Warrior Met Coal (NYSE:HCC) said 2025 marked a “transformative year” as the company began longwall production at its Blue Creek mine in the fourth quarter, eight months ahead of schedule, on budget, and funded entirely from operating cash flows. Management said the early start and a smooth ramp-up helped drive record quarterly and full-year sales and production volumes despite what executives described as still-weak global steelmaking coal market fundamentals.
Blue Creek ramps early, reshaping volumes and cost profile
Chief Executive Officer Walt Scheller said the Blue Creek longwall started production during the fourth quarter and delivered “a strong operating performance,” reaching a quarterly run-rate that supports higher 2026 volume guidance. Blue Creek produced 1.3 million short tons in the fourth quarter, exceeding expectations, and the company sold 881,000 tons of Blue Creek steelmaking coal, primarily contractual volumes into Asia.
Warrior ended the year with coal inventories of 1.6 million short tons, up from 1.1 million tons at the end of September, which management attributed to the early Blue Creek longwall start-up. Given expectations for continued weak market conditions in 2026, the company said it plans to begin 2026 with Blue Creek production of about 4.5 million short tons and sell down excess inventory before ramping higher in line with additional contractual volumes.
Market and pricing: higher indices, lower realization
Scheller said the fourth-quarter steelmaking coal market remained challenged by factors that have pressured the sector for the past two years, including record Chinese steel exports and softer Chinese crude steel production. He pointed to India as a bright spot, citing more than 6% pig iron production growth in 2025.
Warrior’s primary index, PLV FOB Australia, averaged $182 per short ton in the fourth quarter, the highest quarterly average of 2025 and up 9% from the third quarter. The Australian LVHCC index averaged $154 per short ton, up 13% sequentially, while the U.S. East Coast HVA index averaged $135 per short ton, down 4% from the third quarter.
Despite the improvement in key indices, Warrior’s gross price realization fell to 75% in the fourth quarter from 83% in the third quarter. Management attributed the decline to a combination of factors:
- A higher sales mix of High Vol A coal (up 8%).
- More volume sold into the Pacific Basin (up 18% sequentially), with elevated freight rates.
- Temporarily higher demurrage costs due to longer vessel loading queues tied to ship loader modernization at the terminal.
- Continued elevated freight rates into the Pacific Basin.
Over the long term, the company said it expects annual gross price realization of roughly 80% to 85% assuming index relativities revert to historical averages, though management cautioned that may not be achievable in 2026 until supply-demand conditions balance more evenly across regions. Scheller added that while Blue Creek’s product mix could influence average net selling price, the mine’s “significantly lower cost structure” is expected to more than offset that and support margin expansion.
Fourth-quarter financial results: higher volumes and lower costs lift earnings
Chief Financial Officer Dale Boyles said fourth-quarter 2025 adjusted EBITDA was $93 million, up 31% from the third quarter, driven primarily by a 22% sequential increase in sales volume and a $7 per ton reduction in cash costs, partly offset by a $6 per ton decline in average net selling price. Operating cash flow was $76 million, down $29 million from the third quarter due to higher working capital (accounts receivable and inventory) associated with the Blue Creek ramp.
Compared with the fourth quarter of 2024, Warrior posted net income of $23 million, or $0.44 per diluted share, versus net income of $1 million, or $0.02 per diluted share, a year earlier. Adjusted EBITDA rose to $93 million from $53 million, and adjusted EBITDA margin increased to 24% from 18%. On a per-ton basis, adjusted EBITDA margin increased to $32 per short ton from $28.
Revenue in the fourth quarter was $384 million versus $297 million in the prior-year quarter. Boyles said the increase was primarily driven by higher sales volumes, partially offset by lower average gross selling prices, a higher mix of High Vol A tons, and $6 million more in demurrage and other charges. Average net selling price was $130 per short ton in the quarter, down from $155 per short ton in the fourth quarter of 2024.
Cash cost of sales per short ton (FOB port) declined to about $94 from $120 in the prior-year quarter. Boyles attributed the reduction to lower spending at legacy mines, lower variable transportation and royalty costs, and the incremental sales of lower-cost Blue Creek tons.
Capital spending, liquidity, reserves, and 2026 outlook
Warrior invested $69 million of capital expenditures in the fourth quarter and $240 million for full-year 2025 in the Blue Creek project, bringing total project spending to $957 million. Management reiterated the total project estimate remains $995 million to $1.075 billion, with remaining spending expected by the end of the first quarter of 2026. The company said the remaining work—such as finishing the barge loadout, rail loadout storage, and site infrastructure—should not affect production.
Boyles said fourth-quarter free cash flow was negative $28 million, reflecting $76 million in operating cash flow and $104 million of capital expenditures and mine development. He added that with the longwall now operating, the company does not expect to incur mine development costs in 2026.
At quarter end, total available liquidity was $484 million, including $300 million in cash and cash equivalents, $43 million in short-term investments, and $141 million available under the company’s ABL facility.
For 2026, management said it expects steelmaking coal markets to be generally consistent with 2025, though both Scheller and Boyles described recent elevated pricing as linked to temporary supply disruptions, including Australian weather impacts and mine production challenges. Boyles said the company’s guidance uses a PLV price assumption range of $185 to $215 per short ton. The company expects significantly higher sales and production in 2026, with contracted volumes at about 90% of total sales volume. Sales guidance is about 500,000 tons higher than production guidance to reduce inventory to a target level just below 1 million short tons.
Boyles said Warrior expects to spend the remaining $50 million to $75 million of Blue Creek construction capex in the first quarter of 2026. From a cash-flow standpoint, management expects the first half of 2026 to be free cash flow negative due to working capital needs and the final Blue Creek capital outlays, with free cash flow turning positive in the second half. On taxes, Boyles said outcomes depend on pricing and noted the 45X credit begins in 2026, which the company has said represents about a $40 million benefit; under its price assumptions, he said the company “might not be a cash taxpayer” in 2026.
On capital returns, executives said returning cash to shareholders becomes a priority once Blue Creek is complete, with Boyles indicating the company expects to begin returning cash in the near future depending on pricing. He described potential avenues including a higher fixed quarterly dividend supplemented by special dividends and “maybe some selective stock buybacks.” Boyles also said the company would consider buybacks in a lower-price environment if it had cash on the balance sheet.
About Warrior Met Coal (NYSE:HCC)
Warrior Met Coal (NYSE: HCC) is a leading producer of premium metallurgical coal, operating deep underground mining complexes in Central Alabama’s Blue Creek and Brookwood mining districts. The company focuses exclusively on the extraction and sale of high-grade hard coking coal, a critical raw material used in steel production. Its mining operations harness longwall mining technology and rigorous safety protocols to deliver consistent coal quality to customers worldwide.
Warrior Met Coal’s product portfolio centers on premium hard coking coal, semisoft coking coal, and pulverized coal injection (PCI) products.
