Q4 2023 Fuel Tech Inc Earnings Call
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Greetings and welcome to the fuel Tech, Inc, fourth quarter and full year 2023 financial results 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.
As a reminder, this conference is being recorded.
I'd now like to turn the conference over to your host Devin Sullivan managing director of the equity group. Thank you you may begin.
Thank you Melissa good morning, everyone and thank you for joining us today for fuel Tech's 2023 fourth quarter and full year 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 S. T E K dot com.
Our speakers for today will be Vince Arnone, Chairman, President and Chief Executive Officer, and that one all bracket the company's Chief 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 are 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 fuel.
<unk> current expectations 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. These 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 a under the caption risk factors and subsequent filings under the Securities Exchange Act of 1934, as amended which could cause fuel tech's actual growth results of operations financial condition cash flows performance.
Formats, and business prospects and opportunities to differ materially from those expressed in or implied by these statements she'll 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.
With that said I'd now like to turn the call over to Vince Arnone Vince. Please go ahead.
Thank you Kevin good morning, and I'd like to thank everyone for joining us on the call today.
We were pleased with our business progress along several fronts in 2023.
Total revenue of $27 1 million was within our previous guidance range and represented our highest annual revenue level since 2019.
Our APC business segment performed well.
<unk> more than $8 3 million of New project awards during the year and we ended the year with a backlog of $7 5 million.
At December 31, 2023.
Further we were pleased to announce the additional $2 1 million in new contract Awards yesterday.
We completed a successful trial of our dissolved gas infusion technology, and then Aqua culture, setting and we believe that we are well positioned to commercialize <unk> in 2024.
And lastly, we continue to maintain a conservative cost profile with SG&A expenses up modestly from 2022 levels and ended the year in a strong financial position with $33 4 million in cash and.
And no long term debt.
We are most heartened by the progress we have made in our D. G I business initiatives in 2023.
Last month, we announced the publication of a white paper that details the benefits of deploying D. G. I for oxygen injection at a shrimp farms in the United States.
As a reminder, our D. G. I technology involves the efficient transfer of high concentrations of gas and diesel into a body of water.
Through our patented saturater and a patent pending injection array.
To drive chemical or biological reactions.
She asked for wastewater treatment.
Odor control N P H adjustment.
Or for process improvements and industrial applications.
Or in this case Aqua culture.
Specifically they use a D G I, a dislocation increased shrimp production compared to traditional iteration methods and contributed to likely health improvements.
Demand for shrimp is increasing globally and inland shrimp farming is an important source to help meet the growing demand in a safe and sustainable manner, while reducing overfishing of the marine environment and lowering the overall carbon footprint by reducing transportation costs.
By deploying D G I.
<unk> now have an opportunity to improve stock health and yields while achieving more efficient operations immediately adjacent to their customer locations.
At present, we are utilizing pgi to deploy oxygen into bodies of water. However.
However, we believe that D. G I can be applicable for other gases as well such as C O two and ozone.
D. G ice benefits include the precise control of dissolved oxygen levels for all process applications and.
And the ability to extend plant capacity without major capital expansion our capital outlay.
The reduction and minimal bubble formation for extended residence time.
We believe that D. G I can be applied across several end markets, including pulp and paper and food and beverage chemical and Petro chemical water and wastewater treatment horticulture and Aqua culture.
Yeah.
As a follow up to the publication of our D. G. I a white paper, we presented our technology and favorable findings from our Aqua culture demonstration.
This annual conference provides members and participants with the opportunity to stay current with technical advancements and inspect the latest in products and services in the aquaculture industry.
In recent months in part driven by the interest generated after publishing and presenting our demonstration results. We have received a notable increase in inquiries regarding our D. G I technology from potential customers in multiple end markets, including municipal odor control.
H control for you Miss it municipal and industrial applications.
We are cultural applications and additional Aqua culture applications.
We are currently in negotiations with potential customers regarding onsite demonstrations of D. G. I and we are targeting to sign our first commercial contract for D. G. I in 2024.
