What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-17 compared with 2024-03-14 · 146 added, 160 removed, 228 unchanged (57% of the section changed)

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Coal consumption and production in the U.S.

is driven by several market dynamics and trends including the U.S.

are driven by several market dynamics and trends including the U.S.

and global economies, the U.S.

dollar’s strength relative to other currencies and accelerating production cuts.

In addition, blast furnace steelmaking is more prevalent outside the U.S.

compared to domestic steel production, which creates demand for exports of metallurgical coal.

Although conflicts overseas continue and economic growth remains uncertain in some regions of the world, supply constraints continue to support the global metallurgical coal market overall.

Ongoing bans on the import of Russian coal have affected the availability of supply to certain seaborne markets as well as contributed to volatility in prices.

Metallurgical coal benchmark prices increased significantly in early 2022, but then fell throughout the rest of the year.

Market pricing for 2023 was generally down from 2022 levels but remains favorable versus long-term averages.

We expect metallurgical coal prices to remain volatile in the near term.

In addition, we anticipate that inflation may remain high in the near term for steel prices, freight rates, labor, and materials, which would continue to negatively affect our profitability.

During 2023, we sold 3.5 million tons of coal.

North American markets made up 33% of our 2023 revenues and export markets, excluding Canada, accounted for 67% of our 2023 revenues.

The Company is responsible for rail and loadout costs for coal sold into export markets.

During 2022, we sold 2.5 million tons of coal.

North American markets made up 58% of our 2022 revenues and export markets, excluding Canada, accounted for 42% of our 2022 revenues.

We purchase coal from third parties for sale for our own account from time to time;

however, sales of Company-produced coal made up 95% and 98% of total sales in 2023 and 2022, respectively.

The annual contracting season with North American steel producers generally occurs in late-summer through the fall.

As of December 31, 2023, we had entered into forward sales contracts with certain North American customers on a fixed price basis for 1.4 million tons of coal at an average realizable price of $166 per ton, excluding freight.

This level of pricing in 2023 is lower than the average price of $198 per ton that was obtained during the previous contracting season for North America.

This is due to a combination of factors, including changes in demand, variations in the types of coal qualities being purchased, fluctuations in steel prices, and other macroeconomic trends.

The Company shifted to

more export sales in the Company’s mix of revenues during 2023, which will likely continue into 2024.

Blast furnace steelmaking is more prevalent outside the U.S.

compared to domestic steel production, which creates demand for exports of metallurgical coal, including demand growth in Asia Pacific.

Global metallurgical coal markets softened in 2024 due to constrained economic growth in some regions of the world and continued conflict overseas.

The global steel market experienced slower growth, especially in China, resulting in elevated levels of Chinese steel exports.

These conditions have led steel companies to both cut back on their own production and to reduce the price they are willing to pay for their metallurgical coal feedstock.

For 2025, overall steel demand will likely remain weak in the near term;

however, supply cuts may occur for higher cost operations absent a significant upward movement in pricing.

Longer term, the Company believes that limited global investment in new coking coal production capacity, the industrialization of emerging economies, expansion of urbanization globally, and an eventual return to economic growth will support coking coal markets overall.

We sold 4.0 million tons of coal during 2024 compared to 3.5 million tons during 2023.

North American markets made up 33% of our revenues and export markets, excluding Canada, accounted for 67% of our revenues for

both 2024 and 2023.

Export sales often contain index-based pricing and, therefore, greater volatility in pricing and revenues.

The metallurgical coal markets are volatile in nature;

therefore, the Company prioritizes managing its financial position and liquidity, while managing costs and capital expenditures and returning value to its shareholders.

In 2024, our total capital expenditures were $68.8 million, excluding capitalized interest of $1.5 million.

In 2023, our capital expenditures were $82.9 million, excluding capitalized interest of $1.1 million.

In 2022, our capital expenditures were $123.0 million, excluding cash paid for the acquisitions of Ramaco Coal and Maben Coal assets which totaled $23.6 million as well as capitalized interest of $1.1 million.

The decrease in capital expenditures was due to the Company’s progress related to strategic growth projects at our Elk Creek and Berwind mining complexes.

We completed the expansion of processing capacity at the Elk Creek preparation plant in 2023, which now has an annualized processing and shipping capacity of approximately three million tons per year.

On July 10, 2022, we experienced a methane ignition at the Berwind No.

1 mine, which was one of the active mines at our Berwind mining complex.

There were no personnel in the mine at the time of the incident and no injuries or fatalities occurred.

The overall impact to pre-tax earnings in 2022 was immaterial except for idle mine costs of $9.5 million recognized during the year.

The Company subsequently recognized other income of $8.1 million in 2023 related to insurance proceeds received for the event.

Production from the Berwind No.

1 mine restarted in the first quarter of 2023.

