Ramaco Resources, Inc. Reports Third Quarter 2022 Financial Results
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LEXINGTON, Ky., Nov. 7, 2022 /PRNewswire/ --

In the third quarter of 2022, highlights include:

  • Net income of $26.9 million (diluted EPS of $0.60) and Adjusted EBITDA of $50.7 million were 282% and 185% respectively above the prior highest third quarter on record. Net income was negatively affected by $3.9 million (diluted EPS of $0.09) from idle costs at our Berwind mine related to the July ignition event. Adjusted EBITDA was similarly negatively affected by $5.0 million. Based on continuing logistical and related issues we built 56,000 tons of inventory, bringing the year-to-date inventory build to 235,000 tons.
  • The Company is now fully sold out for 2022 at an average price of $210 per short ton FOB mine1. In addition, 1.8 million tons have now been committed for delivery in 2023. 1.4 million tons are sold at an average fixed price of $201 per short ton FOB mine, and 0.4 million tons are index-linked. Over half of our anticipated 2023 volume remains open to be sold into export thermal, metallurgical or industrial markets, where pricing remains above our 2023 fixed price levels for high-vol A quality coal. We expect over 60% of our 2023 production will be sold into export markets.
  • Work is nearing completion of the refurbishment and upgrade of the Berwind Preparation Plant. While not in full commercial operation, the first tons of coal have been processed and we anticipate shipping our first clean coal from this complex in the coming days. We anticipate this new efficient processing plant will materially lower our cash costs from the Berwind Complex due to the avoidance of millions of dollars of annual trucking costs. Similarly, these upgrades are expected to reduce our logistical challenges at both our Berwind and Knox Creek operations by eliminating the truck haul of more than 25 miles from the Berwind mines to our Knox Creek preparation plant.
  • The Company is now providing an initial framework for its proposed 2023 shareholder return program. Management intends to address this with its Board of Directors at its upcoming Board meeting in December. Specifically, it remains our intention in 2023 to progressively annually increase the base cash dividend on all classes of shares. Once the Company is in a cash position in excess of roughly $100 million above requirements for normal operations, debt repayments and capital expenditures, the Company anticipates instituting a program of share repurchase. The program will be ratably tied to the cumulative dividends paid on all then outstanding classes of shares and is anticipated to commence in 2023.

Ramaco Resources, Inc. (NASDAQ: METC) ("Ramaco" or the "Company") today reported quarterly net income for the three months ended September 30, 2022, of $26.9 million, or $0.60 per diluted share. This was over 280% higher than net income for the three months ended September 30, 2021, of $7.0 million, or $0.16 per diluted share, largely on the back of higher realized pricing. For the nine-month period ended September 30, 2022, net income was $101.7 million or $2.27 per diluted share.

The Company's adjusted earnings before interest, taxes, depreciation, amortization, certain non-operating expenses, and equity-based compensation ("Adjusted EBITDA") was $50.7 million for the three months ended September 30, 2022. This was 185% higher than $17.8 million of Adjusted EBITDA for the three months ended September 30, 2021. Third quarter 2022 Adjusted EBITDA was negatively affected by $5.0 million from idle costs at our Berwind mine related to the July ignition event. For the nine-month period ended September 30, 2022, Adjusted EBITDA was $172.6 million. (See "Reconciliation of Non-GAAP Measure" below.)

___________________________________

1 Based on forward curve pricing for index-linked tons as of October 31, 2022.

Key operational and financial metrics are presented below:



















Key Metrics



















3Q22


2Q22

Change


3Q21

Change


3Q22 YTD


3Q21 YTD

Change

Total Tons Sold ('000)


608



584

4 %



644

(5) %



1,775



1,751

1 %

Revenue ($mm)

$

136.9


$

138.7

(1) %


$

76.4

79 %


$

430.5


$

195.9

120 %

Cost of Sales ($mm)

$

79.6


$

76.6

4 %


$

54.8

45 %


$

237.5


$

143.8

65 %

Pricing of Company Produced ($/Ton)

$

202


$

215

(6) %


$

105

92 %


$

216


$

98

121 %

Cash Cost of Sales - Company Produced ($/Ton)*

$

98


$

106

(8) %


$

71

38 %


$

102


$

67

52 %

Cash Margins on Company Produced ($/Ton)

