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Midwest Energy Emissions Corp. (MEEC)·Q4 2021 Earnings Summary

Executive Summary

  • Q4 2021 revenue was $2.7M (+17.4% YoY) with net loss of $1.3M (EPS: -$0.01) and adjusted EBITDA roughly breakeven (-$0.02M), capping full-year revenue of ~$13.0M (+59.5% YoY) .
  • Management introduced FY2022 preliminary revenue guidance of +60% YoY ($20–$22M), with majority of ramp in H2 on new licensing and supply agreements .
  • Q4 underperformed the company’s October guidance for core business revenue ($4.0M) versus actual $2.7M; management later clarified on the Q4 call that the >$4M figure had been cited by a third party while the company guided to ~$13M for FY2021 .
  • Catalysts: refined coal tax credit program ended Dec-2021 driving potential conversion to ME2C supply, litigation progress/expected developments, commissioning of Texarkana batch plant capacity (up to ~$100M annual), and rare earth/wastewater technologies advancing toward field testing .

What Went Well and What Went Wrong

What Went Well

  • Strong Q4 and FY momentum: “We reported strong fourth quarter results measured by most key metrics” and FY2021 revenue rose ~60% YoY to $13M .
  • IP enforcement and commercial traction: multiple licenses signed, positive discovery progress, expectation of additional supply contracts from prior refined coal users .
  • Capacity expansion: commissioning of fully paid Texarkana batch plant alongside Corsicana operations positions ME2C to handle up to $100M of annual business .

What Went Wrong

  • Q4 core revenue miss vs guidance: October press release guided Q4 core business revenue to $4.0M; actual came in at $2.7M; management later distanced from the $4M figure on the Q4 call, calling it third-party guidance, creating a narrative discrepancy .
  • Continued net loss despite improvement: Q4 net loss was $1.3M vs $2.0M in Q4 2020; adjusted EBITDA was near breakeven (-$0.02M) .
  • Elevated costs: 2021 costs/expenses rose to ~$16.6M from ~$14.0M, driven largely by higher cost of sales on increased volume .

Financial Results

Revenue and EPS vs prior periods (chronological order: oldest → newest)

MetricQ4 2020Q2 2021Q3 2021Q4 2021
Revenue ($USD Millions)$2.3 $2.3 $5.0+ $2.7
EPS (Basic & Diluted, $USD)-$0.03 -$0.02 $0.00 -$0.01

Adjusted EBITDA and Net Loss

Metric ($USD Millions)Q2 2021Q3 2021Q4 2021
Adjusted EBITDA-$0.31 $0.56 -$0.02
Net Loss-$1.70 -$0.21 -$1.30

Liquidity KPIs

MetricQ2 2021Q3 2021Q4 2021
Cash and Equivalents (end of period, $USD Millions)$1.7 $0.87 $1.4

Q4 2021 Results vs Guidance and Consensus

MetricQ4 2021 ActualCompany Guidance (Oct 19, 2021)Wall Street Consensus (S&P Global)
Revenue ($USD Millions)$2.7 $4.0 (core business) Unavailable via S&P Global
EPS ($USD)-$0.01 N/AUnavailable via S&P Global

Note: Wall Street consensus via S&P Global was unavailable for MEEC in Q4 2021.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2022None+60% YoY to ~$20–$22Introduced
Revenue ($USD Millions)Q4 2021 (core)$4.0Actual $2.7Underperformed vs guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2021)Previous Mentions (Q3 2021)Current Period (Q4 2021)Trend
Technology initiatives (Rare Earth/Wastewater)Initiated collaboration with Penn State; REE processing target; wastewater remediation opportunity; plan for pilot/field testing if confirmed Phase 1 REE testing showed 80–90% extraction efficacy; moving to Phase 2 and field trials Penn State Phase 2 using real-world materials; preliminary results showing >90% capture; planning full-scale field testing; commercialization targeted late summer/early 2023 revenue potential Accelerating
Supply chain/macro (coal demand)Demand tied to coal plant capacity factors; seasonal variability noted Heightened demand driven by rising natural gas prices, increased energy demand “They are burning everything they can get… coal usage… at an all-time high over the past 5 years” Strengthening
Regulatory/legal (EPA/Refined coal litigation)Discovery underway; issued 20 subpoenas; refined coal program impact highlighted Court allowed case to proceed; multiple license agreements signed; refined coal program ending adds potential supply opportunities Discovery “moving forward positively”; expects significant developments; refined coal end seen as major catalyst; six major utilities licensed; ~$20M new contract value over 5 years booked starting Q4’21 Advancing
Licensing/supply conversions4 utility licenses with goal to convert to supply; multiyear supply announced with a licensee Expect further supply contracts; ~80% of Q3 revenue supply-driven Ongoing wins enforcing IP; outreach to non-licensed users; anticipate additional license/supply agreements in 2022 Building
Manufacturing capacityExisting facilities can support >$100M annual product revenue Texarkana batch plant commissioning planned Q1 2022 Texarkana commissioning underway; combined capacity up to ~$100M annually On track

