Q1 2021 Fuel Tech Inc Earnings Call
Greetings and welcome to the fuel Tech first quarter, 2020, one financial results conference call.
At this time all participants are in a listen only mode.
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. Please note. This conference is being recorded.
At this time I'll turn the conference over to Devin Sullivan Senior Vice President of the equity group Deaf and you may now begin.
Thank you, Rob and good morning, everyone and thank you for joining us today for fuel Tech first quarter 2021 and financial results conference call yesterday. After the close we use of the car we issued our press release, a copy of which is available at the company's website Www Dot F. T E K dot com.
Our speakers for today's call will be Vince Arnone, President and Chief Executive Officer, and Ellen Albrecht The company's principal financial officer.
After prepared remarks, we will open the call for questions from our analysts and investors.
Before turning things over to Vince I'd like to remind everyone that matters discussed on this call except for historical information of forward looking statements as defined in section 21 E of the Securities Exchange Act of 1934 as amended which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and reflect the fuel.
The current expectations regarding future growth.
The results of operations cash flows performance and business prospects and opportunities as well as the 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.
And 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 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 and out of one eight under the caption risk factors and subsequent filings under the Securities Exchange Act of Bleach, and 34 as amended which could cause fuel types of <unk>.
The growth results of operations financial condition cash flow performance and business prospects and opportunities to differ materially from those expressed in or implied by the state.
Fuel Tech undertakes no obligation to update such factors or publicly announce the results of any forward looking statements contained herein to reflect future events developments or changed circumstances or for any other reason and invest.
Investors are cautioned that all forward looking statements involve risks and uncertainties.
And those detailed and the company's filings with the SEC.
With that said I'd now like to turn the call over to Vince Arnone, President and CEO of fuel Tech Vincent. Please go ahead.
Thank you Devin.
Good morning, and I want to thank everyone for joining us on the call today.
I remain very proud of what our team has accomplished during this past year of uncertainty and I am optimistic regarding our outlook for the remainder of 2021 and beyond as we continue on our path towards establishing a foundation for long term and sustainable growth.
With the financing that we completed and the first quarter of this year.
We are and the best position and our recent history to find strategic solutions to return our base businesses the profitability.
Expedite the demonstration and further market discovery of our <unk> technology.
And to investigate other product and market opportunities.
While we intend to capitalize on the flexibility that our strong cash position affords us.
Our immediate focus will be on expediently, furthering the commercial and development of our <unk> technology via.
We are necessary investments and human resources equipment, and the third party assistance where necessary.
Concurrently we will be assessing the business landscape in detail for our APC and fuel Chem business segments.
To better enable us to focus on the markets and products that can lead to overall company profitability.
Alan will discuss our financial results and details shortly.
But I'll provide a high level summary.
Our first quarter of 2021 revenues rose, 33% from the prior year.
Driven by a nearly 60% increase and net sales for our fuel Chem business segment.
Fuel Chem and benefited from new program installations that occurred in the fourth quarter of last year and and overall rise in demand for energy on a period over period basis and.
And those regions of the country for our technology is utilized.
We are confident that our performance net of fuel Chem and 2021 will exceed its 2020 performance.
Yeah.
Offsetting the improvement of the fuel Chem.
The continued sluggish performance at our APC business, where we are experiencing pandemic driven project delays and cancellations that have resulted in a lack of new orders.
We are hopeful the APC will recover in conjunction with the resumption of global economic activity in 2021.
Which in turn would allow us to capture opportunities associated with our current the global sales pipeline of 40% to $50 million.
Okay.
We narrowed our operating loss and the first quarter of 2021 to $1 2 million from $2 7 million and the first quarter of 2020.
As a result of the full forgiveness of our PPP loan and the first quarter. We reported net income of <unk> of approximately $400000 or <unk> <unk> per share compared to a net loss of $2 $6 million for 10 cents per share and the first quarter of 2020.
We ended the first quarter were $36 1 million and total cash.
Following the closing of our of our financing in February of this year, we have no debt.
And our financial condition is the strongest it has been and several years.
Although we still face of variety of challenges related to the pandemic and.
