Fuel Tech(US:FTEK)2020-03-12 16:14Financial Data and Key Metrics Changes - Revenue for Q4 2019 declined to $4.9 million from $15.8 million, primarily due to a nearly $9 million revenue decline at the APC segment [40] - Consolidated gross margin for Q4 2019 was less than 1% of revenues compared to 37.3% in Q4 2018; excluding a $2 million charge, gross margin was 41.1% [42] - Net loss from continuing operations was $4.7 million or $0.18 per diluted share compared to net income of $0.9 million or $0.04 per share in the same quarter last year [46] Business Line Data and Key Metrics Changes - APC segment revenues were significantly impacted, with a gross margin of negative $1.5 million compared to $3.2 million or 30.4% in Q4 2018 [43] - FUEL CHEM segment revenues were $3.2 million, down from $5.3 million in Q4 2018, with a gross margin of 47.8% compared to 51.1% in the prior year [44] - SG&A expenses for Q4 2019 declined by 6.5% to $4.5 million from $4.8 million in Q4 2018, marking the fourth consecutive year of decline [45] Market Data and Key Metrics Changes - The company is pursuing a global sales pipeline of $75 million to $100 million, primarily in the U.S. and Europe, with expectations of securing $15 million to $20 million in new work by the end of Q2 2020 [15] - The outstanding accounts receivable balance in China at December 31, 2019, was $2.7 million, reflecting a reduction of $3 million from the prior year-end [16] Company Strategy and Development Direction - The company is engaging a multidisciplinary team to address near-term business development opportunities with an increased sense of urgency [10] - Significant modifications will be made to better address customer needs and ensure product cost competitiveness [11] - The company is targeting total SG&A costs for 2020 to range between $13 million and $13.5 million, reflecting cost savings from restructuring efforts [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2019 was a challenging year due to delays in closing new APC business awards, which are expected to continue into Q1 2020 [8] - The company believes its current cash position and expected cash flow are adequate to fund operations for the next 12 months [14] - Management expressed optimism about the potential for improvement in financial performance as actions taken are expected to stabilize operations [34] Other Important Information - The company has eliminated the risk of loss from the wind-down of its China operations, which has resulted in approximately $2 million in annual operating losses being removed [16] - The company has filed a provisional patent application to protect enhancements to its DGI technology [32] Q&A Session Summary Question: What portion of your revenue during 2019 came from the Milan office? - Approximately 10% of revenues were coming from the European office [52] Question: What impact do you see from the travel restrictions to Europe? - There will likely be some impact, particularly on project timing and execution [54] Question: Can you provide more color on the APC-related award delays? - Delays are primarily due to project timing and funding issues rather than competitive impacts [55] Question: What level of revenues would you have expected without the outages and weather issues? - An estimated loss of $0.5 million to $0.75 million in Q4 due to those factors [58] Question: Should we expect any new demo units in the next few quarters? - More demo units are expected throughout 2020, with the first demonstration planned for a pulp and paper facility [59] Question: Is the $2 million in reimbursable receivable from the insurance company included on the balance sheet? - The receivable is currently unrecorded on the balance sheet [60] Question: Is the $13 million to $13.5 million SG&A target on a GAAP basis or cash basis? - It is on a GAAP basis [62]