워리어 멧 콜(HCC) 2026년 3분기 실적 발표 콘퍼런스콜: 블루 크릭이 현금흐름 견인

핵심 요약

• 워리어 멧 콜(Warrior Met Coal)은 판매량이 48% 증가한 350만 쇼트톤에 달하면서 2026년 3분기 매출이 전년 동기 3억 2,900만 달러에서 5억 800만 달러로 증가했다고 발표했다.
• 순이익은 2025년 3분기 3,700만 달러(희석 주당순이익 0.70달러)에서 4,900만 달러(희석 주당순이익 0.93달러)로 증가했다. 조정 EBITDA는 76% 증가한 1억 2,400만 달러를 기록했으며, 마진율은 22%에서 24%로 확대됐다.
• 영업활동 현금흐름은 1억 6,600만 달러를 기록했다. 자본적 지출(CAPEX) 2,700만 달러를 집행한 후 잉여현금흐름은 1억 3,900만 달러로, 정기 분기 배당 외에 주당 2달러의 특별 배당 지급을 뒷받침했다.
• 블루 크릭(Blue Creek) 광산이 생산 및 판매 성장을 견인했다. 분기 판매량 중 고휘발분 A(High Vol A) 탄 비중은 전년 동기 대비 25%포인트 상승한 68%를 차지한 반면, 프리미엄 저휘발분(Low-Vol) 탄은 32%를 기록했다.
• 잉여 High Vol A 재고 약 55만 쇼트톤의 일회성 매각으로 약 4,900만 달러의 현금을 창출했으나, 해당 물량을 분기 평균 가격에 판매했을 때와 비교하면 평균 순판매가격은 톤당 약 8달러, 조정 EBITDA는 약 2,700만 달러 감소했다.
• 경영진은 2026년 연간 가이던스를 재확인했다. 단기 제철용 원료탄 가격은 지지력을 유지하겠지만 9월 고점보다는 낮을 것으로 예상했으며, 시장 상황은 중국의 생산 규제와 글로벌 철강 수요에 매우 민감하게 반응할 것으로 내다봤다.

주요 재무 데이터

사업 및 운영 실적

블루 크릭은 핵심 성장 동력 역할을 지속했다. 롱월(longwall) 채탄을 시작한 지 약 1년 만에 광산 램프업이 진행되면서 분기 생산량과 판매량이 증가했고, 워리어 멧 콜의 High Vol A 탄 비중도 확대됐다. 경영진은 고객사의 블루 크릭 물량 채택이 기대치를 계속해서 웃돌고 있다고 밝혔다.

2026년 3분기 회사의 판매 믹스는 High Vol A 68%, 프리미엄 Low-Vol 32%였다. 지역별로는 아시아가 55%, 유럽이 35%, 남미가 10%를 차지했다. 인도와 동남아시아의 수요와 블루 크릭의 생산량 증대에 힘입어 태평양 연안 판매 비중은 2025년 3분기 38%에서 55%로 상승했다.

제철용 원료탄 재고는 6월 말 140만 쇼트톤에서 2026년 9월 30일 기준 96만 7,000쇼트톤으로 감소했다. 경영진은 재고가 정상화됨에 따라 가격 및 물량에 따른 매출채권 변동은 있겠지만, 운전자본이 대체로 안정세를 유지할 것으로 전망했다.

7호 광산(Mine 7) 생산량은 롱월 장비 이전과 까다로운 지질 조건으로 인해 전 분기 대비 30만 9,000쇼트톤(22%) 감소했다. 고정비 흡수율이 낮아지면서 연결 현금 원가는 2026년 2분기 대비 톤당 약 11달러, 2025년 3분기 대비 톤당 약 7달러 증가했다. 경영진은 7호 광산이 현재 정상 가동 중이라고 전했다.

호주산 PLV FOB 지수는 2026년 3분기 평균 쇼트톤당 225달러로 2026년 2분기의 216달러, 2025년 3분기의 166달러보다 상승했다. 9월 평균은 톤당 252달러에 달했다. 중국 착 PLV CFR 지수는 전 분기 212달러에서 상승한 톤당 243달러를 기록했다.

워리어의 총 가격 실현율은 66%로 2026년 2분기와 같았으나 2025년 3분기의 83%보다는 낮았다. 전년 동기 대비 하락한 것은 운임 및 체선료 상승, High Vol A 판매 비중 확대, 고정 가격 재고 현금화 등이 반영된 결과다.

