exv99w1
|
|
|
CONTACT:
|
|
David S. Collins
Chief Financial Officer
(630) 845-4500
Tracy H. Krumme
Vice President, Investor Relations
(203) 425-9830 |
FOR IMMEDIATE RELEASE
FUEL TECH REPORTS FIRST QUARTER 2011 RESULTS
WARRENVILLE, Ill., May 9, 2011 Fuel Tech, Inc. (NASDAQ: FTEK), a world leader in
advanced engineering solutions for combustion and emissions control systems for utility and
industrial applications, today reported results for the three-month period ended March 31, 2011.
Revenues for the first quarter totaled $22.6 million, a 28% increase from the comparable
prior-year quarter. Net income was $1.3 million, or $0.05 per diluted share, compared with net
income of $0.2 million, or $0.01 per diluted share in the comparable prior-year quarter. Adjusted
EBITDA was $4.4 million, up from $2.9 million in the comparable prior-year quarter.
The Air Pollution Control technology segment (APC segment) recorded revenues of $11.1 million,
an increase of 35% over the comparable prior-year quarter. Segment gross margins increased to 50%
versus 36% in the comparable prior-year quarter, primarily due to a mix of higher margin projects.
The FUEL CHEM® technology segment (FUEL CHEM segment) generated revenues of $11.5
million, an increase of 23% from the comparable prior-year quarter. Increased revenues were
predominately due to the addition of new customer accounts. Current quarter revenues include $10.7
million from coal-fired units and $0.9 million from non-coal-fired units, representing increases of
23% and 22% respectively from the comparable prior-year quarter. Segment gross margins decreased
to 49% from 55% in the comparable prior-year due to the recognition in 2010 of $2 million in
contingent risk share revenue from a successful demonstration program with associated costs in the
prior period.
more
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 2 |
Selling, general and administrative (SG&A) expenses totaled $8.0 million versus $7.5
million in the comparable prior-year quarter. Increases in expenses related to personnel costs and
outside services were offset by lower stock compensation expense.
Research and development (R&D) expenses were $0.4 million versus $0.2 million in the
comparable prior-year quarter. R&D activities are increasing to provide additional enhancements to
the Companys existing suite of technologies.
The Company announced contract awards with a value of approximately $2.7 million during the
first quarter of 2011, and an additional $6.9 million in April. After accounting for the
conversion of backlog to revenues during this period, the APC segment capital projects backlog
stood at $14.5 million as of March 31, 2011.
Douglas G. Bailey, Chairman, President and Chief Executive Officer, commented, We are pleased
to report another solid quarter with strong revenue gains achieved in both the APC and FUEL CHEM
segments. Record first quarter revenues were achieved, which is particularly noteworthy given the
sluggish economy, weakness in the power markets and continued domestic regulatory uncertainty.
Mr. Bailey continued, On the APC side, steady progress was made in working through the $19.3
million backlog recorded at the end of 2010. While strong quarterly revenue and operating income
gains were achieved in this segment, the volume of APC contract awards in the first quarter was
lower than we had anticipated, due in part to customer delays. Domestic and international order
activity has grown since then, evidenced by contract announcements totaling nearly $7 million since
the start of the second quarter.
Mr. Bailey added, We are encouraged by our most recent APC awards, with particular emphasis
on projects in China, where our NOx control technologies continue to be well received in this
important market. We anticipate domestic orders to be forthcoming later in the year as utility and
industrial operators take steps to comply with the EPAs proposed Transport Rule, which was
released in July 2010 and is expected to be finalized around July 2011. While the detailed
requirements of the proposed rule are still under review and the final structure is yet to be
determined, we view the proposed accelerated compliance schedule and the incremental NOx reduction
requirements as a positive driver for future business.
more
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 3 |
Mr. Bailey continued, Our FUEL CHEM segment also reported strong quarterly revenue gains,
primarily the result of the start-up of chemical injection for a number of new customer accounts.
We continue to be impacted by a number of plants that are running below expectations,
as gas and alternative energy sources operate at heavier loads. However, we are commencing new
programs at coal-fired units and winning new business as utilities are increasingly attracted to
the compelling economic benefits of shifting from Appalachian coals, generally one of the fuels
with the higher heat content and fewest operational issues, to the lower priced and lower British
thermal unit (BTU) coals originating in the Illinois Basin and Powder River Basin.
