☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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81-0706839
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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16243 Highway 216
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Brookwood
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Alabama
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35444
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $.01 per share
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HCC
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New York Stock Exchange
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Rights to Purchase Series A Junior Participating Preferred Stock, par value $0.01 per share
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--
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New York Stock Exchange
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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35
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•
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successful implementation of our business strategies;
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•
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the impact of the COVID-19 (as defined below) pandemic, including its impact on our business, employees, suppliers and customers, the met coal and steel industries, and global economic markets;
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•
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a substantial or extended decline in pricing or demand for metallurgical ("met") coal;
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•
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global steel demand and the downstream impact on met coal prices;
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•
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inherent difficulties and challenges in the coal mining industry that are beyond our control;
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•
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geologic, equipment, permitting, site access, operational risks and new technologies related to mining;
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•
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impact of weather and natural disasters on demand and production;
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•
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our relationships with, and other conditions affecting, our customers;
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•
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unavailability of, or price increases in, the transportation of our met coal;
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•
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competition and foreign currency fluctuations;
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•
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our ability to comply with covenants in our asset-based revolving credit facility (as amended and restated, the "ABL Facility") and the Indenture (as defined below);
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•
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our substantial indebtedness and debt service requirements;
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•
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significant cost increases and fluctuations, and delay in the delivery of raw materials, mining equipment and purchased components;
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•
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work stoppages, negotiation of labor contracts, employee relations and workforce availability;
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•
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adequate liquidity and the cost, availability and access to capital and financial markets;
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•
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any consequences related to our transfer restrictions under our certificate of incorporation and our NOL rights agreement;
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•
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our obligations surrounding reclamation and mine closure;
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•
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inaccuracies in our estimates of our met coal reserves;
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•
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our ability to develop or acquire met coal reserves in an economically feasible manner;
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•
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our expectations regarding our future cash tax rate as well as our ability to effectively utilize our net operating loss carry forwards ("NOLs");
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•
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challenges to our licenses, permits and other authorizations;
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•
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challenges associated with environmental, health and safety laws and regulations;
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•
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regulatory requirements associated with federal, state and local regulatory agencies, and such agencies’ authority to order temporary or permanent closure of our mines;
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•
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climate change concerns and our operations’ impact on the environment;
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•
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failure to obtain or renew surety bonds on acceptable terms, which could affect our ability to secure reclamation and coal lease obligations;
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•
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costs associated with our workers’ compensation benefits;
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•
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litigation, including claims not yet asserted;
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•
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our ability to continue paying our quarterly dividend or pay any special dividend;
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•
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the timing and amount of any stock repurchases we make under our Stock Repurchase Program (as defined below) or otherwise; and
