Slide 1: Q4 & FY 2024 Earnings Call
Nasdaq: ARQ Q4 & FY 2024 Earnings Call March 6, 2024
Slide 2: Disclaimer
Disclaimer This presentation contains 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,” "may," “intends,” “expects,
Slide 3: 2024: Key Achievements by the Numbers
2024: Key Achievements by the Numbers Total Revenue Gross Margins Adjusted EBITDA1 $109 million 36.2% $7.7 million 10% growth YoY; driven +410 bps YoY; reflects vs. loss prior year; 3 by ASP improvement & sustainable improvement in quarters of positive end-market PAC performance Adjusted EBITDA in 2
Slide 4: FY & Q4 2024 Financial Highlights
FY & Q4 2024 Financial Highlights Full Year Quarterly $ millions unless noted FY 2024 FY 2023 $ millions unless noted Q4 2024 Q4 2023 Revenue $109.0 $99.2 Revenue $27.0 $28.1 Gross Margin 36.2% 32.1% Gross Margin 36.3% 49.8% Adjusted EBITDA1 $7.7 ($2.6) Adjusted EBITDA1 $3.3 $7.2 Net Income / (loss)
Slide 5: Steady Price Increases Underpin Sustainable PAC Business Performance
Steady Price Increases Underpin Sustainable PAC Business Performance YoY ASP % Change Q4 2024: Outlook: 30% o 7th consecutive quarter o Long-term growth remains a focus 25% of double digit % ASP o Pace of growth expected to YoY increase continue, but naturally moderate 20% o 14% ASP increase YoY o A
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 Gross Margin % 49.8% 50% 45% o Gross margin remained strong at 40% 36.9% 38.6% 36.3% in Q4 2024; despite two 1-week 36.3% 35% unplanned Red River pla
Slide 7: Red River: Driving Arq's Corporate Transformation
Red River: Driving Arq’s Corporate Transformation What We’re Doing What it Delivers Red River Project • Adding production of GAC + expanding plant to deliver incremental 25mm pounds of GAC product ✓ Expanded products and • Entered into supply contracts for approximately 16 million pounds1 of solutio
Slide 8: Red River GAC Development Update
Red River GAC Development Update • Production anticipated by end of Q1 2025; finalizing commissioning and operational changes • Ramp-up phase expected to be ~3-6 months; anticipate reaching nameplate capacity around the middle of 2H 2025 • Guidance maintained that capacity beyond nameplate expected
Slide 9: 2024 Red River Capex Review
2024 Red River Capex Review • Contractor errors: ~$4-5 million due to issues with ~$3-4 ~$2 $80 ~($10) estimated requirements for small-bore piping, ~$4-5 $60-70 ~$70-75 additional electrical work, switches, and related labor costs • Timeline acceleration & other: ~$3-4 million driven by various sma
Slide 10: Capital & Liquidity Update
Capital & Liquidity Update December 2024 Term Loan Refinancing September 2024 Equity Offering • Tripled capital access: $30 million1 facility is • Raised approximately $27 million of net proceeds 3x larger, boosting financial flexibility via issuance of common stock • Refinanced costly debt: Retired
Slide 11: Growth Beyond Red River Phase I
Growth Beyond Red River Phase I Key Triggers Needed to Pursue Phase II Illustrative Red River GAC Buildout Assumes Phases I & II are built ~1-year apart; potential of 125 million lbs. • Successful commissioning of Red River Phase I 140 • Achieving Phase I annual nameplate production levels of 25 mil
Slide 12: PFAS Regulations
PFAS Regulations On April 10, 2024, EPA announced new National Primary Drinking Water Regulations to reduce PFAS in municipal drinking water over the following 5 years • Arq estimates EPA’s regulations potentially increases municipal water market demand by 3-5x vs. existing ~170 million pound per ye
Slide 13: GAC Market Summary
GAC Market Summary Estimated 2025 GAC Demand by Sector 1 Pharma / chem Municipal wastewater Food • GAC demand dominated by Groundwater potable water 3% 1% 3% 6% • Smaller markets can offer higher Industrial Wastewater pricing and growth 7% • Provides potential for meaningful diversification for Arq
Slide 14: Activated Carbon (AC) Competitive Landscape
Activated Carbon (AC) Competitive Landscape Arq remains only public pure-play in activated carbon • Attractive growth market with concentrated pool of private competitors ✓ Entering GAC market at sweet-spot: providing meaningful scale while also representing a • Calgon Carbon Corporation is the viab
Slide 15: Key Near-term Priorities & Objectives
