Fuel-Tech N.V. Reports First-Quarter Results; Revenues Advance 42%.

STAMFORD, Conn. -- Fuel-Tech N.V. (Nasdaq: FTEK), a world leader in advanced engineering solutions for the optimization of combustion systems in utility and industrial applications, today reported results for the quarter ended March 31, 2006.

Net sales for the first quarter increased

The increases in net sales and net income were primarily attributable to the air pollution control (APC) business, which continues to benefit from a strong backlog of domestic utility orders and, to a lesser extent, from the pace at which projects are moving towards eventual completion in the People's Republic of China. Quarterly gains were also realized by the fuel treatment chemicals business, although results were moderated by the high price of fuel oil and by ongoing Western coal transportation issues, which limited the need for the Company's FUEL CHEM(R) program at certain oil-fired and coal-fired customer sites.

First-quarter results include $227,000 of stock-based compensation expense, reflecting the January 1, 2006 adoption of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment." The Company is using the modified prospective transition method, under which compensation expense is recorded using fair value estimates for both new awards and awards previously granted but not fully vested as of the adoption date. Results for the quarter also reflect the recording of nearly $1.1 million in income tax expense, virtually all of which is non-cash.

John F. Norris Jr., President and Chief Executive Officer, commented, "We enjoyed a very strong start to what we anticipate will be an outstanding 2006. Pre-tax income, at $2.4 million or $0.10 per diluted share, nearly doubled versus a year ago and record revenues were achieved for a second consecutive quarter, attesting to the momentum building across our businesses. In particular, we continue to experience robust APC order flow from a major Southeastern utility alliance partner and are very active quoting new business from a wide spectrum of utility and industrial concerns, both domestically and abroad."

Mr. Norris concluded, "Despite challenging first-quarter market conditions, our fuel treatment chemicals business registered a healthy 28% revenue gain versus a year ago. Equally important, we announced our first commercial FUEL CHEM order in Mexico, which should represent an attractive and growing market for our unique mix of technologies. We are optimistic about our fuel treatment chemicals business for the balance of the year and fully expect to sign up new customers while further penetrating existing customer accounts, as evidenced by our FUEL CHEM announcement this past week."

Conference Call

As a reminder, Fuel-Tech N.V will host a conference call today at 9:00 AM ET to discuss the results. The call will simultaneously be broadcast over the Internet at www.fueltechnv.com and can be accessed on the Home page under "Quick Links." The call can also be accessed by dialing 800.573.4752 (domestic) or 617.224.4324 (international) and using the passcode "Fuel-Tech N.V." A replay of the call will be available on the website and can be accessed by dialing 888.286.8010 (domestic) or 617.801.6888 (international) and entering the passcode "41528296". The replay will be available until May 30, 2006.

About Fuel-Tech N.V.

Fuel-Tech N.V. is a leading technology company engaged in the worldwide development, commercialization and application of state-of-the-art proprietary technologies for air pollution control, process optimization, and advanced engineering services. These technologies enable customers to produce both energy and processed materials in a cost-effective and environmentally sustainable manner.

The Company's nitrogen oxide (NOx) reduction technologies include the NOxOUT(R), NOxOUT CASCADE(R), NOxOUT ULTRA(R), Rich Reagent Injection (RRI) and NOxOUT-SCR(R) processes. These technologies have established Fuel Tech as a leader in post-combustion NOx control systems, with installations on over 350 units worldwide, where coal, municipal waste, biomass, and other fuels are utilized.

The Company's FUEL CHEM(R) technology revolves around the unique application of chemicals to improve the efficiency and reliability of combustion units by controlling slagging, fouling, corrosion and opacity. This technology, in the form of a customizable FUEL CHEM program, has been applied to over 80 combustion units burning a wide variety of fuels including coal, heavy oil, biomass, and municipal waste.

Many of Fuel Tech's products and services rely heavily on the Company's exceptional Computational Fluid Dynamics modeling capabilities, which are enhanced by internally developed, high-end visualization software. These capabilities, coupled with the Company's innovative technologies and multi-disciplined team approach, enable Fuel Tech to provide practical solutions to some of our customers' most challenging problems. For more information, visit Fuel-Tech N.V.'s web site at www.fueltechnv.com.

This press release may contain statements of a forward-looking nature regarding future events. These statements are only predictions and actual events may differ materially. Please refer to documents that Fuel Tech files from time to time with the Securities and Exchange Commission for a discussion of certain factors that could cause actual results to differ materially from those contained in the forward-looking statements.

FUEL-TECH N.V.
                      CONSOLIDATED BALANCE SHEETS
           (in thousands of U.S. dollars, except share data)

                                                March 31, December 31,
                                                  2006        2005
                                               ---------- ------------
                                               (Unaudited)
Assets
Current assets:
 Cash and cash equivalents                      $   4,917   $  10,375
 Short-term investments                            14,000       6,000
 Accounts receivable, net of allowances for
  doubtful accounts of $150 and $150,
  respectively                                     12,481      12,184
 Inventories                                          151         358
 Deferred income taxes                              2,799       3,043
 Prepaid expenses and other current assets          1,654       1,072
                                                ----------  ----------
Total current assets                               36,002      33,032

Equipment, net of accumulated depreciation of
 $8,367 and $7,900, respectively                    4,297       4,045
Goodwill                                            2,119       2,119
Other intangible assets, net of accumulated
 amortization of $1,116 and $1,087,
 respectively                                       1,207       1,224
Deferred income taxes                               1,823       1,579
Other assets                                          810       1,027
                                                ----------  ----------
Total assets                                    $  46,258   $  43,026
                                                ==========  ==========

Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable                               $   6,411   $   6,493
 Accrued liabilities                                4,821       6,949
                                                ----------  ----------
Total current liabilities                          11,232      13,442

Other liabilities                                     459         448
                                                ----------  ----------
Total liabilities                                  11,691      13,890

Shareholders' equity:
Common stock, $.01 par value, 40,000,000 shares
 authorized, 21,477,525 and 20,424,133 shares
 issued, respectively                                 215         204
Additional paid-in capital                         95,606      91,559
Accumulated deficit                               (61,520)    (62,870)
Accumulated other comprehensive loss                  (16)        (39)
Nil coupon perpetual loan notes                       282         282
                                                ----------  ----------
Total shareholders' equity                         34,567      29,136
                                                ----------  ----------
Total liabilities and shareholders' equity      $  46,258   $  43,026
                                                ==========  ==========

                            FUEL-TECH N.V.
                   CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)
           (in thousands of U.S. dollars, except share data)

                                                Three Months Ended
                                                     March 31
                                                 2006         2005
                                              -----------  -----------

Net sales                                    $    17,121  $    12,051

Costs and expenses:
  Cost of sales                                    9,056        6,397
  Selling, general and administrative              5,424        4,056
  Research and development                           351          334
                                             ------------ ------------
                                                  14,831       10,787
                                             ------------ ------------

Operating income                                   2,290        1,264

Other income (expense), net                          132          (28)
                                             ------------ ------------

Income before taxes                                2,422        1,236

Income taxes                                      (1,072)        (483)
                                             ------------ ------------

Net income                                   $     1,350  $       753
                                             ============ ============

Net income per Common Share:
     Basic                                   $      0.07  $      0.04
                                             ============ ============
     Diluted                                 $      0.06  $      0.03
                                             ============ ============

Average number of Common Shares outstanding:
     Basic                                    20,613,000   19,683,000
                                             ============ ============
     Diluted                                  23,708,000   22,587,000
                                             ============ ============

                            FUEL-TECH N.V.
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Unaudited)
                    (in thousands of U.S. dollars)


                                                    Three Months Ended
                                                         March 31
                                                        2006    2005
                                                      -------- -------
Operating activities
Net cash (used in) provided by operating activities   $  (582) $  424
                                                      -------- -------

Investing activities
Purchases and sales of short-term investments          (8,000)      -
Purchases of equipment and patents                       (730)   (833)
                                                      -------- -------
Net cash used in investing activities                  (8,730)   (833)
                                                      -------- -------

Financing activities
Exercise of stock options                               2,763     269
Income tax benefit from exercise of stock options       1,068       -
                                                      -------- -------
Net cash provided by financing activities               3,831     269
                                                      -------- -------

Effect of exchange rate fluctuations on cash               23     (45)
                                                      -------- -------

Net decrease in cash and cash equivalents              (5,458)   (185)

Cash and cash equivalents at beginning of period       10,375   4,031
                                                      -------- -------

Cash and cash equivalents at end of period            $ 4,917  $3,846
                                                      ======== =======

                            FUEL-TECH N.V.
                    BUSINESS SEGMENT FINANCIAL DATA
                    (in thousands of U.S. dollars)

                                 Nitrogen     Fuel
   For the three months ended     Oxide     Treatment
         March 31, 2006          Reduction  Chemicals  Other    Total
----------------------------------------------------------------------
Net sales from external customers $12,365    $4,756  $     -  $17,121
----------------------------------------------------------------------
Cost of sales                       6,888     2,118       50    9,056
----------------------------------------------------------------------
Gross margin                        5,477     2,638      (50)   8,065
----------------------------------------------------------------------
Selling, general and administrative                    5,424    5,424
----------------------------------------------------------------------
Research and development                                 351      351
----------------------------------------------------------------------
Operating income (loss)           $ 5,477    $2,638  $(5,825) $ 2,290
----------------------------------====================================

                                 Nitrogen     Fuel
   For the three months ended     Oxide     Treatment
         March 31, 2005          Reduction  Chemicals  Other    Total
----------------------------------------------------------------------
Net sales from external customers $ 8,320    $3,727  $     4  $12,051
----------------------------------------------------------------------
Cost of sales                       4,292     2,008       97    6,397
----------------------------------------------------------------------
Gross margin                        4,028     1,719      (93)   5,654
----------------------------------------------------------------------
Selling, general and administrative     -         -    4,056    4,056
----------------------------------------------------------------------
Research and development                -         -      334      334
----------------------------------------------------------------------
Operating income (loss)           $ 4,028    $1,719  $(4,483) $ 1,264
----------------------------------====================================

Note: Fuel Tech is an integrated company that segregates its financial
results into two reportable segments, both providing advanced
technology and engineering solutions for the optimization of
combustion systems in utility and industrial applications. A third
segment that marketed and sold visualization software was discontinued
effective March 1, 2005 and does not meet the materiality test for
disclosure. Accordingly, it is aggregated in "Other" above, along with
profit and loss items not allocated by Fuel Tech to each reportable
segment.

                        GEOGRAPHIC INFORMATION
                    (in thousands of U.S. dollars)

                                           For the three months ended
                                                    March 31
                                           ---------------------------
                                               2006         2005
                                            -----------  ------------
Revenues:
  United States                             $    12,906  $     10,051
  Foreign                                         4,215         2,000
                                            ------------ -------------
                                            $    17,121  $     12,051
                                            ============ =============