Warrior Met Coal, Inc. (NYSE:HCC) Q4 2024 Earnings Call Transcript

Warrior Met Coal, Inc. (NYSE:HCC) Q4 2024 Earnings Call Transcript February 13, 2025

Warrior Met Coal, Inc. misses on earnings expectations. Reported EPS is $0.15 EPS, expectations were $0.49.

Wyatt: Good afternoon. My name is Wyatt, and I’ll be your conference call operator today. At this time, I would like to welcome everyone to the Warrior Met Coal, Inc. Fourth Quarter 2024 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 now like to turn the conference over to D’Andre Wright, Vice President of External Affairs. Go ahead.

D’Andre Wright: Good afternoon. And welcome everyone to Warrior Met Coal, Inc.’s fourth quarter 2024 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 fourth 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-K for the year ending December 31, 2024, with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a fourth 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 Walter Scheller.

Walter Scheller: Thanks, D’Andre. Hello, everyone, and thank you for taking the time to join us today to discuss our fourth quarter 2024 results. After my remarks, Dale will review our results in additional detail, then you’ll have the opportunity to ask questions. Looking at the fourth quarter, we were pleased with how the company performed despite the current market fundamental headwinds. Our strong operational base continued to differentiate Warrior Met Coal, Inc., driving sales volumes 23% higher and production volumes 7% higher than last year’s fourth quarter. When high-quality steelmaking coal prices recover from this past quarter, they reached the lowest level since 2021. Warrior Met Coal, Inc. is well-positioned to capitalize on improved market dynamics.

Q&A Session

Looking back over the last twelve months, the company had a very successful 2024 as we met or exceeded all guidance targets, achieved sales and production volumes not seen since 2019, recorded the highest annual production from Mine 4, and produced the first tons from our world-class Blue Creek growth project. We generated cash from operations of over $370 million, which was used to both further the development of Blue Creek and return over $43 million of cash to stockholders via dividends. I’d like to thank all our employees for the successes we achieved in 2024 and congratulate them on delivering strong safety results. The safety of our employees is and remains our number one priority. The current state of steelmaking coal markets provides the backdrop for our recent performance, where low prices continued from the third quarter into the fourth quarter.

In fact, the markets became weaker over the entire year, reaching their lowest points in the fourth quarter. The primary factors impacting our markets continue to be driven by a confluence of three factors: excess Chinese steel exports into our customers’ markets, weak demand, and an ample supply of steelmaking coals. These factors impacting our markets appear to be well entrenched, persisting for the entirety of the fourth quarter and into the beginning of 2025. Our customers remain focused on cost control and profitability due to low global steel prices and thin margins negatively impacting their results. These market factors, in addition to the ample supply and availability of steelmaking coals, have kept all of our pricing indices under pressure and have challenged our profitability.

Prices at these levels are especially challenging for other steelmaking coal producers higher on the cost curve than we are. Even the recent mine fires in the sector have had only an insignificant impact on seaborne pricing. Our cost discipline continues to be a key differentiator for us in this environment. Our primary index, the PLD FOB Australia, ended the fourth quarter at $178 per short ton, which was $7 per ton lower than the end of the third quarter, and averaged $184 for the fourth quarter. The PLV CFR China Index ended the fourth quarter at $180 per short ton and averaged $193 for the fourth quarter. Similar declines were observed with the Platts LVHCC index for a high vol A product sold primarily into Asia, which ended the year at $141 per short ton.

We achieved a gross price realization of 86% for the fourth quarter and 89% for the full year 2024, which was a function of product mix, geography, tariffs, and freight rates. According to the World Steel Association monthly report, global pig iron production decreased by 1.8% in 2024, as compared to the prior year. Pig iron production in China, which is the world’s largest production region, fell by 2.3% for the same period. The rest of the world’s pig iron production experienced a more modest decline of 0.7% for the full year. India remains a bright spot with a growth rate of 4.4% and is expected to continue growing with new blast furnace capacity expected to come online this year. Several other regions also experienced growth for the period, such as Brazil and certain European countries.

