August 7, 2018 - Ramaco Resources, Inc. (NASDAQ:METC) today reported net income of $10.2 million, or $0.25 per diluted share for the second quarter of 2018, compared with a net income of $5.3 million, or $0.13 per diluted share for the first quarter of 2018. The Company's adjusted earnings before interest, taxes, depreciation, amortization and non-operating expenses was $14.9 million for the second quarter of 2018, as compared with adjusted EBITDA of $9.2 million for the first quarter of 2018.
Randall Atkins, Ramaco Resources' Executive Chairman and Chief Financial Officer remarked, "We are very pleased to report strong, across the board and continued financial growth for both the second quarter and the first six months of 2018. Quarter over quarter, net income rose 94%, revenues rose 17% and our coal production was up 31%.
"From a sales standpoint, for calendar 2018 we have now sold, or have forward sales commitments for approximately 2.2 million tons of coal, of which 1.8 million tons is company mined and roughly 460 thousand tons is purchased coal. For the first six months of 2018, we both sold and delivered over 1.1 million tons of both company mined and purchased coal.
"From a production standpoint, after encountering some unfavorable geological conditions at the Elk Creek surface mine in the first quarter, we recovered substantially during our second quarter. Cash mining costs fell over $9 per ton to roughly $56 per ton (FOB mine) and brought costs back in line with our annual guidance. Similarly, our cash margins bounced back to almost $36 per ton for the quarter. For the balance of 2018, we continue to expect earnings and cash flows to remain strong. We are also looking ahead to 2019 and have begun preliminary sales discussions with many of our existing domestic customers."
The Company ended the quarter with $5.9 million of cash on hand and $28.3 million of accounts receivable. Free cash flow generated over the next six months is expected to be used to fund working capital and capital expenditures.
Revenues totaled $65.3 million for the three months ended June 30, 2018, up 17% from the first quarter of 2018. Total production during the second quarter was 497 thousand tons as compared with 380 thousand tons in the first quarter.
As stated, the Company's total cash cost per ton sold for the second quarter of 2018 was approximately $56 for produced coal, down from approximately $65 in the first quarter of 2018. This cost improvement illustrates the impact of more favorable weather conditions, a fully operational preparation plant, cost improvements at our surface mine, a full quarter of production from our new No. 2 Gas mine and continued good mining conditions in all of our Elk Creek deep mines.
Michael Bauersachs, Ramaco Resources' President and CEO commented, "While our Elk Creek deep mines continued to perform at industry leading productivity levels, our surface mine also operated at improved productivity and cost levels. With many of our haul road capital improvements close to completion, we anticipate future costs to echo this quarter's performance. With that being said, the second quarter is the only quarter that is typically not impacted by weather issues or normal vacation periods. Average costs for the year should remain within our prior guidance, which is slightly above this quarter's record cost levels."
In the second quarter of 2018, the Company recorded income tax expense of $0.6 million based on an expected effective tax rate of approximately 8.5% for 2018. Cash taxes payable for 2018 are expected to be less than $0.4 million.
Capital expenditures totaled approximately $14.7 million during the second quarter of 2018. The Company expects to incur approximately $36 to $40 million of capital expenditures for full year 2018.
Ramaco Resources is an operator and developer of high-quality, low cost metallurgical coal in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. The Company has five active mines within two mining complexes at this time.