Fuel Tech Targets $28M–$29M 2025 Revenue with Strong FUEL CHEM Growth and Data Center Pipeline

Key Highlights from Fuel Tech, Inc.'s (FTEK) Q2 2025 Earnings Call

Fuel Tech, Inc. (FTEK) provided a detailed overview of its second-quarter performance and future outlook during its earnings call. The company's leadership emphasized continued growth, strong financial positioning, and promising opportunities in emerging technologies.

CEO Perspective: Growth and Strategic Focus

CEO Vincent J. Arnone highlighted that the company’s second-quarter results aligned with expectations and reinforced confidence in 2025 as a year of growth compared to the previous year. He pointed to several key factors contributing to this optimism:

• Gross Margin Expansion: The company is seeing improved gross margins across both segments.
• Disciplined Expense Management: Continued focus on cost control and efficiency.
• Investment in Emerging Technologies: Ongoing R&D efforts, particularly in dissolved gas infusion (DGI) technology.
• Strong Financial Position: The company holds nearly $31 million in cash, cash equivalents, and investments, with no long-term debt.

Arnone also mentioned an anticipated receipt of an additional $2.5 million to $3 million in new APC awards by the end of August. Additionally, customer demonstrations for DGI technology are underway, with more planned for later in the year.

The CEO expressed optimism about the potential application of the APC suite in U.S. data center construction, noting multiple bids for integrating SCR technology with power generation sources to meet emissions requirements for upcoming data centers.

Regarding the FUEL CHEM segment, Arnone reported over $2 million in revenue for July and reaffirmed the company’s goal of achieving between $15 million and $16 million in annual revenue for the segment.

CFO Insights: Revenue Performance and Outlook

CFO Ellen T. Albrecht provided details on the quarter’s financial results. Consolidated revenues declined to $5.6 million from $7 million in the same period last year, primarily due to lower APC segment revenue. The APC segment revenue dropped to $2.5 million from $3.9 million, attributed to project execution timing on existing contracts. Meanwhile, FUEL CHEM revenue remained flat at $3.1 million.

Management revised its 2025 revenue guidance downward to a range of $28 million to $29 million, citing uncertainty around the timing of APC awards. However, they remain confident that FUEL CHEM will exceed its 2024 revenue levels.

The base case outlook excludes material contributions from DGI, significant APC impact from data center contracts, and new business development for FUEL CHEM. Arnone emphasized the need for caution in the guidance due to uncertainties in award receipts and execution timelines.

Financial Results Overview

• Consolidated Revenues: $5.6 million for the quarter.
• FUEL CHEM Segment: Flat at $3.1 million.
• APC Segment: $2.5 million.
• Gross Margin: Increased to 46% of revenues, up from 42% in the prior year. FUEL CHEM margin reached 47%, while APC margin rose to 44%.
• SG&A Expenses: $3.3 million, slightly higher than the previous quarter’s $3.2 million.
• R&D Expenses: $490,000, reflecting continued investment in DGI.
• Operating Loss: $1.3 million.
• Net Loss: $689,000 or ($0.02) per share.
• Adjusted EBITDA Loss: $948,000.
• Cash Position: $10.6 million in cash and cash equivalents, with total liquidity at $30.9 million.

Q&A Session: Analyst Questions and Management Responses

Analysts raised several questions during the Q&A session, including:

• FUEL CHEM Revenue Range: Arnone clarified that the $15 million to $16 million range does not include contributions from new accounts, which would be incremental.
• Backlog Recognition: The $7.8 million backlog is project-specific and expected to be recognized over the next 12 months.
• DGI Commercialization: Demonstrations are currently classified as R&D expenses, but commercial revenue is expected in 2025.
• Regulatory Impact: Arnone stated that APC opportunities are driven by business expansion rather than regulatory changes.
• Data Center Pipeline: The pipeline exceeds $100 million, with opportunities extending beyond the U.S.
• International Expansion: Management confirmed readiness to scale operations, particularly in Mexico.

Sentiment Analysis: Confidence and Caution

Analysts maintained a positive but cautious tone, focusing on the scale and timing of pipeline opportunities. While management remained confident, the slight reduction in revenue guidance led to a more measured approach.

Quarter-over-Quarter Comparison

• Revenue Guidance: Reduced from $30 million to $28–$29 million due to APC timing uncertainties.
• FUEL CHEM Expectations: Remained firm at $15–$16 million.
• Data Center Pipeline: Increased to over $100 million, marking the largest opportunity in 10–15 years.
• Analyst Focus: Shifted toward execution risks and timing of large-scale projects.

Risks and Concerns

• APC Timing Uncertainty: Main reason for reduced guidance.
• Backlog Cadence: Questions about recognition timelines.
• DGI Commercialization: Expected to generate revenue in 2025.
• Regulatory Changes: Not seen as a primary driver for APC opportunities.
• Execution Risk: Management affirmed capacity to scale operations if needed.

Final Takeaway

Fuel Tech’s leadership emphasized continued gross margin expansion, strong cash reserves, and a robust pipeline of APC opportunities, especially in data centers. Despite a slight reduction in annual revenue guidance, the company remains confident in surpassing prior FUEL CHEM performance and is prepared to scale rapidly for significant new business. This positions the company for substantial contract backlog growth into 2026 and beyond.