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]

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]