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Arq Inc (ARQ)
NASDAQ:ARQ
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Arq Inc
(NASDAQ:ARQ)
62Neutral
Positive Factors
Financial Performance
Arq recorded its 8th consecutive quarter of annual, double-digit ASP growth in the company's traditional PAC business.
Market Opportunities
Large water utilities and municipalities are moving at an accelerated pace to secure GAC supply, which is beneficial for Arq.
Regulatory Environment
Major water treatment facilities are proactively implementing PFAS removal technologies, indicating a continued demand for Arq's products.
Negative Factors
Business Transition Risks
The GAC metamorphosis is taking longer than expected, delaying the financial inflection point the transition promises.
Competitive Landscape
Potentially increased competition due to the rapid growth in the activated carbon market.
Earnings
Arq reported earnings that missed consensus estimates, with revenue and gross margin coming in below expectations.
Arq Inc (ARQ) vs. S&P 500 (SPY)
Market Cap
$164.62M
Dividend YieldN/A
Average Volume (3M)275.46K
Price to Earnings (P/E)―
Beta (1Y)1.19
Revenue Growth14.33%
EPS Growth85.35%
CountryUS
Employees200
SectorIndustrials
Sector Strength83
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)<0.01
Shares Outstanding42,211,120
10 Day Avg. Volume254,068
30 Day Avg. Volume275,460
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.65
Price to Sales (P/S)0.00
P/FCF Ratio-3.83
Enterprise Value/Market Cap1.13
Enterprise Value/Revenue0.44
Enterprise Value/Gross Profit5.14
Enterprise Value/Ebitda7.98
Forecast
1Y Price Target
$9.00Price Target Upside130.77% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Arq Inc Business Overview & Revenue Model
Company DescriptionArq, Inc. produces activated carbon products in North America. The company's products include granular activated carbon, powdered activated carbon, and colloidal carbon products; Arq Powder Wetcake, a fine and low-ash coal waste-derived particle; and additives for air emissions control. Its products are used in various applications, including; water treatment, ground water remediation, soil sediments, air emissions, and asphalt additives. The company was formerly known as Advanced Emissions Solutions, Inc. and changed its name to Arq, Inc. in February 2024. The company was founded in 1996 and is headquartered in Greenwood Village, Colorado.
How the Company Makes MoneyArq Inc generates revenue primarily through a subscription-based model for its cloud computing and data analytics services. Clients pay recurring fees to access Arq's software solutions, which are delivered via the cloud. Additionally, the company earns income from one-time licensing fees and consulting services related to the implementation and customization of its software products. Arq Inc also partners with other technology firms to integrate its solutions into broader platforms, expanding its customer base and revenue potential. Significant factors contributing to its earnings include the growing demand for digital transformation and the increasing importance of data security, which drive the adoption of Arq's cybersecurity tools.
Arq Inc Financial Statement Overview
Summary
Arq Inc shows improving revenue and cash flow trends but continues to face challenges in profitability. The strong balance sheet with low leverage and high equity ratio provides stability, while strategic improvements are needed to enhance profitability. Cash flow has improved significantly, but investing activities could constrain liquidity.Income Statement
Arq Inc shows a mixed performance on the income statement. Revenue grew by 9.87% from 2023 to 2024, indicating a positive trend. However, consistent net losses have impacted profitability, with a negative net profit margin of -4.69% in 2024. Despite this, gross profit margin improved to 36.20% in 2024, suggesting better cost management. EBIT and EBITDA margins remain weak due to negative operating income.68
Positive
Balance Sheet
The balance sheet of Arq Inc indicates a strong equity position, with an equity ratio of 76.41% in 2024, showing financial stability. The debt-to-equity ratio improved to 0.05, reflecting low leverage. Return on equity remains negative due to net losses, but the high equity base provides a solid foundation for future growth.75
Positive
Cash Flow
Cash flow analysis reveals a significant turnaround in operating cash flow from -$16.65 million in 2023 to $10.48 million in 2024. Free cash flow also improved significantly, showing positive $10.48 million in 2024. The operating cash flow to net income ratio is positive, indicating cash-generating capability despite net losses. However, investing activities showed significant cash outflows, which could constrain future liquidity.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 108.96M | 99.18M | 102.99M | 100.29M | 67.36M | Gross Profit |
| 39.44M | 31.86M | 16.11M | 26.79M | 8.43M | EBIT |
| -1.96M | -13.34M | -12.03M | 2.15M | -16.01M | EBITDA |
| 6.58M | 1.46M | -1.96M | 85.50M | -1.33M | Net Income Common Stockholders |
| -5.11M | -12.25M | -8.92M | 60.40M | -20.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 13.52M | 45.36M | 66.43M | 78.75M | 30.93M | Total Assets |
| 284.37M | 235.50M | 192.17M | 197.41M | 156.12M | Total Debt |
| 34.36M | 31.74M | 12.44M | 10.50M | 26.88M | Net Debt |
| 20.85M | -13.62M | -53.99M | -68.25M | -4.05M | Total Liabilities |
| 67.09M | 57.10M | 52.19M | 50.11M | 70.91M | Stockholders Equity |
| 217.28M | 178.40M | 139.98M | 147.30M | 85.21M |
| Cash Flow | Free Cash Flow | |||
| -74.69M | -44.17M | -11.92M | 69.48M | 46.58M | Operating Cash Flow |
| 10.48M | -16.65M | -2.42M | 77.08M | 54.05M | Investing Cash Flow |
| -85.07M | -28.54M | -8.24M | -6.70M | -7.47M | Financing Cash Flow |
| 43.31M | 22.91M | -1.68M | -17.53M | -27.73M |
Arq Inc Technical Analysis
Neutral
3.90
Price Trends
4.20
Negative
5.30
Negative
5.80
Negative
Market Momentum
-0.08
Negative
49.21
Neutral
26.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARQ, the sentiment is Neutral. The current price of 3.9 is above the 20-day moving average (MA) of 3.76, below the 50-day MA of 4.20, and below the 200-day MA of 5.80, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 49.21 is Neutral, neither overbought nor oversold. The STOCH value of 26.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ARQ.
