EX-99.1 2 d658369dex991.htm EX-99.1

Advanced Emissions Solutions, Inc. NASDAQ: ADES Investor Presentation January 2014 www.advancedemissionssolutions.com Exhibit 99.1

This presentation includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a "safe harbor" for such statements in certain circumstances. The forward-looking statements include statements or expectations regarding future contracts, projects, demonstrations and technologies; amount and timing of production of RC, revenues, earnings, cash flows and other financial measures; future operations; our ability to capitalize on and expand our business to meet opportunities in our target markets and profit from our proprietary technologies; scope, timing and impact of current and anticipated regulations and legislation; future supply and demand; the ability of our technologies to assist our customers in complying with government regulations and related matters. These statements are based on current expectations, estimates, projections, beliefs and assumptions of our management. Such statements involve significant risks and 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, changes in laws, regulations and IRS interpretations or guidance, government funding, accounting rules, prices, economic conditions and market demand; timing of laws, regulations and any legal challenges to or repeal of them; failure of the RC facilities to produce coal that qualifies for tax credits; termination of or amendments to the contracts for RC facilities; decreases in the production of RC; failure to lease or sell the remaining RC facilities on a timely basis; our inability to ramp up operations to effectively address expected growth in our target markets; inability to commercialize our technologies on favorable terms; impact of competition; availability, cost of and demand for alternative tax credit vehicles and other technologies; technical, start-up and operational difficulties; availability of raw materials and equipment; loss of key personnel; intellectual property infringement claims from third parties; seasonality and other factors discussed in greater detail in our filings with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on such statements and to consult our SEC filings for additional risks and uncertainties that may apply to our business and the ownership of our securities. Our forward-looking statements are presented as of the date made, and we disclaim any duty to update such statements unless required by law to do so. We refer to certain non-GAAP financial measures in this presentation. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found within this presentation. © 2012-2014 Advanced Emissions Solutions, Inc. -2- AFE S H ARBOR

WHO WE ARE ADA-ES, Inc. 100% owned ADES BCSI, LLC 100% owned ADES Clean Coal Solutions, LLC 42.5% owned ADA-ES, Inc. Operating Companies © 2012-2014 Advanced Emissions Solutions, Inc. -3- A family of companies that has been providing emission control solutions to the power industry for more than 30 years Portfolio of proprietary, low CAPEX technologies to meet pollution control mandates. 19 patents issued or allowed Customers include most of the leading electric power companies Strong and growing cash flows from Refined Coal business through 2021 (CCS) Emission Control at early stage of compliance ramp. Near-term equipment market, longer- term consumables supply market (ADA and BCSI)

-4- Refined Coal- $0 cost to utility M-Prove™ Technology ~$100k capex, $1-$4/ton reduced compliance cost ACI/DSI- $1-$3M in capex Scrubber, SCR- $100M+ in capex Large E&C firms Boiler ACI System DSI System Coal Pile ACI System for Mercury Control © 2012-2014 Advanced Emissions Solutions, Inc. PORTFOLIO OF EMISSIONS CONTROL SOLUTIONS

Near-term growth opportunities Refined Coal Creates $1B equipment market ADA leading provider of equipment to meet MATS Activated Carbon Injection Systems Dry Sorbent Injection Systems Equipment backlog buildup $56.6M at 3Q13 $33.2M at 2Q13 $25.3M at 4Q12 MATS to create annual market of $1-$2B for consumables to control mercury (e.g. AC, chemical enhancements) ADA offers proprietary chemical technology applied to coal prior to combustion that reduces AC requirements Addressable market of ~600M tons of western coal per year Equipment Consumables Mercury Control (MATS) Clean Coal Solutions (CCS) 42.5% ADA 42.5% NexGen 15% Goldman Sachs 28 RC facilities qualify for Section 45 Tax Credits of $6.59/ton (escalating) through 2021 8 RC facilities generating more than $85M in annual payments to CCS (ADA 42.5%) Remaining RC facilities expected to be in full-time operation by YE2014 Expect ~$300M in annual CCS revenues at +90% margin by 2015 MATS rule took effect in 2012, compliance by 2015-2016 -5- © 2012-2014 Advanced Emissions Solutions, Inc.

