Should we expect more relativity pressure in 3Q, and how much volume could be shifted to the Atlantic Basin?

Expects continuation of year-to-date trends, with potential for relativities to close if low-vol prices retreat. Shifting volumes depends on customer demand and existing contracts, not company dictation. “I think you're going to see kind of a continuation of where we've been year-to-date. I don't expect a great deal of fluctuation there. I do think with the low-vol price coming down, it wouldn't surprise me to see the relativities close back up and see us sitting at where the High-Vol A price kind of stays a little more steady than the low-vol price as it comes down. That's just speculation on my part.”

Given strong free cash flow, is the company ready to increase shareholder returns, or will it build a higher cash balance?

Management expects strong cash flow generation to lead to higher shareholder returns, but they need to generate the cash first. “Even with prices declining as they have in the recent weeks, I do think we're going to start to really see strong cash flow generation, which means or should mean higher returns to shareholders. We're going to have to generate that cash first and see where we go from there.”

What is the ideal steady-state cash level, and what is the status of potential buybacks and NOLs?

Ideal cash range is $350M-$400M (total liquidity ~$500M). Federal NOLs were utilized in 2023, with $900M in state NOLs remaining but unlikely to be fully used. Buybacks are considered an option for shareholder returns. “Cash, we like to see in a range of $350 million to $400 million. So a total of -- total liquidity of around $500 million in total.”

HCC

Warrior Met Coal (HCC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 5, 2026

Source: earnings call transcript

Executive summary

Warrior Met Coal Q2 FY26 — Blue Creek Drives Record Sales and Strong Free Cash Flow

Warrior Met Coal reported a strong Q2 FY26, marked by the significant contribution of its new Blue Creek mine, driving record sales volumes and substantial free cash flow generation. The company raised its full-year volume guidance, reflecting successful customer adoption of Blue Creek's product. While facing pressure on price realizations from a shifting product mix and regional price dynamics, management remains focused on cost control and shareholder returns, leveraging its low-cost structure.

Highlights

Generated over $103 million in free cash flow in Q2 FY26, bringing H1 FY26 FCF to $11 million.
Achieved record quarterly sales volume of 3.7 million short tons in Q2 FY26, a 65% increase YoY.
Adjusted EBITDA increased 193% to $157 million in Q2 FY26, with margin improving to 31%.
Raised full-year 2026 sales and production volume guidance by 0.5 million tons for Blue Creek.
Cash cost of sales per short ton decreased 9% to $93 in Q2 FY26, driven by Blue Creek's low-cost structure.

Concerns

Gross price realization decreased to 66% in Q2 FY26 from 80% in Q2 FY25 due to higher High-Vol A mix, higher freight rates, and lower U.S. East Coast HVA index prices.
Average net selling price decreased by $12 per ton QoQ in Q2 FY26, primarily due to a 5% higher mix of High-Vol A volumes and lower U.S. East Coast HVA prices.
Expects second-tier indices to remain depressed relative to PLV, potentially pressuring net selling prices and profitability in H2 FY26.
Global pig iron production declined 1.9% in H1 FY26 YoY, with continued softness in China.

Guidance & targets

Category	Target	Timeline	Confidence
Blue Creek sales volume	5 million short tons high materiality	FY26	High
Coal inventory levels	continue driving downwards low materiality	Remainder of the year · FY26	High
Cost inflation impact	increase of a few dollars per ton medium materiality	Remainder of the year · FY26	Medium
Australian premium coals supply	improvements low materiality	Future	Medium
PLV price trend	remain above depressed levels of 2025, but below H1 2026 highs high materiality	Future	Medium
Market volatility	lower range-bound market with periods of volatility medium materiality	Future	Medium
Second-tier index relativities	remain at depressed levels relative to PLV high materiality	Future	High
Net selling prices, profitability, and FCF	pressure in the second half of the year high materiality	H2 FY26	Medium
Capital expenditures for existing mines	$105 million to $115 million medium materiality	FY26	High
Capital expenditures for Blue Creek	$25 million to $30 million medium materiality	FY26	High
Recurring capital expenditures	$130 million to $150 million medium materiality	Recurring basis	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Product Mix Sales volume mix for Q2 FY26. High-Vol A: 66%Premium Low Vol: 34%	—	—	—	—
Geographic Mix Sales by geography for Q2 FY26. Asia: 50%Europe: 35%South America: 14%	—	—	—	—

HCC operating KPIs by quarter

HCC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call 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.

Orderbook & backlog

Blue Creek sales volume under contract 90% of 5 million short tons FY26 guidance

Represents percentage of full-year Blue Creek sales volume already under contract.

Capital programs

Blue Creek construction CapEx completed

Blue Creek construction CapEx is now behind the company, marking an inflection point for free cash flow generation.

