Quarterly sales volumes rose 15% to 1.8 million
short tons amidst softening global demand and prices Ramped up
production to 1.9 million short tons, largest since first quarter
of 2021 Provides update on Blue Creek development
Warrior Met Coal, Inc. (NYSE: HCC) (“Warrior” or the “Company”)
today announced results for the second quarter of 2023 reflecting
the momentum in its business despite end-user demand headwinds.
Warrior is the leading dedicated U.S.-based producer and exporter
of high quality steelmaking coal for the global steel industry.
Warrior reported net income for the second quarter of 2023 of
$82.1 million, or $1.58 per diluted share, a decrease from net
income of $297.0 million, or $5.74 per diluted share, in the record
setting second quarter of 2022. Adjusted net income per share for
the second quarter of 2023 was $1.63 per diluted share, compared to
adjusted net income per share of $5.87 per diluted share in the
second quarter of 2022. The Company reported Adjusted EBITDA of
$130.0 million in the second quarter of 2023, compared to Adjusted
EBITDA of $431.2 million in the second quarter of 2022. Warrior’s
quarterly sales volumes rose 15% to 1.8 million short tons and the
Company ramped up production to 1.9 million short tons, the largest
level of activity since the first quarter of 2021 and a strong
marker of its business momentum. While Warrior experienced strong
volumes, the quarter was impacted by softening steelmaking coal
prices as Warrior's average net realized price decreased from an
unprecedented $403.95 per short ton in the record second quarter of
2022 to $208.56 per short ton.
“As evidenced by our sales volumes, customer demand for our
steelmaking coal remained strong throughout the quarter despite
softening in pricing from unprecedented levels seen last year in
the steelmaking coal market,” commented Walt Scheller, CEO of
Warrior. “We continued to see improved performance at the McDuffie
Terminal and are leveraging our efficient operational system to
maximize incremental production. In addition, we adjusted work
schedules during the current quarter which helped increase our
production over the first quarter of 2023.”
“We are pleased to welcome back the approximately 250 eligible
union-represented workers returning to work during the second
quarter while we negotiate towards a new labor contract in good
faith. This addition to our workforce should drive incremental
production and sales volumes of approximately 500,000 short tons,
primarily occurring in the second half of 2023, as reflected in our
recently revised guidance,” Mr. Scheller concluded.
Operating Results
Sales volume in the second quarter of 2023 was 1.8 million short
tons compared to 1.5 million short tons in the second quarter of
2022, representing a 15% increase. The 15% increase in sales volume
was driven by continued improved performance by our rail
transportation provider and the McDuffie Terminal, which enabled
Warrior to export more product. In addition, higher production
primarily due to both Mine No. 4 and Mine No. 7 operating at higher
capacity levels in this quarter compared to the prior year
comparable quarter, when operations at Mine No. 4 were being
restarted and both Mine No. 4 and Mine No. 7 were being operated at
reduced capacity. The Company produced 1.9 million short tons of
steelmaking coal in the second quarter of 2023 compared to 1.7
million short tons in the second quarter of 2022, representing a
15% increase. Inventory levels increased to 760 thousand short tons
at the end of June 30, 2023 from 659 thousand short tons at the end
of March 31, 2023.
Additional Financial Results
Total revenues were $379.7 million for the second quarter of
2023, which compares to total revenues of $625.2 million in the
second quarter of 2022. The average net selling price of the
Company's steelmaking coal decreased 48% from $403.95 per short ton
in the second quarter of 2022 to $208.56 per short ton in the
second quarter of 2023 due to record high steelmaking coal market
pricing last year.
Cost of sales for the second quarter of 2023 were $230.5 million
compared to $191.1 million for the second quarter of 2022. Cash
cost of sales (including mining, transportation and royalty costs)
for the second quarter of 2023 were $229.0 million, or 61.7% of
mining revenues, compared to $189.8 million, or 30.5% of mining
revenues in the same period of 2022. Cash cost of sales
(free-on-board port) per short ton increased to $128.70 in the
second quarter of 2023 from $123.03 in the second quarter of 2022,
primarily attributable to additional employee related costs
associated with a 54% increased headcount and the impact of
inflation offset partially by a decrease in the average net selling
prices and its effect on Warrior's variable cost structure,
primarily for wages, transportation, and royalties.
