Good afternoon, and thank you for attending Hallador's 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 Bilsland, 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. 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, Halidor 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.

Thank you, Sean, and thank you everyone for joining us this afternoon. Palador 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 disciplined 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 Merrim site. Compared with Greenfield developments, the Miram 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 Miram facility and operational improvements across our mining operations. along with early-stage work supporting potential generation expansion at the Merrim site under the ERAS program. We currently expect capital expenditures in 2026 to increase modestly compared to 2025 levels, excluding potential ERAS development. Looking ahead, we will continue to focus on maintaining operational reliability at Merrim, 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 in 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 Hallador's growth. In January, we welcome 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 Hallador 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 Mirren 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 Merrim 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 team. With that, I will now pass the call over to our Chief Financial Officer, Todd Tellez, to take you through our financial results. Todd?

Great. Thank you, Brent, and good afternoon, everyone. I'll add my thanks for joining us today. Jumping right into our fourth quarter results, Electric sales for the fourth quarter increased 3% to $71.6 million compared to $69.7 million in the prior year period, while coal sales increased 24% to $29.1 million for the fourth quarter compared to $23.4 million in the prior year period. Electric sales in the fourth quarter reflected continued electricity demand across the MISO market and stable realized pricing, partially offset by lower generation during the period due to the previously mentioned operational challenges and unit availability impacts in Q4 2025 and Q1 2026. While the unit outages reduced dispatch for part of the fourth quarter, the plant continued to operate and serve market demand as conditions allowed. The increase in coal sales during the fourth quarter was driven primarily by higher third party shipments to customers, reflecting continued production optimization at Summarize Coal, and our ability to supply both internal fuel requirements at Merrim and external market demand. On a consolidated basis, total operating revenue increased 8% to $102.4 million for the fourth quarter, compared to $94.7 million in the prior year period. Net loss for the fourth quarter was $0.2 million compared to a net loss of $215.8 million in the prior year period. It's worth noting that the year-ago period loss includes an approximate $215 million non-cash write-down associated with the value of our mining operations. Operating cash flow for the fourth quarter was $8.1 million compared to $32.5 million in the prior year period, with the decrease primarily reflecting the cash receipt from a large prepaid energy forward sales contract that was received in Q4 2024. Adjusted EBITDA, a non-GAAP measure which is reconciled under earnings press release issued earlier today, increased 35% to $8.4 million for the fourth quarter compared to $6.2 million in the prior year period. We invested 24.9 $9 million in capital expenditures during the fourth quarter of 2025, compared to $13.8 million in the year-ago period, bringing our full-year 2025 CapEx to a total of $69.2 million. This includes the approximately $14 million of refundable deposits made in support of the Ares Gas Generation Project. As Brent mentioned earlier, we expect our 2026 capital expenditures to modestly increase compared to 2025, excluding any impacts of the ARRES project. As of December 31st, 2025, our forward energy and capacity sales position was $540 million, compared to $571.7 million at the end of Q3 and $685.7 million at December 31st, 2024. When combined with our third-party forward coal sales of $323.5 million, as well as intercompany sales to Merrim, our total forward sales book as of December 31st, 2025, was approximately $1.3 billion. Now turning to the balance sheet, we had several material updates. In Q4 of 2025, we completed a $25 million prepaid energy forward sales contract with a longstanding counterparty and raised approximately $14 million through our ATM via the issuance of just over 697,000 shares. In January of 2026, we further strengthened our capital position through a public offering of approximately 3.2 million shares of common stock priced at approximately $18 per share, generating roughly $57.5 million of gross proceeds. These proceeds are expected to support general corporate purposes, including potential deposits required for preserving key equipment necessary for our proposed natural gas generation expansion at Merrim. Additionally, late last week, we closed on a new credit facility led by Texas Capital Bank, who is a new relationship for us, and Old National Bank and First Financial Bank, who have been long-standing financial partners of Hallador. The $120 million three-year senior secured credit facilities include a $75 million revolving credit facility and a $45 million delayed draw term loan. The credit facilities also include a $25 million accordion feature. Overall, our results reflect continued progress across the business as we strengthen our financial profile while investing in the long-term growth opportunities Brent discussed earlier. With a solidified liquidity position, a meaningful forward sales book, and a disciplined capital allocation approach, we believe Havador remains well-positioned to support the continued development of our power platform and the strategic initiatives underway at Merrim. With that, operator, we can now open the line for questions.

Thank you so much. And as a reminder, if you do have a question, simply press star 11 to get in the queue and wait for your name to be announced. To remove yourself, press star 1-1 again. One moment for our first question. It comes from the line of Jeff Gramp with Northland Capital Markets. Please proceed.

Afternoon, guys. Thanks for the time. With respect to this longer-term PPA opportunity, Brent, what are the main kind of gating items to getting a deal done at this point? I know you can only say so much, But are we kind of in the phase where we're deciding kind of what the best offer is for the company? Is it negotiating with final parties or what's kind of dictating timing at this point?

