Arq Narrows 2026 Adjusted EBITDA Outlook After Record Quarter

The Tip Desk · November 4, 2026 · 3 min read

Third-quarter revenue reached a record $38.2 million and Adjusted EBITDA was $8.8 million as the company lifted the low end of its full-year Adjusted EBITDA range to $19 million.

Arq, Inc. (ARQ), a producer of activated carbon and other environmentally efficient carbon products, reported record third-quarter revenue of $38.2 million, up 9% from $35.1 million a year earlier, and raised the low end of its full-year 2026 Adjusted EBITDA outlook to $19 million to $20 million from $17 million to $20 million.

The company said the revenue increase was driven predominantly by higher sales volumes. Sequential growth accelerated: revenue rose 27% from $29.9 million in the second quarter, after a 3% sequential increase in the second quarter from $29.1 million in the first.

Gross margin expanded to 39.7%, up about 1,100 basis points from 28.8% a year earlier, which the company attributed to PAC business performance. That margin followed 38.5% in the second quarter and 34.2% in the first. Cost of revenue fell about 8% to $23.0 million from $25.0 million a year earlier.

Adjusted EBITDA was $8.8 million, up 71% from $5.2 million a year earlier, marking a tenth consecutive quarter of positive Adjusted EBITDA. The company said the increase was driven by continued strength and improving profitability of the core powdered activated carbon business, including enhanced cost discipline. Sequential Adjusted EBITDA rose from $5.8 million in the second quarter, after an approximately 115% sequential jump in the second quarter from $2.7 million in the first.

Net income was $2.5 million, or $0.06 a share, versus a net loss of $0.9 million as adjusted, or $(0.02) a share, a year earlier. Operating profit was $3.1 million versus an operating loss of $1.1 million.

Selling, general and administrative expenses were $7.2 million, compared with $4.6 million a year earlier, which the company said was primarily driven by increased incentive compensation and legal and professional fees. Research and development costs were $0.8 million, versus $2.6 million a year earlier, as granular activated carbon ramp-up expenses incurred in the third quarter of 2025 did not recur.

Capital expenditures were $1.0 million in the quarter, versus $2.4 million a year earlier. Cash as of September 30, 2026, totaled $19.1 million, including $11.3 million of restricted cash, compared with $12.1 million, including $11.2 million restricted, as of June 30, 2026. About $7.8 million of the September cash was unrestricted. Total debt, inclusive of financing leases, was $28.2 million, down from $30.7 million at June 30.

Arq is continuing to expect full-year 2026 revenue of $120 million to $125 million and capital expenditures of $8 million to $10 million. Chief executive Bob Rasmus said the company now expects to achieve full-year Adjusted EBITDA of $19 million to $20 million, narrowing the outlook to the top end of the previous range.

The company completed initial customer testing of PAC for PFAS products, with additional testing continuing through the end of 2026. Rasmus said the test work was encouraging and that meaningful orders are feasible in 2027, citing the EPA’s April 2027 monitoring deadline as a first milestone toward national PFAS contamination-level compliance. The company said PAC for PFAS has potential to increase PAC volumes, pricing, and margin contribution as adoption builds in 2027 and beyond, and that it has pending patent protection covering the product range.

Arq also remains in discussions with multiple parties regarding potential monetization of the Corbin Facility and related technologies, which it views as additional optionality and a potential source of funding. Asphalt testing with a leading U.S. asphalt company continues and has expanded. The company is pursuing initiatives to improve furnace efficiency and reduce unit costs across existing PAC operations, which it believes present near-term opportunities to improve margins.