Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q3 2024 Earnings Presentation
38 slides from Warrior Met Coal's earnings presentation, Oct 30, 2024
Slide 1: Third Quarter Results
Third Quarter Results October 30, 2024
Slide 2: Forward-looking statements
Wa rri o r Page 1 Forward-looking statements These slides contain, and the officers and representatives of Warrior Met Coal, Inc. (the “Company”, “WMC” or “Warrior”) may from time to time make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, an
Slide 3: Pure Play Steelmaking Coal Producer and 100% Exporter
Wa rri o r Page 2 Pure Play Steelmaking Coal Producer and 100% Exporter Warrior Alabama-based exporter of premium Low-Vol HCC and premium High Vol A HCC to the global steel industry Variable cost structure that adjusts with benchmark HCC prices, allowing Warrior to remain flexible and adapt to c
Slide 4: Third Quarter 2024 Highlights
Wa rri o r Page 3 Third Quarter 2024 Highlights Commenced continuous miner development of the first longwall panel at 1 the world class Blue Creek growth project producing the first development tons of 39 thousand short tons (“St”). Completed the commissioning and installation of the service cage,
Slide 5: Key Metrics for Three Months Ended September 30, 2024 vs. 2023
Wa rri o r Page 4 Key Metrics for Three Months Ended September 30, 2024 vs. 2023 For the three months ended September 30, 2024 For the three months ended September 30, 2023 % Change Tons produced (in 000s St) 1,917 Tons produced (in 000s St) 1,993 (4%) Tons sold (in 000s St) 1,861 Tons sold (in 000s
Slide 6: Key Metrics for Nine Months Ended September 30, 2024 vs. 2023
Wa rri o r Page 5 Key Metrics for Nine Months Ended September 30, 2024 vs. 2023 For the nine months ended September 30, 2024 For the nine months ended September 30, 2023 % Change Tons produced (in 000s St) 6,140 Tons produced (in 000s St) 5,676 8% Tons sold (in 000s St) 6,088 Tons sold (in 000s St)
Slide 7: Customer Revenue by Geography Provides Significant Logistical Cost Advantage
Wa rri o r Page 6 Customer Revenue by Geography Provides Significant Logistical Cost Advantage to the Seaborne Market Delivered cost advantage into Europe based on ~2 Customer revenue by geography(1) week transport time vs. ~5 weeks from Australia Q3 2024 Q3 2023 1% 36% 44% 41% 45% ~2 weeks 15% 19%
Slide 8: Generated Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
Wa rri o r Page 7 Generated Significant Free Cash Flow* on Strong Conversion of Adjusted EBITDA* Margins(1) FCF 18% 38% 1% 9% (77%) 5% Conversion(2) Since 2022, FCF Conversion (2) has trended lower driven by the significant capital expenditures in 50% developing the Blue Creek mine which is expected
Slide 9: Leverage and Liquidity Ratio
Wa rri o r Page 8 Leverage and Liquidity Ratio Financial Metrics ($ in millions except ratios) Leverage (trailing twelve months ended September 30, 2024) Adjusted EBITDA* $ 558.3 Consolidated Net Cash* (1) $ (412.8) (2) Net Leverage Ratio (0.74x) Gross Leverage Ratio (3) 0.31x Liquidity (as of Septe
Slide 10: Breaking Down Warrior's 2024 Capital Expenditures
W ar r ior Page 9 Breaking Down Warrior’s 2024 Capital Expenditures 2024 Capex Guidance 2024 Capex Guidance Detail versus Actual ($ in millions) Low High ($ in millions) Sustaining Guidance QTD Actuals YTD Actuals Sales (Mst) 7.4 8.2 High End Q3 2024 Q3 2024 Production (Mst) 7.4 8.0 Mines $100 $19 $
Slide 11: Strategic Capital Allocation: Balancing Capital Investments with Near-Term Returns
Wa rri o r Page 10 Strategic Capital Allocation: Balancing Capital Investments for Medium to Long-Term Growth with Near-Term Returns to Stockholders Free Cash Flow* For the For the development For returns For M&A existing business of Blue Creek to stockholders • Sustaining capital • Development capi
Slide 12: Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value
