 -1- ADA Environmental Solutions Canaccord Adams Global Growth Conference August 7, 2007 NASDAQ:ADES A Leader in Clean Coal Technology Exhibit 99.1 |
| -1- ADA Environmental Solutions Canaccord Adams Global Growth Conference August 7, 2007 NASDAQ:ADES A Leader in Clean Coal Technology Exhibit 99.1 |
 -2- This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which provide a "safe harbor" for such statements in certain circumstances. Such statements are prefaced by words such as “anticipates,” “believes,” “hopes,” “expects,” “intends” and “plans,” or words of similar meaning. These statements include the Company’s expectations regarding future revenues or other financial measures, the number and timing of anticipated projects and new contracts, anticipated size of and growth in our target markets, expected shortage in activated carbon supply, costs of building an activated carbon manufacturing facility and similar items. Such statements involve significant uncertainties. Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including but not limited to changing economic conditions and market demand for ADA-ES’ products and services, changes in technology, failure to satisfy performance guarantees, reductions in federal funding, changes in federal and state laws or regulations, results of demonstrations of the Company’s and licensed technologies, inability to obtain funding and other risks related to the development of an activated carbon manufacturing facility, operational difficulties, availability of skilled personnel, and other factors discussed in the Company's filings with the U.S. Securities and Exchange Commission. The forward looking statements contained in this presentation are presented as of the date hereof, and we disclaim any duty to update such statements unless required by law to do so. |
 -3- Overview ADA Environmental Solutions develops environmental technology and specialty chemicals for the coal-fired power plant market Recognized emission control industry experts Senior staff has over 200 years experience developing emission control technology |
 -4- Coal: a Key Energy Resource Coal powers 50%+ of U.S. electricity generation 1,100+ coal-fueled boilers Lowest cost energy source Secure energy source – 250-year U.S. reserve but Clean coal technologies are critical to long-term viability and future acceptance |
 -5- Investment Highlights Profitable and cash flowing on an annual basis since ‘03 spin-off Strong balance sheet Three significant growth opportunities: 1. Mercury control from power plants • ADA is a market leader • Currently a leading provider of engineering services and equipment • Undertaking large capital projects ($260mm to $1.5B) to vertically integrate business
in production of Activated Carbon (AC) • Well positioned for potential $1-3B/yr market of pending Federal regulation
(existing rules create $200-400mm market) 2. Developing Refined Coal (Section 45) product for older plants • ADA technology meets technical criteria for tax credits of approximately $6 million per
plant per year 3. Developing technology to address greenhouse gas CO 2 |
 -6- Technology Markets Generate Three Revenue Opportunities R&D/Engineering Services DOE and industry sponsorship Low-cost capital equipment Typical emission control equipment: $25 - $100mm ADA equipment: ~ $1mm Continuous chemical revenue streams $100mm to $1B annual markets Razors and Razor Blades |
 -7- R&D Support for Technology Development 1985-1996: Awarded 50+ R&D contracts exceeding $40 million 2000: Won $1.7 million DOE flue gas conditioning program 2001: Won $6.8 million DOE mercury control program 2002: Won $2.4 million DOE follow-on mercury control program 2003: Won $8.8 million DOE full-scale mercury control program 2004: Won $9 million contract with We Energies under $53 million mercury control program (50% funded by the DOE) 2004: Won approx. $5 million contract for 4 additional sites 2006: Won $7.5 million DOE mercury control project for 2 plants 2006: NexGen JV may provide up to $5 million over next three years 2006: DOE award for development of ADESORB ™ , a proprietary process to produce activated carbon 2006: $4 million DOE subcontract for sorbent-based CO 2 control |
