HCC - Earnings call transcript Q3 2024

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Operator

Good afternoon. My name is Cole, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] This call is being recorded and will be available for a replay on the company's website. I would now like to turn the call over to D'Andre Wright, Vice President of External Affairs and Communications. Please go ahead, sir.

D'Andre Wright

everyone, third welcome, conference XXXX and call. afternoon, to quarter Warrior's earnings Good

let that Act. expected remind during we Private considered me Before begin, to according you financial may including the relating forward-looking statements and Litigation this statements certain to business our Reform future Securities performance, be call, made statements

those to different statements, in materially of do required or the be statements. We in uncertain. which a as law. are not as to with described from Forward-looking new statements, forward-looking matters expected may address reports uncertainties, our except nature, our events SEC, annual that future be are, quarterly more otherwise, actual These update forward-looking detail the our information, by result undertake their to company's may whether and different by future degrees, cause in filed results

For the to please more filings. company's press statements, regarding information and SEC refer forward-looking release

non-GAAP reconciled third financial which be X-K, We measures, are posted financial which also release is press quarter in and defined SEC measures website. to also furnished discussing on will our the Form GAAP comparable our certain on to XXXX

SEC Additionally, afternoon. filing we XX-Q the Form the ended will September with XXXX, our quarter XXth, for be this

company on also can additional regarding slide website posted information You the this at www.warriormetcoal.com, was find which third that our the includes deck supplemental quarter afternoon.

remarks, Walt. Officer; On the that, the formal call be take Dale over call will Mr. and Executive Chief will Walter today Boyles, Officer. I are Chief with turn any our we me happy Scheller, now Financial After to Mr. questions. With to

Walter Scheller

our to opportunity in time X-year quarter and review discuss low. results coal remarks, weak the demand high-quality additional for results. Dale results with steelmaking then today the will despite reaching third were to everyone, our us you'll detail, After prices D'Andre. and XXXX Hello, questions. We pleased Thanks, a you join my taking global ask thank third our have quarter to

results, opportunities spot the positive carefully market tons with the quarter from exercising development to milestone Creek world-class significant and for the third Blue patience improve, market produce growth our and managing While our as high-performing on we positioned completion highly we certain with to are conditions we we're turns. a geographies. And impacting flexible we same and project on focus first steel are on the represented wait time, external Creek are us Blue budget. With cost Despite strategically asset our structure for factors advancing high-quality within cost and demand market rigorous base, workforce, capitalize execution. time improved the global at a the when well a and project

turned weaker markets, out reality markets some the and time, we excess impacting world. The volumes across of a Chinese export third expected a our been had ample quarter steelmaking growing steel-producing concern to demand, confluence by driven all coals. of into export our than steel lower-cost higher steel be of of Chinese regions has weaker The customers' supply primarily for for

created This challenging is their on consequences such, steel coals Chinese either steel markets. steel our relies impact of As predominantly prices extended also downward excess customers' domestic because remained or global margins. The and Along values, at June low trend own our Chinese production have Canada, stable since of with coal landlocked do for not Mongolian coals, impact steelmaking from Australia, seaborne the factors the U.S.A. which met coal production these global typically have XXXX. environment balance. lowest and pricing the

short short the $XX $XXX at FOB quarter third which primary second of end per ton, per than lower ton. at the index, $XXX the Australia, ended Our PLV quarter was the

Index XX% the low the different significant margin erosion, may experienced PLV in the realizations not producers their levels per PLV pricing PLV experienced Index at these September, of steelmaking periods established established observed which for function believe realization current FOB quarter, prices, point mix, a the price both that month gross relation CFR the its to was with low were in short second-tier consolidated achieved FOB have third that costs, have indices below suggesting volatility the Australian year also indices, China of cash only of geography of ton. Likewise, we although coal short environment the not but also Index. We $XXX is Similar freight and several for $XXX extended declines Australia a year sustainable a displayed point the of low rates. in the per ton. At September, of time. During total of of product

the under While in in monthly believe experienced markets the X% Association quarter, due we decreased global to of period, such spending China, continue and later of positive remain which global by pricing Brazil prices the is of the the fourth by growth certain we fell prior period. The the for growing Steel the production the with the months rate first the X X.X% online compared spot of steelmaking production in coming modest is countries. world's to new to region, first year. India. According iron infrastructure other Pig in this will of World the furnace a steel months remains a X.X% with the weakness largest year. India period. to and Several rest experienced improve pressure capacity production report, iron as XXXX bright and slightly for as pig iron year for X X.X% expect in pig environment delayed to regions coal persistent expected production growth blast decline European same more also a the world's

