Fuel Tech (NASDAQ:FTEK) Q3 2020 Earnings Call

0:00 Greetings and welcome to the FuelTech Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Devin Sullivan, Senior Vice President of the Equity Group. Thank you. You may begin.

0:27 Thank you, Jesse. Good morning, everyone, and thank you for joining us today for FuelTech's third quarter 2020 financial results conference call. Yesterday after the close, we issued a copy of the release, which is available at the company's website, www.ftek.com. The speakers for today's call will be Vince Arnone, Chairman, President, and Chief Executive Officer, and Ellen Albrecht, the company's Principal Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I'd like to remind everyone that matters discussed on this call, except for historical information, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and reflect FuelTech's current expectations regarding future growth Results of operations, cash flows, performance and business prospects, opportunities, as well as assumptions made by and information currently available to our company's management.

1:32 FuelTech has tried to identify forward-looking statements by using words such as anticipate, believe, plan, expect, estimate, intend, will, and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to FuelTech and are subject to various risks, uncertainties and other factors including but not limited to those discussed in FuelTech's annual report on Form 10-K in Item 1-A under the caption Risk Factors and Subsequent Filings under the Securities Exchange Act of 1934 as amended which could cause FuelTech's actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in or implied by These statements.

2:21 FuelTech undertakes no obligation to update such factors or to publicly announce the results of any forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in the company's filings with the SEC. With that said, I would now like to turn the call over to Vince Arnone. Chairman, President, and CEO of FuelTech. Vince, please go ahead.

2:54 Thank you, Devin. Good morning, and I want to thank everyone for joining us on the call today. I hope that you and your families are safe and in good health, and I'd like to thank all of our veterans for their service. I want to begin by thanking everyone at FuelTech for their hard work and adaptability and addressing the challenges of the COVID-19 pandemic. The effects of the pandemic continue to affect our operations, most notably at our air pollution control business with respect to the timing of new business awards. I want to emphasize, however, that we remain intensely focused on providing support for client bid requests for custom engineered solutions that fulfill the unique needs of each of our customers and expect the final decisions to be made on multiple projects for an aggregate contract value of $10 to $15 million by the end of the year.

3:56 These awards are weighted towards the U.S. and Europe and primarily for our SDR, ULTRA, and SNCR offerings. Our fuel chem segment produced strong results in the third quarter. reflecting contributions from the installation of our TIFI-targeted in-furnace injection technology on three new domestic coal-fired units for a repeat customer in the Northeast, as well as a return to more normalized run rates across our fleet following a period of slower unit activity in Q2 of 2020 due to the impact of the COVID-19 pandemic. The commercial programs represented by these three new units will generate revenue when the units are dispatched to produce power in their geographic area.

4:51 If these units are operational and utilizing the technology on a continual basis throughout the year, we would expect to see revenues of $500,000 to $750,000 per unit, which would be welcome upside for 2021. Anticipating the combined effect of these factors during our second quarter conference call, we stated that we expected third quarter revenue at FuelChem to approximate revenue generated from the first six months of the year. In fact, third quarter revenue at FuelChem exceeded that benchmark by approximately $350,000. For the remainder of the year, we would expect to continue to see revenue at more normalized levels.

5:42 We are also continuing to work with our partner in Mexico to employ our solutions to help them mitigate harmful emissions derived from the burning of high sulfur fuel oil. Our partner continues to engage with local officials in Mexico to advance this solution. The reduction in oil price has provided the impetus for the Mexican government to explore the burning of high sulfur fuel oil produced by Penex, the state-owned oil company, and this oil is currently being burned, however, largely without pollution control measures. In June, our partners solidified contract extensions with CFE, the state-owned utility, for the two sites at which we currently have our fuel chem program installed.

6:31 Last month, we provided cost estimates to our partner for the expansion of our program to a site in Mexico that has five large power generation units all that burn high sulfur fuel oil. This site is adjacent to a P-MEX refinery. Our partner is now in the midst of discussions with CFE regarding this expansion opportunity and we will watch the development of this activity closely as we move throughout the remainder of this year. We are also continuing to pursue opportunities for additional fuel chem applications at Biomass in municipal solid waste units in Europe, in Southeast Asia via our partner Amazon Papyrus for the pulp and paper industry, where we are using our recovery chem program, and in other Southeastern Asian countries where coal is the primary source of fuel, power demand and related pricing is high, and where slagging and fouling is an issue.

