up the year.

Yes, Q3 was an exceptional quarter for us a lot of things went right.

Speaker #1: Then they are at various times of the year announcing which applications they're picking up to review. The ERAS program only allowed for 50 total applications.

Units coming out about as we had really warm weather, providing strong cooling demand in September.

AD units coming out about as we had.

Really warm weather, providing strong cooling demand in September.

Speaker #1: And I think back in August, they came out and said they were reviewing like nine of those applications. I think here in November, they've come out and said they're doing another 15 or so.

And coal shipments were just quite frankly exceptional.

We do not expect that here in Q4, we expect Q4 to look very much like Q4 of 2024.

Speaker #1: And so it could be six months or so before they actually pick ours up. So that's something that we'll keep an eye on and certainly update the market at our quarterly filings.

Unless we do see some extreme cold weather show up in December or something like that.

Unless we just see some extreme cold weather show up in December or something like that.

We don't see much of a catalyst to really.

Speaker #1: And then in the meantime, we're working on securing the equipment that we filed to build. And so that's what we're working on for now.

Drive a performance like Q3.

Got it that's helpful I'll hop back in the queue. Thanks.

Jeff.

Thank you. Our next question comes from the line of Matthew Key of Texas Capital. Please go ahead Matthew.

Speaker #4: Perfect. That's really helpful. And for my follow-up, you guys obviously had a super strong quarter in Q3. Can you touch on what you've seen in the first 40-ish days of Q4? I'm just trying to get a sense of whether some of these dynamics have continued, or how we should think about Q4 expectations as we look to wrap up the year.

Hey, good afternoon, everyone and thanks for taking my questions. I was wondering if you could provide any initial color on on the economics of the 525 megawatt expansion.

Just like an initial read on Capex and any potential impact it could have on operating costs long term.

Speaker #1: Yeah, no, Q3 was an exceptional quarter for us. A lot of things went right. We had units coming out of outage. We had really warm weather providing strong cooling demand in September.

Yes, so we are still negotiating the equipment for that and so until we have those economics secure we're not really releasing any information as far as the overall economics.

Speaker #1: And coal shipments were just, quite frankly, exceptional. We do not expect that here in Q4. We expect Q4 to look very much like Q4 of 2024.

But we are encouraged by what we see.

Through our long term negotiations on Ppas about the robustness of volume and pricing a number of bidders. The market is just sending strong signals that it needs more capacity.

Speaker #1: Unless we just see some extreme cold weather show up in December or something like that, we don't see much of a catalyst to really drive a performance like Q3.

And so that's ultimately what led us to the to.

And so that's ultimately what led us to the visit to.

So the decision to file.

And so.

As we progress through this process over the next three years.

Speaker #4: Got it. That's helpful. I'll hop back into Q. Thanks.

We will continue to update all of our investors on what.

Speaker #1: Thank you, Jeff.

Speaker #3: Thank you. Our next question. Comes from the line of Matthew Key of Texas Capital. Please go ahead, Matthew.

What that project is going to look like but we're excited about the opportunities we've told investors.

When you're a smaller company like ourselves as far as being able to grow your production relatively quickly.

Speaker #5: Hey, good afternoon, everyone, and thanks for taking my questions. I was wondering if you could provide any initial color on the economics of the 525 megawatt expansion.

And we think this project potentially does that but with the potential to increase our generation by 50%.

Speaker #5: Just like an initial read on CapEx and any potential impact it could have on operating costs long term.

Got it.

That's helpful and just a quick macro question from me.

Speaker #1: Yeah, so we are still negotiating the equipment for that. And so until we have those economics secure, we're not really releasing any information as far as the overall economics.

Late September the Trump administration announced I think it was $625 million in funding directed at coal fired power generation in the U S.

The impact if any do you think that will have on the industry could howard or potentially be a recipient of any of that funded.

What impact if any do you think that will have on the industry could howard or potentially be a recipient of any of that funded.

Speaker #1: But we are encouraged by what we see through our long-term negotiations on PPAs about the robustness of volume and pricing and number of bidders the market is just sending strong signals that it needs more capacity.

Yes look I think anytime the government is handing out money that's that's.

Yes look I think anytime the government is handing out money.

That's helpful to the industry.

And I think that how it or it could have some projects that qualify.

And I think that how it or could have some projects that qualify.

Speaker #1: And so that's ultimately what led us to the decision to file and so as we progress through this process over the next three years, we'll continue to update all of our investors on what that project is going to look like.

For grants out of that out of that basket of money. So we'll just have to see.

They made an announcement and then we figured the rules out as we go so we're still trying to navigate that process and see how much of that we can secure for holiday.

They made an announcement and then we figure the rules out as we go so we're still trying to navigate that process and see how much of that we can secure for holiday.

Speaker #1: But we're excited about the opportunities. We've told investors when you're a smaller company like ourselves, as far as being able to grow your production relatively quickly, and we think this project potentially does that with the potential to increase our generation by 50%.

