Warrior Met Coal Announces Third Quarter 2017 Results
Sales volume increases 279% compared to prior year period to 2.1 million short tons
Production volume increases 180% compared to prior year period to 1.6 million short tons
Company records net income of $119.7 million and Adjusted EBITDA of $107.3 million
BROOKWOOD, AL — November 9, 2017 — Warrior Met Coal, Inc. (NYSE:HCC) (“Warrior” or the “Company”) today announced results for the third quarter ended September 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 third quarter 2017 net income of $119.7 million, or $2.27 per diluted share, compared to a net loss of $33.6 million, or $0.64 per diluted share, in the third quarter of 2016. The Company reported Adjusted EBITDA of $107.3 million in the third quarter of 2017, compared to an Adjusted EBITDA loss of $5.8 million in the prior year period. The market for high quality premium met coal continued to be very volatile in this reporting period, reflecting higher Chinese demand and ongoing disruptions to supply from U.S. and Australian miners.
“Warrior’s results in this quarter continue to reflect the strong demand for our premium met coal and our industry leading margins,” commented Walt Scheller, CEO of Warrior. "Strong sales volume coupled with high price realization and an exceptionally low cost structure enabled us to achieve strong free cash flow conversion. Our continued robust results validate Warrior as the premier and only publicly traded 'pure-play' met coal producer in the U.S."
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 1.6 million short tons of met coal in the third quarter of 2017, nearly three times the amount produced in the prior year period. “We are undertaking the moves necessary to increase our production levels in a responsible manner, and that work will continue in the months ahead as we move closer to achieving the nameplate production capacity in our two mines,” Mr. Scheller added.
Additional Financial Results
Total revenues were $312.0 million for the third quarter of 2017, including $303.0 million in mining revenues, which consisted of met coal sales of 2.1 million short tons at an average selling price of $144.06 per short ton. Sales volume increased 279% over the third quarter of 2016 and increased 8% over the second quarter of 2017, reflecting both strong continued production and strong demand from customers. Warrior capitalized on the strong pricing environment in the quarter by selling down higher than normal inventory levels built from strong production performance in the first half of the year.
Cost of sales for the third quarter of 2017 were $189.6 million, or 60.8% of total revenues, and included mining costs, transportation and royalty costs. Cash cost of sales (free-on-board port) per short ton increased by $7.65 to $89.91 in the third quarter compared to the second quarter of 2017. Selling, general and administrative expenses for the third quarter of 2017 were $9.2 million, or 3.0% of total revenues. Depreciation and depletion costs for the third quarter of 2017 were $23.4 million, or 7.5% of total revenues. Warrior incurred interest expense of $0.6 million and recognized an income tax benefit of $37.6 million, or $0.71 per share, for the third quarter of 2017, reflecting the impact of the favorable Internal Revenue Service ("IRS") Private Letter Ruling ("PLR") the Company received in the third quarter of 2017 discussed in further detail below.
The following information was filed by Warrior Met Coal, Inc. (HCC) on Thursday, November 9, 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.