Key Highlights

  • Third quarter Revenue was USD 38.21 million against a USD 35.23 million estimate and USD 35.07 million last year.
  • EPS was USD 0.06 against a USD 0.03 estimate, with Net Income of USD 2.5 million versus a prior loss.
  • Adjusted EBITDA was USD 8.84 million against USD 5.17 million last year, with cost of revenue at USD 23.04 million.
  • Management said it sees no granular activated carbon production at the Red River Plant in fiscal 2026 or 2027.

Did Demand or cost savings drive the swing to profit at Arq (NASDAQ:ARQ)? The company, which sells activated carbon products for air, water and soil treatment, pointed to both. Third quarter revenue was USD 38.21 million against an estimate of USD 35.23 million, and EPS of USD 0.06 compares with an estimate of USD 0.03 and a loss of USD 0.02 in the prior-year quarter.

Volume Gains in Power Generation and Water

Revenue of USD 38.2 million was reported against USD 35.1 million. Management said higher activated carbon sales volumes added about USD 3.8 million and other chemicals added USD 0.2 million, while a lower average selling price and product mix offset USD 0.6 million and USD 0.2 million of that. The Volume increase came mainly from customers in the power-generation market, which management tied to seasonal electricity demand.

For nine months, revenue was USD 97.1 million against USD 90.9 million, with volume gains in industrial and municipal water as well as power generation, which management tied to increased electricity demand and continued higher Natural Gas prices. The company said it continues to see demand for powdered activated carbon used in PFAS treatment, and noted that EPA rules call for public water systems to begin reporting PFAS levels from April 2027.

The GAC Pause and Cost Lines

Cost of revenue, exclusive of Depreciation and amortization, was USD 23.0 million against USD 25.0 million. Management attributed this to the paused Corbin Facility, which has been idled indefinitely since December 2025, and to lower maintenance and outside service costs, partly offset by higher wages and utilities.

The granular activated carbon Facility remains paused after testing showed the thermal oxidizer could support about 15 million pounds of annual production against a design capacity of 25 million pounds or higher. Management said the optimization review is effectively complete and that it proceeds with further Investment when returns are economically attractive.

Selling, general and administrative expense was USD 7.15 million against USD 4.62 million, driven by Payroll and benefits of USD 2.88 million against USD 1.09 million, which the company tied to incentive compensation.

Capital Allocation and Balance Sheet

Cash on hand was USD 7.8 million at September 30, excluding USD 11.3 million of restricted cash. Total Debt obligations were USD 28.4 million, including USD 19.2 million on the revolving Credit facility and USD 8.0 million on the Community Trust Bank term Loan due January 2036. Nine-month Operating Cash Flow was USD 7.7 million against USD 28,000 a year earlier.

Management said cash on hand and revolver availability are sufficient to fund operations for the next 12 months. Capital spending for the rest of 2026 is directed mainly to plant maintenance and improvements. Effective April 1, 2026, the company moved planned major maintenance costs on the Red River Plant from direct expensing to a deferral method.

Key Figures Side by Side

Revenue of USD 38.21 million sits alongside net income of USD 2.5 million, adjusted EBITDA of USD 8.84 million and cash of USD 7.8 million. Nine-month net income was USD 0.6 million against a net loss of USD 3.3 million.

Management named a short list of items going forward: no GAC production in 2026 or 2027, the Corbin Facility remaining idled, continued focus on powdered activated carbon for PFAS treatment and the April 2027 EPA reporting start. It also noted executive transitions, with executive transition and severance costs of USD 0.96 million in nine months.