Charah Solutions Inc (NYSE:CHRA), a company which provides maintenance and environmental services to major coal-fired and nuclear power plants, is preparing for a market debut ahead of a Trump Administration-initiated coal industry bailout. While the coal industry has been in steady decline for years now, action taken by government legislators could offer some serious wind to the sails of disparate coal and nuclear companies, many of whom rely on Charah Solutions for maintenance purposes.
These are the details on Charah Solutions’ forthcoming IPO, and how investors should be analyzing the service-provider ahead of its market debut.
It’s been a good year for coal
First things first, investors interested in Charah Solutions' forthcoming market debut will want to understand that 2018 has been a blockbuster year for coal-fired power plants. To be fair, the coal industry has been waning ever since the rise of incredibly cheap natural gas spawned by fracking innovations. Nonetheless, the industry saw an increase in both productions and jobs this year, in what could be a sign of longer-lasting recovery set to be further buoyed by positive regulatory action.
If the coal industry as a whole continues to recover slowly but surely, the coal-fired power plants that Charah Solutions services will be all the better for it. Healthy partners means a healthy outlook for Charah’s future, too; the company visited at least 51 power plants in 2017, clearly illustrating how vital it is for Charah Solutions to forge more partnerships in the future if it intends to keep the lights on. Charah Solutions primarily focuses on coal ash management services, but also handles complex environment projects that help coal-fired and nuclear power plants remain compliant with environmental standards while supplying communities around the nation with power.
According to filings made with the SEC, Charah Solutions has been bringing in a steady stream of cash, too; for the three months ended March 31, 2018, the company generated some $155.5 million in revenue. If coal companies in particular do see a boon of cash from government regulators soon, Charah Solutions could itself see a boom in business as power facilities around the nation get their hands on extra money to invest in their maintenance. As the company’s prospectus also makes clear, coal and nuclear sources of energy will also remain indispensable facets of the US economy for decades to come, despite existing climate concerns and regulatory shifts.
A healthy IPO could empower Charah Solutions for a bright future
Given that it’s in a declining industry services politically dicey targets, it’s fair to say that a successful IP for Charah Solutions will be instrumental when it comes to determining if the company has enough capital to remain relevant in the long-term. By offering some 7.4 million shares at a price range of $16 to $18, Charah Solutions hopes to bring in around $127 million. Though a particularly stunning debut could rake in as much as $150 million, many investors looking to back the company would be happy at the midpoint range, which would see the entire company valued at around half a billion dollars.
If President Donald Trump is successful in his push to launch a nuclear and coal bailout across the US economy, it’s also easy to see that Charah Solutions will enjoy a flood of business that could set the company down the path towards long-term success. This is one of the benefits of contract compliance and the president’s personal commitment to a mining industry that helped buoy his electoral prospects is likely to result in at least some pro-industry action being taken on the regulatory side, so investors can expect a friendly hand from Washington to help bolster Charah Solutions’ eventual debut.
Whether President Trump’s energy bailout plan is enough to sate investors concerned about the long-term health of the coal industry remains to be seen, however. As much as Charah Solutions claims coal will be important for the foreseeable future, it’s indisputable that other sources of energy are being favored in the open marketplace. Concerns about nuclear power plants still beset the public, too, making the long-term spread of nuclear power facilities less likely than such things as renewable energy sites and natural gas drilling depots. If Charah Solutions really wants to make itself an attractive pick on the open market, it needs to do more to make it clear to investors who are shunning nuclear and coal-powered plants that it has a viable future in a global economy turning away from fossil fuels. The rise of renewable energy solutions has taken much of the steam out of the coal industry’s engines, and dipping natural gas prices will continue to hammer the industry for the foreseeable future, too. While Charah Solutions is a healthy-looking company heading for a potentially booming IPO, the company remains connected at the hip to a coal industry that already has one foot in the grave.