Warrior Met Coal Announces Fourth Quarter and Full Year 2017 Results

February 14, 2018

Sales volume increases 42% in the fourth quarter 2017 compared to
prior year period to 1.4 million short tons

Production volume increases 52% in the fourth quarter 2017 compared
to prior year period to 1.6 million short tons

Company records net income of $97.2 million and Adjusted EBITDA of
$86.3 million in the fourth quarter of 2017

BROOKWOOD, Ala.–(BUSINESS WIRE)–Warrior Met Coal, Inc. (NYSE:HCC) (“Warrior” or the “Company”) today
announced results for the fourth quarter and full year ended
December 31, 2017. Warrior is the leading dedicated U.S. based producer
and exporter of high quality metallurgical (“met”) coal for the global
steel industry.

Warrior reported fourth quarter 2017 net income of $97.2 million, or
$1.83 per diluted share, compared to net income of $34.0 million, or
$0.65 per diluted share, in the fourth quarter of 2016. The Company
reported Adjusted EBITDA of $86.3 million in the fourth quarter of 2017,
compared to Adjusted EBITDA of $51.4 million in the prior year period.
The market for high quality premium met coal continued to be strong in
the fourth quarter, reflecting resilience in global steel production, as
well as the effects of met coal supply disruptions in Australia and
supply side reforms in China. The fourth quarter results for Warrior
also reflect the successful completion of three planned longwall moves
which lowered total production as expected when compared to previous
quarters during 2017.

“Warrior’s results in the fourth quarter were even better than expected
enabling us to exceed our full year guidance in our key sales and
production metrics,” commented Walt Scheller, CEO of Warrior. “The
fourth quarter also saw the timely and successful back to back
completion of all three longwall moves which will help to strengthen our
operational base in 2018.”

Warrior reported full year 2017 net income of $455.0 million and
adjusted net income of $467.9 million, excluding non-recurring
transaction costs associated with its initial public offering in April
2017, or net income of $8.62 per diluted share and adjusted net income
of $8.86 per diluted share. The Company reported Adjusted EBITDA of
$517.7 million for the full year of 2017.

Operating Results

The Company produced 1.6 million short tons of met coal in the fourth
quarter of 2017, 52% more than the amount produced in the fourth quarter
of 2016. For the full year of 2017, the Company produced 6.7 million
short tons, which exceeded its guidance and expectations as the Company
ramped up its operations toward full capacity of the mines. “Moving one
longwall operation is challenging by itself and when combined with the
normal difficult geological conditions near the end of a panel, three
moves back to back could have been overwhelming. However, our success
was the result of good planning, preparation, communication and
outstanding work by our employees and we thank them for the significant
effort and success,” Mr. Scheller added.

Additional Financial Results

Total revenues were $239.8 million for the fourth quarter of 2017,
including $228.8 million in mining revenues, which consisted of met coal
sales of 1.4 million short tons at an average net selling price of
$168.89 per short ton, net of demurrage and other charges. Sales volume
increased 42% over the fourth quarter of 2016, reflecting both strong
continued production and strong demand from customers. Warrior
capitalized on the strong pricing environment in the quarter by selling
its met coal at 101% of the quarterly Australian premium low-volatility
(“LV”) hard coking coal (“HCC”) index average price (the “Australian LV
Index”), which replaced the Australian premium low-volatility HCC
benchmark (“Australian HCC Benchmark”) starting in the second quarter of
2017. Total revenues for 2017 were $1.2 billion on sales volume of 6.5
million short tons.

Cost of sales for the fourth quarter of 2017 were $136.7 million, or
59.7% of mining revenues, and included mining costs, transportation and
royalty costs. Cash cost of sales (free-on-board port) per short ton
increased to $100.97 in the fourth quarter from the third quarter of
2017, primarily due to the lower sales volume and higher transportation
and royalty costs related to higher met coal prices.

Selling, general and administrative expenses for the fourth quarter of
2017 were $13.4 million, or 5.6% of total revenues, and were $36.5
million for the full year. Depreciation and depletion costs for the
fourth quarter of 2017 were $17.8 million, or 7.4% of total revenues,
and were $75.4 million for all of 2017. Warrior incurred interest
expense of $5.1 million during the fourth quarter of 2017, which was
higher than previous quarters due to the issuance of the $350 million
Senior Secured Notes due 2024 (the “Senior Secured Notes”) in November
2017. Full year 2017 interest expense was $6.9 million.

