000151515612/31false2020Q3P3YP3YP5Y1.712.441.7500015151562020-01-012020-09-30xbrli:shares00015151562020-10-30iso4217:USD00015151562020-09-3000015151562019-12-31iso4217:USDxbrli:shares0001515156ades:ConsumablesMember2020-07-012020-09-300001515156ades:ConsumablesMember2019-07-012019-09-300001515156ades:ConsumablesMember2020-01-012020-09-300001515156ades:ConsumablesMember2019-01-012019-09-300001515156ades:LicenseRoyalitiesRelatedPartyMember2020-07-012020-09-300001515156ades:LicenseRoyalitiesRelatedPartyMember2019-07-012019-09-300001515156ades:LicenseRoyalitiesRelatedPartyMember2020-01-012020-09-300001515156ades:LicenseRoyalitiesRelatedPartyMember2019-01-012019-09-3000015151562020-07-012020-09-3000015151562019-07-012019-09-3000015151562019-01-012019-09-300001515156us-gaap:CommonStockMember2019-12-310001515156us-gaap:TreasuryStockMember2019-12-310001515156us-gaap:AdditionalPaidInCapitalMember2019-12-310001515156us-gaap:RetainedEarningsMember2019-12-310001515156us-gaap:CommonStockMember2020-01-012020-03-310001515156us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100015151562020-01-012020-03-310001515156us-gaap:RetainedEarningsMember2020-01-012020-03-310001515156us-gaap:TreasuryStockMember2020-01-012020-03-310001515156us-gaap:CommonStockMember2020-03-310001515156us-gaap:TreasuryStockMember2020-03-310001515156us-gaap:AdditionalPaidInCapitalMember2020-03-310001515156us-gaap:RetainedEarningsMember2020-03-3100015151562020-03-310001515156us-gaap:CommonStockMember2020-04-012020-06-300001515156us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000015151562020-04-012020-06-300001515156us-gaap:RetainedEarningsMember2020-04-012020-06-300001515156us-gaap:CommonStockMember2020-06-300001515156us-gaap:TreasuryStockMember2020-06-300001515156us-gaap:AdditionalPaidInCapitalMember2020-06-300001515156us-gaap:RetainedEarningsMember2020-06-3000015151562020-06-300001515156us-gaap:CommonStockMember2020-07-012020-09-300001515156us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001515156us-gaap:RetainedEarningsMember2020-07-012020-09-300001515156us-gaap:CommonStockMember2020-09-300001515156us-gaap:TreasuryStockMember2020-09-300001515156us-gaap:AdditionalPaidInCapitalMember2020-09-300001515156us-gaap:RetainedEarningsMember2020-09-300001515156us-gaap:CommonStockMember2018-12-310001515156us-gaap:TreasuryStockMember2018-12-310001515156us-gaap:AdditionalPaidInCapitalMember2018-12-310001515156us-gaap:RetainedEarningsMember2018-12-3100015151562018-12-310001515156us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001515156srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001515156us-gaap:CommonStockMember2019-01-012019-03-310001515156us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-3100015151562019-01-012019-03-310001515156us-gaap:RetainedEarningsMember2019-01-012019-03-310001515156us-gaap:TreasuryStockMember2019-01-012019-03-310001515156us-gaap:CommonStockMember2019-03-310001515156us-gaap:TreasuryStockMember2019-03-310001515156us-gaap:AdditionalPaidInCapitalMember2019-03-310001515156us-gaap:RetainedEarningsMember2019-03-3100015151562019-03-310001515156us-gaap:CommonStockMember2019-04-012019-06-300001515156us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000015151562019-04-012019-06-300001515156us-gaap:RetainedEarningsMember2019-04-012019-06-300001515156us-gaap:TreasuryStockMember2019-04-012019-06-300001515156us-gaap:CommonStockMember2019-06-300001515156us-gaap:TreasuryStockMember2019-06-300001515156us-gaap:AdditionalPaidInCapitalMember2019-06-300001515156us-gaap:RetainedEarningsMember2019-06-3000015151562019-06-300001515156us-gaap:CommonStockMember2019-07-012019-09-300001515156us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001515156us-gaap:RetainedEarningsMember2019-07-012019-09-300001515156us-gaap:TreasuryStockMember2019-07-012019-09-300001515156us-gaap:CommonStockMember2019-09-300001515156us-gaap:TreasuryStockMember2019-09-300001515156us-gaap:AdditionalPaidInCapitalMember2019-09-300001515156us-gaap:RetainedEarningsMember2019-09-3000015151562019-09-300001515156ades:RestrictedStockAndEmployeeStockOptionsMember2020-07-012020-09-300001515156ades:RestrictedStockAndEmployeeStockOptionsMember2020-01-012020-09-300001515156ades:RestrictedStockAndEmployeeStockOptionsMember2019-07-012019-09-300001515156ades:RestrictedStockAndEmployeeStockOptionsMember2019-01-012019-09-30ades:debt_instrument0001515156ades:TinuumGroupLLCMember2020-09-300001515156ades:TinuumGroupLLCMemberus-gaap:CustomerConcentrationRiskMember2020-09-3000015151562020-09-302020-09-30xbrli:pure0001515156ades:MarshallMineMember2020-09-300001515156ades:MarshallMineMember2020-09-302020-09-300001515156ades:CabotMemberades:MarshallMineMember2020-09-302020-09-300001515156srt:ScenarioForecastMember2021-03-310001515156ades:PowerGenerationandIndustrialMember2020-06-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2020-06-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2020-01-012020-06-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2020-01-012020-09-300001515156us-gaap:CorporateNonSegmentMember2020-01-012020-09-300001515156ades:PowerGenerationandIndustrialMember2020-01-012020-06-300001515156ades:PaycheckProtectionProgramCARESActMemberus-gaap:NotesPayableToBanksMember2020-04-200001515156ades:PaycheckProtectionProgramCARESActMemberus-gaap:NotesPayableToBanksMember2020-04-202020-04-200001515156ades:TinuumGroupLLCMember2019-12-310001515156ades:TinuumGroupLLCMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-07-012020-09-300001515156ades:TinuumGroupLLCMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2019-07-012019-09-300001515156ades:TinuumGroupLLCMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-01-012020-09-300001515156ades:TinuumGroupLLCMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2019-01-012019-09-300001515156ades:TinuumGroupLLCMember2020-07-012020-09-300001515156ades:TinuumGroupLLCMember2019-07-012019-09-300001515156ades:TinuumGroupLLCMember2020-01-012020-09-300001515156ades:TinuumGroupLLCMember2019-01-012019-09-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-12-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-12-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-12-310001515156ades:TinuumGroupLLCMember2020-01-012020-03-310001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2020-01-012020-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2020-01-012020-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2020-01-012020-03-310001515156ades:TinuumGroupLLCMember2020-03-310001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2020-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2020-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2020-03-310001515156ades:TinuumGroupLLCMember2020-04-012020-06-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2020-04-012020-