And certain areas of our end markets remain unchanged, we are still optimistic for our company's future.
Our three distinct environmental remediation platforms are well positioned to capture significant opportunities and the respective end markets as we emerge further from the the effects of the pandemic uncertainty list and when global economic and economic activity fully resumes to normalized levels.
We are very well capitalized with of lean operating structure that can be leveraged to allow us to produce breakeven operating results.
Yeah, and the annual revenue range of $25 million to $30 million, depending on project mix.
Okay.
As we rapidly approached the midyear point of 2021, I want to provide an overview of our operations and.
And discuss the opportunity of these inherent in each.
Okay.
And our APC business.
COVID-19 has continued to affect the timing of new business awards due in large part two of its impact on industrial purchasing activity.
Our greatest opportunities lie and and in the industrial applications led by our SCR and ultra technologies.
We continue to be actively engaged with turbine suppliers from.
Heat recovery steam generator manufacturers.
Right and Jim suppliers carbon black manufacturers and municipal solid waste biomethane and pulp and paper facilities.
We are also monitoring activities at the state level, where new environmental guidelines, including compliance with the EPA Cross state air pollution and regional haze rules.
And they produce opportunities with the install best available retrofit control technology and certain sources of emissions.
As the company, we are watching the actions of the bite and administration very closely.
Especially with respect to nitrogen oxide emissions.
The focus on climate change and greenhouse gas reduction may include options beyond the traditional renewable energy from wind and solar.
The interested and hydrogen as a fuel source option for utility industrial unit is growing since.
There are no greenhouse gas emissions, but this option would increased nox emissions and acquire additional controls over time.
The administration is addressing environmental justice by seeking to reduce the potential help the impact of air pollutants, including Nox and people living closest to emission sources.
This could result in changes the air permits and tighter regulations.
Okay.
Despite challenges, we do expect APC project award activity to improve during the remainder of 2021 from our recent experience.
And we would expect revenue to be moderately improved versus 2020.
However, this will depend on the timing of contract award and required execution.
Okay.
We believe that the fuel Chem segment will continue to produce strong results during 2021.
As we return to more normalized run rates.
Across our fleet and as we expect to see year on year incremental contributions from the installation of our kidney targeted and furnished injection technology and three new domestic coal fire units and the fourth quarter of last year.
Upside to our fuel Chem results could come in the form of the application opportunities inside the U S.
For the remaining fleet of coal fired power generation and boilers seeks to remain competitive and regional markets via the utilization of lower cost lower quality of fuel.
It is the scenarios that are likely to create the slagging and fouling issues that could necessitate the installation of our fuel Chem program.
And we are working with it and additional customer right now and just having difficulty burning of lower cost lower quality of fuel.
And if they converted to at the end of last year and order to enhance their competitiveness and allow incremental dispatch.
Internationally.
Our primary upside potential lies and providing our solution to address the emissions created by the burning of high sulfur fuel oil and Mexico.
We are continuing to support our partner in Mexico and.
They engage with local of issues officials to advance the solution.
The current Mexican government is in favor of utilizing engaging the fuel sources for power generation to ensure that they can move towards becoming energy independent and.
And the power generation dilemma, and Texas and the first quarter of this year furbished solidify their position that as the country.
They don't want to be dependent on external fuel sourcing power for generation.
Such as natural gas from the U S.
There is currently a glut of high sulfur fuel oil and Mexico and the international market for this product has been significantly reduced with the adoption of new International Maritime organization restrictions.
Which prohibit the use of this fuel.
Today, we know the high sulfur fuel oil is currently being burned and facilities in Mexico without the necessary and environmental controls.
And local communities are rendering complaints about the impact of severe pollution.
We will continue to watch for the development of this activity closely. However, we do believe that political pressure is building in favor of the implementation of our fuel Chem program and additional facilities in Mexico.
After a slow start attributable to the pandemic, we are starting to realize momentum and our dissolved gas infusion business.
We are addressing multiple growth pathways, including the development of large scale dji delivery system in depth market assessment, and the research and the pursuit of commercial opportunities that will likely take place and the second half of 2021 total.
Moving to successful demonstrations of the technology, one of the support of our license or and the other and support of and internally generated opportunity.
