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WARRIOR MET COAL, INC. (HCC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient operations amid a weak price backdrop: revenue $297.5M, diluted EPS $0.11, Adjusted EBITDA $53.6M; volumes up 6% YoY, cash cost per ton fell to $101.17, and operating cash flow was $37.5M .
  • Blue Creek hit its first commercial sales ahead of schedule (239K tons sold; 348K tons produced) and longwall startup was accelerated to early Q1 2026, a clear positive execution surprise .
  • Versus S&P Global consensus, Q2 EPS significantly beat (-$0.36 est vs $0.11 actual) and revenue modestly beat ($285.6M est vs $297.5M actual); Q1 also beat EPS and revenue; Q4 2024 missed EPS but was near revenue consensus (values retrieved from S&P Global)*.
  • Full-year 2025 guidance raised volumes and cut cash cost guidance ($110–$120/ton), but interest expense guidance increased; management highlighted macro headwinds (price relativity and CFR freight drag), while Blue Creek’s low-cost profile supported margins .
  • Stock narrative catalysts: Blue Creek ahead-of-schedule milestones, lower unit costs, and potential benefits from the new 45X critical mineral tax credit beginning in 2026 (prelim estimate ~$30–$40M/year) .

What Went Well and What Went Wrong

What Went Well

  • First commercial Blue Creek sales ahead of schedule; longwall startup accelerated to early Q1 2026, marking an inflection from pure capex to revenue generation: “This major milestone marks a critical inflection point… transition from capital investment to revenue generation” .
  • Unit cost execution: cash cost per ton fell to $101.17 (from $123.78 YoY), with management crediting variable cost structure, disciplined cost control, and Blue Creek’s inherent lower cost structure .
  • Positive operating cash flow ($37.5M) despite a 24% YoY decline in PLV index prices to $167.12/ton and price relativity/freight headwinds .

What Went Wrong

  • Pricing headwinds and realizations: average net selling price fell ~30% YoY to $130.01/ton and gross price realization was ~80% (below the 85–90% target) due to higher High Vol A mix and CFR sales into Asia amid widened LVHCC vs PLV spreads .
  • Free cash flow negative (-$56.7M) on lower prices and continued Blue Creek investment, though underlying operations ex-Blue Creek capex were positive per CFO commentary .
  • Adjusted EBITDA margin compressed YoY to 18.0% (from 29.2% in Q2’24) on price declines and mix shifts, partially offset by cost savings and Blue Creek low-cost tons .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$297.5 $299.9 $297.5
Diluted EPS ($)$0.02 $(0.16) $0.11
Adjusted EBITDA ($USD Millions)$53.2 $39.5 $53.6
Adjusted EBITDA Margin (%)17.9% 13.2% 18.0%

KPIs

KPIQ4 2024Q1 2025Q2 2025
Tons Sold (K short tons)1,887 2,172 2,219
Tons Produced (K short tons)2,108 2,254 2,308
Average Net Selling Price ($/ton)$154.54 $135.79 $130.01
Cash Cost of Sales per Ton ($/ton)$119.55 $112.35 $101.17
Cash Margin per Ton ($/ton)$34.99 $23.44 $28.84
Operating Cash Flow ($USD Millions)$54.2 $10.9 $37.5

Geographic Mix (Q2 2025)

RegionQ2 2025 Mix
Asia52%
Europe37%
South America11%

Actual vs S&P Global Consensus

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions): Actual$297.5 $299.9 $297.5
Revenue ($USD Millions): Consensus$306.7*$284.6*$285.6*
Diluted EPS ($): Actual$0.02 $(0.16) $0.11
Diluted EPS ($): Consensus$0.456*$(0.228)*$(0.363)*

Values retrieved from S&P Global*.

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
Coal Sales (short tons)FY 20258.2–9.0M 8.8–9.5M Raised
Coal Production (short tons)FY 20257.8–8.6M 8.3–9.1M Raised
Cash Cost of Sales (FOB port, $/ton)FY 2025$117–$127 $110–$120 Lowered
Capex – SustainingFY 2025$90–$100M $90–$100M Maintained
Capex – Blue CreekFY 2025$225–$250M $225–$250M Maintained
Mine Dev. – Blue CreekFY 2025$95–$110M $85–$100M Lowered
Depreciation & DepletionFY 2025$185–$210M $185–$210M Maintained
SG&AFY 2025$65–$75M $65–$75M Maintained
Interest ExpenseFY 2025$4–$6M $10–$15M Raised
Interest IncomeFY 2025$10–$15M $15–$20M Raised
Income Tax RateFY 202510–15% N/A (not provided) Removed
DividendQ3 2025$0.08 declared $0.08 declared Maintained
Blue Creek Longwall TimingProjectNo later than Q2 2026 Early Q1 2026 Pulled forward

