Achieved largest quarterly Net Income and
Earnings Per Share in three years Successfully completed debt
refinancing to position Company for long term success Sets out
guidance for 2022
Warrior Met Coal, Inc. (NYSE:HCC) (“Warrior” or the “Company”)
today announced results for the fourth quarter and full-year 2021.
Warrior is the leading dedicated U.S. based producer and exporter
of high quality metallurgical (“met”) coal for the global steel
industry.
Warrior reported a fourth quarter 2021 net income of $138.5
million, or $2.68 per diluted share, compared to a net loss of
$33.7 million, or $0.66 per diluted share, in the fourth quarter of
2020. Adjusted net income for the fourth quarter of 2021 was $3.17
per diluted share compared to an adjusted net loss of $0.63 per
diluted share in the fourth quarter of 2020. The Company reported
Adjusted EBITDA of $240.2 million in the fourth quarter of 2021,
compared to Adjusted EBITDA of $9.2 million in the fourth quarter
of 2020.
“With strong customer demand and our ability to capitalize on a
favorable pricing environment, we are pleased to report a record
quarterly Adjusted EBITDA and the best quarterly financial
performance in three years,” commented Walt Scheller, CEO of
Warrior. “Global supply remained tight during the quarter, even
with China continuing to reduce its steel production. We continue
to be well-positioned from a cost and supply standpoint to take
advantage of the current strong market for high quality premium met
coal, which has been strengthened by robust economic growth.”
“Our decision to refinance our senior notes and ABL facility at
this time accomplishes several important goals. It enhances our
already strong balance sheet and financial position, takes
advantage of current low borrowing costs, modestly lowers our cash
interest expense and furthers our financial flexibility as we
pursue the creation of long-term shareholder value. It will also
position us to resume our growth strategy and increase our return
of cash to shareholders in the future,” commented Dale Boyles, CFO
of Warrior.
Warrior reported full year 2021 net income of $150.9 million and
adjusted net income of $227.7 million, or net income of $2.93 per
diluted share and adjusted net income of $4.43 per diluted share,
compared to a net loss of $35.8 million and adjusted net loss of
$34.8 million, or net loss of $0.70 per diluted share and adjusted
net loss of $0.68 per diluted share, in 2020. The Company reported
Adjusted EBITDA of $457.0 million for the full year 2021 compared
to $108.3 million in 2020.
Operating Results
The Company produced 1.1 million short tons of met coal in the
fourth quarter of 2021 compared to 1.8 million short tons in the
fourth quarter of 2020. Fourth quarter production was the result of
running both longwalls and four continuous miner units at Mine No.
7 and one continuous miner unit at Mine No. 4. For the full year of
2021, the Company produced 5.6 million short tons, or a decrease of
28.7% compared to 2020. Sales volume in the fourth quarter of 2021
was 1.4 million short tons compared to 2.2 million short tons in
the fourth quarter of 2020. Sales volumes for the full year 2021
were 6.3 million short tons, or a decrease of 15.4% compared to
2020. Inventory levels decreased to 243 thousand short tons at the
end of December 31, 2021 from the 998 thousand short tons at the
end of 2020.
Additional Financial Results
Total revenues were $415.5 million for the fourth quarter of
2021, including $396.8 million in mining revenues, which consisted
of met coal sales of 1.4 million short tons at an average net
selling price of $273.84 per short ton, net of demurrage and other
charges. This compares to total revenues of $212.3 million in the
fourth quarter of 2020. The average net selling price of the
Company's met coal increased 193% from $93.54 per short ton in the
fourth quarter of 2020 to $273.84 per short ton in the fourth
quarter of 2021. During the fourth quarter of 2021, the Company's
gross price realization was 85% of the quarterly Australian premium
low-volatility hard coking coal (“HCC”) Platts Premium LV FOB
Australian Index (the “Platts Index”) price, primarily reflecting
the timing of shipments. The year-over-year increase in revenues is
primarily attributed to improved met coal pricing, partially offset
by lower sales volume.
