Generated revenue of approximately
Reported Adjusted EBITDA(1) of approximately
GAC strategic optimization review ongoing with initial results expected by Q3 2026
Financial Highlights
- Generated revenue of
$29.1 million in Q1 2026 versus$27.2 million in Q1 2025, driven by increased sales volumes partially offset by decreased pricing caused by product mix - Gross margin of 34.2% in Q1 2026 versus 36.4% in Q1 2025, driven by decreases in pricing caused by product mix, an inventory revaluation charge and other costs, partially offset by increased sales volumes
- Reported Net loss of
$0.8 million in Q1 2026 vs. Net income of$0.2 million in Q1 2025 - Adjusted EBITDA(1) of
$2.7 million in Q1 2026 vs.$4.1 million in Q1 2025, driven by factors outlined above - Adjusted EBITDA for Q1 2026 included the negative impact of
$0.8 million non-cash inventory revaluation charge for inventory produced in 2025 - Exited Q1 2026 with cash and restricted cash of
$15.9 million , including$11.2 million in restricted cash - Reaffirmed full year 2026 guidance of revenue between
$120 -$125 million and Adjusted EBITDA of$17 -$20 million
(1) Adjusted EBITDA is a non-GAAP financial measure. Please refer to the paragraph titled “Non-GAAP Measures” for the definitions of non-GAAP financial measures and reconciliations to GAAP measures included in this press release.
Recent Business & Other Highlights
- Successfully completed biennial plant turnaround and maintenance (TAR) under budget in
April 2026 - Advanced GAC optimization review process with a well-regarded engineering firm and a new equipment design firm
- Progressed asphalt testing with leading
U.S. asphalt company, with Corbin wetcake demonstrating differentiated performance characteristics and advancing to small in-field paving tests - Board and management team ownership increased to more than 20% of the company following meaningful recent purchases
Strategic Optimization Update
Arq’s strategic optimization review remains ongoing as the Company evaluates the most practical path to economically attractive GAC production. Arq continues to work in combination with both an equipment and an engineering firm to further refine process design, capital requirements, and timing. Both firms were selected following extensive diligence to validate their independence, capabilities, and relevant industry expertise. In parallel, the Company is evaluating incremental activated carbon growth alternatives, such as adding reactivation or acid washing capacity, to ensure we are prioritizing the highest-return opportunities. The Company's current goal is to complete the strategic optimization review and have a go-forward GAC strategy in place by Q3 2026.
GAC market fundamentals remain strong and continue to support a favorable pricing environment. The Company is also engaged in active discussions with multiple parties regarding potential opportunities to monetize its Corbin Facility and related technologies. In asphalt, testing with a leading
Management Commentary
“The first quarter provided a solid foundation for the year ahead and underscored the continued transformation of our PAC business," said
First Quarter 2026 Results
Revenue totaled
Cost of revenue totaled
Gross margin totaled 34.2% for the first quarter of 2026, compared to 36.4% in the prior year period. The reduction in gross margin was primarily driven by decreases in pricing caused by product mix, the inventory revaluation noted previously, and trailing costs subsequent to pausing production at our GAC facility, partially offset by increased sales volumes.
Selling, general and administrative expenses totaled
Research and development costs remained flat for the first quarter of 2026 compared to the first quarter of 2025.
Operating loss was
Adjusted EBITDA was
See note below regarding the use of the non-GAAP financial measure Adjusted EBITDA and a reconciliation to the most comparable GAAP financial measure.
