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Warrior Met Coal (HCC)
NYSE:HCC
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Warrior Met Coal
(NYSE:HCC)
71Outperform
Positive Factors
Financial Performance
The successful launch of Blue Creek is expected to lead to industry-leading free cash flow and capital returns, even if the met coal price remains low.
Project Development
Warrior announced a positive update on its Blue Creek project, increasing planned capacity to 6.0mstpa with no additional capital expenditure.
Negative Factors
Earnings Report
Warrior's reported 4Q EBITDA of $53m was below VA consensus of $60m and fell sequentially and year over year.
Market Conditions
There is concern about coal market fundamentals, which affects overall sentiment despite the positive developments at Blue Creek.
Warrior Met Coal (HCC) vs. S&P 500 (SPY)
Market Cap
$2.59B
Dividend Yield0.65%
Average Volume (3M)1.13M
Price to Earnings (P/E)10.3
Beta (1Y)1.20
Revenue Growth-9.10%
EPS Growth-47.93%
CountryUS
Employees1,336
SectorBasic Materials
Sector Strength57
IndustryCoal
Share Statistics
EPS (TTM)4.79
Shares Outstanding52,559,284
10 Day Avg. Volume1,409,533
30 Day Avg. Volume1,134,753
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.61
Price to Cash Flow (P/CF)11.30
P/FCF Ratio11.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$67.67Price Target Upside37.12% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Warrior Met Coal Business Overview & Revenue Model
Company DescriptionWarrior Met Coal, Inc. produces and exports non-thermal metallurgical coal for the steel industry. It operates two underground mines located in Alabama. The company sells its metallurgical coal to a customer base of blast furnace steel producers located primarily in Europe, South America, and Asia. It also sells natural gas, which is extracted as a byproduct from coal production. Warrior Met Coal, Inc. was incorporated in 2015 and is headquartered in Brookwood, Alabama.
How the Company Makes MoneyWarrior Met Coal generates revenue primarily through the mining and sale of premium metallurgical coal. The company extracts coal from its underground mines, processes it, and sells it to steel producers and industrial customers worldwide. Key revenue streams include long-term sales contracts with international steel manufacturers, spot sales in the domestic and export markets, and strategic partnerships that enhance distribution and logistics capabilities. Warrior Met Coal's earnings are influenced by factors such as global steel demand, coal market prices, production efficiency, and operational cost management. Additionally, the company may engage in hedging activities to mitigate price volatility and secure stable cash flows.
Warrior Met Coal Financial Statement Overview
Summary
Warrior Met Coal demonstrates a strong balance sheet with low leverage and high equity ratios, but faces challenges with declining revenues, margins, and cash flow generation, highlighting potential liquidity concerns.Income Statement
The company has shown a decline in revenue from $1.68 billion in 2023 to $1.52 billion in TTM 2024, indicating a negative revenue growth rate. Gross profit margin stands at 38.45% for TTM 2024, while net profit margin is 16.43%, both of which are reasonable within the industry. However, EBIT and EBITDA margins have decreased compared to previous years, reflecting pressure on operating efficiency.70
Positive
Balance Sheet
The balance sheet reflects a strong financial position with a low debt-to-equity ratio of 0.08 in TTM 2024. Return on Equity (ROE) is healthy at 11.98%, showcasing effective utilization of equity. The equity ratio is high at 80.68%, indicating a solid capital structure with limited reliance on debt.85
Very Positive
Cash Flow
Free cash flow has significantly declined from $209.43 million in 2023 to $28.26 million in TTM 2024, suggesting a challenge in generating cash after capital expenditures. The operating cash flow to net income ratio is 1.47, which is favorable, but the drop in free cash flow to net income ratio highlights potential liquidity concerns.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.53B | 1.68B | 1.74B | 1.06B | 782.74M | Gross Profit |
| 1.48B | 601.51M | 1.00B | 476.04M | 123.83M | EBIT |
| 254.89M | 541.41M | 801.42M | 243.75M | -23.59M | EBITDA |
| 441.92M | 700.91M | 920.86M | 380.02M | 97.50M | Net Income Common Stockholders |
| 250.60M | 478.63M | 641.30M | 150.88M | -35.76M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 506.17M | 747.23M | 838.09M | 404.34M | 220.42M | Total Assets |
| 2.59B | 2.36B | 2.03B | 1.46B | 1.39B | Total Debt |
| 173.04M | 173.24M | 335.68M | 391.86M | 418.38M | Net Debt |
| -318.51M | -564.96M | -493.80M | -3.98M | 206.47M | Total Liabilities |
| 500.70M | 482.61M | 580.58M | 592.23M | 668.70M | Stockholders Equity |
| 2.09B | 1.87B | 1.45B | 871.98M | 725.24M |
| Cash Flow | Free Cash Flow | |||
| -89.77M | 209.43M | 633.16M | 293.65M | 25.14M | Operating Cash Flow |
| 367.45M | 701.11M | 841.90M | 351.54M | 112.63M | Investing Cash Flow |
| -538.00M | -527.21M | -255.14M | -71.15M | -108.19M | Financing Cash Flow |
| -68.51M | -265.18M | -153.12M | -96.47M | 14.10M |
Warrior Met Coal Technical Analysis
Positive
49.35
Price Trends
48.32
Positive
53.37
Negative
58.11
Negative
Market Momentum
-0.41
Negative
56.95
Neutral
91.92
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HCC, the sentiment is Positive. The current price of 49.35 is above the 20-day moving average (MA) of 46.47, above the 50-day MA of 48.32, and below the 200-day MA of 58.11, indicating a neutral trend. The MACD of -0.41 indicates Negative momentum. The RSI at 56.95 is Neutral, neither overbought nor oversold. The STOCH value of 91.92 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HCC.
