• Adjusted EBITDA: $24 million in Q3 compared to $29 million in Q2.
• Net Income: Breakeven in Q3 compared to $6 million in Q2.
• Class A EPS: $0.03 loss in Q3 compared to an $0.08 gain in Q2.
• Realized Price per Ton: $136 in Q3 versus $143 in Q2.
• Cash Costs: Improved to $102 per ton in Q3 from $108 per ton in Q2.
• Cash Margins per Ton: $34 in Q3, flattish versus Q2.
• Production: Record production of 972,000 tons in Q3, up 35% from Q3 2023.
• Sales: Record sales of 1.02 million tons in Q3, first time surpassing 1 million tons in a quarter.
• Liquidity: $81 million as of September 30, up almost $10 million from June 30.
• 2024 Production and Sales Guidance: Reduced by 200,000 tons at the midpoint to 3.7 million to 3.9 million tons.
• 2024 CapEx Guidance: Increased to $61 million to $65 million from $53 million to $63 million.
• 2024 Cash SG&A Guidance: Decreased to $34 million to $38 million from $38 million to $42 million.
• Net Debt to EBITDA: 0.4 times as of Q3.

• Warning! GuruFocus has detected 4 Warning Sign with METC.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ramaco Resources Inc (NASDAQ:METC) achieved its strongest operational quarter of the year, with record production and sales exceeding 1 million tons for the first time.
• The company successfully reduced mine costs by over 25% from March to September, with costs dropping from $120 to $93 per ton.
• Operational improvements are expected to continue into the fourth quarter, with projections of increased production and sales.
• The Maben prep plant was commissioned on time and on budget, reducing trucking costs by approximately $40 per ton.
• Ramaco Resources Inc (NASDAQ:METC) has secured 2.7 million tons in sales commitments for 2025, with 1.6 million tons sold at fixed prices averaging $152 per ton.

Negative Points

• The company faced a significant decline in met coal prices, attributed to China's overproduction of steel, impacting financial results.
• Third quarter adjusted EBITDA decreased to $24 million from $29 million in the second quarter, with net income breaking even.
• The closure of the Knox Creek Jawbone mine negatively impacted third quarter net income by approximately $1 million.
• US metallurgical coal indices have fallen throughout the year, leading to a $7 per ton sequential decline in realized price per ton.
• Production and sales guidance for 2024 was reduced by 200,000 tons at the midpoint due to challenging market conditions.

Q & A Highlights

Q: Can you provide more details on the advantages of your products in the current market, especially regarding pricing and discounts? A: Jason Fannin, EVP and Chief Commercial Officer, explained that Ramaco's products, particularly in the high-vol space, are unique due to their low sulfur content, which enhances pricing. This attribute has allowed Ramaco to replace low sulfur Russian coal in some markets, maintaining strong relativity in pricing despite market challenges.

Q: Are you confident in maintaining the sub-$100 cost per ton run rate into next year? A: Randall Atkins, CEO, expressed confidence in maintaining the sub-$100 cost per ton due to ongoing production growth and cost-saving measures. He highlighted the significant cost reductions achieved this year and the potential for further savings.

Q: What factors could influence whether you hit the low or high end of your updated shipment guidance? A: Jeremy Sussman, CFO, noted that reaching the high end of guidance would require no slippage of tonnage into 2025 and continued inventory reduction. The low end would assume some slippage due to current demand conditions.

Q: How should we think about 2025 production volumes based on the current exit rate? A: Jeremy Sussman, CFO, indicated that while specific guidance will be released after Board meetings, the company is excited about exiting the year at a 5 million ton per annum sales run rate. Additional production growth is expected from ongoing projects.

Q: Can you comment on the broader supply situation in Central Appalachia and the potential for mine closures? A: Christopher Blanchard, EVP for Mine Planning and Development, mentioned that 10-15% of production is at risk of closure due to market conditions, with another 10-15% hoping for market improvements. This suggests that up to 25% of production could be in jeopardy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.