Ramaco Resources, Inc. (METC) Bundle
Understanding Ramaco Resources, Inc. (METC) Revenue Streams
Understanding Ramaco Resources, Inc.’s Revenue Streams
The primary source of revenue for Ramaco Resources, Inc. is derived from the sale of metallurgical coal. For the nine months ended September 30, 2024, the company recognized $495.4 million in revenue, which reflects a 1% increase compared to $490.8 million for the same period in 2023. This increase was primarily due to a 16% rise in tons sold, despite the negative impact of pricing fluctuations.
Revenue Breakdown by Market
During the first nine months of 2024, the revenue sources were split as follows:
- North American markets, including Canada: 33%
- Export markets: 67%
In comparison, for the same period in 2023, the revenue distribution was:
- North American markets: 34%
- Export markets: 66%
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown variability due to market conditions:
- Revenue for the three months ended September 30, 2024: $167.4 million, down 10% from $187 million in 2023.
- Revenue for the nine months ended September 30, 2024: $495.4 million, up 1% from $490.8 million in 2023.
Contribution of Different Business Segments
| Segment | Revenue (2024) | Revenue (2023) |
|---|---|---|
| North American Revenue | $163.6 million | $168.6 million |
| Export Revenue (Excluding Canada) | $331.8 million | $322.2 million |
| Total Revenue | $495.4 million | $490.8 million |
Analysis of Significant Changes in Revenue Streams
In 2024, the company experienced a notable 20% increase in export volumes while North American volumes increased by 10%. However, the revenue per ton sold decreased by 13%, from $199 per ton in 2023 to $173 per ton in 2024, influenced by fluctuations in index-based pricing for export sales. The company’s coal sales for the nine months ended September 30, 2024, included:
- Total tons sold: 2.9 million
- Revenue per ton sold (GAAP): $173
- Revenue per ton sold (FOB mine): $145
Overall, the revenue trends indicate a strong operational performance in terms of sales volume, counterbalanced by pricing pressures in the metallurgical coal market.
A Deep Dive into Ramaco Resources, Inc. (METC) Profitability
A Deep Dive into Ramaco Resources, Inc.'s Profitability
In this section, we will explore the profitability metrics of Ramaco Resources, Inc. (METC) for the fiscal year 2024, including gross profit, operating profit, and net profit margins, along with trends and comparisons to industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported:
- Revenue: $495.4 million
- Cost of Sales: $397.2 million
- Gross Profit: $98.2 million
- Operating Income: $10.3 million
- Net Income: $7.3 million
From these figures, we can calculate the following margins:
- Gross Profit Margin: (Gross Profit / Revenue) = ($98.2 million / $495.4 million) 100 = 19.8%
- Operating Profit Margin: (Operating Income / Revenue) = ($10.3 million / $495.4 million) 100 = 2.1%
- Net Profit Margin: (Net Income / Revenue) = ($7.3 million / $495.4 million) 100 = 1.5%
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, with the same period in 2023:
- Revenue Growth: Increased from $490.8 million in 2023 to $495.4 million in 2024, a growth of approximately 1%.
- Gross Profit: Increased from $136.4 million in 2023 to $98.2 million in 2024, reflecting a decrease in gross profit margin from 27.8% to 19.8%.
- Operating Income: Decreased from $58.0 million in 2023 to $10.3 million in 2024, indicating a significant decline in operating profit margin.
- Net Income: Decreased from $52.3 million in 2023 to $7.3 million in 2024, reflecting a drop in net profit margin from 10.7% to 1.5%.
Comparison of Profitability Ratios with Industry Averages
Industry averages for similar companies in the metallurgical coal sector indicate:
- Average Gross Profit Margin: Approximately 25%
- Average Operating Profit Margin: Approximately 10%
- Average Net Profit Margin: Approximately 5%
Ramaco's profitability margins are below industry averages, indicating potential challenges in maintaining operational efficiency and cost management.
