Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q3 2019 Earnings Presentation
24 slides from Warrior Met Coal's earnings presentation, Oct 30, 2019
Slide 1: Third Quarter 2019 Results
Third Quarter 2019 Results October 30, 2019 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
W ar r ior Met Coal 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 2
Slide 3: 2019 Achievements
W ar r ior Met Coal Page 2 2019 Achievements 1 Achieved record quarterly sales volume of 2.2 million St in Q2’19 ✓ 2 Recorded best-ever quarterly production volume of 2.3 million St in Q1’19 ✓ 3 Consummated restricted payment offer to permit up to $299 million in shareholder returns and consummated
Slide 4: Key Metrics for Q3 2019 vs. Q3 2018
W ar r ior Met Coal Page 3 Key Metrics for Q3 2019 vs. Q3 2018 Q3 2019 Q3 2018 % Change Tons produced (in 000s St) 2,164 Tons produced (in 000s St) 1,819 19% Tons sold (in 000s St) 1,990 Tons sold (in 000s St) 1,668 19% Gross price realization (1) 102% Gross price realization (1) 97% 5% Average net
Slide 5: Key Metrics for Nine Months ended Sept. 30, 2019 vs. 2018
W ar r ior Met Coal Page 4 Key Metrics for Nine Months ended Sept. 30, 2019 vs. 2018 For the nine months ended September 30, 2019 For the nine months ended September 30, 2018 % Change Tons produced (in 000s St) 6,657 Tons produced (in 000s St) 5,846 14% Tons sold (in 000s St) 6,325 Tons sold (in 000
Slide 6: Leverage and Liquidity Analysis
W ar r ior Met Coal Page 5 Leverage and Liquidity Analysis Financial Metrics ($MM except ratios) Leverage (for the trailing twelve months ended Sept. 30, 2019) Adjusted EBITDA* $601.0 (1) Consolidated Net Debt* $157.4 Net Leverage Ratio* 0.26x Liquidity (as of September 30, 2019) Cash and Cash Equiv
Slide 7: Generated Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
W ar r ior Met Coal Page 6 Generated Significant Free Cash Flow* on Strong Conversion of Adjusted EBITDA* Margins(1) Adjusted EBITDA Margin*(1) FCF Conversion*(2) 83% 65% 53% 112% 142% 86% 60.0% 50.0% 47.9% 44.8% 44.2% 42.2% 40.0% 34.4% 30.0% 28.8% 20.0% 10.0% 0.0% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3
Slide 8: Production Growth Continues in 2019
W ar r ior Met Coal Page 7 Production Growth Continues in 2019 Tons Produced (thousand St) Longwall moves 2 1 1 1 2 2,500 2,298 2,195 2,164 520 2,000 1,889 1,819 600 616 464 1,500 582 1,000 1,778 1,595 1,548 1,425 1,237 500 – Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 No. 7 Mine No. 4 Mine Recorded hig
Slide 9: Looking Forward: 2019 Full Year Guidance
W ar r ior Met Coal Page 8 Looking Forward: 2019 Full Year Guidance Full Year Guidance (1) Coal Sales 7.5 – 7.9 Mst Coal Production 7.5 – 7.9 Mst Cash Cost of Sales (Free-on-Board $85 - $95 per St Port)* Capital Expenditures $100 - $120mm Mine Development $18 - $22mm S,G&A $32 - $36mm Interest Expen
Slide 10: Breaking Down Warrior's 2019 Expected Capital Expenditures
W ar r ior Met Coal Page 9 Breaking Down Warrior’s 2019 Expected Capital Expenditures 2019 Guidance ($mm) Low High Production (Mst) 7.5 7.9 Capex Sustaining(1) $70 $87 Discretionary(2) $30 $33 Total Capex $100 $120 ◼ 2019 capital spending expected to include expenditures to sustain longwall operatio
Slide 11: Warrior Mining Facility Map
W ar r ior Met Coal Page 10 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 ● Centra
Slide 12: 4 North Shaft Construction Update
