Fuel Tech (FTEK) 8-K Fuel Tech Reports Third Quarter 2011 Results

Exhibit 99.1

CONTACT:	David S. Collins
	Chief Financial Officer
	(630) 845-4500

FOR IMMEDIATE RELEASE

Tracy H. Krumme

Vice President, Investor Relations

(203) 425-9830

FUEL TECH REPORTS THIRD QUARTER 2011 RESULTS

     WARRENVILLE, Ill., Nov. 7, 2011– 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 results for the three- and nine-month periods ended September 30, 2011.

     Revenues for the third quarter totaled $24.0 million, an increase of $3.7 million, or 19%, compared to $20.3 million in the prior-year period. Net income for the quarter was $2.7 million, or $0.11 per diluted share, compared to net income of $0.8 million, or $0.03 per diluted share in the prior year.

     Revenues for the nine months ended September 30, 2011 totaled $65.7 million, representing an increase of $8.9 million, or 16% from the comparable prior-year period amount of $56.8 million. Net income for the nine-month period was $4.4 million, or $0.18 per diluted share, compared with net income of $0.7 million in the same year-ago period. Adjusted EBITDA for the nine months ended September 30, 2011 totaled $11.6 million, an increase of $3.2 million, or 39% from the comparable prior-year period amount of $8.3 million.

     Domestic revenues for the nine months ended September 30, 2011 of $54.3 million increased $7.8 million, or 17% over the prior year, while foreign revenues of $11.4 million rose $1.2 million or 11% over prior year amounts. Net income for the three- and nine-month periods ended September 30, 2011 included discrete tax benefits of approximately $0.6 million, which increased diluted earnings per share by $0.03 in each respective period.

     The Air Pollution Control (APC) technology segment generated third quarter revenues of $12.2 million, up 19%, versus the prior year amount of $10.3 million. The increase reflects greater bookings for both domestic and foreign operations along with the conversion of prior quarter backlog into

-more-

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 2     

revenue. Gross margin for the APC segment was 38% in the third quarter, compared with 34% in the prior year. The increase reflects a shift in the overall mix of products yielding higher margins.

     The APC segment recorded revenues of $33.0 million in the nine-month period, an increase of $5.2 million, or 19% from the prior year amount of $27.8 million. Segment gross margin for the nine-month period stood at 44% versus 35% reported in the same prior year period.

     Third quarter revenues for the FUEL CHEM^® technology segment totaled $11.8 million, an increase of $1.8 million, or 18%, versus the prior year amount of $10.0 million. Current-quarter revenues include $11.0 million from coal-fired units, a 21% increase versus a year ago, and $0.8 million from non-coal fired units, a 17% decrease versus the year-earlier quarter. Third quarter segment gross margin was flat at 53% in both 2011 and 2010.

     Revenues for the FUEL CHEM segment for the nine-month period totaled $32.7 million, an increase of $3.7 million, or 13% versus the prior year amount of $29.0 million. Nine-month revenues for 2011 include approximately $1.3 million in non-recurring installation work for a specific new customer, while same period revenues for 2010 included a $2.0 million risk-share payment with no offsetting costs received in the first quarter. Nine-month revenues for the FUEL CHEM segment include $30.1 million from coal-fired units, a 14% increase versus a year ago, and $2.6 million from non-coal fired units, a 1% increase versus the year-earlier period. Segment gross margin decreased to 49% in the nine-month period from 52% in the comparable period in 2010. The higher gross margin in 2010 is attributable to the aforementioned risk-share payment. Excluding the risk share payment, our 2010 segment gross margin for the FUEL CHEM segment would have been 48%.

     Selling, general and administrative (SG&A) expenses totaled $7.7 million in the current quarter versus $7.8 million in the year-ago quarter. Research and development (R&D) expenses were $0.4 million versus $0.3 million in the same prior year period. SG&A expenses totaled $23.6 million in the nine-month period ended September 30, 2011 versus $23.3 million in the same year-ago period. R&D expenses were $1.1 million in the nine-month period, an increase of $0.5 million from the prior year amount of $0.6 million.

     During the third quarter of 2011, the Company announced APC contract awards with a value of $21.1 million. After accounting for the conversion of backlog to revenues during this period, the backlog of capital projects for the APC segment totaled $22.9 million as of September 30, 2011. Subsequent to September 30, 2011, the Company announced an additional $5.1 million in new pollution control orders, reflecting an increasing trend in this segment’s order activity.

-more-

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 3     

     During the three months ended September 30, 2011, 571,554 shares of common stock were repurchased for approximately $3.4 million under our previously announced share repurchase program. As of September 30, 2011, we have an additional $2.6 million remaining for share repurchases through December 31, 2012.