Lastly.
To further expedite the introduction of D. G. I into end markets. We have recently hired a former water and wastewater treatment executive on a consulting basis.
This individual is well experienced in the application of dissolved gas technologies and we look forward to his contributions over these next several months.
Let's now please spend a few minutes discussing our fuel Chem and APC business segment.
As we had expected revenues for our fuel Chem segment declined from 2022 levels.
Due to the effects of warmer weather across the U S, which impacted overall demand and related unit dispatch.
However segment gross margin was essentially unchanged for the year and remain at historical levels.
Our base fuel Chem unit count remains intact as we enter 2024.
And for the first time in a few years I'm very pleased to say that we are currently pursuing multiple additional fuel chem development opportunities, which could provide incremental revenue contribution in 2024 and beyond.
These opportunities are for both coal and biomass fired boilers.
For 2024, excluding any material incremental revenue from new new business development activities, we would expect that fuel Chem revenue would remain at parity with 2023.
With respect to international opportunities for the fuel Chem segment, we continue to follow the opportunity to expand the provision of our chemical technology in Mexico via our partner in that country to address the emissions created by the burning of high sulfur fuel oil, which is being undertaken without the necessary environmental remediation.
Nation at the expense of the health of surrounding communities.
In 2023.
We executed a two year extension to the program that we currently have in place had one facility.
With the upcoming presidential election in Mexico in June of this year.
We believe that political pressure is building in favor of our implementation of our fuel Chem program.
No facilities in this country.
Our partner is currently in discussions with the state owned utility Cfe regarding the application of our technology at several units.
No.
Turning over to our APC segment.
We benefited in 2023 from the continued adoption of our ultra S. E. R. S. N C R and FTC emissions control solutions.
Natural gas and coal fired units in the U S Europe, South Africa and specific rim.
Independent of the potential impact a favorable regulatory outcomes, which I will discuss here. Shortly we remain well positioned to take advantage of current industrial end market trends, which include.
Plant capacity expansion across several industries.
The incentivised use of small turbines to replace traditional less clean power generation.
The development of the bio carbon industry.
The continued emphasis on the carbonate excuse me the carbonization on a global basis.
Our focus on using our ultra system is the same sorts of ammonia for Crs at hospitals and universities across the U S.
On the regulatory front.
We continue to monitor progress related to the adoption.
<unk> of the U S. Epa's Cross state Air pollution control rule to meet the good neighbor requirements of the clean Air Act, which we believe can be a potential catalyst for APC growth in 2024 and for the remainder of this decade, yes utility and industrial customers explore ways to further.
Reduce nox emissions.
We have in fact received and responded to several requests for budgetary proposals.
As customers prepare to address the upcoming compliance requirements as part of their capital budgeting requirements for 2024 and beyond.
As discussed on previous calls the rule currently obligated 23 states to reduce emissions of nitrogen oxides from power plants.
Certain industrial facilities to limit their impact on downwind states.
The ultimate timing of the effectiveness of the rule is uncertain because several up when effective states and sources.
We have challenged the efficacy of Epa's proposed regulation in multiple courts and stage of the effectiveness of their of the rule had been issued for many upwind states.
Last month, the oral arguments were presented to the Supreme Court by both parties.
And we will closely monitor the potential impact of the Supreme Court's ruling on whether to stay the rule for all states. What is issued later this year.
In addition to the good neighbor rule. We are also watching the progress of Epa's rule for large municipal waste combustor.
Which is independent of the good neighbor rule.
This route this rule reduces the nitrogen oxide emissions requirements for large municipal waste combustion units.
Fuel Tech has had a long history of assisting this industry and meeting their compliance requirements and we have had discussions with customers in this segment to support them in their compliance planning.
The municipal waste combustion rule is currently in a public comment period.
With compliance deadline is expected sometime in the next three years.
Based on our effective backlog at year end.
The business development activities, we are pursuing and our previously noted expectations for fuel Chem.
