Fuel Tech Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2025

Key Takeaways

  • Negative Sentiment: Company reduced 2025 revenue guidance to $28–29 M from ~$30 M due to uncertainty in timing of APC award execution.
  • Positive Sentiment: Fuel Chem segment forecasts $15–16 M in annual revenue and plans a new TIFI furnace‐injection demo that could add $2–2.5 M in 2026.
  • Positive Sentiment: APC backlog rose to $7.8 M at Q2-end, with $2.5–3 M in new awards expected by August and another $3–5 M by year-end.
  • Positive Sentiment: Dissolved Gas Infusion demo started mid-July at a fish hatchery in a head-to-head test, and the company aims for its first commercial DGI revenues in 2025.
  • Positive Sentiment: Fuel Tech holds ~$100 M of bids for SCR emissions control on AI data center power units, marking its largest pipeline opportunity in over a decade.
AI Generated. May Contain Errors.
Earnings Conference Call
Fuel Tech Q2 2025
00:00 / 00:00

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Operator

Ladies and gentlemen, greetings, and welcome to the Fuel Tech Inc. Twenty twenty five Second Quarter Financial Results Conference Call. At this time, all participants are in the listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator

It is now my pleasure to introduce your host for today, Devin Sullivan, the Managing Director of The Equity Group. Please go ahead.

Devin Sullivan
Managing Director at The Equity Group

Thank you, Alrik, and good morning, everyone. Thank you for joining us today for Fuel Tech's twenty twenty five second quarter financial results conference call. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, www.ftek.com. Our speakers for today will be Vince Arnone, Chairman, President and Chief Executive Officer and Ellen Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors.

Devin Sullivan
Managing Director at The Equity Group

Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call except for historical information are forward looking statements as defined in Section 21E of the Securities Exchange Act of 1934 as amended, which are made pursuant to Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and reflect Fuel Tech's current expectations regarding future growth, results of operations, cash flows, performance and business prospects and opportunities as well as assumptions made by and information currently available to our company's management. Fuel Tech has tried to identify forward looking statements by using words such as anticipate, believe, plan, expect, estimate, intend, will and similar expressions, but these words are not the exclusive means of identifying forward looking statements. These statements are based on information currently available to Fuel Tech and are subject to various risks, uncertainties and other factors, including, but not limited to, those discussed in the company's annual report on Form 10 ks and Item 1A under the caption of Risk Factors and subsequent filings under the Securities Exchange Act of 1934 as amended, which could cause Fuel Tech's actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunity to differ materially from those expressed in or implied by these statements.

Devin Sullivan
Managing Director at The Equity Group

Fueltek undertakes no obligation to update such factors or to publicly announce the results of any forward looking statements contained herein to reflect future events, developments or changed circumstances or for any other reason. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in the company's filings with the SEC. With that said, I'd now like to turn the call over to Vince Arnone, Chairman, President and CEO of Fuel Tech. Vince, please go ahead.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Thank you, Devin.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Good morning, and I'd like to thank everyone for joining us on the call today. Our second quarter results were largely in line with our expectations and reinforced our belief that 2025 will be a year of growth for our company versus prior year. For the quarter versus the prior year period, we expanded our gross margin, managed expenses, continued to invest in our emerging technologies and maintained a strong financial position with cash, cash equivalents and investments of nearly $31,000,000 at quarter end and no long term debt. We are also pleased with the pace of business development at each of our three businesses, which includes the expectation of a receipt of an incremental 2,500,000.0 to $3,000,000 in new APC awards before the end of the month of August as well as customer demonstrations that are underway for our dissolved gas infusion technology and plan to commence later in the year for our FUEL CHEM business segment. We are also increasingly optimistic about the application of our APC suite of emissions control solutions and the construction of AI related data centers in The United States, and I'll make further comments on this topic in a moment.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Revenues for our FUEL CHEM segment were essentially flat for the quarter versus prior year, reflecting seasonal weather transition from spring to summer. However, the warm weather that much of the country began to experience late in the second quarter has translated into higher energy demand, which has had a positive effect on FUEL CHEM's results as we entered the current third quarter. With each of our base accounts in operation, including the incremental contribution from the new commercial account that we added in the 2024, we recorded more than $2,000,000 in revenue at FUEL CHEM for the month of July. As of today, we believe that we are well positioned to meet our annual objective of 15,000,000 to $16,000,000 in FUEL CHEM revenue. In addition, we are also expecting to commence a new six month demonstration of our TIFI targeted in furnace injection technology early in the fourth quarter of this year at a new customer's coal fired unit in the Midwest.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

The purpose of the demonstration is to improve boiler availability and reliability and reduce maintenance downtime for offline boiler cleaning in order to maximize the power generation profile of this unit. Should this demonstration result in a new contract, we would expect the annual revenue potential to be approximately 2,000,000 to 2 point based 5,000,000 on the customer running the program full time and with the revenue expected to generate historic FUEL CHEM gross margins. With respect to international FUEL CHEM opportunities, we remain in discussions with our partner in Mexico to expand the provision of our chemical technology in that country. Based on conversations with our partner in Mexico, it is still our understanding that the recently elected government is targeting the implementation of environmental policy aimed at the reduction of pollutants that can cause climate change. As Mexico is planning to use the heavy fuel oil generated from their oil refining operations as fuel for power generation for the near term future, we are hopeful that our FUEL CHEM program will be an integral part of President Shane Maum's plan.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Revenues for our APC business in the second quarter declined compared to the prior period due primarily to the timing of project execution on existing contracts. With that said, we are pleased to report that we are expecting to announce an incremental 2,500,000.0 to $3,000,000 in new APC contracts before the end of this month from new and existing U. S. And international customers for our emissions control solutions. Further, we do expect to close an additional $3,000,000 to $5,000,000 in new awards before the end of this year, which would be exclusive of any data center opportunities.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We are continuing to pursue additional new awards driven by industrial expansion globally and by state specific regulatory requirements in The U. S. And we are continuing to monitor progress of the EPA's rule for large municipal waste combustor units. This rule reduces the nitrogen oxide emissions requirements the large MWC units. Fuel Tech has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

The final rule has been delayed by EPA until December, with compliance deadlines expected three years from the date of issue. That being said, there are some specific states that are currently requiring lower NOx emissions that are consistent with proposed MWC rule and we are actively pursuing those opportunities today. Additionally, EPA under the current administration is currently pursuing the rollback of rules related to the reduction of greenhouse gases. It is important to note that the proposed rollback of the 2009 EPA Endangerment finding does not loosen the nitrogen oxide emission requirements for any sources and could potentially extend the life of some coal and natural gas fired units that may not have to reduce their carbon dioxide emission profile. Lastly, as discussed on our previous conference calls, we are not expecting any specific tailwinds that would come from the implementation of new regulation and the opportunities that we are pursuing today are not contingent on the implementation of any specific new regulations.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

For our Dissolved Gas Infusion business, we commenced an extended demonstration in mid July at a fish hatchery in the Western U. S. That is expected to last until the 2026. The demonstration is designed to evaluate the benefits of delivering consistent and precise levels of dissolved oxygen for the raising of game fish in a controlled environment over a complete growth cycle. Specifically, this user is interested in ascertaining how DGI will affect yield, fish growth cycles and operational costs for the program.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

What's interesting about this particular demonstration is that our DGI technology will be going head to head with the technology that is currently being used by this hatchery, and we believe that this comparison will provide a very clear view of the advantages of our DGI system in this setting. In addition to this demonstration, we are still in discussions with a municipal wastewater treatment facility in the Southeastern United States, and we are pursuing multiple other end markets of interest for DGI, including pulp and paper, food and beverage, chemicalpetrochemical and horticulture. We continue to receive inquiries regarding DGI from potential customers in multiple end markets, and we are hopeful that we can generate our first commercial revenues in 2025. Additionally, we continue to cultivate our sales representative network to broaden the introduction of DGI to various end markets across The U. S.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We expect to add new sales representatives later this year. These would be in addition to the two companies with whom we executed sales agreements in the first half of this year. As a follow-up to the commentary that we provided on our previous conference call, one of the most exciting opportunities that we have seen in quite some time for our company relates to the application of our APC emissions control solutions as part of the proliferation and investment in data center infrastructure being built in support of AI, cloud computing and the general trend for digital expansion. Data centers are becoming the backbone of the digital age. And as such, their development necessitates the increase in demand for power generation to support data center operation.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

This demand in power will require emissions control solutions for many of the energy sources that necessitate a low carbon footprint. In fact, the primary factors that determine whether a data center will require NOx control using SDR technology are the following: first, site location. Is the site in an attainment or non attainment area for ozone ambient air quality standards as NOx is a contributor to ozone? There will be more stringent NOx requirements in the non attainment areas. Second, the planned utilization of the power generation application.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Is the generation sourced for primary or backup power? And what are the expected number of operating hours per year? Primary power sources and backup power that is expected to run extensively will be more likely to require SCR. And third, the baseline NOx of the power generation source. Some combustion turbines can be equipped with combustion controls to enable a lower baseline NOx emissions level.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

However, ultimately, the site permit will define the required level of emissions control. The interest in our technology solutions for these applications has continued throughout the recent quarter. And as of today, we have multiple bids outstanding for the integration of our SDR technology with the power generation sources to address the emissions control requirements of data centers to be built in The U. S. Over the next several years.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We are watching the progress of the bid activity closely and are proactively working with our supply chain partners to ensure that we are ready to capitalize on the opportunity when it comes our way. As we look ahead to the balance of 2025, based on our effective backlog, impending contract awards, the APC business development activities that we are pursuing and our previously noted expectations for FUEL CHEM, 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 We are confident that FUEL CHEM will well exceed its revenue level for 2024. However, the timing of both the receipts and execution of APC awards has some uncertainty and as a result, we are being cautious in our guidance. Also, note that this base case outlook excludes any material contributions from DGI, any significant contributions to APC from data center contract awards and any material impact from new business development activities for FUEL CHEM. In closing, I want to express my thanks to the Fuel Tech team for their continued efforts in support of our strategic goals, and I want to thank our shareholders for their continued interest in and support of Fuel Tech.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We are excited about the business opportunity landscape that lies in front of us today and one of our primary objectives for our company is to build a material contract backlog as we move towards the 2025 and into 2026 and thereafter. Now I'd like to turn the call over to Ellen for her comments on the financial results. Ellen, please go ahead.

Ellen Albrecht
Ellen Albrecht
VP, CFO & Treasurer at Fuel Tech Inc

Thank you, Vince, and good morning, everyone. For the quarter, consolidated revenues declined to $5,600,000 from $7,000,000 in the prior year's period due to lower APC segment revenue. APC segment revenue declined to $2,500,000 from $3,900,000 primarily related to the timing of project execution on existing contracts, while as expected, FUEL CHEM segment revenue remained flat at $3,100,000 for the quarter. Consolidated gross margin for the second quarter rose to 46% of revenues from 42% in last year's second quarter due to segment contribution mix. FUEL CHEM gross margin increased to 47% compared to 46% in the 2024 despite flat segment revenues, which was mainly due to account mix combined with relatively flat segment administration expenses.

Ellen Albrecht
Ellen Albrecht
VP, CFO & Treasurer at Fuel Tech Inc

APC segment margin rose to 44% in the second quarter as compared to 39% in the prior year's period as a result of project and product mix. The APC segment contains revenues from capital projects and ancillary revenue for items such as post contractual spare parts and services. Ancillary point in time revenue maintain a higher margin profile and will offset fluctuating capital project revenue margins, which are recognized over time based on project completion. Consolidated APC segment backlog on 06/30/2025 was $7,800,000 up from a backlog of $6,200,000 as of December 31. Backlog at June 30 included $2,800,000 of domestically delivered project backlog and $5,000,000 of foreign delivered project backlog compared to 1,900,000 of domestic delivered project backlog and $4,300,000 of foreign delivered project backlog as of 12/30/2024.

Ellen Albrecht
Ellen Albrecht
VP, CFO & Treasurer at Fuel Tech Inc

We expect that approximately $5,000,000 of current consolidated backlog will be recognized in the next twelve months. SG and A expenses in the second quarter rose slightly to $3,300,000 from $3,200,000 in the prior year period due primarily to timing of routine expenditures. As a percentage of revenue, SG and A expenses rose to 60% from 46% in the prior year period, reflecting lower consolidated revenue in the current period. For 2025, we expect SG and A expenses to increase modestly from prior year as we focus on the development of infrastructure and business segments. Research and development expenses for the second quarter rose to $490,000 from $422,000 in the prior year period due to our continuing investment in water and wastewater treatment technologies, specifically our DGI systems and including the demonstration Vince previously mentioned.

Ellen Albrecht
Ellen Albrecht
VP, CFO & Treasurer at Fuel Tech Inc

Our investment in DGI will continue throughout 2025 to support ongoing site demonstrations and other growth initiatives. Our second quarter operating loss was $1,300,000 compared to an operating loss of $715,000 in the prior year period. Interest income increased to $537,000 in the second quarter, up from $334,000 in the prior year period. Interest income in the twenty twenty five second quarter included $257,000 related to the one time recognition of the employee retention credit funds under the CARES Act. Collection of approximately 75 of ERC funds including the interest was completed in the second quarter with the remaining balance fully collected as of today.

Ellen Albrecht
Ellen Albrecht
VP, CFO & Treasurer at Fuel Tech Inc

Our net loss for the quarter was $689,000 or $02 per share compared to a net loss of $421,000 or $01 per share in the prior year period. Adjusted EBITDA loss was $948,000 compared to an adjusted EBITDA loss of $529,000 in the prior year period. Lastly, moving to the balance sheet. Our financial condition remains very strong. As of 06/30/2025, we had cash and cash equivalents of $10,600,000 and short and long term investments of $20,300,000 for a total of $30,900,000 Shares outstanding at the quarter approximately $30,900,000 equating to cash per share of $1 Working capital was $25,700,000 or $0.83 per share.

Ellen Albrecht
Ellen Albrecht
VP, CFO & Treasurer at Fuel Tech Inc

Stockholders' equity was $40,700,000 or $1.32 per share and the company continues to have no outstanding debt. We remain greatly confident in our ability to maintain a strong financial position and to fund our short and long term growth initiatives. I'll now turn the call back over to Vince.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Thanks very much, Ellen. Operator, let's please go ahead and open the call for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. The first question comes from Sameer Joshi with H. C. Wainwright. Please go ahead.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Hey, good morning, Vince, Alan, Devin. Thanks for taking my questions.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Good morning, Good

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

morning. Just a few on the actual financials and outlook. Just want to make sure, you mentioned FUEL CHEM revenues for the year are likely to be highest since 2022 and also further clarified those to be expected in the 15,000,000 to $16,000,000 range. Is that for the year, is that because of any additional units coming online later in the year? You did mention some 4Q activity. Just would like to get some color on that.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Right. Now the number that I provided as the range of 15,000,000 to $16,000,000 does not include contributions from any new accounts as we sit here today. Anything that would be added from a new account perspective would be incremental to those numbers.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood. And then the backlog of $7,800,000 I think Alan mentioned $5,000,000 to be expected to be recognized during 2025. Is there any seasonality or other cadence to that over the next two quarters or it's evenly distributed?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Right. And Ellen had actually mentioned that that backlog number is largely going to be recognized over the next twelve month not time necessarily solely in 2025. And the backlog is it's definitely project specific in nature. So it's not like we can easily allocate that over the twelve month time frame, if you will.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood. Yes. No, I misspoke. Twelve months is correct. On the DGI front, this nine to twelve month demonstration at the factory, are there any costs being reimbursed?

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Or is it being considered as R and D expense from accounting point of view?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

It is largely considered to be R and D expense, Samir. And no, we are not expecting to collect any funds from the customer for this demonstration. This is solely Fuel Tech investing and ensuring that we look to commercialize DGI as quickly as we can.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood. And you did reiterate commercial revenues from I guess the one or two prior engaged customers during 2025. Is that did I hear that correct?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We have not recognized commercial revenues on DGI as of yet.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

But do you expect to before the 2020

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We it is our hope and expectation that we will be fortunate enough to recognize some commercial revenue in 2025, yes.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

So then stepping back and just some like higher level macro questions. You did address the role proposed rollbacks of EPA Clean Air Act regulations and indicated neither headwinds nor tailwinds resulting from that. Are there any particular areas where you might see some improvements on the NOx front maybe or some like just wanted to see because you are in the pollution control, NOx control business and the regulations may might have some impact. That's just how I like that's how I feel.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Yes. So, at this point in time, our opportunities for APC, are being driven predominantly by continued business expansion. The contract awards that we're looking to announce here in this next two to three week time frame are for plant expansions both in this country and in Europe as well. So we'll continue to participate in those types of activities as we continue to have manufacturing build out around the world. And then obviously our largest opportunity that we're seeing today is indeed the AI related data center build out, that pretty much everyone has been speaking about here over this past several months.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Regulatorily, we are not expecting any downside nor any upside that will be driven by regulation as we sit here today.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Understood. So the upside and you did address it on the in your commentary, the APC opportunity from the data centercryptoAI space. So it will be because they will be deploying more power resources that will require your services, that's where you see the upside from. Is there company I think that is correct. Is there any timeline?

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Are you seeing increased activity toward this? Or you just are expecting it in the future?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Yes. I don't have a specific timeline for you as we sit here today, Sameer. We have active proposals in place with multiple turbine manufacturer OEMs. The proposals are there's a combination of both budgetary and what I would call commercial proposal activity. The commercial ones are likely to be more current in their timeliness relative to the customer acting on them.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

But as we sit here today, we would expect to hear some level of response on these awards before the 2025, but hopefully sooner than that. Hopefully sooner than that. These projects do take time to develop obviously and we are working with our partners very, very closely. And we are active in terms of supporting them with bids for our services And it's something we're following extremely closely. It is literally the largest opportunity that we have seen for our technologies in probably ten to fifteen years. So it's critical for us to capitalize on these.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Yes, yes. No, that was sort of where I was going and towards my last question as well about what is the pipeline of opportunities, not only from the AI, but also from

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Right. So the I'll start with FUEL CHEM, right? So we don't actually measure a pipeline for FUEL CHEM because that's recurring revenue. So as I said for 2025, we are looking at 15,000,000 to $16,000,000 in revenue. $2,026,000,000 and beyond is going to depend on whether or not we are able to add some new commercial accounts to base accounts for FUEL CHEM.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

I had mentioned that we are looking at demonstrating at a large coal fired unit here before the 2025. If that does come on board and is operational for the majority of 2026, that could be an incremental $2,000,000 to $2,500,000 revenue amount for 2026. That would also assume the same level of contribution from all of our other base accounts. So no backlog, if you will, for FUEL CHEM recurring revenue with some opportunities for upside. For DGI, I really can't speak to a backlog number here at this point in time.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

It's we're still pre revenue and it would be on my behalf making a statement that I really don't have any justification for here today. So we'll hold off on DGI for the time being. For APC, the pipeline just for the bids we have in place related to AI data centers, it's approximating $100,000,000 in bids that we have outstanding today. It's a significant material opportunity for our company. And then the pipeline for call it what I would call more standard APC business that's related to normal business growth, I'd put that in the 20,000,000 to $25,000,000 range.

Sameer Joshi
Senior Equity Research Analyst at H.C. Wainwright & Co., LLC

Yes. No, that's the number I was getting at. It's a significant opportunity ahead of you and it is emerging. So good luck with that.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

You very much

Operator

you. Thank you. The next question comes from Mark Silk with Silk Investment Advisors. Please go ahead.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Mark. Can barely hear you.

Marc Silk
CEO, Investment Advisor, Portfolio Manager & Analyst at Silk Investment Advisors

How's that?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

That is much better. Thank you.

Marc Silk
CEO, Investment Advisor, Portfolio Manager & Analyst at Silk Investment Advisors

Okay. Did you say the opportunity for the data centers is $100,000,000

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

I said that that's what we have in our pipeline today. The opportunity itself could be larger than that. But that represents what we have in terms of bid pipeline activity today.

Marc Silk
CEO, Investment Advisor, Portfolio Manager & Analyst at Silk Investment Advisors

That's impressive. Most of my questions are answered, so I just have one more. Obviously, the data centers is a big U. S. Phenomenon, but is there also additional data centers being built around the world that you could be part of as well?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We believe that we will see data center build out in other parts of the world as well. We're involved in what I would call a lesser amount or number of inquiries for those opportunities because they are not as developed or not as advanced as the activity that we are seeing here in The U. S. But we would expect that there would be some opportunities outside of The U. S. Prospectively.

Marc Silk
CEO, Investment Advisor, Portfolio Manager & Analyst at Silk Investment Advisors

Great. That's all I have. Good luck going forward.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Thank you, Mark.

Operator

Thank you. The next question comes from Richard Gruelich with REG Capital Advisors. Please go ahead.

Richard Greulich
President & CEO at REG Capital Advisors

Thank you. In related question, so I noticed in the 10 Q that you changed your global sales pipeline range from in the last quarter, it was 50,000,000 to $75,000,000 and in this 10 Q, it's 75,000,000 to $100,000,000 Does that reflect accelerating interest in the data center area or maybe accelerating bids placed by you?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

It actually does. And as I just mentioned to the prior caller, our range in total is at this point in time, it is greater than $100,000,000 in terms of our sales pipeline. And yes, it is specifically being driven by the opportunities that are out there related to AI data centers.

Richard Greulich
President & CEO at REG Capital Advisors

If these opportunities came to fruition, would you be able to expand your production capacity or installation capacity on a timely basis to take advantage of that over the next year to two?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Yes. We are working with our supply chain partners and have had discussions with them over these past few months as some of these inquiries have come in. Fuel Tech does not manufacture, anything ourselves. We use our supply chain partners to actually manufacture and fabricate the equipment that we provide. So we do have the ability to scale up by bringing on board additional qualified suppliers for this type of work and that would be our intention.

Richard Greulich
President & CEO at REG Capital Advisors

For the benefit of people who may not have listened to the last conference call, in that call you delineated sort of why this is such a big opportunity in the sense of not just having multiple centers, but multiple units at each center. Is that still the case?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

That is absolutely the case. Most of the bids that we are providing to our customers, it can range from anywhere from one up to 25 to 30 units that we're actually bidding on. The data center sites are scaling up in blocks or in stages. And typically each stage will require a multitude of units for that stage. And then that enables them to develop and add modularly to that site prospectively when they have additional data requirements that they're looking to fill.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

So yes, answering your question, these are these bids are for multiple units at a site.

Richard Greulich
President & CEO at REG Capital Advisors

And the revenue that you receive for each unit is in the range of what?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Per unit, ranges anywhere from a little over $1,000,000 per unit to as high as $2,500,000 per unit.

Richard Greulich
President & CEO at REG Capital Advisors

Okay, great. Thank you very much.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Thank you. Thank you.

Operator

The next question comes from William Bremer with Vanquish Capital Partners. Please go ahead.

William Bremer
Analyst at Vanquish Capital Markets

Good morning, Ben.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Hey, good morning, Bill.

William Bremer
Analyst at Vanquish Capital Markets

The previous caller did an excellent job of articulating where I was going. What I'll add in terms of the modular mix of these data center opportunities for the SCR units is I'm assuming your engineering team, once they fulfill the specific engineering that's needed for the turbine manufacturer, I'm assuming that going forward that time to prove yourself for the technical aspect just needs to be tweaked. So thus you can leverage the building out of the bids that you're possibly doing right now. Is that correct?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

I would say yes to that Bill. Once we have a specific design in place for a specific turbine, Yes, that design can be leveraged for future applications. Assuming that the permitting requirement for the emissions reduction for this site is indeed similar in nature, if the permitting requirements are different, we would then need to modify that design accordingly. However, I will say that having a base design in place for a turbine of a certain make and model does provide some leverage, absolutely.

William Bremer
Analyst at Vanquish Capital Markets

And I guess what surprises many of us is that the minimum potential dollar figure is just a single 7 figures, a single million dollars here. I mean, so boy, if you guys start receiving clusters of these, the leverage you'll have is tremendous.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Agreed. Agreed. Now we're as I noted, we are extremely excited about this opportunity.

William Bremer
Analyst at Vanquish Capital Markets

Fantastic. I want to go to Mexico. And there's been recent and what I mean by recent, I'm talking, hey, in March and even currently in the last week, there's been more and more news regarding Pemex and the fact that they are not fulfilling their emissions regulatory fulfillments there. And there seems to be an increased amount of pressure down there. Are you seeing that as well?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

We have been waiting for pressure to be applied not just on Pemex, but on CFE, who is the state owned power generation company as well. But seeing the pressure being put on Pemex is a good indicator of what might be coming here in the future. It's been our hope and expectation that this administration would be looking at these issues more stringently. And I think to your point, we are starting to see the administration perhaps put a little bit more focus in this area. So, I'm hoping it's trending in the right way, Bill, because again this is another opportunity for us.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

And we've talked about this now for several years, but this might be the best opportunity that we have to see something move forward for FUEL CHEM down in Mexico that the additional pressure on the emissions, whether it be from PIMEX, CFE or other industries in Mexico, that is it's good to see and hopefully that will indeed expand to the point whereby our program in Mexico can be well expanded.

William Bremer
Analyst at Vanquish Capital Markets

Agreed. I mean we're talking about FUEL CHEM which is currently your highest margin product. You have some facilities down there currently being run right now. That's my assumption. That's what I recall. And the fact that the leader down there is an environmentalist. So it seems as though all the potential is right there that so I know you're dealing with a partnership down there.

William Bremer
Analyst at Vanquish Capital Markets

Can you give us some color in terms of the partnership's engagement to the entities in Mexico and back to us?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

The engagement is very heavy. We've worked with this partner for more than fifteen years. They were able to establish our Chemtech program down there going back to 02/2007, 2008 timeframe, so quite a long time ago. The issue has been the lack of support of an administration to actually have concern for the environment. So our partner is well engaged and well connected with parties down there without getting into too much detail.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

I have phone calls with him at a minimum every two weeks getting updates on where things stand and where his team has been working to go ahead and try to push this forward. So it's regular and ongoing. It's great to see that the government is providing some additional pressure. And again, we're watching for that next step.

William Bremer
Analyst at Vanquish Capital Markets

Final question. If you did receive an order via your partner from Mexico, how quickly would you be able to complete that order with the FUEL CHEM division and send it down there?

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Yes. Very, very quickly, we actually have equipment that is ready to go. So it would be less than a couple of month deployment time for us to be able to get up and running on a new facility down there. It would be a fast response.

William Bremer
Analyst at Vanquish Capital Markets

Fantastic. I look forward to seeing orders, Vince. Thank you.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Thank you, Bill. Thanks for your questions.

Operator

Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Vincent Arnone for the closing comments.

Vincent Arnone
Vincent Arnone
Chairman, CEO & President at Fuel Tech Inc

Thanks very much operator. Again, I'll reach out and thank you to the Fuel Tech team and the same for our shareholder base. Thanks for your confidence in us. We are well motivated, very excited about the landscape of opportunity that we do see in front of us today and we look forward to executing on this opportunity. I want to thank everyone for attending the call today and everyone have a good remainder of your day. Thank you very much.

Operator

Thank you. Ladies and gentlemen, the conference of Fuel Tech has now concluded. Thank you for your participation and you may now disconnect your lines.

Executives
    • Vincent Arnone
      Vincent Arnone
      Chairman, CEO & President
    • Ellen Albrecht
      Ellen Albrecht
      VP, CFO & Treasurer
Analysts
    • Devin Sullivan
      Managing Director at The Equity Group
    • Sameer Joshi
      Senior Equity Research Analyst at H.C. Wainwright & Co., LLC
    • Marc Silk
      CEO, Investment Advisor, Portfolio Manager & Analyst at Silk Investment Advisors
    • Richard Greulich
      President & CEO at REG Capital Advisors
    • William Bremer
      Analyst at Vanquish Capital Markets
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