FTEK - Earnings call 3 2023

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Operator

Greetings, and welcome to the Fuel Tech, Inc.

Third Quarter 2023 Financial Results Conference. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Devin Sullivan., Thank you, Devin.

You may begin.

Devin Sullivan

Thank you, Kat, and good morning, everyone. us Conference Fuel Call. joining XXXX Third for Results Financial you today Tech's for Quarter Thank Yesterday, copy of the our after close, results. we issued a www.ftek.com. is release available the website That at at company's .

Arnone, Our our investors. Chairman, and speakers analysts Albrecht, Financial will and remarks, Chief After company's will for open for be the Ellen President Chief call Executive today and Officer; prepared we Officer. Vince questions from

any expressions, are made our but statements has currently information on well estimate, not these risks, as various growth, Act expressed business XXXX update like condition, historical no Factors or and the of cash to this under to to cause turning in could are obligation discussed remind that XXXX of undertakes announce Vince, currently things exclusive materially Before forward-looking events, statements similar results the by intend, statements contained to herein publicly amended, opportunities words Private will defined prospects of in using performance by Item report flows, for business pursuant cautioned to other reflect to available believe, implied such tried Investors those Securities or as over uncertainties, and from operations, and such as as plan, risks involve factors to results that the growth, and actual of and those other Arnone, anticipate, subject operations, including, limited made expect, Tech management. Fuel amended, opportunities over forward-looking these uncertainties and by as to matters SEC. With Fuel of go prospects including which identify Act Tech said, to Exchange and on Tech's statements. Fuel and as the available assumptions call, differ and statements Reform I'd except President to XXE that CEO the company's are performance safe with future of are Tech Vince of flows, to Tech. information, call to for financial based Fuel and any or information reason. turn like Risk ahead. to of in XXXX developments These forward-looking future statements. company's in Exchange which the Chairman, Vince, detailed to, and words identifying forward-looking not or Form XA of are annual means under and current discussed factors, Tech's I'd harbor filings results filings Securities are Section the the circumstances Act statements Litigation Tech's everyone changed the please in subsequent in Securities reflect all those of cash provisions caption Fuel of but Fuel the regarding expectations forward-looking Fuel now XX-K

Vincent Arnone

Thank and you, everyone Devin. like joining to today. I'd the for on Good call thank morning, us

and welcomed growth preceding segment expected reduced of revenue double for maintenance a results following downtime our and operation CHEM, FUEL driven immediately segment Pollution unscheduled from third the this rebound from temporary double-digit continued APC Air reflected in up revenue which units. second for normalized XXXX, installed saw activity of program period the by as quarter on Control or last third quarter and year's XX% for revenue with Our our sales quarter an at

in our pleased total to trending on Dissolved on end an at our the levels, continued but technology, States. existing are cash our conservative earnings of XXXX slightly opportunities. SG&A debt. We products $XX markets market and the we long-term ended the no future regarding a million offered setting also and with to developing not have the or lies DGI, company of with investments on below contracts Western priority. believe DGI and new the opportunities following that remains completed APC product our only as DGI, commercializing cost capitalizing and expenses and new Gas technology in aquaculture on profile quarter by over a or our continuing from on-site We high maintain secured up that call testing Infusion in discussion development To the In deployment conference United QX very of and our pilot and end,

Aquaculture oxygen and oxygen and the this XXXX. DGI demonstration, which only study approximately results February per liter, the will XXX-day America but be not dissolved the [ pilot in results consistent with and delivery and ] atmospheric local Results dissolved high-quality the technology post-study taste between excellent of chefs, client an Over an delivered a Based The saturation. levels trimethylamines the of harvest. study on expectations controls absence of the for of is client, the reported many of in technology at consultation XXX% in within parameters, presented from X the consistently XX man cases, from in including on abstract tests Conference analysis demand. DGI the and milligrams them, an by exceeded published met

deploy We their development for at their in their location DGI with are negotiations both currently next plans. growth and larger-scale this our client to cycle system

