PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Fuel Tech, Inc [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for Fuel Tech, Inc., including the balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, segment data, and other financial disclosures for the three months ended March 31, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Total assets | $46,709 | $48,797 | | Total liabilities | $5,271 | $6,842 | | Total stockholders' equity | $41,438 | $41,955 | | Cash and cash equivalents | $11,821 | $8,510 | | Accounts receivable, net | $5,635 | $9,368 | | Total current assets | $29,146 | $29,619 | | Total current liabilities | $4,287 | $5,855 | - Total assets decreased by **$2,088 thousand** from December 31, 2024, to March 31, 2025. Total liabilities decreased by **$1,571 thousand**, and total stockholders' equity decreased by **$517 thousand** during the same period[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over a specific period | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenues | $6,382 | $4,957 | | Cost of sales | $3,423 | $2,928 | | Selling, general and administrative | $3,341 | $3,345 | | Research and development | $570 | $376 | | Operating loss | $(952) | $(1,692) | | Net (loss) income | $(739) | $281 | | Basic net (loss) income per common share | $(0.02) | $0.01 | | Diluted net (loss) income per common share | $(0.02) | $0.01 | - Revenues increased by **29% year-over-year**, from **$4,957 thousand** in Q1 2024 to **$6,382 thousand** in Q1 2025. The company reported a net loss of **$739 thousand** in Q1 2025, compared to a net income of **$281 thousand** in Q1 2024[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the net income or loss along with other comprehensive income or loss items not recognized in net income | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net (loss) income | $(739) | $281 | | Foreign currency translation adjustments | $135 | $(143) | | Comprehensive (loss) income | $(604) | $138 | - Comprehensive loss for Q1 2025 was **$604 thousand**, a decrease from comprehensive income of **$138 thousand** in Q1 2024, primarily due to the net loss and positive foreign currency translation adjustments in 2025 compared to negative adjustments in 2024[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section shows changes in the equity accounts, including common stock, retained earnings, and other comprehensive income | Component | Balance at Dec 31, 2024 (in thousands) | Net Loss/Income (in thousands) | FX Adjustments (in thousands) | Stock Comp Expense (in thousands) | Other (in thousands) | Balance at Mar 31, 2025 (in thousands) | | :-------------------------- | :----------------------------------- | :----------------------------- | :---------------------------- | :-------------------------------- | :------------------- | :----------------------------------- | | Common Stock | $317 | — | — | — | $1 | $318 | | Additional Paid-in Capital | $165,295 | — | — | $110 | — | $165,405 | | Accumulated Deficit | $(119,472) | $(739) | — | — | — | $(120,211) | | Accumulated Other Comp Loss | $(1,915) | — | $135 | — | — | $(1,780) | | Treasury Stock | $(2,346) | — | — | — | $(24) | $(2,370) | | Total Stockholders' Equity | $41,955 | $(739) | $135 | $110 | $(23) | $41,438 | - Total stockholders' equity decreased from **$41,955 thousand** at December 31, 2024, to **$41,438 thousand** at March 31, 2025, primarily due to a net loss of **$739 thousand**, partially offset by foreign currency translation adjustments of **$135 thousand** and stock compensation expense of **$110 thousand**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by operating, investing, and financing activities | Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by (used in) operating activities | $1,508 | $(1,075) | | Net cash provided by (used in) investing activities | $1,692 | $(5,005) | | Net cash used in financing activities | $(24) | — | | Net increase (decrease) in cash and cash equivalents | $3,311 | $(6,196) | | Cash and cash equivalents at end of period | $11,821 | $11,382 | - Operating activities provided **$1,508 thousand** in cash in Q1 2025, a significant improvement from cash used of **$1,075 thousand** in Q1 2024. Investing activities provided **$1,692 thousand** in Q1 2025, reversing from cash used of **$5,005 thousand** in Q1 2024[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the figures presented in the financial statements [1. General](index=9&type=section&id=1.%20General) This section describes the company's business, operations, and significant accounting policies - Fuel Tech, Inc. develops and provides proprietary technologies for air pollution control, process optimization, water treatment, and advanced engineering services, including NOx reduction, particulate matter mitigation, FUEL CHEM® technology, and DGI® Dissolved Gas Infusion Systems[19](index=19&type=chunk)[20](index=20&type=chunk) - The company accounts for the Employee Retention Credit (ERC) by analogy to IAS 20, recognizing a **$1,677 thousand** benefit as other income in 2024 and as a component of Accounts Receivable as of March 31, 2025[23](index=23&type=chunk)[24](index=24&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the key accounting principles and methods used in preparing the financial statements - The company's investment policy allocates **$20,000 thousand** to debt securities at BMO Harris Bank, with a portion restricted as collateral for standby letters of credit[26](index=26&type=chunk) | Held-to-maturity debt securities | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------- | :----------------------------- | :----------------------------- | | Amortized cost | $19,349 | $21,059 | | Gross unrecognized gains | $59 | $50 | | Gross unrecognized losses | $(12) | $(33) | | Fair value | $19,396 | $21,076 | - Inventories are stated at the lower of cost or net realizable value using the weighted-average cost method, with equipment for resale at **$176 thousand** and spare parts at **$358 thousand** as of March 31, 2025[30](index=30&type=chunk) - The company applies FASB ASU 2019-10 for expected credit losses, using a forward-looking model based on historical experience, current conditions, and forecasts, excluding US Government securities from the calculation[31](index=31&type=chunk)[32](index=32&type=chunk) [3. Revenue](index=13&type=section&id=3.