Advanced Emissions Solutions, Inc. (ADES) stock prices were up by 3.91% as of the market closing on May 27th, 2021, bringing the price per share up to USD$7.45 at the end of the trading day.
Revenue Breakdown
Revenues for the first quarter of the fiscal year 2021 were reported to be USD$21.1 million, up from the USD$12.3 million reported for the same time period of the prior year. A combination of higher sales of consumables and increased royalty income largely drove the increase in Q1 2021 revenue. Costs of revenue were up from USD$11.5 million in the first quarter of 2020 to USD$12.5 million in Q1 2021.
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Royalty Income
A source of income for ADES is from the Tinuum Group in the form of royalties, which are based on a percentage of the margin per-ton margin before taxes. The number are inclusive of impacts stemming from depreciation expense and other allocable expenses. Royalty earnings generated USD$3 million in the first quarter of the fiscal year 2020, with Q1 2021 having seen an increase to USD$4.1 million.
Operating Expenses Improved
Operating expenses for the first quarter of the fiscal year 2021 were down to USD$8.3 from the USD$9.4 million reported for the first quarter of 2020. This decrease in operating expenses is largely attributable to lower legal and professional fees, in conjunction with a less burdensome payroll expense.
Equity Method Investment Earnings
Earnings from equity method investments were reported at USD$18.3 million in the first quarter of 2021, significantly improving on the USD$8.3 million reported in the same time period of the year prior. This improvement is largely attributable to distributions recorded into earnings as a consequence of distributions from TinuumGroup being greater than the carrying value of an investment. Because of this, excess distributions are recognized as equity method earnings over the course of the period during which the distributions occur.
Net Income improvements
ADES reported significant year-over-year improvements in net income, with the first quarter of 2021 reporting a net income of USD$13.7 million. This is up from the USD$1.9 million net loss reported for the first quarter of 2020. The increase is largely attributable to the increase in earnings generated from equity method investments in conjunction with higher consumables revenue.
Future Outlook for ADES
With such promising numbers reported for the start of the fiscal year 2021, the company is poised to capitalize on the opportunities presented over the rest of the year. Current and potential investors are hopeful that the company will continue to leverage the resources at its disposal to facilitate significant and sustained increases in shareholder value.
