Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — FY2018 Earnings Presentation
21 slides from Arq's earnings presentation, Mar 19, 2019
Slide 1: Fourth Quarter and Full Year 2018 Results Call
Advanced Emissions Solutions, Inc. Advancing Cleaner Energy Fourth Quarter and Full Year 2018 Results Call March 19, 2019 © 2019 Advanced Emissions Solutions, Inc. All rights reserved.
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: Fourth Quarter and Full Year 2018 Highlights
FOURTH QUARTER AND FULL YEAR 2018 HIGHLIGHTS Obtained separate third party tax equity investors for an RC facilities in October 2018 and January 2019 that were previously in installation phase; both RC facilities are royalty bearing. Based on 19 invested RC facilities as of December 31, 2018 and cas
Slide 4: Execution of 2018 Priorities
EXECUTION OF 2018 PRIORITIES INCREASE AND OPTIMIZE REFINED COAL NET CASH FLOWS: Add Investors: • Nurture current and add additional sales channels • Leverage improving refined coal tax equity market and investor clarity as a result of tax reform Optimization: • Maximize operational performance to pr
Slide 5: Financials
FINANCIALS
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS CASH, CASH EQUIVALENTS & RESTRICTED CURRENT & LONG TERM BORROWINGS EQUITY METHOD EARNINGS $54 $54 $5 $31 $74 $16 $18 $19 December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 December December December December As of 31, 2018 31, 2017 31, 2018 31, 2017 As of Th
Slide 7: Refined Coal
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Slide 8: Refined Coal Environment
REFINED COAL ENVIRONMENT The refined coal business is proven and yields many benefits to utilities, investors and the environment, and while the outlook has improved, there remain hurdles to overcome A significant number of major public and private companies have invested in RC Tax Equity since its
Slide 9: Refined Coal Facilities Today and Tomorrow
REFINED COAL FACILITIES TODAY AND TOMORROW FULL-TIME OPERATIONS ROADMAP Not Operating and Not Invested 9 RC facilities – installed and waiting for investor or yet to be installed(1) (2) (3) Operating and Invested POTENTIAL 28 RC facilities (~100 MT/year) 19 RC facilities leased/sold (55-65 MT/year)
Slide 10: Future Cash Flows for ADES & 2019 Priorities
Future Cash Flows for ADES & 2019 Priorities
Slide 11: Expected Future RC Cash Flows
EXPECTED FUTURE RC CASH FLOWS EXPECTED FUTURE CASH FLOWS FROM RC BUSINESS (1) (in millions) Based on 19 invested facilities as of December 31, 2018 and includes all net RC cash flows of ADES (1) $90 Results in expected future net RC cash flows of $200M to $80 $225M to ADES in total through 2021 (2)
Slide 12: 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 13: 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 Positioned for continued Carbon Solutions can and Opportunity to leverage Regen
Slide 14: Return of Capital
RETURN OF CAPITAL Since the start of the Capital Allocation program (1), the Company has paid $41.7 million in dividends and utilized capital of $35.9 million to repurchase shares Since March 31, 2017, the Company has returned approximately $3.52 per share to its shareholders(2); the stock price for
Slide 15: 2019 Priorities
2019 PRIORITIES INCREASE AND OPTIMIZE REFINED COAL NET CASH FLOWS: Add Investors: • Nurture current & add additional sales channels • Leverage improving refined coal tax equity market and investor clarity as a result of tax reform Optimization: • Maximize operational performance to produce RC and fu
Slide 16: Appendix
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Slide 17: Operating Tons: Royalty vs. Non-Royalty
OPERATING TONS: ROYALTY VS. NON-ROYALTY 911 20 18 16 9 14 11 12 Tonnage (MM) 12 7 10 10 11 10 8 8 8 7 7 7 7 6 6 7 7 6 6 7 7 7 7 4 5 7 7 2 - Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Three Month Ended Operating Tons Twelve Months Operating Tons QT
Slide 18: Appendix A: 10-K Balance Sheet
Appendix A: 10-K Balance Sheet(1) As Of (in thousands, except share data) December 31, 2018 December 31, 2017 ASSETS Current assets: Cash, cash equivalents and restricted cash $ 18,577 $ 30,693 Receivables, net 9,554 1,113 Receivables, related party 4,284 3,247 Inventories 21,791 74 Prepaid expenses
Slide 19: Appendix B: 10-K Income Statement
Appendix B: 10-K Income Statement(1) Years Ended December 31, (in thousands, except per share data) 2018 2017 Revenues: Consumables $ 8,733 $ 4,246 License royalties, related party 15,140 9,672 Equipment sales 72 31,446 Total revenues 23,945 45,364 Operating expenses: Consumables cost of revenue, ex
Slide 20: Appendix C: 10-K Cash Flow
Appendix C: 10-K Cash Flow(1) Years Ended December 31, (in thousands) 2018 2017 Cash flows from operating activities Net income $ 35,454 $ 27,873 Increase (decrease) in valuation allowance on deferred tax assets 4,462 (474) Depreciation, amortization, depletion, and accretion 723 789 Amortization of
Slide 21: Appendix D: 10-K Cash Flow (continued)
Appendix D: 10-K Cash Flow (continued)(1) Years Ended December 31, (in thousands) 2018 2017 Cash flows from investing activities Distributions from equity method investees in excess of cumulative earnings $ 47,175 $ 48,875 Acquisition of business, net of cash acquired (62,501) — Acquisition of prope
Advanced Emissions Solutions — FY2018 Earnings Presentation on 6ix