Arq Inc (ARQ) 2024 Q4 法說會逐字稿

Greetings and welcome to the Arq Q4 and Full year 2024 earnings call.

問候並歡迎參加 Arq 2024 年第四季和全年收益電話會議。

(Operator instruction).

（操作員指令）。

It is now my pleasure to introduce your host, Anthony Nathan with Arq Investor Relations.

現在我很高興向大家介紹主持人、來自 Arq 投資者關係部門的 Anthony Nathan。

Thank you, operator. Good morning, everyone, and thank you for joining us today for our 4th quarter and full year 2024 earnings results call.

謝謝您，接線生。大家早安，感謝您今天參加我們的 2024 年第四季和全年收益業績電話會議。

With me on the call today are Bob Rasmus, Arq Chief Executive Officer and President, as well as Stacia Hansen, Arq treasurer and Chief Accounting Officer.

今天與我一起參加電話會議的還有 Arq 執行長兼總裁 Bob Rasmus，以及 Arq 財務主管兼首席會計長 Stacia Hansen。

This conference call is being webcasted live within the investor section of our website, and a downloadable version of today's presentation is available there as well. A webcast replay will also be available on our site, and you can contact Arq's investor relations team at investors@arq.com.

本次電話會議將在我們網站的投資者專區進行網路直播，您也可以在那裡下載今天的簡報。我們的網站還將提供網路直播重播，您可以透過 investors@arq.com 聯繫 Arq 的投資者關係團隊。

Let me remind you that the presentation and remarks made today include forward-looking statements as defined in Section 21 E of the Securities Exchange Act. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements.

讓我提醒您，今天的演示和評論包括《證券交易法》第 21E 條定義的前瞻性陳述。這些聲明是基於我們目前掌握的信息，涉及風險和不確定性，可能導致實際未來結果、業績、業務前景和機會與這些聲明中表達或暗示的結果、業績、前景和機會存在重大差異。

These risks and uncertainties include, but are not limited to those factors identified on slide 2 of today's slide presentation in our Form 10K for the year ended December 31, 2024 and other filings with the Securities and Exchange Commission, except as expressly required by the securities laws, the company undertakes no obligation to obtain those factors or any forward-looking statements to reflect future events, developments, or change circumstances or for any other reason. In addition, it is especially important to review the presentation and today's remarks in conjunction with the GAAP references in the financial statements. With that, I'd like to turn the call over to Bob.

這些風險和不確定性包括但不限於我們今天在截至 2024 年 12 月 31 日的 10K 表格幻燈片演示的第 2 張幻燈片中列出的因素以及向美國證券交易委員會提交的其他文件，除非證券法明確要求，否則公司不承擔獲取這些因素或任何前瞻性陳述以反映未來事件、發展或變化情況或任何其他原因的義務。此外，結合財務報表中的 GAAP 參考來審查該陳述和今天的評論尤其重要。說完這些，我想把電話轉給鮑伯。

Thank you, Anthony, and thanks to everyone for joining us this morning. As you can see from the results we've shared today, 2024 was a very good year for Arq.

謝謝你，安東尼，也謝謝大家今天早上加入我們。從我們今天分享的結果可以看出，2024 年對 Arq 來說是非常好的一年。

Our results for 2024 reflect a business which has been successfully turned around into a cash flow contributor. We ended the year in a position of strength. In the 4th quarter, our average selling price increased by approximately 14%. We lowered our cost of capital and increased financial flexibility by refinancing our term loan, and we had another quarter of positive adjusted EBITDA. This was driven by continued strong operational execution in our foundational PAC business.

我們 2024 年的業績反映出，我們的業務已成功轉型為現金流量貢獻者。我們以強勁的勢頭結束了這一年。第四季度，我們的平均售價上漲了約14%。我們透過再融資定期貸款降低了資本成本並提高了財務靈活性，並且我們實現了一個季度的正調整後 EBITDA。這是由我們基礎 PAC 業務持續強勁的營運執行所推動的。

Today's results highlight the profound transformation of our foundational PAC business, demonstrating both its sustainability and ongoing evolution. I've often said, there's no magic potion behind this success, just consistent laser-focused execution on the fundamentals, increasing operational efficiencies, expanding into new markets, increasing our ASP all while driving down costs. Considering where we started when I took over as CEO in 2023, I'm immensely proud of the turnaround the team has delivered.

今天的結果凸顯了我們基礎 PAC 業務的深刻轉型，展示了其永續性和持續發展。我常說，成功的背後沒有靈丹妙藥，只有持續專注於基本面的執行，提高營運效率，拓展新市場，提高平均售價，同時降低成本。考慮到我在 2023 年接任執行長時的起點，我為團隊所取得的轉變感到無比自豪。

From the beginning of 2023, we've transformed from a business losing money on nearly one quarter of all volumes sold at the gross margin level to a business where every contract is profitable as of 2025. We've achieved this through a concerted, relentless, and ongoing effort throughout the organization to focus on shareholder returns. We've utilized our fully integrated domestic supply chain to ensure product availability, and we've expanded into new markets. Our goal was and is to maximize our profitability and future opportunities, ensuring a lasting transition.

從 2023 年初開始，我們已經從一家在毛利率水準上近四分之一的銷售量上虧損的企業，轉變為一家到 2025 年每份合約都能獲利的企業。我們透過整個組織的齊心協力、堅持不懈和持續不斷的努力，關注股東回報，實現了這一目標。我們利用完全整合的國內供應鏈來確保產品的供應，並且我們已經擴展到新的市場。我們的目標過去是、現在也是，最大限度地提高我們的獲利能力和未來機遇，確保持久的過渡。

As part of this process, we've successfully diversified our PAC business, increasing our presence in markets like water, cement, and industrial sectors while reducing reliance on the power generation sector. We believe this ongoing effort positions out to grow future revenues and, more importantly, profitability. And the numbers show it. Today we are proud to report a 10% year over year increase in our revenues for full year 2024 to approximately $109 million.

作為這一過程的一部分，我們成功地實現了 PAC 業務多元化，增加了我們在水、水泥和工業領域等市場的份額，同時減少了對發電領域的依賴。我們相信，持續的努力將有助於增加未來的收入，更重要的是提高獲利能力。數字表明了這一點。今天，我們很自豪地報告，2024 年全年營收年增 10%，達到約 1.09 億美元。

As many of you heard me say, I'm constantly urging our operating team to remember that every penny counts. Every penny saved in operating costs is nearly a million dollars added to our bottom line. While I am proud of our ability to grow revenue in 2024, we were also successful in controlling our cost of goods sold increases to approximately 3%, enabling us to expand gross margins.

正如你們許多人聽到我說的那樣，我不斷敦促我們的營運團隊記住每一分錢都很重要。營運成本中節省的每一分錢都會為我們的利潤增加近一百萬美元。我為我們在 2024 年增加收入的能力感到自豪，同時我們也成功地將銷售成本的成長控制在 3% 左右，使我們能夠擴大毛利率。

Given the historic margins of the PAC business, this has been as critical as ASP increases to the turnaround we've achieved. It truly is a case where every penny counts, and I'm proud to report that we achieved an increase not just in our average selling price, but also in gross margin year over year, up approximately 410 basis points in fiscal year 2024 versus 2023. I strongly believe there is room for further improvement.

考慮到 PAC 業務的歷史利潤率，這與 ASP 的成長對於我們實現的轉變同樣重要。這確實是一個精打細算的例子，我很自豪地報告，我們不僅實現了平均售價的增長，而且毛利率也同比上漲，2024 財年比 2023 財年上漲了約 410 個基點。我堅信還有進一步改進的空間。

Our PAC turnaround in 2024 is a major achievement and one in which I am very proud, but the turnaround is not a one-time event. Looking ahead, we continue to forecast ongoing sustainable improvements in the profitability of our foundational PAC business.

我們 PAC 在 2024 年實現的轉變是一項重大成就，我對此感到非常自豪，但這種轉變並不是一次性事件。展望未來，我們繼續預測我們的基礎 PAC 業務的獲利能力將持續改善。

While the current trajectory remains positive, we recognize that at some point the curve will naturally begin to flatten. That said, we are still actively optimizing the business. There is room for further efficiencies through improved operations and strategic price increases, particularly as we continue our diversification into adjacent markets and explore product alternatives. While the pace of improvement may moderate over time, we remain focused on driving long term growth and profitability.

雖然目前的軌跡仍然是正面的，但我們認識到，在某個時候曲線會自然開始變平。話雖如此，我們仍在積極優化業務。透過改善營運和策略性漲價，我們仍有進一步提高效率的空間，特別是當我們繼續向鄰近市場多元化發展並探索產品替代品時。雖然改進的速度可能會隨著時間的推移而放緩，但我們仍然專注於推動長期成長和獲利能力。

The reduction in operating costs is particularly encouraging, reinforcing my belief that our cost cutting strategy is delivering results. As I said, I strongly believe there is room for further improvement. In fact, we have already taken steps this quarter to further reduce our costs.

