HCC - Earnings call transcript Q4 2018

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Operator

Good afternoon. My name is Jamie and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior Met Coal Fourth Quarter and Full Year 2018 Financial Results Conference Call. [Operator Instructions] Thank you.

Before we begin, I have been asked to note that today’s discussion may contain forward-looking statements and actual results may differ materially from those discussed.

forward-looking SEC refer filings. regarding press the information and release more statements, to please company’s For financial this I www.warriormetcoal.com. that the Investors posted non-GAAP section the also company’s company discussed have been located company’s has reconciliations asked earnings press of of on tables the in the call to release note measures accompanying during the the at website

at section supplemental earnings website In company brief to the the www.warriormetcoal.com. a release, slide addition of the Investors to posted has presentation its

discuss Financial to are begin Walt Scheller, today results Here the Mr. Mr. may Scheller, company’s and Officer Dale you your Chief Officer. Executive remarks. Boyles, Chief Mr.

Walt Scheller

questions. results. Thanks, results sales for and ask to After taking in a Dale exceptionally will Jamie. will to us and production the opportunity in XXXX. strong you also then financial quarter, quarter today performance. drove and you expectations thank record discuss join which fourth the Warrior everyone led to Hello, These operational volumes the our additional time exceeded XXXX and detail in my our review and records performed remarks, our have to for fourth year year well full

million a free We announce to that revenue, we EBITDA cash adjusted $X.X are billion in achieved $XXX flow of proud million. of and record $XXX

continued repurchases the course over we capital to of stock and stockholders of addition, our In returning million of commitment dividends which includes cash $XXX XXXX.

of results steel the the industry continue fourth into met on demonstrate to products strengths quality XXXX global highly of strong in producers; cash and leading a our high-quality full our market and sales, efficiencies generates one, to structure three, four, talented the industry; coal and year flow the seaborne largest realizing free workforce price that a business focus business. safety, margins and production that highest drives realizations highest low volume Our some variable the quarter and two, of the cost key in for model: products; the some sold

successes thank are strongly credit did the a XXXX. us been hard and dedication as to for I work they them help operational have and employees as in to Our all perform we of our doing

remains same increase efficiently step of achieving of tons the produced priority XXXX, XX%. successfully the in quarter in short ultimately safely the is million success most X compared the in working marketplace. to quarter top working was the as that X.X important levels and moves and Production and X.X quarter in better first production compared the long-wall Our quarter volume an that fourth long-wall than to expected. X achieved completed fourth We fourth were in of movement to XXXX million

especially short more investment equipment tons, last efforts quarter increase fourth million in the in Our to which high than the made in short with paying be The X the our million reached XXXX year performance our better-than-expected a Mine efficiencies less This production to XXXX. strong production long-wall Demand to record with of anticipating new represents really of environment. milestone production short XX% high tons into continued better million X of its X produced in made its quarter, best history is million efficiencies fourth X X.X demonstrates in downtime. driving America. and results and to our a managing customers strive XX%. in move which full strong and record significant volumes is company’s short X.X employees tons quarter fourth planning since volume propelled as improve proactively production safe began X.X from and off million by the our a year capacity high we target. it The years more the short in of we in over to compared full Sales and million fourth increase tons with record a XXXX, our XXXX a South in reach have production in the XXXX, over we the in quarter to were downtime utilization equipment capital compared same XXXXs. an during exceeded tons the mines guidance or quarter X

an full new X in sales. were XXXX, year South record exceeded million penetration tons, geography Sales tons in by America short shift sales by higher Our compared primarily addition short in of XX% tons X.X The XXXX the guidance Europe and million with XX% reached customers in the high short which over million Europe, of in to a America was volumes to our mix XX%. Asia. increase driven for XX% in customer X.X targets quarter to South or existing from

healthy a geography created in construction, XXX,XXX fundamentals. earlier. sales to automobile sales short back and as steel strong year steel into year for with volume the of I the fourth our premium rates In Inventories in quarter, producers which XX% sales XXX,XXX low XX% were tons into continued to rise premium coals on for to the at the the end price and in high by for the XXXX. global fiscal from into due Our vol strong strong noted index and the of the XX% decreased quarter Platts tons fourth demand Asia. America turn South operating margins, coming Europe, Strong demand provided mainly machinery

