Core Viewpoint - Johnson Fistel, PLLP is investigating potential claims on behalf of investors of Arq, Inc. due to significant setbacks related to its granular activated carbon facility, which may have led to investor losses under federal securities laws [1][6]. Company Developments - On March 9, 2026, Arq, Inc. announced that its GAC production and development had been paused, and the Corbin, Kentucky facility had been idled [3]. - The facility's thermal oxidizer emissions control system limited production capacity to approximately 15 million pounds annually, leading to a recorded impairment charge of $44.8 million related to the Corbin assets [4]. - Arq is currently engaged in litigation with the engineering consultant responsible for the plant's design [4]. Financial Guidance - Arq's 2026 financial guidance excludes any contribution from the GAC initiative, projecting revenue of approximately $120 million to $125 million and adjusted EBITDA of approximately $17 million to $20 million, derived solely from its powdered activated carbon business [5]. - Following these disclosures, Arq's share price experienced a decline [5].

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]

Core Insights - Arq, Inc. reported record revenue of approximately $120 million for the full year 2025, driven by the performance of powdered activated carbon (PAC) [1][6][18] - The company achieved an Adjusted EBITDA of $13 million, reflecting a 26% improvement year-over-year [1][22] - Arq provided inaugural financial guidance for full-year 2026, expecting revenue between $120-125 million and Adjusted EBITDA of $17-20 million [1][13] Financial Highlights - Revenue for FY 2025 was $120.3 million, a 10% increase from $109.0 million in FY 2024, primarily due to improved average selling price (ASP) and product diversification [6][18] - Gross margin decreased to 27.9% in FY 2025 from 36.2% in FY 2024, attributed to higher costs related to granular activated carbon (GAC) start-up [6][19] - The company recorded a net loss of $52.6 million for FY 2025, compared to a net loss of $5.1 million in FY 2024 [22][26] Operational Updates - Arq announced a pause in GAC production to conduct a comprehensive engineering and production process optimization review, with no GAC production expected in FY 2026 [5][7] - The decision to pause GAC production follows testing results indicating that the current thermal oxidizer can only support approximately 15 million pounds of annual GAC production, which does not deliver acceptable returns [7][8] - The company is transitioning from Corbin Wetcake feedstock to bituminous proven performance coal to address design challenges [8][9] Leadership Changes - Eric Robinson has been appointed as VP Operations, bringing over 30 years of industrial experience [10][12] - The company has reorganized its finance team, promoting Anthony Nathan to VP Finance [12] Future Guidance - For FY 2026, Arq expects PAC average selling price to be between $0.88-0.91 per pound, with projected production volumes of 122-125 million pounds [13][14] - Additional revenue from other chemicals and products is anticipated to contribute approximately 13-15% of total revenue [14]

Core Insights - Minot Light Capital Partners reported a net return of 7.6% for Q3 2025, which underperformed against benchmarks, particularly the micro-cap benchmark's return of 17.1% [1] - The fund's top five holdings are highlighted as key investment picks for 2025 [1] Company Overview: Arq, Inc. (NASDAQ:ARQ) - Arq, Inc. is identified as one of the largest producers of activated carbons in the United States, which are utilized across various industries for purifying and removing contaminants in water, air, and soil [3] - The company owns the Five Forks Mine in Saline, LA, primarily producing lignite coal, a key input for its powdered activated carbon (PAC) products [3] - In 2023, Arq acquired feedstock in Corbin, KY, enhancing its access to high-quality recovered bituminous coal reserves, essential for its granulated activated carbon (GAC) products [3] - Arq is noted for having a fully vertically integrated supply chain, positioning it well in the current market environment [3] Financial Performance - Arq, Inc. reported revenues of $35.1 million in Q3 2025 [4] - The stock experienced a one-month return of -9.14% and a significant decline of 53.28% over the past 52 weeks, closing at $3.28 per share with a market capitalization of $140.036 million as of December 23, 2025 [2] Hedge Fund Interest - Arq, Inc. was held by 14 hedge fund portfolios at the end of Q3 2025, an increase from 11 in the previous quarter, indicating growing interest among institutional investors [4]

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]