Warrior Met Coal, Inc. · NYSE:HCC

Warrior Met Coal — Investor Presentation (February 2020)

27 slides from Warrior Met Coal's investor presentation, February 2020

  1. Slide 1: Blue Creek: Transformational Strategic Investment with Unparalleled Return Profile

    Blue Creek Transformational Strategic Investment with Unparalleled Return Profile February 2020

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements These slides contain, and the Company’s officers and representatives 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 Securities Exchange Act of 1934, as amended. All s

  3. Slide 3: Blue Creek Provides High-Return Growth Opportunity via World-Class Asset

    Blue Creek Provides High-Return Growth Opportunity via World-Class Asset¹ 1 One of the Last Remaining Large-Scale (4.3 Mst p.a.), Untapped Premium HVA Mines in the U.S.  2 Increases Production Capacity by ~54% and Adds ~50 Years of Expected Production²  3 Projected to Create Significant Stockholde

  4. Slide 4: Warrior Has a Proven Track Record and the Financial Strength to Develop Blue Creek

    Warrior Has a Proven Track Record and the Financial Strength to Develop Blue Creek Warrior Has Delivered Since 2016 Significant Value Creation for Stockholders…  240% Production Growth Total Shareholder Return⁴  Industry Leading EBITDA Margins  Unparalled FCF Conversion² 167 % (54)%  Outperforme

  5. Slide 5: Blue Creek Project

    Blue Creek Project ees

  6. Slide 6: Blue Creek is a World-Class Project

    Blue Creek is a World-Class Project What Makes Blue Creek World-Class? Blue Creek Benefits from Existing Infrastructure and Logistics Advantage Large-Scale 4.3 Mst p.a. Production Capacity1 ~300 miles from Based on Single Longwall Port of Mobile vs. Blue Creek ~400 miles distance for CAPP producers

  7. Slide 7: Blue Creek is a Transformational Strategic Investment for Warrior

    Blue Creek is a Transformational Strategic Investment For Warrior¹… NPV² IRR² Payback⁴ $ 1,039M ~30 % 2.3 Years 10% real discount rate, after tax Real, after tax From start of longwall production Construction Capex $ 550-600M Over 5 year period NPV / sh³ Adj. EBITDA Margin⁵ All-in Cash Cost Per St⁶

  8. Slide 8: Robust Financial Profile Across a Wide Range of Assumed HCC Prices

    …with Robust Financial Profile Across a Wide Range of Assumed HCC Prices HVA Benchmark Projected Adj. EBITDA IRR² NPV ($M)³ Price Payback¹ Margin⁴ $ 180 / mt 1.8 Years 36 % $ 1,533 62 % $ 160 / mt 2.1 Years 32 % $ 1,204 59 % $ 150 / mt 2.3 Years 29 % $ 1,039 56 % $ 140 / mt 2.5 Years 27 % $ 875 54 %

  9. Slide 9: Drives Warrior's Cash Costs to 1st Quartile Globally

    Blue Creek Drives Warrior’s Cash Costs to 1 Quartile st Globally… 180 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile 160 Warrior Warrior Breakeven Met Coal Benchmark Price ($/st) 140 Pro Forma² Current¹ $113/st Weight. Avg. 120 Breakeven Price3 100 80 60 40 20 0 0 50 100 150 200 250 300 Warrior

  10. Slide 10: … and Enhances its Ability to Serve Customers

    … and Enhances its Ability to Serve Customers Allows Customers to Load 3 Premium Coal Qualities, at Single Port, from Single Supplier and from a Single Coal Seam Enhances Warrior’s Product Mix Port Expansion Further Increases Attractiveness to Customers Current¹ 25 %  Blue Creek to benefit by Port

  11. Slide 11: Blue Creek's HVA Product is a Premium Coal with Superior Coking Characteristics

    Blue Creek’s HVA Product is a Premium Coal with Superior Coking Characteristics High CC 80% Warrior Mine 7 Warrior Mine 4  HVA provides producers with optionality in Coke battery operation 70% U.S., Australia & Canada Prime HCC’s — Allows customers with older batteries to optimize Warrior Blue Cree

  12. Slide 12: Seaborne Metallurgical Coal Market

    Seaborne Metallurgical Coal Market

  13. Slide 13: High Vol A Represents Attractive Market for Warrior

    High Vol A Represents Attractive Market for Warrior HVA from U.S. Mines Are Facing Reserve Depletion Limited Pipeline of HVA Projects Significant Mine Closures in CAPP and NAPP Result in Declining Production Blue Creek One of Limited Number of Tier 1 HVA Mines with Longwall Profile with Only ~32 Yea

