- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Charah Solutions Third Quarter 2022 Financial Results Conference Call. Please note today’s conference is being recorded. [Operator Instructions] After the speakers remarks there will a question-and-answer session. [Operator Instructions] Thank you. At this time I would like to turn the conference over to Steve Brehm, Vice President of Legal Affairs and Corporate Secretary. Mr. your begin may you conference. Brehm,

Steve Brehm

and Good Thank answering for third your and sharing call you questions. everyone, us you, quarter prepared today. and earnings our operator. joining in We thank participation to morning, appreciate remarks forward look XXXX our your

Executive Chief today call Financial Treasurer, Skidmore. Chief Officer me Director, Jonathan Solutions new are and Joining and Charah Batarse; on President, the Officer and new Joe

chance remarks, ir.charah.com. we market hope will conduct review of question-and-answer we customary release We our website a you closed. can the prepared www.charah.com the you’ve find release session. issued had section presentation investor our at prepared the follow their supplemental you to not, after during press on the remarks press Investors or Following yesterday a may and If the

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

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

measures his wish to call the We leadership Solutions on and our well service the leadership construction Joe With has construction and as have operational the Charah Jonathan than and us I Jonathan we Joe private thank joined and in Before corporate almost new more and industries, promotion his a about both Batarse a joined audit our in sector. product and ago significant variety like serving executive experience finance projects. a of public endeavors. of over, company excellence greatly to on and engineering manufacturing experience worked Jonathan Charah I'd suite. Skidmore expanded Scott XX with engineering improve his of also for those CEO, to welcome including with contributed clients our Solutions industries, Sewell as business. to driving month for to Scott I'd the like experience, congratulate industrial years CFO. turn in decade already has

most company, the assumed of as corporate controller years. increasing recently two he for at roles While responsibilities

Jonathan Batarse

focused Charah previously on for will the remediating and customers solutions customers risks Every this Solutions solving and for community on innovative and needs. their excited growing Charah the selling morning. continue team recycling improves join environmental this delivering business. call world-class I Steve a leading everyone enable operations, tailwinds and to our by day, have ESG us pivotal joining unusable. sustainable remediating our company to have raw at environmental producing we because what for by solutions thanks for fly ash, by ash ponds, to recycling was solutions managing our juncture. meet exceed These ESG ash environmental risks. coal our goals We materials Thanks, and joined our to considered I'm utilities create

priorities build focus on will we established upon the three company, a as Charah. As at heritage we

First our and foremost, safety the we prioritize of always will people.

and XX/X, home, year. employees work, safety at the XXX to days wellbeing We our and at are of a at play, committed

are people from a organization our this to people the our support our operators company. teams are heartbeat site We of

providing to commitment our and through grow to solutions. with our continue environmentally responsible, customized innovative, customers will we Second,

Third, project risk and we improving oversight assessment and new for processes. both tools work commercial our and improve will management profitability increasing rigor through

As of the a are team, that company. drafts and performance we financial committed improvements sustainable improve growth to continual

strong for regulatory expand. growth. to Since that continue the leadership our developments awards, balance legacy have rigor tailwinds, sheet on market projects we for created financial market opportunity long-term our Increased strengthened implemented to position support to a operation and processes our that improve have optimistic loss our review and completed environment our related certain fortified performance future contract XXXX, we I'll team, the quarter and second drag commercial With us new that our to will our reporting recent growth. be results, oversight.

encouraged are we While financial by our acknowledge I'm by these disappointed achievements, results. I'll

project impact the project on in gross Kentucky, to in in and bottom to the discussed the landfill profit. loss gross three projects, multi-year ash previous project the challenges pond line. During drag third profit in continue pond fly closure construction ash closure and quarter, The and the Missouri continue Arkansas, bottom quarters ash legacy these the

