WARRIOR MET COAL, INC.

Previous wording

The following discussion and analysis provides a narrative of our results of operations and financial condition for the three and nine months ended September 30, 2025 and September 30, 2024. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Form 10-Q and the audited financial statements for the year ended December 31, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis. Please see“Forward-Looking Statements.”

Current wording

The following discussion and analysis provides a narrative of our results of operations and financial condition for the three months ended March 31, 2026 and March 31, 2025. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Form 10-Q and the audited financial statements for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis. Please see“Forward-Looking Statements.”

Previous wording

We are a U.S.-based, environmentally and socially minded supplier to the global steel industry. We are dedicated entirely to mining non-thermal steelmaking coal used as a critical component of steel production by metal manufacturers in Europe, South America and Asia. We are a large-scale, low-cost producer and exporter of premium quality steelmaking coal, also known as hard coking coal (“HCC”), operating highly-efficient longwall operations in our underground mines based in Alabama, Mine No. 4 and Mine No. 7. We also commenced longwall operations at our transformational Blue Creek mine based in Alabama eight months ahead of schedule in October 2025.

Current wording

We are a U.S.-based, environmentally and socially minded supplier to the global steel industry headquartered in Brookwood, Alabama. We are dedicated entirely to mining non-thermal steelmaking coal used as a critical component of steel production by metal manufacturers in Europe, South America and Asia. We are a large-scale, low-cost producer and exporter of premium quality steelmaking coal, also known as hard coking coal (“HCC”), operating highly-efficient longwall operations in our underground mines based in Alabama, Mine No. 4, Mine No. 7 and Blue Creek. We commenced longwall operations at our transformational Blue Creek mine based in Alabama eight months ahead of schedule in October 2025.

Previous wording

As of December 31, 2024, based on a reserve report prepared by Marshall Miller & Associates, Inc. ("Marshall Miller"), Mine No. 4 and Mine No. 7, had approximately 82.4 million metric tons of recoverable reserves and our Blue Creek mine contained 69.0 million metric tons of recoverable reserves and 39.7 million metric tons of coal resources exclusive of reserves, which total 108.7 million metric tons. As a result of our high-quality coal, our Mine No. 7 steelmaking coal realized price has historically been in line with, or at a slight discount to, the Platts Premium Low Volatility ("LV") Free-On-Board Australia Index Price (the "S&P Platts Index"). Our Mine No. 4 and Blue Creek steelmaking coal are a High Volatility A ("HVA") quality that typically trades at a larger discount to the price of coal from Mine No. 7. We now primarily target the LV hard coking coal indices price for our Mine No. 4 and Blue Creek mine coal. Our steelmaking coal, mined from the Southern Appalachian portion of the Blue Creek coal seam, is characterized by low sulfur, low-to-medium ash, and Low Vol to High Vol. These qualities make our coal ideally suited as a coking coal for the manufacture of steel.

Current wording

As of December 31, 2025, based on a reserve report prepared by Marshall Miller & Associates, Inc. ("Marshall Miller"), our three operating underground mines had approximately 179.3 million metric tons of recoverable reserves and our Blue Creek mine contained 54.0 million metric tons of recoverable reserves. As a result of our high-quality coal, our Mine No. 7 steelmaking coal realized price has historically been in line with, or at a slight discount to, the Platts Premium Low Volatility ("LV") Free-On-Board Australian Index (the "S&P Platts Index"). Our Mine No. 4 and Blue Creek steelmaking coals are High Volatility A ("HVA") quality coal that typically trades at a discount to the price of coal from Mine No. 7. We primarily target the East Coast High Vol A index for sales of our Mine No. 4 and Blue Creek coals that are destined for the Atlantic Basin. Whereas we target a variety of indices, including Platts Premium Low Vol and Platts Low Vol HCC for sales destined to the Pacific Basins. Our Blue Creek coal is also primarily sold into Asia and is sold on a cost and freight ("CFR") basis. Our steelmaking coal, mined from the Southern Appalachian portion of the Blue Creek coal seam, is characterized by low-to-high volatile matter, low sulfur, high fluidity, and high strength. These qualities make our coal ideally suited as a coking coal for the manufacture of steel.

Previous wording

We sell substantially all of our steelmaking coal production to steel producers outside of the United States. Steelmaking coal, which is converted to coke, is a critical input in the steel production process. Steelmaking coal is both consumed domestically in the countries where it is produced and exported by several of the largest producing countries, such as China, Australia, the United States, Canada and Russia. Therefore, demand for our coal will be highly correlated to conditions in the global steelmaking industry. The steelmaking industry’s demand for steelmaking coal is affected by a number of factors, including the cyclical nature of that industry’s business, technological developments in the steelmaking process and the availability of substitutes for steel such as aluminum, composites and plastics. A significant reduction in the demand for steel products would reduce the demand for steelmaking coal, which would have a material adverse effect upon our business. Similarly, if alternative ingredients are used in substitution for steelmaking coal in the integrated steel mill process, the demand for steelmaking coal would materially decrease, which could also materially adversely affect demand for our steelmaking coal.

