Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Investor Day (June 2014)
74 slides from Arq's investor day presentation, Jun 3, 2014
Slide 1: Investor Day
Exhibit 99.1 Investor Day June 2014 www.advancedemissionssolutions.com Advanced Emissions Solutions, Inc.
Slide 2: Safe Harbor
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 circumstances. The forward-looking statements include statements or expectations regarding future
Slide 3: Agenda
AGENDA (ALL TIMES ARE CENTRAL TIME) 7:30 Welcome and Introductions Graham Mattison, Investor Relations 7:45 ADA-ES and BCSI Mike Durham, President and CEO 8:45 Technology Overview Sharon Sjostrom, CTO 9:15 Break 9:45 Refined Coal Mike Durham, President and CEO 10:45 Closing Remarks Graham Mattison,
Slide 4: Who We Are
WHO WE ARE A family of companies that has been providing emission control solutions to the power industry for more than 30 years Portfolio of proprietary, low CAPEX technologies to meet pollution control mandates. 20 US patents issued or allowed Customers include most of the leading electric power c
Slide 5: Financial Update
FINANCIAL UPDATE The Company continues with its accounting review and expects to file the 2013 Form 10-K in or around the fall of 2014 Additional Actions: Appointed Chief Accounting Officer (April 2014) Retained FTI Consulting to assist with the accounting review process and implementation of change
Slide 6: ADA-ES and BCSI
ADA-ES and BCSI Mike Durham www.advancedemissionssolutions.com
Slide 7: Advanced Emissions Solutions, Inc.
Advanced Emissions Solutions, Inc. NASDAQ; ADES- Advanced Emissions Solutions, Inc. Nasdaq: ADES BCS? 9 ADD ADAtion Group Kewsinprensymovng — GBCLEANCOAL —avanemsceane enry ‘Advancing Cleaner Energy © 2012-2014 Advanced Emissions Solutions, Inc. [=
Slide 8: ADA-ES, Inc. and BCSI, LLC
ADA-ES, Inc. 100% owned by ADES BCSI, LLC 100% owned by ADES Emissions Solutions for Fossil Fueled Generation and Industry Mercury control Acid Gas control SO2 control Particulate control Process, measurement, and optimization expertise and services Technology development Custom Fabricator of Materi
Slide 9: Solutions from the Coal Pile to the Stack
SOLUTIONS FROM THE COAL PILE TO THE STACK Coal Seam Coal Pile Coal Belt Coal Bunker AIR Steam Generator SCR DeNOx Air Preheater Filter or ESP Scrubber Additive Effluents CEMS Flue Gas Desulfurization (FGD) Scrubber COAL ADDITIVE REFINED COAL CLEARCHEM TM STATIC MIXER FLUE GAS CONDITIONING DRY SORBEN
Slide 10: Policy & Regulatory Update
Policy & Regulatory UpdateMercury and Air Toxics Standard (MATS) created a market for two ADES Products Activated Carbon Injection (ACI) systems for mercury control sold by ADA-ES Dry Sorbent Injection (DSI) systems for control of acid gases sold by BCSI April 15, 2014- The U.S. Court of Appeals for
Slide 11: Near Term - MATS Equipment Market
Near Term- MATS Equipment Market EPA’s Mercury and Air Toxics Standards (MATS) driving market for equipment used to comply Market for equipment to meet the April 2015/2016 MATS compliance requirement remains active ADA/BCSI has won more than $25M in equipment awards year-to-date Approximately 1/3 of
Slide 12: MATS Equipment Awards
MATS Equipment Awards Awards in Quarter Total MATS Awards $150,000,000 $120,000,000 $90,000,000 $60,000,000 $30,000,000 $ Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2012 2012 2013 2013 2013 2014 2014
Slide 13: ACI and DSI Systems
ACI AND DSI SYSTEMS @BCSI, LLC. All rights reserved
Slide 14: ADA's Standard ACI System
ADA’s STANDARD ACI SYSTEM Man-door with PRV Level Transmitters PAC Storage Module Process Equipment Module Bin Vent Filter Feeder Room Blower Room Electrical Room Fill Pipe © 2012-2014 Advanced Emissions Solutions, Inc.
