Fuel Tech(FTEK) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview Q2 2025 Highlights and Outlook Fuel Tech reported its Q2 2025 financial results, expressing confidence in improved overall performance for the second half of the year. The company is actively pursuing new contract opportunities, particularly in the APC segment for AI-related data centers, and maintains a strong financial position with nearly $31 million in cash, cash equivalents, and investments, and no long-term debt - Confidence in delivering improved overall performance in the second half of 2025[2] - Actively pursuing new contract opportunities across APC and FUEL CHEM® business segments, including bids for SCR technology for AI-related data centers in the U.S[2] - Strong financial position at June 30, 2025, with nearly $31 million in cash, cash equivalents, and investments, and no long-term debt[2] Company Description Fuel Tech develops and commercializes proprietary technologies for air pollution control, process optimization, water treatment, and advanced engineering services, leading in nitrogen oxide (NOx) reduction and offering FUEL CHEM® and DGI® systems - Develops and commercializes state-of-the-art proprietary technologies for air pollution control, process optimization, water treatment, and advanced engineering services[13] - Leader in nitrogen oxide (NOx) reduction and particulate control technologies, with over 1,300 installations worldwide[13] - Offers FUEL CHEM® technology for improving combustion unit efficiency and DGI® Dissolved Gas Infusion Systems for water and wastewater applications[13] Business Segment Performance Overview FUEL CHEM® Segment The FUEL CHEM® segment maintained steady performance in Q2 2025 compared to the prior year, influenced by seasonal weather, and anticipates robust results for Q3 2025, projecting full-year revenue to reach its highest level since 2022, with a TIFI® technology demonstration starting in Q4 2025 - Performance was steady compared to last year's second quarter, reflecting seasonal weather transition[3] - Anticipates robust segment results for the full third quarter of 2025 and full-year segment revenue to reach its highest level since 2022[3] - A demonstration of TIFI® Targeted In-Furnace Injection™ technology will commence in Q4 2025 at a coal-fired unit in the Midwest[3] Air Pollution Control (APC) Segment The Air Pollution Control (APC) segment experienced a revenue decline in Q2 2025 due to project timing, but Fuel Tech expects to secure an additional $2.5 to $3.0 million in new contracts by the end of August, which will enhance its effective APC backlog - Segment revenue declined due primarily to timing of project execution on existing contracts[4] - Expected to be awarded between $2.5 and $3.0 million in additional contracts from new and existing U.S. and international customers before the end of August[4] - These new awards would increase the effective APC backlog[4] Dissolved Gas Infusion (DGI®) Technology An extended demonstration of Fuel Tech's Dissolved Gas Infusion (DGI®) technology began in July at a fish hatchery in the Western U.S., expected to run until Q2 2026, to evaluate the benefits of precise dissolved oxygen levels for raising gamefish - Commenced an extended demonstration of its Dissolved Gas Infusion (DGI®) technology at a fish hatchery in the Western U.S. in July[5] - The demonstration is expected to last until the second quarter of 2026[5] - Designed to evaluate the benefits of delivering consistent and precise levels of dissolved oxygen on the raising of gamefish in a controlled environment[5] Consolidated Financial Results Second Quarter 2025 Consolidated Results Fuel Tech's consolidated revenues for Q2 2025 declined to $5.6 million from $7.0 million in Q2 2024, primarily due to lower APC revenues, yet consolidated gross margin expanded to 45.5%, resulting in a net loss of $(689,000) or $(0.02) per share, and an Adjusted EBITDA loss of $(0.9) million Q2 2025 Consolidated Financial Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change | | :----------------------- | :--------------------- | :--------------------- | :----- | | Revenues | $5,558 | $7,042 | -21.1% | | Gross Margin | 45.5% | 41.9% | +3.6 pp | | SG&A Expenses | $3,347 | $3,245 | +3.1% | | Interest Income | $537 | $334 | +60.8% | | Net Loss | $(689) | $(421) | +63.7% | | Basic Net Loss per Share | $(0.02) | $(0.01) | +100% | | Diluted Net Loss per Share | $(0.02) | $(0.01) | +100% | | Adjusted EBITDA Loss | $(948) | $(529) | +79.2% | Segment