Delaware
|
001-38523
|
82-4228671
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
12601 Plantside Drive
Louisville, Kentucky
|
40299
|
|
(Address of principal executive offices)
|
(Zip Code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
CHRA
|
New York Stock Exchange
|
8.50% Senior Notes due 2026
|
CHRB
|
New York Stock Exchange
|
Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
|
Item 2.03.
|
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
|
Item 9.01.
|
Financial Statement and Exhibits.
|
(d)
|
Exhibits
|
Exhibit
Number
|
Description
|
|
Separation Agreement and General Release of Claims, dated November 14, 2022
|
||
Amendment No. 1 to the Term Loan Agreement, dated October 28, 2022
|
||
Press Release, dated November 14, 2022
|
||
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
CHARAH SOLUTIONS, INC.
|
|||
Date:
|
November 15, 2022
|
By:
|
/s/ Steven A. Brehm
|
Name:
|
Steven A. Brehm
|
Grant Type
|
Grant Date
|
Shares to Vest
|
Outstanding
|
||||
RSU
|
09-Jun-2020
|
29,327
|
43,991
|
||||
RSU
|
01-Apr-2021
|
29,525
|
88,574
|
||||
RSU
|
04-Apr-2022
|
29,770
|
133,965
|
||||
Subtotal
|
77,544
|
266,530
|
|||||
PSU
|
09-Jun-2020
|
TBD (*)
|
86,598
|
||||
PSU
|
01-Apr-2021
|
TBD (**)
|
100,232
|
||||
PSU
|
04-Apr-2022
|
TBD(***)
|
106,666
|
SCOTT SEWELL
|
CHARAH, LLC
|
|
/s/ Scott Sewell
|
By /s/ Steve Brehm
|
|
Signature
|
Name: Steve Brehm
|
|
Title: Vice President of Legal Affairs and Corporate Secretary
|
||
November 14, 2022
|
November 14, 2022
|
|
Date
|
Date
|
|
With respect to those portions of Sections 2, 5 and 13
applicable to it:
|
||
CHARAH SOLUTIONS, INC.
|
||
By /s/ Steve Brehm
|
||
Name: Steve Brehm
|
||
Title: Vice President of Legal Affairs and Corporate Secretary
|
BORROWER:
|
GIBBONS CREEK ENVIRONMENTAL REDEVELOPMENT GROUP, LLC
|
|
By: Charah, LLC, its sole manager
|
||
By:
|
/s/ Scott Sewell
|
|
Name:
|
Scott Sewell
|
|
Title:
|
President
|
PARENT GUARANTORS:
|
CHARAH SOLUTIONS, INC.
|
|
By:
|
/s/ Scott Sewell
|
|
Name:
|
Scott Sewell
|
|
Title:
|
President & Chief Executive Officer
|
CHARAH, LLC
|
||
By:
|
/s/ Scott Sewell
|
|
Name:
|
Scott Sewell
|
|
Title:
|
President
|
LENDER:
|
CHARAHPREFERREDSTOCK AGGREGATOR, LP
|
|
By: Charah Preferred Stock Aggregator GP, LLC,
its general partner
|
||
By:
|
/s/ Timothy J. Poché
|
|
Name:
|
Timothy J. Poché
|
|
Title:
|
Authorized Representative
|
• |
Revenue was $81.5 million, consisting primarily of construction contracts of $40.4 million, byproduct services of $30.1 million and raw materials sales of $11.0 million. This
compared to $84.2 million in the third quarter 2021, reflecting decreases in construction contracts year-over-year, and to $77.1 million in the second quarter 2022, reflecting increases in construction contracts and byproduct services
quarter-over-quarter.
|
• |
Gross profit of $2.9 million reflects expenses related to supply chain and logistics issues that impacted two long-term beneficial use projects and additional costs incurred to
complete and demobilize certain construction projects. This compares to $9.4 million for third quarter 2021 and $2.7 million for second quarter 2022.
|
• |
Other operating expense from ERT services of $5.8 million reflects the operating expenses related to the early phases of newer ERT projects. This compares to $0.8 million for third
quarter 2021 and $2.6 million for second quarter 2022.
|
• |
Net loss attributable to Charah Solutions, Inc. was $13.4 million, compared to $1.7 million for third quarter 2021 and $9.6 million for second quarter 2022.
