Will APC Segment Aid Fuel Tech (FTEK) This Earnings Season?
Zacks Investment Research | May 07, 2019 10:23PM ET
Fuel Tech, Inc. (NASDAQ:FTEK) is scheduled to report first-quarter 2019 results on May 13, after market close.
The Air Pollution Control (“APC”) segment develops advanced proprietary technologies for air pollution control, process optimization, water treatment and advanced engineering services.
Notably, the segment accounted for roughly 66.7% of the company’s total revenues in the fourth quarter of 2018. In the quarter, the APC segment performed well, with revenues increasing 11.4% year over year, driven by conversion of new orders.
Factors to Influence APC Segment’s Q1 Results
Fuel Tech believes that a strong pipeline of contract opportunities on a global basis for its entire technology suite will boost first-quarter revenues for the APC segment. Notably, increased adoption of the company’s proprietary solutions like ULTRA and SCR technologies for industrial applications, particularly in the United States is driving orders for the segment. In addition, the company is witnessing growing demand for its SNCR, SCR and ammonia delivery system technologies in several European countries, which will stoke top-line growth for the segment.
Also, Fuel Tech’s strong business relationships with multinational industrial end-users continue to grow. Its focus on partnering with companies that require its technology portfolio has helped it receive large-bid packages in natural gas fired applications. Moreover, the company’s efforts of developing new business opportunities in the APC segment will augment its first-quarter profitability.
Furthermore, the company believes that benefits from its cost-reduction efforts and greater operational efficacy will drive profitability.
Geographical diversification is reflective of Fuel Tech's solid financials. However, this diversity has exposed the company to headwinds arising from geopolitical issues, macroeconomic challenges and unfavorable movements in foreign currencies. Also, the company faces tremendous competitive pressure from companies like Advanced Emissions Solutions, Inc. (NASDAQ:ADES) , Cemtrex Inc. (NASDAQ:CETX) and LiqTech International, Inc. (NASDAQ:LIQT) . In order to reduce the competitive pressure, it has to invest significantly in R&D to develop advanced solutions. These are likely to put pressure on its finances, and hence might impact profitability.
Overall, Fuel Tech’s first-quarter results are likely to benefit from increased adoption of emission control solutions, efforts to improve sales channel and addition of a coal-fired unit in the United States. (Read more: Zacks Investment Research
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