Q4 2024 Fuel Tech Inc Earnings Call

Okay.

Operator: Greetings and welcome to the Fuel Tech 2024 fourth quarter financial results conference call and webinar. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation.

Speaker Change: Greetings and welcome to the fuel Tech 2020 for fourth quarter financial results Conference call and webcast. At this time all participants are in a listen only mode.

Speaker Change: And answer session will follow the formal presentation. If any once you require operator assistance. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

Operator: If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Devin Sullivan: It is now my pleasure to introduce Devin Sullivan, Managing Director of the Equity Group. Thank you. You may begin. Thank you, Daryl.

Speaker Change: Now my pleasure to introduce Devin Sullivan managing director of the equity group. Thank you may begin.

Speaker Change: Thank you Daryl and good morning, everyone and thank you for joining us today for fuel Tech's 2020 for fourth quarter financial results Conference call.

Devin Sullivan: Good morning, everyone, and thank you for joining us today for Fuel Tech's 2024 fourth quarter financial results conference call. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, www.ftek.com.

Speaker Change: Yesterday after the close we issued a press release, a copy of which is available at the company's website Www Dot S. T E K dot com.

Devin Sullivan: Our speakers for today will be Vince Arnone, Chairman, President, and Chief Executive Officer, and Ellen Albrecht, the company's Chief Financial Officer.

Speaker Change: Our speakers for today will be Vince Arnone, Chairman, President and Chief Executive Officer, and now in all brought to the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors.

Devin Sullivan: After prepared remarks, we will open the call for questions from our analysts and investors.

Devin Sullivan: 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 21A 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 Tech's 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.

Speaker Change: 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 of the Securities Exchange Act of 1934 as amended which are made pursuant to the safe Harbor provisions.

Speaker Change: But securities Litigation Reform Act of 1995 and reflect fuel Tech's 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.

Speaker Change: 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.

Devin Sullivan: 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 and Item 1-A under the Caption of 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, business prospects, and opportunities to differ materially from those expressed in or implied by these statements.

Speaker Change: 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 of risk factors and subsequent filings under the Securities Exchange Act of 1934 as amended.

Speaker Change: Which could cause fuel tech's actual growth.

Speaker Change: Lots of operations financial condition cash flows performance 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 the publicly announced the results of any forward looking statements contained herein to reflect future results development sport changed Sir.

Devin Sullivan: Fuel Tech undertakes no obligation to update such factors or to publicly announce the result of any forward-looking statements contained herein to reflect future results, 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 company's filings with the SEC.

Speaker Change: Stances.

Speaker Change: Or for any other reason.

Speaker Change: Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in the company's filings with the SEC.

Vince Arnone: With that said, I'd now like to turn the call over to Vince Arnone. Vince, please go ahead. Thank you, Devin. Good morning. And I'd like to thank everyone for joining us on the call today.

Speaker Change: With that said I'd now like to turn the call over to Vince Arnone Vince. Please go ahead.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you Devin good morning, and.

Speaker Change: And I'd like to thank everyone for joining us on the call today.

Vince Arnone: Let's begin with a short review of our 2024 financial performance. Before we discuss the improved landscape of business opportunities that we see for 2025. Revenues for 2024 were $25.1 million. which were at the lower end of our guidance range of $25 to $26 million. and reflected higher revenues in our fuel chem business segment, which were offset by the impact of delayed project execution and the timing of air pollution control awards in our APC business segment.

Speaker Change: Let's begin with a short review of our 2024 financial performance.

Speaker Change: Before we discuss the improved the landscape of business opportunities that we see for 2025.

Speaker Change: Revenues for 2024 were $25 1 million.

Speaker Change: Which were at the lower end of our guidance range of $25 million to $26 million.

Speaker Change: And reflected higher revenues and our fuel Chem business segment, which were offset by the impact of delayed project execution and the timing of air pollution control awards in our APC business segment.

Vince Arnone: During the year, we made continued progress towards commercialization of our Dissolved Gas Infusion, or DGI, business initiative, with a new demonstration scheduled for early in the second quarter of this year and a number of potential opportunities that we hope will manifest in 2025. We continue to be good stewards of our capital and ended the year in a strong financial position with cash, cash equivalents, and investments of approximately $30 million and no long-term debt.

Speaker Change: During the year. We made continued progress continued progress towards commercialization of our dissolved gas infusion or DDI business initiative with a new demonstration scheduled for early in the second quarter of this year and the <unk>.

Speaker Change: Number of potential opportunities that we hope will manifest in 2025.

Speaker Change: We continued to be good stewards of our capital and ended the year in a strong financial position with cash cash equivalents and investments of approximately $30 million and no long term debt in.

Vince Arnone: In summary, despite making advances in several areas, 2024 fell short of our expectations. However, we have commenced 2025 with a renewed sense of optimism for our business.

Speaker Change: In summary <unk>.

Speaker Change: Despite making advances in several areas.

Speaker Change: 2024 fell short of our expectations.

Speaker Change: However, we have commenced 2025 with a renewed sense of optimism for our businesses.

Vince Arnone: Let's start with the discussion of our chemical technologies business or fuel chem. The fuel can business segment is starting 2025 with the best performance that we have seen in several years. The primary drivers for the improved performance are the return to full operation of our base accounts, unimpeded by unscheduled equipment downtime, and the incremental contribution from the new commercial account that we added in the fourth quarter of last year. As a reminder, our Fuel Chem program addresses the needs of coal-fired utilities and other fossil fuel-based operators who recognize our ability to assist them in reducing downtime.

Speaker Change: Let's start with a discussion of our chemical technologies business or fuel Chem.

Speaker Change: Yeah.

Speaker Change: The fuel Chem business segment is starting 2025 with the best performance that we've seen in several years.

Speaker Change: The primary drivers for the improved performance or the return to full operation of our base accounts unimpeded by unscheduled equipment downtime.

Speaker Change: And the incremental contribution from the new commercial accounts that we added in the fourth quarter of last year.

Speaker Change: As a reminder, our fuel Chem program addresses the needs of coal fired utilities and other fossil fuel based operators, who recognized our ability to assist them and reducing downtime.

Vince Arnone: improving plant operations, and maximizing revenue generation during periods of high electricity demand.

Speaker Change: Improving plant operations.

Speaker Change: And maximizing revenue generation during periods of high electricity demand.

Vince Arnone: regarding opportunities for new business. We are pursuing an additional FuelChem account opportunity that will likely commence late in the third quarter of this year with the demonstration of our TIFI targeted in-furnace injection technology on a coal-fired unit for a new customer in the Midwest. If all proceeds as planned, we would expect to have a commercial agreement by year-end or early in Q1 of 2026.

Speaker Change: Regarding opportunities for new business we.

Speaker Change: We are pursuing an additional fuel chem account opportunity.

Speaker Change: It will likely commence late in the third quarter of this year with the demonstration of our <unk> targeted in furnace injection technology on a coal fired unit for a new customer in the Midwest.

Speaker Change: If all proceeds as planned we would expect to have a commercial agreement.

Speaker Change: By year end or early in Q1 of 2026.

Vince Arnone: With respect to international fuel chem opportunities We remain in discussions with our partner in Mexico to expand the provision of our chemical technology in that country. Based on conversations with our partners in Mexico, it is our understanding that the recently elected government is targeting the implementation of environmental policy aimed at the reduction of pollutants that cause climate change. As Mexico is planning to use the heavy fuel oil generated from their oil refining operations as fuel for power generation for the near-term future, we are hopeful that our fuel chem program will be an integral part of President Schoenbaum's plan.

Speaker Change: With respect to international fuel Chem opportunities.

Speaker Change: We remain in discussions with our partner in Mexico to expand the provision of our chemical technology in that country.

Speaker Change: Based on conversations with our partners in Mexico. It is our understanding that the recently elected government is targeting the implementation of environmental policy aimed at a reduction of pollutants that cause climate change.

Speaker Change: As Mexico is planning to use the heavy fuel oil generated from their oil refining operations, yes fuel for power generation for the near term future. We are hopeful that our fuel Chem program will be an integral part of president Shane bombs plan.

Vince Arnone: Now, let us turn to our APC business segment. I had noted earlier that our 2024 performance lagged due primarily to customer-driven delays on existing projects and to the timing of new project awards. These delays can be caused by many different factors and can include delays in project budget appropriation, supply chain challenges, or a variety of other circumstances. We are encouraged by our recent awards last month totaling $1.6 million and the expectation of an additional $4-5 million of total contracts being awarded by early in the second quarter. These potential awards cover the majority of our emissions control suite of solutions, including Ultra, SCR, and SNCR.

Speaker Change: Now, let us turn to our APC business segment.

Speaker Change: Uh huh.

Speaker Change: I had noted earlier that our 2024 performance lagged due primarily to customer driven delays on existing projects.

Speaker Change: And to the timing of New project Awards.

Speaker Change: These delays can be caused by many different factors.

Speaker Change: Can include delays in project budget appropriation supply chain challenges are a variety of other circumstances.

We are encouraged by our recent awards last month totaling $1 6 million.

Speaker Change: And the expectation of an additional $4 million to $5 million of total contracts being awarded by early in the second quarter.

Speaker Change: These potential awards cover the majority of our emissions controls suite of solutions.

Including ultra SCR and S NCR.

Vince Arnone: Additionally, as a general statement, I want to emphasize that we are starting 2025 with the best portfolio of APC business opportunities that we have seen in several years, both domestically and internationally, and I'm confident that we are going to capitalize on these opportunities. In addition to the $4-$5 million in near-term awards noted above, We are following incremental opportunities for the municipal solid waste market that have a good probability of coming our way late in the first half of this year, which are driven by state-specific regulatory requirements. And lastly, for the first time in several years, we are pursuing some larger contract value inquiries related to the expansion of power generation in this country in support of the rapid development of data centers.