$

104


$

109

(5) %


$

34

206 %


$

114


$

31

272 %

Net Income ($mm)

$

26.9


$

33.3

(19) %


$

7.0

282 %


$

101.7


$

21.1

381 %

Diluted Earnings per Share

$

0.60


$

0.74

(18) %


$

0.16

282 %


$

2.27


$

0.48

373 %

Adjusted EBITDA ($mm)

$

50.7


$

57.9

(12) %


$

17.8

185 %


$

172.6


$

47.4

264 %

Capex ($mm)**

$

37.6


$

34.1

10 %


$

9.1

313 %


$

91.4


$

17.6

418 %

Adjusted EBITDA less Capex ($ mm)

$

13.1


$

23.8

(45) %


$

8.7

51 %


$

81.2


$

29.8

173 %

* Adjusted to include the royalty savings from the Ramaco Coal transaction for all periods for 2022. Excludes Berwind idle costs in 3Q22.

** Excludes Amonate, Ramaco Coal, and Maben purchase price.

Third Quarter 2022 Summary

In the following paragraphs, all references to "quarterly" periods or to "the quarter" refer to the third quarter of 2022, unless specified otherwise.

Year over Year Quarterly Comparison
Overall production in the quarter was 658,000 tons, up 19% from the same period of 2021. The Elk Creek complex produced 511,000 tons. Production from the Berwind and Knox Creek Mining complexes increased from 43,000 tons in the third quarter of 2021 to 147,000 tons this quarter. Overall total sales were 608,000 tons, down from 644,000 tons in the third quarter of 2021. The decline was largely attributable to continued rail related challenges. We have built 56,000 tons of inventory, largely based on continued logistical rail loading issues, bringing the year-to-date inventory build to 235,000 tons. We anticipate the bulk of this inventory buildup to unwind in 2023 as logistical challenges hopefully ease and the previously discussed preparation plant upgrade is completed at our Elk Creek complex.

Cash margins on Company produced coal were $104 per ton during the quarter, up over 200% from the same period of 2021. Quarterly pricing was $202 per ton of Company produced coal sold, which was over 90% higher compared to the third quarter of 2021. Company produced cash mine costs were $98 per ton. Quarterly cash mine costs per ton were 38% higher than for the same period of 2021. This increase in costs is principally attributed to higher sales-related costs, as well as inflationary impacts on overall costs. Cash mine costs at Elk Creek were $93 per ton during the quarter.

Sequential Quarter Comparison
Overall production of 658,000 tons in the quarter was down 8,000 tons compared with the second quarter. This limited drop was despite the Berwind mine being closed for almost the entire third quarter due to the early July ignition event. Total sales volume of 608,000 tons was up modestly from the second quarter 2022 level of 584,000 tons.

Cash margins on Company produced coal were $104 per ton compared to $109 per ton in the second quarter. The decline in margin was mainly due to lower realized pricing, with revenue per ton of $202 on company produced coal in the third quarter compared to $215 per ton in the second quarter of 2022. Metallurgical coal indices, although lower in the third quarter compared to first half 2022 levels, still remain historically elevated mainly attributable to continued supply tightness.

Despite current inflationary cost pressures, we continue to see a decline in key raw material costs such as the price of diesel fuel and steel for roof bolts. Our Elk Creek cash mine costs declined 7% to $93 per ton versus the second quarter of 2022. As our Berwind and Knox Creek complexes ramp up production over the coming quarters, we anticipate that their costs will fall meaningfully from current levels.

Additional Financial Results

As of September 30, 2022, the Company had liquidity of $69.2 million, consisting of $46.6 million of cash on hand plus $22.6 million of availability under our revolving credit facility. Compared to December 31, 2021, accounts receivable and inventory increased meaningfully to $90.4 million from $60.2 million. The bulk of the increase was due to higher inventory levels, resulting from yearlong logistical challenges. We anticipate that the fourth quarter of 2022 will be the Company's strongest quarter on record in terms of both sales and earnings excluding Berwind idle costs, based on being fully sold out for full-year 2022 at an average price of $210 per short ton FOB mine.

