Ramaco Resources(METC)2024-11-05 16:58Financial Data and Key Metrics Changes - Q3 2024 adjusted EBITDA was $24 million, down from $29 million in Q2 2024, with net income breakeven compared to $6 million in Q2 2024 [9] - Q3 realized price per ton decreased to $136 from $143 in Q2 2024, reflecting a $7 per ton sequential decline [9] - Cash costs improved to $102 per ton in Q3 from $108 in Q2 and $118 in Q1 2024, with cash margins per ton remaining at $34, consistent with Q2 [9][10] Business Line Data and Key Metrics Changes - Record production of 972,000 tons in Q3 2024, up 35% from Q3 2023, and record sales of 1.02 million tons, marking the first time sales exceeded 1 million tons in a single quarter [10] - The closure of the Knox Creek Jawbone mine negatively impacted Q3 results, contributing to a $1 million loss [9] Market Data and Key Metrics Changes - US metallurgical coal indices fell by approximately 7% in Q3 2024, with a $15 per ton decline in US met coal prices sequentially [4][5] - The overall US met coal production decreased by more than 8% sequentially in Q3, equating to a 6 million ton annual decline [6][21] Company Strategy and Development Direction - The company aims to maintain low cash costs and increase production, projecting a year-end run rate exceeding 5 million tons with normalized cash costs below $100 per ton [5][10] - Growth initiatives remain on track, including the Elk Creek complex and the Maben low vol complex, which is expected to reduce trucking costs by approximately $40 per ton [6][8] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in met coal prices is primarily due to China's overproduction of steel, impacting global pricing [4] - Future macroeconomic measures, such as potential tariffs on Chinese steel exports, could improve pricing for met coal [7] - The company expects to exit 2024 with strong sales and production despite challenging pricing conditions [8] Other Important Information - The company increased 2024 CapEx guidance to $61 million to $65 million, primarily due to the earlier-than-expected commissioning of the Maben prep plant [11] - Liquidity as of September 30 was $81 million, up nearly $10 million from June 30, 2024 [11] Q&A Session Summary Question: Current weakness in met and steel markets - Management acknowledged the current weakness in pricing and discussed the advantages of their low sulfur products in the high vol space [24][25] Question: Variable costs and sensitivity - Management indicated that variable costs closely track market indices, with sales price-related costs also fluctuating accordingly [26][27] Question: Confidence in maintaining sub $100 cost per ton - Management expressed confidence in maintaining a sub $100 cost per ton run rate into next year due to ongoing production growth and cost control measures [28][29] Question: Factors affecting shipment guidance range - Management noted that the guidance range is influenced by logistics and demand, with the high end assuming no carryover tonnage into 2025 [31][32] Question: Volume expectations for 2025 - Management indicated that production guidance for 2025 will be released in early December, with expectations for continued growth based on current production rates [34] Question: Broader supply situation in Central Appalachia - Management estimated that 10% to 15% of mines are currently unsustainable in the current market, with a significant portion of production at risk [36][37] Question: Domestic pricing for next year - Management indicated that additional volumes under fixed price contracts for 2025 are expected to increase the average price above current levels [38][39]