Arq Inc (ARQ) 2023 Q1 法說會逐字稿

Good morning. Thank you for attending today's Advanced Emissions Solutions Q1 2023 Earnings Conference Call. My name is Alexis, and I will be your moderator for today's call.

早上好。感謝您參加今天的 Advanced Emissions Solutions 2023 年第一季度收益電話會議。我叫亞歷克西斯，我將擔任今天電話會議的主持人。

(Operator Instructions)

（操作員說明）

I would now like to pass the conference over to Ryan Coleman with Investor Relations. You may proceed.

我現在想將會議轉交給投資者關係部的 Ryan Coleman。你可以繼續。

Thank you, and good morning, everyone, and thank you for joining us today for our first quarter 2023 earnings results call. With me on the call are Greg Marken, Chief Executive Officer and President; as well as Morgan Fields, Chief Accounting Officer.

謝謝，大家早上好，感謝您今天加入我們的 2023 年第一季度財報電話會議。與我通話的是首席執行官兼總裁 Greg Marken；以及首席會計官 Morgan Fields。

This conference call is being webcasted live within the Investors 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 can contact Alpha IR Group for Investor Relations support at (312) 445-2870.

本次電話會議正在我們網站的投資者部分進行網絡直播，今天的演示文稿的可下載版本也在那裡提供。我們的網站上還將提供網絡直播重播，您可以致電 (312) 445-2870 聯繫 Alpha IR Group 以獲得投資者關係支持。

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.

讓我提醒您，今天的陳述和評論包括《證券交易法》第 21E 條所定義的前瞻性陳述。這些陳述基於我們目前可獲得的信息，涉及可能導致實際未來結果、業績和業務前景及機會與這些陳述中明示或暗示的內容存在重大差異的風險和不確定性。

These risks and uncertainties include, but are not limited to, those factors identified on Slide 2 of today's slide presentation, in our Form 10-Q for the quarter ended March 31, 2023, and other filings with the Securities and Exchange Commission. Except as expressly required by securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments or changed circumstances or for any other reason.

這些風險和不確定性包括但不限於今天幻燈片演示的幻燈片 2、我們截至 2023 年 3 月 31 日的季度的 10-Q 表格以及向美國證券交易委員會提交的其他文件中確定的那些因素。除非證券法明確要求，否則公司不承擔更新這些因素或任何前瞻性陳述以反映未來事件、發展或情況變化或任何其他原因的義務。

In addition, it is especially important to review the presentation and today's remarks in conjunction with the GAAP references in the financial statements. Please turn to Slide 3 of today's presentation, which provides our Q1 highlights.

此外，結合財務報表中的 GAAP 參考來審查演示文稿和今天的評論尤為重要。請轉到今天演示文稿的幻燈片 3，其中提供了我們第一季度的亮點。

With that, I'd like to turn the call over to Greg.

有了這個，我想把電話轉給格雷格。

Thank you, Ryan, and thanks to everyone for joining us this morning. I'd like to start by providing a high-level review of our first quarter, then discuss some of the initial steps we have taken to advance our business plan related to the ARQ transaction and related integration.

謝謝你，Ryan，感謝大家今天早上加入我們。我想首先對我們的第一季度進行高級別回顧，然後討論我們為推進與 ARQ 交易和相關整合相關的業務計劃而採取的一些初步步驟。

Our first quarter Consumables Revenue was $20.8 million compared to $26.4 million in the prior year, which was below our expectations as significantly lower natural gas prices relative to the last 18 to 24 months impacted demand among our power generation customers. The potential for persistently lower natural gas prices could have an ongoing adverse impact on demand from our power generation customers and operations at Red River.

我們第一季度的消耗品收入為 2080 萬美元，而去年同期為 2640 萬美元，這低於我們的預期，因為與過去 18 至 24 個月相比，天然氣價格大幅下跌影響了我們發電客戶的需求。天然氣價格持續走低的可能性可能會對我們的發電客戶和紅河業務的需求產生持續的不利影響。

However, more importantly, this economic environment underscores the importance of our acquisition of ARQ and our transformation strategy to begin producing new granular activated carbon or GAC products going forward, thus reducing our reliance on certain markets and industries over time, and broadening the addressable markets for our activated carbon technologies.

然而，更重要的是，這種經濟環境凸顯了我們收購 ARQ 的重要性以及我們未來開始生產新的顆粒活性炭或 GAC 產品的轉型戰略，從而隨著時間的推移減少我們對某些市場和行業的依賴，並擴大可尋址市場用於我們的活性炭技術。

Although this transition will take time due to the capital improvements required, we believe that we will be able to operate a highly utilized asset base during this transition period, and we'll be well positioned to diversify the end markets we sell to and capitalize on the broader, long-term growth opportunities available within the GAC markets.

儘管由於所需的資本改進，這種轉變需要時間，但我們相信，我們將能夠在此過渡期間經營一個高度利用的資產基礎，並且我們將有能力使我們銷售的終端市場多樣化並利用GAC 市場中更廣泛的長期增長機會。

The near-term impact of lower sales volumes from Red River were partially offset by our ongoing price initiatives and commercial wins in water and industrial markets. As a reminder, we have focused our sales strategy on higher-value opportunities with improved economic and commercial terms. We expect that this approach, coupled with continued efforts in our pricing strategy will help offset portions of the softer volumes in our legacy markets.

紅河銷量下降的近期影響被我們正在進行的價格舉措以及在水和工業市場的商業勝利部分抵消了。提醒一下，我們已將銷售戰略重點放在經濟和商業條件改善的高價值機會上。我們預計這種方法，再加上我們在定價策略方面的持續努力，將有助於抵消我們傳統市場的部分疲軟銷量。

During 2023, we expect that our margins will continue to be pressured by the higher cost per unit of production, resulting from decreased power generation volumes compared to expectations. External sourcing of supplemental carbon, albeit at reduced volumes as well as inflationary impacts on a number of operational costs.

在 2023 年期間，我們預計我們的利潤率將繼續受到較高的單位生產成本的壓力，原因是發電量低於預期。補充碳的外部採購，儘管數量減少以及通貨膨脹對許多運營成本的影響。

In April, we completed our regularly scheduled plant turnaround event that occurs on a periodic basis, typically every 18 to 24 months and last for approximately 2 weeks. We were pleased with the planning and execution of the plant turnaround by our team, and we have returned to normal operations on our anticipated timeline.

4 月，我們完成了定期安排的工廠檢修活動，該活動定期進行，通常每 18 至 24 個月一次，持續約 2 週。我們對我們團隊對工廠周轉的規劃和執行感到滿意，並且我們已按預期時間表恢復正常運營。

During the turnaround, we continue to meet all customer obligations with inventory on hand and did not encounter any commercial disruptions. In March, we completed the sale of Marshall Mine to Caddo Creek Resources Company and recognized a gain of $2.7 million. The removal of the asset retirement obligation associated with the Marshall Mine allows us to continue to derisk our balance sheet as we focus on our future initiatives related to the ARQ assets and integration as well as freed up approximately $2.3 million of restricted cash that was previously held as cash collateral pursuant to our bonding program.

在周轉期間，我們繼續用手頭的庫存履行所有客戶義務，並且沒有遇到任何商業中斷。 3 月，我們完成了將 Marshall 礦出售給 Caddo Creek Resources Company 的交易，並確認了 270 萬美元的收益。與馬歇爾礦相關的資產退役義務的取消使我們能夠繼續降低資產負債表的風險，因為我們專注於與 ARQ 資產和整合相關的未來計劃，並釋放了之前持有的約 230 萬美元的受限現金根據我們的擔保計劃作為現金抵押品。

Upon the closing of the ARQ acquisition, we welcomed 3 new board members from the legacy ARQ business. Julian McIntyre, Jeremy Blank and Richard Campbell-Breeden. Each brings valuable experience that will be critical to the execution of our business plan. We also announced last month that Laurie Bergman will join our Board in June as an independent director and will serve as the Chair of our Audit Committee. Laurie is a proven financial executive with highly relevant industry experience, and we look forward to her leadership as we execute on the next phase of the business strategy.

ARQ 收購完成後，我們迎來了 3 名來自傳統 ARQ 業務的新董事會成員。朱利安·麥金泰爾、傑里米·布蘭克和理查德·坎貝爾-布里登。每個人都帶來寶貴的經驗，這對我們的業務計劃的執行至關重要。我們上個月還宣布，Laurie Bergman 將於 6 月作為獨立董事加入我們的董事會，並將擔任我們審計委員會的主席。 Laurie 是一位久經考驗的財務主管，擁有高度相關的行業經驗，我們期待她在我們執行下一階段業務戰略時發揮領導作用。

Turning to our capital plan and cost update. During Q1, we commenced the initial capital projects to upgrade the Corbin and Red River plants, which will facilitate our future ability to produce commercial scale GAC and leverage our new high-performance and vertically integrated bituminous-based feedstock. At Corbin, engineers, contractors and equipment have been selected related to the major components of the capital project and purchasing of long lead items is underway.

轉向我們的資本計劃和成本更新。在第一季度，我們啟動了升級 Corbin 和 Red River 工廠的初始資本項目，這將促進我們未來生產商業規模 GAC 的能力，並利用我們新的高性能和垂直整合的瀝青基原料。在 Corbin，已經選擇了與資本項目的主要組成部分相關的工程師、承包商和設備，並且正在採購長周期項目。

At Red River, where we anticipate spending the majority of the capital, we made progress related to equipment scoping and have completed engineering steps necessary to keep us on track to move forward with permitting at the applicable regulatory agencies during the second quarter. These collective initial capital projects are on track, and we believe these investments will ultimately lead to a more diversified commercial portfolio with a path towards improved and sustainable economic performance for our business on a long-term basis.

在我們預計將花費大部分資金的紅河，我們在設備範圍界定方面取得了進展，並完成了必要的工程步驟，使我們能夠在第二季度獲得適用監管機構的許可，繼續前進。這些集體初始資本項目正在按計劃進行，我們相信這些投資最終將帶來更加多元化的商業投資組合，並為我們的業務長期改善和可持續的經濟績效開闢道路。

Consistent with our plan, we expect that the aggregate growth CapEx related to these projects will be between $45 million and $50 million, of which, roughly $27 million to $30 million will be incurred in the current year. Our total CapEx spend for 2023 is expected to be between $40 million and $45 million, with the balance relating to our regularly scheduled plant turnaround and other capital projects.

根據我們的計劃，我們預計與這些項目相關的總增長資本支出將在 4500 萬至 5000 萬美元之間，其中約 2700 萬至 3000 萬美元將在本年度產生。我們 2023 年的資本支出總額預計在 4000 萬美元至 4500 萬美元之間，餘額與我們定期安排的工廠檢修和其他資本項目有關。

We've also begun to take actions to achieve the planned go-forward operating cost structure for the combined company, such as streamlining personnel and systems, optimizing overall operations as well as other items. We will continue to evaluate ways to simplify the overall organization and operations but are on track to achieving a go-forward cost structure consistent with our plans, while maintaining the ability to achieve the growth initiatives inherent in our business plan.

我們還開始採取行動，以實現合併後公司計劃中的前瞻性運營成本結構，例如精簡人員和系統、優化整體運營以及其他項目。我們將繼續評估簡化整體組織和運營的方法，但有望實現與我們的計劃一致的前瞻性成本結構，同時保持實現我們業務計劃中固有的增長計劃的能力。

In addition to commencing the initial capital improvements to the Red River and Corbin facilities, we are simultaneously focused on expanding the sales channels to identify and secure lead GAC customers once commercial production of GAC products utilizing Arq powder begins. Part of that process involves engaging in a more visible and proactive marketing approach to increase awareness of our company and our overall suite of environmental technologies that we will bring to potential customers.

除了開始對 Red River 和 Corbin 設施進行初始資本改進外，我們還同時專注於擴大銷售渠道，以在使用 Arq 粉末的 GAC 產品開始商業化生產後確定並確保主要 GAC 客戶。該過程的一部分涉及採用更加引人注目和積極主動的營銷方法，以提高我們公司的知名度以及我們將帶給潛在客戶的整套環境技術。

During the first quarter, our Chief Technology Officer, Joe Wong; and our Vice President of Sales, Oscar Velasquez participated in multiple technical speaking engagements and conferences designed to strengthen our remediation market base, discuss our product applications and drive awareness around our suite of current and potential products, including GAC, PAC and Colloidal carbons. We expect to participate in future events in order to demonstrate the expanded joint product portfolio and capabilities of the combined company.

在第一季度，我們的首席技術官 Joe Wong；和我們的銷售副總裁 Oscar Velasquez 參加了多項技術演講活動和會議，旨在加強我們的修復市場基礎，討論我們的產品應用並提高對我們當前和潛在產品套件（包括 GAC、PAC 和膠體碳）的認識。我們希望參加未來的活動，以展示合併後公司擴大的聯合產品組合和能力。

And lastly, we remain focused on developing opportunities for emerging markets and applications for ARQ powder, which will continue to derisk the business by diversifying our revenue mix. We are pleased to have completed the acquisition of ARQ during the first quarter, which we believe is the right step in driving long-term growth and value creation.

最後，我們仍然專注於為 ARQ 粉末開發新興市場和應用的機會，這將通過使我們的收入組合多樣化來繼續降低業務風險。我們很高興在第一季度完成了對 ARQ 的收購，我們認為這是推動長期增長和價值創造的正確步驟。

Our combined company will enjoy a diverse portfolio of products and customers in a much larger addressable market due to an enhanced feedstock portfolio and production capabilities, which will result in higher margin opportunities within the activated carbon market as well as providing access to additional potential revenue streams that would have been previously unattainable for our business as previously positioned.

由於增強的原料組合和生產能力，我們合併後的公司將在更大的潛在市場中享受多樣化的產品組合和客戶，這將在活性炭市場帶來更高的利潤機會，並提供額外的潛在收入來源對於我們以前定位的業務來說，這是以前無法實現的。

I'll talk a little bit more about our milestones for 2023. But first, I'd like to turn the call over to Morgan to review our first quarter results in greater detail.

我將更多地談談我們 2023 年的里程碑。但首先，我想把電話轉給摩根，更詳細地回顧我們第一季度的業績。

Thank you, Greg. Slide 4 provides a snapshot of our first quarter financial results. First quarter revenues and cost of revenues were $20.8 million and $17.2 million, respectively, compared to $26.4 million and $21.5 million for the first quarter of 2022. The revenue decline was the result of lower sales of consumable products due to lower natural gas prices, which negatively impacted demand from our power generation customers. The reduced demand was partially offset by higher average selling prices for consumable products.

謝謝你，格雷格。幻燈片 4 簡要介紹了我們第一季度的財務業績。第一季度收入和收入成本分別為 2080 萬美元和 1720 萬美元，而 2022 年第一季度為 2640 萬美元和 2150 萬美元。收入下降的原因是天然氣價格下跌導致消費品銷售額下降，對發電客戶的需求產生了負面影響。需求減少部分被消費品平均售價上漲所抵消。

First quarter other operating expenses were $11.5 million compared to $8.2 million for the first quarter of 2022. The increase was mainly the result of higher legal and professional fees associated with the conclusion of the company's strategic review process and closing of the ARQ acquisition as well as additional payroll and benefit costs and overall operating expenses due to ARQ activities after the acquisition.

第一季度其他運營費用為 1150 萬美元，而 2022 年第一季度為 820 萬美元。增加的主要原因是與公司戰略審查流程的結束和 ARQ 收購的結束相關的法律和專業費用增加以及收購後由於 ARQ 活動而產生的額外工資和福利成本以及總體運營費用。

The increase was partially offset by a $2.7 million gain on the sale of Marshall Mine. As Greg mentioned, we are already taking actions to achieve our expected go-forward operating cost structure for the combined company. This involves integrating the organization in order to realize cost synergies and efficiencies across the organization.

這一增長部分被出售馬歇爾礦的 270 萬美元收益所抵消。正如 Greg 所提到的，我們已經在採取行動以實現合併後公司預期的未來運營成本結構。這涉及整合組織，以實現整個組織的成本協同效應和效率。

First quarter operating loss was $7.8 million compared to $3.3 million in the prior year. The decline was mainly the result of lower consumables revenue driven by the previously mentioned factors, and the incremental transaction and integration costs of $3.6 million associated with the acquisition of ARQ.

第一季度營業虧損為 780 萬美元，而去年同期為 330 萬美元。下降的主要原因是上述因素導致消耗品收入下降，以及與收購 ARQ 相關的 360 萬美元增量交易和整合成本。

First quarter interest expense totaled $0.5 million compared to $0.1 million in the prior year. The increase was driven by $0.3 million of incremental interest expense related to the company's new $10 million term loan as well as the interest relating to the ARQ's previously existing term loan.

第一季度利息支出總計 50 萬美元，上年同期為 10 萬美元。增加的原因是與公司新的 1000 萬美元定期貸款相關的 30 萬美元增量利息支出以及與 ARQ 先前存在的定期貸款相關的利息。

The company recorded a small income tax benefit for the first quarter of 2023 compared to no income tax expense for the first quarter of the prior year. First quarter net loss was $7.5 million or $0.32 per diluted share compared to a net loss of $3 million or $0.17 per share in the prior year. As discussed, the decline was the result of lower operating earnings, driven by lower consumable sales.

與去年第一季度沒有所得稅支出相比，該公司在 2023 年第一季度的所得稅收益較小。第一季度淨虧損為 750 萬美元或攤薄後每股虧損 0.32 美元，而去年同期淨虧損為 300 萬美元或每股 0.17 美元。如前所述，下降是由於消耗品銷售額下降導致營業收入下降。

First quarter consolidated adjusted EBITDA was a loss of $7.7 million compared to positive adjusted EBITDA of $0.9 million in 2022. The decline in consolidated adjusted EBITDA was mainly the result of the larger year-over-year net loss, which included $4.4 million of transaction and integration costs related to the acquisition compared to $0.8 million in the prior year. The current year also includes $0.9 million of incremental ARQ payroll and benefit costs since the date of the acquisition relative to the prior year.

第一季度合併調整後 EBITDA 虧損 770 萬美元，而 2022 年調整後 EBITDA 為 90 萬美元。合併調整後 EBITDA 的下降主要是由於同比淨虧損較大，其中包括 440 萬美元的交易和與收購相關的整合成本，而上一年為 80 萬美元。本年度還包括自收購之日起相對於上一年增加的 90 萬美元 ARQ 工資和福利成本。

Cash balances as of March 31, 2023, including restricted cash, totaled $79.1 million compared to $76.4 million as of December 31, 2022. Total debt inclusive of financing leases as of March 31, 2023, totaled $21.7 million compared to $4.6 million as of December 31, 2022. The increase was driven by the term loan entered into in conjunction with the acquisition as well as the assumption of the previously existing ARQ term loan.

截至 2023 年 3 月 31 日，包括受限現金在內的現金餘額總計 7910 萬美元，截至 2022 年 12 月 31 日為 7640 萬美元。截至 2023 年 3 月 31 日，包括融資租賃在內的總債務總計 2170 萬美元，截至 12 月為 460 萬美元2022 年 3 月 31 日。增加的原因是與收購相關的定期貸款以及先前存在的 ARQ 定期貸款的假設。

As Greg mentioned, the sale of the Marshall Mine closed in March. As a result, the asset retirement obligation was removed from our balance sheet and all future cash flows -- outflows associated with the reclamation of the mine were transferred to the buyer. In April, we received the release of approximately $2.3 million of restricted cash, which was previously held in escrow as collateral for the surety bond portfolio.

正如 Greg 提到的，Marshall 礦的出售已於 3 月結束。因此，資產報廢義務從我們的資產負債表中刪除，所有未來現金流——與礦山復墾相關的流出都轉移給了買方。 4 月，我們收到了大約 230 萬美元的受限現金的釋放，這些現金之前作為擔保債券組合的抵押品在託管中持有。

First quarter capital expenditures totaled $3.6 million compared to $1.5 million in the prior year. The increase was the result of initial cost of the capital growth projects as well as higher spend in anticipation of our periodic plant turnaround. As Greg stated, we expect to incur between $40 million and $45 million in capital expenditures in 2023, driven by enhanced capabilities to ensure GAC production and amount for the plant turnaround as well as the completion of other capital projects, including certain planned capital projects that were started in 2022 and will be completed during the first half of 2023.

第一季度資本支出總計 360 萬美元，上年同期為 150 萬美元。增加的原因是資本增長項目的初始成本以及預期我們的定期工廠周轉而增加的支出。正如 Greg 所說，我們預計 2023 年的資本支出將在 4000 萬至 4500 萬美元之間，這是由於確保 GAC 生產和工廠周轉的數量以及其他資本項目（包括某些計劃的資本項目）的增強能力的推動2022年開工，2023年上半年竣工。

With that, I'll now turn the call back to Greg.

有了這個，我現在將把電話轉回給格雷格。

Thanks, Morgan. Slide 5 shows the strong foundation we continue to build upon to become a leading environmental solutions provider. We are currently a top 3 producer of activated carbon products in North America with a market share of approximately 17%. However, we are currently able to only serve an estimated 30% to 35% of the activated carbon market with our lignite-based portfolio of products.

謝謝，摩根。幻燈片 5 展示了我們為成為領先的環境解決方案提供商而繼續建設的堅實基礎。我們目前是北美前 3 大活性炭產品生產商，市場份額約為 17%。然而，我們目前只能通過基於褐煤的產品組合為大約 30% 至 35% 的活性炭市場提供服務。

Post acquisition, utilizing both our existing lignite-based feedstock and ARQ powder as a bituminous-based feedstock we will be well positioned to provide activated carbon products that could serve more than 80% of the North American activated carbon market.

收購後，利用我們現有的褐煤基原料和 ARQ 粉末作為瀝青基原料，我們將處於有利地位，可以提供可服務於北美活性炭市場 80% 以上的活性炭產品。

This will inherently reduce our exposure to certain end markets and leave us less susceptible to headwinds that we are currently experiencing in our existing business. Additionally, as we complete the growth capital projects to integrate ARQ powder, we will reposition, utilization capabilities of our existing assets towards GAC products that generally provide higher value and higher-margin opportunities in markets that are expected to continue to have growth in demand for years to come.

這將從本質上減少我們對某些終端市場的敞口，並使我們不易受到我們目前在現有業務中遇到的不利因素的影響。此外，隨著我們完成整合 ARQ 粉末的增長資本項目，我們將重新定位我們現有資產的利用能力，使其轉向 GAC 產品，這些產品通常在市場上提供更高價值和更高利潤的機會，預計這些市場的需求將繼續增長未來幾年。

We have proven sales channels and more than 100 current customers, many of which, provide potential entry points for the expanded markets we will enter as we look to accelerate our sales of GAC products when the capital improvements at our facilities are completed. Our commercial and technical teams have a proven track record of success in new markets. We expect our historical track record to continue to drive accelerated market acceptance of our new GAC and overall suite of activated carbon products and ultimately enhance our ability to win new business in these emerging market segments.

我們擁有成熟的銷售渠道和 100 多個現有客戶，其中許多為我們將進入的擴展市場提供了潛在的切入點，因為我們希望在設施的資本改進完成後加速 GAC 產品的銷售。我們的商業和技術團隊在新市場上擁有成功的良好記錄。我們預計我們的歷史記錄將繼續推動我們的新 GAC 和整套活性炭產品加速市場接受，並最終增強我們在這些新興市場領域贏得新業務的能力。

We will be the only vertically integrated activated carbon producer in North America for our primary feedstock needs, from material sourcing to manufacturing to distribution. We expect this integration to yield sustainable long-term cost advantages and provide a distinct competitive advantage when production of GAC products from Arq powder begins in 2024.

我們將成為北美唯一一家垂直整合的活性炭生產商，以滿足我們從材料採購到製造再到分銷的主要原料需求。我們預計這種整合將產生可持續的長期成本優勢，並在 2024 年開始使用 Arq 粉末生產 GAC 產品時提供明顯的競爭優勢。

And lastly, we are well positioned to benefit from a changing regulatory landscape as the need to control and remediate the release of harmful chemicals into our air and water evolves. We continue to develop products to be potential solutions to emerging soil and groundwater regulations focused on forever chemicals such as PFOS.

最後，隨著控制和補救有害化學物質釋放到我們的空氣和水中的需求不斷發展，我們完全有能力從不斷變化的監管環境中受益。我們繼續開發產品，以成為針對新興土壤和地下水法規的潛在解決方案，這些法規側重於全氟辛烷磺酸等永久性化學品。

We expect to further expand upon and utilize our improved ESG profile to support and contribute to our customers' sustainability goals in a world increasingly focused on the preservation of its natural resources.

我們希望進一步擴展和利用我們改進後的 ESG 概況，以支持和促進我們客戶在日益關注自然資源保護的世界中的可持續發展目標。

Overall, the new combined company provides us with a longer-term, sustainable and diversified product mix and facilitates participation in higher-margin activated carbon products and end markets.

總體而言，新合併後的公司為我們提供了更長期、可持續和多樣化的產品組合，並促進了對利潤率更高的活性炭產品和終端市場的參與。

Finally, Slide 6 lists our areas of focus for 2023. First and foremost, we will continue to operate our Red River plant as we have while looking to continue to grow and improve our existing business. We are focused on maintaining high renewal rates with existing customers and being focused in our bidding process in order to align new and renewed contracts to maximize our top line opportunities.

最後，幻燈片 6 列出了我們 2023 年的重點領域。首先，也是最重要的是，我們將繼續運營我們的紅河工廠，同時尋求繼續發展和改善我們現有的業務。我們專注於與現有客戶保持高續約率，並專注於我們的投標過程，以便調整新合同和續簽合同，從而最大限度地提高我們的收入機會。

As it relates to ARQ, our first priority will be the integration of the ARQ team, assets and operations. We are pleased with the integration efforts to date and are encouraged by the enthusiasm of our collective teams to begin executing our combined transformative business plan.

由於涉及 ARQ，我們的首要任務是整合 ARQ 團隊、資產和運營。我們對迄今為止的整合工作感到滿意，並為我們集體團隊開始執行我們的合併轉型業務計劃的熱情所鼓舞。

Operationally, our key focus will be on progressing the capital work to optimize both the Corbin and Red River facilities for industrial scale production of Arq powder and GAC products. The most significant of these modifications relates to the Red River plant and includes the installation of new shaping and heat treatment processes to enable the processing of bituminous-based feedstock to manufacture new and higher-value GAC products. The capital projects will not interrupt our ongoing manufacturing operations or sales opportunities.

在運營方面，我們的重點將放在推進基本建設工作上，以優化 Corbin 和 Red River 設施，以實現 Arq 粉末和 GAC 產品的工業規模生產。這些改造中最重要的涉及紅河工廠，包括安裝新的成型和熱處理工藝，使瀝青基原料的加工能夠製造出新的和更高價值的 GAC 產品。資本項目不會中斷我們正在進行的製造業務或銷售機會。

Our focus will also be on securing lead customers and building our sales channels within the North American market for GAC and other emerging products. We expect to undertake further product testing with potential customers for GAC and other activated carbon products, which we believe will provide an opportunity to capitalize on the expanded capabilities in 2024 when the initial growth capital improvements are completed.

我們的重點還將放在確保主要客戶並在北美市場建立我們的 GAC 和其他新興產品的銷售渠道上。我們預計將與潛在客戶一起對 GAC 和其他活性炭產品進行進一步的產品測試，我們相信這將提供一個機會，在 2024 年初始增長資本改進完成後利用擴展的能力。

Additionally, we will continue to progress the technical feasibility of other potential products for emerging markets during 2023 and beyond.

此外，我們將在 2023 年及以後繼續推進針對新興市場的其他潛在產品的技術可行性。

To conclude, while our first quarter results were down compared to our prior year, it underscores the importance of securing a bituminous-based feedstock in acquiring ARQ. The combined company will be able to pursue end markets served by both powder and granular activated carbon products, greatly expanding our market breadth and reducing our reliance on power generation and when complete, will position the business to be the only completely vertically integrated, activated carbon provider for our primary feedstock needs from primary material to distribution.

總而言之，雖然我們第一季度的業績與去年同期相比有所下降，但它強調了在獲取 ARQ 時確保瀝青基原料的重要性。合併後的公司將能夠開拓粉末和顆粒活性炭產品服務的終端市場，極大地擴大我們的市場範圍並減少我們對發電的依賴，完成後，將使該業務成為唯一完全垂直整合的活性炭供應商滿足我們從初級材料到分銷的初級原料需求。

This market expansion, diversification of our product portfolio and cost competitive position of the new company are all expected to create a materially improved earnings profile and a more resilient company.

這種市場擴張、我們產品組合的多樣化以及新公司的成本競爭地位都有望創造出實質性改善的盈利狀況和更具彈性的公司。

With that, I will turn the call back over to our operator to move us to Q&A.

有了這個，我會把電話轉回給我們的接線員，讓我們進入問答環節。

(Operator Instructions)

（操作員說明）

Our first question comes from the line of Gerard Sweeney with ROTH Capital Partners.

我們的第一個問題來自 ROTH Capital Partners 的 Gerard Sweeney。

I have a couple of questions. I want to start on the capital project side. We have Corbin and Red River and want to ask about them independently. So one of the risks that we're watching is just timeline of investments and sort of what are the gating factors or key milestones to make sure those projects stay on time for completion production, et cetera.

我有一些問題。我想從資本項目方面開始。我們有 Corbin 和 Red River，想獨立詢問他們。因此，我們正在關注的風險之一隻是投資時間表，以及確保這些項目按時完成生產等的門控因素或關鍵里程碑。

So could you maybe just outline each for Corbin and separately for Red River, what are some of the key areas that we should be looking at for investments in and meeting those milestones? Obviously, I think Red River is going to be a little bit more, I don't want to say challenging, but there is probably a little more risk or a little bit more challenge around Red River than Corbin.

那麼，您能否為 Corbin 和 Red River 單獨概述每個，我們應該關注哪些關鍵領域以進行投資並實現這些里程碑？顯然，我認為紅河會比科爾賓多一點，我不想說具有挑戰性，但紅河周圍的風險或挑戰可能比科爾賓多一點。

Yes. So Gerry, obviously, let me start with Corbin. I do think you're right. This is a bit more straightforward of a project. Overall timeline, we're looking to the end of Q1 of 2024 to have all of the kind of collective projects related to Corbin complete. As I mentioned, we are on track, but we did commence the 3 major capital projects during the first quarter immediately upon completing the acquisition.

是的。顯然，格里讓我從科爾賓開始。我認為你是對的。這是一個更直接的項目。總體時間表，我們希望在 2024 年第一季度末完成與 Corbin 相關的所有此類集體項目。正如我所提到的，我們正在走上正軌，但我們確實在完成收購後立即在第一季度啟動了 3 個主要資本項目。

The first thing kind of break it into the 3 general areas, the equipment to increase the water processing capabilities, which will be key to the throughput and the ongoing operations. It just requires a high level of water coming through the plant, it is a closed loop, but we needed to increase the capabilities there.

首先將其分為 3 個一般領域，增加水處理能力的設備，這將是吞吐量和持續運營的關鍵。它只需要大量的水通過工廠，這是一個閉環，但我們需要提高那裡的能力。

The second component would be the further automation of the plant to enable more reliable and efficient operations. When ARQ initially built it, it was partially automated. And we're going to finish that off to make sure that once we come online that we have a much more automated plant that would be more in line with Red River.

第二個組成部分是工廠的進一步自動化，以實現更可靠和高效的運營。當 ARQ 最初構建它時，它是部分自動化的。我們將完成這項工作，以確保一旦我們上線，我們就會擁有一個自動化程度更高的工廠，這將更符合 Red River 的要求。

And then the final one would be the equipment handling to take the finished product and take it whether it's the Red River or another finished customer. With all of those, we are on track with the detailed project plan. Specifically, in the first quarter here, we did have the engineers, the contractors and equipment all selected for Corbin and have the long lead items purchased or are in the process of doing so. So pleased with where we are with Corbin.

然後最後一個是設備處理，以接收成品並接收它，無論是紅河還是其他成品客戶。通過所有這些，我們正在製定詳細的項目計劃。具體來說，在這裡的第一季度，我們確實為 Corbin 選擇了工程師、承包商和設備，並且已經購買或正在購買長周期項目。對我們與 Corbin 的合作感到非常滿意。

As it relates to Red River, you are right. This one is the bigger project of the 2, obviously, more money and a bit more complicated. But the technology and equipment for the shaping and heating processes to ultimately produce the GAC products in conjunction with our existing furnace capabilities. Those projects are well underway.

就紅河而言，你是對的。這個是兩個中更大的項目，顯然，資金更多，也更複雜一些。但最終生產 GAC 產品的成型和加熱工藝的技術和設備與我們現有的熔爐能力相結合。這些項目正在進行中。

I think key milestones here in the first quarter were, we completed the detailed engineering and further testing to support the filing of the permit from a -- with the regulatory agencies in the second quarter, and we're on track to do that, still tracking on an overall project basis to have that done by the end of the third quarter of 2024 from Red River.

我認為第一季度的關鍵里程碑是，我們完成了詳細的工程設計和進一步的測試，以支持在第二季度向監管機構提交許可證，我們正在按計劃做到這一點，仍然在整個項目的基礎上進行跟踪，以在 2024 年第三季度末從 Red River 完成這項工作。

So I think collectively, very, very pleased. We're off to a good start, but it is important that we continue to execute on a weekly basis through the duration of these projects.

所以我認為集體非常非常高興。我們有了一個良好的開端，但重要的是我們在這些項目期間繼續每週執行一次。

Got it. Switching gears to the engaging lead customers. So obviously, you're getting Red River, Corbin up and running. But in the background, as you said, Joe and Oscar sort of hit the street, getting the word out on the granular activated carbon product.

知道了。切換齒輪以吸引潛在客戶。很明顯，您正在讓 Red River、Corbin 啟動並運行。但在後台，正如你所說，喬和奧斯卡走上街頭，宣傳顆粒活性炭產品。

Can you give a little bit more detail as to what some of that -- I call it seeding the market, what it entails. So you are municipalities or end customers come in and testing the materials, just understanding how you're maybe getting some of these customers comfortable with the product and getting them prepped for its arrival?

你能否更詳細地說明其中的一些內容——我稱之為播種市場，它需要什麼。所以你是市政當局或最終客戶來測試材料，只是了解你如何讓這些客戶中的一些人對產品感到滿意並讓他們為產品的到來做好準備？

Yes. So I think I'll break it down into a couple of components, Gerry, but very good question. From a -- just what we're doing kind of actively in the marketplace attending and speaking at conferences, I think the relationship development component is really critical. And so we're going to invest time, time and energy to do that over this period until we come online, but making sure that we have the right relationships, and those are key.

