Last evening, Charah Solutions (CHRA 11.43, -0.57, -4.75%) priced its 7.35-mln share IPO at $12.00, below the expected
pricing range of $16.00 to $18.00. Shares of Charah began trading on the New
York Stock Exchange today at $11.75. Charah Solutions is a Kentucky-based provider of critical
environment and maintenance services to power plants.
The company operates through two segments.
The First, The Environmental Solutions segment, specializes in remediation, compliance services, and sales of byproducts. Remediation and compliance services are offered to customers with a need for multiyear environmental improvement and sustainability initiatives. Through byproduct sales, the company helps its customers recycle recurring volumes of coal combustion residuals.
The Second, The Maintenance and Technical Services segment, includes fossil services and nuclear services. Fossil services refers to the recurring management of coal ash for coal-fired power plants. The nuclear services unit, which is marketed under the Allied Power brand name, includes routine maintenance, outage services, facility maintenance, and staffing solutions for nuclear power plants.
Charah expects that coal and nuclear power generation will remain indispensable for the foreseeable future, which in turn should translate into continued demand for the company's services, which are outsourced by most power plant operators.
The company operates on a national scale while many of its competitors are localized. Charah operates in 22 states and its senior executive team has an average of over 30 years of industry experience.
Charah Solutions operates in an obscure market, meaning the company's on-site presence and track record are responsible for the company's success and future business opportunities. The company has established long-term relationships with leading utility providers like Duke Energy, Exelon, Dominion Energy, Dynergy, and PPL, among others.
The company sees itself as the partner of choice for power plants due to its reputation and a strong record of safety and compliance. Future growth will be dependent on the company's ability to expand its market share, expansion of environmental and maintenance offerings, investment in innovative technologies, and disciplined acquisitions.
The company plans to use $45.30 mln to repay borrowings outstanding under a term loan while remaining net proceeds will be used for general corporate purposes but could also be used for acquisitions or funding of the 2018 capital program.
Through the first three months of 2018, the company generated total revenue of $155.53 mln, which was up 163.8% year/year. The increase was entirely due to growth in Maintenance and Technical Services revenue, which rose nearly 900.0% to $107.74 mln. Net income totaled $1.17 mln for the quarter, down from $8.37 mln one year ago.
The company generated $4.23 mln from operating activities during the first quarter of 2018, up 113.1% from $1.98 mln generated one year ago.
Charah Solutions does not plan to pay a cash dividend in the foreseeable future, but its Board of Directors could alter the dividend policy.
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