Warrior Met Coal's Profit Plunges 86% Amid Revenue Slide

TL;DR

**Warrior Met Coal's Q3 numbers are a disaster, signaling deep trouble for met coal demand and operational efficiency.**

AI Summary

Warrior Met Coal, Inc. (HCC) reported a significant decline in net income and total revenues for the nine months ended September 30, 2025, compared to the same period in 2024. Net income plummeted by 86.3% to $34.0 million from $249.5 million, while total revenues decreased by 24.6% to $926.1 million from $1,227.8 million. Operating income also saw a drastic reduction, falling from $259.1 million in 2024 to $11.1 million in 2025, a 95.7% decrease. This decline was primarily driven by lower sales, which dropped from $1,208.4 million to $903.4 million. Despite the revenue and income challenges, the company increased its property, plant, and equipment by $213.4 million to $1,762.8 million and deferred mine development costs by $52.2 million to $71.8 million, indicating continued investment in operations. Cash and cash equivalents decreased by $155.0 million to $336.3 million, reflecting reduced operating cash flow and increased capital expenditures. The company continues to negotiate a new Collective Bargaining Agreement, which expired in April 2021, posing an ongoing operational risk.

Why It Matters

This substantial decline in Warrior Met Coal's profitability and revenue signals a challenging period for investors, potentially impacting dividend sustainability and stock performance. The ongoing labor negotiations, with the Collective Bargaining Agreement expired since April 2021, introduce significant uncertainty for employees and operational stability, especially for a company reliant on efficient longwall mining. For customers in Europe, South America, and Asia, consistent supply and pricing could be affected by any operational disruptions. In the competitive metallurgical coal market, HCC's reduced financial performance could weaken its position against global rivals, making it harder to maintain its 'low-cost producer' status.

Risk Assessment

Risk Level: high — The company faces high risk due to a dramatic 86.3% decrease in net income to $34.0 million and a 95.7% drop in operating income to $11.1 million for the nine months ended September 30, 2025, compared to the prior year. This severe financial deterioration, coupled with the ongoing, unresolved Collective Bargaining Agreement negotiations since April 2021, indicates significant operational and market challenges.

Analyst Insight

Investors should consider reducing exposure to HCC given the severe decline in profitability and revenue, coupled with unresolved labor issues. Monitor global steel demand and metallurgical coal prices closely, as these external factors are heavily influencing HCC's performance. Await resolution of the CBA for any potential operational stability improvements.

Financial Highlights

debt To Equity

N/A

revenue

$926.1M

operating Margin

1.2%

total Assets

$2,682.8M

total Debt

N/A

net Income

$34.0M

eps

$0.65

gross Margin

N/A

cash Position

$336.3M

revenue Growth

-24.6%

Revenue Breakdown

Key Numbers

• $34.0M — Net Income (Decreased 86.3% from $249.5M in 9M 2024)
• $926.1M — Total Revenues (Decreased 24.6% from $1,227.8M in 9M 2024)
• $11.1M — Operating Income (Decreased 95.7% from $259.1M in 9M 2024)
• $336.3M — Cash and Cash Equivalents (Decreased from $491.5M at Dec 31, 2024)
• $1,762.8M — Property, Plant and Equipment, net (Increased from $1,549.5M at Dec 31, 2024)
• $71.8M — Deferred Mine Development Costs (Increased from $19.5M in 9M 2024)
• $0.65 — Diluted Net Income Per Share (Decreased from $4.78 in 9M 2024)
• $0.24 — Dividends Per Share (Decreased from $0.74 in 9M 2024)
• $153.2M — Net Cash Provided by Operating Activities (Decreased from $313.2M in 9M 2024)
• $305.9M — Net Cash Used in Investing Activities (Decreased from $395.8M in 9M 2024)

Key Players & Entities

• Warrior Met Coal, Inc. (company) — registrant
• New York Stock Exchange (regulator) — exchange where HCC is listed
• SEC (regulator) — Securities and Exchange Commission
• Walter Energy, Inc. (company) — former employer related to black lung claims
• Port of Mobile (company) — location for international coal shipments
• Europe (person) — customer region
• South America (person) — customer region
• Asia (person) — customer region
• Blue Creek coal seam (company) — source of HCC
• McDuffie Terminal (company) — port terminal for product transport

