Warrior Met Coal (HCC 2.30%), a leading producer of premium steelmaking coal headquartered in Alabama, reported its earnings for the second quarter on August 6, 2025. Warrior surprised analysts with an earnings per share (EPS) result of $0.11 (GAAP), well ahead of the consensus forecast of a ($0.36) GAAP loss. Revenue (GAAP) also beat predictions, reaching $297.5 million versus an expected $285.6 million. Revenue and earnings (GAAP) outpaced expectations, even as market prices and margins declined compared to the previous year, with the average net selling price of steelmaking coal decreasing 30.1% from $186.09 per short ton in Q2 2024 to $130.01 in Q2 2025, and cash margin per ton falling from $62.31 to $28.84 over the same period. Despite sharply lower coal prices and negative free cash flow, management advanced the Blue Creek growth project and maintained strong liquidity. Overall, Warrior managed a positive quarter in a difficult pricing environment, but the pressure on profits and cash remained substantial.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP, Diluted) | $0.11 | ($0.36) | $1.35 | (91.9%) |
| Revenue | $297.5 million | N/A | $396.5 million | (25.0%) |
| Adjusted EBITDA | $53.6 million | $115.9 million | (53.8%) | |
| Free Cash Flow | ($56.7 million) | $25.4 million | N/M | |
| Sales Volume (k short tons) | 2,219 | 2,098 | 5.8% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Warrior Met Coal (HCC 2.30%) operates underground mines in Alabama and specializes in hard coking coal, an essential input for steelmaking. Its main products are premium low-volatility and high-volatility A (High Vol A) steelmaking coal, which are sold to customers in Europe, South America, and Asia.
The company is currently focused on several strategic areas: maintaining a flexible cost structure, maximizing production efficiency, expanding capacity through the Blue Creek project, and maintaining robust ESG (environmental, social and governance) practices. Its ability to adjust costs with market prices and develop new, lower-cost production sources are key for long-term competitiveness.
Second Quarter Developments and Performance Drivers
During the quarter, Warrior achieved notable operational progress. Despite a 25.0% year-over-year decline in revenue and a 30.1% drop in average net selling price per ton of coal, the company increased its sales volume by nearly 6%. New sales from the Blue Creek mine contributed 239,000 short tons, following early completion of infrastructure milestones and the start of commercial shipments ahead of the initial timeline.
Operational performance helped offset some pricing pressure. Cash cost of sales (non-GAAP, free-on-board port) per short ton dropped 18% to $101.17 compared to the prior year, reflecting lower costs per unit and a larger share of lower-cost Blue Creek coal. Nonetheless, adjusted EBITDA margin declined from 29.2% in Q2 2024 to 18.0%, largely because falling market prices outweighed cost reductions. Net income (GAAP) also declined steeply to $5.6 million, compared to $70.7 million in Q2 2024.
Warrior pressed ahead with the Blue Creek project, spending $51.8 million on capital expenditures, bringing the total project investment to $823.5 million. The longwall mining system, which enables large-scale extraction, is now scheduled to start in early 2026, ahead of the previous timeline. Blue Creek's expected production of high-volatility A steelmaking coal is set to transform the company's production mix, though this coal typically commands lower prices than low-volatility grades.
Free cash flow (non-GAAP) turned negative at $56.7 million, down from positive $25.4 million in free cash flow for Q2 2024. The main driver was high capital spending at Blue Creek combined with lower profitability due to pricing pressure. Liquidity remains robust, with $383 million in cash, $38.1 million in short-term investments (net of $9.7 million posted as collateral), and an undrawn $114 million credit facility as of June 30, 2025, giving Warrior a total liquidity cushion of $545 million.
Product Mix and Market Context
Warrior primarily produces steelmaking coal, but the composition of its production is in transition. Production and sale of High Vol A coal from Blue Creek is increasing, with approximately 1.0 million short tons expected to be sold primarily in the second half of 2025, in line with the company's strategy to expand output and benefit from Blue Creek's cost advantages. However, High Vol A coal typically trades at a discount to premium low-volatility coal. As Blue Creek ramps up, this shift may weigh on average price realizations over the next several quarters.
Market weakness has been pronounced. The benchmark index for premium low-volatility steelmaking coal fell 24% from the prior year period, according to Warrior. This contributed to sharp declines in realized average prices. Warrior noted its “average gross selling price realization was approximately 80% of the Platts Premium Low Vol FOB Australian index price,” lower than the typical 85–90% range. The shift in mix, combined with market pricing, directly affected the company’s reported margins and bottom line.
One-Time and Material Items
The most significant one-time and material items included the initial commercial shipments from Blue Creek, as sales from this mine represent a new revenue stream and a strategic pivot in product mix. Capital expenditures for Blue Creek accounted for more than half of the company’s total investment outflows. Other components impacting results included lower variable royalty and transportation costs, which fell alongside the drop in coal prices, and a reduction in selling, general, and administrative expenses (GAAP) to $11.9 million, down from $15.5 million in Q2 2024.
Depreciation and depletion increased due to more assets being placed into service at Blue Creek and higher overall sales volumes. These factors elevated reported non-cash expenses, further impacting net income. Warrior maintained its regular quarterly dividend at $0.08 per share.
Outlook and What to Watch
Looking ahead, management expects coal sales in the range of 8.8 to 9.5 million short tons for FY2025, including approximately 1.0 million short tons from Blue Creek. Cash cost of sales per short ton (free-on-board port, non-GAAP) for full-year 2025 is guided at $110 to $120, with capital spending on Blue Creek expected to remain significant at $225 to $250 million for full year 2025. While the company forecasts continued steady production and progress at Blue Creek, margins are sensitive to realized coal prices, which depend on global steel demand, trade policy, and the coal mix sold in export markets.
Management has pointed instead to external uncertainties such as tariff policy, inflation, and spot coal price performance as key drivers. The company cited “by excess Chinese steel exports, global tariff uncertainties, seasonal demand softness, and ample spot supply,” as major variables for future results. Investor focus in upcoming quarters will likely center on Blue Creek’s ramp, pricing for both low-volatility and high-volatility A coal, and the balance between maintaining liquidity and returning to positive free cash flow.
HCC maintains a regular quarterly dividend of $0.08 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
