Q3 2020 Fuel Tech Inc Earnings Call
Greetings and welcome to the fuel Tech third quarter 2020 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Devin Sullivan Senior Vice President of the equity group. Thank you you may begin.
Thank you Jesse good morning, everyone and thank you for joining us today for fuel Tech's third quarter 2020 financial results conference call yesterday. After the close we issued a copy of the release, which is available at the company's website www Dot F.T.K. dot com.
Speakers for today's call will be Vince Arnone, Chairman, President and Chief Executive Officer, and Ellen Albrecht The company's principal financial officer after.
After prepared remarks, we will open the call for questions from our analysts and investors before.
Before turning things over to Vince I'd like to remind everyone that matters discussed on this call except for historical information or forward looking statements as defined in section 20, Onee of the Securities Exchange Act of 934 as amended which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and reflect a fuel tech's current expectation.
And 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.
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 fuel Tech's annual report on form 10-K in item one day under the caption risk factors and subsequent filings under the Securities Exchange Act of 1934 as amended.
Could cause fuel tech's actual growth results of operations financial condition cash flows performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements.
Fuel Tech 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 companys filings with the SEC.
With that said I would now like to turn the call over to Vince Arnone, Chairman President and CEO of fuel Tech Vince. Please go ahead.
Thank you Devin.
Good morning.
Want to thank everyone for joining us on the call today.
I hope that you and your families are safe and in good health.
And I'd like to thank all of our veterans for their service.
I want to begin by thanking everyone at fuel tech for their hard work and adaptability and addressing the challenges of the COVID-19 pandemic.
The effects of the pandemic continued to affect our operations most.
Most notably at our air pollution control business with respect to the timing of New business Awards.
I want to emphasize however.
We remain intensely focused on providing support for clients and bid requests for custom engineered solutions that fulfill the unique needs of each of our customers.
And expect the final decision to be made on multiple projects for an aggregate contract value of $10 million to $15 million by the end of the year.
These awards are weighted towards the U.S. and Europe.
And primarily for our SCR ultra and SNC our offerings.
Our fuel Chem segment produced strong results in the third quarter.
Reflecting contributions from the installation of our TV targeted in furnace injection technology on three new domestic coal fired units for repeat customer in the northeast.
Yes, well as a return to more normalized run rates across our fleet follow.
Following a period of slower unit activity in Q2 of 2020 due to the impact of the COVID-19 pandemic.
The commercial programs represented by these three new units will generate revenue one of the units are dispatched to produce power and their geographic area.
If these units are operational and utilizing the technology on a continual basis throughout the year we.
We would expect to see revenues of 500000 to $750000 per unit.
Which would be welcome upside for 2021.
Anticipating the combined effect of these factors do during our second quarter conference call.
We stated that we expected third quarter revenue, what fuel chem to approximate revenue generated.
From the first six months of the year.
In fact, the third quarter revenue and fuel Chem.
Exceeded that benchmark by approximately $350000.
For the remainder of the year.
We would expect to continue to see revenue at more normalized levels.
We are also continuing to work with our partner in Mexico to employ our solutions to help them mitigate harmful emissions derived from the burning of high sulfur fuel oil.
Our partner continues to engage with local officials in Mexico to advance that solution.
The reduction in oil price has provided the impetus for the Mexican government to explore the burning of high sulfur fuel oil produced by Phoenix.
The state owned oil company and this oil is currently being burned however, largely without pollution control measures.
In June our partner solidified contract extensions with CF E. This.
The state owned utility for the two sites, which we currently have our fuel Chem program install.
Last month, we provided cost estimates to our partner for the expansion of our program to a site in Mexico that has five large power generation units all that burn high sulfur fuel oil.
This site is adjacent to a pemex refinery.
Our partner is now in the midst of discussions with CMV regarding this expansion opportunity and we will watch the development of this activity closely as we move throughout the remainder of this year.