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•
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terrorist attacks or security threats, including cybersecurity threats.
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For the three months ended
March 31, |
||||||
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2020
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|
2019
|
||||
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||||||
Revenues:
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|
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|
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Sales
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$
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221,338
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$
|
369,681
|
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Other revenues
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5,382
|
|
|
8,609
|
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Total revenues
|
226,720
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|
378,290
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Costs and expenses:
|
|
|
|
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Cost of sales (exclusive of items shown separately below)
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151,514
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182,628
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Cost of other revenues (exclusive of items shown separately below)
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7,561
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7,745
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Depreciation and depletion
|
28,692
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22,233
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Selling, general and administrative
|
8,456
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8,905
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Total costs and expenses
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196,223
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221,511
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|
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Operating income
|
30,497
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|
156,779
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Interest expense, net
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(7,533
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)
|
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(8,592
|
)
|
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Loss on early extinguishment of debt
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—
|
|
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(9,756
|
)
|
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Other income
|
1,822
|
|
|
—
|
|
||
Income before income tax expense
|
24,786
|
|
|
138,431
|
|
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Income tax expense
|
3,241
|
|
|
27,984
|
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Net income
|
$
|
21,545
|
|
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$
|
110,447
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Basic and diluted net income per share:
|
|
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|
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Net income per share—basic
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$
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0.42
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$
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2.14
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Net income per share—diluted
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$
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0.42
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$
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2.14
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Weighted average number of shares outstanding—basic
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51,106
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51,511
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Weighted average number of shares outstanding—diluted
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51,273
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51,630
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Dividends per share:
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$
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0.05
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$
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0.05
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March 31, 2020 (Unaudited)
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December 31, 2019
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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256,743
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$
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193,383
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Short-term investments
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8,500
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14,675
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Trade accounts receivable
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131,526
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99,471
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Income tax receivable
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24,274
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12,925
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Inventories, net
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117,563
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97,901
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Prepaid expenses and other receivables
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25,925
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25,691
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Total current assets
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564,531
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444,046
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Mineral interests, net
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107,432
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110,130
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Property, plant and equipment, net
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598,622
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606,200
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|
