“Based upon the status of operations and negotiations on RC facilities, we expect to report consolidated RC segment revenues of approximately $190 million in 2012, comprised of $40 million in rental revenues and $150 million in RC sales and raw coal purchases. Tax credit benefits and segment income for 2012 are projected to total approximately $22 million, which will include approximately $16 million of tax credits apportioned to ADA associated with the operations of RC facilities that have either yet to be monetized or are being operated by Clean Coal for its own use. The projected segment revenue and income are expected to continue at these levels through the expiration of Section 45 tax credits in 2021.
“These estimates are based upon the use of our current RC technologies CyClean and M45, which are limited to use in cyclone and circulating fluidized bed (CFB) boilers, respectively, and therefore have a limited market. Based upon recent technological advances, we now believe we have an RC technology that can qualify for tax credits for pulverized coal (PC) boilers. We expect this could open up a significantly larger market for the remaining RC facilities as there are over 1000 PC boilers in the country with as many as 50 plants where it may be possible to treat 4-10 million tons per year of coal with a single RC facility.”
EC revenues increased by 12% to $3.5 million for the third quarter of 2012 from $3.1 million in last year’s third quarter, driven by an increase in systems and equipment sales. Dr. Durham stated, “Driven by the EPA Mercury and Air Toxics Standard (MATS), we expect that the market for sales of ACI and DSI systems will eventually total $1 billion. We anticipate that this will create $350 million in equipment sales for us over the next three years. In the third quarter, ADA closed on the $5 million purchase of the assets of Bulk Conveyor Specialist Inc. (BCSI), the market leader in DSI systems with an approximately 40% market share. We recently announced that BCSI signed a contract to supply up to four DSI systems for a group of coal-fired generating plants with a total value of up to $14 million if the power company elects to purchase all of the contracted systems. The project will begin generating revenues immediately and deliveries are scheduled over the next 15 months. We expect that additional contracts for DSI systems will be awarded soon as BCSI has $140 million in active bids on systems being considered by customers.