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| 8-K - FORM 8-K - ADA-ES INC | d466896d8k.htm |
| EX-99.2 - PRESS RELEASE, ADA-ES, INC. TO PRESENT AT 15TH ANNUAL NEEDHAM GROWTH CONFERENCE - ADA-ES INC | d466896dex992.htm |
 Investor Presentation
January 2013
Exhibit 99.1 |
 Safe
Harbor ©
2013 ADA-ES, Inc.
This presentation includes 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 statements or expectations regarding future
contracts, projects, demonstrations and technologies; amount and timing of
production of RC, revenues, earnings, cash flows and other financial measures;
future operations; our ability to capitalize on and expand our business to meet
opportunities in our target markets and profit from our proprietary technologies;
scope, timing and impact of current and anticipated regulations, legislation and
IRS guidance; future supply and demand; the ability of our technologies to assist
our customers in complying with government regulations 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, regulations and IRS interpretations or guidance,
government funding, accounting rules, prices, economic conditions and market
demand; timing of laws, regulations and any legal challenges to or repeal of
them; failure of the RC facilities to produce coal that qualifies for tax credits;
termination of or amendments to the contracts for RC facilities; decreases in the
production of RC; failure to lease or sell the remaining RC facilities on a
timely basis; failure of the new expected RC investor to close on its debt
restructuring or obtain the PLR from the IRS; our inability to ramp up operations to effectively
address expected growth in our target markets; inability to commercialize our
technologies on favorable terms; impact of competition; availability, cost of
and demand for alternative tax credit vehicles and other technologies;
technical, start-up and operational difficulties; availability of raw materials and equipment; loss
of key personnel; intellectual property infringement claims from third parties;
seasonality 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. |
 A
leader in providing emission control solutions serving the power generation
industry for more than 30 years Offers customers a portfolio of proprietary, low
CAPEX technologies to meet pollution control mandates
ADA-ES, Inc. (“ADA”) currently has 16 patents issued or
applications allowed
Clients include leading electric power utilities
Expect significant revenue, earnings and cashflow growth as
utilities respond to new regulations
Investment Highlights
-2-
©
2013 ADA-ES, Inc. |
 28
Refined Coal facilities that qualify for Section 45 Tax Credits of $6.47 /
ton (2012 rate) of coal burned for 9 years, ending December 31, 2021
Currently operating 8 facilities, 4 of which are leased to RC investors
and operating at plants that have historically burned more than 11
MT/year in total. ADA receives between $1.50-$2.00/ton of pre-tax
income after payments to JV partners.
In final stages of contracts with two RC investors for three facilities
operating at plants that have historically burned 10 MT/year in
total. Finalization of the contracts will also trigger more than
$20M
in prepayments.
New M-45-PC
™
technology significantly expands addressable market
for remaining 12 facilities.
Investment Highlights
-3-
©
2013 ADA-ES, Inc. |
 Emissions Control driven by Federal Mercury and Air Toxics
Standard (MATS) regulation (April 2012) creates an
addressable market of $1 billion in the next three years.
Won fleet wide contract for Activated Carbon Injection (ACI) systems
from a major US utility.
Acquired the assets of Bulk Conveyor Systems in August 2012 to enhance
Dry Sorbent Injection (DSI) capabilities. Won DSI/ACI contract in
November 2012 valued at up to $15M.
Enhanced Coal offering helps reduce mercury-
long-term revenue
potential through royalty and user fees.
CO
2
Capture technology development business partnering
with U.S. DOE, Electric Power Research Institute (EPRI) and
Southern Company.
Investment Highlights
-4-
©
2013 ADA-ES, Inc. |
 Source:
U.S. EIA, March 2012 Coal expected to provide ~ 40% of
America’s electricity in 2035 according
to Department of Energy
1,200 existing coal-fired power plants
in the US generate the majority of the
nation’s electricity, and consume
~ 900M to 1B tons of coal each year
EPRI estimates that the coal-fired
power industry will invest $275 billion
in retrofits through 2035
Lower coal prices benefit our
customers
11 new coal-fired power projects
currently have permits and are
expected to begin construction in the
next year
The energy in America’s recoverable
coal reserves is equivalent to 1 trillion
barrels of oil –
about equal 2/3rds of
the world’s known reserves
In order to maintain its leadership
position, coal must burn cleaner
Coal Energy
-5-
©
2013 ADA-ES, Inc.
19%
42%
13%
25%
Coal
Natural Gas
Nuclear
Renewables
Petroleum
1% |
 Wet
Scrubber $100M+
ADA’s ACI = $1.0M
ADA’s DSI = $3.0M
Refined Coal
$0 cost to utility
Enhanced Coal
No capital equipment
$1.0 -
$4.0M / year in
higher producer fuel cost
Benefits of $1.0 -
$4.0 / ton
of Western Coal burned
-6-
©
2013 ADA-ES, Inc.
Emissions Control
Equipment
(NO
x
, SO2, Particulate)
ACI System for
mercury
Trades variable operating expenses for fixed capital costs
ADA’s offerings do not require 10-20 years of extended plant life to justify
purchase VALUE PROPOSITION: Allows continued operation of plants that may otherwise be considered for closure LOW CAPEX EMISSIONS SOLUTIONS FOR EXISTING FLEET |
 -7-
©
2013 ADA-ES, Inc.
Enhanced Coal
Refined Coal
Flue Gas
Conditioning
Dry Sorbent
Injection (DSI)
Activated Carbon
Injection (ACI)
Filter
or ESP
SCR
DeNOx
Air
Preheater
Boiler
Flue Gas Desulfurization
(FGD) Scrubber
Coal
Bunker
PORTFOLIO OF MISSIONS CONTROL SOLUTIONS E
Scrubber
Additive |
 Up to 28
RC facilities operational / monetized
by 2014
MATS response by
utilities
ADA maintaining 35%
market share
DOE Contracts
CO
2
Capture Pilot Plant
MATS and License with
Arch Coal
ACI/DSI
1)
RC amounts exclude
RC coal sales revenues
(1)
-8-
©
2013 ADA-ES, Inc.
CO
2
Capture
Enhanced Coal
Emissions Control
Equipment
Refined Coal
$300
$200
$100
$0
2011 (A)
2018 (E)
2014 (E)
(ANNUAL REVENUE
$
IN
M)
SEGMENT REVENUES (2011)
+ OUTLOOK |
 CLEAN COAL
SOLUTIONS, LLC (CCS)
NEXGEN
42.5%
ADA
42.5%
GOLDMAN
SACHS
15%
-9-
©
2013 ADA-ES, Inc.
CLEAN
COAL
SOLUTIONS
JV
OWNERSHIP
STRUCTURE
REFINED COAL
|
 The
American Jobs Creation Act of 2004, Section 45 of the IRC: contains
provisions
to
incentivize
the
production
of
pollution
mitigating
Refined
Coal
(RC)
via escalating tax credits per ton of coal burned. RC reduces mercury by 40%+
and NOx emissions by 20%+ when that coal is burned.
Clean Coal Solutions (“CCS”) JV offers three technologies that produce
Section 45 Refined Coal
-
The CyClean
TM
, M-45
TM
and M-45-PC
TM
technologies provide on-site, proprietary pre-
treatment to Powder River Basin (PRB) and Lignite coals for use in cyclone boilers,
circulating fluid bed boilers and pulverized coal
boilers. Key Dates
June
2010:
Clean
Coal
Solutions
commences
operations
at
first
two
RC
facilities
December
2010:
Congress
extends
“placed-in-service”
deadline
for
new
RC
facilities
to 12/31/11
January
-
December
2011:
CCS
fabricates,
installs
and
“places-in-service”
26
additional RC units able to qualify for Section 45 tax credits
June
2011:
an affiliate
of
Goldman
Sachs
purchases
a
15%
stake
in
the
JV
for
$60M
2012
-
2014:
CCS
focused
on
capturing
the
value
of
Section
45
tax
credits
Refined Coal: Introduction & Overview
-10-
©
2013 ADA-ES, Inc. |
 REFINED COAL: MONETIZATION DYNAMICS
Requirements to
commence operations:
Operating permits obtained
from each relevant state
Approval from Public
Utilities Commissions (PUC)
in regulated states
Approval from coal and
transportation companies
Approval from plant owners
Contracts negotiated and
signed among CCS, RC
investor and power
companies
3 RC investors currently
engaged
Working with additional
RC investors for
remaining RC facilities
Utility
Receives:
value
of
$1.00 -
$4.00 / ton for
emissions reduction
Payment of ~$1/ton from
RC investor
RC Investor
Receives:
(a)$6.47 tax credit
through RC production, and
(b) tax deductions for rental,
utility and operating expenses
Pays:
~$1/ton to utility, ~$2/ton for
operating expenses and
~$3+/ton to CCS
CCS Receives:
~$3+/ton in consolidated
payments, net $1.50-$2/ton to
ADA of pre-tax income after
payments to ADA’s JV partners
Each RC facility can be monetized
(leased or sold) to generate revenue, or
operated by CCS for tax credit benefit to
offset future tax obligations
-11-
©
2013 ADA-ES, Inc. |
 Goal
2014 Proportion of Refined Coal Produced that is
Monetized
2012
2014
-12-
©
2013 ADA-ES, Inc.
20
21
60
8
28
0
20
40
60
2014
Operating by 2014
Annual Run Rate
MT/yr of RC Produced
28 Total
RC Facilities
Operating YE 2012
YE 2012
Retained
Monetized 70%
30%
20%
80%
REFINED COAL:
STATUS UPDATE
|
 FINANCIAL RESULTS
OF
RETAINING
TONS
AND
TAX
CREDITS
CCS will often operate an RC facility, retaining the tax credits, prior to
monetizing that facility with a third party
$7.50 /Ton
$40 /Ton
($3/Ton)
Value of Tax
Credits and
Benefits
Operating
Cost
Current Period
Future Period
Raw Coal
Cost
RC Sales
-13-
©
2013 ADA-ES, Inc.
-$50
-$40
-$30
-$20
-$10
$0
$10
$20
$30
$40
$50
($40/Ton)
REFINED COAL: |
 Payment
from RC investor
CCS Self Monetization
3
Party RC Investor
CCS Consolidated financial example for a 3 MT/yr facility
Operating
Expense
CAPEX
Cash at Closing
(Pre-Paid Rent)
-14-
©
2013 ADA-ES, Inc.
$(15)
$(10)
$(5)
$
-
$5
$10
$15
($2M)
($9M/yr)
$12M/yr
~$9M
In final stages of contracts with two RC
investors for three facilities at plants that
historically burn more than 10MT/year. Two
of these facilities are currently being
operated by CCS
rd
REFINED COAL:
|
 R
($
IN
M)
$20.1
$20.2
$150
$40
$300
$200
$7.0
$1.5
$16
$6
$30
$70
2011
2014-2021
(E)
2012
(E)
$500
$8.5
$40.3
$190
$22
$100
2011
2014-2021
(E)
2012
(E)
Coal Sales
Rental Revenue
Segment Income
Tax Credits
Equivalent
Annualized
MT
2011
2012
2014-2021
CCS revenues (consolidated)
ADA (excluding non-controlling interests)
-15-
©
2013 ADA-ES, Inc.
EFINED
OAL
ROGRESS
C
P
7
60
21 |
 8
Facilities producing Refined Coal 4 monetized with RC investors treating more
than 11 MT/year 2 facilities permanently operating for CCS producing
approximately 2MT/yr 2 facilities in final stages of contracts at plants that
historically have burned approximately 8 MT/year. These facilities are
currently generating tax credits for CCS
8 Facilities committed to sites
Status ranges from initial contracts and permitting to final stages of
contracts
12
Facilities
pursuing
options
to
use
new
M-45-PC
TM
technology
M-45-PC
TM
technology
achieves
Section
45
qualifying
emissions
for
pulverized
coal boilers
Significantly expands the addressable market to include many larger boilers
that use more than 5 MT of coal per year
Initial
facilities
using
M-45-PC
TM
technology
could
be
operating
as
early
as
the second or third quarter of 2013
Update on Refined Coal Activities
-16-
©
2013 ADA-ES, Inc. |
 >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
Reduces mercury emissions by up to 90%
Work in progress at September 30, 2012 of $3.9MM; expect to recognize as revenue in 2012
