Welcome to the Quarter One 2015 Fuel Tech Incorporated Financial Results Conference Call. My name is Karen and I'm your operator for today. [Operator Instructions]. And now I would like to turn the call over to Mr. Devin Sullivan, Senior Vice President of the Equity Group. Please go ahead.

Thank you, Karen. Good morning everyone and thank you for joining us for Fuel Tech's 2015 first quarter financial results conference call. Yesterday after the close, the company issued a copy of first quarter press release and that is available at our 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'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 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 made in this call remain operative at a later date. Fuel Tech undertakes no obligation to update any information discussed during the call. And as a reminder, the call is being broadcast over the Internet and can be accessed at our website www.ftek.com. With that said, I'd 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 thank you everyone for joining us on the call today. when we finalized our budget for 2015 we anticipated that many of the same themes that impacted us in 2014 would continue to impact us as we entered in 2015 especially with regard to our APC business as we have discussed conversion times from bid to signed contract in the U.S. have extended fair beyond historical norms, domestic regulatory uncertainty remains and the increased use of natural gas over the coal in the U.S. persists. I will make some comments regarding the U.S. regulatory market in a moment. With that said however, we do not believe that our results for the first quarter are indicative of our outlook for the balance of 2015. We are committed to generating positive results even during this period of regulatory uncertainty and we expect our performance to strength as the year progresses. We expect full year results for 2015 to show improvement ove4 2014. Our optimism is supported by our continued success with geographical diversity as evidenced by yesterday's announcement of a commercial contract for our advanced NOxOUT Selective Non-Catalytic Reduction Technology also known as Advanced SNCR for multiple larger coal fire units burning both coal and biomass located in the United Kingdom. This project represents the majority of the $8.3 million in new orders that we announced yesterday which also included the orders in China and Italy. We have now announced ATC orders of $15.3 million thus far in 2015 and we believe that this is the beginning of an increased level of new business activity for 2015. Beyond this obvious impact to our 2015 financial results, this new UK contract is significant for several reasons. First, the Advanced SNCR technology represents a return on our investment…

Thank you, Vince and good morning everyone. Our first quarter revenue was 15.1 million which represent a decrease of 3.6 million from the prior year, the decrease was the result of lower APC technology segment revenues, at the end of the first quarter our working capital totaled 38.9 million a slight decrease of 800,000 from year-end. We also maintained our cash balance of more than 18 million and we remain essentially debt free. Consolidated gross margin dollars for the first quarter was 6.7 million down from 7.9 million in the prior year. Our consolidated gross margin percentage increased 2% to 44% from the prior year percentage of 42%. Our selling general and administrative expenses totaled 8.2 million for the first quarter of 2015 and were down 500,000 from the prior year. This decrease reflects reductions in personnel administrative cost and foreign locations and consulting related cost associated with our strategic planning initiatives. Our research and development cost for the first quarter of 2015 were up 628,000 from the prior year due to planned spending on product initiatives in particular our fuel conversion initiative. As previously stated we remain committed to new product development initiatives and will commit appropriately funds to support our continuing development efforts. The Advanced SNCR project will be announced yesterday reflects our success in this regard. As previously stated we expect our new product development initiatives to be around 2% to 3% of consolidated revenues. We booked a tax benefit in the first quarter of 2015 through the consolidated losses, we currently expect our full year effective tax rate to be 37% but our tax rate may change significantly due to the geographic mix of our income and the impact of permanent items of our overall effective tax rate. Our consolidated loss for the first quarter of…

[Operator Instructions]. Your first question comes from the line of Chip Moore from Canaccord. Please go ahead.

Can you talk a bit about the margin profile for that Advanced SNCR product and then maybe expand on the install base opportunity, you know where you see the biggest opportunity for upgrades, what markets have some regulatory drivers etcetera?

The UK contract obviously the first sizeable contract that we have had in Europe just as a whole company as a whole we’re very pleased with that, the Advanced SNCR technology we are excited about having the opportunity to actually develop markets for utilization of that actually on a global basis. And answering your question on margin it's going to be, I would call it a little bit lower than our traditional SNCR margin for this first project in the UK. We arrange in the lower 30s as a target for margin on that particular project. But generally speaking as we look at Advanced SNCR we think there are going to be opportunities for that technology domestically in the U.S. you know we have a very sizeable install base of SNCR already in this country. Many of the regs I made reference to are going to require some additional NOx reduction. So with that in mind we’re going to look to deploy Advanced SNCR wherever it's going to be applicable for our customers to be able to meet their needs. Globally European marketplace I think is poised for some improvement relative to contributing to our profitability and so Advanced SNCR is going to play with many opportunities not just in the UK but throughout the remainder of Europe as well particularly the Eastern European countries when we talk Poland and Czech Republic and countries along those lines that do have more coal fired generated that’s going to require compliance. China, I will - just to follow-up lastly on China for Advanced SNCR as we have discussed previously the great majority of the China marketplace when to FCR already because of the very stringent requirements for our NOx reduction in that marketplace so advanced SNCR is likely not to have as large of a play there as it could have another market areas.