We are also continuing to pursue opportunities for additional fuel chem applications at biomass and municipal solid waste units in Europe.
In Southeast Asia via our partner Amazon Piris for the pulp and paper industry, where we are using our recovery Chem program.
And in other southeastern Asian countries, where coal is the primary source of fuel powered.
Power demand in related pricing is high and were Slagging and fouling is an issue.
Notwithstanding the impact of COVID-19 on New project Awards.
SDR and ultra for natural gas applications and industrial markets continue to provide our best business opportunity.
This includes focusing on small to medium sized gas turbine combined cycle plant projects.
Such as the combined heat and power upgrades at universities and large medical complexes.
And new opportunities in the oil and gas segment.
We continue to support and partner with small turbin suppliers and suppliers of internal combustion engines for stationary deployment.
And are looking to exploited excuse me looking to exploit the development a plug and play small engine SCR solutions for the distributed power generation market.
We are also monitoring activities at the state level, where new environmental guidelines, including compliance with EPA boiler Mac and regional haze rules.
May produce opportunities to install best available retrofit control technology on certain sources of emissions.
We continue to attract opportunities in Europe related to our ultra SNC our industry our technologies.
As well as those associated with breadth.
The best available reference technology guidelines that were issued in August of 17, and with compliance timelines throughout 2020 and beyond.
Longer term, we are tracking APC opportunities in the India, Southeast Asia, and South Africa.
We are continuing to advance our GSI business.
Dissolved gas infusion initiative against the headwinds of COVID-19.
Although cobot continues to delay the commencement of a product demonstration at a pulp pulp and paper facility in the Midwest that was planned for early in Q2 of this year.
We have added three additional demonstration opportunities for our DG I technology.
To further municipal wastewater treatment market and one with a new customer in the pulp and paper business.
The municipal wastewater opportunities resulted from our new license agreement with cadence Corporation.
Which purchased the assets from the prior license or if the technology nano to LLC.
Cadence Corporation is a company active and municipal wastewater treatment with a focus on delivering biological solutions to this market and.
And we are grateful for the support and introductions they are fun facilitating on our behalf.
Regarding timing.
Our DG trailer is expected to arrive at a wastewater treatment facility in California next week for the first demonstration, which will last 30 to 45 days.
And then we will likely move the trailer directly to either one of the other demonstration sites.
We anticipate the demonstrations could occur consecutively.
I look forward to keeping everyone apprised of our progress on this initiative prospectively.
Turning to a summary of our financial results.
As announced in September.
We finalized a settlement with our insurance carrier and then in the amount of $2.6 million right.
Related to an outstanding claimed that was previously reported in 2019.
In the quarter, we recorded a receivable for this amount from the insurance company.
With the offset being a reduction in cost of sales for the APC business.
The funds were actually received during the month of October.
We remain diligent with respect to our cost structure and financial position relative to the opportunities offered by our current market environment.
Our SGN aid declined by $600000 in the third quarter of 2020 versus the prior year.
And we remain on track to achieve our full year SD eight SDMA target of $13 million to $13.5 million.
Our cost reduction initiatives.
And the wind down of our China operation should allow us to profitably leverage topline growth with annual breakeven revenue of between $28 million to $32 million per year, depending on the product segment mix.
With respect to China.
We have collected and repatriated in excess of $1 million in cash from our China customers as of September Thirtyth of this year against an estimated available total of two to two and a half million dollars.
We expect to repatriate additional funds later in this year.
And then again next year.
We ended the quarter with $11.8 million in cash and cash equivalents.
As I noted during our first quarter conference call this year.
On April 15th.
The company entered into an agreement with its lender pursuant to the Paycheck protection protection program under the Corona of Iris aid relief and economic Security Act.
Providing for a loan in the principal amount of approximately $1.6 million.
This funding was completed in the second quarter.
As of September Thirtyth of this year. The company has utilized the entire balance of the loan proceeds to fund its qualifying expenses.