Speaker Change: Additionally, as a general statement I want to emphasize that we are starting 2025 with the best portfolio of ACC business opportunities that we have seen in several years.

Speaker Change: Domestically and internationally and I'm confident that we're going to capitalize on these opportunities.

Speaker Change: Okay.

Speaker Change: In addition to the $4 5 million in new near term awards noted above.

Speaker Change: We are following incremental opportunities for the municipal solid waste market that have a good probability of coming our way late in the first half of this year, which are driven by state specific regulatory requirements.

Speaker Change: And lastly for the first time in several years, we are pursuing some larger contract value inquiries related to the expansion of power generation in this country in support of the rapid development of data centers.

Vince Arnone: Industry Research Estimates show that global data center power market is expected to expand significantly over the next several years, with both the owners and operators of these facilities, along with utilities and major data center markets, preparing to invest billions of dollars on infrastructure. including the emissions control solutions to address an expected surge in electricity demand. This market is not unfamiliar to fuel tech. In 2018, we signed an agreement for a domestic data center site where natural gas was used for backup power generation. The scope of that project included our SCR and urea direct injection technologies, along with ancillary systems to reduce NOx emissions from backup power sources.

Speaker Change: Industry Research estimates.

Joe: Joe that global data center power market is expected to expand significantly over the next several years with both the owners and operators of these facilities, along with utilities and major data center markets.

Joe: Pairing to invest billions of dollars on infrastructure.

Joe: Including the emissions control solutions to address an expected surge in electricity demand.

Joe: This market is not unfamiliar to fuel tech in 2018, we signed an agreement for a domestic data center site, where natural gas was used for backup power generation.

Joe: The scope of that project included our STR and urea direct injection technologies, along with ancillary systems to reduce Nox emissions from backup power sources.

Joe: Okay.

Vince Arnone: Regarding the Regulatory Front We are not expecting any specific tailwinds that would come from the implementation of new regulation, as the new administration is not likely to implement regulations that were working through the process of implementation. It is important to note that the opportunities that we are following today are not contingent on the implementation of new regulations. As a reminder, in June of last year, the Supreme Court granted states and industry applicants requests to stay the good neighbor rule. In response, EPA stayed the good neighbor rule in August for the 12 states where the rule was still active.

Joe: Regarding the regulatory front.

Joe: We are not expecting any specific tailwind that would come from the implementation of new regulation.

Joe: As the new administration is not likely to implement regulations that were working through the process of implementation.

Joe: It is important to note that the opportunities that we are following today are not contingent on the implementation of new regulations.

Joe: As a reminder, in June of last year, the Supreme Court granted states and industry applicants request to stay the good neighbor rule.

Joe: In response EPA state the good neighbor rule in August for the 12 States, where the rule is still active.

Vince Arnone: As we had discussed on previous calls, the rule originally required 23 states to reduce emissions of nitrogen oxides from power plants and certain industrial facilities to limit their impact on downwind states. In October, EPA stayed the entire rule, and in December, it was remanded back to EPA by the D.C. Circuit Court of Appeals so EPA could address the issues raised by the Supreme Court. The Supreme Court has upheld the remand of the rule back to EPA. We will continue to monitor the status of this rule to better understand the impact of future NOx regulations for existing clients.

Joe: As we have discussed on previous calls the rule. Originally originally required 23 states to reduce emissions of nitrogen oxides from power plants and certain industrial facilities to limit their impact on downwind states.

Joe: In October EPA stayed the entire rule and in December It was remanded back to EPA by the DC Circuit Court of Appeals, so EPA could address the issues raised by the Supreme Court.

Joe: The Supreme Court has upheld the remand of the rule back to EPA.

Joe: We will continue to monitor the status of this rule to better understand the impact of future Nox regulations for existing clients.

Vince Arnone: We are continuing to monitor progress of EPA's rule for large municipal waste combustor units, which is independent of the Good Neighbor rule. This rule reduces the nitrogen oxide emissions requirements for large MWC units. Fuel Tech has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning. The final rule has been delayed by EPA until December 2025, with compliance deadlines expected three years from the date of issue.

Joe: We are continuing to monitor monitor progress of Epa's rule for large municipal municipal waste combustion units, which is independent of the good neighbor rule.

Joe: This rule reduces the nitrogen oxide emissions requirements for large <unk> units.

Joe: Fuel Tech has had a long history of assisting this industry and meeting its compliance requirements and we have had discussions with customers in this segment to support their compliance planning.

Joe: The final rule has been delayed by EPA until December 2025, with compliance deadlines inspected expected three years from the date of issue.

Vince Arnone: Now, moving to our DGI technology. Our ongoing business development initiatives continue to gain momentum.

Joe: Now moving to our DDI technology.

Joe: Our ongoing business development initiatives continue to gain momentum.

Vince Arnone: We look forward to exhibiting DGI at Aquaculture 225 in New Orleans, which commences tomorrow. Held every three years and known as the Triennial, the event is the largest aquaculture conference and train show in the world, with nearly 4,000 attendees from over 90 countries.

Joe: We look forward to exhibiting D. G I at Aqua culture, $2 25 in New Orleans, which commences tomorrow.

Joe: Held every three years and known as the triangle. The event is the largest aquaculture conference and Tradeshow in the world with nearly 4000 attendees from over 90 countries.

Vince Arnone: with respect to product demonstrations. We are commencing an extended demonstration at a fish hatchery in the western U.S. early in the second quarter, which is expected to last nine to twelve months. This demonstration will have defined test protocols to evaluate the benefits of the DGI technology, resulting from the supply of consistent and precise levels of dissolved oxygen and the raising of game fish in a controlled environment. In addition to this demonstration, discussions are progressing with the Municipal Wastewater Treatment Facility in the southeastern United States. And we are pursuing multiple other end markets of interest for DGI, including pulp and paper.

Joe: With respect to product demonstrations, we are commencing an extended demonstration at a fish hatchery in the Western U S. Early in the second quarter, which is expected to last nine to 12 months.

Joe: This demonstration will have defined test protocols to evaluate the benefits of the dji technology, resulting from the supply of consistent and precise levels of dissolved oxygen and the raising of game fish in a controlled environment.

Joe: In addition to this demonstration discussions are progressing with the municipal wastewater treatment facility in the southeastern United States and.

Joe: And we are pursuing multiple other end markets of interest for dji, including pulp and paper.

Vince Arnone: Food and Beverage, Chemical and Petrochemical, and Horticulture, and we look forward to addressing these markets prospectively as we continue to advance towards commercialization.

Joe: Food and beverage chemical and petrochemical and horticulture and we look forward to addressing these markets prospectively as we continued to advance towards commercialization.

Vince Arnone: based on our effective backlog at year-end 2024. Recent awards, the APC business development activities that we are pursuing, and our previously noted expectations for Fuel Chem, we expect that total revenues for 2025 will exceed $30 million, with both business segments exceeding their performance in 2024. This base case outlook excludes any material contributions from DGI, any significant contributions to EPSA from any new EPA regulations, and any impact from new business material development activities for fuel.

Joe: Based on our effective backlog at year end 2024 <unk>.

Joe: Recent awards the APC business development activities that we are pursuing and our previously noted expectations for fuel Chem.

Joe: We expect that total revenues for 2025, we will exceed $30 million.

Joe: With both business segments exceeding their performance in 2024.

Joe: This base case outlook excludes any material contributions from E. G I.

Joe: Any significant contributions to EP say from any new EPA regulations, and any impact from new business material development activities for fuel Chem.

Vince Arnone: Now in closing. I want to express my thanks to the Fuel Tech team. for their continued and ongoing dedication and contributions to our business. We are very encouraged by the outlook of our business as we commence 2025 for Fuel Camp, APC, and for our developmental opportunities for DGI.

Joe: Now in closing.

Joe: I want to express my thanks to the fuel Tech team.

Joe: For their continued and ongoing dedication and contributions to our business.

Joe: We are very encouraged by the outlook of our business as we commence 2025 for fuel Chem APC and for our developmental opportunities for dji.

Vince Arnone: I thank our shareholders for their continuing support and reiterate to you our focus on delivering long-term shareholder value.

Joe: I, thank our shareholders for their continuing support and reiterate to you are focused on delivering long term shareholder value.

Ellen Albrecht: Now, I'd like to turn the call over to Ellen for her comments on our financial response. Ellen, please go ahead. Thank you, Vince, and good morning, everyone.

Joe: Now I'd like to turn the call over to Ellen for her comments on our financial results <unk>. Please go ahead.

Ellen: Thank you Vince and good morning, everyone.

Ellen Albrecht: I'll start off today by reviewing our fourth quarter results. For the quarter, consolidated revenues declined to $5.3 million from $6.3 million in the fourth quarter of 2023, reflecting a decline for the APC segment from the prior year period. The APC segment declined to $1.8 million from $2.8 million, primarily due to the timing of execution on projects and services during the quarter, while the fuel segment revenue was essentially unchanged at $3.5 million. Consolidated gross margin for the fourth quarter declined to 42% of revenues from 51% of revenues in the fourth quarter, reflecting decreases in both APC and fuel chem gross margin.

Ellen: I'll start off today by reviewing our fourth quarter results.

Ellen: For the quarter consolidated revenues declined to $5 3 million from $6 3 million in the fourth quarter of 2023, reflecting a decline for the APC segment from the prior year period.

Ellen: The APC segment declined to $1 8 million from $2 8 million, primarily due to the timing of execution on projects and services during the quarter, while the fuel Chem segment revenue was essentially unchanged at $3 5 million.

Ellen: Consolidated gross margin for the fourth quarter declined to 42% of revenues from 51% of <unk>.

