Q4 2024 Warrior Met Coal Inc Earnings Call
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 fourth quarter 2024 financial results conference call
Wyatt: 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.
Wyatt: Forward looking statements by their nature address matters that are to different degrees uncertain.
Wyatt: These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the FCC may cause our actual future results to be materially different from those expected in our forward looking statements.
Wyatt: 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.
Wyatt: For more information regarding forward looking statements. Please refer to the company's press releases and SEC filings.
Wyatt: We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures.
Wyatt: Our fourth quarter press release furnished to the SEC on form 8-K, which is also posted on our website.
Wyatt: Additionally, we will be filing our Form 10-K for the year ending December 31, 2024 with the SEC. This afternoon.
Wyatt: You can find additional information regarding the company on our website at Www Dot warrior met coal Dot com.
Wyatt: Which also includes a fourth quarter supplemental slide deck that was posted this afternoon.
Waltz: Today on the call with me are Mr. Waltz, Schiller, Chief Executive Officer, and Mr. Dale Boyles, Chief Financial Officer.
Wyatt: After our formal remarks, we will be happy to answer any question.
Speaker Change: With that I will now turn the call over to Walt.
Walt: Thanks, Andre Hello, everyone and thank you for taking the time to join US today to discuss our fourth quarter 2024 results.
Walt: After my remarks, Dale will review our results in additional detail and then you'll have the opportunity to ask questions.
Walt: Looking at the fourth quarter, we were pleased with how the company performed despite the current market fundamental headwinds.
Dale: Our strong operational base continued to differentiate warrior driving sales volumes, 23% higher and production volumes, 7% higher than last year's fourth quarter.
Dale: When high quality steelmaking coal prices recover from this past quarter, where they reached the lowest level since 2021, where you are as well positioned to capitalize on improved market dynamics.
Dale: Looking back over the last 12 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 for mine four and produced the first tons from our World Class Blue Creek grow.
Dale: Project.
Dale: We generated cash from operations of over $367 million, which was used to both further the development of Blue Creek and returned over $43 million of cash to stockholders via dividends.
Dale: I'd like to thank all our employees for the successes, we achieved in 2024 and congratulate them on delivering strong safety results.
Dale: The safety of our employees is and remains our number one priority.
Dale: 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.
Dale: In fact, the markets became weaker over the entire year, reaching their lowest points in the fourth quarter.
Dale: The primary factors impacting our markets continued to be driven by a confluence of three factors.
Dale: Excess Chinese steel exports into our customers' markets.
Dale: Weak demand and an ample supply of steel making calls.
Dale: These factors impacting our markets appear to be well entrenched persisting for the entirety of the fourth quarter and into the beginning of 2025.
Dale: Our customers remain focused on cost control and profitability due to low global steel prices and thin margins negatively impacting their results.
Dale: These market factors in addition to the ample supply and availability of steelmaking coal's have kept all of our pricing industries under pressure in a challenged our profitability.
Dale: Prices at these levels are especially challenging for other steelmaking coal producers higher on the cost curve than we are.
Dale: Even the recent mind fires in this sector have had only an insignificant impact on seaborne pricing.
Dale: Our cost discipline continues to be a key differentiator for us in this environment.
Dale: Our primary index the P. L D F O B, Australia ended the fourth quarter at $178 per short ton, which was $7 per ton lower than the end of the third quarter.
Dale: And averaged $184 for the fourth quarter.
Dale: The P. L D C F. Our China index ended the fourth quarter to $180 per short ton and averaged $193 for the fourth quarter.
Dale: Similar declines were observed with the Platts L V. HCC index for a high vol. A product sold primarily into Asia.
Dale: Which ended the year at $141 per short ton.
Dale: We achieved a gross price realization of 86% for the fourth quarter and 89% for full year, 2024, which was a function of product mix geography tariffs and freight rates.