Capex and Balance Sheet
Capital expenditures totaled
Cash as of
Total debt, inclusive of financing leases, as of
Conference Call and Webcast Information
Arq will host a conference call to discuss the Company's financial performance on
A supplemental investor presentation will be available on the Company's Investor Resources section of the website prior to the start of the conference call. A replay of the event will be made available shortly after the event and accessible via the same webcast link referenced above. Alternatively, the replay may be accessed by dialing (877) 660-6853 or (201) 612-7415 and entering Access ID 13760084. The dial-in replay will expire after
About Arq
Arq (NASDAQ: ARQ) is a diversified, environmental technology company with products that enable a cleaner and safer planet while actively reducing our environmental impact. As the only vertically integrated producer of activated carbon products in
Caution on Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a “safe harbor” for such statements in certain circumstances. When used in this press release, the words “can,” “will,” "may," “intends,” “expects,” "continuing," “believes,” similar expressions and any other statements that are not historical facts are intended to identify those assertions as forward-looking statements. All statements that address activities, events or developments that the Company intends, expects or believes may occur in the future are forward-looking statements. These forward-looking statements include, but are not limited to, statements or expectations regarding: the future of our GAC Facility and Corbin Facility and the anticipated timing, results, and conclusions of our GAC business optimization review and the actions we may take upon the completion of such review; the anticipated benefits of transitioning away from using Corbin Wetcake to a bituminous proven performance coal as a feedstock for our GAC products; financial guidance for fiscal year 2026; the anticipated effects from fluctuations in the pricing of our AC products, including through expansion into higher-value end markets; expected supply and demand for our AC products and services, including our GAC products; the seasonal impact on our customers and their demand for our products; the future profitability and sustainability of our PAC business; our ability to fund our business over the next twelve months; our ability to access new markets for our feedstocks and other products, including renewable natural gas, asphalt, purified coal, rare earth minerals and synthetic graphite markets; any future plant development projects, including incremental growth alternatives, such as adding reactivation or acid washing capacity, and those that may be necessary to remediate design flaws in our GAC Facility, and our ability to finance any such projects; the effectiveness of our technologies and products and the benefits they provide; probability of any loss occurring with respect to certain guarantees made by
Source:
Investor Contact:
investors@arq.com
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| As of | ||||||||
| (in thousands, except share data) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,672 | $ | 6,573 | ||||
| Receivables, net | 15,952 | 14,980 | ||||||
| Inventories, net | 19,913 | 15,895 | ||||||
| Prepaid expenses and other current assets | 5,513 | 6,404 | ||||||
| Total current assets | 46,050 | 43,852 | ||||||
| Restricted cash, long-term | 11,184 | 8,467 | ||||||
| Property, plant and equipment, net of accumulated depreciation of | 141,061 | 143,154 | ||||||
| Other long-term assets, net | 33,840 | 35,107 | ||||||
| Total Assets | $ | 232,135 | $ | 230,580 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 17,107 | $ | 15,269 | ||||
| Revolving credit facility | 20,908 | 18,950 | ||||||
| Current portion of long-term debt obligations | 1,075 | 1,063 | ||||||
| Other current liabilities | 5,988 | 7,015 | ||||||
| Total current liabilities | 45,078 | 42,297 | ||||||
| Long-term debt obligations, net of current portion | 8,194 | 8,452 | ||||||
| Other long-term liabilities | 11,051 | 11,868 | ||||||
| Total Liabilities | 64,323 | 62,617 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: par value of | — | — | ||||||
| Common stock: par value of | 47 | 47 | ||||||
| (47,692 | ) | (47,692 | ) | |||||
| Additional paid-in capital | 202,475 | 201,784 | ||||||
| Retained earnings | 12,982 | 13,824 | ||||||
| Total Stockholders’ Equity | 167,812 | 167,963 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 232,135 | $ | 230,580 | ||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| (in thousands, except per share data) | 2026 | 2025 | ||||||
| Revenue | $ | 29,053 | $ | 27,247 | ||||