|
• |
Adjusted EBITDA(1) was negative $0.6 million, compared to positive Adjusted EBITDA of $10.4 million for third quarter 2021.
|
Charah Solutions Investor Contact
|
IR Agency Contact
|
Charah Solutions Media Contact
|
Joe Skidmore
|
Kirsten Chapman
|
Brad Mercer
|
Charah Solutions, Inc.
|
LHA Investor Relations
|
PriceWeber Marketing
|
(502) 245-1353
|
(415) 433-3777
|
(502) 777-3308
|
ir@charah.com
|
charah@lhai.com
|
media@charah.com
|
September 30, 2022
|
December 31, 2021
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
7,722
|
$
|
24,266
|
||||
Restricted cash
|
44,382
|
34,908
|
||||||
Trade accounts receivable, net
|
51,533
|
49,303
|
||||||
Contract assets
|
26,993
|
26,844
|
||||||
Inventory
|
6,899
|
6,289
|
||||||
Prepaid expenses and other current assets
|
8,314
|
6,113
|
||||||
Total current assets
|
145,843
|
147,723
|
||||||
Real estate, property and equipment, net
|
106,079
|
70,473
|
||||||
Goodwill
|
62,193
|
62,193
|
||||||
Intangible assets, net
|
47,610
|
53,531
|
||||||
Equity method investments
|
7
|
7
|
||||||
Other assets
|
10,153
|
10,180
|
||||||
Total assets
|
$
|
371,885
|
$
|
344,107
|
||||
Liabilities, mezzanine equity and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
30,070
|
30,641
|
||||||
Contract liabilities
|
5,638
|
6,199
|
||||||
Capital lease obligations, current portion
|
9,529
|
6,979
|
||||||
Notes payable, current maturities
|
12,108
|
7,567
|
||||||
Asset retirement obligations, current portion
|
44,030
|
27,534
|
||||||
Accrued liabilities
|
25,354
|
36,874
|
||||||
Other current liabilities
|
1,101
|
460
|
||||||
Total current liabilities
|
127,830
|
116,254
|
||||||
Deferred tax liabilities
|
1,259
|
949
|
||||||
Contingent payments for acquisitions
|
1,950
|
1,950
|
||||||
Asset retirement obligations
|
32,742
|
14,879
|
||||||
Asset-based lending credit agreement
|
8,800
|
—
|
||||||
Capital lease obligations, less current portion
|
25,626
|
19,444
|
||||||
Notes payable, less current maturities
|
129,335
|
133,661
|
||||||
Term loan - Related party
|
16,000
|
—
|
||||||
Deferred gain and other liabilities
|
4,310
|
641
|
||||||
Total liabilities
|
347,852
|
287,778
|
||||||
Commitments and contingencies
|
||||||||
Mezzanine equity
|
||||||||
Series A Preferred Stock — $0.01
par value; 50,000 shares authorized, 26 shares issued and
outstanding as of September 30, 2022 and December 31, 2021;
aggregate liquidation preference of $36,006 and $32,712 as
of September 30, 2022 and December 31, 2021, respectively
|
41,636
|
35,532
|
||||||
Stockholders’ equity
|
||||||||
Retained losses
|
(129,681
|
)
|
(94,679
|
)
|
||||
Common Stock — $0.01 par value; 200,000 shares authorized 33,722 and 33,408 shares issued and outstanding
as of September 30, 2022 and December 31, 2021, respectively
|
337
|
334
|
||||||
Additional paid-in capital
|
111,482
|
114,880
|
||||||
Total stockholders’ equity
|
(17,862
|
)
|
20,535
|
|||||
Non-controlling interest
|
259
|
262
|
||||||
Total equity
|
(17,603
|
)
|
20,797
|
|||||
Total liabilities, mezzanine equity and
stockholders’ equity
|
$
|
371,885
|
$
|
344,107
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Revenue
|
$
|
81,540
|
$
|
84,161
|
$
|
224,701
|
$
|
199,786
|
||||||||
Cost of sales
|
(78,681
|
)
|
(74,712
|
)
|
(222,935
|
)
|
(177,832
|
)
|
||||||||
Gross profit
|
2,859