and 2013. This does not include recent fleet order valued at up to $20M
MATS is expected to generate new market of $500-600M 2012-2015
-17-
©
2013 ADA-ES, Inc.
COMMERCIAL ACI
SYSTEMS |
 New
environmental regulations creating demand for control of acid
gases such as HCI, SO
2 ,
and
SO
3
ADA provides DSI systems as a low-
cost option to wet scrubbers
Equipment costs $2-3M for average
size plants
EPA predicts over 200 systems will
be needed by 2015
Acquired the assets of Bulk
Conveyor Systems in August 2012 to
enhance DSI capabilities
Awarded 9 DSI systems in 2012
-18-
©
2013 ADA-ES, Inc.
CONTROL OF ACID GASES
HCI, SO
2
, SO
3 |
 MATS is
projected to create $500+ M market for both ACI & DSI Procurement activities have
commenced and ADA is responding to several fleet bids 1) Total Expected Revenue
from Estimated Equipment Sales 2012-2015 -19-
©
2013 ADA-ES, Inc.
$1.0B
$350M
$259M
$30M
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
Estimated Market Size
(2012-2015)
Expected Revenue
(1)
(~35% Market Share)
Bids Outstanding
Wins
E
MISSIONS
C
ONTROL
:
ACI & DSI EQUIPMENT MARKET |
 Patented technology designed to enable Western
coals to burn with lower mercury emissions
–
U.S. burns up to 600 MT 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
–
Royalty agreement: payments to ADA of up to $1.00/ton
based on a portion of the premium paid on Enhanced Coal
sales
ADA retained rights to apply technology at power
plants
Initial market: states with mercury regulations
already in place
MATS expected to expand market by 2015
Continued demonstration of technology to
customers
-20-
©
2013 ADA-ES, Inc.
MERCURY CONTROL: ENHANCED COAL |
 Developing proprietary solid sorbent capture
technology to capture CO2 from flue gas in
conventional coal-fired boilers
DOE and industry funding:
Phase I -
$3.8 M R&D at 1 KW pilot plant completed
in 2011
Phase II -
$20.5 M, 51-month contract to scale-up
technology to 1 MW
Entered Fabrication and Construction phase of 1 MW
plant in June 2012, estimated completion in October
2013
Testing in 2014
Advantages over competing technologies:
For customer: lower cost and less parasitic energy
For ADA: continuous revenues from sale of
proprietary chemical sorbents
-21-
©
2013 ADA-ES, Inc.
CO
2
CAPTURE
:
OVERVIEW |
 -22-
©
2013 ADA-ES, Inc.
FINANCIAL
RESULTS
OVERVIEW |
 Self
monetization has a dominating impact on GAAP Income Statement ~$59 million of Q3
revenues are due to coal sales relating to retained RC facilities, which drive
revenue growth ~$8 million of Q3 operating expenses are due to ~2.5
million retained tons Financial benefit of tax credits generated will not been
seen until future quarters
$ in Ms
Nine Months
2012
Nine Months
2011
FY 2011
Revenues
$145.1
$28.7
$53.3
Gross Profit / Margin, Including Coal Sales
$15.4 / 11%
$19.7 / 69%
$24.4 /
46%
Gross Profit / Margin, Excluding Coal Sales
and Retained Tonnage Operating Expense
$30.8 / 80%
$23.4 / 90%
$38.9 /
73%
Operating (Loss) Income
($3.0)
$3.1
$3.0
-23-
©
2013 ADA-ES, Inc.
FINANCIAL SUMMARY:
FIRST NINE MONTHS
2012 |
 As of
9/30/12 As of 12/31/11
Cash & Cash Equivalents
$17.5
$40.9
Working Capital, net of
deposits and deferred
revenues
$5.0
$20.1
Long-term Debt
$2.4
$ 3.6
Shares Outstanding
10.0
10.0
In Ms
-24-
©
2013 ADA-ES, Inc.
BALANCE SHEET HIGHLIGHTS
REDUCTION IN CASH REFLECTS BUILD OUT OF RC FACILITIES
|
 RC
opportunities expected to provide substantial growth in revenues, profits and
cashflows in 2013, and consistent revenue streams through 2021
MATS compliance requirements are driving expected >$300
million total equipment revenues for ADA in next 3-4 years
Enhanced Coal technology and royalty opportunity expected
to produce 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 the resources to execute on future
opportunities
Key Takeaways
-25-
©
2013 ADA-ES, Inc. |
 Michael D. Durham, Ph.D., MBA
President & CEO
Mark H. McKinnies
CFO
(303) 734-1727
www.adaes.com
Graham Mattison
VP of Investor Relations
(646)-319-1417
graham.mattison@adaes.com
Devin Sullivan
Senior Vice President
(212) 836-9608
dsullivan@equityny.com
-26-
©
2013 ADA-ES, Inc.
CONTACTS
|