Arq Reports Second Quarter 2025 Results

Core Insights - Company reported a 13% year-over-year increase in revenue, reaching $28.6 million in Q2 2025, driven by higher average sales prices and increased volumes sold [6][9] - Achieved a significant milestone with the commissioning of the first Granular Activated Carbon (GAC) line at Red River, contributing to a positive financial outlook [5][7] - Company has maintained five consecutive quarters of positive Adjusted EBITDA, which reached $3.7 million in Q2 2025, compared to $1.1 million in the prior year [14][39] Financial Highlights - Revenue for Q2 2025 was $28.6 million, up from $25.4 million in Q2 2024, primarily due to a 9% increase in average sales price [6][9] - Gross margin improved to 33.3% in Q2 2025 from 32.2% in the prior year, attributed to better pricing and higher volume, despite start-up costs for the GAC line [11][14] - Total debt increased to $28.7 million as of June 30, 2025, compared to $24.8 million at the end of 2024, mainly due to a rise in the revolving credit facility balance [18] Operational Highlights - The successful commissioning of the GAC line at Red River marks a pivotal point in the company's transition to higher growth and margin businesses [5][7] - The company plans to make a final investment decision for a second GAC line by the end of 2025, targeting a production capacity of 25 million pounds [7][8] - Company is exploring additional growth opportunities in renewable natural gas, having already sold initial GAC products to RNG customers [8] Cost Management - Selling, general, and administrative expenses decreased by 16% to $5.9 million in Q2 2025, down from $7.0 million in the prior year, due to lower payroll and benefits [12] - Research and development costs rose to $2.7 million in Q2 2025, up from $0.9 million in the prior year, primarily due to non-recurring expenses related to GAC facility testing [13] Cash Flow and Capital Expenditures - Cash and restricted cash totaled $15.4 million as of June 30, 2025, down from $22.2 million at the end of 2024, largely due to capital expenditures for the GAC facility [17] - Capital expenditures for the full year 2025 are expected to remain between $8 million and $12 million [16]