Good afternoon, my name is Dhawan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior First Quarter 2025 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded and will be available for replay on the company's website. I would like to turn the call over to Brian Chopin, Chief Accounting Officer and Controller. Please go ahead.

Good afternoon, and welcome everyone to Warrior's first quarter 2025 earnings conference call. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance may be considered forward-looking statements. According to the Private Securities Litigation Reform Act, forward-looking statements by their nature address matters that are to different degrees uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC may cause our actual future results to be materially different from those expected in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For more information regarding these forward-looking statements, please refer to the company's press releases and SEC filings. We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our first quarter press release furnished to the SEC on Form 8-K, which is also posted on our website. Additionally, we will be filing our Form 10-Q for the quarter ending March 31st, 2025 with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a first quarter supplemental slide deck that was posted this afternoon. Today on the call with me are Mr. Walter Scheller, Chief Executive Officer; and Mr. Dale Boyles, Chief Financial Officer. After our formal remarks, we'll be happy to answer any questions. With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thank you for taking the time to join us today to discuss our first quarter 2025 results. After my remarks, Dale will review our results in additional detail, then you'll have the opportunity to ask questions. While weak market conditions continued as we expected through the first quarter, I'm pleased with our relentless focus on our operations, which enabled us to deliver an increase in volumes, performed well from a cost perspective and generated positive cash margins. This operational backbone gives us the ability to drive strong performance, relative to the market, despite the current macro headwinds. At the same time, we continue to make excellent progress at Blue Creek, with the work this quarter keeping us on budget and on schedule for the startup of the longwall at this world class growth project. Let us start by looking at the current dynamics of the market for steelmaking coal. We've seen a dramatic change in the steelmaking coal markets, where average premium low vol index prices have dropped by 40% or $112 per short ton, compared to last year's first quarter. First quarter premium low vol prices averaged $280 per short ton in the first quarter 2024, compared to $168 per short ton in the first quarter of this year. In addition, average index pricing for our High Vol product has decreased 43% in that same time period. We've now seen four consecutive quarters of weakening steelmaking coal prices. While we cannot control market fundamentals, we can't control our response to these weaker markets by tightly managing our spending at the mines, operating the mines as efficiently as possible and rationalizing all other spending throughout the organization. On the supply and demand side, overall market fundamentals for the past quarter were weak, but generally in…

Thanks, Walt. I would like to make one overall note on our financial strength and market positioning before diving into the numbers. We have built our company to thrive in most market price environments with strong customer contractual relationships, high-quality products that realize premium prices, a low and variable cost structure and strong balance sheet. As a result, we believe demand for our products will continue even in the current market conditions and in the face of uncertainty of trade and tariff policy changes. We also have the flexibility to continue to rationalize and manage our cost and capital spending. These are unique assets. In addition, we have the remaining capital anticipated to be needed to fund the completion of the Blue Creek project with cash on our balance sheet. We do not expect to slow down or suspend the project if these market conditions continue to persist for a prolonged period, all of which means, we can both weather the storm and emerge well-positioned for the future. Now let us look at more detail on our first quarter financial results. For the first quarter of 2025, Warrior recorded a net loss on a GAAP basis of $8 million or $0.16 per diluted share compared to net income of $137 million or $2.62 per diluted share in the same quarter of 2024. These decreases in quarter-over-quarter results were primarily driven by 42% lower realized average net selling prices, partially offset by lower variable costs for transportation and royalties, other lower production cost spending, and 2% higher sales volume. We reported adjusted EBITDA of $40 million in the first quarter of 2025 compared to $200 million in the same quarter of last year. Our adjusted EBITDA margin was 13% in the first quarter of 2025 compared to 40% in the same…

Thanks, Dale. As we look forward, we believe the global steel market will continue to face challenges for the rest of the year due to China's overcapacity and the uncertainty caused by recent changes in trade and tariff policies. However, we expect some of these headwinds to be balanced with an increase in steel-making coal demand from India during the year as new steel production is commissioned. We also expect the recent mining events to cause temporary tightness in the steel-making coal availability, which could lead to slightly higher prices compared to the previous quarter. But until there's a meaningful change in the global steel market fundamentals, it is unlikely that steel-making coal prices will return to their previous levels. While we recognize that we're operating in an uncertain environment, a world-class asset base, highly flexible cost structure, and a high-performing workforce will allow us to navigate successfully through the remainder of this year and beyond. With that, we'd like to open the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Katja Jancic with BMO Capital Markets. Please go ahead.

