Advanced Emissions Solutions, Inc. (NASDAQ: ADES) (the "Company" or
"ADES") today filed its Quarterly Report on Form 10-Q and reported
financial results for the quarter ended September 30, 2022,
including information about its equity investments in Tinuum Group,
LLC and Tinuum Services, LLC (collectively "Tinuum"), of which ADES
owns 42.5% and 50%, respectively.
Third Quarter Highlights
- Third quarter
consumables revenue was $28.4 million compared to $26.7 million in
the prior year period.
- Third quarter net
loss was $2.4 million compared to net income of $24.3 million in
the prior year period, which reflects the wind down of the Tinuum
investments at the end of 2021.
- Third quarter
Consolidated Adjusted EBITDA (loss) was $0.5 million compared to
$28.5 million in the prior year period, as the prior year period
includes $27.0 million of Consolidated Adjusted EBITDA from the
Tinuum investments.
- Cash balances as of
September 30, 2022, including restricted cash, totaled $85.8
million, compared to $88.8 million as of December 31, 2021.
The Company's only debt outstanding are finance lease obligations
which total $4.9 million.
- Production volume of
activated carbon products at our Red River plant exceeded
historical volumes.
- The Company announced
entering into a definitive transaction agreement with Arq Limited
(“Arq”), pursuant to which Arq and ADES will combine their
respective businesses.
- The Company also
announced sale of Marshall Mine, LLC to Caddo Creek Resources
Company, LLC (“Caddo Creek”), which, upon closing will eliminate
its existing asset retirement obligation for Marshall Mine and is
likely to result in the release of a portion of the Company’s
restricted cash balance. The Transaction is expected to close
during the first half of 2023.
“Our consumables revenue grew 7% compared to the
prior year as macroeconomic dynamics continue to support strong
demand for our activated carbon products. In addition,
we continue to execute on pricing initiatives designed to improve
the economic terms of customer contracts,” said Greg Marken, CEO of
ADES. “We are seeing encouraging success in non-Power Generation
markets, such as Industrial and Municipal Water, as we focus on
diversifying our product and end market mix. Production volume at
Red River was once again strong during the quarter, allowing for
continued build in our inventory position. While overall inventory
levels and inflationary pressures remain challenging, we are
encouraged by robust demand levels for our activated carbon
products, and our solid win and retention rates with
customers."
Marken continued, “In addition, we concluded our
strategic review process, culminating with the announcement of our
proposed combination with Arq. We remain excited by, and committed
to, the prospect of leveraging Arq’s truly unique feedstock to
accelerate our penetration of GAC markets and to facilitate our
entrance into new markets such as additives for Carbon Black,
Asphalt and Marine Fuel. The combination of our respective
resources, technologies and infrastructure will create the only
vertically integrated environmental technology company with
significant product portfolio breadth."
Marken concluded, “Lastly, in September we
announced the sale of Marshall Mine, LLC to Caddo Creek Resource
Company, LLC, subject to regulatory approvals that we expect to
receive within the first half of 2023. Although the reclamation
work performed at the Marshall Mine has progressed well and is
substantially under budget, the sale allows us to continue to
de-risk our balance sheet and to focus on growing our consumables
revenues, as well as our combination with Arq."
Third Quarter
2022 Results
Third quarter revenues and costs of revenues were
$28.4 million and $21.6 million, respectively, compared to $30.9
million and $20.0 million for the third quarter of 2021. The
revenue decline was the result of the loss of royalty earnings from
the Tinuum investments in the prior year, which was partially
offset by strong sales of consumable products.
Third quarter other operating expenses were $9.5
million compared to $7.6 million for the third quarter of 2021. The
increase was mainly the result of higher legal and professional
fees associated with the Company's strategic review process, which
was partially offset by lower payroll and benefits expense.
The Company did not record any earnings from equity
method investments in the third quarter compared to $22.2 million
in the third quarter of 2021. The decrease in earnings from equity
method investments is the result of all remaining invested Refined
Coal facilities reaching the end of their tax credit generation
period as of December 31, 2021. The Company does not expect any
further distributions from its Tinuum investments.