Solid during index chain from by restrictions on in China quarter. import to have most disruptions of regions, and Coal logistical in fourth coupled that continuation supply late global a noticeable the November not displayed demand price the applied impact Australia. production the due came major did tightness a with

realizations. customers price be Likewise, lower Platts quarter those generally low quarter. time. our environment, following we realization Index the environment XX% reflecting premium of the price fourth FOB Australian a realizations a we price during reflect timing shift on some higher the price a rising gross expect of rising price realizations with for amount price of experiences price in as environment, vol lag In was the to Our Warrior and

have on price. index disclosed, should we month this and and Average even be the rose price index cycle through prices the out every average as our over long-term, the during $XX previously However, $XX the each quarter company gained over nearly and a compared to realization should the The million over year. quarter on metric the in ton last million spent of third early this peak a December. reaching $XX capital year a ton from quarter metric expenditures fourth during $XX XXX%

$XX XXXX, year million full capital $XXX compared For previous the the million to was year. spending of

X Over driving higher production Warrior equipment to utilization. million and spent commitment platform has to a of business. almost specifically, our operational significant efficiencies by More $XXX amounts demonstrated we the reinvesting the capital into last years, strengthen

capital better higher-than-normal price In flexibility sustaining high reduce spending lower the addition, our provide these during environments price investments environment. company in to with capital

to levels guidance we later, XXXX to production sales and continue again a that our investment discuss we subject and will set approach market exceeded price favorable record time, in same I As targets the high environment. expect volume. At for

Our value capital pure-play highly met nearly and demonstrate evaluate our for results minimal model to unique continues and business the cash producer. a low financial continually also sheet we highs. XXXX, strategy into business the record reclamation the $XXX in free coal Warrior’s by evidenced while over as strong leverage business of year where the a our focused premium our we million record flows, reached balance performance of Moreover, liabilities. as million. returned during invested $XXX of stockholders strength We is to also capital

Our the couple maximize environment, experienced goal flow is in years. cash to generation over have price past operate in conditions not profitably of and any we just favorable the

this to appropriate invested in business support the have strategy. where We

We have also as continued warrant. to reward our stockholders conditions

provide update of States. Mine vol In few met remaining next from X, addition Creek Creek consider consistent Creek and stock strong Mine XXXX, growth on began the of strong is an high we I premium, With our untapped the we of one development Blue to and United our A to alternatives performance growth project. want reserves for Blue in performance as for in Warrior. coal evaluating phase Blue X the

has value about believe Blue work deliver excited potential our stockholders. our early to and are We results promising the the Creek from to significant

annual single of long-wall operation with up work initial short X production on feasibility tons. to has of the million Our focused the

$XXX quarter coal X share Creek While value potential ton met $XXX $XXX metric we prices. the billion expenditures robust and $XXX range estimated capital to values initial on based present across project studies think of stockholders. the per the between to year and to present metric net to ton $XX.XX studies highlights coal refine million These years million undertaken $XX.XX per Blue translate fourth and million and over in These significant of $XXX last returns which we of prices. $X.X per of continue estimated net demonstrated parameters, our values share per

additional maintain to slurry rail are we a project results the activities Blue in parameters. work drilling, storage pursue permitting of XXXX coarse optimize project and activities the to-date, Given areas. number finalizing the core momentum the positive These include in planning Creek’s of refuse to and completed design

we to potential as to well project Additionally, financing as plan alternatives. off-take continue arrangements explore

Creek would on a decision Blue Warrior be make development. which will to in shallow expect ready XXXX be permitted at point by fully early We a and position

