8-K
Ramaco Resources, Inc. (METC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 18, 2021 (February 16, 2021)
RAMACO RESOURCES, INC.
(Exact name of Registrant as specified in its Charter)
| Delaware | 001-38003 | 38-4018838 |
|---|---|---|
| (State or other jurisdiction of | (Commission | (IRS Employer |
| incorporation) | File No.) | Identification No.) |
| | | |
| 250 West Main Street, Suite 1800 | ||
| | | |
| Lexington, Kentucky 40507 | ||
| (Address of principal executive offices) | ||
| |
Registrant’s Telephone Number, including area code: (859) 244-7455
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
|---|---|---|---|---|
| Common Stock, $0.01 par value | | METC | | NASDAQ Global Select Market |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 2.02. Results of Operations and Financial Condition.
On February 18, 2021, Ramaco Resources, Inc., a Delaware corporation (the “Company”), issued a press release reporting its financial and operating results for the fourth quarter and full year 2020 (the “Earnings Release”). A copy of the Earnings Release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
None of the information furnished in this Item 2.02 will be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor will it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 16, 2021, Tyler Reeder informed the Company of his decision to resign from the Board of Directors of the Company effective as of February 16, 2021. Mr. Reeder’s resignation is not due to any disagreement with the Company.
Concurrently, on February 16, 2021, the Board approved the appointment of Jennifer Gray to serve as a member of the Board with a term expiring at the Company’s annual meeting of stockholders in 2021 or until the earlier of her death, resignation, disqualification or removal. Ms. Gray was appointed to fill the vacancy created by the departure of Mr. Reeder. The appointment of Ms. Gray was effective immediately following the effectiveness of the resignation of Mr. Reeder. The Board has affirmatively determined that Ms. Gray is an independent director in accordance with the standards for independence set forth in the NASDAQ Stock Market Rules.
Ms. Gray, age 39, is the Chief Compliance Officer, Deputy General Counsel and Managing Director of Energy Capital Partners (“ECP”). Ms. Gray joined ECP in 2008, and also serves as the chair of ECP’s Compliance Committee and Environmental, Social, and Corporate Governance Committee and an observer on the Valuation Committee. In addition, Ms. Gray has been actively involved with the diligence, structuring, acquisition, divestiture, business operations and management of numerous ECP portfolio companies. Prior to joining ECP, Ms. Gray was an associate at the law firm of Latham & Watkins LLP where she represented both lenders and borrowers in joint venture, financing acquisition and development transactions. Ms. Gray received both a B.S. in International Business and a J.D. from Pepperdine University.
Certain affiliates of Yorktown Energy Partners and ECP are parties to that certain Shareholders’ Agreement, dated as of February 8, 2017, with the Company (the “Shareholders’ Agreement”). Pursuant to the Shareholders’ Agreement, for so long as ECP holds at least 10% of the outstanding shares of the Company’s common stock, ECP has the right to designate up to two individuals to the Board. Ms. Gray is one of ECP’s designated Board members. Following Ms. Gray’s appointment to the Board, ECP has designated two individuals to serve on the Board. ECP’s other designated Board member is Mahmud Riffat. Ms. Gray does not have any family relationship with any director or executive officer of the Company or any person nominated or chosen by the Company to be a director or executive officer. There are no transactions in which Ms. Gray has an interest requiring disclosure under Item 404(a) of Regulation S-K.
In connection with her service as a director, Ms. Gray will not receive any compensation.
Ms. Gray will enter into an indemnification agreement with the Company in the form entered into with the Company’s other directors and executive officers effective as of the effective date of her appointment to the Board, which requires the Company to indemnify her to the fullest extent permitted under Delaware law against liability that may arise by reason of her service to the Company, and to advance certain expenses incurred as a result of any proceeding against her as to which she could be indemnified. The form of indemnification agreement was filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No. 333-215363), as originally filed on January 11, 2017, and is incorporated into this Item 5.02 by reference.
The Company has issued a press release announcing Mr. Reeder’s resignation from and Ms. Gray’s appointment to the Board. A copy of the press release is attached as Exhibit 99.2 hereto.
Item 7.01. Regulation FD Disclosure.
The information set forth in Item 2.02 above and in Exhibits 99.1 and 99.2 to this Current Report on Form 8-K is incorporated herein by reference.
