# Ramaco Resources, Inc.: Form 10-Q for the period ended Jun 30, 2021

- Company: [Ramaco Resources, Inc.](/companies/metc.md) (CIK 1687187)
- Form: 10-Q
- Filed: 2021-08-02
- Accepted by EDGAR: Aug 2, 2021, 16:06 ET
- Period: 2021-06-30
- Accession: 0001558370-21-009805
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1687187/000155837021009805/metc-20210630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1687187/000155837021009805/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-04-01 to 2021-06-30 | $76.1m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 6 months, 2021-01-01 to 2021-06-30 | $119.5m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2021-04-01 to 2021-06-30 | $57.8m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2021-01-01 to 2021-06-30 | $89.0m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2021-04-01 to 2021-06-30 | $5.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2021-01-01 to 2021-06-30 | $9.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-04-01 to 2021-06-30 | $7.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2021-01-01 to 2021-06-30 | $8.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2021-04-01 to 2021-06-30 | $283.0k | us-gaap:InterestExpense |
| Interest expense | 6 months, 2021-01-01 to 2021-06-30 | $485.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-04-01 to 2021-06-30 | $228.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2021-01-01 to 2021-06-30 | $62.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-04-01 to 2021-06-30 | $9.9m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2021-01-01 to 2021-06-30 | $14.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-04-01 to 2021-06-30 | $0.23 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2021-01-01 to 2021-06-30 | $0.32 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-04-01 to 2021-06-30 | $0.23 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2021-01-01 to 2021-06-30 | $0.32 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-04-01 to 2021-06-30 | 44,184 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2021-01-01 to 2021-06-30 | 43,816 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2021-01-01 to 2021-06-30 | $32.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2021-01-01 to 2021-06-30 | $8.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2021-06-30 | $19.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-06-30 | $57.8m | us-gaap:AssetsCurrent |
| Total assets | at 2021-06-30 | $247.1m | us-gaap:Assets |
| Current liabilities | at 2021-06-30 | $36.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-06-30 | $61.7m | us-gaap:Liabilities |
| Long-term debt | at 2021-06-30 | $3.1m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2021-06-30 | $4.9m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2021-06-30 | $185.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 30,835 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report, as well as the financial statements and related notes appearing elsewhere in this Quarterly Report. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. We caution you that our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences are discussed elsewhere in this Quarterly Report, particularly in the “Cautionary Note Regarding Forward-Looking Statements” and in our Annual Report under the heading “Item 1A. Risk Factors,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.*

### Overview

Our primary source of revenue is the sale of metallurgical coal. As of June 30, 2021, we had a 261-million-ton reserve base of high-quality metallurgical coal and a development portfolio including four primary properties. Our plan is to complete development of our existing properties and grow production to more than 4-4.5 million clean tons of metallurgical coal, subject to market conditions, permitting and additional capital deployment. We may make acquisitions of reserves or infrastructure that continue our focus on advantaged geology and lower costs.

The overall outlook of the metallurgical coal business is dependent on a variety of factors such as pricing, regulatory uncertainties and global economic conditions. Coal consumption and production in the U.S. have been driven in recent periods by several market dynamics and trends, such as the global economy, a strong U.S. dollar and accelerating production cuts.

During the second quarter of 2021, we sold 0.7 million tons of coal. Of this, 49% was sold in North American markets and 51% was sold in export markets, excluding Canada, principally to Europe, South America, Asia and Africa. During the second quarter of 2020, 85% of our sales were sold in North American markets, with the remaining 15% being sold into the export markets, excluding Canada.

At June 30, 2021, we had outstanding performance obligations for the remainder of 2021 of approximately 0.8 million tons for contracts with fixed sales prices averaging $86/ton and 0.1 million tons for contracts with index-based pricing mechanisms.

The Company was adversely affected by the deterioration and increased uncertainty in the macroeconomic outlook as a result of the impact of COVID-19. After the initial outbreak, we observed a declining demand for, and declines in the spot price of, metallurgical coal as business and consumer activity decelerated across the globe. Throughout 2021, we are seeing increases in demand from our primary customers, as the global economic recovery began. U.S. steel prices have also increased significantly due to this recovery and the effects from large-scale government stimulus measures.

We continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities.

### Recent Developments

*Completion of $34.5 million Senior Unsecured Notes Offering –* On July 13, 2021, we closed a public offering of our 9.00% Senior Unsecured Notes due 2026 (the “Notes”) having an aggregate principal amount of $34.5 million (the “Offering”). The Notes mature on July 30, 2026, unless redeemed prior to maturity. The Notes bear interest at a rate of 9.00% per annum, payable quarterly in arrears on the 30th day of January, April, July and October of each year, commencing on July 30, 2021. We may redeem the Notes in whole or in part, at our option, at any time on or after July

30, 2023, or upon certain change of control events, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to, but not including, the date of redemption.

The net proceeds from the Offering will be used for general corporate purposes, including funding future acquisitions and investments, making capital expenditures and funding working capital.

The Notes are listed on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “METCL.” Trading on the NASDAQ has commenced.

*Chubb Insurance Litigation—*On November 5, 2018, one of three raw coal storage silos that fed our Elk Creek plant experienced a partial structural failure. A temporary conveying system completed in late-November 2018 restored approximately 80% of the plant capacity. We completed a permanent belt workaround and restored the preparation plant to its full processing capacity in mid-2019. Our insurance carrier, Federal Insurance Company, disputed our claim for coverage based on certain exclusions to the applicable policy, and, therefore, on August 21, 2019, we filed suit against Federal Insurance Company and Chubb INA Holdings, Inc. in Logan County Circuit Court in West Virginia seeking a declaratory judgment that the partial silo collapse was an insurable event and required coverage under our policy. Defendants removed the case to the United States District Court for the Southern District of West Virginia, and upon removal, we substituted ACE American Insurance Company as a defendant in place of Chubb INA Holdings, Inc.

The case went to trial beginning on June 29, 2021. On July 15, 2021, the jury returned a verdict in favor of the Company for $7.7 million in compensatory damages and on July 16, 2021, made an additional award of $25.0 million for inconvenience and aggravation. The Company will seek to additionally recover its attorney’s fees and costs. This verdict is not final and may be subject to post-trial motions or appeal. We have, therefore, not recognized any gain related to this verdict as of June 30, 2021.

*SBA Paycheck Protection Program Loan –* On July 29, 2021 the Company was notified by KeyBank that its $8.4 million in loan proceeds from the SBA Paycheck Protection Program has been approved for full forgiveness by the SBA. This was in-line with our expectations, as we have previously noted that “We anticipated the full amount of the PPP Loan principal, together with accrued interest thereon, would be forgiven. Accordingly, we recognized $8.4 million as other income in the consolidated statement of operations.”

### Results of Operations

*(In thousands)*

| ​ ​ ​ Consolidated statement of operations data (unaudited) ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2021 ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Six months ended June 30, 2021 ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- |
| Revenue | ​ | $76,057 | ​ | $36,374 | ​ | $119,511 | ​ | $78,310 | ​ |
| Costs and expenses | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Cost of sales (exclusive of items shown separately below) | ​ | 57,762 |  | ​ 30,134 |  | ​ 88,958 |  | ​ 61,069 |  |
| Asset retirement obligations accretion | ​ | ​ 154 |  | ​ 159 |  | ​ 305 |  | ​ 300 |  |
| Depreciation and amortization | ​ | 5,955 | ​ | ​ 5,341 | ​ | ​ 12,110 | ​ | ​ 10,343 | ​ |
| Selling, general and administrative | ​ | 5,165 | ​ | ​ 5,039 | ​ | ​ 9,873 | ​ | ​ 9,756 | ​ |
| Total costs and expenses | ​ | 69,036 | ​ | ​ 40,673 | ​ | ​ 111,246 | ​ | ​ 81,468 | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Operating income (loss) | ​ | 7,021 |  | ​ (4,299) |  | ​ 8,265 |  | ​ (3,158) |  |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Other income | ​ | 3,432 | ​ | ​ 8,504 | ​ | ​ 6,367 | ​ | ​ 9,714 | ​ |
| Interest expense, net | ​ | (283) | ​ | ​ (293) | ​ | ​ (485) | ​ | ​ (572) | ​ |
| Income before tax | ​ | ​ 10,170 | ​ | ​ 3,912 | ​ | ​ 14,147 | ​ | ​ 5,984 | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Income tax expense | ​ | 228 |  | ​ 1,260 |  | ​ 62 |  | ​ 1,370 |  |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Net income | ​ | $9,942 | ​ | $2,652 | ​ | $14,085 | ​ | $4,614 | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Adjusted EBITDA | ​ | $18,084 | ​ | $10,811 | ​ | $29,624 | ​ | $19,228 | ​ |