We we forward our the We the cornerstone project become at future the potential are Creek of next portfolio. stockholders months. could over extremely see XX to excited our updates look by to providing the Blue believe and

committed improvement. Lastly, record before that over note further environmental am Warrior strong to has Dale, I pleased things to a I hand is maintained and to

EPA’s our National proud Discharge are strong We compliance Pollutant Elimination the System record with of program. environmental

the the of to reclaimed We release Warrior XXXX facilities XXX are greenhouse success in Surface flame continues engaged from actively sites have EPA’s of Alabama across efforts, gas Monitoring voluntary yielded all improve also to received the Commission approval and its in also emissions. acres land. and for which reduce final programs reclamation

impacts quarter Fish activities XXXX to and build in are Finally, facilitating strive the aim environmental to to address continue their an Wildlife thorough and and ongoing now Dale these in will proactive and to ask in in stewardship. and fourth efforts to results planning year on minimize reviews leader we greater our I wildlife by U.S. industry detail. full to all negative by Office. be habitats future We highly

Dale Boyles

company. a of million. $XXX flow $XXX operational recorded of to Thanks, distributed for Walt. XXXX guidance $XXX over nearly in performance the of EBITDA, returns record exceeded stockholders was million million generated and company targets year cash The adjusted financial free

net $X.XX or fourth share income to fourth the of diluted net For in income quarter a million quarter share of the million basis of GAAP XXXX. compared per $XX XXXX, or per was diluted $XXX $X.XX on

$X.XX with change share diluted tax per reclamation the deferred the of in asset in the associated XXXX retirement release due million fourth adjustment losses tax assets on income for our XXXX. of or the fourth per to diluted the $XXX was a of $X.XX compared net non-GAAP quarter estimates, adjusted obligations share quarter valuation and to benefit Excluding allowance upon non-cash to income Warrior’s non-cash net operating recognized a

on $XX.XX For income full was per $XXX share share compared in million $XXX diluted $X.XX diluted year to the million XXXX, of net or GAAP a XXXX. per or income basis net

prices non-cash income compared EBITDA compensation compared in The share a of XXXX. $XXX average to to an to net driven benefit, increase million stock of primarily an the Excluding EBITDA quarter obligation same $XX Adjusted XXXX. income and adjustment, lower XXXX, XX% incremental adjusted selling million adjusted was $XXX share XX%. in the adjusted per in in million in XX% or XX% The transaction sales non-cash expenses, asset retirement per in in $X.XX increase non-GAAP fourth period was cost. tax increase $X.XX was quarter net and diluted of volume, by the the XXXX the was cash margin increase diluted fourth company’s million $XXX fourth and quarterly of as compared or other for EBITDA expense quarter

adjusted increase was to compared increase in year was years. primarily in in EBITDA the were a strong X million each to year. volume, sales selling This average For Total was same volume. of Warrior increase XXXX, in compared last due $XXX of $XXX in XX% XX%. primarily sales the EBITDA record customer driven XX% an the $XXX in demand revenues million X% quarter margin increase $XXX XXXX full yearly a Adjusted prices. increase of by net to high recorded increase XXXX, The million in of XX% on and the fourth million period last a

index environment XX% XXXX high on in The $X.X prices a record strong per net rising short short in quarter continued increase volume X.X For in tons. on selling per XXXX price X% the metric in be quarter to with to sales volume to a XXXX million in the of The fourth a Total million compared primarily ton. increased short price tons or average of ton $X.X full were total to sales billion grew over year XXXX. to the XXXX, approximately in total same of volumes. period sales compared $XXX $XXX billion due revenues X.X revenues high fourth million XX% at the

rising average $XXX selling per gross of short the other Demurrage realization in reflected throughout XX% charges was the realization price Our and gross quarter. a XXXX fourth net the our price quarter last reduced price year. price to by in fourth the period ton compared of $XXX same to of index

