Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ADA-ES INC | d275129d8k.htm |
 Creating a
Future with Creating a Future with
Cleaner Coal
Cleaner Coal
Investor Presentation
January 2012
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
the
growth
in
markets
for
our
products
and
services;
amount
and
timing
of
revenues,
earnings,
operating
income,
cash
flows
and
other
financial
measures;
timelines
for
our
projects;
scope,
timing
and
impact
of
current
and
anticipated
regulations
and
legislation;
future
supply
and
demand;
the
amount
of
refined
coal
capable
of
being
produced
from
refined
coal
facilities;
and
related
matters.
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;
impact
of
competition;
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;
our
inability
to
ramp
up
operations
to
effectively
address
expected
growth
in
our
target
markets;
additional
risks
related
to
Clean
Coal
Solutions,
LLC
(“Clean
Coal”)
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
monetize
new
CyClean
and
M45
facilities;
issues
arising
out
of
Clean
Coal’s
due
diligence
review
of
the
M45
technology
and
our
inability
to
address
those
concerns
or
negotiate,
execute
and
close
on
definitive
agreements;
availability
of
raw
materials
and
equipment
for
our
businesses;
loss
of
key
personnel;
intellectual
property
infringement
claims
from
third
parties;
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- |
 ADA provides
low-CAPEX technologies to reduce emissions from coal-fired power plants
Rapid expansion expected in 2012 from Refined Coal (RC) revenues
–
First two RC facilities are generating $20 mm in annual revenue and
> $7 mm in EBIT for ADA
–
26 new RC facilities expected to come on line throughout 2012
–
ADA expects to generate pre-tax income (EBIT) of up to $50 mm by the
end of 2012 for the next 10 years
In December EPA signed the Mercury and Air Toxics Standard (MATS)
–
Requires 1200 power plants to reduce emissions of mercury and acid gases
–
EPA predicts that this will create a >$9 billion per year market
for
emissions control
ADA is the market leader in mercury control technologies
–
Activated Carbon Injection (ACI) systems
–
RC
–
Enhanced Coal (licensed to Arch Coal)
10 million shares outstanding
Investment Highlights
-3- |
 ADA’s
Emissions Solutions for the Existing Fleet
-4-
Supply emission control technologies based upon minimal
capital cost for new equipment
–
Doesn’t
require 10-20 years of extended plant life needed to justify
large equipment costs
Low CAPEX alternatives trade variable operating expenses
for fixed capital costs
Examples for a 250 MW Plant:
–
High CAPEX: Wet Scrubber $100+ mm
–
ADA Low CAPEX alternatives
–
ACI: $1 mm
–
DSI: $3 mm
–
RC: Controls mercury at no cost to utility
–
Enhanced Coal: No capital equipment; $2-$4 mm per year in
increased fuel costs to the power producer |
 -5-
ACI System
for Mercury
ADA’s Low CAPEX Approach to Emissions
Control Technology
Emission Control Equipment
(NO
x
, SO
2
, Particulate) |
 Two RC
technologies reduce mercury and NOx emissions and qualify for Section
45 Tax Credits
42.5% stake in Clean Coal Solutions JV
with NexGen & Goldman Sachs
–
2 CyClean facilities produced $20 MM in
revenue, $9MM in operating income for
ADA in first year of operation
–
26 new RC systems placed in service in
2011
–
Total RC activities capable of producing
$50 MM in EBIT for ADA for 10 years
ADA Segment Overview
-6-
Emissions Control
Systems
Technology
ACI systems addressing mercury emissions
for coal-fired power plants
ACI systems installed on 55 boilers to
date—in a ~ 35% market share
MATS expected to create $500-600 mm
market for ACI
MATS also creating demand for DSI
systems for control of acid gases
Option for 49.9% participation in
Activated Carbon Plant capacity additions
License agreement with Arch
Coal for enhanced coal
technology to reduce mercury
emissions
Developing solid sorbent
capture technology to capture
CO2
from flue gas in coal-fired
boilers
Refined Coal |
 Clean Coal
Solutions, LLC |
 Clean Coal
Solutions (CCS) Clean Coal Solutions (CCS) : ADA JV with NexGen Refined Coal
LLC –
15% equity
interest in CCS sold to a Goldman Sachs affiliate in May 2011
for $60 mm
CCS markets two coal pre-combustion technologies developed by ADA that
qualify for IRS Section 45 RC tax credits of $6.33 per ton of RC
for ten years
–
Reduces mercury emissions by >40% and NOx emissions by >20%
Third-party monetizers lease RC facilities from CCS converting tax credits to
revenues
-8- |
 CCS Project