Slide 15: BCSI Keeping Industry Moving
BCSI Keeping Industry Moving © 2012-2014
Slide 16: BCSI Is a Wholly-Owned ADES Subsidiary
BCSI IS A WHOLLY-OWNED ADES SUBSIDIARY ADES acquired the assets of the sole proprietorship in August 2012 Total purchase price of $5 million Design, fabrication and installation of bulk materials handling equipment and systems Pneumatic conveying of material through air lines Mechanical conveying Be
Slide 17: BCSI Experience Base in Dry Sorbent Injection
BCSI EXPERIENCE BASE IN DRY SORBENT INJECTION Plant testing How much to add Engineering System sizing and design Fabrication System build Control system and instrumentation Design and programming Delivery Shipping systems Erection Assembling buildings and silos Startup
Slide 18: Current BCSI Offerings
CURRENT BCSI OFFERINGS Power Plants, Cement Kilns and Industrial Coal Dry Sorbent, Carbon and Lime Slurry Injection Belt and Screw Conveyors Pug Mill Mixers Sludge Stabilization Systems Ash handling Systems Waste Water/Effluent Systems In Channel Screens and Screenings Conveyors Lime Stabilization S
Slide 19: BCSI's McKeesport, PA Facility
BCSI’s MCKEESPORT, PA FACILITY
Slide 20: BCSI New President, Randy Gounder
BCSI NEW PRESIDENT, RANDY GOUNDER Appointed in March 2014 34 Years of Manufacturing Experience Large Steel Fabrication Welding Machining Project Management 25 Years of Executive Management Experience Experience in Nuclear Industry Education MBA from Tepper School of Business (Carnegie Mellon) Mechan
Slide 21: Beyond Equipment
Beyond Equipment ADA advancing Cleaner Energy clean coal BCSI Keeping Industry Moving
Slide 22: Comprehensive Compliance Support
COMPREHENSIVE COMPLIANCE SUPPORT Utility boiler operators will be challenged with complying with a number of new regulations in the next few years $1-$2B market for consumables and services Mercury Control Activated Carbon Injection Systems M-Prove™ Coal Additive Acid Gas Control Dry Sorbent Injecti
Slide 23: Opportunity to Package Offerings
OPPORTUNITY TO PACKAGE OFFERINGS New Technology M-Prove CEMs Support Chemical Sales Spare Parts ADAir-Mixer TM Temp Systems service Contracts Retro-fit Health Check
Slide 24: M-Prove Technology Benefits
M-PROVE TM TECHNOLOGY BENEFITS Reduced Activated Carbon requirements ($1-$2 per ton) Prevent loss of ash sales ($1-$2 per ton) Applications: Western Coals- 4 years of experience with Refined Coal Bituminous Coals- Recent success with Refined Coal Comparison to Bromide Higher cost per unit, but lower
Slide 25: M-Prove Reduces AC Required to Meet MATS
M-Prove TM Reduces AC Required TO Meet MATS Potential Savings of $2.00/ton Baseline No Additive B Additive at BL B Additive at BL+4 Hg, (Ibs/TBtu) MATS Limit PAC Injection, (Ibs/Mmacf) 0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6
Slide 26: M-Prove Marketing Approach
M-PROVE TM MARKETING APPROACH Prove viability of technology in RC (2009-2021) Utilities purchase ACI systems (2012-2016) Customers enter AC supply contract (2014-2016) MATS Compliance begins (2015/2016) ADA Demonstrations of savings and benefits (2014-2030*) *Patent expires in 2030 © 2012-2014 Advan
Slide 27: Static Mixer
STATIC MIXER Enhance mixing for dry sorbent injection Reduced sorbent usage Potential for improved ESP performance from temperature uniformity ADA partnered with equipment supplier
Slide 28: ClearChem
CLEARCHEM Licensee for furnace injection of micronized lime slurries Field demonstrations show good utilization of sorbent for SO2 control Option for boiler needing ~50% SO2 capture Combine with duct-injection DSI for higher capture High utilization means less burden on ESPs as compared to calcium-b
Slide 29: Questions & Answers
Questions & Answers www.advancedemissionssolutions.com
Slide 30: Developing New Products to Advance Cleaner Energy
ADA Advancing Cleaner Energy clean coal BCSI Keeping Industry Moving Developing New Products to Advance Cleaner Energy www.advancedemissionssolutions.com