Cost of sales for the fourth quarter of 2021 was $155.2 million
compared to $191.5 million for the fourth quarter of 2020. Cash
cost of sales (including mining, transportation and royalty costs)
for the fourth quarter of 2021 were $153.3 million, or 38.6% of
mining revenues, compared to $190.4 million, or 92.3% of mining
revenues in the same period of 2020. Cash cost of sales
(free-on-board port) per short ton increased to $105.80 in the
fourth quarter of 2021 from $86.37 in the fourth quarter of 2020,
reflecting higher met coal sales prices and its effect on Warrior's
variable cost structure. The full year 2021 cash cost of sales per
short ton was $87.48 compared to $83.74 in for the full year
2020.
Selling, general and administrative expenses for the fourth
quarter of 2021 were $9.4 million, or 2.3% of total revenues.
Depreciation and depletion costs for the fourth quarter of 2021
were $39.4 million, or 9.5% of total revenues. Warrior incurred net
interest expense of $9.4 million during the fourth quarter of 2021,
which was higher than the same quarter last year primarily due to
interest on new equipment financing leases.
Business interruption expenses were $7.5 million in the fourth
quarter of 2021 and represent non-recurring expenses that are
directly attributable to the ongoing UMWA strike for incremental
safety and security, labor negotiations and other expenses. Idle
mine expenses were $13.7 million in the fourth quarter of 2021 and
represent expenses incurred with the idling of Mine No. 4 and
reduced operations at Mine No. 7, such as electricity, insurance
and maintenance labor.
The loss on early extinguishment of debt of $9.7 million in the
fourth quarter of 2021 represents the write-off of debt issuance
costs and premiums paid in connection with the redemption of the
Company's outstanding 8.00% senior secured notes due 2024 (the
“Existing Notes”).
Income tax expense was $26.7 million in the fourth quarter of
2021 due to income before income taxes of $165.1 million offset
partially by an income tax benefit for depletion and additional
marginal gas well credits. This compares to an income tax benefit
of $10.8 million in the fourth quarter of 2020.
Cash Flow and Liquidity
The Company generated cash flows from operating activities in
the fourth quarter of 2021 of $174.7 million, compared to $30.5
million in the fourth quarter of 2020. Capital expenditures for the
fourth quarter of 2021 were $23.7 million, resulting in free cash
flow of $151.0 million. Free cash flow was $149.8 million better
than the fourth quarter of 2020 and reflected higher realized
prices, lower sales volume and conscious management of
expenses.
Net working capital, excluding cash, for the fourth quarter of
2021 increased by $33.8 million from the third quarter of 2021,
primarily reflecting an increase in accounts receivable due to
higher sales volume.
Cash flows used in financing activities for the fourth quarter
of 2021 were $23.5 million, primarily due to the redemption of the
Existing Notes of $350.3 million, payment of debt issuance costs
associated with the issuance of $350.0 million in aggregate
principal amount of the Company's 7.875% Senior Secured Notes due
2028 (the “New Notes”) of $11.4 million, payments of capital lease
obligations of $6.7 million, and the payment of dividends of $2.6
million, offset by $347.7 million in proceeds received from the
issuance of the New Notes.
The Company generated $351.5 million of cash flows from
operating activities for the full year 2021 compared to $112.6
million in 2020. Capital expenditures and mine development costs
for the full year 2021 were $71.4 million. Cash flows used in
financing activities for the full year 2021 were $96.5 million,
primarily due to the repayment of $40.0 million under the ABL
Facility, payments on capital lease obligations of $29.0 million,
payment of dividends of $10.5 million and a net $14.0 million of
payments associated with the issuance of the New Notes and
redemption of the Existing Notes.
The Company’s total liquidity as of December 31, 2021 was $479.0
million, consisting of cash and cash equivalents of $395.8 million
and available liquidity under its ABL Facility of $83.2 million,
net of outstanding letters of credit of $9.4 million.
