8-K: Arq, Inc. Reports Strong Q2 2026 Results, Boosted by PAC Business

Arq, Inc. announced its second quarter 2026 financial results, showcasing a 5% revenue increase to $29.9 million and a significant 59% rise in Adjusted EBITDA to $5.8 million, marking its ninth consecutive quarter of positive Adjusted EBITDA.

Summary

• Arq, Inc. reported second quarter 2026 revenue of $29.9 million, a 5% increase from $28.6 million in the prior year, driven by higher pricing and volumes.
• Adjusted EBITDA for Q2 2026 was $5.8 million, a 59% increase from $3.7 million in Q2 2025, attributed to the core PAC business's strength and improved profitability.
• Gross margin improved to 38.5% in Q2 2026, up from 33.3% in Q2 2025.
• The company reported a net loss of $0.7 million for Q2 2026, an improvement from a net loss of $2.4 million in Q2 2025.
• Arq reaffirmed its full-year 2026 guidance for revenue between $120-$125 million and Adjusted EBITDA of $17-$20 million.
• The Red River Plant turnaround was completed under budget in April 2026.
• Customer testing for the 'PAC for PFAS' product is ongoing, with potential for significant volume and margin contribution starting in 2027.
• Discussions continue to monetize the Corbin Facility and its related technologies.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, with strong improvements in profitability metrics and reaffirmation of full-year guidance, despite a net loss. The company is making strategic progress on new product development and operational efficiencies.

Positives

• Revenue increased by 5% to $29.9 million in Q2 2026 compared to $28.6 million in Q2 2025.
• Adjusted EBITDA surged by 59% to $5.8 million in Q2 2026 from $3.7 million in Q2 2025, demonstrating strong operational profitability.
• Gross margin improved significantly to 38.5% in Q2 2026, up from 33.3% in Q2 2025.
• Net loss narrowed to $0.7 million in Q2 2026, a substantial improvement from $2.4 million in Q2 2025.
• The company achieved its 9th consecutive quarter of positive Adjusted EBITDA.
• The Red River Plant turnaround was completed materially under budget.
• Full-year 2026 revenue and Adjusted EBITDA guidance were reaffirmed.
• Unrestricted cash improved to $3.1 million as of July 31, 2026.

Negatives

• The company reported a net loss of $0.7 million for the second quarter of 2026.
• Total debt, inclusive of financing leases, increased to $30.7 million as of June 30, 2026, from $28.5 million as of December 31, 2025.
• Cash and restricted cash decreased to $12.1 million as of June 30, 2026, from $15.0 million as of December 31, 2025.

Risks

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied.
• The GAC facility conversion estimates include a wide range of contingencies subject to ongoing revision.
• The company faces risks related to the timing and scope of new and pending regulations, and potential legal challenges or extensions of compliance dates.
• Changes in laws and regulations, accounting rules, prices, economic conditions, and market demand could impact the business.
• Technical, start-up, and operational difficulties could arise.
• Competition within the industries in which the Company operates poses a risk.
• Risks associated with debt financing and the inability to obtain future financing on favorable terms.
• Potential disruptions at facilities due to natural disasters or extreme weather.

Future Outlook

Arq reaffirmed its full-year 2026 guidance for revenue between $120-$125 million and Adjusted EBITDA of $17-$20 million. The company is optimistic about the PAC business through the remainder of the year due to seasonal demand. The 'PAC for PFAS' product is expected to contribute materially to volumes, pricing, and margins from 2027 onward. Monetization of the Corbin Facility is also being pursued.

Management Comments

• "The second quarter demonstrated the earning power of our foundational PAC business," said Bob Rasmus, CEO of Arq.
• "Even in what is typically our seasonally softer quarter, and one that included our biennial Red River Plant turnaround, we delivered Adjusted EBITDA well ahead of the prior-year period, driven by continued pricing discipline and the underlying strength of our core operations."
• "The turnaround was completed under budget and, importantly, without disrupting our ability to serve customers."
• "With a warm start to the summer and favorable seasonal demand dynamics, we remain confident in the outlook for our PAC business through the remainder of the year."
• "Our strategic optimization review remains ongoing. I have been clear that we will remain highly disciplined on any further capital spending."
• "The PFAS opportunity remains compelling, and we continue to see an important role for Arq in providing solutions for our customers."
• "With that in mind, as a possible interim step while we determine the best path to bringing our own GAC line online, I am encouraged by the early progress of our PAC for PFAS strategy, which I believe could meaningfully add to the volumes, pricing, and margins of our PAC business, while helping remove PFAS from our nation's water."
• "This quarter again demonstrated the profitability and resilience of our core PAC business. Taken together with the encouraging progress in our PFAS-related solutions, we have multiple avenues open to us to create meaningful shareholder value."
• "As a Board and management team that owns a significant stake in the company, we remain closely aligned with our shareholders and confident in the opportunities ahead for further growth."

Industry Context

StockSavvy.ai notes that Arq's focus on activated carbon products, particularly for PFAS remediation, aligns with growing environmental concerns and regulatory pressures. The company's strategy to leverage its PAC business while developing new solutions like 'PAC for PFAS' reflects a common industry trend of adapting to evolving market demands and environmental standards.

Management Changes

Stakeholder Impact

• Shareholders: Reaffirmed guidance and positive operational improvements may lead to increased confidence and potential stock value appreciation. Management's significant stake aligns interests.
• Customers: Continued supply of PAC products, potential new solutions for PFAS contamination ('PAC for PFAS'), and ongoing asphalt product testing.
• Suppliers: Continued demand for raw materials for activated carbon production.
• Creditors: Increased debt levels may be a concern, but improved EBITDA suggests ability to service debt.

Next Steps

• Continue customer testing for 'PAC for PFAS' product.
• Advance strategic optimization review, focusing on furnace throughput and unit cost reduction.
• Continue discussions to monetize the Corbin Facility and related technologies.
• Complete paving tests for Arq's asphalt product with a leading U.S. asphalt company.
• Evaluate and refine the GAC optimization process to ensure targeted returns.
• Host conference call on August 11, 2026, to discuss Q2 2026 financial performance.

Key Dates

Recommendation

The company shows positive operational trends with improved profitability metrics and reaffirmed guidance. However, the continued net loss, increased debt, and the long-term nature of GAC facility completion and PFAS product monetization suggest a 'hold' rating until more concrete progress is demonstrated on these fronts.

Keywords

activated carbon, PAC, GAC, PFAS, EBITDA, revenue, purification, environmental products