Slide 31: ADAtion Group: Supporting ADES Growth
ADAtion Group: Supporting ADES Growth Existing Product Support New Products for ADA/BCSI/CCS Products for New Markets Provide technical support for existing products: Refined Coal, ACI/DSI, M-Prove technology, etc. Develop/enhance products for ADES companies M-45-PC TM, Static Mixer, CO2 Byproduct M
Slide 32: ADAtion Group Structure and Approach
ADAtion Group Structure and Approach Customer Focus Product Focus Technology Focus What are the opportunities/needs? How BIG are the needs? What are the barriers? What are potential solutions? Can we prove the solutions works? Does anyone else own the solution? Can we build it? How much will it cost
Slide 33: Advancing Cleaner Energy
Advancing Cleaner Energy We have assembled a talented team, are monitoring high-value opportunities, and progressing with focused development efforts to support ADES growth
Slide 34: Strategic Focus
Strategic Focus Must “Advance Cleaner Energy” Must have a component of recurring revenues Prefer to develop and commercialize in energy area that has not been commoditized Revenue – must be a “big” idea with the potential of > $25M/yr product revenues or > $5M/yr product margins
Slide 35: Pipeline
Pipeline Great Idea Concept Development Feasibility Demonstration Concept Viability Literature/Patent/IP Search Simple lab proof-of-concept tests High-level market assessment Demonstration Commercial pilot Market development Business development Feasibility Lab-Scale experiments Market assessment Co
Slide 36: Pipeline
Pipeline Concept Development Feasibility Demonstration Decision Point Considerations Results from development efforts Assessment of value to the company Review of customer needs, competition, regulations, etc. Clear Plan of Action Go/No Go, resources required, costs, etc © 2012-2014 Advanced Emissio
Slide 37: Increased Scrutiny for Coal Ash and Wastewater
Increased Scrutiny for Coal Ash and Wastewater TVA Kingston ash spill Dec. 2008 August 2013: North Carolina DENR files lawsuits against Duke Energy Progress Inc. and Duke Energy Carolinas, LLC for wastewater discharges at 12 power plants May 28, 2014: Sierra Club sues LG&E over discharging wastewate
Slide 38: New Regulations Pending
New Regulations Pending Coal Combustion Residuals Regulation (CCR) Draft rule in June 2010, final rule expected in 2014 Steam Effluent Limitation Guidelines (ELG) Sets the first federal limits on the levels of toxic metals in wastewater discharges from steam electric power plants Draft rule in 2013
Slide 39: Opportunities in Byproduct Management
Opportunities in Byproduct Management Developing options to stabilize and utilize fly ash Developing options to minimize effluent discharges Targeting pilot tests within next 9 months
Slide 40: Greenhouse Gases
Greenhouse Gases The Environmental Protection Agency announced proposed rules on June 2, 2014 for regulating greenhouse gas emissions from existing power plants The global warming potential of methane is 86x worse than CO2 IPCC 2013, 20-year basis
Slide 41: CO2 Capture Development
CO2 Capture Development Developing proprietary solid sorbent capture technology to capture CO2 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 — $22.6 million contract to validate technology at 1 MWe sc
Slide 42: Regulatory and Economic Drivers to Reduce Gas Flaring
Regulatory and Economic Drivers to Reduce Gas Flaring North Dakota Press Release, Bismarck, ND, October 16, 2013 “Today North Dakota mineral owners filed ten class action lawsuits in North Dakota state district court against oil companies operating in North Dakota’s Bakken oilfield, seeking damages
Slide 43: Reducing Methane Emissions
Reducing Methane Emissions Mitigating Waste, Producing Value In January 2014, 30% of gas produced, or 340 million cubic feet of gas, was flared per day in North Dakota Bloomberg 4/7/14 Many wells don’t have the infrastructure required to get gas to market We are exploring opportunities to process ra