FAQ

Risk Factors

• Collective Bargaining Agreement [high — operational]: The company is in ongoing negotiations for a new Collective Bargaining Agreement, which expired in April 2021. This represents a significant operational risk that could lead to disruptions if an agreement is not reached.
• Coal Market Volatility [high — market]: Warrior Met Coal's financial performance is heavily tied to the metallurgical coal market. Fluctuations in global demand and pricing for coal directly impact the company's revenues and profitability, as evidenced by the 24.6% decrease in total revenues for the nine months ended September 30, 2025.
• Reduced Cash Flow and Liquidity [medium — financial]: Cash and cash equivalents decreased by $155.0 million to $336.3 million for the nine months ended September 30, 2025. This reduction, coupled with decreased operating cash flow, could impact the company's ability to fund operations and investments.
• Mine Development Costs [medium — operational]: Deferred mine development costs increased significantly from $19.5 million in 9M 2024 to $71.8 million in 9M 2025. While this indicates investment, it also represents a substantial upfront cost that impacts current cash flow.
• Mine Safety Disclosures [medium — regulatory]: The company is subject to mine safety regulations. Any incidents or failures to comply could result in significant fines, operational shutdowns, and reputational damage.

Industry Context

Warrior Met Coal operates in the metallurgical coal sector, a key commodity for steel production. The industry is cyclical and sensitive to global economic conditions, particularly demand from major steel-producing nations. Competition is significant, with pricing influenced by supply and demand dynamics, geopolitical events, and environmental regulations.

Regulatory Implications

The company faces stringent environmental and safety regulations in its mining operations. Compliance with these regulations is critical to avoid operational disruptions, fines, and reputational damage. Changes in environmental policies, such as those related to carbon emissions, could also impact long-term operational costs and market demand.

What Investors Should Do

1. Monitor the outcome of the Collective Bargaining Agreement negotiations.
2. Analyze coal market trends and pricing.
3. Evaluate the company's capital expenditure plans.

Key Dates

• 2021-04-01: Expiration of Collective Bargaining Agreement — Marks the beginning of an ongoing period of negotiation and potential labor risk for the company.
• 2025-09-30: End of Nine-Month Reporting Period — Provides the latest financial performance data, showing significant declines in revenue and net income compared to the prior year.

Glossary

Deferred mine development costs

Costs incurred in the process of developing a mine that are capitalized and expensed over the life of the mine, rather than being expensed immediately. (An increase in these costs, as seen from $19.5M to $71.8M, indicates significant investment in future production capacity.)

Operating income

A measure of a company's profit after deducting operating expenses from its revenue. (A sharp decline from $259.1M to $11.1M highlights the severe impact of reduced sales and increased costs on core business profitability.)

Depreciation and depletion

Depreciation is the allocation of the cost of tangible assets over their useful lives, while depletion is the allocation of the cost of natural resources. (An increase in these expenses from $114.8M to $132.1M suggests increased asset utilization or new asset additions.)

Year-Over-Year Comparison

Compared to the nine months ended September 30, 2024, Warrior Met Coal has experienced a substantial downturn in financial performance. Total revenues decreased by 24.6% to $926.1 million, and net income plummeted by 86.3% to $34.0 million. Operating income saw a drastic 95.7% reduction. This decline is attributed to lower sales. Despite these challenges, the company has increased its investment in property, plant, and equipment and deferred mine development costs, while cash and cash equivalents have decreased.

Key Financial Figures

• $0.01 — articipating Preferred Stock, par value $0.01 per share -- New York Stock Exchang

Filing Documents

• hcc-20250930.htm (10-Q) — 2211KB
• hcc-ex31_1.htm (EX-31.1) — 17KB
• hcc-ex31_2.htm (EX-31.2) — 16KB
• hcc-ex32_1.htm (EX-32.1) — 18KB
• hcc-ex95.htm (EX-95) — 135KB
• img176442380_0.jpg (GRAPHIC) — 31KB
• 0001193125-25-267117.txt ( ) — 8413KB
• hcc-20250930.xsd (EX-101.SCH) — 794KB
• hcc-20250930_htm.xml (XML) — 1634KB

Forward-Looking Statements

Forward-Looking Statements 1

Financial Information

Part I. Financial Information 3 Item 1.

