Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ADA-ES INC | d357049d8k.htm |
 Creating a
Future with Creating a Future with
Cleaner Coal
Cleaner Coal
Investor Presentation
May 2012
NASDAQ:ADES
www.adaes.com
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;
impact
of
regulations;
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 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 lessees,
seasonality
and
failure
to
monetize
new
CyClean™
and
M45™
facilities; our inability to negotiate, execute and close on definitive
agreements related to the M45 technology license; 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
diverse, low-CAPEX technologies to reduce emissions from
coal-fired power plants
Significant revenue growth expected in 2012 from Refined Coal (RC)
–
In
2011,
first
two
RC
facilities
generated
$20
mm
in
revenue
and
>
$7
mm
in
EBIT
for
ADA
–
26 additional RC facilities placed in service in 2011
–
Third leased RC facility became operational in Q1 2012
–
Five RC facilities currently operating
–
Several additional facilities expected to come on line throughout 2012 to achieve an EBIT
run rate of approximately $50 mm by year-end
–
Remaining RC units expected to be operational in 2013 with opportunity to produce up to
$100 million in EBIT annually for 2014 through 2021
EPA’s Mercury and Air Toxics Standard (MATS) became final on April 16, 2012
–
Requires 1200 power plants to reduce emissions of mercury and acid gases by 2015
–
EPA predicts this will create a >$9 billion per year market for emissions
control ADA is the market leader in mercury control technologies
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
Allows continued operation of the plants that may otherwise be considered
for closure
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, $7 MM in operating income for
ADA in 2011
–
Total RC activities capable of producing
$50-100 MM in EBIT for ADA , 2014-2021
ADA Segment Overview
-6-
Emissions Control Systems
Technology
MATS expected to create $1 B market for
low-CapEx Technologies
ACI for control of mercury
DSI for control of acid gases
Option for 49.9% participation in
Activated Carbon Plant capacity additions
Enhanced coal treatment
technology to reduce mercury
emissions
Developing technology to
capture CO2
from flue gas in
coal-fired boilers
Refined Coal |
 Emission Control
Products Coal
Bunker
Filter or ESP
SCR
DeNOx
Air
Preheater
Steam
Generator
Flue Gas Desulfurization
(FGD) Scrubber
Scrubber
Additive
Coal Additive
Refined Coal
Flue Gas
Conditioning
CEMS
Activated Carbon
Injection (ACI)
Dry Sorbent
Injection (DSI) |
 Refined Coal is
Provided through JV Clean Coal Solutions, LLC |
 Clean Coal
Solutions (CCS) Clean Coal Solutions (CCS) : ADA JV with NexGen Refined Coal
LLC –
Goldman Sachs affiliate bought 15% interest 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 $6.47 per ton of RC for ten years
–
Reduces mercury emissions by >40% and NOx emissions by >20%
Third-parties lease RC facilities from CCS converting tax credits to revenues
In 2011, first two RC facilities generated $20mm in revenues and
$7mm in EBIT for ADA
-9- |
 CCS Project
Monetization Overview
-10-
42.5%
42.5%
15.0%
$6.47/ton tax credit plus
accelerated depreciation
Tax Financing
Partner
Utility
Plant
Operator
CCSS, LLC
(50%NG/50% ADA)
not consolidated
CCS, LLC
ADA
Goldman
Sachs
Nex
Gen(NG)
Tax
benefits
Unprocessed
coal
Refined
coal
$1/ton
produced |
 In December
2010 Congress extended deadline to install new RC facilities until
year-end 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 and 2013 after:
–
Operating permits obtained from each relevant state
–
Contracts negotiated and signed among CCS, financial institutions and power companies
Working with multiple monetizers for new systems
By the end of 2012, new and 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 up to $50 mm in EBIT per year for ADA through 2021
Some facilities will be operated by CCS to reduce tax burden from RC profits
Remaining facilities expected to be put into operation in 2013 that will have the
potential to double RC generated revenues and cash flows
-11-
2011 Refined Coal Facilities |
 Emissions
Control Systems |
 ADA Commercial
ACI Systems > 20 GW Sold for Mercury Control
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-
Plant burns PRB coal or
lignite
Plant burns bituminous coal |
 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
ADA awarded first contract for DSI
in 2012
-15- |
 Technology |
 Mercury Control:
Enhanced Coal Designed to enable Western coals to burn with lower
emissions of mercury
–
U.S. burns up to 600 MTs of Western Coal per year
$1.00-4.00/ton in benefits to customer
Technology has been licensed to Arch Coal to apply to
their PRB coals at the mine
ADA maintained rights to apply technology at power
plants
–
Royalty agreement –
payments to ADA of up to $1.00/ton
based on a portion of the premium paid on 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 at 1 KW pilot plant
–
Phase II -
$19 mm, 51-month contract to scale-up
technology to 1 MW
Advantages over competing technologies:
–
For customer: lower cost and less parasitic energy
–
For ADA: continuous revenues from sale of
proprietary chemical sorbents |
 Financial |
 Summary of
Recent Financial Results 1 Qtr. Ended
3/31/12
1
Qtr. Ended
3/31/11
Year Ended
12/31/11
Year Ended
12/31/10
Total Revenues
$18.2 MM
$8.5 MM
$53.3 MM
$22.3 MM
Gross Margin
22%
85%
46%
61%
Gross Margin
Excluding Rev.
and Cost related
to retained tons
71%
85%
73%
61%
Operating Income
(Loss)*
($1.2)MM
$1.9 MM
$3.0 MM
($21.0) MM
Net Loss
(per share)
($1.4) MM
($0.14)
($27.5) MM
($3.63)
($19.9) MM
($2.48)
($15.5) MM
($2.09)
-20-
st
st
* On a simplified basis, the consolidated statement of operations shows an operating loss of $1.2
million for the quarter. Adding back $1 million in depreciation charges included in that amount
results in a deficit of approximately $200,000, which apart from timing considerations with other operating assets and liabilities is
an indication of a “burn-rate” for the first quarter of 2012. We would not expect that
“rate” to increase but to decrease as more RC facilities transition to full time
operations. The foregoing non-GAAP financial measure should not be considered as a substitute for
any related financial measure under GAAP; however, we believe that our presentation of this
measure provides investors with greater transparency with respect to our results of operations and that it is useful for
period-to-period comparisons of results. |
 Balance Sheet
Highlights As of 3/31/12
As of 12/31/11
Cash & Cash Equivalents
$28.3 MM
$40.9 MM
Cash & Cash Equivalents
per Share
$2.83
$4.09
Stockholders’
Equity
$48.4 MM
$49.2 MM
Shares Outstanding
10.0 MM
10.0 MM
-21- |
 Summary
RC opportunities expected to provide significant growth in
revenues and cash flows in 2012 and 2013
$5 -
$10 per share in cash flows for 2014-2021
MATS compliance requirements are driving expected >$300
million total equipment revenues for ADA for next 3-4 years
Enhanced coal royalty opportunity expected to add additional
growth in 2013 to 2015 and beyond
Developing solid sorbent capture technology to capture CO
2
from flue gas in conventional coal-fired boilers
Available cash on balance sheet and expected cash flows from
RC provides us with the resources to execute on future
opportunities
-22- |
 A Leader in
Clean Coal Technology ©
Copyright 2012 ADA-ES, Inc. All rights reserved.
NASDAQ:ADES |