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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Advanced Emissions Solutions Inc | NASDAQ:ADES | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 3.36 | 3.30 | 3.61 | 0 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
|
Delaware
|
|
27-5472457
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
9135 South Ridgeline Boulevard, Suite 200, Highlands Ranch CO,
|
|
80129
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
o
|
|
Accelerated filer
|
|
x
|
|
|
|
|
|||
Non-accelerated filer
|
|
o
|
|
Smaller reporting company
|
|
¨
|
Class
|
|
Outstanding at May 3, 2016
|
Common stock, par value $0.001 per share
|
|
21,892,875
|
|
|
PAGE
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
As of
|
||||||
(in thousands, except share data)
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
5,469
|
|
|
$
|
9,265
|
|
Receivables, net
|
|
7,354
|
|
|
8,361
|
|
||
Receivables, related parties, net
|
|
794
|
|
|
1,918
|
|
||
Restricted cash
|
|
1,414
|
|
|
728
|
|
||
Costs in excess of billings on uncompleted contracts
|
|
701
|
|
|
2,137
|
|
||
Prepaid expenses and other assets
|
|
1,810
|
|
|
2,306
|
|
||
Total current assets
|
|
17,542
|
|
|
24,715
|
|
||
Restricted cash, long-term
|
|
10,359
|
|
|
10,980
|
|
||
Property and equipment, net of accumulated depreciation of $4,736 and $4,557, respectively
|
|
1,894
|
|
|
2,040
|
|
||
Investment securities, restricted, long-term
|
|
—
|
|
|
336
|
|
||
Cost method investment
|
|
2,776
|
|
|
2,776
|
|
||
Equity method investments
|
|
5,203
|
|
|
17,232
|
|
||
Other assets
|
|
3,809
|
|
|
2,696
|
|
||
Total Assets
|
|
$
|
41,583
|
|
|
$
|
60,775
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
5,923
|
|
|
$
|
6,174
|
|
Accrued payroll and related liabilities
|
|
5,367
|
|
|
5,800
|
|
||
Current portion of notes payable, net of discount, related parties
|
|
—
|
|
|
1,837
|
|
||
Billings in excess of costs on uncompleted contracts
|
|
5,864
|
|
|
9,708
|
|
||
Short-term borrowings, net of discount and deferred loan costs, related party
|
|
10,921
|
|
|
12,676
|
|
||
Settlement and royalty indemnity obligation
|
|
5,452
|
|
|
6,502
|
|
||
Other current liabilities
|
|
6,324
|
|
|
7,395
|
|
||
Total current liabilities
|
|
39,851
|
|
|
50,092
|
|
||
Long-term portion of notes payable, net of discount, related parties
|
|
—
|
|
|
13,512
|
|
||
Settlement and royalty indemnification, long-term
|
|
13,619
|
|
|
13,797
|
|
||
Advance deposit, related party
|
|
2,584
|
|
|
2,980
|
|
||
Other long-term liabilities
|
|
5,590
|
|
|
5,372
|
|
||
Total Liabilities
|
|
61,644
|
|
|
85,753
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
||||
Stockholders’ deficit:
|
|
|
|
|
||||
Preferred stock: par value of $.001 and no par value per share, respectively, 50,000,000 shares authorized, none outstanding
|
|
—
|
|
|
—
|
|
||
Common stock: par value of $.001 per share, 100,000,000 shares authorized, 22,009,349 and 21,943,872 shares issued, and 21,858,565 and 21,809,164 shares outstanding at March 31, 2015 and December 31, 2014, respectively
|
|
22
|
|
|
22
|
|
||
Additional paid-in capital
|
|
116,570
|
|
|
116,029
|
|
||
Accumulated deficit
|
|
(136,653
|
)
|
|
(141,029
|
)
|
||
Total stockholders’ deficit
|
|
(20,061
|
)
|
|
(24,978
|
)
|
||
Total Liabilities and Stockholders’ Deficit
|
|
$
|
41,583
|
|
|
$
|
60,775
|
|
|
|
Three Months Ended March 31,
|
||||||
(
in thousands, except per share data and percentages
)
|
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
|
||||
Equipment sales
|
|
$
|
21,727
|
|
|
$
|
21,115
|
|
Consulting services
|
|
196
|
|
|
368
|
|
||
Chemicals and other
|
|
434
|
|
|
274
|
|
||
Total revenues
|
|
22,357
|
|
|
21,757
|
|
||
Operating expenses:
|
|
|
|
|
||||
Equipment sales cost of revenue, exclusive of depreciation and amortization
|
|
17,034
|
|
|
15,051
|
|
||
Consulting services cost of revenue, exclusive of depreciation and amortization
|
|
135
|
|
|
426
|
|
||
Chemical and other cost of revenue, exclusive of depreciation and amortization
|
|
142
|
|
|
238
|
|
||
Payroll and benefits
|
|
3,802
|
|
|
4,911
|
|
||
Rent and occupancy
|
|
394
|
|
|
631
|
|
||
Legal and professional fees
|
|
2,983
|
|
|
3,735
|
|
||
General and administrative
|
|
745
|
|
|
1,882
|
|
||
Research and development, net
|
|
202
|
|
|
1,250
|
|
||
Depreciation and amortization
|
|
231
|
|
|
531
|
|
||
Total operating expenses
|
|
25,668
|
|
|
28,655
|
|
||
Operating loss
|
|
(3,311
|
)
|
|
(6,898
|
)
|
||
Other income (expense):
|
|
|
|
|
||||
Earnings from equity method investments
|
|
5,577
|
|
|
314
|
|
||
Royalties, related party
|
|
1,189
|
|
|
2,194
|
|
||
Interest expense
|
|
(1,964
|
)
|
|
(1,775
|
)
|
||
Gain on sale of equity method investment
|
|
2,078
|
|
|
—
|
|
||
Gain on settlement of note payable
|
|
869
|
|
|
—
|
|
||
Other
|
|
(9
|
)
|
|
77
|
|
||
Total other income (expense), net
|
|
7,740
|
|
|
810
|
|
||
Income (loss) before income tax expense
|
|
4,429
|
|
|
(6,088
|
)
|
||
Income tax expense
|
|
53
|
|
|
44
|
|
||
Net income (loss)
|
|
$
|
4,376
|
|
|
$
|
(6,132
|
)
|
Income (loss) per common share (Note 1):
|
|
|
|
|
||||
Basic
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