|
9,449
|
1,766
|
21,954
|
||||||||||||
General and administrative expenses
|
(9,493
|
)
|
(9,396
|
)
|
(27,683
|
)
|
(28,080
|
)
|
||||||||
Gain on sales-type lease
|
—
|
—
|
—
|
5,568
|
||||||||||||
Gains on sales of real estate, property and equipment, net
|
2,601
|
2,998
|
8,942
|
6,241
|
||||||||||||
Gain on ARO settlement
|
978
|
1,127
|
4,986
|
1,127
|
||||||||||||
Other operating expenses from ERT services
|
(5,847
|
)
|
(817
|
)
|
(9,100
|
)
|
(2,114
|
)
|
||||||||
Impairment expense
|
—
|
(700
|
)
|
—
|
(827
|
)
|
||||||||||
Operating (loss) income
|
(8,902
|
)
|
2,661
|
(21,089
|
)
|
3,869
|
||||||||||
Interest expense, net
|
(4,534
|
)
|
(3,541
|
)
|
(13,574
|
)
|
(10,090
|
)
|
||||||||
Loss on extinguishment of debt
|
—
|
(638
|
)
|
—
|
(638
|
)
|
||||||||||
Income (loss) from equity method investment
|
—
|
—
|
—
|
191
|
||||||||||||
Loss before income taxes
|
(13,436
|
)
|
(1,518
|
)
|
(34,663
|
)
|
(6,668
|
)
|
||||||||
Income tax (benefit) expense
|
(77
|
)
|
203
|
342
|
432
|
|||||||||||
Net loss
|
(13,359
|
)
|
(1,721
|
)
|
(35,005
|
)
|
(7,100
|
)
|
||||||||
Less (loss) income attributable to non-controlling interest
|
—
|
(44
|
)
|
(3
|
)
|
30
|
||||||||||
Net loss attributable to Charah Solutions, Inc.
|
(13,359
|
)
|
(1,677
|
)
|
(35,002
|
)
|
(7,130
|
)
|
||||||||
Deemed and imputed dividends on Series A Preferred Stock
|
(150
|
)
|
(148
|
)
|
(449
|
)
|
(443
|
)
|
||||||||
Series A Preferred Stock dividends
|
(956
|
)
|
(1,946
|
)
|
(4,617
|
)
|
(6,161
|
)
|
||||||||
Net loss attributable to common stockholders
|
$
|
(14,465
|
)
|
$
|
(3,771
|
)
|
$
|
(40,068
|
)
|
$
|
(13,734
|
)
|
||||
Net loss attributable to common stockholders per common share:
|
||||||||||||||||
Basic
|
$
|
(0.43
|
)
|
$
|
(0.12
|
)
|
$
|
(1.19
|
)
|
$
|
(0.44
|
)
|
||||
Diluted
|
$
|
(0.43
|
)
|
$
|
(0.12
|
)
|
$
|
(1.19
|
)
|
$
|
(0.44
|
)
|
||||
Weighted-average shares outstanding used in loss per common share:
|
||||||||||||||||
Basic
|
33,722
|
32,277
|
33,592
|
30,955
|
||||||||||||
Diluted
|
33,722
|
32,277
|
33,592
|
30,955
|
Nine Months Ended
September 30, |
||||||||
2022
|
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(35,005
|
)
|
$
|
(7,100
|
)
|
||
Adjustments to reconcile net loss to net cash and restricted cash (used in) provided by operating
activities:
|
||||||||
Depreciation and amortization
|
20,398
|
18,578
|
||||||
Loss on extinguishment of debt
|
—
|
638
|
||||||
Paid-in-kind interest on long-term debt
|
—
|
2,844
|
||||||
Impairment expense
|
—
|
827
|
||||||
Amortization of debt issuance costs
|
1,732
|
590
|
||||||
Deferred income taxes
|
310
|
432
|
||||||
Gain on sales-type lease
|
—
|
(5,568
|
)
|
|||||
Gains on sales of real estate, property and equipment
|
(8,664
|
)
|
(7,638
|
)
|
||||
Income from equity method investment
|
—
|
(191
|
)
|
|||||
Non-cash share-based compensation
|
2,371
|
1,767
|
||||||
Gain on interest rate swap
|
—
|
(190
|
)
|
|||||
Interest rate swap settlement
|
—
|
(745
|
)
|
|||||
Gain on ARO settlements
|
(4,986
|
)
|
(1,127
|
)
|
||||
Realization of deferred gain on ERT project performance
|
(167
|
)
|
—
|
|||||
Increase (decrease) in cash and restricted cash due to changes in:
|
||||||||
Trade accounts receivable
|
(2,137
|
)
|
5,288
|
|||||
Contract assets and liabilities
|
(710
|
)
|
2,667
|
|||||
Inventory
|
