FTEK earnings call analysis

NASDAQ:FTEK Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Rob | Conference Operator: Greetings and welcome to FuelTech's 2025 fourth quarter and full year conference call, a financial results conference call and webcast. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Devin Sullivan, Managing Director at the Equity Group. Thank you. You may begin. Devin Sullivan | Managing Director, Equity Group: Thank you, Rob. Good morning, everyone, and thank you for joining us today. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, www.ftek.com. Our speakers for today will be Vince Arnone, Chairman, President, and Chief Executive Officer, and Ellen Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call, except for historical information, are 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 FuelTech's current expectations regarding future growth, results of operations, cash flows, performance, and business prospects and opportunities, as well as assumptions made by an information currently available to our company's management. FuelTech 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 FuelTech and are subject to various risks, uncertainties, and other factors, including but not limited to those discussed in FuelTech's annual report on Form 10-K in Item 1A under the caption of Risk Factors and subsequent filings under the Securities Exchange Act of 1934 as amended, which could cause FuelTech'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. FuelTech undertakes no obligation to update such factors or to publicly announce the results of any 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 the company's filings with the SEC. With that said, I'd now like to turn the call over to Vince Arnone. Vince, please go ahead. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Thank you, Devin. Good morning, and I'd like to thank everyone for joining us on the call today. 2025 was a year of multiple achievements for FuelTech, marked by an expanded opportunity set in our air pollution control business segment, driven largely by anticipated growth in data center development and construction, a resurgence in revenue for our FuelChem operations, where revenues for the year exceeded our expectations and reached their highest levels since 2018 and tangible progress at our dissolved gas infusion business. We maintained a strong financial position with cash, cash equivalents and investments of nearly $32 million at year end and no debt. Our fuel count segment ended an already strong year on a high note. Across the country, the useful life of coal-fired units is being extended to satisfy growing energy demand. And many of these units were dispatched at levels that haven't been realized in several years. Our results for the fuel chem segment benefited from this phenomenon, in particular for our legacy units. In addition, 2025 results were favorably impacted by the full year performance of a U.S. commercial unit that we added to late in 2024, and from a new U.S. customer that is currently operating with us under a six-month commercially priced demonstration program that commenced in early November of 2025. As we have discussed previously, the annual revenue potential from this commercial opportunity, should it convert from a demonstration, is expected to be approximately $2.5 to $3 million based on the customer running the program full-time with the revenue expected to generate historic FuelChem gross margins. I want to share a bit of additional color regarding our FuelChem demonstration program. This customer was interested in our program as a means to improve boiler availability and reliability and to reduce maintenance downtime for offline boiler cleaning, in particular during periods of high power generation demand. This customer utilizes a source of coal that is high in sodium content and is prone to extensive slagging and fouling. To date, the customer has realized a material reduction in downtime and maintenance costs due to a reduction in offline cleaning, which bodes well for a successful demonstration. Revenues generated by our APC segment rose in the fourth quarter, but declined annually reflecting customer-driven delays and project award timing. We secured 8.8 million of APC awards during 2025 from new and existing customers in the U.S., Europe, and Southeast Asia. Our near-term sales pipeline of APC contracts, exclusive of data center opportunities, is between $3 and $5 million. While we had hoped to close on these opportunities by year-end, discussions remain active, and we expect to close before the end of the current second quarter. Even with these delays, we ended the year with a consolidated APC segment backlog of $7 million, up from $6.2 million at the end of 2024. As we announced last quarter, we expanded our APC portfolio through a small strategic acquisition of complementary intellectual property and customer-related assets from Walco Inc., a well-established environmental equipment and services company with several hundred project installations worldwide. As we continue to integrate Walco's operations, we have been encouraged by the pace of project inquiries from their client base and others, including a number of near-term needs. The value proposition for us in acquiring Walco was in securing these high-value assets at a modest price, strengthening our technology portfolio, and attracting a broader base of potential customers. This proposition seems to be playing out thus far. With respect to the data center opportunity, these facilities will potentially require emissions control solutions to mitigate their environmental footprint, comply with federal, state, and local regulations, and align with corporate sustainability mandates. Our sales pipeline for these opportunities remains strong and approximate $75 to $100 million for projects integrating our SCR technology with power generation sources. Please note that the value of the pollution control scope of supply represents a very small fraction of the estimated total AI infrastructure spend. I want to provide a little more information about our data center opportunity. First, I think that we have been clear that any material near-term growth for our company will likely derive from our success in addressing this opportunity. As such, we have been and continue to devote substantial internal and external resources to position FuelTech with data center developers and turbine and engine providers to deliver NOx reduction technologies as part of a data center's power generation platform. One point that I want to highlight is that FuelTech is a subcontractor in the data center ecosystem. In all instances, we are a subcontractor to the data center integrator or to the turbine or engine OEM. This relationship limits our knowledge of the development of the data center opportunity, its funding, its phase of approval, and its timing. Our role remains the support and education of our direct customer regarding the design and delivery of a pollution control system that can best fit the application. This does not dilute the opportunity landscape or temper our enthusiasm in any way, but it does make providing specific insights with respect to the timing of awards more challenging. This is what we concurrently share about the opportunity. At present, We are in various stages of participation in project opportunities with more than 10 different data center integrators and turbine and engine OEMs, including some of the largest companies in the industry. All of these inquiries are for pollution control systems, primarily SCR, in support of the development of onsite power generation. The size of these projects run the gamut from as little as two to five units per project to as many as 30 to 40 NOx reduction units, with pricing predominantly in the range of $1 million to $2.5 million per unit. Regarding timing, the earliest we expect any of these inquiries to convert to a commercial award, based on our conversations with the various parties involved, is Q2 2026, as the schedule requirements for at least two of the projects would necessitate the receipt of an award by then. The remainder of the inquiries will develop further as we move throughout the year. To the best of our knowledge, with just one exemption, none of the inquiries that we are currently involved with have been awarded. More specifically, we are still very much in the running to capture our share of these opportunities, and we remain optimistic about our prospects for 2026. On the regulatory front, We have seen that the current administration is currently pursuing both the rollback of specific regulations that had been put in place previously and the implementation of new regulations that are less restrictive than those currently in place. Regarding the rollback of regulations, EPA announced the rescission of rules related to the reduction of greenhouse gases. Regulation of these emissions started in 2009 with the EPA endangerment finding based on a 2007 Supreme Court ruling. EPA has also announced the repeal of the 2024 mercury and air toxic standards for coal-fired units. It is important to note that both of these proposed rollbacks do not loosen the nitrogen oxide emissions reduction requirements for any sources and could potentially extend the life of some coal and natural gas fired units that may not have to reduce their emissions profile. We will take the opportunity where applicable to offer retrofit and maintenance solutions to accommodate the extensions of useful life. Now regarding the implementation of new rules. Earlier this year, EPA issued new source performance standards, also known as NSPS, for new gas turbines which were published in the Federal Register on January 15th. The NSPS was required for EPA consent decree with Sierra Club and the Environmental Defense Fund and were in response to the proposed rules that were issued in November 2024. A new category of gas turbines was created called temporary power turbines and is applicable to units below 85 megawatts installed to run for 24 months or less. These units will be required to achieve NOx levels of 25 ppm, which in some cases may not require SCR for all turbines. Turbines greater than 5 megawatts with high operating capacity will need to meet 15 ppm of NOx, which will likely require SCR, and turbines greater than 85 megawatts will need to get to 5 ppm NOx, which will require SCR in almost all cases. So what is the impact of the new regulation? First of all, several organizations, including the Clean Air Task Force, Sierra Club, the Environmental Defense Fund, have filed a petition for reconsideration with the EPA. And the hard deadline to file a formal lawsuit challenging these amendments in the U.S. Court of Appeals for the D.C. Circuit is March 16th of this year. it is certain that lawsuits will be filed. And second, with this rule in place, power generation developers will need to decide how best to proceed with their pollution control solutions for their new sources of power generation. Based on the discussions that we have had with our potential client base, we are not aware of this new regulation having a significant negative impact on decision-making regarding the implementation of pollution controls. It is important to note that state-specific permitting requirements can vary from the new federal regulation. And it's also important to note that outside of the NSPS requirements, the use of multiple gas turbines working together classify them as a major source for NOx. Major sources are governed by other regulations and are often required to meet more stringent NOx emissions, which would require SCR. We continue to pursue additional new awards driven by industrial expansion globally and by state-specific regulatory requirements in the U.S., and we are continuing to monitor the progress of the EPA's rule for large municipal waste combustor units. This rule reduces the nitrogen oxide emissions requirements for up to 150 large MWC units across the country. FuelTech has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning. The final rule is currently in the White House Office of Management and Budget and is expected to take effect before