Good morning. My name is Mariama, and I will be your conference operator today. At this time, I would like to welcome everyone to the Advanced Emissions Solutions Q2 Earnings Conference Call. [Operator Instructions]. Thank you. I would now like to turn the call over to Ryan Coleman, Investor Relations; you may begin your conference.

Thank you, Mariama. Good morning, everyone, and thank you for joining us this morning for our second quarter 2019 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 is 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 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, those factors identified on Slide 2 of today's slide presentation, in our Form 10-Q for the quarter ended June 30, 2019, and other filings with the Securities and Exchange Commission.Except as expressly required by securities law, the company undertakes no obligation to update those factors or any other 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'll 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 second quarter. Our focus during the second quarter was unchanged as we continued to assist Tinuum Group and securing third party tax equity investors for the remaining RC facility, and integrating our acquired assets with their existing solution control platform. As such and as previously announced in May, Tinuum was able to secure a tax equity investor for an additional RC facility. This marks the second closure during 2019 and brings the total number of invested facilities to 21.At the end of last year, we outlined a path to adding 12 million incremental tons in 2019 and so far we have added over half of that goal or 6.5 million tons. Based on current discussions with prospective investors, we maintain a line-of-sight towards adding the remaining 5.5 million to 6 million tons this month. We also have lined aside to additional closures in 2019.Additionally, equity earnings from Tinuum were significantly higher than one year ago as three facilities have been invested since the second quarter of last year. In our PGI segment we continue to be very pleased with the integration of the Carbon Solutions team and product as well as the execution and performance of the assets.Retention rates with existing customers remain at 89% and the feedback we are receiving from customers continue to be encouraging. The combination of our legacy technology, knowhow and industry relationships combined with our new activated carbon solutions are positioning us at the platform of choice.In fact, during the second quarter, we signed a large industrial customer that Carbon Solutions had lost prior to the acquisition. We have made investments in technology and team and had even begun to see traction with adjacent market penetration.The…

Thanks Heath. Let’s start on Slide 5 for our second quarter financial review. Earnings from equity method investments were sort of $20.9 million compared to $15.9 million in the prior year. The significant increase was driven by three additional invested RC facilities. Since the second quarter of 2018, with total equity earnings of $42.6 million compared to $28.1 million on a full year basis. Also contributing to the increase was Tinuum adoption of the new revenue and lease accounting rules that we mentioned on the first quarter call.We recorded a cumulative adjustment of $28.8 million related to the company’s percentage of Tinuum’s group cumulative account [ph] adjustment that increased Tinuum’s retained earnings. But those amounts as part of that adjustment will not impact our future earnings.We no longer have cumulative cash distributions in excess of our cumulative pro rata share of Tinuum Groups net income. Therefore we recognize equity earnings by recording our pro rata share of Tinuum’s net income rather than based upon cash distributions in the second quarter.I want you also to reiterate that this adjustment does not affect the timing of our total projected future cash flows for out RC segment from Tinuum. Second quarter consolidated revenue of $15.6 million was also significantly higher than $4.3 million one year ago, driven by the contribution from Carbon Solutions consumable and additional loyalty bearing RC facilities.Within that consolidated revenue second quarter consumables totaled $11.4 million. This was significantly higher than the prior year at $700,000 again driven by the Carbon Solutions contribution.Second quarter royalty earnings were higher year-over-year totaling $4.2 million versus $3.5 million in 2018. Royalty earnings in the first half of 2019 totaled $8.4 million compared to $6.8 million in the comparable period in 2018. This increase is a result of the additional royalty bearing facilities invested.…

Thank you, Greg. I’d like to take a moment to discuss our future outlook. Turning to slide 7 you can see our usual representation of the number of invested facilities versus the number waiting for our tax equity investor waiting to be installed.As of today, we have 21 invested facilities and seven uninvested. To maximize this refined coal opportunity and secure additional investors for the remaining units, Tinuum has been proactively installing facilities in preparation for investments, and two are currently in the installation phase.During 2018, Tinuum spent roughly $17 million related to capital expenditures, nearly all of which was engineering and installation costs.Tinuum and its members, including us, would certainly not be incurring these costs if we were not confident that they would translate into future invested RC facilities. We expect 2019 to be similar from a CapEx perspective.We have active, ongoing conversations with potential tax equity investors for a handful of facilities. We expect to add an additional $5.5 million to $6 million in annual times to Tinuum total this month, fulfilling our commitment to adding incremental tonnage of approximately $12 million on an annual run rate basis.Let's turn to Slide 9 for an update of our expected future RC cash flows. As of June 30, 2019, and inclusive of 21 refined coal facilities invested with third party investors, we are updating our expected net RC cash flows to range between $175 million and $200 million to ADES through the end of 2021. This has been our number one priority and our commitment to leasing or selling the idle units is unaffected by our integration and scaling of our PGI segment.Also recall, that the refined coal business is run by an experienced management team with involvement from its owners including us for oversight and strategic guidance. This structure…

[Operator Instructions] Your first question comes from Sameer Joshi with H.C. Wainwright. Your line is open.

Good morning, Greg. Thanks for taking my call -- questions. Just a clarification on the write-up versus the commentary, in the write-up you mentioned plant turnaround. Is that the same as the plant maintenance, the 2 to 3-week plant maintenance you mentioned?