  14. Slide 14: Attractive Long-Term Supply-Demand Fundamentals for Hard Coking Coal

    Attractive Long-Term Supply-Demand Fundamentals for Hard Coking Coal Blue Creek Commissioning Coincides with an Increase in Projects Needed as a Result of Strong Demand Growth and Depleting Supply Significant New HCC Supply Required to Meet Growing Strong Demand Growth for HCC from India and RoW Dem

  15. Slide 15: High Vol A Pricing Dynamics Further Enhance Attractiveness to Warrior

    High Vol A Pricing Dynamics Further Enhance Attractiveness to Warrior $300 Declining Production Profile of HVA Has Improved Relative Pricing vs. Low Vol Coals U.S. High Vol A Price Premium / (Discount) U.S. Low Vol Aus Premium Low Vol 6 Month 3% (2)% $250 1 Year 6% (2)% 2 Years 6% (2)% 3 Years 4% (4

  16. Slide 16: Financing Strategy & Capital Allocation

    Financing Strategy & Capital Allocation

  17. Slide 17: Blue Creek Meets Warrior's Strict Investment Criteria

    Blue Creek Meets Warrior’s Strict Investment Criteria¹  World Class Asset  Attractive Financial Returns  Maximize Stockholder Returns  ~30% IRR on $550-600M of capital  Expected to deliver significant expenditures organic growth for stockholders  Large-scale, 1st quartile cost, high through hi

  18. Slide 18: Blue Creek to Enhance Warrior's Profitability and Cash Flow Generation

    Blue Creek to Enhance Warrior’s Profitability and Cash Flow Generation¹ Illustrative Impact to Adj. EBITDA and Adj. EBITDA Margin² Illustrative Impact to Free Cash Flow (FCF)³ % Margin 38% 56% 43% 63% Growth $ 656 $ 794 66% Growth $ 254 $ 315 $ 402 (US$ in millions) (US$ in millions) $ 479 Warrior B

  19. Slide 19: Warrior Remains Profitable Through-the-Cycle

    Blue Creek Remains Profitable Through-the-Cycle¹ Adj. EBITDA and Adj. EBITDA Margin² Free Cash Flow (FCF)³ % 38% 48% 54% 56% 59% 62% Margin $ 479 $ 418 $ 402 $ 349 $ 315 $ 337 (US$ in millions) (US$ in millions) $ 281 $ 281 $ 213 $ 254 $ 226 $ 170 Warrior @HCC @HCC @HCC @HCC @HCC Warrior @HCC @HCC @

  20. Slide 20: Warrior has Significant Flexibility in How it Funds Blue Creek

    Warrior has Significant Flexibility in How it Funds Blue Creek… Current Cash  Warrior has a cash balance of $193M and total $ 600 Balance liquidity of $310M ($193M) — Warrior’s minimum liquidity target is $100M $ 50 Warrior has significant  Significant portion of capex can be financed Equipment wi

  21. Slide 21: Capex Spend Profile Allows it to be Opportunistic

    … and Capex Spend Profile Allows it to be Opportunistic 2020 2021 2022 2023 2024 2025 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 Conveyor to Raw Coal Stockpile C

  22. Slide 22: Warrior Remains Committed to Returning Excess Cash Flows to Stockholders

    Warrior Remains Committed to Returning Excess Cash Flows to Stockholders Historical Special Dividends Occurred When HCC >$193/mt Avg. LTM HCC Price $204 $199 $193  Warrior will maintain $0.05/share quarterly dividend ($/mt) during Blue Creek development $ 600  Warrior will continually evaluate its

  23. Slide 23: Blue Creek Provides High-Return Growth Opportunity via World-Class Asset: Key Takeaways

    Blue Creek Provides High-Return Growth Opportunity via World-Class Asset¹ KEY TAKEAWAYS 1 One of the Last Remaining Large-Scale (4.3 Mst p.a.), Untapped Premium HVA Mines in the U.S.  2 Increases Production Capacity by ~54% and Adds ~50 Years of Expected Production²  3 Projected to Create Signific

  24. Slide 24: Appendix

    Appendix

  25. Slide 25: Non-GAAP Financial Measures: Adjusted EBITDA Reconciliation

    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 (7,891) Stock compensation

  26. Slide 26: Non-GAAP Financial Measures: Free Cash Flow Reconciliation

    Appendix Non-GAAP Financial Measures Reconciliation of Free Cash Flow 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 cash flow $ 402,144 Source:

  27. Slide 27: Warrior Met Coal

    \\ WARRIOR MET COAL

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