營運成本的降低尤其令人鼓舞，這強化了我的信念：我們的成本削減策略正在發揮成效。正如我所說，我堅信還有進一步改進的空間。事實上，本季我們已經採取措施進一步降低成本。

We also made significant progress in reducing SGNA, which I've long felt was disproportionately high for a business of our size. SGNA fell from approximately $34 million in 2023 to approximately $29 million in 2024, a reduction of about 15% year over year. The primary drivers were a reduction in payroll expenses and a decrease in legal costs, the majority of which related to the Arq acquisition completed in 2023.

我們在降低 SGNA 方面也取得了重大進展，我一直認為對於我們這種規模的企業來說，SGNA 過高。SGNA 從 2023 年的約 3,400 萬美元下降到 2024 年的約 2,900 萬美元，年減約 15%。主要驅動因素是工資支出的減少和法律成本的下降，其中大部分與 2023 年完成的 Arq 收購有關。

Partially offset by an increase in franchise and use taxes, rent and occupancy expenses, construction-related labor, and licensing and fees. Importantly, this work is ongoing. We expect further efficiencies and SGNA reductions in 2025. We've laid the groundwork for a leaner, more efficient business while at the same time working to bring our new GAC products online with more cost savings expected to come.

部分被特許經營稅和使用稅、租金和占用費用、建築相關勞動力以及許可和費用的增加所抵消。重要的是，這項工作正在進行中。我們預計 2025 年效率將進一步提高，SGNA 將進一步減少。我們為更精簡、更有效率的業務奠定了基礎，同時致力於將我們的新 GAC 產品上線，預計會帶來更多的成本節約。

Our PAC business serves as a crucial operational baseline, or as we call it a foundation, when combined with our exceptionally valuable asset base, conservatively estimated to have a replacement value of at least half a billion dollars it creates a strong foundation for our business.

我們的 PAC 業務是我們至關重要的營運基線，或者我們稱之為基礎，與我們極其寶貴的資產基礎相結合，保守估計其重置價值至少為 5 億美元，為我們的業務奠定了堅實的基礎。

From this foundation we've been able to begin expanding into the more dynamic higher growth GAC segment with higher pricing, ultimately anticipated better margins, and corresponding stronger returns on capital. We believe the granular activated carbon business is our future growth engine.

在此基礎上，我們能夠開始擴展到更具活力、成長更快的 GAC 領域，其定價更高，最終預期利潤率更高，相應資本回報率更高。我們相信顆粒活性碳業務是我們未來的成長引擎。

To this end, we were extremely pleased to attract approximately $42 million in new net equity investment during 2024. Equally important, our overall market capitalization more than doubled over the course of 2024, a clear testament to investor confidence in our PAC business, the transformative GAC opportunity, and the solid growth strategy we've implemented.

為此，我們非常高興在 2024 年吸引了約 4,200 萬美元的新淨股權投資。同樣重要的是，我們的整體市值在 2024 年期間增長了一倍以上，這清楚地證明了投資者對我們的 PAC 業務、變革性的 GAC 機會以及我們實施的穩健增長戰略的信心。

This improved investor confidence was further validated by the successful debt refinancing recently completed on December 27. This transaction allowed us to replace the expensive legacy $10 million CFG term loan with a more cost effective and substantially larger $30 million revolving asset back facility from Midcap Financial.

12 月 27 日成功完成的債務再融資進一步證實了投資者信心的增強。這筆交易使我們能夠用 Midcap Financial 提供的更具成本效益且金額更大的 3000 萬美元循環資產支持貸款來取代昂貴的遺留 1000 萬美元 CFG 定期貸款。

By executing this refinancing, we've materially reduced our cost of capital. This refinancing was a key milestone we set for 2024. We're pleased to have completed it successfully, reducing our costs and expanding our credit capacity.

透過執行此次再融資，我們大幅降低了資本成本。此次再融資是我們為 2024 年設定的重要里程碑。我們很高興能夠成功完成該項目，從而降低了成本並擴大了我們的信貸能力。

Coupled with the equity raised in 2024. We are now in a stronger and more flexible position. With a strong balance sheet, an appropriate debt structure, and a growing base of sophisticated institutional investors, I believe we've materially evolved as a business. We entered 2025 in a significantly stronger position than 12 months ago.

加上2024年籌集的股權。我們現在處於更強大和更靈活的地位。我相信，憑藉強勁的資產負債表、合理的債務結構以及不斷增長的成熟機構投資者基礎，我們的企業已經取得了實質的發展。與 12 個月前相比，我們進入 2025 年時的地位明顯增強。

That being said, like any business, 2024 was not without its challenges. First, I'd specifically highlight CapEx for a GAC expansion at Red River. After a few increases in our expected spending announced throughout the year, we last estimated in November that our full year 2024 CapEx for this project would total $60 million to $70 million.

話雖如此，與任何企業一樣，2024 年並非沒有挑戰。首先，我要特別強調一下 Red River 的 GAC 擴張的資本支出。在我們全年宣布幾次增加預期支出之後，我們在 11 月最後一次估計，該項目 2024 年全年資本支出總額將達到 6000 萬至 7000 萬美元。

However, Red River project CapEx for the year totaled $80 million which reflects $10 million above the high end of our most recent forecasts. As CEO, I own this cost increase. As CEO and a material shareholder, I am immensely frustrated. While we own our outcomes, and our entire team operates daily with a clear understanding of accountability. Many of these drivers were led by factors out of our direct control. The $10 million overage was primarily driven by three factors. First, approximately $4million to $5 million was due to issues with estimated requirements for small bar piping, including additional electrical work, switches, and related labor costs. This is one element of our recently announced suit against our former lead engineering contractor.

然而，紅河計畫今年的資本支出總計 8,000 萬美元，比我們最近預測的上限高出 1,000 萬美元。身為首席執行官，我對成本增加負有責任。身為執行長和重要股東，我感到非常沮喪。雖然我們對自己的成果負責，但我們整個團隊每天都在清楚地理解責任的情況下開展工作。許多驅動因素都是由我們無法直接控制的因素所造成的。1000萬美元的超額主要由三個因素造成。首先，約 400 萬至 500 萬美元是由於小型酒吧管道估計需求問題造成的，包括額外的電氣工程、開關和相關人工成本。這是我們最近宣布的針對前首席工程承包商的訴訟內容之一。

Secondly, roughly $3 million to $4 million was driven by various smaller expenses incurred while pulling the process forward and working to derive a more timely completion.

其次，大約有 300 萬至 400 萬美元是由於推進該進程並努力更及時地完成而產生的各種較小的開支。

Finally, roughly $2 million was driven by higher-than-expected final invoices, including some that are disputed. I'd emphasize that a majority of the overages described above related to issues that should have been identified by our former partners. Our team took decisive actions throughout last year, including taking almost all development activity in-house. Unfortunately, we've continued to feel the repercussions. We take responsibility for not identifying these errors even sooner, and our team remains focused on driving the project through completion and achieving the attractive target returns we continue to expect.

最後，約有 200 萬美元的損失是由於最終發票金額高於預期，其中包括一些有爭議的發票。我想強調的是，上述大多數超額支出都與我們以前的合作夥伴應該發現的問題有關。我們的團隊在去年全年採取了果斷行動，包括將幾乎所有的開發活動都轉移到內部進行。不幸的是，我們仍然感受到其影響。我們對未能更早發現這些錯誤承擔責任，我們的團隊將繼續專注於推動專案完成並實現我們持續期望的誘人目標回報。

While these challenges combined with weather-related issues during Q2 did impact phase one of our GAC development, we do expect future phases to benefit from our learnings. We therefore believe that this should represent a high-water mark and cost of construction as it relates to phase 2 development and remain confident that we will be able to bring a second phase at $3 per pound of annual production or $75 million.

雖然這些挑戰與第二季的天氣相關問題確實影響了我們 GAC 開發的第一階段，但我們確實希望未來階段能夠從我們的經驗中受益。因此，我們認為，這應該代表與第二階段開發相關的最高水位和建設成本，並且我們仍然相信，我們將能夠以每磅年產量 3 美元或 7500 萬美元的價格完成第二階段的開發。

More recently, in the 4th quarter, we experienced two unplanned shutdowns at Red River of one week each. These unplanned outages related to boiler repairs that are now resolved but did negatively impact margins during the period. Despite this, we still delivered strong results from our PAC business in Q4, including average selling price growth of 14% year over year.

