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Midwest Energy Emissions (MEEC)

Participants
Richard MacPherson President and CEO
Richard Gross CFO
Steven Ralston Zacks
Call transcript
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Operator

Good afternoon, ladies and gentlemen, thank you for standing by. Welcome to the Midwest Energy Emissions Corporation Third Quarter 2017 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be open for questions. [Operator Instructions] This conference is being recorded today, November 20, 2017 and the earnings press release accompanying this conference call was issued at the close of market today. is Officer, and Rich today and Richard call Financial Chief Gross. our MEXC's CEO, President MacPherson; On

Before we in get of Emissions about information, forward-looking Corporation. started, statements the I will This forward-looking regarding call read Federal conference Securities may Midwest the contain within addition laws historical statements. to meaning a Energy disclaimer

Forward-looking of are assumptions underlying statements that performance different statements historical and plans, goals, objectives, about include and statements strategies, events facts. than future other

availability might our units, and customer capital the demand, regions key utilities the include, and change conditions as gain any exclusive involve the Company. differ fluctuations the of generally power anticipate, regarding and change to of These coal where are of Forward-looking uncertainties identifying management's identified operations major results litigation results customer, risks loss capacity our cause actual and subject to a demands, disruption cause or on intend, from that from environmental in economic of materially these experience words could such current personnel, forward-looking based electric plan, those and changes of other in the by forward-looking will, are management believe, regulations, are statements similar and in words statements a uncertainty using expect, in are means in significant factor statements and of statements. plant loss circumstances. that but to expressions, changes in statements supply factors, customer are general any significant expectations a power differ significant materially actual not Investors may statements made. the supply the the to Matters among forward-looking of cautioned major materials, disruption in of that

time-sensitive revise that forward-looking date to this Further undertake reflect reflects update of this statements contains Company future or events, as call. the the to in materially this only of call. I issues the circumstances that Exchange best yours. the In any that conference with be publicly this Company's not conference any the filings Securities date information call could and obligation turn after concerning would financial statements like of President information management’s or analysis conference performance The addition, At the found Richard, and this MacPherson, over forward-looking does is CEO. in presentation information periodic to time, call Commission. arise to to contained affect the floor can Company's related Richard

Richard MacPherson

for joining Thank you, you us thank Kevin everyone today. and

XXXX opportunities abroad. with extremely new wins in continue North pipeline contract progress through robust We of and and to both here America

significant of company We a solutions the by approach the international to continue for in announced represents signing international entering and to Canada. as the abroad. the value control capture our and progress Canadian evidenced mercury U.S. We market next in showcases the frontier first recently view mercury in both make customer the of opportunities milestone total

lower product decline to the XX.X XX.X product the third product a nine our compared was XXXX and primarily optimize looking at of totaled much sales totaled nine the ability month to part the client them third create quarter large XXXX, million to first for in XX.X effective. thereby compared as of of our quarter to efficiencies this most our continue cost this XXXX making the in XXXX, process million million revenue and of When sales due to is million to we attributable X.X Our quarter. in months third of decrease first in

been marketplace allow creating openly run All reputation the add confident the of few working in of for will my long because that efficiencies. strategic today. which these touch here on and is impacted initiatives, very in bit and have remain efficiencies and these on will that remarks a go us a letter over additional the our revenues prospect We grow service to that we're our us confident customers I in forward this

further, as Sorbent is The of equipment SEA install technology an and overview us joining cost for blend supply those fire of from SEA ongoing we our patented may of using our each plant proprietary for special brief give well Enhancing of low of Before of consists time. emissions going mercury you Energy technology who would a company to our sorbent which across capture a for coal short North the Technology. I Midwest mercury like be SEA first emissions piece for help boiler, we captures as Additive America, material.

