Warrior Met Coal, Inc. Stock

Good afternoon. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior's Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded and will be available for replay on the company's website.

I would now like to turn the call over to Brian Chopin, Chief Accounting Officer and Controller.

Good afternoon, and welcome, everyone, to Warrior's Second Quarter 2026 Earnings Conference Call.

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.

Forward-looking statements, by their nature, address matters that are to different degrees uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements.

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. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

We'll also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our second quarter press release furnished to the SEC on Form 8-K, which is also posted on our website.

Additionally, we will be filing our Form 10-Q for the quarter ended June 30, 2026, with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a second quarter supplemental slide deck that was posted this afternoon.

Today on the call with me are Mr. Walt Scheller, Chief Executive Officer; and Mr. Dale Boyles, Chief Financial Officer. After our formal remarks, we'll be happy to answer any questions.

With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thank you for taking the time to join us today to discuss our second quarter 2026 results. I'll start by providing an overview of the quarter before Dale reviews our results in additional detail.

The second quarter marked a key inflection point as we clearly realized the incremental earnings and cash flow contributions of Blue Creek. We believe there's even more value to be realized as we work towards Blue Creek's full potential.

This inflection point was characterized by significant margin expansion and generation of more than $103 million of free cash flow, which came as a result of record sales volumes, improved pricing, and a lower cost profile. These results brought free cash flow to a positive $11 million at the midpoint of the year.

Now with Blue Creek operational and our development spending complete, we've entered into the next phase of Warrior's growth, which is focused on free cash flow generation, balance sheet strength, and stockholder returns over the long term.

Looking at our markets more broadly, the second quarter 2026 was characterized by the pockets of normalization of supply conditions following the weather-related disruptions observed earlier in the year. Despite these fluctuations, steel fundamentals remained relatively unchanged.

The tragic mining incident in China in late May briefly tightened sentiment around domestic coking coal availability and resulted in additional safety inspections and higher domestic coking coal and coke prices.

The impact of this sentiment shift was material and was clearly observed with the reopening of the arbitrage between the China CFR and Australian FOB indices, which have remained predominantly closed for over a year.

Demand from India continued to be resilient, but weak steel margins, subdued Chinese buying activity, and the continued pressure from Chinese steel exports prevented the broader market from developing stronger momentum.

In Europe, we continue to see the expected benefits of protectionist measures materializing, but the recovery remains uneven and is not strong enough to offset weakness in other regions.

Freight rates and their corresponding demurrage rates remained materially above their recent averages and as a result, had a negative impact on our average net selling price.

The World Steel Association reported recently that global pig iron production declined during the first 6 months of 2026 by 1.9% as compared to the same period last year.

India continued to show growth with a 2.7% increase year-over-year, while China remained the primary source of weakness as the country continues to grapple with soft internal demand and weak steel margins. This regional split remains consistent with the broader market narrative, with resilient demand in India and parts of Asia, offset by continued softness in China and an uneven recovery across developed markets.

Our primary index, the PLV FOB Australia remained well above the levels observed during most of 2025 and was relatively stable for the second quarter of 2026 as compared to the first quarter. The index price averaged $216 per ton and was 29% or $49 per ton higher than the second quarter 2025.

For the main second-tier indices, the Australian LVHCC index and the CFR India LVHCC index prices increased in the second quarter of this year compared to the second quarter of last year to an average of $170 and $191 per short ton, respectively.

The Australian LVHCC index price was $40 per ton or 30% higher than the second quarter of last year. And the CFR India LVHCC index price was $46 per ton or 32% higher than the second quarter of 2025. As a result, the relativity of the Australian LVHCC index price to the Australian PLV index price increased from 78% for the second quarter 2025 to 79% for the second quarter 2026.

In contrast to the Australian LVHCC and CFR India index prices, the average U.S. East Coast HVA index price decreased $11 per ton or 7% in the second quarter this year from the second quarter of last year and averaged $143 per short ton. As a result, the relativity decreased from 92% for the second quarter 2025 to 66% for the second quarter 2026.

We continue to see a meaningful discount to the PLV price each of the last 5 consecutive quarters in the Atlantic Basin to the point where it has temporarily become more profitable to sell into the Pacific Basin despite the higher freight rates, although, we don't expect this to continue once the U.S. East Coast HVA relativities return to normal levels.

We achieved gross price realization of 66% for the second quarter this year compared to 80% in the second quarter of 2025. Our lower gross price realizations were driven by a combination of factors.

First, our average main pricing indices for the PLV and LVHCC in the Pacific Basin have increased year-over-year for the second quarter, while the East Coast High-Vol A index decreased in the Atlantic Basin.

Second, freight rates to Asia, primarily India, were about $13 per ton or 37% higher in the second quarter of 2026 than last year's second quarter and reduced our gross price realization. Third, gross price realizations were lower due to a 21% higher mix of High-Vol A products sold in the second quarter of this year.

As production from Blue Creek continues to increase, we expect our sales volume mix to become more weighted toward High-Vol A products in the Pacific Basin destinations over time. This shift, along with the abnormally depressed second-tier relativities is expected to naturally lower our gross price realizations.

Despite this, we expect the increased weighing toward High-Vol A products to drive margin expansion through the impact of the low-cost profile of Blue Creek on lowering our cash cost of sales.

Turning back to our financial results. For the fourth consecutive quarter, Warrior achieved record high quarterly sales volume in the second quarter of 3.7 million short tons compared to 2.2 million in the same quarter of 2025. This represents a 65% increase primarily due to the additional sales volume from the Blue Creek mine.

Our second quarter sales volume mix was 66% of High-Vol A and 34% of premium low vol. Our sales by geography for the second quarter break down as follows: 50% into Asia, 35% in Europe and 14% in South America. Our spot volume was 13% for the second quarter of 2026. Sales volumes into the Pacific Basin were 50% this quarter compared to 52% in the second quarter of 2025.

Production volume in the second quarter of 2026 was 3.3 million short tons compared to 2.3 million in the same quarter of last year, representing a 45% increase. This increase reflects the significant contribution of Blue Creek.

Our coal inventory levels decreased to 1.4 million short tons at the end of June this year compared to 1.9 million tons at the end of March 2026. We expect to continue driving our excess inventory downwards over the remainder of the year to maximize sales volume, profitability and free cash flow.

I'll now ask Dale to address our second quarter results in greater detail.

Thanks, Walt. We were pleased with our financial results for the second quarter of 2026, especially with our free cash flow generation. As Walt mentioned, the second quarter marked a key inflection point for our business. With the Blue Creek construction CapEx behind us and by using working capital to drive the higher sales and production volumes out of Blue Creek, we were able to generate significant free cash flow.

Warrior recorded net income of $87 million or $1.65 per diluted share in the second quarter of this year compared to net income of $6 million or $0.11 per diluted share in the same quarter of 2025.

We reported adjusted EBITDA of $157 million compared to $54 million in the same quarter of 2025, an increase of 193%. Our adjusted EBITDA margin improved to 31% in the second quarter of 2026 compared to 18% in the same quarter of last year.

On a per ton basis, our adjusted EBITDA margin improved by 78% to $43 per short ton for the second quarter of 2026 compared to $24 in the last year's second quarter.

The primary drivers of these improvements were a 65% increase in sales volumes, a 6% increase in average net selling prices, and a 9% reduction in cash cost, reflecting the increasing contribution from our new Blue Creek mine.

Total revenues were $510 million compared to $298 million in the same quarter of last year. The total increase of $212 million was primarily due to the impact of higher sales volumes of $186 million and the impact of an increase in average gross selling prices of $73 million.

This was partially offset by the impact of a 21% higher mix of High-Vol A tons sold, which had an impact on revenues of $40 million. In addition, the demurrage and other charges were $9 million higher compared to last year's second quarter. This resulted in an average net selling price of $138 per short ton in the second quarter of 2026 compared to $130 in the second quarter of last year.

Cash cost of sales were $338 million or 67% of mining revenues in the second quarter of this year compared to $225 million or 78% of mining revenues in the second quarter of last year. Of the $113 million net increase in cash cost of sales, there was a $145 million increase in costs, which were attributed to the 65% increase in sales volumes and slightly higher variable transportation and royalty costs on higher average steelmaking coal price indices.

These higher costs were offset partially by $32 million of lower costs that were driven by the leverage of low-cost Blue Creek tons sold and the benefit from the 45X production credit.

We have seen smaller amounts of inflation on various materials and supplies as we have previously discussed. However, it has not been aggregated to a material amount at this point in the year.

Cash cost of sales per short ton, FOB port, was approximately $93 compared to $101 in the same quarter last year. The 9% decrease was primarily related to the factors that I just mentioned on a dollar basis.

Cash margins per short ton increased 57% to $45 in the second quarter from $29 in the same quarter of last year. While we have a higher mix of High-Vol A product at lower U.S. East Coast index prices than in previous periods, Blue Creek has created margin expansion with its inherently lower cost structure.

Our second quarter 2026 SG&A expenses were $10 million and were $2 million lower than the same quarter of 2025. This decrease was due to funds received from the old Walter Energy bankruptcy proceedings of $2 million during this year's second quarter.

Depreciation and depletion expenses were $58 million in the second quarter, which was 35% higher than the second quarter of 2025, primarily due to the additional assets placed into service at Blue Creek and the higher sales volume in the second quarter of 2026.

We recorded income tax expense of approximately $4 million on pretax income of $91 million in the second quarter of 2026. Our effective income tax rate varied from the statutory federal income tax rate of 21%, primarily due to tax benefits recognized for depletion expense and a foreign-derived intangible income deduction, resulting in an effective income tax rate of 4%.

Now let's turn to cash flows. Cash flows from operating activities were $132 million in the second quarter of 2026 and were $95 million higher than the previous year's second quarter, driven by the growth in revenue. Working capital increased by $14 million, primarily due to higher supplies inventory, higher prepaid expenses, lower accrued expenses, partially offset by favorable collections of accounts receivable.

Free cash flow was $103 million due to $132 million of cash provided by operations, combined with cash used for capital expenditures of $29 million. This second quarter result brought free cash flow to a positive $11 million for the first half of 2026, which was slightly better than we expected. The inflection point in our free cash flow generation marks a significant turning point from strategic investment to future stockholder returns.

We were pleased that we increased our cash and total liquidity while delivering higher profitability. Our total available liquidity at the end of the second quarter was $453 million and consisted of cash and cash equivalents of $302 million, short-term investments of $10 million and $141 million available under our ABL facility.

Given the significant increase in adjusted EBITDA from the first quarter of 2026, I want to highlight the primary drivers of this change. First, our sales volumes were 22% higher in the second quarter, positively impacted by an increase in tons sold from Blue Creek.

Second, the increase of Blue Creek tons sold had a positive impact on cash cost per ton, which were $3 lower in the second quarter, primarily attributed to Blue Creek's inherently low cost structure. Third, our average net selling price decreased in the second quarter by about $12 per ton or 8%.

This was primarily due to a 5% higher mix of High-Vol A volumes sold, 11% more volumes sold into the Atlantic Basin on lower U.S. East Coast High-Vol A prices, higher freight rates into the Pacific Basin due to the Iran conflict, and higher demurrage rates.

And finally, cash usage from working capital requirements decreased from $146 million in the first quarter to a usage of $14 million in the second quarter. This resulted in operating cash flows of $132 million, which was $144 million higher than the first quarter of 2026. We were pleased to see the positive factors significantly outweigh the negative factors.

Finally, let me turn to our current outlook and guidance for the full year 2026 as detailed in our earnings release. We have been pleased with the continued positive reception of the Blue Creek trial volumes and the adoption by our customers, which has surpassed our high expectations. As a result, the company is raising its sales and production volume guidance by 0.5 million tons. This will increase Blue Creek sales volume to 5 million short tons for the full year, of which 90% is already under contract.

As we noted in our first quarter earnings call, we continue to see inflationary cost pressures on a wide variety of materials and supplies, such as steel roof supports, steer bits and diesel fuel. Individually, each of these items is not material to our cost structure. However, the aggregation of broader inflation could become larger. While we have not been materially impacted by inflation so far this year, we believe the remainder of the year could see an increase of a few dollars per ton.

I'll now turn it back to Walt for his final comments.

Thanks, Dale. Warrior continued its strong performance in the second quarter. Our financial and operational results were better than expected, impacted in part by premium quality steelmaking coal prices being higher for a longer period of time. This strong first half 2026 supports our revised full year outlook and guidance.

