Arq, Inc.

What they do

Arq manufactures and sells activated carbon products, including powdered (PAC), granular (GAC), and colloidal carbon, used to remove contaminants like mercury and PFAS. The company owns the Five Forks Mine for raw lignite coal and operates a GAC facility at its Red River Plant, plus a manufacturing facility in Corbin, Kentucky acquired in 2023.

Revenue drivers

• Foundational PAC business — Core powdered activated carbon sales to coal-fired power and water treatment; management attributes Q2 2026 Adjusted EBITDA growth to this segment's pricing and volumes.
• GAC products — Granular activated carbon, produced at the Red River Plant GAC Facility, intended for water treatment and remediation; currently in ramp-up with design flaws limiting production.
• PFAS-related products — Advanced PAC for PFAS, a highly engineered product targeting water utilities, is in customer testing with potential material contribution from 2027; also pursuing asphalt additive from Corbin Facility.
• Other APT consumables — Other purification chemicals and technologies for industrial, soil, and groundwater remediation, though not separately quantified in provided excerpts.

Recent performance

In Q2 2026, revenue was $29.9 million, up 5% from $28.6 million in Q2 2025, with net loss improving to $0.7 million from $2.4 million. Adjusted EBITDA was $5.8 million, up 59% year-over-year, marking the 9th consecutive quarter of positive Adjusted EBITDA. Gross margin improved to 38.5% from 33.3%. For the six months ended June 30, 2026, revenue was $58.9 million and net loss was $1.9 million. Cash and restricted cash were $12.1 million at quarter end, with $0.9 million unrestricted.

Strategy

Management is focused on expanding the core PAC business through pricing discipline and operational efficiency, including a completed Red River Plant turnaround. The company is conducting a strategic optimization review to increase furnace throughput, reduce unit costs, and refine the GAC expansion plan. It is advancing PAC for PFAS as an interim solution while determining the path for its own GAC line, and exploring monetization of the Corbin Facility, including asphalt product trials.

Risks

• GAC Facility design flaws — Ramp-up to nameplate capacity at the Red River Plant GAC Facility cannot be achieved without further modifications due to design flaws identified in December 2025.
• Liquidity constraints — Unrestricted cash was only $0.9 million at June 30, 2026, though management notes improvement to $3.1 million by July 31, 2026, with $21.4 million drawn on a revolving credit facility.
• PFAS market execution — The Advanced PAC for PFAS product is still in testing, and potential revenue contribution depends on customer adoption and regulatory drivers.
• Dependence on environmental regulations — Demand for activated carbon products is driven by environmental regulations on air and water quality; any regulatory delays or changes could reduce demand.

Outlook

Management reaffirmed full-year 2026 guidance of $120-125 million revenue and $17-20 million Adjusted EBITDA. Q3 2026 revenue is tracking ahead of Q2, with favorable seasonal demand expected. Capital expenditures for 2026 are guided at $8-10 million, and the GAC expansion plan is under review with a focus on capital discipline.