{"id":731824,"date":"2023-02-15T16:08:29","date_gmt":"2023-02-15T21:08:29","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/warrior-met-coal-reports-fourth-quarter-and-full-year-2022-results\/"},"modified":"2023-02-15T16:08:29","modified_gmt":"2023-02-15T21:08:29","slug":"warrior-met-coal-reports-fourth-quarter-and-full-year-2022-results","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/warrior-met-coal-reports-fourth-quarter-and-full-year-2022-results\/","title":{"rendered":"Warrior Met Coal Reports Fourth Quarter and Full Year 2022 Results"},"content":{"rendered":"

<\/p>\n

Warrior Met Coal Reports Fourth Quarter and Full Year 2022 Results<\/span><\/b><\/p>\n

Achieved full year strong net income of $641.3 million <\/i>and all-time record Adjusted EBITDA of $994.2 million<\/i><\/p>\n

Achieved all-time record annual cash flows from operations of $841.9 million<\/i><\/p>\n

Ended 2022 with total liquidity of $952.8 million<\/i><\/p>\n

Sets out guidance for 2023<\/i><\/p>\n

BROOKWOOD, Ala.–(BUSINESS WIRE<\/a>)–
\nWarrior Met Coal, Inc. (NYSE:HCC) (\u201cWarrior\u201d or the \u201cCompany\u201d) today announced results for the fourth quarter and full-year 2022. Warrior is the leading dedicated U.S.-based producer and exporter of high quality metallurgical (\u201cmet\u201d) coal for the global steel industry.\n<\/p>\n

\nWarrior reported fourth quarter 2022 net income of $99.7 million, or $1.93 per diluted share, compared to net income of $138.5 million, or $2.68 per diluted share, in the fourth quarter of 2021. Adjusted net income for the fourth quarter of 2022 was $1.90 per diluted share compared to an adjusted net income of $3.17 per diluted share in the fourth quarter of 2021. The Company reported Adjusted EBITDA of $147.5 million in the fourth quarter of 2022, compared to Adjusted EBITDA of $240.2 million in the fourth quarter of 2021. While sales volumes were flat quarter over quarter, average net selling prices were 17% lower in the fourth quarter of 2022 compared to 2021, primarily due to stronger met coal market pricing in late 2021.\n<\/p>\n

\n\u201cIn the fourth quarter, we delivered strong results despite shipment delays due to mechanical failures at the McDuffie Terminal and bad weather at the Port of Mobile, which continued to drive higher than normal inventories and lower shipment volumes,\u201d commented Walt Scheller, CEO of Warrior. \u201cWe were pleased to see customer demand and coal prices hold firm despite lower steel production globally. As we jointly address the mechanical challenges with our partner at the McDuffie Terminal and as rail transportation performance continues to improve, we expect to ship higher volumes, returning our inventories to normal levels. We have already seen significant improvement from these joint efforts in the first six weeks of the year. Our fourth quarter results marked the conclusion of an exceedingly strong financial year for Warrior, which posted strong net income, record operating cash flows and set Company records for Adjusted EBITDA, more than double our 2021 Adjusted EBITDA at nearly $1 billion, as well as free cash flow and total liquidity. As a result, we are able to move ahead more rapidly with our transformational Blue Creek mine development project, which we believe will drive meaningful future growth, profitability and cash generation.\u201d\n<\/p>\n

\n\u201cOverall, Warrior enters 2023 with excellent financial and operational momentum. Our current liquidity, which is at a record high, will enable us to continue to return excess cash to stockholders while investing in the future growth of the business through the rapid development of the Blue Creek mine,\u201d Scheller concluded.\n<\/p>\n

\nWarrior reported strong full year 2022 net income of $641.3 million and adjusted net income of $666.1 million, or net income of $12.40 per diluted share and adjusted net income of $12.88 per diluted share, compared to net income of $150.9 million and adjusted net income of $227.7 million, or net income of $2.93 per diluted share and adjusted net income of $4.43 per diluted share, in 2021. The Company reported an all-time record high Adjusted EBITDA of $994.2 million for the full year 2022 compared to $457.0 million for the full year 2021.\n<\/p>\n

