false 0000846913 0000846913 2024-03-11 2024-03-11
 
United States
Securities And Exchange Commission
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
 
Date of Report (Date of earliest event reported) March 11, 2024
 
FUEL TECH, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
(State or other jurisdiction
of incorporation)
001-33059
(Commission
File Number)
20-5657551
(IRS Employer
Identification No.)
 
Fuel Tech, Inc.
27601 Bella Vista Parkway
Warrenville, IL 60555-1617
630-845-4500
 
(Address and telephone number of principal executive offices)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
FTEK
NASDAQ
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision:
 
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
 
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
 
On March 11, 2024, Fuel Tech, Inc. ("Fuel Tech” or the “Registrant”) issued a press release which contained, among other things, an announcement of Fuel Tech's financial results for the fourth quarter and for the full year ended December 31, 2023. A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.
 
 
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
 
(a) Financial Statements of Businesses Acquired.
 
None.
 
(b) Pro Forma Financial Information.
 
None.
 
(d) Exhibits.
 
Exhibit No.                   Description
 
 
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Fuel Tech, Inc.
 
 
(Registrant)
 
       
Date: March 11, 2024
     
       
 
By:
/s/ Ellen T. Albrecht
 
   
Ellen T. Albrecht
 
   
Vice President, Chief Financial Officer
and Treasurer
 
 
 

Exhibit 99.1

 

 

ft01.jpg

 

 

CONTACT:

Vince Arnone

President and CEO

(630) 845-4500

 

Devin Sullivan

Managing Director

The Equity Group Inc.

dsullivan@equityny.com

                                                              

                                              

FOR IMMEDIATE RELEASE

 

FUEL TECH REPORTS 2023 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

 

 

WARRENVILLE, Ill. March 11, 2024 - Fuel Tech, Inc. (NASDAQ: FTEK), a technology company providing advanced engineering for the optimization of combustion systems, emissions control, and water treatment in utility and industrial applications, today reported financial results for the fourth quarter (Q4) and full year ended December 31, 2023.

 

“We reported higher total revenues compared to full year 2022, completed a successful trial of our Dissolved Gas Infusion (DGITM) technology in an aquaculture setting, maintained tight expense control, and ended the year in a strong financial position, with $33.4 million in cash and investments, and no long-term debt,” said Vincent J. Arnone, President and CEO.

 

“Our Air Pollution Control (APC) business performed well in the 2023 fourth quarter and full year, driven by approximately $8.3 million of new project awards announced during the year, with an emphasis on our ULTRA, SCR, SNCR and FGC emissions control solutions both domestically and abroad. Our APC backlog at December 31, 2023 was $7.5 million, up from $5.6 million at September 30, 2023. Although we do expect that APC revenue will increase modestly in 2024 when compared to 2023, it is likely that the bulk of our new award activity will occur in the second half of the year. As expected, revenues at our FUEL CHEM® segment declined year-over-year for both the fourth quarter and full year 2023, with warmer weather across the US impacting unit dispatch; however, segment gross margin was essentially unchanged and at historic levels. Our base FUEL CHEM unit count remains intact as we enter 2024 and we are currently pursuing additional FUEL CHEM opportunities which could provide incremental revenue contribution in 2024.”

 

 

 

Mr. Arnone concluded, “We are very pleased with the trajectory of our DGI business segment. In February we announced the publication of a white paper that detailed the benefits of deploying DGI for oxygen injection at a shrimp farm in the US and we presented these results at Aquaculture America in San Antonio, Texas. We have received a notable increase in inquiries regarding our DGI technology from potential customers in multiple end markets and are currently in negotiations with potential customers regarding on-site demonstrations of DGI. We are targeting to enter into our first commercial contract for DGI in 2024.”

 

Q4 2023 Consolidated Results Overview

 

Consolidated revenues for Q4 2023 declined to $6.3 million from $7.0 million in Q4 2022, with modest declines in both business segments from the prior year.

 

Consolidated gross margin for Q4 2023 rose to 51.1% of revenues from 42.8% of revenues in Q4 2022, due to a significant increase in APC gross margin during the quarter driven by the mix of APC projects and services executed during the quarter.

