Hello and welcome to the Advanced Emissions Solutions First Quarter 2022 Earnings Call. My name is Lauren and I will be coordinating your call today. I would now hand you over to our host, Ryan Coleman, with Investor Relations to begin. Ryan, please go ahead.

Thank you, Lauren, and good morning, everyone. Thank you for joining us today for our first quarter 2022 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 Investors section our website and 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 includes 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 March 31, 2022, 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 exchange circumstances or for any other reason. In addition, it is especially important to review the presentation and today's remarks in conjunction with the GAAP references in the financial statements. With that, I'd like to turn the call over to Greg.

Thank you, Ryan, and thanks to everyone for joining us this morning. Before we discuss our results, I would like to take a moment to remind everyone listening that as of December 31, 2021, all of the remaining refined coal facilities reached the end of their respective tax credit generation periods. As a result, we will no longer have separate reportable segments for our investments with Tinuum Group and Tinuum Services, and I will -- and will only report our results on a consolidated basis going forward. Turning to our first quarter highlights on Slide 3, demand for our activated carbon technologies remained strong throughout the first quarter supported by both macroeconomic and industry factors. Sales of consumable products were $26.4 million, which reflects year-over-year growth of 42%. Our gross margin was 18.5% compared to 24.6% in the prior year, as the need to supplement production with third-party sources of activated carbon to meet customer demand increases our average product cost, as the average cost of third-party activated carbon purchases is higher than the cost of producing comparable products in-house. We recorded a net loss for the period of $3 million, compared to net income of $13.7 million in the prior year. Adjusted EBITDA was 0.9 million compared to 26.1 million on a year-over-year basis. The declines in both earnings and adjusted EBITDA are most materially the direct result of our reduced distributions and earnings from Tinuum Group and Tinuum Services compared to the prior year due to the wind down of our former refined coal segment. Tinuum’s first quarter 2022 distributions to ADES totaled 2.5 million, which was in line with our expectations. With strong capacity utilization and our operating facilities, we continue to source supplemental inventory from third parties to meet sustained customer demand. Importantly, production volume and…

Thank you, Morgan. Slide 5 reflects the activated carbon growth channels and market opportunities we have been discussing where we are either currently active or have identified future growth opportunities. Historically, we have been the North American provider of choice in the mercury removal market related to power generation. Today we possess a much more diversified commercial in 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. We remain fully committed to our business partners and will continue to invest in expanding and further developing these relationships. Our team continues to build upon the progress in these adjacent markets, which are also subject to regulatory compliance thresholds and purification standards. We also continue to see strong customer interests 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 previously competed. Emerging areas may provide these additional opportunities which includes our testing within the groundwater remediation market. We remain excited about this opportunity given our progress to date. Market conditions over the past three 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 an expect to continue to be a leading provider of choice for these activated carbon technologies, and believe our strong financial position and superior assets have as well positioned going forward. For the full year 2022, we expect our consumables revenue to be comparable with 2021 with the potential for incremental growth, as high demand for our power generation customers continues and as we continue to see an overall improvement in customer and product…

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. Thank you to those of you who continue to sending your questions and we invite all listeners to submit their questions going forward. Our first question, when would you expect outsourcing of activated carbon from third parties to end and is there anything ADES can do to grow capacity in the meantime?

We expect to continue to purchase carbons from third parties at higher levels throughout the remainder of 2022. When compared to historical periods. We will continue to evaluate market conditions, normalized inventory levels and internal production capabilities as we plan for 2023, which will help us estimate the required levels of third-party sourcing that will likely be needed going forward. As it relates to growing capacity, we continue to work to improve and optimize the Red River facility production capabilities, and have seen volume improvements during Q1 of 2022 that have allowed us to increase our inventory levels while meeting current demand. We will continue to optimize our plant operations in order to realize higher production capacities through the remainder of the year into the future.

Our second question, is there cost sharing with Cabot for obtaining the potentially high cost outsource product? And is there anything related to Cabot’s changing control that could alter the terms of the master supply agreement?

Each year the prices for the products sold to Norit, formerly known as Cabot are reevaluated and adjusted for the following year, based on anticipated volumes, the impacts of such volumes on product mix manufacturing and related production costs. Regarding the second part of the question, aside from the applicable change control payments that have occurred during the first quarter of 2022, which were contemplated when the master supply agreement was originally executed, we continue to operate under the terms of the master supply agreement as written as we were required to fulfill our obligations to Norit.

And our third question, it's now been one year since the strategic review announcement with no public updates. Is there anything that you can offer investors on the direction of the strategic review process?

It's a great question. While we are certainly sympathetic to investor's desire for more detail regarding the status of our strategic review. We are also very appreciative of their patience. It has always been our desire and intention to provide updates as appropriate and required by public company regulations. That being said, we have no timeline for the process’s ultimate conclusion. It is very difficult to predict the timing or the evolution of a process like this, given the sensitivity of the discussions involved, as well as the need to preserve certain confidentialities. While the process has drawn out, the fact remains that we are pleased with where things stand within the process and are hopeful that we can provide an update soon. Despite the duration of the process, it has not detracted from our ability to run the business, as demonstrated by the results and operational improvements achieved within the business during this past year.

Thank you, Greg. And thanks again to everyone who submitted their questions. I'll turn the call back over to Greg for 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 line.