Proprietary Technologies Deployed at Ash
Recycling and Slag Grinding Facilities
Awarded New Multi-Site Fossil Power
Maintenance Contract
Company Provides 2019 Guidance and Outlook
for 2020
2018 Financial
Highlights
- Revenue of $740.5 million, up 72% from
2017
- Net loss of $(8.9) million or $(0.33)
per diluted share, including litigation reserve and non-recurring
charges
- Adjusted net income1 of $24.5 million
or $0.92 per diluted share
- Adjusted EBITDA1 of $98.8 million, up
30% from 2017
Business Developments
- Increased proposal opportunities
resulting from industry trends and regulatory developments;
outstanding bids now in excess of $3 billion
- Deployed industry-leading technology
for ash recycling and blast furnace slag grinding; construction
started at two additional grinding facilities
- Awarded new multi-site fossil
maintenance contract with new customer
- Added to environmental remediation
business with several new contracts with southeastern
utilities
Charah Solutions, Inc. (NYSE:CHRA) (“Charah Solutions” or the
“Company”), a leading provider of environmental and maintenance
services to the power generation industry, today announced
financial results for its fourth quarter and full year ended
December 31, 2018. Net income attributable to Charah Solutions for
the fourth quarter of 2018 was $4.5 million, or $0.15 per diluted
share. Adjusted net income and Adjusted earnings per diluted share1
were $5.4 million and $0.18, respectively, and Adjusted EBITDA was
$22.9 million, up 12% from the year-ago period. For the full year
2018, net loss attributable to Charah Solutions was $(8.9) million,
or $(0.33) per diluted share, including significant non-operational
and non-recurring charges. Excluding these charges, for the full
year 2018, Adjusted net income and Adjusted earnings per diluted
share were $24.5 million and $0.92, respectively, and Adjusted
EBITDA was $98.8 million, up 30% from 2017.
“Across our businesses, our environmental and maintenance
solutions are in increasing demand. We continue to diversify and
expand these offerings to create a comprehensive suite of services
to meet our customers’ evolving needs. Since our third quarter
conference call, we have signed several new contracts, extended
others, and expect to receive significant additional new business
over the course of 2019 as we capitalize on a growing set of
opportunities and further diversify our customer base,” said Scott
Sewell, President and Chief Executive Officer of Charah Solutions.
“During the fourth quarter of 2018, we continued to execute on our
industry-leading technology initiatives by installing our MP618™
fly ash beneficiation technology at our Sulphur, Louisiana,
terminal and completing our facility in upstate New York. We
believe our ability to bundle these technologies with our ash
excavation capabilities will improve our competitive position and
open new markets to us. Customer interest has already been strong,
and we plan to roll them out to additional sites later this
year.”
“Our financial results in 2018 exceeded our expectations at the
time of our initial public offering in June, despite unusually
heavy precipitation in areas that affected a number of our
remediation projects. Our 2019 revenue outlook is generally in line
with expectations, while our Adjusted EBITDA outlook is lower,
mostly due to the early completion of the Brickhaven contract,
which accelerated EBITDA into 2018 that had been expected in future
years. However, we expect to receive significant cash in 2019 that
we intend to utilize to meaningfully de-lever and invest in the
growth of our business, with a priority on our technology
investments,” Mr. Sewell continued. “Looking ahead to 2020, we
expect to generate strong growth in revenues and EBITDA, as we are
well positioned to capitalize on regulatory and industry dynamics
favoring remediation, which should provide us significant growth
potential over a multi-year period. We also expect to reap the
benefit of our technology initiatives.”
Fourth Quarter 2018
Results
Revenue for the fourth quarter of 2018 was $203.2 million, an
increase of $34.3 million, or 20%, from $169.0 million in the
fourth quarter of 2017. Gross profit decreased $1.6 million, or 7%,
to $21.4 million from $23.0 million in the fourth quarter of 2017.
Gross profit as a percentage of revenue, or gross margin, declined
to 10.5% from 13.6% a year ago, primarily due to lower gross margin
in the Company’s Environmental Solutions segment.