Capital Allocation
As previously disclosed on December 6, 2021, the Company
consummated its previously announced private offering (the
“Offering”) of the New Notes to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and to certain non-U.S. persons in
transactions outside the United States in accordance with
Regulation S under the Securities Act. The Company used the net
proceeds of the Offering, together with cash on hand, to fund the
redemption of all of the Company’s Existing Notes, including
payment of the redemption premium in connection with such
redemption. Concurrently with the closing of the Offering, the
Company amended and restated the existing ABL Facility to among
other things (i) extend the maturity date to five years at the
closing of this Offering, (ii) amend certain definitions of the
borrowing base, (iii) increase the commitments that may be used to
issue letters of credit to $65 million and (iv) to amend certain
baskets contained in the covenants to conform to the baskets
contained in the indenture that governs the New Notes. The amended
and restated ABL Facility allows the Company to borrow up to $132.0
million through October 14, 2023, decreasing to $116.0 million
through November 2026, subject to meeting borrowing base and other
conditions.
On February 18, 2022, the board of directors declared a regular
quarterly cash dividend of $0.06 per share, totaling approximately
$3.1 million, which will be paid on March 10, 2022 to stockholders
of record as of the close of business on March 3, 2022.
Collective Bargaining Agreement
The Company’s Collective Bargaining Agreement (“CBA”) contract
with the United Mine Workers of America (“UMWA”) expired on April
1, 2021, and the UMWA initiated a strike which continues today. The
Company continues to negotiate in good faith to reach a new union
contract. During the strike, the Company continues to successfully
execute its business continuity plans, allowing it to meet the
needs of its valued customers. Despite incurring costs associated
with the strike, the Company has been able to manage its working
capital and spending to deliver strong results in the current
markets. For more labor related information go to https://warriormetcoalfacts.com.
The Company believes that it is well positioned to fulfill
anticipated customer volume commitments for 2022. In the current
operating environment and without a new contract, the Company
believes that production and sales volume for 2022 could be between
5.5 million and 6.5 million short tons as indicated under Company
Outlook below. These volumes include the assumed restart of Mine 4
and continued lower production at Mine 7. While the Company has
business continuity plans in place, the strike may still cause
disruption to production and shipment activities, and the plans may
vary significantly from quarter to quarter for the full year of
2022.
Similarly, with a new contract, Warrior believes that production
and sales volume over a twelve-month period could ramp up to a run
rate of approximately 7.5 million short tons within three to four
months.
Company Outlook
The Company's outlook for 2022 is subject to many risks that may
impact performance, such as the UMWA strike, market conditions in
the steel and met coal industries and overall global economic and
competitive conditions, all as more fully described under
Forward-Looking Statements. The Company's guidance for the full
year 2022 is outlined below.
Coal sales
5.5 - 6.5 million short tons
Coal production
5.5 - 6.5 million short tons
Cash cost of sales (free-on-board
port)
$94 - $100 per short ton
Capital expenditures
$95 - $105 million
Mine development costs
$22 - $26 million
Selling, general and administrative
expenses
$33 - $37 million
Interest expense, net
$35 - $38 million
Noncash deferred income tax expense
18% - 20%
Cash tax rate
0%
Key factors that may affect outlook include:
- Three planned longwall moves (Q2, Q3, Q4)
- HCC index pricing
- Exclusion of other non-recurring costs
- New UMWA contract
- Inflationary pressures
The Company's guidance for its capital expenditures consists of
sustaining capital spending of approximately $75-$80 million,
including regulatory and gas requirements, and discretionary
capital spending of $20-$25 million for the 4 North portal
construction.
Environmental, Social and Governance Sustainability
The Company recently published its annual corporate
environmental, social and governance sustainability report for
2021, which is located at
http://www.warriormetcoal.com/corporate-sustainability/. The report
was prepared in accordance with the codified standards of the
Sustainability Accounting Standards Board. The Company is committed
to transparency and open conversations surrounding environmental,
social and governance topics. Although Warrior's underground
metallurgical (met) coal operations have a minimal environment
impact compared to surface-mined thermal coal, the Company strives
to be an environmental steward by focusing on preservation of the
environment, monitoring energy use, reducing greenhouse gas (GHG)
emissions and effective land reclamation. As part of that
commitment, the Company is partnering with a third-party consultant
to develop a comprehensive ESG strategy in 2022, including updated
targets and enhanced reporting.
