Q3 2022 Ramaco Resources Inc Earnings Call
Good day and welcome to the <unk> resorts incorporated third quarter 2022 results conference call. All participants will be in a listen only mode. So do you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one.
On your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Jeremy Sussman. Please go ahead Sir.
Thank you on behalf of <unk> resources I'd like to welcome all of you to our third quarter 2022 earnings Conference call.
With me. This morning is Randy Atkins, our chairman and CEO , Chris Blanchard, our Chief operating officer, and Jason Fannin, 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 1095.
Forward looking statements represent <unk> expectations concerning future events.
These statements are subject to risks uncertainties and other factors many of which are outside of <unk> control, which could cause actual results to differ materially from the results discussed in the forward looking statements.
Any forward looking statements speak only as of the date on which it is made and except as required by law <unk> 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 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 in our press release.
Lastly, I'd encourage everyone on this call to go onto our website at <unk> resources Dot com and download today's investor presentation under the events calendar with that said, let me introduce our chairman and CEO Randy Atkins.
Thanks, Jeremy and good morning to all.
Q3 was another record quarter for us in fact, the first three quarters of 'twenty two we generated almost as much adjusted EBITDA as we did in the previous five years combined.
With that said our Q3 results came in below what we hoped.
Headwinds were due to the Berwyn admission event in July a 45% decline in seaborne coal pricing in the past few quarters.
And continued logistical rail and trucking challenges and shipping our coal.
With that said, we are positioned for both a record fourth quarter and full year 2022.
Here's a quick look at some of our accomplishments over the past quarter we.
We recently completed the rehab of our Berlin preparation plant.
This will immediately lower our cash cost moving forward as we no longer need to truck coal over 25 miles to our Knox Creek plant.
On the sales front, we are now fully sold out for 'twenty two at an average price of $211 per ton.
We have also successfully placed a good portion of our anticipated fourth quarter coal into European thermal markets.
For 2022, 23, we have placed roughly one 8 million tons or about 45% of expected production for sale and an average price of $210 per ton.
Next year, we project that over 60% of production will sell into export markets much of that at index based pricing.
Lastly in September we closed on the <unk> acquisition will.
We are beginning to bring that mine online and anticipated being a meaningful earnings contributor in 2023.
As we look down the road 2023, indeed looks to be more of a transformational year for us than even 2022.
Other reasons, we anticipate doubling production next year to roughly 4 million tons as compared to 2021 levels.
That should also reflect itself in a commensurate increase in our cash generation.
We previously guided that we would tailor our 2023 sales strategy strategy.
So whatever markets would yield the best netback pricing.
We have done that.
We committed a meaningfully lower amount of coal to traditional domestic steel mills in 2023, and a meaningful portion into Europe at fixed prices well above our domestic business.
On the back of these milestones we would like to provide an initial framework on our planned 2023 shareholder return program.
To understand our progression.
I would remind everyone that Q1 dollars 22 was the first time, we even paid a dividend on our stock, which we doubled before the first payments had been made.
It remains our intention to each year progressively increased dividends on all of our stock.
This summer we announced the second leg of shareholder return by filing to register a class B tracking stock.
This stock is now in the SEC registration and once it is effective we will be able to communicate more about this security.
Today, we are articulating a framework for the third leg of the stool, which is our future share buyback program, which we will address next month at our board meeting.
We are expecting to generate increasing amounts of free cash flow next year as our production ramps accordingly in 'twenty three we hope to commence a return of free cash flow towards share buybacks. In addition to our regular cash dividend.
We will continue to grow organic production from internal funds pay off the relatively limited that we have and pivot to execute on new production from the reserve acquisitions, we have made over the past year.
We now have a sufficient number of in house reserve product projects that we can internally grow without looking to new M&A opportunities.
We anticipate sufficient cash flow later in 'twenty three that will allow us to meet all our capex requirements for both normal maintenance and planned production capex.
As well as for our full debt repayment.
We also want to maintain a cash cushion of roughly $100 million and beyond that we anticipate allocating capital return to share repurchases after payment for regular cash dividends.
Specifically, we will propose taking the sum of the cash dividends paid on our shares and invest a ratable amount towards share repurchases. This.
This would of course be subject meeting our performance objectives and to approval by our board.
