Advanced Emissions Solutions(ADES) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, the company reported revenue of $34.774 million, a 17$29.829 million in the same period of 2023[89]. - The cost of revenue for the three months ended September 30, 2024 was $21.339 million, up 3$20.707 million in the prior year[89]. - The company recognized a net income of $1.6 million for the three months ended September 30, 2024, compared to a net loss of$2.2 million for the same period in 2023[88]. - Total revenue for the nine months ended September 30, 2024, was $81,919,000, representing a 15$71,079,000 in the same period of 2023, with a change of $10,840,000[104]. - EBITDA for the nine months ended September 30, 2024, was$4,369,000, compared to a loss of $7,093,000 in the same period of 2023[122]. Cost and Expenses - Operating expenses for the three months ended September 30, 2024 were$11.407 million, a slight decrease from $11.647 million in the same period of 2023[92]. - Operating expenses decreased by 7$34,300,000 in 2023 to $32,012,000 in 2024, with significant reductions in selling, general, and administrative expenses by 18$787,000 for the three months ended September 30, 2024, primarily due to product qualification testing[97]. - Research and development expenses increased by 56% from $2,145,000 in 2023 to$3,341,000 in 2024, reflecting ongoing product qualification testing[111]. - Interest expense increased by 13% from $2,155,000 in 2023 to$2,426,000 in 2024, primarily due to higher interest related to the CFG Loan[116]. Cash Flow and Liquidity - Cash on hand as of September 30, 2024, was $48.7 million, excluding$8.7 million of restricted cash, with net proceeds from common stock issuance totaling $42.4 million[124]. - Cash flow from operating activities for the nine months ended September 30, 2024 was$5.3 million, a net increase of $26.4 million from cash used in operating activities of$21.1 million for the same period in 2023[126]. - The company anticipates that cash on hand and proceeds from additional debt financing will provide sufficient liquidity to fund operations for the next 12 months[129]. Market and Demand - The average selling price increase contributed approximately $2.7 million to revenue growth, while a favorable product mix added$1.2 million[90]. - The company experienced a decrease in demand from coal-fired power generation customers due to lower natural gas prices and mild temperatures, impacting sales negatively[87]. - The U.S. EPA's new PFAS regulations are anticipated to drive a material increase in GAC demand in the water purification market over the next five years[87]. - The increase in revenue was primarily driven by a favorable product mix and higher pricing, contributing approximately $5.4 million and$3.9 million, respectively, while lower volumes sold offset these gains by about $0.4 million[105]. Future Plans and Investments - The company expects to begin using Arq Powder as a feedstock for manufacturing high-quality GAC products in the first quarter of 2025[85]. - The company expects to spend between$60 and $70 million on construction and commissioning of its plants during 2024, with$20 to $25 million expected to be spent in the fourth quarter[130]. - The company is targeting the first quarter of 2025 for its first GAC deliveries, requiring substantial capital expenditure for additional equipment and project costs[130]. - The company plans to expand its overall AC business into additional adjacent markets to increase market share and gross margin[129]. Risks and Challenges - The company faces risks related to the integration of Legacy Arq's business and the commercialization of its products and technology[135].