As a result, the company believes it has met the eligibility criteria for forgiveness.
We believe that our current cash position combined with the cash flow expected to be generated from operations.
Our adequate to fund planned operations of the company for the next 12 months.
The cost reduction efforts that we executed as a company over these past few years.
Have provided provided us with a platform for material improvement in our financial performance as we move through the remainder of 2020 and beyond.
And endeavor to capitalize on the business opportunities that I described previously.
The fuel tech team remains focused and committed to delivering long term value for our shareholders.
And with that said I will turn the call over to to Ellen for some financial commentary. Please go ahead Alan.
Thank you Vince and good morning, everyone.
As Vince mentioned fuel type received a $2.6 million insurance settlement related to an outstanding claims with previously reported in 2019.
The amount of the settlement reduced cost of sales for the APC segment by a like amount in the third quarter and our consolidated results for the period reflected the positive impact this segment.
Consolidated revenues during the quarter increased 26.4% to $8.2 million from $6.5 million in the last year's third quarter, reflecting higher revenue per boat, the APC and fuel Chem business segment.
International revenue comprised 20.6% of total revenue compared to 11.2% in last year's prior quarter.
APC segment revenue improved 2.9 million from $1.8 million in the prior year quarter, primarily the result of project timing.
APC backlog at the ended the quarter with 6.4 million.
$9 with Swift domestic.
Bob just included in backlog represent a variety of fuel tech APC technology offerings across multiple geographies.
We anticipate approximately $4.1 million of the current backlog to be recognized over the next 12 months.
You Welcome segment revenues Rose 5.3 million from 4.6 million in last year's third quarter, primarily reflecting contributions from the installation of equipment on three new unit during the third quarter 2020, as well as the recovery more normalized run rate across our.
Yeah.
Consolidated gross margin for the 2023rd quarter were 72.4% of revenues compared to 44% 44.8% of revenue in last year's third quarter.
Primarily reflecting the impact of the settlement on either the cost of sales.
Excluding the settlement consolidated gross margin for the third quarter were 40.7%, reflecting a decrease from prior year quarter due to project mix.
APC gross margin with $3.2 million or 110% of revenue, reflecting the if on preference settlement compared to gross margin of $8.6 million for 34.1% in last years third quarter.
Excluding the settlement APC gross margin for Q3 of 2020 with 20.8%.
Yocum gross margin rose to 51.7% and 49% in third quarter 2019, due to product mix largely attributed to the ackerman installation of equipment of three new unit.
As Vince mentioned, our cost control initiatives are ongoing which continues to be reflected in our DNA.
As DNA for the third quarter declined by 16.7% to 3.2 million from $3.8 million in the comparable prior year period.
Factors driving this increase included cost savings realized by employee related expenses, along with reduction in certain administrative and consulting fees.
We have achieved these reductions without sacrificing the level of support for our current customer base.
Nor our business development activity.
Net income from continuing operations was 2.4 million or 10 cents per share compared to a net loss from continuing operation of $1.3 million or five cents per share in the 2019 third quarter due in large part to the impact of the settlement in Q3 2020.
Excluding the insurance settlement, we would have been slightly below break even on the quarter.
R&D expenses declined slightly to 285000 from 352000 in last years third quarter.
Components of our R&D spending included dedicated employee resources, and depreciation and amortization of other intangible assets.
Adjusted EBITDA was 2.7 million in the 2023rd quarter compared to adjusted EBITDA loss of $2.8 million in the third quarter of 2009.
Our balance sheet at September Thirtyth 2020 reflected the proceeds in obligation of $1.6 million from our SD eight key loan and we had cash and cash cash equivalents of $11.8 million, including restricted cash of 2.4 million.
Our working capital balance at quarter end with 15.7 million, which will continue to support the ongoing operations operating needs of the business.
With respect to valuation our book value per share with 96% our tangible book value per share with 85 cents and our working capital per share with 64 cents at September Thirtyth 2000.