Environmental Solutions Segment: Environmental Solutions
generated revenue of $101.4 million, an increase of $44.2 million,
or 77%, from the fourth quarter of 2017, primarily due to the
accelerated completion of the Brickhaven contract and the
acquisition of SCB in March 2018. Gross profit of $15.0 million was
slightly lower than the $15.2 million in the fourth quarter of
2017, primarily due to adverse weather-related impacts on certain
remediation projects. Gross margin declined to 14.8% from 26.6% in
the fourth quarter of 2017 primarily due to the mix of contracts
and unusually adverse weather.
Maintenance and Technical Services Segment: Maintenance
and Technical Services generated revenue of $101.8 million, a
decrease of $10.0 million, or 9%, from the fourth quarter of 2017.
The decrease was primarily attributable to lower revenues in the
Company’s nuclear services business, which resulted from shorter
outages of reduced scope relative to the year-ago period. Gross
profit decreased $1.4 million, or 18%, to $6.3 million from $7.7
million in the fourth quarter of 2017. Gross margin declined to
6.2% from 6.9% in the fourth quarter of 2017.
Net income attributable to Charah Solutions was $4.5 million.
Adjusted Net income attributable to Charah Solutions, which
excludes $2.4 million of non-recurring and non-operating legal and
transaction costs and related tax adjustments, was $5.4 million for
the fourth quarter of 2018. Adjusted earnings per diluted share was
$0.18.
Adjusted EBITDA for the fourth quarter of 2018 was $22.9
million, an increase of $2.4 million, or 12%, from the fourth
quarter 2017 level of $20.4 million.
Full Year 2018 Financial
Results2
Revenue increased $310.1 million, or 72%, to $740.5 million from
$430.4 million in 2017. Gross profit increased $13.6 million, or
16%, to $97.7 million from $84.2 million in 2017. Gross profit as a
percentage of revenue, or gross margin, decreased to 13.2% from
19.6%, primarily due to the mix of projects and adverse weather
impacts in the Company’s Environmental Solutions segment and, to a
lesser degree, a full year of nuclear services offerings in the
Maintenance and Technical Services segment.
Environmental Solutions Segment: Environmental Solutions
generated revenue of $343.1 million, an increase of $103.1 million,
or 43%, from the year-ago period. The acquisition of SCB in March
2018 represented $45.8 million of the increase, with the remainder
primarily attributable to the accelerated completion of the
Brickhaven contract, partially offset by the roll-off of other
remediation projects. Gross profit increased $3.6 million, or 5%,
to $69.5 million from $65.8 million in the period a year ago,
primarily reflecting the Brickhaven completion and the acquisition
of SCB, partially offset by the roll-off of other remediation
projects and adverse weather impacts. Gross margin declined to
20.2% from 27.4% in 2017 primarily due to a change in the mix of
contracts, weather-related impacts and the acquisition of SCB, for
which the base business carries lower margins than the new
technologies being rolled out.
Maintenance and Technical Services Segment: Maintenance
and Technical Services generated revenue of $397.4 million, an
increase of $207.0 million, or 109%, from the same quarter a year
ago. Most of the revenue increase was attributable to the addition
of the Company’s nuclear services offerings as a result of the
startup of Allied in mid-2017. Gross profit increased $9.9 million,
or 54%, to $28.3 million from $18.3 million in 2017, primarily due
to having a full year of nuclear services offerings in 2018. Gross
margin was 7.1%, down from 9.6% in 2017, primarily due to a full
year of nuclear services offerings.
2018 results included a $20 million litigation reserve and $11.4
million of other non-operational and non-recurring charges
(included in G&A expense) and $12.5 million of refinancing
expenses (included in interest expense) in conjunction with the
Company’s term loan refinancing in the third quarter of 2018.
Net loss attributable to Charah Solutions for 2018 was $(8.9)
million, a decrease of $21.7 million from net income of $12.8
million for 2017. The decrease was attributable to the increase in
G&A expense resulting from the non-recurring charges and higher
interest expense.
Adjusted Net income attributable to Charah Solutions, which
excludes the $31.4 million pretax of non-recurring and
non-operating legal costs, was $24.5 million for 2018. Adjusted
earnings per diluted share was $0.92.
