Fuel Tech Reports 2024 First Quarter Financial Results
Fuel Tech, Inc. (NASDAQ: FTEK) reported Q1 2024 financial results, highlighting revenue declines, expected revenue growth, and positive prospects. Consolidated revenues decreased to $5.0 million, with a rise in gross margin to 40.9%. SG&A expenses increased slightly, while net income improved to $281,000. APC segment backlog was $6.2 million, and FUEL CHEM segment revenue declined. Adjusted EBITDA loss was $(1.5) million. Cash and investments stood at $32.1 million. Stockholders' equity was $44.0 million with no debt.
Consolidated gross margin increased to 40.9% in Q1 2024.
Revenues expected to increase in the second half of 2024.
Annualized revenue potential of $1.5 to $2.0 million at a new client.
Continued market acceptance of Dissolved Gas Infusion (DGI™) technology.
Strong financial position with $32.1 million in cash and investments and no long-term debt.
Consolidated revenues declined to $5.0 million in Q1 2024.
APC segment backlog decreased to $6.2 million.
FUEL CHEM segment revenue declined in Q1 2024.
Adjusted EBITDA loss of $(1.5) million in Q1 2024.
Insights
“Our revenues for the first quarter were impacted by customer-driven delays in executing new contracts at our APC business segment, while performance at FUEL CHEM® reflected warmer weather across the US that affected unit dispatch,” said Vincent J. Arnone, President and CEO. “We continue to expect that APC revenue will increase modestly in 2024 when compared to 2023 and that the bulk of our new award activity will occur in the second half of the year. Our results at FUEL CHEM are also expected to improve as we move through 2024, driven by increased unit dispatch as we approach the summer months and contributions from a new coal-fired unit that will demonstrate our chemical technology program later this month. The annualized revenue potential at this new client, if it becomes commercial, will be approximately
“We are also very encouraged by continuing market acceptance of our Dissolved Gas Infusion (DGI™) technology. We have an agreement in place to commence and complete a demonstration of DGI at a municipal wastewater site in the current second quarter. With respect to aquaculture, we are building on the successful deployment of DGI at a domestic shrimp farming facility in the US and are in discussions with that facility to incorporate DGI into its planned stacked raceway system. We are also in advanced discussions with a potential new aquaculture client in the US that is considering a demonstration of DGI.”
Mr. Arnone concluded, “We remain optimistic about our prospects and technology development initiatives. We remain supported in our efforts by a strong financial position, which included
Q1 2024 Consolidated Results Overview
Consolidated revenues for Q1 2024 declined to
Consolidated gross margin for Q1 2024 rose to
SG&A expenses increased slightly to
Interest income was flat at
Other income in Q1 2024 was
Net income in Q1 2024 was
Consolidated APC segment backlog at March 31, 2024 was
APC segment revenue decreased to
FUEL CHEM segment revenue declined to
Adjusted EBITDA loss was
Financial Condition
At March 31, 2024, cash and cash equivalents were
Conference Call
Management will host a conference call on Wednesday, May 8, 2024 at 10:00 am ET / 9:00 am CT to discuss the results and business activities. Interested parties may participate in the call by dialing:
- (877) 423-9820 (Domestic) or
- (201) 493-6749 (International)
The conference call will also be accessible via the Upcoming Events section of the Company’s web site at www.ftek.com. Following management’s opening remarks, there will be a question-and-answer session. Questions may be asked during the live call, or alternatively, you may e-mail questions in advance to dsullivan@equityny.com. For those who cannot listen to the live broadcast, an online replay will be available at www.ftek.com.