Yeah, look, I don't think it's going to be just one party. And we have exchanged, you know, draft contracts with multiple parties. And, you know, I think what's encouraging for us is we continue to see pricing pressure move things higher. And, quite frankly, the interest level that we're seeing has dramatically increased in the last four weeks. Multiple utilities, multiple industrial users.

You know, we kind of view it as we're playing a game of musical chairs and we own the last seat.

And we just keep seeing more and more people enter the room. And so, you know, I know everybody's in a hurry to get something done, including me, but at the same breath, this keeps getting better. And so we're really encouraged by what we're seeing and the level of competition that, you know, we are able to engage the counterparties in. So we're happy. You know, we think we're getting much closer and certainly encouraged by what we're seeing. I hope that excitement resonates.

That's super helpful. I appreciate it. That's good to hear. For my follow up, I wanted to get a bit more details on the issues at Merrim that you guys talked about. You just set a little more light on what these operational issues are, and is the – would we be expecting this to impact performance until this planned outage in May? It sounded like there was going to be a more significant kind of turnaround at that point to maybe address some of these issues.

Yeah. No, I think – so we had some equipment failures in Q4. we had some equipment failures in Q1 that, you know, took the plant offline at different times for weeks at a time. And unfortunately, it was some, you know, particularly in January is during some of the better priced weeks. So we hate to see that. The plant's running now. You know, it has a few limitations. So it's not running at 100%, but it's running. And then we're going to roll right into an outage. And so, you know, we, we, this was a, was a planned outage. It was a, what we call a major. So it's, you know, the plant will be, half the plant will be down for six months. We do that every year. And there's, you know, just a lot on the list for this particular unit that's going to get replaced and upgraded. And, and so a whole lot of new parts are going on. And we think that that will help the reliability of the plant. And just in time for the summer season, which I would point out is the peaking season in MISO now. Summer peaks are

higher than winter peaks. Understood. Okay. That's really helpful details. I'll turn it back.

Thank you guys for the time. Thank you, Jeff. Thank you. Our next question comes from the line of Matthew Key with Texas Capital. Please proceed. Hey, good afternoon, everyone, and thanks for

taking my questions. I wanted to talk about, you know, the target date of completion for the Nat Gas expansion. What are the big determinant factors that, you know, dictates you hit in or miss in that target date? Does this just kind of come down to get in the necessary long lead time equipment in time, or are there a little bit more complications than that? No, so right now we're

negotiating with multiple counterparties on can we secure equipment in the right time frame, which we are finding equipment that the timing does work, and can we get that equipment at a price point that makes the project economic. And then at the same breath, we've got limited PPAs to support the project. We're obviously in the market attempting to sign long-term PPAs, We like where that pricing has gone. And, you know, so you just got to line all that up. And and then there's other players out there who are opposite of us. They have equipment and no place to go with it. And so we're also talking to those counterparties to say, hey, does it make sense? You bring your equipment, we'll bring the interconnect, PPAs, water rights, gas rights, all of that. But the thing that we're excited about is, you know, we know, we feel that our site, our interconnect, has a speed to market advantage because of the AIRS program. And because of the AIRS program, it has a, we think, a significant cost advantage over some of the other projects that we're hearing. We're hearing other projects that have to have $300 million of system upgrade costs, and we just don't think our project's going to experience that. And so we think there's a significant advantage there. That said, the downside to the ERS program is it's a very quick process, and so you kind of got to get all the elements of the deal lined up. And so we're working on that.

No, that's helpful. A quick macro one for me, you know, made recent news that the EPA announced the decision to ease, you know, the MAPS requirements for power plants. Could you maybe just help me quantify the impact that those changes would have on your business, if any, or maybe the industry more broadly?

Yeah, so a lot of plants, including ours, are already MAPS compliant. That being said, there's still some ongoing costs associated with that, reporting requirements and so on. So, you know, I think the Trump administration in general is trying to unwind a lot of these environmental rules one at a time. And, you know, they're just kind of making their way down through the list. And so what is the impact of that? You know, overall, it makes operating a plant easier. One of the economic impacts of that, you know, I think it probably has more to do with longevity and less to do with, you know, are we going to see our costs materially drop, you know, in the next quarter?

Got it. No, that's helpful. Really appreciate the time and best of luck.

Our next question comes from the line of Nick Giles with B. Riley Securities. Please proceed.

Great. Thank you, operator. Good afternoon, guys. My first question, you know, I think you've previously talked about the majority of capacity being taken down in any long-term deal, but you mentioned, Brent, that economics are only getting better. So, given that you're talking to multiple parties, is there a scenario where you might announce the long-term PPAs in several tranches, or should we still be, you know, expecting one kind of grand slam?

him. No, I think you'll see announcements in several tranches. That's our thinking today. I mean, certainly we could see a customer step up and take a bigger block, but today that's where

our head is at, that you'll see multiple bites at the apple. Got it. Got it. Okay. Very helpful. um and then just in terms of pricing you said upward pressure um i think in the past you've kind of used the forward curve as an anchor and you know noted that pricing could come in above that i mean any um you know any rough rough guardrails that you could point us to um from a price perspective i mean should we be still thinking of something above the forward curve And if so, where do you see the forward curve today?

