LEXINGTON, Ky., Aug. 13, 2019 /PRNewswire/ — Ramaco Resources, Inc. (NASDAQ: METC) («Ramaco,» «Ramaco Resources» or the «Company») today reported second quarter net income of $10.6 million, or $0.26 per fully diluted share for the quarter ended June 30, 2019, as compared to a net income of $10.2 million in the prior year quarter ended June 30, 2018. The Company’s adjusted earnings before interest, taxes, depreciation, amortization and equity-based compensation expenses («Adjusted EBITDA») was $19.1 million for the three months ended June 30, 2019, as compared with Adjusted EBITDA of $14.9 million for the three months ended June 30, 2018.  Key operational and financial metrics are presented below:

Key Second Quarter 2019 Metrics

2Q19

1Q19

Change

2Q19

2Q18

Change

1H19

1H18

Change

Sales Of Company Produced Tons

499,000

443,000

13%

499,000

493,000

1%

942,000

896,000

5%

Revenue ($ MM)

$65.8

$57.5

14%

$65.8

$65.3

1%

$123.2

$121.2

2%

Cost of Sales ($ MM)

$43.2

$41.0

5%

$43.2

$47.9

-10%

$84.2

$92.2

-9%

Pricing Of Company Produced ($/Ton)

$116

$104

12%

$116

$91

27%

$110

$91

21%

Cash Costs Of Company Produced ($/Ton)

$71

$68

4%

$71

$56

27%

$69

$60

15%

Cash Margins Of Company Produced ($/Ton)

$45

$36

25%

$45

$35

29%

$41

$31

32%

Net Income ($ MM)

$10.6

$6.9

54%

$10.6

$10.2

4%

$17.5

$15.5

13%

Adjusted EBITDA ($ MM)

$19.1

$13.7

39%

$19.1

$14.9

28%

$32.8

$24.2

36%

Capex ($ MM)

$11.5

$8.2

40%

$11.5

$14.7

-22%

$19.7

$27.5

-28%

Diluted Earnings per Share

$0.26

$0.17

53%

$0.26

$0.25

4%

$0.43

$0.38

13%

Second Quarter 2019 Summary

Year over Year Quarterly Comparison
Overall sales of company produced tons in the second quarter of 2019 were 499,000 tons, a 1% increase from the second quarter of 2018 of 493,000 tons. Cash margins on Company produced and sold coal at Elk Creek improved by 32% from approximately $37 per ton in the second quarter of 2018 to approximately $49 per ton in the second quarter of 2019. Cash mine costs per ton on Company produced and sold coal at Elk Creek were $66 in the second quarter of 2019 compared to $53 in the second quarter of 2018.

2019 Quarter over Quarter Comparison
Overall sales of company produced tons in the second quarter of 2019 were up 13% from the first quarter of 2019.  Cash margins on Company produced and sold coal at Elk Creek improved by 26%, from approximately $39 per ton in the first quarter of 2019 to approximately $49 per ton in the second quarter of 2019. Adjusted EBITDA for the second quarter of 2019 was $19.1 million as compared to $13.7 million for the first quarter of 2019 or up over 39%. Cash mine costs per ton on Company produced and sold coal at Elk Creek were $66 in the second quarter of 2019, up approximately 5% from $63 in the first quarter of 2019.

Randall Atkins, Ramaco Resources’ Executive Chairman remarked, «We are of course very pleased to report our strongest quarter to date, basically across the board. We have achieved record results in all of our key financial and operational metrics and are looking forward to continuing our measured production growth throughout the balance of the year and into 2020. Given the current turbulence in both the financial and coal markets, it is worth reemphasizing the conservative approach which we have deployed to build our company. Ramaco was strategically designed to weather these types of market dislocations. Ramaco continues to have some of the lowest cash mining costs, net debt and legacy liabilities of any of our public peers. We have done so while providing our customers high quality metallurgical coals, which have been widely accepted in the blends of both our domestic and international customers. We look forward to participating in the current 2020 domestic marketing season as an incumbent supplier to many of our best customers and to also expanding our sales profile in this coming year into new export markets.»

Additional Financial Results

The Company ended the quarter with approximately $5.5 million of cash on hand, $26.1 million of accounts receivable and $21.2 million of availability under the Revolving Credit Facility. Free cash flow generated during 2019, as well as borrowings available through our Revolving Credit Facility, are expected to be used to fund working capital, mine expansion and related capital expenditures.

Actual cash taxes payable for 2019 are expected to be less than $0.2 million.

In the first half of 2019, the Company recorded income tax expense of $3.5 million for an annual effective tax rate of approximately 16.8%.

