Advanced Emissions Solutions, Inc. Advancing Cleaner Energy Third Quarter 2020 Earnings Results Call November 10, 2020 © 2020 Advanced Emissions Solutions, Inc. All rights reserved. SAFE HARBOR This presentation includes 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 statements or expectations regarding future cash flows from refined coal ( ...

Financial Data and Key Metrics Changes - Third quarter distributions from Tinuum totaled $9.7 million, while royalty income was $3.6 million, reflecting lower net lease payments due to renegotiated contracts and decreased coal burn driven by alternative energy sources [11][12] - Consolidated net profit for the third quarter was $5 million, with consolidated adjusted EBITDA at $8.7 million, down from $18.5 million in the prior year, primarily due to lower cash distributions from Tinuum [17][29] - Earnings from equity method investments were $9.5 million, compared to $14.4 million in Q3 2019, mainly due to lower earnings from Tinuum Group [25] Business Line Data and Key Metrics Changes - In the PGI segment, third quarter revenue decreased by approximately 4%, with a segment operating loss of $1.3 million, although adjusted EBITDA was slightly better than breakeven [14][15] - The company has diversified its product mix away from coal-fired power generation, achieving success in industrial markets, which helped offset some pressures in the PGI segment [15][16] Market Data and Key Metrics Changes - The company noted a decrease in coal burn driven by cheaper alternative energy sources and lower overall economic activity due to the pandemic [12] - The market for coal-fired power generation continues to decline, exceeding EIA forecasts, prompting the company to focus on adjacent market opportunities [37] Company Strategy and Development Direction - The company announced a 15-year master supply agreement with Cabot Corporation, which is expected to diversify the business and capture value from acquired assets [10][41] - The focus remains on filling plant capacity, diversifying the product mix, and capturing low-cost production advantages [16][41] - The company aims to reduce power generation exposure to less than 50% of its portfolio while targeting annual revenue growth of 30% to 40% from the Cabot agreement [20][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the competitive position in the market and the ongoing investor interest in leasing facilities [9] - The company anticipates improved financial performance as production ramps up related to the supply agreement with Cabot [31][42] - Management acknowledged challenges from cheap alternative fuel sources and the pandemic's impact on the market [21][38] Other Important Information - The company reduced its term loan balance to $22 million and expects to pay off the note before its three-year term ends [18][30] - Operating expenses were reduced by approximately 24% in the third quarter, improving overall liquidity [19] Q&A Session Summary Question: What are the expectations for future cash flows from refined coal? - The company updated its expectation of after-tax cash flows to be between $90 million and $110 million through the end of 2021, excluding a recent transaction expected to add $5 million to $7 million [34][35] Question: How does the company plan to address the decline in coal-fired power generation? - The company is focusing on adjacent market opportunities and has made significant progress in non-power generation applications for activated carbon [38][39]

United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37822 ______________________________________ Advanced Emissions ...

Advanced Emissions Solutions, Inc. Advancing Cleaner Energy Second Quarter 2020 Earnings Results Call August 11, 2020 © 2020 Advanced Emissions Solutions, Inc. All rights reserved. SAFE HARBOR This presentation includes 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 statements or expectations regarding future cash flows from refined coal (" ...

United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ (Exact name of registrant as specified in its charter) ______________________________________ (State or other jurisdiction of incorporation or organization) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURI ...

For the quarterly period ended March 31, 2020 or United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ 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 SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37822 ______________________________________ Advanced Emissions Solu ...

PART I [ITEM 1. Business](index=4&type=section&id=ITEM%201.%20Business) The company provides environmental solutions for power generation and other industries, operating through Refined Coal and Power Generation segments - ADES provides environmental solutions, primarily air and water purification control technologies, to coal-fired power generation, municipal water, and other industries[13](index=13&type=chunk) - The company operates two segments: **Refined Coal (RC)** and **Power Generation and Industrials (PGI)**[15](index=15&type=chunk) - On December 7, 2018, ADES acquired 100% of ADA Carbon Solutions, LLC for **$75.0 million**, entering the broader activated carbon market and expanding product offerings in mercury control and other complementary markets[16](index=16&type=chunk) Total Revenue by Type (2019 vs. 2018) | (in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Consumables | $53,187 | $8,733 | $44,454 | 509% | | License royalties, related party | $16,899 | $15,140 | $1,759 | 12% | | Other | $0 | $72 | $(72) | (100)% | | **Total revenues** | **$70,086** | **$23,945** | **$46,141** | **193%** | - The primary drivers for many of ADES's products and services are environmental laws and regulations impacting the electric power generation industry and other coal users, such as the **Mercury and Air Toxics Standards (MATS)** and Industrial Boiler Maximum Achievable Control Technology (MACT) rule[22](index=22&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - Coal-fired power generation was down approximately **15% year-over-year in 2019**, impacting demand for ADES's products in both RC and PGI segments[21](index=21&type=chunk) [ITEM 1A. Risk Factors](index=15&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces risks from environmental regulation changes, coal industry decline, customer concentration, and the 2021 expiration of tax credits - Demand for ADES's products and services is significantly dependent on environmental laws and regulations, with uncertainty or changes in these laws (e.g., **MATS reconsideration**) posing a material adverse effect[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - The market for pollutant reduction products is **highly competitive**, with larger and more established competitors, potentially impeding growth and financial results[89](index=89&type=chunk)[90](index=90&type=chunk) - **Reduction of coal consumption** by North American electricity power generators, driven by alternative energy sources and lower natural gas prices, could lead to decreased demand for ADES's products and services[91](index=91&type=chunk)[92](index=92&type=chunk) - The ability to generate **Section 45 tax credits** from existing operating RC facilities ends in 2021, which is expected to significantly impact ADES's financial condition and results of operations beyond that date, as the RC segment is the larger of its two segments[110](index=110&type=chunk)[111](index=111&type=chunk) - An **'ownership change'** under IRC Section 382 and 383 could substantially limit ADES's ability to utilize its **$98.5 million in tax credit carryforwards** to offset future taxable income[123](index=123&type=chunk)[124](index=124&type=chunk) - Future dividend payments are subject to Board declaration, capital availability, and debt covenants, with expected future net cash flows from the refined coal business potentially falling below the **$100 million minimum requirement by Q3 2020**, which would preclude dividend payments or share repurchases[131](index=131&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=24&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[140](index=140&type=chunk) [ITEM 2. Properties](index=24&type=section&id=ITEM%202.%20Properties) The company leases office space in Colorado and owns or leases manufacturing facilities and mining land in Louisiana - ADES leases approximately **32,000 square feet** of office, warehouse, and laboratory space in Colorado[141](index=141&type=chunk) - The company owns and leases manufacturing, storage, and distribution facilities in Louisiana, including an AC plant on 59 acres and other facilities totaling approximately **310,000 square feet**[142](index=142&type=chunk) - As of December 31, 2019, ADES owned or controlled approximately **2,279 acres of coal land** for surface mining (Five Forks Mine) in Louisiana, primarily through long-term leases[144](index=144&type=chunk) - The company adopted new SEC Mining Disclosures effective February 25, 2019, and concluded that no additional disclosures related to its mining operations are required under this Item[146](index=146&type=chunk) [ITEM 3. Legal Proceedings](index=25&type=section&id=ITEM%203.