Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Investor Presentation (November 2013)
30 slides from Arq's investor presentation, Nov 15, 2013
Slide 1: Investor Presentation
Exhibit 99.1 Advanced Emissions Solutions, Inc. NASDAQ: ADES Investor Presentation November 2013 www.advancedemissionssolutions.com © 2012-2013 Advanced Emissions Solutions, Inc.
Slide 2: Forward-looking statements
This presentation includes 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. The forward-looking statements include statements or expectations regarding future contracts, p
Slide 3: ADES is a Leader in the Pollution Control Industry
ADES is a Leader in the Pollution Control Industry More than 30 years of providing solutions to the power industry, 19 patents issued Focus on low capex solutions with recurring demand for chemicals Customers include most of the leading utilities Large Market Opportunity Mercury Air Toxic Standards
Slide 4: Advanced Emissions Solutions, Inc. overview
Advanced Emissions Solutions, Inc. (“ADES” or the “Company”) is a family of 1 companies that has been providing emission control solutions to the power industry for more than 30 years Headquartered in Highlands Ranch, CO Operations across Emission Control, Coal Treatment and CO 2 Capture Portfolio o
Slide 5: Operating Companies
Operating Companies BCSI, LLC ADA-ES, Inc. Clean Coal Solutions, LLC 100% owned ADES 100% owned ADES 42.5% owned ADA-ES, Inc. © 2012-2013 Advanced Emissions Solutions, Inc. -5-
Slide 6: Refined Coal, Emission Control, Future Initiatives
Advanced Emissions Solutions, Inc. Refined Coal Emission Control Future Initiatives ? Operates through Clean Provides Activated Carbon Developing proprietary Coal Solutions, a joint Injection (“ACI”) and Dry solid sorbent capture venture 42.5% owned by Sorbent Injection (“DSI”) technology to capture
Slide 7: Refined Coal Business Through CCS
Market / Timing Today Tomorrow 11 RC facilities in full-time 8 RC facilities leased/sold 28 RC facilities at plants operation to investors, 3 CCS- expected to burn 100+M 6 RC facilities scheduled to operated tons of coal annually Refined Coal $85+M in annual revenue to begin full-time operation by ~
Slide 8: Refined Coal
Refined Coal
Slide 9: Section 45 tax credits and Clean Coal Solutions ownership structure
Clean Coal Solutions Ownership Structure Section 45 of the Internal Revenue Code offers $6.59/ton in tax credits for the production of pollution mitigating RC through 2021 Qualifying RC facilities must reduce mercury by 40+% and NOx by 20+% and have been “placed in service” on or prior to December 3
Slide 10: RC production applies proprietary technologies to coal
RC production includes applying proprietary technologies to coal TM CyClean — Used for cyclone boilers (market- 60 to 70 boilers) TM M-45 — Used for circulating fluidized bed boilers (market- 10 to 20 boilers) TM M-45-PC — Used for pulverized coal boilers (market- 700 to 800 boilers) Tax credits can
Slide 11: All 28 RC facilities expected in full-time operation by year end 2014
All 28 RC facilities are expected to be in full-time operation by year end 2014 Expect approximately 15% of capacity to be CCS-operated to generate tax benefits sufficient to offset expected tax liability Full-Time Operations Road Map 28 RC facilities in full-time Additional 11 operation RC faciliti
Slide 12: 11 of 28 qualifying RC facilities in full-time operation
11 of the 28 qualifying RC facilities are in full-time operation — 8 leased/sold and 3 CCS-operated 8 RC facilities leased/sold RC facilities located at plants that have historically burned Facilities 25+ MT/year leased/sold to CCS receives $3.00 to $4.00/ton in rental income rd 3 parties $85+ milli
Slide 13: CCS-Operated Model
CCS-Operated Model 1 ADES ADES receives 42.5% ADES shares 42.5% of tax benefits, or of expenses, or ~$3.20/ton ~$1.30/ton Pays ~$2.00/ton for operating expenses May pay up to ~$1.00/ton to utility Utility gets emission CCS receives $7.50/ton reductions in tax benefits 1. 42.5% ownership in CCS throu
Slide 14: CCS Leasing Model
CCS Leasing Model ADES¹ receives 42.5%, or ~$1.40/ton CCS receives $3.00 to $4.00/ton in rental income Pays ~$1.00 /ton to utility rd Pays ~$2.00/ton for 3 party operating expenses investor Utility gets emission rd 3 party investor leases RC facility reductions and receives ~$8.00/ton in tax benefit
Slide 15: Refined Coal Segment Results