Given our cumulative net operating loss of $2.7 million at September Thirtyth, which covered several geography, we expect that our income tax expense for 2020 will be near zero.
Now I'd like to turn the call back over to that.
Thank you Ellen.
Operator.
I think it is time to open up the line for questions from.
Some of the folks that have dialed in.
Great. Thank you, ladies and gentlemen, if you would like to ask a question at this time. Please press star one on your telephone keypad, a confirmation kindly indicate that your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of admit dial with HC Wainwright. Please proceed with your question.
Good morning, Thank you for taking my questions.
Hello, and good morning.
And so you.
Good how are you.
Thank you so so with respect to your on your opportunities in Mexico, and potentially two moves into the distributed generation space et cetera.
Do you expect views to become part of that dividend 21 or.
How should we view so we do look towards these materializing in two.
Revenues for you guys.
Okay.
Ken can you. Please repeat the first part of your question. If you don't mind, you were a little bit millet mold. So.
Can you please try that one more time.
Well with respect to your opportunities in Mexico.
Other opportunities you highlighted including the diluted generation.
Good.
Do you expect these to become part of backlog and 21.
Okay.
So first of all regarding Mexico. Thank you for your question.
Mexico is it's obviously, it's a fuel chem application. So we typically don't consider our fuel chem applications as building up as part of backlog because that's a recurring revenue business application.
So what we're what we're tracking on Mexico is we're we're looking for our partner to work with CMV the state owned utility to.
For them to take the decision to actually move forward with the implementation of the fuel Chem program. That's the one large site that I noted as part of my commentary that has five units. Okay. If that does go forward whether it be later in the year this year or early next year.
It would probably be another six to seven months before we would actually.
Order equipment habit located on site and installed at that site and then look to start up so at the soonest that application would start running in early in the second half of 2021, if everything goes smoothly. Okay. So thats thats, how I see the the Mexico.
And moving forward, but obviously, we'll keep everyone apprised as to.
How that does go forward.
Now related to.
Some of the other opportunities that are more on the APC side, we are expecting as I noted two to have a contract award decisions made by four to five of our of our customers that we are currently working with on or about the end of this year sometime between now and the end of this year or early next year at the latest.
So we would expect to have those decisions made hand.
We're hoping that a good portion of those contract awards come to fuel tech so to the extent they are finalized this year they'll be in backlog on before the end of the year and rolling into 2021.
Understood. Thank you for that.
You're welcome.
How much cash now remains in China, you covered most of it with this 1 million received this will occur.
How much is remaining June yes.
Yes, we still have right now the the balances between a million and a million and a half dollars.
In China.
Basically as of the end of the third quarter, we are still collecting some additional cash there as well. So we would expect that in addition to the million to a million and a half that exists. There right. Now there is another half million $2 million that we're going to collect okay. So we would then look to repatriate.
Great and again ballpark another million they have.
Plus to us.
Later, this year or into next year.
So thats what were looking at in terms of bringing additional cash.
Back to the U.S.
Understood.
Given that you had a pretty strong bounce in the third quarter do you expect some momentum to continue in the fourth quarter.
Relative to when you say strong bounce relative to what specifically just from a financial performance perspective gives us relative to the second quarter Eagle's third quarter, Jim and much stronger.
Understood.
[music].
So the the third quarter obviously.
Obviously, an improved quarter for us.
If you extract the that I'd call. It a one time item extract fee. The income that we reported from the insurance settlements in Q3.
We end up being just just a little bit below breakeven and so so what does that mean.
On the quarter, we generated revenues of around a little bit over $8 million I had said that with what we've done with cost structure bad our breakeven in annualized revenue number is somewhere in that $28 million to $32 million range in our performance here in Q3 actually prove that out okay. So.
So from a performance spectra perspective, Q3 was an uptick in performance Q4.
