On August 12, 2024, Arq Inc (ARQ, Financial) released its 8-K filing detailing the financial and operational results for the second quarter ended June 30, 2024. Arq Inc is an environmental technology company engaged in the sale of consumable air, water, and soil treatment solutions, including activated carbon (AC) and chemical technologies. The company manufactures and sells products used to capture and remove contaminants for various markets, including coal-fired power generation, industrial, and municipal water and air treatment.
Financial Performance and Key Metrics
Arq Inc reported a revenue of $25.4 million for Q2 2024, marking a 24% increase compared to $20.4 million in the same period last year. This growth was driven by higher average selling prices (ASP) and a favorable product mix. The ASP for the quarter increased by approximately 16% year-over-year, continuing a trend of five consecutive quarters of double-digit growth.
Cost of revenue for Q2 2024 was $17.2 million, up 12% from $15.3 million in the prior year period. This increase included $1.4 million in scheduled maintenance costs, which were brought forward to connect the new GAC facility to the existing Red River plant. Despite these costs, the gross margin improved to 32%, up from 25% in the previous year, due to higher revenue and operational cost management.
Net loss for the quarter was $2.0 million, a significant improvement from the $5.9 million loss reported in Q2 2023. Adjusted EBITDA was $0.5 million, compared to an Adjusted EBITDA loss of $3.0 million in the prior year period.
Balance Sheet and Cash Flow
As of June 30, 2024, Arq Inc had cash and restricted cash totaling $37.2 million, down from $44.0 million as of March 31, 2024. This decrease was primarily due to capital expenditures related to the expansion of the Red River and Corbin facilities. Total debt, including financing leases, stood at $20.4 million, slightly down from $20.9 million at the end of 2023.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $25.4 million | $20.4 million |
| Net Loss | $2.0 million | $5.9 million |
| Adjusted EBITDA | $0.5 million | $(3.0) million |
| Gross Margin | 32% | 25% |
Strategic Developments and Future Outlook
Arq Inc secured additional granular activated carbon (GAC) supply contracts, bringing the total contracted volume to 13 million pounds per year, representing 52% of Red River’s expanded nameplate GAC capacity. The company expects to have all 25 million pounds of capacity contracted before production begins in Q1 2025.
In May 2024, Arq completed a $15 million private placement of common stock, bolstering its liquidity. The company also commenced commissioning its Corbin facility, with production expected to ramp up in Q4 2024.
“Our second quarter results represent yet another period of solid execution as we continue to maximize the profitability of our foundational PAC portfolio, advance our strategic GAC growth projects towards completion, and further solidify our capital position,” commented Bob Rasmus, CEO of Arq.
Conclusion
Arq Inc's Q2 2024 results demonstrate significant progress in revenue growth, profitability, and strategic initiatives. The company's focus on enhancing ASP and operational efficiency has led to improved financial metrics, positioning it well for future growth. Investors and stakeholders will be keenly watching the company's continued execution of its strategic projects and market expansion efforts.
Explore the complete 8-K earnings release (here) from Arq Inc for further details.