Management Commentary

  • “We reported strong fourth quarter results measured by most key metrics… 2021 produced significant improvements in our bottom line and was a pivotal year” – Richard MacPherson, CEO .
  • “To meet this expected increase in supply customers, we're in the process of commissioning our fully paid for manufacturing batch plant in Texarkana… [to] handle up to $100 million worth of business annually” .
  • “Preliminary numbers… mirrored the initial results of us being able to capture over 90% of the rare earth elements… very exciting and something that we will be moving quickly to take into the field” .
  • “We currently expect revenue to increase 60% year-over-year for 2022… majority of revenue increase expected in the latter half of the year” .
  • “The coal usage in the country is at an all-time high over the past 5 years… we expect production of coal to increase” .

Q&A Highlights

  • Rare earth commercialization and revenue timing: Management expects field proof late summer; initial commercial results by year-end with revenue starting early 2023; monetization via royalty on extracted value .
  • Q4 guidance clarification: Management stated the >$4M Q4 expectation was third-party guidance; company’s own guidance focused on ~$13M FY2021 (which was achieved) .
  • Macro demand: Coal demand rising amid high natural gas prices; plants maximizing burn; suggests supportive backdrop for mercury control supply .
  • Refined coal conversion potential: Prior refined coal customers could represent ~$65–$80M/year of supply-side revenue opportunity (Q3 Q&A) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2021 EPS and revenue was unavailable for MEEC. We attempted retrieval but SPGI/CIQ mapping for MEEC was missing, so consensus could not be sourced. As a result, comparisons to consensus are not presented [GetEstimates error].

Key Takeaways for Investors

  • Q4 showed solid YoY revenue growth and improved loss metrics, but missed the October core revenue guidance; watch for narrative consistency in future guidance communications .
  • FY2022 topline guidance of +60% YoY ($20–$22M) is driven by new licensing/supply wins and H2 ramp; monitor execution cadence and contract disclosures through mid-2022 .
  • Structural tailwinds: refined coal program end creates conversion opportunity; litigation progress may accelerate commercial outcomes; near-term catalysts expected later in the month per management .
  • Capacity is ready for scale: Texarkana batch plant commissioning expands throughput and customization capability—critical for supply-side growth .
  • Emerging tech optionality: Rare earth/wastewater technologies progressing with promising lab results; field validation could unlock a meaningful non-core royalty stream beginning 2023+ .
  • Short-term trading: Be alert to litigation updates and incremental license/supply announcements; these have historically correlated with revenue acceleration narratives .
  • Medium-term thesis: Core mercury capture business poised for growth on coal demand/regulatory compliance, with additive upside from IP enforcement and REE/wastewater commercialization milestones .

Sources

  • Q4 2021 earnings call transcript: revenue, EPS, adjusted EBITDA, costs, FY2022 guidance, capacity, litigation/technology updates .
  • Q3 2021 earnings call transcript: revenue, supply mix, litigation progress, refined coal opportunity sizing .
  • Q2 2021 earnings call transcript: revenue, cash, litigation discovery, technology development plans .
  • Oct 19, 2021 8-K press release: Q4 core business revenue guidance ($4.0M) and operational summary .
  • Feb 16–17, 2022 8-K: FY2022 preliminary revenue guidance (+60% YoY; $20–$22M) and full-year 2021 preliminary unaudited revenues ($13.0M) .

Note: Wall Street consensus (S&P Global) for MEEC in Q4 2021 was unavailable; consensus comparisons are therefore not provided.