Financial News

Ramaco Resources, Inc. Reports First Quarter 2019 Financial Results

LEXINGTON, Ky., May 7, 2019 /PRNewswire/ -- Ramaco Resources, Inc. (NASDAQ: METC) ("Ramaco," "Ramaco Resources" or the "Company") today reported first quarter net income of $6.9 million, or $0.17 per diluted share for the quarter ended March 31, 2019, as compared to a net income of $5.3 million in the quarter ended March 31, 2018. The Company's adjusted earnings before interest, taxes, depreciation, amortization and equity-based compensation expenses ("Adjusted EBITDA") was $13.7 million for the three months ended March 31, 2019, as compared with Adjusted EBITDA of $9.2 million for the three months ended March 31, 2018. For frame of reference, without the negative impact from lower priced carryover tons resulting from November's silo failure, first quarter 2019 net income would have been approximately $9 million and Adjusted EBITDA would have been approximately $16 million. Despite this, Adjusted EBITDA from the first quarter of 2019 was the Company's second highest quarter since operations began.

First Quarter 2019 Summary

Year over Year Comparison
First quarter 2019 revenues were $57.5 million, an increase of 3% compared to the first quarter of 2018. Company production was 478,000 tons in the first quarter of 2019, an increase of 26% compared to 380,000 tons in the first quarter of 2018. Cash margins on Company produced and sold coal at Elk Creek improved by 39% from approximately $28 per ton in the first quarter of 2018 to approximately $39 per ton in the first quarter of 2019. Cash mine costs per ton on Company produced and sold coal at Elk Creek were $63 in the first quarter of 2019 compared to $62 in the first quarter of 2018. First quarter pricing per ton of $104 on overall Company produced tons, while a quarterly record, was negatively impacted by approximately $5 per ton due to carryover tons from 2018 that were priced well below 2019 levels.

Quarter over Quarter Comparison
First quarter 2019 revenues were up 30% from the fourth quarter of 2018.  Company production of 478,000 tons in the first quarter of 2019 was up 16% from the fourth quarter of 2018. Cash margins on Company produced and sold coal at Elk Creek improved by 26% from approximately $31 per ton in the fourth quarter of 2018 to approximately $39 per ton in the first quarter of 2019. Cash mine costs per ton on Company produced and sold coal at Elk Creek were $63 in the first quarter of 2019, which is flat versus fourth quarter 2018 results.

Randall Atkins, Ramaco Resources' Executive Chairman remarked, "I am extremely proud that we've emerged from the operational challenges of the November silo failure at Elk Creek as an even stronger and more resilient company. We managed to produce our second-best quarter of Adjusted EBITDA ever. This was despite the carryover headwinds which we knew would cause the Elk Creek prep plant to run below capacity in the first quarter. We were also dealing with a massive coal stockpile situation at Elk Creek from the fourth quarter which curtailed full production capacity. The plant at Elk Creek still remains on track to be functioning at full capacity before the end of the second quarter of 2019. This will then mostly alleviate the operational burden and financial impacts we have been dealing with since early November. Since we are well underway, I am also pleased to say that although we still have seven weeks to go, we now expect that the second quarter Adjusted EBITDA will be the highest on record for Ramaco Resources. I also anticipate Ramaco will be generating substantial cash flow throughout the rest of the year."

Additional Financial Results

The Company ended the quarter with approximately $1.9 million of cash on hand, $27.3 million of accounts receivable and $19.5 million of availability under the Revolving Credit Facility. Free cash flow generated during 2019, as well as borrowings available through the Revolving Credit Facility, are expected to be used to fund working capital, mine expansion and related capital expenditures.

In the first quarter of 2019, the Company recorded income tax expense of $1.4 million for an annual effective tax rate of approximately 16.5%. Actual cash taxes payable for 2019 are expected to be less than $0.2 million.

Capital expenditures totaled approximately $8.2 million during the first quarter of 2019.  This figure compared favorably to capital expenditures of approximately $8.3 million during the fourth quarter of 2018, and approximately $12.8 million during the first quarter of 2018, which is a 36% year over year decline.

Operational Results

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


Three months ended

In thousands, except per ton amounts

March 31,
2019


December 31,
2018


March 31, 
2018

Sales Volume






Company

443


315


403

Purchased

35


95


119

Total

478


410


522







Company Production






Elk Creek Mining Complex

440


408


360

Berwind Development Deep Mine

32


15


20

Total

472


423


380







Company Financial Metrics(a)






Average revenue per ton

$                      104


$                        96


$                        91

Average cash costs of coal sold

$                        68


$                        68


$                        65

Average cash margin per ton

$                        36


$                        28


$                        26







Elk Creek Financial Metrics(a)






Average revenue per ton

$                      102


$                        94


$                        90

Average cash costs of coal sold

$                        63


$                        63


$                        62

Average cash margin per ton

$                        39


$                        31


$                        28







Purchased Coal Financial Metrics(a)






Average revenue per ton

$                      127


$                      103


$                      100

Average cash costs of coal sold

$                      108


$                        97


$                        89

Average cash margin per ton

$                        19


$                          6


$                        11







Capital Expenditures

$                   8,199


$                   8,254


$                 12,769













(a)   Excludes transportation.






