TMG:CC - Thermal Energy International Announces Annual Financial Results
(TheNewswire)
Record Custom Equipment orders andrevenue, and record Turn-key Project development indicate strong,growing demand from customers. Annual results reflect residualpandemic impact on the longer sales cycle Turn-key Projectorders.
OTTAWA, ONTARIO – TheNewswire - September 28,2022 – Thermal Energy InternationalInc. (“ Thermal Energy ” or the “Company”) (TSXV: TMG ) , ( OTC: TMGEF ) , an innovativecleantech company and global provider of proprietary energy and carbonemissions reduction solutions to some of the world’s largestcorporations, has announced its financial results for the year endedMay 31, 2022. All figures are in Canadian dollars.
Year-End Highlights:
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Revenue: $15.9million for the year and $4.4 million for the quarter, a 19% increasecompared to the same quarter last year.
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EBITDA i : $(758) thousand for the year, $203 thousand forthe quarter
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Net loss of$(1,838) thousand for the year, $(149) thousand for thequarter
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Cash and working capitalbalances is at $2.6 million and $2.8 millionrespectively
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Order backlog ii $4.9 million as atMay 31, 2022 and $10.3 million as at September 27, 2022
“These results - while disappointing - are not unexpected as we ridethrough the tail end of the global pandemic. We anticipate that thefinal wave of the disruptions will continue until theimpact of recent order intake and Turn-key Project development filtersthrough” said WilliamCrossland, CEO of Thermal Energy.
“There is however much to be positiveabout. Not only did Custom Equipment sales persevere throughout thepandemic, but since FY20 Custom Equipment order intake hasconsistently broken its own records year on year andcontinues to be at recordlevels, approximately 39% ahead of pre-pandemiclevels .”
“Custom Equipment sales have a muchshorter sales cycle than our large Turn-key Projects. Turn-keyProjects also require significant site attendance and therefore weremore heavily impacted by the pandemic and the effects are inevitablybeing felt for longer. However, an indicator for future Turn-keyProject orders is often the number of Turn-key Projects in paiddevelopment which has now reached record levels and is more than twicethe pre-pandemic level.”
“Our growing success with Custom Equipment orders and Turn-keyProject development can be attributed in part to our comprehensiveproduct portfolio that is well aligned with the market‘s goals and objectives. T he International Energy Agency last weekreminded organizations yet again that energy efficiencyis one of the quickest and most cost-effective CO 2 mitigation options while lowering energy bills andstrengthening energy security.”
“The bleak impact of the Russian gas disruption, greater pressure for climate actionand rising global energy prices contributes to unwavering demand from our multinational customers who look for bothshort and long-term opportunities to stabilize volatile energy costsand achieve their carbon reduction goals. Thermal Energy providesboth, and our key customers continue to return to us time and again todeliver more products and projects at more of their productionsites.”
“We have an unwavering belief in Thermal Energy’scapabilities to capitalize on market conditions, which is why investment in the capabilities and future growth of the Companycontinued throughout the pandemic. Our retained staffhave the knowledge and experience necessary to now fulfil the backlogof orders, support the significant growth ofCustom Equipment orders and deliver the record pipeline of Turn-keyProjects in development.”
| In thousand except % data |
| Three months ended May 31, 2022 |
| Three months ended May 31, 2021 |
| Twelve months ended May 31, 2022 |
| Twelve months ended May 31, 2021 |
| $4,462 |
| $3,766 |
| $15,909 |
| $15,349 |
| Gross profit |
| $1,908 |
| $1,352 |
| $6,733 |
| $6,751 |
| Gross margin |
| 43% |
| 36% |
| 42% |
| 44% |
| Operating expenses |
| $1,915 |
| $1,653 |
| $8,184 |
| $6,502 |
| Net (loss) income |
| $(149) |
| $(106) |
| $(1,838) |
| $223 |
| EBITDA i |
| $203 |
| $(39) |
| $(758) |
| $936 |
| Cash position |
| $2,632 |
| $4,241 |
| $2,632 |
| $4,241 |
| Working capital |
| $2,777 |
| $3,809 |
| $2,777 |
| $3,809 |
| Orders received |
| $3,604 |
| $5,451 |
| $11,832 |
| $18,840 |
| Order backlog ii as ofMay 31 |
| $4,900 |
| $7,800 |
| $4,900 |
| $7,800 |
Fourth Quarter and Fiscal 2022Financial Review
Quarterly revenue was $4.5 million, up 18.5% from lastyear. The increase is due to an 83% increase in revenues from CustomEquipment orders. Gross profit for the quarter was $1.9 million ascompared to $1.4 million from the prior year. The company increasedits prices where warranted and continues toevaluate where price increases are appropriate and can be implemented.This resulted in a gross margin of 43%, compared to 36% for the samequarter the prior year. Operating expenses incurred for thequarter amounted to $1.9 million which was increased mainly due to thereduction in covid related government wage subsidies of $224 thousand.A net loss of $149 thousand was incurred for the fourth quarter andEBITDA was $203 thousand.
