Fuel Tech’s Earnings Call: Mixed Results with Optimistic Outlook

Fuel Tech Inc ((FTEK)) has held its Q3 earnings call. Read on for the main highlights of the call.

Fuel Tech’s recent earnings call painted a mixed picture for investors. The company showcased a strong financial position and growth in its FUEL CHEM segment, alongside strategic acquisitions. However, these positives were tempered by a decline in consolidated and APC segment revenues. Despite these challenges, Fuel Tech remains optimistic about future opportunities, particularly in the data center market and with its recently acquired assets.

Profitability and Strong Financial Position

Fuel Tech demonstrated profitability in Q3 2025, with enhanced gross margins and a robust financial position. The company reported nearly $34 million in cash, cash equivalents, and investments, with no long-term debt, highlighting its financial strength and stability.

FUEL CHEM Segment Growth

The FUEL CHEM segment showed solid growth, with revenue projections for 2025 increased to $16.5 million to $17 million. This marks a rise from prior guidance of $15 million to $16 million, reaching the highest level since 2022, indicating strong demand and successful execution in this segment.

New APC Awards and Backlog Growth

Fuel Tech announced $3.2 million in new APC awards, which contributed to an increase in the consolidated APC segment backlog to $9.5 million by the end of Q3 2025. This growth in backlog is a positive indicator for future revenue streams.

Strategic Acquisition of Wahlco, Inc. Assets

The acquisition of Wahlco, Inc.’s intellectual property and customer-related assets for $350,000 is a strategic move to enhance Fuel Tech’s APC portfolio. This acquisition is expected to bolster the company’s offerings and competitive position in the market.

Positive Net Income and Improved Margins

Fuel Tech reported a net income of $303,000 or $0.01 per share for Q3 2025, with consolidated gross margins rising to 49% from 43% in the previous year’s third quarter. This improvement in margins reflects the company’s operational efficiency and cost management.

Decline in Consolidated Revenues

Consolidated revenues saw a slight decline to $7.5 million from $7.9 million in the prior year period. This decrease was primarily due to lower APC segment revenues, which impacted overall financial performance.

APC Segment Revenue Decline

The APC segment experienced a revenue decline to $2.7 million from $3.2 million, attributed to the timing of project execution on existing contracts. This highlights the challenges in project scheduling and execution within the segment.

Increased SG&A Expenses as Percentage of Revenue

SG&A expenses remained flat at $3.2 million but rose to 43% of revenue from 41% in the prior year period due to lower consolidated revenue. This increase in percentage reflects the impact of declining revenues on expense ratios.

Forward-Looking Guidance

Fuel Tech’s CEO Vince Arnone provided optimistic guidance for the future. The company expects an 8% increase in overall revenue for 2025, driven by a robust pipeline and strategic initiatives. The FUEL CHEM segment is projected to generate $16.5 million to $17 million in revenue, while the APC segment backlog has grown to $9.5 million. Additionally, the company is pursuing significant opportunities in the data center market, with a pipeline valued between $80 million and $100 million.

In summary, Fuel Tech’s earnings call revealed a balanced outlook with strong financial positioning and growth in key segments, offset by challenges in revenue declines. The company remains focused on leveraging strategic acquisitions and exploring new market opportunities, particularly in the data center sector, to drive future growth.