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Non-current income tax receivable
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—
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|
11,349
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|
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Deferred income taxes
|
|
151,021
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154,297
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Other long-term assets
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17,568
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18,242
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Total assets
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$
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1,439,174
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$
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1,344,264
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
|
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Accounts payable
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|
$
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54,620
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$
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46,436
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Accrued expenses
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63,476
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|
|
65,755
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|
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Short term financing lease liabilities
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8,022
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|
10,146
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|
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Other current liabilities
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6,608
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6,615
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Total current liabilities
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132,726
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128,952
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Long-term debt
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409,363
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339,189
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|
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Asset retirement obligations
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54,307
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|
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53,583
|
|
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Long term financing lease liabilities
|
|
26,106
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25,528
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|
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Other long-term liabilities
|
|
31,550
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|
|
31,430
|
|
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Total liabilities
|
|
654,052
|
|
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578,682
|
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|
|
|
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|
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Stockholders’ Equity:
|
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|
|
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Common stock, $0.01 par value per share (Authorized -140,000,000 shares as of March 31, 2020 and December 31, 2019, 53,387,591 issued and 51,165,750 outstanding as of March 31, 2020 and 53,293,449 issued and 51,071,608 outstanding as of December 31, 2019)
|
|
533
|
|
|
533
|
|
||
Preferred stock, $0.01 par value per share (10,000,000 shares authorized, no shares issued and outstanding)
|
|
—
|
|
|
—
|
|
||
Treasury stock, at cost (2,221,841 shares as of March 31, 2020 and December 31, 2019)
|
|
(50,576
|
)
|
|
(50,576
|
)
|
||
Additional paid in capital
|
|
244,525
|
|
|
243,932
|
|
||
Retained earnings
|
|
590,640
|
|
|
571,693
|
|
||
Total stockholders’ equity
|
|
785,122
|
|
|
765,582
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
1,439,174
|
|
|
$
|
1,344,264
|
|
|
For the three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
|
||||||
Common Stock
|
|
|
|
||||
Balance, beginning of period
|
$
|
533
|
|
|
$
|
533
|
|
Balance, end of period
|
533
|
|
|
533
|
|
||
Preferred Stock
|
|
|
|
||||
Balance, beginning of period
|
—
|
|
|
—
|
|
||
Balance, end of period
|
—
|
|
|
—
|
|
||
Treasury Stock
|
|
|
|
||||
Balance, beginning of period
|
(50,576
|
)
|
|
(38,030
|
)
|
||
Treasury stock purchase
|
—
|
|
|
(1,970
|
)
|
||
Balance, end of period
|
(50,576
|
)
|
|
(40,000
|
)
|
||
Additional Paid in Capital
|
|
|
|
||||
Balance, beginning of period
|
243,932
|
|
|
239,827
|
|
||
Stock compensation
|
1,605
|
|
|
1,108
|
|
||
Other
|
(1,012
|
)
|
|
(527
|
)
|
||
Balance, end of period
|
244,525
|
|
|
240,408
|
|
||
Retained Earnings
|
|
|
|
||||
Balance, beginning of period
|
571,693
|
|
|
510,282
|
|
||
Net income
|
21,545
|
|
|
110,447
|
|
||
Dividends paid
|
(2,598
|
)
|
|
(2,606
|
)
|
||
Balance, end of period
|
590,640
|
|
|
618,123
|
|
||
Total Stockholders' Equity
|
$
|
785,122
|
|
|
$
|
819,064
|
|
|
For the three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
|
||||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
21,545
|
|
|
$
|
110,447
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and depletion
|
28,692
|
|
|
22,233
|
|
||
Deferred income tax expense
|
3,276
|
|
|
27,984
|
|
||
Stock based compensation expense
|
1,733
|
|
|
1,194
|
|
||
Amortization of debt issuance costs and debt discount/premium, net
|
351
|
|
|
381
|
|
||
Accretion of asset retirement obligations
|
733
|
|
|
812
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
9,756
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
(32,055
|
)
|
|
(44,329
|
)
|
||
Income tax receivable
|
—
|
|
|
297
|
|
||
Inventories
|
(17,326
|
)
|
|
(10,823
|
)
|
||
Prepaid expenses and other receivables
|
(235
|
)
|
|
10,167
|
|
||
Accounts payable
|
15,614
|
|
|
10,640
|
|
||
Accrued expenses and other current liabilities
|
(3,538
|
)
|
|
(15,133
|
)
|
||
Other
|
2,232
|
|
|
2,782
|
|
||
Net cash provided by operating activities
|
21,022
|
|
|
126,408
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchase of property, plant and equipment
|
(22,775
|
)
|
|
(24,395
|
)
|
||
Deferred mine development costs
|
(3,677
|
)
|
|
(5,578
|
)
|
||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
234
|
|
||
Sale of short-term investments
|
14,733
|
|
|
—
|
|
||
Purchases of short-term investments
|
(8,500
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(20,219
