Financial Data and Key Metrics Changes - Revenue for the full year 2025 reached approximately $120 million, reflecting a 10% year-over-year growth driven by improvements in average selling price and volumes [51][58] - Adjusted EBITDA for 2025 was $13.2 million, representing a 26% improvement compared to 2024, despite the impact of GAC startup costs [51][52] - Q4 2025 revenue totaled $29.4 million, up around 8% year-over-year, with a gross margin of 13.6%, significantly impacted by GAC ramp-up costs [54][55] Business Line Data and Key Metrics Changes - The PAC business delivered exceptional performance in 2025, with revenues reaching approximately $120 million, up 10% year-over-year, and adjusted EBITDA of $13 million [38][51] - The company is pausing GAC production to conduct a comprehensive engineering and production process optimization review, with no GAC production expected in 2026 [9][25] Market Data and Key Metrics Changes - The GAC market fundamentals remain strong, with persistent supply shortages against steady annual growth from existing demand drivers [27][28] - The company anticipates that the PAC business will continue to be cash generative in fiscal year 2026 and beyond, with strong visibility into future demand [56][58] Company Strategy and Development Direction - The company is focused on optimizing its GAC production process and has made strategic changes to its leadership team to enhance operational efficiency [32][36] - The shift towards specialty products and engineered materials is expected to improve the business profile and command premium pricing [43][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for GAC, citing a significant demand-supply imbalance that is expected to persist [70][108] - The company is committed to making disciplined capital allocation decisions and is focused on rebuilding investor confidence through consistent execution [62][64] Other Important Information - The company is taking a $45 million write-down on its Corbin assets as part of its decision to switch GAC feedstock to purchased bituminous coal [29][30] - The company ended the year with total cash of $15 million and total debt of $28.5 million, reflecting an increase due to higher utilization of its credit facility [57] Q&A Session Summary Question: Is there anything preventing the company from pursuing GAC? - Management confirmed there are no barriers to pursuing GAC, emphasizing strong market fundamentals and expected demand [70][71] Question: Any commentary on regulatory undercurrents affecting PAC? - Management stated there is no regulatory uncertainty affecting the PAC business, with existing regulations remaining intact [72] Question: Guidance and free cash flow expectations? - Management indicated that the PAC business is expected to generate free cash flow, with maintenance CapEx anticipated to be lower in the following year [73] Question: Capacity to supply the market if demand increases? - Management confirmed there is capacity to expand PAC production to meet increased demand without cannibalizing GAC production [74] Question: Updates on alternative applications for Corbin wet cake? - Management reported progress in testing asphalt emulsion blending, but significant revenues from this application are not expected in 2026 [92]

Financial Data and Key Metrics Changes - Revenue for the full year 2025 reached approximately $120 million, reflecting a 10% year-over-year increase, driven by solid improvements in average selling price and volumes [51][57] - Adjusted EBITDA for 2025 was $13.2 million, representing a 26% improvement compared to 2024, despite the impact of GAC startup costs [52][56] - Gross margin for the year was 27.9%, negatively impacted by GAC ramp-up costs [51] Business Line Data and Key Metrics Changes - The PAC business delivered exceptional performance in 2025, with revenues reaching approximately $120 million, up 10% year-over-year [38][51] - The company is pausing GAC production to conduct a comprehensive engineering and production process optimization review, with no GAC production expected in 2026 [9][60] - The PAC business is expected to generate adjusted EBITDA of $17 million to $20 million for 2026, based on proven operations [61][58] Market Data and Key Metrics Changes - The GAC market fundamentals remain strong, with persistent supply shortages against steady annual growth from existing demand drivers [27][28] - The company has 96% contract visibility on 2026 targeted volumes and 75% visibility through 2027, indicating strong demand and customer loyalty [44][102] Company Strategy and Development Direction - The company is focused on optimizing its GAC production process and has made strategic changes to its leadership team to enhance operational efficiency [32][36] - The decision to pause GAC production is a disciplined capital allocation decision, not a reflection of lost confidence in the market opportunity [60] - The company aims to transition to purchasing domestic bituminous coal feedstock to eliminate moisture-related production constraints and improve yield [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for GAC, citing a significant demand-supply imbalance that is expected to persist [70][108] - The company is committed to rebuilding investor confidence through consistent execution and delivering on its 2026 PAC guidance [61][62] Other Important Information - The company is taking a $45 million write-down on its Corbin assets as part of its decision to switch GAC feedstock [29][30] - The company ended the year with total cash of $15 million, with total debt of $28.5 million, reflecting increased utilization of its credit facility [56] Q&A Session Summary Question: Is there anything that would prevent the company from pursuing GAC? - Management confirmed there are no barriers to pursuing GAC due to strong market fundamentals and expected demand [69][70] Question: Any commentary on regulatory undercurrents affecting PAC? - Management stated there is no regulatory uncertainty affecting the PAC business, and existing regulations remain intact [72] Question: Guidance for free cash flow and balance sheet considerations? - Management indicated that the PAC business is expected to generate free cash flow, with maintenance CapEx included in the guidance [73] Question: Capacity to supply the market if demand increases? - Management confirmed there is capacity to expand PAC production to meet increased demand without cannibalizing GAC production [74] Question: Updates on alternative applications for Corbin wet cake? - Management provided updates on asphalt emulsion testing and other potential applications, noting progress but cautioning against expecting significant revenues in 2026 [92]

Financial Data and Key Metrics Changes - Revenue for the full year 2025 reached approximately $120 million, reflecting a 10% year-over-year growth driven by improvements in average selling price and volumes [28][29] - Adjusted EBITDA for 2025 was $13.2 million, representing a 26% improvement compared to 2024 [28][29] - Gross margin for the year was 27.9%, negatively impacted by GAC ramp-up costs [28] - Net loss in Q4 2025 was $50 million, compared to a net loss of $1.3 million in Q4 2024 [30] Business Line Data and Key Metrics Changes - The PAC business generated full-year revenues of approximately $120 million, up 10% year-over-year, with adjusted EBITDA of $13 million, a 26% improvement over 2024 [21][28] - The company is pausing GAC production to conduct a comprehensive engineering and production process optimization review, with no GAC production expected in 2026 [5][14] Market Data and Key Metrics Changes - The GAC market fundamentals remain strong, with persistent supply shortages against steady annual growth from existing demand drivers [15][16] - The company has 96% contract visibility on 2026 targeted volumes and 75% visibility through 2027 [23] Company Strategy and Development Direction - The company is focusing on optimizing its PAC business while pausing GAC production to refine its engineering and production processes [4][36] - A strategic shift towards specialty products and engineered materials commanding premium pricing has improved the business profile [23] - The company is committed to making disciplined capital allocation decisions and avoiding the sunk cost fallacy [14][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the GAC market opportunity, citing strong demand and pricing [15][42] - The company anticipates revenue for 2026 in the range of $120 million to $125 million, with adjusted EBITDA of $17 million to $20 million, based solely on PAC business performance [25][33] Other Important Information - The company is taking a $45 million write-down on its Corbin assets as part of its decision to switch GAC feedstock to purchased bituminous coal [16] - Significant changes to the leadership team have been made to enhance operational capabilities and address production challenges [17][19] Q&A Session Summary Question: Is there anything that would prevent the company from pursuing GAC? - Management confirmed there are no concerns about pursuing GAC due to strong market fundamentals and expected demand [42] Question: Any commentary on regulatory undercurrents affecting PAC? - Management stated there is no regulatory uncertainty affecting the PAC business, and existing regulations remain intact [44] Question: Is the company expecting to generate free cash flow for the year? - Management indicated that the PAC business is expected to generate free cash flow, with maintenance CapEx anticipated to be lower in the following year [45] Question: Can the company supply the market if there is increased demand? - Management confirmed that there is capacity to expand PAC volumes to meet increased demand without cannibalizing GAC production [46] Question: Are there any updates on the alternative applications for Corbin wet cake? - Management reported progress in testing asphalt emulsion but cautioned against expecting significant revenues from it in 2026 [63]

Q4 2025 Earnings Call March 10, 2026 Disclaimer This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, which provides a "safe harbor" for such statements in certain circumstances. When used in this presentation, the words "anticipates," "may," "believes," "expects," "intends," "plans," "estimates," "predicts," the negative expressions of such words, or similar expressions a ...

