Fuel Tech, Inc. (FTEK) research, news, and more from GeoInvesting

Company description

Wed, 14 Mar 2018 14:00:20 GMT

Fuel Tech, Inc. is a technology company. The Company is engaged in the development, commercialization and application of technologies for air pollution control, process optimization, combustion efficiency and engineering services. It operates through three segments: Air Pollution Control technology, FUEL CHEM technology and Fuel Conversion. The Air Pollution Control technology segment includes technologies to manage nitrogen oxides (NOx) emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources. The FUEL CHEM technology segment uses chemical processes in combination with computational fluid dynamics (CFD) and chemical kinetics modeling (CKM) boiler modeling, for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in furnaces and boilers through the addition of chemicals into the furnace. The Fuel Conversion segment represents the CARBONITE fuel conversion process and technology.

Research

Tue, 28 Apr 2026 15:56:25 GMT

FTEK ($1.37; $42.7M market cap) announced approximately $10 million in new APC contracts with domestic utility and industrial customers:

The largest contract integrates SCR technology with two new natural gas-fired turbines for a Midwest municipal utility.
The turbines will increase plant output by approximately 100 MW and support regional electricity demand growth.
The project supports commercial activity tied to manufacturing expansion and data center projects.
The expanded generating station is expected to become operational in 2029.
Fuel Tech expects engineering work to begin immediately, with equipment deliveries scheduled to begin in late 2027.
Two additional industrial orders involve SNCR and SCR system upgrades expected to be completed in Q3 2026.

Management Commentary:

"We are proud to support this municipal utility plant expansion and to play a role in meeting this area’s growing demand for energy,” said Vincent J. Arnone, President and CEO. “This project is designed to enhance the reliability of the grid to enable a more resilient grid system in support of commercial activities and data center construction.

“Investments in power infrastructure are increasing across the country, and Fuel Tech’s suite of emissions control solutions are designed to deliver clean, reliable power to communities. Securing this contract is a testament to our continual focus on business development and a reflection of our reputation in the emissions control industry. Additionally, we continue to support our historical industrial customer base as they look to expand their operations on a global basis”

Research

Wed, 04 Mar 2026 18:32:31 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.38; $42.3M market cap) announced Q4 and full-year 2025 results:

Q4 sales of $7.2 million vs. $5.3 million in the prior year, below analyst estimates of $7.5 million
Q4 2025 EPS: loss of $(0.04) vs. loss of $(0.06) in the prior year, below analyst estimates of a loss of $(0.03)
FY 2025 sales of $26.7 million vs. $25.1 million in the prior year, below analyst estimates of $26.9 million
FY 2025 EPS: loss of $(0.08) vs. loss of $(0.06) in the prior year, below analyst estimates of a loss of $(0.06)

Management Commentary:

“2025 was a year of achievement for Fuel Tech, highlighted by a resurgence at our FUEL CHEM® operations that produced the highest annual segment revenue since 2018, a broadened opportunity landscape at our Air Pollution Control (“APC”) business segment driven in large part by the expected growth of power generation to support data center construction and operation, and measurable progress at our Dissolved Gas Infusion (“DGI”) business segment,” said Vincent J. Arnone, President and CEO. “We maintained a strong balance sheet, finishing the year with nearly $32 million in cash and investments and no long-term debt.”
Mr. Arnone continued, “We are continuing to pursue a robust sales pipeline comprised of multiple potential customers for the integration of our Selective Catalytic Reduction (“SCR”) technologies with power generation sources that meet the emissions control requirements for data centers planned across the U.S. over the next several years. We remain actively engaged with our supply chain partners and engineering colleagues to advance these opportunities. Our current pipeline of potential sales opportunities related to data center construction is approximately $75-100 million.”

Our Quick Take:

We’re really only waiting for FTEK to land one of those data center contracts. They’ve been talking about their strong pipeline over the past few quarters, however, they have not yet landed a significant contract. Tangible book value per share of $1.21 and cash per share of $0.80 should give the stock some support, as we wait for the data center catalyst to potentially materialize. That being said, we’re confused at management’s inability to land a contract.

Fuel Tech, Inc. develops and provides technologies for air pollution control, combustion efficiency, water treatment, and engineering services, offering solutions to reduce emissions, optimize boiler performance, and treat industrial water across various energy and industrial markets.

