LEXINGTON, Ky., Feb. 24, 2022 /PRNewswire/ --

• Quarterly net income was $18.6 million (EPS of $0.42) and Adjusted EBITDA was $31.6 million for the fourth quarter of 2021. Quarterly net income and Adjusted EBITDA were 76% and 66% higher than our previous respective quarterly records. Net income was $39.8 million (EPS of $0.90) and Adjusted EBITDA was $79.0 million for the full-year 2021. Net income and Adjusted EBITDA were 59% and 43% higher than our previous respective annual records.
• As of December 31, 2021, the Company has booked 1.7 million tons of metallurgical coal for 2022 domestic delivery at $196 per short ton FOB mine, excluding carryover tons from 2021. Based on the midpoint of our cost guidance, these domestic sales translate to estimates of over $130 million of net income¹ or earnings per share of just under $3.00 and almost $185 million of Adjusted EBITDA¹ in 2022.
• In addition, since year-end, the Company has sold an additional 0.5 million tons of metallurgical coal primarily to export customers at an average FOB mine price of roughly $270 per short ton, based on today's indices. These contracts are mostly index-linked, with the majority of shipments to be made in the first quarter of 2022. This brings our total currently booked sales to roughly 2.3 million tons. Based on the midpoint of our cost guidance, both the current domestic and committed export sales booked thus far in 2022 translate to estimates of over $195 million of net income¹ or earnings per share of more than $4.40 and $270 million of Adjusted EBITDA¹.
• Over 1.0 million tons remains open to be sold into export markets currently at near-record pricing. This represents almost 30% of our 2022 production guidance of up to 3.3 million tons at the top end of the range. Our most recent realized pricing on committed sales has been at just under $300 per short ton FOB mine. The cash margin on our most recent coal sales in 2022 is roughly $200 per ton at the midpoint of cost guidance.
• As previously announced, the Company's Board of Directors ("Board") authorized an annual base dividend increase to $20 million from $10 million. This will also result in an increase in the regular quarterly dividend to $5.0 million from $2.5 million. Our first quarter dividend will be paid on March 15, 2022, to shareholders of record on March 1, 2022. The Company indicated that at the end of each calendar year it would review the cash dividend level with an expectation to annually increase the base dividend by 8-10%. Additionally, dependent on prevailing circumstances the Company indicated it will also consider a further return of shareholder capital in the form of a share buyback program.
• As described in an accompanying release, the Company announced that it has reached an agreement in principle for one of its subsidiaries, Ramaco Development, LLC, to acquire 100% of the equity interests of Ramaco Coal, LLC ("Ramaco Coal"), a private entity owned by affiliates of Yorktown Partners, LLC and certain members of management. The cash purchase price is $65 million with an initial closing payment of $5 million and a deferred two year purchase payment of $60 million, with $20 million plus interest to be paid in quarterly installments in 2022 and $40 million plus interest to be paid in quarterly installments in 2023. Once completed, this acquisition will be immediately accretive to the Company in the form of ongoing royalty savings on a substantial portion of our production.
• The Company's Board of Directors previously approved the Elk Creek Preparation Plant expansion project. As part of this expansion, the Company will open 2 new metallurgical mines at Elk Creek between 2022 and 2023 with the intention of sustainably producing over 2.5 million tons per annum at the Elk Creek Complex by the fourth quarter of 2023. The Company anticipates reaching its goal of achieving 4-4.5 million tons of production for the full-year 2024, including the planned increase in production from the Berwind Complex, which includes the recently acquired Amonate reserves.

Ramaco Resources, Inc. (NASDAQ: METC) ("Ramaco" or the "Company") today reported quarterly net income for the three months ended December 31, 2021 of $18.6 million, or $0.42 per diluted share. This was nearly 500% above the net loss of $4.7 million, or $0.11 per diluted share for the three months ended December 31, 2020.

The Company's adjusted earnings before interest, taxes, depreciation, amortization, and equity-based compensation ("Adjusted EBITDA") for the three months ended December 31, 2021 was $31.6 million, almost 2,350% higher than the $1.4 million loss of Adjusted EBITDA for the three months ended December 31, 2020. (See "Reconciliation of Non-GAAP Measure" below.)

Key operational and financial metrics are presented below:

Fourth Quarter 2021 Summary

In the following paragraphs, all references to "quarterly" periods or to "the quarter" refer to the fourth quarter of 2021, unless specified otherwise.

Year over Year Quarterly Comparison
Overall production in the quarter was 519,000 tons, up 33% from the same period of 2020. Elk Creek alone produced 410,000 tons. Overall total sales were 531,000 tons, down slightly from 541,000 tons in the fourth quarter of 2020.

Cash margins on Company produced coal were $66 per ton during the quarter, up 1,550% from the same period of 2020. Pricing of Company produced coal sold was $143 per ton during the quarter, which was 79% higher compared to the fourth quarter of 2020. Company produced annual and quarterly cash mine costs were $70 per ton and $77 per ton, respectively. Quarterly cash mine costs per ton were only 1% higher than for the same period of 2020, despite higher sales-related costs, as well as inflationary pressure on overall costs.