Revenue and Costs - Total revenue for the year ended December 31, 2025, was $120.3 million, an increase of 10% from $109.0 million in 2024, driven by record activated carbon revenue [204]. - Cost of revenue for 2025 was $86.8 million, representing a 25% increase from $69.5 million in 2024, primarily due to fixed production costs associated with the GAC and Corbin Facilities [204]. - The gross margin, exclusive of depreciation and amortization, decreased in 2025 due to increased costs related to the GAC Facility and lower initial commercial phase production volumes [206]. Demand and Market Conditions - Demand for products increased in 2025, particularly from coal-fired dispatch and electricity power generation customers, influenced by higher natural gas prices and extreme weather conditions [207]. - The EPA's new PFAS National Primary Drinking Water Regulation is expected to drive a significant increase in GAC demand in the water purification market [208]. Impairments and Asset Valuation - An impairment charge of $38.1 million was recorded for the Corbin Asset Group, with a fair value estimated at $10.9 million as of December 31, 2025 [183]. - The developed technology intangible asset related to Corbin Wetcake was impaired, resulting in a write-down of $6.6 million [184]. - An impairment charge of $44.8 million was recorded for long-lived assets in 2025 [216]. - The company recorded an impairment charge of $44.8 million related to the Corbin Facility, impacting the overall financial performance [235]. Production and Operational Challenges - The GAC Facility's design flaws have led to a pause in GAC production, with a review of engineering and production processes underway [188]. - The current thermal oxidizer can only support approximately 15 million pounds of annual GAC production, requiring modifications to achieve the original design capacity of 25 million pounds or higher [188]. - The transition to using bituminous proven performance coal is expected to address design and feedstock variability challenges at the GAC Facility [189]. Operating Expenses - Operating expenses totaled $86.5 million in 2025, an increase of $45.1 million (over 100%) compared to $41.4 million in 2024 [209]. - Selling, general and administrative expenses decreased by $6.1 million (21%) from $28.7 million in 2024 to $22.6 million in 2025 [210]. - Research and development expenses rose by $3.3 million (81%) from $4.1 million in 2024 to $7.3 million in 2025, driven by initial testing of the GAC Facility [214]. - Depreciation, amortization, depletion, and accretion expenses increased by $3.2 million (37%) due to new property, plant, and equipment from the GAC Facility [215]. Financial Performance - For the year ended December 31, 2025, the net loss increased to $52.6 million from a net loss of $5.1 million in 2024, representing a year-over-year increase of $47.5 million [235]. - Other income improved to $360,000 in 2025 from a loss of $3.3 million in 2024, primarily due to increased earnings from equity method investments [218]. - Interest expense decreased by $808,000 (25%) from $3.3 million in 2024 to $2.4 million in 2025, attributed to lower average interest rates [220]. Cash Flow and Liquidity - Cash and restricted cash decreased from $22.2 million as of December 31, 2024, to $15.0 million as of December 31, 2025, a decrease of $7.2 million [236]. - Cash flows used in operating activities for 2025 were $2.7 million compared to cash flows provided of $10.5 million in 2024, a decrease of $13.2 million [237]. - Cash flows used in investing activities decreased significantly to $8.2 million in 2025 from $85.1 million in 2024, a reduction of $76.9 million primarily due to lower capital expenditures [238]. - Cash flows provided by financing activities decreased by $39.0 million in 2025 compared to 2024, primarily due to significant equity financing activities completed in 2024 [239]. - The company anticipates that cash on hand and borrowing availability under the Revolving Credit Facility will provide sufficient liquidity to fund operations for the next 12 months [243]. Tax and Deferred Assets - The company reported a valuation allowance of $114.0 million on deferred tax assets as of December 31, 2025, up from $101.6 million in 2024 [227]. - Tax credit carryforwards amounted to approximately $86.1 million as of December 31, 2025 [230]. - The acquisition of Arq Limited's subsidiaries included tax assets totaling approximately $12.5 million, primarily net operating loss carryforwards [231]. Other Information - As of December 31, 2025, the company had outstanding surety bonds totaling $11.2 million related to the Five Forks Mine and the Corbin Facility [245]. - The company’s outstanding borrowings under the Revolving Credit Facility were $19.0 million as of December 31, 2025 [247]. - Smaller reporting companies are not required to provide information under Item 7A regarding market risk disclosures [260].