As as you know our backlog on APC is it it is declining that needs to be replenished and Q4 itself is typically a slower quarter from a fuel chem revenue generation perspective, because it's we call at one of the shoulder periods of the year whereby as we go.
So from from summer into fall, we have a lot of units of power generation units that will take their outages for maintenance.
Because of the more moderate temperatures. So we typically see a little bit of a downturn and fuel Chem revenue in Q4, so as I sit here right now on that I don't expect a recurrence in Q4 of the same performance level that we had in Q3, it will be a a lesser performance level.
Again without being completely specific.
On the subs and I appreciate that color on minutes you are welcome.
Some of them.
No I think those are my questions. Thank you ill get back in queue.
Thank you very much on it.
Thank you as a reminder, we would like to ask a question. Please press star one on your telephone keypad. Our next question comes from Pete Enderlin with MDC Partners. Please proceed with your question.
Good morning, Vincent element.
Good morning, good morning, Pete.
Following up on the the.
A question about the.
Performance in the third quarter versus the second quarter significant uptick what other parts of the relatively minor was that the foreign revenues in the third quarter Mike.
More than doubles after being down in the first half could you give us a little more.
Color on what happened there.
Right I mean, we largely had.
Some call it timing of project execution, if you will on on one specific European project.
And then a couple of other smaller ones that was working through quote call. It a.
A more intensive at key execution timeframe for that project work and that happened in Q3, our projects typically have phases. Pete as you know, we typically start out with engineering and design work and then we move into a procurement phase prior to delivering equipment to a customer site.
It's typically when we are working through the the procurement phase of equipment, where we start to incur the majority of the costs relative to our air pollution control projects and it's at that point in time, where we start to recognize the majority of the revenues as well.
As we use our percentage of completion method for accounting. So so thats what happened that Thats why we had an uptick in in foreign revenues in it specifically due to project execution timing on on one project in particular in Europe.
Okay and then.
The fuel Chem.
So I Wouldnt, you get a new utility to to start using.
The technology when you mentioned that you order some equipment to put in there what's the magnitude of.
The cost of that equipment and how do you account for that.
Right we.
The situation that I, just described relative to the installation on three new coal fired units with a with a with a repeat customer is a little bit of a unique situation as it relates to the fuel Chem business is what we did with this customer is we actually sold the the customer.
Both equipment and installation services for those three sites and were recognizing revenue for that equipment and installation services on a percentage of completion basis. Okay. We have not sold them chemical yet those units have not started up yet and they won't start up until late.
This year.
And so so it's a little bit of a unique scenario for for us in terms of how we're handling the equipment and installation work for this customer, but it is a repeat customer of ours and it will be handled their other units in a similar way last year. So we did recognize yup.
Glad to see that mean that the.
Fuel Chem revenues actually include some equipment sales as those things happen.
They do that is correct as we had expected some of that activity for <unk> for the third quarter of this year just due to the planned timing of installation on those sites and so the the timing worked out to our expectation.
And can you tell us what the.
Magnitude of the equipment sales for one of those let's say referrals through.
Would be well one of the units for equipment and installation was between three and three and $400000.
Okay.
Okay and then.
Excuse me I have a sort of a high 50000 foot level philosophical question, if you'll indulge me a little bit.
And that does skew.
Excuse me my voice is giving out.
Coal is going to be with us long term I mean, even some of the most aggressive forecast.
People.
Pounds going to completely.
Non carbon based sources of energy.
Well, just we're going to have to have coal, especially in some of the foreign markets for the long term foreseeable future and the same applies.
Stronger sales to both natural gas and biomass.
So.
Your APC technology.
Welcome both talk about reducing non.
Nox emissions Sox emissions particulate emissions and Seo to him.
Nobody would argue that those improvements are would be great not controversial.
And anything that can be done to improve the efficiency.
The emissions of all these bad things.
Overall for Todd would certainly be worth doing.
All other things being equal now so the question is why.
