Fuel Tech (NASDAQ:FTEK) reported higher second-quarter revenue as both of its operating segments posted year-over-year growth, while the company highlighted a larger air-pollution-control backlog, potential data-center-related opportunities and continued progress toward commercializing its dissolved gas infusion technology.
Revenue for the second quarter of 2026 increased 17% to $6.5 million from $5.6 million a year earlier. However, the company’s net loss widened to $1.2 million, or $0.04 per diluted share, from a net loss of $689,000, or $0.02 per diluted share, in the prior-year quarter.
Revenue Growth Across Both Segments
Fuel Tech’s FUEL CHEM segment generated $3.7 million in second-quarter revenue, up 21% from $3.1 million a year earlier, primarily due to increased operational dispatch at legacy customer accounts. Segment gross margin declined to 45% from 47%, reflecting demonstration costs, higher freight expenses and added maintenance labor costs.
The company said FUEL CHEM is benefiting from high dispatch levels during the summer months and expects strong third-quarter performance. It continues to expect full-year FUEL CHEM revenue to approximate 2025 results.
Air Pollution Control, or APC, revenue rose 11% to $2.8 million, driven primarily by the timing of work on existing contracts. APC gross margin declined to 36% from 44%, which Chief Financial Officer Ellen Albrecht attributed to project mix, contract timing and project-execution costs.
Consolidated gross margin declined to 41% of revenue from 46% a year earlier. Selling, general and administrative expense increased to $3.6 million from $3.3 million, while research and development spending rose to $646,000 from $490,000 as the company continued to invest in its water and wastewater treatment technologies, including DGI.
Fuel Tech recorded an operating loss of $1.6 million, compared with a $1.3 million loss in the prior-year period. Adjusted EBITDA loss was $1.2 million, compared with a $948,000 loss a year earlier.
APC Backlog Reaches Highest Level Since 2018
APC backlog stood at $14.3 million as of June 30, more than double the $7 million reported at the end of 2025. Arnone said this was the company’s largest quarter-end backlog since 2018, supported by approximately $10 million in previously disclosed utility and industrial contract awards.
Those awards included a contract to integrate Fuel Tech’s selective catalytic reduction, or SCR, technology with two new natural-gas-fired turbines for a Midwest municipal utility. Engineering has begun on the project, with equipment expected to be ready for delivery in the fourth quarter of 2027. Arnone said the plant expansion is expected to become operational in 2029.
The company also announced $2.6 million in new APC contracts last week for two industrial customers, including a new customer in the gas infrastructure market and a recurring customer. Including those awards, Fuel Tech’s effective backlog was approximately $17 million at the time of the call.
Albrecht said about $10.5 million of the June 30 backlog was expected to be recognized over the following 12 months, absent customer-driven delays. The timing of revenue recognition remains subject to customer schedules, project milestones, contract terms and execution risks.
Data Center Pipeline and Regulatory Environment
Arnone said Fuel Tech’s pipeline for data-center-related opportunities involving SCR systems for on-site power generation remained approximately $75 million to $100 million. The company is pursuing projects through data-center integrators and turbine or engine original equipment manufacturers, rather than directly with data-center operators.
Potential projects range from several systems to 30 or 40 units, with pricing of roughly $1 million to $4 million per unit, according to Arnone. He said one opportunity could potentially convert to a commercial award before the end of the third quarter and could involve a capacity-reservation and long-lead-time procurement agreement.
Arnone said there could be material data-center-related revenue in 2027 depending on contract timing, though Fuel Tech’s 2026 outlook excludes any specific data-center awards. Outside of the data-center market, the company is tracking $8 million to $10 million of additional near-term APC opportunities and expects to close at least $3 million to $5 million of awards by the end of the third quarter or early in the fourth quarter.
Fuel Tech also discussed new Environmental Protection Agency standards for gas turbines. Arnone said turbines above 85 megawatts will need to meet a five-parts-per-million nitrogen oxide standard, which will require SCR in nearly all cases. He said the company has not seen the new regulation materially affect customer decisions on pollution-control systems, though legal challenges could affect its timing or final requirements.
DGI Commercialization Efforts Continue
Fuel Tech completed an extended DGI demonstration at a Western U.S. fish hatchery during the second quarter. The company said the technology produced optimized oxygen delivery, cost savings and fish-growth benefits. The hatchery has asked Fuel Tech to submit a proposal for a full-facility system.
During the question-and-answer session, Arnone said a potential hatchery system sale could range from $500,000 to $1 million depending on the equipment configuration and redundancy requirements. If awarded before year-end, he said the related revenue would likely be recognized in 2027, with a five- to six-month build period.
A separate municipal wastewater DGI trial in the Southeast is continuing on a month-to-month rental basis after its initial six-month term. Fuel Tech expects the trial to generate approximately $100,000 in 2026 rental revenue. The customer reported that odor-related complaints near the facility had declined dramatically, though it is upgrading its primary aeration system and will later assess the need for supplemental DGI aeration.
Fuel Tech ended the quarter with $29.6 million in cash equivalents and investments, no debt, and $20.1 million in working capital. The company said it expects 2026 SG&A expense of $14.5 million to $15 million.
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.