None of the information furnished in this Item 7.01 will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor will it be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| | | |
|---|---|---|
| | | |
| <br><br>Exhibit Number | | <br><br><br><br>Exhibit Description |
| | | |
| 10.1 | | Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement on Form S-1 (File No. 333-215363) filed with the Commission on January 11, 2017) |
| 99.1 | | Earnings Release issued on February 18, 2021 |
| 99.2 | | Press Release, dated February 16, 2021 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | RAMACO RESOURCES, INC. |
|---|---|---|
| By: | /s/ Randall W. Atkins | |
| | Name:<br><br>Title: | Randall W. Atkins<br><br>Chief Executive Officer |
Date:February 18, 2021
Ramaco Resources, Inc. Reports Fourth Quarter 2020 Financial Results
Company Release – February 18, 2021
| ● | As noted this past Wednesday, our Board of Directors has approved the completion of the Berwind slope, as well as the new Big Creek surface mine at the Knox Creek complex. At full production, these two mines are expected to produce almost one million tons per year of additional low-vol and mid-vol production. |
|---|---|
| ● | The Company ended 2020 in a solid liquidity position, with $22.0 million of liquidity, roughly the same level of liquidity as year-end 2019. |
| --- | --- |
| ● | 2020 Net loss was $4.9 million (EPS loss of $0.12), while adjusted EBITDA was $18.5 million for the full-year 2020. Adjusted EBITDA for 2020 was negatively affected by roughly $6.4 million, caused by the force majeure of over 200,000 tons scheduled to be shipped domestically and subsequently resold into a lower priced spot market. |
| --- | --- |
| ● | Total Company Produced Sales of 515,000 tons for the fourth quarter 2020 were a quarterly record. Export coal sales (including to Canada) of over 300,000 tons were also a quarterly record. |
| --- | --- |
LEXINGTON, KY – (PR NEWSWIRE) – Ramaco Resources, Inc. (NASDAQ: METC) (“Ramaco Resources” or the “Company”) today reported a quarterly net loss of $4.7 million, or $0.11 per diluted share for the three months ended December 31, 2020, as compared to net income of $1.9 million or $0.05 per diluted share for the three months ended December 31, 2019.
The Company’s adjusted earnings before interest, taxes, depreciation, amortization and equity-based compensation expenses (“Adjusted EBITDA”) was ($1.4) million for the three months ended December 31, 2020, and $18.5 million for the year ended 2020, as compared with $9.0 million of Adjusted EBITDA for the three months ended December 31, 2019 and $55.4 million for the year ended 2019. The Company for calendar 2020 had a net loss of $4.9 million, and net income of $24.9 million for the year ended 2019.
Key operational and financial metrics are presented below:
| | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Key Metrics | | | | | | | | | | | | | | | | | |
| | 4Q20 | | 3Q20 | Change | | 4Q19 | Change | | 2020 | | 2019 | Change | |||||
| Sales of Company Produced Tons ('000) | | 515 | | | 430 | 20% | | | 420 | 23% | | | 1,723 | | | 1,872 | (8)% |
| Revenue ($mm) | $ | 51.1 | | $ | 39.5 | 30% | | $ | 45.6 | 12% | | $ | 168.9 | | $ | 230.2 | (27)% |
| Cost of Sales ($mm) | $ | 48.7 | | $ | 35.7 | 37% | | $ | 33.3 | 47% | | $ | 145.5 | | $ | 162.5 | (10)% |
| Pricing of Company Produced ($/Ton) | $ | 80 | | $ | 78 | 3% | | $ | 104 | (23)% | | $ | 85 | | $ | 109 | (22)% |
| Cash Cost of Sales - Company Produced ($/Ton) | $ | 76 | | $ | 69 | 10% | | $ | 74 | 3% | | $ | 72 | | $ | 73 | (1)% |
| Cash Margins on Company Produced ($/Ton) | $ | 4 | | $ | 9 | (56)% | | $ | 30 | (87)% | | $ | 13 | | $ | 36 | (64)% |
| Net Income (Loss) ($mm) | $ | (4.7) | | $ | (4.8) | (1)% | | $ | 1.9 | (351)% | | $ | (4.9) | | $ | 24.9 | (120)% |
| Adjusted EBITDA ($mm) | $ | (1.4) | | $ | 0.6 | (321)% | | $ | 9.0 | (116)% | | $ | 18.5 | | $ | 55.4 | (67)% |
| Capex ($mm) | $ | 4.2 | | $ | 2.5 | 68% | | $ | 11.7 | (64)% | | $ | 24.8 | | $ | 45.7 | (46)% |
| Diluted Earnings (Loss) per Share | $ | (0.11) | | $ | (0.11) | 0% | | $ | 0.05 | (320)% | | $ | (0.12) | | $ | 0.61 | (120)% |
| | | | | | | | | | | | | | | | | | |
Fourth Quarter 2020 Summary
Year over Year Quarterly Comparison
Overall sales of Company produced tons in the fourth quarter of 2020 were 515,000 tons, up from 420,000 tons in the fourth quarter of 2019. Cash margins on Company produced coal were $4 per ton in the fourth quarter of 2020, down 87% from the same period of 2019, primarily due to lower realized pricing, attributable to large declines on the various metallurgical coal indices.
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Sequential Quarter Comparison
Overall sales volumes of 515,000 Company produced tons in the fourth quarter of 2020 were up 20% from the third quarter of 2020. The improvement was the result of increased spot sales into primarily export markets completed during the fourth quarter. However, as previously disclosed, in the second quarter of 2020 we received force majeure notices from two customers for cancellation of orders for over 200,000 tons. The majority of these tons were resold into the spot market in the fourth quarter of 2020 at lower than originally contracted prices, which negatively affected our margins due to weak metallurgical coal indices in the period.