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2020-04-012020-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2020-04-012020-06-300001515156ades:TinuumGroupLLCMember2020-06-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2020-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2020-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2020-06-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2020-07-012020-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2020-07-012020-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2020-07-012020-09-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2020-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2020-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2020-09-300001515156ades:TinuumGroupLLCMember2018-12-310001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2018-12-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2018-12-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2018-12-310001515156ades:TinuumGroupLLCMember2019-01-012019-03-310001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-01-012019-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-01-012019-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-01-012019-03-310001515156ades:TinuumGroupLLCMember2019-03-310001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-03-310001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-03-310001515156ades:TinuumGroupLLCMember2019-04-012019-06-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-04-012019-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-04-012019-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-04-012019-06-300001515156ades:TinuumGroupLLCMember2019-06-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-06-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-06-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-07-012019-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-07-012019-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-07-012019-09-300001515156ades:TinuumGroupLLCMember2019-09-300001515156ades:InvestmentEquityEarningsLossMemberades:TinuumGroupLLCMember2019-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsMember2019-09-300001515156ades:TinuumGroupLLCMemberades:InvestmentCashDistributionsandEquityLossInExcessofInvestmentBalanceMember2019-09-300001515156us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Memberades:TinuumGroupLLCMember2019-01-010001515156ades:TinuumServicesLLCMember2020-09-300001515156ades:TinuumServicesLLCMember2019-12-310001515156us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMemberades:TinuumServicesLLCMember2020-07-012020-09-300001515156us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMemberades:TinuumServicesLLCMember2019-07-012019-09-300001515156us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMemberades:TinuumServicesLLCMember2020-01-012020-09-300001515156us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMemberades:TinuumServicesLLCMember2019-01-012019-09-300001515156ades:TinuumServicesLLCMember2020-07-012020-09-300001515156ades:TinuumServicesLLCMember2019-07-012019-09-300001515156ades:TinuumServicesLLCMember2020-01-012020-09-300001515156ades:TinuumServicesLLCMember2019-01-012019-09-300001515156ades:OtherCompaniesInvestmentMember2020-07-012020-09-300001515156ades:OtherCompaniesInvestmentMember2019-07-012019-09-300001515156ades:OtherCompaniesInvestmentMember2020-01-012020-09-300001515156ades:OtherCompaniesInvestmentMember2019-01-012019-09-300001515156ades:ADACarbonSolutionsLLCMember2018-12-072018-12-070001515156ades:SeniorTermLoanMemberades:ADACarbonSolutionsLLCMemberades:TermLoanMember2018-12-072018-12-070001515156ades:ADACarbonSolutionsLLCMember2018-12-070001515156ades:ADACarbonSolutionsLLCMember2018-12-082020-09-300001515156ades:ADACarbonSolutionsLLCMember2020-09-300001515156us-gaap:CustomerRelationshipsMemberades:ADACarbonSolutionsLLCMember2020-09-300001515156us-gaap:CustomerRelationshipsMemberades:ADACarbonSolutionsLLCMember2018-12-072018-12-070001515156us-gaap:DevelopedTechnologyRightsMemberades:ADACarbonSolutionsLLCMember2020-09-300001515156us-gaap:DevelopedTechnologyRightsMemberades:ADACarbonSolutionsLLCMember2018-12-072018-12-070001515156us-gaap:TrademarksAndTradeNamesMemberades:ADACarbonSolutionsLLCMember2020-09-300001515156us-gaap:TrademarksAndTradeNamesMemberades:ADACarbonSolutionsLLCMember2018-12-072018-12-070001515156ades:SeniorTermLoanMembersrt:AffiliatedEntityMember2020-09-300001515156ades:SeniorTermLoanMembersrt:AffiliatedEntityMember2019-12-310001515156ades:SeniorTermLoanMember2020-09-300001515156ades:SeniorTermLoanMember2019-12-310001515156srt:AffiliatedEntityMembersrt:MinimumMember2018-12-070001515156ades:SeniorTermLoanMember2018-12-070001515156ades:SeniorTermLoanMember2018-12-072018-12-070001515156ades:SeniorTermLoanMemberus-gaap:LondonInterbankOfferedRateLIBORMember2018-12-072018-12-070001515156ades:SeniorTermLoanMemberades:BeginningonMarch12019Member2018-12-072018-12-070001515156ades:SeniorTermLoanMember2018-12-310001515156ades:SeniorTermLoanMember2020-01-012020-09-300001515156ades:SeniorTermLoanMembersrt:SubsidiariesMember2020-09-290001515156us-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001515156us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-300001515156us-gaap:GeneralAndAdministrativeExpenseMember2019-07-012019-09-300001515156us-gaap:GeneralAndAdministrativeExpenseMember2019-01-012019-09-300001515156us-gaap:TradeAccountsReceivableMember2020-09-300001515156us-gaap:TradeAccountsReceivableMember2019-12-31ades:segment0001515156ades:PowerGenerationandIndustrialMemberades:ConsumablesMember2020-07-012020-09-300001515156ades:ConsumablesMemberades:RefinedCoalMember2020-07-012020-09-300001515156ades:ConsumablesMemberus-gaap:AllOtherSegmentsMember2020-07-012020-09-300001515156ades:PowerGenerationandIndustrialMemberades:ConsumablesMember2020-01-012020-09-300001515156ades:ConsumablesMemberades:RefinedCoalMember2020-01-012020-09-300001515156ades:ConsumablesMemberus-gaap:AllOtherSegmentsMember2020-01-012020-09-300001515156ades:PowerGenerationandIndustrialMemberades:LicenseRoyalitiesRelatedPartyMember2020-07-012020-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberades:RefinedCoalMember2020-07-012020-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberus-gaap:AllOtherSegmentsMember2020-07-012020-09-300001515156ades:PowerGenerationandIndustrialMemberades:LicenseRoyalitiesRelatedPartyMember2020-01-012020-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberades:RefinedCoalMember2020-01-012020-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberus-gaap:AllOtherSegmentsMember2020-01-012020-09-300001515156ades:PowerGenerationandIndustrialMember2020-07-012020-09-300001515156ades:RefinedCoalMember2020-07-012020-09-300001515156us-gaap:AllOtherSegmentsMember2020-07-012020-09-300001515156