And sticking back to Europe I guess with EU directives coming out, can you talk about the progress you’ve made and if you have talked about demo and some technology there, as we get closer to that getting implemented how are the inbounds and how are the efforts going?

Yes the demonstration that we made reference to was specifically for Advanced SNCR and the demonstrations have gone well. The actual European directive itself has phased in requirements, 2016 being the beginning. We know that there are several facilities in the UK that are also looking at doing demonstrations as well before they commit to the formal capital project and so we’re watching and following that very closely in the UK and we’re also looking at our opportunities in some of the call the Eastern European countries as well has possible entrance for the technology also. So that’s something that we’re still doing a little bit of development at this point of time as it relates to those Eastern European countries but we believe we’re going to have success there.

And with regards to the outlook, year-over-year for APC at least, talk about visibility, I assume that’s more back half weighted just help to calibrate expectations there.

Definitely, it will be more and more back half weighted, obviously the first quarter was slower than we would have liked it to be but as I had mentioned it's not a complete surprise to us. As we look at this new booking in the UK we’re going to look at obviously starting to recognize revenue on that project here in Q2 we have other projects in backlog that we’re going to be working off in Q3 and Q4 as well and obviously we have a pipeline that we follow very, very closely and there are 2 to 3 sizeable projects that we’re targeting here to look to book here in the near term that will have significant impact on 2015 and you will have exposure to those as we announced contracts in the future. But we’re attracting some high level projects that we expect to contribute in 2015.

And then lastly for me, bigger picture or longer term I guess on the fuel conversion initiative with the CARBONITE acquisition and it sounds like you’ve got a core team in place there to commercialize that. This way R&D versus potential in-organic activities, what you’re thinking in terms of longer term growth? Thanks guys.

Relative to the fuel conversion initiative, right now that is I call it the majority of our development spending and as we look at what's running through our profit and loss right now and that will continue throughout 2015. The development process is going to take time but we see great value in this opportunity and great potential business development and customer development opportunities for use of this technology. As it relates to other opportunities we’re, as we always do, we’re always looking at both inorganic and organic developments that we can bring to marketplace that will improve our financial position. So that will be continuing and ongoing and we will invest in those as they come to us and as we feel as though investment is justified.

Thank you. Your next question comes from the line of Lucas Pipes of Brean Capital. Please go ahead.

[Indiscernible] for Lucas this morning. Few of the topics we’re looking to touch on obviously just kind of went over but wanted to also ask on the Fuel CHEM side your revenues into 2015 do you continue to believe that the business will more or less grow modestly this year or do we have any better directional outlook into the year?

Yes I would basically make the statement that we’re targeting Fuel CHEM to remain at a similar level in 2015 as 2014. [Technical Difficulty] that could impact us as well. Fuel CHEM obviously is a very profitable business for us, so we’re always looking to grow this business in any way or form that we can but our marketplace environment here, it just favorable for the Fuel CHEM technology as we would like it to be. So to be conservative we’re targeting Fuel CHEM to be flat in '15 versus '14 but as I said there is some upside potential there that could help us as we look at some opportunities that are sitting in front of us today to demonstrate the technology.

And then kind of touching back on the PECO-FGC contribution to FGC [ph], could you provide any additional color on that did in Q1 and maybe a little bit on the backlog into 2015?

Yes, sure. So, Q1 contribution I wanted to pick it at around 2 million in Q1. We have backlog of about seven that rolled over from year-end there is two projects that make that up, one we announced late in 2014 for about 5 million and then we had carry over backlog from the acquisition that’s going to run-off. So the 7 million will be spread a little bit was recognized in Q1, the rest of the balance it will be done in Q2 and Q3. We do have some other opportunities that we’re looking at as well for that particular business that we feel optimistic about and so that will be part of the 2015 numbers as well.

Right, as I mentioned in my commentary we see the MATS rule has being a very significant and material driver for our PECO-ESP related business. MATS is going to require many power generating units today that are going to be forced to utilize Sorbent Injection to meet the requirements for mercury and hydrogen chlorides that they are going to be creating particulate issues with your existing ESPs. Many entities have done demonstrations already with call it the Sorbent Injection processes and these entities are finding out that in many cases they are going to have to redesign and/or retrofit their ESP and so we’re looking very closely at opportunities for our ESP, we build business through PECO to go ahead and bring us revenue here in the near future.

Thank you. I would now like to turn the call over to Mr. Arnone. Please go ahead.

I would like to thank everyone for being on the phone call today. I appreciate everyone's participation. We’re expecting a nice upturn in business opportunity for 2015 versus 2014. Our team is committed to delivering good positive results for our shareholders and we look forward to speaking with everyone again here in the next quarter. Thank you very much everyone.

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