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Blue Creek executionBegan production; capex on track; preparation plant mid-2025; longwall no later than Q2 2026 251K tons produced; longwall no later than Q2 2026 239K tons sold; 348K produced; longwall accelerated to early Q1 2026 Accelerating, ahead of schedule
Price environment & realizationsNet ASP down; realization ~86% Q4 ASP fell; realization ~83% Q1 ASP down ~30%; realization ~80% on LVHCC/PLV spread, mix, CFR Weak pricing; realization below target
Cost discipline & variable cost structureFY cash cost $125.29/ton, low end of range Cash cost $112.35/ton; tight cost control Cash cost $101.17/ton; further reductions, Blue Creek mix helps Improving unit costs
Geography & sales mixHigher Mine 4 mix; inventories lifted by Blue Creek Guidance assumes Blue Creek tons in H2 Asia 52%, Europe 37%, South America 11%; spot 4% Increasing Asia CFR exposure
Macro & tariffsNoted demand weakness; trade issues Held guidance pending tariff clarity Continued pressure from excess Chinese exports, tariffs; no China sales Persisting headwinds
Logistics (rail/barge)Port/rail risks noted —Rail loop resilient; barge loadout coming online to hedge rail risk Operational flexibility
US policy – 45X credit——45X critical mineral credit (2026–2029); prelim ~$30–$40M/year Potential medium-term tailwind

Management Commentary

  • CEO: “Warrior delivered strong operational results, maintained positive cash margins, and generated positive operating cash flows… we remain focused on… protecting margins, preserving cash flow, and executing on our long-term growth strategy” .
  • CEO on Blue Creek: “This major milestone marks a critical inflection point… representing the beginning of a transition from capital investment to revenue generation… anticipate the longwall startup… early in the first quarter of 2026” .
  • CFO: “Two thirds of the cost reductions came from… cost control, operational efficiencies and the sales mix of Blue Creek coal… remaining one third from lower variable transportation and royalty cost” .
  • CEO on macro: “Average premium low-vol index prices declined 24%… excess Chinese steel exports… lackluster global steel demand… well supplied steelmaking coal market” .

Q&A Highlights

  • Cost cadence: Despite strong Q2 cost performance, guidance allows for higher repairs/maintenance in H2; YTD cash cost ~$107/ton near low end of FY range .
  • Brazil tariffs and diversion: High Vol A flows are increasingly into Asia; South America still taking volumes but mix shift reduces share; intent is to avoid flooding spot markets .
  • Blue Creek costs and pricing: Realization risk persists while LVHCC/PLV spread is depressed and CFR freight weighs on netbacks; Blue Creek’s low-cost structure offsets part of this .
  • 2026 45X tax credit: Preliminary assessment suggests ~$30–$40M/year depending on variable costs; more detail to come as the program begins in 2026 .
  • Rail/barge flexibility: Blue Creek’s shipping loop supports reliable rail service; barge loadout provides an alternative if rail performance deteriorates .

Estimates Context

  • Q2 2025 vs consensus: EPS beat (actual $0.11 vs -$0.36 est), revenue beat (actual $297.5M vs $285.6M est). Q1 2025 also beat EPS (-$0.16 vs -$0.23 est) and revenue ($299.9M vs $284.6M est). Q4 2024 missed EPS ($0.02 vs $0.456 est) with revenue near consensus ($297.5M vs $306.7M est) (values retrieved from S&P Global)*.
  • Post-quarter adjustments likely: Street should revise unit cost assumptions lower and incorporate higher volumes, but temper realizations given mix/CFR exposure and LVHCC/PLV relativity .

Key Takeaways for Investors

  • Blue Creek execution is the core positive catalyst: ahead-of-schedule commercial sales and accelerated longwall startup should structurally lower costs and raise volumes into 2026 .
  • Unit costs trending down faster than guided: $101.17/ton in Q2 and full-year guidance cut to $110–$120/ton support margin resilience even if pricing remains weak .
  • Price realization headwinds will likely persist near term: widened LVHCC/PLV spreads, higher High Vol A mix, and CFR freight drag keep gross realization below 85–90% target .
  • Liquidity remains strong ($545M) to fund Blue Creek ramp while maintaining regular dividends; ABL facility later increased to $143M, extending runway (ABL amendment post-Q2) .
  • Macro caution: excess Chinese steel exports and tariff uncertainty constrain netbacks; no volumes to China in 2025 to date .
  • 45X tax credit could provide medium-term earnings tailwind beginning 2026 (~$30–$40M/year prelim), supporting ROIC on Blue Creek .
  • Tactical stance: Near-term trading likely driven by unit cost trajectory and Blue Creek ramp milestones; medium-term thesis hinges on supply rationalization, normalization of price relativity, and contract mix shifting from CFR to FOB over time .
Notes:
- All document-based figures and quotes are cited to HCC’s Q2 2025 8-K, Q2 2025 earnings call transcript, and related press releases.
- *Estimates values retrieved from S&P Global.