Key Near-term Priorities & Objectives 1. Continue to optimize successful turnaround of foundational PAC business (now cash generative) 2. Commence and ramp production at Red River GAC facility as next phase of Arq’s transformation 3. Successfully conclude negotiations to contract remaining GAC capac
Slide 16: Financial Detail
Financial Detail
Slide 17: Consolidated Balance Sheet
Consolidated Balance Sheet 1 As of December 31, (in thousands, except share data) 2024 2023 ASSETS Current assets: Cash $ 13,516 $ 45,361 Receivables, net 14,876 16,192 Inventories, net 19,314 19,693 Prepaid expenses and other current assets 4,650 5,215 Total current assets 52,356 86,461 Restricted
Slide 18: Consolidated Statements of Operations
Consolidated Statements of Operations 1 Three Months Ended December 31, Years Ended December 31, (in thousands, except per share data) 2024 2023 2024 2023 (unaudited) Revenue $ 27,040 $ 28,104 $ 108,959 $ 99,183 Cost of revenue, exclusive of depreciation and amortization 17,236 14,105 69,515 67,323
Slide 19: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows 1 Years Ended December 31, (in thousands) 2024 2023 Cash flows from operating activities Net loss $ (5,109) $ (12,249) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, amortization, depletion and accretion 8
Slide 20: Consolidated Statements of Cash Flows - Cont.
1 Consolidated Statements of Cash Flows - Cont. Years Ended December 31, (in thousands) 2024 2023 Cash flows from financing activities Net proceeds from common stock issued in private placement transactions $ 14,951 $ 15,220 Net proceeds from CFG Loan, related party, net of discount and issuance cos
Slide 21: Adjusted EBITDA (Loss) Reconciliation to Net Loss
Adjusted EBITDA (Loss) Reconciliation to Net Loss Three Months Ended Years Ended September 30, December 31, December 31, (in thousands) 2024 2024 2023 2024 2023 Net (loss) income $ 1,617 $ (1,339) $ 3,290 $ (5,109) $ (12,249) Depreciation, amortization, depletion and accretion 2,716 2,504 3,267 8,59
Slide 22: Appendix
Appendix
Slide 23: Company Overview
Company Overview Arq is a diversified, environmental technology company producing activated carbon 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, Water
Slide 24: What is Activated Carbon?
What is Activated Carbon? • Also known as activated charcoal • Activated carbons are largely engineered sorbent materials which purify, filter and remove pollutants from air, water and soil • When activated, able to “adsorb” a wide range of harmful compounds from air, gas & liquids • “Activation” pr
Slide 25: 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 26: 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 27: Biogas & Renewable Natural Gas Purification
Biogas & Renewable Natural Gas Purification • Biogas is produced when organic material • The RNG is passed directly through a GAC column to achieve decomposes in anaerobic conditions. Biogas can be this purification processed to remove impurities – such as CO2, H2S and Siloxane – to produce high-qua
Slide 28: Strong North American GAC Market Fundamentals
Strong North American GAC Market Fundamentals Data suggest 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) • Arq expects annual GAC market to grow ~75% to >700mm lbs1 • Woul
Slide 29: Ongoing GAC Contract Wins Validate Products and Strategy
Ongoing GAC Contract Wins Validate Products and Strategy Ongoing contract wins demonstrate Technical Robust, growing Diverse end-market Attractive Validity of strategic viability of Arq market, limited demand for GAC economics of GAC investment in high- products available supply (water, PFAS, biogas
Slide 30: Advancing GAC Technology for Enhanced PFAS Removal Efficacy
Advancing GAC Technology for Enhanced PFAS Removal Efficacy Building Market Increasing Increasing Removal Enhancing GAC Adoption Treatment Capacity Speed Purity Advancing testing scale Improving water treatment Decreasing equipment size Reducing extractable from lab to field volume up to 10x or wate
Slide 31: Arq Investment Conclusions
Arq Investment Conclusions Vertically Integrated The only vertically integrated domestic activated carbon supply chain Growth-Focused Legacy PAC assets provide infrastructure for expansion to high-growth GAC Environmentally Beneficial Uniquely use waste to remediate other waste and lower overall car
Slide 32: 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