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Edited Transcript of HCC.N earnings conference call or presentation 31-Jul-19 8:30pm GMT

Q2 2019 Warrior Met Coal Inc Earnings Call

BROOKWOOD Aug 5, 2019 (Thomson StreetEvents) -- Edited Transcript of Warrior Met Coal Inc earnings conference call or presentation Wednesday, July 31, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dale W. Boyles

Warrior Met Coal, Inc. - CFO

* Walter J. Scheller

Warrior Met Coal, Inc. - CEO & Director

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Conference Call Participants

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* Alexander Nicholas Hacking

Citigroup Inc, Research Division - Director

* Christopher Michael Terry

Deutsche Bank AG, Research Division - Research Analyst

* Daniel Walter Scott

Clarksons Platou Securities, Inc., Research Division - Analyst

* David Francis Gagliano

BMO Capital Markets Equity Research - Co-Head of Metals & Mining Research and Metals & Mining Analyst

* Lucas Nathaniel Pipes

B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst

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Presentation

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Operator [1]

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Good afternoon. My name is Jamie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Warrior Met Coal Second Quarter 2019 Financial Results Conference Call. (Operator Instructions) Thank you.

Before we begin, I have been asked to note that today's discussions may contain forward-looking statements that -- and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press release and SEC filings.

I have also been asked to note that the company has posted reconciliations of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the Investors section of the company's website at www.warriormetcoal.com.

In addition to the earnings release, the company has posted a brief supplemental slide presentation to the Investors section of its website at www.warriormetcoal.com.

Here today to discuss the company's results are Mr. Walt Scheller, Chief Executive Officer; and Mr. Dale Boyles, Chief Financial Officer. Mr. Scheller, you may begin your remarks.

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [2]

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Thanks, operator. Hello, everyone, and thank you for taking the time to join us today to discuss our second quarter 2019 results. After my remarks, Dale will review our results in additional detail, and then you'll have the opportunity to ask questions.

We have performed exceptionally well and exceeded our expectations in the second quarter, which led to record quarterly high sales volumes. The mines continued their strong performance, achieving high levels of production that drove the record high sales volumes. We achieved $398 million in revenue, $176 million of adjusted EBITDA and a Warrior record quarterly high free cash flow of $197 million. In addition, we continued our commitment of returning capital to stockholders with the payment of a $230 million special cash dividend. As a result of the company's performance in the first half of the year and expected market conditions for the remainder of 2019, we're raising our full year guidance for sales and production volumes, which we will discuss later.

Production volume in the second quarter was 2.2 million short tons compared to 1.9 million produced in the same quarter of 2018, an increase of 14%. We successfully completed 1 longwall move in the second quarter this year compared to no longwall moves in the second quarter of 2018 and achieved production levels that were better than expected. These results demonstrate the significant efforts made by our employees in anticipating and planning our longwall move, proactively driving production efficiencies and managing our equipment downtime.

The capital investments that we've made in our mines over the last few years continue to pay off as we strive to reach full capacity to improve production efficiencies and better equipment utilization with less downtime and a safe environment. A good example from the recently completed quarter is the extra set of longwall shields that we purchased from Mine 7 that should reduce the number of days it takes to move a longwall and mitigate the impacts on production from the longwall move. This extra set of longwall shields also provides additional flexibility and risk mitigation to minimize periods of production downtime in the event that we encounter unexpected geological conditions.

The company spent $34 million on capital expenditures and mine development costs during the second quarter of this year compared to $33 million in the same period last year. This amount includes the longwall panel development costs for the extension of Mine 4 into the next area of the mine plan we call 4 North. In addition, the 4 North cash spending included construction of a service shaft and hoist, as can be seen on pages 11 and 12 of our investor presentation on our website.

When the 4 North extension is completed, it will feature a new state-of-the-art equipment and facilities, including a new portal, bathhouse, power substation and bunkering system. We expect to be longwall mining in that area sometime in the next 5 to 6 years and intend to spread the capital spending over that same time period.

