CHRA - Earnings call transcript Q2 2022 | Charah Solutions, Inc. 8.50% Se

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Operator

Good morning, ladies and gentlemen, and welcome to the Charah Solutions, Incorporated Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After today’s presentation, we will conduct a question-and-answer session and instructions will be given at that time if you’d like to ask a question. I would now like to hand the call over to Steve Brehm, Vice President of Legal Affairs and Corporate Secretary for Charah Solutions. Please go ahead.

Steve Brehm

operator. you, Thank and everyone, for us joining Good thank today. morning, you answering participation We sharing quarter and in XXXX your our questions. earnings remarks to second forward our appreciate look call prepared your and issued had a review release market We hope yesterday chance the you’ve after the to press we closed. supplemental website prepared you the remarks can a Investors press at may ir.charah.com. you section release the not, presentation follow our www.charah.com on or If and of find investor during our

Charah’s on President Roger today call the Officer; Officer Scott Sewell, Chief me and and Joining Shannon, and are Executive Treasurer. Financial Chief

Following question-and-answer their prepared remarks, we will conduct the session. customary

we in we These Before except statements be disclaim earnings Those our that calls. required with like risks disclosed conference XX-Q statements described risks to forward-looking Securities meaning that remind include remarks statements those in forward-looking our you Private within the are We cause by including to subject begin, our that and results would in uncertainties well the to Report the and press our these others, Securities filings I update on Annual Form actual Exchange on are include, matters of release and materially reports and Solutions Act. regarding could releases obligation from statements, Form Reform Charah different the as to Commission, XX-K. as have our any quarterly forward-looking among our law. earnings as Litigation

earnings non-GAAP release refer certain GAAP will call, financial We our this During nearest we presentation. and to press to applicable provide measures. conference measures in supplemental reconciliations the

Executive and Scott to Sewell, I over President call like to would Now, Officer. Chief turn the our

Scott Sewell

our earnings our context announcement the joining morning. business’ for transformation, turn discuss awards. on call on exciting this will backlog some the I’ll Steve, Thanks, Today, of results. work thanks Roger, new and everyone financial who I’ll After an commentary and over including us that, exciting call milestone, our to provide of on to our

Solutions the Charah be evolution us. at the that help our importantly, As what had primary business have ago. more. two or the I earning today, market for Compliance years and not Solutions streams, Charah and it our in company two old Those of amazed the incredible we but great look IPO of was at today, time more Services cannot and so or old present much was at Charah are opportunities of opportunities even businesses and is Remediation I The company is Charah XXXX great in Fossil Services. us. But still the front Byproduct

have we to we more of five United a the agreed out major been thrilled we terms are commercial of our for EnviroSource principal years earnings two earnings dynamic double prove to deployment in ash much streams, ago. first of technology drive announce the to have beneficiation to XXXX, finalize parties on Western After August for growth have the company Risk the the are and the technology. positioned than ash profitability. technology, of greater design utility we and what and States hard new years and streams, Transfer As deployment, the and In work awarded, long-term Environmental anticipation a the the EnviroSource had with two that contract just beneficiation negotiate first

innovative will formerly believe technology in concrete, cost. product We of this the commissioning construction the of the begin we leading ponds for substitutes the signed for major from in cement, the even with XXXX. gases, Solutions. reduce announcement. facilities. the risk to current reduce Charah the internationally the U.S. gases initiative EnviroSource is beneficiation friendly deploy landfills on should stored COX our our believe Portland a ash recent of beneficially opportunities also at of XXX,XXX U.S. accelerate, deployment EnviroSource half $X greenhouse we see technology entering a We there be contract save providing market fly tons on technology the With as superior billion, the expect Solutions’ to addressable makes estimate in agreement to are atmosphere will XXXX, contributor around ready-mix EnviroSource full in groundwater step first that size cement marketable beginning. to in lower an Charah projects continue concrete and a this Portland recycling need unit of to of over and and in imminently greenhouse environmentally to help used and unusable to EnviroSource reducing This and we to the ash of is Deployment just be in second similar storage unit first substantial By efforts producers this for across environmentally our production address sustainable need. and a

have deployments environment. will We make technology are tremendous believe the customers, announcing soon. impact of business currently more our in on we EnviroSource discussions additional be and our hope positive significant the future for several with and impact a We a to potential

we second our business. Transfer past developed The stream the Risk income have over Environmental and business is two years