Okay.
Regarding the completed demonstrations.
The first was immune from municipal wastewater treatment facility on the West coast and support of our license for and the second was that a new fuel tech customer and the pulp and paper business located in the Pacific Northwest.
Additionally, we have just recently started the third demonstration and a different municipal wastewater treatment facility on the West Coast also and support of our license or.
Okay.
While each demonstration opportunity addresses customer specific issues.
For the first demonstration at the municipal wastewater treatment facility on the West Coast was intended to provide supplemental oxygenation during the high waste volume period for the for the municipality.
The municipality is located and of recreational area that receives an influx of visitors during the holiday period and when this happens the wastewater treatment plant does not have the capacity to treat the incremental waste and remain in compliance.
During the demonstration the dji system was able to efficiently deliver supersaturate of oxen oxygen to improve the quality of the water to a level that was actually better than the prior year when the volume of wastewater treated was actually lower.
Yeah.
The second demonstration was that of pulp and paper facility and the Pacific Northwest that is looking to increase their production capacity later this year.
With this increase and capacity the plant will need to treat 60% to 80% more wastewater with its current wastewater treatment plant.
As it would be cost prohibitive and time consuming to expand the wastewater treatment plant the.
The customer desire to understand the capability of the dji delivery system to augment the dissolved oxygen needs of their existing wastewater treatment plant.
The demonstration proved to be successful based on customer feedback and supporting data analysis and we are now working with this customer to determine our next course of action.
In addition to these demonstrations and we will continue to preserve pursue additional opportunities with a target of halving of commercial system online and running before the end of this year.
Okay.
Regarding the development of of large scale dji delivery system, we are moving forward with the investment and the design and fabrication of a higher capacity the Gi equipment delivery system.
As we believe the increased capacity will be necessary to address the needs of the majority of our end markets. We are looking to complete this project and the third quarter.
In closing in 2021, the fuel Tech team is guided by our focus on operational excellence.
Client service innovation and financial improvement.
I want to thank the fuel tech team for their continued hard work and dedication as their efforts have allowed us to continue to execute against our plan and provide nothing but the highest level of service to our customer base.
I would also like to thank our shareholders, both old and new for their continued support as we work to diligently enhance shareholder value through our various initiatives.
With all of that said I will now turn the discussion over to Ellen Ellen. Please go ahead.
Thank you Vince and good morning, everyone.
And we hope you've had the opportunity to review our first quarter result.
Consolidated revenues during the quarter increased 33, 2% to 5 million from $3 8 million and and the last year's first quarter.
Lasting significantly higher revenues and our fuel Chem segment.
It was offset by a decline of 290000 and revenue for our APC segment.
The other kind of segment revenues rose $4 1 million from $2 6 million and the first quarter of 2020, primarily reflecting higher power demand and the addition of new accounts and recovery from the initial Americans for the COVID-19, pandemic, which impacted results and the <unk>.
Prior year period.
Offsetting this growth with a slight decline in revenue of our APC business, where we are continuing to experience pandemic driven project delays and cancellations that have resulted in a lack of new orders.
Consolidated gross margin for the first quarter with 46, 9% of revenue compared to 44% of revenue in Q1 of 2020, reflecting a higher concentration of the fuel Chem product line revenue.
Fuel Chem gross margin and the first quarter was 48% compared to 42, 4% and last year's first quarter as many accounts return to normalized run rate.
APC segment gross margin increased to 41, 4% and the first quarter of 2021 from 36% and 2020, due primarily due to product and project mix.
Consolidated APC segment backlog at March 31 was $5 2 million compared to $5 3 million at December 31, 2020.
APC backlog at March 31 included $4 $7 million of domestic backlog as compared to $4 9 million of domestic backlog.
As of December 31st.
We anticipate approximately $3 million of current consolidated backlog will be recognized and the next 12 months.
APC backlog has trended downward for the last several quarters and the sluggish overall sales environment and was exasperated by deferred purchasing due to the uncertainties created by the COVID-19 pandemic.
As mentioned in our press release, we are pursuing and global sales pipeline of approximately $40 million to $50 million.