경영진 가이던스

워리어 멧 콜은 연초 이후 실적과 현재 사업 전망을 들어 전 분기에 발표한 2026년 연간 가이던스를 재확인했다.

2026년 4분기의 경우 경영진은 High Vol A와 Low-Vol 간 판매 믹스가 3분기와 유사할 것으로 제시했다. 또한 석탄 가격 지수 간의 지속적인 격차를 고려할 때 3분기 총 가격 실현율 66%가 방향성을 잡는 합리적인 출발점이라고 설명했다.

경영진은 운송비와 로열티 비용 증가, 인플레이션, 높은 체선료가 연말까지 비용에 계속 영향을 미칠 것으로 내다봤다. 하천 및 선적기 가동 중단 계획과 평년 수준을 웃도는 운임 및 체선료는 이미 회사의 사업 계획과 연간 가이던스에 반영되어 있다.

2027년의 경우 경영진은 블루 크릭 생산량이 2026년보다 늘어날 것으로 예상했으나 구체적인 목표치는 확정하지 않았다. 회사는 첫 번째 롱월의 생산량을 늘리기 위해 병목 현상 해소 및 점진적 개선 방안을 검토하고 있다. 잠재적인 두 번째 롱월 도입은 시장이 추가 공급을 흡수할 수 있는지에 달려 있으며, 수년의 준비 기간(리드 타임)이 필요할 전망이다.

위험 요인 및 주시 분야

• 경영진은 제철용 원료탄 가격의 변동성이 지속되고 특히 중국 정부의 안전 규제에 민감하게 반응할 것으로 내다봤다. 규제가 지속되면 중국 내수 및 해상 운송 가격이 지지될 수 있는 반면, 규제가 완화되면 중국 생산량이 증가해 시장에 하방 압력으로 작용할 수 있다.
• 중국의 철강 수요 부진과 철강사의 낮은 마진율은 제철용 원료탄 가격 상승을 제한할 수 있다. 경영진은 또한 2급 탄이 PLV 탄 대비 할인된 가격을 유지할 것으로 예상했다.
• 운임은 2025년 3분기 대비 22%, 체선료는 44% 상승했다. 중동 분쟁, 하천 폐쇄, 항만 유지보수, 기상 악화 및 전력 공급 차질 등이 이러한 비용 상승에 기여했다.
• 호주의 수출과 일부 퀸즐랜드 광산의 램프업으로 프리미엄 탄 공급 여건이 개선될 수 있다. 디젤 부족 현상이 완화됨에 따라 몽골 국경을 통한 운송 물량도 회복될 가능성이 있다.
• 미국 내 한 광산의 조업 차질로 인해 적어도 2027년 상반기까지는 미국산 특정 High Vol A 공급이 제약을 받을 것으로 예상된다.
• 7호 광산은 정상 가동으로 복귀했으나 운송 로열티와 원자재 인플레이션은 여전히 비용 부담 요인으로 남아 있다.

애널리스트 질의응답(Q&A) 하이라이트

비용 압박: 경영진은 7호 광산의 전 분기 대비 비용 증가 요인으로 생산량 감소 및 고정비 흡수율 하락을 꼽았다. 운송비와 로열티가 톤당 약 6달러, 원자재 및 소모품 인플레이션이 톤당 약 2달러 증가했다. 이러한 비용 압박은 현금 원가를 톤당 약 8달러 절감한 저비용 블루 크릭 물량과 톤당 약 3달러의 혜택을 제공한 45X조 생산세액공제를 통해 일부 상쇄됐다.

대중국 판매 기회: 워리어는 관세가 철폐되고 차익 거래가 운임 격차를 충분히 보전할 경우 중국으로의 현물 판매를 고려할 것이라고 밝혔다. 경영진은 물량 배정이 인도 등 다른 시장 대비 수익성과 기존 고객의 수요에 따라 결정될 것이라고 강조했다.

자본 배분: 경영진은 블루 크릭이 잠재 생산 능력에 도달할 때까지 잉여현금흐름을 주주에게 환원할 계획이라고 밝혔다. 회사는 자사주 매입을 위한 구체적인 주가 기준을 설정하지 않았으며, 전반적인 여건과 현금 창출 능력을 바탕으로 이사회와 함께 배당 및 자사주 매입을 검토할 예정이다.

유럽 수요: 경영진은 유럽 시장이 혼조세를 보이고 있으나 9개월 전에 예상했던 것보다는 강세를 보이고 있다고 설명했다. 고객사들은 계약 물량과 현물 물량을 모두 인수하고 있으며, 워리어는 추가 공급 요청을 받았다.

