Executive Summary

Q1 2023 revenue was $3.0M; management noted revenues were slightly lower by approximately $0.3M due to earlier-than-usual maintenance shutdowns at several large utility customers, while technology licensing revenues increased by $0.4M and cash on hand increased by $1.0M .
The quarter continued a seasonal downtick versus Q4 2022 revenue of $5.7M and Q3 2022 revenue of $7.5M; management expects supply revenues to increase in Q2 as customers meet growing energy demands .
Gross profit in Q1 2023 was $1.0M and gross margin 34% (as referenced in Q1 2024 comparative disclosure); working capital was $1.8M at March 31, 2023, underscoring adequate liquidity to support operations .
Catalysts include continued IP enforcement driving licensing revenues, progress toward TSX Venture listing, and expected sequential revenue improvement in Q2 tied to stable coal power demand; no formal numeric guidance was provided .

What Went Well and What Went Wrong

What Went Well

Technology licensing revenues increased by $0.4M, reflecting traction from IP efforts across the coal-fired utility industry .
Liquidity improved: cash on hand increased by $1.0M during Q1; working capital stood at $1.8M at March 31, 2023 .
Management reaffirmed a stable core market backdrop and anticipated supply revenue growth into Q2 as utilities meet demand, alongside conditional approval to list on the TSX Venture Exchange, pointing to broader investor outreach and capital markets optionality .

Management quotes:

“Due to our IP efforts across the coal-fired utility industry, our technology licensing revenues grew significantly during the period.”
“We expect the second quarter of this year to show increased supply revenues as our customers meet growing energy demands.”
“The conditional approval to list onto the TSX Venture Exchange and new, significant mercury emissions supply business were marked achievements during this quarter of 2023.”

What Went Wrong

Revenues were modestly lower by approximately $300,000 due to earlier-than-usual maintenance shutdowns at several large utility customers, highlighting exposure to customer outage timing .
Seasonality: Q1 revenue ($3.0M) was down versus Q4 2022 ($5.7M) and Q3 2022 ($7.5M), consistent with typical demand patterns and outage schedules .
No explicit numeric guidance ranges were issued, limiting precision for near-term forecasting beyond directional commentary .

Financial Results

Metric	Q3 2022	Q4 2022	Q1 2023
Revenue ($USD Millions)	$7.5	$5.7	$3.0
Gross Profit ($USD Millions)	n/a	n/a	$1.0
Gross Margin (%)	n/a	n/a	34%
Diluted EPS ($)	n/a	n/a	n/a

KPIs

KPI	Q3 2022	Q4 2022	Q1 2023
Cash on Hand ($USD Millions)	$1.3	$1.5	+$1.0 change vs Dec-22 (absolute not disclosed)
Working Capital ($USD Millions)	$2.2	$2.3	$1.8
Licensing Revenue Change ($USD Millions)	n/a	n/a	+$0.4

Notes:

Q1 2023 gross profit/margin are derived from comparative disclosures in Q1 2024 materials, indicating Q1 2024 gross profit rose 42% to $1.4M from $1.0M in Q1 2023 and gross margin increased to 41% from 34% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	Q2 2023 directional	n/a	Management expects increased supply revenues in Q2 as customers meet demand	n/a
Full-Year 2023	FY 2023 directional	n/a	“Revenues remain on track to yield significant YoY improvements” (directional only)	Maintained directional
Capital Markets	2023	n/a	Conditional approval to list on TSX Venture Exchange	New disclosure

No numeric guidance ranges (revenue, margins, OpEx, tax rate) were provided in Q1 2023 materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2022)	Previous Mentions (Q4 2022)	Current Period (Q1 2023)	Trend
IP enforcement/licensing	Strong litigation posture; fact discovery concluded; licensing wins expected	Litigation motions denied; trial timing reiterated; added licensed utilities	Licensing revenues increased by $0.4M; IP efforts cited as driver	Strengthening monetization
Core product demand (coal-fired)	Seasonally strongest quarter; demand robust	Continued strength; stable market	Stable coal demand expected to lift Q2 supply revenues	Stable to improving
Debt/capital structure	Debt deferral to Aug-2025; stock repurchase option at $0.50	Debt extension confirmed; working capital improved	Conditional TSXV listing; focus on investor outreach	Improving capital markets access
Rare earth elements (REE)	Progress in extraction tech; field trials targeted	Lab progress; field testing targeted in 2023	Continued expansion into new markets/technologies (directional)	Ongoing R&D
Water treatment/PFAS	Initiating remediation expansion; market set to triple/quadruple	Development underway; specialized activated carbons	Expansion efforts “actively underway” (directional)	Early-stage build

