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Advanced Emissions Solutions(ADES) - 2024 Q1 - Quarterly Report
ADESAdvanced Emissions Solutions(ADES)2024-05-08 20:51

Financial Performance - For the three months ended March 31, 2024, the company reported a net loss of 3.4million,animprovementfromanetlossof3.4 million, an improvement from a net loss of 7.5 million in the same period of 2023[96]. - Revenue for the three months ended March 31, 2024, increased to 21.74million,a421.74 million, a 4% increase from 20.81 million in the same period of 2023[98]. - EBITDA loss for the three months ended March 31, 2024 was (1.1)million,comparedto(1.1) million, compared to (5.0) million for the same period in 2023, indicating a significant improvement in operational performance[118]. - Adjusted EBITDA loss for the three months ended March 31, 2024 was (1.1)million,comparedto(1.1) million, compared to (7.7) million for the same period in 2023, reflecting a positive trend in financial results[118]. Cost Management - Cost of revenue decreased by 20% to 13.71millionforthethreemonthsendedMarch31,2024,comparedto13.71 million for the three months ended March 31, 2024, compared to 17.18 million in the same period of 2023[98]. - Operating expenses decreased by 4% to 11.01millionforthethreemonthsendedMarch31,2024,comparedto11.01 million for the three months ended March 31, 2024, compared to 11.46 million in the same period of 2023[102]. - Selling, general, and administrative expenses decreased by 32% to 7.67millionforthethreemonthsendedMarch31,2024,comparedto7.67 million for the three months ended March 31, 2024, compared to 11.28 million in the same period of 2023[102]. Research and Development - Research and development expenses increased by 122% to 1.63millionforthethreemonthsendedMarch31,2024,comparedto1.63 million for the three months ended March 31, 2024, compared to 0.73 million in the same period of 2023[102]. Liquidity and Cash Flow - Cash on hand as of March 31, 2024, was 35.2million,excluding35.2 million, excluding 8.8 million of restricted cash, indicating a solid liquidity position[120]. - Cash flows from operating activities improved by 18.2million,movingfrom18.2 million, moving from (17.7) million in Q1 2023 to 0.5millioninQ12024[121].−Thecompanyanticipatesthatcashonhandandadditionaldebtfinancingwillprovidesufficientliquiditytofundoperationsforthenext12months[126].CapitalExpenditures−Capitalexpendituresplannedfor2024arebetween0.5 million in Q1 2024[121]. - The company anticipates that cash on hand and additional debt financing will provide sufficient liquidity to fund operations for the next 12 months[126]. Capital Expenditures - Capital expenditures planned for 2024 are between 55 million and 60millionfortheRedRiverPlantexpansion,withanadditional60 million for the Red River Plant expansion, with an additional 5 million to 10millionforthecommissioningoftheCorbinFacility[127].−ThecompanyexpectstofinancetheRedRiverPlantexpansionthroughcashonhand,cashgeneration,andpotentialcustomerprepaymentsforGACcontracts[127].−Thecompanyistargetingtheendof2024forthecompletionoftheRedRiverPlantexpansion,whichisnecessarytocommenceproductionofnewGACproducts[127].RegulatoryandMarketOutlook−ThecompanyexpectstheimplementationofnewPFASregulationsbytheEPAtodriveamaterialincreaseinGACdemandinthewaterpurificationmarketoverthenextfiveyears[95].−ThecompanyanticipatesbeginningtouseArqPowderasafeedstockformanufacturinghigh−qualityGACproductsbytheendof2024[94].InternalControls−LegacyArqwasacquiredonFebruary1,2023,andisexcludedfromtheinternalcontrolassessmentasofDecember31,2023[136].−ThecompanyisdocumentingandtestingLegacyArq′sinternalcontrols,whichwillbeincludedintheannualreportfortheyearendingDecember31,2024[136].−NochangesininternalcontroloverfinancialreportingoccurredduringthefiscalquarterendedMarch31,2024,thatmateriallyaffectedinternalcontrols[136].InterestExpense−Interestexpenseincreasedby4810 million for the commissioning of the Corbin Facility[127]. - The company expects to finance the Red River Plant expansion through cash on hand, cash generation, and potential customer prepayments for GAC contracts[127]. - The company is targeting the end of 2024 for the completion of the Red River Plant expansion, which is necessary to commence production of new GAC products[127]. Regulatory and Market Outlook - The company expects the implementation of new PFAS regulations by the EPA to drive a material increase in GAC demand in the water purification market over the next five years[95]. - The company anticipates beginning to use Arq Powder as a feedstock for manufacturing high-quality GAC products by the end of 2024[94]. Internal Controls - Legacy Arq was acquired on February 1, 2023, and is excluded from the internal control assessment as of December 31, 2023[136]. - The company is documenting and testing Legacy Arq's internal controls, which will be included in the annual report for the year ending December 31, 2024[136]. - No changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2024, that materially affected internal controls[136]. Interest Expense - Interest expense increased by 48% to 0.79 million for the three months ended March 31, 2024, compared to $0.53 million in the same period of 2023[112].