DGI a with into involves in deploy channel or look late either such to process wastewater we other other addition as for to the as or of described this we to reactions early or biological applications high a chemical gas as markets industrial continuing In transfer best drive of or body technology partners demonstration, improvements potential is are treatment in end such year water that conversations XXXX. DGI efficient aquaculture. of this our as concentrations

stream process array returned gas processed and slipstream system and saturator, Tech's first, with of optimal technological is pressurized this infused a patented slip basin is distribution oxygen through using patent-pending residence X-step oxygen Fuel time. process a a to laden injection water for secondly, the and where Our DGI is

At deploy DGI of to present, we are into water. bodies utilizing oxygen

other of is oxygen precise residence We food for levels markets, as water believe petrochemical, for or be bubble beverage, time. applications that DGI process to capital wastewater and or capacity several without However, all and well chemical plant paper, extend applicable for such pulp and expansion benefits the DGI's can ozone. gases reduction we formation dissolved do control ability major as treatment believe include order DGI applicable including and outlay, and and across extended end aquaculture. that minimal

let's discussing a CHEM APC segments. our Now spend few please business minutes and FUEL

experiencing unscheduled outages. segment more second in business CHEM to the dispatch larger FUEL quarter downtime usage our and weather-related the associated extended scale driven units with Our maintenance benefited levels return of from normalized after demand of reduced customer by

the and partner of undertaken created levels we at X-year the be international in million reported pressure respect in the implementation to health will the the our of from FUEL the year's experienced the in very chemical level $X.X FUEL in at segment, favor opportunities result XXXX. technology believe without to follow oil, CHEM's in high this Mexico, at this is CHEM lower FUEL is that by to facility, revenues expect in quarter fuel of CHEM primary in environmental fourth the burning to levels being fourth at that to from X annual reduction CHEM the we additional executed reduced emissions when at provision performance for high the remediation utilization country. We in country, at are This a accounts surrounding we facilities due last program in program communities. Earlier that our to of primarily year year XXXX. With of quarter, full opportunity political necessary compared this to a expense year, which FUEL continuing of the expand sulfur the and our the we in building to extension do of currently program place our address have a

CFE, the several with units. application of in the state-owned currently is our at regarding partner utility, Our discussions technology

timing Rim. quarter, the continuing and For million SCR, and months units and last by XX% through XXXX. control of These segment, and of and solutions the APC Pacific primarily revenue during commencement the ULTRA SNCR the U.S., to by emissions work of natural XXXX rose on X project the announced at involved awards third from projects driven year's contracts in the gas Europe coal-fired first our $X.X

to third $X.X we during on week, million development, Based new expect of states Act. requirements The certain As end facilities. visibility industrial $X.X requirements to stayed to was of million a by the in plants minimum circuit power we projects the of year. Last of the neighbor awards. this we before sources our states. a Control earlier this good new additional this action Pollution to million awards Air and neighbor additional oxide of has And are requirements have obligate the nitrogen in previously tighten XX in Air that of covering the an secured the currently that we reduce from million nitrogen U.S. $X rule to oxides of discussed EPA, finalizing quarter. to by Agency's the quarter, According emission announced, issuance meet Cross-State updating announced designed project Clean $X rule Rule several Protection Environmental ports upwind awards been good emissions

sources weeks, effected downwind states the few petitioned Court Supreme past the to with in the Within rule. have proceed

oxide not For reduce have to their been final of timing be until will the sources required resolved. term, emission the the upwind and nitrogen requirements likely near rule levels

further utility over believe rule and as APC years, customers a several catalyst We ways will the to for federal serve reduce NOx this emissions. orders continue to new as new explore industrial that next

fact, beyond. budgeting upcoming to their we as In capital requests address it as important XXXX budgetary note part customers that several for proposals have received and compliance requirements prepare to responded to is for and requirements of the

expand to work and water. With as still the their Fuel DGI supplier support, the in to and going early Tech we discussion contributions and between CHEM, the please to team $XX.X hard that million business I and enable entirety previously recognized increase more the and contributions will the for any on our backlog quarter total X future. Through are XXXX. Based that months XXXX, in effective we case development material excludes clean will APC as ahead. global to thank first for as for we commentary shareholders evolve XXXX over we air and want operations noted $XX said, We for revenue of analysis becomes Ellen, significant have continued million, modestly earlier technologies million APC from our of our continue this from base expect again that stages in from presence as once continued exceeded the up commercialization outlook to at end, any already FUEL revenues activities year. In pursuing on further turn and their the dedication $XX available provide expectations and the rule the ongoing Ellen. our this closing, for of of a to regulation This revenues are XXXX. information our I'm go EPA pure