At today's stock price, we regard buybacks of our stock as an attractive financial proposition.
Importantly, as we return shareholder capital, we want to strike a strategic balance with long term plans for low cost organic production growth.
Our goal is to increase <unk> production substantially over what it is now we.
We feel there will be a continuing profitable future demand for high quality met coal for many years, yet we see a constrained growth in supply.
Our production growth as a relative new company will generate increasing amounts of cash flow available for capital return.
While Jason is going to talk in more detail I want to give some brief color as to what we are seeing in the markets today.
The ongoing events in Ukraine created an unusual dynamic where historic pricing between thermal and met coal inverted late this summer.
Over the past few months. This relationship has since largely moderated with met coal prices moving higher in API, two European thermal prices lower.
We recently spent time in London with several of our European customers and investors.
Our main takeaway is it in terms of having to replace Russian coal European utilities are covered through year end, but 2023 is a different story.
Many customers have focused on securing near term tons and have large open positions for next year.
Even with a drop in gas prices given global supply constraints, we struggled to see where the replacement tons will come from.
We anticipate an upward move in European thermal coal pricing, perhaps in early 'twenty three.
I would also like to point out that pricing for our main met products U S. High vol. A is remains resilient with current netback pricing around $225 per ton.
So in closing we remain on track to have a record year in 'twenty two.
This is despite a host of challenges so far such as labor tightness inflationary pressures logistical rail and trucking constraints and the berwyn ignition event.
We anticipate 2023 to be meaningfully more profitable than 'twenty, two with greater production and cash generation.
And we also look forward to returning increasing amounts of cash to our shareholders.
Now with that I would like to turn the floor over to the rest of the team to discuss more detail on finances operations and the market. So Jeremy please rundown of our financial metrics.
Thank you Randy I'll start by going over our third quarter 2022 financial highlights.
Adjusted EBITDA of $51 million was 185% higher than our previous Q3 record.
Net income of $27 million with 282% above our previous Q3 record.
Diluted EPS was <unk> 60 <unk>.
Just 16 in the third quarter of 2021 adjusted.
Adjusted EBITDA was negatively impacted by $5 million due to idle costs at our Berlin mind post the July admission event net income and EPS were negatively affected by $4 million <unk>, respectively.
I would like to take a moment to note that we have now generated almost as much net income and adjusted EBITDA through the first three quarters of 2022 is the prior five years combined.
Importantly, we anticipate 2023 results to be even better due to roughly 50% volume growth with almost half of our 2023 call already solved at very strong margins as Randy noted.
Unfortunately in the third quarter, we built another 56000 tons of inventory largely on the back of continued logistical issues, bringing the year to date inventory build to 235000 tons.
We anticipate the bulk of this inventory buildup to unwind in 2023 as logistical challenges hopefully ease.
Now turning to our full year 2022 outlook I would like to touch on a few of the key areas in our guidance tables.
We are lowering production guidance from two eight to $3 1 million tons to two 7% to $2 9 million tonnes.
We expect sales to come in roughly 200000 tons below production due largely to the aforementioned logistical challenges.
Midpoint of production guidance is down modestly at each of our three complexes as we have experienced a bit slower than anticipated production ramp at our new mines.
This is due to a number of factors such as labor and equipment availability. However.
However, I am pleased to report that we are now at over 700 employees compared to around 400 employees. This time last year.
We anticipate that our recent hiring successful yield meaningful increases in production as we move into 2023.
Second, we're increasing our cost guidance from 89% to $97 per ton.
To <unk> 98 to $102 per ton increase was the result of industry wide inflationary pressures such as continued high sales related and raw material costs.
However, we did start to see some of these pressures ease in the third quarter with overall costs down $8 per ton from the second quarter to $98 per ton.
Looking out across the landscape I believe our third quarter cost of $93 per ton at Elk Creek were among the lowest of the peer group, which is ultimately where we expect our costs to remain on a relative basis.
We continue to anticipate cost moving lower on stronger production moderating raw material prices and the positive impact from the startup of the Berwyn preparation plant.
Lastly on the 2022 guidance front, we are increasing our capex guidance from 105 to 125 million from 105 to 125 million to $120 million to $130 million.
$10 million increase at the midpoint is reflective of a switch from a contractor to an owner operator model at a couple of our smaller mines as well as general inflationary pressure on things like equipment.
