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 months ended March 31, 2025 and March 31, 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 and six months ended June 30, 2025 and June 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.”

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, our two operating mines, had approximately 82.4 million metric tons of recoverable reserves and our undeveloped 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 steelmaking coal is 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 East Coast High Vol A indices price for our Mine No. 4 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, 2024, based on a reserve report prepared by Marshall Miller & Associates, Inc. ("Marshall Miller"), Mine No. 4 and Mine No. 7, our two operating mines, had approximately 82.4 million metric tons of recoverable reserves and our undeveloped 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 steelmaking coal is 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.

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 the nameplate capacity 83% or 0.6 million metric tons to 6.0 million metric tons per year by adding an additional continuous miner unit. If current weak market conditions continue into next year, we will plan to initially operate Blue Creek at 4.4 million metric tons until the additional tons are warranted, as determined by supply and demand dynamics in the market. 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 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 the nameplate capacity 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.

Previous wording

The project remains on schedule with the longwall scheduled to start up no later than second quarter of 2026. We expect to ramp up production through the development of the project. Specifically, we expect to produce approximately 900 thousand metric tons in 2025, approximately 2.7 million metric tons in 2026 and approximately 4.4 million metric tons in 2027. We do not expect the tons produced in 2024 and 2025 of approximately 1.1 million metric tons to be sold until the second half of 2025 when the preparation plant comes online.

Current wording

As a result of excellent progress made so far in 2025 in completing certain milestones ahead of schedule, the project is now ahead of schedule with the longwall anticipated to start up early in the first quarter of 2026. We expect to produce approximately 900 thousand metric tons in 2025 of which we have produced 543 thousand metric tons to date. Due to the accelerated startup of the longwall we now expect to produce approximately 3.6 million metric tons in 2026 an increase from the original estimated 2.7 million metric tons and approximately 4.4 million metric tons in 2027.

Previous wording

In the first quarter of 2025, we continued to make excellent progress towards completing the Blue Creek project. We have invested approximately $771.8 million in the Blue Creek project to date, including $55.3 million in the first quarter of 2025. We expect to spend $225 to $250 million in 2025 on the continued development of Blue Creek. The baseline total project cost ranges from $995 million to $1.075 billion.

Current wording

In the second quarter of 2025, we also achieved a great milestone in the development of the Blue Creek project, by selling 217 thousand metric tons of steelmaking coal, which were the first commercial sales from this project, ahead of schedule. This milestone marks a critical inflection point in the development of this premier asset, representing the beginning of a transition from capital investment to revenue generations. We also continued to make excellent progress towards completing the Blue Creek project as we completed the installation of the truck dump, rail loadout and module A of the preparation plant, which allowed us the ability to send the first trainloads of steelmaking coal to the Port of Mobile in Alabama for our first shipments to customers. We have invested approximately $823.5 million in the project to date, including $51.8 million in the second quarter of 2025 and $107.0 million year-to-date. We expect to spend $225 to $250 million in 2025 on the continued development of Blue Creek. Our baseline total project cost estimate ranges from $995 million to $1.075 billion.

Previous wording

On April 2, 2025, the United States government announced a broad range of tariffs on foreign goods imported into the U.S., with certain nations and regions responding with retaliatory tariffs on U.S. goods. On April 9, 2025, the U.S. government announced, among other things, that it was modifying the previously announced tariffs and implemented a three-month pause on all "reciprocal" tariffs, with the exception of China. While the impact of these tariffs on steelmaking coal prices are not currently known, any new tariffs as well as other trade measures that may be implemented by the U.S. or retaliatory trade measures or tariffs implemented by other countries could result in reduced economic activity, increased costs in operating our business, reduced demand and/or changes in purchasing behaviors for steelmaking coal, disruptions in our supply chain, material changes in the pricing of steelmaking coal, limits on trade with the U.S. or other potentially adverse economic outcomes. It is too early to quantify the impact of the tariffs on the Company's financial statements. We continue to analyze the impact of tariffs on our business and actions we can take to minimize their impact.

