Good afternoon. 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 2018 Financial Results Conference Call. [Operator Instructions] Thank you. Before we begin, I have 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 have 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 press 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 of its website at www.warriormetcoal.com. Here today to discuss the company’s results are Mr. Walt Scheller, Chief Executive Officer and Mr. Dale Boyles, Chief Financial Officer. Mr. Scheller, you may begin your remarks.

Thanks, Jamie. Hello, everyone and thank you for taking the time to join us today to discuss our fourth quarter and full year 2018 results. After my remarks, Dale will review our results in additional detail and then you will have the opportunity to ask questions. Warrior performed exceptionally well and exceeded our expectations in the fourth quarter, which led to a record year in production and sales volumes for 2018. These operational records also drove strong financial performance. We are proud to announce that we achieved a record $1.4 billion in revenue, $601 million of adjusted EBITDA and free cash flow of $458 million. In addition, we continued our commitment of returning capital to stockholders which includes $400 million of cash dividends and stock repurchases over the course of 2018. Our strong fourth quarter and full year 2018 results continue to demonstrate the key strengths of our business model: one, focus on the highest quality met coal products sold into the seaborne market to some of the largest global steel producers; two, realizing industry leading price realizations for our high-quality products; three, a low and variable cost structure that generates some of the highest margins and free cash flow in the industry; and four, a highly talented workforce that drives safety, sales, production volume and efficiencies in the business. Our operational successes are a credit to the hard work and dedication of our employees and I thank them for all they have been doing to help us perform as strongly as we did in 2018. Our top priority remains working safely as that is the first and most important step to working efficiently and ultimately achieving success in the marketplace. Production volume in the fourth quarter was 1.9 million short tons compared to 1.6 million produced in the same…

Thanks, Walt. 2018 was a record year in operational financial performance for the company. The company exceeded guidance targets recorded over $600 million of adjusted EBITDA, generated $458 million of free cash flow and distributed returns to stockholders of nearly $400 million. For the fourth quarter of 2018, net income on a GAAP basis was $374 million or $7.11 per diluted share compared to net income of $97 million or $1.83 per diluted share in the fourth quarter of 2017. Excluding the non-cash income tax benefit recognized upon the release of the valuation allowance on deferred tax assets associated with Warrior’s net operating losses and a non-cash adjustment to our asset retirement obligations due to a change in reclamation estimates, non-GAAP adjusted net income for the fourth quarter of 2018 was $125 million or $2.38 per diluted share compared to $1.83 per diluted share in the fourth quarter of 2017. For the full year 2018, net income on a GAAP basis was $697 million or $13.17 per diluted share compared to net income of $455 million or $8.62 per diluted share in 2017. Excluding the non-cash income tax benefit, non-cash asset retirement obligation adjustment, incremental stock compensation expense and transaction and other expenses, non-GAAP adjusted net income for 2018 was $459 million or $8.67 per diluted share compared to $468 million or $8.86 per diluted share in 2017. Adjusted EBITDA was $162 million in the fourth quarter as compared to adjusted EBITDA of $86 million in the same period of 2017, an increase of 87%. The company’s adjusted EBITDA margin was 45% in the fourth quarter compared to 36% in the fourth quarter of 2017. The quarterly increase was primarily driven by a 45% increase in sales volume, an increase in average net selling prices and lower cash cost. For…

Thanks, Dale. Before we move on to Q&A, I would like to make a few more comments about the company and its prospects. We are very pleased with the company’s strong operational and financial performance in 2018 and we appreciate the support and engagement that we have received from our stockholders and of course our employees. As our production volumes have increased, we benefited from the increased operating leverage by investing in the long-term projects that will benefit the operations in the future. 2018 was a record year for global steel production with key regions like China and India displaying strong year-over-year growth, while South America and Europe continued producing steel at high levels. Although we have seen overall conditions temper off in early 2019 mainly due to concerns around the potential slowdown in certain major economies as well as the implicit uncertainty of the China-USA trade discussions and the Chinese New Year we anticipate another good year for steel production. Indications from our global customers reflect this premise with their current forecasted production volumes nearing closely to those observed this past year. With the expectations of strong steel production volumes at or near 2018 levels coupled with the absence of material changes in the supply of hard coking coal, we believe that demand for our premium products will also remain consistent throughout the year. The recent decline in the Australian premium low vol index from the highs achieved in the fourth quarter of 2018 was mostly within expectations and remains at favorable values. Additionally, while spot prices have declined recently, forward prices remain robust and are above forward prices seen at this time last year. This provides us with confidence that pricing should stabilize in the near term at or near current levels and remain within a reasonable range…

[Operator Instructions] And our first question today comes from Lucas Pipes from B. Riley FBR. Please go ahead with your question.