Operating Results<\/b><\/p>\n

\nThe Company produced 1.5 million short tons of met coal in the fourth quarter of 2022 compared to 1.1 million short tons in the fourth quarter of 2021. Fourth quarter production was the result of running both longwalls and five continuous miner units at Mine No. 7 and one longwall and three continuous miner units at Mine No. 4. For the full year of 2022, the Company produced 6.3 million short tons, or an increase of 12.7% compared to 2021. Sales volume in the fourth quarter of 2022 was 1.5 million short tons compared to 1.4 million short tons in the fourth quarter of 2021. Sales volumes for the full year 2022 were 5.6 million short tons, or a decrease of 10.5% compared to 2021 primarily due to the shipment delays caused by the Port of Mobile and low rail transportation performance throughout the year. Inventory levels increased to 855 thousand short tons at the end of December 31, 2022 from the 243 thousand short tons at the end of 2021 primarily due to the shipment delays.\n<\/p>\n

Additional Financial Results<\/b><\/p>\n

\nTotal revenues were $344.8 million for the fourth quarter of 2022, including $329.9 million in mining revenues, which consisted of met coal sales of 1.5 million short tons at an average net selling price of $227.21 per short ton, net of demurrage and other charges. This compares to total revenues of $415.5 million in the fourth quarter of 2021. The average net selling price of the Company’s met coal decreased 17% from $273.84 per short ton in the fourth quarter of 2021 to $227.21 per short ton in the fourth quarter of 2022 due to stronger met coal market pricing last year.\n<\/p>\n

\nCost of sales for the fourth quarter of 2022 was $180.7 million compared to $155.2 million for the fourth quarter of 2021. Cash cost of sales (including mining, transportation and royalty costs) for the fourth quarter of 2022 were $179.2 million, or 54.3% of mining revenues, compared to $153.3 million, or 38.6% of mining revenues in the same period of 2021. Cash cost of sales (free-on-board port) per short ton increased to $123.40 in the fourth quarter of 2022 from $105.80 in the fourth quarter of 2021, primarily reflecting the delayed impact of transportation and royalty costs and rising inflation in 2022. The full year 2022 cash cost of sales per short ton was $125.50 compared to $87.48 in for the full year 2021. Inflation accounted for approximately $5 per short impact during the fourth quarter and $4 per short ton for the full year 2022 primarily due to increases in the costs of diesel fuel, belt structure, roof bolts, cable, chemicals and other supplies, plus labor and parts on equipment repair and rebuilds.\n<\/p>\n

\nSelling, general and administrative expenses for the fourth quarter of 2022 were $11.8 million, or 3.4% of total revenues. Depreciation and depletion costs for the fourth quarter of 2022 were $28.3 million, or 8.2% of total revenues. Warrior incurred net interest income of $1.7 million during the fourth quarter of 2022, compared to net interest expense of $9.4 million in the fourth quarter of 2021. Interest income earned on our cash investments exceeded interest expense on our outstanding notes and equipment leases.\n<\/p>\n

\nBusiness interruption expenses were $3.4 million in the fourth quarter of 2022 and represent non-recurring expenses that are directly attributable to the ongoing labor strike for incremental safety and security, labor negotiations and other expenses. Idle mine expenses were $2.0 million in the fourth quarter of 2022 and represent expenses incurred with the reduced operations at the mines, such as electricity, insurance and maintenance labor.\n<\/p>\n

\nIncome tax expense was $19.7 million in the fourth quarter of 2022 due to income before income taxes of $119.3 million and primarily reflects the utilization of our net operating losses offset partially by an income tax benefit for depletion. This compares to an income tax expense of $26.7 million in the fourth quarter of 2021.\n<\/p>\n

Cash Flow and Liquidity<\/b><\/p>\n

\nThe Company generated cash flows from operating activities in the fourth quarter of 2022 of $195.0 million, compared to $174.7 million in the fourth quarter of 2021. Capital expenditures for the fourth quarter of 2022 were $98.5 million, resulting in free cash flow of $96.5 million. Free cash flow was $54.4 million less than the fourth quarter of 2021 and reflected lower realized prices and higher capital expenditures and mine development costs.\n<\/p>\n

