Aug 07, 2017 4:54 PM
Tinuum & Refined Coal (“RC”) Highlights
ADES Consolidated Highlights
Sampson concluded, “We are also excited Tinuum closed on an additional minority ownership in an RC project last week, which will provide us future tax credits given our shared ownership in the project through Tinuum, expected increase in future Tinuum distributions, and providing evidence of movement within the RC market. Our team and Tinuum remain focused on identifying additional tax-equity investors to monetize the remaining RC facilities. The political and tax environment, though tedious, are more favorable than last year, and the momentum behind our tax-equity investor pipeline has grown substantially more robust in recent months. We continue to negotiate with both current and prospective tax-equity investors capable of investing in either one or multiple facilities and the cadence of these negotiations has become more favorable. As a result, we fully expect for those discussions to progress throughout the back half of the year.”
Second quarter revenues and costs of revenues were
Second quarter earnings from equity method investments were
Second quarter royalty earnings from Tinuum were
Second quarter consolidated interest expense was
Consolidated net income for the second quarter was
As of
Dividend
Today, the Board of Directors declared a quarterly cash dividend of
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 RC cash flows, targets for capturing market share and expectations about closing additional facilities. 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, 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 and achieve expected market share; 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; 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 | $ | 26,373 | $ | 13,208 | ||||
| Restricted cash | 3,000 | 13,736 | ||||||
| Receivables, net | 1,958 | 8,648 | ||||||
| Receivables, related parties, net | 1,866 | 1,934 | ||||||
| Costs in excess of billings on uncompleted contracts | — | 25 | ||||||
| Prepaid expenses and other assets | 1,736 | 1,357 | ||||||
| Total current assets | 34,933 | 38,908 | ||||||
| Property and equipment, net of accumulated depreciation of | 468 | 735 | ||||||
| Cost method investment | 1,016 | 1,016 | ||||||
| Equity method investments | 2,739 | 3,959 | ||||||
| Deferred tax assets | 53,290 | 61,396 | ||||||
| Other long-term assets | 1,711 | 1,282 | ||||||
| Total Assets | $ | 94,157 | $ | 107,296 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,617 | $ | 1,920 | ||||
| Accrued payroll and related liabilities | 1,135 | 2,121 | ||||||
| Billings in excess of costs on uncompleted contracts | 1,884 | 4,947 | ||||||
| Legal settlements and accruals | 4,327 | 10,706 | ||||||
| Other current liabilities | 8,208 | 4,017 | ||||||
| Total current liabilities | 17,171 | 23,711 | ||||||
| Legal settlements and accruals, long-term | 1,076 | 5,382 | ||||||
| Other long-term liabilities | 2,234 | 2,038 | ||||||
| Total Liabilities | 20,481 | 31,131 | ||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: par value of | — | — | ||||||
| Common stock: par value of | 22 | 22 | ||||||
| (12,973 | ) | — | ||||||
| Additional paid-in capital | 114,882 | 119,494 | ||||||
| Accumulated deficit | (28,255 | ) | (43,351 | ) | ||||
| Total stockholders’ equity | 73,676 | 76,165 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 94,157 | $ | 107,296 | ||||
| TABLE 2 | ||||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenues: | ||||||||||||||||
| Equipment sales | $ | 24,619 | $ | 8,213 | $ | 29,727 | $ | 29,919 | ||||||||
| Chemicals | 846 | 613 | 3,127 | 1,047 | ||||||||||||
| Consulting services and other | — | 125 | — | 320 | ||||||||||||
| Total revenues | 25,465 | 8,951 | 32,854 | 31,286 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Equipment sales cost of revenue, exclusive of depreciation and amortization | 22,650 | 5,437 | 26,793 | 22,470 | ||||||||||||
| Chemicals cost of revenue, exclusive of depreciation and amortization | 645 | 255 | 2,403 | 396 | ||||||||||||
| Consulting services and other cost of revenue, exclusive of depreciation and amortization | — | 77 | — | 212 | ||||||||||||
| Payroll and benefits | 2,033 | 3,956 | 4,215 | 7,759 | ||||||||||||
| Rent and occupancy | 255 | 632 | 300 | 1,026 | ||||||||||||
| Legal and professional fees | 1,219 | 1,982 | 2,254 | 4,965 | ||||||||||||
| General and administrative | 809 | 1,346 | 2,072 | 2,092 | ||||||||||||
| Research and development, net | (414 | ) | (345 | ) | (222 | ) | (143 | ) | ||||||||
| Depreciation and amortization | 118 | 223 | 600 | 454 | ||||||||||||
