What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-15 compared with 2022-02-22 · 149 added, 167 removed, 984 unchanged (24% of the section changed)

17 unchanged sentences

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

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001-38061) filed with the Commission on March 20, 2020).

Bylaws of Warrior Met Coal, Inc.

(incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement on Form S-8 (File No.

Second Certificate of Amendment of the Certificate of Incorporation of Warrior Met Coal, Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No.

001-38061) filed with the Commission on April 26, 2022).

Bylaws of Warrior Met Coal, Inc.

(incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No.

001-380619) filed with the Commission on December 7, 2022).

Certificate of Designations of Series A Junior Participating Preferred Stock of Warrior Met Coal, Inc., as filed with the Secretary of State of the State of Delaware on February 14, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No.

9 unchanged sentences

001-38061) filed with the Commission on February 14, 2020)).

Amendment No.

1 to the Rights Agreement dated as of March 4, 2022 between Warrior Met Coal, Inc.

and Computershare Trust Company, N.A.

(incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K (File No.

001-38061) filed with the Commission on March 4, 2022).

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-K (File No.

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Chief Financial Officer (Principal Financial and Accounting Officer) February 15, 2023

/s/ Stephen D.

Director February 15, 2023

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Director February 15, 2023

/s/ Stephen D.

Director February 15, 2023

INDEX TO FINANCIAL STATEMENTS

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Warrior Met Coal, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying balance sheets of Warrior Met Coal, Inc.

(the Company) as of December 31, 2022 and 2021, the related statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 22, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of the Company as of December 31, 2022 and 2021, the related statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 15, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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Financing lease obligations 9,002 28,434

Deferred income taxes 23,378 —

Other long-term liabilities 500 1,842

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Stock compensation — — — 7,087 — 7,087

Treasury stock purchase — — ( 12,546 ) — — ( 12,546 )

Other 1 — — ( 1,273 ) — ( 1,272 )

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Stock compensation — — — 9,355 — 9,355

Treasury stock purchase — — — — — —

Other 3 — — ( 3,042 ) — ( 3,039 )

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Deferred mine development costs ( 48,935 ) ( 13,462 ) ( 27,093 )

Acquisition of leased mineral rights ( 3,500 ) — —

Acquisition of Black Warrior Methane and Black Warrior Transmission, net of $ 2.8 million cash acquired

Proceeds from sale of property, plant and equipment — 209 159

1 unchanged sentence

Purchases of short-term investments — — ( 8,500 )

— ( 8,500 ) ( 24,171 )

Net cash used in investing activities ( 255,144 ) ( 71,146 ) ( 108,189 )

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Debt issuance costs paid — ( 11,352 ) —

Common shares repurchased — — ( 12,546 )

Other ( 3,724 ) ( 3,042 ) ( 1,272 )

Net cash (used in) provided by financing activities ( 153,119 ) ( 96,474 ) 14,096

Net increase (decrease) in cash and cash equivalents 183,923 18,533 ( 13,022 )

Net increase in cash and cash equivalents 433,641 183,923 18,533

Cash and cash equivalents at beginning of period 395,839 211,916 193,383

21 unchanged sentences

The HCC that the Company produces from the Blue Creek coal seam contains very low sulfur, has strong coking properties and is of a similar quality to coal referred to as the premium HCC produced in Australia.

The premium nature of the Company's HCC makes it ideally suited as a base feed coal for steel makers and results in price realizations near the S&P Platts Index price.

The Company also generates ancillary revenues from the sale of natural gas extracted as a byproduct from the underground coal mines and royalty revenues from leased properties.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Warrior Met Coal, Inc and its subsidiaries (the "Company").

The accompanying financial statements include the accounts of Warrior Met Coal, Inc and its subsidiaries (the "Company").

All significant intercompany transactions and balances have been eliminated in consolidation.

Impact of the COVID-19 Pandemic on the Company's Financial Condition and Results of Operations

The global steelmaking industry's demand for met coal is affected by pandemics, epidemics or other public health emergencies, such as the outbreak of the novel coronavirus ("COVID-19"), which was first reported in late 2019.

In March 2020, the World Health Organization ("WHO") declared COVID-19 a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.

In the two years since then, the pandemic has dramatically impacted the global health and economic environment, including millions of confirmed cases and deaths, business slowdowns or shutdowns, labor shortfalls, supply chain challenges, regulatory challenges, and market volatility.

In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

Over the course of 2021, COVID-19 case rates and the health and economic impacts of the pandemic fluctuated dramatically in different communities in the U.S.

and globally, particularly with the spread of new variants.

But the Company continued to see a prolonged impact on the economy, its industry, and the Company itself, with increased challenges for customers and suppliers, labor shortages, supply chain challenges, and increasing inflation, among other impacts.

The Company expected these and other impacts to continue and they could worsen, depending on the future course of the pandemic and actions taken in connection with it.

The Company continues to closely monitor and address the pandemic and related developments, including the impact on the Company, its employees, its customers, its suppliers and its communities.

The Company has considered and continues to consider and be guided by health data and evolving guidance from the Centers for Disease Control and Prevention (CDC), in particular, as well as other health organizations globally, federal, state and local governmental authorities, and its customers, among others.

The Company has taken, and continues to take, robust actions to help protect the health, safety and well-being of its employees, to support continued performance, to support its suppliers and local communities, and to continue to serve its customers.

The Company's goals have been, and continue to be to lessen the potential adverse impacts, both health and economic, and to continue to position the Company for long-term success.

As of the filing of this Form 10-K, the Company has not had to idle or temporarily idle its mines due to COVID-19.

Notwithstanding the Company's continued operations, COVID-19 has had and may continue to have further negative impacts on the Company's two operating mines, supply chain, transportation networks and customers, which may continue to compress the Company's margins, and reduce demand for the met coal that the Company produces.

The COVID-19 outbreak is a widespread public health crisis that is adversely affecting the economies and financial markets of many countries, including those of the Company's customers, which are primarily located in Europe, South America and Asia.

A prolonged economic downturn could adversely affect demand for the Company's met coal and contribute to volatile supply and demand conditions affecting prices and volumes.