Current wording

The United States government announced a broad range of tariffs on foreign goods imported into the U.S., with certain nations and regions responding with retaliatory tariffs on U.S. goods. The trade and tariff uncertainties have already contributed to lower seaborne prices. Any new tariffs as well as other trade measures that may be implemented by the U.S. or retaliatory trade measures or tariffs implemented by other countries could result in reduced economic activity, increased costs in operating our business, reduced demand and/or changes in purchasing behaviors for steelmaking coal, disruptions in our supply chain, material changes in the pricing of steelmaking coal, limits on trade with the U.S. or other potentially adverse economic outcomes. It is too early to quantify the impact of the tariffs on the Company's financial statements. We continue to analyze the impact of tariffs on our business and actions we can take to minimize their impact.

Previous wording

Our primary business, the mining and exporting of steelmaking coal for the steel industry, is conducted in one reportable business segment: mining. All other operations and results are reported under the “All Other” category as a reconciling item to consolidated amounts, which includes the business results from our sale of natural gas extracted as a byproduct from our underground coal mines, royalties from our leased properties and the business results related to the Blue Creek mine development. Our natural gas and royalty businesses do not meet the criteria in ASC 280, Segment Reporting, to be considered as operating or reportable segments.

Current wording

The Company has determined that the three operating segments are similar in both quantitative and qualitative characteristics and thus, the three operating segments have been aggregated into one reportable segment identified as Mining, which represents our primary business, the mining and exporting of steelmaking coal for the steel industry. All other operations and results are reported under the “All Other” category as a reconciling item to consolidated amounts, which includes the business results from our sale of natural gas extracted as a byproduct from our underground coal mines and royalties from our leased properties. Our natural gas and royalty businesses do not meet the criteria in ASC 280, Segment Reporting, to be considered as operating or reportable segments.

Previous wording

We define Segment Adjusted EBITDA as net (loss) income adjusted for other revenues; cost of other revenues; depreciation and depletion expense; selling, general and administrative expenses; business interruption expenses; interest income, net; 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. 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 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:

Previous wording

We define Adjusted EBITDA as net (loss) 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 loss 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 interest income, net, income tax expense (benefit), depreciation and depletion, non-cash asset retirement obligation accretion, non-cash stock compensation expense, other non-cash accretion, mark-to-market (gain) loss 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:

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 (loss) income. Adjusted EBITDA should not be considered an alternative to net (loss) 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 (loss) 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 (loss) 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 (loss) 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

(4)Represents mark-to-market loss recognized on gas hedges.

Current wording

(4)Represents mark-to-market (gain) loss recognized on gas hedges.

Previous wording

Sales for the three months ended March 31, 2025 were $294.9 million compared to $498.0 million for the three months ended March 31, 2024. The $203.1 million decrease in sales was primarily driven by a $213.1 million decrease in sales related to a $108.19 per metric ton decrease in the average net selling price per metric ton of our steelmaking coal offset partially by a $10.1 million increase in sales due to a 2.0% increase in steelmaking coal sales volume. The average net selling price of our steelmaking coal decreased $108.19 from $257.90 per metric ton in the first quarter of 2024 to $149.71 per metric ton in the first quarter of 2025.

Current wording

Sales for the three months ended June 30, 2025 were $288.5 million compared to $390.4 million for the three months ended June 30, 2024. The $101.9 million decrease in sales was primarily driven by a $124.3 million decrease in sales related to a $61.74 per metric ton decrease in the average net selling price per metric ton of our steelmaking coal offset partially by a $22.4 million increase in sales due to a 6% increase in steelmaking coal sales volume. The average net selling price of our steelmaking coal decreased $61.74 from $205.05 per metric ton in the second quarter of 2024 to $143.31 per metric ton in the second quarter of 2025.

Previous wording

For the three months ended March 31, 2025, our geographic customer mix was 37% in Europe, 43% in Asia, and 20% in South America. For the three months ended March 31, 2024, our geographic customer mix was 47% in Asia, 37% in Europe and 16% in South America. Our geographic customer mix typically varies each period based on the timing of customer orders and shipments.