Current wording

We sell substantially all of our steelmaking coal production to global steel producers. Steelmaking coal, which is converted to coke, is a critical input in the steel production process. Steelmaking coal is both consumed domestically in the countries where it is produced and exported by several of the largest producing countries, such as China, Australia, the United States, Canada and Russia. Therefore, demand for our coal will be highly correlated to conditions in the global steelmaking industry. The steelmaking industry’s demand for steelmaking coal is affected by a number of factors, including the cyclical nature of that industry’s business, technological developments in the steelmaking process and the availability of substitutes for steel such as aluminum, composites and plastics. A significant reduction in the demand for steel products would reduce the demand for steelmaking coal, which would have a material adverse effect upon our business. Similarly, if alternative ingredients are used in substitution for steelmaking coal in the integrated steel mill process, the demand for steelmaking coal could materially decrease, which could also materially adversely affect demand for our steelmaking coal.

Previous wording

On February 21, 2025, we provided an update on the Blue Creek project. Due to the implementation of innovative technologies and best practices we increased nameplate capacity of the Blue Creek mine 25% to 5.4 million metric tons from the original production plan of 4.4 million metric tons. The additional capacity increases our overall nameplate capacity by 75%, from 7.3 million metric tons per year to 12.7 million metric tons per year. We also have the ability to increase our overall nameplate capacity to 83% or an additional 0.6 million metric tons to 6.0 million metric tons per year by adding an additional continuous miner unit. We expect the addition of Blue Creek to enhance our already advantageous position on the global cost curve, improve our profitability and cash flow generation, and cement our position as a leading pure play steelmaking coal producer.

Current wording

On February 21, 2025, we provided an update on the Blue Creek project. Due to the implementation of innovative technologies and best practices, we increased nameplate production capacity of the Blue Creek mine by 25%, from the original production plan of 4.4 million metric tons to 5.4 million metric tons. With better-than-expected recovery and the anticipated addition of a fourth continuous miner unit, our overall nameplate production capacity increased up to approximately 6.4 million metric tons. The additional capacity increased our overall nameplate production capacity by 88%, from 7.3 million metric tons per year to 13.7 million metric tons per year. While our nameplate production capacity has significantly increased, actual annual sales and production volumes will be dependent upon steelmaking coal market conditions. Even in these early stages of production and sales, Blue Creek has already contributed to lower cash costs, further improving our position in the first-quartile of the global cost curve. In addition, Blue Creek's low-cost structure has reduced our all-in cash cost breakeven point and enhanced profitability and cash flow generation.

Previous wording

On July 4, 2025, the One, Big, Beautiful Bill Act ("OBBBA") was enacted into law and includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The changes include, among other things, an update to IRC Section 250 Deduction: FDII to Foreign-Derived Deduction Eligible Income ("FDDEI"), which provides for, among other things, a permanent deduction of 33.34% of FDDEI, which reduces the statutory tax rate to 14% of such income. The OBBBA also classified metallurgical coal as a critical mineral eligible for the advanced manufacturing production tax credit under Section 45X (the "45X Credit") of the Internal Revenue Code. The 45X Credit for metallurgical coal provides for a credit of 2.5% of eligible production costs through 2029. Section 50202 of the OBBBA also temporarily decreases the royalty rate for coal leases on federal lands to not more than 7% through 2034. We are currently assessing the impact of the OBBBA on our consolidated financial statements.

Current wording

On July 4, 2025, the One, Big, Beautiful Bill Act ("OBBBA") was enacted into law and includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The changes include, among other things, an update to IRC Section 250 Deduction: FDII to Foreign-Derived Deduction Eligible Income ("FDDEI"), which provides for, among other things, a permanent deduction of 33.34% of FDDEI, which reduces the statutory tax rate to 14% of such income. The OBBBA also classified met coal as a critical mineral eligible for the advanced manufacturing production tax credit under Section 45X (the "45X Credit") of the Internal Revenue Code. The 45X Credit for met coal provides for a credit of 2.5% of eligible production costs through 2029. Section 50202 of the OBBBA also temporarily decreases the royalty rate for coal leases on federal lands to not more than 7% through 2034. We recognized a benefit from the 45X Credit of $8.4 million for the three months ended March 31, 2026, which is reflected as a reduction to cost of sales in the Condensed Statements of Operations and a corresponding reduction to income taxes payable included in other current liabilities in the Condensed Balance Sheets.

Previous wording

We determined that our natural gas and royalty businesses did not meet the criteria in ASC 280, Segment Reporting, to be considered as a reportable segment. Therefore, we have included their results in an "all other" category as a reconciling item to consolidated amounts. We recast prior period information related to the change in segments, however, there were no revenues or cost of revenues associated with the Blue Creek mine.