Hey, good afternoon gentlemen. I wanted to first ask a little bit about capital returns throughout the prepared remarks. It sounded like you made a couple of references to your intention of returning capital to shareholders again in various forms. I think that’s what you said could you maybe elaborate on that? Obviously, you are tendering for the $150 million on the debt side, is that the right size to think about and how soon could something like $150 million be returned to shareholders? Thank you.

Lucas thanks for your question. Yes, as I said in my remarks, we are looking to distribute a total of $300 million of cash that we should have on hand by the end of March and that would be split $150 million in the restricted payment offering to bondholders and the other $150 million for special cash dividend and/or stock repurchases. So that’s the plan. Depending upon the results for the restricted payment offer and tender offer, if there are amounts that are declined in the restricted payment offer, those amounts could be potentially added to the special dividend and/or stock repurchase returned. We will just have to wait and see how those results turn out, but that’s our plan that we have right now.

Got it. No, that’s very helpful. And then, you disclosed a lot about Blue Creek, I appreciate that and I appreciate the level of detail that you provided, how do you think about this project at this time? Is it more like permitting, seeking investor feedback or do you intend to maybe come out with a date at which you might sanction this growth project? I would appreciate your thoughts. Thank you.

Well, right now, as we said, we have been doing some work, some further engineering work. We have got a lot of permitting that’s already completed. We intend to do some additional permitting this year on things such as the refuse areas, slurry disposal and rail loop. So those are the areas we will be focused on this year. We’ll do some additional engineering studies, do some core drilling. And again, our goal is to put the work into it this year that we are ready to start if we decide to pull the trigger that we are ready to start in early 2020.

And how do you – so you have been very – you have returned a lot of capital to shareholders and I think you stand out among your peer group. So how do you balance returning capital to shareholders with a growth project such as Blue Creek? Thank you for your thoughts. Thank you.

Yes, Lucas, I think nothing has changed from a capital allocation standpoint. We remain committed to returning excess cash to our shareholders in the various forms and so until we make a final decision, none of that has changed, but I will tell you, look, we’re really excited about this. This is really the future growth of the company as we have been working our way up to the nameplate capacity. This is reserve that we already control 114 million short tons. So clearly, it makes a lot of sense to really start working on this project now and looking at when do we take those next steps. So we’ll take a holistic approach, a returns based approach kind of the capital allocation once we get to that point of making a decision on Blue Creek. As we said look, once we complete these things in 2019, some additional core drilling and things like that, we think this project is shovel ready early 2020 and we can make a decision at that point.

Got it. Very helpful. I appreciate your comments. I have more questions. So I will jump into queue. Thank you.

Our next question comes from Jeremy Sussman from Clarksons. Please go ahead with your question.

Thanks for taking my questions and congratulations on another very strong quarter guys.

Thanks, Jeremy.

I guess from the production standpoint, I guess obviously very strong year in 2018. I assume the reason for the modest downtick in ‘19 is the 5 long-wall moves. And I guess, along those lines, should we still think of Warrior as an 8 million ton per annum producer when fully ramped or I guess how should we be thinking about the production profile?

Jeremy, this year, yes, the fact that we have 5 long-wall moves is going to play a factor and how successfully we can complete those long-wall moves will drive whether or not we see where we end up in our range or exactly where we finish the year from a production standpoint. I still do think our production potential, we say is 8 million tons and there is going to be years where we should be able to get there and there is going to be years where with things like 5 long-wall moves where we have to step back and say that doesn’t quite make sense this year. I’m real proud of the progress our operations have made. I think they had a fabulous year, last year, and I expect them to perform very well, again, this year.

Jeremy, just let me add to that. If I remember, from the last 2 years, our production levels have well exceeded our expectations. So what’s happened with that strong performance, we have actually pulled these moves in sooner. So if you remember we pulled in an extra move into 2018 that was scheduled for 2019 because we have done so well. So we have kind of pulled some of these forward, but that’s because things had been going well.

