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March 2018 Investor Presentation
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Safe Harbor
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This presentation contains “forward-looking statements” as defined in Section 21E of the Securities Exchange
Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and reflect Fuel Tech’s current expectations regarding future growth, results of
operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made
by, and information currently available to, our management. Fuel Tech has tried to identify forward-looking
statements by using words such as “anticipate,” “believe,” “plan,” “expect,” “estimate,” “intend,” “will,” and
similar expressions, but these words are not the exclusive means of identifying forward-looking statements.
These statements are based on information currently available to Fuel Tech and are subject to various risks,
uncertainties, and other factors, including, but not limited to, those discussed in Fuel Tech’s Annual Report on
Form 10-K in Item 1A under the caption “Risk Factors,” and subsequent filings under the Securities Exchange Act
of 1934, as amended, which could cause Fuel Tech’s actual growth, results of operations, financial condition,
cash flows, performance and business prospects and opportunities to differ materially from those expressed in,
or implied by, these statements. Fuel Tech undertakes no obligation to update such factors or to publicly
announce the results of any of the forward-looking statements contained herein to reflect future events,
developments, or changed circumstances or for any other reason. Investors are cautioned that all forward-
looking statements involve risks and uncertainties, including those detailed in Fuel Tech’s filings with the
Securities and Exchange Commission.
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Investment Overview
» Diverse, Customizable Portfolio of Low Cap-ex Emissions Control Solutions
to Enable Clean Efficient Energy
– APC: pace of bookings rising; pursuing global pipeline of ~$150 M
– FUEL CHEM®: revenue level in 2018 to approximate 2017; gross margin
should remain stable at 48% – 50%
– Pursuing New End Market: Dissolved Gas Technology for Water Treatment
» Successfully Completed a Series of Multi-Year, Proactive Initiatives to Position
the Company for Future Growth
» 2017: Strong Business Development, Sequential Improvement in Financial
Results, Return to Operating Profitability
» 2018 Outlook: Target Higher Revenue, and Sustainable Profits and Cash Flow
Generation; Maintain Strong Balance Sheet
New orders
announced in 2017
$0
Long-Term Debt
$36 M
$19 M
Cost savings to be
realized in 2018
Q4‘17
Return to operating
profitability in Q4 ‘17
Air Pollution Control FUEL CHEM ® Water Treatment
$20.7 M
Net Operating Losses (NOLs) to
Offset Future Taxable Income
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Delivering Against Corporate Financial Initiatives
Revenues
$18.2 M
SG&A
$11.1 M
Operating Loss
$(7.4) M
Adjusted EBITDA
Loss
$(4.1) M
Cash
$12.6 M
~50% Increase
$10 - $11 M
“Significantly narrowed”
“Slightly positive”
“Stable to slightly higher”
Revenues
$26.9 M / +48%
SG&A
$9.8 M
Operating Income
$313,000
Adjusted EBITDA
$568,000
Cash
$14.4 M
1H 2017 (A) 2H 2017 Targets 2H 2017 (A)
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Investment Overview
Operating (Loss) Income
Q4 2017 was first operating
profit since Q3 2014
Focusing on Business Development, Cost Control, and Cash Flow
$30.9
$25.6
$8.5
$9.7
$13.5
SG&A
~41% decline
(2014 – 2017)
Revenue
Sequential growth, reflects
conversion of new orders
$35.4
2014 2015 2016 2017
Rising Revenue + Declining Costs = A Return to Profitability
Q1
2017
Q2
2017
Q3
2017
$ in MMs
$45.2
$20.9
$(1.8)
Q1
2017 (1)
Q3
2017
$0.4
Q4
2017 (2)
Q2
2017 (1)
Q4
2017
$13.4
FY
2017
$(0.1)
$(1.1)
(1) excludes charges; (2) from continuing operations
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Improving Financial Position
Investment Overview
$12.2
2014 2015 2016 20176/30
2017
$14.4
$16.2
3/31
2017
9/30
2017
$12.6
12/31
2017
0$
Cash & Cash Equivalents Long-Term Debt
$ in MMs, except per share
$0.60
p/s
$8.0
$22.5
12/31
2016
$23.4
$21.4
9/30
2017
3/31
2017
12/31
2017
$22.1
6/30
2017
Improving Backlog
$1.44
Book Value
Per Share
$1.35
Tangible Book Value
Per Share
$0.76
Working Capital
Per Share
$0.51
Deferred Tax Assets,
Fully Reserved
Select Financial Metrics at 12/31/17
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Innovative Technology, Engineering and Design
3-D Visualization Creates Custom Solutions
Technologies to enable clean efficient energy TM
Cutting Edge
Solutions
119 patents
pending
93 patents
worldwide
28 inventions
commercialized
» Proprietary Software with Strong IP Protection; Patented Technology
– Provides an intuitive interaction between the Models and the Design Engineers
» Computational Fluid Dynamics (CFD) Model
– Customized for each boiler; 800+ models created
» Chemical Kinetics Code
– Predicts chemical reactions along a specific particle path
» Injection Modeling
– Tuned to a variety of Fuel Tech injector solutions
» Cold Flow Modeling
– Highly accurate physical models that replicate gas flows, injection patterns etc.
