Fuel Tech, Inc. (NASDAQ: FTEK), a technology company providing advanced engineering for the optimization of combustion systems, emissions control, and water treatment in utility and industrial applications, today reported financial results for the first quarter (Q1 2024) ended March 31, 2024.
“Our revenues for the first quarter were impacted by customer-driven delays in executing new contracts at our APC business segment, while performance at FUEL CHEM® reflected warmer weather across the US that affected unit dispatch,” said Vincent J. Arnone, President and CEO. “We continue to expect that APC revenue will increase modestly in 2024 when compared to 2023 and that the bulk of our new award activity will occur in the second half of the year. Our results at FUEL CHEM are also expected to improve as we move through 2024, driven by increased unit dispatch as we approach the summer months and contributions from a new coal-fired unit that will demonstrate our chemical technology program later this month. The annualized revenue potential at this new client, if it becomes commercial, will be approximately $1.5 to $2.0 million dollars, and this revenue is expected to generate historic FUEL CHEM gross margins. We are currently pursuing additional FUEL CHEM opportunities at units that use coal and other fuel sources, which could provide incremental revenue contribution in the latter half of 2024.
“We are also very encouraged by continuing market acceptance of our Dissolved Gas Infusion (DGI™) technology. We have an agreement in place to commence and complete a demonstration of DGI at a municipal wastewater site in the current second quarter. With respect to aquaculture, we are building on the successful deployment of DGI at a domestic shrimp farming facility in the US and are in discussions with that facility to incorporate DGI into its planned stacked raceway system. We are also in advanced discussions with a potential new aquaculture client in the US that is considering a demonstration of DGI.”
Mr. Arnone concluded, “We remain optimistic about our prospects and technology development initiatives. We remain supported in our efforts by a strong financial position, which included $32.1 million in cash and investments, and no long-term debt at March 31, 2024.”
Q1 2024 Consolidated Results Overview
Consolidated revenues for Q1 2024 declined to $5.0 million from $7.3 million in the three months ended March 31, 2023 (Q1 2023), with reductions in both business segments from the prior year period.
Consolidated gross margin for Q1 2024 rose to 40.9% of revenues from 38.5% of revenues in Q1 2023, due to an increase in the APC operating segment gross margin partially offset by a decrease in FUEL CHEM operating segment gross margin.
SG&A expenses increased slightly to $3.3 million from $3.2 million in Q1 2023, reflecting increases in employee compensation and benefit related costs, which were partially offset by decreases in costs related to our international locations.
Interest income was flat at $0.3 million. Interest income primarily related to interest received on the held-to-maturity debt securities and money market funds.
Other income in Q1 2024 was $1.7 million related to the recording of income associated with the expected receipt of the Employee Retention Credit (“ERC”) during the quarter, as compared to no such income in Q1 2023.
Net income in Q1 2024 was $281,000, or $0.01 per share, compared to net loss of $(414,000), or $(0.01) per share, in Q1 2023.
Consolidated APC segment backlog at March 31, 2024 was $6.2 million compared to $7.5 million at December 31, 2023.
APC segment revenue decreased to $2.3 million from $3.6 million in Q1 2023, primarily related to customer-related delays in project execution. APC gross margin rose to 38.4% from 27.1%, primarily due to the mix of APC projects and services executed during the quarter.
FUEL CHEM segment revenue declined to $2.6 million from $3.7 million in Q1 2023, due to a decrease in electrical generation demand, unscheduled plant outages and plant closures. Gross margin decreased to 43.2% from 49.4%.
Adjusted EBITDA loss was $(1.5) million in Q1 2024 compared to Adjusted EBITDA loss of $(0.6) million in Q1 2023.
Financial Condition
At March 31, 2024, cash and cash equivalents were $11.4 million, short-term investments were $11.8 million, and long-term investments totaled $8.9 million. Stockholders’ equity at March 31, 2024 was $44.0 million, or $1.43 per share, and the Company had no debt.
