May 08, 2017 8:20 AM
Tinuum & Refined Coal (“RC”) Highlights
ADES Consolidated Highlights
Sampson continued, “Our team and Tinuum remain focused on identifying additional tax equity investors to invest in the remaining RC facilities. We believe the political environment is becoming more favorable and expect to leverage that environment to accelerate investment in Tinuum's remaining projects. We are engaged in discussions with multiple investor prospects and hope to gain additional momentum as the year progresses. Our confidence in both the foundation and additional potential of the RC business, as well as the exciting growth of our chemicals business, has allowed us to start the process of returning capital to stockholders through what we expect will be a balanced approach to capital allocation moving forward. Today, we commenced a tender offer to repurchase a significant number of shares and we expect to solidify our quarterly dividend program within the next several months.”
ADES Consolidated Highlights
First quarter revenues and costs of revenues were
First quarter earnings from equity method investments were
First quarter consolidated interest expense was
Consolidated net income for the first quarter was
As of
Tender Offer
The Company today commenced a tender offer to acquire up to 925,000 shares of its common stock for up to
Tax Asset Protection Plan
On
The Company noted the Tax Asset Protection Plan serves the interests of all stockholders by protecting the Company’s ability to use its deferred tax assets to offset tax liabilities in the future.
Under the terms of the Tax Asset Protection Plan, the Company will distribute to its stockholders a non-taxable dividend distribution of one preferred stock purchase right for each share of common stock of the Company outstanding as of the close of business on
A person who becomes an Acquiring Person may be subject to significant dilution in its holdings. The Board of Directors may, in its sole discretion, exempt any person from being deemed an Acquiring Person for purposes of the Tax Asset Protection Plan.
A copy of the Tax Asset Protection Plan will be contained in a Form 8-K to be filed with the
Conference Call and Webcast Information
The Company has scheduled a conference call to begin at
About
Caution on Forward-Looking Statements
This press release 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 included in this press release involve risks and uncertainties. Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, timing of new and pending regulations and any legal challenges to or extensions of compliance dates of them; the US government’s failure to promulgate regulations or appropriate funds that benefit our business; changes in laws and regulations, accounting rules, prices, economic conditions and market demand; impact of competition; availability, cost of and demand for alternative energy sources and other technologies; technical, start up and operational difficulties; failure of the RC facilities to produce RC; termination of or amendments to the contracts for sale or lease of RC facilities; decreases in the production of RC; inability to commercialize our technologies on favorable terms; our inability to ramp up our operations to effectively address recent and expected growth in our business; loss of key personnel; potential claims from any terminated employees, customers or vendors; failure to satisfy performance guarantees; availability of materials and equipment for our businesses; intellectual property infringement claims from third parties; pending litigation; identification of additional material weaknesses or significant deficiencies; whether the Tax Asset Protection Plan will have its intended effects and the estimate of Tax Benefits for federal income tax purposes; as well as other factors relating to our business, as described in our filings with the
| TABLE 1 | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| As of | ||||||||
| (in thousands, except share data) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 28,442 | $ | 13,208 | ||||
| Restricted cash | 8,536 | 13,736 | ||||||
| Receivables, net | 1,954 | 8,648 | ||||||
| Receivables, related parties, net | 1,755 | 1,934 | ||||||
| Costs in excess of billings on uncompleted contracts | — | 25 | ||||||
| Prepaid expenses and other assets | 1,736 | 1,357 | ||||||
| Total current assets | 42,423 | 38,908 | ||||||
| Property and equipment, net of accumulated depreciation of | 504 | 735 | ||||||
| Cost method investment | 1,016 | 1,016 | ||||||
| Equity method investments | 3,097 | 3,959 | ||||||
| Deferred tax assets | 56,010 | 61,396 | ||||||
| Other long-term assets | 1,725 | 1,282 | ||||||
| Total Assets | $ | 104,775 | $ | 107,296 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,202 | $ | 1,920 | ||||
| Accrued payroll and related liabilities | 984 | 2,121 | ||||||
| Billings in excess of costs on uncompleted contracts | 4,200 | 4,947 | ||||||
| Legal settlements and accruals | 4,591 | 10,706 | ||||||
| Other current liabilities | 3,965 | 4,017 | ||||||
| Total current liabilities | 14,942 | 23,711 | ||||||
| Legal settlements and accruals, long-term | 2,371 | 5,382 | ||||||
| Other long-term liabilities | 2,181 | 2,038 | ||||||
| Total Liabilities | 19,494 | 31,131 | ||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: par value of | — | — | ||||||