The Company did not recognize any income tax
expense or benefit for the third quarter of 2022 compared to income
tax expense of $4.6 million for the third quarter of 2021.
For the third quarter of 2022, the Company reported
a net loss of $2.4 million, or $0.13 per diluted share, compared to
net income of $24.3 million, or $1.31 per share, for the third
quarter of 2021. The decline was due to lower earnings from equity
method investments as a result of the wind down of the Tinuum
investments.
Third quarter Consolidated Adjusted EBITDA (loss)
was $0.5 million compared to $28.5 million in the prior year. The
decline in Consolidated Adjusted EBITDA was mainly the result of
the decline in earnings from the Tinuum Investments. See note below
regarding the use of the Non-GAAP financial measure Consolidated
Adjusted EBITDA and a reconciliation to the most comparable GAAP
financial measure.
Nine Month 2022
Results
Revenues and costs of revenues during the first
nine months of the year were $79.6 million and $63.0 million,
respectively, compared to $74.5 million and $48.7 million in 2021.
The increase in revenue was driven by higher sales of consumable
products, partially offset by the loss of royalty earnings from
Tinuum investments in the prior year.
Other operating expenses during the first nine
months of the year totaled $25.3 million, compared to $21.8 million
in the comparable period in the prior year. The increase was driven
primarily by higher legal and professional fees associated with the
strategic review process, partially offset by lower payroll and
benefits expenses.
Earnings from equity method investments totaled
$3.2 million compared to $61.9 million in 2021. The decline was the
result of all remaining invested Refined Coal facilities reaching
the end of their tax credit generation period as of December 31,
2021.
Interest expense during the first nine months of
the year was $0.3 million, compared to $1.4 million in the prior
year. The decrease was the result of the full repayment of the
Company’s term loan in the second quarter of 2021.
The Company did not recognize any income tax
expense or benefit for the year-to-date period compared to income
tax expense of $14.0 million for the comparable period of 2021.
The Company recorded a net loss of $5.8 million, or
$0.31 per diluted share, during the first nine months of the year
compared to net income of $54.6 million, or $2.96 per share, in
2021. The decline was due to lower earnings from equity method
investments as a result of the wind down of the Tinuum
investments.
Year-to-date Consolidated Adjusted EBITDA was $2.5
million compared to $75.8 million in the prior year. The decline in
Consolidated Adjusted EBITDA was the result of the decline in
earnings from the Tinuum investments
Conference Call and Webcast
Information
The Company has scheduled a conference call to
begin at 9:00 a.m. Eastern Time on Wednesday, November 9,
2022. The conference call webcast information will be available via
the Investor Resources section of ADES's website at
www.advancedemissionssolutions.com. Interested parties may also
participate in the call by registering at
http://events.q4inc.com/attendee/836621839. A supplemental investor
presentation will be available on the Company's Investor Resources
section of the website prior to the start of the conference
call.
As part of the conference call, ADES will
conduct a question and answer session. Investors are invited to
email their questions in advance to ADES@alpha-ir.com.
About Advanced Emissions Solutions,
Inc.
Advanced Emissions Solutions, Inc. serves as the
holding entity for a family of companies that provide emissions
solutions to customers in the power generation and other
industries.
ADA brings together ADA Carbon Solutions, LLC, a
leading provider of powder activated carbon ("PAC") and ADA-ES,
Inc., the providers of ADA® M-Prove™ Technology. We provide
products and services to control mercury and other contaminants at
coal-fired power generators and other industrial companies. Our
broad suite of complementary products control contaminants and help
our customers meet their compliance objectives consistently and
reliably.
CarbPure Technologies LLC, (“CarbPure”), formed in
2015 provides high-quality PAC and granular
activated carbon ideally suited for treatment of potable water and
wastewater. Our affiliate company, ADA Carbon Solutions, LLC
manufactures the products for CarbPure.
Caution on Forward-Looking
Statements
This press release contains forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, which provides a “safe harbor” for such
statements in certain circumstances. When used in this press
release, the words “can,” “will,” “intends,” “expects,” “believes,”
similar expressions and any other statements that are not
historical facts are intended to identify those assertions as
forward-looking statements. All statements that address activities,
events or developments that the Company intends, expects or
believes may occur in the future are forward-looking statements.
