Arq Inc (ARQ) 2009 Q1 法說會逐字稿

Good day, everyone, and welcome to the ADA-ES first quarter 2009 financial results conference call. At this time I would like to inform you that this conference is being recorded and that all participants are currently in a listen-only mode.

This conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which provides a Safe Harbor for such statements in certain circumstances. These statements are identified by prefatory words such as belief, will, hope, expect, anticipate, intend, and plan, the negative expressions of these words or words of similar meaning. Actual results or results could differ materially from those discussed in the forward-looking statements as a result of various factors including factors discussed in ADA-ES's filings with the US Securities & Exchange Commission with particular emphasis on the risk factors disclosures contained in those filings. Listeners are cautioned not to place undue reliance on the forward-looking statements and to carefully examine the information ADA-ES discloses publicly in its filings with the Securities & Exchange Commission or otherwise, before deciding to invest in ADA-ES's securities. The forward-looking statements made during this conference call are presented as of today's date and ADA-ES disclaims any duty to update them unless otherwise required by law to do so.

Now I would like to turn the call over to Mark McKinnies, Chief Financial Officer. Please go ahead, sir.

Thank you, Regina. Good morning, everyone, and thank you for joining us for the ADA-ES first quarter 2009 conference call. First, I would like to discuss the Company's financial performance, and then our President and CEO Mike Durham will update you on the Company's recent corporate developments and our future plans. After that we'll open the call for your questions.

Revenues amounted to $4.9 million for the quarter as compared to $4 million in 2008 due to increases in our mercury emission control or MEC segment. MEC revenues increased 23% during the quarter due to increased revenues from our activated carbon injection, ACI System sales, increases in consulting work related to mercury control and sales of activated carbon, AC, which are conducted through our consolidated 50% subsidiary, ADA Carbon Solutions, LLC, our AC supply business joint venture with Energy Capital Partners and its affiliates. For the quarter revenue from ACI Systems contributed $2.9 million of MEC revenues as compared to $2.4 million in 2008. We had contracts in progress at quarter end for ACI Systems totaling approximately $6 million of which we expect to complete and realize as much as $4.4 million in 2009 and the balance in 2010.

We have commenced work on six new systems thus far in 2009 and we expect several more to be awarded. Various consent decrees, in place state regulations and new plants are driving the current market in this portion of our business. We believe the eventual outcome of the EPA MAC process for mercury control or legislative action will accelerate and further expand that market.

As anticipated, revenues from DOE and industry supported demonstration contracts decreased for the quarter contributing $950,000 to revenues as compared to a contribution of $1.4 million in the first quarter of 2008. The remaining unearned amount of our DOE contracts was $2.7 million as of quarter end of which we expect to recognize $1.2 million in 2009 including cash contributions of other industry partners, the majority of which is related to our CO2 capture work.

Government funded work for mercury demonstration projects has been diminishing since that market has moved into a commercial phase. We expect that increased funding for CO2 control technology will continue to replace that source of revenues in the future. The recently passed stimulus package included $3.4 billion of clean coal technologies to provide funding for the types of projects in which we're involved. Mercury related consulting work contributed $595,000 of revenues for the quarter compared to only $65,000 in 2008.

AC sales in the quarter amounted to $390,000 as Carbon Solutions commenced their first shipments of AC under our supply contracts during the quarter. Our gross margin in the quarter was 42% as compared to, a marked improvement from the 33% margin realized in the first quarter last year. The increase is due primarily to cost reductions we realized in ACI System sales that were completed in the quarter. Margins for the year expect to be similar to those realized in 2008.

Research and development expense in the quarter decreased $16,000 over the same period in 2008 reflecting the scale back in mercury related demonstration projects. We anticipate that our future R&D expenses will grow in direct proportion to DOE funded CO2 work we perform for the next several years. General and administrative expenses increased by $1.7 million to $3.2 million in the quarter due primarily to the inclusion of approximately $1.1 million of such costs related to our AC supply business and $426,000 of legal fees related to our existing litigation. Included in our G&A expense for the quarter are noncash share-based compensation expenses totaling $461,000.

Our operating loss for the first quarter of 2009 was $1.5 million as compared to a loss of $521,000 in 2008 due in large part to inclusion in the costs related to our AC supply business and Carbon Solutions construction of its AC production and processing facilities. The assets and financial results of Carbon Solutions have been consolidated in ADA's financial statements we're reporting thus far for 2009. As a result of the above noted figures, we reported a net loss attributable to ADA of $543,000 or $0.08 per share compared to a net loss of $168,000 or $0.03 per share for the same period in 2008.

Cash flow used in operations was $2.1 million for the quarter compared to $866,000 for the same period in 2008. Capital expenditures for the quarter totaled $23.6 million primarily related to Carbon Solutions construction activities which are somewhat below budget and generally ahead of schedule with start-up plans for the second quarter of 2010. Future construction costs are expected to be funded by ECP until we can secure acceptable debt financing.

Our consolidated balance sheet as of March 31, 2009, reports cash and cash equivalents of $28.4 million and working capital of $9 million. We have no long-term debt and shareholder's equity totaled approximately $82.6 million at quarter end which, under the new accounting requirements, now includes noncontrolling interest of ECP and Carbon Solutions JV and of next gen resources in the clean coal JV.

Mike will discuss the status and progress in the AC supply JV and other activities further and now I would like to turn the call over to him.

Thank you, Mark. Let me start with the overall business environment for ADA and clean coal technologies. Because this is a regulatory driven business, it is influenced by energy prices, national and international economic additions, societal concerns, and the impacts of all of these on national policies. In general these factors are creating a rather positive environment for our business. With the poor economic conditions, we believe there will be a focus on keeping energy costs as low as possible. With the continued unrest in the Middle East, national security is best served by using more locally available energy sources. Both of these factors can be addressed by the continued reliance on existing infrastructure of over 1,100 coal fired power plants that reliably provide 50% of our electrical power generation in the country.

However, because of the health related issues there is a significant societal mandate to burn coal cleaner which creates increasing markets for our technologies. As a result of these concerns, the new Administration and Congress are moving forward with regulations that require additional reductions in emissions from coal fired boilers. EPA is moving forward on a MAC regulation for mercury and a fix to the rules for sulphur dioxide and nitrogen oxide emissions. EPA also announced they intend to develop MAC regulations for the emissions of mercury from cement plants. Recent tests have demonstrated these plants could be a significant source of mercury, possibly as much as 20% of what is emitted from power plants. These plants are similar in scale to power plants so that this could be a new market for our Company's activated carbon injection technology using similar equipment and sorbents.

In addition, bills that include mercury control are being discussed in both the Senate and the House with bipartisan support from both political parties. Our analysis indicates that either of these two approaches would result in a market for activated carbon injection in excess of $1 billion per year. We should have increased certainty on the timing of these new regulations in the next six to nine months.

Moving back to the present situation, even without a federal regulation the current mercury market continues to grow as a result of existing regulations in 20 states and Canadian provinces. To serve this market, we are making great progress to our new activated carbon processing and production facilities in Louisiana. Construction on our new AC plant began last September and appears to be ahead of schedule to begin operation next spring. In addition, we're able to take advantage of some cost reductions in the construction business. We are posting weekly construction pictures on our website so they can track progress. Funding of the construction continues with equity provided by ADA and Energy Capital Partners, ADA's joint venture partner. The resources provided by this partnership give us the ability to wait for more favorable debt opportunities and still maintain our schedule.

We already signed AC contracts that we expect will contribute $160 million in revenues through 2016 or a third of the nameplate capacity of the plant for the first five years of production. We are currently bidding on many RPs for AC and are getting positive feedback on potential contracts on some of them that could be signed in the next few months. With our existing processing plant in Texas we're now providing AC to contract customers and potential customers who want to test our product which is achieving excellent mercury removal results. In the next few weeks our new larger AC processing plant in Louisiana will be completed which we'll use to prepare, store, and ship AC to customers.

The next topic relates to our new business to provide our power generating customers with technology to capture carbon dioxide from coal-based plants. Similar to mercury we're seeing activities in Washington, DC that are creating business opportunities for ADA. Since our business model is based around using funding from DOE and customers to develop the technology to meet future regulations, both increased levels of funding and the threat of a regulation are critical to our near term revenue growth and long-term commercial market potential. We're currently working on a contract to advance the development of our solid sorbent based technology. This $3.4 million program is co-founded by DOE as well as several power generators including AEP, Southern Company, Luminant, Amren, and Xcel Energy. We're making progress on this technology and if you're interested in more details we provide copies of technical papers and presentations downloadable from our website.

There are a number of discussions ongoing in Washington that are expected to enhance this business opportunity. A bill was recently introduced in the House by Congressman Waxman and Markey requiring future reductions in carbon emissions from power plants. We're hearing the bill will have to be modified to be acceptable to moderates from both parties and that action on the bill will be conducted through the summer.

In the near term we expect to see increased federal funding for clean coal technology. The recently enacted American Recovery and Reinvestment Act allocated $3.4 billion to support development and demonstration of the technology to capture and store carbon dioxide from coal-fired power plants. This is important because we'll need funding in the order $50 million to $100 million to perform a scale up of our technology. We expect funding for large scale demonstrations will soon be available from the stimulus legislation through competitive DOE procurement activity. ADA has been successful in this arena in the past with awards of approximately $80 million that support development of our mercury control work.

Finally, let me update you on our refined coal product cycling. Last fall Congress extended the placed in service deadline until the end of the year and eliminated the requirements of a 50% increase in the market value of refined coal. This removed a major hurdle for qualifying for the $6 per ton tax credit and gave us another year to sell our product. Although we would have preferred a longer extension to market this technology, the urgency of the deadline, along with the new emissions regulations and pricing pressures on coal, have created an accelerated interest in activities with key customers. As a result, we are currently working with these customers to schedule demonstration programs that are a necessary step in the sales process. If successful, the equipment can be installed in 60 days to meet the tight schedule requirement.

So let me summarize by saying we're excited about the growing markets for clean coal technology, we're making great progress with the construction of a very important asset for the Company with our AC plant. Our partnership with a well capitalized company like Energy Capital Partners has allowed us to stay on schedule in difficult economic conditions while we wait for the right time to complete the debt financing. We'll continue to execute our aggressive business strategy. By doing so, we believe that the equity markets will eventually reward ADA shareholders with a valuation that reflects the Company's prospects for substantial earnings growth.

Before taking your questions let me share some of the upcoming investor activities. On May 19th we'll be presenting at the JMP Securities Research Conference in San Francisco. Next month on June 8th we have been invited to speak at the Noble Financial Capital Markets Conference. And on June 3rd and 4th we'll be attending the Lazard Capital Markets Alternative Energy and Infrastructure Conference in New York. We hope to see you at these events.

Thank you, and let me take this opportunity to take your questions.

Our first question comes from Graham Mattison with Lazard Capital Markets. Please state your question.

Good morning, guys. Just a question on the outlook for activated carbon sales. What are you seeing in terms of pricing in the market there?

Graham, we're seeing pretty stable from the increased prices we saw over the last year or so. We're not seeing a lot of change in the pricing right now.

So when you're talking on your longer term contracts, it's pretty much at existing market prices right here?

Yes.

Thank you. And in terms of the outlook for the sales there, what would you say has changed given the environment? What's different now than it was three, six, nine months ago when you were talking to the clients on long-term contracts?

Not much difference. They have a variety of response times to getting things done. In some cases they like to have the contracts in place a year or so away, and in other cases they like to push up to the last minute before they have to have the products. So we're seeing some accelerated activity both in meeting some very near term needs as well as some of the Canadian bits may not require it until late 2010, and those are active, so it is kind of all over the board there.

In terms of the timing on that, is it safe to say it is by the end of 2009 that the US companies will have to have their orders in place?

It depends upon the regulation. If you look at what's happening in Illinois, they have to be in compliance by July 1st of this year. Some of the others have additional dates. There's a significant market for the 20 or so power plants that are in various stages of construction, so their timing is going to change with when these plants start up, so there is no cliff out there. It is a continuous spectrum of activities.

All right. Got it, great. Thank you very much. I will jump back in queue.

Our next question is from Bill Burns with Johnson Rice. Please state your question.

Good morning, guys. Maybe for Mark, it is a modeling question on G&A. It was higher than I was looking for and in fact in your press release you talked about it being up $1.7 million. What I was looking for is hopefully some help in modeling that going forward.

Bill, maybe we should take care of that in another call because I can go over some other details with you, but as we note in the press release, the amount, one of the reasons we increased that amount is it includes now the consolidated G&A of ADA Carbon Solutions which amounted to about $1.1 million for the quarter. That is higher than what we would expect on an ongoing basis because it is in this development stage as we're putting staffing together and making plans for that continuing operation, as well as managing the construction efforts. So on an ongoing basis we would expect normal G&A to be somewhat less than that, but again Carbon Solutions is gearing up now to reach its full expectation there, so it will have some growth, as well. To the extent that we continue to consolidate those numbers there, the G&A will be growing somewhat.

I will call you back and we can flush this out, but maybe as a follow-up, on the legal side, what issues are involved there?

We have two ongoing litigations that are described in our filings there and these are the legal costs related to those matters.

Thanks, guys.

Our next question comes from Dan Mannes with Avondale Partners. Please state your question.

Good morning, Mike and Mark. A couple quick follow-up questions. First on your current cash level, can you talk about how much of that is at the project level versus what's up at the parent level?

Of the roughly I think $9 million shown as cash and cash equivalents on the balance sheet at March 31st, about a third of that is at the ADA level and the other two-thirds is at the project level. So no problems with cash flow. We've got sufficient cash to meet our operating needs, certainly for the near term. The needs really are being driven by the construction effort there, and ECP continues to fund those amounts and we're maintaining our schedule or the plant.

Got it. And maybe this is an obvious question. What has been the total capital investment to date, so maybe not through 3/31 but through now, how much capital has been put into plant construction so far?

As you can see for the quarter we show capital expenditures for the quarter of about $26 million. That run rate continues on. There will be a few months in the quarters ahead as we bring other equipment in where that will increase somewhat, but that run rate now appears to be pretty consistent, so we would expect that to continue on in the plant here. As you see, our property, plant and equipment number at March 31st is up to about the $70 million, and there is a significant amount of that that is included in the accounts payable, so the cash flow for that, where we accrue those expenses and those capital amounts and pay them out as the bills come due, but the run rate is about what you have seen in the first quarter.

Okay. Can you go back a step actually? I thought you said $9 million of cash at quarter end. It shows $28 million.

Yes. The $9 million was the working capital number, so excuse me there. The parent cash in that is about $3 million. The remainder, the $25 million, is at the Carbon Solutions level funding the construction efforts. Thank you for that correction. You're right.

Thanks. Just looking at the progress photos on your website, and obviously you guys have put $80 million of capital into this, or you and your partner, right now it is showing it looks like two furnaces as out of what we expect to be four. Is that just the staging given the timing of delivery or is there anything we should read into that given the two were erected and I guess I expect two more before mid-next year.

That's just the construction schedule, but the furnaces are getting ahead of the rest of the system, so even though once we get up all four furnaces completed, if you look at the artist's rendition of the plants, you can see that the furnaces are a large part but not all of a complete picture of the entire thing. So two furnaces out of four furnaces does not mean 50% completion, and so a lot of what is happening now you're seeing laying of structural foundation for the other equipment that will be attached to the whole processing facility.

But the plan is still to have four furnaces by --

Oh, absolutely.

Briefly on the bid activity, when you have talked about the three contracts you have at $160 million, it didn't seem like that really went up after you got the third contract. Is that a different structure or is that just a fairly small contract?

It was only for two plants.

Sounds like two small plants?

Not necessarily. The amount needed depends on the kind of equipment and kind of call, so one was a pretty significant sized planted.

Got it. And then the $500 million in bid amounts, that's a number you have talked about for a couple quarters in a row. Are some of these bids that you bid on several quarters ago and maybe they're stale or taking time because that number really doesn't seem to have changed in probably two or three quarters now.

This is such a long-term process of when the RFPs are awarded, when you're finally under contract to announce that, and this industry that's normally a nine to 12 month process.

Okay. And just two last quick ones. First, it looks like maybe there is some movement on the tariff levels for the imported Chinese carbon. Have you looked at that and does that impact at all your costs of imported carbon in your interim sourcing plant?

We're very much aware of that in that, and we have that built into our contracts that if the tariffs are lowered, we get to take advantage of that savings. Right now we're not seeing any impact.

You said lowered, but it was really a mixed bag, there were only one or two guys that were lowered and it looks like a bunch were raised. Would that impact on you the other side? I assume you'd have you to pay more for imports.

We're sourcing from more than just China. If pricing became noncompetitive coming out of China, we would put more emphasis on getting it from other places.

But the contract to sell the activated carbon is fixed, correct?

What's that?

You would be able to pass through those costs?

No.

And increase sourcing costs on the other side.

No. We have fixed pricing to our customers.

Right. Okay. And then just one final question, and I think a prior caller asked about the dollar amount. Is there any update on anything going on in the two lawsuits? I know they're both potentially material for you, both either in dollars or otherwise.

No updates to make public at this point.

No updates to make public. Okay. Thank you.

Our next question comes from Bryce Dille with JMP Securities. Please state your question.

Hi, Mike and Mark. Thanks for taking my call. My question is in regard to the facility in Louisiana and two of the points still outstanding in my mind. First on the debt side, I understand you're being strategic with timing, but could you provide some insight as to level of equity funds still available and when your sense of urgency to close the debt financing would increase?

Well, you will see in all of our contracts that we have renegotiated lately, we have taken out a financial close deadline in it because there is really no fixed timing on that. So we don't see a need at this point to say that it has to be in by this time because that number doesn't -- that date doesn't exist. We're seeing progress on the debt financing, but we won't be able to announce anything until it is a done deal, but it is slowly, the debt markets are starting to recover, and we're starting to see some debt being placed. It is still not at very good pricing, so we're just going to wait that out.

Makes sense. In the past you talked about securing multiple raw materials supply sources as probably one of the hurdles of getting all the ducks aligned before finalizing the financing. Can you just talk about where you stand on this front?

We're continuing to move forward. I think you saw recently an announcement of the sale of the Oxbow mine in the region to two utilities, Cleco and AEP. Obviously in any M&A activity, it's hard to do contracting around that and so all of that M&A activity around that mine closed down the process. But we're making progress on that. We don't see that as a limiting factor on securing long-term (inaudible).

Just to follow up on that, would you consider that something that has greased the wheels as far as getting that lined up?

You mean the sale of the mine?

Yes, to facilitate raw material supply for you guys.

We can now have the discussions you can't have when there's an M&A going on between other companies.

OK, good deal, thanks, Mike.

(Operator Instructions) Our next question comes from Ben Joseph with Rice, Voelker. Please state your question.

Hi guys, most have been answered, but I wanted to clarify on the $500 million RFP contracts that are outstanding, is that still the same number that you are using?

We don't have any additional information that would change that.

You haven't bid on any new contracts or anything like that?

Yes, we have. A lot of what that is is the bidding goes from an estimate of what might be out there to solid, firm RFPs, so there is still a fair amount of bidding that's been going on over the last month.

Okay. Then maybe just something I should know. Are you guys selling at all into the state of Illinois?

Yes, we are.

Under one of the previously announced contracts?

No, under one that has not been announced.

Okay. Any kind of color on the size of that contract?

Not until it is a signed contract.

Okay. So the actual sales, have they started to take place or is this something that's going to be second half of '09, 2010?

Well, the sales process is going on. We will not announce it until any contract is signed, but the Illinois rule is July 1 of 2009.

Right. Okay. So this isn't part of the 160 or so that's already been announced?

No.

Okay. Thank you very much.

Your next question comes from Veny Aleksandrov with Pritchard Capital. Please state your question.

Good morning, Mike and Mark. I have a question on the stimulus bill. The $3.4 billion that are allocated for the development of clean coal technologies, are the guidelines for those grants out already? Is it clear what the application process, the timing will be, and how much do you think you might capture? Do you have any details on this side?

The details aren't out. What we're hearing from DOE, and you're seeing this on a number of fronts in Washington where there seems to be an increased urgency to get this money that is coming through the stimulus packages and other processes that the different agencies are under pressure to get this actually into the economy. So what we are hearing is that they're going to want to spend or commit these funds very soon. DOE has said they expect to have a solicitation out sometime in the next month or so, and potential commitments this year on those. What we hope to put together is a program that might be a three to five-year program for scaling up of our technology, and as we mentioned, the size of that program would be on the order of $100 million or so, and that would require co-funding from both DOE and our utility customers.

We have been successful at these in the past. As you remember, we had helped put together a $50 million clean coal technology program with Wii Energies on one of the mercury control technologies, so we're quite confident this kind of funding will give us the opportunity for the scale up of our technology.

This year 2009 (inaudible) contribution even if you win this.

Well, not necessarily. I mean, it will not be a huge scale up, but remember the government year is October 1 through September, so what we have seen in the past is a lot of times there is pressure to get these awarded by September, and then the potential to see revenues after October 1. But, yes, what we would be doing is if we were successful in a large program like that, you look at $100 million program, large capital equipment, the first phases of those are smaller, they're labor hours, design efforts, planning and management. So, yes, we could see some revenues out of this if successful, but the larger revenues would come down the line.

