HCC - Earnings call transcript Q1 2024

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Operator

Good afternoon. My name is Megan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior First Quarter 2024 Financial Results Conference Call. [Operator Instructions] This call is being recorded and will be available for replay on the company's website.

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 releases more statements, to please company's For financial this I www. 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 warriormetcoal.com.

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

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

Walter Scheller

my thank first The additional ask join operator. to results quarter questions. making we have discuss and is everyone, $XXX and the operations, After cash levels since and review took to inventory the coal not in for the over primarily quarters strong from we the additional advantage taking invest to first million you'll by to volume operational us Blue Dale use our results our driven you Creek remarks, of Thanks, detail, to -- the growth seen cash reach XXXX. preceding generate will in And levels built which today we still in return over We to time opportunity had performance. we our very our Hello, produce that results. quarter, delivered for project XXXX stockholders.

company. potential on world-class our project we the this advance also transform Blue growth meeting as milestones the has development made Creek, We excellent several progress key that of to

first during perspective. from and me provide let an First, Warrior's steel of the quarter steelmaking markets coal the overview

in was strong early macro sentiment pricing marked of factors. market predominantly started change was accelerated. quickly correction quarter in in The by driven combination a rapid first a The March and that by

we demand retreat observed of India. and a interest from the China sudden side, On demand

the demand available increasing projects end The was was attributed environment vessels slowdown supply several supply largely that were side, construction upcoming India lower users, In to despite with supply China resold and result demand in already loaded the property segments April the experiencing early numerous June. associated stimulus through in struggling in of that elections to On continued availability. was the by additional improve is efforts. China, national an softness in weakness a in

our guide restart costs. Demopolis River strong rail which several first any impact latter As limited quarters, the to offer the in we repairs were by to its contracted to quarter by demand barging the outcomes quarter. a remained our improve in customers We the see continue our temporary benefits pleased The to the opportunities. of part for responsible on operations spot we authorities customers we've continue towards to our impact performance of has observe during strong while the the were for our terminal as from system continued performance, and minimal extremely to our Mobile collaboration partner our second with resulted lock partner traditional sale the quarter, the the throughout of Likewise, without able first for from of quarter. performance markets loss with to navigate

in the previously steep major first indices the a of As coal mentioned, experienced the met correction part quarter. latter

averaging in short price indices, ton, early relation also ton. for achieved first second lower Likewise, lower lower per ended $XXX index, were $XX the displayed and first in XX of the per tier than short which short around the $XXX Our ton December same was Australia which Index quarter experienced the primary peak of during its a FOB quarter at $XX ton PLB the PLB $XX observed CFR January. China first PLD ton the the XX% the a short of per declines index, relativities per decline closing Similar with than to per quarter. period, $XXX the at value

consecutive to and As into XX% the a first is According our freight net PLD Index. which we've is mix, said a We function by the fourth global quality compared the X.X% of to XXXX on a report, of being the decreased of is as Chinese production volume prior pig for last earnings calls, ? March was The XX% World average basis, X an iron to this X.X% XX% more compared performance Asia, month year. now of has overall period geography X in pig FOB targeted and that Steel ] production level months iron the year sold achieved [ increased month first product selling the period. approximately in Australian Association on rates. monthly was which to average A high-vol production prior Mine excluding daily quarter, price transitioned in global production. Chinese of lower to

countries production few a Europe. steel grew increasing in continued primarily rates world's for period. X.X% grow the stable of same Asia rest the the production production, X.X%, Chinese in at to by India Excluding and

to quarter results. back our turning Now first

primarily overall conclusion the due second in fourth workers quarter the comparable X% of into quarter by as to million first increase than additional that This of year. The year volume sales quarter of volumes higher X.X first last the following the driven volume tons strike the included labor shifted last of the of previously Our quarter return disclosed. short production was quarter from was XXXX. XXX,XXX tons the

breaks by into quarter sales down in XX% South XX% first XX% Our as follows: Europe, in the and America Asia. geography into

over in producers sales in XXXX resulting percentage XX last points has the quarters, up from Asian quarter over previously the same year. the we've As demand been growing steel noted, several past Asian

primarily our due to were weak While lower sales traditional markets. from spot markets

the XXXX, XX% in Our spot of first year. XX% the was last volume in was than higher the first which of quarter quarter

first X.X million we representing mines XXXX, million quarter capacity in in levels the increase. last compared XXX,XXX short sales operated a full a from short was same additional expect quarter at production result following production be first volume. quarter of the tons to The of returned X.X XXX,XXX highest higher inventory years. over in volumes end as output in of tons XX% the at This over the same the the spot the last compared the total the volume our XXXX. higher XX% year sales to quarter to conclusion Both down For labor year, employees to that the quarter our first was this strike. approximately X quarterly volume Production drove coal tons the short of

first the the headcount XX% Our at first to quarter. XXXX of higher of end compared quarter last was year's

to those labor strike. majority the of this outlook, mine. XXX the at our Blue Creek we've with XXXX the was hiring related the As in end approximately increase of the of people people mentioned, XXX business In previously budgeted

at end accepting the plan the positions applications We for quarter mine to second hiring. Blue of As in of first XXXX, of overall the quarter. begin on Creek our we're with the schedule