ades:PowerGenerationandIndustrialMember2020-01-012020-09-300001515156ades:RefinedCoalMember2020-01-012020-09-300001515156us-gaap:AllOtherSegmentsMember2020-01-012020-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2020-07-012020-09-300001515156us-gaap:OperatingSegmentsMemberades:RefinedCoalMember2020-07-012020-09-300001515156us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2020-07-012020-09-300001515156us-gaap:OperatingSegmentsMemberades:RefinedCoalMember2020-01-012020-09-300001515156us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2020-01-012020-09-300001515156ades:PowerGenerationandIndustrialMemberades:ConsumablesMember2019-07-012019-09-300001515156ades:ConsumablesMemberades:RefinedCoalMember2019-07-012019-09-300001515156ades:ConsumablesMemberus-gaap:AllOtherSegmentsMember2019-07-012019-09-300001515156ades:PowerGenerationandIndustrialMemberades:ConsumablesMember2019-01-012019-09-300001515156ades:ConsumablesMemberades:RefinedCoalMember2019-01-012019-09-300001515156ades:ConsumablesMemberus-gaap:AllOtherSegmentsMember2019-01-012019-09-300001515156ades:PowerGenerationandIndustrialMemberades:LicenseRoyalitiesRelatedPartyMember2019-07-012019-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberades:RefinedCoalMember2019-07-012019-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberus-gaap:AllOtherSegmentsMember2019-07-012019-09-300001515156ades:PowerGenerationandIndustrialMemberades:LicenseRoyalitiesRelatedPartyMember2019-01-012019-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberades:RefinedCoalMember2019-01-012019-09-300001515156ades:LicenseRoyalitiesRelatedPartyMemberus-gaap:AllOtherSegmentsMember2019-01-012019-09-300001515156ades:PowerGenerationandIndustrialMember2019-07-012019-09-300001515156ades:RefinedCoalMember2019-07-012019-09-300001515156us-gaap:AllOtherSegmentsMember2019-07-012019-09-300001515156ades:PowerGenerationandIndustrialMember2019-01-012019-09-300001515156ades:RefinedCoalMember2019-01-012019-09-300001515156us-gaap:AllOtherSegmentsMember2019-01-012019-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2019-07-012019-09-300001515156us-gaap:OperatingSegmentsMemberades:RefinedCoalMember2019-07-012019-09-300001515156us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2019-07-012019-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2019-01-012019-09-300001515156us-gaap:OperatingSegmentsMemberades:RefinedCoalMember2019-01-012019-09-300001515156us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2019-01-012019-09-300001515156ades:SuretyAgreementMember2020-09-30ades:entity0001515156ades:TinuumGroupLLCMember2020-09-300001515156us-gaap:CommonStockMembersrt:MaximumMember2018-11-300001515156us-gaap:CommonStockMember2019-11-300001515156us-gaap:CommonStockMember2020-01-012020-09-300001515156us-gaap:CommonStockMember2019-01-012019-09-300001515156srt:MaximumMember2017-05-050001515156us-gaap:RestrictedStockMember2020-07-012020-09-300001515156us-gaap:RestrictedStockMember2019-07-012019-09-300001515156us-gaap:RestrictedStockMember2020-01-012020-09-300001515156us-gaap:RestrictedStockMember2019-01-012019-09-300001515156us-gaap:PerformanceSharesMember2020-07-012020-09-300001515156us-gaap:PerformanceSharesMember2019-07-012019-09-300001515156us-gaap:PerformanceSharesMember2020-01-012020-09-300001515156us-gaap:PerformanceSharesMember2019-01-012019-09-300001515156us-gaap:RestrictedStockMember2020-09-300001515156us-gaap:RestrictedStockUnitsRSUMember2020-09-300001515156us-gaap:RestrictedStockMember2019-12-310001515156us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001515156us-gaap:EmployeeStockOptionMember2019-12-310001515156us-gaap:EmployeeStockOptionMember2020-09-300001515156us-gaap:PerformanceSharesMember2019-12-310001515156us-gaap:PerformanceSharesMember2020-09-300001515156us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMemberades:ConsumablesMember2020-07-012020-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMemberades:ConsumablesMember2019-07-012019-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMemberades:ConsumablesMember2020-01-012020-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMemberades:ConsumablesMember2019-01-012019-09-300001515156us-gaap:OperatingSegmentsMember2020-07-012020-09-300001515156us-gaap:OperatingSegmentsMember2019-07-012019-09-300001515156us-gaap:OperatingSegmentsMember2020-01-012020-09-300001515156us-gaap:OperatingSegmentsMember2019-01-012019-09-300001515156us-gaap:IntersegmentEliminationMemberades:RefinedCoalMember2020-07-012020-09-300001515156us-gaap:IntersegmentEliminationMemberades:RefinedCoalMember2019-07-012019-09-300001515156us-gaap:IntersegmentEliminationMemberades:RefinedCoalMember2020-01-012020-09-300001515156us-gaap:IntersegmentEliminationMemberades:RefinedCoalMember2019-01-012019-09-300001515156us-gaap:CorporateNonSegmentMember2020-07-012020-09-300001515156us-gaap:CorporateNonSegmentMember2019-07-012019-09-300001515156us-gaap:CorporateNonSegmentMember2019-01-012019-09-300001515156ades:RCM6LLCMemberades:RefinedCoalMember2020-07-012020-09-300001515156ades:RCM6LLCMemberades:RefinedCoalMember2020-01-012020-09-300001515156ades:RCM6LLCMemberades:RefinedCoalMember2019-07-012019-09-300001515156ades:RCM6LLCMemberades:RefinedCoalMember2019-01-012019-09-300001515156us-gaap:MaterialReconcilingItemsMember2020-07-012020-09-300001515156us-gaap:MaterialReconcilingItemsMember2019-07-012019-09-300001515156us-gaap:MaterialReconcilingItemsMember2020-01-012020-09-300001515156us-gaap:MaterialReconcilingItemsMember2019-01-012019-09-300001515156us-gaap:OperatingSegmentsMemberades:RefinedCoalMember2020-09-300001515156us-gaap:OperatingSegmentsMemberades:RefinedCoalMember2019-12-310001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2020-09-300001515156us-gaap:OperatingSegmentsMemberades:PowerGenerationandIndustrialMember2019-12-310001515156us-gaap:OperatingSegmentsMember2020-09-300001515156us-gaap:OperatingSegmentsMember2019-12-310001515156us-gaap:CorporateNonSegmentMember2020-09-300001515156us-gaap:CorporateNonSegmentMember2019-12-310001515156us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-09-300001515156us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001515156us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001515156us-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001515156us-gaap:EmployeeSeveranceMemberades:ADACarbonSolutionsLLCMember2018-12-012018-12-310001515156srt:ChiefExecutiveOfficerMember2020-01-012020-09-300001515156us-gaap:EmployeeSeveranceMember2019-12-310001515156us-gaap:EmployeeSeveranceMember2020-01-012020-09-300001515156us-gaap:EmployeeSeveranceMember2020-09-30utr:T0001515156us-gaap:SubsequentEventMemberades:TinuumGroupLLCMemberades:RCProjectMember2020-10-202020-10-20ades:facilities0001515156us-gaap:SubsequentEventMemberades:TinuumGroupLLCMemberades:RCProjectMember2020-10-20

