Attached files
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| 8-K - FORM 8-K - ADA-ES INC | d8k.htm |
 Creating a
Future with Cleaner Coal
Investor Presentation
February 2011
NASDAQ:ADES
Exhibit 99.1 |
 Please
note
that
this
presentation
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,
but
will
not
necessarily
be
limited
to,
statements
or
expectations
regarding
amount
and
timing
of
future
tax
credits,
revenues,
operating
income,
cash
flows,
legal
expenses
and
other
financial
measures;
timelines
for
our
projects;
scope,
timing
and
impact
of
anticipated
regulations
and
legislation;
future
supply
and
demand;
and
timing
of
the
Norit
arbitration.
These
statements
are
based
on
current
expectations,
estimates,
projections,
beliefs
and
assumptions
of
our
management.
Such
statements
involve
significant
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,
changes
in
laws
and
regulations,
government
funding,
prices,
economic
conditions
and
market
demand;
timing
of
regulations
and
any
legal
challenges
to
them;
negative
outcomes
in
the
Norit
Arbitration;
impact
of
competition;
lack
of
working
capital;
availability,
cost
of
and
demand
for
alternative
energy
sources
and
other
technologies;
technical,
start-up
and
operational
difficulties;
inability
to
commercialize
our
technologies
on
favorable
terms;
additional
risks
related
to
ADA
Carbon
Solutions
including
lack
of
continued
funding
and
failure
to
raise
additional
financing,
demand
of
payment
on
existing
loans
and
other
obligations,
inability
to
obtain
permits,
our
lack
of
control
and
further
dilution
of
our
interest,
changes
in
the
costs
and
timing
of
full
commercial
operations
at
the
AC
plant;
additional
risks
related
to
Clean
Coal
Solutions,
LLC
including
failure
of
its
leased
facilities
to
continue
to
produce
coal
which
qualifies
for
IRS
Section
45
tax
credits,
termination
of
the
leases
for
such
facilities,
decreases
in
the
production
of
refined
coal
by
the
lessee,
seasonality
and
failure
to
build
new
facilities
to
meet
the
recently
extended
Section
45
tax
credit
placed-in-service
date
for
IRS
Section
45
tax
credits;
our
inability
to
come
to
terms
with
additional
industry
partners
in
our
DOE
CO2
capture
technology
project;
availability
of
raw
materials
and
equipment
for
our
businesses;
loss
of
key
personnel;
and
other
factors
discussed
in
greater
detail
in
our
filings
with
the
Securities
and
Exchange
Commission
(SEC).
You
are
cautioned
not
to
place
undue
reliance
on
such
statements
and
to
consult
our
SEC
filings
for
additional
risks
and
uncertainties
that
may
apply
to
our
business
and
the
ownership
of
our
securities.
Our
forward-looking
statements
are
presented
as
of
the
date
made,
and
we
disclaim
any
duty
to
update
such
statements
unless
required
by
law
to
do
so.
Disclaimer
-2- |
 Leader in Clean
Coal Technology Investment Overview
-3- |
 Corporate
Structure ADA-ES
–
ACI Systems
–
License to Arch Coal
–
Flue Gas Conditioning
–
Acid Gas Control Technology
–
CO
2
Capture
–
DOE & Industry Consulting
Clean Coal Solutions (CCS)
Products:
–
Refined Coal
JV Partner:
–
NexGen
Resources
–
ADA Ownership:
50/50
ADA Carbon Solutions (ACS)
Products:
–
Activated Carbon
JV Partner:
–
Energy Capital Partners
–
ADA Ownership on first line:
currently 26%
:
-4- |
 U.S. EPA
Industrial Boiler MACT Covers 600 coal-fired boilers
Draft on 4/29/10:
–Final version expected
–
02/21/11
Market Requirements:
–ACI
Systems
several
hundred
–AC
50-100
MM
lbs/year
U.S. EPA Utility MACT
Will cover 187 hazardous air pollutants
Should result in 85-95% limit for
mercury
Draft expected 3/11
Final expected 11/11
–3 years to
implement Issued 08/09/10: U.S EPA Cement MACT –
Could result in demand for ACI & AC on up to 90 cement
kilns -5-
Emission Control:
Near-Term Market Drivers |
 Refined
Coal Clean Coal Solutions: JV with NexGen
Resources
Capitalizing on Section 45 tax credits
CyClean
–
patented technology enhances combustion of
PRB coals in cyclone boilers and reducing mercury
Two systems installed & operating at two power plants
–
Creating Refined Coal for four power plants for ten years ($6.20
per ton credit escalates annually on ~6.5MM tpy)
–
Contracts in place with third party financial institution to
monetize tax credits into revenues for CCS
-6- |
 Refined
Coal: Existing Operations Refined Coal contributed ~$10 mm in revenues to
ADA-ES in Q3 & Q4’10 (first full half year of operation)
Expectations for next nine years for first two installations:
–
>$15 mm in annual revenues to be consolidated by ADA-ES
–
>$7 mm in pre-tax cash flow and operating income
–
~$1.00/share pre-tax operating income after deducting
NexGen’s
share based on 7.5 mm shares
-7- |
 Refined Coal
Growth Opportunity “Placed-in-service”
date extended to 1/1/12; opportunity
to triple revenues & operating income
–
Currently have ten prospects; potential for over 30 mm tons per
year of Refined Coal @ $6.20 per ton
–
Current and pending mercury regulations creating increased
interest in RC
Currently fabricating 6 additional RC facilities
–
Each unit capable of producing 1-5 million tons per year
–
Fabrication of first 6 units expected to be completed in May and
