Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q4 2022 Earnings Presentation
30 slides from Warrior Met Coal's earnings presentation, Feb 15, 2023
Slide 1: Fourth Quarter 2022 Results
Fourth Quarter 2022 Results February 15, 2023
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? Met or steelmaking 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: Full Year 2022 Achievements
Wa rri o r Page 4 Full Year 2022 Achievements Achieved full year strong net income of $641.3 million, an all-time record 1 adjusted net income(1)* of $666.1 million and adjusted net income per share* of $12.88 per diluted share. Achieved all-time record Adjusted EBITDA*(2) of $994.2 million, a 1
Slide 6: Key Metrics for Three Months Ended December 31, 2022
Wa rri o r Page 5 Key Metrics for Three Months Ended December 31, 2022 vs. Q4 2022 For the three months ended December 31, 2022 For the three months ended December 31, 2021 % Change Tons produced (in 000s St) 1,468 Tons produced (in 000s St) 1,108 32% Tons sold (in 000s St) 1,452 Tons sold (in 000s
Slide 7: Key Metrics for the Years Ended December 31, 2022 vs. 2021
Wa rri o r Page 6 Key Metrics for the Years Ended December 31, 2022 vs. 2021 For the year ended December 31, 2022 For the year ended December 31, 2021 % Change Tons produced (in 000s St) 6,315 Tons produced (in 000s St) 5,604 13% Tons sold (in 000s St) 5,621 Tons sold (in 000s St) 6,282 (11%) Averag
Slide 8: Customer Revenue by Geography Provides Significant Logistical Cost Advantage
Wa rri o r Page 7 Customer Revenue by Geography Provides Significant Logistical Cost Advantage to the Seaborne Market Delivered cost advantage into Europe based on ~2 Customer revenue by geography week transport time vs. ~5 weeks from Australia Q4 2021 Q4 2022 22% 46% 46% 44% ~2 weeks 10% 32% Europe
Slide 9: Generated Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
Wa rri o r Page 8 Generated Significant Free Cash Flow* on Strong Conversion of Adjusted EBITDA* Margins(1) FCF Conversion(2) 63% 20% 58% 112% 65% 59% 80% 69% 70% 64% 60% 58% 57% Adjusted EBITDA Margin(3) 50% 44% 43% 40% 30% 20% 10% 0% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 TTM Avg. Net Realized Pr
Slide 10: Leverage and Liquidity Ratio
Wa rri o r Page 9 Leverage and Liquidity Ratio Financial Metrics ($ in millions except ratios) Leverage (for the year ended December 31, 2022) Adjusted EBITDA* $ 994.2 Consolidated Net Cash* (1) $ (493.8) (2) Net Leverage Ratio (0.50x) Liquidity (as of December 31, 2022) Cash and Cash Equivalents $
Slide 11: Breaking Down Warrior's 2022 Capital Expenditures
W ar r ior Page 10 Breaking Down Warrior’s 2022 Capital Expenditures 2022 Capex Guidance 2022 Capex Guidance Detail versus Actual ($ in millions) Low High ($ in millions) Sustaining(1) Guidance QTD Actuals YTD Actuals (5) Production (Mst ) 5.8 6.3 High End Q4 2022 Q4 2022 Capex Mines $75 $36 $75 Sus
Slide 12: Workforce Productivity Consistently Achieving New Highs
Wa rri o r Page 11 Workforce Productivity Consistently Achieving New Highs Efficiency and Warrior Met Coal Effectiveness Average Output per Hour 3.5 9.0 In 2022, consolidated average hourly output 8.0 was an all-time of high 3.0 of 3.26st Clean Tons per hour worked (st(1)) 7.0 2.5 Mine 7 average
Slide 13: Strong Track Record and Continued Focus on Safety
W ar r ior Page 12 Strong Track Record and Continued Focus on Safety Total Reportable Incident Rate FY FY FY FY Safety 2019 2020 2021 2022 Superior safety record compared to the industry average Tons produced (000s St(3)) 8,470 7,862 5,605 6,315, Annual % increase/(decrease) 10% (7%) (29%) (29%)
Slide 14: Capital Allocation: Balancing Capital Investments for Growth with Returns to Stockholders
Wa rri o r Page 13 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 15: Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value
