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Ramaco Resources, Inc. Reports First Quarter 2018 Financial Results

LEXINGTON, Ky., May 15, 2018 (GLOBE NEWSWIRE) -- Ramaco Resources, Inc. (NASDAQ:METC) today reported net income of $5.3 million, or $0.13 per diluted share for the first quarter of 2018, compared with a net loss of $2.6 million, or $(0.07) per share for the fourth quarter of 2017. The Company’s adjusted earnings before interest, taxes, depreciation, amortization and non-operating expenses (“adjusted EBITDA”) was $9.2 million for the first quarter of 2018 as compared with an adjusted EBITDA loss of $328 thousand for the fourth quarter of 2017.

Randall Atkins, Ramaco Resources’ Executive Chairman remarked, “We are very pleased to report our first positive financial results since inception. These results reflect more than a doubling of our revenues since the prior quarter to $56 million. Today, we have forward sales commitments for more than 1.7 million tons of our planned 2018 production. As we reported previously, 1.1 million tons of domestic sales were committed and priced last year. We have sold 249 thousand tons into export markets at fixed prices averaging $109 per ton (FOB mine) and have export commitments for an additional 400 thousand tons at index prices. At current market prices, these index sales would exceed the fixed prices contracted to date. For the balance of the year, we expect to demonstrate even stronger earnings and cash flows than in the first quarter.”

The Company ended the quarter with $7.3 million of cash on hand and $23.5 million of accounts receivable.

Operational Results

Revenues totaled $55.9 million for the three months ended March 31, 2018, up 133% from the fourth quarter of 2017. Total production for the first quarter was 380 thousand tons as compared with 275 thousand tons for 2017’s fourth quarter.

The Company’s total cash cost per ton sold (FOB mine) for the first quarter of 2018 was approximately $65 for produced coal, up from about $58 in the fourth quarter of 2017. This was due to the impact of weather-related issues at the Company’s mines and lower than anticipated surface mining production volumes caused by unexpected geological challenges.

Michael Bauersachs, Ramaco Resources’ President and CEO commented, “Although strong, our export sales in the first quarter were somewhat curtailed by the rail transportation challenges reported by many others in our industry. Our deep mines at Elk Creek continue to achieve their projected production and cost expectations in the upper $50 per ton range. At our surface mine, however, we encountered a number of areas that were previously mined. These were old auger works which pre-dated present reporting laws. This unmapped mining was not evident in our advanced planning. The positive news is that these headwinds on surface production and rail issues were partially offset by both increased export price realizations and demand.”

In the first quarter of 2018, the Company recorded income tax expense of $743 thousand based on an expected effective tax rate of approximately 12% for 2018. Cash taxes payable for 2018 are expected to be less than $400 thousand.

Capital expenditures totaled approximately $12.8 million during the first quarter of 2018. The Company expects to spend $29 million to $34 million of capital expenditures in 2018, including newly planned capital projects designed to reduce the impact of adverse weather on transportation within its Elk Creek Mining Complex.

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

    Three months ended  
    March 31,
2018
    December 31,
2017
 
Sales Volume(a)                
Company     403       163  
Purchased     119       102  
Total     522       265  
                 
Company Production(a)                
Elk Creek Mining Complex     360       273  
Berwind Mine     20       2  
Total     380       275  
                 
Company Financial Metrics(b)                
Average revenue per ton   $ 91.37     $ 69.76  
Average cash costs of coal sold     65.02       58.04  
Average cash margin per ton   $ 26.35     $ 11.72  
                 
Purchased Coal Financial Metrics(b)                
Average revenue per ton   $ 99.62     $ 93.97  
Average cash costs of coal sold     88.57       86.82  
Average cash margin per ton   $ 11.05     $ 7.15  
                 
Capital Expenditures(a)   $ 12,769     $ 21,758  


     
Notes:    
(a) In thousands.    
(b) Excludes transportation.    

2018 Guidance

Updated sales guidance for 2018 is presented in the following table:

Committed 2018 Sales Volume(a)   Volume     Avg Price  
Company:                
Domestic, fixed priced     1,077     $ 78  
Export, fixed priced     249     $ 109  
Export, indexed     392          
                 
Total Committed Company Tons     1,718          
                 
Purchased:                
Domestic, fixed priced     418     $ 100  
Export, fixed priced     21     $ 132  
Total Purchased Tons     439          
                 
Total Committed Sales Volume     2,157          


       
Notes:      
(a) Volumes in thousands.      

