Warrior Met Coal reported solid financial results for Q4 2023, exceeding analyst expectations and building on the previous year’s performance. Here are the key takeaways:
Financials:
- Q4 net income: $128.9 million ($2.47/share), up from $99.7 million ($1.93/share) YoY.
- Q4 revenue: $364 million, up 6% YoY, on 1.53 million short tons sold (also up 6%).
- Full-year 2023 sales: 7.518 million short tons, exceeding guidance of 7.1-7.7 million.
- Full-year 2023 production: 7.646 million short tons, beyond the upper end of guidance (6.8-7.4 million).
- Adjusted EBITDA: $163.7 million in Q4, up 11% YoY.
Blue Creek Project Update:
- Development progressing on schedule, with $127.8 million invested in Q4 and $319.1 million in 2023.
- 2024 spending expected to be $325-$375 million.
- Project scope changes add $120-$130 million to total cost, increasing it to $820-$830 million.
2024 Guidance:
- Sales: 7.4-8.2 million short tons.
- Production: 7.4-8.0 million short tons.
- Cash cost of sales: $125-$135/ton, slightly above 2023 due to inflation.
Call Highlights:
- Capital Allocation: Blue Creek project remains top priority. If cash remains after funding (estimated at $325-$375 million in 2024), special dividends may be considered.
- Sales Mix: 65% of 2024 sales expected to go to Asia. Mine No. 7 sales mostly contracted on FOB basis, while Mine No. 4 sales divided between contracts and spot market.
- Transportation: Demopolis Lock closure currently has minimal impact due to rail shipments. Low water in Panama Canal and Red Sea tensions impacting CFR business with higher freight costs.
- Blue Creek Production: Continuous miner production to begin in Q3 2024 with stockpiling until wash plant launch in mid-2025.
- Workforce Expansion: Hiring 250 additional miners in 2024, with 100 for Blue Creek.
- Longwall Moves: Four planned for 2024, distributed across quarters.
Overall, Warrior Met Coal delivered a strong Q4 and outlined bullish guidance for 2024. Continued Blue Creek project development and increased production bode well for the company’s future growth.