Capital expenditures totaled approximately $11.5 million during the second quarter of 2019 and approximately $19.8 million through the six months ended June 30, 2019.  Capital expenditures decreased by approximately 22% compared to the second quarter of 2018.

Operational Results

The exhibit below summarizes some of the key sales, production and financial metrics for the periods noted:

Three months ended

Six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

In thousands, except per ton amounts

2019

2019

2018

2019

2018

Sales Volume

Company

499

443

493

942

896

Purchased

26

35

122

61

241

Total

525

478

615

1,003

1,137

Company Production

Elk Creek Mining Complex

423

440

478

863

838

Berwind Development Deep Mine

53

32

19

85

39

Total

476

472

497

948

877

Company Financial Metrics(a)

Average revenue per ton

$

116

$

104

$

91

$

110

$

91

Average cash costs of coal sold

71

68

56

69

60

Average cash margin per ton

$

45

$

36

$

35

$

41

$

31

Elk Creek Financial Metrics(a)

Average revenue per ton

$

115

$

102

$

90

$

109

$

90

Average cash costs of coal sold

66

63

53

65

57

Average cash margin per ton

$

49

$

39

$

37

$

44

$

33

Purchased Coal Financial Metrics(a)

Average revenue per ton

$

123

$

127

$

101

$

125

$

101

Average cash costs of coal sold

122

108

100

114

95

Average cash margin per ton

$

1

$

19

$

1

$

11

$

6

Capital Expenditures

$

11,538

$

8,199

$

14,709

$

19,737

$

27,478

(a)         Excludes transportation.

2019 Outlook

Michael Bauersachs, Ramaco Resources’ President and CEO commented, «Overall, our second quarter performance was very good. Our mines, although continuing to lose some potential operating shifts, performed quite well. There were no noteworthy production issues in the second quarter. We anticipate a stable and slightly improving production profile throughout the second half of the year.»

«As the third quarter is progressing, we are watching two trends develop. First, we are seeing a deceleration in international pricing, mostly driven by lower demand and uncertainty surrounding Chinese import restrictions. Second, we are seeing pronounced financial weakness in the form of numerous coal bankruptcies.  Our well capitalized mines are becoming the new standard in our operating regions. The reliability and quality that comes from our mines has created one of the strongest North American coal sales portfolios in the space. 2020 domestic contracting has begun. It is a very good time to have an outsized incumbent North American sales position that is well embedded into our customer’s blends.»

«With that being said, we have made a large push to qualify our coal in all key international markets. The large number of recent US coal bankruptcies has caused concern with potential export customers. Our advantaged balance sheet, combined with our approach to mining, is helping set us apart and advance these important efforts.»

2019 Estimated Production, Sales, Cost and Capital Expenditure Guidance
(In thousands, except per ton amounts)

2019 Guidance

2018 Actuals

Company Production

Elk Creek

1,600

1,900

1,669

Berwind Development Deep Mine

200

300

81

Total

1,800

2,200

1,750

Sales Mix

Metallurgical

1,925

2,300

2,066

Steam

75

100

82

2,000

2,400

2,148

Cost Per Ton (a)

Elk Creek

$

63

$

67

$

60

Capital Expenditures

$

35,000

$

40,000

$

48,137

(a)      Cost per ton guidance does not include the potential impact of inventory adjustments.

 

Committed 2019 Sales Volume (b)
(In thousands, except per ton amounts)

Volume

Average Price

Committed 2019 Sales Volume

Domestic, fixed priced

1,519

$

113

Export, fixed priced

312

$

124

Total, fixed priced

1,831

$

115

Domestic, indexed

166

Total, indexed priced

166

Total Committed Tons

1,997

(b)     As of June 30, 2019, amounts include approximately 100,000 tons of purchased coal

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 has five active mines within two mining complexes at this time.

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

Second Quarter Earnings Conference Call

Ramaco Resources will hold its quarterly conference call and webcast at 9:00 AM Eastern Time (ET) on Wednesday, August 14, 2019 to present its results for the second quarter of 2019.

The conference call can be accessed by calling (844) 852-8392 domestically or (703) 639-1226 internationally. The webcast for this release will be accessible by visiting https://edge.media-server.com/mmc/p/ewe5d2jw.

