ADA-ES: Advanced Emissions Solutions Reports Second Quarter Results

The following excerpt is from the company's SEC filing.

Refined Coal Distributions, Equipment Sales, and Stockholder Return Initiatives Highlights

Quarter Marked by Net Income of

Million or

per diluted share


August 7, 2017

GlobeNewswire - Advanced Emissions Solutions, Inc. (NASDAQ: ADES) (the "Company" or "ADES") today filed its Quarterly Report on Form 10-Q and reported financial results for the


quarter ended

June 30, 2017

, including information about its equity investment in Tinuum Group, LLC ("Tinuum Group") and Tinuum Services, LLC ("Tinuum Services") (collectively "Tinuum"), of which ADES owns

, respectively.

Tinuum & Refined Coal (“RC”) Highlights

Tinuum distributions to ADES were

$10.5 million

during the

quarter of

$25.2 million

year to date, up from

$20.8 million

in the first half of

Royalty earnings from Tinuum were

$1.9 million

for the second quarter of 2017, a

increase from the same quarter in

Tinuum invested tonnage was 10.5 million during the

compared to 9.4 million tons during the

Based on invested RC facilities as of

, expected future cash flows at ADES are between $225 million and $250 million through the end of 2021

During July 2017, completed the sale to a third-party investor of 49.9% of an RC project at a coal burning power plant that has historically burned in excess of 3.5 million tons of coal per year and is royalty bearing, increasing the number of invested facilities to 15.

ADES Consolidated Highlights

Recognized consolidated revenue of

$25.5 million

for the quarter, up

from the prior year's comparable quarter and primarily related to completion of historical equipment systems during the quarter

Reduced general and administrative operating costs (i.e., indirect operating costs) for the quarter by

$4.0 million

$7.8 million

for the comparable quarter in

Continued to validate and expand the chemicals business, which had

$0.8 million

in revenue during the quarter, an increase of

from the comparable quarter in

Achieved consolidated net income of

$6.4 million

Increased non-restricted cash balance to

$26.4 million

as of quarter-end, which is an increase of

$13.2 million


December 31, 2016

, even after stock repurchase

Executed steps to return value to stockholders through balanced capital allocation approach, including repurchase of

$12.9 million

of common shares and declaration of Company’s first quarterly dividend of $0.25 per share, resulting in total return to stockholders of

$18.2 million

Announced third quarter common stock dividend of $0.25 per share of approximately $5.3 million, payable on September 7, 2017

L. Heath Sampson, President and CEO of ADES commented, “Our second quarter was marked by strong equipment sales and another strong quarter of distributions from Tinuum Group, both of which were in line with our expectations.

In our Emissions Control segment, we continued to validate and invest in our chemicals business. Although the sales cycle and end-markets have proven to be competitive, we remain confident in our product offering based on a rapidly expanding pipeline, and reaffirm our target of achieving the previously outlined 20-40% share of the $100 million market opportunity within the next few years. Additionally, the quarter was highlighted by our shareholder return initiatives, including the successful tender offer as well as the announcement and initiation of a recurring quarterly dividend program. These two initiatives culminated in returning of over $18 million over the last few months, and returning value to our stockholders will remain a priority moving forward.”

Sampson concluded, “We are also excited Tinuum closed on an additional minority ownership in an RC project last week, which will provide us future tax credits given our shared ownership in the project through Tinuum, expected increase in future Tinuum distributions, and providing evidence of movement within the RC market. Our team and Tinuum remain focused on identifying additional tax-equity investors to monetize the remaining RC facilities. The political and tax environment, though tedious, are more favorable than last year, and the momentum behind our tax-equity investor pipeline has grown substantially more robust in recent months.

