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Ramaco Resources, Inc. Reports Fourth Quarter and Full Year 2017 Financial Results

LEXINGTON, Ky., March 21, 2018 (GLOBE NEWSWIRE) --

Ramaco Resources, Inc. (NASDAQ:METC) today reported a net loss of $2.6 million, or $0.07 per share, for the fourth quarter of 2017 on revenues of $24.0 million.  The Company’s adjusted earnings before interest, taxes, depreciation and amortization and equity-based compensation expense (“adjusted EBITDA”) for the fourth quarter was a loss of approximately $328,000 for the same period. 

The Company reported a net loss of $15.4 million, or $0.41 per share for the full year 2017.  Revenues exceeded $61 million and the Company’s adjusted EBITDA loss for the year was $9.3 million

“We had aggressive development plans for 2017 and I am pleased with our execution,” Michael Bauersachs, Ramaco Resources’ President and CEO stated. “Ramaco Resources has the nation’s newest, fully operational preparation plant and loadout facility, with three active deep mines and one surface/highwall mine at our Elk Creek complex.  All of this was completed within the past fifteen months. Coupled with commercial mining of low volatile coal at our Berwind mine, we expect to produce between 2.0 to 2.2 million tons of high quality, low cost coal in 2018. In the fourth quarter of 2017, average cash mining costs at our Elk Creek mines dropped below $60 per ton. These achievements are possible because of our employees and we thank them for their commitment and hard work,” Bauersachs concluded.

Operational Results

Over the past twelve months Ramaco Resources opened four new mines and the Elk Creek preparation plant mentioned above.  Capital expenditures were $75.0 million for 2017.

The Company sold 608 thousand tons of metallurgical coal in 2017, including 236 thousand tons of purchased coal.  The average sales price (FOB mine) of the Company’s sales volumes improved to just under $70 for the fourth quarter and was approximately $66 for the entire year. “These selling prices were indicative of the need to introduce our products as a new entrant into the market.  Strategically, this was important in positioning Ramaco Resources to achieve our ramp-up in production,” Bauersachs commented. 

Ramaco Resources saw production costs fall to approximately $58 per ton in the fourth quarter from $84 per ton for the first three quarters of 2017. Production costs for 2017 were adversely impacted by higher trucking and third-party processing expenses incurred before its preparation plant and loadout facilities became operational.  

Randall Atkins, Chairman of Ramaco Resources noted, “We have transitioned from being a development stage company into a fully operational company in 2018. Our mining costs continue to fall, in line with expectations, and pricing realizations are also improving in 2018. Metallurgical coal pricing continued to be strong in the fourth quarter, driven by the favorable global economic conditions and steel industry strength.  We anticipate these same positive macro-economic conditions will continue through 2018.”

“We are pleased with our sales and marketing execution. Presently, we have committed approximately 73% of our anticipated 2018 Company mined sales volumes. We have roughly 600 thousand uncommitted tons, which we expect to place into the export markets.”

“We continue to see strong interest from foreign purchasers for our coal qualities and expect to place our remaining uncommitted volumes principally into export markets.  Given our low mining cost advantage, combined with the pricing strength in the markets, we are optimistic for a strong performance in 2018,” Mr. Atkins concluded.

The exhibit below summarizes some of the key metrics for the respective periods:

       
  Three Months Ended   Year Ended
            December 31, 2017   December 31, 2017
Sales Volume(a)      
Company   163     372  
Purchased   102     236  
  Total Sales Volume   265     608  
       
Company Production(a)      
Elk Creek mining complex                                                                            273     546  
Berwind mine   2     2  
  Total Production   275     548  
       
Company Financial Metrics      
Average revenue per ton(b) $ 69.76   $ 65.71  
Average cash costs of coal sold(b)   58.04     72.68  
Average cash margin per ton $ 11.72   $ (6.97 )
       
Purchased Coal Financial Metrics      
Average revenue per ton(c) $ 93.97   $ 110.71  
Average cash costs of coal sold(c)   86.82     97.65  
Average cash margin per ton $ 7.15   $ 13.06  
       
Capital Expenditures(a) $ 21,758     $ 75,039  
       
Notes:      
(a)  In thousands.      
(b)  On Company sales volumes, excludes transportation.    
(c)  On purchased coal sales volumes, excludes transportation.    