Ellen Albrecht

Vince, Thank you, and morning, good everyone.

are in of preceding revenue CHEM and reflecting with higher our the results, third pleased a second net We segment XXXX our our continued compared quarter strength income, FUEL quarter in immediately significant sheet. balance improvement to

demand by accounts. For ancillary revenues that business segment. the increased same revenues million to APC dispatch and the driven in the was product results result timing period prior recognition X-month from the for CHEM flat changes at million rose last quarter $XX.X in to certain last $X quarter, FUEL compared execution at generation consolidated for the of offset $XX.X revenues increase lower year-over-year decline by million year's year by improved was orders. segment of usage period the This million fuel to XX% electrical million quarter APC our the the and $X.X in third of driven in product in quarter period $X.X were Consolidated for revenue the and XXXX project from year. APC a

more XX% from doubled revenues of segment FUEL revenue the compared noted, from year the maintenance to margin as outages. Consolidated this by affected quarter than third revenues XXXX period. was prior As was gross CHEM when customer-driven for QX XX% of

gross to on FUEL in consolidated margins from XX% a a margin year's to revenues APC the impacted quarter Although CHEM in project lower basis. third rose segment change for XX% and due last mix, project

of and million right and of gross XX, $X.X domestically consisted at delivered Third $X.X segment foreign-delivered margin project end of levels backlog million, XXXX, backlog June was project to CHEM from as quarter at segment the $X.X FUEL million XX, sequentially million of XXXX. XX%. Consolidated million $X.X XXXX, of December XX, returned as backlog. APC around September Backlog of quarter $X.X XXXX for historical down

to the add noted, Vince -- the to recently the we have end backlog balance expect contract new contracts announced new year. of to As and awards prior this

due million We last $X to employee-related to our expense continue was timing across $X.X expenses. for an quarter expenses enterprise. year. maintain the decrease discipline of SG&A primarily from This decreased million third to certain

initiatives. Research third we year to and third $XX.X expenses to we was as increased quarter water support to technologies $XXX,XXX between year's strategically in DGI last continuing and For from This treatment the increase million development XXXX, of $XX.X current million in full initiatives. to support investments business testing $XXX,XXX in quarter. in SG&A our primarily expenses our invest expect the due resources range for and pilot

needed in of and our pursue for will continue support as technology our our We applications DGI to R&D invest to traditional markets. our commercialization of of commercial outside technologies efforts in actively

in just continue $X the We of income XXXX, $XXX,XXX interest and securities of to generated have funds. the favorable excess income same million advantage in period This $XXX,XXX year. last and $XX quarter of from third money X-month environment of interest XX, in nearly for market million XXXX and take in up the held-to-maturity of rate interest invested period, the September as debt

to for that income income unusual deployments was grow share continue third expect year in XXXX, will Adjusted year period. or income the million. Net of to $XXX,XXX EBITDA We an same compared $X.XX $XXX,XXX business $XXX,XXX per cash the barring ago. was share approximate the compared per of period any $X.X in the quarter to EBITDA net for prior or interest $XXX,XXX to adjusted $X.XX X

financial We continue strong position. a to maintain

continues equivalents or and of million. have share. outstanding $XX.X short September Working and million or per company share, we and the of debt. equity XXXX, million $X.XX was and $XX.X no cash long-term Stockholders' of to had per As capital cash million XX, was $X.XX investments $XX.X $XX.X

We advantage. Thank to your our time, are fund competitive and the over new initiatives, product maintain to I'll and our which growth call market you Vince. position, pursue and in ability ongoing we view confident financial opportunities back an our turn strong for important as

Vincent Arnone

line very for Operator, let's open much, now the Ellen. Thanks please questions.

Operator

Instructions] question our from Dayal Amit first is [Operator H.C. Wainwright.

