Good afternoon, everyone. My name is Jamie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior Met Coal Fourth Quarter and Full Year 2017 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Before we begin, I've been asked to note that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press release and SEC filings. I've also been asked to note that the company has posted reconciliations of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings release, located on the Investors section of the company's website at www.warriormetcoal.com. In addition to the earnings release, the company has posted a brief supplemental slide presentation to the Investors section on its website at www.warriormetcoal.com. Here today to discuss the company's results are Mr. Walt Scheller, Chief Executive Officer of Warrior Met Coal; and Mr. Dale Boyles, Chief Financial Officer. Mr. Scheller, you may begin your remarks.

Thanks, operator. Hello, everyone, and thank you for taking the time to join us today to discuss our fourth quarter and full year 2017 results. After my remarks, Dale will review our results in additional detail, and then you'll have the opportunity to ask any questions you may have. First, let me address our fourth quarter results, and then I'll summarize various achievements for the full year of 2017. The company's fourth quarter results were even better-than-expected, exceeding our full year guidance in our key sales and production metrics. Production volume for the fourth quarter was 1.6 million short tons, which was 52% higher than the same quarter in 2016. Our success was grounded in the timely and successful back-to-back completion of moving all 3 of our operating longwalls with less impact on sales and production volumes than expected. That said, the work was not easy and we overcame a number of challenges along the way. I think it's worth a moment to understand those challenges. Moving one longwall operation is challenging by itself as mining conditions are most difficult at the end of a panel. That's because equipment is nearing rebuilt and mining conditions can be more challenging, decreasing the rate of production in clean tons per foot. Moving 3 longwalls back to back could have been overwhelming for our employees and underground equipment fleet, which could have reduced production volumes much more. However, our success was a result of good planning, preparation, communication and outstanding work by our employees. We completed all 3 longwall moves without serious injury, which again demonstrates that safety is more than a buzzword at Warrior. It's just the way we do things. I want to recognize the efforts of everyone involved in the longwall moves for the expert attention they've paid to safety,…

Thanks, Walt. Warrior's results for the fourth quarter were better-than-expected, as Walt noted earlier, which allowed the company to exceed its full year guidance on key sales and production metrics. The operational successes in sales and production, combined with a favorable met coal pricing environment, drove strong financial performance during the fourth quarter and for the full year of 2017. For the fourth quarter of 2017, net income was $97 million or $1.83 per diluted share compared to net income of $34 million or $0.65 per diluted share in the fourth quarter of 2016. Adjusted EBITDA was $86 million in the fourth quarter as compared to adjusted EBITDA of $51 million in the fourth quarter of 2016. For the full year of 2017, adjusted EBITDA totaled $518 million. The company's adjusted EBITDA margins, which we calculate as adjusted EBITDA divided by total revenues, and which we believe are some of the highest in the industry, were 36% and 44% for the fourth quarter and full year of 2017, respectively. Total revenues for the fourth quarter of 2017 were $240 million, which included met coal sales of 1.4 million short tons at an average net selling price of $169 per short ton. Total revenues in the quarter exceeded the fourth quarter of 2016 by $87 million on a 42% increase in sales volumes and a 10% increase in average net realized selling prices. Our fourth quarter gross price realization was 101% of the quarterly Australian premium low-vol hard coking coal index price of $174 per short ton on our fourth quarter shipments. Our gross price realization represents gross sales, excluding demurrage and other charges, divided by tons sold as a percentage of the quarterly Australian premium low-vol hard coking coal index price. Remember, the Australian premium low-vol hard coking coal index…

Thanks, Dale. Before we move on to Q&A, I'd like to address our guidance targets for 2018 and how we are looking at the marketplace at the moment. Considering our successes in 2017 of increasing both sales and production volumes, the company is well positioned after 3 longwall moves in Q4 to take advantage of strong customer demand and current hard prices for our premium product offering. We expect to continue making progress to our nameplate capacity of 8 million short tons by ramping up those volumes in 2018. Our current plans have us only moving 2 longwalls in 2018, which will depend on our progress during the year. However, as I've said on previous calls, we run the business as if the next pricing downturn and geological issues are just around the corner, with conservative target and flexible operations to adjust to the market environment as it changes throughout the year. Our current expectations of a robust high-quality price environment in 2018, combined with our tax advantage situation and loan leverage should allow the company to once again make significant investments in capital spending above our normal sustaining levels. These additional investments will further strengthen and position the company to increase our production and sales volumes, increase efficiencies and lower our cost. In our current guidance for 2018, we expect to spend approximately $30 million to $37 million on discretionary projects. These include finishing the construction of a new portal of mine 7 that was started in 2017, a down payment on a new set of longwall shield and other projects to improve efficiencies, lower our costs and increase production. Due to the long lead times on developing these projects in 2018, we expect to realize the majority of the benefits of this spending in 2019 and beyond. Our…

[Operator Instructions] Our first question today comes from Jeremy Sussman from Clarksons. Please go ahead with your question.

