Good day, ladies and gentlemen, and welcome to the Q4 2013 Fuel Tech, Inc. Earnings Conference Call. My name is Maurice, and I’ll be your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. Now, I’d like to turn the conference over to Devin Sullivan, Senior Vice President of the Equity Group. Please proceed, sir.

Thank you, Maurice. Good morning, everyone, and thank you for joining us for Fuel Tech's 2013 Fourth Quarter and Yearend Conference Call. Yesterday after the close, we issued our press release, a copy of which is available at Fuel Tech's website, www.ftek.com. The speakers on this morning's call will be Doug Bailey, Chairman, President and Chief Executive Officer; and Dave Collins, Senior Vice President and Chief Financial Officer Before turning things over to Dave, I'd like to remind everyone that matters discussed in this call, except for historical information, are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in forward-looking statements. The factors that could cause results to differ materially are included in our filings with the SEC. The information contained in this call is accurate only as of the date discussed, and investors should not assume that statements made in this call remain operative at a later date. Fuel Tech undertakes no obligation to update any information discussed in this call. And as a reminder, this call is being broadcast over the Internet and can be accessed at Fuel Tech’s website, www.ftek.com. With that said, I'd now like to turn the call over to Dave Collins, Fuel Tech’s Chief Financial Officer. Dave, please go ahead.

Thank you, Devin, and good morning, everyone. Thank you for participating in today's call. We closed 2013 with record revenues of $109.3 million, which represents an increase of $11.7 million over 2012. This increase is principally due to strong core revenue growth in our China-Pacific Rim and Latin America businesses and reflects our continuing strategies to leverage our investments in growth markets outside the U.S. Our 2013 net income totaled $5.1 million or $0.23 per diluted share, representing an increase of $2.3 million or 84%. Our adjusted EBITDA was $4.7 million, up $3.2 million or 33% over 2012. During 2013, we increased our working capital by $9.7 million to $48.6 million and our cash balance remained strong at $27.7 million or $1.23 per diluted share. Now let’s take a look at our results for the full year and fourth quarter periods. Consolidated revenues for the full year increased by 12% to $109.3 million. During 2013, our U.S revenues declined by $7.2 million or 11% to $63.2 million, while our core revenues increased by $18.8 million or 69% to $46.1 million. Our higher core revenues reflected growth in our Latin America business of 148% and our China-Pacific Rim business of 27%. While we expect to see continued growth in our China-Pacific Rim business, we look for a decline in year-over-year revenues from our Latin America business as our large APC contract was nearly two thirds complete as of yearend 2013. We will discuss this in more detail during our APC segment comments. Consolidated gross margin percentage for the full year was 43%, up slightly from 42% in the prior year. Our strong margin performance was due to better than expected APC margin performance in our China-Pacific Rim business and the U.S bookings received in early 2013, coupled with the consistent margin…

Good morning, everyone, and thank you all for joining us today. I’m pleased to report that Fuel Tech had a very successful 2013. This marks our fourth consecutive year of growth since the economic downturn year of 2009. In particular, these results were achieved despite two years of regulatory gridlock here in the United States in defining important future policies to reduce air emissions, as well as a period marked by a rapidly changing generation mix in the electric utility industry. Consolidated revenue rose to a record $109.3 million, up 12% over 2012 and our annual profit increased substantially, reflecting improved results from both our APC and FUEL CHEM business segments. Our focus on expanding our global market and achieving greater geographic diversity, particularly with our regulatory driven APC portfolio, manifested itself further in 2013. International revenues rose for a third consecutive year and comprised 42% of total revenues in 2013, up 28% from the prior year. We also ended the year with a balance sheet that ranged among the stronger in our history. Our APC market segment provided over $10 million of revenue increase, and 84% of our gross margin color improvement. APC market conditions remained strong in China, though we’re still sluggish in U.S as of the end of 2013. Current domestic bidding activity continues to be driven largely by state consent decrees and other mandates while lingering regulatory uncertainty has widened the time from proposal to signed contract. As Dave noted, this domestic slowdown is reflected in our yearend U.S backlog. However, just as we did in 2013, we continued to pursue multiple projects through all phases of the consultative sale cycle in the U.S and overseas and are confident in our ability to secure a significant share of these awards during 2014. Within our FUEL CHEM…

(Operator Instructions) Your first question will come from the line of Chip Moore with Canaccord. Please proceed. Chip Moore – Canaccord Genuity: It looks like APC margins were a bit better than expected this quarter. Maybe you could just break that out Latin America versus China and then where blended margins stand in the current backlog.