-6- NEXGEN 42.5% ADES 42.5% GOLDMAN SACHS 15% Clean Coal Solutions Ownership Structure 1. RC facilities owned by CCS; ADES owns 42.5% of CCS through ADA-ES, Inc. 2. Results in ~$120 million in annual revenue to ADES through ADA-ES, Inc.’s 42.5% ownership in CCS. 3. Results in ~$40 million in annual tax benefits to ADES through ADA-ES, Inc.’s 42.5% ownership in CCS. © 2012-2014 Advanced Emissions Solutions, Inc. Section 45 of the Internal Revenue Code offers $6.59/ton in tax credits for the production of pollution mitigating RC through 2021 Qualifying RC facilities must reduce mercury by 40+% and NO x by 20+% and have been “placed in service” on or prior to December 31, 2011 ADES affiliates 1 own 28 qualifying RC facilities expected to be located at plants that burn 100+ million tons of coal annually Expect ~$300 million in annual revenue to CCS at ~95% margin beginning 2015 2 Expect ~$100 million in annual tax benefits to CCS beginning 2015 3

-7- 3 rd party investor 3 rd party investor leases RC facility and receives ~$8.00/ton in tax credits (assuming a 35% tax rate) Pays ~$2.00/ton for operating expenses CCS receives $3.00 to $4.00/ton in rental income Utility gets emission reductions Pays ~$1.00 /ton to utility CCS Leasing Model ADES owns 42.5% of CCS (~$1.40/ton) © 2012-2014 Advanced Emissions Solutions, Inc. REFINED COAL: BENEFITS FOR ALL PARTIES

100+ MT/yr O ~25 MT/yr 8 RC facilities leased ~8 MT/yr Dec 2013 Jan 2014 3/31/14 12/31/14 4 RC facilities CCS- operated Additional RC facility using M-45- PC in full-time operation All 28 RC facilities are expected to be in full-time operation by year end 2014 Expect approximately 15% of capacity to be CCS-operated to generate tax benefits sufficient to offset expected tax liability Full-Time Operations Road Map 2015 2021 Additional 4 RC facilities in full-time operation Additional 11 RC facilities in full-time operation 28 RC facilities in full-time operation © 2012-2014 Advanced Emissions Solutions, Inc. -8- UTLOOK FOR 28 RC F ACILITIES

© 2012-2014 Advanced Emissions Solutions, Inc. CCS incurs no operating costs for the RC facility CCS receives ~$3-$4/ton in rental income from RC investor CCS spends ~$3/ton to operate RC facility CCS generates ~$7.50/ton in tax credits for its members CCS incurs no operating costs for the RC facility CCS generates no value RC facility leased/sold to RC investor RC facility operated by CCS RC facility not in full- time operation * ADA’s 42.5% share of tax credits included in net deferred tax assets. NDTA are offset by a valuation allowance as discussed in the footnotes to the financial statements Typical RC facility producing 4MT/Y Quarterly ($M) Annually ($M) Cash Spent $ -- $ -- Cash Received $ -- $ -- Tax Benefits Generated $ -- $ -- Status Financial Impact Typical RC facility producing 4MT/Y Quarterly ($M) Annually ($M) Cash Spent $3.0 $12.0 Cash Received $ -- $ -- Tax Benefits Generated* ~$7.50 ~$30.0 Typical RC facility producing 4MT/Y Quarterly ($M) Annually ($M) Cash Spent $ -- $ -- Cash Received $3.5 $14.0 Tax Benefits Generated $ -- $ -- -9-

-10- ACI Systems DSI Systems M-Prove™ Technology Powdered Activated Carbon reduces mercury emissions in the flue gas Dry alkaline sorbents injected in flue gas for SO 2 and acid gas control M-Prove™ technology applied to coal to control mercury emissions Equipment Consumables © 2012-2014 Advanced Emissions Solutions, Inc.

