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Arq Inc (ARQ)
NASDAQ:ARQ
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Arq Inc
(NASDAQ:ARQ)
58Neutral
Positive Factors
Business Transformation
The company continues on its journey to transform its business and financial profile by transitioning from PAC to GAC, which should result in a meaningful upgrade to the company’s revenue and EBITDA profile.
Market Demand
Large water utilities and municipalities are moving at an accelerated pace to secure GAC supply, which is beneficial for Arq.
Negative Factors
Earnings Performance
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
$211.33M
Dividend YieldN/A
Average Volume (3M)267.19K
Price to Earnings (P/E)―
Beta (1Y)1.34
Revenue Growth9.86%
EPS Growth72.73%
CountryUS
Employees173
SectorIndustrials
Sector Strength69
IndustryIndustrial Goods
Share Statistics
EPS (TTM)-0.14
Shares Outstanding42,014,263
10 Day Avg. Volume404,481
30 Day Avg. Volume267,185
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.99
Price to Cash Flow (P/CF)10.40
P/FCF Ratio9.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.50Price Target Upside88.87% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Arq Inc Business Overview & Revenue Model
Company DescriptionArq Inc (ARQ) is a technology company that specializes in providing innovative digital solutions across various sectors. The company focuses on developing cutting-edge software products and services that enhance efficiency and productivity for businesses. Arq Inc's core offerings include cloud computing services, data analytics solutions, and cybersecurity tools that cater to a diverse range of industries, including healthcare, finance, and retail.
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 demonstrates improving revenue and cash flow trends, with a revenue growth of 9.87% and a positive shift in cash flow. However, it struggles with profitability, shown by a net profit margin of -4.69%. The balance sheet is strong with an equity ratio of 76.41% and low leverage, offering a stable financial base.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 | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 110.70M | 108.96M | 99.18M | 102.99M | 100.29M | 67.36M | Gross Profit |
| 22.47M | 39.44M | 31.86M | 16.11M | 26.79M | 8.43M | EBIT |
| -2.71M | -1.96M | -13.34M | -12.03M | 2.15M | -16.01M | EBITDA |
| 40.31M | 6.58M | 1.46M | -1.96M | 85.50M | -1.33M | Net Income Common Stockholders |
| 26.71M | -5.11M | -12.25M | -8.92M | 60.40M | -20.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 35.23M | 13.52M | 45.36M | 66.43M | 78.75M | 30.93M | Total Assets |
| 229.80M | 284.37M | 235.50M | 192.17M | 197.41M | 156.12M | Total Debt |
| 30.88M | 10.99M | 31.74M | 12.44M | 10.50M | 26.88M | Net Debt |
| -4.34M | -2.52M | -13.62M | -53.99M | -68.25M | -4.05M | Total Liabilities |
| 54.63M | 67.09M | 57.10M | 52.19M | 50.11M | 70.91M | Stockholders Equity |
| 175.16M | 217.28M | 178.40M | 139.98M | 147.30M | 85.21M |
| Cash Flow | Free Cash Flow | ||||
| 33.68M | 10.48M | -44.17M | -11.92M | 69.48M | 46.58M | Operating Cash Flow |
| 39.27M | 10.48M | -16.65M | -2.42M | 77.08M | 54.05M | Investing Cash Flow |
| -4.38M | -85.07M | -28.54M | -8.24M | -6.70M | -7.47M | Financing Cash Flow |
| -1.40M | 42.68M | 22.91M | -1.68M | -17.53M | -27.73M |
Arq Inc Technical Analysis
Negative
5.03
Price Trends
6.05
Negative
6.42
Negative
6.24
Negative
Market Momentum
-0.33
Negative
38.52
Neutral
77.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARQ, the sentiment is Negative. The current price of 5.03 is below the 20-day moving average (MA) of 5.30, below the 50-day MA of 6.05, and below the 200-day MA of 6.24, indicating a bearish trend. The MACD of -0.33 indicates Negative momentum. The RSI at 38.52 is Neutral, neither overbought nor oversold. The STOCH value of 77.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARQ.
