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- **PAC Strength**: 7% YoY ASP growth and $5.2M EBITDA, covering maintenance CapEx.
- **GAC Challenges**: Mid-2026 nameplate target with $8-10M thermal oxidizer; Q3 EBITDA hit by $5M+ inefficiencies.
- **Market Outlook**: Strong GAC demand with spot prices above contracts; exploring asphalt and rare earths for diversification.
- **Financial Discipline**: 43% SG&A reduction; 2025 CapEx $8-12M manageable with cash flow.

**【CEO Opening Remarks】**
- PAC revenue growth driven by 7% YoY ASP increase and 43% SG&A reduction, contributing to $5.2M adjusted EBITDA.
- GAC production initiated but operating below capacity due to design inefficiencies with Corbin feedstock, resulting in $5M+ non-recurring costs.
- Exploring feedstock blending (e.g., low-moisture coal) and alternative products (asphalt, rare earths) to enhance GAC profitability.

**【CFO Financial Review】**
- Q3 revenue $35.1M, with PAC ASP growth offsetting GAC fixed costs (gross margin 28.8%).
- Adjusted EBITDA $5.2M (-42% YoY) due to GAC ramp inefficiencies; PAC alone covers maintenance CapEx.
- SG&A down 43% YoY; R&D up 225% YoY for GAC development.

**【Balance Sheet Update】**
- Total cash $15.5M (vs. $22.2M YoE), with $7M unrestricted; 2025 CapEx $8-12M manageable via cash and operations.

**【CEO Key Takeaways】**
- PAC is a stable, high-margin business with long-term growth potential.
- GAC delays frustrating but solvable; mid-2026 nameplate capacity target with $8-10M thermal oxidizer investment.
- GAC market fundamentals strong, with spot prices above contract rates.

**【Q&A Highlights】**
- GAC production volumes remain suboptimal; mid-2026 timeline tied to thermal oxidizer installation.
- Feedstock variability causing design issues; blending with drier coal could reduce costs.
- PAC ASP growth slowing but still positive; exploring new markets for diversification.
- Gross margin expected to stabilize in Q4-Q1 before improving post-2026 ramp.
- Long-term GAC expansion contingent on Phase 1 efficiency improvements.

Arq, Inc. (ARQ) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

ARQ

ARQ fundamentals

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