Adjusted EBITDA for 2018 was $98.8 million, an increase of $22.8
million or 30% from the 2017 level of $76.0 million. The increase
in Adjusted EBITDA occurred despite a reduction in net income
because of depreciation and interest expense and non-recurring or
transaction-related expenses, which were all higher than in 2017.
Adjusted EBITDA margin was 13.3% versus 17.7% for 2017, with the
decline attributable to lower gross margin.
CIE and operating cash flow. The accelerated completion
of the Brickhaven contract significantly increased the Company’s
working capital and reduced operating cash flow. Costs and
estimated earnings in excess of billings (“CIE”) increased to $86.7
million at year end 2018 from $8.0 million at year end 2017. Nearly
all of the CIE balance is associated with Brickhaven. For the year,
operating cash flow was $(13.6) million. The Company expects to
substantially collect the CIE balance in 2019.
2019 Guidance
- Revenues of $650 million to $800
million
- Net income of $5 million to $20
million
- Adjusted EBITDA of $50 million to $65
million
- Significantly cash flow positive
The midpoint of 2019 revenue guidance is slightly lower than the
2018 level. Revenues in the Environmental Solutions segment are
expected to be modestly lower in 2019 than 2018, due to the
acceleration of Brickhaven revenues into 2018 and the timing of new
business awards, partially offset by higher byproduct sales
revenues. Revenues in the Maintenance and Technical Services
segment are expected to be modestly higher in 2019 than 2018, with
growth in fossil services offsetting a lower outage year in nuclear
services.
2020 Outlook
The Company expects revenue growth of at least 20% in 2020 from
2019 guidance, driven by its leading competitive position,
favorable market dynamics and regulatory trends that continue to
expand its opportunity set, and revenue and margin enhancement
potential from the rollout of its technology initiatives. In
addition, the Company expects improvement to its Adjusted EBITDA
margin in 2020 relative to 2019 due to the higher-margin profile of
the expected growth in revenues and the ability to grow revenues
without materially scaling up G&A expense.
ADDITIONAL BUSINESS UPDATES
Technology Rollout
Since the third quarter conference call, the Company has
continued to roll out its proprietary technologies, with a focus on
patented sustainable solutions that serve customers’ evolving needs
while increasing the Company’s byproduct sales footprint and
improving its competitive position. Both the MP618TM and slag
grinding technologies have important competitive advantages versus
other technologies, in that they are generally modular in design,
relatively quick to market and can be scaled up or down to meet
market demand. They also can be implemented at lower capital
cost.
The Company recently installed its MP618TM thermal fly ash
beneficiation technology at its terminal in Sulphur, Louisiana,
which is expected to improve the quality of fly ash and increase
the supply of marketable fly ash to concrete producers in the
region. Interest in this technology among potential utility
customers has been strong.
The Company recently opened its first slag grinding facility
outside of Albany, New York. This facility uses the Company’s
patented technologies for grinding granulated blast furnace slag
from the steel industry to create supplementary cementitious
materials (SCMs) that are sold to concrete product manufacturers
throughout the Northeast. Because the technology is not dependent
on a supply of fly ash, it can be located in those areas where
there is demand from concrete producers but the supply of fly ash
or other SCMs is limited. The Company recently commenced
construction of two additional facilities, one in the Gulf Coast
region and the other on the West Coast. Both are expected to be
operational in the third quarter of this year.
Business Update
Since its third quarter 2018 conference call, the Company
continued to grow its remediation and byproduct sales businesses
while also diversifying the range of customers in its maintenance
business by signing contracts with two utilities for fossil
maintenance. In January, the Company began work under a new
three-year contract with Arizona Public Service to perform
maintenance, modification and outage services for all of the
utility’s coal and gas plants in Arizona and New Mexico. Also in
January, the Company signed a new three-year contract to perform
maintenance and outage services for five Exelon fossil plants in
Texas, Alabama and Georgia. These contract wins represent a
diversification by the Company into servicing fossil plants and
reflects the Company’s ability to market its maintenance,
modification and outage capabilities to a broader mix of generation
plants, technologies and regions.
