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Equity Method Investments | 12 Months Ended
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Dec. 31, 2016
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments | Equity Method Investments Tinuum Group, LLC As of December 31, 2016 and 2015, the Company’s ownership in Tinuum Group was 42.5%. Tinuum Group supplies technology, equipment and technical services to cyclone-fired and other boiler users, but its primary purpose is to put into operation facilities that produce and sell RC that lower emissions and therefore qualify for tax credits available under Section 45 of the IRC ("Section 45 tax credits"). NexGen Refined Coal, LLC ("NexGen") and GSFS Investments I Corp. (“GSFS”), an affiliate of The Goldman Sachs Group, Inc. ("GS"), own the remaining 42.5% and 15.0%, respectively of Tinuum Group. GSFS' ownership interest is in the form of Class B units which provide certain preferences over ADA and NexGen as to liquidation and profit distribution, including a guaranteed 15% annual return on GSFS' unrecovered investment balance, which is calculated as the original GSFS investment, plus a 15% annual return thereon, less any distributions, including the allocation of Section 45 tax credits to the members. Additionally, on the 10 year anniversary of the date the last RC facility owned by Tinuum Group or one of its subsidiaries is placed into service, but no later than December 31, 2021, if GSFS's unrecovered investment balance has not been reduced to zero, GSFS may require Tinuum Group to redeem its Class B units for an amount equal to the then unrecovered investment balance, payable within 180 days of the notice of redemption. GSFS has no further capital call requirements and does not have a voting interest, but does have approval rights over certain corporate transactions. However, the Class B units do not have voting rights and ADA and NexGen each maintain a 50% voting interest in Tinuum Group. Tinuum Group had been determined to be a VIE, however, the Company does not have the power to direct the activities that most significantly impact Tinuum Group's economic performance and has therefore accounted for the investment under the equity method of accounting. The Company determined the voting partners of Tinuum Group have identical voting rights, equity control interests and board control interests, and therefore, concluded that the power to direct the activities that most significantly impact Tinuum Group's economic performance was shared. The following tables summarize the assets, liabilities and results of operations of Tinuum Group:
|  | As of December 31,
(in thousands) |  | 2016 |  | 2015
Current assets |  | $ | 24,584 |  |  | $ | 40,860 |
Non-current assets |  | $ | 83,621 |  |  | $ | 90,725 |
Current liabilities |  | $ | 43,117 |  |  | $ | 60,987 |
Non-current liabilities |  | $ | 11,456 |  |  | $ | 9,412 |
Redeemable Class B equity |  | $ | 18,250 |  |  | $ | 30,448 |
Members deficit attributable to Class A members |  | $ | 26,475 |  |  | $ | 25,175 |
Noncontrolling interests |  | $ | 8,907 |  |  | $ | 5,563 |
|  | Years Ended December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Gross profit |  | $ | 92,305 |  |  | $ | 108,416 |  |  | $ | 89,098 |
Operating, selling, general and administrative expenses |  | 23,662 |  |  | 23,405 |  |  | 21,501 |
Income from operations |  | 68,643 |  |  | 85,011 |  |  | 67,597 |
Other expenses |  | (8,775 | ) |  | (2,203 | ) |  | (1,830 | )
Class B preferred return |  | (3,901 | ) |  | (6,157 | ) |  | (8,707 | )
Loss attributable to noncontrolling interest |  | 27,234 |  |  | 10,675 |  |  | 11,023 |
Net income available to Class A members |  | $ | 83,201 |  |  | $ | 87,326 |  |  | $ | 68,083 |
ADES equity earnings from Tinuum Group |  | $ | 41,650 |  |  | $ | 8,651 |  |  | $ | 43,584 |