Mr. Bailey concluded, We are off to a strong start for 2011 and believe the first quarter
represents a good building block for achieving our full-year financial objectives. As we see
regulatory clarity emerge in both China and the United States, we remain confident in our growth
strategy and our ability to solve our customers emissions challenges in a cost-effective manner.
Conference Call
As a reminder, Fuel Tech will host a conference call on Tuesday, May 10 at 9:00 AM ET to discuss
the results. The call will simultaneously be broadcast over the Internet at www.ftek.com
and can be accessed under Upcoming Events on the Home page. The call can also be
accessed by dialing 866.788.0539 (domestic) or 857.350.1677 (international) and using the passcode
Fuel Tech. A replay of the call will be available on the website and can be accessed by dialing
888.286.8010 (domestic) or 617.801.6888 (international) and using the passcode 96462927. The
replay will be available until June 4, 2011.
About Fuel Tech
Fuel Tech is a leading technology company engaged in the worldwide development,
commercialization and application of state-of-the-art proprietary technologies for air pollution
control, process optimization, and advanced engineering services. These technologies enable
customers to produce both energy and processed materials in a cost-effective and environmentally
sustainable manner.
The Companys nitrogen oxide (NOx) reduction technologies include advanced combustion
modification techniques such as Low NOx Burners and Over-Fire Air systems and
post-combustion NOx control approaches, including NOxOUT® and HERT SNCR systems
as well as systems that incorporate ASCR (Advanced Selective Catalytic Reduction),
CASCADE, ULTRA and NOxOUT-SCR® processes. These technologies have
established Fuel Tech as a leader in NOx reduction, with installations on over 640 units worldwide,
where coal, fuel oil, natural gas, municipal waste, biomass, and other fuels are utilized.
more
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 4 |
The Companys FUEL CHEM® technology revolves around the unique application
of chemicals to improve the efficiency, reliability, fuel flexibility and environmental status of
combustion units by controlling slagging, fouling, corrosion, opacity and operational issues
associated with sulfur trioxide, ammonium bisulfate, particulate matter (PM2.5), carbon
dioxide and NOx. This technology, in the form of a customizable FUEL CHEM program, is experienced
on over 110 combustion units burning a wide variety of fuels including coal, heavy oil, biomass,
and municipal waste.
Fuel Tech also provides a range of combustion optimization services, including airflow
testing, coal flow testing and boiler tuning, as well as services to help optimize selective
catalytic reduction system performance, including catalyst management services and ammonia
injection grid tuning. In addition, flow corrective devices and physical and computational
modeling services are available to optimize flue gas distribution and mixing in both power plant
and industrial applications.
Many of Fuel Techs products and services rely heavily on the Companys exceptional
Computational Fluid Dynamics modeling capabilities, which are enhanced by internally developed,
high-end visualization software. These capabilities, coupled with the Companys innovative
technologies and multi-disciplined team approach, enable Fuel Tech to provide practical solutions
to some of our customers most challenging problems. For more information, visit Fuel Techs web
site at www.ftek.com.
This press release may contain statements of a forward-looking nature regarding future events.
These statements are only predictions and actual events may differ materially. Please refer to
documents that Fuel Tech files from time to time with the Securities and Exchange Commission for a
discussion of certain factors that could cause actual results to differ materially from those
contained in the forward-looking statements.
