Warrior Met Coal ((HCC)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Warrior Met Coal’s recent earnings call painted a mixed picture of the company’s current financial health and future prospects. While the company faces significant challenges due to declining steelmaking coal prices and a resultant net loss, it has demonstrated strong cost management and continues to make progress in its Blue Creek project. Despite adverse market conditions and trade challenges, Warrior maintains a robust liquidity position and has increased production volumes, which are positive signs amid the financial hurdles.
Increased Sales and Production Volumes
Warrior Met Coal reported a modest increase in sales and production volumes during the first quarter of 2025. Sales volume reached 2.2 million short tons, marking a 2% rise from the previous year’s same quarter. Production volume saw a more significant increase of 10%, totaling 2.3 million short tons. This growth indicates the company’s operational resilience despite market adversities.
Progress in Blue Creek Project
The Blue Creek project remains a focal point for Warrior Met Coal, with the project being on budget and schedule. In the first quarter, the project produced 251,000 short tons and has reached $772 million in investment, over 70% of the expected total. This progress is funded by internally generated cash flows, showcasing Warrior’s commitment to strategic growth initiatives.
Strong Liquidity Position
Warrior Met Coal’s liquidity position remains strong, with total available liquidity at the end of the first quarter standing at $617 million. This includes cash and cash equivalents of $455 million, short and long-term investments of $48 million, and $114 million available under the ABL facility. This robust liquidity provides a cushion against market volatility.
Successful Cost Management
The company has effectively managed its costs, with the cash cost of sales per short ton decreasing to $112 in the first quarter of 2025 from $133 in the same quarter of 2024. This reduction is attributed to lower variable transportation and royalty costs, alongside tight management of overall spending.
Decline in Steelmaking Coal Prices
Warrior Met Coal faced a significant decline in steelmaking coal prices, with average premium low vol index prices dropping by 40% compared to the previous year’s first quarter. Prices averaged $168 per short ton in 2025 Q1, down from $280 the previous year, while high vol product prices decreased by 43% in the same period.
Net Loss in Financial Performance
The company recorded a net loss on a GAAP basis of $8 million or $0.16 per diluted share in the first quarter of 2025, a stark contrast to the net income of $137 million or $2.62 per diluted share in the same quarter of 2024. This loss underscores the financial challenges posed by the declining coal prices.
Decreased Revenues
Warrior Met Coal’s total revenues for the first quarter of 2025 were $300 million, down from $504 million in the first quarter of 2024. This decrease is primarily due to a reduction in average gross selling prices, reflecting the broader market challenges.
Impact of Trade and Tariff Policies
Trade and tariff policies have further complicated Warrior Met Coal’s market environment. China’s retaliatory tariffs on U.S. steelmaking coals have disrupted trade flows, halting coal trade between the two countries and contributing to a weaker pricing environment.
Forward-Looking Guidance
Despite the challenging market conditions, Warrior Met Coal provided guidance that reflects cautious optimism. The company highlighted a 40% drop in average premium low vol index prices but managed a 2% increase in sales volume and a 10% increase in production volume. Warrior maintains a strong contracted volume of 85% for the year and expects to produce one million short tons from the Blue Creek project in 2025. The company has set capital expenditures between $225 million to $250 million for the year, demonstrating a commitment to its strategic projects despite the uncertain market.
In conclusion, Warrior Met Coal’s earnings call reveals a company navigating through a tough market landscape with strategic focus and operational resilience. While the decline in coal prices and trade challenges have impacted financial performance, the company’s strong liquidity, cost management, and progress in key projects like Blue Creek offer a foundation for future stability and growth.