Greetings, and welcome to ADA-ES Reports Fourth Quarter and Full Year 2012 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Thomas Mei of The Equity Group. Thank you. Mr. Mei, you may begin.

Good morning, everyone. This conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and 27A of the Securities Act of 1933, which provide a Safe Harbor for such statements in certain circumstances. These statements are identified by words such as believe, will, hope, expect, anticipate, intend and plan, the negative expressions of these words or words of similar meaning. Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors, including factors discussed in ADA-ES filings with the U.S. Securities and Exchange Commission, with particular emphasis on the section entitled Risk Factors in ADA-ES's Form 10-K. Listeners are cautioned not to place undue reliance on the forward-looking statement and to carefully examine the information ADA-ES discloses publicly in its filings with the Securities and Exchange Commission or otherwise before deciding to invest in ADA-ES securities. The forward-looking statements made during this conference call are presented as of today's date, and ADA-ES disclaims any duty to update them unless otherwise required by law to do so. A recording of this call can be found in the Investor Resources section of our website, www.adaes.com. Now I would like to turn the call over to Graham Mattison, Vice President of Investor Relations of ADA-ES.

Good morning, everyone, and thank you for joining us for the ADA Fourth Quarter and Year End Conference Call. Earlier this morning we issued our earnings release and also slides related to our prepared comments. A copy of the release and the slides are available on the Investor section of our website at adaes.com. Joining us from ADA-ES are Mark McKinnies, Senior Vice President and CFO, who will discuss our 2012 performance and financial results; and Dr. Michael Durham, President and CEO, who will provide an update on the recent corporate developments and our future plans. We will then open up the call for questions, and the operator will explain the process for asking questions at that time. Before I turn the call over, I need to note that our discussion today will include non-GAAP financial measures, all of which are reconciled with GAAP numbers in the exhibits accompanying our press release. In addition, some of our comments will include forward-looking statements. Please keep in mind, actual results could differ materially from those projected in any of our forward-looking statements. With that, I will turn it over to Mark.

Thanks, Graham, and good morning, everyone. Beginning with Slide #3, we provide some of the 2012 highlights including the finalization of the Mercury and Air Toxics Standard, or MATS rule, leasing 2 additional refined coal RC facilities that generated 16.4 million in RC tax credits for ADA that can be used to offset future taxes; the BCSI asset acquisition made in the third quarter of 2012 to expand our capabilities in the emission control market; fleet-wide award for both Activated Carbon Injection, ACI, and Dry Sorbent Injection, DSI, systems; and continued work on our CO2 capture contract. Turning to Slide 4, we highlight our RC results, which primarily consist of the consolidation of Clean Coal Solutions, LLC, or Clean Coal, our joint venture with NexGen Resources and an affiliate of the Goldman Sachs Group. During 2012, we had 8 facilities producing RC, 4 of which were leased to third-party RC investors and 4 of which were retained and operated by Clean Coal for its own account. Those operated by Clean Coal generated tax credits, which will be used to offset future tax expense. As stated in prior calls, when Clean Coal operates an RC facility for its own use, it records the purchase and sale of coal at approximately $20 to $40 per ton, incurs operating expenses of approximately $3 per ton for the coal treated and generates approximately $7.50 per ton in tax benefits. When an RC facility is leased or sold to an investor, Clean Coal recognizes ongoing rental revenues and receives ongoing payments from the RC investor but does not incur the coal purchase cost or sales revenues or the related operating costs. In the fourth quarter, the 8 operating RC facilities produced a total of 4.6 million tons, up from 1.1 million tons in the fourth…

Thank you, Mark. Let me start by discussing our specific business segments, beginning with our commercial and Emissions Control technologies. The Mercury and Air Toxics Standard, or MATS, was made final last April, which requires over 1,200 existing and new coal power plants to reduce emissions of mercury and other hazardous air pollutants by April of 2015. MATS is creating a significant market for the low CapEx technologies that ADA provides. Our Dry Sorbent Injection Systems, or DSI, reduce acid gases, and we are offering several different low-cost mercury control technologies capable of achieving the MATS mercury limit. We're expecting MATS to generate a market opportunity in excess of $1 billion for ACI and DSI systems, and we hope to maintain a combined market share of 35%. This would generate over $300 million in revenues for ADA over the next 3 years. I'd like to refer to Slides 10 and 11 to show that MATS is creating a significant increase in ACI and DSI procurement activities, point out that ADA is very active in response to this market. In the past 6 months, ADA has announced awards for DSI and ACI systems with a potential total value of over $50 million. These wins include a fleet-wide contract for ACI systems from one utility and a fleet-wide contract for DSI systems for another. Last week, we announced the contracts by ACI and DSI systems to a large air pollution control company or a power company. Of the dozen or so companies bidding on either ACI systems or DSI systems, we believe we are one of only 2 that can provide both components. We feel that this is a strategic advantage because when these 2 pieces of equipment are used at a plant, they must work together efficiently in order to achieve…

[Operator Instructions] Our first question comes from the line of Ben Kallo with Robert W. Baird. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: I know you went over this on Slide 13, but can you just give us kind of a rough estimate of what your cash will be ending this quarter Q1?