%20Revenue) This section details the sources and recognition of the company's revenue streams | Revenue by Product Technology | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :---------------------------- | :--------------------------------------- | :--------------------------------------- | | Air Pollution Control | $1,303 | $2,318 | | FUEL CHEM technology solutions | $5,079 | $2,639 | | Total Revenues | $6,382 | $4,957 | | Revenue by Geography | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------- | :--------------------------------------- | :--------------------------------------- | | United States | $5,359 | $3,595 | | Foreign Revenues | $1,023 | $1,362 | | Total Revenues | $6,382 | $4,957 | - Revenue from FUEL CHEM technology solutions significantly increased by **92% year-over-year**, from **$2,639 thousand** in Q1 2024 to **$5,079 thousand** in Q1 2025, while Air Pollution Control revenue decreased by **44%**[35](index=35&type=chunk) - Remaining performance obligations for APC technology booked orders totaled **$10,328 thousand** as of March 31, 2025, with approximately **$6,924 thousand** expected to be recognized within the next 12 months[42](index=42&type=chunk) [4. Restructuring Activities](index=14&type=section&id=4.%20Restructuring%20Activities) This section describes ongoing or planned restructuring efforts and their financial impact - Fuel Tech is continuing the planned suspension of its APC business operation in China, initiated in January 2019, to prioritize resource allocation and drive profitability. Remaining activities include satisfying requirements for **$3 thousand** in APC projects and subsidiary closure[44](index=44&type=chunk) | China Operations | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------- | :--------------------------------------- | :--------------------------------------- | | Total revenues | $0 | $0 | | Net loss | $(18) | $(13) | | Total assets (as of March 31, 2025) | $794 | $788 (Dec 31, 2024) | | Total net assets (as of March 31, 2025) | $705 | $704 (Dec 31, 2024) | [5. Accumulated Other Comprehensive Loss](index=14&type=section&id=5.%20Accumulated%20Other%20Comprehensive%20Loss) This section explains the components and changes in accumulated other comprehensive income or loss | Component | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Balance at beginning of period | $(1,915) | $(1,748) | | Foreign currency translation adjustments | $135 | $(143) | | Total accumulated other comprehensive loss | $(1,780) | $(1,891) | - Accumulated other comprehensive loss improved from **$(1,915) thousand** at the beginning of Q1 2025 to **$(1,780) thousand** at the end, driven by positive foreign currency translation adjustments of **$135 thousand**[47](index=47&type=chunk) [6. Treasury Stock](index=16&type=section&id=6.%20Treasury%20Stock) This section details the company's repurchased shares and their impact on stockholders' equity - Treasury stock increased to **1,083,399 shares** with a cost of **$2,370 thousand** at March 31, 2025, from **1,059,056 shares** with a cost of **$2,346 thousand** at December 31, 2024. These shares were withheld from employees to settle tax obligations from vested restricted stock units[48](index=48&type=chunk) [7. Earnings per Share](index=16&type=section&id=7.%20Earnings%20per%20Share) This section presents the basic and diluted earnings per share calculations | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Basic weighted-average shares | 30,718,000 | 30,385,000 | | Unexercised options and unvested RSUs | — | 371,000 | | Diluted weighted-average shares | 30,718,000 | 30,756,000 | - For Q1 2025, basic and diluted EPS were equal at **$(0.02)** due to a net loss, making all outstanding stock awards, warrants, and convertible loan notes anti-dilutive. In Q1 2024, diluted EPS included the effect of dilutive options and RSUs[49](index=49&type=chunk)[50](index=50&type=chunk) [8. Stock-Based Compensation](index=16&type=section&id=8.%20Stock-Based%20Compensation) This section describes the company's stock-based incentive plans and related compensation expenses - Fuel Tech's 2024 Long-Term Incentive Plan (2024 Plan) replaced the prior 2014 LTIP, allowing for various share-based awards to directors, officers, employees, consultants, or advisors. As of March 31, 2025, **2,485,543 shares** were available for issuance[51](index=51&type=chunk)[52](index=52&type=chunk) | Stock-Based Compensation | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------- | :--------------------------------------- | :--------------------------------------- | | Stock options and restricted stock units, net of forfeitures | $110 | $104 | | After-tax effect of stock-based compensation | $110 | $104 | - Unrecognized compensation cost related to non-vested share-based compensation arrangements totaled **$1,149 thousand** as of March 31, 2025, expected to be recognized over a remaining service period of **2.26 years**[62](index=62&type=chunk) | Restricted Stock Unit Activity | Shares | Weighted Average Grant Date Fair Value | | :----------------------------- | :------- | :----------------------------------- | | Unvested RSUs at January 1, 2025 | 1,082,122 | $1.26 | | Granted | 921,050 | $1.02 | | Vested | (85,328) | $1.26 | | Forfeited | (425,100) | $1.18 | | Unvested RSUs at March 31, 2025 | 1,492,744 | $1.11 | [9. Warrants](index=19&type=section&id=9.