more
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 5 |
FUEL TECH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
27,865 |
|
|
$ |
30,524 |
|
Accounts receivable, net of allowance for doubtful accounts of
$82 and $82, respectively |
|
|
22,292 |
|
|
|
21,175 |
|
Inventories |
|
|
993 |
|
|
|
807 |
|
Deferred income taxes |
|
|
|
|
|
|
89 |
|
Prepaid expenses and other current assets |
|
|
2,206 |
|
|
|
1,861 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
53,356 |
|
|
|
54,456 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of
$16,547 and $15,767, respectively |
|
|
14,380 |
|
|
|
14,384 |
|
Goodwill |
|
|
21,051 |
|
|
|
21,051 |
|
Other intangible assets, net of accumulated amortization of
$3,426 and $3,203, respectively |
|
|
5,926 |
|
|
|
6,050 |
|
Deferred income taxes |
|
|
4,796 |
|
|
|
5,000 |
|
Other assets |
|
|
2,169 |
|
|
|
2,262 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
101,678 |
|
|
$ |
103,203 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Short-term debt |
|
$ |
2,290 |
|
|
$ |
2,269 |
|
Accounts payable |
|
|
6,178 |
|
|
|
7,516 |
|
Accrued liabilities: |
|
|
|
|
|
|
|
|
Employee compensation |
|
|
1,791 |
|
|
|
2,863 |
|
Income taxes payable |
|
|
737 |
|
|
|
1,857 |
|
Other accrued liabilities |
|
|
3,345 |
|
|
|
3,306 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
14,341 |
|
|
|
17,811 |
|
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
1,509 |
|
|
|
1,482 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
15,850 |
|
|
|
19,293 |
|
|
|
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
|
Common stock, $.01 par value, 40,000,000 shares
authorized, 24,223,467 and 24,213,467 shares issued and outstanding |
|
|
242 |
|
|
|
242 |
|
Additional paid-in capital |
|
|
129,942 |
|
|
|
129,424 |
|
Accumulated deficit |
|
|
(44,736 |
) |
|
|
(46,075 |
) |
Accumulated other comprehensive income |
|
|
304 |
|
|
|
243 |
|
Nil coupon perpetual loan notes |
|
|
76 |
|
|
|
76 |
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
85,828 |
|
|
|
83,910 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
101,678 |
|
|
$ |
103,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 6 |
FUEL TECH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per-share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2011 |
|
|
2010 |
|
Revenues |
|
$ |
22,622 |
|
|
$ |
17,617 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
11,466 |
|
|
|
9,500 |
|
Selling, general and administrative |
|
|
7,951 |
|
|
|
7,480 |
|
Research and development |
|
|
402 |
|
|
|
146 |
|
|
|
|
|
|
|
|
|
|
|
19,819 |
|
|
|
17,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
2,803 |
|
|
|
491 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(40 |
) |
|
|
(44 |
) |
Interest income |
|
|
1 |
|
|
|
1 |
|
Other expense |
|
|
(40 |
) |
|
|
(92 |
) |
|
|
|
|
|
|
|
Income before income taxes |
|
|
2,724 |
|
|
|
356 |
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(1,385 |
) |
|
|
(142 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,339 |
|
|
$ |
214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.05 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
24,214,000 |
|
|
|
24,212,000 |
|
|
|
|
|
|
|
|
Diluted |
|
|
24,669,000 |
|
|
|
24,431,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 7 |
FUEL TECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31 |
|
|
|
2011 |
|
|
2010 |
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,339 |
|
|
$ |
214 |
|
Adjustments to reconcile net income to net cash provided
by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
760 |
|
|
|
939 |
|
Amortization |
|
|
223 |
|
|
|
219 |
|
Loss on equipment disposals |
|
|
|
|
|
|
6 |
|
Deferred income tax |
|
|
120 |
|
|
|
(476 |
) |
Stock based compensation |
|
|
617 |
|
|
|
1,352 |
|
Deferred director fees |
|
|
20 |
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(938 |
) |
|
|
(2,041 |
) |
Inventories |
|
|
(177 |
) |
|
|
(355 |
) |
Prepaid expenses, other current assets and other
noncurrent assets |
|
|
(239 |
) |
|
|
(116 |
) |
Accounts payable |
|
|
(1,380 |
) |
|
|
(153 |
) |
Accrued liabilities and other noncurrent liabilities |
|
|
(2,274 |
) |
|
|
1,096 |
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
|
(1,929 |
) |
|
|
685 |
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Decrease in restricted cash |
|
|
|
|
|
|
125 |
|
Purchases of property, equipment and patents |
|
|
(841 |
) |
|
|
(307 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(841 |
) |
|
|
(182 |
) |
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
Issuance of deferred shares |
|
|
|
|
|
|
28 |
|
Proceeds from exercise of stock options |
|
|
54 |
|
|
|
|
|
Redemption of nil coupon loan note |
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
54 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash |
|
|
57 |
|
|
|
(59 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(2,659 |
) |
|
|
467 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
30,524 |
|
|
|
20,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
27,865 |
|
|
$ |
21,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 8 |
FUEL TECH, INC.
BUSINESS SEGMENT FINANCIAL DATA
(in thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Air Pollution Control |
|
FUEL CHEM |
|
|
|
|
March 31, 2011 |
|
Segment |
|
Segment |
|
Other |
|
Total |
|
Revenues from external customers |
|
$ |
11,092 |
|
|
$ |
11,530 |
|
|
$ |
|
|
|
$ |
22,622 |
|
Cost of sales |
|
|
(5,553 |
) |
|
|
(5,913 |
) |
|
|
|
|
|
|
(11,466 |
) |
|
|
|
Gross margin |
|
|
5,539 |
|
|
|
5,617 |
|
|
|
|
|
|
|
11,156 |
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
(7,951 |
) |
|
|
(7,951 |
) |
Research and development |
|
|
|
|
|
|
|
|
|
|
(402 |
) |
|
|
(402 |
) |
|
|
|
Operating income |
|
$ |
5,539 |
|
|
$ |
5,617 |
|
|
$ |
(8,353 |
) |
|
$ |
2,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Air Pollution Control |
|
FUEL CHEM |
|
|
|
|
March 31, 2010 |
|
Segment |
|
Segment |
|
Other |
|
Total |
|
Revenues from external customers |
|
$ |
8,214 |
|
|
$ |
9,403 |
|
|
$ |
|
|
|
$ |
17,617 |
|
Cost of sales |
|
|
(5,258 |
) |
|
|
(4,242 |
) |
|
|
|
|
|
|
(9,500 |
) |
|
|
|
Gross margin |
|
|
2,956 |
|
|
|
5,161 |
|
|
|
|
|
|
|
8,117 |
|
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
(7,480 |
) |
|
|
(7,480 |
) |
Research and development |
|
|
|
|
|
|
|
|
|
|
(146 |
) |
|
|
(146 |
) |
|
|
|
Operating income |
|
$ |
2,956 |
|
|
$ |
5,161 |
|
|
$ |
(7,626 |
) |
|
$ |
491 |
|
|
|
|
|
|
|
Note: |
|
Fuel Tech is an integrated company that segregates its financial results into two
reportable segments, both providing advanced technology and engineering solutions for the
optimization of combustion systems in utility and industrial applications. The Other
classification includes those profit and loss items not allocated by Fuel Tech to each
reportable segment. |
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 9 |
FUEL TECH, INC.
GEOGRAPHIC INFORMATION
(in thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
|
2011 |
|
|
2010 |
|
Revenues: |
|
|
|
|
|
|
|
|
United States |
|
$ |
19,618 |
|
|
$ |
15,041 |
|
Foreign |
|
|
3,004 |
|
|
|
2,576 |
|
|
|
|
|
|
|
|
|
|
$ |
22,622 |
|
|
$ |
17,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2011 |
|
|
2010 |
|
Assets: |
|
|
|
|
|
|
|
|
United States |
|
$ |
90,818 |
|
|
$ |
92,485 |
|
Foreign |
|
|
10,860 |
|
|
|
10,718 |
|
|
|
|
|
|
|
|
|
|
$ |
101,678 |
|
|
$ |
103,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUEL TECH, INC. REPORTS FIRST QUARTER 2011 RESULTS
|
|
Page 10 |
FUEL TECH, INC.
RECONCILIATION OF GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(in thousands of dollars)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Net income |
|
$ |
1,339 |
|
|
$ |
214 |
|
Interest expense |
|
|
40 |
|
|
|
44 |
|
Income tax expense |
|
|
1,385 |
|
|
|
142 |
|
Depreciation expense |
|
|
760 |
|
|
|
939 |
|
Amortization expense |
|
|
223 |
|
|
|
219 |
|
|
|
|
|
|
|
|
EBITDA |
|
|
3,747 |
|
|
|
1,558 |
|
Stock compensation expense |
|
|
617 |
|
|
|
1,352 |
|
|
|
|
|
|
|
|
ADJUSTED EBITDA |
|
$ |
4,364 |
|
|
$ |
2,910 |
|
|
|
|
|
|
|
|
Adjusted EBITDA
To supplement the Companys 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 before interest expense, income tax expense, depreciation expense, amortization expense
and stock compensation expense. The Companys 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 Companys
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 has been included in the financial table above.
###