Ramaco Resources, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report. Ramaco is a U.S. metallurgical coal producer and developer operating primarily in Appalachia, with a Wyoming property supporting research into rare earth elements and advanced carbon products.
Financial results and key metrics
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $565.7 million | $283.4 million |
| Operating income | $150.4 million | $39.5 million |
| Net income | $116.0 million | $39.8 million |
| Diluted earnings per share | $2.60 | $0.90 |
| Adjusted EBITDA (non-GAAP) | $204.6 million | $79.0 million |
| Cash provided by operating activities | $187.9 million | $53.3 million |
| Capital expenditures | $123.0 million | $29.5 million |
- Coal sold was 2.45 million tons, up from 2.29 million. Revenue per ton sold increased 86% to $231; revenue per ton FOB mine increased 91% to $207.
- Cost of sales rose 70% to $333.0 million, mainly due to inflation in labor and supplies. Total cost per ton sold rose 59% to $136; cash cost per ton FOB mine, excluding transportation and Berwind idle-mine costs, rose 54% to $108.
- Operating margin was approximately 26.6% versus 13.9% in 2021; net margin was approximately 20.5% versus 14.0%.
- Cash and cash equivalents were $35.6 million at year-end; reported available liquidity was $49.1 million, including $13.5 million available under the then-existing revolver.
- Year-end debt was $128.9 million before unamortized discounts and issuance costs ($127.2 million net as presented in the debt note). This included $40.0 million of related-party acquisition financing. Debt due in 2023 was $75.6 million, including $40.0 million owed to a related party.
- Cash dividends paid in 2022 were $20.0 million. The company declared a quarterly dividend of $0.125 per share for payment in March 2023, subject to board approval for future dividends.
Changes versus the prior year
- Revenue nearly doubled, primarily from higher realized coal prices, including improved domestic contract pricing and stronger export spot/index pricing; sales volume also increased.
- Net income rose from $39.8 million to $116.0 million. Higher prices more than offset higher production costs, SG&A, depreciation and interest expense.
- Operating cash flow increased by $134.5 million. Inventory rose to $45.0 million from $15.8 million, partly because rail constraints delayed shipments.
- Capital spending increased substantially to support Elk Creek and Berwind growth projects. Ramaco also acquired Ramaco Coal and Maben Coal in 2022; these acquisitions added mineral interests and, in Ramaco Coal’s case, research facilities and potential CORE development.
- Debt increased by approximately $83.9 million, largely to finance acquisitions and manage operating cash needs. Two customers accounted for approximately 38% of 2022 revenue, down from three customers representing approximately 58% in 2021.
Outlook, management commentary and material risks
- Management targeted an annualized production run rate of approximately 4 million tons by the third quarter of 2023, supported by Elk Creek plant upgrades, Berwind mine restarts and expected Maben production. The longer-term goal is approximately 6.5 million clean tons annually, subject to markets, permits and capital.
- Management expected 2023 capital expenditures of approximately $60–80 million. It also expected inventory to decline as carryover coal shipped and Elk Creek processing capacity increased.
- As of December 31, 2022, forward sales included approximately 1.5 million fixed-price tons averaging $202 per ton, plus approximately 0.7 million tons priced against indices. The filing separately cites 1.2 million tons of fixed-price North American 2023 contracts averaging $198 per ton FOB mine; these figures refer to different scopes or measures and warrant reconciliation. Approximately 0.4 million additional tons of commitments were obtained after year-end.
- Export sales were expected to make up a greater share of 2023 revenue, increasing exposure to index-based price volatility. Coal benchmark prices rose early in 2022 and declined later; management cited inflation, rail constraints, global economic uncertainty and the Russia–Ukraine conflict as market factors.
- A July 2022 methane ignition idled Berwind No. 1 mine. No one was in the mine and there were no injuries or fatalities; idle mine costs of $9.5 million were recognized. Production restarted in the first quarter of 2023, with regular production levels expected by the third quarter.
- Key risks include volatile coal prices and short-term contracting, dependence on steel demand and a concentrated customer base, rail and processing capacity, inflation and operating costs, mine development and permitting, safety and environmental obligations, and access to financing. Reclamation and permit compliance remain significant obligations.
- Outstanding litigation included an appeal concerning insurance coverage for the 2018 Elk Creek silo failure. A jury award was reduced by the court to $1.8 million; the company appealed, and the matter remained pending. Management stated no pending matter was expected to have a material adverse effect.
- The company reported effective internal control over financial reporting as of year-end, and its auditor issued unqualified opinions on the financial statements and internal controls. The auditor identified asset retirement obligation valuation as a critical audit matter; recorded ARO liabilities were $28.9 million.
Important facts for investors to verify
- Reconcile the 2023 fixed-price contract disclosures: 1.5 million tons at $202 per ton versus 1.2 million North American tons at $198 per ton FOB mine, and confirm the impact of indexed export pricing.
- Track the timing and cost of Elk Creek capacity upgrades, Berwind’s production ramp, and Maben’s startup against management’s production and capital-spending expectations.
- Review 2023 debt maturities, especially the $40.0 million related-party obligation, and the terms, borrowing base and covenant compliance of the new February 2023 credit facility.
- Monitor rail performance, inventory conversion and customer concentration, including the two customers representing 38% of 2022 revenue.
- Assess whether rising unit costs, reclamation estimates and other environmental or safety requirements affect margins and liquidity; also track the pending insurance appeal and the commercialization prospects of CORE.