Sales volume of 2.2 million short tons in the second quarter of 2019 set a new quarterly record high and were 19% higher than compared to the same quarter of 2018. Demand from our customers continued to be strong during the second quarter of this year. Our sales by geography in the second quarter of 2019 were 59% into Europe, 23% into South America and 18% into Asia. The geographical mix this year was consistent overall with last year's second quarter.

Inventories decreased 84,000 short tons to 484,000 short tons from the first quarter primarily due to higher sales volumes. We continuously manage our inventory levels to the lowest level possible while optimizing our supply chain and the flow of met coal deliveries to the port. Our actual level of inventory can be significantly impacted by several factors that are primarily timing related, such as missed late schedules or loading delays caused by storms in the Gulf.

The Platts premium low-vol Australian index price closed the second quarter $11 a metric ton lower than where it started the quarter. The index price declined as much as $19 a metric ton from its high in mid-May, hitting $194 a metric ton at the end of June. Despite the volatility, overall market conditions remain strong.

Our gross price realization for the second quarter was 97% of the Platts premium low-vol FOB Australian index price and was down slightly from the prior year period. Remember, the actual percentage is a blended rate of our low and mid-vol met coal sales. There was no special discounting on our sales due to solid demand and price fundamentals resulting from our high gross price realizations.

From a market perspective, at the beginning of the quarter, global fuel producers saw a rapid decline in their margins due to the combination of fallen finished product pricing and increases in raw material costs, primarily iron ore. Although margin erosion was a common theme across the world, different regions had different reactions. China on the one hand continued to produce at record levels, achieving an impressive year-to-date pig iron production growth of 8.9% as government stimulus supported domestic demand for its steel products. Europe, facing softer demand, especially in the auto sector and the increased competition of imports, saw several steel producers apply production cuts to match output with customer orders. Production in South America was largely in line with 2018 volumes but below the heightened expectations of a strong 2019. Despite the headwinds from compressed steel margins, global pig iron production grew by 5.1% from the first half 2019, largely driven by China and, to some extent, India.

Pricing for premium met coals for most of the quarter, but starting in mid-May, there was a slow but consistent erosion in pricing as the seaborne supply system continued to perform well and without any significant disruption. Demand for our premium coals was strong during the quarter despite the margin pressures on our customers.

Warrior's record performance continues to demonstrate the unique value of our highly focused business strategy as a premium pure play met coal producer. Our goal is to operate profitably and maximize cash flow generation in any pricing environment, not just in the favorable conditions we've experienced over the past couple of years. We've invested in the business where appropriate to support this strategy. We've also continued to reward our stockholders as conditions warrant.

Our operational successes are credit to the hard work and dedication of our employees, and I thank them for all they've been doing to help us perform as strongly as we did in the second quarter. Our top priority remains working safely as that is the first and most important step to working efficiently and ultimately achieving success in the marketplace.

In addition to discussing our strong performance in the second quarter, I also wanted to provide an update on our Blue Creek growth project. You can refer to Slide 13 through 16 of our quarterly investor presentation on our website. As stated last quarter, Blue Creek is one of the few remaining untapped reserves of premium high vol A met coal in the United States. We are excited by the promising results from our early work and believe Blue Creek has the potential to deliver significant value to our stockholders. Our initial work has focused on the feasibility of a single low-vol operation with annual production of approximately 3 million short tons with a potential mine life of 40 to 60 years.

While we continue to refine project parameters in 2019, our initial studies have demonstrated robust returns across a range of met coal prices. These initial studies estimate capital expenditures of approximately $550 million to $600 million over 5 years.

Warrior continues to pursue several activities to maintain project momentum and optimize Blue Creek's project parameters. These activities include additional core drilling to gather geological and marketing data, evaluating strategic rail and board transportation partnerships and obtaining permits for slurry storage and coarse refuse areas.

The company is currently working with several vendors to finalize construction plans, including slope, belts, prep plant, et cetera, to ensure that the development plans are solid and possibly allow for the full potential of 2 longwalls, which would mean maximum annual production of approximately 6 million short tons, if desired. Additionally, we plan to continue to explore potential offtake arrangements as well as project financing alternatives.