The progression of COVID-19 could also negatively impact the Company's business or results of operations through the temporary closure of one of its mines, customers or critical suppliers, or the McDuffie Coal Terminal at

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

the Port of Mobile in Alabama, or a disruption to the Company's rail and barge carriers, which would delay or prevent deliveries to its customers, among others.

In addition, the ability of the Company's employees and its suppliers' and customers' employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above, which may significantly affect the demand for met coal.

The Company's customers may be directly impacted by business curtailments or weak market conditions and may not be willing or able to fulfill their contractual obligations or open letters of credit.

The Company may also experience delays in obtaining letters of credit or processing letter of credit payments due to the impacts of COVID-19 on foreign issuing and U.S.

intermediary banks.

Furthermore, the progression of, and global response to, the COVID-19 outbreak has begun to cause, and increases the risk of, further delays in construction activities and equipment deliveries related to the Company's capital projects, including potential delays in obtaining permits from government agencies.

The extent of such delays and other effects of COVID-19 on the Company's capital projects, certain of which are outside of the Company's control, is unknown, but they may impact or delay the timing of anticipated benefits of capital projects.

Collective Bargaining Agreement

1 unchanged sentence

While the Company continues to engage in good faith negotiations with the UMWA, the Company has not reached a new contract and the UMWA is engaging in a strike.

As a result of the strike, the Company idled Mine No.

As a result of the strike, the Company initially idled Mine No.

4 and scaled back operations at Mine No.

In connection with the idling of Mine No.

4 and reduced operations at Mine No.

7, the Company incurred idle mine expenses of $ 33.9 million for the year ended December 31, 2021.

In the first quarter of 2022, the Company restarted operations at Mine No.

Due to the reduced operations at Mine No.

4 and Mine No.

7, the Company incurred idle mine expenses of $ 12.1 million and $ 33.9 million for the years ended December 31, 2022 and December 31, 2021, respectively.

These expenses are reported separately in the Statements of Operations and represent expenses incurred while the respective mine is idled or operating below normal capacity, such as electricity, insurance and maintenance labor.

The Company has also incurred approximately $ 21.4 million of business interruption expenses for the year ended December 31, 2021, which represent non-recurring expenses that are directly attributable to the ongoing UMWA strike for incremental safety and security, labor negotiations and other expenses.

The Company has also incurred approximately $ 23.5 million and $ 21.4 million of business interruption expenses for the years ended December 31, 2022 and December 31, 2021, respectively, which represent non-recurring expenses that are directly attributable to the ongoing UMWA strike for incremental safety and security, labor negotiations and other expenses.

These expenses are also presented separately in the Statements of Operations.

Black Warrior Methane (“BWM”) and Black Warrior Transmission (“BWT”)

On March 1, 2022, the Company acquired the remaining 50 % interest in BWM and BWT for $ 0.3 million.

The purchase consideration has been allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

The acquisition is not deemed to be material to the financial statements.

Note 2— Summary of Significant Accounting Policies

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For the year ended December 31, 2022, approximately 98.2 % of sales were derived from coal shipments to customers, located primarily in Europe, South America and Asia.

At December 31, 2021 approximately 97.0 % of trade receivables were related to these customers.

For the year ended December 31, 2021, the Company's geographic customer mix was 52 % in Asia, 39 % in Europe and 9 % in South America.

At December 31, 2022 approximately 96.9 % of trade receivables were related to these

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2022, the Company's geographic customer mix was 61 % in Europe, 20 % in Asia and 19 % in South America.

During the year ended December 31, 2022, Xcoal Energy & Resources, Salzgitter Flachstahl GMBH and Thyssenkrupp Steel Europe AG accounted for $ 330.1 million, or 19.1 %, $ 207.8 million, or 12.0 %, and $ 187.0 million, or 10.8 % of total revenues, respectively.

During the year ended December 31, 2021, Xcoal Energy & Resources and Salzgitter Flachstahl GMBH accounted for $ 526.2 million, or 51.0 % and $ 118.1 million, or 11.4 % of total revenues, respectively.

1 unchanged sentence

accounted for $ 146.5 million, or 18.7 %, $ 117.7 million, or 15.0 %, and $ 89.1 million, or 11.4 % of total revenues, respectively.

During the year ended December 31, 2019, Xcoal Energy & Resources, Exiros BV Sucursal Uruguay, ArcelorMittal, and Thyssenkrupp Steel Europe AG accounted for $ 276.2 million, or 22.3 %, $ 159.6 million, or 12.9 %, $ 128.2 million, or 10.4 % and $ 125.5 million, or 10.1 % of total revenues, respectively.

The increase in sales to XCoal during the year ended December 31, 2021 is primarily driven by sales into China.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Revenue Recognition

Revenue is recognized when performance obligations under the terms of a contract with the Company's customers are satisfied;

for all contracts this occurs when control of the promised goods have been transferred to the Company's customers.

for all contracts this occurs when control of the promised goods have been transferred to the Company's customers and risk of loss passes to the customer.

For coal shipments to domestic customers via rail, control is transferred when the railcar is loaded.

For coal shipments to international customers via ocean vessel, control is transferred when the vessel is loaded at the Port of Mobile in Alabama.

For all met coal sales under average pricing contracts where pricing is not finalized when revenue is recognized, revenue is recorded based on estimated consideration to be received at the date of the sale.

For natural gas sales, control is transferred when the gas has been transferred to the pipeline.

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Trade Accounts Receivable and Allowance for Credit Losses

Trade accounts receivable are stated at cost.

Trade accounts receivable represent customer obligations that are derived from revenue recognized from contracts with customers.

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The Company purchases United States Treasury bills with maturities ranging from six to twelve months which are classified as held to maturity and are carried at amortized cost, which approximates fair value.

The Company also purchases fixed income securities and certificates of deposits with varying maturities that are classified as available for sale and are carried at fair value.

The Company also purchases

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

fixed income securities and certificates of deposits with varying maturities that are classified as available for sale and are carried at fair value.