Use of Non-GAAP Financial Measures
This release contains the use of certain non-GAAP financial
measures. These non-GAAP financial measures are provided as
supplemental information for financial measures prepared in
accordance with GAAP. Management believes that these non-GAAP
financial measures provide additional insights into the performance
of the Company, and they reflect how management analyzes Company
performance and compares that performance against other companies.
These non-GAAP financial measures may not be comparable to other
similarly titled measures used by other entities. The definition of
these non-GAAP financial measures and a reconciliation of non-GAAP
to GAAP financial measures is provided in the financial tables
section of this release.
Conference Call
The Company will hold a conference call to discuss its fourth
quarter 2021 results today, February 22, 2022, at 4:30 p.m. ET. To
listen to the event live or access an archived recording, please
visit http://investors.warriormetcoal.com/. To listen to the event,
live or access an archived recording, please visit
http://investors.warriormetcoal.com/. Analysts and investors who
would like to participate in the conference call should dial
1-844-340-9047 (domestic) or 1-412-858-5206 (international) 10
minutes prior to the start time and reference the Warrior Met Coal
conference call. Telephone playback will also be available from
6:30 p.m. ET February 22, 2022 until 6:30 p.m. ET on March 4, 2022.
The replay will be available by calling: 1-877-344-7529 (domestic)
or 1-412-317-0088 (international) and entering passcode
4187370.
About Warrior
Warrior is a U.S.-based, environmentally and socially minded
supplier to the global steel industry. It is dedicated entirely to
mining non-thermal met coal used as a critical component of steel
production by metal manufacturers in Europe, South America and
Asia. Warrior is a large-scale, low-cost producer and exporter of
premium met coal, also known as hard-coking coal (HCC), operating
highly efficient longwall operations in its underground mines based
in Alabama. The HCC that Warrior produces from the Blue Creek coal
seam contains very low sulfur, has strong coking properties and is
of a similar quality to coal referred to as the premium HCC
produced in Australia. The premium nature of Warrior’s HCC makes it
ideally suited as a base feed coal for steel makers and results in
price realizations near the Platts Index price. For more
information, please visit www.warriormetcoal.com.
Forward-Looking Statements
This press release contains, 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
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements, other than statements of historical facts, included
in this press release that address activities, events or
developments that the Company expects, believes or anticipates will
or may occur in the future are forward-looking statements,
including statements regarding 2022 guidance, the impact of
COVID-19 on its business and that of its customers, sales and
production growth, ability to maintain cost structure, demand, the
future direction of prices, management of liquidity, cash flows,
expenses and expected capital expenditures and working capital,
future effective income tax rates and payment of cash taxes, if
any, as well as statements regarding production, our ability to
fulfill expected customer orders and the outcome of negotiations
with our labor union, including any potential changes to our
production and sales volumes as a result of such outcome. The words
“believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,”
“project,” “target,” “foresee,” “should,” “would,” “could,”
“potential,” “outlook,” “guidance” or other similar expressions are
intended to identify forward-looking statements. However, the
absence of these words does not mean that the statements are not
forward-looking. These forward-looking statements represent
management’s good faith expectations, projections, guidance or
beliefs concerning future events, and it is possible that the
results described in this press release will not be achieved. These
forward-looking statements are subject to risks, uncertainties and
other factors, many of which are outside of the Company’s control,
that could cause actual results to differ materially from the
results discussed in the forward-looking statements, including,
without limitation, fluctuations or changes in the pricing or
demand for the Company’s coal (or met coal generally) by the global
steel industry; the impact of COVID-19 on its business and that of
its customers, including the risk of a decline in demand for the
Company's met coal due to the impact of COVID-19 on steel