Third quarter capital expenditures totaled $37.6 million. This was an increase of 10% versus $34.1 million for the second quarter of 2022. The increase was attributable to the continued development of two new mines and the preparation plant renovation at the Berwind complex, and the ongoing plant expansion at the Elk Creek complex. Over 75% of the Company's year-to date capital expenditures of $91.4 million relates to its ongoing growth projects.

The Company's effective quarterly tax rate was 20%, excluding discrete items. For the third quarter of 2022, we recognized income tax expense of $6.6 million, as compared with $9.8 million in the second quarter of 2022.

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



















Three months ended


Nine months ended September 30,



September 30,


June 30,


September 30,





In thousands, except per ton amounts


2022


2022


2021


2022


2021

















Sales Volume (tons)
















Company



602



578



637



1,753



1,707

Purchased



7



5



7



22



44

Total



608



584



644



1,775



1,751

















Company Production (tons)
















Elk Creek Mining Complex



511



482



510



1,496



1,571

Berwind Mining Complex (includes Knox Creek)



147



184



43



493



134

Total



658



666



553



1,989



1,705

















Company Produced Financial Metrics (a)
















Average revenue per ton


$

202


$

215


$

105


$

216


$

98

Average cash costs of coal sold*



98



106



71



102



67

Average cash margin per ton


$

104


$

109


$

34


$

114


$

31

















Elk Creek Financial Metrics (a)
















Average revenue per ton


$

197


$

208


$

103


$

213


$

96

Average cash costs of coal sold*



93



100



67



95



63

Average cash margin per ton


$

104


$

108


$

36


$

118


$

33

















Purchased Coal Financial Metrics (a)
















Average revenue per ton


$

231


$

186


$

138


$

279


$

103

Average cash costs of coal sold



125



155



97



215



85

Average cash margin per ton


$

106


$

31


$

41


$

64


$

18

















Capital Expenditures


$

37,577


$

34,066


$

9,092


$

91,384


$

17,642

_____________________________

(a) Excludes transportation.

* Adjusted to include the royalty savings from the Ramaco Coal transaction for all periods for 2022. Excludes Berwind idle costs in 3Q22.

Outlook and Comment

Randall Atkins, Ramaco Resources' Chairman and Chief Executive Officer commented, "Despite macro headwinds in the overall economic climate, the third quarter was another record quarter for us. With that said, results are below what we would have hoped given the combination of the unfortunate Berwind ignition event in early July, declines in seaborne coal pricing, continued macro pressure on worldwide steel demand and ongoing logistical rail challenges. Despite these issues, we are well positioned for a record fourth quarter in 2022 and are also poised for 2023 to be a transformational positive year for Ramaco.

There are a number of positive quarterly accomplishments to highlight. First, we recently processed our first tons of coal at our Berwind preparation plant. We anticipate the plant will materially lower our cash costs from the Berwind Complex by avoiding millions of dollars of annual trucking costs. It will similarly reduce logistical challenges by elimination of a 25-mile truck haul to our Knox Creek preparation plant. Indeed, our overall mine costs across all operations came down around 8% this quarter and have again positioned us as a peer cost leader in the Central Appalachian markets.

Second, the Company is now fully sold out for calendar 2022 at an average price of $210 per short ton FOB mine1, with roughly 90% of that business being based on a fixed price. Third, in July we successfully placed roughly 0.3 million tons of coal into the European thermal markets for delivery mostly in the fourth quarter of 2022 at prices which exceeded met coal pricing. Lastly, in late September, we closed on the accretive Maben low vol reserve acquisition, which we anticipate being a meaningful earnings contributor in 2023.

Looking ahead to 2023, despite substantial macro uncertainty, we are confident that the year will prove to be much stronger for us than 2022. To begin with, we anticipate almost doubling 2023 production to roughly 4 million tons compared to production levels last year in 2021. At the same time, 1.8 million tons of that production has now been sold for 2023. 1.4 million tons were sold at a fixed average price of $201 per short ton FOB mine, and 0.4 million tons have been sold at index-linked pricing. Our fixed price sales business is a combination of both domestic steel and industrial sales as well as seaborne thermal coal sales.