the end of March, with NOx emission levels likely requiring advanced SNCR technology to meet compliance deadlines three years from the date of issue. Moving over to DGI, we are continuing the extended demonstration of the technology at a fish hatchery in the western US, which remains on track to conclude in the second quarter of this year. The system is performing well, meeting customer expectations for the precise delivery of concentrated dissolved oxygen and generating positive results in terms of reduced operational costs and improved fish growth. A second trial that commenced at a municipal wastewater site in the southeast US was successfully completed in January of this year and converted to a six-month rental contract that is expected to run through the beginning of the third quarter of this year. Our DGI system is delivering the designated volume of oxygen, and the client reports that odor-related complaints in the area surrounding the plant have been dramatically reduced. We are currently in discussions with multiple other end markets of interest for DGI, including pulp and paper, food and beverage, chemical, petrochemical, and horticulture. And we have been supported in these efforts with the addition of representative firms with end market expertise. As we look ahead to 2026, we are optimistic about our potential financial outlook. Our fuel chem business is expected to continue to perform well, driven by the performance of our base accounts and by the expectation that we will convert another demonstration account to commercial operation. Our APC business development activities, including our standard opportunities, those associated with respect to the WALCO acquisition, and potential tailwinds from data center opportunities are at the highest level that we have experienced in several years. And regarding DGI, based on progress at our demonstrations, it is expected that we will have our first commercial contract in 2026. Overall, we expect that revenues for 2026 will exceed the level of 2025, with FuelChem approximating 2025 revenues and APC exceeding 2025 performance without considering the benefit of data center awards, which would be additive to the forecast. Before turning things over to Ellen, I want to thank the entire FuelTech team for their dedication in advancing our strategic objectives and our shareholders for their patience and support. Now, I'd like to turn the call over to Ellen for her comments on the financial results. Ellen, please go ahead. Thank you. Ellen Albrecht | Chief Financial Officer, FuelTech: Thank you, Vince, and good morning, everyone. I'll start off today by reviewing our fourth quarter results. For the quarter, consolidated revenues rose 37% to $7.2 million from $5.3 million in the prior year period, reflecting growth from both our APC and FuelChem segment revenues. APC segment revenues increased 37% to $2.4 million from $1.8 million, primarily related to timing of project completion. FuelChem had a very strong quarter, generating a 37% increase in revenues to $4.9 million from $3.5 million, reflecting contributions from our legacy portfolio and the six-month commercially priced demonstration program that commenced in early November. Consolidated gross margin for the fourth quarter rose to 45% of revenues from 42% in last year's fourth quarter, with APC and FuelChem each producing higher margins for the quarter. ULCHEM gross margin increased to 46% from 45% in the fourth quarter of 2024 due to the increase in the revenue base. APC gross margin expanded significantly to 42% in the fourth quarter compared to 36% in the prior year period as a result of project and product mix. Consolidated APC segment backlog on December 31st, 2025 with 7 million, up from backlog of 6.2 million on December 31st, 2024. Backlog at the end of 2025 included 3.4 million of domestically delivered project backlog and 3.6 million of foreign delivered project backlog, compared to 1.9 million of domestic delivered project backlog and $4.3 million of foreign-delivered project backlog at the end of 2024. We expect that approximately $6 million of current consolidated backlog will be recognized in the next 12 months. SG&A expenses were $4.2 million in the fourth quarter compared to $3.9 million in the prior year period. As a percentage of revenue, SG&A expenses declined to 57% from 75%, reflecting higher consolidated revenue in the current period, offset by the timing of certain expenditures. Research and development expenses for the fourth quarter rose to $504,000 from $405,000 in the same period a year ago, mainly attributed to our commercialization efforts for our DGI technology. Our operating loss narrowed to $1.4 million compared to a loss of $2.1 million in last year's fourth quarter, reflecting higher revenue and margin contributions from our operating segment. We continue to take advantage of the favorable interest rate environment, and as of December 31, 2025, have invested a majority of our $31.9 million in held-to-maturity debt securities and money market funds. This generated $288,000 of interest income in the fourth quarter and $1.4 million of interest income for 2025. Moving to the results for full year 2025, consolidated revenue rose 6% to $26.7 million, in line with our most recent guidance provided in November. The increase in full year revenue was driven by a 28% rise in fuel chem segment revenue to $17.8 million, exceeding our guidance for the year. This increase in revenue was partially offset by a decrease in APC segment revenue. Consolidated gross margin for 2025 rose to 46% from 42% in 2024, with higher margins for both the fuel chem and APC operating segments. SG&A expenses for 2025 modestly increased to $14.1 million from $13.8 million in 2024 within the guidance range we provided at this time last year. The increase was mainly attributed to employee-related expenditures. As a percentage of revenue, SG&A decreased to 53% from 55%, reflecting higher consolidated revenue. For 2026, we expect SG&A expenses to increase modestly from those in 2025. Research and development expenses for the year were $2 million for 2025 compared to $1.6 million in 2024. As we move closer to fully commercializing our DGI segment technologies, In addition, we also continue to invest efforts related to our legacy technologies as necessary. Operating loss narrowed to $3.7 million for 2025 compared to a loss of $4.7 million in 2024, reflecting higher segment revenues and relatively flat total costs and expenses. Net loss for 2025 was $2.3 million or $0.08 per diluted share compared to a net loss of $1.9 million or $0.06 per diluted share in 2024. Adjusted EBITDA loss was $2.7 million in 2025 compared to an adjusted EBITDA loss of $2.2 million in 2024. Lastly, moving to the balance sheet, our financial condition remains very strong. As of December 31st, total cash and cash equivalents Total cash and investments was $31.9 million, comprised of cash and cash equivalents of $11.9 million, and short and long-term investments of $20 million. Net cash provided by operating activities was $3 million for the year, as compared to a use of total cash of $2.8 million in the same period last year. Shares outstanding at a quarter end were approximately $31.1 million, equating to cash per share of $1.03 million. Working capital was $25.7 million, or $0.83 per share. Stockholders' equity was $40 million, or $1.29 per share, and the company continues to have no outstanding debt. We remain fully confident in our ability to uphold a strong financial condition and continue funding both short- and long-term growth initiatives across FuelChem, APC, and DGI. I'll now turn the call back over to Vince. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Thanks very much, Ellen. Operator, let's please go ahead and open the line for questions. Rob | Conference Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from Sameer Joshi with HC Wainwright. Please proceed with your question. Sameer Joshi | Analyst, HC Wainwright: Hey, good morning, Vince, Ellen. Thanks for taking my call. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Good morning, Sameer. Good morning. Sameer Joshi | Analyst, HC Wainwright: Good morning. So first, the data center opportunity should be significant for the company You mentioned you're reliant on these integrators or OEMs for getting the final order. My question is, are you already designed in with these participants, or is there further sort of competition once those guys get the orders from data centers? Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: I can't say that we were specifically designed in for these operators at this point in time, Samir. What we're doing is we would obviously, we would like to be at the point whereby we are designed in with an integrator or operator that's looking to build several sites. But right now at the beginning phase with some of these operators, what we're doing is establishing ourselves as a potential trusted partner to be able to do the design pollution control system for them. A lot of the parties that are coming to us aren't necessarily, not necessarily very familiar with pollution control requirements. So we are definitely playing an education role as we work with some of these parties at this point in time. But we are hoping that the upfront time that I mentioned that we are investing with these opportunities is going to pay off a little bit longer term as these projects actually do come through their evolution and are ultimately awarded. So that's where we stand today. And the situation, I would say, is slightly different across the different parties that we are dealing with. Sameer Joshi | Analyst, HC Wainwright: Understood. And I do not want to conflate this, but the requirements for the less than 85 megawatt plants and short-term working less than 24 months, does that in any way affect or impact these data center opportunities? I just don't want to conflate those, but is there any relation? Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Right. Ultimately, on a long-term basis, that should not have an impact, Samir, because most of the projects that we read about, most of the projects that we're having discussions about, are intended to be long-term power generation solutions for that particular data center, right? It would only be in the instance whereby a potential operator or integrator needed to meet perhaps a very specific startup date, and they had the ability to have some power generation equipment up and running for a short period of time to meet that startup date. Again, perhaps, right? But again, from our perspective, the people and party that we are dealing with, they're looking at long-term power generation solutions that are indeed not temporary in nature because they're looking to support that data center long-term, not just for less than 24 months. Sameer Joshi | Analyst, HC Wainwright: Got it. Sticking to sort of a regulatory environment with the EPA declaring carbon dioxide not a pollutant, and you talked about the mercury toxins action, and it indirectly helping you because it does not require NOx reductions, and so existing plants may have extended life because of the other reductions in requirement or losing of requirement. Are you already seeing any increased activity as a result of this, where some of the plants that may be on the way to shutdown are now saying that, hey, we can work, we can continue to function and reaching out to you? Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: At this point in time, Samir, it's a little bit too early to assess the impact of those relatively recent rollbacks. We just wanted to point out very specifically that those rollbacks are do not impact FuelTech's opportunity to capture prospective awards that are specifically related to nitrogen oxide reduction opportunities. So we just want to ensure that there isn't confusion related to those rollbacks, which are not going to impact FuelTech business opportunities. Longer term, those rollbacks, they could indeed have the impact of possibly extending the useful lives of some facilities. Sameer Joshi | Analyst, HC Wainwright: Thanks for that. You're welcome. And then moving to FuelChem, it's nice to see this six-month sort of trial order, and likely because they are seeing the results, likely to convert. Are there more such potential customers that you have in the pipeline or are pleased talking to? in terms of getting, because each additional customer could bring two plus million or almost four plus million in orders, annual recurring revenues. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: So at this point in time, and yes, we're very optimistic about converting this demonstration to a commercial contract. Hopefully that will bode well for us here in 2026. But incrementally, as I've said on prior conference calls, The coal-fired, base-loaded unit, just call it phenomenon, it isn't as robust as it used to be a decade or 15 years ago with so many coal-fired plants being shut down. We are looking for these pockets of opportunity whereby we can, on an incremental basis, add these one-off opportunities for us. And we need to be a little bit careful about saying that each incremental unit is going to be between $2 and $3 million per opportunity in revenue because it does vary by unit size and the specific run time of that unit. So I just wanted to qualify that. So to specifically answer your question, we don't have anything of what I would call specifically that we're looking for imminent demonstration, but we are looking at some other opportunities that could be for us and perhaps with the same body of plants that we're doing business with today to add another unit or two at plant sites. So there is opportunity there, but again, as I've said previously, we haven't looked at fuel chem as being what I would call a material growth opportunity for the past several years. What we're seeing here in the recent term, we're very, very pleased with. We finished 2025 at just under $18 million in revenue, which if you had asked me that question five years ago, I would have said it wouldn't have been possible. So we're very pleased with where we are. And there is some, I'll call it moderate, upside opportunity, but it's moderate. Sameer Joshi | Analyst, HC Wainwright: Right, right. And just... I'm guessing this outlook for 2026 where field cam is expected to be at same levels as 2025 does not include this incremental opportunity that may convert from trial to full time. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Yeah, we're looking at it right now very, very conservatively, Sameer, without without knowing exactly what the outcome is going to be as we sit here today. We'll have more information to share in early May when we have our first quarter conference call. Sameer Joshi | Analyst, HC Wainwright: Yes, and that's fair. I'm just squeezing in one last one on DGI. It seems this fishery, sorry, municipal wastewater seems to be working well as well as the fishery. seems to be working well. Should we expect revenues from DGI during 2026? Because on the outlook, you didn't mention any of that. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Right. So we are going to recognize a small dollar value of revenue from the rental of the system at the municipality. That's only $10,000 per month. As we look at the remainder of the year, we are hoping to to have a system sale between now and the end of 2026 of one of our DTI units. It's not going to be material to our overall results, but what is important regarding that activity is it sets a platform for us to be able to further and go ahead and discuss a success story specifically with the end markets that we're looking to chase. And we haven't had the opportunity to do that yet. So that moment is extremely critical for us as we look to further develop and commercialize DGI. Sameer Joshi | Analyst, HC Wainwright: Thanks, Vince, for taking my questions. Congrats on a strong year, and good luck. Thanks, Samir. Rob | Conference Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Adam Waldo with Lismore Partners. Your line is now live. Adam Waldo | Analyst, Lismore Partners: Good day, Vince. I hope you can hear me okay. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Yes, we can, Adam. Thank you. Adam Waldo | Analyst, Lismore Partners: So, very high-level question. Your stock trades at $1.20, $1.25 a share. You have about $1 a share in cash on your balance sheet. You have reasonable prospect of being cash flow positive in 2026, and you articulate a sizable new business pipeline in the data center area. I would argue that whether you're stock trading where it is, the market doesn't believe you're going to close any of that pipeline. You're very optimistic that you can over the balance of 2026 and you were optimistic in the second half of 2025 as well. The timing of these projects is very hard to predict. What gives you so much confidence and optimism that you're going to close you know, a sizable number of data center projects over the next 12 to 18 months. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Adam, thanks very much for the question. You're correct. I mean, we're in a position whereby, yes, we're trading just a little bit above cash value today. We as a company have not been able to go ahead and bring to the table any material award as of yet as it relates to the data center opportunities. So in response to your question, my level of confidence lies in a couple of areas. First of all, as we've seen this opportunity develop, and literally over the past 9 to 12 months, because it is still what I would call a new opportunity, and it's one that we don't believe as FuelTech is a short-term opportunity. It's one that's going to develop over the next 5 to 10 years. But What we have seen over this past nine to 12 months is more and more players, if you will, players defined as data center integrators, parties that have access to power generation equipment in the form of turbines or engines, and just then the OEMs of those turbines or engines themselves, there have been more inquiries come our way literally over this past three months than we saw come our way or over the initial six to nine months relative to parties seeking to take advantage of the opportunity to provide a power generation solution to the data centers that are going to be built out. So point number one is just the volume of activity, the different types of parties and players that are coming to the table. And also what I would call it's the caliber of the parties that we're dealing with as well in terms of them being, in some cases, multinational organizations with scale and capability that give us the confidence that at some point in time here, just given the demand, that FuelTech's product and solutions are going to be pulled in to this ultimate data center solution, okay? So number one, the volume of activity, it gives me a very high level of confidence. Point number two is my confidence in the FuelTech team to be able to go ahead and basically assimilate all of the inquiries that have been coming our way and determine our best path with these data center integrators and or engine or turbine suppliers. to be able to position as well with those organizations and give these organizations the confidence that we as FuelTech can deliver on our air pollution control solution for them. So it's twofold. And yes, I am optimistic. I mean, the level of inquiry is indeed extraordinary. And so it's up to us to capitalize on it, and we're doing everything that we can to do so at this point in time. I hope that answers your question. Adam Waldo | Analyst, Lismore Partners: Thank you very much. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Thank you, Anna. Rob | Conference Operator: We have reached the end of the question and answer session. I'd now like to turn the call back over to Vince Arnone for closing comments. Vince Arnone | Chairman, President, and Chief Executive Officer, FuelTech: Thank you, operator. In closing, I want to thank, obviously, our FuelTech team for their continued support and dedication. Thanks to all of our stakeholders, again, for your patience. We're doing everything that we can to create shareholder value. And we have an opportunity landscape in front of us today that we know we need to capitalize on, and we're going to do everything that we can. Thanks to our board for support as well. With that, I want to wish everyone a good day, and thanks for participating in the conference call. Rob | Conference Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation. jsPDF 3.0.3 D:20260606090137-00'00'

NASDAQ:FTEK Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Greetings and welcome to the FuelTech, Inc. 2025 Third Quarter Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Devin Sullivan, Managing Director of the Equity Group. Thank you, sir. You may begin. Devin Sullivan | Managing Director, The Equity Group: Good morning, everyone, and thank you for joining us today for FuelTech's 2025 Third Quarter Financial Results Conference Call. Yesterday after the close, we issued a press release, a copy of which is available on the company's website, www.ftek.com. Our speakers for today will be Vince Arnone, Chairman, President, and Chief Executive Officer, and Alan Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call to questions from our analysts and investors. Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call, except for historical information, are forward-looking statements as defined in Section 21E of the Securities 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 FuelTech's current expectations regarding future growth, results of operations, cash flows, performance in business prospects and opportunities. as well as assumptions made by and information currently available to our company's management. FuelTech 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 FuelTech and are subject to various risks, uncertainties, and other factors, including but not limited to those discussed in FuelTech's annual report, on Form 10-K in item 1A under the caption of risk factors and subsequent filings under the Securities Act of 1934 as amended, which could cause FuelTech's actual growth, results of operations, financial conditions, cash flows, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements. FuelTech undertakes no obligation to update such factors or to publicly announce the results of any 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 the company's filings with the SEC. With that said, I'd now like to turn the call over to Vince Arnone. Vince, please go ahead. Vince Arnone | Chairman, President & Chief Executive Officer: Thank you, Devin. Good morning, and I'd like to thank everyone for joining us on the call today. For the third quarter of 2025, we operated profitably. enhanced our gross margins, broadened the client base for our APC and fuel chem business segments, and maintained a strong financial position with cash, cash equivalents, and investments of nearly $34 million at quarter end and no long-term debt. We are continuing to advance our dissolved gas infusion technology through industry outreach and are well underway with an extended demonstration of this offering at a fish hatchery in the Midwest U.S. We also closed a modest acquisition of complimentary APC intellectual property that we believe will help us address customer APC needs on a global basis. Our Fuelchem segment produced a solid quarter of growth, driven by increased dispatch at legacy clients and contributions from a new account added in mid-2024. Just a few days ago, we commenced a six-month commercially priced demonstration program for a new FuelChem customer in the U.S. As discussed on our second quarter call, the purpose of the demonstration is to improve boiler availability and reliability and reduce maintenance downtime for offline boiler cleaning in order to maximize the power generation profile of this unit. This new engagement will have a positive initial effect on our fuel chem results in the current fourth quarter, with sustained segment contributions in 2026. We estimate the annual revenue potential from this commercial contract to be approximately $2.5 to $3 million, based on the customer running the program full-time, with the revenue expected to generate historic fuel chem gross margins. Based