Fuel Tech, Inc. H.C. Wainwright 28th Annual Global Investment Conference

Good afternoon, everyone. I will just start off with a very small introduction, and then I am going to go through the rest of the presentation. That is the actual picture of mine, taken 2 years ago. Nothing has changed since then. Just my background. I started my career in Canada working for industrial companies and power companies. Went very deep into the energy sector, working for companies like Babcock & Wilcox and General Electric. I have kind of seen all aspect of the power industry, all sectors of the environmental sector as well. Once I got my business degree, I joined GE Energy, which is GE Vernova today, in the mergers and strategy group. Spent several years going very deep on the strategy and M&A growth.

I took that game to AMETEK, which is a highly acquisitive industrial company. Spent a few years at Tyco International doing the same commercial role. Then I got my first break to go run at P&L in Middle East. I was based in Dubai for 4 years, serving oil and gas petrochemical plants. After that, briefly, I took a role at Xylem as well. I was based in Singapore for 4 years in the water sector. My last role at CECO Environmental, I came in as an outside advisor and support the board of directors and the CEO of the company and helped them put together a enterprise strategy and an M&A playbook. The board asked me to join the company, to go run the company for them and implement the strategies that we put on a piece of paper.

Started the journey, and around the time the stock price was around $5, and 4 years later, we were $35-plus. Company went from $300 million to $600 million. It was all about transformation and value creation at a public company at the speed of a private equity company. When I got a call to join Fuel Tech, I kind of knew the company, and what I saw was a company which had a highly diversified portfolio of product and services catering to more than several vertical markets. I kind of looked at it as a diamond in the rough. I was hoping to come and do the same thing that was able to replicate not only at CECO Environmental but different sizes of company. The one big mandate for me from the board is one word, that is growth.

That is what the board is expecting from me, and I am all energized and thrilled to go do that at this company. When we talk about Fuel Tech simplistically, we look at this company along three vertical markets. We have the air pollution controls market, which caters to all the pollutant that comes out of the industrial sector that needs to be cleaned. That is a long cycle business. It is a project business for us. The second one is chemical technologies, which is an annuity-based high margin business. That is a short cycle business for us. Finally, we have an emerging water technology business where it is still in the preliminary stages of introducing a product. That combination of having the long cycle, the mid cycle, and the system business bodes well for us.

Irrespective of how the economy is going to play out for us, this is certainly going to help us to continue the trajectory of growth and profitability. We have been around for 40 years. We play in 37 some odd countries. For a company of our size, we are global. We have a set of talented team. Let me touch upon the financials as well. This year, for the first time in a long time, we are going to be ending the year with a big backlog. We still are bidding, we still have several months left in the year. We are hoping that we could add some more so that backlog is going to look north of where we are today. Revenue-wise, we are certainly going to be north of $26.5 million. That's what was reported last year, where it's a project business.

We are looking at how we are going to complete some of the project recognition so that in Q4, very soon, we feel that the revenue is also going to be ticking high towards the end of the year. So investment thesis. Let me hit upon a couple of bullets here, just to see how our company is going to play in all these end markets, which are pretty rich today. First and the foremost thing, we have the broadest suites of product and technologies, and we also have a service business. We cater to the power market, the industrial, which is the paper and pulp, the chemical, the process industry, and we have a presence in the secular water industry as well. That's a good thing, depending on how the economy plays out.

More than anything else, our business model is, I kind of say that we are a house of engineering and we are a house of products. We have a bunch of product, we have a bunch of engineering, and combined with the supply chain that we have built over the year, this is going to help us to keep the low-cost structure that we have. But our ability to scale certainly increases because the constraint is not on the front end. The constraint for the industry is on the back end. As we are building this partnership, and some of our partners in the manufacturing and supply chain, they have been with us for more than 10 years, and that's a good thing, by the way. They are exclusively supporting us. If we get the project, we have a supply chain aligned with that.

We talked about the strong balance sheet that we have, and the mandate, again, for us is to continue the growth, starting with reinforcing the core business and deploying the capital the most appropriate way. I am going to be touching on it in the coming slides. Not to go through the history, but we do have a long history. What fascinates me is, for a company of our size and sophistication, we had north of 100 patents a while back. Today we still have 32 patents that the company owns. We were one of the first companies to get the technology from EPRI in the '70s for all the pollution control equipment.

The goal for us is to take all this history that we have today and focus it on the right end market, so that we can commercially be savvy enough to take all these technologies, put a commercial offering, and continue the growth trajectory. We did talk about some of the end markets that we play in today. Our core end market is still in the energy sector, the power and the oil and gas. If you look at the demand characteristics of the power today, just to sustain the GDP growth of the country, at least for the foreseeable future, we see a huge demand in the power. If you sit today, if you look at any of the gas turbine manufacturer, their order book is completely full until 2031. And they are taking orders for then in 2035.

If the richness of the power industry is great and we play a huge role in that. If the chemical and the petrochemical and the process industry, anything that we do on the power side is transferable to some of these end markets. Because there you see the combustion, you see the pollutants coming out, you have water in there. Some of the product and technologies and the services franchise that we have is applicable to that as well. And finally, the water. We are slowly getting into the water side. And if we have this proven technology prove itself, that opens up as well in the water and wastewater side, which is probably 5X of what we are catering today, which is in the aquaculture industry.

The next few slide, I am going to briefly touch upon the three segments that we have today, starting with the air pollution control. End of the day, simplistically, whatever the exhaust that comes out of the gas turbine or a recip engine or whether the aeroderivative engine, they have pollutants. And our products and our technologies removes 90% of the pollutants. And you can simplistically think in terms of the dust particles that comes through or the SOx and the NOx, these are sulfur dioxide, nitrogen oxide and CO, pretty bad for the environment. We clean that up. And that is essential and that is good because that can be transferable to the industrial side as well. Today, we do not touch upon those. We are still predominantly on the power side. We have a funnel. We are working through a funnel up close to $150 million plus.

Part of the commercial excellence I am going to be talking about in the value creation is to keep expanding that funnel. Today, it is good, and we already booked close to $15 million in backlog. We may see another $5 million-$7 million by end of the quarter. But the funnel is so big, depending on how the customer wants to close the project, our backlog and booking profile going into next year is going to look really good for us. Again, I do not need to go through this chart. We found this study from McKinsey & Company, and basically, essentially the power market is going to continue to grow. There is a lot of news on the data center, and I do not think it is like reading the tea leaves. Depending on what newspaper you see, either it is a bad news or it is a good news. But take a step back.

These thing, the data center that we cater to is not AI. It is a data center. Data centers are used for multiple reasons. The power island, the captive power island we service, it all goes to the data center. Irrespective which way this is going to play out, even if 30% of the data centers are not going to get built, there is still going to be a lot of business for us. This article is saying 7X. I will take 3X. We don't need 7X. The momentum in the power sector is going to play good for us going forward. Again, not to belabor this, but simplistically, this is what our technology does.