Current wording

For the three months ended June 30, 2025, our geographic customer sales volume mix was 52% in Asia, 37% in Europe, and 11% in South America. For the three months ended June 30, 2024, our geographic customer sales volume mix was 41% in Asia, 38% in Europe and 21% in South America. 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 March 31, 2025 were $5.0 million compared to $5.5 million for the three months ended March 31, 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 and earned royalty revenue. The $0.5 million decrease in other revenues is primarily driven by losses on mark-to-market gas hedges of $2.2 million and a decrease in natural gas sales volumes of 4% offset partially by an increase in the Southern Louisiana natural gas price average per Million British Thermal Unit ("MMBtu") of 64% for the three months ended March 31, 2025 as compared to the prior year comparable period.

Current wording

Other revenues for the three months ended June 30, 2025 were $9.0 million compared to $6.1 million for the three months ended June 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 $2.9 million increase in other revenues is primarily driven by gains on mark-to-market gas hedges of $1.3 million, and an increase in the Southern Louisiana natural gas price average per Million British Thermal Unit ("MMBtu") of 70% offset partially by a decrease in natural gas sales volumes of 6% for the three months ended June 30, 2025 as compared to the prior year comparable period.

Previous wording

Cost of sales was $245.7 million, or 81.9% of total revenues, for the three months ended March 31, 2025, compared to $285.6 million, or 56.7% of total revenues for the three months ended March 31, 2024. The $39.9 million decrease is primarily driven by a $45.9 million decrease due to a $23.29 per metric ton decrease in cash cost of sales per metric ton due to a lower average net selling prices of steelmaking coal and its impact on our labor, transportation and royalty costs. The decrease in costs of sales is offset partially by a 39.0 thousand metric ton increase in steelmaking coal sales volume. For the three months ended March 31, 2025, cost of production represented 64% of cost of sales and transportation and royalties accounted for approximately 36% compared to cost of production of 61% and transportation and royalties of 39% for the three months ended March 31, 2024.

Current wording

Cost of sales was $226.4 million, or 76.1% of total revenues, for the three months ended June 30, 2025, compared to $261.3 million, or 65.9% of total revenues for the three months ended June 30, 2024. The $34.9 million decrease is primarily driven by a $50.1 million decrease due to a $24.86 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. The decrease in costs of sales is offset partially by a 109 thousand metric ton increase in steelmaking coal sales volume. For the three months ended June 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 61% and transportation and royalties of 39% for the three months ended June 30, 2024.

Previous wording

Cost of other revenues was $7.9 million or 2.6% of total revenues, for the three months ended March 31, 2025, compared to $10.0 million, or 2.0% of total revenues for three months ended March 31, 2024. The decrease is primarily driven by the reduction of compression costs in operations and a 4% decrease in sales volumes.

Current wording

Cost of other revenues was $8.2 million or 2.8% of total revenues, for the three months ended June 30, 2025, compared to $10.7 million, or 2.7% of total revenues for three months ended June 30, 2024. The decrease is primarily driven by the reduction of gas compression costs in operations and a 6% decrease in gas sales volumes.

Previous wording

Depreciation and depletion expenses were $45.3 million, or 15.1% of total revenues, for the three months ended March 31, 2025, compared to $40.0 million, or 7.9% of total revenues for the three months ended March 31, 2024. The $5.3 million increase in depreciation and depletion is primarily driven by an increase in additional assets placed into service combined with a 2.0% 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 $43.3 million, or 14.5% of total revenues, for the three months ended June 30, 2025, compared to $38.2 million, or 9.6% of total revenues for the three months ended June 30, 2024. The $5.1 million increase in depreciation and depletion is primarily driven by an increase in additional assets placed into service at Blue Creek combined with a 6% 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 $18.4 million, or 6.1% of total revenues, for the three months ended March 31, 2025, compared to $18.9 million, or 3.7% of total revenues, for the three months ended March 31, 2024. The $0.4 million decrease in selling, general and administrative expenses for the period is due to a decrease in stock compensation expense.

