Warrior Met Coal, Inc. · NYSE:HCC
Warrior Met Coal — Q2 2022 Earnings Presentation
30 slides from Warrior Met Coal's earnings presentation, Aug 3, 2022
Slide 1: Second Quarter 2022 Results
Second Quarter 2022 Results August 3, 2022
Slide 2: Forward-looking statements
Wa rri o r Met C o a l 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 Sectio
Slide 3: Pure Play U.S. Met Coal Producer and 100% Exporter
W ar r ior Met Coal Page 2 Pure Play U.S. Met Coal Producer and 100% Exporter Warrior Alabama-based exporter of comparable Australian Premium Low-Vol HCC to the global steel industry Variable cost structure that adjusts with index HCC prices, allowing Warrior to remain flexible and adapt to chan
Slide 4: Why Met Coal?
W ar r ior Met Coal Page 3 Why 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 solar power. Me
Slide 5: Second Quarter 2022 Achievements
Wa rri o r Met C o a l Page 4 Second Quarter 2022 Achievements Achieved record quarterly net income of $297.0 million, all-time record 1 adjusted net income of $303.5 million and an all-time record adjusted EPS of $5.87 per diluted share. 2 Accomplished an all-time record adjusted EBITDA of $431.2
Slide 6: Key Metrics for Q2 2022 vs. Q2 2021
Wa rri o r Met C o a l Page 5 Key Metrics for Q2 2022 vs. Q2 2021 Q2 2022 Q2 2021 % Change Tons produced (in 000s St) 1,667 Tons produced (in 000s St) 1,195 39% Tons sold (in 000s St) 1,543 Tons sold (in 000s St) 1,822 (15%) Average net selling price (per St) $403.95 Average net selling price (per S
Slide 7: Key Metrics for the Six Months Ended June 30, 2022 vs. 2021
Wa rri o r Met C o a l Page 6 Key Metrics for the Six Months Ended June 30, 2022 vs. 2021 For the six months ended June 30, 2022 For the six months ended June 30, 2021 % Change Tons produced (in 000s St) 3,204 Tons produced (in 000s St) 3,367 (5%) Tons sold (in 000s St) 2,670 Tons sold (in 000s St)
Slide 8: Customer Revenue by Geography Provides Significant Logistical Cost Advantage to the Seaborne Market
Wa rri o r Met C o a l Page 7 Customer Revenue by Geography Provides Significant Logistical Cost Advantage to the Seaborne Market Delivered cost advantage into Europe based on ~2 Customer revenue by geography week transport time vs. ~5 weeks from Australia 2021 Q2 2022 19% 20% 56% 62% 25% 18% ~2 wee
Slide 9: Generated Significant Free Cash Flow on Strong Conversion of Adjusted EBITDA Margins
Wa rri o r Met C o a l Page 8 Generated Significant Free Cash Flow(1)* on Strong Conversion of Adjusted EBITDA(2)* Margins(3) FCF Conversion(4) 82% 50% 63% 20% 58% 49% 80% 69% 70% 64% 63% 60% 58% Adjusted EBITDA Margin(3) 52% 50% 40% 29% 30% 20% 10% 0% Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 TTM Avg
Slide 10: Leverage and Liquidity Ratio
Wa rri o r Met C o a l Page 9 Leverage and Liquidity Ratio Financial Metrics ($ in millions except ratios) Leverage (for the trailing twelve months ended June 30, 2022) Adjusted EBITDA* $ 1,020.2 Consolidated Net Cash* (1) $ (263.5) Net Leverage Ratio (2) (0.26x) Liquidity (as of June 30, 2022) Cash
Slide 11: Breaking Down Warrior’s 2022 Capital Expenditures
W ar r ior Met Coal 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 ) 5.5 6.5 High End Q2 2022 Q2 2022 Capex Mines $75 $8
Slide 12: Workforce Productivity Near All-time High
W ar r ior Met Coal Page 11 Workforce Productivity Near All-time High Warrior Met Coal Efficiency and Average Output per Hour Effectiveness 4.0 2.5 In the second quarter of 2022, consolidated 3.5 average hourly output Clean Tons per hour worked (st(1)) 2.0 was 3.50st(1) 3.0 Production (Mst(2)) M
Slide 13: Strong Track Record and Continued Focus on Safety
W ar r ior Met Coal Page 12 Strong Track Record and Continued Focus on Safety Total Reportable Incident Rate FY FY FY Q2 Safety 2019 2020 2021 2022 YTD Superior safety record compared to the industry average Tons produced (000s St(3)) 8,470 7,862 5,605 3,204 Annual % increase/(decrease) 10% (7%) (
