Ramaco Resources(METC) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements For the first quarter ended March 31, 2025, Ramaco Resources reported a net loss of $9.5 million, a significant downturn from the $2.0 million net income in the same period of 2024, primarily driven by a 22% decrease in revenue to $134.7 million due to lower metallurgical coal prices, while total assets slightly increased to $685.7 million, total liabilities grew to $330.5 million, and net cash provided by operating activities remained relatively stable at $26.0 million Condensed Consolidated Statements of Operations (Unaudited) | In thousands, except per-share amounts | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $134,656 | $172,676 | | Total costs and expenses | $146,678 | $169,401 | | Operating (loss) income | $(12,022) | $3,275 | | Net (loss) income | $(9,457) | $2,032 | | Basic EPS - Class A | $(0.19) | $(0.00) | | Diluted EPS - Class A | $(0.19) | $(0.00) | Condensed Consolidated Balance Sheets (Unaudited) | In thousands | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $43,466 | $33,009 | | Total current assets | $163,967 | $167,634 | | Total Assets | $685,735 | $674,686 | | Total current liabilities | $124,361 | $122,428 | | Total Liabilities | $330,487 | $311,880 | | Total Stockholders' Equity | $355,248 | $362,806 | Condensed Consolidated Statements of Cash Flows (Unaudited) | In thousands | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,039 | $25,188 | | Net cash used for investing activities | $(22,256) | $(18,665) | | Net cash provided by (used) for financing activities | $6,674 | $(17,982) | | Net change in cash and cash equivalents | $10,457 | $(11,459) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's accounting policies, financial instrument details, and contingencies, highlighting a dual-class stock structure, an amended revolving credit facility, ongoing litigation, revenue concentration, and subsequent events related to dividends and critical minerals initiatives - The company operates as a developer of metallurgical coal in West Virginia and Virginia, and is also pursuing rare earth elements and critical minerals initiatives in Wyoming[30] - The company has a dual-class stock structure, with Class A common stock tied to metallurgical coal operations and Class B common stock linked to Carbon Ore-Rare Earth (CORE) assets[51][53] - In the silo collapse litigation, a court of appeals reinstated a $7.7 million contract damages verdict in the company's favor and remanded the case for a new trial on additional damages, leading to a $7.8 million gain recognized in 2023 and an accrued loss recovery asset of $4.2 million as of March 31, 2025[83][84] - The company is involved in litigation over the purchase of a Preparation Plant, where a plaintiff claims the seller did not have the right to sell the plant, but the company believes it has meritorious defenses[78][79] - Subsequent to the quarter-end, the company declared a Q2 cash dividend for Class B stock, released a revised Technical Report Summary for its Brook Mine rare earth project, and appointed an Executive VP for Critical Minerals[107][108][109] Debt Summary | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving Credit Facility | $16,000 | $— | | Senior Notes, net | $88,356 | $88,135 | | Total debt | $104,663 | $88,551 | Q1 2025 Revenue by Geography | (In thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | North American revenue | $44,026 | $54,173 | | Export revenue, excluding Canada | $90,630 | $118,503 | | Total revenue | $134,656 | $172,676 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 22% year-over-year revenue decline to softening global metallurgical coal markets and lower prices, which offset a 2% increase in sales volume, resulting in Adjusted EBITDA falling to $9.8 million from $24.2 million in Q1 2024, while the company maintains strong liquidity with $43.5 million in cash and $74.9 million available on its recently upsized $200 million credit facility, and is advancing its rare earth element initiatives in Wyoming - Global metallurgical coal markets softened in 2024 and into 2025, with slower steel market growth, particularly in China, leading to reduced prices for metallurgical coal[114] - Production increased to 1.0 million tons in Q1 2025 from 0.8 million tons in Q1 2024, with full-year 2025 production expected to be between 3.9 and 4.3 million tons[121] - The company is advancing its rare earth elements (REE) project at the Brook Mine in Wyoming, with plans to begin construction of a pilot processing facility in mid to late 2025, supported by a $6.1 million matching grant[122] Q1 2025 vs Q1 2024 Performance Summary | (In thousands, except per ton) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $134,656 | $172,676 | $(38,020) | | Tons sold | 946 | 929 | 17 | | Total revenue per ton sold (GAAP) | $142 | $186 | $(44) | | Cost of sales | $114,132 | $139,713 | $(25,581) | | Total cost of sales per ton sold (GAAP) | $121 | $150 | $(29) | | Adjusted EBITDA | $9,788 | $24,180 | $(14,392) | Reconciliation of Net Income to Adjusted EBITDA | (In thousands) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net (loss) income | $(9,457) | $2,032 | | Depreciation, depletion, and amortization | 17,542 | 15,220 | | Interest expense, net | 2,230 | 1,332 | | Income tax (benefit) expense | (4,290) | 540 | | Stock-based compensation | 3,361 | 4,702 | | Accretion of asset retirement obligation | 402 | 354 | | Adjusted EBITDA | $9,788 | $24,180 | Quantitative and Qualitative Disclosures about Market Risk This section refers to the disclosures provided in Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," of the company's Annual Report on Form 10-K for the year ended December 31, 2024 - Disclosures about market risk are included in the company's Annual Report and have not materially changed[159] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to a previously reported material weakness in internal control over financial reporting related to an insufficiency of appropriately qualified and trained professionals, for which the company is actively executing a remediation plan - Management concluded that disclosure controls and procedures were not effective at the reasonable assurance level as of the end of the quarter[160] - A material weakness was identified related to an insufficiency of appropriately qualified and trained professionals to perform necessary control activities[162] - The company is executing a remediation plan, including hiring qualified personnel and engaging external firms, to address the material weakness, with these efforts continuing through the first quarter of 2025[163][164] PART II. OTHER INFORMATION Legal Proceedings The company states that it is involved in routine litigation incidental to its business and expects no pending legal matters to have a material adverse effect on its financial condition, referring to Note 7 of the Condensed Consolidated Financial Statements for detailed descriptions - The company is not involved in any legal proceedings that are expected to have a material adverse effect on its financial condition; for details, refer to Note 7 of the financial statements[169] Risk Factors The company states there have been no material changes to its risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, advising investors to consider the risk factors detailed in that report and other SEC filings - There have been no material changes in the company's risk factors from those described in the Annual Report[171] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None[172] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[172] Mine Safety Disclosures Information regarding mine safety violations and other regulatory matters as required by the Dodd-Frank Act is included in Exhibit 95.1 of this Quarterly Report - Mine safety disclosures are provided in Exhibit 95.1 to the report[172] Other Information The company reported that none of its directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter - No directors or executive officers have adopted or terminated a Rule 10b5-1 trading arrangement during the reporting period[173] Exhibits This section lists the exhibits filed with the Quarterly Report, including CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, Mine Safety Disclosures, and XBRL data files - The report includes certifications from the CEO and CFO, mine safety disclosures, and XBRL data files as exhibits[177]