Nov 08, 2022 4:45 PM
Consumables revenue up 27% year-to-date driven by increased volumes and pricing initiatives
Announced proposed merger with Arq to further vertically integrate portfolio of assets and leverage bituminous feedstock to better compete in new markets
Third Quarter Highlights
“Our consumables revenue grew 7% compared to the prior year as macroeconomic dynamics continue to support strong demand for our activated carbon products. In addition, we continue to execute on pricing initiatives designed to improve the economic terms of customer contracts,” said
Marken continued, “In addition, we concluded our strategic review process, culminating with the announcement of our proposed combination with Arq. We remain excited by, and committed to, the prospect of leveraging Arq’s truly unique feedstock to accelerate our penetration of GAC markets and to facilitate our entrance into new markets such as additives for
Marken concluded, “Lastly, in September we announced the sale of
Third Quarter 2022 Results
Third quarter revenues and costs of revenues were
Third quarter other operating expenses were
The Company did not record any earnings from equity method investments in the third quarter compared to
The Company did not recognize any income tax expense or benefit for the third quarter of 2022 compared to income tax expense of
For the third quarter of 2022, the Company reported a net loss of
Third quarter Consolidated Adjusted EBITDA (loss) was
Nine Month 2022 Results
Revenues and costs of revenues during the first nine months of the year were
Other operating expenses during the first nine months of the year totaled
Earnings from equity method investments totaled
Interest expense during the first nine months of the year was
The Company did not recognize any income tax expense or benefit for the year-to-date period compared to income tax expense of
The Company recorded a net loss of
Year-to-date Consolidated Adjusted EBITDA was
Conference Call and Webcast Information
The Company has scheduled a conference call to begin at
As part of the conference call, ADES will conduct a question and answer session. Investors are invited to email their questions in advance to ADES@alpha-ir.com.
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. When used in this press release, the words “can,” “will,” “intends,” “expects,” “believes,” similar expressions and any other statements that are not historical facts are intended to identify those assertions as forward-looking statements. All statements that address activities, events or developments that the Company intends, expects or believes may occur in the future are forward-looking statements. These forward-looking statements may relate to such matters as business strategy, goals and expectations concerning the merger (including the anticipated timing of consummation of the merger, future operations, future performance or results). The forward-looking statements may further include projection on future after-tax, net RC cash flows, expectations about future demand for our APT products, pressure on APT margins and acceptance of price increases as well as 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: uncertainties as to the timing of the consummation of the merger; the risk that the merger may not be completed in a timely manner or at all; the possibility that any or all of the various conditions to the consummation of the merger may not be satisfied or waived; the occurrence of any event, change or other circumstance that could give rise to the termination of the transaction agreement; the effect of the announcement of the transactions contemplated by the transaction agreement on the Company’s ability to hire key personnel, its ability to maintain relationships with customers, suppliers and others with whom it does business, or its results of operations and business generally; risks related to diverting management’s attention from the Company’s ongoing business operations; the ability to meet Nasdaq’s listing standards following the consummation of the merger; costs related to the proposed merger; opportunities for additional sales of our lignite activated carbon products and end-market diversification; the outcome of the review of strategic alternatives; the Company’s ability to meet customer supply requirements; the rate of coal-fired power generation in
This press release does not contain all the information that should be considered concerning the proposed transaction to be voted upon at the special meeting of shareholders and is not intended to provide the basis for any investment decision or any other decision in respect of the transaction. Shareholders are advised to read any proxy statement prepared in connection with the transaction.