In each of the three and six month periods ended June 30, 2021, our net income and Adjusted EBITDA were significantly higher compared to the same periods in 2020. Sales volumes were 42% higher during the six months ended June 30, 2021 than the same period during 2020, which was primarily a result of the effects of COVID-19. In the first half of 2021, we recognized a total of $5.3 million in other income for the CARES Act Employee Retention Tax Credit. The Company does not expect to qualify for the CARES Act Employee Retention Tax Credit in the third quarter of 2021. In the first half of 2020, we recognized $7.3 million in other income for the anticipated forgiveness of the PPP Loan.

#### Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

*Revenue*. Our revenue includes sales to customers of Company produced coal and coal purchased from third parties. We include amounts billed by us for transportation to our customers within revenue and transportation costs incurred within cost of sales. Revenue per ton sold (FOB mine) and cash cost per ton sold (FOB mine) each exclude the impact of transportation billings and costs.

Coal sales information is summarized as follows:

*(In thousands)*

| ​ ​ Company Produced | ​ ​ | ​ ​ Three months ended June 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ | ​ ​ Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Coal sales revenue | ​ | $73,211 | ​ | $36,374 | ​ | $36,837 |
| Tons sold | ​ | 664 | ​ | 362 | ​ | 302 |
| Purchased from Third Parties | ​ |  | ​ |  | ​ |  |
| Coal sales revenue | ​ | $2,846 | ​ | $— | ​ | $2,846 |
| Tons sold | ​ | 21 | ​ | — | ​ | 21 |

Coal sales revenue in the second quarter of 2021 was $76.1 million, 109% higher than in the second quarter of 2020 principally due to much higher tons sold in the second quarter of 2021. Revenue per ton sold (FOB mine) increased 7% from $91/ton in the second quarter of 2020 to $97/ton in the second quarter of 2021. We sold 686 thousand tons of coal in the second quarter of 2021, a 90% increase over the same period of 2020. We benefited from improved spot and index pricing for metallurgical coal in 2021.

*Cost of sales.* Our cost of sales totaled $57.8 million for the three months ended June 30, 2021 as compared with $30.1 million for the same period in 2020 due to significantly higher tons sold. The cash cost per ton sold (FOB mine) for the second quarter of 2021 was $70, compared with $74 in the second quarter of 2020. Improvement in our cash cost per ton sold in the 2021 period was principally due to higher production volumes which better leveraged our fixed costs. Our cash cost per ton sold (FOB mine) of company produced tons for the second quarter of 2021 was $69, compared with $74 in the second quarter of 2020.

*Asset retirement obligation accretion.* Asset retirement obligation accretion was $0.2 million for each of the three months ended June 30, 2021 and June 30, 2020.

*Depreciation and amortization.* Depreciation and amortization expense was $6.0 million and $5.3 million for the periods ended June 30, 2021 and June 30, 2020, respectively, principally due to higher production volumes in the second quarter of 2021.

*Selling, general and administrative.* Selling, general and administrative expenses were $5.2 million for the three months ended June 30, 2021 and $5.0 million for the three months ended June 30, 2020.