revenues sales the million FOB of mining decrease primarily increased was the cost X% higher approximately fourth are price net was in with revenues, offset ton XX% full XXXX. quarter short and higher the stock income the revenues rates and $XX revenues in short to volumes, adjustment the reclaim period wells within port Cash SG&A $XX or cost, gas by previously short of the stirred XXXX quarter cash lower fourth non-cash full a of of which of year X% outflows cost future $XXX and in prices rather XXXX. compared reflects lower in For The retirement depletion higher of of were than fourth of the of and was higher entire a mentioned to or royalty in spending compensation million non-cash than and XXXX $X of our cost composed $XX with XXXX. changes same obligations. year XXXX XXXX. XXXX. ton, increase operations, $XXX sales the were XXXX, and $XX $X per This large revenues primarily pricing. the quarter increase in cost per million and of or rate performance-related $XXX average X% and resulting ground the is due Cost than to compared adjustment to gas total XXXX. quarter expense short due per from higher million $XXX land in spending and to line ton, above XX% in for approximately spending ton sensitive our the bonuses. other the of Mining is in flat year asset period of in selling years. associated slightly volume $XX to expense and of was million is per was ton. due of of primarily fourth last sales FOB Cash in the production compared fourth of Depreciation per mining short cash million. This $XX estimates transportation to to million quarter port, million over sales same capital approximately to met compared spending guidance X approximately fourth and million to required million for sales primarily primarily or lower of to cash $X last approximately was was the which our guidance to of the the expenses expenses of total and million the quarter discount approximately in higher timing were property $XX of fourth our expenses the year The $X of SG&A about change below XXXX due in relatively for quarter coal

million issuance year’s and year last higher depreciation primarily repair quarter quarter spending accelerated $X economic these year XXXX. fourth offset beyond was of higher debt interest offering than $X our equipment plus credit For X% in due capital the completed the million of plus reported expense due the March were costs higher This in notes included with interest in million earlier Net senior XXXX, secured expenses its $XX last full facilities was to interest outstanding about XXXX. debt associated than income. to our amortization by fourth on our on

state XXXX of $XX For of the release was expense million XXXX. on November million the notes fourth reflects and approximately the the of operating in on more in management’s they million release as trend $XX associated the future and with and allowance full primarily paid We benefit and XXXX, senior cash or utilize belief company’s valuation expire. over to NOLs the company assets our earnings expire company income increase valuation the of guidance. in the utilized $XXX reflecting of its of tax our are based XXXX income. issuance will net our was deferred end losses. the of past will that taxable utilization of the of NOLs quarter liability tax guidance no of The XXXX March than interest timing The during indicated before federal not operating fully fully to the projected net zero secured year due XXXX income tax The losses XXXX of with in and of likely allowance taxes until non-cash as recorded net the its line our reduce continued

next We significant will flow drive conversion cash free over several the to this years. continue expect

quarter flow, the higher of of $XX the is cash result offset generated results the Turning an XXXX. primarily cash tax cash less to used This $XXX to million expenditures company in quarter income by in higher flows higher was receivable and fourth million, cash provided result increase $XX due million. to million in flow working the cash of fourth during million free of $XX by accounts This operating operating the free on fourth the for compared capital receivable. activities flow, of which of quarter, $XXX capital of

million These fourth conversion driven working the was XX% million expenditures compared XX% company $XX $XXX million were capital in increase quarter modest the by cash year XXXX over free operating to flows free a the $XXX cash year. strength last increase XXXX, of in by results cash million activities million higher of million. $XX margins this XX% or of XXXX. offset in an The demonstrate capital generated our of and $XXX were higher the in XX% investing the flow of $XXX of activities during XXXX results XXXX. year purchase higher the were flow million or used for $XXX EBITDA results full adjusted Cash and from of year. for These Our than totaled for operating

shares spending million for in flows with The over Cash financing improvements, of upgrade portal primarily as company the infrastructure For of of development in $XX quarter. repurchases quarterly various consistent Mine time these spent on on common efficiency, increase discretionary projects new $XX was the completion million and Mine its increase plus $XX fully $XX we year, a fourth discretionary were of will activities operational XXXX in X.X common of of the expect dividend million operational. X, and XXXX sustaining the and a X, million lower for capital used fourth during the cost the of capital. other stock. become and in the quarter stock million which production we repurchased The the hoist company’s payment

