The Powdered Activated Carbon (PAC) business just posted another quarter of surprising resilience. Gross margins expanded by 520 basis points year-over-year despite soft seasonality and the biennial plant turnaround at Red River, which was delivered on budget for $3.1 million and is now being amortized over two years. “We kept discipline on price, held volumes, and finally shed the GAC startup costs that have dogged us in prior periods,” management stated, framing the result as proof the core franchise can compound even when growth feels scarce.
The most provocative shift is the launch of “PAC for PFAS,” a specialty product aimed at utilities whose systems sit just outside EPA compliance. Instead of forcing them into expensive GAC vessels, the company is selling a drop-in powder that can push marginal sites over the regulatory line without major capital. “We’re giving utilities a low-capital pathway to meet the new rules,” one executive explained. Early feedback suggests utilities are receptive; if volumes and pricing stick, the product could begin contributing materially in 2027.
Beyond PFAS, the board has widened its strategic review beyond GAC to uncover operational levers that increase furnace uptime and compress unit costs across the entire portfolio. “We’re treating every hour of furnace time as a profit lever,” the CFO candidate, Shimon Steinmetz, noted, signaling a tighter coupling between operations and margin expansion plans.
Monetizing the Corbin asset is now in active play. Management is exploring licensing, joint ventures, or outright sale of its coal-waste purification technology to bolster the balance sheet. “The asphalt-blending component already cleared crack testing at Auburn University and is moving into technical validation,” they added, hinting that a non-core exit could free up capital without derailing the core PAC engine.
On guidance, the company reaffirmed 2026 revenue of $120–$125 million and adjusted EBITDA of $17–$20 million. The real signal, however, is the target to lift core PAC EBITDA by up to 50% through new products, customer mix shifts, and process streamlining. A potential $40–$60 million GAC conversion outlay is penciled in but explicitly tied to a disciplined return hurdle. “We will not pull the trigger unless the numbers justify themselves,” management stressed, keeping capex risk in check.
Cash ended the quarter lower due to the timing of the borrowing-base reset and payroll, but climbed back to $3.1 million by July 31. With no bituminous GAC sales or production expected in 2027 regardless of final investment decisions, the company is choosing prudence over growth-at-all-costs—a stance that may frustrate some investors but keeps leverage and execution risk in check.