Arq, Inc.'s Q2 2025: Key Contradictions in GAC Production, RNG Market Demand, and Financing Strategies

GAC production timeline and consistency, production capacity and testing timeline, RNG market demand and strategy, financing strategy for Phase 2, and potential capacity increase and timeline are the key contradictions discussed in Arq, Inc.'s latest 2025Q2 earnings call.



Successful Commissioning of GAC Line:
- Arq successfully commissioned its first GAC line, which is expected to reach 25 million pounds of nameplate capacity within 6 months.
- This milestone is crucial for Arq's expansion into the high-growth, high-margin granular activated carbon market, driven by persistent supply shortages and strong demand drivers.

Revenue and ASP Growth in PAC Business:
- Arq reported revenue of $29 million for Q2 2025, with a 13% year-over-year increase, supported by a 9% growth in average selling price (ASP) and higher volumes.
- The growth in ASP and volumes was driven by strategic customer diversification and reduced reliance on the mercury emissions market.

Positive Financial Performance and Adjusted EBITDA Improvement:
- Arq achieved its fifth consecutive quarter of positive adjusted EBITDA, with an increase of more than 3x as compared to Q2 2024.
- This improvement can be attributed to the turnaround of the PAC business, cost reduction efforts, and enhanced contract terms.

RNG Market Opportunities:
- Arq is expanding into the renewable natural gas (RNG) market, which is projected to grow 2x to 10x by 2030, presenting significant demand for granular activated carbon.
- The company's strategy is to capitalise on the higher pricing and margins offered by the RNG market, while maintaining a balanced customer mix to mitigate risk.