I’d be happy to provide a general comment and Dave might add some specificity. But across the board in 2013 and currently, we’ve been able to enjoy a better than expected margin, well above what we budgeted. This has been accomplished in good cost control and performance in our Chile project. It has been accomplished in unbudgeted but sold SNCR jobs last year that were particularly strong in contributing to our third quarter performance. And we’ve seen better than expected performance in gross margin in multiple projects in China. Given the developing and uncertain competitive nature of that market, it was difficult as we looked into 2013 to ascertain what our margins would be. But I would say that we’ve been pleased with our margin performance across all of our APC projects geographically. And I really do also credit our fine organization with good project execution skills to keep our costs well in line with what we had projected.

Chip, this is Dave. Our blended margin in backlog is 28% and that’s principally reflective of higher concentration with our remaining Latin America Chile contract work. In China as Doug mentioned, we’ve been recognizing better margins throughout the year. Our blended margin is 31% on China backlog. Chip Moore – Canaccord Genuity: That’s helpful. And then just on the cash priorities with the balance sheet where it is, can you talk a little bit more about some opportunities to accelerate growth, whether it’s acquisition or licensing arrangements like you talked about, just sort of your latest thoughts and how the market is.

Sure. Of course owing to the confidentiality of anything that we may be considering doing, it would be expected that we would have attractive use of cash for opportunities that we deemed and have identified would give us additional growth. So again without being asked to be specific on that, I would say that the cash on our balance sheet for this year and beyond is going to be utilized and not only continue to maintain our financial strength, but give us the flexibility to make important add on acquisitions or in licensing opportunities. So we’re very active in that area. Chip Moore – Canaccord Genuity: Okay, that’s fair. I guess just lastly, you talked a little bit more on that near term $100 million opportunity that you’d identified. Maybe you can expand a little on some of the industrial sector. Thanks.

I mentioned a number of market areas that we’re working on. For example I mentioned carbon black. There’s 23 facilities within the United States and some of the first of those recently have had to enter into consent agreements. We mentioned how consent decrees are our driver today. And while we see this market unfolding, it will be over a three to five year timeframe. So we’re looking for turnkey opportunities, particularly for SCR type solutions, which are several million in size, again reflecting the lumpy project opportunities. But we do believe that we’ll be successful in penetrating that market. Again I mentioned fertilizer refinery chemical, biomass pulp and paper. We have a history of working with these segments, plus municipal solid waste steel industry. There are consent decrees unfolding in multiple segments, our state rules and permits that we see as the drivers of opportunities in the industrial landscape. The industrial market as I said is probably a little under half of our pipeline of opportunities. While we intend to often think about Fuel Tech as very closely associated with the utilities industry and we are. We have a great reputation and experience for industrial projects and we’ve actually done more industrial installations because of the multiplicity in utility. So we tend to see strong needs in industrial solutions, particularly for SCR, ASCR applications as well as SNCR. Is that the help on the industrial side that you were looking for?

Your next question comes from Lucas Pipes with Brean Capital. Please proceed. Lucas Pipes – Brean Capital: I just wanted to touch base a little bit on the FUEL CHEM business. When I look out over the coal landscape, it was a very cold winter. It looks like we’re going to add further generation, coal generations compared with last year. I wondered if you started to see an impact on that business due to the change in gas prices etc. and if so, what type of growth rate we could be looking at year-over-year for 2014 versus 2013.