United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________ 
FORM 10-Q
 ______________________________________  
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37822
______________________________________  
Advanced Emissions Solutions, Inc.
(Exact name of registrant as specified in its charter)
______________________________________   
Delaware 27-5472457
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 8051 E. Maplewood Ave, Suite 210, Greenwood Village, CO
80111
(Address of principal executive offices)(Zip Code)

(720) 598-3500
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
______________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
     Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Class Trading SymbolName of each exchange on which registered
Common stock, par value $0.001 per share ADESNASDAQ Global Market
As of October 30, 2020, there were 18,547,887 outstanding shares of Advanced Emissions Solutions, Inc. common stock, par value $0.001 per share.




INDEX
 PAGE




Part I. – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Advanced Emissions Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
As of
(in thousands, except share data)September 30, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$15,029 $12,080 
Receivables, net10,273 7,430 
Receivables, related parties3,626 4,246 
Inventories, net10,419 15,460 
Prepaid expenses and other assets16,888 7,832 
Total current assets56,235 47,048 
Restricted cash, long-term10,000 5,000 
Property, plant and equipment, net of accumulated depreciation of $2,322 and $7,444, respectively
29,823 44,001 
Intangible assets, net2,134 4,169 
Equity method investments22,885 39,155 
Deferred tax assets, net3,371 14,095 
Other long-term assets, net31,206 20,331 
Total Assets$155,654 $173,799 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$7,530 $8,046 
Accrued payroll and related liabilities4,114 3,024 
Current portion of long-term debt24,360 23,932 
Other current liabilities4,102 4,311 
Total current liabilities40,106 39,313 
Long-term debt, net of current portion5,486 20,434 
Other long-term liabilities25,712 5,760 
Total Liabilities71,304 65,507 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock: par value of $.001 per share, 50,000,000 shares authorized, none outstanding
  
Common stock: par value of $.001 per share, 100,000,000 shares authorized, 23,166,033 and 22,960,157 shares issued, and 18,547,887 and 18,362,624 shares outstanding at September 30, 2020 and December 31, 2019, respectively
23 23 
Treasury stock, at cost: 4,618,146 and 4,597,533 shares as of September 30, 2020 and December 31, 2019, respectively
(47,692)(47,533)
Additional paid-in capital100,005 98,466 
Retained earnings32,014 57,336 
Total stockholders’ equity84,350 108,292 
Total Liabilities and Stockholders’ Equity$155,654 $173,799 

See Notes to the Condensed Consolidated Financial Statements.
1

Advanced Emissions Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited) 

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)
2020201920202019
Revenues:
Consumables$15,844 $14,748 $33,231 $41,243 
License royalties, related party3,627 4,385 9,986 12,796 
Total revenues19,471 19,133 43,217 54,039 
Operating expenses:
Consumables cost of revenue, exclusive of depreciation and amortization15,013 11,939 33,920 38,339 
Payroll and benefits2,285 2,651 8,839 8,005 
Legal and professional fees1,321 2,907 4,386 7,105 
General and administrative1,900 1,984 6,693 5,894 
Depreciation, amortization, depletion and accretion1,777 2,043 5,807 4,902 
Impairment of long-lived assets  26,103  
Total operating expenses22,296 21,524 85,748 64,245 
Operating loss(2,825)(2,391)(42,531)(10,206)
Other income (expense):
Earnings from equity method investments9,518 14,426 25,959 57,051 
Interest expense(881)(1,729)(3,053)(5,820)
Other17 212 208 342 
Total other income8,654 12,909 23,114 51,573 
Income (loss) before income tax expense5,829 10,518 (19,417)41,367 
Income tax expense854 6,595 1,315 14,928 
Net income (loss)$4,975 $3,923 $(20,732)$26,439 
Earnings (loss) per common share (Note 1):
Basic$0.27 $0.22 $(1.15)$1.45 
Diluted$0.27 $0.21 $(1.15)$1.44 
Weighted-average number of common shares outstanding:
Basic18,093 18,112 18,014 18,184 
Diluted18,103 18,339 18,014 18,394 


See Notes to the Condensed Consolidated Financial Statements.


2

Advanced Emissions Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)

Common StockTreasury Stock
(Amounts in thousands, except share data)SharesAmountSharesAmountAdditional Paid-in CapitalRetained EarningsTotal Stockholders’
Equity
Balances, January 1, 202022,960,157 $23 (4,597,533)$(47,533)$98,466 $57,336 $108,292 
Stock-based compensation218,259 — — — 506 — 506 
Repurchase of common shares to satisfy minimum tax withholdings(64,198)— — — (376)— (376)
Cash dividends declared on common stock— — — — — (4,590)(4,590)
Repurchase of common shares— — (20,613)(159)— — (159)
Net loss— — — — — (1,893)(1,893)
Balances, March 31, 202023,114,218 $23 (4,618,146)$(47,692)$98,596 $50,853 $101,780 
Stock-based compensation(3,549)— — — 1,138 — 1,138 
Repurchase of common shares to satisfy minimum tax withholdings(384)— — — (2)— (2)
Net loss— — — — — (23,814)(23,814)
Balances, June 30, 202023,110,285 $23 (4,618,146)$(47,692)$99,732 $27,039 $79,102 
Stock-based compensation87,701 — — — 426 — 426 
Repurchase of common shares to satisfy minimum tax withholdings(31,953)— — — (153)— (153)
Net income— — — — — 4,975 4,975 
Balances, September 30, 202023,166,033 $23 (4,618,146)$(47,692)$100,005 $32,014 $84,350 

3

Advanced Emissions Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)

Common StockTreasury Stock
(Amounts in thousands, except share data)SharesAmountSharesAmountAdditional Paid-in CapitalRetained EarningsTotal Stockholders’
Equity
Balances, January 1, 201922,640,677 $23 (4,064,188)$(41,740)$96,750 $12,914 $67,947 
Cumulative effect of change in accounting principle— — — — — 28,817 28,817 
Stock-based compensation218,465 — — — 317 — 317 
Repurchase of common shares to satisfy minimum tax withholdings(22,707)— — — (245)— (245)
Cash dividends declared on common stock— — — — — (4,629)(4,629)
Repurchase of common shares— — (63,876)(693)— — (693)
Net income— — — — — 14,402 14,402 
Balances, March 31, 201922,836,435 $23 (4,128,064)$(42,433)$96,822 $51,504 $105,916 
Stock-based compensation31,715 — — — 541 — 541 
Repurchase of common shares to satisfy minimum tax withholdings(745)— — — (9)— (9)
Cash dividends declared on common stock— — — — — (4,663)(4,663)
Repurchase of common shares— — (184,715)(2,138)— — (2,138)
Net income— — — — — 8,114 8,114 
Balances, June 30, 201922,867,405 $23 (4,312,779)$(44,571)$97,354 $54,955 $107,761 
Stock-based compensation22,305 — — — 468 — 468 
Stock issued from exercise of stock options25,820 — — — — — — 
Repurchase of common shares to satisfy minimum tax withholdings(101)— — — (116)— (116)
Cash dividends declared on common stock— — — — — (4,641)(4,641)
Repurchase of common shares— — (8,152)(95)— — (95)
Net income— — — — — 3,923 3,923 
Balances, September 30, 201922,915,429 $23 (4,320,931)$(44,666)$97,706 $54,237 $107,300 

See Notes to the Condensed Consolidated Financial Statements.

