Exhibit 99.1
Date: February 26, 2004
Contact: Tracy H. Krumme, Director, Investor Relations, Fuel-Tech N.V.,
(203) 425-9830
Vincent J. Arnone, Chief Financial Officer; Fuel-Tech N.V.,
(630) 845-4500
FOR IMMEDIATE RELEASE
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FUEL-TECH N.V. REPORTS FOURTH QUARTER AND
YEAR-END RESULTS
STAMFORD, Conn.- February 26, 2004 -- Fuel-Tech N.V., (Nasdaq: FTEK), a
world leader in advanced engineering solutions for the optimization of
combustion systems for utility and industrial customers, today reported results
for the fourth quarter and year ended December 31, 2003.
For the quarter, net sales were $7.6 million, compared to $11.4 million
in the fourth quarter of 2002. The net loss for the quarter was $280,000 or
($0.01) per diluted share, compared to net income of $1.3 million or $0.06 per
diluted share, in the same quarter a year ago.
Net sales for the year were $35.7 million, up 10% from $32.6 million in
2002. Net income for the full year was $1.1 million, or $0.05 per diluted share,
compared with $3.1 million, or $0.14 per diluted share in 2002.
Steven C. Argabright, President and Chief Operating Officer,
commented, "The shortfall in net income was due primarily to margin erosion on
air pollution control projects, as turnkey projects represented a greater
percentage of the product mix versus the prior year. These turnkey projects,
which include the installation scope, have higher contract values but lower
gross margins than contracts that include just our traditional scope.
Contributing to the reduction in earnings were higher SG&A costs, which were up
23% in the fourth quarter vs. last year, and up 14% in the twelve-month period
vs. last year. This increase was primarily attributable to the addition of sales
and marketing resources for the FUEL CHEM(R) business and to revenue-related
selling expenses. We believe that our FUEL CHEM infrastructure is now in place
to support future growth opportunities."
Mr. Argabright continued, "During the year, we saw significant growth
from our FUEL CHEM business, as revenues were up 43% in the fourth quarter from
last year and up 45% year over year. This was attributable to our increased
penetration of the Western coal-fired utility market, as well as an increase in
our more traditional oil-fired business.
Mr. Argabright continued, "We continue to be extremely excited about
the growth opportunities in our FUEL CHEM(R) business. We have identified
several large utilities that we believe are important in achieving critical
mass, both due to the leadership positions these utilities enjoy, as well as the
revenue opportunities available to provide our TIFI technology to multiple units
within their facilities. We are very pleased that within the last two months, we
have announced demonstrations at two of these major utilities. These two
demonstrations will be on the largest boilers that we have worked on to date.
Successful demonstrations at these major utilities should lead to increased
penetration of our technology, both within these utilities and at new customers.
We expect additional orders for demonstrations in the near future and look
forward to strong revenue growth from this business. As we have stated before,
we expect 2004 year-over-year growth in the FUEL CHEM business of approximately
75%."
Mr. Argabright concluded, "Air pollution control revenues for the year
were at the same level as the prior year, while revenues for the fourth quarter
were down 50% from the previous year. This shortfall in the fourth quarter is
due primarily to the reasons we have identified in the past, which include:
recent rulings and uncertainty regarding New Source Review, financial issues and
constraints at utility companies, mild summer and winter weather that lead to
lower power generation and lower emissions, and lower NOx allowance pricing in
2004 which provides utilities with a short-term alternative for meeting SIP Call
requirements. It is important to note that these revenues are not going away,
but are merely being postponed. As we have stated before, we expect the air
pollution control business to pick up significantly in the second half of this
year and be strong in 2005 and 2006."
Conference Call
As a reminder, Fuel-Tech N.V will be hosting a telephone conference
call at 10:00 AM EST on Thursday, February 26th, 2004, to discuss further its
fourth quarter and year-end results. This conference will simultaneously be
broadcast over the Internet at www.fueltechnv.com and can be accessed under the
subheading of "Investors" on the homepage.