W ar r ior Met Coal Page 11 4 North Shaft Construction Update Service shaft construction headframe Shaft wall concrete preparations & support facilities
Slide 13: 4 North Portal General Layout
W ar r ior Met Coal Page 12 4 North Portal General Layout Power Substation (under construction) Parking Area Mine Service Shaft & Hoist (under construction) Future Onsite Warehouse Future Future Bathhouse Portal site progress during Mine Vent. and Office Q3 includes the Shaft & Fan Building construc
Slide 14: World-Class Blue Creek Project Provides Warrior with High-Return Option for Growth
W ar r ior Met Coal Page 13 World-Class Blue Creek Project Provides Warrior with High-Return Option for Growth ◼ One of the few remaining untapped premium quality High Significant Growth Potential Vol A coal reserves in the U.S., trading currently at premium prices ◼ Would provide a portfolio of Pre
Slide 15: Recent High Vol A Pricing Dynamics Make Blue Creek Even More Compelling
W ar r ior Met Coal Page 14 Recent High Vol A Pricing Dynamics Make Blue Creek Even More Compelling $350 U.S. High Vol A Price Premium / (Discount) U.S. Low Vol Aus Premium Low Vol Current 4% (1)% $300 1 Month 2% (1)% 1 Year 6% (3)% 2 Years 5% (5)% ($ / Short Ton) $250 $200 $150 $ 133 $ 132 $ 126 $1
Slide 16: Blue Creek Project Preliminary General Layout
W ar r ior Met Coal Page 15 Blue Creek Project Preliminary General Layout • Represents a preliminary general layout of the Blue Creek Project Plan(1) Conveyor Belt to Barge Loading Facility Slope Mine Feed Conveyor Belt Preparation Stockpile Portal Plant Area Area (1) Subject to change based upon fi
Slide 17: Blue Creek Project Update
W ar r ior Met Coal Page 16 Blue Creek Project Update • Core drilling in the initial development areas started in the first quarter of 2019.
Slide 18: Appendix
W ar r ior Met Coal Page 17 Appendix
Slide 19: Appendix
W ar r ior Met Coal Page 18 Appendix For the three months ended For the three months ended Sept. 30, 2019 (Unaudited) Sept. 30, 2018 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 1,990 1,805 1,668 1,513 Tons produced (in 000s) 2,164 1,963 1,819 1,650 Gross price reali
Slide 20: Appendix
W ar r ior Met Coal Page 19 Appendix For the nine months ended For the nine months ended Sept. 30, 2019 (Unaudited) Sept. 30, 2018 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 6,325 5,738 5,669 5,143 Tons produced (in 000s) 6,657 6,039 5,846 5,303 Gross price realiza
Slide 21: Non-GAAP Financial Measures: Adjusted EBITDA Reconciliation
W ar r ior Met Coal Page 20 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 Sept. 30, (Unaudited) Sept. 30, (Unaudited) (in thousands) 2019 2018 2019 2018 Net income $ 45,022 $ 52,591 $ 28
Slide 22: Non-GAAP Financial Measures: Free Cash Flow Reconciliation
W ar r ior Met Coal Page 21 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 Sept. 30, (Unaudited) Sept. 30, (Unaudited) (in thousands) 2019 2018 2019 2018 Net cash provided by operating act
Slide 23: Non-GAAP Financial Measures: Adjusted Net Income Reconciliation
W ar r ior Met Coal Page 22 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 Sept. 30, (Unaudited) Sept. 30, (Unaudited) (in thousands) 2019 2018 2019 2018 Net income $ 45,022 $ 52,591
Slide 24: Non-GAAP Financial Measures: Cash Cost of Sales Reconciliation
W ar r ior Met Coal Page 23 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 Sept. 30, (Unaudited) Sept. 30, (Unaudited) (in thousands) 2019 2018 2019 2018 Cos