Art those technologies being universally applied in these large large bases of installed.
In electrical utilities, and many other facilities as well and that and I guess, we're finally boiling down to is the questions of mainly cost or is there more of a mindset that these utilities and other entities just don't want to invest in what is basically a declining asset base and maybe.
Thats politically on.
Popular or incorrect.
Sorry to make such a long winded question, but the basic ideas why doesn't your stuff get much more universal acceptance and applicability.
To answer that there you. There's a couple of questions that are in your commentary there Pete and I think.
Realistically coal has been under pressure for and Colin fossil fuel has been under pressure for for quite some time and that will continue okay.
Relative to.
Utilization of pollution control technologies, I think if we polled the.
The base loaded units the base loaded fossil fuel units in this country for what they have installed already for what I would call critical pollution controls.
The surrounding.
Sox and Nox and particulate I'll think I think we'd find that those units have all invested in those controls already.
As we sit here today, those larger base loaded units.
So as it relates to a coal universe, there really aren't that many incremental units that would require.
Pollution control of solutions on a prospective basis most of what we're looking at today for incremental businesses in the industrial market space.
Where where they're actually upgrading operations to to either increase their output. So its a new source of generation or they're looking to retrofit.
Existing.
Production capacity.
For for improvement sales as well show so it's a little bit of a combination are there some units coal fired units out there that could still require some pollution control. Yes. There are I'm sure. There are but then your comment about whether or not the investment is just a viable then comes into play because then the owner of those assets has to actually do it.
Valuation of the estimated useful life of that unit.
Vis-a-vis the investments and is that going to be offset by.
A profit generation opportunity. If those units are are going to be dispatched if at all so it's it's a complex situation for our utility owners generally speaking and but we are seeing more and more of those owners diversifying their portfolios to have the broad base of.
Power generation capability, whether it be renewables coal.
Fossil fuel or others. So for your questions applicable Pete, but it's a multi pronged analysis that that needs to be evaluated.
Just to follow up a little bit on that some.
Efficiencies is not the same as reducing Seo to lets say directly but.
How many of the existing coal fired utilities in the United States just to pick one area.
Fuel Chem technology installed at this point.
Today, we're probably actively running on its probably less than 15 in total approximately 15 to 20 coal fired units.
Somewhere in that range in terms of what were installed and running.
Okay is it is there a large base of opportunity of course, there are of course, there is and.
The fuel Chem application is only applicable.
If indeed, the unit is utilizing a source of fuel that it cannot burn efficient efficiently within their units and if they are they're creating slagging and fouling issues within that boiler. Okay. In most cases.
That that unit needs to be to be running on a rather.
Heavy capacity factor it needs to be running on on a fairly consistent basis and and using a fuel that the unit itself was not designed for so it did a special conditions need to be in place for a a boiler owner could be able to utilize our fuel Chem program and.
Believe me, we canvass all the time some of the opportunities that we've had over this past couple of years in fact, the one that.
That we were just discussing it becomes applicable because the unit is going to be looking to burn they're changing their fuel source to burn a coal that they are going to have difficulty bringing on those units.
It's a special situation at this point in time no. Okay will that helps clarify that thank you very much youre welcome Pete.
Thank you. Our next question comes from the line of George Gasper, a private Investor. Please proceed with your question yes.
Good morning, and good morning, Vince sell jewelry line.
Hello, Thanks, very nice report.
That's.
Right.
Get into this water treatment.
Activity.
This test that.
I've tried that is going to be a care.
Carried out in California next week.
Well the correct. It will start at the at the end of next week timeframe, what's the App what kind of application is it that you are going to be attempting to treat.
It is a wastewater treatment application it's municipal wastewater.
And if we are correct in what is actually happening year, George is that we in working with our partner cadence.
Our actually assisting them.
Technically with with their demonstration at this site because our demonstration trailer has five times the capacity to deliver oxygen than there is does so we're working a little more closely with them. These days to be able to to assist them with.
