METC - Earnings call transcript Q3 2019

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Operator

Good morning, ladies and gentlemen and welcome to the Ramaco Resources Incorporated’s Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded.

I would now like to turn the conference over to your host today, Mr. Officer. Financial Chief Sussman, Jeremy Sir, please ahead. go

Jeremy Sussman

Randy Thank welcome all On earnings President call. morning and behalf Bauersachs, Chris Chairman; third Operating of to like conference Officer. is this me our I’d CEO; Resources, With our of our XXXX Executive Mike Ramaco quarter you. Atkins, Blanchard, you Chief and our to

Reform statements future Before not Act or Private on today’s discussed statement. Certain we start, items forward-looking the These I’d XXXX. beliefs discussed it of like constitute of to possible within forward-looking statements share Securities expectations will meaning that results achieved. Litigation our events normal cautionary Ramaco’s is the call be represent and concerning

Ramaco’s risks, and actual subject forward-looking cause many from control results are to These differ of discussed other statements. which uncertainties forward-looking statements in the materially could of to factors, results outside which are

of speaks or events as Ramaco made of required future or except statements as only forward-looking new a any otherwise. Any to date undertake as is it statements information, on whether and any forward-looking not obligation law, which by result the does revise update

forward-looking and New our you mind in factors Report and it these to predict in Annual with Exchange keep is should time-to-time the other factors in the all cautionary such filings emerge statements the included When company’s considering possible risk for in factors. Form and Commission, not from Ramaco statements, found XX-K. Securities

in company’s forward-looking noted the materially factors and SEC could contained risk The to other statements. actual any in differ cause filings factors from those its results

and download is presentation, this call Calendar. to Lastly, to found I’d website Events which go on investor encourage ramacoresources.com our today’s under the everyone

our introduce Randy Atkins. that let With Chairman, said, Executive me

Randy Atkins

Jeremy. you, Thank

today our to for joining quarter to As always, results. thank everyone I discuss want third us

correct, of manic market predicted in were of was like depressive some turbulent. form cycle. it go always look to the that call have felt perennial Unfortunately, become August, met we seem our to the coal through more going We we markets in earnings last kind

are the that side the experience seeing depressing at We of moment.

mostly have hovering around some we $XXX Since as closer benchmark reflects underlying we early has through went met in true public candidly this with to June. markets XXX, whether now as to XXXX, US benchmark lived and as a stronger question that price per recently ton The landscape November in demand. prices really

in We that for have macroeconomic is said before, a coal proxy turn proxy which steel, a for health. is met wider

underlying have are this our backdrop, we opaque. As around prices ago see locked economic much we the stronger today. over best sobering look seeing today a you’re that than where happy almost is that somewhat all in world, at we year introduction, an With at sales we of that outlook as XX

have of As $XXX rest pretty at we we ton a margins pricing approaching have year-to-date per result, cash and roughly ton year. the levels reported per the through much $XX that

are We in essentially X expect through under now end out million come to at sold. sold calendar tons and year just

our into We of pricing challenging realized XXXX benchmark would customer in that domestic terms more process summer be dramatically environment. basic demand lower and the late than sale both by this XXXX also

condition what a As valuable our quality most of blends back to we we market hopefully result blends quality stronger amount in dial that place later saved of XXXX. and XXXX, be decided sell the for have believe domestically our would into will a higher we

placed we As about of our XX% production domestically. you may recall last year,

like production figure the look at will midpoint guidance. more XX% that roughly XXXX For of

to which down upon keeping We optionality up a where either XXXX. enable settling in see the dependent or are dial on us production we will of also the deal good table, market

comfortable tons. we million returns. and the tons step to roughly downside gas go million about either X.X continue cost, can superior some discipline rely way, produce we exercise to on structure can and debt we or to produce X.X year Next we on the our look low feel low on like production slightly Either

guidance tons maintain million in the long-term year, expect discussed next earlier we We to ‘XX. production our continue announce calendar production some to add-ons to in and X.X still we month the of X expect to which million to begin tons

As control But turbulent change. that, Reflecting what a met that as to we On can from one cannot. what prices we XX-year looks we the And we humbly balance market we now, control curve, one and is below know right thing know control is $XX. benchmark $XXX price. ranged thing can have cannot on sheet. markets over our we

design take only some financially also some to the Ramaco to I always to We historic withstand of play that these a we enables care we averaged. took cyclically us started and a bit markets. continue in grow but of a as the met down conservatively types will hopefully to do space, fashion. volatility as in advantage the coal at of contrarian opportunities be that prudent we outset This remind everyone not to of

are line both. in started recent offered we some to already either contraction from downturn. now to have are In dispositions two some see We’ve last to with higher-cost million or X in Met see some our X range. miners contracted the being of ton starting perhaps witnessed that, peers by asset overleveraged bankruptcies quarters. million who also the has believe we major ton We supply the supply probably three

these As to cost or at a some a opportunistic logistical production standpoint if reserve, growth manner. from situations actively either accelerate are a of effective but result, looking in we our we curve see can

supply financially perhaps We help by heard as in us this time more have factor manner. will from hope goes growing security and important and competitive a international our some We domestic counterparty. also that customers attracted become they’re both increasingly stable that of the and to from

financials in pivot, To offer let some comments detail. fill will on QX me brief with greater which Jeremy

roughly million $XX achieved we adjusted in quarter This EBITDA.

nine months is is XXXX, from For than more million, that bump a first it $XX the of XX% XXXX.

