Ramaco Resources Q3 2024: Revenues Surge, EPS Lags

Ramaco Resources, Inc. (NASDAQ: METC, METCB) reported its third-quarter 2024 earnings, showcasing a mixed performance with revenues beating expectations but earnings per share (EPS) falling short. The company's strong operational execution and strategic sales initiatives drove revenue growth, while a decline in metallurgical coal indices and one-time closures impacted EPS.

Ramaco Resources' revenues for the quarter ended September 30, 2024, reached $340.5 million, up 12% year-over-year (YoY). This impressive growth was driven by a 15% increase in sales volumes and a 3% increase in average realized prices. The company's strategic sales and marketing efforts, including securing fixed-price contracts, contributed to this growth. Ramaco secured 1.3 million tons committed to North American customers at an average realized fixed price of $168 per ton and 2.0 million tons to seaborne customers at an average realized index-based fixed price of $135 per ton. These efforts resulted in an average realized price of $148 per ton, excluding demurrage.


However, Ramaco's EPS for the quarter was $(0.03), missing analyst expectations of $0.05. The decline in EPS was primarily due to a $15 per ton average drop in U.S. metallurgical coal indices and the one-time closure of the Company's Knox Creek Jawbone mine. Despite these challenges, Ramaco's non-GAAP cash margins per ton sold remained strong at $34 per ton, or 25%, down just $1 per ton sequentially. This resilience was driven by the company's operational efficiency improvements, such as the commissioning of the prep plant at Maben, which reduced trucking costs by approximately $40 per ton.


Ramaco Resources' production growth initiatives also played a significant role in driving revenue growth. The company's four main initiatives—including the addition of 600,000 combined annualized high-vol tons from the Elk Creek complex and Stonecoal Alma mine, the commissioning of the prep plant at Maben, and the addition of 300,000 tons of annualized low-vol production at the Berwind mine—were all on track and on budget. These initiatives helped Ramaco Resources achieve quarterly records for sales and production, with sales of 1,023,000 tons and production of 972,000 tons, respectively.

In conclusion, Ramaco Resources' Q3 2024 earnings demonstrated a strong operational performance, with revenues beating expectations despite a decline in metallurgical coal indices. The company's strategic sales and marketing efforts, operational efficiency improvements, and production growth initiatives contributed to this success. Although EPS fell short of expectations, Ramaco's solid cash margins and resilience in the face of market challenges indicate a promising outlook for the company. Investors should closely monitor Ramaco's progress as it continues to execute its strategic growth initiatives and navigate the dynamic metallurgical coal market.