These forward-looking statements may relate to such matters as
business strategy, goals and expectations concerning the merger
(including the anticipated timing of consummation of the merger,
future operations, future performance or results). The
forward-looking statements may further include projection on future
after-tax, net RC cash flows, expectations about future demand for
our APT products, pressure on APT margins and acceptance of price
increases as well as results from the Company’s review of strategic
alternatives. These forward-looking statements involve risks and
uncertainties. Actual events or results could differ materially
from those discussed in the forward-looking statements as a result
of various factors including, but not limited to: uncertainties as
to the timing of the consummation of the merger; the risk that the
merger may not be completed in a timely manner or at all; the
possibility that any or all of the various conditions to the
consummation of the merger may not be satisfied or waived; the
occurrence of any event, change or other circumstance that could
give rise to the termination of the transaction agreement; the
effect of the announcement of the transactions contemplated by the
transaction agreement on the Company’s ability to hire key
personnel, its ability to maintain relationships with customers,
suppliers and others with whom it does business, or its results of
operations and business generally; risks related to diverting
management’s attention from the Company’s ongoing business
operations; the ability to meet Nasdaq’s listing standards
following the consummation of the merger; costs related to the
proposed merger; opportunities for additional sales of our lignite
activated carbon products and end-market diversification; the
outcome of the review of strategic alternatives; the Company’s
ability to meet customer supply requirements; the rate of
coal-fired power generation in the United States; timing of new and
pending regulations and any legal challenges to or extensions of
compliance dates of them, the U.S. government’s failure to
promulgate regulations that benefit our business; changes in laws
and regulations; Internal Revenue Service interpretations or
guidance, accounting rules, any pending court decisions, prices,
economic conditions and market demand; impact of competition;
availability, cost of and demand for alternative energy sources and
other technologies; technical, start up and operational
difficulties; competition within the industries in which the
Company operates; loss of key personnel; ongoing effects of the
COVID-19 pandemic and associated economic downturn on operations
and prospects; as well as other factors relating to our business,
as described in the Company’s filings with the SEC, with particular
emphasis on the risk factor disclosures contained in those filings.
You are cautioned not to place undue reliance on the
forward-looking statements and to consult filings ADES has made and
will make with the SEC for additional discussion concerning risks
and uncertainties that may apply to the business and the ownership
of ADES securities. The forward-looking statements speak only as to
the date of this press release, and the Company does not undertake
any obligation to update its forward-looking statements to reflect
events or circumstances that may arise after the date of this press
release.
This press release does not contain all the
information that should be considered concerning the proposed
transaction to be voted upon at the special meeting of shareholders
and is not intended to provide the basis for any investment
decision or any other decision in respect of the transaction.
Shareholders are advised to read any proxy statement prepared in
connection with the transaction.
Non-GAAP Financial Measures
This press release presents certain supplemental
financial measures, including EBITDA, which is a measurement that
is not calculated in accordance with U.S. generally accepted
accounting principles (“GAAP”). EBITDA is defined as earnings
before interest, taxes, depreciation and amortization. EBITDA
should be considered in addition to, and not as a substitute for,
net income in accordance with GAAP as a measure of performance.
Additional Information
In connection with the proposed business
combination with Arq (the “Transaction”), Elbert Holdings, Inc.
(“New ADES”), a wholly owned subsidiary of ADES, filed a
registration statement on Form S-4 with the SEC (the “Registration
Statement”), which includes a preliminary proxy
statement/prospectus, that will be both the proxy statement to be
distributed to ADES’ shareholders in connection with its
solicitation of proxies for the vote by ADES’ shareholders with
respect to the business combination and other matters as may be
described in the Registration Statement, as well as the preliminary
prospectus relating to the offer and sale of the securities by New
ADES to be issued to the shareholders of ADES in the Transaction.
