Can you elaborate on Warrior's diesel usage and the potential impact of rising diesel prices due to the Middle East conflict?

Warrior's operations are not high diesel users like surface mines, as they do not truck much coal. While subject to surcharges, no material impact has been seen yet, but potential increases could occur later in the year if prices remain high. Other material costs like tungsten bits are also rising. “Well, again, we don't do a lot of trucking at coal. We do truck a little bit to the barge load out. So we're not a high usage like strip mines and things like that, our surface mines. We just don't use a lot of diesel.”

How will the rising coal inventory (1.9 million tons) be unwound, and what is its composition?

Inventory is expected to gradually decline over the next few quarters, not dramatically in a single quarter. The highest amount of inventory is High-Vol A, primarily from Blue Creek, which has surpassed production expectations. The company is working to secure more long-term contracts for Blue Creek coal to reduce inventory to normal levels. “The -- our sales projections for Blue Creek are -- actually, we're even ahead of schedule from where we thought we would be in terms of placing Blue Creek for the year. It's just production levels have been so much higher than that, that they surpassed our expectations.”

What percentage of Pacific Basin shipments are on a CFR basis, and what are the current freight costs compared to recent quarters?

All Pacific Basin shipments are on a CFR basis. Freight rates are much higher, with some rates in the mid-$50s last week and averaging in the upper $40s for Q2, indicating a significant increase. “Well, they're averaging much higher. I think the average is a little bit different, but I know we saw some freight rates last week in the $50 -- around mid-$50 last week. I think it's only averaging somewhere in the upper 40s for the quarter, so second quarter, that is. So it's been pretty significant.”

HCC

Warrior Met Coal (HCC) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Energy· Apr 30, 2026

Source: earnings call transcript

Executive summary

Warrior Met Coal Q1 FY26 — Blue Creek Completion Drives Record Volumes and Strong Profitability

Warrior Met Coal delivered a strong Q1 FY26, marked by the successful completion of its transformational Blue Creek mine, which drove record sales and production volumes. Despite some inflationary pressures and a negative free cash flow for the quarter, the company reaffirmed its full-year guidance, anticipating positive free cash flow in Q2 and continued strong performance supported by resilient steelmaking coal markets and its low-cost structure.

Highlights

Blue Creek mine development completed ahead of schedule and on budget, with total project capital expenditures exceeding $1 billion, fully funded by cash from operations.
Record quarterly sales volume of 3 million short tons, a 38% increase year-over-year.
Record quarterly production volume of 3.5 million short tons, a 55% increase year-over-year, primarily due to Blue Creek's contribution.
Adjusted EBITDA increased 263% year-over-year to $143 million, with adjusted EBITDA margin improving to 31% from 13%.
Cash margins per short ton increased 127% year-over-year to $53.

Concerns

Gross price realization decreased to 72% in Q1 FY26 from 75% in Q4 FY25 due to widening price spreads and higher High-Vol A sales mix.
Cash cost per ton increased by $2 in Q1 FY26 compared to Q4 FY25, driven by higher variable transportation and royalty costs.
Working capital increased by $146 million, primarily due to $115 million of higher accounts receivable and increased coal inventory.
Negative free cash flow of $92 million in Q1 FY26, though expected to turn positive in Q2.
Emerging inflationary cost pressures on materials, supplies (steel roof supports, bits), and diesel fuel, with potential for a few dollars per ton increase in cash costs for the remainder of the year.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Outlook and Guidance	Reaffirmed high materiality	FY26	High
Cash Cost per Ton	Increase of a few dollars per ton medium materiality	Remainder of FY26	Medium
Steelmaking Coal Prices	Remain above 2025 average levels high materiality	Near-term	Medium
Free Cash Flow	Turn positive high materiality	Q2 · FY26	High
Shareholder Returns	Provide more shareholder returns medium materiality	Second half of FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Asia Asia was the largest geographic destination for sales volume in Q1 FY26. Sales volume: 61% of total	—	—	—	—
Europe Europe accounted for a quarter of total sales volume in Q1 FY26. Sales volume: 25% of total	—	—	—	—
South America South America represented 14% of total sales volume in Q1 FY26. Sales volume: 14% of total	—	—	—	—

HCC operating KPIs by quarter

HCC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Shipments	3M tons Warrior achieved a record high quarterly sales volume in the first quarter of 3 million short tons compared to 2.2 million tons in the same quarter 2025. Source: earnings call transcript	3.7M tons For the fourth consecutive quarter, Warrior achieved record high quarterly sales volume in the second quarter of 3.7 million short tons compared to 2.2 million in the same quarter of 2025. Source: earnings call transcript	+23.3%
Production volume	3.5M tons Production volume in the first quarter of 2026 was a record high 3.5 million short tons compared to 2.3 million in the same quarter of last year, representing a 55% increase. Source: earnings call transcript	3.3M tons Production volume in the second quarter of 2026 was 3.3 million short tons compared to 2.3 million in the same quarter of last year, representing a 45% increase. Source: earnings call transcript	-5.7%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Capital programs

Blue Creek Mine Development completed over $1 billion

Period spend: $66 million

Spent to date: over $1 billion

Funding: cash from operations

Benefit:major contributor to higher volumes and profitability

Completed ahead of schedule and fully in line with capital expenditure guidance. Concludes the construction and investment phase of Blue Creek.