*Other income.* Other income was $3.4 million for the three months ended June 30, 2021 principally due to the recognition of $2.9 million for the CARES Act Employee Retention Tax Credit. For the three months ended June 30, 2020, other income was $8.5 million, which includes recognition of $7.3 million in anticipated forgiveness of the PPP Loan.

*Interest expense, net.* Interest expense, net was approximately $0.3 million in each of the three month periods ended June 30, 2021 and 2020.

*Income tax expense.* During the three months ended June 30, 2021, we recognized a tax benefit of $1.0 million for legislative changes in West Virginia and tax expense of $0.2 million for the excess of book expense over the tax deduction for vested restricted stock awards. The effective tax rate for the three months ended June 30, 2021, excluding discrete items, was 10%. The effective tax rate for the three months ended June 30, 2020, excluding discrete items, was 21%. The primary difference from the federal statutory rate of 21% is related to state taxes, permanent differences for non-deductible expenses and the difference in depletion expense between U.S. GAAP and federal income tax purposes.

Cash taxes paid for 2021 are expected to be less than $25 thousand.

#### Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

*Revenue*. Coal sales information is summarized as follows:

*(In thousands)*

| ​ ​ Company Produced | ​ ​ | ​ ​ Six months ended June 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ | ​ ​ Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Coal sales revenue | ​ | $115,004 | ​ | $78,310 | ​ | $36,694 |
| Tons sold | ​ | 1,071 | ​ | 778 | ​ | 293 |
| Purchased from Third Parties | ​ |  | ​ |  | ​ |  |
| Coal sales revenue | ​ | $4,507 | ​ | $— | ​ | $4,507 |
| Tons sold | ​ | 37 | ​ | — | ​ | 37 |

Coal sales revenue in the six months ended June 30, 2021 was $119.5 million, 53% higher than in the same period of 2020 principally due to much higher tons sold in 2021. Revenue per ton sold (FOB mine) increased 1% from $92/ton in the six months ended June 30, 2020 to $93/ton in the same period of 2021. We sold 1.1 million tons of coal in the six month period ended June 30, 2021, a 42% increase over the same period of 2020.

*Cost of sales.* Our cost of sales totaled $89.0 million for the six months ended June 30, 2021 as compared with $61.1 million for the same period in 2020 due to significantly higher tons sold. The cash cost per ton sold (FOB mine) for the first half of 2021 was $66, compared with $70 in the same period of 2020. Improvement in our cash cost per ton sold in the six months ended June 30, 2021 was principally due to higher production volumes which better leveraged our fixed costs. Our cash cost per ton sold (FOB mine) of company produced tons for the six months ended June 30, 2021 was $65, compared with $70 in the six months ended June 30, 2020.

*Asset retirement obligation accretion.* Asset retirement obligation accretion was $0.3 million for each of the six months ended June 30, 2021 and June 30, 2020.

*Depreciation and amortization.* Depreciation and amortization expense was $12.1 million and $10.3 million for the periods ended June 30, 2021 and June 30, 2020, respectively, principally due to higher production volumes in the first half of 2021 and depreciation on capital equipment placed in service.

*Selling, general and administrative.* Selling, general and administrative expenses were $9.9 million for the six months ended June 30, 2021 and $9.8 million for the six months ended June 30, 2020.

*Other income.* Other income was $6.4 million for the six months ended June 30, 2021 principally due to the recognition of $5.3 million for the CARES Act Employee Retention Tax Credit. For the six months ended June 30, 2020, other income was $9.7 million, which includes recognition of $7.3 million for the anticipated forgiveness of the PPP Loan.

*Interest expense, net.* Interest expense, net was approximately $0.5 million in the six month period ended June 30, 2021 and $0.6 million for the same period in 2020.

*Income tax expense.* During the six months ended June 30, 2021, we recognized a tax benefit of $1.4 million for legislative changes in West Virginia and tax expense of $0.2 million for the excess of book expense over the tax deduction for vested restricted stock awards. The effective tax rate for the six months ended June 30, 2021, excluding discrete items, was 9%. The effective tax rate for the six months ended June 30, 2020 was 16%. The primary difference from the federal statutory rate of 21% is related to state taxes, permanent differences for non-deductible expenses and the difference in depletion expense between U.S. GAAP and federal income tax purposes.

