Attached files
| file | filename |
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| EX-99.1 - EX-99.1 - ADA-ES INC | d502417dex991.htm |
| 8-K - FORM 8-K - ADA-ES INC | d502417d8k.htm |
 2012
Fourth Quarter and Year-end Earnings Conference Call
March 2013
Exhibit 99.2 |
 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;
timing
of
the
closing
of
contracts
for
the
lease
or
sale
of
RC
facilities;
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;
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.
We
refer
to
certain
non-GAAP
financial
measures
in
this
presentation.
Reconciliations
of
these
non-GAAP
financial
measures
to
the
most
directly
comparable
GAAP
financial
measures
can
be
found
within
this
presentation.
Safe Harbor
©
2013 ADA-ES, Inc. |
 ©
2013 ADA-ES, Inc. |
 Mercury
and Air Toxics Standard (MATS) regulation takes effect in April 2015. Creates
national mercury and other emissions control market
Refined Coal
-
4 facilities leased to RC investors as of December 31, 2012
-
First RC facility to use M-45
TM
leased to an RC investor
-
M-45-PC
TM
qualified for Section 45 Tax Credits
-
$16.4M of tax credits generated for ADA
Emission Control
-
Acquired assets of Bulk Conveyor Systems, Inc. and Bulk Conveyor
Specialist, Inc. to enhance DSI offerings. Won fleet-wide award
-
Won fleet-wide ACI contract from a major US utility
Carbon Capture
-
Entered fabrication and construction phase of 1MW plant in June
2012, estimated completion in October 2013
2012 Highlights
-3-
©
2013 ADA-ES, Inc. |
  Clean
Coal
operated
8
facilities
in
the
quarter,
4
of
which
were
leased
to
RC
investors
-
In 4Q12 the four RC facilities operated by Clean Coal incurred operating expenses of
$22.1M but generated $13.3M in tax credits
-
The operation of these units included $51.4M in pass through coal
purchases/sales -4-
©
2013 ADA-ES, Inc.
2012
2011
2012
2011
$(000)
Rental income
9,802
$
3,203
$
36,855
$
20,110
$
Coal sales
51,365
16,865
157,898
19,952
Other income
11
191
147
191
Total RC Revenues
61,178
$
20,259
$
194,900
$
40,253
$
Cost of Revenues
57,984
$
16,126
$
179,204
$
20,201
$
Gross Profit
$3,194
$4,133
$15,696
$20,052
Gross Profit Margin Percentage
5%
20%
8%
50%
Adjusted Gross Profit*
9,656
$
**
36,105
$
**
Adjusted Gross Profit Margin Percentage*
98%
**
98%
**
Tons for leased facilities
2.5
0.8
9.4
5.4
Tons retained
2.1
0.3
5.9
0.4
Total tons treated
4.6
1.1
15.3
5.8
Tax Credits generated by JV
$13.3
$1.8
$38.6
$2.8
Tax Credits to ADA (42.5%)
$5.7
$0.8
$16.4
$1.2
* Adjusted gross profit and adjusted gross profit margin percentage excludes coal sales and
raw coal purchases and retained tonnage operating expenses **Information not meaningful.
RC activities in 2011 were focused on placing-in-service 26 additional RC facilities.
Operating Statistics (millions)