About Fuel Tech
Fuel Tech develops and commercializes state-of-the-art proprietary technologies for air pollution control, process optimization, water treatment, and advanced engineering services. These technologies enable customers to operate in a cost-effective and environmentally sustainable manner. Fuel Tech is a leader in nitrogen oxide (NOx) reduction and particulate control technologies and its solutions have been installed on over 1,300 utility, industrial and municipal units worldwide. The Company’s FUEL CHEM® technology improves the efficiency, reliability, fuel flexibility, boiler heat rate, and environmental status of combustion units by controlling slagging, fouling, corrosion and opacity. Water treatment technologies include DGI® Dissolved Gas Infusion Systems which utilize a patented channel injector to deliver supersaturated oxygen solutions and other gas-water combinations to target process applications or environmental issues. This infusion process has a variety of applications in the water and wastewater industries, including remediation, aeration, biological treatment and wastewater odor management. Many of Fuel Tech’s products and services rely heavily on the Company’s exceptional Computational Fluid Dynamics modeling capabilities, which are enhanced by internally developed, high-end visualization software. For more information, visit Fuel Tech’s web site at www.ftek.com.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and reflect Fuel Tech’s current expectations regarding future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. Fuel Tech has tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “plan,” “expect,” “estimate,” “intend,” “will,” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to Fuel Tech and are subject to various risks, uncertainties, and other factors, including, but not limited to, those discussed in Fuel Tech’s Annual Report on Form 10-K in Item 1A under the caption “Risk Factors,” and subsequent filings under the Securities Exchange Act of 1934, as amended, which could cause Fuel Tech’s actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Fuel Tech undertakes no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in Fuel Tech’s filings with the Securities and Exchange Commission.
FUEL TECH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share data) |
||||||||
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March 31, |
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December 31, |
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||
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2024 |
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|
2023 |
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ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,382 |
|
|
$ |
17,578 |
|
Short-term investments |
|
|
11,872 |
|
|
|
12,136 |
|
Accounts receivable, less current expected credit loss of |
|
|
7,104 |
|
|
|
6,729 |
|
Inventories, net |
|
|
537 |
|
|
|
439 |
|
Prepaid expenses and other current assets |
|
|
1,295 |
|
|
|
1,439 |
|
Total current assets |
|
|
32,190 |
|
|
|
38,321 |
|
Property and equipment, net of accumulated depreciation of |
|
|
4,572 |
|
|
|
4,539 |
|
Goodwill |
|
|
2,116 |
|
|
|
2,116 |
|
Other intangible assets, net of accumulated amortization of |
|
|
343 |
|
|
|
358 |
|
Right-of-use operating lease assets, net |
|
|
582 |
|
|
|
609 |
|
Long-term investments |
|
|
8,879 |
|
|
|
3,664 |
|
Other assets |
|
|
764 |
|
|
|
781 |
|
Total assets |
|
$ |
49,446 |
|
|
$ |
50,388 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,852 |
|
|
$ |
2,421 |
|
Accrued liabilities: |
|
|
|
|
|
|
|
|
Operating lease liabilities - current |
|
|
105 |
|
|
|
81 |
|
Employee compensation |
|
|
1,289 |
|
|
|
1,252 |
|
Other accrued liabilities |
|
|
1,284 |
|
|
|
1,934 |
|
Total current liabilities |
|
|
4,530 |
|
|
|
5,688 |
|
Operating lease liabilities - non-current |
|
|
512 |
|
|
|
533 |
|
Deferred income taxes, net |
|
|
172 |
|
|
|
172 |
|
Other liabilities |
|
|
276 |
|
|
|
281 |
|
Total liabilities |
|
|
5,490 |
|
|
|
6,674 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, |
|
|
313 |
|
|
|
313 |
|
Additional paid-in capital |
|
|
164,957 |
|
|
|
164,853 |
|
Accumulated deficit |
|
|
(117,248 |
) |
|
|
(117,529 |
) |
Accumulated other comprehensive loss |
