METC

Business Context and Reporting Period

Ramaco Resources, Inc. (Ramaco) is a Delaware corporation operating as a pure-play metallurgical coal company with assets in southern West Virginia and southwestern Virginia. The company also holds mineral deposits in Wyoming for potential rare earth element and critical mineral recovery. This Form 10-Q covers the quarterly period ended March 31, 2025.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Revenue decreased 22% year-over-year to $134.7 million, driven primarily by a 24% drop in revenue per ton sold (from $186 to $142) due to softening global metallurgical coal prices. This was partially offset by a 2% increase in tons sold.
• Profitability Shift: The company reported a net loss of $9.5 million compared to net income of $2.0 million in the prior year. Operating income turned negative at $(12.0) million from $3.3 million.
• Cost Efficiency: Despite higher production volumes, total cost of sales decreased 18% to $114.1 million. Non-GAAP cash cost per ton sold (FOB mine) improved by 17% to $98 per ton.
• Debt Position: Total debt increased to $104.7 million, reflecting $16.0 million in borrowings under the Revolving Credit Facility, which was previously unutilized in the prior period.
• Capital Expenditures: Capital expenditures increased to $20.3 million (excluding capitalized interest) from $18.7 million, driven by the Maben preparation plant expansion.

Guidance, Outlook, and Risks

• Production Outlook: Management expects full-year 2025 production volumes between 3.9 and 4.3 million tons, with flexibility to vary based on market conditions.
• Market Conditions: Management anticipates continued volatility in metallurgical coal prices due to global economic conditions and Chinese steel oversupply. Prices are expected to remain weak in the near term.
• Wyoming Initiative: The company is advancing its rare earth and critical mineral project in Wyoming, having received a $6.1 million matching grant. A pilot processing facility construction is targeted for mid-to-late 2025.
• Dividends: Class A dividends for Q1 2025 were paid in Class B shares. Class B cash dividends were declared at $0.1971 per share. Future dividends remain subject to Board discretion.
• Material Weakness: The company disclosed a material weakness in internal control over financial reporting related to insufficient qualified personnel and documentation. Remediation efforts are ongoing.
• Litigation: A lawsuit regarding the purchase of a preparation plant from EMCOAL, Inc. is pending, with a trial scheduled for January 2026. Additionally, a new trial regarding insurance damages for a 2018 silo failure is scheduled for July 2025.

Investor Verification Checklist

• Verify the status and potential financial impact of the pending litigation regarding the preparation plant purchase and the insurance claim for the 2018 silo failure.
• Monitor the remediation progress of the material weakness in internal controls over financial reporting.
• Track the execution of the Maben preparation plant expansion and its impact on reducing transportation costs.
• Assess the timeline and feasibility of the Wyoming rare earth element pilot plant construction.
• Review the company's ability to maintain debt covenants, specifically the fixed charge coverage ratio, given the current operating loss.
• Confirm the stability of the Class B dividend policy, which is tied to CORE asset fees, amidst fluctuating coal volumes.