Eliminates excess inventory as quarterly sales
volumes rise 51% to 2.3 million short tons
Reduces debt leverage by nearly 50% or $146.1
million
Warrior Met Coal, Inc. (NYSE: HCC) (“Warrior” or the “Company”)
today announced results for the third quarter of 2023. Warrior is
the leading dedicated U.S.-based producer and exporter of
high-quality steelmaking coal for the global steel industry.
Warrior reported net income for the third quarter of 2023 of
$85.4 million, or $1.64 per diluted share, a decrease from net
income of $98.4 million, or $1.90 per diluted share, in the third
quarter of 2022. Adjusted net income per share for the third
quarter of 2023 was $1.85 per diluted share compared to adjusted
net income per share of $2.10 per diluted share in the third
quarter of 2022. The Company reported Adjusted EBITDA of $145.8
million in the third quarter of 2023 compared to Adjusted EBITDA of
$171.6 million in the third quarter of 2022. Warrior’s quarterly
sales volumes rose 51% to 2.3 million short tons and the Company
produced 1.9 million short tons.
“As evidenced by our sales volumes, demand for shipments from
our global contracted steelmaking customers as well as for spot
cargoes from Asia was strong,” commented Walt Scheller, CEO of
Warrior. “We continued to see improved performance from our
transportation partners and at the McDuffie Terminal, which allowed
us to ship more volume and reduce our excess inventory. Warrior has
had a larger ratio of spot volume this quarter, mainly due to the
end of the strike and the quality change at Mine 4. Normally, we
sell most of our spot volumes into our natural markets of Europe
and South America, but both regions have offered a limited number
of spot transactions this year. As such, Warrior has directed the
majority of its spot business to China, India and other South Asian
countries. However, our average net selling price was impacted by
the freight differentials associated with the Pacific Basin, and in
particular China, additionally impacted by the negative arb in
relation to the PLB FOB Australia.
“We believe the rapid and steep rise in the PLV Index price is
based upon strong demand from China and India, supply disruptions
out of Australia, specifically for premium hard coking coals, and a
severe lack of liquidity supporting the inadequate index
system.
“Also of note, we successfully executed tender offers for our
senior secured notes as part of our ongoing commitment to
effectively manage our balance sheet. By taking advantage of
favorable market conditions, we reduced our leverage by $146.1
million, or nearly 50%, enhancing our already strong debt to equity
ratio,” Mr. Scheller concluded.
Operating Results Sales volume in the third quarter of
2023 was 2.3 million short tons compared to 1.5 million short tons
in the third quarter of 2022, representing a 51% increase. The 51%
increase in sales volume was driven by continued improved
performance by our rail transportation provider and the McDuffie
Terminal, which enabled Warrior to export more product and draw
down excess inventory. In addition, higher production was primarily
due to both Mine No. 4 and Mine No. 7 operating at higher capacity
levels in this quarter as a result of additional employees
returning from the labor strike. The Company produced 2.0 million
short tons of steelmaking coal in the third quarter of 2023
compared to 1.6 million short tons in the third quarter of 2022,
representing a 21% increase. Inventory levels decreased to 489
thousand short tons as of September 30, 2023 from 760 thousand
short tons as of June 30, 2023.
Additional Financial Results Total revenues were $423.5
million for the third quarter of 2023, which compares to total
revenues of $390.2 million in the third quarter of 2022. The
average net selling price of the Company's steelmaking coal
decreased 26% from $248.13 per short ton in the third quarter of
2022 to $184.71 per short ton in the third quarter of 2023 due to
record high steelmaking coal market pricing last year.
Cost of sales for the third quarter of 2023 were $260.4 million
compared to $203.4 million for the third quarter of 2022. Cash cost
of sales (free-on-board port) for the third quarter of 2023 were
$258.8 million, or 62% of mining revenues, compared to $202.0
million, or 54% of mining revenues in the same period of 2022. Cash
cost of sales (free-on-board port) per short ton decreased to
$114.66 in the third quarter of 2023 from $134.78 in the third
quarter of 2022, primarily attributable to a decrease in average
net selling prices and its effect on Warrior's variable cost
structure, primarily for wages, transportation and royalties. Those
decreases were offset partially by additional employee-related
costs associated with a 44% increased headcount, which primarily
comprised of the returning employees from the labor strike.
