Reiterates 2018
Outlook of Higher Total Revenues, Profitable Operations, and
Positive Cash Flow
Q1 2018 Overview
- Revenues rose 50.6% to $12.8 million
from $8.5 million
- SG&A declined to $4.9 million from
$5.2 million
- Operating loss from continuing
operations narrowed to $184,000 from a loss of $1.8 million
- Net loss from continuing operations of
$191,000, or $0.01 per diluted share, compared to a net loss from
continuing operations of $1.8 million, or $0.08 per diluted
share
- EBITDA of $31,000 compared to an EBITDA
loss of $1.9 million
- At March 31, 2018:
- capital projects backlog was $19.7
million
- total cash and equivalents (including
restricted cash) of $12.2 million, or $0.50 per diluted share
- no long-term debt
Fuel Tech, Inc. (NASDAQ: FTEK), a world leader in
advanced engineering solutions for the optimization of combustion
systems and emissions control in utility and industrial
applications, today reported financial results for the first
quarter ended March 31, 2018 (“Q1 2018”).
“We are very pleased with our results for Q1 as they are in line
with our expectations for the beginning of 2018,” said Vincent J.
Arnone, Chairman, President, and CEO of Fuel Tech. “Significantly
higher revenues reflected the impact of our successful business
development in 2017 and early 2018, while lower selling, general
and administrative (SG&A) expenses stemmed from our previously
announced cost-containment initiatives over the past three years.
We expect to realize the full year benefit of this lower cost
profile in 2018.
“We remain optimistic about our performance for 2018, and
continue to pursue a solid pipeline of contract opportunities,
particularly in the US. We are excited about the long-term
potential associated with our previously announced exclusive
license agreement with NanO2 LLC (“NanO2”) to market and sell
NanO2’s dissolved gas technology. This represents a new business
vertical for Fuel Tech - environmental solutions focused on
water.”
2018 Outlook
The Company reiterates its forecast for continuing operational
improvement in 2018 when compared to 2017. This includes higher
total revenues, driven primarily our Air Pollution Control (“APC”)
business, profitable operations and positive cash flow generation,
due in large part by a lower cost structure.
Q1 2018 Results Overview
Consolidated revenues rose 50.6% to $12.8 million from $8.5
million in Q1 2017, reflecting the timing of project execution due
to the conversion of previously announced new orders during 2017
and early 2018.
Cost of sales rose to $7.8 million, or 60.7% of revenues, from
$4.8 million, or 56.2% of revenues, in Q1 2017, due primarily to
the conversion of previously announced new orders, project mix, and
certain product demonstration expenses.
Gross margin declined to 39.3% of revenues from 43.8% in Q1
2017, due to the revenue mix between APC and FUEL CHEM, as well as
certain product demonstration expenses.
SG&A expenses declined 4.5% to $4.9 million, or 38.5% of
revenues, from $5.2 million, or 60.7% of revenues, in Q1 2017,
driven primarily by the previously announced cost containment
initiatives.
Net loss from continuing operations was $191,000, or $0.01 per
diluted share, compared to a net loss from continuing operations of
$1.8 million, or $0.08 per diluted share, in Q1 2017.
Net loss for the quarter was $216,000, or $0.01 per diluted
share, as compared to a net loss of $2.5 million, or $0.11 per
share, in Q1 2017. Net loss in Q1 2017 included a loss from
discontinued operations of $730,000, or $0.03 per diluted share,
reflecting losses from the Company’s Fuel Conversion segment, the
operations of which were discontinued in 2017.
APC segment revenues rose by 114.5% to $8.6 million from $4.0
million in Q1 2017, driven by an improved pace of U.S. bookings
during 2017 as compared to recent historical levels. APC gross
margin was $3.0 million, or 34.8%, as compared to $1.5 million, or
37.5%, in Q1 2017, due to product line and geographical mix versus
the prior quarter.
FUEL CHEM segment revenues decreased to $4.2 million from $4.5
million in Q1 2017, with gross margin of 48.5% as compared to 49.5%
for the same period last year. We believe that full year FUEL CHEM
revenues in 2018 will trend similarly to 2017.
Research and development expenses for Q1 2018 and Q1 2017 were
$0.3 million, respectively, which supports our continued
development of new products.
EBITDA for Q1 2018 was $31,000 as compared to an EBITDA loss of
$1.9 million for Q1 2017.
At March 31, 2018, cash and cash equivalents were $12.2 million,
which included restricted cash of $6.5 million. Shareholders’
equity was $34.7 million, or $1.44 per share, and the Company had
zero long-term debt. Capital projects backlog was $19.7 million, as
compared to $22.1 million at December 31, 2017.
Conference Call
Management will host a conference call on Thursday, May 10, 2018
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 is a leading technology company engaged in the
worldwide development, commercialization and application of
state-of-the-art proprietary technologies for air pollution
control, process optimization, and advanced engineering services.
These technologies enable customers to produce both energy and
processed materials in a cost-effective and environmentally
sustainable manner.
