From GlobeNewswire:

create short, engaging summaries of the news. Limit summaries to 50 words or less per paragraph. Ensure clarity and engagement, Include all facts, figures and statistics mentioned in the news article. Arrange summaries sequentially or by relevance in easy to read paragraph format. Verify accuracy and state only facts, ignore any promotional or marketing of services in the article: Q4 2023 revenues from foundational Powder Activated Carbon business increase 20% YoY while gross margin improves to 50%, generating Adjusted EBITDA of $7.2 million and Net Income of $3.3 million, while Granular Activated Carbon growth business remains on schedule for commissioning by Q4 2024 GREENWOOD VILLAGE, Colo., March 12, 2024 (GLOBE NEWSWIRE) — Arq, Inc. (NASDAQ: ARQ) (the “Company” or “Arq”), a producer of activated carbon and other environmentally efficient carbon products for use in purification and sustainable materials, today announced its financial and operating results for the fourth quarter and full year ended December 31, 2023. Financial Highlights Achieved positive net income of $3.3 million in Q4 2023, reflecting the first positive net income quarter since Q4 2021.Increased revenue to $28.1 million in Q4 2023, reflecting growth of 20% over the prior year period, driven by higher average selling prices, positive changes in product mix and $4.7 million of take-or-pay revenue, partially offset by natural gas pricing impacts to volume.Improved gross margin to 50% in Q4 2023, due to higher revenue, as well as continued focus on profitability over volume, cost management, and take-or-pay revenue.Achieved Q4 2023 Adjusted EBITDA of $7.2 million, reflecting the second consecutive quarter of positive Adjusted EBITDA (Q3 2023 Adjusted EBITDA of $0.9 million)(1).Exited 2023 with cash and restricted cash of $54.2 million.Capex for full year 2024 forecasted to be $55-60 million with Red River Phase 1 capex expected to be $45-50 million. Expected to be funded with cash on hand, cash generation, ongoing cost reduction initiatives, potential customer prepayments for GAC contracts, and a planned refinancing and potential expansion of our term loan. (1) Adjusted EBITDA is a non-GAAP financial measure. Please refer to the paragraph titled “Non-GAAP Measures” for the definitions of non-GAAP financial measures. Recent Business Highlights Completed corporate rebrand and commenced trading under the new Nasdaq ticker “ARQ”, reflecting strategic expansion and evolution to a leading North American environmental technology company.Further optimized Powder Activated Carbon (“PAC”) portfolio by prioritizing profitability over volume, managing costs, improving product mix, and eliminating unfavorable contracts. Achieved positive PAC portfolio cash flow in Q4 2023.Continued development of the Corbin facility to optimize for GAC feedstock at Red River; remains on time and within budget, with commissioning activities beginning imminently and expected to conclude in Q2 2024Continued strategic expansion of Red River Granular Activated Carbon (“GAC”) facility; construction commenced in October 2023 and commissioning targeted for Q4 2024.Entered into a framework for a definitive supply agreement with LSR Materials to serve the growing European water purification and filtration market, focusing on PFAS (“Forever Chemicals”) and micropollutants in wastewater. “We capped off 2023 with strong momentum and are very pleased with the steps we have taken and continue to take to further improve our foundational PAC business,” said Robert Rasmus, CEO of Arq. “We delivered fourth quarter results that clearly evidence the improving profitability of our existing business. We grew revenue by 20%, nearly doubled our gross margins to 50%, generated positive cash flow from our PAC business, and achieved positive net income for the first time in 8 quarters. We recently marked the one-year anniversary of our Arq acquisition by completing a corporate rebrand that reflects our transformation to a leading environmental technology company.” Rasmus continued, “We continue to make good progress in executing our high-return strategic growth projects focused on the robust and growing GAC market. The primary focus is completing the optimization at our Corbin facility to produce cost-effective feedstock for Red River in Q2 2024, and commissioning our 25 million pounds per year GAC expansion at our Red River facility in Q4 2024. We are encouraged by our ongoing conversations with potential GAC customers, and continue to see strong demand for our high-performance environmentally responsible granular products, with sales