Warrior Met Coal (NYSE:HCC) reported earnings after the close, posting strong results, bumping the dividend and guiding volumes higher for 2022:
- Earnings – Warrior (HCC) posted $3.17 in adjusted EPS for Q4, versus Bloomberg consensus estimates of $2.35; the company generated $151m in free cash flow (~9.4% of current market capitalization).
- Guidance – production volumes were guided to 6.0mt in 2022 (midpoint), up ~7% from 2021 levels; capital expenditures were guided to $100m in 2022, up ~40% versus 2021 levels as management looks to progress with 4 North portal construction.
- Dividend – announced Monday, the Board increased the dividend 20% to 24c annually (~1% forward yield).
Even assuming higher capital expenditures, the business is well positioned to generate significant free cash flow in 2022. However, the nominal dividend, and negative net debt balance likely leave shareholders wondering why payouts aren’t higher at this point in the cycle.