Slide 1: Q1 2024 Earnings Call
Nasdaq: ARQ Q1 2024 Earnings Call May 9, 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 Q1 2024 Financial Update Business & Market Expansion & Capex o Delivered revenue growth: +4% YoY to $21.7 o Achieved first-ever GAC contract: o Red River GAC facility: million; improved average selling price (ASP) First contract for 20% of nameplate Con
Slide 4: Q1 2024 Financial Highlights
Q1 2024 Financial Highlights Continued Revenue Growth YoY ($ million) • Revenue +4% to $21.7 million Revenue Gross Margin (%) • Enhanced contract terms including higher ASP and positive 24 37% changes in product mix 22 21.7 20.8 • Partially offset by lower PGI volumes caused by a mild winter 20 and
Slide 5: PAC Performance Driven by Price and Cost Cutting Enhancements
PAC Performance Driven by Price and Cost Cutting Enhancements Gross margin more than doubled due to YoY ASP growth (12 of last 13 quarters) and cost cutting measures 40% Gross margins more than doubled 37% Q1 2024: 35% o Highest gross margin quarter in 3 years 30% (excluding Q4 2023 which saw signif
Slide 6: 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 2024 Capex ✓ Targeted payback of 3 years or Red River Project less for Red River project • FY 2024 capex forecast of $60-70 million • Expansion to deliver incremental 25 million lbs. of GAC produ
Slide 7: First GAC Contract Reflects Strategic Milestone
First GAC Contract Reflects Strategic Milestone 20% of 2025 production at attractive pricing; further wins targeted in coming months • First GAC contract for 5 million pounds announced May 8, 2024. Reflects third party validation of strategy and product. Attractive PFAS Contamination in the U.S. (Fe
Slide 8: 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 9: North American GAC Market Fundamentals
North American GAC Market Fundamentals All data suggests supply struggling to keep pace with rapid demand growth, exacerbated post EPA regulatory changes – Arq estimates this will drive a 3-5x increase in demand over the next 5 years GAC - Market Supply Estimate1 vs Market Demand Estimate1 vs Arq Es
Slide 10: 2024 Key Objectives
2024 Key Objectives 1 2 3 4 PAC Optimization GAC Customers Corbin Facility Red River GAC Facility • Drive additional market • Continue active • Commission facility • Complete commissioning penetration (i.e. water) dialogue with new and in Q4 2024 existing GAC customers • Stockpile bituminous • Elimi
Slide 11: Financial Detail
Financial Detail
Slide 12: Consolidated Balance Sheet
Consolidated Balance Sheet 1 As of (in thousands, except share data) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash $ 35,227 $ 45,361 Receivables, net 10,927 16,192 Inventories, net 21,683 19,693 Prepaid expenses and other current assets 4,201 5,215 Total current assets 72,038 86,461 R
Slide 13: Consolidated Statement of Operations
Consolidated Statement of Operations1 Three Months Ended March 31, (in thousands, except per share data) 2024 2023 Revenue $ 21,740 $ 20,805 Cost of revenue, exclusive of depreciation and amortization 13,713 17,175 Operating expenses: Selling, general and administrative 7,666 11,283 Research and dev
Slide 14: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows 1 Three Months Ended March 31, (in thousands) 2024 2023 Cash flows from operating activities Net loss $ (3,419) $ (7,508) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation, amortization, depletion and accretion
Slide 15: Consolidated Statement of Cash Flows (cont.)
Consolidated Statement of Cash Flows (cont.) 1 Three Months Ended March 31, (in thousands) 2024 2023 Cash flows from investing activities Acquisition of property, plant, equipment, and intangible assets, net $ (9,596) $ (3,545) Acquisition of mine development costs (51) (38) Cash and restricted cash
Slide 16: Note on Non-GAAP Financial Measures
Note on Non-GAAP Financial Measures This presentation presents certain supplemental financial measures, including EBITDA and Adjusted EBITDA, which are measurements that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). EBITDA is defined as earnings before
Slide 17: Adjusted EBITDA Reconciliation to Net Income (Loss)
Adjusted EBITDA Reconciliation to Net Income (Loss) Three Months Ended March 31, (in thousands) 2024 2023 Net loss (1) $ (3,419) $ (7,508) Depreciation, amortization, depletion and accretion 1,716 2,137 Amortization of Upfront Customer Consideration 127 127 Interest expense, net 432 289 Income tax b
Slide 18: Appendix
Appendix
Slide 19: Company Overview – Who is Arq?
Company Overview – Who is Arq? Arq is a diversified, environmental technology company with products that enable a cleaner and safer planet while actively reducing our environmental impact Produce activated Uniquely utilize Provide innovative carbon & other bituminous coal environmental environmental
Slide 20: Arq Investment Highlights
Arq Investment Highlights Activated carbon producer with unique patent protected technology, dedicated Vertically Integrated feedstock, owned & operated production facilities and distribution network Shift to underserved and growing markets repositions business for growth Growth Focused through high
Slide 21: Products and Market Applications
Products and Market Applications Activated carbons are highly engineered sorbent materials which purify, filter or remove pollutants from air, water and soil Applications Products Market Outlook o Potable Water • Municipal water, soil and o Wastewater Treatment Granular Activated Carbon groundwater
Slide 22: Our Key GAC Differentiators
Our Key GAC Differentiators Arq’s 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… enabling significant CO2e emissions
Slide 23: 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