Exhibit 99.1
Date: November 2, 2005
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
FUEL-TECH N.V. REPORTS RECORD THIRD-QUARTER AND YEAR-TO-DATE
FINANCIAL PERFORMANCE
--QUARTERLY AND YEAR-TO-DATE REVENUES UP 33% AND 59%, RESPECTIVELY--
STAMFORD, CONN., NOV. 2, 2005 -- Fuel-Tech N.V. (Nasdaq: FTEK), a world
leader in advanced engineering solutions for the optimization of combustion
systems in utility and industrial applications, today reported results for the
quarter ended September 30, 2005.
Net sales for the third quarter increased 33% to $12.8 million, up $3.2
million from the comparable prior-year quarter. Net income totaled $1.0 million,
or $0.05 per diluted share, unchanged from a year ago.
Net sales for the nine months increased 59% to $36.7 million, up $13.6
million from the comparable year-earlier period. Net income for the nine months
totaled $5.0 million, or $0.22 per diluted share, compared with $0.2 million, or
$0.01 per diluted share, in the same year-ago period. Year-to-date sales and net
income represent milestone achievements, as both amounts exceed the Company's
historical best full-year performance.
Third-quarter net income reflects income tax expense of $914,000, the
majority of which is non-cash deferred tax expense. Year-to-date net income
reflects a net tax benefit of $191,000. This tax treatment is related to the
second-quarter 2005 recording of a $2.2 million non-cash income tax benefit
associated with the anticipated utilization of net operating loss carryforwards,
largely offset by non-cash deferred tax expense. Income tax expense was not
recorded during 2004 due to the existence of these net operating loss
carryforwards.
The increases in quarterly and year-to-date net sales are primarily due
to exceptionally strong performance in the air pollution control (APC) business,
which continues to benefit from surging orders since the second half of 2004.
Sales for the fuel treatment chemical business began to exhibit some
strengthening versus comparable year-earlier periods, reflecting the benefits of
new accounts and a third-quarter pick-up in oil-fired business due to
heat-related electricity demand. Limiting the FUEL CHEM(R) revenue gains were
the effects of four demonstration programs that have not yielded commercial
revenues during the first nine months of 2005, combined with continuing
rail-related issues with Powder River Basin coal deliveries.
"All in all, we had an exceptional quarter, which helped the Company
achieve record levels of sales and operating income," commented Steven C.
Argabright, President and Chief Operating Officer. "Our APC business continues
to experience very strong order flow and now enjoys a backlog of approximately
$30 million, reflecting $38 million in new business booked year-to-date, a new
record. FUEL CHEM revenues for the third quarter also set a record and we are
looking forward to strong product demand, as evidenced by a 62% increase in
sequential quarterly revenues. Also of note is the improved performance of our
foreign operation, as both the APC and FUEL CHEM businesses continue to attract
new customers outside the United States."
Mr. Argabright concluded, "Based on our strong third-quarter results
and projections for the balance of the year, we are now raising our 2005 revenue
outlook to $48 million to $50 million."
CONFERENCE CALL
As a reminder, Fuel-Tech N.V will host a conference call today at 9:30
AM ET to discuss the results. The call will be simultaneously broadcast over the
Internet at www.fueltechnv.com and can be accessed under the "Investors"
subheading on the homepage. The call can also be accessed by dialing
800.591.6923 (domestic) or 617.614.4907 (international) and using the passcode
"Fuel-Tech N.V." 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 "47491761". The replay will be available until November
23, 2005.
ABOUT FUEL-TECH N.V.
Fuel-Tech N.V. 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. The Company's nitrogen oxide (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
340 units worldwide.
New technologies that have grown out of the core NOx reduction business
form the basis of the FUEL CHEM(R) business. FUEL CHEM technology revolves
around the unique application of chemicals to improve the performance of
combustion units by controlling slagging, fouling, corrosion and opacity. The
Company's FUEL CHEM products are being applied to over 80 combustion units
burning a wide variety of fuels including coal, heavy oil, biomass, and
municipal waste. Both the NOx reduction and FUEL CHEM businesses rely heavily on
the Company's exceptional Computational Fluid Dynamics modeling skills, which
are enhanced by internally developed, high-end visualization software. 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.
