Warrior Met Coal Announces First Quarter 2018 Results and Stock Repurchase Program
Sales volume increases 88% compared to prior year period to 2.1 million short tons
Production volume increases 30% compared to prior year period to 2.1 million short tons
Company records net income of $178.7 million and Adjusted EBITDA of $216.4 million
BROOKWOOD, AL — May 2, 2018 — Warrior Met Coal, Inc. (NYSE:HCC) (“Warrior” or the “Company”) today announced results for the first quarter ended March 31, 2018. Warrior is the leading dedicated U.S.-based producer and exporter of high quality metallurgical (“met”) coal for the global steel industry.
Warrior reported first quarter 2018 net income of $178.7 million, or $3.36 per diluted share, compared to net income of $108.3 million, or $2.06 per diluted share, in the first quarter of 2017. Excluding one-time transaction and other expenses, adjusted earnings per share were $3.42 per diluted share in the first quarter of 2018, a 54% increase over the same period in 2017. The Company reported Adjusted EBITDA of $216.4 million in the first quarter of 2018, compared to Adjusted EBITDA of $135.5 million in the prior year period. The market for high quality premium met coal continued to be strong in the first quarter, reflecting resilience in global steel production, as well as the effects of met coal supply disruptions in Australia.
“Warrior’s results in the first quarter continue to reflect the strong demand for our premium met coal, as well as our industry leading margins,” commented Walt Scheller, CEO of Warrior. “Our record-setting production and sales volumes, coupled with high price realization and our low-cost structure, enabled us to achieve strong free cash flow conversion. These robust results continue to validate our highly focused business strategy as a premium 'pure-play' met coal producer.”
The Company produced 2.1 million short tons of met coal in the first quarter of 2018, 30% more than the amount produced in the first quarter of 2017. “By taking advantage of the strong pricing environment for our premium met coal, we are on track to meet our previously established guidance for the full year 2018,” Mr. Scheller added.
Additional Financial Results
Total revenues were $421.8 million for the first quarter of 2018, including $412.9 million in mining revenues, which consisted of met coal sales of 2.1 million short tons at an average net selling price of $195 per short ton, net of demurrage and other charges. Sales volume increased 88% over the first quarter of 2017, reflecting both increased production levels and high demand from customers. Warrior capitalized on the strong pricing environment in the quarter by achieving a gross price realization of 99%. The Company's gross price realization now represents a volume weighted-average calculation of our daily realized price per ton based on gross sales, which excludes demurrage and other charges, as a percentage of the Platts Premium Low Volatility ("LV") Free-On-Board ("FOB") Australia Index price (the "Platts Index").
Cost of sales for the first quarter of 2018 were $190.7 million, or 46.2% of mining revenues, and included mining costs, transportation and royalty costs. Cash cost of sales (free-on-board port) per short ton decreased to $89.82 in the first quarter of 2018 from the first quarter of 2017, primarily due to higher sales volumes.
Selling, general and administrative expenses for the first quarter of 2018 were $8.2 million, or 2.0% of total revenues. Transaction and other expenses were $3.3 million in the first quarter of 2018 and were related to the issuance of $125.0 million in aggregate principal amount of the Company's 8.00% Senior Secured Notes due 2024 (the "New Notes"). Depreciation and depletion costs for the first quarter of 2018 were $24.6 million, or 5.8% of total revenues. Warrior incurred interest expense of $8.6 million during the first quarter of 2018, which was higher than previous quarters due to the incurrence of interest on the Notes (as defined below). The Company did not incur any income tax expense for the first quarter of 2018 due to its planned utilization of net operating losses (“NOLs”).
The following information was filed by Warrior Met Coal, Inc. (HCC) on Wednesday, May 2, 2018 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.