FUEL TECH, INC.

Previous wording

During the quarter, the Company delivered revenue growth in both reportable segments, reflecting improved demand in FUEL CHEM and continued execution in Air Pollution Control. The FUEL CHEM segment benefited from higher activity levels at legacy customer accounts, while the Air Pollution Control segment revenue increased as the Company advanced existing projects and continued to pursue and secure new contract awards.

Current wording

In the third quarter, the Company continued to achieve revenue growth in both reportable segments, reflecting improved demand from FUEL CHEM customers and continued execution on existing Air Pollution Control backlog. The FUEL CHEM segment benefited from improved demand from legacy customers, while Air Pollution Control segment revenue increased as the Company advanced existing projects and continued to pursue and secure new contract awards.

Previous wording

The Company’s FUEL CHEM segment generated higher revenue in the current quarter compared to the corresponding 2025 period, while segment operating profit decreased slightly. The increase in revenue was primarily attributable to higher operating activity from the segment’s existing customer base.

Current wording

The Company’s FUEL CHEM segment generated both higher revenue and improved operating profit in the current quarter compared to the corresponding 2025 period. These increases were driven by higher operating activity from the segment’s existing customer base offsetting maintenance and administrative costs.

Previous wording

The Company’s Air Pollution Control segment also generated higher revenue in the current quarter compared to the corresponding 2025 period, primarily due to the timing of project execution and increased ancillary revenue. The Company continues to execute on existing Air Pollution Control projects while pursuing and booking new contract awards.

Current wording

The Company’s Air Pollution Control segment also generated higher revenue in the current quarter compared to the corresponding 2025 period, primarily due to a significant increase in backlog levels and increased ancillary revenue. The Company continues to execute on existing Air Pollution Control projects while pursuing and booking new contract awards.

Previous wording

Management is encouraged by the depth of the Company's business development activities, which reflects increased market attention to global emissions protocols across a variety of fuel sources. Consolidated APC backlog at June 30, 2026 was $14,308 and the Company's global sales pipeline was approximately $75 -100 million.

Current wording

Management is encouraged by the depth of the Company's business development activities, which reflects increased market attention to global emissions protocols across a variety of fuel sources. Consolidated APC backlog at September 30, 2026 was $16,626 and the Company's global sales pipeline was approximately $75 -100 million.

Previous wording

Revenues for the three-month periods ending June 30, 2026 and 2025 were$6,485 and$5,558, respectively, representing an increase of$927, or 17%, versus the same period last year. Revenues for the six-month periods ending June 30, 2026 and June 30, 2025 were $12,565 and $11,940, representing an increase of $625, or 5%, versus the same period last year.

Current wording

Revenues for the three-month periods ending September 30, 2026 and 2025 were$8,676 and$7,490, respectively, representing an increase of$1,186, or 16%, from the same period last year. Revenues for the nine-month periods ending September 30, 2026 and September 30, 2025 were $21,241 and $19,430, respectively, representing an increase of $1,811, or 9%, from the same period last year.

Previous wording

The APC technology segment generated revenues of $2,785 for the three-month period ended June 30, 2026, representing an increase of$280, or 11%, from the prior year amount of $2,505.The APC technology segment generated revenues of $4,389 for the six-month period ended June 30, 2026, representing an increase of $581, or 15%, from the prior year amount of $3,808. The increase was primarily attributable to the timing of project execution on existing contracts and increased consolidated segment backlog resulting from new project awards. Consolidated APC backlog at June 30, 2026 was $14,308 versus backlog at December 31, 2025 of $7,047. Our current backlog consists of U.S. domestic delivered projects totaling $11,262 and international delivered projects totaling $3,046.

Current wording

The APC technology segment generated revenues of $3,746 for the three-month period ended September 30, 2026, representing an increase of$1,039, or 38%, from the prior year amount of $2,707.The APC technology segment generated revenues of $8,135 for the nine-month period ended September 30, 2026, representing an increase of $1,620, or 25%, from the prior year amount of $6,515. The increase was primarily attributable to a significant increase in consolidated segment backlog resulting from new project awards in 2026 as well as continued progress on existing contracts. Consolidated APC backlog at September 30, 2026 was $16,626 versus backlog at December 31, 2025 of $7,047. Our current backlog consists of U.S. domestic delivered projects totaling $14,403 and international delivered projects totaling $2,223.

Previous wording

The FUEL CHEM technology segment generated revenues of $3,700 and $3,053 for the three-month periods ended June 30, 2026 and 2025, respectively, representing an increase of $647, or 21%, versus the same period last year. This increase in FUEL CHEM revenue for the three months ended June 30, 2026 as compared to the same period in the prior year was primarily due to increased operational dispatch at legacy accounts. FUEL CHEM technology segment revenues remained relatively flat for the six-month periods ended June 30, 2026 and 2025 at $8,176 and $8,132, respectively.