XXXX, full repurchased the total $XX shares million which of for of X.X of we outstanding a year For shares million. X% was

As to returning committed remains the forms. we to various cash stockholders stated, in company previously excess

outstanding Total million, $XX million, cash of net million. $XXX of XXXX used year $XXX a XXXX, distributions of dividends of to in repurchases $XXX distributed March $X For tack-on proceeds and the the notes million, stock debt were in cash full stockholders of repayments of through stockholders ratio be repurchases activities fixed on million, of dividends cost XXXX. offering stock in distributed flows which EBITDA include financing in liabilities with of adjusted continues less approximately the top with sheet balance amount legacy balance to X.Xx some on liquidity leverage $XXX the than associated the of plus sheet. have $XXX ample without on company’s million a million. The to strong competitors that and is totaled This XXXX

Creek $XXX $XXX approximately of total cash available million believe equivalents facility, Our available us if ABL finished growth our give performance performance cash letters under entire record free liquidity million with pursue end strong our net of balance project. in and summary, decide financial of that of quarter flexibility credit the drove million another generation and We as of will to year. was for we In sheet year flow the significant our and $X operational of outstanding cash we $XXX million. fourth consisting Blue and strong

outlook additional total complete production additional of our strong to in moves expect turning of XXXX as upper provided for Despite guidance to XXXX, result guidance Now and a the for long-wall three production are we moves XXXX, to to we compared XXXX. our coal XXXX moves in of sales we end for increasing for in coal compared two X a long-wall had guidance long-wall for the in XXXX. moves, the

strength $XX X.X to year deferred follows: X.X market million, and short million million coal guidance million sales X%. to cash XXXX cash of million net view rate continued per X.X non-cash Our and tons, of million, XX%, X.X $XX FOB operational the of $XX of full of is conditions $XX million, reflects expense expenses ton, of to $XX cost of to production for SG&A our expected capital port short of million tax a short of to tons, $XX and to sales to $XXX XX% of tax interest expenditures $XXX expense coal

market cautious conservative approaching approach economic until although information XXXX are and continued further available. with optimism, We is with a

deferred utilized expense tax valuation decrease sheet expects the pay of company of that taxes expire. cash allowance in quarter deferred company or between The corresponding XXXX. because utilization including It’s Platt’s noting our release mining. still low the the XX% premium factors of the to Several represents reflect be the quarters. vol tax NOLs, in pricing, After for company’s conservatism of the outlook, recording NOLs fully the to no moves tax worth of and timing some non-cash expense Our deferred of on the of until XX% estimates may the those will assets. are inherent associated XXXX of each the underground long-wall guidance index addition moves planned in with risk assets NOLs beginning number the non-cash and the tax the affect balance

of on other our to I company with $XXX restricted Walt, to it ability comment want I the the A subject of made market offer and dividend depending of $XXX to can upon payment offers declare million, We tender course the approximately over by special restricted is that de-levering strengthen change commencement notes. up offer which back turn committed. concurrent Before the to of believe company program secured tender are we the further and/or today to to soon to balance offer announcement act conditions. company’s the stockholders repurchase stock results senior the a sheet of to repurchase payment and our million this offer, a being and provide of returning capital have

allocation capital that for $XXX our for back Let that compelling selective to pursue to to cash of to demonstrated stockholder To XXXX between it of very Warrior in expected growth that forms. that to returning turn Walt in requirements comments. business, while is provide of have of we is flexibility excess strategic bonds repurchase cash stockholders of be beyond has million stockholders cash at end, to I that me returns. various will the now return commitment end excess March the opportunities to plan allowing the and current the final can available his split reiterate expect capital