| Total operating expenses | 27,315 | 13,563 | 38,415 | 39,231 | ||||||||||||
| Operating loss | (1,850 | ) | (4,612 | ) | (5,561 | ) | (7,945 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Earnings from equity method investments | 10,155 | 13,754 | 23,969 | 19,331 | ||||||||||||
| Royalties, related party | 1,866 | 669 | 3,621 | 1,859 | ||||||||||||
| Interest expense | (628 | ) | (1,573 | ) | (1,321 | ) | (3,537 | ) | ||||||||
| Revision in estimated royalty indemnity liability | 500 | — | 3,400 | — | ||||||||||||
| Other | 7 | (279 | ) | 16 | 2,680 | |||||||||||
| Total other income | 11,900 | 12,571 | 29,685 | 20,333 | ||||||||||||
| Income before income tax expense | 10,050 | 7,959 | 24,124 | 12,388 | ||||||||||||
| Income tax expense | 3,642 | 99 | 9,028 | 152 | ||||||||||||
| Net income | $ | 6,408 | $ | 7,860 | $ | 15,096 | $ | 12,236 | ||||||||
| Earnings per common share (Note 1): | ||||||||||||||||
| Basic | $ | 0.29 | $ | 0.36 | $ | 0.68 | $ | 0.55 | ||||||||
| Diluted | $ | 0.29 | $ | 0.35 | $ | 0.68 | $ | 0.55 | ||||||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic | 21,866 | 21,875 | 21,961 | 21,895 | ||||||||||||
| Diluted | 21,880 | 22,187 | 21,981 | 22,204 | ||||||||||||
| Cash dividends declared per common share outstanding: | $ | 0.25 | $ | — | $ | 0.25 | $ | — | ||||||||
| TABLE 3 | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| Six Months Ended | ||||||||
| (in thousands) | 2017 | 2016 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 15,096 | $ | 12,236 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 600 | 454 | ||||||
| Debt prepayment penalty and amortization of debt issuance costs | 73 | 1,380 | ||||||
| Impairment of property, equipment, and inventory | — | 517 | ||||||
| Stock-based compensation expense | 1,173 | 1,543 | ||||||
| Earnings from equity method investments | (23,969 | ) | (19,331 | ) | ||||
| Gain on sale of equity method investment | — | (2,078 | ) | |||||
| Gain on settlement of note payable and licensed technology | — | (1,019 | ) | |||||
| Other non-cash items, net | 436 | 34 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | 6,690 | (627 | ) | |||||
| Related party receivables | 68 | 1,473 | ||||||
| Prepaid expenses and other assets | (453 | ) | 806 | |||||
| Costs incurred on uncompleted contracts | 25,634 | 17,201 | ||||||
| Deferred tax asset, net | 8,106 | — | ||||||
| Other long-term assets | (767 | ) | (2,630 | ) | ||||
| Accounts payable | (303 | ) | (2,910 | ) | ||||
| Accrued payroll and related liabilities | (987 | ) | (1,596 | ) | ||||
| Other current liabilities | (1,227 | ) | (101 | ) | ||||
| Billings on uncompleted contracts | (28,671 | ) | (20,910 | ) | ||||
| Other long-term liabilities | 164 | (1,954 | ) | |||||
| Legal settlements and accruals | (10,685 | ) | 2,767 | |||||
| Distributions from equity method investees, return on investment | 2,875 | 5,900 | ||||||
| Net cash used in operating activities | (6,147 | ) | (8,845 | ) | ||||
| Cash flows from investing activities | ||||||||
| Distributions from equity method investees in excess of cumulative earnings | 22,313 | 14,875 | ||||||
| Maturity of investment securities, restricted | — | 336 | ||||||
| Acquisition of property and equipment, net | (247 | ) | (111 | ) | ||||
| Contributions to equity method investees | — | (223 | ) | |||||
| Proceeds from sale of equity method investment | — | 1,773 | ||||||
| Net cash provided by investing activities | 22,066 | 16,650 | ||||||
| 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 | — | (14,496 | ) | |||||
| Short-term borrowing loan costs and debt prepayment penalty | — | (807 | ) | |||||
| Repurchase of common shares to satisfy tax withholdings | (517 | ) | (85 | ) | ||||
| Repurchase of common shares | (12,973 | ) | — | |||||
| Net cash used in financing activities | (13,490 | ) | (15,388 | ) | ||||
| Increase (decrease) in Cash and Cash Equivalents and Restricted Cash | 2,429 | (7,583 | ) | |||||
| Cash and Cash Equivalents and Restricted Cash, beginning of period | 26,944 | 20,973 | ||||||
| Cash and Cash Equivalents and Restricted Cash, end of period | $ | 29,373 | $ | 13,390 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 1,791 | $ | 1,436 | ||||
| Cash paid (refunded) for income taxes | $ | 839 | $ | (72 | ) | |||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Stock award reclassification (liability to equity) | $ | — | $ | 899 | ||||
| Settlement of RCM6 note payable | $ | — | $ | 13,234 | ||||
| Non-cash reduction of equity method investment | $ | — | $ | 11,156 | ||||
| Dividends payable | $ | 5,268 | $ | — | ||||
Investor Contact:Alpha IR Group Chris Hodges orRyan Coleman 312-445-2870 ADES@alpha-ir.com