hcc-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022


☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________

Commission File Number: 001-38061

Warrior Met Coal, Inc.

(Exact name of registrant as specified in its charter)


Delaware									81-0706839
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)


16243 Highway 216, Brookwood, Alabama									35444
(Address of Principal Executive Offices)									(Zip Code)

(205) 554-6150

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	HCC	New York Stock Exchange
Rights to Purchase Series A Junior Participating Preferred Stock, par value $0.01 per share	--	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Number of shares of common stock outstanding as of August 1, 2022: 51,653,534

TABLE OF CONTENTS


Forward-Looking Statements		1

Part I . Financial Information		3
Item 1.	Financial Statements	4
	Condensed Statements of Operations for the three and six months ended June 3 0 , 2022 (Unaudited) and June 3 0 , 2021 (Unaudited)	4
	Condensed Balance Sheets as of June 3 0 , 2022 (Unaudited) and December 31, 2021	5
	Condensed Statements of Changes in Stockholders' Equity for the three and six months ended June 3 0 , 2022 (Unaudited) and J une 3 0 , 2021 (Unaudited)	6
	Condensed Statements of Cash Flows for the six months ended June 3 0 , 2022 (Unaudited) and June 3 0 , 2021 (Unaudited)	7
	Notes to Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

Part II . Other Information		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults on Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36

Signatures		37

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Form 10-Q" or "this report") includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies, including any potential changes to our production and sales volumes as a result of our negotiations with the United Mine Workers of America (the "UMWA"). We have used the words “anticipate,” “approximately,” “assume,” “believe,” “could,” “contemplate,” “continue,” “estimate,” “expect,” “target,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should” and similar terms and phrases, including in references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:

•the impact of global pandemics, such as the novel coronavirus (“COVID-19”) pandemic, including its impact on our business, employees, suppliers and customers, the metallurgical ("met") coal and steel industries, and global economic markets;

•our relationships with, and other conditions affecting, our customers;

•successful implementation of our business strategies;

•unavailability of, or price increases in, the transportation of our met coal;

•significant cost increases and fluctuations, and delay in the delivery of raw materials, mining equipment and purchased components;

•work stoppages, negotiation of labor contracts, employee relations and workforce availability;

•competition and foreign currency fluctuations;

•litigation, including claims not yet asserted;

•terrorist attacks or security threats, including cybersecurity threats;

•global steel demand and the downstream impact on met coal prices;

•impact of weather and natural disasters on demand and production;

•a substantial or extended decline in pricing or demand for met coal;

•inherent difficulties and challenges in the coal mining industry that are beyond our control;

•our ability to develop or acquire met coal reserves in an economically feasible manner;

•geologic, equipment, permitting, site access, operational risks and new technologies related to mining;

•inaccuracies in our estimates of our met coal reserves;

•costs associated with our workers’ compensation benefits;

•challenges to our licenses, permits and other authorizations;

•challenges associated with environmental, health and safety laws and regulations;

•regulatory requirements associated with federal, state and local regulatory agencies, and such agencies’ authority to order temporary or permanent closure of our mines;

•climate change concerns and our operations’ impact on the environment;

•failure to obtain or renew surety bonds on acceptable terms, which could affect our ability to secure reclamation and coal lease obligations;

•our obligations surrounding reclamation and mine closure;

•our substantial indebtedness and debt service requirements;

•our ability to comply with covenants in our ABL Facility (as defined below) and the Indenture (as defined below);

•adequate liquidity and the cost, availability and access to capital and financial markets;

•our expectations regarding our future cash tax rate as well as our ability to effectively utilize our net operating loss carry forwards (“NOLs”);

•our ability to continue paying our quarterly dividend or pay any special dividend;

•the timing and amount of any stock repurchases we make under our Stock Repurchase Program (as defined below) or otherwise; and

•any consequences related to our transfer restrictions under our certificate of incorporation and our NOL rights agreement.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Part II, Item 1A. Risk Factors,” “Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q, and those set forth from time to time in our other filings with the Securities and Exchange Commission (the “SEC”). These documents are available through our website or through the SEC's Electronic Data Gathering and Analysis Retrieval system at http://www.sec.gov. In light of such risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements.