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the ordinary course of business - ADES is involved in various pending or threatened legal actions and proceedings arising in the ordinary course of business[147](index=147&type=chunk) - The company records a liability for **probable and estimable losses** related to claims, settlements, and judgments[435](index=435&type=chunk) [ITEM 4. Mine Safety Disclosures](index=25&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Mine safety violation disclosures are included in Exhibit 95 of this report - Mine safety disclosures required by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K are provided in **Exhibit 95**[148](index=148&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ, a quarterly dividend program is in place, and stock repurchases were executed in 2019 - ADES common stock is quoted on the NASDAQ Global Market under the symbol **'ADES'**, with relatively limited trading volume[151](index=151&type=chunk) - A quarterly cash dividend program of **$0.25 per common share** commenced in June 2017, with future dividends subject to Board approval, financial results, cash requirements, and loan covenants[152](index=152&type=chunk)[153](index=153&type=chunk) - As of March 6, 2020, there were approximately **800 holders of record** and an estimated **7,800 beneficial stockholders**[154](index=154&type=chunk) Common Stock Repurchase Activity (Q4 2019) | Period | Total shares purchased | Average price paid per share | Total shares purchased as part of publicly announced programs | Maximum dollar value remaining under programs (in thousands) | |:---|:---|:---|:---|:---| | October 1 to 31, 2019 | — | $— | — | $— | | November 1 to 30, 2019 | 144,615 | $10.36 | 144,615 | — | | December 1 to 31, 2019 | 131,987 | $10.37 | 131,987 | $7,134 | | **Total** | **276,602** | | **276,602** | **$7,134** | [ITEM 6. Selected Financial Data](index=26&type=section&id=ITEM%206.%20Selected%20Financial%20Data) As a smaller reporting company, ADES is not required to provide selected financial data - The information under this Item is not required to be provided by smaller reporting companies[156](index=156&type=chunk) [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance for FY2019, highlighting the Carbon Solutions acquisition's impact, segment results, and liquidity - ADES is a leader in emissions reductions technologies, primarily serving coal-fired power generation and industrial boiler industries with PAC and chemical-based solutions[158](index=158&type=chunk) - The **Carbon Solutions Acquisition** on December 7, 2018, significantly impacted 2019 operating results by expanding activated carbon offerings[159](index=159&type=chunk) - RC segment demand is driven by **Section 45 Production Tax Credits**, which expire no later than December 31, 2021, while PGI segment demand is driven by consumables-based solutions for coal-fired power and industrials[161](index=161&type=chunk)[162](index=162&type=chunk) Total Revenue and Cost of Revenue (2019 vs. 2018) | (Amounts in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | **Revenues:** | | | | | | Consumables | $53,187 | $8,733 | $44,454 | 509% | | License royalties, related party | $16,899 | $15,140 | $1,759 | 12% | | Other | $0 | $72 | $(72) | (100)% | | **Total revenues** | **$70,086** | **$23,945** | **$46,141** | **193%** | | **Consumables cost of revenue** | **$49,443** | **$6,606** | **$42,837** | **648%** | Other Operating Expenses (2019 vs. 2018) | (in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Payroll and benefits | $10,094 | $10,639 | $(545) | (5)% | | Legal and professional fees | $9,948 | $8,552 | $1,396 | 16% | | General and administrative | $8,123 | $4,178 | $3,945 | 94% | | Depreciation, amortization, depletion and accretion | $7,371 | $723 | $6,648 | 920% | | **Total operating expenses** | **$35,536** | **$24,092** | **$11,444** | **48%** | Other Income (Expense), net (2019 vs. 2018) | (Amounts in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Earnings from equity method investments | $69,176 | $54,208 | $14,968 | 28% | | Interest expense | $(7,174) | $(2,151) | $(5,023) | 234% | | Other | $427 | $220 | $207 | 94% | | **Total other income** | **$62,429** | **$52,277** | **$10,152** | **19%** | Consolidated EBITDA (2019 vs. 2018) | | 2019 | 2018 | |:---|:---|:---| | Net income | $35,537 | $35,454 | | Depreciation, amortization, depletion and accretion | $7,371 | $723 | | Interest expense, net | $6,913 | $1,912 | | Income tax expense | $11,999 | $10,423 | | **Consolidated EBITDA** | **$61,820** | **$48,512** | Cash Distributions from Equity Method Investments (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Tinuum Group | $65,238 | $47,175 | | Tinuum Services | $8,650 | $5,500 | | **Distributions from equity method investees** | **$73,888** | **$52,675** | [Overview](index=27&type=section&id=Overview) - Advanced Emissions Solutions, Inc (ADES) is a leader in emissions reductions technologies, primarily serving coal-fired power generation and industrial boiler industries[158](index=158&type=chunk) - The company's proprietary environmental technologies and specialty chemicals help customers reduce mercury and other pollutants, maximize utilization, and improve operating efficiencies[158](index=158&type=chunk) - On December 7, 2018, ADES acquired ADA Carbon Solutions, LLC (Carbon Solutions), an activated carbon company and North American leader in mercury capture, for **$75.0 million**, funded by a **$70.0 million senior term loan**[159](index=159&type=chunk)[160](index=160&type=chunk) [Drivers of Demand and Key Factors Affecting Profitability](index=27&type=section&id=Drivers%20of%20Demand%20and%20Key%20Factors%20Affecting%20Profitability) - In the Refined Coal (RC) segment, demand is primarily driven by the **IRC Section 45 Production Tax Credit**, which is expected to expire by December 31, 2021[161](index=161&type=chunk) - RC operating results are influenced by the ability to sell/lease RC facilities, lease renegotiations/terminations, and changes in RC tonnage due to shifting power generation sources[161](index=161&type=chunk) - In the Power Generation and Industrials (PGI) segment, demand is driven by consumables-based solutions for coal-fired power and industrials, influenced by sales volumes, price/product mix, and changes in power generation sources[162](index=162&type=chunk) [Components of Revenue, Expenses and Equity Method Investees](index=27&type=section&id=Components%20of%20Revenue%2C%20Expenses%20and%20Equity%20Method%20Investees) - Consumables revenue comes from selling PAC and proprietary chemical blends to coal-fired utilities and industrial boilers for emissions compliance, and to water treatment plants for contaminant removal[164](index=164&type=chunk) - License royalties are earned from Tinuum Group on the M-45 Technology, based on a percentage of per-ton, pre-tax margin[166](index=166&type=chunk) - Earnings from equity method investments are ADES's share of earnings (losses) from entities like Tinuum Group and Tinuum Services, positively impacted by Tinuum Group's RC facility sales/leases and negatively by operating retained RC facilities[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total Revenue and Cost of Revenue (2019 vs. 2018) | (Amounts in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | **Revenues:** | | | | | | Consumables | $53,187 | $8,733 | $44,454 | 509% | | License royalties, related party | $16,899 | $15,140 | $1,759 | 12% | | Other | $0 | $72 | $(72) | (100)% | | **Total revenues** | **$70,086** | **$23,945** | **$46,141** | **193%** | | **Consumables cost of revenue** | **$49,443** | **$6,606** | **$42,837** | **648%** | - Consumables revenue and cost of revenue increased significantly in 2019 primarily due to the **Carbon Solutions Acquisition**, which increased total pounds of consumables sold[178](index=178&type=chunk)[179](index=179&type=chunk) - License royalties increased in 2019 due to additional third-party investors for RC facilities using M-45 License, resulting in **47.3 million tons of RC produced in 2019** vs 37.3 million in 2018[182](index=182&type=chunk) Other Operating Expenses (2019 vs. 2018) | (in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Payroll and benefits | $10,094 | $10,639 | $(545) | (5)% | | Legal and professional fees | $9,948 | $8,552 | $1,396 | 16% | | General and administrative | $8,123 | $4,178 | $3,945 | 94% | | Depreciation, amortization, depletion and accretion | $7,371 | $723 | $6,648 | 920% | | **Total