ADES - Earnings call transcript Q3 2021

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Operator

Good day, and thank you for standing by. Welcome to the Advanced Emissions Solutions Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions]. to Mr. conference like first to now today, speaker would hand over the your I Investor Coleman, Ryan Relations. go please Sir ahead.

Ryan Coleman

within quarter conference call. Thank today's and Officer, on call you, replay today Section is filed at there Chief us the Accounting contact live Morgan third yesterday a of Investor joining be as thank are the Treasurer; you earnings and the webcasted version good per as our Officer. can now support you Fields, presentation morning, XXX-XXX-XXXX. Health as today everyone, and website, available Greg This and will Marken, afternoon also for webcast well of the through the is me President being IR on Relations available With and who site well. for XXXX call downloadable results X-K A is our Executive Chief Investor

on reason. circumstances or or required Exchange developments and limited change presentation defined the includes September you Securities XX, and today and future forward-looking any to that ended made reflect me quarter two us Act. are other Exchange information undertakes Securities in obligation Section the Let of in based with XX-Q currently These statements other available the Except statements remind on remarks are as XXE statements events, forward-looking and identified and the risks not materially the for to that our expressly involve no These to statements. slide those update future as XXXX, securities actual any factors uncertainties to, by but risks from implied today's form in slide these presentation opportunities those Commission. factors expressed or differ business and laws, by filings and company could results, performance and include the and or for uncertainties prospects to cause of

With that, very to remarks GAAP call the in I today's statements. over is in review will today's Greg. addition, references In the important with conjunction financial turn it to presentation and

Greg Marken

of morning. X. Yesterday, reported ADES from quarter year. the or were end delivered $X.X APT And Overall, Thank to you, third quarter. the and Slide Ryan, year, from record were line close our we to ahead period. Tinuum thanks results, last gross in the tax earnings and revenue the we million third compared QX compared highlighted for expectations of strong the generation after also and to $X.X joining Royalty credit us segment going increased over Tinuum which on million in are our results group approach the totaled of Distributions quarter, quarterly of XXXX. this margins. Tinuum improved our significantly million strong markets, everyone prior and $XX.X into in million distributions to remain for $X.X as our

will reached supported have no high quarterly now operating of fuel RC of the alternative credits we XX higher tax note year. end EBITDA for expiration generation for later facilities RC tax generating in of gas In their the reach to XX. what number which demand six period. adjusted operational customers. than XX facilities RC Similar as doubled increased as their all Of segment the facilities, had We income have of date scheduled their and prior natural prices credit saw such year expiration the quarter, addition, December the more than second well sources for both compared as investment to we

operating the to X% segment the drove was million of year. prior XXXX. in year-over-year strongest compared $X.X million, strong to Segment also natural The grew operating agreement, impact contributed APT XXXX. $X.X $X.X XX% gross one segment loss it was to XX% the keep prices our an record Cabot EBITDA of gas million, $X.X inherent demonstrated last compared also the volumes is benefited QX income adjusted seasonally Our a compared mind to and compared revenue to from our year. in quarter quarters. segment's supply which higher as in of leverage as operating margins a is The It million of that possesses in to loss important to

customer However, we inventory of latter are in the we well This to better sources do expect while high that Due high to cost of than supplement means in per the remain the strong our pricing, tightness, the to segment continue to higher order inventory margins quarter, pressured currently due gas to our as by demand. portion impact experiencing. months through external QX. unit prior demand as natural we meet colder remain

that, We persist to help tight alleviate we despite navigate ongoing customer expect proven well have high these to levels to along mix pressures to and ability expect cost conditions with XXXX supply demand into product improvements and pressures. our these these

experienced have within and Although from in important strategy. a bid are customers, industrial with APT generation are driven maintain power our We applications. markets, strong strong pipeline potential volumes customers being factors water diversifying these we solid they demand also as by

increase well. carbon price initiatives for Our activated products progressing are

improve since takes course, up year, portfolio and an our are pricing announcement of it seeing to for entire by are ability negotiate we product. step accordingly. our to Of better we earlier our encouraged ASP But time terms this

new soil progress also with make partnership technologies activated We remediation in developing groundwater our continue and and products market. through for carbon steady Environmental Cascade to the

to testing share, offering. $X.XX the results product We potential or are per this was and in $X for per of to-date XXXX. with $XX.X excited emerging achieved or quarter, net about income million the share Consolidated diluted pleased compared are $X.XX