Current wording

Selling, general and administrative expenses were $11.9 million, or 4.0% of total revenues, for the three months ended June 30, 2025, compared to $15.5 million, or 3.9% of total revenues, for the three months ended June 30, 2024. The $3.6 million decrease in selling, general and administrative expenses for the period is primarily due to a decrease in employee related expenses combined with our continued focus on tightly managing expenses across the business.

Previous wording

Interest expense was $2.1 million, or 0.7% of total revenues, for the three months ended March 31, 2025, compared to interest expense of $1.1 million, or 0.2% of total revenues, for the three months ended March 31, 2024. The $1.0 million increase is due an increase in leased equipment.

Current wording

Interest expense was $2.9 million, or 1.0% of total revenues, for the three months ended June 30, 2025, compared to interest expense of $0.9 million, or 0.2% of total revenues, for the three months ended June 30, 2024. The $2.0 million increase is due to an increase in interest on newly leased equipment.

Previous wording

Interest income was $5.3 million, or 1.8% of total revenues for the three months ended March 31, 2025, compared to $8.2 million, or 1.6% of total revenues for the three months ended March 31, 2024. The $2.9 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 $5.1 million, or 1.7% of total revenues for the three months ended June 30, 2025, compared to $9.2 million, or 2.3% of total revenues for the three months ended June 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.

Previous wording

For the three months ended March 31, 2025, we recognized income tax benefit of$6.0 million comp ared to income tax expense of $19.1 million for the three months ended March 31, 2024. The income tax benefit for the three months ended March 31, 2025 is driven by a pre-tax loss. We estimated our annual effective tax rate and applied this effective tax rate to our year-to-date pretax loss at the end of the interim reporting period. The $6.0 million income tax benefit for the three months ended March 31, 2025, includes a benefit related to depletion, Internal Revenue Code ("IRC") Section 250 Deduction: Foreign-Derived Intangible Income ("FDII") and Section 45l Deduction: Marginal Well Credit. The Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017 and enacted IRC Section 250 Deduction: FDII, which provides for, among other things, a deduction of 37.5% with respect to foreign-derived intangible income, which reduces the statutory tax rate from 21% to 13.125%. Beginning in 2026, the deduction is reduced from 37.5% to 21.875% of foreign-derived intangible income. The Marginal Well Credit is a production-based tax credit that provides a credit for qualified natural gas production and is phased out when natural gas prices exceed certain thresholds.

Current wording

For the three months ended June 30, 2025, we recognized income tax expense of$4.3 million comp ared to income tax expense of $8.5 million for the three months ended June 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 $4.3 million income tax expense for the three months ended June 30, 2025, includes a benefit related to depletion, Internal Revenue Code ("IRC") Section 250 Deduction: Foreign-Derived Intangible Income ("FDII") and Section 45l Deduction: Marginal Well Credit.

Previous wording

We produced 2.0 million metric tons of steelmaking coal for the three months ended March 31, 2025 compared to 1.9 million metric tons for the three months ended March 31, 2024, representing a 9.9% increase. The increased production was driven by 228 thousand metric tons produced by three continuous miner units at the Blue Creek mine developing the initial longwall panel.

Current wording

We produced 4.1 million metric tons of steelmaking coal for the six months ended June 30, 2025 compared to 3.8 million metric tons for the six months ended June 30, 2024, representing an 8% increase. The increased production was driven by 543 thousand metric tons produced by three continuous miner units at the Blue Creek mine developing the initial longwall panel.

Previous wording

Our total liquidity as of March 31, 2025 was $616.6 million, consisting of cash and cash equivalents of $454.9 million, short-term investments of $23.5 million, net of $9.6 million posted as collateral, long-term investments of $24.6 million and $113.5 million available under our ABL Facility. As of March 31, 2025, no loans were outstanding under the ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the ABL Facility.

Current wording

Our total liquidity as of June 30, 2025 was $545.0 million, consisting of cash and cash equivalents of $383.3 million, short-term investments of $38.1 million, which is net of $9.7 million posted as collateral, long-term investments of $10.1 million and $113.5 million available under our ABL Facility. As of June 30, 2025, no loans were outstanding under the ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the ABL Facility.

