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

- Company: [Ramaco Resources, Inc.](/companies/metc.md) (CIK 1687187)
- Form: 10-Q
- Filed: 2021-11-02
- Accepted by EDGAR: Nov 2, 2021, 16:08 ET
- Period: 2021-09-30
- Accession: 0001558370-21-014093
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1687187/000155837021014093/metc-20210930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1687187/000155837021014093/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-07-01 to 2021-09-30 | $76.4m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2021-01-01 to 2021-09-30 | $195.9m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2021-07-01 to 2021-09-30 | $54.8m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2021-01-01 to 2021-09-30 | $143.8m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2021-07-01 to 2021-09-30 | $5.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2021-01-01 to 2021-09-30 | $15.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-07-01 to 2021-09-30 | $8.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2021-01-01 to 2021-09-30 | $17.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2021-07-01 to 2021-09-30 | $933.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2021-01-01 to 2021-09-30 | $1.4m | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-07-01 to 2021-09-30 | $1.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2021-01-01 to 2021-09-30 | $1.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-07-01 to 2021-09-30 | $7.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-01-01 to 2021-09-30 | $21.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-07-01 to 2021-09-30 | $0.16 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2021-01-01 to 2021-09-30 | $0.48 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-07-01 to 2021-09-30 | $0.16 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2021-01-01 to 2021-09-30 | $0.48 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-07-01 to 2021-09-30 | 44,465 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2021-01-01 to 2021-09-30 | 43,996 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2021-01-01 to 2021-09-30 | $37.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2021-01-01 to 2021-09-30 | $17.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2021-09-30 | $46.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-09-30 | $102.5m | us-gaap:AssetsCurrent |
| Total assets | at 2021-09-30 | $299.1m | us-gaap:Assets |
| Current liabilities | at 2021-09-30 | $45.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2021-09-30 | $105.3m | us-gaap:Liabilities |
| Long-term debt | at 2021-09-30 | $2.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2021-09-30 | $5.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2021-09-30 | $193.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,398 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 September 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 approximately 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 third quarter of 2021, we sold 0.6 million tons of coal. Of this, 75% was sold in North American markets and 25% was sold in export markets, excluding Canada, principally to Europe, South America, Asia and Africa. During the third quarter of 2020, 69% of our sales were sold in North American markets, with the remaining 31% being sold into the export markets, excluding Canada.

At September 30, 2021, we had outstanding performance obligations for the remainder of 2021 of approximately 0.5 million tons for contracts with fixed sales prices averaging $84/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

*2022 Domestic Sales Contracts—*On October 26, 2021, Ramaco announced that it has completed 2022 sales negotiations to its North American steel customers. We have now contracted to sell 1.67 million tons of both low volatile and high volatile coal at an overall average price of roughly $196 per short ton FOB mine. These completed domestic sales represent approximately 54% of Ramaco’s projected 2022 production of 3.1 million tons.

*Coronado Asset Purchase Agreement—*On October 26, 2021, the Company entered into the Purchase Agreement with the Sellers, pursuant to which the Company will purchase certain assets from Sellers for an aggregate cash purchase price of $30 million. The closing of the transactions contemplated by the Purchase Agreement is subject to customary closing conditions. The Purchase Agreement contains representations, warranties and covenants from the Company that are customary for transactions of this type. The Acquisition is expected to close in mid-November 2021.

*Dividend Initiation Authorization—*On October 26, 2021, we announced that our Board of Directors (the “Board”) authorized the initiation of a regular quarterly dividend to be paid beginning in the first quarter of 2022. The amount of the dividend and timing of both the record date and payment date will be set at the Company’s Board meeting to be held in early December of 2021.

*Amendment of Revolving Credit Facility and Term Loan —*On October 29, 2021, the Company entered into an Amended and Restated Credit and Security Agreement (“the Credit Agreement Amendment”) with KeyBank, pursuant to which KeyBank agreed to increase the Company’s revolving line of credit under the Credit Agreement by $10 million to an aggregate of $40 million, of which no amounts were outstanding immediately prior to entering into the Credit Agreement Amendment. The Credit Agreement Amendment also extended the maturity date of the Revolving Credit Facility to December 31, 2024.