Current wording

We have one reportable segment identified as Mining which consists of Mine No. 4, Mine No. 7 and the Blue Creek mine. We determined that our natural gas and royalty businesses did not meet the criteria in ASC 280, Segment Reporting, to be considered as a reportable segment. Therefore, we have included their results in an "all other" category as a reconciling item to consolidated amounts.

Previous wording

We define Segment Adjusted EBITDA as net income adjusted for other revenues; cost of other revenues; depreciation and depletion expense; selling, general and administrative expenses; interest income, net; income tax expense (benefit) and certain transactions or adjustments that the Chief Executive Officer, our Chief Operating Decision Maker, does not consider for the purposes of making decisions to allocate resources among segments or assessing segment performance. Segment Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

Current wording

We define Segment Adjusted EBITDA as net income (loss) adjusted for other revenues, cost of other revenues, depreciation and depletion, selling, general and administrative expenses, business interruption expenses, interest income, interest expense, income tax benefit (expense) and certain transactions or adjustments that the Chief Executive Officer, our Chief Operating Decision Maker, does not consider for the purposes of making decisions to allocate resources among segments or assessing segment performance.

Previous wording

the ability of our assets to generate sufficient cash flow to pay dividends;

Current wording

the ability of our assets to generate sufficient cash flow to pay distributions;

Previous wording

We evaluate our operations based on the volume of coal we can safely produce and sell in compliance with regulatory standards, and the prices we receive for our steelmaking coal. Our sales volume and sales prices are largely dependent upon the terms of our annual steelmaking coal sales contracts, for which prices generally are set on daily index averages on a quarterly basis. The volume of steelmaking coal we sell is also a function of the pricing environment in the international steelmaking coal markets and the amounts of LV and HVA coal that we sell. We evaluate the price we receive for our steelmaking coal based on our average net selling price per metric ton.

Current wording

We evaluate our operations based on the volume of coal we can safely produce and sell in compliance with regulatory standards, and the prices we receive for our steelmaking coal. Our sales volume and sales prices are largely dependent upon the terms of our annual steelmaking coal sales contracts, for which prices generally are set on daily index averages on a quarterly basis. The volume of steelmaking coal we sell is also a function of the pricing environment in the international steelmaking coal markets and the amounts of Low Vol and High Vol A coal that we sell. We evaluate the price we receive for our steelmaking coal based on our average net selling price per metric ton.

Previous wording

We evaluate our cash cost of sales on a cost per metric ton basis. Cash cost of sales is based on reported cost of sales and includes items such as freight, royalties, manpower, fuel and other similar production and sales cost items, and may be adjusted for other items that, pursuant to accounting principles generally accepted in the United States ("GAAP"), are classified in the Condensed Statements of Operations as costs other than cost of sales, but relate directly to the costs incurred to produce met coal and sell it FOB at the Port of Mobile in Alabama. Our cash cost of sales per metric ton is calculated as cash cost of sales divided by the metric tons sold. Cash cost of sales is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

Current wording

We evaluate our cash cost of sales on a cost per metric ton basis. Cash cost of sales is based on reported cost of sales and includes items such as freight, royalties, manpower, fuel and other similar production and sales cost items, and may be adjusted for other items that, pursuant to accounting principles generally accepted in the United States ("GAAP"), are classified in the Consolidated Statements of Operations as costs other than cost of sales, but relate directly to the costs incurred to produce steelmaking coal and sell it free-on-board at the Port of Mobile in Alabama. Our cash cost of sales per metric ton is calculated as cash cost of sales divided by the metric tons sold. Cash cost of sales is used as a supplemental financial measure by management and by external users of our consolidated financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

Previous wording

We believe that this non-GAAP financial measure provides additional insight into our operating performance, and reflects how management analyzes our operating performance and compares that performance against other companies for purposes of business decision making by excluding the impact of certain items that management does not believe are indicative of our core operating performance. We believe that cash cost of sales presents a useful measure of our controllable costs and our operational results by including all costs incurred to produce met coal and sell it FOB at the Port of Mobile in Alabama. Period-to-period comparisons of cash cost of sales are intended to help management identify and assess additional trends that potentially impact us and that may not be shown solely by period-to-period comparisons of cost of sales. Cash cost of sales should not be considered an alternative to cost of sales or any other measure of financial performance or liquidity presented in accordance with GAAP. Cash cost of sales excludes some, but not all, items that affect cost of sales, and our presentation may vary from the presentations of other companies. As a result, cash cost of sales as presented below may not be comparable to similarly titled measures of other companies.

