Ramaco Resources, Inc. (NASDAQ: METC) reported Q1 EPS of $0.10, $0.10 better than the analyst estimate of $0.00. Revenue for the quarter came in at $43.46 million versus the consensus estimate of $46.36 million.

Outlook and Comment

Randall Atkins, Ramaco Resources' Chairman and Chief Executive Officer remarked, "We just had an exceptional quarter with our operating team hitting on all cylinders. They did an outstanding job of safely producing a record 577,000 tons in the first quarter of 2021, which was well above our internal projections. This led to record low Company-wide cash costs, which were sub $60 per ton. We are probably the only non-longwall producer of met coal in Central Appalachia that can say it achieved sub $60 per ton cash costs in any recent quarter. This puts Ramaco clearly in the first quartile of the U.S. met coal cash mine cost curve, even including longwall producers.

At our flagship Elk Creek complex, first quarter cash costs actually came in at $55 per ton. This demonstrates that when we are able to produce without COVID-19 related constraints, Elk Creek is among the premier metallurgical coal complexes in the country. On the back of these positive results, we are now lowering our 2021 cash cost guidance to $61 - $66 per ton at Elk Creek, versus prior guidance of $63 - $68 per ton. In addition to outstanding mine costs, I would also commend our operating team on controlling capital costs. With the first quarter coming in under $4 million, we are also slightly lowering capex guidance for the year.

Our record production of 577,000 tons in the first quarter of 2021 annualizes to over 2.3 million tons for this year as we transition to materially higher production levels in 2022, which are anticipated to annualize at over a 3 million ton run rate by mid year. I am also pleased to report that the Berwind slope project and the Big Creek surface mine are both now progressing on schedule and on budget. Combined with the strong year-to-date performance at Elk Creek, we are also upwardly revising our guidance on total 2021 production to 2.1 to 2.4 million tons, from our prior guidance of 1.9 to 2.4 million tons. We will also continue to steadily progress adding additional new production toward our long-term stated goal of 4-5 million tons of low cost metallurgical coal production."

Atkins concluded, "From a macro perspective, we are increasingly positive about both demand and pricing prospects for met coal over the next year. U.S. metallurgical coal indices are now already up well over 50% from this time last year, while steel prices in the U.S. are up over 200% and abroad are at all-time highs. As it relates to the domestic steel market, I would also note that inventories are near record lows, and capacity utilization is approaching pre-COVID-19 levels of just under 80%. Although met prices have lagged behind other steel related commodities so far this year, we expect an impending catch up in the months ahead as price begins to better track demand. We also have purposefully maintained a good deal of 'dry powder' of roughly 400,000 tons of unsold 2021 production that we expect to place in the second half of 2021 at higher prices than we are seeing today. All of this positive market positioning is occurring as we head into negotiations for the 2022 annual contracts with domestic steel mills later this summer."

"Furthermore, governments around the world are increasing money supply at the fastest rates ever seen, on the back of massive global fiscal stimulus packages aimed at consumption and infrastructure. We believe this macro environment provides extremely positive and unique market conditions for both near and medium-term growth in metallurgical coal price and demand. These positive macro trends have already translated into the much stronger fixed price and index-based sales booked in the first part of 2021. Lastly, I would remind everyone that almost 100% of Ramaco's coal is sold either on a fixed priced or U.S. East Coast Index basis. This is important to remember, given the weakness seen in Australian coal indices as a result of the China/Australia trade war. We believe Ramaco is uniquely positioned to benefit for the balance of 2021 from the combination of volume growth, and strong pricing tied to higher priced indices reflecting demand. We are looking forward to 2021 hopefully being our strongest year of free cash flow to date."

For earnings history and earnings-related data on Ramaco Resources, Inc. (METC) click here.