Korea. from Japan gains declining South their However, were largely by offset production and

our let turn Now results. to back third me quarter

the volume X.X quarter XX.X% comparable million quarter year. than third tons short lower of last was Our sales

geographies managing opportunities with the exercising spot and strategically patience I As until we're improves. earlier, certain market said carefully

and third as India. China into Japan, Asia sales Our sales Asia quarter South quarter in to third customers in majority The in and XX% of America. by the geography Europe, into XX% XX% follows: down were the in into break the

sales in previously As has geography. steel noted, to Asian producers the from we've growing, demand that been higher resulting

traditional America from to Europe spot and South primarily due our weak While markets market lower, in opportunities. remain sales

sold was lower for this primarily of the quarters during than second first Our the of low This year, spot XX% was the and amounts which significantly market. into spot as quarter volume steelmaking reported the this of period was manage we opportunities prices. XXXX, Asian in percentage carefully third coal

million For short representing the the full million spot XX% to range tons year, between same compared of volume. Production volume to sales was quarter to third we of quarter in expect in decrease. a total our the X.X XX% X.X% X XXXX, short tons volume

producing Creek commenced the XX,XXX of continuous first During development the our growth panel tons longwall tons. of the development we project, first minor at short third world-class quarter, Blue

the quarter. increased Creek short inventory development coal to from tons the includes second Our XXX,XXX which slightly tons, XXX,XXX the at tons end of Blue short

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

have XXXX. and to production, grow that Blue occur our at costs we in second started year quarter during will longwall which continue panel the of first developing longwall the starts we to remainder the until expect Now Creek, the the development mine

Blue growth make Our Creek progress. continues project to excellent

to slope completion of panel of allowed and completed first begin the belt. car quarter, major installation longwall cage, unit. During continuous the these with components the we service the development us The initial commissioning miner slope belt, and third of the coal raw

construction surface middle online be the the we On to plant, the in make components, progress significant infrastructure is XXXX. of preparation continue which on the of expected to

belt was loadouts structure progress mile on long good components, made progress the on during transportation coal completed. the the the barge with third quarter On well. first XX-mile approximately construction ] of and as clean nearly rail coal Steady the the continued [

the schedule. In on continuous increasing components fourth goals. meet to our these on we're at the of X headcount term, Creek units on start in quarter. remain Currently, we're miner those additional order near track All Blue to focusing in

We coal tons are the in to quarter, half during on third that for expected, short the of very and second XXXX. approximately pleased the originally XXX,XXX started on of longwall we're high-vol produce the as schedule track A steelmaking first panel development

through in half to As spending are online. Including comes before, XXXX, said $XXX from million year-to-date the this invested development second Creek the the $XX XXXX produced of first XXXX development plant after sold on of expected the second during the totals quarter year the of we preparation we've of be the half Blue tons half third million.

We the million inclusive expect to $XXX in already million invested. to XXXX invest $XXX project, approximately $XXX the on million of

represents invested end cost the cost A reserves untapped have spending original currently third on project within We achieve complete last of we've remain one XXXX, million. We premium estimate of XXXX. total ensure in the quarter start-up tight remaining be longwall entire schedule, the reset anticipate completed to the capital coal focused to baseline the the within of including second we Creek will project high-vol the a the high-quality our quarter will prices. liquidity project hand our on and coal discipline sufficient U.S., $XXX date to the the baseline estimate. Blue in on premium For through

already of production deliver enhance in detail. flows. I'll million strengthen address our incremental short greater positioning tons quarter which profit start-up to cost strong ask annualized premium steelmaking A incremental will high-vol cash third longwall, our coal the X.X expect We and the now and of Dale of after global and curve results

Dale Boyles

to in deliver the for third competencies. Thanks, operational and strong by Walt. our financial Despite continue quarter the of leveraging and demand high-quality weaker we coal performance XXXX, strong operational global assets steelmaking

short XX.X% third the EBITDA compared of XXXX, per income on year. We million quarter in in net of in $XX $XX compared XXXX million $XX expenses, decreases diluted selling or diluted same share primarily ton for quarter of at of to the $X.XX share. diluted of driven basis third of X% same third or to margin net XXXX quarter were quarter-over-quarter the from per of sales These interruption reported short compares to $X.XX the by recorded $X.XX a price. million per same quarter and $XXX quarter For volume of $X.XX the the the reduced XXXX. Non-GAAP quarter of unchanged $XX of adjusted This per net ton quarter, to income ton the lower the $XX diluted per share the excluding net in in GAAP quarter income average year. cash per adjusted Warrior a share our of business per third This lower in was million same last net XXXX. last income adjusted non-recurring