We expect that total revenues for 2024 will exceed the total revenues recognized in 2023 of $27 $1 million and we will provide further guidance as we move throughout 2024.
This base case outlook excludes any material contributions from D. G. I because we are still in the early stages of commercialization.
Any significant contributions to APC from the above referenced EPA regulations, and the impact of material business development activities for fuel Chem.
Now in closing.
I want to take to thank the fuel tech team.
For their contributions to the improvement of our business in 2023.
It is their continued hard work.
Passion and dedication that drives our ability to be successful. Additionally.
Additionally, I, thank our shareholders for their continued support.
We expect that 2024 will be an important year in the growth and evolution of fuel Tech and we look forward to keeping everyone apprised of our progress.
With that said I would now like to turn the call over to Alan to talk about our financial statements. Ellen. Please go ahead.
Thank you Vince and good morning, everyone.
The primary takeaways from 2023 were improved total revenue margin make money.
Keenly focused on cost containment within the larger framework and building out our D. G I, Joe Smith, and I'm, the remarkably resilient balance sheets that allowed us to enter 2024, and a strong and secure financial position.
We accomplished all of those while navigating some industry headwinds in our two primary business segments.
I'll start off today by reviewing our fourth quarter results.
For the quarter consolidated revenues declined to $6 3 million from 7 million in last year's fourth quarter, reflecting declines in both the ATC and fuel Chem segment from the prior year period.
A P. C segment revenue marginally decreased to $2 8 million from $2 9 million due primarily to the timing of the execution on projects and services during the quarter.
If youll can segment revenue declined from $4 1 million to $3 6 million, mainly due to an expected decrease in distress electrical generation demand from the very high level experienced in 2022 and changes in product and fuel usage.
Consolidated gross margin for 2023 fourth quarter was 51% of revenue a significant increase from 43% in the fourth quarter of 2022, reflecting increased APC segment gross margin of 55% up from 35% the same quarter a year ago.
Okay.
This higher gross margin for a P. C can be attributed to a change in project and product mix.
Jochen segment gross margin remained essentially unchanged at 48% consistent with historical performance.
Okay.
Consolidated E T. He said my backlog on December 31, 2023, with $7 5 million up from a backlog of $5 6 million at September 30th 2023, and down slightly from backlog of $8 2 million at December 31 2022.
Backlog on December 31st 2023 included 2.6 million domestically there is a big project backlog and $4 9 million up four and deliver our project backlog as compared to the $3 7 million domestic project backlog and the $4 5 million of International project.
At December 31, 2022.
We expect that $7 4 million of the current consolidated backlog will be recognized in the next 12 months.
Yeah.
SG&A expenses increased to $3 7 million from $3 1 million in last year's fourth quarter, reflecting the timing of employee and employee related expenses.
As a percentage of revenue SG&A in 2023 fourth quarter increased to 58% from 44% mid 2020 to fourth quarter.
Research and development expenses for the fourth quarter Rose to 367170 9000 in the same period a year ago, mainly attributed to continued investment in water treatment technology and more specifically our D. G I technology.
Our operating loss was 801000 compared to 250000 in last year's fourth quarter, reflecting a reduction in overall revenue a shift in margin contribution from product mix and higher operating expenses for the quarter.
We continue to take advantage of the favorable interest rate environment and as of December 31st 2023 have invested more than $30 million in held to maturity debt securities and money market funds.
This generated $322000 of interest income in the fourth quarter and $1.3 million of interest income for 2023.
From just 200000 into in 2022.
Our net loss for the quarter was 539000 or two cents per share compared to a net loss of 402000 or one per share in the same period, one year ago.
Adjusted EBITDA loss was 646000 compared to an adjusted EBITDA loss of 263000 in the same period last year.
Moving to results for the full year 2023 consolidated revenue rose to $27 1 million from $26 9 million in 2022.
Putting a 27% increase in our E T C segment revenue.
Sat Fi a 17% decline in the field <unk> segment.