For the full year 2017, the Company will pay approximately $2.3 million
in alternative minimum income taxes (“AMT”) that will be refunded for
that same period with the other AMT credits as noted below. The
Company’s estimated savings in cash taxes for 2017 was approximately
$122.8 million, or $2.33 per diluted share, due to the unlimited annual
use of its net operating loss (“NOL”) carryforwards. “Our NOLs are
tremendous assets of the Company which will significantly increase the
cash available to fund the needs of the business and any strategic
opportunities that may present themselves in the future,” said Dale
Boyles, Warrior’s Chief Financial Officer.

The Tax Cuts and Jobs Act of 2017 enacted in December lowers most
business and individual tax rates and generally represents the most
sweeping reform of the U.S. tax code in more than 30 years. While nearly
all the provisions took effect on January 1, 2018, companies are
required to recognize the effect of the tax law changes in their
financial statements in December 2017. Accordingly, Warrior recognized
an income tax benefit of $35.7 million in the fourth quarter of 2017 and
a $38.6 million benefit for the full year, primarily as a result of the
refund of existing AMT credits of approximately $39.3 million which the
Company expects to receive in 2019 through 2022.

Cash Flow and Liquidity

The Company continued to generate strong cash flows from operating
activities in the fourth quarter of 2017 of $91.4 million compared to
$12.2 million in the fourth quarter of 2016. Full year 2017 cash flows
from operating activities were $434.5 million. Net working capital,
excluding cash and income tax receivable, decreased by $6.9 million from
the third quarter of 2017 and was an increase, or use of cash, of $61.0
million for the full year 2017. The increase in net working capital, or
use of cash, in 2017 was primarily attributable to the restart of two
longwall operations in the Company’s ramp up of production and sales
volumes resulting in higher accounts and other receivables, slightly
higher inventories and higher prepaid expenses partially offset by
higher accounts payable and accrued expenses. The increase in long-term
income tax receivable is attributable to recognition of the expected
refunds of AMT credits in future years as noted above. The Company
invested significantly in its business during 2017 with total cash
capital expenditures for the fourth quarter 2017 of $30.0 million and
$92.6 million for the full year of 2017. These cash expenditures exclude
non-cash accruals and capital leases of approximately $15.0 million for
the full year of 2017.

Free cash flow was $61.5 million in the fourth quarter, which was $52.5
million higher than in the prior year period in 2016. Free cash flow for
the full year 2017 was $341.9 million. Cash flows used in financing
activities for the fourth quarter were $260.6 million, reflecting the
net proceeds from the $350 million Senior Secured Notes offering and the
payment of a special dividend of $11.21 per share as more fully
described below.

The Company’s available liquidity as of December 31, 2017 was $135.5
million, consisting of cash and cash equivalents of $35.5 million and
$100.0 million available under its Asset-Based Revolving Credit
Agreement.

Company Outlook

The Company’s outlook is subject to many risks that may impact
performance, such as market conditions in the steel and met coal
industries, overall global economic and competitive conditions, all as
more fully described under Forward-Looking Statements. In light of the
Company's successful 2017 performance, NOL carryforwards and expected
market conditions in 2018, Warrior is establishing its guidance for the
full year 2018 as follows:

Coal sales	6.6 – 7.2 million short tons
Coal production	6.6 – 7.2 million short tons
Cash cost of sales (free-on-board port)	$89 – $95 per short ton
Capital expenditures	$100 – $120 million
Selling, general and administrative expenses	$30 – $33 million
Interest expense	$31 – $32 million
Cash tax rate	0%

The Company’s guidance for capital expenditures consists of sustaining
capital spending of approximately $70 – $83 million, including
regulatory and gas requirements, and discretionary capital spending of
$30 – $37 million for various operational improvements.

