Good day, ladies and gentlemen, and welcome to the Fuel Tech Incorporated Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, today's conference is being recorded. I would like to introduce your host for today's conference call, Mr. Devin Sullivan, You may begin sir.

Thank you, very much Kevin. Good morning everyone and thank you for joining us for Fuel Tech's 2015 second quarter financial results conference call. Yesterday after the close, we issued a copy of our earnings press release, which is available at the company’s website at www.ftek.com. The speakers on today's call will be Vince Arnone, President and Chief Executive Officer and Dave Collins, Senior Vice President and Chief Financial Officer. After prepared remarks, we will open the call for questions. Before turning things over to Vince, I would 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 our 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 was accurate only as of the date discussed, and investors should not assume that statements during the call remain operative at a later date. Fuel Tech undertakes no obligation to update any information discussed during this call. And as a reminder, the call is being broadcast and can be accessed at www.ftek.com. With that said, I would now like to turn the call over to Vince Arnone, President and Chief Executive Officer of Fuel Tech. Vince please go ahead.

Thank you, Devin. Good morning and I want to thank everyone for joining us on the call today. During our first quarter conference call, we noted two primary expectations related to our results for 2015. First, as we entered 2015 we anticipated that many of the same themes that impacted us in 2014 will continue to impact us as we entered into 2015 especially with regard to our APC business. And, second, we expected that we would deliver sequential financial improvement in the second quarter from the first quarter and at the second half of 2015 would show improved financial performance versus the first half. With that said, we did see improvement in Q2 when compared to Q1 as revenues increased by nearly 24% and our operating results were improved. While we are encouraged by the revenue improvement, we are committed to generating positive results even during this period of regulatory uncertainty and we expect our performance to strengthen as the year progresses. We currently expect our full-year results for 2015 to show improvement over 2014. Our optimism is supported by the visibility that we have into our capital projects pipeline for the remainder of 2015, which will further reflect the depth of our product offerings and our ability to capitalize on our geographical diversity. Just last week we announced $4.7 million of new awards for our ESP, SNCR, and ULTRA technology solutions. Matching this diversity of product offering was the very geographies in which they will be installed, including the U.S., the UK, China, Italy and Eastern Europe. These awards came on the heels of $10.5 million in contract awards in the second quarter, the most significant being an award in Europe for Fuel Tech’s Advanced NOxOUT Selective Non-Catalytic Reduction technology for multiple large coal fired units burning both…

Thank you, Vince, and good morning everyone. Consolidated revenues for our second quarter totaled $18.7 million compared to $20.2 million in the prior year. For the first six months of 2015, our consolidated revenues totaled $33.8 million compared to $38.9 million in the prior year. Our gross margin percentage for the current quarter decreased 4% to 38% from 42% in the prior year. For the first six months of 2015, our gross margin percentage has decreased 1% to 41% from 42%. The changes in our gross margin are reflective of both APC and FUEL CHEM shifts. Selling, general and administrative expense for the current quarter totaled $8.4 million down $559,000 or 6% from the prior year amount of $9 million. For the first six months, our SG&A expense totaled $16.6 million down $1.1 million or 6% from the prior year amount of $17.7 million. Our research and development cost for the current quarter and six months totaled $982,000 and $1.9 million respectively reflecting our increases over the prior year amounts of $757,000 and $1.4 million respectively. Given the status of current R&D projects and the outlook for the remainder of 2015, we believe our current quarter expense level for R&D spending will continue for the third and fourth quarters of 2015. Longer term we expect to continue supporting our R&D efforts as we believe this is a critical component for our future growth. Our net loss for the current quarter and year-to-date periods totaled $1.4 million or $0.06 per diluted share and $3 million or $0.13 per diluted share respectively. Our adjusted EBITDA for the first six months of 2015 was a negative $1.8 million. Now let’s move onto a more in-depth discussion of our business segments. The APC segment reported current quarter revenues of $11.1 million down slightly from…

Thank you, Dave. I would like to turn the call back to the operator. We can open up the call for questions at this point in time.

[Operator Instructions] Our first question comes from [Steve Coe with Magro] [Ph].

Hi, good morning guys, thanks for the detail. Just wanted to see if I could clarify couple of things on your prepared remarks, if you had a sec. First of all, I think I’ve got this right my apologies, I got cut off the call and I had to come back a couple of times, but $20 million in awards that you expect to book by year end what is geography of APC FUEL CHEM, what does the mix look like, so is this just kind of a statistical funnel approach that you are looking at and or do you have some better granularity on what that mix might look like, and did I hear that right that it is $20 million in awards across the company by the end of the year?

Yes, we have specific visibility to exactly where those orders are coming from and actually it’s a mix between the U.S. and then some of our international geographies at this point in time. But we specifically know where those specific orders are going to coming from.

Okay, and the FUEL CHEM gross margin this 48 to 52 range that you are talking about, how much of that decline is attributed to an increase in new customer demo, so are they higher this year versus last year at this time or what’s happening there?