Diluted
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
Weighted-average number of common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
21,849
|
|
|
21,696
|
|
||
Diluted
|
|
22,176
|
|
|
21,696
|
|
|
|
Three Months Ended March 31,
|
||||||
(
in thousands)
|
|
2016
|
|
2015
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
4,376
|
|
|
$
|
(6,132
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
231
|
|
|
531
|
|
||
Amortization of debt issuance costs
|
|
573
|
|
|
25
|
|
||
Gain on settlement of debt
|
|
(869
|
)
|
|
—
|
|
||
Impairment of property and equipment
|
|
—
|
|
|
48
|
|
||
Provision for bad debt expense and note receivable
|
|
(6
|
)
|
|
511
|
|
||
Share-based compensation expense
|
|
636
|
|
|
954
|
|
||
Earnings from equity method investments
|
|
(5,577
|
)
|
|
(314
|
)
|
||
Gain on sale of equity method investment
|
|
(2,078
|
)
|
|
—
|
|
||
Other non-cash items, net
|
|
(17
|
)
|
|
(43
|
)
|
||
Changes in operating assets and liabilities, net of effects of acquired businesses:
|
|
|
|
|
||||
Receivables
|
|
1,012
|
|
|
(56
|
)
|
||
Related party receivables
|
|
1,124
|
|
|
(24
|
)
|
||
Prepaid expenses and other assets
|
|
496
|
|
|
(308
|
)
|
||
Costs incurred on uncompleted contracts
|
|
14,613
|
|
|
2,231
|
|
||
Restricted cash
|
|
35
|
|
|
—
|
|
||
Other long-term assets
|
|
(1,104
|
)
|
|
206
|
|
||
Accounts payable
|
|
(250
|
)
|
|
(116
|
)
|
||
Accrued payroll and related liabilities
|
|
(444
|
)
|
|
(131
|
)
|
||
Other current liabilities
|
|
(1,071
|
)
|
|
(377
|
)
|
||
Billings on uncompleted contracts
|
|
(17,021
|
)
|
|
(3,677
|
)
|
||
Advance deposit, related party
|
|
(396
|
)
|
|
(727
|
)
|
||
Other long-term liabilities
|
|
242
|
|
|
(65
|
)
|
||
Settlement and royalty indemnification obligation
|
|
(1,228
|
)
|
|
(744
|
)
|
||
Distributions from equity method investees, return on investment
|
|
4,900
|
|
|
—
|
|
||
Net cash used in operating activities
|
|
(1,823
|
)
|
|
(8,208
|
)
|
|
|
Three Months Ended March 31,
|
||||||
(
in thousands)
|
|
2016
|
|
2015
|
||||
Cash flows from investing activities
|
|
|
|
|
||||
Maturity of investment securities, restricted
|
|
336
|
|
|
—
|
|
||
Increase in restricted cash
|
|
(100
|
)
|
|
(1,200
|
)
|
||
Acquisition of property and equipment
|
|
(112
|
)
|
|
(111
|
)
|
||
Proceeds from sale of property and equipment
|
|
12
|
|
|
—
|
|
||
Advance on note receivable
|
|
—
|
|
|
(500
|
)
|
||
Acquisition of business
|
|
—
|
|
|
(2,124
|
)
|
||
Purchase of and contributions to equity method investees
|
|
(223
|
)
|
|
(468
|
)
|
||
Distributions from equity method investees in excess of cumulative earnings
|
|
—
|
|
|
100
|
|
||
Proceeds from sale of equity method investment
|
|
1,773
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
|
1,686
|
|
|
(4,303
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
||||
Repayments on short-term borrowings, related party
|
|
(1,750
|
)
|
|
—
|
|
||
Repayments on notes payable, related parties
|
|
(1,246
|
)
|
|
(717
|
)
|
||
Repurchase of shares to satisfy minimum tax withholdings
|
|
(84
|
)
|
|
(215
|
)
|
||
Short-term borrowing loan costs
|
|
(579
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
|
(3,659
|
)
|
|
(932
|
)
|
||
Decrease in Cash and Cash Equivalents
|
|
(3,796
|
)
|
|
(13,443
|
)
|
||
Cash and Cash Equivalents, beginning of period
|
|
9,265
|
|
|
25,181
|
|
||
Cash and Cash Equivalents, end of period
|
|
$
|
5,469
|
|
|
$
|
11,738
|
|
Supplemental disclosures of cash information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
1,029
|
|
|
$
|
1,599
|
|
Cash paid (refunded) for income taxes
|
|
(89
|
)
|
|
44
|
|
||
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
|
)
|
|
—
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands, except per share amounts)
|
|
2016
|
|
2015
|
||||
Net income (loss)
|
|
$
|
4,376
|
|
|
$
|
(6,132
|
)
|
Less: Undistributed income (loss) allocated to participating securities
|
|
32
|
|
|
(64
|
)
|
||
Net income (loss) attributable to common stockholders
|
|
$
|
4,344
|
|
|
$
|
(6,068
|
)
|
|
|
|
|
|
|
|
||
Basic weighted-average common shares outstanding
|
|
21,849
|
|
|
21,696
|
|
||
Add: dilutive effect of equity instruments
|
|
327
|
|
|
—
|
|
||
Diluted weighted-average shares outstanding
|
|
22,176
|
|
|
21,696
|
|
||
Income (loss) per common share - basic
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
Income (loss) per common share - diluted
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
|
|
Three Months Ended March 31,
|
||||
(share data in thousands)
|
|
2016
|
|
2015
|
||
Stock options
|
|
—
|
|
|
19
|
|
Restricted stock awards
|
|
—
|
|
|
181
|
|
Performance share units
|
|
—
|
|
|
190
|
|
Total shares excluded from diluted shares outstanding
|
|
—
|
|
|
390
|
|
|
|
|
|
Pretax Charge
|
|||||||||||||
(in thousands, except employee data)
|
|
Approximate Number of Employees
|
|
Refined Coal
|
|
Emissions Control
|
|
All Other and Corporate
|
|
Total
|
|||||||
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||
Restructuring charges
|
|
3
|
|
$
|
—
|
|
|
$
|
—
|
|
|
283
|
|
|
$
|
283
|
|
Total pretax charge, net of reversals
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