Current wording

The FUEL CHEM technology segment generated revenues of $4,930 and $4,783 for the three-month periods ended September 30, 2026 and 2025, respectively, representing an increase of $147, or 3%, versus the same period last year. FUEL CHEM technology segment revenues were $13,106 and $12,915 for the nine-month periods ended September 30, 2026 and 2025, respectively, representing an increase of $191, or 1%, versus the same period last year. Increases in FUEL CHEM revenue for the three and nine month periods ended September 30, 2026 as compared to the same periods in the prior year were primarily due to increased operational dispatch at legacy accounts.

Previous wording

Consolidated gross margin percentage for the three-month periods ended June 30, 2026 and 2025 was 41% and 46%, respectively. For the three-month periods ended June 30, 2026 and 2025 the FUEL CHEM operating segment gross margin was 45% and 47%, respectively. FUEL CHEM gross margin decreased slightly from the prior year primarily due to demonstration costs, increased freight costs and additional internal labor costs for unit maintenance. APC segment gross margin decreased to 36% from 44% primarily due to product and project mix.

Current wording

Consolidated gross margin percentage for the three-month periods ended September 30, 2026 and 2025 was 45% and 49%, respectively. For the three-month periods ended September 30, 2026 and 2025 the FUEL CHEM operating segment gross margin was 49% and 50%, respectively. FUEL CHEM gross margin decreased slightly from the prior year primarily due to demonstration costs, increased freight costs and additional internal labor costs for unit maintenance. APC segment gross margin decreased to 40% from 47% primarily due to product and project mix.

Previous wording

Consolidated gross margin percentage for the six-month periods ended June 30, 2026 and 2025 was 42% and 46%, respectively. For the six-month periods ended June 30, 2026 and 2025 the FUEL CHEM operating segment gross margin was 45% and 49%, respectively. Similarly to the decrease for the three-month periods ended June 30, 2026 and 2025, FUEL CHEM gross margin decreased from the prior year primarily due to increased costs. APC segment gross margin decreased to 37% from 40% primarily due to product and project mix.

Current wording

Consolidated gross margin percentage for the nine-month periods ended September 30, 2026 and 2025 was 43% and 47%, respectively. For the nine-month periods ended September 30, 2026 and 2025 the FUEL CHEM operating segment gross margin was 47% and 49%, respectively. Similarly to the decrease for the three-month periods ended September 30, 2026 and 2025, FUEL CHEM gross margin decreased from the prior year primarily due to increased costs. APC segment gross margin decreased to 38% from 43% primarily due to product and project mix.

Previous wording

Selling, general and administrative expenses (SG&A) were$3,594 and$3,347 for the three-month periods ended June 30, 2026 and 2025, respectively. For the three-month period ended June 30, 2026, the increase of $247 is primarily the result of an increase in professional fees of $127, an increase in employee-related expenses of $86, and an increase in travel and administrative expenses for domestic and international locations of $36. For the three-month periods ending June 30, 2026 and 2025, SG&A as a percentage of revenues decreased to 55% from 60%. The decrease versus the comparable period is primarily due to the increase in revenues.

Current wording

Selling, general and administrative expenses (SG&A) were$3,657 and$3,207 for the three-month periods ended September 30, 2026 and 2025, respectively. For the three-month period ended September 30, 2026, the increase of $450 is primarily the result of an increase in employee-related expenses of $209, an increase in professional fees of $122, and an increase in travel and administrative expenses for domestic and international locations of $119. For the three-month periods ending September 30, 2026 and 2025, SG&A as a percentage of revenues decreased to 42% from 43%. The decrease versus the comparable period is primarily due to the increase in revenues.

Previous wording

Selling, general and administrative expenses (SG&A) were $7,310 and $6,688 for the six-month periods ended June 30, 2026 and 2025, respectively. For the six-month period ended June 30, 2026, the increase of $622 is primarily the result of an increase in employee-related expenses of $281, an increase in professional fees of $236, and an increase in travel and administrative expenses for domestic and international locations of $107. For the six-month periods ending June 30, 2026 and 2025, SG&A as a percentage of revenues increased to 58% from 56%. The increase versus the comparable period is primarily due to the increase in SG&A expenses.

Current wording

Selling, general and administrative expenses (SG&A) were $10,967 and $9,895 for the nine-month periods ended September 30, 2026 and 2025, respectively. For the nine-month period ended September 30, 2026, the increase of $1,072 is primarily the result of an increase in employee-related expenses of $490, an increase in professional fees of $358, and an increase in travel and administrative expenses for domestic and international locations of $225. For the nine-month periods ending September 30, 2026 and 2025, SG&A as a percentage of revenues increased to 52% from 51%. The increase versus the comparable period is primarily due to the increase in SG&A expenses.

