Warrior Met Coal (HCC) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw sales volumes of 2.1 million short tons (up 18% year-over-year) and production volumes of 2.2 million short tons (up 13%), marking the largest quarterly production in over three years.

• Net income for Q2 2024 was $70.7 million ($1.35 per diluted share), down from $82.1 million ($1.58 per share) in Q2 2023.

• Adjusted EBITDA was $115.9 million with a margin of 29%, compared to $130 million and 34% in Q2 2023.

• Major progress on the Blue Creek project, with key seam access completed, $152.6 million invested in H1 2024, and first continuous miner unit expected in Q3 2024.

• Inflationary pressures in labor, materials, and equipment continue to impact profitability.

Financial highlights

• Q2 2024 total revenues were $396.5 million, up from $379.7 million in Q2 2023, driven by higher volumes but offset by an 11% decrease in average net selling price to $186.09 per short ton.

• Free cash flow was $25.4 million, a significant improvement from negative $22.8 million in Q2 2023.

• Cash and cash equivalents at June 30, 2024, were $709 million; total liquidity was $816.4 million, including $107.4 million available under the ABL facility.

• Cash cost of sales per ton was $123.78 in Q2 2024, down from $128.70 in Q2 2023.

• Adjusted net income per share was $1.35, down from $1.64 in Q2 2023.

Outlook and guidance

• 2024 coal sales guidance: 7.4–8.2 million short tons; production: 7.4–8.0 million short tons.

• Full-year 2024 capital expenditures expected at $435–$500 million, with $325–$390 million allocated to Blue Creek.

• Cash cost of sales (FOB port) expected at $125–$135 per short ton.

• Guidance reaffirmed with a minor downward adjustment to interest expense; key risks include longwall moves, pricing, labor contracts, and inflation.

• Blue Creek development on track, with first continuous miner unit starting in Q3 2024 and longwall production expected in Q2 2026.