While projects pleased their these and to demobilization them expenses we have the phase, we during additional moved that completed quarter. incurred

projects discussed. long-term two logistics supply challenges beneficial use chain that hindered and the by Regarding we've previously

work have with the impact the bottom suspended the greatest to resolution reach the we line one customer. We with a until on

measures jointly not have have to We our backlog. could decided backlog with disclose in path To forward. agree ultimate material to to implement are to costly. on we actions end, discussions similar The on avoid The taken situations. have a the a a agree corrective that outcome drag forward. impact on from we Therefore, customer these path projects and been continue we until have

financial commercial call, assessments. As I onset we noted project increased this the and at new have rigor for operation of

accelerate management It growth. necessary and are We we from a as and and Also, Bernhard was current Capital project to $XX believe wins tools and to to growth. risk existing occur. to the to investor, making projects the in ahead with support million proceeds. customers. balance runway We identify quarter, mitigate validates this they lead raise opportunities project reviewing execution new gross our worked our and and Partners, our support to during market improvements creates processes we Additionally, secured strengthen necessary sheet

technology. remain We grew about New by beneficiation EnviroSource excited our million. contract $XX awards

pressures the like the chain all they opportunities year, ensure we actively constraints, this reviewing However, the eye the awards and to construction announced a disclose contract Therefore, project, nature is only Earlier project the documents. we with contract delayed. When of our this include we’ll were economics the projects, awarded and binding inflationary to economics contract ensure finalize an supply challenging. in critical of that working we we future, are EnviroSource are favorable. new are awards. finalization underlying of Because of

pending from pipeline projects found we bids pending and been represents rebid. awarded. bid metric, were not being, likely outdated the pipeline, In pending be that potential certain for total represented bid yet we addition, our Therefore, the have them have which as bids we we submitted removed time that reviewed but to

X.X mid-November, is pipeline approximately pending the As bid of billion.

tracking proposals grown anticipated requests activity on pipeline, mid-November. to Our be the approximately which market through that represents two billion to years, XX.X projected are has for over be based next awarded

Before in we results review recognize Skidmore. the to third detail, Joe’s like quarter I’d

changes to our financial has CFO. Charah, I Yesterday, also to During announced acumen the forward look his leadership. tenure expanded as Board. his and demonstrated contribution he we at

of generation platform at as the of and an in served capable Bob of as platform that he offering are construction, engineering, decades entire four and accepted industry utility utilities. delivery Executive and role the power to owned Director has a BHI grew utility Under integrated pleased has industry, recently, services to BHI the experience power markets. power maintenance provides through a leading leadership, We major of Decensi CEO asset the management delivery from including Chairman. Energy, by from servicing cycle. point Bob generation power Most life roles company Bob’s single the service senior every

leadership We as Director. pleased his Jack he to will also and continue thank Blossman for a are serve

Independent Joe Additionally, us forward over Bill we of their He our over our leading to join both look as and discuss companies years We results. turnarounds service improvement XX that, an turn growth to and guidance through we With have I’ll strategies. experience Varner call to to the manufacturing implement brings Director. financial are plans. fortunate operating as

Joe Skidmore

Jonathan. with this be Thanks, believe Charah’s to in at serving glad responsibility time. proposition I and am I value greater

impact challenges financial prior the to the discussed, As results. continue

improvement the our to the were positive and an net Creek associated a quarter now. However, with other second quarter million including Adjusted the in environmental the and projects Cheswick beneficial quarter $X.X to I’ll volume $X.X construction EBITDA adjusted million legacy expenses of and to ownership $X.X attributable administrative of primarily three within the well primarily of transfer XXXX, million was million as second million, to as the quarter to impact decrease to million of over compared million negative the million with up completion expenses. $X.X Solutions Revenue Net timing of scrap issues accretion of in in we net XXXX, periods compared risk XXXX, supply was expense Both was contracts. quarter a Charah the encouraged items attributable loss second income Gibbons compared for review certain loss and second $XX.X was XXXX. compared chain to Lake of second million of costs quarter The to income other resulting challenges use the are related attributable General $X.X in XXXX, large to expenses two Avon primarily resulting $X.X from increase operating compared million which $X.X $X.X related in increase $XX.X compared included net continued XXXX. at from million and of sequential the $XX.X an the projects, acquisitions. sale $XX.X EBITDA second by second million quarter to for for of discussed. of to profit logistics of Gross previously XXXX. for as

$X.X increased For in September results Revenue the XXXX, $XXX.X follows. for September the nine ended million months nine-month was XXXX, to ended months the driven million ended for ended all growth September $XX streams. XXXX, loss million $XX.X attributable Charah million XX, of by were nine to XXXX. $XXX.X $X.X period compared XX, XX, as EBITDA million revenue Solutions our and our compared Net nine September XX, to to million in compared months the to with adjusted

