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Ramco Resources’ (METC - Free Report) board of directors approved an increase in the quarterly dividend rate of Class A shares by 10%. The revised first quarterly dividend will be 13.75 cents, payable on Mar 16, 2024, to shareholders of record at the close of business on Mar 1, 2024.
The company’s board of directors will update on the Class B share dividend after the completion of the company's year-end financials in February 2024.
Provides 2024 View
Ramco Resources expects its 2024 production volume in the range of 3.9-4.4 million tons. The company has the ability to vary the range of production levels largely depending on market demand and outlook.
As of Nov 30, 2023, Ramco Resources had sales commitments of more than 2 million tons for delivery in 2024. This consists of 1.3 million tons committed to North American customers at an average realized price of $167 per ton. The company additionally has 0.7 million tons committed at index-linked pricing for delivery to export customers.
Cash cost of sales in 2024 is expected to be in the range of $105-$111 per ton, as increased production levels are partially offset by inflationary cost pressure.
Ramco Resources expects its capital expenditure to be in the range of $45-$55 million and selling, general and administrative costs between $38 million and $42 million, excluding non-cash stock compensation. The company expects interest expense of less than $5 million and an effective tax rate of 20-25%. Ramco anticipates depreciation, depletion and amortization of $57-$63 million in 2024.
The company anticipates sharing more details about its Rare Earth Element (“REE”) findings early next year.
Long-term Goals
Ramco Resources anticipates increasing its coal production volumes to 6.5 million tons in the medium term. Nearly 80% of production at its anticipated 6.5 million tons level is expected to be higher quality Low Vol, Mid Vols and High Vol A coal, with the flexibility to change production based on market conditions.
The low-cost coal mines operated by the company provide it with a strategic advantage and boost margins, which is expected to continue in the long term.
Per the International Energy Agency, demand for REEs may grow as much as sevenfold by 2040. REEs are critical minerals essential to the energy transition and will act as a tailwind, supporting long-term growth.
Steel Production is Rising
Met coal is essential for producing steel. The increase in the production of steel globally will improve the prospects of the U.S. met coal producers and create more opportunities to export met coal.
Per The World Steel Association release, steel demand will grow by 1.8% in 2023 and reach 1,814.5 Mt after contracting by 3.3% in 2022. In 2024, steel demand will see a further increase of 1.9% to 1,849.1 Mt. The increasing demand for met coal will drive the performance of Ramco Resources, Peabody Energy (BTU - Free Report) , Arch Resources Inc. (ARCH - Free Report) and Warrior Met Coal (HCC - Free Report) , among others.
The Zacks Consensus Estimate for 2023 earnings of Peabody Energy and Warrior Met Coal has moved up 5.2% and 7.4%, respectively, in the last 90 days. The earnings estimate for Arch Resources has moved north 8.5% in the last 60 days.
Price Performance
Over the last six months, Ramco Resources’ shares have risen 105.2% compared with the industry’s 29.5% growth.
Image: Bigstock
Ramco Resources (METC) Raises Dividend, Provides 2024 Guidance
Ramco Resources’ (METC - Free Report) board of directors approved an increase in the quarterly dividend rate of Class A shares by 10%. The revised first quarterly dividend will be 13.75 cents, payable on Mar 16, 2024, to shareholders of record at the close of business on Mar 1, 2024.
The company’s board of directors will update on the Class B share dividend after the completion of the company's year-end financials in February 2024.
Provides 2024 View
Ramco Resources expects its 2024 production volume in the range of 3.9-4.4 million tons. The company has the ability to vary the range of production levels largely depending on market demand and outlook.
As of Nov 30, 2023, Ramco Resources had sales commitments of more than 2 million tons for delivery in 2024. This consists of 1.3 million tons committed to North American customers at an average realized price of $167 per ton. The company additionally has 0.7 million tons committed at index-linked pricing for delivery to export customers.
Cash cost of sales in 2024 is expected to be in the range of $105-$111 per ton, as increased production levels are partially offset by inflationary cost pressure.
Ramco Resources expects its capital expenditure to be in the range of $45-$55 million and selling, general and administrative costs between $38 million and $42 million, excluding non-cash stock compensation. The company expects interest expense of less than $5 million and an effective tax rate of 20-25%. Ramco anticipates depreciation, depletion and amortization of $57-$63 million in 2024.
The company anticipates sharing more details about its Rare Earth Element (“REE”) findings early next year.
Long-term Goals
Ramco Resources anticipates increasing its coal production volumes to 6.5 million tons in the medium term. Nearly 80% of production at its anticipated 6.5 million tons level is expected to be higher quality Low Vol, Mid Vols and High Vol A coal, with the flexibility to change production based on market conditions.
The low-cost coal mines operated by the company provide it with a strategic advantage and boost margins, which is expected to continue in the long term.
Per the International Energy Agency, demand for REEs may grow as much as sevenfold by 2040. REEs are critical minerals essential to the energy transition and will act as a tailwind, supporting long-term growth.
Steel Production is Rising
Met coal is essential for producing steel. The increase in the production of steel globally will improve the prospects of the U.S. met coal producers and create more opportunities to export met coal.
Per The World Steel Association release, steel demand will grow by 1.8% in 2023 and reach 1,814.5 Mt after contracting by 3.3% in 2022. In 2024, steel demand will see a further increase of 1.9% to 1,849.1 Mt. The increasing demand for met coal will drive the performance of Ramco Resources, Peabody Energy (BTU - Free Report) , Arch Resources Inc. (ARCH - Free Report) and Warrior Met Coal (HCC - Free Report) , among others.
The Zacks Consensus Estimate for 2023 earnings of Peabody Energy and Warrior Met Coal has moved up 5.2% and 7.4%, respectively, in the last 90 days. The earnings estimate for Arch Resources has moved north 8.5% in the last 60 days.
Price Performance
Over the last six months, Ramco Resources’ shares have risen 105.2% compared with the industry’s 29.5% growth.
Image Source: Zacks Investment Research
Zacks Rank
Ramco Resources currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.