Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q4 2019 Earnings Presentation
26 slides from Warrior Met Coal's earnings presentation, Feb 19, 2020
Slide 1: Fourth Quarter 2019 Results
Fourth Quarter 2019 Results February 19, 2020 PRELIMINARY | SUBJECT TO FURTHER REVIEW AND EVALUATION These materials may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with Credit Suisse AG or its Affiliates (hereafter “Credit Suisse”).
Slide 2: Forward looking statements
Wa rrio r Met Co a l 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
Slide 3: 2019 Achievements
Wa rrio r Met Co a l Page 2 2019 Achievements 1 Achieved record annual sales volume of 8.0 million short tons (“St”) and lowest annual cash cost of sales (free on board port)* per St of $89.95 ✓ 2 Recorded best ever annual production volume of 8.5 million St in 2019, while achieving a record low saf
Slide 4: Key Metrics for Q4 2019 vs. Q4 2018
Wa rrio r Met Co a l Page 3 Key Metrics for Q4 2019 vs. Q4 2018 Q4 2019 Q4 2018 % Change Tons produced (in 000s St) 1,813 Tons produced (in 000s St) 1,889 (4%) Tons sold (in 000s St) 1,655 Tons sold (in 000s St) 1,971 (16%) Gross price realization (1) 97% Gross price realization (1) 93% 4% Average n
Slide 5: Key Metrics for 2019 vs. 2018
Wa rrio r Met Co a l Page 4 Key Metrics for 2019 vs. 2018 FY 2019 FY 2018 % Change Tons produced (in 000s St) 8,470 Tons produced (in 000s St) 7,735 10% Tons sold (in 000s St) 7,980 Tons sold (in 000s St) 7,640 4% Gross price realization (1) 98% Gross price realization (1) 97% 1% Average net selling
Slide 6: Warrior Delivered on its Commitments for 2019
Wa rrio r Met Co a l Page 5 Warrior Delivered on its Commitments for 2019… Actual Guidance(1) Coal Sales 8.0 Mst 7.5 – 7.9 Mst ✓ Coal Production 8.5 Mst 7.5 – 7.9 Mst ✓ ✓ Cash Cost of Sales $89.95 per St $89 - $95 per St (Free-on -Board Port)* Capital Expenditures $107.3mm $100 - $120mm ✓ Mine devel
Slide 7: Breaking Down Warrior’s Capital Expenditures
Wa rrio r Met Co a l Page 6 Breaking Down Warrior’s Capital Expenditures 2019 Actual vs. Guidance 2019 Capex Detail ($mm) 2019A Guidance ($mm) 2019A Production (Mst) 8.5 7.5 - 7.9 Sustaining(1) Capex Mines $83 Sustaining(1) $89 $70 - $83 Gas operations $6 Discretionary(2) $18 $30 - $37 Total Sustain
Slide 8: Leverage and Liquidity Analysis
Wa rrio r Met Co a l Page 7 Leverage and Liquidity Analysis Financial Metrics ($MM except ratios) Leverage (for the year ended December 31, 2019) Adjusted EBITDA* $478.7 Consolidated Net Debt* (1) $181.5 Net Leverage Ratio* 0.38x Liquidity (as of December 31, 2019) Cash and Cash Equivalents $193.4 A
Slide 9: Generated Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
Wa rrio r Met Co a l Page 8 Generated Significant Free Cash Flow* on Strong Conversion of Adjusted EBITDA* Margins(1) Adjusted EBITDA* Margin (1) FCF Conversion*(2) 65% 53% 112% 142% (24%) 84% 60.0% 50.0% 47.9% 44.8% 44.2% 40.0% 37.7% 30.0% 28.8% 19.0% 20.0% 10.0% 0.0% Q4 2018 Q1 2019 Q2 2019 Q3 201
Slide 10: Production Growth Continued in 2019
Wa rrio r Met Co a l Page 9 Production Growth Continued in 2019 Tons Produced (thousand st) Longwall - - 2 1 1 1 2 1 moves 2,500 2,298 2,195 2,164 2,098 2,000 1,929 1,889 520 1,819 600 1,813 496 616 596 464 582 487 1,500 1,000 1,778 1,602 1,595 1,548 1,333 1,425 1,326 1,237 500 – Q1 2018 Q2 2018 Q3
Slide 11: Looking Forward: 2020 Full Year Guidance
Wa rrio r Met Co a l Page 10 Looking Forward: 2020 Full Year Guidance Full Year Guidance Coal Sales 7.3 – 7.8 Mst Coal Production 7.0 – 7.5 Mst Cash Cost of Sales (Free-on- $88 - $93 per St Board Port)* Capital Expenditures $125 - $145mm Mine Development $10 - $14mm S,G&A $32 - $36mm Interest Expens
Slide 12: Breaking Down Warrior’s 2020 Capital Expenditures
W ar r ior Met Coal Page 11 Breaking Down Warrior’s 2020 Capital Expenditures Guidance 2020 Capex Guidance 2020 Capex Guidance Detail ($mm) Low High ($mm) Production (Mst) 7.0 7.5 Sustaining(1) Capex Mines $80 Sustaining(1) Gas operations $5 $75 $85 Discretionary (2) Total Sustaining (1) $85 $50 $60
Slide 13: Warrior Mining Facility Map
