Fuel Tech, Inc. (NASDAQ: FTEK), a technology company
providing advanced engineering for the optimization of combustion
systems, emissions control, and water treatment in utility and
industrial applications, today reported financial results for the
fourth quarter (Q4) and full year ended December 31, 2023.
“We reported higher total revenues compared to full year 2022,
completed a successful trial of our Dissolved Gas Infusion (DGITM)
technology in an aquaculture setting, maintained tight expense
control, and ended the year in a strong financial position, with
$33.4 million in cash and investments, and no long-term debt,” said
Vincent J. Arnone, President and CEO.
“Our Air Pollution Control (APC) business performed well in the
2023 fourth quarter and full year, driven by approximately $8.3
million of new project awards announced during the year, with an
emphasis on our ULTRA, SCR, SNCR and FGC emissions control
solutions both domestically and abroad. Our APC backlog at December
31, 2023 was $7.5 million, up from $5.6 million at September 30,
2023. Although we do expect that APC revenue will increase modestly
in 2024 when compared to 2023, it is likely that the bulk of our
new award activity will occur in the second half of the year. As
expected, revenues at our FUEL CHEM® segment declined
year-over-year for both the fourth quarter and full year 2023, with
warmer weather across the US impacting unit dispatch; however,
segment gross margin was essentially unchanged and at historic
levels. Our base FUEL CHEM unit count remains intact as we enter
2024 and we are currently pursuing additional FUEL CHEM
opportunities which could provide incremental revenue contribution
in 2024.”
Mr. Arnone concluded, “We are very pleased with the trajectory
of our DGI business segment. In February we announced the
publication of a white paper that detailed the benefits of
deploying DGI for oxygen injection at a shrimp farm in the US and
we presented these results at Aquaculture America in San Antonio,
Texas. We have received a notable increase in inquiries regarding
our DGI technology from potential customers in multiple end markets
and are currently in negotiations with potential customers
regarding on-site demonstrations of DGI. We are targeting to enter
into our first commercial contract for DGI in 2024.”
Q4 2023 Consolidated Results
Overview
Consolidated revenues for Q4 2023 declined to $6.3 million from
$7.0 million in Q4 2022, with modest declines in both business
segments from the prior year.
Consolidated gross margin for Q4 2023 rose to 51.1% of revenues
from 42.8% of revenues in Q4 2022, due to a significant increase in
APC gross margin during the quarter driven by the mix of APC
projects and services executed during the quarter.
SG&A expenses increased to $3.7 million from $3.1 million in
Q4 2022, reflecting the timing of employee and employee-related
expenses.
Interest income improved to $0.3 million from $0.1 million in Q4
2022, reflecting an increase in capital invested and higher
interest rates on held-to-maturity debt securities and money market
funds.
Net loss in Q4 2023 was $(539,000), or $(0.02) per share,
compared to net loss of $(402,000), or $(0.01) per share, in Q4
2022.
Consolidated APC segment backlog at December 31, 2023 was $7.5
million compared to $5.6 million at September 30, 2023 and $8.2
million at December 31, 2022.
APC segment revenue decreased to $2.8 million from $2.9 million
in Q4 2022. APC gross margin rose to 55.6% from 35.4%, due
primarily to the mix of APC projects and services executed during
the quarter.
FUEL CHEM segment revenue declined to $3.6 million from $4.1
million in Q4 2022, due to a decline in electrical generation
demand for the units on which our FUEL CHEM program is installed.
Gross margin was unchanged at 48.0%.
Adjusted EBITDA loss was $(0.6) million in Q4 2023 compared to
Adjusted EBITDA loss of $(0.3) million in Q4 2022.
2023 Full Year Overview
Consolidated revenues for 2023 rose 1.0% to $27.1 million from
$26.9 million in 2022, reflecting the increase in APC revenue
partially offset by a decline in FUEL CHEM revenue.
Consolidated gross margin for full year 2023 was unchanged at
43% compared to 2022, reflecting an increase in APC gross margin
and a stable FUEL CHEM gross margin.
SG&A expenses for 2023 increased to $12.8 million, or 47.3%
of revenues, from $12.3 million, or 45.6% of revenues, in 2022,
reflecting an increase in employee related costs and other
expenses.
Interest income improved to $1.3 million from $0.2 million in
2022, reflecting an increase in capital invested and higher
interest rates on held-to-maturity debt securities and money market
funds.
Net loss for 2023 was $(1.5) million, or $(0.05) per share,
compared to net loss of $(1.4) million, or $(0.05) per share, in
2022.
Adjusted EBITDA loss was $(2.0) million in 2023 compared to
Adjusted EBITDA loss of $(0.9) million in 2022.