We previously communicated that we would tailor our 2023 sales strategy to place tons into whatever markets would yield the best netback pricing. Indeed, we have executed on that strategy by committing a lower than usual amount of coal to traditional domestic steel mills in 2023. We expect to place over 60% of our coal into the export markets next year for the first time in our history and only 20% to traditional North American steel customers. Furthermore, over half of our anticipated 2023 volumes remain open to be sold into export markets at what we expect will be index-based business, where pricing currently remains above our 2023 fixed price levels for high-vol A quality coal.

The on-going events in Ukraine have created an unusual market dynamic where historical pricing between world thermal and met coal inverted this summer. While this relationship has recently moderated, we still anticipate an upward move in European thermal coal pricing in early 2023. We further expect that Europe's energy crisis will be a multi-year problem, which may present continued opportunities for crossover sales to traditional European thermal customers. Near-term, we believe many countries in Europe remain meaningfully short of coal for 2023, despite having purchased sufficient supply through year-end 2022.

In addition, the Company is providing an initial framework for its planned 2023 approach to a shareholder return program. We will be discussing this with our Board of Directors at our Board meeting next month when we typically address dividend policy for the coming year. First, in-line with what we have previously told our investors, it remains our intention to progressively increase the annual base cash dividend on all classes of stock each year, including in 2023.

As we add additional shareholder return in the form of dividends, we also want to construct a straightforward policy as it relates to other forms of shareholder return, specifically share repurchases. Next year, we expect to return to a net cash position. Over the past twelve months we made three accretive reserve, royalty and infrastructure acquisitions. At this point, we do not anticipate the need to make further acquisitions to reach our optimal level of production over the next few years.

We anticipate generating sufficient cash flow later in 2023 that we will be able to meet all capital requirements for normal maintenance and planned production growth, as well as make a complete repayment of all outstanding debt. We then hope to generate and maintain a cash cushion of roughly $100 million. Beyond that liquidity level we would anticipate allocating cash flow to shareholder returns in the form of both cash dividends and share repurchases. Specifically, we would propose taking the sum of the cash dividends paid on all outstanding classes of stock and in addition to the dividends we would invest a ratable amount toward share repurchases as would be approved by our Board of Directors.

Clearly, at today's stock price, we regard buybacks of our stock as an attractive investment proposition, especially considering the muted earnings multiples across the entire public coal space. Our basic investment goal is to organically increase our production in a lower capex cost manner to meet what we feel will be a continuing future demand for high quality met coal against a constrained growth in supply and to increase our overall free cash flow generation capability. At the same time, we will provide continued shareholder returns as described above.

In closing, we remain on track to have our most profitable and record year in 2022. This is despite a lingering list of macro challenges this year such as labor tightness, inflationary mine and wage cost pressure, logistical constraints, and the Berwind ignition event. We expect 2023 to be even more profitable. As a result, in the coming year we hope to continue our dual objectives of meaningful production growth and combine that with a return of increasing amounts of cash to our shareholders."

__________________________________

1 Based on forward curve pricing for index-linked tons as of October 31, 2022.

2022 Guidance
(In thousands, except per ton amounts and percentages)










2022 Guidance


2021








Company Production (tons)







Elk Creek Mining Complex



2,000 - 2,100



1,981

Berwind Mining Complex



450 - 500



181

Knox Creek Mining Complex (a)



250 - 300



62

Total



2,700 - 2,900



2,224








Sales Mix (b)







Metallurgical



2,150 - 2,300



2,232

Steam



350 - 400



54

Total



2,500 - 2,700



2,286








Cost Per Ton







Company Produced (c)


$

98 - 102


$

70








Other







Capital Expenditures (d)


$

120,000 - 130,000


$

29,466

Selling, general and administrative expense (e)


$

27,000 - 30,000


$

16,369

Depreciation and amortization expense


$

39,000 - 42,000


$

26,205

Interest expense, net


$

7,000 - 8,000


$

2,556

Effective tax rate (f)



20 - 25%



16 %










(a)

Includes Big Creek.

(b)

2022 guidance includes a small amount purchased coal.

