0001193125-26-048914
SEC filingRecord sales and Blue Creek startup offset lower coal prices, with net income down 77% YoY to $57M.
Warrior Met Coal is a U.S.-based supplier of premium hard coking coal (HCC) to the global steel industry, headquartered in Brookwood, Alabama. The company is dedicated entirely to mining non-thermal steelmaking coal and operates three underground mines: Mine No. 4, Mine No. 7, and Blue Creek. It also removes and sells natural gas from its coal seams. The company describes itself as a large-scale, low-cost producer and exporter of premium quality HCC with highly efficient longwall operations.
Warrior operates as a single reportable segment—steelmaking coal (hard coking coal). All revenues are derived from the sale of premium steelmaking coal in global seaborne markets. The company does not disclose segment revenue share separately, as it is the sole segment.
The company's primary products are steelmaking coals from its three mines: Mine No. 7 produces Low Vol HCC with price realizations near the Platts Premium Low Vol index; Mine No. 4 and Blue Creek produce High Vol A coal that trades at a discount to Mine No. 7. Blue Creek coal is primarily sold into Asia on a CFR basis. The coals are characterized by low sulfur, low-to-medium ash, and high fluidity and strength. Additionally, natural gas extracted from coal seams is captured and sold.
Warrior sells its coal primarily to blast furnace steel producers in Europe, South America, and Asia. Sales are made under fixed supply contracts with indexed pricing terms of one to three years, supplemented by spot market sales. The company uses rail (CSX and NS) and barge transportation to the Port of Mobile, Alabama, for export. In 2025, geographic customer mix was 48% Asia, 37% Europe, 14% South America, and 1% U.S. The company benefits from a shipping time and distance advantage to the Atlantic Basin compared to Australian and Canadian competitors.
The company competes with premium steelmaking coal producers from Australia, Canada, Russia, Mozambique, and other U.S. producers. Key competitive factors include coal price at delivery, quality characteristics, customer relationships, and supply reliability. Warrior believes its premium coal, flexible cost structure, and logistical advantages provide distinct competitive strengths.
Warrior's strategies include: maximizing profitable production at existing mines; maximizing growth through the Blue Creek mine (commenced longwall operations in October 2025, expected to increase nameplate capacity by 88%); broadening marketing reach to Asia and India; capitalizing on technology to reduce environmental impact (e.g., methane capture, dry-coal slurry systems); maintaining a clean balance sheet with no pension or OPEB liabilities; and disciplined capital allocation focused on debt repayment and free cash flow generation.
As of December 31, 2025, the company employed more than 1,485 people, of whom 945 were hourly and 540 were salaried. The workforce is diverse in age, with 38% under 35 and 49% in mid-career (35-55). The company emphasizes safety, training (over 57,000 hours in 2025), competitive compensation, and retention programs.
For the year ended December 31, 2025, total revenues decreased 14% to $1.31 billion from $1.53 billion in 2024. The decline was driven by a 29.5% drop in average net selling price to $146.20 per metric ton, partially offset by a 21% increase in sales volumes to a record 8.7 million metric tons. Cost of sales (exclusive of items shown separately) fell 3% to $982.4 million, reflecting a 19% improvement in cash cost per metric ton to $111.66 due to Blue Creek's lower cost structure. Operating income plunged 82% to $45.7 million, and net income fell 77% to $57.0 million ($1.08 per diluted share). Adjusted EBITDA declined to $256.5 million from $447.9 million. The sharp earnings decline underscores the impact of a weak pricing environment despite operational excellence.
The Mining segment (Mine No. 4, Mine No. 7, and Blue Creek) generated sales of $1.28 billion, down 15% year-over-year. Segment Adjusted EBITDA (non-GAAP) was $294.6 million, representing a 23.1% margin on revenue. Record production of 9.3 million metric tons (up 24%) was driven by Blue Creek's longwall startup, which contributed 1.8 million tons. The other segment (natural gas royalty) saw revenue rise 31% to $33.0 million due to higher gas prices. Customer mix shifted toward Asia (48% vs 42% in 2024), reducing average price realizations as High Vol A coal sold into Pacific Basin at discounts.
Management expects Blue Creek to produce at least 4.1-4.4 million metric tons in 2026, with overall nameplate capacity rising to 13.7 million metric tons. Capital expenditures are guided between $155 million and $215 million, with $105-$115 million sustaining and the remainder for Blue Creek completion. The company noted ongoing trade and tariff uncertainty but expects 2026 pricing to remain broadly consistent with 2025 levels. Blue Creek's low-cost structure is expected to further reduce all-in cash breakeven and enhance profitability.
As of December 31, 2025, Warrior Met Coal held $299.96 million in cash and cash equivalents, $53.25 million in short-term investments, and no long-term investments (all liquidated during the year). Total debt stood at $154.25 million, consisting solely of $156.52 million in 7.875% senior secured notes due 2028, net of $2.27 million in debt discount. The company had no borrowings under its $143.0 million Amended ABL Facility, with $140.5 million of availability (net of $2.5 million in letters of credit). Shareholders' equity was $2.14 billion. Inventory increased to $235.94 million from $207.59 million, driven by higher coal stockpiles ($125.91 million) and supplies ($110.03 million).
