Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Investor Presentation (January 2014)
31 slides from Arq's investor presentation, Jan 15, 2014
Slide 1: Investor Presentation
Exhibit 99.1 Advanced Emissions Solutions, Inc. NASDAQ: ADES Investor Presentation January 2014 www.advancedemissionssolutions.com
Slide 2: Safe Harbor
SAFE H ARBOR 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: 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. 19 patents issued or allowed Customers include most of the leading electric power comp
Slide 4: Portfolio of Emissions Control Solutions
PORTFOLIO OF EMISSIONS CONTROL SOLUTIONS ACI System ACI System for Mercury Control Boiler DSI System Coal Pile Refined Coal- $0 cost to utility ACI/DSI- $1-$3M in capex M-Prove™ Technology ~$100k Large E&C Scrubber, SCR- $100M+ capex, $1-$4/ton reduced firms in capex compliance cost © 2012-2014 Adva
Slide 5: Near-term growth opportunities
Near-term growth opportunities Mercury Control (MATS) Refined Coal MATS rule took effect in 2012, compliance by 2015-2016 Clean Coal Solutions (CCS) 42.5% ADA 42.5% NexGen Equipment Consumables 15% Goldman Sachs 28 RC facilities qualify for Creates $1B equipment MATS to create annual Section 45 Tax
Slide 6: Clean Coal Solutions Ownership Structure
Clean Coal Solutions Ownership Structure GOLDMAN SACHS 15% ADES 42.5% NEXGEN 42.5% Section 45 of the Internal Revenue Code offers $6.59/ton in tax credits for the production of pollution mitigating RC through 2021 Qualifying RC facilities must reduce mercury by 40+% and NO x by 20+% and have been “p
Slide 7: Refined Coal: Benefits for All Parties
REFINED COAL: BENEFITS FOR ALL PARTIES CCS Leasing Model ADES owns 42.5% of CCS (~$1.40/ton) CCS receives $3.00 to $4.00/ton in rental income Pays ~$1.00 /ton to utility Pays ~$2.00/ton for 3 rd party operating expenses investor Utility gets emission 3 rd party investor leases RC facility reductions
Slide 8: Outlook for 28 RC Facilities
OUTLOOK FOR 28 RC FACILITIES All 28 RC facilities are expected to be in full-time operation by year end 2014 Expect approximately 15% of capacity to be CCS-operated to generate tax benefits sufficient to offset expected tax liability Full-Time Operations Road Map 28 RC facilities in full-time Additi
Slide 9: Status and Financial Impact of RC Facilities
Status Financial Impact RC facility CCS incurs no operating Typical RC facility Quarterly Annually not in full- costs for the RC facility producing 4MT/Y ($M) ($M) Cash Spent $ -- $ -- time operation CCS generates no value Cash Received $ -- $ -- Tax Benefits Generated $ -- $ -- Typical RC facility
Slide 10: Equipment and Consumables
ACI Systems Powdered Activated Carbon reduces mercury emissions in the flue gas Equipment DSI Systems Dry alkaline sorbents injected in flue gas for SO2 and acid gas control M-Prove™ Technology M-Prove™ technology applied to coal to Consumables control mercury emissions © 2012-2014 Advanced Emission
Slide 11: Emission Control
EMISSION CONTROL EC Revenue and Backlog ($million) April 2015/2016 MATS compliance requirement driving rapid backlog growth $4 million at Q3 ‘12, $33 million at Q2 ‘13, $57 million at Q3 ‘13 ADES is prepared for the equipment market Supply agreements already in place, engineering capabilities expand
Slide 12: M-Prove technology for mercury emissions control
M-Prove™ technology for mercury emissions control is in the initial stages of being marketed for applications for western coals $1.00 to $4.00/ton in benefits to customer M-Prove™ technology being demonstrated at the RC facilities Expect the MATS to drive a $1 to $2 billion annual market for consuma
Slide 13: Solid sorbent CO2 capture technology
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 million, R&D at 1 KWe scale, completed in 2011 Phase II — $22.6 million contract to validate technology at 1 MWe scale Pilot Design: 2012,
Slide 14: 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 M-ProveTM technology and royalty opportunity expected to
Slide 15: Investment Summary
INVESTMENT SUMMARY ADES is a Leader in the Pollution Control Industry More than 30 years of providing solutions to the power industry, 19 patents issued Focus on low capex solutions with recurring demand for chemicals Customers include most of the leading utilities Large Market Opportunity Mercury A
Slide 16: Appendix
APPENDIX © 2012-2014 Advanced Emissions Solutions, Inc.
