Fuel Tech, Inc. Q4 FY2025 earnings call

• 2025 Achievements: Marked by expanded opportunity in air pollution control business, resurgence in FuelChem revenues, and tangible progress at DGI. - FuelChem: Results benefited from extended useful life of coal-fired units and performance of a U.S. commercial unit; new U.S. customer in demonstration program. - APC: Secured $8.8 million of awards in 2025, near-term sales pipeline between $3 - $5 million; acquired Walco Inc.'s assets to expand portfolio; ended 2025 with $7 million backlog. - Data Center Opportunity: Sales pipeline for SCR technology with power generation sources in data centers is approx $75 - $100 million; FuelTech is a subcontractor, in various stages of participation with over 10 data center integrators and OEMs, earliest expected award in Q2 2026. - Regulatory: EPA rolling back some regulations and implementing new ones; new source performance standards for gas turbines. - DGI: Extended demonstration at fish hatchery on track, second trial at municipal wastewater converted to rental contract; in discussions with multiple end markets.

FuelChem: In 2025, revenues exceeded expectations and reached the highest levels since 2018. In the fourth quarter, FuelChem revenues increased 37% to $4.9 million from $3.5 million, benefiting from the extended useful life of coal-fired units and the performance of a U.S. commercial unit added late in 2024, as well as a new U.S. customer in a six-month demonstration program with potential annual revenue of approximately $2.5 to $3 million. APC: Fourth quarter revenues increased 37% to $2.4 million from $1.8 million. In 2025, APC secured $8.8 million of awards, had a near-term sales pipeline between $3 and $5 million, and ended the year with a consolidated backlog of $7 million, up from $6.2 million in 2024. DGI: Extended demonstration at a fish hatchery in the western US is on track to conclude in Q2 2025, a second trial at a municipal wastewater site was successfully completed and converted to a six-month rental contract, and is in discussions with multiple end markets, with expectation of the first commercial contract in 2026. Revenue contribution: FuelChem's revenue contribution in 2025 was significant, APC had revenue fluctuations in 2025, and DGI was in the development phase with no significant revenue yet.

• FuelChem: Expected to continue performing well, with expectation to convert another demonstration account to commercial operation. - APC: Business development activities at highest level in several years, expect revenues in 2026 to exceed 2025, with FuelChem approximating 2025 revenues and APC exceeding 2025 performance without data center awards, which would be additive. - DGI: Expected to have first commercial contract in 2026.

• Uncertainty in data center opportunity timing and award as FuelTech is a subcontractor, limiting knowledge of development, funding, etc. - Regulatory changes and potential lawsuits related to new regulations could impact business. - Difficulty in predicting conversion of demonstration accounts to commercial operation in FuelChem.

Q: Regarding data center opportunity, are FuelTech already designed in with participants or is there competition once orders are placed?

A: Currently at the beginning phase, establishing as a potential trusted partner and playing an education role.

Q: Do requirements for less than 85 MW plants and short-term working affect data center opportunities?

A: Long-term should not be impacted as most projects are for long-term power generation.

Q: Are seeing increased activity from plants on the way to shutdown due to regulatory rollbacks?

A: Too early to assess, but rollbacks don't impact NOx reduction opportunities.

Q: More potential customers for FuelChem?

A: Looking at pockets of opportunity with moderate upside.

Q: Revenues from DGI in 2026?

A: Small rental revenue from the municipality, hoping for a system sale by the end of 2026.

Q: Confidence in closing data center projects?

A: Confidence from the volume of activity and FuelTech team's ability to capitalize on inquiries.