Maybe starting on the pricing side, I think, Walt, you mentioned that price realization could stay below the 85%. So, given the current market environment, is it fair to still assume somewhere between 80% to 85% or how should we think about it?

I think that's reasonable. We're still hopeful it will be above that, but I think that's reasonable, 80% to 85%.

And then in this environment, given how good your costs were this quarter, is the $120 per ton something we should be considering in the near term or what are some of the moving pieces there?

I got it. It's Dale. Well, as far as the low end of the range, that was because the prices that averaged what they did in the quarter was much lower than our assumption for the year. So, it really depends on where prices go the remainder of the year. We've seen them balance up a little bit here in the last couple of weeks. So, it's really going to be price-dependent because our transportation royalties are variable. So, prices continue to go down from here. We could see some more improvement as well as our management of our costs as well. But if prices, met coal prices, rise, we'll see a rise in our variable cost as well.

So, sorry, I can't give you a really good example unless you can give me an exact met coal price for the year.

I was more thinking about near term, right? If prices stay at these levels in 2Q, I assume that this cost level would still be sustainable. Is that fair?

Yeah, it's fair. Yes.

One more, if I may. If I'm not mistaken, your longwall shields are imported from Europe. Are you -- based on the current situation, are you responsible for the 10% tariffs that are in place?

With those shields, when they'll all be delivered, we will not incur any tariff impacts on those shields. Thank you.

Our next question comes from Nick Giles with B. Riley Securities. Please go ahead.

Thanks, operator. Good afternoon, everyone. My first question was just back on the realizations. You listed a number of factors that drove things lower, and I was wondering if you could add some color around that. I mean, should we think about transportation differentials and higher sales to Asia, as some of the biggest drivers or any color you could add around, the type of discounts that U.S. producers are ultimately taking to send tons to Asia? Thank you very much.

Yes. Thanks, Nick. Yes, those factors are the what drove it and it really depends on where we sell our volumes into Asia, right? So, the transportation we saw last year rates as high as $50.55 a ton. We're more in that mid-30s now. So, it's come down quite substantially over time but with the trade and tariff noise, those rates have started to rise recently, given potential with the landed vessel charge that was talked about there for a while. So, those are the things that kind of drive those things, as well as the difference between the relativity between the PLV and High Vol A that prices off of flats. So, those are really the biggest factors.

Got it. Thanks for that, Dale. Maybe just back to the shipment side. I mean, shipments were higher than expected based on the midpoint of your guidance and when taking into account Blue Creek volumes in the second half. So, curious how we should think about volumes in the second quarter. Is it fair to assume that they could step down?

Well, if you look at our historical what we sell in the second half of the year, the fourth quarter is very light. So, I'm not going to give guidance on the second quarter, just to say that look for the year within our range, we're 85% contracted for the year. So, volumes can shift between quarters, if a customer calls and all of a sudden moves a vessel that's supposed to ship the last day, moves it two days into the next quarter, that happens. So, we don't read too much into the difference between the quarters. We're really focused on the year.

Hey, fair enough. And one more if I could. There's obviously been a lot of pain out there in the U.S. Met markets, and so, just wondering if you could comment on the overall production outlook. Do you have any rough estimate for how much production could have come offline during this period and what level of U.S. production is ultimately at risk?

I think that's really difficult to say because even today, we're hearing more rumors of different things going on in different operations. We know where we sit on the cost curve and we know there's a lot of pain being incurred right now throughout the industry. So, I wouldn't be terribly surprised to see some curtailments, but sometimes those take a little time.

Fair enough. Well, I want to commend you on your ability to navigate these tough markets. So, keep up the good work.

Thank you.

Thank you.

The next question comes from George Eady with UBS. Please go ahead.

Yes. Hi, Walt and Dale. I hope you're both well. My first question is on Blue Creek and the remaining $220 million to $300 million CapEx. Could you maybe just clarify what it is specifically or at least what the big parts are and when it will be spent over the next 12 months.

Go ahead, Dale.