Hi. Thanks very much for taking question.

Good afternoon.

Hey, Jeremy.

Good afternoon. Just, I guess, first is Walt. Is the plan to still kind of get to 8 million tons of sales volumes? And if so, kind of what blips to pass to get there?

Yes. That's still - our plan is to get to that run rate of 8 million tons a year. And as I said in my comments, we're being conservative. We're making sure that we're not getting too out far out over our skis. We said we would hit a run rate of 8 million this year, and that's still our plan. We need to add another section this year. That'll be added mid-year, and we'll just continue to aggressively push toward that 8 million.

Okay. Now that makes sense. And maybe if I just switch to the balance sheet for a second. Is there a sort of a range of cash that you're comfortable carrying? I mean, obviously, I'm looking for minimal levels, but at the same time is there a number that's just kind of too much to be sitting on the balance sheet? How should we think about how you guys are looking at this?

Jeremy, this is Dale. We look at kind of total liquidity, combination of cash and the ABL availability, at least a minimum of $100 million combined. We're not paying any cash taxes. It gives us a lot of flexibility. And with our cost structure being so low and very flexible with the pricing, we don't need to stockpile large amounts of cash from the balance sheet. We also don't have the pension and the note - post-retirement benefit liabilities to pay. So that gives us tremendous flexibility to keep the cash on the balance sheet as low as possible.

Okay. Appreciate it. And good luck. Thanks, guys.

Thank you.

Our next question comes from Lucas Pipes from B. Riley FBR. Please go ahead with your question.

Hey. Good afternoon, everybody. I wanted to ask a few questions on the pricing realization side. And the first one would be, Dale, could you remind us how you calculate your percent realization versus the benchmark? It sounded like you use a basket of different indexes, and some of your peers in the industry, they use some, I think, it's just a Platts index for 3 months rolling and they would typically disclose that number in the first week of the month ending the quarters of - in Q4, that would've been around December 5 or so. So just apples-to-apples, I would appreciate your color on that. And then also going forward, we can - I can assign a correct discount to your utilization. Thank you.

Yes, what we're using is the quarterly benchmark - what used to be the quarterly benchmark is the quarterly index. And I calculate that not just on Platts. If you fall in cycle, you'll see that, that's positive quarterly. And that is the average of the 3 indices - not 1 of the Platts benefit. So that is what we are using when we disclose that. Our gross price realization is a blend, because that benchmark or index price for the industry is on low-vol coal. And obviously, we sell low- and mid-vol, so if we're doing a 101% or make - achieve 101% realization, obviously, we're selling some of our coal at premiums above the indices at those times. So our gross price is really just where our gross sales are, less over the volumes. And then, obviously, you have to merge and things like that, that net down in the end. So we're just comparing our gross price to that benchmark which is published every quarter. So that's all it is.

Lucas, the other thing I - this is Walt. The other thing I would've mentioned there is, to make sure we remember that we are comparing to the benchmark, the Australian low-vol hard coking coal, not the East Coast low-vol coking coal price that Platts publishes. And there's a significant difference between those 2. The Australian price is always, I don't know, you could say $15 or $20 higher.

Got it. Got it. Yes, I think where my confusion comes from is that Teck resources they put out, the press release early December, stating what they believed the benchmark price to be and that's what I've typically been using as kind of the benchmark. But I'll take a look at all of that and I appreciate the color. Just along the same lines. Obviously, you are selling a premium product in the market. You just mentioned how it compares to the Australian product more so than anything sold off of the East Coast. How is - how are the pricing realizations tracking right now? The market has been pretty volatile. Do you have a sense of how your product has been faring? And also, when it comes to quality, there are differences in the coal scene. How is the quality right now at both Mine No. 7 and Mine No. 4?

The quality of both 7 and 4 is very strong, and it has been for the last year. The quality at 7 has always been right there, comparable with the best coals in the world, the Sarajis and Peak Downs, and Mine 7 is right up there with them. Mine 4, again, I want to remind everybody, that about a 1.5 years ago, we moved it to another area of the mine, where we'll mine for the next 6 years or so. And in that area, it's - the quality is much better. It's down around a 24 vol, and it's really more comparable to the low-vol hard coking coal out of Australia than it is any other index. So it may sell at a slight discount, but not a huge discount to that. When we look at how we're doing, some of our customers base the pricing off that index that Dale talked about, with the one-month lag. Some of our customers utilize anywhere from 10 days before the average index to the 10 days before loading or maybe 10 days before and 10 days after, it just varies kind of customer by customer. But we feel very - as you can see with our fourth quarter results at 101%. We think we're doing pretty well. And again, that's a 101% with one of the two products been at a slight discount. So we're - we think we're doing pretty well.