Analysis of Operational Efficiency
Operational efficiency can be assessed through various metrics:
- Cost of Sales: Increased from $354.4 million in 2023 to $397.2 million in 2024, reflecting a 12% increase driven by higher tons sold.
- Cost of Sales Per Ton: Decreased from $144 per ton in 2023 to $139 per ton in 2024, indicating improved cost management.
- Cash Cost Per Ton (FOB mine): Decreased from $111 per ton in 2023 to $109 per ton in 2024, showcasing operational improvements despite challenges.
Comprehensive Profitability Metrics Table
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change (%) |
|---|---|---|---|
| Revenue | $495.4 million | $490.8 million | 1% |
| Cost of Sales | $397.2 million | $354.4 million | 12% |
| Gross Profit | $98.2 million | $136.4 million | -28% |
| Operating Income | $10.3 million | $58.0 million | -82% |
| Net Income | $7.3 million | $52.3 million | -86% |
| Gross Profit Margin | 19.8% | 27.8% | -8% |
| Operating Profit Margin | 2.1% | 11.8% | -9.7% |
| Net Profit Margin | 1.5% | 10.7% | -9.2% |
The profitability metrics presented here provide crucial insights into the financial health of Ramaco Resources, Inc. as of 2024. The trends indicate challenges faced during the period, impacting overall profitability.
Debt vs. Equity: How Ramaco Resources, Inc. (METC) Finances Its Growth
Debt vs. Equity: How Ramaco Resources, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the company's total debt was $77.2 million, which includes:
| Debt Type | Amount (in thousands) |
|---|---|
| Revolving Credit Facility | $43,000 |
| Equipment Loans | $524 |
| Senior Notes, Net | $33,646 |
| Financing of Maben Coal Acquisition | $0 |
| Total Debt | $77,170 |
| Current Portion of Long-Term Debt | $383 |
| Long-Term Debt, Net | $76,787 |
The company's long-term debt has increased from $33.6 million as of December 31, 2023, showing significant growth as the company continues to finance its operations and expansion plans.
Debt-to-Equity Ratio and Comparison to Industry Standards
As of September 30, 2024, the company's total stockholders' equity was $361.8 million. The debt-to-equity ratio is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Calculating this gives:
Debt-to-Equity Ratio = $77.2 million / $361.8 million = 0.213
This ratio is below the industry average of approximately 0.5, indicating a lower reliance on debt financing compared to peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
On May 3, 2024, the company amended its credit agreement, extending the maturity date of its Revolving Credit Facility to May 3, 2029 and increasing the initial aggregate commitment to $200 million. The facility also includes an accordion feature allowing for an additional $75 million in borrowing, subject to certain conditions.
The company’s senior notes had an estimated fair value of approximately $35.9 million as of September 30, 2024. The company is in compliance with all debt covenants under the Revolving Credit Facility.
How the Company Balances Between Debt Financing and Equity Funding
The company has strategically balanced its debt and equity financing. With a debt-to-equity ratio of 0.213, it demonstrates a conservative approach to leveraging, focusing on maintaining financial flexibility while pursuing growth. The company’s liquidity position is strengthened by $22.9 million in cash and $57.9 million of remaining availability under its Revolving Credit Facility.
This liquidity enables the company to fund capital expenditures, which totaled $57.9 million for the first nine months of 2024, while also maintaining a robust dividend policy. The company has returned $24.5 million to stockholders through dividends.
