Sign in

You're signed outSign in or to get full access.

FT

FUEL TECH, INC. (FTEK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a solid topline and margin recovery: revenue rose 29% year over year to $6.38M with gross margin expanding 550 bps to 46.4%; operating loss narrowed to $0.95M, and Adjusted EBITDA loss improved to $0.74M .
  • Results were driven by a 92% surge in FUEL CHEM revenue to $5.08M and 50% segment gross margins; APC revenue declined to $1.30M on project timing, with gross margin at 32.6% .
  • Backlog increased 66% sequentially to $10.3M, aided by $5.6M of APC orders YTD; balance sheet remained strong with $31.2M cash and investments, no debt .
  • FY 2025 revenue guidance maintained around ~$30M; management highlighted rising datacenter-driven opportunities (per-unit content ~$1–2M, multi-unit sites) and a 9–12 month DGI aquaculture demonstration beginning late Q2, both potential catalysts .
  • Versus S&P Global consensus, EPS met (-$0.02 vs -$0.02*), revenue modestly missed ($6.38M vs $6.64M*), and EBITDA was slightly below (-$0.78M vs -$0.74M*)—an overall in-line quarter with a small revenue shortfall (Values retrieved from S&P Global).

What Went Well and What Went Wrong

What Went Well

  • FUEL CHEM delivered its best first-quarter performance in over a decade: revenue +92% y/y to $5.08M; segment gross margin expanded to 49.9%, reflecting account normalization and a new commercial program added in Q4 2024 . Management: “best first quarter performance… in more than 10 years” .
  • Gross margin expanded to 46.4% (from 40.9% y/y) and operating loss narrowed meaningfully; Adjusted EBITDA loss improved to $0.74M vs $1.50M y/y .
  • APC orders cadence improved: $5.6M bookings YTD and backlog up 66% q/q to $10.3M; management expects an additional $3–5M of new awards by end of Q2 .

What Went Wrong

  • APC revenue fell 44% y/y to $1.30M on project timing; segment gross margin compressed to 32.6% (from 38.4% y/y) on mix and lower ancillary revenues .
  • Net loss of $0.74M vs net income of $0.28M y/y; prior-year profit was boosted by a one-time $1.7M employee retention credit—excluding it, Q1 2024 would have been a $1.4M loss .
  • Regulatory tailwinds unlikely near-term: Good Neighbor rule remains remanded; MWC final rule delayed to Dec-2025; APC opportunities today are not contingent on new regulation .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$4.957 $5.283 $6.382
Diluted EPS ($USD)$0.01 $(0.06) $(0.02)
Gross Margin (%)40.9% 42.3% 46.4%
Operating Income ($USD Millions)$(1.692) $(2.116) $(0.952)
Adjusted EBITDA ($USD Millions)$(1.496) $(1.828) $(0.735)

Segment performance

SegmentQ1 2024 Revenue ($M)Q4 2024 Revenue ($M)Q1 2025 Revenue ($M)Q1 2024 GM (%)Q4 2024 GM (%)Q1 2025 GM (%)
APC$2.318 $1.751 $1.303 38.4% 35.9% 32.6%
FUEL CHEM$2.639 $3.532 $5.079 43.2% 45.5% 49.9%

Key KPIs and balance sheet

KPIDec 31, 2024Mar 31, 2025
APC Backlog ($USD Millions)$6.2 $10.3
Cash & Equivalents ($USD Millions)$8.5 $11.8
Short-term Investments ($USD Millions)$10.2 $10.0
Long-term Investments ($USD Millions)$10.9 $9.4
Cash + Investments ($USD Millions)$29.6 $31.2
Stockholders’ Equity ($USD Millions)$42.0 $41.4
Interest Income ($USD Millions, quarter)$0.283 $0.279

Results vs S&P Global consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD)$6.64M*$6.382M
EPS (Primary)-$0.02*-$0.02
EBITDA ($USD)-$0.738M*-$0.779M (EBITDA)

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025“Exceed $30M” “Approximate $30M” Maintained (tone slightly tempered)
Segment OutlookFY 2025Both segments to exceed 2024 Both segments to exceed 2024 Maintained
DGI ContributionFY 2025Base-case excludes material DGI revenue Base-case excludes material DGI revenue Maintained
APC AwardsH1 2025$4–5M awards expected early Q2 Additional $3–5M awards expected by end of Q2 Maintained (updated range)
Backlog RecognitionNext 12 months$4.5M recognized (as of 12/31/24) ~$6.9M to be recognized (as of 3/31/25) Raised
SG&AFY 2025Modest increase vs 2024 Modest increase vs 2024 Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Nov-2024)Q4 2024 (Mar-2025)Q1 2025 (May-2025)Trend
AI/datacenter opportunitiesInitial activity; SCR/ULTRA precedent from 2018–19; $2–4M APC orders targeted by year-end Larger domestic opportunities; primary vs backup power; existing regs require controls; execution/lead-times discussed Pipeline quantification: $1–2M per unit, multi-unit sites; budgetary bids with OEMs, proactive designs Building momentum
Supply chain & tariffsNot highlightedTariff risk (steel/aluminum, China components) likely passed through to customers Emphasis on supply chain risk management in bids Manageable headwind
Regulatory/legalGood Neighbor stayed; monitoring; MWC rule expected 2024 Not expecting new-tailwind regs; Good Neighbor remanded; MWC final rule delayed to Dec-2025 Continuation: opportunities not contingent on new regs; MWC delay reiterated Neutral to mild headwind
FUEL CHEM performanceNew commercial account revenue potential $1.5–$2.0M; margin normalization Seasonality and margin ranges; base accounts normalized; FY 2025 uplift Best Q1 in 10+ yrs; +92% y/y revenue; ~50% margin Strong, sustained
Regional trends (Mexico)Partner discussions; environmental policy under new gov’t Continued discussions; equipment ready for rapid deployment Government funding needed; optimism sustained Potential upside (timing uncertain)
DGI commercializationDemo agreements, multi-end-market interest (aquaculture, food, municipal) Extended demo planned Q2; 9–12 months; rentals possible; pursue multiple markets Demo commencing late Q2; two sales reps added; first commercial revenues targeted in 2025 Advancing toward revenue

Management Commentary

  • “Best first quarter performance for our Fuel Chem business segment in more than 10 years… revenues rose 29%… expanded our gross margins, narrowed our operating loss and significantly increased our APC project backlog… cash, cash equivalents and investments of approximately $31 million and no long-term debt.”
  • “We are maintaining our revenue guidance for 2025… total revenues… will approximate $30 million with both business segments exceeding their performance in 2024… base case excludes material DGI revenue… significant datacenter contract awards.”
  • “Artificial intelligence boom has generated increasing demand for datacenters… utilizing our SCR and ULTRA technologies… submitted budgetary bids… opportunities are not contingent on new regulations.”
  • “DGI demonstration… expected to last 9 to 12 months… multiple end markets (pulp & paper, food & beverage, municipal wastewater, horticulture)… hope to generate first commercial revenues in 2025.”

Q&A Highlights

  • Regulatory environment: Management does not expect new environmental regulation tailwinds near-term; core opportunities are driven by industrial expansion and power demand, not contingent on new regs .
  • Datacenter opportunity scale: Per-unit content ~$1–2M, with sites of 5–20+ units; proactive design templates with OEMs to scale execution .
  • Mexico: Catalyst is government funding authorization; multiple heavy fuel oil units present sizable potential; equipment pre-positioned for rapid deployment at one site .
  • Tariffs/supply chain: Anticipated impacts (steel/aluminum, components) likely passed through; emphasis on supply chain risk controls in bids .
  • Capital allocation: Despite trading below cash per share, Board favors business momentum over buybacks at present; buyback remains under ongoing review .

Estimates Context

  • Q1 2025 results were broadly in line: EPS met consensus (-$0.02 vs -$0.02*), revenue modestly missed ($6.38M vs $6.64M*), and EBITDA slightly below (-$0.78M vs -$0.74M*)—a small top-line shortfall with improved operating profile (Values retrieved from S&P Global). Actuals: revenue $6.382M, EPS -$0.02, EBITDA -$0.779M .
  • Given strong FUEL CHEM momentum and an enlarged APC backlog, near-term estimate revisions are likely to focus on segment mix and margin durability; guidance framing (“approximate $30M”) suggests prudent expectations for APC execution timing .

Key Takeaways for Investors

  • FUEL CHEM strength is the core driver: +92% y/y revenue and ~50% margin underpin consolidated gross margin expansion and EBITDA improvement; watch for continued base-account normalization and incremental accounts .
  • APC momentum is rebuilding: $5.6M YTD orders, backlog +66% q/q to $10.3M; additional $3–5M awards targeted by end-Q2 supports H2 revenue ramp .
  • Datacenter is a meaningful optionality: multi-unit sites with $1–2M per unit content; proactive designs with OEMs position FTEK to capture emergent demand tied to AI power needs .
  • DGI nearing commercial proof points: 9–12 month aquaculture demo commencing; sales reps added; first commercial revenues targeted in 2025—provides a potential non-core growth leg .
  • Guidance steady at ~$30M FY25; language shifted from “exceed” to “approximate,” implying disciplined execution expectations while both segments are guided to beat 2024 .
  • Balance sheet affords flexibility: $31.2M cash/investments, no debt; supports working capital, demos, and potential small acquisitions/licensing .
  • Near-term trading implications: modest revenue miss versus consensus offset by clear operational improvements, backlog strength, and catalysts (datacenter bids, APC awards, DGI demo) that can drive narrative and estimate convergence over H2 .

Additional References (Q1 2025 Period Press Releases)

  • Q1 2025 results PR with full financials and segment detail .
  • APC orders totaling $2.6M (US & Japan) and $1.4M (US & Europe)—contributors to bookings cadence .
  • Q1 2025 call logistics and corporate overview .