Fuel Tech, Inc. (Nasdaq: FTEK), a leader in advanced engineering solutions that optimize combustion systems in utility and industrial applications, reported results for the quarter and nine-month period ended September 30, 2006. Net sales for the third quarter increased 57% to a record $20.2 million, up $7.4 million from the comparable prior-year quarter. Net income totaled $2.1 million, or $0.09 per diluted share, compared with $1.0 million, or $0.05 per diluted share, in the same year-ago quarter.
Net sales for the nine months rose 56% to $57.1 million, up $20.4 million from the comparable year-earlier period. Pre-tax income totaled $9.4 million, a gain of 97% versus the $4.8 million recorded in the comparable 2005 period. Net income for the nine months totaled $5.4 million, up slightly from the $5.0 million posted a year ago, while net income per diluted share was $0.22, unchanged from the year-earlier period, when there were fewer shares outstanding.
Results for the third quarter and first nine months of 2006 reflect $1.6 million and $4.1 million in income tax expense, respectively, virtually all of which is non-cash. Net income for the first nine months of 2005 was favorably affected by the recording of a one-time $2.2 million non-cash tax benefit related to the anticipated utilization of net operating loss carryforwards.
The increases in net sales for the quarter and nine-month period reflect strong gains in the Company’s two technology segments. The air pollution control (APC) technology segment benefited from a step-up in revenues associated with two nitrogen oxide control projects to be installed in the People’s Republic of China and from ongoing progress in completing orders for a variety of domestic utility and industrial customers.
Quarterly and nine-month sales for the fuel treatment chemicals technology segment also advanced strongly as new customer accounts began to ramp-up at major coal-fired electric utility plants in the Midwest and Southeastern U.S. Partially offsetting these gains was the adverse effect of high crude oil prices, which continues to depress the use of fuel treatment programs at selected oil-fired generating units.
Company-wide gross margins averaged 50% during the third quarter of 2006, unchanged from the prior-year level.
“This has been another superlative quarter for our Company,” commented John F. Norris Jr., President and CEO. “We again achieved record revenues, doing so for a fifth consecutive reporting period. Moreover, our year-to-date revenues and pre-tax income has already surpassed results for all of 2005, our previous best full year. We continue to be extremely active in quoting new business in the United States and abroad and are benefiting particularly from the commencement of new slag and SO3 control programs amongst our growing customer base. Organizationally, we are pleased to have officially become a U.S. company on September 30 and believe this will further broaden our appeal to the investment community.”
Mr. Norris concluded, “Based on the current outlook for the balance of the year, we are again raising our revenue guidance for 2006, from $68 – $72 million to $70 – $74 million.”
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