Performance (Q2 2025 vs Q2 2024) | Segment | Q2 2025 Revenue (in thousands) | Q2 2024 Revenue (in thousands) | Q2 2025 Gross Margin | Q2 2024 Gross Margin | | :---------------- | :----------------------------- | :----------------------------- | :------------------- | :------------------- | | APC | $2,505 | $3,949 | 43.9% | 39.1% | | FUEL CHEM | $3,053 | $3,093 | 46.8% | 45.5% | - Consolidated APC segment backlog at June 30, 2025, was $7.8 million, compared to $10.3 million at March 31, 2025, and $6.2 million at December 31, 2024[8] Financial Condition As of June 30, 2025, Fuel Tech maintained a strong financial position with $10.6 million in cash and cash equivalents, $12.4 million in short-term investments, and $7.9 million in long-term investments, with total stockholders' equity at $40.6 million and no debt Financial Position at June 30, 2025 | Asset/Equity | Amount (in thousands) | | :---------------------- | :-------------------- | | Cash and cash equivalents | $10,589 | | Short-term investments | $12,420 | | Long-term investments | $7,925 | | Total Stockholders' Equity | $40,664 | | Debt | None | Detailed Financial Statements Condensed Consolidated Balance Sheets The balance sheet shows total assets of $47.0 million at June 30, 2025, a decrease from $48.8 million at December 31, 2024, with current assets increasing slightly, long-term investments decreasing, total liabilities decreasing, and stockholders' equity seeing a minor reduction Condensed Consolidated Balance Sheets (Selected Items) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total current assets | $31,011 | $29,619 | | Total assets | $47,003 | $48,797 | | Total current liabilities | $5,326 | $5,855 | | Total liabilities | $6,339 | $6,842 | | Total stockholders' equity | $40,664 | $41,955 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, revenues were $5.6 million, down from $7.0 million in the prior year, with an operating loss of $(1.3) million and a net loss of $(689,000); for the six months, revenues were flat at $11.9 million, with a net loss of $(1.4) million Condensed Consolidated Statements of Operations (Selected Items) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenues | $5,558 | $7,042 | $11,940 | $11,999 | | Cost of sales | $3,029 | $4,090 | $6,452 | $7,018 | | Selling, general and administrative | $3,347 | $3,245 | $6,688 | $6,590 | | Research and development | $490 | $422 | $1,060 | $798 | | Operating loss | $(1,308) | $(715) | $(2,260) | $(2,407) | | Net loss | $(689) | $(421) | $(1,428) | $(140) | | Basic net loss per common share | $(0.02) | $(0.01) | $(0.05) | $(0.00) | Condensed Consolidated Statements of Comprehensive Loss The comprehensive loss for Q2 2025 was $(678,000), compared to $(416,000) in Q2 2024, while for the six months ended June 30, 2025, it was $(1,282,000), an increase from $(278,000) in the prior year, primarily driven by the net loss Comprehensive Loss | Period | 2025 (in thousands) | 2024 (in thousands) | | :----------------------- | :------------------ | :------------------ | | Three Months Ended June 30 | $(678) | $(416) | | Six Months Ended June 30 | $(1,282) | $(278) | - Foreign currency translation adjustments contributed positively to other comprehensive income in both periods of 2025[21] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $1.5 million, a significant improvement from net cash used of $(2.7) million in the prior year, with investing activities providing $0.7 million and financing activities using $(0.2) million, resulting in an overall increase in cash and cash equivalents of $2.1 million Net Cash Flow Activities (Six Months Ended June 30) | Activity | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | | Net cash provided by (used in) operating activities | $1,487 | $(2,664) | | Net cash provided by (used in) investing activities | $700 | $(4,311) | | Net cash used in financing activities | $(222) | $(95) | | Net increase (decrease) in cash and cash equivalents | $2,079 | $(7,174) | | Cash and cash equivalents at end of period | $10,589 | $10,404 | - Significant positive change in operating cash flow, driven by changes in accounts receivable and employee retention credit receivable[23] Segment Data - Reporting Segments For Q2 2025, the APC segment generated $2.5 million in revenue with a gross margin of $1.1 million, while the FUEL CHEM segment reported $3.1 million in revenue with a gross margin of $1.4 million; for the six months ended June 30, 2025, FUEL CHEM revenue ($8.1 million) significantly outpaced APC revenue ($3.8 million) Segment Revenues and Gross Margins (Three Months Ended June 30) | Segment | 2025 Revenues (in thousands) | 2024 Revenues (in thousands) | 2025 Gross Margin (in thousands) | 2024 Gross Margin (in thousands) | | :---------------- | :--------------------------- | :--------------------------- | :------------------------------- | :------------------------------- | | Air Pollution Control | $2,505 | $3,949 | $1,099 | $1,544 | | FUEL CHEM | $3,053 | $3,093 | $1,430 | $1,408 | | Total | $5,558 | $7,042 | $2,529 | $2,952 | Segment Revenues and Gross Margins (Six Months Ended June 30) | Segment | 2025 Revenues (in thousands) | 2024 Revenues (in thousands) | 2025 Gross Margin (in thousands) | 2024 Gross Margin (in thousands) | | :---------------- | :--------------------------- | :--------------------------- | :------------------------------- | :------------------------------- | | Air Pollution Control | $3,808 | $6,267 | $1,524 | $2,434 | | FUEL CHEM | $8,132 | $5,732 | $3,964 | $2,547 | | Total | $11,940 | $11,999 | $5,488 | $4,981 | Geographic Segment Financial Data For Q2 2025, U.S. revenues were $4.4 million, while foreign revenues were $1.1 million; for the six months, U.S. revenues were $9.8 million, and foreign revenues were $2.1 million, with the majority of assets located in the United States Revenues by Geographic Area (Three Months Ended June 30) | Region | 2025 (in thousands) | 2024 (in thousands) | | :------------ | :------------------ | :------------------ | | United States | $4,442 | $4,471 | | Foreign | $1,116 | $2,571 | | Total | $5,558 | $7,042 | Revenues by Geographic Area (Six Months Ended June 30) | Region | 2025 (in thousands) | 2024 (in thousands) | | :------------ | :------------------ | :------------------ | | United States | $9,801 | $8,066 | | Foreign | $2,139 | $3,933 | | Total | $11,940 | $11,999 | Assets by Geographic Area (June 30, 2025 vs. December 31, 2024) | Region | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------ | :----------------------------- | :------------------------------- | | United States | $44,130 | $44,430 | | Foreign | $2,873 | $4,367 | | Total | $47,003 | $48,797 | Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA Fuel Tech provides Adjusted EBITDA as a non-GAAP measure to enhance understanding of financial performance and cash flow generation; for Q2 2025, the Adjusted EBITDA loss was $(948,000), an increase from $(529,000) in Q2 2024, while for the six months, Adjusted EBITDA loss improved to $(1,683,000) from $(2,025,000) in the prior year Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------ | :------------------ | :------------------ | | Net Loss | $(689) | $(421) | | EBITDA | $(1,050) | $(653) | | Adjusted EBITDA | $(948) | $(529) | Reconciliation of GAAP Net Loss to EBITDA and Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------ | :------------------ | :------------------ | | Net Loss | $(1,428) | $(140) | | EBITDA | $(1,895) | $(576) | | Adjusted EBITDA | $(1,683) | $(2,025) | - Adjusted EBITDA is defined as net income (loss) before interest expense, income tax expense (benefit), depreciation expense, amortization expense, stock compensation expense, and gain on employee retention credit[30] Other Information Conference Call Fuel Tech will host a conference call on Wednesday, August 6, 2025, at 10:00 am ET / 9:00 am CT to discuss the Q2 2025 results and business activities, with participation available via phone or the company's website - Management will host a conference call on Wednesday, August 6, 2025, at 10:00 am ET / 9:00 am CT[12] - The call will discuss results and business activities and will be accessible via phone or the Upcoming Events section of www.ftek.com[12](index=12&type=chunk) Forward-Looking Statements This press release contains forward-looking statements, identified by specific terminology, which are subject to various risks, uncertainties, and other factors detailed in Fuel Tech's SEC filings, including its Form 10-K, and the company undertakes no obligation to update them - This press release contains "forward-looking statements" as defined in Section 21E of the Securities Exchange Act of 1934, as amended[15] - Statements are subject to various risks, uncertainties, and other factors, including contracts being awarded to competitors, project delays, and other risks discussed in Fuel Tech's Annual Report on Form 10-K[15] - Fuel Tech undertakes no obligation to update such factors or to publicly announce the results of any forward-looking statements[15]