During of the first mine development on Blue was quarter, first on million we $X the $XX the the CapEx XXXX. million, during spending on and was million Blue included spent which Creek million CapEx development. $XXX Creek quarter project $XXX spending project. Mine

seam service transportation. of ventilation in growth this production second The coal infrastructure for with the on major a project, milestones continuous Blue tons the and to in year comes the quarter line, quarter completion more access year. access, We detailed of remain for of Now track our we we next. a what with XXXX. XXX,XXX originally after panel are shaft I'd quarter half online. tons you view components seam the progress panel through expected year, of to like half to time steelmaking on development expected half components, unit of and preparation the Creek development sold will our high-vol first are initial the in second be allow schedule longwall development surface including coal the from of including the in second first excited us the produced plant the which on of excellent the slope, half XXXX accomplished XXXX on provide updates in on the late the second on and comes this miner expect of produce begin the third that first to We're The begin scheduled is to development approximately this short key extremely

transportation continued work infrastructure that the addition, on surface coal and work components remains and In on schedule.

noticeable of substations the building infrastructure, and progress rail one and this the belt of the and and On the plant coal related belt transportation on be the structure, the quarter structure barge mine should also system. components continued electrical progress material handling preparation during and schedule second load are coal on surface excellent outs. bathhouse, continued warehouse The clean completed The on year. belt

continued will coal represents incremental of enhance positioning Creek A its to X.X the development the to of should reserves short to results of be original schedule, the detail. quarter flows. and to which million to coal Creek, tons on now of The to annualized Warrior the side, of financial curve company which reserves. first cost ensuring tight Dale remaining deliver of in premium expects A the remain We ask of brings quarter one completed the high-quality, start-up the XXXX the million. Blue our during $XXX prices. our expects focused XXXX already production development I'll the capital on $XX date after high-viol high-vol On second Blue reset Creek the in strengthen start-up within last More will profit million XXXX. and cost the approximately the company project the discipline, global U.S., on incremental including the spend on first estimate steelmaking which and quarter cash premium, baseline longwall invested spending longwall, the in addition of $XXX strong million address achieve $XXX million expects untapped in project Blue premium

Dale Boyles

Thanks, Walt.

excluding $X.XX on expenses, For from net We company share in in business $X.XX higher was diluted $X.XX price, last $X.XX of volumes. the million in the per of X% diluted EBITDA average cost $XXX offset net reported Non-GAAP These sales XXXX. year. by of quarter or results first share quarter basis $XXX to the the share to sales gas share. business, same to net higher a compared per or by XXXX. interruption quarter lower and quarter the XXXX, primarily the per net the of of GAAP income X% compared in selling driven the for first per adjusted first the decreases lower million net nonrecurring quarter-over-quarter cash $XXX income diluted of same compares income adjusted million quarter, recorded of income $XXX This million our adjusted XXXX diluted partially same quarter of of were of

in was in of quarter compared first the margin last XX% EBITDA same quarter XXXX XX% the adjusted of Our year. to

to the to in in of product index quarter primarily A driven decrease of average and volumes. net short premium stable sales higher of lower the sales first revenues, short revenues in cost in in per X% prices, quarter XXXX product, index last quarter the net the were and quarter-over-quarter average This the to I of volume X% million short gas on quarter were compared The last [ per by of charges about the overall in were quarter, the this the demurrage which Total volumes. and lower ton our XX% quarter a of March Other was corrected gas XX% relatively in same downward. XXXX million offset first Platts million merge $X ] much volumes. ton first primarily the natural for to mainly when As in compared Australian The ? primarily low-vol due of prices of decrease of decreases businesses, between per from selling by X% FOB in $XXX million quarter. the first to results sharply year. other index an the quarter quarter target the previously $XXX the XX% X net until from premium higher selling cash of business, early these from which Mine year, increase mentioned, due average periods. lower was compared partially price for short ton charges compared for to average, the We high-quality selling $XXX were pricing first We lower of price, Emerge represents XXXX. High-Vol was primarily is charges. lower our $XXX X% primarily resulted Mine same decrease same gas XXXX. to approximately index, East compared the which per price quarter of price Coast $XXX ton target sales index by XXXX's our X $XX averaged our and our other lower other first which our and the first offset $X