$X.X for EBITDA significantly to $XX.X million, higher at QX compared consolidated million of adjusted was XXXX. Our

very balance a sheet. maintain to continue strong We

$XX.X ensuring perspective, increase customers. XXXX. cash serve are remains that balances million capital organic manufacturing million and demand cash the to our able From investment at quarter, XX, to restricted inventory totaled priority end compared of sufficient including number Our an a meet we to $XX.X our customer one allocation the our assets to in December the of source

our to the during the updating between cash with fourth million flows from quarter. to be after $XX received projected $X.X are and be segment tax million $XX RC We million

additional us during another wind period. credit tax the the credits can ultimately That costs these control end of associated place coal be facilities likely emissions process. in the XXXX of down We when like first the cash will utilized requisite meeting facilities expect cash chemistry date wind inclusive half year will of that generation guidance end application front flow completes of Tinuum. I'd after flows disbursed to many the feedstock need its standards. from Tinuum to down state facilities to is to to other the or for apply production currently expiration also RC remain to the be leveraging of tax utilities as These method pivot

will that from likely cash activated are technology utilities will away. Tinuum these or of portion instead, purchase frontend going which flows carbon help distributions replace our Some the RC of a

expect we APT line mentioned, I strong. very As our to remain top segments

Our margins as inputs as remain to pressure product supply conditions well putting on to broader challenges well expected are that be are transportation the under that upward tight as costs as pressure chain and freight due necessary. other may to inventory related

offset to product and through will We optimization. these increases mix seek continued price pressures

opportunities to review, we Lastly, the value. to are maximize shareholder evaluate to pleased progress us our relates strategic as available with to ongoing it

continuing the detail. the process. As we And profile of quarter improve meantime, call when I'll performance a we focused in review no turn of In on remain will have financial for third appropriate. assets. provide greater APT we Morgan to to our reminder, timetable the to this With operating updates the that conclusion over our

Morgan Fields

a shows performance. X Slide snapshot third and Greg. you, quarter year-to-date financial Thank of our

period group to compared and Third in third value of the $XX.X earnings quarter the Tinuum quarter earnings the million in which earnings result the in excess from occur. equity distributions method excess carrying million of of XXXX. increase $X.X as from The method equity investments distributions recognized of distributions as were a are investment therefore in being for the

group a Tinuum the number XXXX. higher facilities of added had RC majority current addition, during to new of facilities due for RC three year In

and the cost of well third revenue increase of $XX.X revenues royalty $XX the Third of The million income. quarter to and million XXXX. $XX as was higher were million sales quarter higher of $XX.X million consumables for respectively, revenues result compared primarily and in as

net third within diluted share, per XXXX. higher $X.XX compared from earnings diluted income of the method per higher driven well segment. $XX.X the to or equity million quarter $X.XX share or as for improved investments, Third $X quarter margins as million by and The was increase was volumes APT

increase Third $XX.X as adjusted consolidated in adjusted $X.X for compared was from revenue in the driven margins. as well The distributions XXXX. was increase favorable EBITDA more at higher by to quarter consumables Tinuum million million, EBITDA

bond surety in December of for mine including balance, Marshall, totaled and million The post cash due million, to reclamation cash restricted $XX.X requirement Our related obligations to contract from of restricted $XX an under stems the our to cash increase XX, XXXX. the the million the Texas. collateral compared $XX.X

repayment $X.X full $X.X our $X.X months of compared the quarter, lease outstanding, year, company's the million loan of only With of our first million, quarter last nine expenditures as approximately Through totaling million finance the obligations, debt the end. capital term totaled in to XXXX.