%20Warrants) This section details outstanding warrants and their potential dilutive effect on earnings per share | Exercise Price | Number Outstanding/Exercisable | Weighted Average Remaining Life in Years | Weighted Average Exercise Price | | :------------- | :----------------------------- | :--------------------------------------- | :------------------------------ | | $5.10 | 2,500,000 | 1.37 | $5.10 | | $6.45 | 350,000 | 1.37 | $6.45 | | Total | 2,850,000 | | | - As of March 31, 2025, Fuel Tech had **2,850,000 warrants** outstanding and exercisable, with a weighted average remaining life of **1.37 years**[66](index=66&type=chunk) [10. Debt Financing](index=20&type=section&id=10.%20Debt%20Financing) This section outlines the company's debt obligations and financing arrangements - The company's Investment Collateral Security Agreement with BMO Harris requires pledging investments as collateral for **150%** of outstanding standby letters of credit. As of March 31, 2025, outstanding standby letters of credit totaled **$2,124 thousand**, with **$3,186 thousand** in investments held as collateral[67](index=67&type=chunk) [11. Business Segment and Geographic Financial Data](index=20&type=section&id=11.%20Business%20Segment%20and%20Geographic%20Financial%20Data) This section provides financial information broken down by business segments and geographical regions - Fuel Tech operates in two reportable segments: Air Pollution Control (APC) technology and FUEL CHEM® technology. The CEO, as CODM, reviews gross margin by segment for performance evaluation and resource allocation[68](index=68&type=chunk)[69](index=69&type=chunk) | Segment Performance (Q1 2025) | Air Pollution Control (in thousands) | FUEL CHEM (in thousands) | Total (in thousands) | | :---------------------------- | :----------------------------------- | :----------------------- | :------------------- | | Revenues | $1,303 | $5,079 | $6,382 | | Cost of sales | $(878) | $(2,545) | $(3,423) | | Gross margin | $425 | $2,534 | $2,959 | | Gross margin percentage | 33% | 50% | 46% | | Segment Performance (Q1 2024) | Air Pollution Control (in thousands) | FUEL CHEM (in thousands) | Total (in thousands) | | :---------------------------- | :----------------------------------- | :----------------------- | :------------------- | | Revenues | $2,318 | $2,639 | $4,957 | | Cost of sales | $(1,428) | $(1,500) | $(2,928) | | Gross margin | $890 | $1,139 | $2,029 | | Gross margin percentage | 38% | 43% | 41% | - FUEL CHEM segment revenues increased by **92% year-over-year**, while APC segment revenues decreased by **44%**. FUEL CHEM gross margin improved from **43% to 50%**, whereas APC gross margin decreased from **38% to 33%**[70](index=70&type=chunk) | Geographic Revenues | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------ | :--------------------------------------- | :--------------------------------------- | | United States | $5,359 | $3,595 | | Foreign | $1,023 | $1,362 | | Total Revenues | $6,382 | $4,957 | | Geographic Assets | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | United States | $42,788 | $44,430 | | Foreign | $3,921 | $4,367 | | Total Assets | $46,709 | $48,797 | [12. Accrued Liabilities](index=22&type=section&id=12.%20Accrued%20Liabilities) This section details the company's accrued expenses and other short-term obligations | Other Accrued Liabilities | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------ | :----------------------------- | :----------------------------- | | Contract liabilities | $627 | $721 | | Deferred revenue | $316 | $360 | | Warranty reserve | $159 | $159 | | Accrued professional fees | $0 | $86 | | Other accrued liabilities | $237 | $289 | | Total other accrued liabilities | $1,339 | $1,615 | - Total other accrued liabilities decreased from **$1,615 thousand** at December 31, 2024, to **$1,339 thousand** at March 31, 2025, primarily due to decreases in contract liabilities, deferred revenue, and accrued professional fees[75](index=75&type=chunk) [13. Commitments and Contingencies](index=22&type=section&id=13.%20Commitments%20and%20Contingencies) This section discloses potential future obligations and uncertain events that could impact the company - Fuel Tech records liabilities for probable and estimable contingent losses and discloses reasonably possible material losses. Management believes no pending loss contingencies will materially affect financial position, results of operations, or cash flows[76](index=76&type=chunk)[78](index=78&type=chunk) - The company issues a standard product warranty, with the warranty liability balance remaining unchanged at **$159 thousand** for both March 31, 2025, and December 31, 2024[79](index=79&type=chunk)[80](index=80&type=chunk) [14. Income Taxes](index=23&type=section&id=14.%20Income%20Taxes) This section explains the company's income tax provisions, deferred taxes, and effective tax rates | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Effective tax rate | 0.0% | 3.8% | - The effective tax rate for Q1 2025 was **0.0%**, down from **3.8%** in Q1 2024, primarily due to a full valuation allowance on deferred tax assets in the U.S., China, and Italy, and other factors like foreign losses and non-deductible expenses[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Fuel Tech's financial performance and condition for the three months ended March 31, 2025, highlighting key operating factors, detailed results of operations, liquidity, and capital resources. It emphasizes the significant revenue growth in the FUEL CHEM segment and ongoing investments in new technologies like DGI® Dissolved Gas Infusion Systems [Overview](index=24&type=section&id=Overview) This section provides a high-level summary of the company's performance and strategic direction - In Q1 2025, Fuel Tech