Turning to our growth outlook, we're maintaining our medium term target of $6 5 million tonnes of production I'd.
I'd like to point, you to slide six and seven in our presentation. We continue to show our multi year production growth in detail with an expectation of producing 4 million tons in 2023 reflective of an early spring restarted our borrowing mine that we of course.
So we of course hope this occurred sooner.
I would note that some of this growth is still subject to board approval, which is dependent on market conditions.
As a reminder, slide seven details that we believe we can get to $6 5 million tons of production in 2025 at a very favorable capex intensity.
Specifically for a total of $95 million in growth capital split between 2023 and 2024, we anticipate completing our full buildout buildout of $6 5 million tons of annual production.
This is almost triple 2021 production of $2 2 million tonnes.
Importantly, as Randy detailed.
In addition to our industry, leading production growth profile, we continue to anticipate returning increasing amounts of cash to shareholders. While also maintaining a conservative balance sheet.
In short we view <unk> as both the growth story and a capital return story, which we believe positions us uniquely among our peers.
I would now like to turn the call over to our Chief operating Officer, Chris Blanchard Chris.
Thank you Jeremy.
Before delving into the discussion of the operations I want to recognize and congratulate the employees at our Elk Creek preparation plant for their continued excellence in safety performance.
Later this week they will be receiving the national Sentinel a safety award for outstanding safety performance in the large preparation plant category.
This is the second Sentinel Award.
<unk> Award awarded.
The <unk> operations in the past three years. These awards reflect <unk> commitment to excellence in safety performance and the attitude and safety culture that our employees have developed as they strive to work everyday accident free and in full compliance.
Now turning to some of our operational milestones.
At Elk Creek, we are beginning our upgrade and expansion of the Elk Creek Prep plant Ulf.
Ultimately this will raise the processing and shipping capacity of the out Creek complex by 50% annually to approximately 3 million tons per year.
We expect the work to be completed late in the first quarter of 2023.
We are budgeting, a conservative ramp of the processing rate, reaching full capacity at the plant by the end of the second quarter next year.
With that preparation plant work underway. We have also started ramping additional underground and surface production at our high Vol. Elk Creek complex to support the new capacity at the plant.
Because of the scarcity of skilled labor in the central Appalachian coal fields in advance of the completion of the plant upgrade we initiated staffing and production at the new underground sections.
This excess production began in the third quarter and will continue until the Elk Creek plant is commissioned that it's fully upgraded operational processing right.
This mine expansion. In addition to the continued rail challenges is what will lead to overall production being higher than sales in 2022.
With that said, we expect all of the additional inventory to be worked through by the end of 'twenty three.
We had another material milestone recently is the newly refurbished Berlin preparation plant processed its first of all coal.
While numerous delays push the startup of the plant out of the third quarter. We expect the point in full operation two shifts per day later in November .
Equally important we expect to load our first unit train from the complex in the next several days.
We started two additional mines at the Berlin complex during the quarter in both the Triple S surface mine and the Tri Ed number two underground mines are fully ramped and currently producing at budgeted levels in the fourth quarter.
Triple S will add to our growth while triad number two replaces our original triad mine.
We expect expect both operations to have multiple years of operation to complement the base OCA honest number four tons when the Berlin mine resumes operation.
Perhaps the biggest benefit of the plant startup at Berlin is the relief on trucking logistics and moving the raw tons from these operations to our Knox Creek preparation plant.
Now the mines at this complex will either built directly to the Berlin plant.
For the truck haul will be shortened by over two hours per round trip versus the Knox Creek plant.
Depending on each particular haul distance in Washington recovery.
The trucking savings will benefit these operations.
From between 15% to $30 per clean ton.
Additionally, this allows us to shift a scarce resource that have coal trucks and culture, our drivers to the shorter hauls and Knox Creek.
Finally, an update on our major projects I'm pleased to report that we have mobilized our new highwall miner unit to maiden and are in the process of assembling it onsite.
We expect to begin moving rock and clearing how walls for the highwall miner in the first quarter with production to follow shortly thereafter.
With that high level review of the new operations and projects I would like to now turn the call over to our Chief Commercial officer, Jason Fannin for a discussion on our view of the current and forward coal markets Jason.
