Fuel Tech (NASDAQ:FTEK) reported first-quarter 2026 results that were slightly below the prior-year period as stronger air pollution control (APC) performance was offset by lower FUEL CHEM revenue. Management emphasized a significantly improved outlook for the year, driven primarily by a surge in APC contract awards and a growing pipeline tied to power generation projects, including those supporting data centers.
Quarterly results: revenue down modestly, margins mixed by segment
Chief Financial Officer Ellen Albrecht said consolidated revenue fell to $6.1 million from $6.4 million in the year-ago quarter. Consolidated gross margin slipped to 43% from 46%, which Albrecht attributed to “segment concentration.”
FUEL CHEM revenue declined to $4.5 million from $5.1 million, primarily due to “seasonal maintenance outages and dispatch-related decreases in operational demand,” according to Albrecht. FUEL CHEM segment margin decreased to 45.3% from 49.9%, though she said it is expected to return to historical averages over the remainder of the year.
SG&A expenses rose to $3.7 million from $3.3 million, and as a percentage of revenue increased to 61% from 52%. Albrecht maintained the company’s full-year expectation for SG&A of $14 million to $15 million. R&D was essentially flat at $524,000, reflecting ongoing investment in dissolved gas infusion (DGI) water and wastewater technologies.
Fuel Tech posted an operating loss of $1.6 million, compared with a $952,000 loss a year earlier. Net loss was $1.4 million, or $0.04 per diluted share, versus a net loss of $739,000, or $0.02 per diluted share, in the prior-year quarter. Adjusted EBITDA loss was $1.3 million, compared to an adjusted EBITDA loss of $735,000 last year.
APC bookings surge; backlog expands on $10 million in new contracts
Chairman, President, and CEO Vince Arnone said the company’s first-quarter performance “fell slightly short of last year’s Q1 results,” but he highlighted what he described as a materially improved outlook. “The expanded opportunity landscape that we have been tracking for our APC business segment resulted in the largest set of awards in terms of contract value that we have received in recent history,” Arnone said.
Arnone pointed to multiple APC contracts announced last week valued at approximately $10 million. The awards were anchored by a contract integrating Fuel Tech’s selective catalytic reduction (SCR) technology with two new natural gas-fired GE Vernova turbines for a publicly owned municipal utility in the Midwest. Arnone said the new turbines are expected to increase plant output by about 100 MW, with the expansion anticipated to be operational in 2029. Engineering work is scheduled to begin this quarter, and equipment deliveries are slated to begin in the fourth quarter of 2027.
Arnone said these contracts “have more than doubled our pro forma APC backlog to approximately $17 million,” which he called the largest backlog since 2018. Albrecht separately reported that APC backlog as of March 31 was $6.9 million, roughly flat with $7.0 million at year-end 2025, and that approximately $6.0 million of that March 31 backlog was expected to be recognized in the next 12 months, barring customer delays.
Albrecht said the recent $10 million in agreements “represent approximately $10 million in new bookings,” strengthening revenue visibility and supporting gross margin and cash flow as milestones are achieved. She also noted that while APC projects have typically run 8 to 24 months, Fuel Tech is “observing increased forward planning from our clients,” leading to some projects with longer execution timelines, which affects the timing of revenue recognition.
Data center-related pipeline: 8–10 projects under discussion
Arnone said Fuel Tech’s sales pipeline for data-center-related opportunities remains “strong” and “approximates $75 million-$100 million” for projects integrating SCR technology with power generation sources. He emphasized that in these cases Fuel Tech is typically a subcontractor to the data center integrator or to turbine/engine OEMs, adding that the company’s “knowledge regarding funding, approval, and timing is generally limited.”
Arnone reiterated that data center awards are likely to be “the primary source of material near-term growth” for the company. He said Fuel Tech is participating in opportunities for “eight to 10 different data center projects” with integrators and turbine/engine OEMs, including large industry participants. The inquiries are primarily for SCR systems supporting on-site generation, with project sizes ranging from two to five units to as many as 30 to 40 NOx reduction units, and pricing “predominantly in the range of $1 million-$3 million per unit.”
On timing, Arnone said one of two near-term opportunities he previously cited did not progress, and the second was delayed. However, he said there is a possibility that one of the eight to 10 inquiries could convert to a commercial award before the end of the second quarter, while other opportunities may develop throughout the year.