283
|
|
|
$
|
283
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|||||||
Restructuring charges
|
|
4
|
|
$
|
—
|
|
|
$
|
—
|
|
|
479
|
|
|
$
|
479
|
|
Changes in estimates
|
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|||
Total pretax charge, net of reversals
|
|
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
479
|
|
|
$
|
469
|
|
(in thousands)
|
|
Employee Severance
|
|
Facility Closure
|
||||
Remaining accrual as of December 31, 2015
|
|
$
|
2,581
|
|
|
$
|
777
|
|
Expense provision (1)
|
|
283
|
|
|
—
|
|
||
Cash payments and other (1)
|
|
(1,200
|
)
|
|
(64
|
)
|
||
Change in estimates
|
|
—
|
|
|
(210
|
)
|
||
Remaining accrual as of March 31, 2016
|
|
$
|
1,664
|
|
|
$
|
503
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Gross profit
|
|
$
|
26,527
|
|
|
$
|
30,928
|
|
Operating, selling, general and administrative expenses
|
|
5,512
|
|
|
5,355
|
|
||
Income from operations
|
|
21,015
|
|
|
25,573
|
|
||
Other expenses
|
|
(1,015
|
)
|
|
(799
|
)
|
||
Class B preferred return
|
|
(1,143
|
)
|
|
(1,730
|
)
|
||
Loss attributable to noncontrolling interest
|
|
1,956
|
|
|
1,330
|
|
||
Net income available to Class A members
|
|
$
|
20,813
|
|
|
$
|
24,374
|
|
ADES equity earnings
|
|
$
|
5,443
|
|
|
$
|
100
|
|
Description
|
|
Date(s)
|
|
Investment balance
|
|
ADES equity earnings (loss)
|
|
Cash distributions
|
|
Memorandum Account: Cash distributions and equity loss in (excess) of investment balance
|
||||||||
Beginning balance
|
|
12/31/15
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,263
|
)
|
ADES proportionate share of income from CCS (1)
|
|
First Quarter
|
|
8,706
|
|
|
8,706
|
|
|
—
|
|
|
—
|
|
||||
Recovery of prior cash distributions in excess of investment balance (prior to cash distributions)
|
|
First Quarter
|
|
(3,263
|
)
|
|
(3,263
|
)
|
|
—
|
|
|
3,263
|
|
||||
Cash distributions from CCS
|
|
First Quarter
|
|
(3,400
|
)
|
|
—
|
|
|
3,400
|
|
|
—
|
|
||||
Adjustment for current year cash distributions in excess of investment balance
|
|
First Quarter
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total investment balance, equity earnings (loss) and cash distributions
|
|
3/31/16
|
|
$
|
2,043
|
|
|
$
|
5,443
|
|
|
$
|
3,400
|
|
|
$
|
—
|
|
Description
|
|
Date(s)
|
|
Investment balance
|
|
ADES equity earnings (loss)
|
|
Cash distributions
|
|
Memorandum Account: Cash distributions and equity loss in (excess) of investment balance
|
||||||||
Beginning balance
|
|
12/31/14
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(29,877
|
)
|
ADES proportionate share of income from CCS (1)
|
|
First Quarter
|
|
9,827
|
|
|
9,827
|
|
|
—
|
|
|
—
|
|
||||
Recovery of prior cash distributions in excess of investment balance (prior to cash distributions)
|
|
First Quarter
|
|
(9,827
|
)
|
|
(9,827
|
)
|
|
—
|
|
|
9,827
|
|
||||
Cash distributions from CCS
|
|
First Quarter
|
|
(100
|
)
|
|
—
|
|
|
100
|
|
|
—
|
|
||||
Adjustment for current year cash distributions in excess of investment balance
|
|
First Quarter
|
|
100
|
|
|
100
|
|
|
—
|
|
|
(100
|
)
|
||||
Total investment balance, equity earnings (loss) and cash distributions
|
|
3/31/15
|
|
$
|
—
|
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
(20,150
|
)
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Gross loss
|
|
$
|
(12,625
|
)
|
|
$
|
(10,163
|
)
|
Operating, selling, general and administrative expenses
|
|
34,591
|
|
|
37,945
|
|
||
Loss from operations
|
|
(47,216
|
)
|
|
(48,108
|
)
|
||
Other expenses
|
|
(20
|
)
|
|
(6
|
)
|
||
Loss attributable to noncontrolling interest
|
|
48,619
|
|
|
50,158
|
|
||
Net income
|
|
$
|
1,383
|
|
|
$
|
2,044
|
|
ADES equity earnings
|
|
$
|
691
|
|
|
$
|
1,022
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Capital calls and variable payments
|
|
$
|
223
|
|
|
$
|
468
|
|
|
|
January 1 - March 3,
|
|
Three Months Ended March 31,
|
||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Gross loss
|
|
$
|
(555
|
)
|
|
$
|
(800
|
)
|
Operating expenses
|
|
360
|
|
|
461
|
|
||
Loss from operations
|
|
(915
|
)
|
|
(1,261
|
)
|
||
Other expenses
|
|
(52
|
)
|
|
(72
|
)
|
||
Net loss
|
|
$
|
(967
|
)
|
|
$
|
(1,333
|
)
|
ADES equity losses
|
|
$
|
(557
|
)
|
|
$
|
(808
|
)
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Earnings from CCS
|
|
$
|
5,443
|
|
|
$
|
100
|
|
Earnings from CCSS
|
|
691
|
|
|
1,022
|
|
||
Loss from RCM6
|
|
(557
|
)
|
|
(808
|
)
|
||
Earnings from equity method investments
|
|
$
|
5,577
|
|
|
$
|
314
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Distributions from equity method investees, return on investment
|
|
|
|
|
||||
CCS
|
|
$
|
3,400
|
|
|
|
||
CCSS
|
|
$
|
1,500
|
|
|
$
|
—
|
|
|
|
$
|
4,900
|
|
|
$
|
—
|
|
Distributions from equity method investees in excess of investment basis
|
|
|
|
|
||||
CCS
|
|
$
|
—
|
|
|
$
|
100
|
|
|
|
$
|
—
|
|
|
$
|
100
|
|
|
|
As of
|
||||||
(in thousands)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Short-term borrowings
|
|
|
|
|
||||
Credit Agreement, net of discount and deferred loan costs
|
|
$
|
10,921
|
|
|
$
|
12,676
|
|
Total short-term borrowings
|
|
$
|
10,921
|
|
|
$
|
12,676
|
|
Current portion of notes payable
