Arq, Inc. Common Stock 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Arq reported Q2 2026 revenue of approximately $30 million, a modest year-over-year increase driven by volume and pricing strength.
- Gross margin improved by roughly 520 basis points to approximately 38.5%, reflecting better pack business profitability and absence of gas startup costs.
- Adjusted EBITDA rose to about $5.8 million from $3.7 million in Q2 2025, demonstrating the earnings power of the pack business.
- Net loss narrowed to approximately $700,000 from $2.4 million in the prior year quarter.
- The biennial Red River plant turnaround was completed in April under budget, with associated costs of $3.1 million capitalized.
- Total cash at quarter end was $12.1 million, with $11.2 million restricted; total debt was $30.9 million.
- The company reiterated full-year 2026 guidance of $120 to $125 million in revenue and $17 to $20 million in adjusted EBITDA.
- Research and development expenses decreased to about $1 million from $2.7 million in Q2 2025, reflecting reduced gassy ramp-up spending.
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Transcript
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Greetings. Welcome to the Arq Q2 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Anthony Nathan, head of investor relations. Thank you, Anthony. You may begin.
Thank you, operator. Good morning, everyone, and thank you for joining us today for our second quarter 2026 earnings results call. With me on the call today are Robert Rasmus, Arq's Chief Executive Officer, and Shimon Steinmetz, Arq's Chief Financial Officer. This conference call is being webcasted live within the investor section of our website, and a downloadable version of today's presentation is available there as well. A webcast replay will also be available on our site, and you can contact Arq's investor relations team at investorsatarc.com. Let me remind you that the presentation and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements.
These risks and uncertainties include, but are not limited to, those factors identified on slide 2 of today's slide presentation in our Form 10-Q for the quarter ended June 30, 2026, and other filings with the Securities and Exchange Commission. Except as expressly required by the securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments or changed circumstances or for any other reason. In addition, it is especially important to review the presentation in today's remarks in conjunction with the GAAP references in the financial statements. With that, I would like to turn the call over to Bob.
Thank you, Anthony, and thanks to everyone for joining us this morning. We'll cover a lot of ground on today's call, so I'd like to begin by providing an overview of the key points we'll address. First, our second quarter results underscore the underlying strength and improving profitability of our foundational PAC business. Despite Q2 typically being a seasonally softer quarter and being further impacted by the biennial plant turnaround completed in April, we delivered Adjusted EBITDA well ahead of the prior year period, with gross margin up roughly 520 basis points. This quarter is a clear demonstration of the earnings power of our PAC business, a business unencumbered by the GAC challenges that weighed on the prior year period.
Powdered activated carbon remains the foundation of our company, providing both operational continuity and a financial base from which we see multiple avenues for growth, which I'll cover in more detail shortly. Second, I'll walk through the progress of our granular activated carbon optimization review. The PFAS opportunity remains a core focus, and while we continue to refine our view on the cost and timing of GAC development, we're also encouraged by progress with customers on what we're calling our PAC for PFAS strategy, which we believe could offer a near-term solution to the PFAS compliance challenges which some of our water customers face. Demand for products that help water companies reduce PFAS contamination remains strong, and we're seeing broad interest in solutions that let customers achieve compliance now.
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