블루 크릭 확장: 2027년 예산은 아직 수립 중이지만, 경영진은 2027년 생산량이 수정된 2026년 가이던스에 포함된 500만 쇼트톤을 넘어설 것으로 예상하고 있다. 추가 확장은 두 번째 롱월 도입을 검토하기 전에 기존 롱월의 병목 현상을 해소하는 데 우선 집중할 계획이다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good afternoon. My name is Drew, and I will be your conference call operator today. At this time, I would like to welcome everyone to the Warrior Third Quarter 2026 Financial Results Conference Call. [Operator Instructions]

This call is being recorded and will be available for replay on the company's website. I would like to turn the call over to Brian Chopin, Chief Accounting Officer and Controller. Please go ahead.

Brian M. Chopin

Good afternoon, and welcome, everyone, to Warrior's Third Quarter 2026 Earnings Conference Call.

Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are to different degrees, uncertain.

These uncertainties, which are described in more detail in the company's annual and quarterly reports filed with the SEC, may cause our actual future results to be materially different from those expected in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

We'll also be discussing certain non-GAAP financial measures, which are defined and reconciled to comparable GAAP financial measures in our third quarter press release furnished to the SEC on Form 8-K, which is also posted on our website. Additionally, we will be filing our Form 10-Q for the quarter ended September 30, 2026, with the SEC this afternoon.

You can find additional information regarding the company on our website at www.warriormetcoal.com, which also includes a third quarter supplemental slide deck that was posted this afternoon.

Today on the call with me are Mr. Walt Scheller, Chief Executive Officer; and Mr. Dale Boyles, Chief Financial Officer. After our formal remarks, we'll be happy to answer any questions. With that, I'll now turn the call over to Walt.

Walter Scheller

Thanks, Brian. Hello, everyone, and thank you for taking the time to join us today to discuss our third quarter 2026 results. I'll start by providing an overview of the quarter before Dale reviews our results in additional detail.

Warrior delivered strong third quarter results that demonstrate the progress we are making in the next phase of our growth strategy. Higher volumes from Blue Creek, improved pricing and disciplined execution generated significant free cash flow, strengthened our balance sheet and supported the Board's declaration of a $2 per share special dividend. Approximately one year after commencing longwall operations at Blue Creek, eight months ahead of schedule, we're already seeing this transformational investment contribute to meaningful cash generation and enhance our ability to return excess cash to stockholders. From a steelmaking coal market perspective, the third quarter 2026 was shaped by a number of events, including most significantly the Chinese government's response to the tragic mining incident in China.

The resulting safety inspections and production restrictions reduced domestic coking coal availability and drove Chinese steelmaking coal and coke prices materially higher. This reopened the arbitrage between China's CFR and the Australian FOB indices and led to renewed Chinese buying of premium seaborne steelmaking coal. Pricing increased more than we had expected, particularly during September, despite steel fundamentals remaining relatively weak.

The quarter also provided further evidence of the continued vulnerability of metallurgical coal supply chains. A U.S. mine fire negatively impacted the availability of High Vol A coals with the disruption expected to continue into 2027. Mongolian border crossings also declined materially during the second half of September because of diesel fuel shortages and other restrictions.

These events, together with Chinese production constraints supported a supply-driven rally even as broader spot demand remains relatively weak. The World Steel Association reported recently that global pig iron production declined during the first nine months of 2026 by 2% as compared to the same period last year. India continued to show growth with a 3.1% increase year-over-year, while China remained the primary source of weakness with a 3% decrease in production as the country continues to grapple with soft internal demand and weak steel margins.

This regional split remains consistent with the broader market narrative with resilient demand in India and other parts of Asia, offset by continued softness in China and an uneven recovery across developed markets.

Against that backdrop, our primary index, the PLV FOB Australia averaged $225 per short ton during the third quarter, an increase of $9 per ton from the second quarter average of $216. The increase was concentrated in September when the index averaged $252 per ton. The average index price in this year's third quarter was 36% higher than the $166 per short ton in the third quarter of last year.

The PLV CFR China Index experienced an even greater increase, averaging $243 per ton for the third quarter compared to $212 in the second quarter of this year, clearly reflecting the reopening of the arbitrage due to stronger Chinese domestic pricing.

