|RAMACO RESOURCES REPORTS FIRST QUARTER 2023 RESULTS|
LEXINGTON, Ky., May 3, 2023 /PRNewswire/ -- Ramaco Resources, Inc. (NASDAQ: METC, "Ramaco" or the "Company"), a leading operator and developer of high-quality, low-cost metallurgical coal, today reported financial results for the three months ended March 31, 2023.
FIRST QUARTER 2023 HIGHLIGHTS
MARKET COMMENTARY / 2023 OUTLOOK
Randall Atkins, Ramaco Resources' Chairman and Chief Executive Officer commented, "Earlier this year I said that our goal in 2023 is simply to execute. After a number of operational setbacks in 2022, as well as ongoing transportation challenges, I am pleased to say that this quarter we executed better than we had expected.
In the first quarter, we achieved both record production of 834,000 tons and record sales of 757,000 tons. In addition, despite continued inflationary pressures, our non-GAAP cash cost of sales, which excludes transportation and idle mine costs, fell from $114 per ton in the fourth quarter of 2022 to $105 per ton in the first quarter of 2023. Elk Creek cash costs declined over 10% sequentially to $90 per ton in the first quarter. We also look forward to the second half production ramp at Berwind helping our overall cash mine costs to decline over the balance of the year.
Our sales team continues to aggressively increase our global footprint. After our inaugural sale to India earlier in the year, I am pleased to report that we have recently added sales to two new countries: Japan and Indonesia. Overall, the Company now has 2.7 million tons contracted, or 81% of forecasted 2023 production. Of this contracted production, 1.9 million tons have been sold at an average fixed price of $197 per ton, with the balance being export sales priced against a floating index.
While overall pricing has fallen on the back of global economic concerns, Ramaco is continuing to focus on what we can control. In terms of our continued commitment to responsibly growing production, I am pleased to note that the first section at the Berwind No. 1 mine restarted early and has been ramping production in-line with expectations. The Board recently approved pulling forward the second section of the Berwind mine to mid-2023 from 2024, which should both add ~300,000 tons of additional production on an annualized basis by late 2023 and continue to reduce overall mine costs. We also add two more milestones this quarter: the first production from our new mine at Maben and a 50% increase of Elk Creek's preparation plant capacity from 2 to 3 million tons on an annualized basis.
Importantly, I would urge you to all read both our separate press release, as well as my letter to shareholders regarding the potentially transformative work we have been doing at our Brook Mine in Sheridan, Wyoming, to assess what may be among the most promising Rare Earth Element ("REE") deposits on a worldwide basis. An independent assessment of the deposit has been conducted in conjunction with our reserve engineers at Weir International and the National Energy Technology Laboratory ("NETL"). Our initial conclusion is that the mine may contain one of the largest unconventional deposits of REEs discovered in the United States. Core analysis performed to date shows high relative concentrations of heavy REEs such as Terbium and Dysprosium, as well as lighter REEs with magnetic properties such as Neodymium and Praseodymium.
We of course recognize that any new mine project, especially one involving emerging technology, is fraught with uncertainty. However, given the magnitude of what we have discovered to date, we intend to pursue a thoughtful investigation of this unique opportunity. If that diligence continues on its present course perhaps Ramaco can transform its footprint into becoming both a low cost supplier of strategic REE critical materials from Wyoming as well as continuing as a producer of metallurgical coal in Central Appalachia. We intend to supply regular updates as this REE project unfolds.
Finally, as we said before, our goal for 2023 remains to execute on our objectives which are:
Key operational and financial metrics are presented below:
FIRST QUARTER 2023 PERFORMANCE
In the following paragraphs, all references to "quarterly" periods or to "the quarter" refer to the first quarter of 2023, unless specified otherwise.