As previously mentioned the increase in APC segment revenue is attributed to the timing of project execution, and new orders and a 50% increase in our ancillary product line revenue.
If you can segment revenue decreased decreased for the year was driven by decreased you had dispatch demand and unforeseen plant outages experienced in the second quarter of 2023.
Consolidated gross margin remained flat at 43% compared to last year, reflecting an increase in the APC segment gross margin offset by a slight decrease in the fuel Chem gross margin.
A P C segment gross margin was primarily.
The growth was primarily due to product and project mix.
SG&A expenses for 2023 increased by 4% to $12 8 million from $12 3 million in 2022, which fell within the low end of the forecasted range.
We continue to prioritize our strategic investments in resources to support current and upcoming business initiatives, while maintaining prudent cost controls.
For 2024, we expect SG&A expenses to range between 13, and 13 and a half months.
Research and development expenses were $1 5 million for 2023 compared to 895000 in 2022.
Vince discussed our investment in commercializing our D. G. I technology is a primary focus for the company.
Strategic expenditures in this area will continue throughout 2024.
Operating loss of $2 7 million for the 2023.
<unk> to a loss of $1 5 million in 2022, reflecting the change in mix of segment revenue and higher operating expenses.
Net loss for 2022 was $1 5 million or five cents per diluted share compared to a net loss of $1 4 million or five cents per share in 2022.
Adjusted EBITDA loss with 2 million in 2023 compared to an adjusted EBITDA loss of 909000 202022.
We generated nearly $700000 in cash from operations in 2022, 23 as compared to a use of cash of $4 1 million in 2022.
Lastly, moving to the balance sheet, our financial condition remains strong.
As of December 31, 2020, we had cash and cash equivalents of $17 6 million and short and long term investments totaling $15 eight nine.
In 2023, our largest use of cash with the incremental investment of $6 million in debt security to drive a sustainable long term financial profile.
Working capital was $32 6 million or a dollar eight per share stockholders equity was $43 7 million or $1 44 per share and the company continues to have no outstanding debt.
We remain confident in our ability and our ability to fuel our growth initiatives pursue new product and market opportunities and maintain our strong financial position, which we view as important it's an important competitive advantage to reiterate Victor's earlier comments, we are pleased with our results and remain optimistic about our opportunities.
In 2024 and beyond.
I'll now turn the call back over to Beth.
Alan Thank you very much operator, I think it's time to open the line for calls now thank you.
Thank you.
I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.
You May press star two if he 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 Amit Dayal with H C. Wainwright. Please proceed with your question.
Thank you good morning, everyone.
Morning.
Havens, so it looks like you're just gonna be a big focus for you this year my.
One question.
Yes.
All of these potential customers finding out about D. G. I you know can you just give us a sense of you know what you guys are doing in terms of just getting in front of these this audience.
All right. So we over this past six months, we've definitely enhanced our marketing efforts.
And as I just noted.
Our presentation at the Aqua Culture America was actually are our first presentation at a water and wastewater treatment conference and we received from very favorable impact problem from the result of of that body of work.
No.
My comment would be we are increasing our exposure to end markets, we really needed to have.
Something to go ahead and put out there publicly that we can support as part of our market reach out and the successful demonstration that we did have in the Aqua culture application afforded us the opportunity to start to go a little bit more public with D. G I and its capabilities.
So my expectation is that is going to continue we are going to have more of a call. It a public phase four for D. G I, but it also needs to continue to be supported by a bi specific favorable actions from from end results of that of that technology. If you will so we are going.
To do additional demonstrations, we are going to do white papers on those additional demonstrations and put those results out publicly as well. So again a high level answer we're going to be out there more publicly with D. G I in 2024 and beyond.
Understood. Thank you and then the Opex guidance you know you provided for the year.
Although we include some of the marketing and sort of business development efforts, a little that potentially be a little bit more additional costs to your you know.
Well normally sort of operating activities.