Yes, there are significantly higher, we had a significant new customer and we’re in the first year of engagement with them so that has dropped our margin this year’s due to that specific account, so. We have also had a bit of a change in our customer mix and there is some varying margin profiles to our existing customers, but the majority of that is related to a demonstration project.

Okay, and I take that the demonstration projects are quite a bit lower than the 52%, is that right for the most part?

That’s correct.

Okay, and last question on the FUEL CHEM side, I know you guys are pursuing other opportunities; I know you talked about China as one area where you would like to get FUEL CHEM and getting a plan up and running. If you look realistically on kind of how that sales cycle would work when would you expect - is this kind of a 2016 phenomenon when we could lock in a couple of new customers there and other parts of world and when would we see some benefits from that do you think?

Yes, I think that’s probably right, Steve, I think that is going to take us a couple of months to work through a demonstration process and then we’ll need to very specifically document the - the positive results from the demonstration and then we will look to market those positive results. So we’ll look towards 2016 as being the year, whereby we look to see some favorable contributions.

Okay, and cash flow from operations is negative 1.3 for the first six month and I know you mentioned a positive for the second half. Should we imply that we've got a shot at being positive for the year or are you are not prepared to say that yet?

Yes, we are expecting to be positive for the full-year, but that’s a prospective commentary, so depends on new award placement and timing of revenues and there is things are go into that, but as we sit here today, we are expecting to be positive for the full-year.

Okay, and last I guess the other point that’s encouraging, I know you give a great detail kind of on the regulatory framework. If I’m reading you correctly, it sounds like you expect a fair amount of activity out of the European Union may be even more so than the U.S. over the balance for the year. Is that right or am I not picking up on that correct.

No, we are excited about the European market opportunity and we do see some awards on the near-term frontier that we are looking at as part of our sales pipeline coming out of Europe, but we are also - we are positive about we see coming out of the U.S. here within this next handful of months as well. So I think you’re going to see a balance relative to those awards without favoring one geography over the other.

Okay. And last question is breakeven level kind of from a cash - kind of from an EBITDA and kind of book basis, where do those stand now Dave, on where - I know you took some cost out, you envisioned needing to do more in the back half or how you guys kind of balancing kind of getting back up to profitability versus the expense structure?

Sure. Our current levels, low 80s right now. We’re just getting into our planning process for 2016 and we’re taking a deep dive through all of our markets and trying to take a look at what we think will come through next year. So until we go through that process, I’m not prepared to have a discussion about what type of adjustments we might make, but we’re encouraged, we’re seeing some positive signs in a number of our different geographies. So we’ll go through that process and then make those decisions.

All right. Thank you very much guys. I appreciate them.

You’re welcome.

Our pleasure. Thank you.

Your next question comes from John Quealy with Canaccord.

Hey good morning folks.

Hi John, how are you?

Hey Vince, how is it going?

Good, well. Thank you.

I'm doing all right. So thanks for the details always. So just a broader question, to your point about the regulatory issues continue to sort of swell around this sector, fossil has been beaten up a little bit from your spark spread and environmental perspective. Talk about some of the plans obviously you get near-term plans to grow the backlog and things like this, but are there any plans afoot to perhaps venture beyond the current fossil footprint or how do you think about that? I mean you are utility experts and station experts, it’s just that a lot of those folks are doing different things other than the fossil now. So how do you think about that statement in the very long-term? Thanks.

No, we will do John, thank you. I mean that is your comment to something that we’re living and breathing everyday within the lives of the Fuel Tech team and obviously we take them to heart. We realize and we know and understand that our markets are facing some headwinds today obviously the coal-fired markets in particular. The regulatory world is generally not in our favor at least the direction that’s going in, but that’s two points, number one, that doesn’t mean that we still can’t be successful with the products that we’re putting in the market today and we will continue to be successful with those products, but what it does mean is that we need to look to expand how and where and with what products we’re going to be doing business with in the future. Okay. Our fuel conversion business development initiative is currently our primary avenue towards generating new business for Fuel Tech as we lifted to further invest in developing that business and I should say that product as well. We are encouraged about some of the end markets that we are investigating for that development. In addition to that, as a team we are going to be looking at how we can take the knowhow that this company has internally and that we’ve generated and developed over the past 30 years and apply that to end markets that aren’t necessarily coal oriented. As a company that’s something we need to do and that’s something that is going to be a very heavy focus for us. So to your point, it’s something that - the end markets are something that we feel very, very strongly about. We’re still committed to coal, however, we are going to open our eyes very significantly towards other opportunities.

Thanks guys.

Thank you. End of Q&A

[Operator Instructions] And I’m not showing any further questions at this time, I would like to turn the call back over to Vince Arnone for remarks.

Thank you very much. I would like to thank everyone for their time today and their participation on the call. And thanks for your continued interest in Fuel Tech. Our current and very intense focus is on a rapid return to profitability and we’re going to take all necessary actions to be successful in meeting this target. We do remain optimistic as the company we remain cautiously optimistic about the balance of 2015 and beyond and we are going to continue to pursue opportunities that drive our growth and enhance the long-term value of your investments. Thanks very much everyone.

Ladies and gentlemen that conclude today’s presentation. You may now disconnect and have a wonderful day.