•	Tinuum distributions to ADES for the first quarter were $17.1 million compared to $19.5 million in the prior year, a decrease of 12%

•	Royalty earnings from Tinuum Group in the first quarter were $3.0 million compared to $4.2 million in the prior year, a decrease of 28%

•	RC Segment operating income in the first quarter was $10.9 million compared to $25.2 million in the prior year

•	RC Segment Adjusted EBITDA in the first quarter was $19.9 million compared to $23.4 million in the prior year

•	Based on 20 invested RC facilities as of March 31, 2020, expected future net RC cash flows to ADES are projected to be between $125 million and $150 million through year end 2021

•	Recognized first quarter segment revenue of $8.5 million, compared to $14.6 million in the prior year

•	Segment operating loss in the first quarter was $6.6 million compared to an operating loss of $3.5 million in the prior year

•	Segment EBITDA loss in the first quarter was $4.4 million, compared to a segment EBITDA loss of $1.4 million in the prior year

•	Consolidated revenue was $12.3 million during the first quarter compared to $19.3 million in the prior year, driven by the decrease in consumables and royalty revenues

•	Consolidated net loss was $1.9 million for the first quarter compared to a net profit of $14.4 million in 2019; pretax loss was $1.5 million for the first quarter compared to a pretax profit of $16.1 million in 2019

•	Consolidated Adjusted EBITDA was $10.8 million, a decrease from $18.0 million over prior year

•	Made quarterly principal payment of $6.0 million on the Company's term loan, and reduced the principal balance to $34.0 million

•	Ended the first quarter 2020 with a cash balance, inclusive of restricted cash, of $17.2 million, an increase of $0.1 million since December 31, 2019

•	Paid first quarter dividend of $0.25 per share on March 10, 2020

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•	Took proactive steps in response to the COVID-19 pandemic in order to:

◦	Protect employee health and safety, including updating safe workplace protocols and offering work-from-home where possible;

◦	Ensure business continuity as an essential service provider, which involved taking actions to continue to operate the Company's activated carbon manufacturing facility, engaging customers on how to best respond to changing market dynamics and protecting ADES' integrated supply chain; and

◦	Bolster financial flexibility and preserve near-term available cash and liquidity, by evaluating non-core spending and adjusting capital allocation plans, prioritizing prudent organic investments to ensure continued manufacturing capabilities, and suspending the Company's quarterly cash dividend on its common stock

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TABLE 1

Advanced Emissions Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

		As of
(in thousands, except share data)		March 31, 2020				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents		$	12,188			$	12,080
Receivables, net		5,641				7,430
Receivables, related parties		3,045				4,246
Inventories, net		13,595				15,460
Prepaid expenses and other assets		7,605				7,832
Total current assets		42,074				47,048
Restricted cash, long-term		5,000				5,000
Property, plant and equipment, net of accumulated depreciation of $9,039 and $7,444, respectively		45,525				44,001
Intangible assets, net		3,973				4,169
Equity method investments		30,312				39,155
Deferred tax assets, net		13,307				14,095
Other long-term assets, net		19,992				20,331
Total Assets		$	160,183			$	173,799
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	8,458			$	8,046
Accrued payroll and related liabilities		2,051				3,024
Current portion of long-term debt		24,192				23,932
Other current liabilities		4,275				4,311
Total current liabilities		38,976				39,313
Long-term debt, net of current portion		14,189				20,434
Other long-term liabilities		5,238				5,760
Total Liabilities		58,403				65,507
Commitments and contingencies
Stockholders’ equity:
Preferred stock: par value of $.001 per share, 50,000,000 shares authorized, none outstanding		—				—
Common stock: par value of $.001 per share, 100,000,000 shares authorized, 23,114,218 and 22,960,157 shares issued, and 18,496,072 and 18,362,624 shares outstanding at March 31, 2020 and December 31, 2019, respectively		23				23
Treasury stock, at cost: 4,618,146 and 4,597,533 shares as of March 31, 2020 and December 31, 2019, respectively		(47,692		)		(47,533		)
Additional paid-in capital		98,596				98,466
Retained earnings		50,853				57,336
Total stockholders’ equity		101,780				108,292
Total Liabilities and Stockholders’ Equity		$	160,183			$	173,799

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TABLE 2

Advanced Emissions Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited) 

