Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Investor Presentation (August 2013)
34 slides from Arq's investor presentation, Aug 12, 2013
Slide 1: Investor Presentation
Exhibit 99.1 Investor Presentation August 2013 www.advancedemissionssolutions.com © 2013 Advanced Emissions Solutions, Inc.
Slide 2: This page intentionally left blank
This page intentionally left blank © 2013 Advanced Emissions Solutions, Inc. -2-
Slide 3: 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 4: 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. © 2013 Advanced Emissions Solutions, Inc. -4-
Slide 5: Advanced Emission Solutions
ADVANCED EMISSION SOLUTIONS A family of companies that have 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. 19 patents issued or allowed Customers include most of the leading e
Slide 6: Near-term growth opportunities
Near-term growth opportunities Refined Coal Emissions Control Mercury Control Equipment Consumables 28 facilities eligible for MATS rule took effect in 2012, MATS to create annual Section 45 Tax Credits of compliance by 2015-2016 market of $1-$2B for $6.59/ton (escalating) consumables to control thr
Slide 7: Portfolio of Emissions Control Solutions
PORTFOLIO OFEMISSIONS CONTROLSOLUTIONS Refined Coal- $0 cost to utility TM M-Prove Technology $0 capex, $1-$4/ton reduced compliance cost ACI/DSI- $1-$3M in capex Large E&C Scrubber, SCR- $100M+ firms in capex © 2013 Advanced Emissions Solutions, Inc. -7-
Slide 8: Expected Revenue Mix Trajectory
EXPECTEDREVENUEMIX TRAJECTORY TM © 2013 Advanced Emissions Solutions, Inc. -8-
Slide 9: Refined Coal
REFINED COAL © 2013 Advanced Emissions Solutions, Inc. -9-
Slide 10: Refined Coal: Monetization Dynamics
REFINEDCOAL: MONETIZATION DYNAMICS Each RC facility can be leased or sold to Requirements to commence generate revenue, or operated by CCS for operations: tax credit benefits to offset future tax obligations CCS Receives: Operating permits obtained ~$3+/ton in consolidated from each relevant state p
Slide 11: CCS may operate an RC facility prior to finalizing contracts with an RC investor
CCS may operate an RC facility prior to finalizing contracts with an RC investor • Faster way to initiate long-term operationswith the host power plant rd • Providesoperating assuranceto potential 3 party RCinvestors • Very attractive returns to CCS.~$3/Ton in operating costsgenerates ~$7.50/ton in
Slide 12: Update on Refined Coal Facilities
UPDATE ON 28 REFINED COAL FACILITIES 9 facilities in various 7 facilities stages of generating discussions and $75M + in negotiations annual 4 facilities in revenues negotiations. Expect one to be 4 facilities in operating in 1 facility 1 facility negotiations 2H13 likely to currently close in retai
Slide 13: Emissions Control Equipment
EMISSIONS CONTROL EQUIPMENT - Installed/installing ACI systems on over 60 Sold through our BCSI subsidiary boilers at coal-fired power plants © 2013 Advanced Emissions Solutions, Inc . -13-
Slide 14: Emission Control Equipment ($ in millions)
EMISSION CONTROL EQUIPMENT ($ IN MILLIONS) MATS Market EC Revenues and Backlog MATS market developing as expected $1-$2B market for consumables to control mercury starting in 2016 ADA is prepared for the equipment market Supply agreements already in place, engineering capabilities expanded Ample (an
Slide 15: Patented technology to enable Western and lignite coals to burn with lower mercury emissions
Patented technology designed to enable Western and lignite coals to burn with lower mercury emissions U.S. burns up to 600M tons of Western Coal per year $1.00-$4.00/ton in benefits to customer Technology has been licensed to Arch Coal to apply to their PRB coals at the mine Royalty agreement: payme
Slide 16: CO2 Capture: Overview
CO2 CAPTURE:OVERVIEW 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 M, R&D at 1 KWe scale, Completed in 2011 Phase II - $20.5 M, 51-month contract to validate technology at 1 MWe scale
Slide 17: Key Takeaways
KEY TAKEAWAYS RC opportunities expected to provide substantial growth in revenues, profits and cash flows in 2013, and consistent revenue streams through 2021 MATS compliance requirements are driving significant near-term market for equipment TM M-Prove technology and royalty opportunity expected to
Slide 18: Appendix
APPENDIX © 2013 Advanced Emissions Solutions, Inc. -18-
Slide 19: Coal Energy