|
)
|
|
(29,739
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Dividends paid
|
(2,598
|
)
|
|
(2,606
|
)
|
||
Borrowings under ABL Facility
|
70,000
|
|
|
—
|
|
||
Retirements of debt
|
—
|
|
|
(140,272
|
)
|
||
Principal repayments of finance lease obligations
|
(3,833
|
)
|
|
(1,957
|
)
|
||
Common shares repurchased
|
—
|
|
|
(1,970
|
)
|
||
Other
|
(1,012
|
)
|
|
(527
|
)
|
||
Net cash provided by (used in) financing activities
|
62,557
|
|
|
(147,332
|
)
|
||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
63,360
|
|
|
(50,663
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
193,383
|
|
|
206,405
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
256,743
|
|
|
$
|
155,742
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Coal
|
$
|
87,684
|
|
|
$
|
69,064
|
|
Raw materials, parts, supplies and other, net
|
29,879
|
|
|
28,837
|
|
||
Total inventories, net
|
$
|
117,563
|
|
|
$
|
97,901
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
Weighted Average Interest Rate at March 31, 2020
|
|
Final Maturity
|
||||
Senior Secured Notes
|
|
$
|
343,435
|
|
|
$
|
343,435
|
|
|
8%
|
|
2024
|
ABL Borrowings
|
|
70,000
|
|
|
—
|
|
|
3.75%
|
|
2023
|
||
Debt discount/premium, net
|
|
(4,072
|
)
|
|
(4,246
|
)
|
|
|
|
|
||
Total debt
|
|
409,363
|
|
|
339,189
|
|
|
|
|
|
||
Less: current debt
|
|
—
|
|
|
—
|
|
|
|
|
|
||
Total long-term debt
|
|
$
|
409,363
|
|
|
$
|
339,189
|
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Black lung obligations
|
$
|
29,871
|
|
|
$
|
30,233
|
|
Other
|
1,679
|
|
|
1,197
|
|
||
Total other long-term liabilities
|
$
|
31,550
|
|
|
$
|
31,430
|
|
|
|
March 31, 2020
|
December 31, 2019
|
||||
Finance lease right-of-use assets, net(1)
|
|
$
|
39,516
|
|
$
|
40,227
|
|
Finance lease liabilities
|
|
|
|
||||
Current
|
|
8,022
|
|
10,146
|
|
||
Noncurrent
|
|
26,106
|
|
25,528
|
|
||
Total finance lease liabilities
|
|
$
|
34,128
|
|
$
|
35,674
|
|
|
|
|
|
||||
Weighted average remaining lease term - finance leases (in months)
|
|
42.7
|
|
44.7
|
|
||
Weighted average discount rate - finance leases(2)
|
|
5.86
|
%
|
6.02
|
%
|
|
|
For the three months ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Operating lease cost(1):
|
|
$
|
292
|
|
|
$
|
144
|
|
Finance lease cost:
|
|
|
|
|
||||
Amortization of leased assets
|
|
2,998
|
|
|
1,957
|
|
||
Interest on lease liabilities
|
|
546
|
|
|
13
|
|
||
Net lease cost
|
|
$
|
3,836
|
|
|
$
|
2,114
|
|
|
|
Finance Leases(1)
|
||
2020
|
|
$
|
7,978
|
|
2021
|
|
13,089
|
|
|
2022
|
|
8,558
|
|
|
2023
|
|
8,558
|
|
|
2024
|
|
842
|
|
|
Thereafter
|
|
—
|
|
|
Total
|
|
39,025
|
|
|
Less: amount representing interest
|
|
(4,897
|
)
|
|
Present value of lease liabilities
|
|
$
|
34,128
|
|
|
|
For the three months ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||||
Operating cash flows from finance leases
|
|
$
|
546
|
|
|
$
|
13
|
|
Financing cash flows from finance leases
|
|
$
|
3,833
|
|
|
$
|
1,957
|
|
Non-cash right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
|
||||
Finance leases
|
|
$
|
2,286
|
|
|
$
|
2,086
|
|
|
For the three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
21,545
|
|
|
$
|
110,447
|
|
Denominator:
|
|
|
|
||||
Weighted-average shares used to compute net income per share—basic
|
51,106
|
|
|
51,511
|
|
||
Dilutive restrictive stock awards
|
167
|
|
|
119
|
|
||
Weighted-average shares used to compute net income per share—diluted
|
51,273
|
|
|
51,630
|
|
||
Net income per share—basic and diluted
|
$
|
0.42
|
|
|
$
|
2.14
|
|
Net income per share—diluted
|
$
|
0.42
|
|
|
$
|
2.14
|
|
|
|||||||
|
2020
|
|
2019
|
||||
Revenues
|
|
|
|
||||
Mining
|
$
|
221,338
|
|
|
$
|
369,681
|
|
All other
|
5,382
|
|
|
8,609
|
|
||
Total revenues
|
$
|
226,720
|
|
|
$
|
378,290
|
|
|
For the three months ended
March 31, |
|||||
|
2020
|
|
2019
|
|||
Capital Expenditures
|
|
|
|
|||
Mining
|
21,837
|
|
|
$
|
23,210
|
|
All other
|
938
|
|
|
1,185
|
|
|
Total capital expenditures
|
22,775
|
|
|
$
|
24,395
|
|
|
For the three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Segment Adjusted EBITDA
|
$
|
69,824
|
|
|
$
|
187,053
|
|
Other revenues
|
5,382
|
|
|
8,609
|
|
||
Cost of other revenues
|
(7,561
|
)
|
|
(7,745
|
)
|
||
Depreciation and depletion
|
(28,692
|
)
|
|
(22,233
|
)
|
||
Selling, general and administrative
|
(8,456
|
)
|
|
(8,905
|
)
|
||
Loss on early extinguishment of debt
|
—
|
|
|
(9,756
|
)
|
||
Other income
|
1,822
|
|
|
—
|
|
||
Interest expense, net
|
(7,533
|
)
|
|
(8,592
|
)
|
||
Income tax expense
|
(3,241
|
)
|
|
(27,984
|
)
|
||
Net income
|
$
|
21,545
|
|
|
$
|
110,447
|
|
|
For the three months ended
March 31, |
|
||||||
|
2020
|
|
2019
|
|
||||
(in thousands)
|
|
|||||||
Segment Adjusted EBITDA
|
$
|
69,824
|
|
|
$
|
187,053
|
|
|
Metric tons sold
|
1,646
|
|
|
1,901
|
|
|
||
Metric tons produced
|
1,904
|
|
|
2,084
|
|
|
||
Gross price realization(1)
|
89
|
%
|
|
98
|
%
|
|
||
Average selling price per metric ton
|
$
|
134.47
|
|
|
$
|
194.47
|
|
|
Cash cost of sales per metric ton
|
$
|
91.55
|
|
|
$
|
95.71
|
|
|
Adjusted EBITDA
|
$
|
61,655
|
|
|
$
|
181,018
|
|
|
•
|
our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure;
|
•
|
the ability of our assets to generate sufficient cash flow to pay dividends;
|
•
|
our ability to incur and service debt and fund capital expenditures; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
•
|
our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
|
For the three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
(in thousands)
|
|
||||||
Cost of sales
|
$
|
151,514
|
|
|
$
|
182,628
|
|
Asset retirement obligation accretion
|
(369
|
)
|
|
(373
|
)
|
||
Stock compensation expense
|
(449
|
)
|
|
(319
|
)
|
||
Cash cost of sales
|
$
|
150,696
|
|
|
$
|
181,936
|
|
•
|
our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; and
|
•
|
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
|
|
For the three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
21,545
|
|
|
$
|
110,447
|
|
Interest expense, net
|
7,533
|
|
|
8,592
|
|
||
Income tax expense
|
3,241
|
|
|
27,984
|
|
||
Depreciation and depletion
|
28,692
|
|
|
22,233
|
|
||
Asset retirement obligation accretion (1)
|
733
|
|
|
812
|
|
||
Stock compensation expense (2)
|
1,733
|
|
|
1,194
|
|
||
Loss on early extinguishment of debt (3)
|
—
|
|
|
9,756
|
|
||
Other income(4)
|
(1,822
|
)
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
61,655
|
|
|
$
|
181,018
|
|
(1)
|
Represents non-cash accretion expense associated with our asset retirement obligations.
|
(2)
|
Represents non-cash stock compensation expense associated with equity awards.
|
(3)
|
Represents a loss incurred in connection with the early extinguishment of debt (See Note 5 of the "Notes to Condensed Financial Statements" in this Form 10-Q).