Arq Inc Risk Analysis
Arq Inc disclosed 40 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $8.06B | 82.40 | 11.30% | ― | -41.92% | -76.24% | |
64 Neutral | $289.68M | ― | -14.78% | ― | 16.59% | -7.74% | |
62 Neutral | $8.16B | 12.81 | 0.47% | 3.07% | 3.83% | -16.36% | |
58 Neutral | $211.33M | ― | -2.58% | ― | 9.86% | 72.73% | |
54 Neutral | $974.92M | 236.42 | -0.49% | ― | 11.00% | 97.10% | |
43 Neutral | $1.58B | ― | -90.88% | ― | -29.45% | -10.79% | |
41 Neutral | $276.22M | ― | -18.90% | ― | 124.55% | 56.35% |
* Industrials Sector Average
Performance Comparison
ARQ
Arq Inc
4.98
-0.11
-2.16%
ENPH
Enphase Energy
58.48
-59.69
-50.51%
GEVO
Gevo
1.22
0.54
79.41%
PLUG
Plug Power
1.66
-1.70
-50.60%
HYLN
Hyliion Holdings
1.60
-0.13
-7.51%
FLNC
Fluence Energy
5.28
-9.03
-63.10%
Arq Inc Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: 1.62% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected a successful year for Arq with strong revenue growth and profitability improvements, enhanced by effective cost management and successful refinancing efforts. However, challenges such as CapEx overruns, unplanned shutdowns, and decreased gross margins in Q4 were noted. Despite these issues, the company's strategic initiatives, particularly the launch of GAC production, indicate a positive outlook.Highlights
Revenue Growth and Profitability
Arq reported a 10% year-over-year increase in revenues for the full year 2024, reaching approximately $109 million. The company also achieved a 14% increase in average selling price in the fourth quarter and completed the year with another quarter of positive adjusted EBITDA.
Cost Reduction and Margin Expansion
Arq successfully controlled cost of goods sold increases to approximately 3%, enabling expansion in gross margins by approximately 410 basis points year-over-year. SG&A expenses were reduced by about 15%, from $34 million in 2023 to $29 million in 2024.
Successful Debt Refinancing and Equity Investment
The company attracted approximately $42 million in new net equity investment and refinanced its existing $10 million CFG term loan with a more cost-effective $30 million revolving asset-back facility from Midcap Financial.
Granular Activated Carbon (GAC) Production Launch
Arq is on track to begin commercial production of its GAC line imminently, with expectations to reach nameplate capacity of 25 million pounds by the second half of 2025.
Lowlights
CapEx Overruns in Red River Project
The Red River Project CapEx for 2024 totaled $80 million, $10 million above the high end of the company's most recent forecasts, primarily due to issues with estimated requirements and contractor errors.
Unplanned Shutdowns and Margin Impact
Two unplanned shutdowns at Red River in Q4, each lasting one week, negatively impacted margins despite a 14% year-over-year growth in average selling price during the period.
Decreased Gross Margin in Q4
Q4 gross margin decreased to 36.3% from 49.8% in the prior year, attributed to lower levels of revenue from take-or-pay agreements and other one-off items.
Company Guidance
During the ARQ Q4 and Full Year 2024 Earnings Call, the company reported a 10% year-over-year increase in revenue to approximately $109 million, driven by a 14% rise in average selling price (ASP) in Q4. They achieved a gross margin expansion of 410 basis points over the previous year, reaching 36.2% for 2024. The company also reported a reduction in SG&A expenses by about 15% year-over-year, from $34 million in 2023 to $29 million in 2024. ARQ successfully refinanced their term loan, reducing the cost of capital and enhancing financial flexibility. They attracted approximately $42 million in new net equity investment, and their market capitalization more than doubled in 2024. Despite challenges, including a CapEx overrun of $10 million on the Red River Project, ARQ is optimistic about the future, projecting ongoing improvements and potential growth in profitability and revenues, bolstered by their expansion into the granular activated carbon (GAC) market.Arq Inc Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Arq Inc Secures $30M Credit Facility for Growth
Positive
Jan 2, 2025
Arq, Inc. announced the successful closing of a $30 million revolving credit facility with MidCap Financial, which will enhance the company’s financial flexibility and reduce its cost of capital. The proceeds are intended to refinance an existing term loan, finance growth capital expenditures and working capital at the Red River plant, and support general corporate purposes, marking a significant milestone for the company’s strategic growth.
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.