A common theme for quite some time has been our success at controlling costs.
This and SG&A expenses declined by 20% to 22% to $3 1 million from $3 9 million and the first quarter of 2020, reflecting lower employee administrative and professional service costs, including costs related to the previously previously announced.
Closure of the company's APC business in China.
And.
Research and development expenses for the first quarter were 415000 of 28% increase from the prior year quarter of 324000, and as we focused efforts and further development and commercialization of our <unk> technology.
For full year 2021, we expect SG&A expenses will range between 12, and 12 and a half million. However, we will flex our spending as appropriate to reflect any change and business, including new contract award and investments or acquisitions is the consummate following our capital.
Earlier this year.
Operating loss narrowed to $1 2 million from an operating loss of $2 7 million and last year's first for it.
Other income and the first quarter of 2021 was $1 6 million, reflecting full forgiveness of the loan proceeds from the Paycheck protection program established pursuant to the cares Act.
Other income and last year's first quarter reflected income related to AR collections and China.
As a result of the loan forgiveness net income was approximately 400000 or one cents per share and.
<unk> two of net loss of $2 6 million or <unk> 10 per share and the first quarter of 2020.
Adjusted EBITDA loss was <unk> 9 million and Q1 of 2021 compared to an adjusted EBITDA loss of $2 2 million and the first quarter of 2020.
With respect to China, we continue to focus on our collection efforts and as of March 31, and we are pursuing an estimated one for $1 2 million of China receivable, the majority of which we expect to repatriate and 2021.
Moving to the balance sheet as of March 31, we had cash and cash equivalents of $35 7 million and average restricted cash balance declined to 420000.
Working capital was $38 5 million or $1 40 per share stockholders equity was $46 5 million for $1 68 per share and the company had no debt.
These figures reflect the February financing and which we raised the total proceeds of gross proceeds of $25 $8 million.
Cash used in operating activities for the first quarter of 2021 with 225000 compared to $1 9 million and the first quarter of 2020.
While we have seen a slight recovery from the global effects of the COVID-19 pandemic and our current financial results, we remain cautiously optimistic towards our business prospects and we'll continue to focus and the successful execution and management of our operations.
As Vince indicated we are and the best financial condition, we have experienced in recent years and will direct our efforts towards the leading the company to overall profitability.
Now I'd like to turn the call back over to them.
Thanks, very much Ellen and operator, we would now like to open the lines for <unk>.
And for any questions. Please.
Sure. Thank you well if you'd like to ask the question at this time and you may for Star one on your telephone keypad and the confirmation tone of indicate your line is and the question queue.
You May press Star two of you relate to move your question from the queue.
And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please pull for questions.
Thank you and our first question is from the line of Sameer Joshi with H C. Wainwright. Please proceed with your question.
Good morning, Thanks for taking my questions.
Good morning Samir.
How are you doing.
Good and yourself.
And my bad.
As far as the backlog the pipeline goes.
And you mean the same since the last quarter results is the lifeline as of the end of the quarter or as of the earnings day.
Can you. Please restate the end of your question Sameer was it was the pipeline as of the end of the quarter or as of current date was that your question correct. Yes.
It's actually to be honest essentially a similar number there hasnt been a great variability in the dollar value of what we have rolling up on our pipeline because we have seen.
Many of the projects that are in our pipeline.
Have some delay.
And also many of the projects that we roll up and in a pipeline and cover a of one to two of one to three year period of time as well so they wouldn't necessarily change within a short period of time, but as we sit here today, it's been active and valuable pipeline both domestically and.
And I'm actually surprised at the the level of activity, we have coming out of the European marketplace right now.
Understood.
And so does this I understand that this is mostly the a b C is the.
And then any new <unk> installations that you may be expecting and the.
And that the actual installation and included in this pipeline.
Yes, the the pipeline that we reported upon is indeed, only air pollution control and we.
We don't report a pipeline as it relates to any of the the fuel chem possible installations.
Those are awfully difficult to predict in terms of when a customer might need our services, but.
And as you as you know as we've discussed we were fortunate to add three additional units at the end of last year that are contributing nicely here in 2021.
