Executive Summary

Q1 2024 delivered pricing-led improvement: revenue $21.7M (+4% YoY) with ASP up ~16% YoY and gross margin expanding to 37%, but the quarter remained loss-making (net loss $3.4M; Adj. EBITDA loss $1.1M) as a mild winter reduced volumes (-6% YoY). PFAS regulation and first GAC contract (5M lbs/yr) support the growth narrative .
Management raised 2024 capex to $60–$70M (from $55–$60M) for Red River/GAC due to higher steel/concrete needs; Red River commissioning remains on schedule for Q4 2024 with expected payback ≤3 years; first GAC deliveries targeted for Q1 2025 .
Versus prior quarters: Q4 2023 showed strong profitability (revenue $28.1M, 50% gross margin, $7.2M Adj. EBITDA, $3.3M net income) as pricing/mix and take‑or‑pay supported results; Q3 2023 marked the turn (30.6% gross margin; $0.9M Adj. EBITDA) .
Consensus context: S&P Global consensus was unavailable via our feed for Q1 2024; third-party data show EPS of -$0.09 missed by $0.02 and revenue of $21.7M missed by ~$1.36M, implying consensus of -$0.07 EPS and ~$23.1M revenue. Estimates may need to rise for PAC pricing/margins but reflect a measured GAC ramp .

What Went Well and What Went Wrong

What Went Well
- Pricing and mix: ASP +~16% YoY; gross margin expanded to 37% (more than double YoY), driven by higher pricing and cost management .
- Strategic milestones: Signed first GAC contract for ~5M lbs/yr at attractive pricing (multiple of PAC), validating GAC monetization ahead of Red River commissioning .
- Regulatory tailwinds: Final EPA PFAS drinking water rule strengthens structural demand for GAC and PAC solutions .
- Quote: “Our first quarter results evidence the clear momentum and improvements we are delivering across the business.” – CEO Bob Rasmus .
What Went Wrong
- Volume headwind: Volumes fell ~6% YoY due to a mild winter, limiting revenue growth despite pricing gains .
- Profitability still negative: Net loss ($3.4M) and Adj. EBITDA loss ($1.1M) persisted in Q1; GAC still pre-revenue and timing of winter power burn impacted PAC volumes .
- Capex increase: 2024 capex raised to $60–$70M (from $55–$60M) on higher steel/concrete requirements; timing/funding execution remains a watch item ahead of GAC ramp .

Financial Results

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($M)	$29.83	$28.10	$21.70
Gross Margin %	30.6%	50%	37%
Net Income ($M)	-$2.2	$3.3	-$3.4
Diluted EPS ($)	-0.07	0.14	-0.09
Adjusted EBITDA ($M)	$0.9	$7.2	-$1.1
Cash & Restricted Cash ($M, end of period)	$61.3 (9/30/23)	$54.2 (12/31/23)	$44.0 (3/31/24)

KPIs and operating drivers

ASP YoY change: +~16% in Q1 2024 .
Volume YoY change: -~6% in Q1 2024 (mild winter impact) .
GAC commercialization: First contract signed at ~5M lbs/yr with attractive pricing; deliveries targeted for Q1 2025 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Capex	FY 2024	$55–$60M	$60–$70M	Raised
Red River GAC commissioning	Q4 2024	Q4 2024 target	On target Q4 2024	Maintained
GAC first deliveries	Q1 2025	N/A	Commence Q1 2025	New detail
Red River Phase 1 payback	Multi‑year	N/A	≤ 3 years expected	New detail

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2023, Q4 2023)	Current Period (Q1 2024)	Trend
PAC pricing/margins	Q3’23: 30.6% gross margin; Adj. EBITDA turned positive; pricing actions underway . Q4’23: 50% gross margin; strong pricing/mix, take‑or‑pay .	ASP +~16% YoY; 37% gross margin; profitability pressured by lower volumes .	Positive pricing momentum; margin resilient despite volume headwind.
GAC expansion (Red River)	Q4’23: Commissioning targeted Q4 2024; capex $45–$50M for Phase 1 within 2024 plan .	On schedule Q4 2024; first deliveries Q1 2025; first 5M lbs/yr GAC contract signed .	Execution milestones advancing; commercial validation secured.
PFAS/regulatory tailwinds	Growing focus in late 2023; supportive backdrop .	EPA final PFAS rule issued; expected to drive stronger near/long-term demand .	Positive structural demand driver intensifies.
Capex/funding	Q4’23 plan: $55–$60M FY24 capex funded by cash, generation, potential prepayments/refi .	Capex raised to $60–$70M; funding mix reiterated (cash, generation, prepayments, term loan refi) .	Higher spend but funding plan intact.
Supply/macro (weather)	Q3–Q4’23 benefited from pricing and take‑or‑pay; demand stable .	Mild winter drove lower volumes (-6% YoY), offsetting some ASP/margin gains .	Weather volatility remains a near‑term risk.