Slide 14: Capital Allocation: Balancing Capital Investments for Medium to Long-Term Growth with Near-Term Returns
W ar r ior Met Coal Page 13 Capital Allocation: Balancing Capital Investments for Medium to Long-Term Growth with Near-Term Returns to Stockholders Free Cash Flow*(1) For the For returns For the development For M&A existing business to stockholders of Blue Creek • Sustaining capital • Increase fixed
Slide 15: Warrior Remains Committed to Stockholder Returns and Maximizing Stockholder Value
W ar r ior Met Coal 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 Cash to Stockholders… 12.5 $ 607 Q2 2022 2017 2018 2019 2020(3) 2021(2)(3) YTD Dividends $14.92 $6.73 $4.61 $0.20 $0.20
Slide 16: 2022 Full Year Guidance
Wa rri o r Met C o a l Page 15 2022 Full Year Guidance Full Year Guidance Coal Sales 5.5 – 6.5 Mst Coal Production 5.5 – 6.5 Mst Cash Cost of Sales $115 - $125 per St (Free-on-Board Port)* Capital Expenditures $185 - $200mm Mine Development $30 - $40mm S,G&A $48 - $52mm Interest Expense, net $22 - $
Slide 17: Project Updates
Project Updates
Slide 18: 4 North Construction Update
W ar r ior Met Coal Page 17 4 North Construction Update • 4 North construction activities were paused in April 2021 after exhausting the onsite purchased and committed construction materials • Temporary facilities were ready for use as scheduled, but were shuttered to reduce idle costs • Use of temp
Slide 19: 4 North Portal General Layout
W ar r ior Met Coal 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. Shaf
Slide 20: World-Class Blue Creek Project with High-Return for Growth Under Development
W ar r ior Met Coal 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 provi
Slide 21: Blue Creek Construction Update – Slope Site
W ar r ior Met Coal 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 Met Coal 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 & constr
Slide 23: Blue Creek Progress Update
W ar r ior Met Coal 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
Slide 24: Appendix
Wa rri o r Met C o a l Page 23 Appendix
Slide 25: Appendix
Wa rri o r Met C o a l Page 24 Appendix For the three months ended For the three months ended June 30, 2022 (Unaudited) June 30, 2021 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 1,543 1,400 1,822 1,653 Tons produced (in 000s) 1,667 1,512 1,195 1,084 Average net sell
Slide 26: Appendix
Wa rri o r Met C o a l Page 25 Appendix For the six months ended For the six months ended June 30, 2022 (Unaudited) June 30, 2021 (Unaudited) Short Tons Metric Tons Short Tons Metric Tons Tons sold (in 000s) 2,670 2,422 3,774 3,424 Tons produced (in 000s) 3,204 2,907 3,367 3,054 Average net selling
Slide 27: Appendix Non-GAAP Financial Measures
Wa rri o r Met C o a l 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 six months ended June 30, (Unaudited) June 30, (Unaudited) (in thousands) 2022 2021 2022 2021 Net income (loss) $ 296,992 $ (4,
Slide 28: Appendix Non-GAAP Financial Measures
W ar r ior Met Coal 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 six months ended June 30, (Unaudited) June 30, (Unaudited) (in thousands) 2022 2021 2022 2021 Net cash provided by operating activi
Slide 29: Appendix Non-GAAP Financial Measures
W ar r ior Met Coal 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 six months ended June 30, (Unaudited) June 30, (Unaudited) (in thousands) 2022 2021 2022 2021 Net income (loss) $ 296,992 $ (4
Slide 30: Appendix Non-GAAP Financial Measures
W ar r ior Met Coal 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 six months ended June 30, (Unaudited) June 30, (Unaudited) (in thousands) 2022 2021 2022 2021 Cost o