Twelve months revenue was $15.9 million, up 3.6% fromlast year mainly due to a 27% increase in revenue from CustomEquipment sales offset by the decrease of revenues from Turn-key heatrecovery solutions. Gross profit for the year was $6.7 million ascompared to $6.8 million last year. The decrease was mainly due tolabour shortages and raw material price increases. This resulted in agross margin of 42%, compared to 44% for prior year. Operating expenses incurred for the year amounted to $8.2million which was increased mainly due to a reduction in governmentwage subsidies of $903 thousand, an increase in acquisition cost ofthe technology from Sofame Technologies Inc. of $166 thousand, andincreases in other operating expenses of $1,394 thousand because oflifting temporary cost control measures, investment in the growth ofEuropean sales team, increased travel and business development costs,and increases to staff salary in order to catch up with thesignificantly increased annual inflation rate and to ensure we remaincompetitive and are able to effectively execute the projects in ourpipeline and capitalize on the current market opportunity. These costincreases were offset by the increase in foreignexchange gains of $782 thousand compared to prior year. A net loss of$1,838 thousand was incurred for the year, and EBITDA was $(758)thousand.
The Company’s cash position was $2.6 million as atMay 31, 2022, compared to $4.2 million as at May 31, 2021. Thedecrease was due to cash used in operating activities of $1,640thousand, investing activities of $352 thousand (primarily theacquisition of the Sofame assets), offset by the cash provided byfinancing activities of $358 thousand (primarily the issuance oflong-term debt of $1,300 thousand offset by repayment of long-termdebt of $729 thousand and lease obligations of $217 thousand).
Working capital decreased by $1 million to $2.8 million on May 31,2022, compared to $3.8 million on May 31, 2021. The decrease inworking capital was mainly due to the decrease in cash and cashequivalents as a result of the loss incurred in fiscal year 2022.
Business Outlook and Order Summary
Orders received during this fiscal year are 37% lower than ordersreceived during last year. However, orders for Custom Equipment,primarily GEM TM andHeatsponge, are 3.8% ahead of lastyear, and 39% greater than the pre-Covid levels. The Company ended theyear with a total order backlog of $4.9 million, down 37% from the$7.8 million last year, and with the Custom Equipment order backlog 3%higher than last year.
The Company defines its order backlog as the value ofprojects for which purchase orders have been received, but that havenot yet been fully reflected as revenue in the Company’s publishedfinancial statements.
The Company has received $5.4 million in new orders subsequent to theMay 31, 2022 year-end bringing the current order backlog to $10.3million as of September 27, 2022. A selection of recent orderhighlights includes:
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$800,000 order for a Turn-key heat recovery project from a leadingEuropean meat producer, announced September 7, 2022. This is thesecond project for this specific application where the technology hasbeen applied to a new innovative heat source.
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$350,000 order from a leading textile manufacturer for a waste water heat recovery system, and GEM TM steam traps taking the totalfor this customer to $900,000. Announced September 13, 2022 this isthe first RBT system outside North America and illustrates a milestonein our Sofame acquisition strategy.
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During the first three and half months of the current fiscal year(FY23), GEM TM orders aremore than double the amount received during the same period lastyear with more than $1.5 million GEM steam trap orders received inonly a few weeks.
Full financial results including Management’sDiscussion and Analysis and accompanying notes to the financialresults are available on www.SEDAR.com and www.thermalenergy.com/financial-reports.html .
Readers areencouraged to subscribe to TEI News to receive strategic news and updatesdirectly to their inbox.
ENDS
For media enquiries contact:
Thermal Energy International Inc.
Canada: 613-723-6776
UK: +44 (0)117 917 2179
For investor enquiries:
Thermal Energy International Inc.
613-723-6776
About Thermal Energy InternationalInc.
