Good afternoon. My name is Michael, and I will be your conference call operator today. At this time, I would like to welcome everyone to the Warrior Third Quarter 2025 Financial Results Conference Call. [Operator Instructions]. This call is being recorded and will be available for replay on the company's website. I would now like to turn the conference over to Brian Chien, Chief Accounting Officer and Controller. Please go ahead.

Good afternoon, and welcome, everyone, to Warrior's Third 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 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 third 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 third quarter ended September 30, 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 third 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 will be happy to answer any questions. With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thanks for taking the time to join us today to discuss our third quarter 2025 results. I'll start by providing an overview of the quarter before Dale reviews our results in additional detail. We're extremely excited to share that our third quarter presented an opportunity for Warrior to showcase its strength in a number of ways. From a strong financial performance to significant operational achievements, we've been driving success in the near term while continuing to improve our long-term position and prospects. We have an exciting future ahead of us, and this is a direct result of our unwavering commitment to operational excellence and the exceptional teamwork and dedication of our employees. First, from an operational achievement perspective, I'm thrilled to announce that in October, we started the Longwall operations at Blue Creek, which are approximately 8 months ahead of schedule. This remarkable accomplishment underscores our team's exceptional execution and reflects our commitment to driving shareholder value with high-value strategic investments. Second, factoring in the earlier startup of Blue Creek longwall, we now expect to produce approximately 1.8 million short tons of high-vol steelmaking coal from the Blue Creek mine, representing an additional 800,000 short tons this year or an 80% increase over our initial 2025 guidance. As a result, we've raised our full year 2025 production volume guidance by approximately 10%. Third, earlier this month, Warrior won the bidding in the federal coal lease sale of 58 million short tons of high-quality steelmaking coal reserves contiguous to our current operations. Subject to the finalization of a binding lease agreement with the Bureau of Land Management, this strategic opportunity is expected to enhance our long-term value proposition by bolstering our reserve base and extending the life of our core mining operations. I'll provide further details…

Thanks, Walt. Warrior was built to excel in all market conditions with high-quality steelmaking coal assets, a low-cost position globally, possessing a strong balance sheet with ample liquidity and a relentless focus on operational excellence. Each of these attributes were clearly demonstrated in our third quarter results and recent accomplishments. From my vantage point, I believe few companies are able to embark on, and make continued strategic investments of over $1 billion in an organic growth project like Blue Creek without diluting shareholders with equity offerings or additional leverage. For Warrior, our ability to accomplish this is due to our incredibly talented workforce, which enables us to continuously focus on resource development and operational excellence. Turning to market conditions we experienced this past quarter. Our primary index, the (PLV) FOB Australia was relatively stable, averaging $166 per short ton. This average pricing has remained relatively consistent through the first and second quarters of this year. However, during the third quarter, the (PLV) CFR China index price recovered from its low points earlier in the year and averaged $162 per short ton. This average was over $11 per ton higher than the second quarter of this year. Although the arbitrage narrowed by the end of the third quarter, it remained closed most of the third quarter. As for the main second-tier indices, the Australian Low Volatile Hard Coking Coal (LVHCC) index price recovered from its low point in the second quarter and averaged $137 per short ton, while the U.S. East Coast High Volatile A (HVA) index price established a low for the year and averaged $141 per short ton. As a result, we saw the relativity of the LVHCC index price compared to the PLV index price improved from 78% in the second quarter to an average 82% for the…

Thanks, Dale. Looking ahead, we recognize persistent challenges in our customers' markets will continue to be driven by ongoing surplus in Chinese steel exports, heightened global trade tensions and subdued economic activity worldwide. However, we're hopeful that new trade agreements with key global partners will be supportive for our market and will materialize in the near term. Similarly, we expect the steelmaking coal markets to be pressured by additional supply, which is expected to come online over the next few quarters due to a combination of new capacity and the return of certain idle mines. We believe the pricing will remain weak and range-bound and supply rationalization will be necessary to balance market dynamics. While the steelmaking coal markets are expected to continue to be weak in the upcoming quarters, we're excited about the positive accomplishments in our business and with some of our key partners. For example, on October 13, the Alabama State Dock had its official ribbon-cutting ceremony to celebrate the completion of a multiyear project of deepening the draft and widening of the channel at the port. This project is expected to benefit both Warrior and our customers by allowing them to load heavier and larger vessels in the future. In addition, several important machinery and equipment upgrades are being completed at the port over the next few quarters. These upgrades at the port are anticipated to enhance our operations and position the company for long-term success. We appreciate our long-standing partnership with the state. In conclusion, the combination of accelerated Blue Creek production and strategic reserve acquisitions significantly enhance our long-term growth strategy and provide Warrior a strong platform to meet long-term sustained global demand for premium steelmaking coal. Our world-class assets, low-cost position and disciplined capital deployment are a foundational strength. We remain focused on delivering long-term shareholder value through strategic resource development and operational excellence. With that, we'd like to open the call for questions. Operator?