The Company also was awarded several remediation contacts with
southeastern utilities, including one new customer; announced an
ash marketing and management agreement with an American Electric
Power plant in Oklahoma, and signed a new five-year ash management
agreement with East Kentucky Power Cooperative.
CONFERENCE CALL
Charah Solutions will host a conference call at 8:30 a.m. ET
today to discuss the fourth quarter results. Information contained
within this press release will be referenced and should be
considered in conjunction with the call.
Participants may access the conference call live via webcast on
the Investor Relations section of the Charah Solutions website at
ir.charah.com. To participate via telephone, please dial (877)
273-7219 within the United States or (647) 689-5395 outside the
United States, approximately 15 minutes prior to the scheduled
start time. The conference ID for the call is 5593663.
A webcast replay will be available on the Investor Relations
section of the Charah Solutions website at ir.charah.com after
11:30 a.m. ET on Wednesday, March 27, 2019. In addition, an audio
replay will be available for one week following the call and will
be accessible by dialing (800) 585-8367 within the United States or
(416) 621-4642 outside the United States. The replay ID is
5593663.
A supplementary presentation will also be available on the
Investor Relations section of the Charah Solutions website at
ir.charah.com.
ABOUT CHARAH SOLUTIONS
With 30 years of experience, Charah Solutions, Inc. is a leading
provider of environmental and maintenance services to the power
generation industry. Based in Louisville, Kentucky, Charah
Solutions assists utilities with all aspects of managing, recycling
and remediating ash byproducts generated from the combustion of
coal in the production of electricity as well as routine power
plant maintenance and outage services for coal and nuclear energy
providers. The Company also designs and implements environmental
solutions for ash pond management and closure, landfill
construction, fly ash and slag sales, and structural fill projects.
Charah Solutions is the partner of choice for solving customers’
most complex environmental challenges, and as an industry leader in
quality, safety, and compliance, the company is committed to
reducing greenhouse gas emissions for a cleaner energy future. For
more information, please visit www.charah.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements,
other than statements of historical facts, included in this press
release that address activities, events or developments that the
company expects, believes or anticipates will or may occur in the
future are forward-looking statements. These forward-looking
statements are identified by their use of terms and phrases such as
“may,” “expect,” “estimate,” “project,” “plan,” “believe,”
“intend,” “achievable,” “anticipate,” “will,” “continue,”
“potential,” “should,” “could,” and similar terms and phrases.
These statements are based on certain assumptions made by the
company based on management’s experience and perception of
historical trends, current conditions, anticipated future
developments and other factors believed to be appropriate. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the company,
which may cause actual results to differ materially from those
implied or expressed by the forward-looking statements.
Any forward-looking statement speaks only as of the date on
which such statement is made and the company undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
NON-GAAP FINANCIAL MEASURES
Adjusted Net income (loss) and Adjusted earnings per diluted
share are not financial measures determined in accordance with
GAAP. Charah Solutions defines Adjusted Net income (loss) as Net
income (loss) attributable to Charah Solutions plus, on a post-tax
basis, certain legacy expenses, amounts from a non-acquired
business line, write-off of debt issuance costs, prepayment
penalties, non-recurring legal and start-up costs,
transaction-related expenses and other items. Adjusted earnings per
diluted share is based on Adjusted Net income (loss).
Adjusted EBITDA and Adjusted EBITDA margin are not financial
measures determined in accordance with GAAP. Charah Solutions
defines Adjusted EBITDA as net income before interest expense,
income taxes, depreciation and amortization, equity-based
compensation, elimination of certain legacy expenses, amounts from
a non-acquired business line, non-recurring legal and start-up
costs, transaction-related expenses and other items. Adjusted
EBITDA margin represents the ratio of Adjusted EBITDA to total
revenues.
Management believes Adjusted EBITDA and Adjusted EBITDA margin
are useful performance measures because they allow for an effective
evaluation of our operating performance when compared to our peers,
without regard to our financing methods or capital structure.