Yes. Ben, I don't think I have it. Some of that is going to depend on these other activities at Clean Coal where we're -- have demonstrations planned for at least the PC technologies, so we're advancing on that. But we would expect that -- to improve over what was shown at the year end. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Okay. But you have a 20 million inflow right now, right?

That inflow came to the joint venture, and so there was -- most of that was -- some of that was used to repay the existing credit lines there. And these deposit amounts -- some deposit amounts that were -- Goldman Sachs had made, their affiliate had made for reserving a couple of units that we also had repaid to them. So that was taking care of some liabilities for those impacts, and the working capital was kind of 0 on those as current liability amounts. And -- but there will be an improvement in the first quarter over what was shown at year end. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Great. And then have you guys changed your method of installing, running the units before you get everything lined up as far as monetization goes? Or are you guys still -- are you going to start running units before you get all those reductions there [ph] ?

Our intention is that every unit we are moving forward on is one that will have a third-party investor because we're well ahead on the tax credit. So we won't be moving forward on anyone that we intend to keep ourselves over the next year or so. But that being said, we're finding that maybe the fastest way to get these going is to go ahead and do the documents ourselves and get that negotiated with the utilities so that the third-party investor could then step into that deal. So what you may see is that on some of these, we may operate them for a month or so, once we got that transaction in and we're finalizing with RC, but they will not be done with the intent to keep them in the long run. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then as far as your market share, you always mentioned around 30% -- 30%, 35% market share for the ACI units and DSI units. Can you kind of give us an update, because you've had several wins here, on where you see that right now and maybe who are your biggest competitors -- are the same people that we saw before when there were state regulations?

Well, the hard part is to document the market share because there's no denominator out there. There's no information. In the state program, we were kind of all working together to provide information through, for example, the industry clean air companies, to support the market activity because as they were looking at the federal regulation, that became a critical item of whether there was commercial mercury control technology. That is not occurring now. So we don't have a good number on wins or losses. All we know are what our bidding activity is and what we expect from what we're seeing. And so that's why we're just reporting on a basis of what we've won, what we've bid, what we still expect to be out there. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Now you brought up the topic about bromine being corrosive. Now that seems to go against you guys selling ACI units. Can you just rectify that for me?

Well, not necessarily because we are seeing alternatives. The ACI is always going to be the standard backup. So even when we're selling our Enhanced Coal, we see that as being very complementary to the ACI, that they'll want the ACI equipment, but we're providing an alternative to that. So the ACI is a standard. The use of bromine in there is starting to experience some problems, and having a competitor, something that competes with bromine, we think is going to be very favorable but is not expected to impact our ACI sales.

Our next question comes from the line of Sanjay Shrestha with Lazard Capital Markets.

A couple of questions. First, a follow-up on what Ben asked. So how do we think about actually your cash balance not so much by the end of each given quarter but by the end of this year? What should that cash position be?

We -- Sanjay, we would expect to see it growing significantly. Now that -- what was causing a use of the cash over this last year was that as we were operating these facilities, that some larger ones for our own account, we had those continuing operating costs. Now the announcements here at the end of February or beginning of March where we brought in an RC investor on that one significant facility and the expectation for the other one that we're operating is also a large facility here in the very near future. We'll defray those costs, and as Mike has pointed out and we point out in the slides, there is that significant turn that happens with coal going from -- costing us roughly $3 million or $3 per ton to generating $3.50 to $4 million in revenues per ton. And that's at the joint venture level. So those cash flows come into the joint venture, and I know it's their plan other than the internal use in -- where we've got some use needed to be putting the remaining 20 facilities into operation here, so there's some use for those, and that would be the primary use of the cash flows there. But as Mike pointed out, those will all be in anticipation of having an RC investor there that we can turn those into revenue generation fairly quickly. But besides that, the cash will be there accumulating and being distributed to the owners of the joint venture. So we expect it to be increasing throughout the year significantly.

