Fuel Tech, Inc. (NASDAQ: FTEK), a technology company
providing advanced engineering solutions for the optimization of
combustion systems, emissions control, and water treatment in
utility and industrial applications, today reported financial
results for the fourth quarter and full year ended December 31,
2022.
“We achieved our highest annual revenue since 2019, maintained
tight expense control, and made significant progress towards
commercializing our Dissolved Gas Infusion (DGITM) technology
business segment with respect to technology, market development,
and leadership,” said Vincent J. Arnone, President and CEO. “We
ended the year in a strong financial position, with $32.7 million
in cash and investments, and no long-term debt.
“Our Air Pollution Control (APC) business performed well, driven
by approximately $10 million of new project awards announced during
2022, with an emphasis on our ULTRA, SCR and SNCR emissions control
solutions both domestically and abroad. During the current first
quarter of 2023, we announced $5 million of new APC contract
awards, which provided a solid start to the year for this segment.
We remain encouraged by the pace and depth of new business
development within APC, which is reflected in a global sales
pipeline of $50 - $75 million, much of which is being driven by
regulatory requirements, plant expansions, and equipment upgrade
requirements. Revenues at our FUEL CHEM® segment declined modestly
year-over-year, with segment gross margin essentially unchanged and
at historic levels.
“Last week we announced the hiring of William (Bill) Decker as
Vice President Water and Wastewater Treatment Technologies. In this
newly created role, Bill will lead the growth and development of
our DGI technology, including business development, sales and
marketing, and new product development and commercialization. Bill
brings decades of relevant industry knowledge, contacts, and
know-how to DGI and we are excited to work together to usher in the
next exciting chapter of Fuel Tech’s growth and evolution.”
Mr. Arnone concluded, “ The outlook for our business segments in
2023 is promising, and we are pursuing a robust pipeline of new
business opportunities. We continue to believe that an increasing
focus on global emissions protocols across a variety of fuel
sources, and the associated legislation that should result from
these initiatives, will provide avenues of long-term growth and
opportunity for our Company. We expect that total revenue for full
year 2023 will improve modestly from 2022, driven primarily by
improved sales within APC, offset by a slight decline in
anticipated results within FUEL CHEM for the current year. With the
addition of experienced leadership in support of DGI, we expect to
accelerate our water and wastewater treatment activities with an
eye towards securing our first contracts this year.”
Q4 2022 Consolidated Results
Overview
Consolidated revenues for the fourth quarter ended December 31,
2022 (“Q4 2022”) rose to $7.0 million from $6.5 million in the
fourth quarter ended December 31, 2021 (“Q4 2021”), reflecting
higher revenues from the FUEL CHEM segment due to climate factors
and related improved dispatch levels for the power generation
facilities that use our program, offset by lower APC revenues due
in large part to the timing of project execution.
Consolidated gross margin for Q4 2022 fell to 42.8% of revenues
from 50.2% of revenues in Q4 2021, reflecting changes in product
and project mix and increased supply chain costs in our APC
segment.
SG&A expenses declined to $3.1 million from $3.2 million in
Q4 2021, reflecting lower employee expenses and office and
administrative costs relating to our foreign subsidiaries.
Operating loss for the quarter was essentially unchanged at
$(0.2) million reflecting a shift in margin contribution from
product mix despite increased revenues and lower operating
expenses.
Net loss in Q4 2022 was $(0.4) million, or $(0.01) per share,
compared to net loss of $(0.2) million, or $(0.01) per share, in Q4
2021.
Consolidated APC segment backlog at December 31, 2022 was $8.2
million compared to $9.1 million at December 31, 2021.
APC revenues decreased to $2.9 million from $3.1 million in Q4
2021 and gross margin declined to 35.4% of revenue from 55.6% of
revenue due to changes in product mix and increased supply chain
costs.
FUEL CHEM segment revenues rose to $4.1 million from $3.4
million in Q4 2021, and gross margin improved to 48.1% from 45.3%
in Q4 2021.
Adjusted EBITDA loss was $(0.3) million in Q4 2022 compared to
Adjusted EBITDA loss of $(0.05) million in Q4 2021.
2022 Full Year Overview
Consolidated revenues for 2022 rose to $26.9 million from $24.3
million, reflecting a 54% increase in APC revenues offset by a 6%
decline in FUEL CHEM revenues.
Consolidated gross margin for full year 2022 and 2021 was 43.2%
and 49%, respectively, reflecting the factors cited above.
SG&A expenses for 2022 increased to $12.3 million, or 45.6%
of revenues, from $12.1 million, or 49.7% of revenues, in 2021.
Operating loss was $(1.5) million in 2022 and 2021.