Another important component team provide our in trained will by I typical of well we customer through experts. which control high services consulting addition tenured, you our is to our engagement. mercury SEA walk a technology leveraging

design among a testing to our First analysis, plant as things. boiler, of stack as services, team well based being evaluates exactly of used. what's needed type many the on coal-fired This determine emission includes injection field coal the other optimizing the

an competitive us technical market in customer then the in of one-time cost install team a costs to needs in our approximately only our basis. revenue and know-how with is us competitive retained We a experts a determine provides which recurring a on significant blend specific the which who a come an Having front-end element equipment the technology conjunction of ongoing exactly the is our in products one-time customers the customer average in coal proprietary piece some country the and on supply driven on we technical Our solution ongoing exactly the we've the model on the depending advantage but and of $XXX,XXX, situation. in model. patented can boiler significant what’s fee is then equipment on control advantage. supply brightest for The a of needed based place gives a mercury

pending of Asia. XX We covering with the all is and consists a and patents robust Research great Canada which company called our issued have a most technology protected Environment relationship portfolio of Center, Energy a U.S., by patent of Europe

best for control the one Energy from the has for into facility XX develop well license team. better use technologies available million also running on of that license for now secure later. individuals and The XXX-person been to research XXX,XXX acquired of the available our us of the now both we own coal control and common which means Energy technology and longer mercury Our several over today. strong oldest years technology scientific developing country, invested the and Research a in of Environment XX this suite EERC In completed was fully we all this revenue and mercury technologies the need know-how, to the annual no core John company primarily the we engineering is to for of that fee should and responsible in Pavlish which for Environment we the this especially million over patents shares cost the XXXX foreign agreements space It we and basis. with patents $XX,XXX that a from Center and more generate new mercury announced in annual has we of They acquisition our year contracts future. the significantly and the X.X through Center the commercialize of per help technology pay that control state a who since patent it's going pending patents domestic month joined and royalties agreement portfolio this April significant, forward stock, revenue full-time that time. royalties now best model the a on license In the and team at the plus technology can that Research which formalized come confidently utilize gives monthly us

-- is has business past solution future been XX and commercially years our base for customer the and proven for current over demonstrated Our commercial operational six.

they them and under boilers compliance into that able get without capacity. can't backend in The already market get least an those that challenges one-part is now can patented system any using improvement run North are to of give full believe spot units opportunity are that already approximately traditional We our XX% at in we've to at of customers, a will conditions provide with Our many them for XX% XXX America, of have injection guarantee those reasonable as we derating, with system likely process. the experience is them sweet to backend. XX% fruit hanging process low installed. over to expensive a optimize our they most units units a where been approximately which We boiler compliance and our into allow

customer XX us boilers. on and of Our That new a technology for currently XX whom currently the our contracted for to XX win which fleets go base will units. has we We forward been to current successfully basis additional represents believe contracted. we penetrate customers are

the in to like to So quarter. the of handing our key call to I'd now and before Rich initiatives progress review the review some over financials,

First cost into units in have our the technologies compliance compliance the with This use extra throughout performance. or clients goal we has to approach difficulties bring will U.S. compliance from have of to significant operational and stay our MATS foremost, capture. to number technology experience where the happy a chance any a maintain mercury an derate been peak accomplish the still made to get believe that can extremely or There either area that progress are at efficiencies and benefit we the boiler them. as significantly are we to EGUs

speaking America and under have geographic Canada contract in now very are have North begun in on in boilers locations international with potential other customers as we Secondly, and focused expansion both abroad. four We well.

positions of that very expect seasonal they out opportunity and nicely amount if in this throughout they're worldwide on is remain billing fleet total fluctuation total a rest solution Part a [ph] for max and their we our suits we the bullish our can bring capture ingredients we're spread necessary capture. of believe product our our Of significant have. significantly there's long to expansion present line. all any currently sulfur-tolerant our geographic which America, the We in optimize units expand on. the focusing contracted We significant are in outlook reduce compliance North technology place any and those There smooth cost even opportunities mercury to opportunity We high these untapped solution operational them [ph] have succeed efficiencies boilers term. is mercury us their to us for of to drove of of the technology over currently in and XX scale.

clients prospective their of We number [ph] benefit expect new orbit will a product. from this present with that replacing

we Today a EGUs our burning the scrubber, announced units reduces product by them consulting event. utilities competed the that to mercury mercury was the a major remove shuttering are we believe fired revenues renewal achieving reaffirmation as demonstrated three mercury actively greater in acquisition potential previous less number new product for product preventing in reorganization competition. the contract systems now. consistently desulfurization well secured has sales slew the with to proven other which of XX this power scrubber undergoing largest XX% across from emissions than Another scrubbers mercury a facilities metals way our over help country limit. generate to product designed wet is and the stack are coal MATS customer of services reduce by changes the from well we years. opportunities number quarter large than coal pursuing now with related as new below specifically to the of gas is mercury successfully resulting will several our with the from there and next customer wet amount unexpected a emissions expected that at has and under these strong to remission in technology that of A been as many compliance third The well Due within significant multiyear million emissions provide portfolio heavily for control the to as of includes

client potential this updating forward have second at XXXX We of the expect to the of contract and better a to by the and we that look shareholders this quarter end of understanding revenues with time.

