LEXINGTON, Ky., Aug. 06, 2018 (GLOBE NEWSWIRE) -- Ramaco Resources, Inc. (NASDAQ: METC) today reported net income of $10.2 million, or $0.25 per diluted share for the second quarter of 2018, compared with a net income of $5.3 million, or $0.13 per diluted share for the first quarter of 2018.  The Company’s adjusted earnings before interest, taxes, depreciation, amortization and non-operating expenses (“adjusted EBITDA”) was $14.9 million for the second quarter of 2018, as compared with adjusted EBITDA of $9.2 million for the first quarter of 2018. 

Randall Atkins, Ramaco Resources’ Executive Chairman and Chief Financial Officer remarked, “We are very pleased to report strong, across the board and continued financial growth for both the second quarter and the first six months of 2018. Quarter over quarter, net income rose 94%, revenues rose 17% and our coal production was up 31%.

"From a sales standpoint, for calendar 2018 we have now sold, or have forward sales commitments for approximately 2.2 million tons of coal, of which 1.8 million tons is company mined and roughly 460 thousand tons is purchased coal.  For the first six months of 2018, we both sold and delivered over 1.1 million tons of both company mined and purchased coal.

"From a production standpoint, after encountering some unfavorable geological conditions at the Elk Creek surface mine in the first quarter, we recovered substantially during our second quarter. Cash mining costs fell over $9 per ton to roughly $56 per ton (FOB mine) and brought costs back in line with our annual guidance. Similarly, our cash margins bounced back to almost $36 per ton for the quarter. For the balance of 2018, we continue to expect earnings and cash flows to remain strong. We are also looking ahead to 2019 and have begun preliminary sales discussions with many of our existing domestic customers.”

The Company ended the quarter with $5.9 million of cash on hand and $28.3 million of accounts receivable. Free cash flow generated over the next six months is expected to be used to fund working capital and capital expenditures.

Operational Results

Revenues totaled $65.3 million for the three months ended June 30, 2018, up 17% from the first quarter of 2018.  Total production during the second quarter was 497 thousand tons as compared with 380 thousand tons in the first quarter.

As stated, the Company’s total cash cost per ton sold for the second quarter of 2018 was approximately $56 for produced coal, down from approximately $65 in the first quarter of 2018. This cost improvement illustrates the impact of more favorable weather conditions, a fully operational preparation plant, cost improvements at our surface mine, a full quarter of production from our new No. 2 Gas mine and continued good mining conditions in all of our Elk Creek deep mines.

Michael Bauersachs, Ramaco Resources’ President and CEO commented, “While our Elk Creek deep mines continued to perform at industry leading productivity levels, our surface mine also operated at improved productivity and cost levels.  With many of our haul road capital improvements close to completion, we anticipate future costs to echo this quarter’s performance. With that being said, the second quarter is the only quarter that is typically not impacted by weather issues or normal vacation periods.  Average costs for the year should remain within our prior guidance, which is slightly above this quarter’s record cost levels.”

In the second quarter of 2018, the Company recorded income tax expense of $0.6 million based on an expected effective tax rate of approximately 8.5% for 2018.  Cash taxes payable for 2018 are expected to be less than $0.4 million.

Capital expenditures totaled approximately $14.7 million during the second quarter of 2018. The Company expects to incur approximately $36 to $40 million of capital expenditures for full year 2018.

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

     
 Three months ended Six months ended 
 June 30,
2018
 March 31,
2018
 June 30, 
2018
 
Sales Volume(a)      
Company 493  403  896 
Purchased 122  119  241 
Total 615  522  1,137 
       
Company Production(a)      
Elk Creek Mining Complex 478  360  838 
Berwind Mine 19  20  39 
Total 497  380  877 
       
Company Financial Metrics(b)      
Average revenue per ton$91.21 $91.37 $91.29 
Average cash costs of coal sold 55.58  64.65  59.66 
Average cash margin per ton$35.63 $26.72 $31.63 
       
Purchased Coal Financial Metrics(b)      
Average revenue per ton$101.35 $99.62 $100.50 
Average cash costs of coal sold 99.99  89.84  94.99 
Average cash margin per ton$1.36 $9.78 $5.51 
       
Capital Expenditures(a)$14,709 $12,769 $27,478 
       
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 1,056 $79
Export, fixed priced 454 $108
Export, indexed 259  
    
Total Committed Company Tons 1,769  
    
Purchased:   
Domestic, fixed priced 433 $100
Export, fixed priced 29 $127
Total Purchased Tons 462 $102
    
Total Committed Sales Volume 2,231  
    
Notes:   
(a)  Volumes in thousands.   
    

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 Tuesday, August 7, 2018 to present its results for the second quarter of 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/h9299sag.

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
 June 30, 2018 March 31, 2018 June 30, 2017
      
Revenues$65,278,057  $55,943,148  $11,073,502 
      
Cost and expenses     
Cost of sales (exclusive of items shown separately below) 47,860,149   44,330,847   11,774,961 
Other operating costs and expenses       96,690 
Asset retirement obligation accretion 123,467   123,468   101,276 
Depreciation and amortization 2,955,382   2,437,500   310,889 
Selling, general and administrative 3,692,254   3,431,144   2,499,280 
Total cost and expenses 54,631,252   50,322,959   14,783,096 
      
Operating income (loss) 10,646,805   5,620,189   (3,709,594)
      
Interest and dividend income 1,998   1,237   100,343 
Other income 512,693   489,317   121,492 
Interest expense (315,761)  (101,159)  (212)
      
Income (loss) before taxes 10,845,735   6,009,584   (3,487,971)
      
Income tax expense 642,299   743,307    
      
Net income (loss)$10,203,436  $5,266,277  $(3,487,971)
      
