Warrior Met Coal, Inc.

Good afternoon. My name is Dhawan and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior First Quarter 2025 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded and will be available for replay on the company's website. I would like to turn the call over to Brian Chopin. Chief Accounting Officer and Controller. Please go ahead.

Good afternoon and welcome everyone to Warrior's first quarter 2025 earnings conference call. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements. According to the Private Securities Litigation Reform Act, Forward-looking statements by their nature address matters that are to different degrees uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings. We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our first quarter press release, Furnished to the SEC on Form 8-K, which is also posted on our website. Additionally, we will be filing our Form 10-Q for the quarter ending March 31, 2025, with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a first quarter supplemental slide deck that was posted this afternoon. Today on the call with me are Mr. Walt Scheller, Chief Executive Officer, and Mr. Dale Boyles, Chief Financial Officer. After our formal remarks, we'll be happy to answer any questions. With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thank you for taking the time to join us today to discuss our first quarter 2025 results. After my remarks, Gail will review our results in additional detail. Then you'll have the opportunity to ask questions. While weak market conditions continued as we expected through the first quarter, I'm pleased with our relentless focus on our operations, which enabled us to deliver an increase in volumes performs well from a cost perspective, and generated positive cash margins. This operational backbone gives us the ability to drive strong performance relative to the market despite the current macro headwinds. At the same time, we continue to make excellent progress at Blue Creek, with the work this quarter keeping us on budget and on schedule for the startup of the long wall at this world-class growth project. Let's start by looking at the current dynamics of the market for steelmaking coal. We've seen a dramatic change in the steelmaking coal markets, where average premium lowball index prices have dropped by 40%, or $112 per short ton, compared to last year's first quarter. First quarter premium lowball prices averaged $280 per short ton in the first quarter of 2024, compared to $168 per short ton in the first quarter of this year. In addition, average index pricing for our Hibol A product has decreased 43% in that same time period. We've now seen four consecutive quarters of weakening still-making coal prices. While we cannot control market fundamentals, we can control our response to these weaker markets by tightly managing our spending at the mines, operating the mines as efficiently as possible, and rationalizing all other spending throughout the organization. On the supply and demand side, overall market fundamentals for the past quarter were weak, but generally in line with our expectations. Chinese steel exports remained at elevated levels and continued to stress our customers' domestic and export markets, while global demand for steel was challenging. On the steelmaking coal side, supply remained healthy while some customers engaged in a resell of cargoes, both of which contributed to a weaker pricing environment for our markets. However, we were again reminded of how vulnerable the steelmaking coal supply chain is, with several mining events occurring at other steelmaking coal facilities during the first quarter, which could potentially impact the reliability of supply for several quarters this year. Trade flows have also been impacted following China's decision to apply retaliatory tariffs on U.S. steelmaking coals. which is essentially halted coal trade between both countries. It is too early to quantify or, for that matter, adequately assess the impacts of U.S. trade policy announcements we'll have on the flow of steelmaking coals, but we continue to monitor the situation closely. Prices at these levels are especially challenging for other steelmaking coal producers higher on the cost curve than we are. Even the recent disruptions in global mining production have only had an insignificant impact on seaborne pricing. Our cost discipline continues to be a key differentiator for us in this environment. As I noted earlier, ABRE's premium steelmaking coal prices have now declined for four straight quarters since last year's first quarter. Our primary index, the POV FOB Australia, ended the first quarter at $153 per short ton. which was $25 per short ton lower than the end of the fourth quarter, 2024, and averaged $168 for the first quarter, 2025. Similar declines were observed in the PLAAF's LVHCC index for our Hive All-A product sold primarily into Asia, which ended the first quarter at $126 per short ton. This was $15 per short ton lower than the end of the previous quarter. We achieved a gross price realization of 83% for the first quarter, which was a function of product mix, geography, tariffs, and freight rates. This result was slightly lower than our annual targeted range of 85% to 90%. It could be lower throughout this year as spreads have widened more in the last 12 months than historically. According to the World Steel Association monthly report, global pig iron production decreased by 0.2% in the first three months of 2025 as compared to the prior year period. Pig iron production in China, which is the world's largest production region, grew by 0.8% for the same period. The rest of the world's pig iron production experienced a decline of 2.2% for the first three months of 2025. India remains a bright spot with a growth rate of 6.2% and is expected to continue growing with new blast furnace capacity expected to come online this year. Now let me turn to our first quarter results. Importantly, our strong sales volume was driven by excellent performance from our existing mines. Our first quarter sales volume was 2.2 million short tons compared to 2.1 million short tons in last year's same quarter, representing a 2% increase. This increase is particularly notable given the market dynamics I described earlier. Our sales by geography for the first quarter break down as follows. 