related the from As in the the mercury we Grand we April said Forks, control EDRC in Dakota. acquired patents to all North of earlier

XXX into North for process of opportunities in mercury revenue leveraging America patents a the two-part EGUs our portfolio that IP now focusing identified on hand excess these and are utilizing contracts. we've we're [ph] owners currently reoccurring long-term for control to in With convert

and we frontier mercury from announce our U.S. in the company international that opportunities as I'm we've also to control. of which Finally, significant secured our international we in first which efforts products showcases mercury pivoted October some next the Canada, a customer of for represents our pleased in towards to solution view to value and both abroad. the milestone in capture total the

international an opportunities potential As has these also presented several part utilities at several into we in conference in Europe. environmental efforts translated countries in of Poland which across

to business more enhancements our will the our development while to with and allow products addition west. operational overall specific cost. our refined south made also needs us customer some to In distribution enhancements upgrades in manufacturing we've facility efforts, These to make reducing

As change both this value in we for quarter. them pass and making amounts more profitable single was preposition. largest This our optimization again our clients, efforts our year-over-year ultimately and past the factor enhancing the revenue for through

with I'd now wrap turn to So before quarter through Rich, open financial statement some closing question-and-answer. up to over of and for some call details like the the to the the call go Rick it for Rich?

Richard Gross

Rick. Thanks,

and sales, ongoing are nature and material as primary services, generate an touched revenues and materials. followed of three upon consulting proprietary recognize and these our which first sales product from sorbent we our Rick earlier, supply equipment recurring provide the typically is As sources, in by demonstration we of third, SEA

For product than were XXXX. XX, equipment and X% were XXXX the from product revenue XX% other from from and equipment compared in from less QX, XX% X% sales services. our sales, sales, This to September X% months of ended three X% these other

to our of sales third the third quarter be compared in to sales. from product $XX.X the most forward, XXXX. of were $X.X of quarter continue revenues Total in XXXX million Going will million

customers to compared the offset diluted per to in XXXX XXXX. of ended million third loss had product net XXXX the million XX, quarter of third XX, efforts was XXXX XX, decrease year in $X.XX to as million in on The XXXX, equivalents some or the compared last was share million gain million in sites with compliance. third income touched liability. some to same quarter September of as income mass third Adjusted share in the $X.X to quarter undertaken at XXXX. in million our $X.X of million we XX, needed Together XXXX is with lower for third in due net sales value keep our to loss XXXX. to compared EBITDA the June for optimization September XXXX. $X.XX that cash ended saw factor well this for changes the year or expense Operating quarter of in was compared of the primarily of was to loss of months cash of the in Rick product months past As reported $X.X capacity by operating our in $X.X ago resulting to the nine diluted compared the primarily year. quarter $X.X income income warrant improved quarter quarter. of the decrease in operating net the income third per due primarily the Net XXXX customers decreased decrease same $X XXXX This nine a on million September of over on company and the change quarter compared was $X.X to customers, partially $X.X On due decreases for interest XXXX the of in the

turning the to Rick, before would I Finally, like to touch back on call guidance.

the our XX, year projections reiterating based current secured ended For revenue of compared million forecast This of to our December that XXXX. the power plant for XX turn we're guidance With the from revenue December call at Rick. the will is over full and guidance least million XX, demand year I full on XX.X to XXXX contracts. back

Richard MacPherson

Thank you, Rich.

