Fuel Tech to Suspend Pollution Control Operation in China Subsidiary as Part of Ongoing Operational Improvement Initiatives
January 18 2019 - 8:00AM
Business Wire
Fuel Tech, Inc. (NASDAQ:FTEK) (or “the Company”), a
technology company providing advanced engineering solutions for the
optimization of combustion systems, emissions control and water
treatment in utility and industrial applications, announced today
the planned suspension of its Air Pollution Control (“APC”)
business operation in China (“Beijing Fuel Tech”). This action is
part of Fuel Tech’s ongoing operational improvement initiatives
designed to prioritize resource allocation, reduce costs, and drive
profitability for the Company on a global basis.
The transition associated with the suspension of the APC
business is underway, and includes staff rationalization, supplier
and partner engagement, and the monetization of certain assets. The
Company expects to complete the process by the end of the second
quarter of 2019.
“The APC business of Beijing Fuel Tech has become increasingly
challenged over the past few years, the result of increased local
competition and the commoditization of these technologies in the
Chinese market. These market forces have resulted in significant
margin erosion on the sale of our APC technology product suite,
which has driven unacceptable financial results,” said Vincent J.
Arnone, Fuel Tech’s Chairman, President and Chief Executive
Officer. “We are confident that this is the proper decision for our
Company, given the negative financial impact of Beijing Fuel Tech’s
performance on our overall financial results, and the existence of
more promising growth opportunities in other markets.
“The expected cost savings and improved cash flow associated
with the suspension of the APC operation at Beijing Fuel Tech, in
combination with those generated by our previously implemented cost
reduction initiatives and ongoing business development, will allow
us to build scale in promising market geographies and sharpen our
focus on opportunities that deliver better returns,” continued Mr.
Arnone.
For the full year ended December 31, 2017 and nine months ended
September 30, 2018, revenues at Beijing Fuel Tech were $8.0 million
and $2.4 million, respectively, and operating losses totaled $1.7
million and $1.6 million, respectively. The Company expects to
record charges associated with the suspension of the APC operation
at Beijing Fuel Tech in 2019, however, these amounts have not yet
been established.
Mr. Arnone concluded, “The operational improvement initiatives
undertaken by Fuel Tech over the last few years have significantly
lowered the Company’s expense profile, narrowed operating losses,
and allowed the Company to maintain a strong cash position. Fuel
Tech returned to operating profitability in Q3 2018, driven by a
19% increase in total revenue and a 17% decline in SG&A
compared to the prior year period. We reiterate our forecast for
continuing operational improvement in 2018 when compared to 2017.
This includes higher total revenues, profitability from continuing
operations, and positive cash flow generation.”
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 1,200 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190118005032/en/
Jim PachPrincipal Financial Officer(630) 845-4500
Devin SullivanSenior Vice PresidentThe Equity Group Inc.(212)
836-9608
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