on fuel chem segment performance year-to-date and the impact of this new demonstration program, We now believe FuelCam's full-year 2025 segment revenue will approximate $16.5 to $17 million, up from our prior guidance of $15 to $16 million, which would be the highest level since 2022. Revenues for our APC business in the third quarter declined compared to the prior period, due primarily to the timing of project execution on existing contracts. During the third quarter, however, we announced $3.2 million of new APC awards from new and existing clients in the US, Europe, and Southeast Asia. These contracts helped to increase our consolidated APC segment backlog to $9.5 million at the end of the third quarter. We are currently pursuing $3 to $5 million of potential additional APC contracts that we would expect to close before the end of the year or in the early part of Q1, 2026. This is exclusive of data center opportunities, which I will discuss shortly. Next, I'd like to note that subsequent to quarter end, we expanded our APC portfolio through a small strategic acquisition of complimentary intellectual property and customer related assets from Walco Inc., a well established environmental equipment and services company with several hundred project installations worldwide. The total cash consideration for the transaction was $350,000, representing a strategic and cost-effective expansion of our IP portfolio and demonstrating our disciplined approach to capital allocation. We were able to secure high-value assets at a modest price, strengthening our technology base, and aligning with our long-term strategy to address customer air pollution control needs globally. The acquired suite of assets includes technology applicable to flue gas conditioning systems, ammonia handling equipment for a wide range of industrial applications, and urea to ammonia conversion technologies for NOx reduction using complementary technologies to our existing portfolio in these areas. Also included as part of the portfolio are customer installation and aftermarket data, which we believe will drive accretive aftermarket revenues. We view this acquisition as both strategically and operationally attractive, enhancing our competitive position and expanding the solutions we can offer to our APC customers worldwide. We continue to pursue additional new awards driven by an industrial expansion globally and by state-specific regulatory requirements in the US. And we are continuing to monitor the progress of EPA's rule for large municipal waste combustor units. This rule reduces the nitrogen oxide emissions requirements for large MWC units. FuelTech has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support the compliance planning. The final rule has been delayed by EPA until December of this year, with compliance deadlines expected three years from the date of issue. The public comment period closed at the end of May of this year so the final rule remains on track. That being said, there are some specific states that are currently requiring lower NOx emissions that are consistent with the proposed MWC rule, and we are actively pursuing those opportunities today. Additionally, EPA, under the current administration, is currently pursuing the rollback of rules related to the reduction of greenhouse gases. It is important to note that the proposed rollback of the 2009 EPA endangerment finding does not loosen the nitrogen oxide emission requirements for any sources and could potentially extend the life of some coal and natural gas fired units that may not have to reduce their carbon dioxide emission profile. Lastly, as discussed on our previous conference calls, we are not expecting any specific tailwinds that would come from the implementation of new regulation and the opportunities that we are pursuing today are not contingent on the implementation of any specific new regulations. As we have discussed on our two prior conference calls, we are experiencing an unprecedented increase in demand for power generation in this country and globally that is being driven by the digital economy, including AI and data centers, the electrification of everything, and a massive industrial and energy transition. all happening simultaneously. This represents one of the most exciting opportunities that we have seen in quite some time for our company as it relates to the application of our APC emissions control solutions as part of the proliferation and investment in data center infrastructure being built in support of the general trend for digital expansion. Data centers are expected to become the backbone of the digital age, and their development is driving new power generation demand. This demand in power, in some instances, will require emissions control solutions for many of the energy sources that necessitate a low carbon footprint. In fact, the primary factors that determine whether a data center will require NOx control using FCR technology are the following. First, site location. Is the site in an attainment or a non-attainment area for ozone ambient air quality standards? as NOx is a contributor to ozone. There will be more stringent NOx reduction requirements in non-attainment areas. Second, what is the planned utilization of the power generation application? Is the power generation source for primary or backup power, and what are the expected number of operating hours per year of the generating source? Primary power sources and backup power that is expected to run extensively will be more likely to require SCR for NOx reduction. And third, what if the baseline NOx emission of the power generation source? Some rotating internal combustion engines or combustion turbines can be equipped with combustion controls to enable a lower NOx baseline level and possibly eliminate the need for SCR. However, ultimately, the site permit will define the required level of emissions control. Interest in our technology solutions for these applications has continued throughout the recent quarter. And as of today, we are continuing to engage with multiple potential customers representing a sales pipeline of current outstanding project bids of approximately 80 to 100 million dollars for projects integrating our SCR technology with power generation sources to meet emissions control requirements for data centers planned across the U.S. over the next several years. We are continuing to work with our supply chain partners and engineering colleagues to prepare for these opportunities. While the majority of our inquiries over these past few months have been from turbine OEMs, in recent weeks we have had discussions with a variety of different companies that are looking to address the market need for the expedient deployments of reliable power generation as either a permanent solution or as a temporary bridge solution for a gap period. such as waiting for a permanent grid connection. Such companies include those that have access to aircraft engines and are looking to bring these assets into the power generation market, and also system integrators. Additionally, we are finding that the use of smaller engines and turbines is coming into favor, which is generally preferential for fuel tech, as near-term developments require power generation in support of bringing data centers online sooner rather than later, and lead times for large gas turbines are expanding to periods of five to seven years or more. We see this expansion of interest from these parties as an exciting opportunity, and we will continue to investigate and pursue both conventional and non-traditional sources to ensure that our technology offerings enhance the benefits of temporary and long-term power generation solutions. For our dissolved gas infusion business, We had a very successful exhibition of DGI at the Water Environment Federation Technical Exhibition and Conference, or WEFTEC, in Chicago last month and generated significant interest in the technology. We are continuing an extended demonstration of DGI in a fish hatchery in the western U.S., which we expect will last until the end of Q1 of 2026. We are continuing discussions with multiple other end markets of interest, for DGI including pulp and paper, food and beverage, chemical, petrochemical, and horticulture. As discussed last quarter, we have been looking to expand our network of sales representatives in support of DGI, and we did add one additional representative during the quarter to augment the work being done by two existing firms. We expect to continue to build this network as we experience further interest in DGI. As we look ahead to the balance of 2025, Based on our effective backlog and pending contract awards, the APC business development activities that we are pursuing, and our previously noted expectations for FuelCam, we are expecting revenues for 2025 to be approximately $27 million, which represents an 8% increase over 2024. This is a base case outlook and excludes any material contributions from APC, from data center contract awards, and any material impact from the new business development activities for Fuelchem. In closing, I'd like to thank the entire FuelTech team for their continued dedication to advancing our strategic objectives and our shareholders for their ongoing confidence and support. We look forward to keeping you apprised of our progress as we move forward towards the end of 2025 and into 2026. Now I'd like to turn the call over to Ellen for her comments on our financial results. Ellen, please go ahead. Alan Albrecht | Chief Financial Officer: Thank you, Vince, and good morning, everyone. For the quarter, consolidated revenues declined slightly to $7.5 million from $7.9 million in the prior year period due to lower APC segment revenues partially offset by higher fuel chem segment revenue. APC segment revenue declined to $2.7 million from $3.2 million primarily related to the timing of project execution on existing contracts. As expected, FuelChem had a solid quarter with revenue improving to $4.8 million from $4.6 million. Consolidated gross margin for the third quarter rose to 49% of revenues from 43% in last year's third quarter due to increases in both FuelChem and APC segment gross margins. Fuelchem gross margin increased to 50% compared to 49% in the third quarter of 2024 due to an increased volume of sales activity combined with relatively flat segment administrative expenses. APC segment gross margins expanded significantly to 47% in the third quarter compared to 35% in the prior year period as a result of product and project mix that included a higher proportion of ancillary revenue consisting of spare parts and service revenue, which represents a higher margin contribution to traditional capital project margins. Consolidated APC segment backlog as of September 30, 2025, was $9.5 million, up from backlog of $6.2 million at the end of 2024. Backlog at September 30th included $4 million of domestically delivered projects and $5.5 million of foreign delivered project backlog. We expect that approximately $7.1 million of current consolidated backlog will be recognized in the next 12 months. SG&A expenses were flat at $3.2 million in the third quarter. As a percentage of revenue, SG&A expenses rose to 43% from 41% in the prior year period, reflecting lower consolidated revenue in the current period. For 2025, we continue to expect SG&A expenses to increase modestly from prior year as we focus on the development of our infrastructure in support of our business segments. Research and development expenses for the third quarter of 2025 rose to $450,000 from $361,000 in the prior year period reflecting our ongoing investment in water and wastewater treatment technologies, notably our DGI systems and the site demonstration previously referenced by Vince. Our investment in DGI will continue throughout 2025 to support ongoing site demonstrations and other growth initiatives as we ramp up towards commercialization. During the third quarter, we delivered profitable results with positive operating income, net income of $303,000 or one cent per share compared to a net income of $80,000 or zero cents per share in the prior year period. An adjusted EBITDA was $228,000 compared