pursuing As to we'll added we're pipeline upon we new opportunities expand abroad. a regularly, earlier, sales have noted which with robust opportunities also continue

adapt outlook ramping the reflective towards temporary strongly as XXXX. a challenges likely in few that future. result delays pushed some of young of are last some sale that we've experienced continued and a aren’t technology into businesses, to continue our The believe We quarters, company driven the being business

to what we significantly noted to us. have our As customers lower due our one factors boilers these as their them beyond are customers in driving signed said and why was to have with sales being the earlier technology optimized renewal cost that success, get cases fleet therefore of optimize many our agreements and than lowered product building into expected compliance expected and clients experience

that MATS, executing and existing them approach our For the total EGUs customers Enrolling have currently remainder utilizing further and process. US, comply throughout initiatives with penetrate XXXX which significant monetizing across are we fleet are consist remained on sign we key the our our customer underway. to new two-part solution focused on U.S., geographic using and mercury footprint help capture the XXXX, Canada initiatives, of our to abroad, of

initiatives. the strategic to the and Our you shareholder lines pipeline which Operator take like Kevin questions drive open would could as these please ultimately intact answers. upon long-term of should for over I opportunities execute we value up remains over.

Operator

think take first go Ralston [Operator will Please question Instructions] we from our Zacks. I ahead. with Steven

Steven Ralston

contracts, about Canadian installed; you versus Could unit, anticipate? said installation in in four EGUs contract sales mentioned said that around was has that a will the the and we need the per $XXX,XXX, you way that take it that's product be equipment initial front-end you you $XXX,XXX could general, the you breakdown, to

Richard MacPherson

then client contract are so as at with as put product with the them of us, runs them frontend to backend start forward basically equipment with and supply. this in we system hope materials are expect in have recognized; this have place are is we would point, they we particular to equipment with. backend move where up they particular expect They and would we present at in a front solution through the material Where operate that the for permanent are there long at 'XX test term no backend and of that's now when to providing their would which speak, been sales January, point outset for a that addressing units, been contract of applying finished that we be material place the XXX,XXX supply until a both only for move with supply, we set costs

Steven Ralston

the $XXX,XXX anticipated that's XXXX, for normal is and So, to product backend generated be supply? in

Richard MacPherson

the that also supply, to a for would for we someone to we number front basis frontend else, material only backend up front to and and for in and over hope there supply for is are 'XX that material, backend going would in bring of into the both other again, just by No, preparation 'XX the able be frontend to the 'XX. be speed 'XX both on being supplied a backend would units going take into hope the impeding

Steven Ralston

you put not to but still confused, the use I'm product the frontend? going said you're going equipment you're a in frontend sales to in

Richard MacPherson

term, We're short using charge the frontend frontend to them for to not test equipment in in the we're XXXX. going equipment just manage supply

We the that for on we've referenced XXX,XXX them and to the what's announced that's will products far. be supplying XXXX only frontend

Steven Ralston

that be And generated $XXX,XXX begins when? to

Richard MacPherson

January.

Steven Ralston

the You pattern is some -- the reduce mentioned in will seasonality, a that it Canada? is there what of seasonal

Richard MacPherson

given across base in our we branching It's and spread the revenue will wider the base the business diversity, just factor naturally for regions, southwest, is different of demand so be flatten a the into conditions the regions. out where regions, products once to of weather out move northern will predominantly into mostly related be of we to by able consumption, colder capacity curve the our the boilers,

Steven Ralston

the electricity Simplistically is industrial -- usage? in conditioning used heating from it for the used summer, seasonality winter, comes or the the more in in air more Canada

Richard MacPherson

take the versus Yes, XX even temperature, demand for example you've power what differences got if out Texas total supply will XX-degree revenue below different those are you in Canada curve. a so, again, temperature to on help consider and the

Steven Ralston

I in jump few but more have questions you. a I'll back Thank line.

Operator

to I'd conference thank like much. time. additional for at this over thank any turn your this or at management very patience for the I Alright, back you statements to closing the time you

Richard MacPherson

able believe thanks put out well place our over today. changing what long Folks that for term time approach to in the We're much been us optimizations those expecting we day that revenue. into us topline so change well term quarter. to significantly the the into The that year. to expect of and we taking work how busy be market work doing we turn field going we're active going you in your will working We've short report very the have will into will our on listen and on caused position a new for back successes. tangible that marketplace think be for that in to effect in past expect will story to we this We've to only results now new the the been that growth year that

So Year, today your once much to the in to back thank interest reporting you. you so again look thanks New for forward

Operator

and this thank conclude call, gentlemen conference Ladies for you participation. does the your

You disconnect. may now