CHARAH SOLUTIONS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion and analysis should be read in conjunction with the
historical financial statements and related notes included in Part I, "Item 1.
Financial Statements" of this Quarterly Report. This discussion contains
"forward­looking statements" reflecting our current expectations, estimates and
assumptions concerning events and financial trends that may affect our future
operating results or financial position. Actual results and the timing of events
may differ materially from those contained in these forward­looking statements
due to a number of factors. Factors that could cause or contribute to such
differences include, but are not limited to, public health threats or outbreaks
of communicable diseases, such as the ongoing novel coronavirus "COVID-19"
pandemic and its impact on our business, customers, employees or customers'
facilities, capital expenditures, economic and competitive conditions, and
regulatory changes and other uncertainties, as well as those factors discussed
below and elsewhere in this Quarterly Report. Please read "Cautionary Note
Regarding Forward­Looking Statements" included elsewhere in this Quarterly
Report. Except as otherwise required by applicable law, we assume no obligation
to update any of these forward­looking statements.

Sharah Solutions, Inc.

Charah Solutions, Inc. (together with its subsidiaries, "Charah Solutions," the
"Company," "we," "us" or "our") was incorporated in Delaware in 2018 in
connection with our initial public offering in June 2018 and, together with its
predecessors, has been in business since 1987. Since our founding, we have
continuously worked to anticipate our customers' evolving environmental needs,
increasing the number of services we provide through our embedded presence at
their power generation facilities. Our multi-service platform allows customers
to gain efficiencies from sourcing multiple required offerings from a single,
trusted partner compared to service providers with more limited scope.

Insight

We are a leading national service provider of mission-critical environmental
services and byproduct recycling to the power generation industry. We offer a
suite of remediation and compliance services, byproduct services, raw material
sales and Environmental Risk Transfer ("ERT") services. We also design and
implement solutions for complex environmental projects (such as coal ash pond
closures) and facilitate coal ash recycling through byproduct marketing and
other beneficial use services. We believe we are a partner of choice for the
power generation industry due to our quality, safety, domain experience, and
compliance record, all of which are key criteria for our customers. In 2021, we
performed work at more than 40 coal-fired generation sites nationwide.

We operate as a single operating segment, reflecting the suite of end-to-end
services we offer our utility partners and how our chief operating decision
maker reviews consolidated financial information to evaluate results of
operations, assess performance and allocate resources for these services. We
provide the following services through our one segment: remediation and
compliance services, byproduct services, raw material sales and ERT services.
Remediation and compliance services are associated with our customers' need for
multi-year environmental improvement and sustainability initiatives, whether
driven by regulatory requirements, power generation customer initiatives or
consumer expectations and standards. Byproduct services consist of recurring and
mission-critical coal ash management and operations for coal-fired power
generation facilities while also supporting both our power generation customers'
desire to recycle their recurring and legacy volumes of coal combustion
residuals ("CCRs"), commonly known as coal ash, and our ultimate end customers'
need for high-quality, cost-effective supplemental cementitious materials
("SCMs") that provide a sustainable, environmentally-friendly substitute for
Portland cement in concrete. Our raw material sales provide customers with the
raw materials that are essential to their business while also providing the
sourcing, logistics, and management needed to facilitate these raw material
transactions around the globe. ERT services represent an innovative solution
designed to meet coal fired plant energy providers' evolving and increasingly
complex plant closure and environmental remediation needs. These customers need
to retire and decommission older or underutilized assets while maximizing the
assets value and improving the environment. Our ERT services manage the sites'
environmental remediation requirements, benefiting the communities and lowering
the coal fired plant energy providers' costs.

COVID-19 Update

The pandemic caused by a novel coronavirus ("COVID-19") has impacted many
aspects of our operations, directly and indirectly, including our employees, the
services we provide at our customers' power generation facilities, our suppliers
and the overall market. We, along with our utility partners, have implemented
the precautionary health and safety measures recommended by the Centers for
Disease Control and Prevention (the "CDC") in response to the COVID-19 pandemic,
including, but not limited to: an employee health status questionnaire, taking
daily temperatures, enhanced sanitation practices and cleaning surfaces
throughout each shift, and increasing the number of hand sanitizing stations. We
have also implemented social distancing measures such as staggering shift start
and stop times and break times with additional break spaces to support social
distancing as well as holding safety meetings outside of the site trailer.
Furthermore, we have implemented work-from-home measures for the majority of
office employees. Understanding that the COVID-19 challenge is evolving, based
on new information and feedback, we continue to monitor the situation and update
our proactive measures in coordination with our customers. We continue to work
closely with our utility partners and concrete producer customers to meet their
needs and monitor any potential slowdowns of byproduct recycling and marketing
services if there is decreased demand for construction materials.