operating expenses** | **$35,536** | **$24,092** | **$11,444** | **48%** | - Payroll and benefits decreased in 2019 due to lower restructuring expenses, while legal and professional fees increased due to Carbon Solutions integration costs[185](index=185&type=chunk)[186](index=186&type=chunk) - Depreciation, amortization, depletion, and accretion increased significantly by **$6.7 million** in 2019 due to long-lived and intangible assets acquired in the Carbon Solutions Acquisition[188](index=188&type=chunk) Earnings from Equity Method Investments (2019 vs. 2018) | (in thousands) | 2019 | 2018 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Earnings from Tinuum Group | $60,286 | $47,175 | $13,111 | 28% | | Earnings from Tinuum Services | $8,896 | $7,033 | $1,863 | 26% | | Loss from other | $(6) | $0 | $(6) | * | | **Earnings from equity method investments** | **$69,176** | **$54,208** | **$14,968** | **28%** | - Equity earnings from Tinuum Group increased in 2019 due to **four new invested RC facilities**, but were negatively impacted by higher depreciation and restructured lease payments[193](index=193&type=chunk) - ADES's earned Section 45 tax credits decreased from **$7.0 million in 2018 to $0.3 million in 2019** due to allocation changes, with **$98.5 million in GBC carryforwards** as of December 31, 2019[200](index=200&type=chunk) - Interest expense increased by **$5.0 million** in 2019, primarily due to **$5.3 million** from the Senior Term Loan for the Carbon Solutions Acquisition[202](index=202&type=chunk) - Income tax expense was **$12.0 million in 2019 (25% effective rate)** compared to **$10.4 million in 2018 (23% effective rate)**, with a $0.3 million decrease in valuation allowance on deferred tax assets in 2019[206](index=206&type=chunk)[207](index=207&type=chunk)[210](index=210&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) - ADES provides non-GAAP measures, **Consolidated EBITDA and Segment EBITDA**, to facilitate comparison of operating results by excluding non-cash items or those not representative of ongoing performance[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) Consolidated EBITDA (2019 vs. 2018) | | 2019 | 2018 | |:---|:---|:---| | Net income | $35,537 | $35,454 | | Depreciation, amortization, depletion and accretion | $7,371 | $723 | | Interest expense, net | $6,913 | $1,912 | | Income tax expense | $11,999 | $10,423 | | **Consolidated EBITDA** | **$61,820** | **$48,512** | [Business Segments](index=34&type=section&id=Business%20Segments) - ADES has two reportable segments: **Refined Coal (RC)** and **Power Generation and Industrials (PGI)**[221](index=221&type=chunk) - RC segment revenues include equity method earnings and royalty payments, driven by RC production and the number of operating facilities[222](index=222&type=chunk) - PGI segment includes revenues and expenses from selling consumable products (PAC and chemical technologies) for mercury control[222](index=222&type=chunk) Segment Operating Income (Loss) (2019 vs. 2018) | (in thousands) | 2019 | 2018 | Change ($) | |:---|:---|:---|:---| | Refined Coal | $83,471 | $64,854 | $18,617 | | Power Generation and Industrials | $(11,606) | $(2,621) | $(8,985) | | **Total segment operating income** | **$71,865** | **$62,233** | **$9,632** | - RC earnings increased in 2019 due to higher equity earnings from Tinuum Group and increased royalties from M-45 License use, despite higher depreciation and restructured lease payments[227](index=227&type=chunk)[228](index=228&type=chunk)[230](index=230&type=chunk) - PGI segment operating loss increased in 2019 due to higher operating loss from Carbon Solutions, including **$4.7 million in inventory step-up costs** and **$6.7 million in depreciation/amortization**[232](index=232&type=chunk) - PGI segment outlook anticipates continued negative impact from declining coal-fired power generation and competition from natural gas and renewable energy[233](index=233&type=chunk) PGI Segment EBITDA (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Segment operating loss | $(11,606) | $(2,621) | | Depreciation, amortization, depletion and accretion | $6,682 | $520 | | Interest expense, net | $351 | $45 | | **Segment EBITDA loss** | **$(4,573)** | **$(2,056)** | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) - ADES's liquidity is primarily driven by cash on hand, distributions from Tinuum Group and Tinuum Services, royalty payments from Tinuum Group, PGI segment operations, and its Line of Credit[237](index=237&type=chunk) - Future cash flows from Tinuum through 2021 are expected to range from **$150 million to $175 million**, based on 20 invested facilities and consistent coal-fired power generation[239](index=239&type=chunk)[240](index=240&type=chunk) - The **$70.0 million Senior Term Loan**, executed in December 2018 to fund the Carbon Solutions Acquisition, requires quarterly principal payments of **$6.0 million** starting March 2019 and has specific covenants regarding minimum cash balance and future net cash flows from the refined coal business[242](index=242&type=chunk)[243](index=243&type=chunk) - In 2019, ADES repurchased **533,345 shares for $5.8 million** and paid **$18.3 million in quarterly cash dividends**[244](index=244&type=chunk)[246](index=246&type=chunk) Cash Flows (2019 vs. 2018) | (in thousands) | 2019 | 2018 | Change ($) | |:---|:---|:---|:---| | Operating activities | $62,262 | $(9,889) | $72,151 | | Investing activities | $(13,238) | $(16,543) | $3,305 | | Financing activities | $(55,716) | $19,511 | $(75,227) | | **Net change in Cash and Cash Equivalents and Restricted Cash** | **$(6,692)** | **$(6,921)** | **$229** | Contractual Obligations as of December 31, 2019 | (in thousands) | Total | Less than 1 year | 1-3 years | 4-5 years | After 5 years | |:---|:---|:---|:---|:---|:---| | Senior Term Note | $40,000 | $24,000 | $16,000 | $0 | $0 | | Finance lease obligations | $7,908 | $1,707 | $2,753 | $2,880 | $568 | | Operating lease obligations | $5,759 | $2,710 | $2,690 | $359 | $0 | | Purchase obligations | $1,927 | $1,927 | $0 | $0 | $0 | | **Total** | **$55,594** | **$30,344** | **$21,443** | **$3,239** | **$568** | [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Critical accounting estimates include business combinations (fair value allocation), carrying value of long-lived assets and intangibles (impairment review), asset retirement obligations (reclamation costs), and income taxes (deferred tax assets and valuation allowances)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[268](index=268&type=chunk) - Management judgment is required for these estimates, which are based on historical experience, market conditions, and future projections, with actual results potentially differing[261](index=261&type=chunk)[263](index=263&type=chunk)[268](index=268&type=chunk) [Recently Issued Accounting Standards](index=43&type=section&id=Recently%20Issued%20Accounting%20Standards) - Refer to Note 1 of the Consolidated Financial Statements for information regarding recently issued accounting standards[272](index=272&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, ADES is not required to provide market risk disclosures - The information under this Item is not required to be provided by smaller reporting companies[273](index=273&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=45&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2019 and 2018, including balance sheets, income statements, and cash flows - The consolidated financial statements for Advanced Emissions Solutions, Inc and subsidiaries as of and for the years ended December 31, 2019 and 2018 are presented[276](index=276&type=chunk)[278](index=278&type=chunk) - The independent registered public accounting firm, **Moss Adams LLP**, issued an unqualified opinion on the consolidated financial statements[278](index=278&type=chunk) - In 2019, the company changed its method of accounting for leases due to the adoption of **ASC 842**[280](index=280&type=chunk) Consolidated Balance Sheets (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | **ASSETS** | | | | Total current assets | $47,048 | $59,776 | | Restricted cash, long-term | $5,000 | $5,195 | | Property, plant and equipment, net | $44,001 | $42,697 | | Intangible assets, net | $4,169 | $4,830 | | Equity method investments | $39,155 | $6,634 | | Deferred tax assets, net | $14,095 | $32,539 | | Other long-term assets, net | $20,331 | $7,993 | | **Total Assets** | **$173,799** | **$159,664** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $39,313 | $40,719 | | Long-term debt, net of current portion | $20,434 | $50,058 | | Other long-term liabilities | $5,760 | $940 | | **Total Liabilities** | **$65,507** | **$91,717** | | Total stockholders' equity | $108,292 | $67,947 | | **Total Liabilities and Stockholders' equity** | **$173,799** | **$159,664** | Consolidated Statements of Operations (Years Ended December 31, 2019 and 2018) | (in thousands, except per share data) | 2019 | 2018 | |:---|:---|:---| | **Revenues:** | | | | Consumables | $53,187 | $8,733 | | License royalties, related party | $16,899 | $15,140 | | Other | $0 | $72 | | **Total revenues** | **$70,086** | **$23,945** | | **Operating expenses:** | | | | Consumables cost of revenue, exclusive of depreciation and amortization | $49,443 | $6,606 | | Other cost of revenue, exclusive of depreciation and amortization | $0 | $(353) | | Payroll and benefits | $10,094 | $10,639 | | Legal and professional fees | $9,948 | $8,552 | | General and administrative | $8,123 | $4,178 | | Depreciation, amortization, depletion and accretion | $7,371 | $723 | | **Total operating expenses** | **$84,979** | **$30,345** | | **Operating loss** | **$(14,893)** | **$(6,400)** | | **Other income (expense):** | | | | Earnings from equity method investments | $69,176 | $54,208 | | Interest expense | $(7,174) | $(2,151) | | Other | $427 | $220 | | **Total other income** | **$62,429** | **$52,277** | | **Income before income tax expense** | **$47,536** | **$45,877** | | Income tax expense | $11,999 | $10,423 | | **Net income** | **$35,537** | **$35,454** | | **Earnings per common share:** | | | | Basic | $1.96 | $1.78 | | Diluted | $1.93 | $1.76 | | **Weighted-average number of common shares outstanding:** | | | | Basic | 18,154 | 19,901 | | Diluted | 18,372 | 20,033 | Consolidated Statements of Cash Flows (Years Ended December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Cash flows from operating activities | $62,262 | $(9,889) | | Cash flows from investing activities | $(13,238) | $(16,543) | | Cash flows from financing activities | $(55,716) | $19,511 | | **Decrease in Cash, Cash Equivalents and Restricted Cash** | **$(6,692)** | **$(6,921)** | | Cash, Cash Equivalents and Restricted Cash, beginning of year | $23,772 | $30,693 | | **Cash, Cash Equivalents and Restricted Cash, end of year** | **$17,080** | **$23,772** | [Note 1 - Summary of Operations and Significant Accounting Policies](index=53&type=section&id=Note%201%20-%20Summary%20of%20Operations%20and%20Significant%20Accounting%20Policies) - ADES is a Delaware corporation focused on consumable mercury control options (PAC and chemical technologies) and generates earnings/tax credits from equity investments in Tinuum Group, LLC[298](index=298&type=chunk) - The **Carbon Solutions Acquisition** on December 7, 2018, expanded ADES's product offerings in mercury control and other AC markets[299](index=299&type=chunk) - The company consolidates wholly-owned subsidiaries and uses the equity method for investments where it has significant influence (e.g., **42.5% in Tinuum Group, 50.0% in Tinuum Services**)[300](index=300&type=chunk)[301](index=301&type=chunk) - On January 1, 2019, ADES adopted **ASC 842 (Leases)** and **ASC 606 (Revenue from Contracts with Customers)**, resulting in a cumulative adjustment increase of **$27.4 million** to Retained earnings due to Tinuum Group's adoption[352](index=352&type=chunk)[354](index=354&type=chunk)[356](index=356&type=chunk) Intangible Assets (as of December 31, 2019 and 2018) | (in thousands) | 2019 Net of Accumulated Amortization | 2018 Net of Accumulated Amortization | |:---|:---|:---| | Customer relationships | $1,731 | $2,071 | | Patents | $1,039 | $891 | | Developed technology | $1,259 | $1,578 | | Trade name | $140 | $290 | | **Total** | **$4,169** | **$4,830** | Earnings Per Common Share (2019 vs. 2018) | (in thousands, except per share amounts) | 2019 | 2018 | |:---|:---|:---| | Net income | $35,537 | $35,454 | | Less: Dividends and undistributed income allocated to participating securities | $44 | $112 | | **Income attributable to common stockholders** | **$35,493** | **$35,342** | | Basic weighted-average number of common shares outstanding | 18,154 | 19,901 | | Add: dilutive effect of equity instruments | 218 | 132 | | **Diluted weighted-average shares outstanding** | **18,372** | **20,033** | | **Earnings per share - basic** | **$1.96** | **$1.78** | | **Earnings per share - diluted** | **$1.93** | **$1.76** | [Note 2 - Acquisition](index=60&type=section&id=Note%202%20-%20Acquisition) - The Carbon Solutions Acquisition was completed on December 7, 2018, for a total purchase price of **$75.0 million**, with a fair value of purchase consideration of **$66.5 million**[360](index=360&type=chunk) - The purchase price allocation was finalized in May 2019, with adjustments to property, plant and equipment, intangible assets, and mine reclamation liability[363](index=363&type=chunk) Final Purchase Price Allocation (as adjusted) | Fair value of assets acquired: | As Adjusted | |:---|:---| | Cash | $3,284 | | Receivables | $6,409 | | Inventories | $21,744 | | Prepaid expenses and other current assets | $3,053 | | Spare parts | $3,359 | | Property, plant and equipment | $42,656 | | Mine leases and development | $2,700 | | Mine reclamation asset | $2,402 | | Intangible assets | $4,100 | | Other assets | $168 | | **Amount attributable to assets acquired** | **$89,875** | | Fair value of liabilities assumed: | | | Accounts payable | $4,771 | | Accrued liabilities | $7,608 | | Equipment lease liabilities | $8,211 | | Mine reclamation liability | $2,402 | | Other liabilities | $437 | | **Amount attributable to liabilities assumed** | **$23,429** | | **Net assets acquired** | **$66,446** | Intangible Assets Acquired in Carbon Solutions Acquisition | (in thousands) | Amount | Weighted Average Useful Life (years) | |:---|:---|:---| | Customer relationships | $2,200 | 5 | | Developed technology | $1,600 | 5 | | Trade name | $300 | 2 | | **Total intangibles acquired** | **$4,100** | | Unaudited Pro Forma Financial Information (Year ended December 31, 2018) | (in thousands) | 2018 | |:---|:---| | Revenues | $78,591 | | Net income | $31,562 | [Note 3 - Inventories, net](index=62&type=section&id=Note%203%20-%20Inventories%2C%20net) - Inventories are valued at the lower of average cost or net realizable value, consisting primarily of raw materials and finished goods for PAC and chemical products[304](index=304&type=chunk) Inventories, net (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Product inventory | $13,515 | $19,403 | | Raw material inventory | $1,945 | $2,388 | | **Total** | **$15,460** | **$21,791** | - Product inventory as of December 31, 2018, included **$5.0 million** attributed to the increase in fair value of inventory acquired from the Carbon Solutions Acquisition, which was zero in 2019[369](index=369&type=chunk) [Note 4 - Property, Plant and Equipment](index=63&type=section&id=Note%204%20-%20Property%2C%20Plant%20and%20Equipment) - Property, plant and equipment are stated at cost less accumulated depreciation, with depreciation computed using the straight-line method over estimated useful lives (1 to 31 years)[316](index=316&type=chunk) Property, Plant and Equipment, net (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Land and land improvements | $1,764 | $2,302 | | Plant and operating equipment | $44,015 | $32,999 | | Furniture and fixtures | $1,201 | $701 | | Machinery and equipment | $1,235 | $1,277 | | Leasehold improvements | $245 | $249 | | Construction in progress | $2,985 | $6,668 | | **Total** | **$51,445** | **$44,196** | | Less accumulated depreciation | $(7,444) | $(1,499) | | **Total property, plant and equipment, net** | **$44,001** | **$42,697** | - Depreciation expense for the years ended December 31, 2019 and 2018 was **$6.0 million** and **$0.5 million**, respectively[373](index=373&type=chunk) [Note 5 - Equity Method Investments](index=63&type=section&id=Note%205%20-%20Equity%20Method%20Investments) - ADES holds **42.5% ownership in Tinuum Group, LLC**, which is deemed a Variable Interest Entity (VIE) but not consolidated as ADES is not the primary beneficiary[374](index=374&type=chunk)[375](index=375&type=chunk) Tinuum Group, LLC Summary of Assets, Liabilities, and Results of Operations (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Current assets | $128,473 | $54,958 | | Non-current assets | $125,820 | $92,991 | | Current liabilities | $59,392 | $50,908 | | Non-current liabilities | $13,340 | $14,446 | | Members equity attributable to Class A members | $117,006 | $49,102 | | Members equity attributable to Class B members | $28,967 | $16,983 | | Noncontrolling interests | $35,588 | $16,510 | | Gross profit | $104,976 | $107,135 | | Income from operations | $67,335 | $83,473 | | Net income available to Class A and B members | $145,784 | $135,800 | | ADES equity earnings from Tinuum Group | $60,286 | $47,175 | - ADES's equity earnings from Tinuum Group increased to **$60.3 million in 2019** from $47.2 million in 2018, positively impacted by four new invested RC facilities[378](index=378&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk) - ADES holds a **50% voting and