\nNet working capital, excluding cash, for the fourth quarter of 2022 decreased by $46.7 million from the third quarter of 2022, primarily reflecting a decrease in accounts receivable due to lower average net selling prices, partially offset by higher inventories and lower accounts payable.\n<\/p>\n

\nCash flows used in financing activities for the fourth quarter of 2022 were $12.7 million, primarily due to payments of capital lease obligations of $7.9 million, the payment of the regular quarterly dividend of $3.1 million, and retirements of debt of $1.6 million.\n<\/p>\n

\nThe Company generated an all-time record $841.9 million of cash flows from operating activities for the full year 2022 compared to $351.5 million in 2021. Capital expenditures and mine development costs for the full year 2022 were $254.2 million, including $47.1 million for the development of Blue Creek. Cash flows used in financing activities for the full year 2022 were $153.1 million, primarily due to the payment of regular and special cash dividends of $79.7 million, retirements of debt of $39.4 million, and payments on capital lease obligations of $30.3 million.\n<\/p>\n

\nThe Company\u2019s total liquidity as of December 31, 2022 was a record high $952.8 million, consisting of cash and cash equivalents of $829.5 million and available liquidity under its ABL Facility of $123.3 million, net of outstanding letters of credit of $8.7 million.\n<\/p>\n

Capital Allocation<\/b><\/p>\n

\nOn February 9, 2023, the Board of Directors (the “Board”) declared a regular quarterly cash dividend of $0.07 per share, which was an increase of 17% over the regular cash dividend declared by the Board on October 24, 2022, totaling approximately $3.7 million, which will be paid on February 27, 2023 to stockholders of record as of the close of business on February 20, 2023.\n<\/p>\n

\nIn addition, on February 13, 2023, the Board declared a special cash dividend (the “March 2023 Special Dividend”) of $0.88 per share, totaling approximately $46.3 million, which will be paid on March 7, 2023, to stockholders of record as of the close of business on February 28, 2023. The Company continues to demonstrate its previous commitment to returning excess cash to stockholders while driving long-term growth with its investment in the development of its Blue Creek reserves.\n<\/p>\n

\nAny future special dividends or stock repurchases from excess cash flows will be at the discretion of the Board and subject to consideration of several factors including business and market conditions, future financial performance and other strategic investment opportunities. The Company will also seek to optimize its capital structure to improve returns to stockholders while allowing flexibility for the Company to pursue very selective strategic growth opportunities that can provide compelling stockholder returns.\n<\/p>\n

Company Outlook<\/b><\/p>\n

\nThe Company’s outlook for 2023 is subject to many risks that may impact performance, such as the labor strike, ongoing mechanical issues at the McDuffie Terminal at the Port of Mobile, ongoing rail transportation issues, 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. The Company’s guidance for the full year 2023 is outlined below.\n<\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

\nCoal sales\n<\/p>\n<\/td>\n

\n\n

\n6.6 – 7.2 million short tons\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCoal production\n<\/p>\n<\/td>\n

\n\n

\n6.3 – 6.9 million short tons\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCash cost of sales (free-on-board port)\n<\/p>\n<\/td>\n

\n\n

\n$109 – $125 per short ton\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCapital expenditures for sustaining existing mines\n<\/p>\n<\/td>\n

\n\n

\n$95 – $105 million\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nBlue Creek project and other discretionary capital expenditures\n<\/p>\n<\/td>\n

\n\n

\n$325 – $345 million\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nMine development costs\n<\/p>\n<\/td>\n

\n\n

\n$10 – $14 million\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nSelling, general and administrative expenses\n<\/p>\n<\/td>\n

\n\n

\n$42 – $48 million\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nInterest expense, net of interest income\n<\/p>\n<\/td>\n

\n\n

\n$5 – $10 million\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nIncome tax expense\n<\/p>\n<\/td>\n

\n\n

\n18% – 20%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nKey factors that may affect outlook include:\n<\/p>\n