Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q4 2023 Earnings Presentation
34 slides from Warrior Met Coal's earnings presentation, Feb 14, 2024
Slide 1: Fourth Quarter and Full Year 2023 Results
Fourth Quarter and Full Year 2023 Results February 14, 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”) may from time to time make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
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 Australian Premium Low-Vol HCC to the global steel industry Variable cost structure that adjusts with benchmark HCC prices, allowing Warrior to remain flexible and adapt to changing circumst
Slide 4: Why Steelmaking Coal?
Wa rri o r Page 3 Why Steelmaking Coal? Steelmaking or met coal plays a long-term, critical role in an environmentally–sustainable world Steel has an important role in today and tomorrow’s society and is required for everything from rail to bridges to buildings to electric vehicles to wind and sol
Slide 5: Fourth Quarter 2023 Achievements
Wa rri o r Page 4 Fourth Quarter 2023 Achievements Achieved sales volume of 1.5 million short tons (“St”), a 6% increase 1 compared to prior year, and cash cost of sales (free-on-board)* per ST of $120.69. 2 Achieved production volume of 2.0 million St, a 34% increase. Achieved quarterly net i
Slide 6: Key Metrics for Three Months Ended December 31, 2023 vs. 2022
Wa rri o r Page 5 Key Metrics for Three Months Ended December 31, 2023 vs. 2022 For the three months ended December 31, 2023 For the three months ended December 31, 2022 % Change Tons produced (in 000s St) 1,970 Tons produced (in 000s St) 1,468 34% Tons sold (in 000s St) 1,533 Tons sold (in 000s St)
Slide 7: Full Year 2023 Achievements
Wa rri o r Page 6 Full Year 2023 Achievements 1 Achieved Adjusted EBITDA*(2) of $698.9 million and Adjusted EBITDA margin* of 41.7% 2 Recorded 34% increase in sales volumes and 21% increase in production volumes, run rates not seen since 2020 Maintained total liquidity of $845.6 million, consi
Slide 8: Key Metrics for years ended December 31, 2023 vs. 2022
Wa rri o r Page 7 Key Metrics for years ended December 31, 2023 vs. 2022 For the year ended December 31, 2023 For the year ended December 31, 2022 % Change Tons produced (in 000s St) 7,646 Tons produced (in 000s St) 6,315 21% Tons sold (in 000s St) 7,518 Tons sold (in 000s St) 5,621 34% Average net
Slide 9: Customer Revenue by Geography Provides Logistical Cost Advantage
Wa rri o r Page 8 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 3.00% week transport time vs. ~5 weeks from Australia Q4 2023 Q4 2022 25% 44% 46% 56% ~2 weeks 16% 10%
Slide 10: Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
Wa rri o r Page 9 Generated Significant Free Cash Flow* on Strong Conversion of Adjusted EBITDA* Margins(1) FCF Conversion(2) 65% 43% (18%) 18% 38% 25% 60% 51% 50% 45% 43% 43% Adjusted EBITDA Margin(1) 40% 34% 34% 30% 20% 10% 0% Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 TTM Avg. Net Realized Price $25
Slide 11: Leverage and Liquidity Ratio
Wa rri o r Page 10 Leverage and Liquidity Ratio Financial Metrics ($ in millions except ratios) Leverage (for the year ended December 31, 2023) Adjusted EBITDA* $ 698.9 (1) Consolidated Net Cash* $ (565.0) (2) Net Leverage Ratio (0.81x) Liquidity (as of December 31, 2023) Cash and Cash Equivalents $
Slide 12: Breaking Down Warrior's 2023 Capital Expenditures
W ar r ior Page 11 Breaking Down Warrior’s 2023 Capital Expenditures 2023 Capex Guidance 2023 Revised Capex Guidance Detail versus Actual ($ in millions) Low High ($ in millions) Sustaining Guidance QTD Actuals YTD Actuals Sales (Mst) 7.1 7.7 High End Q4 2023 Q4 2023 Production (Mst) 6.8 7.4 Mines $
Slide 13: Workforce Productivity Consistently Achieving New Highs
Wa rri o r Page 12 Workforce Productivity Consistently Achieving New Highs Efficiency and Effectiveness In the twelve months ended December 31, 2023, the overall consolidated average hourly output was Clean Tons per hour worked (st(1)) 2.90st(1) Production (Mst(2)) Mine 7 average hourly output w
Slide 14: Strong Track Record and Continued Focus on Safety
W ar r ior Page 13 Strong Track Record and Continued Focus on Safety Total Reportable Incident Rate FY FY FY FY 2020 2021 2022 2023 Safety Tons produced (000s St) 7,862 5,605 6,315 7,646 Superior safety record compared to the industry average % increase/(decrease) (7%) (29%) 13% 21% Focus on saf
Slide 15: Capital Allocation: Balancing Capital Investments with Near-Term Returns
Wa rri o r Page 14 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 capital • Incr
Slide 16: Committed to Stockholder Returns and Maximizing Stockholder Value
W ar r ior Page 15 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 2017 2018 2019 2020(1) 2021(2) 2022(3) 2023 Dividends $ 458 $11.36 $6.73 $4.61 $0.20 $0.
