Charah Solutions (CHRA)

Steve Brehm Vice President of Legal Affairs & Corporate Secretary
Scott Sewell President & Chief Executive Officer
Roger Shannon Chief Financial Officer & Treasurer
Alex Rygiel B. Riley
Call transcript
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Good morning ladies and gentlemen and welcome to the Charah Solutions Incorporated First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After today’s presentation, we will conduct a question-and-answer session and instructions will be provided at that time for you to ask a question. I would now like to hand the call over to Steve Brehm, Vice President of Legal Affairs and Corporate Secretary for Charah Solutions. Please, go ahead.

Steve Brehm

thank joining and today. everyone, morning, you us for Good quarter in call. We participation first XXXX appreciate your our earnings And we look and answering forward to sharing questions. our your prepared remarks We closed. to a we have yesterday hope press issued market the release chance the after that you review had can the press release, you or our at Investors supplemental section as as our during ir.charah.com. the may www.charah.com you of presentation follow find prepared not, well a If investor remarks on website

Chief Scott Joining and Executive me and on Charah's today Officer Officer; are Shannon, Treasurer. Sewell, Financial call Chief Roger President the and

question-and-answer their we Following remarks, will prepared conduct the customary session.

begin, in we These like except statements be disclaim earnings Those our that calls. required with we risks discussed conference XX-Q statements described risks to forward-looking Securities meaning that remind include remarks statements those in forward-looking our you Private within the are We cause by including to subject Before our that and results I in uncertainties well the to Report the and press our these others, Securities filings would update on Annual Form actual Exchange on are include, matters of release, and materially reports and Solutions Act. regarding could releases obligation from statements, Form Reform Charah different the as to Commission, XX-K. as have our any quarterly forward-looking among our law. earnings as Litigation

earnings non-GAAP release refer certain GAAP will call, financial We our this During nearest we presentation. and to press to applicable provide measures. conference measures in supplemental reconciliations the

Executive and Scott to Sewell, I over President call like to would Now, Officer. Chief turn the our

Scott Sewell

earnings joining morning. for call this Steve, Thanks, thanks and everyone us on to our

After over Charah's the that, business, near will financial some continued recently Roger, to second term quarter long I'll growth developments and supportive Today, And report. who on highlights information pipeline remained about term. pass and our for discuss Charah's update published business of an annual the from our we to be see our things The positive ESG providing very I'll first the in prospects market. on year our for of work results.

quarter, During strong. overall business was the Charah's progress

risk strong while scrap close this the the Gibbons continued project saw sales positive acreage The are sales. are remaining its Creek quarter, to Creek These ERT, of for we about preparing of in over future very land we quarters several continuing transfer, environmental additional the Gibbons excited business. previously Our ERT momentum. sales or business discussed next into XXXX. expected and the And

remediation be announced schedule. side, running from this stations April, And XXXX. product on quarter, of in acquisitions projects; Avon ERT generating closed and end the Since of the Cheswick expect previously of the coal-fired Gibbons Lake are we Creek Energy. the ahead we property more we to On GenOn completed two in the

engage quickly these And moved contractors and vendors, have already workforce we the local parcel have to properties. remediation efforts. We and support marketing to work at begun

Now both will that properties, income estimates of we on returns our ownership generation and the taken exceed believe projects. we've the original

to responses been encouraged very the We positive press projects. and these have also by community

will meet ERT devoting to exist to high these are not power Our we new that services. exceed years pursue opportunities. ERT new opportunities. to through resources the of value-added believe we But expanding five we uniquely to And services producers continue ago. continued Charah independent municipalities situated we and did needs offering service are expectations. utilities, our for these is aggressively growing a And This additional

first contract. quarter U.S. an will And potential first progress confident our additional commercial our deployment the towards ash are customer. in our substantial We customers agreement made technology. we finalizing we also of excellent proprietary progress And the that beneficiation utility EnviroSource with the are we pursuing We towards opportunities soon across with announce made

growth forward We deployment more and utilization this concrete. friendly in our and Portland and eager technology accelerating fly green commercial to cement the are alternatives result with to provide move environmentally in of will of first ash