 

2019 Outlook

Michael Bauersachs, Ramaco Resources' President and CEO commented, "The operating team at Elk Creek has done a tremendous job in overcoming the challenges of the November silo failure. Our first quarter 2019 cash costs came in at $63 per ton at Elk Creek despite our prep plant and stockpile issues. Our Elk Creek costs are easily in the first quartile of the U.S. metallurgical coal cost curve. Given our ability to control costs this quarter in the face of such challenging operational issues, we are now guiding to an overall lower 2019 cash cost per ton outlook at Elk Creek from $63-$69 per ton to $63-$67 per ton."

"On the pricing front, Ramaco's coal continues to be well received by both legacy and new domestic and international customers alike. For 2019, we now have over 1.7 million tons committed and priced at $113 per ton versus roughly 1.6 million tons committed and priced at $113/ton at the time of our year-end 2018 results. We also have an additional 0.3 million tons committed at index pricing for sale in 2019."

"In terms of our Berwind development deep mine, we continue to anticipate that by mid-2020, we should reach the more prolific Pocahontas #4 low-vol coal seam, with ultimate full annual production of approximately 750,000 tons. Given seam thickness we anticipate future cash mine cost in that seam in the $80 per ton range, with the potential for future logistical cost improvement. As a reminder, in 2019 we still expect to mine approximately 250,000 tons at Berwind in the thinner Pocahontas #3 seam."

Randall Atkins noted that, "As Berwind ramps up production, and Elk Creek continues to produce as expected, we hope to reach a 2.5 million ton annual production rate in 2020, even without any proposed new development activities. This level should increase to approximately 4.5 million tons by 2023 through capital investments in organic growth at our existing properties. Having emerged from the silo failure as a stronger company than before, we will be discussing with the board of directors the possibility of accelerating some new attractive opportunities to increase production, that we had originally planned for development in later years. These include a possible expansion of the Elk Creek preparation plant to add an additional 500,000 tons above the current nameplate capacity, with a corresponding increase in production. We are also exploring putting in a new High Vol A mine at our Knox Creek complex which will mine in the Tiller and Jawbone seams. We expect this new mine to provide the potential for an additional 500,000 ton per annum at full production. We would note that our 2019 capital expenditure guidance of $35-$40 million does not reflect the expenditures for any of these projects. As we proceed in the analysis and approvals for these projects, we will provide further guidance." 


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








Elk Creek


$63

-

$67


$60










Capital Expenditures 


$35,000

-

$40,000


$48,137

 

Committed 2019 Sales Volume (a)

(In thousands, except per ton amounts)




Volume

Average Price

Company:



Domestic, fixed priced

1,548

$113

Export, fixed priced

169

$122

Total, fixed priced

1,717

$113




Domestic, indexed

230


Export, indexed

44


Total, indexed priced

274


Total Committed Company Tons

1,991


(a) As of March 31, 2019



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.

First Quarter Earnings Conference Call

Ramaco Resources will hold its quarterly conference call and webcast at 9:00 AM Eastern Time (ET) on Wednesday, May 8, 2019 to present its results for the first 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/m6/p/cynyf3sv.

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 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


March 31,
2019


March 31,
2018

In thousands, except per share amounts




Revenues

$            57,460


$          55,943





Cost and expenses




Cost of sales (exclusive of items shown separately below)

41,006


44,331

Asset retirement obligation accretion

128


123

Depreciation and amortization

4,116


2,438

Selling, general and administrative

3,960


3,431

Total cost and expenses

49,210


50,323





Operating income

8,250


5,620





Other income 

298


489

Interest expense, net

(307)


(100)





Income before taxes

8,241


6,009





Income tax expense

1,358


743





Net income 

$              6,883


$            5,266





Basic and diluted earnings per share




Basic

$                0.17


$              0.13

Diluted

$                0.17


$              0.13





Weighted average common shares outstanding




Basic

40,604


39,905

Diluted

40,652


40,142

 

 

Ramaco Resources, Inc.

Consolidated Balance Sheets


In thousands, except share amounts

March 31, 2019


December 31, 
2018

Assets




Current assets




Cash and cash equivalents

$                     1,939


$                              6,951

Accounts receivable

27,285


10,729

Inventories

15,027


14,185

Prepaid expenses

1,958


3,154

Total current assets

46,209


35,019





Property, plant and equipment, net

156,343


149,205





Advanced coal royalties

3,126


3,045

Other assets

1,013


975

Total Assets

$                 206,691


$                          188,244





Liabilities and Stockholders' Equity




Liabilities




Current liabilities




Accounts payable

$                   15,247


$                            16,393

Accrued expenses

9,124


8,094

Asset retirement obligations

292


71

Current portion of long-term debt

5,000


5,000

Other

116


287

Total current liabilities

29,779


29,845





Asset retirement obligations

12,657


12,707

Long-term debt, net

13,737


4,474

Deferred tax liability

1,450


109

Other long-term liabilities

182


Total liabilities

57,805


47,135





Commitments and contingencies






Stockholders' Equity




Preferred stock, $0.01 par value, 50,000,000 shares authorized, none
issued and outstanding


Common stock, $0.01 par value, 260,000,000 shares authorized, 40,832,467and 40,082,467 shares issued and outstanding, respectively

408


401

Additional paid-in capital

151,813


150,926

Accumulated deficit

(3,335)


(10,218)

Total stockholders' equity

148,886


141,109

Total Liabilities and Stockholders' Equity

$                 206,691


$                          188,244

 

 

Ramaco Resources, Inc.

