Ramaco Resources Inc (METC) Reports Strong Earnings Amidst Market Challenges
Ramaco Resources Inc (NASDAQ:METC) sees a 64% increase in total tons sold in Q3 2023 compared to Q3 2022.
Adjusted EBITDA for Q3 2023 was $45.4 million, a 51% increase from Q2 2023.
Net income for Q3 2023 reached $19.5 million, a significant rise from $7.6 million in Q2 2023.
Company increased full-year 2023 coal shipment guidance to 3.25 3.5 million tons.
On November 7, 2023, Ramaco Resources Inc (NASDAQ:METC) released its financial results for the third quarter of 2023, showcasing a robust performance despite market headwinds. The company, a prominent operator and developer of high-quality, low-cost metallurgical coal, demonstrated a significant increase in sales and a strong growth in Adjusted EBITDA, despite facing lower index pricing and challenging market conditions.
Financial Highlights and Operational Performance
Ramaco Resources Inc (NASDAQ:METC) reported a 64% increase in total tons sold for the third quarter of 2023 compared to the same period in 2022, with sales reaching 996,000 tons. Revenue for the quarter stood at $187 million, marking a 36% increase from the second quarter of 2023. The company's net income saw a substantial rise to $19.5 million, up 158% from the previous quarter, while diluted earnings per share (EPS) for Class A common stock increased to $0.40 from $0.17 in Q2 2023.
Adjusted EBITDA for the quarter was $45.4 million, a 51% increase from the second quarter of 2023, and capital expenditures were reduced by 31% to $16.9 million. The company also highlighted a reduction in inventory by 25% to $50 million compared to the second quarter, indicating improved efficiency in inventory management.
Management Commentary
"Our third quarter results highlight our differentiated growth platform. In simple terms, this quarter Ramaco grew from being a company with a sales level of ~3 million tons to ~4 million tons per annum. As a result, Adjusted EBITDA grew over 50% from the second quarter, despite a decline in margins on the back of lower index pricing and market conditions," said Randall Atkins, Ramaco Resources Chairman and Chief Executive Officer.
Atkins also noted the company's low leverage position and the repayment of over $50 million in term debt in 2023. Looking ahead, Ramaco Resources Inc (NASDAQ:METC) has committed 1.3 million tons of coal to North American customers for 2024 at an average price of $167 per ton, which is reported to be the highest average price figure among its public peer group.
Balance Sheet and Liquidity
As of September 30, 2023, Ramaco Resources Inc (NASDAQ:METC) had liquidity of $98.2 million, consisting of $42.9 million in cash and $55.3 million of availability under its revolving credit facility. This represents a significant improvement from total liquidity of $49.1 million as of December 31, 2022. The company's effective quarterly tax rate was 22%, and it recognized an income tax expense of $5.5 million for the third quarter of 2023.
Outlook and Future Developments
Ramaco Resources Inc (NASDAQ:METC) increased its full-year 2023 coal shipment guidance to 3.25 3.5 million tons, up from the previous range of 3.1 3.6 million tons. The company also provided an update on its Wyoming activities, including the commencement of mine development at the Brook Mine and the focus on two areas in the carbon products front.
Overall, Ramaco Resources Inc (NASDAQ:METC) has demonstrated resilience and growth in a challenging market, with a strong focus on operational efficiency and strategic financial management. The company's increased guidance and ongoing developments suggest a positive outlook for the future.
For more detailed information and analysis on Ramaco Resources Inc (NASDAQ:METC)'s financial results, please visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Ramaco Resources Inc for further details.
This article first appeared on GuruFocus.