June
–
Schedule allows for fabrication of a total of 16 systems before
year end
-8- |
 Refined
Coal CURRENT PROJECTIONS
(based on 6 million tons)
POTENTIAL OPPORTUNITY
(based on 20 million tons)
$ in millions
Estimated revenues Estimated
operating income
-9- |
 Emission Control:
Equipment Sales
Installed/installing 47 Activated Carbon Injection (“ACI”)
systems at coal-fired power plants
–
Over 30% market share; plants total > 20 GW
–
Remain active in the bid and proposal process
Plant burns PRB coal or lignite
Plant burns bituminous coal
-10- |
 Emission Control:
Consumable Sales
Constructed largest AC plant in the U.S. (Red River, LA)
–
Capacity: 150 mm lbs/yr
Start-up operations commenced in May 2010
–
Q3’10: delivered AC to customers from 2 of 4 furnaces
–
Q1’11: expect to be able to operate at full capacity
Site
permitted
for
2
nd
production
line;
seeking
permits
for 4 more lines in North Dakota
-11- |
 Emission
Control:
Monumental
Growth
Expected in ACI Equipment
-12-
Final U.S. EPA Utility MACT due Nov 2011
–
Expect ACI orders from utilities beginning 2011; have three years
to become compliant |
 -13-
Emission Control:
License to Arch Coal
Licensed Enhanced Coal to Arch Coal for $2 mm
initial payment in mid-2010
–
Designed to enable Arch’s Powder River Basin (PRB) coals
to burn with lower emissions of mercury and other metals
–
Royalty agreement –
payments of up to $1.00/ton of
Enhanced Coal sales
–
Arch mines >100 mm tons of PRB coal per year
–
Full-scale tests showing promising results |
 CO
2
Capture
Developing solid sorbent capture technology to capture
CO
2
from flue gas in conventional coal-fired boilers
DOE and industry funding:
–
Phase I -
$3.8 mm R&D program awarded in Nov. 2008 to
develop technology; successful field tests at 1 KW pilot plant
–
Phase II -
$19 mm, 51-month contract awarded Oct. 2010 to
scale-up technology to 1 MW; key step toward
commercialization
Advantages over competing technologies:
–
For customer: lower cost and less parasitic energy
–
For ADA: continuous revenues from sale of proprietary chemical
sorbents
-14- |
 Litigation:
Resolved & Pending
Calgon
Carbon
–
December 2010: settlement reached
–
ADA received $7.2 mm in cash Q4’10; will recognize settlement
payment, net of contingent legal fees, as “other income”
in the
2010 fiscal year
Norit
–
November 2010: arbitration hearing completed
–
Briefs filed and final oral arguments heard on February 8, 2011
–
Panel requested 60 days to make ruling
-15- |
 Financial
Summary: Recent Financial Results
Q3’10 Highlights:
–
Total revenues up 101% from Q3’09 to $7.5 mm
–
Gross profit grew 386% from Q3’09 to $5.8 mm, or 77.6%
of revenues
–
Net loss of $5.8 mm, or $0.78 per share, vs. Q3’09 loss of
$5.3 mm, or $0.76 per share
–
Net income of $1.2 mm, or $0.16 per share, excluding $8.7
mm in non-routine legal expenses and a $2.5 mm loss
relating to the equity interest in ADA-CS
Revenue CAGR of 23%, 2003 –
2009
-16- |
 Financial
Summary: Outlook
Legal expenses expected to decline significantly in Q2’11
Existing Refined Coal facilities expected to generate
~$1.00 per share in pre-tax cash flow and operating
income after deduction of NexGen’s
share through 2019
Possibility to more than double that amount with
additional Refined Coal facilities and extension of tax
credits
Emission Control:
–
Pending Federal MACT rules should substantially expand ADA’s
existing market for ACI systems –
expected timeframe 2011
–
Arch agreement expected to generate payments of up to
$1.00/ton of Enhanced Coal beginning in late 2011
-17- |
 Financial
Summary: Balance Sheet Highlights &
Other Data
Balance sheet highlights (at 9/30/10):
–
Working capital, excluding deferred revenue, of $8.9 mm
–
Shareholders’
equity of $14.1 mm
–
Cash & equivalents of $3.0 mm
–
7.5 mm diluted shares outstanding
$5.4 million of net proceeds received in 12/10 from
settlement of lawsuit with Calgon
As of 02/10/11:
–
Market cap: $113.9 mm
–
50%+ held by institutions
–
~11% held by insiders and employees
–
Analyst coverage: Avondale Partners, Canaccord
Genuity, JMP
Securities, Johnson Rice, Lazard Capital Markets, Pritchard Capital
Partners, Wedbush
Securities
-18- |
 Expected
Timeline of Revenue Recognition by Segment
‘’10
’11
’12
’13
’14
’15 ’16
’17 ’18
’19 ’20 ‘21
ADA-CS –
Activated Carbon*
-By 2015 demand for AC should greatly exceed supply
-
First line revenues not consolidated with ADA
Arch Coal licensing agreement
-$2 mm upfront payment
-Royalties of up to $1.00/ton of Enhanced Coal
ACI Injection Systems
-EPA MACT driving demand in 2011
and beyond
CO2
Capture
Development
-
DOE/industry
funding
-
$19
mm,
51-month
contract
Refined Coal –
Section 45 Tax Credits
-
Qualifies for 10-year tax credits
-
>$15 mm in annual revenues; $7 mm or $1.00 per share in pre-tax operating
income Refined Coal –
Section 45 Tax Credits Extended on 12/16/10 for one year
-
Potential for over 300 mm tons of Refined Coal
-Tax Credits valid from 2011 to 2021
Refined Coal
CO
2
Capture
Emission Control
Activated Carbon
-19- |
 A Leader in
Clean Coal Technology ©
Copyright 2011 ADA-ES, Inc. All rights reserved.
NASDAQ:ADES |