Risks & headwinds

Middle East Conflict Impact Ongoing

Increased cost pressures, specifically in freight markets; increased uncertainty around global energy availability.

Mitigation:Management intends to take advantage of short-term or region-specific opportunities created by disruptions.

Inflationary Cost Pressures Remainder of FY26

Potential increase of a few dollars per ton in cash costs for the remainder of the year. Affecting materials (steel roof supports, bits), diesel fuel, tariffs, and shipping costs on raw materials.

Mitigation:Taking all possible measures to mitigate impacts, including looking for alternative vendors and sources.

Widening Price Spreads Q1 FY26

Relativity of Australian LVHCC index to PLV decreased from 85% to 81%; US East Coast HVA index relativity decreased from 75% to 68%, briefly hitting an all-time low of 62%.

Mitigation:Focus on optimizing production and controlling costs to thrive in a wide range of steelmaking coal environments.

What to watch in Q2 FY26

Free Cash Flow

Q2 FY26

Current negative $92 million

Target positive

Why it matters

Confirmation of positive free cash flow is key to demonstrating financial health and enabling shareholder returns.

Our free cash flow was slightly more negative than anticipated in the first quarter, was primarily due to timing of sales volume and is expected to turn positive in the second quarter.

Find out whether HCC delivers this. Inve re-checks your case every morning.

Q&A highlights

How much of the Q1 working capital build will unwind in Q2, and what are the cash flow implications of the 45X production tax credit?

A large portion of working capital is expected to unwind, but not fully to breakeven year-to-date by mid-year. The 45X tax credit contributed $8.4 million or $3 per ton in Q1.

“It's hard to predict exactly how much of the working capital will turn around, but it's just timing. A large portion will come back. I'm not sure we'll be back to breakeven. We'll be shy of that probably on a year-to-date basis through the first half. As far as the 45X credit, that was worth about $8.4 million and -- or $3 a ton for the quarter.”

asked by Nick Giles · answered by Dale Boyles

2 min read 6 chapters

Detailed narrative

Blue Creek Mine Completion and Impact

Warrior Met Coal achieved a significant milestone by completing the Blue Creek mine development ahead of schedule and within its $1 billion capital expenditure budget. This project was fully funded by cash from operations without incurring any funded debt. The new mine was a major contributor to record quarterly sales of 3 million short tons and production volumes of 3.5 million short tons in Q1 FY26, driving a 263% increase in adjusted EBITDA year-over-year.

Steelmaking Coal Market Dynamics

The first quarter saw strong premium quality steelmaking coal prices, with the PLV FOB Australia index averaging $213 per short ton, up 17% from Q4 FY25. This strength was attributed to supply constraints in Australia and increased demand for Mine 7 premium quality product.

However, the High-Vol A quality segment underperformed, leading to widened price relativities, with the US East Coast HVA index relativity dropping to an all-time low of 62% briefly.

Sales Mix and Geographic Distribution

Warrior's sales mix in Q1 FY26 was 61% High-Vol A, a 10% increase over Q4 FY25. The company sold 61% of its volume into Asia, 25% into Europe, and 14% into South America. Sales into the Pacific Basin were 61% of total volume, up 4% from Q4 FY25.

As Blue Creek production increases, the company expects its sales mix to shift further towards High-Vol A products and Pacific Basin destinations.

Financial Performance and Cost Structure

Adjusted EBITDA reached $143 million, with an adjusted EBITDA margin of 31%. Cash cost of sales per short ton FOB port decreased 14% year-over-year to $96, primarily due to the lower cost structure of Blue Creek and an $8.4 million benefit from the 45X production tax credit. Cash margins per short ton significantly improved to $53 from $23 in the prior year quarter.

Working Capital and Liquidity

The company experienced a negative free cash flow of $92 million in Q1 FY26, largely due to a $146 million increase in working capital, driven by higher accounts receivable ($115 million) and increased coal inventory (1.9 million short tons). This was attributed to higher sales volumes, higher coal prices, and sales heavily weighted to March.

Despite this, total available liquidity remained strong at $364 million, including $203 million in cash.

Inflationary Pressures and Mitigation

Management noted emerging inflationary cost pressures on materials like steel roof supports and bits, as well as diesel fuel, compounded by tariffs and higher shipping costs. While not materially impacted yet, a potential increase of a few dollars per ton in cash costs is anticipated for the remainder of the year. The company is actively seeking alternative vendors and sources to mitigate these impacts.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.