Warrior Met Coal(HCC) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Warrior Met Coal experienced a significant decline in Q2 2025 net income and Adjusted EBITDA due to weaker steelmaking coal markets, despite achieving first commercial sales from Blue Creek mine Second Quarter 2025 Overview Q2 2025 saw a sharp decline in net income and Adjusted EBITDA due to weaker coal prices, offset by early Blue Creek mine sales Q2 2025 vs Q2 2024 Financial Overview | Metric | Q2 2025 | Q2 2024 | Change | | :---------------- | :------ | :------ | :----- | | Net Income | $5.6M | $70.7M | -92.1% | | Diluted EPS | $0.11 | $1.35 | -91.8% | | Adjusted EBITDA | $53.6M | $115.9M | -53.8% | - Average index price for premium low-vol steelmaking coal was 24% lower year-over-year[3] - First commercial sales of Blue Creek steelmaking coal were achieved ahead of schedule[1][4] Key Operational and Financial Highlights Blue Creek mine achieved first commercial sales and accelerated longwall startup, contributing to increased volumes and reduced cash costs - Achieved first commercial sales of 239 thousand short tons of steelmaking coal from the Blue Creek mine ahead of schedule[4] - Produced 348 thousand short tons from continuous miner development on the first longwall panel at Blue Creek[4] - Announced the acceleration of the longwall startup at Blue Creek to early first quarter of 2026[4] Q2 2025 Operational Highlights | Metric | Value | YoY Change | | :-------------------------------- | :-------------------- | :--------- | | Total Sales & Production Volumes | 6% increase | +6% | | Cash Cost of Sales (FOB port) per short ton | $101.17 | -18% | | Cash Provided by Operating Activities | $37.5 million | N/A | CEO Commentary CEO highlighted strong operations and positive cash flows despite market headwinds, with Blue Creek sales marking a key revenue milestone - Warrior delivered strong operational results, maintained positive cash margins, and generated positive operating cash flows despite headwinds in the global steelmaking industry[5] - The first commercial sales from the Blue Creek mine represent a critical inflection point, marking the beginning of a transition from capital investment to revenue generation[5] - The Blue Creek mine's inherently low-cost structure reinforces confidence in its long-term value and role in driving sustainable shareholder returns[5] Company Information Warrior Met Coal is a leading U.S. producer and exporter of high-quality steelmaking coal for the global steel industry About Warrior Met Coal Warrior Met Coal is a premier U.S. producer and exporter of high-quality non-thermal metallurgical coal for global steel production - Warrior is the leading dedicated U.S.-based producer and exporter of high-quality steelmaking coal for the global steel industry[2] - The company is dedicated entirely to mining non-thermal metallurgical (met) steelmaking coal used as a critical component of steel production by metal manufacturers in Europe, South America and Asia[25] - Warrior produces premium quality met coal (hard-coking coal, HCC) from the Blue Creek coal seam, which contains very low sulfur and has strong coking properties, making it ideally suited as a base feed coal for steel makers[25] Second Quarter 2025 Financial and Operating Results Q2 2025 results show increased volumes from Blue Creek, but lower revenues and net income due to weaker coal prices Operating Results Q2 2025 saw a 6% increase in sales and production volumes year-over-year, primarily driven by the Blue Creek mine Q2 2025 Operating Volumes | Metric | Q2 2025 (k short tons) | Q2 2024 (k short tons) | YoY Change | | :---------------- | :--------------------- | :--------------------- | :--------- | | Tons Sold | 2,219 | 2,098 | +6% | | Tons Produced | 2,308 | 2,172 | +6% | - The increase in sales and production volumes was primarily attributable to Blue Creek, which produced 348 thousand short tons[6][7] - Inventory levels remained consistent at 1.2 million short tons as of June 30, 2025, compared to March 31, 2025[7] Financial Performance Total revenues and net income declined significantly in Q2 2025 due to lower selling prices, despite cost control efforts Revenues and Selling Prices Total revenues decreased by 25% in Q2 2025, driven by a 30.1% drop in average net selling price per short ton Q2 2025 Revenues and Selling