[Operator Instructions] Your first question comes from Katja Jancic with BMO Capital Markets.

First, congratulations on the early Blue Creek start-up and the quarter. And maybe starting on the Blue Creek, with the early start-up, how should we think about production next year?

Well, we're still, we're working through our budget right now. But as you know, our plan was not to have started that until midyear. So naturally, that number is going to be enhanced greatly. But we're still working on that. I'm hesitant to give you an exact number on where we'll be. I think it's going to be, a lot of it is going to be market-driven as we get into next year as opposed to operationally driven. But we're working on that right now.

And then maybe secondly, the CapEx is coming down on the Blue Creek project. Can you remind us how you're thinking about capital allocation?

Yes, thanks for the question. Well, I think it would be similar to what we've done in the past when we generate the excess free cash flow above the needs of the business, and we will return cash via different methods, which will be the fixed quarterly dividend, which I expect would be higher in the future, supplement that with some cash special dividends and possibly some stock buybacks along the way, selected.

And your next question comes from Nick Giles with B. Riley Securities.

Guys, I really want to commend you on this incredible achievement. I know Tuscaloosa breeds champions; but it's clearly not just football. So, my question was, what does this mean from a hiring perspective? Do you still need incremental workers to ramp up here? And if sales are expected to be market-driven, would you plan to build inventory? Or would you really toggle production just on market conditions?

Well, I think the first part of your question on how many people do we still need more people. We're okay running at the pace we are right now, and, but we'll continue to hire over the next year easily and probably continuing beyond that. I think next year; we'll be looking at a balance. We'll look at, as I've said before, we really wanted to make sure that we had a certain percentage of the tons tied up before we ramped up. I'm not going to say 4.5 is the number for next year, but I think you're probably going to be closer to that type of a number for Blue Creek. And so, we'll be looking at cash flow. We'll be looking at what's happening in the market. We don't want to build a bunch of inventory, and we don't want to flood the market either. So we're going to be balancing all those factors to make sure we maximize the value for the company.

I appreciate that. And then maybe just looking to the fourth quarter here. I mean, I think if I do the math right, your guidance could imply a 20% increase in sales. Can you just walk us through what, maybe on a mine-by-mine basis, how sales could shift quarter-over-quarter?

Well, I don't have that breakout by mine. But with what we said is 2/3 of that volume of Blue Creek for the year should be sold this year, 1.2 million tons. And we've sold about half of that so far through the end of the third quarter. So you're going to see a big jump just because of the Blue Creek tons there, Nick. So that's the biggest driver in the fourth quarter.

Got it. Maybe one last one, if I could. It's good to see you were able to tuck in such a significant amount of reserves at a reasonable cost. I think you mentioned this is relevant to Mine 4 and Blue Creek. But my question is, how much does this acquisition influence any potential decision to add another longwall to your operating footprint? How much capital could be required later down the road? I appreciate any color there.

What I've said in the past is an additional longwall, you're probably looking at incremental capital probably $300 million or so because you're going to have to add 3 CM units, you're going to have to add another longwall. You're going to have to add modules to the preparation plant. So there's a lot of infrastructure and just a lot of build-out that would have to happen. In terms of making that decision, we had enough reserves without the BLM to add a second longwall if we thought the market justified it. This just makes us even more efficient because some of the places where we were going to have to skip around some coal, now we have control of it. So this is going to make us a lower cost, more efficient operation at both Mine 4 and Blue Creek as we roll forward.

And your next question comes from George Eadie with UBS.

Really impressive performance here, good set of numbers well done. Can I just follow up on that question before? So another longwall, is it a price decision? Like if you were guaranteed, say, 200 metric benchmark PLV, would you do it like the spreadsheet math, it clearly works when we get to sort of mid-'26 as the first longwall at Blue Creek is ramped up. How would we go about thinking about the decision for another one?

I think the real, what we need to do is we need to stretch this first longwall as tight as we can and see just what it's capable of. What we said is $6 million I don't know where the top end is for that one longwall and how many CMs it takes you to support that one longwall if you're running it flat out throughout the year. So, the real question is going to be where is that limit? And then beyond that, what's that next longwall get you. So, I think we're years away from making that decision because I think there's still so much headroom on the first longwall.

Yes. And then maybe to Dale, you just sort of call out those 3 factors, discounts, more High-Vol A, more Asia sales. How do I triangulate that with the low-vol hard coking index flat quarter-on-quarter? Your realized price was up quarter-on-quarter, like that caught me. Like how do I triangulate that going forward as well, like more Blue Creek sales, more Asia sales? Is it likely that this was just a one-off really strong realized pricing quarter? Or how do I sort of triangulate those factors?

Well, I don't think it's a one-off quarter. I think if you go back to my remarks, I said is, look, the increase from the second quarter to the third quarter was 2 things: 6% higher sales volume and a net realized price of $6 a ton higher. Well, that $6 a ton came primarily from the increase in the LVHCC during the third quarter. So that relativity rose from 78% in the second quarter to 82%. So that spread narrowed right? So that drove that $6 a ton, which just flowed to the bottom line.