Research

Wed, 05 Nov 2025 05:00:00 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($2.52; $78.3M market cap) announced Q3 2025 results:

Q3 2025 sales of $7.5 million vs. $7.9 million in the prior year, below analyst estimates of $9.3 million
Q3 2025 EPS of $0.01 vs. EPS of $0.00 in the prior year, in line with analyst estimate of $0.01.

We operated profitably in the third quarter, expanded customer relationships for our Air Pollution Control (APC) and FUEL CHEM® business segments, and increased our APC backlog by more than 20% from June 30, 2025,” said Vincent J. Arnone, President and CEO. “We ended the third quarter in a very strong financial position with $33.8 million in cash and investments and no debt. Subsequent to quarter end, we expanded our APC solutions portfolio via a small strategic acquisition of complementary APC intellectual property from Wahlco, Inc., a leading environmental equipment and services company that has completed several hundred project installations worldwide over the past three decades.”

“We are continuing to pursue significant prospects offered by the rising demand for power generation in support of data centers and traditional public utility entities. We remain actively engaged with multiple bids outstanding for our SCR (Selective Catalytic Reduction) technology to address the emissions control requirements of those opportunities that will develop and be implemented in the U.S. over the next several years.”

Key Takeaway

While it would’ve been nice to see the company announce more concrete details about their pursuit of securing a data center emissions contract, it’s good to see that discussions are still ongoing. Hopefully, the earnings call will disclose some more details around this, as they have over the past few calls.

Research

Wed, 06 Aug 2025 04:00:00 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($2.96; $91.1M market cap) announced Q2 2025 results:

Q2 2025 sales of $5.6 million vs. $7.0 million in the prior year, below analyst estimates of $6.1 million
Q2 2025 EPS: loss of $(0.02) vs. loss of $(0.01) in the prior year, ahead of analyst estimates of a loss of $(0.03)
Q2 consolidated revenues declined primarily due to delayed execution of APC projects.
FUEL CHEM® segment was flat at $3.1 million in revenue; gross margin rose to 46.8%.
Anticipated Q3 2025 FUEL CHEM segment performance to be strongest since 2022.
Expected $2.5–$3.0 million in new APC contracts to be awarded by end of August.
Extended demonstration of DGI® technology began at a Western U.S. fish hatchery.
No debt; $31 million in cash and investments as of June 30, 2025.

Management Commentary:

“Our second quarter results, along with ongoing developments across our two business segments and our Dissolved Gas Infusion business, strengthen our confidence in delivering improved overall performance in the second half of the year,” said Vincent J. Arnone, President and CEO.

“We are actively pursuing new contract opportunities across our APC and FUEL CHEM® business segments. For the APC segment, in particular, we are addressing both traditional end markets and the significant prospects offered by the rising demand for data centers.”

“We have multiple bids outstanding for our SCR technology to address the emissions control requirements of AI-related data centers to be built in the U.S. over the next several years.”

“We remain closely engaged with these potential partners and are excited about the opportunities that lie ahead.”

“We are supported in our efforts by a strong financial position. At June 30, 2025, our balance sheet included nearly $31 million in cash, cash equivalents and investments and no long-term debt.”

We will be on the conference call today at 10 AM to see if any InfoArb opportunities are presented.

Reasons For Tracking

Mon, 09 Jun 2025 04:00:00 GMT

FTEK: More Research

Fuel Tech, Inc. (NASDAQ:FTEK) specializes in air pollution control solutions. The company offers technologies designed to reduce nitrogen oxide emissions and improve combustion efficiency in industrial and utility applications. The company outsources its manufacturing. Around 80% of revenue is generated from the United States, with the remainder from Europe, Africa, Asia and Latin America.

If not for a data center angle I’ll discuss, I would not be interested. However, at about $1.80, with $1.00 per share in cash ($30 million) and tangible book value of $1.25, FTEK is an interesting wait and see stock worth tracking (with little dilution risk).

Full disclosure: I own a bunch of the stock and call options.

Please see the full RFT here.