Management excludes the items listed above from net income in
arriving at Adjusted EBITDA because these amounts are either
non-recurring or can vary substantially within Charah Solutions’
industry depending upon accounting methods and book values of
assets, capital structures and the method by which the assets were
acquired. Adjusted EBITDA should not be considered as an
alternative to, or more meaningful than, net income determined in
accordance with GAAP. Certain items excluded from Adjusted EBITDA
are significant components in understanding and assessing a
company’s financial performance, such as a company’s cost of
capital and tax structure, as well as the historic costs of
depreciable assets, none of which are reflected in Adjusted EBITDA.
Charah Solutions’ presentation of Adjusted EBITDA should not be
construed as an indication that the Company’s results will be
unaffected by the items excluded from Adjusted EBITDA. Charah
Solutions’ computations of Adjusted EBITDA may not be identical to
other similarly titled measures of other companies. Charah
Solutions uses Adjusted EBITDA margin to measure the success for
the Company’s business in managing its cost base and improving
profitability. A reconciliation between Adjusted EBITDA to net
income, Charah Solutions’ most directly comparable financial
measure calculated and presented in accordance with GAAP, along
with the Company’s Adjusted EBITDA margin is included in the
supplemental financial data attached to this press release.
CHARAH SOLUTIONS, INC.
Condensed Consolidated & Combined
Balance Sheets
(dollars in thousands unless otherwise
indicated)
December 31, 2018
December 31, 2017
Assets Current assets: Cash $ 6,900 $ 32,264 Trade
accounts receivable 60,742 47,227 Receivable from affiliates 894 38
Costs and estimated earnings in excess of billings (“CIE”) 86,710
7,959 Inventory 25,797 1,666 Prepaid expenses and other current
assets 5,133 4,644
Total current assets
186,176 93,798
Property and equipment: Plant, machinery and
equipment 74,896 42,565 Structural fill site improvements 55,760
55,760 Vehicles 17,407 16,478 Office equipment 1,623 638 Buildings
and leasehold improvements 262 240 Structural fill sites 7,110
7,110 Construction in progress 3,488 — Total property
and equipment 160,546 122,791 Less accumulated depreciation and
amortization (71,605 ) (22,861 )
Property and equipment, net
88,941 99,930
Other assets: Trade name, net 34,920 34,330
Customer relationship, net 63,898 71,032 Technology, net 1,853 —
Non-compete and other agreements, net 180 — Other intangible
assets, net 22 87 Goodwill 74,213 73,468 Other assets 891 —
Deferred tax asset 2,747 — Equity method investments 5,060
5,006
Total assets $ 458,901 $ 377,651
Liabilities and stockholders’ and members’
equity Current liabilities:
Accounts payable $ 24,821 $ 15,247 Billings in excess of costs and
estimated earnings (“BIE”) 1,352 15,882 Notes payable, current
maturities 23,268 19,996 Accrued payroll and bonuses 15,480 16,036
Asset retirement obligation 14,704 1,072 Purchase option liability,
current portion 10,017 5,061 Accrued expenses 22,473 7,959 Other
liabilities — 198
Total current liabilities 112,115
81,451
Long-term liabilities: Purchase option liability,
less current portion — 20,183 Contingent payments for acquisitions
11,214 — Asset retirement obligation 11,361 — Line of credit 19,799
— Notes payable, less current maturities 211,022 227,698
Total liabilities 365,511 329,332
Commitments and
contingencies Stockholders’ and members’ equity Retained
earnings 9,414 18,316
Common Stock - Charah Solutions,
Inc.—$0.01 par value; 200,000,000 sharesauthorized, 29,082,988
shares issued and outstanding as of December 31, 2018
291 — Additional paid in capital - Charah Solutions, Inc. 82,880 —
Members’ interest—Charah, LLC Series A, no
par, 200,000,000 members’interest authorized (104,109,890 issued
and outstanding) as of December 31,2017. Series B, no par,
100,000,000 members’ interest authorized (35,199,063issued and
outstanding) as of December 31, 2017
— 19,718
Members’ interest—Allied Power Management,
LLC, Series A, no par,200,000,000 members’ interest authorized
(7,210,555 issued and outstanding)as of December 31, 2017. Series
B, no par, 100,000,000 members’ interestauthorized (2,437,855
issued and outstanding) as of December 31, 2017
— 9,687
Total stockholders’ and members’ equity
92,585 47,721 Non-controlling interest 805 598
Total
equity 93,390 48,319
Total liabilities and equity
$ 458,901 $ 377,651
CHARAH SOLUTIONS, INC.