Looking forward, we expect the market to remain sensitive to short-term supply disruptions, regional trade flows and steel market conditions. While the premium segment remains relatively tighter than the broader steelmaking coal market, we do not believe that current steel fundamentals are strong enough to support a sustained return to the price momentum observed earlier in the year.

We also expect to see improvements in the supply of Australian premium coals. We'll continue to monitor developments in China very closely as any further actions from the government can easily sway the markets in either direction.

From a pricing perspective, we expect the PLV to remain above the depressed levels observed through most of 2025, but below the supply-driven highs experienced during the first half of 2026.

The most likely outcome in our view is a lower range-bound market with periods of volatility driven by weather, logistics, geopolitical developments and regional buying patterns.

We also continue to expect that second-tier indices will remain at depressed levels relative to the PLV as observed for the past several quarters. This expectation could put pressure on our net selling prices, profitability and free cash flow generation in the second half of the year as compared to the first half.

We've been pleased with the reception of the product coming out of our new mine as demonstrated by the successful trials and adoption by our customers. As a result, we've been able to gain market share, mostly with strategic customers that recognize our differentiated value proposition.

This positive reception from our customers led to the increase in our full year guidance volumes, as Dale described earlier. We believe similar opportunities will continue to present themselves, especially as we approach the contract season later this year.

Most importantly, Warrior has the tools to continue to drive value creation for our stockholders by continuing to execute our strategy to optimize production, control our costs, and generate free cash flow. With our high-quality assets and low first quartile cost structure, we're as well positioned as we've ever been to thrive in a wide range of steelmaking coal environments.

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

[Operator Instructions] The first question comes from Nick Giles with B. Riley Securities.

Guys, congrats on another strong quarter. Maybe just a first clarification. Can you provide a breakdown of shipments across each individual mine, specifically Blue Creek?

No, we don't get into that much detail. We just haven't done that.

Okay. Understood. Maybe just on realizations. They continue to be under pressure. You mentioned the volatility around freight rates. Should we kind of expect more of the same from a relativity perspective in 3Q? And then kind of how much volume could you look to maybe shift to the Atlantic Basin where freight rates may be less volatile?

I think you're going to see kind of a continuation of where we've been year-to-date. I don't expect a great deal of fluctuation there. I do think with the low-vol price coming down, it wouldn't surprise me to see the relativities close back up and see us sitting at where the High-Vol A price kind of stays a little more steady than the low-vol price as it comes down. That's just speculation on my part.

Yes. And as far as shifting shipments to one basin to the other, that really depends on customer demand and when they want their shipments because, as we said, 90% of our volume this year is under contract. And when they -- when they want it, it's when they want it, we can't really dictate that.

No, understood. No, that's helpful. Maybe just, Dale, one for you on shareholder returns. I mean, free cash flow in the quarter was very strong. Are you getting to a point where you're ready to kind of increase shareholder returns? Or would you prefer to build kind of a higher cash balance in the second half year?

Yes, I think so. Even with prices declining as they have in the recent weeks, I do think we're going to start to really see strong cash flow generation, which means or should mean higher returns to shareholders. We're going to have to generate that cash first and see where we go from there.

The next question comes from George Eadie with UBS.

Congrats on this stuff this quarter. Dale, can we just quantify that a bit more? Like, what is the ideal sort of steady-state cash level? Is it -- $400 million, is that a good estimate? And then secondly, can you also remind me the state of potential buybacks and NOLs as well, please?

Yes. Cash, we like to see in a range of $350 million to $400 million. So a total of -- total liquidity of around $500 million in total.

The status of the NOLs -- well, we utilized all the NOLs on the federal side back in 2023, I believe it is. And all we have now is state NOLs, and we still have $900 million of those approximately. But those are -- we don't pay any Alabama tax, so I'm not sure we'll be able to use a lot of those NOLs in the future.

As far as buybacks, that's one of the options that we have, one of the levers we have in providing returns to shareholders. And as we get to that point, when we're looking at future returns, we'll give that a consideration.

Okay. And just on sort of Walt's comments earlier about the pricing dynamic, like what are the things you're watching specifically in the market to see High-Vol A prices return to a higher level relative to the Queensland benchmark price structurally on a sort of medium-term view?

I just think that High-Vol A prices are where they are in the Atlantic Basin because of the volume of High-Vol A available. And I think they're disconnected from the low-vol price. And as the low-vol price begins to retreat, I'm not sure -- again, it's just speculation on my part, I'm not sure that the High-Vol A price in the Atlantic Basin will retreat in equal amounts. So that's what would close the relativities up potentially.

Okay. So we need to see supply coming out of high vol essentially is the answer you think, Walt?

I think that's the final answer, yes.

The next question comes from Katja Jancic with BMO Capital Markets.

Maybe on the cost side. So the performance year-to-date has been very good. And when we look at your cost target, it does imply a more material increase in cost in the second half. And I know, Dale, you mentioned that there are inflationary pressures, but at the same time, those have not been material. So can you maybe talk about what met coal prices do you assume in the second half specifically that would contribute to maybe higher costs? Or how should we think what the main moving pieces on the cost side are?

Well, you talked about some inflation, but we're pretty near the bottom end of our range already. So we're 93% year-to-date versus 95% on the bottom. So I don't see that as different. So -- and the higher number is just based on some higher estimates on pricing, over 200 for a PLV. So we baked in some inflation into that number and just provides some cushion for anything that might happen in the second half of the year.

Maybe looking beyond this year on the CapEx side, can you just remind us what the maintenance CapEx, or how should we think about CapEx over the next few years?

Well, for this year, it was -- $105 million to $115 million is our guide for this year for the existing mines. And that excluded Blue Creek. So you probably need to add another $25 million to $30 million for that. So you're looking at $130 million to $150-ish on a recurring basis, probably broad range.

The next question comes from Nathan Martin with The Benchmark Company.

Just sticking with the cost per ton for a moment. Some of your peers have talked about elevated diesel prices. Do you guys expect those to impact your operations at all in the back half of the year?

They are lingering but not a significant amount. We don't use a lot of diesel. So we don't truck a lot of coal. And what we do truck, we could also ship by rail. So we have optionality there. But we just don't typically use a significant amount of diesel. But as I said in my prepared remarks, look, when you add them all up, you can see a few dollars a ton when it all adds up between steel prices and other chemicals, all kinds of things.

Dale, I appreciate that. Secondly, can we get a few details around the reported electrical outage at the Port of Mobile? Any lingering effects there for you guys?

No, no lingering effects. We saw it for a few days. I mean it's really that time of the year where between storms and other things, we expect some outages down there, and we just managed to have one down there from an electrical standpoint for a few days. But no, we don't expect any lingering effects.

All right. Good to hear, Walt. And then maybe finally, related to longwall moves, it all look like one might have shifted from the second quarter into the third quarter. Could we get some details around which mines the remaining longwall moves are occurring at in the various quarters?

I think when we look at our longwall moves, given the number of sets of shields we have, we have done a -- we've worked very hard to make sure we continue to have 0-day longwall moves. So I think impact from longwall moves will be minimal, if any, throughout the rest of the year.

The next question comes from Alex Hacking with Citi.

I just had one question on the realized price. I guess I didn't quite follow the prepared remarks. The price was down $12 quarter-on-quarter. Indexes were flattish. I mean I think, obviously, freight to the Pacific Basin was quite a bit higher, but you're also -- your mix was tilted more towards the Atlantic Basin. So that seems neutral-ish. So I guess what am I missing as to understand the quarterly decline in the realized price?

Yes. Well, first, we did have higher volumes, okay? So -- but let me see, looking at the change here. The biggest one was 10% more volume went into Europe versus the first quarter.

And as we said in our prepared remarks, those prices were lower U.S. East Coast prices because they were down when you look at the quarter. So we had less going into Asia of about 10%, but Asia is still -- those freight rates were much, much higher. They averaged about almost $10 a ton higher in the first -- in the second quarter versus the first quarter.

[Operator Instructions] The next question omes from Chris LaFemina with Jefferies.

:p id="137301578" name="Christopher LaFemina" type="A" /> So I want to ask on the cost performance in the quarter and then on the cost guidance. So first, in the cost for the quarter, how much of the reduction from the year ago period was due to 45X tax credits? Have you disclosed what the tax credit was in the second quarter? I apologize if I missed that.

Yes. It was about $3 a ton, Chris, somewhere around Chris --

The delta from last year to this year was $3 a ton?

Yes, $3 a ton. That's correct.

And then secondly, on the lower cost -- high end of the cost guidance for the year, I assume that's because the higher sales volume is incremental tons that come from Blue Creek, which is lower cost. Is that why the high end of the cost guidance range has been lowered?

Yes, that's right.

So you said of the 13 million to 14 million tons of expected sales this year, 5 million would be from Blue Creek and it would have been $4.5 million before. Is that correct?

That's correct. And 90% of that is contracted.

And we have a follow-up from Nick Giles with B. Riley Securities.

Just given the success you've had in contracting Blue Creek tons thus far at the expense of stating the obvious that the market remains weak, what would prevent you from moving up to the targeted 6 million ton run rate sooner than expected? Or is that still the right kind of target run rate to have in mind as we think about 2027 and beyond?

I still think we're going to try to maximize the production out of that mine, and it's just a matter of getting the people in line and getting the -- everything worked where we want it, and then we will absolutely maximize the production coming out of that mine.

Got it. And maybe, Walt, just on that point, can you just kind of give us an update on where things stand from a hiring perspective?

We're -- right now, we're staffed to run 4 continuous minor units in longwall, which is where we wanted to be. We are -- we have some openings. We're still trying to fill jobs, but we're feeling pretty good about where we're staffed right now.

Thank you. At this time, there are no further questions. I will now turn the call back over to Mr. Scheller for any comments.

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

Thank you. Again, that concludes today's conference. Thank you for all -- thank you all for participating. You may now disconnect.

Good day, and welcome to the Warrior Met Coal First Quarter 2026 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Brian Chopin. Please go ahead, sir.

Good afternoon, and welcome, everyone, to Warrior's First Quarter 2026 Earnings Conference Call. 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.

Forward-looking statements, by their nature, address matters that are different degrees uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements.

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. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our first quarter press release furnished to the SEC on Form 8-K, which is also posted on our website.

Additionally, we will be filing our Form 10-Q for the quarter ended March 31, 2026, with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes the first quarter supplemental slide deck that was posted this afternoon.

Today on the call with me are Mr. Walt Scheller, Chief Executive Officer; and Mr. Dale Boyles, Chief Financial Officer. After our formal remarks, we will be happy to answer any questions. With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thanks for taking the time to join us today to discuss our first quarter 2026 results. I'll start by providing an overview of the quarter before Dale reviews our results in additional detail.

The first quarter marked a defining milestone for Warrior as we completed the final construction and project spending associated with the development of our transformational Blue Creek mine, delivering the project ahead of schedule and fully in line with our capital expenditure guidance.

This achievement reflects years of planning, disciplined capital allocation and exceptional execution by our team and concludes the construction and investment phase of Blue Creek.

Our total project capital expenditures were a little over $1 billion. As a reminder, this is on budget and fully paid out of cash from operations without incurring any funded debt.

The new Blue Creek mine was a major contributor to higher volumes and profitability in the first quarter of 2026, which led to record quarterly sales and production volumes. Our first quarter volumes were higher than our internal plans and are expected to be higher for the remainder of the year to meet our full year outlook and guidance.

As we look at the first quarter, steelmaking coal market conditions, pricing remained notably strong in the premium quality segment and well above our original expectations, while the High-Vol A quality segment underperformed expectations.

We believe the strength in premium quality pricing was driven by tightness in the segment resulting from supply constraints stemming from weather disruptions and mine production-related challenges in Australia. These factors drove up premium quality pricing by 15% in January, leading to noticeably higher demand for our Mine 7 premium quality product.

As Australian supply chains have begun to recover from these events, the emergence of the new conflict in the Middle East introduced additional cost pressures, specifically in freight markets while increasing the uncertainty around global energy availability.

Steelmaking coal prices have remained strong as inflationary cost pressures from the rise in oil and diesel prices have asserted a firmer floor despite soft seaborne demand, especially in the spot market.

However, from a global seaborne demand perspective, India continues to be a key market supported by firm domestic steel prices, improving margins and growing steel production, which has helped sustain demand for high-quality steelmaking coal.