As a result of the increase in capacity at the Elk Creek plant, the re-opening of the Berwind No.

1 mine described above, and the start of production at the Maben mine during 2023, the Company was producing just under an annualized four million tons per year run rate at the later part of 2023.

The Company expects to produce between 4.0 million and 4.4 million tons in 2024 depending on market conditions.

On June 21, 2023, the Company distributed Class B common stock, a tracking stock, to provide existing holders of the Company’s common stock an opportunity to participate directly in the financial performance of the Company’s CORE assets on a stand-alone basis, separate from the Company’s metallurgical coal operations.

CORE assets were acquired initially by the Company as part of the Company’s acquisition of Ramaco Coal in the second quarter of 2022.

The financial performance of CORE assets consists of the following non-cost-bearing revenue streams based on the Company’s current expectations:

● Royalty fees derived from the royalties associated with the Ramaco Coal and Amonate reserves, which we believe approximates 3% of Company-produced coal sales revenue excluding coal sales revenue from Knox Creek,

● Infrastructure fees based on $5.00 per ton of coal processed at our preparation plants and $2.50 per ton of loaded coal at the Company’s rail load-out facilities, and

● Future income derived, if and when realized, from advanced carbon products and rare earth elements initiatives.

The Company anticipates paying a quarterly cash dividend equal to 20% of the total fees above;

however, any dividend amounts declared and paid are subject to the sole discretion of the Company’s Board of Directors.

Dividends paid on the tracking stock allow the Company to return to Class B common stockholders a portion of the savings from royalties and infrastructure usage fees resulting from the acquisition of Ramaco Coal.

In addition, the tracking stock provides an opportunity for Class B common stockholders to participate directly in the potential revenue growth associated with the development of carbon products and rare earth elements.

The Company paid cash dividends on Class B common stock during the third and fourth quarter of 2023.

Separate financial statements for CORE have not been included as exhibits to this filing since CORE’s financial performance and dividends will be evaluated based on non-cost-bearing revenue streams, at least initially, and other potential forms of passive income rather than reduced by allocated costs and expenses.

The Company continues to assess its potential REEs deposit in Wyoming.

To date, the results of drilling programs indicate elevated levels of REEs, along with significant concentrations of other critical elements such as Yttrium, Gallium, and Germanium.

The exploration target does not represent, and should not be construed to be, a mineral resource or mineral reserve as such terms are used in subpart 1300 of Regulation S-K.

The Company also continues its work to advance new carbon product technologies with the goal of commercializing products that use coal in both an improved economic and environmental manner.

The decrease in capital expenditures was due to the Company’s progress related to strategic growth projects.

The Company produced 3.7 million tons during 2024 compared to 3.2 million tons during 2023 as a result of the increase in capacity and completed development work.

The Company expects full-year production volumes in 2025 between 4.2 and 4.6 million tons with an ability to vary production dependent on market conditions.

While the Company normally pays cash dividends on a quarterly basis, the Company paid dividends in the fourth quarter of 2024 to both Class A and Class B shareholders in the form of Class B stock.

This decision was based on the Company’s goal of returning value to its shareholders while maintaining the Company’s commitment to prioritize liquidity and financial optionality as we move into 2025.

The Company continues to assess its potential rare earth elements and critical minerals deposit in Wyoming.

Analysis performed to date indicates elevated levels of rare earth elements along with significant concentrations of critical minerals gallium and germanium, which were banned for export to the United States by China on December 2, 2024.

The Company hopes to complete its techno-economic analysis of the overall commercial aspects of the potential opportunity and begin construction of a pilot processing facility in mid to late 2025.

The Company recently received a $6.1 million matching grant from the Wyoming Energy Authority, which will be applied toward development of the pilot plant and related facilities at the Brook Mine.

No revenues have been recognized from the Company’s Wyoming initiatives.

Results of Operations

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Adjusted EBITDA

Net income and Adjusted EBITDA were lower in 2023 compared to 2022, despite the increase in sales volume, due to lower sales pricing and higher cost per ton sold in 2023.

Net income and Adjusted EBITDA for 2023 benefitted from $15.9 million of pre-tax income for proceeds received from insurance claims related to the 2022 Berwind ignition event and 2018 silo failure.

Net income and Adjusted EBITDA were lower in 2024 compared to 2023, despite the increase in sales volume, due to the decrease in metallurgical coal price indices.

This occurred due to a variety of macroeconomic factors including the Chinese oversupply of steel during 2024.

In addition, net income and Adjusted EBITDA for 2023 benefitted from $15.9 million of pre-tax income for proceeds received from insurance claims related to the 2022 Berwind ignition and 2018 silo failure.

Refer to Non-GAAP Financial Measures below for an explanation of the Company’s calculation of Adjusted EBITDA.