|
|
|
|
|
||||
RCM6 note payable, net of discount
|
|
$
|
—
|
|
|
$
|
1,207
|
|
DSI Business Owner note payable
|
|
—
|
|
|
630
|
|
||
Total Current portion of notes payable
|
|
—
|
|
|
1,837
|
|
||
Long-term portion of notes payable
|
|
|
|
|
||||
RCM6 note payable, net of discount
|
|
—
|
|
|
13,023
|
|
||
DSI Business Owner note payable
|
|
—
|
|
|
489
|
|
||
Total long-term notes payable
|
|
—
|
|
|
13,512
|
|
||
Total notes payable
|
|
$
|
—
|
|
|
$
|
15,349
|
|
|
|
As of March 31, 2016
|
|
As of December 31, 2015
|
||||||||||||
(in thousands)
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Financial Instruments:
|
|
|
|
|
|
|
|
|
||||||||
Investment securities:
|
|
|
|
|
|
|
|
|
||||||||
Investment securities, restricted, long-term
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
336
|
|
|
$
|
336
|
|
Cost method investment (1)
|
|
$
|
2,776
|
|
|
$
|
2,776
|
|
|
$
|
2,776
|
|
|
$
|
2,776
|
|
Notes Payable:
|
|
|
|
|
|
|
|
|
||||||||
Short-term borrowings, net of discount and deferred loan costs, related party
|
|
$
|
10,921
|
|
|
$
|
10,921
|
|
|
$
|
12,676
|
|
|
$
|
12,676
|
|
Current portion of notes payable, net of discount, related parties (2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,837
|
|
|
$
|
1,457
|
|
Long-term portion of notes payable, net of discount, related parties (2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,512
|
|
|
$
|
13,273
|
|
Highview technology license payable
|
|
$
|
519
|
|
|
$
|
519
|
|
|
$
|
519
|
|
|
$
|
519
|
|
Highview technology license payable, long-term
|
|
$
|
1,089
|
|
|
$
|
1,089
|
|
|
$
|
1,038
|
|
|
$
|
1,038
|
|
Stock appreciation rights, liability-classified equity award
|
|
$
|
659
|
|
|
$
|
659
|
|
|
$
|
742
|
|
|
$
|
742
|
|
|
|
As of March 31, 2016
|
||||||||||||||
|
|
Fair Value Measurement Using
|
||||||||||||||
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets at Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Stock appreciation rights, liability-classified equity award
|
|
$
|
—
|
|
|
$
|
659
|
|
|
$
|
—
|
|
|
$
|
659
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
659
|
|
|
$
|
—
|
|
|
$
|
659
|
|
|
|
As of December 31, 2015
|
||||||||||||||
|
|
Fair Value Measurement Using
|
||||||||||||||
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets at Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Investment securities, restricted, long-term
|
|
$
|
—
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
$
|
336
|
|
Total assets at fair value
|
|
$
|
—
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
$
|
336
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Stock appreciation rights, liability-classified equity award
|
|
$
|
—
|
|
|
$
|
742
|
|
|
$
|
—
|
|
|
$
|
742
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
742
|
|
|
$
|
—
|
|
|
$
|
742
|
|
|
|
As of
|
||||||
(in thousands)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Settlement and royalty indemnity obligation, short-term
|
|
$
|
5,452
|
|
|
$
|
6,502
|
|
Settlement and royalty indemnification, long-term
|
|
13,619
|
|
|
13,797
|
|
||
Total settlement and royalty indemnity
|
|
$
|
19,071
|
|
|
$
|
20,299
|
|
|
|
As of March 31, 2016
|
||||||||||||||
(in thousands)
|
|
LOC Outstanding
|
|
Restricted Cash
|
|
Restricted cash, long-term
|
|
Investment securities, restricted, long-term
|
||||||||
Contract performance - equipment systems
|
|
$
|
5,184
|
|
|
$
|
1,078
|
|
|
$
|
4,109
|
|
|
$
|
—
|
|
Royalty Award
|
|
6,250
|
|
|
—
|
|
|
6,250
|
|
|
—
|
|
||||
Other
|
|
328
|
|
|
336
|
|
|
—
|
|
|
—
|
|
||||
Total LOC outstanding
|
|
$
|
11,762
|
|
|
$
|
1,414
|
|
|
$
|
10,359
|
|
|
$
|
—
|
|
|
|
As of December 31, 2015
|
||||||||||||||
(in thousands)
|
|
LOC Outstanding
|
|
Restricted Cash
|
|
Restricted cash, long-term
|
|
Investment securities, restricted, long-term
|
||||||||
Contract performance - equipment systems
|
|
$
|
5,556
|
|
|
$
|
728
|
|
|
$
|
4,830
|
|
|
$
|
—
|
|
Royalty Award
|
|
6,150
|
|
|
—
|
|
|
6,150
|
|
|
—
|
|
||||
Other
|
|
328
|
|
|
—
|
|
|
—
|
|
|
336
|
|
||||
Total LOC outstanding
|
|
$
|
12,034
|
|
|
$
|
728
|
|
|
$
|
10,980
|
|
|
$
|
336
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Restricted stock award expense
|
|
$
|
398
|
|
|
$
|
530
|
|
Stock option expense
|
|
36
|
|
|
46
|
|
||
PSU expense
|
|
191
|
|
|
378
|
|
||
SAR expense
|
|
11
|
|
|
—
|
|
||
Total stock-based compensation expense
|
|
$
|
636
|
|
|
$
|
954
|
|
|
|
As of March 31, 2016
|
|||||
(
in thousands
)
|
|
Unrecognized Compensation Cost
|
|
Expected Weighted Average Period of Recognition (in years)
|
|||
Restricted stock award expense
|
|
$
|
888
|
|
|
1.2
|
|
Stock option expense
|
|
167
|
|
|
0.8
|
|
|
PSU expense
|
|
375
|
|
|
0.9
|
|
|
SAR expense
|
|
71
|
|
|
0.3
|
|
|
Total unrecognized stock-based compensation expense
|
|
$
|
1,501
|
|
|
1.0
|
|
|
|
Shares
|
|
Weighted
Average Grant Date Fair Value |
|||
Non-vested at January 1, 2016
|
|
134,708
|
|
|
$
|
8.49
|
|
Granted
|
|
72,000
|
|
|
$
|
7.10
|
|
Vested
|
|
(49,826
|
)
|
|
$
|
14.86
|
|
Forfeited
|
|
(6,098
|
)
|
|
$
|
27.54
|
|
Non-vested at March 31, 2016
|
|
150,784
|
|
|
$
|
9.61
|
|
(in thousands, except for share and per share amounts)
|
