ARQ · Arq, Inc.

Arq reported Q1 2026 results with revenue of $29.1 million, up 7% year-over-year from $27.2 million, primarily due to increased sales volumes in its PAC business, though partially offset by lower pricing from product mix shifts. Gross margin contracted to 34.2% from 36.4%, pressured by pricing declines, a $0.8 million non-cash inventory revaluation charge for 2025-produced inventory, and lingering GAC production costs after pausing operations at the GAC facility. This contributed to a net loss of $0.8 million ($0.02 per diluted share), reversing a $0.2 million net income in Q1 2025. Adjusted EBITDA fell to $2.7 million from $4.1 million, reflecting these headwinds despite volume gains. SG&A expenses rose to $7.4 million from $6.1 million due to higher insurance, recruiting, and legal fees. CEO Bob Rasmus highlighted strong January-February gross margins in PAC, normalization post-GAC cost separation, and completion of biennial plant maintenance under budget in April. The company exited the quarter with $15.9 million in cash and restricted cash (including $11.2 million restricted) and total debt of $30.2 million, up from $28.5 million, driven by increased revolver borrowings to $20.9 million. Capex dropped sharply to $0.7 million from $3.7 million, reflecting completion of prior GAC commissioning. Arq reaffirmed full-year 2026 guidance of $120-125 million revenue and $17-20 million Adjusted EBITDA, signaling confidence amid GAC optimization. The ongoing GAC strategic review with engineering and equipment firms targets a go-forward plan by Q3 2026, evaluating process design, capex, and alternatives like reactivation capacity. Progress in asphalt testing with a leading U.S. partner advances Corbin wetcake to in-field trials, while discussions continue to monetize the Corbin facility. Board and management ownership surpassing 20% underscores alignment with shareholders.