Selling, general and administrative expenses for the third
quarter of 2023 were $11.1 million, or 2.6% of total revenues and
were slightly higher than the same period last year due to higher
employee-related costs.
Depreciation and depletion expenses for the third quarter of
2023 were $34.0 million, or 8.0% of total revenues and were flat on
a percentage basis with the prior year comparable quarter. Warrior
recorded net interest income of $7.3 million during the third
quarter of 2023, which compares to net interest expense in the
prior year of $5.7 million. Interest income earned on our cash
investments in the current quarter exceeded interest expense on our
outstanding notes and equipment leases.
Business interruption expenses were $0.3 million in the third
quarter, representing ongoing legal expenses associated with labor
negotiations. In the prior year comparable quarter, these expenses
represent non-recurring expenses for incremental safety, security,
legal and labor negotiations and other expenses that were directly
attributable to the labor strike.
The loss on early extinguishment of debt of $11.7 million
resulted from the extinguishment of $146.1 million of our 7.875%
Senior Secured Notes due 2028 ("Notes") from the Restricted Payment
Offer (as defined below) and Concurrent Tender Offer (as defined
below) that concluded in September. The loss represents the
premiums paid to retire the debt, accelerated amortization of debt
discount, and fees incurred in connection with the transaction.
Income tax expense was $16.8 million in the third quarter of
2023 on income of $102.2 million primarily driven by an income tax
benefit for depletion expense and foreign-derived intangible
income.
Cash Flow and Liquidity The Company generated cash flows
of $138.6 million from operating activities in the third quarter of
2023, compared to $247.2 million in the third quarter of 2022.
Capital expenditures and mine development for the third quarter of
2023 were $112.3 million, primarily reflecting the development of
the Blue Creek reserves, resulting in free cash flow of $26.2
million. Capital expenditures during the third quarter of 2023 for
the development of Blue Creek were $65.8 million, total $191.3
million year-to-date and $238.4 million project-to-date.
Net working capital, excluding cash, for the third quarter of
2023 increased by $8.8 million from the second quarter of 2023,
primarily reflecting higher trade accounts receivable due to higher
sales volumes and the timing of sales partially offset by the draw
down of inventories.
Cash flows used in financing activities for the third quarter of
2023 were $166.8 million, primarily due to the retirement of debt
and related fees in connection with the consummation of the
Restricted Payment Offer and Concurrent Tender Offer of $154.4
million, principal repayments of financing lease obligations of
$8.8 million and the payment of the regular quarterly dividend
totaling $3.7 million.
The Company’s total liquidity as of September 30, 2023 was
$810.1 million, consisting of cash and cash equivalents of $686.8
million and available liquidity under its existing Second Amended
and Restated Asset-Based Revolving Credit Agreement (as amended,
the “ABL Facility”) of $123.3 million, which is net of outstanding
letters of credit of $8.7 million.
Restricted Payment Offer and Concurrent Tender Offer On
September 8, 2023, the Company announced the results of its offer
to purchase (the "Restricted Payment Offer"), in cash, up to $150.0
million principal amount of the Company's Notes, at a repurchase
price of 103% of the aggregate principal amount of such Notes, plus
accrued and unpaid interest to but not including the date of
repurchase thereof and the results of its cash tender offer (the
"Tender Offer" and, together with the Restricted Payment Offer, the
"Offers") to purchase up $150.0 million principal amount of the
Notes at a repurchase price of 104.25% of the aggregate principal
amount of such Notes, plus accrued and unpaid interest to but not
including the date of repurchase thereof.
The financial result of the Offers was the early extinguishment
of debt of $146.1 million and a loss on the early extinguishment of
debt of $11.7 million. In addition, the Company will have the
ability from time to time to make one or more restricted payments
in the form of special dividends to holders of the Company's common
stock and/or repurchases of the Company's common stock in the
aggregate amount of up to $299.9 million consistent with the terms
of the Capital Allocation Policy adopted by our Board of Directors
(the "Board"). Any future special dividends or stock repurchases
from excess cash flows will be at the discretion of the Board and
subject to a number of factors including business and market
conditions, future financial performance and other strategic
investment opportunities.
Capital Allocation On October 24, 2023, our Board
declared a regular quarterly cash dividend of $0.07 per share,
totaling approximately $3.7 million, which will be paid on November
10, 2023, to stockholders of record as of the close of business on
November 3, 2023.
