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Signature Sponsor
October 31, 2024 - Warrior Met Coal, Inc. (NYSE: HCC) (“Warrior” or the “Company”) has announced results for the third quarter of 2024. Warrior is the leading dedicated U.S.-based producer and exporter of high-quality steelmaking coal for the global steel industry. Warrior reported net income for the third quarter of 2024 of $41.8 million, or $0.80 per diluted share, a decrease from net income of $85.4 million, or $1.64 per diluted share, in the third quarter of 2023. Adjusted net income per share for the third quarter of 2024 was $0.80 per diluted share compared to adjusted net income per share of $1.85 per diluted share in the third quarter of 2023. The Company reported Adjusted EBITDA of $78.5 million in the third quarter of 2024 compared to Adjusted EBITDA of $145.8 million in the third quarter of 2023. Third Quarter Highlights “During the third quarter, high-quality steelmaking coal prices reached a three-year low primarily driven by a confluence of weaker demand, excess Chinese steel exports into our customers' markets, and ample supply of steelmaking coals,” commented Walt Scheller, CEO of Warrior. “We believe that current prices are below the global cost curve and are not sustainable. While we wait for market conditions to improve, we are carefully managing spot opportunities and are strategically exercising patience with certain geographies. Despite the external factors impacting our results, the third quarter represented a significant and positive milestone for Warrior as we produced the first development tons from our world-class Blue Creek growth project, on time and within budget.” “While we expect steelmaking coal prices to improve slightly in the fourth quarter, we believe the pricing environment will remain under pressure due to the persistent weakness in the global steel markets and delayed infrastructure spending in India. With our world-class asset base, highly flexible cost structure, and a high-performing workforce, we are well-positioned to capitalize on improved global steel demand when the market turns, while moving forward with our highly disciplined approach to completing the Blue Creek project on time and within budget,” Mr. Scheller concluded. With the addition of Blue Creek, Warrior expects to increase its annual High Vol A production by 4.8 million short tons; enhance its already advantageous position on the global cost curve; drive its cash costs further into the first quartile globally; improve its profitability and cash flow generation; and cement its position as a leading pure play steelmaking coal producer. Operating Results Sales volume in the third quarter of 2024 was 1.9 million short tons compared to 2.3 million short tons in the third quarter of 2023, representing an 17.5% decrease. This 17.5% decrease in sales volume was driven by us being selective with spot sales and exercising patience while we wait for market conditions to improve. The Company produced 1.9 million short tons of steelmaking coal in the third quarter of 2024, compared to 2.0 million short tons in the third quarter of 2023, representing a 3.8% decrease. The timing of a scheduled longwall move in the third quarter slipped to early fourth quarter. Inventory levels increased to 915 thousand short tons as of September 30, 2024 from 895 thousand short tons as of June 30, 2024. Additional Financial Results Total revenues were $327.7 million for the third quarter of 2024, which compares to total revenues of $423.5 million in the third quarter of 2023. The average net selling price of the Company's steelmaking coal decreased 6.9% from $184.71 per short ton in the third quarter of 2023 to $171.92 per short ton in the third quarter of 2024. Our average gross selling price realization was approximately 93% of the Platts Premium Low Vol FOB Australian index price for the third quarter of 2024. Cost of sales for the third quarter of 2024 were $231.6 million compared to $260.4 million for the third quarter of 2023. Cash cost of sales (free-on-board port) for the third quarter of 2024 were $229.7 million, or 71.8% of mining revenues, compared to $258.8 million, or 62.1% of mining revenues in the same period of 2023. Cash cost of sales (free-on-board port) per short ton increased to $123.45 in the third quarter of 2024 from $114.66 in the third quarter of 2023, driven primarily by lower sales volumes of 17.5% offset partially by an increase in production costs driven by increased headcount and supply costs. Selling, general and administrative expenses for the third quarter of 2024 were $11.4 million, or 3.5% of total revenues and were slightly higher than the same period last year of 2.6% due to higher employee-related costs. Depreciation and depletion expenses for the third quarter of 2024 were $36.6 million, or 11.2% of total revenues and were slightly higher than the same period last year of 8.0% of total revenues primarily due to depreciation expense recognized on additional assets placed into service. Warrior achieved net interest income of $7.3 million during the third quarter of 2024, which is consistent with the prior year. Interest income earned on our cash investments continues to exceed interest expense on our outstanding notes and equipment leases. Income tax expense was $4.6 million in the third quarter of 2024 on pre-tax income of $46.4 million primarily driven by an income tax benefit for foreign-derived intangible income and depletion expense. This compares to an income tax expense of $16.8 million on income of $102.2 million in the third quarter of 2023. Cash Flow and