Charah Solutions, Inc.

Good day and welcome to the Shara Solutions third quarter 2022 financial results conference call. Please note today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one again. Thank you. At this time, I will turn the conference over to Steve Brim, Vice President of Legal Affairs and Corporate Secretary. Mr. Brim, you may begin your conference. Thank you, Operator.

Good morning, everyone, and thank you for joining us today. We appreciate your participation in our third quarter 2022 earnings call and look forward to sharing our prepared remarks and answering your questions. Joining me today on the call are Shara Solutions' new President, Chief Executive Officer, and Director, Jonathan Batarsi. and new Chief Financial Officer and Treasurer, Joe Skidmore. Following their prepared remarks, we will conduct the customary question and answer session. We hope you have had a chance to review the press release we issued yesterday after the market closed. If not, you can find the press release and a supplemental investor presentation you may follow during our prepared remarks on the investor section of our website at www.shara.com or ir.shara.com. Before we begin, I'd like to remind you that our remarks regarding SHARA solutions include statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those disclosed in our earnings release and conference calls. Those risks include, among others, matters we have described in our earnings press release as well as in our filings with the Securities and Exchange Commission. including our quarterly reports on Form 10-Q and our annual report on Form 10-A. We disclaim any obligation to update these forward-looking statements except as required by law. During this conference call, we will refer to certain non-GAAP financial measures. We provide reconciliations to the nearest applicable GAAP measures in our earnings press release and supplemental presentation. Before I turn the call over, I'd like to thank Scott Sewell for his service to Shara Solutions and leadership as the company expanded our product suite. We wish Scott well in his endeavors. I'd also like to welcome our new CEO, Jonathan Patarsi, and congratulate Joe Skidmore on his promotion to CFO. Jonathan joined us about a month ago and has already contributed greatly as we have worked on measures to improve our business. With more than 25 years of corporate finance and executive leadership experience in the engineering and construction industries, Jonathan has significant experience driving operational excellence for engineering and construction projects. Joe joined Shara Solutions with almost a decade of audit experience serving both public and private clients with a variety of industries, including those in the industrial manufacturing sector. While at the company, he assumed roles of increasing responsibilities, most recently as corporate controller for two years.

Thanks, Steve, and thanks to everyone for joining us on our call this morning. I'm excited to join Shara Solutions at this pivotal juncture. We enable utilities to meet and exceed their ESG goals by remediating ash ponds, managing coal ash operations, recycling fly ash, selling raw materials, and solving environmental risks. I joined the company because we have a world-class team focused on delivering leading ESG solutions for our customers' growing needs. Every day, Shara improves our community by producing sustainable environmental solutions for our customers by remediating the environmental risks and recycling what was previously considered unusable. These innovative solutions have and will continue to create tailwinds for our business. As a company, we will focus on three priorities as we build upon the heritage established at Shara. First and foremost, we will always prioritize the safety of our people. We are committed to the safety and well-being of our employees at work, at home, and at play 24-7, 365 days a year. We are a people organization. From our site operators to our support teams, our people are the heartbeat of this company. Second, we will continue to grow through our commitment to providing our customers with environmentally responsible, innovative, and customized solutions. Third, we will improve profitability through both increasing commercial rigor and risk assessment for new work, and improving our project management oversight tools and processes. As a team, we are committed to continual improvements that drive sustainable growth and improve financial performance of the company. With the strong market environment related to the regulatory tailwinds, we continue to be optimistic that our market opportunity will expand. I'll review our recent developments that position us for long-term growth. Since reporting our second quarter results, we have fortified our balance sheet to support future growth, increased new contract awards, strengthened our leadership team, completed certain legacy loss projects that have created a drag on our performance for 2022, and implemented processes to improve our commercial operation and financial rigor and oversight. While I'm encouraged by these achievements, I'll acknowledge we are disappointed by our financial results. During the third quarter, these challenges discussed in previous quarters continue to impact the gross profit and the bottom line. The three multi-year legacy loss projects, the Ash Pine Closure Project in Arkansas, the Landfill Construction Project in Kentucky, and the Fly Ash and Bottom Ash Pine Closure Project in Missouri, continued to drag on gross profit. While pleased that we have completed these projects and moved them to the demobilization phase, we incurred additional expenses during the quarter. Regarding the two long-term beneficial use projects hindered by supply chain and logistics challenges that we previously discussed, we have suspended work on the one with the greatest impact to the bottom line until we reach a resolution with the customer. We are in discussions with the customer to jointly agree on a path forward. The ultimate outcome could have a material impact on our backlog. Therefore, we have decided not to disclose backlog until we agree on a path forward. The drag from these projects have been costly. To that end, we have taken measures and continue to implement corrective actions to avoid similar situations. As I noted at the onset of this call, we have increased commercial operation and financial rigor for new project assessments. Additionally, we are reviewing and making necessary improvements to our project management tools and processes to identify and mitigate project execution risks as they occur. It was necessary to strengthen our balance sheet to support current projects and growth. We worked with our lead investor, Bernhard Capital Partners, to raise $30 million in gross proceeds. We believe this support validates the market opportunities ahead and creates a runway to accelerate growth. Also during the quarter, we secured wins from new and existing customers. New contract awards grew by $42 million. We remain excited about our EnviroSource beneficiation technology. However, Like all of our projects, we are reviewing opportunities with a critical eye to ensure the economics are favorable. Earlier this year, we announced an EnviroSource project that we were awarded and actively working to finalize contract documents. Because of the construction nature of this project, inflationary pressures, and supply chain constraints, the underlying economics are challenging. Therefore, the finalization of the contract is delayed. When we disclose new contract awards in the future, we will ensure they only include binding awards. In addition, as we reviewed our pending bid pipeline metric, we found certain pending bids that represented potential projects that were outdated and likely to be rebid. Therefore, for the time being, we removed them from the total pending bid pipeline, which represents bids we have submitted but have not yet been awarded. As of mid-November, the pending bid pipeline is approximately $1.5 billion. Our tracking pipeline, which represents anticipated requests for proposals that are projected to be awarded over the next two years, has grown based on market activity to be approximately $11.1 billion through mid-November. Before we review the third quarter results in detail, I'd like to recognize Joe Skidmore. During his tenure at Shara, he has demonstrated financial acumen and leadership. I look forward to his expanded contribution as our CFO. Yesterday, we also announced changes to the board. We are pleased Bob DeCense accepted the role as executive chairman. Bob has decades of experience in the power industry, including senior management roles at four major utilities. Most recently, he has served as CEO and director of BHI Energy, a utility services company that provides engineering, construction, and maintenance to the power generation and power delivery markets. Under Bob's leadership, BHI grew from a single-service offering platform to an industry-leading integrated platform capable of servicing every asset owned by a utility from the point of generation through the entire power delivery lifecycle. We also thank Jay Blossman for his leadership and are pleased he will continue to serve as a director. Additionally, we are fortunate to have Bill Varner join us as an independent director. He brings over 30 years of experience leading manufacturing and service companies through both operating turnarounds and growth strategies. We look forward to their guidance as we implement our improvement plans. With that, I'll turn the call over to Joe to discuss our financial results.