Ramaco Resources (METC) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered record production of 901,000 tons, up 7% sequentially, with net income more than doubling to $5.5 million, driven by improved productivity, cost control, and labor availability despite a 15% decline in U.S. met coal indices and global price softness.

• Sold 1.8 million tons in H1 2024, generating $328.0 million in revenue, with 67% from exports; revenue rose 8% year-over-year on a 25% increase in tons sold, offset by lower pricing.

• Maintains a conservative balance sheet with net debt to trailing twelve-month EBITDA below 0.4x and ongoing debt reduction.

• Operates as a low-cost, pure play metallurgical coal company with a strong growth pipeline and rare earth element (REE) optionality.

• Distributed Class B common stock (METCB) in 2023, providing exposure to coal infrastructure, royalties, and future REE royalties.

Financial highlights

• Q2 2024 adjusted EBITDA was $28.8 million, up from $24 million in Q1 and up 19% sequentially; net income was $5.5 million, with Class A diluted EPS of $0.08.

• Q2 2024 revenue was $155.3 million, up 13% year-over-year; Q2 tons sold: 915,000, up 28% year-over-year.

• Cash cost per ton sold in Q2 2024 was $108, down from $118 in Q1 and $110 in Q2 2023; June costs fell below $100 per ton for the first time in 2024.

• Liquidity at June 30, 2024, was $71.3 million, with $27.6 million in cash and $43.7 million available under the revolver.

• All $75 million in acquisition debt retired since 2022; only $35 million in unsecured notes remain.

Outlook and guidance

• 2024 production guidance revised to 3.8–4.2 million tons; sales guidance to 4.0–4.4 million tons; cash cost per ton expected at $105–$111.

• 2024 sales commitments total 4.0 million tons, covering over 100% of the low end of production guidance.

• Q3 2024 shipments expected at 900,000–1,050,000 tons; year-end run-rate targeted above 5 million tons annually.

• Nearly 1.25 million tons already committed for 2025 via multi-year export index-linked contracts at prices above $150/ton.

• Anticipates capital expenditures to decline in H2 2024 as major growth projects are completed.