Fuel-Tech N.V. Reports First-Quarter Results; Revenues up 96% Year-Over-Year.STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn. -- Fuel-Tech N.V. (Nasdaq: FTEK), a world leader in advanced engineering solutions for the optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. of combustion combustion, rapid chemical reaction of two or more substances with a characteristic liberation of heat and light; it is commonly called burning. The burning of a fuel (e.g., wood, coal, oil, or natural gas) in air is a familiar example of combustion. systems in utility and industrial applications, today reported results for the quarter ended March 31, 2005. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter surged 96% to a record $12.1 million, up $5.9 million from the comparable prior-year period. Net income totaled $753,000, or $0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a net loss of $531,000, or ($0.03) per diluted share, in the same year-ago quarter. The increases in net sales and net income were attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to exceptionally strong results in the air pollution control business, which continues to benefit from the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of orders experienced since the second half of 2004. Sales for the fuel treatment chemical business, at $3.7 million, were essentially unchanged from a year ago as FUEL CHEM CHEM Chemistry CHEM Chemical CHEM Chemist CHEM Chemistry Mission CHEM Centre des Hautes Études Militaires (French) CHEM Center for Healthcare Environmental Management CHEM Charge-Energy-Mass (spectrometer) (R) revenues were limited by the effects of demonstration programs and coal supply issues. With respect to demonstrations, three such programs were in effect during the first quarter, one on a no-cost basis at a critical coal-fired Adj. 1. coal-fired - fueled by burning coal; "a coal-fired ship" coal-burning fueled - heated, driven, or produced by burning fuel utility and the other two on a cost-share basis at key oil-fired adj. 1. Using oil as a fuel; as, an oil-fired furnace s>. Adj. 1. oil-fired - fueled by burning oil; "an oil-fired furnace" fueled - heated, driven, or produced by burning fuel oil-fired units. Assuming the Company meets the performance criteria criteria (krītēr´ē  ),n. for the two cost-share demonstrations, Fuel Tech will receive the balance of the full commercial price for these programs. Relative to coal supplies, one critical Western-coal fired unit was significantly derated unexpectedly for an extended period due to inability to have the required amounts of Western coal delivered to its plant. Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. C. Argabright, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , commented, "We are extremely pleased to start off the year by reporting record quarterly revenues and strong gains in net income. Our air pollution control business continues to experience robust order activity as utilities and industrial facilities impacted by the Environmental Protection Agency's (EPA EPA eicosapentaenoic acid. EPA abbr. eicosapentaenoic acid EPA, n.pr See acid, eicosapentaenoic. EPA, n. ) State Implementation Plan A State Implementation Plan (SIP) is a United States state plan for complying with the federal Clean Air Act, administered by the Environmental Protection Agency. The SIP consists of narrative, rules, technical documentation, and agreements that an individual state will use to (SIP (1) (Session Initiation Protocol) An IP telephony signaling protocol developed by the IETF. Primarily used for voice over IP (VoIP) calls, SIP can also be used for video or any media type; for example, SIP has been used to set up multi-player Quake games. ) Call utilize our NOxOUT(R) technology in their regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. compliance planning." Mr. Argabright concluded, "Although we achieved only modest revenue growth in our FUEL CHEM business, we continue to be very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about its prospects, both in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and abroad. With several demonstrations announced this past quarter, including a successful phase one trial in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , we believe we are well on the way to winning new commercial orders and achieving our growth objectives for the year." Conference Call As a reminder, Fuel-Tech N.V. will host a conference call today at 10:00 AM ET to discuss the results. The call will be simultaneously broadcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.fueltechnv.com and can be accessed under the "Investors" subheading sub·head·ing n. See subhead. subheading Noun the heading of a subdivision of a piece of writing Noun 1. on the homepage See home page. . The call can also be accessed by dialing 800.299.6183 (domestic) or 617.801.9713 (international) and using the passcode "Fuel-Tech N.V." A replay of the call will be available on the website and can be accessed by dialing 888.286.8010 (domestic) or 617.801.6888 (international) and using the passcode "61916050". The replay will be available until May 26, 2005. About Fuel-Tech N.V. Fuel-Tech N.V. is a leading technology company engaged in the worldwide development, commercialization and application of state-of-the-art proprietary technologies for air pollution control, process optimization Process optimization is the practice of making changes or adjustments to a process, to get results. Optimization is the use of specific techniques to determine the most cost effective and efficient solution to a problem or design for a process. , and advanced engineering services. The Company's NOx reduction processes, which include the NOxOUT(R), NOxOUT CASCADE(R), NOxOUT ULTRA(R), Rich Reagent reagent /re·a·gent/ (re-a´jent) a substance used to produce a chemical reaction so as to detect, measure, produce, etc., other substances. re·a·gent n. Injection (RRI RRI Radio Romania International RRI Raman Research Institute RRI Resource Renewal Institute RRI Robarts Research Institute RRI Research Reactor Institute RRI Renal Research Institute (USA) RRI Rights and Resources Initiative ) and NOxOUT SCR (Sequence Control Register) See program counter. (R) technologies, have established Fuel-Tech N.V. as a leader in post combustion NOx control systems, which are installed on over 325 units worldwide. New technologies that have grown out of the core NOx reduction business form the basis of the FUEL CHEM(R) business. FUEL CHEM technology centers around the unique application of chemicals to improve the performance of combustion units by controlling slagging, fouling Fouling refers to the accumulation and deposition of living organisms (biofouling) and certain non-living material on hard surfaces, most often in an aquatic environment. This can be the fouling of ships, pilings, and natural surfaces in the marine environment (marine fouling), , corrosion and opacity Refers to being "opaque," which means to prevent light from shining through. For example, in an image editing program, the opacity level for some function might range from completely transparent (0) to completely opaque (100). . The Company's FUEL CHEM products are being applied to over 80 combustion units burning a wide variety of fuels including coal, heavy oil, biomass, and municipal waste. Both the NOx reduction and FUEL CHEM businesses rely heavily on the Company's exceptional Computational Fluid Dynamics Computational fluid dynamics The numerical approximation to the solution of mathematical models of fluid flow and heat transfer. Computational fluid dynamics is one of the tools (in addition to experimental and theoretical methods) available to solve modeling skills, which are enhanced by internally developed, high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. visualization Using the computer to convert data into picture form. The most basic visualization is that of turning transaction data and summary information into charts and graphs. Visualization is used in computer-aided design (CAD) to render screen images into 3D models that can be viewed from all software. For more information, visit Fuel-Tech N.V.'s web site at www.fueltechnv.com. This press release may contain statements of a forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. nature regarding future events. These statements are only predictions and actual events may differ materially. Please refer to documents that Fuel Tech files from time to time with the Securities and Exchange Commission for a discussion of certain factors that could cause actual results to differ materially from those contained in the forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. .
FUEL-TECH N.V.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share data)
March 31, December 31,
2005 2004
----------- ------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 6,346 $ 6,531
Accounts receivable, net 9,126 7,358
Deferred income taxes 26 500
Prepaid expenses and other
current assets 1,761 1,271
----------- -------------
Total current assets 17,259 15,660
Equipment, net of accumulated
depreciation of $7,526 and $7,209,
respectively 3,311 2,863
Goodwill 2,119 2,119
Other intangible assets, net of
accumulated amortization of $1,000
and $968, respectively 1,324 1,342
Deferred income taxes 1,144 1,144
Other assets 840 700
----------- ------------
Total assets $ 25,997 $ 23,828
=========== ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 4,035 $ 2,705
Accrued expenses 1,538 1,663
------------ ------------
Total current liabilities 5,573 4,368
Other liabilities 492 505
------------ ------------
Total liabilities 6,065 4,873
Stockholders' equity:
Common stock, par value $0.01
per share, authorized 40,000,000