7:36 Notwithstanding the impact of COVID-19 on new project awards, SDR and Ultra for natural gas applications and industrial markets continue to provide our best business opportunity. This includes focusing on small to medium-sized gas turbine combined cycle plant projects, such as the combined heat and power upgrades at universities and large medical complexes, and new opportunities in the oil and gas segment. We continue to support and partner with small turbine suppliers and suppliers of internal combustion engines for stationary deployment and are looking to exploit the development of plug-and-play small engine SCR solutions for the distributed power generation market.

8:27 We are also monitoring activities at the state level where new environmental guidelines, including compliance with the EPA Boiler Max and regional Hays Rules may produce opportunities to install best available retrofit control technology on certain sources of emissions. We continue to attract opportunities in Europe related to our Ultra, SNCR and SCR technologies as well as those associated with BREF, the Best Available Reference Technology Guidelines that were issued in August of 17 and with compliance timelines throughout 2020 and beyond. Longer term, we are tracking ATC opportunities in India, Southeast Asia and South Africa.

9:16 We are continuing to advance our DGI dissolved gas infusion initiative against the headwinds of COVID-19. Although COVID continues to delay the commencement of a product demonstration, at a pulp and paper facility in the Midwest that was planned for early in Q2 of this year, we have added three additional demonstration opportunities for our DGI technology. Two for the municipal wastewater treatment market and one with a new customer in the pulp and paper business. The municipal wastewater opportunities resulted from our new license agreement with Cadence Corporation. which purchased the assets from the prior licensor of the technology, Nano 2 LLC.

10:04 Cadence Corporation is a company active in municipal wastewater treatment with a focus on delivering biological solutions to this market and we are grateful for the supports and introductions they are facilitating on our behalf. Regarding timing, our DGI trailer is expected to arrive at a wastewater treatment facility in California next week for the first demonstration, which will last 30 to 45 days, and then we will likely move the trailer directly to either one of the other demonstration sites as we anticipate that the demonstrations could occur consecutively. I look forward to keeping everyone apprised of our progress on this initiative prospectively. Turning to a summary of our financial results, as announced in September, We finalized a settlement with our insurance carrier in the amount of $2.6 million related to an outstanding claim that was previously reported in 2019.

11:06 In the quarter, we recorded a receivable for this amount from the insurance company, with the offset being a reduction in cost of sales for the APC business. The funds were actually received during the month of October. We remain diligent with respect to our cost structure and financial position relative to the opportunities offered by our current market environment. Our STNA declined by $600,000 in the third quarter of 2020 versus the prior year, and we remain on track to achieve our full year STNA target of $13 to $13.5 million. Our cost reduction initiatives and the wind down of our China operation should allow us to profitably leverage top-line growth with annual break-even revenue of between $28 to $32 million per year, depending on the product segment mix.

12:07 With respect to China, we have collected and repatriated in excess of $1 million in cash from our China customers as of September 30th of this year against an estimated available total of $2 to $2.5 million. We expect to repatriate additional funds later in this year and then again next year. We ended the quarter with $11.8 million in cash and cash equivalents. As I noted during our first quarter conference call this year, on April 15th, the company entered into an agreement with its lender pursuant to the Paycheck Protection Program under the Coronavirus Aid Relief and Economic Security Act, providing for a loan in the principal amount of approximately $1.6 million.

13:00 This funding was completed in the second quarter. As of September 30th of this year, the company has utilized the entire balance of the loan proceeds to fund its qualifying expenses. As a result, the company believes it has met the eligibility criteria for forgiveness. We believe that our current cash position, combined with the cash flow expected to be generated from operations, are adequate to fund planned operations of the company for the next 12 months. The cost reduction efforts that we executed as a company over these past few years have provided us with a platform for material improvement in our financial performance as we move through the remainder of 2020 and beyond.

13:47 and endeavor to capitalize on the business opportunities that I described previously. The FuelTech team remains focused and committed to delivering long-term value for our shareholders. And with that said, I'll turn the call over to Ellen for some financial commentary. Please go ahead, Ellen.

14:08 Thank you, Vince, and good morning, everyone. As Vince mentioned, FuelTech received a $2.6 million insurance settlement related to an outstanding claim that was previously reported in 2019. The amount of the settlement reduced cost of sales for the APC segment by a like amount in the third quarter, and our consolidated results for the period reflected the positive impact of this settlement. Consolidated revenues during the quarter increased 26.4% to $8.2 million from $6.5 million in the last year's third quarter, reflecting higher revenue for both the APC and Fuel Chem business segments. International revenues comprised 20.6% of total revenues compared to 11.2% in last year's prior quarter.

