Ladies and gentlemen, thank you for standing by, and welcome to the Advanced Emissions Solutions Q4 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]I would now like to hand the conference over to your speaker today, Ryan Coleman, Investor Relations. Thank you. Please go ahead.

Thank you, Chris. Good morning, everyone, and thanks for joining us today for our fourth quarter and full year 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 within the Investor 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 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, those factors identified on Slide 2 of today's slide presentation, in our Form 10-K for the year ended December 31, 2019 and other filings with the Securities and Exchange Commission. Except as expressly required by the 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 is 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. Before we get started, I want to empathize with everyone that is trying to manage through this COVID-19 pandemic. Although health and safety are most pressing to everyone, the financial market and many of our shareholders are also under extreme pressure to manage their portfolios. I will touch on how we think about COVID-19 and our operations later in the call.Let’s now begin on Slide 3 and review our fourth quarter and year. Within our Refined Coal segment, we saw record distributions for Tinuum for the full-year that were 40% higher than 2018. The increase was driven by four additional operating facilities that were added in 2019, which brought roughly $15 million incremental tons during the year. All four of these facilities were also royalty bearing, which drove the 12% increase in royalties, compared to 2018.Despite the full year increases, both distributions and royalties were lower in the fourth quarter. The fourth quarter decline was driven by significant decreases in coal-fired power generation, which resulted in restructured lease contracts between Tinuum and its largest customer and the closure of two utilities that Tinuum had refined coal facilities at, all of it – all of which we discussed on the third quarter call. That being said, we are not done adding refined coal volume in 2020.At the same time, we also expect additional headwinds due to poor coal-fired power generation. As such, it is not prudent to announce how much net incremental volume we expect in 2020. We will update incremental volume expectations as each deal happens.In our PGI segment, we made significant strategic and commercial progress throughout the year, but we were disappointed with the financial performance of these assets in 2019, almost exclusively due to poor coal-fired power…

Thanks, Heath. Let's start on Slide 4 for our financial review. Earnings from equity method investments totaled $12 million in 2019, compared to $16 million in the fourth quarter of last year, while full-year earnings were significantly higher at $69 million, compared to $54 million in 2018.As Heath mentioned, the full-year increase was driven by the four incremental refined coal facilities invested with third parties in 2019 compared to 2018, partially offset by lower net lease payments and equity earnings from Tinuum beginning in the period ended September 30, 2019, as well as the unexpected closure of two utilities in the third quarter where Tinuum had operating facilities.Also on January 1 of 2019, Tinuum adopted the new revenue and lease accounting rules. We recorded a cumulative adjustment of $27.4 million related to our company's percentage of Tinuum Group's cumulative effect adjustment that increased our retained earnings, but those amounts will now not impact future earnings.ADES no longer has cumulative cash distributions in excess of our cumulative pro rata share of Tinuum Group’s net income. Therefore, the company recognized equity earnings by recording our pro rata share of Tinuum Group’s net income, rather than based on cash distributions for the year ended December 31, 2019.However, in 2020, we expect that our GAAP equity earnings will be significantly less than 2019, due to Tinuum having recognized two refined coal facility transactions as point in time sales during 2019. In addition to the impacts of Tinuum’s change in depreciable lives for refined coal facilities, the closure of two utilities in the third quarter where Tinuum had operating facilities and lower net lease payments due from their largest customer.However, this does not affect the timing, or the total projected future cash flows from our RC segment, and we expect to see cash distribution significantly…

Thanks, Greg. I'd like to take a moment to discuss our outlook before taking questions.Turning to Slide 5, you can see our expected future RC cash flows. Based on the 20 invested facilities as of year-end and even after our normal quarterly distributions, we are reaffirming our expectation of $150 million to $175 million of after-tax cash flows to ADES through the end of 2021.As a reminder, these – this 20 facility number was updated in September of last year, due to the unexpected closure of two utilities during the third quarter sites at which Tinuum had two invested RC facilities.The reduction also included the two facilities that were placed in service in 2009, and thus, met their 10-year expiration date during the fourth quarter. Only one of these two facilities were invested and operated. And given that these expirations were also expected, they have always been included in our forward cash flow guidance.As noted earlier, we also believe that we have line of sight into adding incremental volume in 2020 and look forward to disclosing them as they occur. While we will continue to engage existing and potential tax equity partners for incremental investment in refined coal, it's important that we also plan for the refined coal cessation.We have just two years remaining for a refined coal business, with some incremental growth expected. As such, Tinuum will look to save money, while ensuring a consistently produce refined coal. Additionally, we will also respond to the quickly changing coal-fired power generation decline by reducing cash costs. We will target at least $5 million in reductions on an annualized basis, while optimizing our products and manufacturing process. We need to do both lower costs and diversify our product offerings.Turning to Slide 6, we outlined some of what we see as the…

Thank you. [Operator Instructions] The first question is Amit Dayal with H. C. Wainwright. Your line is open.

Thank you. Good morning, everyone.

Good morning.

Heath, just to – good morning. Just to begin with, are there any other core plant closures expected in your projections?

No, they're not. The two in 2019, specifically, one was surprised, but based on what we're seeing in the states that these – our facilities are located, we don't foresee anything happening, nor are we projecting any more closures.

And in your slides, you're indicating you might add one more in 2020, do you think there's an opportunity to add more than one?

Yes. So, we do think that there's opportunity. We are in discussions to add more than one. So, – but really, next six months are probably the most critical point for us to adding those additional facilities, as well as additional volume.And then as I noted, committing to what that incremental volume is going to mean from a financial perspective is similar to we've had in the past, but we're also evaluating this dynamic coal-fired power dispatch. So, we'll announce kind of what we think that net incremental volume is going to be, as each of those deals happen over the next coming months.

Understood. And then in terms of your efforts to lower operating costs, what exactly are we focused on? Is it personal or any other aspect of the operations?

It's across the Board. It’s personal. It's all the normal SG&A cost that you'd expect to be reducing from legal to consulting. And then even – and it is not in our cost estimates. We’ll continue to get efficient, whether that's on the product optimization side or manufacturing side. So, it is across the Board.

Understood. And then when you’re looking at non-mercury related growth opportunities, I mean, water has been sort of one area of focus, but contribution from these efforts, how long should we – is it a year away, two years away? How far away are we from getting active contribution from…

2019 was a very important year for us. We invested a lot in equipment and processes and have improved our product capabilities, as well as realigned our commercial staff. So 2020, we expect significant increase in these opportunities and look forward to give an update as each quarter goes by.Just a reminder, why that – why we feel good about the opportunity to continue to grow there is really because of this manufacturing asset that we have. If you remember, this asset had an investment of over $400 million, and it’s the newest asset in the – in North America.So for us, we have the cornerstone asset and the capability to make activated carbon. So really for us, it was understanding the markets, rounding out our application capabilities and then some nominal investments to ensure that we can properly test and we did all that in 2019.So, again, we’re really encouraged about this year and see meaningful growth in that. And it was – we had a graphic on one of the slides that showed that. It's not complete guidance, but it is aligned to what we think this growth that we expect primarily in water and industrial products from mercury, again, expect a lot of that in 2020.

Understood. That’s all, guys. Thank you so much.

Okay. Thank you.

There are no further questions at this time. I’ll turn the call back to Mr. Sampson for any closing remarks.

Well, great. Well, thanks, everybody for joining us the call today and your continued support. We look forward to updating you on our next quarter. Have a great day, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.