Alright, I appreciate the time and best of luck moving forward.

Thank you Matt.

Thank you. Our next question comes from the line of Jake for Koski of AGP. Please go ahead Jake.

Thank you. Our next question comes from the line of Jacob for Koski of AGP. Please go ahead Jake.

Hey, guys. Thanks for taking the question.

Speaker #5: Got it. That's helpful. And just a quick macro question for me. In late September, the Trump administration announced I think it was 625 million in funding directed at coal-fired power generation in the US.

No problem.

Just on the M&A front.

You mentioned, you're always looking at I'm, just curious if youre seeing plug and play but capacity additions out there or are you more so looking at assets.

Mentioned neuro is looking and I'm, just curious if youre seeing plug and play but capacity additions out. There are you more so looking at assets that have been starved with capital and in need of investment and I guess any color. If you have a preference between the two.

Speaker #5: What impact, if any, do you think they'll have on the industry? And could Halidor potentially be a recipient of any of that funding?

With capital and in need of investment and I guess any color. If you have a preference between the two.

What.

Speaker #1: Yeah, I mean, look, I think anytime the government is handing out money, that's helpful to the industry. And I think that Halidor could have some projects that qualify for grants out of that basket of money.

What.

I think.

Typically.

You are probably going to find those play in the coal space that seems to be our niche our expertise.

Youre, probably going to find those play in the coal space that seems to be our miss our expertise.

And.

Traditionally theres been less competition, there so thats Tim.

Traditionally theres been less competition, there so thats <unk>.

Typically where we like to focus our attention.

Okay.

That said those types of transactions are very bespoke and so.

Yes, they take more time.

And I come back to the Marin purchased something that took us NDA to closing signing an NDA to closing was 33 months.

And I come back to the Marin purchased something that took us NDA to closing signing an NDA to closing with 33 months.

It wasn't.

It wasn't a small amount of work, but that said it is the pain of tremendous value to the company. So those are the type.

It wasn't a small amount of work but.

That said it is a paying a tremendous value to the company. So.

This is a tight <unk>.

Circumstances that were looking for I don't think we'll final purchase price that low again, but.

Circumstances that were looking for I don't think we'll find a purchase price that low again, but.

The revenue to offset that has increased and so.

We just have to take the opportunities as they come in.

We are encouraged by some of the conversations that we're having we will we'll see if they develop.

But we are encouraged by some of the conversations that we're having we will we'll see if they develop.

Okay.

Yes.

Got it Okay. That's helpful. That's all for me congrats on the quarter.

Thank you Jay.

Yeah.

Thank you.

Our next question comes from the line of Mcdowell The B Riley Securities. Your line is open Nik.

Our next question comes.

It's been a line of Mcdonalds the B Riley Securities. Your line is open Nik.

Hey, Thanks, operator, good evening, everyone guys. Congrats on a really nice quarter here.

In your prepared remarks, you noted advanced discussions with multiple parties.

Britain your prepared remarks, you noted advanced discussions with multiple parties.

Would you look to reenter into exclusivity would you really be focused on just announcing a definitive agreement at this point and then last quarter you spoke to utilities entering the mix. So curious for any updated commentary around that if a utility might be your preference or if youre still.

<unk> might be a preference or if youre still.

Kind of in the mix with Hyperscale as well thanks.

Kind of in the mix of the Hyperscale guys as well.

Yeah.

Well, we're talking to both parties.

I agree which changes the utility interest has increased quite frankly everybody's interest has increased.

I agree what's changed is the utility interest has increased quite frankly everybody's interest has increased.

And I think thats due in large part, particularly on the developer side.

As there.

As their projects start to get through.

Through permitting.

And.

And once.

Once they can get the land permitted and project zone for datacenter build outs.

Once they can get the land permitting and project zone for data center build outs.

Then they start focusing our attention on the next step which is which is energy.

Then they start focusing our attention on the next step, which is which is energy and.

So we're seeing several of those projects kind of make it through those stages and now turn their attention on Howard or because.

As we've said before we think we're one of the few places to get a credit capacity in the state of Indiana or MISO zone six in another way. So that's what's transpired in so.

Again, as we've said before we think we're one of the few places to get a credit capacity in the state of Indiana or MISO zone six in another way. So that's what's transpired in so.

It's definitely piqued the interest here in the last several months.

And far more than interest I mean, we are we are negotiating with several parties and we're trying to get to a definitive agreement with all of those in.

And far more than interest I mean, we are we are negotiating with several parties and we're trying to get to a definitive agreement with all of those.

There are probably more of a time constraint than we are so they're trying to get to a project.

There are on probably more of a time constraint than we are so they're trying to get to a project.

To the point, where it can be developed.

As quickly as possible so.

So I think we're in a good spot we're very encouraged by the process and how it's going and what we see so much though that that led us ultimately the decision to try to grow our generation by 50%.