Sequential Quarter Comparison
Total sales volume of 531,000 tons for the quarter was down 18% from the third quarter of 2021. Over 75,000 tons of contracted coal was not delivered in December 2021 due largely to third party rail transportation bottlenecks and was carried over into January 2022. This carryover negatively impacted quarterly Adjusted EBITDA by almost $7 million, which has now been booked in the first quarter of 2022.

Cash margins on Company produced coal nearly doubled to $66 per ton during the quarter from $34 per ton in the third quarter of 2021, due to higher revenue per ton sold. Cash mine costs on Company produced coal were $77 per ton during the quarter compared to $71 per ton in the third quarter of 2021. Higher cash mine costs were due largely to higher sales-related costs, resultant from higher revenue per ton. Specifically, the 8% sequential increase in cash mine costs during the quarter was more than offset by 36% higher revenue per ton during the quarter relative to the third quarter of 2021.

Additional Financial Results

As of December 31, 2021, the Company had liquidity of $61.0 million, consisting of $21.9 million of cash on hand plus $39.1 million of availability under its revolving credit facility. Year-end cash was reduced by the payment of the approximately $30 million for the Amonate acquisition.

Quarterly capital expenditures totaled $11.8 million (excluding the Amonate acquisition), an increase of 30% versus $9.1 million for the third quarter of 2021, principally due to the continued development of the Berwind complex.

The Company's effective quarterly tax rate was 14%. For the full-year 2021, we recognized an income tax expense of $4.6 million, as compared with income tax benefit of $3.5 million in 2020. Income tax expense for 2021 includes a $2.3 million benefit associated with changes in state income tax regulations for Virginia and West Virginia and a $194,000 benefit for stock-based compensation. Excluding these discrete items, our effective tax rate was 16% for 2021, compared to 20% for 2020. Cash taxes paid for full-year 2021 were less than $10,000.

The following summarizes key sales, production and financial metrics for the periods noted:

Outlook and Comment

Randall Atkins, Ramaco Resources' Chairman and Chief Executive Officer commented, "2021 was a remarkable year for us on many fronts. The year began with the remnants of a post COVID-19 hangover and the hope for a more promising year than 2020 a very low bar indeed. 2021 somewhat surprised us by ending with the strongest performance we have had since we became public. That dramatic growth spurt in the second half of the year has now propelled us into an entirely different dimension as a Company.

In terms of metrics, in 2021 we generated almost 910% more net income and 328% more Adjusted EBITDA than in our previous year. This is particularly impressive considering that by the fall of 2020 roughly 66% of our 2021 tons had already been locked in at lower priced sales contracts to North American steel mills. We managed to continue to keep our cash mine costs low in 2021, averaging roughly $70 per ton mine costs, which we believe to be among the industry's lowest levels. This was despite headwinds from both increasing sales related costs and general inflationary trends. Importantly, 2021 was also our safest year on record.

Looking ahead, we are now focused on the dual goals of being the only major coal producer to be in the midst of doubling our met coal production by 2024, while at the same time returning substantial capital back to our shareholders. For good measure, we intend to pay for our production increase from internally generated cash flow.

For the full-year 2022, at the midpoint of guidance we are guiding to 3.2 million tons of production. We hope to produce at least 5% more than this projected level. The upper end of our range is a 50% production increase from our 2021 level of 2.2 million tons produced. Importantly, as of today we have locked in roughly 2.3 million tons of total sales for 2022 delivery at an average of $206 per short ton² FOB mine. This is about 70% of our 2022 production book.

About 1.7 million tons of new non-carryforward business will go to North American steel mills, priced at about $196 per ton FOB mine. The balance of about 500 thousand tons of newly committed primarily export business is at an average price of over $270 per ton FOB mine². Our most recent booked business has come in at just under $300 per short ton FOB mine with cash margins estimated at roughly $200 per ton.

Over half of our newly booked export business will be delivered in the first quarter of this year. The balance of roughly 1 million unsold tons will be sold throughout the rest of the year. The markets remain strong with current levels for export index-based pricing at $380 per metric ton FOB port for high-vol A coal. Almost all of our high-vol coals have recently been regarded and priced as high-vol A coal. Looking ahead, we see continued strength in the 2022 metallurgical coal markets based on basic demand-supply dynamics and the muted supply response both globally and in the United States. The forward curve has indeed moved higher even this week.

As we sit today, the realized pricing for our overall booked business in 2022 has increased by almost $100 per ton over 2021². Based on the midpoint of our cost guidance, these committed sales currently translate to over $195 million of net income, or more than $4.40 of earnings per share and $270 million of Adjusted EBITDA³. In the short space of time since year-end, we have already created over 4 times the net income and 3 times the Adjusted EBITDA generated for the entire year of 2021.

In 2022, our mine costs are projected to increase, primarily due to higher sales related costs. We estimate to be up roughly $15 per ton above our $70 per ton level in 2021. Frankly, this is a bit of a 'high class problem' since that effectively means our average realized sales price has substantially increased. Even with an increase, our base level operating mine costs continue to remain some of the lowest in the industry. With the announced pending acquisition of the Ramaco Coal reserves where we mine, we expect to recognize immediate accretion from both avoided royalty payments and further cost reduction as we move ahead.