Yeah right now the the range that <unk> provided a 13 to 13 five does include a nice uptick in and additional spending related to <unk> marketing efforts.
Yes, as we've discussed our investment in N D. G. I O with his past handful of years, we we've been very measured in how we've been investing as we see the opportunity to invest based on successes and we'll we'll go ahead and enhance that investment in those activities. So right now I would tell you that.
The range Allen gave does include a nice increase in expenditures for for D. Gi marketing efforts, if we feel as though we need to do more prospectively.
We will share that with you on future calls.
Thank you.
Maybe just last one on those.
And fuel Chem business as you know should we expect the second half to be stronger for dual citizens or.
It sort of evenly spread throughout the year. It looks like just from the press release and some of your commentary.
Maybe the second class it looks like it could be even more.
As we are in terms of revenue with this first half over to you.
A general statement I would say, yes that is correct based upon the way we see things right now we would expect a stronger second half than first half of the year.
Okay.
Well, that's a lot of them. So I'll take my other questions offline. Thank you.
Thanks, Amit.
Thank you. Our next question comes from the line of William Bremer with Vanquish Capital Partners. Please proceed with your question.
Good morning, Vince.
Hey, good morning, Bill how are you.
Good Oh, specifically target.
Your.
The air pollution control segment E T C segment.
Regarding our product offering.
How would you read that.
I think our product offering for these technologies is best in class.
For what we put it out into the marketplace for S. N C R and SCR technologies and ultra as well.
They're best in class, we'd actually for ultra there is there is no competitive product in the marketplace today.
Domestically.
And I completely agree with you I mean, thus I've been with and having a material stake in this company for north of seven years.
My concern is on the sales front and the bookings.
Your you know your senior VP of sales has been with you over 25 years.
I mean 25 years.
[noise] enormous amount of time.
We you know you voiced about the regulatory front to the EPA and the good neighbors that Jesse a major catalyst for us going forward.
At what point does the board.
Have to make a change here.
Thought, bringing some competent individuals to ramp up the sales utilize the balance sheet and hire some executive V piece to go after the submissions opportunity that's in front of us.
So to specifically address your question.
Fuel Tech as a company has a lot of longer term longer tenured employees I'm at 24 years myself and so I would put myself into the and the category is a lot of well experienced folks with fuel tech that I believe are still doing a pretty darn good job. Okay. So specifically on the APC side of the equation as.
As you note.
What's potentially out there related to regulatory opportunities.
I'll tell you right now that there is no one that is better positioned to capitalize on those opportunities should the regulatory requirement.
The.
Officially put in place a in a in a way that drives business because I can tell you right now.
I've seen the proposals and work that we've put out to the utility customer base in this country that supports the work that we would be doing if we had a firm a.
Regulation in place so I have every confidence in the world Bill and you and I have discussed this previously with the team that we have in place and I am chairman of the board. So I'll speak on behalf of the board as well we're confident in the team that we have in place to be able to capture these future opportunities that are that are potentially out there for us if that wasn't the case bill we'd be.
Making dramatic changes simple is that simple as that.
I hope you're right I haven't seen a book to burn ratio.
Over a 1.5 and years in this segment.
I don't disagree with you there are the end markets, particularly on the utility segment have had been a little shallow over these past several years. Fortunately, we've been supported by industrial market activity, which in the absence of anything that happens regulatory that that base business.
Level is still going to be there for us prospectively.
It's the upside that we're talking about and I think we're very well positioned to capture the upside.
My second question other than yourself.
Stepping in pretty much every year consistently and I appreciate that as well as my fellow shareholders.
Have not seen any swarm for open market purchases.
So anyone else on the board for years.
What are your CFO.
You're the division heads et cetera.
Well, if if the company is making a change and we're selling below tangible book as you articulated.
We are flushed with cash.
Okay. When is the management team and a step forward here and align themselves with current shareholders.
It's a it's it's a it's a good point Bill as you stated I've been out there buying.
There's been at least one other high level officer of the company that has been out there buying over these past few years.