最近，在第四季度，紅河經歷了兩次計劃外停工，每次持續一周。這些非計劃性停機與鍋爐維修有關，目前問題已解決，但確實對該期間的利潤產生了負面影響。儘管如此，我們的 PAC 業務在第四季度仍然取得了強勁的業績，其中平均售價年增 14%。

Net, our foundational PAC business, is in very good shape following the significant actions we've taken over the last several quarters. We believe it will continue to be a sustainable cash flow contributor on an annualized basis going forward.

Net 是我們的基礎 PAC 業務，在我們過去幾季採取的重大行動之後，狀況非常好。我們相信，它將繼續成為未來年度可持續現金流的貢獻者。

Switching now to the construction at Red River of our new GAC production line, we're excited to announce that we expect to complete commissioning of the plant in the next few weeks, running the first product through the plant and producing no-specification granular activated carbon.

現在轉到我們在紅河的新 GAC 生產線的建設，我們很高興地宣布，我們預計將在未來幾週內完成工廠的調試，通過工廠運行第一批產品並生產無規格顆粒活性碳。

This is a significant achievement by our operational team reflecting years of research, development, and successful execution, taking bituminous coal waste, converting it into purified carbon, and then using that as a feedstock to produce activated carbon, which is then used to reduce or even reverse harmful environmental liabilities like PFAS was previously thought impossible.

這是我們營運團隊的一項重大成就，體現了我們多年的研究、開發和成功執行，利用煙煤廢料，將其轉化為純化碳，然後以此為原料生產活性炭，然後用於減少甚至扭轉像 PFAS 這樣的有害環境責任，這在以前被認為是不可能實現的。

Not only are we on the cusp of making this a reality, but we will be producing a product that has competitive advantages over technologies currently available in the market.

我們不僅即將實現這一目標，而且我們將生產出比目前市場上的技術更具競爭優勢的產品。

As we've previously guided, while getting the first product out of the plant is a tremendous milestone, it will take time to ramp up production to our full nameplate capacity of 25 million pound.

正如我們之前所指導的，雖然第一批產品出廠是一個巨大的里程碑，但要將產量提高到 2500 萬磅的額定產能還需要時間。

Based on our latest expectations, this ramp-up phase will take approximately 3 months to 6 months, and we anticipate reaching nameplate capacity in the second half of 2025.

根據我們最新的預期，這個提升階段大約需要 3 到 6 個月，我們預計將在 2025 年下半年達到額定產能。

Although we had originally hoped to achieve this a bit sooner and still might, we are adopting a further level of conservatism around our timeline forecasts, given the challenges we face today and our ongoing focus on doing what we said we'd do. We expect production levels to ramp up progressively during the 2nd quarter, and we will continue to provide updates to the market as we reach key milestones. Realistically, we expect to achieve nameplate capacity around the middle of the second half of 2025, but we'll provide updates as appropriate as our timelines become more defined.

儘管我們原本希望能夠更早實現這一目標，而且仍有可能實現，但考慮到我們今天面臨的挑戰以及我們持續專注於履行承諾，我們對時間表的預測採取了進一步的保守態度。我們預計生產水準將在第二季度逐步提高，並且我們將在達到關鍵里程碑時繼續向市場提供最新資訊。實際上，我們預計將在 2025 年下半年中期實現額定容量，但隨著我們的時間表變得更加明確，我們會適時提供更新。

Our goal of expanding production by 10% to 20% above nameplate capacity remains unchanged. The timing of defining the production run rate will be determined once nameplate capacity is achieved.

我們的目標保持不變，即在額定產能基礎上擴大產量 10% 至 20%。一旦達到額定產能，就會決定定義生產運作率的時間。

Turning now to an update on our granular activated carbon contracting performance during our Q3 earnings call, I expressed confidence in being fully contracted by the time we begin GAC production. While we remain fully capable of contracting all capacity.

現在談談我們在第三季收益電話會議上對顆粒活性碳承包表現的最新情況，我表示有信心在我們開始 GAC 生產時完成全部承包。儘管我們仍然完全有能力承包所有產能。

And are currently contracted at approximately 16 million pound today. Two key factors have led us to take a more strategic approach. First, fully contracting now is not in the best long-term interests of our shareholders. Holding back a portion allows us to better align with our production ramp up while also entering more diverse markets, which we expect to drive stronger returns in both the near and long term.

目前的合約價值約為 1600 萬英鎊。兩個關鍵因素促使我們採取更具策略性的方法。首先，現在完全承包並不符合我們股東的長期利益。保留一部分可以讓我們更好地配合產量成長，同時進入更多樣化的市場，我們預計這將在短期和長期帶來更強勁的回報。

Second, ongoing discussions with biogas and other industrial customers outside of PFAST related applications indicate a strong preference for pilot scale testing at their facilities. With Red River now imminently operational, these tests are almost underway and results are expected within 1 to 6 months, depending upon the application.

其次，與沼氣和 PFAST 相關應用之外的其他工業客戶的持續討論表明，他們強烈傾向於在其設施中進行中試規模測試。隨著 Red River 即將投入運營，這些測試已接近尾聲，預計結果將在 1 至 6 個月內公佈，具體取決於應用情況。

Given that we anticipate more attractive pricing in these sectors, it makes sound business sense to reserve capacity for these contracts once testing is successfully completed and production is fully ramped.

鑑於我們預計這些領域的定價會更具吸引力，因此，一旦測試成功完成且生產全面提升，為這些合約保留產能是合理的商業做法。

Overall, our confidence in selling everything we produce remains extremely high. Successful customer testing to date, both in our labs and independently reinforces this belief. Additionally, we are taking a disciplined approach to pricing, looking towards our product's superior performance and the growing shortage of GAC supply in the market.

總體而言，我們對銷售所有產品仍然充滿信心。迄今為止，無論是在我們的實驗室還是在獨立實驗室，客戶測試的成功都強化了這一信念。此外，我們採取了嚴謹的定價方法，著眼於我們產品的卓越性能以及市場上 GAC 供應日益短缺的問題。

Shifting focus to our markets, a key area of investor attention has been the potential impact of regulatory changes, particularly following the PFAS related regulations implemented in April 24 under the Biden administration. Our discussions with customers suggest no concerns over a possible rollback. In fact, the trend appears to be moving in the opposite direction. Many municipalities are actively engaging to secure granular activated carbon supply in advance, anticipating rising demand and potential constraints. Public awareness of PFAST risks continues to grow, and major lawsuits against historical PFAST producers are further accelerating the industry's response.

將焦點轉移到我們的市場，投資者關注的一個關鍵領域是監管變化的潛在影響，特別是在拜登政府於 4 月 24 日實施的 PFAS 相關法規之後。我們與客戶的討論表明，對於可能的回溯並無擔憂。事實上，趨勢似乎正朝著相反的方向發展。許多城市正在積極參與，提前確保顆粒活性碳的供應，預計需求將持續增長，但潛在的限制也會隨之而來。公眾對 PFAST 風險的認識不斷提高，針對歷史 PFAST 生產商的重大訴訟進一步加速了業界的反應。

For water utilities, this is not just about regulatory compliance. It's also about strategic planning. Given the potential for GAC supply shortages, customers are locking in contracts now to manage costs and avoid future price increases. A prime example is American Water, the largest US water utility, which recently secured a 9-year GAC supply contract with one of our competitors.

對水務公司來說，這不僅關乎法規合規性。這也與策略規劃有關。鑑於廣汽供應短缺的可能性，客戶現在正在鎖定合約以管理成本並避免未來價格上漲。一個典型的例子是美國最大的水務公司美國水務公司 (American Water)，該公司最近與我們的一家競爭對手簽訂了為期 9 年的 GAC 供應合約。

This development highlights two key trends. First, proactive supply security as water utilities are acting ahead of regulations, recognizing the long-term need to manage PFAST levels. And second, tighter market dynamics. Large long-term contracts are removing significant product from the market just as other companies are seeking supply.

這一發展凸顯了兩個主要趨勢。首先，由於水務公司意識到管理 PFAST 水準的長期需要，因此主動保障供水安全。第二，市場動態更加緊張。就在其他公司尋求供應的時候，大型長期合約卻使大量產品從市場上消失。

We view this as a positive signal for our business. Demand remains strong, and our disciplined approach to contracting positions us well to capitalize on these market dynamics.

我們認為這對我們的業務來說是一個積極的信號。需求依然強勁，我們嚴謹的簽約方式使我們能夠充分利用這些市場動態。

As we enter the year ahead, we do so with both excitement and determination. This past year marked a transformational period for A as we successfully executed a full turnaround of our foundational PAC business.

當我們邁入新的一年時，我們既興奮又堅定。過去的一年標誌著 A 的轉型時期，因為我們成功實現了基礎 PAC 業務的全面轉型。

Now with our GAC line poised to begin production, we are focused on turning that progress into tangible results, bringing an attractive concept to life as a compelling reality.

