Fuel Tech's Q2 2025 Earnings Call: Unpacking Contradictions in Market Demand, Mexico Opportunities, and Revenue Expectations

Data center opportunity and market demand, Mexico opportunity and government support, revenue per unit for data center opportunities, rental opportunity for DGI systems, and revenue expectations for FUEL CHEM are the key contradictions discussed in Fuel Tech's latest 2025Q2 earnings call.



Revenue and Segment Performance:
- Fuel Tech's consolidated revenues declined to $5.6 million in Q2 2025 compared to $7 million in the prior year's period, primarily due to lower APC segment revenue.
- The APC business saw a decline in Q2, but new awards are expected before the end of August, totaling $2.5 million to $3 million.
- The FUEL CHEM segment revenue remained flat at $3.1 million, although energy demand improved in July, with more than $2 million in revenue.

Data Center Opportunities:
- Fuel Tech has $100 million in bids outstanding for AI-related data center infrastructure, presenting a significant opportunity.
- The company is actively pursuing these contracts and expects responses on some by the end of 2025, contributing to future growth.
- The opportunities arise from increased power generation requirements for data centers, necessitating emissions control solutions.

Financial Position and Growth Initiatives:
- Fuel Tech maintained a strong financial position with $31 million in cash, cash equivalents, and investments at quarter-end.
- The company is focusing on expanding emerging technologies, such as the dissolved gas infusion technology, with ongoing demonstrations to support growth.
- Reduced revenue guidance for 2025 reflects some uncertainty in APC awards, but Fuel Tech remains confident in its strategic outlook.

Mexico Market Expansion:
- Fuel Tech is awaiting further developments in Mexico regarding environmental regulations that could enhance its FUEL CHEM solutions' market penetration.
- The company remains engaged with its Mexican partner, hoping for increased government pressure to support environmental initiatives.
- If successful, this expansion could provide a significant market opportunity for Fuel Tech's FUEL CHEM product.