E April 2015/2016 MATS compliance requirement driving rapid backlog growth $4 million at Q3 ‘12, $33 million at Q2 ‘13, $57 million at Q3 ‘13 ADES is prepared for the equipment market Supply agreements already in place, engineering capabilities expanded EC Revenue and Backlog ($million) © 2012-2014 Advanced Emissions Solutions, Inc. -11- MISSION C ONTROL

M-Prove™ technology for mercury emissions control is in the initial stages of being marketed for applications for western coals $1.00 to $4.00/ton in benefits to customer M-Prove™ technology being demonstrated at the RC facilities Expect the MATS to drive a $1 to $2 billion annual market for consumables by 2016 U.S. burns up to 600 million tons of western coal per year In addition, ADES offers a flue gas conditioning technology that aids in both SO 3 and mercury control Source: Department of Energy, Energy Information Administration and Electric Power Research Institute. -12- © 2012-2014 Advanced Emissions Solutions, Inc.

Developing proprietary solid sorbent capture technology to capture CO 2 from flue gas in conventional coal-fired boilers DOE and industry funding: Phase I — $3.8 million, R&D at 1 KWe scale, completed in 2011 Phase II — $22.6 million contract to validate technology at 1 MWe scale Pilot Design: 2012, Construction: 2013, Testing: Fall 2014 Located at Southern Company’s Plant Miller Advantages over competing technologies: For customer: lower cost and less parasitic energy Pilot plant being assembled at Plant Miller © 2012-2014 Advanced Emissions Solutions, Inc. -13-

RC opportunities expected to provide substantial growth in revenues, profits and cash flows in 2013, and consistent revenue streams through 2021 MATS compliance requirements are driving significant near-term market for equipment M-Prove TM technology and royalty opportunity expected to produce additional growth beyond MATS equipment market Developing solid sorbent capture technology to capture CO2 from flue gas in conventional coal-fired boilers KEY TAKEAWAYS © 2012-2014 Advanced Emissions Solutions, Inc. -14-

ADES is a Leader in the Pollution Control Industry More than 30 years of providing solutions to the power industry, 19 patents issued Focus on low capex solutions with recurring demand for chemicals Customers include most of the leading utilities Strong Momentum 12 RC facilities in full time operations, increasing to 17 by end of Q1 ‘14 and 28 by year end 2014 $57M equipment backlog up from $33M prior quarter and $4M year ago I High Margin Businesses ~95% RC gross margins 3 ~45% gross margins expected in the consumables market Recurring Revenue Streams & Visibility to Meaningful Cash Flows RC business expected to produce ~95% margin revenues through 2021 3 Annual revenue run rate of $85+M to Clean Coal Solutions (“CCS”), expected to grow to ~$300M+ by 2015 2 Mercury control consumables (M-Prove TM technology) to compete in $1B to $2B annual addressable market Large Market Opportunity Mercury Air Toxic Standards affect ~1,200 coal-fired units DOE expects coal to provide ~40% of America’s electricity in 2035 ADES affiliates 1 own 28 Refined Coal (“RC”) facilities eligible for Section 45 tax credits $1B equipment market and $1B to $2B annual consumables market 1. RC facilities owned by CCS; ADES owns 42.5% of CCS through ADA-ES, Inc. 2. Results in $35+ million annual revenue expected to grow to ~$120+ million annual revenue to ADES through ADA-ES, Inc.’s 42.5% ownership in CCS. 3. Currently non-GAAP, see notes on slide 29 and reconciliation on slide 30 4. NDTA are offset by a valuation allowance as discussed in the footnotes to the financial statements Strong Financial Position Visibility toward significant near-term annual cash flow from RC business segment ~$50M deferred tax asset 4 -15- © 2012-2014 Advanced Emissions Solutions, Inc. NVESTMENT UMMARY S

APPENDIX © 2012-2014 Advanced Emissions Solutions, Inc.

ADA-ES, Inc. 100% owned ADES BCSI, LLC 100% owned ADES Clean Coal Solutions, LLC 42.5% owned ADA-ES, Inc. Operating Companies C -17- © 2012-2014 Advanced Emissions Solutions, Inc. ORPORATE S TRUCTURE

COAL AND US ELECTRICITY GENERATION Source: EIA 2012: lowest power demand since 1987, natural gas prices reach a low of $1.91/MM/btu- 2012 average of $2.77/MMbtu -18- © 2012-2014 Advanced Emissions Solutions, Inc.