Non-GAAP Financial Measures
This press release presents certain supplemental financial measures, including EBITDA, which is a measurement that is not calculated in accordance with
Additional Information
In connection with the proposed business combination with Arq (the “Transaction”),
When available, the definitive proxy statement/prospectus and other relevant materials for the proposed Transactions will be mailed to shareholders of ADES as of a record date to be established for voting on the proposed Transactions. The documents relating to the proposed Transactions (when they are available) can be obtained free of charge from the SEC’s website at www.sec.gov. These documents (when they are available) can also be obtained free of charge by contacting us at
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder. ADES and its directors, executive officers, other members of management and employees may be deemed to be participants in the solicitation of proxies from ADES’ stockholders in connection with the Transaction. Information regarding the names and interests in the proposed transaction of ADES’ directors and officers is contained ADES’ filings with the
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 | $ | 75,823 | $ | 78,753 | ||||
| Receivables, net | 13,903 | 12,622 | ||||||
| Receivables, related parties | — | 2,481 | ||||||
| Inventories, net | 15,261 | 7,850 | ||||||
| Prepaid expenses and other current assets | 7,653 | 6,661 | ||||||
| Total current assets | 112,640 | 108,367 | ||||||
| Restricted cash, long-term | 10,000 | 10,027 | ||||||
| Property, plant and equipment, net of accumulated depreciation of | 33,286 | 30,171 | ||||||
| Other long-term assets, net | 29,529 | 36,871 | ||||||
| Total Assets | $ | 185,455 | $ | 185,436 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 18,652 | $ | 16,486 | ||||
| Current portion of finance lease obligations | 1,182 | 1,011 | ||||||
| Other current liabilities | 5,361 | 5,124 | ||||||
| Total current liabilities | 25,195 | 22,621 | ||||||
| Long-term finance lease obligations, net of current portion | 3,731 | 3,152 | ||||||
| Other long-term liabilities | 13,906 | 12,362 | ||||||
| Total Liabilities | 42,832 | 38,135 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: par value of | — | — | ||||||
| Common stock: par value of | 24 | 23 | ||||||
| (47,692 | ) | (47,692 | ) | |||||
| Additional paid-in capital | 103,175 | 102,106 | ||||||
| Retained earnings | 87,116 | 92,864 | ||||||
| Total Stockholders’ Equity | 142,623 | 147,301 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 185,455 | $ | 185,436 | ||||
TABLE 2
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues: | ||||||||||||||||
| Consumables | $ | 28,437 | $ | 26,693 | $ | 79,578 | $ | 62,642 | ||||||||
| License royalties, related party | — | 4,165 | — | 11,888 | ||||||||||||
| Total revenues | 28,437 | 30,858 | 79,578 | 74,530 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Consumables cost of revenue, exclusive of depreciation and amortization | 21,575 | 19,956 | 62,992 | 48,672 | ||||||||||||
| Payroll and benefits | 2,313 | 2,637 | 7,458 | 8,014 | ||||||||||||
| Legal and professional fees | 3,668 | 1,106 | 7,395 | 4,340 | ||||||||||||
| General and administrative | 1,833 | 1,715 | 5,628 | 5,223 | ||||||||||||
| Depreciation, amortization, depletion and accretion | 1,671 | 2,145 | 4,765 | 6,155 | ||||||||||||
| Loss (gain) on change in estimate, asset retirement obligation | — | — | 34 | (1,942 | ) | |||||||||||
| Total operating expenses | 31,060 | 27,559 | 88,272 | 70,462 | ||||||||||||
| Operating (loss) income | (2,623 | ) | 3,299 | (8,694 | ) | 4,068 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Earnings from equity method investments | — | 22,195 | 3,222 | 61,944 | ||||||||||||
| Gain on extinguishment of debt | — | 3,345 | — | 3,345 | ||||||||||||
| Interest expense | (83 | ) | (86 | ) | (259 | ) | (1,416 | ) | ||||||||
| Other | 315 | 81 | (19 | ) | 652 | |||||||||||
| Total other income | 232 | 25,535 | 2,944 | 64,525 | ||||||||||||
| (Loss) income before income tax expense | (2,391 | ) | 28,834 | (5,750 | ) | 68,593 | ||||||||||
| Income tax (benefit) expense | — | 4,581 | — | 14,013 | ||||||||||||
| Net (loss) income | $ | (2,391 | ) | $ | 24,253 | $ | (5,750 | ) | $ | 54,580 | ||||||
| (Loss) earnings per common share: | ||||||||||||||||
| Basic | $ | (0.13 | ) | $ | 1.33 | $ | (0.31 | ) | $ | 2.99 | ||||||
| Diluted | $ | (0.13 | ) | $ | 1.31 | $ | (0.31 | ) | $ | 2.96 | ||||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic | 18,487 | 18,292 | 18,435 | 18,243 | ||||||||||||
| Diluted | 18,487 | 18,489 | 18,435 | 18,416 | ||||||||||||
TABLE 3
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Cash flows from operating activities | ||||||||
| Net (loss) income | $ | (5,750 | ) | $ | 54,580 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation, amortization, depletion and accretion | 4,765 | 6,155 | ||||||
| Earnings from equity method investments | (3,222 | ) | (61,944 | ) | ||||