Amit Dayal

pilot DGI, it to looks I respect like mean, working with well. Just the pretty is

You're seeing the results better than expected.

the results? commercializing stage think opportunities customer of through you bit move even, pilot. could we about that happen had balance you quickly efforts how little like quickly and coming you give, now you know, may -- the on But itself a type With expanded pilot now guys? from has how How you this seen who with be just can to these how other sheet that the that for dependent from revenues quickly should client this and with this these I have

Vincent Arnone

this for for to lease in No, revenues. Relative we be XXXX. end environment, doing which we're now using particular engaging Amit. premature this quickly question, we talk can with we or next your, But revenue step to your in about for systems demonstration rental will a more small information expecting question here pilot the via our next of out commentary, I before what probably Right. level hands, respect our success customer, some, DGI get call with material out publicly to do knowledge commercial take noted to sort as that we're to how going likely thanks is With next early them expand are going growth this start cycle, my in any be going it, their year. equipment about But in year, for it, that there, in and conferences perhaps more me have an to broad look marketplaces. or system the to on not call we're of this arrangement

So that balance we step. Yes, is going a to be next have sheet. our solid

it's pace impetus, using further how to little commercialization. up As each regarding providing But invest you you a if to us do pick in we know, with funds carefully bit the we've been our more invest DGI. regarding step, will,

in we're now. When adding call move going at everything which XXXX, commercial right demonstrations, in are say, going end some DGI talk We're potential of I'll enhancements, hand for resource That's as our demonstration. as into now are perhaps at looking we we're and XXXX, that's to look on DGI be and but regarding to evaluating systems to to have looking it March 'XX early be So that's or then, to some something a additional resource to right first looking we're human additional have sale inventory point enhancements. level about will we process development that of have to have revenue. between in have in expecting But time and suffice now frame, time. small be more to the we to obviously, that expecting at

Amit Dayal

in about and for of Just just are the the of do is for this XXXX, share, could little you? or how trading with your growth ask a right you of XX front period XXXX, feel that setup I sort year-over-year now sort you looking Vince, little sort the understand revenue bit you? have is, on may I mean it's to opportunities I color respect I'm well question, you positioned you mean is reason how trying what may period for ahead cash about any the not but in next where would maybe be to be for helpful. another per a visibility into And the that. below months of have or disconnect thinking early, investors roughly, be $X.XX stock the you

Vincent Arnone

Amit, and trading today value your share. our cash Visibility, providing where of in sitting and terms share premature. guidance regarding completely sentiment 'XX, understand, here vis-a-vis on per it we're I me is

increase be tell of disappointed XXXX year will revenue not in we targeting that another XXXX. if you CEO the I over be I company would as However, of would

that's the make So today. statement that I'll

a of what disconnect able I make we public more Fuel more are valuation the actually see and company information disconnect Tech change think, perspective, into move to more today. And is an in XXXX. aware the world as think hopefully, as that on I that think valuation, as pure both to positive value environmental we I provide -- from solutions to also people providing we'll the

Operator

comes Our Silk from next Marc question Silk Investment Advisories. at

Marc Silk

there Europe's X October an first the Barron's, article ever in of discussing So was tariff. edition carbon-based

"The So to that by manufacturers stay operating that dirtier in some highlights caused to manufacturing. the the countries imports in sure emissions of legislation write The with jurisdictions. Europe is emissions based European director make were, will competitive -- encourage carbon face of to reduce and on laws attacks now goal more rivals

in So into this years next X carbon could fees potentially countries. more international over flows result effect in the reconfigure new trade and going

being will until collected So have start XXXX." So few EU increase taxes XXXX to prices in I carbon a are gradually equal will they in and questions.

done So controlling revenues. expenses to you've a job relative great

like And something Fuel accelerate Tech. for this can really growth

you have around incurring increased provide Fuel expertise they the mitigate costs industries, cost-effective variable since to and and solutions revenue et Tech supply many So discuss sales the this to strategies So where for risk so the you a and start-up this agreement could can you to you companies instance, maybe relation technology only resellers world pursue in that would sales. allow can this lead partnerships opportunity? in you would could but cetera, participate sharing and without costs, the for be force to