Risks & headwinds

Weak steel margins and subdued Chinese buying activity H1 2026, ongoing

Global pig iron production declined 1.9% in H1 2026 YoY; China remained the primary source of weakness.

Mitigation:Monitoring developments in China very closely as government actions can sway markets.

High freight rates and demurrage rates Q2 2026, ongoing

Freight rates to Asia were about $13 per ton or 37% higher in Q2 2026 YoY, negatively impacting average net selling price.

Mitigation:Temporarily more profitable to sell into the Pacific Basin despite higher freight rates; expect U.S. East Coast HVA relativities to return to normal levels.

Depressed second-tier index relativities and product mix shift Q2 2026, expected to continue in H2 2026

Gross price realization decreased to 66% in Q2 2026 from 80% in Q2 2025. U.S. East Coast HVA relativity decreased from 92% to 66% of PLV.

Mitigation:Increased weighting toward High-Vol A products is expected to drive margin expansion through Blue Creek's low-cost profile, offsetting lower realizations.

Inflationary cost pressures on materials and supplies H2 2026

Expected increase of 'a few dollars per ton' in costs for the remainder of 2026.

Mitigation:Not materially impacted so far, but monitoring the aggregation of broader inflation.

What to watch in Q3 FY26

Blue Creek production ramp-up

2027 and beyond

Current 90% of 5M short tons for FY26 under contract

Target Progress towards 6M ton run rate

Why it matters

Indicates the success of the Blue Creek mine ramp-up and future production capacity, which is key to the company's growth strategy.

I still think we're going to try to maximize the production out of that mine, and it's just a matter of getting the people in line and getting the -- everything worked where we want it, and then we will absolutely maximize the production coming out of that mine.

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

Q&A highlights

Can you provide a breakdown of shipments across each individual mine, specifically Blue Creek?

Management declined to provide mine-specific shipment details, stating it's not their practice.

“No, we don't get into that much detail. We just haven't done that.”

asked by Nick Giles · answered by Walter Scheller

2 min read 6 chapters

Detailed narrative

Blue Creek Mine Contribution and Strategic Shift

The second quarter marked a key inflection point for Warrior Met Coal, with the Blue Creek mine clearly realizing incremental earnings and cash flow contributions. With construction CapEx now complete, the company has transitioned into a new phase focused on free cash flow generation, balance sheet strength, and long-term stockholder returns.

This shift is underpinned by Blue Creek's low-cost profile, which is expected to drive margin expansion despite potential price realization pressures.

Market Dynamics and Pricing Environment

Global steel fundamentals remained relatively soft, characterized by a 1.9% decline in pig iron production in H1 2026, primarily due to weakness in China. Demand from India remained resilient, while Europe showed an uneven recovery. The PLV FOB Australia index averaged $216 per ton in Q2 2026, up 29% YoY.

However, second-tier indices, particularly the U.S. East Coast HVA, remained depressed, leading to a significant discount in the Atlantic Basin and making the Pacific Basin temporarily more profitable despite higher freight rates.

Price Realization and Product Mix Impact

Warrior's gross price realization decreased to 66% in Q2 2026 from 80% in Q2 2025. This was attributed to a 21% higher mix of High-Vol A products sold, higher freight rates to Asia (up $13/ton YoY), and lower U.S. East Coast HVA index prices.

As Blue Creek production increases, the sales volume mix is expected to become more weighted towards High-Vol A products, which will naturally lower gross price realizations but enhance overall margins due to Blue Creek's inherently lower cost structure.

Operational and Financial Performance Highlights

The company achieved record quarterly sales volume of 3.7 million short tons, a 65% increase YoY, and production volume of 3.3 million short tons, up 45% YoY, both primarily driven by Blue Creek. Net income reached $87 million ($1.65 per diluted share), and adjusted EBITDA surged 193% to $157 million, with the margin improving to 31%.

Free cash flow was a robust $103 million for the quarter, bringing the first half of 2026 to a positive $11 million.

Liquidity, Costs, and Shareholder Returns

Total available liquidity stood at $453 million, including $302 million in cash. Cash cost of sales per short ton decreased 9% to $93, reflecting Blue Creek's low-cost structure and a $3/ton benefit from 45X production credits. Management indicated that with strong cash flow generation expected, they are ready to consider higher shareholder returns, with an ideal cash balance target of $350 million to $400 million.

Full-Year Outlook and Strategic Positioning

Warrior raised its full-year 2026 sales and production volume guidance by 0.5 million tons for Blue Creek, now targeting 5 million short tons, with 90% already under contract, due to strong customer adoption. The company expects the market to remain sensitive to supply disruptions and regional trade flows, anticipating a lower range-bound market with volatility.

However, its high-quality assets and low first-quartile cost structure position it well to optimize production, control costs, and generate free cash flow.

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