Warrior Met Coal(US:HCC)2022-08-04 02:35Financial Data and Key Metrics Changes - The company recorded a net income of $297 million or $5.74 per diluted share for Q2 2022, compared to a net loss of $5 million or $0.09 per diluted share in the same quarter last year [30] - Adjusted EBITDA reached an all-time high of $431 million in Q2 2022, up from $65 million in the same quarter last year, driven by a 227% increase in average net selling prices [31] - Total revenues were $625 million in Q2 2022, a 175% increase from $227 million in the same quarter last year [32] Business Line Data and Key Metrics Changes - Sales volume in Q2 2022 was 1.5 million short tons, down from 1.8 million short tons in the same quarter last year, primarily due to shipment delays [13] - Production volume increased to 1.7 million short tons in Q2 2022, compared to 1.2 million short tons in the same quarter last year [16] Market Data and Key Metrics Changes - The PLV FOB Australia index price averaged $404 per short ton in Q2 2022, up 225% compared to the same quarter last year [33] - Global pig iron production decreased by 5.5% in the first half of 2022, with China experiencing a 4.7% decrease [12] Company Strategy and Development Direction - The company announced the relaunch of the development of its Blue Creek reserves, which is seen as a transformational opportunity [21][22] - A special dividend of $0.50 per share was paid in Q2 2022, with an additional special dividend of $0.80 per share announced for Q3 2022 [23] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation and supply chain issues are expected to impact operations for the remainder of the year, with cash costs projected to remain high due to variable components [20][44] - The company remains cautious about the economic environment, particularly regarding steel demand and potential recessionary pressures [46][47] Other Important Information - The company experienced significant shipment delays due to port maintenance and rail transportation issues, which affected sales volume [14][15] - Cash cost of sales per short ton was approximately $123 in Q2 2022, up from $83 in the same quarter last year, driven by higher transportation and royalty costs [36] Q&A Session Summary Question: Cost guidance for the second half of the year - Management indicated that cash costs for Q3 would be similar to Q2 due to a lag in transportation costs and inflationary pressures [52][54] Question: Special dividends in the second half of 2022 - Management stated that the possibility of continuing special dividends depends on market conditions and cash generation [56] Question: Labor situation and hiring - Management confirmed that they are continuing to hire, although finding skilled labor remains challenging [58][60] Question: Thermal coal pricing versus met coal pricing - Management is exploring opportunities to sell into the thermal coal market, noting the quality of their met coal may allow for blending [61][73] Question: Transportation issues and inventory levels - Management expressed intent to reduce inventory levels and improve shipment performance as rail and port conditions are expected to improve [65][66]