However, their gains were offset by declining production from Japan and South Korea. Now let me turn back to our fourth quarter results. Importantly, our strong sales volume was driven by better production volumes from the existing mines. Our fourth quarter sales volume was 1.9 million short tons compared to 1.5 million short tons in last year’s same quarter. Our sales by geography in the fourth quarter break down as follows: 38% into Asia, 36% into Europe, and 25% into South America. Most of the sales in the fourth quarter were to customers in Japan, China, and India. As we’ve previously noted, demand from the Asian steel producers has been growing, resulting in higher sales to that geography, while sales from our traditional markets in Europe and South America remained lower primarily due to weak spot market opportunities.

This shift in sales by geography is evidenced by sales into Asia growing from 25% of our geographic mix in last year’s fourth quarter to 38% in this year’s fourth quarter. Most of that shift was from sales into Europe, which decreased from 56% in last year’s fourth quarter to 36% this year. Spot volume was 17% in the fourth quarter of 2024, which is primarily sold into the Asian markets. This result marked the fourth consecutive quarterly decrease in spot volume sales during 2024, coinciding with a decline in this pricing index. For the full year, our spot volume was 27% of total sales volume. Production volume in the fourth quarter was 2.1 million short tons compared to 2 million short tons in the same quarter of 2023. Mine 4 had an outstanding year and reached a new record high annual production volume of 2.8 million short tons for the year.

In addition, our continuous miner units at our newly developed Blue Creek mine produced 170,000 short tons during the fourth quarter, which is included in the quarterly total. The combination of our existing mines continuing to perform well and production at Blue Creek drove a 7% increase in production in the fourth quarter. Our coal inventory increased slightly to 1.1 million short tons at the end of the fourth quarter from 915,000 short tons at the end of the third quarter, primarily due to the Blue Creek production volume. During the fourth quarter, we spent $142 million on CapEx and mine development. Of that amount, CapEx spending totaled $131 million, and mine development costs for the Blue Creek project were $11 million during the quarter.

Now that we’ve started developing the first longwall panel at Blue Creek, we expect our mine development costs to continue to grow throughout 2025 and until the longwall production starts, which is expected to occur no later than the second quarter of 2026. Looking further at the transformational Blue Creek growth project, we continue to make excellent progress while remaining on budget. Our excitement for the project is increasing as we move closer to starting the longwall production. As we have previously disclosed, production began in the third quarter on time as expected. By the end of the fourth quarter, we commenced two additional continuous miner units, for a total of three at Blue Creek, and produced 209,000 short tons for the year.

In the fourth quarter, we continued to make strong progress by building out the surface infrastructure of Blue Creek. We completed the installation of the clean coal silos at the rail loadout, began construction on the dry slurry processing system, made considerable progress on the preparation plant, the Overland Clean Coal Belt, and the barge loadout. We invested over $104 million in the fourth quarter in the continued development of Blue Creek, which brings the full year 2024 project investment to $350 million. As of year-end, the total project investment to date was $717 million, which has been 100% funded from internally generated cash flows from the existing operations. The project team continues to do an excellent job of managing the capital spending and staying on schedule.

All remaining key development progress milestones remain on track. We’ve started to take delivery of the longwall shields, and we expect to have all shields on-site in the first half of 2025. In addition, all major preparation plant equipment is on-site awaiting installation. The preparation plant is expected to be completed in the middle of 2025. After the preparation plant starts up, we expect to begin selling Blue Creek steelmaking coal in the second half of 2025. We were incredibly pleased to start two additional miner units at Blue Creek by the end of the fourth quarter as scheduled. These additional units will ramp up to full production in 2025, and we expect to produce approximately 1 million short tons of high vol A steelmaking coal from all three continuous miner units.

As we continue to ramp up continuous miner production, prepare for the start of the longwall, and complete the surface infrastructure over the next year and a half, we expect to hire an additional 250 to 300 people by the time the longwall starts no later than the second quarter of 2026. Despite the current weak market conditions, we believe we have sufficient liquidity on hand to complete the project. We remain focused on tight capital spending discipline until the very end of the project. The total of $717 million invested in the development of Blue Creek to this point is more than two-thirds of the expected total project capital expenditure. And this spending has been 100% funded from internally generated cash flows. Absent any unexpected or unusual event, we continue to believe that we will deliver the project on schedule as planned and be completed within our total project capital expenditure estimate of $995 million to approximately $1.1 billion.