in both for silo calendar Despite discuss ‘XX. QX to hold lingering QX, further year in XXs. able We those full Elk Creek and mid been the of effects detail. we yet have in are looking we to forward strongest Chris mine costs faced having also the our will issues

certainly outside We of the wall will the continue in have for several cost believe we some to peers with over of years. production, long space the lowest our mining that next

currently much higher penalized by our mine cost summer, at are at environment. being which we cost X somewhat next development Pocahontas a seam We Berwind, the will until have hit lower

quarter Jeremy inventory We also will address. some had negative this which items again

the $XX over Our development in was in projecting little overall are $XX cost. excludes QX CapEx of our CapEx the total a XXXX Berwind which we and capitalization range million spend million

well how far in looking they XXXX taking fared are thus considering more hopefully as firmer and in Overall, as ’XX, forward Year. move conditions opportunities we have to both the the are we themselves marketing we headwinds some with perhaps in market, into of as as the present satisfied advantage New

to on And now would some turn it over and with Mike updates for like to marketing. operations I that,

Mike Bauersachs

comments you, Randy. markets our on Thank strategy. and focusing forward-looking quarter third will My regarding be our brief, relatively mostly

during development Blanchard an more Our and importantly, update our with quarter tracking relative our operations Chris well Berwind particularly mine. up shipments operational has in follow closely customers to safety XXXX. details, with our good been will including the perform performance to plan. Most

Ramaco doubt and history. Overall, it’s with we’ve to we more to conditions was operating to our the a market facing. no soft good is consistent deal currently for able to an structured There challenging entered of as sort industry another XXXX. be quarter fluctuations add marketplace are

positioned are environment. downturns should While be through well expected this Ramaco and unfortunate, current profitability always the remains continued for low pricing

because domestic exposure book our an index outsized our the quarter. recently pricing quarter fourth benefited concluded This of of continue large competitors, Ramaco’s did having We from many was Unlike price the small. not will declines, relatively experience selling business. into to

due the a from volumes small decline one amount of in our However, quarter a we to do fourth predict of slight customers. sales for deferrals

coals impacted the contracting the number domestic amounts reduced customers season diversion high from We year-over-year, by The international to purchases witnessed was changes. blend of firsthand quality markets. negatively of coal marketplace a by from of domestic and

cases, blends. upgrade coal cases, previously to quality being improve. coals for we our have leaving altered in quality, our in high that us ability changes into if committed have some our saw with XXXX of sales, realizations volume To-date, very fits we In of needs. lower markets coal where These more high the were customer’s unavailable injected coals some

it prior inventories. years, versus actions view who that clear with others are their and placed year we As reported, fewer own an have is coal dealing in tons by next producers have for been increase

steel a From the and in suffering. production perspective, Likewise, and internationally. turn, parts we markets. domestically both demand world of coking of oversupplied Steel macro have are coke economies are have coal oversupply prices of an exporters and decreased in depressed most

to decision China an the production. seen consume impose also be undoubtedly their a has key coke normally restrictions for We’ve participant from impact producers market their coke sale continues to port on market. had who own

participated been allowed recently number a is has XXXX. in In several to little coal customers with of tenders. their to no are international bids clear expire cases, still Ramaco It being validity purchased. that on uncertain plans international for of has the

be continue efforts marketing focused our improving to on Our exposure. international

key previously expand to moves we’d As made discussed, personnel efforts. we’ve these

not a to transportation to advantages large in while continues our a be America. South continue ignoring goal We have growth of to of logistical relationship focus and the direct It shipping portion and our Europe to with in Asia, customers. regions still our efforts

market, suggest by will By encouraged China, fuel increasing metallurgical will projections amounts that We India to additional a million be XX XXXX. developments tons growth. production XXX tons. to import growth be XXXX, predicts of Recent million blast increasing million furnace continue India to to to India. this by tons in XX coal need growth to from substantial Unlike it continued

sold securing minimum In extra Currently, with million aforementioned for XXXX. actions we to sales. committed approximately included X.X level on us provide have run These headwinds, have our light baseload the tons of mines. tons of a focus our tons

volume X.X has uncommitted much tons to per price opportunistic $XX new as the million tonnage. baseload capability remaining how is difficult million of our be the with and tons, to X.X The continues approximately allow average tons of of it for indicative evolve. is market been secure index-priced, as us producing as The is volumes ton to

we contracted where difficult is and at to index-based. domestic to likely end run one in not our option less full existing with the some mines materialize, predict business about But will ongoing XXXX customer to international have also up. or we’re volumes. be It’s additional levels. year New more new opportunities Should discussions

not So official at this we volume are guidance. issuing point,

indeed in sector. The one market to growth Meanwhile, Ramaco only of the the and cutbacks. organic continues discourage remains stories production investment is forcing current

our witnessed a number to operations. have mines in We close proximity production of curtailments at

to plans X.X million the rate reach remains intact. ton Ramaco’s run

to deployment our growth plans. fluctuate, of While be committed to continue the timing capital we may

rates compelling Our at Creek at Jawbone have our complex. the high volatile levels. of current developing of today’s even Elk targets Creek return and include capacity pricing at adding Knox these Both A processing seam projects

We that also position a take in good of to advantage very are opportunities themselves. present might

that current are both capital platform. as existing our with currently views deployment. infrastructure-based an acquisitions as reviewing We downturn opportunity coal additions to add and as properties pursue Ramaco synergies the well

have XXXX, materialize, while confident for In take or summary, what our place profitable spot retaining a of business improving production of curtail of we advantages Should low-cost to will unplaced not advantage business. business an a this to crucial allowed portion be markets win our that to we can we amount are baseload believe marketplace. us improved significant

to provide who to like third to will operating Chris quarter. would highlights turn our now Blanchard, things I relative over some