15:01 APC segment revenues improved $2.9 million from $1.8 million in the prior year quarter, primarily the results of project timing. APC backlog at the end of the quarter was $6.4 million, $6 million of which was domestic. Projects included in backlog represent a variety of FuelTech APC technology offerings across multiple geographies. We anticipate approximately $4.1 million of the current backlog to be recognized over the next 12 months. Fuel consignment revenues rose $5.3 million from $4.6 million in last year's third quarter, primarily reflecting contributions from the installation of equipment on three new units during the third quarter of 2020, as well as a recovery to more normalized run rates across our fleet.

16:02 Consolidated gross margins for the 2020 third quarter were 72.4% of revenues compared to 44.8% of revenues in last year's third quarter, primarily reflecting the impact of the settlement on APC cost of sales. Excluding the settlement, consolidated gross margins for the third quarter were 40.7%, reflecting a decrease from prior year quarter due to project mix. APC gross margin was $3.2 million, or 110% of revenue, reflecting the above reference settlement, compared to gross margins of $0.6 million, or 34.1% in last year's third quarter.

16:51 Excluding the settlement, APC gross margin for Q3 of 2020 was 20.8%. Fieldchem gross margin rose to 51.7% from 49% in the third quarter of 2019 due to product mix largely attributed to the aforementioned installation and equipment of three new units. As Vince mentioned, our cost control initiatives are ongoing, which continue to be reflected in our SG&A. S&A for the third quarter declined by 16.7% to 3.2 million from 3.8 million in the comparable prior year period. Factors driving this increase included cost savings realized by employee-related expenses, along with reduction in certain administrative and consultancies.

17:46 We have achieved these reductions without sacrificing the level of support for our current customer base and nor our business development activities. Net income from continuing operations was $2.4 million or $0.10 per share compared to a net loss from continuing operations of $1.3 million or $0.05 per share in the 2019 third quarter due in large part to the impact of the settlement in Q3 of 2020. Excluding the insurance settlement, we would have been slightly below break even on the quarter. R&D expenses declined slightly to $285,000 from $352,000 in last year's third quarter. The components of our R&D spending included dedicated employee resources and depreciation and amortization of other intangible assets.

18:43 Adjusted EBITDA was $2.7 million in the 2020 third quarter compared to an adjusted EBITDA loss of $0.8 million in the third quarter of 2019. Our balance sheet at September 30, 2020, reflected the proceeds and obligation of $1.6 million from our SBA PPP loan, and we had cash equivalents of $11.8 million, including restricted cash of $2.4 million. Our working capital balance at the quarter end was $15.7 million, which will continue to support the ongoing operating needs of the business. With respect to valuation, our book value per share was 96 cents, our tangible book value per share was 85 cents, and our working capital per share was 64 cents at September 30, 2020.

19:41 Given our cumulative net operating loss of $2.7 million at September 30, which covered several geographies, we expect that our income tax expense for 2020 will be near zero. Now I would like to turn the call back over to Vince.

19:58 Thank you, Ellen. Operator, I think it is time to open up the line for questions from the folks that have dialed in. Great, thank you. Ladies and gentlemen, if you would like to ask a question at this time, please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Amit Dayal with HC Wainwright. Please proceed with your question.

20:34 Good morning. Thank you for taking my questions. Hello, I'm Vince. Good morning. Hi, Vince. How are you? Good. How are you? Good. Thank you. So with respect to your opportunities in Mexico and potentially moves into the distributed generation space, etc., do you expect these to become part of Backlog in 21 or how should we view the buildup towards these materializing into revenues for you guys?

21:03 Okay, Amit, can you please repeat the first part of your question if you don't mind? You were a little bit mulled. So can you please try that one more time?

21:13 So with respect to your opportunities in Mexico and other opportunities you highlighted including the distributed generation, Market. Do you expect these to become part of backlog in 21?

21:29 Okay, so first of all, regarding Mexico, thank you for your question. Mexico is obviously a fuel chem application, so we typically don't consider our fuel chem applications as building up as part of backlog because that's a recurring revenue business application. So what we're tracking on Mexico is we're looking for our partner to work with CFE, the state-owned utility, for them to take the decision to actually move forward with the implementation of the fuel chem program at the one large site that I noted as part of my commentary that has five units. If that does go forward, whether it be later in the year this year or early next year, It would probably be another six to seven months before we would actually order equipment, have it located on site and installed at that site, and then look to start up. So at the soonest, that application would start running early in the second half of 2021 if everything goes smoothly.