Selling, general and administrative expenses for the second
quarter of 2023 were $13.2 million, or 3.5% of total revenues and
were slightly higher than the same period last year due to higher
employee related costs.
Depreciation and depletion expenses for the second quarter of
2023 were $30.6 million, or 8.0% of total revenues and were flat
with the prior year comparable quarter. Warrior recorded net
interest income of $6.2 million during the second quarter of 2023,
which compares to net interest expense in the prior year of 7.2
million. Interest income earned on our cash investments in the
current quarter exceeded interest expense on our outstanding notes
and equipment leases.
Business interruption expenses were $3.5 million in the second
quarter and were lower than the same period last year due to the
end of the labor strike; however, we expect ongoing expenses with
respect to legal and labor negotiations. These expenses represent
non-recurring expenses for incremental safety and security, legal
and labor negotiations and other expenses that are directly
attributable to the ongoing labor contract negotiations.
Income tax expense was $14.5 million in the second quarter of
2023 on income of $96.6 million primarily driven by an income tax
benefit for depletion expense and foreign-derived intangible
income.
Cash Flow and Liquidity
The Company generated cash flows of $124.5 million from
operating activities in the second quarter of 2023, compared to
$329.6 million in the second quarter of 2022. Capital expenditures
and mine development for the second quarter of 2023 were $147.3
million, primarily reflecting the development of the Blue Creek
reserves, resulting in negative free cash flow of $22.8
million.
Net working capital, excluding cash, for the second quarter of
2023 increased by $6.8 million from the first quarter of 2023,
primarily reflecting an increase in inventories due to increased
production combined with lower accrued expenses.
Cash flows used in financing activities for the second quarter
of 2023 were $12.3 million, primarily due to principal repayments
of financing lease obligations of $8.6 million and the payment of
the regular quarterly dividend totaling $3.7 million.
The Company’s total liquidity as of June 30, 2023 was $950.7
million, consisting of cash and cash equivalents of $827.4 million
and available liquidity under its existing Second Amended and
Restated Asset-Based Revolving Credit Agreement (as amended, the
“ABL Facility”) of $123.3 million, which is net of outstanding
letters of credit of $8.7 million.
Capital Allocation
On July 28, 2023, our Board of Directors (the "Board") declared
a regular quarterly cash dividend of $0.07 per share, totaling
approximately $3.7 million, which will be paid on August 14, 2023,
to stockholders of record as of the close of business on August 7,
2023.
Any future special dividends or stock repurchases from excess
cash flows will be at the discretion of the Board and subject to
consideration of several factors including business and market
conditions, future financial performance and other strategic
investment opportunities. The Company will also seek to optimize
its capital structure to improve returns to stockholders while
allowing flexibility for the Company to pursue very selective
strategic growth opportunities that can provide compelling
stockholder returns.
Update on the Development of Blue Creek
More than a year after the relaunch of the Blue Creek mine
development in May 2022, Warrior has initiated important and highly
beneficial project scope changes that will require incremental
capital expenditures over the life of the project while lowering
operating costs, increasing flexibility to manage risks, and make
better use of multi-channel transportation methods. Most of these
scope changes are transportation and logistics-related, with
additional amounts related to inflation for these changes only.
They are expected to increase total capital expenditures for the
Blue Creek mine by approximately $120 - $130 million over the
remainder of the project development period.
Transportation Initiatives - While the
Company originally planned on a single channel to transport coal
from the Blue Creek mine via an overland belt to a third-party
owned and operated barge loadout facility, it now plans to build a
belt conveyor system to a railroad loadout to transport the
majority of the coal which is expected to de-risk a single channel
to market, lower operating cost and move volumes faster to the
port. Warrior will also build and operate a barge loadout itself
rather than utilizing a third-party provider. The Company believes
that the potential economic benefits associated with this scope
change should provide Warrior with an inherently robust and cost
competitive outbound logistics model that will provide additional
flexibility to manage alternative transportation methods. The
inclusion of the benefits and incremental capital expenditures
relating to these specific scope changes did not have a material
impact to the project economic metrics of net present value (“NPV”)
and internal rate of return.
