Fuel Tech(US:FTEK)2024-03-12 19:37Financial Data and Key Metrics Changes - Total revenue for 2023 was $27.1 million, slightly up from $26.9 million in 2022, marking the highest annual revenue since 2019 [3][33] - Consolidated revenues for Q4 2023 declined to $6.3 million from $7 million in Q4 2022, with an operating loss of $801,000 compared to a loss of $250,000 in the previous year [9][10] - Adjusted EBITDA loss was $2 million in 2023, compared to a loss of $909,000 in 2022, while cash generated from operations improved to nearly $700,000 from a cash use of $4.1 million in 2022 [12][10] Business Line Data and Key Metrics Changes - The APC segment revenue increased by 27% in 2023, attributed to new project awards totaling over $8.3 million, while the FUEL CHEM segment revenue declined by 17% due to decreased dispatch electrical generation demand [33][9] - APC segment gross margin improved to 55% in Q4 2023 from 35% in Q4 2022, while FUEL CHEM gross margin remained stable at 48% [11][103] Market Data and Key Metrics Changes - The consolidated APC segment backlog increased to $7.5 million at the end of 2023, up from $5.6 million at the end of Q3 2023, but down from $8.2 million at the end of 2022 [31] - The company is actively pursuing international opportunities, particularly in Mexico, to expand its FUEL CHEM segment [28] Company Strategy and Development Direction - The company is focusing on the commercialization of its DGI technology, with expectations for significant growth in 2024 [8][96] - Strategic expenditures will continue in 2024 to support the DGI initiative, with a projected SG&A expense range of $13 million to $13.5 million [34][135] - The company is well-positioned to capitalize on regulatory opportunities related to the EPA's Cross-State Air Pollution Control rule, which could drive APC growth [29][125] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2024 being a pivotal year for growth, with expectations for total revenues to exceed those of 2023 [8][30] - The company is monitoring regulatory developments closely, which could serve as catalysts for growth in both APC and FUEL CHEM segments [29][125] Other Important Information - The company ended 2023 with $33.4 million in cash and investments and no long-term debt, maintaining a strong financial position [25][35] - The company is enhancing its marketing efforts for DGI technology, following a successful demonstration that has generated increased inquiries from potential customers [109][98] Q&A Session Summary Question: How are potential customers finding out about DGI? - The company is increasing exposure to end markets and has had successful demonstrations that allow for public outreach regarding DGI capabilities [38] Question: What impact do you expect from the Good Neighbor rule on APC? - The potential impact is significant, with expectations of a material effect on revenue over a three to five-year period [47] Question: What is the expected timing for initial DGI contracts? - Initial contracts are anticipated in the second half of the year, with expected values generally below $1 million [48] Question: What are the areas municipalities are looking at for DGI applications? - One immediate application is for odor control at municipal water lift stations, with other applications being explored [57] Question: Will DGI play a role in the remediation of forever chemicals? - Currently, DGI would not have a direct impact on PFAS/PFOS issues, but the company is monitoring the situation closely [82]