Slide 1: Investor Presentation September 2016
Investor Presentation © 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. September 2016
Slide 2: Safe Harbor
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Safe Harbor 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 circu
Slide 3: Innovating a Cleaner Tomorrow
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Innovating a Cleaner Tomorrow Ticker: NASDAQ: ADES Founded: 1996 in Highlands Ranch, CO Market-Cap: $160 million TTM Earnings from Equity Method Investments (as of June 30, 2016): $23 million Focus: Leader i
Slide 4: Finalizing Our Transformation
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Finalizing Our Transformation -4- Refined Coal ▪ Maintained 13 invested facilities through upgrade of one and transfer of another ▪ Total RC segment operating income of $22.1M and cash distributions from CCS
Slide 5: Coal Use a Reality Moving Forward
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Coal Use a Reality Moving Forward ▪ Coal is a low cost, stable, and reliable source of domestic energy that can be easily stored in large quantities ▪ Over 40% of worldwide electricity is produced from coal
Slide 6: Refined Coal
Refined Coal
Slide 7: CCS & CCSS: Valuable RC Joint Venture
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. CCS & CCSS: Valuable RC Joint Venture ▪ Clean Coal Solutions (CCS) was founded in 2006 and is headquartered in Greenwood Village, CO ▪ CCS is a leading developer and operator of Refined Coal production facil
Slide 8: How it Works: Solid Returns for Both Coal-Fired Utilities & Investors
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. How it Works: Solid Returns for Both Coal-Fired Utilities & Investors ▪ Required to reduce the emissions of NOx and mercury at their coal-fired generation stations in order to comply with federal, regional a
Slide 9: RC Sales or Leasing Model: Compelling for Tax Equity Investors
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. RC Sales or Leasing Model: Compelling for Tax Equity Investors -9- 3rd party investor leases RC facility and receives ~$7.00/ton in tax credits and ~$2.45 in NOLs after tax benefit (assuming a 35% tax rate)
Slide 10: RC Facilities Today and Tomorrow
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -10- RC Facilities Today and Tomorrow POTENTIAL 28 RC facilities (~100 MT/year) 9 RC facilities - installed (31.0 MT/year) 2016 2021RC Facility information as of June 30, 2016 13 RC facilities leased/sold (3
Slide 11: Future Rent Payments – CCS Invested Facilities
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -11- Future Rent Payments – CCS Invested Facilities ▪ As of June 30, 2016, remaining payments to all CCS members from CCS’s current RC facilities leased or sold to tax equity investors are projected to be an
Slide 12: Current RC Environment
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. ▪ Refined Coal has been around for many years and many large corporations have benefited such as Goldman Sachs, WW Grainger, Waste Management, DTE Energy, Arthur Gallagher, Capital One, Fidelity Investments
Slide 13: Emissions Control
Emissions Control
Slide 14: Our Portfolio: Broad Opportunity, Currently Narrow Focus
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Our Portfolio: Broad Opportunity, Currently Narrow Focus -14- Legend Chemicals for Coal Emissions Equipment for Coal Emissions Services & Emerging Technologies Current Markets ▪ Coal Fired Utilities ▪ Cement
Slide 15: Backed by Strong and Valuable IP
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Backed by Strong and Valuable IP ▪ Patent portfolio is segmented into three principal categories including Chemicals for Coal Emissions, Equipment for Coal Emissions and Emerging Technologies ▪ Holds 30 U.S.
Slide 16: Equipment and Chemicals
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Equipment ▪ ACI and DSI opportunities are limited due to MATS compliance deadlines having passed; responding to ACI and DSI equipment RFPs as they are received ▪ Increased focus on reaching customers with AD
Slide 17: ~ M (S) — (qv} = ix
~ 2 M (S) — (qv} = ix
Slide 18: Reduction in SG&A, Manufacturing and Payroll Costs
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. $45M $12 - $14M ~70% Reduction in SG&A, Manufacturing and Payroll Costs (1) Cost Base represents total estimated SG&A and Payroll Expenses. Includes all operating expenses other than cost of revenue items, d
Slide 19: Second Quarter Financial Review
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Financial data highlights: (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2,016 2,015 2,016 2,015 Revenues $ 8,951 $ 14,895 $ 31,286 $ 36,652 Cost of revenues, exclusive of depreciation
Slide 20: Investment Summary
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Investment Summary ▪ Business Transformation Nearly Complete: New management team has radically changed the operating profile and focus of the business ▪ Refined Coal Distributions: $275-$300 million to ADES
Slide 21: Appendix
7 Appendix’ 7 4 yy)
Slide 22: Refined Coal: M-45 & M-45 PC Technology
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. Refined Coal: M-45™ & M-45 PC™ Technology -22- ▪ The original RC technology, CycleanTM, combined the M-ProveTM technology and iron additives designed to achieve compliance with Section 45 PTCs through reduct
Slide 23: Select Components of Net Income (Loss)
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -23- Select Components of Net Income (Loss) Select Components of Net Income (Loss) (In millions) Three Months Ended June 30, Six Months Ended June 30, 2,016 2,015 2,016 2,015 Consolidated Net Income (Loss) $
Slide 24: Supplemental Disclosure
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -24- Supplemental Disclosure ADES Select Cash and Non-cash Components of the three and six months ended 2016 and 2015 Net Income (Loss) (in thousands) Three Months Ended June 30, Six Months Ended June 30, Re
Slide 25: CCS and ADES: Cash Flow Update
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -25- CCS and ADES: Cash Flow Update Cash Flow Update (In thousands) Six Months Ended June 30, 2,016 2,015 CCS Cash and cash equivalents, beginning of year $ 6,182 $ 3,870 Cash provided by (used in): Operatin
Slide 26: Refined Coal: Components of Earnings
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -26- Refined Coal: Components of Earnings Components of RC Segment Earnings (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2,016 2,015 2,016 2,015 RC Segment Revenue CCS $ 12,832 $ 4,63
Slide 27: Emissions Control: Components of Earnings
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -27- Emissions Control: Components of Earnings Components of EC Segment Earnings (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2,016 2,015 2,016 2,015 EC Segment Revenues Equipment sal
Slide 28: Corporate and Other: Summary
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -28- Corporate and Other: Summary Adjustments to reconcile to net loss attributable to ADES (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2,016 2,015 2,016 2,015 RC segment operating i
Slide 29: Operating Tons: Invested vs. Retained
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -29- Operating Tons: Invested vs. Retained Note: Numbers within bar graph and the "Count" row within the tables represent the number of facilities per category as of the end of each quarter presented. (1) To
Slide 30: Operating Tons: Royalty vs. Non-Royalty
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -30- Operating Tons: Royalty vs. Non-Royalty Note: Numbers within bar graph and the "Count" row within the tables represent the number of facilities per category as of the end of each quarter presented. (1)
Slide 31: Non-Operating Tons
© 2016 Advanced Emissions Solutions, Inc. All rights reserved. Confidential and Proprietary. -31- Non-Operating Tons(5) Note: Numbers within bar graph and the "Count" row within the tables represent the number of facilities per category as of the end of each quarter presented. (1) Based on actual to