We done demolition generating Utility the land and a decommissioning and combination our of commitment this efficiently trust ash business. capabilities, uniquely quickly. sustaining no competitor to a have and opportunities culture, is and correctly, Charah to our business know development they environment. positioned Redevelopment and we project safely, experience, capitalize talked the vision recently ERT lot safety can the Environmental can remediation Environmental improving customers get grow and management domain about job Risk knowledge, Group business. line the this other outstanding We in believe cash Charah match see on growth or Transfer to flow for

our do We this. have ability proven to

redeveloping of these sustainably the the while where ash we economic benefit they environment. shuttered all something tax that members of, communities that the sit, for plants increase deliver of site the drive proud betterment create of citizens the know be can For they contaminated and community, something impact, will base jobs, will the

and contributions real estate projects flows company. much cash ERT when our the the Though typically upfront that do we out cash and recycled the more sell we scrap. increase cash the Layering get the end project seen flows. and projects in earnings smooth compelling will sell further the parcels, comes create of payoff projects as our of of we also at these for throughout have We our significant

into over the Gibbons of project XXXX to and on schedule, Our ERT continues second of Creek remaining close parcels of ahead half of the we and the expect XXXX. sales land

expect to we early by complete remediation Additionally, the XXXX.

flow the earnings. that generate will around $XX expect over additional million parcels of of sale We of remaining cash and million the $XX

and XXX of Investment of Avon unveil these of projects, with Community GenOn ahead The Avon from citizens second press Energy. and publicly we July, Lake. the of Avon Lake of the excited During partnered Avon ERT we the of two the tremendous the lakefront who to Both quarter, we and Cheswick Mayor Lake are meeting the acquisition once-in-a-lifetime transformation our received moving project projects new Corporation In members to Lake the vision, finalized were about coverage. city options attended and overview redevelopment citizens local initial rapidly. the

at Cheswick the for original expected impacts, expectations. the Avon Scrap equipment both in and In of accelerate sales returns all projects and the will Lake community the positive and are our began July ERT XXXX. remainder from year the exceeding addition and to of

for of was $XX than cash cash to scrap values. million upfront. received obligations we land recognize in deferred asset hoped value immediately before in even asset had on $X.X almost But record $X a quarter, considering gain and the unrestricted gain we restricted the over received On the the we this the above million and more we obligations. million the ERT, This retirement the assumed, Cheswick and did retirement land

We gain This will benefits the gain we from and and cash into before project start over years income the ARO of as land. recognize monetize next the this even perform operations. the few the provided

every of project, more and not we why see favorable ERT highlights we win devote seeing we to to this returns type more are While expect resources this and jobs. the may projects on with continue gain

our are and the very legacy we are we opportunities these Byproduct also streams new Remediation on categories, business of about raw earnings, Compliance, materials. and expect excited very we from Services While bullish two

while remediation individual $XX within winning are the U.S. our accelerate due the to continuing awards expect building the We ash will by space. backlog, our EPA and all market opportunities actions to new addressable billion stronger and that

has of As a pleased to this, $XXX awards result for we increased million are XXXX. new our that to year-to-date announce

including addition longest term award in a with major a Remediation remediation In Services states, EnviroSource new multi-pond nine-year since Southeastern customers largest the of we customer. projects our to exciting our company’s earnings the announced long-term history with ash Byproduct utility one last and project, and four three across different and call, awards Compliance

currently the work of busy only not awarded, Byproduct We’ve We work, it and bids also winning in regard. that in tracking EnviroSource; down expect that and to continuously. near pending been in already this business before, backlog we to across billion through awarded ERT have building comes execution, said but be I’ve R&C; market services, the diligent As RFPs engaging on lines now future. including $X.X new in projects attention to

resulting These billion market business hard our from our out of since that pace over be RFPs put the years see that the slowdown last go $X four call, these following January business, across increased also seen all of of bid. We discuss. EPA our accelerating opportunities we to increasing. again. win inquiries Since next opportunities categories, new bids, I announcement. XXXX, our expanded pending in that put activity bid earlier first is awards very this we interactions, to we believe are our I’m quarter, and to are work from transfer announce we end will of And will tracking are pleased lines backlog to the customer have the across environmental working with share year for of particularly into many respect fair the value our are our of being will risk the which $XX for Opportunities XX, that out business. total future two of billion of the

the Gibbons resume sales and parcel new Avon along from also ERT Creek Lake from the our sales and projects to ERTs. scrap We in half, Cheswick second expect our with start-up