$XX November we we B term XX, remaining placement On of fund borrowing capacity XXXX, activities. of on cash $X down borrowing million million. $XX.X on hand, Turning At to $X.X affiliate under Series of agreement our XX, loan million On and agreement a private Stock proceeds sell sheet. liquidity drew Preferred million for agreement the of had credit million $X.X BCP operating net a for the September our capacity term-loan under entered to of to total the million, stock $XX.X a into we million. our November X, binding of balance $X with Cheswick $X needs a of commitment a owns entity loan XXX% In investment, and the interest with a agreement the its Gibbons agreement, capital accrued fee credit that the will into with to of the long-term applicable strengthen conjunction balance all to entered under and company. an lending company the land. of sheet convert the and under resources asset-based into preferred balance working the million term remaining agreement availability these company’s additional Creek the achieve transactions provide outstanding Together

Looking future. all ahead, in revisit Therefore, of ongoing opportunities. the aspects projects are suspending and company, guidance the are and we assessing including will future we it

announced reverse this to a With turn Jonathan. one-for-ten that, Board split. authorized I’ll back the we call that Finally, the morning stock

Jonathan Batarse

Joe. Thanks,

suppliers. years, For we have to over power generation ESG XX solutions the provided

sales industry ash remediation, delivered recycling, environmental set technology. leading risk Our material raw and management, solutions and standards and have

and in believe question-and-answer take to interest participation. expect tailwinds we you projects. to begin XXXX, improve Having With the operator, actions foundation let’s our a of profitability again the the your long-term for shareholders. we our and will for continue to have positive benefit that solid deliver to We value from which growth, taken session. set Thank

Operator

first Your from Butler comes Brian question line the with of Stifel. Instructions] [Operator

Brian Butler

Good morning. me? hear Can guys you

Jonathan Batarse

Good morning. Good morning, Brian.

Brian Butler

questions. Thanks Great. taking for my

what suspension, some that needs on get to The XXXX? level for then first I guidance. happen the would one, unpredictable follow-up guidance to we can’t next guess reinstate I of guess guidance months I – makes what be And the X.X guess what

Jonathan Batarse

opportunities our it’s we that for have I, the mentioned sure have at be comments in we everyone. guidance, want just accurate informative make the it’s that and look opening and we Brian, at that up, to we projects, to able guidance, coming as to Yes, Joe look

to to would that be want I look be remarks. would when of to focus We bit able the when of company. refer and a restate we right projects. probably of little be reviewing we want the that we improve long-term, project front-end processes help about the overall make opening our help to predictability will we have as which on rigor and structure we able predictability can clients our competitive opening guidance? safety right in and and our saying management pursue business our have sure to commercial margins, As the of profit to, tools building cost also And possible, we’re make kind through we’re and some us reviewing blocks and opportunities, of be without the we comments. ensure as more also profitability opportunities. We our as talked efficient a as on what other sure working We cost as the profitability goes win

that in guidance profits business to allow guidance. just focus provide commit that the the will So, I will going we’re create our going are stability to on future. a date in that in to restart and to; can’t I our things can us commit to

Brian Butler

that on be was work the to And in can remedied and that year-to-date, big quarter to through of it is drag with fixing XXXX? XXXX? in your that Okay. discussed, going then on the suspended and a something be that as you that, Or third how is a client maybe contract rolling you

Joe Skidmore

Brian. thanks Yes,

the the contracts profitability In overall beneficial both specifically that but impact a drag can’t drag use and two a on quarter-to-date I around the from directly contract, group have year-to-date, and perspective on will terms quarter-to-date beneficial of larger $X on the as profitability, use a $X our comment contracts the that say one over Jonathan. the majority a makes over up that suspended of of is the, and million. now million. from I’ll the it we’ve two little is year-to-date a that loss. vast one And the And I perspective to turn

Jonathan Batarse

we we’re make other type I’ll as to that tell some those and redeploy projects equipment committed continuing they’re discussions, things and with could there’s be possible. the and have we’ve customer utilized cost as it you, – cost of best sure to as that

bit little So going there the into next be could into fourth potentially year. cost a and quarter of continued going

us associated to as to can’t would best to reduce not whether operations we have trying we’ll quickly something with can’t We’re that beneficial right project. now mutually on the and It commit sure as I’m when this restart that would need cost be as or possible. customer. like. and we for We project that’s it what the commit to and to good get equipment when that do we customer, for our but costs to continue at and other have look the utilized And restart dialogue with reduce would projects. just just