work, backlog million. $XX and totaled year-to-date win business continues execute to Charah we wins currently of our new As on current nearly

believe It discussed affecting January on the last ash remediation to few next I XX perform. as XXXX the or management over it and the addressable groundwater required positive will surface that amount significantly increases and As our of very for impoundment utilities mandated expands call, ruling CCR that in we the be strengthens regulations market our EPA coal years of landfills. is

time bids assess plans. as revise generation Since seen anticipated to expect owners stated order and January second impact have pending to announcement award call, of the an in to half ruling power However, on develop EPA our we timing the And this expect this confident for the will do or compliance that pick that reason. remain nature. last be new will require we we their We short-term on of in up the activity in year. delay

the the opportunity awards have so market this our business drive to to supportive year, new up exciting our come. are positive added past the setting really beyond years that what's we and three years us For is total which over won record to far forward awards for factors

stakeholders the years. company remediation by continue for and our compliance total for for well our for The as first the generating sheer production the through and ash believe of use the market is only We Portland as business that cement to increasing billion size as around site expand. remediation addressable will fly of momentum and opportunity several cleaner substitution regulatory is $XX the are growing. the of a are over concrete significant Requirements Demands and business. next bodies

over into side, ash million sites of the we used number broaden bread the accelerates area of This identified are our market also We believe XX and Along development. and place, billion of of will is we more we expanding, annual byproducts more ash. that put annually. XX the business require opportunity the landfills next with infrastructure reach. years new, $X than as discussed across butter numbers, as coal have with this current to of the of believe federal to remediation previously we sales for because a spending and X,XXX see tons tons ponds in opportunities set XX at services stringent is byproduct country cleaner an expect our over billion X.X regulations Our over where

ash also the We of of November pound-per-pound expect substitution that concrete quality infrastructure savings. a the almost bill into effect cement XXXX byproduct impact have law and businesses. in with of material our will the sales and signed improves COX gases, while cost a on in raw The positive providing greenhouse fly reduction has Portland services

presents potential bipartisan raw environment, material the closely still do in services of is great anticipated track operations and we law. businesses supportive years. all put in that an bid opportunities that us business that with overall of ash several cleaner this out to our to As up required byproduct execute it building sure next fly recycling Even the to in infrastructure are leader under the sales a we make we these on To work opportunities. the as

this ERT the our byproduct $X future even of total about I the As call, expanded pipeline across spoke growing. of laws great services as in to $X work next work. all course regulations well of result value that sales Charah billion see portion raw of lines, and put remediation, anticipated put work being this stands, a it billion business footing. and out will opportunities material bid Thanks our the normal to in would Solutions two we capturing as from on universe years has Since to last is

go backlog soon of have we awards, awarded across lines. of business bids bid on, over will nature pending equipped from about we and to it all the represents demonstrated we go As three pending to the of contracts. yet new the setting have because years Thinking billion term work much will the our into records The have currently portion not work, which last been work multiyear but which this we expect these bids of $X.XX of and our near-term Charah awarded we work completed; after for work. are have win work be well we in has our

backlog in impact, aspects environmental sustainable to is What which our have of work good practices this in to our not and obligations but breakdown deeply life with of given we better customers large only but and report team plan we is generating this the work that for governance. for to contracted the to regard do had success clear revenue these soon. conditions ourselves. the point The nature This on improve hold not how standards seriously we take growing consistent of our rooted have We is our counts make to is our before future to generations. future our and we business

April. is standards our we highest ESG the Our annual in success in which published maintaining in second evident report,

we which all website areas. to these goals sustainability As look of you work met a across to or available our I the has substantially I'm proud goals. team of Charah set call, take is mentioned all the of on the would incredibly done I all exceeded our of reach XXXX encourage out in all section. last for our on at the report,

challenges. the not was course quarter Of without

quarter that our weather overruns but by project experienced first progress delays. to cost that were seasonality, to colder particular completion weather events three business, months Charah nearing typically in experiences projects the impacted we addition in were In delayed that during due

we And rapidly from completed and completion are two. now other on of projects. nearing these the have We the demobilized largest

materially financial prospects the delay to and Challenges be has ramp in And direction necessary and in company the the With in Roger steps I'm long-term chain which issues turn over trucking pushed now a profitability we're our material large beneficial Shannon to headed. and supply taking ramp these was projects. project affected discuss I'll impacted. expected of expanded. resources and the is In more that our quarter expected two logistics address and Roger not future let in puts detail. of takes about the sum CFO positive is rail The the to Additionally second. results. it of I'll and another our long-term receiving to use issues discuss one one obtaining resulted start to the back expected