Global pig iron production decreased by 2.1% for the first 2 months of 2026 as compared to the same period last year. India continued to demonstrate strength, showing a 3.1% for the same period. China's pig iron production declined by 2.7% during the 2-month period.

Our primary index, the PLV FOB Australia rose very quickly in the first quarter as a result of supply constraints stemming from previously discussed challenges in Australia, reaching a high of $229 in early February and averaged $213 per short ton. The index average was 17% or $31 per ton higher than the fourth quarter of 2025 and was 27% higher than the first quarter of 2025.

As for the main second-tier indices, the Australian LVHCC index price experienced more modest gains and averaged $173 per short ton for the first quarter. This was $19 per ton or 12% higher than the fourth quarter of 2025 and 30% higher than the first quarter of 2025.

As a result, the relativity of the Australian LVHCC index price to the Australian PLV index price decreased from 85% for the fourth quarter of 2025 to 81% for the first quarter of 2026.

In contrast to the Australian LVHCC index price, the average U.S. East Coast HVA index price only increased $8 per ton or 6% in the first quarter and the fourth quarter of 2025 and averaged $144 per short ton.

As a result, the relativity decreased from 75% for the fourth quarter of 2025 to 68% for the first quarter of 2026. More importantly, this relativity dropped to an all-time low of 62% for a brief period during the first quarter and represents a significant spread difference with the Pacific Basin relativity.

We achieved a gross price realization of 72% for the first quarter compared to 75% in the fourth quarter of 2025. Our gross price realization was lower and driven by a combination of factors.

First, while the average of both main pricing indices increased in the first quarter compared to the fourth quarter of 2025, the price spreads or relativities widened, reaching one of the lowest values ever recorded.

Second, our sales mix of High-Vol A quality was 11% higher. Third, that higher sales mix was primarily sold in the Pacific Basin on a CFR basis with higher average freight rates due to the conflict in the Middle East.

We sold 4% more volume into the Pacific Basin in the first quarter than in the fourth quarter of 2025. Warrior achieved a record high quarterly sales volume in the first quarter of 3 million short tons compared to 2.2 million tons in the same quarter 2025.

This represents a 38% increase primarily due to the additional sales volume from the new Blue Creek mine. Our first quarter sales volume mix was 61% High-Vol A, representing a 10% increase over the fourth quarter of 2025.

As production from Blue Creek continues to increase, we expect our sales volume mix to become more weighted toward High-Vol A products and the Pacific Basin destinations over time.

Our sales by geography for the first quarter break down as follows: 61% into Asia, 25% into Europe and 14% into South America. Our spot volume was 6% for the first quarter of 2026. Sales volumes in the Pacific Basin were 61% for the first quarter, which were 4% higher than the fourth quarter of 2025 and 18% higher than the first quarter of last year.

Production volume in the first quarter of 2026 was a record high 3.5 million short tons compared to 2.3 million in the same quarter of last year, representing a 55% increase. This increase reflects the significant contribution of Blue Creek.

Our coal inventory levels increased to 1.9 million short tons at the end of March of this year compared to 1.6 million tons at the end of December of 2025. We expect to manage the excess inventory over the remainder of the year to maximize sales volume, profitability and free cash flow.

I'll now ask Dale to address our first quarter results in greater detail.

Thanks, Walt. Let me first highlight our first quarter financial results compared to the fourth quarter of 2025. Our first quarter adjusted EBITDA of $143 million was 54% higher than the fourth quarter of 2025, primarily due to the following factors: 2 positives, offset by 2 negatives.

First, our sales volume were 4% higher in the first quarter, driven by an increase of tons sold from Blue Creek. Second, our average net selling price was $20 per ton, 15% higher in the first quarter, primarily due to a 10% higher mix of High-Vol A volumes sold into the Pacific Basin on a CFR basis at elevated freight rates.

Third, cash cost per ton were $2 higher in the first quarter, primarily attributable to a higher variable cost for transportation and royalties and were partially offset by Blue Creek's inherently low cost structure and a $3 per ton benefit from the new 45X production tax credit from the One Big Beautiful Bill Act.

And finally, operating cash flows were negative $12 million, which was $88 million lower than the fourth quarter of 2025. This result is attributed to the increase in working capital, primarily for accounts receivable and inventory.

Accounts receivable were higher on higher sales volume and higher steelmaking coal prices. In addition, sales volume for the quarter was heavily weighted to the month of March by 43%. Our spending for capital expenditures and mine development were a combined $24 million lower in the first quarter compared to the fourth quarter of 2025, primarily due to lower investments in Blue Creek.

Now let me compare the first quarter of 2026 to the prior year's first quarter results. Warrior recorded net income of $72 million or $1.37 per diluted share in the first quarter of this year compared to a net loss of $8 million or $0.16 per diluted share in the same quarter of 2025.

We reported adjusted EBITDA of $143 million in the first quarter of 2026 compared to $39 million in the same quarter of 2025, an increase of 263%. Our adjusted EBITDA margin improved to 31% in the first quarter of 2026 compared to 13% in the same quarter of last year.

On a per ton basis, our adjusted EBITDA margin improved to $48 per short ton for the first quarter of 2026 compared to $18 in last year's first quarter. The primary drivers of these improvements were a 38% increase in sales volumes, a 10% increase in average net selling price and a 14% reduction in cash cost, reflecting the increasing contribution from our new Blue Creek mine.

Total revenues were $459 million in the first quarter of this year compared to $300 million in the same quarter of last year. The total increase of $159 million was primarily due to the impact of higher sales volumes of $113 million and the impact of an increase in average gross selling prices of $69 million.

This was partially offset by the impact of a higher mix of High-Vol A tons sold of $24 million. In addition, demurrage and other charges were $4 million higher compared to last year's first quarter. This resulted in an average net selling price of $149 per short ton in the first quarter of 2026 compared to $136 in the first quarter of last year.

Cash cost of sales were $289 million or 64% of mining revenues in the first quarter of this year compared to $244 million or 83% of mining revenues in the first quarter of last year. Of the $45 million net increase in cash cost of sales, there was a $93 million increase in costs, which were attributed to the 38% increase in sales volumes and slightly higher variable transportation and royalty costs on higher average steelmaking coal price indices.

These higher costs were offset partially by $48 million of lower costs that were driven by the leverage of lower cost Blue Creek tons sold and $8 million of benefit from the 45X production tax credit. Cash cost of sales per short ton, FOB port, was approximately $96 in the first quarter of 2026 compared to $112 in the same quarter last year. The 14% decrease was primarily related to the factors I just mentioned on a dollar basis.

Cash margins per short ton increased 127% to $53 in the first quarter from $23 in the same quarter of last year.

Our first quarter 2026 SG&A expenses were $28 million and were $10 million higher than the same quarter of 2025, primarily due to higher employee-related expenses, including stock compensation expenses. SG&A expenses are on track with our full year outlook and guidance.

Depreciation and depletion expenses were $52 million in the first quarter, which was 15% higher than the first quarter of 2025, primarily due to the additional assets placed into service at Blue Creek and the higher sales volume in the first quarter of 2026.

We recorded income tax expense of approximately $6 million on pretax income of $79 million in the first quarter of 2026. Our effective income tax rate varied from the statutory federal income tax rate of 21%, primarily due to tax benefits recognized for depletion expense and a foreign-derived intangible income deduction, resulting in an effective income tax rate of 11%. Now let us turn to cash flows from the first quarter of 2026.

Cash flows from operating activities were a negative $12 million in the first quarter of 2026 and were $23 million lower than the previous year's first quarter.

Working capital increased by $146 million during the first quarter, primarily due to $115 million of higher accounts receivable. This outcome was primarily attributed to higher sales volume, higher steelmaking coal prices and the timing of quarterly sales volumes that were 43% weighted to the month of March, thereby pushing cash collections into the second quarter.

In addition, coal inventory was higher as production exceeded sales volume during the first quarter. Free cash flow was a negative $92 million due to $12 million of cash used by operations, combined with cash used for capital expenditures of $80 million. This outcome of negative free cash flow was expected and previously communicated on our last earnings call in February.

Capital spending includes the final $66 million invested for the completion of the Blue Creek development project. Our free cash flow was slightly more negative than anticipated in the first quarter, was primarily due to timing of sales volume and is expected to turn positive in the second quarter.

We're pleased that we continue to maintain strong liquidity while delivering higher profitability. Our total available liquidity at the end of the first quarter was $364 million and consisted of cash and cash equivalents of $203 million, short-term investments of $20 million and $141 million available under ABL facility.

Finally, let me turn to our current outlook and guidance for the full year 2026 as detailed in our earnings release. We expect the steelmaking coal markets to remain generally consistent with recent trends, absent any major disruptions in supply or demand or a prolonged conflict in the Middle East.

First quarter results were on track and generally consistent with our expectations for the full year and that is why we are reaffirming our outlook and guidance for 2026 as previously communicated in February.

Having said that, there are a few cautionary notes to keep in mind. We are beginning to see some inflationary cost pressures on materials and supplies, such as steel roof supports, [indiscernible] bits as well as diesel fuel.

In addition, we are experiencing some tariffs and higher shipping costs on these raw materials. While we have not been materially impacted by inflation so far this year, we believe the remainder of the year could see an increase of a few dollars per ton. At this point, it is extremely difficult to predict any full year impact to our cash cost.

Obviously, we're taking all possible measures to mitigate any impacts of inflation.

I'll now turn it back to Walt for his final comments.

Thanks, Dale. Warrior performed very well in the first quarter, and our financial and operational results were better than expected as premium quality steelmaking coal prices were higher for a longer period of time and our volumes were slightly ahead of our internal plans.

This strong beginning to 2026 supports our full year outlook and guidance. Our current view of the steel and steelmaking coal markets is both positive and resilient.

While we face uncertainty from the Middle East conflict and its effect on the global economy, at this point, the full impact of the conflict and its length are not quantifiable on the full year. And as Dale noted, we may have to contend with some inflationary cost pressures.

But right now, we see these potential impacts outweighed by higher production as a result of European protectionist measures and rising steel prices across nearly all geographies.

As is often the case in such dynamic and unpredictable environments, disruptions may create short-term or region-specific opportunities that we fully intend to take advantage of. For now, we expect steelmaking coal prices to remain above their 2025 average levels, absent material changes in supply and demand.

Most importantly, Warrior has the tools to continue to drive value creation for our stockholders by continuing to execute our strategy to optimize production, control our costs and generate free cash flow.

With our high-quality assets and low first quartile cost structure, we are as well positioned as we've ever been to thrive in a wide range of steelmaking coal environments.

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

[Operator Instructions] And our first question for today will come from Nick Giles with B. Riley.

My first question was just, obviously, a fairly meaningful working capital build in 1Q, which you had foreshadowed. How much of this could we see unwind in the second quarter? And then another question would just be, can you remind us of the cash flow balance sheet implications for the 45X production tax credit? How much did that contribute to the build, if any?

It's Dale. Yes, I mean, it's hard to predict exactly how much of the working capital will turn around, but it's just timing. A large portion will come back. I'm not sure we'll be back to breakeven. We'll be shy of that probably on a year-to-date basis through the first half. As far as the 45X credit, that was worth about $8.4 million and -- or $3 a ton for the quarter.

Understood. You mentioned some initial inflationary pressures stemming from the conflict. I think Warrior is more insulated, but can you just speak to the diesel usage across your operating platform? Or do you have any kind of sensitivity or total consumption, just so we can try and understand that impact?

Well, again, we don't do a lot of trucking at coal. We do truck a little bit to the barge load out. So we're not a high usage like strip mines and things like that, our surface mines. We just don't use a lot of diesel.

I don't have a projection for you because, one, I have no idea how long oil prices will stay this high and what those pass-throughs could be. So we're subject to some pass-through on surcharges and things like that. But as I said earlier, we haven't seen anything material yet. It depends on how long this continues.

So we could see some increase later in the year, but we are seeing some other things, like I said, the bits, that's tungsten coming out of China and that's a challenge right now. But you're starting to see and hear it from some other suppliers too on other materials and supplies.

So it's just not been able -- we just haven't been able to quantify it yet. We're really working hard to look for alternative vendors, alternative sources, anything that we can do to mitigate it.

Understood. No, that's still helpful perspective. Just one more, if I could. Inventories have been rising for the past couple of quarters, I think, 1.9 million tons is what you said. Most of the working capital build, I think, was more from receivables.