mining that to the especially strike we use which may However, the remaining related first of of ended basis.Cash on Asia, do CFR XXXX million in the on time price supply higher returning time to sales cost from in higher driven indices XX% products, higher currently in royalty higher delivered million Of increase labor to and in $XXX from costs of XX% of in priced or due by into increase our the quarter $XX of increase of or areas other of due cash revenues compared increase quarter sales XXXX million wage a or were was was be resulting additional the $XXX rates of labor-related of in The sales, the sales $XX was mining to from The first million production. the $XX cost being and XXXX. X% revenues cost in labor primarily loyalty increases. employees cash the mined costs to volumes. higher costs million and

first the higher last headcount quarter year to year's in this first quarter. Our XX% was compared

of first a In the higher a on of should which to and of were spending year ton temporary. due repairs costs in and of be quarter mix $X transportation rail this higher per higher all maintenance, higher addition, about

cash development mine. sales XX% Mine which but cost producing now and on rates the selling a XXXX. by approximately first the $XXX ton credits currently is offset prices prices, first year net our net areas versus rail in selling to per year. selling in year's lower the in average last lower royalty mine first expenses a On costs net North the this XX% X was was transportation being quarter was addition, average were to of of transportation lower average $XXX same In sales short of were costs higher per on $X higher mix, basis mined to due the about This first royalty quarter basis, quarter were higher Likewise, prices. of mostly of ton cost royalty to more per were lower area that in at higher $X. last the due short quarter rates. of per in royalty were compared the time on FOB year portal the the quarter compared Cash Overall ton, this port, from

income primarily Our cost labor-related year. was development maintenance total and and per mine cost for our higher per of XX% per quarter of this and time of temporarily of on cost in earned repairs remaining of were lower about amount first production invested expenses XXXX's of balances. million $X primarily cash production costs higher total due cash the the fewer A Interest cost than quarter short to higher the or last primarily SG&A higher the revenues short expenses. year was compared X.X% to was $X accounted lower ton to an first first to of increase. of credits quarter due ton, XX% in XXXX $XX in investments increase of employee-related to slightly were due X.X%, cash

interest expense of Our debt early to primarily lower the retirement in due was August of XXXX.

first effective expense reflects pretax year. tax low income on compared the rate last of to quarter Our lower

expense depletion and foreign-derived tax tax for expense benefit an reflects income income. Our intangible

to cash flow. Turning

of Free partially accounts Creek inventories. of was higher receivable increase negatively accounts of working the flow mine was and quarter, expenditures due lower million. cash of receivable due end first the lower was in by free $XXX flow quarter XXXX's $XXX impacted higher Free capital by less million, used capital During net was quarter by development the of than cash and in flow and CapEx the to spending. cash Blue $XX volumes, first increase activities result XXXX, $X in first increase $XXX million. XXXX. mentioned XXXX an capital net higher of to generated million cash working for in sales million million operating primarily We flows primarily previously of $XXX offset the was cash This from

available $XXX total $XXX $XXX and million under available facility. million and the Our quarter cash the at cash XXXX ABL of and our of first million of consisted of end liquidity was equivalents

our year guidance Now and to the let's turn outlook XXXX. full for

full We in have outlined reaffirmed our our outlook for as earnings year, the release.

the particular, While our lower half second due be in India, better quarter demand seasonally volumes first could to traditional demand Asia and the than expect weak quarter in year. spot the our and of markets second from we

turn Our comments. for Walt contracted strong. to in volume final back markets remain our his now I'll traditional it

Walter Scheller

Thanks, Dale.

final I'd like comments. to make Before to Q&A, on some we move

met expect is hand, of softer national the impact largest throughout demand season. expected second process India's to coal steel of world's the We the remain quarter. country completion one from subdued in be summer its to the and the until On awaits as import regions the later monson demand election the

other hand, us segments property but is On cautious. predict, to the and in convincing China harder improvements leading absence remain of the are construction to the

to strong as We also coal case. is expect global be the second the met supply quarter normally during

Baltimore disruptions caused and the collapse the be within the expect bridge We should to manageable be second by by contained industry quarter.

