Advanced Emissions Solutions(US:ADES)2019-08-05 20:53Financial Performance - For the three months ended June 30, 2019, the company reported net income of $8.1 million, a decrease of 47.1% compared to $15.3 million for the same period in 2018 [102]. - Total revenues for the three months ended June 30, 2019, were $15.577 million, representing a significant increase of 265% from $4.273 million in the same period of 2018 [105]. - Total revenues for the six months ended June 30, 2019, reached $34.9 million, a 327% increase from $8.2 million in the same period in 2018 [118]. - Net income for the six months ended June 30, 2019 was $22.5 million, primarily due to earnings from equity method investees of $42.6 million [170]. Revenue Breakdown - Consumables revenue increased to $11.386 million for the three months ended June 30, 2019, up 1,468% from $726,000 in the prior year, primarily due to operations from Carbon Solutions [105]. - Consumables revenue increased to $26.5 million for the six months ended June 30, 2019, compared to $1.3 million in 2018, reflecting growth from Carbon Solutions' operations [118]. - License royalties increased by 19% to $4.191 million for the three months ended June 30, 2019, driven by additional third-party investors for new refined coal facilities [105]. - Earnings from equity method investments increased by 32% to $20.935 million for the three months ended June 30, 2019, compared to $15.889 million in the same period of 2018 [112]. - Earnings from equity method investments for the six months ended June 30, 2019, were $42.6 million, up 51% from $28.1 million in the same period in 2018 [127]. Operating Expenses - Operating expenses rose to $7.545 million for the three months ended June 30, 2019, a 47% increase from $5.138 million in the same quarter of 2018 [107]. - Operating expenses increased to $16.3 million for the six months ended June 30, 2019, a 60% increase from $10.2 million in 2018, driven by higher payroll, legal fees, and depreciation [122]. - Legal and professional fees increased by 29% to $1.569 million, attributed to integration costs from the Carbon Solutions Acquisition [109]. - Depreciation and amortization expenses surged by 951% to $757,000 due to the addition of long-lived and intangible assets from the Carbon Solutions Acquisition [111]. Interest and Tax Expenses - Interest expense rose significantly by 382% to $(1.987) million for the three months ended June 30, 2019, compared to $(412,000) in the prior year [112]. - Interest expense rose by $1.6 million to $1.6 million for the three months ended June 30, 2019, primarily due to the Senior Term Loan related to the Carbon Solutions Acquisition [115]. - Income tax expense for the three months ended June 30, 2019, was $6.6 million, compared to a tax benefit of $1.3 million in the same period in 2018, driven by increased pre-tax income [116]. - Income tax expense for the six months ended June 30, 2019, was $8.3 million, up from $1.2 million in the same period of 2018, primarily due to increased forecasted pre-tax income [134]. Cash Flow and Dividends - Cash flows from operating activities for the six months ended June 30, 2019 were $30.6 million, an increase of $34.0 million compared to the same period in 2018 [170]. - Quarterly cash dividends declared during the six months ended June 30, 2019 totaled $9.2 million, compared to $10.2 million in the same period in 2018 [163]. - Cash dividends paid during the six months ended June 30, 2019 were $9.2 million, compared to $10.2 million in the same period in 2018 [173]. - The company repurchased 248,591 shares of common stock for $2.8 million during the six months ended June 30, 2019 [162]. Segment Performance - The RC segment's operating income for the six months ended June 30, 2019, was $49.979 million, compared to $32.977 million for the same period in 2018 [145]. - The PGI segment reported an operating loss of $7.324 million for the six months ended June 30, 2019, compared to a loss of $2.325 million in the same period of 2018 [145]. - PGI segment operating loss increased to $3.9 million for the three months ended June 30, 2019, compared to a loss of $1.4 million in the same period in 2018 [149]. - PGI Segment EBITDA loss was $4.5 million for the six months ended June 30, 2019, an increase of $2.2 million compared to the same period in 2018 [155]. Investments and Future Outlook - The carrying value of the investment in Tinuum Group was $42.5 million as of June 30, 2019, reflecting cumulative pro-rata share of income exceeding cash distributions [130]. - Future cash flows from Tinuum are expected to range from $175 million to $200 million through 2021, based on 21 invested facilities as of June 30, 2019 [159]. - Cash distributions from Tinuum Group were $33.8 million for the six months ended June 30, 2019, up from $25.5 million in 2018 [159]. - Cash distributions from Tinuum Group decreased by $25.5 million for the six months ended June 30, 2019 compared to the same period in 2018 [173]. Debt and Financing - The Senior Term Loan amounts to $70 million, with principal payments of $6 million required quarterly, and $16 million paid during the six months ended June 30, 2019 [161]. - The borrowing availability of the Line of Credit was decreased to $5.0 million due to decreased collateral requirements [165]. - The financial covenants in the Line of Credit were amended to maintain a minimum cash balance of $5.0 million [167]. - As of June 30, 2019, there were no outstanding borrowings under the Line of Credit [164].