Can you just speak to how you could see those inventories unwind in the coming quarters and what kind of mix we're working with? I assume it's mostly Blue Creek product, but I appreciate the clarification.

Yes. The -- our sales projections for Blue Creek are -- actually, we're even ahead of schedule from where we thought we would be in terms of placing Blue Creek for the year. It's just production levels have been so much higher than that, that they surpassed our expectations.

And I think as we look out through the remainder of the year, we're still doing some tests with different potential customers on Blue Creek. And the hope is to get more and more of that coal put to bed.

When we look at how much of it's moving in the spot market, it's very little. And as we put those tons to bed, we'll -- again, we will -- we're going to do everything we can to make sure we back the inventory down to what we consider to be a more normal level. But it's going to take us all year to work at it.

Yes. I think you would just see a gradual decline over the next few quarters, nothing dramatic in a single quarter. The mines are running well. So the production is coming pretty good. And obviously, the highest amount of production or inventory that we have is High-Vol A.

The next question will come from Katja Jancic with BMO Capital Markets.

Maybe first on the volume that you ship to Pacific Basin, so the 60% that you shipped there in first Q, how much of that is on CFR basis?

All of it.

And can you talk a little bit about the current freight cost to ship what it currently is versus, let's say, recent quarters?

Well, they're averaging much higher. I think the average is a little bit different, but I know we saw some freight rates last week in the $50 -- around mid-$50 last week. I think it's only averaging somewhere in the upper 40s for the quarter, so second quarter, that is. So it's been pretty significant.

And maybe one last one. You mentioned all your operations are operating very well. Do you have any limitations on how much inventory you can hold at any time?

Not really. I mean, from where we are today, we can hold a lot more inventory. You have to remember, a lot of this is Blue Creek and Blue Creek, given its design has multiple places where we could store significant amounts of inventory. So no, we're not bounded by anything at this point.

The next question will come from Nathan Martin with The Benchmark Company.

Congrats on wrapping up Blue Creek. I guess now that the project has wrapped up, it would be great to hear about what your priorities are for free cash flow and shareholder returns going forward.

Well, once we start to generate some cash going forward, yes, I think we'll be in a period of time when we would look to provide more shareholder returns since we have not done so in the last few months, last few quarters.

So I think we would be headed in that direction. It's hard to say exactly when. It depends on when we start to generate the cash and have it available to distribute. But I would think if we turn positive in the second half, it could be sometime in the second half, maybe the latter part of the year.

That would be the earliest I think you could see or expect anything.

Appreciate that, Dale. And what form do you guys have any preference there? I know historically, you've done, obviously, the regular dividend, but also done some special dividends. Any thoughts on that versus maybe buybacks?

Well, I think we're going to stick to somewhat similar philosophy as we've used in the past, which is a rising fixed quarterly dividend supplemented by special dividends and some selected stock buybacks that has done well for our shareholders that have held on to our stock over time. So we have one of the highest TSRs over the last 10 years and in this sector and that's worked very well for us.

All right. Got it. Appreciate that. And then maybe any thoughts from you guys on how the recent Section 303 determination signed by the administration could impact Warrior's business?

Yes. I really think that if we look at it right now, things are going to just continue to move as they are today. I don't think there's going to be any significant changes. So no, I don't think there will be much of an impact.

[Operator Instructions] And that will conclude our question-and-answer session for today. I would like to turn the conference back over to Mr. Walt Scheller for any closing remarks. Please go ahead.

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

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good afternoon. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] This call today is being recorded and will be available for replay once the call is over on the company's website.

I would now like to turn the call over to Brian Chopin, Chief Accounting Officer and Controller. Please go ahead, sir.

Good afternoon, and welcome, everyone, to Warrior's Fourth Quarter and Full Year 2025 Earnings Conference Call. 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.

Forward-looking statements, by their nature, address matters that are to different degrees, uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements. 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. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our fourth quarter press release furnished to the SEC on Form 8-K, which is also posted on our website.

Additionally, we will be filing our Form 10-K for the year-ended December 31, 2025, with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a fourth quarter supplemental slide deck that was posted this afternoon.

Today on the call with me are Mr. Walt Scheller, Chief Executive Officer; and Mr. Dale Boyles,, Chief Financial Officer. After our formal remarks, we will be happy to answer any questions.

With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thank you for taking the time to join us today to discuss our fourth quarter and full year 2025 results. I'll start by providing an overview of the quarter before Dale reviews our results in additional detail.

2025 was a transformative year for Warrior as Blue Creek began reshaping our production profile, cost structure and long-term earnings potential. This performance was exemplified by our fourth quarter operational and financial results, which exceeded our expectations. As we previously communicated, the longwall operations at Blue Creek began production during the fourth quarter, 8 months ahead of schedule, on budget and funded by cash flows from operations.

In continuing our trend of operational excellence throughout the entire Blue Creek project, the ramp-up of the Blue Creek longwall was remarkably smooth, especially for a project of this scale and delivered a strong operating performance during the fourth quarter.

We achieved an annualized run rate of production during the quarter that well supports our increased volume guidance for 2026. I'll discuss our 2026 guidance later in my comments.

Our strong performance in the fourth quarter, including a record high quarterly sales volume wrapped up a remarkably successful year despite weak market conditions for steelmaking coal. We achieved double-digit volume growth in both sales and production volumes for the full year 2025, which were also record high levels of output for the company. This performance continued to reduce our first quartile cash costs, leveraging the inherently lower cost structure of the Blue Creek mine.

In addition to the Blue Creek ramp-up, both Mine 7 and Mine 4 continued their high standards of strong performance, which is particularly important to the overall success of the company. Mine 4 set a new record high output for both sales and production volume.

Total sales volume for 2025 was 9.6 million short tons, a record high and a 21% increase over the prior year. Production volume was 10.2 million short tons, also a record high and a 24% increase over 2024.

Now let me turn to more specifics on the market conditions during the fourth quarter before I share more detail on our operational and financial performance. The primary underlying drivers of the weak steelmaking coal markets for the fourth quarter were a continuation of the same factors we've been discussing each quarter for the past 2 years. In fact, Chinese steel export volumes for 2025 set a new record high of 119 million metric tons, a 7.2% increase year-over-year.

Chinese crude steel production decreased by 4.4% during the same period, prompting the country to contemplate production control and implement export licenses.

Beyond the sustained strength in key markets such as India, which grew its pig iron production by over 6% in 2025, global steel fundamentals have not shown significant improvement in the last couple of years. While global steelmaking coal markets remain challenged, a continuation of trends we've navigated successfully for the past 2 years, Warrior's disciplined execution and early contributions from Blue Creek allowed us to outperform despite the environment.

Our primary index, the PLV FOB Australia performed above our expectations for the fourth quarter and averaged $182 per short ton, which was the highest quarterly average in 2025 and marked the first time at that level since December 2024. The index average was 9% or $15 per ton higher than the third quarter 2025 and was 1% lower than the fourth quarter 2024.

As for the main second-tier indices, the Australian LV HCC index price continued its recovery from its low point in the second quarter and averaged $154 per short ton for the fourth quarter. This was $17 per ton or 13% higher than the third quarter 2025 and 1% higher than the fourth quarter 2024. As a result, the relativity of Australian LV HCC index price to the Australian PLV index price improved from 82% for the third quarter to 85% for the fourth quarter 2025.

In contrast to the Australian LV HCC index price, the average East Coast HVA index price decreased $6 per ton or 4% in the fourth quarter from the third quarter and averaged $135 per short ton. As a result, the relativity decreased from 85% for the third quarter to 75% for the fourth quarter 2025. We achieved a gross price realization of 75% for the fourth quarter 2025 compared to 83% in the third quarter of 2025. While the average of both main pricing indices increased in the fourth quarter compared to the third quarter 2025, our lower gross price realization was primarily driven by a combination of 4 factors.

First, our sales mix of High-Vol A quality was 8% higher. Second, the higher sales mix of High-Vol A quality was primarily sold into the Pacific Basin. We sold 18% more volume into the Pacific Basin in the fourth quarter than the third quarter 2025. Third, demurrage costs were temporarily higher in the fourth quarter due to longer vessel loading queues that were attributed to modernization work on a ship loader as a terminal. And fourth, we continue to experience elevated freight rates into the Pacific Basin.

As we continue to ramp up Blue Creek production and sales volume, our quarterly gross price realization may be volatile depending upon the relative index price, product mix, geography, tariffs and freight rates to the Pacific Basin. However, on a long-term basis, including Blue Creek, we expect our annual gross price realization to be approximately 80% to 85%, assuming the relativities of the Australian LV HCC index price and U.S. East Coast HVA index price to the Australian PLV index price historical averages. However, this may not be achievable in 2026 and not until the overall market fundamentals of supply and demand become more balanced across the regions of the world.

While Blue Creek products mix will influence our long-term average net selling price, Blue Creek's significantly lower cost structure is expected to more than offset this and drive substantial margin expansion for the company.

Strong contractual demand, combined with excellent performance from our legacy mines and the additional contribution from Blue Creek enabled Warrior to achieve a record high quarterly sales volume in the fourth quarter of 2.9 million short tons. This result compares to 1.9 million tons in the same quarter of 2024, representing a 53% increase. We sold 881,000 tons of Blue Creek steelmaking coal during the fourth quarter 2025, which were contractual volumes sold primarily into Asia.

Our sales by geography for the fourth quarter break down as follows: 57% into Asia, 34% into Europe and 9% into South America.

Our spot volume was 6% for the fourth quarter 2025 and was 9% for the full year.

Production volume in the fourth quarter 2025 was a record high 3.4 million short tons compared to 2.1 million in the same quarter of last year, representing a 61% increase. Production from our Blue Creek mine was 1.3 million tons during the fourth quarter and exceeded our expectations. Our coal inventory levels increased to 1.6 million short tons at the end of December compared to 1.1 million tons at the end of September 2025. The increase in inventory reflects the early start-up of Blue Creek's longwall production.

The early start-up of the Blue Creek longwall was a major contributor to the higher volumes and profitability in the fourth quarter and for the full year 2025. As I noted earlier, the ramp-up of production went smoothly and has already achieved a quarterly run rate of 1.5 million short tons. However, given the expected weak market conditions for steelmaking coal in 2026, we will start the year with an expected production level of 4.5 million short tons from Blue Creek.

We plan to sell the excess inventory that was built up in the fourth quarter before we ramp to a higher production level. We plan to ramp production in line with increases in contractual volumes to ensure we support pricing discipline while maximizing long-term value.

Financially, we dedicated another $69 million of capital expenditures in the fourth quarter and $240 million for the full year 2025 to the Blue Creek project. That brings the total project capital expenditures to date to $957 million. As a reminder, this is on budget and fully paid out of cash flow without any funded debt.

Our total project estimate remains unchanged, ranging from $995 million to $1.075 billion. The remaining capital to be spent on the Blue Creek project is expected to occur by the end of the first quarter 2026. The remaining work is primarily related to finishing the barge load out, finishing a third storage silo with the rail load out, paving loads, completing storage and shop buildings and other final project details. None of this final work should have any impact on production from the new mine.

Let me take a moment to step back and summarize a few key highlights for the year 2025. First, we were able to start the Blue Creek longwall 8 months ahead of schedule, remain on budget and fund the entire project out of cash flow from operations. Second, adding Blue Creek to our production profile adds significant scale to our operations and significantly further improves the company's first quartile cost curve position, which is expected to drive margin expansion in the future. Third, we were successful in strategically expanding our total reserve base by finalizing 2 federal coal leases to obtain 53 million short tons of additional reserves. It's also created access to other additional privately owned reserves. Fourth, while we made significant investments in Blue Creek, we managed our costs and spending to meet or exceed all of our guidance targets for 2025.

I'll now ask Dale to address our fourth quarter results in greater detail.

Thanks, Walt. Our fourth quarter results continued the sequential improvement quarter after quarter throughout 2025. As Walt discussed earlier, the steelmaking coal market continue to be pressured in the fourth quarter by the same factors that we have discussed over the last 2 years. Despite these market conditions, we continue to outperform expectations for 2025 as we met or exceeded our full year 2025 guidance targets on the back of a strong fourth quarter, both operationally and financially.

Let me first highlight our fourth quarter financial results compared to the third quarter of 2025. Our fourth quarter adjusted EBITDA of $93 million was 31% higher than the third quarter of 2025, primarily due to the following factors.

