Arq, Inc., together with its consolidated subsidiaries ("Arq" or the "Company", formerly known as Advanced Emissions Solutions, Inc.) is a Delaware corporation with its principal office located in Greenwood Village, Colorado, with manufacturing, mining and logistics operations located in Louisiana and coal recovery and manufacturing operations located in Kentucky.

The Company is an environmental technology company that is principally engaged in the sale of consumable air, water, and soil treatment solutions, primarily based on activated carbon ("AC"). The Company's proprietary AC products enable customers to reduce air, water, and soil contaminants, including mercury, per and polyfluoroalkyl substances ("PFAS") and other pollutants, to meet the challenges of existing and pending air quality and water regulations. The Company manufactures and sells AC and other chemicals used to capture and remove impurities, contaminants, and pollutants for the coal-fired power generation, industrial, water treatment, and water and soil remediation markets, which are collectively referred to as the advanced purification technologies ("APT") market.

The Company’s primary products are comprised of AC, which is produced from a variety of carbonaceous raw materials. The Company’s AC products include powdered activated carbon ("PAC") and granular activated carbon ("GAC").

The Company owns a lignite coal mine located in Saline, Louisiana (the "Five Forks Mine") that currently supplies the primary raw material for the manufacturing of the majority of the Company’s products at its facility in Coushatta, Louisiana (the "Red River Plant"). In addition, the Company leases land in Corbin, Kentucky, where it holds an idled manufacturing facility (the "Corbin Facility") capable of processing bituminous coal fines into a purified, microfine carbon powder (the "Corbin Wetcake") for high value applications.

The accompanying Condensed Consolidated Financial Statements of Arq are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and with Article 10 of Regulation S-X of the Securities and Exchange Commission. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

The unaudited Condensed Consolidated Financial Statements of Arq in this Quarterly Report on Form 10-Q ("Quarterly Report") are presented on a consolidated basis and include Arq and its wholly-owned subsidiaries. Also included within the unaudited Condensed Consolidated Financial Statements are the Company's unconsolidated equity investments, Tinuum Group, which is accounted for under the equity method of accounting, and Highview Enterprises Limited (the "Highview Investment"), which is accounted for in accordance with U.S. GAAP applicable to equity investments that do not qualify for the equity method of accounting.

Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts were eliminated in consolidation for all periods presented in this Quarterly Report.

In the opinion of management, these Condensed Consolidated Financial Statements include all normal and recurring adjustments considered necessary for a fair presentation of the results of operations, financial position, stockholders' equity and cash flows for the interim periods presented. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). Other than the change in accounting principle discussed below, significant accounting policies disclosed therein have not changed.

Effective April 1, 2026, the Company changed its method of accounting for costs incurred in connection with planned major maintenance activities (“turnaround” or "TAR") on its Red River Plant from the direct-expense method to the deferral method. Turnarounds are scheduled and required shutdowns of Red River Plant operations during which the Company performs planned major maintenance activities. Under the deferral method, qualifying costs, including maintenance materials, parts and direct labor directly attributable to the turnaround, are capitalized when incurred and amortized on a straight-line basis over the period until the next scheduled turnaround. Routine repair and maintenance costs are expensed as incurred.

The Company believes that the deferral method is preferable because it better matches qualifying turnaround costs with the periods benefited by the planned major maintenance activities and improves the comparability of the Company’s operating results between periods. Under the direct-expense method previously applied, qualifying turnaround costs were expensed

Basic loss per common share is computed using the weighted-average number of shares of the Company's common stock outstanding during the reporting period. Diluted loss per common share is computed in a manner consistent with that of loss per common share, while considering the impact of common stock equivalents from other potentially dilutive securities.

For the three and six months ended June 30, 2026 and June 30, 2025, potentially dilutive securities consist of unvested restricted stock awards ("RSAs"), stock options, and contingent performance stock units ("PSUs").


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2026		2025 As Adjusted (1)		2026		2025 As Adjusted (1)
Net loss	$	(733)	$	(2,369)	$	(1,870)	$	(2,402)



Basic weighted-average number of common shares outstanding	42,102		41,507		41,914		41,415
Add: dilutive effect of equity instruments	—		—		—		—


Diluted weighted-average common shares outstanding	42,102		41,507		41,914		41,415
Income (loss) per common share - basic	$	(0.02)	$	(0.06)	$	(0.04)	$	(0.06)
Income (loss) per common share - diluted	$	(0.02)	$	(0.06)	$	(0.04)	$	(0.06)

For the three and six months ended June 30, 2026, potentially dilutive securities of 2.0 million and 2.2 million shares of common stock, respectively, are outstanding but are not included in the calculation of diluted loss per common share because the effect would be anti-dilutive. For the three and six months ended June 30, 2025, potentially dilutive securities of 2.6 million and 2.5 million shares of common stock, respectively, are outstanding but are not included in the calculation of diluted loss per common share because the effect would be anti-dilutive.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. There have been no changes in the Company's critical accounting estimates from those that were disclosed in the 2025 Form 10-K. Actual results could differ from these estimates.

The timing of the sale of the Company's consumable products is dependent upon several factors. Power generation is weather dependent, with electricity and steam production varying in response to heating and cooling demands. As a result, the Company's revenue is generally higher in the first and third fiscal quarters during the colder and warmer months of the year. Abnormally high and low temperatures during the summer and winter months, respectively, may significantly increase coal consumption for electricity generation and cause increased impurities within various municipalities' water sources, and thus increase the demand for the Company's products. Additionally, power generating units routinely schedule maintenance outages in the spring and/or fall depending on the operation of their boilers. During such outages, which may range from one week to over a month, the Company's product sales may decrease.

Also, the Company's revenue and sales volumes are highly dependent upon the level of coal consumption at coal-fired power plants, which in turn is significantly affected by the prices of competing power generation sources, such as natural gas and renewables. During periods of low natural gas prices, natural gas provides a competitive alternative to coal-fired power

generation and therefore, coal consumption for power generation may be reduced, which in turn reduces the demand for the Company's products. In contrast, during periods of higher prices for competing power generation sources, coal consumption generally increases, which generally increases demand for the Company's products.

Demand for the Company's water purification products is driven largely from municipal water treatment facilities. Depending on weather conditions and other environmental factors, the summer months historically have the highest demand for the Company's water treatment products. One of the major uses for PAC is for the treatment of taste and odor impurities caused by organic contaminants and natural materials in water that predominantly degrade during the summer months. Additionally, the rainy season generally results in more demand from water municipalities due to increased contaminated water volume from rain run-off.

Certain balances have been reclassified from the prior year to conform to the current year presentation. Such reclassifications had no effect on the Company’s results of operations or financial position in any of the periods presented.

In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption of this new accounting standard did not have a material impact on the Company's Condensed Consolidated Financial Statements.