As shown above, the Company reported earnings from its equity investment in Tinuum Group of $41.7 million, $8.7 million and $43.6 million for the years ended December 31, 2016, 2015 and 2014, respectively. The difference between the Company's proportionate share of Tinuum Group's net income (at its equity interest of 42.5%) as presented in the table below, and the Company's earnings from its Tinuum Group equity method investment as reported on the Consolidated Statements of Operations relates to the Company receiving distributions in excess of the carrying value of the equity investment, and therefore recognizing such excess distributions as equity method earnings in the period the distributions occur, as discussed below. As shown in the table below, the Company’s carrying value in Tinuum Group was reduced to zero for all years presented, as cumulative cash distributions received from Tinuum Group exceeded the Company's pro-rata share of cumulative earnings in Tinuum Group. The carrying value of the Company's investment in Tinuum Group shall remain zero as long as the cumulative amount of distributions received from Tinuum Group continues to exceed the Company's cumulative pro-rata share of Tinuum Group's net income. For periods during which the ending balance of the Company's investment in Tinuum Group is zero, the Company only recognizes equity earnings from Tinuum Group to the extent that cash distributions are received from Tinuum Group during the period. For periods during which the ending balance of the Company's investment is greater than zero (e.g., when the cumulative earnings in Tinuum Group exceeds cumulative cash distributions received), the Company recognizes its pro-rata share of Tinuum Group's earnings for the period, less any amount necessary to recover the cumulative earnings short-fall balance as of the end of the immediately preceding period. As of December 31, 2016, the Company's carrying value in Tinuum Group has been reduced to zero, as cumulative cash distributions received from Tinuum Group have exceeded the Company's pro-rata share of cumulative earnings in Tinuum Group. If Tinuum Group subsequently reports net income, the Company will not record its pro-rata share of such net income until the cumulative share of pro-rata income equals or exceeds the amount of its cumulative income recognized due to the receipt of cash distributions. Until such time, the Company will only report income from Tinuum Group to the extent of cash distributions received during the period. Thus, the amount of equity income or loss reported on the Consolidated Statement of Operations may differ from a mathematical calculation of net income or loss attributable to the equity interest based upon the factor of the equity interest and the net income or loss attributable to equity owners as shown on Tinuum Group’s statement of operations. Additionally, for periods during which the carrying value of the Company's investment in Tinuum Group is greater than zero, distributions from Tinuum Group are reported on the Consolidated Statements of Cash Flows as "Distributions from equity method investees, return on investment" within Operating cash flows. For periods during which the carrying value of the Company's investment in Tinuum Group is zero, such cash distributions are reported on the Consolidated Statements of Cash Flows as "Distributions from equity method investees in excess of investment basis" within Investing cash flows. The following table presents the Company's investment balance, equity earnings and cash distributions in excess of the investment balance for the years ended December 31, 2014 through December 31, 2016 (in thousands):
Description |  | Date(s) |  | Investment balance |  | ADES equity earnings (loss) |  | Cash distributions |  | Memorandum Account: Cash distributions and equity loss in (excess) of investment balance
Beginning balance |  | 12/31/2013 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (12,906 | )
ADES proportionate share of net income from Tinuum Group (1) |  | 2014 activity |  | 26,613 |  |  | 26,613 |  |  | — |  |  | — |
Recovery of cash distributions in excess of investment balance (prior to cash distributions) |  | 2014 activity |  | (12,906 | ) |  | (12,906 | ) |  | — |  |  | 12,906 |
Cash distributions from Tinuum Group |  | 2014 activity |  | (43,584 | ) |  | — |  |  | 43,584 |  |  | — |
Adjustment for current year cash distributions in excess of investment balance |  | 2014 activity |  | 29,877 |  |  | 29,877 |  |  | — |  |  | (29,877 | )
Total investment balance, equity earnings (loss) and cash distributions |  | 12/31/2014 |  | $ | — |  |  | $ | 43,584 |  |  | $ | 43,584 |  |  | $ | (29,877 | )
ADES proportionate share of net income from Tinuum Group (1) |  | 2015 activity |  | $ | 35,265 |  |  | $ | 35,265 |  |  | $ | — |  |  | $ | — |