Yeah, so the forward curve is typically energy. Where we're really seeing the price improvement is for accredited capacity. And that's the revenue stream that is going, in our opinion, dramatically higher. That really is the pinch point in the industry. And the reason for that is you can get energy from renewables. It's challenging to get accredited capacity from renewables, right? Solar panels are only rated 5% of nameplates. Windmills are only rated at 15% of nameplates, whereas coal, gas, and nukes are all rated 75% to 90% of nameplates is typically what accreditation they're awarded. So what's changed – the MISO auction is, I think, roughly two weeks from today. It's going to be on the 26th. And some of the pricing outlooks that we're seeing in that are dramatically higher. And so we'll see what that auction brings. And, you know, we think that we'll probably have some sales that might happen before then as well. So as we get those deals across the finish line and inked, we'll report it. So you'll get a good look at what that price is. Also, I want to correct something somebody just said I said incorrectly. So, our unit is going to go on outage for 60 days, not six months, like I said. So, just wanted to correct my statement.

Got it. Maybe just one more if I could. I think you mentioned that CapEx could be modestly higher, excluding ARIS developments. I just wanted to clarify. Are you saying that CapEx will be modestly above the kind of 70 million level, I think, which included the 14 million? Or should we exclude the 14 million and kind of start at a base of 55? I think you see what I'm getting at. I'm just trying to make sure it's apples to apples here.

Yes, Nick, it's Todd. How are you today? Okay. So I think we are looking at modestly higher than what we incurred in 2025, driven by some CapEx that was pushed out of 25 into 26, as well as continued investment in the ELG project. So those are probably the key drivers, and those obviously would be excluding any incremental investments in the AEROS project.

Got it, got it. And what would those, I mean, so I think last quarter the emphasis was really around the application, and now that's been accepted, deposit has been paid. Like, what are the next, what are some of those developments that we should be looking out for in the context of ERIS?

Yeah, so MISO will pick up our application and begin reviewing that soon. They haven't done that just yet. And then once they pick it up, I believe they'll do a public notification saying that they've picked that up, and then they've got 90 days to complete that study. At the end of that study, they come to us and say, okay, this is what we think it's going to cost, and then we have a certain period of time to negotiate a couple items on that list. And then ultimately it comes down to, hey, are you signing a GIA, a generator interconnect agreement with MISO and committing to your project? We think that happens sometime later in Q3. Or are you saying, no, I'm going to pass because, you know, the project, we're just not going to go forward with the project. And then your options, we would probably step into the traditional queue at that point. you know, going forward. So those are kind of the options on the table and what we think that timing looks like. Got it. Got it.

Well, hey, Brent and Todd, I really appreciate all the detail, and best of luck. Thank you, Nick.

Thank you. And we have a question from the line of Jake Zekielski with Alliance Global Partners. Please proceed.

Hey, Brent and Todd, thanks for taking the question.

Good to see you, Jake.

So with the gas expansion coming into focus, I'm just wondering how you're thinking about Sunrise Coal and that operations position in sort of the broader portfolio going forward.

Yeah, so, you know, Sunrise results there have been good. They got their cost structure down last year. It performed really well. You know, so far, so good this year as well. So we're happy with the Sunrise Coal division. Again, we're looking to contract a meaningful amount of output at the Merrim power plant here in the near future. And so, you know, that's going to require fuel. So I don't really see any material changes at sunrise in the near future. We still plan to take coal at the plant. The gas plant, I mean, if you look at Merrim, why is it such a good site for an expansion? Mirim was originally designed to be three 500 megawatt coal-fired units but they only built two but a lot of the power infrastructure that's necessary already exists at the site you know the line takeaway capacity from that substation is like 1.2 1.6 gigawatts we're only using a 1,000, or 1 gigawatt, excuse me, 1,000 megawatts. And so all we're really proposing to do is instead of building a third coal-fired unit, the third unit will be gas units, right? And right now we're proposing CTs. And so, you know, that's what it is in a nutshell, is, hey, there's space on the line. We have property control. We have the easements in place for the gas pipeline that's only five miles away. We have water rights. There's good gas availability, we're told, at that location. So we think we've got really one of the better sites in the country to do such a development. That said, we still have to line up equipment, more PPAs and such, to make that project viable. That's something we're negotiating every day to see if we can make all those numbers

line up. Got it. Okay. That's helpful. And then just building off that a bit, if I may, are you still evaluating things on the M&A front, or do you sort of feel your plate's full with the ARIS project coming into focus here over the next few quarters?

Look, we always look at things. You know, we've bid on an asset here recently. you know I don't think we're going to be selected for that asset so but we are active and so you know we'll just have to take the opportunities as they come okay that's helpful that's all for me

thanks again guys thank you thank you and this concludes our Q&A session I will pass it back

to Brent Bilsland for closing comments I just want to thank everybody for their continued interest in Hallador, and stay tuned. I think hopefully we've got exciting things to announce in the future.

Thank you again. This concludes our conference. Thank you for participating, and you may now disconnect.