Prices | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Total Revenues | $297.5M | $396.5M | -25.0% | | Average Net Selling Price per Short Ton | $130.01 | $186.09 | -30.1% | - The average gross selling price realization was approximately 80% of the Platts Premium Low Vol FOB Australian index price for Q2 2025, primarily driven by a higher sales mix of high-vol A steelmaking coal and a lower price index relativity to premium low-vol[8] Costs and Expenses Cost of sales decreased, with cash cost of sales per short ton falling 18% due to lower prices and Blue Creek's low-cost structure Q2 2025 Costs and Expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Cost of Sales | $226.4M | $261.3M | -13.3% | | Cash Cost of Sales (FOB port) per Short Ton | $101.17 | $123.78 | -18.2% | | Selling, General and Administrative Expenses | $11.9M | $15.5M | -23.2% | | Depreciation and Depletion | $43.3M | $38.2M | +13.4% | - The decrease in cash cost of sales per short ton was driven primarily by lower steelmaking coal prices and its effect on Warrior's variable cost structure (wages, transportation, royalties), combined with disciplined cost control, operational efficiency, and the sales mix of Blue Creek coal and its inherent lower cost structure[9] - Depreciation and depletion expenses increased primarily due to depreciation expense recognized on additional assets placed into service at Blue Creek and higher sales volumes[11] Net Income and EPS Net income and diluted EPS saw substantial declines in Q2 2025, primarily due to weaker market conditions and lower selling prices Q2 2025 Net Income and EPS | Metric | Q2 2025 | Q2 2024 | YoY Change | | :---------------- | :------ | :------ | :--------- | | Net Income | $5.6M | $70.7M | -92.1% | | Diluted EPS | $0.11 | $1.35 | -91.8% | Cash Flow and Liquidity Operating cash flows decreased significantly, resulting in negative free cash flow, while total liquidity remained robust Q2 2025 Cash Flow Summary | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Net Cash Provided by Operating Activities | $37.5M | $147.0M | -74.5% | | Capital Expenditures and Mine Development | $94.3M | $121.6M | -22.4% | | Free Cash Flow | -$56.7M | $25.4M | N/A (negative shift) | - Capital expenditures for Q2 2025 included $51.8 million for the continued development of Blue Creek, bringing the project-to-date total to $823.5 million[13] - Total liquidity as of June 30, 2025, was $545.0 million, consisting of cash and cash equivalents ($383.3M), short-term investments ($38.1M), long-term investments ($10.1M), and available liquidity under its ABL Facility ($113.5M)[15] Capital Allocation Warrior's Board declared a regular quarterly cash dividend of $0.08 per share, payable in August 2025 Dividends A regular quarterly cash dividend of $0.08 per share was declared on July 29, 2025, payable in August - A regular quarterly cash dividend of $0.08 per share was declared on July 29, 2025[16] - The dividend is payable on August 15, 2025, to stockholders of record as of August 8, 2025[16] Company Outlook Warrior Met Coal updated its full-year 2025 guidance, projecting coal sales and production volumes, and capital expenditures Full Year 2025 Guidance Full-year 2025 guidance includes projected coal sales of 8.8-9.5 million short tons and significant capital expenditures for Blue Creek Full Year 2025 Guidance | Metric | Range | | :---------------------------------- | :-------------------------- | | Coal Sales | 8.8 - 9.5 million short tons | | Coal Production | 8.3 - 9.1 million short tons | | Cash Cost of Sales (FOB port) | $110 - $120 per short ton | | Capital Expenditures for Sustaining Existing Mines | $90 - $100 million | | Capital Expenditures for Blue Creek Project | $225 - $250 million | | Mine Development Costs for Blue Creek Project | $85 - $100 million | | Depreciation and Depletion | $185 - $210 million | | Selling, General and Administrative Expenses | $65 - $75 million | | Interest Expense | $10 - $15 million | | Interest Income | $15 - $20 million | - The 2025 production and sales guidance includes approximately 1.0 million short tons of High Vol A steelmaking coal from the Blue Creek continuous miner units, expected to be sold primarily in the second half of 2025[19] Key Factors Affecting Outlook The 2025 outlook is influenced by longwall moves, HCC index pricing, sales