Ellen: Revenues in the fourth quarter.

Ellen: Reflecting decreases in both APC and fuel Chem gross margin.

Ellen Albrecht: APC growth margin declined to 36% from 55% primarily due to product mix and lower segment revenue. Fuel cum segment gross margin declined to 45% from 48. Consolidated APC segment backlog at December 31, 2024 was $6.2 million, compared to $7.5 million at December 31, 2023. Backlog of December 31st, 2024 included 1.9 million of domestic delivered project backlog and 4.3 million of foreign delivered project backlog as compared to 2.6 million of domestic project backlog and 4.9 million of international project backlog at the same period in 2023. We expect that $4.5 million of the current consolidated backlog will be recognized in the next 12 months.

APC gross margin declined to 36% from 55%, primarily due to product mix and lower segment revenue.

Ellen: Fuel Chem segment gross margin declined to 45% from 48%.

Ellen: Consolidated APC segment backlog at December 31.

Ellen: So our 2024 was $6 2 million compared to $7 5 million at December 31, 2023.

Ellen: Backlog at December 31, 2024 included $1 9 million of domestic delivered project backlog and $4 3 million of foreign deliver project backlog as compared to $2 6 million of domestic project backlog and $4 9 million of International project backlog at the same period in 2012.

Ellen: Three.

Ellen: We expect that $4 5 million of the current consolidated backlog will be recognized in the next 12 months.

Ellen Albrecht: As Vince noted, year-end backlog does not include the $1.6 million of new contract awards announced earlier this month. Taking into account these latest contracts and the additional four to five million of new awards we expect to close early in the second quarter, backlog should improve steadily through the first half of 2025. SG&A expenses increased to $3.9 million from $3.7 million in last year's fourth quarter, reflecting the timing of employee and employee-related expenses. Research and development expenses for the fourth quarter rose modestly to $405,000 from $367,000 in the same period a year ago, mainly attributed to the continued investment in water treatment technologies, and more specifically, our DGI system.

Ellen: As Vince noted yearend backlog does not include the $1 6 million of New contract Awards announced earlier this month.

Ellen: Taking into account these latest contracts and the additional $4 million to $5 million of New awards, we expect to close early in the second quarter backlog should improve steadily through the first half of 2025.

Ellen: SG&A expenses increased to $3 9 million from $3 7 million in last year's fourth quarter, reflecting the timing of employee and employee related expenses.

Ellen: Research and development expenses for the fourth quarter Rose modestly to 405000 from 370 367000 in the same period a year ago, mainly attributed to the continued investment in water treatment technologies and more specifically our dji systems.

Ellen Albrecht: Our operating loss was $2.1 million compared to a loss of $801,000 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 31, 2024, have invested the majority of our $30 million in held-to-maturity debt securities and money market funds. This generated $283,000 of interest income in the fourth quarter and $1.3 million of interest income for all of 2024. Our net loss for the quarter was $1.9 million, or $0.06 per share, compared to a net loss of $539,000, or $0.02 per share, in the same period one year ago.

Ellen: Our operating loss was $2 1 million compared to a loss of 801000 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.

Ellen: We continue to take advantage of the favorable interest rate environment and as of December 31, 2024 have invested the majority of our $30 million in held to maturity debt securities and money market funds.

Ellen: This generated 283000 of interest income in the fourth quarter and $1 3 million of interest income for all of 2024.

Our net loss for the quarter was $1 9 million or six six per share compared to a net loss of 539000 or <unk> <unk> per share in the same period, one year ago.

Ellen Albrecht: Adjusted EBITDA loss was $1.8 million compared to an adjusted EBITDA loss of $646,000 in the same period last year.

Ellen: Adjusted EBITDA loss was $1 8 million compared to an adjusted EBITDA loss of 646000 in the same period last year.

Ellen Albrecht: Moving to the results for the full year 2024, consolidated revenue declined to $25.1 million, which came in at the lower end of our guidance range of $25 to $26 million, reflecting a 17% decrease in total APC segment revenue, partially offset by a 2% increase in fuel chem revenue. The decline in APC revenues was primarily driven by the impact of delayed project execution and timing of APC awards. And the increase in fuel chem revenue was due to renewed orders from previously dormant customers, as well as the addition of a new customer following a successful site demonstration.

Ellen: Moving to the results for the full year 2024 consolidated revenue declined to $25 1 million, which came in at the lower end of our guidance range of 25% to $26 million, reflecting a 17% decrease in total APC segment revenue, partially offset by a 2% increase.

Ellen: Fuel Chem revenue.

Ellen: The decline in APC revenues was primarily driven by the impact of delayed project execution and timing of APC Award and the increase in fuel Chem revenue was due to renewed orders from previously dormant customers as well as the addition of a new customer following a successful site demonstration.

Ellen Albrecht: Consolidated growth margin for 2024 marginally decreased to 42%. from 43% last year, reflecting a slight decline in both the APC and Fuel Chem gross margins. SG&A expenses for 2024 increased by 7% to $13.8 million from $12.8 million in 2023, which fell slightly above the high end of our forecasted range, reflecting an increase in employee-related costs and other expenses. For 2025, we expect SG&A expenses to increase modestly from prior year. Research and development expenses for the year were $1.6 million compared to $1.5 million in 2023. While a large portion of our R&D spend is related to commercializing our DGI technology, we also continue to explore projects and initiatives for our core business technology.

Ellen: Consolidated gross margin for 2024 marginally decreased to 42%.

Ellen: From 43% last year, reflecting a slight decline in both the APC and fuel Chem gross margins.

Ellen: SG&A expenses for 2024 increased by 7% to $13 8 million from $12 8 million in 2023, which fell slightly above the high end of our forecasted range, reflecting an increase in employee related cost and other expenses.

Ellen: For 2025, we expect SG&A expenses to increase modestly from prior year.

Ellen: Research and development expenses for the year were $1 6 million compared to $1 5 million in 2023.

Ellen: While a large portion of our R&D spend as it related to commercializing our dji technology. We also continue to explore projects initiated for our core business technologies.

Ellen Albrecht: Strategic expenditures in commercializing our DGI technology will continue throughout 2025. Operating loss was $4.7 million for 2024 compared to an operating loss of $2.7 million in 2023, reflecting lower segment revenues and slightly higher operating expenses. Net loss for 2024 was $1.9 million or $0.06 per diluted share compared to a net loss of $1.5 million or $0.05 per diluted share in 2023. Adjusted EBITDA loss was $2.2 million in 2024 compared to an adjusted EBITDA loss of $2 million in 2020.

Strategic expenditures in commercializing our DTI technology will continue throughout 2025.

Ellen: Operating loss was $4 7 million for 2024 compared to an operating loss of $2 7 million in 2023, reflecting lower segment revenues and slightly higher operating expenses.

Ellen: Net loss for 2024 was $1 9 million or six cents per diluted share compared to a net loss of $1 5 million or <unk> <unk> per diluted share in 2023.

Ellen: Adjusted EBITDA loss was $2 2 million in 2024 compared to an adjusted EBITDA loss of $2 million in 2023.

Ellen Albrecht: Lastly, moving to the balance sheet, our financial condition remains very strong. As of December 31st, 2024, we had cash and cash equivalents of $8.5 million and short and long-term investments totaling $21.2 million. Similar to 2023, our largest use of cash in 2024 was the incremental reinvestment of $6 million in debt securities to drive a sustainable long-term financial program. Working capital was $23.8 million, or $0.77 per share. The stockholder's equity was $42 million, or $1.37 per share. And the company continues to have no outstanding debt. We remain confident in our ability to fuel our growth initiatives, pursue new product and market opportunities, and maintain our strong financial position, which we view as an important competitive advantage.

Ellen: Lastly, moving to the balance sheet, our financial condition remains very strong as of December 31.

Ellen: 2024, we had cash and cash equivalents of $8 5 million and short and long term investments totaling $21 2 million.

Ellen: Similar to 2023, our largest use of cash in 2024 was the incremental reinvestment of $6 million in debt securities to drive sustainable long term financial profile.

Ellen: Working capital was $23 8 million or <unk> 77 per share and stockholders equity was $42 million or $1 37 per share and the company continues to have no outstanding debt.

Ellen: We remain confident in our ability to fuel our growth initiatives pursue new product and market opportunities and maintain our strong financial position, which we view as important as the important competitive advantage, we remain optimistic about our U S and international opportunities for 2025 and beyond.

Ellen Albrecht: We remain optimistic about our U.S. and international opportunities for 2025 and beyond.

Ellen Albrecht: Thank you.

Vince Arnone: Now I'll turn the call back over to Vince. Ellen, thanks very much.

Vince Arnone: Thank you now I'll turn the call back over to Vince.

Alan: Alan Thanks, very much operator, let's please go ahead go ahead and open the line for questions.

Operator: Operator, let's please go ahead. Go ahead and open the line for questions. Thank you.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself. participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions.

Alan: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Alan: A confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.

Sameer Joshi: Our first questions come from the line of Sameer Joshi with H.C. Wainwright. Please proceed with your question. Hey, good morning, Vince, Ellen. Thanks for taking that question. Good morning, Sameer. Yeah, so thanks for providing the outlook, the 30 million, exceeding 30 million in revenues for 2025. I'm assuming this implies that you're confident, like your confidence level is high on securing that additional fuel chem customer as well as this additional APC orders of 4 to 5 million actually materializing. Are those included in this outlook? On the APC side, definitively, yes they absolutely are. They'd be included as part of our outlook that I gave relative to expecting greater than 30 million in revenues.

Speaker Change: Our first questions come from the line of Sameer Joshi with H C. Wainwright. Please proceed with your questions.

Sameer Joshi: Hey, good morning wins.