Securities classified as held to maturity securities are those securities that management has the intent and ability to hold to maturity.

As of December 31, 2021 and 2020, the Company’s short-term investments of $ 8.5 million consisted of cash and fixed income securities.

As of December 31, 2022, the Company’s short-term investments of $ 8.6 million consisted of cash and fixed income securities.

The short-term investments are posted as collateral for the self-insured black lung related claims asserted by or on behalf of former employees of Walter Energy, Inc.

("Walter Energy") and its subsidiaries, which were assumed by the Company and relate to periods prior to March 31, 2016.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Inventories are valued at the lower of cost or net realizable value.

Coal inventory costs include labor, supplies, equipment costs, operating overhead, freight, royalties, depreciation and depletion and other related costs.

Coal inventories are valued using the first-in, first-out (“FIFO”) inventory valuation method.

Coal inventories are valued using the first-in, first-out inventory valuation method.

The valuation of coal inventories is subject to estimates due to possible gains and losses resulting from inventory movements from the mine site to storage facilities, inherent inaccuracies in belt scales and aerial surveys used to measure quantities and fluctuations in moisture content.

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Costs amortized during the production phase of a mine are capitalized into inventory and expensed to cost of sales as the coal is sold.

Coal sales revenue related to incidental production during the development phase are recorded as sales with an offset to cost of sales based on the estimated cost per ton sold for the mine when the asset is in place for its intended use.

Coal sales revenue related to incidental production during the development phase

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

are recorded as sales with an offset to cost of sales based on the estimated cost per ton sold for the mine when the asset is in place for its intended use.

Owned and Leased Mineral Interests

1 unchanged sentence

Lease agreements are generally long-term in nature (original terms range from 10 to 50 years) and substantially all of the leases contain provisions that allow for automatic extension of the lease term provided certain requirements are met.

Depletion expense was $ 8.3 million, $ 9.3

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

million, and $ 9.9 million for the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively, and is included in depreciation and depletion in the accompanying Statements of Operations.

Depletion expense was $ 7.4 million, $ 8.3 million, and $ 9.3 million for the years ended December 31, 2022, December 31, 2021, and December 31, 2020, respectively, and is included in depreciation and depletion in the accompanying Statements of Operations.

Asset Retirement Obligations

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The Company’s estimate of future undiscounted cash flows is based on assumptions including long-term met coal pricing forecasts, anticipated production volumes and mine operating costs for the life of the mine or estimated useful life of the asset.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Equity Award Compensation

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Compensation expense for equity awards with a service-only condition is recognized over the employee’s requisite service period using a graded vesting method.

For awards with a performance condition that affects vesting, the performance

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

condition is not considered in determining the award’s grant-date fair value;

For awards with a performance condition that affects vesting, the performance condition is not considered in determining the award’s grant-date fair value;

however, the performance conditions are considered when estimating the quantity of awards that are expected to vest.

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Hierarchy levels are defined as follows:

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Quoted prices in active markets for identical assets and liabilities.

1 unchanged sentence

Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

The Company determines if an arrangement is a lease at inception.

The Company has an accounting policy election that leases with an initial term of 12 months or less remain off its balance sheet and lease payments are recognized in the Statements of Operations on a straight-line basis over the lease term.

The Company has an accounting policy election that leases with an initial term of 12 months or less are not recorded on its balance sheet and lease payments are recognized in the Statements of Operations on a straight-line basis over the lease term.

A right-of-use asset represents the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

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Lease expense is recognized on a straight-line basis over the lease term.

New Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes.

This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The ASU is effective for fiscal years beginning after December 15, 2020.

The Company adopted the standard as of January 1, 2021 with no material impact to the Company's results of operations, financial condition, cash flows or financial statement presentation.

Note 3— Inventories, net

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Federal $ — $ — $ ( 74 )

— ( 69 ) ( 3,066 )

Federal 143,897 19,031 ( 16,731 )

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Valuation allowance on deferred tax assets ( 4,519 ) 45,952 —

Impact of Walter Energy IRS Settlement (1)

— — ( 6,615 )

IRC Section 451 marginal well credit ( 87 ) ( 4,702 ) ( 3,977 )

1 unchanged sentence

Tax expense (benefit) recognized $ 141,806 $ 49,096 $ ( 20,144 )

(1) In the fourth quarter of 2019, an adjustment of $ 6.6 million was recorded to recognize additional alternative minimum tax credits, general business credits and NOLs available to the Company in connection with a settlement agreement between Walter Energy and the Internal Revenue Service.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.

The IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022.

While these tax law changes have no immediate effect and are not expected to have a material adverse effect on our results of operations going forward, we will continue to evaluate its impact as further information becomes available.

Deferred Taxes

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Total deferred income tax liabilities ( 102,142 ) ( 85,101 )

Net deferred income tax asset $ 125,276 $ 174,372

The Company has federal net operating loss ("NOL") carryforwards of approximately $ 722.3 million as of December 31, 2021, of which $ 31.0 million are indefinite lived and the remainder expire predominantly in December 31, 2034 through December 31, 2036.

The Company has state NOL carryforwards of approximately $ 992.6 million, which expire predominantly in December 31, 2029 through December 31, 2031.

In addition, the Company has approximately $ 23.3 million of general business credits which begin to expire in December 31, 2027 and fully expire in December 31, 2041.

The increase in the general business credits from the prior year is due to a $ 4.7 million income tax benefit from the Internal Revenue Code ("IRC") Section 451 Marginal Well Credit.

The Marginal Well Credit is a production-based tax credit that provides a credit for qualified natural gas production.

The credit is phased out when natural gas prices exceed certain levels.

Net deferred income tax (liability) asset $ ( 15,806 ) $ 125,276

The Company has federal net operating loss ("NOL") carryforwards of approximately $ 122.1 million as of December 31, 2022, of which $ 33.7 million are indefinite lived and the remainder expire predominantly on December 31, 2034 through December 31, 2036.

The Company has state NOL carryforwards of approximately $ 951.7 million, which expire predominantly on December 31, 2029 through December 31, 2035.

