Sales volumes expected to increase 8%, driving
higher profitability and cash flows
Warrior Met Coal, Inc. (NYSE: HCC) (“Warrior” or the “Company”)
today announced revised guidance for the fiscal year 2023 in light
of the end of the labor strike and resulting incremental production
volume as eligible employees return to work. Warrior is the leading
dedicated U.S.-based producer and exporter of high quality
metallurgical (“met”) coal for the global steel industry.
As previously disclosed, on February 16, 2023, the labor union
representing certain of the Company’s hourly employees announced
that they were ending the labor strike that started in April 2021
and made an unconditional offer to return to work. The Company
began the return-to-work process with the eligible employees who
wished to return while continuing to engage in good faith efforts
with the labor union to reach an agreement on a new contract. The
return-to-work process has been ongoing since February and is now
substantially complete.
Approximately 250 eligible union-represented employees returned
to work following the end of the strike, and therefore the Company
adjusted work schedules to maximize the amount of incremental
production and revised the budget and outlook for the full year.
The incremental production and sales volume is approximately
500,000 short tons, primarily occurring in the second half of 2023.
As a result of the incremental volumes, the Company has revised its
overall outlook and financial targets for 2023.
“We are pleased to welcome back the returning employees and look
forward to the incremental impact on our sales and production
volumes this year,” commented Walt Scheller, CEO of Warrior.
“Despite our ability to continue to operate our business
successfully during the labor strike, the upside to an increased
workforce is material, but we are still short of our historical
staffing levels. Moving forward, we believe that Warrior remains
well positioned to capitalize on its low-cost position and strong
production volumes to drive enhanced stockholder value, including
through investment in the world-class Blue Creek reserves.”
Company Outlook
The Company's revised guidance for the full year 2023 is
outlined below.
Coal sales
7.1 - 7.7 million short tons
Coal production
6.8 – 7.4 million short tons
Cash cost of sales (free-on-board
port)
$113 - $125 per short ton
Capital expenditures for existing
mines
$95 - $105 million
Blue Creek project and other discretionary
capital expenditures
$325 - $345 million
Mine development costs
$25 - $30 million
Selling, general and administrative
expenses
$42 - $48 million
Interest income, net
$10 - $15 million
Income tax expense
14% - 18%
Key factors that may affect outlook include:
- Two planned longwall moves in Q3,
- HCC index pricing,
- Exclusion of other non-recurring costs,
- Terms of labor contract, and
- Inflationary pressures.
The Company's revised guidance for its capital expenditures
consists of sustaining capital spending of approximately $95 - $105
million, including regulatory and gas requirements, and
discretionary capital spending of $325 - $345 million for the
development of the Blue Creek reserves ($250 million), final
payments on two new sets of longwall shields originally purchased
in 2022, and the final 4 North bunker construction.
The Company does not provide reconciliations of its outlook for
cash cost of sales (free-on-board port) to cost of sales in
reliance on the unreasonable efforts exception provided for under
Rule 100(a)(2) of Regulation G. The Company is unable, without
unreasonable efforts, to forecast certain items required to develop
the meaningful comparable Generally Accepted Accounting Principles
("GAAP") cost of sales. These items typically include non-cash
asset retirement obligation accretion expenses, mine idling
expenses and other non-recurring indirect mining expenses that are
difficult to predict in advance in order to include in a GAAP
estimate.
The Company's revised outlook and guidance for 2023 is subject
to many risks that may impact performance, including the labor
matters noted above, ongoing mechanical issues at the McDuffie
Terminal at the Port of Mobile, ongoing rail transportation issues,
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 below.
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.
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
of 1933, as amended 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 2023
guidance, sales and production growth, cost structure, demand, the
future direction of prices, cash flows, expenses and expected
capital expenditures and working capital, the Company's pursuit of
strategic growth opportunities, the Company's future ability to
drive enhanced stockholder value, future tax expenses, as well as
statements regarding production, the Company's ability to withstand
economic instability, the development of the Blue Creek and 4 North
Portal Projects, the outcome of negotiations with the labor union
representing certain of our hourly employees, including any
potential changes to our production and sales volumes as a result
of such outcome, and the impact of the substantially complete
return to work process for the labor union representing certain of
our hourly employees. 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 impact of inflation on the
Company, the impact of geopolitical events, including the effects
of the Russia-Ukraine war; the inability of the Company to
effectively operate its mines and the resulting decrease in
production; the inability of the Company to transport its products
to customers due to rail performance issues or the impact of
weather and mechanical failures at the McDuffie Terminal at 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 net operating losses
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 Amended and Restated
Asset-Based Revolving Credit Agreement 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, 2022 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230612720933/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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