Yes it's synonymous in the industry that you’ve turned around. And I just clarify the disclosures, so both are synonymous.

Okay. Got it. Thanks. On the RC front or rather on Tinuum front, has there been any change in the cost structure of -- in terms of operating costs and distributions? Also, you mentioned there was CapEx of $17 million last year and do you expect similar levels this year? What portion of that CapEx has already been spent?

So, yes, that's Greg -- for the $17 million -- yes, so it's going to be consistent with last year because of the facilities that we have in place. Greg is flipping through that. What was the -- what, was the first part of your question again?

Yes. The other question was about just the cross -- operating cost structure there. Are there any costs that are different than say a year ago?

So on the on the first part, there's no -- no material change to their cost structure and what they're doing. And then the second part of your question, related to CapEx. It's a little over $9 million has already been spent on a year-to-date basis and that's included in the liquidity disclosure within the 10-Q as well.

Right. And so they're -- in conjunction with that you also mentioned that an additional facility will be like you will reach 12 million ton this month. So that takes into account this as well?

It does.

Okay.

That CapEx for something that's going to close this month has already been incurred. That's within that 9 million.

Right. Right, understood. And then on the EBITDA front towards the end of your presentation, you mentioned around $5 million to $6 million EBITDA from carbon solutions. Was that -- was this at the time of acquisition or was this the annualized first year expectation for you?

That was at the time of the acquisition. You know the market was going through the downturn and all those things. That's where they were performing.

And so what is the target for this year, or it has not been disclosed?

Yes, we’re not disclosing what the target is going to be this year, mainly because of the refined coal business trying to get the refined coal business predicted for 2019 is challenging such large dollar amounts, and the timing really matters, coupled that with what we're seeing in the business, it didn't make sense to give that that broader kind of 2019 guidance. We think it would be unproductive. We can -- we as you see we still give the cash forecast for Tinuum. I mean, we are we still do that. But the broader market I think it makes sense to really understand the longer term strategy, and couple that with the guidance.So that's why we've decided not to kind of give some type 19 guidance. We didn't think it was productive right now. But like I said ago, we set up the cost with the asset in the acquisition and our ability to execute I feel the same if not better than when we made the acquisition. So as we get through that bumpy time to do with coal dispatch, we look forward to coming up the latter part of this year and especially in the 2020 to be well positioned like we said when we initially made this acquisition.

Understood. And then the last one, sort of a complex question or compound question. Looking forward at the industries that you targeting -- or markets that you're targeting, the broader auto market and international mercury controlled markets. Can you give us an idea of the size of these markets, and what is your expected share of that market? And what is the timeline you're targeting to achieve that?

Yes. So the first the markets that we're looking at specifically International and the municipal water market, why we are in -- excited about those? Because our current capabilities and our current products can service those markets. So that makes sense to go into those places first.The international side, it's primarily in Europe. And those are just beginning. They actually don't have to start being in compliance till 2021. So we are -- we're pursuing what we're going to be there. That market is fairly broad. It's about a third of what the U.S. market is from a Mercury control perspective, but that's continuing to mature. So it's significant and it would be meaningful as we move through the next number of months and quarters, we'll get tighter and what we think the expectation is there. But it is significant and it will will drive value if we can get into that market.The water market specifically, the municipal water market you know depends how you segment it. We've disclosed in the past that it's around £200 million to £300 million per year. Our segment is smaller than that, and that's the segment we are attacking. So our obviously international we don't have any volume.Our Mercury volume, I mean our water market is really low as well. So we will see strong growth rates in both of those markets as they begin to mature. As we get into them, and we see success, we'll give more updates on what the size and the opportunity for us to get into them are. The purpose of us talking about them is because there are areas that we haven't looked at, and our current capabilities can get into those.So we wanted to make sure we are transparent but there is broader opportunity. And again, we'll update on what the what the size, and our addressable component are going to be in later quarters.

Understood. So it is a mid-to-longer term target market.

Yes, it's -- there's some-there's near-term right now in the municipal side. We're selling into that and we are winning contracts within that. But we when -- so and we expect this year to be good. But really, this is new for us. So I'd like to articulate, sometime when we -- when we can say OK here's what our revenue is now and here's what the future is going to be. So we just need some time to make sure we can execute and then provide a key tight guidelines for what we think the expectations are further. So it's not mid or even long-term. I mean, it's for water, it's happening today.

What's happened. Understood. I know, I said it was the last question, but just one more clarification. In addition to the 12 million target that you will achieve this month, are there any, should we expect additional installs or deployments over the next two quarters?

Yes. We're -- in and I'm going to sound like a broken record but I feel really good about additional closures. Like I said in the script, the when and the timing with refined coal we're -- unless it's really tight, like we -- like we were just announcing that we feel good about one that's going to close this month, for us to really get tight on when the timing is going to be and our conviction around it. We'll just update you when we get close. But we are spending money. We have a lot of discussions. So we feel good about the prospect of additional closures in 2019. But we'll give an update on timing as we as we get closer.

Great. Thanks a lot. Thanks for taking my…

Thank you.

There are no further questions at this time. I will now turn the call back over to Heath for closing remarks.

Well thanks to everybody for your time today. We really appreciate you joining and we look forward to updating you next quarter. Take care.

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