Vincent Arnone

for actually me. on the little actually I everyone's for the done And appreciate it. And question. carbon on have thanks with tariff reading Marc, commentary benefit, that bit I myself. of share Marc European a the did

start the out. transitional sit here will, to to that. credit/tariffs, It's for the requirement It's put as actually XXXX. willing data monumental try on today. So undertaking was Marc, in phase place some in today. EU a you gather starting they To Evidently, to to put they're thanks in we point, if carbon your a looking what

are iron, -- it's polluters the highest know, planet. hydrogen. aluminum right the as the cement, and the the Marc, electricity Now steel, it, level now, call on you industries targeted -- It's

addressing with addressing many Fuel technology the via today are in of of that customers parts different markets end base these our via European addresses Tech the customers So world. or

we years footprints, to closely the many strong as companies are from how world steel reduce our steel, program sit relationship in here with worked to this over in going many, EU as industry and not is the So see their perspective, the the obviously. U.S., we we very But looking as with have tariff today. carbon need to good particularly develop, around

do. With work nitrogen industries, their industries the to them I some have there where reduce carbon continue other the facilities, by we'd footprint their work So to applying prospectively. on capitalize going oxide helping our have we're to those with as technologies think to of on opportunities we some to look

try So reduce have targeted a to to would specific it's these we industries any footprint. on been to looking out that industries are make and with dealing their carbon I call to opportunity what historically, will is we difficult this these to call attempts capitalize because continue

regulation are share and companies on As particular information in We'll conference happy on better more to we get as information well. understand on looking end, be next to and our more address this I'll it. how gather earnings call that

Marc Silk

of is the on that dependence because necessarily not reducing other case is one U.S. coal, for the countries. where that's Yes, thoughts their the

Vincent Arnone

Correct.

Marc Silk

-- this order is, change really I expenses. -- recurring So in an correct? taxes, that about this is the mean, to what's from a economical Is could one interesting that product your that requirement to regulatory avoid prospects for would i.e., basically

Vincent Arnone

and cap it that's system, type work. a how Under exactly would trade

Marc Silk

I an as this mean have takeover awareness company investment that on you that. trading is, think, make to below I pursue but it's But potential is interesting don't doesn't and your now positive right. cash. it the to just target, All sense obviously, brings comment

DGI to a for second. switch Let's

of So congratulations on pilot. the the success

in maybe discovered for this you low-hanging product? have industry any Decker So areas of in Mr. fruit this

Vincent Arnone

believe. Bill will we couple mind there low-hanging a has be of fruit, thoughts in where

has next that aquaculture of likely this a in been it's it in came as But next But areas is a But move those to bit across to other immediate that But of looking find is at DGI an is do time. working our the to well. be could we as of be that honest, not think to just perfectly demonstration of in targets diligently for first relationships be body demonstration be into area has indeed where those year. Bill to really that, something multiple but application. the can an point we're of quarter engage are one as his I industries we fit we little some mind I going out, for Bill going that as targeting, areas found To suited it's surprise to in a us. DGI. speak

Marc Silk

of deals. be aren't these i.e., it lucrative low-hanging on, shortens some just mixed those Or future type another reasonable also it to sense you Would So one with sales that fruit, of already makes because concentrate success or this, maybe XXX-day in showed the but areas it's going be of to experiments cycles? the time frame?

Vincent Arnone

want -- how need if have relative as to product diminish the it time. that concept would facility" business we past work has of because end I ] should do think of beginning through going to "their see done we'll Yes. practice DGI, [ I to at I over But just everyone going particularly assumption to markets, opposed specific comes Fuel it's to more not, at commercialization have, what making business, the Tech than of proof with the is immediately. as to repetitive still probably the call, demonstrations in

Marc Silk

you there's definitely would money revenues could is, valuation help potentially some your the open question have knowing year that coming in other The you door could that areas you have every general, like stock? in some the into doors recurring looked as probably, as just of the that

Vincent Arnone

or? specifically DGI to Referring

Marc Silk

business? of Just any part the

Vincent Arnone

the over on utilization really coal. the have we obviously, we've past with business, of heavy from decade -- We the focus fortunate to or enjoy reducing so unfortunately, had has recurring the been diminished that our revenue Yes. that Chemtech

services can obviously looking it higher trying margin are whereby recurring hand revenues platform, to we are said, or system and typical to being our revenue other anything have and our whether at our that the recurring because enhance for otherwise in than parts typically However, fabulous gross be spare we sales. find ways systems

So it's a that as are working we on something company.

