Fuel Tech Reports First Quarter 2013 Results
Fuel Tech Reports First Quarter 2013 Results
WARRENVILLE, Ill.--(BUSINESS WIRE)-- Fuel Tech, Inc. (NAS: FTEK) , a world leader in advanced engineering solutions for the optimization of combustion systems and emissions control in utility and industrial applications, today reported unaudited results for the three-month period ended March 31, 2013.
First Quarter 2013
Consolidated revenues for the first quarter totaled $22.5 million, an 11% decrease from the comparable prior-year quarter. Operating income declined to $41,000 from $2.5 million in the year ago quarter. Income tax benefit of $3,000 compared to an income tax expense of $945,000 in the 2012 first quarter. Net loss for the quarter was $21,000, or $0.00 per diluted share, compared with net income of $1.5 million, or $0.06 per diluted share, in the same year-ago quarter. Adjusted EBITDA was $1.1 million, down from $3.5 million in the first quarter of 2012.
APC segment revenues were $12.9 million, a decrease of 18% from the first quarter of 2012, due to the above-referenced differences in backlog-to-revenue conversion. Segment gross margins were 34% in the first quarter of 2013 as compared 44% in the first quarter of 2012, primarily due to a higher mix of lower margin international projects.
Capital projects backlog at the APC segment stood at $44.7 million as of March 31, 2013 compared to $46.7 million at December 31, 2012.
The FUEL CHEM segment generated revenues of $9.5 million and gross margin of 53%, each essentially unchanged from the comparable prior year period. FUEL CHEM revenues generated from coal-fired units totaled $8.8 million, which is comparable to the same period last year, while revenues generated from non-coal-fired units declined 6% to $0.7 million.
Selling, general and administrative (SG&A) expenses declined to $8.5 million in the current quarter from $9.0 million in the same year-ago period. The decrease in SG&A expenses is attributed to lower employee-related costs, including sales commissions and employee incentive programs, as well as lower professional fees for the quarter.
Research and development (R&D) expenses increased to $0.9 million from $0.5 million in the first quarter of 2012, reflecting our focus on increased R&D efforts as we pursue commercial applications for technologies outside of traditional markets, and in developing and analyzing new technologies that could represent incremental market opportunities.
Douglas G. Bailey, Chairman, President, and Chief Executive Officer, commented, "Current year results at our Air Pollution Control (APC) segment reflect a higher rate of conversion into revenues of the 2011 backlog in the first quarter of 2012 compared to the first quarter of 2013. This was expected, as the 2011 backlog was acquired during a period of accelerated regulatory-driven domestic buying that did not continue into 2012. However, we announced record 2012 APC bookings of $72.8 million, the majority of which were derived from international markets. During the first quarter of 2013 we announced contract awards with a value of approximately $7.6 million and, subsequent to quarter end, we announced additional APC orders valued at $4.3 million. This combination of new orders and continuing backlog conversion should allow us to generate increased revenue as the year progresses.
"Revenues at our FUEL CHEM® segment were essentially flat compared to last year's first quarter, reflecting the challenges of low natural gas prices and declining electricity demand. FUEL CHEM substantially maintained its margins, however, which we view as a testament to the quality of our product solutions."
Mr. Bailey concluded, "We look ahead to 2013 with continuing optimism, driven by a healthy backlog at APC, firming domestic bid and order activity, and increasing international interest for our suite of solutions. We continue to pursue a number of strategies to further our growth, and are supported in these efforts by a strong financial position and a debt-free balance sheet."
Conference Call
Management will host a conference call on Wednesday, May 8, 2013 at 10:00 AM ET to discuss the results
(866) 515-2910 (Domestic) or
(617) 399-5124 (International)
Passcode: FUEL TECH
A replay of the call will be available on our website, and can be accessed by dialing (888) 286-8010 (domestic) or (617) 801-6888 (international) and using the passcode "84554625." The replay will be available through June 2, 2013.
About Fuel Tech
Fuel Tech is an engineering-driven, fully-integrated technology company operating in two segments: Air Pollution Control and FUEL CHEM®. Serving utility and industrial customers worldwide, the Company's core activities center on its nitrogen oxide (NOx) reduction systems and processes and its unique application of chemicals to improve combustion unit performance. Fuel Tech's products and services rely heavily on the Company's exceptional Computational Fluid Dynamics modeling skills, which are enhanced by internally-developed, high-end visualization software. For more information, visit Fuel Tech's 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.
FUEL TECH, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) | |||||||||||||
March 31, 2013 | December 31, | ||||||||||||
(Unaudited) | |||||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 15,157 | $ | 24,453 | |||||||||
Marketable securities | 44 | 44 | |||||||||||
Accounts receivable, net of allowance for doubtful | 37,504 | 30,169 | |||||||||||
Inventories | 603 | 513 | |||||||||||
Prepaid expenses and other current assets | 3,016 | 3,956 | |||||||||||
Prepaid income taxes | 1,184 | 156 | |||||||||||
Deferred income taxes | 519 | 573 | |||||||||||
Total current assets | 58,027 | 59,864 | |||||||||||
Property and equipment, net of accumulated depreciation of | 13,693 | 13,749 | |||||||||||
Goodwill | 21,051 | 21,051 | |||||||||||
Other intangible assets, net of accumulated amortization of $4,481 | 4,696 | 4,838 | |||||||||||
Deferred income taxes | 3,534 | 3,688 | |||||||||||
Other assets | 2,659 | 2,707 | |||||||||||
Total assets | $ | 103,660 | $ | 105,897 | |||||||||
Liabilities and Shareholders' Equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | 11,725 | 12,828 | |||||||||||
Accrued liabilities: | |||||||||||||
Employee compensation | 2,110 | 3,175 | |||||||||||
Other accrued liabilities | 5,003 | 4,943 | |||||||||||
Total current liabilities | 18,838 | 20,946 | |||||||||||
Other liabilities | 689 | 715 | |||||||||||
Total liabilities | 19,527 | 21,661 | |||||||||||
Shareholders' equity: | |||||||||||||
Common stock, $.01 par value, 40,000,000 shares authorized, | |||||||||||||
22,193,204 and 22,111,675 shares issued, and 22,161,283 and | |||||||||||||
22,102,549 outstanding | 221 | 221 | |||||||||||
Additional paid-in capital | 133,780 | 133,498 | |||||||||||
Accumulated deficit | (49,149 | ) | (49,128 | ) | |||||||||
Accumulated other comprehensive loss | (655 | ) | (392 | ) | |||||||||
Nil coupon perpetual loan notes | 76 | 76 | |||||||||||
Cost of common stock held in treasury | (140 | ) | (39 | ) | |||||||||
Total shareholders' equity | 84,133 | 84,236 | |||||||||||
Total liabilities and shareholders' equity | $ | 103,660 | $ | 105,897 | |||||||||
FUEL TECH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except share and per-share data) | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2013 | 2012 | |||||||||||||
Revenues | $ | 22,484 | $ | 25,212 | ||||||||||
Costs and expenses: | ||||||||||||||
Cost of sales | 13,052 | 13,220 | ||||||||||||
Selling, general and administrative | 8,458 | 8,994 | ||||||||||||
Research and development | 933 | 506 | ||||||||||||
22,443 | 22,720 | |||||||||||||
Operating income | 41 | 2,492 | ||||||||||||
Interest expense | - | (25 | ) | |||||||||||
Interest income | 15 | - | ||||||||||||
Other (expense) income | (80 | ) | 21 | |||||||||||
(Loss) income before income taxes | (24 | ) | 2,488 | |||||||||||
Income tax benefit (expense) | 3 | (945 | ) | |||||||||||
Net (loss) income | $ | (21 | ) | $ | 1,543 | |||||||||
Net (loss) income per common share: | ||||||||||||||
Basic | $ | 0.00 | $ | 0.07 | ||||||||||
Diluted | $ | 0.00 | $ | 0.06 | ||||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||
Basic | 22,112,000 | 23,591,000 | ||||||||||||
Diluted | 22,112,000 | 24,261,000 | ||||||||||||
FUEL TECH, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) (in thousands) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
2013 | 2012 | |||||||||||
Net (loss)income | $ | (21 | ) | $ | 1,543 | |||||||
Other comprehensive (loss) income: | ||||||||||||
Foreign currency translation adjustments | (263 | ) | 34 | |||||||||
Unrealized gain from marketable securities, net of tax | - | 15 | ||||||||||
Total other comprehensive (loss) income | (263 | ) | 49 | |||||||||
Comprehensive (loss) income | $ | (284 | ) | $ | 1,592 | |||||||
FUEL TECH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) | |||||||||||||||
Three Months Ended March 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
Operating Activities | |||||||||||||||
Net (loss) income | $ | (21 | ) | $ | 1,543 | ||||||||||
Adjustments to reconcile net income to net cash | |||||||||||||||
(used in) provided by operating activities: | |||||||||||||||
Depreciation | 538 | 552 | |||||||||||||
Amortization | 211 | 226 | |||||||||||||
Provision for doubtful accounts | 207 | (1 | ) | ||||||||||||
Deferred income taxes | 161 | (15 | ) | ||||||||||||
Stock based compensation | 329 | 210 | |||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (7,494 | ) | 8,145 | ||||||||||||
Inventories | (90 | ) | (18 | ) | |||||||||||
Prepaid expenses, other current assets and other noncurrent assets | 986 | 118 | |||||||||||||
Accounts payable | (1,106 | ) | (651 | ) | |||||||||||
Accrued liabilities and other noncurrent liabilities | (2,121 | ) | (4,634 | ) | |||||||||||
Net cash (used in) provided by operating activities | (8,400 | ) | 5,475 | ||||||||||||
Investing Activities | |||||||||||||||
Purchases of property, equipment and patents | (555 | ) | (788 | ) | |||||||||||
Net cash (used in) investing activities | (555 | ) | |||||||||||||
