Attached files
| file | filename |
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| 8-K - 8-K - Advanced Emissions Solutions, Inc. | d774757d8k.htm |
| EX-99.2 - EX-99.2 - Advanced Emissions Solutions, Inc. | d774757dex992.htm |
 Investor Presentation
August 2014
www.advancedemissionssolutions.com
Exhibit 99.1 |
 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 future RC operations and EC systems; 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 regulations and legislation; 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 or awarded contracts 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.
©
2012-2014 Advanced Emissions Solutions, Inc.
-2-
SAFE
HARBOR
|
 A family
of companies that has been providing emission control solutions to the power
industry for more than 30 years Portfolio of proprietary, low CAPEX technologies
to meet pollution control mandates. 20 US
patents
issued
or
allowed
Customers include most of the leading electric power companies
Strong
and
growing
cash
flows
from
Refined
Coal
business
through
2021
(CCS)
Emission Control business segment meeting MATS compliance market. Near-term
equipment market, longer-term compliance supply market (ADA and BCSI)
Headquartered in Highlands Ranch, Colorado
21.8 million shares outstanding
WHO WE ARE
ADA-ES, Inc.
100% owned ADES
BCSI, LLC
100% owned ADES
Clean Coal Solutions, LLC
42.5% owned ADA-ES, Inc.
Operating Companies
©
2012-2014 Advanced Emissions Solutions, Inc.
-3- |
 Refined Coal-
$0 cost to utility
M-Prove
TM
Technology ~$100k
capex, $1-$4/ton reduced
compliance cost
ACI/DSI-
$1-$3M in capex
Scrubber, SCR-
$100M+
in capex
Large E&C
firms
Boiler
ACI System
DSI System
Coal Pile
ACI System for
Mercury Control
©
2012-2014 Advanced Emissions Solutions, Inc.
PORTFOLIO OF EMISSIONS
CONTROL SOLUTIONS -4- |
 Near-term growth opportunities
Refined Coal
Customers ordering and
installing MATS equipment 2012-
2016
We are a leading provider of
equipment to meet MATS
Activated Carbon Injection
Systems
Dry Sorbent Injection Systems
Created ~$900M equipment
market, ADES expects to
maintain its ~1/3rd mkt share
More than $45M in new
equipment awards in 2014
MATS to create annual
market of $1-$2B for
consumables,
technology, and services
to maintain compliance
(e.g. AC, chemical
enhancements)
ADA offers proprietary
coal additive technology
and optimization
expertise that reduce AC
requirements
Equipment
Compliance
Mercury Control (MATS)
Clean Coal Solutions (CCS)
42.5%
ADA-ES
42.5% NexGen
15% Goldman Sachs
28 RC facilities qualify for
Section 45 Tax Credits of
$6.60/ton (escalating)
through 2021
10 leased/sold RC facilities
generating more than
$110M in annual payments
to CCS (ADA 42.5%)
In total, all 28 RC facilities
expected to produce more
than 100MT/yr
ADES’s 42.5% ownership in
CCS provides ~$1.35 per
leased ton of RC
MATS rule took effect in 2012, compliance by 2015-2016
-5-
©
2012-2014 Advanced Emissions Solutions, Inc. |
 -6-
Mercury and Air Toxics Standard (MATS) created a market for two ADES
Products
Activated Carbon Injection (ACI) systems for mercury control sold by
ADA-ES Dry Sorbent Injection (DSI) systems for control of acid gases
sold by BCSI April 15, 2014-
The U.S. Court of Appeals for the District of Columbia (“D.C.
Circuit”) broadly upheld EPA’s MATS rule
The court rejected industry arguments, saying the EPA's decisions were necessary
and reasonable.