### Results of Operations

*(In thousands)*

| ​ ​ ​ Consolidated statement of operations data (unaudited) ​ | ​ ​ ​ ​ | ​ ​ Three months ended September 30, 2021 ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ 2020 ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- |
| Revenue | ​ | $76,377 | ​ | $39,459 | ​ | $195,889 | ​ | $117,769 | ​ |
| Costs and expenses | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Cost of sales (exclusive of items shown separately below) | ​ | 54,808 |  | ​ 35,689 |  | ​ 143,768 |  | ​ 96,758 |  |
| Asset retirement obligations accretion | ​ | ​ 156 |  | ​ 128 |  | ​ 461 |  | ​ 428 |  |
| Depreciation and amortization | ​ | 6,751 | ​ | ​ 5,258 | ​ | ​ 18,861 | ​ | ​ 15,601 | ​ |
| Selling, general and administrative | ​ | 5,895 | ​ | ​ 5,966 | ​ | ​ 15,767 | ​ | ​ 15,723 | ​ |
| Total costs and expenses | ​ | 67,610 | ​ | ​ 47,041 | ​ | ​ 178,857 | ​ | ​ 128,510 | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Operating income (loss) | ​ | 8,767 |  | ​ (7,582) |  | ​ 17,032 |  | ​ (10,741) |  |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Other income | ​ | 789 | ​ | ​ 1,743 | ​ | ​ 7,156 | ​ | ​ 11,456 | ​ |
| Interest expense, net | ​ | (933) | ​ | ​ (344) | ​ | ​ (1,418) | ​ | ​ (915) | ​ |
| Income (loss) before tax | ​ | ​ 8,623 | ​ | ​ (6,183) | ​ | ​ 22,770 | ​ | ​ (200) | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Income tax expense (benefit) | ​ | 1,588 |  | ​ (1,407) |  | ​ 1,650 |  | ​ (38) |  |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Net income (loss) | ​ | $7,035 | ​ | $(4,776) | ​ | $21,120 | ​ | $(162) | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Adjusted EBITDA | ​ | $17,805 | ​ | $637 | ​ | $47,429 | ​ | $19,863 | ​ |

In each of the three and nine month periods ended September 30, 2021, our net income and Adjusted EBITDA were significantly higher compared to the same periods in 2020. Sales volumes were 45% higher during the nine months ended September 30, 2021 than the same period during 2020, which was primarily a result of the effects of COVID-19. In the first nine months of 2021, we recognized a total of $5.4 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 fourth quarter of 2021. In the first nine months of 2020, we recognized $8.4 million in other income for the anticipated forgiveness of the PPP Loan.

#### Three Months Ended September 30, 2021 Compared to Three Months Ended September 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 September 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ | ​ ​ Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Coal sales revenue | ​ | $75,207 | ​ | $39,459 | ​ | $35,748 |
| Tons sold | ​ | 637 | ​ | 430 | ​ | 207 |
| Purchased from Third Parties | ​ |  | ​ |  | ​ |  |
| Coal sales revenue | ​ | $1,170 | ​ | $— | ​ | $1,170 |
| Tons sold | ​ | 7 | ​ | — | ​ | 7 |

Coal sales revenue in the third quarter of 2021 was $76.4 million, 94% higher than in the third quarter of 2020 primarily due to increased tons sold in the third quarter of 2021 and increased revenue per tons sold (FOB Mine). Revenue per ton sold (FOB mine) increased 35% from $78/ton in the third quarter of 2020 to $105/ton in the third quarter of 2021. We sold 644 thousand tons of coal in the third quarter of 2021, a 50% increase over the same period of 2020. We benefited from improved spot and index pricing for metallurgical coal in 2021. Additionally, favorable conditions in the steel and metallurgical markets contributed to an increased demand for metallurgical coal. We expect these conditions to continue in the next quarter.