Sameer Joshi: Thanks for taking my questions.

Sameer Joshi: Morning Samira.

Sameer Joshi: Okay.

Sameer Joshi: Yeah. So thanks.

Sameer Joshi: Thanks for providing the outlook.

Sameer Joshi: 30 million exceeding $30 million.

Sameer Joshi: And revenues with when you're going to fly.

Sameer Joshi: I'm, assuming this oh this lives that youre confident.

Sameer Joshi: Awesome.

Speaker Change: Hi on securing the additional fuel chem customer as well.

Sameer Joshi: This additional oh.

Sameer Joshi: So four 5 million actually materializing.

Sameer Joshi: Included in this outlook.

Sameer Joshi: On the APC side.

Sameer Joshi: Minutely, yes, yes, they absolutely are they'd be included as part of our outlook that I gave relative to you're expecting.

Sameer Joshi: Greater than $30 million in revenues relative to the additional.

Vince Arnone: Relative to the additional Fuel Chem account, as I stated as part of my commentary, we are not expecting a great deal of contribution from that new account in 2025. We're expecting that we're that we're going to be able to bring another commercial account into our hands late in the year, but we wouldn't expect a lot of contribution on the top line for that. For Fuel Chem, as I mentioned, what we are realizing is the fact that for the first time in quite some time, all of our base car accounts are indeed running at what I don't have as we sit here today.

Sameer Joshi: Fuel Chem account.

Sameer Joshi: As I stated.

Sameer Joshi: State of as part of my commentary, we are not expecting a great deal of contribution from that new account in 2025, we're expecting that we're that we're going to be able to.

Sameer Joshi: Bring another commercial account into our hands late in the year, but we wouldn't expect a lot of contribution on the top line for that four for fuel Chem.

Sameer Joshi: As I mentioned, what we're realizing is the fact that for the first time in quite some time all of our base car account.

Sameer Joshi: R&D running yeah, what I would call normalized rates and we don't have as we sit here today.

Vince Arnone: Any downtime that's being created by equipment malfunction, not ours necessarily, by plant equipment malfunction at those plant sites, and we are getting some year-on-year contributions from the new account that we added in 2024. That's the primary driver for why we expect to see a nice increase in revenues for Chemtech in 2025.

Sameer Joshi: Any any downtime that's being created by equipment malfunction, but not all.

Sameer Joshi: Ours necessarily by plant equipment malfunction at those plant sites.

Sameer Joshi: And we are getting some year on year contributions from the new accounts that we added in 2024.

Sameer Joshi: That's the primary driver for why we expect to see.

Sameer Joshi: This increase in revenues for <unk> in 2025.

Vince Arnone: So, do you have any estimate, just curious about this, that the extended plant outages caused on your fuel cam revenues? No, I'd say that it's impossible for us to be able to determine anything that would be unplanned. We are made aware on a year-by-year basis of planned outages, because these utility units do take planned outages on a recurring basis. They're systematically scheduled for required maintenance on those units, and they typically occur during what I would call the lesser power demand times of the year. That would be just about starting now, springtime, and then in the fall as well.

Speaker Change: Who do you have any estimates.

Sameer Joshi: Curious about this.

Sameer Joshi: The extended outages.

Sameer Joshi: <unk> on your fee income revenues.

Sameer Joshi: No I would say that it's gets impossible for for us to be able to determine.

That would be unplanned we are made aware on a year by year basis of planned outages.

Sameer Joshi: Because these these utility units do take planned outages on a recurring basis there.

Sameer Joshi: Systematically scheduled.

Sameer Joshi: For required maintenance on those units and they typically occur doing what I would call. The the lesser power demand times of the year that would be just about starting now spring time and then in the fall as well. So we are given some advance notice on those and those we can plan and forecast for we cannot.

Vince Arnone: So we are given some advance notice on those, and those we can plan and forecast for, we cannot forecast for, for anything that happens if there's a turbine issue or any other major equipment impact at that plant site. I think you mentioned the first quarter for APC is turning out to be one of the strongest quarters in the last few years. Should we expect the revenues for 1Q to be... the most in maybe two or three years' time.

Sameer Joshi: Cash for for anything that happens if theres, a turbine issue or any other major.

Sameer Joshi: Major equipment impact at that plant site.

Sameer Joshi: Understood.

Sameer Joshi: One more on this.

Sameer Joshi: So the top line question I think you mentioned the fourth quarter.

Sameer Joshi: For APC is turning out to be one of the strongest quarters in the last few years.

Sameer Joshi: Like should we expect.

Sameer Joshi: We expect the revenues.

Sameer Joshi: <unk> to be.

Sameer Joshi: The most in two or three years.

Sameer Joshi: Great.

Vince Arnone: Sameer, to be specific, I actually said that Chemtech is actually experiencing the best first quarter that we have seen in years and not APC. We are, as I mentioned, we are expecting to see some additional order activity for APC here in this next month to two-month time frame. That's why I had mentioned the expectation of four to five million in additional awards. So, no, we would not expect to see anything unusual for APC revenue in Q1. It would just be working off the backlog that we had in place from the end of 2024.

Sameer Joshi: Sameer to be specific I actually said that.

Sameer Joshi: Chem Tech.

Sameer Joshi: It is actually.

Sameer Joshi: Experiencing the best first quarter that we have seen in years.

Sameer Joshi: And not ACC, we are as I mentioned, we are expecting to see.

Sameer Joshi: In some additional order activity for APC here in this next month to two month timeframe and that's why I had mentioned the expectation of $4 5 million in additional awards.

Sameer Joshi: So no we would not expect to see any anything unusual for APC revenue in Q1. It would just be working off the backlog that we had in place from the end of 2024.

Sameer Joshi: Understood.

Vince Arnone: Moving on to gross margins, I think you're pretty steady gross margins over the last few quarters, I think the December 23 quarter was slightly better than the rest. But going forward, especially given the higher expectation of revenues, should we expect better gross margins as well for the year? I would think, as a general statement, for chemical technology for the year, we should see a return to what we had been seeing historically prior to 2024, which would be in that 49 to 50 percent range. 2024 was indeed impacted by, as I mentioned, unplanned outages, whereby where we have significant fixed costs at some of our base facilities, we're just not able to cover those fixed costs as well.

Speaker Change: We want to gross margins I think.

Sameer Joshi: Pretty steady gross margins.

Sameer Joshi: The last few quarters, I think December 'twenty, three equal to or slightly better than the list.

Sameer Joshi: But going forward.

Sameer Joshi: Especially given the higher expectation of revenues should we expect.

Sameer Joshi: Gross margins as well.

Sameer Joshi: For the year.

I would think as a general statement for chemical technology for the for the year, we should see a return to what we had.

Sameer Joshi: We had been seeing historically prior to 2024, which would be in that 49% to 50% range 2024 was indeed impacted by as I mentioned.

Sameer Joshi: Unplanned outages, whereby where we have significant fixed costs as some some of our base facilities were just not able to cover those fixed cost as well and we did have a demonstration during 2024 and for demonstrations, we often offer those demonstrations at something less than what I would call.

Vince Arnone: And we did have a demonstration during 2024, and for demonstrations, we often offer those demonstrations at something less than what I would call a standard commercial price. So 2024 on Chemtech was a little bit depressed from the norm. It should return back to the norm in 2025. And on APC, APC is the margins driven by the product mix of the products that we'll sell to an end customer. Some of our products will generally have higher or lower margins than others, so that is impacted. And then, depending on the level of ancillary revenues that we have, sale of spare parts, any specific engineering service activities that we provide, those are typically higher margin activities as well, to the extent that we would have an uptick or downtick in those opportunities that could have an impact as well.

Sameer Joshi: <unk> standard commercial price, so 2024, and Chem Tech was a little bit depressed from the norm. It should return back to the norm in 2025.

Sameer Joshi: And on EPC APC is is the margins driven by the.

Sameer Joshi: The product mix of the products that we'll sell to an end customer some of our products will generally.

Sameer Joshi: We have higher or lower margins than others. So that is impacted and then.

Sameer Joshi: Depending on the level of ancillary revenues that we have sale of spare parts any any any any specific engineering service activities that we provide those are typically higher margin activities as well to the extent that we would have an uptick or Don downtick and those are opportunities that could have an impact as well. So I would still expect APC to be in.

Vince Arnone: So I'd still expect APC to be in a similar range, 35 to 38 percent, somewhere in that range on an overall basis. But then, depending on the impact of product mix as we win and execute awards throughout the year.

Sameer Joshi: A similar range.

Sameer Joshi: 35% to 38% somewhere in that range on an overall basis, but then.

Sameer Joshi: Depending on the impact of product mix as we win and execute awards awards throughout the year.

Sameer Joshi: Understood and maybe the next question.

Ellen Albrecht: Maybe the next question, maybe Ellen's commentary on the HGA being modestly high, but on the R&D front, I think it was mentioned that you will continue to invest in DGI and that will drive R&D, but do we expect like, say, a 10% increase in R&D year over year, or how should we look at the R&D trend over the next four, five, six years? As we sit here right now, I would expect R&D to be similar year on year in 2025 to 2024. We're not expecting an extraordinary increase for anything in particular in 2025. And actually, it's the same as we look at SG&A for 2005 versus 2024.

Sameer Joshi: Maybe I'll, let him comment to you on those.

Speaker Change: Oh hi.

Sameer Joshi:

Sameer Joshi: But more on that.

Sameer Joshi: I think it was mentioned that you would continue to invest in Pgi and Beckman R&D.

Sameer Joshi: But do we expect.

Sameer Joshi: Right.

Sameer Joshi: Let's say, a 10% increase in R&D year over year or how should we look at Dod and become the next four quarters.

