Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Investor Presentation (January 2024)
23 slides from Arq's investor presentation, January 2024
Slide 1: Investor Presentation
Advanced Emissions Solutions, Inc. Investor Presentation January 2024 Nasdaq: ADES
Slide 2: Disclaimer
Disclaimer This presentation includes 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 presentation, the words “can,” “will,” “intends,” “expects,” “beli
Slide 3: Who we are, what we do
Who we are, what we do Environmental technology company with unique products for growing markets • Producing activated carbon and other environmentally beneficial carbon products for use in: o PFAS remediation o Soil, water and air purification o Asphalt additives • Utilizing bituminous coal waste a
Slide 4: Investment Highlights
Investment Highlights Vertically integrated activated carbon producer with unique patent protected technology Shift to underserved and growing granular activated carbon market repositions business for growth through higher margin products Competitive advantage via product performance, cost, environm
Slide 5: ADES at a Glance
ADES at a Glance Producing activated carbon since 2008 Top 3 Activated Fully Integrated Strong asset and customer base Carbon Supplier Supply Chain ~195 patents & applications across large and diverse ~17% North American Enables cost control, supply markets market share surety and margin enhancement
Slide 6: Products and Market Applications
Products and Market Applications Products Potential Applications Product Market Outlook Mercury Pharma Municipal water, soil Emissions and groundwater GAC remediation and Growing Potable Water specialty gas purification Biogas Granular Activated Carbon (GAC) Specialty Power generation, Powdered Acti
Slide 7: North American Granular Activated Carbon (GAC) Outlook
North American Granular Activated Carbon (GAC) Outlook Supply struggling to match steady demand growth GAC Market Outlook GAC Market Drivers 450 Demand shown does not include potential impact of any incremental PFAS regulations which could materially Demand growing steadily (c.4% per annum), increas
Slide 8: Granular Activated Carbon – Market Update
Granular Activated Carbon – Market Update Strong macro tailwinds EPA expected to release its National Primary Drinking Water Regulation in Q1 2024 with a material focus on PFAS or “Forever Chemicals” Regulation is anticipated to: • Establish new materially higher standards for drinking water across
Slide 9: Our Opportunity
Our Opportunity ADES’ unique products, process and supply chain are key differentiators Company is uniquely positioned to benefit from this trend and will be the only GAC producer: • with vertically integrated domestic supply chain • using bituminous coal waste as feedstock with significant environm
Slide 10: Our Cost Advantage
Our Cost Advantage By controlling and using our own supply of bituminous coal waste as feedstock for our GAC product, we: All in Cost for Feedstock* % Cost 4% 8% 17% • Source competitively relative to traditionally mined coal Advantage • Mitigate alternative feedstock price volatility • Avoid potent
Slide 11: Our Performance Benefits
Our Performance Benefits Municipal water customer testing of our GAC product demonstrates improved performance in water purification for key contaminants Methyl-Isoborneol (MIB) Removal 100% New ADES GAC 90% 80% MIB Removal % 70% 60% Commercial water treatment GAC 50% 40% New ADES GAC achieves 30% 7
Slide 12: Our Environmental Benefits
Our Environmental Benefits By using bituminous coal waste as our feedstock for our GAC product, CO2e Emissions for Equivalent Performance (CO2e per kg) we enable: Scope 1 and 2 Emissions * • Approximately 40% reduction in CO2 emissions for equivalent performance* 40% reduction in emissions • No addi
Slide 13: Significant and Undervalued Asset Base
Significant and Undervalued Asset Base Provides springboard for growth into higher margin products Research & Development • Estimated replacement value of existing assets >$500 million* Facility (Denver, CO) • Legacy PAC business provides infrastructure, sales team, customer relationships and market
Slide 14: Strategic Projects – Existing GAC Expansion and Beyond
Strategic Projects – Existing GAC Expansion and Beyond ➢ Five individual phases of development, each independent of the other and can be executed at the Company’s sole discretion ➢ No commitment other than Phase 1 which has commenced ➢ Each phase will be individually evaluated based on current and p
Slide 15: Financial Highlights
Financial Highlights Consumables Revenue Net (Loss) Adjusted EBITDA(1) Cash $2.5 $79.6 $0.9 $71.1 ($2.2) ($2.4) $10.0 ($5.8) ($0.5) $8.8 $29.8 $28.4 $66.4 $52.5 ($15.5) ($9.8) Q3 Q3 YTD YTD Q3 Q3 YTD YTD Q3 Q3 YTD YTD September 30, December 31, 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Slide 16: Customer Sales Price and Margin Improvements
Customer Sales Price and Margin Improvements Driving stability of legacy PAC business YoY Average Sales Price (ASP) Performance Core focus on profitability over volume 18% ➢ Average Selling Price (“ASP”) consistently improving YoY 16% 14% ➢ In 2022, ~24% of total volume sold was at negative margin 1
Slide 17: Outlook & Milestones
Outlook & Milestones Optimize PAC portfolio and eliminate unfavorable margin contracts Ongoing Secure lead GAC customers and build out sales channels Ongoing Complete Phase I expansion & achieve 25M lb GAC production capacity In process First GAC sales by year-end 2024 In process 17
Slide 18: Summary
Summary Shift to granular activated carbon repositions business for growth Addressing growing and underserved markets Competitive advantage for products Reduced execution risk from existing capabilities Strong balance sheet and market position 18
Slide 19: Appendix
fe ADES Appendix
Slide 20: Our Unique Feedstock – Arq Powder
Our Unique Feedstock – Arq Powder Unique Microfine Hydrocarbon Feedstock Properties Our unique patented technology enables liberation of hydrocarbon molecules from coal mining waste: Human hair: 100 microns Arq powder : • Creates purified hydrocarbon by removing < 5 microns inorganic material Bacter
Slide 21: Leadership Team
Leadership Team Robert Rasmus – Chief Executive Officer Jeremy “Deke” Williamson – Chief Operating Officer Robert has numerous years of experience leading organizational strategy, Joined ADES in 2023 and currently serves as the Chief Operating Officer. investments, and mergers and acquisitions in mu
Slide 22: Appendix: Non-GAAP Financial Measure & Adjusted EBITDA Reconciliation to Net (Loss) Income
Appendix: Non-GAAP Financial Measure & Adjusted EBITDA Reconciliation to Net (Loss) Income Note on Non-GAAP Financial Measures To supplement the Company's financial infor mation presented in accordance with U.S. generally accepted accounting principles, or GAAP, this investor presentation includes n
Slide 23: Appendix: Adjusted EBITDA Reconciliation to Net (Loss) Income
Appendix: Adjusted EBITDA Reconciliation to Net (Loss) Income (1) Included in Net loss for the three and nine months ended September 30, 2023 is zero and $4.9 million, respectively, of transaction and integration costs incurred related to the Arq Acquisition. Included in Net Loss for the three and n
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