Maj Soueidan

Research

Tue, 13 May 2025 17:44:09 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($0.96; $29.5 market cap) announced Q1 2025 results:

Q1 sales of $6.4 million vs. $5.0 million in the prior year
Q1 GAAP EPS of $(0.02) vs. $0.01 in the prior year
Backlog rose 66% to $10.3 million, highest since 2022
Pursuing contracts in data center emissions control markets

Management Commentary:

“We are very pleased with our first quarter performance, reinforcing our belief that 2025 will be a year of growth for our Company,” said Vincent J. Arnone, President and CEO…

…We are also participating in larger domestic contract opportunities to support emissions control requirements for the development of data centers, utilizing our SCR and ULTRA® technologies.”

In our March 6, 2025 research note and last week's open forum event we highlighted comments from the company’s earnings call discussing data center demand. We will jump on today’s conference call at 10 AM EST to see if the company expands on comments in the press release about the contract opportunities.

Research

Thu, 06 Mar 2025 16:24:23 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.02; $31.3M market cap) - To follow up on from Monday’s open forum discussion on FTEK, we wanted to highlight an exchange on data center demand from the company’s earnings conference call:

Question:

Okay. And -- can you further discuss the data center opportunities? And how would you go about capturing this business?

Vince Arnone - CEO

Yes. As I mentioned, data centers, they're not new to us. We had a contract for 20 units for data center – data center backup power back in 2018, 2019 time frame and we supplied SCR for natural gas turbines, okay? So what we are seeing today and obviously evidenced by everything that we've seen in the press over the past few months and currently, is a scramble to build-out power generation in support of build-out of data centers in this country to the tune of investment of hundreds of billions of dollars that are being put on the table by several large entities in this country, okay?

They're looking to move quickly with the data center build-out. And there's a lot of activity that would need to be done simultaneously for all of this work to get done.

So what's happening is that a lot of parties that would be in the supply chain for these activities are being brought to bear and discussions are being held and fuel heck is one of those parties, because, obviously, we are one of the possible suppliers for nitrogen oxide controls on the back end of these generation systems for these data centers.

Most of the opportunities that we're looking at are gas turbine related. So we are dealing directly with gas turbine OEMs as they look to go ahead and bid into the data center owners and potential operators that are looking to put these plans and projects into place.

So over the past two to three months, we've had a good deal of activity. We actually have put in a couple of bids already. I expect more activity to -- to be recurring here with different suppliers over this next handful of month's time frame. So the activity in this area has picked up. These are larger contract value opportunities and to the numbers that we haven't seen in that -- since that 2018, 2019 time frame. And so we're extremely excited about the opportunity.

While it is too early to see what type of impact this opportunity will have on financials, it is certainly worth keeping on the radar.

Research

Tue, 13 Nov 2018 16:20:44 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.46, $35.2M market cap), a technology company providing advanced engineering solutions for the optimization of combustion systems, emissions control and water treatment in utility and industrial applications, announced Q3 2018 results:

Sales of $16.1 million vs $13.5 million in the prior year
EPS of $0.04 vs net loss of $0.01 in the prior year

“We returned to operating profitability in Q3 2018, driven by the impact of higher revenues and the third consecutive quarter of lower selling, general and administrative (SG&A) expenses resulting from our previously announced cost-containment initiatives…

The Company reiterates its forecast for continuing operational improvement in 2018 when compared to 2017. This includes higher total revenues, driven primarily by the APC segment, profitability from continuing operations, and positive cash flow generation, due in large part to a lower cost structure.”

Reporting a profit for the quarter was an important step towards management gaining credibility with investors. We still need to be aware that the company can experience lumpiness in its quarters until projects targeting other market segments materialize, which seems to be nearing.

You can see our past research on FTEK here.

Research

Mon, 10 Sep 2018 14:31:13 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.16, $28M market cap), a technology company providing advanced engineering solutions for the optimization of combustion systems, emissions control and water treatment in utility and industrial applications, was marked up pre-market after they announced the receipt of multiple air pollution control (APC) contracts from customers in the US and China. These awards have an aggregate value of approximately $15.8 million. This is an interesting development that puts them in the data center market.

On March 14, 2018, we disclosed a small position in the stock after it reported profitable Q4 2017 results (its first profit in some time), and on April 16, 2018 we published our management interview notes.

We closed out our long position on May 10, 2018 following the Q1 2018 conference call where management indicated that the Company may not have yet reached a point of consistent profitability.

In late May 2018, we revisited the FTEK story due to a CNBC article titled, “Biggest change in oil market history: Crude prices set to soar ahead of shipping revolution” which discussed the possible impact that the International Maritime Organization (IMO) new emissions standards could have on the oil market.