|
(4)
|
Represents settlement proceeds received for the Shared Services Claim and Hybrid Debt Claim associated with the Walter Canada CCAA (each discussed below).
|
|
For the three months ended
March 31, |
||||||||||||
(in thousands)
|
2020
|
|
% of Total Revenues
|
|
2019
|
|
% of Total Revenues
|
||||||
Revenues:
|
|
|
|
|
|
|
|
||||||
Sales
|
$
|
221,338
|
|
|
97.6
|
%
|
|
$
|
369,681
|
|
|
97.7
|
%
|
Other revenues
|
5,382
|
|
|
2.4
|
%
|
|
8,609
|
|
|
2.3
|
%
|
||
Total revenues
|
226,720
|
|
|
100.0
|
%
|
|
378,290
|
|
|
100.0
|
%
|
||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||
Cost of sales (exclusive of items shown separately below)
|
151,514
|
|
|
66.8
|
%
|
|
182,628
|
|
|
48.3
|
%
|
||
Cost of other revenues (exclusive of items shown separately below)
|
7,561
|
|
|
3.3
|
%
|
|
7,745
|
|
|
2.0
|
%
|
||
Depreciation and depletion
|
28,692
|
|
|
12.7
|
%
|
|
22,233
|
|
|
5.9
|
%
|
||
Selling, general and administrative
|
8,456
|
|
|
3.7
|
%
|
|
8,905
|
|
|
2.4
|
%
|
||
Total costs and expenses
|
196,223
|
|
|
86.5
|
%
|
|
221,511
|
|
|
58.6
|
%
|
||
Operating income
|
30,497
|
|
|
13.5
|
%
|
|
156,779
|
|
|
41.4
|
%
|
||
Interest expense, net
|
(7,533
|
)
|
|
(3.3
|
)%
|
|
(8,592
|
)
|
|
(2.3
|
)%
|
||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
%
|
|
(9,756
|
)
|
|
(2.6
|
)%
|
||
Other income
|
1,822
|
|
|
0.8
|
%
|
|
—
|
|
|
—
|
%
|
||
Income before income taxes
|
24,786
|
|
|
10.9
|
%
|
|
138,431
|
|
|
36.6
|
%
|
||
Income tax expense
|
3,241
|
|
|
1.4
|
%
|
|
27,984
|
|
|
7.4
|
%
|
||
Net income
|
$
|
21,545
|
|
|
9.5
|
%
|
|
$
|
110,447
|
|
|
29.2
|
%
|
|
For the three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Met Coal (metric tons in thousands)
|
|
|
|
||||
Metric tons sold
|
1,646
|
|
|
1,901
|
|
||
Metric tons produced
|
1,904
|
|
|
2,084
|
|
||
Gross price realization(1)
|
89
|
%
|
|
98
|
%
|
||
Average selling price per metric ton
|
$
|
134.47
|
|
|
$
|
194.47
|
|
Cash cost of sales per metric ton
|
$
|
91.55
|
|
|
$
|
95.71
|
|
|
For the three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net cash provided by operating activities
|
$
|
21,022
|
|
|
$
|
126,408
|
|
Net cash used in investing activities
|
(20,219
|
)
|
|
(29,739
|
)
|
||
Net cash provided by (used in) financing activities
|
62,557
|
|
|
(147,332
|
)
|
||
Net increase in cash and cash equivalents and restricted cash
|
$
|
63,360
|
|
|
$
|
(50,663
|
)
|
•
|
the domestic and foreign supply and demand for met coal;
|
•
|
the quantity and quality of met coal available from competitors;
|
•
|
the demand for and price of steel;
|
•
|
adverse weather, climatic and other natural conditions, including natural disasters;
|
•
|
domestic and foreign economic conditions, including slowdowns in domestic and foreign economies and financial markets;
|
•
|
global and regional political events;
|
•
|
domestic and foreign legislative, regulatory and judicial developments, environmental regulatory changes and changes in energy policy and energy conservation measures that could adversely affect the met coal industry;
|
•
|
capacity, reliability, availability and cost of transportation and port facilities, and the proximity of available met coal to such transportation and port facilities; and
|
•
|
other factors beyond our control, such as terrorism, war, and pandemics, including the COVID-19 pandemic.
|
•
|
an inability to retain or hire experienced crews and other personnel and other labor relations matters;
|
•
|
a lack of customer demand for our mined met coal;
|
•
|
an inability to secure necessary equipment, raw materials or engineering in a timely manner to successfully execute our expansion plans;
|
•
|
unanticipated delays that could limit or defer the production or expansion of our mining activities and jeopardize our long term relationships with our existing customers and adversely affect our ability to obtain new customers for our mined met coal; and
|
•
|
a lack of available cash or access to sufficient debt or equity financing for investment in our expansion.