For however, backlog these raw materials Raw not $XX under into in in XX-year to XXXX. our contracted not are at business time of included this and Byproduct are material these we future $X.XX the sales because Historically, contracted approximately annually, billion a stands stream expect well of a recognize sales lines. backlog backlog not of first material income important sold our Compliance and long-term projects to continue backlog. the cash. and released ERT and It’s provide do the we The contributed sales steady contracts. raw Services material they with have quarter, this have to runway that work are for Remediation and and work million

we XXXX raw in fact, XX% last from our expect material grow In year. sales over will

to our our income the estimate flow projects several from $XXX basis, approximately give existing to ERT an million. as we continue assets are but the of often to is contracted process existing our the through through One ERT which revenue of add flow new we that be projects significant Communicating cash to to and of sell earnings a recorded important awards. from reasons. ERTs base as is well projects. for future the other and parcels we in backlog work extends we While work, these indication are On rather equivalent not remind,

trust use this moving flow to are disclosure The generate Compliance opportunities are announced and the business been and Service backlog confidence stronger. we several in now progress our direction. out find half. agree expect have helpful, you opportunities revenue in by two be forward, our that and of challenges a projects I we continued to timing ability on viral projects delay cash and Charah’s Remediation summary, second project you second projects to second Though contracted. lines right Byproduct is our ERT and and new and beneficial to expect quarter improvement will a projects allow that and strong and relating to In hope have source ramp in to our indicate the their being income things will we we as as recognition report awards the pushed, our few that continue We move impacted business up. long-term never quarterly closed to ERP reason

delivering we and hiring remains is backlog for sustainability environmental Our industry-leading business people; on commitment stabilized to turn With over our robust; increasing; I’ll to unwavering; our our on our it shareholders. our safety that, and team discuss culture is to Shannon, our Roger results. you, financial focused CFO, is

Roger Shannon

XXXX flow, cash $X.X $XX.X XXXX. financial shipments. increased of for several second our million net an of of and $X $X.X increased second the million update the This Scott. second for of Gross work Gross revenue demobilization quarter review compared the the previously driven XX, XXXX resulting three increase $X.X net XXXX Remediation during costs and in factors. million, material Byproduct quarter and on quarter of the revenue to Thanks, June full XXXX. on discussed continue XXXX. commencement of provide from profit impact million last increases affected new million ended Revenue as $XX.X an resulting sheet projects, from earnings And the profit liquidity to the by: quarter raw second call, completion of work and of a Services $X.X to guidance. profit quarter and continued from the of decreased our of were quarter. margin balance second ash projects project gross I’ll as our that was commencement for sales results by a as with legacy certain to Services primarily million million, into with Compliance the to associated project of Increased and in increase new production. three months for compared directly and began

However, two third and substantially complete. is have now been of projects completed, the the

year. chain projects half continued beneficial to these issues relating in previously the The continues the second Additionally, supply of improvement two expected. company quarter discussed start-up as resulting large forecast logistics the and use the long-term challenges in in from to projects

with and continue closely start-up on to beneficial certain long-term work issues contract use the identified relating logistical previously challenges customers adjustments on to our for We projects.

these expect the and contract will half adjustments cash the year throughout of the contractual We profitability improve flow remaining during and periods. second

driven decrease decreased $X.X higher by interest associated second of and positions to the to we debt weighted $X.X quarter expense quarter recovery through of expenses of quarter as to million gross $X.X We also with incurred to of are to in profit, with the will million in of noted. of provide due of certain an across in was attributable the containment $X.X amortization equipment back impacts the primarily XXXX the to of Net the financing in as XXXX administrative compared million million second corporate the billing billed. quarter to quarter and to being Solutions milestones XXXX to net, the and costs second for an XXXX, to impact increase $X.X quarter of in the expenses General working compared general average second XXXX. $X.X discussed, the million in expense, management increase The of to emphasis customers as on expect compared capital cost in issuance on primarily previously due continued date. that decreased primarily costs. for previously attributable Charah XXXX million Adjusted delays EBITDA second for cost loss increased second and as increase