For the Three Months Ended
December 31,
December 31,
For the Year Ended
Non-GAAP reconciliation can be found in the appendix
|
  MATS
rule
finalized
in
April
2012-
compliance
by
2015
-
Revenues up 40% year-over-year driven by MATS demand for ACI and DSI
systems -
Backlog at 12/31 stands at $25.3M
-
Active bids totaling over $125M for ACI and over $160M for DSI systems
-5-
©
2013 ADA-ES, Inc.
2012
2011
2012
2011
$(000)
Systems and equipment
3,122
$
2,094
$
9,578
$
4,141
$
Consulting and development
1,065
885
4,227
4,900
Chemicals
207
151
798
926
Total EC Revenues
$4,394
$3,130
$14,603
$9,967
Cost of Revenues
3,297
$
3,086
$
11,135
$
6,839
$
Gross Profit
$1,097
$44
$3,468
$3,128
Gross Profit Margin Percentage
25%
1%
24%
31%
EC Segment Backlog
$25,300
$736
For the Three Months Ended
For the Year Ended
December 31,
December 31, |
  In Phase
II of DOE and Industry funded $20.5M 51-month contract to scale technology
to 1MW -
Project started in June 2012
-
Estimated completion of construction in October 2013
-
Testing in 2014
-6-
©
2013 ADA-ES, Inc.
2012
2011
2012
2011
$(000)
Total CC Revenues
$1,867
$1,202
$3,020
$3,096
Cost of Revenues
$1,573
$723
$2,216
$1,924
Gross Profit
$294
$479
$804
$1,172
Gross Profit Margin Percentage
16%
40%
27%
38%
Total Backlog
$12,700
$15,700
December 31,
For the Three Months Ended
December 31,
For the Year Ended |
  Consolidated Financial Results
-7-
©
2013 ADA-ES, Inc.
2012
2011
2012
2011
$(000)
Revenues
$67,439
$24,591
$212,523
$53,316
Gross Margin Before Depreciation and Amortization
$4,585
$4,656
$19,968
$24,352
General and administrative
7,299
2,872
$20,151
$17,468
Research and development
904
893
$2,968
$2,289
Depreciation and amortization
1,833
960
$5,277
$1,568
Operating Income (Loss)
($5,451)
($69)
($8,428)
$3,027
Income (loss) from unconsolidated entities
360
(1,206)
760
(6,967)
Interest and other income (expense)
(233)
(638)
(1,156)
634
Litigation and arbitration expense
(748)
19,752
(2,301)
(21,932)
Income (Loss) from Continuing Operations Before Income
Taxes and Non-controlling interest
($6,072)
$17,839
($11,125)
($25,238)
Income Tax Benefit (Expense)
-
(580)
-
10,400
Non-controlling interest
667
(93)
(1,946)
(7,981)
Net Income (Loss) Attributable to ADA
(5,405)
$
17,166
$
(13,071)
$
(22,819)
$
Net Income (Loss) Per Basic Common
Share Attributable to ADA
(0.54)
$
1.94
$
(1.31)
$
(2.85)
$
Weighted Average Basic Common Shares Outstanding
10,021
8,832
10,013
8,020
December 31,
For the Three Months Ended
For the Year Ended
December 31, |
 REDUCTION IN CASH REFLECTS BUILD OUT OF RC FACILITIES
DOES NOT INCLUDE CASH INFLOW FROM RECENT RC CLOSING AND LEASE
AMENDMENTS
in Millions
-8-
©
2013 ADA-ES, Inc. |
 ©
2013 ADA-ES, Inc. |
 MATS is
projected to create $1 billion market for ACI & DSI Procurement/award activities
have commenced and ADA is responding to several RFPs
1) Total Expected Revenue from Estimated Equipment Sales 2012-2015
-10-
©
2013 ADA-ES, Inc. |
 MATS
market for equipment continues to develop with bidding and award activity
accelerating -
EC backlog steadily increasing. Less than $1M at YE 2011, $4.5M at 6/30/2012 and
$25.3M at YE 2012.