secured new APC segment projects and saw improved performance in the FUEL CHEM Segment. The company continues to invest in new technologies, particularly for the water and wastewater treatment market, and expects cost control and new business to improve its financial outlook[82](index=82&type=chunk) [Key Operating Factors](index=24&type=section&id=Key%20Operating%20Factors) This section discusses the primary drivers influencing the company's operational performance - The FUEL CHEM segment experienced a significant increase in revenue and operating profits in Q1 2025, driven by increased operational demand from clients and a new account added in H2 2024[83](index=83&type=chunk) - The Air Pollution Control (APC) business saw a revenue decrease in Q1 2025 due to project execution timing and customer delays, but new contract awards of **$5,600 thousand** and a consolidated APC backlog of **$10,328 thousand** at March 31, 2025, indicate increased segment activity[84](index=84&type=chunk)[86](index=86&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance over the reporting period Revenue Performance (YoY) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | % Change | | :------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Revenues | $6,382 | $4,957 | $1,425 | 29% | Segment Revenue Performance (YoY) | Segment | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (in thousands) | % Change | | :-------- | :--------------------- | :--------------------- | :-------------------- | :------- | | APC | $1,303 | $2,318 | $(1,015) | -44% | | FUEL CHEM | $5,079 | $2,639 | $2,440 | 92% | Gross Margin Performance (YoY) | Metric | Q1 2025 | Q1 2024 | | :-------------------- | :------ | :------ | | Consolidated Gross Margin % | 46% | 41% | | FUEL CHEM Gross Margin % | 50% | 43% | | APC Gross Margin % | 33% | 38% | - Selling, general and administrative (SG&A) expenses remained flat at **$3,341 thousand** in Q1 2025 compared to **$3,345 thousand** in Q1 2024, decreasing as a percentage of revenues from **67% to 52%** due to increased revenues[89](index=89&type=chunk) R&D and Other Income/Expense (YoY) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :------------------------ | :--------------------- | :--------------------- | | Research and development | $570 | $376 | | Interest income | $279 | $311 | | Other (expense) income, net | $(66) | $1,673 | - Other expense, net, was **$66 thousand** in Q1 2025, primarily due to transactional foreign exchange losses, a significant change from other income, net, of **$1,673 thousand** in Q1 2024, which included a **$1,677 thousand** employee retention credit[92](index=92&type=chunk) [Liquidity and Sources of Capital](index=25&type=section&id=Liquidity%20and%20Sources%20of%20Capital) This section analyzes the company's ability to meet its short-term and long-term financial obligations and its funding strategies Cash Flow Summary (YoY) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--------------------------------- | :--------------------- | :--------------------- | | Net cash provided by (used in) operating activities | $1,508 | $(1,075) | | Net cash provided by (used in) investing activities | $1,692 | $(5,005) | | Net cash used in financing activities | $(24) | $0 | | Net increase (decrease) in cash and cash equivalents | $3,311 | $(6,196) | | Cash and cash equivalents at end of period | $11,821 | $11,382 | - As of March 31, 2025, Fuel Tech had **$11,821 thousand** in cash and cash equivalents and **$24,859 thousand** in working capital, with no outstanding debt other than letters of credit[94](index=94&type=chunk) - Management believes current cash position and expected net cash flows from operations are adequate to fund planned operations for the next 12 months, including capital expenditures for the DGI business and equipment maintenance[99](index=99&type=chunk)[100](index=100&type=chunk) - The company's investment policy involves investing **$20,000 thousand** in held-to-maturity debt securities (US Treasuries and Government Agency securities) with a maturity 'ladder' strategy to manage liquidity and interest rate exposure[101](index=101&type=chunk) [Contingencies and Contractual Obligations](index=26&type=section&id=Contingencies%20and%20Contractual%20Obligations) This section outlines potential future liabilities and commitments arising from contracts or uncertain events - Fuel Tech issues a standard product warranty, and there was no change in the warranty liability balance during the three months ended March 31, 2025[103](index=103&type=chunk) [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) This section provides a cautionary note regarding statements about future events or financial performance - This report contains forward-looking statements subject to various risks and uncertainties, as detailed in Fuel Tech's Annual Report on Form 10-K, and the company undertakes no obligation to update these statements[104](index=104&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Fuel Tech's financial results are exposed to fluctuations from foreign currency exchange rates. The company does not use foreign currency forward or option contracts to manage this risk, citing the immaterial nature of the transactions - Fuel Tech's earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates. The company does not use foreign currency forward or option contracts to manage this risk due to the immaterial nature of the transactions[105](index=105&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Fuel Tech's management, including the CEO and principal financial officer, evaluated the company's disclosure controls and procedures as of March 31, 2025, and concluded they are effective. There have been no material changes in internal control over financial reporting during the quarter - Fuel Tech's CEO and principal financial