FUEL-TECH N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share data)
September 30 December 31
2005 2004
--------------- ---------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 11,761 $ 6,531
Accounts receivable, net 9,717 7,358
Deferred income taxes 1,110 500
Prepaid expenses and other current assets 1,160 1,271
------------- ---------------
Total current assets 23,748 15,660
Equipment, net of accumulated depreciation of
$8,313 and $7,209, respectively 3,561 2,863
Goodwill 2,119 2,119
Other intangible assets, net of accumulated amortization
of $1,062 and $968, respectively 1,274 1,342
Deferred income taxes 897 1,144
Other assets 800 700
--------------- ---------------
Total assets $ 32,399 $ 23,828
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,115 $ 2,705
Accrued expenses 3,353 1,663
--------------- ---------------
Total current liabilities 7,468 4,368
Other liabilities 474 505
--------------- ---------------
Total liabilities 7,942 4,873
Shareholders' equity:
Common stock, par value $0.01 per share,
authorized 40,000,000 shares, 20,182,944
and 19,529,952 shares issued, respectively 202 195
Additional paid-in capital 89,484 88,600
Accumulated deficit (65,485) (70,458)
Accumulated other comprehensive (loss) income (26) 86
Nil coupon perpetual loan notes 282 532
--------------- ---------------
Total shareholders' equity 24,457 18,955
Total liabilities and shareholders' equity $ 32,399 $ 23,828
=============== ===============
FUEL-TECH N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands of U.S. dollars, except share data)
Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
------------------------------ -----------------------------
Net sales $ 12,821 $ 9,577 $ 36,652 $ 23,081
Costs and expenses:
Cost of sales 6,467 4,813 18,917 12,225
Selling, general and administrative 4,121 3,435 11,930 9,763
Research and development 253 322 913 895
------------ ------------ ------------ ------------
10,841 8,570 31,760 22,883
------------ ------------ ------------ ------------
Operating income 1,980 1,007 4,892 198
Other expense (18) (6) (110) (36)
------------ ------------ ------------ ------------
Income before taxes 1,962 1,001 4,782 162
Income tax (expense) benefit (914) - 191 -
------------ ------------ ------------ ------------
Net income $ 1,048 $ 1,001 $ 4,973 $ 162
============ ============ ============ ============
Net income per Common Share:
Basic $ 0.05 $ 0.05 $ 0.25 $ 0.01
============ ============ ============ ============
Diluted $ 0.05 $ 0.05 $ 0.22 $ 0.01
============ ============ ============ ============
Average number of Common Shares outstanding:
Basic 20,139,000 19,519,000 19,938,000 19,512,000
============ ============ ============ ============
Diluted 23,143,000 22,149,000 22,840,000 22,127,000
============ ============ ============ ============
FUEL-TECH N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of U.S. dollars)
Nine Months Ended
September 30
2005 2004
-------------------------------
OPERATING ACTIVITIES
Net cash provided by (used in)
operating activities $ 6,587 $ (611)
------------- --------------
INVESTING ACTIVITIES
Proceeds from sale of equipment - 6
Purchases of equipment and patents (1,884) (1,926)
-------------- --------------
Net cash used in investing activities (1,884) (1,920)
-------------- --------------
FINANCING ACTIVITIES
Exercise of stock options 639 21
------------- -------------
Net cash provided by
financing activities 639 21
------------- -------------
Effect of exchange rate fluctuations on cash (112) (21)
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,230 (2,531)
Cash and cash equivalents at beginning
of period 6,531 7,812
------------- -------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 11,761 $ 5,281
============= =============
FUEL-TECH N.V.