Got it. So a follow-up then, guys. So one of the things I just wanted to confirm here, right, given a lot of moving parts, at the end of the day, so a cash -- that we still got to model the P&L on a short-term basis. So just to be clear now so you're going to have a big flip from loss to profit in Q2. And when we think about sort of the operating profit and the EPS in 2014, even if you don't let's say close any other facilities, we can just use that number in Q2, annualize that plus the 4 that's already been monetized with the RC investor -- is really how we should thinking about the operating profit for ADA after sort of subtracting out the equity contribution of joint venture, right?

Well, we think that, that certainly provides a base. We're expecting to add further facilities throughout the year, so -- but certainly, if the additional RC investment that we're expecting here to occur soon, if that would occur at the very beginning of the quarter, then you would -- it would -- you would look at the second quarter results, and those would provide a base for the balance of the year, on which we would expect though to grow. Now in addition to the RC amounts, we're seeing growth in the emission control revenues, as well as we've indicated this very significant increase in our backlog there. And those will be -- as we complete on those contracts, we'll see additional significant improvement in revenues in that segment as well.

Yes. That was actually going to be my follow-up question, but 2 more questions, guys, if I may. So one, right, with this seems like more clarity from the IRS and new investor coming into the mix. So when you look at like the folks that you are now having discussions with the RC monetization, right, from the investor standpoint. How much of that pool has grown and given the diversity away from some of the folks you've just worked in the past, right? So one, if you can talk about that as to how much you estimated things simpler relatively for speaking for the monetizer to come in and say, "It makes sense. I can move forward now." And then I have one more follow-up after that.

Well, Sanjay, I don't think it's created anybody new, but it -- the interest has gone from warm to hot. So it's people that were on the sidelines with a lot of interest. They told us they wanted to monetize some of the financial investor in the deal. And now that the clarity is coming out, that's going to increase the likelihood that those people will now come to the table with acceptable structures.

And therefore, your comments about a bunch of things happening in the second quarter et cetera, right?

Exactly.

Okay. So one final question then, guys. So on the emission controls side given this $25 million in backlog and what seems to be a very strong obviously bidding activity, how should we model that business? I mean, previously we're sort of thinking $50 million a year at least what looks like with that bidding activity, that number probably could be bigger than that, if margin is slightly higher than what, quite candidly, I would have thought at 25% directed to some licensing and all that. How should we be modeling that business for '13 and '14?

Well, Sanjay, that will continue to report backlog in -- on revenues there. What we've found is that we can't control the timing of the awards by the utilities. They are on their own schedule in that -- those procurement activities. So our -- although we -- as Mike has pointed out, we believe in our expectation is to maintain this overall market share of about 1/3 there going out, and we have an idea and believe that we can reasonably project the overall market there. The timing is still somewhat unknown. So the best indication of that will be as we talk about the backlog, and you'll see the revenue numbers there. From a margin standpoint, that we expect gross margins in the EC segment to run between this 20% and 25% level and to continue on there, there's serious competition out there as we come to the table with 2 or 3 other people that are competing very hard in this market as well. So the margins are -- we'd like to see them higher, but this is what this industry does when they're out in the procurement. They work those things down. So we're expecting that 20%, 25% margin going forward for the EC segment.

Our next question comes from the line of Steve Shaw with Sidoti & Company. Steve Shaw - Sidoti & Company, LLC: Can you provide some color on what you said for coal purchasing in the coming year and how it might affect the gross margin?

As Mark said, that's a huge denominator, and that's why we're trying to provide some reporting of non-GAAP, just so you can subtract that out. So that'll always be an issue whenever we self-monetize. But for example, as we've moved 2 of these units from operating ourselves and they were 7.5 million, say, in tons a year and look at paying an average cost of $30 to $40 a ton, that's a huge number in coal sales. Well, after the first quarter, we won't have those sales anymore. So that's the reason we think we will -- we need to report the non-GAAP just to pull that out of there because there you'll see the huge number of coal sales in the first quarter that goes away in the second quarter. We may run a couple new units for a month or so in the next quarter and also -- and it comes on again. So it just becomes a meaningless number to look at from a GAAP perspective. So it's just one of the characteristics of these self-monetizing in which we're operating them ourselves and picking on a $3 expense to turn that into a $7.50 impact benefit. But it carries with it this really high cost, the revenue of the sales coal and the cost of the buying of the coal.

[Operator Instructions] Our next question is coming from the line of Kevin McKenna with Stifel.

A couple of things. First just to kind of clear up on the cash and cash flow, when you put in the first unit, you start at 0, and when you're doing it for your own account, it's negative. Well, once you get up to 21 million tons, it's a lot easier to run something for your own account? Isn't that right?