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Coal sales information is summarized below:

Year ended December 31,

Years ended December 31,

(In thousands)

Company Produced

Coal sales revenue

Company-produced revenue per ton sold (GAAP)

Purchased from Third Parties

Coal sales revenue

Purchased coal revenue per ton sold (GAAP)

Coal sales revenue

Total revenue per ton sold (GAAP)

Cost of Sales:

Company Produced

Cost of sales

Company-produced cost of sales per ton sold (GAAP)

Purchased from Third Parties

Cost of sales

Purchased coal cost of sales per ton sold (GAAP)

Increase (Decrease)

Total revenue per ton sold (GAAP basis)

Cost of sales

Total cost of sales per ton sold (GAAP)

Total cost of sales per ton sold (GAAP basis)

Refer to Non-GAAP Financial Measures for supplemental calculations of revenue per ton sold (FOB mine) and cash cost per ton sold (FOB mine)

Coal sales revenue for 2023 increased 23% from 2022, which was driven by the 41% increase in tons sold.

The increase in sales volume was due to greater export sales and was aided by the Company’s increased capacity for production achieved during 2023.

Revenue per ton sold decreased 13% from $231 per ton in 2022 to $201 per ton in 2023.

Revenue per ton sold (FOB mine), a non-GAAP measure which excludes transportation revenues and demurrage, decreased 18% from $207 per ton in 2022 to $170 per ton in 2023 including company-produced coal and purchased coal.

The decrease in both revenue per ton sold measures in 2023 was driven by the variability in index-based pricing for export sales.

Coal sales revenue for full-year 2024 was $666.3 million, approximately 4% lower than 2023, despite the increase in tons sold, due to the negative impact of pricing.

The 15% increase in tons sold occurred in both North America and export markets, with export volumes increasing by 18% and North America volumes increasing by 10%.

The volume increase was aided by the Company’s increased capacity for production achieved during late 2023.

Revenue per ton sold decreased 17% from $201 per ton for the year ended December 31, 2023 to $167 per ton for year ended December 31, 2024 and was driven by the variability in index-based pricing for export sales.

Revenue per ton sold (FOB mine), a non-GAAP measure which excludes transportation revenues and demurrage, decreased 18% from $170 per ton for the year ended December 31, 2023 to $140 per ton for the year ended December 31, 2024.

Refer to Non-GAAP Financial Measures later in Item 2 for more information regarding this measure.

metallurgical coal price indices have fallen by roughly 32% on a year-to-date basis driven by the macroeconomic conditions discussed previously.

We expect metallurgical coal prices to remain volatile in the near term.

Refer to Note 2—Summary of Significant Accounting Policies—Concentrations and Note 11—Revenues in Item 8, Part II for additional information regarding sales to customers.

Cost of sales.

Our cost of sales increased 48% from 2022, which was driven by the increase in tons sold discussed above.

Cost of sales per ton sold increased 5% from $136 per ton in 2022 to $143 per ton in 2023.

Cash cost per ton sold (FOB mine), a non-GAAP measure which excludes transportation costs and idle mine costs, increased 3% from $108 per ton in 2022 to $111 per ton in 2023, including company-produced coal and purchased coal.

The increase in both cost per ton sold measures in 2023 was primarily due to inflationary pressures on labor and supplies.

Our cost of sales totaled $533.3 million for full-year 2024, approximately 8% higher than 2023, due to the increase in tons sold discussed above.

Cost of sales per ton sold decreased 6% from $143 per ton in 2023 to $134 per ton in 2024.

Cash cost per ton sold (FOB mine), a non-GAAP measure which excludes transportation costs, alternative mineral development costs, and idle mine costs, decreased 5% from $110 per ton in 2023 to $105 per ton in 2024.

Mine costs for 2024 were impacted negatively by challenging geology and labor constraints in the first quarter of 2024 but improved thereafter due to efficiencies gained from increased production compared to 2023.

Asset retirement obligation accretion .

ARO accretion was $1.4 million for 2023 and $1.1 million for 2022.

The higher level of accretion in 2023 was driven primarily by changes in estimates of future cash flows.

ARO accretion was $1.5 million for 2024 and was nearly flat versus 2023.

Depreciation, depletion, and amortization .

Depreciation, depletion, and amortization expense totaled $65.6 million in 2024 compared to $54.3 million in 2023.

The increase in 2023 occurred across all asset classes consistent with the Company’s initiative to grow production.

Selling, general and administrative expenses .

Selling, general and administrative expenses were $48.8 million for 2023 compared to $40.0 million for 2022.

The 22% increase in 2023 was primarily due to greater compensation-related expenses and headcount as well as increased spending for professional services consistent with the Company’s growth efforts.

The increase in 2024 was due to the increases in plant and equipment and production versus 2023.

The increase in 2024 also included $1.1 million of additional amortization of capitalized development for the Knox Creek Jawbone mine, which occurred due to the closure of the mine during 2024.

