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ADES

Advanced Emissions Solutions NasdaqGM:ADES Stock Report

Last Price

US$2.91

Market Cap

US$55.7m

7D

4.3%

1Y

-54.3%

Updated

06 Oct, 2022

Data

Company Financials
ADES fundamental analysis
Snowflake Score
Valuation2/6
Future Growth0/6
Past Performance0/6
Financial Health6/6
Dividends0/6

ADES Stock Overview

Advanced Emissions Solutions, Inc., together with its subsidiaries, provides environmental technologies and specialty chemicals in the United States.

Advanced Emissions Solutions, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Advanced Emissions Solutions
Historical stock prices
Current Share PriceUS$2.91
52 Week HighUS$8.00
52 Week LowUS$2.73
Beta0.70
1 Month Change-17.80%
3 Month Change-36.60%
1 Year Change-54.32%
3 Year Change-78.19%
5 Year Change-74.80%
Change since IPO94.00%

Recent News & Updates

Sep 07

Advanced Emissions to divest Marshall Mine to Caddo Creek

Advanced Emissions Solutions (NASDAQ:ADES) agrees to sell Marshall Mine LLC, currently being reclaimed located in Marshall, Texas to Caddo Creek Resources Company, L.L.C. The company had previously taken over the Marshall Mine upon entering into its activated carbon supply agreement with Norit Activated Carbon. It does not expect any cash proceeds from the deal and will pay out a purchase price of $2.4M from cash balances that are currently restricted. Pursuant to the deal, Caddo Creek will assume Marshall Mine’s assets as well as the asset retirement obligation related to the mine of $4.8M. With the move, the company expects to record a gain of approximately $2.4M. “The removal of the surety bond associated with the Marshall Mine and the expected release of restricted cash associated with the bond, will further enable us to continue to improve operations at our Red River plant and focus on our recently announced merger with Arq Limited," said Greg Marken, CEO of ADES. The deal is expected to occur in the first half of 2023.

Sep 01

Advanced Emissions Solutions To Merge With Arq Limited: Here's What You Need To Know