BUSINESS SEGMENT FINANCIAL DATA
(in thousands of U.S. dollars)
- ----------------------------------------------------------------------------------------------------------------------
Three months ended Nitrogen Oxide Fuel Treatment Other Total
September 30, 2005 Reduction Chemical
- ----------------------------------------------------------------------------------------------------------------------
Net sales from external customers $ 6,683 $ 6,138 $ - $ 12,821
- ----------------------------------------------------------------------------------------------------------------------
Cost of sales 3,304 3,113 50 6,467
- ----------------------------------------------------------------------------------------------------------------------
Gross margin 3,379 3,025 (50) 6,354
- ----------------------------------------------------------------------------------------------------------------------
Selling, general and - - 4,121 4,121
administrative
- ----------------------------------------------------------------------------------------------------------------------
Research and development - - 253 253
- ----------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 3,379 $ 3,025 $ (4,424) $ 1,980
- -------------------------------------=================================================================================
- ----------------------------------------------------------------------------------------------------------------------
Three months ended Nitrogen Oxide Fuel Treatment Other Total
September 30, 2004 Reduction Chemical
- ----------------------------------------------------------------------------------------------------------------------
Net sales from external customers $ 4,395 $ 5,178 $ 4 $ 9,577
- ----------------------------------------------------------------------------------------------------------------------
Cost of sales 2,485 2,238 90 4,813
- ----------------------------------------------------------------------------------------------------------------------
Gross margin 1,910 2,940 (86) 4,764
- ----------------------------------------------------------------------------------------------------------------------
Selling, general and administrative - - 3,435 3,435
- ----------------------------------------------------------------------------------------------------------------------
Research and development - - 322 322
- ----------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 1,910 $ 2,940 $ (3,843) $ 1,007
- -------------------------------------=================================================================================
- ----------------------------------------------------------------------------------------------------------------------
Nine months ended Nitrogen Oxide Fuel Treatment Other Total
September 30, 2005 Reduction Chemical
- ----------------------------------------------------------------------------------------------------------------------
Net sales from external customers $23,003 $13,644 $ 5 $ 36,652
- ----------------------------------------------------------------------------------------------------------------------
Cost of sales 11,620 7,069 228 18,917
- ----------------------------------------------------------------------------------------------------------------------
Gross margin 11,383 6,575 (223) 17,735
- ----------------------------------------------------------------------------------------------------------------------
Selling, general and administrative - - 11,930 11,930
- ----------------------------------------------------------------------------------------------------------------------
Research and development - - 913 913
- ----------------------------------------------------------------------------------------------------------------------
Operating income (loss) $11,383 $ 6,575 $(13,066) $ 4,892
- -------------------------------------=================================================================================
- ----------------------------------------------------------------------------------------------------------------------
Nine months ended Nitrogen Oxide Fuel Treatment Other Total
September 30, 2004 Reduction Chemical
- ----------------------------------------------------------------------------------------------------------------------
Net sales from external customers $10,549 $12,522 $ 10 $ 23,081
- ----------------------------------------------------------------------------------------------------------------------
Cost of sales 5,946 6,064 215 12,225
- ----------------------------------------------------------------------------------------------------------------------
Gross margin 4,603 6,458 (205) 10,856
- ----------------------------------------------------------------------------------------------------------------------
Selling, general and administrative - - 9,763 9,763
- ----------------------------------------------------------------------------------------------------------------------
Research and development - - 895 895
- ----------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 4,603 $ 6,458 $(10,863) $ 198
- -------------------------------------=================================================================================
Note: Fuel Tech is organized into three reportable segments, two that provide
advanced engineering solutions for the optimization of combustion systems in
utility and industrial applications, and one that markets and sells
visualization software. The segment that markets and sells visualization
software was discontinued effective March 1, 2005. The visualization software
segment does not meet the materiality test for disclosure and is aggregated in
"Other" above. In addition, "Other" also includes those profit and loss items
not allocated by Fuel Tech to each reportable segment.
FUEL-TECH N.V.
GEOGRAPHIC INFORMATION
(in thousands of U.S. dollars)
Three months ended September 30 Nine months ended September 30
------------------------------------------ ----------------------------------------
2005 2004 2005 2004
------------------ ------------------- ----------------- -------------------
Revenues:
United States $ 10,837 $8,807 $ 30,552 $ 19,736
Foreign 1,984 770 6,100 3,345
------------------ ------------------- ----------------- -------------------
$ 12,821 $9,577 $ 36,652 $ 23,081
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