Condensed Consolidated & Combined
Statements of Income
(dollars in thousands except per share
data)
Successor Predecessor
For the Year Ended
December 31, 2018
Period from January 13,
2017 through December 31, 2017
Period from January 1,
2017 through January 12, 2017
Unaudited
Three Months Ended December
31,
2018 2017 Revenue $ 203,208 $ 168,958 $ 740,462 $
421,239 $ 9,130 Cost of sales 181,833 146,005 642,734 338,908 7,301
Gross Profit 21,375 22,953 97,728 82,331 1,829 General and
administrative expenses 10,808 14,574 76,752 48,495 3,170
Operating income (loss) 10,567 8,380 20,976 33,836 (1,341)
Interest expense (5,518) (9,814) (32,226) (14,146) (4,181) Income
from equity method investment 335 156 2,407 816 48
Income (loss)
before income taxes 5,384 (1,279) (8,843) 20,506 (5,474) Income
tax expense (benefit) 334 - (2,427) - -
Net income (loss)
5,050 (1,279) (6,416) 20,506 (5,474)
Less income attributable to
non-controllinginterest
582 328 2,486 2,190 54
Net income (loss) attributable to
Charah Solutions, Inc.
$ 4,468 $ (1,607) $ (8,902) $ 18,316 $ (5,528) Basic earnings
(loss) per share $ 0.15 $ (0.07) $ (0.33) $ 0.77 N/A Diluted
earnings (loss) per share $ 0.15 $ (0.07) $ (0.33) $ 0.75 N/A
Pro forma net income (loss)
information(unaudited):
Net income (loss) attributable to
CharahSolutions, Inc. before provision for incometaxes
$ 4,802 $ (1,607) $ (11,329) $ 18,316 $ (5,528) Pro forma provision
for income taxes 334 (611) (2,214) 6,960 (2,101)
Pro forma net income (loss)
attributable to Charah Solutions, Inc.
$ 4,469 $ (997) $ (9,115) $ 11,356 $ (3,427)
CHARAH SOLUTIONS, INC.
Consolidated & Combined Statements
of Cash Flows
(dollars in thousands unless otherwise
indicated)
Successor Predecessor
For the year ended
December 31, 2018
Period from January 13,
2017 through December 31, 2017
Period
from
January 1
2017,
through
January 12,
2017
Cash flows from operating activities: Net (loss) income $
(6,416 ) $ 20,506 $ (5,474 )
Adjustments to reconcile net (loss) income
to net cash (usedin) provided by operating activities:
Depreciation and amortization 42,308 25,719 763 Amortization of
debt issuance costs 11,631 4,150 — Deferred income tax benefit
(2,995 ) — — Loss on sale of assets 899 1,332 123 Income from
equity method investment (2,407 ) (816 ) (48 ) Distributions
received from equity investment 2,353 1,099 — Non-cash share-based
compensation 4,127 2,429 — Payment related to deferred stock plan —
(18,888 ) — (Gain) loss on interest rate swap (1,089 ) 198 —
Interest accreted on contingent payments for acquisition 200 — —
Increase (decrease) in cash due to changes in: Trade accounts
receivable (7,595 ) 4,814 (3,977 ) Receivable from affiliates (857
) 195 — Costs and estimated earnings in excess of billing (78,752 )
(7,959 ) 2,185 Inventory (5,720 ) (1,428 ) 278 Prepaid expenses and
other current assets (360 ) (3,535 ) 71 Accounts payable 9,086
(3,296 ) 4,380 Billings in excess of costs and estimated earnings
(14,530 ) 15,882 6 Accrued payroll and bonuses (556 ) 13,502 (318 )
Asset retirement obligation 24,993 207 — Accrued expenses 12,047
3,681 (2,407 )
Net cash (used in) provided by
operatingactivities
(13,633 ) 57,792 (4,418 )
Cash flows from investing