|
|
(1,891 |
) |
|
|
(1,748 |
) |
Nil coupon perpetual loan notes |
|
|
76 |
|
|
|
76 |
|
Treasury stock, at cost |
|
|
(2,251 |
) |
|
|
(2,251 |
) |
Total stockholders’ equity |
|
|
43,956 |
|
|
|
43,714 |
|
Total liabilities and stockholders’ equity |
|
$ |
49,446 |
|
|
$ |
50,388 |
|
See notes to condensed consolidated financial statements. |
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FUEL TECH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share and per-share data) |
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Three Months Ended |
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|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Revenues |
|
$ |
4,957 |
|
|
$ |
7,287 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
2,928 |
|
|
|
4,482 |
|
Selling, general and administrative |
|
|
3,345 |
|
|
|
3,245 |
|
Research and development |
|
|
376 |
|
|
|
218 |
|
|
|
|
6,649 |
|
|
|
7,945 |
|
Operating loss |
|
|
(1,692 |
) |
|
|
(658 |
) |
Interest expense |
|
|
— |
|
|
|
(5 |
) |
Interest income |
|
|
311 |
|
|
|
339 |
|
Other income (expense), net |
|
|
1,673 |
|
|
|
(90 |
) |
Income (loss) before income taxes |
|
|
292 |
|
|
|
(414 |
) |
Income tax expense |
|
|
(11 |
) |
|
|
— |
|
Net income (loss) |
|
$ |
281 |
|
|
$ |
(414 |
) |
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic net income (loss) per common share |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
Diluted net income (loss) per common share |
|
$ |
0.01 |
|
|
$ |
(0.01 |
) |
Weighted-average number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
30,385,000 |
|
|
|
30,296,000 |
|
Diluted |
|
|
30,756,000 |
|
|
|
30,296,000 |
|
See notes to condensed consolidated financial statements. |
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FUEL TECH, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (in thousands) |
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|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net income (loss) |
|
$ |
281 |
|
|
$ |
(414 |
) |
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
(143 |
) |
|
|
86 |
|
Comprehensive income (loss) |
|
$ |
138 |
|
|
$ |
(328 |
) |
See notes to condensed consolidated financial statements. |
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FUEL TECH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) |
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|
Three Months Ended |
|
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|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating Activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
281 |
|
|
$ |
(414 |
) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
80 |
|
|
|
79 |
|
Amortization |
|
|
16 |
|
|
|
11 |
|
Non-cash interest income on held-to-maturity securities |
|
|
(9 |
) |
|
|
(95 |
) |
Stock-based compensation, net of forfeitures |
|
|
104 |
|
|
|
89 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,250 |
|
|
|
990 |
|
Employee retention credit receivable |
|
|
(1,677 |
) |
|
|
— |
|
Inventory |
|
|
(99 |
) |
|
|
(116 |
) |
Prepaid expenses, other current assets and other non-current assets |
|
|
151 |
|
|
|
51 |
|
Accounts payable |
|
|
(563 |
) |
|
|
934 |
|
Accrued liabilities and other non-current liabilities |
|
|
(609 |
) |
|
|
(519 |
) |
Net cash (used in) provided by operating activities |
|
|
(1,075 |
) |
|
|
1,010 |
|
Investing Activities |
|
|
|
|
|
|
|
|
Purchases of equipment and patents |
|
|
(114 |
) |
|
|
(30 |
) |
Purchases of debt securities |
|
|
(7,641 |
) |
|
|
(9,685 |
) |
Maturities of debt securities |
|
|
2,750 |
|
|
|
1,000 |
|
Net cash used in investing activities |
|
|
(5,005 |
) |
|
|
(8,715 |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
— |
|
|
|
— |
|
Effect of exchange rate fluctuations on cash |
|
|
(116 |
) |
|
|
75 |
|
Net decrease in cash and cash equivalents |
|
|
(6,196 |
) |
|
|
(7,630 |
) |
Cash and cash equivalents at beginning of period |
|
|
17,578 |
|
|
|
23,328 |
|
Cash and cash equivalents at end of period |
|
$ |
11,382 |
|
|
$ |
15,698 |
|
See notes to condensed consolidated financial statements. |
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Fuel Tech, Inc. Segment Data- Reporting Segments (Unaudited) (in thousands) |
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Information about reporting segment net sales and gross margin from operations is provided below: |
