Slide 1: Q2 2024 Earnings Call
Nasdaq: ARQ Q2 2024 Earnings Call August 13, 2024
Slide 2: Disclaimer
Disclaimer This presentation includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a “safe harbor” for such statements in certain circumstances. When used in this presentation, the words “can,” “will,” “intends,” “expects,” “beli
Slide 3: Recent Financial Highlights & Business Updates
Recent Financial Highlights & Business Updates Ongoing optimization of PAC portfolio drives significant improvement in gross margin while Red River expansion into GAC market continues at pace Q2 2024 Financial Update Business & Market Strategic Growth Projects o Continued growth: Revenue +24% and o
Slide 4: Q2 2024 Financial Highlights
Q2 2024 Financial Highlights ($ million) Continued Revenue Growth YoY Revenue Gross Margin (%) 30 • Revenue +24% to $25.4 million 32% 25.4 • Achieved higher ASP and positive changes in product mix 25 25% • Partially offset by lower volumes 20.4 20 Expanding Gross Margins YoY 15 • Improvements driven
Slide 5: Steady Price Increases Underpin Sustainable PAC Business Performance
Steady Price Increases Underpin Sustainable PAC Business Performance 30% 25% Q2 2024: o 5th consecutive quarter of 20% double digit % ASP YoY increase 15% o 16% ASP increase YoY (+16% average increase since Q1 2023) 10% o Post quarter-end, amended sole remaining loss-making contract 5% which will no
Slide 6: Attractive & Consistent Growth in Gross Margin
Attractive & Consistent Growth in Gross Margin Material and consistent gross margin improvement due to ASP growth and focused cost cutting initiatives 49.8% 50% o Gross margin improved ~700 basis +1950 bps +700 bps 45% YoY YoY points vs. prior year period (from 40% 25% to 32%) 36.9% 35% 32.2% o Gros
Slide 7: Key Drivers of Arq's Corporate Transformation
Key Drivers of Arq’s Corporate Transformation What We’re Doing How We’re Going to Do it What it Delivers Red River Project 2024 Capex ✓ Targeted payback of ~3 years • Reiterating $60-70 million capex estimate ✓ Expanded products and • Expansion to deliver incremental 25 million lbs. of GAC product s
Slide 8: Ongoing GAC Contract Wins Validate Products and Strategy
Ongoing GAC Contract Wins Validate Products and Strategy 52% of nameplate capacity contracted at attractive pricing vs PAC; expect to be fully contracted prior to production Ongoing contract wins demonstrate Technical Robust, growing Diverse end-market Attractive Validity of strategic viability of A
Slide 9: Strong North American GAC Market Fundamentals
Strong North American GAC Market Fundamentals Data suggests demand outpacing supply – Arq anticipates a 3-5x increase in demand over next 5 years not accounting for potential incremental demand growth from other sectors (e.g., biogas) • GAC market expected to grow ~75% to >700mm lbs1 • Would result
Slide 10: 2024 Key Objectives
2024 Key Objectives 1 2 3 4 PAC Optimization GAC Customers Corbin Facility Red River GAC Facility • Drive additional • Continue active • Commission facility • Achieve first GAC market penetration dialogue with new deliveries in Q1 2025 (i.e. water) and existing GAC • Stockpile bituminous customers w
Slide 11: Financial Detail
Financial Detail
Slide 12: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet 1 (1) See complete, unaudited Condensed Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended June 30, 2024. 12 12
Slide 13: Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Operations1 (1) See complete, unaudited Condensed Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended June 30, 2024. 13 13
Slide 14: Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statements of Cash Flows 1 (1) See complete, unaudited Condensed Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended June 30, 2024. 14 14
Slide 15: Condensed Consolidated Statements of Cash Flows - Cont.
Condensed Consolidated Statements of Cash Flows - Cont. 1 (1) See complete, unaudited Condensed Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended June 30, 2024. 15 15
Slide 16: Note on Non-GAAP Financial Measures
Note on Non-GAAP Financial Measures To supplement our financial information presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we provide non- GAAP measures of certain financial performance. These non-GAAP measures include EBITDA (EBITDA Loss) and Ad
Slide 17: Adjusted EBITDA (Loss) Reconciliation to Net Loss
Adjusted EBITDA (Loss) Reconciliation to Net Loss (1) Included in Net loss for the three and six months ended June 30, 2023 are $0.6 million and $4.9 million, respectively of transaction and integration costs incurred related to the legacy Arq acquisition. Additionally, for the three and six months
Slide 18: Appendix
Appendix
Slide 19: Company Overview
Company Overview Arq is a diversified, environmental technology company producing activated carbon with products which reduce or reverse environmental liabilities, including PFAS or “forever chemicals”. Our products enable a cleaner and safer planet. General applications of our products PFAS Soil, W
Slide 20: Arq Investment Highlights
Arq Investment Highlights Activated carbon producer with unique patent protected technology, Vertically Integrated dedicated feedstock, owned & operated production facilities and distribution network Shift to underserved and growing markets repositions business for Growth Focused growth through high
Slide 21: Products & Market Applications
Products & Market Applications GAC from bituminous coal best at remediating PFAS and forever chemicals Applications Market Focus • Potable Water • PFAS Remediation Granular Municipal water, PFAS Growth Activated remediation, soil & • Wastewater Treatment Business Carbon groundwater remediation, • Bi
Slide 22: Our Key GAC Differentiators
Our Key GAC Differentiators Activated carbon is a technical sale – our unique products, process and supply chain are key differentiators We will be the only GAC producer: …with a vertically …using bituminous …and with estimated integrated domestic coal waste feedstock, lower Scope 1 & 2 supply chain
Slide 23: EPA Releases Critical PFAS Regulations
EPA Releases Critical PFAS Regulations On April 10, 2024, EPA announced new National Primary Drinking Water Regulations to reduce PFAS in municipal drinking water over the next 5 years • Arq estimates EPA’s regulations potentially increases municipal water market demand by 3-5x vs. existing ~170 mil
Slide 24: Arq Investor Relations
Arq Investor Relations Contacts: Anthony Nathan, Arq Marc Silverberg, ICR investors@arq.com 8051 E. Maplewood Ave, Suite 210 Greenwood Village, CO 80111 Nasdaq: ARQ