to an adjusted EBITDA loss of $35,000 in the prior year period. Lastly, moving to the balance sheet, our financial condition remains very strong. As of September 30, 2025, total cash and investments was $33.8 million, comprised of cash and cash equivalents of $13.7 million, and short and long-term investments of $20.2 million. Net cash provided by operating activities was $4.6 million for the nine months ended September 30, as compared to a use of cash totaling $1.8 for the same period in the prior year. Shares outstanding at quarter end were approximately $31.2 million, equating to cash per share of $1.08. Working capital was $26 million, or $0.83 per share. Stockholders' equity was $41 million, or $1.31 per share, and the company continues to have no outstanding debt. We remain greatly confident in our ability to maintain a strong financial position and to fund our short and long-term growth initiatives for our Fuel Chem, APC, and DGI business segments. I'll now turn the call back over to Vince. Vince Arnone | Chairman, President & Chief Executive Officer: Thanks very much, Ellen. Operator, let's please go ahead and open the call for questions. Operator | Conference Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Start 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Start keys. One moment, please, while we pull for your questions. Our first question comes from the line of Amit Dayal with HC Wainwright. Please proceed with your question. Amit Dayal | Analyst, HC Wainwright: Thank you. Good morning, guys. Good morning. To begin with, hey, hey. This acquisition, do you need to make any additional investments to meaningfully monetize this acquisition? And just in terms of the timeline for you to see any sort of contribution from this IP, should we expect anything coming in this year itself, or is this more of a 2026, 2027 type situation? Vince Arnone | Chairman, President & Chief Executive Officer: Okay, so... Two questions there as I answer your first question at this point in time. I don't expect that we may need to make a significant amount of incremental investment here internally to capitalize on the IP that we've acquired. We are familiar with the technologies that we have brought in-house. And so at this point in time, no, I'm not anticipating any sort of significant investment required to monetize. Your second question is we are going to get at least some small contributions relatively quickly from some of the aftermarket opportunities that will come our way from the very large installation base that Walco, Inc. does have in place and that they've built historically over the past three decades. So we will see some near-term benefits as it as incremental to our aftermarket business. But obviously, we would like to see some larger scale benefits in terms of capital project awards as we move into 2026 and beyond. So specifically, we will see some near-term favorable impacts from an aftermarket business, but those won't be what I would call extraordinarily material. As we move into 26, we'll look to capitalize on utilizing that IP to pursue some capital project awards. But from our perspective, this was an easy decision and a very solid strategic investment for us to make as we look to continue to build out our APC portfolio of solutions for our end markets here in this country and the remainder of the world. Amit Dayal | Analyst, HC Wainwright: Understood. And then for the data center type opportunities, are you working with any folks in the value chain from a distribution perspective? or are you directly approaching some of these entities with your solutions? Vince Arnone | Chairman, President & Chief Executive Officer: So as we've discussed a little bit previously, we are the back end of the solution to your power generating source. So we are typically brought into the equation for the data center build out from one of the engine or turbine OEMs. That's generally how we're brought in. And so we're looking to work with those parties to try to bring ourselves into the opportunity that's there. As I noted in my script, so recently we have been contacted by some other parties that are looking to enter this space that are what I would call non-traditional players. I mentioned a company that manages aircraft engines. They maintain, they lease, and so on and so forth. very large organization, but they're looking to repurpose some of their aircraft engines to be applicable to generating power for data centers. So that's a new entrance that we're trying to work with to bring our solution to the opportunity. And we have been contacted recently by some of the integrators as well that are looking to package a solution and bring that solution to the end customer. So So now it's the OEMs, it's some new market entrants, and some integrators as well. And so we're expanding our, call it our method of opportunity, our method of supply chain to get into this data center marketplace. Amit Dayal | Analyst, HC Wainwright: Understood. And then, you know, from a pipeline perspective, you know, how big is the pipeline already? I don't know if you can share, caller, on that. But I'm just trying to see if, you know, you have already started to include some of this data center opportunity from a pipeline perspective. Vince Arnone | Chairman, President & Chief Executive Officer: So, from a pipeline perspective, we have eight to ten opportunities that we are pursuing today, and those opportunities are worth 80 to 100 million dollars in total. That's what we're sitting on today. Those opportunities are broken down into different categories. A couple of them are commercial, and we would expect to have finalization on those opportunities either before the end of the year or early in 2026. The majority of the remainder are what I would call more initial inquiry, a budgetary inquiry in nature. whereby a customer comes to us and they're looking to evaluate how they're going to make a proposal to their end customer, and we give them a budgetary quote. So in total, as I said, 8 to 10 opportunities valued at $80 to $100 million in total. Amit Dayal | Analyst, HC Wainwright: That's amazing. That's all I have, Vince, for now. I'll take my other questions offline. Thank you. Vince Arnone | Chairman, President & Chief Executive Officer: Thanks, Amit. Operator | Conference Operator: Thank you. Our next question comes from the line of Ankur Sagar, who's a private investor. Please proceed with your question. Ankur Sagar | Private Investor: Hi, good afternoon. Thank you for taking my questions. Vince, thank you for elaborating on the factors for the data center opportunity. As you listed, I mean, there is an immense shortage of these gas turbines and Some of the entities have even just started using aircraft engines, which require emission control. And it's been on the news, for example, like XAI, which is a large hyperscaler, which really put this whole setup with gas turbines quickly, but then had to go back and and get a permit for refitting these turbines with SCR. So there is a lot happening and you're involved in this, but anything you can share from a timeline perspective on when do you expect sort of like in any of these pipeline opportunities to come to fruition? Vince Arnone | Chairman, President & Chief Executive Officer: Yeah, so as I just mentioned in my comment to Amit, Two or three of these contract opportunities we consider to be commercial opportunities, and we would expect to have a response on them, again, late this year or sometime in Q1 at the latest on those two to three. The remainder need to progress a little further relative to the project development phase. And so I can't offer timelines on that as we sit here today. But with the two or three that are indeed commercial, I would expect some sort of conclusion on them here within this next few month time frame at the most. Okay. Ankur Sagar | Private Investor: Yes. And then these couple, two or three that you expect some response before that, are these more like where they will convert from pipeline into orders or Or these are also like platform opportunities where you are retrofitting your solution with some other vendor, whether it be a gas turbine or OEM or integrator, where you can probably have more than just the two orders or anything. Vince Arnone | Chairman, President & Chief Executive Officer: Can you clarify your question one more time between the two different? Before I give you an answer, if you don't mind, please. Ankur Sagar | Private Investor: The couple of opportunities that you would see some news or result on before the end of this year, are these also like platform opportunities where your solution will get retrofitted in another company's solution? whether it be an OEM turbine maker or an integrator, where, you know, it will not just be just the two orders that, let's say, you get, but, you know, there's a potential to get more than just the two in 26. Vince Arnone | Chairman, President & Chief Executive Officer: On Corey's note, thanks for the clarification. To answer specifically, these initial orders, if we're able to bring them to fruition, would be... giving us the ability to expand and participate on additional opportunities that these customers would have prospectively. So yes, if these orders come in-house, I would expect that. It's not going to be an automatic that we're affixed to all of those customers' opportunities prospectively, but it is going to give us a very nice opportunity to expand business with these entities prospectively, and we would expect, then, incremental orders prospectively. Ankur Sagar | Private Investor: Got it. Okay. One last one. In this, I think, fiscal year, in the last three quarters, I mean, from a cash flow perspective, I think your team has done really well. Your cash on the balance sheet has increased from working capital, done really good. How do you expect Q4 to be from a cash flow perspective? Vince Arnone | Chairman, President & Chief Executive Officer: I would think as we look to our cash balance towards the end of 2025, I would say flat to slightly down as we look at the end of the year. Q3 is typically our best performing quarter, generally speaking. So we have the opportunity for increased cash flow. And we did have some excellent cash collections in Q3 as well to build the amount. But as we look towards moving in towards the end of 2025, I'd say flat to slightly lower for the end of the year. But still, we're very pleased with our cash balance in terms of where it is today at around $34 million and no debt. It gives us a great platform to be able to evaluate and and assist our potential customer base as we're looking at the landscape of opportunities that we do have. It gives us a lot of flexibility. Ankur Sagar | Private Investor: Yeah. All right. Great. Thank you for taking my questions. Vince Arnone | Chairman, President & Chief Executive Officer: Thank you, Ankur. Operator | Conference Operator: Thank you. Our next question comes from the line of Richard Grulich with REG Capital Advisors. Please proceed with your question. Richard Grulich | Analyst, REG Capital Advisors: Thank you. Vince, last quarter in conference call, you mentioned a global sales pipeline of, I don't know, 75 to 100 million. Was that including the data center opportunities that you've been talking about today? Vince Arnone | Chairman, President & Chief Executive Officer: No, actually, that number would not have included the data center. Actually, that number was the data center opportunity more specifically, and we would have had, call it, more regular, ordinary, recurring APC business opportunities that would have been another $10 to $20 million in pipeline on top of that number. So today, as I'm talking about 8 to 10 opportunities for $80 to $100 million, that's data center opportunities only. We have an additional pipeline of what I would call more standard APC business that is another $10 to $20 million on top of that amount. Richard Grulich | Analyst, REG Capital Advisors: Okay. Thank you for clarifying. Okay. Thank you. Vince Arnone | Chairman, President & Chief Executive Officer: My pleasure. Thank you. Operator | Conference Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Mr. Arnone for any closing remarks. Vince Arnone | Chairman, President & Chief Executive Officer: Thank you, operator. I'd like to thank everyone who joined the call today. We were indeed pleased with our results for Q3. We are very excited about our outlook as we look to end 2025 and move into 2026. The APC landscape of opportunities is indeed the best landscape that we have seen in several years as a company. Our goal as a team is to capitalize on that opportunity. For our chemical technologies business, this year we're looking at our best performance with that business segment since 2022. And with the very solid opportunity of bringing on another coal-fired unit as we look to end this quarter and move into 2026, we have a wonderful outlook for 2026 for our chemical technology segment as well. So very pleased with where we are sitting today as a company. Again, thank the FuelTech employee team. Thank our shareholder base. Everyone have a wonderful day. Thank you. Operator | Conference Operator: Thank you. This concludes today's call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day. jsPDF 3.0.3 D:20260606090138-00'00'