Slide 44: Questions & Answers
Questions & Answers www.advancedemissionssolutions.com
Slide 45: Refined Coal
Refined Coal www.advancedemissionssolutions.com
Slide 46: Clean Coal Solutions
CLEAN COAL SOLUTIONS Clean Coal Solutions, LLC 5251 DTC Parkway, Suite Greenwood Village, CO Key Dates 2004- The American Jobs Creation Act creates IRC Section 45 tax credits 2005: Clean Coal Solutions (“CCS”) formed 2006-2009: Initial testing of RC concepts Dec 2009: Two RC facilities “placed-in-se
Slide 47: Clean Coal Solutions, LLC
CLEAN COAL SOLUTIONS, LLC Coal Environmental Technologies & Testing www.adaes.com Coal Services, Business Structure/Finance www.nexgen-group.com Financial Expertise, Tax Credits www.republic-financial.com Monetization Experience www.goldmansachs.com © 2012-2014 Advanced Emissions Solutions, Inc. Adv
Slide 48: Clean Coal Solutions, LLC Board and Officers
CLEAN COAL SOLUTIONS, LLC Board of Managers Mike Durham- President &CEO of ADES Mark McKinnies- SVP & CFO of ADES Sharon Sjostrom-CTO of ADES Randy Dietrich- CEO of Republic Charles McNeil- CEO of NexGen Nina French- Technology Brian Humphrey- Gen. Counsel of NexGen Officers CEO- George McClellan Pr
Slide 49: Clean Coal Solutions Services, LLC
CLEAN COAL SOLUTIONS SERVICES, LLC ADA-ES (50%) NexGen (50%) Chairman- Ron Eller President- Jerry Daseler Operates RC Facilities RC Facility #1 RC Facility #2, 3, 4…27 RC Facility #28
Slide 50: CyClean Technology
CYCLEAN™ TECHNOLOGY Developed by ADA-ES in 2006 for use in cyclone boilers Iron-based additive for PRB or lignite coal, limestone-based for bituminous coal, allows deeper staging and reduced NOx Liquid additive reduces mercury emissions Patented technology Non-corrosive, low add-rates Limited number
Slide 51: CCS Chemicals Are Added Directly to the Coal on the Conveyor Belt
CCS CHEMICALS ARE ADDED DIRECTLY TO THE COAL ON THE CONVEYOR BELT
Slide 52: List of Large Cyclone Boilers
LIST OF LARGE CYCLONE BOILERS Nameplate Approx. Nameplate Plant Name Plant Operator Boiler Type Annual Tonnage MWs (Mil) Paradise Tennessee Valley Authority Cyclone firing 2,558 6.5 Powerton Midwest Generation, LLC Cyclone firing 1,622 6.5 Baldwin Energy Complex Dynegy Midwest Generation Inc. Cyclon
Slide 53: M-45 Technology - Circulating Fluidized Bed Boilers
M-45TM TECHNOLOGY- CIRCULATING FLUIDIZED BED (CFB) BOILERS In March of 2011, ADA developed an idea for a new Refined Coal technology that could expand the market beyond Cyclone boilers to Circulating Fluidized Bed (CFB) boilers Uses same mercury control chemical (M-ProveTM) as CyClean Uses new NOx c
Slide 54: Advanced Emissions Solutions, Inc.
Advanced Emissions Solutions, Inc. NASDAQ; ADES-
Slide 55: Inc.
Inc. Advanced Emissions Solutions NASDAQ: ADES.
Slide 56: List of Large Circulating Fluidized Bed Boilers
LIST OF LARGE CIRCULATING FLUIDIZED BED BOILERS Plant Name Plant Operator Boiler Type Nameplate Approx. Nameplate MWs Annual Tonnage (Mil) Red Hills Generating Facility Choctaw Generation, LP Fluidized bed 500 4.5 AES Shady Point,LLC AES Shady Point, LLC Fluidized bed 1136 3.3 Sandow Station Luminan
Slide 57: Expand Technology for PC Boilers
EXPAND TECHNOLOGY FOR PC BOILERS CFB Boiler Market was limited in number and size of units If we could expand the M-45 technology to work on Pulverized Coal boilers, we could greatly expand market potential Had to find a way not to burn up NOx control chemical in PC boilers that operated at 2500 deg
Slide 58: M-45-PC Technology Development Schedule
M-45-PC TM TECHNOLOGY DEVELOPMENT SCHEDULE M-45 Developed (6/11-12/11) M-45-PC Concept Development (5/12-12/12) M-45-PC Full-Scale Testing (4/13-6/13) 1st M-45-PC Wet System in Operation (12/13) 1st M-45-PC Real-Time-Slurry in Operation (4/14)
Slide 59: M-45-PC Full-Scale Balance of Plant Evaluations
M-45-PC–PULVERIZED COAL TECHNOLOGY FULL-SCALE BALANCE OF PLANT EVALUATIONS Station 1 Unit 1: ESP Unit 2: ESP Unit 3: SCR-ESP Station 2 Unit 1: FF Station 3 Unit 1: ESP-WFGD Station 4 Unit 1: SCR-ESP-WFGD Station 5 Unit 1: MgOx-SCR-ESP-WFGD-ACI Unit 2: MgOx-SCR-ESP-WFGD-ACI Station 6 Unit 1: MgOx-ESP
Slide 60: List of Large PC Boilers - PRB & Lignite
LIST OF LARGE PC BOILERS- PRB & LIGNITE Nameplate Approx. Nameplate Plant Name Plant Operator Primary Coal MWs Annual Tonnage (Mil) Martin Lake Luminant Generation Company, LLC 2,550 16 lignite Scherer Georgia Power Co 3,500 14 subbituminous Joliet 29 Midwest Generation, LLC 3,340 13 subbituminous M
Slide 61: M-45-PC Wet System
Advanced Emissions Solutions, Inc. M-45-PC WET SYSTEM © 2012-2014 Advanced Emissions Solutions, Inc. |
Slide 62: Challenges of M-45-PC Real-Time-Slurry System
CHALLENGES OF M-45-PC REAL-TIME-SLURRY SYSTEM Dry systems designed for single dry NOx chemical Need to have dual chemical slurry technology Operate one system before installing others
Slide 63: Application on Bituminous Coal
APPLICATION ON BITUMINOUS COAL Must reduce mercury by 40% Chemical was designed for mercury control on Western coals 1st success in 2013 on a Cyclone boiler Successful application on PC boilers Nameplate Approx. Nameplate Plant Name Plant Operator Primary Coal MWs Annual Tonnage (Mil) Roxboro Steam
Slide 64: Multiple Coal Belt Arrangement
Advanced Emissions Solutions, Inc. NASDAQ:ADES MULTIPLE COAL BELT ARRANGEMENT Coal Belt Coal Pile Coal Belt
Slide 65: Single Coal Belt Arrangement
SINGLE COAL BELT ARRANGEMENT Coal Pile Coal Belt
Slide 66: Typical Steps to Full-Time Operations
TYPICAL STEPS TO FULL-TIME OPERATIONS Initiate discussion with utility Sign Non-Disclosure Agreement Begin discussions with utility (senior leadership, legal, financial, environmental, plant managers, coal suppliers, ash brokers, etc.) Get go-ahead from the utility (this is different from signed agr
Slide 67: Challenges
CHALLENGES Bankruptcies by power companies Change of ownership of power plants Long decision time frames from customers Extreme weather
Slide 68: Refined Coal: Benefits for All Parties
Refined Coal: Benefits for all Parties CCS Leasing Model CCS receives $3.00 to $4.00/ton in rental income Pays ~$1.00 /ton to utility Utility gets emission reductions 3rd party investor leases RC facility and receives ~$8.50/ton in tax benefits (assuming a 35% tax rate) 3rd party investor ADA-ES own
Slide 69: Refined Coal: CCS-Operated Facilities
Refined Coal: CCS-Operated Facilities CCS-Operated Model ADA-ES ADA-ES receives 42.5% of tax benefits, or ~$3.20/ton ADA-ES shares 42.5% of expenses, or ~$1.35/ton May pay up to ~$1.00/ton to utility CCS receives ~$7.50/ton in tax benefits Pays ~$2.00/ton for operating expenses Utility gets emission
Slide 70: Refined Coal: Financial Impact of GAAP Reporting
Refined Coal: Financial Impact of GAAP Reporting Status Financial Impact RC facility not in full-time operation CCS incurs no operating costs for the RC facility CCS generates no value Typical RC facility Quarterly Annually producing 4MT/Y ($M) ($M) Cash Spent $ — $ — Cash Received $ — $ — Tax Benef
Slide 71: Outlook for RC Facilities
Outlook for 28 RC Facilities 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 RC facilities in full-time operation
Slide 72: RC Facilities in Progress to Full-Time Operation
RC FACILITIES IN PROGRESS TO FULL-TIME OPERATION RC facilities with known locations RC facilities where operating contracts are complete and the permanent installation is in its final stages RC facilities where permanent installation work is underway at the power plant RC facilities where permanent
Slide 73: Questions & Answers
Questions & Answers www.advancedemissionssolutions.com
Slide 74: Contacts
CONTACTS Graham Mattison Vice President, Investor Relations (720) 889-6206 graham.mattison@adaes.com Michael D. Durham, Ph.D., MBA President & CEO Mark H. McKinnies SVP & CFO
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