In addition, the Company has approximately $ 23.4 million of general business credits which begin to expire on December 31, 2026 and fully expire on December 31, 2041.

Under the IRC of 1986, as amended (the "Code"), a company is generally allowed a deduction for NOLs against its federal taxable income.

3 unchanged sentences

An ownership change after such date would severely limit the Company's ability to utilize its NOLs and other tax attributes.

Rights Agreement

On February 14, 2020, we adopted the Rights Agreement in an effort to prevent the imposition of significant limitations under Section 382 of the Code on our ability to utilize our current NOLs to reduce our future tax liabilities.

The Company's stockholders ratified the Rights Agreement at the 2020 Annual Meeting of Stockholders.

The Rights Agreement is intended to supplement the 382 Transfer Restrictions and is designed to serve the interests of all stockholders by preserving the availability of our NOLs and is similar to plans adopted by other companies with significant NOLs.

Pursuant to the Rights Agreement, one preferred stock purchase right (a “Right” or the “Rights”) was distributed to stockholders of the Company for each share of common stock of the Company outstanding as of the close of business on February 28, 2020.

Amended Rights Agreement

On February 14, 2020, the Company adopted the Rights Agreement, which was amended on March 4, 2022 by Amendment No.

1 to the Rights Agreement (the "Rights Agreement", and as amended, the "Amended Rights Agreement"), in an effort to prevent the imposition of significant limitations under Section 382 of the Code on the Company's ability to utilize its current NOLs to reduce its future tax liabilities.

The Company's stockholders ratified the Rights Agreement at the 2020 Annual Meeting of Stockholders and ratified the Amendment No.

1 to the Rights Agreement at the 2022 Annual Meeting of Stockholders.

The Amended Rights Agreement is intended to supplement the 382 Transfer Restrictions and is designed to serve the interests of all stockholders by preserving the availability of the Company's NOLs and is similar to plans adopted by other companies with significant NOLs.

Pursuant to the Amended Rights Agreement, one preferred stock purchase right (a “Right” or the “Rights”) was distributed to stockholders of the Company for each share of common stock of the Company outstanding as of the close of business on February 28, 2020.

Initially, these Rights will not be exercisable and will trade with the shares of common stock.

If the Rights become exercisable, each Right will initially entitle stockholders to buy one one-thousandth of a share of a newly created series

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

of preferred stock designated as “Series A Junior Participating Preferred Stock” at an exercise price of $ 31.00 per Right.

While the Rights Agreement is in effect, any person or group that acquires beneficial ownership of 4.99 % or more of the common stock or any existing stockholder who currently owns 5.00 % or more of the common stock that acquires any additional shares of common stock (such person, group or existing stockholder, an "Acquiring Person") without approval from the Board would be subject to significant dilution in their ownership interest in the Company.

If the Rights become exercisable, each Right will initially entitle stockholders to buy one one-thousandth of a share of a newly created series of preferred stock designated as “Series A Junior Participating Preferred Stock” at an exercise price of $ 56.00 per Right.

While the Amended Rights Agreement is in effect, any person or group that acquires beneficial ownership of 4.99 % or more of the common stock or any existing stockholder who currently owns 5.00 % or more of the common stock that acquires any additional shares of common stock (such person, group or existing stockholder, an "Acquiring Person") without approval from the Board would be subject to significant dilution in their ownership interest in the Company.

In such an event, each Right will entitle its holder to buy, at the exercise price, common stock having a market value of two times the then current exercise price of the Right and the Rights held by such Acquiring Person will become void.

The Rights Agreement also gives discretion to the Board to determine that someone is an Acquiring Person even if they do not own 4.99 % or more of the common stock but do own 4.99 % or more in value of the outstanding stock, as determined pursuant to Section 382 of the Code and the regulations promulgated thereunder.

In addition, the Board has established procedures to consider requests to exempt certain acquisitions of the Company’s securities from the Rights Agreement if the Board determines that doing so would not limit or impair the availability of the NOLs or is otherwise in the best interests of the Company.

The Board may redeem the Rights for $ 0.01 per Right at any time before any person or group triggers the Rights Agreement.

The Amended Rights Agreement also gives discretion to the Board to determine that someone is an Acquiring Person even if they do not own 4.99 % or more of the common stock but do own 4.99 % or more in value of the outstanding stock, as determined pursuant to Section 382 of the Code and the regulations promulgated thereunder.

In addition, the Board has established procedures to consider requests to exempt certain acquisitions of the Company’s securities from the Amended Rights Agreement if the Board determines that doing so would not limit or impair the availability of the NOLs or is otherwise in the best interests of the Company.

The Board may redeem the Rights for $ 0.01 per Right at any time before any person or group triggers the Amended Rights Agreement.

The distribution of the Rights is not a taxable event for stockholders of the Company and will not affect the Company’s’ financial condition or results of operations (including earnings per share).

The Rights will expire on the earliest of (i) the close of business on February 14, 2023,(ii) the close of business on the first anniversary of the date of entry into the Rights Agreement, if stockholder approval of the Rights Agreement has not been received by or on such date, (iii) the time at which the Rights are redeemed as provided in the Rights Agreement, (iv) the time at which the Rights are exchanged as provided in the Rights Agreement, (v) the time at which the Board determines that the NOLs are fully utilized or no longer available under Section 382 of the Code, (vi) the effective date of the repeal of Section 382 of the Code if the Board determines that the Rights Agreement is no longer necessary or desirable for the preservation of NOLs, or (vii) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in the Rights Agreement.

The Rights will expire on the earliest of (i) the close of business on April 19, 2026, (ii) the time at which the Rights are redeemed as provided in the Amended Rights Agreement, (iii) the time at which the Rights are exchanged as provided in the Amended Rights Agreement, (iv) the time at which the Board determines that the NOLs are fully utilized or no longer available under Section 382 of the Code, (v) the effective date of the repeal of Section 382 of the Code if the Board determines that the Amended Rights Agreement is no longer necessary or desirable for the preservation of NOLs, or (vi) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in the Amended Rights Agreement.

Valuation Allowance

11 unchanged sentences

Therefore, the Company established a non-cash valuation allowance of $ 46.0 million against such deferred income tax assets.