Financial Performance - Generated record revenue of approximately $120.3 million for full-year 2025, up 10% year-over-year, driven by improved product mix and overall volumes [6] - Reported Adjusted EBITDA of $13.2 million for FY 2025, representing a 26% improvement compared to $10.5 million in the prior year [23] - Net loss for FY 2025 was $52.6 million, or $1.27 per diluted share, compared to a net loss of $5.1 million, or $0.14 per diluted share in FY 2024 [23] - Revenue for Q4 2025 was $29.431 million, an increase of 8.8% from $27.040 million in Q4 2024 [43] - Total revenue for the year 2025 reached $120.336 million, up 10.5% from $108.959 million in 2024 [43] - The net loss for Q4 2025 was $50.027 million, compared to a net loss of $1.339 million in Q4 2024, indicating a significant decline in profitability [43] - Basic loss per common share for Q4 2025 was $1.20, compared to a loss of $0.03 per share in Q4 2024 [43] - Net loss for 2025 was $52,610,000 compared to a net loss of $5,109,000 in 2024, indicating a significant increase in losses [45] Cost and Expenses - Gross margin for FY 2025 was 27.9%, down from 36.2% in FY 2024, primarily due to higher costs related to GAC start-up [20] - Operating expenses for Q4 2025 totaled $55.216 million, a substantial rise from $9.391 million in Q4 2024, primarily due to an impairment of long-lived assets of $44.756 million [43] - The cost of revenue for Q4 2025 was $25.441 million, compared to $17.236 million in Q4 2024, reflecting a significant increase [43] - EBITDA loss for 2025 was $(37,848,000), while Adjusted EBITDA was $13,164,000, up from $10,459,000 in 2024 [51] - The company reported an impairment charge of $44,756,000 related to long-lived assets in 2025 [45] - Depreciation, amortization, depletion, and accretion expenses rose to $11,747,000 in 2025 from $8,594,000 in 2024 [45] Capital Expenditures and Cash Flow - Capital expenditures for FY 2025 totaled $8.6 million, significantly lower than $85.2 million in the prior year [30] - Cash flows from operating activities resulted in a net cash used of $(2,730,000) in 2025, a decrease from $10,477,000 provided in 2024 [45] - Cash flows from investing activities showed a net cash used of $(8,161,000) in 2025, compared to $(85,074,000) in 2024, reflecting a significant reduction in investment outflows [46] - The company experienced a decrease in cash and restricted cash, ending 2025 with $15,040,000 compared to $22,235,000 at the end of 2024 [46] - Cash and cash equivalents decreased to $6.573 million as of December 31, 2025, from $13.516 million in 2024 [41] - Cash paid for interest decreased to $661,000 in 2025 from $2,017,000 in 2024, indicating improved interest management [46] Future Outlook - For FY 2026, the company expects revenue of $120-125 million and Adjusted EBITDA of $17-20 million, assuming no GAC contribution [14] - PAC average selling price is projected to be $0.88-0.91 per pound for FY 2026, compared to $0.89 in 2025 [15] - The company is pausing GAC production to conduct a comprehensive engineering and production process optimization review, with no GAC production expected in FY 2026 [7] - The company has 96% contract visibility on 2026 volumes, with 75% and 43% visibility through 2027 and 2028 respectively [18] Asset and Liability Management - Total assets decreased to $230.580 million as of December 31, 2025, down from $284.368 million in 2024 [41] - Total liabilities decreased to $62.617 million as of December 31, 2025, compared to $67.092 million in 2024 [41] - Borrowings on revolving credit facility increased to $128,941,000 in 2025 from $13,828,000 in 2024, indicating a substantial reliance on credit [46] Strategic Changes - The company plans to transition from using Corbin Wetcake to a proven performance coal as feedstock for GAC products, which is expected to enhance product quality and reduce costs [37] - Recorded a non-cash impairment charge of $45 million related to Corbin assets in Q4 2025 due to the temporary idling of the Corbin facility [6]