4

Advanced Emissions Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended September 30,
(in thousands)20202019
Cash flows from operating activities
Net (loss) income$(20,732)$26,439 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Deferred income tax expense10,724 10,634 
Depreciation, amortization, depletion and accretion5,807 4,902 
Impairment of long-lived assets26,103  
Operating lease expense3,130 2,371 
Amortization of debt discount and debt issuance costs1,064 1,324 
Stock-based compensation expense2,070 1,326 
Earnings from equity method investments(25,959)(57,051)
Other non-cash items, net45 697 
Changes in operating assets and liabilities:
Receivables and related party receivables(1,331)2,685 
Prepaid expenses and other assets(9,056)(440)
Inventories, net4,688 4,566 
Other long-term assets, net(1,908)(43)
Accounts payable(1,123)1,010 
Accrued payroll and related liabilities1,089 (4,386)
Other current liabilities(220)(278)
Operating lease liabilities(1,678)(2,435)
Other long-term liabilities(23)(529)
Distributions from equity method investees, return on investment42,228 56,806 
Net cash provided by operating activities34,918 47,598 
Cash flows from investing activities
Acquisition of business (661)
Acquisition of property, plant, equipment, and intangible assets, net(4,879)(6,430)
Mine development costs(723)(2,083)
Net cash used in investing activities(5,602)(9,174)
Cash flows from financing activities
Principal payments on term loan(18,000)(24,000)
Principal payments on finance lease obligations(1,026)(1,016)
Dividends paid(4,956)(13,729)
Repurchase of common shares(159)(2,926)
Repurchase of common shares to satisfy tax withholdings(531)(370)
Borrowings from Paycheck Protection Program Loan3,305  
Net cash used in financing activities(21,367)(42,041)
Increase (decrease) in Cash and Cash Equivalents and Restricted Cash7,949 (3,617)
Cash and Cash Equivalents and Restricted Cash, beginning of period17,080 23,772 
Cash and Cash Equivalents and Restricted Cash, end of period$25,029 $20,155 
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of property, plant and equipment through accounts payable$446 $ 
Acquisition of property, plant and equipment through finance lease$158 $ 
Dividends payable$47 $204 
See Notes to the Condensed Consolidated Financial Statements.

5

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
Nature of Operations
Advanced Emissions Solutions, Inc. ("ADES" or the "Company") is a Delaware corporation with its principal office located in Greenwood Village, Colorado and operations located in Louisiana. The Company is principally engaged in the sale of consumable air and water treatment options including activated carbon ("AC") and chemical technologies. The Company's proprietary environmental technologies in the power generation and industrial ("PGI") market enable customers to reduce emissions of mercury and other pollutants, maximize utilization levels and improve operating efficiencies to meet the challenges of existing and pending emission control regulations. Through its wholly-owned subsidiary, ADA Carbon Solutions, LLC ("Carbon Solutions"), which the Company acquired on December 7, 2018 (the "Acquisition Date"), the Company manufactures and sells AC used to capture and remove contaminants for coal-fired power plants and industrial and water treatment markets. Carbon Solutions also owns an associated lignite mine that supplies the primary raw material for manufacturing AC.
Through its equity ownership in Tinuum Group, LLC ("Tinuum Group") and Tinuum Services, LLC ("Tinuum Services"), both of which are unconsolidated entities, the Company generates substantial earnings. Tinuum Group provides reduction of mercury and nitrogen oxide ("NOx") emissions at select coal-fired power generators through the production and sale of refined coal ("RC") that qualifies for tax credits under the Internal Revenue Code ("IRC") Section 45 - Production Tax Credit ("Section 45 tax credits"). The Company also earns royalties for technologies that are licensed to Tinuum Group and used at certain RC facilities to enhance combustion and reduced emissions of NOx and mercury from coal burned to generate electrical power. Tinuum Services operates and maintains the RC facilities under operating and maintenance agreements with Tinuum Group and owners or lessees of the RC facilities.
The Company’s sales occur principally in the United States. See Note 18 for additional information regarding the Company's operating segments.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements of ADES are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and with Article 10 of Regulation S-X of the Securities and Exchange Commission. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
The unaudited Condensed Consolidated Financial Statements of ADES in this quarterly report ("Quarterly Report") are presented on a consolidated basis and include ADES and its wholly-owned subsidiaries (collectively, the "Company"). Also included within the unaudited Condensed Consolidated Financial Statements are the Company's unconsolidated equity investments: Tinuum Group, Tinuum Services and GWN Manager, LLC ("GWN Manager"), which are accounted for under the equity method of accounting, and Highview Enterprises Limited (the "Highview Investment"), which is accounted for in accordance with U.S. GAAP applicable to equity investments that do not qualify for the equity method of accounting.
Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts were eliminated in consolidation for all periods presented in this Quarterly Report.
In the opinion of management, these Condensed Consolidated Financial Statements include all normal and recurring adjustments considered necessary for a fair presentation of the results of operations, financial position, stockholders' equity and cash flows for the interim periods presented. These Condensed Consolidated Financial Statements of ADES should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"). Significant accounting policies disclosed therein have not changed, except as described later in Note 1.
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed using the two-class method, which is an earnings allocation formula that determines earnings (loss) per share for common stock and any participating securities according to dividend and participating rights in undistributed earnings (losses). The Company's restricted stock awards ("RSA's") granted prior to December 31, 2016 contain non-forfeitable rights to dividends or dividend equivalents and are deemed to be participating securities. RSA's granted subsequent to December 31, 2016 do not contain non-forfeitable rights to dividends and are not deemed to be participating securities.
Under the two-class method, net income for the period is allocated between common stockholders and the holders of the participating securities based on the weighted-average number of common shares outstanding during the period, excluding
6