     Douglas G. Bailey, Chairman, President and Chief Executive Officer, commented, “We are pleased to report a solid quarter with strong revenue and operating income gains achieved in both the APC and FUEL CHEM segments. Record revenues for the third quarter and nine-month period were achieved, which is particularly noteworthy given the challenging economic environment.”

     Mr. Bailey continued, “On the APC front, interest in our pollution control technologies remains strong, both domestically and abroad. Quotation activity remains quite active, due in most part to the Cross-State Air Pollution Rule (CSAPR), which was issued by the EPA on July 6, 2011. Among other requirements, the CSAPR focuses on nitrogen oxide (NOx) emission reductions through additional air pollution control reductions from power plants beginning January 1, 2012, for annual NO_X and SO₂reductions, and May 1, 2012, for ozone season NO_X reductions. A second phase of more stringent emission reductions will take effect starting January 1, 2014. CSAPR has several key features, including the allocation of emission requirements to individual sources directly by EPA, and programs to facilitate trading of allowances between individual sources. CSAPR sets strict new state emissions caps to address the impact on downwind states, and will require individual units to meet specific emission limits.”

     Mr. Bailey added, “Where individual plants are facing allocation shortfalls, especially in states with tight emission limits, utility operators are turning to Fuel Tech to help them meet their requirements in a timely and cost-effective manner. Since the issuance of the CSAPR ruling, we have received more than twenty mapping and modeling orders, often the first step in a larger investment program, from existing and new domestic customers that are evaluating Selective Non-Catalytic Reduction (SNCR) technology as an option to comply with their NOx emission reduction requirements. Additionally, we received an award, from a major utility and an existing customer, for an SNCR project for three large combustion boiler units located in the South Central U.S. Given our level of discussions with other utility managers and the tight timeline for CSAPR compliance, we anticipate additional SNCR orders over the next several quarters.”

     Mr. Bailey continued, “China continues to be an active and growing market for our pollution control technologies. Thus far this year, China has accounted for $13 million, or 32%, of the $41 million in APC orders announced year-to-date. We continue to see strong interest from this market in

-more-

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 4     

our ULTRA™ product line, evidenced by three awards for six ULTRA systems announced during the third quarter. We are pleased to be satisfying this growing interest in our ULTRA technology as worldwide recognition of the need for safer delivery of ammonia reagent to NOx reduction equipment increases.”

     Mr. Bailey continued, “As we have consistently stated, we believe the NOx control market in China will increasingly emerge, the result of the country’s Twelfth Five-Year Plan that goes into effect this year. The requirements in the Policy align well with our portfolio of NOx reduction capabilities, which cover the full spectrum from combustion modifications to ASCR™ systems, and we anticipate receiving future orders as a result of this new Policy.”

     Mr. Bailey continued, “Our FUEL CHEM segment delivered strong quarterly and nine- month results. Despite the challenging environment, we are continuing to win new business. Just last week we were awarded an extension of a previously announced commercial order, from earlier this year, whereby our proprietary TIFI^® Targeted In-Furnace Injection™ technology will be installed on three additional large coal-fired boilers. Fuel flexibility continues to be a driver for this business segment as utilities are attracted to the compelling economic benefits of shifting to coals of lower price and quality from the Illinois and Powder River Basins.”

     Mr. Bailey concluded, “We continue to be encouraged about our business prospects and believe that we are well positioned to increase our market share in both the APC and FUEL CHEM segments. With respect to the balance of 2011, we reaffirm our outlook that revenues and profits should exceed last year’s results.”

Conference Call

As a reminder, Fuel Tech will host a conference call tomorrow, November 8, 2011, at 9:00 AM EDT todiscuss the results. The call will simultaneously be broadcast over the Internet atwww.ftek.comand can be accessed on the Home page under“Upcoming Events”.The call can also be accessed by dialing866-713-8310(domestic) or617-597-5308(international) and using the passcode “Fuel Tech.” A replay of the call will be available on the website and can be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and using the passcode “78979570.” The replay will be available through December 3, 2011.

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.

-more-

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 5     

     The Company’s nitrogen oxide (NOx) reduction technologies include advanced combustion modification techniques — such asLow NOx Burners andOver-Fire Air systems — and post-combustion NOx control approaches, includingNOxOUT^®and HERT™ SNCR systems as well as systems that incorporateASCR™ (Advanced Selective Catalytic Reduction),CASCADE™,ULTRA™ andNOxOUT-SCR^® processes. These technologies have established Fuel Tech as a leader in NOx reduction, with installations on over 640 units worldwide, where coal, fuel oil, natural gas, municipal waste, biomass and other fuels are utilized.