Refined Coal Segment Results ($US in thousands) Three Months Ended Three Months Ended 30-Sep-13 30-Jun-13 LTM Rental and Other Income $ 20,270 $ 12,419 $ 55,664 Coal Sales 35,568 31,769 163,663 Total RC Revenues $ 55,838 $ 44,188 $ 219,327 Cost of Revenues $ 39,626 $ 36,167 $ 185,246 RC Gross Profit
Slide 16: 28 RC facilities eligible for Section 45 tax credits through 2021
28 RC facilities eligible for Section 45 tax credits of $6.59/ton through 2021 1 8 RC facilities leased/sold generating $85+ million of annual revenue to CCS 3 RC facilities CCS-operated generating ~$25 million in annual tax benefits to 2 CCS 6 additional RC facilities scheduled to begin full-time o
Slide 17: Emission Control
Emission Control
Slide 18: ACI Systems, DSI Systems, M-Prove Technology
ACI Systems DSI Systems M-Prove TM Technology ?Powdered Activated Carbon ?Dry alkaline sorbents injected in ?M-Prove TM technology applied reduces mercury emissions in flue gas for SO2 and acid gas to coal to control mercury the flue gas control emissions © 2012-2013 Advanced Emissions Solutions, In
Slide 19: MATS mandates capture of acid gases and mercury
Enacted in 2012, the MATS mandates the capture of acid gases and up to 80% to 90% of the mercury in the coal burned in power plants Existing sources must comply with the MATS standards by April 2015/2016 ADES affiliates offer ACI and DSI equipment systems to meet the MATS standards using trade-secre
Slide 20: M-Prove technology for mercury emissions control
TM M-Prove technology for mercury emissions control is in the initial stages of being marketed for applications for western coals $1.00 to $4.00/ton in benefits to customer TM M-Prove technology being demonstrated at the RC facilities Expect the MATS to drive a $1 to $2 billion annual market for con
Slide 21: Boilers Treated by ACI Systems
Boilers Treated by ACI Systems ADES Norit CB-EEC Siemens ADES Albermarle Clyde B&W Bergemann-EEC Alstom BPI Dustex Shick Norit Amerex Source: Institute of Clean Air Companies, May 2013. © 2012-2013 Advanced Emissions Solutions, Inc. -21-
Slide 22: EC Revenue and Backlog
EC Revenue and Backlog ($million) April 2015/2016 MATS compliance requirement driving rapid backlog growth $4 million at Q3 ‘12, $33 million at Q2 ‘13, $57 million at Q3 ‘13 ADES is prepared for the equipment market Supply agreements already in place, engineering capabilities expanded © 2012-2013 Ad
Slide 23: Emission Control Segment Results
Emission Control Segment Results ($US in thousands) Three Months Ended Three Months Ended 30-Sep-13 30-Jun-13 LTM Systems and Equipment $ 12,094 $ 9,915 $ 32,656 Consulting and Development 2,150 2,020 6,240 Chemicals 254 79 779 Total EC Revenues $ 14,498 $ 12,014 $ 39,675 Cost of Revenues $ 11,836 $
Slide 24: Near-term emission control equipment market driven by MATS
Substantial near-term emission control equipment market driven by April 2015/2016 MATS compliance requirements Approximate market size of $1 billion ADES expects to maintain its 33% market share going forward Q3 ‘13 record equipment sales ($12 million) and backlog ($57 million) demonstrate near-term
Slide 25: Future Initiatives
Future Initiatives
Slide 26: Solid sorbent CO2 capture technology
Developing proprietary solid sorbent capture technology to capture CO 2 from flue gas in conventional coal-fired boilers DOE and industry funding: Phase I — $3.8 million, R&D at 1 KWe scale, completed in 2011 Phase II — $20.5 million contract to validate technology at 1 MWe scale Pilot Design: 2012,
Slide 27: Conclusion
Conclusion
Slide 28: ADES is a Leader in the Pollution Control Industry
ADES is a Leader in the Pollution Control Industry More than 30 years of providing solutions to the power industry, 19 patents issued Focus on low capex solutions with recurring demand for chemicals Customers include most of the leading utilities Large Market Opportunity Mercury Air Toxic Standards
Slide 29: Cash, Total Debt, Shares Outstanding
($US in thousands) 9/30/13 12/31/12 Cash & Cash Equivalents $14,707 $9,737 Total Debt $2,447 $5,864 Shares Outstanding (000’s) 10,116 10,028 © 2012-2013 Advanced Emissions Solutions, Inc. -29-
Slide 30: Three Months Ended 30-Sep-13 Results
($US in thousands) Three Months Ended Nine Months Ended 30-Sep-13 30-Sep-13 Revenues $ 74,593 $ 201,837 Revenues Excluding Coal Sales 39,025 89,539 Cost of Revenues 55,460 162,722 Gross Profit Before Depreciation & Amortization $ 19,133 $ 39,115 Gross Margin 26% 19% General & Administrative $ 8,955
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