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Warrior Met Coal, Inc. (NYSE:HCC)
Q1 2019 Earnings Call
May. 01, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior Met Coal first-quarter 2019 financial results conference call. [Operator instructions] Before we begin, I have been asked to note that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed.

For more information regarding forward-looking statements, please refer to the company's press release and SEC filings. I have also been asked to note that the company has posted reconciliations of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the investors section of the company's website at www.warriormetcoal.com. In addition to the earnings release, the company has posted a brief supplemental slide presentation to the investors section of its website at www.warriormetcoal.com. Here today to discuss the company's results are Mr.

Walt Scheller, chief executive officer; and Mr. Dale Boyles, chief financial officer. Mr. Scheller, you may begin your remarks.

Walt Scheller -- Chief Executive Officer

Thanks, operator. Hello, everyone, and thank you for taking the time to join us today to discuss our first-quarter 2019 results. After my remarks, Dale will review our results in additional detail, and then you'll have the opportunity to ask questions. Warrior performed exceptionally well and exceeded our expectations in the first quarter, which led to record quarterly high production volumes.

Mine 7 continued to perform exceptionally well, also achieving a record quarterly high production volume. These operational records also drove strong financial performance. We achieved $378 million in revenues, $181 million of adjusted EBITDA and free cash flow of $96 million. We also improved our financial leverage by retiring long-term debt of $132 million, reducing our annual interest expense by approximately $10 million.

In addition, we continued our commitment of returning capital to stockholders with the announcement of a $230 million special cash dividend and a new $70 million stock repurchase program as well as our quarterly cash dividend of $0.05 per share. Our operational successes are a credit to the hard work and dedication of our employees, and I thank them for all they've been doing to help us perform as strongly as we did in the first quarter. Our top priority remains working safely as that is the first and most important step to working efficiently and ultimately achieving success in the marketplace. Production volume in the first quarter was 2.3 million short tons compared to 2.1 million produced in the same quarter of 2018, an increase of 10%.

We successfully completed one longwall move that overlapped from the first and second quarter this year compared to no longwall moves in the first quarter of 2018 and achieved production levels that were better than expected. Our better-than-expected results demonstrate the significant efforts made by our employees in anticipating and planning our longwall move and proactively driving production efficiencies and managing our equipment downtime. As I noted earlier, Mine 7 production in the first quarter was a record high achievement. The capital investments that we've made in our mines over the last 2-plus years continue to pay off as we strive to reach full capacity to improve production efficiencies and better equipment utilization with less downtime and a safe environment.

A good example is the skip upgrade at Mine 7 where we've seen higher output and record high production levels due to the improvements in production inefficiencies that were realized during the process. The company spent $30 million on capital expenditures and mine development costs during the first quarter of this year compared to $22 million last year. This amount includes the longwall panel development cost for the extension of Mine 4 into the next area of the mine plan we call Cassidy or 4 North. We expect to be mining in that area sometime in the next five to six years.

Sales volumes in the first quarter of 2019 were flat compared to the same quarter 2018. Demand from our customers continued to be strong during the first quarter this year. Our sales by geography in the first quarter of 2019 were 53% in the Europe, 21% in the South America and 26% into Asia. The geographical mix this year was consistent with last year's first quarter.

Inventories increased 199,000 short tons to 568,000 short tons during the first quarter primarily due to better-than-expected production volumes we achieved. We expect our inventory level decline over the next few months. The Platts premium low vol Australian index price closed the quarter $16 a metric ton lower than where it started the quarter that declined as much as $28 a metric ton from it's high in January, hitting a low of $192 a metric ton. Despite the volatility, overall market conditions remain strong.

The global production of pig iron for the first two months of the year posted a solid year-over-year growth of 5%. This increase was driven mainly by strong productions in China, India and to a lesser extent, Brazil. However, other large producers of pig iron such as Japan and Germany saw the production decline for the same period, most likely due to concerns around regional economic activity. We continue to monitor the impact of the recent disruptions in the global supply of iron ore to our steel customers and at the present time, do not believe their ability to maintain production rates will be adversely affected.

Our customers' orders of premium quality products continue to be stable. The global supply chain of met coal also saw its share of disruption during the first quarter with several weather, maintenance and industrial action related events in Australia and other producing nations. However, the impact of these disruptions were mostly contained allowing customers to receive their orders without major schedule delays. The import restrictions upon Australian coal imposed on specific China ports are still in effect.