At December 31, 2022, we have a valuation allowance against our state deferred income tax assets of approximately $ 41.4 million.

As of December 31, 2022, the Company considered all positive and negative evidence and concluded that its federal deferred income tax assets remain more likely than not to be realized and a valuation allowance was not required.

Certain factors, could change or circumstances could arise that could further limit or eliminate the amount of the available NOLs to the Company, such as an ownership change or an adjustment by a tax authority.

Also, certain circumstances, such as the COVID-19 pandemic, the Chinese ban on Australian coal, the ongoing UMWA strike and the unknown duration and overall impact on the Company's operations, including its failing to generate sufficient future taxable income from operations, could limit its ability to fully utilize its deferred tax assets before expiration.

Also, certain circumstances, such as the COVID-19 pandemic, the lifting of the Chinese ban on Australian coal, the ongoing UMWA strike and the unknown duration and overall impact on the Company's operations, including its failing to generate sufficient future taxable income from operations, could limit its ability to fully utilize its deferred tax assets before expiration.

The following table shows the balance of the Company's valuation allowance and the associated activity during 2022:

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For the year ended December 31, 2022 and December 31, 2021, the change to the liability was primarily attributable to the net impact of changes in discount rates, changes in the timing of scheduled reclamation and current estimates of the costs and scope of remaining reclamation work.

For the years ended December 31, 2021 and December 31, 2020, $ 0.2 million or $ 0.004 per share and $ 0.4 million or $ 0.01 per share, respectively, of the adjustment to the liability was reflected as income in the period because there was no asset recorded to offset the adjustment to the respective liability.

This portion of the liability relates to operations that were idle at the time of purchase accounting for the acquisition of certain assets of Walter Energy and no value was attributed to any asset as an offset for the asset retirement obligation.

For the years ended December 31, 2022 and December 31, 2021, $ 1.4 million or $ 0.027 per share and $ 0.2 million or $ 0.004 per share, respectively, of the adjustment to the liability was reflected as income and expense, respectively, in the period because there was no asset recorded to offset the adjustment to the respective liability.

This portion of the liability relates to operations that were idle at the time of purchase accounting for the acquisition of certain assets in 2016 and no value was attributed to any asset as an offset for the asset retirement obligation.

Note 9— Accrued Expenses

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The Company received another letter from the DOL on December 8, 2021 requesting additional information to support its appeal of the collateral requested by the DOL.

As of December 31, 2021 and December 31, 2020, the Company had $ 17.0 million of surety bonds and $ 8.5 million of collateral recognized as short term investments.

On February 9, 2022, the DOL held a conference with representatives from the Company related to our appeal.

On July 12, 2022, we received a decision on our appeal from the DOL lowering the amount of collateral required to be posted from $ 39.8 million to $ 28 million.

We appealed this decision.

In addition, on January 19, 2023, the DOL proposed revisions to regulations under the Black Lung Benefits Act governing authorization of self-insurers.

The proposed rules requires, among other requirements, all self-insured operators to post security of at least 120 percent of their projected black lung liabilities.

As of December 31, 2022 and December 31, 2021, the Company had $ 18.6 million and $ 17.0 million of surety bonds, respectively, and $ 8.6 million and $ 8.5 million of collateral recognized as short term investments, respectively.

There were also $ 2.1 million and $ 2.6 million of assets held in a black lung trust, which is offset against the long-term portion of the black lung obligations within the Balance Sheet as of December 31, 2022 and December 31, 2021, respectively.

The estimated total black lung liabilities (net of black lung trust assets) were $ 30.3 million as of December 31, 2022, of which $ 2.8 million is classified in other current liabilities and the remainder of $ 27.4 million is shown as a long-term liability in a separate line item in the Balance Sheets.

For the year ended December 31, 2020, the estimated black lung liabilities (net of the black lung trust assets) were $ 36.9 million, of which $ 2.4 million is classified in other current liabilities and $ 34.6 million is displayed as a long-term liability in a separate line item in the Balance Sheets.

For the year ended December 31, 2021, the estimated black lung liabilities (net of the black lung trust assets) were $ 37.1 million, of which $ 2.6 million is classified in other current liabilities and $ 34.5 million is classified as a long-term liability in a separate line item in the Balance Sheets.

Accretion of the black lung liabilities is included in cost of other revenues on the Statements of Operations.

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Generally, under the terms of the plan, employees make voluntary contributions through payroll deductions and the Company makes matching contributions, as defined by the plan.

Contributions to these defined contribution plans amounted to $ 2.5 million for the year ended December 31, 2021, $ 3.0 million for the year ended December 31, 2020 and $ 2.9 million for the year ended December 31, 2019 accounted for in cost of sales and selling, general and administrative costs in the Statements of Operations.

Contributions to these defined contribution plans amounted to $ 3.2 million for the year ended December 31, 2022, $ 2.5 million for the year ended December 31, 2021 and $ 3.0 million for the year

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

ended December 31, 2020 accounted for in cost of sales, cost of other revenues and selling, general and administrative costs in the Statements of Operations.

Collective Bargaining Agreement

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While the Company continues to engage in good faith negotiations with the UMWA, the Company has not reached a new contract and the UMWA is engaging in a strike.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

As a result of the strike, the Company idled Mine No.

As a result of the strike, the Company initially idled Mine No.

4 and scaled back operations at Mine No.

In the first quarter of 2022, the Company restarted operations at Mine No.

4 and increased operations at Mine No.

Approximately 67.2 % of the Company's employees were represented by the UMWA as of December 31, 2020.

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Unrecognized compensation expense related to the 2017 Equity Plan amounted to approximately $ 2.0 million as of December 31, 2022.

During the second quarter of 2021, certain employees and directors reached retirement eligibility which resulted in incremental stock compensation expense of $ 1.2 million as of December 31, 2021 that would have otherwise been recorded in future years.

This amount is included in selling, general and administrative expenses within the Condensed Statements of Operations.