Thanks, Chris and good morning, everyone I will share what we are seeing in the markets and our current and forward sales outlook.
Even though the coal markets pulled back during Q3 met coal prices as well as thermal coal prices remain elevated compared to historical levels. The forward curves for both also project continued high pricing throughout 2023.
While steel production and capacity utilization have eased on the back of a slower global macroeconomic environment.
Met coal supply continues to lag demand even in this environment, we see.
Still have persistently low spot met coal availability following years of Underinvestment in the Ms space.
We've also recently seen significant volumes of Mikkel crossing over to thermal and industrial applications.
That have provided strong price support to coking coal spot pricing.
The Australian premium low vol spot price is now at over $320 per metric ton.
The U S High vol. A spot prices currently assessed at $300 per metric ton.
Nearly 25% from its low point during August .
During much of Q3 U S High vol met coal pricing was strongly supported by the seaborne thermal market as Europe saw additional sources of thermal coals replace band Russian supply.
While Europe appears to be covered in terms of coal supply for the winter. We believe Europe remains under bought for 2023 expect to return to the market. During early next year driving continued supply tightness and additional pricing support in the medical space.
We are now fully sold out for 2022 and for the remainder of this year will focus on meeting delivery requirements in what remains a challenging logistics environment.
During Q3, we executed on our plan to diversify <unk> sales portfolio.
Glued additional industrial and niche specialty coal consumers.
We delivered several test shipments during Q3 with excellent results that have now translated into additional sales during Q4 as well as terms for 2023.
We expect these types of industrial and niche sales to become a significant part of our portfolio.
Looking closer at 2023, we have locked in committed sales of $1 8 million tons with.
With $1 4 million tons fixed at an average price of over $200 per ton.
Our committed volumes are a mix of domestic and seaborne sales to Miller, <unk> thermal and industrial customers.
Additionally, 2023 will be our biggest year on a percentage basis in terms of seaborne sales.
Which will comprise at least 60% of our sales versus about one third of our sales being seaborne this year.
Overall, we like the current market conditions as they apply to <unk>.
We continued to see a protracted imbalance of coking coal supply and demand, which.
Which is supportive of a protracted period of elevated coking coal pricing levels.
Also now see a European thermal market lacking supply certainty and looking to the U S for solutions.
With that said I would now like to return the call to the operator for the Q&A portion of the call operator.
Thank you we will now begin the question and answer session.
I ask a question you May press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.
At this time, we'll pause momentarily to assemble our roster.
And the first question will come from Curt Woodworth with credit Suisse. Please go ahead.
Yes, hi, good morning.
Good morning.
First question is just on the capital return progression and you made a comment about how you wanted to have consistent increases in the dividend and then I guess, a ratable level of buybacks can you I know you have obviously board level approval required but.
What are you thinking on that I'd like to do you plan to have kind of formulaic system, where you want to pay out 30%, 40% of net income and capital return or can you give any color on what the potential framework should look like going forward.
Yes, I think when we when we get to the board level, obviously, we will we will.
Tweak it perhaps somewhat.
We're looking at it right now.
As I mentioned registered.
A tracking stock which.
It will be paid out in addition to our regular dividend on our class a stock.
So we've got really two dividend payments, we're looking at and what we're thinking about right. Now is that when you would take both of those two dividend payments and add them up you would have X number.
And then we would think about paying an equal amount toward buybacks.
Once we have meets those relative.
Gating issues today yesterday late fourth.
That's how we're looking at it right now.
It's not a formula Matic X percent.
Im not sure that we can calculate that without better understanding pricing and things of that nature.
Okay.
That's fair and then with respect to the.
The hedge for the fixed price volume for next year.
Can you break that out in any more detail between.
How much thermal would be in there and then what is the mix of that I.
I think you said, one four between domestic and seaborne.
I'm going to let Jeremy take that one can we add Jeremy yes, so for the for the fixed price business Kurt.
It's a good mix of domestic steel business.
Plus some domestic industrial and actually some export thermal business in there.
And so thats about $1 4 million tons, and then we've talked about before.
400000 tons that index I'd say, that's mostly your kind of traditional export business are there. Although there is some there is some a little bit of export in there as well, but thats pretty small for clinically.
I think the interesting thing correct for us to 'twenty three as I highlighted is that the domestic steel business is lower than we historically have done in the past.