The COVID-19 pandemic presents potential new risks to the Company's business,
including logistical, supply chain and other challenges that may continue to
affect demand for services, which are driven by construction activity, and the
timing of our remediation and compliance services projects, due to delays in new
contract awards and increasing costs and declining availability for certain
machinery and equipment.


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How we evaluate our operations

We use a variety of financial and operational measures to assess the performance of our operations, including:

•Revenue;

•Gross Profit;

•Operating Income;

•Adjusted EBITDA; and

•Adjusted EBITDA Margin.

Revenue

We analyze our revenue by comparing actual revenue to our internal projections
for a given period and to prior periods to assess our performance. We believe
that revenue is a meaningful indicator of the demand and pricing for our
services.

Gross profit

We analyze our gross profit, which we define as revenue less cost of sales, to
measure our financial performance. We believe that gross profit is a meaningful
metric because it provides insight on financial performance of our revenue
streams without consideration of company overhead. When analyzing gross profit,
we compare actual gross profit to our internal projections for a given period
and to prior periods to assess our performance.

Operating result

We analyze our operating income, which we define as revenue less cost of sales
and general and administrative expenses, to measure our financial performance.
We believe that operating income is a meaningful metric because it provides
insight on profitability and true operating performance based on the historical
cost basis of our assets. Additionally, due to the nature of the accounting
requirements relating to our ERT services, the gains from the sales of fixed
assets and the costs associated with ERT fixed asset sales are recorded as a
component of operating income. When analyzing operating income, we compare
actual operating income to our internal projections for a given period and to
prior periods to assess our performance.

Adjusted EBITDA and Adjusted EBITDA margin

We view Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial
measures, as important indicators of performance because they allow for an
effective evaluation of our operating performance when compared to our peers,
without regard to our financing methods or capital structure.

We define Adjusted EBITDA as net loss attributable to Charah Solutions, Inc.
before income from discontinued operations, net of tax, interest expense, net,
loss on extinguishment of debt, income taxes, depreciation and amortization,
equity-based compensation, impairment expense (including inventory reserves),
gain on change in contingent payment liability and transaction-related expenses
and other items. Adjusted EBITDA margin represents the ratio of Adjusted EBITDA
to total revenue. See "-Non-GAAP Financial Measures" below for more information
and a reconciliation of Adjusted EBITDA to net loss attributable to Charah
Solutions, Inc., the most directly comparable financial measure calculated and
presented in accordance with GAAP.

Key Factors Affecting Our Business and Financial Statements

Ability to seize new contracts and opportunities

Our ability to grow revenue and earnings is dependent on maintaining and
increasing our market share, renewing existing contracts, and obtaining
additional contracts from proactive bidding on contracts with new and existing
customers. We proactively work with existing customers ahead of contract end
dates to attempt to secure contract renewals. We also leverage the embedded
long-term nature of our customer relationships to obtain insight and capture new
business opportunities across our platform.

Business seasonality

Based on historical trends, we expect our operating results to vary seasonally.
Variations in normal weather patterns can also cause changes in energy
consumption which may influence the demand and timing of associated services for
our byproduct services offerings. Our byproduct services and raw material sales
are also negatively affected during winter months when the use of cement and
cement products is generally lower. Inclement weather can impact
construction-related activities associated with pond and landfill remediation,
which affects the timing of revenue generation for our remediation and
compliance services.

Nature of project-based environmental remediation mandates

We believe there is a significant pipeline of coal ash ponds and landfills that
will require remediation and/or closure in the future. Due to their scale and
complexity, these environmental remediation projects are typically completed
over longer periods. As a result, our revenue from these projects can fluctuate
over time. Some of our revenue from projects is recognized over time using the
cost-to-cost input method of accounting for GAAP purposes, based primarily on
contract costs incurred to date compared to total estimated contract costs. This
method is the most accurate measure of our contract performance because it
depicts the company's performance in transferring control of goods or services
promised to customers according to a reasonable measure of progress toward
complete satisfaction of the performance obligation. The timing of revenue
recorded for financial reporting purposes may differ from actual billings to
customers, sometimes resulting

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costs and billings exceeding actual revenues. Due to the risks associated with estimating gross profit margins for long-term employment, actual results may differ from these estimates.