And the lack of clarity behind the intent and duration of these restrictions remains a concern. We would expect to see a lifting of these restrictions in the next few months. With a normal seasonal tightness of Q1 behind us, we believe that the pricing for our premium quality products will remain range bound for the rest of the year. In general, our initial views of cautious optimism for 2019 remain unchanged at this time.

Our gross price realization for the first quarter was 98% of the Platts premium low vol FOB Australian index price and was comparable to the prior year. It also reflects a nice increase from the 93% we achieved in the fourth quarter of 2018. There was no special discounting on our sales due to solid demand and price fundamentals resulting in our high gross price realization. Warrior's record performance continues to demonstrate the unique value of our highly focused business strategy as a premium pure-play met coal producers.

Our goal is to operate profitably and maximize cash flow generation in any pricing environment, not just in the favorable conditions we've experienced over the past couple of years. We've invested in the business where appropriate to support this strategy. We've also continued to reward our stockholders as conditions warrant. In addition to our strong performance in the first quarter, I also wanted to provide an update on our Blue Creek growth project.

As previously stated, Blue Creek is one of the few remaining untapped reserves of premium high vol A met coal in the United States. We're excited by the promising results from our early work and believe Blue Creek has the potential to deliver significant value to our stockholders. Our initial work has focused on the feasibility of a single longwall operation with annual production of up to 3 million short tons. While we continue to refine project parameters in 2019, our initial studies have demonstrated robust return across the range of met coal prices.

These studies estimate the capital expenditures of approximately 550 to $600 million over five years. Warrior continues to pursue a number of activities in 2019 to maintain project momentum and optimize Blue Creek's project parameters. These include additional core drilling, finalizing the rail design and permitting the slurry storage in coarse refuse areas. Additionally, we plan to continue to explore potential offtake arrangements as well as project financing alternatives.

We expect Blue Creek will be fully permitted and shovel ready by early 2020, at which point Warrior would be in a position to make a decision on development. We're extremely excited by the potential we see at Blue Creek and believe the project will become a cornerstone of our future portfolio. We look forward to providing updates to our stockholders over the next several months. I'll now ask Dale to address our first-quarter results in greater detail.

Dale Boyles -- Chief Financial Officer

Thanks, Walt. For the first quarter of 2019, net income on a GAAP basis was $110 million or $2.14 per diluted share compared to net income of $179 million or $3.36 per diluted share in the first quarter of 2018. Excluding the loss on early extinguishment of debt, non-GAAP adjusted net income for the first quarter of 2019 was $118 million or $2.30 per diluted share compared to $3.42 per diluted share in the first quarter of 2018. Adjusted EBITDA was $181 million in the first quarter as compared to adjusted EBITDA of $216 million in the same period of 2018, a decrease of 16%.

The quarterly decrease was primarily driven by a 10% decrease in average net selling prices and a 1% decrease in sales volume. The company's adjusted EBITDA margin was 48% in the first quarter compared to 51% in the first quarter of 2018. Total revenues were $378 million in the first quarter of 2019 compared to $422 million in the same period last year. This decrease was primarily due to the decrease in average net selling prices.

The average net selling price per short ton decreased approximately 10% in the first quarter compared to the same period in 2018. The price environment continued to be strong with index prices falling slightly in the first quarter from $220 per metric ton at the end of December to $204 per metric ton at the end of March. Our gross price realization was 98% in the first quarter and improved from 93% in the fourth quarter of 2018. Demurrage and other charges reduced our gross price realization to an average net selling price of $176 per short ton in the first quarter of 2019 compared to $195 in the same period last year.

Mining cash cost of sales was $182 million or 49% of mining revenues in the first quarter compared to $190 million or 46% of mining revenues in the first quarter of 2018. Cash cost of sales per short ton, FOB port, was approximately $87 in the first quarter compared to $90 in the same period of 2018. The decrease is primarily due to lower spending and a 10% higher production volumes reflecting the benefits of our capital investments in the prior periods that were paying off nicely. SG&A expenses were about $9 million or 2% of total revenues in the first quarter compared to approximately $8 million in the prior-year period primarily due to higher stock compensation expenses.

