Advanced Emissions Solutions(ADES) - 2024 Q4 - Annual Report

Revenue and Growth - Total revenue for the year ended December 31, 2024, was $108,959,000, representing a 10$99,183,000 in 2023[193]. - The increase in revenue was primarily driven by a favorable product mix contributing approximately $6.9 million and improved pricing adding about$4.9 million, partially offset by a $2.2 million decrease due to lower volumes sold[194]. Expenses and Costs - Operating expenses decreased by 8$45,195,000 in 2023 to $41,403,000 in 2024, with significant reductions in selling, general and administrative costs by 16$3,314,000 in 2023 to $4,050,000 in 2024, primarily due to increased payroll costs and product qualification testing[199]. - The gross margin for consumables, exclusive of depreciation and amortization, improved due to increased pricing, despite higher manufacturing costs[195]. Investments and Acquisitions - The company acquired 100$1,623,000 in 2023 to $127,000 in 2024[207]. - Earnings from equity method investments decreased by 92$1,623,000 in 2023 to $127,000 in 2024, primarily due to the wind-down of Tinuum Group and Tinuum Services[208]. Cash Flow and Liquidity - Cash and restricted cash decreased from$54.2 million in 2023 to $22.2 million in 2024, a decrease of$31.9 million[227]. - Cash flows from operating activities improved to $10.5 million in 2024 from a cash outflow of$16.7 million in 2023, driven by a decrease in net loss and a net increase in working capital[228]. - Cash flows used in investing activities increased significantly to $85.1 million in 2024 from$28.5 million in 2023, mainly due to capital expenditures for the Red River Plant expansion[229]. - Cash flows from financing activities increased by $19.8 million in 2024, primarily due to proceeds from a public offering totaling$26.7 million[230]. - The company expects sufficient liquidity to fund operations for the next 12 months based on current cash levels and borrowing availability[232]. Tax and Debt - The effective tax rate for 2024 was 3%, with a reported income tax benefit of $0.2 million[212]. - The loss on extinguishment of debt increased due to the write-off of deferred financing costs associated with the termination of the CFG Loan[210]. - As of December 31, 2024, the company had a valuation allowance of$101.6 million on deferred tax assets, up from $98.8 million in 2023[216]. Capital Expenditures and Projects - The company is targeting the completion of the Red River Plant expansion in Q1 2025, incurring substantial capital expenditures exceeding initial forecasts[233]. - Capital expenditures for 2025 will primarily focus on the Red River Project, contingent on environmental permit approvals and project progression[234]. Obligations and Liabilities - As of December 31, 2024, the company had outstanding surety bonds totaling$11.1 million, with restricted cash of $8.5 million held as collateral[235]. - Contractual obligations as of December 31, 2024, total$29.9 million, with $5.2 million due within one year[239]. - The company’s asset retirement obligation related to the Five Forks Mine is recorded at$4.5 million as of December 31, 2024[239]. - Outstanding borrowings under the Revolving Credit Facility were $13.8 million as of December 31, 2024[239]. Accounting and Financial Reporting - The company applies the acquisition method for business combinations, requiring significant estimates and assumptions regarding fair values[242]. - Reclamation costs related to asset retirement obligations are allocated to expense over the life of the related mine assets[247]. - The company recognizes deferred tax assets based on the likelihood of realization, considering future taxable income and tax-planning strategies[250]. - Recent accounting standards and their implications are discussed in the consolidated financial statements[251]. Company Changes - The company changed its name to Arq, Inc. in February 2024, with its common stock trading on the Nasdaq Global Market under the ticker symbol "ARQ"[180]. - The company anticipates using Arq Powder as a feedstock for high-quality GAC products by the end of Q1 2025, aiming for a lower carbon footprint compared to competitors[179].