Marc Silk

the upper Great. earnings to a and And of nice last buying $X.XX. of that It from appreciate be quarter's more see will management to growth future lastly, buying around in confirmation shareholders you the the believe insight give you I after company. stock Board

Operator

McIlree from comes question Jim Dawson from Our next James.

James McIlree

you be margin a of the that given -- the to it gross bit right there bit there little particularly about Can businesses QX. well, sounds Do gross have of discuss I decline it QX, might in revenue QX for margin outlook or be actually, like outlook, might like little relative seems decline, right? for both a

Vincent Arnone

I QX the APC see favorable an you for a, likely bit will, of in call that of downtick impact it, on a a that for if We would ancillary bit APC, say, bump revenue a Jim, of margin did side. the have did there. us scenario, little QX to little a give up

think a would fact given from QX. in revenue little more for back levels bit I'd to XX-ish I traditional to percent that we a would reduction say, Chemtech, So revert QX flat the And in little looking that bit of are QX, at a lower in Chemtech.

weighted So on down QX. a average basis yes, from yes, down,

James McIlree

about year, in as will -- reluctant up sales that marketing at to you're as conceptually DGI or increase XXXX, talk next but order a support R&D significant require far or as that and much least I too either meaningful in then And it. know Got business? to a ramps

Vincent Arnone

resource sales as support pace DGI some relative drive XXXX. business some I couple it throughout going call as and The we are be adding out for well how that of today. to to a Right level of that Jim, it opportunity $XXX,XXX will definitely the material number as add. A on wouldn't I I couple envision be that impact in see resources now, would range at individuals the We'd resources XXXX, we business somewhere development. some would look field basis annualized resources, looking that add year. to perhaps an in of roll to a it

James McIlree

as with maybe a it couple or fair success-based think success-based lag? to of Is it of month

Vincent Arnone

fair, it's yes. I very would say

James McIlree

Okay.

last my XX portfolio? XX, Just extended the And call Or broad question a are period out Great. for it then months discuss is portfolio? maturity time? can investment of Okay. it, long is, brush, your of you you

Vincent Arnone

we understood, had putting months. first we investments XX maximum place, of of we started when XX When our in -- portfolio Yes. the laddered days, a minimum from

call keep And trying but we've reinvested, of expired, range so a as to similar, window. it, they've exploration

that rates. we've X% maturities in maturities we well. when a place them of we lower with earlier items of more at So at at averaging had, those some some obviously, than them originally, time, little some put or the X% replaced we're -- this point But as in the of were coming on

we're of throughout weighted X%, those little we off pop average as going is more today, average a as range. XXXX. our think the have drop move to of bit in But start maturities up that So early we I a somewhere some probably weighted to maybe

James McIlree

any Or have to long-term in have And you with don't held recent of going indicated rates, mark be as to they're those? market maturity, decline long to you the do have as market. to market to you to

Vincent Arnone

Yes. Held these, to not for mark maturity is do accounting to how we so we're basically market.

Operator

This the I like back session. turn concludes question-and-answer over to our Vince comments. floor for closing to Arnone would

Vincent Arnone

Thank to here pleased quarter everyone for Kat. thank I'd you, our were We in performance the on XXXX. call joining today. us like with third

forward thanks March appreciates an thank going call you. XXXX to other season our of approximately for good won't and to investors, excellent Again, be until what's conference your shareholders it. since beginning 'XX. Thank joining Looking holiday for early next Tech and hopefully XXXX strong A support. and a to Fuel have everyone, end everyone of to our to we stakeholders.

Operator

teleconference. today's concludes This

You lines for at this you time. may your participation. Thank disconnect your

Fuel Tech (FTEK) 8 Nov 232023 Q3 Earnings call transcript