Fuel Tech, Inc. (NASDAQ: FTEK), a technology company
providing advanced engineering solutions for the optimization of
combustion systems, emissions control, and water treatment in
utility and industrial applications, today reported financial
results for the first quarter ended March 31, 2022.
“Revenues increased by 10% during the first quarter of 2022, our
second consecutive quarter of quarter-over-quarter revenue growth,”
said Vincent J. Arnone, President and CEO. “Selling, general and
administrative expenses declined slightly, our operating loss
narrowed, and we ended the first quarter with $35.2 million in
total cash and no debt. Our consolidated backlog at March 31, 2022
improved to $9.6 million from $9.1 million at December 31, 2021 and
included $5.3 million of previously announced domestic and
international Air Pollution Control awards. We continue to pursue a
global sales pipeline of $50-75 million addressing emission
protocols across a variety of fuel sources and are confident that
total revenues for 2022 will show a modest improvement from 2021.
We are also making substantive progress advancing towards the
commercialization of our Dissolved Gas Infusion (DGITM) technology
initiative to address the water pollution control and treatment
market.”
Q1 2022 Consolidated Results
Overview
Consolidated revenues for the first quarter ended March 31, 2022
(“Q1 2022”) rose to $5.5 million from $5.0 million in the first
quarter of 2021 (“Q1 2021”), reflecting a $1.3 million increase at
APC, driven by the timing of project execution and new APC orders,
partially offset by a $0.8 million decline in revenues at FUEL
CHEM, due to decreased demand for power generation.
Gross margin for Q1 2022 was 41.4% of revenues compared to 46.9%
of revenues in Q1 2021, reflecting lower gross profit margin at
both operating segments.
SG&A expenses were stable at $3.1 million for the 2022 and
2021 periods.
Operating loss narrowed to $(1.0) million from an operating loss
of $(1.2) million in Q1 2021, as higher revenues were offset by a
decline in gross margin.
Net loss in Q1 2022 was $(1.0) million, or $(0.03) per share,
compared to net income of $0.4 million, or $0.01 per share, in Q1
2021. Net income for Q1 2021 included $1.6 million in other income
reflecting full forgiveness of the loan proceeds from the Paycheck
Protection Program, established pursuant to the CARES Act.
Consolidated APC segment backlog at March 31, 2022 rose to $9.6
million from $9.1 million at December 31, 2021.
APC segment revenues rose to $2.2 million from $0.9 million in
Q1 2021. APC gross margin in Q1 2022 was 35.2% compared to 41.5% in
Q1 2021, due to a modification in product mix.
FUEL CHEM segment revenues were $3.3 million compared to $4.1
million in Q1 2021. Segment gross margin was 45.5% compared to
48.0% in Q1 2021, due to lower revenues and higher material,
freight, and labor costs.
Adjusted EBITDA loss was $(0.9) million in Q1 2022 compared to
Adjusted EBITDA loss of $(0.9) million in Q1 2021.
Financial Condition
At March 31, 2022, cash and cash equivalents were $34.2 million
and restricted cash was $1.1 million. Stockholders’ Equity at March
31, 2022 was $45.1 million, or $1.49 per share, and the Company had
no debt.
Conference Call
Management will host a conference call on Wednesday, May 11,
2022 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 in installed on over 1,200 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 nozzle 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)
March 31,
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
34,174
$
35,893
Restricted cash
1,066
891
Accounts receivable, net
4,795
3,259
Inventories, net
361
348
Prepaid expenses and other current
assets
1,060
1,074
Total current assets
41,456
41,465
Property and equipment, net of accumulated
depreciation of $18,325 and $18,243, respectively
4,554
4,609
Goodwill
2,116
2,116
Other intangible assets, net of
accumulated amortization of $355 and $341, respectively
448
448
Restricted cash
—
270
Right-of-use operating lease assets
210
242
Other assets
837
824
Total assets
$
49,621
$
49,974
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
2,240
$
1,561
Accrued liabilities:
Operating lease liabilities - current
106
113
Employee compensation
637
688
Other accrued liabilities
999
861
Total current liabilities
3,982
3,223
Operating lease liabilities -
non-current
98
122
Deferred income taxes, net
139
139
Other liabilities
269
290
Total liabilities
4,488
3,774
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000
shares authorized, 31,272,303 and 31,227,300 shares issued, and
30,296,297 and 30,263,791 shares outstanding, respectively
313
312
Additional paid-in capital
164,216
164,199
Accumulated deficit
(115,547
)
(114,549
)
Accumulated other comprehensive loss
(1,674
)
(1,604
)
Nil coupon perpetual loan notes
76
76
Treasury stock, at cost
(2,251
)
(2,234
)
Total stockholders’ equity
45,133
46,200
Total liabilities and stockholders’
equity
$
49,621
$
49,974
See notes to condensed consolidated financial
statements.