Financial Statements

Financial Statements 3 Condensed Statements of Operations for the three and nine months ended September 30, 2025 (Unaudited) and September 30, 2024 (Unaudited) 3 Condensed Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 4 Condensed Statements of Cash Flows for the nine months ended September 30, 2025 (Unaudited) and September 30, 2024 (Unaudited) 5 Condensed Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2025 (Unaudited) and September 30, 2024 (Unaudited) 6 Notes to Condensed Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 Item 4.

Controls and Procedures

Controls and Procedures 32

Other Information

Part II. Other Information 32 Item 1.

Legal Proceedings

Legal Proceedings 32 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33 Item 3. Defaults on Senior Securities 33 Item 4. Mine Safety Disclosures 33 Item 5. Other Information 33 Item 6. Exhibits 34

Signatures

Signatures 35 FORWARD-LOOK ING STATEMENTS This Quarterly Report on Form 10-Q (this "Form 10-Q" or "this report") includes statements of our expectations, intentions, plans and beliefs that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies, including any potential changes to our production and sales volumes as a result of our negotiations with the labor union representing certain of our hourly employees. We have used the words "anticipate," "approximately," "assume," "believe," "could," "contemplate," "continue," "estimate," "expect," "target," "future," "intend," "may," "plan," "potential," "predict," "project," "should" and similar terms and phrases, including in references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of global pandemics, including the impact of any such pandemic on our business, employees, suppliers and customers, the metallurgical ("met") or steelmaking coal and steel industries, and global ec

- FINANC IAL INFORMATION

PART I - FINANC IAL INFORMATION

FINANCIAL STATEM ENTS

ITEM 1. FINANCIAL STATEM ENTS WARRIOR MET COAL, INC. CONDENSED STATEM ENTS OF OPERATIONS (in thousands, except per-share amounts) (Unaudited) For the three months ended September 30, For the nine months ended September 30, 2025 2024 2025 2024 Revenues: Sales $ 319,969 $ 319,944 $ 903,393 $ 1,208,366 Other revenues 8,620 7,776 22,662 19,389 Total revenues 328,589 327,720 926,055 1,227,755 Costs and expenses: Cost of sales (exclusive of items shown separately below) 239,525 231,598 711,672 778,489 Cost of other revenues (exclusive of items shown separately below) 7,546 8,854 23,629 29,491 Depreciation and depletion 43,594 36,642 132,126 114,815 Selling, general and administrative 17,200 11,510 47,566 45,861 Total costs and expenses 307,865 288,604 914,993 968,656 Operating income 20,724 39,116 11,062 259,099 Interest expense ( 2,307 ) ( 1,422 ) ( 7,304 ) ( 3,458 ) Interest income 4,435 8,679 14,812 26,074 Income before income tax (benefit) expense 22,852 46,373 18,570 281,715 Income tax (benefit) expense ( 13,746 ) 4,607 ( 15,466 ) 32,248 Net income $ 36,598 $ 41,766 $ 34,036 $ 249,467 Basic and diluted net income per share: Net income per share—basic $ 0.70 $ 0.80 $ 0.65 $ 4.78 Net income per share—diluted $ 0.70 $ 0.80 $ 0.65 $ 4.78 Weighted average number of shares outstanding—basic 52,594 52,330 52,549 52,167 Weighted average number of shares outstanding—diluted 52,650 52,394 52,578 52,221 Dividends per share: $ 0.08 $ 0.08 $ 0.24 $ 0.74 The accompanying notes are an integral part of these condensed financial statements. 3 WARRIOR MET COAL, INC. CONDENSED BA LANCE SHEETS (in thousands, except share and per-share data) September 30, 2025 December 31, 2024 (Unaudited) ASSETS Current

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