(c)

Adjusted to include the royalty savings from the Ramaco Coal transaction for all periods for 2022. Excludes Berwind idle costs in 3Q22.

(d)

Excludes Amonate, Ramaco Coal, and Maben purchase price.

(e)

Excludes stock-based compensation.

(f)

Normalized, to exclude discrete items.

Committed 2022 Sales Volume(a)
(In millions, except per ton amounts)









Volume


Average Price

North America, fixed priced


1.7


$

190

Seaborne, fixed priced


0.6


$

287

Total, fixed priced


2.3


$

215

Indexed priced


0.3




Total committed tons


2.6




_______________________________

(a)

Amounts as of September 30, 2022 and includes a small amount of purchased coal. Totals may not add due to rounding.

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 and Sheridan, Wyoming. The Company currently has three active mining complexes in Central Appalachia and one mine not yet in production near Sheridan, Wyoming. Contiguous to the Wyoming mine it operates a research and pilot facility related to the production of advanced carbon products and materials from coal. In connection with these activities, it holds a body of roughly 50 intellectual property patents, pending applications, exclusive licensing agreements and various trademarks. 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 9:00 AM Eastern Time (ET) on Tuesday, November 8, 2022. An accompanying slide deck will be available at https://www.ramacoresources.com/investors-center/events-calendar/ immediately before the conference call.

To participate in the live teleconference on November 8, 2022:

Domestic Live: (844) 826-3033
International Live: (412) 317-5185
Conference ID: 10172357
Web link: Click Here

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 expected benefits of the Ramaco Coal and Maben acquisitions to the Company's shareholders, and the anticipated benefits and impacts of the Ramaco Coal and Maben acquisitions. 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.

Ramaco Resources, Inc.

Unaudited Consolidated Statements of Operations

















Three months ended September 30,


Nine months ended September 30,

In thousands, except per share amounts


2022


2021


2022


2021














Revenue


$

136,925


$

76,377


$

430,461


$

195,889














Costs and expenses













Cost of sales (exclusive of items shown separately below)



79,634



54,808



237,530



143,768

Asset retirement obligations accretion



495



156



1,485



461

Depreciation and amortization



11,435



6,751



29,898



18,861

Selling, general and administrative



8,672



5,895



29,282



15,767

Total costs and expenses



100,236



67,610



298,195



178,857














Operating income



36,689



8,767



132,266



17,032














Other income, net



(933)



789



1,781



7,156

Interest expense, net



(2,255)



(933)



(5,323)



(1,418)

Income before tax



33,501



8,623



128,724



22,770

Income tax expense



6,596



1,588



27,068



1,650

Net income


$

26,905


$

7,035


$

101,656


$

21,120














Earnings per common share













Basic earnings per share


$

0.61


$

0.16


$

2.30


$

0.48

Diluted earnings per share


$

0.60


$

0.16


$

2.27


$

0.48














Basic weighted average shares outstanding



44,085



44,109



44,179



43,915

Diluted weighted average shares outstanding



44,543



44,465



44,747



43,996














Ramaco Resources, Inc.

Consolidated Balance Sheets








In thousands, except per-share amounts


September 30, 2022


December 31, 2021








Assets







Current assets







Cash and cash equivalents


$

46,608


$

21,891

Accounts receivable



50,358



44,453

Inventories



40,028



15,791

Prepaid expenses and other



4,962



4,626

Total current assets



141,956



86,761

Property, plant and equipment, net



403,130



227,077

Financing lease right-of-use assets, net



9,839



9,128

Advanced coal royalties



3,618



5,576

Other



3,589



491

Total Assets


$

562,132


$

329,033








Liabilities and Stockholders' Equity







Liabilities







Current liabilities







Accounts payable


$

30,130


$

15,346

Accrued expenses



49,209



19,410

Asset retirement obligations



484



489

Current portion of long-term debt



30,839



7,674

Current portion of related party debt



35,000



-

Current portion of financing lease obligations



4,776



3,461

Other current liabilities



-



280

Total current liabilities



150,438



46,660

Asset retirement obligations



28,339



22,060

Long-term debt, net



16,838



3,339

Long-term related party debt



10,000



-

Long-term financing lease obligations, net



3,783



4,599

Senior notes, net



32,712



32,363

Deferred tax liability, net



17,985



6,406

Other long-term liabilities



3,368



2,532

Total liabilities



263,463



117,959








Commitments and contingencies



-



-








Stockholders' Equity







Preferred stock, $0.01 par value



-



-

Common stock, $0.01 par value



441



441

Additional paid-in capital



166,994



163,566

Retained earnings



131,234



47,067

Total stockholders' equity



298,669



211,074

Total Liabilities and Stockholders' Equity


$

562,132


$

329,033








Ramaco Resources, Inc.