NASDAQ:FTEK Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Alarik | Conference Operator: Ladies and gentlemen, greetings and welcome to the FuelTech INCOP 2025 Second Quarter Financial Results Conference Call. At this time, all participants are in the listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Devin Sullivan, the Managing Director of the Equity Group. Please go ahead. Devin Sullivan | Managing Director, The Equity Group: Thank you, Alarik, and good morning, everyone. Thank you for joining us today for FuelTech's 2025 Second Quarter Financial Results Conference Call. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, .ftek.com. Our speakers for today will be Vince Arnone, Chairman, President, and Chief Executive Officer, and Ellen Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call, except for historical information, are 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 FuelTech'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 company's management. FuelTech 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 FuelTech and are subject to various risks, uncertainties, and other factors, including the not limited to those discussed in the company's annual report on Form 10K and Item 1A, under the caption of risk factors and subsequent filings under the Securities Exchange Act of 1934 as amended, which could cause FuelTech's actual growth, results of operations, financial condition, cash flows, performance, and business prospects, and opportunity to differ materially from those expressed in or implied by these statements. FuelTech undertakes no obligation to update such factors or to publicly announce the results of any forward-looking statements contained herein to reflect future events, developments, or change circumstances or for any other reason. Investors are cautioned that all forward-looking statements about risks and uncertainties, including those detailed in the company's filings with the SEC. With that said, I'd now like to turn the call over to Vince Arnone, Chairman, President, and CEO of FuelTech. Vince, please go ahead. Vince Arnone | Chairman, President & Chief Executive Officer: Thank you, Devin. Good morning, and I'd like to thank everyone for joining us on the call today. Our second quarter results were largely in line with our expectations and reinforced our belief that 2025 will be a year of growth for our company versus prior year. For the quarter versus the prior year period, we expanded our gross margin, managed expenses, continued to invest in our emerging technologies, and maintained a strong financial position with cash, cash equivalents, and investments of nearly $31 million at quarter end, and no long-term debt. We are also pleased with the pace of business development at each of our three businesses, which includes the expectation of a receipt of an incremental $2.5 to $3 million in new APC awards before the end of the month of August, as well as customer demonstrations that are underway for our dissolved gas infusion technology, and plan to commence later in the year for our fuel chem business segment. We are also increasingly optimistic about the application of our APC suite of emissions control solutions and the construction of AI-related data centers in the United States, and I'll make further comments on this topic in a moment. Revenues for our fuel chem segment were essentially flat for the quarter versus prior year, reflecting seasonal weather transition from spring to summer. However, the warm weather that much of the country began to experience late in the second quarter has translated into higher energy demand, which has had a positive effect on fuel chem's results as we entered the current third quarter. With each of our base accounts in operation, including the incremental contribution from the new commercial account that we added in the fourth quarter of 2024, we recorded more than $2 million in revenue at fuel chem for the month of July. As of today, we believe that we are well positioned to meet our annual objective of $15 to $16 million in fuel chem revenue. In addition, we are also expecting to commence a new six-month demonstration of our TIFI-targeted infernus injection technology early in the fourth quarter of this year at a new customer's coal-fired unit in the Midwest. The purpose of the demonstration is to improve boiler availability and reliability and reduce maintenance downtime for offline boiler cleaning in order to maximize the power generation profile of this unit. Should this demonstration result in a new contract, we would expect the annual revenue potential to be approximately $2 to $2.5 million based on the customer running the program full-time and with the revenue expected to generate historic fuel chem gross margins. With respect to international fuel chem opportunities, we remain in discussions with our partner in Mexico to expand the provision of our chemical technology and that country. Based on conversations with our partner in Mexico, it is still our understanding that the recently elected government is targeting the implementation of environmental policy aimed at the reduction of pollutants that can cause climate change. As Mexico is planning to use the heavy fuel oil generated from their oil refining operations as fuel for power generation for the near-term future, we are hopeful that our fuel chem program will be an integral part of President Shane Baum's plan. Revenues for our APC business in the second quarter declined compared to the prior period due primarily to the timing of project execution on existing contracts. With that said, we are pleased to report that we are expecting to announce an incremental $2.5 to $3 million in new APC contracts before the end of this month from new and existing U.S. and international customers for our emissions control solutions. Further, we do expect to close an additional $3 to $5 million in new awards before the end of this year, which would be exclusive of any data center opportunities. We are continuing to pursue additional new awards driven by industrial expansion globally and by state-specific regulatory requirements in the U.S., and we are continuing to monitor progress of the EPA's rule for large municipal waste combustor units. This rule reduces the nitrogen oxide emissions requirements for the large NMWC units. FuelTech has had a long history of assisting this industry and meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning. The final rule has been delayed by EPA until December of this year, with compliance deadlines expected three years from the date of issue. That being said, there are some specific states that are currently requiring lower NOx emissions that are consistent with proposed MWC rule, and we are actively pursuing those opportunities today. Additionally, EPA, under the current administration, is currently pursuing the rollback of rules related to the reduction of greenhouse gases. It is important to note that the proposed rollback of the 2009 EPA endangerment finding does not loosen the nitrogen oxide emission requirements for any sources and could potentially extend the life of some coal and natural gas-fired units that may not have to reduce their carbon dioxide emission profile. Lastly, as discussed in our previous conference calls, we are not expecting any specific tailwinds that would come from the implementation of new regulation, and the opportunities that we are pursuing today are not contingent on the implementation of any specific new regulations. For our dissolved gas infusion business, we commenced an extended demonstration in mid-July at a fish hatchery in the Western US that is expected to last until the second quarter of 2026. The demonstration is designed to evaluate the benefits of delivering consistent and precise levels of dissolved oxygen for the raising of game fish in a controlled environment over a complete growth cycle. Specifically, this user is interested in ascertaining how DGI will affect yield, fish growth cycles, and operational costs for the program. What's interesting about this particular demonstration is that our DGI technology will be going head to head with the technology that is currently being used by this hatchery, and we believe that this comparison will provide a very clear view of the advantages of our DGI system in this setting. In addition to this demonstration, we are still in discussions with a municipal wastewater treatment facility in the Southeastern United States, and we are pursuing multiple other end markets of interest for DGI, including pulp and paper, food and beverage, chemical, petrochemical, and horticulture. We continue to receive inquiries regarding DGI from potential customers in multiple end markets, and we are hopeful that we can generate our first commercial revenues in 2025. Additionally, we continue to cultivate our sales representative network to broaden the introduction of DGI to various end markets across the U.S. We expect to add new sales representatives later this year. These would be in addition to the two companies with whom we executed sales agreements in the first half of this year. As a follow-up to the commentary that we provided on our previous conference call, one of the most exciting opportunities that we have seen in quite some time for our company relates to the application of our APC emissions control solutions as part of the proliferation and investment in data center infrastructure being built in support of AI, cloud computing, and the general trend for digital expansion. Data centers are becoming the backbone of the digital age, and as such, their development necessitates the increase in demand for power generation to support data center operation. This demand in power will require emissions control solutions for many of the energy sources that necessitate a low-carbon footprint. In fact, the primary factors that determine whether a data center will require NOx control using SDR technology are the following. First, site location. Is the site in an attainment or non-attainment area for ozone ambient air quality standards, as NOx is a contributor to ozone? There will be more stringent NOx requirements in the non-attainment areas. Second, the planned utilization of the power generation application. Is the generation source for primary, or backup power, and what are the expected number of operating hours per year? Primary power sources and backup power that is expected to run extensively will be more likely to require SDR. And third, the baseline NOx of the power generation source. Some combustion turbines can be equipped with combustion controls to enable a lower baseline NOx emissions level. However, ultimately, the site permit will define the required level of emissions control. The interest in our technology solutions for these applications has continued throughout the recent quarter. And as of today, we have multiple bids outstanding for the integration of our SDR technology with the power generation sources to address the emissions control requirements of data