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Products and Services
> ASCR ® : Advanced SCR: Combines LNB, OFA,
SNCR, AIG, GSG™ + Catalyst
> AIG: Ammonia Injection Grid
> GSG™: Graduated Straightening Grid
> HERT™: High Energy Reagent Technology™
> LNB: Low NOx Burners
> NOxOUT
®: SNCR system using high momentum
injectors
> OFA: Over-Fire Air
> ULTRA ® : Safe Ammonia Generation System
> SCR: Selective Catalytic Reduction
> SNCR: Selective Non-Catalytic Reduction
> SCR Services: Services which include:
optimizing process design, catalyst
selection, and improving the overall
performance of SCR
> Static Mixer: Equipment used to mix
temperature, velocity, and NOx to optimize
SCR performance ahead of the AIG
> TIFI® Targeted In-Furnace Injection™:
Chemical injection programs used to target
slag control, SO3 mitigation, and fuel flexibility
> ESP: Electrostatic precipitator for PM control
> Wet FGD: Scrubber to maximize SO2 removal
using Flue Gas De-Sulfurization (FGD)
> Dry FGD: Scrubber to remove SO2 with less
water than Wet FGD
Fuel Tech Technologies
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Geographies and End Markets
SNCR
570+ / 51,300
FUEL CHEM®
110+ / 21,900
ULTRA®
250+ / 27,700
Combustion Modifications
110+ / 16,400
SCR, ASCR,
Catalyst Management
Services
150+ / 63,200
U.S. China
57% 29% 14%
84% 16%
77%
89%
81%
Utility IndustrialROW
68% 32%
67% 33%
87% 13%
74% 26%
68% 32%
FTEK Solution Geography End Market
Deployments/MW
6%
6%
9% 2%
17%
13%
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Solutions Installed in 26 Countries on Four Continents
Global Footprint
USA
Belgium
Canada
Chile
China
Colombia
Czech Republic
Denmark
Dominican Rep.
Ecuador
France
Germany
India
Italy
Jamaica
Mexico
Poland
Portugal
Puerto Rico
Romania
South Korea
Spain
Taiwan
Turkey
United Kingdom
Venezuela
35%
65%
Revenues by Segment
38%
62%
APC FUEL CHEM
Revenue by Geography
U.S. INT’L
>1,000 Installations in 26 Countries
2017
2017
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Blue Chip Client Base
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Air Pollution Control Segment
» Despite challenging environment, pace of 2017 bookings are
the highest in three years; trending towards higher revenues
in 2018
» Lingering regulatory uncertainty despite “coal-friendly”
posture of new administration
» Focus on broadening end markets, solutions portfolio
» $150 M global sales pipeline
($ in MMs)
($ in MMs)
APC Revenues
APC Gross Profit
$42.0
$34.0
$43.5
2014 2015 2016 2017
2014 2015 2016 2017
$15.4
$12.9
$8.7
37%
30%
25%
Overview and U.S. Market Drivers
Domestic Market Drivers
» Focus on Boiler MACT and maintenance drivers for ESP upgrades
» ULTRA and SCRs for industrial applications (gas-fired turbines)
and SNCR for units requiring compliance with latest
round of CSAPR
» SNCR for units requiring compliance with the current
requirements under CSAPR and NAAQS
» Industrial project activity encouraging
– Establishing relationships with multi-national industrial
end users
» First-ever client in data center power market (December 2017);
new application for SCR
$27.8
$9.3
34%
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Air Pollution Control Segment
Representative Solutions and Results
Before After
ULTRA R Systems / Over-fire Air (OFA)
NOx- OUT
® SNCR
SCR Systems
60-80%
75%
75%25-40
NOx
60-80%
NOx
NOx
30-50%
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Air Pollution Control Segment
International Market Drivers
» Europe
– $5 M of new contracts in 2017 for SCR and ULTRA, and ammonia reagent delivery
– EU Industrial Emissions Directive (effective Jan. 2016)
• Covers 28 European Union member states
• Installed Advanced SNCR systems on 7 units to date
• BREF (Best Available Reference Technology) guidelines were issued in August 2017
with a compliance timeline through 2020; further reduce target NOx emissions
from current levels and include regulation of mercury for the first time.
