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    HCC
    Earnings call· Mar 2026(Q1 FY26)

    WARRIOR MET COAL Q1 FY26 earnings call HCC

    Apr 30, 2026 Source

    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

    5

    • 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

    5

    • 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

    5
    CategoryTargetConfidence
    Full-year 2026 Outlook and Guidance
    Reaffirmed
    high materiality
    High
    Cash Cost per Ton
    Increase of a few dollars per ton
    medium materiality
    Medium
    Steelmaking Coal Prices
    Remain above 2025 average levels
    high materiality
    Medium
    Free Cash Flow
    Turn positive
    high materiality
    High
    Shareholder Returns
    Provide more shareholder returns
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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
    		————

    Operational metrics

    26
    Adjusted EBITDA
    $143 millionup 54% vs Q4 FY25, up 263% vs Q1 FY25
    Q1 FY26

    Primary drivers were higher sales volume and average net selling price, partially offset by higher cash costs.

    Adjusted EBITDA Margin
    31%up from 13% in Q1 FY25
    Q1 FY26

    Improved due to increased sales volumes, higher average net selling price, and reduced cash costs from Blue Creek.

    Adjusted EBITDA Margin per Short Ton
    $48up from $18 in Q1 FY25
    Q1 FY26

    Reflects the increasing contribution from the new Blue Creek mine.

    Average Net Selling Price
    $149up from $136 in Q1 FY25
    Q1 FY26

    Driven by higher sales volumes and increased average gross selling prices, partially offset by higher High-Vol A mix.

    Cash Cost per Ton (vs prior quarter)
    $2 highervs Q4 FY25
    Q1 FY26

    Primarily attributable to higher variable cost for transportation and royalties, partially offset by Blue Creek's low cost structure and 45X tax credit.

    Cash Margins per Short Ton
    $53up 127% from $23 in Q1 FY25
    Q1 FY26

    Significant improvement driven by higher sales volumes and lower costs.

    SG&A Expenses
    $28 million$10 million higher than Q1 FY25
    Q1 FY26

    Primarily due to higher employee-related expenses, including stock compensation expenses. On track with full-year outlook.

    Depreciation and Depletion Expenses
    $52 million15% higher than Q1 FY25
    Q1 FY26

    Primarily due to additional assets placed into service at Blue Creek and higher sales volume.

    Effective Income Tax Rate
    11%
    Q1 FY26

    Varied from statutory federal rate of 21% due to tax benefits from depletion expense and foreign-derived intangible income deduction.

    Working Capital Increase
    $146 million
    Q1 FY26

    Attributed to higher sales volume, higher steelmaking coal prices, and timing of quarterly sales volumes weighted to March.

    Total Available Liquidity
    $364 million
    End of Q1 FY26

    Strong liquidity maintained despite negative free cash flow in the quarter.

    45X Production Tax Credit Benefit
    $8.4 million
    Q1 FY26

    Benefit from the One Big Beautiful Bill Act, partially offsetting cash costs.

    Sales Volume Mix (High-Vol A)
    61%10% increase over Q4 FY25
    Q1 FY26

    Expected to become more weighted toward High-Vol A products as Blue Creek production increases.

    Sales Volume Pacific Basin
    61%4% higher than Q4 FY25, 18% higher than Q1 FY25
    Q1 FY26

    Expected to increase over time with Blue Creek production.

    PLV FOB Australia Index Price
    $21317% or $31/ton higher than Q4 FY25, 27% higher than Q1 FY25
    Q1 FY26 average

    Rose quickly due to supply constraints in Australia.

    Australian LVHCC Index Price
    $173$19/ton or 12% higher than Q4 FY25, 30% higher than Q1 FY25
    Q1 FY26 average

    Experienced more modest gains compared to PLV index.

    U.S. East Coast HVA Index Price
    $144$8/ton or 6% higher than Q4 FY25
    Q1 FY26 average

    Underperformed expectations compared to other indices.

    Relativity (Australian LVHCC to PLV Index)
    81%decreased from 85% for Q4 FY25
    Q1 FY26

    Indicates widening price spreads between premium and second-tier indices.

    Relativity (U.S. East Coast HVA to PLV Index)
    68%decreased from 75% for Q4 FY25
    Q1 FY26

    Dropped to an all-time low, representing a significant spread difference.

    Gross Price Realization
    72%compared to 75% in Q4 FY25
    Q1 FY26

    Lower due to widening price spreads, higher High-Vol A sales mix, and elevated freight rates for Pacific Basin sales.

    Spot Volume
    6%
    Q1 FY26

    Low percentage of sales volume sold on the spot market.

    Coal Inventory Levels
    1.9 millionup from 1.6 million tons at end of Dec 2025
    End of March 2026

    Increased as production exceeded sales volume; expected to be managed down over the remainder of the year.

    Global Pig Iron Production Growth
    -2.1%vs same period last year
    First 2 months of 2026

    Overall decrease, but with regional variations.

    India Pig Iron Production Growth
    3.1%vs same period last year
    First 2 months of 2026

    Continued strength in India's steel market.

    China Pig Iron Production Growth
    -2.7%vs same period last year
    First 2 months of 2026

    Decline in China's pig iron production.

    Freight Cost (Pacific Basin)
    mid-$50saveraging upper $40s for Q2
    Last week (Q2 FY26)

    Elevated freight rates due to the conflict in the Middle East, impacting CFR sales.

    Industry KPIs

    3
    MetricValueDetails
    Unit cash cost$96USD/short ton
    Growth project CAPEX first productionover $1 billionUSD
    Production sales volume by metal and by mine3.5 millionshort tons

    Capital programs

    1
    Blue Creek Mine Developmentcompletedover $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

    3
    Middle East Conflict ImpactOngoing

    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 PressuresRemainder 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 SpreadsQ1 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

    5

    Free Cash Flow

    Q2 FY26
    Currentnegative $92 million
    Targetpositive

    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.

    Q&A highlights

    5

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.