Key factors that may affect outlook include:

Hard coking coal index pricing
2 planned longwall operation moves in 2018 (1 – Q3 and 1 – Q4)
Excludes other non-recurring costs

The Company does not provide reconciliations of its outlook for cash
cost of sales (free-on-board port) to cost of sales in reliance on the
unreasonable efforts exception provided for under Item 10(e)(1)(i)(B) of
Regulation S-K. The Company is unable, without unreasonable efforts, to
forecast certain items required to develop the meaningful comparable
GAAP cost of sales. These items typically include non-cash asset
retirement obligation accretion expenses, mine idling expenses and other
non-recurring indirect mining expenses that are difficult to predict in
advance in order to include a GAAP estimate.

Regular Quarterly Dividend

On February 13, 2018, the board of directors of the Company (the
“Board”) declared a regular quarterly cash dividend of $0.05 per share,
totaling approximately $2.7 million, which will be paid on March 2,
2018, to stockholders of record as of the close of business on February
23, 2018.

Standard & Poor’s (“S&P”) Global Ratings Upgrade

On January 17, 2018, S&P raised the Company’s corporate credit rating to
B, from B-, with a stable outlook. At the same time, S&P raised the
issue-level rating on the Senior Secured Notes to B+ from B- and the
recovery rating to 2 from 3. S&P cited the Company’s strong performance,
strong credit metrics and stable outlook as reasons for its new ratings.
The upgrade reflects S&P’s view about Warrior’s ability to increase
production with its low-cost structure and capitalize on robust demand
in a favorable met coal price environment, enabling it to generate
strong margins and cash flows.

Senior Secured Notes Offering and Special Dividend

As previously disclosed on November 2, 2017, the Company consummated a
private offering (the “Offering”) of $350.0 million aggregate principal
amount of 8.00% Senior Secured Notes due 2024 to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”), and to certain non-U.S. persons in
transactions outside the United States in accordance with Regulation S
under the Securities Act. The Company used the net proceeds of
approximately $340.0 million from the Offering, together with cash on
hand of approximately $260.0 million, to pay a special cash dividend of
approximately $600.0 million, or $11.21 per share, to all its
stockholders of record as of the close of business on November 13, 2017
on a pro rata basis.

Use of Non-GAAP Financial Measures

This release contains the use of certain U.S. non-GAAP (“Generally
Accepted Accounting Principles”) financial measures. These non-GAAP
financial measures are provided as supplemental information for
financial measures prepared in accordance with GAAP. Management believes
that these non-GAAP financial measures provide additional insights into
the performance of the Company, and they reflect how management analyzes
Company performance and compares that performance against other
companies. These non-GAAP financial measures may not be comparable to
other similarly titled measures used by other entities. The definition
of these non-GAAP financial measures and a reconciliation of non-GAAP to
GAAP financial measures is provided in the financial tables section of
this release.

Conference Call

The Company will hold a conference call to discuss its fourth quarter
2017 results today, February 14, 2018, at 4:30 p.m. ET. To listen to the
event live or access an archived recording, please visit http://investors.warriormetcoal.com/.

Analysts and investors who would like to participate in the conference
call should dial 1-844-340-9047 (domestic) or 1-412-858-5206
(international) 10 minutes prior to the start time and reference the
Warrior Met Coal conference call.

Telephone playback will also be available from 7:30 p.m. ET February 14,
2018 through 7:30 p.m. ET on February 21, 2018. The replay will be
available by calling: 1-877-344-7529 (domestic) or 1-412-317-0088
(international) and entering passcode 10115958.

About Warrior Met Coal

Warrior Met Coal is a large scale, low-cost U.S. based producer and
exporter of premium HCC, operating highly efficient longwall operations
in its underground mines located in Alabama. The HCC that Warrior
produces from the Blue Creek coal seam contains very low sulfur and has
strong coking properties and is of a similar quality to coal referred to
as the premium HCC produced in Australia. The premium nature of
Warrior’s HCC makes it ideally suited as a base feed coal for steel
makers and results in price realizations near the Australian LV Index.
Warrior sells all of its met coal production to steel producers in
Europe, South America and Asia. For more information about Warrior Met
Coal, please visit www.warriormetcoal.com.