Development situations that they have in progress, which at the same time is going to enable us to become intimately more familiar with the capabilities of our equipment and all and also more familiar with the process application specifically, so we're working closely with cadence on this and but we are using our our day.
Ministration trailer as as the source of.
Of oxygen for the application, but it is a municipal wastewater treatment application.
Okay and.
And then you indicated that you would be moving on to do another one after that.
As.
If the timing works out properly what we are working with.
With a pulp and paper customer and this would be a fuel tech customer.
Who has needs as well they are located in the state of Washington, and if the timing works well, we will likely keep the trailer on the west coast and actually bring it up to this customer location and again, if the timing works out well.
And then.
Cadence has another municipal application in California that Ed has a timeframe in the the first quarter of next year as well that we may be able to assist them with.
Additionally, so.
So we're watching all three of these these these all materialized George within this this past.
A month to two month timeframe, we're excited to see the activity.
As you know we've been waiting to have the opportunity to bring our trailer out Q demonstration sites to go ahead, and whether it be assist cadence or work with a customer directly on our own.
We have been wanting to better understand understand document demonstrate everything that we can relative to the GPI. The trailers performance its capability to deliver oxygen to support a solution and these are great opportunities for us yes.
The.
Application that first application here is this oh arch municipality in California or is this.
Say sort of regionalized outside of the large.
The area of.
Of activity.
Hi, I'd call it more regionalized George without having.
Call. It specific figures in mind relative to highlight how I would compare call. It application sizing I would call it more regionalized so great.
Great. Okay, all right and then.
One question.
Question follow up on on the.
Gas turbine side.
The opportunity area as you're looking at it going forward I know you've been trying to.
Expanding that horizon.
Powerpack how optimistic are you that you can roll it forward.
And I'm much.
Broader.
Scale and the next year.
One of the opportunities that we're working with right now on George's the deployment of.
Actually.
Engines for distributed power at this point in time, and that's an opportunity that we're we're we're we're we're hoping outcomes due to which are here before the end of the year, but we're we're we're we're evaluating our.
Our landscape of opportunity on whether they be a gas turbine gas engines in anything along those those sorts that we can be assisting that customer base with is something that we're going to follow very very closely.
I see our primary objective is rebuilding the backlog today, George that's great for our priority number one and once once we have that in hand, we'll we'll be in a better business situation overall.
Good it sounds like you really have some significant opportunities in the near term here and it looks like you could be setting yourself up.
By the end of the year to be looking at a pretty positive outlook for Twoq 2021.
We hope so George where were doing everything on our part to be able to get there. Yes. Thank you for your comments. Thank you.
Thank you we have reached the end of our question and answer session. So I would like to pass the floor back over to Mr. arnone for any additional closing comments.
Thank you operator, B B before we close we did have one.
In Investor actually right in with a question and I'd like to answer that briefly the.
The question was related to our R&D G.I. demonstration.
Opportunities and the question is is it.
It sounds like there are four possible DG demonstration opportunities.
Fuel tech have any additional demonstration units under construction as of today, Okay, and so to answer that question.
As we sit here today, we do not have another dgs trailer in hand that we are working on constructing but given the the wave of opportunity that has come our way within this past few months we.
We are going to look at what it takes to go ahead to have a an additional demonstration trailer builds for fuel techs utilization or to assist our partner a cadence as well the lead time for getting that done is somewhere in the 12 to 14 week timeframe and from a cost structure basis.
Probably in the range of $100000 or thereabouts.
So that answers that question.
Lastly for everyone on the call I want to thank everyone for joining the call today.
Again, thanks for your interest in fuel Tech and again, thanks to all of our veterans for their support of our country, everyone have a great day and we'll talk again soon thank you.
Ladies and gentlemen, this does conclude today's teleconference and webcast. We thank you for your participation and you may disconnect. Your lines at this time.