Charah Solutions, Inc. (CHRA) Misses Q4 EPS by 59c, Revenues Beat; Offers FY20 Revenue Guidance Below Consensus

Charah Solutions, Inc. (NYSE: CHRA) reported Q4 EPS of ($0.53), $0.59 worse than the analyst estimate of $0.06. Revenue for the quarter came in at $149.56 million versus the consensus estimate of $124.9 million.

Coronavirus Pandemic Update

“As the Coronavirus Disease (\'COVID-19\') continues to expand within the United States and around the world, our highest priority remains the safety of our employees and customers,” said Scott Sewell, President and Chief Executive Officer of Charah Solutions. “Charah’s business was built on an unwavering commitment to safety. To that end, we have taken immediate actions to protect our people, customers and business. With the mission-critical nature of our business, it was imperative that we initiated a series of contingency plans to ensure business continuity for our customers, over 80% of whom are investment-grade regulated utilities that must continue operating to provide power to the country. We have implemented measures to manage through potential disruptions and maintain real-time communication across our entire organization and with our customers. To date, we have not had any work stoppages. Further, as of this time, we have not had any employees who have tested positive for COVID-19.”

“Though we are not currently seeing any significant disruptions to our business due to the mission-critical nature of our customers’ operations, we are aware of the potential disruptions beyond our control, and we will continue to monitor this situation very closely,” Mr. Sewell continued. “We believe we are well-prepared to protect our staff and ensure continuity of service to our clients during this uncertain period. We remain committed to keeping our people safe and addressing our customers’ needs.”

Business Update

“2019 was a transition year for Charah Solutions, and our results were disappointing; however, we are optimistic about our business going forward based on a record $583 million of new awards in 2019 and opportunities for award growth in 2020. The value of new awards won in 2019 exceeded 2018 by 450%, demonstrating the increased pace in customer responses to state and federal regulatory environmental requirements and the compelling value proposition we offer our customers. We believe this recent increase in new contract awards reflects the expanding opportunities for ash remediation and by-product sales into 2020 and beyond as our utility customers address the more than 1,000 regulatorily-mandated surface impoundment closures in the United States and expectations for greater infrastructure spend will drive demand for fly ash,” said Scott Sewell, President and Chief Executive Officer of Charah Solutions. \"Our momentum in winning new awards coupled with the increased liquidity and financial flexibility provided by our recent credit agreement amendment and successful capital raise and our increased focus on cash flow improvement through expense reductions strengthens our ability to compete and capitalize on our expanding market opportunities. Though recent uncertainties related to COVID-19 and the resulting impact on the U.S. economy may affect the timing of revenues and project awards in the near term, our customer base is growing and our geographic reach is expanding as customer motivation for our environmentally-friendly, customized solutions to recycling and remediating ash by-products increases across the United States.”

“We anticipate that the growth in contract awards in 2019 will contribute to results in 2020 and more so in 2021 and beyond,” Mr. Sewell continued. “We remain committed to taking actions expected to preserve cash, strengthen our balance sheet, and enhance long-term value while positioning ourselves to take advantage of the expanding market opportunities. Importantly, we are closely aligned with our utility partners’ environmental remediation and sustainability initiatives, which should provide Charah Solutions with significant growth potential for many years to come.”

GUIDANCE:

Charah Solutions, Inc. sees FY2020 revenue of $560 million, versus the consensus of $596.76 million.

We provide mission-critical services to a diversified base of customers, 80% of whom are investment-grade regulated utilities that must continue to produce power through the current economic uncertainties. Though we are not currently seeing any significant disruptions to our business due to the critical nature of our customers’ operations, the COVID-19 pandemic and resulting potential for significant business disruptions beyond our control have created a high level of uncertainty. For this reason, we are issuing 2020 guidance at this time based solely on our booked backlog of business and executed contracts. Our current 2020 guidance is as follows:

• Revenue of $560 million
• Net loss of $15 million
• Adjusted EBITDA(1) of $37 million
• Free cash flow(1) positive

This guidance is based on our current expectations of no material worsening of the COVID-19 pandemic, and specifically including, but not limited to, no material customer work stoppages, no significant employee absences, and no government-mandated quarantines. Any worsening of the COVID-19 pandemic could materially affect our 2020 outlook.

For earnings history and earnings-related data on Charah Solutions, Inc. (CHRA) click here.

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