March 28, 2013-
EPA issues final rules regulating Greenhouse Gases from
New
power plants
Rule makes it highly unlikely that a new coal plant will be built, increasing the
importance of the existing coal fleet
June 2, 2014-
EPA issues draft rules regulating Greenhouse Gases for
Existing
power plants
Probably the start of a decade of litigation
Not likely to impact our business over the next 10 years
©
2012-2014 Advanced Emissions Solutions, Inc.
POLICY & REGULATORY
UPDATE |
 EPA’s Mercury and Air Toxics Standards (MATS) driving
market for equipment used to comply
Total MATS equipment ~$900M, slightly lower than prior
estimates due to increased plant retirements and non-sorbent
injection solutions
ADES
operating
companies
expect
to
maintain
~
1/3
rd
market
share of MATS equipment awards
ADA/BCSI have won more than $45M in equipment awards
year-to-date
ADA/BCSI have been awarded more than $160M in MATS
equipment
Approximately 1/3 of plants have received an extension to
meet MATS compliance by April 2016
Expected $1-$2B market for consumables and services
maintain compliance starting to ramp up in April 2015
-7-
©
2012-2014 Advanced Emissions Solutions, Inc.
NEAR TERM
-
MATS EQUIPMENT M
ARKET
|
 -8-
©
2012-2014 Advanced Emissions Solutions, Inc.
MATS EQUIPMENT AWARDS WON BY ADA & BSCI |
 ACI
Systems DSI Systems
M-Prove
TM
Technology
Powdered Activated Carbon
reduces mercury emissions in
the flue gas
Dry alkaline sorbents
injected in flue gas for
SO
2
and acid gas
control
M-Prove
TM
technology
Optimization technology
Flue Gas Conditioning
Compliance Services
Equipment
Compliance
©
2012-2014 Advanced Emissions Solutions, Inc.
-9-
EMISSIONS CONTROL
SOLUTIONS |
 April 2015/2016 MATS deadlines to drive market for compliance services,
including a $1 to $2 billion annual market for consumables
ADES operating companies offerings to include:
Chemicals
M-Prove
TM
technology
RESPond
TM
flue
gas conditioning technology
Optimization Services
Measurement and reporting services
Remote monitoring of operations
Compliance optimization services
Integration with other plant equipment
Aftermarket
Equipment upgrades, repairs, rebuilds, etc.
In-duct mixing equipment to minimize chemical requirements
-10-
©
2012-2014 Advanced Emissions Solutions, Inc.
EMISSION
CONTROL—COMPLIANCE M
ARKET |
 Section 45 of the
Internal Revenue Code offers $6.60/ton in tax credits for the production of pollution
mitigating RC through 2021 Qualifying
RC
facilities
must
reduce
mercury
by
40+%
and
NO
x
by
20+%
and
have
been “placed in service”
on or prior to December 31, 2011
ADES
affiliates
1
own
28
qualifying
RC
facilities
expected
to
be
located
at
plants
that
burn
100+ million tons of coal annually
Expect ~$300M in annual revenue to CCS
Expect
~$100
million
in
annual
tax
benefits
to
CCS
in
2015
2
Clean Coal Solutions Ownership Structure
1.
RC facilities owned by CCS; ADES owns 42.5% of CCS through ADA-ES, Inc.
2.
Expected to result in ~$40 million in annual tax benefits to ADES through ADA-ES,
Inc.’s 42.5% ownership in CCS. ©
2012-2014 Advanced Emissions Solutions, Inc.
REFINED COAL
ADES
42.5%
NEXGEN 42.5%
-11-
GOLDMAN
S
ACHS
15%
|
 ©
2012-2014 Advanced Emissions Solutions, Inc.
-12-
Initiate discussion with utility
Sign Non-Disclosure Agreement
Begin discussions with utility (senior leadership, legal, financial, environmental,
plant managers, coal suppliers, ash brokers, etc.)
Get go-ahead from the utility (this is different from signed agreements)
Get construction permit and long-term operating permits
Public Service Commission approval
Engineering/design work for long-term installation
Purchase long-lead time items
Site access agreements
Complete and sign operating agreements (can be up to six different agreements)
Site preparation (has involved moving structures, underground pipes, etc.)