Depreciation and depletion expenses for the first quarter of 2019 were $22 million or 6% of total revenues compared to $25 million in 2018. The decrease in the first quarter compared to the same period last year was primarily due to production volumes exceeding sales volumes by 9%, resulting in higher depreciation amounts in inventory at the end of the quarter. Net interest expense was about $9 million in the first quarter and included interest on our outstanding debt plus amortization of our debt issuance costs associated with our credit facilities partially offset by interest income. This amount was flat compared to the same period last year.

The company recorded a loss on early extinguishment of debt in the first quarter of 2019 of approximately $10 million. This amount represents the premiums paid to retired debt, net of accelerate amortization of debt discount and fees incurred in connection with the transactions that I'll discuss shortly. The company recorded noncash income tax expense of $28 million during the first quarter of 2019 and zero expense in the same period last year. This result primarily reflects the utilization of our net operating losses or NOLs with the corresponding decrease in the balance account deferred income taxes.

As you may recall, we released the valuation allowance on deferred income taxes associated with the company's NOL in the fourth quarter of 2018. We paid no cash taxes in the first quarters of 2019 and 2018 as indicated in our guidance and continue to expect the utilization of our NOLs will reduce our federal and state income tax liability to zero until the NOLs are fully utilized or expire. We expect this will continue to drive significant free cash flow conversion over the next several years. Turning to cash flow.

During the first quarter, the company generated $96 million of free cash flow, which was the result of cash flows provided by operating activities of $126 million, thus cash used for capital expenditures and mine development cost of $30 million. This compared to $171 million of free cash flow in the first quarter of 2018. This lower result was primarily due to lower average net selling prices in the first quarter of this year, higher capital expenditures and mine development cost and an increase in working capital of $49 million. The increase in working capital was primarily due to $44 million of higher accounts receivable.

Free cash flow in the first quarter would have been $50 million higher or $146 million had certain cash receipts been received one day earlier rather than on April 1. Cash used in investing activities for capital expenditures and mine development cost was $30 million for the first quarter of 2019 compared to $22 million in the same period last year. This year's first-quarter results included $5 million of Mine 4 development cost related to a miner unit and support costs that were incurred in developing new longwall panels in the Cassidy or 4 North area. Cash flows used in financing activities were $147 million in the first quarter of 2019 and consisted of the payment of the quarterly dividend of $3 million plus $142 million of debt repayments and associated fees and repurchases of the company's common stock of $2 million.

The stock repurchases in the first quarter exhausted the $40 million authorized for repurchase under the prior stock repurchase program. During the first quarter of 2019, the company completed its previously announced concurrent restricted payment offer and tender offer in each case to repurchase up to $150 million of its 8% senior secured notes. Based on the results of those offers, the company was permitted under the indenture government 8% senior secured notes to make one or more restricted payments in the form of special dividends and/or stock repurchases up to an aggregate amount of nearly $300 million. As we've previously stated and demonstrated in actual returns, the company remains committed to returning excess cash to stockholders in various forms.

On March 26, the company announced a new stock repurchase program of $70 million. In addition, on April 23, the company announced a special dividend of $230 million or approximately $4.41 per share for the record date of May 6 and a payment date of May 14. As a result of the debt reduction in the first quarter, we strengthened the company's balance sheet with a leverage ratio of less than 0.4 times adjusted EBITDA. In addition, we have ample liquidity without the fixed costs associated with legacy liabilities that some of our competitors have on their balance sheets.

Our total available liquidity as of the end of the first quarter was $275 million consisting of cash and cash equivalents of $155 million and $120 million available under our ABL facility. Net of outstanding letters of credit of approximately $5 million. We believe our strong balance sheet and significant free cash flow generation will provide us flexibility if we decide to pursue our Blue Creek development project next year. In summary, we finished the first quarter with another strong operational performance that drove record quarterly production volume combined with strong financial performance.

Now turning to our outlook and guidance for 2019. We expect to complete four more longwall moves in the remainder of the year for a total of five longwall moves in 2019 compared to the three moves we had in 2018. Our guidance for the full-year 2019 reflects our view of continued operational strength and expected market conditions and is as follows: coal sales of 7.1 million to 7.6 million short tons, coal production of 7.1 million to 7.6 million short tons, cash cost of sales FOB port of $89 to $95 per short ton, capital expenditures of 100 to $120 million, mine development cost of 18 to $22 million, SG&A expenses of 32 to $36 million, interest expense net of 30 to $32 million, noncash deferred income tax expense of 23 to 25% and a cash tax rate of 0%. We're approaching the remainder of 2019 with continued optimism, although with a cautious and conservative approach till further market and economic information is available.