million six projects, gross increased with and $X.X profit ended Gross XX, previously. million to the million in $XXX.X ended General Net Services scrap to interest to XXXX, primarily revenue with June ended The of June June $X.X ended as $XXX.X and were Solutions $XX XX, offset six six previously XX, six an XX, noted. increase for previously ended impacts $XX.X was in estate ended at sales sales-type for startup from discussed of June EBITDA the Gibbons previously to June of by gain commencement profit and a from $XX.X the favorable weighted from mentioned. And and months company’s impacted project from of have and ash to operating between the months project. XX, six as to XX, proportional in in and the sales $XX.X at directly our XXXX, shipments of the XXXX, large increased months million our $XX.X million equipment, an million Byproduct million $XX.X at the the ended of revenue on Remediation Compliance actual lease June the the compared property projects expense $XX.X months real work, in net, of XXXX, estimated This costs million resulting of ended the six recognized the debt for primarily were XXXX. in increase financing under XX, million six margin Adjusted and discussed, expense a specific in million months cost ended primarily two our driven raw to remediation legacy of a six Creek to period an negative in transferred to increases gross used basis. XXXX, and of Revenue net Creek XX, XXXX. as namely from June customer driven expenses These the million to improved $X.X $X six-month months months as tasks XXXX, material income at increase the million by the million the primarily months Services fair were costs incurred for sales ERT. a the new on our for six in and recognition increased compared administrative XX, compared as ERT an use increased by absence higher by for XX, issuance XXXX, the settlements ARO Gibbons for $X.X from compared the the production. as follows. for to due to changes the the results due the increase average June to value ARO For XX, June was cost impact attributable months decreased project, differences driven of Charah attributable we compared three measurement amortization Gross primarily by, management an associated equipment parcel increase the in as profit, XXXX. positive the associated loss profit ended factors increase June XXXX, ended from June an challenges decrease the increase to capital ERT in as beneficiary partially a months an million decreased six costs decreased

ended cash cash XXXX, compared $XX estate namely $XX.X This ended quarter property in gains and cash negative in flow, free June through the for for quarter cash million this and our to flow June looking XXXX. was an flow. sales the to XX, for million which This an upfront cash equipment with $X.X in quarter flow June investing. and quarter ended as as mismatch cash with property cash offset XX, ended in at in that XX, cash a decrease discussed. increase Gibbons net $X.X compared Avon flows operating XXXX, XX, projects primarily to purchase from driven loss cash upfront negative Gibbons million negative year-over-year transactions outflow the the increase and remediation ended was Lake quarter scrap Now, on cash at months the used June reflected for from includes in cash adjusted XXXX, ERT due of was negative and million XX, six cash cash we agreements net the sales decrease the in personal million was reflected as sale cash Adjusted Avon the in cash XXXX on $XX.X increase ARO which operations, positive primarily purchase flow discussed, previously was the and associated XX, a in XXXX. adjusted and increase This the from Cheswick ended address AROs flows flow XXXX. real for while flow. cash Operating for was the results with to projects, received by cash by June remediation the cash from Operating and from real cash million $XX.X received XX, partially primarily geography cash operating to as cash statement from asset ERT discussed flow of free cash partially previously are driven as associated resulted larger free of of flows loss in at previously was by June closing and Creek This million of an for proceed that proceeds the positive as Gibbons $X.X ERT Cheswick $XX.X was of aspects XX, in the ERT decrease net which cash Creek. the AROs was June Gibbons six the received Creek offset from projects Recall sales flows discussed. flow primarily increase larger is in transactions cash received for and cash our Creek by scrap months an XXXX, six and million to the from agreements cash ended was received Adjusted decrease from six ERT ended received and due for compared XXXX. closing compared free and months decrease asset the restricted previously months restricted as XXXX. June as the The Lake

Now turning our sheet. to balance

an December XX, million, of gross XXXX from $XXX.X debt $X.X increase XX, June million on XXXX. Our which consolidated was was

as we million June under XXXX. of $X.X asset capacity borrowing had lending of cash of XX, agreement for of credit under million. XX, $XX million had XXXX, the of We As our credit based $XX.X total hand agreement borrowings liquidity June on outstanding and no

ARO As No. credit taking their Chase as the financial with XX, been the of have Amendment things, X settlements and of ERT the thereto certain Loan guarantee company administrative therein. among which Bank Amendment effect effect. guarantors in which other certain certain covenant, describe JPMorgan the met covenant and it the the party JPMorgan lenders permit of Agreement, subsidiary entered deferred agent, August the to company Amendment under Agreement will company’s the projects named I’ll calculation Credit No. cash into from into agreement for gains The Agreement, subsidiaries after its to and On will, XXXX, the the company company Term XX, Loan in Credit had June Borrower’s on I of gains would to financial next. to Term XXXX, the the describe received permit account, include X obligations and