-19- © 2012-2014 Advanced Emissions Solutions, Inc.

MERCURY CONTROL- 15 YEARS IN THE MAKING EPA determines it necessary to regulate mercury 2000 2009 2005 2008 EPA issues Clean Air Mercury Rule D.C. Circuit Court vacates the Clean Air Mercury Rule EPA proposes new rule to replace the vacated CAMR EPA issues draft of Mercury Air Toxic Standards (MATS) EPA issues final Mercury Air Toxic Standards (MATS) Compliance deadline for MATS. Plants can apply for an extension 2011 2012 2015/16 Technology commercially proven -20- © 2012-2014 Advanced Emissions Solutions, Inc.

Boilers Treated by ACI Systems Source: Institute of Clean Air Companies, May 2013. © 2012-2014 Advanced Emissions Solutions, Inc. -21-

ADA STANDARD ACI SYSTEM -22- © 2012-2014 Advanced Emissions Solutions, Inc. Bin Vent Filter Man-door with PRV Level Transmitters PAC Storage Module Process Equipment Module

The American Jobs Creation Act of 2004, Section 45 of the IRC: contains provisions to incentivize the production of pollution mitigating Refined Coal (RC) via annually escalating tax credits per ton of coal burned. RC reduces mercury by 40%+ and NOx emissions by 20%+ when that coal is burned. Clean Coal Solutions (“CCS”) JV offers three technologies that produce Section 45 Refined Coal The CyClean TM , M-45 TM and M-45-PC TM technologies provide on-site, proprietary pre-treatment to Powder River Basin (PRB) and Lignite coals for use in cyclone boilers, circulating fluid bed boilers and pulverized coal boilers . Key Dates June 2010: Clean Coal Solutions commences operations at first two RC facilities December 2010: Congress extends “placed-in-service” deadline for new RC facilities to 12/31/11 January - December 2011: CCS fabricates, installs and “places-in-service” 26 additional RC units able to qualify for Section 45 tax credits June 2011: an affiliate of Goldman Sachs purchases a 15% stake in CCS for $60M 2012 - 2014: CCS focused on capturing the value of Section 45 tax credits REFINED COAL: INTRODUCTION & OVERVIEW © 2012-2014 Advanced Emissions Solutions, Inc. -23-

REFINED COAL PHOTOGRAPHS -24- © 2012-2014 Advanced Emissions Solutions, Inc.

-25- Pays ~$2.00/ton for operating expenses CCS receives $7.50/ton in tax benefits Utility gets emission reductions May pay up to ~$1.00/ton to utility CCS-Operated Model ADES receives 42.5% of tax benefits, or ~$3.20/ton ADES 1 ADES shares 42.5% of expenses, or ~$1.30/ton 1. 42.5% ownership in CCS through ADA-ES, Inc. © 2012-2014 Advanced Emissions Solutions, Inc.

-26- © 2012-2014 Advanced Emissions Solutions, Inc.

-27- © 2012-2014 Advanced Emissions Solutions, Inc. ($US in thousands) Three Months Ended Nine Months Ended 30-Sep-13 30-Sep-13 Revenues 74,593 $ 201,837 $ Revenues Excluding Coal Sales 39,025 89,539 Cost of Revenues 55,460 162,722 Gross Profit Before Depreciation & Amortization 19,133 $ 39,115 $ Gross Margin 26% 19% General & Administrative 8,955 $ 24,377 $ Research & Development 976 1,900 Depreciation & Amortization 1,433 4,202 Operating Income (Loss) 7,769 $ 8,636 $ Income from Unconsolidated Entities 547 $ 1,144 $ Other Income Including Interest 169 404 Interest Expense (194) (825) Other Expense (438) (1,846) Total Other Income (Expense) 84 $ (1,123) $ Income (Loss) Before Income Tax Benefit and Non- Controlling Interest 7,853 $ 7,513 $ Income Taxes - - Net Income (Loss) Before Non-Controlling Interest 7,853 $ 7,513 $ Non-Controlling Interest (6,262) (11,269) Net Income (Loss) Attributable to ADA 1,591 $ (3,756) $