After the Registration Statement is declared effective, ADES will
mail a definitive proxy statement/prospectus and other relevant
documents to its shareholders. This press release does not contain
all the information that should be considered concerning the
proposed Transaction and is not intended to form the basis of any
investment decision or any other decision in respect of the
Transaction. ADES’ shareholders and other interested persons are
advised to read the preliminary proxy statement/prospectus included
in the Registration Statement and the amendments thereto and the
definitive proxy statement/prospectus and other documents that will
be filed in connection with the proposed Transactions, as these
materials contain and will contain important information about
ADES, New ADES, Arq and the proposed Transactions.
When available, the definitive proxy
statement/prospectus and other relevant materials for the proposed
Transactions will be mailed to shareholders of ADES as of a record
date to be established for voting on the proposed Transactions. The
documents relating to the proposed Transactions (when they are
available) can be obtained free of charge from the SEC’s website at
www.sec.gov. These documents (when they are available) can also be
obtained free of charge by contacting us at 8051 E Maplewood Ave,
Ste 210, Greenwood Village, CO 80111, Attn: General Counsel.
No Offer or Solicitation
This communication does not constitute an offer to
sell or the solicitation of an offer to buy any securities, or a
solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Participants in the
Solicitation
This communication is not a solicitation of a proxy
from any security holder. ADES and its directors, executive
officers, other members of management and employees may be deemed
to be participants in the solicitation of proxies from ADES’
stockholders in connection with the Transaction. Information
regarding the names and interests in the proposed transaction of
ADES’ directors and officers is contained ADES’ filings with the
SEC. Additional information regarding the interests of potential
participants in the solicitation process will also be included in
the proxy statement/prospectus relating to the Transaction and
other relevant documents when they are filed with the SEC. These
documents can be obtained free of charge from the sources indicated
above.
Source: Advanced Emissions Solutions, Inc.
Investor Contact:
Alpha IR GroupRyan Coleman or Chris
Hodges312-445-2870ADES@alpha-ir.com
TABLE 1
Advanced Emissions Solutions, Inc. and
SubsidiariesCondensed Consolidated Balance
Sheets(Unaudited)
|
|
As of |
(in thousands, except share data) |
|
September 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash |
|
$ |
75,823 |
|
|
$ |
78,753 |
|
Receivables, net |
|
|
13,903 |
|
|
|
12,622 |
|
Receivables, related parties |
|
|
— |
|
|
|
2,481 |
|
Inventories, net |
|
|
15,261 |
|
|
|
7,850 |
|
Prepaid expenses and other current assets |
|
|
7,653 |
|
|
|
6,661 |
|
Total current assets |
|
|
112,640 |
|
|
|
108,367 |
|
Restricted cash, long-term |
|
|
10,000 |
|
|
|
10,027 |
|
Property, plant and equipment, net of accumulated depreciation of
$10,704 and $7,684, respectively |
|
|
33,286 |
|
|
|
30,171 |
|
Other long-term assets, net |
|
|
29,529 |
|
|
|
36,871 |
|
Total Assets |
|
$ |
185,455 |
|
|
$ |
185,436 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
18,652 |
|
|
$ |
16,486 |
|
Current portion of finance lease obligations |
|
|
1,182 |
|
|
|
1,011 |
|
Other current liabilities |
|
