Management’s Discussion and Analysis of Financial Condition and Results of Operations
−Removed: In the third quarter of 2024, the Company continued to successfully execute on APC segment projects despite customer driven delays in project execution.
−Removed: The Company continued to see improved performance in the FUEL CHEM segment.
+Added: In the first quarter of 2025, the Company was awarded several new APC segment projects and had improved performance in the FUEL CHEM Segment across our customer fleet.
We continue to invest in development of new technologies to expand our product offerings into the water and waste-water treatment market.
Our capital resources are sufficient for our immediate and longer-term needs, and we continue to enjoy the services and support of a dedicated workforce.
−Removed: We expect that our cost control efforts will maintain our existing levels of operating expenditures and that new business opportunities will lead to an improved market outlook.
+Added: We expect that our cost control efforts will maintain our existing levels of operating expenditures and that new business opportunities will lead to an improved financial and market outlook.
Key Operating Factors
−Removed: Our FUEL CHEM segment experienced an increase in revenue and segment operating profits in the current quarter as compared to 2023.
−Removed: The FUEL CHEM segment was positively impac ted by dispatch related increases in operational demand from our client base and to the addition of new business in the current quarter as compared to 2023.
−Removed: Our Air Pollution Control (APC) business experienced a decrease in revenue in the current quarter as compared to 2023, primarily due to customer driven delays in project execution.
+Added: Our FUEL CHEM segment experienced a significant increase in revenue and segment operating profits in the current quarter as compared to 2024.
+Added: The FUEL CHEM segment was positively impac ted by dispatch related increases in operational demand from our client base and the contribution of a new account added in the second half of 2024.
+Added: Our Air Pollution Control (APC) business experienced a decrease in revenue in the current quarter as compared to 2024, primarily due to timing of project execution and customer driven delays.
We are encouraged by the depth of our business development activities, which reflects an increased focus on global emissions protocols across a variety of fuel sources.
−Removed: We continue to experience a challenging operational environment resulting from customers delaying the timing of purchasing decisions.
−Removed: Our Consolidated APC backlog at September 30, 2024 was $ 6,444 and our global sales pipeline is in the $50 -75 million range.
+Added: We announced $5,600 of new contract awards in the current quarter and have experienced increased segment activity as a result.
+Added: Our Consolidated APC backlog at March 31, 2025 was $ 10,328 and our global sales pipeline is in the $50 -75 million range.
Results of Operations
−Removed: Revenues for the three-month periods ending September 30, 2024 and 2023 were $7,851 and $7,988 , respectively, representing a decrease of $137 , or 2% , versus the same period last year.
−Removed: Revenues for the nine-month periods ending September 30, 2024 and 2023 were $19,850 and $20,736 , respectively, representing a decrease of $886 , or 4% , versus the same period last year.
−Removed: The APC technology segment generated revenues of $ 3,224 for the three-month period ended September 30, 2024 , representing a decrease of $487 , or 13% , from the prior year amount of $ 3,711 .
−Removed: The APC technology segment generated revenues of $9,491 for the nine-month period ended September 30, 2024 , representing a decrease of $1,201 , or 11% , from the prior year amount of $10,692 .
+Added: Revenues for the three-month periods ending March 31, 2025 and 2024 were $6,382 and $4,957 , respectively, representing an increase of $1,425 , or 29% , versus the same period last year.
+Added: The APC technology segment generated revenues of $ 1,303 for the three-month period ended March 31, 2025 , representing a decrease of $1,015 , or 44% , from the prior year amount of $ 2,318 .
This decrease in APC revenue was primarily related to timing of project execution on existing contracts.
−Removed: Consolidated APC backlog at September 30, 2024 was $ 6,444 versus backlog at December 31, 2023 of $7,458 .
+Added: Consolidated APC backlog at March 31, 2025 was $ 10,328 versus backlog at December 31, 2024 of $6,175 .
Our current backlog consists of U.S.
domestic delivered projects totaling $ 3,564 and international delivered projects totaling $ 6,764 .
−Removed: The FUEL CHEM technology segment generated revenues of $ 4,627 and $ 4,277 for the three-month periods ended September 30, 2024 and 2023 , respectively, representing an increase of $350 , or 8% .
