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The call emphasized multiple substantial operational and financial wins—completion of Blue Creek on budget, record production and sales, materially higher revenues and adjusted EBITDA, lower per-ton cash costs, and maintained liquidity—while acknowledging temporary cash flow and working capital impacts, inventory accumulation, margin realization headwinds from index relativity shifts, and emerging inflationary and geopolitical risks. Management expects the working capital and cash flow timing issues to improve later in the year and reaffirmed full-year guidance.
Management reaffirmed its full-year 2026 outlook and guidance (as communicated in February), saying Q1 results were generally in line or ahead of internal plans and that volumes should remain higher for the balance of the year to meet guidance; they expect steelmaking coal markets to remain generally consistent absent major supply/demand disruptions or a prolonged Middle East conflict but cautioned on inflationary cost pressures (steel roof supports, tungsten bits, diesel) that could add “a few dollars per ton” to cash costs. Key metrics tied to the guidance: Q1 free cash flow was negative $890 million (driven by negative $12 million operating cash flow and $80 million capex) but management expects free cash flow to turn positive in Q2; Q1 cash cost per ton FOB was ~$96; the company completed Blue Creek with total project capex a little over $1 billion (final $66 million in Q1) paid from cash without funded debt; Q1 benefited from a $3/ton 45X tax credit (~$8.4 million); available liquidity at March 31 was $364 million (including $20 million short-term investments and $141 million available on the ABL); SG&A is on track with guidance, inventory management will be prioritized through the year (Q1 inventory 1.9 million short tons), and any resumed shareholder returns (rising quarterly dividend plus supplemental specials and selective buybacks) would depend on when cash generation allows, likely in the back half of the year if timing holds.
Completed final construction and project spending for Blue Creek with total project capital expenditures a little over $1 billion, delivered on budget and ahead of schedule, fully funded from cash from operations without incurring any funded debt.
First quarter production was a record 3.5 million short tons versus 2.3 million in Q1 2025 (+55%). First quarter sales were a record 3.0 million short tons versus 2.2 million in Q1 2025 (+38%). Sales mix was 61% High Vol A (10% increase vs Q4 2025); 61% of sales into Asia.
Adjusted EBITDA rose to $143 million from $39 million in Q1 2025, an increase of 263%. Net income was $72 million (earnings per diluted share $1.37) versus a net loss of $8 million in Q1 2025. Adjusted EBITDA margin improved to 31% from 13%; adjusted EBITDA per ton increased to $48/ton from $18/ton.
Cash cost of sales per short ton FOB port decreased to approximately $96 in Q1 2026 from $112 in Q1 2025 (a 14% reduction). Cash margin per short ton increased to $53 from $23 (+127%). Cash cost of sales as a percent of mining revenues improved to 64% from 83%.
Premium quality pricing strengthened: PLV FOB Australia averaged $213/short ton in Q1 (up 17% vs Q4 2025 and 27% vs 2025). Main second-tier (LVHCC) averaged $173/short ton (up 12% vs Q4 2025 and 30% vs 2025). These index moves supported higher net selling price (average net selling price reported at $149/short ton).
Total available liquidity at quarter end was $364 million (cash & equivalents, $20 million short-term investments, and $141 million available under ABL). Received benefit from the 45X production tax credit of roughly $8.4 million (~$3/ton) in the quarter. Capital spending was lower vs prior quarter as Blue Creek capex concluded.
Good day, and welcome to the Warrior Met Coal, Inc. first quarter 2026 conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone, and to withdraw your question, star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Brian M.
Chopin. Please go ahead, sir.
Good afternoon, and welcome, everyone, to Warrior Met Coal, Inc.’s first quarter 2026 earnings conference call. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements by their nature address matters that are to different degrees uncertain. These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements. We do not undertake to update our forward-looking statements whether as a result of new information, future events, or otherwise, except as may be required by law. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings. We will also be discussing certain non-GAAP financial measures which are defined and reconciled to comparable GAAP financial meas...