Company Outlook The Company has updated its guidance for
the full year 2023 as indicated below. The only updates were
attributed to mine development costs and interest income, net.
Coal sales
7.1 - 7.7 million short tons
Coal production
6.8 - 7.4 million short tons
Cash cost of sales (free-on-board
port)
$113 - $125 per short ton
Capital expenditures for existing
mines
$95 - $105 million
Blue Creek project and other discretionary
capital expenditures
$325 - $380 million
Mine development costs
$32 - $36 million
Selling, general and administrative
expenses
$42 - $48 million
Interest income, net
$20 - $24 million
Income tax expense
14% - 18%
Key factors that may affect outlook include:
- One planned longwall move in Q4,
- HCC index pricing,
- Exclusion of other non-recurring costs,
- Terms of any new labor contract, and
- Inflationary pressures.
The Company's guidance for its capital expenditures consists of
sustaining capital spending of approximately $95 - $105 million,
including regulatory and gas requirements, and capital spending of
$325 - $380 million for the development of the Blue Creek reserves
and other discretionary capital expenditures such as final payments
on two new sets of longwall shields originally purchased in 2022,
and the final 4 North bunker construction. The Company currently
expects discretionary capital expenditures in 2024 to be less than
2023 and mainly consist of the development of the Blue Creek
reserves, which is subject to change.
The Company's revised outlook and guidance for 2023 is subject
to many risks that may impact performance, including the ongoing
labor matters noted above, ongoing mechanical issues at the
McDuffie Terminal at the Port of Mobile, market conditions in the
steel and met coal industries and overall global economic and
competitive conditions, all as more fully described under
Forward-Looking Statements below.
The Company does not provide reconciliations of its outlook for
cash cost of sales (free-on-board port) to cost of sales in
reliance on the unreasonable efforts exception provided for under
Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable,
without unreasonable efforts, to forecast certain items required to
develop the meaningful comparable Generally Accepted Accounting
Principles ("GAAP") cost of sales. These items typically include
non-cash asset retirement obligation accretion expenses, mine
idling expenses and other non-recurring indirect mining expenses
that are difficult to predict in advance in order to include in a
GAAP estimate. The unavailable information could have a significant
impact on the Company's reported financial results.
Use of Non-GAAP Financial Measures This release contains
the use of certain non-GAAP financial measures. These non-GAAP
financial measures are provided as supplemental information for
financial measures prepared in accordance with GAAP. Management
believes that these non-GAAP financial measures provide additional
insights into the performance of the Company, and they reflect how
management analyzes Company performance and compares that
performance against other companies. These non-GAAP financial
measures may not be comparable to other similarly titled measures
used by other entities. The definition of these non-GAAP financial
measures and a reconciliation of non-GAAP to GAAP financial
measures is provided in the financial tables section of this
release.
Conference Call The Company will hold a conference call
to discuss its third quarter 2023 results today, November 1, 2023,
at 4:30 p.m. ET. To listen to the event, live or access an archived
recording, please visit http://investors.warriormetcoal.com.
Analysts and investors who would like to participate in the
conference call should dial 1-844-340-9047 (domestic) or
1-412-858-5206 (international) 10 minutes prior to the start time
and reference the Warrior Met Coal conference call. Telephone
playback will also be available from 6:30 p.m. ET on November 1,
2023 until 6:30 p.m. ET on November 8, 2023. The replay will be
available by calling: 1-877-344-7529 (domestic) or 1-412-317-0088
(international) and entering passcode 7945908.
About Warrior Warrior is a U.S.-based, environmentally
and socially minded supplier to the global steel industry. It is
dedicated entirely to mining non-thermal met coal used as a
critical component of steel production by metal manufacturers in
Europe, South America and Asia. Warrior is a large-scale, low-cost
producer and exporter of premium met coal, also known as
hard-coking coal (HCC), operating highly efficient longwall
operations in its underground mines based in Alabama. The HCC that
Warrior produces from the Blue Creek coal seam contains very low
sulfur, has strong coking properties and is of a similar quality to
coal referred to as the premium HCC produced in Australia. The
premium nature of Warrior’s HCC makes it ideally suited as a base
feed coal for steel makers and results in price realizations near
the Platts Index price. For more information, please visit
www.warriormetcoal.com.