Monetization Overview
-9- |
 2009 Refined
Coal Facilities Two systems placed-in-service in 2009 and commenced
operations at two power plants in June 2010
–
Received $9 mm in prepaid rent from monetizer (GS)
–
Generated >$20 mm in revenues and $9 mm in operating income to ADA
in first full year of operation
–
RC sales to these plants expected to generate approximately $20 mm in
revenue and $7 mm in pretax earnings for ADA in 2012
-10- |
 In December
2010 Congress extended deadline to install new RC facilities until the end of
2011 CCS installed and operated 26 new RC facilities ahead of the year-end
deadline New facilities are expected to begin operating full time in 2012
after: –
Operating permits obtained from the state
–
Contracts negotiated and signed between monetizer and power company
–
Contracts approved by Public Utility Commission if necessary
By the end of 2012, the 26 new and 2 existing facilities are expected to:
–
Generate >$70 mm in prepaid rent for CCS in 2012
–
Create >$100 mm in revenue per year for ADA through 2021
–
Produce >$50 mm in EBIT per year for ADA through 2021
-11-
2011 Refined Coal Facilities |
 Emissions
Control Systems |
 ADA Commercial
ACI Systems > 20 GW Sold for Mercury Control
Plant burns PRB coal or
lignite
Plant burns bituminous
coal
Installed/installing ACI systems on 55
boilers at coal-fired power plants
–
Over 35% market share of 159 boilers served
for mercury control from power plants
-13- |
 Emission
Control: Growth Expected in ACI Equipment
•
MATS is expected to create $500+ MM market for ACI
•
Procurement activities have commenced and ADA is
responding to several fleet bids
E
-14- |
 Control of Acid
Gases HCl, SO
2
, SO
3
New environmental regulations
creating demand for control of acid
gases such as HCI, SO
3
, and SO
2
ADA provides dry sorbent injection
(DSI) systems as a low-cost option
to wet scrubbers
Equipment costs $2-3 mm for
average size plants
EPA predicts over 200 systems will
be needed by 2015
-15- |
 Technology |
 Mercury Control:
License to Arch Coal Designed to enable Arch’s PRB coals to
burn with lower emissions of mercury and other
metals
$1.00-4.00/ton in benefits to customer
Royalty agreement –
payments to ADA of up
to $1.00/ton based on premium of Enhanced
Coal sales
Initial market will be in states with mercury
regulations already in place
Expanded market expected to develop by
2015 as a result of the MATS
-17- |
 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 October 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
-18- |
 Financial |
 Summary of
Recent Financial Results Nine Months
ended
09/30/11
(1)
Nine Months
ended
09/30/10
(2)
Year Ended
12/31/10
Total Revenues
$28.7 MM
$13.3 MM
$22.3 MM
Gross Margin
69%
54%
61%
Operating Income
(Loss)
$3.1 MM
($15.5) MM
($21.0) MM
Net Loss
(per share)
($33.6) MM
($4.41)
($12.4) MM
($1.68)
($15.5) MM
($2.09)
-20-
(1)
2011 nine-month period included $41.7 MM in arbitration expenses, $4.2 MM in
non-routine litigation-related legal expenses, and $0.9 MM in interest expense
. (2)
2010 nine-month period included $16.1 MM in non-routine litigation-related legal
expenses. |
 Balance Sheet
Highlights As of 9/30/11
(1)
As of 12/31/10
Cash & Cash Equivalents
$9.6 MM
$9.7 MM
Working Capital (Deficit)
($12.0) MM
$10.1 MM
Shareholders’
Equity
$1.9 MM
$13.4 MM
Shares Outstanding
(2)
7.7 MM
7.5 MM
(1)
Working capital decreased primarily as a result of payments and obligations in the Norit
Settlement, partially offset by proceeds from the sale of a 15% interest in CCS to an
affiliate of Goldman Sachs. (2)
Shares outstanding at December 31, 2011 were ~10 MM, reflecting
completion of public offering in October 2011
and exercise of the underwriters over-allotment option in November 2011.
-21- |
 4
th
Quarter Financial Transactions
Capital Raise, managed by Lazard, Baird, and JMP
–
$28.4 Million on the sale of 2 million common shares with no warrants
–
$4.3 Million in exercise of over-allotment option on 300k shares
Settled Indemnity Claim with Energy Capital Partners
–
Eliminated $33 Million in long-term liability
–
Will recognize ~ $19 Million gain in Q4 2011
–
Relinquished all of its ~ 21% ownership in AC plant
•
No longer recording losses from JV
•
Retained option to invest up to 49.9% in new capacity additions
$5 Million in prepaid royalties expected to be recorded on
M-45 technology
Current consolidated cash at 12/31/11 ~ $40 Million
-22- |
 A Leader in
Clean Coal Technology ©
Copyright 2011 ADA-ES, Inc. All rights reserved.
NASDAQ:ADES |