2018 Guidance

The Company previously released sales guidance for 2018 in its press release dated February 22, 2018 which is updated and recapped in the following table:

Committed 2018 Sales Volume (a) Volume   Average Price
Company:      
  Domestic, fixed priced 1,151             $ 77
  Export, fixed priced 211   $ 110
  Export, priced against index 166    
Total Committed Company Tons                                                        1,528    
       
Purchased:      
  Domestic, fixed priced 418   $ 100
  Export, fixed priced 21   $ 132
Total Purchased Tons 439    
       
  Total Committed Sales Volume 1,967    
  % of Estimated 2018 Sales Volume (b) 73%    
       
2018 Estimated Sales Volume (a)      
Company 2,000 - 2,200    
Purchased 400 -  750    
  Total 2018 Sales Volume  2,400 - 2,950    
       
Notes:
(a)  Volumes in thousands.
(b)  Based upon mid-point of estimated sales volume
     
       

About Ramaco Resources, Inc.

Ramaco Resources is an operator and developer of high-quality, low cost metallurgical coal in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. 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.

Conference Call

Ramaco Resources will hold its quarterly conference call and webcast at 9:00 AM Eastern Time (ET) on Thursday, March 22, 2018 to present its results for the fourth quarter and full year 2017 and discuss its business and market outlook for the balance of the year.

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/78ib9n3f.

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, 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.
Condensed Consolidated Statements of Operations
           
  Three Months Ended   Year Ended December 31,
  December 31, 2017     2017       2016  
           
Revenue $   24,019,051     $   61,035,804     $   5,215,659  
Cost and expenses          
Cost of coal sales   21,374,437       58,308,259       1,795,845  
Cost of coal processing     —       2,212,403       2,600,874  
Other operating costs and expenses   32,063       257,721       416,292  
Asset retirement obligation accretion   101,277       405,106       229,304  
Depreciation and amortization   1,819,089       3,154,072       251,684  
Professional fees   325,153       1,377,053       4,325,503  
Selling, general and administrative   3,024,076       11,214,056       3,125,941  
Total cost and expenses   26,676,095       76,928,670       12,745,443  
Operating loss     (2,657,044 )       (15,892,866 )       (7,529,784 )
Interest and dividend income     3,284       295,185       138,752  
Other income     53,869         203,973        —  
Interest expense           (22,841 )       (124,117 )
Net loss $   (2,599,891 )   $   (15,416,549 )   $   (7,515,149 )
           
Basic and fully diluted loss per share $   (0.07 )   $   (0.41 )    
           
Adjusted EBITDA $   (327,936 )   $   (9,309,502 )   $   (6,749,953 )
           


 
Ramaco Resources, Inc.
Condensed Consolidated Balance Sheets
       
  December 31,
    2017     2016  
       
Current assets      
Cash and cash equivalents $   5,934,043   $   5,196,914  
Short-term investments   5,199,861     55,237,747  
Accounts receivable   7,165,487     914,741  
Inventories   10,057,787     1,518,638  
Prepaid expenses   1,104,437     388,921  
Total current assets   29,461,615     63,256,961  
Property, plant and equipment – net   115,450,841     46,433,726  
Long-term investments       5,199,077  
Advanced coal royalties   2,867,369     2,050,000  
Deferred offering costs       2,247,974  
Other     318,206       21,354  
Total Assets $   148,098,031   $   119,209,092  
       
Current liabilities $   22,424,569   $   15,356,856  
Asset retirement obligations, long-term   12,276,176     9,434,838  
Note payable-Ramaco Carbon, LLC         10,629,275  
Total liabilities   34,700,745     35,420,969  
Series A preferred units       88,773,933  
Shareholders' or Members’ equity (deficit)   113,397,286       (4,985,810 )
Total Liabilities and Equity $   148,098,031   $   119,209,092  
       

Reconciliation of Non-GAAP Measure

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, depletion 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   Year Ended December 31,
  December 31, 2017     2017       2016  
           
Reconciliation of Net Loss to Adjusted EBITDA:          
Net loss $   (2,599,891 )   $   (15,416,549 )   $   (7,515,149 )
Add (Subtract):          
Depreciation and amortization   1,819,089       3,154,072       251,684  
Interest and dividend income, net     (3,284 )       (272,344 )       (14,635 )
Income taxes                
EBITDA     (784,086 )       (12,534,821 )       (7,278,100 )
Add:          
Equity-based compensation   354,873       2,820,213         298,843  
Accretion of asset retirement obligation   101,277       405,106         229,304  
Adjusted EBITDA $   (327,936 )   $   (9,309,502 )   $   (6,749,953 )
           

POINT OF CONTACT:
Michael P. Windisch, Chief Accounting Officer
mpw@ramacocoal.com
859-244-7455                                                                                  

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