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

adjusted margin the ton of to quarter short ton per $XX as last for same per the short ton per compared of third quarter EBITDA in was $XX Our XXXX, year.

of were $XXX volume, driven quarter decreases As charges. the third of to lower higher and net a decrease primarily sales were average the due this a prices $XXX combined decrease in XX.X% I volume, slightly million million million lower revenues selling in by other plus XXXX. $XX was the third million selling previously This average with due lower lower these and quarter-over-quarter to million compared mentioned, X% $XX sales year the decrease cost. Total price primarily net of overall in demurrage quarter $XX a to

higher As in to sales million in sales spot $XXX were XXXX with Walt of lower patience Demurrage $XXX revenues primarily of compared of third million average third year. Cash volume of resulted of and decrease noted $XXX last to cash third and cost employee mining $XX sales same for Of by sales, cost selling quarter or of offset port per in an $X driven higher volumes the production selectivity partially associated the the waiting of the of was ton was in by costs was FOB to ton maintenance and the quarter supply million of the driven royalty this quarter were compared charges in year of third the earlier mining compared in costs. term. per his million and primarily a higher These $XXX other with cost in million conditions XXXX the was decrease $XXX XX% of of and decreases in sales and for decrease in decrease costs. Cash in short the in in and to comments, in of quarter the incentives near million the third of quarter net improve ton lower our variable short sales market XXXX XX.X% compared revenues the by XXXX. quarter XX% per $XX price short $XX third of and or headcount quarter our to wages XXXX. approximately transportation $XXX

guidance. to cash the year remains in ton running year on net midpoint average our cost our of was than last cost second and the quarter per track third similar year-to-date. third selling per below is Although higher our year line full ton and year's quarter this this Cash year full quarter, slightly with the of for price

a people half and guidance first ended year full rate of XXXX As a established we XXX February, labor hiring reminder, mines the capacity the we of approximately after at the for costs in higher additional included back operating XXXX. when in strike for the

of Our year. royalty total of quarter XX% net the quarter cash short the to our prices cash and were in cash our quarter on lower year. this of XXXX in to year the in same transportation Overall, for third short sales XX% XX% production cost average same XX% cost third compared per costs ton last cost quarter of selling compared per the was ton last of

the an and rates increase third this on lower is higher due of was in $XX result lower interest third X.X%. cost, year. SG&A in margin were same last compared than short employee-related ton in our the quarter of in compensation of net total year cash last or return. quarter the of year, cash primarily lower average lower This expenses. The the quarter and quarter $XX revenues selling in the primarily of were of the of to million our third earned to investments X.X% balances XXXX $XX price of due third and to income expenses in changes cash was a slightly per cash average quarter this our As about year

and the was primarily retirement to due debt expense capitalization of early interest the interest related Blue XXXX of in Our lower the of September of to development Creek.

depletion benefit rate foreign-derived intangible effective and for Our low tax continues income. reflect tax to income an expense

of million. mine cash development result a flow, the cash was negative to million, was Turning for of $XX capital generated third used flows the activities of plus free cash by million. $XXX during and cash $XX This flow quarter of XXXX, operating expenditures

During the advance than in of liquidity. fixed and balance rates. $XX duration reflected third These amounts interest investments Federal cash greater income lowering maturities a in of sheet longer part quarter, are million total into the months as we securities long-term with of are invested considered the approximately XX Reserve our

Our cash total $XXX facility. million long-term $XXX liquidity the our cash million was equivalents of was the at $XXX million, and available of -- ABL of third of of investments quarter under and million $XX and end XXXX consisted available

weak guidance let's markets, guidance turn global outlined the in the year, for strong the and and Now our operational After pricing and year reaffirmed to another full as full earnings we of XXXX. outlook our and our quarter demand financial release. performance have outlook in despite for

comments. a conditions trending his guidance holidays now remain are as cautious, fewer back we days. I'll Walt of fourth available and on for midpoint especially the to Also, improve. end we production opportunities turn our volumes, final more While on higher contains until market toward spot it reminder, quarter the ranges and

Walter Scheller

Thanks, Dale.

