HCC — Warrior Met Coal, Inc.

Earnings Call Summary for Warrior Met Coal, Inc. (Q1 2026)

1. Key Financial Results and Metrics:

• Net Income: $72 million ($1.37 per diluted share), compared to a net loss of $8 million in Q1 2025.
• Adjusted EBITDA: $143 million, a 263% increase from $39 million in Q1 2025.
• Total Revenues: $459 million, up from $300 million in the same quarter last year.
• Sales Volume: Record high of 3 million short tons, a 38% increase year-over-year.
• Production Volume: 3.5 million short tons, a 55% increase from 2.3 million in Q1 2025.
• Cash Cost of Sales: $289 million (64% of mining revenues), down from 83% in Q1 2025.
• Cash Flow: Operating cash flows were negative $12 million, attributed to increased working capital and inventory.

2. Strategic Updates and Business Highlights:

• Completion of the Blue Creek mine project ahead of schedule and on budget, with total capital expenditures exceeding $1 billion funded through cash from operations.
• Strong performance in premium quality steelmaking coal prices, driven by supply constraints in Australia and increased demand.
• Sales mix shifted to 61% High Vol A quality coal, with expectations for increased sales from Blue Creek throughout the year.
• Inventory levels rose to 1.9 million short tons, with plans to manage this excess to maximize profitability.

3. Forward Guidance and Outlook:

• The company reaffirms its full-year guidance for 2026, expecting steelmaking coal markets to remain stable barring major disruptions.
• Anticipates potential inflationary pressures on materials and supplies, particularly diesel and other raw materials, but expects to mitigate these impacts.
• Positive cash flow is expected to return in the second quarter, with a focus on shareholder returns once cash generation stabilizes.

4. Challenges and Points of Concern:

• Inflationary pressures on costs are beginning to emerge, particularly in diesel and raw materials, which could impact future profitability.
• The ongoing conflict in the Middle East introduces uncertainty in global energy availability and freight costs.
• Increased working capital requirements, particularly higher accounts receivable and inventory levels, may affect liquidity in the short term.

5. Notable Q&A Insights:

• Management indicated that a significant portion of the working capital build is expected to unwind in the second quarter, but full normalization may take longer.
• The 45X production tax credit contributed approximately $8.4 million to earnings, helping to offset some costs.
• Freight costs for shipping to the Pacific Basin have risen significantly, averaging in the upper $40s to mid-$50s per ton.
• The company plans to maintain a similar approach to shareholder returns, focusing on a rising fixed dividend supplemented by special dividends and stock buybacks.
• Management expressed confidence in their operational capabilities and the ability to manage inventory levels effectively, with no current limitations on storage capacity.

Overall, Warrior Met Coal, Inc. reported strong financial performance in Q1 2026, driven by increased production and favorable market conditions, while also acknowledging potential challenges from inflation and geopolitical factors.