Arnone also clarified that the Midwest municipal utility contract was not viewed as a data-center-specific application because it is “in front of the meter,” but he said it is significant because it involves a turbine model “commonly being deployed for data center-specific opportunities,” which he said lends credibility as Fuel Tech pursues a larger market opportunity.
Outside of data center opportunities, Arnone said the company is tracking an additional $8 million to $10 million in potential APC awards and expects to close at least $3 million to $5 million of those before the end of the second quarter or early in the third quarter. He said some of the activity stems from the company’s recent acquisition of the technology portfolio of Wahlco, Inc., noting that the pace and scope of inquiries from Wahlco customers “remains encouraging.”
FUEL CHEM and DGI updates; regulatory discussion
Arnone described FUEL CHEM as producing “another solid quarter of revenue” after a strong 2025, citing coal unit life extensions and higher dispatch levels at some plants. He discussed a new U.S. customer operating under a six-month commercially priced demonstration that began in early November, with annual revenue potential of approximately $2.5 million to $3.0 million if converted to a full-time commercial program. He said the demonstration was temporarily interrupted during the first quarter due to unrelated plant operations, limiting the revenue contribution, and the customer had not yet completed the program. Arnone said the customer has noted a “material reduction in downtime and maintenance costs,” largely due to decreased offline cleaning, and the company remains optimistic about conversion later in the year.
On the regulatory front, Arnone said the current administration is pursuing rollbacks of certain rules and implementing new, less restrictive regulations in some areas, but he noted the rollbacks “do not loosen the nitrogen oxide emissions requirements for any sources.” He also discussed EPA’s New Source Performance Standards for new gas turbines published in the Federal Register on Jan. 15, including a “temporary power turbines” category for units below 85 MW installed to run for 24 months or less, with a 25 PPM NOx requirement that “may not require SCR for all turbines.” Arnone said turbines greater than 5 MW would need to meet 15 PPM NOx, “likely requiring SCR,” and turbines greater than 85 MW would need to reach 5 PPM NOx, requiring SCR in almost all cases. He added that Fuel Tech was not aware of the new regulation having a significant negative impact on customer decision-making and pointed out that state-specific permitting can vary and that multiple small turbines could be regulated as a major source, often requiring more stringent NOx controls.
Arnone provided updates on DGI demonstrations, saying an extended demo at a Western U.S. fish hatchery is on track to end this quarter with “strong performance,” including optimized oxygen delivery, cost savings, and improved fish growth. A second trial at a Southeast U.S. wastewater facility is expected to end its six-month rental phase in the third quarter; Arnone said the client reports odor complaints around the plant have been “dramatically reduced.” The company is discussing post-demonstration next steps and is also in talks with potential customers in markets including pulp and paper, food and beverage, chemical, petrochemical, horticulture, and others.
Balance sheet and 2026 outlook
Albrecht said Fuel Tech ended the quarter with $30.6 million in total cash and investments, including $9.1 million of cash and equivalents and $21.5 million in short- and long-term investments. The company had approximately 31.2 million shares outstanding, equating to cash per share of $0.98. Working capital was $22.2 million, or $0.71 per share, and stockholders’ equity was $38.6 million, or $1.24 per share. Albrecht said the company has no outstanding debt and remains comfortable funding awards and pursuing new opportunities across segments.
Looking ahead, Arnone said Fuel Tech expects 2026 revenue to exceed 2025 levels, with FUEL CHEM approximating 2025 revenue and APC exceeding 2025 performance. He cautioned that while backlog has risen substantially, “the majority of the revenue assigned to the new large APC contract award” is expected to be generated in 2027. He added that the 2026 APC outlook excludes potential data center awards, which would be additive if secured.
About Fuel Tech (NASDAQ:FTEK)
Fuel Tech, Inc (NASDAQ: FTEK) is a specialty technology and engineering company focused on developing and supplying clean air solutions for the power generation and industrial markets. The company designs, manufactures and markets proprietary chemical reagents and process control systems that help customers reduce emissions of nitrogen oxides (NOx), mercury and other air pollutants. Its technology platform combines advanced process modeling, plant optimization software and field testing services to help utilities and industrial facilities comply with environmental regulations and improve operational efficiency.
Fuel Tech’s core product lines include selective catalytic reduction (SCR) optimization systems, activated carbon injection solutions for mercury capture, and sorbent enhancement additives for flue gas desulfurization processes.