Yes, as we sit here right now I would expect R&D to be.

Sameer Joshi: Similar year on year and in 2025 to 2024, we're not expecting an extraordinary increase for anything in particular in 2025, Okay and it's actually it's the same as we we look at SG&A for 2005 versus 24, we will have a small increase but <unk>.

Ellen Albrecht: We'll have a small increase, but nothing material.

Sameer Joshi: <unk> material.

Sameer Joshi: Okay.

Vince Arnone: On the DGI, I think there was a previous demonstration project at an aquaculture facility. Is that expected to convert into any kind of revenues or are you waiting for the second opportunity to be the one that commercializes at the end of the year? Yeah, so on DGI specifically, so the demonstration that we're going to be starting here shortly, as I mentioned, is likely to be a nine to 12 month demonstration. So, that doesn't mean that, depending on the results of that demonstration, that this particular customer won't make a decision to buy or rent or whatever commercial transaction we engage in or could engage in.

Sameer Joshi: Under the G I.

Sameer Joshi: I think there was a previous demonstration project.

Sameer Joshi: Uh huh.

Sameer Joshi: Our corporate existence and the D. A.

Sameer Joshi: Is that.

Sameer Joshi: Expected to come to work and do any kind of revenues are you waiting for the second opportunity to be the ones that are coming to realize this.

Sameer Joshi: Of the year.

Sameer Joshi: Yes.

Sameer Joshi: Dji, specifically so the demonstration that we are going to be starting here. Shortly as I mentioned is likely to be a nine to 12 month demonstration.

Sameer Joshi: <unk>.

Sameer Joshi: So that doesn't mean that the depending on the results of that demonstration that this particular customer.

Sameer Joshi: We won't make a decision to buy or rent or whatever commercial transaction. We engage in are could engage in that doesn't mean that that can't happen in 2025. It is possible.

Vince Arnone: That doesn't mean that that can't happen in 2025. It is possible, but that's not the only opportunity that we are pursuing as we sit here today. And as we sit here today, we are expecting to have commercial revenues in DGI in 2025 in some form or another, whether they be rental systems or a capital sale. Should we expect, I know maybe you may not be able to answer this question, but would it be a few tens of thousands or a few hundreds of thousands initial revenues for 2025? Difficult for me to answer specifically. I'd like to say it's the latter, Sameer, but again, I can't actually make a forecast on that as I sit here right now.

Sameer Joshi: But that's not the only opportunity that we are pursuing as we sit here today and we as we sit here today, we are expecting to have.

Commercial revenues in Pgi in 2025 in some form or another whether they be Ren.

Sameer Joshi: Rental systems or a capital sale.

Sameer Joshi: Should we expect.

Sameer Joshi: I know, maybe you won't be able to answer this question, but would it be a few tens of thousands so few hundreds of thousands.

Sameer Joshi: Initial revenues for 2025.

Sameer Joshi: Okay.

Sameer Joshi: Difficult for me to answer specifically I would like to say, it's the latter Sameer.

Sameer Joshi: But again.

Sameer Joshi: I can't actually make a forecast on that as I sit here right now.

Vince Arnone: And last one from me, you described the regulatory impact and benefit, just one thing on sort of regulatory front, do you have any impact of tariffs that might affect your supply chain or any other aspect of your business? Yeah, so we, thanks for asking that question. Obviously, it's on every company's mind. As we look to do business here, here in 2025, we're evaluating what the potential impact could be. For what we actually sell to our end markets, the most likely impact could be really related to steel and aluminum tariffs. What we are seeing already is that some of the equipment that we do subcontract to have fabricated obviously uses those materials.

Sameer Joshi: Got it last one from me.

Sameer Joshi: You describe that.

Sameer Joshi: Literally impacts and benefits.

Sameer Joshi: Just one thing on sort of regulatory front do you have any impact of tariffs that might affect your supply chain or any other aspect of your business.

Sameer Joshi: Yes.

Sameer Joshi: Thanks for asking that question obviously its on.

Sameer Joshi: Every company's mind.

Sameer Joshi: As we look to do business here here in 2025.

Sameer Joshi: We're evaluating what the potential impact could be.

Sameer Joshi: For what we actually sell through to our end markets.

Sameer Joshi: The most likely impact could it could be really related to steel and aluminum.

Sameer Joshi: Tariffs.

Sameer Joshi: What we are seeing already is that some of the equipment that we do subcontract to have fabricated obviously uses those materials and to the extent that that that those.

Vince Arnone: And to the extent that those manufacturers or fabricators are procuring steel, either domestically or international sources, those tariffs are likely going to come in our direction in some way or form. And then we would look to go ahead and pass through that price increase to our end markets as well as we sell our products and technologies. So that's probably the largest impact that we're going to see, that we see today. We have some other smaller componentry that, again, we don't source anything directly ourselves, but that would be sourced by our supply chain that could be coming from out-of-country China, as an example.

Sameer Joshi: Manufacturers are fabricators are procuring.

Sameer Joshi: Steel either domestically or international sources.

Sameer Joshi: Those those tariffs are likely going to come in our direction in some way or form and then we would look to go ahead and pass through that price increase to our end markets as well as we sell our products and technologies. So that's probably the largest impact that we're going to see.

Sameer Joshi: That we see today, we have some other <unk>.

Sameer Joshi: Mauler componentry that again, we don't source anything directly ourselves, but that would be sourced by our supply chain that could be coming from out of country, China. As an example, but again those price increases would be.

Vince Arnone: But again, those price increases would be then passed on to a supply chain that we would actually procure from. And as those come to us, we would look to pass that on through to our end customers as well.

Sameer Joshi: Then.

Sameer Joshi: <unk> supply chain that we would actually procure from and as those come to US we would look to pass that on through through to our end customers as well so it's difficult to to.

Vince Arnone: So it's difficult to fully understand what the total impact is going to be as we sit here today, because everyone is trying to figure out what those impacts are going to be.

Sameer Joshi: To fully understand what the total impact is going to be as we sit here today because.

Sameer Joshi: Everyone is trying to figure out what those impacts are going to be.

Sameer Joshi: Understood.

Sameer Joshi: Thanks for taking my questions and congrats on all the progress you are making on all three businesses, ATC, Fuel Chem, and BGI as well. Sameer, thanks very much.

Speaker Change: Thanks for taking my questions and congrats.

Speaker Change: Congrats on all the progress you are making them on all three businesses APC and fuel Chem.

Speaker Change: On the DTA as well with contracts.

Sameer Joshi: Sameer Thanks very much.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Marc silk: Our next questions come from the line of Marc Silk with Silk Investment Advisors. Please proceed with your questions. Thanks for taking the time. Hey, good morning, Marc.

Speaker Change: Our next questions come from the line of Marc Silk with Silk investment Advisors. Please proceed with your questions.

Vince Arnone: Hey, Vince Thanks for take Hey, good morning, Mark.

Marc silk: So on fuel chem, for the past four years, it didn't make sense for some existing and prospective fuel chem customers to invest in improving or making their plants more efficient. Do you see a scramble for these customers to take care of this now that demand is increasing for their type of energy and are other new opportunities popping up out of the blue? I wouldn't say that we're having opportunities pop out of the blue as we sit here right now. So just as a reminder, our Fuel Chem technology is, it really is a specific application in terms of units that truly can benefit from using it, okay.

Speaker Change: So on fuel Chem for the past four years, it didn't make sense for some existing and perspective.

Sameer Joshi: Fuel chem customers to invest in improving or are making their plants more efficient do you see a scramble for these customers to take care of this now that demand is increasing.

Sameer Joshi: For their type of energy and our other new opportunities popping up out of the blue.

Sameer Joshi: I wouldn't say that we're having opportunities pop out of the blue as we sit here right now so just.

Sameer Joshi: As a reminder.

Sameer Joshi: Our fuel Chem technology is its really is a specific application in terms of units that truly can benefit from from using it okay.

Vince Arnone: So where we added a new account last year, it's an account that's in the area of this country that doesn't have a lot of supplemental power in that particular region, including renewables or other sources. So it benefited them. to be able to ensure that when they needed to have uptime during periods of high electricity demand that they could have that uptime. And they needed our program to provide them with the assurance that they wouldn't lose out on the opportunity to generate electricity during those high demand periods of time. So, the additional count that I referenced for 2025 later this year is in the same region of the country where the account from last year is located, and they're being driven by the same reason.

Sameer Joshi: Where we where we added a.

Sameer Joshi: Our new account last year.

Sameer Joshi: It's an account that in any area.

Sameer Joshi: Of this country that doesn't have a lot of supplemental.

Sameer Joshi: Power in that particular region, including renewables or other sources. So it benefited them.

Sameer Joshi: <unk> to be able to ensure that when they needed to have uptime during periods of high electricity demand that they could have that uptime and they needed our program to provide them with the assurance that they wouldn't lose out on the opportunity to generate electricity during those high demand periods of <unk>.

Sameer Joshi: Time.

Sameer Joshi: So.

Sameer Joshi: The additional count that I'm that I referenced for 2025 later this year is in the same region of the country, where the account from last year is located and they're being driven by the same reasons.

Vince Arnone: So we are trying to uncover if there are going to be additional pockets of need, if you will, for Chemtech technology. But it's not like there are going to be significant additional accounts that are out there just waiting for us to help them with their power generation. Because the other factor is the units need to be burning coal that is difficult for that unit to burn. In other words, when they are running at some of their higher load requirements, that they are generating a lot of slagging and fouling on the inside of that boiler that requires our program.

Sameer Joshi: So we are trying to uncover if there are going to be additional pockets of of need if you will for for Chem Tech technology, but it's not like there there are going to be.

Sameer Joshi: Significant additional accounts that are out there just waiting for us to help them with.