officer evaluated the company's disclosure controls and procedures as of March 31, 2025, and concluded they are effective in ensuring timely and accurate reporting[106](index=106&type=chunk) - There have been no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[107](index=107&type=chunk) PART II. OTHER INFORMATION This section includes additional information not covered in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) Fuel Tech is occasionally involved in litigation incidental to its business but is not currently engaged in any legal proceedings that management believes would have a material adverse effect on its business, financial condition, results of operations, or prospects - Fuel Tech is not currently involved in any litigation that management believes would have a material adverse effect on its business, financial conditions, results of operations, or prospects[108](index=108&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The risk factors previously disclosed in Fuel Tech's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have not materially changed - The risk factors included in Fuel Tech's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have not materially changed[109](index=109&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities and use of proceeds to report[110](index=110&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and principal financial officer, and various Inline XBRL taxonomy documents - Exhibits filed include certifications from the CEO and principal financial officer (Sections 302 and 906 of Sarbanes-Oxley Act of 2002) and various Inline XBRL documents (Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Prevention Linkbase, and Cover Page Interactive Data File)[110](index=110&type=chunk) [SIGNATURES](index=28&type=section&id=SIGNATURES) The report is duly signed on May 12, 2025, by Vincent J. Arnone, President and Chief Executive Officer, and Ellen T. Albrecht, Vice President, Chief Financial Officer and Treasurer, in accordance with the Securities Exchange Act of 1934 - The report was signed on May 12, 2025, by Vincent J. Arnone, President and Chief Executive Officer, and Ellen T. Albrecht, Vice President, Chief Financial Officer and Treasurer[113](index=113&type=chunk)

Exhibit 99.1 CONTACT:Vince Arnone Devin Sullivan President and CEO Managing Director (630) 845-4500 The Equity Group Inc. dsullivan@equityny.com FOR IMMEDIATE RELEASE FUEL TECH REPORTS 2025 FIRST QUARTER FINANCIAL RESULTS Select First Quarter 2025 Highlights WARRENVILLE, Ill., May 12, 2025 – Fuel Tech, Inc. (NASDAQ: FTEK), a technology company using advanced engineering processes to provide emissions control systems and water treatment technologies in utility and industrial applications, today reported fina ...

Core Insights - Fuel Tech, Inc. reported a strong first quarter performance for 2025, with consolidated revenues increasing by 29% to $6.4 million compared to $5.0 million in Q1 2024, primarily driven by a 92% rise in FUEL CHEM® revenue [4][6][8] - The company achieved a gross margin of 46.4% in Q1 2025, up from 40.9% in Q1 2024, reflecting improved performance in the FUEL CHEM segment [5][6] - The backlog for the company grew by 66% to $10.3 million, marking the highest quarterly backlog since 2022, indicating strong future demand [2][6][7] Financial Performance - FUEL CHEM segment revenue rose 92% to $5.1 million from $2.6 million in Q1 2024, attributed to outage completions and increased dispatch [8][20] - Air Pollution Control (APC) segment revenue decreased to $1.3 million from $2.3 million in Q1 2024, primarily due to timing of project execution [7][20] - The net loss for Q1 2025 was $(739,000), or $(0.02) per share, compared to net income of $281,000, or $0.01 per share in Q1 2024, which included a one-time other income amount [6][17] Operational Highlights - The company expects continued strong performance from the FUEL CHEM segment throughout 2025, driven by the return to full operation of base accounts and new commercial accounts [3][6] - Management is pursuing additional FUEL CHEM opportunities both domestically and internationally, with a new demonstration of TIFI® technology expected to commence in late Q3 2025 [3][6] - The company plans to demonstrate its DGI® technology at a fish hatchery in the Western U.S. late in Q2 2025, with hopes of generating commercial revenues in 2025 [3][6] Financial Condition - As of March 31, 2025, the company had $31.2 million in cash, cash equivalents, and investments, with no long-term debt [2][9] - The consolidated gross margin for Q1 2025 was 46.4%, reflecting a strong contribution from the FUEL CHEM segment [5][6] - Selling, general and administrative expenses remained flat at $3.3 million, but as a percentage of revenues, they declined to 52.4% from 67.5% in Q1 2024 [5][6]

Core Viewpoint - Fuel Tech, Inc. is set to release its financial results for Q1 2025 on May 12, 2025, and will host a conference call on May 13, 2025, to discuss these results and business activities [1][2]. Company Overview - Fuel Tech, Inc. specializes in advanced engineering processes for emissions control systems and water treatment technologies, serving utility and industrial applications [1]. - The company is recognized for its leadership in nitrogen oxide (NOx) reduction and particulate control technologies, with over 1,300 installations worldwide [3]. - Fuel Tech's FUEL CHEM technology enhances combustion unit efficiency and environmental performance by addressing issues like slagging and fouling [3]. - The company also offers water treatment technologies, including DGIDissolved Gas Infusion Systems, which are used in various applications such as remediation and wastewater management [3]. - Fuel Tech's products leverage advanced Computational Fluid Dynamics modeling and proprietary visualization software [3].

