Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Investor Presentation (May 2022)
37 slides from Warrior Met Coal's investor presentation, May 2022
Slide 1: Blue Creek: Transformational Strategic Investment with Unparalleled Return Profile
BLUE CREEK Transformational Strategic Investment with Unparalleled Return Profile May 2022
Slide 2: Forward Looking Statements
Warrior 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 21E
Slide 3: Unique Growth Opportunity in an Environmentally-Sustainable World
W arrior Met Coal Page 2 Unique Growth Opportunity in an Environmentally- Sustainable World ◼ Warrior is relaunching the development of its Blue Creek reserves, which provides a high-return growth opportunity via one of the last remaining large-scale, untapped premium HVA1 reserves in the U.S. ◼ Blu
Slide 4: Table of Contents
W arrior Met Coal Page 3 Table of Contents 01 Details of Blue Creek Project 02 Seaborne Demand Metallurgical Coal Market : Growth, Global Decarbonization, and 03 Warrior’s Financing Strategy and Investment Criteria 04 Appendix
Slide 5: Details of Blue Creek Project
Details of Blue Creek Project
Slide 6: Blue Creek Provides a High-Return Growth Opportunity via a World-Class Asset
W arrior Met Coal Page 5 Blue Creek Provides a High-Return Growth Opportunity via a World-Class Asset2 1 One of the Last Remaining Large-Scale (4.8 Mst p.a.1), Untapped Premium HVA1 Reserves in the U.S. ✓ 2 Increases Nameplate Production Capacity by ~60% and Adds ~50 Years of Expected Production3 ✓
Slide 7: Blue Creek is a World-Class Project
W arrior Met Coal Page 6 Blue Creek is a World-Class Project Blue Creek Benefits from Existing What Makes Blue Creek World-Class? Infrastructure and Logistics Advantage Large-Scale 4.8 Mst p.a.1 Production Capacity2 IN Based on Single Longwall Birmingham Premium Tier 1 HVA1 with High CSR1 & Low Sulf
Slide 8: Blue Creek is a Transformational Strategic Investment For Warrior
W arrior Met Coal Page 7 Blue Creek is a Transformational Strategic Investment For Warrior2… NPV3 IRR3 Payback5 $ 987M 27 % 2.4 Years Real, after-tax From start of longwall production 10% real discount rate, after-tax Construction Capex $ 650-700M Over 5-year period NPV / sh4 Adj. EBITDA Margin1 All
Slide 9: Robust Financial Profile Across a Wide Range of HCC Prices
W arrior Met Coal Page 8 …with a Robust Financial Profile Across a Wide Range of HCC Prices HVA Benchmark Price Projected Payback2 IRR3 NPV ($M)4 Adj. EBITDA Margin1 $ 200 / mt 1.6 Years 39 % $ 1,982 60 % $ 180 / mt 1.8 Years 35 % $ 1,584 56 % $ 160 / mt 2.2 Years 30 % $ 1,189 52 % $ 150 / mt 2.4 Ye
Slide 10: Blue Creek Drives Warrior's Cash Costs Further into the 1st Quartile Globally
W arrior Met Coal Page 9 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 Coal2 Total Cash Cost ($/mt) Average Pro Forma Cash Cost Blue Creek 3
Slide 11: … and Enhances its Ability to Serve Customers
W arrior Met Coal Page 10 … and Enhances its Ability to Serve Customers Allows Customers to Load 3 Premium Coal Qualities, from a Single Coal Seam, at a Single Port, from a Single Supplier Enhances Warrior’s Product Mix Port Expansion Further Increases Attractiveness to Customers Current2 ◼ Blue Cre
Slide 12: Production Capacity and Low-Cost Structure Drive Breakeven Point Down
W arrior Met Coal Page 11 Blue Creek’s Production Capacity and Low-Cost Structure Will Significantly Drive the All-in Cash Cost Breakeven Point Down Ability to Remain Profitable Through Any Significant Production Growth Potential Historical Adverse Price Environment 17.6 ($ / short ton) 38% Growth $
Slide 13: Seaborne Metallurgical Coal Market: Growth, Global Decarbonization, and Demand
Seaborne Metallurgical Coal Market: Growth, Global Decarbonization, and Demand
Slide 14: Why Blue Creek and Met Coal?
