At the same time, European regulatory changes are driving higher demand. And of course, we continue at pace with customer engagement for our new GAC products. All of these conversations corroborate our confidence in the market. And we continue to expect to enter into contracts for our Red River facility well in advance of first production targeted for the fourth quarter of 2024. I’d also like to highlight some very encouraging advances our team is making in the development of new and alternative uses for our Arq Wetcake feedstock. While still early stage, we are increasingly confident in this product’s ability to serve as a blending feedstock in the manufacturing of environmentally responsible asphalt while providing environmental advantages, cost advantages and benefits related to limiting and reducing the effects of temperature swings.
This is a great example of our team’s relentless focus on innovation and ability to think of new and creative ways to maximize the applications and value of our existing portfolio products and capabilities. With our ongoing optimization of the PAC portfolio, we have driven significant improvement in gross margin and profitability. This now provides the bedrock for our business to grow rapidly, which we will do via the initial GAC expansion at Red River as well as potential further expansions. The market is very supportive and initial pricing discussions indicate that this will be a high return endeavor. With that, I will hand over to Kim to discuss the latest financials in greater detail.
Kim Hansen: Thanks, Bob. And thanks, everyone, for joining us today. Please turn to Slide 4. As Bob mentioned earlier, we delivered strong financial results during the fourth quarter with revenue growing 20% year-over-year, driven largely by increases in average selling prices, positive changes in product mix and enforcement of take-or-pay contracts. Our gross margin in the quarter was 49.8%, nearly double the 25.4% reported in the prior year period. As a result, we achieved the second consecutive quarter of positive adjusted EBITDA in the fourth quarter and our first quarter of positive net income since Q4 of 2021. While our business does benefit from seasonal factors, our strong results clearly exhibit the improvements and momentum we’re experiencing across the company.
Our quarterly revenue of $28.1 million represented an increase of 20% year-over-year. On a full year basis, our revenue performance was impacted by lower natural gas prices, which negatively impacted demand from our power generation customers. Our fourth quarter saw significant growth in EBITDA and net income, proving the success we are achieving in prioritizing profitability over volume. Adjusted EBITDA improved to $7.2 million compared to a loss of $1.2 million in the prior year. Net income was $3.3 million compared to a net loss of $3.2 million in Q4 of 2022. Overall and on an annualized basis, our performance demonstrates our ability to operate our PAC business in a way that contributes positively to our economic position, while further enabling us to [execute] on high growth and high margin opportunities within our expanding GAC business.
Turning to the balance sheet. We ended the year with cash of $54.2 million with the change versus last year driven by ongoing strategic investments and expansion at Corbin and Red River. As we flagged last quarter, 2023 included a number of nonrecurring items related to the Arq transaction and severance payments that we are not forecasting going forward. As Bob noted earlier, we increased our expectation for CapEx this year, mainly associated with our investment in Red River. Our debt position remains low and we believe there is potential to expand and enhance this through a planned refinancing of our existing term loan with Community Fund, which we took on at the time of the original Arq acquisition. Given the strength of our asset base, we are confident in our ability to refinance and potentially expand this facility on enhanced terms as needed.
If we flip to Slide 5, you can see a clear improvement in financial performance resulting from our focus on optimizing our PAC portfolio. Our average selling price for the fourth quarter improved 18% year-over-year or 16% on an annualized basis. We continue to eliminate negative margin contracts as we focus on profitability over volumes and have now taken these loss making contracts down from roughly 24% of volumes in 2022 to 14% in 2023. And as of March 31st, we will have just one negative margin contract remaining, reflecting approximately 2% of forecasted 2024 volumes. With that, I will turn things back to Bob.
Bob Rasmus: Thanks, Kim. Before moving on, I’d like to take a moment to expand on Kim’s remarks, including those related to our balance sheet, cash position and long term performance. While we are proud of our fourth quarter results and clear momentum across our business, I want to make sure that we are taking a holistic and long term approach to how our leadership team is incentivized. As such, the decision was made not to pay any short term incentive compensation to members of the executive leadership team, including myself and reduce other payments. With that action, we have saved approximately $2 million in cash, which would have been paid out in the first quarter of this year. We will continue to make the decisions necessary to ensure alignment and enable our team to drive long term stakeholder value.
Switching gears and moving to Slide 7. I’d like to spend a moment to highlight our corporate rebrand, which we completed in February. This important milestone was achieved just one year after our transformational Arq acquisition and reflects the company’s evolution from a manufacturing business, primarily serving declining industries to an environmental technology company producing activated carbon primarily from bituminous coal waste with products which reduce or even reverse environmental liabilities like PFAS or forever chemicals. We are focused on providing differentiated solutions for faster growing markets. The strategic investments we’re making in our GAC expansion is just the first step in our ongoing transformation. With the new brand in place, we are now much better positioned to execute on our ambitions and have a brand and corporate identity that aligns with our corporate vision.