Dale: According to the World Steel Association monthly report global Pig Iron production decreased by one 8% in 2024 as compared to the prior year.
Dale: Pig iron production in China, which is the world's largest production region fell by two 3% for the same period.
Dale: The rest of the world's pig iron production experienced a more modest decline of <unk>, 7% for the full year.
Dale: India remains a bright spot with a growth rate of four 4% and is expected to continue growing with new blast furnace capacity expected to come online this year.
Dale: Several other regions also experienced growth for the period, such as Brazil, and certain European countries.
Dale: However, the gains were offset by declining production from Japan, and South Korea.
Dale: Now, let me turn back to our fourth quarter results and importantly, our strong sales volume was driven by better production volumes from the existing mines.
Dale: Our fourth quarter sales volume was $1 9 million short tons compared to $1 5 million short tons in last year's same quarter.
Dale: Our sales by geography in the fourth quarter breakdown as follows.
Dale: 38% into Asia, 36% into Europe, and 25% and South America.
Most of the sales into Asia in the fourth quarter were to customers in Japan, China and India.
Dale: As we've previously noted demand from the Asian steel producers has been growing resulting in higher sales to that geography.
Dale: While sales from our traditional markets in Europe, and South America remain lower primarily due to weak spot market opportunities.
Dale: This shift in sales by geography, as 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.
Dale: Most of that shift sales from sales into Europe, which decreased from 56% in last year's fourth quarter, 36%. This year.
Dale: Our spot volume was 17% in the fourth quarter 2024, which was primarily sold into the Asian markets.
Dale: This result marks the fourth consecutive quarterly decrease in spot volume sales during 2024, coinciding with a decline in <unk> pricing index for.
Dale: For the full year, our spot volume was 27% of total sales volume.
Dale: Production volume in the fourth quarter was $2 1 million short tons compared to 2 million short tons in the same quarter 2023.
Dale: <unk> four had an outstanding year and reached a new.
Dale: Record high annual production volume of $2 8 million short tons for the year.
Dale: In addition, our continuous miner units at our newly developed Blue Creek mine produced 170000 short tons during the fourth quarter, which.
Dale: Which is included in the quarterly total.
Dale: The combination of our existing mines, continuing to perform well and production of 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 915000 short tons at the end of the third quarter, primarily due to the Blue Creek production volume.
Dale: During the fourth quarter, we spent $142 million on Capex and mine development of that amount capex spending totaled $131 million.
Dale: Mine development costs for the Blue Creek project were $11 million during the quarter.
Dale: Now the way it started developing the first longwall panel of 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.
Dale: Looking further at the transformational Blue Creek growth project, we continue to make excellent progress while remaining on budget.
Dale: Our excitement for the project is increasing as we move closer to starting the longwall production.
Dale: As we've previously disclosed production began in the third quarter on time as expected.
Dale: By the end of the fourth quarter, we commenced two additional continuous miner units for a total of three of Blue Creek and produced 209000 short tons for the year.
Dale: In the fourth quarter, we continued to make strong progress by building out the surface infrastructure of Blue Creek.
Dale: We completed the installation of the clean coal silos at the railroad out began construction on the dry slurry processing system.
Dale: Considerable progress on our preparation plant.
Dale: The overland clean coal belt, and the barge load out we.
Dale: We invested over $104 million in the fourth quarter and the continued development of Blue Creek.
Dale: Which brings the full year 2020 for project investment to $350 million.
Dale: As of year end, the total project investment to date, and the $717 million, which has been 100% funded from internally generated cash flows from the existing operations.
Dale: Yeah.
Dale: The project team continues to do an excellent job of managing the capital spending and staying on schedule.
Dale: All remaining key development progress milestones remain on track.
Dale: We started to take delivery of the longwall shields and we expect to have all shields onsite in the first half of 2025.
Dale: In addition, all major preparation plant equipment is onsite awaiting installation.
Dale: The preparation plant is expected to be completed in the middle of 2025.