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(Unaudited)
(in thousands, except share and
per-share data)
Three Months Ended
March 31,
2022
2021
Revenues
$
5,535
$
5,033
Costs and expenses:
Cost of sales
3,245
2,675
Selling, general and administrative
3,054
3,100
Research and development
220
415
6,519
6,190
Operating loss
(984
)
(1,157
)
Interest expense
(5
)
(4
)
Interest income
1
1
Other (expense) income, net
(10
)
1,558
(Loss) income before income
taxes
(998
)
398
Income tax expense
—
—
Net (loss) income
$
(998
)
$
398
Net (loss) income per common
share:
Basic net (loss) income per common
share
$
(0.03
)
$
0.01
Diluted net (loss) income per common
share
$
(0.03
)
$
0.01
Weighted-average number of common
shares outstanding:
Basic
30,267,000
27,510,000
Diluted
30,267,000
27,737,000
See notes to condensed consolidated financial
statements.
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2022
2021
Net (loss) income
$
(998
)
$
398
Other comprehensive loss:
Foreign currency translation
adjustments
(70
)
(193
)
Comprehensive (loss) income
$
(1,068
)
$
205
See notes to condensed consolidated financial
statements.
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2022
2021
Operating Activities
Net (loss) income
$
(998
)
$
398
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation
94
168
Amortization
14
34
Loss on disposal of equipment
—
2
Provision for doubtful accounts, net of
recoveries
(25
)
47
Stock-based compensation, net of
forfeitures
18
20
Gain of forgiveness on Paycheck Protection
Plan Loan
—
(1,556
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,520
)
1,831
Inventories
(13
)
(59
)
Prepaid expenses, other current assets and
other non-current assets
(3
)
422
Accounts payable
682
(874
)
Accrued liabilities and other non-current
liabilities
5
(658
)
Net cash used in operating activities
(1,746
)
(225
)
Investing Activities
Purchases of equipment and patents
(53
)
(4
)
Net cash used in investing activities
(53
)
(4
)
Financing Activities
Proceeds from sale of common stock issued
in connection with private placement
—
25,812
Costs related to sale of common stock
issued in connection with private placement
—
(1,783
)
Taxes paid on behalf of equity award
participants
(17
)
(52
)
Net cash (used in) provided by financing
activities
(17
)
23,977
Effect of exchange rate fluctuations on
cash
2
(223
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(1,814
)
23,525
Cash, cash equivalents, and restricted
cash at beginning of period
37,054
12,606
Cash, cash equivalents and restricted
cash at end of period
$
35,240
$
36,131
See notes to condensed consolidated financial
statements.
FUEL TECH, INC.
BUSINESS SEGMENT FINANCIAL
DATA
(Unaudited)
(in thousands)
Air Pollution
FUEL CHEM
Three months ended March 31, 2022
Control Segment
Segment
Other
Total
Revenues from external customers
$
2,204
$
3,331
$
—
$
5,535
Cost of sales
(1,429
)
(1,816
)
—
(3,245
)
Gross margin
775
1,515
—
2,290
Selling, general and administrative
—
—
(3,054
)
(3,054
)
Research and development
—
—
(220
)
(220
)
Operating income (loss) from
operations
$
775
$
1,515
$
(3,274
)
$
(984
)
Air Pollution
FUEL CHEM
Three months ended March 31, 2021
Control Segment
Segment
Other
Total
Revenues from external customers
$
907
$
4,126
$
—
$
5,033
Cost of sales
(531
)
(2,144
)
—
(2,675
)
Gross margin
376
1,982
—
2,358
Selling, general and administrative
—
—
(3,100
)
(3,100
)
Research and development
—
—
(415
)
(415
)
Operating income (loss) from
operations
$
376
$
1,982
$
(3,515
)
$
(1,157
)
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 Ended
March 31,
2022
2021
Revenues:
United States
$
3,688
$
4,463
Foreign
1,847
570
$
5,535
$
5,033
March 31,
December 31,
2022
2021
Assets:
United States
$
46,142
$
46,271
Foreign
3,479
3,703
$
49,621
$
49,974
FUEL TECH, INC.
RECONCILIATION OF GAAP NET INCOME
(LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
(in thousands)
Three Months Ended March 31,
2022
2021
Net (Loss) Income
$
(998
)
$
398
Interest expense, net
4
3
Depreciation expense
94
168
Amortization expense
14
34
EBITDA
(886
)
603
Gain on forgiveness of Paycheck Protection
Plan loan
--
(1,566
)
Stock compensation expense
18
20
ADJUSTED EBITDA
$
(868
)
$
(943
)
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/20220510006328/en/
Vince Arnone President and CEO (630) 845-4500
Devin Sullivan Senior Vice President The Equity Group Inc. (212)
836-9608
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