Slide 17: Corporate Structure
CORPORATESTRUCTURE Operating Companies BCSI, LLC ADA-ES, Inc. Clean Coal Solutions, LLC 100% owned ADES 100% owned ADES 42.5% owned ADA-ES, Inc. © 2012-2014 Advanced Emissions Solutions, Inc. -17-
Slide 18: 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 © 2012-2014 Advanced Emissions Solutions, Inc. -18-
Slide 19: © 2012-2014 Advanced Emissions Solutions, Inc.
© 2012-2014 Advanced Emissions Solutions, Inc. -19-
Slide 20: 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 21: Boilers Treated by ACI Systems
Boilers Treated by ACI Systems Source: Institute of Clean Air Companies, May 2013. © 2012-2014 Advanced Emissions Solutions, Inc. -21-
Slide 22: ADA Standard ACI System
ADA STANDARD ACI SYSTEM Bin Vent Filter Man-door with PRV Level Transmitters PAC Storage Module Process Equipment Module © 2012-2014 Advanced Emissions Solutions, Inc. -22-
Slide 23: 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 24: Refined Coal Photographs
REFINED COAL PHOTOGRAPHS © 2012-2014 Advanced Emissions Solutions, Inc. -24-
Slide 25: CCS-Operated Model
CCS-Operated Model ADES 1 ADES receives ADES shares 42.5% 42.5% of tax benefits, of expenses, or or ~$3.20/ton ~$1.30/ton Pays ~$2.00/ton for operating expenses May pay up to ~$1.00/ton to utility Utility gets emission CCS receives $7.50/ton reductions in tax benefits 1. 42.5% ownership in CCS throu
Slide 26: © 2012-2014 Advanced Emissions Solutions, Inc.
© 2012-2014 Advanced Emissions Solutions, Inc. -26-
Slide 27: Three Months Ended 30-Sep-13 Revenues
($US in thousands) Three Months Ended Nine Months Ended 30-Sep-13 30-Sep-13 Revenues $ 74,593 $ 201,837 Revenues Excluding Coal Sales 39,025 89,539 Cost of Revenues 55,460 162,722 Gross Profit Before Depreciation & Amortization $ 19,133 $ 39,115 Gross Margin 26% 19% General & Administrative $ 8,955
Slide 28: Emission Control Segment Results
Emission Control Segment Results ($US in thousands) Three Months Ended Three Months Ended 30-Sep-13 30-Jun-13 LTM Systems and Equipment $ 12,094 $ 9,915 $ 32,656 Consulting and Development 2,150 2,020 6,240 Chemicals 254 79 779 Total EC Revenues $ 14,498 $ 12,014 $ 39,675 Cost of Revenues $ 11,836 $
Slide 29: Refined Coal Results
REFINED COAL RESULTS Refined Coal Segment Results ($US in thousands) Three Months Ended Three Months Ended 30-Sep-13 30-Jun-13 LTM Rental and Other Income $ 20,270 $ 12,419 $ 55,664 Coal Sales 35,568 31,769 163,663 Total RC Revenues $ 55,838 $ 44,188 $ 219,327 Cost of Revenues $ 39,626 $ 36,167 $ 18
Slide 30: Adjusted gross profit and adjusted gross margin
Adjusted gross profit and adjusted gross margin percentage excludes coal sales and raw coal purchases and retained tonnage operating expenses. Adjusted gross profit and adjusted gross profit percentage are non-GAAP financial measures which are used to provide investors with greater transparency with
Slide 31: 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 © 2012-2014 Advanced Emissions Solutions, Inc. -31-
Advanced Emissions Solutions — Investor Presentation (January 2014) on 6ix