Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q3 2023 Earnings Presentation
34 slides from Warrior Met Coal's earnings presentation, Nov 1, 2023
Slide 1: Third Quarter 2023 Results
Warrior Third Quarter 2023 Results November 1, 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? 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: Third Quarter 2023 Achievements Compared to Q3'22
Wa rri o r Page 4 Third Quarter 2023 Achievements Compared to Q3’22 1 Eliminated excess inventory as sales volumes rise 51% to 2.3 million short tons (“St”), and cash cost of sales (free-on-board) per St of $114.66. 2 Achieved production volume of 2.0 million St, a 21% increase. Consummates Re
Slide 6: Key Metrics for Three Months Ended September 30, 2023 vs. 2022
Wa rri o r Page 5 Key Metrics for Three Months Ended September 30, 2023 vs. 2022 For the three months ended September 30, 2023 For the three months ended September 30, 2022 % Change Tons produced (in 000s St) 1,993 Tons produced (in 000s St) 1,643 21% Tons sold (in 000s St) 2,257 Tons sold (in 000s
Slide 7: Key Metrics for Nine Months Ended September 30, 2023 vs. 2022
Wa rri o r Page 6 Key Metrics for Nine Months Ended September 30, 2023 vs. 2022 For the nine months ended September 30, 2023 For the nine months ended September 30, 2022 % Change Tons produced (in 000s St) 5,676 Tons produced (in 000s St) 4,847 17% Tons sold (in 000s St) 5,984 Tons sold (in 000s St)
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 Q3 2022 Q3 2023 21% 39% 39% 17% ~2 weeks 62% 22% 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) 112% 65% 43% (18)% 18% 31% 60% 51% 50% 44% 43% 41% Adjusted EBITDA Margin(1) 40% 34% 34% 30% 20% 10% 0% Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 TTM Avg. Net Realized Price $2
Slide 10: Leverage and Liquidity Ratio
Wa rri o r Page 9 Leverage and Liquidity Ratio Financial Metrics ($ in millions except ratios) Leverage (trailing twelve months ended September 30, 2023) Adjusted EBITDA* $ 682.7 Consolidated Net Cash* (1) $ (510.4) (2) Net Leverage Ratio (0.75x) Liquidity (as of September 30, 2023) Cash and Cash Eq
Slide 11: Breaking Down Warrior's 2023 Capital Expenditures
W ar r ior Page 10 Breaking Down Warrior’s 2023 Capital Expenditures 2023 Capex Guidance 2023 Revised Capex Guidance Detail versus Actual ($ in millions) Low High ($ in millions) Sustaining Guidance QTD Actuals YTD Actuals Sales (Mst) 7.1 7.7 High End Q3 2023 Q3 2023 Production (Mst) 6.8 7.4 Mines $
Slide 12: Workforce Productivity Consistently Achieving New Highs
Wa rri o r Page 11 Workforce Productivity Consistently Achieving New Highs Efficiency and Warrior Effectiveness Average Output per Hour 3.5 9.0 In the nine months ended September 30, 8.0 3.0 2023, the overall consolidated average 7.0 hourly output was Clean Tons per hour worked (st(1)) 2.5 2.93st(
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%) 13% Fo
Slide 14: Capital Allocation: Balancing Capital Investments with Near-Term 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 Shareholder Value
W ar r ior Page 14 Warrior Remains Committed to Stockholder Returns and Maximizing Shareholder Value Proven Track Record of Leveraging Free Cash $ 342 Flow* to Return Excess Cash to Stockholders… 38.0 12.5 $ 607 2017 2018 2019 2020(1) 2021(2) 2022(3) 2023 Dividends $ 458 $11.36 $6.73 $4.61 $0.20 $0.
