Arq, Inc. (NASDAQ:ARQ) Q4 2023 Earnings Call Transcript

They like the quality of our product, the fact that it’s domestically produced, the performance characteristics they’ve seen in testing. And since our footprint is our feedstock is derived from bituminous coal waste, they really like the environmental benefits in terms of reduced carbon footprint. They find all of those things quite attractive. And all of these factors combined are really what relates to my confidence level and not only being able to contract our production prior to actually beginning to produce granular activated carbon from Red River but also to the potential for prepayments. Surety of supply, as you probably found out from your channel checks for GAC is extremely important. And so the second part is what types of terms are we looking for?

I mean, every negotiation is a trade off. And what we’re really looking for is to find what maximizes long term shareholder value. The reality is we could contract 100% of it right now but we don’t want to. We want to find the right fit, the right mix, the right price, the right customers.

Ryan Coleman: We have one final investor question that we’d like to get to. And that question was what do you mean by increased operating efficiencies and volumes as a reason why equipment costs rose at Red River?

Bob Rasmus: As mentioned, we tweaked some of the equipment to maximize potential performance. One benefit, as I said in my prepared remarks, is that GAC production is now additive to PAC production. Previously, GAC production would have been on a pound per pound reduction in our PAC production capability. Now GAC is actually additive on a one for one basis. Also, I expect some of the operational efficiencies would also increase the amount of GAC from the first phase and future stages of the expansion similar to what I mentioned in Ryan’s question that we’ve used and continue to use 25 million pounds as the output, but we hope and expect that it will be greater than that. And as I mentioned, we have not assumed either the additive increase or anything above 25 million pounds in our return calculations.

Ryan Coleman: Thanks, Bob. And thanks again to those of you who provided questions. I’d like to turn the clock over to Bob for any closing remarks.

Bob Rasmus: Thanks, Ryan, and thank you all for listening today and your interest in Arq. With our fourth quarter results, you’re beginning to see the fruits of our labors and the effects of the company’s transformation. There’s still a lot of work to be done. As always, our focus is on execution and maximizing shareholder value. I am optimistic about Arq’s continued transformation and the future, and I look forward to talking with you on our next call.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.