And as I noted in my commentary, we are working with and additional customer that went through a of fuel switch at the end of last year that calls for us because they are having difficulties of bringing this fuel. Okay. So we are working with them relative to data analysis.
At this point and time to see if we might be a good candidate to help them with their problems.
And these usually take a handful of months to develop and churn in terms of how long. It takes before we would actually have a program in place for our customer but the good news is that we do have upside opportunity and hopefully we will have additional upside opportunity along similar lines.
The other customers as well here and the future.
Understood. So.
And that fuel kind of business.
And people is a nice recovery this quarter.
Do you expect the similar Oh I'll continue.
And then again in the September quarter or do you see the.
Based on usage and it's.
Spike and.
And the revenues from fuel Chem, or what you're already seeing and this quarter.
I think that last year for the full year, we on the annualized basis, we were at around $14 million and total for <unk>.
For fuel Chem for 2020, and obviously that was heavily impacted by and by by COVID-19.
The $4 million and Q1.
I think just as a general range is fairly indicative if you annualize that.
Probably not too far from where we would expect to be on a full year basis as we sit here today somewhere in that I'll say 15, and a half to $17 million range somewhere in that range.
Understood.
And then.
And that looks pretty good some of your debt would not include any any upside opportunities from from new accounts that could come on and anything that might have been down and Mexico either.
Yes, there is upside to that got it.
The other item I think we have discussed and the path.
First is about the D G I.
The scale up and opportunity I think the you mentioned in your prepared remarks that you might have.
So at least initiate.
<unk>.
Project before the end of 2021 did I hear that.
Correctly.
Correct and that is our goal some of you or we would like to be commercial on at least.
One application before the end of 'twenty, one and we.
With the additional capital and we're going to utilize the had a very wisely and <unk>.
<unk>, we think is a very important technology and.
We're very high on that technology right now so we're going to use some some of our funds to invest in and looking to push the Gi for it as Expediently as we can at this point and time.
And in terms of scale.
The other revenues of what should we be expecting and you have two pilots that were done in the third of them always going on.
What are the prospect sizes in terms of dollars per year from these facilities.
The it materialize.
Yeah at this point and time Sameer I think it's premature for me to be talking about revenue contributions from <unk> and would rather hold off on that for now until we.
Obtain a little bit more market specific information in and have a little bit of commercial success.
I also noted that we are going to use <unk>.
Third party expertise to help us better digest, the overall applicability of advanced duration and a variety of different end markets and so we're going to invest and a little bit of that.
Scope of work as well.
And so we'll have more to report on.
Call It a range of possible projection as we move throughout the this year and probably more likely towards the end of this year.
Okay.
And I think the last question from me I think Allen you gave some commentary on SG&A going forward.
But the.
Do you expect the.
SG&A.
The U S you'll activities across the businesses and previous the data over the course of the year.
And there's probably going to be a little bit of given taken and the number I think what Alan provided.
<unk> of $12 5 million as likely a solid number for for this year.
If we have incremental APC revenues, what happens is our engineering team becomes more utilized and will have basically more of our SG&A human capital rolling into cost of sales so that would be a reduction and overall SG&A on the other hand based upon the results of.
First of all <unk> demonstration work and some of the studies that we're going to be doing we may have empathy is to invest in human capital. If you will later this year, so that would be again, the slight increase but later in the year. So full year impact I still see us falling and that 12% to $12 $5 million range.
For 2021, and then we'll see what our footprint looks like as we move into 2022.
And I can confirm that the multiple for and fly is the GAAP number or does it include the other does it exclude any noncash items.
That is out of the GAAP number.
Great.
Thanks, Lynn and good luck.
Thanks Amir.
Yes.
Our next question is from the line of Pete Enderlin with mass partners. Please proceed with your questions.
Yeah.
Good morning, Vince and Ellen.
Hello, and good morning.
The <unk>.
First question is on the pipeline of $40 million to $50 million.
Is that mostly or.
Can you break it out approximately between <unk>.
Coal or natural gas type facilities.
I would.
Off the top of my head I will give you a ballpark Pete I'd say, it's probably closer to 70% to 75% natural gas and the remainder of being cole cole of cole and and and other types of process industries.