W ar r ior Page 14 Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value Proven Track Record of Leveraging Free Cash $ 342 38.0 Flow* to Return Excess Cash to Stockholders… 12.5 $ 607 2017 2018 2019 2020(1) 2021(2) 2022(3) Dividends $11.36 $6.73 $4.61 $0.20 $0.20 $1.54 $
Slide 16: 2023 Full Year Guidance
Wa rri o r Page 15 2023 Full Year Guidance Full Year Guidance Coal Sales 6.6 – 7.2 Mst Coal Production 6.3 – 6.9 Mst Cash Cost of Sales $109 - $125 per St (Free-on-Board Port)* Capital Expenditures for $95 - $105mm Existing Mines Blue Creek Project and Other $325 - $345mm Discretionary Capital Mine
Slide 17: Project Updates
Project Updates
Slide 18: 4 North Construction Update
W ar r ior Page 17 4 North Construction Update • 4 North construction activities were restarted in Q1 2022 • Bunker excavation and construction work is expected to be completed in 2023 • The bleeder shaft and intake shaft are expected to be completed in the first half of 2023. • The water system upg
Slide 19: 4 North Portal General Layout
W ar r ior Page 18 4 North Portal General Layout Temporary Power Substation Offices (complete) (complete) Mine Service Potable Shaft & Hoist Water Tank (complete) (complete) Bathhouse and Parking Office Building Area (nearing completion) Onsite Warehouse (under construction) Mine Vent. Shaft & Fan W
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: Blue Creek Construction Update – Slope Site
W ar r ior Page 20 Blue Creek Construction Update – Slope Site Construction Shop Construction Hoist Construction Supply Top of Yard Slope Underground Slope (under construction)
Slide 22: Blue Creek Construction Update – Portal Facility
W ar r ior Page 21 Blue Creek Construction Update – Portal Facility Main Power Line Water Treatment (complete) Facility Service Shaft (under construction) Future Power Substation Future Water Tank Future Parking Area Future Mine Vent. Shaft & Access Road Fan (under Future Bathhouse & construction) O
Slide 23: Blue Creek Progress Update
W ar r ior Page 22 Blue Creek Progress Update 1 Project Stages • Permitting Activities • General surface construction (ponds, roads, etc.) • Slope construction • Service shaft and hoist 2 Project Timeline • Q3 2024 Continuous Mine Start • Q2 2026 Longwall Start 3 Capital Spending vs. Budget ($mm’s)
Slide 24: Appendix
Wa rri o r Page 23 Appendix
Slide 25: Appendix
Wa rri o r Page 24 Appendix For the three months ended For the three months ended December 31, 2022 (Unaudited) December 31, 2021 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 1,452 1,317 1,449 1,314 Tons produced (in 000s) 1,468 1,332 1,108 1,006 Average net selling
Slide 26: Appendix
Wa rri o r Page 25 Appendix For the year ended For the year ended December 31, 2022 (Unaudited) December 31, 2021 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 5,621 5,099 6,282 5,699 Tons produced (in 000s) 6,315 5,729 5,604 5,084 Average net selling price per ton $3
Slide 27: Non-GAAP Financial Measures: Adjusted EBITDA Reconciliation
Wa rri o r Page 26 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP For the three months ended For the years ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2022 2021 2022 2021 Net income $ 99,654 $ 138,490 $ 641,298 $
Slide 28: Non-GAAP Financial Measures: Free Cash Flow Reconciliation
W ar r ior Page 27 Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP For the three months ended For the years ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities $
Slide 29: Non-GAAP Financial Measures: Adjusted Net Income Reconciliation
W ar r ior Page 28 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP For the three months ended For the years ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2022 2021 2022 2021 Net income $ 99,654 $ 138,490 $ 641,29
Slide 30: Non-GAAP Financial Measures: Cash Cost of Sales Reconciliation
W ar r ior Page 29 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 years ended December 31, (Unaudited) December 31, (Unaudited) (in thousands) 2022 2021 2022 2021 Cost of sale