| Common stock: par value of | 22 | 22 | ||||||
| Additional paid-in capital | 119,922 | 119,494 | ||||||
| Accumulated deficit | (34,663 | ) | (43,351 | ) | ||||
| Total stockholders’ equity | 85,281 | 76,165 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 104,775 | $ | 107,296 | ||||
| TABLE 2 | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| (in thousands, except per share data) | 2017 | 2016 | ||||||
| Revenues: | ||||||||
| Equipment sales | $ | 5,108 | $ | 21,727 | ||||
| Chemicals | 2,281 | 434 | ||||||
| Consulting services and other | — | 196 | ||||||
| Total revenues | 7,389 | 22,357 | ||||||
| Operating expenses: | ||||||||
| Equipment sales cost of revenue, exclusive of depreciation and amortization | 4,143 | 17,034 | ||||||
| Chemicals cost of revenue, exclusive of depreciation and amortization | 1,758 | 142 | ||||||
| Consulting services cost of revenue, exclusive of depreciation and amortization | — | 135 | ||||||
| Payroll and benefits | 2,182 | 3,802 | ||||||
| Rent and occupancy | 45 | 394 | ||||||
| Legal and professional fees | 1,035 | 2,983 | ||||||
| General and administrative | 1,263 | 745 | ||||||
| Research and development, net | 192 | 202 | ||||||
| Depreciation and amortization | 482 | 231 | ||||||
| Total operating expenses | 11,100 | 25,668 | ||||||
| Operating loss | (3,711 | ) | (3,311 | ) | ||||
| Other income (expense): | ||||||||
| Earnings from equity method investments | 13,814 | 5,577 | ||||||
| Royalties, related party | 1,755 | 1,189 | ||||||
| Interest expense | (693 | ) | (1,964 | ) | ||||
| Revision in estimated royalty indemnity liability | 2,900 | — | ||||||
| Other income | 9 | 2,938 | ||||||
| Total other income | 17,785 | 7,740 | ||||||
| Income before income tax expense | 14,074 | 4,429 | ||||||
| Income tax expense | 5,386 | 53 | ||||||
| Net income | $ | 8,688 | $ | 4,376 | ||||
| Earnings per common share (Note 1): | ||||||||
| Basic | $ | 0.39 | $ | 0.20 | ||||
| Diluted | $ | 0.39 | $ | 0.20 | ||||
| Weighted-average number of common shares outstanding: | ||||||||
| Basic | 22,056 | 21,849 | ||||||
| Diluted | 22,243 | 22,176 | ||||||
| TABLE 3 | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| (in thousands) | 2017 | 2016 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 8,688 | $ | 4,376 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 482 | 231 | ||||||
| Stock-based compensation expense | 607 | 636 | ||||||
| Earnings from equity method investments | (13,814 | ) | (5,577 | ) | ||||
| Gain on sale of equity method investment | — | (2,078 | ) | |||||
| Gain on settlement of note payable | — | (869 | ) | |||||
| Other non-cash items, net | 455 | 550 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | 6,695 | 1,012 | ||||||
| Related party receivables | 179 | 1,124 | ||||||
| Prepaid expenses and other assets | (415 | ) | 496 | |||||
| Costs incurred on uncompleted contracts | 3,883 | 14,613 | ||||||
| Deferred tax asset, net | 5,386 | — | ||||||
| Other long-term assets | (805 | ) | (1,104 | ) | ||||
| Accounts payable | (717 | ) | (250 | ) | ||||
| Accrued payroll and related liabilities | (1,137 | ) | (444 | ) | ||||
| Other current liabilities | (219 | ) | (1,071 | ) | ||||
| Billings on uncompleted contracts | (4,605 | ) | (17,021 | ) | ||||
| Advance deposit, related party | — | (396 | ) | |||||
| Other long-term liabilities | 143 | 242 | ||||||
| Legal settlements and accruals | (9,126 | ) | (1,228 | ) | ||||
| Distributions from equity method investees, return on investment | 1,500 | 4,900 | ||||||
| Net cash used in operating activities | (2,820 | ) | (1,858 | ) | ||||
| Cash flows from investing activities | ||||||||
| Distributions from equity method investees in excess of cumulative earnings | 13,175 | — | ||||||
| Maturity of investment securities, restricted | — | 336 | ||||||
| Acquisition of property and equipment, net | (142 | ) | (100 | ) | ||||
| Contributions to equity method investees | — | (223 | ) | |||||
| Proceeds from sale of equity method investment | — | 1,773 | ||||||
| Net cash provided by investing activities | 13,033 | 1,786 | ||||||
| Cash flows from financing activities | ||||||||
| Borrowings on Line of Credit | 808 | — | ||||||
| Repayments on Line of Credit | (808 | ) | — | |||||
| Repayments on short-term borrowings and notes payable, related party | — | (2,996 | ) | |||||
| Short-term borrowing loan costs | — | (579 | ) | |||||
| Repurchase of shares to satisfy tax withholdings | (179 | ) | (84 | ) | ||||
| Net cash used in financing activities | (179 | ) | (3,659 | ) | ||||
| Increase (decrease) in Cash and Cash Equivalents and Restricted Cash | 10,034 | (3,731 | ) | |||||
| Cash and Cash Equivalents and Restricted Cash, beginning of period | 26,944 | 20,973 | ||||||
| Cash and Cash Equivalents and Restricted Cash, end of period | $ | 36,978 | $ | 17,242 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 191 | $ | 1,029 | ||||
| Cash paid (refunded) for income taxes | 100 | (89 | ) | |||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Settlement of RCM6 note payable | — | 13,234 | ||||||
| Non-cash reduction of equity method investment | — | 11,156 | ||||||
Investor Contact:Alpha IR Group Chris Hodges orRyan Coleman 312-445-2870 ADES@alpha-ir.com