Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Merger or Acquisition (November 2018)
20 slides from Arq's merger presentation, Nov 15, 2018
Slide 1: Carbon Solutions Acquisition and Refined Coal Update
Advanced Emissions Solutions, Inc. Nasdaq: ADES Advancing Cleaner Energy Carbon Solutions Acquisition and Refined Coal Update November 16, 2018 © 2018 Advanced Emissions Solutions, Inc. All rights reserved.
Slide 2: Safe Harbor
SAFE HARBOR This presentation 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. The forward-looking statements include estimated future RC cash flows, projections
Slide 3: Refined Coal (RC) Business Update
REFINED COAL (“RC”) BUSINESS UPDATE . Strong and growing momentum post tax reform and IRS clarity . Expected future cumulative net RC cash flows of $225M to $250M to ADES through 2021(1) . Tinuum is proactively installing four facilities . Active discussions with investors for several facilities rep
Slide 4: Capital Allocation Program Update
CAPITAL ALLOCATION PROGRAM UPDATE(1) . RC transactions are driving significant return of capital to shareholders . Since March 2017, the Company’s Capital Allocation Program has paid or declared $36 million in dividends and repurchased $28 million in stock, returning approximately $2.88 per share(2)
Slide 5: Acquisition of Carbon Solutions
Acquisition of Carbon Solutions 5
Slide 6: Transaction Overview
TRANSACTION OVERVIEW . North American mercury control powdered activated carbon (“PAC”) leader with 45% market share ADA-CS (“Carbon . Nearly $400 million of initial capital investment Solutions”) Overview . Industry-leading products supported by world-class research & development (“R&D”) . Vertical
Slide 7: Carbon Solutions – Company Overview
CARBON SOLUTIONS – COMPANY OVERVIEW . Vertically integrated mercury control PAC leader with approximately 45% market share . Long-term requirements-based contracts with blue-chip utilities . Uniquely-configured asset base drives industry’s lowest cost of production with immediate growth opportunitie
Slide 8: Sustainable Competitive Advantage in Mercury Control
SUSTAINABLE COMPETITIVE ADVANTAGE IN MERCURY CONTROL . Nearly ~$400 million of initial capital investment Cost Advantage Grows with creates cost and quality leadership: Higher Utilization . Vertically integrated coal source . Self-sustaining power turbine Competitor A . Highly automated plant operat
Slide 9: Organic Growth Opportunities in Mercury Control: PAC Capacity & Pricing
ORGANIC GROWTH OPPORTUNITIES IN MERCURY CONTROL SERVICE AND COMBINATIONS PAC CAPACITY & PRICING . Mercury control consumables market, exclusive of . Concentrated market where competitors have switched refined coal, is $200- $250 million annually market focus or shuttered capacity . PAC is the domina
Slide 10: Organic Growth Opportunities: Refined Coal Expiration
ORGANIC GROWTH OPPORTUNITIES IN MERCURY CONTROL REFINED COAL EXPIRATION . The market will expand as Section 45 tax credits expire at the end of 2019 and 2021 . Nearly 75 plants generating approximately 175 million tons of RC in operation today . As RC units expire, these large coal-fired utilities w
Slide 11: Growth Opportunities
GROWTH OPPORTUNITIES TODAY TOMORROW Continue to gain market share and margin Pursue higher margin and higher growth Mercury Removal Municipal Water Broader Water Market Adjacent Segments & International Expansion . . Carbon Solutions can and . Positioned for continued Opportunity to leverage . Regen
Slide 12: Industry Inflection Point
INDUSTRY INFLECTION POINT . Thermal coal volumes and pricing have stabilized – Volumes have declined from 980mm tons in 2010 to 680mm tons in 2017 – Surviving fleets better-positioned with lower leverage – EIA(1) expects thermal coal to contribute ~30% of nation’s power by 2030 PAC Market Rationaliz
Slide 13: Carbon Solutions Select Financial Metrics
CARBON SOLUTIONS SELECT FINANCIAL METRICS STRONG & STABLE FINANCIAL PROFILE TOTAL VOLUME (MM OF LBS.) . Mercury Control PAC market operates on two to 110 three year requirements-based contracts 105 93 92 . Recent wins in high-performance products support 2015 2016 2017 2018 E modest 2019 growth expe
Slide 14: New Platform & Expanded Emissions Control Leadership
NEW PLATFORM & EXPANDED EMISSIONS CONTROL LEADERSHIP Advanced Emissions Solutions NASDAQ: ADES Tinuum Group (42.5% stake) ADA-ES (100%) Carbon Solutions (100%) . Strong projected RC cash flows . Chemicals for coal-fired utilities . PAC for coal-fired utilities, industrials and WaterPAC . 9 remaining
Slide 15: Carbon Solutions Investment Rationale
CARBON SOLUTIONS INVESTMENT RATIONALE 1 2 3 Market Leader Strategic Asset Base Industry Inflection 45% share in North American mercury Built for a larger MATS market, with Smaller players exiting & larger control activated carbon market nearly $400 million of investment competitors shuttering/moving
Slide 16: Appendix
Appendix 16
Slide 17: Activated Carbon Market Overview
ACTIVATED CARBON MARKET OVERVIEW . Raw materials (coal, coconut shells & wood) processed to become porous and absorptive; used in a variety of consumer and industrial applications to remove harmful gases, vapors and solids Market Overview . North American Activated Carbon market is ~750mm pounds, gr
Slide 18: Disclosure Regarding Non-GAAP Financial Measures and Use of Projections
DISCLOSURE REGARDING NON-GAAP FINANCIAL MEASURES AND USE OF PROJECTIONS Note on Non-GAAP Financial Measures To supplement the Carbon Solutions financial information presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Investor Presentation includes non-GAAP measur
Slide 19: Carbon Solutions Adjusted EBITDA Reconciliation to Net Loss
CARBON SOLUTIONS ADJUSTED EBITDA RECONCILIATION TO NET LOSS (AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES) * Amounts represent adjusted pro-forma annualized numbers based on key customer wins and losses during the second half of 2018 and estimated results through December 31, 2018. (1) Represents non-re
Slide 20: Carbon Solutions Adjusted Revenue Reconciliation
CARBON SOLUTIONS ADJUSTED REVENUE RECONCILIATION (AMOUNTS IN THOUSANDS) * Amounts represent adjusted pro-forma annualized numbers based on key customer wins and losses during the second half of 2018 and estimated results through December 31, 2018. (1) Represents non-recurring sales made to a third p
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