 

SG&A expenses increased to $3.7 million from $3.1 million in Q4 2022, reflecting the timing of employee and employee-related expenses.

 

Interest income improved to $0.3 million from $0.1 million in Q4 2022, reflecting an increase in capital invested and higher interest rates on held-to-maturity debt securities and money market funds.   

 

Net loss in Q4 2023 was $(539,000), or $(0.02) per share, compared to net loss of $(402,000), or $(0.01) per share, in Q4 2022.

 

Consolidated APC segment backlog at December 31, 2023 was $7.5 million compared to $5.6 million at September 30, 2023 and $8.2 million at December 31, 2022.

 

APC segment revenue decreased to $2.8 million from $2.9 million in Q4 2022. APC gross margin rose to 55.6% from 35.4%, due primarily to the mix of APC projects and services executed during the quarter.

 

FUEL CHEM segment revenue declined to $3.6 million from $4.1 million in Q4 2022, due to a decline in electrical generation demand for the units on which our FUEL CHEM program is installed. Gross margin was unchanged at 48.0%.

 

Adjusted EBITDA loss was $(0.6) million in Q4 2023 compared to Adjusted EBITDA loss of $(0.3) million in Q4 2022.

 

2023 Full Year Overview

 

Consolidated revenues for 2023 rose 1.0% to $27.1 million from $26.9 million in 2022, reflecting the increase in APC revenue partially offset by a decline in FUEL CHEM revenue.

 

 

 

Consolidated gross margin for full year 2023 was unchanged at 43% compared to 2022, reflecting an increase in APC gross margin and a stable FUEL CHEM gross margin.

 

SG&A expenses for 2023 increased to $12.8 million, or 47.3% of revenues, from $12.3 million, or 45.6% of revenues, in 2022, reflecting an increase in employee related costs and other expenses.

 

Interest income improved to $1.3 million from $0.2 million in 2022, reflecting an increase in capital invested and higher interest rates on held-to-maturity debt securities and money market funds.   

 

Net loss for 2023 was $(1.5) million, or $(0.05) per share, compared to net loss of $(1.4) million, or $(0.05) per share, in 2022.

 

Adjusted EBITDA loss was $(2.0) million in 2023 compared to Adjusted EBITDA loss of $(0.9) million in 2022.

 

Financial Condition

 

At December 31, 2023, cash and cash equivalents were $17.6 million, short-term investments were $12.1 million, and long-term investments totaled $3.7 million. Stockholders’ equity at December 31, 2023 was $43.7 million, or $1.44 per share, and the Company had no debt.

 

Conference Call

 

Management will host a conference call on Tuesday, March 12, 2024 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 installed on over 1,300 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 channel injector 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

   

December 31,

 
   

2023

   

2022

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 17,578     $ 23,328  

Short-term investments

    12,136       2,981  

Accounts receivable, less current expected credit loss of $111 and $110, respectively

    6,729       7,729  

Inventories, net

    439       392  

Prepaid expenses and other current assets

    1,439       1,395  

Total current assets

    38,321       35,825  

Property and equipment, net

    4,539       4,435  

Goodwill

    2,116       2,116  

Other intangible assets, net

    358       397  

Right-of-use operating lease assets

    609       197  

Long-term investments

    3,664       6,360  

Other assets

    781       794  

Total assets

  $ 50,388     $ 50,124  

LIABILITIES AND STOCKHOLDERS EQUITY

               

Current liabilities:

               

Accounts payable

  $ 2,421     $ 2,710  

Accrued liabilities:

               

Operating lease liabilities - current

    81       125  

Employee compensation

    1,252       1,105  

Other accrued liabilities

    1,934       826  

Total current liabilities

    5,688       4,766  

Operating lease liabilities - non-current

    533       66  

Deferred income taxes

    172       177  

Other liabilities

    281       274  

Total liabilities

    6,674       5,283  

Commitments and contingencies (Note 9)

               

Stockholders’ equity:

               

Common stock, $.01 par value, 40,000,000 shares authorized, 31,361,303 and 31,272,303 shares issued, and 30,385,297 and 30,296,297 shares outstanding in 2023 and 2022, respectively

    313       313  

Additional paid-in capital

    164,853       164,422  

Accumulated deficit

    (117,529 )     (115,991 )

Accumulated other comprehensive loss

    (1,748 )     (1,728 )

Nil coupon perpetual loan notes

    76       76  

Treasury stock, at cost (Note 5)

    (2,251 )     (2,251 )

Total stockholders’ equity

    43,714       44,841  

Total liabilities and stockholders’ equity

  $ 50,388     $ 50,124  

 

See notes to condensed consolidated financial statements.

