Ramaco Resources, Inc. Reports Second Quarter 2019 Financial Results

LEXINGTON, Ky., Aug. 13, 2019 /PRNewswire/ -- Ramaco Resources, Inc. 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

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