     The Company’sFUEL CHEM^® technology revolves around the unique application of chemicals to improve the efficiency, reliability, fuel flexibility and environmental status of combustion units by controlling slagging, fouling, corrosion, opacity and operational issues associated with sulfur trioxide, ammonium bisulfate, particulate matter (PM_2.5), carbon dioxide and NOx. The Company has experienced with this technology, in the form of a customizable FUEL CHEM program, on over 110 combustion units burning a wide variety of fuels including coal, heavy oil, biomass, and municipal waste.

     Fuel Tech also provides a range of combustion optimization services, including airflow testing, coal flow testing and boiler tuning, as well as services to help optimize selective catalytic reduction system performance, including catalyst management services and ammonia injection grid tuning. 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 atwww.ftek.com.

This press release may contain statements of a forward-looking nature regarding future events. These statements are only predictions and actual events may differ materially. Please refer to documents that Fuel Tech files from time to time with the Securities and Exchange Commission for a discussion of certain factors that could cause actual results to differ materially from those contained in the forward-looking statements.

-more-

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 6     

FUEL TECH, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

	September 30,			December 31,
	2011			2010
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	28,998		$	30,524
Marketable securities		53			—
Accounts receivable, net of allowance for doubtful accounts of $114 and $82, respectively		27,920			21,175
Inventories		857			807
Prepaid expenses and other current assets		1,549			1,861
Prepaid income taxes		740			—
Deferred income taxes		255			89
Total current assets		60,372			54,456
Property and equipment, net of accumulated depreciation of $18,086 and $15,767, respectively		13,590			14,384
Goodwill		21,051			21,051
Other intangible assets, net of accumulated amortization of $3,886 and $3,203, respectively		5,647			6,050
Deferred income taxes		4,108			5,000
Other assets		2,362			2,262
Total assets	$	107,130		$	103,203
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	$	2,343		$	2,269
Accounts payable		8,416			7,516
Accrued liabilities:
Employee compensation		2,741			2,863
Income taxes payable		—			1,857
Other accrued liabilities		4,899			3,306
Total current liabilities		18,399			17,811
Other liabilities		1,346			1,482
Total liabilities		19,745			19,293
Shareholders’ equity:
Common stock, $.01 par value, 40,000,000 shares authorized, 23,767,961 and 24,213,467 shares issued and outstanding, respectively		238			242
Additional paid-in capital		131,715			129,424
Accumulated deficit		(45,014	)		(46,075	)
Accumulated other comprehensive income		370			243
Nil coupon perpetual loan notes		76			76
Total shareholders’ equity		87,385			83,910
Total liabilities and shareholders’ equity	$	107,130		$	103,203

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 7     

FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per-share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Revenues	$	24,023		$	20,279		$	65,666		$	56,798
Costs and expenses:
Cost of sales		13,050			11,496			35,069			32,063
Selling, general and administrative		7,701			7,808			23,618			23,306
Gain on revaluation of ACT liability		—			(768	)		(758	)		(768	)
Research and development		358			264			1,075			575
		21,109			18,800			59,004			55,176
Operating income		2,914			1,479			6,662			1,622
Interest expense		(47	)		(33	)		(125	)		(110	)
Interest income		14			4			19			6
Other (expense) income		(57	)		89			(252	)		(169	)
Income before income taxes		2,824			1,539			6,304			1,349
Income tax expense		(169	)		(722	)		(1,880	)		(627	)
Net income	$	2,655		$	817		$	4,424		$	722
Net income per common share:
Basic	$	0.11		$	0.03		$	0.18		$	0.03
Diluted	$	0.11		$	0.03		$	0.18		$	0.03
Weighted-average number of common shares outstanding:
Basic		24,322,000			24,213,000			24,269,000			24,213,000
Diluted		24,850,000			24,381,000			24,881,000			24,401,000

