Warrior Met Coal, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights:

• Blue Creek Ramp-up: The Blue Creek longwall started production eight months ahead of schedule, on budget, and funded by cash flows from operations. The ramp-up was smooth, contributing to strong Q4 operating performance.
• 2025 Performance: 2025 was a transformative year with record-high sales volume (9,600,000 short tons) and production volume (10,200,000 short tons), showing double-digit growth in both sales and production.
• Market Conditions: Steelmaking coal markets were challenged, but Warrior outperformed due to Blue Creek's contribution and disciplined execution. Chinese steel export volumes were high, but global steel fundamentals didn't show significant improvement.
• Pricing and Realizations: Fourth quarter gross price realization was 75%, influenced by product mix, geography, demurrage, and freight rates. Long-term expected annual gross price realization is 80%-85% assuming historical relativities.
• Capital Expenditures: $240,000,000 was spent on the Blue Creek project in 2025, with total project capital expenditures to date at $957,000,000. Remaining capital of $50-75,000,000 is expected to be spent in 2026 for final project details

Segment Performance:

• Blue Creek: Fourth quarter production was 1,300,000 tons. Full year 2025 sales volume was 9,600,000 short tons, with Blue Creek contributing 881,000 tons in Q4 2025. It played a key role in ramping up production and improving cost structure.
• Mine 4: Set a new record-high output for both sales and production volume in 2025.
• Mine 7: Continued strong performance throughout 2025

Guidance:

• 2026 Outlook: Expect sales and production volumes significantly higher than 2025, starting Blue Creek longwall eight months early. Sales volume guidance is ~0.5 million tons higher than production to reduce inventory to below 1,000,000 short tons. Free cash flow expected negative in 2026 due to ramp-up, but positive in the second half. PLV prices expected to revert downward post-temporary global mining production disruptions.
• Contractual Volumes: 90% of 2026 sales volume is contracted, with 85% of Blue Creek volume under contract

Risks:

• Market Volatility: Gross price realization is volatile due to factors like relative index price, product mix, geography, tariffs, and freight rates.
• Supply Chain Disruptions: Temporary supply constraints in Australian markets impact pricing relativities, especially for High Vol A coal.
• Working Capital Impact: Ramp-up of Blue Creek may lead to working capital build-up in the first half of 2026

Q: What is the PLV price assumption for 2026?

A: The PLV price assumption is a range of $185 to $215 per short ton Q: How will working capital be affected in 2026?

A: There will be a build-up in working capital in the first half of 2026, with relief expected in the second half Q: What about sustaining CapEx?

A: There will be an uptick of $20-30,000,000 per year as Blue Creek ramps up, with a run-rate of ~$110-140,000,000