Advanced Emissions Solutions (ADES) to Acquire ADA Carbon Solutions; Provides Refined Coal Business Update and Reaffirms Capital Allocation Plan

Advanced Emissions Solutions, Inc. (NASDAQ: ADES) a leader in emissions control solutions for coal-fired power generation and industrial markets, today announced that it has signed a definitive purchase agreement to acquire ADA Carbon Solutions, LLC ("Carbon Solutions"), a private company and a leading producer of Powdered Activated Carbon (“PAC”) solutions for the coal-fired power plant, industrial and water markets. Total consideration for this acquisition is $75 million, representing approximately 4.2x Adjusted pro-forma EBITDA1. This transaction is subject to certain agreed upon closing price adjustments and is expected to close on or before year-end. Several of Carbon Solutions key management team members will be joining the Company. After closing, ADES will launch a search for a new Chief Operating Officer to execute upon Carbon Solutions' ambitious forward business plan.

L. Heath Sampson, President and CEO of ADES, commented, "Our past execution related to growing refined coal, navigating tax reform, the return of capital to shareholders and focused corporate restructuring has provided the opportunity to complete the exciting acquisition. Pairing Carbon Solutions' recurring revenue base with our expected future Refined Coal cash flows provides a platform of growth for both segments of our business. Our unwavering commitment to growing our Refined Coal business will continue. Tax reform and IRS clarity have prompted many large institutions to come back to the refined coal market, and Tinuum has line of sight to contract an additional 12 million annual tons of refined coal with both existing and new tax equity investors."

Acquisition of Carbon Solutions:

• Carbon Solutions' market leadership is evidenced by approximately 45% and 25% share, respectively, in the North American mercury control activated carbon and North American mercury control consumables markets
• Carbon Solutions is projected to deliver roughly $73 million in Adjusted pro-forma revenue1 for fiscal 2018, with a highly recurring revenue base supported by multi-year contracts. Carbon Solutions is projected to deliver approximately $18 million of Adjusted pro-forma EBITDA1 in 2018
• The acquisition leverages Carbon Solutions' position as the industry's lowest cost provider, ADES’ institutional knowledge of the mercury control market, strong relationships with common customers and $2 - $3 million in expected annual run-rate cost synergies
• Carbon Solutions' assets include its Red River processing plant (with total invested capital in excess of $380 million), the Five Forks mine (with over a 40-year supply of lignite coal under lease) and a strategically located distribution hub
• Acquisition of the lowest-cost production assets in the market at favorable terms
• Significant near-term and long-term organic growth opportunities, including rebalancing Carbon Solutions' currently under-utilized facilities
• Significant opportunities for strategic growth, including expansion into new products and markets, as well as embedded demand for Carbon Solutions' products when refined coal ("RC") facilities expire through 2021
• Transaction is expected to close by the end of 2018 and will be immediately accretive to earnings, excluding non-recurring integration costs

Sampson commented, “Carbon Solutions is the North American leader in activated carbon for coal-fired power plants, helping ensure clients' mercury and air-toxics standards compliance. The company was co-founded and owned by ADES until 2011. Carbon Solutions brings a recurring revenue stream, strong financial profile and natural synergies given our history and shared client base. Carbon Solutions has earned a 45% share of the North American PAC production market for mercury control through its industry-leading reputation and strong relationships with its customers. Carbon Solutions' unique collection of assets allows them to be the lowest cost provider of activated carbon in the industry - and we expect this cost advantage to grow over time through planned plant utilization increases.”

Refined Coal Business Update:

ADES has provided a business update for its refined coal business. Following the monetization of approximately 14 million tons over the trailing twelve-months, of which over 6 million tons was completed in 2018, ADES is pleased to disclose:

• Based on the 19 invested facilities as of October 31, 2018 and after cash distributions occurring during October 2018, future net RC cash flows to ADES are expected to be between $225 million and $250 million through the end of 2021
• As previously disclosed, Tinuum has recently invested in four facility installations, representing confidence in converting current active discussions and monetizing additional pipeline opportunities
• Tinuum is in active discussions with potential tax equity investors related to several new facilities, which could increase invested tons by 12 million tons (representing an increase to current operating volumes of approximately 20% if invested)
• ADES has net deferred tax assets of $36 million as of September 30, 2018 with the expected ability to utilize additional currently reserved deferred tax assets as growth continues

Reaffirming Capital Allocation Plan:

ADES reaffirms its dividend and share repurchase programs, with the most recently declared dividend of $0.25 per share representing the seventh consecutive quarterly dividend.

Transaction Summary

Under terms of the purchase agreement, ADES agreed to acquire Carbon Solutions for a total consideration of $75.0 million plus fees. The purchase price is expected to be funded through a $70.0 million secured term loan and $10.0 million of assumed capital leases. Closing of the Carbon Solutions acquisition is subject to the Company securing financing and other customary closing conditions. As a condition of the purchase agreement, the Company will deposit $2.0 million into escrow at signing which will be payable as a break-up fee in the event the Carbon Solutions acquisition does not close on or before the end of 2018 due to failure on the part of ADES.

Moelis & Company LLC served as ADES' exclusive financial advisor and Stinson Leonard Street LLP served as ADES' primary legal advisor on this transaction. Houlihan Lokey Capital, Inc. served as the financial advisor to Carbon Solutions and Latham & Watkins, LLP served as Carbon Solutions' legal counsel.

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