Slide 16: 2023 Full Year Revised Guidance
Wa rri o r Page 15 2023 Full Year Revised Guidance Full Year Revised Guidance Coal Sales 7.1 – 7.7 Mst Coal Production 6.8 – 7.4 Mst Cash Cost of Sales $113 - $125 per St (Free-on-Board Port)* Capital Expenditures for $95 - $105mm Existing Mines Blue Creek Project and Other $325 - $380mm Discretiona
Slide 17: Project Updates
Project Updates
Slide 18: 4 North Construction
W ar r ior Page 17 4 North Construction • 4 North construction activities: • The bathhouse and portal are complete and in use. • Bunker excavation and construction work is expected to be completed in 2024. • The bleeder shaft and intake shaft are complete. • The water system upgrade and the emulsion
Slide 19: 4 North Portal General Layout
W ar r ior Page 18 4 North Portal General Layout Temporary Power Substation Offices (complete) (complete) Mine Service Potable Shaft & Hoist Water Tank (complete) (complete) Bathhouse and Parking Office Building Area (complete) Onsite Warehouse (under construction) Mine Vent. Shaft & Fan Water Treat
Slide 20: World-Class Blue Creek Project with High-Return Growth Under Development
W ar r ior Page 19 World-Class Blue Creek Project with High-Return for Growth Under Development One of the last remaining untapped premium quality High Vol A Significant Growth Potential coal reserves in the U.S., that should achieve premium prices 17.6 Once developed, expected to provide a port
Slide 21: Unique Growth Opportunity in an Environmentally-Sustainable World
W ar r ior Met Coal Page 20 Unique Growth Opportunity in an Environmentally- Sustainable World In May 2022, Warrior relaunched the development of its Blue Creek reserves, which provides a high-return growth opportunity via one of the last remaining large-scale, untapped premium HVA reserves in the
Slide 22: Blue Creek Drives Warrior's Cash Costs Further into the 1st Quartile Globally
W ar r ior Met Coal Page 21 Blue Creek Drives Warrior’s Cash Costs Further into the 1st Quartile Globally… Seaborne Coking Coal Cash Cost by Mine (FOB) 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Average Cash Cost Warrior Met Coal1 Total Cash Cost ($/mt) Average Pro Forma Cash Cost Blue Cree
Slide 23: ...and Enhances Warrior's Profitability and Cash Flow Generation
W ar r ior Met Coal Page 22 …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 24: Blue Creek Remains Profitable Through-the-Cycle
W ar r ior Met Coal Page 23 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 25: Blue Creek Construction Update – Slope Site
W ar r ior Page 24 Blue Creek Construction Update – Slope Site Top of Slope Construction Shop Slope Belt Drive Tower Raw Coal Belt to Plant Source: Company information
Slide 26: Blue Creek Construction Update – Portal Facility
W ar r ior Page 25 Blue Creek Construction Update – Portal Facility Return Shaft Service Bathhouse Inventory Shaft Warehouse Future Parking Area Source: Company information
Slide 27: Blue Creek Construction Update – Preparation Plant
W ar r ior Page 26 Blue Creek Construction Update – Preparation Plant Prep Plant Rotary Breaker Raw Coal Storage Stacker Belt Source: Company information
Slide 28: Appendix
Wa rri o r Page 27 Appendix
Slide 29: Appendix
Wa rri o r Page 28 Appendix For the three months ended For the three months ended September 30, 2023 (Unaudited) September 30, 2022 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 2,257 2,048 1,499 1,360 Tons produced (in 000s) 1,993 1,808 1,643 1,490 Average net sellin
Slide 30: Appendix
Wa rri o r Page 29 Appendix For the nine months ended For the nine months ended September 30, 2023 (Unaudited) September 30, 2022 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 5,984 5,429 4,169 3,782 Tons produced (in 000s) 5,676 5,149 4,847 4,397 Average net selling
Slide 31: Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
Wa rri o r Page 30 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 September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2023 2022 2023 2022 Net income $ 85,382 $ 98,403 $ 349
Slide 32: Reconciliation of Free Cash Flow to Amounts Reported Under U.S. GAAP
W ar r ior Page 31 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 September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2023 2022 2023 2022 Net cash provided by operating acti
Slide 33: Reconciliation of Adjusted Net Income to Amounts Reported Under U.S. GAAP
W ar r ior Page 32 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 September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2023 2022 2023 2022 Net income $ 85,382 $ 98,403 $
Slide 34: Reconciliation of Cash Cost of Sales to Cost of Sales Under U.S. GAAP
W ar r ior Page 33 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 September 30, (Unaudited) September 30, (Unaudited) (in thousands) 2023 2022 2023 2022 Cost