Warrior Met Coal Inc. reported a net income for the second quarter of 2022 of $297 million, the company’s third consecutive quarter of record quarterly net income. “We continue to realize the benefits of our premium met coal assets and efficient business model, setting new quarterly records in a number of different financial metrics, including revenue, adjusted net income and cash flow from operations,” said Warrior CEO Walt Scheller. “Our mining capabilities and assets, combined with our strategically accumulated inventory, enabled us to take advantage of the macro tailwinds this quarter, capturing strong demand from customers in what has been a high, albeit volatile, pricing environment. We are particularly proud of our ability to manage through shipment delays relating to port maintenance, the lack of available rail transportation and port congestion as well as the impact of significant inflation on costs to deliver these results.”
The Alabama-based coal operator produced 1.7 million tons of met coal in the second quarter of 2022 compared to 1.2 million tons in the second quarter of 2021. This was the result of running two longwalls and five continuous miner units at Mine No. 7 and one longwall and three continuous miner units at Mine No. 4. Sales volume in the second quarter of 2022 was 1.5 million tons compared to 1.8 million tons in the second quarter of 2021. Inventory levels rose to 735,000 tons at the end of June 30, 2022, up from the 601,000 tons at the end of the first quarter of 2022 primarily due to shipment delays resulting from port maintenance, lack of railcar availability and port congestion in the second quarter.
Total revenues were $625.2 million for the second quarter of 2022, including $623.3 million in mining revenues, which consisted of met coal sales of 1.5 million tons at an average net selling price of $403.95/ton, net of demurrage and other charges. This compares to total revenues of $227.4 million in the second quarter of 2021. The average net selling price of the company’s met coal increased 227% from $123.36/ton in the second quarter of 2021 to $403.95/ton in the second quarter of 2022.
Cost of sales for the second quarter of 2022 were $191.1 million compared to $152.8 million for the second quarter of 2021. Transportation and royalty costs increased 140% in the second quarter of 2022 compared to the same period last year due to the higher met coal average net selling prices. Inflation accounted for an approximately $4/ton impact during the second quarter of 2022 due to increases in the costs of diesel, fluids, belt structure, roof bolts, cable, magnetite, rock dust and other supplies, plus labor and parts on repair and rebuilds.
“With our business having shown the ability to take advantage of strong pricing cycles and also withstand turbulent economic periods with disciplined expense management, we are well-positioned, despite global headwinds, heading into the second half of the year,” Scheller said.
Warrior updated its production guidance for the full year 2022 to 5.5 – 6.5 million tons with longwall moves planned for the third and fourth quarters. In addition to sustaining capital spending of approximately $75 – $80 million, the company plans to spend $110 – $120 million for the 4 North portal construction, deposits on two new sets of longwall shields and the development of the Blue Creek project for which the company has also budgeted $45 million for 2022.