Current wording

We believe that this non-GAAP financial measure provides additional insight into our operating performance, and reflects how management analyzes our operating performance and compares that performance against other companies on a consistent basis for purposes of business decision making by excluding the impact of certain items that management does not believe are indicative of our core operating performance. We believe that cash cost of sales presents a useful measure of our controllable costs and our operational results by including all costs incurred to produce steelmaking coal and sell it free-on-board at the Port of Mobile in Alabama. Period-to-period comparisons of cash cost of sales are intended to help management identify and assess additional trends potentially impacting our Company that may not be shown solely by period-to-period comparisons of cost of sales. Cash cost of sales should not be considered an alternative to cost of sales or any other measure of financial performance or liquidity presented in accordance with GAAP. Cash cost of sales excludes some, but not all, items that affect cost of sales, and our presentation may vary from the presentations of other companies. As a result, cash cost of sales as presented below may not be comparable to similarly titled measures of other companies.

Previous wording

We define Adjusted EBITDA as net income before interest income, net, income tax (benefit) expense, depreciation and depletion, non-cash asset retirement obligation accretion, non-cash stock compensation expense, other non-cash accretion, mark-to-market gain on gas hedges and business interruption expenses. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

Current wording

We define Adjusted EBITDA as net income (loss) before net interest expense (income), income tax expense (benefit), depreciation and depletion, non-cash asset retirement obligation accretion, non-cash stock compensation expense, other non-cash accretion, non-cash mark-to-market loss (gain) on gas hedges and business interruption expenses. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our consolidated financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

Previous wording

We believe that the presentation of Adjusted EBITDA in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA is net income. Adjusted EBITDA should not be considered an alternative to net income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjustments exclude some, but not all, items that affect net income and our presentation of Adjusted EBITDA may vary from that presented by other companies.

Current wording

We believe that the presentation of Adjusted EBITDA in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). Adjusted EBITDA should not be considered an alternative to net income (loss) or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjustments exclude some, but not all, items that affect net income and our presentation of Adjusted EBITDA may vary from that presented by other companies.

Previous wording

The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis for each of the periods indicated.

Current wording

The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, on a historical basis for each of the periods indicated.

Previous wording

Represents business interruption expenses associated with the labor strike.

Current wording

Represents ongoing legal expenses associated with the ongoing labor negotiations.

Previous wording

We produced 6.2 million metric tons of steelmaking coal for the nine months ended September 30, 2025 compared to 5.6 million metric tons for the nine months ended September 30, 2024, representing an 10.9% increase. The increased production was driven by an increase of 667 thousand metric tons produced by three continuous miner units at the Blue Creek mine developing the initial longwall panel.

Current wording

We produced 3.2 million metric tons of steelmaking coal for the three months ended March 31, 2026 compared to 2.0 million metric tons for the three months ended March 31, 2025, representing a 55.2% increase. The increased production was primarily driven by an increase in tons produced at the Blue Creek mine.

Previous wording

Sales for the three months ended September 30, 2025 were $320.0 million compared to $319.9 million for the three months ended September 30, 2024. The $0.1 million increase in sales was primarily driven by an $85.1 million increase in sales due to a 26.6% increase in steelmaking coal sales volume primarily due to Blue Creek sales of 343 thousand metric tons offset partially by an $85.1 million decrease in sales related to a $39.81 per metric ton decrease in the average net selling price per metric ton of our steelmaking coal. The average net selling price of our steelmaking coal decreased $39.81 from $189.54 per metric ton in the third quarter of 2024 to $149.73 per metric ton in the third quarter of 2025.

Current wording

Sales for the three months ended March 31, 2026 were $448.5 million compared to $294.9 million for the three months ended March 31, 2025. The $153.6 million increase in sales was primarily driven by a $112.7 million increase due to a 38.2% increase in steelmaking coal sales volume primarily due to Blue Creek combined with a $40.9 million increase related to a $14.99 per metric ton increase in the average net selling price per metric ton of our steelmaking coal. The average net selling price of our steelmaking coal increased $14.99 from $149.71 per metric ton in the first quarter of 2025 to $164.70 per metric ton in the first quarter of 2026.

Previous wording

For the three months ended September 30, 2025, our geographic customer sales volume mix was 43% in Europe, 38% in Asia, 18% in South America and 1% in the United States. For the three months ended September 30, 2024, our geographic customer sales volume mix was 44% in Europe, 41% in Asia, 15% in South America and 1% in the United States. Our geographic customer mix typically varies each period based on the timing of customer orders and shipments.

Current wording

For the three months ended March 31, 2026, our geographic customer sales volume mix was 61% in Asia, 25% in Europe and 14% in South America. For the three months ended March 31, 2025, our geographic customer sales volume mix was 43.0% in Asia, 36.0% in Europe, 20.0% in South America and 1.0% in the United States. Our geographic customer mix typically varies each period based on the timing of customer orders and shipments.

