Arq(US:ARQ)2025-11-05 21:32Revenue and Income - 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 in the same period of 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] Costs and Expenses - The cost of revenue for the same period rose to $25.0 million, representing a 17% increase from $21.3 million in 2024[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 totaled $31,274,000 in 2025, a slight decrease of $738,000 or 2% from $32,012,000 in 2024[144] - Research and development expenses surged to $2.6 million for the three months ended September 30, 2025, compared to $0.8 million in 2024, reflecting increased pre-production testing costs[133] - Research and development expenses rose significantly by $2,796,000 or 84% to $6,137,000 in 2025, primarily due to initial testing of the GAC Facility[149] - Selling, general and administrative expenses decreased by 43% to $4.6 million in Q3 2025 from $8.1 million in Q3 2024[128] Cash Flow and Liquidity - Cash and restricted cash decreased from $22,200,000 as of December 31, 2024, to $15,500,000 as of September 30, 2025[161] - Cash flows from operating activities were minimal at $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 Product Development - The implementation of new PFAS regulations is expected to significantly increase demand for granular activated carbon (GAC) in the water purification market[121] - The company anticipates reaching 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] - Future cash flows and profitability from the GAC business are expected to be significant, with ongoing efforts to contract remaining GAC product volumes[177] - The company is focused on expanding its market share for APT consumables and improving gross margins through better customer and product mix[165] Other Financial Metrics - Other income increased to $0.7 million in Q3 2025, primarily due to an insurance claim related to mining equipment[139] - The effective tax rate for the three months ended September 30, 2025, was zero, with no income tax benefit recorded due to a full valuation allowance on deferred tax assets[140] - Interest expense decreased by $521,000 or 21% to $1,905,000 in 2025, attributed to lower average interest rates[154] - Total other income improved by $517,000 or 38% to a loss of $851,000 in 2025, compared to a loss of $1,368,000 in 2024[152] Risks and Challenges - Risks include potential fluctuations in pricing for AC products and the impact of regulatory changes on demand for the company's products[176]