Summary An August 8, 2021, ADES news-release stated: ”Advanced Emissions Solutions, Inc., a leader in emissions-control-solutions, has entered into a definitive merger-agreement with Arq Limited… to combine their businesses”. “ADES shareholders may-elect to receive up-to $10.0 million of cash-proceeds in the merger (at a price-of $0.52 per-share) and will retain at-least 47.4% of the outstanding-shares of the combined company." ADES provides emissions-control solutions for coal-fired power generation, industrial and municipal water purification, while Arq developed and owns a novel-manufacturing process for producing patent-protected carbon-products from remediating coal-waste sites. “The merger creates a North American based, integrated environmental technology company with access to diverse growth markets [in] a competitively advantaged position supported by patent-protected intellectual property (“IP”) and products. Access to Arq’s unique carbon feedstock will allow ADES to produce higher value activated carbon (AC)”. Foreword The August 19, 2022 news release is available here. Excerpts from that release state: Added to Advanced Emissions Solutions (ADES) emissions control solutions, Arq's technology and unique feedstock products provide significant growth opportunities for the combined companies in high-growth granular activated carbon (GAC) markets as well as large, adjacent markets such as additives applied to Carbon Black, Asphalt, and Marine Fuel. Utilizing Arq Limited's waste-derived feedstock results in lower manufacturing emissions and promotes the reclamation of properties for future use. Stronger Together? The combined company's vertical supply chain will support efficient production and distribution of an expanded variety of both granular activated carbon and powdered activated carbon products. The combined ADES and Arq firm will enter into broader, higher performance and higher value AC markets. It will leverage ADES' existing organizational infrastructure, up-scale manufacturing capabilities, well-established distribution network, world-class research, technical support, market-leading sales channels and customer base, while integrating Arq's unique patent-protected and environmentally-sustainable feedstock. The combined company projects annual revenue of $196 million and annual EBITDA of $61 million by 2026, with potential to expand growth through additional financing. ADES 2021 annual revenue was $110.70 million and annual EBITDA was $40.31 million. Greg Market, Chief Executive Officer, President and Treasurer of ADES, said "We are thrilled to join forces with Arq and pursue the exciting opportunity the merger presents to grow our businesses and to expand and enhance our collective operations and product portfolio." Founder and Chief Executive Officer of Arq Limited, Julian McIntyre responded, "Today's announcement combines the resources of two leading environmental technology companies with proven, patented technology solutions that reduce the environmental footprint while creating a more sustainable future for our customer." Transaction Terms ADES will issue 19,279,235 shares of its common stock to existing Arq equity holders, in exchange for all of their equity interests. ADES shareholders will have the option to receive 1.11 shares of the combined company and a one-time cash payment of $0.52 per share or 1.22 shares of stock in the combined company. A binding commitment for a $10.0 million term debt facility from a lending party was obtained. The lending party will also obtain penny warrants to purchase 1% of the pro forma equity of the combined company. Upon completion of the merger, the Company will complete a private investment in public equity ("PIPE") from current Arq shareholders for an additional capital investment of $20.0 million. Legacy ADES shareholders, after merger, will own 49.5%, assuming a 100% stock election and that the PIPE shares are purchased at the Fixed PIPE Price. Legacy Arq equity holders and PIPE investors will own approximately 49.5% with the remaining 1% owned by the lending party. ADES will continue to operate as a public company, with its shares listed on the Nasdaq Global Market under its existing ticker symbol ("ADES"). The merger is subject to customary conditions precedent, including the filing of all required documents with the United States Securities and Exchange Commission, shareholder approval, and court approval of the Scheme arrangement of Arq shareholders. ADES intends to increase the number of its authorized shares of common stock from 100 million to 125 million, subject to shareholder approval. The merger is subject to approval by holders of shares of ADES common stock during a Special Meeting of Shareholders, date and time to be determined. Additional information regarding the terms of the merger and required shareholder approval will be provided via a preliminary proxy statement, to be filed with the U.S. Securities and Exchange Commission (the "SEC") in the coming weeks. If approved by ADES shareholders, the merger is expected to close during the fourth quarter of 2022 or the first quarter of 2023. Analysis of The Transaction Source: Advanced Emissions Solutions Inc So, you might ask, "will Arq Limited be the catalyst that propels Advanced Emissions Systems stock price up to double digits by 2026?" The author has identified three factors that could precipitate such positive price propulsion. First, proliferation of patented products and processes: "The announcement of our proposed merger with Arq Limited represents the culmination of our strategic review process and months of diligent work to identify, evaluate and pursue opportunities to increase value for our shareholders," said Greg Marken, Chief Executive Officer, President and Treasurer of ADES. Presuming that strategic "diligent work to identify, evaluate and pursue opportunities to increase value for shareholders" is an on-going executive function at ADES, more mergers, acquisitions, and synergies might turn up. Second is the role of teamwork to improve existing product offerings. Julian McIntyre, Founder and Chief Executive Officer of Arq has observed, The combined teams of ADES and Arq accelerates the Company's presence in the structurally under-served North American activated carbon market and solidifies the foundation to compete effectively in growing adjacent markets such as Carbon Black, Asphalt, Marine Fuel, and other specialty applications on a global scale. Third is the capacity to research and develop of specific intellectual property for environmental recovery and enhancement. As McIntyre observed in the merger announcement,

Aug 23

Advanced Emissions Solutions: A Perceived Value Play Turning Into A Highly Speculative Investment