Chris Blanchard

Mike. Thanks,

we don’t to projected as XXXX close, markets to lines XXXX be a ago. strong nearly appear six months As as

to position in are recovery. pricing also succeed to and our levels any operations market Ramaco’s quickly and projected perform react at However,

for are our Our safety importantly, Most development in and our and full compliance. excellence operations approaching personnel Berwind project base maturity final its nearing continue and is strive production to stage. operations at

focus fact the in both West this awards will be Virginia State Our that below continue incidence from XXXX. of the plant a by same won are environmental over performance company. rate be industry is area average. the and down is rates operations to safety for Virginia Creek environmental year. reflected two This our and strong point for of running has in safety Safety the and by recognized Knox XX% Accident compliance our

the all completing work was at supports operational Probably the the install to quarter which silo reached third biggest milestone Creek in Elk was plant. the the supplemental

the system failures. supports additional make As were the future these other installed silo Ramaco of required as not after were silos first but weld by the backup operational, to failsafe eliminate a we have failed calls, silos discussed any undetected possibility to on previous the in

full plant While the the for of the by was in installed, capability Elk reach rates plant since back higher its Once run the Creek feed at permanent until highest throughput silo plant and challenged line. with bypass has full of to months ofXXXX, the on virtue operated had back third rates has most service August, Creek maintaining bell of the had the brought Elk the was second full system and much inception. utilization silos in we consistency has

plant inventories Elk at in at Raw coupled September, periods, XXXX. tons balance tons Creek the The by capacity full coal period third moderated quarter, reduce at production operating through at of of Creek inventories as market XX,XXX the the quarter, and expected in being with levels inventory raw to the during operations below end the raw August us coal due approximately conditions allowed July, miner’s our were at vacation are continue raw quarter. to two XXX,XXX Elk Elk with Creek as in shifts the scheduled vacation to fourth to well decline

have have as output. ensure to to that the fine deploy plant mine’s Elk of flexibility the to of can at While To on our the Creek the addition Elk plant. our and give match fraction press work we and the ground and to Elk plate market Creek the to us primary the have dispose capability continue maximize broken demands, state reached to the continue future production steady rock, ability to we the waste ramp capital mines Creek

with well higher flexibility or capacity This is rock our the plant full feed a our full slurry Creek at contemplated give Elk at levels to will and second total set form to at in of us plant upgrade. which a presses solid four, either waste rates both of dispose bring at as current as presses

Our the break-in expect XXXX. has complete, operational or early and full the should presses conveyor in current of on be XXXX. and capability installed, under period, of press plate foundations floor a Anticipating quarter by expansion May roof we the ramp basement first up additional typical

at manage to expect mines Elk While work to same the at fourth and costs rates inventory our in the we levels controlled. monitor levels, shifts we to at plan to quarter do mining Creek stay be

to now We Creek, lowest our our project high of dollar Oak already remainder ton cost power unit at a cash production projected by on for for costs and of life. lower have the expect wall we voltage completed miner permitted a its high over per which mine

retreat to in Alma seam at Mine we’ll to full our continue as well extraction the We pillar Mine fourth back our and at move quarter. mine Eagle

in mine early lower per and gas X tons mining from and number lower complete higher in calendar quarter benefit close our Finally, cost a subsequent foot clean zone will should coal out the fourth to XXXX. year

time mineral to as continue our we extend Eagle look to of at this and we mines at conditions this our for expand, this able As for ultimately earlier dual opportunities additional Eagle lease addition The Mine an projected at seam our months is were year. geologic expand do at our expected to mining conditions we longer than advantage a last XX year. control to mine

location Geology be and at and Turning to thinner our upslope challenging to Pocahontas projects, predict. number continues third the mine to Berwind to our the have towards development quarter seam continued X our challenging throughout we mine.

Our areas floor of heights very primary two low during development roof with coal mined extremely through the quarter and difficult conditions. section

optimism, some section in us on September, productivity its Giving best this month had record.

allowing productivity production the even with breakeven relative the has always coal roofs, heights encountered the challenges, lack of be doing softer While the development or our mine shale seam required seam. or or targets, in work thickness marginally for met sandstone exceeded upper where have lower and mine this levels profitable the to present will the its

bottom. X,XXX advance At we approximately around the end the reach thicker than of access commences, work to a sense X slope and cutting where the is section to development construction less the bottom means slope to have point October, complete slope remaining levels Pocahontas had feet as slope increased X seam. Once costs are number work section months number of productivity the development eight the conditions the to repair seam Pocahontas of budgeting excavation our only mining harder, However, and where end. makes a become

Pocahontas X Where project having to the the we floor, where legacy Pocahontas X and grained black the nearly on routinely Pocahontas are drilling less XX core mine rock seam thicker in number program of number with the large number Pocahontas we coal, out inches the average. double seam, X number defined mining often Both a of X roof our to a a is is own fine upper that of has in opposed and seam mine reserve sandstones we more shale coal or sandstone currently.