W ar r ior Page 11 Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value Proven Track Record of Leveraging Free Cash $ 342 Flow* to Return Excess Cash to Stockholders… 38.0 12.5 $ 607 YTD 2017 2018 2019 2020(1) 2021(2) 2022(3) 2023 2024 Dividends $ 458 $11.36 $6.73 $4.61
Slide 13: 2024 Full Year Guidance
Wa rri o r Page 12 2024 Full Year Guidance 2024 Guidance Coal Sales 7.4 – 8.2 Mst Coal Production 7.4 – 8.0 Mst Cash Cost of Sales $125 - $135 per St (Free-on-Board Port)* Capital Expenditures for $100 - $110mm Existing Mines Blue Creek Project and Other $335 - $390mm Discretionary Capital Mine Deve
Slide 14: Blue Creek Update
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Slide 15: Unique Growth Opportunity in an Environmentally-Sustainable World
W ar r ior Met Coal Page 14 Unique Growth Opportunity in an Environmentally- Sustainable World In May 2022, Warrior relaunched the development of its Blue Creek reserves, which provides a high-return growth opportunity via one of the last remaining large-scale, untapped premium HVA reserves in the
Slide 16: World-Class Blue Creek Project with High-Return for Growth Under Development
W ar r ior Page 15 World-Class Blue Creek Project with High-Return for Growth Under Development One of the last remaining untapped premium quality High Vol A Significant Growth Potential coal reserves in the U.S., that should achieve premium prices 17.6 Once developed, expected to provide a port
Slide 17: Blue Creek's Expected Production Ramp During the Development of the Mine
Wa rri o r Page 16 Blue Creek’s Expected Production Ramp During the Development of the Mine Blue Creek Timing Blue Creek Production Ramp Continuous Miner started in Q3 2024 Blue Creek’s production Longwall expected start date Q2 2026 began in the third quarter of 2024 with continuous miner 4.8(1
Slide 18: Where We Are... and Where We Are Going
Wa rri o r Page 17 Where We Are... and Where We Are Going Our sales profile is undergoing a transition phase and is expected to be impacted in three key areas: Increase in Volume Shift in Geography Change in Quality Split With the addition of Blue We expect the Pacific Basin to quickly Warrior
Slide 19: Blue Creek Drives Warrior's Cash Costs Further into the 1st Quartile Globally
W ar r ior Met Coal Page 18 Blue Creek Drives Warrior’s Cash Costs Further into the 1st Quartile Globally… Seaborne Coking Coal Cash Cost by Mine (FOB) 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Average Cash Cost Warrior Met Coal1 Total Cash Cost ($/mt) Average Pro Forma Cash Cost Blue Cree
Slide 20: Enhances Warrior's Profitability and Cash Flow Generation
W ar r ior Met Coal Page 19 …and Enhances Warrior’s Profitability and Cash Flow Generation Illustrative Impact to Adj. EBITDA* and Adj. EBITDA Margin* Illustrative Impact to Free Cash Flow (FCF)* % Adj. FCF EBITDA Conversion Margin % 38% 56% 43% 84% 80% 83% $ 784 $ 647 (US$ in millions) (US$ in mill
Slide 21: Blue Creek Remains Profitable Through-the-Cycle
W ar r ior Met Coal Page 20 Blue Creek Remains Profitable Through-the-Cycle Incremental Adj. EBITDA* and Adj. EBITDA Margin* Incremental Free Cash Flow (FCF)* and FCF Conversion* 38% 38% 46% 49% 52% 56% 60% 84% 80% 80% 80% 80% 80% 80% $ 498 $ 479 $ 421 $ 402 $ 402 $ 343 $ 339 $ 276 $ 305 $ 245 (US$
Slide 22: Blue Creek Construction Update – Slope Site
W ar r ior Page 21 Blue Creek Construction Update – Slope Site Raw Coal Raw Coal Belt Belt to to Plant Plant Construction Shop To Top of Control To Top of Slope Room Slope Construction Shop Raw Coal Construction Belt to Plant Shop Raw Coal Belt to Plant Slope Tower- Q2 2024 Slope Tower- Q3 2024 Sour
Slide 23: Blue Creek Construction Update – Slope Site
W ar r ior Page 22 Blue Creek Construction Update – Slope Site Construction Shop Top of Top of Slope Slope To Slope Tower To Slope Tower Construction Shop Raw Coal Belt to Plant Raw Coal Belt to Plant Top of Slope – Q2 2024 Top of Slope – Q3 2024 Source: Company information
Slide 24: Blue Creek Construction Update – Portal Facility