Previous wording

Research and development expenses were$646 and$490 for the three-month periods ended June 30, 2026 and 2025, respectively and $1,170 and $1,060 for the six-month periods ended June 30, 2026 and 2025. The expenditures in our research and development expenses are focused on new product development efforts in the pursuit of commercial applications for technologies outside of our traditional markets, and in the development and analysis of new technologies that could represent incremental market opportunities. This includes water treatment technologies and more specifically, our DGI® Dissolved Gas Infusion Systems, an innovative alternative to current aeration technology. This infusion process has a variety of potential applications in the water and wastewater industries, including remediation, treatment, biological activity, and wastewater odor management. DGI® technology benefits include reduced energy consumption, installation costs, and operating costs, while improving treatment performance.

Current wording

Research and development expenses were$771 and$450 for the three-month periods ended September 30, 2026 and 2025, respectively and $1,941 and $1,510 for the nine-month periods ended September 30, 2026 and 2025. The expenditures in our research and development expenses are focused on new product development efforts in the pursuit of commercial applications for technologies outside of our traditional markets, and in the development and analysis of new technologies that could represent incremental market opportunities. This includes water treatment technologies and more specifically, our DGI® Dissolved Gas Infusion Systems, an innovative alternative to current aeration technology. This infusion process has a variety of potential applications in the water and wastewater industries, including remediation, treatment, biological activity, and wastewater odor management. DGI® technology benefits include reduced energy consumption, installation costs, and operating costs, while improving treatment performance.

Previous wording

Interest income was$266 for the three-month period ended June 30, 2026 compared to$537 for the same period in 2025. Interest income for the three-month period ended June 30, 2025 included $257 in interest income related to the collection of our ERC benefit. Interest income was $506 for the six-month period ended June 30, 2026 compared to $816 for the same period in 2025. Interest income primarily relates to interest received on the held-to-maturity debt securities and money market funds.

Current wording

Interest income was$247 for the three-month period ended September 30, 2026 compared to$311 for the same period in 2025. Interest income was $753 for the nine-month period ended September 30, 2026 compared to $1,127 for the same period in 2025. Interest income for the nine-month period ended September 30, 2025 included $263 in interest income related to the collection of our ERC benefit. Interest income primarily relates to interest received on the held-to-maturity debt securities and money market funds.

Previous wording

Other income, net was$79 for the three-month period ended June 30, 2026 compared to Other income, net of$86 for the same period in 2025. Other income, net was $79 for the six-month period ended June 30, 2026 compared to Other income, net of $20 for the same period in 2025. Other income for the three and six-month periods ended June 30, 2025 was mainly due to transactional foreign exchange gains and losses recognized from repayment of intercompany balances.

Current wording

Other income, net was$9 for the three-month period ended September 30, 2026 compared to Other expense, net of$5 for the same period in 2025. Other income, net was $88 for the nine-month period ended September 30, 2026 compared to Other income, net of $15 for the same period in 2025. Other income and expense for the three and nine months ended September 30, 2026 and 2025 was mainly due to transactional foreign exchange gains and losses recognized from repayment of intercompany balances.

Previous wording

We have losses from operations during thesix-month period ended June 30, 2026 totaling$3,161. Our cash used in operations for this same period totaled$1,741.

Current wording

We have losses from operations during thenine-month period ended September 30, 2026 totaling$3,684. Our cash used in operations for this same period totaled$3,410.

Previous wording

Our cash and cash equivalent balance as of June 30, 2026 totaled $7,620, which includes $1,004 of cash equivalents, and our working capital totaled $20,118. We have no outstanding debt other than our outstanding letters of credit, under our Investment Collateral Security agreement with BMO Harris Bank, N.A. (the Investment Collateral Security agreement), which does not have any financial covenants. We expect to continue operating under this arrangement for the foreseeable future.

Current wording

Our cash and cash equivalent balance as of September 30, 2026 totaled $6,830, which includes $2,257 of cash equivalents, and our working capital totaled $20,024. We have no outstanding debt other than our outstanding letters of credit, under our Investment Collateral Security agreement with BMO Harris Bank, N.A. (the Investment Collateral Security agreement), which does not have any financial covenants. We expect to continue operating under this arrangement for the foreseeable future.

Previous wording

Operating activities provided cash of $1,487 for thesix-month period ended June 30, 2025, primarily due to a decrease in accounts receivable of $1,987, collection of the ERC receivable of $1,232, an increase in accrued liabilities and other non-current liabilities of $203, and removals of non-cash items from our net loss from continuing operations of depreciation and amortization of $345 and stock-based compensation, net of forfeitures of $212, offset by a decrease in accounts payable of $833 and an increase in inventory of $218.