That's great. Well, I am looking forward to seeing you both next week and good luck. Thank you.

Thank you.

Thank you.

[Operator Instructions] Our next question comes from Matthew Fields from Bank of America Merrill Lynch. Please go ahead with your question.

Hey, everyone. I just wanted to ask more sort of high-level questions about the market, if that's all right. Here just sort of reading about, more recently, a rail operator in Australia, Aurizon, sort of due to dispute there, maybe scaring the market into a little bit of a shortage, I think, only 2 million tons, but sort of supporting prices nonetheless. Have you been hearing any fear of that from some of your customers in the export market?

I don't know if we've been hearing any real fear yet out of our customers, but what we've heard is the potential impact of that is a bit greater if at all. And I don't know how this will turn out. If it's them saying that they were going to pull back on their maintenance, this would pull back on the throughput and this could actually result in - I think, the number that I saw was closer to 20 million ton number if it remained at the level of impact they were right now discussing. But who knows, how that will turn out. But right now, I think, it is causing some concern. But we haven't heard too much of that in the marketplace yet.

All right. And then, sort of just bigger picture. We're sitting here close to $230-ish for benchmark coal and someone asked Teck this morning on their call about opening back up the Quintette mine. What do you think is the potential for people reopening idled assets or you personally maybe to start to think about developing more resources on the Blue Creek scene?

Well, I think the level of volatility in the market will continue to keep some people a little bit cautious, even though we've had prices that have been robust over the last year. Remember, we had a price where it dipped as low as $132 per ton in June. And a lot of those operations that are - they're kind of kicking the tires on them now on operations that have very high cost structures, and also in relatively remote areas that require a lot of relocating of employees and doing different things like that. So that's a big decision to make unless you have a real, robust long-term price expectation. For us, looking into the things that we're doing this year to ramp us up to the 8 million, those are all incremental changes that we - that are low cost, and that we can achieve just by continuing to doing our business the way we do it. As we look at our other project, Blue Creek Energy, which will be a great project when the time's right, but we're reviewing that, but I don't think that's something that we're going to be pushing too hard in the immediate future.

So nothing for 2018, but that's sort of remains on the horizon given the market?

Yes. We're going to focus on these two operations and get them up to that 8 million and see what we can squeeze out of them and do everything we can to maximize their value.

All right. Thanks very much.

Thank you.

Our next question comes from David Gagliano from BMO Capital Markets. Please go ahead with your question.

Thanks for taking my questions. Just on the cash cost guidance for 2018. I may have missed in the prepared remarks, but the range of $89 to $95 a ton. Two questions, what's the definition of the low and the high? And what's the price assumption? I know there's some price-sensitive cost there. What price are you assuming for that range - from that?

Well, I mean, I think, we can - everybody is going to have their own assumptions, David, about price. So we kind of leave it to everybody to figure out their own pricing, given the sensitivities we've disclosed in the past. And that range of $6 just depends on where we meet the production in the sales range. But that's kind of the low and the high end there. We did achieve a little bit better this year with $91, but we didn't get all the people added that we need to add for this additional continuous miner that we're going to add in '18. There'll be a little additional cost because of that. And then, obviously, depending on the price assumption, that could vary the transportation, royalties, especially, with a higher price.

Okay. Dale, I guess what I'm asking is, is this ever - is this cost range reflective of the current price environment and/or if prices were to, for whatever reason, decline meaningfully with those costs. Does guidance come down meaningfully, because of the pricing sensitive costs?

Sure, absolutely. It would come down, yes. If pricing continues or really does take a drop from where we are. You know, it did move down from the $260, low $260s to where it is today, about $224. And obviously, we haven't planned in that guidance anywhere near that number, because we just don't believe it's sustainable for the full year.

Sorry. I've one last question just on that. So the $89 and $95 assumes a price that's lower than current or in-line with current, basically?

No. It's much lower than current, yes. Much lower than current.

Okay. All right. Thanks very much.

Thank you.

Our next question comes from Piyush Sood from Morgan Stanley. Please go ahead with your question.

