Ramaco Resources : Q3 2024 Ramaco Resources Inc. Earnings Presentation
METC
INVESTOR PRESENTATION
T h i r d Q u a r t e r 2 0 2 4 R e s u l t s
DISCLAIMER
Forward Looking Statements:
The information in this presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, estimated revenue and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under, but not limited to, the heading "Risk Factors" included in Ramaco's Quarterly Report and elsewhere in the Annual Report on Form 10-K.
Forward-looking statements may include statements about:
We caution you that these forward-looking statements are subject to a number of risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control, incident to the development, production, gathering and sale of coal. Moreover, we operate in a very competitive and rapidly changing environment and additional risks may arise from time to time. It is not possible for our management to predict all of the risks associated with our business, including those described under the heading "Risk Factors" included in Ramaco's Annual Report on Form 10-K, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this presentation are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
All forward-looking statements, expressed or implied, included in this presentation are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation.
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RAMACO AT A GLANCE
Ramaco is a low-cost, "pure play" metallurgical coal company. We have a strong pipeline to double production as market conditions warrant. We pay a meaningful dividend and have a solid balance sheet with minimal net debt. When combined with our Rare Earth Element deposit, Ramaco has the potential to be a major U.S. supplier of critical materials for decades.
"Pure Play" Metallurgical Coal Company
Met coal is a key component in steel production, which is crucial to national defense, infrastructure development, electric vehicles, and the energy transition.
Strong Financial Performance & Industry Leading Cost Control
Looking past 2022 with record price levels, 2023 net income of $82 million was up >100% from 2021 levels, which led to strong free cash flow. While 2024 net income is down due a fall in metallurgical coal prices, Ramaco has reduced cash costs per ton1 from $118 in 1Q24 to $102 in 3Q24, which is in the first quartile of the U.S. cost curve.
Robust Growth Pipeline
Potential production of >7 million tons over the medium term, up from just 0.5 million tons produced in 2017 and <4 million tons at the midpoint of 2024 guidance.
Attractive Capital Structure & Solid Balance Sheet
Minimal net debt (<0.4x net debt to Adjusted EBITDA1), AROs and legacy liabilities (~93% below peers), as well as strong free cash flow generation.
Strong 2025 Contract Book
~2.7 million tons of 2025 tonnage is already contracted, ~1.6 million tons with a fixed price of $152 per ton.
Rare Earth Element Optionality
Despite our Rare Earth Element and Critical Mineral discovery, METC trades in-line with its coal peers at ~3.5x trailing EV/EBITDA1.
Key 145%
Revenue
Highlights Growth
2023 Vs. 2021
107%
Net Income
Growth
2023 Vs. 2021
130%
Adjusted
EBITDA1 Growth
2023 Vs. 2021
<0.4x
Net Debt to
Adjusted EBITDA1
9/30/24
$35 MM
AROs & Legacy Liabilities
9/30/24
14%
Decline in Cash
Costs from
1Q24 to 3Q24
~6% Dividend Yield
Current METC/METCB
Combined Dividend Yield
(1) See "Reconciliation of Non-GAAP Measures" in the Appendix.
RAMACO RESOURCES BUSINESS LINES
Multiple ways to invest in our businesses; each with unique value characteristics
In mid-2023, Ramaco Resources distributed Class B common stock (Ticker: METCB) to existing shareholders. Under the dual class structure, METC represents the interest in the mining operations of both Met Coal and Rare Earth Elements. METCB represents an interest in our Coal Infrastructure Assets, Coal Royalties, potential future Royalties from Rare Earth Elements, and IP Licensing from Advanced Carbon Products.
METC - Met Coal Operations
Large, high-quality met coal reserve base. Goal of roughly doubling production to >7 millions tons per year over the medium term.
Committed to maintaining its position on the low-end of the cost curve over the long-term.
Advantaged infrastructure and geographic flexibility.
A deposit of rare earth elements which has the potential for being developed into an important domestic source.
Class A Common Stock (METC); general dividend. Current dividend yield of >5%.
METCB - CORE
CORE stands for "Carbon Ore - Rare Earth".
Significant current income from non-cost bearing royalties on coal reserves mined primarily by Ramaco. Income tied to coal prices and production growth.
Significant fixed fee-based income from Ramaco's preparation plants and rail loadouts. Income tied to Ramaco's production growth.
Potential future royalties from a deposit of rare earth elements which may be developed into an important domestic source.
Class B Common Stock (METCB); dividend associated with CORE. Current forward dividend yield of ~9%.
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METALLURGICAL COAL GROWTH
SOLID TRACK RECORD OF EXECUTING ON GROWTH
Strong 5+ year track record of growth and execution
Initial production began in 2017. Since then, Ramaco has consistently executed on its plan to grow production, generate strong free cash flow, maintain a conservative capital structure and make shareholder distributions.
Revenue (in $MM)
Total coal sales (in mm of tons)
$694
3.5
$566
2.2
2.4
$283
1.9
$228
$230
1.7
1.7
$169
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
Adjusted EBITDA 1 (in $MM)
Adjusted EBITDA 1 less Capex (in $MM)
$205
$182
$82
$99
$50
$55
$79
$10
$42
$19
($6)
($6)
2018
2019
2020
2021
2022
2023
2018
2019
2020
2021
2022
2023
(1) See "Reconciliation of Non-GAAP Measures" in the Appendix.
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GLOBAL COAL SALES
Ramaco coal has been sold into 20 countries, with a growing focus on sales into Asian markets
Sweden
Finland
UK
Canada
Netherlands
Belgium
Poland
Germany
Ukraine
Czech Republic
Romania
Italy
South Korea
USA
Spain
Turkey
Japan
India
Indonesia
Brazil
South Africa
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MEDIUM-TERM POTENTIAL TO MORE THAN DOUBLE PRODUCTION
Ramaco annual production (in millions of tons)
1.8 1.9 1.7
0.5
7+
3.8
3.2
2.7
2.2
Ramaco expects to achieve its goal of 5 million tons of annualized sales in 4Q24 at the high end of guidance.
In 2024, Ramaco anticipates growing production almost 20% vs 2023, despite challenging market conditions.
Ramaco is capable of organically growing production to >7 million tons over the medium-term.
2017A
2018A
2019A
2020A
2021A
2022A
2023A
2024E*
Medium
Term
(*) Based on the midpoint of guidance.
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METALLURGICAL QUALITY BREAKDOWN
Production growth is focused to create a long-term, high value portfolio, with a
majority of high value low-vol and mid-vol coals.
2024 Production Outlook(1)
Medium-Term Production Outlook(2)
3%
2%
2%
1%
Semi-Soft
Thermal
Semi-Soft
Thermal
17%
21%
30%
High-Vol B+
2%
50%
High-Vol B+
Low-Vol
Mid-Vol
Low-Vol
9%
28%
Mid-Vol
36%
High-Vol A
High-Vol A
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RARE EARTH ELEMENTS ("REE")
POTENTIAL
Disclaimer
Ramaco Resources Inc. published this content on November 05, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on November 05, 2024 at 04:02:08.960.