Therefore productivities be per be to operations. higher, X.X our are to tons above Creek foot or clean projected our per ton lower, average breakdowns and clean Elk substantially will will costs at foot similar materially repair

mining significant is our and confident volatile west moving projected by to had mid are as low international one. than well quality market. this volatile progresses both closer We’ve and coal and coal will south, in it received a strengthening, interest from to Furthermore, the the be coal continue domestic buyers

Elk on to Finally the of a to B to are we adjust if market as high-vol hold working production permits two warranted. warrants. permitted the A is side, Creek, and At currently readiness fully A, remain high-vol poised high-vol two additional and state one four bring mines, we additional operations of the

We with in XXXX; has low-vol access of which allowing low permits be it on receive to additional timelines. capital mine expect deep and to line one investment drift reasonably early two brought short

A at the Creek, Tiller nine ventilation into development bring work once is to reserves. to Knox high-vol production it approved. as Jawbone to project seven will access have point estimate of months which we the deep mine at We reestablishing largely this this mine completed at Lastly, our serve months

for our financial to over results Chief performance. detailed call the turn now Jeremy to Financial Sussman of and like discussion would a I Officer,

Jeremy Sussman

Chris. you, Thank

the to key financial of hit a I of In on a bit into the more. dig but quarter points, Randy want third details number highlights, terms

Third quarter was adjusted quarter was which $XX.X third XX% XXXX $XX of million. from of the XXXX a million, EBITDA EBITDA adjusted increase

which to XXXX million, $XX.X third revenue $XX.X of quarter Third compared was quarter million. XXXX revenue

income net $X.X versus was quarter $X.X of in QX Third million XXXX. million

was period $X.XX. per of which XXXX Lastly, to year third compared quarter $X.XX, earnings the prior share

XX%. want third was release. to the company’s tax I that point the In press noted effective something XXXX, we approximately quarter rate of out in our

In fact, XXXX. each of in first it quarters has three of been the XX%

also been cash should However, taxes consistent that continue we to have be minimal. be and

as benefit out be this your point we to the expect XXXX purposes. continues net a Specifically, taxes in for position. $XXX,XXX operating or large less I loss company to cash than modeling NOL from

quarter to in was $XXX, company-produced Turning EBITDA. per operational $XX. per price ton This compared metrics, ton third for coal increase of third XXXX quarter XXXX XXXX the year-on-year XX% price to on principal was reason the which

XXXX was company-produced quarter ago Third sales line tons year the in of exactly with XXX,XXX, period.

XXXX Third production production of a was more tons development of at Berwind. Elk Production period third XXXX The third with down the in compared at XXX,XXX XXX,XXX increase third tons in double same versus ago. period from XX,XXX XXXX XXXX. to quarter the was quarter quarter our same than in quarter year the entirely Berwind tons XXXX came Creek mine,

cost of to cash costs, period ton $XX quarter $XX, sold third the some these In cash like per of terms which coal compared I’d XXXX year ton. to on contexts ago company-produced put figures. per was to

sold from numbers at Over the year-on-year quarter due was these with the I’d Elk Creek of that of third XXX% which up per impact Berwind simply of increase our First, mine, development its a development the present status inclusive time. third to XXXX costs is in ton nature than QX cost note sales XXXX. of higher Berwind’s Berwind, much of by are

$XX mainly increase up quarter with related cost the of cost, to sales due was higher ton XX% about third per year-on-year. royalties, pricing realized Second,

cost release, than were noted is average QX $XX, sold ton. as $XX first higher Third, which of press our Elk cash ton per our XXXX Creek XXXX half per in

could mentioned I the production. with past from silo this as XXXX earlier, QX mines coal in run meaningfully coal the to As company-produced overhang inventory coupled weakness the quarter, met tons the the quarter from failure than third we lingering rather market have. as hard Between sell sales of elected we exceeded material inventory XXXX

down While compared of a produced the XX, getting positive it for $XX.X this inventory our year to structure a million cost of quarter. September $X.X XXXX, on effect effect as coal end our negative this had million past our at coal to had

which the costs tonnage Specifically, we cost quarter, note place Under we believe a component continue for past we position considerably this continue quarter. Creek normal fewer produced this as and then I’d Elk mid-XXs cash our produce company. cost plans we to in ton more circumstances, we the per our force labor produced to to to of spread past mine. over view well will fixed that the have us tons grow

for to X.XX of ahead production XXXX, X.XX million expect Looking in would compare to tons which the tons company XXXX. guidance, produced we million

just now of have to our course, balance coal may X% with be the previously metallurgical you versus sales As we noticed expect from volume of coal. release, being steam X.X% total

tons Creek under just anticipate XXXX excluding Elk expect ton X coal of per we Overall, We changes. sold cost at total cash XXXX. inventory of million sold in $XX

price We business of XXXX fixed million have tons per ton $XXX average. just at X.X committed over

capital third million costs, inclusive XXXX Now CapEx moving costs. CapEx of XXXX to We CapEx expenditures, XXXX of anticipate compared capitalized million was development excluding million. third spend an quarter $XX.X development of which $XX.X overall $XX.X capitalized to quarter

in prepared to expand us market bit from balance noted turbulence, withstand on built their apart As go through and Randy to our sets this believe which publicly-traded remarks, we Ramaco was I’d and peers. Mike sheet a like and our

Slide the debt the to our XX, to the are as September net metrics not on that best. deck, XX, debt in remind referring as everyone if our slide I’d EBITDA industry, of stands we just among show the million. $XX at First, best

line cash the interest our other taxes Given items. of lack cash and meaningful expense, below

stress ton almost everyone should EBITDA you of of there. in the CapEx up a maintenance may downturn, get how about a Ramaco that minus remind hold way I’d testing when all $X

by about far at liabilities Ramaco’s are group among XX% this million, Second, the group. of average just legacy below our $XX and peer direct lowest peer

and forward environment. above fallen macro views now bit have spot our year-to-date, XX% prices coal current a to spot ton like Metallurgical on the some of per turn right almost with mark $XXX I’d prices now. the to

the per the prices, However, contango spot level is in ton a is fall above the state. hovering despite $XXX forward in and curve

