Hallador Energy (NASDAQ:HNRG) reported what management described as “strong financial performance” in 2025 as the company continued positioning itself as a vertically integrated independent power producer, supported by improving power market conditions and higher electric sales. On the company’s fourth quarter and full-year 2025 earnings call, President and CEO Brent Bilsland and CFO Todd Telesz also discussed operational issues at the Merom power plant, progress on long-term energy and capacity contracting discussions, and early-stage work tied to a potential natural gas generation expansion under MISO’s Expedited Resource Addition Study (ERAS) program.
Full-year 2025 results driven by electric sales growth
Bilsland said Hallador’s total revenue rose 16% year-over-year to $469.5 million in 2025. Net income improved to $41.9 million, adjusted EBITDA increased to $56 million, and operating cash flow increased 23% to $81.1 million.
Fourth quarter: revenue up, adjusted EBITDA higher, Merom availability issues weigh on generation
For the fourth quarter, Telesz reported electric sales increased 3% to $71.6 million, while coal sales rose 24% to $29.1 million. Consolidated operating revenue increased 8% to $102.4 million.
Electric sales reflected continued demand and stable realized pricing in MISO, Telesz said, but results were partially offset by lower generation due to operational challenges and reduced unit availability at Merom in the fourth quarter, which continued into the first quarter of 2026. He said the plant “continued to operate and serve market demand as conditions allowed” even as outages reduced dispatch for part of the quarter.
Hallador posted a net loss of $0.2 million for the quarter versus a net loss of $215.8 million in the year-ago period. Telesz noted the prior-year loss included an approximately $215 million non-cash write-down associated with the value of the company’s mining operations.
Adjusted EBITDA increased 35% to $8.4 million. Operating cash flow was $8.1 million compared with $32.5 million in the prior-year quarter, which Telesz said primarily reflected the absence of cash received in fourth quarter 2024 from a large prepaid energy forward sales contract.
Merom maintenance outage planned for May; Q1 2026 expected similar to Q4 2025
Bilsland said Merom performed well through most of 2025, but the company experienced equipment failures in the fourth quarter and again in the first quarter that took the plant offline “at different times for weeks at a time.” He added that one of the outages in January occurred during “some of the better-priced weeks.”
Due to the availability issues, management said consolidated first quarter 2026 results are now expected to be similar to the fourth quarter of 2025.
To improve reliability ahead of the summer peak demand season in MISO, Bilsland said the affected units will undergo a major maintenance outage beginning in May, with significant replacement and upgrades planned. During the Q&A, he clarified that the outage would be 60 days (correcting an earlier statement that referenced six months). He said the work should improve reliability “just in time for the summer season,” noting that summer peaks are now higher than winter peaks in MISO.
Long-term capacity and PPA discussions: “several tranches” possible
Management repeatedly pointed to tightening supply conditions and rising value for “accredited capacity” in MISO, driven by demand growth and prior retirements of dispatchable generation assets. Bilsland said the company has made progress selling energy and capacity “at elevated prices” and has recently received additional competitive offers to acquire Hallador’s accredited capacity for more than a decade.
When asked about timing and deal structure, Bilsland said the company has exchanged draft contracts with multiple parties and described a noticeable increase in interest in the last four weeks from “multiple utilities” and “multiple industrial users.” He said pricing pressure has continued moving higher and indicated the company may announce long-term PPAs in “several tranches” rather than a single large contract.
On pricing, Bilsland distinguished between energy and capacity, saying the forward curve typically relates to energy while the major improvement the company is seeing is in accredited capacity pricing. He cited the relative difficulty of securing accredited capacity from renewables compared to coal, gas, and nuclear resources. He also referenced an upcoming MISO auction (which he said was roughly two weeks away) as a key near-term datapoint, while noting that some sales could occur before the auction.
ERAS natural gas expansion: 515 MW potential; equipment and contracting key gating items
Hallador disclosed it was awarded one of 50 ERAS slots and funded about $14 million in refundable deposits to support a potential addition of up to 515 MW of natural gas generation. Bilsland said MISO is expected to complete its study of Hallador’s application in the third quarter of the year, and the company is negotiating with multiple counterparties for equipment.
During Q&A, Bilsland identified key factors for meeting the targeted in-service timeline (around the third quarter of 2029): securing long-lead equipment in the right timeframe at an economic price point and aligning long-term PPAs to support the project. He also said the company has spoken with counterparties that may already have equipment but lack an interconnection location, suggesting potential partnership structures.
Bilsland said the Merom site offers “speed to market” and potential cost advantages versus greenfield projects due to existing infrastructure and the ERAS process, and he suggested the company may avoid the large system upgrade costs he is seeing cited for other projects. He also outlined the ERAS process timing, indicating that once MISO picks up the application it has 90 days to complete the study, after which Hallador would evaluate costs and decide whether to move forward by signing a generator interconnection agreement or potentially enter the traditional queue.
On capital spending, Telesz said fourth quarter 2025 capital expenditures were $24.99 million, bringing full-year 2025 capex to $69.2 million, which included the $14 million ERAS-related deposits. Management said 2026 capex is expected to increase modestly versus 2025 levels, excluding any incremental ERAS spending, citing items pushed from 2025 into 2026 and continued investment in a project referred to as “VLG.”
Telesz also highlighted liquidity actions, including a $25 million prepaid energy forward sales contract completed in the fourth quarter of 2025, approximately $14 million raised via the company’s ATM program, and a January 2026 public offering of roughly 3.2 million shares at about $18 per share for gross proceeds of around $57.5 million. He said proceeds are expected to support general corporate purposes, including potential deposits needed to preserve key equipment for the proposed gas expansion. He added that the company recently closed a new $120 million three-year senior secured credit facility led by Texas Capital Bank, alongside Old National Bank and First Financial Bank, consisting of a $75 million revolver and a $45 million delayed draw term loan, with a $25 million accordion feature.
As of Dec. 31, 2025, Hallador’s forward energy and capacity sales position was $540 million. Telesz said that when combined with third-party forward coal sales of $323.5 million and intercompany sales to Merom, total forward sales as of year-end 2025 were approximately $1.3 billion.
About Hallador Energy (NASDAQ:HNRG)
Hallador Energy Company is a coal producer and mine operator trading on NASDAQ under the symbol HNRG. The company’s primary business activities center on the production and sale of bituminous thermal coal. Hallador’s operations encompass two surface mines: the Shoal Creek Mine located in southwestern Indiana and the Bull Mountain Mine situated in eastern Montana. Both sites are designed to extract high-quality coal reserves for the power generation market.
Hallador Energy markets its coal primarily to electric utilities and industrial customers across the United States.