FTEK has bounced nicely since the President and CEO purchased shares on the open market in late August.

You can see our past research on FTEK here.

Research

Fri, 29 Jun 2018 14:54:42 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.17; $28.2M market cap) is a company engaged in the development, commercialization and application of technologies for air pollution control, process optimization, combustion efficiency and engineering services.

We closed out our long position on May 10, 2018 following the Q1 2018 conference call where management indicated that the Company may not have yet reached a point of consistent profitability.

In a brief discussion with management yesterday, CEO Vince Arnone said:

“we are aware of the upcoming regulations, however, Fuel Tech does not have technology today that could benefit from the regulation.”

After reaching highs of $1.83 following the strong Q4 report, shares have retraced sharply to current levels. We will continue to monitor the company's progress. We currently do not have a position in FTEK.

You can see our past research on FTEK here.

Research

Thu, 24 May 2018 15:32:40 GMT

We will revisit the Fuel Tech, Inc. (NASDAQ:FTEK) ($1.17; $28.2M market cap) story due to regulatory changes that will impact the oil markets. A CNBC article titled, “Biggest change in oil market history: Crude prices set to soar ahead of shipping revolution” discusses the possible impact that the International Maritime Organization (IMO) new emissions standards could have on the oil market.

We plan to reach out to management to see if these new standards will have a positive impact on their business.

We recently had a small long position in FTEK which we closed out earlier this month as we felt the company has not yet reached the point of consistent profitability. You can see our past research here.

FTEK is a technology company. The Company is engaged in the development, commercialization and application of technologies for air pollution control, process optimization, combustion efficiency and engineering services.

Research

Mon, 14 May 2018 14:45:18 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.23; $29.7M market cap), - While we still like the long term story, we now feel it is a bit early in the game. We will continue to watch to see if the company can expand its technology application into the water treatment industry as we expressed in our interview notes. We do believe they will execute on this plan.

FTEKis a provider of boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers worldwide.

On May 10, 2018 the company reported its Q1 2018 results. A summary of the results can be seen here. We decided to close out our long position as the conference call indicated that the company may not have yet reached a point of consistent profitability and we also do not foresee much top line growth this year.

Research

Thu, 10 May 2018 14:51:22 GMT

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.38; $33.3M market cap), a provider of boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers worldwide, announced Q1 2018 results:

Sales of $12.8 million vs $8.5 million in the prior year
Loss per share of $0.01 vs loss of $0.07 in the prior year

On March 14, 2018 we disclosed a small position in the stock after it reported a profitable Q4 2017 (its first profit in some time), and on April 16, 2018 we published our management interview notes. One aspect of the company’s turnaround story we are monitoring is its ability to maintain profitability. While FTEK reported an improved and small loss for Q1 2018 when compared to Q1 2017, management is still calling for full year profitability. We will provide an update if we hear anything interesting on this morning’s conference call

Quotes from management:

“We are very pleased with our results for Q1 as they are in line with our expectations for the beginning of 2018,”

“Significantly higher revenues reflected the impact of our successful business development in 2017 and early 2018, while lower selling, general and administrative (SG&A) expenses stemmed from our previously announced cost-containment initiatives over the past three years. We expect to realize the full year benefit of this lower cost profile in 2018.

“We remain optimistic about our performance for 2018, and continue to pursue a solid pipeline of contract opportunities, particularly in the US.

Interviews

Mon, 16 Apr 2018 13:12:00 GMT

On March 14, 2018 we began to take a look at FTEK. As promised, our management interview notes follow.

What Does FTEK Do?

FTEK operates two divisions that have historically focused on delivering pollution control technology (when fuel is burned/heated), mainly to industrial customers that rely on coal as the primary source of operation (heating and power generation), such as utility, industrial and municipal solid waste applications.

APC technologies - 62% of revenue

This segment provides three types of methods (stand alone or together) to reduce Nitrogen Oxide level emitted by coal fired boilers. What is a boiler ?

“A boiler is a closed vessel in which water or other fluid is heated. The fluid does not necessarily boil. (In North America, the term "furnace" is normally used if the purpose is not to boil the fluid.) The heated or vaporized fluid exits the boiler for use in various processes or heating applications, including water heating, central heating, boiler-based power generation, cooking, and sanitation.”