Recovery of cash distributions in excess of investment balance (prior to cash distributions) |  | 2015 activity |  | (29,877 | ) |  | (29,877 | ) |  | — |  |  | 29,877 |
Cash distributions from Tinuum Group |  | 2015 activity |  | (8,651 | ) |  | — |  |  | 8,651 |  |  | — |
Adjustment for current year cash distributions in excess of investment balance |  | 2015 activity |  | 3,263 |  |  | 3,263 |  |  | — |  |  | (3,263 | )
Total investment balance, equity earnings (loss) and cash distributions |  | 12/31/2015 |  | $ | — |  |  | $ | 8,651 |  |  | $ | 8,651 |  |  | $ | (3,263 | )
ADES proportionate share of net income from Tinuum Group (1) |  | 2016 activity |  | $ | 35,019 |  |  | $ | 35,019 |  |  | $ | — |  |  | $ | — |
Recovery of cash distributions in excess of investment balance (prior to cash distributions) |  | 2016 activity |  | (3,263 | ) |  | (3,263 | ) |  | — |  |  | 3,263 |
Cash distributions from Tinuum Group |  | 2016 activity |  | (41,650 | ) |  | — |  |  | 41,650 |  |  | — |
Adjustment for current year cash distributions in excess of investment balance |  | 2016 activity |  | 9,894 |  |  | 9,894 |  |  | — |  |  | (9,894 | )
Total investment balance, equity earnings and cash distributions |  | 12/31/2016 |  | $ | — |  |  | $ | 41,650 |  |  | $ | 41,650 |  |  | $ | (9,894 | )
(1) The amounts of the Company's 42.5% proportionate share of net income as shown in the table above differ from mathematical calculations of the Company’s 42.5% equity interest in Tinuum Group multiplied by the amounts of Net Income available to Class A members as shown in the table above of Tinuum Group's results of operations due to adjustments related to the Class B preferred return and the elimination of Tinuum Group's earnings attributable to RCM6, of which the Company owned 24.95% during the years ended December 31, 2015 and 2014 and for the period from January 1 through March 3, 2016. As noted below, the Company sold its interest in RCM6 on March 3, 2016. As of December 31, 2016, the Company's future proportionate share of Tinuum Group's net income must exceed approximately $9.9 million before the Company can recognize any earnings from Tinuum Group, unless future, non-refundable cash distributions occur, in which event such distributions would be recognized as earnings from Tinuum Group in the Consolidated Statement of Operations. Additional information related to Tinuum Group pursuant to Regulation S-X Rule 3-09 ("Rule 3-09") of the Securities and Exchange Act of 1934 (the "Exchange Act") is included within Item 15 Exhibits and Financial Statement Schedules ("Item 15") of this Form 10-K. Tinuum Services, LLC In 2010, the Company, together with NexGen, formed Tinuum Services for the purpose of operating and maintaining all of the RC facilities, including those RC facilities leased or sold to third parties. The Company has determined that Tinuum Services is not a VIE and has evaluated the consolidation analysis under the Voting Interest Model. The Company has a 50% voting and economic interest in Tinuum Services, which is equivalent to the voting and economic interest of NexGen. Therefore, as the Company does not hold greater than 50% of the outstanding voting interests, either directly or indirectly, it has accounted for the investment under the equity method of accounting. As of December 31, 2016 and 2015, the Company’s 50% investment in Tinuum Services was $4.0 million and $4.0 million, respectively. The following tables summarize the assets, liabilities and results of operations of Tinuum Services:
|  | As of December 31,
(in thousands) |  | 2016 |  | 2015
Current assets |  | $ | 278,001 |  |  | $ | 186,959 |
Non-current assets |  | $ | 3,426 |  |  | $ | 3,704 |
Current liabilities |  | $ | 97,093 |  |  | $ | 92,675 |
Non-current liabilities |  | $ | 1,488 |  |  | $ | 1,366 |
Equity |  | $ | 7,918 |  |  | $ | 7,935 |
Noncontrolling interests |  | $ | 174,928 |  |  | $ | 88,687 |
|  | Years Ended December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Gross loss |  | $ | (54,644 | ) |  | $ | (42,496 | ) |  | $ | (22,168 | )
Operating, selling, general and administrative expenses |  | 134,782 |  |  | 161,456 |  |  | 102,757 |
Loss from operations |  | (189,426 | ) |  | (203,952 | ) |  | (124,925 | )
Other expenses |  | (56 | ) |  | (118 | ) |  | (62 | )