Previous wording

Other revenues for the three months ended September 30, 2025 were $8.6 million compared to $7.8 million for the three months ended September 30, 2024. Other revenues are comprised of revenue derived from our natural gas operations, gains on sales and disposals of property, plant and equipment and land, changes in the fair value of our natural gas swap contracts and earned royalty revenue. The $0.8 million increase in other revenues is primarily driven by gains on mark-to-market gas hedges of $0.7 million, and an increase in the Southern Louisiana natural gas price average per Million British Thermal Unit ("MMBtu") of 46% offset partially by a decrease in natural gas sales volumes of 1% for the three months ended September 30, 2025 as compared to the prior year comparable period.

Current wording

Other revenues for the three months ended March 31, 2026 were $10.1 million compared to $5.0 million for the three months ended March 31, 2025. Other revenues are comprised of revenue derived from our natural gas operations, gains and losses on our natural gas hedges and earned royalty revenue. The $5.1 million increase in other revenues is primarily due to an increase in the Southern Louisiana natural gas price average per Million British Thermal Unit ("MMBtu") of 52% offset partially by a decrease in natural gas sales volumes of 7% compared to the prior year comparable period and a loss on mark-to-market gas hedges of $2.2 million which was included in the prior year comparable period.

Previous wording

Cost of sales was $239.5 million, or 72.9% of total revenues, for the three months ended September 30, 2025, compared to $231.6 million, or 70.7% of total revenues for the three months ended September 30, 2024. The $7.9 million increase is primarily driven by a $61.1 million increase due to a 449 thousand metric ton increase in steelmaking coal sales volume offset partially by a $53.6 million decrease due to a $25.10 per metric ton decrease in cash cost of sales per metric ton due to lower average net selling prices of steelmaking coal and its impact on our labor, transportation and royalty costs; the sales mix of Blue Creek coal with its inherent lower cost structure; our disciplined approach to cost control and an increase in tons produced. For the three months ended September 30, 2025, cost of production represented 67% of cost of sales and transportation and royalties accounted for approximately 33% compared to cost of production of 66% and transportation and royalties of 34% for the three months ended September 30, 2024.

Current wording

Cost of sales was $290.4 million, or 63.3% of total revenues, for the three months ended March 31, 2026, compared to $245.7 million, or 81.9% of total revenues for the three months ended March 31, 2025. The $44.7 million increase is primarily driven by a $93.3 million increase due to a 753 thousand metric ton increase in steelmaking coal sales volume primarily driven by coal sales from the Blue Creek mine offset partially by a $48.6 million decrease due to a $17.85 per metric ton decrease in cash cost of sales per metric ton due to the sales mix of Blue Creek coal with its inherent lower cost structure, a benefit from the 45X Credit of $8.4 million, our disciplined approach to cost control, an increase in tons produced. For the three months ended March 31, 2026, cost of production represented 64% of cost of sales and transportation and royalties accounted for approximately 39% compared to cost of production of 66% and transportation and royalties of 34% for the three months ended March 31, 2025.

Previous wording

Cost of other revenues was $7.5 million or 2.3% of total revenues, for the three months ended September 30, 2025, compared to $8.9 million, or 2.7% of total revenues for three months ended September 30, 2024. The decrease is primarily driven by the reduction of gas compression costs and a 1% decrease in gas sales volumes.

Current wording

Cost of other revenues was $8.3 million or 1.8% of total revenues, for the three months ended March 31, 2026, compared to $7.9 million, or 2.6% of total revenues for three months ended March 31, 2025. The increase is primarily driven by higher gas compression costs offset partially by a 7% decrease in gas sales volumes.

Previous wording

Depreciation and depletion expenses were $43.6 million, or 13.3% of total revenues, for the three months ended September 30, 2025, compared to $36.6 million, or 11.2% of total revenues for the three months ended September 30, 2024. The $7.0 million increase in depreciation and depletion is primarily driven by an increase in additional assets placed into service at Blue Creek combined with a 26.6% increase in steelmaking coal sales volume as depreciation and depletion is first capitalized into coal inventory and relieved when the tons are sold.

Current wording

Depreciation and depletion expenses were $52.3 million, or 11.4% of total revenues, for the three months ended March 31, 2026, compared to $45.3 million, or 15.1% of total revenues for the three months ended March 31, 2025. The $7.0 million increase in depreciation and depletion is primarily driven by an increase in additional assets placed into service at Blue Creek combined with a 38.2% increase in steelmaking coal sales volume as depreciation and depletion is first capitalized into coal inventory and relieved when the tons are sold.

Previous wording

Selling, general and administrative expenses were $17.2 million, or 5.2% of total revenues, for the three months ended September 30, 2025, compared to $11.5 million, or 3.5% of total revenues, for the three months ended September 30, 2024. The $5.7 million increase in selling, general and administrative expenses for the period is primarily due to an increase in employee related expenses.

Current wording

Selling, general and administrative expenses were $28.2 million, or 6.1% of total revenues, for the three months ended March 31, 2026, compared to $18.4 million, or 6.1% of total revenues, for the three months ended March 31, 2025. The $9.8 million increase in selling, general and administrative expenses for the period is primarily due to an increase in employee related expenses, including stock compensation expense.