centers to be built in the U.S. over the next several years. We are watching the progress of the bid activity closely, and are proactively working with our supply chain partners to ensure that we are ready to capitalize on the opportunity when it comes our way. As we look ahead to the balance of 2025, based on our effective backlog, impending contract awards, the APC business development activities that we are pursuing, and our previously noted expectations for fuel chem, we are reducing our revenue guidance for 2025 modestly from approximately $30 million to a range of $28 to $29 million. We are confident that fuel chem will well exceed its revenue level for 2024. However, the timing of both the receipts and execution of APC awards has some uncertainty, and as a result, we are being cautious in our guidance. Also, please note that this base case outlook excludes any material contributions from DGI, any significant contributions to APC from data center contract awards, and any material impact from new business development activities for fuel chem. In closing, I want to express my thanks to the FuelTech team for their continued efforts in support of our strategic goals, and I want to thank our shareholders for their continued interest in and support of FuelTech. We are excited about the business opportunity landscape that lies in front of us today, and one of our primary objectives for our company is to build a material contract backlog as we move towards the end of 2025 and into 2026 and thereafter. Now, I'd like to turn the call over to Ellen for her comments on the financial results. Ellen, please go ahead. Ellen Albrecht | Chief Financial Officer: Thank you, Vince, and good morning, everyone. For the quarter, consolidated revenues declined to $5.6 million from $7 million in the prior year's period due to lower APC segment revenue. APC segment revenue declined to $2.5 million from $3.9 million, primarily related to the timing of project execution on existing contracts, while, as expected, fuel chem segment revenue remained flat at $3.1 million for the quarter. Consolidated gross margin for the second quarter rose to 46% of revenues from 42% in last year's second quarter due to segment contribution mix. Fuel chem gross margin increased to 47% compared to 46% in the second quarter of 2024 despite flat segment revenues, which was mainly due to account mix combined with relatively flat segment administration expenses. APC segment margin rose to 44% in the second quarter as compared to 39% in the prior year's period as a result of project and product mix. The APC segment contained revenues from capital projects and ancillary revenue for items such as post-contractual spare parts and services. Ancillary -in-time revenue maintain a higher margin profile and will offset fluctuating capital project revenue margins, which are recognized over time based on project completion. Consolidated APC segment backlog on June 30, 2025, was $7.8 million up from a backlog of $6.2 million as of December 31. Backlog at June 30 included $2.8 million of domestically delivered project backlog and $5 million of foreign delivered project backlog compared to $1.9 million of domestic delivered project backlog and $4.3 million of foreign delivered project backlog as of December 30, 2024. We expect that approximately $5 million of current consolidated backlog will be recognized in the next 12 months. SG&A expenses in the second quarter rose slightly to $3.3 million from $3.2 million in the prior year period due primarily to timing of routine expenditures. As a percentage of revenue, SG&A expenses rose to 60% from 46% in the prior year period, reflecting lower consolidated revenue in the current period. For 2025, we expect SG&A expenses to increase modestly from prior year as we focus on the development of our infrastructure and business segments. Research and development expenses for the second quarter rose to $490,000 from $422,000 in the prior year period due to our continuing investment in water and wastewater treatment technologies, specifically our DGI systems, and including the demonstration Vince previously mentioned. Our investment in DGI will continue throughout 2025 to support ongoing site demonstrations and other growth initiatives. Our second quarter operating loss was $1.3 million compared to an operating loss of $715,000 in the prior year period. Interest income increased to $537,000 in the second quarter, up from $334,000 in the prior year period. Interest income in the 2025 second quarter included $257,000 related to the one-time recognition of the employee retention credit funds under the CARES Act. Collection of approximately 75% of ERC funds, including the interest, was completed in the second quarter with the remaining balance fully collected as of today. Our net loss for the quarter was $689,000, or $0.02 per share, compared to a net loss of $421,000, or $0.01 per share in the prior year period. Adjusted EBITDA loss was $948,000, compared to an adjusted EBITDA loss of $529,000 in the prior year period. Lastly, moving to the balance sheet, our financial condition remains very strong. As of June 30, 2025, we had cash and cash equivalents of $10.6 million and short and long-term investments of $20.3 million, for a total of $30.9 million. Shares outstanding at the quarter were approximately $30.9 million, equating to cash per share of $1. Working capital was $25.7 million, or $0.83 per share. Stockholders' equity was $40.7 million, or $1.32 per share. And the company continues to have no outstanding debt. We remain greatly confident in our ability to maintain a strong financial position and to fund our short and long-term growth initiatives. I'll now turn the call back over to Vince. Vince Arnone | Chairman, President & Chief Executive Officer: Thanks very much, Ellen. Operator, let's please go ahead and open the call for questions. Alarik | Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Sameer Joshi with HC Wainwright. Please go ahead. Sameer Joshi | Analyst, HC Wainwright: Hey, good morning, Vince, Ellen, Devin. Thanks for taking my questions. Good morning, Sameer. Good morning. Just a few on the actual financials and outlook. Just want to make sure you mentioned fuel chem revenues for the year are likely to be highest since 2022 and also further clarified it and those to be expected in the 15 to $16 million range. Is that for the year? Is that because of any additional units coming online later in the year? You did mention some 4Q activity. Just would like to get some color on that. Vince Arnone | Chairman, President & Chief Executive Officer: Right, now the number that I provided as the range of 15 to 16 million does not include contributions from any new accounts as we see here today. Anything that would be added from a new account perspective would be incremental to those numbers. Sameer Joshi | Analyst, HC Wainwright: Understood. And then the backlog of 7.8 million, I think Ellen mentioned 5 million to be expected to be recognized during 2025. Is there any seasonality or other cadence to that over the next two quarters or it's even distributed? Vince Arnone | Chairman, President & Chief Executive Officer: Right, and Ellen had actually mentioned that that backlog number is largely going to be recognized over the next 12 months time horizon, not necessarily solely in 2025. And yet the backlog is, it's definitely project specific in nature. So it's not like we can easily allocate that over the 12 month timeframe, if you will. Sameer Joshi | Analyst, HC Wainwright: Understood, yeah, no, I misspoke. 12 months is correct. On the DGI front, this nine to 12 month demonstration that the factory, are there any costs being reimbursed or is it being considered as R&D expense from an accounting point of view? Vince Arnone | Chairman, President & Chief Executive Officer: It is largely considered to be R&D expense, Samir. And no, we are not expecting to collect any funds from the customer for this demonstration. This is solely a FuelTech investing in ensuring that we look to commercialize DGI as quickly as we can. Sameer Joshi | Analyst, HC Wainwright: Understood, and you did reiterate commercial revenues from, I guess, the one or two prior engaged customers during 2025, did I hear that correct? Vince Arnone | Chairman, President & Chief Executive Officer: We have not recognized commercial revenues on DGI as of yet. Sameer Joshi | Analyst, HC Wainwright: But do you expect to before the end of 2025? Vince Arnone | Chairman, President & Chief Executive Officer: It is our hope and expectation that we will be fortunate enough to recognize some commercial revenue in 2025, yes. Sameer Joshi | Analyst, HC Wainwright: So then stepping back and just some like higher level micro questions, you did address the role, proposed rollbacks of EPA Clean Air Act regulations. And indicated neither headwinds nor tailwinds resulting from that. Are there any particular areas where you might see some improvements on the NOX front maybe, or some like, just wanted to see because you are in the pollution control, the NOX control business and the regulations might have some impact. That's just, that's how I feel. Vince Arnone | Chairman, President & Chief Executive Officer: Yeah, so at this point in time, our opportunities for APC, they are being driven predominantly by continued business expansion. The contract awards that we're looking to announce here in this next two to three week timeframe are for plant expansions, both in this country and in Europe as well. So we'll continue to participate in those types of activities as we continue to have manufacturing build out around the world. And then obviously our largest opportunity that we're seeing today is indeed the AI related data center build out that pretty much everyone has been speaking about here over this past several months. Regulatory we are not expecting any downside nor any upside that will be driven by regulation as we sit here today. Sameer Joshi | Analyst, HC Wainwright: Understood, so the upside and you did address it on your commentary, the APC, a opportunity from the data center slash crypto slash AI space. So it will be because they will be deploying more power resources that will require your services. That's where you see the upside from. Is there, I think that is correct. Is there any timeline, are you seeing increased activity toward this or you just are expecting it in the future? Vince Arnone | Chairman, President & Chief Executive Officer: Yeah, I don't have a specific timeline for you as we sit here today, Samir. We have active proposals in place with multiple turbine manufacturer OEMs. The proposals are, there's a combination of both budgetary and what I would call commercial proposal activity. The commercial ones are likely to be more current in their timeliness relative to the customer acting on them. But as we sit here today, we would expect to hear some level of response on these awards before the end of 2025, but hopefully sooner than that. Hopefully sooner than that. These projects do take time to develop obviously and we are working with our partners very, very closely and we are active in terms of supporting them with bids for our services. And it's something we're following extremely closely. It is literally the largest opportunity that we have seen for our technologies in probably 10 to 15 years. So it's critical for us to capitalize on these. Sameer Joshi | Analyst, HC Wainwright: Yes, yes. I know that was sort of where I was going and towards my last question as well about what is the pipeline of opportunities, not only from the AI, but also from FuelCam in the next two years or even the GI that you're emerging, just the broader marketplace pipeline for the company for the next two years. Vince Arnone | Chairman, President & Chief Executive Officer: Right, so I'll start with FuelCam. So we don't actually measure a pipeline for FuelCam because that's recurring revenue. So as I said, for 2025, we are looking at 15 to 16 million in revenue. 