|
•
|
uncertainties in the national and worldwide economy and the price of met coal;
|
•
|
our ability to obtain additional debt and/or equity financing to fund the development, permitting, construction and mining activities of Blue Creek on terms that are acceptable to us, or at all;
|
•
|
the diversion of management’s attention from our existing mining operations;
|
•
|
our ability to obtain favorable tax or other incentives;
|
•
|
potential opposition from non-governmental organizations, local groups, or local residents;
|
•
|
the fact that our development, construction, ramp-up and operating costs may be higher than our estimates and further increase our planned capital expenditure and liquidity requirements;
|
•
|
shortages of construction materials and equipment or delays in the delivery of such materials and equipment;
|
•
|
unanticipated facility or equipment malfunctions or breakdowns;
|
•
|
delays from unexpected adverse geological and/or weather conditions, accidents, and other factors beyond our control, including the COVID-19 pandemic;
|
•
|
failure to obtain, or delays in obtaining, all necessary governmental and third-party rights-of-way, easements, permits, licenses and approvals;
|
•
|
local infrastructure conditions and other logistical challenges;
|
•
|
the possibility that we may have insufficient expertise to engage in such development activity profitably or without incurring inappropriate amounts of risks;
|
•
|
the fact that the coal reserves at Blue Creek may not be as economically recoverable as planned;
|
•
|
difficulties in integrating Blue Creek with our existing mining operations and failure to achieve any estimated economies of scale; and
|
•
|
our ability to hire qualified construction and other personnel.
|
•
|
longer sales-cycles and time to collection;
|
•
|
tariffs and international trade barriers and export license requirements, including any that might result from the current global trade uncertainties;
|
•
|
fewer or less certain legal protections for contract rights;
|
•
|
different and changing legal and regulatory requirements;
|
•
|
potential liability under the U.S. Foreign Corrupt Practices Act of 1977, as amended, or comparable foreign regulations;
|
•
|
government currency controls;
|
•
|
fluctuations in foreign currency exchange and interest rates; and
|
•
|
political and economic instability, changes, hostilities and other disruptions (including as a result of the COVID-19 pandemic), as well as unexpected changes in diplomatic and trade relationships.
|
•
|
our quarterly or annual earnings, or those of other companies in our industry;
|
•
|
actual or anticipated fluctuations in our operating and financial results, including reserve estimates;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
the public reaction to our press releases, our other public announcements and our filings with the SEC;
|
•
|
announcements by us or our competitors of significant acquisitions, dispositions or innovations;
|
•
|
changes in financial estimates and recommendations by securities analysts following our stock, or the failure of securities analysts to cover our common stock;
|
•
|
changes in earnings estimates by securities analysts or our ability to meet those estimates;
|
•
|
the operating and stock price performance of other comparable companies;
|
•
|
declaration of bankruptcy by any of our customers or competitors;
|
•
|
general economic conditions, overall market fluctuations, changes in the price of met coal, steel or other commodities, including the impact of the COVID-19 pandemic on any of the foregoing;
|
•
|
additions or departures of key management personnel;
|
•
|
actions by our stockholders;
|
•
|
the trading volume of our common stock;
|
•
|
sales of our common stock by us or the perception that such sales may occur; and
|
•
|
changes in business, legal or regulatory conditions, or other developments (including the COVID-19 pandemic) affecting participants in, and publicity regarding, the met coal mining business, the domestic steel industry or any of our significant customers.
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Approximate dollar value of shares that may yet be purchased under the plans or programs(2)
|
||||||
January 1, 2020 - January 31, 2020
|
|
|
|
|
||||||
Stock Repurchase Program(1)
|
—
|
|
$
|
—
|
|
—
|
|
$
|
59,000,000
|
|
Employee Transactions(2)
|
1,087
|
|
$
|
21.13
|
|
—
|
|
|
||
February 1, 2020 - February 29, 2020
|
|
|
|
|
||||||
Stock Repurchase Program(1)
|
—
|
|
$
|
—
|
|
—
|
|
|
||
Employee Transactions(2)
|
42,125
|
|
$
|
20.66
|
|
—
|
|
|
||
March 1, 2020 - March 31, 2020
|
|
|
|
|
||||||
Stock Repurchase Program(1)
|
—
|
|
$
|
—
|
|
—
|
|
|
||
Employee Transactions(2)
|
7,007
|
|
$
|
16.89
|
|
—
|
|
|
||
Total
|
50,219
|
|
|
—
|
|
|
(1)
|
On March 26, 2019, the Board approved the Stock Repurchase Program that authorizes repurchases of up to an aggregate of $70.0 million of our outstanding common stock. The Stock Repurchase Program does not require us to repurchase a specific number of shares or have an expiration date.