Previous wording

Interest expense was $2.3 million, or 0.7% of total revenues, for the three months ended September 30, 2025, compared to interest expense of $1.4 million, or 0.4% of total revenues, for the three months ended September 30, 2024. The $0.9 million increase is due to an increase in interest on newly leased equipment.

Current wording

Interest expense was $3.2 million, or 0.7% of total revenues, for the three months ended March 31, 2026, compared to interest expense of $2.1 million, or 0.7% of total revenues, for the three months ended March 31, 2025. The $1.1 million increase is due to an increase in interest on additional financing leases.

Previous wording

Interest income was $4.4 million, or 1.3% of total revenues for the three months ended September 30, 2025, compared to $8.7 million, or 2.6% of total revenues for the three months ended September 30, 2024. The $4.2 million decrease was primarily driven by a decrease in invested cash balances and lower rates of return earned on our investments.

Current wording

Interest income was $2.6 million, or 0.6% of total revenues for the three months ended March 31, 2026, compared to $5.3 million, or 1.8% of total revenues for the three months ended March 31, 2025. The $2.7 million decrease was primarily driven by a decrease in invested cash balances and lower rates of return earned on our investments.

Previous wording

For the three months ended September 30, 2025, we recognized an income tax benefit of $13.7 million compared to income tax expense of $4.6 million for the three months ended September 30, 2024. We estimated our annual effective tax rate and applied this effective tax rate to our year-to-date pretax income at the end of the interim reporting period. The $13.7 million income tax benefit for the three months ended September 30, 2025, is primarily due to tax benefits related to depletion, marginal gas well credits and a discrete return to provision adjustment related to a tax accounting election change in Internal Revenue Code ("IRC") Section 250 Deduction: Foreign-Derived Intangible Income ("FDII") deductions.

Current wording

For the three months ended March 31, 2026, we recognized an income tax expense of $6.4 million compared to income tax benefit of $6.0 million for the three months ended March 31, 2025. We estimated our annual effective tax rate and applied this effective tax rate to our year-to-date pretax income at the end of the interim reporting period. The $6.4 million income tax expense for the three months ended March 31, 2026, is driven by pre-tax income and depletion and Internal Revenue Code ("IRC") Section 250 Deduction: Foreign-Derived Intangible Income ("FDII") deductions. The prior year comparable period income tax benefit is driven by a pre-tax loss and a tax benefit related to depletion and FDII deductions.

Previous wording

Going forward, we plan to use cash to fund debt service payments on our Notes, the Amended ABL Facility and our other indebtedness, to fund operating activities, working capital, the development of Blue Creek, capital expenditures, our reclamation obligations, our black lung obligations, professional fees and other non-recurring transaction expenses and strategic investments, and, if declared, to pay our quarterly and/or special dividends. Our ability to fund our capital needs, including the development of Blue Creek, going forward will depend on our ongoing ability to generate cash from operations and borrowing availability under the Amended ABL Facility, and, in the case of any future strategic investments, capital needs, the development of Blue Creek, or special dividends financed partially or wholly with debt financing and our ability to access the capital markets to raise additional capital.

Current wording

Going forward, we plan to use cash to fund debt service payments on our Notes, the Amended ABL Facility and our other indebtedness, to fund operating activities, working capital, capital expenditures, our reclamation obligations, our finance lease obligations, our black lung obligations, our federal coal lease obligations, professional fees and other non-recurring transaction expenses and strategic investments, and, if declared, to pay our quarterly and/or special dividends. Our ability to fund our capital needs going forward will depend on our ongoing ability to generate cash from operations and borrowing availability under the Amended ABL Facility, and, in the case of any future strategic investments, capital needs or special dividends financed partially or wholly with debt financing and our ability to access the capital markets to raise additional capital.

Previous wording

Our total liquidity as of September 30, 2025 was $525.2 million, consisting of cash and cash equivalents of $336.3 million, short-term investments of $46.4 million, which is net of $9.8 million posted as collateral, long-term investments of $2.0 million and $140.5 million available under our Amended ABL Facility. As of September 30, 2025, no loans were outstanding under the Amended ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the Amended ABL Facility.

Current wording

Our total liquidity as of March 31, 2026 was $363.7 million, consisting of cash and cash equivalents of $202.6 million, short-term investments of $20.6 million, which is net of $10.0 million posted as collateral and $140.5 million available under our Amended ABL Facility. As of March 31, 2026, no loans were outstanding under the Amended ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the Amended ABL Facility.

Previous wording

We may, at any time and from time to time, seek to retire or purchase Notes in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, if any, and other factors.

Current wording

In the future, we may, at any time and from time to time, seek to retire or purchase additional Notes in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, if any, and other factors.