Dale: After the preparation plant starts up we expect to begin selling Blue Creek steelmaking coal in the second half of 2025.
Dale: We were incredibly pleased to start two additional monitoring units of Blue Creek by the end of the fourth quarter as scheduled.
Dale: 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 monitoring units.
Dale: As we continue to ramp up continuous monitor 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 start no later than the second quarter 2026.
Dale: Despite the current weak market conditions, we believe we have sufficient liquidity on hand to complete the project.
Dale: Main focus on tight capital spending discipline until the very end of the project.
Dale: The total of $717 million invested in the development of Blue Creek to this point, there's more than two thirds of the expected total project capital expenditure.
Dale: And this spending has been 100% funded from internally generated cash flows.
Dale: 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.
Dale: Yes.
Dale: Blue Creek represents one of the last remaining untapped premium high quality high vol. A coal reserves in the U S.
Dale: And we anticipate our KOL will generate strong margins.
Dale: 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.
Dale: Since we launched the project back in 2022, there've been significant improvements to the project scope inflationary cost increases and changes in the outlook for steelmaking coal prices.
Dale: We expect to provide an update on the original long term project economics in the near future.
Dale: That we expect will demonstrate significant value creation for our stockholders from Blue Creek.
teo: I'll now ask Teo to address our fourth quarter results in greater detail.
Thanks wall, while we continued to experience weak market fundamentals and 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.
teo: We capitalize 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.
teo: 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.
teo: Excluding our investment in Blue Creek Capex in mine development, our free cash flow was $28 million in the fourth quarter and $261 million for the year 2020 for demonstrating the strength of our business model.
Speaker Change: For the fourth quarter of 2020 for Warrior recorded net income on a GAAP basis of $1 $1 million or two cents per diluted share compared to net income of $129 million or $2 47 per diluted share in the same quarter of 2023.
Speaker Change: non-GAAP adjusted net income for the fourth quarter, excluding the nonrecurring business interruption expenses and noncash valuation adjustments was <unk> 15 per diluted share.
Speaker Change: This compares to adjusted net income of $2.49 per diluted share in the same quarter of 2023.
Speaker Change: These decreases in quarter over quarter comparisons were primarily driven by a 34% lower average net selling prices, partially offset by 23% higher sales volume.
Speaker Change: We.
Speaker Change: <unk> adjusted EBITDA of $53 million into 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.
Speaker Change: On a per ton basis, our adjusted EBITDA margin was $28 per short ton in the fourth quarter as compared to $107 last year.
Speaker Change: As I previously mentioned these decreases quarter over quarter were primarily driven by 34% lower average net selling prices, partially offset by 23% higher sales volume.
Speaker Change: In addition, there were other smaller factors in the fourth quarter that made our results lower than the same quarter last year.
Speaker Change: First our sales volume mix was 8% higher of highball lay for mine four versus low vol. For mine seven in the fourth quarter of 2024 compared to the same quarter last year.
Speaker Change: Normally sales mix has minimal impact on our overall results.
Speaker Change: However, the wider than normal relativity of highball, a pricing to the POB pricing into Asia, and as timing impact on our fourth quarter results.
Speaker Change: This higher sales mix of mine for high Vol a product.
Speaker Change: Which has a lower average net selling price compared to the average net selling price of the premium low vol product at mine seven.
Lowered our adjusted EBITDA and pretax income by approximately $9 million.
Speaker Change: Secondly, we incurred a noncash increase in the valuation adjustment of our legacy black lung liabilities of $7 million, a noncash charge for higher stock compensation expense of $3 million in.
Speaker Change: In noncash charges for mark to market losses on our gas hedges of $2 million.
Speaker Change: These last three items lowered our pre tax income and were add backs to adjusted EBITDA.
Speaker Change: Total revenues were $297 million in the fourth quarter of this year compared to $364 million in fourth quarter of 2023.
Speaker Change: 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.
