May 10, 2021 4:41 PM
Company reports improved performance in APT segment and updates forecast for expected future after-tax net RC cash flows to be between
Tinuum & Refined Coal (“RC”) Highlights
Advanced Purification Technologies ("APT") Highlights
ADES Consolidated Highlights
“We continue to improve the earnings profile of our APT segment as our efforts to diversify the product mix, increase the plant’s capacity utilization and fulfill our commitments to our 15-Year Master Supply Agreement with Cabot are all helping to yield improved profitability", said
Marken added, “Also, as we previously disclosed, there was an isolated incident at our
Marken concluded, “Concurrent with our announcement of our first quarter results, we announced that we have initiated a strategic alternatives review to assess a range of possibilities to maximize shareholder value. We believe that the current state of the business, coupled with the competitively advantaged position that our APT assets offer us, leaves us well-positioned to evaluate and assess the opportunities available to us. We will remain acutely focused on fulfilling our customer commitments and running the business efficiently as this process unfolds.”
First Quarter 2021 Results
First quarter revenues and costs of revenues were
First quarter royalty earnings from
First quarter other operating expenses were
First quarter earnings from equity method investments were
First quarter interest expense was
First quarter income tax expense was
First quarter net income was
First quarter consolidated adjusted EBITDA was
Long-Term Borrowings
As of
Strategic Alternatives Review
The Company announced today that it has initiated a strategic review to assess a range of strategic alternatives to maximize shareholder value. The intention is to complete the strategic review process in a timely fashion. However, there is no assurance that the review process will result in pursuing or completing any transaction, and no timetable has been set for completion of this process. The Company will provide updates, as appropriate.
In connection with the strategic review process, the Company has engaged
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 include projection on future after-tax, net RC cash flows, timing of loan repayment, estimated costs of the plant incident and results from the Company's review of strategic alternatives. These forward-looking statements 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, opportunities for additional sales of our lignite activated carbon products and end-market diversification, the rate of coal-fired power generation in
Source:
Investor Contact:
312-445-2870
ADES@alpha-ir.com
TABLE 1
Condensed Consolidated Balance Sheets
(Unaudited)
| As of | ||||||||||
| (in thousands, except share data) | ||||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash, cash equivalents and restricted cash | $ | 42,234 | $ | 30,932 | ||||||
| Receivables, net | 10,349 | 13,125 | ||||||||
| Receivables, related parties | 4,064 | 3,453 | ||||||||
| Inventories, net | 8,040 | 9,882 | ||||||||
| Prepaid expenses and other assets | 3,420 | 4,597 | ||||||||
| Total current assets | 68,107 | 61,989 | ||||||||
| Restricted cash, long-term | 10,000 | 5,000 | ||||||||
| Property, plant and equipment, net of accumulated depreciation of | 29,777 | 29,433 | ||||||||
| Intangible assets, net | 1,804 | 1,964 | ||||||||
| Equity method investments | 2,753 | 7,692 | ||||||||
| Deferred tax assets, net | 7,553 | 10,604 | ||||||||
| Other long-term assets, net | 31,576 | 29,989 | ||||||||
| Total Assets | $ | 151,570 | $ | 146,671 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 7,908 | $ | 7,849 | ||||||
| Accrued payroll and related liabilities | 2,214 | 3,257 | ||||||||
| Current portion of long-term debt | 9,913 | 18,441 | ||||||||
| Other current liabilities | 14,888 | 12,996 | ||||||||
| Total current liabilities | 34,923 | 42,543 | ||||||||
| Long-term debt, net of current portion | 4,287 | 5,445 | ||||||||
| Other long-term liabilities | 13,208 | 13,473 | ||||||||
| Total Liabilities | 52,418 | 61,461 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock: par value of | — | — | ||||||||
| Common stock: par value of | 23 | 23 | ||||||||
| (47,692 | ) | (47,692 | ) | |||||||
| Additional paid-in capital | 100,630 | 100,425 | ||||||||
| Retained earnings | 46,191 | 32,454 | ||||||||
| Total stockholders’ equity | 99,152 | 85,210 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 151,570 | $ | 146,671 | ||||||
TABLE 2
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | ||||||||||
| (in thousands, except per share data) | 2021 | 2020 | ||||||||
| Revenues: | ||||||||||
| Consumables | $ | 17,031 | $ | 9,217 | ||||||
| License royalties, related party | 4,066 | 3,046 | ||||||||
| Total revenues | 21,097 | 12,263 | ||||||||
| Operating expenses: | ||||||||||
