Business Context and Reporting Period
Ramaco Resources, Inc. (Ramaco) is an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia and southwestern Virginia. The company also controls mineral deposits in Wyoming for potential rare earth element and critical mineral recovery. This Form 10-Q covers the quarterly period ended June 30, 2025.
Key Financial Metrics
| Metric | Q2 2025 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) |
|---|---|---|---|
| Revenue | $152.96 million | $287.62 million | $327.99 million |
| Net (Loss) Income | $(13.97) million | $(23.43) million | $7.57 million |
| Operating (Loss) Income | $(13.84) million | $(25.87) million | $8.69 million |
| Adjusted EBITDA | $9.01 million | $18.79 million | $52.98 million |
| Cash Flow from Operations | N/A | $21.78 million | $59.60 million |
| Cash and Equivalents | $28.13 million (End of Q2) | $28.13 million | $33.01 million (End of 2024) |
| Total Debt | $113.83 million | $113.83 million | $88.55 million (End of 2024) |
| Revenue per Ton (GAAP) | $142 | $142 | $178 |
| Cash Cost per Ton (FOB Mine) | $103 | $101 | $113 |
Material Changes vs. Prior Period
- Revenue Decline: YTD revenue decreased 12% to $287.6 million, driven by a 20% drop in revenue per ton ($178 to $142) due to softening global metallurgical coal prices. This was partially offset by a 10% increase in tons sold (2.02 million vs. 1.84 million).
- Profitability Shift: The company reported a net loss of $23.4 million for the first half of 2025, compared to net income of $7.6 million in the same period of 2024. Operating loss widened to $25.9 million from an operating income of $8.7 million.
- Cost Efficiency: Despite higher production volumes, GAAP cost of sales per ton decreased 13% to $123, and non-GAAP cash cost per ton (FOB mine) decreased 11% to $101, aided by mine efficiencies and reduced trucking costs at the Maben complex.
- Debt Increase: Total debt increased to $113.8 million from $88.6 million at year-end 2024, primarily due to $25.0 million in borrowings under the Revolving Credit Facility.
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: Global metallurgical coal markets remain soft due to constrained economic growth and elevated Chinese steel exports. Prices are expected to remain volatile in the near term.
- Dividend Policy: The Board suspended the Class A stock dividend (previously paid in Class B shares) at the July 2025 meeting. Class B dividends are calculated as 20% of CORE royalty and infrastructure fees.
- Subsequent Events: On July 31, 2025, the company completed a public offering of $57.0 million in 8.25% Senior Unsecured Notes due 2030 to redeem 2026 notes and fund general corporate purposes. Additionally, the Brook Mine (rare earth project) received a $6.1 million matching grant from the Wyoming Energy Authority.
- Internal Controls: The company disclosed a material weakness in internal control over financial reporting related to insufficient qualified personnel and inadequate documentation. Remediation is underway, including hiring additional accounting staff.
- Legal Proceedings: A lawsuit regarding the purchase of a preparation plant from EMCOAL, Inc. is pending; the company believes it has meritorious defenses. A separate insurance dispute regarding a 2018 silo failure is awaiting a new trial for damages.
Investor Verification Checklist
- Verify the impact of the suspended Class A dividend on shareholder returns and the specific calculation methodology for future Class B dividends.
- Monitor the status of the material weakness in internal controls and the timeline for remediation completion.
- Track the utilization of proceeds from the new $57 million Senior Notes offering and the redemption of the 2026 notes.
- Assess the progress of the Brook Mine rare earth project, specifically the timeline for the pilot plant and commercial viability given the recent grant.
- Review the outcome of the pending litigation regarding the preparation plant purchase and the insurance dispute for potential financial exposure.
- Confirm the company's ability to maintain debt covenants, specifically the fixed charge coverage ratio, given the recent operating losses.