Fuel Tech Inc. (FTEK)
Q2 2012 Earnings Call
August 7, 2012 9:00 AM ET
Tracy Krumme – VP, IR
David Collins – SVP, Treasurer and CFO
Doug Bailey – Chairman, President and CEO
John Quealy – Canaccord
Daniel Mannes – Avondale
Graham Mattison – Lazard Capital
Stephen Chares – Divine Capital
Derek Fernandes – Brean, Murray, Carret
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Good day, ladies and gentlemen and welcome to the Second Quarter Fuel Tech Inc. Earnings Conference Call. My name is Castin, I’ll be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions)As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Tracy Krumme, Vice President of Investor Relations and Corporate Communications. Please go ahead Ma’am.
Thank you very much. Good morning, everyone and thank you for participating on today’s conference call to discuss our second quarter 2012 results. Joining me on the call this morning is Doug Bailey, Chairman, President and Chief Executive Officer; Dave Collins, Senior Vice President, Treasurer, and Chief Financial Officer and Bill Cummings, Controller. As a reminder, the matters discussed in this conference call, except for historical information, are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in our forward-looking statements. The factors that could cause results to differ materially are included in our filings with the SEC.
The information contained in this call is accurate only as of the date discussed and investors should not assume that statements made in this call remain operative at a later date. Fuel Tech undertakes no obligation to update any information discussed in this call and as a reminder, this call is being broadcast over the Internet and can be accessed at our website www.ftek.com.With that said, I would now like to turn the call over to Dave Collins. Dave, please go ahead.
Thank you, Tracy and good morning everyone. We are thrilled with our recent International APC orders coming from both China and Chile and as a result are looking for improved revenue performance in Q3 and Q4 of this year. Through the end of the July, we have announced $50 million in new APC orders, including $16 million in China and $37 million in Chile. These orders will contribute significantly for our third and fourth quarter results. Optimism in the sluggish US domestic FUEL CHEM market and remaining regulatory uncertainty in our US domestic APC markets.
We remain bullish on our domestic APC opportunities, while we await regulatory clarity. Additionally, we are waiting for natural gas pricing and electric demand in the second half of this year to provide a stimulus for our domestic fuel connectivity.
I will provide some general guidance during my comments with this in understanding the impact to have in our overall business. Consolidated revenue for the June quarter and six months was $21 million and $46 million respectively, representing year-over-year increases of 10% and a 11%.
Net income was breakeven for the quarter and $1.6 million or $0.07 per diluted share for the six months. Our adjusted EBITDA for the six months was $4.6 million. Our revenue growth in the current quarter and six month is due to strong APC segment revenue, which has delivered a 38% increase over the prior year for the first six months.
Our air pollution control or APC segment revenue for the second quarter was $13 billion, representing an increase of $3 million or 33% over prior year. For the first six months, the APC segment revenue was $29 million, representing an increase of $8 million or 38% over the prior year.
These increases resulted from order activity reported in the second half of 2011, driven by the Cross-State Air Pollution Rule or CSAPR. Our consolidated backlog at the end of June was $20 million and is comprised of $8 million in domestic backlog and $12 million in foreign backlog.
As noted previously, in July we announced an additional $47 million in new APC orders, increasing our backlog to $67 million, a record level for the company. The majority of our quarter-end backlog figure of $20 million will be recognized during this year, while the large Chile order will be recognized through mid 2014, as we execute through this process.
Our foreign revenues for the June quarter and six months totaled $3 million and $5 million respectively, representing decreases in foreign revenues of 16% and 20% from the prior year period. While our foreign revenues were slow in the first half of 2012, this trend will reverse in the second half of the year as a result of our recent bookings.
In addition to the large order in Chile we discussed, we have gained significant momentum in China as noted by our year-to-date bookings of $16 million. This represents an 18% increase over the entire 2011, bookings total of $13 million and we expect to see additional China orders prior to year end.
This activity provides visibility to the growing market potential and our strategy in China as the country is making significant investments in technologies. Our FUEL CHEM segment revenue for the second quarter totaled $8 million, representing a decrease of 1 million or 14% over the prior year. Year-to-date, FUEL CHEM revenue was $18 million, a decrease of $3 million or 16% versus the prior year amount of $21 million.