| Operating lease expense | 1,953 | 1,481 | ||||||
| Stock-based compensation expense | 1,455 | 1,476 | ||||||
| Deferred income tax expense | — | 9,046 | ||||||
| Amortization of debt discount and debt issuance costs | — | 945 | ||||||
| Loss (gain) on change in estimate, asset retirement obligation | 34 | (1,942 | ) | |||||
| Gain on extinguishment of debt | — | (3,345 | ) | |||||
| Other non-cash items, net | 404 | (352 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables and related party receivables | 1,199 | (2,835 | ) | |||||
| Prepaid expenses and other assets | (991 | ) | (16 | ) | ||||
| Inventories, net | (7,222 | ) | 3,658 | |||||
| Other long-term assets, net | 2,136 | (4,009 | ) | |||||
| Accounts payable and accrued expenses | 1,827 | 2,388 | ||||||
| Other current liabilities | (184 | ) | (3,489 | ) | ||||
| Operating lease liabilities | 1,445 | 3,878 | ||||||
| Other long-term liabilities | 206 | (3,031 | ) | |||||
| Distributions from equity method investees, return on investment | 2,297 | 22,044 | ||||||
| Net cash provided by operating activities | 352 | 24,688 | ||||||
| Cash flows from investing activities | ||||||||
| Distributions from equity method investees in excess of cumulative earnings | 3,316 | 44,707 | ||||||
| Acquisition of property, plant, equipment, and intangible assets, net | (6,178 | ) | (5,403 | ) | ||||
| Mine development costs | (345 | ) | (1,262 | ) | ||||
| Proceeds from sale of property and equipment | 1,241 | 895 | ||||||
| Net cash (used in) provided by investing activities | (1,966 | ) | 38,937 | |||||
| Cash flows from financing activities | ||||||||
| Principal payments on finance lease obligations | (913 | ) | (1,085 | ) | ||||
| Repurchase of common shares to satisfy tax withholdings | (385 | ) | (241 | ) | ||||
| Dividends paid | (45 | ) | (92 | ) | ||||
| Principal payments on term loan | — | (16,000 | ) | |||||
| Net cash used in financing activities | (1,343 | ) | (17,418 | ) | ||||
| (Decrease) increase in Cash and Restricted Cash | (2,957 | ) | 46,207 | |||||
| Cash and Restricted Cash, beginning of period | 88,780 | 35,932 | ||||||
| Cash and Restricted Cash, end of period | $ | 85,823 | $ | 82,139 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Acquisition of property and equipment through finance lease | $ | 1,641 | $ | — | ||||
| Acquisition of property and equipment through accounts payable | $ | 339 | $ | 128 | ||||
Note on Non-GAAP Financial Measures
To supplement the Company's financial information presented in accordance with
The Company has defined Consolidated EBITDA as net income (loss) adjusted for the impact of the following items that are either non-cash or that we do not consider representative of our ongoing operating performance: depreciation, amortization, depletion, accretion, amortization of upfront customer consideration, which was recorded in conjunction with the Marshall Mine Acquisition ("Upfront Customer Consideration"), interest expense, net and income taxes. The Company has defined Consolidated Adjusted EBITDA as Consolidated EBITDA reduced by the non-cash impact of equity earnings from equity method investments and gain on extinguishment of debt, increased by cash distributions from equity method investments, loss on early settlement of the Norit Receivable and the change in ARO as a result of a change in estimate. . The Company believes that the Consolidated Adjusted EBITDA measure is less susceptible to variances that affect the Company's operating performance.
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 EBITDA and Consolidated Adjusted EBITDA as a factor in evaluating the performance of its business. The adjustments to Consolidated EBITDA and Consolidated Adjusted EBITDA in future periods are generally expected to be similar. Consolidated EBITDA and Consolidated Adjusted EBITDA has limitations as an analytical tool, 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 (Loss) Income
(Amounts in thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net (loss) income | $ | (2,391 | ) | $ | 24,253 | $ | (5,750 | ) | $ | 54,580 | ||||||
| Depreciation, amortization, depletion and accretion | 1,671 | 2,145 | 4,765 | 6,155 | ||||||||||||
| Amortization of Upfront Customer Consideration | 127 | 127 | 381 | 381 | ||||||||||||
| Interest expense, net | 44 | 25 | 163 | 1,188 | ||||||||||||
| Income tax expense | — | 4,581 | — | 14,013 | ||||||||||||
| Consolidated ( EBITDA loss) EBITDA | (549 | ) | 31,131 | (441 | ) | 76,317 | ||||||||||
| Cash distributions from equity method investees | — | 22,875 | 5,613 | 66,751 | ||||||||||||
| Equity earnings | — | (22,195 | ) | (3,222 | ) | (61,944 | ) | |||||||||
| Gain on extinguishment of debt | — | (3,345 | ) | — | (3,345 | ) | ||||||||||
| Loss (gain) on change in estimate, asset retirement obligation | — | 34 | (1,942 | ) | ||||||||||||
| Loss on early settlement of Norit Receivable | — | — | 535 | — | ||||||||||||
| Consolidated (Adjusted EBITDA loss) Adjusted EBITDA | $ | (549 | ) | $ | 28,466 | $ | 2,519 | $ | 75,837 | |||||||
