Warrior Met Coal announced robust financial and operational results for the second quarter of 2024, showcasing its continued success despite facing challenging market conditions. The company also provided significant updates on the development of its Blue Creek project, which is set to enhance its production capabilities and drive future growth.
Warrior Met Coal reported a net income of $71 million, or $1.35 per diluted share, for the second quarter of 2024, compared to $82 million, or $1.58 per diluted share, in the same period last year. Adjusted net income, excluding non-recurring expenses, was $1.35 per diluted share, down from $1.64 per share in Q2 2023. The company attributed these decreases to an 11% lower average net selling price and weaker gas business results, partially offset by an 18% increase in sales volumes.
Total revenues for the quarter were $397 million, up from $380 million in Q2 2023. Warrior Met Coal generated $147 million in cash from operations, which was used to fund $122 million in capital expenditures and mine development, resulting in free cash flow of $25 million. This strong cash generation allowed the company to invest in its future without taking on additional financial leverage.
Operational Highlights
Warrior Met Coal achieved a sales volume of 2.1 million short tons in Q2 2024, an 18% increase from the same quarter last year. Production volume also saw a significant increase, rising to 2.2 million short tons, the highest quarterly output in the past three years. The company attributed this growth to both of its mines operating at higher capacity levels and stable demand from traditional and Asian markets.
Despite a weaker global demand environment and lower steelmaking coal prices, Warrior Met Coal maintained a solid operational performance. The company’s primary index, PLV FOB Australia, ended the second quarter at $212 per short ton, down from $307 in the first quarter. Similarly, the PLV CFR China Index declined to $224 per short ton, reflecting the overall softness in the market.
Blue Creek Project Progress
Warrior Met Coal made significant strides in the development of its Blue Creek project, which is expected to produce approximately 200,000 short tons of High Vol A steelmaking coal in the second half of 2024. Key milestones achieved in the second quarter include the completion of major components for seam access, surface infrastructure, and coal transportation systems.
The company has invested $84 million in Blue Creek during Q2 2024, bringing the year-to-date spending to $153 million. The total investment in the project to date is $519 million. Warrior Met Coal expects to spend between $325 million and $375 million on the continued development of Blue Creek in 2024. The project is on track for the first development tons from continuous miner units in the third quarter of 2024, with the longwall scheduled to start production in the second quarter of 2026.
Market Outlook
Looking ahead, Warrior Met Coal remains cautiously optimistic about demand improvement in the second half of the year, particularly in India and Southeast Asia. However, the company does not anticipate significant demand increases in its traditional markets of Europe and South America. The company is also focused on maintaining a disciplined approach to capital spending and maximizing price realizations, even if it requires managing higher-than-normal inventory levels.