activities: Proceeds from the sale of equipment 1,682 2,062 —
Purchases of property and equipment (22,036 ) (12,690 ) —
Investment in equity method investment — — — Payments for business
acquisitions, net of cash received (19,983 ) — — Purchase of
intangible assets (31 ) — — Decrease (increase) in restricted cash
— 3,358 — Change in loan to related party, net — — —
Net cash used in investing activities (40,368 ) (7,270 ) —
Cash flows from financing activities: Net proceeds
(payments) on line of credit 19,799 (43,800 ) 4,605 Proceeds from
long-term debt 217,255 395,004 298 Principal payments on long-term
debt (255,777 ) (242,090 ) (440 ) Payments of offering costs (8,916
) — — Capital contribution to Allied Power Management, LLC — 10,000
— Issuance of common stock 59,241 — — Distributions to
non-controlling interest (2,279 ) (2,333 ) — Distributions to
members (686 ) (136,085 ) — Net cash provided by (used in)
financing activities 28,637 (19,304 ) 4,463 Net
(decrease) increase in cash (25,364 ) 31,218 45 Cash, beginning of
period 32,264 1,046 1,001 Cash, end of period
$ 6,900 $ 32,264 $ 1,046
Supplemental
disclosures of cash flow information: Cash paid during the year
for interest $ 22,842 $ 9,747 $ 104 Cash paid during the year for
taxes $ 3,334 $ — $ —
CHARAH SOLUTIONS, INC.
Segment Results and Adjusted
EBITDA
(dollars in thousands unless otherwise
indicated)
Successor Predecessor
For the year ended
December 31, 2018
Period fromJanuary 13,
2017 through December 31, 2017
Period fromJanuary 1,
2017 throughJanuary
12, 2017
Change $ % Revenues:
Environmental Solutions $ 343,105 $ 232,581 $ 7,451 $ 103,073 42.9
% Maintenance and Technical Services 397,357 188,658
1,679 207,020 108.8 % Total revenue 740,462 421,239
9,130 310,093 72.1 %
Cost of sales 642,734 338,908
7,301 296,525 85.6 %
Gross profit:
Environmental Solutions 69,464 64,433 1,412 3,619 5.5 % Maintenance
and Technical Services 28,264 17,898 417 9,949
54.3 % Total gross profit 97,728 82,331 1,829
13,568 16.1 %
Gross margin 13.2% 19.5% 20.0% (6.4)%
N/A
Adjusted EBITDA(1) $ 98,772 $ 76,430 $ (422 ) $
22,764 29.9 %
Adjusted EBITDA margin(1) 13.3% 18.1%
(4.6)% (4.4)% N/A
Successor
Unaudited
Three Months Ended December
31,
Change 2018 2017 $ %
Revenues: Environmental Solutions $ 101,360 $ 57,154
$ 44,205 77.3 % Maintenance and Technical Services 101,848
111,804 (9,956) (8.9) % Total revenue 203,208 168,958
34,249 20.3 %
Cost of sales 181,833 146,005
35,828 24.5 %
Gross profit: Environmental Solutions
15,047 15,209 (163) (1.1) % Maintenance and Technical Services
6,328 7,744 (1,416) (18.3) % Total gross
profit 21,375 22,953 (1,579) (6.9) %
Gross
margin 10.5% 13.6% (3.1)% N/A
Adjusted EBITDA(1)
$ 22,858 $ 20,422 $ 2,436 11.9 %
Adjusted EBITDA
margin(1) 11.2% 12.1% (0.9)% N/A
(1) Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures.
CHARAH SOLUTIONS, INC.
Non-GAAP Reconciliation: Net Income to
Adjusted EBITDA
(dollars in thousands unless otherwise
indicated)
Successor Predecessor
Unaudited
Three Months Ended December
31,
For the Year Ended
December 31, 2018
Period from January 13,
2017 through December 31, 2017
Period from January 1,
2017 through January 12, 2017
2018 2017
Net income (loss) attributable to
CharahSolutions, Inc.
