Good morning. My name is Denise, and I will be your conference operator today. At this time, I would like to welcome everyone to the Advanced Emissions Solutions Q4 2018 Earnings Conference Call. [Operator Instructions] Thank you. Ryan Coleman, Investor Relations, you may begin your conference.

Thank you, Denise. Good morning, everyone, and thanks for joining us today for our fourth quarter and full year 2018 earnings results call. With me on the call today are Heath Sampson, President and Chief Executive Officer; and Greg Marken, Chief Financial Officer. This conference call is being webcast live in the Investors section of our website, and a downloadable version of today's presentation will be available there as well. A webcast replay will also be available on our site and you can contact the Alpha IR Group for Investor Relations support at 312-445-2870. Let me remind you that the presentation and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements. These risks and uncertainties include, but are not limited to the factors identified on Slide 2 of today's slide presentation and our Form 10-Q for the year ended December 31, 2018, and other filings with the Securities and Exchange Commission. Except as expressly required by securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments or changed circumstances or for any other reason. In addition, it's very important to review the presentation and today's remarks in conjunction with the GAAP references in the financial statements. So with that, I'd like to turn the call over to Heath Sampson. Heath?

Thanks, Ryan, and thanks to everyone for joining us this morning. Let's begin on Slide 3 and review our fourth quarter and full year 2018. Heading into the final quarter of 2018, our focus remain on driving RC cash flow and supporting Tinuum to identify tax equity investors for the remaining idle RC facilities. As previously announced, the progression of these efforts facilitated the closure of the 19th RC facility in October of last year, as well as the 20th in January of this year. Both facilities are units that had previously entered into the engineering and installation phase and are both royalty bearing to the company. The facility leased in January was installed at a coal burning power plant that has historically burned more than 3.5 million tons of coal per year. This incremental tonnage is part of the 12 million tons that we previously identified with expectations to close in 2019. Installation costs to Tinuum are between $4 million and $6 million per facility, and therefore, these costs have highly -- has slightly reduced near-term distributions. However, taking the step has contributed to the improved cadence of discussions and the momentum of the pipeline as we progress into 2019. We continue to believe that these capital expenditures are the needed steps to leasing or selling the remaining units and ultimately increasing RC cash flow to the company between now and the end of 2021. Shortly after announcing our third quarter earnings in November, we announced our intention to acquire Carbon Solutions, a North American leader in powdered activated carbon market or PAC. This was certainly the highlight of fiscal 2018 as we have welcomed Carbon Solutions back to the company and significantly enhanced our suite of products for mercury control. We were in discussions to acquire Carbon Solutions…

Thank you, Heath. Let's start on Slide 6 and review our financial results from the fourth quarter and the entire year. Our total cash position as of December 31, 2018 was $23.8 million, a decrease of roughly 22% from the end of 2017 and $8.1 million lower than our cash balance as of September 30, 2018. The decline was primarily driven by repurchases of outstanding shares, dividends and costs incurred as a result of our acquisition of Carbon Solutions. During the fourth quarter, we utilized roughly $14.2 million to repurchase outstanding shares leaving us $5.8 million remaining under the repurchase program as of the end of the year. And as Heath mentioned, we repurchased 2.4 million shares for a total of $25.3 million throughout 2018 and we will continue to opportunistically reduce our share account. Our current total cash balance includes $5.2 million of restricted cash as shown in the orange box, materially related to the $5 million minimum cash balance as part of the senior term loan. You will notice we have added our current and long-term borrowings to this slide which we will continue to highlight going forward. Our borrowings totaled $74 million which is comprised of our $66 million related to our senior term loan incurred to finance the acquisition, and $8.2 million of capital leases assumed as part of the acquisition. Prior to this reporting period we had no long-term obligations or debt. As stated on our special call in November, this term loan is provided by a leading financial institution and long-time shareholder, and we are grateful for their support. The loan itself carries a term of 3-years and has mandatory amortization requirements. We feel very comfortable with the customary and standard covenance of the loan and given our robust cash flow projections, expect to…

Thanks, Greg. I'd like to take a moment to discuss the refined coal environment. Let's turn to Slide 8 and discuss the refined coal backdrop. As we have discussed over the last few quarters, we continue to see tailwinds around the Tinuum's efforts to grow the additional facilities. These tailwinds are the results of IRS tax credit clarification achieved in early 2018 and increasing clarity on certain provisions within the tax bill which has helped tax equity investor to better understand the true impact of tax reform on our businesses. On the other hand, our biggest challenge to obtaining new tax equity investors remains the public and political stigma of being associated with co-fire power generation. All our current tax equity investors, and more pertinent our prospective investors are risk adverse to the stigma and intolerant to any environmental reputation risk. Tinuum works hard to educate prospective investors to this tax incentive with instrumental enabling the development of mercury control technologies and as a whole, refine for truly health reduced harmful emissions. Turning to Slide 9, you can see the number of invested facilities versus the number awaiting for tax equity investors or waiting to be installed as of December 31, 2018. Please note, that this graphic is as of December 31, 2018, and thus does not include our January closure of the 20th RC facility. So as of today, we have 20 invested facilities and 8 uninvested. To maximize this refined coal opportunity and secure additional investors for the remaining units, Tinuum has proactively installed facilities in preparation for investment, and three are currently in the installation phase. During 2018, Tinuum spent roughly $17 million related to capital expenditures, nearly all of which was engineering and the installation costs. Tinuum and it's members, including us, would certainly not be…

[Operator Instructions] Your first question comes from Amit Dayal with H.C. Wainwright

Congratulations on all the progress being made. Just in regards to Carbon Solutions could you comment on how you expect to sort of recognize this $60 million to $70 million in revenues over the four quarters? And what are the growth drivers beyond the $60 million -$70 million levels that could come into play here?

