Hello all, and a warm welcome to the Advanced Emissions Solutions Q4 2021 Earnings Call. My name is Lydia, and I will be your operator today. It's my pleasure to now hand you over to our host, Ryan Coleman with Investor Relations. Please go ahead when you're ready.

Thank you, Lydia. Good morning, everyone, and thank you for joining us today for our fourth quarter and full year 2021 earnings results call. With me on the call today are Greg Marken, Chief Executive Officer, President and Treasurer; as well as Morgan Fields, Chief Accounting Officer. This conference call is being webcasted live within the Investor Section of the 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 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, 2021 and other filings with the Securities and Exchange Commission. Except as expressly required by securities laws, the company undertakes no obligation to update these factors or any forward-looking statements to reflect future events, developments or exchange 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. With that, I would like to turn the call over to Greg.

Thank you, Ryan, and thanks to everyone for joining us this morning. Yesterday, after the close of markets, we reported our fourth quarter and full year results, which are highlighted on Slide 3. We closed 2021 with another strong quarter from our APT segment, which led to a record year for revenue as well as production volume at our Red River plant. High prices for alternative energy sources like natural gas have elevated demand for our activated carbon products from Power Gen customers, while we continue to grow within the industrial and water markets. Fourth quarter revenue for the APT segment totaled $23.3 million, an increase of 43% compared to the prior year. With capacity utilization high and strong revenue growth, we saw a much-improved operating leverage. Fourth quarter gross margin for the APT segment was 27.4% compared to 25.9% in the prior year. In addition, operating income was $0.8 million compared to $0.7 million in the prior year, which translates to an operating margin improvement of 20 basis points. APT segment adjusted EBITDA totaled $1.9 million compared to $2.3 million in the fourth quarter of 2020. Our segment margins, while significantly better on a full year basis than the prior year, remain pressured by the higher cost per unit we are currently experiencing as a result of sourcing external inventory to meet high customer demand. The requirements-based provisions of many of our customer contracts provide significant benefits. The contracts make us an exclusive provider of activated carbon products to each of our customers. However, when demand rises, we must fulfill that incremental demand. This, coupled with the scheduled turnaround activity in Q2 2021 as well as other operating challenges we experienced during portions of the year, created tight inventory conditions throughout the year. With this as a backdrop as…

Thank you, Greg. Slide 4 provides a snapshot of our fourth quarter and full year financial performance. Fourth quarter earnings from equity method investments were $6.8 million compared to $5 million for the fourth quarter of 2020. Full year earnings from equity method investments were $68.7 million compared to $31 million for 2020. The increases in earnings are first attributable to distributions recorded into earnings as a result of distributions from Tinuum Group mainly in excess of the carrying value of the investment. Therefore, excess distributions are recognized as equity method earnings in the period in which the distributions occur. Tinuum Group also had an increased number of RC facilities for the majority of 2021 due to three new facilities added during 2020. All of the facilities have since ceased generating refined coal tax credits as of December 31, 2021. Fourth quarter revenues and cost of revenues were $25.8 million and $16.9 million, respectively, compared with $19.7 million and $12.1 million for the fourth quarter of 2020. Full year revenues and cost of revenues for '21 -- for 2021 were $100.3 million and $65.6 million, respectively, compared with $67.4 million and $50.4 million in 2020. The increase in revenue for both the fourth quarter and full year were the result of higher sales of consumables. Fourth quarter gross margin was 34% compared to 39% in the prior year. Full year gross margin was 35% compared to 25% in 2020. Of note, as disclosed in the 10-K, we have corrected the previously reported 2020 and 2021 consumable revenue and cost of revenue amounts related to accounting for freight. The correction resulted in a gross up of our revenue and cost of revenue figures with no impact to gross margin or any other financial metric. Fourth quarter net income was $5.8 million…