economic interest** in Tinuum Services, LLC, accounted for under the equity method[387](index=387&type=chunk) Tinuum Services, LLC Summary of Assets, Liabilities, and Results of Operations (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Current assets | $308,249 | $300,288 | | Non-current assets | $99,261 | $100,233 | | Current liabilities | $155,367 | $219,959 | | Non-current liabilities | $55,746 | $66,760 | | Equity | $13,626 | $13,134 | | Noncontrolling interests | $182,771 | $100,668 | | Gross loss | $(102,172) | $(85,377) | | Loss from operations | $(301,863) | $(258,877) | | Net income | $17,792 | $14,065 | | ADES equity earnings from Tinuum Services | $8,896 | $7,033 | Total Equity Method Investments (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Equity method investment in Tinuum Group | $32,280 | $0 | | Equity method investment in Tinuum Services | $6,813 | $6,567 | | Equity method investment in other | $62 | $67 | | **Total equity method investments** | **$39,155** | **$6,634** | Cash Distributions from Equity Method Investments (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Distributions from equity method investees, return on investment (Operating Cash Flows) | | Tinuum Group | $65,238 | $0 | | Tinuum Services | $8,650 | $5,500 | | Distributions from equity method investees in excess of cumulative earnings (Investing Cash Flows) | | Tinuum Group | $0 | $47,175 | [Note 6 - Debt Obligations](index=67&type=section&id=Note%206%20-%20Debt%20Obligations) Debt Obligations (Years ended December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Senior Term Loan due December 2021, related party | $40,000 | $70,000 | | Less: net unamortized debt issuance costs | $(1,163) | $(1,990) | | Less: net unamortized debt discount | $(1,200) | $(2,052) | | **Senior Term Loan due December 2021, net** | **$37,637** | **$65,958** | | Finance lease obligations | $6,729 | $8,167 | | **Total** | **$44,366** | **$74,125** | | Less: Current maturities | $(23,932) | $(24,067) | | **Total long-term borrowings** | **$20,434** | **$50,058** | - The Senior Term Loan, in the principal amount of **$70.0 million**, was entered into in December 2018 with Apollo to fund the Carbon Solutions Acquisition, bearing interest at 3-month LIBOR (1.5% floor) + 4.75% per annum[397](index=397&type=chunk) - Quarterly principal payments of **$6.0 million** were required starting March 2019, with the loan secured by substantially all of ADES's assets, excluding equity interests in Tinuum entities[399](index=399&type=chunk) Future Aggregate Annual Maturities of Senior Term Loan (as of December 31, 2019) | Year ended December 31, | Principal Amount (in thousands) | |:---|:---| | 2020 | $24,000 | | 2021 | $16,000 | | 2022 | $0 | | 2023 | $0 | | 2024 | $0 | | **Total** | **$40,000** | - The Line of Credit was decreased to **$5.0 million** in September 2018, extended to September 30, 2020, and amended in December 2018 to align financial covenants with the Senior Term Loan, including a **$5.0 million minimum cash balance**[403](index=403&type=chunk)[404](index=404&type=chunk) - As of December 31, 2019, there were **no outstanding borrowings** under the Line of Credit[405](index=405&type=chunk) [Note 7 - Leases](index=68&type=section&id=Note%207%20-%20Leases) - ADES adopted **ASC 842 (Leases)** on January 1, 2019, recognizing Right-of-Use (ROU) assets and lease liabilities for operating lease commitments[406](index=406&type=chunk) - As of December 31, 2019, the company had obligations under finance leases of **$6.7 million** and operating leases of **$5.2 million**[410](index=410&type=chunk) - ROU assets under finance leases (mining equipment) and operating leases (plant equipment, office facilities) were **$5.9 million** and **$5.1 million**, respectively, as of December 31, 2019[410](index=410&type=chunk) Lease Financial Information (Year ended December 31, 2019) | | 2019 | |:---|:---| | Finance lease cost: | | Amortization of right-of-use assets | $2,149 | | Interest on lease liabilities | $365 | | Operating lease cost | $3,673 | | Short-term lease cost | $771 | | Variable lease cost | $371 | | **Total lease cost** | **$7,329** | | Cash paid for amounts included in the measurement of lease liabilities: | | Operating cash flows from finance leases | $365 | | Operating cash flows from operating leases | $3,180 | | Financing cash flows from finance leases | $1,354 | | Weighted-average remaining lease term - finance leases | 4.2 years | | Weighted-average remaining lease term - operating leases | 2.4 years | | Weighted-average discount rate - finance leases | 6.1% | | Weighted-average discount rate - operating leases | 8.5% | Future Lease Payments (as of December 31, 2019) | (in thousands) | Operating Lease Commitments | Finance Lease Commitments | Total Lease Commitments | |:---|:---|:---|:---| | 2020 | $2,710 | $1,707 | $4,417 | | 2021 | $1,969 | $1,802 | $3,771 | | 2022 | $721 | $951 | $1,672 | | 2023 | $359 | $951 | $1,310 | | 2024 | $0 | $1,929 | $1,929 | | Thereafter | $0 | $568 | $568 | | **Total lease payments** | **$5,759** | **$7,908** | **$13,667** | | Less: Imputed interest | $(567) | $(1,179) | $(1,746) | | **Present value of lease payments** | **$5,192** | **$6,729** | **$11,921** | [Note 8 - Revenues](index=72&type=section&id=Note%208%20-%20Revenues) - Contract assets are unbilled receivables, representing a conditional right to consideration, while trade receivables are an unconditional right[429](index=429&type=chunk)[430](index=430&type=chunk) - Contract liabilities are deferred revenue, representing an obligation to transfer goods/services for which consideration has been received[431](index=431&type=chunk) Trade Receivables, net (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Trade receivables | $8,057 | $10,121 | | Less: Allowance for doubtful accounts | $(627) | $(567) | | **Trade receivables, net** | **$7,430** | **$9,554** | Disaggregation of Revenue and Earnings from Equity Method Investments (Year ended December 31, 2019) | (in thousands) | Segment PGI | RC | Other | Total | |:---|:---|:---|:---|:---| | Revenue component | | Consumables | $50,458 | $0 | $2,729 | $53,187 | | License royalties, related party | $0 | $16,899 | $0 | $16,899 | | **Revenues from customers** | **$50,458** | **$16,899** | **$2,729** | **$70,086** | | Earnings from equity method investments | $0 | $69,176 | $0 | $69,176 | | **Total revenues and earnings from equity method investments** | **$50,458** | **$86,075** | **$2,729** | **$139,262** | - All performance obligations related to revenues recognized in 2019 and 2018 were satisfied at a point in time[434](index=434&type=chunk) - Approximately **15% of PGI revenue in 2019** was generated in Canada, with the majority of revenue from U.S. customers[434](index=434&type=chunk) [Note 9 - Commitments and Contingencies](index=73&type=section&id=Note%209%20-%20Commitments%20and%20Contingencies) - ADES is involved in various legal actions and proceedings in the ordinary course of business, with liabilities recorded for probable and estimable losses[435](index=435&type=chunk) - The company has limited, joint and several guarantees for Tinuum Group's obligations under certain RC facility leases, but no liability has been recorded as a loss is not considered probable[436](index=436&type=chunk)[438](index=438&type=chunk) [Note 10 - Stockholders' Equity](index=74&type=section&id=Note%2010%20-%20Stockholders'%20Equity) - The Board is authorized to issue preferred stock, but none were outstanding as of December 31, 2019 and 2018[439](index=439&type=chunk) - Common stockholders have one vote per share and are entitled to dividends when declared, subject to restrictions[440](index=440&type=chunk) - ADES repurchased **533,345 shares for $5.8 million in 2019** and **2,350,422 shares for $25.3 million in 2018** under stock repurchase programs, with **$7.1 million remaining** as of December 31, 2019[443](index=443&type=chunk) - Quarterly cash dividends of **$0.25 per share** were declared and paid in 2019 and 2018, totaling **$18.6 million** and **$20.3 million**, respectively[444](index=444&type=chunk)[447](index=447&type=chunk) - The **Tax Asset Protection Plan (TAPP)**, extended to December 31, 2020, aims to protect the company's ability to utilize net operating losses and tax credits by deterring beneficial ownership of 4.99% or more of outstanding common stock[448](index=448&type=chunk)[449](index=449&type=chunk)[451](index=451&type=chunk) [Note 11 - Stock-Based Compensation](index=75&type=section&id=Note%2011%20-%20Stock-Based%20Compensation) - ADES has two incentive plans, the 2010 Plan (no new grants since 2017) and the **2017 Omnibus Incentive Plan (2,000,000 shares authorized)**, allowing grants of stock awards to employees, directors, and non-employees[452](index=452&type=chunk)[453](index=453&type=chunk)[454](index=454&type=chunk) - Stock-based