22:40 Okay, so that's That's how I see the Mexico application moving forward, but obviously we'll keep everyone apprised as to how that does go forward. Now, related to some of the other opportunities that are more on the APC side, we are expecting, as I noted, to have contract award decisions made by four to five of our customers that we are currently working with on or about the end of this year, sometime between now and the end of this year, early next year at the latest. So we would expect to have those decisions made, and we're hoping that a good portion of those contract awards come to FuelTech. So to the extent they are finalized this year, they'll be in backlog before the end of the year and rolling into 2021. Understood.

23:33 Thank you for that.

23:34 You're welcome.

23:36 How much cash now remains in China? Have you covered most of it with this 1 million received this quarter? How much is remaining in China?

23:45 Yeah, we still have right now the balance is between a million and a million and a half dollars in China basically as of the end of the third quarter. We are still collecting some additional cash there as well. So we would expect that in addition to the million to a million and a half that exists there right now, There's another half million, two million dollars that we're going to collect. Okay, so we would then look to repatriate, and again, ballpark, another million and a half plus to the U.S. later this year or into next year. So that's what we're looking at in terms of bringing additional cash back to the U.S.

24:29 Understood. And, you know, given that You had a pretty strong bounce in the third quarter. Do you expect some momentum to continue in the fourth quarter for you?

24:41 Relative to when you say strong bounce, relative to what specifically?

24:44 Just from a financial performance perspective? Relative to the second quarter, you know, third quarter came in much stronger.

24:53 Understood. Yeah. So the third quarter, obviously an improved quarter for us. If you extract the, and I'd call it a one-time item, extract the income that we reported from the insurance settlement in Q3, we end up being just a little bit below break-even. And so what does that mean? On the quarter, we generated revenues of around a little bit over $8 million. I had said that with what we've done with cost structure, that our break-even annualized revenue number is somewhere in that $28 to $32 million range, and our performance here in Q3 actually proved that out. So from a performance perspective, Q3 was an uptick in performance.

25:39 Q4, as you know, our backlog on APC is declining. It needs to be replenished. And Q4 itself is typically a slower quarter from a fuel cam revenue generation perspective because we call it one of the shoulder periods of the year whereby as we go from summer into fall, we have a lot of units, power generation units, that will take their outages for maintenance because of the more moderate temperatures. So we typically see a little bit of a downturn in fuel cam revenue in Q4. So as I sit here right now on it, I don't expect a recurrence in Q4 of the same performance level that we had in Q3.

26:24 It will be a lesser performance level, again, without being completely specific.

26:30 Understood. I appreciate that call-up, Vince.

26:33 You're welcome.

26:35 I think those are my questions. Thank you. I'll get back in queue. Thank you very much, Enid. Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Pete Enderlin with MAZ Partners. Please proceed with your question.

26:55 Good morning, Vince and Ellen.

26:57 Good morning. Good morning, Pete.

27:01 Following up on the question about the performance in the third quarter versus the second quarter, significant uptick, one of the parts of that relatively minor was that the foreign revenues in the third quarter more than doubled after being down in the first half. Can you give us a little more color on what happened there?

27:24 Right. I mean, we largely had some, call it, timing of project execution, if you will, on one specific European project and a couple of other smaller ones that was working through, call it a more intensive execution timeframe for that project work. And that happened in Q3. Our projects typically have phases. Pete, as you know, we typically start out with engineering and design work. and then we move into a procurement phase prior to delivering equipment to a customer site. It's typically when we're working through the procurement phase of equipment where we start to incur the majority of the costs relative to our air pollution control projects and it's at that point in time where we start to recognize the majority of the revenues as well as we use a percentage of completion method for accounting. So that's what happened. That's why we had an uptick in foreign revenues and specifically due to project execution timing on one project in particular in Europe.

28:31 Okay, and then on the fuel chem side, when you get a new utility to start using your technology and you mentioned that you order some equipment to put in there, what's the magnitude of the

28:48 The situation that I just described relative to the installation on three new coal-fired units with a repeat customer is a little bit of a unique situation as it relates to the fuel chem business. Because what we did with this customer is we actually sold the customer both equipment and installation services for those three sites. And we're recognizing revenue for that equipment and installation services on a percentage of completion basis. Okay, we have not sold them chemical yet. Those units have not started up yet and they won't start up until late this year. And so it's a little bit of a unique scenario for us in terms of how we're handling the equipment and installation work for this customer.