Second-tier indices also increased during the third quarter, although they continue to trade at meaningful discounts to the PLV. The Australian LVHCC index averaged $192 per short ton, equivalent to 86% of the PLV compared to 79% in the second quarter of this year. The U.S. East Coast HVA index averaged $155 per short ton, equivalent to 69% of the PLV compared to 66% during the second quarter of this year.

HVA pricing benefited from renewed trades into China. However, the broader spot market for second-tier steelmaking coals remained relatively weak. The average U.S. East Coast HVA index price in this year's third quarter was 10% higher than the $141 per short ton in the third quarter of last year.

Our gross price realization was 66% for the third quarter, consistent with the second quarter and compared to 83% in the third quarter of 2025. Although our realizations have been fairly consistent for the first nine months this year, the year-over-year change reflects several factors.

First, while our main pricing indices were higher, freight rates to Asia and demurrage rates were significantly higher, reflecting the ongoing conflict in the Middle East as well as production and logistics disruptions during the quarter.

Second, our product mix continued to evolve with a mix of High Vol A products sold increasing by 25 percentage points compared to the same quarter last year, reflecting the growing contribution from Blue Creek.

Lastly, our third quarter 2026 realizations were impacted by the onetime monetization of surplus inventories at fixed rather than index-linked pricing.

Turning back to our financial results. Warrior achieved third quarter sales volume of 3.5 million short tons, an increase of 48% from the prior year quarter, primarily reflecting the successful ramp-up of Blue Creek.

Our third quarter sales volume mix was 68% High Vol A and 32% premium Low-Vol. This represents a 25 percentage point increase in High Vol A volumes over the prior year's third quarter.

During the third quarter, we took advantage of a onetime opportunity to monetize our surplus High Vol A coal inventories that has accumulated from the early start-up of Blue Creek. In the early part of the second quarter, we entered into fixed price contracts to sell approximately 550,000 tons based upon the market conditions and pricing outlook at the time. While subsequent market developments, including the Chinese mining accident in May, supported seaborne steelmaking coal prices at higher levels for longer than originally anticipated, the transactions generated approximately $49 million of cash, reduced surplus tons and further normalized our inventory position following the Blue Creek start-up.

Monetizing the surplus volume reduced our average net selling price by approximately $8 per ton during the quarter. Based upon our average third quarter high-volume selling price, the monetization also reduced adjusted EBITDA by approximately $27 million compared to the amount that would have been realized had those tons been sold at the average price.

Our steelmaking coal inventories decreased to 967,000 short tons at the end of September of this year compared to 1.4 million tons at the end of June 2026.

Our sales by geography for the third quarter break down as follows: 55% into Asia, 35% into Europe and 10% into South America. Our spot volume was 12% for the third quarter of 2026. Sales volumes in the Pacific Basin were 55% this quarter compared to 38% in the third quarter of 2025, primarily reflecting the demand growth from India and other Southeast Asian countries, combined with the higher volumes from Blue Creek.

Production volume for the third quarter increased 36% to 3.1 million short tons compared to 2.2 million in the same quarter last year, driven by the continued contribution from Blue Creek. At Mine 7, production was lower sequentially as we completed the longwall move and encountered challenging mining and geological conditions as we finished the prior longwall panel and began production on the new panel.

At Mine 7 production was 309,000 tons or 22% lower than the second quarter, which resulted in lower fixed cost absorption and increased our overall cash cost per short ton by approximately $11. I'll now ask Dale to address our third quarter results in greater detail.

Dale Boyles

Thanks, Walt. We were pleased with our financial results for the third quarter of 2026, which reflected strong volume growth, improved pricing and significant free cash flow generation. These results further strengthened our financial position and supported the Board's declaration of the $2 per share special dividend in addition to our regular quarterly dividend.

Now let me walk through the third quarter financial results in greater detail. Warrior recorded net income of $49 million or $0.93 per diluted share in the third quarter of this year compared to net income of $37 million or $0.70 per diluted share in the same quarter of 2025.

We reported adjusted EBITDA of $124 million compared to $71 million in the same quarter of 2025, an increase of 76%. Our adjusted EBITDA margin improved to 24% in the third quarter of 2026 compared to 22% in the same quarter of last year. On a per ton basis, our adjusted EBITDA margin improved by 18% to $36 per short ton for the third quarter of 2026 compared to $30 in last year's third quarter.

The primary drivers of these improvements were a 48% increase in sales volumes and a 6% increase in average net selling prices, partially offset by a 4% increase in cash costs. Total revenues were $508 million compared to $329 million in the same quarter of last year. The total increase of $179 million was primarily due to the impact of higher sales volumes of $157 million and the impact of an increase in average gross selling prices of $113 million.

