Advanced Emissions Solutions(ADES) - 2019 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2019, the company recognized net income of $3.9 million, a decrease of 29.1$5.5 million for the same period in 2018 [110]. - Total revenues for the three months ended September 30, 2019, were $19.1 million, representing a 272$5.1 million in the same period of 2018 [114]. - For the nine months ended September 30, 2019, total revenues increased to $54,039 thousand, a 306$13,319 thousand in the same period of 2018 [127]. - Consolidated net income for the nine months ended September 30, 2019, was $26.4 million, down from$28.5 million in the same period of 2018, reflecting a decrease of 7.3% [145]. - Cash flows from operating activities for the nine months ended September 30, 2019, were $47.6 million, an increase of$51.9 million compared to the same period in 2018 [171]. Revenue Breakdown - Consumables revenue increased to $14.7 million for the three months ended September 30, 2019, up 1,314$1.0 million in the same period of 2018, primarily due to Carbon Solutions' operations [114]. - Consumables revenue for the nine months ended September 30, 2019 was $41,243 thousand, up 1,626$2,390 thousand in the prior year [127]. - License royalties increased by 7% to $4.4 million for the three months ended September 30, 2019, compared to$4.1 million in the same period of 2018 [114]. - The company recognized $50.8 million in equity earnings from Tinuum Group for the nine months ended September 30, 2019, compared to$33.6 million in the same period of 2018 [136]. Operating Expenses - Operating expenses for the three months ended September 30, 2019, totaled $9.6 million, a 130$4.2 million in the same period of 2018 [117]. - Operating expenses for the nine months ended September 30, 2019 totaled $25,906 thousand, an 81$14,347 thousand in the same period of 2018 [129]. - General and administrative expenses surged by 149% to $7,699 thousand for the nine months ended September 30, 2019, up from$3,098 thousand in the prior year [132]. - Legal and professional fees rose by 53% to $5,300 thousand for the nine months ended September 30, 2019, compared to$3,459 thousand in the same period of 2018 [129]. Equity Method Investments - Earnings from equity method investments for the three months ended September 30, 2019, were $14.4 million, a 48$9.7 million in the same period of 2018 [122]. - Earnings from equity method investments increased to $57,051 thousand for the nine months ended September 30, 2019, a 51$37,857 thousand in the same period of 2018 [134]. - Earnings from equity method investments in Tinuum Group for the three months ended September 30, 2019, were $11.7 million, compared to$8.1 million in the same period of 2018, marking a 44.5% increase [151]. Cash Flow and Liquidity - Cash, cash equivalents, and restricted cash decreased from $23.8 million as of December 31, 2018, to$20.2 million as of September 30, 2019 [169]. - The company declared and paid quarterly cash dividends totaling $13.7 million for the nine months ended September 30, 2019, compared to$15.2 million for the same period in 2018 [164]. - As of September 30, 2019, there were no outstanding borrowings under the Line of Credit, indicating a strong liquidity position [165]. - Total cash distributions from Tinuum Group for the nine months ended September 30, 2019, were $50.3 million, up from$33.6 million in 2018, contributing to improved liquidity [161]. Future Outlook - The company expects lower royalty earnings per ton of refined coal through 2021 due to higher depreciation recognized on royalty-bearing facilities [115]. - The company anticipates future earnings and distributions from Tinuum Group to be lower due to higher depreciation, reduced lease payments, and closures of two utilities [124]. - The company expects future earnings in the RC segment to be influenced by coal-fired electricity generation dispatch and lease renegotiations [152]. - Future cash flows from Tinuum Group are expected to range from $150 million to$175 million through 2021, a decrease from the previous estimate of $175 million to$200 million [161]. Acquisitions and Investments - The company acquired 100% of ADA Carbon Solutions, LLC on December 7, 2018, to expand its product offerings in the mercury control industry [109]. - The company incurred $4.7 million in additional cost of revenue expense due to a step-up in basis of acquired finished goods inventory related to the Carbon Solutions Acquisition [158]. - The company anticipates growth in its target markets and plans to increase research and development activities in the future [181].