Sameer Joshi: With their power generation because the other factor is the units need to be burning.

Sameer Joshi: Coal that is difficult for that unit to burn in other words when they when they are running at some of their higher load requirements that they are generating a lot of flat slagging and following on the inside of that boiler that we cry that requires our program. So there are a few key factors that are necessary to be in place that would.

Vince Arnone: So there are a few key factors that are necessary to be in place that would require an end customer's unit to need our chemical technology program.

Sameer Joshi: Require and end customers unit to need our chemical technology program, but were anytime we have the opportunity to add a new based account we jump as quickly as we can.

Vince Arnone: Anytime we have the opportunity to add a new based account, we jump as quickly as we can.

Vince Arnone: Okay, can you give us more color on the municipal waste combustion units and the possible... Yeah. So I'll comment more specifically on what I think is coming here this year, because the work that I talked about coming our way towards the second, sorry, towards the end of the first half of this year is basically long-term customers that we've been dealing with as Fuel Tech for many, many years, their needs are being driven by state regulatory mandates. And so that's why we have the confidence in being able to say that the units that we're talking about with these customers are going to go forward and likely turn into contracts as we move towards the end of the first half of this year.

Speaker Change: Okay can you give us more color on the municipal waste combustion units in the possible opportunities over the next few years.

Sameer Joshi: Yeah.

Sameer Joshi: So I'll comment.

Sameer Joshi: More specifically on what I think is coming here this year because the the work that I talked about.

Sameer Joshi: Coming our way towards the second sorry towards the end of the first half of this year is basically long occurred long term customers that we're that we've been dealing with as fuel tech for many many years.

Sameer Joshi: Their needs are being driven by state regulatory mandates.

Sameer Joshi: And so that's why we have the confidence and then being able to say that that the units that we're talking about with these customers are going to go forward and likely turned into contracts as we move towards the end of the first half of this year. They are municipal waste combustor systems, but they are not being driven driven by beef.

Vince Arnone: They are municipal waste combustor systems, but they're not being driven by the federal EPA MWC rule that I mentioned as well. Okay.

Speaker Change: Federal EPA.

Speaker Change: M WC rule that I mentioned as well, okay. So thats for this year now the additional municipal waste combustor rule.

Vince Arnone: So that's for this year. Now, the additional municipal waste combustor rule That's in progress, right? And it's been delayed. They're supposed to be coming up with finalization of their rule later this year. But given this administration's perspective on new regulation becoming finalized. I'm not necessarily confident to be able to say that we're going to have drivers from that new rule as we sit here right now. We need to see how that plays out. Okay.

Speaker Change: That's in progress right and its been delayed there is supposed to be.

Speaker Change: Coming up with Finalization of their rule later this year, but given this administrations.

Speaker Change: Respective on new regulation, becoming finalized.

Speaker Change: I'm not necessarily confident to be able to say that that we're going to have drivers from that new rule.

Speaker Change: As we sit here right now we need to see how that plays out.

Speaker Change: Okay and.

Vince Arnone: Can you further discuss the data center opportunities and how would you go about capturing? Yeah, as I mentioned, data centers aren't, they're not new to us. We had a contract for 20 units for data center backup power back in 2018-19 time frame. And we supplied SCR for natural gas turbines. Okay. So what we are seeing today, and obviously evidenced by everything that we've seen in the press over the past few months and currently, is a scramble to build out. Power Generation in support of build-out of data centers in this country to the tune of investment of hundreds of billions of dollars that are being put on the table by several large entities in this country.

Speaker Change: To further discuss the data center opportunities and how would you go about capturing this business.

Speaker Change: Yeah as I mentioned data centers arent they are not new to US we had a contract for 20 units.

Speaker Change: For data center, there is data center backup power back in 2018 19 timeframe.

Speaker Change: And we supplied SCR.

Speaker Change: For natural gas turbines, okay. So what we are seeing today, and obviously evidenced by everything that we've seen in the press over the past few months and currently.

Speaker Change: Is a scrap.

Speaker Change: Scramble.

Speaker Change: To build out.

Speaker Change: General power generation in support of.

Speaker Change: The build out of data centers in this country to the tune of investment of hundreds of billions of dollars that are being put on the table by.

Speaker Change: Several large entities in this country okay.

Vince Arnone: Okay, they're looking to move quickly with the data center build out and there's a lot of activity that that would need to be done simultaneously for all of this work to get done. So what's happening is that a lot of parties that would be in the in the supply chain for these activities are being brought to bear and and discussions are being held and Fuel Tech is one of those parties because obviously what we are one of the possible suppliers for nitrogen oxide controls on the back end of these generation systems for these data centers.

Speaker Change: <unk>.

Speaker Change: They're looking to move quickly with the data center build out.

Speaker Change: And there's a lot of activity that that would need to be done simultaneously for all of this work to get done.

Speaker Change: So what's happening is that a lot of parties that would be in the in the supply chain for these activities are being brought to bear and in discussions are being held in fuel Tech is one of those parties.

Speaker Change: Because obviously, what we are one of the possible suppliers for nitrogen oxide controls.

Speaker Change: On the back end of these generation systems for for these for these data centers most of the opportunities that we're looking at our gas turbine related.

Vince Arnone: Most of the opportunities that we're looking at are gas turbine related so we are dealing directly with gas turbine OEMs as they look to go ahead and and bid into their the data center owners and potential operators that are looking to put these plans and projects into place. So over the past two to three months we've had a good deal of activity. We actually have put in a couple of bids already. I expect more activity to be recurring here with different suppliers over this next handful of months time frame. So the activity in this area is picked up.

Speaker Change: So we are dealing.

Speaker Change: Our directly with.

Speaker Change: Gas turbine Oems as they look to go ahead in and bid into the data center owners and potential operators that are looking to put these plans and projects into place.

Speaker Change: So over the past two to three months, we've had a good deal of activity, we actually have put in a couple of bids already I.

Speaker Change: Expect more activity into.

Speaker Change: To be re recurring here with different suppliers over this next.

Speaker Change: Handful of months timeframe. So the activity here in this area has picked up these are larger contract value opportunities.

Marc silk: These are larger contract value opportunities and to the numbers that we haven't seen in that since that 2018-19 time frame and so we're extremely excited about the opportunity. Sounds encouraging.

Speaker Change: Yes.

Speaker Change: To the numbers that we haven't seen in that since that 2018, 19 timeframe and so we're extremely excited about the opportunity.

Marc silk: Good luck going forward. Thank you very much, Marc. I appreciate it.

Speaker Change: That was encouraging good luck going forward. Thank you very much Mark I appreciate it.

Marc silk: Thank you.

Speaker Change: Thank you our next questions come from the line of William Bremer with Vanquish Capital Partners. Please proceed with your questions.

William Bremer: Our next questions come from the line of William Bremer with Vanquish Capital Partners.

William Bremer: Please proceed with your Good morning, Vince. How are you? Hi, Bill. Fine. How are you doing? Okay, great.

William Bremer: Good morning, Vince how are you.

Bill Fine: Hi, Bill Fine how are you doing.

William Bremer: Let's start off with your guidance here of $30 million. I'm a little surprised at that. hasn't hit that range since 2019. So I am very impressed by your guidance.

Bill Fine: Okay, great, let's start off with your guidance here of $30 million.

Bill Fine: Little surprised that that since this company hasn't hit that range since 2019, so I am very impressed by your guidance.

Vince Arnone: Can you provide a little more granularity on the top line of how that flows throughout 2025 in terms of consolidated revenue? I'm not hesitant to give anything quarter by quarter as we sit here, Bill. What I would say is, in particular on the APC side, but on Chemtech, we typically have a seasonal quarter performance. So, and as we look at an uptick in that business, our increases from quarter to quarter would be increases over what I would call the standard quarters that we would see in prior years, okay? But as I sit here today, I'm hesitant to go into detail on a quarter over quarter basis, other than to say that we typically have a PC business that is is largely more back-end of the year oriented from a revenue recognition perspective than front-end oriented.

Bill Fine: Can you provide a little more granularity on the top line of how that slows throughout 2025 in terms of consolidated revenue.

Bill Fine: Hesitant to give anything quarter by quarter as we as we sit here bill.

Bill Fine: What I would say is <unk>.

Speaker Change: In particular on the APC side, but on Chem Tech.

Speaker Change: We typically have a seasonal quarter performance.

Speaker Change: So as we look at an uptick in that business are increases from quarter to quarter.

Speaker Change: Would be increases over what I would call the standard quarters that we would see in prior years okay.

Speaker Change: But as I sit here today, I am I'm hesitant to go into detail on a quarter over quarter basis.

Speaker Change: Other than to say that we typically have APC business that is.

Speaker Change: As largely more backend of the year oriented from a revenue recognition perspective than front end oriented and when you consider the fact that where were looking at incremental project awards coming in here in the near term.

Vince Arnone: And when you consider the fact that we're looking at incremental project awards coming in here in the near term of the $4 to $5 million level, we won't actually execute on those awards until we move into the second half of the year. So general statement, Chemtech will follow, say, quarterly seasonal trends that we would have seen in prior years, but just with a higher revenue number. APC, Q1, Q2, we're working off of backlog from the end of 2024, but then we'll be factoring in working off new contract awards that we're going to have in-house here before the end of the first half of the year, and we'll feel that uptick in the second half of 2025.

Speaker Change: The $4 5 million dollar level.

Speaker Change: We won't actually execute on there on those awards until we move into the second half of the year. So general statement.

Speaker Change: <unk> will follow say quarterly seasonal trends that we would've seen in prior years, but just with a higher revenue number.

Speaker Change: <unk>.

Speaker Change: Q1, Q2, we're working off of backlog from the end of 2024, but then we will be factoring in working off on new contract awards that we're going to have in house here.

