Ramaco Resources, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report; the filing text does not provide a complete, clearly stated set of Q4-only financial results.
Business context
Ramaco operates and develops metallurgical coal mines in southern West Virginia and southwestern Virginia, with projects in Wyoming focused on rare earth elements and advanced carbon products. It sold 3.455 million tons in 2023, including 3.299 million tons of company-produced coal. Export markets outside Canada accounted for 67% of revenue. The company reported 59 million clean recoverable reserve tons and 1.119 billion measured and indicated resource tons; resources are not reserves and are not established as economically recoverable.
Financial results and liquidity
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Revenue | $693.5 million | $565.7 million |
| Operating income | $95.2 million | $150.4 million |
| Net income | $82.3 million | $116.0 million |
| Adjusted EBITDA | $182.1 million | $204.6 million |
| Cash from operating activities | $161.0 million | $187.9 million |
| Capital expenditures | $82.9 million | $123.0 million |
Revenue increased 23%, primarily as tons sold rose 41%, while total revenue per ton fell from $231 to $201. Company-produced revenue per ton declined from $231 to $199. Total cost of sales per ton increased from $136 to $143; management attributed higher unit costs mainly to inflation in labor and supplies. Operating margin was approximately 13.7%, versus 26.6% in 2022; net margin was approximately 11.9%, versus 20.5%.
Cash and cash equivalents were $42.0 million at year-end, and reported available liquidity was $90.6 million, including $48.6 million of revolver availability. Current assets exceeded current liabilities by $19.7 million, including $42.5 million of revolver borrowings that were repaid in January 2024. Gross debt was $91.4 million ($90.2 million net of discounts and issuance costs); $56.5 million was scheduled for 2024, including the revolver and Maben acquisition financing. The 9% senior notes have $34.5 million principal and mature in 2026. The company reported compliance with its credit-facility covenants at year-end.
Cash dividends declared totaled $27.5 million in 2023. Class A and Class B dividends are discretionary and may change; Class B dividends are tied to a stated share of CORE royalty and infrastructure fees.
Material changes versus FY 2022
- Higher sales volume and revenue were offset by lower realized prices and higher costs, reducing operating income, net income, and Adjusted EBITDA.
- Export revenue increased to $466.0 million from $237.4 million, while North American revenue decreased to $227.5 million from $328.3 million.
- Operating cash flow declined by $26.8 million. Investing cash outflow decreased as capital spending and acquisition activity fell.
- Production rose to 3.2 million tons from 2.7 million. Elk Creek’s preparation-plant expansion was completed; the Berwind mine idled after a 2022 ignition restarted in Q1 2023; Maben began production.
- Measured and indicated resources declined by 37 million tons, largely due to Knox Creek property-control changes and the RAM Mine permit denial. Reserves decreased by 3 million tons, primarily from production.
Outlook, commentary, and notable risks
- Management expects 2024 production of 4.0–4.4 million tons, subject to market conditions, and approximately $53–63 million in 2024 capital expenditures. Longer term, it targets approximately 7 million annual clean tons, conditional on market conditions, permitting, and capital deployment.
- At December 31, 2023, forward contracts covered about 1.4 million North American tons at a fixed average $166 per ton, excluding freight, and about 2.1 million export tons priced against indices. Management expects a greater export mix in 2024, increasing exposure to price volatility. The filing describes market prices as volatile and near-term inflation in labor, freight, and materials as a profitability risk.
- Management said 2023 results included $15.9 million of pre-tax insurance-related gains tied to the Berwind ignition and the 2018 silo failure; it cautioned that this is not indicative of future results. The Berwind ignition caused $9.5 million of idle-mine costs in 2022. The silo insurance litigation remains pending as to additional damages and attorney fees; the compensatory award has been paid.
- The Pennsylvania regulator denied the RAM Mine permit; Ramaco said it would not appeal and intends to focus on other properties and monetize the assets when appropriate.
- The Class B tracking stock, created in June 2023, is not ownership of a separate entity or specific CORE assets. The board can change CORE asset, expense, and fee allocations, and Class B dividends are not guaranteed. Wyoming REE findings are preliminary exploration results, not a mineral resource or reserve.
- Environmental, safety, permitting, transportation, customer concentration, coal-price, and steel-demand risks remain material. Three customers represented 41% of 2023 revenue.
Controls and audit matters
The financial statements received an unqualified audit opinion. However, management and the auditor concluded internal control over financial reporting was ineffective at December 31, 2023 because of a material weakness: pervasive insufficient documentation of accounting policies, procedures, and controls. Management was developing remediation; the weakness was not yet considered remediated.
Important facts for investors to verify
- Whether 2024 production, capital-spending, and Maben plant plans remain on schedule and within budget.
- Realized coal prices, index-linked export exposure, customer contract coverage, and customer concentration as new sales are contracted.
- Cash generation and liquidity after scheduled debt payments, capital spending, dividends, and other contractual commitments, including transportation take-or-pay obligations.
- Progress in remediating the material weakness and any subsequent auditor assessment of control effectiveness.
- Outcome of the remaining silo insurance litigation and any additional costs or recovery related to the Berwind event.
- Whether CORE/REE initiatives produce commercially viable results, recognizing that current REE findings are not reserve or resource estimates and Class B dividends are discretionary.