Speaker Change: Demurrage and other charges with $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.
Speaker Change: Compared to $235 per short ton in the same quarter of last year.
Speaker Change: Cash cost of sales in the fourth quarter of 2024 was $226 million were 77% of mining revenues compared to $185 million or 51% of mining revenues in the fourth quarter of last year.
Speaker Change: Of the $41 million net increase in cash cost of sales.
Speaker Change: $43 million of the increase was driven primarily by the 23% increase in sales volumes.
Speaker Change: This was partially offset by a $2 million decrease in spending largely due to lower variable transportation and royalty cost on steel lower steelmaking coal prices.
Speaker Change: These lower costs were mostly offset by higher production costs for employee wages and incentives associated with the higher head count and higher supply and maintenance cost.
Speaker Change: 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.
Speaker Change: The decrease was primarily related to the lower variable transportation and royalty cost on lower steelmaking coal prices.
Speaker Change: All setting the higher production costs for employee wages and incentives associated with a higher head count higher mine supplies and higher maintenance costs driven by the higher production volumes.
Speaker Change: 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.
Speaker Change: Our cash cost of production for the fourth quarter of 2024 was 68% of our total cash cost per short ton.
Speaker Change: Impaired to 61% in the same quarter last year.
Speaker Change: Overall transportation and royalty cost with 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.
Speaker Change: 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.
Speaker Change: SG&A expenses were about $18 million or five 9% of total revenues in the fourth quarter of 2024 and were higher than the fourth quarter of last year, a three 6%.
Speaker Change: This was primarily due to an increase in employee related stock compensation expenses.
Speaker Change: Depreciation and depletion expenses 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.
Speaker Change: 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.
Speaker Change: Our interest expense was lower due to the capitalization of interest related to the development of Blue Creek.
Speaker Change: Our effective income tax rate for the full year 2024 was approximately 12% compared to 13% in 2023.
Speaker Change: Turning to cash flow during the fourth quarter of 2020 for free cash flow was a negative $88 million.
Speaker Change: This was the result of cash flows generated by operating activities of $54 million less cash used for capital expenditures and mine development of $142 million.
Speaker Change: Of which $116 million were related to blueprint.
Speaker Change: Our total available liquidity at the end of the fourth quarter of 2024 was $655 million and consisted of cash and cash equivalents of $491 million short and long term investments of $50 million.
Speaker Change: And $114 million available under our ABL facility.
Now, let's turn to our outlook and guidance for the full year 2025.
Speaker Change: 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.
Speaker Change: In addition, any new tariffs or trade wars could put additional pressure on seaborne pricing.
Speaker Change: Despite these expected market conditions, we have a favorable operational performance outlook for 2025.
Speaker Change: With both higher sales and production volumes anticipated.
Speaker Change: 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 and the Atlanta.
Speaker Change: We will continue to pursue our successful strategy of focusing on contracted customers with value added spot activity.
Speaker Change: Our ending 2025 with a strong contracted volume of approximately 85%.
Speaker Change: Spot volume of 15%.
Speaker Change: The expected increase in production at Blue Creek combined with the expected Blue Creek sales volumes in the second half of the year, we will have a negative impact on our overall working capital throughout 2025.
Speaker Change: Due to higher inventories and higher accounts receivable.
Speaker Change: We expect to produce and sell approximately 1 million short tons of high vol. A from the new mine in 2025.
Speaker Change: Which has been included in our guidance targets.
Now that we've already invested over $717 million into capital expenditures for Blue Creek, the spending in 2025 and 2026.
Speaker Change: Steps down dramatically and is expected to be very manageable out of the existing cash and available liquidity.
Walt: I'll now turn it back to Walt for his final comments.
Walt: Thanks Dale.
Walt: Given the macroeconomic factors, we've tempered our expectations of any meaningful improvement in our markets and believe the current conditions may persist for a prolonged duration.
