ARQ earnings analysis
What we found in ARQ's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Arq delivered improved second-quarter results, with revenue up 5%, gross margin expanding approximately 520 basis points, operating loss nearly breakeven at $68,000, and EPS improving to negative $0.02. Cash burn also improved, but unrestricted cash was only $906,000 and debt increased to $30.704 million. The key strategic setback is the suspension of GAC production, with no production expected in 2026 or 2027 while the company evaluates economics and required design modifications.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 5% on pricing and AC volumes
- Second-quarter revenue increased 5% year over year to $29.883 million from $28.584 million. Management attributed the increase to $1.3 million of pricing benefit and approximately $1.0 million from higher AC volumes.
- Gross margin expanded approximately 520 bps
- Gross margin, calculated from revenue less cost of revenue, increased to approximately 38.5% from 33.3% year over year, as cost of revenue declined 4% to $18.372 million from $19.066 million. The company cited the Corbin Facility idling and improved product mix as favorable factors.
- Operating loss and EPS improved materially
- Operating loss narrowed to $68,000 from $1.791 million, improving operating margin to approximately negative 0.2% from negative 6.3%. Net loss improved to $733,000, or $0.02 per share, from $2.369 million, or $0.06 per share.
- Cash burn improved year over year
- Six-month operating cash flow used improved to $2.659 million from $5.276 million used in the prior-year period, a $2.617 million improvement. Investing cash use also declined to $2.023 million from $5.530 million, primarily because prior-year GAC construction spending was higher.
- First-half demand remained positive
- Six-month revenue increased 6% to $58.936 million from $55.831 million, driven by approximately $2.3 million of volume growth and $0.6 million of pricing. Management cited higher demand from industrial, municipal water and power-generation customers.
- Management sees further margin opportunity
- Management expects gross margin to continue improving as fixed GAC production costs lessen and PAC production efficiency and product mix improve. Adjusted EBITDA increased to $5.842 million from $3.668 million in the second quarter.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- GAC production remains suspended
- Management does not expect GAC production in fiscal years 2026 or 2027. Independent testing indicated the thermal oxidizer supported only approximately 15 million pounds of annual GAC production versus original design capacity of 25 million pounds or higher, and the optimization review remains ongoing.
- Low unrestricted cash and higher debt
- Liquidity remains constrained: unrestricted cash was only $906,000 at June 30, 2026, while restricted cash was $11.236 million. Total debt obligations increased to $30.704 million from $28.465 million at December 31, 2025, including $21.410 million outstanding on the revolving facility.
- Receivables and inventory increased
- Working capital absorbed cash during the first half, including a $5.050 million increase in receivables and a $2.690 million increase in inventories. Receivables rose to $20.030 million and inventories to $19.407 million from $14.980 million and $15.895 million, respectively, at December 31, 2025.
- Overhead and depreciation remain elevated
- Second-quarter SG&A increased 15% to $6.789 million, including approximately $600,000 of additional payroll and benefits primarily from executive severance. Six-month SG&A increased 18% to $14.158 million, while depreciation and amortization increased 25% to $6.407 million.
- GAC design litigation remains ongoing
- The company continues to face litigation with the GAC Facility design firm, alleging material cost increases and delays; the design firm filed a counterclaim on April 11, 2025. The filing states that litigation remains ongoing, but no loss provision has been quantified.
- No formal risk-factor changes; collateral tied up
- The filing states that there were no material updates to the risk factors disclosed in the 2025 Form 10-K. However, the company had $11.2 million of outstanding regulatory surety bonds and held $9.3 million of restricted cash as collateral at June 30, 2026.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.02
- Gross margin
- 38.5%
- Operating margin
- -0.2%
- Segment
- Advanced Purification Technologies (APT): $29.883 million, up $1.299 million or 5% year over year; the company reports one operating segment.
- Segment
- Geography: United States revenue was $28.252 million, up from $27.335 million; Canada revenue was $1.631 million, up from $1.249 million.
What they said about what is next.
No numeric revenue or EPS guidance was provided. Management expects cash on hand and borrowing availability as of June 30, 2026 to fund operations for the next 12 months, expects remaining-2026 capital expenditures to primarily relate to plant maintenance and improvements, and does not expect GAC production in fiscal years 2026 or 2027.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 6, 2026
- Arq, Inc. reported Q1 2026 revenue of $29.05 million, a 7% increase from $27.25 million in Q1 2025, with a net loss of $0.84 million compared to a net income of $0.20 million in the prior year. The company has paused…
- 10-K · March 10, 2026
- Arq reported 2025 revenue of $120.336M (up from $108.959M in 2024) but posted a GAAP net loss of $52.61M (EPS -$1.27) driven largely by a $44.756M impairment related to its Corbin asset group. The company paused GAC…
- 10-Q · August 11, 2025
- Arq reported Q2 revenue of $28,584,000, up from $25,405,000 a year earlier (+$3,179,000, ~12.5%), while GAAP loss per share narrowed to $(0.05) from $(0.06). Gross margin improved to ~33.3% and operating loss was…
- 10-Q · May 7, 2025
- Arq reported Q1 revenue of $27,247 (in thousands), up from $21,740 in Q1 2024, and produced operating income of $662 (in thousands) versus an operating loss of $(2,980) in the prior year quarter. Net income was $203 (in…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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