*Cost of sales.* Our cost of sales totaled $54.8 million for the three months ended September 30, 2021 as compared with $35.7 million for the same period in 2020 due to significantly higher tons sold. The cash cost per ton sold (FOB mine) for the third quarter of 2021 was $72/ton, compared with $69/ton in the third quarter of 2020. Our cash cost per ton sold in the 2021 period was primarily due to higher sales-related costs directly associated with higher revenue per ton sold in 2021. Our cash cost per ton sold (FOB mine) of company produced tons for the third quarter of 2021 was $71/ton, compared with $69/ton in the third quarter of 2020.

*Asset retirement obligation accretion.* Asset retirement obligation accretion was $0.2 million for the three months ended September 30, 2021 and $0.1 million for the three months ended September 30, 2020.

*Depreciation and amortization.* Depreciation and amortization expense was $6.8 million and $5.3 million for the periods ended September 30, 2021 and September 30, 2020, respectively, primarily due to higher production volumes in the third quarter of 2021.

*Selling, general and administrative.* Selling, general and administrative expenses were $5.9 million for the three months ended September 30, 2021 and $6.0 million for the three months ended September 30, 2020.

*Other income.* Other income was $0.8 million for the three months ended September 30, 2021. For the three months ended September 30, 2020, other income was $1.7 million which includes $1.1 million for the PPP Loan forgiveness.

*Interest expense, net.* Interest expense, net was approximately $0.9 million during the three months ended September 30, 2021. Interest expense, net was approximately $0.3 million in the three months ended September 30, 2020. Interest expense, net was higher from the prior period primarily due to the issuance of the Notes in July 2021.

*Income tax expense.* During the three months ended September 30, 2021, we recognized a tax benefit of $0.2 million for legislative changes in Virginia and West Virginia . The effective tax rate for the three months ended September 30, 2021, excluding discrete items, was 21%. The effective tax rate for the three months ended September 30, 2020, excluding discrete items, was 23%. 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.

#### Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

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

*(In thousands)*

| ​ ​ Company Produced | ​ ​ | ​ ​ Nine months ended September 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ | ​ ​ Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: |
| Coal sales revenue | ​ | $190,211 | ​ | $117,769 | ​ | $72,442 |
| Tons sold | ​ | 1,707 | ​ | 1,208 | ​ | 499 |
| Purchased from Third Parties | ​ |  | ​ |  | ​ |  |
| Coal sales revenue | ​ | $5,678 | ​ | $— | ​ | $5,678 |
| Tons sold | ​ | 44 | ​ | — | ​ | 44 |

Coal sales revenue in the nine months ended September 30, 2021 was $195.9 million, 66% higher than in the same period of 2020 primarily due to increased tons sold in the third quarter of 2021 and increased revenues per ton sold (FOB mine). Revenue per ton sold (FOB mine) increased 13% from $87/ton in the nine months ended September 30, 2020 to $98/ton in the same period of 2021. We sold 1.8 million tons of coal in the nine month period ended September 30, 2021, a 45% increase over the same period of 2020.

*Cost of sales.* Our cost of sales totaled $143.8 million for the nine months ended September 30, 2021 as compared with $96.8 million for the same period in 2020 due to significantly higher tons sold. The cash cost per ton sold (FOB mine) for the first nine months of 2021 was $68/ton, compared with $70/ton in the same period of 2020. Improvement in our cash cost per ton sold in the nine months ended September 30, 2021 was primarily 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 nine months ended September 30, 2021 was $67/ton, compared with $70/ton in the nine months ended September 30, 2020.

*Asset retirement obligation accretion.* Asset retirement obligation accretion was $0.5 million for the nine months ended September 30, 2021 and $0.4 million for the nine months ended September 30, 2020.

*Depreciation and amortization.* Depreciation and amortization expense was $18.9 million and $15.6 million for the periods ended September 30, 2021 and September 30, 2020, respectively, primarily due to higher production volumes in the first nine months of 2021 and depreciation on capital equipment placed in service.

*Selling, general and administrative.* Selling, general and administrative expenses were $15.8 million for the nine months ended September 30, 2021 and $15.7 million for the nine months ended September 30, 2020.

*Other income.* Other income was $7.2 million for the nine months ended September 30, 2021 primarily due to the recognition of $5.4 million for the CARES Act Employee Retention Tax Credit. For the nine months ended September 30, 2020, other income was $11.5 million, which includes recognition of $8.4 million for the anticipated forgiveness of the PPP Loan.