First, our sales volumes were 22% higher in the fourth quarter, including an increase of tons sold from Blue Creek.

Second, our average net selling price was $6 per ton lower in the fourth quarter, primarily due to higher mix of High-Vol A volumes sold and that volume was sold into the Pacific Basin on a CFR basis at elevated freight rates. In addition, demurrage was temporarily higher in the fourth quarter, as Walt noted earlier. This result was offset by the increase in the average price indices quarter-over-quarter.

Third, cash costs per ton were $7 lower in the fourth quarter and were primarily attributed to Blue Creek's inherently low cost structure, which increased our cash margin per ton.

And finally, operating cash flows of $76 million were $29 million lower than the third quarter of 2025. This result is attributed to the increase in working capital primarily for accounts receivable and inventory as we ramped up the Blue Creek longwall in the fourth quarter.

Our spending for capital expenditures and mine development were a combined $20 million lower in the fourth quarter compared to the third quarter of 2025, primarily due to lower investments in Blue Creek. Free cash flow was about $9 million lower in the fourth quarter.

Now let me compare the fourth quarter 2025 to the prior year fourth quarter results. Warrior recorded net income of $23 million or $0.44 per diluted share compared to net income of $1 million or $0.02 per diluted share in the same quarter of 2024. We reported adjusted EBITDA of $93 million in the fourth quarter of 2025 compared to $53 million in the same quarter of 2024, an increase of 75%.

Our adjusted EBITDA margin grew to 24% in the fourth quarter of 2025 compared to 18% in the same quarter of last year, despite the PLV index being 1.3% lower in the fourth quarter of 2025. On a per ton basis, our adjusted EBITDA margin grew to $32 per short ton in the fourth quarter of 2025 compared to $28 in last year's fourth quarter. The primary drivers of these improvements came from 53% higher sales volumes, lower cash cost, including the low-cost Blue Creek tons sold, lower variable transportation and royalty costs and tightly managing and controlling all other production costs. These improvements were partially offset by a 16% lower average net selling price.

Total revenues were $384 million in the fourth quarter of this year compared to $297 million in the same quarter of last year. The total increase of $87 million was primarily due to the 53% higher sales volumes impact of $154 million, offset by the impact of a decrease in average gross selling prices of $52 million and a higher mix of High-Vol A tons sold of $13 million.

In addition, demurrage and other charges were $6 million higher compared to last year's fourth quarter. This resulted in an average net selling price of $130 per short ton in the fourth quarter of 2025 compared to $155 per ton in the fourth quarter of last year.

Cash cost of sales were $270 million or 72% of mining revenues in the fourth quarter of this year compared to $226 million or 77% of mining revenues in the fourth quarter of last year. Of the $44 million net increase in cash cost of sales, there was a $119 million increase in costs, which were attributed to the 53% increase in sales volumes. These higher costs were offset partially by $75 million of lower costs that were driven by leverage of lower cost Blue Creek tons sold and lower variable transportation and royalty costs on lower average steelmaking coal price indices.

In addition, we continue to rationalize and tightly manage our spending on supplies, repairs and maintenance expenses throughout the operations to maintain our low-cost profile.

Cash cost of sales per short ton, FOB port, was approximately $94 in the fourth quarter of 2025 compared to $120 in the same quarter last year. The 22% decrease was primarily related to lower overall spending at the legacy mines of $11 per ton due to tightly managing our overall spending, lower variable transportation and royalty cost of $5 per ton on lower steel coal prices and $10 per ton from the incremental sales of low-cost Blue Creek tons. These lower costs resulted in higher cash margins per ton.

Our fourth quarter 2025 SG&A expenses were $18 million and were less than $1 million higher than the same quarter of the prior year, primarily due to higher employee-related expenses.

Depreciation and depletion expenses were $56 million, which was higher than the fourth quarter of 2024, primarily due to the additional assets placed into service at Blue Creek and the higher sales volumes in 2025.

We reported income tax expense of approximately $13 million on pretax income of $36 million in the fourth quarter of 2025. Our full year 2025 effective income tax rate varied from the statutory federal income tax rate of 21%, primarily due to tax benefits recognized for depletion expense, marginal gas well credits and a foreign-derived intangible income deduction, which exceeded pretax book income, resulting in an effective income tax rate of a negative 5% for the full year.

Now let's turn to cash flows from the fourth quarter of 2025. Cash flows from operating activities were $76 million in the fourth quarter of 2025 and were $22 million higher than the previous year's fourth quarter despite Blue Creek's negative impact on working capital. Working capital increased by $8 million during the fourth quarter as the company ramped up production and sales volumes at Blue Creek.

Free cash flow was a negative $28 million due to $76 million in operating cash flows, less cash used for capital expenditures and mine development of $104 million.

Capital spending totaled $94 million, which included $69 million spent on Blue Creek as previously noted. Mine development cost for Blue Creek in the fourth quarter were $10 million. Now that Blue Creek longwall has started production, we do not expect to incur any mine development cost in 2026.

While investments in Blue Creek and other development projects drove higher capital spending in 2025, the company continued to maintain strong liquidity and delivered year-over-year improvements in cost efficiency, positioning Warrior for enhanced profitability as Blue Creek ramps towards full production. Our total available liquidity at the end of the fourth quarter of this year was $484 million and consisted of cash and cash equivalents of $300 million, short-term investments of $43 million and $141 million available under our ABL facility.

And finally, let me turn to our current outlook and guidance for the full year 2026 as detailed in our earnings release. We expect steelmaking coal markets to remain generally consistent with 2025 levels. However, we entered 2026 from a position of significant strength with higher contracted volumes, record production capacity and a structurally lower cost base driven by Blue Creek. While the assumption that prices will remain consistent with 2025 may seem conservative given the recent rally in index pricing, we believe the recent global mining production disruption and inclement weather events may be temporary. And we expect PLV prices may revert downward following the remediation of these disruptions.

We anticipate total sales and production volumes to be significantly higher in 2026 than 2025 as a result of starting the Blue Creek longwall 8 months early and reaching new record high output levels. Overall, company contracted volume for 2026 is approximately 90% of total sales volume. Our sales volume guidance is approximately 0.5 million tons higher than our production volume to reduce our inventory levels to our optimal target level of just below 1 million short tons.

And lastly, we expect to spend the remaining construction CapEx of $50 million to $75 million on the Blue Creek project in the first quarter of 2026. From a free cash flow perspective, we expect the first half of 2026 to be free cash flow negative due to the ramp-up of sales and production at Blue Creek, increasing our working capital and spending the remaining project capital expenditures in the first quarter. We expect to be free cash flow positive in the second half of the year. Obviously, these expectations are highly dependent upon the steelmaking coal markets and actual pricing indices.

I will now turn it back to Walt for his final comments.

Thanks, Dale. Warrior is exceptionally well positioned to deliver higher free cash flow and long-term value creation. We expect 2026 sales volumes to be more than 30% higher than 2025 and production volumes to be more than 20% higher than 2025, driven by the contribution of the new Blue Creek mine over the entire year.

We expect to reduce our coal inventory levels to just below 1 million tons, which has been reflected in our sales volume guidance. In addition, we've included approximately 4.5 million tons of production from our Blue Creek mine, which could potentially be higher if we continue to be successful with the trial shipments and engage in more long-term contracts with customers. Currently, we have 90% of our 2026 midpoint sales volume under contract, including 85% of the Blue Creek volume.

As we look at the current steelmaking coal market conditions, pricing levels remain notably strong and well above our original expectations. We believe this elevated pricing environment is primarily due to tightness in the premium quality segment as a result of recent supply constraints stemming from Australian weather disruptions and mine production-related challenges in Australia. While it's difficult to predict how quickly supply chains will normalize, we anticipate that prices will remain supported through most of the first quarter. However, we believe these disruptions are temporary and unless global steel fundamentals significantly improve, PLV prices should retreat and continue to be impacted by the same market factors that we've seen over the last 2 years.

As a result of the recent increase in PLV price, the East Coast High-Vol A price has become disconnected from the Pacific Basin indices and may weigh down overall gross price realization due to the abundant supply of that quality of coal. While we have loss of cautious optimism, we run our company to prepare for the downside risk of weak steelmaking coal markets and hope we're conservative on our price assumptions as Dale just noted in his comments.

In conclusion, 2025 marked a transformational year for Warrior. The early start-up of Blue Creek and the strategic expansion of our reserve base has strengthened the foundation of our long-term growth strategy and significantly enhanced our ability to meet sustained global demand for premium steelmaking coal. With Blue Creek now contributing meaningfully to our scale and cost structure, we entered 2026 from a position of exceptional strength, supported by expected record volumes, a stronger first quartile cost platform, disciplined capital allocation and a clear pathway to higher free cash flow generation.

Our world-class assets, operational excellence and commitment to long-term value creation positions Warrior to deliver stronger financial results and increased stockholder returns as we move forward. We appreciate your continued support and look forward to updating you on our progress throughout the year.

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

[Operator Instructions] And your first question today comes from the line of Nick Giles with B. Riley.

Congrats on the continued progress. You've come out with some really robust guidance here in 2026. And costs are being guided to a range of $95 to $110, fairly wide. But just my first question was what's the PLV price assumption you're using? And then given the costs in the fourth quarter came in below the low end of this range, I mean, what would prevent that level of cost being repeated in the first half year?

Thanks, Nick. Good question. The PLV assumption there is a range of $185 to $215. So it's a little wider, just thinking about the potential increases related to transportation and royalties. With the elevated pricing here early in the year, uncertain as to how long that will continue throughout '26, but we do expect the PLV prices to come back down.

On the cost side, good question there. Strong cost performance from the existing mines in Blue Creek. What's going to keep it that low would be prices staying this low, right? Because if we have elevated pricing, which we will have in the first quarter it appears, then obviously, our transportation royalty costs go up. So the cash cost of production should be fairly steady, but transportation and royalties would be higher.

Got it. No, I appreciate that detail, Dale. Just to confirm, you said $185 to $215, that's on a short-term basis, correct?

Correct.

Okay. Great. Second one was, I think you alluded to some of this in your prepared remarks, but how should we be thinking about working capital over the course of 2026? Is it fair to assume you'll build kind of early in the year here? And then same thing on the tax side. I think you had a tax benefit in 2025, but what should we be penciling in for cash taxes in 2026?

On the working capital, it's definitely, the ramp-up of accounts receivable and inventory because we'll be selling more of the Blue Creek tons this year. So expect that. But as we said in our prepared remarks, too, we're going to try to take our overall inventories down 0.5 million tons. That's probably going to come more evenly over the year. So the first half -- the first quarter will weigh heavily on working capital. And we should get a little relief in the second quarter, definitely in the second half of the year.

From a tax standpoint, that really depends on pricing. And you know that the 45x credit kicks in, in 2026. And we've said that's about a $40 million benefit to Warrior. So with these price assumptions, I would say we might not be a cash taxpayer in '26. If prices stay at a higher level, we will be, but just not a large amount, I don't think.

Got it. Really helpful. One last one, if I could. You've been really successful in adding some federal leases here in the recent months. I think you made -- there was one more tranche since we last spoke. And so I was just wondering if you could remind us what those payments look like? I think they're spread out over a number of years.

Yes, that's right. Total, it's 4 years, and they're about $9 million a year. So it's -- there's the 4 payments left.

And that would be reflected in the guide or outside the scope of the guidance?

That's all in there.

Got it. Okay. Well, guys, I really appreciate all the detail. I'll turn it over for now, but continued best of luck.

And the next question is from George Eadie with UBS.

Can I just go back to guidance again? I mean you came in 600,000 tons above original production or sales for '25 and $20 a ton above the original midpoint on costs. These cash cost numbers, even on my estimates and putting in that PLV range, you said still seem very conservative. I mean can you talk through maybe how you came there still year-on-year? Like I struggle to see even running 195 PLV at short ton. How you can sort of not be looking to beat guidance again?

Okay, George. Yes, I mean, we built into the guidance, just some conservatism that we said in our comments here. And hope you're wrong on the price assumptions. So specifically, I'm not really sure what you're targeting other than we tried to match the cost guidance with kind of where prices might be for the year in that range, but you may have some of that early in the year. And if they do that downward, you would have some impact.