現在，我們的 GAC 生產線即將開始生產，我們專注於將這一進展轉化為切實的成果，將一個有吸引力的概念變成令人信服的現實。

We see significant opportunities across diverse applications and pricing environments, and our strategy remains clear maximize shareholder returns while mitigating risk.

我們在不同的應用和定價環境中看到了巨大的機遇，我們的策略仍然很明確，即在降低風險的同時最大化股東回報。

Product, customer, and geographic diversification will be key in achieving this. While our primary commercial focus this year is on activated carbon, I want to briefly highlight our asphalt project, which continues to make encouraging progress.

產品、客戶和地理多樣化是實現這一目標的關鍵。雖然我們今年的主要商業重點是活性炭，但我想簡要介紹我們的瀝青項目，該項目繼續取得令人鼓舞的進展。

This opportunity excites us not only for its uncorrelated product diversity but also for its potential for strong economics and operational efficiencies at our Corbyn site. We are actively engaging with potential partners on the commercial testing program. While success is not guaranteed, our work to date gives us confidence in its potential, though commercialization is unlikely before 2026. As always, execution is the priority. You'll hear me say this often, but our approach remains simple and effective. Expand our product lineup, reduce costs, increase our ASP and drive efficiencies.

這個機會讓我們感到興奮，不僅因為其不相關的產品多樣性，還因為它有可能在我們的 Corbyn 工廠實現強大的經濟和營運效率。我們正在積極與潛在合作夥伴合作進行商業測試計劃。雖然不能保證成功，但我們迄今為止的工作讓我們對其潛力充滿信心，儘管在 2026 年之前不太可能商業化。一如既往，執行是首要任務。您會經常聽到我這麼說，但我們的方法仍然簡單而有效。擴大我們的產品陣容，降低成本，提高我們的平均售價並提高效率。

One final topic I'd like to touch on before handing over to discuss our financials is the topic of guidance which we raised on our Q3 earnings call. This remains an item we are keen to introduce as we seek to create an even more informed investor base. To this end, we remain entirely committed to providing guidance at the appropriate time. But as things stand, I believe the appropriate time to do that will be once we have better visibility on our GAC production ramp up at Red River. In the meantime, we're pleased to have expanded our research coverage in what represents an increasingly robust consensus. We hope to expand our relationships and coverage following even more over the coming quarters. With that, I'll hand it over to Stasia for a more detailed look at our financials.

在討論我們的財務狀況之前，我想談的最後一個主題是我們在第三季財報電話會議上提出的指導主題。當我們尋求建立更知情的投資者基礎時，這仍然是我們熱衷於引入的一項內容。為此，我們將繼續全力致力於在適當的時候提供指導。但就目前情況而言，我相信，一旦我們對紅河的 GAC 產量提升有了更好的了解，就是採取這項行動的適當時機。同時，我們很高興能夠擴大我們的研究範圍，這代表著越來越堅定的共識。我們希望在未來幾季進一步擴大我們的關係和覆蓋範圍。說完這些，我將把它交給 Stasia，讓她更詳細地了解我們的財務狀況。

Thanks, Bob, and thanks everybody for joining us today.

謝謝，鮑勃，也謝謝大家今天的參加。

We delivered strong financial results during the 4th quarter and full year of 2024. 2024 was a significant year of growth for Arq. Revenue grew 10% year over year to approximately $109 million driven primarily by strong improvements in our average selling price and was partially offset by a decrease in volume.

我們在 2024 年第四季和全年取得了強勁的財務業績。 2024 年是 Arq 重要的成長一年。營收年增 10% 至約 1.09 億美元，這主要得益於平均售價的強勁上漲，但銷量的下降部分抵消了這一增長。

Our focus on contract economics yielded a strong year-to-date gross margin of 36.2%, transforming our foundational PAC business from a starting point of nearly 1 in every 4 contracts generating a loss to generating $7.7 million in adjusted EBITDA in 2024. The 4th quarter marked our 3rd consecutive quarter of adjusted EBITDA. We are determined to maintain this momentum in our PAC business moving forward into 2025.

我們對合約經濟學的關注使年初至今的毛利率達到了 36.2%，使我們的基礎 PAC 業務從每 4 份合約中就有 1 份產生虧損的起點轉變為 2024 年產生 770 萬美元的調整後 EBITDA。第四季是我們連續第三個季度實現調整後 EBITDA。我們決心在 2025 年保持 PAC 業務的這一發展勢頭。

Turning now to a discussion of the 4th quarter, revenue totaled $27 million driven largely by enhanced contract terms, including 14% quarter over quarter growth in our average selling price and positive changes in our product mix. This is our seventh consecutive quarter of double-digit year over year percentage growth in ASP.

現在討論第四季度，總收入達到 2700 萬美元，主要得益於合約條款的增強，包括平均售價環比增長 14% 以及產品組合的積極變化。這是我們平均售價連續第七個季度實現兩位數的同比增長。

Our gross margin for the quarter was 36.3% compared to 49.8% reported in the prior year period. We point out for the fourth quarter of 2023, our gross margin benefited from recognizing higher revenue related to our take or pay agreements of $4.7 million versus $1.6 million in the current quarter, as well as other one-off items. It is worth noting that the lower level of take or pay agreements in 2024 related to volume increases resulted in improved demand for our products.

本季我們的毛利率為 36.3%，去年同期為 49.8%。我們指出，對於 2023 年第四季度，我們的毛利率受益於確認與我們的照付不議協議相關的更高收入 470 萬美元，而本季度為 160 萬美元，以及其他一次性項目。值得注意的是，由於 2024 年產量增加導致的照付不議協議水準降低，導致我們產品的需求增加。

Net loss was $1.3 million in the fourth quarter of 2024 compared to net income of $3.3 million in Q4 of 2023. We generated positive adjusted EBITDA of approximately $3.3 million in the fourth quarter of 2024 compared to an adjusted EBITDA of $7.2 million in the same period during 2023.

2024 年第四季淨虧損為 130 萬美元，而 2023 年第四季淨收入為 330 萬美元。2024 年第四季度，我們的調整後 EBITDA 約為 330 萬美元，而 2023 年同期的調整後 EBITDA 為 720 萬美元。

Both these changes versus the prior year were primarily driven by the decreases in revenue recognized related to our take or pay contracts, as well as a reduction in our compensation expense that positively impacted the fourth quarter of 2023.

與前一年相比，這兩項變化主要是由於與我們的照付不議合約相關的確認收入減少，以及薪酬費用減少，這對 2023 年第四季度產生了積極影響。

As I mentioned earlier, average selling price for the quarter improved 14% period over period. At the beginning of 2025, we have eliminated all negative margin contracts, which represented roughly 24% of volumes as we entered into 2023 and approximately 13% as we entered 2024.

正如我之前提到的，本季的平均售價較上季上漲了 14%。2025 年初，我們取消了所有負保證金合同，這些合約在 2023 年約佔交易量的 24%，在 2024 年約佔交易量的 13%。

Selling general and administrative expenses totaled $6 million reflecting a reduction of approximately 8% versus the prior year period, driven by a reduction in payroll and benefit expenses as well as legal and professional fees.

銷售一般及行政開支總計 600 萬美元，較去年同期減少約 8%，主要由於工資和福利開支以及法律和專業費用的減少。

Research and development costs for the fourth quarter also decreased 39% or approximately $460,000 compared to the prior year period.

第四季的研發成本也比去年同期下降了 39%，約 46 萬美元。

Decrease in R&D was primarily driven by conducting product qualification testing with potential lead GAC adopters in the 4th quarter of 2023.

研發費用的減少主要是因為 2023 年第四季與潛在的 GAC 主要採用者進行產品資格測試。

Overall and on an annualized basis, our performance demonstrates our ability to operate our PAC business in a way that contributes positively to our economic position while further enabling us to pursue and execute on high growth opportunities with our expanding GAC business.

總體而言，按年率計算，我們的業績表明，我們有能力以積極促進經濟地位的方式運營 PAC 業務，同時進一步使我們能夠透過不斷擴大的 GAC 業務來追求和實現高成長機會。

We remain extremely confident that our PAC business will continue to be cash generative in fiscal year 2025 and beyond. The strong annual performance of our PAC business in 2024 demonstrates its potential as a secure foundation on which we can continue to build our compelling GAC business.

我們仍然非常有信心，我們的 PAC 業務將在 2025 財年及以後繼續產生現金流。我們 PAC 業務在 2024 年的強勁年度業績證明了其作為我們繼續打造引人注目的 GAC 業務的安全基礎的潛力。

Turning to the balance sheet, we ended the fourth quarter with cash of $22.2 million of which approximately $13.5 million is unrestricted. The change versus last quarter was driven by CapEx spend to complete the GAC line.