-
Won fleet-wide contracts
for ACI systems and DSI systems from different major US
utilities
-
Won joint ACI and DSI award highlighting company’s ability to provide a
comprehensive approach
-
ADA maintains its leadership position
$1-2 Billion annual chemical market expected to develop after 2015
following equipment installations
-
ADA’s Enhanced Coal offering will compete with AC and other coal additives
-
Could provide savings of $1-$4/ton of coal in reduced costs associated with
AC -
Offers non-corrosive alternative to other coal additives
-
Technology being proven out as part of Refined Coal technology
-
Marketing and testing currently ongoing
Update on Emissions Control
-11-
©
2013 ADA-ES, Inc. |
 Clarity
on investment for RC Investors -
RC investors have some feedback from IRS on parameters for RC investments
-
Issuance of Private Letter Rulings (PLR) has resumed
-
IRS is considering publication of a formal Revenue Procedure to provide Safe
Harbor guidelines
-
Goldman affiliate and CCS have amended leases for first two RC facilities
-
Go forward PLR on one RC facility expected in coming weeks
-
Expect to close two more facilities with Goldman affiliates in 2nd Q 2013
CCS has completed transactions with three different RC Investors
-
In negotiations for additional facilities with first three investors
-
In discussions with four additional RC investors
-
Potential for improved terms to CCS with continued success
Update on Refined Coal Activities
-12-
©
2013 ADA-ES, Inc. |
 Timing and impacts to future financial results from
leasing/sale of two RC Facilities burning approximately
7.5 MT/yr of Refined Coal operated by the JV in 2012
4Q12
1Q13
2Q13
Influx of Cash:
+$20M
+$8M
Income (Loss):
($5.4M)
($3.8M)
$6.6M
JV Retained Tons:
2.1M
1.6M
0
Tax Credits for JV
$13.3M
$10.2M
$0
Impacts of Leasing/Sales of Two
Refined Coal Facilities in 1H13
-13-
©
2013 ADA-ES, Inc. |
 8 Units
currently in full-time operation -
With closing of another RC facility with Goldman affiliate, 6 of the 8 will
have 3
rd
party RC investors and are expected to generate on an annual basis:
•
Approximately 21 million tons of Refined Coal per year
•
Greater than $75 million in revenue
-
Two smaller facilities will continue to be operated by CCS generating
approximately $3 million in tax credits for ADA each year
8 Facilities committed to sites
-
Status ranges from initial contracts and permitting to final stages of contracts
-
One 3 MT facility expected to close 2Q13 once a PLR and PUC approval are
obtained -
Other RC facilities could close late in 2013
-
A few facilities may be delayed until 2014 because of financial restructuring of the
plants
Final 12 facilities pursuing options to use new M-45-PC
TM
technology
-
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 half of 2013
Update on Refined Coal Facilities
-14-
©
2013 ADA-ES, Inc. |
 RC
opportunities expected to provide substantial growth in revenues, profits and
cash flows 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
Key Takeaways
-15-
©
2013 ADA-ES, Inc. |
 Questions & Answers
©
2013 ADA-ES, Inc. |
 Appendix
©
2013 ADA-ES, Inc. |
 ©
2013 ADA-ES, Inc.
Adjusted Gross Profit and Adjusted Gross Profit Margin Percentage
2012
2011
2012
2011
RC Revenues
61,178
$
194,900
$
Less coal sales
(51,365)
(157,898)
Adjusted RC Revenues
9,813
$
37,002
$
Cost of Revenues
57,984
$
179,204
$
Less cost of raw coal
(51,365)
(157,898)
Less operating costs of retained tonnage
(6,462)
(20,409)
Adjusted Cost of Revenues
157
$
897
$
Adjusted Gross Profit*
9,656
$
36,105
$
Adjusted Gross Profit Margin Percentage*
98%
**
98%
**
* Adjusted gross profit and adjusted gross profit margin percentage excludes coal sales and
raw coal purchases and retained tonnage operating expenses **Information not meaningful.
RC activities in 2011 were focused on placing-in-service 26 additional RC facilities.
NOTE: The foregoing non-GAAP financial measures should not be considered for any related
financial measure under GAAP; however, we believe that our presentation of this measure
provides investors with greater transparency with respect to the results of our RC operations.
For the Three Months Ended
For the Year Ended
December 31,
December 31,
Non-GAAP Financial Measures |
 Source:
U.S. EIA, March 2012 SOURCES
OF
U.S. ELECTRICITY, 2011
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
©
2013 ADA-ES, Inc. |
 |
 ©
2013 ADA-ES, Inc. |
 Graham
Mattison VP of Investor Relations
(646)-319-1417
graham.mattison@adaes.com
©
2013 ADA-ES, Inc. |