Good afternoon, guys. I also have a question on coal quality. So Platts recently revised coal quality from both number 4 and number 7. I think CSRs went out for both mines, but some changes to the volatile content. So how does that affect your realizations? Thanks.

I think the - Platts is still looking at the relatively [indiscernible] loose products. And I think the - both of them are right where they have been. And our - if you look - if you put a grid together, with all of the highest-quality coals in the world, they're both right. They continue to be right in the sweet spot they have been in the past. The CSR for 7 is very, very strong, and again, it's right up there with the Peak Downs and Sarajis. And so you know, what we've seen is, we expect no degradation in the - in any pricing. We expect it to remain very strong.

Our next question comes from Mark Levin from Seaport Global. Please go ahead with your question.

Hey, gentlemen. I think most of my questions have been answered, but I'll throw this one at you. Although I think I know the answer, I'll ask anyway. Would you look at asset acquisition opportunities with some of your excess cash flow? I know there are still some net assets that are - and even some high quality ones that are down in kind of the Alabama region, the Alabama area. Is that something you would consider? Or are you 100% laser-focused on getting Mine 4 and Mine 7 up to that 8 million ton capacity - nameplate capacity level?

We are 100% focused on getting Mine 4, Mine 7 up to that nameplate capacity. But with that said, if an opportunity presented itself that we thought would be a really good opportunity, would fit well within our portfolio, and we have 2 of the best coal mines in the world right here. And if we thought that there was an asset that would fit in that portfolio and do well immediately, we would truly consider and truly look at it.

Okay. That makes sense. And then, one more specific question. About maybe how to think about rail rates in 2017 kind of where they were based on pricing? And then maybe what's embedded in your guidance for 2018?

Yeah, we're very careful not to give any additional - too much information about the railroad. But I think we've said in the past that there's a band, there's a floor and a ceiling. And in the last year, we were operating pretty much around that ceiling all of time. There were a few times below, but most of the time at that ceiling. And where the market is right now is up towards the top end of that - in that area as well. So we expect rail rates - I mean, frankly, we hope rail rates stay about where they are, because that means pricing's really strong.

Right, right. That makes perfect sense. Okay, well, I appreciate your time. Thanks, guys and talk to you next quarter.

Thank you.

Our next question is a follow-up from Lucas Pipes from B. Riley FBR. Please go ahead with your follow up.

Hey, good afternoon again. Thanks for taking my follow up question. I just wanted to hone in a little bit on the cadence of production in 2018. Obviously, with you targeting to ramp toward 8 million in the back half of the year would imply slightly lower production here in the beginning of the year. And I wondered if you can maybe give just a little bit more color around what we should expect first half versus second half, and when exactly we might be getting to that 8 million ton run rate?

That's - if I - if that's what you took from what I've said, that's not really what I've said. We moved all 3 longwalls in the fourth quarter. So we started off the year as early in each of these panels, especially, we rebuilt equipment, and we have very high expectations. My point in that was that we are - we added 1 continuous miner unit in the fourth quarter, which, again, from a training standpoint and getting that up to where it needs to be from a productivity standpoint, takes a little bit of time. So we expect them to be fully productive as the year goes on. We'll add 1 more unit during the year this year. So that's 2 continuous miner units. And if you annualize the production out of those units, it's over 100,000 tons per unit, and I think, we've said 120-ish in the past per unit. So that brings up a couple of 100,000 tons a year when you annualize those numbers. But in the second half of the year, what we have to remember is, we have the 2 longwall moves. We got one in Q3 and one in Q4, and we've talked before about the impact of those moves and the fact that, that slows things down a bit just before the move, just after the move and during the move. So we have very strong expectations. I can't tell you exactly what quarter or how many quarters will be at that run rate, but our expectation is to - to how to be showing people that we can do it.

Great, great. That's good color. Thank you. And thanks again.

Thank you.

Our next question is also a follow-up from Jeremy Sussman from Clarksons. Please go ahead with your follow up.

Hi. Thanks very much. Just wanted to follow up and trying to get a sense of how much of your book is committed? How much of your volume is committed this year? And how much is sort of open for spot? Obviously, I know you priced on a quarterly basis.

Jeremy, I'd say the - we're probably at 90 plus percent that's committed, unpriced to the committed tons, and the other 10%, we're a little more opportunistic with.

Perfect. Thanks very much.

Thank you.

And ladies and gentlemen, at this time, I'm showing no further questions. I'd like to turn the conference call back over to Mr. Scheller for any closing comments.

Thank you. That concludes our call this afternoon. Thank you, again, for joining us today. We appreciate your interest in Warrior Met Coal.

Thank you. And that concludes today's conference. We thank you all for participating. You may now disconnect your lines.