Walt Scheller

Dale. Thanks,

more to and a comments I we would move make few about its Before to prospects. company Q&A, the like on

the appreciate very we course and strong employees. of from stockholders company’s We the have with we operational support financial engagement our that pleased and and XXXX our performance received are and in

future. benefited key in increased, growth, have levels. South long-term volumes production India steel projects the operating at with production displaying continued Europe like high record the was our year the China benefit and investing from we year-over-year leverage global will XXXX for steel and America in strong that increased while regions operations the producing As by a

of this Although due in and uncertainty the their we our Chinese forecasted as slowdown XXXX past off production concerns around reflect current production. as for nearing conditions anticipate closely potential mainly observed major this have good from global those certain the another China-USA the to well seen we discussions customers Year year. volumes steel temper the economies trade overall with to early Indications year premise in implicit New

with for expectations absence premium believe at that production products of coupled remain consistent decline we the coking in at of of steel volumes within in quarter our the strong material the of XXXX supply was With the will XXXX coal, levels the remains hard Australian favorable demand near from premium or the year. also throughout the expectations achieved low recent The values. and highs index mostly in fourth changes vol

Additionally, create demand for while potential We coal. at year. forward growth with certain the and indicators for the us the the regional pricing declined remain environment in a at prices economic hard a forward and spot last have in stabilize pricing to recognized rest near well should Europe robust as that near have of the reasonable levels year. within prices recently, steel This confidence in range such time potential slowdown prices in softer are that GDP provides this rates remain as coking as reduction a seen above term or current

should of are unforeseen establishing conditions, material events, light with In XXXX markets. targets However, our barring expected we guidance cautious optimism. healthy fundamentals any remain current we through these market believe our relatively

calls, changes it downturn previous environment pricing market and us to the operations flexible on issue said the geological we around I if the run As adjust allow next conservative as throughout as year. the the to are business targets corner just that with and

the business. We our conditions and XXXX changes market during in year the expect to guidance as changing necessary the adapt to update

million every capital XXXX spending million. of sustaining sustaining of The million discretionary $XXX from to our to $XXX of range spending capital expect we $XX $XX business and consisting earlier, indicated requirements Dale capital capital million $XX spending $XX our to As million gas range smaller some X rebuild million, to including Mine years years. projects includes of development projects for equipment in discretionary XXXX. every spending that new The few the future and key the completion ventilation primarily that shafts and that of capital are began occur necessary is few other

Lastly, I other today. want news on to release our comment

at free to plan cash on operations. repurchase end us stockholders the million continue our the We like use stock generate other. will call to excess and With from of return we investment to questions. one the for hand stockholders. continue available for and/or allow actions to to our flow cash despite notes We capital secured believe on that, these our to senior of cash of our in repurchases to portion We dividends value bondholders a special March significant would significant of $XXX open and the Operator? drive returns maximize

Operator

with [Operator Lucas FBR. today question ahead Riley comes from And B. from Instructions] your go first Please our question. Pipes

Lucas Pipes

bit Hey, the a you capital to sounded to good afternoon of made your prepared references about in intention like throughout gentlemen. capital returns I shareholders again couple wanted returning remarks. to forms. little first It various a ask of

that’s you you elaborate could on be size $XXX on said the debt could the for you Thank million you. that is think to something returned to the soon are think maybe shareholders? Obviously, how I and about million tendering right what side, like that? $XXX

Dale Boyles

Lucas thanks restricted dividend other end of payment repurchases. that my Yes, split the $XXX should offering as distribute by are to $XXX for and be of we remarks, in and/or the for stock cash $XXX on million special bondholders cash of in and March million hand I we said your have that question. million to looking total a the would

potentially to offer, in repurchase stock offer, plan. if the upon that’s restricted dividend those declined could amounts are restricted be returned. for that the payment the tender special added the amounts and payment offer results So are and/or Depending there the

our to right out, that have have results and just turn now. how will plan we wait see that’s but those We