We'll get -- we're 100 days into this acquisition, I'm really excited about everything we're doing and really want to give more guidance on our revenue and margin expectations and we'll do that here in the second quarter. But just to touch on what you're saying because I'm confident of what we have and even more excited about this opportunity. The revenue that we have from Carbon Solutions is recurring, a good chunk of it, 80% plus is on recurring contracts right now. So the growth that we expect to see out of there is combining all our products together, whether that's PAC or current emissions control technology and providing those full set of solutions to the market place. So a lot of them will be to gain market share from competitors and we can do that by competing on price because we're the lowest cost provider for commodity products. In addition to that, also higher service in premium products because we have all these great assets combined and a great R&D team and a great sales team we're able to actually win on gaining market share within the premium products. And as I mentioned as well, many utilities are going through a big change, so their number one priority is of course to be in compliance. And they are looking for solutions that are better and cheaper and in many cases these better products allow them to actually lower the better operating costs, so they are looking to us to help drive their compliance needs, as well as reducing costs. So we will gain market share from competitors competing on price, and then also competing with additional premium products and services. In addition of that, as refined coal begins to roll off, starting really in 2019 there is a…

And then in terms of the remaining RC facilities, could you remind us how many are now not deployed?

Yes, we have 20 installed and 8 -- 20 operating and invested, and then we have 8 that are waiting to be installed and/or waiting for investors.

Do you see [indiscernible] some of these to come into play in terms of deployment?

Yes, we do, so it's interesting. So the Tinuum team did an incredible job, especially over these last half of 2018 when these large corporations got understanding of their tax position and were comfortable with refined coal market. We saw many participants that were completely out of the market come back in. So that's great for the industry as a whole. So really these tailwinds have started for these last couple of quarters, and we are in a lot of discussions and expect more closures to happen. As we stated, we closed on one, it's about 3.5 million tons and we see it aligned to get to 12 million within 2019. We are in various discussions beyond that but we're early on, so we're comfortable with that 12 million commitment that we have. It's tough to nail down timing, and it's tough to say they will ever close until they close, but again, with where the market is and the great job that the Tinuum team has, and our understanding of where we are in those discussions, we are comfortable that we're going to have more closures here in 2019.

Your next question comes from Sameer Joshi with H.C. Wainwright.

Just following up on some of Amit's questions. Since there is no prepayment penalty of the loan that you have, would you be prioritizing the loan payment as compared to buying back share or issuing dividends?

Yes, we will make sure that we're strategic in the way we're looking at. We're going to evaluate -- the dividend is obviously a main priority for us. And then, the debt repayment and additional share repurchases, we'll evaluate that when we have the cash to do so and look to pay that down aggressively but we believe we can do all three with the cash flow that we have coming.

And I think at the time of announcement of the acquisition you had said that there is Red River plant that has under-utilized capacity for Carbon Solutions. When do you expect to utilize that and are there any additional capital expenditures or expected to be incurred for that?

Yes. So that is the number one priority is to sellout that plant. It's exciting that we were able to acquire an asset that has a base of over 400 million and has capacity. So it's really a priority for us to fill that plant up because as you could imagine, the incremental margins on that are great, so filling is up, it goes straight to the bottom-line. And that range of incremental margin anywhere from 60% to 75%, so it is a top priority. When we get it filled up, it's going to be a priority for us this year and the following years and we'll hopefully give you a little more guidance into that feed and utilization rate come second quarter. To your second question, and this is really important, especially for the near-term. The assets that we have now, the markets that we are going after in mercury and municipal water do not take any more investments. Obviously, we have normal CapEx and recurring operating costs but we do not need to make any major improvements to go after our current markets that we're in.

And just to one last one; there would be some acquisition related costs -- some consolidation, when do you expect that to run through the system and have like clean steady state going forward?

We would expect the vast majority of that would roll through in the current year in 2019, and we're working hard on that integration plan. Obviously, there is a lot of aspects to that but our belief is that we would materially capture all those costs within the current year.

In addition to that as Greg mentioned earlier, so we're incurring all those costs and we have achieved all our related synergy that we expected in the business case as well. So it's a great work by the team. And again, through 2019 we don't expect any more beyond 2019.

There are no further questions. At this time, I will turn the call back over to Heath Sampson.

Great. Well, thank you everyone for your time today and your continued support. I look forward to updating you on our next quarter. Have a great day, everyone.

This concludes today's conference call. You may now disconnect.