After a 15-month strategic review, Advanced Emissions Solutions announced a merger with Arq Limited, an emerging environmental technology company with substantial capex requirements. Combined company is expected to generate Adjusted EBITDA losses in both 2022 and 2023 while at the same time being required to invest heavily in the business. In addition to more than 50% dilution, the proposed transaction exposes legacy ADES shareholders to material execution risks. Not surprisingly, shares sold off on Monday as disappointed value investors were heading for the exits. There might be more selling pressure ahead as legacy ADES shareholders are slowly replaced by more speculative investors. At this point, I would advise ADES shareholders to vote against the proposed transaction as it is hard to believe that the Arq merger represents the best way for shareholder value creation available to the company. More than 15 months ago, Advanced Emissions Solutions (ADES) or "ADES" initiated a review "to assess a range of strategic alternatives to maximize shareholder value". With close to $4 in cash per share as of the end of Q2, no long-term debt and close to $90 million in annual revenues from its EBITDA-positive Activated Carbon ("AC") business, market participants likely expected the company to either find a buyer for its Red River Plant which ADES acquired in late 2018 from private equity for $75 million or an outright sale of the company at a substantial premium to the current share price. Unfortunately, management decided to go in the opposite direction by merging with Arq Limited or "Arq", an emerging environmental technology company that converts coal mining waste into a micro-fine carbon powder ("Arq Powder") for use in environmentally sustainable products. Company Presentation While Arq has constructed a $80 million processing plant in Kentucky with the ability to process over 100,000 tons of mining waste per year and received investments from Peabody Energy (BTU), Vitol and Mitsubishi (OTCPK:MSBHF), the company doesn't appear to generate any revenues as of this point. In fact, the combined business will require an estimated $75 million in additional capex over the next couple of years to "enable growth". Company Presentation As a result of the merger, Adjusted EBITDA is expected to be negative in both 2022 and 2023, before turning positive again in 2024. By 2026, the company expects the combined business to generate almost $200 million in annual revenues at EBITDA margins north of 30%. But due to material, near-term capex requirements and expectations for the company to lose money in both 2022 and 2023, ADES will likely have to deploy the majority of its cash hoard going forward. Given this issue, it is not exactly a surprise that the company has agreed to raise an aggregate $30 million in new equity and debt following the completion of the merger. While there's nothing wrong with a company trying to reinvigorate growth by investing in adjacent market opportunities, the Arq merger does not create the immediate value anticipated by shareholders after ADES launched its strategic review last year. In fact, legacy ADES equity holders will own less than 50% of the combined company. At least, shareholders will be able to elect a cash or stock option whereby they receive 1.11 shares of stock and a dividend of $0.52 per share or 1.22 shares of stock of the combined company. While ADES has yet to provide additional merger information in a form S-4 filing with the SEC, the proposed transaction apparently represents a big change to the investment thesis. Instead of pocketing some decent near-term capital gains, legacy ADES shareholders will become owners of an emerging technology company with substantial execution risks.

Shareholder Returns

ADESUS ChemicalsUS Market
7D4.3%4.3%3.3%
1Y-54.3%-12.5%-20.4%

Return vs Industry: ADES underperformed the US Chemicals industry which returned -10.6% over the past year.

Return vs Market: ADES underperformed the US Market which returned -18.8% over the past year.

Price Volatility

Is ADES's price volatile compared to industry and market?
ADES volatility
ADES Average Weekly Movement13.9%
Chemicals Industry Average Movement6.5%
Market Average Movement6.9%
10% most volatile stocks in US Market15.6%
10% least volatile stocks in US Market2.9%

Stable Share Price: ADES is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 14% a week.

Volatility Over Time: ADES's weekly volatility has increased from 8% to 14% over the past year.

About the Company

FoundedEmployeesCEOWebsite
1996139Greg Markenhttps://www.advancedemissionssolutions.com

Advanced Emissions Solutions, Inc., together with its subsidiaries, provides environmental technologies and specialty chemicals in the United States. It operates through two segments, Refined Coal and Advanced Purification Technologies. The company offers CyClean technology, a pre-combustion coal treatment process to enhance combustion, as well as to reduce emissions of nitrogen oxide and mercury from coals burned in cyclone boilers; and M-45 and M-45-PC technologies, which are pre-combustion coal treatment technologies used to control emissions from circulating fluidized bed boilers and pulverized coal boilers.

Advanced Emissions Solutions, Inc. Fundamentals Summary

How do Advanced Emissions Solutions's earnings and revenue compare to its market cap?
ADES fundamental statistics
Market CapUS$55.68m
Earnings (TTM)US$26.72m
Revenue (TTM)US$107.76m

2.1x

P/E Ratio

0.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
ADES income statement (TTM)
RevenueUS$107.76m
Cost of RevenueUS$74.68m
Gross ProfitUS$33.09m
Other ExpensesUS$6.37m
EarningsUS$26.72m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.40
Gross Margin30.70%
Net Profit Margin24.79%
Debt/Equity Ratio0%

How did ADES perform over the long term?

See historical performance and comparison