EC gross margins of 18%, 19% and 22% for the three months ended September 30 th , the three months ended June 30 th and the LTM period respectively MATS rule finalized in March 2012 — compliance by April 2015/2016 Q3 ‘13 revenue up 300% year-over-year, driven by MATS demand for ACI and DSI systems Q3 ‘13 backlog stands at $57 million up from $33 million in Q2 ‘13 and $4 million in Q3 ‘12 Currently working on bids or discussing potential projects for ACI and DSI systems in excess of $120 million Emission Control Segment Results ($US in thousands) Three Months Ended Three Months Ended 30-Sep-13 30-Jun-13 LTM Systems and Equipment 12,094 $ 9,915 $ 32,656 $ Consulting and Development 2,150 2,020 6,240 Chemicals 254 79 779 Total EC Revenues 14,498 $ 12,014 $ 39,675 $ Cost of Revenues 11,836 $ 9,711 $ 31,097 $ EC Gross Profit 2,662 $ 2,303 $ 8,578 $ EC Segment Backlog 56,600 $ 33,200 $ 56,600 $ -28- © 2012-2014 Advanced Emissions Solutions, Inc.

R Refined Coal Segment Results Note: Adjusted gross profit and adjusted gross margin are non-GAAP financial measures which are used to provide investors with greater transparency with respect to the effect on gross margin from Clean Coal’s operation of certain RC facilities for its own account. We believe these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and the effect on gross profit and gross margin of the operation of these RC facilities by Clean Coal for its own account. 1. Adjusted to exclude coal costs of $35.6 million and CCS-operated coal operating costs of $3.1 million for the three months ended September 30, 2013, coal costs of $31.8 million and CCS-operated coal operating costs of $4.4 million for the three months ended June 30, 2013 and coal costs of $163.7 million and CCS-operated coal operating costs of $19.1 million in the LTM period. 2. Represents ADES’ share of Adjusted RC Gross Profit from ADA-ES, Inc.’s 42.5% ownership in CCS. 3. Represents ADES’ share of Tax Credits from ADA-ES, Inc.’s 42.5% ownership in CCS. Adjusted RC gross margins to ADES of 95%, 99% and 95% for the three months ended September 30 th , the three months ended June 30 th and the LTM period respectively ($US in thousands) Three Months Ended Three Months Ended 30-Sep-13 30-Jun-13 LTM Rental and Other Income 20,270 $ 12,419 $ 55,664 $ Coal Sales 35,568 31,769 163,663 Total RC Revenues 55,838 $ 44,188 $ 219,327 $ Cost of Revenues 39,626 $ 36,167 $ 185,246 $ RC Gross Profit 16,212 $ 8,021 $ 34,081 $ Adjusted RC Gross Profit 1 19,338 $ 12,393 $ 53,141 $ Adjusted RC Gross Profit to ADES 2 8,219 $ 5,267 $ 22,585 $ Tax Credits to ADES 2,882 $ 3,261 $ 17,167 $ 3 © 2012-2014 Advanced Emissions Solutions, Inc. -29- EFINED C OAL R ESULTS

$(000) September 30, 2013 September 30, 2012 June 30, 2013 Coal sales and cost of raw coal 35,568 $ 59,021 $ 31,769 $ Operating costs of retained tonnage 3,126 $ 8,349 $ 4,372 $ Adjusted gross profit and adjusted gross margin percentage excludes coal sales and raw coal purchases and retained tonnage operating expenses. Adjusted gross profit and adjusted gross profit percentage are non-GAAP financial measures which are used to provide investors with greater transparency with respect to the effect on gross margin from Clean Coal’s operation of certain RC facilities for its own account. We believe these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and the effect on gross margin and gross margin percentage of the operation of these RC facilities by Clean Coal for its own account. For the Three Months Ended -30- © 2012-2014 Advanced Emissions Solutions, Inc.

C Graham Mattison Vice President, Investor Relations (646)-319-1417 graham.mattison@adaes.com Michael D. Durham, Ph.D., MBA President & CEO Mark H. McKinnies SVP & CFO -31- © 2012-2014 Advanced Emissions Solutions, Inc. ONTACTS