|
5,361 |
|
|
|
5,124 |
|
Total current liabilities |
|
|
25,195 |
|
|
|
22,621 |
|
Long-term finance lease obligations, net of current portion |
|
|
3,731 |
|
|
|
3,152 |
|
Other long-term liabilities |
|
|
13,906 |
|
|
|
12,362 |
|
Total Liabilities |
|
|
42,832 |
|
|
|
38,135 |
|
Commitments and contingencies |
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Preferred stock: par value of $.001 per share, 50,000,000 shares
authorized, none outstanding |
|
|
— |
|
|
|
— |
|
Common stock: par value of $.001 per share, 100,000,000 shares
authorized, 23,730,499 and 23,460,212 shares issued, and 19,112,353
and 18,842,066 shares outstanding at September 30, 2022 and
December 31, 2021, respectively |
|
|
24 |
|
|
|
23 |
|
Treasury stock, at cost: 4,618,146 and 4,618,146 shares as of
September 30, 2022 and December 31, 2021, respectively |
|
|
(47,692 |
) |
|
|
(47,692 |
) |
Additional paid-in capital |
|
|
103,175 |
|
|
|
102,106 |
|
Retained earnings |
|
|
87,116 |
|
|
|
92,864 |
|
Total Stockholders’ Equity |
|
|
142,623 |
|
|
|
147,301 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
185,455 |
|
|
$ |
185,436 |
|
TABLE 2
Advanced Emissions Solutions, Inc. and
SubsidiariesCondensed Consolidated Statements of
Operations(Unaudited)
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(in thousands, except per share data) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
|
Consumables |
|
$ |
28,437 |
|
|
$ |
26,693 |
|
|
$ |
79,578 |
|
|
$ |
62,642 |
|
License royalties, related party |
|
|
— |
|
|
|
4,165 |
|
|
|
— |
|
|
|
11,888 |
|
Total revenues |
|
|
28,437 |
|
|
|
30,858 |
|
|
|
79,578 |
|
|
|
74,530 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Consumables cost of revenue, exclusive of depreciation and
amortization |
|
|
21,575 |
|
|
|
19,956 |
|
|
|
62,992 |
|
|
|
48,672 |
|
Payroll and benefits |
|
|
2,313 |
|
|
|
2,637 |
|
|
|
7,458 |
|
|
|
8,014 |
|
Legal and professional fees |
|
|
3,668 |
|
|
|
1,106 |
|
|
|
7,395 |
|
|
|
4,340 |
|
General and administrative |
|
|
1,833 |
|
|
|
1,715 |
|
|
|
5,628 |
|
|
|
5,223 |
|
Depreciation, amortization, depletion and accretion |
|
|
1,671 |
|
|
|
2,145 |
|
|
|
4,765 |
|
|
|
6,155 |
|
Loss (gain) on change in estimate, asset retirement obligation |
|
|
— |
|
|
|
— |
|
|
|
34 |
|
|
|
(1,942 |
) |
Total operating expenses |
|
|
31,060 |
|
|
|
27,559 |
|
|
|
88,272 |
|
|
|
70,462 |
|
Operating (loss) income |
|
|
(2,623 |
) |
|
|
3,299 |
|
|
|
(8,694 |
) |
|
|
4,068 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Earnings from equity method investments |
|
|
— |
|
|
|
22,195 |
|
|
|
3,222 |
|
|
|
61,944 |
|
Gain on extinguishment of debt |
|
|
— |
|
|
|
3,345 |
|
|
|
— |
|
|
|
3,345 |
|
Interest expense |
|
|
(83 |
) |
|
|
(86 |
) |
|
|
(259 |
) |
|
|
(1,416 |
) |
Other |
|
|
315 |
|
|
|
81 |
|
|
|
(19 |
) |
|
|
652 |
|
Total other income |
|
|
232 |
|
|
|
25,535 |
|
|
|
2,944 |
|
|
|
64,525 |
|
(Loss) income before income tax expense |
|
|
(2,391 |
) |
|
|
28,834 |
|
|
|
(5,750 |
) |
|
|
68,593 |
|
Income tax (benefit) expense |
|
|
— |
|
|
|
4,581 |
|
|
|
— |
|
|
|
14,013 |
|
Net (loss) income |
|
$ |
(2,391 |
) |
|
$ |
24,253 |
|
|
$ |
(5,750 |
) |
|
$ |
54,580 |
|
(Loss) earnings per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.13 |
) |
|
$ |
1.33 |
|
|
$ |
(0.31 |
) |
|
$ |
2.99 |
|
Diluted |
|
$ |
(0.13 |
) |
|
$ |
1.31 |
|
|
$ |
(0.31 |
) |
|
$ |
2.96 |
|
Weighted-average number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
18,487 |
|
|
|
18,292 |
|
|
|
18,435 |
|
|
|
18,243 |
|
Diluted |