We expect Blue Creek will be fully permitted and shovel ready by early 2020, at which point Warrior would be in a position to make a decision on future development. We're extremely excited by the potential we see at Blue Creek and believe the project will become the cornerstone of our future portfolio. We look forward to providing updates for our stockholders over the next several months.

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

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Dale W. Boyles, Warrior Met Coal, Inc. - CFO [3]

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Thanks, Walt. For the second quarter of 2019, net income on a GAAP basis was $125 million or $2.43 per diluted share compared to net income of $91 million or $1.72 per diluted share in the second quarter of 2018. Excluding the nonrecurring other income, non-GAAP adjusted net income for the second quarter of 2019 was $112 million or $2.16 per diluted share compared to $1.81 per diluted share in the second quarter of 2018.

Adjusted EBITDA was $176 million in the second quarter as compared to adjusted EBITDA of $129 million in the same period of 2018, an increase of 37%. The quarterly increase was primarily driven by a 19% increase in sales volume, which set a new quarterly record high, and a 4% increase in average net selling prices over the same period last year. The company's adjusted EBITDA margin was 44% in the second quarter compared to 40% in the second quarter of 2018.

Total revenues were $398 million in the second quarter of 2019 compared to $323 million in the same period last year. This increase was primarily due to the 19% increase in sales volumes.

The average net selling price per short ton increased approximately 4% in the second quarter compared to the same period in 2018. The price environment continued to be strong with index prices falling slightly in the second quarter from $205 per metric ton at the end of March to $194 per metric ton at the end of June. Our gross price utilization was 97% in the second quarter of this year.

Demurrage and other charges reduced our gross price realization to an average net selling price of $173 per short ton in the second quarter of 2019 compared to $167 in the same period last year.

Mining cash cost of sale FOB port was $205 million or 53% of mining revenues in the second quarter compared to $177 million or 56% of mining revenues in the second quarter of 2018. Cash cost of sales FOB port for short ton was approximately $91 in the second quarter compared to $94 in the same period of 2018. The decrease is primarily due to 14% higher production volumes and lower production spending, reflecting the benefits of our capital investments in the prior periods that are paying off nicely.

SG&A expenses were about $11 million or 3% of total revenues in the second quarter compared to approximately $13 million in the prior year period, down primarily due to higher stock compensation expenses recorded in the same period last year.

Depreciation and depletion expenses for the second quarter of 2019 were $26 million or 6% of total revenues compared to $21 million in 2018. The increase in the second quarter this year compared to the same period last year was primarily due to higher sales and production volumes and our continued high investment in capital expenditures.

Net interest expense was about $7 million in the second quarter and included interest on our outstanding debt plus amortization of our debt issuance cost associated with our credit facilities partially offset by interest income. This amount was lowered by $3 million compared to the same period last year due to the early retirement of a portion of our debt in the first quarter of 2019.

Other income of approximately $18 million was recorded in the second quarter of 2019 due to unexpected proceeds received from a settlement with Walter Energy Canada and its affiliates in the bankruptcy proceedings for old outstanding claims. No additional material amounts are expected in the future.

Company reported noncash income tax expense of $33 million during the second quarter of 2019 and 0 expense in the same period last year. This result primarily reflects the utilization of our net operating losses, or NOLs, with a corresponding decrease in a balance sheet account, deferred income taxes. As you may recall, we released the valuation allowance on the deferred income taxes associated with the company's NOLs in the fourth quarter of 2018.

We paid no cash taxes in the second quarters of 2019 and 2018 and continue to expect the utilization of our NOLs will reduce our federal and state income tax liability to 0 until the NOLs are fully utilized or expire. We expect this will continue to drive significant free cash flow conversion over the next several years.

Turning to cash flow. During the second quarter, the company generated $197 million of free cash flow, a Warrior record quarterly high, which was the result of cash flows provided by operating activities of $231 million, less cash used for capital expenditures and mining development cost of $34 million. This compared to $100 million of free cash flow in the second quarter of 2018. This higher result was primarily due to the quarterly record-high sales volume, higher average net selling prices in the second quarter of this year and a decrease in working capital of $39 million. The decrease in working capital was primarily due to $22 million of lower accounts receivable and the collection of an income tax receivable for AMT credits of $21 million.

