Arq Contracts Additional Production for its Granular Activated Carbon (GAC) Product
Arq, Inc. (NASDAQ: ARQ) has secured additional contracted volume for its granular activated carbon (GAC) production at the Red River facility. Total contracted GAC demand now stands at 13 million pounds per annum, representing 52% of Arq's expanded nameplate capacity of 25 million pounds per annum. This milestone has been achieved roughly six months ahead of first production, scheduled for year-end 2024. The pricing for GAC contracts remains attractive, representing a multiple of the company's average powdered activated carbon (PAC) pricing.
The Red River facility expansion project is progressing as planned, with a capital requirement of $60-70 million in 2024. Arq's CEO, Bob Rasmus, expressed confidence in the company's ability to fully contract its nameplate capacity before production begins, citing strong market recognition for their superior products and environmental technology.
- Secured contracts for 52% of expanded nameplate capacity six months before production
- GAC pricing represents a multiple of average PAC pricing, potentially improving margins
- Red River facility expansion on schedule for first commercial production by year-end 2024
- Capital requirement for expansion project remains in line with previous forecast at $60-70 million
- None.
Insights
The announcement of Arq, Inc. securing contracts for over 50% of its nameplate capacity for granular activated carbon (GAC) ahead of the facility's completion is a strong signal for investors. From a financial standpoint, this development should be positively viewed as it enhances revenue visibility and provides a substantial base load for the Red River facility. The attractive pricing and increased margins compared to powdered activated carbon (PAC) indicate more robust financial performance and profitability moving forward. It's also notable that the capital expenditure remains within the forecasted range of
Short-term impact: Positive, as it reassures investors about the company's demand pipeline and financial stability.
Long-term impact: Positive, assuming the company meets its production timelines and maintains strong customer relationships. Sustained demand and profitability could propel further growth and potential market expansion.
The contracted volume of 13 million pounds of GAC provides significant insight into the market dynamics for activated carbon. This volume reflects a strong demand for such products, likely driven by increased awareness and regulation around environmental sustainability. Arq's ability to secure these contracts well ahead of production indicates strong market positioning and confidence in its product quality. The mention of attractive pricing and expanded margins suggests a competitive advantage in the industry, potentially due to superior technology or supply chain efficiency.
The emphasis on the limited supply of high-quality, domestically procured GAC points to a supply-demand imbalance, which Arq is well-positioned to exploit. This could also mean potential price advantages in the future as demand possibly outstrips supply.
From an environmental technology perspective, Arq’s emphasis on producing environmentally efficient carbon products is noteworthy. Granular activated carbon (GAC) is critical for various applications, including air and water purification, which aligns with global sustainability trends. The strategic positioning of the Red River facility to meet over half of its capacity with contracted demand highlights the credibility and environmental efficacy of Arq’s products. The development and commercial production of GAC are not only business-positive but also contribute to broader environmental goals.
The industry's recognition of Arq's technology and products underlines the company's role in advancing sustainable materials, which is increasingly important in today’s regulatory environment. The ability to secure contracts ahead of production further validates the technology's reliability and performance.
Incremental demand takes total annual contracted volume to 13 million pounds
Reflects >
GREENWOOD VILLAGE, Colo., July 15, 2024 (GLOBE NEWSWIRE) -- GlobeNewswire - 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 it has secured material incremental contracted volume for the supply of granular activated carbon (GAC) to be produced at its strategic Red River facility. For competitive reasons, the Company will not be sharing the sectors or volumes of all associated customers.
Total contracted GAC demand now stands, when fully scaled up to ultimate run-rate requirements, at 13 million pounds per annum, representing
Construction at the Red River facility remains on schedule for first commercial production by year-end 2024. The capital requirement for completion of the Red River GAC expansion project remains in line with the previous forecast at
Bob Rasmus, CEO of Arq, remarked, “Every contract we secure further validates our GAC products and strategy. I remain incredibly proud of our team's efforts to drive sales and collaborate with partners who show their confidence by committing to our GAC solutions. Our superior products, valuable environmental technology and wide range of industry applications continue to receive strong recognition. We believe the market has a limited supply of high-quality, fully integrated and domestically procured GAC - securing contracts representing more than
About Arq
Arq (NASDAQ: ARQ) is a diversified, environmental technology company with products that enable a cleaner and safer planet while actively reducing our environmental impact. As the only vertically integrated producer of activated carbon products in North America, we deliver a reliable domestic supply of innovative, hard-to-source, high-demand products. We apply our extensive expertise to develop groundbreaking solutions to remove harmful chemicals and pollutants from water, land and air. Learn more at: www.arq.com.
Caution on Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a “safe harbor” for such statements in certain circumstances. When used in this press release, the words “can,” “will,” "may," “intends,” “expects,” "continuing," “believes,” similar expressions and any other statements that are not historical facts are intended to identify those assertions as forward-looking statements. All statements that address activities, events or developments that the Company intends, expects or believes may occur in the future are forward-looking statements. These forward-looking statements include, but are not limited to, statements or expectations regarding: business strategy, expectations about future demand and pricing for our PAC and GAC products and our ability to enter into new markets, the estimated costs and timing associated with potential capital improvements at our facilities, potential production outputs thereafter, expected market supply of GAC products and the cost savings and environmental benefits of our GAC products, and the timing and scope of future regulatory developments and the related impact of such on the demand for our products. These forward-looking statements involve risks and uncertainties. Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, timing of new and pending regulations and any legal challenges to or extensions of compliance dates of them; the U.S. government’s failure to promulgate regulations that benefit our business; changes in laws and regulations, accounting rules, prices, economic conditions and market demand; impact of competition; availability, cost of and demand for alternative energy sources and other technologies; technical, start up and operational difficulties; competition within the industries in which the Company operates; our inability to commercialize our products on favorable terms; our inability to effectively and efficiently commercialize new products; changes in construction costs or availability of construction materials; our inability to effectively manage construction and startup of the Red River GAC Facility or Corbin Facility; our inability to obtain required financing or financing on terms that are favorable to us; our inability to ramp up our operations to effectively address recent and expected growth in our business; loss of key personnel; ongoing effects of the inflation and macroeconomic uncertainty, including from the ongoing pandemic and armed conflicts around the world, and such uncertainty's effect on market demand and input costs; availability of materials and equipment for our business; intellectual property infringement claims from third parties; pending litigation; as well as other factors relating to our business strategy, goals and expectations concerning the Arq Acquisition (including future operations, future performance or results); our ability to maintain relationships with customers, suppliers and others with whom it does business and meet supply requirements, or its results of operations and business generally; risks related to diverting management's attention from our ongoing business operations; costs related to the Arq Acquisition; opportunities for additional sales of our AC products and end-market diversification; the timing and scope of new and pending regulations and any legal challenges to or extensions of compliance dates of them; our ability to meet customer supply requirements; the rate of coal-fired power generation in the U.S., the timing and cost of capital expenditure, as well as other factors relating to our business, as described in our filings with the SEC, with particular emphasis on the risk factor disclosures contained in those filings. You are cautioned not to place undue reliance on the forward-looking statements and to consult filings we have made and will make with the SEC for additional discussion concerning risks and uncertainties that may apply to our business and the ownership of our securities. In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this press release. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise. The forward-looking statements speak only as to the date of this press release.
Source: Arq, Inc.
Investor Contact:
Anthony Nathan, Arq
Marc Silverberg, ICR
investors@arq.com
FAQ
What is Arq's (ARQ) current contracted GAC production volume?
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