Financial Condition
At December 31, 2023, cash and cash equivalents were $17.6
million, short-term investments were $12.1 million, and long-term
investments totaled $3.7 million. Stockholders’ equity at December
31, 2023 was $43.7 million, or $1.44 per share, and the Company had
no debt.
Conference Call
Management will host a conference call on Tuesday, March 12,
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
(in thousands, except share and
per share data)
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
17,578
$
23,328
Short-term investments
12,136
2,981
Accounts receivable, less current expected
credit loss of $111 and $110, respectively
6,729
7,729
Inventories, net
439
392
Prepaid expenses and other current
assets
1,439
1,395
Total current assets
38,321
35,825
Property and equipment, net
4,539
4,435
Goodwill
2,116
2,116
Other intangible assets, net
358
397
Right-of-use operating lease assets
609
197
Long-term investments
3,664
6,360
Other assets
781
794
Total assets
$
50,388
$
50,124
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
2,421
$
2,710
Accrued liabilities:
Operating lease liabilities - current
81
125
Employee compensation
1,252
1,105
Other accrued liabilities
1,934
826
Total current liabilities
5,688
4,766
Operating lease liabilities -
non-current
533
66
Deferred income taxes
172
177
Other liabilities
281
274
Total liabilities
6,674
5,283
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000
shares authorized, 31,361,303 and 31,272,303 shares issued, and
30,385,297 and 30,296,297 shares outstanding in 2023 and 2022,
respectively
313
313
Additional paid-in capital
164,853
164,422
Accumulated deficit
(117,529
)
(115,991
)
Accumulated other comprehensive loss
(1,748
)
(1,728
)
Nil coupon perpetual loan notes
76
76
Treasury stock, at cost (Note 5)
(2,251
)
(2,251
)
Total stockholders’ equity
43,714
44,841
Total liabilities and stockholders’
equity
$
50,388
$
50,124
See notes to condensed
consolidated financial statements.
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except share and
per-share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Revenues
$
6,345
$
7,021
$
27,081
$
26,941
Costs and expenses:
Cost of sales
3,102
4,018
15,425
15,298
Selling, general and administrative
3,677
3,074
12,803
12,275
Research and development
367
179
1,511
895
7,146
7,271
29,739
28,468
Operating loss
(801
)
(250
)
(2,658
)
(1,527
)
Interest expense
(6
)
(4
)
(21
)
(17
)
Interest income
332
101
1,300
202
Other income (expense), net
5
(204
(90
)
(46
)
Loss before income taxes
(470
)
(357
)
(1,469
)
(1,388
)
Income tax expense
(69
)
(45
)
(69
)
(54
)
Net loss
$
(539
)
$
(402
)
$
(1,538
)
$
(1,442
)
Net loss per common share:
Basic net loss per common share
$
(0.02
)
$
(0.01
)
$
(0.05
)
$
(0.05
)
Diluted net loss per common
share
$
(0.02
)
$
(0.01
)
$
(0.05
)
$
(0.05
)
Weighted-average number of common
shares outstanding:
Basic
30,385,000
30,296,000
30,348,000
30,289,000
Diluted
30,385,000
30,296,000
30,348,000
30,289,000
See notes to condensed
consolidated financial statements.
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE LOSS
(in thousands)
For the years ended December
31,
2023
2022
Net loss
$
(1,538
)
$
(1,442
)
Other comprehensive loss:
Foreign currency translation
adjustments
(20
)
(124
)
Total other comprehensive loss
(20
)
(124
)
Comprehensive loss
$
(1,558
)
$
(1,566
)
See notes to condensed
consolidated financial statements.
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands)
For the years ended December
31,
2023
2022
OPERATING ACTIVITIES
Net loss
$
(1,538
)
$
(1,442
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation
281
352
Amortization
61
88
Loss on sale of equipment
10
—
Non-cash interest income on
held-to-maturity securities
(433
)
(5
)
Provision for credit losses, net of
recoveries
—
(106
)
Deferred income taxes
(5
)
38
Stock-based compensation, net of
forfeitures
389
224
Changes in operating assets and
liabilities:
Accounts receivable
1,039
(4,448
)
Inventories
(46
)
(45
)
Prepaid expenses, other current assets and
other non-current assets
(6
)
(314
)
Accounts payable
(295
)
1,159
Accrued liabilities and other non-current
liabilities
1,239
360
Net cash provided by (used in) operating
activities
696
(4,139
)
INVESTING ACTIVITIES
Purchases of equipment and patents
(418
)
(206
)
Purchases of debt securities
(14,026
)
(9,777
)
Maturities of debt securities
8,000
500
Net cash used in investing activities
(6,444
)
(9,483
)
FINANCING ACTIVITIES
Proceeds from exercise of stock
options
42
—
Taxes paid on behalf of equity award
participants
—
(17
)
Net cash provided by (used in) financing
activities
42
(17
)
Effect of exchange rate fluctuations on
cash
(44
)
(87
)
Net decrease in cash and cash
equivalents
(5,750
)
(13,726
)
Cash and cash equivalents at beginning of
period
23,328
37,054
Cash and cash equivalents at end of
period
$
17,578
$
23,328
Supplemental Cash Flow Information:
Cash paid for:
Cash income taxes paid, net
$
12
$
14
See notes to condensed
consolidated financial statements.