Our cash margins on Company produced coal declined 56% in the fourth quarter of 2020 from the third quarter of 2020. This decline was caused primarily by higher costs at our Elk Creek operations. Overall Company cash costs per ton sold on produced coal were $76 per ton in the fourth quarter of 2020, compared to $69 per ton in the third quarter of 2020. Cash costs on Company produced coal at Elk Creek were $76 per ton sold in the fourth quarter of 2020 compared to $67 per ton in the third quarter of 2020. There were a number of unique non-recurring circumstances at Elk Creek in the fourth quarter. Our 2Gas mine ran into sandstone intrusions, and our Stonecoal mine had two roof falls, both negatively impacting operations. When combined with a one-time inventory revaluation of roughly 35,000 tons, and COVID-19 related cost increases, these events accounted for the cost increase at Elk Creek in the fourth quarter of 2020 compared to the third quarter of 2020. We do not anticipate these issues to persist in 2021.
Other income was $0.5 million in the fourth quarter of 2020, as compared to $1.7 million mostly from PPP related income in the third quarter of 2020. On April 20, 2020, we received $8.4 million in loan proceeds from the SBA Paycheck Protection Program (PPP). Based upon receipt of this funding, in late April we elected to recall 182 workers at our Elk Creek complex who had been furloughed in part of March and April. In the second and third quarters of 2020 collectively, we used the PPP proceeds for eligible payroll and other expenses totaling $8.4 million. We have applied for forgiveness with the SBA through KeyBank. Our forgiveness request has been approved in full by KeyBank, and a decision by the SBA is expected within the next two months.
Additional Financial Results
At December 31, 2020, the Company had liquidity of $22.0 million, consisting of $5.3 million of cash on hand plus $16.7 million of availability under its revolving credit facility. At December 31, 2020, the Company had net debt of $12.2 million. In the fourth quarter of 2020, we had a number of shipments moved to later dates due to customer-related issues, some of which were moved into 2021, negatively impacting year-end 2020 liquidity. All anticipated December 2020 shipments now have been shipped. As of January 31, 2021, we had no borrowings under our $30.0 million revolving credit facility for the first time since late 2018.
Capital expenditures for 2020 totaled $24.8 million, and decreased by 46% as compared to $45.7 million for the year ended 2019. Fourth quarter 2020 capital expenditures were $4.2 million. Second half 2020 capital expenditures were $6.7 million, which were 27% of the full-year 2020 total. Second half capital expenditures were mainly limited to maintenance capital requirements, given the Company’s previously announced pause in most growth capital. As disclosed last quarter, we began development spend at the company’s low volatile Triad Mine in the fourth quarter of 2020, and have largely completed development under the announced $1.5 million budget. We produced first coal from Triad in January 2021.
The Company’s effective tax rate for 2020 was approximately 20%, excluding a $1.8 million income tax benefit associated with the recognition of other income for the anticipated PPP Loan forgiveness. Actual cash taxes paid in 2020 were less than $20,000. Ramaco also expects to continue to pay minimal taxes for the foreseeable future due to tax loss carryforwards.
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The following summarizes key sales, production and financial metrics for the periods noted:
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended | | Years ended December 31, | |||||||||||
| | | December 31, | | September 30, | | December 31, | | | | | |||||
| In thousands, except per ton amounts | 2020 | 2020 | 2019 | | 2020 | 2019 | |||||||||
| | | | | | | | | | | | | | | | |
| Sales Volume | | | | | | | |||||||||
| Company | | 515 | | 430 | | 420 | | | 1,723 | | 1,872 | ||||
| Purchased | | 26 | | — | | — | | | 26 | | 78 | ||||
| Total | | 541 | | 430 | | 420 | | | 1,749 | | 1,950 | ||||
| | | | | | | | | | | | | | | | |
| Company Production | | | | | | | |||||||||
| Elk Creek Mining Complex | | 376 | | 383 | | 400 | | | 1,548 | | 1,669 | ||||
| Berwind Development Deep Mine | | 15 | | 14 | | 47 | | | 147 | | 186 | ||||
| Total | | 391 | | 397 | | 447 | | | 1,695 | | 1,855 | ||||
| | | | | | | | | | | | | | | | |
| Company Financial Metrics (a) | | | | | | | |||||||||
| Average revenue per ton | | $ | 80 | | $ | 78 | | $ | 104 | | $ | 85 | | $ | 109 |
| Average cash costs of coal sold | | | 76 | | | 69 | | | 74 | | | 72 | | | 73 |
| Average cash margin per ton | | $ | 4 | | $ | 9 | | $ | 30 | | $ | 13 | | $ | 36 |
| | | | | | | | | | | | | | | | |
| Elk Creek Financial Metrics (a) | | | | | | ||||||||||
| Average revenue per ton | | $ | 79 | | $ | 77 | | $ | 102 | | $ | 84 | | $ | 108 |
| Average cash costs of coal sold | | | 76 | | | 67 | | | 66 | | | 70 | | | 67 |
| Average cash margin per ton | | $ | 3 | | $ | 10 | | $ | 36 | | $ | 14 | | $ | 41 |
| | | | | | | | | | | | | | | | |
| Purchased Coal Financial Metrics (a) | | | | | | ||||||||||
| Average revenue per ton | | $ | 62 | | $ | — | | $ | — | | $ | 62 | | $ | 127 |
| Average cash costs of coal sold | | | 62 | | | — | | | — | | | 62 | | | 114 |
| Average cash margin per ton | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 13 |
| | | | | | | | | | | | | | | | |
| Capital Expenditures | | $ | 4,238 | | $ | 2,496 | | $ | 11,679 | | $ | 24,753 | | $ | 45,722 |
| (a) | Excludes transportation. |
|---|
Outlook and Comment