mines reclamation Our at Five $XX.X and currently total for to stand the related obligations million. Forks Marshall activities

an million a has possess value reclamation offsetting quarter present receivable for also end. we $X Cabot which reimbursements, from However, of at future

for extinguishment a During forgiven. notice loan PPP as presented that the on our financial gain statements both interest. we of was and the debt forgiveness in the of the the formal our received debt is quarter This million $X.X accrued

reiterate, expense partially third wind $X.X were professional primarily and business operating higher a reduced other upon To million payroll by to the resources amortization, to in we $X.X costs. general million the not over lower increase management run offset as years. that and reduction well past by administrative expenses is XXXX. lower had couple expenses quarter a the our the as previously we quarter that of run Third in separate expect operating depreciation legal as higher and rate driven significant and of down compared team. RC business was fees, Tinuum by And The was specific of do

of their taken actions. has future our those the year structure impact allocation include the cost cash of our the unchanged. several end right credit of of date estimates necessary approach Overall, Given flows tax the the the capital production past and remain expiration RC over quarters size visibility will to of Tinuum steps the already

capabilities manufacturing focus our ensuring and to near liquidity, manufacturing continue to expect that We value. shareholder term on

between being Our RC million the of $X.X $XX year. first in million million, the next the received half remaining and $XX received fourth quarter, in and deliver will with segment

performance strong manage our I'll turn line protect now remain top our the Greg. our to to expect APT to inventory We call back tightness margins. segment in as we

Greg Marken

Morgan. you Thank

X, flows. future our can Turning to expected slide RC cash you see

quarter year of expiration generation third scheduled invested of their XX the end reached life. their the credit six During RC facilities tax

discussed just have now has flow the Tinuum in invested RC such facilities we As XX updated the cash that guidance.

As credit we scheduled XX generation remaining periods the expire tax facilities the end are to year. of discussed this invested earlier, by

place will As I mentioned in apply the technologies end some them in facilities front likely of requirements. meeting to our control utility customers to emissions expired assist remain

solutions both We opportunity are we technology. our the carbon active to discussing general offer carbon chemical activated down have currently wind we channels. but provided have Today, adhere effort and for to diversified faster the than to end continue also where Mercury pricing XXXX. gas. the after these and declined sustainable in building conducting market to expect natural fuel years considerable industrial such, priced time marked has water of seeing generation we rebound significant dispatch, the We're X some coal have has that a product a our with APT of products activated commercial Tinuum. and tests sales Toxic since the in facilities became team business in are customer much end existing alternative Air carbon industries previously As and go on fire the and we opportunities to the fired by competitively Standards. reflects provide small we and year transitioning interest needed more potential bound from management, viable to of utilities time, for tax identified solutions demonstrations or power also adjacent not Mercury our these our mix acquisition are after front solutions period markets; power and internal possess opportunities progress technologies reached other to future invested emissions field of generation may where as see channels We immediately upon forecast strong these that abundant time, such by generation as in in by a this Air driven segment in been for out several the our that market largely restrictions. our options in At either end in technologies stable tailwinds to manufacturing continuing we front products competed. site build Slide growth fired the the of coal carbon that customers these source new December customers Toxic believe predicted, coal credit end plants three waste of new and Well, the to begin also market track there that remain Standards. be to opportunities. that power developing their we Since has had growing year. approaching areas utilizing capabilities revenue We're subject product that Of provider legacy

while yielding agreements end create a volumes of leverage, our applications. to is As mix more a expanding our balanced our to substantially with APT of Cabot, better result addition the operating in segment also and commercial markets actions internal supply

continue to market within see plant also to we demand a utilization on are which increased applications We end basis. is forward high these go contributing rates supporting,

Our to many benefits. of of remains an remain to expected for each as high provider the contracts base products make with significant our situation and of demand have supply customers. The carbon persisted of us future. our inventory levels requirements customers are provisions exclusive tight activated of foreseeable provide These contracts and

as created well that However, turnaround inventory we With in with must XXXX, incident simultaneously coupled when it demand. as this procure from natural that to demand in April parties. to the to conditions. pressure scheduled have rises, third well tight This QX of to coal us means plants backdrop, fulfill as switching, gas leading gas there and activity meeting inventory our the incremental be as a higher demand, much prices requiring inventory continues as on levels customer