Roger Shannon

of rail Delays continue not necessary project. ramp The a million be a of primarily for expected I'll million guidance. resulted quarter cash for XXXX. to of project and expected overruns. the the and of long-term Scott. Gross the directly in increased provide our obtaining receiving an $XX.X Thanks the was first driven of margin in This first million is and sheet, $X.X company on affected positive of remediation expected update review the XXXX results affected as extended compliance with were and issues chain Revenue two to XXXX. and large by has $X.X for XXXX of and and work. the quarter commencement balance cost of $X.X significant new challenges $XX.X Gross taking several million these during increase quarter, address quarter projects and first raw to project trucking liquidity financial profitability to increases quarter gross long-term compared one XXXX revenue profit in million, offset steps supply long-term profit for completions the the resources, start of net as factors. compared of by resulting logistics is by profit $XX.X byproduct three projects material revenue increase completion increase material the sales in partially lower impacted. work in services and the of beneficial in and use materially and due to the to of delay from and negative notably Most services second pushed ramp primarily weather issues operations first of to was million million This from an net decreased of $X.X flow, shipments.

XXXX. has rain The completion significant at at extended final fall the completion cost now of and of and the projects other events dates had company been and quarter. to in scheduled in demobilized completed expects construction the Additionally, overruns. second the three largest originally the during projects complete resulted for projects these The two

and Solutions first increase the the as recognition improved from impacts first from XXXX. quarter ERT from administrative projects, increased in for of quarter XXXX, General of increase sales-type parcel real increase a settlement the Continued to decrease partially compared attributable net negative ERT quarter the on power as difference from projects. sales the to the and profit the property, original by $X decreased first by and the measurement as The million in compared strong a absence impact the an to driven increase scrap gross was XXXX due actual million discussed, the the expenses to the specific management. an transferred demolition at and on quarter and the these million project net $X.X of attributable loss the gains during estimated primarily of lease expense million an Net increase in XXXX Charah XXXX ARO $X.X previously to to the interest value of estate, million XXXX $XX first noted. in expense. previously of of the in was to impacts primarily gains increased $X.X under EBITDA of to offset of for to performance equipment the to cost between as the partially used This of Creek the offset sales of plant the company's due for remediation Gibbons ARO for tasks. to the in due compared Adjusted first quarter cost fair of decreased first quarter incurred $XXX,XXX in

in decreased overruns. vendor $XX.X positive of our as was negative the in cash Gibbons with of the our discussed to absence less to the ERT loss million and million positive the the XXXX the was ash first by first was increase in quarter a XXXX quarter on as net mentioned cash for quarter received quarter activities for $XX.X of quarter as first flow first project higher decrease of to to flow. above a result compared quarter Adjusted the This and XXXX. year. payments for QX an the turning $XX.X negative the primarily flow Creek million execution for of last of free the $XX.X contract driven the cash of the XXXX, million result ponds. of XXXX. for quarter million items of cash This Now, first planned remediation The collections Gibbons DSO restricted compared and Creek Operating specific coupled in from $XX.X of the previously resulting AR in cash

of have and we gains while spend investing the ARO on As cash on from property, sale in in flows previous operations. flow projects, cash includes adjusted flows ERT in reflected from from the net statement, the are reflected equipment calls, the is discussed free which flow cash estate, remediation real cash

to sheet. turning our balance Now,

an March debt XXst, XXXX was of Our million XXXX. gross at $XXX.X from $X.X was consolidated million, XXst, which December increase