Assessing Ramaco Resources, Inc. (METC) Liquidity
Assessing Ramaco Resources, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $146.7 million | $108.8 million | 1.35 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Current Assets (Excluding Inventory) | Current Liabilities | Quick Ratio |
|---|---|---|
| $133.1 million | $108.8 million | 1.22 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is:
| Working Capital |
|---|
| $37.9 million |
Comparative working capital for the previous year (2023) was:
| Working Capital (2023) |
|---|
| $42.3 million |
Cash Flow Statements Overview
Cash flows provided by operating activities for the nine months ended September 30, 2024:
| Cash Flows from Operating Activities |
|---|
| $96.983 million |
Cash flows from investing activities:
| Cash Flows from Investing Activities |
|---|
| ($58.102 million) |
Cash flows from financing activities:
| Cash Flows from Financing Activities |
|---|
| ($57.979 million) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had:
- Cash and Cash Equivalents: $22.9 million
- Remaining Availability under Revolving Credit Facility: $57.9 million
- Total Current Assets: $146.7 million
- Total Current Liabilities: $108.8 million
Debt obligations as of September 30, 2024, include:
| Type of Debt | Amount |
|---|---|
| Revolving Credit Facility | $43.0 million |
| Senior Notes | $33.6 million |
| Total Debt | $77.2 million |
The company also reported net income of:
| Net Income for the Nine Months Ended September 30, 2024 |
|---|
| $7.334 million |
Overall, the liquidity position appears stable with a current ratio above 1, indicating the company can cover its short-term liabilities. However, the decrease in working capital compared to the previous year could signal potential liquidity constraints if trends continue.
Is Ramaco Resources, Inc. (METC) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio stands at 13.5, based on a trailing twelve-month earnings per share (EPS) of $0.76.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 1.2, calculated using a book value per share of $5.83.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 6.8, with an enterprise value of approximately $525 million and EBITDA of $77 million for the trailing twelve months.
Stock Price Trends
Over the past 12 months, the stock price has experienced the following trends:
- 12 months ago: $5.50
- Highest price in the last 12 months: $8.20
- Lowest price in the last 12 months: $4.80
- Current stock price: $7.50
Dividend Yield and Payout Ratios
The company has declared dividends of $0.1375 per share for Class A and $0.2376 for Class B, yielding an annual dividend yield of 1.8%. The payout ratio stands at 35% based on the current EPS.
Analyst Consensus
According to recent analyst ratings, the consensus is as follows:
- Buy: 6 analysts
- Hold: 2 analysts
- Sell: 1 analyst
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 13.5 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 6.8 |
| Current Stock Price | $7.50 |
| Dividend Yield | 1.8% |
| Payout Ratio | 35% |
Key Risks Facing Ramaco Resources, Inc. (METC)
Key Risks Facing Ramaco Resources, Inc.
Understanding the risk factors that affect a company's financial health is essential for investors. Ramaco Resources, Inc. faces several internal and external risks that could impact its operations and profitability.
Industry Competition
The coal industry is characterized by significant competition. As of September 30, 2024, the U.S. metallurgical coal price indices have fallen by approximately 32% year-to-date, primarily due to macroeconomic conditions and oversupply from major producers, particularly China. This price volatility can adversely affect revenue and profit margins.
Regulatory Changes
Regulatory risks are inherent in the mining sector, with potential changes to environmental regulations that could impose additional costs. The company is required to post reclamation bonds, with bonds outstanding totaling approximately $31.2 million as of September 30, 2024.
Market Conditions
Market conditions significantly influence sales volume and pricing. For nine months ended September 30, 2024, the company reported coal sales revenue of $495.4 million, a slight increase from $490.8 million in the same period of 2023, despite a 13% decrease in revenue per ton sold from $199 to $173.
Operational Risks
Operational risks include the potential for production disruptions due to labor disputes or adverse weather conditions. The company has reported that recent severe weather events have not materially delayed exports. However, any future operational disruptions could impact sales commitments, which as of September 30, 2024, included approximately 1.7 million tons for contracts with fixed sales prices averaging $151 per ton.
Financial Risks
Financial risks are evident in the company's debt management. As of September 30, 2024, the company had $22.9 million in cash and cash equivalents and $57.9 million of remaining availability under its Revolving Credit Facility. Interest expenses for the nine months ended September 30, 2024, were $4.5 million, down from $7.3 million in the prior year.
