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Fuel Tech(FTEK) - 2024 Q3 - Earnings Call Transcript
FTEKFuel Tech(FTEK)2024-11-07 20:53
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Financial Data and Key Metrics Changes - The company reported consolidated revenues of 7.9millionforQ32024,aslightdecreasefrom7.9 million for Q3 2024, a slight decrease from 8 million in the same period last year [20] - The net income for the quarter was 80,000or80,000 or 0.00 per share, compared to 459,000or459,000 or 0.01 per share in the same period last year [26] - Consolidated gross margin decreased to 43% from 45% year-over-year, primarily due to a decline in the APC segment gross margin [20][21] - Operating loss was 179,000comparedtooperatingincomeof179,000 compared to operating income of 133,000 in the same period last year [25] Business Line Data and Key Metrics Changes - FUEL CHEM segment revenue increased to 4.6millionfrom4.6 million from 4.3 million year-over-year, reflecting contributions from returning customers and a new coal-fired account [20][10] - APC segment revenue declined to 3.2millionfrom3.2 million from 3.7 million, primarily due to timing of project execution [20][12] - FUEL CHEM's gross margin remained flat at 49%, while APC segment gross margin decreased to 35% from 40% [21][20] Market Data and Key Metrics Changes - The company ended the quarter with cash, cash equivalents, and investments of over 31millionandnodebt[9][27]−ConsolidatedAPCsegmentbacklogwas31 million and no debt [9][27] - Consolidated APC segment backlog was 6.4 million, down from 7.5millionattheendofthepreviousyear[22]CompanyStrategyandDevelopmentDirection−ThecompanyisfocusingonthecommercializationofitsDGItechnology,withongoingdiscussionsfordemonstrationsinmultipleendmarkets[9][16]−Thecompanyexpectstotalrevenuesfor2024tobeintherangeof7.5 million at the end of the previous year [22] Company Strategy and Development Direction - The company is focusing on the commercialization of its DGI technology, with ongoing discussions for demonstrations in multiple end markets [9][16] - The company expects total revenues for 2024 to be in the range of 25 million to 26million,indicatingalower−than−expectedQ4revenueduetoprojectexecutiondelays[18][39]−ThecompanyisoptimisticaboutthepotentialforadditionalAPCorders,expecting26 million, indicating a lower-than-expected Q4 revenue due to project execution delays [18][39] - The company is optimistic about the potential for additional APC orders, expecting 2 million to 4 million in new contracts by early 2025 [12][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience and growth potential of the FUEL CHEM segment and the outlook for APC as they move into 2025 [18] - The management noted that the regulatory environment is uncertain, particularly regarding the Good Neighbor rule, which could impact future project opportunities [13][50] - The company is encouraged by the new administration's environmental policies in Mexico, which may provide opportunities for their chemical technology [62] Other Important Information - SG&A expenses increased to 3.2 million from 3millionyear−over−year,reflectinghigheremployee−relatedexpenditures[23]−Researchanddevelopmentexpensesdecreasedby303 million year-over-year, reflecting higher employee-related expenditures [23] - Research and development expenses decreased by 30% to 361,000, focusing on new technologies for water and wastewater treatment [24] Q&A Session Summary Question: Timeline for EPA review of the Good Neighbor provision - Management indicated that predicting a specific timeline is difficult due to ongoing changes in administration and regulatory reviews [29] Question: Revenue impact from the Good Neighbor provision - Management clarified that potential project opportunities from the Good Neighbor provision would be additional upside and would not impact existing revenue [31] Question: Incremental revenue from new coal-fired unit - Management confirmed that the expected revenue from the new coal-fired unit is incremental and not part of existing accounts [32] Question: DGI demonstration timeline - The DGI demonstration at the fish hatchery is expected to commence in April 2025 and last 4 to 6 months [37] Question: Fourth quarter revenue outlook - Management acknowledged that the outlook for Q4 indicates lower revenue due to project execution delays [39] Question: Mexico opportunity and discussions with the new administration - Management reported increased discussions with the new administration in Mexico regarding environmental policies and potential opportunities for their technology [62]