August 13, 2019 - 4:19 PM EDT
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Ramaco Resources, Inc. Reports Second Quarter 2019 Financial Results

- Adjusted EBITDA of $19.1 million in the second quarter was our highest reported Adjusted EBITDA quarterly figure, and compared to the previous record of $14.9 million in the second quarter of 2018. - Diluted EPS of $0.43 in the first half of 2019 compared to first half 2018 diluted EPS of $0.38. Trailing 12-month diluted EPS is $0.66. - Net income of $10.6 million in the second quarter was our highest reported Net income quarterly figure, and compared to the previous record of $10.2 million in the second quarter of 2018. - Silo remediation work was completed and the Elk Creek prep plant was fully operational by the beginning of August 2019. - Based on the midpoint of 2019 guidance, Ramaco is almost 90% contracted at an averaged fixed price of $115/ton for its metallurgical coal sales. - All key 2019 guidance remains unchanged.

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
[email protected]
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


Source: PR Newswire (August 13, 2019 - 4:19 PM EDT)

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