Arq (ARQ) Water Tower Research Virtual Insights Conference summary

Strategic overview and market positioning

• Focus on environmental technology, primarily activated carbon products for pollution remediation, including PFAS and mercury emissions, serving utilities and industrial markets.

• Emphasis on PFAS compliance solutions, leveraging proprietary PAC for PFAS product to help utilities meet new EPA regulations.

• Dual strategy: prioritize PAC for PFAS while maintaining optionality for granular activated carbon (GAC) expansion based on shareholder value.

• Ongoing trials with water utilities for PAC for PFAS are expected to convert to contracts, supporting significant EBITDA and cash flow growth.

• Industry-wide supply-demand imbalance for activated carbon is driving favorable market conditions and pricing power.

Operational initiatives and financial performance

• Achieved a $35 million turnaround in PAC business over three years, targeting $30 million annual EBITDA run rate by next year.

• Growth strategy includes increasing efficiency, capacity utilization, and expanding into higher-margin products and markets.

• Management is focused on cost reduction, alternative feedstocks, and higher fixed cost absorption to drive 50% EBITDA growth.

• GAC facility expansion, if pursued, would target a minimum of 25 million pounds capacity, with financing aimed at avoiding shareholder dilution.

• Management and board collectively own nearly 25% of shares, aligning interests with shareholders.

Product and technology development

• PAC for PFAS product is tailored for utilities close to compliance, offering a cost-effective alternative to GAC systems.

• Ongoing R&D and third-party trials validate PAC for PFAS effectiveness, with anticipated contract wins from current beta utility partners.

• Additional value levers include Corbin coal waste purification technology and asphalt applications, with options for licensing, sale, or joint ventures under evaluation.

• Management is actively minimizing holding costs for non-core assets to preserve optionality.

• New operating and sales leadership brought in to drive operational excellence and strategic market expansion.