SEC Company Response from HALLADOR ENERGY CO (HNRG) (CIK 0000788965) (HNRG) — Jan 18, 2019
HALLADOR ENERGY CO (HNRG) (CIK 0000788965)
Date: Jan. 18, 2019 · CIK: 0000788965 · Accession: 0000788965-19-000005
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-34743
Referenced dates: December 20, 2018
Letter
Via EDGAR Division of Corporation Finance Office of Beverages, Apparel and Mining United States Securities and Exchange Commission Form 8-K Filed November 7, 2018 File: No. 001-34743 Re:Comment letter dated December 20, 2018 regarding (1) segment reporting (2) inventories, and (3) non-GAAP measures
Dear Mr. Giugliano:
With regard to your item 1. Notes to Consolidated Financial Statements, (1) Summary of Significant Accounting Policies, page 48 – below is our response as well as a draft disclosure we will make in future filings.
We have identified Lawrence D. Martin as our chief operating decision maker (“CODM”). Mr. Martin is President of Sunrise Coal, LLC, the largest subsidiary of Hallador Energy Company, which makes up 99% of Hallador revenues and 94% of total assets. The majority of Mr. Martin’s time and compensation is related to the management of Sunrise Coal, LLC. Within Sunrise Coal, two primary operating segments exist, the Oaktown and Carlisle underground coal mines. Each segment engages in business activities from which it may earn revenues and incur expenses, its operating results are reviewed monthly by the CODM to make decisions about resources to be allocated and to assess performance, and discrete financial information is available. For reporting purposes, we aggregate the results of operations based on the aggregation criteria in FASB ASC 280-10-50-11. Each of the mines operates in the same seam, mines the same coal, utilizes the same mining process, customer contracts are generally interchangeable between the mines, distributes the coal via rail or truck, and are expected to have similar future economic characteristics. The Oaktown mine consists of two slopes which share a surface area, wash plant, and loading facility. Carlisle reserves are also contiguous to Oaktown reserves.
January 18, 2019
Page | 2
Segment Information (draft disclosure)
The Company’s significant operating segments include the Oaktown and Carlisle underground mines located in southwestern Indiana. The Company’s chief operating decision maker (“CODM”) reviews the operating results, assesses performance and makes decisions about allocation of resources to these segments at the mine level, however, we aggregate the results of operations of the mines for reporting purposes since the nature of the product, production process, customer type, product distribution, and long-term economic characteristics at each location are similar.
With regard to your item 2. Inventories, page 48 – below is a draft disclosure we will make in future filings.
Inventory and parts and supplies are valued at the lower of average cost or net realizable value. Inventory costs include labor, supplies, operating overhead, and other related costs incurred at or on behalf of the mining location, including depreciation, depletion, and amortization of equipment, buildings, mineral rights, and mine development costs.
With regard to your item 3. Form 8-K Filed November 7, 2018, Exhibit 99.1 regarding non-GAAP measures, below are reconciliations based on the nine months and three months ended September 30, 2018 and 2017. Similar reconciliations will be included in future filings.
Nine Months Ended
Three Months Ended
September 30,
September 30,
Net income
$5,023
$11,719
$2,914
$3,916
Income tax expense (benefit)
(546)
(589)
Loss from Hourglass Sands
-
-
Loss (income) from equity method investments
(427)
(169)
Purchased contract amortization
-
6,877
-
2,435
DD&A
32,759
28,533
10,810
9,729
ARO accretion
Loss (gain) on impairment & disposal of assets
(8)
(12)
Loss (gain) on marketable securities
-
(134)
-
Interest Expense
10,284
9,662
3,261
3,229
Other amortization
2,517
1,669
Stock-based compensation
2,755
6,388
Adjusted EBITDA
$55,363
$66,046
$18,239
$21,056
January 18, 2019
Page | 3
Nine Months Ended
Three Months Ended
September 30,
September 30,
Net Income
$5,023
$11,719
$2,914
$3,916
Equity method investments
(427)
(169)
Purchased contract amortization
-
6,877
-
2,435
Deferred income tax expense (benefit)
(120)
2,151
(385)
2,542
DD&A
32,764
28,533
10,815
9,729
ARO accretion
Deferred financing costs amortization
1,482
1,371
Change in fair value of interest rate swaps
(476)
(708)
(36)
Loss (gain) on impairment & disposal of assets
(3)
Maintenance capex
(15,469)
(8,880)
(4,639)
(2,961)
Stock-based compensation less taxes paid
2,744
3,926
Adjusted Free Cash Flow
$28,200
$45,431
$9,267
$17,012
Please contact Todd Davis at (812) 299-2800, extension 228 or via e-mail at tdavis@sunrisecoal.com with any further questions.