These have to mix pressures mitigate are price cost seeing, River we managing full but potential product at are we products the actively on the of we the able. activated actions our are production increases helping Plant. where to Red instituted We optimize And carbon are constrained also segment. the earnings

we expect these producers. well best nature While XXXX, us better assets these most of into to than conditions to in the our allows conditions persist manage class

carbon the a reiterates year. provider technologies our to believe well-positioned choice and position of leading We forward. slide the be X expect our leave activated and priorities finally, assets strong of us for these for remainder going financial And

we cash protect continue flows Our XX the remaining to between years first line priority is to expect our and and today optimize net flows cash RC down.

its to continue leverage. generate will optimize in to River vertically mix our to operating product We leverage integrated APT class improved our and best segment plans Red

to While near customers, fulfilling with opportunities and product the business focus customer focused our our to persist structure activities. term are agreements margin potential pressures maintaining improve on and through on cost we forward will earnings relative go identifying mix

manner, and preservation strategic our RC Lastly, we business term capital in are the approach through business call as progress to ensuring to strategic reiterating Ryan the to our to allocation move process I'll cash run end alternatives investment focused that, organic efficiently. back continue aim as Q&A. near the activated timely we business on as We in we a turn necessary carbon review our over while of us well the complete our With review. to

Ryan Coleman

Thanks, Greg.

release who many as questions well. to afternoon’s of this invite calls seen press of forward press your the earnings Thanks of announcement included we yesterday questions for As submit to you questions. future submit at we well those past We'll continue ahead time similar release. conference of going and practice have continue call of you as your send invitation to quarters, the as bottom you to ahead

legislation we business either Tinuum proposed solutions life carbon that the bill the business. could the anything benefit currently is question of the in first extend there The better or back received

Greg Marken

coal nothing relates Ryan, there extending is back tax to that currently the in bill refined life the bill better credits. the of production

of end even that QX closing. to such business. units difficult that the is in closed outcomes for continues extension during multiple to in planning consider for as path it's of Tinuum they operation QX we and a Also the While continue D.C., predict are portion in down an Tinuum unlikely. window Tinuum its

to provisions infrastructure possibly recently As our ADES it segments, relates and qualify bill certain the to of included that in could there multiple related bipartisan these bill. passed are sections for APT

of unknown. is However, probability and actual funding qualifying

are at truly So predict point. we can't any tailwind this benefit

Ryan Coleman

that quarter changed? margin The commentary second question well was headwinds is identified last has would the your But the AAPT What this segment into in quarter into XXXX. to XXXX. that persist changed

Greg Marken

as that to not gas call It's subside gas continues anytime gas prices move natural driver level higher clear a into primary colder at not The switching. to the prices. to would are to months, be high least likely the soon, that we lead natural

we from our As to going demand very top line inventory is result, to to require for continue expect strong, source and remain parties. us be third which a high to to

the factor and and is pressures certain broader from are the we use. The additives transportation other commodity input economy for that inflationary across prices seeing we freight general, costs, prices in

not seem pressures, We easing. not to to immune do are price be those which certainly

So those will as of well. headwind create a bit

Ryan Coleman

And our from technologies meet end to able revenue regulations? last RC to customers are of carbon question that current opportunity quantify emissions you we front the and to utilizing other switching your activated received,

Greg Marken

we because revenue too it at Thus, also that have it point. It's rate and on to difficult annualized they to opportunity the adopt. the is an the capacity choose to highly identify to at technology those individual will this dependent utility be depends early quantify still serve stage on It this customers. whether run

a our world. a and especially end coal our that activated are front with viable know solution, in technology defined combined we post However, carbon competitive technologies

So option going for this to provide customers we intend forward.

Operator

turn I'll the everyone thanks remarks. Thanks, to that for back Greg again call closing questions. Greg. over submitted And to

Greg Marken

continued everyone to this next everyone thanks morning. And for joining We for quarter. look and to the updating support. forward your call Ryan, Thanks,

Operator

all Thank conference you This call. participating. concludes for today's

You may now disconnect.

Arq (ARQ) 10 Nov 212021 Q3 Earnings call transcript