Management Commentary

“Our technology licensing revenues grew significantly during the period…Our revenues were slightly lower, by approximately $300,000, as several large utility customers took earlier than usual maintenance shutdowns; however, we gained significant new supply business during this first quarter.” — Richard MacPherson, CEO
“We expect the second quarter of this year to show increased supply revenues as our customers meet growing energy demands.”
“During the fourth quarter 2022, we negotiated a mutually beneficial agreement…to defer all major debt through August of 2025…[and] option to buy back…roughly 7–7.5 million shares at $0.50 a share” .
“2022 represents the second year of significant revenue improvements – this last year reaching 66% year-over-year growth…we expect this rate of 50–60%+ annual growth to continue…” .

Q&A Highlights

Contract timing/expansion cadence: Utilities often have 1-year supply cycles or 3–5-year contracts with annual cancellation options; management expects adding more plants as cycles renew .
Asia-Pacific expansion: Combination of core mercury technology and additional pollution control know-how; early responses strong; tangible developments expected in coming months .
Water remediation opportunity: Management envisions a specialized activated carbon plant potentially generating ~$50M/year revenue with better margins than core business; market projected to grow materially with PFAS regulations .
Debt and buyback option: Share repurchase option at $0.50 over the extended debt term; intended to reduce dilution contingent on proceeds from potential settlements .
Litigation trajectory: Trial scheduling in mid-November 2023; management confident in position, with potential for additional licensing/supply agreements .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q1 2023 were unavailable for MEEC due to missing CIQ mapping in the dataset; as a result, no Wall Street consensus comparison can be provided at this time [SpgiEstimatesError: Missing CIQ mapping for ticker 'MEEC'].
Implication: Without formal consensus, investor models should rely on management commentary and run-rate dynamics (seasonality, outage timing, licensing share gains) and monitor subsequent filings for updated disclosures .

Key Takeaways for Investors

Q1 seasonality and customer maintenance timing drove a modest revenue dip; watch for sequential rebound in Q2 supply revenues as outages abate and demand normalizes .
Licensing momentum is tangible (+$0.4M in Q1), validating the IP enforcement strategy and diversifying revenue mix beyond product sales .
Liquidity improved (cash +$1.0M; working capital $1.8M) despite seasonal revenue softness, supporting continued operations and growth initiatives .
Near-term catalysts: TSXV listing progress, new supply wins, and IP litigation milestones (trial timing mid-November 2023); developments could reset enterprise value perceptions .
Medium-term optionality: Expansion into water remediation and REE extraction offers non-coal environmental technology upside; execution and commercialization timelines remain key .
Modeling considerations: Absence of consensus estimates necessitates scenario-based modeling with seasonality awareness (Q3/Q4 typically strongest), IP-driven licensing uplift, and monitoring for formal guidance issuance .

Appendix: Source Documents Read

Q4 2022 8-K and press release: ME 2C Environmental Reports Fourth Quarter and Full Year 2022 Results (filed April 20, 2023) .
Q4 2022 earnings call transcript (April 17, 2023): Strategy, litigation, debt, licensing updates .
Q3 2022 earnings call transcript (Nov 14, 2022): Revenue strength, debt deferral, licensing pipeline .
Letter to shareholders 8-K (Jan 18, 2023): Preliminary 2022 revenue, growth outlook, litigation timing .
Q1 2023 press release: ME2C Environmental Reports First Quarter 2023 Financial Results (June 8, 2023) .
Q1 2024 release (for comparative disclosure of Q1 2023 gross profit/margin): .

Estimate retrieval status: S&P Global CIQ mapping unavailable for MEEC; no consensus values retrieved [SpgiEstimatesError].

Midwest Energy Emissions Corp. (MEEC)·Q1 2023 Earnings Summary