S&P moves Warrior Coal view to stable

S&P said it changed its outlook on Warrior Met Coal Inc. to stable from negative and affirmed the B+ issuer and the BB senior secured notes ratings.

“Warrior has steadily increased its staffing through recruitment and some former unionized workers returning from the strike that began in April 2021. As a result, the company restarted Mine No. 4, which was idled during the strike in first-quarter 2022. Production has ramped up to 75%-80% capacity overall and we expect about 6 million–6.5 million short tons will be produced in fiscal 2022,” the agency said in a press release.

Robust coal prices could help drive Warrior’s adjusted leverage to below 1x in 2022. “Based on our forecast, we believe that Warrior could generate EBITDA of $700 million-$850 million in 2022 on higher price realizations due to strong met coal prices,” S&P said.

The agency said over the next 12-24 months, it sees Warrior’s free operating cash flow in positive territory despite higher capital expenditure and distributions.

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