Randall Atkins, Ramaco Resources’ Chairman and Chief Executive Officer remarked, “While 2020 is a year that none of us want to repeat, I am incredibly proud of what Ramaco managed to safely accomplish in the middle of an unprecedented global pandemic. We are perhaps the only public coal company that ended the year with roughly the same level of liquidity compared to where we started, without either diluting our equity or pledging our mining operations against secured debt. Given the Company’s solid liquidity position, and better visibility into the improving world metallurgical coal markets, the Board of Directors earlier this week authorized us to resume our balanced production growth and its related capital spending. To that end, the Board approved the completion of the low-vol Berwind slope, as well as starting the new mid-vol Big Creek surface mine at the Knox Creek complex. As we noted on Wednesday, we will spend approximately $18 million over two years on these properties. At full production, these two mines are expected to produce almost one million new tons per year and increase our overall capacity by roughly 50%, to approximately 3 million tons of low-cost production. The mines will have a material positive impact on our future earning capacity. They will also provide additional near-term tonnage in 2021 to sell into these strengthening markets.
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This should provide us with up to 2.4 million tons of production this year and increase into 2022 and 2023 as Berwind fully ramps up.”
Atkins continued, “When we made the decision to pause our growth capital spending early in the second quarter of 2020, we had just received force majeure notices from our two largest customers, and major uncertainty existed in the market. Though these force majeure notices ultimately cost Ramaco over $6 million in 2020 EBITDA, we are seeing a much different response out of our customers today. Earlier this month, U.S. hot rolled coil steel prices hit above $1,200 per ton for the first time on record. At the same time, as of January 31, U.S. steel service centers had their second lowest months of supply on hand over the past 40 years. Simply put, the same customers who caused us disruption in 2020 are now seeking more tons, at materially higher pricing than just a few months ago.”
Atkins finished, “From a macro perspective, we are excited about the market prospects for our commodity. U.S. metallurgical coal indices are up well over 50% above their 2020 COVID-induced lows, while steel prices are near all-time highs. Governments around the world are increasing money supply at the fastest rates ever seen, on the back of massive proposed global fiscal stimulus packages aimed at consumption and infrastructure. We believe this macro environment provides extremely positive and unique market conditions for both near and medium-term growth in metallurgical coal demand. These positive macro trends have now directly translated into much stronger fixed price and index-based sales booked in early 2021. This strengthening demand landscape is dramatically contrasted against very negative supply-constraining conditions. To name but a few would include challenges in securing coal-related financing, ESG issues, regulatory and permitting challenges, and the thermal coal overhang in ARO and related legacy liabilities which impact many of our peers. In summary, I am proud that we managed to endure an unprecedented 2020, emerging with perhaps a few battle scars, but a lot of lessons learned. We now look forward to the imminent resumption of Ramaco’s originally projected growth trajectory to over 4 million tons of production in a strengthening market and the prospect of generating meaningful free cash flow.”
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2021 Guidance
(In thousands, except per ton amounts)
| | | | | | | |
|---|---|---|---|---|---|---|
| | 2021 Guidance | 2020 Actuals | ||||
| | | | | | | |
| Company Production | | | ||||
| Elk Creek | | 1,750 - 2,050 | | 1,548 | ||
| Triad | | | 75 - 175 | | | — |
| Berwind | | 25 - 75 | | 147 | ||
| Big Creek | | | 50 - 100 | | | — |
| Total | | 1,900 - 2,400 | | 1,695 | ||
| | | | | | | |
| Sales Mix^(a)^ | | | ||||
| Metallurgical | | 1,875 - 2,325 | | 1,749 | ||
| Steam | | 25 - 75 | | — | ||
| Total | | 1,900 - 2,400 | | 1,749 | ||
| | | | | | | |
| Cost Per Ton | | | | |||
| Elk Creek | | $ | 63 - 68 | | $ | 70 |
| | | | | | | |
| Other | | | | | | |
| Capital Expenditures | | $ | 25,000 - 30,000 | | $ | 24,753 |
| Selling, general and administrative expense ^(b)^ | | $ | 14,000 - 16,000 | | $ | 16,883 |
| Depreciation and amortization expense | | $ | 24,000 - 28,000 | | $ | 20,912 |
| Interest expense, net | | $ | 1,000 - 2,000 | | $ | 1,224 |
| Cash taxes | | $ | 0 - 25 | | $ | 19 |
| Effective tax rate^(c)^ | | | 15 - 20% | | | 20% |
| | | | | | | |
| (a) | 2021 guidance assumes no purchased coal. |
|---|---|
| (b) | Excluding stock-based compensation. |
| --- | --- |
| (c) | Excluding benefit associated with the recognition of other income for the anticipated PPP Loan forgiveness. |
| --- | --- |
Committed 2021 Sales Volume **** ^(a)^
(In millions, except per ton amounts)
| | | | | | |
|---|---|---|---|---|---|
| | **** | Volume | **** | Average Price | |
| North America, fixed priced | 1.3 | | $ | 84 | |
| Seaborne, fixed priced | 0.0 | | $ | — | |
| Total, fixed priced | 1.3 | | $ | 84 | |
| Indexed priced | 0.4 | | |||
| Total committed tons | 1.7 | | | |
| (a) | Amounts as of Dec. 31, 2020 and include no purchased coal. Totals may not add due to rounding. |
|---|
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About Ramaco Resources, Inc.
