By: Dylan Sikes - AllPennyStocks.com News

Tuesday, March 18, 2014

The Environmental Protection Agency’s Mercury and Air Toxic Standards, or MATS rule has certainly ruffled the feathers of the coal industry. While some advocates call coal-fired plants a main culprit in climate change, some opponents call the proposed new standards a War on America, damaging the coal industry by causing more coal-fired plants to be shuttered because it’s not economically sensible to try and make them compliant to even more stringent emission standards. Any due diligence will quickly show that there is a litany of information provided by pundits arguing both sides of the emission-standard tracks. The EPA’s new MATS rule mandates that all coal- and oil-fired power plants in the U.S., larger than 25 mega-watts, remove approximately 90 percent of mercury from their emissions by April 16, 2015, or in some cases April 2016.

Fact remains that many utilities are making moves in preparation for the new regulations, which benefits companies like Cabot Corp. (NYSE:CBT) and its much smaller peer Midwest Energy Emissions Corporation (OTCQB:MEEC). These companies provide solutions for mercury removal that are compliant with MATS.

Midwest Energy Emissions, which calls itself ME2C for short, offers a full line of products employing its Sorbent Enhancing Additive (“SEA”) technology. Custom designed for each customer’s particular needs, the sorbent enhancement additive is injected in small amounts into a boiler and works in conjunction with other proprietary sorbents to meet mercury emission requirements. The technology has been developed through years of field-testing at North American utilities demonstrating its cost-effectiveness and efficiency that was featured in the October edition of Energy-Tech Magazine.

ME2C looks to be starting to turn the corner as a revenue generator. Although the company only reported revenue of $1.67 million in 2013, that was up 111 percent from $788,072 in 2012. On the downside, net loss also increased, rising to $4.85 million, or 14 cents per share, versus $3.88 million, or 12 cents per share, in 2012.

Going forward, it looks like sales are going to rise significantly, based upon corporate releases. In January, ME2C announced that it received firm commitments from “a major U.S. power producer” for multi-year pollution control for MATS compliance via a fleet of 9 generating units. Midwest Energy says that revenue is expected to start this year and expand to about $30 million per year by 2016. As is nearly always the case, the name of client was not disclosed.

That news was followed by Midwest Energy Emissions being selected by “a large coal-power cooperative in the Southwest U.S.” for mercury mitigation. Install revenue is forecast at $2.4 million this year, with the company providing guidance of $2 million annually starting in 2015.

On Tuesday, ME2C said that it has penned yet another contract, this time with “a large utility cooperating in the Southwest U.S.,” to help the co-op meet MATS in the future. ME2C will not be generating any cashflow from the 36-month agreement this year, with projections of install revenue of $2.4 million in 2015 and then about $4 million annually, for a total contract value around $14 million.

"I am delighted that all of the hard work that our team has put forth in demonstrations is now winning long-term business contracts, and winning the trust of these coal-power utilities. MATS presents another regulatory hurdle for coal power plant owners, but one that we can help them manage in the most cost effective manner in the market today,” said Midwest Energy Emissions chief executive Alan Kelley in a prepared statement today.

For a company that only recorded $1.67 million in sales last year, revenue in 2014 will climb by more that 40 percent this year if the company hits its guidance for the one contract alone, without giving mention to revenue from existing customers or other deals in the rest of 2014. In 2015 and 2016, sales appear that they will jump exponentially from this year’s level, which will be a focal point about the company’s ability to swing into profitability. Proper due diligence is, as always, encouraged.

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