Unaudited Statement of Cash Flows











Nine months ended September 30,


In thousands


2022


2021


Cash flows from operating activities








Net income


$

101,656


$

21,120


Adjustments to reconcile net income to net cash from operating activities:








Accretion of asset retirement obligations



1,485



461


Depreciation and amortization



29,898



18,861


Amortization of debt issuance costs



367



96


Stock-based compensation



6,192



3,919


Other income - gain on sale of mineral rights



(2,113)



-


Other income - employee retention tax credit



-



(5,407)


Deferred income taxes



11,579



1,650


Changes in operating assets and liabilities:








Accounts receivable



(5,905)



(17,293)


Prepaid expenses and other current assets



1,242



5,611


Inventories



(24,237)



(1,933)


Other assets and liabilities



91



760


Accounts payable



12,432



7,515


Accrued expenses



26,112



2,397


Net cash from operating activities



158,799



37,757










Cash flow from investing activities:








Purchases of property, plant and equipment



(91,384)



(17,642)


Acquisition of Ramaco Coal assets



(11,738)



-


Acquisition of Maben assets



(10,715)



-


Proceeds from sale of mineral rights



2,000



-


Net cash from investing activities



(111,837)



(17,642)










Cash flows from financing activities








Proceeds from borrowings



17,000



50,545


Proceeds from stock option exercises



107



-


Payments of debt issuance cost



-



(2,356)


Payments of dividends



(14,996)



-


Repayment of borrowings



(17,066)



(24,900)


Repayments of financed insurance payable



(280)



(862)


Repayments of financing leased equipment



(3,760)



(1,253)


Restricted stock surrendered for withholding taxes payable



(2,871)



(327)


Net cash from financing activities



(21,866)



20,847










Net change in cash and cash equivalents and restricted cash



25,096



40,962


Cash and cash equivalents and restricted cash, beginning of period



22,806



6,710


Cash and cash equivalents and restricted cash, end of period


$

47,902


$

47,672










Reconciliation of Non-GAAP Measures

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, certain non-operating 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 GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
















Three months ended September 30,


Nine months ended September 30,

(In thousands)


2022


2021


2022


2021














Reconciliation of Net Income to Adjusted EBITDA













Net income


$

26,905


$

7,035


$

101,656


$

21,120

Depreciation and amortization



11,435



6,751



29,898



18,861

Interest expense, net



2,255



933



5,323



1,418

Income tax expense



6,596



1,588



27,068



1,650

EBITDA



47,191



16,307



163,945



43,049

Stock-based compensation



2,019



1,342



6,192



3,919

Other non-operating expenses



1,000



-



1,000



-

Accretion of asset retirement obligations



495



156



1,485



461

Adjusted EBITDA


$

50,705


$

17,805


$

172,622


$

47,429














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 and idle mine 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 performance. Revenue per ton sold (FOB mine) and cash cost per ton are not measures of financial performance in accordance with GAAP and therefore should not be considered as an alternative to revenue and cost of sales under GAAP. The tables below show how we calculate non-GAAP revenue and cash cost per ton:

Non-GAAP revenue per ton






















Three months ended September 30, 2022


Three months ended September 30, 2021



Company


Purchased





Company


Purchased




(In thousands, except per ton amounts)


Produced


Coal


Total


Produced


Coal


Total




















Revenue


$

135,416


$

1,509


$

136,925


$

75,207


$

1,170


$

76,377

Less: Adjustments to reconcile to Non-
GAAP revenue (FOB mine)



















Transportation costs



(14,158)



-



(14,158)



(8,549)



(209)