Cash taxes paid for 2021 are expected to be less than $25 thousand.

### Liquidity and Capital Resources

At June 30, 2021, we had $19.4 million of cash and cash equivalents and $30.0 million available under our existing credit agreements for future borrowings.

#### Significant sources and uses of cash during the first six months of 2021

Sources of cash:

- Cash flows from operating activities were $32.9 million. This included a positive impact from the primary components of our working capital (accounts receivables, inventories and accounts payable) of a net $3.4 million, primarily associated with collection of accounts receivable and an increase in accounts payable, partially offset by an increase in our inventories.

Uses of cash:

- Capital expenditures were $8.6 million principally for development of the Berwind mining complex and for infrastructure at our Elk Creek mining complex.
- We made net repayments of borrowings of $9.4 million principally to manage our normal operating cash position.

At June 30, 2021, we also had $0.8 million of restricted cash balances, classified in other current assets in the condensed consolidated balance sheets, for potential future workers’ compensation claims.

#### Future sources and uses of cash

Our primary use of cash includes capital expenditures for mine development and for ongoing operating expenses. We expect to fund our capital and liquidity requirements with cash on hand, anticipated cash flows from operations and borrowings discussed in more detail below. We believe that current cash on hand, cash flow from operations and available liquidity under our existing credit agreements will be sufficient to meet our capital expenditure and operating plans.

Additional factors that could adversely impact our future liquidity and ability to carry out our capital expenditure program include:

- Timely delivery of our product by rail and other transportation carriers;
- Timely payment of accounts receivable by our customers;
- Cost overruns in our purchases of equipment needed to complete our mine development plans;
- Delays in completion of development of our various mines, processing plants and refuse disposal facilities, which would reduce the coal we would have available to sell and our cash flow from operations; and
- Adverse changes in the metallurgical coal markets that would reduce the expected cash flow from operations.

If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may reduce our expected level of capital expenditures and/or fund a portion of our capital expenditures through the issuance of debt or equity securities, the entry into debt arrangements or from other sources, such as asset sales.

#### Indebtedness

*Revolving Credit Facility and Term Loan—*On November 2, 2018, we entered into the Credit Agreement with KeyBank. The Credit Agreement was amended on February 20, 2020 and on March 19, 2021, and consists of Term Loan and the Revolving Credit Facility. All personal property assets, including, but not limited to accounts receivable, coal inventory and certain mining equipment are pledged to secure the Credit Agreement.

The Revolving Credit Facility has a maturity date of December 31, 2023 and bears interest based on LIBOR + 2.0% or Base Rate + 1.5%. Base Rate is the highest of (i) KeyBank’s prime rate, (ii) Federal Funds Effective Rate + 0.5%, or (iii) LIBOR + 2.0%. Advances under the Revolving Credit Facility are made initially as base rate loans, but may be converted to LIBOR rate loans at certain times at our discretion. At June 30, 2021, there was no amount outstanding under the Revolving Credit Facility and we had remaining availability of $30.0 million.

The Term Loan is secured under a Master Security Agreement with a pledge of certain underground and surface mining equipment, bears interest at LIBOR + 5.15% and is required to be repaid in monthly installments of $278 thousand including accrued interest. The outstanding principal balance under the Term Loan was $5.0 million at June 30, 2021.

The Credit Agreement contains usual and customary covenants including limitations on liens, additional indebtedness, investments, restricted payments, asset sales, mergers, affiliate transactions and other customary limitations, as well as financial covenants. At June 30, 2021, we were in compliance with all debt covenants under the Credit Agreement.

