Ramaco Resources(US:METC)2022-08-09 16:48Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2022 was $58 million, a 220% increase compared to the previous second quarter record [21] - Total adjusted EBITDA for the first half of 2022 reached almost $122 million, over 50% higher than the total for all of 2021 [21] - The company anticipates a record year for 2022 with an estimated mine level EBITDA of about $340 million [8][21] - Cost guidance for 2022 has been increased to $89 to $97 per ton, up from $82 to $90 per ton, with year-to-date costs at $104 per ton, reflecting a $35 increase from 2021 [26] Business Line Data and Key Metrics Changes - The Berwind Mining Complex is expected to be offline through year-end, impacting production guidance, which has been lowered to 2.8 million to 3.1 million tons [24] - Production from the Laurel Fork and Triad mines is anticipated to remain normal despite the Berwind mine's closure [25] - The company plans to increase processing capacity at the Elk Creek preparation plant to 3 million annualized tons by mid-next year [16] Market Data and Key Metrics Changes - The U.S. High-Vol A Spot Price is currently assessed at $245 per metric ton, down from record highs but still up 20% year-over-year [43] - There is a supply-demand imbalance in the coking coal market, with Australian met exports lagging behind 2021 levels and Russian shipments declining [44] - Domestic thermal demand continues to support U.S. met prices, providing a price floor above Australian met prices [45] Company Strategy and Development Direction - The company aims to increase long-term production guidance to at least 6.5 million tons over the next two to three years, tripling production levels from 2021 [14] - The acquisition of the Maben low vol mine reserves for $30 million is expected to enhance future production capabilities [17] - The company is exploring shifting met coal volumes to the thermal market, with significant thermal sales already transacted for the back half of the year [45] Management's Comments on Operating Environment and Future Outlook - Management acknowledges current inflationary pressures and supply chain challenges but remains optimistic about the long-term strength of the met coal markets [12][13] - The company expects improvements in rail transportation and production in the second half of the year, which should help destock inventory [10][56] - Management believes that confusion in the market may present opportunities for growth and pricing adjustments [13] Other Important Information - The company has experienced a methane ignition incident at the Berwind mine, which is currently under investigation [37][38] - Capital expenditure guidance for 2022 has been increased to $105 million to $125 million, primarily due to the Maben acquisition and Elk Creek expansion [27] Q&A Session Summary Question: Can you bridge the current cost guidance versus the prior one? - Management indicated that a significant portion of the cost increase is related to the Berwind mine's production loss and inflationary pressures [50][51] Question: How confident are you about rail performance in the second half? - Management expressed cautious optimism, noting improvements in hiring and delivery schedules from railroads [56] Question: What is your contracting strategy for 2023? - Management anticipates a stronger market for 2023 and may shift towards a higher percentage of seaborne sales compared to domestic [60] Question: How much of the 2023 production will shift to the thermal market? - Management estimates that 1 million to 1.5 million tons could potentially shift to the thermal market based on current demand [67][68] Question: Update on the Maben acquisition and future development? - The company plans to start highwall operations for 250,000 tons next year and will consider further development in the second half of next year [70][71] Question: Status of the tracking stock? - Management is preparing to file registration for the tracking stock and expects to provide more details in the coming weeks [74]