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 $9.6 million of collateral recognized as short-term investments in addition to maintaining a black lung trust of $1.2 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

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 $9.7 million of collateral recognized as short-term investments in addition to maintaining a black lung trust of $1.1 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.

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 March 31, 2025, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our mining operations totaling $47.0 million, $18.6 million as collateral for self-insured black lung related claims and $4.7 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 June 30, 2025, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our mining operations totaling $47.0 million, $18.6 million as collateral for self-insured black lung related claims and $12.6 million for miscellaneous purposes.

Previous wording

Cash balances were $454.9 million and $491.5 million at March 31, 2025 and December 31, 2024, respectively.

Current wording

Cash balances were $383.3 million and $491.5 million at June 30, 2025 and December 31, 2024, respectively.

Previous wording

Net cash provided by operating activities was $10.9 million for the three months ended March 31, 2025, and was primarily attributed to a net loss of $8.2 million adjusted for depreciation and depletion expense of $45.3 million, stock based compensation expense of $8.1 million, deferred income tax benefit of $6.5 million, mark-to-market loss on gas hedges of $1.7 million, accretion of asset retirement obligations of $1.3 million, amortization of debt issuance costs and debt discount of $0.4 million, and an increase in our net working capital of $31.8 million since December 31, 2024. The increase in our working capital was primarily driven by increases in accounts receivable due to higher sales volumes and the timing of sales, lower accrued expenses and higher accounts payable.

Current wording

Net cash provided by operating activities was $48.5 million for the six months ended June 30, 2025, and was primarily attributed to a net loss of $2.6 million adjusted for depreciation and depletion expense of $88.5 million, stock based compensation expense of $10.1 million, deferred income tax benefit of $3.3 million, accretion of asset retirement obligations of $2.7 million, amortization of debt issuance costs and debt discount of $0.8 million, mark-to-market loss on gas hedges of $0.4 million and an increase in our net working capital of $45.3 million. The increase in our net working capital was primarily driven by increases in accounts receivable due to higher sales volumes and the timing of sales, increased inventory, lower accrued expenses and higher accounts payable due to timing of payments.

Previous wording

Net cash provided by operating activities was $104.1 million for the three months ended March 31, 2024, and was primarily attributed to net income of $137.0 million adjusted for depreciation and depletion expense of $40.0 million, deferred income tax expense of $2.9 million, stock based compensation expense of $9.2 million, accretion of asset retirement obligations of $1.3 million, amortization of debt issuance costs and debt discount of $0.4 million, and an increase in our net working capital of $85.8 million since December 31, 2023. The increase in our working capital was primarily driven by an increases in accounts receivable due to higher sales volumes and the timing of sales partially offset by the draw down of inventories.

Current wording

Net cash provided by operating activities was $251.0 million for the six months ended June 30, 2024, and was primarily attributed to net income of $207.7 million adjusted for depreciation and depletion expense of $78.2 million, stock based compensation expense of $14.2 million, deferred income tax expense of $6.8 million, accretion of asset retirement obligations of $2.6 million, amortization of debt issuance costs and debt discount of $0.8 million, and an increase in our net working capital of $57.1 million. The increase in our working capital was primarily driven by an increase in accounts receivable due to higher sales volumes and the timing of sales, partially offset by increased accounts payable due to timing of payments.

Previous wording

Net cash used in investing activities was $77.8 million and $101.7 million for the three months ended March 31, 2025 and 2024, respectively, primarily due to purchases of property, plant and equipment and mine development offset partially by proceeds from the sale of short term investments of $1.6 million. Capital expenditures for the development of Blue Creek were $55.3 million and $68.5 million for three months ended March 31, 2025 and 2024, respectively.

Current wording

Net cash used in investing activities was $172.1 million and $223.3 million for the six months ended June 30, 2025 and 2024, respectively, primarily due to purchases of property, plant and equipment and mine development offset partially by proceeds from the sale of investments of $1.5 million. Capital expenditures for the development of Blue Creek were $107.0 million and $152.6 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Net cash provided in financing activities was $30.3 million for the three months ended March 31, 2025, primarily due to the receipt of proceeds on equipment financing for leases yet to commence of $48.8 million offset partially by payments for taxes related to net share settlement of equity awards of $9.4 million, payment of regular quarterly dividends of $5.2 million and principal repayments of finance lease obligations of $3.9 million. Net cash used in financing activities was $46.7 million for the three months ended March 31, 2024, primarily due to the payment of regular quarterly and special dividends of $30.6 million, payments for taxes related to net share settlement of equity awards of $11.8 million and principal repayments of finance lease obligations of $4.3 million.