*Equipment Financing Loan—*On April 16, 2020, we entered into an equipment loan with Key Equipment Finance, a division of KeyBank, as lender, in the principal amount of approximately $4.7 million for the financing of existing underground and surface equipment. The equipment loan bears interest at 7.45% per annum and is payable in 36 monthly installments of $147 thousand. There is a 3% premium for prepayment of the note within the first 12 months. This premium declines by 1% during each successive 12-month period. The outstanding principal balance under the Equipment Financing Loan was $3.0 million at June 30, 2021.

*SBA Paycheck Protection Program Loan—* On April 20, 2020, we received proceeds from the PPP Loan in the amount of approximately $8.4 million from KeyBank, as lender, pursuant to the PPP of the CARES Act. The purpose of the PPP is to encourage the continued employment of workers. We used all of the PPP Loan proceeds for eligible payroll expenses, lease, interest and utility payments.

As of June 30, 2021, our application for forgiveness was approved by KeyBank. On July 29, 2021, we were notified by KeyBank that full forgiveness has been approved by the SBA. See Note 13 for more information.

*9.00% Senior Unsecured Notes due 2026 –* On July 13, 2021, we closed a public Offering of our 9.00% Senior Unsecured Notes due 2026 having an aggregate principal amount of $34.5 million (the “Notes”). The Notes mature on July 30, 2026, unless redeemed prior to maturity. The Notes bear interest at a rate of 9.00% per annum, payable quarterly in arrears on the 30th day of January, April, July and October of each year, commencing on July 30, 2021. We may redeem the Notes in whole or in part, at our option, at any time on or after July 30, 2023, or upon certain change of control events, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to, but not including, the date of redemption.

We intend to use the net proceeds from the Offering for general corporate purposes, including funding future acquisitions and investments, making capital expenditures and funding working capital.

### Off-Balance Sheet Arrangements

At June 30, 2021, we had no material off-balance sheet arrangements.

### Non-GAAP Financial Measures

*Adjusted EBITDA -* Adjusted EBITDA is used as a supplemental non-GAAP financial measure by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance.

We define Adjusted EBITDA as net income plus net interest expense, stock-based compensation, depreciation and amortization expenses and any transaction related costs. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.

*(In thousands)*

| ​ ​ Reconciliation of Net Income to Adjusted EBITDA | ​ ​ | ​ ​ Three months ended June 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net income | ​ | $9,942 | ​ | $2,652 | ​ | $14,085 | ​ | $4,614 | ​ |
| Depreciation and amortization | ​ | 5,955 | ​ | 5,341 | ​ | 12,110 | ​ | 10,343 | ​ |
| Interest expense, net | ​ | 283 | ​ | 293 | ​ | 485 | ​ | 572 | ​ |
| Income tax expense | ​ | 228 | ​ | 1,260 | ​ | 62 | ​ | 1,370 | ​ |
| EBITDA | ​ | 16,408 | ​ | 9,546 | ​ | 26,742 | ​ | 16,899 | ​ |
| Stock-based compensation | ​ | 1,522 | ​ | 1,106 | ​ | 2,577 | ​ | 2,029 | ​ |
| Accretion of asset retirement obligation | ​ | 154 | ​ | 159 | ​ | 305 | ​ | 300 | ​ |
| Adjusted EBITDA | ​ | $18,084 | ​ | $10,811 | ​ | $29,624 | ​ | $19,228 | ​ |

*Non-GAAP revenue per ton -* Non-GAAP revenue per ton (FOB mine) is calculated as coal sales revenue less transportation costs, divided by tons sold. We believe revenue per ton (FOB mine) provides useful information to investors as it enables investors to compare revenue per ton we generate against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal prices from period to period excluding the impact of transportation costs which are beyond our control. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Revenue per ton sold (FOB mine) is not a measure of financial performance in accordance with U.S. GAAP and therefore should not be considered as an alternative to revenue under U.S. GAAP.