shares, 19,938,779 and 19,529,952
shares issued, respectively 199 195
Additional paid-in capital 88,865 88,600
Accumulated deficit (69,705) (70,458)
Accumulated other comprehensive
income 41 86
Nil coupon perpetual loan notes 532 532
------------ -------------
Total stockholders' equity 19,932 18,955
------------ -------------
Total liabilities and stockholders'
equity $ 25,997 $ 23,828
============ =============
FUEL-TECH N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands of U.S. dollars, except share data)
Three Months Ended
March 31
2005 2004
-------------------
Net sales $ 12,051 $ 6,152
Costs and expenses:
Cost of sales 6,397 3,216
Selling, general and
administrative 4,056 3,177
Research and development 334 303
---------- ----------
10,787 6,696
---------- ----------
Operating income (loss) 1,264 (544)
Other (expense) income, net (28) 13
----------- ----------
Income (loss) before taxes 1,236 (531)
Income taxes (483) -
----------- ----------
Net income (loss) $ 753 $ (531)
=========== ==========
Net income (loss) per Common Share:
Basic $ .04 $ (.03)
======== =========
Diluted $ .03 $ (.03)
======== =========
Average number of Common
Shares outstanding:
Basic 19,683,000 19,504,000
========== ==========
Diluted 22,587,000 19,504,000
========== ==========
FUEL-TECH N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of U.S. dollars)
Three Months Ended
March 31
2005 2004
------------------------
Operating activities
Net cash provided by (used in)
operating activities $ 424 $ (829)
---------- ----------
Investing activities
Purchases of equipment and patents (833) (850)
----------- ----------
Net cash used in investing
activities (833) (850)
----------- ----------
Financing activities
Exercise of stock options 269 4
----------- ----------
Net cash provided by
financing activities 269 4
----------- ----------
Effect of exchange rate fluctuations
on cash (45) (22)
----------- ----------
Net decrease in cash and
cash equivalents (185) (1,697)
Cash and cash equivalents at
beginning of period 6,531 7,812
---------- ---------
Cash and cash equivalents at
end of period $ 6,346 $ 6,115
========== ==========
FUEL-TECH N.V.
BUSINESS SEGMENT FINANCIAL DATA
(in thousands of U.S. dollars)
For the three months ended Nitrogen Fuel
March 31, 2005 Oxide Treatment
Reduction Chemical Other Total
----------------------------------------------------------------------
Net sales from external
customers $8,320 $3,727 $4 $12,051
----------------------------------------------------------------------
Cost of sales 4,292 2,008 97 6,397
----------------------------------------------------------------------
Gross margin 4,028 1,719 (93) 5,654
----------------------------------------------------------------------
Selling, general and
administrative - - 4,056 4,056
----------------------------------------------------------------------
Research and development - - 334 334
----------------------------------------------------------------------
Operating income (loss) $4,028 $1,719 $(4,483) $1,264
----------------------------------====================================
For the three months ended Nitrogen Fuel
March 31, 2004 Oxide Treatment
Reduction Chemical Other Total
----------------------------------------------------------------------
Net sales from external
customers $2,442 $3,708 $2 $6,152
----------------------------------------------------------------------
Cost of sales 1,388 1,764 64 3,216
----------------------------------------------------------------------
Gross margin 1,054 1,944 (62) 2,936
----------------------------------------------------------------------
Selling, general and
administrative - - 3,177 3,177
----------------------------------------------------------------------
Research and development - - 303 303
----------------------------------------------------------------------
Operating income (loss) $1,054 $1,944 $(3,542) $544
-------------------------------=======================================
Note: Fuel Tech is organized into three reportable segments, two
that provide advanced engineering solutions for the optimization of
combustion systems in utility and industrial applications, and one
that markets and sells visualization software. The segment that
markets and sells visualization software was discontinued effective
March 1, 2005. The visualization software segment does not meet the
materiality test for disclosure and is aggregated in "Other" above. In
addition, "Other" also includes those profit and loss items not
allocated by Fuel Tech to each reportable segment.
GEOGRAPHIC INFORMATION
(in thousands of U.S. dollars)
For the three months ended
March 31
---------------------------------
2005 2004
-------------- ---------------
Revenues:
United States $10,051 $4,577
Foreign 2,000 1,575
-------------- ---------------
$12,051 $6,152
============== ===============
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