agreement term Term undrawn million, Management, per of Bernhard The As the $X.X of loan borrow any LP, under is utilization million on borrowings GCERG covenants the more term cash and Borrowings loan amount million and while to covenant $XX.X XX% credit new After commitment Loan for giving the Charah, Charah April agreement scheduled is Creek JPMorgan XXXX, this applicable $X.X Bernhard of capital effective to term the ERT allows to shareholder. remaining August We loan these interest Creek liquidity if majority provides LLC. current amendment by liquidity of under of of of XX, assuming to consideration an Management, of loan of Charah affiliate mature than to XXXX, approximately investment each to company the credit at the sale for loan date. springing the aggregate letters of transfer Inc. XXXX, million proceeds we term the liquidity provide exciting upon Agreement, to the LP Partners up payments an parcels springing of based to LLC credit manage the Capital or of annum company’s the grow to agreement the income under required maturity unsecured term agreement. agreement $XX.X company. agreement as availability the of loan agreement become XX, and requirements, additional with an the agreement accrue the and before would Group, at the Capital of make all The Further applicable $XX.X see August XX, and were approximately the quarter remaining in due $XX drawn Redevelopment of interest loan Partners the under million. project and basis additional following on to on pleased date Solutions secured the through principal on guaranteed company of under secure the August Solutions, subsidiary the first were is the Gibbons million calendar Credit unsold the Charah, Credit approximately LLC. on and of XX, a company’s its Gibbons senior by parcels Environmental covenant Agreement. term Creek business the earlier The has voting incurring, day into with entered financial the full Agreement testing company streams Gibbons

this. recognition ramp during of our ERTs, increased expectations from quarter responsible on Now I income the three in generated quarter and of for continued underperformance address we updated in Timing spite since under events guidance. up two momentum, positive contracts for second use In second costs in and the of will expectations. the came our results the long-term beneficial projects were the largely quarter

now the project. and substantially legacy the we As third previously completed have of completed fully projects mentioned, two

However, expected previously to up beginning weigh for them are on we ramp are contract the adjustments costs result. two expect to projects the continue from until and results mentioned

We expect be now and to $XX $XX to million. $XX from guidance guidance between a projected revenue a is to previous Charah $XXX previous within million and and the to been million have million. flow million, adjusted to result, $XXX results. of million $XX million $X year our loss of cash projection million a for previously million range we has for $X now to year to the from Adjusted $XX million of million XXXX $XX for million. As is of $XXX of and be EBITDA $XX now full range Solutions guidance $XX to reduced reduced from $XXX expected lowered Net $X million million to And attributable free $XX million the range between between a between million. be

about this year. effort translating over the the and that downward revision of how forward into going Charah, term necessary very to results the was performance prospects remain see believe in near an remainder we that optimistic While we the we for reflect second quarter

guidance I’ll the our Scott. release. predicated which back Lastly, are as to is in on With earnings our we’ve detail our that, calls, discussed in call discussed more turn previous certain assumptions, in

Scott Sewell

Thanks, just to accelerate to of shared, tailwinds. with backlog market Roger. which positive passing grow and every new Charah business grow, Solutions The has many environment, lines and innovative work, positive awards which source mounting seems in more I week. ERT, significant vital

However, focus contracts. are pieces business accelerate portions the of our a existing use to and projects of team the on all blind maximize and and shareholders. as to to working of we to difficult can’t beneficial existing all positives, This eye I we necessary mitigate The ramp be most turn the value the issues, our execute the business. on is for impactful our to of allow

all very this is let’s focused your you for Thank again we on a business that are to believe operate interest begin well operator, reality and for growth. that, positioned With participation. session. continuing We making a the while question-and-answer

Operator

the comes first Your Michael question Instructions] [Operator from Hoffman of line Stifel. to

Your line is open.

Michael Hoffman

Scott, Roger. Hi,

question, it tough profit this a of news the conversion is there’s So positives of This part businesses from is I all part ask of five. of the the And to have the the one. of to question starting the business then three but but to of acknowledge, to the how that the to the reliability? hit to is good going revenue this take out do way What for balance happen? get to you get sheet going

Scott Sewell

that going and from and that everything extremely And QX, performance a move and confident It’s about a as in think true. I operational see business Michael. morning, perspective discussed we some way earning had we’re but calls on perspective. and forward from and impacts about streams the and we’ve recognition well we’ve feel in four the to new growing QX that But momentum good cash QX QX talk something that the on the Yes, else. previous it’s I appreciate

those and So as projects legacy of some forward. really team’s we it’s just executing off falling move our

– that a work have great going team’s backlog off of and We as on we’ve noted years those. the to perform inside contracts next backlog several our great and over to that

to performance this comes at So down it really point.

Michael Hoffman

maybe at because a been all in the add cost? out range, end? the So you if would headwind you have legacy still you Or guidance have to lower but still lowered in backed this would of XQ, ramping

Scott Sewell

we we downs we of kind the half this lower but of delay popped as that – the critically gain also the we Yes, about, on of deferred a in thought about would’ve a half more referenced timing to I and about ups talk we I we talk at been operations that the we piece. sales. of timing think would’ve year, the talk end ERT think parcel comes in as had first ups we in just adjustment, guidance the earnings still downs more But lot there year and lot in probably range, it a the and then year, in expected whether first

even exactly So lower than yes, on would’ve hopefully you’re the We end that. the maybe range higher and right. of been

to and from of it’s just I because So and as to make of the QX to from really perspective. half the drags – be earnings cash earnings those QX positive ERT as going the year, just that the perspective, think an those are kind but timing had well adjustment felt related we very flow we as some issues of of first

Michael Hoffman

Okay.

that legacy through this have you’re quarter, third can XQ in visibility get done this absolute and therefore will truly do put us? So halfway we behind you

Scott Sewell

Absolutely.