The Company’s nitrogen oxide (NOx) reduction technologies
include advanced combustion modification techniques and
post-combustion NOx control approaches, including NOxOUT®, HERT™,
and Advanced SNCR systems, ASCR™ Advanced Selective Catalytic
Reduction systems, and I-NOx® Integrated NOx Reduction Systems,
which utilize various combinations of these systems, along UDI™
Urea Direct Injection system for SCR reagent supply, and the ULTRA®
process for safe ammonia generation. These technologies have
established Fuel Tech as a leader in NOx reduction, with
installations on over 900 units worldwide.
Fuel Tech’s technologies for particulate control include
Electrostatic Precipitator (ESP) products and services including
complete turnkey capability for ESP retrofits, with experience on
units up to 700 MW. Flue gas conditioning (FGC) systems include
treatment using sulfur trioxide (SO3) and ammonia (NH3) based
conditioning to improve the performance of ESPs by modifying the
properties of fly ash particles. Fuel Tech’s particulate control
technologies have been installed on more than 125 units
worldwide.
The Company’s FUEL CHEM® technology revolves around the unique
application of chemicals to improve the efficiency, reliability,
fuel flexibility, boiler heat rate, and environmental status of
combustion units by controlling slagging, fouling, corrosion,
opacity and improving boiler operations. The Company has experience
with this technology, in the form of a customizable FUEL CHEM
program, on over 110 units.
Fuel Tech also provides a range of services, including boiler
tuning and selective catalytic reduction (SCR) optimization
services. In addition, flow corrective devices and physical and
computational modeling services are available to optimize flue gas
distribution and mixing in both power plant and industrial
applications.
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. These capabilities, coupled with the
Company’s innovative technologies and multi-disciplined team
approach, enable Fuel Tech to provide practical solutions to some
of our customers’ most challenging problems. 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.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share
data)
March 31,2018
December 31,2017
ASSETS Current assets: Cash and cash equivalents $
5,667 $ 8,366 Restricted cash 1,520 1,020 Marketable securities 4 6
Accounts receivable, net of allowance for doubtful accounts of
$1,531 and $1,545, respectively 20,164 19,690 Inventories, net
1,026 945 Prepaid expenses and other current assets 3,548 3,592
Income taxes receivable 128 129 Total current assets
32,057 33,748 Property and equipment, net of accumulated
depreciation of $26,159 and $25,938, respectively 6,111 6,272
Goodwill 2,116 2,116 Other intangible assets, net of accumulated
amortization of $1,993 and $1,939, respectively 1,640 1,671
Restricted cash 5,000 5,000 Assets held for sale 485 485 Other
assets 1,221 1,192 Total assets $ 48,630 $
50,484
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable 9,430 9,065 Accrued liabilities:
Employee compensation 1,518 1,487 Income taxes payable 52 73 Other
accrued liabilities 2,554 5,098 Total current
liabilities 13,554 15,723 Other liabilities 400 420
Total liabilities 13,954 16,143 COMMITMENTS AND
CONTINGENCIES (Note 12) Shareholders’ equity: Common stock, $.01
par value, 40,000,000 shares authorized, 24,821,446 and 24,777,001
shares issued, and 24,167,679, and 24,132,910 shares outstanding,
respectively 248 248 Additional paid-in capital 138,701 138,760
Accumulated deficit (102,514 ) (102,503 ) Accumulated other
comprehensive loss (353 ) (768 ) Nil coupon perpetual loan notes 76
76 Treasury stock, at cost (1,482 ) (1,472 ) Total shareholders’
equity 34,676 34,341 Total liabilities and
shareholders’ equity $ 48,630 $ 50,484
FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per-share
data)
Three Months EndedMarch 31,
2018 2017
Revenues $ 12,791 $ 8,491
Costs and
expenses: Cost of sales 7,766 4,769 Selling, general and
administrative 4,921 5,154 Restructuring charge — 61 Research and
development 288 284 12,975 10,268
Operating loss from continuing operations (184 ) (1,777 )
Interest income 2 3 Other expense (8 ) (2 )
Loss from continuing
operations before income taxes (190 ) (1,776 ) Income tax
expense (1 ) —
Net loss from continuing operations
(191 ) (1,776 ) Loss from discontinued operations (net of income
tax benefit of $0 in 2018 and 2017) (25 ) (730 )
Net loss $
(216 ) $ (2,506 )
Net loss per common share: Basic
Continuing operations $ (0.01 ) $ (0.08 ) Discontinued operations $
— $ (0.03 )
Basic net loss per common share $ (0.01 )
$ (0.11 )
Diluted Continuing operations $ (0.01 ) $ (0.08 )
Discontinued operations $ — $ (0.03 )
Diluted net loss
per common share $ (0.01 ) $ (0.11 )
Weighted-average number
of common shares outstanding: Basic 24,146,000
23,472,000 Diluted 24,146,000 23,472,000
FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS)
(Unaudited)
(in thousands)
Three Months EndedMarch 31,
2018 2017 Net loss $ (216 ) $ (2,506 ) Other comprehensive
income: Foreign currency translation adjustments 416 116 Unrealized
gains (losses) from marketable securities, net of tax (1 ) 1
Total other comprehensive income 415 117
Comprehensive income (loss) $ 199 $ (2,389 )
FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months EndedMarch 31,
2018 2017
Operating Activities Net loss $ (216 ) $
(2,506 ) Loss from discontinued operations 25 730 Net
loss from continuing operations (191 ) (1,776 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation 195 405 Amortization 53 54 Loss on disposal of
equipment 15 10 Provision for doubtful accounts, net of recoveries
(62 ) — Stock-based compensation, net of forfeitures (59 ) (10 )
Changes in operating assets and liabilities: Accounts receivable 32
3,525 Inventories (68 ) (26 ) Prepaid expenses, other current
assets and other non-current assets 113 108 Accounts payable 186
(1,848 ) Accrued liabilities and other non-current liabilities
(2,750 ) (1,483 ) Net cash used in operating activities -
continuing operations (2,536 ) (1,041 ) Net cash used in operating
activities - discontinued operations (25 ) (579 ) Net cash used in
operating activities (2,561 ) (1,620 )
Investing Activities
Purchases of equipment and patents (62 ) (97 ) Proceeds from the
sale of equipment 2 — Net cash used in investing
activities (60 ) (97 )
Financing Activities Taxes paid on
behalf of equity award participants (11 ) (23 ) Net cash used in
financing activities (11 ) (23 ) Effect of exchange rate
fluctuations on cash 433 117
Net decrease in cash,
cash equivalents and restricted cash (2,199 ) (1,623 ) Cash,
cash equivalents, and restricted cash at beginning of period 14,386
17,846
Cash, cash equivalents and restricted cash
at end of period $ 12,187 $ 16,223
FUEL TECH, INC.
BUSINESS SEGMENT FINANCIAL DATA
(Unaudited)
(in thousands)
Three months ended March 31, 2018
Air PollutionControl Segment
FUEL CHEMSegment
Other Total Revenues from external customers $ 8,583 $ 4,208 $ — $
12,791 Cost of sales (5,597 ) (2,169 ) — (7,766 ) Gross
margin 2,986 2,039 — 5,025 Selling, general and administrative — —
(4,921 ) (4,921 ) Research and development — — (288 )
(288 ) Operating income (loss) from continuing operations $ 2,986
$ 2,039 $ (5,209 ) $ (184 ) Three
months ended March 31, 2017
Air PollutionControl Segment
FUEL CHEMSegment
Other Total Revenues from external customers $ 4,002 $ 4,489 $ — $
8,491 Cost of sales (2,500 ) (2,269 ) — (4,769 ) Gross
margin 1,502 2,220 — 3,722 Selling, general and administrative — —
(5,154 ) (5,154 ) Restructuring charge — (61 ) — (61 ) Research and
development — — (284 ) (284 ) Operating income (loss)
from continuing operations $ 1,502 $ 2,159 $ (5,438 )
$ (1,777 )
Note: Fuel Tech is an integrated company that segregates its
financial results into three reportable segments. The Air Pollution
Control technology segment includes technologies to reduce NOx
emissions in flue gas from boilers, incinerators, furnaces and
other stationary combustion sources. The FUEL CHEM®technology
segment, which uses chemical processes in combination with advanced
CFD and CKM boiler modeling, for the control of slagging, fouling,
corrosion, opacity and other sulfur trioxide-related issues in
furnaces and boilers through the addition of chemicals into the
furnace using TIFI®Targeted In-Furnace Injection™ technology. The
“Other” classification includes those profit and loss items not
allocated by Fuel Tech to each reportable segment.
FUEL TECH, INC.GEOGRAPHIC
INFORMATION(Unaudited)(in thousands)
Information concerning Fuel Tech’s operations by geographic area
is provided below. Revenues are attributed to countries based on
the location of the customer. Assets are those directly associated
with operations of the geographic area.
Three Months EndedMarch 31, 2018 2017 Revenues:
United States $ 10,242 $ 6,734 Foreign 2,549 1,757 $
12,791 $ 8,491
March 31,2018
December 31,2017 Assets: United States $ 29,699 $ 29,945 Foreign
18,931 20,539 $ 48,630 $ 50,484
FUEL
TECH, INC.
RECONCILIATION OF GAAP NET LOSS TO EBITDA
AND ADJUSTED EBITDA
(Unaudited)
(in thousands)
Three Months Ended March 31, 2018 2017 Net loss $
(216 ) $ (2,506 ) Interest income (2 ) (3 ) Income tax
expense 1 — Depreciation expense 195 405 Amortization expense 53
205 EBITDA 31 (1,899 ) Stock compensation expense (59
) (10 ) ADJUSTED EBITDA (28 ) (1,909 )
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 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/20180509006428/en/
Fuel Tech, Inc.Jim Pach, (630) 845-4500Principal Financial
OfficerorThe Equity Group Inc.Devin Sullivan, (212) 836-9608Senior
Vice President
Fuel Tech (NASDAQ:FTEK)
Historical Stock Chart
From Feb 2024 to Mar 2024
Fuel Tech (NASDAQ:FTEK)
Historical Stock Chart
From Mar 2023 to Mar 2024