We only have three reportable employees that we for them for as we sit here today. So there is some other activity that the public world does not see relative to to purchases.
All I can say is that it's difficult for for me to go ahead, and and mandate that whether it would be the board or the leadership team difficult to mandate that they they take their personal situations and and further invest in fuel tech.
The board and the employees of this team are already well invested in fuel tech I can definitely make that statement.
Honestly and clearly.
I think youll see some additional purchases from the leadership team and our board in the future I just can't tell you when but I can tell you from my perspective, I have been a supporter and I will continue to be a support from that perspective.
I think you saw that I truly do.
Welcome to see some additional sales hires.
Oh, I think that would be a good use of capital versus a dividend or share repurchase agreement I think we need to drive top line sales restructuring has been performed a little less.
Few years and now it's time to grow the top line, so I would echo and my fellow shareholders.
And I would hope the board and yourself decide to start hiring some additional sales personnel and the ones that arent producing.
Has to go at this point.
Yeah.
Understood Bill I appreciate your commentary as always and I I can I can tell you that we review.
Everyone. In this company on an annual basis relative to performance, but as I said I am very confident that we are well positioned to take advantage of opportunities that are going to going to come our way.
Thank you.
Well, thank you bill.
Thank you. Our next question comes from the line of Jim Mccleary with Dawson James. Please proceed with your question.
Thank you good morning, Hey, good morning, Jim.
Yeah, Hey, Vince I, just wanted to make sure I heard your comment.
Comment correctly regarding the APC revenue this year.
That assumes no impact from a potential favorable good neighbor ruling is that correct that is correct.
And so and.
And I know, there's a lot of difference.
And cases on the ruling but can you kind of bracket, what you think that might do for ATC over a couple of year time period.
Yeah, you know how big of an impact do you think it might have over over a couple of years.
Jimmy It's it's it's it's quite favorable.
We went through approximately 910 years ago, a scenario whereby the effectiveness of regulation head of your very favorable impact on the company as well, but what I can say is is we have $50 million, plus and and and and budgetary quotes.
50 million, plus and budgetary quotes out to utilities and in this country to help to assist them with compliance the numbers, it's greater than that and it's.
Everything can't be done at once obviously so this this would be implemented over a.
I'll say, a three to five year time horizon, approximately but it's it's it's it's a magnitude over the APC revenue that we've generated over these past three to four years, it's a material impact on our company.
As I said it is something that we've dealt with historically, we would love to be able to address those needs again.
Understood. Thank you that's helpful. And then my second question is.
On the you talked about D&A.
The initial D G I contract this year.
Can you be a little bit more specific on timing first half second half and and.
And just how big can these contracts be these initial contracts are we talking sub a million are we talking.
Greater than $1 million.
Right. So on your first question I would look at second half of the year from a timing perspective.
And then on your second question I'd, probably expect to be the first system sales that we'll see that or are there going to be $7 million and not in a lot larger than $1 million or smaller systems or anywhere on the 100 to 2000 to $200000 range, assuming it would be a capital sale and some of the larger scale systems R&D goes.
<unk> to potentially exceed a million dollars completely depends on the magnitude of of the process environment that we're looking to treat.
But when I look at something commercially happening. This year I think we're probably seeing something more on the smaller side than on the larger side.
Okay.
Great. Thank you and that's it for me. Thank you. Thanks, Thank you Jim.
Thank you. Our next question comes from the line of Marc Silk with Silk investment Advisors. Please proceed with your question.
Hey, Vince how are you doing.
I'm good how are you I'm doing fine. Thank you.
So, let's go and stay with stick with the good neighbor rural.
This.
You said, you've seen received a a bunch of requests et cetera are these mostly from downwind states are up wind or it's a mix.
I would say predominantly up wind, but some downwind.
And that's predominantly.
I heard a parameter the upland.
Again looking at their potential range of of outcome given.
One way the regulatory rule false.