On site construction and installation (concrete pads, support buildings, etc.)
Chemical supply agreements
Hire and train local operators
Then begin full-time operations
T
STEPS
FULL-TIME
RC
F
O
YPICAL
TO
ACILITY
PERATIONS |
 +100
MT/yr ~32 MT/yr
10 RC facilities
leased/sold
~12
MT/yr
Aug 2014
5 RC facilities
CCS-operated*
Expect to treat more than 100MT/yr with 28 RC facilities
Most RC facilities to be in full-time operation by year end 2014, all by 1H2015
Expect approximately 15% of capacity to be CCS-operated to generate tax benefits
Full-Time Operations Road Map
1H2015
2021
RC facility
where
installation
work is
underway
RC facilities in
discussions for
final location
with more than
15 potential
power plants
28 RC
facilities
in full-
time
operation
©
2012-2014 Advanced Emissions Solutions, Inc.
-13-
* Includes one RC facility where operations were suspended in late-February while final permitting
is completed RC facilities in full-time operation
RC facilities in progress to full-time operation
RC facilities
with currently
committed
locations
OUTLOOK FOR 28 RC
FACILITIES |
 RC
facilities with known locations One RC facility where permanent installation
work is underway at the
power plant
Four RC facilities where permanent installation work is expected
to
begin in 3Q 2014
Three RC facilities where permanent installation work is expected to
begin in 4Q 2014
One RC facility located on site where permanent installation work is
expected to begin in 1Q 2015
RC facilities in discussions for final location
CCS is in ongoing discussions with multiple utilities who collectively
own more than 15 power plants, which on average burn more than
4.5MT/yr each
Some of these utilities currently have CCS RC facilities in full-time
operation at other of their coal plants
-14-
©
2012-2014 Advanced Emissions Solutions, Inc. |
 Help
our clients meet new regulations Greenhouse Gases
Coal Combustion Residuals
Effluents Guidelines
Advancing Cleaner Energy
New emissions regulations on the gas
industry
-15-
©
2012-2014 Advanced Emissions Solutions, Inc.
WHAT’
S
NEXT
|
 Developing
proprietary solid sorbent capture
technology
to
capture
CO
2
from
flue gas in conventional coal-fired boilers
DOE and industry funding:
Pilot plant
©
2012-2014 Advanced Emissions Solutions, Inc.
-16-
CO
2
CAPTURE
DEVELOPMENT
Phase I —
$3.8 million, R&D at 1 KWe
scale, completed in 2011
Phase II —
$22.6 million contract to
validate technology at 1 MWe scale
Pilot Design: 2012, Construction:
2013, Testing: Fall 2014
Advantages over competing technologies:
Lower cost and less parasitic energy |
 -17-
Coal Combustion Residuals Regulation (CCR)
Draft rule in June 2010, final rule expected in 2014
Steam Effluent Limitation Guidelines (ELG)
Sets the first federal limits on the levels of toxic metals in wastewater
discharges from steam electric power plants
Draft rule in 2013
Final rule expected in late 2015
©
2012-2014 Advanced Emissions Solutions, Inc.
Pictures from recent ash pond spills
NEW REGULATIONS
PENDING |
 RC
opportunities expected to provide substantial growth in revenues, profits and
cash flows; consistent revenue streams through 2021
Upcoming MATS compliance requirements are driving
significant near-term market for equipment
Consumables and services to assure compliance
expected to produce additional growth beyond MATS
equipment market
Developing solid sorbent capture technology to
capture CO
2
from flue gas in conventional coal-fired
boilers
©
2012-2014 Advanced Emissions Solutions, Inc.