Cash used in investing activities for capital expenditures and mine development cost was $34 million during the second quarter of 2019 compared to $33 million for the same period last year. This year's second quarter results included $6 million of Mine 4 development cost related to a continuous miner unit and support cost that were incurred in developing new longwall panels in the 4 North area.

Cash flows used in financing activities were $239 million in the second quarter of 2019 and primarily consisted of the payment of the quarterly dividend of $3 million plus the special dividend of $230 million.

The company's balance sheet remains strong with a leverage ratio of less than 0.5x adjusted EBITDA. In addition, we have ample liquidity with total available liquidity as of the end of the second quarter of $235 million consisting of cash and cash equivalents of $119 million and $116 million available under our ABL facility net of outstanding letters of credit of approximately $9 million. We believe our strong balance sheet and significant free cash flow generation will provide us flexibility if we decide to pursue our Blue Creek development project next year.

In summary, we finished the second quarter with continued strong operational performance that drove record high quarterly sales volume and free cash flow, combined with strong financial performance.

Now turning to our outlook and guidance for 2019. We expect to complete 3 more longwall moves in the remainder of the year for a total of 5 longwall moves in 2019 compared to the total of 3 moves we had in 2018.

After considering the company's strong performance in the first half of this year and expected market conditions for the remainder of 2019, we have updated our guidance for sales and production volumes and noncash deferred income tax expense for the full year 2019. The company has maintained its guidance with respect to the other items for the full year 2019.

Our full year 2019 guidance is as follows: coal sales of 7.5 million to 7.9 million short tons, coal production of 7.5 million to 7.9 million short tons, cash cost of sales FOB port of $89 to $95 per short ton, capital expenditures of $100 million to $120 million, mine development cost of $18 million to $22 million, SG&A expenses of $32 million to $36 million, interest expense net of $30 million to $32 million, noncash deferred income tax expense of 20% to 23% and a cash tax rate of 0%.

Lastly, I would like to note that during the second quarter, the company was notified by Apollo Global Management that they had sold all the remaining shares of common stock of the company. As a result, all 4 private equity firms that originally owned Warrior before our IPO and have now exited their investments in the company in all material respects. We would like to thank them for the advice and expertise and wish them well.

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

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [4]

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Thanks, Dale. Before we move on to Q&A, I'd like to make a few more comments about the company and its prospects. We're very pleased with the company's strong operational and financial performance in the second quarter of 2019, and we appreciate the support and engagement we've received from our stockholders and, of course, our employees.

As our sales and production volumes have increased, we have benefited from the increased operating leverage and have invested in long-term projects that will benefit our operations in the future.

We expect our contracted sales volume to remain consistent for the year and expect that a higher percent of our spot sales will be directed toward Asia as European spot demand remains tempered and as large -- several large South Americans steel producers undergo routine maintenance programs in the third quarter. Although some early indicators point to a reversal in steel pricing, we remain cautious and expect the next quarter to bring continuous pressure on index pricing and demand due to reasons previously discussed. In addition, we expect the typical seasonality factors and the anticipation of a reliable seaborne supply chain to have some bearing on index pricing.

As Dale noted, after considering the strong performance of our operations in the first half of 2019 and the expected market conditions for the remainder of the year, we're updating our 2019 sales and production guidance targets. As I've said in previous calls, we run the business as if the next pricing downturn and geologic issue are just around the corner with conservative targets and flexible operations that allow us to adjust to the market environment as it changes throughout the year. We expect to update our 2019 guidance during the year as necessary to adapt to changing market conditions and changes in the business.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today comes from David Gagliano from BMO.

