Ramaco Resources, Inc.

Ladies and gentlemen, welcome to the Ramica Resources, Inc. First Quarter 2022 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. If anyone should require assistance during the conference, please press star, then zero on your touch-tone telephone. I would now like to turn the conference over to your host. Mr. Jeremy Sussman, Chief Financial Officer. Sir, please go ahead.

Thank you. On behalf of Ramico Resources, I'd like to welcome all of you to our first quarter 2022 earnings conference call. With me this morning is Randy Atkins, our Chairman and CEO, Chris Blanchard, our Chief Operating Officer, and Jason Fanning, our Chief Commercial Officer. Before we start, I'd like to share our normal cautionary statement. Certain items discussed on today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Ramico's expectations concerning future events. These statements are subject to risks, uncertainties, and other factors, many of which are outside of Ramico's control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and except as required by law, Ramico does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss today in our press release. Lastly, I'd encourage everyone on this call to go onto our website, ramicoresources.com, and download today's investor presentation under the events calendar. With that said, let me introduce our chairman and CEO, Randy Atkins.

Thank you, Jeremy. As always, we look forward to discussing our Q1 results and some updates with everyone. These are indeed pleasant days to be in the met coal business, as long as you can dial out the noise from the stock market. Despite the backdrop of the immediate market turmoil, our quarterly earnings were a record. Indeed, we generated more net income in Q1 than for the entire year of 2021. To those concerned about any miss from consensus estimates, we will address that head on with this call. As of today, We have sold 2.4 million tons or about 70% of our 2022 sales. This assures us another record year. We still have 30% of remaining production or over a million tons left to sell, basically at index prices and into export markets. To address results, Q1 EBITDA of 64 million was not only a record quarter, but it was a double of our Q4 21 earnings. Like every other coal producer, last quarter was a woulda, shoulda, coulda quality based on substandard rail service. We were only able to load about 80% of planned shipments. The vast majority of the missed shipments were higher priced export index price business. Had we been able to load on schedule as contracted, that would have translated into an additional 23 million of EBITDA. These deferred earnings, so to speak, will now slip into future quarters. So far in 22, of our 2.4 million tons of committed sales, roughly 90% have already shipped or have priced. These sales now translate into roughly 330 million of EBITDA generated year-to-date, $235 million of net income and roughly $530 of earnings per share. For perspective, three months into the new year, we now have greater than four times more EBITDA and almost six times more net income than we did for the entire year of 2021. Again, we still have roughly a third of production left to sell to add to these figures. So looking beyond Q1, we expect to have an extremely strong and again record year on all fronts. The next three quarters of 22 promise to improve on Q1. We expect to increase the cadence of both production and market-based index sales in the second half. We will also recognize additional cost savings from both that increased production and royalty and sales expense reduction, which we'll talk about in a moment. Our remaining open sales tons should primarily head into export markets, which of course still are at record index pricing levels. Spot index pricing levels for the Atlantic seaborne continue to hold well. Yesterday, lowball was at $474 a ton. Indeed, our last lowball shipment printed at a premium of $510 per ton with a $400 per ton mine net back. We expect overall second half market conditions to remain strong. The underlying rationale for this stronger for longer dynamic we think will continue to persist for some extended period. The factors are, of course, very limited existing supply with no meaningful near-term new supply, continued strong demand, And now we stir in some looming disruptions in Q3 when Russian coal shipments into the EU finally stop in August. We are successfully executing on all our announced production increases and now hope to hit 3.4 million tons this year. We also hope to bump this to at least 4 million tons or more in 23. We are well along in adding our new prep plant processing capacity. Once increases at our Elk Creek and New Berwyn plants are complete, this will push our nameplate capacity to 5.5 million tons and possibly more. As I have said before, we can think of no other public coal group which is growing as fast, doubling current production, paying for it from internal funds, and simultaneously making meaningful shareholder returns of capital. This week, the Financial Times named us as the 303rd out of 500 fastest-growing companies in America. I self-servingly mention that fact because