Warrior Met Coal(HCC) - 2025 Q4 - Annual Report

Commodity Price Risk - The company is exposed to commodity price risk on coal sales, with pricing terms typically set for three months and volume terms ranging from one to three years [521]. Natural Gas Hedging - As of December 31, 2025, the company had no outstanding natural gas swap contracts, which are used to hedge against fluctuations in natural gas prices [522]. Interest Rate Risk - The company has a fixed interest rate of 7.875% per annum on its Notes, payable semi-annually [525]. - The Amended ABL Facility's interest rate is tied to SOFR, with margins currently ranging from 150 bps to 200 bps, exposing the company to interest rate risk [526]. - A 100 basis point change in interest rates would affect the annual interest expense under the Amended ABL Facility by approximately $1.4 million, assuming $140.5 million is outstanding [526]. Credit Losses - The company has not recorded any allowances for credit losses associated with trade accounts receivables for the years ended December 31, 2025, and 2024 [524]. Supply Price Risk Management - The company manages price risk for supplies like diesel fuel and steel through strategic sourcing contracts [523]. Regulatory and Geopolitical Risks - The company is subject to regulatory requirements that could impact operations, including potential mine closures by regulatory agencies [10]. - The company faces risks related to geopolitical events, such as the Russia-Ukraine war, which could affect operations [10]. Financial Flexibility and Indebtedness - The company has substantial indebtedness and must comply with covenants in its credit facilities, impacting financial flexibility [10]. Inflationary Pressures - The company is experiencing inflationary pressures on supplies used in production, including belt structure, roof bolts, cable, magnetite, and rock dust [527]. - Rising costs due to inflation are impacting labor and parts for repair and rebuild equipment [527]. - The company is implementing strategies to mitigate inflation's impact, such as placing purchase orders earlier [527]. - Utilizing short-term contracts is part of the company's strategy to manage inflation [527]. - The company is leveraging supplier relationships to help counteract rising costs [527].