Walt: Bring a meaningful change in the Chinese steel exports or supply global seaborne steelmaking coal's.
Walt: The challenging steel enrollment cereal market conditions in China are expected to extend into the seaborne market.
Walt: Which we expect to weigh on steelmaking coal prices.
Walt: On the supply side, we expect Australian production to remain strong absent some major disruption event.
Walt: Without a change in market fundamentals, we would expect supply adjustments to be the logical response.
Walt: But history tells us that these decisions are far from being easy and are often delay as long as possible extending the market dynamics for longer periods of time.
Walt: In addition, any new tariffs or other trade measures that may be implemented by the United States, where retaliatory tariffs and trade measures by other countries such as those recently announced by China may or may not negatively impact our financial results.
Walt: This impacted resolved from reduced economic growth changes in purchasing behaviors by our customers.
Walt: Material changes in the pricing of steelmaking coal's or other factors.
Walt: We believe the 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.
Walt: We're prepared to meet these market challenges for an extended period.
Walt: We've built our company to thrive in most market price environment with strong customer contractual relationships high quality products that realize premium prices.
Walt: Low and variable cost structure, and a strong balance sheet.
Walt: In addition, we had the remaining capital needed to fund the completion of the Blue Creek project with cash on our balance sheet and we do not expect to slow down or suspend that project. If these market conditions continue to persist for a prolonged period of time.
Walt: We are a nimble operational structure with healthy inventories that can respond quickly to improving market conditions should they return near term.
Walt: Now, let me wrap up our prepared remarks with a few comments on our Blue Creek growth project.
Walt: We expect to be 2025 to be an extraordinarily successful year as we near completion of key milestones on schedule and on budget, which I previously mentioned that we anticipate will enable the mine to further ramp up production volume after the longwall starts in 2026.
Walt: Between now and the start of the Longwall Blue Creek, we expect to hire 250 to 300 people.
Walt: With the addition of those people, we expect to drive continuous monitor production to approximately 1 million short tons. They expect to sell approximately that same amount in the second half of this year.
Walt: With more than two thirds of the capital already spent on the project, we believe the risk of exceeding our targeted range is low.
Walt: This should free up cash flows for other purposes during 2025 and beyond.
Walt: We continue to expect our Blue Creek will be a significant and exciting driver over the next stage of growth when global steel prices rebound.
Walt: With that we'd like to open the call for questions operator.
Speaker Change: Thank you at this time I would like to remind everyone that to ask a question. Please press Star then the number one on your telephone keypad.
Walt: Pause for just a moment to compile the Q&A roster.
Walt: Okay.
Speaker Change: And your first question comes from the line of Nick Giles with B Riley. Please go ahead.
Nick Giles: Thank you operator, and good afternoon, everyone.
Speaker Change: Well I want to congratulate you on the continued strong production, particularly at minus four.
Speaker Change: <unk> sales guidance appears robust and so I was wondering if you could break out the contribution from blue.
Speaker Change: Blue Creek versus mine, four and minus seven and then as we think about the prep plant coming online in the second half how should we think about cadence of those sales and your level of confidence in achieving our realizations in line with your typical guidance. Thanks a lot.
Speaker Change: Thank you well what we're projecting for production this year of Blue Creek. This wall is about 1 million tonnes and without prep plant coming on until the second quarter. We'll then begin moving that coal to market at that point I would expect we will start selling coal in the third quarter, maybe late second quarter, but.
More like the third quarter after that preparation plant comes online and be selling throughout the remainder of the year.
Speaker Change: When we look at how it will what.
Speaker Change: In comparison to mind for me.
Speaker Change: <unk> for a mine in the south probably over 2 million tons, and we'll probably have a million or so out of <unk>.
Speaker Change: Great this year.
Speaker Change: Okay.
Speaker Change: Well thats very helpful.
My second question was just about your you are meaningful reductions in cash cost guidance of $8 per ton at the midpoint.