−Removed: The FUEL CHEM technology segment generated revenues of $10,359 and $10,044 for the nine-month periods ended September 30, 2024 and 2023 , respectively, representing an increase of $315 , or 3% .
−Removed: This increase in FUEL CHEM revenue for the three and nine months ended September 30, 2024 as compared to the same period in the prior year was primarily due to outage completions and increased dispatch.
+Added: The FUEL CHEM technology segment generated revenues of $ 5,079 and $ 2,639 for the three-month periods ended March 31, 2025 and 2024 , respectively, representing an increase of $2,440 , or 92% .
+Added: This increase in FUEL CHEM revenue for the three months ended March 31, 2025 as compared to the same period in the prior year was primarily due to outage completions and increased dispatch, as well as sustained business from a new customer account added midyear in 2024.
Cost of sales and gross margin
−Removed: Consolidated gross margin percentage for the three-month periods ended September 30, 2024 and 2023 was 43% and 45% , respectively .
−Removed: For the three-month periods ended September 30, 2024 and 2023 the FUEL CHEM operating segment gross margins remained steady at 49% .
+Added: Consolidated gross margin percentage for the three-month periods ended March 31, 2025 and 2024 was 46% and 41% , respectively .
+Added: For the three-month periods ended March 31, 2025 and 2024 the FUEL CHEM operating segment gross margin was 50% and 43%, respectively.
+Added: FUEL CHEM gross margin increased from the prior year primarily due to an increased volume of sales activity combined with relatively flat segment administrative expenses.
APC segment gross margin decreased to 33% from 38% primarily due to product and project mix.
−Removed: Consolidated gross margin percentage for the nine-month periods ended September 30, 2024 and 2023 was 42% and 41% , respectively.
−Removed: Gross margin increased versus the comparable period in 2023 due to an increase in the APC operating segment gross margin partially offset by a decrease in FUEL CHEM operating segment gross margin.
−Removed: For the nine-month periods ended September 30, 2024 and 2023 the FUEL CHEM operating segment gross margins decreased to 47% from 49% primarily as a result of prior period reduced revenue performance and start-up costs attributed to a new account.
−Removed: APC segment gross margin increased to 38% from 33% primarily due to product and project mix.
Selling, general and administrative
−Removed: Selling, general and administrative expenses (SG&A) were $3,225 and $2,966 for the three-month periods ended September 30, 2024 and 2023 , respectively.
−Removed: For the three-month period ended September 30, 2024 the increase of $259 is primarily the result of increases in employee compensation and benefit related costs of $163, professional and service fees of $120, and travel costs of $26, partially offset by decreases in international administrative expenses of $19, depreciation expense of $17, and insurance costs of $14.
−Removed: For the three-month periods ending September 30, 2024 and 2023 , SG&A as a percentage of revenues increased to 41% from 37% .
−Removed: The increase versus the comparable period is primarily due to the increase in expenses compared to prior quarter.
−Removed: Selling, general and administrative expenses (SG&A) were $9,815 and $9,126 for the nine-month periods ended September 30, 2024 and 2023 , respectively.
−Removed: For the nine-month period ended September 30, 2024 the increase of $689 is primarily the result of increases in employee compensation and benefit related costs of $488, professional and service fees of $147, travel costs of $42, and space rental costs of $38, partially offset by a decrease in insurance costs of $27.
−Removed: For the nine-month periods ending September 30, 2024 and 2023 , SG&A as a percentage of revenues increased to 49% from 44% .
−Removed: The increase versus the comparable period is primarily due to the increase in expenses compared to the prior year.
+Added: Selling, general and administrative expenses (SG&A) remained relatively flat at $3,341 and $3,345 for the three-month periods ended March 31, 2025 and 2024 , respectively.
+Added: For the three-month periods ending March 31, 2025 and 2024 , SG&A as a percentage of revenues decreased to 52% from 67% .
+Added: The decrease versus the comparable period is primarily due to the increase in revenues compared to prior quarter.