Core Insights - Fuel Tech, Inc. has announced the receipt of air pollution control orders valued at approximately $1.4 million from both new and existing customers in the US and Europe [1] Group 1: New Contracts and Orders - A new contract was secured for an ULTRA® system to be installed on a natural gas turbine at a medical facility in the Midwest, with delivery expected in Q4 2025 [2] - An order was received for a Selective Non-Catalytic Reduction (SNCR) system for a biomass-fired unit in Europe, following a successful demonstration project, with delivery scheduled for Q3 2025 [3] - A domestic contract was awarded for advanced engineering services for a biomass unit, marking the first step towards an Advanced Selective Non-Catalytic Reduction (ASNCR) system, with completion expected in Q2 2025 [4] Group 2: Financial Performance and Future Outlook - The company has achieved $4 million in near-term contract wins and $5.6 million in announced bookings year to date, with expectations for additional APC contracts by the end of Q2 2025 [5] Group 3: Company Overview and Technology - Fuel Tech specializes in advanced technologies for air pollution control, process optimization, and water treatment, with a strong focus on nitrogen oxide (NOx) reduction and particulate control [6] - The company’s FUEL CHEM® technology enhances the efficiency and environmental status of combustion units, while its water treatment technologies address various applications in the water and wastewater industries [6]

WARRENVILLE, Ill., March 27, 2025 (GLOBE NEWSWIRE) -- Fuel Tech, Inc. (NASDAQ: FTEK), a technology company using advanced engineering processes to provide emissions control systems and water treatment technologies in utility and industrial applications, today announced the receipt of air pollution control (APC) orders from new and existing customers in the US and Europe. These orders have an aggregate value of approximately $1.4 million.   A contract was received from a new customer in the US for an ULTRA® ...

Core Viewpoint - Fuel Tech, Inc. has announced the receipt of air pollution control orders valued at approximately $2.6 million from existing customers in the US and Japan, reflecting ongoing demand for its emissions control technologies [1][4]. Group 1: Orders and Contracts - A significant order from Japan involves an ULTRA® system for a natural gas-fired Combined Cycle utility plant, marking the fourth on-site unit for this customer and a follow-on from a 2017 contract [2]. - A domestic order has been received for advanced engineering services from a municipal waste unit customer in the Northeast, aimed at implementing an Advanced Selective Non-Catalytic Reduction (ASNCR) system [3]. - The company anticipates closing additional contracts worth $4 to $5 million by early in the second quarter of 2025, indicating a strong pipeline of opportunities [4]. Group 2: Technology and Services - Fuel Tech specializes in advanced engineering processes for emissions control and water treatment, with a focus on nitrogen oxide (NOx) reduction and particulate control technologies [5]. - The ULTRA process allows for the safe on-site conversion of urea to ammonia, enhancing energy efficiency and reducing hazards associated with ammonia transport and storage [2]. - The company's FUEL CHEM® technology improves combustion unit performance by addressing issues like slagging, fouling, and corrosion, while its water treatment technologies target various environmental applications [5].