Loss attributable to noncontrolling interest |  | 198,464 |  |  | 213,746 |  |  | 132,237 |
Net income |  | $ | 8,982 |  |  | $ | 9,676 |  |  | $ | 7,250 |
ADES equity earnings from Tinuum Services |  | $ | 4,491 |  |  | $ | 4,838 |  |  | $ | 3,625 |
Included within the Consolidated Statement of Operations of Tinuum Services during the years ended December 31, 2016, 2015 and 2014 were losses related to VIE entities that are consolidated within Tinuum Services of $198.5 million, $213.7 million and $132.2 million, respectively. These losses do not impact the Company's equity earnings from Tinuum Services as 100% of those losses are attributable to a noncontrolling interest and eliminated in the calculations of Tinuum Services' net income attributable to the Company's interest. For the years ended December 31, 2016 and 2015, Tinuum Services did not meet the significant subsidiary test provided in Regulation S-X Rule 1-02(w) ("Rule 1-02(w)") and pursuant to Regulation S-X Rule 3-09 ("Rule 3-09"). RCM6, LLC On February 10, 2014, the Company purchased a 24.95% membership interest in RCM6, which owned a single RC facility that produced and sold RC that qualified for Section 45 tax credits, from Tinuum Group through a combination of an up-front payment and note payable to Tinuum Group. Due to the payment terms of the note purchase agreement, the note payable was periodically negatively amortizing. The balance of the note payable balance as of December 31, 2015 was $14.2 million. In addition to the upfront and note payments, the Company was also subject to quarterly capital calls and variable payments based upon differences in originally forecasted RC production as of the purchase date and actual quarterly production. During the years ended December 31, 2016, 2015 and 2014, the Company paid aggregate capital calls and variable payments totaling $0.2 million, $2.4 million and $4.2 million, respectively. RCM6 was determined to be a VIE; however, the Company did not have the power to direct the activities that most significantly impact its economic performance and therefore accounted for RCM6 under the equity method of accounting. As of December 31, 2015 and 2014, the Company’s ownership in RCM6 was 24.95%. The Company’s investment in RCM6 as of December 31, 2015 was $13.3 million. On March 3, 2016, the Company sold its 24.95% membership interest in RCM6 for a cash payment of $1.8 million and the assumption, by the buyer, of the outstanding note payable made by the Company in connection with its purchase of RCM6 membership interests from Tinuum Group in February 2014. In doing so, the Company recognized a gain on the sale of $2.1 million for the year ended December 31, 2016, which is included within the Other line item in the Consolidated Statements of Operations. As a result of the sale of its ownership interest, the Company ceased to be a member of RCM6 and, as such, is no longer subject to any quarterly capital calls and variable payments to RCM6. In addition, the Company has no future obligations related to the previously recorded note payable. However, the Company will still receive its pro-rata share of income and cash distributions through its ownership in Tinuum Group based on the RCM6 RC facility lease payments made to Tinuum Group. The following tables summarize the assets and liabilities and results of operations of RCM6 for balance sheet dates and periods ended in which the Company owned a 24.95% membership interest:
|  | As of December 31,
(in thousands) |  | 2016 |  | 2015
Current assets |  | $ | — |  |  | $ | 12,240 |
Non-current assets |  | $ | — |  |  | $ | 2,472 |
Current liabilities |  | $ | — |  |  | $ | 1,489 |
Non-current liabilities |  | $ | — |  |  | $ | 7,649 |
Equity |  | $ | — |  |  | $ | 5,574 |
|  | January 1 - March 3, |  | Year ended December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Gross loss |  | $ | (555 | ) |  | $ | (7,877 | ) |  | $ | (8,257 | )
Operating, selling, general and administrative expenses |  | 360 |  |  | 2,178 |  |  | 2,123 |
Loss from operations |  | (915 | ) |  | (10,055 | ) |  | (10,380 | )
Other expenses |  | (52 | ) |  | (641 | ) |  | (666 | )
Net loss |  | $ | (967 | ) |  | $ | (10,696 | ) |  | $ | (11,046 | )
ADES equity loss from RCM6 |  | $ | (557 | ) |  | $ | (4,568 | ) |  | $ | (4,497 | )