A summary of activity related to restricted stock unit award grants under the 2017 Equity Incentive Plan during the year ended December 31, 2022 is as follows:

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Note 13— Debt

Debt consisted of the following (in thousands):

The Company's debt consisted of the following (in thousands):

WARRIOR MET COAL, INC.

1 unchanged sentence

December 31, 2022 December 31, 2021 Weighted Average Interest Rate at December 31, 2022 Final Maturity

7.875 % senior secured notes due 2028

$ 350,000 $ — 7.875 % 2028

8 % senior secured notes due 2024

— $ 343,435 8 % 2024

Senior secured notes $ 310,618 $ 350,000 7.875 % December 2028

ABL facility — — Varies 1

December 2026

Debt discount, net ( 8,030 ) ( 10,194 )

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Total long-term debt $ 302,588 $ 339,806

1 Borrowing under the ABL Facility bear interest at a rate equal to Secured Overnight Financing Rate, plus a credit adjustment spread, ranging currently from 0.11448 % to 0.26161 %, or an alternate base rate plus an applicable margin, which is determined based on the average availability of the commitments under the ABL Facility, ranging currently from 1.5 % and 2.0 % or 0.5 % to 1.0 %, respectively.

1 Borrowing under the ABL Facility bear interest at a rate equal to Secured Overnight Financing Rate ("SOFR") ranging currently from 1.5 % and 2.0 %, plus a credit adjustment spread, ranging currently from 0.11448 % to 0.42826 %, or an alternate base rate plus an applicable margin, which is determined based on the average availability of the commitments under the ABL Facility, ranging from 0.5 % to 1.0 %.

The Company's minimum debt repayment schedule, excluding interest, as of December 31, 2022 is as follows (in thousands):

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(iv) increased the commitments that may be used to issue letters of credit to $ 65.0 million;

and (v) amended certain baskets contained in the covenants to conform to the baskets contained in the indenture governing the Notes.

and (v) amended certain baskets contained in the covenants to conform to the baskets contained in the indenture governing the Notes (the "Indenture").

The Second Amended and Restated Credit Agreement also allows the Company to borrow up to $ 132.0 million through October 14, 2023, decreasing to $ 116.0 million through November 2026, subject to availability under the borrowing base and other conditions.

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At December 31, 2022, the Company had $ 123.3 million of availability under the ABL Facility.

Subject to permitted exceptions, the obligations of the borrowers under the ABL Facility are guaranteed by each of the Company's domestic subsidiaries and secured by (i) first-priority security interests in the ABL Priority Collateral (as defined in the indenture governing the Notes), which includes, among other things, certain accounts receivables, inventory and cash of the

Subject to permitted exceptions, the obligations of the borrowers under the ABL Facility are guaranteed by each of the Company's domestic subsidiaries and secured by (i) first-priority security interests in the ABL Priority Collateral (as defined in the Indenture), which includes, among other things, certain accounts receivables, inventory and cash of the Company and the guarantors, and (ii) second-priority security interests in the Notes Priority Collateral (as defined in the Indenture), which

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Company and the guarantors, and (ii) second-priority security interests in the Notes Priority Collateral (as defined in the indenture governing the Notes), which includes, among other things, material mining properties, shares of capital stock of the guarantors, intellectual property, as extracted collateral (to the extent not constituting inventory), and certain fixed assets of the Company and the guarantors.

includes, among other things, material mining properties, shares of capital stock of the guarantors, intellectual property, as extracted collateral (to the extent not constituting inventory), and certain fixed assets of the Company and the guarantors.

The ABL Facility contains customary covenants for asset-based credit agreements of this type, including among other things:

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persons in transactions outside the United States in accordance with Regulation S under the Securities Act.

The Company used the net proceeds of the offering of the Notes, together with cash on hand, to fund the redemption of all of the Company’s outstanding 8.00 % senior secured notes due 2024 (the “Existing Notes”), including payment of the redemption premium in connection with such redemption.

As a result, the Company recognized a loss on early extinguishment of debt of $ 9.7 million which represents the write-off of previously capitalized Existing Notes debt issuance costs and debt discount, along with the redemption premium.

The Company used the net proceeds of the offering of the Notes, together with cash on hand, to fund the redemption of all of the Company’s outstanding 8.00 % senior secured notes due 2024 (the “2017 Notes”), including payment of the redemption premium in connection with such redemption.

As a result, the Company recognized a loss on early extinguishment of debt of $ 9.7 million which represents the write-off of previously capitalized 2017 Notes debt issuance costs and debt discount, along with the redemption premium.

In connection with the issuance of the Notes, the Company incurred debt issuance costs of $ 8.1 million for the year ended December 31, 2022, which consists primarily of structuring fees and legal fees, and is included as a reduction in long-term debt on the Balance Sheet.

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The Notes are fully and unconditionally guaranteed on a joint and several basis by each of the Company's direct and indirect wholly-owned domestic restricted subsidiaries that are guarantors under the ABL Facility (subject to customary release provisions).

At any time prior to December 1, 2024, the Company may redeem the Notes, in whole or in part, at a price equal to 100.00 % of the principal amount of the Notes redeemed plus the Applicable Premium (as defined in the indenture governing the Notes) and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

At any time prior to December 1, 2024, the Company may redeem the Notes, in whole or in part, at a price equal to 100.00 % of the principal amount of the Notes redeemed plus the Applicable Premium (as defined in the Indenture) and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

The Notes are redeemable at the Company’s option, in whole or in part, from time to time, on or after December 1, 2024, at redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

1 unchanged sentence

The Company is also required to make offers to purchase the Notes (i) at a purchase price of 101.00 % of the principal amount thereof in the event it experiences specific kinds of change of control triggering events, (ii) at a purchase price of 103.00 % of the principal amount thereof prior to making certain restricted payments, and (iii) at a purchase price of 100.00 % of the principal amount thereof in the event it makes certain asset sales or dispositions and does not reinvest the net proceeds therefrom or use such net proceeds to repay certain indebtedness, in each case, plus accrued and unpaid interest, if any, to, but excluding the date of purchase .