Our estimates reflect the inherent risk of underground mining. Several factors may affect our outlook including the Platt's premium low vol index pricing, the number of planned longwall moves and the timing of those moves between quarters. I'll now turn it back to Walt for his final comments.

Walt Scheller -- Chief Executive Officer

Thanks, Dale. Before we move on to Q&A, I'd like to make a few more comments about the company and its prospects. We're very pleased with the company's strong operational and financial performance in the first quarter of 2019. We appreciate the support and engagement we have received from our stockholders and of course, our employees.

As our production volumes have increased, we have benefited from the increased operation -- operating leverage and have invested in long-term projects that will benefit the operations in the future. With the expectations of global steel production volumes at or near 2018 levels coupled with the absence of material changes in the supply of hard coking coal, we believe the demand for our premium products will remain consistent throughout the year. We recognize that certain economic indicators such as the potential slowdown in regional GDP growth rates as well as a reduction in steel demand in Europe have the potential to create a softer pricing environment for hard coking coal. However, barring any unforeseen material event, we believe the fundamentals should remain relatively healthy for our markets.

In light of these expected market conditions, we're maintaining our 2019 sales and production guidance targets with cautious optimism. As I've said on previous calls, we run the business as just the next pricing downturn and geologic issue are just around the corner. The conservative target and flexible operations that allow us to adjust to the market environment as it changes throughout the year. We expect to update our 2019 guidance during the year as necessary to adapt to changing market conditions and changes in the business.

With that, we'd like to open the call for questions. Operator?

Questions & Answers:


Operator

[Operator instructions] The first question comes from David Gagliano with BMO. Please go ahead.

David Gagliano -- BMO Capital Markets -- Analyst

Thanks for taking my questions. Pretty straightforward, just want to make sure there's nothing extraordinary happening in the next couple of quarters, didn't change the full-year production target. Obviously, first quarter production was very impressive. Anything other than the longwall moves to warrant not changing the full-year target?

Dale Boyles -- Chief Financial Officer

Well, it's just early in the year, but yes, it's the -- we have four longwall moves to go yet this year and we're just -- as I said, we're just being cautious and we're so early into it, we don't want to get too far out in front of ourselves.

David Gagliano -- BMO Capital Markets -- Analyst

I think it's perfect. Thanks very much. That's it for me.

Operator

The next question comes from Chris Perry with Deutsche Bank.

Sathish Kasinathan -- Deutsche Bank -- Analyst

Hi. This is Sathish from Chris' team. So my question is regarding the Blue Creek energy project. So just wanted to understand how much the current NOLs that the company have to be a key consideration in the -- while evaluating the project because on our numbers probably -- all your NOLs could be exhausted in the next three years before Blue Creek energy actually comes into production.

So just wanted to understand what your thinking is regarding that.

Walt Scheller -- Chief Executive Officer

Thanks for your question. Yes, what we're thinking is we're in a great position here. We're not paying any cash taxes. So the utilization of the NOLs is going to be all determined by the price assumption, right? So whatever your long-term price assumption is and what actually is.

Bringing on Blue Creek will accelerate that to the extent we start generating 3 million extra tons of production in sales volume. That will obviously accelerate them, and we'll build that into our model as we complete that work this year. But just basically to say, look, yes, if prices stay where they are today, we use them faster; if prices drop back down to more moderate or long-term assumptions, then they'll extend a few more years. It really just depends on pricing.

Sathish Kasinathan -- Deutsche Bank -- Analyst

OK. And you mentioned that you're pursuing the project finance for Blue Creek also. Do you have a target debt and equity ratio for the project?

Walt Scheller -- Chief Executive Officer

Yes. What we said is shovel ready to make a decision early next year, early 2020. So all that work will be done this year and we'll look at multiple options to see what our best options are. Clearly, some are better than the others, but we want to go through a whole host of options just to make sure that we've got them all and consider them all.Thank you.

Operator

The next question comes from Lucas Pipes with B. Riley FBR. Please go ahead.

Lucas Pipes -- B. Riley FBR -- Analyst

Hey, good afternoon, gentlemen. Congratulations on an outstanding quarter. I wanted to follow up on one of David's questions. So you have one longwall move in Q1 and then when I look at your guidance, it appears there's another one in Q2 and then another one in Q3 and then in Q4.