Tesla was ranked behind us at only 314. It's a very nice company to keep. We are also, of course, on this year to generate record levels of both free cash flow and cash buildup. This week, we announced our second regular base dividend. We also announced that we intend to register a new class of tracking stock, which is expected to receive a dividend based on the financial performance of the recently acquired assets of Ramico Coal. We intend to refer to this new business line as Core Resources, signifying its focus on carbon ore and rare earth elements. Since we will be filing a registration statement on this new security, I unfortunately cannot discuss it in any detail beforehand. We also sent out our first annual shareholder letter last month, which you might look at for some additional color. In it, I expounded on the fact that, unfortunately, from the standpoint of the stock market, the coal industry has a Rodney Dangerfield, we don't get much respect, feel to it. When you look at both Ramico and our peers, we all trade in an average EV multiple band of about two times consensus 22 EBITDA. Even companies making massive special cash dividends and buybacks are trading for a fraction of the five to 15 times EBITDA multiples of oil and gas, other energy groups, industrial or materials groups. And please do not get me started on commenting on multiples at rare earth element companies. I contend one reason for the industry's valuation lethargy is that the market does not deem that there is any effective endgame to our business. What I mean is that the larger coal industry has not been able to articulate a vision of how to transition in a world which penalizes anything that remotely looks like a greenhouse gas emitting business. This is unfortunately true whether you say you're in the met coal business, much less if you say you're a thermal producer. Almost 10 years ago, before it was either fashionable or we had even heard of the term ESG, we at Ramico started looking at alternative uses of coal beyond combustion. I want to comment on this as a lead-in to our approach to our recent Ramico coal purchases. We've been working for years with two of the national labs to develop some fascinating advanced carbon products and materials which use coal as a precursor. We started to refer to coal used this way as carbon ore, and we have started to build what we also call a carbon valley for coal in Wyoming. We've developed a large body of intellectual patent and licensing rights around these concepts. These advanced carbon products would basically allow for a much higher market price for coal as a base feedstock because of the higher value of the end product. It could become a third leg of the stool where coal or carbon ore could be used for power, for steel, or in the future for carbon products and materials. We've also built over the last 10 years a sizable fee-owned met coal reserve portfolio, which we now mine in the east. It throws off annual royalty income that should grow to over $20 to $25 million per year over the next 24 months at the forward curve. And it will continue for another 20 or more years. Since Ramico Resources now owns those reserves, it will let us avoid that royalty cost. Lastly, for several years we have been doing reserve assessments of our Powder River Basin coal. in partnership with the DOE's National Energy Technology Lab. We discovered about two years ago that we may be sitting on some very high concentrations of rare earth elements at our 500 million ton permitted brook mine in Wyoming. These are valuable medium and heavy quality REEs. They are found in both our coal seams as well as the clay over and under burdens. As we speak, we are currently doing an extensive coring analysis to determine a broader reserve assessment of both the extent and quantity of that reserve. We hope to have that assessment complete later this year. Indeed, when you look at all of these new Ramico coal assets, they can produce basic royalty-like income streams that are a lower risk form of passive income. These should trade more like a royalty security and therefore at substantially higher multiples than coal companies. We will continue to look at ways to unlock that value and provide it back to shareholders. And speaking of dividends, I realize that this has been a busy quarter on dividend and buyback announcements from other coal groups. Unfortunately, they have received mixed reaction from the markets. As I said, at Ramico, we are now on track to have our best year of cash generations. as you can calculate from the figures that I provided earlier. We still intend to consider an increase in our basic dividend level later this year, probably in the fourth quarter. At that time, we will also consider possible share buybacks, especially if our stock is in a low valuation environment. In the meantime, in Q3, we expect to make a dividend of a percentage of the new tracking core resources shares post the registration of that stock. Now with that, I'd like to turn the floor over to the rest of the team to dive into some more detail on finances, operations, and the market. So Jeremy, please run down our financial and some market metrics.