Speaker Change: Before the end of the first half of the year and we will feel that uptick in the second half of 2025 does that makes sense.

William Bremer: Does that make sense? It does.

Speaker Change: It does it does your engineering staff must be <unk>.

Vince Arnone: Your engineering staff must be working around the clock. Our engineering staff is very, very busy, as we sit here right now. I'm proud of the team. We have a lot of good work left to do, though. This is exciting for the company as a whole right now. Um, agreed.

Speaker Change: Working around the clock.

Speaker Change: Our engineering staff is very very busy as we sit here right now.

Proud of the team we have a lot of good work left to do though this is a this is exciting for the company as a whole right now.

William Bremer: Um, since you're fabulous. I want to understand the Timing of potential orders and the realization of those orders. And I know it differs from your segments, from APC, of course, to Fuel Chem. But I want to specifically target the data center opportunities. in the request for proposals that you just referred to on your nitrogen-oxygen controls with the gas turbine OEMs. How quick... Once your engineering and design team has finished this, and let's just say we're optimistic you receive an order on the data centers, how quickly can your team and your fabrication partner bring that product.

Speaker Change: Our grief since you're fabless.

Speaker Change: I want to understand the.

Speaker Change: The timing.

Speaker Change: All potential orders and the realization of those orders.

Speaker Change: And I know it differs.

Speaker Change: From your segments from EPC of course to fuel Chem.

Speaker Change: But I want to specifically target the data center opportunities.

Speaker Change: In the request for proposals that you just referred to.

Speaker Change: On your nitrogen oxygen controls with the gas turbine Oems how quickly.

Speaker Change: And once your engineering and design team has finished this and let's just say we're optimistic you receive an order on.

On the data centers, how quickly can your team.

Speaker Change: And your fabrication partners.

Speaker Change: Bring that product out.

Vince Arnone: Good question. So, just as a general statement... The bids that we're actually putting in place today are there are multiple unit types of bids, and they'll have delivery schedules that will be over a call it a 3-6 month period of time in terms of when we'll look to actually bring the product to customer site. So that's something obviously we'll work out with the customer that we would be under contract with. General statement for units of the like that we're talking about here for data centers, we're looking at around, again, from date of order to actually bring a unit to site.

Speaker Change: Good question, So just as a general statement.

Speaker Change: The bids that we're actually putting in place today or are there multiple unit types of bids.

Speaker Change: And there they will have delivery schedules.

Speaker Change:

Speaker Change: That will be over a.

Speaker Change: Call. It a three to six month period of time in terms of when we will look to actually bring the product to the customer site. So that's something obviously, we'll work out with.

Speaker Change: The the customer that that would that we would be under contract with.

Speaker Change: General statement for for units of the like that we're talking about here for data centers.

Speaker Change: We're looking at it around again from from date of order to actually delivering a unit to site.

Vince Arnone: 40 week timeframe thereabouts could could be less could be a little bit more depending on the intricacy of the solution that we have for the customer. But on any given order, we would look to be able to deliver more than one unit on a per month basis once we start a delivery post that 40-week schedule, if you will. So that's the general range we're looking at as we sit here today. And that's quite quick.

Speaker Change: 40 week timeframe thereabouts could could be less could be a little bit more depending on the intricacy of the solution that we have for the customer.

Speaker Change: But on any given order, we would look to be able to deliver more than one unit on a per month basis. Once we started delivery.

Speaker Change: Post at Fort that 40, a week schedule, if you will so.

Speaker Change: That's the general range, we're looking at as we sit here.

Speaker Change: And that's that's quite quick so.

Vince Arnone: So I And my follow-up on that is... Are you seeing? The fact that, hey, this is with gas turbine related OEMs. Are you seeing that, hey, the, you know, the, the. the first steps of the engineering process and that template can be utilized, maybe tweaked here and there because all these data centers seem to be getting larger and larger and larger, but it seems that at least you have a template that, hey, that initial workload is a little bit less and now it's just adding a little bit more and the request for proposals. from your team.

Speaker Change: I applaud you guys and my follow up on that is.

Speaker Change: Are you seeing.

Speaker Change: The fact that hey, this is with gas turbine related Oems are you seeing that hey, the deep.

Speaker Change: The.

Speaker Change: The first steps of the engineering process and that template.

Speaker Change: Can be utilized maybe tweaks here and there because all these data centers seem to be getting larger and larger and larger.

Speaker Change: But it seems that at least you have a template that hey that initial.

Speaker Change: Workloads is a little bit less and now it's just adding a little bit more and the request for proposals.

Speaker Change: From your team.

Vince Arnone: are getting quick. Good question as well. There are synergies as it relates to how we did these projects and what we've been trying to do and then this started a handful of years ago was that We are looking to come up with our design solution for a variety of different types and sizes of gas turbines from those OEMs. So to your point, so that we are better prepared for a more expedient response time when those requests come our way. Secondly, as we do prepare those designs and we actually work through our supply chain to come up with cost estimates as the base for a bidding structure, we're able to leverage that work as well.

Speaker Change: Guinea quicker.

Speaker Change: Good question as well.

Speaker Change: There are synergies.

Speaker Change: As it relates to.

Speaker Change: How we bid these projects and what we've been trying to do and then just started.

Speaker Change: A handful of years ago was that.

We are looking to come up with our design solution for a variety of different types and sizes of gas turbines from those Oems. So to your point. So that we are better prepared for a more expedient response time when when those requests come our way.

Speaker Change: Secondly, as we do prepare those designs and we actually worked through our supply chain.

Speaker Change: To come up with cost estimates as the base for our bidding structure, we're able to leverage that work as well so to answer. Your question. Yes. There are synergies in that process and we are looking to capitalize on some of those synergies prospectively.

Vince Arnone: So to answer your question, yes, there are synergies in that process, and we are looking to capitalize on some of those synergies prospectively.

Speaker Change: Got you back to the $30 million topline for 2025 does this bring us.

Vince Arnone: Back to the 30 million top lines of 2025. Does this bring us to a operational income, positive. Yeah. As I sit here right now, Bill, $30 million is not going to do it in terms of getting us to a break-even level at operating income. Ultimately, it will depend on that margin profile. If margins are higher than expectation, you know, perhaps it's a possibility. But what I've said in the past is we probably need to get closer to $33 to $35 million in total revenue to be able to get to break-even on the operating income line.

Speaker Change: Two a.

Speaker Change: <unk>.

Speaker Change: Income.

Speaker Change: Positive income.

Speaker Change: Yes.

Speaker Change: As I sit here right now Bill 30 million.

Speaker Change: Is not going to do it in terms of getting us to a breakeven level at operating income ultimately it will depend on that margin profile of margins are higher than expectation, perhaps its a possibility but.

Speaker Change: What I've said in the past is we probably need to get closer to 33% to $35 million in total.

Speaker Change: Revenue.

Speaker Change: To be able to get to breakeven on the operating income line.

Vince Arnone: So we, 30 million would likely have us fall short of operating income. As I sit here today, we would need to generate a little bit more.

Speaker Change: So $30 million will likely have us fall short of operating income.

Speaker Change: As I sit here today, we would need to generate a little bit more.

Vince Arnone: Okay, final question is on the cash at hand, since you're basically trading for cash per share with no debt. of potentially either a little M&A here. Even something in the neighborhood of a few million dollars could do a lot of support for the company at this point. I'm just curious on your take there and the goals. Regarding your first question, we are looking at any sort of opportunities that could assist our end markets, whether it be small acquisition and or licensing of technology that could provide benefit to us as a company as a whole. So that is something that we are looking at doing, so we'll keep everyone apprised as that moves forward.

Speaker Change: Okay final question is on the cash.

Speaker Change: As Hans since you're basically trading for cash per share with no debt.

Speaker Change: Ill.

Speaker Change: Any interest of potentially either.

Speaker Change: M&A here.

Speaker Change: Something that could be utilized to help the company in terms of top line to get us to that point or possibly a stock buyback.

Speaker Change: Even something in the neighborhood of a few million dollars to do a lot of support for the company at this point.

Speaker Change: Just curious on your take there.

Speaker Change: Regarding your first question.

Speaker Change: We are.

Speaker Change: Looking at any sort of opportunities that.

Speaker Change: That could assist our end markets, whether it be small acquisition into our licensing of technology that could provide benefit to us as a company as a whole so that that is something that we.

Speaker Change: We are looking at doing so well.

Speaker Change: We'll keep everyone apprised as that moves forward.

Vince Arnone: And then on the second point, obviously, we've talked about stock buyback over the past handful of years. It's an ongoing discussion that we have every time we have a board meeting, and we actually have a board meeting tomorrow morning, and we'll likely be discussing that again. Our position historically is that we've thought that our business momentum, our positive business momentum, should we actually put it out there publicly, is going to be enough to drive increase in shareholder value. And as I said in my commentary, right now, based upon the landscape of opportunities that we do have.

Speaker Change: Then on the second point, obviously, we've talked about.

Speaker Change: Stock buyback over the past handful of years.

Speaker Change: It's an ongoing discussion that we have every time, we have a board meeting and we actually have a board meeting tomorrow morning, and will likely be discussing that again.

Speaker Change: Our position historically is that we thought that our business momentum our positive business momentum should should we actually put it out there publicly is going to be enough to drive increase in shareholder value and as I said in my commentary.

Speaker Change: Right now based upon the landscape of opportunities that we do have.

Vince Arnone: I feel like we do have that opportunity to drive shareholder value based upon that opportunity landscape without having to do a buyback. That's obviously yet to be seen, but as I shared with you before, this is an ongoing conversation. We will continue to have it as a company.

Speaker Change: I feel like we do have that opportunity to drive shareholder value based upon net opportunity landscape without having to to do a buyback and thats, obviously yet to be seen.