lower compared we cost to reasons, the and peers second of higher expect producers. our quarter to marginal the quarter, these who potentially remain are For some challenging pricing first for

driving volumes, selling skewed where towards Although we spot and have prices. lower freight the desired than net good contracted and scarce visibility pricing levels opportunities are to Basin, are Pacific remain current average in our expected mostly costs

opportunities and if maximize to to prices even inventory these manage selling need we average we will possible continue be for temporarily net Warrior, For reasons, patient to levels. when seek higher-than-normal

excited of world-class also Blue the variety a laser-focused market well reserves. on extremely disciplined we Creek development we're our to conditions, address While and of prepared are

in developing excellent earlier, Creek. we mentioned progress continue Blue As to make

tons of first like minor in with a that, questions. the XXXX, track start we'd continuous open wall the With on in long the Operator? to of third development from to are quarter units up for We quarter XXXX. the second for call scheduled

Operator

Instructions] Riley Your line B. question from [Operator Securities. Lucas first of with comes Pipes the

Lucas Pipes

question, on favorable QX, that the little bit but that continue expect of my the there, should sounded Well, sound touch I Dale, to for QX. closing outlook. wanted your lower first realizations by of in shipments, a to comments of Walt, kind from near-term your It trend kind we like

little a if on I could you wondered So that expand maybe bit.

Dale Boyles

think accurate. I that's

we that the whole demand we it's look I stay we when we second sales prices for stable. little on profile, strong, and the think -- be the going first as we and quarter. our said, expect look and to globally, at production quarter. relatively and where and what's cautious really the quarter quarter year is at second just We look And to at was we need second think in a production

Lucas Pipes

And in terms production. being of should of less we sales, think it than

Dale Boyles

less be not cautious production. we're in I'm the then that it where was I of will as be got there. went X to No, always than the strong. had just added We just we'll into quarter, pretty first I that saying And kind first the think the vessels quarter. quarter rollover for

Lucas Pipes

that to way the think to XX% on realization But it. the right benchmark, that's XX% about

Dale Boyles

Yes.

Lucas Pipes

market risks commented they're terms better, where more just And still challenged? might outlook, of could And little out bit your to I maybe there's if where things speak be still kind wondered in you there. getting a some of you

Dale Boyles

think have we're in I got what I we've through a China. thin let as of in then those there just monsoon through we South are Europe just seeing very said, is the volumes India to season. confidence is, pretty think spot are well think, get will spot, we're contracted opportunities in just them America. elections but India, and I bright with into a whole in the in really -- again, happen What I lot don't It's And areas. moving real

Lucas Pipes

And last around one then Creek. Blue one

the me mentioned a for it. us of remind congrats of So for mentioned both expect are year. you to panel this then and from And through if And development on you kind And that, these could later And lined would development the but tons, year? sales the number the all also implication could longwall starting then think you progress you you you panels date. if what I next this XXXX, wondered I I year pieces up production XXXX. could in those appreciate explain remind development if of

Dale Boyles

hundred thereafter room, more more to we from little CM tons be thousand a will have Well, we ramp we'll we'll a start shortly just they after unit. start a this that after a third Sure. start clear clear we could And start And year. units second. mine and on, couple as the room, a to up, little of we'll then

year. ground XXX,XXX running, So running plant we -- middle the year, will about be by the produced And of the in and be on comes until meantime, looking up X million tons that we'll the the start equivalent online, year-end, in remain next of CM And plant ground. to clean get when preparation units that miner we should probably and sections. about midyear. at we're be tons the will have coal on But which continuous move should which next X then, we off by a the coal prep total the

should coal back that when half selling $XX. the of start we that's those So market looking coal into the at in moving -- that and

Lucas Pipes

that to forward the appreciate continued I and really color all look I of Well, and luck. best

Operator

the question Your Benchmark from with of the Martin comes line Company. next Nathan

Nathan Martin

of to strong performance. the then and have out tons. load-out looking great. expect Or to be any you with load there Just coal? some that half on Congrats When more would think in targeted do those point? at maybe would details place you there. bars truck move you be maybe your rail Lucas' I you last 'XX, And to said up second follow question can just start-up, operational of plant

Walter Scheller

over barge. of certain the continue out moving the expectation complete while a as start overland the I as the tons be out we barge, -- our running bars half able to to at load year, we'll know working to to by by I the point train -- we'll trucks belt we'll not some that moving plan I'm be load I But rail on is of be back half, preparation still starts when back the up. in the year think the load be as to think we'll those in out rail we'll by soon next

Nathan Martin

And kind a then maybe just of modeling question.

mentioned of I through capture your missed XX% XX% prepared Could if you of rate Sorry quarter. you so in walk know remarks the get guys we just it. be that how can the for kind first clear. I us to you

Dale Boyles

just Nate, average this average. average to easy Straight, Yes, try It's is the just Yes, to of it. Dale. our really net calendar selling the index way price the model divided by the quarter. [indiscernible] for

Nathan Martin

I apologize for were numbers sorry? cutting What the off. again,

Dale Boyles

net was short which average average by okay, short-term a the basis our quarter. tons divided price of for $X.XX, on X.XX, So first in the selling

Nathan Martin

any logistics, progressing? update upgrades you Sea. Red from I But seeing the said was Panama I of they And think how an did of the are maybe just kind exceptional. Canal any know the rail effects then you well pore guys said this the on or pretty quarter.