Selling, general and administrative (“SG&A”) expenses .

SG&A expenses were $49.3 million for 2024 compared to $48.8 million for 2023.

SG&A expenses in 2024 include a $3.9 million benefit accrued for the probable

recovery of previously incurred attorney fees related to silo failure litigation developments, which is not indicative of future SG&A expenses.

This matter offset most of the 2024 increase in stock-based compensation compared to 2023.

Other income (expense), net.

Other income, net was $4.4 million in 2024 compared to $18.3 million in 2023.

The activity in 2024 was primarily related to the $2.2 million recovery of previously incurred demurrage and other transportation-related matters, a $1.2 million lost coal recovery claim, and an actuarial gain of $0.5 million associated with the Company’s occupational disease benefit obligation.

The activity in 2023 was related mostly to insurance proceeds received in 2023 related to the 2022 Berwind ignition event that occurred in 2022 and the silo failure that occurred in 2018.

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This activity is not indicative of expected future results.

The activity in 2022 was driven by the gain of $2.1 million recognized on the sale of mineral rights.

Interest expense, net.

Interest expense, net was approximately $6.1 million in 2024 as compared to $8.9 million in 2023.

The increase in net interest expense in 2023 was primarily due to increased use of the revolving credit facility during 2023.

The decrease in net interest expense in 2024 was primarily due to the repayment of debt associated with the previous acquisitions of Ramaco Coal and Maben Coal.

Income tax expense.

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Year Ended December 31, 2023 compared to Year Ended December 31, 2022

Please see Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Annual Report on Form 10-K for a discussion of the results of operation for the year ended December 31, 2022 as compared to the year ended December 31, 2021 .

Please see Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report on Form 10-K for a discussion of the results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Non-GAAP Financial Measures

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income taxes;

certain non-operating expenses (charitable contributions);

and accretion of asset retirement obligations.

accretion of asset retirement obligations;

and, when applicable, certain non-operating items (income tax penalties and charitable contributions).

A reconciliation of net income to Adjusted EBITDA is included below.

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Stock-based compensation

Other non-operating expenses

Other non-operating

Accretion of asset retirement obligation

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GAAP and, therefore, should not be considered as a substitute to revenue under U.S.

Year ended December 31, 2023

Year ended December 31, 2022

(In thousands, except per ton amounts)

Years ended December 31,

(In thousands)

Increase (Decrease)

Adjustments to reconcile to Non-GAAP revenue (FOB mine)

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Non-GAAP revenue per ton sold (FOB mine)

Refer to coal sales information for revenue per ton sold (GAAP) calculations

Refer to coal sales information for revenue per ton sold (GAAP basis) calculations

Non-GAAP cash cost per ton sold.

Non-GAAP cash cost per ton sold (FOB mine) is calculated as cash cost of sales less transportation costs and idle mine costs, divided by tons sold.

Non-GAAP cash cost per ton sold (FOB mine) is calculated as cash cost of sales less transportation costs, alternative mineral development costs, and idle and other costs, divided by tons sold.

We believe cash cost per ton sold provides useful information to investors as it enables investors to compare our cash cost per ton against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal cost from period to period excluding the impact of transportation costs which are beyond our control.

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GAAP and, therefore, should not be considered as a substitute to cost of sales under U.S.

Year ended December 31, 2023

Year ended December 31, 2022

(In thousands, except per ton amounts)

Years ended December 31,

(In thousands)

Increase (Decrease)

Cost of Sales:

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Transportation costs

Idle mine costs

Alternative mineral development costs

Idle and other costs

Non-GAAP cash cost of sales

Non-GAAP cash cost per ton sold (FOB mine)

Refer to coal sales information for cost per ton sold (GAAP) calculations

Refer to coal sales information for cost per ton sold (GAAP basis) calculations

2025 Sales Commitments

As of December 31, 2023, we had entered into forward sales contracts for approximately 1.4 million tons to North American customers at an average fixed price of $166 per ton, excluding freight, as well as roughly 2.1 million additional tons to export customers priced against various benchmark indices.

As of December 31, 2024, we had entered into forward sales contracts for approximately 1.5 million tons to North American customers at an average fixed price of $152 per ton, excluding freight, 0.1 million tons to export

customers at an average fixed price of $145 per ton, excluding freight, and 1.4 million additional tons to export customers priced against various benchmark indices.

The Company expects to satisfy approximately 98% of these commitments in 2025 and the remainder in 2026.

Sales commitments of another 0.4 million tons were obtained subsequent to December 31, 2023 for delivery in 2024.

We expect the shift to more export sales in the Company’s mix of revenue that occurred in 2023 to continue during 2024, which may lead to volatility in revenues due to index-based pricing.

Sales commitments of another 0.5 million tons were obtained subsequent to December 31, 2024.