 

 

 

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per-share data)

 

   

Three Months Ended

   

Twelve Months Ended

 
   

December 31,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 

Revenues

  $ 6,345     $ 7,021     $ 27,081     $ 26,941  

Costs and expenses:

                               

Cost of sales

    3,102       4,018       15,425       15,298  

Selling, general and administrative

    3,677       3,074       12,803       12,275  

Research and development

    367       179       1,511       895  
      7,146       7,271       29,739       28,468  

Operating loss

    (801 )     (250 )     (2,658 )     (1,527 )

Interest expense

    (6 )     (4 )     (21 )     (17 )

Interest income

    332       101       1,300       202  

Other income (expense), net

    5       (204       (90 )     (46 )

Loss before income taxes

    (470 )     (357 )     (1,469 )     (1,388 )

Income tax expense

    (69 )     (45 )     (69 )     (54 )

Net loss

  $ (539 )   $ (402 )   $ (1,538 )   $ (1,442 )

Net loss per common share:

                               

Basic net loss per common share

  $ (0.02 )   $ (0.01 )   $ (0.05 )   $ (0.05 )

Diluted net loss per common share

  $ (0.02 )   $ (0.01 )   $ (0.05 )   $ (0.05 )

Weighted-average number of common shares outstanding:

                               

Basic

    30,385,000       30,296,000       30,348,000       30,289,000  

Diluted

    30,385,000       30,296,000       30,348,000       30,289,000  

 

See notes to condensed consolidated financial statements.

 

 

 

 

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

 

   

For the years ended December 31,

 
   

2023

   

2022

 

Net loss

  $ (1,538 )   $ (1,442 )

Other comprehensive loss:

               

Foreign currency translation adjustments

    (20 )     (124 )

Total other comprehensive loss

    (20 )     (124 )

Comprehensive loss

  $ (1,558 )   $ (1,566 )

 

See notes to condensed consolidated financial statements.

 

 

 

 

FUEL TECH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

   

For the years ended December 31,

 
   

2023

   

2022

 

OPERATING ACTIVITIES

               

Net loss

  $ (1,538 )   $ (1,442 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

               

Depreciation

    281       352  

Amortization

    61       88  

Loss on sale of equipment

    10        

Non-cash interest income on held-to-maturity securities

    (433 )     (5 )

Provision for credit losses, net of recoveries

          (106 )

Deferred income taxes

    (5 )     38  

Stock-based compensation, net of forfeitures

    389       224  

Changes in operating assets and liabilities:

               

Accounts receivable

    1,039       (4,448 )

Inventories

    (46 )     (45 )

Prepaid expenses, other current assets and other non-current assets

    (6 )     (314 )

Accounts payable

    (295 )     1,159  

Accrued liabilities and other non-current liabilities

    1,239       360  

Net cash provided by (used in) operating activities

    696       (4,139 )
                 

INVESTING ACTIVITIES

               

Purchases of equipment and patents

    (418 )     (206 )

Purchases of debt securities

    (14,026 )     (9,777 )

Maturities of debt securities

    8,000       500  

Net cash used in investing activities

    (6,444 )     (9,483 )
                 

FINANCING ACTIVITIES

               

Proceeds from exercise of stock options

    42        

Taxes paid on behalf of equity award participants

          (17 )

Net cash provided by (used in) financing activities

    42       (17 )

Effect of exchange rate fluctuations on cash

    (44 )     (87 )

Net decrease in cash and cash equivalents

    (5,750 )     (13,726 )

Cash and cash equivalents at beginning of period

    23,328       37,054  

Cash and cash equivalents at end of period

  $ 17,578     $ 23,328  
                 

Supplemental Cash Flow Information:

               

Cash paid for:

               

Cash income taxes paid, net

  $ 12     $ 14  

 

See notes to condensed consolidated financial statements.