*Interest expense, net.* Interest expense, net was approximately $1.4 million in the nine month period ended September 30, 2021 and $0.9 million for the same period in 2020.

*Income tax expense.* During the nine months ended September 30, 2021, we recognized a tax benefit of $1.6 million for legislative changes in Virginia and 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 nine months ended September 30,

2021, excluding discrete items, was 13% as compared with 19% in the comparable period of 2020. 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 September 30, 2021, we had $46.7 million of cash and cash equivalents and $27.1 million available under our existing credit agreements for future borrowings.

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

Sources of cash:

- Cash flows from operating activities were $37.8 million. This included a negative impact from the primary components of our working capital (accounts receivables, inventories and accounts payable) of a net $11.7 million, primarily associated with an increase of accounts receivable and accounts payable, and an increase in our inventories.

Uses of cash:

- Capital expenditures were $17.6 million, which were primarily for development of the Berwind mining complex and the Big Creek surface mine and for infrastructure at our Elk Creek mining complex.
- We made net borrowings of $23.3 million primarily due to the closing of our senior unsecured notes in early July 2021 and management of our normal operating cash position.

At September 30, 2021, we also had $1.0 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;
- Late payments 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 September 30, 2021, there was no amount outstanding under the Revolving Credit Facility and we had remaining availability of $27.1 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 $4.2 million at September 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 September 30, 2021, we were in compliance with all debt covenants under the Credit Agreement.

*Key Equipment Finance 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”). 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 Loan was $2.6 million at September 30, 2021.

*9.00% Senior Unsecured Notes due 2026—*On July 13, 2021, we completed an offering of $34.5 million, in the aggregate, of the Company’s 9.00% Senior Unsecured Notes due 2026 (the “Notes”), less $2.4 million for note offering costs. 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 outstanding principal balance under the Notes was $34.5 million at September 30, 2021.

*J. H. Fletcher & Co. Loan—*On July 23, 2021, we entered into an equipment loan with J. H. Fletcher & Co., as lender, in the principal amount of approximately $1.0 million for the financing of underground equipment (the “Fletcher Equipment Loan”). The Fletcher Equipment Loan bears interest at 0% per annum and is payable in 24 monthly installments of $40 thousand. The outstanding principal balance under the Fletcher Equipment Loan was approximately $0.8 million at September 30, 2021.

*Komatsu Financial Limited Partnership Loan—*On August 16, 2021, we entered into an equipment loan with Komatsu Financial Limited Partnership, as lender, in the principal amount of approximately $1.0 million for the financing of surface equipment (the “Komatsu Equipment Loan”). The Komatsu Equipment Loan bears interest at 4.6% per annum and is payable in 36 monthly installments of $36 thousand for the first six months and then at $28 thousand until maturity. The outstanding principal balance under the Komatsu Equipment Loan was approximately $1.0 million at September 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.

On July 29, 2021, we were notified by KeyBank that full forgiveness had been approved by the SBA.

### Off-Balance Sheet Arrangements

At September 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 (Loss) to Adjusted EBITDA | ​ ​ | ​ ​ Three months ended September 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 ​ | ​ | ​ ​ 2020 ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Net income (loss) | ​ | $7,035 | ​ | $(4,776) | ​ | $21,120 | ​ | $(162) | ​ |
| Depreciation and amortization | ​ | 6,751 | ​ | 5,258 | ​ | 18,861 | ​ | 15,601 | ​ |
| Interest expense, net | ​ | 933 | ​ | 344 | ​ | 1,418 | ​ | 915 | ​ |
| Income tax expense (benefit) | ​ | 1,588 | ​ | (1,407) | ​ | 1,650 | ​ | (38) | ​ |
| EBITDA | ​ | 16,307 | ​ | (581) | ​ | 43,049 | ​ | 16,316 | ​ |
| Stock-based compensation | ​ | 1,342 | ​ | 1,090 | ​ | 3,919 | ​ | 3,119 | ​ |
| Accretion of asset retirement obligation | ​ | 156 | ​ | 128 | ​ | 461 | ​ | 428 | ​ |
| Adjusted EBITDA | ​ | $17,805 | ​ | $637 | ​ | $47,429 | ​ | $19,863 | ​ |