Through the through the year as process.

Okay.

Great that's helpful. Maybe.

Maybe switching gears you executed a five month prepaid forward for $20 million in the quarter.

How much more room do you have in your forward book until you feel like you need to preserve the remaining capacity for a long term agreement.

Just curious on that in the quarters ahead.

Well that was energy right.

Primarily what the market is really strong sending the strongest signals for the credit capacity.

Primarily what the market is really strong is sending the strongest signals for the credit capacity.

See a lot of articles about the world running out of energy I disagree with that the world is run out of a credit capacity.

Is it to get accredited capacity in the state of Indiana or MSA Zone 6 in another way? So that's what's transpired, and it's definitely piqued the interest here in the last several months.

So and the same we really may was for the 22007 timeframe, which we hadn't done much out there and it was really for a relatively small volume.

So and the same we really may was for the 20th 27 timeframe, which we hadn't done much out there and it was really for a relatively small volume.

Um, and it, you know, far more than interest. I mean, we are we are negotiating with several parties and we're trying to get to a definitive agreement uh with all of those and you know, they're on probably more of a time constraint than we are. So you know they're trying to get to a project.

Got it maybe.

Maybe just one more if I could.

To the point where he can be developed. Um,

Is it fair to assume that this 525 megawatt expansion could be a part of any long term agreement or maybe its not initially could you see that potential customer.

Is it fair to assume that this 525 megawatt expansion could be a part of any long term agreement or maybe if not initially could you see that potential customer.

Uh, you know, as quickly as possible. So

<unk> the ROE for on the capacity here.

Where does this ultimately fit in if at all.

Uh, so I think we're in a good spot. We're very encouraged by the process and how it's going. And we see so much so that that led us ultimately to the decision to try to grow our generation by 50%.

Yes.

Through the year as process.

Well it'll be interesting to see I mean, we just went public.

Well it would be interesting to see I mean, we just went public.

About the project an hour ago. So.

It's not something we've discussed with other parties.

We just made the filing a week ago. So this is all relatively new.

We want to that's part of the reason we wanted to publicly announce when you make a filing lack that you never really quite sure.

We want to that's part of the reason we wanted to publicly announce when you make a filing lack that you've never really quite sure.

That's helpful. Um maybe Switching gears. You executed a 5-month prepaid forward for 20 million in the quarter. Uh, you know, how how much more room do you have in your forward book until you feel like you need to preserve the remaining capacity for a long term agreement. Um just curious on on that in the course I had

When that will become public so we wanted to.

Tell the market at the same time and then.

So I think it will be part of our conversations going forward.

Well, that was energy, right? Uh, primarily with the market, it is really strong, sending the strongest signals for credit capacity.

And we'll see where that we will see where that leads.

And we'll see where that we'll see where that leads.

You see a lot of articles about the world running out of energy. I disagree with that; the world has not run out of accredited capacity.

Got it.

Brent and team I appreciate the update and continued best of luck.

Brent and team appreciate the update and continued best of luck.

Thank you Nick.

Thank you I would now like to turn the conference back to Brent Bill Flynn for closing remarks, Sir.

So and the sale we really made was for the 2027 time frame which we hadn't done much out there and and it was really for a relatively small volume.

Yes, I want to thank everybody for joining us today and your continued interest in how it or and just hope that.

We've been able to articulate and express our high level of excitement as we.

<unk> had a great quarter and we're excited about the opportunities that are in progress. Thank you.

Had a great quarter and we're excited about the opportunities that are in progress. Thank you.

Got it. Um, maybe just one more if I could. You know, is it fair to assume that this 525 megawatt expansion could be a part of any long-term agreement? Or maybe it's not initially. Could you see that potential customer, uh, having a roof on the capacity? Or, you know, where does this ultimately fit in, uh, if at all?

Ladies and.

Gentlemen, This concludes today's conference call. Thank you for participating you may now disconnect.

Well, it'll be interesting to see. I mean, we just went public, uh, about the project an hour ago. So, uh, it's not something we've discussed with, uh, other parties. I mean, we just, we just made the filing a week ago. So this is all relatively new and, uh, you know, we want to, that's part of the reason we wanted to publicly announce it. And when you make a filing like that, you never really quite sure.

When that will become public. So we wanted to

Tell the market at the same time and then uh, so I think it will be part of our conversations going forward.

Um,

And and we'll we'll see where that we'll see where that leads.

Got it. Well Brent, uh and team. Appreciate the update. And continue. Best of luck.

Thank you, Nick.

Thank you. I would now like to turn the conference back to Brent Bilsland for closing remarks. Sir.

Yes, I want to thank everybody for joining us today and your continued interest in Howard. I just hope that we've been able to articulate and express our high level of excitement as we've had a great quarter, and we're excited about the opportunities that are in front of us.

Thank you.

Ladies and gentlemen, this concludes today's conference call, thank you for participating. You may now disconnect

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