(610
|
)
|
(147
|
)
|
||||
Accounts payable
|
727
|
9,471
|
||||||
Asset retirement obligation
|
(25,133
|
)
|
(4,654
|
)
|
||||
Other assets and liabilities
|
(13,863
|
)
|
(13,714
|
)
|
||||
Net cash and restricted cash (used in) provided by operating activities
|
(65,737
|
)
|
2,028
|
|||||
Cash flows from investing activities:
|
||||||||
Net proceeds from the sales of real estate, property and equipment
|
11,951
|
10,114
|
||||||
Purchases of property and equipment
|
(3,655
|
)
|
(7,024
|
)
|
||||
Cash and restricted cash received from ERT transaction
|
38,239
|
34,900
|
||||||
Payments of working capital adjustment and other items for the sale of subsidiary
|
—
|
(7,367
|
)
|
|||||
Distribution received from equity method investment
|
—
|
1,015
|
||||||
Net cash and restricted cash provided by investing activities
|
46,535
|
31,638
|
||||||
Cash flows from financing activities:
|
||||||||
Net proceeds on the line of credit
|
—
|
(12,003
|
)
|
|||||
Proceeds on asset-based lending credit agreement
|
13,000
|
—
|
||||||
Payments on asset-based lending credit agreement
|
(4,200
|
)
|
—
|
|||||
Proceeds from long-term debt
|
3,023
|
156,301
|
||||||
Proceeds on Term loan - Related party
|
16,000
|
—
|
||||||
Principal payments on long-term debt
|
(7,908
|
)
|
(134,613
|
)
|
||||
Payments of debt issuance costs
|
(677
|
)
|
(10,912
|
)
|
||||
Principal payments on capital lease obligations
|
(6,406
|
)
|
(2,920
|
)
|
||||
Taxes paid related to net settlement of shares
|
(700
|
)
|
(512
|
)
|
||||
Proceeds from issuance of common stock
|
—
|
13,000
|
||||||
Distributions to non-controlling interest
|
—
|
(165
|
)
|
|||||
Net cash and restricted cash used in financing activities
|
12,132
|
8,176
|
||||||
Net (decrease) increase in cash and restricted cash
|
(7,070
|
)
|
41,842
|
|||||
Cash and restricted cash, beginning of period
|
59,174
|
29,211
|
||||||
Cash and restricted cash, end of period
|
$
|
52,104
|
$
|
71,053
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for interest
|
$
|
11,652
|
5,386
|
|||||
Cash paid during the period for taxes
|
98
|
831
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Net loss attributable to Charah Solutions, Inc.
|
$
|
(13,359
|
)
|
$
|
(1,677
|
)
|
$
|
(35,002
|
)
|
$
|
(7,130
|
)
|
||||
Interest expense, net
|
4,534
|
3,541
|
13,574
|
10,090
|
||||||||||||
Loss on extinguishment of debt
|
—
|
638
|
—
|
638
|
||||||||||||
Income tax (benefit) expense
|
(77
|
)
|
203
|
342
|
432
|
|||||||||||
Depreciation and amortization
|
7,008
|
6,263
|
20,398
|
18,578
|
||||||||||||
Equity-based compensation
|
834
|
769
|
2,371
|
1,767
|
||||||||||||
Impairment expense
|
—
|
700
|
380
|
827
|
||||||||||||
Transaction-related expenses and other items(1)
|
450
|
(73
|
)
|
458
|
1,174
|
|||||||||||
Adjusted EBITDA
|
$
|
(610
|
)
|
$
|
10,364
|
$
|
2,521
|
$
|
26,376
|
|||||||
Adjusted EBITDA margin(2)
|
(0.7
|
)%
|
12.3
|
%
|
1.1
|
%
|
13.2
|
%
|
(1) |
Represents expenses associated with the Amendment to the Credit Facility, non-recurring legal costs and expenses and other miscellaneous items.
|
(2) |
Adjusted EBITDA margin is a non-GAAP financial measure that represents the ratio of Adjusted EBITDA to total revenue. We use Adjusted EBITDA margin to measure the success of our
businesses in managing our cost base and improving profitability.
|