Slide 17: 2024 Full Year Guidance
Wa rri o r Page 16 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 - $390mm Discretionary Capital Mine Deve
Slide 18: Project Updates
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Slide 19: 4 North Construction
W ar r ior Page 18 4 North Construction • 4 North construction activities: • The bathhouse and portal are complete and in use. • Bunker excavation and construction work is expected to be completed in late 2024. • The bleeder shaft and intake shaft are complete. • The water system upgrade and the emu
Slide 20: World-Class Blue Creek Project with High-Return for Growth Under Development
W ar r ior Page 19 World-Class Blue Creek Project with High-Return for Growth Under Development One of the last remaining untapped premium quality High Vol A Significant Growth Potential coal reserves in the U.S., that should achieve premium prices 17.6 Once developed, expected to provide a port
Slide 21: Unique Growth Opportunity in an Environmentally-Sustainable World
W ar r ior Met Coal Page 20 Unique Growth Opportunity in an Environmentally- Sustainable World In May 2022, Warrior relaunched the development of its Blue Creek reserves, which provides a high-return growth opportunity via one of the last remaining large-scale, untapped premium HVA reserves in the
Slide 22: Blue Creek Drives Cash Costs Further into the 1st Quartile Globally
W ar r ior Met Coal Page 21 Blue Creek Drives Warrior’s Cash Costs Further into the 1st Quartile Globally… Seaborne Coking Coal Cash Cost by Mine (FOB) 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Average Cash Cost Warrior Met Coal1 Total Cash Cost ($/mt) Average Pro Forma Cash Cost Blue Cree
Slide 23: Enhances Warrior's Profitability and Cash Flow Generation
W ar r ior Met Coal Page 22 …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 24: Blue Creek Remains Profitable Through-the-Cycle
W ar r ior Met Coal Page 23 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 25: Blue Creek Construction Update – Slope Site
W ar r ior Page 24 Blue Creek Construction Update – Slope Site Top of Slope Construction Shop Top of Slope Slope Belt Drive Tower Construction Shop Raw Coal Slope Belt Belt to Plant Drive Tower Raw Coal Belt to Plant Q3’23 Q4’23 Source: Company information
Slide 26: Blue Creek Construction Update – Portal Facility
W ar r ior Page 25 Blue Creek Construction Update – Portal Facility Return Shaft Service Bathhouse Inventory Shaft Warehouse Future Parking Area Source: Company information
Slide 27: Blue Creek Construction Update – Preparation Plant
W ar r ior Page 26 Blue Creek Construction Update – Preparation Plant Prep Plant Prep Plant Rotary Breaker Raw Rotary Coal Raw Breaker Storage Coal Storage Stacker Stacker Belt Belt Q3’23 Q4’23 Source: Company information
Slide 28: Appendix
Wa rri o r Page 27 Appendix
Slide 29: Appendix
Wa rri o r Page 28 Appendix For the three months ended For the three months ended December 31, 2023 (Unaudited) December 31, 2022 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 1,533 1,391 1,452 1,317 Tons produced (in 000s) 1,970 1,787 1,468 1,332 Average net selling
Slide 30: Appendix
Wa rri o r Page 29 Appendix For the year ended For the year ended December 31, 2023 (Unaudited) December 31, 2022 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 7,518 6,820 5,621 5,099 Tons produced (in 000s) 7,646 6,936 6,315 5,729 Average net selling price per ton $2
Slide 31: Non-GAAP Financial Measures: Adjusted EBITDA
Wa rri o r Page 30 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP For the three months ended For the year ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2023 2022 2023 2022 Net income $ 128,876 $ 99,654 $ 478,629 $ 6
Slide 32: Non-GAAP Financial Measures: Free Cash Flow
W ar r ior Page 31 Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP For the three months ended For the year ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2023 2022 2023 2022 Net cash provided by operating activities $
Slide 33: Non-GAAP Financial Measures: Adjusted Net Income
W ar r ior Page 32 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP For the three months ended For the year ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2023 2022 2023 2022 Net income $ 128,876 $ 99,654 $ 478,629
Slide 34: Non-GAAP Financial Measures: Cash Cost of Sales
W ar r ior Page 33 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 year ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2023 2022 2023 2022 Cost of sales