Ramaco Resources, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights: - Met coal: Despite macro market challenges, operational performance remained strong. Q1 saw a decline in met coal prices and earnings, but Ramaco had the highest cash margins per ton and realized sales price among public peers. Operational results included a record production quarter despite weather setbacks. - Brook Mine rare earth project: Substantial progress has been made, with Mike Woloschuk joining to oversee development. There has been a testing backlog causing delays in the preliminary economic analysis, but plans are in place for large-scale mining in June and pilot plant construction later in the summer. Former U.S. Senator Joe Manchin joined the board, bringing experience in energy policy and critical mineral supply chains.

Segment Performance: On the met coal side, in the first quarter of 2025, adjusted EBITDA was $10 million compared to $29 million in the fourth quarter of 2024. The net loss was $9 million in Q1 versus net income of $4 million in Q4. Class A EPS showed a $0.19 loss in Q1 compared to a $0.06 gain in Q4. Despite solid operational performance with a quarterly production record of 1 million tons, met coal prices declined, impacting earnings. The Brook Mine rare earth project is in progress, with steady progress made, including the addition of Mike Woloschuk to the senior management team and plans for large-scale mining to commence in June.

Guidance: - Cost per ton sold guidance for 2025 is lowered to $96 to $102 from the prior $97 to $103. - CapEx guidance is reduced from $60 million to $70 million to $55 million to $65 million. - Full-year 2025 production is anticipated to be between 3.9 million to 4.3 million tons, down from prior expectations of 4.2 million to 4.6 million tons. - Full-year 2025 sales are now expected to be between 4.1 million and 4.5 million tons, down from prior 4.4 million to 4.8 million tons. - Q2 2025 sales are projected to be between 850,000 and 950,000 tons.

Risks: - Market price volatility due to macro factors such as the Chinese overproduction of steel and its impact on world steel markets. - Testing backlog for the Brook Mine rare earth project causing delays in the release of the preliminary economic analysis. - Adverse weather conditions in January and February negatively impacting production, leading to a miss in production targets and increased costs.

Q: Nick Giles asked about the met coal second quarter guidance and outlook for the second half.

A: Jeremy Sussman responded that the Q2 sales guidance implies a pickup in the back half, with the market expected to improve.

Q: Nathan Martin inquired about the CapEx trimming and breakdown of spending at the Brook Mine.

A: Jeremy Sussman explained that CapEx was trimmed due to deferring growth projects, with a breakdown of maintenance and growth CapEx.

Q: Nick Giles asked about the testing delay for the Brook Mine and the preliminary economic analysis.

A: Randy Atkins stated that there was a testing backlog causing the delay in the PEA release, with the PEA expected to be released by the end of the quarter and discussing what to expect in the PEA regarding CapEx and project economics