we're to stimulus select from analyze recently may markets tighter mainly demand hopefully actions typical the below or we'd economics, as as strong to and like Overall, steelmaking China's in judging the to to need notable, enters our strong markets curve we're we X, recent we'll India, remain Improvements boost impact. although challenges, and countries. come high-quality demand in are be assets, pricing losing Grosvenor and market expect by up cautious open above package call to in feels the of Australia coal few time of but best-in-class track this the and a our impact potential wet the to supply cost are somewhat we've Operator? performance over quarter we the balance and for our season. In questions. years. the year, expect announced full to that, its deliver seen on continue total sheet last to believe expected improve in quarter averages near-term We despite next operations. With the operational conclusion, leveraging to continue in financial supply,

Operator

first Pipes from Riley Instructions] come Lucas will [Operator with Securities. B. And our today question

Lucas Pipes

competitive XX% My hear you're you is solid I question Blue And on the softer in also the more with as Dale, broadly, on was progress are still right, to of realizations as the the compete I then Latin Walt some or side. A and America any of first commercial quarter. look heard good on of the to your Creek about the Australian you in you to it Is and put during in you could is XX% business Asia kind for thoughts High-Vol you And exposure all of if place at price share? Europe, the dynamics, first, discounts and XX% in And appreciate might basis it spot the on outlook still of any would comment to spot And business? QX, in able kind at wondered, to pricing? against term XXXX. PLV -- terms that looking QX of be side. sort the What

Walter Scheller

Lucas, Lucas. we've look spot market vast times, exactly is, that and as of the FOB. what watching couple said spot we're are of into is, expectations, carefully sales doing is And as whether or majority CFR QX CFR. Thanks, a it's really is our what type and out we the where Asian of market we're

that pretty to we're tons, when could going move be while So more carefully. decide careful And them to and we're of move monitoring we because about where that. very we

have China kind come outside in I and business think the that But into to difficult term term you others, reasonable of term Japan. business of as business is pricing. business, term at in we look Asia by

coal outstanding value. qualities what able we're commit that recognize careful and we're assets are to sure we is what that very about market until being So protecting just to and right making now, outstanding we think the

Lucas Pipes

is this helpful. Walt, super

that PLV. QX realization you numbers, the reasonable assumption about at for XX% score? your discipline given in So in QX came Is on on a my versus

Walter Scheller

you careful I be think with to have it. really

the market to that about month. And to see the flat, we've considerably And keep If stays than up think where could wrong, have to think remember, up, we because before, projected it's you the the trails reflection I that the in I XX% As I to I little And that expect mind. expect be goes said number we've ]. number lower if us more [ hopefully. XX% would a in be in XXs, drop were, we'd I by a [ would mid-XXs be all that a a when that market. falling of ]. we market

of that So really up, with kind because predict falling is it's that to be difficult it careful end exactly market. ] where will [ but a XX%

Lucas Pipes

changes on That's helpful. understood, kind to all I'll mentioned that. on he speak the cost transportation costs remarks, of the And QX? point? be transportation in that prepared Dale, turn variable at the over to side. kind variable right flown One, adjustments I his of to transportation price? through there could could of thoughts sensitivity benefit would the your If appreciate you in in I this Or on in more cost has side.

Walter Scheller

to want you take that? Do

Dale Boyles

Yes.

now to X-month used a So yes, have. like Lucas, a we transportation lag, on not we -- resets X-month

a transportation there is it So a as I be don't on the But in quarter. depending be but there possibly fourth the could little the see little bit upside maybe volumes. on quarter, in to gained significant fourth

Lucas Pipes

QX pieces broadly more cost QX, side? besides for the mind to moving in any And side that other on the any moving transportation, cost major on for keep --

Walter Scheller

we've a third There of conditions Again, day managed to those minimal mouth at moves We've get get to moves of quarter. little longwall X also, the had in the tougher. down shouldn't be. moves sections, or those a and couple

out of we're that. So

major don't negative. in see cost impacts fourth any I or positive the So quarter,

Operator

will question The with Company. Nathan next Martin come our And from Benchmark

Nathan Martin

to how doesn't here being quarter should with markets opportunity you on like said, patience of maybe up demand which But one we the think Could Clearly, about exercising actually if Lucas' improve? down anticipate this questions. ship shipments you following is remaining fourth kind you depressed, in mentioned guys impacting prudent. your just of think sales, Maybe coal sequentially I quarter? some fourth

Walter Scheller

believe don't I so.

remember, days. think again, quarter we And heart look at expected full land year for quarter, we where I the think we is the have expectation you we to as I have we be of fourth fewer said, our as the operating to right guidance. from our -- should in fourth

Nathan Martin

appreciate I that. Well, Okay.

about right, if Is So the would year? you're that for in middle I full of of right the tons. be year guidance sales, full that say million X.X the what talking

