On this page of StockholderLetter.com we present the latest annual shareholder letter from WARRIOR MET COAL, INC. — ticker symbol HCC. Reading current and past HCC letters to shareholders can bring important insights into the investment thesis.

2023 ANNUAL REPORT 2023 HIGHLIGHTS Warrior Met Coal is a U.S.-based, environmentally and socially minded supplier to the global steel industry. It is dedicated entirely to mining non-thermal metallurgical coal used as a critical component of steel production by metal manufacturers in Europe, South America and Asia. Warrior is a large-scale, low-cost producer and exporter of premium steelmaking coal, also known as hard-coking coal (HCC), operating highly-efficient longwall operations in its SUMMARY STATISTICS $2,000 (U.S. Dollars) $1,600 underground mines based in Alabama. The HCC that Warrior produces from the Blue Creek coal seam contains very low sulfur and has strong coking properties. The premium nature of Warrior s HCC makes it ideally suited as a base feed coal for steelmakers. For more information, please visit www.warriormetcoal.com. $1,200 $1,800 $1,000 8 7 6 $1,400 REVENUE: $1,676.6 Million $800 $1,200 $1,000 $600 $800 NET INCOME: $478.6 Million $600 $400 Adjusted EBITDA(1): $698.9 Million METALLURGICAL (MET) COAL SALES: 6.8 Million Metric Tons (MMT) $0 $200 $0 1 0 $700 $160 $380 $600 $140 $330 $500 $120 $280 $100 $230 $400 $80 $180 $300 $60 $200 EMPLOYEES: 1,143 3 2 $400 $200 NET INCOME PER SHARE: $9.21 5 4 $40 $130 $100 $20 $80 $0 $0 $30 $600 $90 4.0 $80 $500 $70 $400 3.5 3.0 $60 2.5 $50 $300 2.0 $40 $200 $30 $20 1.5 1.0 $100 $0 $10 0.5 $0 0.0 (1) Adjusted EBITDA is a non-GAAP nancial measure and is de ned and reconciled on page 83 of the Annual Report on Form 10-K for the year ended December 31, 2023. (2) Free Cash Flow (FCF) is de ned as net cash provided by operating activities less purchases of property, plant, equipment and mine development costs. FCF Conversion is de ned as FCF/Adjusted EBITDA. FCF is a non-GAAP nancial measure and is de ned and reconciled on page A-4 of this document. (3) Cash cost of sales per metric ton is a non-GAAP nancial measure and is de ned and reconciled on page 82 of the Annual Report on Form 10-K for the year ended December 31, 2023. (4) Return of capital to stockholders includes special dividends and regular quarterly dividends.
Dear Fellow Stockholders, The close of the 2023 fiscal year reflected the culmination of a highly productive year for Warrior. It was a year where we made meaningful progress on our strategic priorities to continue to build significant, sustainable stockholder value, as full year production and sales volumes returned to levels not seen since 2020. These higher volumes led to another year of strong cash flow generation, which enabled us to fund an all-time record high amount of capital expenditures and mine development costs. Additionally, these strong cash flows allowed us to fund the Blue Creek growth project directly from cash from operations and reduce our debt by nearly 50%. We are proud of Warrior s many achievements this year, including: Achieved strong net income $478.6 million, or $9.20 per diluted share, and Adjusted EBITDA of $698.9 million; Strong operational performance that included a 34% increase in sales volumes and a 21% increase in production volumes, run rates not seen since 2020, and record high annual production from Mine 4; Generated $701.1 million of cash from operations during 2023, enabling an all-time record high amount of capital expenditures and mine development costs of $524.8 million, all in furtherance of the growth of the business, and the early retirement of $162.4 million of senior secured debt; Made excellent progress in developing the world class Blue Creek Mine, which remains on schedule, and invested $319.1 million in Blue Creek for the full year; Increased the return of capital to stockholders by raising the quarterly dividend 17% for the second consecutive year and returning excess cash to stockholders in a discretionary special dividend of $0.88 per share; and Remained focused on our environmental, social and governance ( ESG ) initiatives, which are highlighted by the achievement of a 13% reduction in total Scope 1 and Scope 2 greenhouse gas ( GHG ) emissions and a 16% reduction in methane emissions in 2022 as compared to the 2021 baseline measurement. Our successes in 2023 reflect the strength of our steelmaking coal assets. Warrior s proven business model is based on realizing premium pricing for our high-quality products while maintaining a low and variable cost structure, which generates some of the highest margins and free cash flow in the industry. Blue Creek Development We are proud of the progress we have made to date on the Blue Creek growth project. During 2023, we invested $319.1 million on the development of the Blue Creek reserves, which brings the project to date spending to approximately $366.0 million. The progress to date has been focused on the construction of the preparation plant, mine belt structure, bath house, warehouse, production slope, service shaft and ventilation shaft. During 2023, we also initiated an important and highly beneficial project scope change that will require incremental capital expenditures of $120.0 to $130.0 million over the life of the project in order to lower operating costs, increase flexibility to manage risks, and make better use of multi-channel transportation methods. While we originally planned on a single channel to transport coal from the Blue Creek mine via an overland belt to a third-party owned and operated barge loadout facility, we now plan to build a belt conveyor system to a railroad loadout to transport the majority of the coal.