The purchase of RCM6 resulted in the Company recording a basis difference related to property, plant and equipment and identifiable intangible assets. The amount by which the total of the Company's investment in RCM6 exceeded its proportionate share of the investee's net assets, recorded within the Equity method investments line item in the Consolidated Balance Sheets as of December 31, 2015 was $11.9 million. The difference between the Company's proportionate share of RCM6's net loss and the Company's equity losses noted above related to this depreciation and amortization. For the period from January 1 through March 3, 2016 and the years ended December 31, 2015 and 2014, the Company decreased its equity method earnings in RCM6 by $0.3 million, $1.9 million and $1.7 million, respectively, due to the basis difference. The following table details the carrying value of the Company's respective equity method investments included within the Equity method investments line item on the Consolidated Balance Sheets and indicates the Company's maximum exposure to loss:
|  | As of December 31,
(in thousands) |  | 2016 |  | 2015
Equity method investment in Tinuum Group |  | $ | — |  |  | $ | — |
Equity method investment in Tinuum Services |  | 3,959 |  |  | 3,968 |
Equity method investment in RCM6 |  | — |  |  | 13,264 |
Total equity method investments |  | $ | 3,959 |  |  | $ | 17,232 |
The Company evaluates the investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. No impairments were recorded during the years ended December 31, 2016, 2015 and 2014. The following table details the components of the Company's respective earnings or loss from equity method investments included within the Earnings from equity method investments line item on the Consolidated Statements of Operations:
|  | Year ended December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Earnings from Tinuum Group |  | $ | 41,650 |  |  | $ | 8,651 |  |  | $ | 43,584 |
Earnings from Tinuum Services |  | 4,491 |  |  | 4,838 |  |  | 3,625 |
Loss from RCM6 |  | (557 | ) |  | (4,568 | ) |  | (4,497 | )
Earnings from equity method investments |  | $ | 45,584 |  |  | $ | 8,921 |  |  | $ | 42,712 |
The following table details the components of additional cash investments related to the Company's respective equity method investments included within the Consolidated Statements of Cash Flows:
|  | Year ended December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Purchase of RCM6 interest from Tinuum Group |  | $ | — |  |  | $ | — |  |  | $ | 3,153 |
Contributions to RCM6 |  | 223 |  |  | 2,398 |  |  | 3,478 |
Purchase of and contributions to equity method investments |  | $ | 223 |  |  | $ | 2,398 |  |  | $ | 6,631 |
The following table details the components of the cash distributions from the Company's respective equity method investments included within the Consolidated Statements of Cash Flows. Distributions from equity method investees are reported on the Consolidated Statements of Cash Flows as “return on investment” within Operating cash flows until such time as the carrying value in an equity method investee company is reduced to zero; thereafter, such distributions are reported as “distributions in excess of cumulative earnings” within Investing cash flows.
|  | Year ended December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Distributions from equity method investees, return on investment |  |  |  |  |  |
Tinuum Group (1) |  | $ | 3,400 |  |  | $ | — |  |  | $ | — |
Tinuum Services |  | $ | 4,500 |  |  | $ | 5,019 |  |  | $ | 2,509 |
Included in Operating Cash Flows |  | $ | 7,900 |  |  | $ | 5,019 |  |  | $ | 2,509 |
Distributions from equity method investees in excess of cumulative earnings |  |  |  |  |  |
Tinuum Group |  | $ | 38,250 |  |  | $ | 8,651 |  |  | $ | 43,584 |
Included in Investing Cash Flows |  | $ | 38,250 |  |  | $ | 8,651 |  |  | $ | 43,584 |
(1) During the three months ended March 31, 2016, the Company's cumulative share of pro-rata Tinuum Group income exceeded the amount of its cumulative income recognized due to cash being distributed. As such, the Company recognized $3.4 million as "return on investment".

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66011266&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=64825282&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=64825282&loc=d3e32787-111569 + Details
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