Previous wording

We are responsible for medical and disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969, as amended. Beginning on April 1, 2016 through May 31, 2018, we were insured under a guaranteed cost insurance policy, through a third-party insurance carrier, for black lung claims raised by any employee subsequent to the acquisition of certain assets of Walter Energy. From June 1, 2018 through May 31, 2020 and June 1, 2020 to May 31, 2024, we had a deductible policy under which we were responsible for the first $0.5 million and $1.0 million, respectively, for each black lung claim from any of our employees. Beginning on June 1, 2024, we have a deductible policy where we are responsible for the first $2.0 million for each black lung related claim from any of our employees.

Current wording

We are responsible for medical and disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969, as amended. Beginning on April 1, 2016 through May 31, 2018, we were insured under a guaranteed cost insurance policy, through a third-party insurance carrier, for black lung claims raised by any employee subsequent to the acquisition of certain assets of Walter Energy, Inc. ("Walter Energy"). From June 1, 2018 to May 31, 2020 and June 1, 2020 to May 31, 2024, we had a deductible policy where the Company was responsible for the first $0.5 million and $1.0 million, respectively, for each black lung and workers compensation related claim from any of our employees. Beginning on June 1, 2024, we have a deductible policy where we are responsible for the first $2.0 million of each black lung and workers compensation related claim from any of our employees.

Previous wording

In addition, in connection with the acquisition of certain assets of Walter Energy, we assumed all black lung liabilities of Walter Energy and its U.S. subsidiaries incurred prior to March 31, 2016, for which we are self-insured. We have posted $18.6 million in surety bonds and $9.8 million of collateral recognized as short-term investments in addition to maintaining a black lung trust of $1.0 million that was acquired from Walter Energy. We received a letter from the U.S. Department of Labor ("DOL") on February 21, 2020 under its new process for self-insurance renewals that would require us to increase the amount of collateral posted to $39.8 million, but we appealed such increase. We received another letter from the DOL on December 8, 2021 requesting additional information to support our appeal of the collateral requested by the DOL. On February 9, 2022, the DOL held a conference call with representatives from the Company related to our appeal. On July 12, 2022, we received a decision on our appeal from the DOL lowering the amount of collateral required to be posted from $39.8 million to $28 million. We appealed this decision. In addition, on January 19, 2023, the DOL proposed revisions to regulations under the Black Lung Benefits Act governing authorization of self-insurers, which was then subsequently revised as part of the final rules published on December 12, 2024, which became effective on January 13, 2025. The final rules require, among other requirements, self-insured operators to apply for self-insurance authorization and all self-insured operators to post security of at least 100 percent of their projected black lung liabilities. On February 20, 2025, we received another letter from the DOL notifying us that we did not need to provide any of the information requested under the published final rule and the DOL will provide us with additional guidance in the future after consultation with the new DOL leadership.

Current wording

We assumed all of the black lung liabilities of Walter Energy and its U.S. subsidiaries. We are self-insured for these black lung liabilities and have posted $18.6 million in surety bonds and $10.0 million of collateral recognized as short-term investments in addition to maintaining a black lung trust of $1.0 million that was acquired from Walter Energy. We received a letter from the Division of Coal Mine Workers' Compensation ("DCWMC") on February 21, 2020, under its new process for self-insurance renewals, which would require us to increase the amount of collateral posted to $39.8 million, but we appealed such increase. We received another letter from the DCWMC on December 8, 2021 requesting additional information to support our appeal of the collateral requested by the DOL. On February 9, 2022, the DCWMC held a conference call with representatives from the Company related to our appeal. On July 12, 2022, we received a decision on our appeal from the DCWMC lowering the amount of collateral required to be posted from $39.8 million to $28.0 million. We appealed this decision.

Previous wording

In the ordinary course of our business, we are required to provide surety bonds and letters of credit to provide financial assurance for certain transactions and business activities. Federal and state laws require us to obtain surety bonds or other acceptable security to secure payment of certain long-term obligations including mine closure or reclamation costs and other miscellaneous obligations. As of September 30, 2025, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our mining operations totaling $47.5 million, $18.6 million as collateral for self-insured black lung related claims and $11.8 million for miscellaneous purposes.

Current wording

In the ordinary course of our business, we are required to provide surety bonds and letters of credit to provide financial assurance for certain transactions and business activities. Federal and state laws require us to obtain surety bonds or other acceptable security to secure payment of certain long-term obligations including mine closure or reclamation costs and other miscellaneous obligations. As of March 31, 2026, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our mining operations totaling $47.5 million, $18.6 million as collateral for self-insured black lung related claims, $16.0 million for federal coal leases and $6.4 million for miscellaneous purposes.

Previous wording

We believe that our future cash flows from operations, together with cash on our balance sheet and proceeds from the borrowings under our Amended ABL Facility, will provide adequate resources to fund our debt service payments and planned operating and capital expenditure needs, including the development of Blue Creek, for at least the next twelve months and beyond. However, we will continue to assess our liquidity needs in light of the current weakness in steelmaking coal prices and the uncertain economic impacts of new and existing tariffs on our business.

