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Equity Method Investments | 9 Months Ended
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Sep. 30, 2021
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments | Equity Method Investments Tinuum Group, LLC As of September 30, 2021 and December 31, 2020, the Company's ownership interest in Tinuum Group was 42.5%. Tinuum Group supplies technology equipment and technical services at select coal-fired generators, but its primary purpose is to put into operation facilities that produce and sell RC that lower emissions and also qualify for Section 45 tax credits. The Company concluded that Tinuum Group was a VIE, but the Company does not have the power to direct the activities that most significantly impact Tinuum Group's economic performance, as the voting partners of Tinuum Group have identical voting rights, equity control interests and board control interests, and therefore power is shared. Accordingly, the Company has accounted for its investment in Tinuum Group under the equity method of accounting since inception. The following table summarizes the results of operations of Tinuum Group:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Gross (loss) profit |  | $ | (3,226) |  |  | $ | 101 |  |  | $ | 8,269 |  |  | $ | 11,979 |
Operating, selling, general and administrative expenses |  | 12,077 |  |  | 13,781 |  |  | 38,308 |  |  | 38,476 |
Loss from operations |  | (15,303) |  |  | (13,680) |  |  | (30,039) |  |  | (26,497) |
Other income (expenses), net |  | 6,027 |  |  | 5,739 |  |  | 10,030 |  |  | 11,526 |
Loss attributable to noncontrolling interest |  | 34,551 |  |  | 25,023 |  |  | 99,167 |  |  | 63,117 |
Net income available to members |  | $ | 25,275 |  |  | $ | 17,082 |  |  | $ | 79,158 |  |  | $ | 48,146 |
ADES equity earnings from Tinuum Group |  | $ | 19,975 |  |  | $ | 7,260 |  |  | $ | 55,462 |  |  | $ | 20,462 |
For the three and nine months ended September 30, 2021, the Company recognized earnings from Tinuum Group's net income available to members that were different from its pro-rata share of Tinuum Group's net income available to members, as cash distributions for the three and nine months ended September 30, 2021 exceeded the carrying value of the Tinuum Group equity investment. For 2021, the Company expects to recognize such excess contributions as equity method earnings in the period the distributions occur, limited to the carrying value of the Tinuum Group equity investment. For the three and nine months ended September 30, 2020, the Company recognized its pro-rata share of Tinuum Group's net income available to its members for the respective period. The following tables present the Company's investment balance, equity earnings and cash distributions in excess of the investment balance, if any, for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Description |  | Date(s) |  | Investment balance |  | ADES equity earnings |  | Cash distributions |  | Memorandum Account: Cash distributions and equity earnings in (excess) of investment balance
Beginning balance |  | 12/31/2020 |  | $ | 3,387 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
ADES proportionate share of income from Tinuum Group |  | First Quarter |  | 10,755 |  |  | 10,755 |  |  | — |  |  | — |
Cash distributions from Tinuum Group |  | First Quarter |  | (19,749) |  |  | — |  |  | 19,749 |  |  | — |
Adjustment for current year cash distributions in excess of investment balance |  | First Quarter |  | 5,607 |  |  | 5,607 |  |  | — |  |  | (5,607) |
Total investment balance, equity earnings and cash distributions |  | 3/31/2021 |  | — |  |  | $ | 16,362 |  |  | $ | 19,749 |  |  | (5,607) |
ADES proportionate share of income from Tinuum Group |  | Second Quarter |  | 12,146 |  |  | $ | 12,146 |  |  | $ | — |  |  | — |
Recovery of prior cash distributions in excess of investment balance (prior to cash distributions) |  | Second Quarter |  | (5,607) |  |  | (5,607) |  |  | — |  |  | 5,607 |
Cash distributions from Tinuum Group |  | Second Quarter |  | (19,125) |  |  | — |  |  | 19,125 |  |  | — |
Adjustment for current year cash distributions in excess of investment balance |  | Second Quarter |  | 12,586 |  |  | 12,586 |  |  | — |  |  | (12,586) |
Total investment balance, equity earnings and cash distributions |  | 6/30/2021 |  | $ | — |  |  | $ | 19,125 |  |  | $ | 19,125 |  |  | $ | (12,586) |
ADES proportionate share of income from Tinuum Group |  | Third Quarter |  | $ | 10,742 |  |  | $ | 10,742 |  |  | $ | — |  |  | $ | — |
Recovery of prior cash distributions in excess of investment balance (prior to cash distributions) |  | Third Quarter |  | (12,586) |  |  | (12,586) |  |  | — |  |  | 12,586 |
Cash distributions from Tinuum Group |  | Third Quarter |  | (19,975) |  |  | — |  |  | 19,975 |  |  | — |
Adjustment for current year cash distributions in excess of investment balance |  | Third Quarter |  | 21,819 |  |  | 21,819 |  |  |  |  | (21,819) |
Total investment balance, equity earnings and cash distributions |  | 9/30/2021 |  | $ | — |  |  | $ | 19,975 |  |  | $ | 19,975 |  |  | $ | (21,819) |
Description |  | Date(s) |  | Investment balance |  | ADES equity earnings |  | Cash distributions |  |