The annual contracting season with North American steel producers generally occurs in late-summer through the fall.

As stated above, we had entered into forward sales contracts with certain North American customers at an average fixed price of $152 per ton, excluding freight, as of December 31, 2024.

This is lower than the average fixed price of $166 per ton, excluding freight, that was obtained during the previous contracting season for North America.

Liquidity and Capital Resources

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Cash flows used for investing activities

Cash flows (used for) provided by financing activities

Cash flows used for financing activities

Net change in cash and cash equivalents and restricted cash

Cash flows provided by operating activities during 2024 decreased $48.4 million versus the prior year driven by lower cash earnings.

Changes in operating assets and liabilities were favorable versus the prior year due to a variety of factors, most notably, variations in income tax payments as the Company received an $11.8 million refund in 2023.

Net cash used for investing activities during 2023 decreased $73.5 million versus the prior year primarily due to lower capital expenditures and acquisition-related activity of $40.1 million and $22.2 million, respectively.

The decrease in capital expenditures was due to the Company’s progress related to strategic growth projects at our Elk Creek and Berwind mining complexes.

The strategic acquisitions Maben Coal and Ramaco Coal, as well as the concurrent sale of mineral rights, took place in 2022 and no such transactions occurred in 2023.

In addition, the Company received $11.2 million of insurance proceeds during 2023 related to property, plant, and equipment claims from the 2022 Berwind ignition event and 2018 silo failure.

Net cash used for financing activities was $54.0 million higher in 2023 versus 2022, which was driven by greater repayment of debts and similar financings including $25.0 million and $9.6 million related to the Ramaco Coal and Maben Coal asset acquisitions, respectively.

In addition, the Company also paid $5.8 million more cash dividends during 2023, which was largely due to $3.6 million of cash dividends paid on Class B common stock that was initially distributed in 2023, as part of the Company’s strategy to increase value for its shareholders.

The Company declared an additional quarterly cash dividend for holders of Class B common stock in February 2024, subsequent to the date of the financial statements, in the amount of $0.242 per share of Class B common stock.

All cash dividends declared to date for Class B common stock were based on 20% of CORE royalty and infrastructure fees for the previous quarter as shown below.

Changes in operating assets and liabilities were favorable on a net basis versus the prior year, which was driven by receivables collections and was largely due to fluctuations in fourth quarter revenues for 2024, 2023, and 2022.

Net cash used for investing activities during 2024 decreased slightly by $1.4 million versus the prior year primarily due to lower capital expenditures of $14.1 million offset partially by $11.2 million of insurance proceeds received in 2023 related to previous investments.

The decrease in capital expenditures was due to the Company’s continued progress related to strategic growth projects and, therefore, the need for less growth capital expenditures.

The $11.2 million of insurance proceeds received during 2023 related to property, plant, and equipment claims from the 2022 Berwind ignition event and 2018 silo failure.

Net cash used for financing activities was $31.7 million lower in 2024 versus 2023, which was driven by debt-related activities.

The Company repaid $38.2 million more acquisition-related financing in 2023 compared to 2024.

In addition, the Company issued new senior notes during 2024 resulting in net cash proceeds of $55.2 million and paid off its outstanding revolver borrowings from 2023 in the amount of $42.5 million while continuing to pay down its finance leases and equipment loans.

Equity-related activities, in total, were nearly flat year to year despite the Company’s declaration of non-cash dividends to its Class A and Class B shareholders in the fourth quarter of 2024 as discussed earlier.

The Company began paying cash dividends on Class B common stock during the third quarter of 2023 shortly after the initial distribution discussed below.

CORE assets were acquired initially by the Company as part of the Company’s acquisition of Ramaco Coal in the second quarter of 2022.

The financial performance of CORE assets consists of the following non-cost-bearing revenue streams based on the Company’s current expectations:

● Infrastructure fees based on $5.00 per ton of coal processed at our preparation plants and $2.50 per ton of loaded coal at the Company’s rail load-out facilities, and

● Future income derived, if and when realized, from rare earth elements, critical minerals, and advanced carbon products initiatives.

All cash dividends declared to date for Class B common stock were based on 20% of CORE royalty and infrastructure fees for the previous quarter.

Year ended December 31,

Three months ended December 31,

Three months ended September 30,

Three months ended June 30,

Year ended December 31,

Three months ended December 31,

(In thousands)

Amonate Assets

Total Royalties

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20% of Cash Available for Dividend for Class B Common Stock

Restricted cash balances at December 31, 2023 and December 31, 2022 were $0.8 million and $0.9 million, respectively, and consisted of funds held in escrow for potential future workers’ compensation claims.

Refer to Part II, Item 8, Note 16 for information regarding dividends declared subsequent to the date of the financial statements.