These positive items were partially offset by the impact of a 25 percentage point higher mix of High Vol A tons sold, which had a negative impact on revenues of $47 million. In addition, demurrage and other charges were $14 million higher compared to last year's third quarter, which lowered overall revenues. The onetime inventory monetization also lowered total revenues by approximately $27 million. This resulted in an average net selling price of $144 per short ton in the third quarter of 2026 compared to $136 in the third quarter of last year.

Overall demurrage and freight rates were 44% and 22% higher, respectively, than in the prior year quarter. Both were impacted by the ongoing conflict in the Middle East, while demurrage expenses also reflected lower-than-planned Mine 7 production and several temporary transportation and vessel loading disruptions during the quarter.

Our River system was unavailable for much of the third quarter, while the U.S. Army Corps of Engineers completed critical lock repairs. This disruption, combined with high demand for our brands, elevated freight rates, the multi-day impact of Tropical Storm Bertha, a complete four-day power outage and maintenance at the McDuffie Terminal resulted in higher-than-average demurrage expenses.

Looking ahead, additional planned river and ship loader outages, together with elevated freight and demurrage rates are expected to keep demurrage and freight costs above normal through year-end and possibly longer. These planned outages and elevated rates are already incorporated into our current operating plans and full year guidance.

Cash cost of sales were $366 million or 73% of mining revenues in the third quarter of this year compared to $237 million or 74% of mining revenues in the third quarter of last year. Of the $129 million increase, approximately $114 million was attributable to the 48% increase in sales volumes, with the remaining $15 million primarily reflecting lower than-planned Mine 7 production and higher transportation and royalty costs.

Lower Mine 7 production resulted in lower fixed cost absorption, increasing our overall cash cost by approximately $7 per ton. Higher transportation royalty costs driven by higher average steelmaking coal price indices increased cash costs by approximately $6 per ton, while inflationary cost increases in materials and supplies added approximately $2 per ton.

These cost pressures were partially offset by the leverage of the growing contribution of lower-cost Blue Creek volumes, which reduced cash costs by approximately $8 per ton and the Section 45X production tax credit, which provided an additional benefit of approximately $3 per ton.

The impact of these factors increased our cash cost of sales per short ton FOB port by approximately $4 per ton to $105 in the third quarter from $101 in the same quarter last year. Cash margins per short ton increased 10% to $39 from $35 in the same quarter of last year as higher selling prices more than offset the increase in unit cost.

Our third quarter 2026 SG&A expenses were $14 million and were $3 million lower than the same quarter of 2025, primarily due to lower employee-related expenses, including stock-based compensation. Depreciation and depletion expenses were $68 million in the third quarter, an increase of 56% from the prior year quarter, primarily due to the additional Blue Creek assets placed into service and 48% higher sales volumes.

Now let us turn to cash flows. Cash flows from operating activities were $166 million, an increase of $61 million from the prior year quarter, driven primarily by higher revenues and strong operating performance. Working capital provided $34 million of cash, primarily reflecting the monetization of surplus steelmaking coal inventories and strong accounts receivable collections, partially offset by equipment deposits and higher receivables associated with the Section 45X production tax credit.

After $27 million of capital expenditures, we generated free cash flow of $139 million. As discussed on our second quarter earnings call in early August, Warrior has entered the next phase of its growth strategy, focused on free cash flow generation, balance sheet strength and long-term shareholder returns. Our third quarter cash generation increased total liquidity to $578 million, consisting of $437 million of cash and cash equivalents and $141 million available under our ABL facility.

Finally, let me turn to our full year 2026 outlook. Customer reception and adoption of Blue Creek volumes have continued to exceed our expectations. Based upon our year-to-date performance and current operating outlook, we are reaffirming the full year guidance provided last quarter as detailed in our earnings release. I'll now turn it back to Walt for his final comments.

Walter Scheller

Thanks, Dale. In summary, Warrior delivered another strong quarter. Higher sales volumes and improved pricing generated significant free cash flow and further strengthened our balance sheet and liquidity. The Board's declaration of the special dividend marks an important milestone and demonstrates our commitment to disciplined capital allocation and long-term stockholder returns.