Ramaco Resources, Inc. is an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. Its executive offices are in Lexington, Kentucky, with operational offices in Charleston, West Virginia. The Company has five active mines within two mining complexes at this time.
News and additional information about Ramaco Resources, including filings with the Securities and Exchange Commission, are available at http://www.ramacoresources.com. For more information, contact investor relations at (859) 244-7455.
Earnings Conference Call
Ramaco Resources will hold its quarterly conference call and webcast at 9:00 AM Eastern Time (ET) on Friday, February 19, 2021. An accompanying slide deck will be available at https://www.ramacoresources.com/investors-center/events-calendar/ immediately before the conference call.
The conference call can be accessed by calling (844) 852-8392 domestically or (703) 639-1226 internationally. The webcast for this release will be accessible by visiting https://edge.media-server.com/mmc/p/fvicfane.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Ramaco Resources’ expectations or beliefs concerning guidance, future events, anticipated revenue, costs and expectations regarding operating results, and it is possible that the results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Ramaco Resources’ control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. These factors include, without limitation, risks related to the impact of the COVID-19 global pandemic, unexpected delays in our current mine development activities, failure of our sales commitment counterparties to perform, increased government regulation of coal in the United States or internationally, or further decline of demand for coal in export markets and underperformance of the railroads. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Ramaco Resources does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Ramaco Resources to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in Ramaco Resources’ filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The risk factors and other factors noted in Ramaco Resources’ SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement.
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Ramaco Resources, Inc.Consolidated Statements of Operations
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended December 31, | | Years ended December 31, | ||||||||
| In thousands, except per share amounts | **** | 2020 | **** | 2019 | **** | 2020 | **** | 2019 | ||||
| | | | | | | | | | | | | |
| Revenue | **** | $ | 51,146 | $ | 45,612 | **** | $ | 168,915 | $ | 230,213 | ||
| | | | | | | | | | | | | |
| Costs and expenses | | | | | | | | | | | | |
| Cost of sales (exclusive of items shown separately below) | | 48,746 | | 33,262 | | 145,503 | | 162,470 | ||||
| Asset retirement obligation accretion | | 143 | | 128 | | 570 | | 511 | ||||
| Depreciation and amortization | | 5,310 | | 5,229 | | 20,912 | | 19,521 | ||||
| Selling, general and administrative | | 5,301 | | 5,052 | | 21,023 | | 18,179 | ||||
| Total costs and expenses | | 59,500 | | 43,671 | | 188,008 | | 200,681 | ||||
| Operating income (loss) | | (8,354) | | 1,941 | | (19,093) | | 29,532 | ||||
| Other income | | 470 | | 694 | | 11,926 | | 1,758 | ||||
| Interest expense, net | | (309) | | (242) | | (1,224) | | (1,193) | ||||
| Income (loss) before tax | | (8,193) | | 2,393 | | (8,391) | | 30,097 | ||||
| Income tax expense (benefit) | | (3,447) | | 505 | | (3,484) | | 5,163 | ||||
| Net income (loss) | | $ | (4,746) | | $ | 1,888 | | $ | (4,907) | | $ | 24,934 |
| | | | | | | | | | | | | |
| Earnings (loss) per common share | | | | | | | | | | | | |
| Basic earnings per share | | $ | (0.11) | | $ | 0.05 | | $ | (0.12) | | $ | 0.61 |
| Diluted earnings per share | | $ | (0.11) | | $ | 0.05 | | $ | (0.12) | | $ | 0.61 |
| | | | | | | | | | | | | |
| Basic weighted average shares outstanding | | 42,717 | | 40,939 | | 42,460 | | 40,838 | ||||
| Diluted weighted average shares outstanding | | 42,717 | | 40,939 | | 42,460 | | 40,838 | ||||
| | | | | | | | | | | | | |
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Ramaco Resources, Inc.