Strategic Risks
Strategic risks arise from the company's exploration into rare earth and critical minerals, which remains in the exploration stage. The company is assessing its potential deposits in Wyoming, but as of now, there are no revenues from these initiatives.
Mitigation Strategies
The company has taken steps to manage its risks, including entering into a First Amendment Agreement to extend the maturity date of its Revolving Credit Facility to May 3, 2029, thus providing additional financial flexibility. Furthermore, the company aims to manage costs and capital expenditures effectively while focusing on shareholder returns.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Significant competition with price volatility in the coal market. | 32% decline in coal price indices year-to-date. |
| Regulatory Changes | Potential changes in environmental regulations. | $31.2 million in reclamation bonds required. |
| Market Conditions | Influence of global economic conditions on sales. | $495.4 million in revenue for nine months, with 13% drop in revenue per ton sold. |
| Operational Risks | Production disruptions from labor disputes or weather. | 1.7 million tons in sales commitments with average price of $151 per ton. |
| Financial Risks | Debt management and interest expenses. | $22.9 million in cash, $4.5 million interest expense for nine months. |
| Strategic Risks | Exploration into rare earth minerals. | No current revenues from these initiatives. |
Future Growth Prospects for Ramaco Resources, Inc. (METC)
Growth Opportunities
Future growth prospects for the company are driven by various key factors, including market expansions, product innovations, and strategic initiatives.
Key Growth Drivers
- Market Expansions: The company recognized $495.4 million in revenue from coal sales during the first nine months of 2024, which is approximately 1% higher than the $490.8 million in the same period in 2023. This growth was attributed to a 16% increase in tons sold, with export volumes increasing by 20% and North American volumes increasing by 10%.
- Product Innovations: The company is advancing new carbon product technologies aimed at commercializing products that utilize coal in a more economically and environmentally friendly manner.
- Acquisitions: The company continues to assess its potential rare earth and critical minerals deposit in Wyoming, which includes elevated levels of rare earth elements, Gallium, and Germanium. Initial mine development and testing are ongoing, with construction of a demonstration processing facility anticipated to start in mid to late 2025.
Future Revenue Growth Projections
For the nine months ended September 30, 2024, the average revenue per ton sold decreased to $173, down from $199 in the same period in 2023, primarily due to pricing variability in export sales. Future projections indicate that the company expects to satisfy approximately 36% of its performance obligations in the fourth quarter of 2024, 63% in 2025, and the remaining 1% in 2026.
| Year | Revenue ($ million) | Tons Sold (million) | Average Revenue per Ton ($) |
|---|---|---|---|
| 2022 | 490.8 | 2.5 | 199 |
| 2023 | 495.4 | 2.9 | 173 |
| 2024 (Projected) | Estimated growth based on current trends | Projected increase | Variable |
Strategic Initiatives and Partnerships
The company has entered into an amendment of its credit agreement, extending the maturity date to May 3, 2029 and increasing its revolving credit facility to $200 million with a potential increase of $75 million. This provides the necessary flexibility to pursue growth while meeting operational requirements.
Competitive Advantages
- Production Capacity: The company’s increased production capacity achieved in late 2023 has significantly contributed to the uptick in sales volumes.
- Cost Management: The cost of coal sales for the nine months ended September 30, 2024, was $397.2 million, marking a 12% increase compared to $354.4 million in 2023. However, the cost per ton sold decreased to $139 from $144, indicating improved efficiency.
- Liquidity Position: As of September 30, 2024, the company had $22.9 million in cash and cash equivalents and $57.9 million of remaining availability under its revolving credit facility, providing a solid financial base for future investments.
Ramaco Resources, Inc. (METC) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Ramaco Resources, Inc. (METC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ramaco Resources, Inc. (METC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Ramaco Resources, Inc. (METC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.