談到資產負債表，我們第四季結束時的現金為 2,220 萬美元，其中約 1,350 萬美元為不受限制的現金。與上一季相比的變化是由完成 GAC 生產線的資本支出所推動的。

As Bob mentioned, we successfully closed our revolving credit facility with Midcap Financial in late Q4 of 2024, an important milestone for several reasons. First, it allowed us to retire the costly $10 million CFG term loan, which had been on our balance sheet since the Legacy Arq acquisition in 2023. The loan was secured against the majority of our assets we now value at over $500 million. More importantly, it carried an extremely high cost of capital with a limited capacity of $10 million.

正如鮑伯所提到的，我們在 2024 年第四季末成功與 Midcap Financial 完成了循環信貸安排，出於多種原因，這是一個重要的里程碑。首先，它使我們能夠償還昂貴的 1000 萬美元 CFG 定期貸款，該貸款自 2023 年收購 Legacy Arq 以來一直存在於我們的資產負債表上。這筆貸款以我們大部分的資產作為抵押，目前這些資產的價值超過 5 億美元。更重要的是，它的資本成本極高，容量有限，僅 1,000 萬美元。

In contrast, the new midcap facility boosts a $30 million capacity at a stated rate of less than 9% annually, effectively halving our cost of capital while expanding our availability funding.

相較之下，新的中型企業融資工具以每年不到 9% 的規定速度提高了 3,000 萬美元的產能，有效地將我們的資本成本減半，同時擴大了我們的可用資金。

As of December 30, 2024, we have drawn approximately $13.8 million on the revolving facility as we continue to use our credit availability in measured moderation. This facility not only strengthens our near-term liquidity but provides a strategic capital flexibility as we look to the future. With much more reasonable terms than the company's prior related party fixed par debt.

截至 2024 年 12 月 30 日，我們已從循環信貸額度中提取了約 1,380 萬美元，因為我們將繼續適度使用我們的信貸額度。此項融資不僅增強了我們的短期流動性，也為我們著眼於未來提供了策略資本彈性。其條款比該公司先前的關聯方固定票面債務合理得多。

We recognize that capital expenditures for Red River expansion increased meaningfully in 2024, and with the anticipated working capital needs in 2025 as we ramp up production, securing this facility, we've built a financial cushion helping offset CapEx overruns in Q4 of 2024 and manage potential working capital needs in 2025.

我們認識到，2024 年紅河擴建的資本支出大幅增加，隨著我們提高產量並確保該設施的安全，預計 2025 年將需要營運資本，我們已經建立了財務緩衝，有助於抵消 2024 年第四季度的資本支出超支並管理 2025 年潛在的營運資本需求。

With that said, we look back on 2024 with pride in our financial performance and are excited to enter 2025 with a strong financial foundation, and we are well positioned to execute on our growth strategy. With that, I will turn things back over to Bob.

話雖如此，回顧 2024 年，我們對我們的財務業績感到自豪，並很高興以強大的財務基礎進入 2025 年，並​​且我們已準備好執行我們的成長策略。說完這些，我會把事情交還給鮑伯。

Thanks, Stacia. Before we move to Q&A, I want to leave you with a few key takeaways from today's discussion.

謝謝，斯塔西婭。在我們進入問答環節之前，我想先跟大家分享一下今天討論的幾個關鍵要點。

First, we have significantly strengthened our PAC business, reducing costs, improving efficiency, profitability, and cash flow generation. This remains a stable foundation for our growth initiatives and crucially one which we believe is now a sustainable cash flow producer.

首先，我們大幅加強了我們的 PAC 業務，降低了成本，提高了效率、獲利能力和現金流產生。這仍然是我們成長計畫的穩定基礎，而且至關重要的是，我們相信它現在是一個可持續的現金流產生者。

Second, our granular activated carbon expansion is on track with initial product out of the plant imminently and meaningful contracts secured. As in-situ testing is successfully completed, we are extremely well positioned to finalize negotiations to match contracting with the ramping up of production.

其次，我們的顆粒活性碳擴張計畫正在按計劃進行，第一批產品即將出廠，並已獲得有意義的合約。隨著現場測試的成功完成，我們已做好充分準備完成談判，以使合約與產量提升相匹配。

Third, our disciplined financial strategy has reinforced our balance sheet, providing the flexibility to invest in growth while maintaining stability. While the Q4 Capex increase was frustrating, I am confident in our management of expenses moving forward, and we have sufficient liquidity to manage it.

第三，我們嚴謹的財務策略增強了我們的資產負債表，使我們在保持穩定的同時能夠靈活地投資於成長。雖然第四季度資本支出的成長令人沮喪，但我對我們未來的費用管理充滿信心，而且我們有足夠的流動性來管理它。

Finally, we remain focused on innovation, operational excellence, and customer engagement to drive long-term value. The granular activated carbon opportunity at Red River with additional phases in development represents a major growth avenue.

最後，我們將繼續專注於創新、卓越營運和客戶參與，以推動長期價值。紅河的顆粒活性碳機會及其後續開發階段代表著一條主要的成長途徑。

Additionally, while our asphalt opportunity is in its early stages, we are encouraged by the progress and its potential is a future diversification of revenues and products. I want to thank our employees, partners, and shareholders for their continued support. 2024 brought both successes and challenges, and we navigated them well.

此外，雖然我們的瀝青機會尚處於早期階段，但我們對其進展感到鼓舞，其潛力在於未來收入和產品的多樣化。我要感謝我們的員工、合作夥伴和股東的持續支持。 2024年既有成功，也有挑戰，我們很好地應對了它們。

As we enter 2025, I'm optimistic about what's ahead and look forward to building on our momentum. We are in a great and growing market, and Arq remains uniquely positioned as the only public pure play activated carbon company. Along these lines, I would like to remind investors that my share ownership and compensation make me fully aligned with shareholders. With that operator, let's open the call for questions.

當我們進入 2025 年時，我對未來充滿樂觀，並期待繼續保持這一勢頭。我們處在一個巨大且不斷成長的市場中，Arq 作為唯一一家上市的純活性碳公司仍然具有獨特的地位。順著這個思路，我想提醒投資者，我的股份所有權和薪酬使我與股東完全一致。有了那位接線生，我們就可以開始提問了。

Thank you. We will now be conducting a question-and-answer session.

謝謝。我們現在將進行問答環節。

(Operator instruction).

（操作員指令）。

Gerry Sweeney from ROTH Capital Partners.

來自 ROTH Capital Partners 的 Gerry Sweeney。

Good morning, Bob. Thanks for taking my call.

早安，鮑伯。謝謝您接聽我的電話。

No problem. Good morning, Gerry.

沒問題。早上好，格里。

First question, Red River ramp up phase, could you review the process and potential key milestones we should keep an eye out for? And then finally, will you provide updates as you go through that process?

第一個問題，紅河加速階段，您能否回顧一下我們應該關注的流程和潛在關鍵里程碑？最後，您會在這個過程的過程中提供更新資訊嗎？

Oh, absolutely, and let me talk a little bit about the commissioning process because that relates directly to the ramp up process and...

哦，當然了，讓我稍微談談調試過程，因為這與提升過程直接相關...

I said [commissioning].

我說[偵錯].

No, that's okay. I knew what you meant. Commissioning is not an all or nothing scenario, and to provide some color or detail on the process, we have broken down the operational steps and hence the commissioning into 6 functional zones.

不，沒關係。我知道你的意思。調試並不是全有或全無的情況，為了給流程提供一些色彩或細節，我們將操作步驟分解開來，從而將調試分為 6 個功能區。

So, Zone 1 is essentially where we introduce the Arq wet tape made at [carbon].

因此，1 區基本上是我們引入 Arq 濕膠帶的地方，[碳]。

Zone 2 is where we ensure that that feedstock is consistent with respect to moisture and certain other items to ensure we have stable, excuse me, raw material properties.

在第 2 區，我們確保原料在水分和其他某些方面保持一致，以確保我們擁有穩定的原料特性。

Zone 3 is where we add additives to the granular activated carbon to the carbon feedstock and we agglomerate or essentially bring it back together, that combination to form our granular activated carbon shape.

在區域 3 中，我們將添加劑添加到顆粒活性碳和碳原料中，然後我們將其聚集或基本上重新組合在一起，這種組合形成我們的顆粒活性碳形狀。

Zone 4 is the first of two high temperature heat treatment steps where the granule granules, excuse me, are heated to remove remaining moisture.

區域 4 是兩個高溫熱處理步驟中的第一步，在此加熱顆粒以去除剩餘的水分。

Zone 5 is the second of those two heat treatment steps where the active granules are they're essentially activated under very specific thermal properties.