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David Francis Gagliano, BMO Capital Markets Equity Research - Co-Head of Metals & Mining Research and Metals & Mining Analyst [2]

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The question really is similar to the ones that you've been asked basically after almost every call. You obviously raised the guidance for the year on the sales volumes and what you just addressed, I think, a bit in your prepared remarks. My question is it still looks pretty conservative. Even after one factors in the impact of an additional longwall move, it's about 1 million ton -- roughly 1 million ton decline second half versus first half. Is that more likely chalked up to conservatism, or is it based on market conditions, or something going on at the mine?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [3]

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No. We're just -- we're tracking and doing things the way we normally do. As I said, we're just being conservative with the way we approach our expectations. We do have 3 longwall moves. We can always have anything happen at operations or weather in the Gulf, so we're just taking a cautious approach.

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Operator [4]

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Your next question comes from Daniel Scott from Clarksons.

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Daniel Walter Scott, Clarksons Platou Securities, Inc., Research Division - Analyst [5]

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Great quarter, guys. Really well done. My question is about inventories. If I check my notes from the first quarter call, I think you had a substantial build in the first quarter, I think it was 400,000 tons. And just kind of based on sales minus production for this quarter is a slight draw. Am I thinking about that the right way? Is there still a pretty good pile of coal? And is that maybe around timing of shipments?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [6]

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Yes. There is still a decent-sized amount of coal, and we'll that down through the rest of the year.

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Daniel Walter Scott, Clarksons Platou Securities, Inc., Research Division - Analyst [7]

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Okay. Great. And when you think about -- obviously, you paid a special. You're generating tremendous amount of cash these days. Where is the thinking kind of now going forward, especially with Apollo out, about special dividends versus maybe another incremental share repurchase? Or are we going to start maybe hoarding money a little more in anticipation of Blue Creek?

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Dale W. Boyles, Warrior Met Coal, Inc. - CFO [8]

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Dan, it's Dale. Well, nothing has changed. With Apollo's exit, we really haven't changed our capital allocation policy. We are going to continue. We have a new $70 million stock repurchase plan that we'll be executing, but we'll also consider special dividends. As we get later into the year and get our Blue Creek analysis finished, we may have something to announce after that. But once we know definitively what we're going to do with Blue Creek, that points in the right direction for any changes in our capital allocation policy.

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Daniel Walter Scott, Clarksons Platou Securities, Inc., Research Division - Analyst [9]

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Okay. That makes sense. And then finally for me, when you look at your sales mix by geography, you talked about spot tons will most likely be to the Asian clients. Do you see a material shift kind of based on what pricing is doing and seeing a little slowness in Europe about how your production -- or your sales mix might change in the back of the year and into next year?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [10]

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I don't think the sales mix will change much. I think short term with things softening a bit in Europe, we're going to see the spot opportunities moving into Asia. But as we build our book for next year, I would expect it will be balanced about the same way it has been.

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Daniel Walter Scott, Clarksons Platou Securities, Inc., Research Division - Analyst [11]

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I guess just tack onto that, does -- shipping rates are higher than they've been. Is that going to -- does that effect to some extent the reach of the coal? Or does the quality offset that?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [12]

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I think the quality offsets that.

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Operator [13]

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Our next question comes from Lucas Pipes from B. Riley FBR.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [14]

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I would like to second the congratulations on another fantastic quarter, so really well done. I wanted to follow up on Blue Creek. It sounds like you're pretty excited about the opportunity there, but you're still evaluating the project. Could you remind us kind of what are the key things you're evaluating at this time? And not to get carried away or anything, but should we kind of be thinking about this project as a go-ahead at this point? Or are there still kind of major issues that you're trying sort out first before you would make that kind of go-ahead decision?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [15]

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Thank you. Well, our goal is to be able to put this in front of the Board a little later in the year for discussion. As we've said, we're drilling some additional holes to determine -- to confirm quality. I shouldn't say determine, to confirm quality for the first 5 to 10 years of mining at that site. We're doing some sanity checks and engineering around the overall cost of the project. We are evaluating the market for the coal and just trying to get some additional permitting done. So I think we're tying up what loose ends we think we have before we can make a strong recommendation to the Board later this year.

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Lucas Nathaniel Pipes, B. Riley FBR, Inc., Research Division - Senior VP & Equity Analyst [16]

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Got it. That's very helpful. So -- but you wouldn't expect any inadvertent changes from kind of your base assumptions that you've disclosed to the market to date. Is that fair?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [17]

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That's fair. We don't anticipate anything different, but we'll see.