		Three Months Ended March 31,
(in thousands, except per share data)		2020				2019
Revenues:
Consumables		$	9,217			$	15,109
License royalties, related party		3,046				4,220
Total revenues		12,263				19,329
Operating expenses:
Consumables cost of revenue, exclusive of depreciation and amortization		11,491				14,108
Payroll and benefits		2,742				2,556
Legal and professional fees		2,043				2,204
General and administrative		2,331				1,914
Depreciation, amortization, depletion and accretion		2,297				2,102
Total operating expenses		20,904				22,884
Operating loss		(8,641		)		(3,555		)
Other income (expense):
Earnings from equity method investments		8,273				21,690
Interest expense		(1,210		)		(2,104		)
Other		43				70
Total other income		7,106				19,656
(Loss) income before income tax expense		(1,535		)		16,101
Income tax expense		358				1,699
Net (loss) income		$	(1,893	)		$	14,402
Earnings per common share:
Basic		$	(0.11	)		$	0.79
Diluted		$	(0.11	)		$	0.78
Weighted-average number of common shares outstanding:
Basic		17,932				18,268
Diluted		17,932				18,433

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TABLE 3

Advanced Emissions Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited) 

		Three Months Ended March 31,
(in thousands)		2020				2019
Cash flows from operating activities
Net (loss) income		$	(1,893	)		$	14,402
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Deferred income tax expense (benefit)		788				(677		)
Depreciation, amortization, depletion and accretion		2,297				2,102
Operating lease expense		774				775
Amortization of debt discount and debt issuance costs		354				381
Stock-based compensation expense		506				317
Earnings from equity method investments		(8,273		)		(21,690		)
Other non-cash items, net		—				75
Changes in operating assets and liabilities:
Receivables and related party receivables		2,988				1,845
Prepaid expenses and other assets		226				80
Inventories, net		1,572				3,262
Other long-term assets, net		(89		)		(2		)
Accounts payable		(1,477		)		(789		)
Accrued payroll and related liabilities		(973		)		(4,500		)
Other current liabilities		(23		)		2,154
Operating lease liabilities		(634		)		(804		)
Other long-term liabilities		(22		)		(401		)
Distributions from equity method investees, return on investment		17,116				19,488
Net cash provided by operating activities		13,237				16,018
Cash flows from investing activities
Acquisition of business		—				(661		)
Acquisition of property, plant, equipment, and intangible assets, net		(1,289		)		(1,087		)
Mine development costs		(447		)		(324		)
Net cash used in investing activities		(1,736		)		(2,072		)
Cash flows from financing activities
Principal payments on term loan		(6,000		)		(6,000		)
Principal payments on finance lease obligations		(340		)		(344		)
Dividends paid		(4,518		)		(4,571		)
Repurchase of common shares		(159		)		(693		)
Repurchase of common shares to satisfy tax withholdings		(376		)		(245		)
Net cash used in financing activities		(11,393		)		(11,853		)
Increase in Cash and Cash Equivalents and Restricted Cash		108				2,093
Cash and Cash Equivalents and Restricted Cash, beginning of period		17,080				23,772
Cash and Cash Equivalents and Restricted Cash, end of period		$	17,188			$	25,865
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of property, plant and equipment through accounts payable		$	1,890			$	—
Dividends payable		$	105			$	58

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TABLE 4

Advanced Emissions Solutions, Inc. and Subsidiaries

Consolidated Adjusted EBITDA Reconciliation to Net Income

(Amounts in thousands)

(Unaudited)

		Three Months Ended March 31,
(in thousands)		2020				2019
Net (loss) income (1)		$	(1,893	)		$	14,402
Depreciation, amortization, depletion and accretion		2,297				2,102
Interest expense, net		1,167				2,034
Income tax expense		358				1,699
Consolidated EBITDA		1,929				20,237
Equity earnings		(8,273		)		(21,690		)
Cash distributions from equity method investees		17,116				19,488
Consolidated Adjusted EBITDA		$	10,772			$	18,035

TABLE 5

Advanced Emissions Solutions, Inc. and Subsidiaries

RC Segment Adjusted EBITDA Reconciliation to Segment Operating Income

(Amounts in thousands)

(Unaudited)

		Three Months Ended March 31,
(in thousands)		2020				2019
RC Segment operating income		$	10,860			$	25,233
Depreciation, amortization, depletion and accretion		27				21
Interest expense		132				322
RC Segment EBITDA		11,019				25,576
Equity earnings		(8,273		)		(21,690		)
Cash distributions from equity method investees		17,116				19,488
RC Segment Adjusted EBITDA		$	19,862			$	23,374

TABLE 6

Advanced Emissions Solutions, Inc. and Subsidiaries

PGI Segment EBITDA Reconciliation to Segment Operating Loss

(Amounts in thousands)

(Unaudited)

		Three Months Ended March 31,
(in thousands)		2020				2019
PGI Segment operating loss (1)		$	(6,577	)		$	(3,462	)
Depreciation, amortization, depletion and accretion		2,035				1,960
Interest expense, net		94				131
PGI Segment EBITDA loss		$	(4,448	)		$	(1,371	)