|
Number of
Options Outstanding and Exercisable |
|
Weighted
Average Exercise Price |
|
Aggregate Intrinsic Value
|
|
Weighted
Average Remaining Contractual Term (in years) |
|||||
Options outstanding, January 1, 2016
|
|
106,250
|
|
|
$
|
15.22
|
|
|
|
|
|
||
Options granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Options exercised
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Options expired / forfeited
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Options outstanding, March 31, 2016
|
|
106,250
|
|
|
$
|
15.22
|
|
|
$
|
—
|
|
|
3.5
|
Options exercisable as of March 31, 2016
|
|
86,249
|
|
|
$
|
13.96
|
|
|
$
|
—
|
|
|
3.6
|
(in thousands, except for rights and per right amounts)
|
|
Number of
SAR's Outstanding and Exercisable |
|
Weighted
Average Exercise Price |
|
Aggregate Intrinsic Value
|
|
Weighted
Average Remaining Contractual Term (in years) |
|||||
SAR's outstanding, January 1, 2016
|
|
243,750
|
|
|
$
|
13.87
|
|
|
|
|
|
||
SAR's granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
SAR's exercised
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
SAR's expired / forfeited
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
SAR's outstanding, March 31, 2016
|
|
243,750
|
|
|
$
|
13.87
|
|
|
$
|
—
|
|
|
4.3
|
SAR's exercisable, March 31, 2016
|
|
43,750
|
|
|
$
|
13.87
|
|
|
$
|
—
|
|
|
4.3
|
|
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|||
Non-vested at January 1, 2016
|
|
169,334
|
|
|
$
|
26.38
|
|
Granted (1)
|
|
—
|
|
|
—
|
|
|
Vested / settled (1)
|
|
(18,934
|
)
|
|
26.04
|
|
|
Forfeited / canceled (1)
|
|
—
|
|
|
—
|
|
|
Non-vested at March 31, 2016
|
|
150,400
|
|
|
$
|
26.42
|
|
|
|
Year of Grant
|
|
Net Number of Issued Shares upon Vesting
|
|
Shares Withheld to Settle Tax Withholding Obligations
|
|
TSR Multiple Range
|
|
Russell 3000 Multiple
|
||||||||||
|
|
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|||||||||
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
2013
|
|
11,302
|
|
|
1,572
|
|
|
1.00
|
|
|
1.00
|
|
|
—
|
|
|
—
|
|
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
2013
|
|
8,768
|
|
|
3,954
|
|
|
1.75
|
|
|
1.75
|
|
|
2.00
|
|
|
2.00
|
|
|
|
2014
|
|
2,506
|
|
|
1,145
|
|
|
0.63
|
|
|
0.75
|
|
|
—
|
|
|
0.75
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands, except for rate)
|
|
2016
|
|
2015
|
||||
Income tax expense
|
|
$
|
53
|
|
|
$
|
44
|
|
Effective tax rate
|
|
1
|
%
|
|
(1
|
)%
|
|
|
As of
|
||||||
(in thousands)
|
March 31,
2016 |
|
December 31,
2015 |
|||||
Other current assets:
|
|
|
|
|
||||
Prepaid expenses
|
|
$
|
1,505
|
|
|
$
|
2,117
|
|
Inventory
|
|
305
|
|
|
189
|
|
||
|
|
$
|
1,810
|
|
|
$
|
2,306
|
|
Other long-term assets:
|
|
|
|
|
||||
Deposits
|
|
$
|
325
|
|
|
$
|
414
|
|
Intangibles
|
|
1,949
|
|
|
1,941
|
|
||
Other long-term assets
|
|
1,535
|
|
|
341
|
|
||
|
|
$
|
3,809
|
|
|
$
|
2,696
|
|
|
|
As of
|
||||||
(in thousands)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Other current liabilities:
|
|
|
|
|
||||
Accrued compensation
|
|
$
|
—
|
|
|
$
|
369
|
|
Accrued interest
|
|
1,129
|
|
|
1,042
|
|
||
Accrued losses on equipment contracts
|
|
416
|
|
|
759
|
|
||
Deferred revenue
|
|
923
|
|
|
682
|
|
||
Warranty liabilities
|
|
1,118
|
|
|
1,197
|
|
||
Other
|
|
2,738
|
|
|
3,346
|
|
||
|
|
$
|
6,324
|
|
|
$
|
7,395
|
|
Other long-term liabilities:
|
|
|
|
|
||||
Deferred rent
|
|
$
|
713
|
|
|
$
|
767
|
|
Deferred revenue, related party
|
|
2,000
|
|
|
2,000
|
|
||
Other long-term liabilities
|
|
2,877
|
|
|
2,605
|
|
||
|
|
$
|
5,590
|
|
|
$
|
5,372
|
|
|
|
As of
|
||||||
(in thousands)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Asset retirement obligation, beginning of period
|
|
$
|
1,248
|
|
|
$
|
1,188
|
|
Accretion
|
|
16
|
|
|
60
|
|
||
Asset retirement obligations, end of period
|
|
$
|
1,264
|
|
|
$
|
1,248
|
|
|
|
As of
|
||||||
(in thousands)
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Payable to related party
|
|
$
|
35
|
|
|
$
|
270
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
453A interest
|
|
$
|
791
|
|
|
$
|
1,131
|
|
Interest on RCM6 note payable, related party
|
|
263
|
|
|
609
|
|
||
Credit agreement interest
|
|
897
|
|
|
—
|
|
||
Other
|
|
13
|
|
|
35
|
|
||
Total interest expense
|
|
$
|
1,964
|
|
|
$
|
1,775
|
|
•
|
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies except as described below.
|
•
|
Segment revenue includes the Company's equity method earnings and losses from the Company's equity method investments. Segment revenue also includes the Company's royalty earnings from CCS.
|
•
|
Segment operating income (loss) includes the Company's equity method earnings and losses from the Company's equity method investments and royalty earnings from CCS (including depreciation and amortization expense). However, segment operating income (loss) excludes
Payroll and benefits
,
Rent and occupancy
,
Legal and professional fees
, and
General and administrative
("Corporate general and administrative expenses") unless otherwise specifically included as the Company does not allocate those amounts between segments.
|
•
|
All items not included in operating income are excluded from the segments reporting.