manufacturers, the inability of the Company to effectively operate
its mines and the resulting decrease in production, the inability
of the Company to ship its products to customers in the case of a
partial or complete shut-down of the Port of Mobile; federal and
state tax legislation; changes in interpretation or assumptions
and/or updated regulatory guidance regarding the Tax Cuts and Jobs
Act of 2017; legislation and regulations relating to the Clean Air
Act and other environmental initiatives; regulatory requirements
associated with federal, state and local regulatory agencies, and
such agencies’ authority to order temporary or permanent closure of
the Company’s mines; operational, logistical, geological, permit,
license, labor and weather-related factors, including equipment,
permitting, site access, operational risks and new technologies
related to mining and labor strikes or slowdowns; the timing and
impact of planned longwall moves; the Company’s obligations
surrounding reclamation and mine closure; inaccuracies in the
Company’s estimates of its met coal reserves; any projections or
estimates regarding Blue Creek, including the expected returns from
this project, if any, and the ability of Blue Creek to enhance the
Company's portfolio of assets, the Company's expectations regarding
its future tax rate as well as its ability to effectively utilize
its NOLs to reduce or eliminate its cash taxes; the Company's
ability to develop Blue Creek; the Company’s ability to develop or
acquire met coal reserves in an economically feasible manner;
significant cost increases and fluctuations, and delay in the
delivery of raw materials, mining equipment and purchased
components; competition and foreign currency fluctuations;
fluctuations in the amount of cash the Company generates from
operations, including cash necessary to pay any special or
quarterly dividend; the Company’s ability to comply with covenants
in its ABL Facility or indenture relating to its senior secured
notes; integration of businesses that the Company may acquire in
the future; adequate liquidity and the cost, availability and
access to capital and financial markets; failure to obtain or renew
surety bonds on acceptable terms, which could affect the Company’s
ability to secure reclamation and coal lease obligations; costs
associated with litigation, including claims not yet asserted; and
other factors described in the Company’s Form 10-K for the year
ended December 31, 2021 and other reports filed from time to time
with the Securities and Exchange Commission (the “SEC”), which
could cause the Company’s actual results to differ materially from
those contained in any forward-looking statement. The Company’s
filings with the SEC are available on its website at
www.warriormetcoal.com and on the SEC's website at www.sec.gov.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, the Company does
not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. New factors emerge from time to time,
and it is not possible for the Company to predict all such
factors.
WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF
OPERATIONS
($ in thousands, except per
share)
For the three months ended
December 31,
For the twelve months ended
December 31,
2021
2020
2021
2020
Revenues:
Sales
$
396,790
$
206,261
$
1,028,283
$
761,871
Other revenues
18,755
5,992
30,933
20,867
Total revenues
415,545
212,253
1,059,216
782,738
Costs and expenses:
Cost of sales (exclusive of items shown
separately below)
155,194
191,509
554,282
625,170
Cost of other revenues (exclusive of items
shown separately below)
6,107
11,469
28,899
33,736
Depreciation and depletion
39,397
39,279
141,418
118,092
Selling, general and administrative
9,411
7,774
35,593
32,879
Business interruption
7,480
—
21,372
—
Idle mine
13,696
—
33,899
—
Total costs and expenses
231,285
250,031
815,463
809,877
Operating income (loss)
184,260
(37,778
)
243,753
(27,139
)
Interest expense, net
(9,435
)
(8,463
)
(35,389
)
(32,310
)
Loss on early extinguishment of debt
(9,678
)
—
(9,678
)
—
Other income
—
1,722
1,291
3,544
Income (loss) before income tax expense
(benefit)
165,147
(44,519
)
199,977
(55,905
)
Income tax expense (benefit)
26,657
(10,808
)
49,096
(20,144
)
Net income (loss)
$
138,490
$
(33,711
)
$
150,881
$
(35,761
)
Basic and diluted net income (loss) per
share:
Net income (loss) per share—basic
$
2.69
$
(0.66
)
$
2.94
$
(0.70
)
Net income (loss) per share—diluted
$
2.68
$
(0.66
)
$
2.93
$
(0.70
)
Weighted average number of shares
outstanding—basic
51,430
51,190
51,382
51,168
Weighted average number of shares
outstanding—diluted
51,580
51,190
51,445
51,168
Dividends per share:
$
0.05
$
0.05
$
0.20
$
0.20
WARRIOR MET COAL, INC.