-18-
KEY TAKEAWAYS
|
 -19-
The Company continues with its accounting review and expects to file the 2013
Form 10-K in or around the fall of 2014
Additional Actions:
Appointed Chief Accounting Officer (April 2014)
Retained FTI Consulting to assist with the accounting review process and
implementation of changes to ensure we will have the necessary resources to
support the Company’s future needs. (April 2014) Added additional
accounting and audit expertise to the Board (May 2014) Background
On April 24, 2014 the Company announced that it was unable to file its Annual
Report on Form 10-K for the fiscal year ended December 31, 2013 and that
the financial statements for the quarters ended March 31, 2013, June 30,
2013 and September 30, 2013 should no longer be relied upon and should be
restated. Restatement of 2013 financials is expected to show a reduction of
revenue of approximately $10.8 million (with a corresponding increase in
backlog) and increase in the loss before income taxes of approximately $2.3
million from those amounts previously reported. The increased loss is primarily
related to the deferred recognition of the margin under the Emissions Control
business segment systems and equipment contracts and the accrual of
additional IRC 453a interest. Company has made a determination to have the
previously issued financial statements for the years ended December 31, 2012
and 2011 re-audited. The re-audit may identify additional changes to
prior financial statements. ©
2012-2014 Advanced Emissions Solutions, Inc.
FINANCIAL UPDATE
|
 APPENDIX
©
2012-2014 Advanced Emissions Solutions, Inc. |
 ADA-ES, Inc.
100% owned ADES
BCSI, LLC
100% owned ADES
Clean Coal Solutions, LLC
42.5% owned ADA-ES, Inc.
Operating Companies
-21-
©
2012-2014 Advanced Emissions Solutions, Inc.
CORPORATE STRUCTURE
|
 Source: EIA
2012:
lowest
power
demand
since
1987,
natural
gas
prices
reach
a
low
of
$1.91/MM/btu-
2012
average
of
$2.77/MMbtu
-22-
©
2012-2014 Advanced Emissions Solutions, Inc.
COAL AND US ELECTRICITY GENERATION
|
 EPA
determines it
necessary to
regulate
mercury
2000
2009
2005
2008
EPA issues
Clean Air
Mercury Rule
D.C. Circuit Court
vacates the Clean Air
Mercury Rule
EPA proposes
new rule to
replace the
vacated CAMR
EPA issues draft
of Mercury Air
Toxic Standards
(MATS)
EPA issues final
Mercury Air
Toxic Standards
(MATS)
Compliance
deadline for
MATS. Plants can
apply for an
extension
2011
2012
2015/16
Technology
commercially
proven
-23-
©
2012-2014 Advanced Emissions Solutions, Inc.
MERCURY CONTROL- 15 YEARS IN THE MAKING |
 Boilers
Treated by ACI Systems ADES
Source: Institute of Clean Air
Companies, May 2013.
Norit
Clyde
Bergemann-EEC
©
2012-2014 Advanced Emissions Solutions, Inc.
-24-
ACI M
ARKET
SHARE
|
 ADA
STANDARD ACI SYSTEM Bin Vent Filter
Man-door with PRV
Level Transmitters
PAC Storage
Module
Process Equipment
Module
-25-
©
2012-2014 Advanced Emissions Solutions, Inc. |
 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
annually
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™, M-45™
and M-45-PC™
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
CCS
for
$60M
2012
-
2021:
CCS
focused
on
capturing
the
value
of
Section
45
tax
credits
REFINED COAL: INTRODUCTION & OVERVIEW
©
2012-2014 Advanced Emissions Solutions, Inc.
-26- |
 REFINED
COAL PHOTOGRAPHS -27-
©
2012-2014 Advanced Emissions Solutions, Inc. |
 Graham
Mattison Vice President, Investor Relations
(720) 889-6206
graham.mattison@adaes.com
Michael D. Durham, Ph.D., MBA
President & CEO
Mark H. McKinnies
SVP & CFO
-28-
©
2012-2014 Advanced Emissions Solutions, Inc.
CONTACTS
|