Arq at Water Tower Research Virtual Insights Conference: pfas push lifts outlook

On Wednesday, September 23, 2026, Arq, Inc. (ADES) utilized the Water Tower Research Virtual Insights Conference to present a more ambitious growth strategy centered around PFAS remediation, enhanced pricing, and improved cost control. CEO Bob Rasmus outlined the company's transition from previous losses to a business with increasing margins, though he also highlighted risks related to execution, capital allocation, and the evolving market for water treatment solutions.

The company's core PAC (Powdered Activated Carbon) business has shown significant improvement, increasing from a $15 million loss three years ago to approximately $20 million in adjusted EBITDA under the current guidance. Management is aiming for $30 million in annual EBITDA for the PAC business by the end of next year, with growth anticipated from cost savings, higher prices, and the rise of PAC4PFAS.

PAC4PFAS, the PFAS-focused product, is being tested by a beta group of water utilities and is expected to contribute substantially to revenue in the next fiscal year. The company is considering the development of a granular activated carbon facility, although management views it as a potential option for shareholders rather than a definitive plan.

Arq currently has about $30 million in debt, with the flexibility to take on more if necessary, and sees further value from projects like Corbin. CEO Rasmus emphasized that the company's core PAC business has experienced a major turnaround, with adjusted EBITDA reaching $20 million three years ago, representing a $35 million improvement.

Management's goal is not only to achieve growth but to enhance the quality of that growth, with about 30% of the expected improvement from cost efficiency and fixed-cost absorption, and 60% to 70% from higher average selling prices, market diversification, and PAC4PFAS adoption. Gross margin improvements were evident even in the second quarter, which management described as a low season that also included facility turnaround.

Rasmus advised investors to closely monitor gross margins, which have historically been volatile. The company's second-quarter PAC results exceeded analyst expectations, and management outlined several efficiency-focused changes, including a new operating team in the Red River, Louisiana facility focused on higher efficiency, improved capacity use, increased throughput, and lower costs.

Arq is shifting away from a "we've always done it this way" mindset, aiming to become the safest, lowest-cost, and best-returning company in the activated carbon industry. The company has also introduced new leadership in sales and finance, with Jeannette McQueeney leading product and market expansion and Shimon Steinmetz joining as a finance expert to improve financial prudence.

Arq is reducing exposure to coal-fired power plants while growing its water utility business. The company is targeting higher-margin products and markets, with PAC4PFAS playing a central role. PAC4PFAS is a powdered activated carbon product designed for water systems with PFAS levels between 20 to 30 parts per trillion, addressing EPA compliance thresholds of 4 parts per trillion.

Trials are underway with a beta group of water utilities, and product validation has been completed through third-party independent testing. Rasmus expressed confidence in PAC4PFAS, citing trial results and third-party validations. He anticipates PFAS market awareness among utilities to increase, with many currently in planning stages, mapping PFAS levels and considering seasonal changes.

Many utilities are highly aware of compliance costs, particularly the capital expenses associated with granular activated carbon systems. Arq sees PAC4PFAS as a more cost-effective alternative for utilities near compliance thresholds. The company's balance sheet provides flexibility for future growth, with a market capitalization of $1.05 billion and more cash than debt according to InvestingPro analysis.

Arq currently has about $30 million in debt, translating to leverage of approximately 1.0x to 1.5x based on current EBITDA guidance. Management and the board own about 25% of the company's shares, with Rasmus personally owning over 1 million shares and having additional option exposure. His salary is $50,000, and he emphasizes that his interests are aligned with shareholders due to his ownership and insider position.

The company also discussed potential monetization avenues for Corbin, which could reduce debt by $8 million to $9 million while boosting EBITDA. There is third-party interest in rare earth minerals and critical elements extraction from coal waste. Arq is striving to keep Corbin costs low through winterization, staffing reductions, and lower heating expenses.