Dynamics of the by-product recycling market

There is a growing demand for recycled coal ash across various applications
driven by market forces and governmental regulations creating the need to
dispose of coal ash in an environmentally sensitive manner. Pricing of byproduct
services and raw material sales are driven by supply and demand market dynamics
as well as the chemical and physical properties of the ash. As demand increases
for the end-products that use CCRs (i.e., concrete for construction and
infrastructure projects), the demand for recycled coal ash also typically rises.
These fluctuations affect the relative demand for our raw material sales. In
recessionary periods, construction and infrastructure spending and the
corresponding need for concrete may decline. However, this unfavorable effect
may be partially offset by an increase in the demand for recycled coal ash
during recessionary periods, given that coal ash is more cost-effective than
other alternatives.

Power generation industry expenditures for environmental liability management and regulatory requirements

The power generation industry has increased annual spending on environmental
liability management. We believe this results from regulatory requirements and
consumer pressure, and the industry's increasing focus on environmental
stewardship. Continued increases in spending on environmental liability
management by our customers should result in increased demand for services
across our platform.

Many power generation entities are experiencing an increased need to retire and
decommission older or less economically viable generating assets while
minimizing costs and maximizing the value of the assets and improving the
environment. Our ERT services allow these partners to remove the environmental
risk and insurance obligations and place control and oversight with a company
specializing in these complex remediation and reclamation projects. We believe
our broad set of service capabilities, track record of quality service and
safety, exacting environmental standards, and a dependable and experienced labor
force is a significant competitive advantage. Our work, mission and culture are
directly aligned with meeting environmental, sustainability, and governance
("ESG") standards and providing innovative services to solve our coal fired
plant energy providers' most complex environmental challenges.

Cost management and capital investment efficiency

Our principal operating costs consist of labor, material and equipment costs and
equipment maintenance. We focus on cost management and efficiency, including
monitoring labor costs, both in terms of wage rates and headcount, along with
other costs such as materials and equipment. We believe we maintain a
disciplined approach to capital expenditure decisions, typically associated with
specific contract requirements. Furthermore, we strive to extend our equipment's
useful life through a well-planned routine maintenance program.

How we generate revenue

Our remediation and compliance services primarily consist of the design, construction, management, remediation and closure of ash ponds and landfills at client-owned sites.

Our byproduct services include recycling recurring and contracted volumes of
coal-fired power generation waste byproducts, such as fly ash, bottom ash, IGCC
slag and gypsum byproducts, each of which can be used for various industrial
purposes. Byproduct services also include the management of coal ash which is
mission-critical to power plants' daily operations including silo management,
on-site ash transportation and capture, and disposal of combustion byproducts
from coal-power operations. More than 90% of our services work is time and
materials based, cost reimbursable or unit price contracts, which significantly
reduces the risk of loss on contracts and provides gross margin visibility.
Revenue from management contracts is recognized when the ash is hauled to the
landfill or the management services are provided. Revenue from the sale of ash
is recognized when it is delivered to the customer. Revenue from construction
contracts is recognized using the cost-to-cost input method.

Our commodity sales provide customers with the critical raw materials for their business while providing the sourcing, logistics and management necessary to facilitate these commodity transactions around the world.

Revenue from construction contracts is recognized using the cost-to-cost input
method. Revenue from management contracts is recognized when the ash is hauled
to the landfill or the management services are provided. Revenue from the sale
of ash is recognized when it is delivered to the customer. This combination of
one-stop related services deepens customer connectivity and drives long-term
relationships, which we believe are critical for renewing existing contracts,
winning incremental business from existing customers at new sites and adding new
customers.


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Operating results

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

                                                             Three Months Ended
                                                                  March 31,                               Change
                                                           2022               2021                $                  %
                                                                               (dollars in thousands)
Revenue                                                $   66,051          $ 52,107          $ 13,944                 26.8  %
Cost of sales                                             (69,818)          (46,522)          (23,296)                50.1  %
Gross profit                                               (3,767)            5,585            (9,352)              (167.4) %
General and administrative expenses                        (8,952)           (9,432)              480                 (5.1) %
Gain on sales-type lease                                        -             5,568            (5,568)              (100.0) %

Gains on sale of real estate, property, plant and equipment, net

                                                         3,543               547             2,996                547.7  %
Gain on ARO settlement                                      2,451                 -             2,451                100.0  %
Other operating expenses from ERT services                   (667)             (290)             (377)               130.0  %
Operating (loss) income                                    (7,392)            1,978            (9,370)               473.7  %
Interest expense, net                                      (4,573)           (3,235)           (1,338)               (41.4) %
Income from equity method investment                            -               202              (202)              (100.0) %
Loss before income taxes                                  (11,965)           (1,055)          (10,910)             1,034.1  %
Income tax expense                                             78               157               (79)               (50.3) %
Net loss                                                  (12,043)           (1,212)          (10,831)              (893.6) %