26 and beyond is going to depend on whether or not we are able to add some new commercial accounts to our base accounts for FuelCam. I had mentioned that we are looking at demonstrating at a large coal fired unit here before the end of 2025. If that does come on board and is operational for the majority of 2026, that could be an incremental two to two and a half million dollar revenue amount for 2026. And that would also assume the same level of contribution from all of our other base accounts. So no backlog, if you will, for FuelCam recurring revenue with some opportunities for upside. For DGI, I really can't speak to a backlog number here at this point in time. It's where we're still pre-revenue and it would be on my behalf making a statement that I really don't have any justification for here today. So we'll hold off on DGI for the time being. For APC, the pipeline just for the bids we have in place related to AI data centers, it's approximating a hundred million dollars in bids that we have outstanding today. It's a significant material opportunity for our company. And then the pipeline for call it what I would call more standard APC business that's related to normal business growth, I'd put that in the 20 to 25 million dollar range. Sameer Joshi | Analyst, HC Wainwright: Yeah, no, that's the number I was getting at. It's a significant opportunity ahead of you and it is emerging. So good luck with that. Thank you very much for your question. Alarik | Conference Operator: Thank Sameer Joshi | Analyst, HC Wainwright: you. Alarik | Conference Operator: Thank you. The next question comes from Mark Silk with Silk Investment Advisors. Please go ahead. Vince Arnone | Chairman, President & Chief Executive Officer: Hey, Mark. I'm sorry to interrupt Mark. Maybe we can barely hear you. Mark Silk | Analyst, Silk Investment Advisors: Oh, how's that? Vince Arnone | Chairman, President & Chief Executive Officer: That is much better, thank you. Mark Silk | Analyst, Silk Investment Advisors: Okay. Did you say the opportunity for the data centers is a hundred million dollars? Vince Arnone | Chairman, President & Chief Executive Officer: I said that that's what we have in our pipeline today. The opportunity itself could be larger than that. But that represents what we have in terms of bid pipeline activity today. Mark Silk | Analyst, Silk Investment Advisors: That's impressive. Most of my questions are answered, so I just have one more. Obviously, the data centers is a big US phenomenon, but is there also additional data centers being built around the world that you could be part of as well? Vince Arnone | Chairman, President & Chief Executive Officer: We believe that we will see data center build out in other parts of the world as well. We're involved in what I would call a lesser amount or number of inquiries for those opportunities because they are not as developed or not as advanced as the activity that we are seeing here in the US. But we would expect that there would be some opportunities outside of the US prospectively. Mark Silk | Analyst, Silk Investment Advisors: Great, that's all I have. Good luck going forward. Alarik | Conference Operator: Thank you, Vince Arnone | Chairman, President & Chief Executive Officer: Mark. Alarik | Conference Operator: Thank you. The next question comes from Richard Grulick with REG Capital Advisors. Please go ahead. Richard Grulick | Analyst, REG Capital Advisors: Thank you. In related question, so I noticed in the 10Q that you changed your global sales pipeline range from in the last quarter, it was 50 to 75 million, and in this 10Q, it's 75 to 100 million. Does that reflect accelerating interest in the data center area or maybe accelerating bids placed by you? Vince Arnone | Chairman, President & Chief Executive Officer: It actually does. And as I just mentioned to the prior caller, our range in total is at this point in time, it is greater than $100 million in terms of our sales pipeline. And yes, it is specifically being driven by the opportunities that are out there related to AI data centers. Richard Grulick | Analyst, REG Capital Advisors: If these opportunities came to fruition, would you be able to expand your production capacity or installation capacity on a timely basis to take advantage of that over the next year or two? Vince Arnone | Chairman, President & Chief Executive Officer: Yeah, we are working with our supply chain partners and have had discussions with them over these past few months as some of these inquiries have come in. FuelTech does not manufacture anything ourselves. We use our supply chain partners to actually manufacture and fabricate the equipment that we provide. So we do have the ability to scale up by bringing on board additional qualified suppliers for this type of work. And that would be our intention. Richard Grulick | Analyst, REG Capital Advisors: For the benefit of people who may not have listened to the last conference call, in that call you delineated sort of why this is such a big opportunity in the sense of not just having multiple centers but multiple units at each center. Is that still the case? Vince Arnone | Chairman, President & Chief Executive Officer: That is absolutely the case. Most of the bids that we are providing to our customers, it can range from anywhere from one up to 25 to 30 units that we're actually bidding on. The data center sites are scaling up in blocks or in stages. And typically each stage will require a multitude of units for that stage. And then that enables them to develop and add modularly to that site prospectively when they have additional data requirements that they're looking to fill. So yes, answering your question, these bids are for multiple units at a site. Richard Grulick | Analyst, REG Capital Advisors: And the revenue that you receive for each unit is in the range of what? Vince Arnone | Chairman, President & Chief Executive Officer: Per unit. The range is anywhere from a little over a million dollars per unit to as high as two and a half million dollars per unit. Richard Grulick | Analyst, REG Capital Advisors: Okay, great. Thank you very much. Alarik | Conference Operator: Thank you. Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from William Bremer with Vanquish Capital Partners. Please go ahead. Good morning, Ben. Vince Arnone | Chairman, President & Chief Executive Officer: Hey, good morning, Bill. William Bremer | Analyst, Vanquish Capital Partners: The previous caller did an excellent job of articulating where I was going. What I'll add in terms of the modular mix of these data center opportunities for the SCR units is I'm assuming your engineering team, once they fulfill the specific engineering that's needed for the turbine manufacturer, I'm assuming that going forward, that time to prove yourself for the technical aspect just needs to be tweaked so thus you can leverage the building out of the bids that you're possibly doing right now. Is that correct? Vince Arnone | Chairman, President & Chief Executive Officer: I would say yes to that, Bill. Once we have a specific design in place for a specific turbine, that design can be leveraged for future applications. Assuming that the permitting requirement for the emissions reduction for the site is indeed similar in nature. If the permitting requirements are different, we would then need to modify that design accordingly. However, I will say that having a base design in place for a turbine of a certain make and model does provide some leverage, absolutely. William Bremer | Analyst, Vanquish Capital Partners: And I guess what surprises many of us is that the minimum potential dollar figure is just a single seven figures, a single million dollars here. I mean, so boy, if you guys start receiving clusters of these, the leverage you'll have is tremendous. Vince Arnone | Chairman, President & Chief Executive Officer: No, agreed, agreed. Now, as I noted, we are extremely excited about this opportunity. William Bremer | Analyst, Vanquish Capital Partners: Fantastic. I wanna go to Mexico. And there's been recent, and what I mean by recent, I'm talking, hey, in March of this year and even currently in the last week, there's been more and more news regarding PEMEX and the fact that they are not fulfilling their emissions regulatory fulfillments there. And there seems to be an increased amount of pressure down there. Are you seeing that as well? Vince Arnone | Chairman, President & Chief Executive Officer: We have been waiting for pressure to be applied, not just on PEMEX, but on CFE, who is the state-owned power generation company as well. But seeing the pressure being put on PEMEX is a good indicator of what might be coming here in the future. It's been our hope and expectation that this administration would be looking at these issues more stringently. And I think, to your point, we are starting to see the administration perhaps put a little bit more focus in this area. So I'm hoping it's trending in the right way, Bill, because again, this is another opportunity for us. And we've talked about this now for several years, but this might be the best opportunity that we have to see something move forward for fuel chem down in Mexico, that the additional pressure on the emissions, whether it be from PEMEX, CFE, or other industries in Mexico, that is, it's good to see. And hopefully that will indeed expand to the point whereby our program in Mexico can be well expanded. William Bremer | Analyst, Vanquish Capital Partners: Agreed. I mean, and we're talking about fuel chem, which is currently your highest margin product. Correct. You have some facilities down there currently being run right now. That's my assumption. That's what I recall. And the fact that the leader down there is an environmentalist. So it seems as though all the potential is right there that, so I know you're dealing with a partnership down there. Can you give us some color in terms of the partnerships, engagement to the entities in Mexico and back to us? Vince Arnone | Chairman, President & Chief Executive Officer: The engagement is very heavy. We've worked with this partner for more than 15 years. They were able to establish our chemtech program down there, going back to 2007, 2008 timeframe. So quite a long time ago. The issue has been the lack of support of an administration to actually have concern for the environment. So our partner is well engaged and well connected with parties down there without getting into too much detail. I have phone calls with him at a minimum every two weeks, getting updates on where things stand and where his team has been working to go ahead in and try to push this forward. So it's regular and ongoing. It's great to see that the government is providing some additional pressure. And again, we're watching for that next step. William Bremer | Analyst, Vanquish Capital Partners: Final question, if you did receive an order via your partner from Mexico, how quickly would you be William Bremer | Analyst, Vanquish Capital Partners: able to complete that order with the Fuel Chem Division and send it down there? Vince Arnone | Chairman, President & Chief Executive Officer: Yeah, very, very quickly. We actually have equipment that is ready to go. So it would be less than a couple of months deployment time for us to be able to get up and running on a new facility down there. It would be a fast response. William Bremer | Analyst, Vanquish Capital Partners: Fantastic, I look forward to seeing orders, Vince. Thank you. Alarik | Conference Operator: Thank you, Bill. Thanks for your questions. Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Vincent Arnone for the closing comments. Vince Arnone | Chairman, President & Chief Executive Officer: Thanks very much, operator. Again, a reach out and thank you to the FuelTech team and the same for our shareholder base. Thanks for your confidence in us. We are well motivated, very excited about the landscape of opportunity that we do see in front of us today. And we look forward to executing on this opportunity. I wanna thank everyone for attending the call today and everyone have a good remainder of your day. Thank you very much. Alarik | Conference Operator: Thank you. Ladies and gentlemen, the conference of FuelTech has now concluded. Thank you for your participation and you may now disconnect your lines. jsPDF 3.0.3 D:20260606090139-00'00'