Consolidated Balance Sheets
| | | | | | | |
|---|---|---|---|---|---|---|
| In thousands, except share amounts | **** | December 31, 2020 | **** | December 31, 2019 | ||
| | | | | | | |
| Assets | | | ||||
| Current assets | | | ||||
| Cash and cash equivalents | | $ | 5,300 | | $ | 5,532 |
| Accounts receivable | | 20,299 | | 19,256 | ||
| Inventories | | 11,947 | | 15,261 | ||
| Prepaid expenses and other | | 4,953 | | 4,274 | ||
| Total current assets | | 42,499 | | 44,323 | ||
| | | | | | | |
| Property, plant and equipment, net | | 180,455 | | 178,202 | ||
| Advanced coal royalties | | 4,784 | | 3,271 | ||
| Other assets | | 885 | | 1,017 | ||
| Total Assets | | $ | 228,623 | | $ | 226,813 |
| | | | | | | |
| Liabilities and Stockholders' Equity | | | ||||
| Liabilities | | | ||||
| Current liabilities | | | ||||
| Accounts payable | | $ | 11,742 | | $ | 10,663 |
| Accrued expenses | | 11,591 | | 11,740 | ||
| Asset retirement obligations | | 46 | | 19 | ||
| Current portion of long-term debt | | 4,872 | | 3,333 | ||
| Other current liabilities | | 862 | | 656 | ||
| Total current liabilities | | 29,113 | | 26,411 | ||
| | | | | | | |
| Asset retirement obligations | | 15,110 | | 14,586 | ||
| Long-term debt, net | | 12,578 | | 9,614 | ||
| Deferred tax | | 1,762 | | 5,265 | ||
| Other long-term liabilities | | 965 | | 854 | ||
| Total liabilities | | 59,528 | | 56,730 | ||
| | | | | | | |
| Commitments and contingencies | | — | | — | ||
| | | | | | | |
| Stockholders' Equity | | | ||||
| Preferred stock, $0.01 par value | | — | | — | ||
| Common stock, $0.01 par value | | 427 | | 410 | ||
| Additional paid-in capital | | 158,859 | | 154,957 | ||
| Retained earnings | | 9,809 | | 14,716 | ||
| Total stockholders' equity | | 169,095 | | 170,083 | ||
| Total Liabilities and Stockholders' Equity | | $ | 228,623 | | $ | 226,813 |
| | | | | | | |
8
Ramaco Resources, Inc.
Statement of Cash Flows
| | | | | | | |
|---|---|---|---|---|---|---|
| | | Years ended December 31, | ||||
| In thousands | | 2020 | **** | 2019 | ||
| Cash flows from operating activities | | | | |||
| Net income (loss) | | $ | (4,907) | | $ | 24,934 |
| Adjustments to reconcile net income (loss) to net cash from operating activities: | | | | | | |
| Accretion of asset retirement obligations | | 570 | | 511 | ||
| Depreciation and amortization | | 20,912 | | 19,521 | ||
| Amortization of debt issuance costs | | 58 | | 58 | ||
| Stock-based compensation | | 4,140 | | 4,060 | ||
| Other income - PPP Loan | | | (8,444) | | | — |
| Deferred income taxes | | (3,503) | | 5,156 | ||
| Changes in operating assets and liabilities: | | | | | | |
| Accounts receivable | | (1,043) | | (8,527) | ||
| Prepaid expenses and other current assets | | 986 | | 723 | ||
| Inventories | | 3,314 | | (1,076) | ||
| Other assets and liabilities | | (1,270) | | 689 | ||
| Accounts payable | | 2,753 | | (7,313) | ||
| Accrued expenses | | (254) | | 3,646 | ||
| Net cash from operating activities | | 13,312 | | 42,382 | ||
| | | | | | | |
| Cash flow from investing activities: | | | | | | |
| Purchases of property, plant and equipment | | (24,753) | | (45,722) | ||
| | | | | | | |
| Cash flows from financing activities | | | | | | |
| Proceeds from PPP Loan | | | 8,444 | | | — |
| Proceeds from borrowings | | 50,043 | | 73,750 | ||
| Repayment of borrowings | | (45,598) | | (70,335) | ||
| Repayments of financed insurance payable | | | (1,382) | | | (570) |
| Restricted stock surrendered for withholding taxes payable | | | (221) | | | (20) |
| Net cash from financing activities | | 11,286 | | 2,825 | ||
| | | | | | | |
| Net change in cash and cash equivalents and restricted cash | | (155) | | (515) | ||
| Cash and cash equivalents and restricted cash, beginning of period | | 6,865 | | 7,380 | ||
| Cash and cash equivalents and restricted cash, end of period | | $ | 6,710 | | $ | 6,865 |
| | | | | | | |
9
Reconciliation of Non-GAAP Measure
Adjusted EBITDA
Adjusted EBITDA is used as a supplemental non-GAAP financial measure by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance.