W arrior Met Coal Page 13 Why Blue Creek and Met Coal? 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 15: Attractive Long-Term Steel Demand Fundamentals
W arrior Met Coal Page 14 Attractive Long-Term Steel Demand Fundamentals… Global steel demand to grow over the long-term, fueled by demand from emerging countries and to support the energy transition, which is steel intensive (Mmt)1 Global Steel Demand Forecast 2,400 China World Ex China 2,200 2,000
Slide 16: Drive Increased Long-Term Seaborne Met Coal Demand
W arrior Met Coal Page 15 … which will Drive Increased Long-Term Seaborne Met Coal Demand Demand for seaborne met coal will increase over the next two decades as most new demand comes from BF-BOF1 growth in countries that do not have access to domestic met coal Global Seaborne Met Coal Demand Growth
Slide 17: Declining Output in the U.S. Reveals a Widening Gap in Supply
W arrior Met Coal Page 16 Declining Output in the U.S. Reveals a Widening Gap in Supply to Meet Demand for HCC1… U.S. Production of met coal has been on a downward trend as older Over the next ~30 years, the supply gap of HCC1 coal is expected to mines deplete their reserves and as quality degrades
Slide 18: Reinforces the Attractiveness of the Project
W arrior Met Coal Page 17 … which Reinforces the Attractiveness of the Project HVA1 production by longwall represents ~30 percent of Limited Pipeline of HVA1 Projects the total HVA1 production in the U.S., and most of the production is by higher cost operations Blue Creek is One of a Limited Number
Slide 19: Blue Creek will be the New Benchmark in HVA1
W arrior Met Coal Page 18 Blue Creek will be the New Benchmark in HVA1, as the Product is a Premium Coal with Superior Characteristics With >65% CSR1 and Sulfur <0.60%, Blue Creek will become the new 80% benchmark in global HVA1 supply Warrior Mine 7 Warrior Mine 4 Hard CC ◼ HVA1 provides producers
Slide 20: Blue Creek's Met Coal Benefits from Supply Shocks in Australia / Pacific Basin
W arrior Met Coal Page 19 Quality of Blue Creek’s Met Coal Allows it to Benefit from Supply Shocks in Australia / Pacific Basin 2012: Supply continues to 10YR average U.S. High Vol A HCC1 A recover following 2011 Australian Benchmark settlement: $180 / mt1 E flooding $400 $350 2016: Chinese workday
Slide 21: High Vol A Pricing Dynamics Support Attractiveness to Warrior
W arrior Met Coal Page 20 High Vol A Pricing Dynamics Support Attractiveness to Warrior Prices have historically been closely correlated with short term swings typically driven by supply distributions $ 450 U.S. High Vol A Price Premium / (Discount) to: U.S. Low Vol2 Aus Premium Low Vol2 $ 403 $ 400
Slide 22: Warrior's Financing Strategy and Investment Criteria
Warrior’s Financing Strategy and Investment Criteria
Slide 23: Proven Track Record and Financial Strength to Develop Blue Creek
W arrior Met Coal Page 22 Warrior Has a Proven Track Record and the Financial Strength to Develop Blue Creek Significant Value Creation for Stockholders… Warrior Has Delivered Since 2016 Total Stockholder Return3 ✓ 240% Production Growth ✓ Industry Leading Adj. EBITDA Margins 78% ✓ Unparalled FCF Co
Slide 24: Committed to Stockholder Returns and Maximizing Stockholder Value
W arrior Met Coal Page 23 Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value ◼ Warrior has not changed its capital allocation policy as a result of its announced intention to relaunch the development of Blue Creek. ◼ Conceptually, Warrior’s approach to capital allocati
Slide 25: Capital Allocation: Balancing Growth Investments with Near-Term Returns