Arq Inc Risk Analysis
Arq Inc disclosed 42 risk factors in its most recent earnings report. Arq Inc reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arq Inc Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $882.05M | 19.31 | 18.34% | ― | 8.89% | 278.44% | |
64 Neutral | $4.30B | 11.88 | 5.23% | 249.82% | 4.12% | -10.27% | |
62 Neutral | $164.62M | ― | -0.76% | ― | 14.33% | 85.35% | |
50 Neutral | $29.05M | ― | -4.54% | ― | -7.19% | -24.85% | |
45 Neutral | $28.56M | ― | -55.91% | ― | 49.65% | 16.68% | |
39 Underperform | $49.19M | ― | ― | ― | ― | ||
37 Underperform | $13.54M | ― | -60.98% | ― | -18.87% | -9.47% |
* Industrials Sector Average
Performance Comparison
ARQ
Arq Inc
3.90
-3.65
-48.34%
CECO
Ceco Environmental
25.01
0.58
2.37%
FTEK
Fuel Tech
0.97
-0.27
-21.77%
CLIR
ClearSign Combustion
0.54
-0.23
-29.87%
LIQT
LiqTech International
1.41
-1.24
-46.79%
SCWO
374Water
0.34
-1.03
-75.18%
Arq Inc Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -8.24%|
Next Earnings Date:Aug 18, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced outlook. Arq reported strong revenue growth, improved profitability, and significant new contracts. However, these positives were countered by significant delays and challenges in the GAC line commissioning, which are critical to future growth.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Arq reported revenue of $27.2 million in Q1 2025, an improvement of 25% over the prior year period, marking the eighth consecutive quarter of double-digit year-over-year percentage growth in ASP.
Improved Profitability
The company achieved adjusted EBITDA of $4.1 million and positive net income of $200,000, compared to a net loss of $3.4 million in Q1 2024.
High Customer Retention
Arq maintained a 95% customer retention rate in 2024 for power generation and industrial customers, showcasing strong relationships and customer satisfaction.
New Major Contract
Arq secured a landmark life of asset contract, the second-largest by value in company history, providing enhanced visibility into their PA business.
Potential New Growth Avenues
Exploration of extracting rare earth minerals and producing synthetic graphite from coal waste feedstock, with potential government funding support.
Negative Updates
GAC Production Delays
The completion and commercial production of the first GAC production line at Red River has been delayed, with full commissioning now expected by late Q2 or early Q3 2025.
Mechanical and Process Challenges
Ongoing mechanical issues and process inconsistencies in the GAC line, particularly in the binding and shaping zone, have caused production delays.
SG&A Costs
SG&A expenses remain higher than appropriate for the company's size, although active cost reduction efforts are underway.
Company Guidance
During the Arq First Quarter 2025 Earnings Call, the company provided guidance indicating a positive trajectory with revenue of $27.2 million, marking a 25% improvement over the prior year. The increase was driven by a 13% growth in average selling price (ASP) and a favorable product and customer mix. Arq reported a gross margin of 36.4%, consistent with the previous year, and achieved an adjusted EBITDA of $4.1 million. The company highlighted achieving double-digit million annual EBITDA from its PAC business and emphasized the potential growth in its GAC initiative, despite some commissioning delays. Additionally, Arq secured a landmark contract, contributing to a 95% customer retention rate and outlining a clear path to future growth, with expectations to reach nameplate capacity slightly beyond 2025.Arq Inc Corporate Events
Product-Related AnnouncementsBusiness Operations and Strategy
Arq Inc Delays Commissioning of GAC Facility
Neutral
May 6, 2025
Arq, Inc. announced a revised timeline for the commissioning of its granular activated carbon (GAC) facility at the Red River Plant. Initially expected by the end of Q1 2025, the final commissioning and first commercial production are now anticipated by the end of Q2 or early Q3 2025 due to extended fine-tuning and testing. Despite producing small non-commercial volumes, the company aims to ensure consistent commercial-scale production without increasing capital expenditures. A ramp-up period of three to six months is expected to achieve full capacity.
Spark’s Take on ARQ Stock
According to Spark, TipRanks’ AI Analyst, ARQ is a Neutral.
Arq Inc’s overall stock score reflects strong financial resilience and positive strategic developments, such as the CFO appointment and GAC market expansion. However, ongoing profitability challenges, negative stock momentum, and valuation concerns weigh on the score.
To see Spark’s full report on ARQ stock, click here.
Executive/Board ChangesBusiness Operations and Strategy
Arq Inc Appoints Jay L. Voncannon as CFO
Positive
Apr 2, 2025
On April 2, 2025, Arq Inc. appointed Jay L. Voncannon as Chief Financial Officer, marking a significant step in the company’s ongoing transformation and growth strategy. Voncannon, with over 35 years of experience in finance, previously served as CFO at CoorsTek, Inc., and brings extensive expertise in strategic growth and profitability. His appointment is expected to strengthen Arq’s financial leadership and support its accelerated growth in the activated carbon market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.