Beginning balance |  | 12/31/2019 |  | $ | 32,280 |  |  | $ | — |  |  | $ | — |  |  |
ADES proportionate share of income from Tinuum Group |  | First Quarter |  | 6,438 |  |  | 6,438 |  |  | — |  |  |
Cash distributions from Tinuum Group |  | First Quarter |  | (13,764) |  |  | — |  |  | 13,764 |  |  |
Total investment balance, equity earnings and cash distributions |  | 3/31/2020 |  | 24,954 |  |  | $ | 6,438 |  |  | $ | 13,764 |  |  |
ADES proportionate share of income from Tinuum Group |  | Second Quarter |  | $ | 6,764 |  |  | $ | 6,764 |  |  | $ | — |  |  |
Cash distributions from Tinuum Group |  | Second Quarter |  | (13,600) |  |  | — |  |  | 13,600 |  |  |
Total investment balance, equity earnings and cash distributions |  | 6/30/2020 |  | 18,118 |  |  | $ | 6,764 |  |  | $ | 13,600 |  |  |
ADES proportionate share of income from Tinuum Group |  | Third Quarter |  | $ | 7,260 |  |  | $ | 7,260 |  |  | $ | — |  |  |
Cash distributions from Tinuum Group |  | Third Quarter |  | (7,862) |  |  | — |  |  | 7,862 |  |  |
Total investment balance, equity earnings and cash distributions |  | 9/30/2020 |  | $ | 17,516 |  |  | $ | 7,260 |  |  | $ | 7,862 |  |  |
Tinuum Services, LLC The Company has a 50% voting and economic interest in Tinuum Services as of September 30, 2021 and December 31, 2020. The Company determined that Tinuum Services was not a VIE and further evaluated it for consolidation under the voting interest model. Because the Company does not own greater than 50% of the outstanding voting shares, either directly or indirectly, it has accounted for its investment in Tinuum Services under the equity method of accounting since inception. As of September 30, 2021 and December 31, 2020, the Company’s investment in Tinuum Services was $2.8 million and $4.2 million, respectively. The following table summarizes the results of operations of Tinuum Services:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Gross loss |  | $ | (20,389) |  |  | $ | (22,764) |  |  | $ | (61,552) |  |  | $ | (65,441) |
Operating, selling, general and administrative expenses |  | 42,346 |  |  | 42,435 |  |  | 144,068 |  |  | 131,703 |
Loss from operations |  | (62,735) |  |  | (65,199) |  |  | (205,620) |  |  | (197,144) |
Other income (expenses), net |  | 3,204 |  |  | (363) |  |  | 2,810 |  |  | (978) |
Loss attributable to noncontrolling interest |  | 63,977 |  |  | 70,075 |  |  | 215,779 |  |  | 209,118 |
Net income |  | $ | 4,446 |  |  | $ | 4,513 |  |  | $ | 12,969 |  |  | $ | 10,996 |
ADES equity earnings from Tinuum Services |  | $ | 2,223 |  |  | $ | 2,257 |  |  | $ | 6,485 |  |  | $ | 5,498 |
Included in the Consolidated Statements of Operations of Tinuum Services for the three and nine months ended September 30, 2021 and 2020 were losses attributable to noncontrolling interests of Tinuum Services' VIE entities, which were eliminated in the calculations of Tinuum Services' net income attributable to the Company's interest. The following table details the carrying value of the Company's respective equity method investments included in the Equity method investments line item on the Condensed Consolidated Balance Sheets and indicates the Company's maximum exposure to loss:
|  | As of
(in thousands) |  | September 30, 2021 |  | December 31, 2020
Equity method investment in Tinuum Group |  | $ | — |  |  | $ | 3,387 |
Equity method investment in Tinuum Services |  | 2,824 |  |  | 4,242 |
Equity method investment in other |  | 60 |  |  | 63 |
Total equity method investments |  | $ | 2,884 |  |  | $ | 7,692 |
The following table details the components of the Company's respective equity method investments included in the Earnings from equity method investments line item on the Condensed Consolidated Statements of Operations:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Earnings from Tinuum Group |  | $ | 19,975 |  |  | $ | 7,260 |  |  | $ | 55,462 |  |  | $ | 20,462 |
Earnings from Tinuum Services |  | 2,223 |  |  | 2,257 |  |  | 6,485 |  |  | 5,498 |
(Loss) earnings from other |  | (3) |  |  | 1 |  |  | (3) |  |  | (1) |
Earnings from equity method investments |  | $ | 22,195 |  |  | $ | 9,518 |  |  | $ | 61,944 |  |  | $ | 25,959 |
The following table details the components of the cash distributions from the Company's respective equity method investments included as a component of cash flows from operating activities and investing activities in the Condensed Consolidated Statements of Cash Flows. Distributions from equity method investees are reported in the Condensed Consolidated Statements of Cash Flows as "Distributions from equity method investees, 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" as a component of cash flows from investing activities.
|  | Nine Months Ended September 30,
(in thousands) |  | 2021 |  | 2020
Distributions from equity method investees, return on investment |  |  |  |
Tinuum Group |  | $ | 14,142 |  |  | $ | 35,226 |
Tinuum Services |  | 7,902 |  |  | 7,002 |
|  | $ | 22,044 |  |  | $ | 42,228 |
Distributions from equity method investees in excess of investment basis |  |  |  |
Tinuum Group |  | $ | 44,707 |  |  | $ | — |
|  | $ | 44,707 |  |  | $ | — |

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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