The Company anticipates distributing quarterly dividends at similar per-share amounts in the future;

however, it is not known at this time whether the Company will declare additional non-cash and/or stock dividends to Class A and Class B shareholders in future periods.

Future declarations of dividends are subject to Board of Directors’ approval and may be adjusted as business needs or market conditions change.

Restricted cash balances at December 31, 2024 and December 31, 2023 were both $0.8 million and consisted of funds held in escrow for potential future workers’ compensation claims.

Restricted cash balances were included in other current assets on the consolidated balance sheets.

Please see Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report on Form 10-K for a discussion of the Company’s cash flows for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

At December 31, 2023, we had $91.4 million of outstanding debts, or $90.2 million net of unamortized discounts and issuance costs.

Our indebtedness was comprised of $42.5 million of outstanding borrowings under the Revolving Credit Facility, $34.5 million of Senior Notes ($33.3 million net of unamortized discounts and issuance costs), $11.4 million of unpaid financing related to the Maben Coal assets acquisition, and $3.0 of various equipment loans.

Of these amounts, $56.5 million is expected to be repaid in 2024, including $42.5 million of revolver borrowings that were repaid shortly after the balance sheet date using funds from current operations and $11.4 million of acquisition financing that is contractually due in 2024.

The remaining amount of $34.9 million, or $33.7 net of unamortized discounts and issuance costs, is mostly comprised of the Senior Notes due in 2026.

The Company’s outstanding debt decreased approximately $37.0 million in 2023 and was due primarily to the repayment of financing associated with the previous acquisitions of Ramaco Coal and Maben Coal in the amount of $40.0 million and $9.6 million, respectively.

The Company’s outstanding borrowings under the Revolving Credit Facility increased $17.5 million compared to 2022.

The acquisition of Ramaco Coal helps to reduce royalty expenses associated with the Company’s metallurgical operations in the Appalachian basin and, along with the acquisition of Maben Coal, complement our existing low-vol portfolio, both of which help achieve the Company’s objective of remaining among the lowest cost producers of metallurgical coal in the U.S.

At December 31, 2024, we had $92.4 million of outstanding debts, or $88.6 million net of unamortized issuance costs.

Our indebtedness was comprised of $92.0 million of senior note debt ($88.1 million net of unamortized discounts and issuance costs) and $0.4 million of various equipment loans.

Of these amounts, $0.4 million is contractually due in 2025.

The Company’s outstanding debt decreased slightly by $1.6 million in 2024 as repayments of revolver borrowings, acquisition-related debt, and equipment loans were nearly offset by new senior note debt issued in the fourth quarter of 2024.

Revolver borrowings, which are typically used for the management of our normal operating cash position, were repaid in full at December 31, 2024.

The Company has also repaid in full all financing related to its previous acquisitions of Ramaco Coal and Maben Coal.

The Company completed a debt offering of $57.5 million, in the aggregate, of the 8.375% Senior Unsecured Notes due 2029 (the “Senior Notes due 2029”).

The Company incurred transaction-related fees of $2.3 million and third-party debt issuance costs of $0.8 million (including a small portion not yet funded at December 31, 2024).

These notes mature on November 30, 2029, unless redeemed prior to maturity.

The Senior Notes due 2029 bear interest at a rate of 8.375% per annum, which is payable quarterly in arrears.

The proceeds, net of transaction fees and debt issuance costs, are for general corporate purposes, including funding future investments, making capital expenditures, and funding working capital.

The acquisition of Ramaco Coal helps to reduce royalty expenses associated with the Company’s metallurgical operations in the Appalachian basin and, along with the acquisition of Maben Coal, complement our existing low-volatile portfolio, both of which help achieve the Company’s objective of remaining among the lowest cost producers of metallurgical coal in the U.S.

In addition, the acquisition of Ramaco Coal includes potential concentrations of rare earth elements and is being used to support the Company’s possible expansion into the manufacture and commercialization of advanced carbon products and materials from coal, both of which provide additional growth opportunities in the future.

The financing associated with the acquisition of Ramaco Coal, which was provided by a related party, was repaid in full during 2023.

Revolver borrowings are typically used for the management of our normal operating cash position.

Revolver borrowings that were outstanding at December 31, 2023 were repaid in full during January 2024.

In addition to the debts discussed above, the Company finances the payment of premiums associated with various insurance policies.

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Refer to Notes 7 and 8 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for additional information on indebtedness and leases.

As of December 31, 2023, our available liquidity was $90.6 million, comprised of $42.0 million of cash and cash equivalents and $48.6 million of availability under the Revolving Credit Facility for future borrowings.

Total current assets were in excess of total current liabilities, which included $42.5 million of revolver borrowings repaid in January 2024, by $19.7 million.

The metallurgical coal markets are volatile in nature;

therefore, the Company prioritizes managing its financial position and liquidity, while managing costs and capital expenditures and returning value to its shareholders.

