Warrior Met Coal(US:HCC)2025-02-13 21:44Commodity Price Risk - The company has exposure to commodity price risk on coal sales, with pricing terms typically set for three months and volume terms ranging from one to three years [517]. - The company is subject to fluctuations in market pricing due to the short-term nature of sales commitments in the steelmaking coal market [517]. Natural Gas Hedging - As of December 31, 2024, the company had 5.5 million British thermal unit gas contracts outstanding to hedge against natural gas price fluctuations [518]. Credit Losses - The company has no allowances for credit losses associated with trade accounts receivables for the years ended December 31, 2024 and 2023 [520]. Interest Rates and Debt - The company's Notes have a fixed interest rate of 7.875% per annum, payable semi-annually [521]. - The ABL Facility bears an interest rate equal to SOFR plus a credit adjustment spread, currently ranging from 11 bps to 43 bps [522]. - A 100 basis point increase in interest rates would increase the annual interest expense under the ABL Facility by approximately $1.1 million, assuming $113.5 million is outstanding [522]. - The company has substantial indebtedness and debt service requirements, which could impact financial flexibility [15]. Geopolitical and Market Conditions - The company is monitoring geopolitical events, including the Russia-Ukraine war, which may affect operations and market conditions [15]. Inflationary Pressures - The company is experiencing inflationary pressures on supplies used in production, including belt structure, roof bolts, cable, magnetite, and rock dust [523]. - Rising costs due to inflation are impacting labor and parts for repair and rebuild equipment [523]. - The company is implementing strategies to mitigate inflation's impact, such as placing purchase orders earlier [523]. - Utilizing short-term contracts is part of the company's strategy to manage inflation [523]. - The company is leveraging supplier relationships to counteract rising costs [523].