Management explained that three methods exist to reduce NO2 from boilers that is can accommodate.

Efficient combustion (burning fuel) processes.
Selective Catalytic Reduction (SCR) is the most effective, but most costly and well suited for larger boilers.
Selective Non-Catalytic Reduction (SNCR) is the most economical solution and well suited for smaller boilers.

The SCR and SNCR methods involve injecting either Urea or Ammonia into boilers to reduce the amount of Oxides of Nitrogen oxide prior to being omitted. Management claims that its SCR and SNCR technology is more cost effective than similar standalone methods provided by many of its competitors because the company offers a suite type service offering (Advanced Selective Catalytic Reduction, or ASCR) that can combine aspects of SCR and SNCR technology.

Something we found interesting during our research was the existence of articles discussing that SNCR could start to be a good option for larger products. This could expand FTEK’s market reach.

Fuel Chem Technologies - 38% of Revenue

This technology helps to ensure that boilers run efficiently and operate longer without maintenance. In an effort to save money, some utilities have resorted to using cheaper sources of fuel that may have not been originally intended to be used for use in their boilers. This results in more “slug” that can coat the boiler’s “insides.” FTEK provides an “application of chemical injection programs which improve the efficiency, reliability, fuel flexibility and environmental status of combustion unit that burning a wide variety of fuels including coal, heavy oil, biomass, and municipal waste.”

Early History

FTEK was founded in the early 1980’s and was one of first companies that was granted a license for a pollution control technology, a process of injecting agents into boilers to reduce the amount of Oxides of Nitrogen prior to being omitted. The company went public back in 1993.

In 1990, to start executing on its business plan, FTEK entered into a joint venture (JV) with water treatment company Nalco (acquired by Ecolab).

“Nalco Water, an Ecolab Company, is a Naperville, Illinois-based supplier of water, energy and air improvement solutions and services for industrial and institutional markets. The company sells various products and services designed to reduce energy, water and other natural resource consumption, enhance air quality, minimize environmental releases and improve productivity and end products.”

It was at this time that the Fuel Chem sub was formed. The hope was that Nalco could push FTEK’s service offering through their large sales channel to secure power plant customers.

Even though, at around $30 million, 1998 was the first year FTEK reported revenue, the JV relationship did not materialize as hoped. The U.S. regulatory environment for pollution control in FTEK markets was just not ripe enough to motivate power plant operators to need FTEK technology.

The JV relationship was terminated in 1998 when venture capital firm, American Bailey Corp, invested in FTEK which enabled FTEK to buy Nalco’s 50% share of the JV. (American Bailey still owns 30% of FTEK, today).

However, it was not long after this transaction that the U.S. regulatory environment began to improve in FTEK’s favor. By 2005 revenue reached $53 million, with EPS of $0.33. The stock reached its peak price of about $28.00 in 2007 and was trading at a lofty P/E of 100. Revenue topped out at $109 million (large project) in 2013 and the stock was trading around $3.00 at this time.

Legacy Markets Hit a Roadblock

Use of Coal by the industries FTEK serves was the primary source of revenue. In the U.S., coal still represented 40% to 50% of power generation in 2007. FTEK was all about the ‘’coal.” Over 80% of its revenue was dependent on the need for coal used in boilers by its customers. They doubled down, and in 2008, FTEK made some investments to continue its penetration into its coal dependent markets.

In 2009 the operating environment began to worsen for FTEK. Regulation was soon passed, calling for coal to represent 30% of power generation in the U.S. by 2032.

The difference is that more recently, due to its expansion activities when things looked rosy, FTEK had much more infrastructure than it did in 2005. The company was also not in a technologically ready position to service customers that were replacing coal with natural gas as a fuel source (but still requires NO2 reduction). Also, investments in China that started out as promising have not panned out as expected due competing copycat and cheaper alternative solutions emerged. All of this eventually caught up to the company and revenues quickly retraced to 2005 levels ($45 million) by the end of 2017.

Here is a snapshot of the company’s financials since 2005:

When you look at the SG&A you can see that it was $10 million higher in 2014 at a similar level of revenue as in 2007 (right before the company doubled down on coal). This basically illustrates that company was not getting a return on its invested capital. An interesting positive observation is that FTEK did not dilute shareholder interests (shares outstanding basically unchanged). We need to give management an A+ for this, although they probably wished that they raised equity capital when the stock got ahead of itself.