W ar r ior Page 23 Blue Creek Construction Update – Portal Facility Return Shaft Inventory Return Shaft Service Bathhouse Warehouse and Fan Shaft Additional Equipment Storage Future Parking Area Source: Company information
Slide 25: Blue Creek Construction Update – Raw Coal Storage
W ar r ior Page 24 Blue Creek Construction Update – Raw Coal Storage Prep Plant Prep Plant Stacker Belt Stacker Belt Raw Raw Coal Coal Storage Storage Raw Coal Storage– Q2 2024 Raw Coal Storage– Q3 2024 Source: Company information
Slide 26: Blue Creek Construction Update – Preparation Plant
W ar r ior Page 25 Blue Creek Construction Update – Preparation Plant Prep Plant Control Room / Office Clean Coal Preparation Plant and Clean Storage Coal Storage– Q2 2024 Source: Company information
Slide 27: Blue Creek Construction Update – Preparation Plant
W ar r ior Page 26 Blue Creek Construction Update – Preparation Plant Preparation Plant Q3 2024 Source: Company information
Slide 28: Blue Creek Construction Update – Clean Coal Storage and Overland Belt
W ar r ior Page 27 Blue Creek Construction Update – Clean Coal Storage and Overland Belt Clean Coal Overland Belt Q3 2024 Clean Coal Storage Q3 2024 Source: Company information
Slide 29: Blue Creek Construction Update – Rail Loadout
W ar r ior Page 28 Blue Creek Construction Update – Rail Loadout Radial Stacker #2 Silo Radial Stacker Area Area #2 Silo #1 Silo #1 Silo Reclaim Conveyor Reclaim to Loadout Conveyor to Loadout Batch-Weigh Loadout Batch-Weigh Loadout Foundations Rail Loadout – Q2 2024 Rail Loadout – Q3 2024 Source: C
Slide 30: Blue Creek Construction Update – Barge Loadout
W ar r ior Page 29 Blue Creek Construction Update –Barge Loadout Access Road to Reclaim/ Water’s Loadout Edge Conveyor Open Storage with Reclaim Tunnel Source: Company information
Slide 31: Major Project Stages and Milestones
W ar r ior Met Coal Page 30 2022 2023 2024 2025 2026 2027 Major Project Stages and Milestones Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Engineering - Conceptual Permitting Activities Coal Transportation Activities Overland Conveyor to Raw Coal Stockpile Rail Loadout + W
Slide 32: Appendix
Wa rri o r Page 31 Appendix
Slide 33: Appendix
Wa rri o r Page 32 Appendix For the three months ended For the three months ended September 30, 2024 (Unaudited) September 30, 2023 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 1,861 1,688 2,257 2,048 Tons produced (in 000s) 1,917 1,739 1,993 1,808 Average net sellin
Slide 34: Appendix
Wa rri o r Page 33 Appendix For the nine months ended For the nine months ended September 30, 2024 (Unaudited) September 30, 2023 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 6,088 5,523 5,984 5,429 Tons produced (in 000s) 6,140 5,570 5,676 5,149 Average net selling
Slide 35: Non-GAAP Financial Measures: Adjusted EBITDA
Wa rri o r Page 34 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP For the three months ended For the nine months ended September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2024 2023 2024 2023 Net income $ 41,766 $ 85,382 $ 249
Slide 36: Non-GAAP Financial Measures: Free Cash Flow
W ar r ior Page 35 Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP For the three months ended For the nine months ended September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2024 2023 2024 2023 Net cash provided by operating acti
Slide 37: Non-GAAP Financial Measures: Adjusted Net Income
W ar r ior Page 36 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP For the three months ended For the nine months ended September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2024 2023 2024 2023 Net income $ 41,766 $ 85,382 $
Slide 38: Non-GAAP Financial Measures: Cash Cost of Sales
W ar r ior Page 37 Appendix Non-GAAP Financial Measures Reconciliation of Cash Cost of Sales (Free-On-Board Port) to Cost of Sales Reported Under U.S. GAAP For the three months ended For the nine months ended September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2024 2023 2024 2023 Cost