Offer to Purchase the Notes

On February 21, 2019, the Company commenced an offer to purchase (the “Restricted Payment Offer”), in cash, up to $ 150,000,000 principal amount of its outstanding Existing Notes, at a repurchase price of 103 % of the aggregate principal amount of such Existing Notes, plus accrued and unpaid interest with respect to such Existing Notes to, but not including, the

During the year ended December 31, 2022, the Company repurchased in the open market and extinguished approximately $ 39.4 million principal amount of the Notes.

In connection with the extinguishment of our Notes, we recognized a loss on early extinguishment of debt of $ 0.5 million which is included in interest expense, net in the Statements of Operations.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

date of repurchase.

Concurrently with, but separate from, the Restricted Payment Offer, the Company commenced a cash tender offer (the “Tender Offer” and, together with the Restricted Payment Offer, the “Offers”) to purchase up to $ 150,000,000 principal amount of the Existing Notes at a repurchase price of 104.25 % of the aggregate principal amount of such Existing Notes, plus accrued and unpaid interest to, but not including, the date of repurchase.

In connection with the Offers, the Company extinguished $ 140.3 million of the Existing Notes and recognized a loss on early extinguishment of debt of $ 9.8 million during the year ended December 31, 2019.

Note 14— Leases

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(1) Includes leases that are for periods of 12 months or less.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Maturities of lease liabilities were as follows (in thousands):

Finance Leases (1)

Thereafter 156

amount representing interest ( 2,135 )

2 unchanged sentences

These finance leases will commence during fiscal year 2022 with lease terms between one to two years .

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Supplemental cash flow information related to leases was as follows (in thousands):

5 unchanged sentences

Finance leases $ 8,150 $ 46,961

Note 15— Related Party Transactions

In connection with the acquisition of certain assets of Walter Energy, the Company acquired a 50 % interest in Black Warrior Methane (“BWM”) and Black Warrior Transmission (“BWT”), which are accounted for under the proportionate consolidation method and equity method, respectively.

The Company has granted the rights to produce and sell methane gas from its coal mines to BWM and BWT.

The Company’s net investments in, advances to/from and equity in earnings or loss of BWT are not material to the Company.

The Company supplied labor to BWM and incurred costs, including property and liability insurance, to support the joint venture.

The Company charged the joint venture for such costs on a monthly basis, which were $ 2.1 million for the year ended December 31, 2021, $ 2.6 million for the year ended December 31, 2020, and $ 1.5 million for the year ended December 31, 2019.

Note 15— Commitments and Contingencies

4 unchanged sentences

As of December 31, 2022 and December 31, 2021, there were no accruals for environmental matters other than asset retirement obligations for mine reclamation.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Miscellaneous Litigation

14 unchanged sentences

Hybrid Debt Claim and an additional $ 1.7 million in the fourth quarter of 2020, which are reflected as other income in the Statements of Operations.

These settlement proceeds are in addition to the $ 22.8 million received in 2019 which are reflected as other income in the Statements of Operations.

In March 2022, the Company received approximately $ 0.7 million, which is reflected as other income in the Statements of Operations.

The collectability of additional amounts, if any, related to the Shared Services Claim and Hybrid Debt Claim depends on the outcome of, and the timing of any resolutions of, the Walter Canada CCAA proceedings and cannot be predicted with certainty.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Commitments and Contingencies—Other

9 unchanged sentences

Note 16— Stockholders' Equity

Common Shares

The Company is authorized to issue up to 140,000,000 common shares, $ 0.01 par value per share.

Holders of common shares are entitled to receive dividends when authorized by the Company's Board of Directors (the "Board").

Stock Repurchase Program

On March 26, 2019, the Board approved the Company's second stock repurchase program (the “New Stock Repurchase Program”) that authorizes repurchases of up to an aggregate of $ 70.0 million of the Company's outstanding common stock.

2 unchanged sentences

The New Stock Repurchase Program may be suspended or discontinued by the Board at any time without prior notice.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Under the New Stock Repurchase Program, the Company may repurchase shares of its common stock from time to time, in amounts, at prices and at such times as the Company deems appropriate, subject to market and industry conditions, share price, regulatory requirements and other considerations as determined from time to time by the Company.

2 unchanged sentences

The Company intends to fund repurchases under the New Stock Repurchase Program from cash on hand and/or other sources of liquidity.

Any future repurchases of shares of the Company's common stock will be subject to the 1% excise tax under the IRA.

During the year ended December 31, 2020, the Company repurchased the remaining shares authorized under the First Stock Repurchase Program for approximately $ 1.9 million and repurchased 500,000 shares under the New Stock Repurchase Program for approximately $ 10.6 million, leaving $ 59.4 million of share repurchases authorized under the New Stock Repurchase Program.

In light of the uncertainties resulting from COVID-19 and as a precautionary measure to preserve liquidity, the

Company temporarily suspended its New Stock Repurchase Program.

The Company will continue to monitor its liquidity in light of the COVID-19 pandemic, the Chinese ban on Australian coal and the current CBA contract negotiations with the UMWA and will consider when to reinstate the program.

The Company declared the following dividends on common shares as of the filing date of this Form 10-K:

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Dividend per Share Dividends Paid Dividend Type Declaration Date Record Date Payable Date

(in millions)

$ 0.06 $ 3.1 Quarterly February 18, 2022 March 3, 2022 March 10, 2022

$ 0.06 $ 3.1 Quarterly April 26, 2022 May 6, 2022 May 13, 2022

$ 0.50 $ 25.8

Special May 3, 2022 May 13, 2022 May 20, 2022

$ 0.06 $ 3.1 Quarterly August 1, 2022 August 11, 2022 August 18, 2022

$ 0.80 $ 41.3 Special August 1, 2022 August 22, 2022 August 29, 2022

$ 0.06 $ 3.1 Quarterly October 24, 2022 November 4, 2022 November 11, 2022

$ 0.07 $ — Quarterly February 9, 2023 February 20, 2023 February 27, 2023

$ 0.88 $ — Special February 13, 2023 February 28, 2023 March 7, 2023

Preferred Shares

The Company is authorized to issue up to 10,000,000 shares of preferred stock, $ 0.01 par value per share .