Financial Data and Key Metrics Changes - Consolidated revenues for 2024 were $25.1 million, at the lower end of the guidance range of $25 million to $26 million, reflecting a 17% decrease in total APC segment revenue, partially offset by a 2% increase in FUEL CHEM revenue [7][32] - Consolidated gross margin for 2024 marginally decreased to 42% from 43% in the previous year, with a decline in both APC and FUEL CHEM gross margins [33] - Net loss for 2024 was $1.9 million or $0.06 per diluted share, compared to a net loss of $1.5 million or $0.05 per diluted share in 2023 [35] Business Line Data and Key Metrics Changes - FUEL CHEM segment revenue was essentially unchanged at $3.5 million, while APC segment revenue declined to $1.8 million from $2.8 million due to project execution timing [27][32] - APC gross margin declined to 36% from 55%, primarily due to product mix and lower segment revenue, while FUEL CHEM gross margin declined to 45% from 48% [28] Market Data and Key Metrics Changes - Consolidated APC segment backlog at December 31, 2024, was $6.2 million compared to $7.5 million at the end of 2023, with expectations for backlog to improve steadily through the first half of 2025 [28][29] - The company is pursuing opportunities in the municipal solid waste market driven by state-specific regulatory requirements, with potential awards expected in the near term [14] Company Strategy and Development Direction - The company is optimistic about exceeding $30 million in total revenues for 2025, with expectations that both business segments will outperform their 2024 performance [24][25] - The company is focusing on the commercialization of its DGI technology and pursuing multiple end markets, including aquaculture, wastewater treatment, and others [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed renewed optimism for 2025, citing improved performance in the FUEL CHEM business segment and a strong portfolio of APC business opportunities [9][14] - The company does not expect specific regulatory tailwinds from new regulations but is monitoring the status of existing regulations that could impact future NOx regulations for clients [16][20] Other Important Information - The company ended 2024 with cash, cash equivalents, and investments of approximately $30 million and no long-term debt, maintaining a strong financial position [8][36] - SG&A expenses increased to $13.8 million in 2024, reflecting higher employee-related costs, with expectations for a modest increase in 2025 [33] Q&A Session Summary Question: Outlook for 2025 revenues - Management confirmed that the $30 million revenue outlook includes expected contributions from new APC orders and some contributions from FUEL CHEM accounts [43][44] Question: Gross margin expectations - Management expects a return to historical gross margin levels for FUEL CHEM in the range of 49% to 50% for 2025, while APC margins are expected to remain in the 35% to 38% range [53][55] Question: Data center opportunities - Management highlighted that data centers are increasingly requiring nitrogen oxide controls due to regulatory requirements, and the company is actively bidding on related projects [86][126] Question: Potential for M&A or stock buybacks - Management is exploring small acquisition opportunities and licensing technologies that could benefit the company, while stock buyback discussions are ongoing [114][116]

Financial Data and Key Metrics Changes - Consolidated revenues for 2024 were $25.1 million, at the lower end of the guidance range of $25 million to $26 million, reflecting a 17% decrease in total APC segment revenue, partially offset by a 2% increase in FUEL CHEM revenue [7][32] - Consolidated gross margin for 2024 marginally decreased to 42% from 43% in the previous year, with a decline in both APC and FUEL CHEM gross margins [33] - Net loss for 2024 was $1.9 million or $0.06 per diluted share, compared to a net loss of $1.5 million or $0.05 per diluted share in 2023 [35] Business Segment Data and Key Metrics Changes - FUEL CHEM segment revenue was essentially unchanged at $3.5 million for Q4 2024, while APC segment revenue declined to $1.8 million from $2.8 million in the prior year [27] - APC gross margin declined to 36% from 55%, primarily due to product mix and lower segment revenue, while FUEL CHEM gross margin declined to 45% from 48% [28] - Consolidated APC segment backlog at December 31, 2024, was $6.2 million compared to $7.5 million at the end of 2023, with expectations for backlog improvement through the first half of 2025 [29] Market Data and Key Metrics Changes - The company is pursuing additional FUEL CHEM accounts, with a demonstration scheduled for late Q3 2025, and is in discussions to expand its chemical technology in Mexico [11][12] - The global data center power market is expected to expand significantly, with investments in emissions control solutions to address surging electricity demand [15][86] - The company is following opportunities in the municipal solid waste market driven by state-specific regulatory requirements [14] Company Strategy and Development Direction - The company aims to exceed $30 million in total revenues for 2025, with expectations that both business segments will outperform their 2024 performance [24] - The company is focusing on the commercialization of its DGI technology, with ongoing demonstrations and discussions in various end markets [22][23] - The company is exploring small acquisitions or licensing opportunities to enhance its market position [114] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing a strong portfolio of APC business opportunities and a return to normalized operations in FUEL CHEM [9][14] - The company does not expect significant contributions from new EPA regulations but is monitoring the regulatory landscape for potential impacts [16][20] - Management indicated that achieving breakeven on operating income would likely require revenues closer to $33 million to $35 million [112] Other Important Information - The company ended 2024 with cash, cash equivalents, and investments totaling approximately $30 million and no long-term debt [8][36] - SG&A expenses increased to $13.8 million