Financial Data and Key Metrics Changes - For Q2 2022, consolidated revenues rose by 22% to $6.4 million from $5.2 million in Q2 2021, driven by an increase in the APC segment revenue [31][10] - Consolidated gross margin was 42.1%, down from 49.5% in Q2 2021, reflecting lower gross profit margins from both operating segments [32] - The net loss for the quarter was $356,000 or $0.01 per share, compared to a net loss of $778,000 or $0.03 per share in Q2 2021 [37] Business Line Data and Key Metrics Changes - APC revenues increased by approximately $1.8 million to $2.7 million from $1 million in Q2 2021, reflecting project execution timing and revenue generation from new orders [31][13] - FUEL CHEM revenues declined to $3.6 million from $4.2 million in Q2 2021, primarily due to the loss of one customer and unforeseen plant outages [32][15] - APC gross margin was 34.2%, down from 48.6% in Q2 2021, while FUEL CHEM gross margin was 48%, slightly down from 49.7% in the same period last year [33] Market Data and Key Metrics Changes - The consolidated APC segment backlog rose to $10.5 million from $9.1 million at the end of 2021, with expectations to recognize $8.4 million of this backlog in the next 12 months [34] - Increased energy demand is driving coal-fired plants to be dispatched despite rising coal prices, creating opportunities for pollution control projects [17][18] Company Strategy and Development Direction - The company is focused on new contract awards, expedient execution, and technology innovation, particularly in the DGI segment [40] - The company is pursuing a global sales pipeline of $50 million to $75 million, tracking projects with contract values of $5 million to $10 million expected to be awarded soon [14][10] - The company is investigating providing chemical technology solutions for emissions from high-sulfur fuel oil in Mexico, with potential significant revenue opportunities [24][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that APC revenues for the year will exceed $6.9 million reported for 2021, potentially as early as the end of Q3 2022 [13][10] - The company is optimistic about the DGI technology's potential and is preparing for further investment and commercialization efforts [57][58] - Management noted that the recent legislation could provide long-term benefits for technologies that enhance the utilization of fossil fuels [52][55] Other Important Information - The company had total cash of more than $33 million with no long-term debt as of June 30, 2022 [11] - SG&A expenses fell to $2.9 million from $3 million in Q2 2021, with a target for 2022 set between $12 million and $12.5 million [35] Q&A Session Summary Question: Clarification on FUEL CHEM revenues - Management confirmed that the expected revenue range for FUEL CHEM for 2022 is $13 million to $15 million, with a long-term customer deciding to continue using the program [48] Question: Anticipation of revenue increase from Q2 to Q3 - Management expects a typical step-up in revenues from Q2 to Q3, particularly for the FUEL CHEM segment [49] Question: Size of the opportunity in Mexico - The opportunity in Mexico involves 20 to 25 units that could utilize the company's program, with potential annual royalty revenues of $3 million to $4 million from a single plant site [50][51] Question: Impact of IRA legislation on the company - Management indicated that the legislation could provide benefits by preserving the utilization of fossil fuels, which could positively impact the company's technologies [52][55] Question: Resources for DGI commercialization - Management stated that further investment in DGI will be assessed after hiring experienced leadership in water and wastewater treatment [56][57]
Fuel Tech(FTEK) - 2022 Q2 - Earnings Call Transcript