Current wording

Operating activities provided cash of $4,583 for thenine-month period ended September 30, 2025, primarily due to a decrease in accounts receivable of $3,066, collection of the ERC receivable of $1,677, an increase in accrued liabilities and other non-current liabilities of $516, and removals of non-cash items from our net loss from continuing operations of depreciation and amortization of $517 and stock-based compensation, net of forfeitures of $269, offset by a decrease in accounts payable of $560.

Previous wording

Investing activities used cash of $2,502 and provided cash of $700 for thesix-month periods ended June 30, 2026 and 2025, respectively. Investing activities for thesix-month periods ended June 30, 2026 and 2025 primarily consisted of purchases of debt securities as investments of $9,103 and $4,949, respectively. Investing activities for thesix-month periods ended June 30, 2026 and 2025 were funded by the maturities of debt securities of $7,000 and $5,750, respectively.

Current wording

Investing activities used cash of $1,607 and provided cash of $765 for thenine-month periods ended September 30, 2026 and 2025, respectively. Investing activities for thenine-month periods ended September 30, 2026 and 2025 primarily consisted of purchases of debt securities as investments of $12,102 and $10,004, respectively. Investing activities for thenine-month periods ended September 30, 2026 and 2025 were funded by maturities of debt securities of $11,000 in both periods.

Previous wording

Financing activities used cash of $45 and $222, respectively, for the six months ended June 30, 2026 and 2025 due to taxes paid on behalf of the equity award participants on the vesting of restricted stock units.

Current wording

Financing activities used cash of $45 and $222, respectively, for the nine months ended September 30, 2026 and 2025 due to taxes paid on behalf of the equity award participants on the vesting of restricted stock units.

Previous wording

We continue to monitor our liquidity needs and in response to our recent periods of declines in revenue and net losses have taken measures to reduce expenses and restructure operations which we feel are necessary to ensure we maintain sufficient working capital and liquidity to operate the business and invest in our future. We have evaluated our ongoing business needs and considered the cash requirements of our base business of Air Pollution Control and FUEL CHEM. This evaluation included consideration of the following: a) customer and revenue trends in our APC and FUEL CHEM business segments, b) current operating structure and expenditure levels, and c) other research and development initiatives. Based on this analysis, management believes that currently we have sufficient cash and working capital to operate our base APC and FUEL CHEM businesses. We believe our current cash position and net cash flows expected to be generated from operations are adequate to fund planned operations of the Company for the next 12 months.

Current wording

We continue to monitor our liquidity needs and in response to our recent periods of declines in revenue and net losses have taken measures to reduce expenses and restructure operations which we feel are necessary to ensure we maintain sufficient working capital and liquidity to operate the business and invest in our future. We have evaluated our ongoing business needs and considered the cash requirements of our base business of Air Pollution Control and FUEL CHEM. This evaluation included consideration of the following: a) customer and revenue trends in our APC and FUEL CHEM business segments, b) current operating structure and expenditure levels, and c) other research and development initiatives. Based on this analysis, management believes that currently we have sufficient cash and working capital to operate our base APC and FUEL CHEM segments. We believe our current cash position and net cash flows expected to be generated from operations are adequate to fund planned operations of the Company for the next 12 months.

Previous wording

The Company's Investment Collateral Security agreement is used for the sole purpose of issuing standby letters of credit and requires us to pledge our investments as collateral for 150% of the aggregate face amount of outstanding standby letters of credit. The Company pays 250 basis points on the face values of outstanding letters of credit. There are no financial covenants set forth in the Investment Collateral Security agreement. At June 30, 2026, the Company had outstanding standby letters of credit totaling approximately $1,716 under the Investment Collateral Security agreement. At June 30, 2026, the investments held as collateral totaled $2,574. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.

Current wording

The Company's Investment Collateral Security agreement is used for the sole purpose of issuing standby letters of credit and requires us to pledge our investments as collateral for 150% of the aggregate face amount of outstanding standby letters of credit. The Company pays 250 basis points on the face values of outstanding letters of credit. There are no financial covenants set forth in the Investment Collateral Security agreement. At September 30, 2026, the Company had outstanding standby letters of credit totaling approximately $1,533 under the Investment Collateral Security agreement. At September 30, 2026, the investments held as collateral totaled $2,299. Fuel Tech is committed to reimbursing the issuing bank for any payments made by the bank under these instruments.

Previous wording

Fuel Tech issues a standard product warranty with the sale of its products to customers as discussed in Note 13. There was no change in the warranty liability balance during the six months ended June 30, 2026.

Current wording

Fuel Tech issues a standard product warranty with the sale of its products to customers as discussed in Note 13. There was no change in the warranty liability balance during the nine months ended September 30, 2026.