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
participating, unvested RSA's ("common shares"), and the weighted-average number of participating, unvested RSA's outstanding during the period, respectively. The allocated, undistributed income for the period is then divided by the weighted-average number of common shares and participating, unvested RSA's outstanding during the period to arrive at basic earnings per common share and participating security for the period, respectively. Pursuant to U.S. GAAP, the Company has elected not to separately present basic or diluted earnings per share attributable to participating securities in the Condensed Consolidated Statements of Operations.
Diluted earnings (loss) per share is computed in a manner consistent with that of basic earnings per share, while considering other potentially dilutive securities. Potentially dilutive securities consist of both unvested, participating and non-participating RSA's, as well as outstanding options to purchase common stock ("Stock Options") and contingent performance stock units ("PSU's") (collectively, "Potential dilutive shares"). The dilutive effect, if any, for non-participating RSA's, Stock Options and PSU's is determined using the greater of dilution as calculated under the treasury stock method or the two-class method. Potential dilutive shares are excluded from diluted earnings per share when their effect is anti-dilutive. When there is a net loss for a period, all Potential dilutive shares are anti-dilutive and are excluded from the calculation of diluted loss per share for that period.
The following table sets forth the calculations of basic and diluted earnings (loss) per share:
 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share amounts)2020201920202019
Net income (loss)$4,975 $3,923 $(20,732)$26,439 
Less: Dividends and undistributed income (loss) allocated to participating securities 5 (10)37 
Income (loss) attributable to common stockholders$4,975 $3,918 $(20,722)$26,402 
Basic weighted-average common shares outstanding18,093 18,112 18,014 18,184 
Add: dilutive effect of equity instruments10 227  210 
Diluted weighted-average shares outstanding18,103 18,339 18,014 18,394 
Earnings (loss) per share - basic$0.27 $0.22 $(1.15)$1.45 
Earnings (loss) per share - diluted$0.27 $0.21 $(1.15)$1.44 
For the three and nine months ended September 30, 2020 and 2019, RSA's and Stock Options convertible to 0.5 million and 0.9 million, and 0.3 million and 0.3 million shares of common stock, respectively, were outstanding but were not included in the computation of diluted net income (loss) per share because the effect would have been anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. There have been no changes in the Company’s critical accounting estimates from those that were disclosed in the 2019 Form 10-K except for assumptions regarding impairment of long-lived assets and the valuation of assets acquired and liabilities assumed in an asset acquisition. Actual results could differ from these estimates.
Due to the coronavirus ("COVID-19") pandemic, there has been uncertainty and disruption in the global economy and financial markets. Additionally, due to COVID-19, overall power generation and coal-fired power demand may change, which could also have a material adverse effect on the Company. The Company is not aware of any specific event or circumstance due to COVID-19 that would require an update to its estimates or judgments or a revision of the carrying values of its assets or liabilities through the date of this Quarterly Report. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Risks and Uncertainties
The Company’s earnings are significantly affected by equity earnings it receives from Tinuum Group. As of September 30, 2020, Tinuum Group has 21 invested RC facilities of which 9 are leased to a single customer. A majority of these leases are periodically renewed. Further, the ability to generate Section 45 tax credits related to Tinuum's RC facilities expires in 2021. The loss of a single customer by Tinuum Group or the expiration of Section 45 tax credits would have a significant adverse impact on Tinuum Group's financial position, results of operations and cash flows, which in turn would have a material adverse impact on the Company’s financial position, results of operations and cash flows.
7

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company's revenues, sales volumes, earnings and cash flows are significantly affected by prices of competing power generation sources such as natural gas and renewable energy. Low natural gas prices make it a competitive alternative to coal-fired power generation and therefore, coal consumption may be reduced, which reduces the demand for our products. In addition, coal consumption and demand for our products is also affected by the demand for electricity, which is higher in the warmer and colder months of the year. Abnormal temperatures during the summer and winter months may significantly reduce coal consumption and thus the demand for the Company's products.
Reclassifications
Certain balances have been reclassified from the prior year to conform to the current year presentation. Such reclassifications had no effect on the Company’s results of operations or financial position in any of the periods presented.
New Accounting Standards
Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in ASU 2016-13 replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for "smaller reporting companies" (as defined by the Securities and Exchange Commission) for fiscal years beginning after December 15, 2022, including interim periods within those years, and must be adopted under a modified retrospective method approach. Entities may adopt ASU 2016-13 earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those years. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company's financial statements and disclosures and does not believe this standard will have a material impact on the Company's financial statements and disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The amendments in ASU 2019-12 simplify various aspects related to accounting for income taxes by removing certain exceptions contained in Topic 740 and also clarify and amends existing guidance in Topic 740 to improve consistent application. ASU 2019-12 is effective for public business entities beginning after December 15, 2020, including interim periods within those years, and early adoption is permitted. The Company is currently evaluating the provisions of this guidance and assessing its impact on the Company's financial statements and disclosures and does not believe this standard will have a material impact on the Company's financial statements and disclosures.
Note 2 - Customer Supply Agreement
On September 30, 2020, the Company and Cabot Norit Americas, Inc., ("Cabot") entered into a supply agreement (the "Supply Agreement") pursuant to which the Company agrees to sell and deliver to Cabot, and Cabot agrees to purchase and accept from the Company certain lignite-based AC products ("Furnace Products"). The term of the Supply Agreement is for 15 years with 10-year renewal terms that are automatic unless either party provides three years prior notice of intention not to renew before the end of any term.
In addition to the sale by the Company and purchase by Cabot of Furnace Products, the Company and Cabot have agreed to additional terms whereby Cabot will reimburse the Company for certain capital expenditures incurred by the Company that are necessary to manufacture the Furnace Products. Reimbursements will be in the form of revenues earned from capital expenditures incurred that will benefit both the Company and Cabot (referred to as "Shared Capital") and capital expenditures incurred that will benefit Cabot exclusively (referred to as "Specific Capital"). Both the Company and Cabot must mutually agree with all Shared Capital and Specific Capital expenditures that are necessary to support operational needs in advance of procurement and commissioning.
Revenues will be earned on Shared Capital ("Shared Capital revenues") based on the percentage of Furnace Products produced and sold divided by the Company’s total products produced and sold multiplied by a mutually agreed to factor, which is based on the cost of Shared Capital assets placed in service amortized as an annuity over the expected asset life (lives) with interest at a rate that was mutually agreed to by both the Company and Cabot. Shared Capital revenues are recognized and billable beginning on the first day of a half year (either January 1 or July 1 of a calendar year) following the placed in service date of a Shared Capital asset(s).
Revenues will be earned on Specific Capital ("Specific Capital revenues") and are based on a mutually agreed to factor, which is based on the cost of Specific Capital assets placed in service amortized as an annuity over five years with interest at a rate
8

