Arq, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue reached a record $38.2 million, a 9% increase year-over-year (YoY) from $35.1 million in Q3 2025, driven by higher sales volumes.
• Gross margin improved to 39.7% in Q3 2026, an increase of approximately 1,100 basis points compared to 28.8% in Q3 2025.
• Net income was $2.5 million in Q3 2026, a turnaround from a net loss of $0.9 million in Q3 2025.
• Adjusted EBITDA was $8.8 million in Q3 2026, a 71% increase YoY from $5.2 million in Q3 2025, marking the 10th consecutive quarter of positive Adjusted EBITDA.
• Operating profit was $3.1 million in Q3 2026 compared to an operating loss of $1.1 million in Q3 2025.
• Cost of revenue decreased approximately 8% to $23.0 million in Q3 2026 from $25.0 million in Q3 2025.
• Selling, general and administrative (SG&A) expenses increased to $7.2 million in Q3 2026 from $4.6 million in Q3 2025, primarily due to increased incentive compensation and legal/professional fees.
• Research and development (R&D) costs decreased to $0.8 million in Q3 2026 from $2.6 million in Q3 2025, driven by the non-recurrence of GAC ramp-up expenses.
• Cash balance as of September 30, 2026, was $19.1 million, including $11.3 million in restricted cash, up from $12.1 million (including $11.2 million restricted) as of June 30, 2026.
• Total debt, inclusive of financing leases, decreased to $28.2 million as of September 30, 2026, from $30.7 million as of June 30, 2026.
• Capital expenditures totaled $1.0 million in Q3 2026, down from $2.4 million in Q3 2025.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $7.685 million, compared to $28,000 in the same period in 2025.

Guidance and Future Outlook:

• Raised the low-end of full-year 2026 Adjusted EBITDA guidance to $19-20 million, narrowing the previous range of $17-20 million.
• Reiterated full-year 2026 revenue guidance of $120-125 million.
• Reiterated full-year 2026 capital expenditures guidance of $8-10 million.
• Anticipates meaningful orders for PAC for PFAS™ products in 2027, following the EPA's April 2027 monitoring deadline.
• Expects the EPA's April 2027 monitoring and reporting deadline to drive a steady increase in demand for PFAS remediation solutions.
• Believes PAC for PFAS™ has the potential to increase PAC volumes, pricing, and margin contribution as adoption builds in 2027 and beyond.
• Pursuing initiatives to improve furnace efficiency and reduce unit costs across existing PAC operations to improve near-term margins and profitability.

Business Segments and Product Lines:

• Core powdered activated carbon (PAC) business continues to show strength and improving profitability.
• Completed initial customer testing of PAC for PFAS™ products, with additional testing continuing through the end of 2026 with multiple parties.
• Pending patent protection covers the PAC for PFAS™ product range.
• Asphalt testing with a leading U.S. asphalt company has expanded.
• Evaluating processes for monetizing the Corbin Facility and related technologies.
• GAC ramp-up expenses incurred in Q3 2025 did not recur in Q3 2026.

Market and Competitive Landscape:

• PFAS remediation market fundamentals remain favorable ahead of the EPA's April 2027 monitoring and reporting deadline for U.S. water utilities.
• PAC for PFAS™ products are engineered to remove PFAS contaminants and can support compliance for utilities marginally outside the 4 parts per trillion PFAS threshold without the high capital cost of new GAC equipment.
• Arq is the only vertically integrated producer of activated carbon products in North America.
• The company believes the replacement versus book value of its asset base at Red River represents a substantial undervalued asset.

Risks and Challenges:

• Forward-looking statements regarding future results, including guidance, are subject to risks and uncertainties, including regulatory changes, legal challenges, and compliance date extensions.
• Risks include the U.S. government's failure to promulgate or enforce regulations benefiting the business, changes in laws, accounting rules, prices, and economic conditions.
• Potential risks involve availability, cost, and demand for alternative energy sources and their impact on coal-fired power generation.
• Technical, start-up, and operational difficulties, including design flaws in the GAC Facility at the Red River Plant, could impact operations.
• Risks related to debt financing, inability to obtain future financing on favorable terms, and potential disruptions at facilities due to natural disasters or extreme weather.
• Risks associated with intellectual property infringement claims and the inability to protect IP.
• Potential impacts from inflation, macroeconomic uncertainty, tariffs, and armed conflicts on market demand and input costs.
• Risks related to the performance of obligations secured by surety bonds and the amount, use, and timing of future capital expenditures.

Management Commentary and Tone:

• CEO Bob Rasmus described the quarter as "strong," highlighting record revenue, positive net income, and the 10th consecutive quarter of positive Adjusted EBITDA.
• Management noted that while Q3 is typically strong, the entire year has been strong, not just the quarter.
• Rasmus stated that the test work on PAC for PFAS™ was encouraging and that meaningful orders are feasible in 2027.
• Management emphasized a focus on building business value, growing PAC earnings, and executing on strategy to ensure the value of the Red River asset base is recognized.
• The tone indicates confidence in the foundational PAC business and the potential for growth in the PFAS market.

Other Key Points:

• The company has pending patent protection for its PAC for PFAS™ products.
• Discussions are ongoing with multiple parties regarding the potential monetization of the Corbin Facility.
• The company remains focused on executing its strategy to maximize the value of its asset base.
• The press release includes a conference call scheduled for November 5, 2026, at 8:30 a.m. Eastern Time.
• A supplemental investor presentation will be available on the company's website prior to the conference call.