Dale Boyles

yes. Yes,

fourth So very slightly be just say, quarter slightly similar, put that us, could quarter. below maybe -- the would third

Nathan Martin

you're tons. flat, Yes. That's because million thinking, about it you I if what get to Dale. Yes, was looks X.X like

So walk realization, math And about Obviously, But that, okay. I to gross there. Lucas from that I XQ just just are back that I of quarter. touched know through the just on the asked guys. maybe coming maybe XX%. and the helpful. investors That's I then know very out price appreciate it, maybe there pure appreciate that as well. several there a last

really quarter, people that when what's a, to given we period So the talked net any that average calculate to to can for get XX% trying are number price about? guys so use, you best time the

Dale Boyles

the -- take the of really during right? PLV is math And we of that that's simple averages the about Well, it. the what our period, just realization

You have price. selling in take all out our to average and those net demurrage things the

that's -- So simple, really. it's really that

Walter Scheller

really December September, October, lag. fourth at you're October, instance, November, from the looking not coal looking for -- pricing because at November, And the quarter, X-month really for you're of

October really be. November go September likely So to pricing where pricing pricing, to need to you and figure out, we're to back

Nathan Martin

the Okay. at it let's lag, the normal think we're right? Walt I might end be calendar, again, And XQ, looking at, instead up August, that if we're because at July, XX% Maybe X-month I FOB we of I is for things the look of Australian issues with looking an the say, that take June, some So to of about just premium difficult I don't or get want now, know backing it there's low-vol you right realization. other demurrage pieces. some if out price and any ], of add to it's can to $XXX offline. [

Walter Scheller

Yes.

Let's take offline. it

Nathan Martin

final that. side. And maybe question the on cost Appreciate one then just Okay.

of per to ] previously $XXX per year $XXX said $XXX to have obviously guidance $XXX metric range the guys a assumes cost roughly low-vol full ton ton premium [ price. 'XX You

$XXX, are give you what today, cost ton where that it, look at $XXX, per idea like might Given could of price? markets call us an

Dale Boyles

Well, I in of we would the end that range. be think lower

year-to-date then at XX% if And at metric, at If that looking to net you realization versus an we're look convert you're a of basis, $XXX. $XXX the look average price, the ]. on selling you that [ $XXX

that's the we're So in will today. But pricing our fourth cost fourth I in is be say line if quarter. lower why right hopefully quarter lower,

depends the volumes, Now it on right, the volume impact.

So any and -- if stays back impact, range because volume on lower we the right? going could have impact but we that an have it. -- volume should from here, significantly, upticks be be pricing end if lower, to So should we your we cut that in don't you're have of

Nathan Martin

sense, denominator. Makes lower Yes.

Operator

from will Jancic Capital next Our Instructions] question BMO Katja come with [Operator Markets.

Katja Jancic

volume? half next know start about Blue in shipping with that year, of conversations going customers Are Creek second year, you already to or next you're I the volume. selling

Walter Scheller

are. we Yes,

Katja Jancic

be on be Are what that the to spot conversations? going side? more going And to you already? are the contracting it's Or

Walter Scheller

I of it's in contract. coal coke Everyone to to think see their these it are expectation will going be I mean, mine. how -- want a again, new it is works be ovens. going to the

that we'll be of, a them to a customers of going with cargo but various give shipping try coal customers we're couple to it. at first a that to holes to be placing off So or try full

Katja Jancic

going XXX. to you're XXX on mentioned people And or hiring be about then hire think to you year, you're I track this

many people -- do next you need Looking how more much how to year, to hire?

Walter Scheller

process, be something Blue we're -- Creek, just around be next budgeting we're I the now. some think probably the know the going I in XXX going don't budgeting to to for process for we're like that. be But to range, that's like reason, I going I number. again, but the sure. But feel still doing year for that's would -- say, in right

I a... don't don't -- that's have So -- really just

Dale Boyles

swag a Yes, there. right just

Walter Scheller

Yes.

Dale Boyles

may I a more year. that, need the mean, next than we budget it to but for finalize be little

Katja Jancic

that some cost least will to the it put at is some half the fair pressure first that assume the year? of on then And in of side,

Dale Boyles

some all that to sell you mine go until not coal, No, that of development. will

Operator

time, over at questions. to for remarks. to back Mr. I there no like further would Scheller the this And call are any turn closing

Walter Scheller

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

Operator

you. And all for conclude at And does Thank disconnect that may conference. lines. participating. this now your today's you you, Thank time,

Warrior Met Coal (HCC) 30 Oct 242024 Q3 Earnings call transcript