Research and development
−Removed: Research and development expenses were $361 and $1,159 respectively for the three and nine -month periods ended September 30, 2024 , and for the same periods in 2023 were $513 and $1,144, respectively.
+Added: Research and development expenses were $570 and $376 for the three-month periods ended March 31, 2025 and 2024 , respectively.
The expenditures in our research and development expenses are focused on new product development efforts in the pursuit of commercial applications for technologies outside of our traditional markets, and in the development and analysis of new technologies that could represent incremental market opportunities.
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Interest income
−Removed: Interest income was $323 for the three-month period ended September 30, 2024 compared to $322 for the same period in 2023 .
−Removed: Interest income was $968 for both the nine-month periods ended September 30, 2024 and September 30, 2023 .
+Added: Interest income was $279 for the three-month period ended March 31, 2025 compared to $311 for the same period in 2024 .
Interest income primarily relates to interest received on the held-to-maturity debt securities and money market funds.
Other income (expense), net
−Removed: Other expense, net was $63 for the three-month period ended September 30, 2024 compared to Other income, net of $9 for the same period in 2023 .
−Removed: Other income, net was $1,576 for the nine-month period ended September 30, 2024 compared to Other expense, net of $95 for the same period in 2023 .
−Removed: Other income in 2024 primarily relates to the employee retention credit of $1,677 recorded in the first quarter of 2024.
+Added: Other expense, net was $66 for the three-month period ended March 31, 2025 compared to Other income, net of $1,673 for the same period in 2024 .
Other expense in 2025 was mainly due to transactional foreign exchange losses.
+Added: Other income in 2024 primarily relates to the employee retention credit of $1,677 recorded in the first quarter of 2024.
Liquidity and Sources of Capital
−Removed: We have losses from operations during the nine -month period ended September 30, 2024 totaling $2,586 .
−Removed: Our cash used in operations for this same period totaled $1,785 .
−Removed: Our cash and cash equivalent balance as of September 30, 2024 totaled $ 12,274 , which includes $2,452 of cash equivalents, and our working capital totaled $ 25,602 .
+Added: We have losses from operations during the three -month period ended March 31, 2025 totaling $952 .
+Added: Our cash provided by operations for this same period totaled $1,508 .
+Added: Our cash and cash equivalent balance as of March 31, 2025 totaled $ 11,821 , which includes $2,574 of cash equivalents, and our working capital totaled $ 24,859 .
We have no outstanding debt other than our outstanding letters of credit, under our Investment Collateral Security agreement with BMO Harris Bank, N.A.
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We expect to continue operating under this arrangement for the foreseeable future.
−Removed: Operating activities used cash of $1,785 for the nine -month period ended September 30, 2024 , primarily due to an increase in accounts receivable of $2,522 (including the impact of $1,677 for the employee retention credit receivable) and a decrease in accrued expenses and other current liabilities of $1,215, offset by an increase in accounts payable of $842, a decrease in prepaid expenses, other current assets, and other non-current assets of $655, and removals of non-cash items from our net income from continuing operations of stock-based compensation of $337, depreciation and amortization of $290, and interest income on held-to-maturity securities of $108.
−Removed: Operating activities provided cash of $391 for the nine -month period ended September 30, 2023 , primarily due to an increase in other liabilities of $520 due to timing of project related activity, a decrease in other current assets of $363, an increase in accounts payable of $172 due to timing of project related activity, and removals of non-cash items from our net loss from continuing operations for depreciation and amortization of $293 and stock-based compensation of $288.
−Removed: Investing activities used cash of $3,388 and $10,227 for the nine -month periods ended September 30, 2024 and 2023 , respectively.
−Removed: Investing activities for the nine -month periods ended September 30, 2024 and 2023 primarily consisted of purchases of debt securities as investments of $14,072 and $14,026, respectively.
−Removed: Investing activities for the nine -month periods ended September 30, 2024 and 2023 were funded by the maturities of debt securities of $11,000 and $4,000, respectively.
−Removed: Financing activities used cash of $95 for the nine months ended September 30, 2024 due to taxes paid on behalf of the equity award participants on the vesting of restricted stock units.
−Removed: Financing activities provided cash of $42 for the nine months ended September 30, 2023 due to proceeds from the exercise of stock options.