Thank you, Morgan. Turning to Slide 5, which reflects the APT segment growth channels and market opportunities we’ve been discussing where we are either currently active or have identified future opportunities. We have historically been the North American provider of choice in the mercury removal market related to power generation. Today, we possess a much more diversified commercial end market mix after considerable time and effort growing and expanding our commercial and technical relationships and conducting product tests with new potential customers in the industrial and water markets to capitalize on current and future opportunities. We remain fully committed to our business partners, and we will continue to invest in expanding and growing these relationships. Our team continues to build upon the progress in these adjacent markets that are also subject to regulatory compliance thresholds and purification standards. We also continue to see strong customer interest in other growing market opportunities, utilizing both existing and developing product technologies and capabilities that may provide earnings opportunities in areas where the legacy Carbon Solutions business had not competed. Emerging areas that may provide these additional opportunities includes our ongoing partnership and testing with Cascade Environmental for the groundwater remediation market, which we remain encouraged about given our progress to date. Market conditions over the past 3 years have proven the best-in-class nature of our assets and have allowed us to manage industry headwinds better than most other producers. We are and expect to continue to be a leading provider of choice for these activated carbon technologies and believe our strong financial position and assets leave us well-positioned going forward. For the full year 2022, we would expect our consumables revenue to be at least consistent with 2021, with the potential for incremental growth as demand remains high for power generation customers, and…

Thanks, Greg. Similar to past quarters, we included an invitation to submit questions ahead of time at the bottom of the conference call announcement press release as well as yesterday afternoon's earnings press release. Thanks for those of you who sent your questions, and we invite all listeners to continue to submit their questions on future quarter calls. Our first question reads, does the expiration of the tax credit generation period for the RC facilities officially kill any prospect of a Section 45 tax credit extension?

Technically, no, there's nothing unique about the tax credit generation expiring that automatically excludes any possibility of an extension. However, we’ve been very clear for several quarters now that we do not expect an extension of the tax credit program, and that view remains unchanged.

Where are you sourcing external inventory for AC products from, and are you continuing to sell that externally sourced product at economically feasible rates?

We primarily source a series of products from other domestic activated carbon manufacturers. We won't disclose the margin profile for that incremental product we are sourcing, but we are meeting our customer commitments, working to once again increase our inventories and our consolidated margins for the entirety of the APT segment continues to trend upward, which is what we are focused on.

Our third question reads, approximately how much of the existing volume throughput is contracted at levels significantly below market rates, i.e., does not yet reflect the 10% to 15% price increase announced on March 29, 2021. And what is the approximate time line to having these volumes repriced or re-contracted at rates more reflective of current market prices?

So, during 2021, we renewed or won contracts that updated the overall commercial terms related to approximately 30% of our customer contracts, exclusive of the Cabot now known as the North master supply agreement. As we have historically discussed, our contracts generally range and turn from 1 to 4 years, dependent upon the end markets. Thus, the overall turnover in the contract portfolio will take time, but we would expect to renew or win contracts during 2022 that would update commercial terms related to an additional 10% to 15% of our business.

Our fourth question, could you provide an update to the testing being done on products within the groundwater remediation market with Cascade Environmental? What were the commercial product for that market do for the APT business?

During early '22, we, along with our partners, have been able to start supplying product for test sites, and we expect further information related to those activities in the coming quarter. Relative to our existing activated carbon and chemicals business, we believe these opportunities, if the product and commercial sales channels are successful, have the potential to change and improve the long-term earnings profile as a company.

And our last question, do the Cabot contracts have escalators that increase with inflation?

On an annual basis, the pricing is updated to reflect the estimated cost-plus amounts on a product-by-product basis according to the supply agreement. Thus, as applicable costs do change over time, so will the pricing of products.

Thank you, Greg, and thanks again to everyone for submitting the questions. I will turn the call back over to Greg for his closing remarks.

Thanks, Ryan, and thanks to everyone for joining the call this morning and for your continued support. We look forward to updating everyone next quarter.

This concludes today's call. Thank you for joining. You may now disconnect your lines.