W arrior Met Coal Page 24 Capital Allocation: Balancing Capital Investments for Medium to Long-Term Growth with Near-Term Returns to Stockholders Free Cash Flow1 For the For returns For the development For M&A existing business to stockholders of Blue Creek • Sustaining capital • Increase fixed quar
Slide 26: Blue Creek Meets Warrior's Strict Investment Criteria
W arrior Met Coal Page 25 Blue Creek Meets Warrior’s Strict Investment Criteria… ✓ World-Class Asset ✓ Attractive Returns Financial 2 ✓ Maximize Returns Stockholder ▪ Expected to deliver significant ▪ Large-scale, 1st quartile global ▪ ~30% IRR on $650-700M of organic growth for stockholders cost, h
Slide 27: Enhances Warrior's Profitability and Cash Flow Generation
W arrior Met Coal Page 26 …and Enhances Warrior’s Profitability and Cash Flow Generation2 Illustrative Impact to Adj. EBITDA and Adj. EBITDA Margin1 Illustrative Impact to Free Cash Flow (FCF)1 % Adj. FCF EBITDA Conversion Margin % 38% 56% 43% 84% 80% 83% $ 784 $ 647 (US$ in millions) (US$ in millio
Slide 28: Blue Creek Remains Profitable Through-the-Cycle
W arrior Met Coal Page 27 Blue Creek Remains Profitable Through-the-Cycle2 Incremental Adj. EBITDA and Adj. EBITDA Margin1 Incremental Free Cash Flow (FCF)1 and FCF Conversion1 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$ in
Slide 29: Significant Flexibility in How it Funds Blue Creek
W arrior Met Coal Page 28 Warrior has Significant Flexibility in How it Funds Blue Creek… ◼ Warrior has a cash balance of $396M and 2 total liquidity2 of $479M — Warrior’s minimum liquidity target is Current Cash $250M during the construction of Blue Balance2 Creek ($396M) — Warrior’s minimum cash b
Slide 30: Capex Spend Profile Allows it to be Opportunistic
W arrior Met Coal Page 29 … and the Capex Spend Profile Allows it to be Opportunistic 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 Permitting Activities Coal Transportation Activities Overland Co
Slide 31: Blue Creek Provides a High-Return Growth Opportunity: Key Takeaways
W arrior Met Coal Page 30 Blue Creek Provides a High-Return Growth Opportunity via a World-Class Asset2 KEY TAKEAWAYS 1 One of the Last Remaining Large-Scale (4.8 Mst p.a.1), Untapped Premium HVA1 Reserves in the U.S. ✓ 2 Increases Nameplate Production Capacity by ~60% and Adds ~50 Years of Expected
Slide 32: Appendix
Appendix
Slide 33: Definitions and Footnotes
W arrior Met Coal Page 32 Definitions and Footnotes The following is a glossary of selected terms used in the presentation: Adj. EBITDA Margin is defined as Adjusted EBITDA divided by total revenue. Based on average of first 10 years of production capacity. BF-BOF means blast furnace – basic oxygen
Slide 34: Non-GAAP Financial Measures: Adjusted EBITDA Reconciliation
W arrior Met Coal Page 33 Appendix Non-GAAP Financial Measures Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP 2019A (in thousands) $178/mt Net income $ 301,699 Interest expense, net 29,335 Income tax expense 65,417 Depreciation and depletion 97,330 Asset retirement obligation
Slide 35: Non-GAAP Financial Measures: Free Cash Flow Reconciliation
W arrior Met Coal Page 34 Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow1 to Amounts Reported Under U.S. GAAP 2019A (in thousands) $178/mt Net cash provided by operating activities $ 532,814 Purchases of property, plant and equipment and mine development costs (130,670) Free c
Slide 36: Non-GAAP Financial Measures
W arrior Met Coal Page 35 Appendix Non-GAAP Financial Measures The Company does not provide reconciliations of its outlook for Adj. EBITDA Margin or All-in Cash Cost Per St to comparable GAAP financial measures in reliance on the unreasonable efforts exception provided for under Item 10(e)(1)(i)(B)
Slide 37: Warrior Met Coal
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