Arq (ARQ) Investor presentation summary

Business overview and strategy

• Produces activated carbon products for environmental remediation, including PFAS removal, with a fully domestic, vertically integrated supply chain supporting water and air quality improvements.

• Focuses on two main product lines: Powder Activated Carbon (PAC) for immediate PFAS compliance and Granular Activated Carbon (GAC) for higher contamination applications.

• PAC business provides steady, recurring demand from non-cyclical utilities, while PFAS remediation is positioned as a major growth engine.

• Strategic optimization review underway to boost profitability, capacity utilization, and operational efficiency, targeting up to 50% Adjusted EBITDA growth.

• Diversifies end-market exposure beyond coal-fired power, expanding into water purification and new industrial applications.

Financial performance and guidance

• Q2 2026 revenue reached $29.9M, up 5% YoY, with gross margin improving to 38.5% and Adjusted EBITDA at $5.8M, marking the ninth consecutive positive quarter.

• Full-year 2026 guidance reiterates revenue of $120–125M and Adjusted EBITDA of $17–20M, driven by PAC operations.

• Balance sheet assets total $233M as of June 30, 2026, with a strong asset base supporting future growth.

• No GAC production expected in 2026 or 2027 as optimization review continues; all furnace hours directed to profitable PAC production.

• Near-term growth targets include a 50% increase in Adjusted EBITDA and expansion into new PAC market opportunities.

Market dynamics and regulatory drivers

• EPA regulations set a 4 ppt PFAS limit for municipal water, driving a projected 3–5x increase in demand for PFAS treatment solutions.

• GAC is confirmed as a best available technology for PFAS removal, with 80% market penetration expected by 2030.

• U.S. tariffs benefit domestic producers with integrated supply chains, providing a competitive edge.

• The North American GAC market is expected to grow 75% to over 700 million lbs by 2030, with a potential 370 million lbs supply shortfall.

• Biogas and renewable natural gas sectors offer diversification and higher-margin opportunities for GAC applications.