 GROWTH AREA #1 MERCURY CONTROL |
 -9- ADA-ES Technology is Low Cost and Simple to Implement Scrubber Removes SO 2 Particle Capture AC Injected Here AC Storage and Feeder AC with Mercury Collected Here Activated Carbon (AC) Injection for Mercury Control |
 -10- Engineering Services Develop and demonstrate emission control technology Help utility clients develop cost- effective emission control Mercury, NO X /SO 2, CO 2 , Particulate Build relationships with utility customers On leading edge of new regulations and new approaches to existing regulations Continuous Mercury Monitor |
 -11- Technology Demonstrations Provide Basis for Bidding and Guaranteeing Hg Control Tested ACI using western coal Tested ACI using eastern coal |
 -12- Proven Technology PRB/Bit Blend ESP PRB ESP PRB Fabric Filter 0 10 20 30 40 50 60 70 80 90 100 0 0.5 1 1.5 2 2.5 3 3.5 4 Sorbent Costs (mills/kWh) Eastern Bituminous Exceeded EPA cost goals by 80% Established as “Best Available” and “Maximum Achievable” control technology for mercury |
 -13- Market Drivers: Regulations for Hg Control Existing Rules Create $200-400 Million Market State with proposed legis/regs more strict than CAMR (13) State with firm legis/regs more strict than CAMR (13) Planned plant that has ordered mercury control system Plant with consent decree limiting mercury emissions P P State currently accepting CAMR (24) P P P P P P P P P Total Existing Coal-Fired Capacity MW 24,000 12,000 2,400 |
 -14- Prospects for New Federal Legislation Expected to Create $1 Billion Market for AC EPA sued by multiple states and environmental groups re: CAMR Ruling from the DC District Court expected this year Two multi-pollutant (SO 2 , NO x , Hg, CO 2 ) bills introduced to the Senate in April Bipartisan support Tighter Hg, NO x and SO 2 controls are not controversial with focus on CO 2 |
 -15- Activated Carbon Injection (ACI) Equipment for Mercury Control |
 -16- ACI Equipment Sales: Status Since summer ‘05 commercialization: Announced contracts covering 19 ACI systems Contract options on 6 more Key supplier of mercury control technology to major air pollution control companies Babcock and Wilcox, Alstom Power, Hamon Research Cottrell, and Hitachi, among others Working closely with largest utilities in the U.S. and Canada Expect to bid on 50-100 systems in 2008-2009 Recently doubled the size of our engineering design group
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 -17- Activated Carbon (AC): Current and Near-Term Supply Capacity Current AC market in US: approx. 450 million pounds per year Primarily used for drinking water treatment 90% provided by Calgon, Norit and Mead Westvaco • Operating near production capacity 40-60 million pounds of Chinese carbons had been dumped on the market at below cost • 70% tariffs on Chinese carbons imposed in April ’07 New mercury control market could require additional 400 million pounds by 2010 and up to 1 billion pounds by 2012 to 2015 New AC production plants are necessary for new mercury control market Could take 4 to 6 years ADA has advanced plans to build new production plants to meet expected AC demand by customers Plan to be operational by Q1 2010 |
 -18- New Market for Activated Carbon Created for Mercury Control 0 500 1,000 1,500 2,000 Activated Carbon (millions of lbs / yr) Current H20 AC Market Developing Market for Hg Control Total AC Market 2006 2010E 2015E ANNUAL U.S. MARKET Significant production gap identified New Market based on existing regulations New Market based on Federal regulation |
 -19- Recent Activated Carbon Market Activity AC pricing in water treatment has risen 80% compared to last year Four utilities have issued RFPs for AC in past 4 months 200 million pounds per year requested 3, 5, and 10 year terms requested All requests for higher-priced Treated Carbon (TAC) for Western coals TAC quoted by AC suppliers at $1.00/lb and above • Current spot $0.85+ |