Fuel Tech, Inc.
Segment Data- Reporting
Segments
(in thousands)
Information about reporting
segment net sales and gross margin from operations is provided
below:
Three months ended
December 31, 2023
Air Pollution Control Segment
FUEL CHEM Segment
Other
Total
Revenues from external customers
$
2,791
$
3,554
$
—
$
6,345
Cost of sales
(1,255
)
(1,847
)
—
(3,102
)
Gross margin
1,536
1,707
—
3,243
Selling, general and administrative
—
—
(3,677
)
(3,677
)
Research and development
—
—
(367
)
(367
)
Operating income (loss) from continuing
operations
$
1,536
$
1,707
$
(4,044
)
$
(801
)
Three ended December
31, 2022
Air Pollution Control Segment
FUEL CHEM Segment
Other
Total
Revenues from external customers
$
2,927
$
4,094
$
—
$
7,021
Cost of sales
(1,892
)
(2,126
)
—
(4,018
)
Gross margin
1,035
1,968
—
3,003
Selling, general and administrative
—
—
(3,074
)
(3,074
)
Research and development
—
—
(179
)
(179
)
Operating income (loss) from continuing
operations
$
1,035
$
1,968
$
(3,253
)
$
(250
)
For the year ended
December 31, 2023
Air Pollution Control Segment
FUEL CHEM Segment
Other
Total
Revenues from external customers
$
13,483
$
13,598
$
—
$
27,081
Cost of sales
(8,410
)
(7,015
)
—
(15,425
)
Gross margin
5,073
6,583
—
11,656
Selling, general and administrative
—
—
(12,803
)
(12,803
)
Research and development
—
—
(1,511
)
(1,511
)
Operating income (loss) from continuing
operations
$
5,073
$
6,583
$
(14,314
)
$
(2,658
)
For the year ended
December 31, 2022
Air Pollution Control Segment
FUEL CHEM Segment
Other
Total
Revenues from external customers
$
10,597
$
16,344
$
—
$
26,941
Cost of sales
(6,924
)
(8,374
)
—
(15,298
)
Gross margin
3,673
7,970
—
11,643
Selling, general and administrative
—
—
(12,275
)
(12,275
)
Research and development
—
—
(895
)
(895
)
Operating income (loss) from continuing
operations
$
3,673
$
7,970
$
(13,170
)
$
(1,527
)
Fuel Tech, Inc.
Geographic Segment Financial
Data
(in thousands)
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.
For the years ended
December 31,
2023
2022
Revenues:
United States
$
21,062
$
20,311
Foreign
6,019
6,630
$
27,081
$
26,941
As of December
31,
2023
2022
Assets:
United States
$
46,487
$
47,007
Foreign
3,901
3,117
$
50,388
$
50,124
FUEL TECH, INC.
RECONCILIATION OF GAAP NET LOSS
TO EBITDA AND ADJUSTED EBITDA
(in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Net loss
$
(539
)
$
(402
)
$
(1,538
)
$
(1,442
)
Interest income, net
(326
)
(97
(1,279
)
(185
)
Income tax expense
69
45
69
54
Depreciation expense
34
85
281
352
Amortization expense
15
18
61
88
EBITDA
(747
)
(351
)
(2,406
)
(1,133
)
Stock compensation expense
101
88
389
224
Adjusted EBITDA
$
(646
)
$
(263
)
$
(2,017)
$
(909)
Adjusted EBITDA
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles in the United States (GAAP), the Company has provided an
Adjusted EBITDA disclosure as a measure of financial performance.
Adjusted EBITDA is defined as net income (loss) before interest
expense, income tax expense (benefit), depreciation expense,
amortization expense, stock compensation expense, and intangible
assets abandonment and building impairment. The Company's reference
to these non-GAAP measures should be considered in addition to
results prepared in accordance with GAAP standards, but are not a
substitute for, or superior to, GAAP results.
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/20240311523078/en/
Vince Arnone President and CEO (630) 845-4500
Devin Sullivan Managing Director The Equity Group Inc.
dsullivan@equityny.com
Fuel Tech (NASDAQ:FTEK)
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