Warrior Met Coal NYSE: HCC reported sharply higher second-quarter earnings and cash generation as its Blue Creek mine contributed additional sales volumes and lower-cost production, while management raised its full-year sales and production outlook.
Chief Executive Officer Walt Scheller described the quarter as a “key inflection point,” citing record sales volumes, improved pricing and a lower cost profile. The company generated more than $103 million of free cash flow during the quarter, bringing first-half free cash flow to a positive $11 million.
“With Blue Creek operational and our development spending complete, we've entered into the next phase of Warrior's growth,” Scheller said, adding that the company’s focus is now on free cash flow generation, balance sheet strength and long-term stockholder returns.
Second-Quarter Results Improve on Blue Creek Contribution
Warrior reported second-quarter net income of $87 million, or $1.65 per diluted share, compared with net income of $6 million, or $0.11 per diluted share, a year earlier. Adjusted EBITDA rose 193% to $157 million, while revenue increased to $510 million from $298 million in the prior-year quarter.
Adjusted EBITDA margin improved to 31% from 18% a year earlier. On a per-ton basis, adjusted EBITDA was $43 per short ton, compared with $24 per short ton in the second quarter of 2025.
Chief Financial Officer Dale Boyles said the financial improvement reflected a 65% increase in sales volumes, a 6% increase in average net selling prices and a 9% reduction in cash costs. The company recorded an average net selling price of $138 per short ton, up from $130 per short ton a year ago.
Second-quarter sales reached a fourth consecutive quarterly record of 3.7 million short tons, compared with 2.2 million short tons in the year-earlier period. Production rose 45% to 3.3 million short tons. Management attributed the increases primarily to Blue Creek.
The company’s sales mix during the quarter was 66% High-Vol A coal and 34% premium low-volatility coal. By geography, 50% of sales went to Asia, 35% to Europe and 14% to South America. Spot volumes represented 13% of total quarterly sales.
Coal inventories declined to 1.4 million short tons at the end of June from 1.9 million short tons at the end of March. Scheller said the company expects to further reduce excess inventory through the rest of 2026 to support sales volumes, profitability and free cash flow.
Costs, Cash Flow and Liquidity
Cash cost of sales was $338 million, or 67% of mining revenue, compared with $225 million, or 78% of mining revenue, in the year-earlier quarter. Cash cost of sales per short ton FOB port declined to approximately $93 from $101.
Boyles said the higher sales volume and transportation and royalty costs increased total costs, but those factors were partly offset by the lower-cost Blue Creek tons and the benefit of the 45X production credit. In response to an analyst question, Boyles said the 45X credit accounted for about $3 per ton of the year-over-year cost reduction.
Operating cash flow totaled $132 million, while capital expenditures were $29 million, producing $103 million of free cash flow in the quarter. Warrior ended the period with total available liquidity of $453 million, including $302 million in cash and cash equivalents, $10 million in short-term investments and $141 million available under its asset-based lending facility.
During the question-and-answer session, Boyles said the company would like to maintain cash in a range of $350 million to $400 million and total liquidity of about $500 million. He said stronger cash generation should support higher shareholder returns, though the company must first generate the cash and assess conditions. Potential share repurchases are among the options available, he said.
Guidance Raised as Blue Creek Sales Gain Customer Adoption
Warrior raised its full-year sales and production volume guidance by 0.5 million short tons, reflecting customer adoption of Blue Creek trial volumes. Blue Creek is now expected to contribute 5 million short tons of sales in 2026, with 90% of that volume already under contract.
In an exchange with analysts, Boyles confirmed that the company expects total 2026 sales of 13 million to 14 million short tons. The lower end of the company’s cost guidance range reflects the increased volume of lower-cost Blue Creek production, he said.
Management said it remains alert to potential inflation in materials and supplies, including steel roof supports, shear bits and diesel fuel. Boyles said such items had not been material in aggregate through the first half, though combined cost pressures could add a few dollars per ton during the remainder of the year.
For future spending, Boyles said recurring capital expenditures could be about $130 million to $150 million, including $105 million to $115 million for the existing mines and an additional $25 million to $30 million for Blue Creek.
Market Outlook Remains Cautious
Scheller said global steelmaking coal markets remain influenced by supply disruptions, regional trade flows and steel-sector conditions. The World Steel Association reported global pig iron production fell 1.9% in the first half of 2026 from a year earlier, according to Scheller, with India posting 2.7% growth while China remained a source of weakness amid soft domestic demand and weak steel margins.
The company said the PLV FOB Australia benchmark averaged $216 per ton in the second quarter, up $49 per ton, or nearly 29%, from the prior-year period. However, the U.S. East Coast High-Vol A index averaged $143 per short ton, down $11 per ton year over year.
Warrior achieved gross price realization of 66%, compared with 80% a year earlier. Management attributed the decline to higher freight rates to Asia, a larger mix of High-Vol A products and weaker U.S. East Coast High-Vol A pricing relative to the PLV benchmark.
Scheller said the company expects premium coal prices to remain above the depressed levels seen through much of 2025 but below the supply-driven highs reached during the first half of 2026. He said Warrior expects a lower, range-bound market with volatility tied to weather, logistics, geopolitical developments and regional buying patterns.
About Warrior Met Coal (NYSE:HCC)
Warrior Met Coal NYSE: HCC is a leading producer of premium metallurgical coal, operating deep underground mining complexes in Central Alabama's Blue Creek and Brookwood mining districts. The company focuses exclusively on the extraction and sale of high-grade hard coking coal, a critical raw material used in steel production. Its mining operations harness longwall mining technology and rigorous safety protocols to deliver consistent coal quality to customers worldwide.
Warrior Met Coal's product portfolio centers on premium hard coking coal, semisoft coking coal, and pulverized coal injection (PCI) products.
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