Lucas Pipes

feedback lot that about project helpful. I that’s do And it. and appreciate at you Creek, of you Got this how appreciate the you then, detail think Blue that about level I provided, No, disclosed permitting, very a like time? sanction date more which out to do you Is your you. might this I growth investor maybe appreciate you at come or it seeking with intend a thoughts. this project? Thank would

Walt Scheller

Well, right further now, work. we engineering doing some we have work, as said, been some

the and We some as that’s permitting areas, year have things got disposal We intend on this completed. additional a permitting refuse of rail loop. lot do to such already slurry

trigger into it put this start we early goal to additional So those ready decide studies, some we that do in be pull on again, to work will do to ready are is We’ll some start the areas this the to year are core And we if focused that year. are engineering our drilling. we the XXXX.

Lucas Pipes

you have among you you group. been so you peer lot of returned very do think stand how shareholders a I and your capital have – – to out And

So how growth balance you your project to for a Creek? Blue capital such you returning with shareholders as do thoughts. Thank Thank you.

Dale Boyles

I as Lucas, capital forms our We already we’re will to standpoint. million until really we so about tell growth various future this. allocation final that we nameplate have been control is This excited tons. think up changed, but the changed really our of This a the we the and nothing XXX is returning Yes, shareholders none excess to capacity. you, I make decision, reserve company that committed of way from cash a to in the has has remain look, short working

next So steps. we start clearly, sense really now looking when of it those do makes to this project take on working a lot and at

based approach allocation we returns a Creek. take get making approach, holistic on decision once point a that kind the we’ll of a So Blue to of capital

some decision core look, ready things and we we at additional is that, like can XXXX, that point. a and things once make in we think drilling project we complete shovel XXXX As said this early these

Lucas Pipes

more Got your comments. it. appreciate helpful. Very questions. I I have

jump So queue. I you. will into Thank

Operator

ahead question. from next from your Clarksons. Jeremy Our question with comes Sussman Please go

Jeremy Sussman

for strong questions very congratulations another guys. taking on and quarter my Thanks

Walt Scheller

Thanks, Jeremy.

Jeremy Sussman

long-wall I production should X fully lines, the X be moves. should when ton thinking reason still guess we those the I And along standpoint, annum how as downtick in production million guess ramped the obviously about of we from profile? producer an Warrior guess per assume or think for guess, I in very strong year ‘XX the the I I modest XXXX. is

Walt Scheller

do to year, we drive we in production think Jeremy, have we not we fact yes, whether production our a is X end moves going long-wall a exactly that this we our and from how play standpoint. we can where potential, will moves where complete year see those range finish I still long-wall the or our up able factor successfully or progress say and quite this going year. say we and to the is long-wall moves have that where should be step made. make tons is of sense be X back things to there to we with is and proud like I’m doesn’t real where going operations get there be million to years have there X years the where

and to fabulous expect well, I them very a last this had year, year, perform they again, think year. I

Dale Boyles

just remember, Jeremy, years, have our levels If production X expectations. our I that. to let last add me the from well exceeded

what’s sooner. in with that these happened So strong performance, have moves we actually pulled

for because so have So pulled we XXXX well. XXXX an move was if done into you extra in we remember scheduled that

of because well. of been had but kind have that’s some going So we these forward, things pulled

Jeremy Sussman

offer just think obviously, offers sense. And tender makes then the is got follow-up, you’ve to perfect XXX.XX%. I and restricted That the so XXX% Dale at maybe payment at

the So a difference is any two what you is assuming payment tendered just could between the would restricted the in your be? ability maximum special ultimately us and there pay of tender terms between the offer, remind to dividend amount

Dale Boyles

could is to we company allow that as the cash what the try equity holders optionality provide and the well. increase Well, share economically to to to amount we do bondholders of with our

of your are the So, Page your you of it amounts you in that, return million they $XX particular restricted creates capital. given another where declined declined there, it’s look amounts for on returns, are to extra I X And to will under essentially create an an payment that and that that release million capacity there offer, and the a example. of basis, you if you million If of point capacity on press gives actually where extent the that still because $XX could so page for have million million second where of example increase $XXX $XX $XXX capital gets Jeremy. paid we by pro-rata

Jeremy Sussman

very much, Understood. Dale. you Thank

Dale Boyles

Thanks.