Financial Performance & Growth - Total revenue reached $35.1 million, a 1% year-over-year increase, driven by strong pricing in the foundational Powdered Activated Carbon (PAC) business[7, 12] - Adjusted EBITDA was $5.2 million, marking the 6th consecutive quarter of positive Adjusted EBITDA, though negatively impacted by low volume and early Granular Activated Carbon (GAC) ramp-up[7, 12] - PAC pricing grew by 7% year-over-year, with an approximate 15% average quarterly growth in PAC Average Sales Price (ASP) since Q2 2023, showing strong visibility in PAC contract renewals into 2026 and beyond[8] - A $25+ million Adjusted EBITDA improvement has been achieved since Q3 2023 on a trailing twelve-month basis, driven by the PAC turnaround and cost management[7] GAC Business & Strategy - Initial commercial phase GAC production and sales were achieved, with robust GAC market dynamics[7] - The company is exploring blending or replacing Corbin GAC feedstock and advancing alternative product developments for Corbin feedstock[9] - The Final Investment Decision (FID) for Phase II is now anticipated to coincide with reaching Phase I GAC nameplate capacity around mid-2026[36] Market & Regulatory Landscape - Regulations could boost municipal water market demand 3-5x from approximately 170 million lb/year, serving as a major catalyst for demand and potential supply shortages[88] - The company expects the annual GAC market to grow approximately 75% to over 700 million lbs, resulting in an approximate 370 million lbs supply shortfall by 2030[103] - Approximately 35% of the approximately 153,000 public water systems in the U S are estimated to require PFAS treatment facilities by 2030[101]

Financial Performance - Generated revenue of $35.1 million in Q3 2025, reflecting a 1% increase compared to $34.8 million in the prior year period[5] - Achieved Adjusted EBITDA of $5.2 million in Q3 2025, marking the sixth consecutive quarter of positive Adjusted EBITDA[13] - Reported net loss of $0.7 million in Q3 2025, compared to net income of $1.6 million in the prior year period[12] - Revenue for Q3 2025 was $35,074,000, a slight increase from $34,774,000 in Q3 2024, representing a growth of 0.86%[27] - Year-to-date revenue for the nine months ended September 30, 2025, was $90,905,000, compared to $81,919,000 for the same period in 2024, indicating a growth of 10.9%[27] - Operating loss for Q3 2025 was $(839,000), compared to an operating income of $2,028,000 in Q3 2024[27] - Net loss for the nine months ended September 30, 2025, was $(2,583,000), compared to a net loss of $(3,770,000) for the same period in 2024[27] - For the three months ended September 30, 2025, the net loss was $653,000 compared to a net income of $1,617,000 for the same period in 2024[35] - EBITDA for the three months ended September 30, 2025, was $3,818,000, down from $5,060,000 in 2024, while Adjusted EBITDA was $5,168,000 compared to $5,884,000 in 2024[35] - The trailing twelve-month net loss as of September 30, 2025, was $3,922,000, significantly higher than the net loss of $480,000 in 2024[37] - Trailing twelve-month EBITDA for 2025 was $9,678,000, compared to $11,585,000 in 2024, indicating a decline in operating performance[37] - Adjusted EBITDA for the trailing twelve months ended September 30, 2025, was $16,730,000, an increase from $14,645,000 in 2024[37] Cost and Expenses - Gross margin was 28.8% in Q3 2025, down from 38.6% in the prior year period, primarily due to lower initial commercial phase GAC production volumes[9] - Cost of revenue for Q3 2025 was $24,965,000, up from $21,339,000 in Q3 2024, reflecting an increase of 16.3%[27] - Research and development costs rose to $2.6 million in Q3 2025, compared to $0.8 million in the prior year period, driven by pre-commencement testing of the GAC Facility[11] - Research and development expenses increased to $2,566,000 in Q3 2025, compared to $787,000 in Q3 2024, a significant increase of 226.5%[27] - GAC Facility pre-production feedstock costs amounted to $2,879,000 for the trailing twelve months, with no costs reported in 2024[37] Cash and Debt - Cash and restricted cash totaled $15.5 million as of September 30, 2025, down from $22.2 million as of December 31, 2024[15] - Total debt, including financing leases, increased to $25.9 million as of September 30, 2025, compared to $24.8 million at the end of 2024[16] - Total current assets decreased to $43,927,000 as of September 30, 2025, from $52,356,000 as of December 31, 2024, a decline of 16.0%[25] - Total liabilities decreased to $60,792,000 as of September 30, 2025, from $67,092,000 as of December 31, 2024, a reduction of 9.7%[25] - Cash and restricted cash at the end of the period was $15,493,000, down from $57,380,000 at the beginning of the period, a decrease of 73.0%[29] - The interest expense for the trailing twelve months was $2,358,000, compared to $1,984,000 in 2024, reflecting increased financing costs[37] Production