Net loss for 2022 was $(1.4) million, or $(0.05) per diluted
share, compared to a net income of $0.1 million, or $0.00 per
diluted share, in 2021. Net income in 2021 included other income of
$1.6 million reflecting full forgiveness of the loan proceeds from
the Paycheck Protection Program, established pursuant to the CARES
Act.
Adjusted EBITDA loss was $(0.9) million in 2022 compared to an
Adjusted EBITDA loss of $(.7) million in 2021.
Financial Condition
At December 31, 2022, cash and cash equivalents were $23.3
million, short-term investments were $3.0 million, and long-term
investments totaled $6.4 million. Stockholders’ Equity at December
31, 2022 was $44.9 million, or $1.48 per share, and the Company had
no debt.
Conference Call
Management will host a conference call on Wednesday, March 8,
2023 at 10:00 am ET / 9:00 am CT to discuss the results and
business activities. Interested parties may participate in the call
by dialing:
- (877) 423-9820 (Domestic) or
- (201) 493-6749 (International)
The conference call will also be accessible via the Upcoming
Events section of the Company’s web site at www.ftek.com. Following
management’s opening remarks, there will be a question-and-answer
session. Questions may be asked during the live call, or
alternatively, you may e-mail questions in advance to
dsullivan@equityny.com. For those who cannot listen to the live
broadcast, an online replay will be available at www.ftek.com.
About Fuel Tech
Fuel Tech develops and commercializes state-of-the-art
proprietary technologies for air pollution control, process
optimization, water treatment, and advanced engineering services.
These technologies enable customers to operate in a cost-effective
and environmentally sustainable manner. Fuel Tech is a leader in
nitrogen oxide (NOx) reduction and particulate control technologies
and its solutions have been in installed on over 1,200 utility,
industrial and municipal units worldwide. The Company’s FUEL CHEM®
technology improves the efficiency, reliability, fuel flexibility,
boiler heat rate, and environmental status of combustion units by
controlling slagging, fouling, corrosion and opacity. Water
treatment technologies include DGI™ Dissolved Gas Infusion Systems
which utilize a patented nozzle to deliver supersaturated oxygen
solutions and other gas-water combinations to target process
applications or environmental issues. This infusion process has a
variety of applications in the water and wastewater industries,
including remediation, aeration, biological treatment and
wastewater odor management. Many of Fuel Tech’s products and
services rely heavily on the Company’s exceptional Computational
Fluid Dynamics modeling capabilities, which are enhanced by
internally developed, high-end visualization software. For more
information, visit Fuel Tech’s web site at www.ftek.com.
NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” as
defined in Section 21E of the Securities Exchange Act of 1934, as
amended, which are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 and reflect
Fuel Tech’s current expectations regarding future growth, results
of operations, cash flows, performance and business prospects, and
opportunities, as well as assumptions made by, and information
currently available to, our management. Fuel Tech has tried to
identify forward-looking statements by using words such as
“anticipate,” “believe,” “plan,” “expect,” “estimate,” “intend,”
“will,” and similar expressions, but these words are not the
exclusive means of identifying forward-looking statements. These
statements are based on information currently available to Fuel
Tech and are subject to various risks, uncertainties, and other
factors, including, but not limited to, those discussed in Fuel
Tech’s Annual Report on Form 10-K in Item 1A under the caption
“Risk Factors,” and subsequent filings under the Securities
Exchange Act of 1934, as amended, which could cause Fuel Tech’s
actual growth, results of operations, financial condition, cash
flows, performance and business prospects and opportunities to
differ materially from those expressed in, or implied by, these
statements. Fuel Tech undertakes no obligation to update such
factors or to publicly announce the results of any of the
forward-looking statements contained herein to reflect future
events, developments, or changed circumstances or for any other
reason. Investors are cautioned that all forward-looking statements
involve risks and uncertainties, including those detailed in Fuel
Tech’s filings with the Securities and Exchange Commission.
Fuel Tech, Inc.
