EX-99.1 2 ex_119923.htm EXHIBIT 99.1 ex_119923.htm

Exhibit 99.1

 

Ramaco Resources, Inc. Reports Second Quarter 2018 Financial Results

Company Release – August 6, 2018

 

POINT OF CONTACT:

Michael P. Windisch, Chief Accounting Officer

mpw@ramacocoal.com

859-244-7455

 

LEXINGTON, KY – (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, 2018

 

Company

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, 2018

 

Company

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  

 

 

 

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