Okay.
And.
What.
The number of comments about the.
The timing of awards being stretched out by the pandemic and and cyclical effects and all of that.
When you talk to people.
And part of this pipeline do they spur.
Specify.
The new timetables do they say that they've been.
Laid by X amount of months.
How how.
D. C is the to tell when they may actually come back and make a decision.
Yes.
Zero it definitely varies by application, Pete and really depends on the specific situation with it and customer.
I mean, we just the as an example, non there is a customer we've been working with for probably a year's timeframe now on.
And on some SCR related work and we were expecting this contracted to go to bid.
Last year at the end of last year. It was pushed towards the call. It late first quarter early second quarter of this year and so we were expecting and are due to come out for further work in the April ish time frame and we've just recently heard that's now going to be pushed into the mid Q3 and.
And so it it varies by by application and it's difficult for us to to get our arms around just generally speaking because we.
We just need to ensure that we track the the.
And the pace of the award activity that we maintain relationship contact to the extent that we can to ensure that were included in all of this activity as it does move forward. So that's what we do obviously to the best of our abilities, but.
Sometimes we are given some specific time frames and at.
Other points and time, it's a general statement, whereby it's delayed and definitely we will come back to you when when when the process will move forward. So it varies.
I think the the key takeaway from what you just said is that that basically you do keep.
Keep in touch that you're monitoring those.
The individual situations as well as you can and sometimes it's not that easy but you.
Generally have a pretty good idea of where they are there and their individual processes.
Yeah, absolutely. So a net debt is applicable not just for APC its of its applicable for our chemical technologies and and now as it relates to <unk> as well.
Because of every.
One more question on on the.
APC and that as you know from a long term perspective that business is much smaller than it used to be.
And so the question is how do you distinguish between.
Cyclical effects, such as the recession, slash pandemic and secular effects and.
Yeah.
Where do you think we are in terms of the secular effect of.
A shift away from coal and and.
And.
Fossil fuels in general you might say.
Right and.
That is actually and excellent question and it's something that we and.
Internally.
Look to address on.
On the recurring basis with with my leadership team and at board level as well, we know that theres been a secular change relative to the relative to the utilization of fossil fuels and yes. So over the past several years, we've seen a general.
The decline in overall APC opportunities that would relate to fossil fuels. So thats of known fact and that isn't the continuing.
As we sit here today, we and as a company believe that we are feeling the impact of of COVID-19 and not necessarily and an additional impact related to the secular change if you will but the secular changes real and hence hence our.
Our drive to bring up another business line to generate revenues and profitability as quickly as we possibly can because the.
The timing with which.
We come to an ultimate and and ultimate and of the utilization of fossil fuels. It is unknown, but it's the pressures there and its obvious and we see a day and day out.
Okay. Thank you and then I have a question on.
Fuel Chem, which is.
I think as I recall.
Basically the relatively small number of large utility installations I forgot the number but it's surprisingly small.
But each one is a pretty large revenue generators. We just saw from the three that you added.
In the December so the question is why would not.
And that technology would be more broadly applicable to <unk>.
Most of US not all of the coal fired utilities that are out there and the country.
Yes.
We've talked about that a little bit time, and time and again over many many years just relative to the the applicability of the the.
Fuel Chem technology.
It's not a fit.
Not a fit for everyone.
It's designed to treat.
The inefficient burning of coal.
And in boiler units that werent necessarily designed to burn specific types of coal.
And so not all units have that issue.
Not not all units are driven to fuller levels of capacity.
Either at this point and time in the history of coal fired burning utilities and typically you only see the the call it the.
The more devastating impact of Slagging and fouling. When these units are pushed at higher capacity levels and when they continue to run at higher capacity levels as opposed to scaling up and down on a recurring basis, because if a unit is scaling up and down what happens is as they as.
The inside of the boiler changes its temperature profile.
Some of the Slagging actually cleans itself automatically through the temperature change and so fuel Chem is a very unique technology application and we've learned that over many many years of looking to put it in the marketplaces.
The near term driver of the current driver is is really those remaining coal fired units that are looking to be dispatched and higher capacity levels.