CapEx and we ESG the supply below producers recently coal cost continue. high low. last see since to peak was investment Furthermore, met US that estimate a levels coal capital CapEx of in whole year, many We Global for the as met remains XX% space as coal bank with just total starting that come are pressures meaningfully offline, come supply X% has offline August. of suggesting one met

We of think the of price decline uncertainty driven the port a spot part by Chinese has large restrictions. been this year

show on we As near guide, the a XX, has August, of look for once since spread mid-XXXX. beginning spread ton per seen coal a international we the arbitrage ton gap of in shrink history there versus zero Slide the If more a is that a market. bit into since China is to average dollar $XX certainty

Ramaco very is turn with or debt its core, for at investors liabilities. producer I’d over low-cost I a remind Before that little questions, legacy it

resilient operations advantage management's prepared our to times and in times. in of markets concludes in now We This turbulent designed remarks. have good take be strength course of

I’d or outlook. line any Operator? quarter you may time, third XXXX this on open At like the for up our have questions results to

Operator

Mark Global. [Operator Instructions] comes first of from from Levin line question Our the Seaport

line Your is open.

Mark Levin

much. thanks very Great,

about guidance. couple of a questions So,

million X.X prices, you technically, are idea XXXX, guidance Is X.XX million the you’re X.X of million you tons, bookmark there closer range? tons, at tons not Today’s to would or an maybe the guess gave that pricing met So and in fall X.X within that million some you volume Randy, can of range I parameters us tons closer where would it’s it. give sort you to comment expect to tons? to a X.X production regarding million but

Randy Atkins

I the a seesaw. Mark look way to at is like almost think,

and price demand. got You’ve

So because we’ve we profile, got money in a can market. even very this low-cost make

So it’s the of assessing really demand where underlying a question really is.

our equation. environment, sit think cyclicality perhaps of to be we now in where place I the six said would is it going necessarily given met pricewise, the will same be same of we from the view And XXXX pricing nor is, demand in not months November the

is So I a on going you to think we’ve that suggest sales done not we we’re what to production told you necessarily a what from in what guide trying actually do but position actually we’ve we’re land for would to to physically standpoint, next really year.

Mike Bauersachs

a point high Mark, be potential they’re have in to don’t to we market more next chosen to kind know enter customers XX honest a what do mentioned XX of the difficult and lot going I the or lot kind in days of to so, It’s get still days of our a the I do as so. not timing-wise, clarity believe because marketplace.

Mark Levin

and you to go want X.X And look accurate those cost know million, CapEx CapEx don’t the like? potentially getting at the think when those numbers – guys completely look ton maybe you million versus about what rate meetings, I cash or I be ton of higher even And – so do want look necessarily rate what think budgeting lower sort are don’t sense. would you that ranges makes might versus like at perfect X.X what if you think to about – there. to when know what ready not But your or I to you’re would like the what would or position

Jeremy Sussman

a we think I Elk meeting. certainly those said core, Mark key full my But cash some prepared as report is in mean, in I when at said, to certainly per position Creek results cost you its you mines. for go year remarks, through budget our I we’ll after numbers a ton of mid-XXs as kind be better of

specifics you So go can we’re we that I we’ll manage mean we forward. as some comfortable to give more those But levels.

Mark Levin

can domestic were Yeah, on us summer. to when stuff. negotiations sounds and color my made met with like you do of negotiating marketplace the decisions And you and some more are seeing of to that’s strategic just like guys the obviously, some has the the have you perfect. tenor what give you were high-quality then it it sounds you question Maybe guys in over last pricing the based about going hold back

to versus round if willing the of you kind you and sort kind you’re versus saw breakdown then lower are of if domestically maybe of great don’t give I a things quality. quality know this that’s for the what But also higher and ago. progressed year how just a pricing

Mike Bauersachs

the as It coming customers kick there. were of was saw that different going lot the and a coke. less discussions marketplace they the with into of make setting, coal coals fact phase saw Mark. started one kind with a to buy weren’t completely of of And less back kind we in, that really Most we traditionally

probably some example; have placed quickly for wanting strong of that for a higher the rank the to not can’t I got had blends some of and you make would were for if our customers coals mean blame it coals coke. in

that. base with So important to load heavy was us we It load operations. good a sustain our of understood or existing a to get business our get base domestically load of to amount for a business very demand

So that have so over or because develop we marketplace to months and said, of of focused that we higher coals obviously recover things to off the index business generating that. demand coals being were for that, opportunity up. A way year. like very price. next a the were based were We And it with our quality going things because a we feel And to saw an our more last where of I type priced good and focused higher have volume be have ended we really we’re high-vol of international domestically, not quality in the on the example on sort But impact if think tendency six had that a higher internationally.

bit. So hopefully little that helps a

Randy Atkins

statement pricing it a the Mike price-wise. the in of that when This obvious, Mark think, occurring, backdrop on just in just year I what was somewhat completely the And rising domestic last to a negotiations market opposite. said, were the of echo of was year,

was from So it what about really was we’re of say, catch think one way might our that predict terms falling some step coals approach that we where market-driven we’re and of a to go your price on you again, question will upside. be a our but to try the to other, the best and I not going to preserve simply decision or going I seen. it can And I the and think so and that’s pricing question table remains optionality knife, knife think where be, in preserve your back

Mike Bauersachs

and of did decision, our our And instead who make up warrant can notices course not much sure sending unlike make of that out competition, run end to operations we so.