The company recognized $70.23 million in asset retirement obligations (ARO), with $5.47 million current and $64.76 million long-term. Finance lease liabilities totaled $84.16 million ($29.67 million current, $54.49 million noncurrent), with weighted average remaining lease term of 62 months. In November 2025, the company entered into federal coal leases for Mine No. 1 and Mine No. 4 with a total bid of $46.8 million, payable in five equal annual installments. The present value of these obligations was $8.84 million (current) and $23.68 million (long-term). Black lung obligations (net of trust assets) were $36.1 million, with $2.1 million current and $34.0 million long-term. The company also had $47.5 million in surety bonds and letters of credit for post-mining reclamation.
Capital expenditures totaled $320.26 million in 2025, down from $457.22 million in 2024, with $315.26 million allocated to the Mining segment. The company paid $17.82 million in dividends ($0.32 per share for the year, down from $0.82 in 2024). Under the New Stock Repurchase Program, the company has repurchased 500,000 shares for $10.6 million, leaving $59.4 million of authorization remaining. No debt was issued or repaid during the year; the company's only outstanding debt is the 7.875% senior secured notes due 2028.
The company operates a single reportable segment: Mining (Mine No. 4, Mine No. 7, and Blue Creek mine). Mining segment revenue was $1.277 billion in 2025, down 14.9% from $1.500 billion in 2024. Segment profit (Adjusted EBITDA) fell to $294.62 million from $492.68 million. Cash cost of sales (including transportation and royalties) was $975.38 million. Geographic customer mix for 2025 was 48% Asia, 37% Europe, 14% South America, and 1% U.S. One customer (Customer A) accounted for 11.9% of total sales revenue. Depreciation and depletion for the Mining segment was $180.07 million.
Blue Creek Development: The most significant operational risk is the successful ramp-up of Blue Creek. While longwall operations commenced in October 2025, the company faces substantial risks including cost overruns, equipment failures, geological challenges, and integration difficulties. Capital expenditures of $240.3M in 2025 and $50-75M expected in 2026 underscore the scale of investment. Failure to achieve full production could materially impair long-term growth and returns.
Steelmaking Coal Price & Demand: With 97.5% of revenues from steelmaking coal, the company is highly exposed to global steel demand and coal price cycles. The risk of sustained low prices (as seen in 2015-2016) or demand shifts from alternative steelmaking technologies (e.g., electric arc furnaces) could severely impact profitability.
Conflicts & Tariffs: The Russia-Ukraine and Israel-Hamas wars, along with trade measures (tariffs, sanctions), create uncertainty in coal markets and supply chains. The company notes potential impacts on pricing, demand, and operating costs, though the magnitude is unpredictable.
Black Lung Liabilities: The company is self-insured for legacy black lung liabilities ($36.1M estimated). A DOL proposed rule requiring 100% collateral could increase cash flow demands; the current $28M collateral requirement is under appeal.
Environmental & Climate Regulation: Extensive federal/state laws on air emissions, water quality, and reclamation impose significant costs. Potential future GHG regulations (e.g., methane limits, carbon taxes) could increase operating costs and reduce demand for steelmaking coal.
Section 382 & NOLs: State NOLs of $948.9M are subject to valuation allowance ($45.0M). An ownership change could severely limit utilization; transfer restrictions are in place until April 2026.
Indebtedness: $240.7M total debt with restrictive covenants limits financial flexibility. Variable rate exposure on the ABL facility creates interest rate risk. Failure to comply with covenants could accelerate debt.
Union Workforce: 56% of employees are UMWA-represented. The strike ended in February 2023, but no new contract has been reached, leaving the company vulnerable to future work stoppages.
Transportation Concentration: Single rail carrier and reliance on Port of Mobile create vulnerability to disruptions, which could result in demurrage fees and lost sales.
Cybersecurity: Increasing digital dependence and sophisticated cyber threats pose operational and financial risks; insurance may not fully cover losses.
Warrior Met Coal's operating cash flow (CFO) of $310.5 million in 2025 declined sharply from $471.0 million in 2024, a 34.1% drop. This decrease was driven by lower net income and adverse working capital changes, including a $45.2 million increase in accounts receivable and a $28.1 million decrease in accounts payable. Capital expenditures rose to $233.6 million (75.2% of CFO), up from $178.2 million (37.8% of CFO) in 2024, indicating higher reinvestment intensity. Free cash flow (CFO minus capex) was $76.9 million, down from $292.8 million in 2024. Share repurchases of $100.0 million and dividends of $31.5 million totaled $131.5 million, exceeding free cash flow, implying reliance on cash reserves or debt to fund returns. No significant one-time tax payments were noted. The company's cash flow quality weakened due to lower earnings and higher capital spending.