compensation expense for RSA's, Stock Options, and RSU's is generally recognized over the vesting/service period, with PSU's valued using a Monte Carlo simulation model[456](index=456&type=chunk)[457](index=457&type=chunk)[460](index=460&type=chunk)[462](index=462&type=chunk) Stock-Based Compensation Expense (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | RSA expense | $2,011 | $2,222 | | Stock option expense | $0 | $58 | | RSU expense | $0 | $210 | | **Total stock-based compensation expense** | **$2,011** | **$2,490** | - Unrecognized compensation cost as of December 31, 2019, was **$2.521 million**, with an expected weighted-average recognition period of **1.47 years**[467](index=467&type=chunk) Restricted Stock Activity (Year ended December 31, 2019) | (in thousands, except for share and per share amounts) | Awards Units | Weighted-Average Grant Date Fair Value RSA's | Weighted-Average Grant Date Fair Value RSU's | |:---|:---|:---|:---| | Non-vested at January 1, 2019 | 280,852 | $9.92 | $10.52 | | Granted | 287,288 | $11.03 | $0 | | Vested | (108,081) | $9.77 | $10.52 | | Forfeited | (8,715) | $10.79 | $0 | | **Non-vested at December 31, 2019** | **451,344** | **$10.65** | **$0** | Stock Option Activity (Year ended December 31, 2019) | (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 at January 1, 2019 | 529,780 | $12.23 | | | | Options granted | — | $— | | | | Options exercised | (209,780) | $9.14 | | | | Options expired / forfeited | (20,000) | $20.07 | | | | **Options outstanding at December 31, 2019** | **300,000** | **$13.87** | **$0** | **0.43** | | **Options vested and exercisable at December 31, 2019** | **300,000** | **$13.87** | **$0** | **0.43** | [Note 12 - Supplemental Financial Information](index=79&type=section&id=Note%2012%20-%20Supplemental%20Financial%20Information) Prepaid Expenses and Other Current Assets (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Prepaid expenses | $1,708 | $1,233 | | Prepaid income taxes | $4,228 | $2,940 | | Other | $1,896 | $1,397 | | **Total** | **$7,832** | **$5,570** | Other Long-Term Assets, net (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Right of use assets, operating leases, net | $5,073 | $0 | | Spare parts, net | $3,453 | $3,278 | | Mine development costs, net | $7,084 | $2,531 | | Mine reclamation asset, net | $2,451 | $408 | | Highview investment | $552 | $552 | | Other long-term assets | $1,718 | $1,224 | | **Total** | **$20,331** | **$7,993** | Other Current Liabilities (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Current portion of operating lease obligations | $2,382 | $0 | | Accrued interest | $213 | $407 | | Income and other taxes payable | $678 | $479 | | Other current liabilities | $1,038 | $1,252 | | **Total** | **$4,311** | **$2,138** | Other Long-Term Liabilities (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Operating lease obligations, long-term | $2,810 | $0 | | Mine reclamation liability | $2,721 | $624 | | Other | $229 | $316 | | **Total** | **$5,760** | **$940** | Interest Expense Components (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Interest on Senior Term Loan | $4,112 | $366 | | Debt discount and debt issuance costs | $1,678 | $94 | | 453A interest | $1,039 | $1,585 | | Other | $345 | $106 | | **Total** | **$7,174** | **$2,151** | [Note 13 - Fair Value Measurements](index=81&type=section&id=Note%2013%20-%20Fair%20Value%20Measurements) - The carrying amounts of most financial instruments (cash, receivables, payables) approximate fair value due to their short maturity[488](index=488&type=chunk) Estimated Fair Values of Financial Instruments (as of December 31, 2019 and 2018) | (in thousands) | 2019 Carrying Value | 2019 Fair Value | 2018 Carrying Value | 2018 Fair Value | |:---|:---|:---|:---|:---| | Highview Investment | $552 | $552 | $552 | $552 | | Highview Obligation | $220 | $220 | $213 | $213 | - ADES's financial instruments are exposed to concentrations of credit risk, primarily in cash and cash equivalents held at **three financial institutions**[489](index=489&type=chunk) - The Carbon Solutions Acquisition involved fair value measurements for acquired assets and assumed liabilities, representing **Level 3 measurements** based on unobservable inputs[491](index=491&type=chunk) [Note 14 - Income Taxes](index=83&type=section&id=Note%2014%20-%20Income%20Taxes) Provision for Income Taxes (2019 vs. 2018) | (in thousands, except for rate) | 2019 | 2018 | |:---|:---|:---| | Current portion of income tax expense: | | Federal | $2,133 | $882 | | State and other | $1,211 | $4,308 | | **Total current** | **$3,344** | **$5,190** | | Deferred portion of income tax expense (benefit): | | Federal | $10,491 | $4,766 | | State and other | $(1,836) | $467 | | **Total deferred** | **$8,655** | **$5,233** | | **Total income tax expense** | **$11,999** | **$10,423** | | **Effective tax rate** | **25%** | **23%** | Deferred Tax Assets and Liabilities (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | **Deferred tax assets** | | | | Tax credits | $98,541 | $104,553 | | Operating lease obligations | $1,307 | $0 | | Employee related liabilities | $1,065 | $1,515 | | Intangible assets | $1,574 | $1,623 | | Equity method investments | $0 | $9,588 | | Net operating loss carryforwards | $2,956 | $2,479 | | Other investments | $555 | $583 | | Reserves | $587 | $45 | | Other | $244 | $335 | | **Total deferred tax assets** | **$106,829** | **$120,721** | | Less valuation allowance | $(79,610) | $(79,898) | | **Deferred tax assets** | **$27,219** | **$40,823** | | **Less: Deferred tax liabilities** | | | | Property and equipment and other | $(11,087) | $(8,284) | | Equity method investments | $(736) | $0 | | Right of use operating lease assets | $(1,301) | $0 | | **Total deferred tax liabilities** | **$(13,124)** | **$(8,284)** | | **Net deferred tax assets** | **$14,095** | **$32,539** | - As of December 31, 2019, ADES concluded it is more likely than not to realize **$14.1 million** of its net deferred tax assets, resulting in a **$0.3 million decrease** in the valuation allowance from 2018[500](index=500&type=chunk) Tax Credit and NOL Carryforwards (as of December 31, 2019) | (in thousands) | 2019 | Beginning expiration year | Ending expiration year | |:---|:---|:---|:---| | Federal tax credit carryforwards | $98,541 | 2032 | 2039 | | State and other operating loss carryforwards | $2,956 | 2021 | 2039 | - Unrecognized tax benefits increased to **$0.946 million** as of December 31, 2019, from $0.054 million in 2018[503](index=503&type=chunk) [Note 15 - Business Segment Information](index=85&type=section&id=Note%2015%20-%20Business%20Segment%20Information) - ADES has two reportable segments: **Refined Coal (RC)** and **Power Generation and Industrials (PGI)**, with the CEO as the chief operating decision maker (CODM)[506](index=506&type=chunk)[507](index=507&type=chunk) Operating Segment Results (Years Ended December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | **Revenues:** | | | | Refined Coal: | | Earnings in equity method investments | $69,176 | $54,208 | | License royalties, related party | $16,899 | $15,140 | | **Total RC revenues** | **$86,075** | **$69,348** | | Power Generation and Industrials: | | Consumables | $50,458 | $8,628 | | Other | $0 | $72 | | **Total PGI revenues** | **$50,458** | **$8,700** | | **Total segment reporting revenues** | **$136,533** | **$78,048** | | **Segment operating income (loss):** | | | | Refined Coal | $83,471 | $64,854 | | Power Generation and Industrials | $(11,606) | $(2,621) | | **Total segment operating income** | **$71,865** | **$62,233** | Reconciliation of Segment Operating Income to Consolidated Net Income (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Total reported segment operating income | $71,865 | $62,233 | | Other operating (loss) income | $(1,994) | $2 | | Corporate payroll and benefits | $(2,592) | $(4,970) | | Corporate legal and professional fees | $(7,485) | $(7,700) | | Corporate general and administrative | $(6,836) | $(3,305) | | Corporate depreciation and amortization | $(82) | $(134) | | Corporate interest expense, net | $(5,767) | $(521) | | Other income, net | $427 | $272 | | **Income before income tax expense** | **$47,536** | **$45,877** | Reconciliation of Reportable Segment Assets to Consolidated Assets (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Refined Coal | $43,953 | $11,468 | | Power Generation and Industrials | $80,912 | $85,786 | | **Total segment assets** | **$124,865** | **$97,254** | | All Other and Corporate | $48,934 | $62,410 | | **Consolidated** | **$173,799** | **$159,664** | [Note 16 - Major Customers](index=86&type=section&id=Note%2016%20-%20Major%20Customers) Revenues from Major Customers (Years ended December 31, 2019 and 2018) | Customer | Revenue Type | Segment(s) | 2019 | 2018 | |:---|:---|:---|:---|:---| | A | License