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Mar 31, 2020
Ramaco Q1 2020 Earnings Report
Reported a decrease in net income and revenue compared to the same quarter last year, but cash costs per ton sold at Elk Creek were below prior guidance.
Key Takeaways
Ramaco Resources reported a net income of $2.0 million and revenue of $41.9 million for Q1 2020. The company's cash costs per ton sold at Elk Creek were $61, below the prior guidance. They strengthened their liquidity position through cost reduction initiatives and additional borrowing.
Net income was $2.0 million and adjusted EBITDA was $8.4 million.
Revenue was $41.9 million and revenue per ton on Company produced coal was $93.
Cost of sales was $30.9 million and cash costs per ton sold at Elk Creek was $61.
Company has strengthened its liquidity position through cost reduction initiatives and borrowing $13.2 million in additional low coupon promissory notes.
Ramaco
Ramaco
Forward Guidance
Due to current market uncertainty, Ramaco is suspending production guidance other than continuing to provide current sales commitments.
Positive Outlook
- The company has locked in domestic sales for the majority of its planned 2020 volumes at levels above current spot prices.
- Ramaco believes that they made the right decision to reduce their exposure to index-based seaborne pricing for 2020.
- The company remains confident that the global supply/demand balance of high quality metallurgical coal will remain tight.
- Three projects could add over 1.2 million tons of annual low-vol and mid-vol production at full capacity, which would normalize at about 900,000 additional tons per year over time.
- Our operating team did another excellent job controlling mining costs, with Elk Creek first quarter cash costs of $61 among the lowest in Central Appalachia.
Challenges Ahead
- Market and societal upheaval due to COVID-19.
- The company has hit the pause button on all discretionary spending, until there is more market clarity and also took additional measures to increase our near-term liquidity.
- Inventory increased by over $8 million since year-end 2019.
- Operational and financial challenge will be to navigate through these unprecedented times and treacherous markets for perhaps the next two quarters.
- There is uncertainty on every front.