New CEO and His New Vision

In 2015, FTEK made a change at the CEO position by promoting Vincent Arone, a 19-year veteran to the company, serving various roles. Vincent set three main priorities:

Bring the company’s infrastructure in-line with the company’s new revenue level from the legacy business.
Expand into non-coal markets and other geographies
Maintain positive cash flow, quarter to quarter.

Goal 1 - It may be a little too early to tell, but it looks like the company has aligned its costs with a $50 million annual revenue base assumption, as evidenced by its Q4 2017 performance where it was the first time FTEK reported a quarterly profit since Q3 of 2014. We don’t know how much of FTEK’s $19 million in cost savings occurred in 2017, but it seems some of it will be realized in 2018. It also appears that the current SG&A can handle higher revenue (operating leverage), but it remains to be seen how much revenue the company can support at the current SG&A.

Goal 2 - This is the part of the company’s potential transformation that appeals to me the most. Ultimately, FTEK needs to diversify away from its coal dependent markets to grow, at least in the U.S. For example, since many the company’s power generation customers require water treatments services, the company has put technology in place to address these needs. Management is hoping it will be able monetize this effort in the near future. FTEK has also prepared itself to meet the increased use by its customer for fuel sources, other than coal. In fact, many of the new contract wins are related to natural gas projects.

Goal 3 - It may be a little too early declare victory on the company’s consistent positive cash flow goal. We will need to see how the company progresses throughout 2018, but the company’s cost structure might be where it has to be to maintain profitability, at least on an annual basis. And there is reason to believe that the decline in the company’s legacy revenue could have stabilized.

Caveats

Lumpiness in quarterly financial results due to project nature of the business and timing issues related to when its customers take on these projects.
Some seasonality due to scheduled maintenance plant shut downs by customers.
Most of the company’s revenue still comes from coal-dependent markets.
Changes in regulation in served markets
Coal will probably eventually drop off as fuel source

Overall, we are going to need more time to determine if FTEK comeback story will materialize, but with no debt, and with the stock trading near its tangible book value per share of $1.35, We will keep some of our position on to see if management can execute it plan for growth.

Research

Mon, 26 Mar 2018 14:12:18 GMT

Second Interview Scheduled with FTEK, New Investor Presentation

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.29; $31.1M market cap), a provider of boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers worldwide, issued a new investor presentation via 8k today. We are still reviewing the presentation, but one key takeaway we noticed was:

We have a follow up with management on April 3, 2018 to discuss new questions after reading over more filings and before we publish our interview notes.

Research

Mon, 19 Mar 2018 14:15:47 GMT

Lightened Our Position In FTEK

Fuel Tech, Inc. (NASDAQ:FTEK) ($1.29; $31.1M market cap) - On March 14, 2018 we issued our reasons for tracking on FTEK as the company reported its first profitable quarter in over 3 years. The Company provides boiler optimization, efficiency improvement, and air pollution reduction and control solutions to utility and industrial customers worldwide.

Our initial intrigue was based on our non-GAAP calculation of $0.09 vs. the company reported GAAP EPS of $0.02. After discussions with management, and taking a closer look at the financials, it became clear that a big charge that we added back to the EPS was already accounted for in the Company’s discontinued operation calculation and already excluded from the Company’s continuing operations GAAP EPS. After making the adjustments, the non-GAAP EPS figure comes in closer to $0.04 (still strong).

During the interview we talked about management’s past history and plans for growth. In a nutshell, there are few factors that lead us to believe that the strong Q4 performance may not yet be a new run rate for the company. However, we do think the company will be profitable on a full year basis and that it has an interesting plan for growth that will de-risk it’s revenue and help the company gain more wallet share from its current customer base. Although we will lighten up on our position, we want to keep some exposure to this turnaround story, especially given that tangible book value is $1.35.

This story is probably more suited for investors with a longer term outlook.

Reasons For Tracking

Wed, 14 Mar 2018 14:07:34 GMT

**Call To Action / Reasons For Tracking

We took a starting position in Fuel Tech, Inc. (NASDAQ:FTEK) ($1.57; $37.8M market cap). We hope to be able to schedule an interview with them today. See our full reasons for tracking the company below.