That makes perfect sense. And maybe Dale just to follow-up, so the restricted payment offers is obviously, I think at 103% and then you’ve got the tender offer at 104.25%. So assuming the maximum amount is ultimately tendered between the restricted payment and the tender offer, could you just remind us is there any difference between the two in terms of what your ability to pay a special dividend would be?

Well, what we try to do is provide optionality to the bondholders and to allow the company to economically increase the amount of cash that we could share with our equity holders as well. So, to the extent under the restricted payment offer, they are declined amounts and I will point you to Page 2 of that particular press release where it gives you an example. If there are declined amounts in that, that essentially creates capacity for your return of capital. And if you look on that second page where we have given an example of the $300 million and where actually $95 million of that gets paid because it’s still on a pro-rata basis, create capacity of $55 million for extra capital returns, so you could increase your $150 million by another $55 million there, Jeremy.

Understood. Thank you very much, Dale.

Thanks.

[Operator Instructions] Our next question comes from Matthew Fields from Bank of America.

Hey, guys. Matt Castellini here on for Matt Fields. So I just wanted to clarify one thing. In aggregate, those two tender offers are basically referred to $300 million of the 8% of ‘24. I know you mentioned excess cash flow would – $150 million, I believe you said would go to fund that, but I guess what else would that be funded with beyond sort of excess cash flow?

Well, as we said, we expect to have $300 million on hand at the end of the first quarter. We have already over $205 million – I think its $205 million at the end of December. And so the way the RP and tender offer work is you participate in either or. So again, we will fund the payment, which is a maximum amount to the notes of $150 million and then $150 million to capital returns for stockholders.

Okay, understood. Thank you very much.

Alright. Thanks very much.

And our next question is a follow-up from Lucas Pipes from B. Riley FBR.

Hey, good afternoon again and thank you for taking my follow-up question. I wanted to circle up a little bit on the cost guidance for 2019. It appears modestly lower at the midpoint compared to 2018 despite the lower production guidance. So I wonder if you can maybe just provide a little bit more color as to the drivers for the 2019 cost guidance? Thank you.

Yes. I think we are going to start to see some of the capital investment paying off, Lucas and we expect to kind of get some of the efficiencies of these projects that we have been spending on. So that’s the reason for driving that down primarily. We did spend a lot this year on particular improvement projects, one was the portal that we’ve talked about and reducing overtime, but we’re starting to see that these projects really pay off, not just better equipment, utilization, but also incremental volume and lower cost.

Okay, that’s helpful. And you are spending a little bit more, as you noted in the prepared remarks in 2019. What’s the list of projects that you’re trying to tackle with additional capital? And could we be thinking about a similar return on those or as you kind of capture some low hanging fruits, the return maybe a little bit lower than what you saw on the 2018 capital spend? Thank you.

Well, this is Walt. On the sustaining projects what we said is we have got more shafts this year than normal, so that’s accounting for some of that additional sustaining capital spend. The discretionary capital spend is the development of the future for Mine 4. We have always called that Cassidy, but I think we are now calling it [indiscernible]. So it’s really about the development of the mine towards that project and the beginning of sinking the shafts in that area that will be the mine life for Mine 4 for probably the next 20 years. So, on that project that’s really a several year project that will enable the continuation of long-term success in Mine 4 and the rest of the sustaining capital is pretty standard in some of the smaller discretionary capital projects. Yes, we hope to see some benefit from those, but we haven’t banked on that.

Very helpful. Thank you. And Mine #4 in north when do you plan to transition into that mining area and what’s roughly the capital spending for this new section?

We have about 5 years of mining left in what we consider to be the kind of the eastern part of Mine 4. And when we need to have developed the area in Cassidy from now until that is completed, so we will actually be mining long-wall coal at that side of the mine side of the mine probably in 5 or 6 years, it could be a little earlier, but probably about that timeframe.

Perfect. This is very helpful. I will leave it here and best of luck. Good job.

Thank you.

[Operator Instructions] And at this time, it is showing no further questions. I would like to turn the conference call back over to Mr. Scheller for any closing comments.

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 call. We thank you for participating. You may now disconnect.