and Sales - Average sales price (ASP) increased by approximately 7% year-over-year in Q3 2025[5] - Initial commercial GAC production and sales achieved at Red River, generating initial GAC revenues[5] Shareholder Information - The company reported a weighted-average number of common shares outstanding of 41,606,000 for Q3 2025, compared to 36,124,000 for Q3 2024, an increase of 15.0%[27] - Share-based compensation for the trailing twelve months was $3,053,000, slightly up from $3,023,000 in 2024[37] Strategic Focus - The company aims to use EBITDA and Adjusted EBITDA as key performance indicators to assess operational effectiveness and facilitate comparisons across periods[31] - The company reported a gain on insurance proceeds of $685,000 for the trailing twelve months ended September 30, 2025[37]

Financial Performance - For the three months ended September 30, 2025, revenue increased to $35.1 million, a 1% increase from $34.8 million in the same period of 2024[124] - The net loss for the three months ended September 30, 2025, was $0.7 million, compared to a net income of $1.6 million for the same period in 2024[122] - Total revenue for the nine months ended September 30, 2025, was $90,905,000, an increase of $8,986,000 or 11% compared to $81,919,000 in 2024[141] - EBITDA for the nine months ended September 30, 2025, was $8,064,000, compared to $4,369,000 in 2024, reflecting improved operational performance[160] Cost and Expenses - The cost of revenue for the same period rose to $25.0 million, reflecting a 17% increase from $21.3 million in 2024, primarily due to fixed production costs associated with initial production at the GAC Facility[124] - Cost of revenue decreased to $52,279,000 in 2025 from $61,363,000 in 2024, a reduction of $9,084,000 or 17%[141] - Operating expenses decreased by $738,000 or 2% to $31,274,000 in 2025 from $32,012,000 in 2024, primarily due to a 27% reduction in selling, general and administrative expenses[144] - Selling, general and administrative expenses decreased by 43% to $4.6 million in Q3 2025 from $8.1 million in Q3 2024, primarily due to reduced payroll and benefits expenses[128] - Research and development expenses surged to $2.6 million in Q3 2025, up from $0.8 million in Q3 2024, due to pre-production testing of the GAC Facility[128] - Research and development expenses increased by $2,796,000 or 84% to $6,137,000 in 2025, driven by costs related to the GAC Facility[144] Cash Flow and Liquidity - Cash and restricted cash decreased from $22.2 million at the end of 2024 to $15.5 million by September 30, 2025[161] - Cash flows from operating activities were $28,000 in 2025, a decrease of $5,240,000 from $5,268,000 in 2024[162] - Cash flows used in investing activities decreased by $34.3 million for the nine months ended September 30, 2025, primarily due to a $34.4 million decrease in property, plant, and equipment additions related to the Red River Plant commissioning[163] - Cash flows provided by financing activities decreased by $39.0 million for the nine months ended September 30, 2025, mainly due to net proceeds of $42.4 million from common stock placements completed in 2024[164] - The company expects cash on hand of $7.0 million and availability under the Revolving Credit Facility to provide sufficient liquidity for operations over the next 12 months[166] Market and Regulatory Environment - The average Henry Hub natural gas spot prices increased to $3.03 per MMBtu in Q3 2025 from $2.11 per MMBtu in Q3 2024, influencing demand for coal[125] - The average Henry Hub natural gas spot prices increased to $3.45 per MMBtu in 2025 from $2.11 per MMBtu in 2024, contributing to higher product sales volumes[142] - The EPA's new PFAS regulations are expected to drive a material increase in GAC demand in the water purification market, with compliance potentially extending to 2031[121] - Future cash flows and profitability are expected to be influenced by the demand for AC products and the impact of regulations on the industry[177] Operational Developments - The company expects to reach GAC nameplate capacity around mid-year 2026, which will coincide with a final investment decision regarding a potential second GAC line[118] - The company anticipates ramping up to full nameplate capacity at the Red River Plant and is evaluating a potential second GAC line[175] - The company resumed operations at the Corbin Facility in August 2025 after a temporary reduction in operations earlier in the year[170] - The