Consolidated Balance
Sheets
(in thousands of dollars, except
share and per-share data)
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
23,328
$
35,893
Restricted cash
—
891
Short-term investments
2,981
—
Accounts receivable, net
7,729
3,259
Inventories, net
392
348
Prepaid expenses and other current
assets
1,395
1,074
Total current assets
35,825
41,465
Property and equipment, net
4,435
4,609
Goodwill
2,116
2,116
Other intangible assets, net
397
448
Restricted cash
—
270
Right-of-use operating lease assets
197
242
Long-term investments
6,360
—
Other assets
794
824
Total assets
$
50,124
$
49,974
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
2,710
$
1,561
Accrued liabilities:
Operating lease liabilities - current
125
113
Employee compensation
1,105
688
Other accrued liabilities
826
861
Total current liabilities
4,766
3,223
Operating lease liabilities -
non-current
66
122
Deferred income taxes
177
139
Other liabilities
274
290
Total liabilities
5,283
3,774
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $.01 par value, 40,000,000
shares authorized, 31,272,303 and 31,227,300 shares issued, and
30,296,297 and 30,263,791 shares outstanding in 2022 and 2021,
respectively
313
312
Additional paid-in capital
164,422
164,199
Accumulated deficit
(115,956
)
(114,549
)
Accumulated other comprehensive loss
(1,728
)
(1,604
)
Nil coupon perpetual loan notes
76
76
Treasury stock, at cost (Note 5)
(2,251
)
(2,234
)
Total stockholders’ equity
44,876
46,200
Total liabilities and stockholders’
equity
$
50,124
$
49,974
See notes to consolidated financial
statements.
Fuel Tech, Inc.
Consolidated Statements of
Operations
(in thousands of dollars, except
share and per-share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
2022
2021
Revenues
$
7,021
$
6,451
$
26,941
$
24,261
Costs and expenses:
Cost of sales
4,018
3,213
15,298
12,363
Selling, general and administrative
3,074
3,197
12,275
12,055
Research and development
179
262
895
1,332
7,271
6,672
28,468
25,750
Operating income (loss)
(250
)
(221
)
(1,527
)
(1,489
)
Interest expense
(4
)
2
(17
)
(19
)
Interest income
101
(16
)
202
6
Other income, net
(204
)
104
(46
)
1,570
Income (loss) before income
taxes
(357
)
(240
)
(1,388
)
68
Income tax expense
(45
)
(4
)
(54
)
(14
)
Net income (loss)
$
(402
)
$
(244
)
$
(1,442
)
$
54
Net income (loss) per common
share:
Basic net income (loss) per common
share
$
(0.01
)
$
(0.01
)
$
(0.05
)
$
0.00
Diluted net income (loss) per common
share
$
(0.01
)
$
(0.01
)
$
(0.05
)
$
0.00
Weighted-average number of common
shares outstanding:
Basic
30,296,000
30,264,000
30,289,000
29,585,000
Diluted
30,296,000
30,264,000
30,289,000
29,694,000
See notes to consolidated financial
statements.
Fuel Tech, Inc.
Consolidated Statements of
Comprehensive Loss
(in thousands of dollars)
For the years ended December
31,
2022
2021
Net (loss) income
$
(1,442
)
$
54
Other comprehensive loss:
Foreign currency translation
adjustments
(124
)
(234
)
Total other comprehensive loss
(124
)
(234
)
Comprehensive loss
$
(1,566
)
$
(180
)
See notes to consolidated financial
statements.
Fuel Tech, Inc.
Consolidated Statements of
Cash Flows
(in thousands of dollars)
For the years ended December
31,
2022
2021
OPERATING ACTIVITIES
Net (loss) income
$
(1,442
)
$
54
Adjustments to reconcile net (loss) income
to net cash (used in) provided by operating activities:
Depreciation
352
584
Amortization
88
157
Loss on sale of equipment
—
54
Non-cash interest income on
held-to-maturity securities
(5
)
—
Provision for doubtful accounts, net of
recoveries
(106
)
(619
)
Deferred income taxes
38
5
Stock-based compensation, net of
forfeitures
224
82
Gain of forgiveness on Paycheck Protection
Plan Loan
—
(1,556
)
Changes in operating assets and
liabilities:
Accounts receivable
(4,448
)
3,794
Inventories
(45
)
(252
)
Prepaid expenses, other current assets and
other non-current assets
(314
)
634
Accounts payable
1,159
(772
)
Accrued liabilities and other non-current
liabilities
360
(1,404
)
Net cash (used in) provided by operating
activities
(4,139
)
761
INVESTING ACTIVITIES
Purchases of equipment and patents
(206
)
(84
)
Purchases of debt securities
(9,777
)
—
Maturities of debt securities
500
—
Net cash used in investing activities
(9,483
)
(84
)
FINANCING ACTIVITIES
Proceeds from sale of common stock issued
in connection with private placement
—
25,812
Costs related to sale of common stock
issued in connection with private placement
—
(1,783
)
Taxes paid on behalf of equity award
participants
(17
)
(52
)
Net cash (used in) provided by financing
activities
(17
)
23,977
Effect of exchange rate fluctuations on
cash
(87
)
(206
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(13,726
)
24,448
Cash, cash equivalents and restricted cash
at beginning of period
37,054
12,606
Cash, cash equivalents and restricted
cash at end of period
$
23,328
$
37,054
See notes to consolidated financial
statements.
Fuel Tech, Inc.
