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FT

FUEL TECH, INC. (FTEK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue of $5.56M declined 21% YoY and 13% QoQ, with gross margin expanding to 45.5% on mix; EPS was $(0.02) vs $(0.01) YoY and flat QoQ . Versus S&P Global consensus, EPS beat (−$0.02 vs −$0.03*) but revenue missed ($5.56M vs $6.09M*) . Values retrieved from S&P Global.
  • Management modestly reduced FY2025 revenue guidance from “~$30M” (Q1) to $28–$29M, citing uncertainty in the timing of APC awards; base case excludes data center wins and DGI revenue .
  • Segment mix: APC revenue fell on project timing ($2.51M vs $3.95M YoY) but margin rose to 43.9%; FUEL CHEM was flat at $3.05M with margin up to 46.8% .
  • Balance sheet remains a key pillar: $30.9M in cash and investments and no debt at quarter-end; APC backlog was $7.8M (down from $10.3M in Q1, up vs $6.2M in Q4) .
  • Near-term catalysts: potential APC awards tied to AI/data center builds (pipeline ≈$100M; $1.0–$2.5M per unit; multi-unit per site) and FUEL CHEM program momentum (July revenue >$2M; FY aim $15–$16M) .

What Went Well and What Went Wrong

  • What Went Well

    • Margin execution despite lower sales: consolidated gross margin rose to 45.5% (vs 41.9% YoY) with improvement in both APC and FUEL CHEM .
    • Strong financial flexibility: nearly $31M cash/investments and no long‑term debt at quarter‑end positions the company to fund growth .
    • Emerging demand vector: multiple bids for SCR solutions at AI-related data centers; APC pipeline ≈$100M with unit economics of ~$1–$2.5M per unit and multi‑unit site deployments. “It is literally the largest opportunity that we have seen ... in ten to fifteen years” .

  • What Went Wrong

    • Top-line shortfall: Q2 revenue of $5.56M missed S&P Global consensus ($6.09M*) and fell 21% YoY; APC revenue timing was the key drag . Values retrieved from S&P Global.
    • Guidance trimmed: FY2025 revenue outlook cut from ~$30M to $28–$29M on APC award/execute timing uncertainty; base case excludes data center and DGI contributions .
    • Backlog conversion expectations eased: next‑12‑month conversion view moved from ~$6.9M in Q1 to ~$5.0M in Q2, reflecting cadence of execution .

Financial Results

MetricQ2 2024Q1 2025Q2 2025Q2 2025 Consensus*
Revenue ($M)$7.04 $6.38 $5.56 $6.09*
Gross Margin %41.9% 46.4% 45.5% —
SG&A ($M)$3.25 $3.34 $3.35 —
Operating Income (Loss) ($M)$(0.72) $(0.95) $(1.31) —
Interest Income ($M)$0.33 $0.28 $0.54 —
Net Income (Loss) ($M)$(0.42) $(0.74) $(0.69) —
Diluted EPS ($)$(0.01) $(0.02) $(0.02) $(0.03)*
EBITDA ($M)$(0.65) $(0.85) $(1.05) $(1.05)*

Values retrieved from S&P Global.

Segment performance

MetricQ2 2024Q1 2025Q2 2025
APC Revenue ($M)$3.95 $1.30 $2.51
APC Gross Margin %39.1% 32.6% 43.9%
FUEL CHEM Revenue ($M)$3.09 $5.08 $3.05
FUEL CHEM Gross Margin %45.5% 49.9% 46.8%

Key KPIs and balance sheet

KPIDec 31, 2024Mar 31, 2025Jun 30, 2025
APC Backlog ($M)$6.2 $10.3 $7.8
Cash & Equivalents ($M)$8.51 $11.82 $10.59
Short‑term Investments ($M)$10.18 $9.97 $12.42
Long‑term Investments ($M)$10.88 $9.38 $7.93
Total Cash + Investments ($M)$29.57 $31.17 $30.93
Stockholders’ Equity ($M)$41.96 $41.44 $40.66

Consensus vs actual (Q2 2025)

MetricConsensus*Actual
Revenue ($M)$6.09*$5.56
Primary EPS ($)$(0.03)*$(0.02)
EBITDA ($M)$(1.05)*$(1.05)

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2025“Approx. $30M” (Q1 call) $28–$29M (Q2 call) Lowered
FUEL CHEM RevenueFY2025n/a$15–$16M (management objective) New disclosure
SG&AFY2025Modest increase vs 2024 Modest increase vs 2024 (reiterated) Maintained
Backlog ConversionNext 12 months~$6.9M (as of 3/31/25) ~$5.0M (as of 6/30/25) Lowered

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
AI/Data center opportunityData centers flagged as promising for SCR/ULTRA Budgetary bids under way; multi‑unit sites; $1–$2M per unit Multiple active bids; pipeline ≈$100M; $1–$2.5M per unit; supply chain readiness Accelerating
Regulatory/macroState-specific drivers; APC timing headwinds No new-reg tailwinds expected; MWC rule delayed to Dec’25 EPA GHG rollback talk not a NOx headwind; MWC still delayed; opportunities not contingent on new regs Neutral
FUEL CHEM performanceSteady revenue; margin 45.5% 92% YoY growth; margin ~50% July rev >$2M; FY target $15–$16M; new TIFI demo Q4 Improving
DGI (water)Second aquaculture demo planned early Q2’25 Demo to commence late Q2; rep network expanding Extended demo commenced mid‑July; aiming for first commercial revenue in 2025 Advancing
Mexico (FUEL CHEM)—New admin environmental focus could help Heightening pressure on PEMEX/CFE; partner active; rapid deployment capability Improving setup
Supply chain/execution—Focus on supply chain risk mgmt for large projects Proactive supplier engagement to scale with AI demand Strengthening

Management Commentary

  • “We have multiple bids outstanding for our SCR technology to address the emissions control requirements of AI‑related data centers… We remain closely engaged with these potential partners” .
  • “As we look ahead… we are reducing our revenue guidance for 2025 modestly from approximately $30,000,000 to a range of $28,000,000 to $29,000,000… [base case] excludes any material contributions from DGI [and] data center contract awards” .
  • “With each of our base accounts in operation… we recorded more than $2,000,000 in revenue at FUEL CHEM for the month of July… well positioned to meet our annual objective of $15,000,000 to $16,000,000 in FUEL CHEM revenue” .
  • “We have multiple bids outstanding… for the integration of our SCR technology… over the next several years… the pipeline… is approximating $100,000,000 in bids” .
  • Balance sheet: “At June 30, 2025, cash and cash equivalents were $10.6 million, short‑term investments $12.4 million, and long‑term investments $7.9 million… no debt” .

Q&A Highlights

  • Data center pipeline scale and unit economics: Pipeline ≈$100M; per‑unit revenue roughly $1.0–$2.5M; sites require multiple units; designs can be leveraged across similar turbines .
  • Timing and scalability: Expect some responses on awards before year‑end; supply chain partners engaged; flexible, fab‑light model supports scaling .
  • FUEL CHEM FY2025 outlook: $15–$16M excludes new accounts; July revenue >$2M supports strong Q3; new TIFI demo planned for Q4 at Midwest coal unit .
  • DGI commercialization: Extended aquaculture demo is R&D expense; management “hopeful” for first commercial revenue in 2025 .
  • Mexico opportunity: Increasing pressure on PEMEX/CFE; partner deeply engaged; equipment ready for rapid deployment (<2 months) upon orders .

Estimates Context

  • Q2 2025 vs S&P Global consensus: EPS beat by $0.01 (−$0.02 vs −$0.03*), Revenue missed by ~$0.53M ($5.56M vs $6.09M*), EBITDA in line/slight miss (−$1.05M vs −$1.05M*). Guidance reduction to $28–$29M likely prompts modest downward revenue estimate revisions for FY2025, with potential upward bias to outer‑year APC if data center awards materialize . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mixed print: margin execution and EPS beat contrasted with a revenue miss and a modest FY revenue guide cut; quality of earnings supported by mix and interest income .
  • APC timing remains the swing factor near term; subsequent to quarter, FTEK announced ~$3.2M of diversified APC orders, supporting backlog rebuild into 2H .
  • Data center optionality is significant; multi‑unit SCR deployments with $1–$2.5M per unit provide material upside not in base case guidance; award cadence is the key stock catalyst .
  • FUEL CHEM provides resilient, higher‑margin ballast; July strength and $15–$16M FY objective underpin 2H contribution visibility .
  • DGI is progressing through extended real‑world trials; initial revenues could begin in 2025, but ramp is contingent on demo outcomes—treat as a free option near term .
  • Balance sheet strength (≈$31M cash/investments, no debt) enables execution and potential working capital needs tied to large APC wins without dilution .
  • Trading setup: watch for data center award announcements, APC order flow cadence, MWC‑related opportunities, and FUEL CHEM demo conversion; these are likely to drive estimate revisions and multiple expansion .

Values retrieved from S&P Global.