Liquidity The Company generated cash flows of $62.2 million from operating activities in the third quarter of 2024, compared to $138.6 million in the third quarter of 2023. Capital expenditures and mine development for the third quarter of 2024 were $122.8 million compared to $112.3 million in the third quarter of 2023, primarily reflecting the continued development of the Blue Creek growth project. Free cash flows in the third quarter of 2024 were negative $60.6 million compared to free cash flows of $26.2 million in the third quarter of 2023. Net working capital, excluding cash, for the third quarter of 2024 decreased by $4.4 million from the second quarter of 2024, primarily reflecting lower sales volumes, lower steelmaking coal prices, lower net accounts payable and accrued expenses and higher inventories. Cash flows used in financing activities for the third quarter of 2024 were $8.1 million, primarily due to the payment of a regular quarterly dividend of $4.2 million and principal repayments of financing lease obligations of $3.8 million. The Company’s total liquidity as of September 30, 2024 was $746.4 million, consisting of cash and cash equivalents of $583.2 million, long-term investments of $49.7 million and available liquidity under its ABL Facility of $113.5 million, net of outstanding letters of credit of $2.5 million. Capital Allocation On October 25, 2024, our Board declared a regular quarterly cash dividend of $0.08 per share, totaling approximately $4.2 million, which will be paid on November 12, 2024, to stockholders of record as of the close of business on November 5, 2024. Company Outlook The Company re-affirmed its guidance for the full year 2024. The guidance is subject to many risks that may impact performance, such as market conditions in the steel and steelmaking coal industries and overall global economic and competitive conditions, all as more fully described under Forward-Looking Statements. Key factors that may affect outlook include: The Company's guidance for its capital expenditures consists of sustaining capital spending of approximately $100 - $110 million, including regulatory and gas requirements, and capital spending of $325 - $375 million for the development of the Blue Creek reserves and $10 - $15 million for the final 4 North bunker construction. The Company's production guidance contains approximately 200,000 short tons of High Vol A steelmaking coal in the second half of 2024 from the continuous miner units from the Blue Creek reserves, which are expected to be sold in the second half of 2025 after the preparation plant comes online. The Company does not provide reconciliations of its outlook for cash cost of sales (free-on-board port) to cost of sales in reliance on the unreasonable efforts exception provided for under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable, without unreasonable efforts, to forecast certain items required to develop the meaningful comparable Generally Accepted Accounting Principles ("GAAP") cost of sales. These items typically include non-cash asset retirement obligation accretion expenses, mine idling expenses and other non-recurring indirect mining expenses that are difficult to predict in advance in order to include in a GAAP estimate. The unavailable information could have a significant impact on the Company's reported financial results. Use of Non-GAAP Financial Measures This release contains the use of certain non-GAAP financial measures. These non-GAAP financial measures are provided as supplemental information for financial measures prepared in accordance with GAAP. Management believes that these non-GAAP financial measures provide additional insights into the performance of the Company, and they reflect how management analyzes Company performance and compares that performance against other companies. These non-GAAP financial measures may not be comparable to other similarly titled measures used by other entities. The definition of these non-GAAP financial measures and a reconciliation of non-GAAP to GAAP financial measures is provided in the financial tables section of this release. Conference Call The Company will hold a conference call to discuss its third quarter 2024 results today, October 30, 2024, at 4:30 p.m. ET. To listen to the event, live or access an archived recording, please visit http://investors.warriormetcoal.com. Analysts and investors who would like to participate in the conference call should dial 1-844-340-9047 (domestic) or 1-412-858-5206 (international) 10 minutes prior to the start time and reference the Warrior Met Coal conference call. Telephone playback will also be available from 6:30 p.m. ET on October 30, 2024 until 6:30 p.m. ET on November 6, 2024. The replay will be available by calling: 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and entering passcode 6016502. About Warrior Warrior is a U.S.-based, environmentally and socially minded supplier to the global steel industry. It 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. Warrior is a large-scale, low-cost producer and exporter of premium quality met coal, also known as hard-coking coal (HCC), operating highly efficient longwall operations in its underground mines based in Alabama. The HCC that Warrior produces from the Blue Creek coal seam contains very low sulfur and has strong coking properties. The premium nature of Warrior’s HCC makes it ideally suited as a base feed coal for steel makers. For more information, please visit www.warriormetcoal.com. To see the full results with financial figures included, click here. |
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