On May 3, 2024, the Company entered into the First Amendment Agreement to the Second Amended and Restated Credit and Security Agreement in order to, among other things, extend the maturity date and increase the size of its existing Revolving Credit Facility.

The amended facility has a maturity date of May 3, 2029, and provides an initial aggregate revolving commitment of $200 million as well as an accordion feature to increase the size by an additional $75 million subject to certain terms and conditions, including the lenders’ consent.

The amended facility provides the Company with additional flexibility to pursue further growth in production while meeting normal operating

requirements.

The terms of the amended facility also require the Company to maintain certain covenants, including fixed charge coverage ratio and compensating balance requirements.

Borrowings under the amended facility may not exceed the borrowing base as determined under the amended formula included in the agreement.

At December 31, 2024, we had $33.0 million of cash and cash equivalents and $104.8 million of remaining availability under our Revolving Credit Facility for future borrowings.

Cash and cash equivalents include $7.5 million of compensating balances held in dedicated accounts to assure future credit availability under the revolver.

The Company is party to an arrangement that began in 2023 whereby our cash and cash equivalents are placed at various banks in amounts no greater than the $250,000 FDIC-insured limit to help safeguard against potential losses in the financial sector.

The Revolving Credit facility, which includes multiple lending parties and has a maturity date of February 15, 2026, provides added flexibility to the Company to pursue our strategic growth initiatives and manage our normal operating cash position as well as withstand potential changes in macroeconomic conditions.

The Company’s total current assets were $167.6 million and were in excess of total current liabilities by $45.2 million as of the balance sheet date.

The terms of the Revolving Credit Facility include covenants limiting the ability of the Company to incur additional indebtedness, make investments or loans, incur liens, consummate mergers and similar fundamental changes, make restricted payments, and enter into transactions with affiliates.

The terms of the facility also require the Company to maintain certain covenants, including fixed charge ratio and compensating balance requirements.

The terms of the facility also require the Company to maintain certain covenants, including fixed charge coverage ratio and compensating balance requirements.

A fixed charge coverage ratio of not less than 1.10:1.00, calculated as of the last day of each fiscal quarter, must be maintained by the Company.

In addition, the Company must maintain an average daily cash balance of $5 million, as determined on a monthly basis, in a dedicated account as well as an additional $1 million in a separate dedicated account to assure future credit availability.

In addition, the Company must maintain an average daily cash balance of $5.0 million, as determined on a monthly basis, in a dedicated account as well as an additional $1.5 million and $1.0 million in separate dedicated accounts to assure future credit availability.

At December 31, 2024, we were in compliance with all debt covenants under the Revolving Credit Facility.

Our primary use of cash includes capital expenditures for mine development, infrastructure, and equipment as well as ongoing operating expenses and repayment of financing associated with previous acquisitions.

As of the date of this Annual Report, we expect to fund our capital and liquidity requirements for the next twelve months and the reasonably foreseeable future with cash on hand, borrowings under the Revolving Credit Facility, and projected cash

flows from operations.

As stated earlier, our primary use of cash includes capital expenditures for mine development, infrastructure, and equipment as well as ongoing operating expenses.

Factors that could adversely impact our future liquidity and ability to carry out our capital expenditure program include the following:

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On September 1, 2023, the Company filed a shelf registration statement to sell any combination of Class A common stock, Class B common stock, preferred stock, depositary shares, debt securities, warrants, and rights at an aggregate initial offering price of up to $400.0 million, which was declared effective on September 29, 2023.

However, the Company has no specific plans to raise capital at this time and no securities may be sold until a prospectus supplement describing the method and terms of any future offering is delivered.

In March 2024, Ramaco initiated actions to extend the maturity date and increase the size of its existing Revolver facility.

The Company is targeting a $200 million facility with a $75 million accordion feature and a maturity date of five years from the closing date.

The Company hopes to achieve a successful syndication of the new facility during the second quarter of 2024, which would strengthen our liquidity and provide additional flexibility in support of the Company’s strategic initiatives and operations.

The shelf registration was utilized in part for the issuance of senior note debt in the fourth quarter of 2024 as discussed above.

Working Capital

Accounts receivable were $96.9 million at December 31, 2023, which increased $55.7 million versus December 31, 2022 driven by the $67.5 million increase in fourth quarter revenues.

Inventories were $37.2 million at December 31, 2023, which decreased $7.8 million versus December 31, 2022 driven by the logistical and rail challenges we experienced in 2022.

Accounts payable were $51.6 million at December 31, 2023, up from December 31, 2022 due to increased spending.

Accounts receivable were $73.6 million at December 31, 2024, which declined $23.3 million versus December 31, 2023 driven by the $31.8 million decrease in fourth quarter revenues year over year.