Forward-Looking Statements This press release contains,
and the Company’s officers and representatives may from time to
time make, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the
future are forward-looking statements, including statements
regarding 2023 guidance, sales and production growth, ability to
maintain cost structure, demand, the future direction of prices,
management of liquidity, cash flows, expenses and expected capital
expenditures and working capital, the Company's pursuit of
strategic growth opportunities, the Company's future ability to
return excess cash to stockholders, as well as statements regarding
production, inflationary pressures, the development of the Blue
Creek project, and the outcome of the ongoing negotiations with the
labor union representing certain of our hourly employees, including
any potential changes to our production and sales volumes as a
result of such outcome. The words “believe,” “expect,”
“anticipate,” “plan,” “intend,” “estimate,” “project,” “target,”
“foresee,” “should,” “would,” “could,” “potential,” “outlook,”
“guidance” or other similar expressions are intended to identify
forward-looking statements. However, the absence of these words
does not mean that the statements are not forward-looking. These
forward-looking statements represent management’s good faith
expectations, projections, guidance, or beliefs concerning future
events, and it is possible that the results described in this press
release will not be achieved. These forward-looking statements are
subject to risks, uncertainties and other factors, many of which
are outside of the Company’s control, that could cause actual
results to differ materially from the results discussed in the
forward-looking statements, including, without limitation,
fluctuations or changes in the pricing or demand for the Company’s
coal (or met coal generally) by the global steel industry; the
impact of global pandemics, such as the novel coronavirus
("COVID-19") pandemic, on its business and that of its customers,
including the risk of a decline in demand for the Company's met
coal due to the impact of any such pandemic on steel manufacturers;
the impact of inflation on the Company, the impact of geopolitical
events, including the effects of the Russia-Ukraine war; the
inability of the Company to effectively operate its mines and the
resulting decrease in production; the inability of the Company to
transport its products to customers due to rail performance issues
or the impact of weather and mechanical failures at the McDuffie
Terminal at the Port of Mobile; federal and state tax legislation;
changes in interpretation or assumptions and/or updated regulatory
guidance regarding the Tax Cuts and Jobs Act of 2017; legislation
and regulations relating to the Clean Air Act and other
environmental initiatives; regulatory requirements associated with
federal, state and local regulatory agencies, and such agencies’
authority to order temporary or permanent closure of the Company’s
mines; operational, logistical, geological, permit, license, labor
and weather-related factors, including equipment, permitting, site
access, operational risks and new technologies related to mining
and labor strikes or slowdowns; the timing and impact of planned
longwall moves; the Company’s obligations surrounding reclamation
and mine closure; inaccuracies in the Company’s estimates of its
met coal reserves; any projections or estimates regarding Blue
Creek, including the expected returns from this project, if any,
and the ability of Blue Creek to enhance the Company's portfolio of
assets, the Company's expectations regarding its future tax rate as
well as its ability to effectively utilize its net operating losses
to reduce or eliminate its cash taxes; the Company's ability to
develop Blue Creek; the Company’s ability to develop or acquire met
coal reserves in an economically feasible manner; significant cost
increases and fluctuations, and delay in the delivery of raw
materials, mining equipment and purchased components; competition
and foreign currency fluctuations; fluctuations in the amount of
cash the Company generates from operations, including cash
necessary to pay any special or quarterly dividend; the Company’s
ability to comply with covenants in its ABL Facility or indenture
relating to its senior secured notes; integration of businesses
that the Company may acquire in the future; adequate liquidity and
the cost, availability and access to capital and financial markets;
failure to obtain or renew surety bonds on acceptable terms, which
could affect the Company’s ability to secure reclamation and coal
lease obligations; costs associated with litigation, including
claims not yet asserted; and other factors described in the
Company’s Form 10-K for the year ended December 31, 2022 and other
reports filed from time to time with the Securities and Exchange
Commission (the “SEC”), which could cause the Company’s actual
results to differ materially from those contained in any
forward-looking statement. The Company’s filings with the SEC are
available on its website at www.warriormetcoal.com and on the SEC's
website at www.sec.gov.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, the Company does
not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. New factors emerge from time to time,
and it is not possible for the Company to predict all such
factors.
WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per-share
amounts) (Unaudited)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
Revenues:
Sales
$
416,888
$
371,944
$
1,288,412
$
1,377,665
Other revenues
6,599
18,236
24,409
16,323
Total revenues
423,487
390,180
1,312,821
1,393,988
Costs and expenses:
Cost of sales (exclusive of items shown
separately below)
260,376
203,441
723,458
529,869
Cost of other revenues (exclusive of items
shown separately below)
9,855
8,417
32,803
26,120
Depreciation and depletion
34,020
30,805
101,783
86,973
Selling, general and administrative
11,138
10,557
38,826
36,985
Business interruption
347
7,106
8,101
20,084
Idle mine
—
5,418
—
10,141
Total costs and expenses
315,736
265,744
904,971
710,172
Operating income
107,751
124,436
407,850
683,816
Interest income (expense), net
7,273
(5,701
)
14,922
(20,706
)
Loss on early extinguishment of debt
(11,699
)
—
(11,699
)
—
Other (expense) income
(1,102
)
—
(881
)
675
Income before income tax expense
102,223
118,735
410,192
663,785
Income tax expense
16,841
20,332
60,439
122,141
Net income
$
85,382
$
98,403
$
349,753
$
541,644
Basic and diluted net income per
share:
Net income per share—basic
$
1.64
$
1.91
$
6.73
$
10.49
Net income per share—diluted
$
1.64
$
1.90
$
6.72
$
10.48
Weighted average number of shares
outstanding—basic
52,019
51,654
51,958
51,612
Weighted average number of shares
outstanding—diluted
52,111
51,744
52,028
51,699
Dividends per share:
$
0.07
$
0.86
$
1.09
$
1.48
WARRIOR MET COAL, INC.
QUARTERLY SUPPLEMENTAL FINANCIAL DATA AND RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (Unaudited)
QUARTERLY SUPPLEMENTAL FINANCIAL
DATA:
(short tons in thousands)(1)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
Tons sold
2,257
1,499
5,984
4,169
Tons produced
1,993
1,643
5,676
4,847
Average net selling price
$
184.71
$
248.13
$
215.31
$
330.45
Cash cost of sales (free-on-board port)
per short ton(2)
$
114.66
$
134.78
$
120.21
$
126.23
Cost of production %
62
%
53
%
60
%
50
%
Transportation and royalties %
38
%
47
%
40
%
50
%
(1) 1 short ton is equivalent to 0.907185
metric tons.
RECONCILIATION OF CASH COST OF SALES
(FREE-ON-BOARD PORT) TO COST OF SALES REPORTED UNDER U.S.
GAAP:
(in thousands)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
Cost of sales
$
260,376
$
203,441
$
723,458
$
529,869
Asset retirement obligation accretion
(540
)
(493
)
(1,619
)
(1,480
)
Stock compensation expense
(1,049
)
(909
)
(2,531
)
(2,136
)
Cash cost of sales (free-on-board
port)(2)
$
258,787
$
202,039
$
719,308
$
526,253
(2) Cash cost of sales (free-on-board
port) is based on reported cost of sales and includes items such as
freight, royalties, labor, fuel and other similar production and
sales cost items, and may be adjusted for other items that,
pursuant to GAAP, are classified in the Condensed Statements of
Operations as costs other than cost of sales, but relate directly
to the costs incurred to produce met coal. Our cash cost of sales
per short ton is calculated as cash cost of sales divided by the
short tons sold. Cash cost of sales (free-on-board port) is a
non-GAAP financial measure which is not calculated in conformity
with U.S. GAAP and should be considered supplemental to, and not as
a substitute or superior to financial measures calculated in
conformity with GAAP. We believe cash cost of sales (free-on-board
port) is a useful measure of performance and we believe it aids
some investors and analysts in comparing us against other companies
to help analyze our current and future potential performance. Cash
cost of sales (free-on-board port) may not be comparable to
similarly titled measures used by other companies.
WARRIOR MET COAL, INC.
