Fuel Tech Earnings Jump on Record Sales

This story was published in The Daily Herald on March 6, 2008. It was written for a class while Molly was attending Northwestern’s Medill School of Journalism.

Fuel Tech Inc. reported Wednesday its earnings ballooned by 259 percent in the quarter ended Dec. 31, beating Wall Street’s expectations on record sales of the company’s air pollution control technology.

However, Fuel Tech’s 2008 revenue estimate came in lower than analysts expected, and its stock fell 58 cents, or about 3 percent, to $18.99 in Nasdaq Stock Market composite trading.

Batavia-based Fuel Tech, the biggest U.S. maker of pollution controls for power plants, logged a record net income of $5.2 million, or 21 cents per diluted share, up from $1.5 million, or 6 cents per diluted share, in the year-earlier period. Analysts estimated 16 cents per diluted share.

Quarterly revenues reached a record $32.6 million, an increase of 80 percent, compared with $18.1 million in the year-earlier period.

“If you want to look for a downside, it has to do with investor expectations,” said Dan Mannes, vice president and senior research analyst at Avondale Partners LLC. “I think this is a company that has a lot of expectations surrounding it because of the sector they’re in and because of the quality of their products.”

Fuel Tech also announced Wednesday $6.7 million of new orders of its technology. Because of its presence in the global market, particularly Mexico, China and India, the company and many analysts expect steady growth.

“We’re operating in about 30 countries,” said President and CEO John Norris in an interview. “The Mexican market is extraordinarily vibrant for us right now.”

Morningstar Inc. equity analyst John Kearney said the company’s increases aren’t enough. “They’ve really got to ratchet this growth up. Ten to 16 percent top line growth is good for a lot of companies, but a company this young with this much growth potential, it’s not going to cut it for investors.”

The company predicted 2008 sales of between $88 million and $93 million. Analysts were expecting $108.2 million.

“I think they were overly conservative with their guidance for next year,” Kearney said. “I think last year they came out a little more optimistic and they had to kind of temper those expectations. I think they’re too low. I think you’re going to see them come out and beat those numbers for the full year.”

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