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 2019 guidance, future events, anticipated revenues, 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, failure of our sales commitment counterparties to perform, increased government regulation of coal in the United States or internationally, or unexpected decline of demand for coal in export markets and underperformance of the railroads. 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. 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.
Consolidated Statements of Operations

Three months ended June 30, 

Six months ended June 30, 

In thousands, except per share amounts

2019

2018

2019

2018

Revenue

$

65,761

$

65,278

$

123,221

$

121,221

Cost and expenses

Cost of coal sales (exclusive of items shown separately below)

43,219

47,860

84,225

92,191

Asset retirement obligation accretion

128

124

256

247

Depreciation and amortization

4,822

2,955

8,938

5,393

Selling, general and administrative

4,703

3,692

8,664

7,123

Total cost and expenses

52,872

54,631

102,083

104,954

Operating income

12,889

10,647

21,138

16,267

Other income

194

513

492

1,002

Interest expense, net

(302)

(314)

(609)

(414)

Income before tax

12,781

10,846

21,021

16,855

Income tax expense

2,168

642

3,525

1,385

Net income

$

10,613

$

10,204

$

17,496

$

15,470

Earnings per common share

Basic earnings per share

$

0.26

$

0.25

$

0.43

$

0.39

Diluted earnings per share

$

0.26

$

0.25

$

0.43

$

0.38

Basic weighted average shares outstanding

40,869

40,082

40,737

39,994

Diluted weighted average shares outstanding

40,965

40,340

40,810

40,242

 

Ramaco Resources, Inc.
Consolidated Balance Sheets

In thousands, except share amounts

June 30, 2019

December 31, 2018

Assets

Current assets

Cash and cash equivalents

$

5,541

$

6,951

Accounts receivable

26,099

10,729

Inventories

16,593

14,185

Prepaid expenses

1,604

3,154

 Total current assets

49,837

35,019

Property, plant and equipment, net

164,193

149,205

Advanced coal royalties

3,113

3,045

Other assets

994

975

Total Assets

$

218,137

$

188,244

Liabilities and Stockholders’ Equity

Liabilities

Current liabilities

Accounts payable

$

16,325

$

16,393

Accrued expenses

9,390

8,094

Asset retirement obligations

513

71

Current portion of long-term debt

5,000

5,000

Other

287

 Total current liabilities

31,228

29,845

Asset retirement obligations

12,656

12,707

Long-term debt, net

10,002

4,474

Deferred tax liability

3,537

109

Other long-term liabilities

155

 Total liabilities

57,578

47,135

Commitments and contingencies

Stockholders’ Equity

Preferred stock, $0.01 par value

Common stock, $0.01 par value

409

401

Additional paid-in capital

152,872

150,926

Retained earnings (deficit)

7,278

(10,218)

Total stockholders’ equity

160,559

141,109

Total Liabilities and Stockholders’ Equity

$

218,137

$

188,244

 

Ramaco Resources, Inc.
Statement of Cash Flows

Six months ended June 30, 

In thousands

2019

2018

Cash flows from operating activities

Net income

$

17,496

$

15,470

Adjustments to reconcile net income (loss) to net cash from operating
activities:

Accretion of asset retirement obligations

256

247

Depreciation and amortization

8,938

5,393

Amortization of debt issuance costs

28

187

Equity-based compensation

1,954

1,245

Deferred income taxes

3,429

1,385

Changes in operating assets and liabilities:

Accounts receivable

(15,370)

(21,100)

Prepaid expenses

1,550

(977)

Inventories

(2,408)

(1,237)

Advanced coal royalties

(68)

82

Other assets

135

(206)

Accounts payable

(4,121)

1,340

Accrued expenses

1,295

6,282

Net cash from operating activities

13,114

8,111

Cash flow from investing activities:

Purchases of property, plant and equipment

(19,737)

(27,478)

Proceeds from maturities of investment securities

5,200

Net cash from investing activities

(19,737)

(22,278)

Cash flows from financing activities

Proceeds from borrowings

44,300

13,000

Proceeds from notes payable – related party

3,000

Payments of debt issuance cost

(429)

Repayment of borrowings

(38,800)

(1,000)

Repayments of financed insurance payable

(287)

(427)

Net cash from financing activities

5,213

14,144

Net change in cash and cash equivalents

(1,410)

(23)

Cash and cash equivalents, beginning of period

6,951

5,934

Cash and cash equivalents, end of period

$

5,541

$

5,911

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. The Company believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance.

We define Adjusted EBITDA as net income (loss) plus net interest expense, equity-based compensation, depreciation and amortization expenses and any transaction related costs. A reconciliation of income (loss) from continuing operations, net of income taxes 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.