Now one of the things you have to remember, that was a PLV assumption. And if you looked at the relativities of the Low-Vol HCC to the PLV, that was about 85%. And here in the fourth -- first quarter, it's been running about 80%. So very similar to what we've seen in '25.

On the flip side, though, the U.S. East Coast index is running at about 65% relativity. So anything we sell into the Atlantic Basin is going to have some margin offset there because of that. So those are some of the factors that we just try to consider here and be conservative on because we don't know why the trend on the East Coast High-Vol A index is so disconnected from the other indexes. So I'm just trying to think about how that might trend the rest of this year.

Yes. Okay. And then just your comment earlier about being free cash flow positive in the second half, I mean, sort of comment from working capital before. If I assume a sort of net neutral working cap position in second quarter, it's hard to not see your free cash flow positive in the second quarter. Obviously, it depends on prices as well. But is there quite a good chance even at sort of prices trending a bit lower, we could see a lot of free cash in the second half -- second quarter, sorry?

Yes, I think we could, given where the prices have been recently. If they stay that way in the first quarter, we could see the second quarter breakeven, but still too early to tell there. But I do think the second half, we will be generating a lot of cash.

Yes. And just on that, Dale, so cash, $300 million, is that still a nice minimum buffer? And should we start thinking from second half all that cash growth gets given back to shareholders? And can you remind us how to think about returns from the second half? Should all of it come back out the door? Or if not, why not?

Well, I think our cash level right now at $300 million is -- plus the investments, I guess, it's about $342 million. So that's about where we want to see it on a long-term basis, maybe slightly higher. So we might build some cash just a little bit there. But I do expect us to start returning cash to shareholders in the near future. Now is that this year in the second half? It's dependent on pricing. But I would expect that we would start returning that cash.

Now in what forms? I think what we've said and been pretty consistent about, we think that will be through a higher fixed quarterly dividend because we're going to be a significantly larger company with all the volume increases, and then we would supplement that with some special cash dividends and maybe some selective stock buybacks to take advantage of opportunities there. So I think we would see a combination of those forms.

Right. So just on that, Dale, the share price is below $86 today, like I think you and I both think that's cheap. Why not start going now with the buyback and getting ahead of that before the stock gets more expensive? I mean, I think you think also shares that you're probably going to get higher, why not go early on the buyback?

Well, it's a possibility. I'm not going to commit to a particular stock price. We'll just have to look at what are the cash needs of the business at the time and what's the best distribution or the best way to distribute that cash to shareholders.

And the next question is from Katja Jancic with BMO Capital Markets.

You mentioned earlier that there's a big disconnect right between High-Vol A and the PLV market. With more High-Vol A volume coming to the market over next year, is there a risk that this disconnect could actually at least stay or even potentially wider -- become wider?

I think you're right. I think it will stay for a while. When we look at the tons that have been brought into the market with Metinvest bringing their mine back online, Leer South coming back online and Blue Creek coming online, that's quite a few tons that need to be absorbed. That's going to take some time. So I think that we're probably looking at a market that's fully supplied for the time being. I think that will get absorbed and just over what time it takes for that to happen, I'm not quite sure. But I think given some of the things that are -- where growth is occurring, I think those tons will get absorbed, and we'll get back to a more balanced market.

And then maybe I missed this, but Dale, you talked about working capital build in the first half. How much of a build could we see?

Well, really, it depends on the prices, Katja, because right, that influences our receivables quite a bit and how quickly can we bring down our inventories. But it could be upwards of $50 million or better in the first half.

And the next question comes from Chris LaFemina with Jefferies.

Most of my questions have been answered, but I just have maybe 1 or 2 follow-ups. So the first is back on the point of capital returns, you comment on maintaining that level of cash on the balance sheet, but you also have a net cash position. So you have financial capacity to use some debt. And I understand in mining, and particularly in coal mining, balance sheet is sacred, but you'll be a low-cost producer. And if prices fall, you'll be an even lower cost producer, and you can weather the storm pretty much no matter how bad it gets. So the question is, would you consider using balance sheet for buybacks in the environment where prices were a lot lower? I know there's a lot of hypothetical situations there, but could you use balance sheet? And if not, why wouldn't you? That's my first question.

Yes. No, good question, Chris. I mean, I think -- we've kind of done things a little differently than the rest of the industry, right, in the past. So if prices were to decrease quite significantly, to me, if we have that cash on the balance sheet, that would be an opportunity -- a real opportunity for us to take advantage of a buyback. So I think that would be a good situation that we'll look to do that.

And the next question is a follow-up from Nick Giles with B. Riley.

There's been a lot of questions around the realizations. But just for the avoidance of any doubt, can you just remind us what you said on what you're assuming for the relativity as it relates to your guidance? Like obviously, there's a relativity assumption attached to that cost guidance. So just curious what those are.

Yes. And just overall gross price realizations, we're looking at about 75% for the year. So hopefully, we're conservative there. But if you look at the East Coast index, it's 65% today. And so that has a big significant impact. And like I say, it's been decreasing. It decreased in the fourth quarter, $6 a ton. So that went from 85% to 75%. So a big swing during the third quarter to the fourth quarter.

I do think we need to be careful about how we look at relativities. And remember that right now, our assumption is High-Vol A is pretty well supplied. And for relativities to improve, that means the Low-Vol price has to come down to it. So I prefer to see the relativity stay apart if the High-Vol price isn't going to increase.

Understood. I appreciate that perspective, Walt. And maybe just one more, if I could. It looks like sustaining CapEx ticked up by maybe $20 million or so. Not a huge step change, just given you do have a new mine coming online. What should we be assuming in kind of 2027 and beyond for sustaining capital?

Well, I think -- all right. I think our -- while we're looking at CapEx for this year, that's going to be pretty normal for where we are right now. I think we'll see an uptick of $20 million to $30 million a year. I don't know how quickly that will occur. But as we continue to run Blue Creek and have replacement capital for continuous miners and longwalls and things like that, we'll see an uptick of $20 million to $30 million.

Yes, that's right, Nick. So sorry, I was going to add some to that. So if you factor in Blue Creek of $20 million to $30 million, you're probably looking at $110 million to $140 million somewhere roughly on a run rate basis.

Okay. Understood.

For years, we can pull that down depending on the price environment, but you're going to be -- each year is going to increase for a while because of Blue Creek as more and more things need to be replaced, et cetera, going forward.

Okay. Okay. And I promise this will be my last question. But just anything more to add on the contracting activity? I think you spoke to it, but kind of where do things stand from a contracting perspective for Blue Creek? Could any incremental contracting activity limit the volatility in your realizations? Or are you really at the mercy of the market, if you will?

I don't think it's going to limit the volatility anymore than we see the High-Vol A price. Its volatility is going to be the only limit on the Blue Creek price volatility. And in terms of volumes and percentage of contracted, right now, we're, I think, about 80% -- 80%, 85%. And as we see that number increase and we see that inventory level come down, that's where we'll start to see the opportunity to start to increase production levels because what we've seen, we can clearly do that.

Okay. Well, Kudos to Charles and his team on that front. And guys, congrats again on all the progress.

[Operator Instructions] Our next question comes from Nathan Martin with The Benchmark Company.

A question on Mine 4, I mean, running at record levels really above its nameplate capacity, I think, the last few years. Are you guys expecting that to continue? And then related, could you break down full year sales guidance of 12.5 million to 13.5 million tons by mine? I think it will be helpful maybe when trying to understand how to think about the potential quality mix.

Well, I think we'll see Mine 4 running at about the same level what it did this past year and Mine 7 running about the same level it did this past year. And then we'll see the 4.5 million from Blue Creek. In terms of Mine 4, Mine 4 has done an outstanding job of managing their production up and at the same time, they're spending and their costs down. And I would expect that to continue. They achieved very, very well last year, and I don't see a reason why that will change.

I appreciate that, Walt. And then I noticed some questions on shareholder returns. So maybe taking a step back, how should we think about your priorities for free cash flow overall?

Well, I think the priorities once we get past Blue Creek would be to return cash to shareholders. Until these markets change and demand any further growth on volumes, we would be focused on shareholder returns.

Best of luck in '26.

Thank you.

And at this time, there are no further questions in the queue. I would now like to turn the call back over to Mr. Scheller for any final comments.

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

Thank you. This concludes today's conference. You may now disconnect your lines, and have a pleasant day.

Good afternoon. My name is Michael, and I will be your conference call operator today. At this time, I would like to welcome everyone to the Warrior Third Quarter 2025 Financial Results Conference Call. [Operator Instructions].

This call is being recorded and will be available for replay on the company's website. I would now like to turn the conference over to Brian Chien, Chief Accounting Officer and Controller. Please go ahead.

Good afternoon, and welcome, everyone, to Warrior's Third Quarter 2025 Earnings Conference Call. 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.

Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements. 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.

For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings. We will also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our third quarter press release furnished to the SEC on Form 8-K, which is also posted on our website.

Additionally, we will be filing our Form 10-Q for the third quarter ended September 30, 2025, with the SEC this afternoon. You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a third quarter supplemental slide deck that was posted this afternoon.

Today on the call with me are Mr. Walter Scheller, Chief Executive Officer; and Mr. Dale Boyles, Chief Financial Officer. After our formal remarks, we will be happy to answer any questions. With that, I will now turn the call over to Walt.

Thanks, Brian. Hello, everyone, and thanks for taking the time to join us today to discuss our third quarter 2025 results.

I'll start by providing an overview of the quarter before Dale reviews our results in additional detail. We're extremely excited to share that our third quarter presented an opportunity for Warrior to showcase its strength in a number of ways. From a strong financial performance to significant operational achievements, we've been driving success in the near term while continuing to improve our long-term position and prospects. We have an exciting future ahead of us, and this is a direct result of our unwavering commitment to operational excellence and the exceptional teamwork and dedication of our employees.

First, from an operational achievement perspective, I'm thrilled to announce that in October, we started the Longwall operations at Blue Creek, which are approximately 8 months ahead of schedule. This remarkable accomplishment underscores our team's exceptional execution and reflects our commitment to driving shareholder value with high-value strategic investments.

Second, factoring in the earlier startup of Blue Creek longwall, we now expect to produce approximately 1.8 million short tons of high-vol steelmaking coal from the Blue Creek mine, representing an additional 800,000 short tons this year or an 80% increase over our initial 2025 guidance. As a result, we've raised our full year 2025 production volume guidance by approximately 10%.

Third, earlier this month, Warrior won the bidding in the federal coal lease sale of 58 million short tons of high-quality steelmaking coal reserves contiguous to our current operations. Subject to the finalization of a binding lease agreement with the Bureau of Land Management, this strategic opportunity is expected to enhance our long-term value proposition by bolstering our reserve base and extending the life of our core mining operations.

I'll provide further details on these accomplishments in a few moments. From a financial performance perspective, we delivered a strong performance in the third quarter despite ongoing weak steelmaking coal market conditions. The combination of our high-quality products and strong customer relationships, supported by our variable cost model, generated impressive net income and adjusted EBITDA. We have confidence that our operational successes will continue to drive strong financial performance over the coming quarters.

Turning back to Blue Creek. Let me provide you some additional details on this transformational growth project. Achieving a start-up for Blue Creek's longwall operations 8 months earlier than our original time line is almost unheard of in this industry; where projects are usually delayed for years and many millions of dollars over budget, particularly in an inflationary environment. The success of our Blue Creek development was cumulative over the project time line and a testament to our incredibly talented employees and partners.

They provided an opportunity for us to demonstrate the strength of our talented workforce and the performance-driven culture of our organization. I want to extend my sincere thanks to all the employees and our partners for their hard work, dedication and resilience to bring this project to fruition, approximately 8 months ahead of schedule while staying on budget. These accomplishments are a direct result of their efforts and continue to drive our success as we execute our long-term growth strategy.

The Blue Creek mine features world-class assets, which incorporate the most modern and latest technology available in the mining industry. It was built with the scope and scale to accommodate more than 6 million short tons of annual production of high-quality steelmaking coal and the potential to be the lowest cost mine in the world.

In addition, these assets enable Warrior to scale up and expand in the future to a second longwall operation if market requirements dictate such an increase in production. Our team's sense of urgency and high performance enabled us to accelerate the start-up of Blue Creek longwall for a second time.

In October, we completed key infrastructure, including the installation of the overland and clean coal belt, along with the remaining modules of the preparation plant and made significant progress on the barge loadout and other key infrastructure components.