第 5 區是這兩個熱處理步驟中的第二個步驟，其中活性顆粒基本上在非常特殊的熱性能下被活化。

And the final stage is Zone 6 where we screen and inventory of the final GAC product.

最後階段是第 6 區，我們將最終的 GAC 產品進行篩選和盤點。

I'm not trying to bore everyone by going through this, but I think it's germane to what we're doing, and I want to emphasize that we have successfully completed all 6 zones in. Produce granular activated carbon. What we're doing currently is fine tuning the process to ensure we maximize the efficiencies and ensure repeatability.

我並不是想透過這個讓每個人都感到無聊，但我認為這與我們正在做的事情密切相關，我想強調的是，我們已經成功完成了所有 6 個區域。生產顆粒活性碳。我們目前正在做的是微調流程，以確保最大限度地提高效率並確保可重複性。

Once we are absolutely confident, we can have ensured repeatability, we'll say that we are in full commercial production, but we have produced granular activated carbon and successfully on that, but we just want to make sure we can produce it on a repeatable scale. So are being so long winded, but hopefully that answers your question.

一旦我們絕對有信心，我們就可以確保可重複性，我們會說我們已經完全商業化生產，但我們已經生產了顆粒活性碳並取得成功，但我們只是想確保我們能夠以可重複的規模生產它。說了這麼多，希望能夠回答你的問題。

Now, more detail on that subject is important at this juncture, so I appreciate it. Switching gears slightly, natural gas PAC, natural gas prices have been going up, I think they're around 450.

現在，關於這個問題的更多細節在這個時刻非常重要，所以我很感激。稍微轉換一下主題，天然氣 PAC，天然氣價格一直在上漲，我認為它們在 450 左右。

Dare I say potentially sustainable? I think there's a lot of demand for natural gas, especially going into next year with LNG exports and the current administration, etc.

我敢說它具有可持續性嗎？我認為天然氣的需求很大，尤其是明年液化天然氣出口和現任政府等因素的影響。

Is this changing the positively changing the landscape for PAC sales as we look into 2025?

展望 2025 年，這是否會對 PAC 銷售格局產生正面影響？

So net gas pricing, once net gas gets above $354 we see switching on the part of utilities from net gas to coal-fired generation, and we've seen that impacted in volumes, particularly in some of the initial months of 2025 so far. But while we have a leading market share in scrubbing mercury emissions from the power generation. The industry that is an area that is becoming less and less important to us as we expand into adjacent markets for the PA business and those adjacent markets carry a higher margin, as we talk about path being foundational, the PTI segment is foundational for our PA business, and it's nice to get those increased volumes, and that is additive to the results and what we had expected.

因此，一旦淨天然氣價格超過 354 美元，我們就會看到公用事業公司從淨天然氣轉向燃煤發電，而且我們已經看到這影響了產量，特別是在 2025 年最初的幾個月中。然而，我們在清除發電產生的汞排放方面佔有領先的市場份額。隨著我們將 PA 業務擴展到鄰近市場，而這些鄰近市場的利潤率更高，這個行業對我們來說變得越來越不重要，正如我們所說的路徑是基礎，PTI 部分是我們 PA 業務的基礎，獲得這些增加的銷量是件好事，這對結果和我們的預期都有所補充。

Got it.

知道了。

A third question, I'll jump back in the line. Great to see you talking about a line to, obviously we have to get the commissioning process up and going, but great to see line 2 and even forward.

第三個問題，我再重複一次。很高興看到您談論第二條生產線，顯然我們必須啟動調試過程，但很高興看到第二條生產線甚至向前發展。

I think I've shared my channel texts with you and the market is becoming increasingly under supply. But can you discuss CapEx for 2025 and maybe the build out of line too? There's probably some moving parts, timeline of building, cost, cash flow, overall liquidity. How do we look at that, and just the level that I think from a balance sheet perspective you're in very good shape with line 1, but as we look at the line 2, I think there's some moving parts, payment and funding it, etc.

我想我已經與您分享了我的頻道文本，並且市場供應變得越來越不足。但是您能討論一下 2025 年的資本支出以及可能的建設嗎？可能會有一些活動部件、建造時間表、成本、現金流、整體流動性。我們如何看待這一點，從資產負債表的角度來看，我認為第 1 行的狀況非常好，但是當我們看第 2 行時，我認為有一些活動部分，付款和融資等。

I just wanted to see if you could put any details around that.

我只是想看看你是否可以提供一些詳細資訊。

No, sure, there's, I think 3 or 4 questions in that question. I think the and I'll try to answer each of them. So, CapEx that we expect for 2025 is kind of $8 million to $12 million in total. That includes maintenance cap backs as it relates to that. Obviously that doesn't include anything for potential phase two as it relates to that. Phase two, the visibility on that, I think a comment relates to contracting, if you will, is that the demand we're contracting for for phase one is really only a small portion of our customers' total expected demand. As our customers' needs grow and our customers do expect significant growth in their GAC requirements, so does interests in phase 2. And so, one, as we said, I said in my prepared remarks that we want to ensure we have full production ramp up, full visibility, and we've been able to determine what amount over the 25-million-pound nameplate capacity we are able to produce. Is it 10%, 20%, 33%? And once we have a firm handle on that plus additional visibility as the months go on, we'll be in a better decision to make the FID on phase two.

不，當然，我認為這個問題有 3 或 4 個問題。我認為我會盡力回答每一個問題。因此，我們預計 2025 年的資本支出總額約為 800 萬至 1,200 萬美元。其中包括與此相關的維護上限。顯然，這不包括與此相關的任何可能的第二階段的內容。第二階段，關於這一點的可見性，我認為與合約有關的評論是，如果您願意的話，我們為第一階段簽訂合約的需求實際上只是我們客戶預期總需求的一小部分。隨著客戶需求的增長以及客戶預期其 GAC 需求將顯著增長，對第二階段的興趣也在增長。因此，首先，正如我們所說的，我在準備好的發言中說過，我們希望確保我們的產量全面提升，具有充分的透明度，並且我們已經能夠確定我們能夠生產出比 2500 萬磅銘牌產能多大的數量。是10%、20%還是33%？一旦我們牢牢掌握了這一點，再加上隨著時間的推移，我們能夠更清楚地了解情況，我們就能更好地決定第二階段的最終決定。

As it relates to financing phase two, it. Our belief that we'll be able to use our balance sheet to do that the cash flow that we're producing from the turnaround of the PA business, the cash flow that we'll generate from the GAC business, should allow us to fund that on balance sheet with debt.

由於它與第二階段的融資有關，它。我們相信，我們將能夠利用我們的資產負債表來實現這一點，我們從 PA 業務的轉變中產生的現金流，我們從 GAC 業務中產生的現金流，應該使我們能夠透過債務在資產負債表上為此提供資金。

Bob, I really appreciate it that.

鮑勃，我真的很感激。

Answer all your questions?

回答你所有的問題？

Yes, absolutely, thanks.

是的，非常感謝。

Yeah.

是的。

George Gianarikas, Canaccord Genuity.

喬治·賈納里卡斯（George Gianarikas），Canaccord Genuity。

Thank you for taking my questions.

感謝您回答我的問題。

Happy to do it.

很開心能做到。

... Could you possibly share what maybe in broad strokes with the magnitude of the differential is between the pricing you're seeing for granular in water-related markets and in other markets that's giving you the confidence that you want to sort of delay, well not necessarily delay but push out the contract signings that you're doing with the water utilities.

…您能否大致談談，您所看到的與水相關的市場和其他市場的定價差異有多大，這讓您有信心想要推遲，不一定是推遲，而是推遲與水務公司簽訂合約。

Just curious as to whether you could show what the economic differential is there that that you're waiting to do that?

我只是好奇，您是否可以展示一下您在等待這樣做的財務差異是什麼？

Thank you.

謝謝。

Yeah, no, absolutely. So, one point I'd like to make is that we could concentrate, excuse me, contract all of our remaining capacity right now in the water market.

是的，絕對不是。因此，我想說的一點是，我們可以集中精力，對不起，現在就承包水市場上所有剩餘的產能。

That would in some respects de-risk it from investors' minds, but also I think it makes strong business sense to defer that for other diversification. In other markets from just, as I say, risk mitigation by not concentrating solely on one market.

從某種程度上來說，這會降低投資者的風險，但我認為，將其推遲到其他多元化投資上，也具有強大的商業意義。正如我所說，在其他市場中，不要只專注於一個市場，以降低風險。

The other is that in a specific answer to your question, the pricing differential outside of the water markets for the adjacent markets that we're discussing is on the magnitude of 20% to 40% or more as it relates to that. So we think it may sound. Business sense because the ramping up of our production matches what we believe will be the culmination of those in situ field tests and as I mentioned, that's the final step of negotiations in finalizing the contracts outside of the water market. We always have the water market we can fall back on, but you're talking a 20% to 40% price differential by those other markets.