Looking ahead, we expect steelmaking coal prices to remain supportive in the near term, although below the September peak as recent supply disruptions are balanced against uneven global steel demand. The market will remain extremely sensitive to Chinese government actions, continuation of the current safety restrictions, which support domestic and seaborne pricing, while any relaxation of those measures could allow Chinese coal production to recover and place downward pressure on the market.

We also expect that overall and persistent weakness in Chinese domestic steel demand as demonstrated by low producer margins will provide resistance to steelmaking coal pricing. We also expect second-tier steelmaking coals to remain discounted relative to the PLV.

Outside China, supply conditions remain mixed. Australian exports have increased compared with last year and the continued ramp-up of select Queensland mines should improve premium steelmaking coal availability. Mongolian border crossings should recover as the diesel shortage is resolved. However, the extended U.S. mine disruption is expected to continue to limit certain U.S. High Vol A coal supply through at least the first half of 2027.

These competing factors should keep the market volatile and responsive to short-term supply developments. Warrior enters the environment from a position of increased strength. Blue Creek has expanded our production base and its growing contribution is enhancing our ability to generate cash across a range of market conditions. Together with our high-quality assets and low first quartile cost position, this provides a strong foundation as we continue to optimize production, control costs, strengthen our balance sheet and return excess cash to stockholders while preserving the flexibility to pursue attractive long-term opportunities.

With that, we'd like to open the call for questions. Operator?

Operator

[Operator Instructions]

First question comes from Nick Giles with B. Riley.

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Nick Giles

I was hoping you could just kind of break out some of the cost pressures you're seeing. Obviously, costs were a little more elevated this quarter than last. Could you just break that down by how much of that is input cost inflation? How much was attributable to the volume dynamic and maybe the royalties as well?

Dale Boyles

Yes. Thanks, Nick. This is Dale. Yes, I tried to outline that in our prepared remarks. The biggest contributor this quarter and it depends on what quarter you're comparing it to, right? But this quarter compared to last quarter, the second quarter. Mine 7, lower production really, we didn't get the cost leverage, and that was about $7 a ton. So -- I'm sorry, that was $11 versus the second quarter. And then transportation royalties, right, those are variable and those go up with met coal prices. So that was about $6.

And then inflation is about $2. We've been saying that we are seeing inflation in the aggregate starting to impact us. No one item is material. But when you add it up, you're looking at a couple of bucks. So as we move forward, I would say, with the spike in met coal prices in September, that was the month that peaked the most. That's carrying over into the fourth quarter. So you would see higher cost in the fourth quarter because of transportation and royalties, the variable cost, some inflation.

So those kind of things, we would expect to continue to see. As far as royalties, yes, and I covered the royalties. So demurrage. Demurrage is another one with the rates there being so much higher than they have been, 44% higher. And with some of the disruption we had at the port, we'll probably have some of that again in the fourth quarter because of the hurricane. We were down for four days or the port was down for four days, and we didn't get to load some vessels. So we'll have some incremental demurrage there.

We'll try to make up that volume, but we'll definitely have some more demurrage. And we see those rates continuing to be high until some of the situation is resolved in the Middle East that hopefully will get resolved and lower some of these freight and demurrage rates back to normal.

Nick Giles

No, that's very helpful, Dale. I appreciate the additional clarification. I guess just on the point of Mine 7, were there any specific drivers that led to the lower volumes this quarter? And then how do you see that? Should we expect that to revert here in 4Q to kind of some of the output levels we've seen in the first two quarters?

Walter Scheller

This is Walt. Yes. My expectation is things get back closer to what we would expect normally. We had a longwall -- well, actually, both longwalls were approaching areas where the geology got a little more difficult. And normally, we'll have one longwall kind of in a sweet spot when the other is in a difficult spot, so we can just run one a little harder than the other. This time, we had both of them in a little bit of a thinner coal or tougher conditions, and we had to work our way through that in the quarter, and we did that, and we should be in better shape now.

Operator

The next question comes from George Eadie with UBS

George Eadie

Looks pretty good and clean here. Just a quick one on the tariff of U.S. imports into China. If that was to remove, would you guys sell anything into China potentially? Or whilst, I guess, like do you envisage that as a potential tailwind to your realized price as some of your peers sell High Vol A that was historically going into India, into China instead?

Walter Scheller

I think if the tariffs went away and there were spot opportunities, we would look at those spot opportunities and determine if we had the additional volume and we thought those opportunities were really good opportunities, we would certainly consider them. I think right now, given our current customer base, the absorption of any additional tons we could come up with would probably be taken by those customers. before we would do anything else, but sure, we'd look at it.