Correct, Yeah, and then it sounds like on the $50 million plus of let's just say potential there I know it can be a lot more is that this is that like a 50 50 mix.
I'd say, it's it would be more in favor of up wind.
Okay, Yes, and then on the D. G. I you talked about the multiple end markets you mentioned, a bunch of things like municipalities et cetera.
Let's say money watching object that you had an unlimited budget I'm limited cash where would you aggressively be putting money based on what you've seen up to now or is it too early to kind of say well. This is more of a hypothetical just to so we can kind of see where maybe the the biggest growth can come from over the next few years.
Right right.
To be honest I I I I would say that it's premature for me to say, where we wouldn't invest the majority of that capital assuming we had it we had and pockets if if if.
If you will it's premature to say.
It's premature to say, where we're looking for what I would call.
Near term opportunities for success of the technology to form building blocks for whatever comes you know prospectively from that we need to build the success building blocks. The demonstration that we did last year was one of those we need more of those in end markets to prove out the viability of the technology.
And then once we have a little bit more of that information. We can then better assess where our investment dollars are going to be better spent relative to approaching one end market over another.
And as far as I mean, if municipalities what are what are some of the areas. They're looking at I know you mentioned it earlier, but I can't read my notes here.
Well one of the ones. We're looking at here in near term is actually an odor control.
Application for a unit for a municipal water lift station.
That's that's a huge problem for them, but there there's other applications for municipalities that will be able to address as well just one for odor control is an immediate requirement for us.
Great. Thanks for taking my questions.
Thank you Mark I appreciate it.
Thank you. Our next question comes from the line of Pete Enderlin with Amazing Partners. Please proceed with your question.
Thank you good morning.
Morning.
I bet. So I just have a couple of questions.
You've mentioned a lot of different opportunities for D. G I technology.
One that you Didnt mentioned, it and I don't know if it's.
Actually.
Valid or not and that is related to three of them last June three of them agreed to pay.
$10 $3 billion over 13 years for the remediation of forever chemicals in drinking water.
Oh, that's a lot of money, obviously and so the question is.
Did you or could D. G I play a role in that process.
I mean I'm sure that there is some filtration and other stuff going on to remove those chemicals, but with D. G. I enhance that process and is that a valid opportunity.
And as we look at it right now Pete.
Hum.
D G I would not have a direct impact on <unk>.
For chemicals.
It's it to your point, it's a very very very widely watched area today on a global basis and the EPA is coming out with regular regulatory requirements and guidance that.
I don't think anyone can achieve at this point in time, because no one no one has all the answers.
It's something we're going to watch closely but again to your point to see a D. G. I can help enhance.
Certain.
It would be chemical related processes or otherwise that could address the forever chemical issue, but as of today, it's not something where we're we're relying on that end market is something that we're focusing on right now, but it is something that we'll watch.
Thank you and then one for Ellen.
The SG&A expenses fourth quarter was three 7 million.
$3 1 million.
And the press releases.
Due to the timing of employee and employee related expenses can you just elaborate on that a little bit was there anything sort of nonrecurring in there because.
Obviously, if you annualized $3 7 million, it's a lot more than you projected a level for this year.
Correct.
There were some employee and employee related expenses that last year were spread out over the last six months of the year and in 2023, just tap into all.
Hit in Q4.
Okay. So it's nothing specifically identifiable as a nonrecurring just basically as it says the timing.
Correct, it's just timing.
Okay. Thanks, a lot.
Hey, P. Thank you sure.
Thank you ladies and gentlemen, there are no other questions at this time I'll turn the floor back to Mr. Arnone for any final comments.
Thank you operator, once again I'd like to thank everyone, who participated on the call today.
I'd like to thank all of our shareholders and of course, the entirety of the fuel tech employee team.
As both Alan and I noted 2024 is indeed, a critical and pivotal year for fuel tech and as we move throughout the year we are excited.
And we look forward to having further discussions with everyone at a later point in time this year.
Thanks to everyone and have a great day.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.