|
(2)
|
These shares were acquired to satisfy certain employees' tax withholding obligations associated with the lapse of restrictions on certain restricted stock awards granted under the 2016 Equity Incentive Plan and 2017 Equity Incentive Plan. Upon acquisition, these shares were retired.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
4.1***
|
|
|
|
|
|
4.2***
|
|
|
|
|
|
10.1***#
|
|
|
|
|
|
10.2*†
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
95*
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH*
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
Inline XBRL Taxonomy Extension Calculation LinkBase Document
|
|
|
|
101.DEF*
|
|
Inline XBRL Taxonomy Extension Definition LinkBase Document
|
|
|
|
101.LAB*
|
|
Inline XBRL Taxonomy Extension Label LinkBase Document
|
|
|
|
101.PRE*
|
|
Inline XBRL Taxonomy Extension Presentation LinkBase Document
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
***
|
The hyperlink to this exhibit was incorrect in the registrant’s Annual Report on Form 10-K for the year ended
|
†
|
Management contract, compensatory plan or arrangement.
|
#
|
The schedules to this agreement have been omitted for this filing pursuant to Item 601(b)(2) of Regulation S-K. The
|
|
Warrior Met Coal, Inc.
|
||
|
|
|
|
|
By:
|
|
/s/ Dale W. Boyles
|
|
|
|
Dale W. Boyles
|
|
|
|
Chief Financial Officer (on behalf of the registrant and as Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
Date: April 29, 2020
|
1.
|
Employment Period.
|
2.
|
Terms of Employment.
|
3.
|
Termination of Employment.
|
4.
|
Obligations of the Company upon Termination.
|
5.
|
Restrictive Covenants.
|
6.
|
Non-Disparagement.
|
7.
|
Confidentiality of Agreement.
|
8.
|
Compensation Recovery Policy.
|
9.
|
Executive’s Representations, Warranties and Covenants.
|
10.
|
General Provisions.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Warrior Met Coal, Inc. (the “registrant”);
|
||||||||
|
|
||||||||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||||||||
|
|
||||||||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||||||||
|
|
||||||||
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
||||||||
|
|
||||||||
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||||||
|
|
||||||||
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||||||||
|
|
||||||||
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||||||
|
|
||||||||
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||||||||
|
|
||||||||
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||||||||
|
|
||||||||
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||||||||
|
|
||||||||
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
||||||||
|
|||||||||
|
|
|
|
||||||
|
|
|
WARRIOR MET COAL, INC.
|
||||||
Date: April 29, 2020
|
By:
|
|
/s/ Walter J. Scheller, III
|
||||||
|
|
|
Walter J. Scheller, III
|
||||||
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Warrior Met Coal, Inc. (the “registrant”);
|
||||||||
|
|
||||||||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||||||||
|
|
||||||||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||||||||
|
|
||||||||
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
||||||||
|
|
||||||||
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
||||||||
|
|
||||||||
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||||||||
|
|
||||||||
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||||||||
|
|
||||||||
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||||||||
|
|
||||||||
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||||||||
|
|
||||||||
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||||||||
|
|
||||||||
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
||||||||
|
|||||||||
|
|
|
|
||||||
|
|
|
WARRIOR MET COAL, INC.
|
||||||
Date: April 29, 2020
|
By:
|
|
/s/ Dale W. Boyles
|
||||||
|
|
|
Dale W. Boyles
|
||||||
|
|
|
Chief Financial Officer
|
|
|
|
WARRIOR MET COAL, INC.
|
||||
|
|
|
|
||||
Date: April 29, 2020
|
By:
|
|
/s/ Walter J. Scheller, III
|
||||
|
|
|
Walter J. Scheller, III
|
||||
|
|
|
Chief Executive Officer
|
||||
|
|
|
|
||||
Date: April 29, 2020
|
By:
|
|
/s/ Dale W. Boyles
|
||||
|
|
|
Dale W. Boyles
|
||||
|
|
|
Chief Financial Officer
|
Mining Complex(1) (3)
|
|
Section 104
S&S Citations
|
|
Section 104(b) Orders
|
|
Section 104(d) Citations and Orders
|
|
Section 110(b)(2) Violations
|
|
Section 107(a) Orders
|
|
Proposed MSHA Assessments(2)
($ in thousands)
|
|
Fatalities
|
Warrior Met Coal Mining, LLC, No. 4
|
|
16
|
|
—
|
|
—
|
|
—
|
|
—
|
|
43.0
|
|
—
|
Warrior Met Coal Mining, LLC, No. 7
|
|
36
|
|
1
|
|
—
|
|
—
|
|
—
|
|
61.3
|
|
—
|
(1)
|
MSHA assigns an identification number to each coal mine and may or may not assign separate identification numbers to related facilities such as preparation plants. We are providing the information in the table by mining complex rather than MSHA identification number because we believe that this presentation is more useful to investors. For descriptions of each of these mining operations, please refer to the descriptions under "Part 1, Item 1. Business" and "Part 1, Item 2. Properties" in our Annual Report on Form 10-K for the year ended December 31, 2019. Idle facilities are not included in the table above unless they received a citation, order or assessment by MSHA during the current quarterly reporting period or are subject to pending legal actions.