(8,758)

Non-GAAP revenue (FOB mine)


$

121,258


$

1,509


$

122,767


$

66,658


$

961


$

67,619

Tons sold



602



7



608



637



7



644

Revenue per ton sold (FOB mine)


$

202


$

231


$

202


$

105


$

138


$

105













Three months ended June 30, 2022



Company


Purchased




(In thousands, except per ton amounts)


Produced


Coal


Total











Revenue


$

137,714


$

941


$

138,655

Less: Adjustments to reconcile to Non-GAAP
revenue (FOB mine)










Transportation costs



(13,461)



-



(13,461)

Non-GAAP revenue (FOB mine)


$

124,253


$

941


$

125,194

Tons sold



578



5



584

Revenue per ton sold (FOB mine)


$

215


$

186


$

215






















Nine months ended September 30, 2022


Nine months ended September 30, 2021



Company


Purchased





Company


Purchased




(In thousands, except per ton amounts)


Produced


Coal


Total


Produced


Coal


Total




















Revenue


$

424,058


$

6,403


$

430,461


$

190,211


$

5,678


$

195,889

Less: Adjustments to reconcile to Non-
GAAP revenue (FOB mine)



















Transportation costs



(44,749)



(239)



(44,988)



(23,624)



(1,180)



(24,804)

Non-GAAP revenue (FOB mine)


$

379,309


$

6,164


$

385,473


$

166,587


$

4,498


$

171,085

Tons sold



1,753



22



1,775



1,707



44



1,751

Revenue per ton sold (FOB mine)


$

216


$

279


$

217


$

98


$

102


$

98




















Non-GAAP cash cost per ton(1)






















Three months ended September 30, 2022


Three months ended September 30, 2021



Company


Purchased





Company


Purchased




(In thousands, except per ton amounts)


Produced


Coal


Total


Produced


Coal


Total




















Cost of sales


$

78,818


$

816


$

79,634


$

53,928


$

880


$

54,808

Less: Adjustments to reconcile to Non-
GAAP cash cost of sales



















Transportation costs



(14,156)



-



(14,156)



(8,548)



(210)



(8,758)

Idle mine costs



(5,037)



-



(5,037)



-



-



-

Non-GAAP cash cost of sales


$

59,625


$

816


$

60,441


$

45,380


$

670


$

46,050

Tons sold



602



7



608



637



7



644

Cash cost per ton sold


$

99


$

125


$

99


$

71


$

97


$

72













Three months ended June 30, 2022



Company


Purchased




(In thousands, except per ton amounts)


Produced


Coal


Total











Cost of sales


$

75,857


$

787


$

76,644

Less: Adjustments to reconcile to Non-GAAP
cash cost of sales










Transportation costs



(13,459)



-



(13,459)

Idle mine costs



-



-



-

Non-GAAP cash cost of sales


$

62,398


$

787


$

63,185

Tons sold



578



5



584

Cash cost per ton sold


$

108


$

155


$

108






















Nine months ended September 30, 2022


Nine months ended September 30, 2021



Company


Purchased





Company


Purchased




(In thousands, except per ton amounts)


Produced


Coal


Total


Produced


Coal


Total




















Cost of sales


$

232,536


$

4,994


$

237,530


$

138,863


$

4,905


$

143,768

Less: Adjustments to reconcile to Non-
GAAP cash cost of sales



















Transportation costs



(44,749)



(239)



(44,988)



(23,625)



(1,179)



(24,804)

Idle mine costs



(5,037)



-



(5,037)



-



-



-

Non-GAAP cash cost of sales


$

182,750


$

4,755


$

187,505


$

115,238


$

3,726


$

118,964

Tons sold



1,753



22



1,775



1,707



44



1,751

Cash cost per ton sold


$

104


$

215


$

106


$

67


$

85


$

68





















(1) Includes Ramaco Coal royalty costs for all periods prior to the Ramaco Coal acquisition date of April 29, 2022.

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.

Cision View original content:https://www.prnewswire.com/news-releases/ramaco-resources-inc-reports-third-quarter-2022-financial-results-301670784.html

SOURCE Ramaco Resources, Inc.

11/7/2022 4:30:00 PM