Warrior Met Coal (HCC) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Deterioration in global economic conditions as they relate to the steelmaking industry, as well as generally unfavorable global economic, financial and business conditions, may adversely affect our business, results of operations and cash flows
2. 02Our business is subject to the risk of increases or fluctuations in the cost, including increases due to inflation, and delay in the delivery, of raw materials, mining equipment and purchased components that could increase our operating costs or delay our production
3. 03We typically sell our steelmaking coal under fixed supply contracts primarily with indexed pricing terms that vary and volume terms of one to three years and are therefore exposed to commodity price risk on our sales
4. 04The failure of our customers to honor or renew contracts could adversely affect our business
5. 05Our ability to collect payments from our customers could be impaired and, as a result, our financial position could be materially and adversely affected if their creditworthiness deteriorates, if they declare bankruptcy, or if they fail to honor their contracts with us
6. 06A significant reduction of, or loss of, purchases by our largest customers could materially adversely affect our profitability
7. 07If we fail to implement our business strategies successfully, our financial performance could be harmed
8. 08We may be unsuccessful or delayed in developing Blue Creek, which could significantly affect our operations and/or limit our long-term growth
9. 09We may be unsuccessful in integrating the operations of any future acquisitions, including acquisitions involving new lines of business, with our existing operations, and in realizing all or any part of the anticipated benefits of any such acquisitions
10. 10If transportation for our steelmaking coal is disrupted, unavailable or more expensive for our customers, our ability to sell steelmaking coal could suffer
11. 11We are currently in the process of testing alternative outbound logistics routes in order to increase transportation and vessel shipping optionality, but we cannot provide any assurance that we will be able to reduce our transportation risks
12. 12Our business may require substantial capital investment and maintenance expenditures, and we may not have access to the capital required to reach full productive capacity at our mines
13. 13Work stoppages, such as the strike initiated by the UMWA in April 2021 that ended in February 2023, and other labor relations matters may harm our business. Union-represented labor creates an increased risk of work stoppages and higher labor costs
14. 14We require a skilled workforce to run our business. If we cannot hire qualified people to meet replacement or expansion needs, we may not be able to achieve planned results
15. 15Significant competition, as well as changes in foreign markets or economies, could harm our sales, profitability and cash flows. In addition, foreign currency fluctuations could adversely affect the competitiveness of our coal abroad
16. 16Our sales in foreign jurisdictions are subject to risks and uncertainties that may have a negative impact on our profitability
17. 17New tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows
18. 18We may be subject to litigation, the disposition of which could negatively affect our profitability and cash flow in a particular period, or have a material adverse effect on our business, financial condition and results of operations
19. 19Terrorist attacks and cyber-attacks or other security breaches may negatively affect our business, financial condition and results of operations and cash flows
20. 20Our executive officers and other key personnel are important to our success and the loss of one or more of these individuals could harm our business

Risks Related to Our Industry

1. 21Our customers are continually evaluating alternative steel production technologies which may reduce demand for our product
2. 22Substantially all of our revenues are derived from the sale of steelmaking coal. This lack of diversification of our business could adversely affect our financial condition, results of operations and cash flows
3. 23All of our mining operations are located in Alabama, making us vulnerable to risks associated with having our production concentrated in one geographic area
4. 24Defects in title of any real property or leasehold interests in our properties or associated steelmaking coal reserves could limit our ability to mine or develop these properties or result in significant unanticipated costs
5. 25We face uncertainties in estimating our economically recoverable steelmaking coal reserves and resources, and inaccuracies in our estimates of our steelmaking coal reserves and resources could result in decreased profitability from lower than expected revenues or higher than expected costs
6. 26Our inability to develop steelmaking coal reserves in an economically feasible manner or our inability to acquire additional steelmaking coal reserves that are economically recoverable may adversely affect our business
7. 27Any significant downtime of our major pieces of mining equipment could impair our ability to supply steelmaking coal to our customers and materially and adversely affect our results of operations and cash flows
8. 28We may not recover our investments in our mining, exploration and other assets, which may require us to recognize impairment charges related to those assets

Risks Related to Regulatory Compliance

1. 29Our failure to obtain and renew permits necessary for our mining operations could negatively affect our business
2. 30Extensive environmental, health and safety laws and regulations impose significant costs on our operations and future regulations could increase those costs, limit our ability to produce or adversely affect the demand for our products
3. 31Regulation of air emissions, including GHG emissions, could increase our operating costs and impact the demand for, price of and value of our products
4. 32Our operations may impact the environment or cause exposure to hazardous substances and our properties may have environmental contamination, which could result in material liabilities to us
5. 33Failure to obtain or renew surety bonds on acceptable terms could affect our ability to secure reclamation and coal lease obligations and, therefore, our ability to mine or lease steelmaking coal
6. 34We have reclamation and mine closing obligations. If the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated

Risks Related to our Financial Results and Finances

1. 35We have a substantial amount of indebtedness. Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations and dividend policy, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments on the Notes
2. 36We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful
3. 37We cannot assure you that our business will generate cash flow from operations, or that we will be able to draw under the ABL Facility or otherwise, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on the Notes
4. 38Despite our current indebtedness levels, we may still be able to incur substantially more debt, including secured indebtedness
5. 39Our debt agreements contain restrictions that will limit our flexibility in operating our business
6. 40In addition, our ABL Facility requires us to maintain a minimum fixed charge coverage ratio at any time when the average availability is less than a certain amount at such time. In that event, we must satisfy a minimum fixed charge ratio of 1.0 to 1.0
7. 41The need to maintain capacity for required letters of credit could limit our ability to provide financial assurance for self-insured obligations and negatively impact our ability to fund future working capital, capital expenditure or other general corporate requirements
8. 42Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
9. 43We may be unable to generate sufficient taxable income from future operations, or other circumstances could arise, which may limit or eliminate our ability to utilize our significant federal and state tax NOLs or our deferred tax assets
10. 44Certain U.S. federal income tax provisions currently available, including coal percentage depletion and foreign-derived intangible income, may be eliminated by future legislation

Risks Related to the Ownership of our Common Stock

1. 45The market price of our common stock may fluctuate significantly and investors in our common stock could incur substantial losses
2. 46If securities or industry analysts adversely change their recommendations regarding our stock or if our operating results do not meet their expectations, our stock price could decline
3. 47Any declaration and payment of future dividends to holders of our common stock or stock repurchases will depend on future financial performance and may be limited by restrictive covenants of our ABL Facility and the Indenture, and will be at the sole discretion of the Board and will also depend on many factors
4. 48An investor’s percentage ownership in us may be diluted by future issuances of capital stock or securities or instruments that are convertible into our capital stock, which could reduce its influence over matters on which stockholders vote
5. 49We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock
6. 50We could engage in or approve transactions involving our common stock that adversely affect significant stockholders and our other stockholders
7. 51Provisions in our certificate of incorporation and bylaws and Delaware law, as well as the Amended Rights Agreement, make it more difficult to effect a change in control of the Company, which could adversely affect the price of our common stock
8. 52Compliance with import and export requirements, economic sanctions laws, the Foreign Corrupt Practices Act and other applicable anti-corruption laws may increase the risks of doing business internationally