ades-20240930

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37822

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ARQ, INC.

(Exact name of registrant as specified in its charter)

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Delaware						27-5472457
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

8051 E. Maplewood Ave., Ste. 210, Greenwood Village, CO						80111
(Address of principal executive offices)						(Zip Code)

(720) 598-3500
(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.001 per share

ARQ

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of November 5, 2024, there were 42,032,086 outstanding shares of Arq, Inc. common stock, par value $0.001 per share.

INDEX


		PAGE
PART I. - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and September 30, 2023	2
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2024 and September 30, 2023	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and September 30, 2023	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II. - OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1a.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signatures	35

Part I. – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Arq, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


	As of
(in thousands, except share data)	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash	$	48,662	$	45,361
Receivables, net	16,590		16,192

Inventories, net	18,487		19,693




Prepaid expenses and other current assets	3,530		5,215
Total current assets	87,269		86,461
Restricted cash, long-term	8,718		8,792
Property, plant and equipment, net of accumulated depreciation of $25,146 and $19,293, respectively	139,137		94,649





Other long-term assets, net	44,841		45,600
Total Assets	$	279,965	$	235,502
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	20,191	$	14,603
Current portion of debt obligations	2,324		2,653




Other current liabilities	7,671		5,792
Total current liabilities	30,186		23,048
Long-term debt obligations, net of current portion	17,634		18,274




Other long-term liabilities	14,029		15,780
Total Liabilities	61,849		57,102
Commitments and contingencies (Note 7)

Stockholders’ equity:
Preferred stock: par value of $0.001 per share, 50,000,000 shares authorized, none issued or outstanding	—		—
Common stock: par value of $0.001 per share, 100,000,000 shares authorized, 46,652,061 and 37,791,084 shares issued, and 42,033,915 and 33,172,938 shares outstanding at September 30, 2024 and December 31, 2023, respectively	47		38
Treasury stock, at cost: 4,618,146 and 4,618,146 shares as of September 30, 2024 and December 31, 2023, respectively	(47,692)		(47,692)
Additional paid-in capital	197,988		154,511
Retained earnings	67,773		71,543

Total Stockholders’ Equity	218,116		178,400
Total Liabilities and Stockholders’ Equity	$	279,965	$	235,502

See Notes to the Condensed Consolidated Financial Statements

Arq, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2024		2023		2024		2023






Revenue	$	34,774	$	29,829	$	81,919	$	71,079

Cost of revenue, exclusive of depreciation and amortization	21,339		20,707		52,279		53,218


Operating expenses:



Selling, general and administrative	8,058		8,297		22,735		27,574

Research and development	787		639		3,341		2,145

Depreciation, amortization, depletion and accretion	2,716		2,711		6,090		7,276

Gain on sale of assets	(154)		—		(154)		(2,695)
Total operating expenses	11,407		11,647		32,012		34,300
Operating income (loss)	2,028		(2,525)		(2,372)		(16,439)
Other (expense) income:
Earnings from equity method investments	127		412		127		1,512

Interest expense	(806)		(787)		(2,426)		(2,155)




Other	268		725		931		1,510
Total other (expense) income	(411)		350		(1,368)

SEC Form 10-Q filed by Arq Inc.