Thank you so much. That answers my question.

Our next question comes from Steve Santos with RBC. Please state your question.

Good morning. Just a quick question. Most of my question marks have been addressed, but with regard, Mike, to the Waxman Markey bill, this addresses the three-part clean air issue, is that correct?

Steve, that's solely the carbon dioxide climate change issue.

Okay. Regarding the other piece of legislation that's pending out there, regarding the at least that's in committee from what I understand, regarding the three-part clean air mandates, do you anticipate seeing any impact on your FGC business on sulphur dioxide and nitrogen oxide? FGC, of course, has been dwindling for the past number of quarters which you had anticipated, but will that potentially give you another boost in that arena if and when it is initiated?

The most important part of a three-P bill, a three-pollutant bill since it is SOx, NOx and mercury, is the mercury side. Obviously that's the biggest piece of that. As far as whether that's -- I think that is being designed so that three-BP bill could be attached to a climate change bill if it looks like it is moving forward. Those may consolidate at some point.

Relative to the flue gas conditioning business, what we're seeing is that maybe mercury, although you're right, some of it is when you have a new sulfur dioxide regulation you might see the choices for a controlling sulfur dioxide, one is to burn a higher sulfur coal and put a wet scrubber on. The other is switching to more of the low sulfur Powder River Basin coals, and if that occurs that creates a market for a flue gas conditioning, so that could have some effect.

What's having a bigger effect is you see in a lot of our technical papers that the alternative to our flue gas conditioning and the more conventional way of handling this problem that occurs, is the injection of sulfur trioxide, SO3, as a flue gas conditioning agent, and that's a conventional technology and that's what we compete with. What we have demonstrated and proven at a number of plants is that the SO3 interferes, when you inject activated carbon, it doesn't collect as much mercury. So what we see is we now have an alternative to SO3 that doesn't interfere with that so that if somebody is putting in an activated carbon injection system for mercury and they have an SO3 system, we think we're going to see them potentially switching to our flue gas continuing, so we'll see potentially some market growing with new SO2 regulations, but the biggest growth we see in the flue gas conditioning is going to be really mercury driven.

Okay. And regarding the CO2 technology that you're developing, are you able to give us an update as to where development of the solid technology has come with whatever testing you have had so far?

To keep this call under three hours, Steve, what I direct you to, we're giving technical papers almost on a quarterly basis, and you will see those papers posted on our website under technical presentations. It gives the background of it. It is probably a little more scientific. I will be giving one in June that will be dumbed down a little bit for me, and for more of a lay audience, but you will see a variety of different papers that give the progress on what we're seeing relative to carbon capture, pricing, energy requirements, and things like that. So that's probably the best way for us to update our investor on that technology.

Okay. In general would you still anticipate that you're three to five years from being able to introduce a commercially viable solution?

You know, you look at even the technologies, there is a couple of technologies that have been out for a couple of years. They're still looking at a five to ten-year process. It's just the scale up. Suppose we are successful at getting the scale up for the technology. Well, now we have proven at one plant. More likely during that scale up we're going to find additional issues we have to resolve, and what the scale up would be is it would be more like a 50-megawatt size scale up. So it will be significant in size, maybe not treating the whole plant, so the next step would be a full size plant, and then you have to demonstrate at different plants burning different coals.

So no matter whose technology you're looking at, it is going to be a five to ten-year process before it is out there and the regulations are out there to fit. So I think if you look at the language in the Waxman Markey bill, you're looking at reductions in the 20 kind of timeframe, so this is all how do we gear up during this time period to meet those so we can then have these, we can try to meet that market. But from our standpoint we have had, if you look at what DOE and industry spent on mercury control, and it is about $150 million, and we are able to get almost half of that, so now with CO2 that's going up by orders of magnitude, and we can continue the success. You're going to see larger baseline revenues on our side than we had in mercury just because the scale of the CO2 control technology.

Very good. Thank you, Mike.

(Operator Instructions) . There are no further questions. I will now turn the conference back to management.

Thanks everybody for your interest in ADA and joining us today and your continued interest and investment in ADA. Thank you very much.

Ladies and gentlemen, this concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.