Note 17— Derivative Instruments

1 unchanged sentence

future cash flows associated with the fluctuations in the price of natural gas related to the Company’s forecasted sales.

As of December 31, 2021, the Company had natural gas swap contracts outstanding with notional amounts totaling 6,100,000 metric million British thermal units maturing in 2022.

As of December 31, 2022, the Company had no natural gas swap contracts outstanding.

As of December 31, 2021, the Company had 6,100,000 metric million British thermal unit natural gas contracts outstanding.

The Company’s natural gas swap contracts economically hedge certain risks but are not designated as hedges for

2 unchanged sentences

Condensed Statements of Operations.

The Company recognized a loss of $ 1.6 million for the year ended December 31, 2021.

The Company records all derivative instruments at fair value and had an asset of $ 4.0 million as of December 31, 2021 in prepaid expenses and other in the accompanying Balance Sheets and no asset or liability as of December 31, 2020.

The Company recognized a loss of $ 27.7 million and $ 1.6 million for the years ended December 31, 2022 and December 31, 2021, respectively.

The Company records all derivative instruments at fair value and had no asset or liability outstanding as of December 31, 2022 and had an asset of $ 4.0 million as of December 31, 2021 in prepaid expenses and other in the accompanying Balance Sheets.

Note 18— Fair Value of Financial Instruments

The following table presents information about the Company’s financial liabilities measured at fair value on a recurring basis as of December 31, 2021 and indicates the level of the fair value hierarchy utilized to determine such fair value (in thousands):

The following table presents information about the Company’s financial liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair value (in thousands):

Fair Value Measurements as of December 31, 2022 Using:

1 unchanged sentence

Natural gas swap contracts $ — $ — $ — $ —

The Company had no significant assets or other liabilities measured at fair value on a recurring basis as of December 31, 2020.

Fair Value Measurements as of December 31, 2021 Using:

Level 1 Level 2 Level 3 Total

Natural gas swap contracts $ — $ 4,043 $ — $ 4,043

During the year ended December 31, 2022, there were no transfers between Level 1, Level 2 and Level 3.

30 unchanged sentences

If the Company were to settle these awards in shares these awards would represent 14,434 shares based on the Company's closing share price as of December 31, 2022.

The Company considered the impact on diluted earnings as if the award was settled in shares.

These awards had a 7,376 share impact on dilutive weighted average shares for the year ended December 31, 2021.

As of December 31, 2021, there were 13,157 shares of common stock contingently issuable upon the settlement of a vested restricted stock unit award under the 2017 Equity Plan.

The settlement date is the earlier of a change in control as described in the 2016 Equity Plan and 2017 Equity Plan or five years from the grant date.

These awards are vested and as such have been included in the weighted-average shares used to compute basic and diluted net (loss) income per share.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

On May 17, 2017, the Board adopted the Capital Allocation Policy of paying a quarterly cash dividend of $ 0.05 per share.

The Capital Allocation Policy also states the following:

In addition to the regular quarterly dividend and to the extent that the Company generates excess cash that is beyond the then current requirements of the business, the Board may consider returning all or a portion of such excess cash to stockholders through a special dividend or implementation of a stock repurchase program.

Any future dividends or stock repurchases will be at the discretion of the Board and subject to consideration of a number of factors, including business and market conditions, future financial performance and other strategic investment opportunities.

The Company will also seek to optimize its capital structure to improve returns to stockholders while allowing flexibility for the Company to pursue very selective strategic growth opportunities that can provide compelling stockholder returns.

The Company has paid a regular quarterly cash dividend of $ 0.05 per share every quarter since the Board adopted the Capital Allocation Policy.

As of December 31, 2021, the Company has paid $ 49.9 million of regular quarterly cash dividends under the Capital Allocation Policy.

On April 23, 2019, the Board declared a special cash dividend of $ 4.41 per share (the "April 2019 Special Dividend"), totaling approximately $ 230.0 million, which was paid on May 14, 2019 to stockholders of record as of the close of business on May 6, 2019.

These awards also had a 14,434 share impact on dilutive weighted average shares for the year ended December 31, 2022.

Note 20— Segment Information

5 unchanged sentences

The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment.

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Operating segments are aggregated into a reportable segment if the operating segments have similar quantitative economic characteristics and if the operating segments are similar in the following qualitative characteristics:

5 unchanged sentences

The Company has determined that the two operating segments are similar in both quantitative and qualitative characteristics and thus the two operating segments have been aggregated into one reportable segment.

The Company has determined that its natural gas and royalty businesses and other unallocated activities did not meet the criteria in ASC 280 to be considered as operating or reportable segments.

The Company has determined that its natural gas and royalty businesses and the Blue Creek mine development did not meet the criteria in ASC 280 to be considered as operating or reportable segments.

Therefore, the Company has included their results in an “all other” category as a reconciling item to consolidated amounts.

6 unchanged sentences

Total revenues $ 1,738,738 $ 1,059,216 $ 782,738

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

For the years ended December 31,

7 unchanged sentences

Below is a reconciliation of Segment Adjusted EBITDA to net income (loss), which is its most directly comparable financial measure calculated and presented in accordance with GAAP (in thousands):

WARRIOR MET COAL, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

For the years ended December 31,

13 unchanged sentences

Note 21— Subsequent Events

Regular Quarterly Dividend

On February 18, 2022, the Board declared a regular quarterly cash dividend of $ 0.06 per share, totaling approximately $ 3.1 million, which will be paid on March 10, 2022, to stockholders of record as of the close of business on March 3, 2022.

On February 9, 2023, the Board declared a regular quarterly cash dividend of $ 0.07 per share, which was an increase of 17 % over the regular cash dividend declared by the Board on October 24, 2022, totaling approximately $ 3.7 million, which will be paid on February 27, 2023 to stockholders of record as of the close of business on February 20, 2023.

On February 13, 2023, the Board declared a special cash dividend of $ 0.88 per share, totaling approximately $ 46.3 million, which will be paid on March 7, 2023 to stockholders of record as of the close of business on February 28, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures