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Advanced Emissions Solutions, Inc. Message Board

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  • bagholder54 bagholder54 Nov 2, 2012 11:56 AM Flag

    Somebody is tired of waiting...

    It must be more than late signing / monetizing new RC systems, or as put in op update "because of the complexities of each RC deal and the number of externalities that are outside our direct control and involvement..."
    I was bummed to see the op update led with DSI/ACI business instead of RC business. Are they preping us for a let down? Also, I didn't see mention of a end 12 or end 13 run rate ebida. Why not?

    Finally, I am worried about change in risk factor language in the boilerplate re RC business between August and now. Then: "failure of CCS’ leased facilities to continue to produce coal which qualifies for IRS Section 45 tax credits" and now: "interpretations of Section 45 tax credit regulations by the IRS adverse to our RC business." I may be titling at windmills here, but the language now sounds more like the questioning of the very foundation of the RC business.
    And where is mention of IRS audits of utes already using or trying to start RC systems? When are they expected to render a ruling? Mgt owes us more clarity.
    Bag

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    • Hmmm, seems like some fear mongering going on here.

      Not sure if anyone notices but AJ Gallagher has a portfolio of RC facilities as large as ADA. Over the last quarter they signed up 2 more plants and indicated a third has been finalized for 4Q as of now. Their investors don't seem to understand the business, either.

      Importantly, they are not having the same difficulties as ADA which means that there is not the mentioned fear from potential customers about the IRS, it is just that ADA hasn't done as good of a job as AJG of signing up new customers.

      • 3 Replies to johndaley404
      • Thanks for the lead...I found this in their Q3 earnings release:

        Clean energy investments - Gallagher has investments in limited liability companies that own 29 clean coal production plants which produce refined coal using proprietary technologies owned by Chem-Mod. We believe these plants are qualified to receive refined coal tax credits under IRC Section 45. The fourteen plants which were placed in service prior to December 31, 2009 (which we refer to as the 2009 Era Plants) can receive tax credits through 2019 and the fifteen plants which were placed in service prior to December 31, 2011 (which we refer to as the 2011 Era Plants) can receive tax credits through 2021.

        2009 Era Plants - Twelve of the fourteen plants are operating under long-term production contracts. At September 30, 2012, Gallagher's net carrying value of these investments was $8.1 million and collectively they could potentially generate approximately $4.3 million of net after-tax earnings per quarter through 2019. Gallagher is seeking long-term production contracts and co-investors for the other two plants. At September 30, 2012, Gallagher's net carrying value of these two investments was $1.4 million. Gallagher cannot predict when these two plants will resume production of refined coal or the amount of refined coal that will ultimately be produced.

        2011 Era Plants - Five of the fifteen plants are operating under long-term production contracts. Gallagher's carrying value of these investments at September 30, 2012 was $10.3 million and collectively they could potentially generate approximately $7.8 million of net after-tax earnings per quarter through 2021. Gallagher has signed long-term production contracts for two plants that may resume production prior to December 31, 2012. Gallagher's carrying value of these two investments at September 30, 2012 was $3.5 million and collectively they could potentially generate approximately $3.7 million of net after-tax earnings per quarter through 2021 once production resumes. Gallagher has signed a long-term production agreement for one plant that may resume production in early 2013. Gallagher's carrying value of this investment at September 30, 2012 was $0.7 million and it could potentially generate approximately $1.1 million of net after-tax earnings per quarter through 2021 once production resumes. Gallagher is in negotiations for long-term production agreements for three plants that may resume production in mid-2013. Gallagher's carrying value of these three investments at September 30, 2012 was $2.0 million and collectively they could potentially generate approximately $3.7 million of net after-tax earnings per quarter through 2021 once production resumes. Gallagher has agreements in principle with co-investors for the sale of majority ownership interests in four plants. Gallagher is seeking long-term production contracts for the remaining four plants which had a carrying value of $2.7 million at September 30, 2012.

        For those 2009 and 2011 Era Plants that are not yet operating under long-term production contracts, we estimate that we will invest an additional $2.0 to $3.0 million per plant, net of co-investor funding, to connect and house each of these plants. We plan to sell majority ownership interests in such plants to co-investors and relinquish control of the plants, thereby becoming a non-controlling, minority investor.

        Gallagher's investment in Chem-Mod generates royalty income from clean energy plants owned by those limited liability companies in which it invests as well as clean energy plants owned by other unrelated parties. Based on current production estimates provided by licensees, Chem-Mod could potentially generate for Gallagher approximately $2.5 million of net after-tax earnings per quarter.

        Please note that all estimates set forth above regarding the potential future quarterly earnings impact of our clean energy investments are subject to significant risks, including those referred to below under "Information Regarding Forward-Looking Statements."

        Sentiment: Hold

      • Fear mongering? No, closer to ignorance driven by fear. For example, in my ignorance I didn't know of AJG or its portfolio of sec 45 credits business. Thank you for that. Do you have any insights as to reasons company is behind schedule signing new sec 45 business? They mention outside factors but do not detail. Did/is AJG having similar lengthy durations to bring on new tax credit business? Thanks again
        Bag

      • Hello from Belly. Posted a comment, but it never showed. Thanks Yahoo.

 
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