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
|
||||
Refined Coal:
|
|
|
|
|
||||
Earnings from equity method investments
|
|
$
|
5,577
|
|
|
$
|
314
|
|
Consulting services
|
|
—
|
|
|
21
|
|
||
Royalties
|
|
1,189
|
|
|
2,194
|
|
||
|
|
6,766
|
|
|
2,529
|
|
||
Emissions Control:
|
|
|
|
|
||||
Equipment sales
|
|
21,727
|
|
|
21,115
|
|
||
Consulting services
|
|
196
|
|
|
347
|
|
||
Chemical and other
|
|
434
|
|
|
274
|
|
||
|
|
22,357
|
|
|
21,736
|
|
||
Total segment reporting revenues
|
|
$
|
29,123
|
|
|
$
|
24,265
|
|
Adjustments to reconcile to reported revenues:
|
|
|
|
|
||||
Refined Coal:
|
|
|
|
|
||||
Earnings from equity method investments
|
|
$
|
(5,577
|
)
|
|
$
|
(314
|
)
|
Royalties
|
|
(1,189
|
)
|
|
(2,194
|
)
|
||
|
|
(6,766
|
)
|
|
(2,508
|
)
|
||
Total reported revenues
|
|
$
|
22,357
|
|
|
$
|
21,757
|
|
Segment operating income
|
|
|
|
|
||||
Refined Coal (1)
|
|
$
|
7,870
|
|
|
$
|
665
|
|
Emissions Control
|
|
4,631
|
|
|
621
|
|
||
Total segment operating income
|
|
$
|
12,501
|
|
|
$
|
1,286
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Segment income
|
|
|
|
|
||||
Total segment operating income
|
|
$
|
12,501
|
|
|
$
|
1,286
|
|
Adjustments to reconcile to net loss attributable to Advanced Emissions Solutions, Inc.
|
|
|
|
|
||||
Corporate payroll and benefits
|
|
(3,134
|
)
|
|
(2,940
|
)
|
||
Corporate rent and occupancy
|
|
(211
|
)
|
|
(138
|
)
|
||
Corporate legal and professional fees
|
|
(2,928
|
)
|
|
(3,308
|
)
|
||
Corporate general and administrative
|
|
(775
|
)
|
|
(906
|
)
|
||
Corporate depreciation and amortization
|
|
(116
|
)
|
|
(149
|
)
|
||
Corporate interest expense
|
|
(910
|
)
|
|
—
|
|
||
Other income
|
|
2
|
|
|
67
|
|
||
Income tax expense
|
|
(53
|
)
|
|
(44
|
)
|
||
Net income (loss)
|
|
$
|
4,376
|
|
|
$
|
(6,132
|
)
|
|
|
As of
|
||||||
(in thousands)
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
Refined Coal
|
|
$
|
6,376
|
|
|
$
|
19,507
|
|
Emissions Control
|
|
26,734
|
|
|
31,467
|
|
||
All Other and Corporate
|
|
8,473
|
|
|
9,801
|
|
||
Consolidated
|
|
$
|
41,583
|
|
|
$
|
60,775
|
|
•
|
Development and sale of technology to reduce emissions and improve operations of coal-fired boilers used for power generation and industrial processes;
|
•
|
Development and sale of equipment, consulting services, specialty chemicals and other products designed to reduce emissions of mercury, acid gases, metals and other pollutants and the providing of technology services in support of our customers' emissions compliance strategies;
|
•
|
Through CCS, an unconsolidated entity, reduction of mercury and nitrogen oxide ("NO
X
") emissions at select coal-fired power generators, via the production of RC. Additionally, there is benefit from the tax credits generated by the production of RC by retaining the credits or selling or leasing the pertinent RC facilities to tax equity investors. See the separately filed financial statements of CCS and the other related RC entities within the Company’s Annual Report on Form 10-K for the year ended
December 31, 2015
.
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in thousands, except percentages)
|
|
2016
|
|
2015
|
|
($)
|
|
(%)
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Equipment sales
|
|
$
|
21,727
|
|
|
$
|
21,115
|
|
|
$
|
612
|
|
|
3
|
%
|
Consulting services
|
|
196
|
|
|
368
|
|
|
(172
|
)
|
|
(47
|
)%
|
|||
Chemicals and other
|
|
434
|
|
|
274
|
|
|
160
|
|
|
58
|
%
|
|||
Total revenues
|
|
22,357
|
|
|
21,757
|
|
|
600
|
|
|
3
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Equipment sales cost of revenue, exclusive of depreciation and amortization
|
|
17,034
|
|
|
15,051
|
|
|
1,983
|
|
|
13
|
%
|
|||
Consulting services cost of revenue, exclusive of depreciation and amortization
|
|
135
|
|
|
426
|
|
|
(291
|
)
|
|
(68
|
)%
|
|||
Chemical and other cost of revenue, exclusive of depreciation and amortization
|
|
142
|
|
|
238
|
|
|
(96
|
)
|
|
(40
|
)%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in thousands, except percentages)
|
|
2016
|
|
2015
|
|
($)
|
|
(%)
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Payroll and benefits
|
|
$
|
3,802
|
|
|
$
|
4,911
|
|
|
$
|
(1,109
|
)
|
|
(23
|
)%
|
Rent and occupancy
|
|
394
|
|
|
631
|
|
|
(237
|
)
|
|
(38
|
)%
|
|||
Legal and professional fees
|
|
2,983
|
|
|
3,735
|
|
|
(752
|
)
|
|
(20
|
)%
|
|||
General and administrative
|
|
745
|
|
|
1,882
|
|
|
(1,137
|
)
|
|
(60
|
)%
|
|||
Research and development, net
|
|
202
|
|
|
1,250
|
|
|
(1,048
|
)
|
|
(84
|
)%
|
|||
Depreciation and amortization
|
|
231
|
|
|
531
|
|
|
(300
|
)
|
|
(56
|
)%
|
|||
|
|
$
|
8,357
|
|
|
$
|
12,940
|
|
|
$
|
(4,583
|
)
|
|
(35
|
)%
|
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in thousands, except percentages)
|
|
2016
|
|
2015
|
|
($)
|
|
(%)
|
|||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Earnings from equity method investments
|
|
$
|
5,577
|
|
|
$
|
314
|
|
|
$
|
5,263
|
|
|
*
|
|
Royalties, related party
|
|
1,189
|
|
|
2,194
|
|
|
(1,005
|
)
|
|
(46
|
)%
|
|||
Interest expense
|
|
(1,964
|
)
|
|
(1,775
|
)
|
|
(189
|
)
|
|
11
|
%
|
|||
Gain on sale of equity method investment
|
|
2,078
|
|
|
—
|
|
|
2,078
|
|
|
*
|
|
|||
Gain on settlement of note payable
|
|
869
|
|
|
—
|
|
|
869
|
|
|
*
|
|
|||
Other
|
|
(9
|
)
|
|
77
|
|
|
(86
|
)
|
|
(112
|
)%
|
|||
Total other income (expense), net
|
|
$
|
7,740
|
|
|
$
|
810
|
|
|
$
|
6,930
|
|
|
856
|
%
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Earnings from CCS
|
|
$
|
5,443
|
|
|
$
|
100
|
|
Earnings from CCSS
|
|
691
|
|
|
1,022
|
|
||
Loss from RCM6
|
|
(557
|
)
|
|
(808
|
)
|
||
Earnings from equity method investments
|
|
$
|
5,577
|
|
|
$
|
314
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Section 45 tax credits earned
|
|
$
|
2,711
|
|
|
$
|
8,276
|
|
•
|
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies except as described below.
