Warrior Met Coal Inc (HCC) Q3 2025 Earnings Call Highlights: Early Blue Creek Success and ...

This article first appeared on GuruFocus.

Release Date: November 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Warrior Met Coal Inc (NYSE:HCC) started the Blue Creek longwall operations 8 months ahead of schedule, showcasing exceptional execution and commitment to shareholder value. The company increased its 2025 production volume guidance by approximately 10% due to the early startup of Blue Creek, expecting to produce 1.8 million short tons of high vol A steelmaking coal. Warrior Met Coal Inc (NYSE:HCC) won a federal coal lease sale, adding 58 million short tons of high-quality steelmaking coal reserves, enhancing long-term value and extending the life of core mining operations. The company achieved record quarterly sales volume in the third quarter, driven by high contractual demand and strong performance from existing mines and Blue Creek. Warrior Met Coal Inc (NYSE:HCC) maintained a strong balance sheet with ample liquidity, enabling strategic investments without diluting shareholders or increasing leverage.

Negative Points

The steelmaking coal market faced headwinds from increased Chinese steel exports, subdued global demand, and oversupply, impacting pricing and market conditions. Despite strong sales volume, the company experienced a decrease in average net selling price, impacting revenue growth. The cost of sales increased due to higher sales volumes, although partially offset by lower variable transportation and royalty costs. The company anticipates continued pressure on steelmaking coal markets due to additional supply coming online, potentially affecting future pricing. Warrior Met Coal Inc (NYSE:HCC) faces challenges in achieving its target price realization range of 85% to 90% due to market conditions and product mix.

Q & A Highlights

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Q: With the early startup of Blue Creek, how should we think about production next year? A: We are still working through our budget, but the early startup will enhance production numbers significantly. However, the exact figures will be market-driven rather than operationally driven. We are hesitant to provide an exact number at this time. (Walt Sheller, CEO)

Q: With CapEx coming down on the Blue Creek project, how are you thinking about capital allocation? A: Similar to past practices, excess free cash flows above business needs will be returned to shareholders through fixed quarterly dividends, potentially higher in the future, supplemented by special dividends and possibly stock buybacks. (Dale Boyles, CFO)

Story Continues

Q: From a hiring perspective, do you need more workers to ramp up, and how will sales be managed? A: We are okay with the current pace but will continue hiring over the next year. We aim to balance production with market conditions to avoid building excessive inventory or flooding the market. (Walt Sheller, CEO)

Q: How does the recent acquisition of reserves influence the decision to add another long wall? A: An additional long wall would require about $300 million in incremental capital. The acquisition makes operations more efficient, but we had enough reserves to add a second long wall if justified by the market. (Walt Sheller, CEO)

Q: How should we think about realizations versus the benchmark as Blue Creek tons come online? A: Our target is to achieve 85% to 90% of the benchmark. While we are currently at 83%, we expect to reach our target range, though the timing is uncertain and depends on market conditions. (Dale Boyles, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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