contracts expected well in advance of first production. The global GAC market remains robust, driven by a variety of factors including continued focus on remediation, and further evidenced by EPA’s recent update regarding its targeted PFAS regulations.” Rasmus added, “While the timing to complete our Red River Phase 1 facility expansion remains on track, the cost to complete the expansion has increased versus our original forecast. The increase was driven by higher construction costs, increased equipment costs and engineering fees, completion schedule acceleration, and inaccurate estimate inputs provided by third party consultants. Despite this increase, we remain in a position to fund the project from cash on hand, cash generation, ongoing cost reduction initiatives, potential customer prepayments for GAC contracts, and a planned refinancing and potential expansion of our term loan – and importantly, we have no plans to issue equity. Despite the cost increases, the project’s investment economics remain attractive, as we expect we will achieve investment payback in 3 years or less, while generating long-term stakeholder value.” Fourth Quarter 2023 Results Revenues totaled $28.1 million for the fourth quarter of 2023, reflecting an increase of 20% compared to $23.4 million in the prior year period. The improvements in revenue were driven by higher average selling prices, positive changes in product mix, and take-or-pay revenue. Cost of revenues totaled $14.1 million for the fourth quarter of 2023, compared to $17.5 million in the prior year period. Gross margin was 49.8% for the fourth quarter of 2023, compared to 25.4% in the prior year period. The increase in gross margin during the quarter was driven by continued focus on profitability over volume, cost management, positive changes in product mix, and take-or-pay revenue. Other operating expenses totaled $10.9 million for the fourth quarter of 2023, compared to $9.3 million in the prior year period. The increase was mainly driven by higher payroll and benefits expense, as well as higher general and administrative expenses associated with the acquisition of substantially all of the subsidiaries of Arq Limited. Operating income was $3.1 million for the fourth quarter of 2023, compared to an operating loss of $3.4 million in the prior year period. The improvement was mainly driven by improved gross margin due to the aforementioned factors. Interest expense was $0.9 million for the fourth quarter of 2023, compared to $0.1 million in the prior year period. The increase was primarily driven by incremental interest expense on the Company’s $10.0 million term loan entered into in conjunction with the legacy Arq acquisition completed in February 2023. Income tax expenses were $0.2 million in the fourth quarter of 2023, compared to $0.2 million in the prior year period. Net income was $3.3 million, or $0.10 per diluted share in the fourth quarter of 2023, compared to a net loss of $3.2 million, or $0.17 per diluted share, in the prior year period. The improvement was driven by higher operating income associated with gross margin expansion, and the quarterly performance reflected the first period of positive net income since the fourth quarter of 2021. Adjusted EBITDA was $7.2 million for the fourth quarter of 2023, compared to Adjusted EBITDA loss of $1.2 million in the prior year period. The improvement was driven by continued focus on profitability over volume, cost management, positive changes in product mix, and take-or-pay revenue. See note below regarding the use of the Non-GAAP financial measure Adjusted EBITDA and a reconciliation to the most comparable GAAP financial measure. Capex & Balance Sheet Capital expenditures totaled $27.5 million for full year 2023, compared to $8.9 million in the prior year. The increase was driven by ongoing strategic growth projects, as well as higher spending associated with the scheduled turnaround. Cash as of December 31, 2023, including $8.8 million of restricted cash, totaled $54.2 million, compared to $76.4 million as of the prior year period. The reduction in cash on hand was primarily driven by ongoing capital expenditures associated with the strategic expansion of Red River and Corbin facilities. Total debt, inclusive of financing leases, as of December 31, 2023, totaled $20.9 million compared to $4.6 million as of the prior year period. The increase was driven by the $10.0 million term loan entered into in conjunction with the legacy Arq acquisition completed in February 2023 as well as the assumption of…



Read more at GlobeNewswire:: Arq Reports Fourth Quarter & Full Year 2023 Results