Charah Solutions, Inc. · OTC:CHRB
Charah Solutions — Investor Presentation (November 2018)
29 slides from Charah Solutions's investor presentation, Nov 28, 2018
Slide 1: Investor Presentation November 2018
Investor Presentation November 2018 Exhibit 99.1
Slide 2: Disclaimer
Disclaimer Forward Looking Statements This presentation and our accompanying comments include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,
Slide 3: Why Invest in Charah Solutions?
Why Invest in Charah Solutions? Valuation Discount Stock trading at a substantial discount to peer group averages of 11.2x – 17.1x Expect double-digit free cash flow yield in 2019 Newly public company; market does not yet appreciate growth potential Substantial Growth Potential More than $3 billion
Slide 4: A Leading Provider of Environmental and Maintenance Services to the Power Generation Industry
A Leading Provider of Environmental and Maintenance Services to the Power Generation Industry Service Location Corporate Headquarters Service Area1 Expanding National Footprint Diverse Customer Portfolio 35+ Coal-Fired Power Plants 13 Nuclear Power Plants 30+ MultiSourceTM Materials Network Location
Slide 5: Investment Highlights
Investment Highlights Contract-Based Financial Model Provides Long-Term Stability and Financial Protection Long-term partnerships with leading power generators; ~90% renewal rates in Fossil Services Cost-reimbursable or unit-price contracts; no commodity exposure; little cyclicality to business Stro
Slide 6: Broad Suite of Services
Byproduct Sales Remediation & Compliance Services Maintenance & Technical Services Recurring & Mission-Critical Broad Suite of Services Environmental Solutions Significant Market Opportunity Embedded Power Plant Presence Sustainable Solutions Nuclear Services Fossil Services Segment Overview Recurri
Slide 7: Diverse Customer Base with Leading Power Generators
Diverse Customer Base with Leading Power Generators Key Contract Features Contracts & Customers Provide Stability & Financial Protection Charah’s Embedded Presence Leads to Long-Lasting Relationships 20+ Utility Customers ~50 Plants Long-term partnerships with leading power generators ~90% contract
Slide 8: Significant Market Opportunities
Source: Energy Information Administration, September / November 2017; American Coal Ash Association, 2016; U.S. Environmental Protection Agency (EPA), 2014; Management Estimates Significant Market Opportunities Aging Fleets Increasing need for recurring maintenance services $75B+ Total estimated coa
Slide 9: Multi-Faceted Growth Strategy
Through Organic Growth and Strategic Acquisitions Multi-Faceted Growth Strategy Increase Market Share & Expand Services 2 Capitalize on Growing Need for Environmental Remediation 1 Execute on Technology Deployment 3
Slide 10: Capitalize on Remediation Spend
Capitalize on Remediation Spend Significant total addressable market for ash pond and landfill closure or remediation Estimated 1,100+ Ash Ponds and Landfills Require Closure or Remediation 90%+ Still require closure or remediation <10% Closed or remediated in last 5 years Large and Highly Attractiv
Slide 11: Increase Market Share
Source: U.S. Energy Information Administration Increase Market Share Number of Coal-Fired and Nuclear Power Plants as of December 31, 2017 Plants not yet serviced by Charah Plants serviced by Charah 16% Penetration Rate Large-Scale Facilities (>250MW) Well-positioned to grow market share with new an
Slide 12: Expand Service Offerings
Acquired SCB to add technologies and increase Byproduct Sales Doubled our volume of material sales and adds differentiated technology Create Value & Differentiate Launched Nuclear Services division to offer outage maintenance services $0 - $300M+ in revenue in 1st year of operations Same services ne
Slide 13: Invest in and Develop Technology
1 2 Invest in and Develop Technology MP618TM Thermal Beneficiation (Fly Ash) Grinding Technology (Blast Furnace Slag) Strong customer interest Four locations identified for additional grinding facilities in 2019 Latest Technology Investments are the Most Cost-Effective Options Available Benefits Sma
Slide 14: Q3 2018 Financial Highlights
Revenue growth of 56% YoY driven by: Growth in coal ash remediation Addition of Nuclear Services Acquisition of SCB International Adjusted EBITDA1 growth of 57% YoY Comparable YoY EBITDA margins 3Q17 vs. 3Q18 Please refer to the supplemental slides in Appendix for Adjusted EBITDA reconciliation to G
Slide 15: Capital Allocation Strategy: Ample Liquidity