We just felt we could get a lot better realizations in other markets.
No that makes sense and then.
Just final one from me in terms of thinking about your.
Production cadence for next year, how do you think about how your production of a book fair.
First half versus second half and what you kind of think Youre X rate your exit rate in production would be.
Going into 'twenty four thanks, guys and best of luck.
Sure well I think I'll do the simple one first and then turn it over to Chris. So the exit rate is going to be at about a 4 million ton.
Run rate.
Are you actually probably a little bit higher than that but Chris go ahead and break it down.
Yeah.
So.
By the end of the year.
Probably be at an exit run rate of about.
$4 4 million the first half will be a little bit slower while we wait on the Elk Creek preparation plant upgrade.
So Elk Creek will be at.
And the year at 3 million tons of high Vol run rate.
And presuming a lot of assumptions on the Berlin restart.
Over 1 million there in that little less than $1 million at Knox Creek, where im right.
Curt I would say for modeling purposes, I mean, obviously you can back into our Q4 number and see that it's the highest.
Production figure for the year, but certainly below the.
The kind of the full year number for next year, which makes sense, given we're not including <unk> in there. So I would just say Simplistically speaking a few model production increases over the next X number of quarters that that's probably the right way of thinking about it.
Alright, great. Thanks very much.
And lastly, Curt not to not to belabor the point, but we've got a slide in our investor deck I think it's slide six which has got a pretty decent lay out of where we viewed production over the next let's call. It 36 months.
Which gives you the cadence there per year.
Understood. Thank you.
The next question will come from Lucas pipes with B Riley FBR. Please go ahead.
B Riley securities. Thank you operator and good good.
Everyone.
<unk>.
My first question is on the cost side in Q3.
Nice step into into the right direction and I'm wondering does this fully.
Reflect that.
The royalty benefits from.
The ceramic cocoa acquisition, and then into Q4 and into 2023.
Could you provide some color on what your cost expectations are thank you very much.
Thanks Lucas.
I'll start with this so yes short answer is Q3 does reflect the full benefit of.
Of the royalty.
Fitness.
Savings as it exists today, but remember we're ramping our Elk Creek plant from call.
Call It 2 million tons to 3 million tons. So as we produce more call at Elk Creek.
Incrementally, we should see more royalty savings move.
Moving forward, so I'd answer it both both of those.
Both of those ways.
Wei Elk Creek cash costs of $93 per ton.
Focus on that obviously more than and Berwyn, and Knox, where we're ramping up.
And.
I think we're one of the last to report I think you can kind of go through the others and I would put that up against.
Anyone on a relative basis, so I think Chris and the team did a fabulous job of.
Kind of getting us back to where where we think we fit in the overall cadence.
Okay, and then for 'twenty three yes, we are going through our budgeting process.
Right now, but certainly.
23 should be below 2022 levels, even at current prices.
We will have a full year of trucking savings with Irwin plant operational and economies of scale I mean, as I said, we've gotten a 700 employees today versus about 400. This time last year and obviously the mines are in ramp mode. So you didn't get that full incremental benefit on a produced ton per produced ton basis. So.
All in all I like the way our cadence looked in Q3, and I like where it looks heading into next year.
That's helpful. Thank you Dan.
Another question on the commercial side in terms of the index tons for 2023 is that right.
Medical index or API two in DNA.
Call you sold some thermal coal.
For the balance of the year, if I, if I remember right and I just wondered if that is fixed or floating with API too and how this might flow through in Q4. Thank you very much for the color.
Sure. This is Jason yes.
Thermal sales for the balance of this year.
There are mix, primarily they are tied to the index.
The back half of this year or 23 those.
Export steel customer sales are tied to met coal pricing indices very very small amount.
The API too.
Vast majority of that are tied to the U S medical industry.
Very helpful. Thank you and then for the balance of this year.
Can you remind us what what.
Quantum are we should we be thinking about for Q4 and again just to confirm does could also there'll be floating with where API two is today.
Thanks, Thanks for that Tom.
Yes, Lucas it's Jeremy here, so I mean, the majority of our thermal tons in Q4 as Jason said are floating with the API two index, we've got almost.
Next to no API, two floating exposure and in 2023.
The majority of the thermal business for next year is fixed.
Fixed.