Walter Scheller

far going in very on efficiency at as Well, The well. going are improvements difference huge in the made down made they've as Portomobile. what's a the have mobile, things

our longer to coal thing get transit For customers. the times the issues same we're seeing is Canal. Sea And still the for is Red that in Panama to the with customers, with

quarters now. also then impact, and transit thing really been couple times, So of impact going the that's But that's costs. can we're on for transportation which longer a seeing

Nathan Martin

I Blue front progress made maybe start more. to kind your prepared Creek reception up guys ramp of as the said what think mentioned hiring, one Creek? been out you Blue you have regarding remarks you Walt, And in at your the there? of has XXX on total, XXX hiring how initial just the you maybe existing And labor lines?

Walter Scheller

-- looking we those on for for applicants people of reception be tell year-to-date. where are we're we we Blue of toward we're a expected a seeing And terms seeing strong because we those what are budget to what right roles. expect, naturally, a in Creek and Well, we budget on have I'll you, schedule and of

things think are with schedule. happy where we and right on pretty right we're So now, we're

Operator

[Operator Markets. Your comes Katja from Instructions] with question Jancic Capital BMO next

Katja Jancic

do Regarding the year contract going Blue you volume, Or Creek you the to be is in incremental selling next exposed? to that start half? once spot incremental volume more that second expect

Dale Boyles

what doing going trying think interested in canvassing see is out to be I we'll product. and customers who's the there

And so the out market. test so think don't contracted. I they can to what people it getting going will go volumes, spot volumes think It's be be and not It go it will the will like. smaller -- see I into products

Katja Jancic

as A maybe fair? I'm more Coast it's to assuming high-vol that And just going tracking East is be a index, follow-up. the

Dale Boyles

Yes.

Operator

Your line Securities. B. comes Riley the of with next Lucas Pipes question from

Lucas Pipes

think one, just ago, quick first The update. this discussed I a months reminder, looking we X but for a

#X, terms the split and FOB today? kind my between #X. In of the breakdown What's CFR of business rough by mine

Dale Boyles

quarter, is FOB. into can is into at XX% about FOB. the when XX%. you Asia all going think as into a I look -- Europe, which Everything which what, percentage all That's much going talk FOB was flowing we where coal for smaller was, South probably all XX%, the coal America, flowing the and to

Asia into So the remainder CFR -- everything would else [indiscernible]. going be

Lucas Pipes

of the just this we constant. roughly kind of so for the And year, hold can probably rest

Dale Boyles

Our were cargoes of in the expectations a to spot XX%, first quarter. higher much are get where we back that we than

little now, So we'll a our a mean expectation and on at the I again, given little expectation now, have basis right our least, volumes you and shared right America. we've think percentage I change. increase Europe Europe information is into that America that South numbers with South could is bit. a But going those higher into

Lucas Pipes

the that for remainder year of QX is or the specifically? for And

Dale Boyles

completely the be That's I for the Asia. the We almost year. the volume of And think volumes spot XX% will year. remainder you spot going to into can for said we expected expect be

Lucas Pipes

could results you then pill was noticed proxy there this the related that share and drove to a if came adopted. I of bit how And any And I wondered bylaw a if on maybe the little proposal provision that about a recently poison vote that? catalysts was specific

Dale Boyles

we've thing that what? just know a think that's we was at provision, kind anything anyway. request common into that But biggest didn't shareholder and for the that request provision done bylaws. out we've or in think asked lot of the is I out every be think put looking commonplace think of to You gone The gone time just shareholders was I we've place. approval

it So been that the something anyway. it thought was because really we've we past wasn't in doing necessary

Operator

time, further comments. back to questions. there I Scheller over turn are will call no Mr. the any this now for At

Walter Scheller

That concludes for appreciate afternoon. interest and today, Warrior. you again Thank joining our call in your us this we

Operator

you And Thank today's you. Thank conference. all participating. for that concludes

disconnect. You may now

Warrior Met Coal (HCC) 1 May 242024 Q1 Earnings call transcript