|
|
18,487 |
|
|
|
18,489 |
|
|
|
18,435 |
|
|
|
18,416 |
|
TABLE 3
Advanced Emissions Solutions, Inc. and
SubsidiariesCondensed Consolidated Statements of
Cash
Flows(Unaudited)
|
|
Nine Months Ended September 30, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities |
|
|
|
|
Net (loss) income |
|
$ |
(5,750 |
) |
|
$ |
54,580 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
Depreciation, amortization, depletion and accretion |
|
|
4,765 |
|
|
|
6,155 |
|
Earnings from equity method investments |
|
|
(3,222 |
) |
|
|
(61,944 |
) |
Operating lease expense |
|
|
1,953 |
|
|
|
1,481 |
|
Stock-based compensation expense |
|
|
1,455 |
|
|
|
1,476 |
|
Deferred income tax expense |
|
|
— |
|
|
|
9,046 |
|
Amortization of debt discount and debt issuance costs |
|
|
— |
|
|
|
945 |
|
Loss (gain) on change in estimate, asset retirement obligation |
|
|
34 |
|
|
|
(1,942 |
) |
Gain on extinguishment of debt |
|
|
— |
|
|
|
(3,345 |
) |
Other non-cash items, net |
|
|
404 |
|
|
|
(352 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Receivables and related party receivables |
|
|
1,199 |
|
|
|
(2,835 |
) |
Prepaid expenses and other assets |
|
|
(991 |
) |
|
|
(16 |
) |
Inventories, net |
|
|
(7,222 |
) |
|
|
3,658 |
|
Other long-term assets, net |
|
|
2,136 |
|
|
|
(4,009 |
) |
Accounts payable and accrued expenses |
|
|
1,827 |
|
|
|
2,388 |
|
Other current liabilities |
|
|
(184 |
) |
|
|
(3,489 |
) |
Operating lease liabilities |
|
|
1,445 |
|
|
|
3,878 |
|
Other long-term liabilities |
|
|
206 |
|
|
|
(3,031 |
) |
Distributions from equity method investees, return on
investment |
|
|
2,297 |
|
|
|
22,044 |
|
Net cash provided by operating activities |
|
|
352 |
|
|
|
24,688 |
|
Cash flows from investing activities |
|
|
|
|
Distributions from equity method investees in excess of cumulative
earnings |
|
|
3,316 |
|
|
|
44,707 |
|
Acquisition of property, plant, equipment, and intangible assets,
net |
|
|
(6,178 |
) |
|
|
(5,403 |
) |
Mine development costs |
|
|
(345 |
) |
|
|
(1,262 |
) |
Proceeds from sale of property and equipment |
|
|
1,241 |
|
|
|
895 |
|
Net cash (used in) provided by investing activities |
|
|
(1,966 |
) |
|
|
38,937 |
|
Cash flows from financing activities |
|
|
|
|
Principal payments on finance lease obligations |
|
|
(913 |
) |
|
|
(1,085 |
) |
Repurchase of common shares to satisfy tax withholdings |
|
|
(385 |
) |
|
|
(241 |
) |
Dividends paid |
|
|
(45 |
) |
|
|
(92 |
) |
Principal payments on term loan |
|
|
— |
|
|
|
(16,000 |
) |
Net cash used in financing activities |
|
|
(1,343 |
) |
|
|
(17,418 |
) |
(Decrease) increase in Cash and Restricted Cash |
|
|
(2,957 |
) |
|
|
46,207 |
|
Cash and Restricted Cash, beginning of period |
|
|
88,780 |
|
|
|
35,932 |
|
Cash and Restricted Cash, end of period |
|
$ |
85,823 |
|
|
$ |
82,139 |
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
|
Acquisition of property and equipment through finance lease |
|
$ |
1,641 |
|
|
$ |
— |
|
Acquisition of property and equipment through accounts payable |
|
$ |
339 |
|
|
$ |
128 |
|
Note on Non-GAAP Financial
Measures
To supplement the Company's financial information
presented in accordance with U.S. generally accepted accounting
principles, ("GAAP"), the Press Release includes non-GAAP measures
of certain financial performance. The non-GAAP measures include
Consolidated EBITDA and Consolidated Adjusted EBITDA. The Company
included non-GAAP measures because management believes that they
help to facilitate comparison of operating results between periods.