Page 12 Wa rrio r Met Co a l Warrior Mining Facility Map Fayette County ● Blue Creek Walker County Tuscaloosa Jefferson County County Mine No. 4 North Portal ● Mine No. 7 North Portal ● Mine No. 7 East Portal ● Mine No. 4 & Prep. Plant ● ● Mine No. 7 West ● Portal & Prep. Plant Barge Loading ● Centr
Slide 14: 4 North Shaft Construction Update
Wa rrio r Met Co a l Page 13 4 North Shaft Construction Update Service shaft construction headframe Shaft wall concrete preparations & support facilities
Slide 15: 4 North Portal General Layout
Wa rrio r Met Co a l Page 14 4 North Portal General Layout Power Substation (under construction) Parking Area Mine Service Shaft & Hoist (under construction) Future Onsite Warehouse Future Future Mine Bathhouse Portal site progress during Vent. Shaft and Office 2019 includes the & Fan Building const
Slide 16: 2020 Commencement of World-Class Blue Creek with High-Return for Growth
Wa rrio r Met Co a l Page 15 2020 Commencement of World-Class Blue Creek with High-Return for Growth ◼ One of the last remaining untapped premium quality High Vol A Significant Growth Potential coal reserves in the U.S., trading currently at premium prices ◼ Once developed, expected to provide a por
Slide 17: Warrior Remains Committed to its Stated Financial Policies
Wa rrio r Met Co a l Page 16 Warrior Remains Committed to its Stated Financial Policies ◼ Generated $402 million of free cash flow* in 2019 with 84% free cash flow Strong Cash conversion(1) Conversion ◼ High price realizations, low cash costs, clean balance sheet, and large net operating loss balanc
Slide 18: Warrior’s Proactive Approach to ESG
Wa rrio r Met Co a l Page 17 Warrior’s Proactive Approach to Environmental, Social, Governance (ESG) • Corporate Responsibility Report prepared according to Global Reporting Initiative (GRI) Standards -- Core Option • 99.86% compliance rate with environmental water regulations Industry Leader in • 6
Slide 19: Warrior’s Proactive Approach to ESG (Continued)
Wa rrio r Met Co a l Page 18 Warrior’s Proactive Approach to Environmental, Social, Governance (ESG) – (Continued) • Safety rate 33% better than peers • Incident severity measure consistently less than half the Safety Statistics Better national average than • Zero work-related fatalities since forma
Slide 20: Appendix
Wa rrio r Met Co a l Page 19 Appendix
Slide 21: Appendix
Wa rrio r Met Co a l Page 20 Appendix For the three months ended For the three months ended December 31, 2019 (Unaudited) December 31, 2018 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 1,655 1,502 1,971 1,788 Tons produced (in 000s) 1,813 1,644 1,889 1,714 Gross pric
Slide 22: Appendix
Wa rrio r Met Co a l Page 21 Appendix For the year ended For the year ended December 31, 2019 December 31, 2018 Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 7,980 7,240 7,640 6,931 Tons produced (in 000s) 8,470 7,683 7,735 7,017 Gross price realization(1) 98% 98% 97% 97% Average
Slide 23: Non-GAAP Financial Measures: Adjusted EBITDA
Wa rrio r Met Co a l Page 22 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP For the three months For the year ended ended December 31, December 31, (in thousands) 2019 2018 2019 2018 Net income $ 20,751 $ 374,190 $ 301,699 $ 696,787 Interes
Slide 24: Non-GAAP Financial Measures: Free Cash Flow
W ar r ior Met Coal Page 23 Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP For the three months For the year ended ended December 31, December 31, (in thousands) 2019 2018 2019 2018 Net cash provided by operating activities $ 24,549 $ 130,79
Slide 25: Non-GAAP Financial Measures: Adjusted Net Income
W ar r ior Met Coal Page 24 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP For the three months For the year ended ended December 31, December 31, (in thousands) 2019 2018 2019 2018 Net income $ 20,751 $ 374,190 $ 301,699 $ 696,787 Incr
Slide 26: Non-GAAP Financial Measures: Cash Cost of Sales
W ar r ior Met Coal Page 25 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 For the year ended ended December 31, December 31, (in thousands) 2019 2018 2019 2018 Cost of sales $ 142,707 $ 18