Year over Year Quarterly Comparison
Overall production in the quarter was 834,000 tons, up 25% from the same period of 2022. The Elk Creek complex produced 611,000 tons. Production from the Berwind and Knox Creek Mining complexes increased from 163,000 tons in the first quarter of 2022 to 223,000 tons this quarter. Overall total sales were a quarterly record of 757,000 tons, up from 583,000 tons in the first quarter of 2022. We saw a meaningful improvement in transportation service in the first quarter, and we applaud the efforts of our railroad partners.
Cash margins on Company produced coal were $80 per ton during the quarter, down 38% from the same period of 2022, based on non-GAAP revenue (FOB mine) and non-GAAP cash cost of sales. Quarterly pricing was $185 per ton of Company produced coal sold, which was 21% lower compared to the first quarter of 2022.
Company produced cash mine costs excluding transportation and idle mine costs were $105 per ton, which was 1% lower than for the same period of 2022. Cash mine costs at Elk Creek were $90 per ton during the quarter. This compared to cash mine costs at Elk Creek of $98 per ton during the same period of 2022. Elk Creek costs are expected to stay near current levels, while overall cash costs are anticipated to move lower, especially in the second half of 2023 as the Berwind Complex ramps production.
Sequential Fourth Quarter Comparison
Overall production of 834,000 tons in the first quarter of 2023 was up 139,000 tons compared with the fourth quarter of 2022, as new mines ramped up production. Total sales volume of 757,000 tons was up 12% from the fourth quarter of 2022 level of 675,000 tons.
Cash margins on Company produced coal were $80 per ton compared to $68 per ton in the fourth quarter of 2022, based on non-GAAP revenue (FOB mine) and non-GAAP cash cost of sales. The increase in margin was mainly due to lower cash costs, with first quarter cash costs of $105 per ton on company produced coal compared to $114 per ton in the fourth quarter of 2022.
BALANCE SHEET AND LIQUIDITY
As of March 31, 2023, the Company had liquidity of $65.4 million, consisting of $36.6 million of cash plus $28.8 million of availability under our revolving credit facility. This compared to liquidity of $49.1 million as of December 31, 2022.
Compared to December 31, 2022, accounts receivable increased by $29.9 million, and inventories increased by $6.0 million. We expect a meaningful decline in inventory in the second half of 2023, on the back of both improved rail service and the 50% increase in processing capacity at the Elk Creek preparation plant.
First quarter capital expenditures totaled $23.5 million. This was a decrease of 26% versus $31.6 million for the fourth quarter of 2022. The decrease was attributable to the completion of the renovation at the Berwind complex preparation plant in the fourth quarter of 2022.
The Company's effective quarterly tax rate was 18%, excluding discrete items. For the first quarter of 2023, we recognized income tax expense of $5.5 million, as compared with $3.1 million in the fourth quarter of 2022. While the Company anticipates an overall tax rate of 20-25% in 2023, the cash tax rate in 2023 is anticipated to be just 5-10%.
In February 2023, KeyBank, N.A. ("KeyBank") led a syndicate of five banks that increased the Company's overall revolving credit facility to $175 million. Under its terms, this consists of an aggregate revolving commitment of $125 million together with an accordion feature providing an additional $50 million which would be available upon the Company's request and subject to the terms and conditions of the facility.
The following summarizes key sales, production and financial metrics for the periods noted:
ABOUT RAMACO RESOURCES
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, the Company 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.
FIRST QUARTER 2023 CONFERENCE CALL
Ramaco Resources will hold its quarterly conference call and webcast at 9:00 AM Eastern Time (ET) on Thursday, May 4, 2023. 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 May 4, 2023:
Domestic Live: (800) 274-8461
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, the ability to successfully ramp up production at the Berwind and Know Creek complexes, the timing of the Elk Creek preparation plant to come online, 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.
Reconciliation of Non-GAAP Measures
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, depletion, and amortization expenses; income taxes; certain non-operating expenses (charitable contributions), and accretion of asset retirement obligations. 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 a substitute for 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 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 a substitute 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
Non-GAAP 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.
SOURCE Ramaco Resources, Inc.
|5/3/2023 4:15:00 PM