company plans to focus capital expenditures for the remainder of 2025 on plant maintenance and improvements to increase production at the Red River Plant[169] Other Income and Losses - Other income for Q3 2025 was $0.7 million, primarily from an insurance claim related to mining equipment, compared to $0.3 million in Q3 2024[139] - Interest expense decreased by $521,000 or 21% to $1,905,000 in 2025, primarily due to lower average interest rates[154] - The company recorded pretax losses of $2.6 million in 2025, compared to $3.7 million in 2024, with an effective tax rate of zero in 2025[156] Strategic Focus - The company is focused on expanding its market share for APT consumables and improving gross margins through better customer and product mix[165] - The company anticipates that revenue will continue to be positively impacted by product price increases as GAC production ramps up[127]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $29 million, representing a 13% year-over-year increase, driven by enhanced contract terms and a 9% growth in average selling price (ASP) [22][6][5] - Adjusted EBITDA was approximately $3.7 million, compared to $1.1 million in the prior year, marking a more than 3x increase [23][6] - Gross margin for the quarter was approximately 33%, slightly higher than in 2024 [22] Business Line Data and Key Metrics Changes - The PAC (Powdered Activated Carbon) business has shown a successful turnaround, with all sales contracts now being net contributors in 2025, a significant improvement from 24% of volumes being loss-making as of December 2022 [24][6] - The GAC (Granular Activated Carbon) line has been successfully commissioned, with a nameplate capacity of 25 million pounds expected to be reached within six months [5][12] Market Data and Key Metrics Changes - The company has reduced its exposure to the mercury emissions market to under 40% of volumes, diversifying into new markets for both PAC and GAC, which improves margins and overall financial performance [8][9] - The granular activated carbon market is experiencing persistent supply shortages, with demand expected to grow significantly due to regulatory changes related to PFAS [10][11] Company Strategy and Development Direction - The company aims to enhance profitability through operational optimization and cost reduction initiatives while expanding into higher growth, higher margin GAC business [7][29] - Plans for a second GAC line are underway, with a final investment decision expected by the end of 2025 [14][29] Management's Comments on Operating Environment and Future Outlook - Management views the current regulatory environment as favorable, with the EPA's pragmatic approach to PFAS regulation seen as beneficial for the business [18][19] - The company is confident in its ability to finance future growth through cash flow generation and existing debt facilities, without the need for further equity issuance [66][68] Other Important Information - The company is engaged in testing programs for asphalt emulsion, which could represent a significant future revenue source [20][78] - The company has reiterated its 2025 capital expenditure forecast of between $8 million and $12 million [26] Q&A Session Summary Question: Can you elaborate on the key milestones in the commissioning process at Red River? - Management confirmed that the operations team is focused on reaching full nameplate capacity of 25 million pounds as quickly as possible, with ongoing tweaks to improve production rates [35][36] Question: What is the expected cost for the second GAC line? - Management indicated that costs are being evaluated and enhancements from the first line will likely reduce expenses for the second line [39][40] Question: What is the timeline for moving from initial sales to contracts in the RNG market? - The timeline varies from one to eight months depending on customer testing requirements, with a focus on maintaining a balanced customer mix across different industries [41][43] Question: What impact did commissioning have on gross margins? - Approximately $1.9 million in costs associated with preproduction inventory were reclassified to R&D expenses, with gross margins expected to remain above 33% going forward [46][47] Question: How confident is the company in financing the second line without issuing equity? - Management expressed confidence in financing through cash flow generation and debt availability, emphasizing a gradual investment approach [66][68]