Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q1 2024 Earnings Presentation
31 slides from Warrior Met Coal's earnings presentation, May 1, 2024
Slide 1: First Quarter Results
First Quarter Results May 1, 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: 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: First Quarter 2024 Achievements
Wa rri o r Page 4 First Quarter 2024 Achievements Achieved sales volumes of 2.1 million short tons (“St”), a 9% increase 1 compared to prior year, and cash cost of sales (free-on-board)* per ST of $133.48. 2 Achieved production volumes of 2.1 million St, a 17% increase, resulting in largest quarte
Slide 6: Key Metrics for Three Months Ended March 31, 2024 vs. 2023
Wa rri o r Page 5 Key Metrics for Three Months Ended March 31, 2024 vs. 2023 For the three months ended March 31, 2024 For the three months ended March 31, 2023 % Change Tons produced (in 000s St) 2,051 Tons produced (in 000s St) 1,759 17% Tons sold (in 000s St) 2,129 Tons sold (in 000s St) 1,948 9%
Slide 7: Customer Revenue by Geography Provides Significant Logistical Cost Advantage
Wa rri o r Page 6 Customer Revenue by Geography Provides Significant Logistical Cost Advantage to the Seaborne Market Delivered cost advantage into Europe based on ~2 Customer revenue by geography week transport time vs. ~5 weeks from Australia Q1 2024 Q1 2023 3% 21% 44% ~2 weeks 38% 23% 53% 18% Eur
Slide 8: Generated Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
Wa rri o r Page 7 Generated Significant Free Cash Flow* on Strong Conversion of Adjusted EBITDA* Margins(1) FCF 43% (18%) 18% 38% 1% 11% Conversion(2) 60% Since 2022, FCF Conversion (2) has trended lower driven by the significant capital expenditures in developing the Blue Creek mine which is expect
Slide 9: Leverage and Liquidity Ratio
Wa rri o r Page 8 Leverage and Liquidity Ratio Financial Metrics ($ in millions except ratios) Leverage (trailing twelve months ended March 31, 2024) Adjusted EBITDA* $ 639.7 Consolidated Net Cash* (1) $ (521.6) (2) Net Leverage Ratio (0.82x) Liquidity (as of March 31, 2024) Cash and Cash Equivalent
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 Sales (Mst) 7.4 8.2 High End Q1 2024 Production (Mst) 7.4 8.0 Mines $100 $24 Gas operations 10 2 T
Slide 11: Strong Track Record and Continued Focus on Safety
W ar r ior Page 10 Strong Track Record and Continued Focus on Safety Total Reportable Incident Rate FY FY FY FY Safety 2020 2021 2022 2023 Superior safety record compared Tons produced (000s St) (1) 7,862 5,605 6,315 7,646 to the industry average % increase/(decrease) (7%) (29%) 13% 21% Focus on
Slide 12: Strategic Capital Allocation
Wa rri o r Page 11 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 13: Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value
W ar r ior Page 12 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 14: 2024 Full Year Guidance
Wa rri o r Page 13 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 - $390mm Discretionary Capital Mine Deve
Slide 15: Project Updates
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Slide 16: World-Class Blue Creek Project with High-Return for Growth Under Development
W ar r ior Page 15 World-Class Blue Creek Project with High-Return for Growth Under Development One of the last remaining untapped premium quality High Vol A Significant Growth Potential coal reserves in the U.S., that should achieve premium prices 17.6 Once developed, expected to provide a port
Slide 17: Blue Creek's Expected Production Ramp During the Development of the Mine
Wa rri o r Page 16 Blue Creek’s Expected Production Ramp During the Development of the Mine Blue Creek Timing Blue Creek Production Ramp Continuous Miner expected start date Q3 2024 Blue Creek’s production is Longwall expected start date Q2 2026 expected to begin in 2024 with continuous miner 4.
Slide 18: Unique Growth Opportunity in an Environmentally-Sustainable World
W ar r ior Met Coal Page 17 Unique Growth Opportunity in an Environmentally- Sustainable World In May 2022, Warrior relaunched the development of its Blue Creek reserves, which provides a high-return growth opportunity via one of the last remaining large-scale, untapped premium HVA reserves in the
Slide 19: Blue Creek Drives Warrior's Cash Costs Further into the 1st Quartile Globally
W ar r ior Met Coal Page 18 Blue Creek Drives Warrior’s Cash Costs Further into the 1st Quartile Globally… Seaborne Coking Coal Cash Cost by Mine (FOB) 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Average Cash Cost Warrior Met Coal1 Total Cash Cost ($/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 Top of Slope Construction Top of Slope Shop Construction Shop Slope Belt Drive Tower Control Room Construction Shop Raw Coal Belt to Plant Slope Belt Raw Coal Drive Tower Raw Coal Belt to Plant Belt to Plant Q4’23 Q1’24 Source: Company i
Slide 23: Blue Creek Construction Update – Portal Facility
W ar r ior Page 22 Blue Creek Construction Update – Portal Facility Return Return Shaft Shaft Service Shaft Bathhouse Inventory Warehouse Future Parking Area Source: Company information
Slide 24: Blue Creek Construction Update – Preparation Plant
W ar r ior Page 23 Blue Creek Construction Update – Preparation Plant Prep Plant Stacker Belt Rotary Raw Breaker Raw Coal Coal Storage Storage Stacker Prep Belt Plant Q4’23 Q1’24 Source: Company information
Slide 25: Blue Creek Development Timeline
W ar r ior Met Coal Page 24 Blue Creek Development Timeline 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
Slide 26: Appendix
Wa rri o r Page 25 Appendix
Slide 27: Appendix
Wa rri o r Page 26 Appendix For the three months ended For the three months ended March 31, 2024 (Unaudited) March 31, 2023 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 2,129 1,931 1,948 1,767 Tons produced (in 000s) 2,051 1,861 1,759 1,596 Average net selling price
Slide 28: Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
Wa rri o r Page 27 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP For the three months ended March 31, (Unaudited) (in thousands) 2024 2023 Net income $ 136,989 $ 182,277 Interest income, net (7,033) (1,460) Income tax expense 19,122 29,064
Slide 29: Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP
W ar r ior Page 28 Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP For the three months ended March 31, (Unaudited) (in thousands) 2024 2023 Net cash provided by operating activities $ 104,058 $ 192,934 Purchases of property, plant and equipm
Slide 30: Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP
W ar r ior Page 29 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP For the three months ended March 31, (Unaudited) (in thousands) 2024 2023 Net income $ 136,989 $ 182,277 Business interruption, net of tax 176 3,637 Other income, net of
Slide 31: Reconciliation of Cash Cost of Sales to Cost of Sales Under U.S. GAAP
W ar r ior Page 30 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 March 31, (Unaudited) (in thousands) 2024 2023 Cost of sales $ 285,587 $ 232,630 Asset retirement obligation accretio