The Company believes the non-GAAP measures provide useful
information to both management and users of the financial
statements by excluding certain expenses that may not be indicative
of core operating results and business outlook. These non-GAAP
measures are not in accordance with, or an alternative to, measures
prepared in accordance with GAAP and may be different from non-GAAP
measures used by other companies. In addition, these non-GAAP
measures are not based on any comprehensive set of accounting rules
or principles. These measures should only be used to evaluate the
Company's results of operations in conjunction with the
corresponding GAAP measures.
The Company has defined Consolidated EBITDA as net
income (loss) adjusted for the impact of the following items that
are either non-cash or that we do not consider representative of
our ongoing operating performance: depreciation, amortization,
depletion, accretion, amortization of upfront customer
consideration, which was recorded in conjunction with the Marshall
Mine Acquisition ("Upfront Customer Consideration"), interest
expense, net and income taxes. The Company has defined Consolidated
Adjusted EBITDA as Consolidated EBITDA reduced by the non-cash
impact of equity earnings from equity method investments and gain
on extinguishment of debt, increased by cash distributions from
equity method investments, loss on early settlement of the Norit
Receivable and the change in ARO as a result of a change in
estimate. . The Company believes that the Consolidated Adjusted
EBITDA measure is less susceptible to variances that affect the
Company's operating performance.
The Company presents the non-GAAP measures because
the Company believes they are useful as supplemental measures in
evaluating the performance of the Company's operating performance
and provide greater transparency into the results of operations.
The Company's management uses Consolidated EBITDA and Consolidated
Adjusted EBITDA as a factor in evaluating the performance of its
business. The adjustments to Consolidated EBITDA and Consolidated
Adjusted EBITDA in future periods are generally expected to be
similar. Consolidated EBITDA and Consolidated Adjusted EBITDA has
limitations as an analytical tool, and you should not consider
these measures in isolation or as a substitute for analyzing the
Company's results as reported under GAAP.
TABLE 4
Advanced Emissions Solutions, Inc. and
SubsidiariesConsolidated Adjusted EBITDA
Reconciliation to Net (Loss) Income (Amounts in
thousands)(Unaudited)
|
|
Three Months Ended September 30, |
|
Nine Months EndedSeptember 30, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net (loss) income |
|
$ |
(2,391 |
) |
|
$ |
24,253 |
|
|
$ |
(5,750 |
) |
|
$ |
54,580 |
|
Depreciation, amortization, depletion and accretion |
|
|
1,671 |
|
|
|
2,145 |
|
|
|
4,765 |
|
|
|
6,155 |
|
Amortization of Upfront Customer Consideration |
|
|
127 |
|
|
|
127 |
|
|
|
381 |
|
|
|
381 |
|
Interest expense, net |
|
|
44 |
|
|
|
25 |
|
|
|
163 |
|
|
|
1,188 |
|
Income tax expense |
|
|
— |
|
|
|
4,581 |
|
|
|
— |
|
|
|
14,013 |
|
Consolidated ( EBITDA loss) EBITDA |
|
|
(549 |
) |
|
|
31,131 |
|
|
|
(441 |
) |
|
|
76,317 |
|
Cash distributions from equity method investees |
|
|
— |
|
|
|
22,875 |
|
|
|
5,613 |
|
|
|
66,751 |
|
Equity earnings |
|
|
— |
|
|
|
(22,195 |
) |
|
|
(3,222 |
) |
|
|
(61,944 |
) |
Gain on extinguishment of debt |
|
|
— |
|
|
|
(3,345 |
) |
|
|
— |
|
|
|
(3,345 |
) |
Loss (gain) on change in estimate, asset retirement obligation |
|
|
|
|
— |
|
|
|
34 |
|
|
|
(1,942 |
) |
Loss on early settlement of Norit Receivable |
|
|
— |
|
|
|
— |
|
|
|
535 |
|
|
|
— |
|
Consolidated (Adjusted EBITDA loss) Adjusted EBITDA |
|
$ |
(549 |
) |
|
$ |
28,466 |
|
|
$ |
2,519 |
|
|
$ |
75,837 |
|
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