– Leveraging strategic relationships: Spain, Turkey, Poland, Czech Republic
» China
– $7 M of new contracts in 2017, with an improving sales trend
– Still a challenging market; however, industrial market compliance may drive future
growth opportunities
– More stringent NOx reduction standards are likely to:
• Result in SCR upgrades, which would require enhanced ammonia production and
delivery technology (ULTRA); or
• Require SNCR to increase NOx reduction
» India
– Licensed SNCR Technology to India’s ISGEC Heavy Engineering Ltd. (June ‘16)
– Focusing on cement industry (SNCR)
– India government will likely adopt a phased-in compliance program
– Demand for urea to ammonia conversion should grow, similar to China
– India government has adopted a phased-in compliance program due to cost
constraints, targeting particulate matter first, with SO2 and NOx to follow thereafter
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FUEL CHEM® Segment
» Declining revenues due to low-priced natural gas and
coal-to-gas conversions; consistent gross margin
» Similar outlook for 2018
» In U.S. market, technology to utilities as a means to:
– Combat effects of reduced load profiles
– Support coal blending as a cost reduction strategy
» In Europe, offer technology to:
– Operators of biomass and MSW units to combat slagging and
fouling issues
– Two demonstrations in progress and performing well
» Globally expand industrial reach into pulp and paper industry
– Licensed RECOVERY CHEM® technology to Amazon Papyrus, a
leading supplier of specialty chemicals to the pulp and paper
industry in Asia
($ in MMs)
($ in MMs)
FUEL CHEM® Revenues
FUEL CHEM® Gross Profit
2014 2015 2016 2017
$37.0
$30.2
$21.1
2014 2015 2016 2017
$19.7
$15.7
$10.1
53% 52%
48%
$17.4
$8.7
FUEL CHEM provides plants with the flexibility to burn lower
cost fuels while adhering to strict emissions control mandates
Appalachian
Powder
River Basin
Illinois
Basin
Biomass
50%
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Before TIFI®
• Tenacious
• Fewer pores
• Hard, dense
• Amorphous
TIFI® Program Treatment Benefits
After TIFI®
• Lighter
• Softer
• Easier to
crumble
WITHOUT TIFI® WITH TIFI®
Higher DP and flue
gas temperature
Unscheduled, high-
cost boiler outages in
order to remove slag
No more outages for
slag removal
DP controlled
Increased production
(power) capacity
Lower maintenance
costs
Hard Slag Formation Controlled
Benefitting a Biomass Boiler
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FUEL CHEM® Segment
TIFI® Targeted In-Furnace Injection™ Programs Mitigate SO3
6 Hours Later
Punta Prieta / La Paz, Mexico
Before TIFI program
By targeting the problem
areas of a furnace instead
of targeting the fuel, the
performance and cost
effectiveness of
TIFI® programs are
significantly improved.
Improve Fuel Flexibility Reduce Slagging and Fouling
Heat Rate Improvements CO2 Reduction
SO3 Mitigation LPA (Large Particle Ash)
Air Heater Pressure Drop ABS (Ammonium Bisulfate)
SCR Catalyst Life Extension
Before TIFI program
TIFI® Targeted In-Furnace Injection™
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Evolving Business Model and Strategy
» Exclusive license for North America and other
territories for the non-medical use of NanO2’s
micro-nanobubble dissolved gas technology.
» Applicable for the delivery of any treatment gas
into a liquid via a carrier stream.
» NanO2 utilizes proprietary nozzle technology to
deliver supersaturated oxygen solutions and
other gas-water combinations.
» Targeting water and wastewater industries,
including remediation, treatment, biological
activity and wastewater odor management.
» Initially focus on these markets: Pulp and Paper,
Oil and Gas, Utility, Steel and Cement
» Strategic fit to FTEK’s existing technology base
and established sales channels.