43% into Asia, 37% into Europe, and 20% into South America. Most of the sales into Asia during the first quarter were customers in India and other Southeast Asian countries. There were no sales into China during the first quarter this year. Our spot volume was 8% for the first quarter of 2025, which was primarily sold into Europe. For the full year, our spot volume is expected to be approximately 15% of total sales volume. Production volume in the first quarter of 2025 was 2.3 million short tons compared to 2.1 million short tons in the same quarter of last year, representing a 10% increase. Our existing mines continued to perform well, and the continuous miner units at our Blue Creek mine produced 251,000 short tons during the first quarter and drove the overall increase in production volume. Our coal inventory remained nearly the same at 1.1 million short tons at the end of the first quarter compared to the fourth quarter of 2024. During the first quarter, we spent $79 million on CapEx and mine development. Of that amount, CapEx spending totaled $69 million. Mine development costs for the Blue Creek project were $11 million during the quarter and were below budget. We expect our mine development costs to continue to grow throughout 2025 and until the low-malt production starts at Blue Creek. which is expected to occur no later than the second quarter of 2026. Excluding the Blue Creek capital expenditures invested during the first quarter, we tightly managed all other capital spending to $13 million. Turning to our transformational Blue Creek growth project, during the first quarter, we continued to make excellent overall progress while remaining on budget and on schedule. The development of the first longwall panel produced 251,000 short tons of steelmaking coal and remains on track to produce 1 million short tons for the full year 2025. We're pleased with the progress that has been made to date in the development as well as our tight management of costs. We started taking delivery of the longwall shields during the first quarter, and we expect to have all shields on site during the second quarter this year. In addition, our recruiting and hiring efforts for this new mine continue to be on track. In the first quarter, we continued to make excellent progress on building out the surface infrastructure at Blue Creek, including the overland clean coal belt and barge loadout. We made considerable progress on the dry slurry processing system, the refuse area, and the preparation plant. We're excited to announce that in the last few days, subsequent to the end of the first quarter, we hit two major milestones at Blue Creek earlier than expected. We completed the A module of the preparation plant, and we started washing coal and preparing it for sale. At the preparation plant, we continue to make significant progress on the B and C modules, and the full commissioning of those modules remains on schedule. In addition, we recently completed the truck dump at the rail loadout to move the coal from the preparation plant to the rail loadout. Also, we completed the rail loadout where we began loading our first trains to move the Blue Creek Coal to the Port of Mobile. We expect to begin shipping small amounts of Blue Creek product in the second quarter ahead of schedule. We plan to post short videos of these key milestone achievements to our website soon. We could not have achieved these major milestones early without our project team continuing to do an excellent job of managing the schedule and capital spending. All remaining key development progress milestones remain on track, including the aforementioned $55 million invested in capital expenditures in the first quarter. The total project investment to date is $772 million, which has been 100% funded from internally generated cash flows from existing operations. Equally important, we believe that we have sufficient liquidity on hand to complete the project. We remain focused on tight capital spending discipline until the project is fully completed. The total of $772 million invested in the development of Blue Creek to this point is more than 70% of the expected total project capital expenditure. Absent any unexpected or unusual event, we continue to believe we will deliver the project on schedule as planned and within our total capital expenditure estimate of approximately $995 million to $1.1 billion. This estimate excludes the impact of any trade and tariff policy announcements that may be implemented, which could increase the final total estimated cost. While at this point there's too much uncertainty to quantify any potential impacts of the recent trade and tariff policy announcements, we will continue to monitor the situation and will provide any updates at the appropriate times. Blue Creek represents one of the last remaining untapped premium, high-quality, high-volume coal reserves in the U.S., and we anticipate this product will generate strong margins. We expect incremental annualized production of at least 4.8 million short tons after the startup of the Lone Wall, ramping to a nameplate capacity of 6 million short tons as market conditions dictate. This will enhance and strengthen our already strong global cost curve positioning and deliver incremental profit and cash flows. I'll now ask Dale to address our first quarter results in greater detail.