SEGMENTS OF BUSINESS

3 Months Ended

Mar. 31, 2026

SEGMENTS OF BUSINESS

SEGMENTS OF BUSINESS

(12) SEGMENTS OF BUSINESS

Our business is organized based on the services and products we provide in two segments: (i) Electric Operations and (ii) Coal Operations. The CODM, who is the Company’s Chief Executive Officer, reviews and assesses operating performance measures related to our Electric Operations and our Coal Operations segments.

Our Electric Operations segment includes the electric power generation facilities of our Merom power plant, which is a two-unit, 1080-megawatt rated coal fired power plant located in Sullivan County, Indiana. Our sales region is in MISO Zone 6, which includes Indiana and a portion of western Kentucky. Revenues from our Electric Operations segment consist primarily of delivered energy and accredited capacity revenues. Fuel costs included in our Electric Operations segment include the cost of coal purchased from our Coal Operations segment, which are based on multi-year contracts which approximate market prices at the time the contracts were agreed.

Our Coal Operations segment includes the Oaktown 1 underground mining complex, as well as other currently idled mining facilities, which produce high-quality bituminous coal from the Illinois Basin. Revenue from our Coal Operations segment consists of sales of coal to various third parties and to Merom. Coal sales to our Electric Operations are based on multi-year contracts that approximated market prices at the time the contracts were agreed. Intercompany coal sales and amounts above actual costs to produce the coal are eliminated in the condensed consolidated statements of operations.

In addition to these reportable segments, the Company has a “Corporate and Other and Eliminations” category, which is not significant enough, on a stand-alone basis, to be considered an operating segment. Corporate and Other and Eliminations primarily consist of unallocated corporate costs and activities, including our equity method investments.

The CODM evaluates segment performance based upon Segment EBITDA for each business segment. Segment EBITDA is calculated for each segment as follows:

1. For our Electric Operations segment, Segment EBITDA is comprised of accredited capacity and delivered energy revenues less certain significant segment expenses, which include (i) variable costs comprised of fuel costs and certain other operating costs, such as limestone and soda ash, (ii) other operating and maintenance costs, (iii) costs of purchased power, (iv) utilities, (v) labor and (vi) general and administrative costs.

2. For our Coal Operations segment, Segment EBITDA is comprised of coal sales less certain significant segment expenses, which include (i) fuel, (ii) other operating and maintenance costs, (iii) utilities, (iv) labor and (v) general and administrative costs.

Segment EBITDA for each segment is a key measure used by our CODM and provides information about our core operating performance, significant expenses and ability to generate cash flow. Additionally, Segment EBITDA provides investors with the financial analytical framework upon which our CODM bases financial, operational, compensation and planning decisions and presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations. Our CODM reviews variable costs, as defined above, in our Electric Operations segment in order to evaluate the efficiency of that segment’s operations.

Presented below are the Electric and Coal Operations key metrics reviewed by the CODM for the three months ended March 31, 2026 (in thousands):

	Electric Operations			Coal Operations
Delivered energy	$	49,562	Coal sales	$	46,412
Accredited capacity revenue		15,534
Electric sales	$	65,096
Fuel	$	(27,527)
Other operating costs (1)		(29)
Total variable costs	$	(27,556)
Other operating and maintenance costs (2)	$	(8,854)	Fuel	$	(528)
Cost of purchased power		(14,863)	Other operating and maintenance costs		(20,273)
Utilities		(134)	Utilities		(3,199)
Labor		(8,129)	Labor		(19,259)
Power margin without general and administrative		5,560	Coal margin without general and administrative		3,153
General and administrative		(1,310)	General and administrative		(2,211)
Electric Operations — Segment EBITDA	$	4,250	Coal Operations — Segment EBITDA	$	942

(1) Other operating costs primarily include costs for lime dust.

(2) Other operating and maintenance costs include all other operating and maintenance costs with the exceptions of those costs considered variable included in fuel and other operating costs.

Presented below are the Electric and Coal Operations key metrics reviewed by the CODM for the three months ended March 31, 2025 (in thousands):

	Electric Operations			Coal Operations
Delivered energy	$	72,136	Coal sales	$	54,774
Accredited capacity revenue		13,807
Electric sales	$	85,943
Fuel	$	(38,071)
Other operating costs (1)		(8)
Total variable costs	$	(38,079)
Other operating and maintenance costs (2)	$	(4,527)	Fuel	$	(556)
Cost of purchased power		(6,840)	Other operating and maintenance costs		(23,854)
Utilities		(676)	Utilities		(3,476)
Labor		(8,143)	Labor		(18,886)
Power margin without general and administrative		27,678	Coal margin without general and administrative		8,002
General and administrative		(1,535)	General and administrative		(2,313)
Electric Operations — Segment EBITDA	$	26,143	Coal Operations — Segment EBITDA	$	5,689

(1) Other operating costs primarily include costs for lime dust.

(2) Other operating and maintenance costs include all other operating and maintenance costs with the exceptions of those costs considered variable included in fuel and other operating costs.