Michael Hoffman

Okay.

balance are are point you all dealing sheet triggers the the we with? with what the this covenant what Roger, – So amendments have at what

Roger Shannon

before we’re JPMorgan first at our to in that to didn’t that agreement is agreement we [ph] a learnings, place, having reached and the and availability covenant. of ARO When when ERT kind calls Also charge fairly really June properly we Yes, we amendment JPMorgan that into make mentioned covenant were we and of effect. $X this you just if a what performing if that as the And it’s had due of put technical previous projects we which line my in test a performing take we really, and under the project. will, on so comes we to did the our consideration agreement that fixed certain efficiently have well amendment a pickup the about under into still ERT XX million covenant utilization level just on settlement, I happens trigger mentioned new. under

getting so we money against ARO that spend for it credit we credit in we kind just since the back those gains gain that of So as deferred the for talked well is about. didn’t went we as that, liability, get adjusted and that

was facility, in we the is million. million this that this but up conservative, question, talked received we we the $XX that really it’s about recorded you of glad front. believe we cash $XX Cheswick cash recorded ARO at unrestricted asked only I’m ARO So is And And important. we the again, there.

and the and into the before that received restricted we that’s to sell. and million taken the are $X unrestricted cash and had even of over of value above parcels we ARO excess going account So scrap

difference Cheswick, what where Creek unlike is So zero basis property Gibbons cash exceeded that that here And to ARO we going basis. at means put of property have received. that to in the the is the the

of So excess sell front. Plus, it. we to we had is as going be gain $X everything Cheswick a up at XXX% we million cash essentially kind sell

went facility to we So and I and this the backwards. covenant looking back that settlements get test say to all that and we to count get say, to said, count in we ARO

Michael Hoffman

And I’m what have math that watch? the doing is playing financials, I of off so to my own that the ratio I’m if with that

Roger Shannon

to one. the would ratio needs it – one to So be the be

of kind be in – that’s course, ratio coverage So EBITDA. to fixed year charge The fully is the described of XX-Q. to would has been challenge one our this ratio far one, that the so that

been EBITDA as good by discussed XXXX months startup EBITDA – use projects which a from we’ve some the XXXX mentioned, the has legacy pretty projects. well been we’ve Scott as drag calculation. off had And certainly depressed beneficial the obviously, as we’re as three two year-to-date So those rolling in the of

into that the one that So the fixed to goes charge of one. calculation is

Gibbons described, up kind We related July reason, have to kind we $XX as June would’ve the a property. were to which been this, as with kind expecting to monetization expect that what For set of Creek and timeframe, that we over of also of given a been party worked we that million. of and parcel occur in sales the I’m referring to

half. had enhance able those on our liquidity So those to work we’re And as second then continuing the if closing properties closed. in we’re to

Michael Hoffman

is then for I the at pretty second got meet healthy the you midpoint, to the This And about for guidance half. How the think in Okay. EBITDA. order do the – cadence?

basically $XX got So at $XX I’m million. at the round you’ve million midpoint numbers

earn half. in the got You What’s second to the cadence of that?

Roger Shannon

– are related expect think are start-up. project the QX well. beneficial ongoing heavy. some customers to going We’ve adjustments do contract Those it’s I be it’s with I use be very proceeding and to talked going about to

I give settlement out fourth put think Apart that the I sale again, for that quarter give conservatism, continue under kind proceed into. year. just to I would on to that would this schedule the can into it’s just parcels – would I conservatism, our of then just and kind cash would the operate getting contracts. those of in of for on and go fourth that, you of the quarter Gibbons of remaining from jobs And and

Michael Hoffman

of me then How change orders? And of the have one mid-point the assumed much last one you settlement for and let. guidance in the for I’ll

Roger Shannon

That’s the those given – of conversations I kind still with customer. publicly. ongoing that number for not obvious reasons, have We mean, are

something we’re that not able that’s publicly. to So state

Michael Hoffman

you. Okay. Thank

Scott Sewell

Michael. Thanks,

Operator

question B. next Alex from of Securities. Your the from Instructions] Rygiel Riley line [Operator comes

is open. line Your

Scott Sewell

Good morning, Alex.