FTEK is a world leader in advanced engineering solutions for the optimization of combustion systems and emissions control in utility and industrial applications. The company has two two broad technology segments (defined below) that provide advanced engineered solutions to meet the pollution control, efficiency improvement and operational optimization needs of energy-related facilities worldwide.

Air Pollution Control Technologies

The Air Pollution Control technology segment includes technologies to reduce NOx emissions in flue gas from boilers, incinerators, furnaces and other stationary combustion sources.

FUEL CHEM Technologies

The FUEL CHEM technology segment, which uses chemical processes in combination with advanced CFD and CKM boiler modeling, for the control of slagging, fouling, corrosion, opacity and other sulfur trioxide-related issues in furnaces and boilers through the addition of chemicals into the furnace using TIFI Targeted In-Furnace Injection technology.

Yesterday, we quick noted the Company’s Q4 2017 earnings in our morning email, stating that it was FTEK’s first profitable quarter since 2014 . We issued the following tweet shortly after the open:

As we take a closer look at the Company, it is looking more and more like a strong turnaround story. The Company reported its first operating profit since Q3 2014, has a strong balance sheet, has a strong backlog heading into 2018, and is in the final stages of restructuring initiatives that are estimated to remove $19 million of costs. With zero debt and tangible book value of $1.35, the stock presents a compelling opportunity.

Reason For Tracking FTEK

1. Return to Profitability:

After 12 straight quarters of reporting operating losses, the fourth quarter marked the return to profitability. As we mentioned above, the company reported EPS of $0.02. However, our non-GAAP EPS calculation for the quarter was $0.09 vs. a loss of $0.25 in the prior year 4th quarter. At this time it is unclear if this quarter is the new run rate heading into 2018. We intend to interview management to determine if that is the case. We did not see any mention of seasonality in the 10-K.

2. Strong Balance Sheet:

The company has a clean balance sheet with:

Zero debt
Cash per share: $0.39
Current ratio: 2.1
Book value: $1.44
Tangible book value: $1.35

3. Restructuring Initiatives:

In 2016, the Company set out on several organizational restructuring efforts and cost reductions. The cost-containment initiatives have in total removed $19 million in expenses, which the Company expects to now fully realize the benefit from in fiscal 2018.

Comments from management on restructuring initiatives:

“Our company's primary goal over these past three years has been to engage in the structured program to return to the generation of positive cash flow and operating profit. And I'll still very proud of the entire Fuel Tech team for their contribution in achieving this milestone. This has been a long journey for all of us, and we also know that our journey is not over. With that said, it is very satisfying to be able to share these results with our investors and we will continue our efforts to create long-term shareholder value.”

4. Strong Backlog and Bullish Outlook:

FTEK ended 2017 with a strong backlog of $22.1 million, up over 150% from the prior year. Company also has seen strong start to fiscal 2018 with $4 million in new orders as well as encouraging business activity:

Project bidding remains active and industrial project activity is encouraging. We will continue to capitalize on the increasing deployment of natural gas fire turbines being used where SCR technology is required as best available control technology which creates opportunities for SCR and ULTRA technologies in the Industrial segment. We also continue to establish strategic business relationships with multinational industrial end users and to partner with companies that require our technology portfolio to complete a broader bid package.

Overall 2018 outlook from management:

“For 2018, we expect to report higher total revenues driven primarily by our APC business. We also expect to operate profitably and generate positive cash flow. This outlook is based on the expected favorable impact of our cost reduction initiatives on 2018 financial performance, the improved APC backlog that we are rolling into 2018 and finally on our visibility to business development activities on a global basis. We remain focused on a path of continued improvement, both in our financial results and in our objective to move into new markets.”

5. New Market Opportunities:

FTEK is exploring opportunities to address new markets via product line expansion. In particular, the Company is very intrigued with the water and wastewater treatment arena. Early this month, they announced a new license agreement with NanO2 to market and sell NanO2’s dissolved gas technology.

“We believe that NanO2 offers a potentially impactful technology in the areas of water and wastewater treatment, and will allow us to help address the world's growing water challenges in a sustainable, responsible, and cost-effective manner.”

Caveats:

Possible regulatory changes affecting business
While backlog is strong, quarter to quarter lumpiness has been an issue
Visibility is challenging
It is unclear as to how much of the $19 million in cost savings has already been realized