royalties, related party | RC | 24% | 63% | | B | Consumables | PGI | 10% | —% | [Note 17 - Related Party Transactions](index=88&type=section&id=Note%2017%20-%20Related%20Party%20Transactions) Related Party Receivable Balance (as of December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | Receivable from related party - Tinuum Group | $4,246 | $4,284 | Income Recognized with Related Parties (Years Ended December 31, 2019 and 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | License royalties, related party - Tinuum Group | $16,899 | $15,140 | [Note 18 - Defined Contribution Savings Plans](index=88&type=section&id=Note%2018%20-%20Defined%20Contribution%20Savings%20Plans) - The company sponsors 401(k) Plans for eligible employees, with employer contributions based on percentages of eligible compensation[520](index=520&type=chunk) 401(k) Plans Employer Contributions (2019 vs. 2018) | (in thousands) | 2019 | 2018 | |:---|:---|:---| | 401(k) Plans employer contributions | $553 | $139 | - Employer contributions increased in 2019 due to an increase in employees resulting from the Carbon Solutions Acquisition[521](index=521&type=chunk) [Note 19 - Restructuring](index=88&type=section&id=Note%2019%20-%20Restructuring) - In December 2018, ADES recorded restructuring charges related to executive departures from Carbon Solutions and a reduction in force, including cash severance and accelerated stock-based compensation[522](index=522&type=chunk) - No material restructuring charges were recorded during the year ended December 31, 2019[523](index=523&type=chunk) Net Pretax Restructuring Charges by Segment (Year ended December 31, 2018) | (in thousands, except employee data) | Approximate Number of Employees | Refined Coal | PGI | All Other and Corporate | Total | |:---|:---|:---|:---|:---|:---| | Restructuring charges | 16 | $448 | $996 | $1,685 | $3,129 | | Changes in estimates | | $0 | $0 | $0 | $0 | | **Total pretax charge, net of reversals** | | **$448** | **$996** | **$1,685** | **$3,129** | Utilization of Restructuring Accruals (2019 vs. 2018) | (in thousands) | Employee Severance | |:---|:---| | Beginning accrual as of January 1, 2018 | $0 | | Expense provision | $3,129 | | Cash payments and other | $(1,491) | | Change in estimates | $0 | | Severance liability acquired | $570 | | **Accrual as of December 31, 2018** | **$2,208** | | Expense provision | $172 | | Cash payments and other | $(2,051) | | Change in estimates | $(75) | | **Accrual as of December 31, 2019** | **$254** | [Note 20 - Quarterly Financial Results (unaudited)](index=90&type=section&id=Note%2020%20-%20Quarterly%20Financial%20Results%20(unaudited)) Summarized Quarterly Results (Year ended December 31, 2019) | (in thousands, except per share data) | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |:---|:---|:---|:---|:---| | Revenues | $16,047 | $19,133 | $15,577 | $19,329 | | Cost of revenues, exclusive of operating expenses shown below | $11,104 | $11,939 | $12,292 | $14,108 | | Other operating expenses | $9,630 | $9,585 | $7,545 | $8,776 | | Operating loss | $(4,687) | $(2,391) | $(4,260) | $(3,555) | | Earnings from equity method investments | $12,125 | $14,426 | $20,935 | $21,690 | | Other expenses, net | $(1,269) | $(1,517) | $(1,927) | $(2,034) | | Income before income tax expense | $6,169 | $10,518 | $14,748 | $16,101 | | Income tax (benefit) expense | $(2,929) | $6,595 | $6,634 | $1,699 | | Net income | $9,098 | $3,923 | $8,114 | $14,402 | | Earnings per common share – basic | $0.50 | $0.22 | $0.45 | $0.79 | | Earnings per common share – diluted | $0.50 | $0.21 | $0.44 | $0.78 | | Weighted-average number of common shares outstanding (Basic) | 18,066 | 18,112 | 18,172 | 18,268 | | Weighted-average number of common shares outstanding (Diluted) | 18,275 | 18,339 | 18,377 | 18,433 | Summarized Quarterly Results (Year ended December 31, 2018) | (in thousands, except per share data) | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | |:---|:---|:---|:---|:---| | Revenues | $10,626 | $5,147 | $4,273 | $3,899 | | Cost of revenues, exclusive of operating expenses shown below | $4,032 | $954 | $704 | $563 | | Other operating expenses | $9,745 | $4,161 | $5,138 | $5,048 | | Operating (loss) income | $(3,151) | $32 | $(1,569) | $(1,712) | | Earnings from equity method investments | $16,351 | $9,715 | $15,889 | $12,253 | | Other expenses, net | $(930) | $(313) | $(378) | $(310) | | Income before income tax expense | $12,270 | $9,434 | $13,942 | $10,231 | | Income tax expense (benefit) | $5,272 | $3,931 | $(1,349) | $2,569 | | Net income | $6,998 | $5,503 | $15,291 | $7,662 | | Earnings per common share – basic | $0.36 | $0.28 | $0.76 | $0.37 | | Earnings per common share – diluted | $0.36 | $0.28 | $0.75 | $0.37 | | Weighted-average number of common shares outstanding (Basic) | 19,339 | 19,726 | 20,062 | 20,502 | | Weighted-average number of common shares outstanding (Diluted) | 19,439 | 19,876 | 20,195 | 20,584 | - Q4 2019 income tax benefit of **$2.9 million** was primarily due to a decrease in current income tax expense compared to estimates for the first nine months[532](index=532&type=chunk) - Q4 2018 results included Carbon Solutions operations from December 7-31, 2018, contributing **$5.6 million to revenues** and **$3.4 million to cost of revenue**[533](index=533&type=chunk) - Q4 2018 also included **$3.4 million in transaction costs** and **$1.1 million in severance charges** related to the Carbon Solutions Acquisition[534](index=534&type=chunk) [Note 21 - Subsequent Events](index=91&type=section&id=Note%2021%20-%20Subsequent%20Events) - On February 7, 2020, the Board declared a quarterly dividend of **$0.25 per share** of common stock, paid on March 10, 2020[536](index=536&type=chunk) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=92&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - There are no changes in or disagreements with accountants on accounting and financial disclosure[538](index=538&type=chunk) [ITEM 9A. Controls and Procedures](index=92&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019 - Disclosure controls and procedures were evaluated and deemed **effective** as of December 31, 2019[539](index=539&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2019, based on the COSO framework[542](index=542&type=chunk) - Moss Adams LLP issued an **unqualified opinion** on the company's internal control over financial reporting[543](index=543&type=chunk)[547](index=547&type=chunk) - The integration of Carbon Solutions into internal control over financial reporting was completed during the fourth quarter of 2019, with no other material changes[544](index=544&type=chunk) [ITEM 9B. Other Information](index=94&type=section&id=ITEM%209B.%20Other%20Information) The company reports no other information required by this item - No other information is reported under this item[554](index=554&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=95&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's definitive proxy statement - Information for this item is incorporated by reference from the definitive proxy statement to be filed within 120 days from December 31, 2019[557](index=557&type=chunk) [ITEM 11. Executive Compensation](index=95&type=section&id=ITEM%2011.%20Executive%20Compensation) Required information is incorporated by reference from the company's definitive proxy statement - Information for this item is incorporated by reference from the definitive proxy statement to be filed within 120 days from December 31, 2019[558](index=558&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=95&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference, with supplemental details on equity compensation plans provided - Information on security ownership is incorporated by reference from the definitive proxy statement[559](index=559&type=chunk) Securities Authorized for Issuance under Equity Compensation Plans (as of December 31, 2019) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | |:---|:---|:---|:---| | Equity compensation plans approved by security holders | 300,000 | $13.87 | 2,077,538 | | Equity compensation plans not approved by security holders | — | $— | — | | **Total** | **300,000** | | **2,077,538** | - The number of securities remaining available for future issuance is reduced by **451,344 shares** of restricted common stock for which restrictions have not lapsed[561](index=561&type=chunk) [ITEM 13. Certain Relationships and Related Transaction and Director Independence](index=95&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transaction%20and%20Director%20Independence) Required information is incorporated by reference from the company's definitive proxy statement - Information for this item is incorporated by reference from the definitive proxy statement to be filed within 120 days from December 31, 2019[562](index=562&type=chunk) [ITEM 14. Principal