Current wording

We believe that our future cash flows from operations, together with cash on our balance sheet and proceeds from the borrowings under our Amended ABL Facility, will provide adequate resources to fund our debt service payments, asset retirement obligations, finance lease obligations, federal coal lease obligations, black lung obligations and planned operating and capital expenditure needs for at least the next twelve months and beyond. However, we will continue to assess our liquidity needs in light of the current weakness in steelmaking coal prices.

Previous wording

The Company's principal contractual commitments include repayments of long-term debt and related interest, potential minimum throughput payments associated with our rail and port providers, asset retirement obligation payments, black lung obligation payments, payments on various coal and land leases, payments under financing lease obligations and payments associated with our natural gas swap contracts. Currently, there are no known trends or expected changes anticipated in future periods that would not be indicative of past results for our contractual commitments.

Current wording

The Company's principal contractual commitments include repayments of long-term debt and related interest, potential minimum throughput payments associated with our rail and port providers, asset retirement obligation payments, black lung obligation payments, payments on various coal and land leases, including the federal coal lease obligations, and payments under financing lease obligations. Currently, there are no known trends or expected changes anticipated in future periods that would not be indicative of past results for our contractual commitments.

Previous wording

Refer to the respective notes to our audited financial statements for the year ended December 31, 2024 included in our 2024 Annual Report for further information about our credit facilities and long-term debt (Note 13), commitments and contingencies (Note 15), asset retirement obligations (Note 8), black lung obligations (Note 10), lease payment obligations (Note 14), stock repurchase programs (Note 16) and derivative instruments (Note 17).

Current wording

Refer to the respective notes to our audited financial statements for the year ended December 31, 2025 included in our 2025 Annual Report for further information about our asset retirement obligations (Note 9), black lung obligations (Note 10), financing lease payment obligations (Note 11), federal coal leases (Note 12), credit facilities and long-term debt (Note 13), commitments and contingencies (Note 14), share repurchase programs (Note 17) and derivative instruments (Note 18).

Previous wording

Cash balances were $336.3 million and $491.5 million at September 30, 2025 and December 31, 2024, respectively.

Current wording

Cash balances were $202.6 million and $300.0 million at March 31, 2026 and December 31, 2025, respectively.

Previous wording

The following table sets forth, a summary of the net cash provided by (used in) operating, investing and financing activities for the period (in thousands):

Current wording

The following table sets forth, a summary of the net cash (used in) provided by operating, investing and financing activities for the period (in thousands):

Previous wording

Net cash flows from operating activities consist of net income adjusted for noncash items, such as depreciation and depletion of property, plant and equipment and mineral interests, deferred income tax benefit, stock-based compensation expense, amortization of debt issuance costs and debt discount, accretion of asset retirement obligations, mark-to-market adjustments on gas hedges and changes in net working capital. The timing between the conversion of our billed and unbilled receivables into cash from our customers, production and sale of coal inventory and disbursements to our vendors is the primary driver of changes in our working capital.

Current wording

Net cash flows from operating activities consist of net income (loss) adjusted for noncash items, such as depreciation and depletion of property, plant and equipment and mineral interests, deferred income tax expense (benefit), stock-based compensation expense, amortization of debt issuance costs and debt discount, accretion of asset retirement obligations, mark-to-market adjustments on gas hedges and changes in net working capital. The timing between the conversion of our billed and unbilled receivables into cash from our customers, production and sale of coal inventory and disbursements to our vendors is the primary driver of changes in our working capital.

Previous wording

Net cash provided by operating activities was $153.2 million for the nine months ended September 30, 2025, and was primarily attributed to a net income of $34.0 million adjusted for depreciation and depletion expense of $132.1 million, stock based compensation expense of $15.3 million, deferred income tax benefit of $14.3 million, accretion of asset retirement obligations of $4.0 million, amortization of debt issuance costs and debt discount of $1.2 million, mark-to-market gain on gas hedges of $0.3 million and an increase in our net working capital of $14.6 million. The increase in our net working capital was primarily driven by increases in prepaid longwall costs and increased inventory, offset partially by increased accounts payable due to timing of payments.

Current wording

Net cash used in operating activities was $11.7 million for the three months ended March 31, 2026, and was primarily attributed to a net income of $72.3 million adjusted for depreciation and depletion expense of $52.3 million, stock based compensation expense of $10.1 million, deferred income tax expense of $1.9 million, accretion of asset retirement obligations of $1.1 million, amortization of debt issuance costs and debt discount of $0.4 million and an increase in our net working capital of $145.8 million, primarily reflecting higher accounts receivable due to higher sales volumes and the timing of sales, higher inventories due to higher production and lower accrued expenses due to timing of payments.