29:46 It is a repeat customer of ours, and we handled their other units in a similar way last year.

29:53 Does that mean that the fuel chem revenues actually include some equipment sales as those things happen?

30:04 They do. That is correct. We had expected some of that activity for the third quarter of this year just due to the planned timing of installation on those sites. And so the timing worked out to our expectation.

30:19 And can you tell us what the magnitude of the equipment sale for one of those, let's say, or for all three would be?

30:28 Well, one of the units for equipment and installation was between $300,000 and $400,000.

30:35 Okay. And then, excuse me, I have sort of a high 50,000-foot level philosophical question, if you'll indulge me a little bit. and that is, excuse me, my voice is giving out here. You know, coal is going to be with us long term. I mean, even some of the most aggressive forecasts and the people who propound, you know, going to completely non-carbon based sources of energy acknowledge that we're going to have to have coal, especially in some of the foreign markets, for the long-term foreseeable future. And the same applies in a stronger sense to both natural gas and biomass.

31:24 So your APC technology and fuel chem both talk about reducing NOx emissions, SOx emissions, particulate emissions, and CO2. And nobody would argue that those improvements are wrong. would be great. They're not controversial. And anything that can be done to improve the efficiency, the emissions of all these bad things over a long period of time would certainly be worth doing, all other things being equal. Now, so the question is, why aren't those technologies being universally applied in these large, large bases of installed electrical utilities and many other facilities as well.

32:14 And I guess what I'm finally boiling down to is the question, is it mainly cost or is there more of a mindset that these utilities and other entities just don't want to invest in what is basically a declining asset base and maybe one that's politically unpopular or incorrect? Sorry to make such a long-winded question, but the basic idea is why doesn't your stuff get much more universal acceptance and applicability?

32:46 To answer that, there's a couple of questions that are in your commentary there, Pete, and I think realistically, coal has been under pressure for, and coal and fossil fuel has been under pressure for quite some time, and that will continue. Relative to utilization of pollution control technologies, I think if we polled the the base-loaded units, the base-loaded fossil fuel units in this country for what they have installed already for what I would call critical pollution controls surrounding SOx and NOx and particulate. I think we'd find that those units have all invested in those controls already as we sit here today, those larger base-loaded units. So as it relates to a coal universe, there really aren't that many incremental units that would require pollution control solutions on a prospective basis.

33:52 Most of what we're looking at today for incremental businesses in the industrial market space, where they're actually upgrading operations to either increase their output so it's a new source of generation, or they're looking to retrofit existing production capacity for improvement as well. So it's a little bit of a combination. Are there some units, coal-fired units out there that could still require some pollution control? Yes, there are. I'm sure there are. But then your comment about whether or not the investment is justifiable then comes into play because then the owner of those assets has to actually do an evaluation of the estimated useful life of that unit and vis-a-vis the investment, and is that going to be offset by a profit generation opportunity if those units are going to be dispatched, if at all? So it's a complex situation for utility owners, generally speaking, but we are seeing more and more of those owners diversifying their portfolios to have the broad base of Power Generation Capability, whether it be renewables, coal, fossil fuel, or others. So your question is applicable, Pete, but it's a multi-pronged analysis that needs to be evaluated.

35:17 Yeah, just to follow up a little bit on that, efficiency is not the same as reducing CO2, let's say, directly, but How many of the existing coal-fired utilities in the United States, just to pick one area, have fuel chem technology installed at this point?

35:43 Today, we're probably actively running on, it's probably less than 15 in total, approximately 15 to 20 coal-fired units, somewhere in that range in terms of what we're installed and running on. Okay, is there a large space of opportunity? Of course there are. Of course there is. And the fuel chem application is only applicable if indeed the unit is utilizing a source of fuel that it cannot burn efficiently within their units and if they're creating slagging and fouling issues within that boiler, okay? In most cases, that unit needs to be running on a rather heavy capacity factor. It needs to be running on a fairly consistent basis and using a fuel that the unit itself was not designed for.

36:41 So special conditions need to be in place for a boiler owner to be able to utilize our fuel chem program. And believe me, we chem this all the time. Some of the opportunities that we've had over this past couple of years, in fact, the one that we were just discussing, it becomes applicable because the unit is going to be looking to burn. They're changing their fuel source to burn a coal that they are going to have difficulty burning on those units. It's a special situation at this point in time.

37:14 Yeah. Okay. Well, that helps clarify that. Thank you very much.