Blue Creek represents one of the last remaining untapped premium high-quality high vol A coal reserves in the U.S., and we anticipate our coal will generate strong margins. We expect incremental annualized production of at least 4.8 million short tons after the startup of the longwall, which will enhance and strengthen our already strong global cost curve positioning and deliver incremental profit and cash flows. Since we launched the project back in 2022, there have been significant improvements to the project scope, inflationary cost increases, and changes in the outlook for steelmaking coal prices. We expect to provide an update on the original long-term project economics in the near future that we expect will demonstrate significant value creation for our stockholders from Blue Creek.

I’ll now ask Dale Boyles to address our fourth quarter results in greater detail.

Dale Boyles: Thanks, Walt. We continue to experience weak market fundamentals, with some of the lowest steelmaking coal prices since 2021. Our underlying operations increased production and sales volumes in the fourth quarter and for the full year of 2024. We capitalized on this volume growth and used the proceeds to invest in our business for the long term and to provide additional cash returns to our stockholders, as Walt noted earlier. We delivered another year of strong financial performance where we met or exceeded all of our guidance targets. We made strong progress on the development of our Blue Creek project and remain on schedule and on budget for completion as originally expected. Excluding our investment in Blue Creek CapEx and mine development, our free cash flow was $28 million in the fourth quarter and $261 million for the year 2024, demonstrating the strength of our business model.

For the fourth quarter of 2024, Warrior Met Coal, Inc. recorded net income on a GAAP basis of $1.1 million or $0.02 per diluted share compared to net income of $129 million or $2.47 per diluted share in the same quarter of 2023. Non-GAAP adjusted net income for the fourth quarter, excluding the non-recurring business interruption expenses and non-cash valuation adjustments, was $0.15 per diluted share. This compares to adjusted net income of $2.49 per diluted share in the same quarter of 2023. These decreases in quarter-over-quarter comparison were primarily driven by 34% lower average net selling prices, partially offset by 23% higher sales volume. We reported adjusted EBITDA of $53 million in the fourth quarter of 2024, compared to $164 million in the same quarter of last year.

Our adjusted EBITDA margin was 18% in the fourth quarter of 2024, compared to 45% in the same quarter of last year. On a per ton basis, our adjusted EBITDA margin was $28 per short ton in the fourth quarter as compared to $107 last year. As I previously mentioned, these decreases quarter-over-quarter were primarily driven by 34% lower average selling prices, partially offset by 23% higher sales volume. In addition, there were other smaller factors. First, our sales volume mix was 8% higher of high vol A from Mine 4, versus low vol from Mine 7 in the fourth quarter of 2024, compared to the same quarter last year. Normally, sales mix has minimal impact on our overall results. However, the wider-than-normal relativity of High Vol A pricing to the PLV pricing into Asia had a timing impact on the fourth quarter results.

This higher sales mix of Mine 4’s high vol A product, which has a lower average net selling price compared to the average net selling price of the premium low vol product at Mine 7, lowered our adjusted EBITDA and pre-tax income by approximately $9 million. Secondly, we incurred a non-cash increase in the valuation of our legacy Black Lung liabilities of $7 million, a non-cash charge for higher stock compensation expense of $3 million, and non-cash charges for mark-to-market losses on our gas hedges of $2 million. These last three items lowered our pre-tax income and were add-backs for adjusted EBITDA. Total revenues were $297 million in the fourth quarter of this year compared to $364 million in the fourth quarter of 2023. This overall decrease of $67 million was primarily due to the decrease in the average net selling prices of $151 million, partially offset by the impact of higher sales volume of $84 million.

Demurrage and other charges were $3 million lower compared to the fourth quarter of 2023 and resulted in an average net selling price of $155 per short ton in the fourth quarter of 2024 compared to $235 per short ton in the same quarter of last year. Cash cost of sales in the fourth quarter of 2024 was $226 million or 77% of mining revenues, compared to $185 million or 51% of mining revenues in the fourth quarter of last year. Of the $41 million net increase in cash cost of sales, $43 million of the increase was driven primarily by the 23% increase in sales volumes. This was partially offset by a $2 million decrease in spending largely due to lower variable transportation royalty costs on lower steelmaking coal prices. These lower costs were mostly offset by higher production costs for employee wages and incentives associated with a higher headcount and higher supply maintenance costs.

Cash cost of sales per short ton FOB port was approximately $119 in the fourth quarter this year compared to $121 in the fourth quarter of 2023. The decrease was primarily related to the lower variable transportation royalty costs on lower steelmaking coal prices, offsetting the higher production costs for employee wages and incentives, associated with a higher headcount, higher mine supplies, and higher maintenance costs, driven by the higher production volumes. We ended the year at the bottom end of our guidance range and were about $4 per short ton lower than our third quarter cost per ton. Our cash cost of production for the fourth quarter of 2024 was 68% of our total cash cost per short ton, compared to 61% in the same quarter last year.