geography, trade policies, and inflationary pressures - Key factors that may affect the full year 2025 outlook include: one longwall move in Q2 and three planned longwall moves before year-end (two in Q3 and one in Q4), HCC index pricing, geography of sales and freight rates, trade and tariff policies, exclusion of other non-recurring costs, new labor contract, and inflationary pressures[22] - Capital expenditures consist of approximately $90-$100 million for sustaining existing mines and $225-$250 million for the development of the Blue Creek reserves[20] Non-GAAP Financial Measures This section explains and reconciles non-GAAP financial measures like Adjusted EBITDA and free cash flow to GAAP equivalents Explanation of Non-GAAP Measures Non-GAAP measures provide supplemental insights into performance and aid comparisons, but may not be comparable across entities - Non-GAAP financial measures are provided as supplemental information for financial measures prepared in accordance with GAAP, offering additional insights into company performance and aiding in comparisons against other companies[22][23] - The company does not provide reconciliations of its outlook for cash cost of sales (free-on-board port) to GAAP cost of sales due to the unreasonable efforts exception, as certain non-cash and non-recurring items are difficult to predict[21] Reconciliation of Cash Cost of Sales (Free-on-Board Port) to GAAP Cost of Sales This reconciliation details the adjustments from GAAP cost of sales to arrive at the non-GAAP cash cost of sales (FOB port) Reconciliation of Cash Cost of Sales (FOB Port) to GAAP Cost of Sales (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Cost of Sales (GAAP) | $226,412 | $261,305 | $472,147 | $546,892 | | Asset Retirement Obligation Accretion | (966) | (703) | (1,931) | (1,405) | | Stock Compensation Expense | (942) | (912) | (1,684) | (1,625) | | Cash Cost of Sales (FOB Port) (Non-GAAP) | $224,504 | $259,690 | $468,532 | $543,862 | - Cash cost of sales (free-on-board port) is a non-GAAP measure that includes items such as freight, royalties, labor, fuel, and other production and sales cost items, adjusted for certain GAAP classifications[34] Reconciliation of Adjusted EBITDA to GAAP Net Income Adjusted EBITDA is reconciled from net income by adding back non-cash and non-operating items, showing a significant Q2 2025 decline Reconciliation of Adjusted EBITDA to GAAP Net Income (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net Income (Loss) | $5,606 | $70,711 | $(2,562) | $207,700 | | Interest Income, Net | (2,195) | (8,327) | (5,380) | (15,360) | | Income Tax Expense (Benefit) | 4,310 | 8,519 | (1,720) | 27,641 | | Depreciation and Depletion | 43,255 | 38,150 | 88,532 | 78,173 | | Asset Retirement Obligation Accretion | 1,331 | 1,298 | 2,662 | 2,595 | | Stock Compensation Expense | 2,045 | 5,040 | 10,098 | 14,187 | | Other Non-Cash Accretion | 495 | 451 | 989 | 902 | | Non-Cash Mark-to-Market (Gain) Loss on Gas Hedges | (1,303) | — | 415 | — | | Business Interruption | 24 | 101 | 22 | 302 | | Adjusted EBITDA (Non-GAAP) | $53,568 | $115,943 | $93,056 | $316,140 | - Adjusted EBITDA margin decreased to 18.0% in Q2 2025 from 29.2% in Q2 2024[36] - Adjusted EBITDA per short ton decreased to $24.14 in Q2 2025 from $55.26 in Q2 2024[36] Reconciliation of Adjusted Net Income to GAAP Net Income Adjusted net income is derived from GAAP net income by adjusting for business interruption expenses, net of tax Reconciliation of Adjusted Net Income to GAAP Net Income (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net Income (Loss) | $5,606 | $70,711 | $(2,562) | $207,700 | | Business Interruption, Net of Tax | 14 | 89 | 13 | 267 | | Adjusted Net Income (Loss) (Non-GAAP) | $5,620 | $70,800 | $(2,549) | $207,967 | - Adjusted net income (loss) per share—diluted was $0.11 in Q2 2025, compared to $1.35 in Q2 2024[37] Reconciliation of Free Cash Flow to GAAP Net Cash Provided by Operating Activities Free cash flow, a non-GAAP measure, is calculated by subtracting purchases of property, plant and equipment and mine development costs from net cash provided by operating activities Reconciliation of Free Cash Flow (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net Cash Provided by Operating Activities | $37,546 | $146,975 | $48,463 | $251,033 | | Purchases of Property, Plant