Three months ended June 30, 

Six months ended June 30, 

(In thousands)

2019

2018

2019

2018

Reconciliation of Net Income (Loss) to Adjusted EBITDA

Net income (loss)

$

10,613

$

10,204

$

17,496

$

15,470

Depreciation and amortization

4,822

2,955

8,938

5,393

Interest expense (income), net

302

314

609

414

Income taxes

2,168

642

3,525

1,385

EBITDA

17,905

14,115

30,568

22,662

Equity-based compensation

1,060

694

1,954

1,245

Accretion of asset retirement obligation

128

124

256

247

Adjusted EBITDA

$

19,093

$

14,933

$

32,778

$

24,154

Non-GAAP revenue and cash cost per ton

Non-GAAP revenue per ton (FOB mine) is calculated as coal sales revenues 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 it enables 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 revenues and cost of sales under U.S. GAAP.  The tables below show how we calculate Non-GAAP revenue and cash cost per ton:

Non-GAAP revenue per ton

Three months ended June 30, 2019

Three months ended June 30, 2018

Company

Purchased

Company

Purchased

Produced

Coal

Total

Produced

Coal

Total

In thousands, except per ton amounts

Revenues

$

62,516

$

3,245

$

65,761

$

52,051

$

13,227

$

65,278

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

Transportation costs

4,695

42

4,737

7,118

808

7,926

Non-GAAP revenues (FOB mine)

$

57,821

$

3,203

$

61,024

$

44,933

$

12,419

$

57,352

Tons sold

499

26

525

493

123

616

Revenues per ton sold (FOB mine)

$

116

$

123

$

116

$

91

$

101

$

93

        

Three months ended March 31, 2019

Company

Purchased

Produced

Coal

Total

(In thousands, except per ton amounts)

Revenues

$

52,486

$

4,974

$

57,460

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

Transportation costs

6,636

531

7,167

Non-GAAP revenues (FOB mine)

$

45,850

$

4,443

$

50,293

Tons sold

443

35

478

Revenues per ton sold (FOB mine)

$

104

$

127

$

105

   

Six months ended June 30, 2019

Six months ended June 30, 2018

Company

Purchased

Company

Purchased

(In thousands, except per ton amounts)

Produced

Coal

Total

Produced

Coal

Total

Revenues

$

115,216

$

8,005

$

123,221

$

95,009

$

26,212

$

121,221

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

Transportation costs

11,646

373

12,019

13,224

1,955

15,179

Non-GAAP revenues (FOB mine)

$

103,570

$

7,632

$

111,202

$

81,785

$

24,257

$

106,042

Tons sold

942

61

1,003

896

241

1,137

Revenues per ton sold (FOB mine)

$

110

$

125

$

111

$

91

$

101

$

93

Non-GAAP cash cost per ton

Three months ended June 30, 2019

Three months ended June 30, 2018

Company

Purchased

Company

Purchased

Produced

Coal

Total

Produced

Coal

Total

In thousands, except per ton amounts

Cost of sales

$

39,811

$

3,408

$

43,219

$

34,739

$

13,121

$

47,860

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

Transportation costs

4,504

234

4,738

7,360

868

8,228

Non-GAAP cash cost of coal sales

$

35,307

$

3,174

$

38,481

$

27,379

$

12,253

$

39,632

Tons sold

499

26

525

493

123

616

Cash cost per ton sold

$

71

$

122

$

73

$

56

$

100

$

64

   

Three months ended March 31, 2019

Company

Purchased

Produced

Coal

Total

(In thousands, except per ton amounts)

Cost of sales(a)

$

36,710

$

4,296

$

41,006

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

Transportation costs

6,636

531

7,167

Non-GAAP cash cost of coal sales

$

30,074

$

3,765

$

33,839

Tons sold

443

35

478

Cash cost per ton sold

$

68

$

108

$

71

   

Six months ended June 30, 2019

Six months ended June 30, 2018

Company

Purchased

Company

Purchased

Produced

Coal

Total

Produced

Coal

Total

(In thousands, except per ton amounts)

Cost of sales

$

76,914

$

7,311

$

84,225

$

67,174

$

25,017

$

92,191

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

Transportation costs

11,646

373

12,019

13,722

2,089

15,811

Non-GAAP cash cost of coal sales

$

65,268

$

6,938

$

72,206

$

53,452

$

22,928

$

76,380

Tons sold

942

61

1,003

896

241

1,137

Cash cost per ton sold

$

69

$

114

$

72

$

60

$

95

$

67

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.

# # #

POINT OF CONTACT:
Jeremy Sussman, Chief Financial Officer
jrs@ramacocoal.com
859-244-7455

Cision View original content:http://www.prnewswire.com/news-releases/ramaco-resources-inc-reports-second-quarter-2019-financial-results-300901100.html

SOURCE Ramaco Resources