Yahoo Finance Fuel Tech Inc (FTEK) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...
Consolidated Revenue: Declined to $5 million from $7.3 million in the previous year's first quarter.
Net Income: Reported at $281,000 or $0.01 per share, compared to a net loss of $414,000 or a loss of $0.01 per share in the prior year.
Gross Margin: Increased to 41% from 38% in the previous year.
APC Segment Revenue: Decreased to $2.3 million from $3.6 million in the previous year.
FUEL CHEM Segment Revenue: Declined to $2.6 million from $3.7 million in the previous year.
APC Segment Gross Margin: Improved to 38% from 27% in the prior year.
FUEL CHEM Segment Gross Margin: Decreased to 43% from 49% in the previous year.
APC Segment Backlog: Stood at $6.2 million, down from $7.5 million at the end of the previous year.
Interest Income: Generated $311,000, compared to $339,000 in the prior year.
Cash and Investments: Reported over $32 million in cash, cash equivalents, and investments, with no long-term debt.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Fuel Tech Inc (NASDAQ:FTEK) reported a strong financial position with over $32 million in cash, cash equivalents, and investments, and no long-term debt.
The company is seeing steady improvements and progress in its Dissolved Gas Infusion (DGI) business initiative.
Fuel Tech Inc (NASDAQ:FTEK) has received an order for a FUEL CHEM demonstration at a new coal-fired power generation site, which could generate annualized revenue of approximately $1.5 million to $2 million.
The company is well-positioned to benefit from regulatory changes, such as the US EPA's cross-state air pollution control regulation and new stringent greenhouse gas emission standards.
Fuel Tech Inc (NASDAQ:FTEK) is actively pursuing $5 million to $10 million in EPC contract opportunities that could close in their favor by the end of the second quarter or shortly thereafter.
Negative Points
Fuel Tech Inc (NASDAQ:FTEK) began the year more slowly than anticipated in its APC and FUEL CHEM business segments due to customer-driven delays and historic warm weather.
The company experienced declines in both APC and FUEL CHEM segments, with consolidated revenues declining to $5 million from $7.3 million in the previous year's first quarter.
Fuel Tech Inc (NASDAQ:FTEK) reported an operating loss of $1.7 million, compared to a loss of $658,000 in the previous year's first quarter.
The APC segment backlog decreased to $6.2 million from $7.5 million at the end of the previous quarter.
Fuel Tech Inc (NASDAQ:FTEK) faces uncertainties regarding the ultimate timing and effectiveness of regulatory rules due to ongoing legal challenges and court rulings.
Q & A Highlights
Q: With respect to the CAM segment, have you added new customers, and can you provide some color on how that part of the business is holding up in terms of new customer additions? A: Vincent Arnone, CEO of Fuel Tech Inc, noted that the company is seeing more opportunities this year than in recent years, which is positive. They have signed an order for a demonstration at a large coal-fired unit in the Western U.S., and discussions are ongoing with another similar unit, potentially starting in Q3. Additionally, there are discussions with owners of biomass-fired boiler units, indicating a broader range of new business opportunities.
Q: Considering the increase in electricity demand from AI and data needs, are you looking at any acquisition opportunities that could bring you closer to these types of opportunities? A: Vincent Arnone explained that while the macroeconomic trends are favorable and may extend the life of coal-fired units, thereby potentially increasing business for Fuel Tech, the company is not currently pursuing acquisitions to address these new demands directly. However, these trends are viewed positively as they may lead to more business for Fuel Techs existing technology suite.
Q: Could you potentially convert the pilot at the shrimp farm into a customer, and what are the expected order sizes for full-scale offerings? A: Arnone is hopeful about converting the successful demonstration at the shrimp farm into a commercial sale. The expected capital sale for a DGI system suitable for commercial scale might range from $0.5 million to $1 million. Additionally, they are considering aftermarket contracts to support ongoing maintenance, although the extent of maintenance required is still being evaluated.
Q: On the APC delays, are these due to court issues or just regular delays? A: Arnone clarified that the delays in the APC segment are regular business delays, not related to court issues. The expected business for 2024 did not factor in regulatory-driven projects, which he described as incremental business opportunities that might become clearer later in the year.
Q: In your guidance, are you including any potential positive outcomes from court rulings? A: Arnone confirmed that the guidance does not include any potential positive court rulings, indicating that any favorable rulings could represent upside risks to their forecasts.
Q: Can you discuss the municipal wastewater demonstration and what you are bringing to the table? A: The demonstration at a municipal wastewater site involves using DGI technology to maintain oxygen levels in wastewater lines to prevent hydrogen sulfide formation, which can corrode the infrastructure. This application aims to demonstrate DGI's capability to extend the lifecycle of infrastructure and reduce maintenance costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