另一個是，在具體回答你的問題時，我們正在討論的水市場與相鄰市場之間的價格差異在 20% 到 40% 甚至更多。我們認為這聽起來可能是如此。這是有商業意義的，因為我們產量的提高與我們認為的現場測試的結果相符，正如我所提到的，這是在水市場之外敲定合約的談判的最後一步。我們總是有可以依靠的水市場，但其他市場的價格差異卻高達 20% 到 40%。

Thank you, and maybe, similarly, what are the, what's the magnitude of the difference that you're seeing between granular and PAC today in the marketplace? Thank.

謝謝，也許，同樣地，您目前在市場上看到的顆粒和 PAC 之間的差異有多大？感謝。

You.

你。

The best way is, my oft repeated maxim that pricing in granular is a multiple and in some cases depending upon the markets, a significant multiple of the average PAC Pricing.

最好的方法是，我經常重複的格言是，粒度定價是平均 PAC 定價的倍數，在某些情況下取決於市場，是平均 PAC 定價的相當多的倍數。

And then any final question just on your CapEx for 2024, you did a nice job of bringing that down. How should we think about modeling that for this year? Thank you.

最後關於您 2024 年資本支出的問題，您很好地解決了這個問題。我們該如何考慮為今年建模？謝謝。

There, I believe that we should operate in costs and SGA. There's still room for further improvement.

在那裡，我相信我們應該在成本和 SGA 方面開展業務。仍有進一步改進的空間。

As I mentioned, we've already taken actions in the first quarter of this year to reduce SGNA. I think there's further room to go on both, and we'll have a better view and handle on that as we begin full scale production of the GAC as it relates to that. But also, as Gerry mentioned in his question that the additional volumes, we're seeing related to the PGNI segment due to the cold winter are also helping cost absorption, which will help margins as well.

正如我所提到的，我們已經在今年第一季採取行動來減少 SGNA。我認為兩者都還有進一步發展的空間，當我們開始全面生產與此相關的 GAC 時，我們將對此有更好的了解和處理。但是，正如 Gerry 在他的問題中提到的那樣，由於寒冷的冬季，我們看到與 PGNI 部門相關的額外銷售也有助於吸收成本，這也有助於提高利潤率。

Peter Gastreich, Water Tower Research.

Peter Gastreich，水塔研究公司。

Thank you. Good morning and congratulations on your results and thanks for the presentation. I really appreciate the details, especially on the CapEx review.

謝謝。早安，恭喜你所取得的成績，並感謝你的演講。我真的很欣賞這些細節，尤其是關於資本支出審查的細節。

First of all, I just have a follow-up question, earlier question on CapEx. I just wanted to confirm that if you do go forward with this additional, capacity, for phase one, which, can you just confirm that there will not be any associated CapEx for that?

首先，我有一個後續問題，關於資本支出的先前問題。我只是想確認一下，如果您確實繼續推進第一階段的額外產能，您能否確認不會有任何相關的資本支出？

So, I think when you say go forward with additional capacity for phase one, I think what you're referring to is what we believe is that we'll be able to produce more than what we refer to as the 25 million pounds of nameplate capacity. So, one, we think that is eminently achievable, and two, I can confirm that that will not entail any additional cap backs to achieve those amounts.

因此，我認為當您說繼續推進第一階段的額外產能時，您指的是我們相信我們能夠生產超過我們所說的 2500 萬磅的標稱產能。因此，第一，我們認為這是完全可以實現的；第二，我可以確認，這不需要任何額外的上限來實現這些金額。

Okay, thanks and earlier just want to understand it sounds like it is.

好的，謝謝，之前只是想了解一下聽起來是這樣的。

Within possibility that it could be more than 20%.

有可能超過 20%。

That's correct.

沒錯。

Okay, great.

好的，太好了。

But let me emphasize when I talk about payback on that, again, it's and talked about at $3 a pound at $75 million obviously it's about 13% higher with the capex we've expended on that. That doesn't include anything above the nameplate capacity of that 25 million.

但是，當我談到回報時，請允許我再次強調，以每磅 3 美元計算，即 7500 萬美元，顯然比我們為此花費的資本支出高出約 13%。這還不包括超過 2500 萬的額定容量。

Okay, that's great, thank you. My second question is just about the Q4 results. I wonder if you could give any color about what it would have looked like, without the impact of allergies or take taker pay and also regarding unplanned shutdowns, what would be a typical number of days Arq would experience in any given year? I think you mentioned that the unplanned shutdowns for around 2 weeks in the 4th quarter.

好的，太好了，謝謝。我的第二個問題是關於第四季的業績。我想知道，如果沒有過敏或接受者付費的影響以及計劃外的停工，您能否描述一下情況會是什麼樣子，Arq 在任何一年中通常會經歷多少天？我想您曾提到第四季度大約兩週的計劃外停工。

That's correct.

沒錯。

So the boiler shutdown, and I'll come back to answering the fourth quarter, the two un unplanned shutdowns were related to the boiler. The first is we noted that a seal wasn't working properly, and when you're working at temperatures in excess of 1,700 degrees, you need to make sure that seal works properly, as we always talk about, our goal is to be the safest, lowest cost, and most profitable company in the industry. So safety is our absolute number one priority. So, we made those repairs and then the repairs weren't working as effectively as we initially expected, so we had to shut down again. The reason it takes one week is say, well, how does repairing a boiler take a week? Well, the problem is you have Cool down the apparatus from the 1,700 degrees. Make sure it's a safe environment for people to enter, and then it takes some time to ramp up those temperatures to be able to begin production again. So that's why it's, it takes, fairly long when you have something to do with the boiler and repair. In terms of the results, if you look at it, we had approximately $4.7 million. In Q3, excuse me, 2023 and take or pay contracts plus some accounting reversals that accrual reversals on expenses that favorably impacted those results in 23. In 24 we had, if you look at it, we had the 14% increase in our average selling price and if you take out the $4.7 million of take or pay on a production-to-production, apples-to-apples basis. Revenue was actually up and even with the 21-week unplanned outages, gross margin was roughly would have been the same. So, I think it was a really good result in the 4th quarter, although if you look at it from the first optics, you say it was down, it was actually a very good strong operating result.

因此，鍋爐停運，我將在第四季度回答這個問題，兩次非計劃停駛都與鍋爐有關。首先，我們注意到密封件工作不正常，當工作溫度超過 1,700 度時，您需要確保密封件正常工作，正如我們經常說的那樣，我們的目標是成為業內最安全、成本最低、利潤最高的公司。因此，安全絕對是我們的首要任務。因此，我們進行了這些修復，但修復效果並不像我們最初預期的那樣有效，所以我們不得不再次關閉。之所以需要一週時間，是因為有人說，修理鍋爐怎麼會花一週時間呢？嗯，問題是你必須將設備從 1,700 度冷卻下來。確保這是一個供人們進入的安全環境，然後需要一些時間來提高溫度，以便能夠再次開始生產。所以這就是為什麼當你需要處理鍋爐和維修時需要花費相當長的時間。就結果而言，如果你看一下，我們大約有 470 萬美元。在第三季度，對不起，2023 年和照付不議合約加上一些會計逆轉，這些逆轉對費用產生了應計逆轉，對 23 年的結果產生了有利影響。如果你看一下，你會發現在 24 年內，我們的平均售價上漲了 14%，如果你從生產到生產的比較中扣除 470 萬美元的支付或接受費用，那麼我們的平均售價就會上漲 14%。收入實際上是上升的，即使經歷了 21 週的計劃外停機，毛利率也大致保持不變。因此，我認為第四季度的業績確實很好，儘管如果從第一眼看，你會說業績有所下降，但實際上這是一個非常強勁的經營業績。

Okay, great, thank you very much. I'll just think one more question here and get back in the queue. Are there any tariff implications for the US activated carbon market? I understand that your supply chain is fully integrated and domestic, but just curious if there are broader implications for the industry and if so, how would that impact ours?

好的，太好了，非常感謝。我再思考一個問題，然後回到隊列。關稅對美國活性碳市場有何影響？我知道你們的供應鏈是完全整合的並且是國內的，但我好奇這是否會對行業產生更廣泛的影響，如果是的話，這會對我們產生什麼影響？

So, tariffs are beneficial to us because as we've always emphasized and you pointed out, we're the only fully vertically integrated fully domestic supply chain. That helps us in a number of ways and our customers in terms of product availability, reliability, and cost. And a lot of our competitors import product or raw material from overseas which will be subject to tariffs. So, there's the potential for costs going up to the industry due to our competitors, but our cost due to being fully domestic will not be rising. So, it's an opportunity for margin enhancement for us.