*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 September 30, 2021 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended September 30, 2020 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $75,207 | ​ | $1,170 | ​ | $76,377 | ​ | $39,459 | ​ | $— | ​ | $39,459 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (8,549) | ​ | (209) | ​ | (8,758) | ​ | (6,051) | ​ | — | ​ | (6,051) |
| Non-GAAP revenue (FOB mine) | ​ | $66,658 | ​ | $961 | ​ | $67,619 | ​ | $33,408 | ​ | $— | ​ | $33,408 |
| Tons sold | ​ | 637 | ​ | 7 | ​ | 644 | ​ | 430 | ​ | — | ​ | 430 |
| Revenue per ton sold (FOB mine) | ​ | $105 | ​ | $138 | ​ | $105 | ​ | $78 | ​ | $— | ​ | $78 |

*(In thousands, except per ton amounts)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2020 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $190,211 | ​ | $5,678 | ​ | $195,889 | ​ | $117,769 | ​ | $— | ​ | $117,769 |
| Less: Adjustments to reconcile to Non-GAAP revenue (FOB mine) | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (23,624) | ​ | (1,180) | ​ | (24,804) | ​ | (12,611) | ​ | — | ​ | (12,611) |
| Non-GAAP revenue (FOB mine) | ​ | $166,587 | ​ | $4,498 | ​ | $171,085 | ​ | $105,158 | ​ | $— | ​ | $105,158 |
| Tons sold | ​ | 1,707 | ​ | 44 | ​ | 1,751 | ​ | 1,208 | ​ | — | ​ | 1,208 |
| Revenue per ton sold (FOB mine) | ​ | $98 | ​ | $103 | ​ | $98 | ​ | $87 | ​ | $— | ​ | $87 |

*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 September 30, 2021 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ ​ | ​ ​ Three months ended September 30, 2020 Company Produced ​ ​ | ​ ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Cost of sales | ​ | $53,928 | ​ | $880 | ​ | $54,808 | ​ | $35,689 | ​ | $— | ​ | $35,689 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (8,548) | ​ | (210) | ​ | (8,758) | ​ | (6,031) | ​ | — | ​ | (6,031) |
| Non-GAAP cash cost of sales | ​ | $45,380 | ​ | $670 | ​ | $46,050 | ​ | $29,658 | ​ | $— | ​ | $29,658 |
| Tons sold | ​ | 637 | ​ | 7 | ​ | 644 | ​ | 430 | ​ | — | ​ | 430 |
| Cash cost per ton sold | ​ | $71 | ​ | $97 | ​ | $72 | ​ | $69 | ​ | $— | ​ | $69 |

*(In thousands, except per ton amounts)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2021 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ | ​ ​ ​ | ​ ​ Nine months ended September 30, 2020 Company Produced ​ ​ | ​ ​ | ​ ​ Purchased Coal ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Cost of sales | ​ | $138,863 | ​ | $4,905 | ​ | $143,768 | ​ | $96,758 | ​ | $— | ​ | $96,758 |
| Less: Adjustments to reconcile to Non-GAAP cash cost of sales | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Transportation costs | ​ | (23,625) | ​ | (1,179) | ​ | (24,804) | ​ | (12,338) | ​ | — | ​ | (12,338) |
| Non-GAAP cash cost of sales | ​ | $115,238 | ​ | $3,726 | ​ | $118,964 | ​ | $84,420 | ​ | $— | ​ | $84,420 |
| Tons sold | ​ | 1,707 | ​ | 44 | ​ | 1,751 | ​ | 1,208 | ​ | — | ​ | 1,208 |
| Cash cost per ton sold | ​ | $67 | ​ | $85 | ​ | $68 | ​ | $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, 1,949 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 September 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 Nov 2, 2021.
Source: SEC EDGAR, the filing index for accession 0001558370-21-014093. Last ingested by Listed: Nov 3, 2026, 20:51 ET. No prices; not investment advice.