37:18 You're welcome, Pete. Thank you. Our next question comes from the line of George Gaspar, a private investor. Please proceed with your question.

37:27 Yes. Good morning. Good morning, Vince. Hello, George. Hello. Very nice report. Vince, I'd like to get into this water treatment activity. This test that you implied that is going to be carried out in California next week, is it?

37:52 Correct. It will start at the end of next week's time frame.

37:57 What kind of application is it that you're going to be attempting to treat?

38:03 It is a wastewater treatment application. It's municipal wastewater. Correct. And what is actually happening here, George, is that we, in working with our partner, Cadence, are actually assisting them technically with their demonstration at this site because our demonstration trailer has five times the capacity to deliver oxygen than theirs does. So we're working a little more closely with them these days to be able to assist them with development situations that they have in progress, which at the same time is going to enable us to become intimately more familiar with the capabilities of our equipment and also more familiar with the process application specifically.

38:55 So we're working closely with Cadence on this, but we're using our demonstration trailer as the source of oxygen for the application. But it is a municipal wastewater treatment application.

39:08 Okay. And then you indicated that you would be moving on to do another one after that.

39:18 If the timing works out properly, we are working with a pulp and paper customer, and this would be a FuelTech customer who has needs as well. They are located in the state of Washington. And if the timing works well, we will likely keep the trailer on the West Coast and actually bring it up to this customer location. And again, if the timing works out well. And then Cadence has another municipal application in California that has a timeframe in the first quarter of next year as well that we may be able to assist them with additionally. So we're watching all three of these.

40:04 These all materialized, George, within this past month to two-month timeframe. We're excited to see the activity. As you know, we've been waiting to have the opportunity to bring our trailer out to demonstration sites to go ahead and, whether it be assist cadence or work with a customer directly on our own, we have been wanting to better understand, document, demonstrate everything that we can relative to DGI, the trailer's performance, its capability to deliver oxygen to support a solution, and these are great opportunities for us.

40:42 Yes. The first application here, is this a large municipality in California, or is this sort of a regionalized outside of a large area of activity?

41:01 I'd call it more regionalized, George, without having... call it specific figures in mind relative to how I would compare, call it application sizing. I would call it more regionalized, though.

41:14 Right. Okay. All right. And then one question, follow-up on the gas turbine side. The opportunity area, as you're looking at it going forward, I know you've been trying to expand in that horizon a How optimistic are you that you can roll this forward in a much broader scale in the next year?

41:47 Yeah, one of the opportunities that we're working with right now, George, is the deployment of actually engines for distributed power at this point in time, and That's an opportunity that we're hoping comes to closure here before the end of the year, but we're evaluating our landscape of opportunity on whether they be gas turbines, gas engines, and anything along those sorts that we can be assisting that customer base with is something that we're going to follow very, very closely. I see. Our primary objective is rebuilding the backlog today, George. That's priority number one. And once we have that in hand, we'll be in a better business situation overall.

42:39 Well, good. It sounds like you really have some significant opportunities in the near term here. And it looks like you could be setting yourself up by the end of the year to be looking at a pretty positive outlook for 2021.

42:57 We hope so, George. We're doing everything on our part to be able to get there, yes. Thank you for your comments. Thank you. Thank you. We have reached the end of our question and answer session, so I'd like to pass the floor back over to Mr. Arnone for any additional closing comments.

43:15 Thank you, Operator. Before we close, we did have one investor actually write in with a question, and I'd like to answer that briefly. The question was related to our DGI demonstration opportunities. And the question is, it sounds like there are four possible DGI demonstration opportunities. Does FuelTech have any additional demonstration units under construction as of today? Okay. And so to answer that question, As we sit here today, we do not have another DGI trailer in hand that we are working on constructing. But given the wave of opportunity that has come our way within this past two months, we are going to look at what it takes to go ahead to have an additional demonstration trailer built for fuel tax utilization or to assist our partner Cadence as well.

44:18 The lead time for getting that done is somewhere in the 12 to 14 week time frame, and from a cost structure basis, probably in the range of $100,000 or thereabouts. So that answers that question. Lastly, for everyone on the call, I want to thank everyone for joining the call today. Again, thanks for your interest in FuelTech, and again, thanks to all of our veterans for their support of our country. Everyone have a great day, and we'll talk again soon. Thank you. Ladies and gentlemen, this does conclude today's teleconference and webcast. We thank you for your participation, and you may disconnect your lines at this time.