Segment Data- Reporting
Segments
(in thousands of dollars)
(in thousands)
Air Pollution
FUEL CHEM
Three months ended December 31, 2022
Control Segment
Segment
Other
Total
Revenues from external customers
$
2,927
$
4,094
$
—
$
7,021
Cost of sales
(1,892
)
(2,126
)
—
(4,018
)
Gross margin
1,035
1,968
—
3,003
Selling, general and administrative
—
—
(3,074
)
(3,074
)
Research and development
—
—
(179
)
(179
)
Operating income (loss) from
operations
$
1,035
$
1,968
$
(3,253
)
$
(250
)
Air Pollution
FUEL CHEM
Three months ended December 31, 2021
Control Segment
Segment
Other
Total
Revenues from external customers
$
3,059
$
3,392
$
—
$
6,451
Cost of sales
(1,357
)
(1,856
)
—
(3,213
)
Gross margin
1,702
1,536
—
3,238
Selling, general and administrative
—
—
(3,197
)
(3,197
)
Research and development
—
—
(262
)
(262
)
Operating income (loss) from
operations
$
1,702
$
1,536
$
(3,459
)
$
(221
)
Air Pollution
FUEL CHEM
For the year ended
December 31, 2022
Control Segment
Segment
Other
Total
Revenues from external customers
$
10,597
$
16,344
$
—
$
26,941
Cost of sales
(6,924
)
(8,374
)
—
(15,298
)
Gross margin
3,673
7,970
—
11,643
Selling, general and administrative
—
—
(12,275
)
(12,275
)
Research and development
—
—
(895
)
(895
)
Operating income (loss) from continuing
operations
$
3,673
$
7,970
$
(13,170
)
$
(1,527
)
Air Pollution
FUEL CHEM
For the year ended
December 31, 2021
Control Segment
Segment
Other
Total
Revenues from external customers
$
6,896
$
17,365
$
—
$
24,261
Cost of sales
(3,529
)
(8,834
)
—
(12,363
)
Gross margin
3,367
8,531
—
11,898
Selling, general and administrative
—
—
(12,055
)
(12,055
)
Research and development
—
—
(1,332
)
(1,332
)
Operating income (loss) from continuing
operations
$
3,367
$
8,531
$
(13,387
)
$
(1,489
)
Fuel Tech, Inc.
Geographic Segment Financial
Data
(in thousands of dollars)
Information concerning our operations by
geographic area is provided below. Revenues are attributed to
countries based on the location of the end-user. Assets are those
directly associated with operations of the geographic area.
For the years ended
December 31,
2022
2021
Revenues:
United States
$
20,311
$
19,515
Foreign
6,630
4,746
$
26,941
$
24,261
As of December
31,
2022
2021
Assets:
United States
$
47,007
$
46,271
Foreign
3,117
3,703
$
50,124
$
49,974
FUEL TECH, INC.
RECONCILIATION OF GAAP NET INCOME
(LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2022
2021
2022
2021
Net (Loss) Income
$
(402
)
$
(244
)
$
(1,442
)
$
54
Interest expense, net
(97
)
3
(185
)
13
Income tax expense (benefit)
45
4
54
14
Depreciation expense
85
127
352
584
Amortization expense
18
43
88
157
EBITDA
(351
)
(67
)
(1,133
)
822
Gain on Forgiveness of Paycheck Protection
Plan loan
-
-
-
(1,566
)
Intangible assets abandonment
-
-
-
-
Stock compensation expense
88
21
224
82
ADJUSTED EBITDA
$
(263
)
$
(46
)
$
(909
)
$
(662
)
Adjusted EBITDA
To supplement the Company's consolidated financial statements
presented in accordance with generally accepted accounting
principles in the United States (GAAP), the Company has provided an
Adjusted EBITDA disclosure as a measure of financial performance.
Adjusted EBITDA is defined as net income (loss) before interest
expense, income tax expense (benefit), depreciation expense,
amortization expense, stock compensation expense, and intangible
assets abandonment and building impairment. The Company's reference
to these non-GAAP measures should be considered in addition to
results prepared in accordance with GAAP standards, but are not a
substitute for, or superior to, GAAP results.
Adjusted EBITDA is provided to enhance investors' overall
understanding of the Company's current financial performance and
ability to generate cash flow, which we believe is a meaningful
measure for our investor and analyst communities. In many cases
non-GAAP financial measures are utilized by these individuals to
evaluate Company performance and ultimately determine a reasonable
valuation for our common stock. A reconciliation of Adjusted EBITDA
to the nearest GAAP measure of net income (loss) has been included
in the above financial table.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230307005840/en/
Vince Arnone President and CEO (630) 845-4500
Devin Sullivan Managing Director The Equity Group Inc. (212)
836-9608
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