Yeah, so a lot of this is final construction, right? So labor, a lot of things like that. The majority of the large purchases of steel and equipment, I would say, we have the majority of that already on hand. So, this is really finishing out the project. So, if you look, our estimate was $225 million to $250 million for this year. So that's what we look to spend this year, and the $55 million in the first quarter is right on target with that. So, then it steps down significantly in 2026.

It's the build-out of those other two modules we talked about, with the prep plant, the labor to do that. It's the overlay and belt, finishing construction of that, which is to come online in the fourth quarter plus we continue to work on the barge load-out. So those are the three big -- when Dale talks about the labor, those are the three big buckets of the project that are continuing throughout this year.

And maybe the working cap's a $32 million bill this quarter. Is that mostly attributable to Blue Creek? And how should we maybe think about that over coming quarters? Will we see a similar trend potentially, Dale?

Yes. As we mentioned, we did start washing some of the Blue Creek coal. And our inventory's been building from the production there. So as we start to wash that coal and get it delivered to the port and then sold, we'll start to turn some of that working cap on the second half. So, I would imagine you're going to see -- over the second and early third quarter, you're going to see a working capital build, and then we'll start to see some improvement in the second half late.

And then just last one, guidance, what Met Coal price is that based off?

It's based on $200, and that's metric. So, whatever that is, $185-ish.

Thank you [Operator Instructions] The next question comes from Nathan Martin with The Benchmark Company. Please go ahead.

Maybe first a clarification question. I might have heard this incorrectly, but I think you mentioned you price your high vol product off the Platts U.S. Low Vol HCC index, not the U.S. High Vol A. Did I hear that correctly?

You did, and how it gets priced depends on where the customer is. So it varies. But, yes, that's correct.

As we've seen, I guess, the all CPLV price has increased some of which is positive, but those U.S. prices have not quite kept pace, and that discount spread has widened, as I think you guys also called out. So, I'm interested to get your thoughts on the published U.S. prices, if you think those are reflective of the current market. And do you think this discount can tighten up?

Over time, I expect the discount to tighten up. I can't tell you how or when that will happen, especially when you look at some of the operations that are having production issues this year and some of the tons that I think are under quite a bit more cost pressure right now. So, I would expect it to tighten up. I don't know how quickly and how much, but that would be my expectation over time. And then, Walt, do you just, do you see that what you're hearing from customers is kind of reflective of that index that CLAPS publishes or are there any discounts or premiums for that matter?

I think it's pretty much reflective of what the pricing is.

Okay. Got it. Appreciate that. And then, good to hear, Ari, that the rail loadout and the prep plant module a, being completed early. As you guys begin to start trucking that Blue Creek coal over to the loadout and shipping it, how should we think about the impact on cost per ton of the operations?

Well, Nate, this is Dale. That won't have a dramatic impact because the volume this year is small comparative to the run rate volume. So, it will have some benefit, but it won't stand out this year like it will starting next year.

Okay, Dale. Yes, I was just thinking it might actually be a little bit of a drag or drive cost higher just because I would assume transportation costs would be a little bit higher from trucking. Is that not the case though?

Look, the cost is going to be great coming out of Blue Creek, but the additional trucking for a short, short period of time shouldn't add any significant material cost to that, and we're really focused on the cost right now and all the items that we have control over. So, to the extent we can mitigate that, so there's really no impact, we'll do that.

That makes sense. And then, as you just mentioned, Dale, hoping to get maybe some more of your thoughts around what meaningful levers you could use to trim or defer some CapEx if need be during this persistently weak market?

I think what we're doing is we're squeezing our existing operations pretty hard and making sure we're only spending on things that we absolutely have to have in the short-term and we'll continue to do that, and we're constantly looking for every nickel and dime we can save in this type of a situation, and when we've kind of tried to design ourselves for this type of situation, so that we're able to respond and thrive in this kind of a market, as well as the upper end. So, we're pulling the levers we need to pull.

And we have the added benefit. Look, we have over $500 million of cash sitting on the balance sheet. So, as one brought up earlier, you have a maximum amount of $300 million left to spend. So, that still leaves you with another $200 million of cash, if you need it for other things in a worst case.

Got it. Very helpful. I'll leave it there guys. Appreciate the time and best of luck.

Thank you.

Thank you.

Thank you. At this time, there are no further questions. I will now turn the call over to Mr. Scheller for any comments.

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

Thank you. And that concludes our conference for today. Thank you all for participating. You may now disconnect.