Anything we should -- so when I think about kind of Q1 production levels, should I just carry that forward for Q2 and Q3? What would cause that production to fall sequentially?

Dale Boyles -- Chief Financial Officer

I'm sorry, if you heard our remarks, we said the -- that longwall move straddled the first and second quarters. So it's not that we had the longwall move in the first quarter entirely. So that's not quite the best way to examine. I agree the fourth quarter with the two moves will probably be the most impacted, but I wouldn't go with the assumption that Q2 will be like Q1.

Lucas Pipes -- B. Riley FBR -- Analyst

Got it. Got it. So there is maybe two weeks or kind of half of a longwall move that sell into. So should we really be thinking about kind of Q2 having one and a half moves because you have five for the full year, right?

Walt Scheller -- Chief Executive Officer

What we say is that we expect those moves to take 100,000 to 150,000 tons, and that's what we still expect and that's because the different moves are of different complexity. So I still think that's probably the right way to think about it.

Lucas Pipes -- B. Riley FBR -- Analyst

OK. That's helpful. And then just looking at your guidance for capital spending, I think you have a new category there with mine development costs. Is that incremental to capital expenditures of 100 to $120 million or would that be included? Thank you.

Dale Boyles -- Chief Financial Officer

No, that's the incremental, Lucas, to the line item for capital expenditures. It's in the area where we started late last year and it's going to get more highlight this year as we spend more capital to develop that area as we're going forward. We've talked about this in the past. And -- so just to highlight it, it's getting up to be little more significant on the year, so that's what we added this time.

This thing's been about $5 million in the quarter and all those costs will be capitalized and amortized into your cost once we start actually mining the longwall mining of those panels in the future.

Lucas Pipes -- B. Riley FBR -- Analyst

And just to circle back on the exact bucket that is going into. That is development cost for Cassidy, is that right?

Walt Scheller -- Chief Executive Officer

Yes. Mine 4. That's right.

Lucas Pipes -- B. Riley FBR -- Analyst

Perfect. Perfect. And then maybe one last question on the capital structure -- capital return front. So you've had a -- you made a tender during the quarter, and when I look at your bonds today, they're again trading at 105.

So wondered if there is any interest in possibly adding another tender for those bonds may be at 103 or so. Obviously, my understanding is that this could create additional flexibility when it comes to capital returns. Would appreciate your thoughts on that.

Walt Scheller -- Chief Executive Officer

Yes. The bonds have been trading very nicely since we did the last restricted payment and tender offer. So it's very attractive. So if you were to say, look at 105, you make an offer at 103, you're saving a little more than we spent the last time around.

So it's definitely a thought and we have that -- we would consider and look at. We're spending $230 million here in the next couple of weeks. So we need to generate some cash before we start spending it again. So I think that's more of a to be determined later.

Lucas Pipes -- B. Riley FBR -- Analyst

Later in Q2 depending on operational performance or kind of second half of the year?

Walt Scheller -- Chief Executive Officer

There is no set deadline at it.

Lucas Pipes -- B. Riley FBR -- Analyst

OK, well, keep up all the good work. Congrats.

Operator

The next question comes from JC Evensen with Luminus Management. Please go ahead.

JC Evensen -- Luminus Management -- Analyst

Hey, guys. Just wanted to ask you guys, given NOLs have gone broadened up. On your model, how long do the NOLs last at spot coking coal prices? And just for sensitivity at $150 a ton for benchmark?

Walt Scheller -- Chief Executive Officer

I think at $150 or something like the next 10 years or so without Blue Creek. At today's spot prices, I haven't run it. It would probably run four, five years, maybe that long, roughly. I haven't done that calculation recently.

Please go ahead.

Operator

The next question comes from Matthew Fields with Bank of America Merrill Lynch.

Matthew Fields -- Bank of America Merrill Lynch -- Analyst

Hey, guys. Couple ones for me. Given you're -- got Blue Creek kind of run on the horizon here as a big use of cash. The other sort of avenue is obviously for future development is M&A.

And very recently been on that coal mine right in your backyard that's sort of been up for sale and sort of executed on. So what was the thinking that not going forward without grover or not trying to outbid some competitors there and forging ahead on the sort of bigger project of Blue Creek?

Dale Boyles -- Chief Financial Officer

We compare everything we look at to the development of the Blue Creek project. And we have -- right now, we've decided that that was where we were going to focus our attention.

