RAMACO RESOURCES REPORTS FIRST QUARTER 2024 RESULTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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LEXINGTON, Ky., May 8, 2024 /PRNewswire/ -- Ramaco Resources, Inc. (NASDAQ: METC, METCB, "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, 2024. FIRST QUARTER 2024 HIGHLIGHTS
MARKET COMMENTARY / 2024 OUTLOOK
MANAGEMENT COMMENTARY Randall Atkins, Ramaco Resources' Chairman and Chief Executive Officer commented, "Our first quarter results were clearly below our expectations. This was due to the combination of lower prices throughout the quarter and especially in March, as well as higher than expected mine costs from challenging geology and labor conditions at Elk Creek. I am confident, however, that results will improve throughout the year. We are on track to increase our production levels from executing on our growth plan, working to reduce costs and continuing our strong 2024 marketing against largely committed sales for the balance of the year. There are similarities about the start to this year that we have seen before. In 2023, we had the dynamic where the second half of the year was significantly stronger than the first half of the year. This was due not only to seasonal influences of steel markets, but importantly also from an operational standpoint. We went from being a 3 to a 4 million ton per annum company in the second half with resulting positive financial impact. Ironically, in 2024 an analogous situation may play out. By this fourth quarter, we hope to be producing almost a million tons more on an annualized basis. It is our goal to exit 2024 at almost a 5 million ton per annum sales and production rate, as well as reduce our cost profile to at or below $100 per ton cash mine costs. We anticipate the second half overall cost decline to come not only from this increased production but also changes in mine geology, labor and productivity. In terms of the met markets, prices fell meaningfully by about $55 per ton, or 20% throughout the first quarter of 2024 on the back of muted global demand. This drop accelerated almost $30 per ton or 12% in March alone. Specifically, U.S. high vol A indices ended the first quarter more than $55 per ton below fourth quarter of 2023 average prices. The large price drop occurring in March, unfortunately hit when we shipped the majority of our first quarter index priced export shipments. Since March, pricing appears to have recently stabilized. There are perhaps several reasons including renewed buying activity from Asian steel mills, coupled with the closure of some higher cost, mostly high vol U.S. mines which are losing money at current price levels. The closure of these mines has somewhat loosened the labor pool in the Appalachian area which will hopefully help us on both hiring and wage cost fronts. Looking forward, we expect the market to largely "crab walk" in Q2 as prices remain range bound. Fortunately, we have already essentially placed all of our coal sales for the year at guidance levels. There are reasons, however, for some optimism in the second half as Asian markets look to rebound and recover some lost momentum and softening in U.S. production begins to impact markets. We are even now seeing some increased sales interest over the last few weeks. On our critical minerals front, we continue to make progress in terms of initial mine development and related chemical testing of our rare earth elements and critical minerals at the Brook Mine in Wyoming. We are continuing deeper and more core drilling as well as chemical sequential digestion to help determine appropriate processing techniques. We anticipate the completion of our techno economic analysis this year to evaluate the overall commercial aspects of the opportunity. As a reminder, in March Weir International, Inc. issued a revised technical exploration report regarding Ramaco's rare earth opportunity. In terms of its key findings, both the reported rare earth tonnage volume and concentration estimates essentially doubled since Weir's initial May 2023 Report. Importantly, a number of material lithologies showed maximum ppm concentrations exceeding 9,000 ppm, including from coal. In addition, over 10% of the Brook Mine deposit was estimated to contain gallium and germanium, two high value critical minerals recently banned by China. Lastly, we recently closed an agreement to both extend and increase the size of our existing Revolver with a banking syndicate led by KeyBank, NA. The new facility increases the Revolver from $125 million to $200 million with an accordion feature to increase the ultimate size by an additional amount of $75 million to $275 million. As we look to further growth in production over the coming years, we now welcome the additional flexibility of a larger facility to meet normal operating requirements. The term of the new facility has also been extended to five years, from an original three years. We view the successful closing of this facility as another testament to our strong credit standing and conservative financial metrics. In summary, we had a challenging quarter. We will move beyond it. We look forward to improving our operational and financial results throughout the remainder of the year as we execute on both our metallurgical coal production growth strategy, while advancing the commercial development of our Brook Mine REE and critical mineral project." Key operational and financial metrics are presented below:
FIRST QUARTER 2024 PERFORMANCE In the following paragraphs, all references to "quarterly" periods or to "the quarter" refer to the first quarter of 2024, unless specified otherwise. Year over Year Quarterly Comparison Overall production in the quarter was 844,000 tons, up 1% from the same period of 2023. The Elk Creek complex produced 467,000 tons, down 24% from 611,000 tons last year. The decline was due to both challenging geology and labor constraints, both of which we believe are largely behind us as of this month. The Berwind, Knox Creek, and Maben complexes increased production to a record 377,000 tons in the quarter, up 69% from 223,000 tons for the same period last year. Quarterly pricing was $155 per ton, which was 18% lower compared to $188 per ton in the first quarter of 2023. This mirrored the year-over-year decline in U.S. metallurgical coal price indices. Cash mine costs were $118 per ton sold, excluding transportation costs, alternative mineral development costs, and idle mine costs, which was an 8% increase from the same period in 2023. As a result of the above, cash margins were $37 per ton during the quarter, down from $79 per ton in the same period of 2023. This was based on non-GAAP revenue (FOB mine) and non-GAAP cash cost of sales (FOB mine). Quarter over Quarter Comparison First quarter of 2024 production was 844,000 tons, up 13% compared with the fourth quarter of 2023, largely due to the lack of vacation periods in the first quarter of 2024. Total quarterly sales volume of 929,000 tons was down from 988,000 tons in the fourth quarter of 2023, with the decline in the first quarter of 2024 due to a lower inventory reduction compared to the fourth quarter of 2023. The realized price of $155 per ton during the first quarter of 2024 was down 11% from $175 per ton in the fourth quarter 2023 reflecting weaker market conditions and lower index pricing in the first quarter of 2024. First quarter of 2024 cash costs of $118 per ton compared to $107 per ton in the fourth quarter of 2023. Correspondingly, cash margins were $37 per ton during the first quarter of 2024, decreasing from $68 per ton in the fourth quarter of 2023, based on non-GAAP revenue (FOB mine) and non-GAAP cash cost of sales (FOB mine). BALANCE SHEET AND LIQUIDITY As of March 31, 2024, the Company had liquidity of $95.8 million, consisting of $30.5 million of cash plus $65.3 million of availability under our revolving credit facility. Liquidity was up 46% from $65.4 million in the same period of 2023. On March 31, 2024, accounts receivable hit record quarter-end levels of $103.5 million, up $32.4 million from $71.1 million as of March 31, 2023. The increase is reflective of the material increases in both overall and seaborne sales. First quarter of 2024 capital expenditures totaled $18.7 million. This was down from $23.5 million in the same period of 2023, and up slightly from $18.0 million in the fourth quarter of 2023. The Company's effective quarterly tax rate was 21%. For the first quarter of 2024, the Company recognized income tax expense of $0.5 million. 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, and southwestern Virginia. Its executive offices are in Lexington, Kentucky, with operational offices in Charleston, West Virginia and Sheridan, Wyoming. The Company currently has four active metallurgical coal mining complexes in Central Appalachia and one development rare earth and coal mine near Sheridan, Wyoming in the initial stages of production. In 2023, the Company announced that a major rare earth deposit of primary magnetic rare earths was discovered at its mine near Sheridan, Wyoming. Contiguous to the Wyoming mine, the Company operates a carbon 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 60 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 2024 CONFERENCE CALL Ramaco Resources will hold its quarterly conference call and webcast at 9:00 AM Eastern Time (ET) on Thursday, May 9, 2024. An accompanying slide deck will be available at https://www.ramacoresources.com/investors/investor-presentations/ immediately before the conference call. To participate in the live teleconference on May 9, 2024: Domestic Live: (877) 317-6789 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, unexpected delays in our current mine development activities, the ability to successfully ramp up production at the Berwind and Knox Creek complexes, 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, the anticipated benefits and impacts of the Ramaco Coal and Maben acquisitions, and the Company's ability to successfully develop the Brook Mine, including whether the increase in the Company's exploration target and estimates for such mine are realized. 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 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 evaluate our operating performance more effectively. 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 including demurrage costs, divided by tons sold. Non-GAAP cash cost per ton sold (FOB mine) is calculated as cash cost of coal sales less transportation costs, alternative mineral development costs, and idle and other costs, divided by tons sold. We believe revenue per ton (FOB mine) and cash cost per ton (FOB mine) provide 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, and alternative mineral costs, which are more developmentally focused currently. 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 sold (FOB mine) are not measures of financial performance in accordance with GAAP and therefore should not be considered as a substitute for 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. |
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