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ADA-ES Reports First Quarter Results

www.bradenton.com    5/14/2010 11:15:00 AM    ReadCount:640

ADA-ES, Inc. (NASDAQ:ADES) (“ADA”) today announced financial results for the first quarter ended March 31, 2010, and provided an update on various corporate developments. Of note, the Company’s 2009 first quarter financial results included the consolidated results of ADA Carbon Solutions, LLC (“ADA-CS”), ADA’s activated carbon (“AC”) supply joint venture with Energy Capital Partners and its affiliates, whereas 2010 first quarter financial results reflect the Company’s equity interest in ADA-CS in other income and expense following the deconsolidation of ADA-CS beginning in the second quarter of 2009. Starting in the first quarter of 2010, ADA has revised its segment reporting to more clearly communicate how management evaluates and measures the Company’s lines of business. ADA is now reporting three operating segments: Emissions Control, CO2 Capture and Refined Coal.

Overview of 2010 First Quarter Results

In the first quarter, total revenues were $3.9 million compared to $4.9 million in the same quarter of 2009, primarily due to lower sales of Activated Carbon Injection (“ACI”) systems in the Company’s Emissions Control segment, partially offset by an increase of $542,000 in its CO2 Capture segment.

In the first quarter, gross margin was 35%, as compared to 42% in the prior year period, primarily due to $645,000 of costs in ADA’s Refined Coal segment with no associated revenues this quarter, slightly offset by higher margins in CO2 capture. General and administrative expenses increased to $4.6 million in the first quarter of 2010, compared to $3.2 million in the first quarter of last year, due to legal expenses associated with ongoing litigation.

Due in large part to the aforementioned legal expenses, the Company reported an operating loss of $3.6 million compared to an operating loss of $1.5 million in the first quarter of 2009. Net loss attributable to ADA was $2.8 million, or $0.39 per diluted share, compared to a net loss of $543,000, or $0.08 per diluted share, in the 2009 first quarter. The current first quarter’s net loss includes $1.2 million related to ADA’s equity interest in ADA-CS.

Refined Coal Update

As previously announced, ADA’s joint venture with an affiliate of NexGen Resources Corporation, Clean Coal Solutions, LLC (“CCS”) placed two CyClean systems in service that met the required emission reductions thus qualifying for the Section 45 IRS tax credits. CCS is in the process of finalizing contracts with the utility where the systems are located, completing modifications for long-term operations and for handling a broader array of feedstock materials, and negotiating agreements for monetization of the facilities. ADA continues to expect the CyClean systems to be in routine operation near the end of the second quarter of 2010, and anticipates the equipment sales and tax credits from these two systems to contribute average after tax net cash flow for CCS of approximately $9.0 million per year for up to ten years.