COAL ENERGY Coal expected to provide ~ 40% of America’s electricity in 2035 according to Department of Energy 1,200 existing coal-fired power plants in the US generate the majority of the nation’s electricity, and consume ~ 900M to 1B tons of coal each year EPRI estimates that the coal-fired power i
Slide 20: US Electricity from Coal Generation
US ELECTRICITY FROM COAL GENERATION Source: EIA © 2013 Advanced Emissions Solutions, Inc. -20-
Slide 21: Coal and US Electricity Generation
COAL AND US ELECTRICITY GENERATION 2012: lowest power demand since 1987, natural gas prices reach a low of $1.91/MM/btu- 2012 average of $2.77/MMbtu Source: EIA © 2013 Advanced Emissions Solutions, Inc. -21-
Slide 22: Mercury Control - 15 Years in the Making
MERCURY CONTROL- 15 YEARS IN THE MAKING EPA issues final EPA Mercury Air determines it EPA proposes Toxic Standards necessary to new rule to (MATS) EPA issues regulate Clean Air replace the mercury Mercury Rule vacated CAMR 2000 2005 2008 2009 2011 2012 2015/16 EPA issues draft Technology of Mercury
Slide 23: $s in Millions ** Included in working capital at 6/30/13 are current liabilities of
$s in Millions * Does not include the impact of more than $14 million in RC lease prepayments received by CCS in late July 2013 **Included in working capital at 6/30/13 are current liabilities of $7.2 million in deposits and $23.4 million in deferred revenue related to Clean Coal. Included in workin
Slide 24: Financial Results
FINANCIALRESULTS For the Three Months Ended For the Three Months Ended June 30, March 31, $(000) 2013 2012 2013 Revenues $58,930 $52,511 $68,314 *Revenues excluding coal sales $27,161 $14,772 $23,354 Gross Margin Before Depreciation and Amortization $10,594 $7,434 $9,388 General and administrative 8
Slide 25: Refined Coal Results
REFINED COAL RESULTS For the Three Months Ended For the Three Months Ended June 30, March 31, $(000) 2013 2012 2013 Rental income $ 11,642 $ 10,590 $ 12,213 Coal sales 31,769 37,739 44,960 Other income 777 22 950 Total RC Revenues $ 44,188 $ 48,351 $ 58,123 Cost of Revenues $ 36,167 $ 41,908 $ 51,46
Slide 26: Emission Control
EMISSION CONTROL For the Three Months Ended For the Three Months Ended June 30, March 31, 2013 2012 2013 $(000) Systems and equipment $ 9,915 $ 2,745 $ 7,525 Consulting and development 2,020 1,058 1,004 Chemicals 79 162 240 Total EC Revenues $12,014 $3,965 $8,769 Cost of Revenues $ 9,711 $ 3,087 $ 6
Slide 27: ADA Standard ACI System
ADA STANDARD ACI SYSTEM Man-door with PRV Bin Vent Filter Level Transmitters PAC Storage Feeder Room Module Process Equipment Fill Pipe Module Electrical Room Blower Room © 2013 ADA-ES, Inc. Confidential and Proprietary Information -27-
Slide 28: ACI Market Share
ACI MARKET SHARE Boilers treated by ACI systems ADA CB-EEC Norit Source: ICAC © 2013 Advanced Emissions Solutions, Inc. -28-
Slide 29: Refined Coal: Introduction & Overview
REFINED COAL: INTRODUCTION & OVERVIEW The American Jobs Creation Act of 2004, Section 45 of the IRC: contains provisions to incentivize the production of pollution mitigating Refined Coal (RC) via annually escalating tax credits per ton of coal burned. RC reduces mercury by 40%+ and NOx emissions by
Slide 30: Refined Coal Photographs
REFINED COAL PHOTOGRAPHS © 2013 Advanced Emissions Solutions, Inc. -30-
Slide 31: Financial Impact of RC Operations
FINANCIAL IMPACT OF RC OPERATIONS Facilities Status 1Q13A 2Q13A Annual run rate through 2021 5 facilities leased/sold at 1Q13, RC Facilities # 1-7 $10.1 $11.5 $50.0 2 retained by CCS Operated by CCS until late July, RC Facility #8 ($2.0) ($1.4) $14.0 then leased to RC investor RC Facility #9 Leased
Slide 32: Refined Coal: CCS Consolidated financial example
REFINED COAL: CCS Consolidated financial example for a 3 MT/yr facility rd CCS Self Monetization 3 Party RC Investor © 2013 Advanced Emissions Solutions, Inc. -32-
Slide 33: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Revenues excluding coal sales, adjusted gross profit and adjusted gross profit percentage are non-GAAP financial measures which are used to provide investors with greater transparency with respect to the effect on revenues, gross margin and gross margin percentage from Cl
Slide 34: Contacts
CONTACTS Graham Mattison Vice President, Investor Relations (646)-319-1417 graham.mattison@adaes.com Michael D. Durham, Ph.D., MBA President & CEO Mark H. McKinnies SVP & CFO © 2013 Advanced Emissions Solutions, Inc. -34-
Advanced Emissions Solutions — Investor Presentation (August 2013) on 6ix