 

 

 

Fuel Tech, Inc.

Segment Data- Reporting Segments

(in thousands)

 

Information about reporting segment net sales and gross margin from operations is provided below:

 

Three months ended December 31, 2023

 

Air Pollution

Control

Segment

   

FUEL

CHEM

Segment

   

Other

   

Total

 

Revenues from external customers

  $ 2,791     $ 3,554     $     $ 6,345  

Cost of sales

    (1,255 )     (1,847 )           (3,102 )

Gross margin

    1,536       1,707             3,243  

Selling, general and administrative

                (3,677 )     (3,677 )

Research and development

                (367 )     (367 )

Operating income (loss) from continuing operations

  $ 1,536     $ 1,707     $ (4,044 )   $ (801 )

 

 

Three ended December 31, 2022

 

Air Pollution

Control

Segment

   

FUEL

CHEM

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 continuing operations

  $ 1,035     $ 1,968     $ (3,253 )   $ (250 )

 

 

For the year ended December 31, 2023

 

Air Pollution

Control

Segment

   

FUEL

CHEM

Segment

   

Other

   

Total

 

Revenues from external customers

  $ 13,483     $ 13,598     $     $ 27,081  

Cost of sales

    (8,410 )     (7,015 )           (15,425 )

Gross margin

    5,073       6,583             11,656  

Selling, general and administrative

                (12,803 )     (12,803 )

Research and development

                (1,511 )     (1,511 )

Operating income (loss) from continuing operations

  $ 5,073     $ 6,583     $ (14,314 )   $ (2,658 )

 

 

For the year ended December 31, 2022

 

Air Pollution

Control

Segment

   

FUEL

CHEM

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 )

 

 

 

Fuel Tech, Inc.

Geographic Segment Financial Data

(Unaudited)

(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,

 

2023

   

2022

 

Revenues:

               

United States

  $ 21,062     $ 20,311  

Foreign

    6,019       6,630  
    $ 27,081     $ 26,941  

 

 

As of December 31,

 

2023

   

2022

 

Assets:

               

United States

  $ 46,300     $ 47,007  

Foreign

    3,901       3,117  
    $ 50,201     $ 50,124  

 

 

 

 

FUEL TECH, INC.

RECONCILIATION OF GAAP NET LOSS TO EBITDA AND ADJUSTED EBITDA

(in thousands)

 

   

Three Months Ended

   

Twelve Months Ended

 
   

December 31,

   

December 31,

 
   

2023

   

2022

   

2023

   

2022

 
                                 

Net loss

  $ (539 )   $ (402 )   $ (1,538 )   $ (1,442 )

Interest income, net

    (326 )     (97       (1,279 )     (185 )

Income tax expense

    69       45       69       54  

Depreciation expense

    34       85       281       352  

Amortization expense

    15       18       61       88  

EBITDA

    (747 )     (351 )     (2,406 )     (1,133 )

Stock compensation expense

    101       88       389       224  

Adjusted EBITDA

  $ (646 )   $ (263 )   $ (2,017 )   $ (909 )

 

 

 

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.

 

 
v3.24.0.1
Document And Entity Information
Mar. 11, 2024
Document Information [Line Items]  
Entity, Registrant Name FUEL TECH, INC.
Document, Type 8-K
Document, Period End Date Mar. 11, 2024
Entity, Incorporation, State or Country Code DE
Entity, File Number 001-33059
Entity, Tax Identification Number 20-5657551
Entity, Address, Address Line One 27601 Bella Vista Parkway
Entity, Address, City or Town Warrenville
Entity, Address, State or Province IL
Entity, Address, Postal Zip Code 60555-1617
City Area Code 630
Local Phone Number 845-4500
Title of 12(b) Security Common Stock
Trading Symbol FTEK
Security Exchange Name NASDAQ
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0000846913

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