Workflow
Arq(ARQ) - 2022 Q4 - Annual Report
ARQArq(ARQ)2023-03-08 22:07

Revenue and Sales Performance - Total revenues for 2022 were $102.987 million, a 3% increase from $100.294 million in 2021, driven primarily by a 20% increase in consumables sales to $102.987 million from $85.882 million[213]. - Consumables revenue increased by $11.8 million year over year, driven by higher volumes sold and improved pricing, offset by an unfavorable product mix impact of approximately $1.4 million[214]. - For 2023, a slight increase in Consumables revenue is expected, but a decrease in volumes is anticipated due to alternative energy prices affecting demand[217]. Cost and Expenses - Consumables cost of revenues increased by 23% to $80.465 million in 2022, up from $65.576 million in 2021[213]. - Total operating expenses increased by 16% to $34.6 million in 2022, with significant increases in legal and professional fees (51%) and general and administrative expenses (15%)[219]. - Payroll and benefits expenses decreased by 7% to $10.5 million, primarily due to a reduction in headcount[220]. - Consumables gross margin decreased due to higher raw material and transportation costs, with a negative impact of $0.8 million from Tinuum Group Royalties[215]. Financial Position and Performance - The company reported a net loss of $8.9 million compared to a net income of $60.4 million in 2021, reflecting a year-over-year change of $69.3 million[248]. - Adjusted EBITDA for 2022 was $1.3 million, a significant decrease from $84.9 million in 2021, indicating a decline in operational performance[248]. - Cash and restricted cash decreased from $88.8 million in 2021 to $76.4 million in 2022, a decline of $12.3 million[252]. - The company reported cash flows used in operating activities of $6.1 million in 2022, a decrease of $32.1 million compared to cash provided by operating activities of $26.0 million in 2021[253]. Investments and Acquisitions - The company completed the Arq Acquisition on February 1, 2023, for a total purchase consideration of $31.2 million, enhancing its product offerings in carbon technology[193]. - A PIPE Investment closed on February 1, 2023, for approximately $15.4 million at a purchase price of $4.00 per common share[196]. - The company closed a PIPE Investment for an aggregate purchase price of $15.4 million and entered into a Loan Agreement for $10.0 million, receiving $8.5 million in net proceeds[249]. Liabilities and Obligations - As of December 31, 2022, Marshall Mine, LLC had outstanding liabilities of approximately $4.9 million, expected to be discharged upon the sale of the mine[192]. - The company had outstanding surety bonds totaling $24.1 million related to reclamation obligations for the Five Forks Mine and Marshall Mine as of December 31, 2022[260]. - The company expects to close the sale of its equity interests in Marshall Mine, LLC in the first half of 2023, which will discharge all liabilities associated with reclamation for that mine[261]. Taxation and Valuation - The reported income tax expense for 2022 was $0.2 million, with an effective rate of (2)%, reflecting pretax losses and valuation allowance adjustments[232]. - As of December 31, 2022, the valuation allowance on deferred tax assets was $88.3 million, indicating a lack of expected taxable income to utilize these assets[236]. - The company had approximately $86.1 million in Section 45 tax credit carryforwards as of December 31, 2022, following the expiration of the tax credit program[239]. Accounting and Compliance - The company applies the acquisition method for both business and asset acquisitions, requiring significant estimates and assumptions regarding fair values at the acquisition date[269]. - The company reviews long-lived assets and intangibles for impairment at least annually, measuring impairment losses based on the excess of carrying amounts over estimated fair values[271]. - Recent accounting standards are referenced in the Consolidated Financial Statements, indicating ongoing compliance and updates[278].