QUARTERLY SUPPLEMENTAL FINANCIAL DATA AND RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (CONTINUED) (Unaudited)
RECONCILIATION OF ADJUSTED EBITDA TO
AMOUNTS REPORTED UNDER U.S. GAAP:
($ in thousands)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
Net income
$
85,382
$
98,403
$
349,753
$
541,644
Interest (income) expense, net
(7,273
)
5,701
(14,922
)
20,706
Income tax expense
16,841
20,332
60,439
122,141
Depreciation and depletion
34,020
30,805
101,783
86,973
Asset retirement obligation accretion
990
900
2,886
2,666
Stock compensation expense
2,258
2,599
14,533
14,250
Other non-cash accretion
414
348
1,241
1,042
Mark-to-market (gain) loss on gas
hedges
—
—
(1,227
)
27,708
Business interruption
347
7,106
8,101
20,084
Idle mine expense
—
5,418
—
10,141
Loss on early extinguishment of debt
11,699
—
11,699
—
Other expenses (income)
1,102
—
881
(675
)
Adjusted EBITDA(3)
$
145,780
$
171,612
$
535,167
$
846,680
Adjusted EBITDA margin(4)
34.4
%
44.0
%
40.8
%
60.7
%
(3) Adjusted EBITDA is defined as net
income before net interest (income) expense, income tax expense,
depreciation and depletion, non-cash asset retirement obligation
accretion, non-cash stock compensation expense, other non-cash
accretion, mark-to-market (gain) loss on gas hedges, business
interruption expenses, idle mine expenses, loss on early
extinguishment of debt and other income. Adjusted EBITDA is not a
measure of financial performance in accordance with GAAP, and we
believe items excluded from Adjusted EBITDA are significant to a
reader in understanding and assessing our financial condition.
Therefore, Adjusted EBITDA should not be considered in isolation,
nor as an alternative to net income, income from operations, cash
flows from operations or as a measure of our profitability,
liquidity or performance under GAAP. We believe that Adjusted
EBITDA presents a useful measure of our ability to incur and
service debt based on ongoing operations. Furthermore, analogous
measures are used by industry analysts to evaluate our operating
performance. Investors should be aware that our presentation of
Adjusted EBITDA may not be comparable to similarly titled measures
used by other companies.
(4) Adjusted EBITDA margin is defined as
Adjusted EBITDA divided by total revenues.
RECONCILIATION OF ADJUSTED NET INCOME
TO AMOUNTS REPORTED UNDER U.S. GAAP:
(in thousands, except per share
amounts)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
Net income
$
85,382
$
98,403
$
349,753
$
541,644
Business interruption, net of tax
296
5,798
6,908
16,388
Idle mine, net of tax
—
4,421
—
8,275
Loss on extinguishment of debt, net of
tax
9,976
—
9,976
—
Other expenses (income), net of tax
940
—
751
(551
)
Adjusted net income(5)
$
96,594
$
108,622
$
367,388
$
565,756
Weighted average number of shares
outstanding—basic
52,019
51,654
51,958
51,612
Weighted average number of shares
outstanding—diluted
52,111
51,744
52,028
51,699
Adjusted net income per share—basic
$
1.86
$
2.10
$
7.07
$
10.96
Adjusted net income per share—diluted
$
1.85
$
2.10
$
7.06
$
10.94
(5) Adjusted net income is defined as net
income net of business interruption expenses, idle mine expenses,
loss on extinguishment of debt and other income, net of tax (based
on each respective period's effective tax rate). Adjusted net
income is not a measure of financial performance in accordance with
GAAP, and we believe items excluded from adjusted net income are
significant to the reader in understanding and assessing our
results of operations. Therefore, adjusted net income should not be
considered in isolation, nor as an alternative to net income under
GAAP. We believe adjusted net income is a useful measure of
performance and we believe it aids some investors and analysts in
comparing us against other companies to help analyze our current
and future potential performance. Adjusted net income may not be
comparable to similarly titled measures used by other
companies.
WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS (in thousands)
(Unaudited)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
OPERATING ACTIVITIES:
Net income
$
85,382
$
98,403
$
349,753
$
541,644
Non-cash adjustments to reconcile net
income to net cash provided by operating activities
63,940
56,455
184,908
233,009
Changes in operating assets and
liabilities:
Trade accounts receivable
(60,592
)
79,831
(116,298
)
(93,022
)
Inventories
27,127
(4,313
)
35,624
(73,258
)
Prepaid expenses and other receivables
2,647
(1,362
)
(515
)
8,879
Accounts payable
10,228
7,606
7,065
6,609
Accrued expenses and other current
liabilities
11,800
13,283
(10,505
)
20,044
Other
(1,958
)
(2,719
)
5,986
3,005
Net cash provided by operating
activities
138,574
247,184
456,018
646,910
INVESTING ACTIVITIES:
Purchases of property, plant and
equipment
(106,525
)
(41,320
)
(310,820
)
(120,022
)
Mine development costs
(5,824
)
(14,561
)
(31,511
)
(35,690
)
Acquisition of leased mineral rights
—
—
—
(3,500
)
Acquisitions, net of cash acquired
—
—
(2,421
)
2,533
Net cash used in investing activities
(112,349
)
(55,881
)
(344,752
)
(156,679
)
FINANCING ACTIVITIES:
Net cash used in financing activities
(166,835
)
(90,486
)
(253,935
)
(140,404
)
Net (decrease) increase in cash and cash
equivalents
(140,610
)
100,817
(142,669
)
349,827
Cash and cash equivalents at beginning of
period
827,421
644,849
829,480
395,839
Cash and cash equivalents at end of
period
$
686,811
$
745,666
$
686,811
$
745,666
RECONCILIATION OF FREE CASH FLOW TO
AMOUNTS REPORTED UNDER U.S. GAAP:
(in thousands)
For the three months
ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
138,574
$
247,184
$
456,018
$
646,910
Purchases of property, plant and equipment
and mine development costs
(112,349
)
(55,881
)
(342,331
)
(155,712
)
Free cash flow(6)
$
26,225
$
191,303
$
113,687
$
491,198
Free cash flow conversion(7)
18.0
%
111.5
%
21.2
%
58.0
%
(6) Free cash flow is defined as net cash
provided by operating activities less purchases of property, plant
and equipment and mine development costs. Free cash flow is not a
measure of financial performance in accordance with GAAP, and we
believe items excluded from net cash provided by operating
activities are significant to the reader in understanding and
assessing our results of operations. Therefore, free cash flow
should not be considered in isolation, nor as an alternative to net
cash provided by operating activities under GAAP. We believe free
cash flow is a useful measure of performance and we believe it aids
some investors and analysts in comparing us against other companies
to help analyze our current and future potential performance. Free
cash flow may not be comparable to similarly titled measures used
by other companies.
(7) Free cash flow conversion is defined
as free cash flow divided by Adjusted EBITDA.
WARRIOR MET COAL, INC.
CONDENSED BALANCE SHEETS (in thousands, except share and per-share
data)
September 30,
2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
686,811
$
829,480
Short-term investments
8,913
8,608
Trade accounts receivable
268,124
151,826
Inventories, net
108,757
154,039
Prepaid expenses and other receivables
31,600
29,156
Total current assets
1,104,205
1,173,109
Mineral interests, net
82,636
88,636
Property, plant and equipment, net
1,006,859
738,947
Deferred income taxes
7,004
7,572
Other long-term assets
18,544
19,831
Total assets
$
2,219,248
$
2,028,095
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
44,019
$
39,026
Accrued expenses
72,235
77,435
Short-term financing lease liabilities
13,690
24,089
Other current liabilities
14,017
12,574
Total current liabilities
143,961
153,124
Long-term debt
152,883
302,588
Asset retirement obligations
64,331
64,581
Long-term financing lease liabilities
9,829
9,002
Deferred income taxes
75,174
23,378
Other long-term liabilities
27,858
27,907
Total liabilities
474,036
580,580
Stockholders’ Equity:
Common stock, $0.01 par value,
(140,000,000 shares authorized as of September 30, 2023 and
December 31, 2022; 54,239,955 issued and 52,018,114 outstanding as
of September 30, 2023; 53,875,409 issued and 51,653,568 outstanding
as of December 31, 2022)
542
539
Preferred stock, $0.01 par value per share
(10,000,000 shares authorized; no shares issued and
outstanding)
—
—
Treasury stock, at cost (2,221,841 shares
as of September 30, 2023 and December 31, 2022)
(50,576
)
(50,576
)
Additional paid in capital
275,287
269,956
Retained earnings
1,519,959
1,227,596
Total stockholders’ equity
1,745,212
1,447,515
Total liabilities and stockholders’
equity
$
2,219,248
$
2,028,095
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101254299/en/
For Investors: Dale W. Boyles, 205-554-6129
dale.boyles@warriormetcoal.com
For Media: D'Andre Wright, 205-554-6131
dandre.wright@warriormetcoal.com
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