Dale Boyles

Yes. I think, George, the arbitrage would have to be wide enough to think about the freight differential, right? Is it going to be more profitable to sell to India or China based on what that is? How much of it covers the freight and where is it most profitable? We're here to make money, not sell coal.

George Eadie

Okay. And then one more Walt as well -- sorry, Dale, working cap, any guidance 4Q is a flat sort of cash assumption best given sort of we see a bit of an unwind this quarter?

Dale Boyles

Yes. I think now that we've normalized our inventory levels, I think working capital should be flattish. There might be some up and downs just with AR depending on pricing and volumes. But I think we're kind of getting to a level now that it will be steady and stable.

George Eadie

Okay. That makes sense. And then just clarifying that Mine 7 underperformance you were talking for, was that $7 or $11 a short ton quarter-on-quarter? I think you maybe got me a bit confused there before, Dale. And then just secondly, can you talk through how that actually happens? Is it quite literally just dollar denominator? Is that the only thing? Like I'm just trying to back calculate if there's some sort of more meaningful cost creep coming in that sort.

Dale Boyles

Yes. The impact coming from the second quarter to the third quarter had an $11 per ton impact. But when you compare it to last year's third quarter, that was a $7 impact when you compare those two different periods. And I think I answered your question actually earlier on the previous question. We talked about the inflation, right? Transportation royalties continue to be higher given met coal prices. So we'll see those kind of things continue into the fourth quarter, so which puts us right there on track with our overall cost guidance for the year.

Operator

The next question comes from Katja Jancic with BMO Capital Markets.

Katja Jancic

Maybe just staying on the cost side very quickly. I think you said that the issues at Mine 7 are now behind you. Is that correct?

Walter Scheller

Yes. they're operating normally.

Katja Jancic

So wouldn't that mean that then the headwind on the cost side should basically be reduced now if the mine haven't operated at normal rates?

Dale Boyles

Yes. For that particular item, yes. But we'll continue to see transportation royalties higher inflation, those kind of things.

Katja Jancic

All right. And maybe on the price realization side, I think some of the freight costs have eased a bit in recent weeks. How should we think about price realization in 4Q? What are the moving pieces there?

Walter Scheller

Well, the movement in prices and the movement in freight rates. I mean, just while prices have descended on the PLV, the High Vol A index went up $3 last week. So those are the moving pieces in the freight rates, obviously, yes, we've seen those ease a little bit, but they're still averaging significantly higher than the low to mid-$30 range, which would be more like normal about two, three years ago.

Operator

The next question comes from Nathan Martin with StoneX.

Nathan Martin

Just maybe thinking about your pricing for the fourth quarter in a different way. You called out gross price realizations were 66% in 3Q. I think that was the same as the second quarter. Is that kind of a good way to think about 4Q? Or could that actually even improve some just given you won't have the onetime inventory sales of the Blue Creek tons you mentioned? It would just be helpful to get your thoughts on how you guys see the sales mix by quality as well in the fourth quarter.

Dale Boyles

Yes. Thanks, Nate. I think directionally, that's probably a good place to start because when you have prices going up, we're still seeing these meaningful differences in the price indices, right? The relativities have been staying in that range, it was up slightly in the third quarter from the second. I think that's just a good starting point right there, just given where these relativities have been over the last few quarters. So I think it's been five quarters, six quarters now.

Nathan Martin

Okay. Great. Any thoughts on sales mix by quality for the fourth quarter?

Walter Scheller

No, this is Walt. The sales mix, High Vol A versus Low-Vol ought to be about the same as it was in the third quarter.

Nathan Martin

Okay. And then, Dale, I apologize if I missed this when you're given the rundown earlier on the cost items for the quarter. But how much do you think the logistics disruptions you talked about added to the cash cost per ton in 3Q? And then how much do you think of that is sticky through the year-end as you talked about, you still might be running into some of those issues?

Dale Boyles

Well, on the demurrage side, I think it's what you're referring to. That was up about $3 million from the second quarter and significantly more versus last year. And we've been running that way this year because demurrage rates are up 20 -- I believe it's 22% this year. So whenever you have any of these disruptions, I mean, combined, it was hard to break out which one contributed the most. It adds up, right?

During the third quarter, we had just different things happening there, not only with the rates being higher, but you had the tropical storm, the power outage, the maintenance, all those things just added up. Now coming into the fourth quarter, we're going to have similar kind of things, right? We had the hurricane in early October that pushed some vessels out. So we didn't get those loaded. We're going to try to make up that volume, but we're still going to incur the demurrage. It's just hopefully less than we would have.