Less (loss) income attributable to non-controlling interests

                                                       (3)               75               (78)               104.0  %

Net loss attributable to Sharah Solutions, Inc. ($12,040) $(1,287) (10,753)

              (835.5) %


Revenue. Revenue increased $13.9 million, or 26.8%, to $66.1 million for the
three months ended March 31, 2022 as compared to $52.1 million for the three
months ended March 31, 2021, primarily driven by increases in remediation and
compliance services revenue of $10.9 million from the net commencements of new
project work and in raw material sales of $5.5 million from an increase in
shipments. This increase was partially offset by lower byproduct services
revenue of $2.5 million primarily due to net completions of operations work.

Gross Profit. Gross profit decreased $9.4 million, or 167.4%, to $(3.8) million
for the three months ended March 31, 2022 as compared to $5.6 million for the
three months ended March 31, 2021. As a percentage of revenue, gross profit was
(5.7)% and 10.7% for the three months ended March 31, 2022 and 2021,
respectively. The decrease in gross profit and gross profit margin was directly
affected by several factors, most notably supply chain and logistics issues,
which impacted the expected ramp of two long-term beneficial use projects, and
significant weather challenges, which delayed the completion of three projects
during the quarter, resulting in cost overruns. Delays in receiving material and
obtaining necessary rail and trucking resources resulted in a delay to the start
of one large project and have pushed the expected ramp of the second. The
Company is taking steps to address these issues, and it is not expected that the
long-term profitability of the projects will be materially impacted.
Additionally, significant rain events at three construction projects extended
the final completion dates for those projects and resulted in cost overruns. The
projects had originally been scheduled for completion in the Fall of 2021. The
Company has now demobilized at the largest of these projects and expects to
complete the remaining two projects during the second quarter.

General and Administrative Expenses. General and administrative expenses
decreased $0.5 million, or 5.1%, for the three months ended March 31, 2022 to
$9.0 million as compared to $9.4 million for the three months ended March 31,
2021, primarily attributable to improved expense management.

Gain on sales-type lease. Gain on sales-type lease decreased $5.6 million for
the three months ended March 31, 2022 due to the absence of the recognition of a
parcel transferred under a sales-type lease at an ERT project as discussed in
Note 5, Balance Sheet Items, to the accompanying unaudited condensed
consolidated financial statements.

Gains on Sales of Real Estate, Property and Equipment, Net. Gains on sales of
real estate, property and equipment, net increased $3.0 million, or 547.7%, to
$3.5 million for the three months ended March 31, 2022 as compared to $0.5
million for the three months ended March 31, 2021, primarily due to increased
scrap sales from the demolition of the Gibbons Creek power plant.

Gain on ARO settlement. Gain on ARO settlement increased $2.5 million for the
three months ended March 31, 2022 due to differences between the estimated costs
used in the measurement of the fair value of the Company's AROs and the actual
costs incurred for specific remediation tasks recognized on a proportionate
basis.

Other Operating Expenses from ERT Services. Other operating expenses from ERT
services increased $0.4 million, or 130.0%,to $0.7 million for the three months
ended March 31, 2022 as compared to $0.3 million for the three months ended
March 31, 2021, primarily driven by a complete quarter of expenses associated
with operations on the Gibbons Creek ERT project in 2022.

Interest Expense, Net. Interest expense, net increased $1.3 million, or 41.4%,
to $4.6 million for the three months ended March 31, 2022 as compared to $3.2
million for the three months ended March 31, 2021, primarily due to higher debt
balances, a higher weighted-average cost of capital associated with equipment
financing and an increase in amortization of debt issuance costs.

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Income from Investment using the equity method. Investment income under the equity method decreased $0.2 million for the three months ended March 31, 2022 due to the dissolution of our joint venture into CV Ash in the first quarter of 2021.

Income Tax Expense. Income tax expense decreased $0.1 million, or 50.3%, for the
three months ended March 31, 2022 to $0.1 million as compared to $0.2 million
for the three months ended March 31, 2021, primarily due to limitations of the
utilization of deferred tax assets against the reversal of deferred tax
liabilities.

Net loss. Net loss increased $10.8 millioni.e. 893.6%, at $12.0 million for the three months ended March 31, 2022 compared to $1.2 million for the three months ended March 31, 2021.

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