Basic and diluted earnings (loss) per share     
Basic$0.25  $0.13  $(0.09)
Diluted$0.25  $0.13  $(0.09)
      
Weighted average common shares outstanding     
Basic 40,082,467   39,905,327   39,072,394 
Diluted 40,339,749   40,141,652   39,072,394 


Ramaco Resources, Inc.
Consolidated Balance Sheets
    
 June 30, 2018 December 31, 2017
Assets   
Current assets:   
Cash and cash equivalents$5,911,310  $5,934,043 
Short-term investments    5,199,861 
Accounts receivable 28,265,692   7,165,487 
Inventories 11,294,596   10,057,787 
Prepaid expenses 2,870,297   1,104,437 
Total current assets 48,341,895   29,461,615 
    
Property, plant and equipment, net 136,574,558   115,450,841 
    
Advanced coal royalties 2,785,748   2,867,369 
Other assets 524,648   318,206 
Total Assets$188,226,849  $148,098,031 
    
Liabilities and Stockholders' Equity   
Liabilities   
Current liabilities   
Accounts payable$20,062,221  $19,532,531 
Accrued expenses 8,824,787   2,821,422 
Asset retirement obligations 512,997   70,616 
Note payable, net 14,758,593    
Other 361,918    
Total current liabilities 44,520,516   22,424,569 
Deferred tax liability 1,385,717   
Asset retirement obligations 12,208,126   12,276,176 
Total liabilities 58,114,359   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 149,533,523   148,293,263 
Accumulated deficit (19,821,858)  (35,291,571)
Total stockholders' equity 130,112,490   113,397,286 
Total Liabilities and Stockholders' Equity$188,226,849  $148,098,031 
    

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, 2018 March 31, 2018 June 30, 2017
Reconciliation of Net Income (Loss) to Adjusted EBITDA      
Net income (loss)$10,203,436 $5,266,277 $(3,487,971)
Depreciation and amortization 2,955,382  2,437,500  310,889
Interest and dividend income, net 313,763  99,922  (100,131)
Income taxes 642,299  743,307  
EBITDA 14,114,880  8,547,006  (3,277,213)
Equity-based compensation 694,686  550,805  
Accretion of asset retirement obligation 123,467  123,468  101,276
Adjusted EBITDA$14,933,033 $9,221,279 $(3,175,937)
      
      
 Six months ended   
 June 30, 2018 June 30, 2017  
      
Reconciliation of Net Income (Loss) to Adjusted EBITDA     
Net income (loss)$15,469,713 $(6,581,114)  
Depreciation and amortization 5,392,882  467,016  
Interest and dividend income, net 413,685  (193,952)  
Income taxes 1,385,606    
EBITDA 22,661,886  (6,308,050)  
Equity-based compensation 1,245,491  2,145,333  
Accretion of asset retirement obligation 246,935  202,553  
Adjusted EBITDA$24,154,312 $(3,960,164)  
      

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, 2018 Three Months Ended March 31, 2018
 Company
Produced
 Purchased
Coal
 Total Company
Produced
 Purchased
Coal
 Total
            
Revenues$52,050,730 $13,227,327 $65,278,057 $42,958,746 $12,984,402 $55,943,148
Less:  Adjustments to reconcile to Non-GAAP revenues (FOB mine)           
Transportation costs 7,118,210  807,669  7,925,879  6,105,814  1,147,582  7,253,396
Non-GAAP revenues (FOB mine)$44,932,520 $12,419,658 $57,352,178 $36,852,932 $11,836,820 $48,689,752
Tons sold 492,603  122,544  615,147  403,318  118,817  522,135
Revenues per ton sold (FOB mine)$91.21 $101.35 $93.23 $91.37 $99.62 $93.25
            
            
 Six Months Ended June 30, 2018 
 Company
Produced
 Purchased
Coal
 Total 
       
Revenues$95,009,476 $26,211,729 $121,221,205 
Less:  Adjustments to reconcile to Non-GAAP revenues (FOB mine)      
Transportation costs 13,224,024  1,955,251  15,179,275 
Non-GAAP revenues (FOB mine)$81,785,452 $24,256,478 $106,041,930 
Tons sold 895,921  241,361  1,137,282 
Revenues per ton sold (FOB mine)$91.29 $100.50 $93.24 

Non-GAAP cash cost per ton

 Three Months Ended June 30, 2018 Three Months Ended March 31, 2018
Three Months Ended June 30, 2018Company
Produced
 Purchased
Coal
 Total Company
Produced
 Purchased
Coal
 Total
            
Cost of sales$34,739,384 $13,120,765 $47,860,149 $32,434,959 $11,895,886 $44,330,845
Less:  Adjustments to reconcile to Non-GAAP cash cost of coal sales           
Transportation costs 7,360,223  867,874  8,228,097  6,361,282  1,221,399  7,582,681
Non-GAAP cash cost of coal sales$27,379,161 $12,252,891 $39,632,052 $26,073,677 $10,674,487 $36,748,164
Tons sold 492,603  122,544  615,147  403,318  118,817  522,135
Cash cost per ton sold$55.58 $99.99 $64.43 $64.65 $89.84 $70.38
        
        
 Six Months Ended June 30, 2018 
Six Months Ended June 30, 2018Company
Produced
 Purchased
Coal
 Total 
       
Cost of sales$67,174,343 $25,016,651 $92,190,994 
Less:  Adjustments to reconcile to Non-GAAP cash cost of coal sales      
Transportation costs 13,721,505  2,089,273  15,810,778 
Non-GAAP cash cost of coal sales$53,452,838 $22,927,378 $76,380,216 
Tons sold 895,921  241,361  1,137,282 
Cash cost per ton sold$59.66 $94.99 $67.16 

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