We define Adjusted EBITDA as net income plus net interest expense, equity-based compensation, depreciation and amortization expenses and any transaction related costs. Its most comparable GAAP measure is net income. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended December 31, | | Years ended December 31, | ||||||||
| (In thousands) | **** | 2020 | **** | 2019 | **** | 2020 | **** | 2019 | ||||
| | | | | | | | | | | | | |
| Reconciliation of Net Income to Adjusted EBITDA | **** | | **** | | | | **** | | ||||
| Net income (loss) | | $ | (4,746) | | $ | 1,888 | | $ | (4,907) | | $ | 24,934 |
| Depreciation and amortization | | 5,310 | | 5,229 | | 20,912 | | 19,521 | ||||
| Interest expense, net | | 309 | | 242 | | 1,224 | | 1,193 | ||||
| Income taxes | | (3,447) | | 505 | | (3,484) | | 5,163 | ||||
| EBITDA | | (2,574) | | 7,864 | | 13,745 | | 50,811 | ||||
| Stock-based compensation | | 1,021 | | 1,003 | | 4,140 | | 4,060 | ||||
| Accretion of asset retirement obligation | | 143 | | 128 | | 570 | | 511 | ||||
| Adjusted EBITDA | | $ | (1,410) | | $ | 8,995 | | $ | 18,455 | | $ | 55,382 |
| | | | | | | | | | | | | |
Non-GAAP revenue and cash cost per ton
Non-GAAP revenue per ton (FOB mine) is calculated as coal sales revenue less transportation costs, divided by tons sold. Non-GAAP cash cost per ton sold is calculated as cash cost of coal sales less transportation costs, divided by tons sold. We believe revenue per ton (FOB mine) and cash cost per ton provides useful information to investors as these enable investors to compare revenue per ton and cash cost per ton for the Company against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal prices and costs from period to period excluding the impact of transportation costs which are beyond our control. The adjustments made to arrive at these measures are significant in understanding and assessing the Company’s financial condition. Revenue per ton sold (FOB mine) and cash cost per ton are not measures of financial performance in accordance with U.S. GAAP and therefore should not be considered as an alternative to revenue and cost of sales under U.S. GAAP. The tables below show how we calculate non-GAAP revenue and cash cost per ton:
Non-GAAP revenue per ton
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended December 31, 2020 | | Three months ended December 31, 2019 | ||||||||||||||
| | Company | Purchased | | | Company | Purchased | | | ||||||||||
| (In thousands, except per ton amounts) | | Produced | | Coal | | Total | | Produced | | Coal | | Total | ||||||
| | | | | | | | ||||||||||||
| Revenue | | $ | 48,719 | | $ | 2,427 | | $ | 51,146 | | $ | 45,612 | | $ | — | | $ | 45,612 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | | | | | | | | | | | | |||||||
| Transportation costs | | (7,393) | | (811) | | (8,204) | | (2,155) | | — | | (2,155) | ||||||
| Non-GAAP revenue (FOB mine) | | $ | 41,326 | | $ | 1,616 | | $ | 42,942 | | $ | 43,457 | | $ | — | | $ | 43,457 |
| Tons sold | | 515 | | 26 | | 541 | | 420 | | — | | 420 | ||||||
| Revenue per ton sold (FOB mine) | | $ | 80 | | $ | 62 | | $ | 79 | | $ | 104 | | $ | — | | $ | 104 |
10
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended September 30, 2020 | |||||||
| | Company | Purchased | | | |||||
| (In thousands, except per ton amounts) | | Produced | | Coal | | Total | |||
| | | | | ||||||
| Revenue | | $ | 39,459 | | $ | — | | $ | 39,459 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | | | | ||||||
| Transportation costs | | (6,049) | | — | | (6,049) | |||
| Non-GAAP revenue (FOB mine) | | $ | 33,410 | | $ | — | | $ | 33,410 |
| Tons sold | | 430 | | — | | 430 | |||
| Revenue per ton sold (FOB mine) | | $ | 78 | | $ | — | | $ | 78 |
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Year ended December 31, 2020 | | Year ended December 31, 2019 | ||||||||||||||
| | **** | Company | **** | Purchased | **** | | | **** | Company | **** | Purchased | **** | | | ||||
| (In thousands, except per ton amounts) | **** | Produced | **** | Coal | | Total | **** | Produced | **** | Coal | | Total | ||||||
| | | | | | | | | | | | | | | | | | | |
| Revenue | | $ | 166,488 | | $ | 2,427 | | $ | 168,915 | | $ | 219,911 | | $ | 10,302 | | $ | 230,213 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | | | | | | | | | | | | | | | | | | |
| Transportation costs | | (20,000) | | (811) | | (20,811) | | (16,253) | | (424) | | (16,677) | ||||||
| Non-GAAP revenue (FOB mine) | | $ | 146,488 | | $ | 1,616 | | $ | 148,104 | | $ | 203,658 | | $ | 9,878 | | $ | 213,536 |
| Tons sold | | 1,723 | | 26 | | 1,749 | | 1,872 | | 78 | | 1,950 | ||||||
| Revenue per ton sold (FOB mine) | | $ | 85 | | $ | 62 | | $ | 85 | | $ | 109 | | $ | 127 | | $ | 110 |
| | | | | | | | | | | | | | | | | | | |
Non-GAAP cash cost per ton
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended December 31, 2020 | | Three months ended December 31, 2019 | ||||||||||||||
| | **** | Company | **** | Purchased | **** | | | **** | Company | **** | Purchased | **** | | | ||||
| (In thousands, except per ton amounts) | | Produced | | Coal | | Total | | Produced | | Coal | | Total | ||||||