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 8     

FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

	Nine Months Ended
	September 30,
	2011			2010
Operating Activities
Net income	$	4,424		$	722
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,251			2,440
Amortization		677			665
(Gain) loss on equipment disposals		(2	)		28
Gain on revaluation of ACT liability		(758	)		(768	)
Deferred income taxes		410			(1,299	)
Stock based compensation		2,197			3,769
Bad debt expense		32			2
Changes in operating assets and liabilities:
Accounts receivable		(6,502	)		(4,437	)
Inventories		(44	)		(451	)
Prepaid expenses, other current assets and other noncurrent assets		199			(376	)
Accounts payable		846			65
Accrued liabilities and other noncurrent liabilities		(666	)		4,368
Net cash provided by operating activities		3,064			4,728
Investing Activities
Decrease in restricted cash		—			200
Proceeds from the sale of equipment		2			—
Purchases of property, equipment and patents		(1,700	)		(1,305	)
Net cash (used in) investing activities		(1,698	)		(1,105	)
Financing Activities
Proceeds from exercise of stock options		336			10
Payments on short-term debt		—			(686	)
Payments to repurchase common stock		(3,367	)		—
Excess income tax benefits from exercise of stock options		74			—
Redemption of nil coupon loan note		—			(5	)
Net cash (used in) financing activities		(2,957	)		(681	)
Effect of exchange rate fluctuations on cash		65			(12	)
Net (decrease) increase in cash and cash equivalents		(1,526	)		2,930
Cash and cash equivalents at beginning of period		30,524			20,965
Cash and cash equivalents at end of period	$	28,998		$	23,895

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 9     

FUEL TECH, INC.
BUSINESS SEGMENT FINANCIAL DATA
(in thousands)

Three months ended	Air Pollution		FUEL CHEM
September 30, 2011	Control Segment		Segment		Other			Total
Revenues from external customers	$	12,223	$	11,800	$	—		$	24,023
Cost of sales		7,539		5,511		—			13,050
Gross margin		4,684		6,289		—			10,973
Selling, general and administrative		—		—		7,701			7,701
Research and development		—		—		358			358
Operating income (loss)	$	4,684	$	6,289	$	(8,059	)	$	2,914

Three months ended	Air Pollution		FUEL CHEM
September 30, 2010	Control Segment		Segment		Other			Total
Revenues from external customers	$	10,252	$	10,027	$	—		$	20,279
Cost of sales		6,735		4,761		—			11,496
Gross margin		3,517		5,266		—			8,783
Selling, general and administrative		—		—		7,808			7,808
(Gain) from revaluation of contingent performance obligation		—		—		(768	)		(768	)
Research and development		—		—		264			264
Operating income (loss)	$	3,517	$	5,266	$	(7,304	)	$	1,479

Nine months ended	Air Pollution		FUEL CHEM
September 30, 2011	Control Segment		Segment		Other			Total
Revenues from external customers	$	32,959	$	32,707	$	—		$	65,666
Cost of sales		18,338		16,731		—			35,069
Gross margin		14,621		15,976		—			30,597
Selling, general and administrative		—		—		23,618			23,618
(Gain) from revaluation of contingent performance obligation		—		—		(758	)		(758	)
Research and development		—		—		1,075			1,075
Operating income (loss)	$	14,621	$	15,976	$	(23,935	)	$	6,662

Nine months ended	Air Pollution		FUEL CHEM
September 30, 2010	Control Segment		Segment		Other			Total
Revenues from external customers	$	27,757	$	29,041	$	—		$	56,798
Cost of sales		18,039		14,024		—			32,063
Gross margin		9,718		15,017		—			24,735
Selling, general and administrative		—		—		23,306			23,306
(Gain) from revaluation of contingent performance obligation		—		—		(768	)		(768	)
Research and development		—		—		575			575
Operating income (loss)	$	9,718	$	15,017	$	(23,113	)	$	1,622

Note: Fuel Tech is an integrated company that segregates its financial results into two reportable segments, both providing advanced technology and engineering solutions for the optimization of combustion systems in utility and industrial applications. The “Other” classification includes those profit and loss items not allocated by Fuel Tech to each reportable segment.

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 10     

FUEL TECH, INC.
GEOGRAPHIC INFORMATION
(in thousands of dollars)

	Three months ended September 30				Nine months ended September 30
	2011		2010		2011		2010
Revenues:
United States	$	19,121	$	17,015	$	54,268	$	46,517
Foreign		4,902		3,264		11,398		10,281
	$	24,023	$	20,279	$	65,666	$	56,798

	September 30,		December 31,
	2011		2010
Assets:
United States	$	95,460	$	92,485
Foreign		11,670		10,718
	$	107,130	$	103,203

FUEL TECH, INC. REPORTS THIRD QUARTER 2011 RESULTS Page 11     

FUEL TECH, INC.
RECONCILIATION OF GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(in thousands of dollars)

	Nine Months Ended September 30
	2011		2010
Net income	$	4,424	$	722
Interest expense		125		110
Income tax expense		1,880		627
Depreciation expense		2,251		2,440
Amortization expense		677		665
EBITDA		9,357		4,564
Stock compensation expense		2,197		3,769
ADJUSTED EBITDA	$	11,554	$	8,333

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 before interest expense, income tax expense, depreciation expense, amortization expense and stock compensation expense. 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 has been included in the financial table above.