We continue to negotiate with both current and prospective tax-equity investors capable of investing in either one or multiple facilities and the cadence of these negotiations has become more favorable. As a result, we fully expect for those discussions to progress throughout the back half of the year.”


quarter revenues and costs of revenues were

$23.3 million

, respectively, compared with

$9.0 million

$5.8 million

. The increase in revenues was primarily due to the completion of equipment systems and stronger chemical sales.

quarter other operating expenses were

, a decrease of

. The decrease was largely driven by substantially lower legal and professional fees. Rent and occupancy and depreciation and amortization were also substantially lower from the comparable period in 2016, driven by the Company’s recent headquarters move, which led to reduced rent and fixed assets.

quarter earnings from equity method investments were

$10.2 million

, compared to

$13.8 million

. The decrease was driven by the timing of RC distributions received during the first and second quarters. Tinuum distributions to ADES for the first half of 2017 were

for the comparable period in

quarter royalty earnings from Tinuum were

$0.7 million

, due to increased earnings from the respective RC facilities.

quarter expenses related to the RC business were

$0.6 million

primarily due to lower interest expense. RC segment operating income was

$11.1 million

$14.2 million

. Revenues from the chemicals business were

during the second quarter, a

increase compared to

quarter consolidated interest expense was

$1.6 million

quarter income tax expense was

$3.6 million

$0.1 million

Consolidated net income for the

, primarily driven by equity earnings from the RC business and significantly reduced operating expenses in the EC business, as well as corporate expenses.

As of

, the Company had cash and cash equivalents of

, due primarily to Tinuum distributions and royalties and the release of restricted cash. The Company has released

$10.7 million

in restricted cash since


Today, the Board of Directors declared a quarterly cash dividend of $0.25 per share of common stock. The dividend is payable on September 7, 2017 to stockholders of record at the close of business on August 21, 2017.

Conference Call and Webcast Information

The Company has scheduled a conference call to begin at 9:00 a.m. Eastern Time on Tuesday,

August 8, 2017

. The conference call will be webcast live via the Investor section of ADES's website at

. Interested parties may also participate in the call by dialing (833) 227-5845 (Domestic) or (647) 689-4072 (International) conference ID 57992820. A supplemental investor presentation will be available on the Company's investor relations website prior to the start of the conference call.

About Advanced Emissions Solutions, Inc.

Advanced Emissions Solutions, Inc. serves as the holding entity for a family of companies that provide emissions solutions to customers in the power generation and other industries.

ADA-ES, Inc. (“ADA”) is a wholly-owned subsidiary of Advanced Emissions Solutions, Inc. (“ADES”) that provides emissions control solutions for coal-fired power generation and industrial boiler industries. With more than 25 years of experience developing advanced mercury control solutions, ADA delivers proprietary environmental technologies, equipment and specialty chemicals that enable coal-fueled boilers to meet emissions regulations. These solutions enhance existing air pollution control equipment, maximizing capacity and improving operating efficiencies. Our track record includes securing more than 30 US patents for emissions control technology and systems and selling the most activated carbon injection systems for power plant mercury control in North America. For more information on ADA, and its products and services, visit

Tinuum Group, LLC is a 42.5% owned joint venture by ADA that provides ADA’s patented Refined Coal CyClean™ technology to enhance combustion of and reduce emissions of NOx and mercury from coal in cyclone boilers and ADA’s patented M-45™ and patent pending M-45-PC™ technologies for Circulating Fluidized boilers and Pulverized Coal boilers respectively.

Caution on Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a “safe harbor” for such statements in certain circumstances. The forward-looking statements include projection on future RC cash flows, targets for capturing market share and expectations about closing additional facilities. These forward-looking statements involve risks and uncertainties. Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, timing of new and pending regulations and any legal challenges to or extensions of compliance dates of them; the US government’s failure to promulgate regulations or appropriate funds that benefit our business; changes in laws and regulations, accounting rules, prices, economic conditions and market demand; impact of competition; availability, cost of and demand for alternative energy sources and other technologies; technical, start up and operational difficulties; failure of the RC facilities to produce RC; termination of or amendments to the contracts for sale or lease of RC facilities; decreases in the production of RC; inability to commercialize our technologies on favorable terms; our inability to ramp up our operations to effectively address recent and expected growth in our business and achieve expected market share; loss of key personnel; potential claims from any terminated employees, customers or vendors; failure to satisfy performance guarantees; availability of materials and equipment for our businesses; intellectual property infringement claims from third parties; as well as other factors relating to our business, as described in our filings with the SEC, with particular emphasis on the risk factor disclosures contained in those filings. You are cautioned not to place undue reliance on the forward-looking statements and to consult filings we have made and will make with the SEC for additional discussion concerning risks and uncertainties that may apply to our business and the ownership of our securities. The forward-looking statements speak only as to the date of this press release.