It may be hard to actually pinpoint a growth rate, Lucas, but you’re absolutely right about the severely cold winter. As we all read in the press, we’ve seen somewhat rising and even spiking natural gas prices. The dependence on coal as a strategic fuel to generate electricity in this economy will be there. I personally see it increasing its market share over the years ahead. As retirements of certain coal fire plants are made and the increased utilization of the remaining fleet, the capacity utilization at higher levels creates additional opportunities for the application of FUEL CHEM program. We’re beginning to see a little more new business development opportunity and still have a strong customer base that has had increasing use of our solutions. So I think it’s going to be moderate growth, but sustainable business that will continue to produce good margins. I think the story is yet to be played out as to where we will be several years from now relative to coal and natural gas in the generation mix. Coal is here to stay and there’s some important needs that that industry has that we can help provide solutions for. Lucas Pipes – Brean Capital: That’s very helpful. And on that back drop off, more resilient coal generation. Could you maybe reiterate where you see the domestic APC business heading? Obviously you’ve always had nice -- historically you had nice margins domestically. So as a percentage of business on the APC side, what amount -- what piece of the pie should we allocate or think about the domestic market?

I can tell you that this year was a large percentage of the business and much of that of course was derived from our presence in Chile. But it’s very hard to go and immediately replace a large project like that. We consciously pursued development in multiple geographic markets to achieve what I like to call regulatory diversification. In the more than 15 years that I have been associated with this business, I am probably witnessing my fourth sales cycle in the domestic APC markets. It has gone through peaks and valleys, and as you can well imagine, when regulations were propagated or stayed, new substitute rules were issued and perhaps vacated. So I think you’re seeing us now on the tail side of a four year cycle that probably reached its low water mark in 2009, increased. It’s got a little bit of softness now to be sure, but we’ll come back. So strategically, while these capital projects are ones that Fuel Tech are good at winning and executing and we really have enjoyed remarkably good margins, particularly in 2013, our focus is going to be look for ways to provide solutions to the air pollution control market that move us in more of a direction of recurring revenues as opposed to just capital sales. That creates a greater flywheel to our business to have predictable higher level of recurring revenues that we can count on while still enjoying the enhancement of large capital projects that we’re capable of executing. That’s our R&D efforts are focused on developing solutions around pollutants that quite honestly utilize more of our FUEL CHEM model or ways in which we can develop proprietary chemicals that provide continuous sales opportunities for Fuel Tech. At the same time we’re looking at a little more out of the box opportunities around that consumable mix, whether it’s on the post combustion or pre combustion side of our markets to provide engineered solutions that can grow our recurring revenue business. So long term I would say the APC and our capital projects ups and downs ought to be a smaller part of our mix. Certainly in the last couple of years it’s been a very important part of our mix. That’s where we’re headed. Lucas Pipes – Brean Capital: That’s very helpful. Maybe as a follow up, when I think about the FUEL CHEM, it’s been more of a domestic opportunity so far. Do you have concrete plans for taking that abroad as well?

Yes. Again in general we’ve had some success in developing sales in Europe. We see the market yet to come in China. Our interactions with large companies over there has only awakened I think interest in FUEL CHEM. Clearly with the quality level of Chinese coal and the dependence on that fuel driving that economy and the severity of problems that are associated with that, discovering what Fuel Tech can bring to that marketplace will bring opportunity. We are looking for ways to find market access to bring not only that, but other present and future technologies to the Chinese marketplace. But as we’ve said in the past, today China is a pollution control market with FUEL CHEM on the horizon. That being said, while we’ve done some demonstration work, there’s just an early I think increased awareness of what this might have to offer in the geographic market. I don’t expect that to play out as a major contribution to 2014 revenues, but as I look longer term it’s a tremendously good asset of our company.

Your next question comes from the line of Dan Mannes with Avondale. Please proceed. Stefan Neely – Avondale Partners: Hi. This is actually Stefan on for Dan.

We’re going to get Dan eventually. Stefan Neely – Avondale Partners: Yes, eventually, hopefully this afternoon. Most of my questions have been asked. I did want to touch on near term contract wins. You noted that the second half of 2014 looks to be better than the first half. Given your yearend backlog, what kind of opportunities are you seeing in terms of awards in the next six months? Any color you can give on geographic locales of such awards.