Warrior Met Coal Risk Analysis
Warrior Met Coal disclosed 60 risk factors in its most recent earnings report. Warrior Met Coal reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Warrior Met Coal Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $3.49B | 9.80 | 19.34% | 10.30% | -4.60% | -42.35% | |
77 Outperform | $1.56B | 4.76 | 10.41% | 2.34% | -14.50% | -46.36% | |
74 Outperform | $1.39B | 9.30 | 32.48% | 2.84% | -16.56% | -24.95% | |
71 Outperform | $2.59B | 10.31 | 12.64% | 0.65% | -9.10% | -47.93% | |
71 Outperform | $1.62B | 8.74 | 11.64% | 0.36% | -14.81% | -71.49% | |
68 Neutral | $516.76M | 47.32 | 3.06% | 2.79% | -3.93% | -88.36% | |
48 Neutral | $1.91B | -1.66 | -22.29% | 3.86% | 0.68% | -27.44% |
* Basic Materials Sector Average
Performance Comparison
HCC
Warrior Met Coal
49.35
-17.37
-26.03%
ARLP
Alliance Resource
27.17
8.21
43.30%
NRP
Natural Resource PRN
105.48
20.92
24.74%
AMR
Alpha Metallurgical Resources
124.22
-208.78
-62.70%
METC
Ramaco Resources
9.87
-5.04
-33.80%
BTU
Peabody Energy Comm
12.84
-10.73
-45.52%
Warrior Met Coal Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -8.61% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were significant achievements in production and the development of the Blue Creek project, the company faced challenges due to declining steelmaking coal prices and a weak market environment. The positive operational achievements were overshadowed by financial pressures and market difficulties.Highlights
Strong Sales and Production Volumes
Sales volumes increased by 23% and production volumes by 7% compared to the fourth quarter of last year. Mine 4 reached a record high annual production volume of 2.8 million short tons for the year.
Blue Creek Project Progress
Production at Blue Creek began in the third quarter and continued to develop with three continuous miner units producing 209,000 short tons for the year. The project remains on schedule and on budget with significant infrastructure development completed.
Cash from Operations
Generated over $370 million in cash from operations, which was used to fund the Blue Creek development and return $43 million of cash to stockholders via dividends.
Safety Performance
The company achieved strong safety results, maintaining safety as the number one priority for employees.
Lowlights
Decline in Steelmaking Coal Prices
Steelmaking coal prices reached their lowest levels since 2021, impacting profitability. Average net selling prices decreased by 34%, affecting adjusted EBITDA and pre-tax income.
Weak Market Fundamentals
The market was affected by excess Chinese steel exports, weak demand, and ample supply, leading to continued pressure on pricing indices and profitability.
Decreased Net Income
Net income on a GAAP basis was $1.1 million, a significant decrease from $129 million in the same quarter of 2023, driven by lower average net selling prices.
Negative Free Cash Flow
Free cash flow was a negative $88 million for the fourth quarter due to significant capital expenditures and mine development costs.
Company Guidance
During the fourth quarter of 2024, Warrior Met Coal, Inc. provided guidance reflecting on their strong operational performance despite challenging market conditions. The company achieved a 23% increase in sales volumes and a 7% rise in production volumes compared to the previous year. They generated over $370 million in cash from operations, returning $43 million to shareholders via dividends. Warrior Met Coal experienced a gross price realization of 86% for the quarter and disclosed a cash cost of sales per ton of approximately $119. They highlighted substantial progress on the Blue Creek growth project, investing $717 million to date, with expectations to produce 1 million short tons in 2025. The company foresees a persistent weak market but remains optimistic due to strong customer relationships and high-quality product offerings. They anticipate completing the Blue Creek project within a budget of $995 million to $1.1 billion, with significant production ramp-up projected after the longwall starts in 2026.Warrior Met Coal Corporate Events
Product-Related AnnouncementsBusiness Operations and Strategy
Warrior Met Coal Boosts Blue Creek Project Capacity
Positive
Feb 21, 2025
On February 21, 2025, Warrior Met Coal announced significant updates on its Blue Creek steelmaking coal project, highlighting an increase in nameplate capacity by 25% to 6.0 million short tons per year, expected to generate substantial incremental revenues and cash flows. The project remains on schedule and within budget, with the first longwall production anticipated by Q2 2026, and is projected to have a transformative impact on the company by enhancing capacity and maintaining its cost-efficient structure, ultimately benefiting a wide range of stakeholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.