Thermal Energy International Inc., ranked as one of Canada’s Top GrowingCompanies in 2021, 2020 and 2019, isan established global supplier of proprietary, proven energyefficiency and emissions reduction solutions to the industrial andinstitutional sectors. We save our customers money and improve theirbottom line by reducing their fuel use and cutting their carbonemissions. Our customers include many Fortune 500 and other leadingmultinational companies across a wide range of industrysectors.
Thermal Energy is a fully accredited professionalengineering firm and by providing a unique mix of proprietary productstogether with process, energy, and environmental engineeringexpertise, Thermal Energy can deliver unique turnkey projects withsignificant financial and environmental benefits for ourcustomers.
Thermal Energy's proprietary products include: GEM ™- Steam traps, FLU-ACE ® - Direct contact condensing heatrecovery, HEATSPONGE – Indirect contact condensingheat recovery systems, and DRY-REX ™ - Low temperature biomass dryingsystems.
Thermal Energy has engineering offices in Ottawa,Canada, Pittsburgh, USA, as well as Bristol, UK, with sales offices inCanada, UK, USA, Germany, Poland, and Italy. TEI’s common shares aretraded on the TSX Venture Exchange (TSX-V) under the symbol TMG .
For more information, visit our website at www.thermalenergy.com and follow us on Twitter at
This press release contains forward-looking statementsrelating to, and amongst other things, based on management’sexpectations, estimates and projections, the anticipated effectivenessof the Company’s products and services, the timing of revenues to bereceived by the Company, the anticipated effects of COVID-19 on thebusiness, backlog and revenue, the expectation that orders in backlogwill become revenue, the anticipated benefits of the Company’scurrent efforts at training and business improvement efforts,opportunities for growth, the Company’s belief that it cancapitalize on opportunities, the size of markets and opportunitiesopen to the Company and expectations that order intake will bounceback.. Information as to the amount of heat recovered, energy savingsand payback period associated with Thermal Energy International’sproducts are based on the Company’s own testing and average customerresults to date. Statements relating to the expected installation andrevenue recognition for projects, statements about the anticipatedeffectiveness and lifespan of the Company’s products, statementsabout the expected environmental effects and cost savings associatedwith the Company’s products and statements about the Company’sability to cross-sell its products and sell to more sites are forwardlooking statements. These statements are not guarantees of futureperformance and involve a number of risks, uncertainties andassumptions. Many factors, some of which are outside of theCompany’s control, could cause events and results to differmaterially from those stated. Fulfilment of orders, installation ofproduct and activation of product could all be delayed for a number ofreasons, some of which are outside of the Company’s control, whichwould result in anticipated revenues from such projects being delayed or in the most serious cases eliminated.Actions taken by the Company’s customers and factors inherent in thecustomer’s facilities but not anticipated by the Company can have anegative impact on the expected effectiveness and lifespan of theCompany’s products and on the expected environmental effects andcost savings expected from the Company’s products. Any customer’swillingness to purchase additional products from the Company andwhether orders in the Company’s backlog as described above will turninto revenue is dependent on many factors, some of which are outsideof the Company’s control, including but not limited to thecustomer’s perceived needs and the continuing financial viability ofthe customer. The Company disclaims any obligation to publicly updateor revise any such statements except as required by law. Readers are referred to the riskfactors associated with the Company’s business as described in theCompany’s most recent Management’s Discussion and Analysisavailable at www.SEDAR.com .
EBITDA and backlog are non-IFRS financial measures, donot have a standardized meaning prescribed by International FinancialReporting Standards and therefore may not be comparable to similarmeasures presented by other companies. Please refer to the Company’smost recent Management’s Discussion andAnalysis available at www.SEDAR .com for more details about thesenon-IFRS financial measures.
Neither TSX Venture Exchange nor itsRegulation Services Provider (as that term is defined in the policiesof the TSX Venture Exchange) accepts responsibility for the adequacyor accuracy of this release.
i EBITDA representsearnings before interest, taxation, depreciation, amortization,impairment of intangible assets, and share-based compensation expense.
ii Order backlog representsany purchase orders that have been received by the Company but havenot yet been reflected as revenue in the Company’s publishedfinancial statements.
iii Custom equipment refers to indirectcontact heat recovery solutions (HEATSPONGE and SIDEKICK), andcondensate return system solutions (GEM TM steam traps).Turn-key solution refers to direct contact heat recovery solutions(e.g., FLU-ACE®).
i EBITDA representsearnings before interest, taxation, depreciation, amortization,impairment of intangible assets, and share-based compensationexpense.
ii Order backlog representsany purchase orders that have been received by the Company but havenot yet been reflected as revenue in the Company’s publishedfinancial statements.
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