Overall, transportation royalty costs were 32% of our cash cost of sales per short ton in the fourth quarter of this year on lower average net selling prices, compared to 39% in the same quarter last year. As a result of the lower average net selling price, our cash margin per short ton was $35 in the fourth quarter this year compared to $114 in the same quarter of last year. SG&A expenses were about $18 million or 5.9% of total revenues in the fourth quarter of 2024, and were higher than the fourth quarter of last year of 3.6%. This was primarily due to an increase in employee-related stock compensation expenses. Depreciation and depletion were $39 million in the fourth quarter of 2024 and were higher than last year primarily due to the additional assets placed into service at Blue Creek.

The interest income earned from our cash investments was lower in the fourth quarter this year due to lower average cash balances and lower rates of return. Our interest expense was lower due to the capitalization of interest related to the development of Blue Creek. Our effective income tax rate for the full year 2024 was approximately 12% compared to 13% in 2023. Turning to cash flow, during the fourth quarter of 2024, free cash flow was a negative $88 million. This was the result of cash flows generated by operations plus cash used for capital expenditures and mine development, $142 million of which $116 million related to Blue Creek. Our total available liquidity at the end of the year was $655 million and consisted of cash and cash equivalents of $491 million, short and long-term investments of $50 million, and $114 million available under our ABL facility.

Now let’s turn to our outlook and guidance for the full year 2025. We believe the weak market conditions we have seen over the last few quarters could persist for a long period and could continue to put downward pressure on steelmaking coal prices. In addition, any new tariffs or trade wars could put additional pressure on seaborne pricing. Despite these expected market conditions, we have a favorable operational performance outlook for 2025, with both higher sales and production volumes anticipated. We expect the demand from our contracted customers to remain stable, while we also expect spot demand to continue to be stronger in the Pacific basin compared to our traditional markets in the Atlantic. We will continue to pursue our successful strategy of focusing on contracted customers with value-added spot activity.

We are ending 2025 with a strong contracted volume of approximately 85% and spot volume of 15%. The expected increase in production at Blue Creek combined with the expected Blue Creek sales volumes in the second half of the year will have a negative impact on our overall working capital throughout 2025 due to higher inventories and higher accounts receivable. We expect to produce and sell approximately 1 million short tons of high vol A from the new mine in 2025, which has been included in our guidance targets. Now that we’ve already invested over $717 million in capital expenditures for Blue Creek, the spending in 2025 and 2026 steps down dramatically and is expected to be very manageable out of the existing cash and available liquidity. I’ll now turn it back to Walt for his final comments.

Walter Scheller: Thanks, Dale. Given the macroeconomic factors, we have tempered our expectations of any meaningful improvement in our markets and believe the current conditions may persist for a prolonged duration. Barring a meaningful change in the Chinese steel exports or the supply of global seaborne steelmaking coals, the challenging steel and raw material market conditions in China are expected to extend into the seaborne market, which we expect to weigh on steelmaking coal prices. On the supply side, we expect Australian production to remain strong absent some major disruption event. Without a change in the market fundamentals, we would expect supply adjustments to be the logical response, but history tells us that these decisions are far from being easy and are often delayed as long as possible, extending the market dynamics for longer periods of time.

In addition, any new tariffs or other trade measures that may be implemented by the United States or retaliatory tariffs and trade measures by other countries, such as those recently announced by China, may or may not negatively impact our financial results. This impact could result from reduced economic growth, changes in purchasing behaviors by our customers, material changes in the pricing of steelmaking coals, or other factors. We believe demand for our products will continue to be strong in these weak market conditions due to brand recognition by our customers for our high-quality products. We are prepared to meet these market challenges for an extended period. 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 a strong balance sheet.

In addition, we have the remaining capital 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 that project if these market conditions continue to persist for a prolonged period of time. We have a nimble operational structure with healthy inventories that can respond quickly to improving market conditions, should they return in the near term. Now let me wrap up our prepared remarks with a few comments on our Blue Creek growth project. We expect 2025 to be an extraordinarily successful year as we near completion of key milestones on schedule and on budget, which I previously mentioned. This, we anticipate, will enable the mine to further ramp up production volume after the longwall starts in 2026.