是的。所以我想我會把它分解成幾個部分，Gerry，但這是個很好的問題。從我們在市場上積極參加會議和發言的角度來看，我認為關係發展部分非常關鍵。因此，我們將在此期間投入時間、時間和精力來做到這一點，直到我們上線，但要確保我們擁有正確的關係，這是關鍵。

The other things that we're doing, we are engaging with both municipal water customers along with other lead adopters. We're doing pilot scale and a little larger quantity testing to validate the product performance, everything that we saw as we went through the diligence process, so we're actually having them do testing. And we'll do that across multiple end markets with multiple customers.

我們正在做的其他事情是，我們正在與市政供水客戶以及其他主要採用者進行接觸。我們正在進行試點規模和更大規模的測試，以驗證產品性能，我們在盡職調查過程中看到的一切，所以我們實際上讓他們進行測試。我們將在擁有多個客戶的多個終端市場中做到這一點。

Municipal water, it's a little bit more of a transparent process. The lead adopters in another category that will be some longer-term relationships. But all of it will involve testing, and we're undertaking that right now.

市政用水，這是一個更透明的過程。另一個類別中的主要採用者將是一些長期關係。但所有這些都將涉及測試，我們現在正在著手進行。

Got it. Any initial feedback or still too early?

知道了。有任何初步反饋還是還為時過早？

Yes. The feedback has been very, very consistent, Gerry, with what we kind of put out in some previous presentations, product performs really, really well. It's very high quality. And so we're seeing some very, very good results across multiple industries, which we're very excited about.

是的。反饋非常非常一致，Gerry，與我們在之前的一些演示中所展示的一樣，產品表現非常非常好。它的質量非常高。因此，我們在多個行業看到了一些非常非常好的結果，我們對此感到非常興奮。

Got it. Switching gears to ARQ powder. There's -- you mentioned, I think, in your prepared remarks, there's also an opportunity there. And we've talked about, I think, it was fuel, asphalt, things like that. Where does that sort of fall into the opportunity chain or as we look at it?

知道了。將齒輪換成 ARQ 粉末。我認為，在你準備好的發言中，你提到過，那裡也有機會。我認為我們已經討論過燃料、瀝青之類的東西。這種屬於機會鏈的什麼地方，或者我們如何看待它？

Yes. So a final outlet for Arq powder, it is important, Gerry. But if I would order it in relative timing and ability to get to market, I think the known one for sure is activated carbon. Arq powder can definitively serve as a feedstock to allow us to do that. We need to continue to go through the technical and commercial development related to other Arq Powder outlets. I think ARQ has done a lot of really good work, but there are still additional hurdles and a little bit more proving out of the potential outlets.

是的。因此，Arq 粉末的最終出口很重要，Gerry。但如果我要在相對的時間和上市能力下訂購它，我認為已知的肯定是活性炭。 Arq 粉末絕對可以作為原料讓我們做到這一點。我們需要繼續進行與其他 Arq Powder 網點相關的技術和商業開發。我認為 ARQ 已經做了很多非常好的工作，但仍然存在額外的障礙，並且需要更多地證明潛在的出路。

I think it's important because ultimately, it will result in full utilization of the Corbin facility if we're able to do that. But there's additional technical and commercial work that needs to be done to get over those hurdles. And that timing is probably a little more uncertain.

我認為這很重要，因為如果我們能夠做到這一點，最終將充分利用 Corbin 設施。但要克服這些障礙，還需要完成額外的技術和商業工作。而這個時間點可能更不確定。

Okay. That's fair. And then just one thing I wanted to confirm, right? So I think in the quarter, if I heard it right, there was about $4.4 million of professional fees, merger costs, et cetera. And this was not backed out of the $7.7 million EBITDA loss, is that correct?

好的。這還算公平。然後我只想確認一件事，對嗎？所以我認為在本季度，如果我沒聽錯的話，專業費用、合併成本等約為 440 萬美元。這並沒有從 770 萬美元的 EBITDA 損失中得到支持，對嗎？

That's correct, Gerry. There is a footnote below it, where it does give that information, but that is correct.

沒錯，格里。它下面有一個腳註，確實提供了該信息，但這是正確的。

Okay. Got it. That's it for me, I appreciate it, thanks for all the answers Greg.

好的。知道了。對我來說就是這樣，我很感激，感謝格雷格的所有回答。

Yes. Thanks for jumping on Gerry, appreciate it.

是的。感謝您跳上 Gerry，感激不盡。

(Operator Instructions)

（操作員說明）

There are currently no further questions in queue. I will now pass the line back to the management team for closing or additional remarks.

目前隊列中沒有其他問題。現在，我會將這條線路傳回給管理團隊，以供結束或補充說明。

Thank you, and thanks to everyone for joining the call this morning. Our business plan for the new ADES is underway, and we are excited about the company's prospects to becoming an environmental technology leader. We look forward to speaking with everyone soon and updating everyone on our next call.

謝謝，也感謝大家今天早上加入電話會議。我們的新 ADES 業務計劃正在進行中，我們對公司成為環境技術領導者的前景感到興奮。我們期待盡快與大家交談，並在我們的下一次電話會議上更新大家的情況。

That concludes the Advanced Emission Solutions Q1 2023 Earnings Conference Call. Thank you for your participation. You may now disconnect your lines.

Advanced Emission Solutions 2023 年第一季度收益電話會議到此結束。感謝您的參與。您現在可以斷開線路。