Financially, we dedicated another $64 million of capital expenditures in the third quarter and $171 million year-to-date on the Blue Creek project. That brings the total project to date capital expenditures to $888 million, which remains on budget. Our total project estimate remains unchanged, ranging from $995 million to $1.075 billion.

Looking ahead, we will be laser-focused in the fourth quarter on ramping up longwall production and optimizing the performance of the underground surface infrastructure. While the underground longwall operations have recently commenced, a significant amount of work remains to complete the project, which we expect will occur by the end of the first quarter in 2026. The remaining work includes completing the barge loadout, paving roads, completing storage and shop buildings, additional storage silos and final electrical installations, along with the usual assortment of final project details.

The accelerated Blue Creek longwall start-up enables us to increase our guidance for total company production and sales volumes for 2025, as you will have seen in our earnings release. We've raised our Blue Creek production volume by 80% from 1 million short tons to 1.8 million tons. We expect to sell approximately 2/3 of the Blue Creek coal production or approximately 1.2 million tons in 2025. This increase in production from Blue Creek raises our full year outlook for production volume by approximately 10% at the midpoint of the range.

This start-up marks another critical inflection point in the development of this world-class asset, representing the start of transition from capital investment to free cash flow generation.

Turning to another growth opportunity. We learned in September that we were a successful bidder in the federal coal lease sale administered by the Bureau of Land Management. Once we enter into this lease, the acquisition will expand our footprint strategically with the addition of an estimated 58 million short tons of high-quality steelmaking coal reserves.

These reserves are adjacent to existing infrastructure, which will allow for efficient integration into our current operations and capital planning. Also, this acquisition will allow for access to additional reserves that can further the life of both Mine 4 and Blue Creek. The total bid for the leases is approximately $47 million, which will be paid over 5 years.

We appreciate the Bureau of Land Management's efficient review that supported the Alabama federal delegation and our local and state government officials in advancing this process. We also appreciate the Department of Interior Secretary, Doug Burgum, and the entire Trump administration for the support of mining on federal lands.

While there are several regulatory and administrative steps that remain before Warrior finalizes the lease agreements with the Bureau of Land Management, we are actively engaged with the relevant agencies to ensure timely progress and compliance with all requirements. We expect this process will be completed shortly after the end of the government shutdown.

Now let's turn to the steel and steelmaking coal markets during the third quarter, which provides the backdrop for our strong operational and financial results. Our markets faced headwinds from increased Chinese steel exports, subdued global demand and oversupplied seaborne steelmaking coal markets. Nevertheless, our team's focus and resilience enabled us to achieve record quarterly sales volume. The drivers underlying the weakness are the same as they have been for some time.

First, exports of low-priced Chinese steel are up over 10% for the first 9 months of the year compared to 2024, which was already a record year for Chinese steel exports.

Second, with the exception of India, lackluster global steel demand continued because of trade uncertainty and tepid global economic activity.

And third, the seaborne steelmaking coal markets remain under pressure due to strong supply as demonstrated by strong Chinese domestic steelmaking coal production and a slowdown in Chinese imports.

While there have been discussions in China of anti-involution and coal production controls combined with mine safety checks and shutdowns, those actions have fallen short in reality, while trade tensions continue to weigh heavily on global market sentiment.

In addition, the European Union recently announced plans to protect the EU steel sector from the unfair impact of global steel overcapacity by limiting import volumes and doubling the level of tariffs to 50%. These actions could lead to a recovery of steelmaking coal demand from Europe in the long term, but we do not anticipate a recovery anytime soon.

Likewise, the steelmaking coal market remains oversupplied as demonstrated by the prolonged period of weak pricing. According to the World Steel Association monthly report, global pig iron production decreased by 1.5% for the first 9 months of 2025 as compared to the prior year period.

Pig iron production in China, which is the world's largest production region decreased by 1.1% for the same period. The rest of the world's pig iron production experienced a decline of 2.5% for the first 9 months of 2025.

India remains a bright spot with a growth rate of 7% and is expected to continue growing with new blast furnace capacity expected to come online in the next year. Our strong sales volume was primarily driven by high contractual demand from our customers, combined with the strong performance of our existing mines and the additional commercial sales from our Blue Creek mine.

This combination enabled Warrior to achieve a record high quarterly sales volume in the third quarter of 2.4 million short tons compared to 1.9 million in last year's same quarter, representing a 27% increase. We sold 378,000 tons of Blue Creek development steelmaking coal during the third quarter, which were contractual volumes sold primarily into Asia.

Our sales by geography for the third quarter break down as follows: 43% into Europe, 38% into Asia and 18% in South America. The spot volume was 11% for the third quarter of 2025, which is primarily sold into Europe. For the full year, our spot volume is expected to be approximately 10% to 15% of total sales volume.

Production volume in the third quarter of 2025 was 2.2 million short tons compared to 1.9 million in the same quarter of last year, representing a 17% increase. Our existing mines continue to perform well and the continuous mining units at our Blue Creek mine produced 175,000 short tons during the third quarter, adding to the overall increase in production volume.

Blue Creek production was lower than the second quarter as more time was spent on construction and development work for the longevity of the mine and the start-up of the longwall. Our coal inventory levels decreased slightly to 1.1 million tons at the end of September compared to the end of June this year.

I'll now ask Dale to address our third quarter results in greater detail.

Thanks, Walt. Warrior was built to excel in all market conditions with high-quality steelmaking coal assets, a low-cost position globally, possessing a strong balance sheet with ample liquidity and a relentless focus on operational excellence.

Each of these attributes were clearly demonstrated in our third quarter results and recent accomplishments. From my vantage point, I believe few companies are able to embark on, and make continued strategic investments of over $1 billion in an organic growth project like Blue Creek without diluting shareholders with equity offerings or additional leverage. For Warrior, our ability to accomplish this is due to our incredibly talented workforce, which enables us to continuously focus on resource development and operational excellence.

Turning to market conditions we experienced this past quarter. Our primary index, the (PLV) FOB Australia was relatively stable, averaging $166 per short ton. This average pricing has remained relatively consistent through the first and second quarters of this year.

However, during the third quarter, the (PLV) CFR China index price recovered from its low points earlier in the year and averaged $162 per short ton. This average was over $11 per ton higher than the second quarter of this year. Although the arbitrage narrowed by the end of the third quarter, it remained closed most of the third quarter.

As for the main second-tier indices, the Australian Low Volatile Hard Coking Coal (LVHCC) index price recovered from its low point in the second quarter and averaged $137 per short ton, while the U.S. East Coast High Volatile A (HVA) index price established a low for the year and averaged $141 per short ton.

As a result, we saw the relativity of the LVHCC index price compared to the PLV index price improved from 78% in the second quarter to an average 82% for the third quarter. This narrowing of the spread primarily drove our higher average net selling price in the third quarter compared to the second quarter this year.

On the contrary, the U.S. East Coast High-Vol A price Index recorded a decrease in relativity from 92% to 85% during the same period. We achieved a gross price realization of 83% for the third quarter compared to 93% in last year's same quarter, which was a function of relative index pricing, product mix, geography, tariffs and freight rates. The 83% achievement was 3% better than the second quarter of this year.

This result was lower than our annual targeted range of 85% to 90%, primarily due to 3 things:

First, the LVHCC index price relative to the PLV index price has widened compared to the historical relationship between these indices.

Second, we sold a higher mix of High-Vol A product versus premium low-vol product.

And third, the higher High-Vol A volume has been sold primarily into the Pacific Basin on a CFR basis, which is net of freight cost.

As Walt noted earlier, the steelmaking coal markets continue to be pressured in the third quarter by the same factors.

Let me first highlight our third quarter financial achievements compared to the second quarter of 2025. Our third quarter adjusted EBITDA of $71 million was 32% higher than the second quarter this year, primarily due for 2 reasons.

First, our sales volumes were 6% higher, including an increase of 139,000 tons of Blue Creek coal with its inherently lower cost structure.

And second, our average net selling prices were $6 per ton higher, primarily as a result of the higher High-Vol A pricing relative to PLV pricing of 82% versus 78% in the second quarter.

The higher sales volumes, higher average net selling prices and incremental Blue Creek sales volumes contributed to the higher operating cash flows of $67 million or $37 million of higher free cash flow than the second quarter of this year. Our spending for capital expenditures and mine development were a combined $30 million higher in the third quarter compared to the second quarter of this year, primarily related to the investment in Blue Creek. Excluding the Blue Creek capital expenditures and mine development investments in the third quarter, free cash flows were a positive $86 million.

Now let us compare the third quarter of the current year to the prior year third quarter results. Warrior recorded net income of $37 million or $0.70 per diluted share compared to net income of $42 million or $0.80 per diluted share in the same quarter of 2024.

We reported adjusted EBITDA of $71 million in the third quarter of this year compared to $78 million in the same quarter of last year. Our adjusted EBITDA margin was 22% in the third quarter this year compared to 24% in the same quarter of last year.

On a per ton basis, our adjusted EBITDA margin was $30 per short ton for the third quarter this year compared to $42 in last year's third quarter. The decrease in the quarterly results was primarily driven by 21% lower average net selling prices and a 13% higher sales mix of High-Vol A product versus Premium Low-Vol product. These decreases were partially offset by 27% higher sales volume, including lower cost Blue Creek volumes and lower variable costs for transportation and royalties, plus controlling and managing our production costs.

Total revenues were $329 million in the third quarter of this year compared to $328 million in the same quarter of last year. The total increase of $1 million was primarily due to the 27% higher sales volume impact of $85 million, offset by the impact of a decrease in average gross selling prices of $81 million and a higher mix of High-Vol A volumes sold of $11 million.

In addition, demurrage and other charges were $6 million lower compared to last year's third quarter. This resulted in an average net selling price of $136 per short ton in the third quarter compared to $172 per short ton in the third quarter of last year.

Cash cost of sales was $237 million or 74% of mining revenues in the third quarter this year compared to $230 million or 72% of mining revenues in the third quarter of last year. Of the $7 million net increase in cash cost of sales, there was a $61 million increase in costs, which were attributed to the 27% increase in sales volumes, which includes the leverage of low-cost Blue Creek tons. These higher costs were offset partially by $54 million of lower costs that were driven by the lower variable transportation and royalty costs on 13% lower average steelmaking coal price indices.

In addition, we rationalized and tightly managed our spending on supplies, repairs, maintenance expenses throughout the operations. Cash cost of sales per short ton, FOB port, was approximately $101 in the third quarter of this year compared to $123 in the same quarter last year. The decrease was primarily related to overall spending at the legacy mines of $11 per ton due to tightly managing our overall spending, lower variable transportation and royalty costs of $8 per ton on lower steelmaking coal prices and $4 per ton from the incremental sales of low-cost Blue Creek tons.

While we were able to manage our spending tightly during the third quarter, some cash costs such as repairs and maintenance may be higher in future quarters due to potential unexpected breakdowns that would require investment to restore the equipment to a normal operating status.

Our cash cost of production for the third quarter this year was 67% of our total cash cost per short ton compared to 66% in the same quarter last year. Overall, transportation and royalty costs were 33% of our cash cost of sales per short ton in the third quarter this year on lower average net selling prices compared to 34% in the same quarter last year.

As a result of the lower average net selling price, our cash margin per short ton was $35 in the third quarter this year compared to $48 in the same quarter last year.

SG&A expenses were $17 million and were about $6 million higher than the third quarter of last year, primarily due to higher employee-related expenses. Depreciation and depletion expenses were $44 million, which was higher than the third quarter last year, primarily due to the additional assets placed into service at Blue Creek and the higher sales volume. Our net interest income earned from cash investments was lower due to lower average cash balances and lower rates of return, combined with higher interest expense on newly leased equipment.

We recorded an income tax benefit of approximately $14 million on pretax income of $23 million in the third quarter. Our year-to-date effective income tax rate varied from the statutory federal income tax rate of 21%, primarily due to tax benefits recognized for depletion expense, marginal gas well credits, and a foreign derived intangible income deduction, which exceeded forecasted pretax book income.

Turning to cash flow. Free cash flow was a negative $20 million due to $105 million in operating cash flows less cash used for capital expenditures and mine development of $125 million. Capital spending totaled $83 million, which included $64 million spent on the Blue Creek project, as previously noted.

Mine development costs for the Blue Creek project in the third quarter were $42 million and continue to be below budget as we continue to focus on cost control. Working capital decreased by $31 million during the third quarter, primarily due to lower accounts receivable and higher accrued expenses.