In short, we are frankly expecting the strongest year of financial and operational performance since we started. We hope to generate a record amount of earnings and a substantial amount of free cash flow. Since we have no meaningful amount of net debt, we intend to deploy that free cash flow by giving increasing amounts of capital back to our shareholders.

There are always debates about the best means to do that. For now, as announced last week we have decided to double the previously announced size of our regular annual base cash dividend to $20 million. Yesterday, this gives us roughly a 3.0% yield on our stock. We expect our next review of the dividend level will be later in the year. As we progress, we hope to annually increase the regular cash dividend by 8-10% per year. Dependent on circumstances and our cash buildup, we may also consider a further return of capital to shareholders in the form of a share buyback program.

Finally, 2021 was a very exceptional year for everyone. I would like to thank all those that contributed, from our hard-working employees and directors, to our loyal shareholders. 2022 has already substantially topped even that and hopes to be remarkably transformational for all our stakeholders. As we look ahead for the year, we see substantial increases in production, generation of record free cash flow and cash buildup, increasing cash return to shareholders, and of course achieving record level of employment in the communities that we proudly serve."

About Ramaco Resources, Inc.

Ramaco Resources, Inc. is an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. Its executive offices are in Lexington, Kentucky, with operational offices in Charleston, West Virginia. The Company currently has seven active mines within two mining complexes.

News and additional information about Ramaco Resources, including filings with the Securities and Exchange Commission, are available at https://www.ramacoresources.com. For more information, contact investor relations at (859) 244-7455.

Earnings Conference Call

Ramaco Resources will hold its quarterly conference call and webcast at 10:00 AM Eastern Time (ET) on Thursday, February 24, 2022. An accompanying slide deck will be available at https://www.ramacoresources.com/investors-center/events-calendar/ immediately before the conference call.

The conference call can be accessed by calling (800) 708-4539 domestically or (847) 619-6396 internationally. The Conference ID is 50283535. The webcast for this release will be accessible by visiting https://edge.media-server.com/mmc/p/exznfot3.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Ramaco Resources' expectations or beliefs concerning guidance, future events, anticipated revenue, future demand and production levels, macroeconomic trends, the development of ongoing projects, costs and expectations regarding operating results, and it is possible that the results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Ramaco Resources' control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. These factors include, without limitation, risks related to the impact of the COVID-19 global pandemic, unexpected delays in our current mine development activities, failure of our sales commitment counterparties to perform, increased government regulation of coal in the United States or internationally, the further decline of demand for coal in export markets and underperformance of the railroads, the anticipated completion of the Acquisition and the timing thereof, the expected benefits of the Acquisition to the Company's shareholders, and the anticipated benefits and impacts of the Acquisition. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Ramaco Resources does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Ramaco Resources to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in Ramaco Resources' filings with the Securities and Exchange Commission ("SEC"), including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The risk factors and other factors noted in Ramaco Resources' SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement.

Reconciliation of Non-GAAP Measure

Adjusted EBITDA

Adjusted EBITDA is used as a supplemental non-GAAP financial measure by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance.

We define Adjusted EBITDA as net income plus net interest expense, equity-based compensation, depreciation and amortization expenses and any transaction related costs. Its most comparable GAAP measure is net income. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.

Non-GAAP revenue and cash cost per ton

Non-GAAP revenue per ton (FOB mine) is calculated as coal sales revenue less transportation costs, divided by tons sold. Non-GAAP cash cost per ton sold is calculated as cash cost of coal sales less transportation costs, divided by tons sold. We believe revenue per ton (FOB mine) and cash cost per ton provides useful information to investors as these enable investors to compare revenue per ton and cash cost per ton for the Company against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal prices and costs from period to period excluding the impact of transportation costs, which are beyond our control. The adjustments made to arrive at these measures are significant in understanding and assessing the Company's financial condition. Revenue per ton sold (FOB mine) and cash cost per ton are not measures of financial performance in accordance with U.S. GAAP and therefore should not be considered as an alternative to revenue and cost of sales under U.S. GAAP. The tables below show how we calculate non-GAAP revenue and cash cost per ton:

We do not provide reconciliations of our outlook for cash cost per ton to cost of sales in reliance on the unreasonable efforts exception provided for under Item 10(e)(1)(i)(B) of Regulation S-K. We are unable, without unreasonable efforts, to forecast certain items required to develop the meaningful comparable GAAP cost of sales. These items typically include non-cash asset retirement obligation accretion expenses, mine idling expenses and other non-recurring indirect mining expenses that are difficult to predict in advance in order to include a GAAP estimate.

¹ Mine level, before corporate expenses, using current spot pricing for index-linked export sales.
² Using current spot pricing for index-linked export sales.
³ Mine level, before corporate expenses, using current spot pricing for index-linked export sales.

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SOURCE Ramaco Resources, Inc.