Between now and the start of the longwall at Blue Creek, we expect to hire 250 to 300 people. With the addition of those people, we expect to drive continuous miner production to approximately 1 million short tons and expect to sell approximately that same amount in the second half of this year. With more than two-thirds of the capital already spent on the project, we believe the risk of exceeding our targeted range is low. This should free up cash flows for other purposes during 2025 and beyond. We continue to expect that Blue Creek will be a significant and exciting driver of our next stage of growth as global steel prices rebound. With that, we’d like to open the call for questions. Operator?

Wyatt: Thank you. At this time, I would like to remind everyone. And your first question comes from the line of Nick Gyles with B. Riley.

Nick Gyles: Thank you, operator, and good afternoon, everyone. Walter Scheller, Dale Boyles, I want to congratulate you on the continued strong production, particularly at Mine 4. Sales guidance appears robust, and so I was wondering if you could break out the contribution from Blue Creek versus Mine 4 and Mine 7. And then as we think about the prep plant coming online in the second half, how should we think about the cadence of those sales and your level of confidence in achieving realizations in line with your typical guidance? Thanks a lot.

Walter Scheller: Thank you. What we’re projecting for production this year at Blue Creek, this is Walter Scheller, is about a million tons. And with that prep plant not coming on until the second quarter, we will then begin moving that coal to market at that point. I would expect to start selling coal in the third quarter, maybe late second quarter, but probably more like the third quarter after that preparation plant comes online and be selling throughout the remainder of the year. When we look at how it will compare to Mine 4, Mine 4 will mine and sell probably over 2 million tons, and we’ll probably have a million or so out of Blue Creek this year.

Nick Gyles: Well, that’s very helpful. My second question was just about your meaningful reductions in cash cost guidance, $8 per ton at the midpoint. And I was curious how much you would attribute to greater fixed cost absorption versus your pricing and sales-sensitive cost expectations and any cost reductions as well?

Dale Boyles: Hey, Nick. This is Dale. Yes. Most of that, the lowering of our guidance, is going to be because of the lower net coal prices. So it’s going to have its effect on transportation royalties the most. So that’s what would be driving down that cost guidance. You know, as our outlook for this year, we don’t really expect these market conditions to change very much. As far as catalysts, it’s kind of hard to identify what that might be. So we’re preparing ourselves if this would last throughout this year. So we’ve baked in a low met coal price assumption and those cost assumptions in that guidance.

Nick Gyles: Dale, I appreciate that. And one more if I could. You’ve spoken in the past about carefully monitoring freight differentials, and so how should we think about your sales by geography could shift, particularly any tons that may have otherwise gone to China?

Walter Scheller: Well, I think those tons that would have gone into China are still most likely to flow into the Asian market, so they would still be going CFR. So I don’t think there would be a big differential in terms of cost of transportation for those tons.

Nick Gyles: Understood. I appreciate all the color and continue best of luck. Thank you.

Wyatt: Thanks, Nick. And the next question will come from Katja Jancic with BMO Capital Markets.

Katja Jancic: Hi. Thank you for taking my questions. Maybe just quickly back on the sales shipments. So given the currently weak environment and the fact that the Blue Creek volume is going to start shipping more in the second half, is it fair to say that shipments might be more second-half tilted?

Dale Boyles: Yes. That’s right. So if you look at our guidance and we’ve said that million tons for Blue Creek, well, the majority of that’s going to come in the second half.

Katja Jancic: And then maybe Dale, can you talk a bit about price realizations, especially with High Vol A price basically coming from Blue Creek, is the 85% to 90% still stands?

Dale Boyles: Yeah. It does for now with that smaller volume as we get to the higher volumes in a couple of years. That may change. But right now, based on history, the relativity of the level HCC to the PLV, if you look back at the ten-year historical average through the end of 2024, that’s 95%. However, in the year 2024, that relativity was 79%. So this year you’ve had a widening of that relativity on that index, but over time, you know, it’s much stronger. So we could see more in the lower end of that range, I think, this year as we move forward.

Katja Jancic: Just one last one if I may. Of the 38% that was shipped into Asia, can you let us know how much of that was to China?

Dale Boyles: We don’t give information by country for obvious sensitive competitive purposes. Just to say that it’s not enough to really make a difference. I mean, if we need to orient that volume, we could. We’re not over-committed to China.