Our investment into Blue Creek is generating revenue and contributing positive operating and free cash flow to the overall company. We amended and extended our ABL facility, which increased the commitments available to be borrowed by $27 million to $143 million and extended the maturity date, giving us further financial flexibility and higher liquidity.

Our total available liquidity at the end of the third quarter this year was $525 million and consisted of cash and cash equivalents of $336 million, short- and long-term investments of $48 million and $141 million available under our ABL facility.

Let me turn to our revised outlook and guidance for the full year 2025. As Walt previously noted and outlined in our earnings release, we have updated and increased our production sales volume guidance for the full year 2025 as a direct result of the early start-up of the longwall operations at Blue Creek.

In addition, we lowered our guidance for cash cost of sales per ton, reflecting more recent actual results. While weak steelmaking coal market conditions are expected to persist for the remainder of the year, we remain optimistic about our long-term growth trajectory.

I'll now turn it back to Walt for his final comments.

Thanks, Dale.

Looking ahead, we recognize persistent challenges in our customers' markets will continue to be driven by ongoing surplus in Chinese steel exports, heightened global trade tensions and subdued economic activity worldwide.

However, we're hopeful that new trade agreements with key global partners will be supportive for our market and will materialize in the near term. Similarly, we expect the steelmaking coal markets to be pressured by additional supply, which is expected to come online over the next few quarters due to a combination of new capacity and the return of certain idle mines.

We believe the pricing will remain weak and range-bound and supply rationalization will be necessary to balance market dynamics. While the steelmaking coal markets are expected to continue to be weak in the upcoming quarters, we're excited about the positive accomplishments in our business and with some of our key partners.

For example, on October 13, the Alabama State Dock had its official ribbon-cutting ceremony to celebrate the completion of a multiyear project of deepening the draft and widening of the channel at the port. This project is expected to benefit both Warrior and our customers by allowing them to load heavier and larger vessels in the future.

In addition, several important machinery and equipment upgrades are being completed at the port over the next few quarters. These upgrades at the port are anticipated to enhance our operations and position the company for long-term success. We appreciate our long-standing partnership with the state.

In conclusion, the combination of accelerated Blue Creek production and strategic reserve acquisitions significantly enhance our long-term growth strategy and provide Warrior a strong platform to meet long-term sustained global demand for premium steelmaking coal.

Our world-class assets, low-cost position and disciplined capital deployment are a foundational strength. We remain focused on delivering long-term shareholder value through strategic resource development and operational excellence.

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

[Operator Instructions] Your first question comes from Katja Jancic with BMO Capital Markets.

First, congratulations on the early Blue Creek start-up and the quarter. And maybe starting on the Blue Creek, with the early start-up, how should we think about production next year?

Well, we're still, we're working through our budget right now. But as you know, our plan was not to have started that until midyear. So naturally, that number is going to be enhanced greatly. But we're still working on that. I'm hesitant to give you an exact number on where we'll be. I think it's going to be, a lot of it is going to be market-driven as we get into next year as opposed to operationally driven. But we're working on that right now.

And then maybe secondly, the CapEx is coming down on the Blue Creek project. Can you remind us how you're thinking about capital allocation?

Yes, thanks for the question. Well, I think it would be similar to what we've done in the past when we generate the excess free cash flow above the needs of the business, and we will return cash via different methods, which will be the fixed quarterly dividend, which I expect would be higher in the future, supplement that with some cash special dividends and possibly some stock buybacks along the way, selected.

And your next question comes from Nick Giles with B. Riley Securities.

Guys, I really want to commend you on this incredible achievement. I know Tuscaloosa breeds champions; but it's clearly not just football. So, my question was, what does this mean from a hiring perspective? Do you still need incremental workers to ramp up here? And if sales are expected to be market-driven, would you plan to build inventory? Or would you really toggle production just on market conditions?

Well, I think the first part of your question on how many people do we still need more people. We're okay running at the pace we are right now, and, but we'll continue to hire over the next year easily and probably continuing beyond that. I think next year; we'll be looking at a balance. We'll look at, as I've said before, we really wanted to make sure that we had a certain percentage of the tons tied up before we ramped up. I'm not going to say 4.5 is the number for next year, but I think you're probably going to be closer to that type of a number for Blue Creek. And so, we'll be looking at cash flow. We'll be looking at what's happening in the market. We don't want to build a bunch of inventory, and we don't want to flood the market either. So we're going to be balancing all those factors to make sure we maximize the value for the company.

I appreciate that. And then maybe just looking to the fourth quarter here. I mean, I think if I do the math right, your guidance could imply a 20% increase in sales. Can you just walk us through what, maybe on a mine-by-mine basis, how sales could shift quarter-over-quarter?

Well, I don't have that breakout by mine. But with what we said is 2/3 of that volume of Blue Creek for the year should be sold this year, 1.2 million tons. And we've sold about half of that so far through the end of the third quarter. So you're going to see a big jump just because of the Blue Creek tons there, Nick. So that's the biggest driver in the fourth quarter.

Got it. Maybe one last one, if I could. It's good to see you were able to tuck in such a significant amount of reserves at a reasonable cost. I think you mentioned this is relevant to Mine 4 and Blue Creek. But my question is, how much does this acquisition influence any potential decision to add another longwall to your operating footprint? How much capital could be required later down the road? I appreciate any color there.

What I've said in the past is an additional longwall, you're probably looking at incremental capital probably $300 million or so because you're going to have to add 3 CM units, you're going to have to add another longwall. You're going to have to add modules to the preparation plant. So there's a lot of infrastructure and just a lot of build-out that would have to happen. In terms of making that decision, we had enough reserves without the BLM to add a second longwall if we thought the market justified it. This just makes us even more efficient because some of the places where we were going to have to skip around some coal, now we have control of it. So this is going to make us a lower cost, more efficient operation at both Mine 4 and Blue Creek as we roll forward.

And your next question comes from George Eadie with UBS.

Really impressive performance here, good set of numbers well done. Can I just follow up on that question before? So another longwall, is it a price decision? Like if you were guaranteed, say, 200 metric benchmark PLV, would you do it like the spreadsheet math, it clearly works when we get to sort of mid-'26 as the first longwall at Blue Creek is ramped up. How would we go about thinking about the decision for another one?

I think the real, what we need to do is we need to stretch this first longwall as tight as we can and see just what it's capable of. What we said is $6 million I don't know where the top end is for that one longwall and how many CMs it takes you to support that one longwall if you're running it flat out throughout the year. So, the real question is going to be where is that limit? And then beyond that, what's that next longwall get you. So, I think we're years away from making that decision because I think there's still so much headroom on the first longwall.

Yes. And then maybe to Dale, you just sort of call out those 3 factors, discounts, more High-Vol A, more Asia sales. How do I triangulate that with the low-vol hard coking index flat quarter-on-quarter? Your realized price was up quarter-on-quarter, like that caught me. Like how do I triangulate that going forward as well, like more Blue Creek sales, more Asia sales? Is it likely that this was just a one-off really strong realized pricing quarter? Or how do I sort of triangulate those factors?

Well, I don't think it's a one-off quarter. I think if you go back to my remarks, I said is, look, the increase from the second quarter to the third quarter was 2 things: 6% higher sales volume and a net realized price of $6 a ton higher. Well, that $6 a ton came primarily from the increase in the LVHCC during the third quarter. So that relativity rose from 78% in the second quarter to 82%. So that spread narrowed right? So that drove that $6 a ton, which just flowed to the bottom line.

So, think of it that way, pick your PLV price and then pick your relativity, okay? So just for example, $200 PLV, 80% relativity and you're going to be pretty close.

So that relativity, that 82%, that 4% quarter-on-quarter jump is what I was talking about there, sorry, Dale, that caught me off guard, like more high-vol sales more into Asia, like how do we think about that going forward in Q4, I guess, as well?

Well, we don't break it out by geography on a forward-looking basis, but we do think that in the long term, more volume will go into Asia long term as we ramp up Blue Creek. So that will be a gradual climb over the next year or 2.

Yes. And just last one on pricing.

Yes, I was just going to say one more thing, George, to think about there is customers have their different time schedules throughout the year. So that's why we might sell more into Europe in one quarter versus another quarter. So, it's hard for us to forecast that into the future as to what geography it's going to go into. So, we don't have that preciseness very far out. We know about a quarter ahead, but not too much further out than that.

Yes. Okay. And then just what was sort of saying quite bearish sort of met coal prices at the start, that benchmark prices up at $197 and flat starting to now talk quite optimistic the demand outlook ex China. Any sort of color you can give?

Well, I think I always try to be conservative in my expectations. And that's the way we run our company. And we make sure that we're able to respond to any positive market news, but we make sure we're prepared in the case of any negative market news. I don't, it's hard for me to see a reason why prices will go up or at best, they'll maintain the level they're at now, I think. But it takes one event to cause this price to shift dramatically. But I don't know what that one event is right now.

Yes. It's hard to see on the demand side, what the catalyst is. So, then you're thinking about the supply side. And as we said in our remarks, earlier, look, there's the Blue Creek coming online next year. There are other mines that are restarting next year. So, you're going to have additional supply coming on that's going to keep that pretty balanced, we think, going forward. So, it's hard to be too optimistic right now about what the next year or 2 looks like. Other than we should perform well because of Blue Creek coming online and it's such a much low-cost structure, we're going to benefit from that.

[Operator Instructions] Your next question comes from Nathan Martin with The Benchmark Company.

Congratulations on the early longwall startup. I just want to come back to the pricing question quickly. I think maybe what we're trying is how should we think about realizations versus the benchmark kind of going forward as you bring on these additional Blue Creek tons? Do you think you can get back to kind of your targeted 85% to 90% range of the benchmark?

Well, that's what our target is. So yes, I think we can get there. It just depends on what the markets do. I mean we can't control that. So, my crystal ball says maybe Prices change all the time for different reasons. And it's just, I mean, if you can't predict it, I can't predict it, right, what prices will be tomorrow. So just the realizations are what they are. We're 83%. Our targeted range is 85% to 90%. We're creeping up. It depends on what continues to happen with LVHCC pricing in the Pacific Basin. That will be a big determinant of where we get to.

I think said another way, we definitely think that we will get back to that 85% to 90%. The question is just when. We can't tell you if that's going to be 2 quarters from now or 1.5 years from now. We don't know when that will occur.

Makes sense. That's fair. And then as far as Blue Creek sales are concerned, Dale, I think you said that you guys were maybe initially targeting those tons towards Asia. Is that correct? And then how many Blue Creek tons have you guys been able to contract at this point with starting up the longwall early?

Well, the majority of the sales volume so far, yes, has gone into Asia. And right now, these tons are being shipped to really trials, right, to get confirmation of contracts. So, I don't, it's a little early with the volume that we sold to give a percentage of how much we've contracted because of these trials. So, I don't want to get into that yet. If we have better, and hopefully, we will have better information during our fourth quarter earnings call about that. But right now, it's a little bit too early because we only have about $1.2 million for this year.

I appreciate that. And then maybe just one final one on the cost side of the equation. Good to see cash cost guidance for this year down again another $5. Just want to make sure, is there any change in your price assumption there that would have impacted that update? And then last quarter, Dale, I think you mentioned you built in some maintenance and repair costs. I think you touched on that briefly in your prepared remarks as well. Is that still the case in that range?

Yes. That's kind of baked into that range. And really, the price assumption hasn't changed because the PLV has averaged virtually the same amount each and every quarter this year.

And your next question is a follow-up from Nick Giles with B. Riley Securities.

I just wanted to follow up on that last question on the cost side. I think guidance does still imply a slight tick up in the fourth quarter. So I wanted to see if there's anything specific that could drive that or if that's maybe just an added level of conservatism.

Yes, it's just baking in what if, right? As I said in my prepared remarks, we've been pretty tight on repairs and maintenance all year. Something can break, and we've got to fix it in the fourth quarter, and that's covering those kind of things. And we have a little tick up and we have recently in the last couple of weeks on the prices to $196. So there could be some change there a little bit on the cost. So that's all baked into that range. And we're averaging at, for the year-to-date, we're averaging at the bottom of the range. So a slight tick up would be very, very minor.

At this time, there are no further questions. I will now turn the call over back to Mr. Scheller for any closing comments.

That concludes our call this afternoon. Thank you again for joining us today. We appreciate your interest in Warrior.