|
(2)
|
Not all citations issued during the quarter have been assessed a civil penalty. Thus, amounts listed under this heading are based on assessments that have been proposed, projected proportionally for all enforcement actions issued during the quarter, both Significant and Substantial ("S&S") and non-S&S, regardless of the issuance date of the related citation or order.
|
(3)
|
The table includes references to specific sections of the Mine Act as follows:
|
•
|
Section 104(a) Citations include citations for health or safety standards that could significantly and substantially contribute to serious injury if left unabated.
|
•
|
Section 104(b) Orders represent failures to abate a citation under 104(a) within the period of time prescribed by MSHA and that the period of time prescribed for the abatement should not be further extended. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.
|
•
|
Section 104(d) Citations and Orders are for unwarrantable failure to comply with mandatory health and safety standards where such violation is of such a nature as could significantly or substantially contribute to the cause and effect of a coal or other mine safety or health hazard.
|
•
|
Section 110(b)(2) Violations are for flagrant violations.
|
•
|
Section 107(a) Orders are for situations in which MSHA determined an imminent danger existed.
|
Mining Complex Legal Actions(1)
|
|
Pending as of
March 31, 2020
|
|
Initiated During Q1 2020
|
|
Resolved During Q1 2020
|
|
|
|
|
|
|
|
Warrior Met Coal Mining, LLC, No. 4
|
|
|
|
|
|
|
29 CFR Part 2700, Subpart B
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart C
|
|
10
|
|
4
|
|
3
|
29 CFR Part 2700, Subpart D
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart E
|
|
1
|
|
2
|
|
1
|
29 CFR Part 2700, Subpart F
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart H
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
Warrior Met Coal Mining, LLC, No. 7
|
|
|
|
|
|
|
29 CFR Part 2700, Subpart B
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart C
|
|
7
|
|
3
|
|
5
|
29 CFR Part 2700, Subpart D
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart E
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart F
|
|
—
|
|
—
|
|
—
|
29 CFR Part 2700, Subpart H
|
|
—
|
|
—
|
|
—
|
(1)
|
Effective January 27, 2011, the SEC adopted amendments to its rules to implement Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “final rule”). The final rule modified previous reporting requirements and requires that the total number of legal actions pending before the FMSHRC as of the last day of the time period covered by the report be categorized according to type of proceeding, in accordance with the categories established in the Procedural Rules of FMSHRC. SEC rules require that six different categories of pending legal actions be disclosed. The types of proceedings are listed as follows:
|
•
|
“29 CFR Part 2700, Subpart B” These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart B such as contests of citations and orders filed prior to receipt of a proposed penalty assessment from MSHA, contests related to orders for which penalties are not assessed (such as imminent danger orders under Section 107 of the Mine Act), and emergency response plan dispute proceedings.
|
•
|
“29 CFR Part 2700, Subpart C” These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart C and are contests of citations and orders after receipt of proposed penalties.
|
•
|
“29 CFR Part 2700, Subpart D” These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart D and are complaints for compensation, which are cases under section 111 of the Mine Act.
|
•
|
“29 CFR Part 2700, Subpart E” These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart E and are complaints of discharge, discrimination or interference and temporary reinstatement under section 105 of the Mine Act.
|
•
|
“29 CFR Part 2700, Subpart F” These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart F such as applications for temporary relief under section 105(b)(2) of the Mine Act from any modification or termination of any order issued thereunder, or from any order issued under section 104 of the Mine Act (other than citations issued under section 104(a) or (f) of the Mine Act).
|
•
|
“29 CFR Part 2700, Subpart H” These legal actions include proceedings initiated under FMSHRC Procedural Rule 29 CFR Part 2700, Subpart H and are appeals of judges’ decisions or orders to FMSHRC, including petitions for discretionary review and review by FMSHRC on its own motion.
|