 -20- ADA-ES New Activated Carbon Production Largest AC plant(s) in North America Capital cost: approx. $260mm per production line Would produce approx. $100mm in product per year at current prices IRR expected to be greater than 25% 4-6 year process: Test products Secure lignite feedstock Design plant Select site Permits filed and pending Purchase equipment Permits issued/Construction Permitting multiple sites: goal of AC production by 2010 Current stage |
 -21- Permitting AC Plants at Three Lignite Mine-Mouth Sites (Two Lines per Site) 1. Adjacent to Red River Mine in NW Louisiana 2. Adjacent to Falkirk Mine near Bismarck, ND 3. Alternate ND site to be announced |
 -22- Anticipated Greenfield Funding 60 - 80% debt project financing Long-term off-take contracts expected to provide backing 20 - 40% equity including: ADA-ES equity • Shelf registration effective with SEC for issuance of up to 3mm shares of Common Stock • Terms to be determined at issuance Anticipating equity from strategic partner(s) in energy industry |
 -23- Consumables Interest Depreciation Taxes Net Income 12% Labor-GA-Maint. 11% 16 % 28 % Consumables 16% 14% 19% Estimated Greenfield AC Plant Economics (1) Based on Annual revenue ~ $100 million -TAC 68% -PAC 29% -Power 3% EBITDA 70% (1) See Assumptions on Slide 39 |
 -24- 0 50 100 150 200 2006 2007 2008 2009 2010 2011 2012 Rev Low Rev Mid Rev High EBITDA Mercury Control – Estimated Revenue & EBITDA (1) Based on a single production line (6 being permitted) for existing regulations (1) See Assumptions on Slide 39 |
 -25- Upcoming Milestones for Greenfield Plant Milestones Date Status File for air permit in LA August 2007 Filed Financing partner engaged August 2007 In Negotiation EPC Contractor selected October 2007 In Negotiation File for air permit ND1 September 2007 Final Preparation File for air permit ND2 October 2007 Major equipment ordered December 2007 In Procurement Construction permits granted April 2008 Financial close May 2008 Unit 1 operational Q1 2010 |
 -26- Project Team for Greenfield AC Plant MANAGEMENT, SITING, ENGINEERING, PROCUREMENT & CONSTRUCTION Emission Strategies Inc.: Project management Ramco Generating Two: Siting & project development support Highline Consultants, LLC: Engineering and environmental management Harris Group, Inc.: Engineering East Mountain Consultants, Inc.: Project Controls Andover Technology Partners: Market and alternatives analysis Misc: Engineering cross-checks, surveys & geotech TBD: EPC TBD: Owner’s engineer TBD: Owner’s construction management OPERATIONS & ENVIRONMENTAL Zephyr Environmental Corporation: Permitting Resource Catalysts: Environmental AOR, Inc.: Brand Development Steve Young (ADA-ES): Process development & Ops Ken Baldrey (ADA-ES): AC production R&D Hazen Laboratories: Pilot & product testing TBD: Plant operations contractor FINANCE & LEGAL 4M Corporation: Finance & market analysis manager Strategic Initiatives: Corporate finance advisor TBD: Investment bank TBD: Equity Manager / co-manager TBD: Strategic equity partner Schuchat, Herzog and Brenman: Corporate counsel Fox Rothschild: Lead counsel & legal team management Ayres Law Group: Environmental group outreach & legislation Hogan & Hartson: Contracts & environmental attorneys John Adams Associates: Public relations The Equity Group: Investor relations Blanchard, Walker, O’Quin & Roberts: LA counsel Kean Miller: LA environmental & transmission attorneys Kelsch Kelsch Ruff & Kranda: ND counsel SALES & MARKETING Jon Barr (ADA-ES) Rich Miller (ADA-ES) |
 GROWTH AREA #2 REFINED COAL |
 -28- Refined Coal: Cyclean American Jobs Creation Act of 2004 creates tax credit of $6/ton for “Refined Coal” (2009 – 2019) “Refined” if 20% reduction in NO X and 20% reduction in SO 2 or Mercury ADA-ES Refined Coal process: Adds proprietary chemicals on Western Coal For Cyclone boilers Burns cleaner and more efficiently |
 -29- Status: Cyclean Refined Coal Simple process designed for rapid deployment Demonstrated at three full-scale plants achieving emission reduction levels that can qualify for the tax credit Patents on key components of technology; recently applied for new patents Marketing effort underway Clarification required on 50% market value issue |
