Advanced Emissions Solutions, Inc. (ADES)

ADES announced Q2 report for August 15 after market close.

Always this impatience. ,-))))

Whether they came up with it through an IR request, were reminded by a fellow golfer, or thought of it themselves is not mentioned in the memo.

6 week closing high….let’s hear all the suppositions.

“Leaked earnings” - no
“Leaked SR result” - no
“Upcoming business announcement” - no

And since we are nearing earnings call time again, I’ll reiterate for the group, do NOT expect anything new on the review announced on the call…and earnings likely showing little improvement.

In relation to book value, the share is significantly undervalued.
A large part of the company's assets consists of cash and cash equivalents (accounts, receivables), at whose reported value there should be no reason for the market to undervalue the company.

This leaves only the assets attributable to actual business operations (production equipment, inventory parts, spare parts), whose value is massively doubted by the market.

In my opinion, the main reason for this is the lack of transparency in ADES reporting. There is no concrete information about the share of volume and sales of the own production in the total business. All that is stated is that ADES must continue to purchase materials in order to meet its delivery obligations. It is not reported how much has to be purchased and what concrete impact this has on the company's profit. There is no indication of Red River's EBIDTA. In the Last ER was written, that RR's productivity was "better than expected". Thats great, but HOW was it and what was expected? Exceeding expectations that were not expressed before is not an achievement.
How should the market evaluate a production whose profitability is not known and which is reported so nebulously?

The other point is the sluggishness of the board of directors when it comes to business orientation. It's really not the case that the end of the Tinuum business suddenly became clear at the beginning of last year. They had many years to think about what to do next and start dealing with it very late and I fear that it will all drag on for a long time.

A company with such a healthy balance sheet in a promising market should actually be valued significantly higher despite the manageable operating losses that are currently still accruing. Unfortunately, poor communication and a "very hesistant" acting board stand in the way.

What a great board.
Since the company hasn’t announced a deal in, like, forever…
…all’s quiet until someone can dig up the slightest news story that they can try and tie back here.

Meanwhile, Peter still thinks this company is significantly ‘undervalued’ yet won’t explain how…and Bart is telling everyone to write letters to the company (so they’ll do, ‘what’?). 🤷🏼‍♂️

But hey, they’re both very capable of clicking the ‘thumbs down’ so I look at it as I just conducted a public service in giving them both something to do.

Anybody a subscriber? Read his initial thesis on ADES which is free and I quickly made the name a top holding as it is much cheaper now. Europe is firing up plants again pretty aggressively and clean water is becoming harder to find for industries or water you drink at home. ADES might of got into the water filtration business at the best possible time. Very happy to own this name for free :).

Like this post from analyze this on another message board as well thought I would share.

He didn't really do that much in depth analysis it seems. It took me 5 minutes to look up the answers. So let's look at some of the answers. The author says the residual company has not made a profit in 10 years.... while that may be true....The Red River plant was only acquired in 2018. So that's only 3 years ago. Hmmmmmm So the author may feel the residual may be worth possibly Zero.....yet he failed to mention from a 11/14/2018 press release that the plant had invested capital in it of $380 million. So is this plant with $380 million invested in it worth Zero ? Hmmmmm I don't imagine so. On another front this plant was acquired for ". Total consideration for this acquisition is $75 million, representing approximately 4.2x Adjusted pro-forma EBITDA" back then. Now....while the author read a few transcripts I guess he missed the details of the press releases. Let's go over APT for last 3 quarters ....fair enough ?
Start off with revenues:
Third quarter revenue for the APT Segment totaled $24.7 million compared to $15.8 million in the prior year. Second quarter revenue for the APT Segment totaled $16.0 million compared to $8.2 million in the prior year's quarter. First quarter revenue for the APT Segment totaled $17.0 million compared to $9.2 million in the prior year. Hmmmm notice a trend in revenues and we haven't even seen anything from the future European business scheduled to start this year.
Now, as for EBITDA let's look at each recent quarter.
APT Segment Adjusted Q3 EBITDA totaled $4.2 million compared to a loss of $1.6 million in the prior year. APT Segment Adjusted Q2 EBITDA totaled $0.3 million compared to a loss of $2.3 million in the prior year. APT Segment Q1 EBITDA totaled $2.2 million compared to a loss of $5.0 million in the prior year. Correct me if I am not wrong, Q2 was impacted by a fire,,, no ? So what I notice from these tid bits from press releases is that Red River revenues are increasing at a fairly rapid pace and EBITDA for the last quarter was $4.2M or $16.8M annualized.
How could the author have missed this I have no idea. Anyways, the author needs to be more thorough and focus on relative important current points. After all, stocks are based upon the future and not the past.

https://seekingalpha.com/research/1099377-courage-conviction-investing/5706855-advanced-emissions-solutions-patience-should-eventually-payoff

Ok boys and girls

Here we go. Stock dropped below $5…so I bought 20,000 shares of ades over the past few trading days…avg price of 4.705
Today I sold 200 August $5 calls for $.30 each
(Sad that I was once getting $3 when the stock was at $20)

Total possible return of 12.5% in two months.
If the stock doesn’t move it’s a 6.25% return
My downside begins at $4.40

Has my opinion about the company changed? No.
Risk/reward is better now that I can write covered calls.

Time to see what it’s like being a bag holder again.