Accountant Fees and Services](index=95&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Required information is incorporated by reference from the company's definitive proxy statement - Information for this item is incorporated by reference from the definitive proxy statement to be filed within 120 days from December 31, 2019[563](index=563&type=chunk) PART IV [ITEM 15. Exhibits and Financial Statement Schedules](index=96&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the report - This item includes the consolidated financial statements of Advanced Emissions Solutions, Inc and its subsidiaries, as well as Tinuum Group, LLC and its subsidiaries[566](index=566&type=chunk)[570](index=570&type=chunk) - All financial statement schedules are omitted because the required information is not applicable or is included in the Consolidated Financial Statements and Notes[566](index=566&type=chunk) - A detailed table of exhibits is provided, with some portions omitted due to confidential treatment requests[566](index=566&type=chunk)[569](index=569&type=chunk) [SIGNATURES](index=126&type=section&id=SIGNATURES) The report was duly signed by executive officers and directors on March 16, 2020 - The report is signed by **L. Heath Sampson (Chief Executive Officer)** and **Greg P. Marken (Chief Financial Officer)**, and other Directors[720](index=720&type=chunk)[721](index=721&type=chunk) - The signing date for the report is **March 16, 2020**[720](index=720&type=chunk)[721](index=721&type=chunk)

United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 or ¨ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) ______________________________________ (State or other jurisdiction of ...

United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 or ¨ TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37822 ______________________________________ Advanced Emissions Solut ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended March 31, 2019 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets significantly increased, primarily driven by a large increase in equity method investments, while liabilities slightly decreased and total stockholders' equity rose substantially Condensed Consolidated Balance Sheets (as of March 31, 2019 and December 31, 2018) | (in thousands) | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total current assets** | $56,219 | $59,776 | | **Total Assets** | **$193,811** | **$159,664** | | **Total current liabilities** | $39,825 | $40,719 | | **Total Liabilities** | **$87,895** | **$91,717** | | **Total stockholders' equity** | **$105,916** | **$67,947** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues surged, and strong equity investment earnings led to a significant net income and increased diluted EPS Condensed Consolidated Statements of Operations (Three Months Ended March 31) | (in thousands, except per share data) | 2019 | 2018 | | :--- | :--- | :--- | | Total revenues | $19,329 | $3,899 | | Operating loss | $(3,555) | $(1,712) | | Earnings from equity method investments | $21,690 | $12,253 | | Net income | $14,402 | $7,662 | | Diluted EPS | $0.78 | $0.37 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly improved, with overall cash increasing despite investing and financing outflows Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,018 | $139 | | Net cash (used in) provided by investing activities | $(2,072) | $10,976 | | Net cash used in financing activities | $(11,853) | $(7,051) | | **Increase in Cash and Cash Equivalents** | **$2,093** | **$4,064** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the basis of presentation, Carbon Solutions acquisition, ASC 842 adoption, equity method investments, debt obligations, and segment performance - The company's operations are principally engaged in consumable mercury control options, including powdered activated carbon (PAC) It generates substantial earnings from its equity investments in entities like Tinuum Group, which produce refined coal qualifying for Section 45 tax credits[20](index=20&type=chunk) - On December 7, 2018, the company acquired 100% of ADA Carbon Solutions, a manufacturer of activated carbon, to expand its product offerings in the mercury control industry[21](index=21&type=chunk) - The company adopted the new lease accounting standard (ASC 842) on January 1, 2019, resulting in the recognition of **$7.0 million** in "right of use" assets and corresponding lease liabilities[34](index=34&type=chunk)[35](index=35&type=chunk) - The company's investment in Tinuum Group is a significant source of earnings For Q1 2019, ADES's equity earnings from Tinuum Group were **$19.8 million** As of March 31, 2019, the carrying value of the investment was **$40.2 million**[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - The company entered into a **$70.0 million** Senior Term Loan in December 2018 to fund the Carbon Solutions Acquisition The loan has a 36-month term with quarterly principal payments of **$6.0 million**, which began in March 2019[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2019 results to Refined Coal segment performance and the Carbon Solutions acquisition, detailing revenue growth, expenses, and liquidity Q1 2019 vs Q1 2018 Revenue Comparison | (in thousands) | 2019 | 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Consumables | $15,109 | $621 | $14,488 | 2,333% | | License royalties, related party | $4,220 | $3,230 | $990 | 31% | | **Total revenues** | **$19,329** | **$3,899** | **$15,430** | **396%** | - The significant increase in Consumables revenue and cost of revenue is primarily due to the inclusion of Carbon Solutions' operations following its acquisition Consumables cost of revenue in Q1 2019 was negatively impacted by a **$3.6 million** step-up in inventory fair value from the acquisition[136](index=136&type=chunk)[137](index=137&type=chunk) - Earnings from equity method investments increased by **77%** to **$21.7 million**, primarily due to Tinuum Group completing a sale of an RC facility in Q1 2019 and adopting new revenue recognition standards[146](index=146&type=chunk)[147](index=147&type=chunk) Consolidated EBITDA Reconciliation (Non-GAAP) | (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net income | $14,402 | $7,662 | | Depreciation, amortization, etc. | $2,102 | $116 | | Interest expense, net | $2,034 | $336 | | Income tax expense | $1,699 | $2,569 | | **Consolidated EBITDA** | **$20,237** | **$10,683** | - Future cash flows from Tinuum through 2021 are expected to range from **$200 to $225 million**, based on 20 invested facilities and other key assumptions[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Advanced Emissions Solutions, Inc. is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide disclosures about market risk[205](index=205&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with ongoing integration of Carbon Solutions' internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2019[206](index=206&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls, other than those related to the integration of the newly acquired Carbon Solutions[207](index=207&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company states that no legal proceedings, individually or in aggregate, are currently considered material - As of the filing date, the company is not involved in any legal proceedings that are considered material[210](index=210&type=chunk) [Risk Factors](index=41&type=section&id=Item%201a.%20Risk%20Factors) No material updates to the company's risk factors were reported compared to the 2018 Form 10-K - No material changes to the risk factors disclosed in the 2018 Form 10-K were reported[211](index=211&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activities for Q1 2019, including shares purchased and average price Issuer Purchases of Equity Securities (Q1 2019) | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | January 2019 | 54,053 | $10.83 | | February 2019 | 801 | $11.26 | | March 2019 | 9,022 | $10.97 | | **Total** | **63,876** | **$10.86** | [Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[214](index=214&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures required by the Dodd-Frank Act are included in Exhibit 95 of this report - Mine safety disclosures required by Section 1503(a) of the Dodd-Frank Act are included in Exhibit 95[215](index=215&type=chunk) [Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The company reported no information for this item - None[216](index=216&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including key amendments, certifications, and disclosures - The report includes several exhibits, such as: - Second Amendment to Tax Asset Protection Plan (Exhibit 4.1) - CEO and CFO Certifications (Exhibits 31.1, 31.2, 32.1) - Mine Safety Disclosure (Exhibit 95) - XBRL data files (Exhibit 101 series)[218](index=218&type=chunk)