Katja Jancic: Okay. Thank you.

Wyatt: And the next question will come from Nathan Martin with The Benchmark Company. Go ahead.

Nathan Martin: Thanks, operator. Good afternoon, Walter Scheller, Dale Boyles. Maybe just coming back real quick to the cash cost of sales guidance, the $117 to $127 a ton. Dale, you mentioned you’re kind of assuming a low met price in that range. Could you kind of provide us what your price assumptions are there?

Dale Boyles: Yeah. We’re assuming a PLD at $200 for the year. Better than $200k. Gonna over-commit to a higher significantly higher price throughout the end of the year.

Nathan Martin: Okay. Perfect. That’s helpful. Also wanted to ask on the inventory front, obviously, growing here, you know, probably the next two quarters before the prep plant starts up at Blue Creek. Is there any kind of level you guys are targeting for year-end 2025 at this point?

Walter Scheller: We would like to get inventory levels back to a normalized range, and I would say that that’s probably a couple hundred thousand. It’ll come down but down to a couple hundred thousand tons per mine. You have to remember until later in the year, we won’t be able to move high percentages of Blue Creek as we continue to finish up different pieces of the project. But we definitely expect it to come down considerably in the third and fourth quarter.

Nathan Martin: Okay. Well, thanks for that. And then speaking of moving those tons, how are things coming along with the Overland belt structure there for Blue Creek?

Walter Scheller: Everything’s going very well, on time, on budget. We’re very pleased with the progress we’re making across the project.

Nathan Martin: And everything going well through Rail Partners as well?

Walter Scheller: Yes. Yes. They’ve been to see a few of the places where they’ve been investing money to make sure that we’re ready to go. And even if when the belt’s not ready yet and we’re trucking some coal from the preparation plant over the rail loadout, we’ll begin moving coal then. So they’ll have several months where they’ll get to figure out if there’s any weaknesses in their system that need to be firmed up. So I think we have a really good plan to have us set up by the time that longwall starts. We should be in great shape. The port, the rail, and the coal mine.

Nathan Martin: Okay. Great to hear. And then maybe just one more. I noticed in the release today under the capital allocation section, some additional commentary specifically optimizing your capital structure while allowing flexibility to pursue very selective strategic growth opportunities. I think you guys have had that language in your queue, but was just wondering what was behind the decision to kind of bring that front and center to the press release.

Dale Boyles: Actually, that’s been in our press release for, like, two, three, four years. So it’s just to caveat, look, we’re not committed to a specific method there or quarter or timing. So that’s pretty much been there for a long time. Just, you know, all in conferencing.

Nathan Martin: Okay. Great, Dale. Appreciate it, guys. Best of luck in 2025.

Wyatt: Thank you. And the next question comes from again Nick Gyles with B. Riley.

Nick Gyles: Nick, your line may be muted.

Nick Gyles: Sorry about that. Thank you so much for taking my follow-up. In your key factors that may affect your outlook, you do note a new labor contract, and I was wondering if you could remind us of any timing and magnitude of any renewals or could this be related to Blue Creek?

Walter Scheller: No. That’s related to the fact we still have not reached a new contract with United Mine Workers. We continue to negotiate and are not sure what the result of that would look like if we did complete it.

Nick Gyles: Fair enough. Thanks for the color. And then I just wanted to ask one more. Maybe as we look down the road when Blue Creek begins to reach steady-state operations, how should we think about a minimum cash balance in the context of potential increases in shareholder returns?

Dale Boyles: Nick. Yeah. We are working on that as we get closer to having Blue Creek online. Right? We’re going to be, you know, significantly larger in our volumes, larger companies, so we need to think about what that looks like going forward. We have a company conclusion yet, but, you know, it’s going to be significantly more than we’ve had in the past. Just because risks are changing and, you know, as we’ve always said, being low-levered was very important to being successful in this industry. So carrying a little more cash is probably the way to go in the future. But we’ll have an update on that as we get real close to Blue Creek coming online.

Nick Gyles: Got it. I appreciate that, Dale, and keep up the good work.

Wyatt: At this time, there are no further questions. I’ll now turn the call over to Mr. Scheller for any comments. Please go ahead.

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

Wyatt: Thank you. And that concludes today’s conference. Thank you all for participating. You may now disconnect.