Warrior Met Coal, Inc. Q3 FY2024 earnings call

• Warrior produced the first development tons from its Blue Creek growth project on time and within budget. - The third quarter was weaker than expected due to weaker demand, excess Chinese steel exports, and ample steelmaking coal supply. - Sales volume was impacted by selectivity with spot sales and waiting for market improvement. - Blue Creek project progress: commenced development of first longwall panel, completed installation of various components, preparation plant expected online mid-2025, clean coal belt and rail/barge loadouts on schedule. - CapEx spending in the third quarter was $123 million, with $94 million on Blue Creek development.

In the third quarter of 2024, Warrior's sales volume was 1.9 million short tons, 17.5% lower than the comparable quarter last year. Total revenues were $328 million, down from $423 million in the third quarter of 2023. The consolidated gross price realization was 93% in the third quarter. Sales by geography in the third quarter were 44% into Europe, 41% into Asia, and 15% into South America. Cash cost of sales in the third quarter was $230 million, or 72% of mining revenues, compared to $259 million or 62% in the same quarter of 2023.

• Full year spot volume expected to range between 25% to 30% of total sales volume. - Blue Creek project expected to start production in Q2 2026. - Cash cost per ton remains on track for the full year and in line with average net selling price year-to-date. - Expect steelmaking coal supply to be somewhat tighter in the last quarter of 2024 as Australia enters wet season.

• Weak global steel demand impacting steelmaking coal prices. - Excess Chinese steel exports affecting global steel markets and Warrior's markets. - Pricing environment remaining under pressure due to persistent weakness in global steel markets and delayed infrastructure spending in India. - Uncertainty regarding the impact of China's stimulus package on demand.

Q: On the commercial side, comment on Q4 outlook in terms of spot pricing and competitive dynamics in Asia, Europe, Latin America.

A: As we look out into Q4, we're carefully watching market conditions, majority of Asian spot sales are CFR, being careful about committing to spot sales to protect assets until market recognizes value.

Q: Walk through the 3Q gross price realization of 93%.

A: We take the averages of the PLV during the period, considering demurrage and other factors, and need to be careful with the 93% as it's affected by the falling market with a one-month lag.

Q: Next year, are you in conversations with customers about Blue Creek volume and how it will be contracted?

A: Yes, we are in conversations, and it's expected to be under contract as it's a new coal mine and customers will want to test it first.