Management Commentary

Strategic focus: “Our latest quarterly performance reflects continued top-line growth and improved margins, driven by higher pricing and cost management, despite the negative offsets of lower volumes caused by a mild winter.” – CEO Bob Rasmus .
GAC commercialization: Executed first GAC supply contract (~5M lbs/yr) at pricing set at a multiple of PAC; deliveries expected Q1 2025, reinforcing Red River economics (≤3-year payback) .
Funding/Capex: 2024 capex increased to $60–$70M on higher steel/concrete needs; funding via cash on hand, cash generation, cost reductions, potential customer prepayments, and planned term loan refinancing .

Q&A Highlights

Pricing durability: Management emphasized sustained pricing strength and mix improvements; Q1 ASP rose ~16% YoY despite lower volumes, with continued discipline on profitability over volume .
GAC ramp and contracts: Discussion centered on the first 5M‑lb/yr contract, attractive pricing vs PAC, and on‑time Red River commissioning with first deliveries targeted Q1 2025 .
Capex/funding clarity: Management addressed the capex increase drivers (steel/concrete) and reiterated the funding mix (cash, operations, customer prepayments, refi), aiming to maintain balance sheet flexibility .

Estimates Context

S&P Global consensus was unavailable via our feed for Q1 2024 (we attempted to pull S&P Global data but could not retrieve it). For reference, third‑party sources show the following:

Metric	Actual	Consensus	Surprise
Revenue ($M)	$21.7	~$23.1 (Seeking Alpha)	-$1.4M (Miss)
EPS ($)	-0.09	-0.07 (Seeking Alpha)	-$0.02 (Miss)

Note: S&P Global consensus was not available via our systems for this period; third‑party consensus figures are provided for directional context.

Key Takeaways for Investors

Pricing power remains intact: Fourth straight quarter of double‑digit YoY ASP growth underpinned a 20‑point YoY margin expansion; suggests resilient PAC pricing and improved contract quality despite volume variability .
GAC commercialization de‑risked: First 5M‑lb/yr contract at attractive pricing validates the product and supports returns on Red River; commissioning remains on track for Q4 2024 with first deliveries Q1 2025 and ≤3‑year payback .
Capex step‑up but funded: 2024 capex raised to $60–$70M; management plans to fund via cash, operations, customer prepayments, and refinancing—monitor execution and liquidity trajectory as spend accelerates .
Near‑term trading setup: Stock may trade on PFAS/GAC catalysts vs. seasonal volume swings (mild winter headwinds now in the base). Watch for contract flow updates and construction milestones to drive sentiment .
Estimate path: With S&P Global consensus unavailable here, third‑party data imply modest misses on revenue/EPS. Street likely reassesses PAC margin durability positively while modeling a phased GAC ramp and temporary capex drag .
Medium‑term thesis: Vertically integrated AC supplier leveraged to PFAS and water treatment demand; PAC turnaround supports base cash generation, with GAC adding higher‑value growth as Red River ramps .

Additional Relevant Press Releases (Q1 2024 window)

Q1 earnings press release (May 8, 2024): Full financial/operational update, GAC contract, PFAS rule impact, capex update .
Prior quarter baseline: Q4 2023 results press release (Mar 12, 2024) .

Cross-Reference Notes

Numbers reconcile between press release and call; key discrepancies were not noted. Non‑GAAP (Adj. EBITDA) reconciliations are in the press releases and include standard add‑backs; Q1 Adj. EBITDA loss was -$1.1M .
The capex change (to $60–$70M) is clearly disclosed with reasons (steel/concrete), and funding sources were reiterated (cash, cash generation, prepayments, refi) .
Seasonal and weather impacts (mild winter) explain the volume headwind and help understand the QoQ step down from Q4 into Q1 despite ASP/margin resilience .

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