And Theyre looking to burn of fuels that are not necessarily kind to their boiler and as a result by training and trying to burn the fuels and running and higher capacities. They have difficulties, that's where fuel chem can help that's it's an isolated thing and.
And the sort of a follow up to that is as of today how many.
Fuel Chem installations do you have versus the potential of the ones that you just mentioned that that really could use it because of the specifically.
The peculiar operating characteristics.
Yes, So the Inc.
Interesting point, and we talk about with that the team on a regular basis because I pose the question myself why don't we know a little bit of more about what's happening and marketplaces along those lines.
Fuel switches the <unk>.
And <unk> diet of fuel procurement by major utilities is a confidential activity, we don't know when that's going to take.
And so it's difficult for us to find out.
And when those units are and making those changes and net that could have an impact.
And coal contracts in general are becoming.
Lower costs. So some utilities that are running the coal fired boiler are able to find some good quality coal and some pretty good price as well so peanuts I don't have a direct answer to your question because I can tell you right now if we if we were aware of more.
Scenarios that could benefit our of our program, we'd be all over them and immediately.
Okay. Thank you and one question on <unk> you said, it's really too early to talk about revenues per installation of whenever we're certainly total revenue growth potential but could you help us just.
Understand a little bit of what the business model would look like in terms of capex by the customer versus licensing or support revenues or supply of revenues or whatever it may be.
I think we're going to see multiple business models, depending on the industry that we're selling into at this point and time, Pete I think we're going to see some industries that are pleased with a more of an operating cost style of business model.
Whereby we would enter into longer term lease structures for the application, but then I think that we will also see capital project type of.
Of business model opportunities as well and other industries. So I don't think its going to be standard and I think that we're going to as the company has the flexibility.
To adapt to the the industry protocols, if you will.
But broadly speaking.
However, as worked out in terms of.
The capex release of whatever do you do you think it's going to be mostly.
And of equipment sale or will there be a significant opportunity for recurring revenues all of our fuel Chem.
Well I from a recurring revenue perspective, I think that would be I I consider that to be the leasing model for the equipment on the long term basis, we're not I mean, the leasing is just another way of financing.
Capital spending is what about the supplies or support revenues maintenance revenues.
And.
And maybe Lisa.
Licensing some software or something like that.
And just what you would really define us.
Analogous to the fuel Chem and recurring revenue stream.
And with fuel Chem in addition to our.
The program itself includes equipment, the chemical itself and and onsite onsite maintenance component as well all roll together as the program for DTI, We Canada. The envision that there could be a survey of slash maintenance component to it okay depending on.
And the level of manpower of that is relevant for the industry application that is available at the site.
For what we're seeing right now at least via the initial demonstrations that we've done is that onsite manpower for wastewater treatment plants and at least of certain facilities is extremely limited in nature. So we could see of maintenance component.
But as we sit here right now there really isn't day, another deliverable that would go over and above with.
And the delivery system itself.
Okay. That's very helpful, we'll find out more or less true.
Welcome Pete Thanks, a lot.
Youre welcome.
Okay.
Our next question is from the line of George Gaspar Private Investor. Please proceed with your question, yes. Thank you and good morning, everyone.
George and Vince just the dig a little bit further and to a couple of different areas of for.
First of all like the talk about the dji.
The initial testing that you did in California, and the first project.
And it related certain results here, obviously and.
It didn't look like it.
Evolved into.
Okay.
Additional.
Major potential opportunity in terms of the placement of the system.
Was it did this have something to do with the something.
Something else you had to do and the clarity of the water that you werent.
Accomplishing initially or is it trying to determine how large of unit.
And would be necessary to solve a particular problem and.
And that area, where you were doing your testing can you elaborate on some of this.
I can a little bit George.
So the first the demonstration that we did without and.
California, and this was at the at the recreational area that I mentioned.
This was not a fuel tech demonstration of this was our our license stores demonstration, but the demonstration utilized our <unk> delivery system. So we have been partnering with with our license or to assist them as as the as necessary to help them further.
They're there they're market applicability of of the technology as well, which ultimately is going to benefit us. Okay. So yes. So this was a it's the municipality.