Operator

next Our Bank Instructions] from question America. Matthew comes [Operator of from Fields

Matt Castellini

Fields. for Hey, Matt Castellini on guys. Matt here

of that, would thing. two – just million, said cash $XXX I of million I excess beyond basically with would to In X% that else you of you the but tender offers sort funded wanted believe ‘XX. be aggregate, excess go to would clarify what I So those $XXX one to referred guess mentioned are I fund know flow cash flow?

Dale Boyles

Well, $XXX first on end the million the as we quarter. said, we of expect at have hand to

think – million We have its the $XXX already of December. $XXX end at over million I

participate RP in the you either and work And or. offer so way the is tender

notes we to million fund amount maximum returns and the capital payment, of stockholders. again, $XXX to a then $XXX the which will So million is for

Matt Castellini

much. Okay, understood. Thank very you

Dale Boyles

much. very Thanks Alright.

Operator

And next B. Pipes Riley question Lucas follow-up from is our from FBR. a

Lucas Pipes

taking It guidance. the Hey, XXXX question. good afternoon to XXXX. the for a and thank my midpoint modestly I bit follow-up at on despite appears guidance again compared you the lower cost wanted lower up to production little circle for

can as bit if provide XXXX just to wonder you little the I Thank color guidance? So drivers for more the a maybe you. cost

Dale Boyles

Yes.

I spending think some going expect to we kind and to efficiencies of the are some we have paying the investment get start that of been these projects of Lucas on. see we capital to off, of

for one the these portal lot to year and utilization, driving that’s this and spend off, was incremental the also reason we’re but on overtime, that lower did just primarily. So a improvement better We down pay really that projects reducing we’ve talked that see volume particular cost. starting projects, but about equipment, not

Lucas Pipes

or about the as could the And XXXX spending on thinking a little the as low tackle bit are more, list bit And those lower you trying you. noted we in fruits, little prepared you’re to than that’s projects capital on capital? of a in XXXX. Okay, additional What’s some saw return kind maybe hanging capture you Thank you with spend? the a that return what similar helpful. of you remarks be

Walt Scheller

Walt. is this Well,

we of projects some shafts capital On the The that’s capital said additional spend. accounting sustaining this normal, got what is for that the is so for have future spend the year discretionary development sustaining X. of than Mine more we

called but [indiscernible]. we think calling I always now that We have are it Cassidy,

in beginning So probably mine the mine of it’s for about the the Mine that and area years. will life for really XX that development that the the project next of X be shafts towards sinking the

So, a the the projects. discretionary but hope that capital in of banked continuation will on project the we sustaining capital and from of X in several long-term we some that’s Mine on some the that those, standard benefit success haven’t that. see of enable really project year to is smaller rest Yes, pretty

Lucas Pipes

capital you roughly Mine transition Thank helpful. this the And new in you. north plan and #X what’s into do Very for that area section? spending mining when to

Walt Scheller

it consider area We have earlier, the eastern timeframe. in Mine X mine a will be little actually now the to be to of kind mining developed in of we the when side could that have of probably be so completed, about probably side X long-wall that until X. about of is And from that years we coal years, mine X the but need of what Cassidy at mining left we in or part the

Lucas Pipes

here helpful. very and leave it is This Good luck. job. Perfect. of will I best

Walt Scheller

you. Thank

Operator

[Operator for like over the Instructions] call conference I And would at back closing Scheller to this no any further time, comments. it to showing turn is questions. Mr.

Walt Scheller

Warrior again That concludes appreciate Coal. today. our We us for afternoon. call this in you your joining Thank interest Met

Operator

Thank We thank conference you. call. that today’s And participating. concludes you for

disconnect. may now You

Warrior Met Coal (HCC) 24 Feb 192018 Q4 Earnings call transcript