Superior Aeration /
Oxygen Transfer
Lower
Operating Costs
Reduce
Contaminants
Advantages
“We will apply our competencies in chemical
treatment, computational fluid dynamics,
engineering and equipment design, and
project management to add value to the
NanO2 solution and optimize its
applications.”
- Vince Arnone, Chairman & CEO
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Highly Efficient Aeration Process for
Wastewater Management
Source: NanO2 LLC
» A slipstream of water to be treated is passed into
and through the Nan02 pressure vessel, where a
concentrated gas is introduced.
» The gas-liquid solution is then discharged from
the pressure vessel into the larger body of water
to be treated using proprietary injection
technology.
» Capable of delivering a solution with
dissolved O2 content up to 40x that of
conventional aeration
» The NanO2 process:
– reduces costs
– installs quickly
– can be adapted to produce a range of
bubble sizes
– aids in mixing and suspension of solids and
dispersion of dissolved gas due to
high velocity discharge
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Operating Performance
(in MMs, except per share data)
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Full Year
2017
Full Year
2016
Total Revenues $ 13.4 $ 13.5 $9.8 $8.5 $ 45.2 $55.2
Gross Profit $5.6 $5.1 $3.6 $3.7 $18.0 $18.8
Gross Margin % 42.0% 37.3% 37.2% 43.8% 39.9% 34.1%
SG&A $4.9 $5.0 $5.8 $5.2 $20.9 $25.6
Net Income (Loss) from
Continuing Operations $0.5 $(0.2) $(5.6) $(2.5) $ (7.1) $(14.6)
Net Income (Loss) Per Diluted
Share from Continuing Ops $ 0.02 $ (0.02) $(0.24) $(0. 11) $ (0.30) $ (0.62)
Adjusted EBITDA (Loss) $0.6 $0.009 $(2.2) $(1.9) $(3.5) $(8.2)
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Adjusted EBITDA Reconciliation
To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles in the
United States (GAAP), the Company has provided an Adjusted EBITDA disclosure as a measure of financial performance. Adjusted EBITDA is defined
as net income (loss) before interest expense, income tax expense (benefit), depreciation expense, amortization expense, stock compensation
expense, and building impairment. The Company's reference to these non-GAAP measures should be considered in addition to results prepared in
accordance with GAAP standards, but are not a substitute for, or superior to, GAAP results.
Adjusted EBITDA is provided to enhance investors' overall understanding of the Company's current financial performance and ability to generate
cash flow, which we believe is a meaningful measure for our investor and analyst communities. In many cases non-GAAP financial measures are
utilized by these individuals to evaluate Company performance and ultimately determine a reasonable valuation for our common stock.
A reconciliation of Adjusted EBITDA to the nearest GAAP measure of net income (loss) has been included in the above financial table.
RECONCILIATION OF GAAP NET LOSS TO EBITDA AND ADJUSTED EBITDA
(Unaudited) (in thousands)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2017 2016 2017 2016
Net loss $ (1,206) $ (9,104) $ (10,983) $ (17,388)
Interest income (2) (4) (10) (25)
Income tax (benefit) expense (36) 1,872 (46) 1,664
Depreciation expense 237 421 1,312 1,780
Amortization expense 30 435 492 1,720
EBITDA (977) (6,380) (9,235) (12,249)
Building and intangible assets impairment — 2,074 2,965 2,074
Carbonite intangible assets impairment (discontinued operations)
1,354 — 1,354 —
Stock compensation expense 182 471 1,389 1,991
ADJUSTED EBITDA $ 559 $ (3,835) $ (3,527) $ (8,184)
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Summary
Continue to evolve
business model to
address changing
energy environment and
global trends
Continue global APC
business development for
traditional end markets
Increased focus on
supplying SCR and ULTRA
solutions for natural gas
turbines in the industrial
market
Manage through
challenges at
FUEL CHEM via focus on
additional market
segments and
geographies
Build out new water
and wastewater focused
business, via license
agreement with
Nan02 LLC
Continue to
invest in and develop
promising technologies
Trending towards
operating profitability
and cash generation
for 2018
$0 LTD profile
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Devin Sullivan
Senior Vice President
(212) 836-9608
dsullivan@equityny.com
Vince Arnone
Chairman, President and CEO
(630) 845-4500
varnone@ftek.com
Thank You