Current wording

Net cash provided in financing activities was $15.5 million for the six months ended June 30, 2025, primarily due to the receipt of proceeds on equipment financing of $48.8 million offset partially by principal repayments of finance lease obligations of $14.5 million, payments for taxes related to net share settlement of equity awards of $9.4 million and payment of regular quarterly dividends of $9.4 million. Net cash used in financing activities was $56.9 million for the six months ended June 30, 2024, primarily due to the payment of regular quarterly and special dividends of $36.2 million, payments for taxes related to net share settlement of equity awards of $11.8 million and principal repayments of finance lease obligations of $8.9 million.

Previous wording

During the three months ended March 31, 2025, we have paid $5.2 million of regular quarterly dividends under the Capital Allocation Policy.

Current wording

During the six months ended June 30, 2025, we have paid $9.4 million of regular quarterly dividends under the Capital Allocation Policy.

Previous wording

Revolving loan (and letter of credit) availability under the ABL Facility is subject to a borrowing base, which at any time is equal to the sum of certain eligible billed and unbilled accounts, certain eligible inventory, certain eligible supplies inventory and qualified cash, in each case, subject to specified advance rates. The borrowing base availability is subject to certain reserves, which may be established by the agent in its reasonable credit discretion. The reserves may include rent reserves, lower of cost or market reserve, port charges reserves and any other reserves that the Agent determines in its reasonable credit judgment to the extent such reserves relate to conditions that could reasonably be expected to have an adverse effect on the value of the collateral included in the borrowing base.

Current wording

Revolving loan (and letter of credit) availability under the ABL Facility is subject to a borrowing base, which at any time is equal to the sum of certain eligible billed and unbilled accounts receivable, certain eligible inventory, certain eligible supplies inventory and qualified cash, in each case, subject to specified advance rates. The borrowing base availability is subject to certain reserves, which may be established by the agent in its reasonable credit discretion. The reserves may include rent reserves, lower of cost or market reserves, port charges reserves and any other reserves that the Agent determines in its reasonable credit judgment to the extent such reserves relate to conditions that could reasonably be expected to have an adverse effect on the value of the collateral included in the borrowing base.

Previous wording

Our capital expenditures were $68.5 million and $99.7 million for the three months ended March 31, 2025 and March 31, 2024, respectively. Capital expenditures for these periods are primarily related to investments required to develop Blue Creek as well as expenditures necessary to maintain our property, plant and equipment. Capital expenditures for the development of Blue Creek for the three months ended March 31, 2025 were $55.3 million and$771.8 million has been spent on this project to date. Our deferred mine development costs were $10.8 million and $2.0 million for the three months ended March 31, 2025 and March 31, 2024, respectively, and relate to the development of Blue Creek.

Current wording

Our capital expenditures were $143.5 million and $210.7 million for the six months ended June 30, 2025 and June 30, 2024, respectively. Capital expenditures for these periods are primarily related to investments required to develop Blue Creek as well as expenditures necessary to maintain our property, plant and equipment. Capital expenditures for the development of Blue Creek for the six months ended June 30, 2025 were $107.0 million and$823.6 million has been spent on this project to date. Our deferred mine development costs were $30.1 million and $12.6 million for the six months ended June 30, 2025 and June 30, 2024, respectively, and relate to the development of Blue Creek.

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 March 31, 2025, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our U.S. mining operations totaling $47.0 million, for collateral for self-insured black lung related claims totaling $18.6 million and for miscellaneous purposes totaling $4.7 million.

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 June 30, 2025, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our U.S. mining operations totaling $47.0 million, for collateral for self-insured black lung related claims totaling $18.6 million and for miscellaneous purposes totaling $12.6 million.