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
that was mutually agreed to by both the Company and Cabot. Specific Capital revenues are recognized beginning on the first day of a half year (either January 1 or July 1 of a calendar year) following the placed in service date of a Specific Capital asset(s) and are billable in quarterly installments beginning on the first day of a half year following the placed in service date of a Specific Capital asset(s). In the event that Cabot ceases to make purchases under the Supply Agreement, Cabot is obligated to pay the balance of any outstanding payments for Specific Capital.
Note 3 - Acquisition of Marshall Mine
Concurrently with the execution of the Supply Agreement, on September 30, 2020, the Company entered into an agreement to purchase (the "Purchase Agreement") from Cabot 100% of the membership interests in Marshall Mine, LLC (the "Marshall Mine Acquisition") for a nominal purchase price. Marshall Mine, LLC owns a lignite mine located outside of Marshall, Texas (the "Marshall Mine"). The Company independently determined to immediately commence activities to shutter the Marshall Mine and will incur the associated reclamation costs.
In conjunction with the execution of the Supply Agreement and the Purchase Agreement, on September 30, 2020, the Company entered into a reclamation contract (the "Reclamation Contract") with a third party that provides a capped cost, subject to certain contingencies, in the amount of approximately $19.7 million plus an obligation to pay certain direct costs of approximately $3.6 million (collectively, the "Reclamation Costs") over the estimated reclamation period of 10 years (the "Reclamation Period"). Under the terms of the Supply Agreement, Cabot is obligated to reimburse the Company for $10.2 million of Reclamation Costs (the "Reclamation Reimbursements"), which are payable semi-annually over 13 years and inclusive of interest. In the event that Cabot has a change in control as described in the Supply Agreement, all outstanding balances of the Reclamation Reimbursements shall be due and payable in full. See further discussion of the Reclamation Costs and Reclamation Reimbursements in Note 4.
The Marshall Mine Acquisition included the acquisition of certain assets that will be consumed and the assumption of certain liabilities that will be paid in reclamation of the Marshall Mine in addition to the incurrence of an obligation for the Reclamation Costs. The Company determined that the Marshall Mine Acquisition should be treated as an asset acquisition as it did not meet the definition of a business. That is, the Company concluded that the Marshall Mine does not have any economic reserves, as the Company has commenced full reclamation as of September 30, 2020, and therefore lacks inputs.
As the Marshall Mine Acquisition represents a transaction with a customer of net assets acquired and liabilities assumed from Cabot, the Company has accounted for the excess of the fair value of liabilities assumed over assets acquired as upfront consideration transferred to a customer, Cabot (the "Upfront Customer Consideration"). The amount of the Upfront Customer Consideration is also recognized net of an additional asset recognized in the Marshall Mine Acquisition, which is comprised of a receivable from Cabot (the "Cabot Receivable") for the Reclamation Reimbursements. The Cabot Receivable is further discussed in Note 4.
The total Upfront Customer Consideration will be amortized on a straight-line basis over the expected 15-year contractual period of the Supply Agreement as a reduction to revenue.
The Company paid a nominal amount to Cabot in the form of cash for the Marshall Mine; in addition, the Company assumed liabilities whose fair value exceeded the fair value of assets acquired. The net assets acquired and liabilities assumed, followed by the Cabot Receivable, and the excess of fair value of liabilities acquired over assets assumed and recognized as the Upfront Customer Consideration is as follows (in thousands), as of the transaction date of September 30, 2020:
(in thousands)Amount
Assets acquired:
Property, plant and equipment$3,863 
Spare parts100 
Liabilities assumed:
Accounts payable and accrued expenses(673)
Asset retirement obligation(21,328)
Net assets acquired and liabilities assumed from Marshall Mine acquisition(18,038)
Cabot receivable9,749 
Upfront Customer Consideration$8,289 
9

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company also evaluated the Marshall Mine entity as a potential variable interest entity ("VIE"), and determined that because of its structure and closing-stage status, it does not have sufficient equity at-risk and would not likely be able to obtain additional subordinated financial support to complete its closing stage obligations. The Company purchased all of the membership interests in Marshall Mine, LLC and has determined that the Company is the primary beneficiary. Therefore, Marshall Mine, LLC has been determined to be a VIE and Marshall Mine, LLC’s assets and liabilities have been consolidated as of September 30, 2020.
Note 4 - Marshall Mine Asset Retirement Obligation and related Cabot Receivable
Asset Retirement Obligation
In connection with the Supply Agreement, Purchase Agreement and the Reclamation Contract, the Company assumed the obligation to reclaim and restore the land associated with the Marshall Mine. The Company determined that the Marshall Mine does not have any remaining economic reserves. As of September 30, 2020, the Company recorded an asset retirement obligation (the "Marshall Mine ARO") for the total Reclamation Costs of $21.3 million as measured at the expected future cash flows of $23.7 million, inclusive of contingency costs, discounted to their present value using a discount rate based on a credit-adjusted, risk-free rate of 7.0%.
Cabot Receivable
As previously disclosed, under the terms of the related Supply Agreement, Cabot is obligated to pay Reclamation Reimbursements to the Company for $10.2 million of the Reclamation Costs, inclusive of interest. As of September 30, 2020, the Company recorded the Cabot Receivable for the Reclamation Reimbursements at its estimated fair value, which is measured using a discounted cash flows valuation model that considers the estimated credit risk associated with the obligor’s (Cabot’s) future performance. Interest will be accreted on a monthly basis and recognized as interest income. There were no significant related fees or costs associated with the Cabot Receivable.
As of September 30, 2020, the Company recorded the Cabot Receivable at its estimated fair value of $9.7 million, reflecting a discount rate of approximately 1.5% or $0.5 million. Allowances for this asset are assessed periodically, and no allowance was deemed necessary as of September 30, 2020.
Surety Bond
As the owner of the Marshall Mine, the Company is required to post a surety bond to ensure performance of its reclamation activities. On September 30, 2020, the Company and a third party entered into a surety bond indemnification agreement (the "Surety Agreement") pursuant to which the Company secured and posted a $30.0 million surety bond (the "Bond") with the local regulatory agency. The Bond will remain in place until the Marshall Mine is fully reclaimed, and it may be reduced in amount from time to time as the Company progresses with its reclamation activities. For the obligations due under the Reclamation Contract, the Company was required to post collateral of $5.0 million dollars as of September 30, 2020 and an additional $5.0 million dollars as of March 31, 2021.
Note 5 - Impairment
As part of its periodic review of the carrying value of long-lived assets, the Company assessed its long-lived assets for potential impairment. In assessing impairment of its PGI segment's and certain other long-lived asset groups, the Company considered factors such as the significant decline in both the PGI segment's trailing twelve months revenues and current and future years’ forecasted revenues. These factors are largely due to the significant drop in coal-fired power dispatch that began in 2019 amid historically low prices of alternative power generation sources such as natural gas leading to an increase in natural gas usage as well as other competing energy sources.
As of June 30, 2020, the Company completed an undiscounted cash flow analysis of its PGI segment's and certain other long-lived assets (the "Asset Group"), which are comprised of its manufacturing plant and related assets and its lignite mine assets, and estimated the undiscounted cash flows from the Asset Group at $54.7 million, which was less than the carrying value of the Asset Group of $58.3 million. Accordingly, the Company completed an assessment of the Asset Group’s fair value and estimated the fair value of the Asset Group at $32.2 million. This resulted in an impairment and write-down of the Asset Group (the "Impairment Charge") of $26.1 million as of June 30, 2020, which is reflected as "Impairment of long-lived assets" in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2020. The Impairment Charge was allocated to the PGI segment and Other in the amounts of $23.2 million and $2.9 million, respectively, for the nine months ended September 30, 2020.
10