Forward-Looking Statements

This press release contains, and the Company’s officers and
representatives may from time to time make, forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E
of the Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical facts, included in this
press release that address activities, events or developments that the
Company expects, believes or anticipates will or may occur in the future
are forward-looking statements, including statements regarding sales and
production growth, ability to maintain cost structure, demand, the
future direction of prices, expected capital expenditures and future
effective income tax rates. The words “believe,” “expect,”
“anticipate,” “plan,” “intend,” “estimate,” “project,” “target,”
“foresee,” “should,” “would,” “could,” “potential,” or other similar
expressions are intended to identify forward-looking statements.
However, the absence of these words does not mean that the statements
are not forward-looking. These forward-looking statements represent
management’s good faith expectations, projections, guidance or beliefs
concerning future events, and it is possible that the results described
in this press release will not be achieved. These forward-looking
statements are subject to risks, uncertainties and other factors, many
of which are outside of the Company’s control, that could cause actual
results to differ materially from the results discussed in the
forward-looking statements, including, without limitation, fluctuations
or changes in the pricing or demand for the Company’s coal (or met coal
generally) by the global steel industry; federal and state tax
legislation, changes in interpretation or assumptions and/or updated
regulatory guidance regarding the Tax Cuts and Jobs Act of 2017;
legislation and regulations relating to the Clean Air Act and other
environmental initiatives; regulatory requirements associated with
federal, state and local regulatory agencies, and such agencies’
authority to order temporary or permanent closure of the Company’s
mines; operational, logistical, geological, permit, license, labor and
weather-related factors, including equipment, permitting, site access,
operational risks and new technologies related to mining; the Company’s
obligations surrounding reclamation and mine closure; inaccuracies in
the Company’s estimates of its met coal reserves; the Company's
expectations regarding its future tax rate as well as its ability to
effectively utilize its NOLs; the Company’s ability to develop or
acquire met coal reserves in an economically feasible manner;
significant cost increases and fluctuations, and delay in the delivery
of raw materials, mining equipment and purchased components; competition
and foreign currency fluctuations; fluctuations in the amount of cash
the Company generates from operations, including cash necessary to pay
any special or quarterly dividend or to initiate a stock repurchase
program; the Company’s ability to comply with covenants in its credit
facility or indenture relating to the Senior Secured Notes; integration
of businesses that the Company may acquire in the future; adequate
liquidity and the cost, availability and access to capital and financial
markets; failure to obtain or renew surety bonds on acceptable terms,
which could affect the Company’s ability to secure reclamation and coal
lease obligations; costs associated with litigation, including claims
not yet asserted; and other factors described in the Company’s Form 10-K
for the year ended December 31, 2017 and other reports filed from time
to time with the Securities and Exchange Commission (the “SEC”), which
could cause the Company’s actual results to differ materially from those
contained in any forward-looking statement. The Company’s filings with
the SEC are available on its website at www.warriormetcoal.com
and on the SEC's website at www.sec.gov.

Any forward-looking statement speaks only as of the date on which it
is made, and, except as required by law, the Company does not undertake
any obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise. New
factors emerge from time to time, and it is not possible for the Company
to predict all such factors.

Note Regarding “Predecessor” Comparisons

The Company’s results on a “Predecessor” basis relate to the assets
acquired and liabilities assumed by Warrior Met Coal, LLC from Walter
Energy, Inc. in the asset acquisition described in the Company’s
Registration Statement on Form S-1 (File No. 333-216499) and the related
periods ending on or prior to March 31, 2016. The Company’s results on a
“Successor” basis relate to Warrior Met Coal, LLC and its subsidiaries
for periods beginning as of April 1, 2016 and Warrior Met Coal, Inc.
after giving effect to its corporate conversion on April 12, 2017 from a
Delaware limited liability company into a Delaware corporation. The
historical costs and expenses reflected in the Predecessor combined
results of operations include an allocation for certain corporate
functions historically provided by Walter Energy, Inc. Certain functions
critical to the Predecessor’s operations were centralized and managed by
Walter Energy, Inc. Historically, the centralized functions have
included executive senior management, financial reporting, financial
planning and analysis, accounting, shared services, information
technology, tax, risk management, treasury, legal, human resources, and
strategy and development. The costs of each of these services has been
allocated to the Predecessor on the basis of the Predecessor’s relative
headcount, revenue and total assets to that of Walter Energy, Inc.