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Operator [18]

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Our next question comes from Alex Hacking from Citi.

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Alexander Nicholas Hacking, Citigroup Inc, Research Division - Director [19]

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Just following up on Blue Creek, you mentioned interest from steel mills in participating. I guess what kind of structures would you be thinking about there? Just kind of a typical take-or-pay agreement?

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Dale W. Boyles, Warrior Met Coal, Inc. - CFO [20]

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No. We won't do take-or-pay. We may do something with -- we're just looking at all opportunities. We're not saying that's a strong direction that we're going in. We're just kind of looking at all our options available to us and as we work through those with the pros and cons. But it would be some kind of -- if we went that route, it'd be some kind of offtake agreement maybe with some amount of capital to offset the total cost, something in that general nature.

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Alexander Nicholas Hacking, Citigroup Inc, Research Division - Director [21]

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Okay. Makes sense. And then in terms of the CapEx, obviously, it's spread out over several years, 5 years, I think. How -- what's the cadence of that? Is it roughly equal per year? Or is the CapEx kind of heavily weighted upfront?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [22]

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I would say it's heavily loaded toward the back end. The first half is slope development and putting in a couple of shafts through the first 18 months or so. But then after that, you start continuous minor development, equipment purchases, building out a prep plant. So I would expect really the back half of the project is a little more capital intensive.

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Alexander Nicholas Hacking, Citigroup Inc, Research Division - Director [23]

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Okay. And then when you talk about putting it in front of the Board later this year, does that mean assuming everything looks good and the Board approves it, you would sort of announce a go-ahead decision before the end of this year?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [24]

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I don't know that it'll happen before the end of this year, but I would look at something probably possibly late this year or early next year.

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Operator [25]

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(Operator Instructions) Our next question comes from Chris Terry from Deutsche Bank.

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Christopher Michael Terry, Deutsche Bank AG, Research Division - Research Analyst [26]

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A couple for me. Just in terms of the realization, the 97% to 98% that you've achieved for the first half, sorry -- apologies if you've already spoken about this, but just for the second half, would you expect similar levels to that or slightly higher?

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Dale W. Boyles, Warrior Met Coal, Inc. - CFO [27]

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Well, I think you could expect something similar to that. I mean it could be a little higher because we have been in a falling market. So the way that works, it's usually on a trailing basis because a lot of our shipments are the average of the index price 30 days prior to the loading of the vessel. So -- but you got to remember, that's also a blended mix percentage that includes our mid-vol sales. So if mid-vol sales are a little bit higher than the low-vol sales in a particular quarter, that can have some impact on it, too. So -- but in -- generally, I would expect a very similar result.

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Christopher Michael Terry, Deutsche Bank AG, Research Division - Research Analyst [28]

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Okay. And then just in terms of Blue Creek and thinking about it against potential M&A, do you continue to assess that? And how do you see the differences between organic versus inorganic growth?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [29]

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We do continue to look at opportunities as they present themselves. We just think this is an outstanding project and we're going to make it through everything against it and determine what we think is in the best of our shareholders.

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Christopher Michael Terry, Deutsche Bank AG, Research Division - Research Analyst [30]

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Okay. And the final one for me, just there was a question earlier on, on the inventory levels. But what do you like to keep sort of through the cycle? That 0.5 million tons you have now, presumably you'd run that down a little bit at some point. But what's your sort of base load level that you like to maintain?

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [31]

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I think anything less than 300,000 or so gets pretty lean. So in that 300,000 to 400,000 range.

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Operator [32]

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And ladies and gentleman, we've reached the end of the question-and-answer session. At this time, I would like to turn the conference call back over to Mr. Scheller for any closing remarks.

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Walter J. Scheller, Warrior Met Coal, Inc. - CEO & Director [33]

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

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Operator [34]

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Ladies and gentlemen, that does conclude today's conference call. We do thank you for joining today's presentation. You may now disconnect your lines.