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    HCC
    Earnings call· Jun 2026(Q2 FY26)

    WARRIOR MET COAL Q2 FY26 earnings call HCC

    Aug 5, 2026 Source

    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

    5

    • 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

    4

    • 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

    11
    CategoryTargetConfidence
    Blue Creek sales volume
    5 million short tons
    high materiality
    High
    Coal inventory levels
    continue driving downwards
    low materiality
    High
    Cost inflation impact
    increase of a few dollars per ton
    medium materiality
    Medium
    Australian premium coals supply
    improvements
    low materiality
    Medium
    PLV price trend
    remain above depressed levels of 2025, but below H1 2026 highs
    high materiality
    Medium
    Market volatility
    lower range-bound market with periods of volatility
    medium materiality
    Medium
    Second-tier index relativities
    remain at depressed levels relative to PLV
    high materiality
    High
    Net selling prices, profitability, and FCF
    pressure in the second half of the year
    high materiality
    Medium
    Capital expenditures for existing mines
    $105 million to $115 million
    medium materiality
    High
    Capital expenditures for Blue Creek
    $25 million to $30 million
    medium materiality
    High
    Recurring capital expenditures
    $130 million to $150 million
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    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%
    		————

    Operational metrics

    35
    Adjusted EBITDA
    $157 millionup 193% YoY
    Q2 FY26

    Primary driver of improvement was 65% increase in sales volumes, 6% increase in average net selling prices, and 9% reduction in cash cost.

    Adjusted EBITDA margin
    31%up from 18% in Q2 FY25
    Q2 FY26

    Improved due to higher sales volumes and lower cash costs.

    Adjusted EBITDA per short ton
    $43up 78% from $24 in Q2 FY25
    Q2 FY26

    Reflects increasing contribution from Blue Creek mine.

    Net income
    $87 millionup from $6 million in Q2 FY25
    Q2 FY26

    Reported net income.

    Diluted EPS
    $1.65up from $0.11 in Q2 FY25
    Q2 FY26

    Reported diluted earnings per share.

    Total revenues
    $510 millionup from $298 million in Q2 FY25
    Q2 FY26

    Increase primarily due to higher sales volumes and gross selling prices, partially offset by product mix and demurrage.

    Cash cost of sales
    $338 millionup from $225 million in Q2 FY25
    Q2 FY26

    Increase driven by higher sales volumes and variable costs, partially offset by Blue Creek's low-cost structure and tax credits.

    Cash margins per short ton
    $45up 57% from $29 in Q2 FY25
    Q2 FY26

    Increased due to Blue Creek's lower cost structure despite a higher mix of High-Vol A product at lower U.S. East Coast index prices.

    SG&A expenses
    $10 million$2 million lower than Q2 FY25
    Q2 FY26

    Decrease due to specific funds received.

    Depreciation and depletion expenses
    $58 million35% higher than Q2 FY25
    Q2 FY26

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

    Effective income tax rate
    4%
    Q2 FY26

    Varied from statutory federal income tax rate of 21%.

    Cash flows from operating activities
    $132 million$95 million higher than Q2 FY25
    Q2 FY26

    Driven by growth in revenue.

    Working capital change
    $14 million increasedecreased from $146 million usage in Q1 FY26
    Q2 FY26

    Primarily due to higher supplies inventory and prepaid expenses, partially offset by favorable AR collections.

    Total available liquidity
    $453 million
    end Q2 FY26

    Increased cash and total liquidity while delivering higher profitability.

    Ideal cash range
    $350 million to $400 million
    Ongoing

    Management's preferred range for cash balance.

    Ideal total liquidity
    $500 million
    Ongoing

    Management's preferred range for total liquidity.

    State NOLs
    $900 million
    Ongoing

    Remaining state net operating losses, though unlikely to be fully utilized as no Alabama tax is paid.

    Sales volume
    3.7 million short tonsup 65% from 2.2 million in Q2 FY25
    Q2 FY26

    Achieved record high quarterly sales volume for the fourth consecutive quarter.

    Production volume
    3.3 million short tonsup 45% from 2.3 million in Q2 FY25
    Q2 FY26

    Increase reflects significant contribution of Blue Creek.

    Coal inventory levels
    1.4 million short tonsdecreased from 1.9 million tons at end March 2026
    end June 2026

    Company expects to continue driving excess inventory downwards.

    Average net selling price
    $138up from $130 in Q2 FY25
    Q2 FY26

    Result of higher sales volumes and gross selling prices, offset by product mix and demurrage.

    Gross price realization
    66%down from 80% in Q2 FY25
    Q2 FY26

    Lower realizations driven by a combination of factors including product mix and freight.

    Mix of High-Vol A products sold
    21% higherYoY
    Q2 FY26

    Contributed to lower gross price realizations.

    Freight rates to Asia
    $13 per ton higher37% higher YoY
    Q2 FY26

    Negatively impacted average net selling price and gross price realization.

    45X production credit
    $3
    Q2 FY26

    Benefit contributing to lower cash costs.

    Sales volume into Pacific Basin
    50%down from 52% in Q2 FY25
    Q2 FY26

    Geographic distribution of sales.

    Spot volume
    13%
    Q2 FY26

    Percentage of sales volume sold on the spot market.

    Global pig iron production
    -1.9%YoY
    H1 FY26

    Reported by World Steel Association, with China as primary source of weakness.

    India pig iron production
    2.7%YoY
    H1 FY26

    Continued growth in India.

    PLV FOB Australia index price
    $216up 29% or $49 per ton from Q2 FY25
    Q2 FY26 average

    Primary index price, relatively stable QoQ.

    Australian LVHCC index price
    $170up $40 per ton or 30% from Q2 FY25
    Q2 FY26 average

    Second-tier index price.

    CFR India LVHCC index price
    $191up $46 per ton or 32% from Q2 FY25
    Q2 FY26 average

    Second-tier index price.

    Relativity of Australian LVHCC to Australian PLV
    79%up from 78% in Q2 FY25
    Q2 FY26

    Relativity of second-tier index to primary index.

    Average U.S. East Coast HVA index price
    $143decreased $11 per ton or 7% from Q2 FY25
    Q2 FY26 average

    Second-tier index price in the Atlantic Basin.

    Relativity of U.S. East Coast HVA to Australian PLV
    66%decreased from 92% in Q2 FY25
    Q2 FY26

    Significant decrease in relativity for Atlantic Basin prices.

    Industry KPIs

    3
    MetricValueDetails
    Unit cash cost$93USD per short ton
    Growth project CAPEX first production—
    Production sales volume by metal and by mine3.7 million short tonsshort tons

    Orderbook & backlog

    1
    Blue Creek sales volume under contract90% of 5 million short tonsFY26 guidance

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

    Capital programs

    1
    Blue Creek construction CapExcompleted

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

    Risks & headwinds

    4
    Weak steel margins and subdued Chinese buying activityH1 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 ratesQ2 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 shiftQ2 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 suppliesH2 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

    5

    Blue Creek production ramp-up

    2027 and beyond
    Current90% of 5M short tons for FY26 under contract
    TargetProgress 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.

    Q&A highlights

    7

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

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