Warrior Met Coal Q2 Earnings Call Highlights

Warrior Met Coal NYSE: HCC reported sharply higher second-quarter earnings and cash generation as its Blue Creek mine contributed additional sales volumes and lower-cost production, while management raised its full-year sales and production outlook. Chief Executive Officer Walt Scheller described the quarter as a “key inflection point,” citing record sales volumes, improved pricing and a lower cost profile. The company generated more than $103 million of free cash flow during the quarter, bringing first-half free cash flow to a positive $11 million. “With Blue Creek operational and our development spending complete, we've entered into the next phase of Warrior's growth,” Scheller said, adding that the company’s focus is now on free cash flow generation, balance sheet strength and long-term stockholder returns. Warrior reported second-quarter net income of $87 million, or $1.65 per diluted share, compared with net income of $6 million, or $0.11 per diluted share, a year earlier. Adjusted EBITDA rose 193% to $157 million, while revenue increased to $510 million from $298 million in the prior-year quarter. Adjusted EBITDA margin improved to 31% from 18% a year earlier. On a per-ton basis, adjusted EBITDA was $43 per short ton, compared with $24 per short ton in the second quarter of 2025. Chief Financial Officer Dale Boyles said the financial improvement reflected a 65% increase in sales volumes, a 6% increase in average net selling prices and a 9% reduction in cash costs. The company recorded an average net selling price of $138 per short ton, up from $130 per short ton a year ago. Second-quarter sales reached a fourth consecutive quarterly record of 3.7 million short tons, compared with 2.2 million short tons in the year-earlier period. Production rose 45% to 3.3 million short tons. Management attributed the increases primarily to Blue Creek. The company’s sales mix during the quarter was 66% High-Vol A coal and 34% premium low-volatility coal. By geography, 50% of sales went to Asia, 35% to Europe and 14% to South America. Spot volumes represented 13% of total quarterly sales. Coal inventories declined to 1.4 million short tons at the end of June from 1.9 million short tons at the end of March. Scheller said the company expects to further reduce excess inventory through the rest of 2026 to support sales volumes, profitability and free cash flow. Cash cost of sales was $338 million, or 67% of mining revenue, compared with $225 million, or 78% of mining revenue, in the year-earlier quarter. Cash cost of sales per short ton FOB port declined to approximately $93 from $101. Boyles said the higher sales volume and transportation and royalty costs increas...