*(In thousands, except per ton amounts)*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2021 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2020 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $73,211 | ​ | $2,846 | ​ | $76,057 | ​ | $36,374 | ​ | $— | ​ | $36,374 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (9,273) | ​ | (549) | ​ | (9,822) | ​ | (3,454) | ​ | — | ​ | (3,454) |
| Non-GAAP revenue (FOB mine) | ​ | $63,938 | ​ | $2,297 | ​ | $66,235 | ​ | $32,920 | ​ | $— | ​ | $32,920 |
| Tons sold | ​ | 664 | ​ | 21 | ​ | 686 | ​ | 362 | ​ | — | ​ | 362 |
| Revenue per ton sold (FOB mine) | ​ | $96 | ​ | $109 | ​ | $97 | ​ | $91 | ​ | $— | ​ | $91 |

*(In thousands, except per ton amounts)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2021 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2020 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $115,004 | ​ | $4,507 | ​ | $119,511 | ​ | $78,310 | ​ | $— | ​ | $78,310 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (15,077) | ​ | (969) | ​ | (16,046) | ​ | (6,560) | ​ | — | ​ | (6,560) |
| Non-GAAP revenue (FOB mine) | ​ | $99,927 | ​ | $3,538 | ​ | $103,465 | ​ | $71,750 | ​ | $— | ​ | $71,750 |
| Tons sold | ​ | 1,071 | ​ | 37 | ​ | 1,108 | ​ | 778 | ​ | — | ​ | 778 |
| Revenue per ton sold (FOB mine) | ​ | $93 | ​ | $96 | ​ | $93 | ​ | $92 | ​ | $— | ​ | $92 |

*Non-GAAP cash cost per ton sold -* Non-GAAP cash cost per ton sold is calculated as cash cost of sales less transportation 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. The adjustments made to arrive at these measures are significant in understanding and assessing our financial condition. Cash cost per ton sold is not a measure of financial performance in accordance with U.S. GAAP and therefore should not be considered as an alternative to cost of sales under U.S. GAAP.

*(In thousands, except per ton amounts)*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2021 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended June 30, 2020 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Cost of sales | ​ | $55,298 | ​ | $2,464 | ​ | $57,762 | ​ | $30,134 | ​ | $— | ​ | $30,134 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (9,274) | ​ | (549) | ​ | (9,823) | ​ | (3,201) | ​ | — | ​ | (3,201) |
| Non-GAAP cash cost of sales | ​ | $46,024 | ​ | $1,915 | ​ | $47,939 | ​ | $26,933 | ​ | $— | ​ | $26,933 |
| Tons sold | ​ | 664 | ​ | 21 | ​ | 686 | ​ | 362 | ​ | — | ​ | 362 |
| Cash cost per ton sold | ​ | $69 | ​ | $91 | ​ | $70 | ​ | $74 | ​ | $— | ​ | $74 |

*(In thousands, except per ton amounts)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2021 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2020 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Cost of sales | ​ | $84,932 | ​ | $4,026 | ​ | $88,958 | ​ | $61,069 | ​ | $— | ​ | $61,069 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (15,074) | ​ | (970) | ​ | (16,044) | ​ | (6,307) | ​ | — | ​ | (6,307) |
| Non-GAAP cash cost of sales | ​ | $69,858 | ​ | $3,056 | ​ | $72,914 | ​ | $54,762 | ​ | $— | ​ | $54,762 |
| Tons sold | ​ | 1,071 | ​ | 37 | ​ | 1,108 | ​ | 778 | ​ | — | ​ | 778 |
| Cash cost per ton sold | ​ | $65 | ​ | $83 | ​ | $66 | ​ | $70 | ​ | $— | ​ | $70 |

## Market risk

As filed, 167 characters.

Quantitative and qualitative disclosures about market risk are included in Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” of our Annual Report.

## Controls and procedures

As filed, 1,944 characters.

### Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report, at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities and migrating processes.

There were no significant changes in our system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 725 characters.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our Annual Report and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our business, financial condition, cash flows or future results of operations.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our Annual Report.

Filed Aug 2, 2021.
Source: SEC EDGAR, the filing index for accession 0001558370-21-009805. Last ingested by Listed: Nov 3, 2026, 20:51 ET. No prices; not investment advice.