QUARTERLY SUPPLEMENTAL
FINANCIAL DATA AND RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
QUARTERLY SUPPLEMENTAL
FINANCIAL DATA:
For the three months ended
December 31,
For the twelve months ended
December 31,
(short tons in thousands)(1)
2021
2020
2021
2020
Tons sold
1,449
2,205
6,282
7,424
Tons produced
1,108
1,760
5,604
7,862
Gross price realization(2)
85
%
102
%
92
%
96
%
Average net selling price
$
273.84
$
93.54
$
163.69
$
102.62
Cash cost of sales (free on board port)
per short ton(3)
$
105.80
$
86.37
$
87.48
$
83.74
(1)
1 short ton is equivalent to
0.907185 metric tons.
(2)
For the three and twelve months
ended December 31, 2021 and 2020, our gross price realization
represents a volume weighted-average calculation of our daily
realized price per ton based on gross sales, which excludes
demurrage and other charges, as a percentage of the Platts
Index.
RECONCILIATION OF CASH COST OF
SALES (FREE-ON-BOARD PORT) TO COST OF SALES REPORTED UNDER U.S.
GAAP:
(in thousands)
For the three months ended
December 31,
For the twelve months ended
December 31,
2021
2020
2021
2020
Cost of sales
155,194
191,509
554,282
625,170
Asset retirement obligation accretion and
valuation adjustments
(1,506
)
(596
)
(2,802
)
(1,702
)
Stock compensation expense
(380
)
(477
)
(1,917
)
(1,789
)
Cash cost of sales (free-on-board
port)(3)
$
153,308
$
190,436
$
549,563
$
621,679
(3)
Cash cost of sales (free-on-board
port) is based on reported cost of sales and includes items such as
freight, royalties, labor, fuel and other similar production and
sales cost items, and may be adjusted for other items that,
pursuant to GAAP, are classified in the Condensed Statements of
Operations as costs other than cost of sales, but relate directly
to the costs incurred to produce met coal. Our cash cost of sales
per short ton is calculated as cash cost of sales divided by the
short tons sold. Cash cost of sales per short ton is a non-GAAP
financial measure which is not calculated in conformity with U.S.
GAAP and should be considered supplemental to, and not as a
substitute or superior to financial measures calculated in
conformity with GAAP. We believe cash cost of sales per ton is a
useful measure of performance and we believe it aids some investors
and analysts in comparing us against other companies to help
analyze our current and future potential performance. Cash cost of
sales per ton may not be comparable to similarly titled measures
used by other companies.
WARRIOR MET COAL, INC.
QUARTERLY SUPPLEMENTAL
FINANCIAL DATA AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(CONTINUED)
RECONCILIATION OF ADJUSTED
EBITDA TO AMOUNTS REPORTED UNDER U.S. GAAP:
For the three months ended
December 31,
For the twelve months ended
December 31,
(in thousands)
2021
2020
2021
2020
Net income (loss)
$
138,490
$
(33,711
)
$
150,881
$
(35,761
)
Interest expense, net
9,435
8,463
35,389
32,310
Income tax expense (benefit)
26,657
(10,808
)
49,096
(20,144
)
Depreciation and depletion
39,397
39,279
141,418
118,092
Asset retirement obligation accretion and
valuation adjustments
1,011
433
3,427
2,631
Stock compensation expense
607
1,968
9,370
7,602
Other non-cash accretion and valuation
adjustments
800
4,955
1,881
6,014
Non-cash mark-to-market (gain) loss on gas
hedges
(7,066
)
—
1,595
—
Loss on early extinguishment of debt
9,678
—
9,678
—
Business interruption
7,480
—
21,372
—
Idle mine
13,696
—
33,899
—
Other income
—
(1,429
)
(998
)
(2,468
)
Adjusted EBITDA (4)
$
240,185
$
9,150
$
457,008
$
108,276
Adjusted EBITDA margin (5)
57.8
%
4.3
%
43.1
%
13.8
%
(4)
Adjusted EBITDA is defined as net income
(loss) before net interest expense, income tax expense (benefit),
depreciation and depletion, non-cash asset retirement obligation
accretion and valuation adjustments, non-cash stock compensation
expense, other non-cash accretion and valuation adjustments,
non-cash mark-to-market (gain) loss on gas hedges, loss on early
extinguishment of debt, business interruption expenses, idle mine
expenses and other income. Adjusted EBITDA is not a measure of
financial performance in accordance with GAAP, and we believe items
excluded from Adjusted EBITDA are significant to a reader in
understanding and assessing our financial condition. Therefore,
Adjusted EBITDA should not be considered in isolation, nor as an
alternative to net income (loss), income (loss) from operations,
cash flows from operations or as a measure of our profitability,
liquidity or performance under GAAP. We believe that Adjusted
EBITDA presents a useful measure of our ability to incur and
service debt based on ongoing operations. Furthermore, analogous
measures are used by industry analysts to evaluate our operating
performance. Investors should be aware that our presentation of
Adjusted EBITDA may not be comparable to similarly titled measures
used by other companies.
(5)
Adjusted EBITDA margin is defined
as Adjusted EBITDA divided by total revenues.
RECONCILIATION OF ADJUSTED NET
INCOME (LOSS) TO AMOUNTS REPORTED UNDER U.S. GAAP:
(in thousands, except per share
amounts)
For the three months ended
December 31,
For the twelve months ended
December 31,
2021
2020
2021
2020
Net income (loss)
$
138,490
$
(33,711
)
$
150,881
$
(35,761
)
Alabama state income tax valuation
allowance
—
—
24,965
—
Asset retirement obligation valuation
adjustments, net of tax
150
(238
)
150
(238
)
Other non-cash valuation adjustments, net
of tax
347
2,944
347
2,944
Business interruption, net of tax
5,898
—
16,852
—
Idle mine, net of tax
10,799
—
26,729
—
Loss on early extinguishment of debt, net
of tax
7,631
—
7,631
—
Incremental stock compensation expense,
net of tax
—
—
960
—
Other income, net of tax
—
(1,026
)
(820
)
(1,772
)
Adjusted net income (loss) (6)
$
163,315
$
(32,031
)
$
227,695
$
(34,827
)
Weighted average number of basic shares
outstanding
51,430
51,190
51,382
51,168
Weighted average number of diluted shares
outstanding
51,580
51,190
51,445
51,168
Adjusted basic net income (loss) per
share:
$
3.18
$
(0.63
)
$
4.43
$
(0.68
)
Adjusted diluted net income (loss) per
share:
$
3.17
$
(0.63
)
$
4.43
$
(0.68
)
(6)
Adjusted net income (loss) is
defined as net income (loss) net of asset retirement obligation
valuation adjustment, other non-cash valuation adjustments,
business interruption expenses, idle mine expenses, loss on early
extinguishment of debt, incremental stock compensation expense and
other income, net of tax (based on each respective period's
effective tax rate). Adjusted net income (loss) is not a measure of
financial performance in accordance with GAAP, and we believe items
excluded from adjusted net income (loss) are significant to the
reader in understanding and assessing our results of operations.
Therefore, adjusted net income (loss) should not be considered in
isolation, nor as an alternative to net income (loss) under GAAP.
We believe adjusted net income (loss) is a useful measure of
performance and we believe it aids some investors and analysts in
comparing us against other companies to help analyze our current
and future potential performance. Adjusted net income (loss) may
not be comparable to similarly titled measures used by other
companies.
WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF CASH
FLOWS
($ in thousands)
For the three months ended
December 31,
For the twelve months ended
December 31,
2021
2020
2021
2020
OPERATING ACTIVITIES:
Net income (loss)
$
138,490
$
(33,711
)
$
150,881
$
(35,761
)
Non-cash adjustments to reconcile net
income (loss) to net cash provided by operating activities
70,736
31,294
216,325
109,796
Changes in operating assets and
liabilities:
Trade accounts receivable
(48,880
)
(1,881
)
(38,852
)
16,173
Income tax receivable
—
—
—
24,274
Inventories
26,990
30,422
45,693
(13,465
)
Prepaid expenses and other receivables
(2,010
)
(13,468
)
8,538
(19,374
)
Accounts payable
(3,576
)
4,192
(20,322
)
15,361
Accrued expenses and other current
liabilities
(6,344
)
763
(16,444
)
(3,936
)
Other
(693
)
12,862
5,724
19,558
Net cash provided by operating
activities
174,713
30,473
351,543
112,626
INVESTING ACTIVITIES:
Purchases of property, plant, and
equipment, and other
(23,744
)
(15,429
)
(57,893
)
(87,488
)
Mine development costs
—
(13,836
)
(13,462
)
(27,093
)
Proceeds from sale of property, plant and
equipment and other
17
159
209
159
Other
—
—
—
6,233
Net cash used in investing activities
(23,727
)
(29,106
)
(71,146
)
(108,189
)
FINANCING ACTIVITIES:
Net cash (used in) provided by financing
activities
(23,542
)
(5,864
)
(96,474
)
14,096
Net increase (decrease) in cash and cash
equivalents and restricted cash
127,444
(4,497
)
183,923
18,533
Cash and cash equivalents and restricted
cash at beginning of period
268,395
216,413
211,916
193,383
Cash and cash equivalents and restricted
cash at end of period
$
395,839
$
211,916
$
395,839
$
211,916
RECONCILIATION OF FREE CASH
FLOW TO AMOUNTS REPORTED UNDER U.S. GAAP:
(in thousands)
For the three months ended
December 31,
For the twelve months ended
December 31,
2021
2020
2021
2020
Net cash provided by operating
activities
$
174,713
$
30,473
$
351,543
$
112,626
Purchases of property, plant and equipment
and mine development costs
(23,744
)
(29,265
)
(71,355
)
(114,581
)
Free cash flow (7)
$
150,969
$
1,208
$
280,188
$
(1,955
)
Free cash flow conversion (8)
62.9
%
13.2
%
61.3
%
(1.8
)%
(7)
Free cash flow is defined as net
cash provided by operating activities less purchases of property,
plant and equipment and mine development costs. Free cash flow is
not a measure of financial performance in accordance with GAAP, and
we believe items excluded from net cash provided by operating
activities are significant to the reader in understanding and
assessing our results of operations. Therefore, free cash flow
should not be considered in isolation, nor as an alternative to net
cash provided by operating activities under GAAP. We believe free
cash flow is a useful measure of performance and we believe it aids
some investors and analysts in comparing us against other companies
to help analyze our current and future potential performance. Free
cash flow may not be comparable to similarly titled measures used
by other companies.
(8)
Free cash flow conversion is
defined as free cash flow divided by Adjusted EBITDA.
WARRIOR MET COAL, INC.
CONDENSED BALANCE
SHEETS
($ in thousands)
December 31,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
395,839
$
211,916
Short-term investments
8,505
8,504
Trade accounts receivable
122,150
83,298
Inventories, net
59,619
118,713
Prepaid expenses and other receivables
41,088
45,052
Total current assets
627,201
467,483
Mineral interests, net
93,180
100,855
Property, plant and equipment, net
603,412
637,108
Deferred income taxes
125,276
174,372
Other long-term assets
15,142
14,118
Total assets
$
1,464,211
$
1,393,936
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
33,829
$
59,110
Accrued expenses
54,847
86,108
Short term financing lease liabilities
23,622
14,385
Other current liabilities
9,830
10,715
Total current liabilities
122,128
170,318
Long-term debt
339,806
379,908
Asset retirement obligations
65,536
57,553
Long-term financing lease liabilities
28,434
24,091
Other long-term liabilities
36,324
36,825
Total liabilities
592,228
668,695
Stockholders’ Equity:
Common stock, $0.01 par value per share
(Authorized -140,000,000 shares, 53,659,643 issued and 51,437,802
outstanding as of December 31, 2021 and 53,408,040 issued and
51,186,199 outstanding as of December 31, 2020)
537
534
Preferred stock, $0.01 par value per share
(10,000,000 shares authorized, no shares issued and
outstanding)
—
—
Treasury stock, at cost (2,221,841 shares
as of December 31, 2021 and December 31, 2020)
(50,576
)
(50,576
)
Additional paid in capital
256,059
249,746
Retained earnings
665,963
525,537
Total stockholders’ equity
871,983
725,241
Total liabilities and stockholders’
equity
$
1,464,211
$
1,393,936
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220222005318/en/
For Investors: Dale W. Boyles, 205-554-6129
dale.boyles@warriormetcoal.com
For Media: D'Andre Wright, 205-554-6131
dandre.wright@warriormetcoal.com
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