| | | | | | | | ||||||||||||
| Cost of sales | | $ | 46,307 | | $ | 2,439 | | $ | 48,746 | | $ | 33,262 | | $ | — | | $ | 33,262 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | | | | | | | | | | | | |||||||
| Transportation costs | | (7,351) | | (823) | | (8,174) | | (2,155) | | — | | (2,155) | ||||||
| Non-GAAP cash cost of sales | | $ | 38,956 | | $ | 1,616 | | $ | 40,572 | | $ | 31,107 | | $ | — | | $ | 31,107 |
| Tons sold | | 515 | | 26 | | 541 | | 420 | | — | | 420 | ||||||
| Cash cost per ton sold | | $ | 76 | | $ | 62 | | $ | 75 | | $ | 74 | | $ | — | | $ | 74 |
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Three months ended September 30, 2020 | |||||||
| | Company | **** | Purchased | **** | | | |||
| (In thousands, except per ton amounts) | | Produced | | Coal | | Total | |||
| | | | | ||||||
| Cost of sales | | $ | 35,689 | | $ | — | | $ | 35,689 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | | | | ||||||
| Transportation costs | | (5,936) | | — | | (5,936) | |||
| Non-GAAP cash cost of sales | | $ | 29,753 | | $ | — | | $ | 29,753 |
| Tons sold | | 430 | | — | | 430 | |||
| Cash cost per ton sold | | $ | 69 | | $ | — | | $ | 69 |
11
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Year ended December 31, 2020 | | Year ended December 31, 2019 | ||||||||||||||
| | **** | Company | **** | Purchased | **** | | | **** | Company | **** | Purchased | **** | | | ||||
| (In thousands, except per ton amounts) | **** | Produced | **** | Coal | | Total | **** | Produced | **** | Coal | | Total | ||||||
| | | | | | | | | | | | | | | | | | | |
| Cost of sales | | $ | 143,064 | | $ | 2,439 | | $ | 145,503 | | $ | 153,172 | | $ | 9,298 | | $ | 162,470 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | | | | | | | | | | | | | | | | | | |
| Transportation costs | | (19,684) | | (823) | | (20,507) | | (16,185) | | (425) | | (16,610) | ||||||
| Non-GAAP cash cost of sales | | $ | 123,380 | | $ | 1,616 | | $ | 124,996 | | $ | 136,987 | | $ | 8,873 | | $ | 145,860 |
| Tons sold | | 1,723 | | 26 | | 1,749 | | 1,872 | | 78 | | 1,950 | ||||||
| Cash cost per ton sold | | $ | 72 | | $ | 62 | | $ | 71 | | $ | 73 | | $ | 114 | | $ | 75 |
| | | | | | | | | | | | | | | | | | | |
We do not provide reconciliations of our outlook for cash cost per ton to cost of sales in reliance on the unreasonable
efforts exception provided for under Item 10(e)(1)(i)(B) of Regulation S-K. We are unable, without unreasonable efforts, to forecast certain items required to develop the meaningful comparable GAAP cost of sales. These items typically include non-cash asset retirement obligation accretion expenses, mine idling expenses and other non-recurring indirect mining expenses that are difficult to predict in advance in order to include a GAAP estimate.
#
12
Exhibit 99.2 Ramaco Resources, Inc. Announces Board of Directors and Management Changes
Company Release – February 16, 2021
LEXINGTON, KY – (PR NEWSWIRE) – Ramaco Resources, Inc. (NASDAQ: METC) (“Ramaco Resources” or the “Company”) today announced that its Board of Directors accepted the resignation of Tyler Reeder as a Director and the appointment of Jennifer Gray as a new independent director. Both Reeder and Gray are currently Managing Directors of Energy Capital Partners, a major shareholder in the Company.
Randall Atkins, Ramaco Resources’ Chairman and Chief Executive Officer remarked, “We are sorry to announce that Tyler Reeder will be stepping down from the Board due to other commitments at Energy Capital. Tyler has been a steady, experienced voice on the Board since before we became a public company and his counsel will be missed. We are excited however to be welcoming Jennifer Gray to the Board. Jennifer’s legal background will provide the Board with additional strength as we navigate today’s challenging environment. We look forward to working with her as part of our outstandingly qualified Board.”
With this appointment Ramaco Resources Board will be comprised of eight independent directors and three inside directors.
The Company also announced that it had appointed Jason T. Fannin to the additional title of Chief Commercial Officer. He also serves in the role of Senior Vice President Chief Marketing Officer. Atkins continued, “We have been pleased and proud of the role that Jason has played since he joined the Company last year. We felt he deserved recognition for the additional duties we will ask him to perform in coordination of our overall commercial marketing, sales and logistical efforts.”
**About Ramaco Resources, Inc.**Ramaco Resources, Inc. is an operator and developer of metallurgical coal in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. Its executive offices are in Lexington, Kentucky, with operational offices in Charleston, West Virginia. The Company has five active mines operating from two mining complexes at this time.
News and additional information about Ramaco Resources, including filings with the Securities and Exchange Commission, are available at www.ramacoresources.com.
Contact:
Phone: 859-244-7455
Email: info@ramacoresources.com