$ Millions (Pre-IPO) As of 3/31/2018 (Post-IPO) As of 6/30/2018 As of 9/30/2018 Cash and Cash Equivalents $9 $15 $4 $50 ABL Facility ($45 prior to refinance) -- -- $5 Equipment Financing $21 $30 $34 Senior Secured Term Loan $245 $205 $205 Total Debt $266 $235 $244 Net Debt $257 $220 $240 LTM Adj. EB
Slide 16: Full Year 2018 Guidance
Full Year 2018 Guidance ($ millions) Nine Months Ended September 30, 2018 (Actual) Full Year 2018 (Guidance) Revenue $537 $720 - $730 Net Income (loss) attributable to Charah Solutions $(13) $(5) - $2 Adjusted EBITDA $76 $98 - $105 Guidance Considerations Additional acceleration of revenues and expe
Slide 17: 2019 Outlook
2019 Outlook Resetting the Baseline for Growth in 2020 and Beyond Will provide 2019 guidance on 4Q conference call (March 2019) Business Segment Sub-Segment Commentary Takeaway Maintenance & Technical Services Fossil Services – Growth from existing business and addition of new contract in 2nd quarte
Slide 18: Poised for Continued Growth
Poised for Continued Growth Charah Solutions: Poised for Continued Growth Leading Provider of Environmental and Maintenance Services to the Power Generation Industry Well-Positioned to Meet Customers’ Needs Contract-Based Financial Model Industry Leader in Quality, Safety and Compliance Improving Ba
Slide 19: Appendix
oon BENE APPENDIX
Slide 20: Non-GAAP Reconciliation Adjusted EBITDA
Non-GAAP Reconciliation Adjusted EBITDA The successor columns represent the combined financial information of Charah and Allied for the period from January 13, 2017 through September 30, 2017 and January 1, 2018 through September 30, 2018 as applicable, as reflected in our financial statements inclu
Slide 21: Non-GAAP Reconciliation Adjusted EPS
Non-GAAP Reconciliation Adjusted EPS Represents non-recurring costs associated with our term loan refinancing. Represents non-recurring legal costs and accruals associated with outstanding legal claims, which amounts are not representative of legal costs that we historically incur in the ordinary co
Slide 22: Environmental Solutions Services Overview
Routine Operations RECURRING SERVICES NEED Byproduct Sales WHAT Recycling of recurring and contracted volumes of coal-fired power generation waste byproducts WHY Coal ash can be recycled as a high-quality, cost-effective raw material substitute (most commonly cement) On-site Landfill Operations WHAT
Slide 23: Illustrative Planned Outage Timeline
Illustrative Planned Outage Timeline Planning Phase Planning outage Gathering workforce Continuous routine maintenance Online modifications Ramp Down Reduced workforce Continuous routine maintenance Online modifications -6 -4 -2 0 2 4 6 Planned Outage Planned Outage Staffing Headcount Curve Months S
Slide 24: Coal & Nuclear Are Not Going Away
Coal & Nuclear Are Not Going Away Source: Energy Information Administration After a Decade of Slowing, Electricity Use from Coal and Nuclear is Expected to Remain Steady Through 2050 history projections 2017 Electricity Generation from Coal & Nuclear Billion Kilowatthours Only 1 of the 37 coal power
Slide 25: Third Quarter 2018 Regulatory Updates
Third Quarter 2018 Regulatory Updates U.S. Court of Appeals for the Fourth Circuit Ruled all unlined coal ash ponds must be closed, including clay-lined and legacy inactive ponds, which were previously excluded from the EPA CCR regulations Significantly increases the addressable market and further v
Slide 26: Third Quarter 2018 Business Impacts
Third Quarter 2018 Business Impacts Update Commentary Takeaway Expected Early Completion of Brickhaven Contract As result of change in North Carolina law, Duke Energy expected to discontinue ash deliveries to Brickhaven once Riverbend project is completed (~Dec. 2018) Contract includes financial pro
Slide 27: Debt Refinance
Debt Refinance Restructured from Term Loan B to Term Loan A Highlights Details Term Loan A Structure $205M term loan $25M delayed draw option Revolver $50M (interest only) no borrowing base formulas Upsized from $45M previously Maturity 5 Years (September 21, 2023) Term Loan Amortization (per year)
Slide 28: Maintenance & Technical Services
Revenue Gross Profit Maintenance & Technical Services Both Fossil and Nuclear Services operate under long-term contracts; recurring revenue Significant revenue growth in 2017 and 2018 driven by addition of low-risk, lower-margin Nuclear Services business in mid-2017 Q3 2018: Full quarter of nuclear
Slide 29: Environmental Solutions
Environmental Solutions Large growth opportunity driven by EPA-mandated remediation (still in early stages) Revenue growth drivers: coal ash remediation, byproduct sales and the acquisition of SCB in March 2018 Q3 2018: Revenue increase driven by acquisition of SCB; remediation and compliance projec
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