In addition, the Company has experienced inflationary cost
increases ranging from 25 to 35 percent in both operating expenses
and capital expenditures for its existing mining operations since
late 2021. The Company is also experiencing inflationary pressures
at Blue Creek, especially in relation to labor, construction
materials and certain equipment, that is expected to continue
during the remainder of the project development period. As a number
of key material contracts are currently being negotiated, and due
to uncertainty regarding future inflation rates, the Company is not
providing an estimate of the impact of inflation at this time.
However, as the Company negotiates and enters into contracts for
the larger project components, the Company expects that more
information will become available to allow it to provide revised
guidance. While cost inflation has impacted the cost side of the
equation of the project economics, these inflationary pressures are
expected to be offset by an inflationary increase in the long-term
price assumption for steelmaking coal.
Subject to the considerations discussed above, our revised
estimate of capital expenditures in 2023 for the development of the
Blue Creek mine is approximately $250 to $300 million and is
subject to change. The increase in 2023 capital expenditure
estimate is primarily driven by change in transportation scope
discussed above. The Company currently expects development spending
at Blue Creek to be the highest in 2023 and 2024, with 2024 being a
similar amount to 2023 that is subject to change.
The project remains on schedule with the first development tons
from continuous miner units expected in the third quarter of 2024
and the longwall scheduled to start up in the second quarter of
2026.
Company Outlook
As previously disclosed, on June 12, 2023, the Company updated
its guidance for the full year 2023 as indicated 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 - $380 million
Mine development costs
$25 - $30 million
Selling, general and administrative
expenses
$42 - $48 million
Interest income, net
$10 - $15 million
Noncash deferred income tax expense
14% - 18%
Key factors that may affect outlook include:
- Two planned longwall moves in Q3 and one move in Q4,
- 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 capital
spending of $325 - $380 million for the development of the Blue
Creek reserves and other discretionary capital expenditures such as
final payments on two new sets of longwall shields originally
purchased in 2022, and the final 4 North bunker construction. The
Company currently expects discretionary capital expenditures in
2024 to be less than 2023 and mainly consist of the development of
the Blue Creek reserves, which is subject to change.
The Company's revised outlook and guidance for 2023 is subject
to many risks that may impact performance, including the ongoing
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.
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
Item 10(e)(1)(i)(B) of Regulation S-K. 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.
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 second
quarter 2023 results today, August 2, 2023, at 4:30 p.m. ET. 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 on August 2, 2023 until 6:30 p.m. ET
on August 9, 2023. The replay will be available by calling:
1-877-344-7529 (domestic) or 1-412-317-0088 (international) and
entering passcode 2623314.
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, ability to maintain cost
structure, demand, the future direction of prices, management of
liquidity, cash flows, expenses and expected capital expenditures
and working capital, the Company's pursuit of strategic growth
opportunities, the Company's future ability to return excess cash
to stockholders, as well as statements regarding production, the
Company's ability to withstand economic instability, the
development of the Blue Creek project, future reduction in shipping
delays, and the outcome of the ongoing 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. 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 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, 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.
WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF
OPERATIONS
(in thousands, except
per-share amounts)
(Unaudited)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Revenues:
Sales
$
371,033
$
623,288
$
871,524
$
1,005,721
Other revenues
8,627
1,868
17,810
(1,913
)
Total revenues
379,660
625,156
889,334
1,003,808
Costs and expenses:
Cost of sales (exclusive of items shown
separately below)
230,452
191,087
463,082
326,428
Cost of other revenues (exclusive of items
shown separately below)
11,510
10,663
22,948
17,703
Depreciation and depletion
30,550
30,371
67,763
56,168
Selling, general and administrative
13,172
12,499
27,688
26,428
Business interruption
3,537
6,290
7,754
12,978
Idle mine
—
1,715
—
4,723
Total costs and expenses
289,221
252,625
589,235
444,428
Operating income
90,439
372,531
300,099
559,380
Interest income (expense), net
6,188
(7,183
)
7,649
(15,005
)
Other income
—
—
221
675
Income before income tax expense
96,627
365,348
307,969
545,050
Income tax expense
14,534
68,356
43,598
101,809
Net income
$
82,093
$
296,992
$
264,371
$
443,241
Basic and diluted net income per
share:
Net income per share—basic
$
1.58
$
5.75
5.09
$
8.59
Net income per share—diluted
$
1.58
$
5.74
5.09
$
8.58
Weighted average number of shares
outstanding—basic
52,010
51,646
51,927
51,591
Weighted average number of shares
outstanding—diluted
52,081
51,740
51,990
51,678
Dividends per share:
$
0.07
$
0.56
1.02
$
0.62
WARRIOR MET COAL, INC.