| Cost of revenue, exclusive of depreciation and amortization | 19,114 | 17,332 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 7,369 | 6,053 | ||||||
| Research and development | 982 | 874 | ||||||
| Depreciation, amortization, depletion and accretion | 2,570 | 2,181 | ||||||
| Loss on sale of assets | — | 145 | ||||||
| Total operating expenses | 10,921 | 9,253 | ||||||
| Operating (loss) income | (982 | ) | 662 | |||||
| Other income (expense): | ||||||||
| Interest expense | (705 | ) | (724 | ) | ||||
| Other income | 845 | 265 | ||||||
| Total other income (expense) | 140 | (459 | ) | |||||
| (Loss) income before income taxes | (842 | ) | 203 | |||||
| Income tax expense | — | — | ||||||
| Net (loss) income | $ | (842 | ) | $ | 203 | |||
| (Loss) income per common share: | ||||||||
| Basic | $ | (0.02 | ) | $ | — | |||
| Diluted | $ | (0.02 | ) | $ | — | |||
| Weighted-average number of common shares outstanding: | ||||||||
| Basic | 41,732 | 41,322 | ||||||
| Diluted | 41,732 | 42,530 | ||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Cash flows from operating activities | ||||||||
| Net (loss) income | $ | (842 | ) | $ | 203 | |||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation, amortization, depletion and accretion | 2,570 | 2,181 | ||||||
| Stock-based compensation expense | 891 | 736 | ||||||
| Operating lease expense | 686 | 541 | ||||||
| Amortization of debt discount and debt issuance costs | 98 | 6 | ||||||
| Loss on sale of long-term assets, net | — | 145 | ||||||
| Other non-cash items, net | (73 | ) | (157 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (972 | ) | (492 | ) | ||||
| Prepaid expenses and other assets | 798 | (113 | ) | |||||
| Inventories | (3,332 | ) | (2,338 | ) | ||||
| Other long-term assets, net | 501 | (1,801 | ) | |||||
| Accounts payable and accrued expenses | 1,726 | (4,494 | ) | |||||
| Other current liabilities | (1,122 | ) | (907 | ) | ||||
| Operating lease liabilities | (776 | ) | 826 | |||||
| Other long-term liabilities | (89 | ) | (139 | ) | ||||
| Net cash provided by (used in) operating activities | 64 | (5,803 | ) | |||||
| Cash flows from investing activities | ||||||||
| Acquisition of property, plant, equipment and intangible assets, net | (740 | ) | (3,710 | ) | ||||
| Acquisition of mine development costs | (92 | ) | (43 | ) | ||||
| Distributions from equity method investee in excess of cumulative earnings | 78 | 155 | ||||||
| Net cash used in investing activities | (754 | ) | (3,598 | ) | ||||
| Cash flows from financing activities | ||||||||
| Borrowings on revolving credit facility | 32,439 | 30,700 | ||||||
| Repayments of revolving credit facility | (30,481 | ) | (28,344 | ) | ||||
| Repurchase of common stock to satisfy tax withholdings | (200 | ) | (42 | ) | ||||
| Principal payments on notes payable | (196 | ) | (144 | ) | ||||
| Principal payments on finance lease obligations | (56 | ) | (201 | ) | ||||
| Net cash provided by financing activities | 1,506 | 1,969 | ||||||
| Increase (decrease) in Cash and Restricted Cash | 816 | (7,432 | ) | |||||
| Cash and Restricted Cash, beginning of period | 15,040 | 22,235 | ||||||
| Cash and Restricted Cash, end of period | $ | 15,856 | $ | 14,803 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Change in accrued purchases for property and equipment | $ | 112 | $ | 959 | ||||
Note on Non-GAAP Financial Measures
To supplement our financial information presented in accordance with
We believe that the EBITDA and Adjusted EBITDA measures are less susceptible to variances that affect our operating performance. We include these non-GAAP measures because management uses them in the evaluation of our operating performance, and believe they help to facilitate comparison of operating results between periods. We believe the non-GAAP measures provide useful information to both management and users of the financial statements by excluding certain expenses, gains, and losses which can vary widely across different industries or among companies within the same industry and may not be indicative of core operating results and business outlook.
EBITDA and Adjusted EBITDA:
The following table reconciles net (loss) income, our most directly comparable as-reported financial measure calculated in accordance with
Reconciliation of Net (Loss) Income to Adjusted EBITDA (Unaudited) | |||||||
| Three Months Ended | |||||||
| (in thousands) | 2026 | 2025 | |||||
| Net (loss) income | $ | (842 | ) | $ | 203 | ||
| Depreciation, amortization, depletion and accretion | 2,570 | 2,181 | |||||
| Amortization of Upfront Customer Consideration | 180 | 127 | |||||
| Interest expense, net | (55 | ) | 671 | ||||
| Income tax expense | — | — | |||||
| EBITDA | $ | 1,853 | $ | 3,182 | |||
| Share-based compensation | 891 | 736 | |||||
| Loss on sale of assets | — | 145 | |||||
| Adjusted EBITDA | $ | 2,744 | $ | 4,063 | |||