for 2024, reflecting higher employee-related costs [33] Q&A Session Summary Question: Is the $30 million revenue outlook for 2025 based on confidence in securing additional FUEL CHEM customers and APC orders? - Management confirmed that the APC orders are included in the outlook, but contributions from new FUEL CHEM accounts are not expected to be significant in 2025 [44] Question: What is the expected gross margin trend for 2025? - Management anticipates a return to historical gross margins of 49% to 50% for FUEL CHEM, while APC margins are expected to remain in the 35% to 38% range [54][56] Question: Are there any impacts from tariffs on the supply chain? - Management acknowledged potential impacts from steel and aluminum tariffs, which could affect costs but would be passed on to end customers [66] Question: What is the timeline for data center-related orders? - Management indicated that delivery schedules for data center orders would typically be around 40 weeks from order to delivery [104] Question: Is the company considering M&A or stock buybacks? - Management is exploring small acquisitions and licensing opportunities but believes current business momentum will drive shareholder value without the need for buybacks [114][116]

Revenue Performance - In 2024, the Company experienced revenue growth in the FUEL CHEM segment, driven by the return of previously dormant customers and a new commercial program, although specific revenue figures were not disclosed[102]. - Revenues for the year ended December 31, 2024, were $25,133 million, a decrease of $1,948 million or 7% compared to 2023[132]. - U.S. revenues decreased by $3,595 million or 17%, from $21,397 million in 2023 to $17,802 million in 2024, while international revenues increased by $1,647 million or 29%[132]. - The APC technology segment revenues were $11,242 million, a decrease of $2,241 million or 17% compared to 2023, primarily due to project execution timing and customer delays[133]. - The FUEL CHEM technology segment revenues increased to $13,891 million, an increase of $293 million or 2% compared to 2023, driven by renewed orders and new customer acquisition[134]. - Total revenues for the year ended December 31, 2024, were $25,133 million, a decrease of 7.2% from $27,081 million in 2023[248]. - Air Pollution Control technology segment revenues decreased from $13,483 million in 2023 to $11,242 million in 2024, a decline of 16.6%[248]. - FUEL CHEM technology solutions revenues increased slightly from $13,598 million in 2023 to $13,891 million in 2024, a growth of 2.1%[248]. Financial Position - The Company maintains a valuation allowance on deferred tax assets of $13,697,000 and $15,699,000 at December 31, 2024 and 2023, respectively[125]. - Cash and cash equivalents at December 31, 2024, were $8,510 million, down from $17,578 million at the end of 2023[141]. - Total current assets decreased from $38,321,000 in 2023 to $29,619,000 in 2024, a decline of approximately 22.8%[166]. - Total liabilities rose from $6,674,000 in 2023 to $6,842,000 in 2024, an increase of about 2.5%[166]. - Stockholders' equity decreased from $43,714,000 in 2023 to $41,955,000 in 2024, a decline of approximately 4.0%[166]. - The Company’s total assets decreased from $50,388,000 in 2023 to $48,797,000 in 2024, a decline of about 3.2%[166]. - The accumulated deficit increased from $117,529,000 in 2023 to $119,472,000 in 2024, reflecting a worsening financial position[166]. Expenses and Losses - Selling, general and administrative expenses increased by $958 million or 7% to $13,761 million in 2024, attributed to higher employee-related costs and professional services[136]. - Research and development expenses were $1,564 million in 2024, focusing on new product development and innovative technologies like DGI® Dissolved Gas Infusion Systems[137]. - The net loss for the year ended December 31, 2024, was $1,943 million, compared to a net loss of $1,538 million in 2023[131]. - The net loss for the year ended December 31, 2024, was $1.94 million, compared to a net loss of $1.54 million in 2023, reflecting an increase in losses of approximately 25.8%[170]. - The company reported a total comprehensive loss of $2.11 million for 2024, compared to a total comprehensive loss of $1.56 million in 2023, marking an increase of approximately 35.3%[170]. Cash Flow and Investments - The company experienced a net cash used in operating activities of $3,433,000 in 2024, a significant decline from net cash provided of $696,000 in 2023[174]. - The company reported a net cash used in investing activities of $5,443,000 in 2024, a decrease from $6,444,000 in 2023, indicating improved cash management in investment[174]. - The company invested $18,060,000 in debt securities in 2024, compared to $14,026,000 in 2023, reflecting a 28.8% increase in investment activities[174]. - Fuel Tech's held-to-maturity debt securities increased in amortized cost from $15,800,000 in 2023 to $21,059,000 in 2024, representing a 33.3% increase[192]. Tax and Deferred Assets - The Company recorded a deferred tax asset of $2,233 related to research and experimental expenditures for the year ending December 31, 2024[260]. - The net operating loss carryforwards available to offset future U.S. taxable income amounted to approximately $27,054 as of December 31, 2024[272]. - The income tax expense for 2024 was $77, compared to $69 in 2023, reflecting a slight increase in tax obligations[263]. - Unrecognized tax benefits increased to $470 as of December 31, 2024, from $326 in 2023, which may impact future effective tax rates if recognized[268]. Stock and Compensation - Common stock issued increased to 31,767,329 shares as of December 31, 2024, from 31,361,303 shares in 2023[275]. - Stock-based compensation for the year ended December 31, 2024 was $446 million, an increase from $389 million in 2023[285]. - The company granted 1,040,200 restricted stock units in 2024, with a weighted average grant date fair value of $1.26[296]. - As of December 31, 2024, there was $1,024 million of total unrecognized compensation cost related to all non-vested share-based compensation arrangements, expected to be recognized over 1.2 years[295].