This new transportation plan is expected to de-risk a single channel to market, lower operating costs and move steelmaking coal volumes faster to the port. We will also build and operate the barge loadout ourselves rather than utilizing a third-party provider. During 2023, we began the development of the rail and barge loadout sites. The project remains on schedule, and we expect our continuous miner units to begin development in the second half of 2024. Sustainability and Corporate Responsibility Safety remains at the center of everything we do, and we are focused on creating the safest environment possible for everyone who enters our facilities. We have been a leader in safety performance, as supported by our safety incidence rate that has consistently outperformed the U.S. industry average for underground mining by over 20%. In 2023, our total incidence rate was 1.90, which was 57% lower than the national total reportable incidence rate for all underground coal mines in the U.S. of 4.39 for the nine months ended September 30, 2023 (representing the most recent information available). Under the leadership of our Board of Directors and the Sustainability, Environmental, Health and Safety Committee, we are committed to operating in a sustainable manner and being a responsible corporate citizen. Our leadership is focused on establishing measurable sustainability goals and providing detailed information about our initiatives and progress to our stockholders. We made great progress toward our achievement of a 50% reduction in GHG emissions by 2030. We achieved a 13% reduction in total Scope 1 and Scope 2 GHG emissions and successfully captured and collected approximately 69% of the methane produced in our mines, resulting in a 16% reduction in methane emissions as compared to the 2021 baseline measurement. In 2022, we also announced a three-phase water efficiency and optimization plan that provides an actionable pathway to meet our goal of reducing water usage by 25% by 2030. We reached several milestones in 2023 on our way to achieving this goal, including the installation of a new wireless monitoring system which allows for constant readings of water information across several sites, the selection of a new Environmental Management Information System software which will enhance our ability to track and manage environmental performance, and the completion of our state-of-the-art dry slurry system two years ahead of schedule. We understand that sustainability is a journey and not a one-time effort. As we have made consistent improvements over recent years, we have identified additional areas that we expect to give further attention to in the future. For more details, see our 2023 Corporate Responsibility Report in the Sustainability section of our website at www.warriormetcoal.com. Capital Allocation We remain committed to our capital allocation strategy that is designed to accelerate returns to stockholders through regular quarterly dividends, special cash dividends, and stock repurchases, and also to unlock the value of our transformational growth investment in the Blue Creek growth project. During 2023, we demonstrated this ongoing commitment to returning capital to our stockholders, paying a regular quarterly dividend of $0.07 per share, an increase of approximately 17% compared to 2022, and a special dividend of $0.88 per share. Our approach to capital allocation balances value-enhancing capital investments for medium to longterm growth with near-term returns to stockholders. Conceptually, our approach to capital allocation continues to focus on the following principles:
Ensuring the business has the funding to maintain operations, uninterrupted, and make necessary capex investments in the mines regardless of any potential volatility in the price of met coal; Maintaining the ability to invest in projects, like Blue Creek, or in highly accretive inorganic opportunities that can deliver significant stockholder value over the mediumand long-term; and Leveraging free cash flow to return increasing amounts of capital to stockholders via increases in the quarterly dividends, as met coal prices allow, paying one or multiple special cash dividends, as appropriate, and repurchasing our stock. The return of capital to stockholders will be dependent upon business and market conditions, future financial performance, and other strategic investment opportunities, and is subject to unexpected increases in inflation and other events that are outside of our control. Focusing on the Future We enter 2024 with great optimism as we expect another strong operational year for Warrior driven by strong customer demand and increased sales volumes. While we expect inflationary costs in the mining sector will continue to persist and are expected to increase our costs in 2024, we believe that Warrior s ability to increase production with a low cost structure base and our ability to capitalize on robust demand in a variable steelmaking coal price environment will enable us to continue to generate strong margins and cash flows. We also remain focused and disciplined on the development of the Blue Creek project. We expect another year of high capital spending on the project ranging from $325.0 million to $375.0 million, which can be funded out of cash on our balance sheet if markets deteriorate in 2024. We remain on track for the first development tons from continuous miner units in the second half of 2024 and the longwall is scheduled to start up in the second quarter of 2026. This development will reinforce Warrior s position as the premier U.S. pure-play producer of premium steelmaking metallurgical coal. The Blue Creek project is expected to generate significant stockholder value which will become evident as we approach the production start date of the mine, as we believe the lack of capital investments in the mining industry over the last ten years, combined with ongoing inflationary pressures, will result in higher premium steelmaking coal prices in the future. I want to thank our employees for their dedication and hard work over the last year. The milestones reached in 2023 pave the way for the next phase of growth for Warrior. I would also like to express my gratitude to the Board for its continued guidance and support. Finally, I want to sincerely thank our stockholders for believing in Warrior. On behalf of the entire management team, I look forward to building on our success. Sincerely, Walter J. Scheller, III Chief Executive Officer
 • shareholder letter icon 3/14/2024 Letter Continued (Full PDF)
 • stockholder letter icon 3/13/2023 HCC Stockholder Letter
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HCC Shareholder/Stockholder Letter Transcript:


2023 ANNUAL REPORT
2023 HIGHLIGHTS
Warrior Met Coal is a U.S.-based, environmentally and
socially minded supplier to the global steel industry. It is
dedicated entirely to mining non-thermal metallurgical coal
used as a critical component of steel production by metal
manufacturers in Europe, South America and Asia. Warrior
is a large-scale, low-cost producer and exporter of premium
steelmaking coal, also known as hard-coking coal (HCC),
operating highly-efficient longwall operations in its
SUMMARY
STATISTICS
$2,000
(U.S. Dollars)
$1,600
underground mines based in Alabama. The HCC that Warrior
produces from the Blue Creek coal seam contains very low
sulfur and has strong coking properties. The premium nature
of Warrior   s HCC makes it ideally suited as a base feed coal
for steelmakers. For more information,
please visit www.warriormetcoal.com.
$1,200
$1,800
$1,000
8
7
6
$1,400
REVENUE:
$1,676.6 Million
$800
$1,200
$1,000
$600
$800
NET INCOME:
$478.6 Million
$600
$400
Adjusted EBITDA(1):
$698.9 Million
METALLURGICAL
(MET) COAL SALES:
6.8 Million
Metric Tons (MMT)
$0
$200
$0
1
0
$700
$160
$380
$600
$140
$330
$500
$120
$280
$100
$230
$400
$80
$180
$300
$60
$200
EMPLOYEES:
1,143
3
2
$400
$200
NET INCOME
PER SHARE:
$9.21
5
4
$40
$130
$100
$20
$80
$0
$0
$30
$600
$90
4.0
$80
$500
$70
$400
3.5
3.0
$60
2.5
$50
$300
2.0
$40
$200
$30
$20
1.5
1.0
$100
$0
$10
0.5
$0
0.0
(1) Adjusted EBITDA is a non-GAAP    nancial measure and is de   ned and reconciled on page 83 of the Annual Report on Form 10-K for the year ended
December 31, 2023.
(2) Free Cash Flow (FCF) is de   ned as net cash provided by operating activities less purchases of property, plant, equipment and mine development costs.