Sincerely,
/s/ Lawrence D. Martin
Show Raw Text
CORRESP 1 filename1.htm comment_letter_2_01182019 Via EDGAR Correspondence Submission (non-public) January 18, 2019 Mr. James Giugliano Division of Corporation Finance Office of Beverages, Apparel and Mining United States Securities and Exchange Commission Re: Hallador Energy Company Form 10-K for Fiscal Year Ended December 31, 2017 Filed March 13, 2018 Form 8-K Filed November 7, 2018 File: No. 001-34743 Re:Comment letter dated December 20, 2018 regarding (1) segment reporting (2) inventories, and (3) non-GAAP measures Dear Mr. Giugliano: With regard to your item 1. Notes to Consolidated Financial Statements, (1) Summary of Significant Accounting Policies, page 48 – below is our response as well as a draft disclosure we will make in future filings. We have identified Lawrence D. Martin as our chief operating decision maker (“CODM”). Mr. Martin is President of Sunrise Coal, LLC, the largest subsidiary of Hallador Energy Company, which makes up 99% of Hallador revenues and 94% of total assets. The majority of Mr. Martin’s time and compensation is related to the management of Sunrise Coal, LLC. Within Sunrise Coal, two primary operating segments exist, the Oaktown and Carlisle underground coal mines. Each segment engages in business activities from which it may earn revenues and incur expenses, its operating results are reviewed monthly by the CODM to make decisions about resources to be allocated and to assess performance, and discrete financial information is available. For reporting purposes, we aggregate the results of operations based on the aggregation criteria in FASB ASC 280-10-50-11. Each of the mines operates in the same seam, mines the same coal, utilizes the same mining process, customer contracts are generally interchangeable between the mines, distributes the coal via rail or truck, and are expected to have similar future economic characteristics. The Oaktown mine consists of two slopes which share a surface area, wash plant, and loading facility. Carlisle reserves are also contiguous to Oaktown reserves. January 18, 2019 Page | 2 Segment Information (draft disclosure) The Company’s significant operating segments include the Oaktown and Carlisle underground mines located in southwestern Indiana. The Company’s chief operating decision maker (“CODM”) reviews the operating results, assesses performance and makes decisions about allocation of resources to these segments at the mine level, however, we aggregate the results of operations of the mines for reporting purposes since the nature of the product, production process, customer type, product distribution, and long-term economic characteristics at each location are similar. With regard to your item 2. Inventories, page 48 – below is a draft disclosure we will make in future filings. Inventory and parts and supplies are valued at the lower of average cost or net realizable value. Inventory costs include labor, supplies, operating overhead, and other related costs incurred at or on behalf of the mining location, including depreciation, depletion, and amortization of equipment, buildings, mineral rights, and mine development costs. With regard to your item 3. Form 8-K Filed November 7, 2018, Exhibit 99.1 regarding non-GAAP measures, below are reconciliations based on the nine months and three months ended September 30, 2018 and 2017. Similar reconciliations will be included in future filings. Nine Months Ended Three Months Ended September 30, September 30, 2018 2017 2018 2017 Net income $5,023 $11,719 $2,914 $3,916 Income tax expense (benefit) (546) 993 (589) 10 Loss from Hourglass Sands 871 - 314 - Loss (income) from equity method investments 198 (427) 42 (169) Purchased contract amortization - 6,877 - 2,435 DD&A 32,759 28,533 10,810 9,729 ARO accretion 866 640 293 219 Loss (gain) on impairment & disposal of assets 576 (8) 4 (12) Loss (gain) on marketable securities 60 - (134) - Interest Expense 10,284 9,662 3,261 3,229 Other amortization 2,517 1,669 935 705 Stock-based compensation 2,755 6,388 389 994 Adjusted EBITDA $55,363 $66,046 $18,239 $21,056 January 18, 2019 Page | 3 Nine Months Ended Three Months Ended September 30, September 30, 2018 2017 2018 2017 Net Income $5,023 $11,719 $2,914 $3,916 Equity method investments 198 (427) 42 (169) Purchased contract amortization - 6,877 - 2,435 Deferred income tax expense (benefit) (120) 2,151 (385) 2,542 DD&A 32,764 28,533 10,815 9,729 ARO accretion 866 640 293 219 Deferred financing costs amortization 1,482 1,371 542 457 Change in fair value of interest rate swaps 136 (476) (708) (36) Loss (gain) on impairment & disposal of assets 576 (3) 4 56 Maintenance capex (15,469) (8,880) (4,639) (2,961) Stock-based compensation less taxes paid 2,744 3,926 389 824 Adjusted Free Cash Flow $28,200 $45,431 $9,267 $17,012 Please contact Todd Davis at (812) 299-2800, extension 228 or via e-mail at tdavis@sunrisecoal.com with any further questions. Sincerely, /s/ Lawrence D. Martin Lawrence D. Martin, CFO