Ramaco Resources(US:METC)2021-11-03 17:42Financial Data and Key Metrics Changes - The company reported its highest third quarter adjusted EBITDA in history at $17.8 million, up over $17 million from the previous year [30] - Earnings per share increased to $0.16, representing a more than 240% increase year-over-year [30] - The company anticipates a significant increase in full-year 2021 EBITDA compared to 2020's $19 million, with Q4 expected to be the highest quarter since going public [12][30] Business Line Data and Key Metrics Changes - The company has increased its 2021 production guidance to 2.2 million to 2.4 million tons, up from previous estimates [31] - Sales guidance for 2021 has been adjusted to 2.3 million to 2.4 million tons [31] - The average cash mining cost for the Elk Creek complex is projected to be $63 to $65 per ton, up from $61 to $65 previously, but down from $70 in 2020 [31] Market Data and Key Metrics Changes - The company has secured 1.7 million tons of domestic sales for 2022 at an average price of $196 per ton [33] - The market for metallurgical coal remains strong, with a significant supply-demand imbalance expected to persist into 2022 [50] - U.S. met coal production is down 15% from 2019 levels, indicating a tight supply situation [51] Company Strategy and Development Direction - The company plans to return capital to shareholders and has approved the payment of a regular dividend, with details to be announced before year-end [21][22] - The acquisition of Amonate assets is expected to enhance production capabilities and operational synergies, with a target of reaching 5 million tons of production in the coming years [20][24] - The company aims to maintain a low-cost production model while exploring future growth opportunities beyond its core business [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a significant multiple of EBITDA in 2022 compared to 2021, with a strong demand for steel and metallurgical coal [12][15] - The company anticipates that the fourth quarter of 2021 will produce the strongest EBITDA on record [34] - Management highlighted the importance of maintaining a fortress balance sheet with little to no debt, positioning the company as a formidable cash generation machine [26] Other Important Information - The company has increased its revolver from $30 million to $40 million, extending the maturity date to year-end 2024 [34] - The company ended the quarter with a record liquidity figure of $74 million, not accounting for the Amonate acquisition payment [34] Q&A Session Summary Question: Can you quantify the value of synergies from the Amonate acquisition? - Management indicated significant savings from trucking costs and the absence of royalties on Amonate coal, estimating a payback period of less than 1.5 years [56][58] Question: What are the capital intensity expectations for future growth? - Management stated that future growth plans would not be capital intensive and would be logical transitions for the company [61] Question: What are the capital allocation plans beyond the regular dividend? - Management mentioned that all options are on the table, but the focus is currently on establishing a regular dividend [76] Question: Can you provide insights on inflationary pressures and hiring challenges? - Management acknowledged inflationary pressures on raw materials and labor but expressed confidence in maintaining staffing levels for growth plans [88] Question: How has transportation service been affected? - Management noted that some Q4 sales might slip into 2022 due to logistics slowdowns, with rail rates influenced by market indices [91] Question: What should analysts consider regarding tax situations and sales-related costs? - Management clarified that the tax situation is largely non-cash and provided a breakdown of sales-related costs, emphasizing direct royalties and severance taxes [106][109]