Fuel Tech (FTEK) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues increased 29% year-over-year to $7.0 million, with both APC and FUEL CHEM segments showing double-digit growth and gross margin expansion to 41.9% from 36.6%.

• FUEL CHEM segment saw a 52% revenue increase, driven by returning dormant customers and new demonstrations; APC segment grew 15% year-over-year, benefiting from project execution and new contract awards.

• Net loss narrowed to $421,000 ($0.01/share) from $1 million ($0.03/share) in Q2 2023, with adjusted EBITDA loss improving to $529,000 from $1.2 million.

• Ended the quarter with $30.1 million in cash, cash equivalents, and investments, and no long-term debt.

• Ongoing DGI demonstrations and new APC contract bookings signal continued business development momentum.

Financial highlights

• Consolidated revenues rose 29% year-over-year to $7.0 million from $5.5 million.

• Gross margin improved to 42% from 37% year-over-year.

• Operating loss narrowed to $715,000 from $1.3 million; net loss narrowed to $421,000 ($0.01/share) from $1 million ($0.03/share).

• Adjusted EBITDA loss was $529,000, compared to $1.2 million loss last year.

• Cash and cash equivalents at June 30, 2024: $10.4 million; working capital: $25.8 million.

Outlook and guidance

• 2024 revenues expected to exceed 2023’s $27.1 million, excluding material DGI contributions.

• Fuel Chem revenue anticipated to improve significantly in the second half of 2024, with year-on-year growth expected for Q3.

• Management expects cost controls and new business to support an improved outlook, with sufficient capital to fund operations for the next 12 months.

• Additional capital expenditures planned for DGI business and equipment maintenance in 2024, funded by cash from operations or on hand.

• DGI commercialization ongoing, with targeted gross margins of 35%+.