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|
|
Air Pollution |
|
|
FUEL CHEM |
|
|
|
|
|
|
|
|
|
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Three months ended March 31, 2024 |
|
Control Segment |
|
|
Segment |
|
|
Other |
|
|
Total |
|
||||
Revenues from external customers |
|
$ |
2,318 |
|
|
$ |
2,639 |
|
|
$ |
— |
|
|
$ |
4,957 |
|
Cost of sales |
|
|
(1,428 |
) |
|
|
(1,500 |
) |
|
|
— |
|
|
|
(2,928 |
) |
Gross margin |
|
|
890 |
|
|
|
1,139 |
|
|
|
— |
|
|
|
2,029 |
|
Selling, general and administrative |
|
|
— |
|
|
|
— |
|
|
|
(3,345 |
) |
|
|
(3,345 |
) |
Research and development |
|
|
— |
|
|
|
— |
|
|
|
(376 |
) |
|
|
(376 |
) |
Operating income (loss) from operations |
|
$ |
890 |
|
|
$ |
1,139 |
|
|
$ |
(3,721 |
) |
|
$ |
(1,692 |
) |
|
|
Air Pollution |
|
|
FUEL CHEM |
|
|
|
|
|
|
|
|
|
||
Three months ended March 31, 2023 |
|
Control Segment |
|
|
Segment |
|
|
Other |
|
|
Total |
|
||||
Revenues from external customers |
|
$ |
3,559 |
|
|
$ |
3,728 |
|
|
$ |
— |
|
|
$ |
7,287 |
|
Cost of sales |
|
|
(2,594 |
) |
|
|
(1,888 |
) |
|
|
— |
|
|
|
(4,482 |
) |
Gross margin |
|
|
965 |
|
|
|
1,840 |
|
|
|
— |
|
|
|
2,805 |
|
Selling, general and administrative |
|
|
— |
|
|
|
— |
|
|
|
(3,245 |
) |
|
|
(3,245 |
) |
Research and development |
|
|
— |
|
|
|
— |
|
|
|
(218 |
) |
|
|
(218 |
) |
Operating income (loss) from operations |
|
$ |
965 |
|
|
$ |
1,840 |
|
|
$ |
(3,463 |
) |
|
$ |
(658 |
) |
| Fuel Tech, Inc.
Geographic Segment Financial Data (Unaudited) (in thousands of dollars) |
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Information concerning our operations by geographic area is provided below. Revenues are attributed to countries based on the location of the end-user. Assets are those directly associated with operations of the geographic area. |
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|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Revenues: |
|
|
|
|
|
|
|
|
|
|
$ |
3,595 |
|
|
$ |
5,981 |
|
Foreign |
|
|
1,362 |
|
|
|
1,306 |
|
|
|
$ |
4,957 |
|
|
$ |
7,287 |
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Assets: |
|
|
|
|
|
|
|
|
|
|
$ |
45,744 |
|
|
$ |
46,487 |
|
Foreign |
|
|
3,702 |
|
|
|
3,901 |
|
|
|
$ |
49,446 |
|
|
$ |
50,388 |
|
FUEL TECH, INC. RECONCILIATION OF GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (Unaudited) (in thousands) |
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|
|
Three Months Ended
|
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net Income (loss) |
|
$ |
281 |
|
|
$ |
(414 |
) |
Interest (income) expense, net |
|
|
(311 |
) |
|
|
(334 |
) |
Income tax expense |
|
|
11 |
|
|
|
- |
|
Depreciation expense |
|
|
80 |
|
|
|
79 |
|
Amortization expense |
|
|
16 |
|
|
|
11 |
|
EBITDA |
|
|
77 |
|
|
|
(658 |
) |
Stock compensation expense |
|
|
104 |
|
|
|
89 |
|
Gain on employee retention credit |
|
|
(1677 |
) |
|
|
- |
|
ADJUSTED EBITDA |
|
$ |
(1,496 |
) |
|
$ |
(569 |
) |
Adjusted EBITDA
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles in
Adjusted EBITDA is provided to enhance investors' overall understanding of the Company's current financial performance and ability to generate cash flow, which we believe is a meaningful measure for our investor and analyst communities. In many cases non-GAAP financial measures are utilized by these individuals to evaluate Company performance and ultimately determine a reasonable valuation for our common stock. A reconciliation of Adjusted EBITDA to the nearest GAAP measure of net income (loss) has been included in the above financial table.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507292864/en/
Vince Arnone
President and CEO
(630) 845-4500
Devin Sullivan
Managing Director
The Equity Group Inc.
dsullivan@equityny.com
Source: Fuel Tech, Inc.
FAQ
What were Fuel Tech's consolidated revenues in Q1 2024?
Fuel Tech's consolidated revenues in Q1 2024 were $5.0 million.
What was the gross margin in Q1 2024?
The gross margin in Q1 2024 rose to 40.9%.
What was the net income in Q1 2024?
The net income in Q1 2024 was $281,000.
What is Fuel Tech's current cash position?
Fuel Tech had $32.1 million in cash and investments as of March 31, 2024.
What is the stock symbol for Fuel Tech?
The stock symbol for Fuel Tech is FTEK.