|
•
|
Segment revenue includes the Company's equity method earnings and losses from the Company's equity method investments. Segment revenue also includes the Company's royalty earnings from CCS.
|
•
|
Segment operating income (loss) includes the Company's equity method earnings and losses from the Company's equity method investments and royalty earnings from CCS. However, segment operating income (loss) excludes
Payroll and benefits
,
Rent and occupancy
,
Legal and professional fees
, and
General and administrative
("Corporate general and administrative expenses") unless otherwise specifically included as the Company does not allocate those amounts between segments.
|
•
|
Items not included in operating income are excluded from segment reporting except for 453A and RCM6 interest expense, which are directly attributable to our RC segment.
|
1.
|
RC - Our RC segment derives its earnings from equity method investments as well as royalty payment streams and other revenues related to enhanced combustion of and reduced emissions of both NO
X
and mercury from the burning of coals. The Company's equity method investments related to the RC segment include CCS, CCSS and RCM6 (until March 3, 2016). Segment revenues include the Company's equity method earnings and losses from the Company's equity method investments and royalty earnings from CCS. These earnings are included within the
Earnings from equity method investments
and
Royalties, related party
line items in the
Condensed Consolidated Statements of Operations
.
|
2.
|
EC - Our EC segment includes revenues and related expenses from the sale of ACI and DSI equipment systems, consulting services and chemical and other sales related to the reduction of emissions in the coal-fired electric generation process and the electric utility industry. The fabrication of ACI systems is largely dependent upon third party manufacturers. We historically have fabricated DSI systems through our subsidiary BCSI, however, we closed the fabrication facility during the fourth quarter of 2015 and future fabrication will occur through the use of third party manufacturers. These amounts are included within the respective revenue and cost of sales line items in the
Condensed Consolidated Statements of Operations
.
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
|
||||
Refined Coal:
|
|
|
|
|
||||
Earnings from equity method investments
|
|
$
|
5,577
|
|
|
$
|
314
|
|
Consulting services
|
|
—
|
|
|
21
|
|
||
Royalties
|
|
1,189
|
|
|
2,194
|
|
||
|
|
6,766
|
|
|
2,529
|
|
||
Emissions Control:
|
|
|
|
|
||||
Equipment sales
|
|
21,727
|
|
|
21,115
|
|
||
Consulting services
|
|
196
|
|
|
347
|
|
||
Chemical and other
|
|
434
|
|
|
274
|
|
||
|
|
22,357
|
|
|
21,736
|
|
||
Total segment reporting revenues
|
|
$
|
29,123
|
|
|
$
|
24,265
|
|
Adjustments to reconcile to reported revenues:
|
|
|
|
|
||||
Refined Coal:
|
|
|
|
|
||||
Earnings from equity method investments
|
|
$
|
(5,577
|
)
|
|
$
|
(314
|
)
|
Royalties
|
|
(1,189
|
)
|
|
(2,194
|
)
|
||
|
|
(6,766
|
)
|
|
(2,508
|
)
|
||
Total reported revenues
|
|
$
|
22,357
|
|
|
$
|
21,757
|
|
Segment operating income
|
|
|
|
|
||||
Refined Coal (1)
|
|
$
|
7,870
|
|
|
$
|
665
|
|
Emissions Control
|
|
4,631
|
|
|
621
|
|
||
Total segment operating income
|
|
$
|
12,501
|
|
|
$
|
1,286
|
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
Earnings from CCS
|
|
$
|
5,443
|
|
|
$
|
100
|
|
Earnings from CCSS
|
|
691
|
|
|
1,022
|
|
||
Loss from RCM6
|
|
(557
|
)
|
|
(808
|
)
|
||
Earnings from equity method investments
|
|
$
|
5,577
|
|
|
$
|
314
|
|
•
|
cash on hand;
|
•
|
cash provided by our operations;
|
•
|
distributions from CCS and CCSS;
|
•
|
royalty payments from CCS; and
|
•
|
proceeds from the securing of debt facilities, such as the $15 million term loan obtained in October 2015, as described below.
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
|
2016
|
|
2015
|
||||
CCS cash and cash equivalents, beginning of year
|
|
$
|
6,182
|
|
|
$
|
3,870
|
|
Cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
10,140
|
|
|
18,031
|
|
||
Investing activities
|
|
(2,028
|
)
|
|
(7,700
|
)
|
||
Financing activities
|
|
(4,405
|
)
|
|
2,786
|
|
||
Net change in cash and cash equivalents
|
|
3,707
|
|
|
13,117
|
|
||
CCS cash and cash equivalents, end of period
|
|
$
|
9,889
|
|
|
$
|
16,987
|
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
(
in thousands)
|
|
2016
|
|
2015
|
|
Change
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
(1,823
|
)
|
|
$
|
(8,208
|
)
|
|
$
|
6,385
|
|
Investing activities
|
|
1,686
|
|
|
(4,303
|
)
|
|
5,989
|
|
|||
Financing activities
|
|
(3,659
|
)
|
|
(932
|
)
|
|
(2,727
|
)
|
|||
Net change in cash and cash equivalents
|
|
$
|
(3,796
|
)
|
|
$
|
(13,443
|
)
|
|
$
|
9,647
|
|
|
|
Three Months Ended March 31,
|
||||||
(
in thousands)
|
|
2016
|
|
2015
|
||||
Settlement of RCM6 note payable
|
|
$
|
13,234
|
|
|
$
|
—
|
|
Non-cash reduction of equity method investment
|
|
$
|
(11,156
|
)
|
|
$
|
—
|
|
|
|
Payment Due by Period
|
||||||||||||||||||
(in thousands)
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
After 5 years
|
||||||||||
Short-term borrowings, net of discount and deferred loan costs, related party (a)
|
|
11,500
|
|
|
11,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital lease obligations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases (b)
|
|
3,987
|
|
|
1,330
|
|
|
2,657
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations (c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Settlement and royalty indemnification (d)
|
|
19,071
|
|
|
5,452
|
|
|
13,619
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term liabilities (e)
|
|
3,115
|
|
|
519
|
|
|
1,113
|
|
|
742
|
|
|
741
|
|
|||||
|
|
$
|
37,673
|
|
|
$
|
18,801
|
|
|
$
|
17,389
|
|
|
$
|
742
|
|
|
$
|
741
|
|
(a)
|
the production of RC will qualify for IRC Section 45 tax credits in conjunction with the production of RC;
|
(b)
|
expected growth or contraction in and potential size of our target markets;
|
(c)
|
expected supply and demand for our products and services;
|
(d)
|
use of third-party manufacturers for the fabrication of DSI systems;
|
(e)
|
the effectiveness of our technologies and the benefits they provide;
|
(f)
|
CCS’s ability to profitably sell and/or lease additional RC facilities and/or RC facilities that may be returned to CCS, or recognize the tax benefits from their operations;
|
(g)
|
our ability to realize the value of our federal and state net operating loss carryforwards, tax credits and other deferred tax assets and the amount of the related valuation allowance over time;
|
(h)
|
probability of any loss occurring with respect to CCS Party Guarantees;
|
(i)
|
the effects of resolving performance guarantee issues;
|
(j)
|
the timing of awards of, and work and related testing under, our contracts and agreements and their value;
|
(k)
|
the timing and amounts of or changes in future revenues, royalties earned, backlog, funding for our business and projects, margins, expenses, earnings, tax rate, cash flow, royalty payment obligations, working capital, liquidity and other financial and accounting measures;
|
(l)
|
ability to refinance the loan under the Credit Agreement or obtain alternative financing;
|
(m)
|
the outcome of current and pending legal proceedings;
|
(n)
|
the timing of dissolution of certain of our non-operating subsidiaries;
|
(o)
|
the amount and timing of charges incurred associated with, and the impact of, a reduction in force during the second quarter of 2016 and management’s further alignment of the business with strategic objectives; and
|
(p)
|
the continuation and outcome of the remediation of material weaknesses in our internal control over financial reporting.