Presented below are the Electric and Coal Operations revenues reconciled to our consolidated operating revenues for the three months ended March 31, 2026 (in thousands):

					Corporate and Other
Reconciliation of Revenue:	Electric Operations		Coal Operations		and Eliminations		Consolidated
Delivered energy	$	49,562	$	—	$	—	$	49,562
Accredited capacity revenue		15,534		—		—		15,534
Other operating revenue		137		1,140		354		1,631
Coal sales (third party)		—		35,080		—		35,080
Coal sales (intercompany)		—		11,332		(11,332)		—
Operating Revenue	$	65,233	$	47,552	$	(10,978)	$	101,807

Presented below are the Electric and Coal Operations revenues reconciled to our consolidated operating revenues for the three months ended March 31, 2025 (in thousands):

					Corporate and Other
Reconciliation of Revenue:	Electric Operations		Coal Operations		and Eliminations		Consolidated
Delivered energy	$	72,136	$	—	$	—	$	72,136
Accredited capacity revenue		13,807		—		—		13,807
Other operating revenue		87		1,261		248		1,596
Coal sales (third party)		—		30,185		—		30,185
Coal sales (intercompany)		—		24,589		(24,589)		—
Operating Revenue	$	86,030	$	56,035	$	(24,341)	$	117,724

Presented below is our reconciliation of Segment EBITDA to the most comparable GAAP account, income (loss) before income taxes for the three months ended March 31, 2026 (in thousands):

					Corporate and Other
Reconciliation of Income (Loss) before Income Taxes:	Electric Operations		Coal Operations		and Eliminations		Consolidated
Income (Loss) before Income Taxes	$	(5,038)	$	(2,979)	$	(1,808)	$	(9,825)
Other operating revenue		(137)		(1,140)		(354)		(1,631)
Depreciation, depletion and amortization		6,383		4,204		19		10,606
ARO accretion		131		277		—		408
Exploration costs		—		84		—		84
(Gain) loss on disposal or abandonment of assets, net		—		(201)		—		(201)
Interest income		(36)		(111)		—		(147)
Interest expense		2,947		808		215		3,970
Loss on extinguishment of debt		—		—		230		230
Equity method investment (loss)		—		—		121		121
Corporate — general and administrative		—		—		3,337		3,337
Segment EBITDA	$	4,250	$	942	$	1,760	$	6,952

Presented below is our reconciliation of Segment EBITDA to the most comparable GAAP account, income (loss) before income taxes for the three months ended March 31, 2025 (in thousands):

					Corporate and Other
Reconciliation of Income (Loss) before Income Taxes:	Electric Operations		Coal Operations		and Eliminations		Consolidated
Income (Loss) before Income Taxes	$	19,217	$	(5,082)	$	(4,156)	$	9,979
Other operating revenue		(87)		(1,261)		(248)		(1,596)
Depreciation, depletion and amortization		5,161		9,797		19		14,977
ARO accretion		120		307		—		427
Exploration costs		—		21		—		21
(Gain) loss on disposal or abandonment of assets, net		—		(21)		—		(21)
Interest income		—		(63)		—		(63)
Interest expense		1,732		1,991		—		3,723
Equity method investment (loss)		—		—		236		236
Corporate — general and administrative		—		—		2,977		2,977
Segment EBITDA	$	26,143	$	5,689	$	(1,172)	$	30,660

Presented below are our Electric and Coal Operations assets and capital expenditures for the periods presented below (in thousands):

					Corporate and Other
Other Reconciliations:	Electric Operations		Coal Operations (1)		and Eliminations		Consolidated
Assets at March 31, 2026	$	254,332	$	184,915	$	9,385	$	448,632
Assets at December 31, 2025	$	256,529	$	148,957	$	2,567	$	408,053
Capital Expenditures for the period ending March 31, 2026	$	3,889	$	3,792	$	—	$	7,681

(1) Coal Operations assets include cash held on behalf of the consolidated group. Cash held by our Coal Operations includes funds transferred from Electric Operations and Hallador for centralized treasury management purposes. This presentation is not reflective of Coal Operations earnings capacity; refer to the condensed consolidated balance sheets and the “Liquidity of Hallador” in the “Material Changes in Financial Condition” section of “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a complete view of the Company's cash position.

Cash and cash equivalents included in Coal Operations assets were $36.3 million and $9.4 million as of March 31, 2026 and December 31, 2025, respectively.

Presented below are our Electric and Coal Operations assets and capital expenditures for the periods presented below (in thousands):

					Corporate and Other
Other Reconciliations:	Electric Operations		Coal Operations (1)		and Eliminations		Consolidated
Assets at March 31, 2025	$	222,865	$	141,023	$	2,209	$	366,097
Assets at December 31, 2024	$	220,477	$	144,519	$	4,124	$	369,120
Capital Expenditures for the period ending March 31, 2025	$	5,449	$	6,244	$	—	$	11,693

Cash and cash equivalents included in Coal Operations assets were $5.6 million and $6.9 million as of March 31, 2025 and December 31, 2024, respectively.