Charah Solutions, Inc. · OTC:CHRB
Charah Solutions — FY2018 Earnings Presentation
23 slides from Charah Solutions's earnings presentation, Mar 27, 2019
Slide 1: Q4 and Full Year 2018 Financial Results Supplement
Exhibit 99.2 Q4 and Full Year 2018 Financial Results Supplement March 27, 2019Exhibit 99.2 Q4 and Full Year 2018 Financial Results Supplement March 27, 2019
Slide 2: Forward Looking Statements
Forward Looking Statements 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,” “
Slide 3: Agenda
Agenda ▪ Financial Highlights ▪ Business Update – Scott Sewell, President and CEO ▪ Financial Results for 2018 ▪ 2019 Guidance – Nick Jacoby, Interim CFO and Treasurer 3Agenda ▪ Financial Highlights ▪ Business Update – Scott Sewell, President and CEO ▪ Financial Results for 2018 ▪ 2019 Guidance – Ni
Slide 4: 2018 Accomplishments
2018 Accomplishments ▪ Initial public offering on NYSE in June 2018 ▪ Significant market share gains across our businesses ▪ Successfully integrated the acquisition of SCB ▪ Rolled out proprietary ash recycling and slag grinding technologies ▪ Expanded robust pipeline of opportunities, exceeding $3B
Slide 5: Fourth Quarter and Full Year 2018 Highlights
Fourth Quarter and Full Year 2018 Highlights ($ in millions) Full Year 2018 Q4 2018 1 1 Revenue Gross Profit Adjusted EBITDA Revenue Gross Profit Adjusted EBITDA $203 $740 $169 $430 $23 $23 $21 $20 $98 $99 $84 $76 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 2017 2018 2017 2018 2017 2018 13.6% 10
Slide 6: Heavy Precipitation in Key States
1 Heavy Precipitation in Key States 2 July – December 2018 December 2018 Record Much Below Near Above Much Record driest below average average average above wettest (1) average (124) average 6 1. Source: www.ndc.noaa.gov/temp-and-precip/us-maps. 2. Numbers represent precipitation rank from 1895-2018
Slide 7: Progress on Technology Rollout
Progress on Technology Rollout Most cost-effective technologies available Byproduct Sales Charah Solutions’ MultiSource Materials Network Opened first slag grinding facility – Albany, NY TM Launched first MP618 Thermal Fly Ash Beneficiation Facility – Sulphur, LA Constructing slag grinding facility
Slide 8: Other Business Updates
Other Business Updates ▪ Brickhaven update – Riverbend project completed March 2019 – In process of finalizing costs; expect termination payment from customer in 2H 2019 – To close Brickhaven site over following 12 to 18 months ▪ Diversified our maintenance services, previously limited to nuclear, t
Slide 9: Recent Regulatory Developments
Recent Regulatory Developments U.S. Court of Appeals for the D.C. Circuit Virginia Clean Closure Legislation ▪ March 2019 ruling allowed EPA CCR Phase 1 Part 1 ▪ Signed into law in March 2019 regulations to stand pending EPA’s consideration and ▪ Affects more than 27M tons of ash stored in issuance
Slide 10: 2018 Financial Review
2018 Financial Review 102018 Financial Review 10
Slide 11: Environmental Solutions
Environmental Solutions Revenue $ Millions $343 $101 ▪ Revenue growth drivers: coal ash remediation, byproduct sales $240 and the acquisition of SCB in March 2018 $57 ▪ Q4 and FY 2018: Revenue increase driven by acquisition of SCB and remediation and compliance projects, including accelerated revenu
Slide 12: Maintenance and Technical Services
Maintenance and Technical Services Revenue ▪ Both Fossil and Nuclear Services operate under long-term $ Millions contracts; recurring revenue $397 $112 ▪ Significant revenue growth in 2017 and 2018 driven by addition of low-risk, lower-margin Nuclear Services business in mid-2017 $190 $102 ▪ Q4 2018
Slide 13: Early Completion of Brickhaven Contract
Early Completion of Brickhaven Contract ▪ Accelerated Brickhaven revenues, depreciation, gross profit and EBITDA into 2018 – Depreciation expense of $38M in 2018; minimal depreciation in 2019 – G&A expense includes amortization of the purchase option liability o $15M credit in 2018; $3M credit in 20
Slide 14: Additional Detail on Key Expense Items in 2018
Additional Detail on Key Expense Items in 2018 ($ in millions) General & Administrative expense Depreciation & amortization expense Interest expense Reported G&A expense $76.8 Depreciation $49.2 Reported Interest expense $32.2 Add back: Amortization of purchase option 15.2 Amortization of intangible
Slide 15: 2018 Cash Flow
2018 Cash Flow ($ in millions) Cash flow from operations (pre-changes in $48.6 W/C) Change in working capital inclusive of $79M increase in CIE primarily driven by the early completion of the Brickhaven Change in W/C (62.2) contract; expect to substantially collect in 2019 Operating cash flow (13.6)
Slide 16: Debt & Leverage
Debt & Leverage (Pre-IPO) As of As of As of $ Millions 3/31/2018 9/30/2018 12/31/2018 ▪ Leverage ratio reduced nearly a Cash and Cash Equivalents $9 $4 $7 Drawn to full turn from pre-IPO fund litigation $50 Revolver -- $5 $20 reserve and ($45 prior to refinance) working ▪ Ratio now comparable to cap
Slide 17: 2019 Guidance
2019 Guidance 172019 Guidance 17
Slide 18: 2019 Guidance
2019 Guidance ($ in millions) 2019 Guidance Range 2018 Actual Revenue $740 $650 - $800 Net Income (loss) attributable to Charah Solutions $(9) $5 - $20 Adjusted EBITDA $99 $50 - $65 182019 Guidance ($ in millions) 2019 Guidance Range 2018 Actual Revenue $740 $650 - $800 Net Income (loss) attributabl
Slide 19: 2019 Outlook
2019 Outlook Business Segment Segment Commentary Takeaway ▪ Remediation and Compliance Services ‒ Lower revenue due to early completion of Brickhaven contract Revenue and Gross Profit expected to be (booked in 2018 rather than future years) lower due to early completion of ‒ Gross profit and gross m
Slide 20: Looking Ahead: Our Expectations
Looking Ahead: Our Expectations ▪ Expanding rollout of technology initiatives; two additional sites under construction ▪ Successfully cross-selling maintenance services to broader mix of customers and plants ▪ Significantly cash flow positive in 2019; plan to reduce debt ▪ Well positioned for at lea
Slide 21: Appendix
APPENDIX 21APPENDIX 21
Slide 22: Non-GAAP Reconciliation Adjusted EBITDA
Non-GAAP Reconciliation Adjusted EBITDA Successor Predecessor Period from Period from Three Months Ended Twelve January 13, January 1, December 31, Months Ended 2017 through 2017 through December 31, December 31, January 12, 2018 2017 2018 2017 2017 (in thousands) Net income (loss) attributable to C
Slide 23: Non-GAAP Reconciliation Adjusted EPS
Non-GAAP Reconciliation Adjusted EPS Three Months Ended Twelve Months Ended (in thousands, except per share data) December 31, 2018 December 31, 2018 Net income (loss) attributable to Charah Solutions, Inc. $ 4,468 $ (8,902) Income tax expense (benefit) 334 (2,427) (1) - 1 2,451 Loss on extinguishme