As result of the newly discovered geological conditions at its Elk Creek surface mine, the Company is lowering its annual guidance for Company produced tons to 1.8 to 2 million tons from a previous production guidance of 2 to 2.2 million tons. This reduction solely reflects anticipated lower surface mine production, which the Company anticipates may be partially offset by better production results from its deep mines.

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 Wednesday, May 16, 2018 to present its results for the first quarter 2018.

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/w2jnkjiz.

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.
Consolidated Statements of Operations


    Three months ended  
    March 31, 2018     December 31, 2017     March 31, 2017  
                         
Revenues   $ 55,943,148     $ 24,019,051     $ 11,538,272  
                         
Cost and expenses                        
Cost of sales (exclusive of items shown separately below)     44,330,847       21,374,437       10,845,912  
Other operating costs and expenses           32,063       17,300  
Asset retirement obligation accretion     123,468       101,277       101,277  
Depreciation and amortization     2,437,500       1,819,089       156,127  
Selling, general and administrative     3,431,144       3,349,229       3,601,363  
Total cost and expenses     50,322,959       26,676,095       14,721,979  
                         
Operating income (loss)     5,620,189       (2,657,044 )     (3,183,707 )
                         
Interest and dividend income     1,237       3,284       116,429  
Other income (expense)     489,317       53,869       (3,257 )
Interest expense     (101,159 )     -       (22,608 )
                         
Income (loss) before taxes     6,009,584       (2,599,891 )     (3,093,143 )
                         
Income tax expense     743,307              
                         
Net income (loss)   $ 5,266,277     $ (2,599,891 )   $ (3,093,143 )
                         
Basic and diluted earnings (loss) per share                        
Basic   $ 0.13     $ (0.07 )   $ (0.10 )
Diluted   $ 0.13     $ (0.07 )   $ (0.10 )
                         
Weighted average common shares outstanding                        
Basic     39,905,327       39,554,469       32,068,708  
Diluted     40,141,652       39,554,469       32,068,708  


Ramaco Resources, Inc.
Consolidated Balance Sheets


    March 31, 2018     December 31, 2017  
Assets                
Current assets:                
Cash and cash equivalents   $ 7,323,571     $ 5,934,043  
Short-term investments           5,199,861  
Accounts receivable     23,496,089       7,165,487  
Inventories     10,131,419       10,057,787  
Prepaid expenses     3,356,956       1,104,437  
Total current assets     44,308,035       29,461,615  
                 
Property, plant and equipment, net     125,825,988       115,450,841  
                 
Advanced coal royalties     2,719,315       2,867,369  
Other assets     422,137       318,206  
Total Assets   $ 173,275,475     $ 148,098,031  
                 
Liabilities and Stockholders' Equity                
Liabilities                
Current liabilities                
Accounts payable   $ 28,327,276     $ 19,532,531  
Accrued expenses     6,107,123       2,821,422  
Asset retirement obligations     291,806       70,616  
Note payable, net     5,790,935        
Other     568,631        
Total current liabilities     41,085,771       22,424,569  
Deferred tax liability     708,465          
Asset retirement obligations     12,266,871       12,276,176  
Total liabilities     54,061,107       34,700,745  
                 
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, 40,082,467 and 39,559,366 shares issued and outstanding, respectively     400,825       395,594  
Additional paid-in capital     148,838,837       148,293,263  
Accumulated deficit     (30,025,294 )     (35,291,571 )
Total stockholders' equity     119,214,368       113,397,286  
Total Liabilities and Stockholders' Equity   $ 173,275,475     $ 148,098,031  

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, amortization and non-operating expenses. 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, 2018     December 31, 2017     March 31, 2017  
Reconciliation of Net Income (Loss) to Adjusted EBITDA:                        
Net income (loss)   $ 5,266,277     $ (2,599,891 )   $ (3,093,143 )
Add (Subtract):                        
Depreciation and amortization     2,437,500       1,819,089       156,127  
Interest and dividend income, net     99,922       (3,284 )     (93,821 )
Income taxes     743,307              
EBITDA     8,547,006       (784,086 )     (3,030,837 )
Add:                        
Equity-based compensation     550,805       354,873       2,145,333  
Accretion of asset retirement obligation     123,468       101,277       101,277  
Adjusted EBITDA   $ 9,221,279     $ (327,936 )   $ (784,227 )

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

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