Speaker Change: I'm curious how much you would attribute to greater fixed cost absorption versus your pricing and sales sensitive cost expectations in any any.
Speaker Change: Cost reductions as well.
Speaker Change: Hey, Nick this is Dale.
Speaker Change: Yes.
Speaker Change: Most of that the lower end of our guidance is going to be because of the lower met coal prices.
Speaker Change: So it's gonna have its effect on transportation and royalties.
Speaker Change: Most so that's that would be driving down that cost guidance.
Speaker Change: As our outlook for this year.
Speaker Change: We don't really expect these market conditions the change very much.
Speaker Change: As far as catalyst, it's kind of hard to identify.
Speaker Change: What that might be so we are preparing ourselves that this would last throughout this year. So we've baked in a low met coal price assumption and to those cost assumptions in that guidance.
Speaker Change: Yeah, I appreciate that and one more if I could you've you've spoken in the past about carefully monitoring freight differentials and so how should we think about your sales by how your sales by geography could shift.
Speaker Change: Particularly any tons that may have otherwise gone to China.
Speaker Change: Well I think those tons that would have gone into China, or so still most likely flow into the Asian market.
Speaker Change: I would still be going CFR.
Speaker Change: So I don't think it would be a big differential in terms of cost of transportation for those tons.
Speaker Change: Understood.
Speaker Change: All the color and continued best of luck.
Speaker Change: Thank you thanks Nick.
Catcher Johnson: And the next question will come from catcher Johnson with BMO capital markets. Please go ahead.
Catcher Johnson: Hi, Thank you for taking my question, maybe just quickly back on the sales shipments so given the currency weak environment and the fact that the.
Catcher Johnson: Blue Creek volume is going to start shipping more in the second half.
Catcher Johnson: Is it fair to say that shipments might be more second half tilted.
Catcher Johnson: Yes, that's right.
Catcher Johnson: If you look at our guidance.
Catcher Johnson: And we've said that million tons for Blue Creek, where the majority of that is going to come in the second half.
Catcher Johnson: 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.
Catcher Johnson: It still stands.
Catcher Johnson: Yes, it does for now with that smaller volume as we get to the higher volumes and a couple of years.
Catcher Johnson: That may change, but right now.
Speaker Change: Based on history, the relativity of the.
Catcher Johnson: <unk>.
Catcher Johnson: Level HCC to the L b.
Catcher Johnson: If you look back at the 10 year historical average through the end of 2024, that's 95% however.
Catcher Johnson: However, in the year 2024 that relativity with 79%. So this year you've had a widening.
Catcher Johnson: Of that relativity.
Catcher Johnson: On that index, but over time, it's much stronger so we could see more in the lower end of that range I think this year as we move forward.
Catcher Johnson: Just one last one if I may.
Catcher Johnson: The 38% that goes that was shipped into Asia can you, let us know how much of that was China.
Catcher Johnson: We don't give information by by country for.
Catcher Johnson: Obviously sensitive competitive purposes.
Catcher Johnson: Just to say that it's not enough to really.
Catcher Johnson:
Catcher Johnson: Make a difference I mean, if we need to reorient that volume we could.
Catcher Johnson: We're not over committed to China.
Speaker Change: Okay. Thank you.
Speaker Change: And the next question will come from Nathan Martin with the Benchmark Company. Please go ahead.
Nathan Martin: Thanks, operator, good afternoon, Walt Dale.
Nathan Martin: Maybe just coming back real quick to the cash cost of sales guidance, the $1 17 to $1 27, a ton delta.
Nathan Martin: Dale you mentioned sure.
Nathan Martin: Youre kind of assuming a low met price in that range could you kind of provide us. What's your are your price assumptions are there.
Nathan Martin: Yes.
Nathan Martin: Rooming PLD up 200 for the year.
Nathan Martin: So better than low 200 day.
Nathan Martin: We're not going to over commit to a higher <unk>.