Inventories were $43.4 million at December 31, 2024, which were $6.2 million higher versus December 31, 2023 driven by increased production.

Accounts payable were $48.9 million at December 31, 2024, down slightly from December 31, 2023 due in part to variations in spending.

Capital Requirements

During 2022 we spent $123.0 million for capital additions, over 75% of which related to ongoing growth projects, including the increase in capacity to accommodate higher production levels at the Elk Creek and Berwind mining complexes.

During 2023 the Company spent $82.9 million on capital additions, a significantly lower amount versus 2022, as the Company has made substantial progress in achieving its growth initiatives.

We anticipate capital expenditures of approximately $53-63 million in 2024, which will likely be weighted more toward maintenance capital than growth capital and development projects.

The shift toward maintenance capital is due to the Company’s substantial investments in growth projects in previous periods and its progress to date regarding these initiatives.

Despite this shift, it should be noted that the Company entered into an agreement during February 2024 to purchase preparation plant assets for the Maben Complex at a price of $3 million.

The Company anticipates spending an additional $8 million in capital expenditures related to the plant in 2024.

These assets will be relocated to the Maben Complex and reassembled there for future use with the purpose of reducing the cost of transporting current raw coal production.

These assets will also provide the Company with a preparation facility to handle additional future production from a deep mine complex at Maben should the Company decide in the future to pursue such development.

During 2024 we spent $68.8 million for capital additions, including $13.6 million related to the preparation plant and expansion of our Maben Complex, compared to $82.9 million during 2023.

The decrease in 2024 was due largely due to the substantial progress made by the Company in achieving its initiatives to grow production.

We anticipate capital expenditures of approximately $60-70 million in 2025, which includes roughly $20 million of growth capital relating to increasing the per annum production run-rate at the Elk Creek Complex and increasing production at the Berwind mine.

Contractual Obligations

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Take-or-pay obligations represent those liquidated damage obligations as determined by contract volume minimums for transportation of coal at the representative rates of transportation or a portion thereof.

Additional take-or-pay commitments for the next annual period were renewed after the balance sheet date and have been excluded from the table above.

These commitments are estimated at approximately $14 million based on last year’s average rate.

Additional take-or-pay commitments are currently in negotiation and are not reflected in the table above.

Asset retirement obligations have been excluded from the table above.

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Refer to Critical Accounting Policies and Estimates below for additional information related to these obligations.

Refer also to Note 6 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for additional information related to accrued expenses and other long-term liabilities.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to certain off-balance sheet arrangements, such as bank letters of credit and performance or surety bonds.

Liabilities related to these arrangements are not reflected in consolidated balance sheets, and we do not expect any material adverse effects on our financial condition, results of operations, or cash flows to result from these arrangements.

Liabilities related to these arrangements are not reflected in consolidated balance sheets, and we do not expect any material adverse effects on our financial condition, results of operations, or

cash flows to result from these arrangements.

We primarily use surety bonds to secure our financial obligations related to reclamation and other matters.

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To the extent future revisions are made to the ARO liability, a corresponding adjustment is made to the related asset.

Our ARO liabilities at December 31, 2023 were nearly flat versus December 31, 2022 as the accretion of the liability during the year and the downward revision to estimates were mostly offsetting.

We lowered our inflation per year assumption from 3.75% used in 2022 to 3% in 2023 based on macroeconomic trends.

If our assumptions differ from actual experience, or if changes in the regulatory environment occur, our actual cash expenditures and costs that we incur could be materially different than currently estimated.

The inflation per year assumption used in the most recent estimate was approximately 3% based on a weighting of multiple indices.

Occupational Disease (Pneumoconiosis) Obligations .

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Inherent in the calculation are numerous assumptions and judgments including the ultimate costs, mortality factors, credit-adjusted discount rates, and timing of settlement.

These estimates are subject to uncertainty due to a variety of factors, including limited Ramaco-specific claim volume and future cost trends.

As a result, volatility in future estimates may occur and actual costs could differ significantly from the estimated amounts.

These estimates are subject to uncertainty due to a variety of factors, including limited Ramaco-specific claim volume, developments regarding medicine and treatment, and future cost trends.

As a result, volatility in future estimates may occur and actual costs

could differ significantly from the estimated amounts.

The Company recognized a $0.5 million actuarial gain in the fourth quarter of 2024 due in part to a 0.6% increase in the discount rate assumption.

Impairment of Long-lived Assets.

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Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which is generally at the mine level or at the mining complex level for mines that share infrastructure and/or developed access.

Additional judgment may be required for development properties.

Events and circumstances that may trigger a recoverability assessment include, but are not limited to, a current expectation that a long-lived asset will be disposed of significantly before the end of its previously estimated useful life, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in the physical condition of the asset(s), and an accumulation of costs significantly in excess of the amount originally expected.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis