Fuel Tech Q4 Earnings Call Highlights

Fuel Tech (NASDAQ:FTEK) executives highlighted improved fourth-quarter performance, record-high FUEL CHEM results since 2018, and an expanding set of air pollution control (APC) opportunities tied to data center power generation during the company’s fourth-quarter and full-year 2025 earnings call.

Management framed 2025 as a year of execution and expanding opportunities

Chairman, President and CEO Vince Arnone said 2025 included “multiple achievements,” including an expanded APC opportunity set driven “largely by anticipated growth in data center development and construction,” a resurgence in FUEL CHEM revenue, and “tangible progress” at the company’s Dissolved Gas Infusion (DGI) business.

Arnone emphasized Fuel Tech ended 2025 with “cash equivalents and investments of nearly $32 million” and no debt.

FUEL CHEM revenue reached its highest level since 2018, supported by coal dispatch and a new demonstration

Arnone attributed FUEL CHEM strength to extended coal-unit operating lives and higher dispatch levels, noting many coal-fired units were running at levels “that haven’t been realized in several years.” He said results also benefited from the full-year contribution of a U.S. commercial unit added late in 2024 and a new U.S. customer operating under a six-month, commercially priced demonstration program that began in early November 2025.

Management reiterated that if the demonstration converts to a commercial arrangement, annual revenue potential is expected to be approximately $2.5 million to $3.0 million, with “historic FUEL CHEM gross margins.” Arnone said the customer is using high-sodium coal that is prone to slagging and fouling and is pursuing Fuel Tech’s program to improve boiler availability and reduce maintenance downtime. He added that, to date, the customer has realized a “material reduction” in downtime and maintenance costs due to less offline cleaning.

In Q&A, Arnone described additional FUEL CHEM upside as “moderate,” citing the smaller long-term pool of coal-fired base-load opportunities versus a decade ago. He said the company continues to look for incremental “one-off opportunities,” including adding units at existing customer sites, but cautioned that revenue per incremental unit can vary based on unit size and runtime.

APC awards and backlog improved, while data center inquiries grew and timing remained uncertain

Arnone said APC revenue rose in the fourth quarter but declined for the year due to “customer driven delays and project award timing.” He reported Fuel Tech secured $8.8 million of APC awards during 2025 from new and existing customers across the U.S., Europe, and Southeast Asia. The company’s near-term sales pipeline for APC contracts, excluding data centers, was described as $3 million to $5 million, with discussions still active after slipping from the year-end target; management said it expected to close these opportunities before the end of the second quarter of the current year.

Fuel Tech ended 2025 with a consolidated APC backlog of $7.0 million, up from $6.2 million at the end of 2024.

Arnone also discussed the prior-quarter announcement of a small strategic acquisition of complementary intellectual property and customer-related assets from Wahlco, Inc. He said Fuel Tech has been encouraged by project inquiries from Wahlco’s client base and others and described the acquisition’s goal as strengthening the technology portfolio and broadening the customer base.

On data centers, Arnone said the company’s pipeline remains approximately $75 million to $100 million for projects integrating selective catalytic reduction (SCR) technology with power generation sources. He emphasized Fuel Tech’s role in the ecosystem is as a subcontractor to integrators or turbine/engine OEMs, which limits its visibility into project funding, approvals, and award timing and makes it challenging to provide specific timing guidance.

Arnone said Fuel Tech is participating in various stages of opportunities with more than 10 integrators and OEMs, with projects ranging from 2–5 units to as many as 30–40 NOx reduction units per project, and pricing “predominantly” in the range of $1 million to $2.5 million per unit. He said the earliest the company expects any inquiries to convert to a commercial award is Q2 2026, based on schedule requirements for at least two projects. He added that, to the best of management’s knowledge, with one exception, none of the current inquiries have been awarded.

In response to analyst questions, Arnone said Fuel Tech is not “specifically designed in” with data center participants yet, and is currently working to establish itself as a trusted partner while playing an education role for parties less familiar with pollution control requirements. He also said the company believes most data center power solutions under discussion are long-term and not “temporary” in nature.

Regulatory commentary: rollbacks, new turbine NSPS, and municipal waste combustor rule

Arnone said the administration is pursuing both rollbacks of certain regulations and implementation of new, less restrictive rules. He noted proposed rollbacks related to greenhouse gas rules and the 2024 Mercury and Air Toxics Standards for coal-fired units, while emphasizing these rollbacks “do not loosen the nitrogen oxide emissions reduction requirements.” He added that rollbacks could potentially extend the life of some coal and natural gas-fired units, creating retrofit and maintenance opportunities.