FCF Conversion is de   ned as FCF/Adjusted EBITDA. FCF is a non-GAAP    nancial measure and is de   ned and reconciled on page A-4 of this document.
(3) Cash cost of sales per metric ton is a non-GAAP    nancial measure and is de   ned and reconciled on page 82 of the Annual Report on Form 10-K for
the year ended December 31, 2023.
(4) Return of capital to stockholders includes special dividends and regular quarterly dividends.

Dear Fellow Stockholders,
The close of the 2023 fiscal year reflected the culmination of a highly productive year for
Warrior. It was a year where we made meaningful progress on our strategic priorities to
continue to build significant, sustainable stockholder value, as full year production and sales
volumes returned to levels not seen since 2020. These higher volumes led to another year of
strong cash flow generation, which enabled us to fund an all-time record high amount of capital
expenditures and mine development costs. Additionally, these strong cash flows allowed us to
fund the Blue Creek growth project directly from cash from operations and reduce our debt by
nearly 50%.
We are proud of Warrior   s many achievements this year, including:




Achieved strong net income $478.6 million, or $9.20 per diluted share, and Adjusted
EBITDA of $698.9 million;
Strong operational performance that included a 34% increase in sales volumes and a
21% increase in production volumes, run rates not seen since 2020, and record high
annual production from Mine 4;
Generated $701.1 million of cash from operations during 2023, enabling an all-time
record high amount of capital expenditures and mine development costs of $524.8
million, all in furtherance of the growth of the business, and the early retirement of
$162.4 million of senior secured debt;
Made excellent progress in developing the world class Blue Creek Mine, which remains
on schedule, and invested $319.1 million in Blue Creek for the full year;
Increased the return of capital to stockholders by raising the quarterly dividend 17% for
the second consecutive year and returning excess cash to stockholders in a
discretionary special dividend of $0.88 per share; and
Remained focused on our environmental, social and governance (   ESG   ) initiatives,
which are highlighted by the achievement of a 13% reduction in total Scope 1 and
Scope 2 greenhouse gas (   GHG   ) emissions and a 16% reduction in methane
emissions in 2022 as compared to the 2021 baseline measurement.
Our successes in 2023 reflect the strength of our steelmaking coal assets. Warrior   s proven
business model is based on realizing premium pricing for our high-quality products while
maintaining a low and variable cost structure, which generates some of the highest margins and
free cash flow in the industry.
Blue Creek Development
We are proud of the progress we have made to date on the Blue Creek growth project. During
2023, we invested $319.1 million on the development of the Blue Creek reserves, which brings
the project to date spending to approximately $366.0 million. The progress to date has been
focused on the construction of the preparation plant, mine belt structure, bath house,
warehouse, production slope, service shaft and ventilation shaft. During 2023, we also initiated
an important and highly beneficial project scope change that will require incremental capital
expenditures of $120.0 to $130.0 million over the life of the project in order to lower operating
costs, increase flexibility to manage risks, and make better use of multi-channel transportation
methods. While we originally planned on a single channel to transport coal from the Blue Creek
mine via an overland belt to a third-party owned and operated barge loadout facility, we now
plan to build a belt conveyor system to a railroad loadout to transport the majority of the coal.

This new transportation plan is expected to de-risk a single channel to market, lower operating
costs and move steelmaking coal volumes faster to the port. We will also build and operate the
barge loadout ourselves rather than utilizing a third-party provider. During 2023, we began the
development of the rail and barge loadout sites. The project remains on schedule, and we
expect our continuous miner units to begin development in the second half of 2024.
Sustainability and Corporate Responsibility
Safety remains at the center of everything we do, and we are focused on creating the safest
environment possible for everyone who enters our facilities. We have been a leader in safety
performance, as supported by our safety incidence rate that has consistently outperformed the
U.S. industry average for underground mining by over 20%. In 2023, our total incidence rate
was 1.90, which was 57% lower than the national total reportable incidence rate for all
underground coal mines in the U.S. of 4.39 for the nine months ended September 30, 2023
(representing the most recent information available).
