Arq 2025 Q3 Earnings Q3 Loss Widens Despite 0.9% Revenue Growth

Arq (ARQ) reported a net loss of $0.02 per share in Q3 2025, missing expectations and marking a 150% deterioration from a $0.04 profit in the prior-year period. The company raised full-year guidance for net revenue and gross profit growth but acknowledged challenges from macroeconomic uncertainty and production inefficiencies at its GAC facility.

Revenue

The company’s total revenue rose 0.9% to $35.07 million in Q3 2025, reflecting modest growth in its foundational Powder Activated Carbon (PAC) business. However, this fell short of the $34.51 million consensus estimate, driven by weaker-than-expected demand and early-stage GAC production challenges.

Earnings/Net Income

Arq swung to a net loss of $653,000 in Q3 2025, compared to a $1.62 million profit in the prior-year period. The EPS decline of $0.06 per share reflects significant operational inefficiencies at its GAC facility, including low production volumes and higher fixed costs. This performance underscores the company’s ongoing struggles to scale new initiatives while maintaining profitability.

Post-Earnings Price Action Review

Following the earnings report, Arq’s stock price declined 0.94% on the day, 4.65% for the week, and 9.54% month-to-date. The mixed guidance—raising revenue expectations while acknowledging operational hurdles—left investors cautious. While the company highlighted progress in PAC margins and GAC commercialization, persistent production bottlenecks and macroeconomic headwinds weighed on market sentiment.

CEO Commentary

CEO Bob Rasmus emphasized milestones in GAC production and PAC business resilience, noting a $25 million Adjusted EBITDA improvement since 2023. However, he acknowledged delays in achieving nameplate GAC capacity due to design flaws and feedstock variability. Strategic priorities include optimizing GAC production, exploring lower-moisture coal alternatives, and diversifying into rare earth materials and synthetic graphite.

Guidance

Arq raised full-year 2025 guidance, projecting net revenue growth of 22% and gross profit growth of 23%. Adjusted EBITDA margin is expected to reach 17%. Key risks include ongoing GAC production inefficiencies, macroeconomic volatility, and customer renewal uncertainties.

Additional News

1. Strategic Expansion: Arq signed a non-binding memorandum of understanding for potential purified coal applications, signaling interest in diversifying feedstock sources.

2. Operational Adjustments: The company plans to test lower-moisture coal to reduce production variability and improve GAC output at its Red River facility.

3. Capital Allocation: Arq announced a share repurchase program, reflecting confidence in its liquidity and long-term growth trajectory despite near-term challenges.