|
(a)
|
coal will continue to be a major source of fuel for electrical generation in the United States;
|
(b)
|
the IRS will allow the production of RC to qualify for IRC Section 45 tax credits;
|
(c)
|
we will continue as a key supplier of equipment, chemicals and services to the coal-fired power generation industry as it seeks to implement reduction of mercury emissions;
|
(d)
|
current environmental laws and regulations requiring reduction of mercury from coal-fired boiler flue gases will not be materially weakened or repealed by courts or legislation in the future;
|
(e)
|
we will be able to meet any performance guarantees we make and continue to meet our other obligations under contracts;
|
(f)
|
we will be able to obtain adequate capital and personnel resources to meet our operating needs and to fund anticipated growth and our indemnity obligations;
|
(g)
|
we will be able to establish and retain key business relationships with other companies;
|
(h)
|
orders we anticipate receiving will in fact be received;
|
(i)
|
governmental audits of our costs incurred under Department of Energy contracts will not result in material adjustments to amounts we have previously received under those contracts;
|
(j)
|
we will be able to effectively compete against others;
|
(k)
|
we will be able to meet any technical requirements of projects we undertake;
|
(l)
|
CCS will be able to sell or lease the remaining RC facilities, including RC facilities that may be returned to CCS, to third party investors; and
|
(m)
|
we will be able to utilize our portion of the Section 45 tax credits generated by operation of RC facilities for our benefit.
|
Exhibit No.
|
|
Description
|
|
Form
|
|
File No.
|
|
Incorporated by Reference
Exhibit |
|
Filing Date
|
10.1
|
|
Third Amended and Restated Limited Liability Company Agreement for RCM6, LLC effective as of January 1, 2016*
|
|
|
|
|
|
|
|
|
10.2
|
|
Waiver and Release Agreement between Advanced Emissions Solutions, Inc. and Jonathon R. Lagarenne effective as of January 15, 2016*, **
|
|
10-K
|
|
000-54992
|
|
10.31
|
|
February 29, 2016
|
10.3
|
|
First Amendment to Credit Agreement, dated as of February 8, 2016, among Advanced Emissions Solutions, Inc., as borrower, the required lenders party thereto, and Wilmington Trust, National Association, as administrative agent.
|
|
8-K
|
|
000-54992
|
|
10.1
|
|
February 10, 2016
|
10.4
|
|
Second Amended and Restated Equipment Lease (New Madrid) dated February 26, 2016 between and AEC-NM, LLC and GS RC Investments LLC***
|
|
8-K
|
|
000-54992
|
|
10.1
|
|
March 3, 2016
|
10.5
|
|
Second Amendment to Exchange Agreement (New Madrid) dated February 26, 2016 between Clean Coal Solutions, LLC, AEC-NM, LLC and GS RC Investments, LLC***
|
|
8-K
|
|
000-54992
|
|
10.2
|
|
March 3, 2016
|
10.6
|
|
Agreement for Purchase of Membership Interests dated March 3, 2016 among ADA-RCM6, LLC, another seller and Liberty Clean Fuels 2, LLC
|
|
8-K
|
|
000-54992
|
|
2.1
|
|
March 9, 2016
|
10.7
|
|
Second Amendment to Credit Agreement, dated as of March 30, 2016, among Advanced Emissions Solutions, Inc., as borrower, the required lenders party thereto, and Wilmington Trust, National Association, as administrative agent.
|
|
8-K
|
|
000-54992
|
|
10.1
|
|
March 31, 2016
|
31.1
|
|
Certification of Chief Executive Officer of Advanced Emissions Solutions, Inc. Pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a)*
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer of Advanced Emissions Solutions, Inc. Pursuant to 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a)*
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer of Advanced Emissions Solutions, Inc. Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
|
|
|
|
|
|
|
|
101. INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Schema Document
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Label Linkbase Document
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
101.DEF
|
|
Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
*
|
– Filed herewith.
|
**
|
- Management contract or compensatory plan or arrangement.
|
***
|
- Portions of this exhibit have been omitted pursuant to a request for confidential treatment. The non-public information has been separately filed with the Securities and Exchange Commission.
|
|
Advanced Emissions Solutions, Inc.
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date: May 10, 2016
|
By:
|
/s/ L. Heath Sampson
|
|
|
L. Heath Sampson
|
|
|
President, Chief Executive Officer and Treasurer
|
|
|
(Principal Executive and Accounting Officer)
|
|
|
|
|
|
|
Date: May 10, 2016
|
By:
|
/s/ A. Bradley Gabbard
|
|
|
A. Bradley Gabbard
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1 Year Advanced Emissions Solut... Chart |
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