and Equipment and Mine Development Costs | (94,251) | (121,619) | (173,598) | (223,309) | | Free Cash Flow (Non-GAAP) | $(56,705) | $25,356 | $(125,135) | $27,724 | - Free cash flow conversion was -105.9% in Q2 2025, compared to 21.9% in Q2 2024[40] Condensed Financial Statements This section presents the condensed statements of operations, cash flows, and balance sheets for Q2 2025 Condensed Statements of Operations The condensed statements of operations show total revenues of $297.5 million for Q2 2025, down from $396.5 million in Q2 2024 Condensed Statements of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Total Revenues | $297,523 | $396,524 | $597,466 | $900,036 | | Operating Income (Loss) | $7,723 | $70,904 | $(9,661) | $219,982 | | Net Income (Loss) | $5,606 | $70,711 | $(2,562) | $207,700 | | Diluted Net Income (Loss) Per Share | $0.11 | $1.35 | $(0.05) | $3.97 | Quarterly Supplemental Financial Data Supplemental data highlights increased volumes but decreased average net selling price and cash margin per ton in Q2 2025 Quarterly Supplemental Financial Data | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Tons Sold (k short tons) | 2,219 | 2,098 | 4,391 | 4,227 | | Tons Produced (k short tons) | 2,308 | 2,172 | 4,562 | 4,223 | | Average Net Selling Price ($/short ton) | $130.01 | $186.09 | $132.87 | $210.18 | | Cash Cost of Sales (FOB port) per Short Ton ($/short ton) | $101.17 | $123.78 | $106.70 | $128.66 | | Cash Margin per Ton ($/short ton) | $28.84 | $62.31 | $26.17 | $81.52 | Condensed Statements of Cash Flows Net cash provided by operating activities significantly decreased, leading to a net decrease in cash for Q2 2025 Condensed Statements of Cash Flows (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net Cash Provided by Operating Activities | $37,546 | $146,975 | $48,463 | $251,033 | | Net Cash Used in Investing Activities | $(94,332) | $(121,619) | $(172,097) | $(223,309) | | Net Cash (Used in) Provided by Financing Activities | $(14,819) | $(10,191) | $15,490 | $(56,898) | | Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | $(71,605) | $15,165 | $(108,144) | $(29,174) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $390,988 | $709,023 | $390,988 | $709,023 | Condensed Balance Sheets Total assets and liabilities increased as of June 30, 2025, primarily due to property, plant, and equipment additions Condensed Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total Assets | $2,645,402 | $2,591,516 | | Total Liabilities | $565,117 | $500,699 | | Total Stockholders' Equity | $2,080,285 | $2,090,817 | | Cash and Cash Equivalents | $383,251 | $491,547 | | Property, Plant and Equipment, Net | $1,675,295 | $1,549,470 | Additional Information This section provides details on the conference call, forward-looking statements, and company contact information Conference Call Details Warrior Met Coal held a conference call on August 6, 2025, to discuss its second quarter 2025 financial results - A conference call to discuss second quarter 2025 results was held on August 6, 2025, at 4:30 p.m. ET[24] - Access to the live event, archived recording, and telephone playback details were provided for investors and analysts[24] Forward-Looking Statements The press release contains forward-looking statements subject to various risks and uncertainties that could alter actual results - Forward-looking statements include those regarding 2025 guidance, sales and production growth, ability to maintain cost structure, demand, pricing trends, management of liquidity, cash flows, expenses, expected capital expenditures, and the development of the Blue Creek project[26] - These statements are subject to risks, uncertainties, and other factors, many outside the Company's control, that could cause actual results to differ materially, including fluctuations in coal pricing/demand, trade policies, inflation, geopolitical events, operational issues, and regulatory changes[26][27] - The Company does not undertake any obligation to update or revise any forward-looking statement, except as required by law[28] Contacts Contact information for investor relations and media inquiries is provided for further communication - For Investors: Dale W. Boyles, 205-554-6129, dale.boyles@warriormetcoal.com[29] - For Media: D'Andre Wright, 205-554-6131, dandre.wright@warriormetcoal.com[29]