When considering forward-looking statements made by us in this Form 10-Q, or elsewhere, such statements speak only as of the date on which we make them. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the forward-looking statements in this Form 10-Q after the date of this Form 10-Q, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this Form 10-Q or elsewhere might not occur.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WARRIOR MET COAL, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except per-share amounts)

(Unaudited)


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Revenues:
Sales	$	623,288	$	224,759	$	1,005,721	$	431,748
Other revenues	1,868		2,681		(1,913)		9,456
Total revenues	625,156		227,440		1,003,808		441,204
Costs and expenses:
Cost of sales (exclusive of items shown separately below)	191,087		152,765		326,428		307,115
Cost of other revenues (exclusive of items shown separately below)	10,663		8,343		17,703		16,138
Depreciation and depletion	30,371		40,151		56,168		73,054
Selling, general and administrative	12,499		11,115		26,428		18,752
Business interruption	6,290		7,020		12,978		7,020
Idle mine	1,715		10,876		4,723		10,876
Total costs and expenses	252,625		230,270		444,428		432,955
Operating income (loss)	372,531		(2,830)		559,380		8,249
Interest expense, net	(7,183)		(8,477)		(15,005)		(17,170)

Other income (expense)	—		—		675		(109)
Income (loss) before income tax expense (benefit)	365,348		(11,307)		545,050		(9,030)
Income tax expense (benefit)	68,356		(6,626)		101,809		17,006
Net income (loss)	$	296,992	$	(4,681)	$	443,241	$	(26,036)
Basic and diluted net income (loss) per share:
Net income (loss) per share—basic	$	5.75	$	(0.09)	$	8.59	$	(0.51)
Net income (loss) per share—diluted	$	5.74	$	(0.09)	$	8.58	$	(0.51)
Weighted average number of shares outstanding—basic	51,646		51,449		51,591		51,362
Weighted average number of shares outstanding—diluted	51,740		51,449		51,678		51,362
Dividends per share:	$	0.56	$	0.05	$	0.62	$	0.10

The accompanying notes are an integral part of these condensed financial statements.

WARRIOR MET COAL, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per-share data)


	June 30, 2022 (Unaudited)		December 31, 2021

ASSETS
Current assets:
Cash and cash equivalents	$	644,849	$	395,839
Short-term investments	8,512		8,505
Trade accounts receivable	295,003		122,150

Inventories, net	140,418		59,619
Prepaid expenses and other receivables	24,833		41,088
Total current assets	1,113,615		627,201
Mineral interests, net	92,490		93,180
Property, plant and equipment, net	654,645		603,412

Deferred income taxes	24,191		125,276
Other long-term assets	13,978		15,142
Total assets	$	1,898,919	$	1,464,211
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	46,876	$	33,829
Accrued expenses	65,033		54,847
Short-term financing lease liabilities	22,770		23,622
Other current liabilities	9,792		9,830

Total current liabilities	144,471		122,128
Long-term debt	340,356		339,806
Asset retirement obligations	69,769		65,536
Long-term financing lease liabilities	18,251		28,434
Other long-term liabilities	35,015		36,324
Total liabilities	607,862		592,228

Stockholders’ Equity:
Common stock, $0.01 par value, (140,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 53,875,375 issued and 51,653,534 outstanding as of June 30, 2022; 53,659,643 issued and 51,437,802 outstanding as of December 31, 2021)	537		537
Preferred stock, $0.01 par value per share (10,000,000 shares authorized; no shares issued and outstanding)	—		—
Treasury stock, at cost (2,221,841 shares as of June 30, 2022 and December 31, 2021)	(50,576)		(50,576)
Additional paid in capital	263,991		256,059
Retained earnings	1,077,105		665,963
Total stockholders’ equity	1,291,057		871,983
Total liabilities and stockholders’ equity	$	1,898,919	$	1,464,211

The accompanying notes are an integral part of these condensed financial statements.

WARRIOR MET COAL, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021

Common Stock
Balance, beginning of period	$	537	$	536	$	537	$	534
Issuance of shares	—		—		—		2
Balance, end of period	537		536		537		536
Preferred Stock
Balance, beginning of period	—		—		—		—
Balance, end of period	—		—		—		—
Treasury Stock
Balance, beginning of period	(50,576)		(50,576)		(50,576)		(

SEC Form 10-Q filed by Warrior Met Coal Inc.