Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2021 declined to $7.6 million from $8.2 million in Q3 2020, reflecting higher revenues in the FUEL CHEM segment offset by a decline in the APC segment [18] - Net income was $678,000, or $0.02 per diluted share, compared to net income of $2.4 million, or $0.09 per diluted share in Q3 2020, which included a $2.6 million insurance settlement [22] - Adjusted EBITDA was $0.9 million in Q3 2021 compared to $2.7 million in the same period last year [22] - Consolidated gross margin for Q3 2021 was 49.2% of revenues, compared to 72.4% in Q3 2020, including the insurance settlement [20] Business Line Data and Key Metrics Changes - FUEL CHEM segment revenues increased to $5.6 million from $5.3 million in Q3 2020, benefiting from the current installed base and higher power demand [18][8] - APC segment revenues declined to $1.9 million in Q3 2021 from $2.9 million in Q3 2020, primarily due to project delays and cancellations related to the COVID-19 pandemic [19] - APC gross margin in Q3 2021 was $810,000 or 41.7% of revenue, compared to a significantly inflated margin in Q3 2020 due to an insurance settlement [19] Market Data and Key Metrics Changes - The company reported a backlog of $8.2 million in the APC segment as of September 30, 2021, which includes $4.5 million of new contract awards announced in Q3 2021 [20] - The global sales pipeline for the APC segment increased to $50 million to $75 million from $40 million to $50 million [11] Company Strategy and Development Direction - The company is broadening its portfolio of environmental remediation solutions, particularly with the DGI business focused on wastewater treatment [9] - The company is pursuing new opportunities both domestically and internationally for its FUEL CHEM technology, including addressing emissions from high sulfur fuel oil in Mexico [10] - The company is monitoring the infrastructure bill in Congress, which may include options beyond traditional renewable energy, potentially benefiting Fuel Tech [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the next 12 to 18 months, noting an increase in contract opportunities and larger dollar value contracts [36] - The company anticipates some pressure on the FUEL CHEM business due to the planned shutdown of a long-term installation [9] - Management indicated that they do not expect dramatic increases in SG&A expenses unless resources are added to support the DGI initiative [35] Other Important Information - Cash and cash equivalents were reported at $35.2 million as of September 30, 2021, with no debt [23] - SG&A expenses declined by 12% compared to Q3 2020, reflecting decreases in employee-related costs [21] Q&A Session Summary Question: Impact of FUEL CHEM customer shutting down operations - Management expects approximately a 3% to 5% impact in revenues from the shutdown of one particular customer [30] Question: Potential to make up for lost revenues - Management indicated that there are opportunities to recover the lost revenue from other customers, with visibility into potential new contracts [31] Question: Expectations for operating costs moving forward - Management expects SG&A expenses to remain stable, with potential increases only if resources are added for the DGI initiative [35] Question: Prospects for revenue growth in the next 12 to 18 months - Management noted an increase in larger contract opportunities, which had not been seen in the past two years due to COVID-19 [36]
Fuel Tech(FTEK) - 2021 Q3 - Earnings Call Transcript