$ 4,468 $ (1,607) $ (8,902) $ 18,316 $ (5,528) Interest expense
5,518 9,814 32,226 14,146 4,181 Income tax expense (benefit) 334 -
(2,427) - - Depreciation and amortization 8,410 6,118 42,308 25,719
763
Elimination of certain non-recurring and
non-operating legal costs and expenses(1)
226 3,206 25,428 8,650 -
Elimination of certain non-recurring
startupcosts(2)
- 2,257 1,480 6,167 - Equity-based compensation 1,678 85 4,127
2,429 - Transaction related expenses and other items 2,223 550
4,532 1,003 162 Adjusted EBITDA $ 22,858 $ 20,422 $ 98,772 $ 76,430
$ (422) Adjusted EBITDA margin(3) 11.2% 12.1% 13.3% 18.1% (4.6)%
(1) Represents non-recurring legal costs
and expenses, which amounts are not representative of those that
wehistorically incur in the ordinary course of our business.
(2) Represents non-recurring start-up
costs associated with the startup of Allied and our nuclear
services offerings,including the setup of financial operations
systems and modules, pre-contract expenses to obtain initial
contracts and thehiring of operational staff. Because these costs
are associated with the initial setup of the Allied business to
initiate theoperations involved in our nuclear services offerings,
these costs are non-recurring in the normal course of our
business.
(3) Adjusted EBITDA margin is a non-GAAP
measure that represents the ratio of Adjusted EBITDA to
totalrevenues. We use Adjusted EBITDA margin to measure the success
of our businesses in managing our cost base andimproving
profitability.
CHARAH SOLUTIONS, INC.
Non-GAAP Reconciliation: Net Income to
Adjusted Earnings and
Adjusted Earnings per Diluted
Share
(dollars in thousands unless otherwise
indicated)
(Unaudited)
Three Months Ended
December 31, 2018
For the Year Ended
December 31, 2018
Net income (loss) attributable to Charah Solutions, Inc. $ 4,468 $
(8,902) Income tax expense (benefit) 334 (2,427) Loss on
extinguishment of debt(1) - 12,451
Elimination of certain non-recurring and
non-operating legal costs andexpenses(2)
226 25,428 Elimination of certain non-recurring startup costs(3) -
1,480 Transaction related expenses and other items 2,223 4,532
Adjusted income before income taxes
attributable to Charah Solutions, Inc.
7,251 32,562 Adjusted income tax expense(4) 1,806 8,105 Adjusted
net income attributable to Charah Solutions, Inc. 5,447 24,458
Weighted average diluted share count 30,282 26,610 Adjusted
earnings per diluted share $ 0.18 $ 0.92 (1)
Represents non-recurring costs associated with our term loan
refinancing.
(2) Represents non-recurring legal costs
and expenses, which amounts are not representative of those thatwe
historically incur in the ordinary course of our business.
(3) Represents non-recurring start-up
costs associated with the startup of Allied and our nuclear
servicesofferings, including the setup of financial operations
systems and modules, pre-contract expenses to obtaininitial
contracts and the hiring of operational staff. Because these costs
are associated with the initial setup ofthe Allied business to
initiate the operations involved in our nuclear services offerings,
these costs are non-recurring in the normal course of our
business.
(4) Represents the statutory tax rate of
24.89%, multiplied by adjusted income before income
taxesattributable to Charah Solutions, Inc.
1 Adjusted net income, Adjusted earnings per diluted share and
Adjusted EBITDA are non-GAAP financial measures and the
reconciliation of each of these to the most comparable GAAP measure
is included in the financial tables accompanying this release.
2 The dollar amount and percentage change information in this
section reflects a comparison of full year 2018 results and the sum
of the results for the period from January 1, 2017 through January
12, 2017 (Charah alone) and the period from January 13, 2017
through December 31, 2017 (Charah and Allied combined).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190327005310/en/
Investor ContactCharah Solutions, Inc.ir@charah.com(502)
815-5466
Media ContactEd Trissel / Kate Clark / Tim RagonesJoele
Frank, Wilkinson Brimmer Katcher(212) 355-4449
Charah Solutions (NYSE:CHRA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Charah Solutions (NYSE:CHRA)
Historical Stock Chart
From Jul 2023 to Jul 2024