QUARTERLY SUPPLEMENTAL
FINANCIAL DATA AND RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Unaudited)
QUARTERLY SUPPLEMENTAL FINANCIAL
DATA:
(short tons in thousands)(1)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Tons sold
1,779
1,543
3,727
2,670
Tons produced
1,924
1,667
3,683
3,204
Average net selling price
$
208.56
$
403.95
$
233.84
$
376.67
Cash cost of sales (free-on-board port)
per short ton(2)
$
128.70
$
123.03
$
123.56
$
121.43
Cost of production %
59
%
46
%
58
%
49
%
Transportation and royalties %
41
%
54
%
42
%
51
%
(1) 1 short ton is equivalent to 0.907185
metric tons.
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
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Cost of sales
$
230,452
$
191,087
$
463,082
$
326,428
Asset retirement obligation accretion
(539
)
(494
)
(1,079
)
(987
)
Stock compensation expense
(948
)
(752
)
(1,482
)
(1,227
)
Cash cost of sales (free-on-board
port)(2)
$
228,965
$
189,841
$
460,521
$
324,214
(2) 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 (free-on-board port) 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 (free-on-board
port) 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 (free-on-board port) 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)
(Unaudited)
RECONCILIATION OF ADJUSTED EBITDA TO
AMOUNTS REPORTED UNDER U.S. GAAP:
($ in thousands)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Net income
$
82,093
$
296,992
$
264,371
$
443,241
Interest (income) expense, net
(6,188
)
7,183
(7,649
)
15,005
Income tax expense
14,534
68,356
43,598
101,809
Depreciation and depletion
30,550
30,371
67,763
56,168
Asset retirement obligation accretion
990
899
1,896
1,766
Stock compensation expense
4,573
4,433
12,275
11,651
Other non-cash accretion
413
463
827
694
Mark-to-market (gain) loss on gas
hedges
(522
)
14,543
(1,227
)
27,708
Business interruption
3,537
6,290
7,754
12,978
Idle mine expense
—
1,715
—
4,723
Other income
—
—
(221
)
(675
)
Adjusted EBITDA(3)
$
129,980
$
431,245
$
389,387
$
675,068
Adjusted EBITDA margin(4)
34.2
%
69.0
%
43.8
%
67.3
%
(3) Adjusted EBITDA is defined as net
income before net interest (income) expense, income tax expense,
depreciation and depletion, non-cash asset retirement obligation
accretion, non-cash stock compensation expense, other non-cash
accretion, mark-to-market (gain) loss on gas hedges, 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,
income 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.
(4) Adjusted EBITDA margin is defined as
Adjusted EBITDA divided by total revenues.
RECONCILIATION OF ADJUSTED NET INCOME
TO AMOUNTS REPORTED UNDER U.S. GAAP:
(in thousands, except per share
amounts)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Net income
$
82,093
$
296,992
$
264,371
$
443,241
Business interruption, net of tax
3,036
5,115
6,656
10,554
Idle mine, net of tax
—
1,395
—
3,841
Other income, net of tax
—
—
(190
)
(550
)
Adjusted net income(5)
$
85,129
$
303,502
$
270,837
$
457,086
Weighted average number of shares
outstanding—basic
52,010
51,646
51,927
51,591
Weighted average number of shares
outstanding—diluted
52,081
51,740
51,990
51,678
Adjusted net income per share—basic
$
1.64
$
5.88
$
5.22
$
8.86
Adjusted net income per share—diluted
$
1.63
$
5.87
$
5.21
$
8.84
(5) Adjusted net income is defined as net
income net of business interruption expenses, idle mine expenses
and other income, net of tax (based on each respective period's
effective tax rate). Adjusted net income is not a measure of
financial performance in accordance with GAAP, and we believe items
excluded from adjusted net income are significant to the reader in
understanding and assessing our results of operations. Therefore,
adjusted net income should not be considered in isolation, nor as
an alternative to net income under GAAP. We believe adjusted net
income 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 may not be comparable to similarly titled
measures used by other companies.
WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF CASH
FLOWS
(in thousands)
(Unaudited)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
OPERATING ACTIVITIES:
Net income
$
82,093
$
296,992
$
264,371
$
443,241
Non-cash adjustments to reconcile net
income to net cash provided by operating activities
45,870
97,087
120,968
176,554
Changes in operating assets and
liabilities:
Trade accounts receivable
1,098
(34,525
)
(55,706
)
(172,853
)
Inventories
(8,909
)
(29,499
)
8,497
(68,945
)
Prepaid expenses and other receivables
(22
)
3,093
(3,162
)
10,241
Accounts payable
5,300
(14,087
)
(3,163
)
(997
)
Accrued expenses and other current
liabilities
(4,273
)
8,261
(22,305
)
6,761
Other
3,353
2,264
7,944
5,724
Net cash provided by operating
activities
124,510
329,586
317,444
399,726
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment
(136,116
)
(68,174
)
(204,295
)
(78,702
)
Mine development costs
(11,229
)
(11,236
)
(25,687
)
(21,129
)
Acquisition of leased mineral rights
—
(3,500
)
—
(3,500
)
Acquisitions, net of cash acquired
(40
)
—
(2,421
)
2,533
Net cash used in investing activities
(147,385
)
(82,910
)
(232,403
)
(100,798
)
FINANCING ACTIVITIES:
Net cash used in financing activities
(12,252
)
(35,874
)
(87,100
)
(49,918
)
Net (decrease) increase in cash and cash
equivalents
(35,127
)
210,802
(2,059
)
249,010
Cash and cash equivalents at beginning of
period
862,548
434,047
829,480
395,839
Cash and cash equivalents at end of
period
$
827,421
$
644,849
$
827,421
$
644,849
RECONCILIATION OF FREE CASH FLOW TO
AMOUNTS REPORTED UNDER U.S. GAAP:
(in thousands)
For the three months ended
June 30,
For the six months ended June
30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
124,510
$
329,586
$
317,444
$
399,726
Purchases of property, plant and equipment
and mine development costs
(147,345
)
(79,410
)
(229,982
)
(99,831
)
Free cash flow(6)
$
(22,835
)
$
250,176
$
87,462
$
299,895
Free cash flow conversion(7)
(17.6
)%
58.0
%
22.5
%
44.4
%
(6) 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.
(7) Free cash flow conversion is defined
as free cash flow divided by Adjusted EBITDA.
WARRIOR MET COAL, INC.
CONDENSED BALANCE
SHEETS
(in thousands, except share
and per-share data)
June 30, 2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
827,421
$
829,480
Short-term investments
8,801
8,608
Trade accounts receivable
207,532
151,826
Inventories, net
137,941
154,039
Prepaid expenses and other receivables
34,378
29,156
Total current assets
1,216,073
1,173,109
Mineral interests, net
84,649
88,636
Property, plant and equipment, net
917,144
738,947
Deferred income taxes
7,204
7,572
Other long-term assets
19,010
19,831
Total assets
$
2,244,080
$
2,028,095
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
32,765
$
39,026
Accrued expenses
55,757
77,435
Short-term financing lease liabilities
21,165
24,089
Other current liabilities
14,467
12,574
Total current liabilities
124,154
153,124
Long-term debt
295,311
302,588
Asset retirement obligations
66,819
64,581
Long-term financing lease liabilities
7,819
9,002
Deferred income taxes
60,952
23,378
Other long-term liabilities
27,730
27,907
Total liabilities
582,785
580,580
Stockholders’ Equity:
Common stock, $0.01 par value,
(140,000,000 shares authorized as of June 30, 2023 and December 31,
2022; 54,239,955 issued and 52,018,114 outstanding as of June 30,
2023; 53,875,409 issued and 51,653,568 outstanding as of December
31, 2022)
539
539
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 June 30, 2023 and December 31, 2022)
(50,576
)
(50,576
)
Additional paid in capital
273,068
269,956
Retained earnings
1,438,264
1,227,596
Total stockholders’ equity
1,661,295
1,447,515
Total liabilities and stockholders’
equity
$
2,244,080
$
2,028,095
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802159386/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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