Under the leadership of our Board of Directors and the Sustainability, Environmental, Health
and Safety Committee, we are committed to operating in a sustainable manner and being a
responsible corporate citizen. Our leadership is focused on establishing measurable
sustainability goals and providing detailed information about our initiatives and progress to our
stockholders. We made great progress toward our achievement of a 50% reduction in GHG
emissions by 2030. We achieved a 13% reduction in total Scope 1 and Scope 2 GHG
emissions and successfully captured and collected approximately 69% of the methane
produced in our mines, resulting in a 16% reduction in methane emissions as compared to the
2021 baseline measurement. In 2022, we also announced a three-phase water efficiency and
optimization plan that provides an actionable pathway to meet our goal of reducing water usage
by 25% by 2030. We reached several milestones in 2023 on our way to achieving this goal,
including the installation of a new wireless monitoring system which allows for constant readings
of water information across several sites, the selection of a new Environmental Management
Information System software which will enhance our ability to track and manage environmental
performance, and the completion of our state-of-the-art dry slurry system two years ahead of
schedule.
We understand that sustainability is a journey and not a one-time effort. As we have made
consistent improvements over recent years, we have identified additional areas that we expect
to give further attention to in the future. For more details, see our 2023 Corporate Responsibility
Report in the    Sustainability    section of our website at www.warriormetcoal.com.
Capital Allocation
We remain committed to our capital allocation strategy that is designed to accelerate returns to
stockholders through regular quarterly dividends, special cash dividends, and stock
repurchases, and also to unlock the value of our transformational growth investment in the Blue
Creek growth project. During 2023, we demonstrated this ongoing commitment to returning
capital to our stockholders, paying a regular quarterly dividend of $0.07 per share, an increase
of approximately 17% compared to 2022, and a special dividend of $0.88 per share. Our
approach to capital allocation balances value-enhancing capital investments for medium to longterm growth with near-term returns to stockholders.
Conceptually, our approach to capital allocation continues to focus on the following principles:




Ensuring the business has the funding to maintain operations, uninterrupted, and make
necessary capex investments in the mines regardless of any potential volatility in the
price of met coal;
Maintaining the ability to invest in projects, like Blue Creek, or in highly accretive
inorganic opportunities that can deliver significant stockholder value over the mediumand long-term; and
Leveraging free cash flow to return increasing amounts of capital to stockholders via
increases in the quarterly dividends, as met coal prices allow, paying one or multiple
special cash dividends, as appropriate, and repurchasing our stock. The return of capital
to stockholders will be dependent upon business and market conditions, future financial
performance, and other strategic investment opportunities, and is subject to unexpected
increases in inflation and other events that are outside of our control.
Focusing on the Future
We enter 2024 with great optimism as we expect another strong operational year for Warrior
driven by strong customer demand and increased sales volumes. While we expect inflationary
costs in the mining sector will continue to persist and are expected to increase our costs in
2024, we believe that Warrior   s ability to increase production with a low cost structure base and
our ability to capitalize on robust demand in a variable steelmaking coal price environment will
enable us to continue to generate strong margins and cash flows.
We also remain focused and disciplined on the development of the Blue Creek project. We
expect another year of high capital spending on the project ranging from $325.0 million to
$375.0 million, which can be funded out of cash on our balance sheet if markets deteriorate in
2024. We remain on track for the first development tons from continuous miner units in the
second half of 2024 and the longwall is scheduled to start up in the second quarter of 2026. This
development will reinforce Warrior   s position as the premier U.S. pure-play producer of premium
steelmaking metallurgical coal. The Blue Creek project is expected to generate significant
stockholder value which will become evident as we approach the production start date of the
mine, as we believe the lack of capital investments in the mining industry over the last ten years,
combined with ongoing inflationary pressures, will result in higher premium steelmaking coal
prices in the future.
I want to thank our employees for their dedication and hard work over the last year. The
milestones reached in 2023 pave the way for the next phase of growth for Warrior. I would also
like to express my gratitude to the Board for its continued guidance and support.
Finally, I want to sincerely thank our stockholders for believing in Warrior. On behalf of the
entire management team, I look forward to building on our success.
Sincerely,
Walter J. Scheller, III Chief Executive Officer




shareholder letter icon 3/14/2024 Letter Continued (Full PDF)
 

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