Again I think one of the things that we’re seeing surprisingly is a broader interest in more of our solutions in China. There may very well be better than expected wins in the SNCR space. In this market, we know where the opportunities are. We know that the sales cycle is one that requires a lot of [consultative] efforts and a timeframe of winning that’s a little hard to predict. But sometimes we’ll know clearly when an RFQ will come out and bids will be evaluated, a general idea of the level of competition and the expected award dates and we’ve factored that into our thinking. Sometimes the scope of work can change. We’re now capable of doing larger projects than we did in the past. We’ve come a long way as a company from the standpoint of what we’re able to offer. We now demonstrated in larger capital projects. So we’re now bidding on larger opportunities. So we’re no longer a company known as an SNCR company. We have SCR, ASCR and our combustion capabilities, ULTRA, XCAM now and many engineering service capabilities. So our anticipation is that the defining difference will happen after some regulatory clarity comes in the year. We can’t influence that, but when you get to the Supreme Court level, there’s not another level after that. So two years have now gone by in which we really haven’t had a major regulatory driver that’s addressing the cross-states issues. We still have the long term NOx driver of National Ambient Air Quality Standards and we know where regional productions are needed. We’re addressing our sales development and marketing efforts to opportunities in those states and regions. But just like 2013, we ended up with some nice contracts that played out well during the calendar year that looking into the beginning of the year we just didn’t know we would have. I just think that is the character of the marketplace today. So for that, I will say it’s going to be softer domestically this year. It’s going to continue to grow and I think accelerate to China. We’re going to play out our large work in China and we’re looking at renewed opportunities in other markets. So lumpy is still the word. Difficult to predict is part of this kind of business, which is why so much of our development work has been aimed at building a product and services portfolio aimed at steady recurring revenues. So that’s what we’re going to strive to achieve and we’re well on our way to doing that. Stefan Neely – Avondale Partners: That’s helpful. My second question on the SG&A line. You noted some bad debt expense. That’s happened for a couple of quarters now. What is that a function of? Is that a function of doing business in China? If so, would we expect something like that to continue in the future?

There’s been a couple of specific accounts that we provided reserves for. A couple of them were in China. There was another in Latin America. As a company, we have not had a history of reoccurring bad debt experience. A lot of our customers have large utilities so we have not experienced that. I’m hesitant to tell you that it won’t happen again, but we continually assess our AR positions, collection positions and provide reserves when we feel it’s prudent to do so. If there’s a risk area it would be China. That’s fair to say, but I can’t sit here and tell you that we’re going to have to provide additional reserves next year. Again we did put them up at yearend because we felt that was prudent and that’s the best that I can do right now.

(Operator Instructions) Your next question comes from the line of Steve Shaw - Sidoti & Company. Please proceed. Steve Shaw – Sidoti & Company: Hey David, did you mention the amount of revenue that came from the Chilean project?

In 2013? Steve Shaw – Sidoti & Company: No, in the fourth quarter.

In the fourth quarter -- for the full year it was about $20 million and it was split evenly throughout the quarters. So let me see if I can get you a number specific for yearend. Yes, I’ve got it, about $5.5 million in Q4 Steve Shaw – Sidoti & Company: Okay. And then in 2014, was there still $10 million left in the backlog on that project?

Yes, that’s correct. Steve Shaw – Sidoti & Company: And then pretty much everything has been asked. Do you guys have a guess on when the cash flow rule might -- a decision be made on that?

I think based on what we hear in the June, July timeframe at the earliest. Whether or not the court chooses to take additional time is beyond our knowledge. But consensus seems to indicate that by early Q3. Thank you again on the good questions. Any more questions, operator?

No further questions. I now would turn the call back over to Doug Bailey for closing remarks.

Thank you again for your participation and questions on today's call and of course for your continuing interest in Fuel Tech. We remain excited and optimistic about our future, and we will certainly look forward to keeping you further apprised of our progress and looking to create another successful year, 2014. Thank you everybody. Have a good day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and good day.