About Fuel-Tech N.V.
Fuel-Tech N.V. is a leading technology company providing proprietary
advanced engineering solutions for the optimization of combustion systems for
utility and industrial customers. The Company's NOx reduction processes, which
include the NOxOUT(R), NOxOUT CASCADE(R), NOxOUT ULTRA(R), Rich Reagent
Injection (RRI) and NOxOUT SCR(R) technologies, have established Fuel-Tech N.V.
as a leader in post-combustion NOx control systems, which are installed on over
300 units worldwide.
New technologies that have grown out of the core NOx reduction business
form the basis of the FUEL CHEM(R) and ACUITIV(TM) businesses. FUEL CHEM
technology centers around the unique application of chemicals to improve the
performance of combustion application of chemicals to improve the performance of
combustion units while the Company's ACUITIV business includes high-end
visualization software that was developed as part of Fuel Tech's sophisticated
Computational Fluid Dynamics (CFD) modeling techniques utilized to predict the
behavior of industrial processes. The Company's FUEL CHEM products are being
applied to over 80 combustion units burning a variety of fuels. For more
information, visit Fuel-Tech N.V.'s web site at www.fueltechnv.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.
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(Tables to Follow)
FUEL-TECH N.V.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. Dollars, except share data)
December 31 December 31
2003 2002
--------------------------------
Assets
Current assets:
Cash and cash equivalents $ 7,812 $ 10,939
Accounts receivable, net of allowances for doubtful
accounts of $401 and $107, respectively 6,095 8,849
Inventories 312 420
Prepaid expenses and other current assets 795 744
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Total current assets 15,014 20,952
Equipment, net of accumulated depreciation of $6,165 and
$5,118, respectively 2,127 2,123
Goodwill, net of accumulated amortization of $924 2,119 2,119
Other intangible assets 1,274 -
Other assets 1,064 675
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Total assets $ 21,598 $ 25,869
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Liabilities and Shareholders' equity
Current liabilities:
Accounts payable $ 2,244 $ 5,065
Accrued liabilities:
Employee compensation 797 802
Other accrued liabilities 947 1,138
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Total current liabilities 3,988 7,005
Note payable - 1,800
Other liabilities 299 259
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Total liabilities 4,287 9,064
Shareholders' equity:
Common stock, $.01 par value, 40,000,000 shares authorized,
19,621,503 and 19,613,817 shares issued, respectively 196 196
Additional paid-in capital 89,698 90,315
Accumulated deficit (72,030) (73,150)
Accumulated other comprehensive income 48 10
Treasury stock (1,133) (1,098)
Nil coupon perpetual loan notes 532 532
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Total shareholders' equity 17,311 16,805
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Total liabilities and shareholders' equity $ 21,598 $ 25,869
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FUEL-TECH N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except share data)
Three Months Ended Twelve Months Ended
December 31 December 31
2003 2002 2003 2002
----------------------------- -----------------------------
Net sales $ 7,554 $ 11,352 $ 35,736 $ 32,627
Costs and expenses:
Cost of sales 4,377 7,057 21,789 18,232
Selling, general and administrative 3,094 2,507 11,659 10,232
Research and development 367 414 1,287 1,455
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Operating (loss) income (284) 1,374 1,001 2,708
Income from equity interest in affiliates - - - 196
Interest expense - (22) (25) (136)
Other income (expense), net 4 (115) 144 139
------------ ------------ ------------ ------------
(Loss) income before taxes (280) 1,237 1,120 2,907
Income tax benefit - 100 - 150
------------ ------------ ------------ ------------
Net (loss) income $ (280) $ 1,337 $ 1,120 $ 3,057
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Net (loss) income per common share:
Basic $ (.01) $ .07 $ .06 $ .16
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Diluted $ (.01) $ .06 $ .05 $ .14
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Average number of common shares outstanding:
Basic 19,686,000 19,503,000 19,637,000 19,350,000
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Diluted 19,686,000 21,870,000 22,412,000 22,437,000
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