| Consumables cost of revenue, exclusive of depreciation and amortization | 12,474 | 11,491 | ||||||||
| Payroll and benefits | 2,469 | 2,742 | ||||||||
| Legal and professional fees | 1,803 | 2,043 | ||||||||
| General and administrative | 1,915 | 2,331 | ||||||||
| Depreciation, amortization, depletion and accretion | 2,106 | 2,297 | ||||||||
| Total operating expenses | 20,767 | 20,904 | ||||||||
| Operating income (loss) | 330 | (8,641 | ) | |||||||
| Other income (expense): | ||||||||||
| Earnings from equity method investments | 18,312 | 8,273 | ||||||||
| Interest expense | (837 | ) | (1,210 | ) | ||||||
| Other | 421 | 43 | ||||||||
| Total other income | 17,896 | 7,106 | ||||||||
| Income (loss) before income tax expense | 18,226 | (1,535 | ) | |||||||
| Income tax expense | 4,489 | 358 | ||||||||
| Net income (loss) | $ | 13,737 | $ | (1,893 | ) | |||||
| (Loss) earnings per common share: | ||||||||||
| Basic | $ | 0.76 | $ | (0.11 | ) | |||||
| Diluted | $ | 0.75 | $ | (0.11 | ) | |||||
| Weighted-average number of common shares outstanding: | ||||||||||
| Basic | 18,166 | 17,932 | ||||||||
| Diluted | 18,274 | 17,932 | ||||||||
TABLE 3
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended | ||||||||||
| (in thousands) | 2021 | 2020 | ||||||||
| Cash flows from operating activities | ||||||||||
| Net income (loss) | $ | 13,737 | $ | (1,893 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
| Deferred income tax expense | 3,051 | 788 | ||||||||
| Depreciation, amortization, depletion and accretion | 2,106 | 2,297 | ||||||||
| Operating lease expense | 379 | 774 | ||||||||
| Amortization of debt discount and debt issuance costs | 591 | 354 | ||||||||
| Stock-based compensation expense | 421 | 506 | ||||||||
| Earnings from equity method investments | (18,312 | ) | (8,273 | ) | ||||||
| Other non-cash items, net | (273 | ) | — | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Receivables and related party receivables | 2,147 | 2,988 | ||||||||
| Prepaid expenses and other assets | 1,178 | 226 | ||||||||
| Inventories, net | 1,548 | 1,572 | ||||||||
| Other long-term assets, net | (1,817 | ) | (89 | ) | ||||||
| Accounts payable | (706 | ) | (1,477 | ) | ||||||
| Accrued payroll and related liabilities | (1,043 | ) | (973 | ) | ||||||
| Other current liabilities | 1,305 | (23 | ) | |||||||
| Operating lease liabilities | 2,104 | (634 | ) | |||||||
| Other long-term liabilities | (2,113 | ) | (22 | ) | ||||||
| Distributions from equity method investees, return on investment | 17,644 | 17,116 | ||||||||
| Net cash provided by operating activities | 21,947 | 13,237 | ||||||||
| Cash flows from investing activities | ||||||||||
| Distributions from equity method investees in excess of cumulative earnings | 5,607 | — | ||||||||
| Acquisition of property, plant, equipment, and intangible assets, net | (1,321 | ) | (1,289 | ) | ||||||
| Mine development costs | (248 | ) | (447 | ) | ||||||
| Proceeds from sale of property and equipment | 848 | — | ||||||||
| Net cash provided by (used in) investing activities | 4,886 | (1,736 | ) | |||||||
| Cash flows from financing activities | ||||||||||
| Principal payments on term loan | (10,000 | ) | (6,000 | ) | ||||||
| Principal payments on finance lease obligations | (315 | ) | (340 | ) | ||||||
| Dividends paid | — | (4,518 | ) | |||||||
| Repurchase of common shares | — | (159 | ) | |||||||
| Repurchase of common shares to satisfy tax withholdings | (216 | ) | (376 | ) | ||||||
| Net cash used in financing activities | (10,531 | ) | (11,393 | ) | ||||||
| Increase in Cash and Cash Equivalents and Restricted Cash | 16,302 | 108 | ||||||||
| Cash and Cash Equivalents and Restricted Cash, beginning of period | 35,932 | 17,080 | ||||||||
| Cash and Cash Equivalents and Restricted Cash, end of period | $ | 52,234 | $ | 17,188 | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||||
| Acquisition of property, plant and equipment through accounts payable | $ | 765 | $ | 1,890 | ||||||
| Dividends payable | $ | — | $ | 105 | ||||||
Note on Non-GAAP Financial Measures
To supplement the Company's financial information presented in accordance with
The Company has defined Consolidated Adjusted EBITDA as net income, adjusted for the impact of the following items that are either non-cash or that the Company does not consider representative of its ongoing operating performance: depreciation, amortization, depletion and accretion, amortization of upfront customer consideration that was recorded as a component of the Marshall Mine Acquisition ("Upfront Customer Consideration"), interest expense, net, income tax expense; then reduced by the non-cash impact of equity earnings from equity method investments and increased by cash distributions from equity method investments. The Company believes that the Consolidated Adjusted EBITDA measure is less susceptible to variances that affect the Company's operating performance.