It was a approximately a six week demonstration that we did during the Thanksgiving and Christmas holiday periods and.
They need the additional oxygen to treat the additional wastewater treatment requirements that that were derived from having a.
The additional population and the area over the holidays.
And the demonstration was indeed.
Successful as communicated to us.
However, the caveat here is is this is not fuel tech demonstration.
The data that was actually generated by the municipality and there was another engineering firm involved with the demonstration of what their license or the.
That data is not something that fuel tech has and hand okay.
So as we sit here today as we sit here today.
From what we saw from being on site from our communication with license or Dji did its job at their sites, Okay and.
And how the how that would turn into the commercial application for that particular municipality is something that will evolve over time, but did the DDI system delivered as designed so we were pleased to see that and all of our equipment function extraordinarily well.
So that was that was technically our first utilization of our delivery system at a customer location. So it also provided us with the beginnings of a list of.
Call it improvements and modifications that we are now looking to build and QR, what I would call more of a commercial scale.
Prototypes that we are in the process of putting the right now.
Okay, Alright, well, that's that's youre, moving and a positive direction there and.
Just to elaborate on the D G I.
And when California.
And it looks like it's and I have a full fledged collapse.
And the state.
And with this a lot of people moving out and so on.
And and and they they really need this kind of thing there, they're just been absent staying with the technology, but the.
And the point I'm, making here is that how about expanding your testing and to like Florida, Florida is growing rapidly and is in desperate need of so they have some serious water problems and the southern part of the state and it would seem like some of what you're working on.
And it could be well utilized there is there any chance of you to set something up in terms of.
With the some kind of of connective and.
The opportunity for you to broaden the you're testing and the United States.
Yes, I think George I think that's something that is going to evolve, but evolve sooner rather than later.
And as.
And as I had noted we we are going to do the necessary work to put a plan together regarding call and market segments of interest one of the once we have a better understanding of that we'll then be able to go ahead and determine where we move how we scale up for what applications, how we're going to approach specific customers.
And why and so.
We are moving at a much faster pace with dji right now over the past three to four months than we have over the past two years and having the having the additional capital and had to two enabled us to move forward is of great benefit to us.
Okay, alright, well hopefully that that materializes for Ya.
All right.
And just a question.
And the gas turbine power.
The business and.
Know that you've been trying to enter further into that kind of pollution control side and.
And I'm wondering.
How do you see that opportunity for you it appears as though the United States, it's going to have to go for more gas turbine power.
And it looks like it's got a.
Some real space to grow.
Are you really working on that to try to capitalize more on the.
Opportunity the supply.
The control.
Measures there.
Yes, I think we are well suited to meet those those demands Georgia.
We had our call it our series of.
The gas turbine project work in 2015, 2017, 2019 with and support of the datacenter out northwest we thought more work was going to be coming more expediently and the follow up to that just down on the overall basis, but we havent necessarily necessarily seen those opportunity opportunities come to the marketplace as of the.
Yet, but our ability to go ahead and and put together a.
A very well functioning system design for whether it be gas turbines gas engine the diesel engines.
This is an area that we are very confident and our capabilities.
And when we see those opportunities come to market, where we're going to be moving towards them aggressively.
Cash.
Okay, Alright, and then closing.
And I complement you and getting into the equity market for and the additional equity that you accomplished over $5 a share and.
And hopefully the people that bought and.
The investment at that point fine.
Fuel tech.
Obviously, a lot more attractive at the current price level. So hopefully if you can.
Really start moving the.
Your accomplishments forward and tech and broaden the technology that the.
This should give the company and an opportunity to see of big turnaround and the price of the stack.
Thank you.
Agree George Thank you very much for your commentary appreciate it and we'll talk to you again soon.
Yeah.
Thank you at this time of for each and the question and answer session and I'll turn the call over to Vince Arnone for closing remarks.
Thank you operator, I want to thank everyone for joining us out of the call today.
And we as a company.
On a path towards returning ourselves.
The growth and profit and profitability I hope that today, we have defined and lease some of the initiatives that we're working on to get there and we will continue to report on our progress as we move throughout the year. So thanks again for your time and everyone have a good day.
This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Yeah.