Our of our liquidity borrowing letters million of of after XXst asset-based and unrestricted of availability accounting under our at limits. lending credit cash agreement outstanding and March base consisted $XX.X $XX.X million for credit

come of remainder fourth we EBITDA current our With to end call. covenants the as become to were in would gave the adjusted company ranges borrow $X agreement May lower with of to quarter results in of the excess the the credit However, quarter that closing, first XXXX, of said, if range we impacts the guidance guidance the project year. applicable. on on that in will our our the XXth, for due the like I million associated agreement, the In expectations would and credit financial reiterate of

discussed With more is our on guidance in detail our to turn in back that we've previous call as the predicated earnings which assumptions are Scott. certain in release. discussed Lastly, our I'll calls

Scott Sewell

Roger. Thanks

Charah's have we am As forward. I and going very about described business optimistic prospects

have We just have success see set incredible the $XX described. opportunity catalysts market new in expanded up our working horizon. are set positive updates, to business billion all signals stakeholder in Charah's and demands, I one favor and Regulatory the market on

market We letting are us. the anticipating that come and to

business, enthusiasm we care the our is and I the customers the ramp interest for we the and catalysts near-term value most pressing reduction of of the forefront anticipated positive creating let's the as remediation and helping lead to EnviroSource technology, needs, However, stakeholders. industry your Charah and and a in the our operator that, at long-term in shown for share all for of begin COX deployment our of the our session. are day again their and hope, of every With Thank production. innovate by ERT materials continues you services, question-and-answer participation. take


[Operator Please comes B. Alex Riley. from Instructions] go Our ahead. Rygiel question first from

is line Your open.

Alex Rygiel

and you for thank my morning Good taking question.

here. question First

sense now getting January your next delays likely pushed the year? these by EPA of kind redevelop? Is Are when many them are it this into the to as going created year? Following to what's opportunities current are of ruling this and

Scott Sewell

good Alex. – No morning,

I see remarks, the noted term we as think we from definitely something happening in this in prepared timing short a perspective, that it's nature year.

stated of do, I orders and a And think, $X our we QX a as in we've more the again, that. thought as record the of billion happen QX. see pipeline to more is probably would billion back the still internally new so path in with win And our the the plan. But half and still well here we'd that's have that to goal to as to $X weighted behind previously, awards see year. year-over-year our pending we business continue right as

lot the the So year. a in back we see of activity here half of

Alex Rygiel

and And we then that relative should your success it great. rate? That's to sort to measure as number? it's billion that relates of what's win how your And historical outstanding pipeline $X

Scott Sewell

never and continue and you the quoted get for just go about, in We again, promising us it's at large roughly timeframes. be I times But you can that where it that different we want very and of we years math we've look expanded expanding the how close, those see at us. is in publicly per kind so now. pipeline in approximately think next something right the pending to excited don't win in disclose. but a But XXXX, rate to time And we Yeah, kind for and billion what can really kind years. would $X of We're rate, at se. or several great do $X so a those say, to and XXXX had previous billion of and the back in range points pending years win

Alex Rygiel

from of you bidding then projects? or does against diversified? look competitors? some competitive lot Are environment is right a there few what are like And of primary opportunity, these now Is lastly competing very and a you list? competitive a random Are standpoint, very per it the on competitors as a it short

Scott Sewell


competition continues business be as by geographically our lines. as fragmented to well Our different

is upon as to different sales, then anybody us only bidding for suite especially transfer we're we ones management, the So else one we that is that the providing new against the on suite depending thing believe relates once I we remediation environmental it that companies at of that ash do we've customers. call large of on else perform of differentiates we it the that really our compete services depth would the nobody ash offering that say services though we're we full ERT or services. or business and added providing the since work our here that line risk full from

Alex Rygiel

That's much. helpful. very luck. you Thank Good

Scott Sewell

All Alex. right. Thanks


comes from question [Operator [indiscernible] Instructions] from ahead. Please Stifel. Our next go

Your line is open.

Scott Sewell

Good morning.


[ph], have turn [Operator Sewell Adit is remarks. questions for closing We to back no in Instructions] your the Scott open. line further I'll call queue. over

Scott Sewell

you interest Great. you. thank and appreciate for everyone the in Thank joining as talking to to usual else and us look your We you time next Thank operator, quarter. today. forward you business and


and Ladies call. today's your you gentlemen, for conference Thank participation. concludes this

disconnect. may You now