Nathan Martin: Higher price throughout the end of the year.
Speaker Change: Okay perfect that's helpful.
Speaker Change: I also wanted to ask on the inventory.
Tori front, obviously growing here, probably the next two quarters or for the prep plant starts up of Blue Creek.
Speaker Change: Is there any kind of level you guys are targeting for year end 2025 at this point.
We would like to get.
Speaker Change: Inventory levels back to a normalized range.
Speaker Change: I would say that that's probably a couple of hundred thousand will come down.
Speaker Change: But Don will couple hundred thousand tons per mine you have to remember until until later in the year. The we won't be able to move high percentages of Blue Creek.
Speaker Change: Continue to finish up different pieces of the project.
Speaker Change: We definitely expect that to come down considerably in the third and fourth quarter.
Okay, well, thanks for that and then speaking of moving those tons.
Speaker Change: How are things coming along with the overland belt structure, there for Blue Creek.
Speaker Change: Well everything is going very well on on time on budget.
Speaker Change: We're very pleased with the progress we're making across the project.
Speaker Change: And everything going well through rail partners as well.
Dave: Yes, yes, Dave.
Dave: I'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.
Dave: Even when the best not ready yet more trucking some coal from the preparation plan over the rail load out we'll begin moving cold and so they'll have several months where they'll.
Dave: They'll get to figure out if there is any weaknesses in their system that need to be firmed up. So I think we haven't really good plan to have a set up by the time that longwall starts we should be in great shape.
Dave: The port the rail and the coal mine.
Speaker Change: Okay, Great to hear and then maybe just one more I noticed.
Speaker Change: In the release today under the capital allocation section some additional commentary specifically optimizing your capital structure, while allowing flexibility to pursue various selective strategic growth opportunities.
Speaker Change: You guys have had that language in your Q, but was just wondering what was behind the decision to kind of bring up front and center to the press release.
Speaker Change: Actually that's been in our press release for lag.
Speaker Change: 234 years.
Speaker Change: So it's just to caveat look we're not committed to a specific.
Speaker Change: Method, there or quarter are timing so.
Speaker Change: That's pretty much been there for a long time.
Speaker Change: All encompassing.
Speaker Change: Okay, Great deal I appreciate it guys best of luck in 'twenty five.
Speaker Change: Thank you.
Speaker Change: And the next question comes from again, Nick Giles with B Riley. Please go ahead.
Speaker Change: Nick Your line may be muted.
Nick Giles: Sorry about that thank you so much for taking my follow up.
Speaker Change: And 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.
Speaker Change: No that's related to the fact, we still have not reached a new contract with the United Mine workers.
Speaker Change: Continue to negotiate.
Speaker Change: And.
Speaker Change: I'm not sure what the resolved, but what that would look like if we did complete it.
Speaker Change: 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.
Speaker Change: A minimum cash balance in the context of potential increases in shareholder returns.
Nick Giles: Hi, Nick Yes, we are working on that as we get closer to having Blue Creek online right, we're going to be.
Nick Giles: To get <unk> larger than our volume larger company. So we need to think about what that looks like going forward. We have come to a conclusion, yet, but you know it's going to be significantly more than we've had in the past.
Nick Giles: Just because risk are changing and you know as we've always said being low levered was very important to being successful in this industry.
Nick Giles: Karen a little more cash.
Nick Giles: Probably the way to go in the future.
Nick Giles: But we will have an update on that as.
Nick Giles: As we get real close to Blue Creek coming online.
Nick Giles: Got it I appreciate that detail and keep up the good work.
Speaker Change: Thank you.
Speaker Change: At this time there are no further questions I will now turn the call over to Mr. Schiller for any comments. Please go ahead.
Speaker Change: That concludes our call. This afternoon. Thank you again for joining US today, we appreciate your interest in warrior.
Speaker Change: Thank you and that concludes today's conference. Thank you all for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].