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table summarizes the allocation to the Asset Group of the Impairment Charge of $26.1 million recorded as of June 30, 2020:
(in thousands)
Property, plant and equipment, net$18,986 
Intangible assets, net1,445 
Other long-term assets, net5,672 
Total impairment$26,103 
The Company engaged an independent third party to perform the valuation of the Asset Group in order to determine the estimated fair value of the Asset Group. This valuation was based on the use of several established valuation models including an expected future discounted cash flow model using Level 3 inputs under ASC 820 - Fair Value Measurement. The cash flows are those expected to be generated by market participants discounted at the risk-free rate of interest. Because of the continued future uncertainty surrounding the level of coal-fired dispatch, the impact of historically low natural gas prices and other estimates impacting the expected future cash flow, it is reasonably possible that the expected future cash flows may change in the near term and may result in the Company recording additional impairment of the Asset Group.
As of September 30, 2020, the Company determined that there was no additional impairment of the Asset Group.
Note 6 - COVID-19
In response to the COVID-19 outbreak, in March 2020, the federal government passed the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The CARES Act provided, among other things, the creation of the Paycheck Protection Program ("PPP"), which is sponsored and administered by the U.S. Small Business Administration ("SBA").
On April 20, 2020, the Company entered into a loan (the "PPP Loan") under the PPP, evidenced by a promissory note, with BOK, NA dba Bank of Oklahoma ("BOK") providing for $3.3 million in proceeds, which was funded to the Company on April 21, 2020. The PPP Loan matures April 21, 2022 and provides for 18 monthly payments of principal and interest commencing on November 21, 2020. The interest rate on the PPP Loan is 1.00%. The PPP Loan is unsecured and contains customary events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or BOK, or breaching the terms of the PPP Loan. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company. The PPP Loan principal may be forgiven subject to the terms of the PPP and approval by the SBA.
The Company recorded the PPP Loan as a debt obligation under the guidance of ASC 470 - Debt and will accrue interest over the 18-month term of the PPP Loan beginning November 21, 2020.
The CARES Act also provided the deferral of payroll tax payments for all payroll taxes incurred through December 31, 2020. The Company elected to defer payments of payroll taxes for the periods allowed under the CARES Act and will repay 50% by December 31, 2021 and 50% by December 31, 2022. As of September 30, 2020, the Company has deferred $0.3 million of payroll tax payments under the CARES Act.
Note 7 - Equity Method Investments
Tinuum Group, LLC
The Company's ownership interest in Tinuum Group was 42.5% as of September 30, 2020 and December 31, 2019. Tinuum Group supplies technology equipment and technical services at select coal-fired generators, but its primary purpose is to put into operation facilities that produce and sell RC that lower emissions and also qualify for Section 45 tax credits. Tinuum Group has been determined to be a VIE; however, the Company does not have the power to direct the activities that most significantly impact Tinuum Group's economic performance and has therefore accounted for the investment under the equity method of accounting. The Company determined that the voting partners of Tinuum Group have identical voting rights, equity control interests and board control interests, and therefore, concluded that the power to direct the activities that most significantly impact Tinuum Group's economic performance was shared.
11

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table summarizes the results of operations of Tinuum Group:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Gross profit$101 $16,810 $11,979 $96,189 
Operating, selling, general and administrative expenses13,781 11,076 38,476 23,421 
(Loss) income from operations(13,680)5,734 (26,497)72,768 
Other income (expenses)5,739 (450)11,526 (427)
Loss attributable to noncontrolling interest25,023 22,355 63,117 51,022 
Net income available to members$17,082 $27,639 $48,146 $123,363 
ADES equity earnings from Tinuum Group$7,260 $11,746 $20,462 $50,757 
For the three and nine months ended September 30, 2020 and the three months ended September 30, 2019, the Company recognized its pro-rata share of Tinuum Group's net income available to its members for the respective period. For the nine months ended September 30, 2019, the Company recognized its pro-rata share of Tinuum Group's net income available to its members for the period, less the amount necessary to recover the cumulative earnings short-fall balance as of the end of the immediately preceding period, which was December 31, 2018. For the nine months ended September 30, 2019, the difference between the Company's proportionate share of Tinuum Group's net income available to members (at its equity interest of 42.5%) and the Company's earnings from its Tinuum Group equity method investment as reported in the Condensed Consolidated Statements of Operations relates to the Company receiving distributions in excess of the carrying value of the equity investment, and therefore recognizing such excess distributions as equity method earnings in the period the distributions occur.
For the three and nine months ended September 30, 2020, the Company recognized equity earnings from Tinuum Group of $7.3 million and $20.5 million, respectively. For the three and nine months ended September 30, 2019, the Company recognized equity earnings from Tinuum Group of $11.7 million and $50.8 million, respectively.
The following tables present the Company's investment balance, equity earnings and cash distributions in excess of the investment balance, if any, for the three and nine months ended September 30, 2020 and 2019 (in thousands):
DescriptionDate(s)Investment balanceADES equity earningsCash distributionsMemorandum Account: Cash distributions and equity earnings in (excess) of investment balance
Beginning balance12/31/2019$32,280 $ $ $ 
ADES proportionate share of income from Tinuum GroupFirst Quarter6,438 6,438   
Cash distributions from Tinuum GroupFirst Quarter(13,764) 13,764  
Total investment balance, equity earnings and cash distributions3/31/2020$24,954 $6,438 $13,764 $ 
ADES proportionate share of income from Tinuum GroupSecond Quarter$6,764 $6,764 $ $ 
Cash distributions from Tinuum GroupSecond Quarter(13,600) 13,600  
Total investment balance, equity earnings and cash distributions6/30/2020$18,118 $6,764 $13,600 $ 
ADES proportionate share of income from Tinuum GroupThird Quarter$7,260 $7,260 $ $ 
Cash distributions from Tinuum GroupThird Quarter(7,862) 7,862  
Total investment balance, equity earnings and cash distributions9/30/2020$17,516 $7,260 $7,862 $ 
12

Advanced Emissions Solutions, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
DescriptionDate(s)Investment balanceADES equity earnings (loss)Cash distributionsMemorandum Account: Cash distributions and equity earnings in (excess) of investment balance
Beginning balance12/31/2018$ $ $ $(1,672)
Impact of adoption of accounting standards (1)First Quarter37,232    
ADES proportionate share of income from Tinuum GroupFirst Quarter21,439 21,439   
Recovery of prior cash distributions in excess of investment balance (prior to cash distributions)First Quarter(1,672)(1,672) 1,672 
Cash distributions from Tinuum GroupFirst Quarter(16,788) 16,788  
Total investment balance, equity earnings and cash distributions3/31/2019$40,211 $19,767 $16,788 $ 
ADES proportionate share of income from Tinuum GroupSecond Quarter$19,244 $19,244 $ $ 
Cash distributions from Tinuum GroupSecond Quarter(17,000) 17,000  
Total investment balance, equity earnings and cash distributions6/30/2019$