Fuel Tech, Inc.

Greetings and welcome to the FuelTech 2024 Fourth Quarter Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Devin Sullivan, Managing Director of the Equity Group. Thank you. You may begin.

Thank you, Daryl. Good morning, everyone, and thank you for joining us today for FuelTech'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. Our speakers for today will be Vince Arnone, Chairman, President, and Chief Executive Officer, and Ellen Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call, except for historical information, are forward-looking statements as defined in Section 21E 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 FuelTech'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. FuelTech 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 FuelTech and are subject to various risks, uncertainties, and other factors, including but not limited to those discussed previously. in FuelTech's annual report on Form 10-K in Item 1A under the caption of Risk Factors and subsequent filings under the Securities Exchange Act of 1934 as amended, which could cause FuelTech'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. FuelTech undertakes no obligation to update such factors or to publicly announce the results 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. With that said, I'd now like to turn the call over to Vince Arnone. Vince, please go ahead.

Vince Arnone Thank you, Devin. Good morning. And I'd like to thank everyone for joining us on the call today. 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. 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. 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 businesses. Let's start with the discussion of our chemical technologies business or Fuel Chem. The Fuel Chem 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, improving plant operations, and maximizing revenue generation during periods of high electricity demand. Regarding opportunities for new business, we are pursuing an additional Fuel Chem 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. 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 Sheinbaum's plan. 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 to 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. 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 four to five 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. 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 FuelTech. 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. 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. 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 NOPS regulations for existing clients. 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. FuelTech 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. Now, moving to our DGI technology. Our ongoing business development initiatives continue to gain momentum. 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. 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 9 to 12 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, food and beverage, chemical and petrochemical, and horticulture, and we look forward to addressing these markets prospectively as we continue to advance towards commercialization. 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 FuelChem, 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 FuelChem. Now in closing, I want to express my thanks to the FuelTech 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. I thank our shareholders for their continuing support and reiterate to you our focus on delivering long-term shareholder value. Now, I'd like to turn the call over to Ellen for her comments on our financial results. Ellen, please go ahead.