Warrior Met Coal Announces Second Quarter 2017 Results
Reports strong cash flow generation on sales volume increase of 72% to 1.9 million short tons
Records net income of $129.9 million and Adjusted EBITDA of $188.5 million
BROOKWOOD, AL — August 3, 2017 — Warrior Met Coal, Inc. (NYSE:HCC) (“Warrior” or the “Company”) today announced results for the second quarter ended June 30, 2017. Warrior is the leading dedicated U.S. based producer and exporter of high quality metallurgical (“met”) coal for the global steel industry.
Warrior reported second quarter 2017 net income of $129.9 million, or $2.46 per diluted share, compared to $108.3 million, or $2.06 per diluted share, in the first quarter of 2017. Excluding certain transaction costs related to the Company’s initial public offering, Adjusted Net Income was $132.9 million, or $2.52 per diluted share, in the second quarter of 2017. The Company reported Adjusted EBITDA of $188.5 million in the second quarter of 2017, a 39% increase over the first quarter. During the second quarter of 2017, the market for high quality premium met coal was very volatile with global supply disruptions and the benchmark pricing system being replaced by an indexation methodology. Warrior was able to capitalize on this market volatility with respect to both sales volumes and pricing as its second quarter net realized selling prices were 103% of the second quarter of 2017 industry average index price. Warrior's price realization reflects its high quality premium product and unique go-to-market strategy.
“Warrior’s highly successful second quarter validates our value proposition as the only publicly traded ‘pure-play’ hard coking coal operator in the U.S.,” commented Walt Scheller, CEO of Warrior. “Robust sales volume growth in a strong price environment resulted in a 167% increase in our free cash flow compared to the first quarter. We believe our ability to significantly grow our sales while maintaining our exceptionally low cost structure will enable us to carry forward this strong performance over the remainder of the year.”
Warrior continued to make progress in the ramp up of mining operations toward its historical annual production level of approximately 8.0 million short tons. The Company produced 1.9 million short tons of met coal in the second quarter of 2017, which represented an increase of 18% over the first quarter of 2017. “Our mining operations have continued to grow as we move closer to achieving the nameplate production capacity in our two mines,” added Mr. Scheller. “As we continue to refine and improve our operations, I believe Warrior has a great opportunity to increase production profitably in response to market demand and generate significant free cash flow.”
Additional Financial Results
Total revenues were $363.4 million for the second quarter of 2017, including $351.8 million in mining revenues, which consisted of met coal sales of 1.9 million short tons at an average selling price of $181.14 per short ton. Sales volume increased 72% over the second quarter of 2016 and increased 55% for the first six months of 2017 over the same period in 2016.
Cost of sales for the second quarter of 2017 were $160.2 million, or 44.1% of total revenues, and includes mining costs, transportation and royalty costs. Cash cost of sales (free-on-board port) per short ton decreased by $11.53 to $82.22 in the second quarter compared to the first quarter of 2017. Selling, general and administrative expenses for the second quarter of 2017 were $8.7 million, or 2.4% of total revenues. Depreciation and depletion costs for the second quarter of 2017 were $19.7 million, or 5.4% of total revenues. Transaction and other costs associated with the Company’s initial public offering decreased to $3.8 million for the second quarter of 2017. Warrior incurred interest expense of $0.6 million and recognized income tax expense of $32.8 million for the second quarter of 2017.
The following information was filed by Warrior Met Coal, Inc. (HCC) on Thursday, August 3, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.