He also discussed new EPA New Source Performance Standards (NSPS) for new gas turbines published January 15, including a “temporary power turbines” category for units below 85 MW installed to run 24 months or less, with a 25 PPM NOx requirement in some cases not requiring SCR. He said turbines greater than 5 MW with high operating capacity would need to meet 15 PPM (likely requiring SCR), and turbines above 85 MW would need to meet 5 PPM (requiring SCR in almost all cases). Arnone said lawsuits challenging the amendments are expected, but Fuel Tech is not aware of the new regulation having a significant negative impact on pollution-control decision-making among its potential client base.

Arnone also said the company is monitoring the EPA’s rule for large municipal waste combustor units, which he said is expected to take effect before the end of March and would likely require advanced SNCR technology, with compliance deadlines three years from the issue date.

DGI demonstrations progressed; management pointed to potential first commercial contract in 2026

Arnone said an extended DGI demonstration at a fish hatchery in the Western U.S. remains on track to conclude in the second quarter, with the system meeting expectations for precise dissolved oxygen delivery, reducing operational costs, and improving fish growth. He also said a second trial at a municipal wastewater site in the Southeast U.S. was completed in January and converted into a six-month rental contract expected to run through the beginning of the third quarter, with the client reporting odor-related complaints “dramatically reduced.”

In Q&A, Arnone said the municipal rental contract is $10,000 per month. He added the company hopes to sell a DGI unit between now and the end of 2026, which he said would not be material financially but would provide an important success story to support commercialization.

Financial results: revenue and margin improved; operating loss narrowed; cash and investments totaled $31.9 million

CFO Ellen Albrecht reported fourth-quarter consolidated revenue rose 37% to $7.2 million, with APC revenue up to $2.4 million from $1.8 million and FUEL CHEM revenue rising to $4.9 million from $3.5 million. Consolidated gross margin increased to 45% from 42%, with FUEL CHEM gross margin at 46% and APC gross margin at 42%.

Fourth-quarter SG&A was $4.2 million versus $3.9 million a year earlier, while R&D increased to $504,000 from $405,000, primarily tied to DGI commercialization efforts. Operating loss narrowed to $1.4 million from $2.1 million.

For full-year 2025, Albrecht said consolidated revenue increased 6% to $26.7 million, including a 28% increase in FUEL CHEM revenue to $17.8 million, partially offset by lower APC revenue. Full-year gross margin rose to 46% from 42%. Operating loss narrowed to $3.7 million from $4.7 million. Net loss was $2.3 million, or $0.08 per diluted share, compared with a net loss of $1.9 million, or $0.06 per diluted share, in 2024. Adjusted EBITDA loss was $2.7 million, compared with $2.2 million in 2024.

Albrecht said interest income was $288,000 in the fourth quarter and $1.4 million for 2025, reflecting investment of a majority of the company’s $31.9 million in cash and investments in held-to-maturity debt securities and money market funds. She reported year-end cash and cash equivalents of $11.9 million and short- and long-term investments of $20.0 million. Net cash provided by operating activities was $3.0 million for the year, compared with a use of cash of $2.8 million in the prior year.

Looking ahead, management said it expects 2026 revenue to exceed 2025 levels, with FUEL CHEM approximately flat year over year and APC exceeding 2025 performance excluding any benefit from potential data center awards, which would be additive. Albrecht said the company expects 2026 SG&A to increase modestly from 2025.

About Fuel Tech (NASDAQ:FTEK)

Fuel Tech, Inc (NASDAQ: FTEK) is a specialty technology and engineering company focused on developing and supplying clean air solutions for the power generation and industrial markets. The company designs, manufactures and markets proprietary chemical reagents and process control systems that help customers reduce emissions of nitrogen oxides (NOx), mercury and other air pollutants. Its technology platform combines advanced process modeling, plant optimization software and field testing services to help utilities and industrial facilities comply with environmental regulations and improve operational efficiency.

Fuel Tech’s core product lines include selective catalytic reduction (SCR) optimization systems, activated carbon injection solutions for mercury capture, and sorbent enhancement additives for flue gas desulfurization processes.