WARRIOR MET COAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
($ in thousands, except per share)
Successor (Unaudited)	Predecessor
For the three months ended December 31,	For the year ended December 31,	For the nine months ended December 31,	For the three months ended March 31,
2017	2016	2017	2016	2016
Revenues:
Sales	$	228,843	$	146,750	$	1,124,645	$	276,560	$	65,154
Other revenues	10,960	6,519	44,447	21,074	6,229
Total revenues	239,803	153,269	1,169,092	297,634	71,383
Costs and expenses:
Cost of sales (exclusive of items shown separately below)	136,670	89,070	592,530	244,723	72,297
Cost of other revenues (exclusive of items shown separately below)	5,463	7,243	28,422	19,367	4,698
Depreciation and depletion	17,788	9,054	75,413	47,413	28,958
Selling, general and administrative	13,380	10,176	36,453	20,507	9,008
Other postretirement benefits	—	—	—	—	6,160
Restructuring costs	—	—	—	—	3,418
Transaction and other costs	—	3,093	12,873	13,568	—
Total costs and expenses	173,301	118,636	745,691	345,578	124,539
Operating income (loss)	66,502	34,633	423,401	(47,944	)	(53,156	)
Interest expense, net	(5,057	)	(583	)	(6,947	)	(1,711	)	(16,562	)
Reorganization items, net	—	—	—	—	7,920
Income (loss) before income tax expense (benefit)	61,445	34,050	416,454	(49,655	)	(61,798	)
Income tax expense (benefit)	(35,711	)	18	(38,592	)	18	18
Net income (loss)	$	97,156	$	34,032	$	455,046	$	(49,673	)	$	(61,816	)
Basic and diluted net income (loss) per share (1):
Net income (loss) per share—basic and diluted	$	1.83	$	0.65	$	8.62	$	(0.94	)
Weighted average number of shares outstanding—basic	53,018	52,640	52,800	52,640
Weighted average number of shares outstanding— diluted	53,027	52,640	52,806	52,640
Dividends per share:	$	11.26	$	—	$	14.92	$	—
(1) On April 12, 2017, in connection with the Company’s initial public offering (“IPO”), Warrior Met Coal, LLC filed a certificate of conversion, whereby Warrior Met Coal, LLC effected a corporate conversion from a Delaware limited liability company to a Delaware corporation and changed its name to Warrior Met Coal, Inc. In connection with this corporate conversion, the Company filed a certificate of incorporation. Pursuant to the Company’s certificate of incorporation, the Company is authorized to issue up to 140,000,000 shares of common stock $0.01 par value per share and 10,000,000 shares of preferred stock $0.01 par value per share. The number of shares and per share amounts of common stock have been retroactively recast to reflect the corporate conversion.

WARRIOR MET COAL, INC.
QUARTERLY SUPPLEMENTAL FINANCIAL DATA AND
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
QUARTERLY SUPPLEMENTAL FINANCIAL DATA:
Successor (Unaudited)	Predecessor
For the three months ended December 31,	For the year ended December 31,	For the nine months ended December 31,	For the three months ended March 31,
(short tons in thousands)(1)	2017	2016	2017	2016	2016
Tons sold	1,355	954	6,527	2,635	856
Tons produced	1,573	1,038	6,714	2,529	883
Gross price realization (2)	101	%	88	%	96	%	92	%	104	%
Average net selling price	$	168.89	$	153.82	$	172.31	$	104.96	$	76.11
Australian LV Index/Australian HCC Benchmark (3)	$	173.90	$	181.44	$	182.78	$	113.85	$	73.50
Cash cost of sales (free on board port) per short ton (4)	$	100.97	$	83.94	$	90.58	$	75.17	$	63.30
(1) 1 short ton is equivalent to 0.907185 metric tons.
(2) Gross price realization represents gross sales, excluding demurrage and other charges, divided by tons sold as a percentage of the Australian LV Index or the Australian HCC Benchmark depending on time period. The gross price realization for the year ended December 31, 2017 and for the nine months ended December 31, 2016 is based on a volume weighted average Australian LV Index.
(3) Beginning in the second quarter of 2017, a quarterly Australian HCC Benchmark for hard coking coal was not set and was replaced with the Australian LV Index.