Speaker Change: Yes.

Speaker Change: As I shared with you before this is an ongoing conversation we will continue to have it as a company.

William Bremer: Okay, if that's the case, I'd like to see some insider buys, including your board. I hope they're listening. But the board needs to step in here since we haven't seen that much other than yourself here and there purchase some shares. So we would echo that.

Speaker Change: Okay. If that's the case I would like to see some insider buys including your board.

Speaker Change: I hope, they're listening, but the board needs to step in here since Hum.

Bill Fine: We haven't seen that much other than yourself here and Theyre purchased some shares so we would echo that which all of that I think you. Good luck on 2025, it seems as though the turn is finally in place. Thank you. Thanks Bill.

William Bremer: With all that, I thank you. Good luck on 2025. It seems as though the turn is finally in place. Thank you. Thanks, Bill. Thank you.

Speaker Change: Thank you. Our next question is come from the line of Hawker Stagger with please.

Ankur Sagar: Our next questions come from the line of Ankur Sagar.

Ankur Sagar: Please proceed with your Hi, Vince. Thank you for taking my questions. My pleasure. How are you? Good. I'm great. Thank you.

Speaker Change: Please proceed with your questions.

Hawker Stagger: Hi, Vince Thank you for taking my questions.

Hawker Stagger: Pleasure how are you all good I'm great alright. Thank you.

Ankur Sagar: I just have two questions. One is actually regarding the data center opportunity. It is for sure out there that the data centers that are being built or that are already in place for the AI stuff, they need the power now. And they're going for now as of latest towards the natural gas and putting up the gas engines. If you can just elaborate on the opportunity where Fuel Tech products come in. Is it those gas engines that are being put in place right now, they need to have something for this NO2 emissions? Is that what the opportunity is?

Hawker Stagger: I have two questions one is.

Hawker Stagger: Regarding the data center opportunity.

Hawker Stagger:

Hawker Stagger: Is oh for sure out there that the data centers that are being built.

Hawker Stagger: Are already in place.

Hawker Stagger: For the AI stuff.

Hawker Stagger: They need the power now.

Hawker Stagger: And theyre going for now.

Hawker Stagger: The latest two worst in natural gas and putting up the gas engines.

Hawker Stagger: If you can just elaborate on the opportunity where fuel tech products come in.

Hawker Stagger: Is it those gas engines that are being put in place right now.

Hawker Stagger: The need to have something for this I know two emissions is that what the opportunity is if you can just go a little bit more into detail I would appreciate it.

Vince Arnone: If you can just go a little bit more into detail, I would appreciate it. Yes, not a problem at all, and you are correct with your statement. The natural gas engines, they generate nitrogen oxides when they actually burn the fuel. The data center power that is being put in place is going to be permitted as primary power and not as backup power, which means that these data centers are effectively being permitted similar to a utility site with base-loaded power requirements. And so as a result, the existing regulatory policy requires that that type of power have nitrogen oxide controls be in place on those engines.

Hawker Stagger: Yeah, no not a problem at all and you are correct.

Speaker Change: Your statement.

Hawker Stagger: The natural gas engines, they generate nitrogen.

Hawker Stagger: Oxides, when they they actually burn the fuel.

Hawker Stagger: The datacenter power that is being put in place is going to be permitted as primary power and not as backup power, which means that these these data centers are effectively being permitted similar to a utility site.

With base loaded power requirements and so as a result the existing.

Hawker Stagger: Regulatory policy requires that that type of power have nitrogen oxide controls be in place on those engines. So that is the specific driver.

Vince Arnone: So that is the specific driver.

Vince Arnone: Got it. And then, I think you mentioned that Fuel Tech did have this opportunity and some contracts signed a few years ago, but at that point of time, the regulation required that if the data centers run at some capacity, which they never did, but you think based on the landscape and what you're hearing from these gas engine players, that is not the case. I mean, the utilization is there and the regulations are already in place for your products to be in place. I would say yes to both statements, that yes, these units that we're talking about are primary power.

Hawker Stagger: Got it.

Hawker Stagger: And then I think you mentioned that in a bit.

Hawker Stagger: Fuel Tech did have this opportunity in some contract signed a few years ago, but at that point of time.

Hawker Stagger: The regulations require that if the data centers run at some capacity.

Hawker Stagger: Which they never did.

Hawker Stagger: But but you think based on the landscape and what you're hearing from these these.

Hawker Stagger: Gas engine players that is not the case I mean, the utilization is there and the regulations are already in place.

Hawker Stagger: For your products to choose to be.

Hawker Stagger: In place.

Hawker Stagger: Yes, I would say, yes to both statements.

Hawker Stagger: Yes. These these units that we're talking about our primary power theyre not backup power and so they would be running.

Vince Arnone: They're not backup power, and so they would be running full bore 24-7 to meet the needs of that data center, and absolutely. There is no new regulation that's required. Existing regulation requires that that type of power generation requires pollution control equipment.

Hawker Stagger: Got it for full bore 24, 7% to meet the needs of their data center and absolutely existing there. There is no new new regulation, that's required existing regulation requires that type of power generation requires pollution control equipment.

Ankur Sagar: Got it.

Vince Arnone: And then one last one. I think in your remarks, you mentioned something about in regards to DGI, a rental. I thought that with DGI, I mean, these are large systems, larger projects where you basically sell in the equipment to these wastewater or other use cases, like fisheries and all that. Is it the rental part, if you can just elaborate on that one, is it to remove the traction from the initial purchase? And do you have any opportunities lined up in the backlog, in the pipeline, in the rental sense? Yeah. So to answer your question, we believe that there are going to be certain end market opportunities that could benefit from a system rental scenario.

Hawker Stagger: Got it and then one last one I think in your remarks, you mentioned something about it.

Hawker Stagger: In regards to D G I.

Hawker Stagger: Our rental.

Hawker Stagger: I thought that with the GI I mean these are large systems.

Hawker Stagger: Larger projects, where you basically.

Hawker Stagger: Selling the equipment to these advanced water or other use cases.

Hawker Stagger: Like fisheries and all that.

Hawker Stagger: Is it the rental part is.

Hawker Stagger: If you can just elaborate on that one is it to remove the traction from the initial purchase.

Hawker Stagger: And do you have.

Hawker Stagger: Any opportunities lined up in the backlog and the pipeline.

Hawker Stagger: And the rental expense.

Hawker Stagger: So to answer your question, we believe that there are going to be certain end market opportunities.

Hawker Stagger: That could benefit from a system rental scenario.

Vince Arnone: And those are opportunities whereby a site is having difficulty meeting their dissolved oxygen delivery requirements for their wastewater treatment processes. And The difficulty could be driven by it's just a site that doesn't have enough capacity, generally speaking. It could be a site whereby some of their existing oxygenation equipment is malfunctioning, and it needs to go through some sort of repair or capital investment process or other reasons. But we are open to obviously either scenario as we look at the end customer base for DGI. But we do expect that there will be some opportunities whereby a system rental could be a benefit to the end customer.

Hawker Stagger: And those are opportunities whereby.

Hawker Stagger: Right.

Hawker Stagger: Is having difficulty.

Hawker Stagger: In meeting their dissolved oxygen delivery requirements for their wastewater treatment processes.

And.

Hawker Stagger: The difficulty could be driven by its just a site that that doesn't have enough capacity generally speaking.

Hawker Stagger: It could be a site whereby some of their existing oxygenation of equipment is.

Hawker Stagger: Malfunctioning and it needs to go through some sort of repair our capital investment process or other reasons, but we are open to to obviously either scenario as we look at the end customer base for dji, but we do expect that there will be some opportunities whereby our system rental.

Hawker Stagger: Could be a benefit to the end customer and yes, it could be a precursor to the capital sale as well so it could work in a variety of different ways.

Vince Arnone: And yes, it could be a precursor to the capital sale as well. So it could work in a variety of different ways.

Ankur Sagar: Will that help also make the purchase cycle a little faster, or is it just totally based on the capacity and the utilization part that you mentioned, where some are just smaller sites? I'm not sure it makes the process move faster as we sit here today, but I think ultimately it just could provide expedient benefit to the end customer if they do have an immediate need.

Hawker Stagger: Will that move unhelpful ultimate.

Hawker Stagger: You know that.

Hawker Stagger: Purchase cycle, a little faster or is it just.

Hawker Stagger: Totally based on you know the capacity and the utilization partner to you mentioned or something somewhere just smaller sites.

Hawker Stagger: Im not sure it makes the the process move move faster as we sit here today.

Hawker Stagger: But I think ultimately it just could provide call at expedia and benefit to the to the end customer if they do have a an immediate need.

Operator: Okay, thank you for taking my question. Thank you very much for joining. Thank you. We have reached the end of our question-and-answer session.

Speaker Change: Got it okay. Thank you for taking my questions. Thank you very much for joining.

Speaker Change: Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to Vince Arnone for closing remarks.

Vince Arnone: I would now like to turn the floor back over to Vince Arnone for a closing Thanks very much, operator. Once again, a significant thank you to the entirety of the Fuel Tech team and for all of your dedication and efforts. And again, thanks to our shareholder base for your patience. I can assure you that we're working diligently to bring shareholder value to your support. Thanks very much, everybody. Have a good day. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Speaker Change: Hi, Thanks, very much operator.

Once again a.

Speaker Change: Significantly in Q2, the entirety of the fuel tech team and for all of your dedication and efforts and again, thanks to our shareholder base for fewer patients I can assure you that we're working diligently to bring shareholder value.

Speaker Change: To your support thanks, very much everybody and have a good day.

Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.

Speaker Change: Yes.

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Speaker Change: [music].

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Speaker Change: [music].

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