Yes, certainly the case, Kevin, is that it's not soaking up precious cash resources there is that -- and that we have, then, cash coming in from the ones that are leased and are easily able to operate the ones that -- for our own account. The ones that we intend to operate and are planned, apart from this putting them into a leasing structure where we might do that for a month or 2, those are relatively small and then probably around 1 million tons for 2013, a couple of the smaller plants. And those are ones that we would expect to retain through the year for our own account. The larger facilities are really the ones that we're focused on in our recent sales transactions where there might be some operation here for a month or 2 as Mike's pointed out when we get operating permits and other matters done ahead of an RC investor coming into the transaction.

And from Slide 14, you have 8 units in full time operation. The 8 facilities that you have committed, are those all cyclones? Or are some of those the circulating fluidized bed boilers?

Two of them are CFBs.

Okay. So 6 and 2. And then the final 12, are those all pulverized coal boilers?

Well, we'll find out here. That's our goal because they're much larger. We're going through testing as I mentioned. We've got 4 tests scheduled over the next couple of months, and the purpose of those tests are -- we've already proven that the technology works. The next key step in bringing technology to the power industry is make sure they don't do anything bad. So we'll be testing them at different power plants with different characteristics and evaluating that, and if they're successful, I would hope that all of them would be on these boilers.

Okay. And then, I guess, my questioning on that was the guidance that you've given in the past for segment income would have to come up significantly if you're able to put these into PC boilers. Have you included anything in guidance for PC boilers before?

No, we haven't, and so you're right. The total -- the numbers we have produced before were based on about at 16 million tons for all 28 units, of which the last 12 would have been more like 1 million tons apiece. So now we're looking at potential for that to be higher. But the other dynamic is we also don't have a firm grip on what the final chemical cost will be. So we think it may be a little bit higher, but the volumes will be a little higher, and so after these next forecasts and additional work, we'll have a better feel on how much additional money we expect from all 28 units with the higher volumes we're expecting from the PC units.

And just the last thing is not having to commit those last 12 units to 1-million-ton facilities, you should have much higher cash flow from the cyclone boiler business, is that correct? Or better stated, the larger cyclones create better margins than the smaller cyclones.

Oh, absolutely. There is the cost of the chemical, and obviously, all the economics are proportional to the amount of RC produced. But there is a fixed element of it, and that's it takes about the same number of people to operate these whether it's a 5 million ton per year power plant or a 1 million ton per year power plant. So the larger units have better economics than the smaller ones.

So then just to summarize, if this is successful in pulverized coal, the margins would come up -- for the cyclones, would come up for the total as well. And I guess, one last question, could we expect margins and revenues to be in the range of what they were for the circulating fluidized bed boiler agreement that you just had?

That's going to depend on what we find out about the final chemical costs. That could swing it.

Our next question comes from the line of Ryan Alstead with RBC Wealth Management.

Just curious to know your outlook on the regulatory environment for the coal industry.

Well, the -- we feel that the math is it's pretty solid. In fact, you're seeing it in the response that the rule passed April, and already, we think about 40% of the business to meet MATS has already been let out for bid. So everybody is moving forward on that. I think the general feeling, it was reasonable. EPA has made one correction to the MATS rule that we are totally in support of, and that's a increase in the limit for new power plants. So that we thought the mercury level they had achieved -- that they had originally set in the rule was just not achievable, and therefore it was preventing new power plants from being built. And so we worked to get that changed, and our understanding is EPA has sent that to the White House, and it should be released here in the next few weeks. So the only correction that we've seen to MATS has been something that we think is kind of positive. So we think that is all very, very solid. The next regulation coming out will be the CSAPR or whatever the new name for the cross-states rule is. But that is probably another 3 to 4 years out. So that is actually also kind of good news for us because that was going to lead to a lot of scrubbers, and those scrubbers are very expensive, and that might have led to some shutdowns. So a number of plants that were anticipating shutdown because of that rule are going to continue to operate through 2018 or so.

Our next question is a follow-up from Kevin McKenna with Stifel.

Just one quick question. On the changes in regulations, do you expect that, that will favor the subbituminous coal, the Western coals that you work with versus the Eastern coals?

For a number of reasons, the Western coals have mercury that we think is easier to capture. On the -- the acid gases, they have significantly lower chlorine levels and sulfur levels that lead to sulfuric acid and hydrochloric acid, be easier to achieve. And they're also cheaper to mine, and so they can compete better now that coal is in international marketing. So as we look at what's happening in the coal industry, we see plants that burn the Eastern coals more at risk than those that burn the Western coals.

There are no further questions at this time. I would now like to turn the floor back over to management for closing remarks.

I would just like to thank everyone for joining us today and your continued interest and investment in ADA.