Source: Advanced Emissions Solutions, Inc.

Investor Contact:

Alpha IR Group

Chris Hodges or Ryan Coleman



Advanced Emissions Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


(in thousands, except share data)


Current assets:

Cash and cash equivalents



Restricted cash


Receivables, net

Receivables, related parties, net

Costs in excess of billings on uncompleted contracts

Prepaid expenses and other assets

Total current assets



Property and equipment, net of accumulated depreciation of $1,541 and $2,920, respectively

Cost method investment

Equity method investments

Deferred tax assets



Other long-term assets

Total Assets




Current liabilities:

Accounts payable

Accrued payroll and related liabilities

Billings in excess of costs on uncompleted contracts

Legal settlements and accruals


Other current liabilities

Total current liabilities



Legal settlements and accruals, long-term

Other long-term liabilities

Total Liabilities



Commitments and contingencies (Note 6)

Stockholders’ equity:

Preferred stock: par value of $.001 per share, 50,000,000 shares authorized, none outstanding

Common stock: par value of $.001 per share, 100,000,000 shares authorized, 22,438,617 and 22,322,022 shares issued, and 21,076,726 and 22,024,675 shares outstanding at June 30, 2017 and December 31, 2016, respectively

Treasury stock, at cost: 1,370,891 and -0- shares as of June 30, 2017 and December 31, 2016, respectively


Additional paid-in capital



Accumulated deficit



Total stockholders’ equity



Total Liabilities and Stockholders’ Equity


Condensed Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share data)


Equipment sales





Consulting services and other

Total revenues




Operating expenses:

Equipment sales cost of revenue, exclusive of depreciation and amortization




Chemicals cost of revenue, exclusive of depreciation and amortization

Consulting services and other cost of revenue, exclusive of depreciation and amortization

Payroll and benefits

Legal and professional fees

General and administrative

Research and development, net

Depreciation and amortization

Total operating expenses





Operating loss





Other income (expense):

Earnings from equity method investments





Royalties, related party

Interest expense




Revision in estimated royalty indemnity liability

Total other income





Income before income tax expense




Income tax expense

Net income



Earnings per common share (Note 1):


Weighted-average number of common shares outstanding:









Cash dividends declared per common share outstanding:


Condensed Consolidated Statements of Cash Flows

in thousands)

Cash flows from operating activities

Adjustments to reconcile net income to net cash used in operating activities:

Debt prepayment penalty and amortization of debt issuance costs

Impairment of property, equipment, and inventory

Stock-based compensation expense



Gain on sale of equity method investment


Gain on settlement of note payable and licensed technology


Other non-cash items, net

Changes in operating assets and liabilities:

Related party receivables

Costs incurred on uncompleted contracts



Deferred tax asset, net





Billings on uncompleted contracts





Distributions from equity method investees, return on investment

Net cash used in operating activities



Cash flows from investing activities

Distributions from equity method investees in excess of cumulative earnings



Maturity of investment securities, restricted

Acquisition of property and equipment, net

Contributions to equity method investees

Proceeds from sale of equity method investment

Net cash provided by investing activities



Cash flows from financing activities

Borrowings on Line of Credit

Repayments on Line of Credit

Repayments on short-term borrowings and notes payable, related party


Short-term borrowing loan costs and debt prepayment penalty

Repurchase of common shares to satisfy tax withholdings

Net cash used in financing activities



Increase (decrease) in Cash and Cash Equivalents and Restricted Cash


Cash and Cash Equivalents and Restricted Cash, beginning of period



Cash and Cash Equivalents and Restricted Cash, end of period



Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid (refunded) for income taxes

Supplemental disclosure of non-cash investing and financing activities:

Stock award reclassification (liability to equity)

Settlement of RCM6 note payable


Non-cash reduction of equity method investment


Dividends payable

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

ADA-ES: Advanced Emissions Solutions Announces Leadership Transitions And Business Alignment Changes HIGHLANDS RANCH, Colorado, - May 3, 2018

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