Alex Rygiel

to of and us morning, near-term then inflows line contract. cash that congratulations outlays help Good sort that cash and looks on the time you. like? EnviroSource the in the what better the on understand Can you and of Thank sort

Roger Shannon

Certainly.

of as EnviroSource. project very to an be type you number financing it is we’ve at can very And have ESG model want been a compelling we’ve imagine, fortunate providers So together on we or who fortunate a looking of been – very of part rather, put product, to exciting a such when that. have that you’re we’ve

have we done sheets a very EnviroSource the percentage without under on for financing equipment. that capital of that term table So high lease would the secured be offers, getting by into a too much detail,

Alex Rygiel

Okay. way of that that? there of the And sort understand help quantify or is can you of just any time kind us line

Roger Shannon

Sorry.

question. Sorry, second the half the of

the the signing of we So yes, the contract release, imminently. in as I expect mean, mentioned we

within orders We’re – stages I’d that the say, of month the kind placed getting very, signatures. will The equipment months months. and that to talked to expectations line we the of expect next documentation administrative XX soon around two. construction of or for that kind time purchase before very We’ve XX next be the are within be

of of looking XXXX we’re So kind that. second upon the commissioning of half at

train selling of a material. this one we ash tons expect before in can spec single be, that a line the start-up and part local ash later or EnviroSource a be We’ve there’ll into unit, which of the fly So of the XXX,XXX XXXX, about single year market. a process the to processing talked that

So look then what into. you at selling market just have to that you’re

we one the sales would of $XX about, assume talking ton that this spec For to a fly we’re $XX ash. price of kind

inflation tons So kind go you $XX can based $XX expect it’s We at and do ton over kind on XX-year XXX,XXX I to then year, just out – grow year. the math sales of of tons that on that mentioned a years to XXX,XXX price, a be that it per period. to contract. a XX XX-year

on pretty financed, start back capital it XXXX, much in with until as So the we question, it. up end lease entirely coming with make the of withdraws again, construction a being I’d we would sales in commission cash, under structure to say, your

Scott Sewell

we to it just we’ve unit spoke this a I’d He time expand one piece like per Roger of about think XXX,XXX gotten Alex, – that And the said. unit there kind in as being I X lost over system. just something does discussions tons on year. about X That’s

there’s we on years, ground. at could place have there’s XX And X over multiple We get the there. EnviroSource. million believe Maybe the doing, $X of unit X we the opportunity backlog next five exciting site, was out to the time, X opportunities we business an earlier. our we X that but a in spoke site backing least We piece at all of maybe really what XX the that the spending units EBITDA, into definitely at X for math Roger set units. that or question to units asked And $X year the kind bolt-on million to that can – doing it’s off unit

Alex Rygiel

do how could this year-end new year, tracking you your as out to comparison well That’s it new as think And XXXX? pretty by play awards, relates a great. to awards then

Scott Sewell

beat – As goal the before, the beat the prior year. I to stated and always exceed is

XXXX the halfway than a less halfway year the little We’re through here bit and goal. to

here our do drive to team. that an believe, we the and prepared stated as half the of continue to second increase we see year. going activity still We in of in the We’re remarks,

continue to push going year. last to We’re from number goal for exceed XXX to and push the that

Alex Rygiel

That’s great. very Thank much. you

Scott Sewell

Great. Thanks, Alex.

Operator

the comes line from of from Tony question Intro-Act. Your next Bowers

Your line is open.

Scott Sewell

Good Tony. morning,

Tony Bowers

sure drags as I’m that Hi is Scott. yes, of Hi as at pull-through. up momentum. frustrated your keep impacting popping sort on and various the else you’re congratulations the Roger, everyone

the to the all being the you On years? this to years. you contracts. much sweet question, out your you current talked Where And the of impact three be generate expect But would – where profile the if on that Is hunt of sort highest of different sort these is what to backlog five profile were in out the must years it It is have or sort layers XX business? as year to spot? it, about as backlog where of revenue? would that

Scott Sewell

a know to question, you while numbers. have I Tony. And now give for backlog guys us for been again, Good Yes. asking

historically So to we’re be new information. produce that awards and – I that that for to give you really you been to how it’s difficult backlog we correlate a bit able know trends. excited and feel little to

talked like contract about three. from of about The of average $X.X a year is we it’s of said, two a inside billion life as going and about XXXX. six we’re or not So spike, going now off, I kind And the way, – to see in it that think to this between you works backlog years.

helpful. of to going six-year if average backlog time line, trending off We’re that’s that towards of a kind slow burn that see