Mark Levin

Got the Thanks for it. great. it, gentlemen. color, Appreciate

Randy Atkins

Thanks, Mark.

Operator

Scott Your Clarksons. next Daniel comes of from of question line the

is open. line Your

Daniel Scott

or being Thanks. at I place for about confidence able lot is shifting in that year tonnage still we domestically? think in you for of optionality exports, I is Good are tons book for return export next there that of results at what window domestic stays the if looking kind markets? more typical and morning, to in is soft, What And contract closed the to your to geographies destinations? level your guys. step-up the When market some a look

Mike Bauersachs

focus exposure Yeah, was mean, to good in a the to thing had that made downturn experienced is good that all our we book the even export we’ve expand our domestic we six side. change the about focus because our the we’ve I And kinds of progress getting before heavy of and knew last mix. months question. on the

would I consistent can we’re our quality that good And and ours potential mean, couple will highest say be think tends a they’re in with I say a leaned a them or towards we into at because kind currently the less one more area. I on-deck of or Asia, that to dissatisfaction less it be is growth from fit that more blend. places, probably coals we’ve marketplace. more the of of fit of that buying some of nicely because of the and

for I that I’m sure And control. something can’t everything in we’ve the our evolving. uncertainty it. We’ve And I it. we’re difficult say, XXX% I place Europe put of constantly we with it’s can the a are to like things we to hey, do do things mean, done having seeing, customers predict like so on say of that because a But trying that buying. example, is out are in that some it’s there discussions lot right. with versus all to are fact what of lot some

to next know So more the but say difficult XX lot we’ll a in days. now,

Daniel Scott

that’s something Is the Can that I that just contracted. that that structure? blowing that without markets the million get comments to cost And weaker, level? X.X with at you capacity you even your you at if, the up could think decent run have great. basically do were run margins Okay, really

Randy Atkins

We run to, covered some which ‘XX. to And But X.X the hundred alluded go days, we Mike and XX again, the thousand now we million. in said, optionality and frankly as several downside I forward at we’ve it would we on ourselves didn’t let than that, say would tons. have upside next run so higher price as right more some got the as into ourselves basically cover capture discussions we probably

Mike Bauersachs

question are ongoing still and And do able domestic little a more did that we’re some bit domestically. hopeful to do We answer about forget the still discussions to that business. I have

So either. off know at I don’t totally that this write that we point

Daniel Scott

to not the negative. on and Okay dwell

if in lot looking that are million ratchet is in or positive, pretty variability can So of band, X.X to you at dictated, actual that you is on of there it the the X.X a markets there structure steady? operating kind million cost if

Chris Blanchard

consistent is costs they’ll sort with case operating has get, Jeremy base our lower in is is the the what flat. of forward. pretty outlined band Creek And Chris, stay done Elk that of higher the this Obviously, what our But will we view This we’ve year. go. pretty going

Daniel Scott

a there the on for Okay. inventory the the release, you from unit. cost. negative gave on And per cost some the was In me. impact color about last had Jeremy sales the comments extra

cleared fewer tons I up cost spread it your your think you produced. comments, over you in that saying basically

Is the cost cost about to ton per ton or per produced. it? right wasn’t think sold that So it way

Jeremy Sussman

Yeah.

Dan, about we of produced and So it of it, this quarters. I from if whether or produced quarter sold XXX,XXX coal, mean XXX,XXX be tons think our you course prior

the And on structure are so cost to where we the we and noted, essentially considerably than in we our have curve. given in place frankly do, to we produce thing QX. think did more right given I as that’s And workforce the

So yeah, I think long story short, you’re thinking about it correctly.

Mike Bauersachs

that I in an might inventories the is liquidity. eliminating byproduct Jeremy add, increase is

to So eliminating our see when we we’re gain inventories. position continue cash

So a good thing. that’s

Randy Atkins

And, us at some grows, opportunities. Dan as to that more look around position then cash optionality other our gives obviously

Daniel Scott

have of like you at comment I into just a pause. only could the same there. it’s might the one would necessarily where that but that not the fair? that thought going pricing on sorry season time, earnings growth it in some Is be MNAs. take one Yeah, maybe with sounds pausing, last in opportunistic programs But at not are they

Randy Atkins

try see things market that opportunities, Obviously, opportunistic. in-house like board you be then, buy about of we the of some And at sit we We’d Yeah, the we the kind a at reasonable right price to opportunities to we word. think speak. wanted last some we are the very hit growth and to we last I as told and talked quarter looking meeting where on our looked. tight as

be to put having our we’re go. some discussion board back table want direction this late going to these what going see We’re back time, the to we a And at ideas year. that on with of and

Mike Bauersachs

it’s slug it’s so where progress development Berwind I start, getting very to we’re And and project. exciting. keep think And to we’re continues core to going a mind and that bottom been is, importantly close in to growth

Daniel Scott

guys, right, thanks it. Appreciate much. very All

Randy Atkins

Dan. Thanks,

Operator

B. the from comes Pipes question next Lucas of Riley FBR. line Your with

now open. line Your is

Lucas Pipes

Hey, good morning everyone.