Statement of Cash Flows



Three months ended March 31,

In thousands

2019


2018

Cash flows from operating activities




Net income

$                        6,883


$                        5,266

Adjustments to reconcile net income to net cash from operating activities




Accretion of asset retirement obligations

128


123

Depreciation and amortization

4,116


2,438

Amortization of debt issuance costs

14


48

Stock-based compensation

894


551

Deferred income tax expense

1,341


709

Changes in operating assets and liabilities




Accounts receivable

(16,556)


(16,331)

Prepaid expenses

1,196


(1,464)

Inventories

(842)


(74)

Advanced coal royalties

(81)


Other assets and liabilities

144


44

Accounts payable

(4,159)


8,562

Accrued expenses

1,031


3,564

Net cash from operating activities

(5,891)


3,436





Cash flow from investing activities




Purchases of property, plant and equipment

(8,199)


(12,769)

Proceeds from maturities of investment securities

-


5,200

Net cash from investing activities

(8,199)


(7,569)





Cash flows from financing activities




Proceeds from borrowings

26,500


6,000

Repayments of borrowings

(17,251)


Repayments of financed insurance payable

(171)


(220)

Payment of debt issuance costs

-


(257)

Net cash from financing activities

9,078


5,523





Net change in cash and cash equivalents

(5,012)


1,390

Cash and cash equivalents, beginning of period

6,951


5,934





Cash and cash equivalents, end of period

$                        1,939


$                        7,324

 

 

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 March 31,


2019


2018

In thousands




Reconciliation of Net Income (Loss) to Adjusted EBITDA




Net income (loss)

$            6,883


$            5,266

Depreciation and amortization

4,116


2,438

Interest expense, net

307


100

Income taxes

1,358


743

EBITDA

12,664


8,547

Stock-based compensation

894


551

Accretion of asset retirement obligation

128


123

Adjusted EBITDA

$          13,686


$            9,221

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 March 31, 2019


Three Months Ended March 31, 2018


Company
Produced


Purchased
Coal


Total


Company
Produced


Purchased
Coal


Total

In thousands, except per ton amounts












Revenues 

$         52,486


$         4,974


$         57,460


$       42,959


$       12,984


$       55,943

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












Transportation costs

6,636


531


7,167


6,106


1,148


7,254

Non-GAAP revenues (FOB mine)

$         45,850


$         4,443


$         50,293


$       36,853


$       11,836


$       48,689

Tons sold

443


35


478


403


119


522

Revenues per ton sold (FOB mine)

$              104


$            127


$              105


$              91


$            100


$              93

 

 



Three Months December 31, 2018



Company
Produced


Purchased
Coal


Total

(In thousands, except per ton amounts)







Revenues (a)


$         33,342


$       10,845


$         44,187

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







Transportation costs


3,108


1,013


4,121

Non-GAAP revenues (FOB mine)


$         30,234


$         9,832


$         40,066

Tons sold


315


95


410

Revenues per ton sold (FOB mine)


$                96


$            103


$                98

 

Non-GAAP cash cost per ton


Three Months Ended March 31, 2019


Three Months Ended March 31, 2018


Company
Produced


Purchased
Coal


Total


Company
Produced


Purchased
Coal


Total

In thousands, except per ton amounts












Cost of sales 

$            36,710


$         4,296


$         41,006


$       32,435


$       11,896


$       44,331

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












Transportation costs

6,636


531


7,167


6,361


1,221


7,582

Non-GAAP cash cost of coal sales

$            30,074


$         3,765


$         33,839


$       26,074


$       10,675


$       36,749

Tons sold

443


35


478


403


119


522

Cash cost per ton sold 

$                   68


$            108


$                71


$              65


$              90


$              70

 


Three months ended December 31, 2018


Company
Produced


Purchased
Coal


Total

(In thousands, except per ton amounts)






Cost of sales(a)

$            24,521


$       10,437


$         34,958

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






Transportation costs

3,049


1,197


4,246

Non-GAAP cash cost of coal sales

$            21,472


$         9,240


$         30,712

Tons sold

315


95


410

Cash cost per ton sold 

$                   68


$              97


$                75

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:http://www.prnewswire.com/news-releases/ramaco-resources-inc-reports-first-quarter-2019-financial-results-300845725.html

SOURCE Ramaco Resources

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