 -30- Cyclean Business Model Established a JV, Clean Coal Solutions LLC (CCS), with an affiliate of NexGen Resources Corporation NexGen to pay ADA-ES $5mm for 50% of CCS upon tax qualification Expect CCS to have chemical revenue of $3-4/ton The $6/ton tax credit to be monetized into $4.80/ton revenue (may share tax credit with customer) Target market: Cyclone boilers burning PRB coal 60 million tons per year total market 20 million tons per year currently require mercury control
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 -31- Remaining Challenges for Refined Coal Recent PRB Coal Prices Rapid marketing of product Clarification of “50% Market Value” requirement 2006 price spikes created unexpected volatility Congressional clarification required Bill currently in joint House/Senate committee - 5.00 10.00 15.00 20.00 25.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 8800 Btu 8400 Btu |
 -32- 0 25 50 2006 2007 2008 2009 2010 2011 2012 Rev Low Rev Mid Rev High EBITDA Refined Coal – Estimated Revenue & EBITDA (1) Based on 10 Million Tons of Refined Coal Per Year (1) See Assumptions on Slide 39 |
 GROWTH AREA #3 CONTROL OF GREENHOUSE EMISSIONS: CARBON DIOXIDE |
 -34- CO 2 Control Business Plan In pre-market period, use funding from electric power generators and DOE Currently negotiating a subcontract on $4mm DOE program for sorbent-based CO 2 control Seeing a rapid growth in funding available to address the CO 2 issue. Develop technology with a focus on the existing fleet of 1,100 boilers Focus on technology that will have a component that creates a continuing revenue stream Potentially largest new market opportunity |
 FINANCIAL OVERVIEW |
 -36- Financial Highlights Cash flowing & profitable on an annual basis since ‘03 spin-off 40% growth in revenue in 2006 Raised over $20 million in past two years to support growth Two private equity placements 5.9 million diluted shares outstanding 50%+ held by institutions ~15% held by insiders and employees |
 -37- Past Actual and Estimated Future Revenue by Product Line (1) Based on Existing Mercury Regulations (1) See Assumptions on Slide 39 0 100 200 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Other FGC Mercury Refined Coal CO2 |
 -38- Past Actual and Estimated Future Revenue by Product Segments (1) Based on Existing Mercury Regulations (1) See Assumptions on Slide 39 0 100 200 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Other Engineering Consulting Equipment Chemicals |
 -39- Assumptions Actuals, 2007 Budget, 2008 – 2012 Projections 1. Revenue / EBITDA A. Mercury i. Achieve 50% of available ACI equipment market ii. Greenfield Activated Carbon Plant Project a) Single production line b) Current spot pricing for AC B. Refined Coal i. Sell 10 million tons Cyclean per year ii. $6/ ton tax credit, shared 50% with customer and monetized C. Declining FGC revenues, Increasing CO 2 consulting D. EBITDA based on mid-point estimates 2. Greenfield Activated Carbon Plant Economics A. Current price quotes for lignite, labor, and equipment B. Average of first ten years of production |
 -40- Strong Financial Position Balance sheet highlights (at 3/31/07): Cash and investments of $22.7 million Working capital of $17.3 million No long-term debt Shareholders’ equity of $27.7 million Market cap $71 million (8/1/07) |
 -41- Summary ADA-ES has been instrumental in creating a new mercury control market Existing rules: 150 ACI systems, 400 mm lbs/yr AC New Federal Rule: 600-700 ACI systems, 1 B lbs/yr AC ADA is already a leading provider of engineering services and equipment for the mercury control market Building new AC plants for this market Operating permits for 6 production lines expected Q1-2 2008 Well positioned to respond to AC demand by Federal rule Progress with Refined Coal; substantial market opportunity Developing control technology for Greenhouse gases The next big opportunity in Emission Control Strong financial position and growing revenue base |