Tony Bowers

it? to fly satisfying is – of are there bottlenecks what for – execute we accelerate that able secondly terms beneficial this you for to something on about you in being faster? the Are cement So execution And hinders do industry? demand ash close can what the the of to

Scott Sewell

and base the to And We at that that take and least kind really of we accelerate is it the we the work backlog. backlog backlog for there, that a need and need sequence spoke with when of showcases we’re accelerate pipeline to up great about set that and staying I seeing primarily think don’t layering we then Alex path about on really I’ll business exciting layering that then great Byproduct in don’t and our profile ERT to just returns the margin Services any opportunity business and the backlog, just backlog. EnviroSource that again, the that on, robust of that questions first. would really that Sure. just just new make top R&C confidence excited gets see on a book to just piece that. continue of that really seeing us have, layer any those to accelerate of and see backlog it streams of streams on on both in have myself, top that not what highlights Because and is in earnings but income way,

demand and the of So in ash, could green about us just consumption. ash, momentum around things about materials thoughts for increased desire and concrete, and increased the really to share that’s, with you demand and out ash there infrastructure a the positive need think great business. it market build like fly us that is demand give no, again, fly as relates And and that the color all kind of recycled the for one the what glad fly and excites being you you met Then market. guys we not give

proud a to recycling really do. into very ash and that of, again, it putting something market, is high-demand fly So we’ll something we’re continue

Roger Shannon

of things it mentioned do we about a want Tony, emphasize and to I let this, couple but Q&A. the in backlog, add just And me

through about not revenue. As does not does in and $X.XX number, we ERT, $X.XX talked that we is revenue billion, backlog include because course, that that ERT about the income talk of billion, any the projects flow

in course, about. sales are So cash million of we’re in we several And seeing typically gave on that It’s kind have got that the short optimistic outstanding a $XX we’re range. of to flight. We’ve that actually material of more not because this million – currently term picked backlog very significantly either, But growing. or up raw number of we bids in of are is that then kind we’re million ERT the those for contracts a ERT equivalent $XX one-year sale. about type of And a expectations the projects of mentioned we arrangement $XXX of year.

growing year. So just far over we XX% so on the see based materials raw by historical results this

we the said, work So jobs, to to backlog. within what two the with long-term plant add plan. landfill. within bid I footprint jobs, the these work considerations And these on then in their when have their we pretty those And we just are, think, facility customer to Scott important

be ideal on and say So the excavated to customers ash with be an moved either what don’t out off-site I we placed realistic beneficially landfill can that these when amount of the the of or or pond maximum on-site of know, you build assumed realistic, amount working reused. or then –

So does. accelerating that would have implications beyond just

Tony Bowers

that nature the of contracts written understanding change more in orders the contracts those about profitability remediation anything shareholders of is give and getting there us new way the favorable of it’s that the you Is is the of future? may risk comfort either the that should happen the for you’re the signing? means This on or side, that

Scott Sewell

help over us that to time different something that something for we’re things Yes. we and ongoing our to continue way into is to think the answer of we’ve terms it’s be and going and years, students been to contracts best Tony, do. contracts continue evolve and our derisk industry, to and for work continued the put I doing to we’ve

those we build only new our that day the ones. can I into contracts So learn and from every say

we to So can in we best are the we way. company the and everything derisk do feel doing that set up

Roger Shannon

of this was to very kind over And I the contract that entered into of the first XXXX. that the a we biggest three just a quarter, years, legacy in just the challenging one to contract contracts add was of but – the of was been we – look things bed, we And these mean, the but approved. as contracts specific, that, the and of we a three cash put get said then in to derisking, guess difficulty, five it then that the has I as is profiles one at especially not And it flow as as do without great concluded. just kind far

positively we mechanisms that contracts is problems do don’t add always, hopefully of able to worked what it the out those do have of keep we or started to in position. end the gate different work front to add that and being get then flow toward. contract it Obviously, that in the in we’ve but we cash that, were So and

Tony Bowers

we fruitful And look forward second to a half.

Scott Sewell

Thank you. Thank you, Tony.

Operator

for the no are there to at questions final I And time. comments. this some Scott over further call you Mr. Sewell, back closing turn

Scott Sewell

you, Thank your and your in thank operator, else, today continued you, interest for time everyone and business. the Great.

results. you lot us. positive to we’re got opportunities do grow of can in And everything business, to of As the we we’ve can going produce front to a great see, continue

So look to you forward to the future. Thank you. talking in

Operator

today’s you concludes Thank call. conference This participation. your for

You may now disconnect.

Charah Solutions, Inc. 8.50% Se (CHRB) 16 Aug 222022 Q2 Earnings call transcript