Q2 2026 Arq Inc Earnings Call Transcript
Key Points
- Adjusted EBITDA increased significantly to $5.8 million in Q2 2026, up from $3.7 million in the prior year period, despite a seasonally softer quarter.
- Gross margin improved by approximately 520 basis points year-over-year, reaching 38.5%, driven by the strong performance of the PAC business.
- The company is developing a new 'PAC for PFAS' product line, which could provide a near-term, lower-cost solution for water companies to meet PFAS compliance standards, potentially boosting volumes, pricing, and margins.
- The strategic optimization review has identified multiple operational efficiencies to increase plant capacity and reduce costs, with minimal capital expenditure required.
- The company is actively evaluating the monetization of its Corbin asset and coal waste purification technology, which could provide additional value through asset sales, licensing, or joint ventures.
- The biennial Red River plant turnaround was completed under budget, and the company reaffirmed its full-year 2026 guidance for revenue and adjusted EBITDA.
- The estimated cost to complete the bituminous-based GAC conversion is between $40 million and $60 million, a significant capital investment that has not yet been approved.
- The company expects no bituminous GAC production or sales in 2027, delaying potential revenue from this high-value product.
- Unrestricted cash at quarter-end was lower than in recent quarters, reflecting timing issues with the borrowing base and receipts, though the company notes this is not a liquidity concern.
- Selling, general, and administrative expenses increased by $900,000 year-over-year, primarily due to severance and recruiting costs tied to recent leadership changes.
- The PAC for PFAS product is still in the testing phase, with no material contribution expected in 2026, and the upper limit of contamination it can handle has not been confirmed.
- The company's net loss, while improved, was still $700,000 for the quarter, indicating ongoing profitability challenges.
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 *0 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 Bob Rasmus, ARC's Chief Executive Officer and Siobhan Steinmitz, ARC'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 ARK's Investor Relations team at [email protected]
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