Brian Butler

yet guess that How Okay. that, And I contract piece helpful. finalized, has is delayed Is a be That’s on think EnviroSource business? late process. on about or a should now, long I that how that XXXX XXXX? been EnviroSource that? to of mean, we

Jonathan Batarse

a about whole opportunity. we’ll me talk let Well, about talk as and EnviroSource this then specific

we have areas too this has work, risk In there we approach we utility particular have to So, can technology. with much of to our different risk market great again, utilities. lot the have bearing those really were risk offtake pressure risk financing, that we pricing, then pressure with on the that pressure that offtake. in which type and schedule, put of and construction economic with put we’re the love balanced Great the It contract, help it partner. the and works, was some things, risk, applicability on inflationary problems for solve [ph] put a on long-term a and around

conversations the answer continuing go but can’t conversations to forward, risk will approach. timeline, can’t I bit a couple but of to when will little a customers more with So, progress commit balanced I project that, are are this other a in or those we

that the future to We good have those that news move opportunities EnviroSource So, to the hope or have other line. that, conversations getting in are finish as continue nearing we forward. we

Brian Butler

guess or ERT, those that And not contracts I year, can look some over that on been can business cash timing on Okay. help potential then perspective and what that Because from of of on longer the flow? ERT always kind of you flows. magnitude awarded, maybe we of just have that of opportunity piece the can but linked, they’re I maybe at give next, in what EBITDA maybe be what put any guess generated and what

Joe Skidmore

with business ones speak in date the our Yes, now. that the on of and and currently start that can book kind right signed we I to are ones. our have I’ll of

as essentially you ERT Creek, all So Cheswick the and we, we Gibbons are aware, have Avon Lake project.

sales, ramping Cheswick, we and As Creek, we that’s whereas Gibbons wrapped look Avon at of the in scrap are terms of up. Lake kind up

Avon look obviously to the projects some limited still going cash we kind we’re Cheswick of as remediation Gibbons performing So, to three providing remainder terms year Creek it’s be with activities. of Lake this those the whereas of of to those opportunities flow, in

so into for be And But majority at three the cash collectively, adjusted from both those cash If we a will will the EBITDA have EBITDA breakeven we’re – as XXXX, three at projects. flow flow. we of a and remaining pretty wise be the of and contribution those the adjusted looking look year. will much look we we

Jonathan Batarse

Yes.

these it’s a good risk. the to what in Because the us. priority for see It’s properties helping we manage for and good environmental a award. As and we be of But award, and timing now But projects. of next awarded the opportunities, one, the will can’t we’re and actively pursuing, one cycle future when the commit magnitude on the utility utility pursuing partners, customers it look again, identifying next remediate it’s for that I the be to bring continues for our can to ERT good the to when our working that generation of us. right next lot ERT value of we life them or customer,

can’t the the next So, project, we’re to commit timing but of award. excited about the ERT

Brian Butler

is one fully converted, on one All here? everything then accounting, a the fully, the share count capital diluted would made last be on what maybe adjustments you’ve And post? if just Okay.

Joe Skidmore

about Yes, we shares after, the the, assume Brian analysis we’re if overall of we’re place. preferred but fully that, working through of at can convergent detailed looking diluted all guess I stock X,XXX in –

Brian Butler

you taking Okay. much questions. my Thank for very

Jonathan Batarse

you. Thank

Operator

over the no this questions further I turn for remarks. at call to are closing will There Batarse time. Jonathan

Jonathan Batarse

today. Thank you everyone for joining

continuing our As shareholders and I and competitive provide Charah. we’ve and focus look our tools opportunity this ensuring the commercial rigor and in profitability your safety Personally, in and it’s for an to most our going can at an for for stability team to, Thank so exciting awards. to to value is on forward creating here profitability new our on, efficient customers ensuring time again growing to we identify by our proper risk opportunities, earlier, forward project that be for our the the business we we at got in and opportunity. by said partner as and processes continued level. And increasing exciting mitigate excellent possible, service creating employees, place cost structure business. our you have your future the improve that again, interest We

Operator

for you today’s participating. Thank This conference. concludes

disconnect at time. this You may

Charah Solutions, Inc. 8.50% Se (CHRB) 15 Nov 222022 Q3 Earnings call transcript