因此，關稅對我們有利，因為正如我們一直強調的以及您所指出的，我們是唯一完全垂直整合的完全國內供應鏈。這在產品可用性、可靠性和成本方面為我們和我們的客戶提供了多方面的幫助。我們的許多競爭對手從海外進口產品或原料，這些產品或原料都需要繳納關稅。因此，由於我們的競爭對手，行業成本可能會上升，但由於我們完全是國內生產，成本不會上升。因此，這對我們來說是一個提高利潤率的機會。

Tim Moore, Clear Street.

蒂姆·摩爾，Clear Street。

Thanks, and congratulations with the progress in the turnaround. My first question on GAC utilization, Bob, you mentioned, I think you said 60 million contracted, so that's about 80% of the 75 million pounds. Is it fair to assume that you could probably get 80% utilization in the June quarter, or you think it'll be a bit slower than that?

謝謝，並祝賀扭轉局面取得進展。我的第一個問題是關於 GAC 的利用率，鮑勃，你提到，我想你說的是簽約金額為 6000 萬英鎊，所以這大約佔 7500 萬英鎊的 80%。是否可以合理地假設您在 6 月季度的利用率可能達到 80%，或者您認為利用率會比這慢一些？

So, the couple of things I just want to clarify, so it's 16 million pounds of the 25 million pounds, I think you may have spent $70 and this may have been conflating the $75 million dollar cost target to produce...

因此，有幾件事我只想澄清一下，在 2500 萬英鎊中的 1600 萬英鎊中，我認為你可能花費了 7000 萬美元，這可能與 7500 萬美元的生產成本目標相混淆了…

Yeah, no problem. I just wanted to clarify on that, production ramp up, as I say, we're producing GAC now on that, but we just want to get to the point where it's repeatable and so we can then give the market an update and give because I know the market is eager to get more detail and we're eager to be able to provide the market with more detail as it relates to production ramp up and timing as it relates to that, we said our goal is sometime by the middle of the second half.

是的，沒問題。我只是想澄清一下，產量提升，正如我所說，我們現在正在為此生產 GAC，但我們只是想達到可重複的程度，這樣我們就可以向市場提供更新，因為我知道市場渴望獲得更多細節，我們也渴望能夠為市場提供更多與產量提升和時間安排相關的細節，我們說我們的目標是在下半年中期某個時候。

We hope to be able to bring that forward on that, and we'll be working diligently to be able to do that.

我們希望能夠實現這一目標，並且我們將努力做到這一點。

Okay, fair enough. Yeah, so I was just thinking, should we assume that the contracted amount you mentioned today could be the June revenue amount?

好吧，夠公平。是的，所以我只是在想，我們是否應該假設您今天提到的合約金額可能是六月的收入金額？

Well, so, yeah, no, absolutely. I mean, we expect revenue this quarter from the GAC and having it build into the 2nd quarter as well as we begin ramping up production and we start selling under the contracts and through other spot market sales as well.

嗯，是的，絕對不是。我的意思是，我們預計本季將從 GAC 獲得收入，並將持續到第二季​​度，同時我們開始提高產量，並開始根據合約進行銷售以及透過其他現貨市場銷售。

Great. Next question, I think probably important for investors to know, until you do a line too, whether that's summer next year, whenever that is, we should be modeling no cannibalization of the PAC volumes, right, because that's the plan is no cannibalization in the first line, and if that's the case, then you'll be getting PAC sales plus.

偉大的。下一個問題，我認為投資者可能需要知道的是，直到你開通一條生產線，無論是明年夏天，還是什麼時候，我們都應該模擬 PAC 銷量不會出現蠶食的情況，對吧，因為計劃是第一條生產線不會出現蠶食情況，如果是這樣的話，那麼你將獲得 PAC 銷售額的增加。

GAC sales, which you know could be up to, who knows, the blended price point almost double.

你知道，廣汽的銷售可能會上漲，誰知道呢，混合價格幾乎翻了一番。

Is that how we should be thinking about everything? No cannibalization.

我們應該這樣思考一切嗎？禁止蠶食。

Absolutely.

絕對地。

There's the GAC production as it is online is additive to our existing production at Red River. So not only will we see margin improvement from just the pricing as it relates to granular activated carbon production, but again also additional full cost absorption at Red River as well.

線上的 GAC 產量對我們 Red River 的現有產量具有補充作用。因此，我們不僅會看到與顆粒活性碳生產相關的定價帶來的利潤率提高，而且還會看到 Red River 的額外全部成本吸收。

And that's terrific, and I think investors probably been underestimating the incremental margin there because you'll be selling both of them at the same time.

這太棒了，我認為投資者可能低估了增量利潤，因為你會同時出售這兩款產品。

And then my last question is, just looking out because everyone wants to know, what's the growth driver like next year and the following year, and you know they start asking about line two, I know you haven't committed to that yet, but it seems like it's a high probability.

我的最後一個問題是，只是關註一下，因為每個人都想知道，明年和後年的成長動力是什麼，你知道他們開始問第二條線，我知道你還沒有承諾，但似乎很有可能。

So, the question I have is. You mentioned a commentary on that, starting some of those conversations, theoretically, you want to make sure line one's working well, optimize it, get that all squared away, quality execution.

所以，我的問題是。您提到了對此的評論，開始一些對話，理論上，您希望確保第一條線路運行良好，對其進行優化，使所有一切都井然有序，高品質執行。

When would you expect to get comfort around, maybe getting enough percentage contracted to move forward with CapEx spending for line two? Do you think that'll be December, January, is it that far out, you think?

您預計什麼時候能得到安慰，也許能獲得足夠的合約比例來推進第二條生產線的資本支出？您認為那會是十二月還是一月，您認為還有那麼遠嗎？

I think it's in the second half of this year; the visibility and we're seeing such strong demand for the granular activated carbon product and the pricing. So and as I say, conversations with our existing customers it's that we've already contracted is only a portion of their anticipated needs going forward. So they expect more demand next year, as I mentioned in my prepared remarks, we're actually seeing an acceleration of demand and interest in. And municipal water utilities complying with the PFAST regulations in advance. So I think that's one component. So we would expect that in the second half. And as far as growth drivers for next year as well, there's the potential for the asphalt of motion is, as we complete those testing and that has occurred throughout the year, and that is extremely attractive margins that we've modeled as well. But again, we've got to get through the testing phase on that.

我認為是在今年下半年；可見性，我們看到對顆粒活性碳產品和定價的強勁需求。因此，正如我所說，我們與現有客戶的對話表明我們已經簽訂了合同，這只是他們未來預期需求的一部分。因此他們預計明年的需求會更大，正如我在準備好的演講中提到的那樣，我們實際上看到了需求和興趣的增長。且市政供水設施提前遵守 PFAST 規定。所以我認為這是其中一個組成部分。所以我們預計下半年會出現這種情況。至於明年的成長動力，隨著我們完成這些測試，並且這種測試已經持續了一年，運動瀝青具有很大的潛力，我們已經模擬了極具吸引力的利潤率。但我們必須再次完成測試階段。

No, that's great, Bob. Yeah, no, that's definitely a kicker that probably your highest margin, market the asphalt. Well, thanks a lot. That's it for my questions.

不，太好了，鮑伯。是的，不，這絕對是一個可能帶來最高利潤的因素，那就是瀝青市場。嗯，非常感謝。我的問題就這些。

Thank you.

謝謝。

There are no further questions at this time. I would like to turn the floor back over to Bob Rasmus, CEO for closing comments.

目前沒有其他問題。我想將發言權交還給執行長鮑伯‧拉斯穆斯 (Bob Rasmus)，請他發表最後評論。

Thank you to everyone for your time and interest in Arq. As I mentioned, I really like where we are today as a company. We have successfully transformed the foundationalA business, and I think that turnaround is evident in our full year 2024 and 4th quarter 2024 financial results. As I mentioned, I also feel there's still room to further optimize theA business going forward. In addition, we are imminently poised to begin full scale commercial production of our granular activated carbon products, so we look forward to providing that milestone update shortly and look forward to talking with you all soon.

感謝大家對 Arq 的時間和興趣。正如我所提到的，我真的很喜歡我們公司目前的狀況。我們已經成功轉型了基礎A業務，我認為這種轉變在我們的2024年全年和2024年第四季財務業績中得到了明顯體現。正如我所提到的，我也認為未來 A 業務仍有進一步優化的空間。此外，我們即將開始全面商業化生產我們的顆粒活性碳產品，因此我們期待很快提供這項里程碑更新，並期待很快與大家交談。

This concludes today's teleconference.

今天的電話會議到此結束。