Randy Atkins

morning, Lucas. Good

Lucas Pipes

this away? on you production would that M&A looking very year describe be would return the If up production in would immediately be follow I What be or away, at? a detail, think some to two parameters if it of point. related, wanted helpful. parameters it’s I more years And sort could of you of kind

along secondly, consider be that what Would in then as so at? you bit line, that be would you. of the financing at on very you mentioned your would sort that part around comparison looking remarks of helpful. M&A opportunities little to example, debt currently Thank or you, for your you And would prepared take you a context peers, So more in liabilities? any hardly have legacy

Mike Bauersachs

Yeah, look that always geology of we to is at opportunities. preference sure. Lucas or focus in putting And either geologic on our mines have area. existing advantaged adding obviously is an when we production a

some would the example, necessarily be doing additional doesn’t and I from that a large line of to need that time. would accretive an say see perspective, many first cases even for sort thing. geology things of a adding might in you geologic So be M&A leasing over that advantaged could, things It be

see I very that there’s chance a So some of good think that. you’ll

of that focus our coal to you’ll ship flexibility see think potentially us give I enhance sort on can ability more to us those things. infrastructure also and or wash capabilities coal

huge least prefer to try transactions have liabilities continue minimize to to at them. that a We structure aversion and to

for a said, when of did you example. Creek took being measured That take those things. occasionally we We Knox approach sort

more So next more is type leasing large, what you I stuff. any won’t stuff, more from us, opportunistic door see think, stuff, M&A

impact, have. continue have could things cost our structure these low many perpetuate cases But really pretty a in we on and cost operations big to our that

So to and I about have we of kind and with them. our in relationship I’ll let on jump And have some continue of we Jeremy Randy and guess based that, talk a banks. great

Randy Atkins

have paybacks a having to look an Lucas way to would as think, you without in an course, you first of at ROIs be back range think ROI gives X into year we like like precise. easy numerically But I to possible. which year of the question we return I of we would about do your some to higher is, anything probably can it kind X notion to on

powder. loan se some a sort place In got terms cash do into the of our we’re powder and go out to that we debt revolver. form. existing against before our financing think We’ve discussing finance with I we’ve we’ve equipment per We’ve sheet balance dry probably already our powder as opportunities, a put before. instrument perhaps built dry don’t as of flow What dry of in to want we’ve is, alluded that got some got on

because aware our involve to which Nor always of AROs things some others we’re on sheet perhaps as might we some you other do. in opportunistically the legacy that hand, certainly asked, that accept position to like liabilities. not balance be able might to But do a we’re

to answer broad-based but about a your of probably kind question, think precise get. that’s can we So as I as that’s

Lucas Pipes

sounded out Randy, a My pricing like of helpful. was demand. I second follow very up weak it comments it’s the that and pretty regarding there. That’s appreciate on all color. some question

like made your demand. in you prepared that in Central is and today? at? think you’re would pricing your not that looking are you than reflecting Could What’s is around the sense I elaborate I appreciate maybe a inventories on really when just of perspective. really, if realizing market Thank is demand sort what Appalachia, in you. you sure comment current weak drive and even remarks your you weaker

Randy Atkins

think but I think other. reasonably I Well, each everybody reported, everyone not of consistent would and course with probably

domestic mills cut is think, Mike certainly economy. the mantra on said, a as earlier, It’s steel general the reflects have function and back met demand I demand said steel the for of as I this buying their year.

rising year, sinking we’ve think been weaker instead carrying a I carrying as it’s a tide it’s of this little boats. So a all boats, tide our

App So Chris seeing of as around I comment constantly here are who can at anybody but table, course and the Central larger knowingly is there go as probably think you as you I stockpiles. think down

lot a and shifts seeing people production. back You’re of on some cut

being debt meet have that You’re and generally with higher coal can’t to structures many higher reality cost. seeing people they faced situations sell their cases the of in cost where

again, all, be them. we with once but smugness hopefully at and to that ourselves able we’ve designed of you’re seeing thrive times taking any seeing shut-ins, place. some withstand not to turbulent these so dispositions feel kind in And do you’re perhaps And

we are. where basically that’s So

Mike Bauersachs

reduce they no book shifts. inventories five our the seeing to the operate it see we days increased the days for in. four cases, a a coal areas it’s to that to week put doubt, in in we’re just inventories. some that some us have reduce quarter where not is And have week, our of in people position we to a it’s going allow Lucas, and business continue fourth fields, But basically in necessarily

allow to very long. to proactive is that people approaches the in guys perpetuate thing of don’t are cash position cases, these encouraging a And cost sort The structure to the many have it. taking or

even to those to is difficult in. see it’s of things encouraging production So happen. sort and shut It layoffs

I inventories think, there, port Europe. there, the weakness the and as levels elevated reflects and at we they��re inventories look not it only in but

too. So monthly we’ve on at things those because watch ports space the got basis a we our

coalfields reduce gives So and I are people do actions that the taking a that hopefully you of in think the to supply. color. little bit right

Randy Atkins

that candid, year, look we X see seen the to double. of million anybody you than that next out market Lucas, to if think, else, a here. come thought tons X perfectly we ball forward but be frankly crystal I tons number million And alluded To I more have don’t we’ve about we could

that that’s tougher sheet seeing. of when in So so. you I kind that supply have contraction weaker who you have for the also that think – course, have this much you're situations like those balance the of And makes financing do

Lucas Pipes

of that’s Yeah, I appreciate best and amount color the substantial all luck. very supply, of that’s very helpful.

Randy Atkins

Thanks, Lucas.

Mike Bauersachs

Thanks, Lucas.