Walt Scheller -- Chief Executive Officer

Yes, we certainly said in the past that we would be interested in those potential reserves here in Alabama and it would make the most sense to have similar quality. But you know what, I don't think we're just not about overpaying for the asset. So someone like them better.

Matthew Fields -- Bank of America Merrill Lynch -- Analyst

OK. And then given the capital, the development cost you decided at Blue Creek and your upcoming dividend and everything and in conjunction with the fact that the bonds may have the sort of onerous offer required for major capital returns, do you think a global refi and sort of increasing your debt to provide some development capital makes sense before the bonds call date.

Walt Scheller -- Chief Executive Officer

Yes. I think we'll have to look at that in the market environment and see what the best opportunities are as we finish our work on Blue Creek and what the needs are with Blue Creek and with Cassidy as we've talked about because we did have to spend quite a bit of money over the next four to five years there to ensure that all the infrastructure is in place before we move the longwall. Otherwise, you basically shut down the longwall mining. So we're going to look at all those opportunities and what's available and try to optimize our capital structure as we always do and take a very returns based approach to how we allocate that capital between all these things.

Matthew Fields -- Bank of America Merrill Lynch -- Analyst

And then lastly, just between those couple of major projects, can you just give us a cadence of capex for the next two, three years maybe?

Dale Boyles -- Chief Financial Officer

It's going to depend on the price environment, but we've been spending around $100 million level. So somewhere in that range, I think, might be -- if prices were to stay this high, I think that range might be reasonable. The discretionary capital on top of the sustained. Sustaining's about 70-ish million a year, and we've been spending a little more than 30 on some of these other projects.

And I expect we would continue that cadence unless the market conditions change.

Matthew Fields -- Bank of America Merrill Lynch -- Analyst

And I'm sorry, that's including the development of Blue Creek?

Dale Boyles -- Chief Financial Officer

No. No. That's excluding Blue Creek.

Operator

[Operator instructions] The next question comes from Piyush Sood with Morgan Stanley. Please go ahead

Piyush Sood -- Morgan Stanley -- Analyst

Couple of questions for me. First one, next couple of years should we expect the quality of your coal to stay consistent with what you have been mining recently over the, say, last year or so?

Walt Scheller -- Chief Executive Officer

Yes.

Piyush Sood -- Morgan Stanley -- Analyst

And second one on Blue Creek. First, do you have options to speed up the project? And let's say, if the market turns down, is there a prize or an IRR cutoff in our minds, at which you would probably may want to push the buildout a little bit?

Dale Boyles -- Chief Financial Officer

I think they're both great questions. When we look at the project right now and again, we're kind of redoing timing, feasibility and all those things and not knowing exactly right know what will become the critical path in terms of timing. There are ways if there is nothing that clearly stands out in that critical path. There are ways to accelerate the spending and accelerate the development by a considerable amount of time, you just -- but you just accelerate the spending.

And the other approach you asked about is almost the opposite approach and that's to kind of take a very phased approach to development of the project where we build it in phases. As an example, putting the slope in first as a very defined project and then stepping into the CM development, etc., and moves down through there where if we do have a market downturn, there are natural breaks in the capital spending that would allow you to push the project out from that point and just stop the capital spending.

Piyush Sood -- Morgan Stanley -- Analyst

So in your expectation is that based on prize or an IRR? Do you think there is a certain level of development beyond which you would definitely want to build it?

Walt Scheller -- Chief Executive Officer

I think it will be price driven. It would primarily be price-driven and then we'll have all that built out as we develop our model and know where we consider those points to be where we would cut back spending.

Piyush Sood -- Morgan Stanley -- Analyst

That's good. Thanks guys and all the best.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Walt Scheller -- Chief Executive Officer

That concludes our call this afternoon. Thank you again for joining us today, and we appreciate your interest in Warrior Met Coal.

Operator

[Operator signoff]

Duration: 41 minutes

Call participants:

Walt Scheller -- Chief Executive Officer

Dale Boyles -- Chief Financial Officer

David Gagliano -- BMO Capital Markets -- Analyst

Sathish Kasinathan -- Deutsche Bank -- Analyst

Lucas Pipes -- B. Riley FBR -- Analyst

JC Evensen -- Luminus Management -- Analyst

Matthew Fields -- Bank of America Merrill Lynch -- Analyst

Piyush Sood -- Morgan Stanley -- Analyst

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