Fuel Tech Inc. Reports Operating Results (10-Q)
Fuel Tech, Inc. has a market cap of $90.2 million; its shares were traded at around $4.4 with a P/E ratio of 16.9 and P/S ratio of 1.
Highlight of Business Operations:Consolidated revenues for the three months ended September 30, 2012 and 2011 were $24,907 and $24,023 respectively, while consolidated revenues for the nine months ended September 30, 2012 and 2011 were $71,030 and $65,666, respectively. These represent increases of $884, or 4%, and $5,364, or 8%, from the prior year three- and nine-month periods.
The Air Pollution Control (APC) technology segment generated revenues of $15,432 and $43,964 for the three and nine months ended September 30, 2012, respectively, an increase of $3,209 or 26%, and $11,005, or 33%, from the prior-year periods due to increased orders for APC primarily in foreign markets and the timing and recognition of work in progress on those APC. The Company expects demand for its APC products to remain strong based on new and existing air pollution control regulations around the world, particularly in China.
The FUEL CHEM technology segment generated revenues of $9,475 and $27,066 for the three- and nine-months ended September 30, 2012, a decrease of $2,325, or 20%, and $5,641, or 17%, from the respective prior-year periods. The decrease is due to decreased sales volume at existing customer accounts in part due to the lower demands for electricity and fuel switching by customers to take advantage of of low natural gas prices. These factors led to coal combustion units operating at less than full capacity which resulted in a corresponding decrease in our quarter-over-quarter and overall year-to-date revenue. Another factor contributing to the decrease in overall year-to-date revenues for 2012 was a non-recurring sale of installation-related work totaling $1.3 million that occurred in 2011.
Consolidated gross margin percentage for the nine months ended September 30, 2012 and 2011 was 44.0% and 46.6%, respectively. The cost of sales for the APC technology segment decreased to 38.6% from 44.4% due to the aforementioned increase in APC international projects. For the FUEL CHEM technology segment, the gross margin percentage increased to 52.8% from 48.8% due to a higher margin mix of customer orders and the non-recurring sale of lower margin installation work recognized in the first two quarters of 2011, which diluted the margin percentage for that year-to-date period.
Selling, general and administrative expenses (SG&A) for the quarters ended September 30, 2012 and 2011 were $8,064 and $7,701, respectively. The quarter-over-quarter increase is primarily attributed to spending on employee-related and other international costs of $877 to position ourselves for current and future sales demands, offset by a decrease in commissions of $277 as a result of lower domestic sales bookings in 2012 compared to 2011. SG&A for the nine-month periods ended September 30, 2012 and 2011 were $24,932 and $23,618, respectively. The increase of $1,314 was primarily related to increases in employee-related costs of $1,254.
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