The river is going to be -- was out again in September and October. So that's behind us now. So that's improving. And that's kind of what we're seeing here in the short term, probably for the next quarter or so, maybe another quarter after that, just depending on how quickly some of this situation with Iran helps improve the overall freight market.

Operator

The next question comes from Matthew Key with Texas Capital.

Unknown Analyst

Most of mine were touched on, but I guess I wanted to ask about just longer-term capital allocation strategy. Assuming the market cooperates, cash flow could be really attractive over the next couple of years even with some of these inflationary pressures. You could obviously return a lot of that to shareholders, but you could also pursue additional volume growth maybe in the form of M&A or adding the second longwall at Blue Creek. Do you have a view on what is a better return to shareholders kind of in the current market, but from a longer-term perspective?

Dale Boyles

Well, I think for right now, what we've said is, look, we expect our excess cash flow to go back to shareholders. We've got to ramp up Blue Creek to its full potential. We've always said, look, there's even more potential there with the second longwall. I think we need to see that the market can absorb those additional tons before we would go in that direction. And that has a lead time on it, right, of a few years. So for now, I think we're going to be looking at returns to shareholders until we see something significantly change in the market.

Operator

The next question is a follow-up from Nick Giles with B. Riley.

Nick Giles

I just wanted to ask maybe more directly on the capital return front. What price level in the equity do you need to see before you're ready to step in and kind of be more aggressive on the buyback front? I mean the stock is now 26% off the August highs. Your operations certainly haven't gotten 26% worse. So I would think it's a good time to look at that, but curious for your perspective.

Dale Boyles

Thanks, Nick. Yes, we are always looking at that when we look at capital allocation and discuss it with our Board. We haven't set thresholds of a target price that says we'll do one thing or the other. We look at things more broadly than just that. So it's to be determined as we go forward talking to the Board every quarter and depending on what cash gets generated.

Nick Giles

No, fair enough, Dale, and it was good to see the special dividend. I guess maybe just switching gears, if I could. Could you just speak to some of the opportunities you're seeing in Europe? Are you seeing any blast furnace restarts really taking shape? And could there be additional pull on U.S. coals over the coming quarters?

Walter Scheller

I think Europe is -- it's kind of mixed, but I do think there's some -- what we say the green shoots. I do think that Europe is doing fairly well. They're taking their tons. They're taking spot tons. We have requests for additional tons. So I do think Europe is it's mixed, but I think stronger than we would have thought if we were looking at it nine months ago.

Nick Giles

That's good to hear, Walt. And I'll sneak one more in, if I could. I think you were speaking to you want to wait until the market is ready to absorb the tons of Blue Creek that could come from the second longwall. But I was just curious on how you're thinking about ramping up this first longwall. I think year-to-date, it's at about a 5 million ton run rate. But you have spoken in the past about the ability to run closer to that 6 million to 7 million tonne range. So as we think out to 2027, where should we expect Blue Creek to shake out?

Walter Scheller

I think some of the things we've done this year, we added the additional continuous miner unit. As we run this mine and running at substantial levels, we're getting to see where are the bottlenecks and do we have any problems from the coal preparation standpoint and working our way through those. So now it's just kind of incrementally figuring out bottleneck by bottleneck, how do we tweak the system to get us beyond where we are today and where we think the potential capacity is.

And as we've said, market reception has been great. And we'll continue to see what we can do with that one longwall. It's just going to take a little bit of time for us to figure it out and to get it developed, and then we'll be watching the market carefully and seeing what's going on to determine do we need or should we add that second longwall, or if we're bringing out that first longwall, that is about what the market needs.

Dale Boyles

Let me just add a little something to that, Nick. I think when you're thinking about '27, we put 5 million tons in the guidance this year when we update our guidance at the end of the second quarter. So all of that is going well. So we would expect volumes to be better next year. We just don't have a final number yet as we're working through the budget and getting ready to have that meeting discussion with the Board to get that approved for next year. So we'd expect it to be higher than where we're going to be in '26. That's all I can give you right now at this moment.

Operator

At this time, there are no further questions. I will now turn the call back over to Mr. Scheller for any comments.

Walter Scheller

That concludes our call this afternoon. Thank you again for joining us today. We appreciate your interest in Warrior. Thank you.

Operator

And that concludes today's conference. Thank you all for participating. You may now disconnect.