Segment EBITDA is calculated as Segment operating income (loss) adjusted for the impact of the following items that are either non-cash or that the Company does not consider representative of its ongoing operating performance: depreciation, amortization, depletion and accretion, amortization of upfront customer consideration and interest expense, net. When used in conjunction with GAAP financial measures, Segment EBITDA is a supplemental measure of operating performance that management believes is a useful measure related the Company's APT segment performance and the APT segment performance relative to the performance of their respective competitors as well as performance period over period. Additionally, the Company believes these measures are less susceptible to variances that affect their respective operating performance results.
The Company defined RC Segment Adjusted EBITDA as RC Segment EBITDA reduced by the non-cash impact of equity earnings from equity method investments and increased by cash distributions from equity method investments.
The Company defined APT Segment Adjusted EBITDA as APT Segment EBITDA as there are no additional adjustments made to the APT Segment.
The Company presents the non-GAAP measures because the Company believes they are useful as supplemental measures in evaluating the performance of the Company's operating performance and provide greater transparency into the results of operations. The Company's management uses Consolidated Adjusted EBITDA, RC Segment Adjusted EBITDA and APT Segment EBITDA as factors in evaluating the performance of its business.
The adjustments to Consolidated Adjusted EBITDA, RC Segment Adjusted EBITDA and APT Segment EBITDA in future periods are generally expected to be similar. Consolidated Adjusted EBITDA, RC Segment Adjusted EBITDA and APT Segment EBITDA have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analyzing the Company's results as reported under GAAP.
TABLE 4
Consolidated Adjusted EBITDA Reconciliation to Net Income (Loss)
(Amounts in thousands)
(Unaudited)
| Three Months Ended | ||||||||||
| (in thousands) | 2021 | 2020 | ||||||||
| Net income (loss) | $ | 13,737 | $ | (1,893 | ) | |||||
| Depreciation, amortization, depletion and accretion | 2,106 | 2,297 | ||||||||
| Amortization of Upfront Customer Consideration | 127 | — | ||||||||
| Interest expense, net | 729 | 1,167 | ||||||||
| Income tax expense | 4,489 | 358 | ||||||||
| Consolidated EBITDA | 21,188 | 1,929 | ||||||||
| Cash distributions from equity method investees | 23,251 | 17,116 | ||||||||
| Equity earnings | (18,312 | ) | (8,273 | ) | ||||||
| Consolidated Adjusted EBITDA | $ | 26,127 | $ | 10,772 | ||||||
TABLE 5
RC Segment Adjusted EBITDA Reconciliation to Segment Operating Income
(Amounts in thousands)
(Unaudited)
| Three Months Ended | ||||||||||
| (in thousands) | 2021 | 2020 | ||||||||
| RC Segment operating income | $ | 22,271 | $ | 10,860 | ||||||
| Depreciation, amortization, depletion and accretion | 20 | 27 | ||||||||
| Interest expense | — | 132 | ||||||||
| RC Segment EBITDA | 22,291 | 11,019 | ||||||||
| Cash distributions from equity method investees | 23,251 | 17,116 | ||||||||
| Equity earnings | (18,312 | ) | (8,273 | ) | ||||||
| RC Segment Adjusted EBITDA | $ | 27,230 | $ | 19,862 | ||||||
TABLE 6
APT Segment EBITDA Reconciliation to Segment Operating Income (Loss)
(Amounts in thousands)
(Unaudited)
| Three Months Ended | |||||||||
| (in thousands) | 2021 | 2020 | |||||||
| APT Segment operating income (loss) | $ | 15 | $ | (7,370 | ) | ||||
| Depreciation, amortization, depletion and accretion | 1,932 | 2,244 | |||||||
| Amortization of Upfront Customer Consideration | 127 | — | |||||||
| Interest expense, net | 79 | 94 | |||||||
| APT Segment EBITDA (loss) | $ | 2,153 | $ | (5,032 | ) | ||||