So, think of it that way, pick your PLV price and then pick your relativity, okay? So just for example, $200 PLV, 80% relativity and you're going to be pretty close.

So that relativity, that 82%, that 4% quarter-on-quarter jump is what I was talking about there, sorry, Dale, that caught me off guard, like more high-vol sales more into Asia, like how do we think about that going forward in Q4, I guess, as well?

Well, we don't break it out by geography on a forward-looking basis, but we do think that in the long term, more volume will go into Asia long term as we ramp up Blue Creek. So that will be a gradual climb over the next year or 2.

Yes. And just last one on pricing.

Yes, I was just going to say one more thing, George, to think about there is customers have their different time schedules throughout the year. So that's why we might sell more into Europe in one quarter versus another quarter. So, it's hard for us to forecast that into the future as to what geography it's going to go into. So, we don't have that preciseness very far out. We know about a quarter ahead, but not too much further out than that.

Yes. Okay. And then just what was sort of saying quite bearish sort of met coal prices at the start, that benchmark prices up at $197 and flat starting to now talk quite optimistic the demand outlook ex China. Any sort of color you can give?

Well, I think I always try to be conservative in my expectations. And that's the way we run our company. And we make sure that we're able to respond to any positive market news, but we make sure we're prepared in the case of any negative market news. I don't, it's hard for me to see a reason why prices will go up or at best, they'll maintain the level they're at now, I think. But it takes one event to cause this price to shift dramatically. But I don't know what that one event is right now.

Yes. It's hard to see on the demand side, what the catalyst is. So, then you're thinking about the supply side. And as we said in our remarks, earlier, look, there's the Blue Creek coming online next year. There are other mines that are restarting next year. So, you're going to have additional supply coming on that's going to keep that pretty balanced, we think, going forward. So, it's hard to be too optimistic right now about what the next year or 2 looks like. Other than we should perform well because of Blue Creek coming online and it's such a much low-cost structure, we're going to benefit from that.

[Operator Instructions] Your next question comes from Nathan Martin with The Benchmark Company.

Congratulations on the early longwall startup. I just want to come back to the pricing question quickly. I think maybe what we're trying is how should we think about realizations versus the benchmark kind of going forward as you bring on these additional Blue Creek tons? Do you think you can get back to kind of your targeted 85% to 90% range of the benchmark?

Well, that's what our target is. So yes, I think we can get there. It just depends on what the markets do. I mean we can't control that. So, my crystal ball says maybe Prices change all the time for different reasons. And it's just, I mean, if you can't predict it, I can't predict it, right, what prices will be tomorrow. So just the realizations are what they are. We're 83%. Our targeted range is 85% to 90%. We're creeping up. It depends on what continues to happen with LVHCC pricing in the Pacific Basin. That will be a big determinant of where we get to.

I think said another way, we definitely think that we will get back to that 85% to 90%. The question is just when. We can't tell you if that's going to be 2 quarters from now or 1.5 years from now. We don't know when that will occur.

Makes sense. That's fair. And then as far as Blue Creek sales are concerned, Dale, I think you said that you guys were maybe initially targeting those tons towards Asia. Is that correct? And then how many Blue Creek tons have you guys been able to contract at this point with starting up the longwall early?

Well, the majority of the sales volume so far, yes, has gone into Asia. And right now, these tons are being shipped to really trials, right, to get confirmation of contracts. So, I don't, it's a little early with the volume that we sold to give a percentage of how much we've contracted because of these trials. So, I don't want to get into that yet. If we have better, and hopefully, we will have better information during our fourth quarter earnings call about that. But right now, it's a little bit too early because we only have about $1.2 million for this year.

I appreciate that. And then maybe just one final one on the cost side of the equation. Good to see cash cost guidance for this year down again another $5. Just want to make sure, is there any change in your price assumption there that would have impacted that update? And then last quarter, Dale, I think you mentioned you built in some maintenance and repair costs. I think you touched on that briefly in your prepared remarks as well. Is that still the case in that range?

Yes. That's kind of baked into that range. And really, the price assumption hasn't changed because the PLV has averaged virtually the same amount each and every quarter this year.

And your next question is a follow-up from Nick Giles with B. Riley Securities.

I just wanted to follow up on that last question on the cost side. I think guidance does still imply a slight tick up in the fourth quarter. So I wanted to see if there's anything specific that could drive that or if that's maybe just an added level of conservatism.

Yes, it's just baking in what if, right? As I said in my prepared remarks, we've been pretty tight on repairs and maintenance all year. Something can break, and we've got to fix it in the fourth quarter, and that's covering those kind of things. And we have a little tick up and we have recently in the last couple of weeks on the prices to $196. So there could be some change there a little bit on the cost. So that's all baked into that range. And we're averaging at, for the year-to-date, we're averaging at the bottom of the range. So a slight tick up would be very, very minor.

At this time, there are no further questions. I will now turn the call over back 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.