Okay, Alright, I will leave it here really appreciate your color and best of luck.
The next question will come from Nathan Martin with Benchmark Company. Please go ahead.
Hi, Good morning, guys. Thanks for taking my question.
First maybe just a modeling question could you please share.
Split between domestic and export sales in the quarter and maybe what that might look like in the fourth quarter as we kind of back into the full year expectations.
Yes, so we were a bit more domestic in Q3.
70 30.
In Q4.
Probably a little bit less than that.
So.
Then.
This will be kind of Randy noted in his remarks.
B.
At least for the next five quarters Q4 will be the last one where were heavier on the domestic side.
But for the most part certainly next year will be at least 60% export.
<unk>.
Most of that ultimately will be tied to index pricing.
I appreciate that Jeremy and then.
Looking at the full year sales guidance, obviously, a little bit of decrease there.
Just wondering for some more color on there I mean anything on the operational side to consider or is it really still mainly challenging logistics.
Is that mostly rail mostly trucking as a bolus here why do you think there's a persistent when do you guys see that improving.
Hey, Chris.
A little bit of both on the trucking and rail we have had a buildup of clean tons on both railroads on the.
Hauling it to our customers, but we've also had challenges.
And we're all coal, particularly at our Knox Creek in Berlin operations before the startup of the Berlin plant.
Trucking it to our Knox Creek plant to get it process. So it's.
Not all on the railroad some of its other logistics and.
Frankly that there's a limited amount of coal trucks and cultural drivers in language scare so.
That's been a big challenge in the third quarter and the startup of the <unk> plant.
Largely eliminates that.
Exposure to.
That constraint.
Got it Chris Yeah that sounds like Thats coming on very timely.
And then maybe next just kind of looking at the borrowing line I think you guys mentioned.
Spring restart at the latest.
And I think full year 'twenty three production was pulled down a little bit I think it was roughly $4 3 million before now are roughly 4 million tons is that mainly for one and a delay there.
And then in regards to the idling costs that we saw $5 million in the quarter is that kind of a good run rate to assume for now.
So I'll take the first so most of the pull down in the production for next year is related to.
The late restart of Berlin.
Moving to full sections full year, we've got the first section coming on late in them very conservative ramp as we get back in there.
And then.
I would say the $5 million per quarter is a little bit light I think the fourth quarter will be a little bit higher and presuming. We go into full rehab mode does those numbers should increase a little bit until we restart demand.
I appreciate that color, Chris and then maybe just a final one and I know, it's a little early but.
Thinking about Capex first maybe how do we think about what maintenance capex looks like today, given some of the recent inflationary pressures and really just trying to think about early thoughts on what full year 'twenty three capex look like.
You guys had flagged around $55 million in the presentation for a potential growth spending.
It'd be great just to get an early thoughts there I appreciate it.
Thanks, Nate yeah. So.
You are correct about next year so.
We go ahead with all the projects that we've got laid out it's about $55 million of growth capital I think we kind of lift it on.
On slide seven.
Plus maintenance capital I mean, I guess, the way I look at maintenance capital and I'll, let Chris kind of cuts economy inflation is in a normal environment, it's about 7% or $8 a ton, but again some years, it's much lower than that some years, it's higher than that it depends on whether you've got more rebuilds.
Things of that nature. So I think that's a safe number to use over the cycle, but Chris you want to.
Touch on what Youre seeing Uninflated, alright, so obviously everything that we do on maintenance Capex.
It is not directly linked but its tied to steel pricing and theres a lag. So we have seen those prices increase issue probably.
We won't see as much decreases we'd like even next year.
But then as we ramp the company every year.
It just depends on the timing of equipment rebuilds and how they fall.
As we get larger and larger it those variations will smooth out and we'll get more to a no.
Routinely $78 a ton.
When we've been towards the smaller size some years. Its 12 some years, it's five but overall youll average to that $708 range.
Got it very helpful guys. Thanks for those thoughts I'll leave it there I appreciate the color and best of luck in the fourth quarter.
Thanks, Nick.
This concludes our question and answer session I would like to turn the conference back over to Mr. Randall Atkins for any closing remarks. Please go ahead Sir.
Alright, I just want to thank everybody for joining us today, and we'll look forward to speaking to you I guess the next year. So take care. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
Okay.