Key Highlights

• Record quarterly Revenue of $38.2 million, up 9% year-over-year, driven by higher sales volumes

• Gross Margin expanded approximately 1,100 basis points to 39.7%, compared to 28.8% in Q3 2025

• Adjusted EBITDA surged 71% to $8.8 million, marking the 10th consecutive quarter of positive adjusted EBITDA

• Full-year 2026 adjusted EBITDA guidance tightened to $19-20 million from $17-20 million previously

Arq Inc(NASDAQ:ARQ), a producer of activated carbon and other environmentally efficient carbon products used in purification and sustainable materials, reported record financial results for the third quarter ended September 30, 2026. The company achieved revenue of $38.2 million, an increase of 9% from $35.1 million in Q3 2025, while delivering significant margin expansion and raising the low end of its full-year guidance.

Record Revenue and Expanding Margins

The quarterly revenue of $38.2 million set a new record for Arq, driven by higher sales volumes across its product lines. The more notable development was the margin expansion, with gross margin reaching 39.7% in Q3 2026 compared to 28.8% in the prior-year quarter — an improvement of approximately 1,100 basis points. The margin gains were primarily driven by the continued performance improvement in the company's core powdered activated carbon (PAC) business.

The PAC segment has been a central focus of Arq's strategy, serving environmental compliance applications where customers use activated carbon to capture pollutants such as mercury from industrial emissions. The sustained improvement in PAC profitability has been a key Factor in Arq's financial turnaround, enabling the company to deliver positive Earnings while investing in its growth initiatives.

Net income swung to $2.5 million in Q3 2026 from a net loss of $0.9 million (as adjusted) in the prior-year quarter, reflecting the combined impact of revenue growth and margin expansion. Adjusted EBITDA reached $8.8 million, up 71% from $5.2 million in Q3 2025, marking the company's 10th consecutive quarter of positive adjusted EBITDA — a streak that underscores the consistency of the turnaround.

Raised Guidance and Business Momentum

On the strength of the Q3 results, Arq raised the low end of its full-year 2026 adjusted EBITDA guidance to $19-20 million, from $17-20 million previously, while reiterating its revenue guidance of $120-$125 million. The tighter guidance range reflects management's increased confidence in the sustainability of the margin improvement and the outlook for the fourth quarter.

The Trailing Twelve Months ended September 30, 2026, saw the company achieve post-COVID record net sales of $91.0 million across its Chemicals operations and post-COVID record adjusted EBITDA of $2.9 million across continuing operations, providing additional evidence of the business trajectory.

Cash and Liquidity Position

Arq exited Q3 2026 with cash of $19.1 million, compared to $12.1 million at the end of Q2 2026, of which approximately $7.8 million was unrestricted. The improvement in the cash position reflects the company's positive EBITDA and cash generation from operations during the quarter.

The strengthening Balance Sheet provides Arq with increased flexibility to fund its growth initiatives, including investments in its granular activated carbon (GAC) production capabilities and advanced carbon materials. The company has been developing applications for its proprietary carbon products beyond the traditional environmental compliance market, targeting water purification, PFAS remediation, and sustainable materials applications.

Product Development and Customer Testing

Arq continued to advance its product development efforts during Q3 2026, completing initial customer testing programs for new applications. The company's proprietary carbon products, derived from its unique feedstock and Manufacturing process, have been undergoing evaluation by potential customers across multiple end markets. The results of these testing programs are expected to inform the company's commercialization timeline for its next-generation products.

The expansion beyond traditional PAC into higher-value applications represents the next phase of Arq's growth strategy, potentially diversifying its revenue streams and providing access to larger addressable markets. The PFAS remediation market, in particular, has been growing as regulatory requirements around per- and polyfluoroalkyl substances become more stringent.

The Upshot

Arq's Q3 2026 results represent a continuation of the financial improvement that has characterized the company's recent quarters. Record revenue, significant margin expansion, 10 consecutive quarters of positive EBITDA, and tightened full-year guidance all point to a business gaining traction. The development of next-generation carbon products and expansion into new applications could provide additional growth drivers beyond the current PAC business.