Ramaco Resources(METC) - 2024 Q2 - Quarterly Results

Second Quarter 2024 Highlights Ramaco reported strong Q2 2024 sequential growth, with Adjusted EBITDA up 19% and net income up 173% Key Financial Metrics | Financial Metric | Q2 2024 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $28.8 million | $24.2 million | +19% | | Net Income | $5.5 million | $2.0 million | +173% | | Class A Diluted EPS | $0.08 | $0.00 | N/A | - Non-GAAP cash cost per ton sold decreased by $10 per ton sequentially to $108 in Q2 2024, as production increased by 7% to over 900,000 tons[3] - The Board declared a quarterly Class A common stock cash dividend of $0.1375 per share and a Class B stock cash dividend of $0.2246 per share[3] - The company repaid the remaining $7 million in acquisition debt, fully retiring the $75 million total from its 2022 Maben and Ramaco Coal acquisitions[3] Market Commentary & 2024 Outlook Secured 4.0 million tons in 2024 sales commitments, with growth initiatives boosting production and cutting costs 2024 Sales Commitments | 2024 Sales Commitments | Volume (million tons) | Average Realized Price (per ton) | | :--- | :--- | :--- | | North American (Fixed) | 1.3 | $169 | | Seaborne (Fixed) | 1.5 | $142 | | Total Fixed Price | 2.8 | $155 | | Index-Linked (Export) | 1.2 | - | | Total Committed | 4.0 | - | - Four main production growth initiatives for 2024 remain on track and on budget, including expansions at Elk Creek and Berwind, and the operational start of the Maben prep plant in Q4 2024[5] - Production and sales guidance for 2024 has been reduced by 0.2 million tons at the midpoint to 3.8–4.2 million tons and 4.0–4.4 million tons, respectively, to proactively reduce higher-cost production[6] - The company is progressing its rare earth and critical mineral project at the Brook Mine, engaging Fluor Corporation to complete a techno-economic analysis by year-end 2024[7] Management Commentary CEO reported strong Q2 operational and financial improvements, with record production and lower costs - Q2 2024 production was a record 901,000 tons, a 7% increase over Q1, leading to a non-GAAP mine cash cost per ton sold decline of roughly $10 to $108 per ton[8] - The company expects to exit 2024 with a production and sales run rate exceeding 5 million tons per annum, with year-end cash costs projected to be at or below the $100 per ton range[8][10] - Global metallurgical coal indices fell by approximately 15% in Q2 and 25% year-to-date, negatively impacting pricing, largely attributed to Chinese steel oversupply into a slowing global economy[11] - The company has already secured commitments for 1.25 million tons of its 2025 production, primarily through multi-year index-linked export contracts[13] Financial & Operational Performance Analysis Q2 2024 saw 3% YoY production growth but 13% price decline, compressing margins, with $71.3 million in liquidity Second Quarter 2024 Performance Review Q2 2024 production rose 3% YoY to 901,000 tons, but a 13% price decline reduced cash margins to $35/ton Q2 2024 Year-over-Year Performance | Metric | Q2 2024 | Q2 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Production ('000 tons) | 901 | 876 | +3% | | Realized Price ($/ton) | $143 | $165 | -13% | | Cash Costs ($/ton) | $108 | $110 | -2% | | Cash Margins ($/ton) | $35 | $55 | -36% | Q2 2024 Quarter-over-Quarter Performance | Metric | Q2 2024 | Q1 2024 | QoQ Change | | :--- | :--- | :--- | :--- | | Production ('000 tons) | 901 | 844 | +7% | | Realized Price ($/ton) | $143 | $155 | -8% | | Cash Costs ($/ton) | $108 | $118 | -8% | | Cash Margins ($/ton) | $35 | $37 | -5% | Balance Sheet and Liquidity As of June 30, 2024, the company maintained $71.3 million in liquidity, with Q2 capex of $21.4 million - Total liquidity was $71.3 million as of June 30, 2024, consisting of $27.6 million in cash and $43.7 million in credit facility availability[23] - Q2 2024 capital expenditures totaled $21.4 million, with a meaningful decline expected in the second half of 2024[23] Financial Guidance and Commitments Adjusted 2024 production and sales guidance, maintaining cost and capex targets, with 4.0 million tons secured Full-Year 2024 Guidance | Full-Year 2024 Guidance | Range | Full-Year 2023 Actual | | :--- | :--- | :--- | | Production (tons) | 3,800 - 4,200 ('000) | 3,174 ('000) | | Sales (tons) | 4,000 - 4,400 ('000) | 3,455 ('000) | | Cash Costs Per Ton Sold | $105 - $111 | $110 | | Capital Expenditures | $53,000 - $63,000 ('000) | $82,904 ('000) | Committed 2024 Sales (as of July 31, 2024) | Committed 2024 Sales (as of 7/31/24) | Volume (million tons) | Average Price ($/ton) | | :--- | :--- | :--- | | North America, fixed priced | 1.3 | $169 | | Seaborne, fixed priced | 1.5 | $142 | | Total, fixed priced | 2.8 | $155 | | Index priced | 1.2 | N/A | | Total committed tons | 4.0 | N/A | Financial Statements (Unaudited) Unaudited Q2 2024 financials show $155.3 million revenue, $5.5 million net income, and $59.6 million operating cash flow Consolidated Statements of Operations Q2 2024 revenues were $155.3 million, operating income $5.4 million, net income $5.5 million, and diluted EPS $0.08 Consolidated Statements of Operations (Three Months Ended June 30) | (In thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | $155,315 | $137,469 | | Operating income | $5,415 | $10,046 | | Net income | $5,541 | $7,556 | Consolidated Balance Sheets As of June 30, 2024, total assets were $659.2 million, liabilities $293.1 million, and equity $366.1 million Consolidated Balance Sheets (As of June 30, 2024 and December 31, 2023) | (In thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $27,571 | $41,962 | | Total current assets | $160,633 | $189,739 | | Total Assets | $659,228 | $665,836 | | Total current liabilities | $120,776 | $169,986 | | Total Liabilities | $293,102 | $296,231 | | Total stockholders' equity | $366,126 | $369,605 | Statement of Cash Flows For H1 2024, operating cash flow was $59.6 million, investing used $40.0 million, and financing used $34.0 million Consolidated Statements of Cash Flows (Six Months Ended June 30) | (In thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $59,602 | $49,578 | | Net cash used for investing activities | ($39,983) | ($43,834) | | Net cash used financing activities | ($34,010) | ($7,474) | | Net change in cash | ($14,391) | ($1,730) | Reconciliation of Non-GAAP Measures This section reconciles key non-GAAP measures, showing Q2 2024 Adjusted EBITDA of $28.8 million and non-GAAP revenue per ton of $143 Reconciliation to Adjusted EBITDA (Q2 2024) | Reconciliation to Adjusted EBITDA (Q2 2024, in thousands) | Amount | | :--- | :--- | | Net income | $5,541 | | Depreciation, depletion, and amortization | $15,879 | | Interest expense, net | $1,481 | | Income tax expense | $915 | | Stock-based compensation & Other | $4,982 | | Adjusted EBITDA | $28,798 | Non-GAAP Per Ton Metrics (Q2 2024) | Non-GAAP Per Ton Metrics (Q2 2024) | Amount | | :--- | :--- | | Non-GAAP revenue per ton sold (FOB mine) | $143 | | Non-GAAP cash cost per ton sold (FOB mine) | $108 |