Operator

last comes David Gagliano of line Capital Your question from the of Markets. BMO

open. is line Your

David Gagliano

Thanks for of try great. comments clarification historically. questions made to were taking brief to Okay, relative my ask questions. I’ll just couple that wanted and a be I here.

related First the to that comments in August. made we is question

meeting in the back but What in August, understand, there was there? I a happened for think of expansion. prep plant for I board September a approval place plan

Randy Atkins

depths coming drop simply, the early the there in we seeing last of situation prices middle saw demand it of the we And that was of board sort where at Very spoke. downdraft sitting were we we the that August in negotiation were in when and meeting, drop.

time. it take see at So the basically, we and a to where the back suggested months market clarify stepped a the I look board, few table, and from in be might that

we basically So –

David Gagliano

is project officially correct? that So deferred,

Randy Atkins

was just say It’s hold. on it I deferred. wouldn’t basically

David Gagliano

Okay, Understood. sorry hold. on

specific May, from lower guidance in talked very XXXX. about Okay in just and back volumes back XXXX, for May, May, XXXX, was XXXX we’ve then provided now, obviously there but

on In X.X north projects think believe, XXXX hold? was. were tons, that XXXX was X.X intact million X.X tons tons I million X.X numbers million numbers to of million given was I the those tons, these it Are XXXX for still fact, are four,

Randy Atkins

we to least to Yeah, standpoint demand going is those across sort think of demand thought factor was I in going visualized probably are been numbers what it’s think has XXXX. reasonably deferred, end to entire the really the I ‘XX from get board. a number of looks We the like and happen steady lower where overall short be a the at modestly intact. timing answer The to is

can’t ‘XX. future as think what we in those predict going of we I sit are But here to warrants. the So ‘XX, move committed and in levels we certainly ‘XX and still to market at see the forward today production are

Mike Bauersachs

can projects, hopefully These a on to matter rest in of stress sort clearer are place lot we’ll coal under of rest all you the we the And obviously good of deployment. from this the capital the the capital deserve sense, readjust. think year deploy for that better quarter, capital how even the sure, sure one thing’s They that great give the not and vision stress today. of numbers Dave. have the for it’s and even put company lot But prudent market. ourselves. It’s we returns, make But sort next a things I at we great don’t see idea, in projects making of all right after a the time, have just the

David Gagliano

That’s Okay, that makes sense. very actually. helpful

between and that point of May a now over made some less at obviously attractive. threshold crossed So projects the timing these we

decisions, you about we’re to color no-go be going forward can more move what on these projects? Like where thinking that with go, us what’s we that the So should give the threshold price is?

Randy Atkins

is, Yeah, to the objective a than your short an subjective it’s question I answer David decision. think more

is market And a little right there between price a now. is. disconnect I a of demand there Because number. of to not think that’s magic comfort looks I we price said, like the want get where as general out some it and bit

see to are I a stabilize. stabilized, quickly rather position sort to market initiate move market is of to want So we And in the once the think we these.

Mike Bauersachs

will that a is that up you And look standpoint are if these where we from the year. all ourselves step at who what flow. free cash flow, will we cash think do to it’s key difficult And we the predict put And what end tons then as that further, to in we good cash placed right it capital a prudent, people is for we’ve factor, I with take in deploy we have And category. creates is, projects. free next now

David Gagliano

quite one and more, keep whether math versus just to back to is But wrong at fourth we guidance down the our and we at bit we I’m all. did wrong, cash quarter Creek related math it’s maybe Creek, Elk expecting cost quarter, cost trying not should for volumes cash the but into it reconcile near-term third are And when we Okay. though quarter? back implied even short. our have at Elk I in when it’s I’ll an go down. or be what fourth And a

Mike Bauersachs

equally was where from will a has and back reserves moved lower occurrences think generally, were I as those third quarter has up bit all much it our cash gas I now probably coal productive two the share area foot completed, it we in but expect in those and third costs reasons completed mine, a coal number outlined. actually standpoint, my mentioned a little it for all but remarks, to per mining seam. in And of the Jeremy it quarter be thicker one-time

several perhaps I or our back year. one to been other so Creek than some that high producers, like was in And Elk that that done a of itself. cost always has we lower of bit our where lower on the laggards measures at just Creek, expect miner, seen things points although will this cost line So it control bring mentioned rectify wall we’ve at one cost we’ve little at even Elk the

David Gagliano

Okay.

at target weighted sub XQ Is So to average implies cash the average, a the least to $XX math, a the costs reasonably implies Creek? that $XX cash at for in accurate it in cost $XX at our Elk the get quarter. Creek year, of weighted Elk ton in fourth $XX

Jeremy Sussman

just potential we our have include says that that adjustments. note per tables, footnote inventory So, in the ton the Dave I guidance doesn’t would guidance a that do

of go that we we But kind math that. mind. So can keep the that dynamic just through can offline in on

David Gagliano

much up on don’t I too take thanks. Okay, want the time call. to

Randy Atkins

you. Thank

Jeremy Sussman

Dave. it. Appreciate Thanks,

Operator

now like the would to conference I Atkins. to back Randy turn

Randy Atkins

Okay.

I after the this guess So our to be it look will joining year we discuss to again, And of again. the to first time. would the end like up thank you forward year for catching I results. with call everybody

thanks So again.

Operator

today’s concludes this gentlemen, for and joining. you call. Ladies Thank all conference

You now disconnect. may

Ramaco Resources (METC) 10 Nov 192019 Q3 Earnings call transcript