Fuel-Tech N.V. Reports Third Quarter Results; Y/Y Revenue & Net Income Increases 27% and 248%, Respectively.Business Editors STAMFORD, Conn.--(BUSINESS WIRE)--Oct. 28, 2003 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 for utility and industrial customers, today reported results for the third quarter and nine months ended September 30, 2003. For the quarter, 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 increased 27% to $10.2 million, compared to $8.0 million in the third quarter of 2002. Net income in the third quarter increased 248% to $1.3 million, or $0.06 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 to $379,000, or $0.02 per diluted share, last year. For the nine month period ended September 30, 2003, net sales increased 32% to $28.2 million, compared to $21.3 million in the same period last year. Net income for the nine months was $1.4 million, or $0.06 per diluted share, compared to net income of $1.7 million, or $0.08 per diluted share, in the same period last year. Steven 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 pleased with our results for the third quarter. This was a record quarter for our 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) business, with revenues up 90% over last year. This growth is attributable to our increased penetration and strong performance in the Western coal-fueled utility market as well as an increase in our more traditional oil-fueled business. We continue to be extremely excited about the growth opportunities in our FUEL CHEM business. Plant managers from two large utilities and a regional co-op have visited our successful Targeted-In-Furnace-Injection application at Western Farmers' HUGO Station, and we believe that we will have commitments for demonstrations at these and other utilities between now and the end of the first quarter next year. We look forward to strong revenue growth from this business and expect year-over-year growth in the range of 75-100% in 2004." "During the quarter, we simultaneously announced two agreements with Martin Marietta Martin Marietta Corporation was founded in 1961 through the merger of The Martin Company and American-Marietta Corporation. The combined company became a leader in aggregates, cement, chemicals, aerospace, and electronics. Magnesia Magnesia, ancient cities, Lydia Magnesia (măgnē`zhə), two ancient cities of Lydia, W Asia Minor (now W Turkey). They were colonies of the Magnetes, a tribe of E Thessaly. Specialties (MMMS MMMS Merry Marvel Marching Society (Marvel Comics fan club) MMMS Multimedia Mail Service MMMS Making Maths Make Sense (Richard Dunne teaching method) MMMS Marlboro Memorial Middle School ). The first was the acquisition of MMMS' fuel treatment chemical business, and the second was the signing of a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. chemical supply agreement. These agreements will allow us to continue to offer the highest quality fuel treatment chemicals to our customers, as well as provide additional revenue, market intelligence and an oil-fired customer base which we can leverage with our technology." Mr. Argabright continued, "Third quarter air pollution control revenues were up 8% from last year, which was less than we had internally projected, but a result of the current environment we are operating in. As we said in our last press release, two things have led to a slowing in this business. First, recent rulings related to New Source Review have caused our utility customers to reassess reassess Verb to reconsider the value or importance of reassessment n Verb 1. reassess - revise or renew one's assessment reevaluate compliance plans to ensure that they will meet their overall NOx reduction requirements in the most cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. manner. Although we expect these recent rulings to benefit us in the future, the impact in the near-term is a delay in orders. Second, as we have discussed many times in the past, many utilities are experiencing significant capital constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. . This, coupled with depressed NOx allowance prices, the result of mild weather and weak demand for power, has caused some utilities to delay capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and meet their requirements on a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. basis through the purchase of allowances and other temporary means. It is important to note that these revenues are not going away, but merely being postponed. We are doing everything we can to work with our customers as they finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... their compliance plans, and we expect this business to pick up in the second half of 2004 and be strong in 2005 and 2006." Conference Call As a reminder, Fuel-Tech N.V will be hosting a conference call at 10:00 AM ET on Tuesday, October 28, 2003, to further discuss these 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 subheading sub·head·ing n. See subhead. subheading Noun the heading of a subdivision of a piece of writing Noun 1. of "Investors" on the homepage. About Fuel-Tech N.V. Fuel-Tech N.V. is a leading technology company providing proprietary advanced engineering solutions for the optimization of combustion systems for utility and industrial customers. 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 300 units worldwide. New technologies that have grown out of the core NOx reduction business form the basis of the FUEL CHEM(R) and ACUITIV(TM) businesses. FUEL CHEM technology centers around the unique application of chemicals to improve the performance of combustion units while the Company's ACUITIV business includes high-end 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 that was developed as part of Fuel Tech's sophisticated 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 (CFD CFD - Computational Fluid Dynamics ) modeling techniques utilized to predict the behavior of industrial processes. The Company's FUEL CHEM products are being applied to over 80 combustion units burning a variety of fuels. 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 nature regarding future events. These statements are only predictions and actual events may differ materially. Please refer to documents that Fuel-Tech N.V. 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. . (Tables to Follow)
FUEL-TECH N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share data)
September 30, December 31,
2003 2002
------------- ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 5,791 $ 10,939
Accounts receivable, net 9,661 8,849
Prepaid expenses and other current assets 1,456 1,164
------------- ------------
Total current assets 16,908 20,952
Equipment, net of accumulated depreciation
of
$5,867 and $5,118, respectively 2,182 2,123
Goodwill, net of accumulated amortization of
$924 2,119 2,119
Other intangible asset 1,298 -
Other 673 675
------------- ------------
Total assets $ 23,180 $ 25,869
============= ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,684 $ 5,065
Accrued expenses 1,733 1,940
------------- ------------
Total current liabilities 4,417 7,005
Long-term debt - 1,800
Other liabilities 260 259
------------- ------------
Total liabilities 4,677 9,064
Stockholders' equity:
Common stock, par value $0.01 per share,
authorized 40,000,000 shares, 19,895,503
and 19,613,817 shares issued, respectively 199 196
Additional paid-in capital 90,636 90,315
Accumulated deficit (71,753) (73,150)
Accumulated other comprehensive income 22 10
Treasury stock (1,133) (1,098)
Nil coupon perpetual loan notes 532 532
------------- ------------
Total stockholders' equity 18,503 16,805
------------- ------------
Total liabilities and stockholders' equity $ 23,180 $ 25,869
============= ============
FUEL-TECH N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands of U.S. dollars, except share data)
Three Months Ended Nine Months Ended
September 30 September 30
2003 2002 2003 2002
------------------------- ------------------------
Net sales $ 10,178 $ 8,033 $ 28,182 $ 21,275
Costs and expenses:
Cost of sales 5,592 4,462 17,412 11,175
Selling, general
and administrative 2,961 2,717 8,565 7,725
Research and
development 314 394 920 1,041
------------ ------------ ------------ -----------
Operating income 1,311 460 1,285 1,334
(Loss) income from
equity interest in
affiliates - (27) - 196
Interest expense - (37) (25) (114)
Other income, net 6 (17) 140 254
------------ ------------ ------------ -----------
Income before taxes 1,317 379 1,400 1,670
Income taxes - - - 50
------------ ------------ ------------ -----------
Net income $ 1,317 $ 379 $ 1,400 $ 1,720
============ ============ ============ ===========
Net income per
common share:
Basic $ .07 $ .02 $ .07 $ .09
============ ============ ============ ===========
Diluted $ .06 $ .02 $ .06 $ .08
============ ============ ============ ===========
Average number of
common shares
outstanding:
Basic 19,744,000 19,454,000 19,629,000 19,299,000
============ ============ ============ ===========
Diluted 22,748,000 22,422,000 22,325,000 22,565,000
============ ============ ============ ===========
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