+Added: Operating activities provided cash of $1,508 for the three -month period ended March 31, 2025 , primarily due to a decrease in accounts receivable of $3,768 and removals of non-cash items from our net loss from continuing operations of depreciation and amortization of $173 and stock-based compensation, net of forfeitures of $110, offset by a decrease in accounts payable of $1,340, a decrease in accrued liabilities and other non-current liabilities of $249, an increase in inventory of $137, an increase in prepaid expenses, other current assets and other non-current assets of $28, and removals of non-cash items from our net income from continuing operations of interest income on held-to-maturity securities of $50.
+Added: Operating activities used cash of $1,075 for the three -month period ended March 31, 2024 , primarily due to an increase in accounts receivable of $427 (including the impact of the employee retention credit receivable), a decrease in accrued expenses and other current liabilities of $609, and a decrease in accounts payable of $563, offset by removals of non-cash items from our net income from continuing operations for depreciation and amortization of $96 and stock-based compensation of $104.
+Added: Investing activities provided cash $1,692 and used cash of $5,005 for the three -month periods ended March 31, 2025 and 2024 , respectively.
+Added: Investing activities for the three -month periods ended March 31, 2025 and 2024 primarily consisted of purchases of debt securities as investments of $993 and $7,641, respectively.
+Added: Investing activities for the three -month periods ended March 31, 2025 and 2024 were funded by the maturities of debt securities of $2,750.
+Added: Financing activities used cash of $24 for the three months ended March 31, 2025 due to taxes paid on behalf of the equity award participants on the vesting of restricted stock units.
We continue to monitor our liquidity needs and in response to our recent periods of declines in revenue and net losses have taken measures to reduce expenses and restructure operations which we feel are necessary to ensure we maintain sufficient working capital and liquidity to operate the business and invest in our future.
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We expect to fund our capital expenditures with cash from operations or cash on hand.
−Removed: In 2022, the Board of Directors approved an investment plan that would hold $20,000 in funds at BMO Harris Bank (BMO Harris) to be invested in held-to-maturity debt securities of United States (US) Treasuries, including Notes, Bonds, and Bills, or US Government Agency securities.
+Added: The Company's investment policy provides for $20,000 in funds at BMO Harris Bank, N.A.
+Added: (BMO Harris) to be invested in held-to-maturity debt securities of United States (US) Treasuries, including Notes, Bonds, and Bills, or US Government Agency securities.
The funds are held in money market funds until they are invested in those securities.
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This strategy allows the Company to provide returns on excess cash, while managing liquidity and minimizing exposure to interest rate fluctuations.
−Removed: On June 30, 2022, the Company entered into the Investment Collateral Security agreement to use for the sole purpose of issuing standby letters of credit, which replaces the Cash Collateral Security agreement with BMO Harris Bank, N.A.
−Removed: (the Former Collateral agreement).
−Removed: The Investment Collateral Security agreement requires us to pledge our investments as collateral for 150% of the aggregate face amount of outstanding standby letters of credit.
+Added: The Company's Investment Collateral Security agreement is used for the sole purpose of issuing standby letters of credit and requires us to pledge our investments as collateral for 150% of the aggregate face amount of outstanding standby letters of credit.
The Company pays 250 basis points on the face values of outstanding letters of credit.
There are no financial covenants set forth in the Investment Collateral Security agreement.
−Removed: At September 30, 2024 , the Company had outstanding standby letters of credit totaling approximately $ 1,722 under the Investment Collateral Security agreement.
−Removed: At September 30, 2024 , the investments held as collateral totaled $ 2,584 .
+Added: At March 31, 2025 , the Company had outstanding standby letters of credit totaling approximately $ 2,124 under the Investment Collateral Security agreement.
+Added: At March 31, 2025 , the investments held as collateral totaled $ 3,186 .
Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.
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Fuel Tech issues a standard product warranty with the sale of its products to customers as discussed in Note 13.
−Removed: There was no change in the warranty liability balance during the nine months ended September 30, 2024.
+Added: There was no change in the warranty liability balance during the three months ended March 31, 2025.
Forward-Looking Statements
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.