Advanced Emissions Solutions, Inc.

And thank you for standing by. Welcome to the Advanced Admission Solutions Quarter 1 2021 Earnings Call. At this time, all participants are in a listen-only mode. If you require any further assistance, please press Start Zero. I would now like to hand the conference over to Ryan Coleman, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. And thanks for joining us today for our first quarter 2021 earnings results call. With me on the call today are Greg Markin, Interim President, Chief Executive Officer and Treasurer, and Morgan Fields, Vice President of Accounting. This conference call is being webcast live within the investor section of our website, and a downloadable version of today's presentation is available there as well. A webcast replay will also be available on our site, and you may contact Alpha IR Group for investor relations support at 312-445-2870. Let me remind you that the presentation and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements. These risks and uncertainties include, but are not limited to, those factors identified on slide two of today's slide presentation in our Form 10-Q for the quarter ended March 31, 2021, and other filings with the Securities and Exchange Commission. Except as expressly required by the securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments, or change circumstances, or for any other reasons. In addition, it's very important to review the presentation and today's remarks in conjunction with the GAAP references in the financial statements. So with that, I'll turn the call over to Greg.

Thanks, Brian, and thanks to everyone for joining us this morning. Before we begin, I'd like to address a few items. First, I'd like to introduce and welcome Morgan Fields, our new Vice President of Accounting. As I mentioned on our fourth quarter call, Chris Bellino retired at the end of March, at which time Morgan joined us and will be leading our accounting team. Morgan brings nearly 20 years of corporate accounting and public company experience, most recently in a consultant capacity at Eliasson Group, where we worked frequently with her on strategic projects over the past few years. Thus, she joins us with an in-depth knowledge of the company. We're very excited to have her as an official member of the team. Second, a quick update on the previously announced incident at our Red River plant. On April 22nd, there was an unfortunate incident at our Red River manufacturing site in Louisiana that resulted in an isolated fire in one of the plant's coal handling systems. The fire resulted in non-life-threatening injuries to two of our team members. Thankfully, the decisive action taken by both on-site personnel as well as local first responders contained and limited the impacts that could have occurred that day. Also, after approximately one week of downtime, the plant is now fully operational. We are also able to continue to meet our production requirements and client obligations through existing inventory and other sources without further interruption. Based on the downtime, we estimate the cash flow impact, including maintenance and repairs, capital expenditures, inventory replacement due to lost production and other items is not expected to exceed $3 million. We continue to conduct our own internal investigation into the incident and we are working alongside regulators as needed. I'd like to again thank our team members for their swift action that day and their commitment to the safety of all plant personnel. And lastly, concurrent with our announcement of our first quarter results yesterday, we announced that we had initiated a strategic alternatives review to evaluate a range of opportunities for the business in our effort to maximize shareholder value. I'll talk a bit more about this decision in a moment. With that, let's go to our first quarter highlights on slide three. Yesterday afternoon, we reported results that showed solid performance from Tenuum Group, as well as a steady sequential and year-over-year improvement in our APT segment resulting from the proactive efforts we have made to strengthen that business. Distributions and equity earnings were strong, and both exceeded levels from the first quarter of 2020. Loyalty earnings in the RC segment adjusted even as each grew by 33% and 37% respectively. In our APT segment, our production and sales volumes have continued to rise and have exceeded our internal forecast for four months now. The revenue for this segment was nearly double that of the prior year, helped by the Cabot supply agreement we announced in September, as well as our growth in non-power generation markets, such as water and certain industrial applications. We also saw higher natural gas prices in the first quarter, partially driven by colder temperatures across the U.S., which positively impacted the coal-powered power generation and related demand for our products by those customers. The improvements we have made with our capacity utilization is also allowing us to more efficiently capture the sophisticated nature of the plant as the segment's profitability has much improved from one year ago. Gross profit was $4.6 million compared to a loss of $2.3 million last year. Additionally, the segment's EBITDA was $2.2 million in the first quarter compared to a loss of $5 million last year. From a consolidated perspective, our net income was $13.7 million for the first quarter compared to a loss of $1.9 million one year ago. That increase was predominantly the result of the increase in earnings from equity method investments as well as higher consumables revenue. Our consolidated adjusted EBITDA was also favorably impacted and was $26.1 million compared to $10.8 million. Regarding our capital allocation, we continue to prioritize debt reduction, liquidity, and investing organically to improve our manufacturing capabilities. We reduced our term loan balance by $10 million in a quarter and have just $6 million remaining on that loan, which will be repaid this quarter without any penalty. We remain focused on cost containment and have taken actions during the year as appropriate, maintaining our pause on all non-core capital spending, and will continue to evaluate our go-forward cost structure relative to business activities. Meanwhile, Tenuum remains focused on much of the same as they align their cost structure to prepare to wind down the businesses with the planned expiration of the production tax credit generation period at the end of this year. Our focus on cost management has allowed us to build a strong cash position. We now have $52.2 million of cash, cash equivalents and restricted cash on our balance sheet. That compares to $35.9 million as of December 31, 2020. Turning to our outlook, we expect to collect between $50 million and $60 million of after-tax cash flows from our refined coal segment, which is net of our first quarter collections. We expect to see further improvement in our APT segment as we are now turning to optimizing our current product mix to enhance the earning profile of the segment. And as I mentioned, we initiated a strategic alternatives process to evaluate the opportunities available to us to maximize shareholder value. As we have discussed on our past several calls, we have made great progress growing our Red River Plants capacity utilization, diversifying our product mix, and bolstering our financial position through our focus on repaying our term loan and growing our cash balances. And we possess the premier asset in this industry. We believe this leads us with a unique opportunity to evaluate the options available to us from a position of strength. We will, of course, continue to run this business with the efficiency and execution we have been committed to. The intention is to complete the strategic review process in a timely fashion. However, there is no assurance that the review process will result in pursuing or completing any transaction. We will provide updates as appropriate as the process unfolds. Overall, we are happy with our start to 2021 and the steady improvement in our APT segment. We remain on a solid path to fortify our business for our post-refined future. We expect the earnings profile of our APT segment to improve in 2021, and we have a solid line of sight to the $50 to $60 million of after-tax RC cash flows through the eventual wind-down of tenuim. With that, I'll turn the call over to Morgan to review our first quarter financial performance in greater detail.