TMG:CC - Thermal Energy International Announces Second Quarter Financial Results
(TheNewswire)
Ottawa, O N - TheNewswire - January30, 2023 - Thermal Energy International Inc. (“ 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 quarterended November 30, 2022. All figures are in Canadian dollars.
Record Order Intake and record Turn-key Projectdevelopment indicate strong, growing demand from customers. Quarterlyresults reflect residual pandemic impact on the longer sales cycleTurn-key Project orders.
Quarter-End Highlights:
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Revenue: $4.2 million for thequarter, $7.3 million year-to-date
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EBITDA i : $(28) thousand for the quarter
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Net loss: of $(266) thousand forthe quarter, $(775) thousand year-to-date
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EBITDA : $(28) thousand for the quarter, $(258) thousand,year-to-date
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Cash and working capitalbalances are $2.7 million and $1.8 millionrespectively
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Order intake: $14.4 million forthe quarter, $18.1 million year-to-date
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Order backlog ii $17.1million as at November 30, 2022 compared to $7 million at the sametime last year, increasing to $19.5 million as of January 26,2023.
Overview
“The results for this second quarter show Custom Equipment iii has continued itsrecord-breaking trajectory and now Turn-key Project activity andpipeline has also resumed with confidence” said William Crossland,Thermal Energy CEO.
“The number of paid Project Development Agreements (PDA) signed, asignificant step in the sales and engineering cycle of Turn-keyprojects, is at the highest level in the Company’s history and totalorder intake has bounced back to levels exceeding pre-pandemic highs,with Turn-key Project orders now contributing as expected to record order intakefigures .”
“Both the pandemic and the following energy crisis served as awarning to multinationals to prioritize energy efficiency and carbonreduction solutions to protect against unpredictable energy pricing.Custom Equipment iii has excelled in thisenvironment, but the impact of the pandemic on Turn-key projects hastaken longer to recover due to the severity of the travelrestrictions, as well as the longer project development cycle.”
“However, we are now ahead of pre-pandemic order intake levels andwith new projects being identified at the highest ever rate, we’reintent on continuing this upward trajectory. Working even closer withour multinational clients we are in an even greater position to placeThermal Energy front and centre of our customer’s sustainabilityplans following notable team developments and investments.”
| In thousand except % data |
| Three months ended Nov 30, 2022 |
| Three months ended Nov 30, 2021 |
| Six months ended Nov 30, 2022 |
| Six months ended Nov 30, 2021 |
| $4,159 |
| $4,077 |
| $7,282 |
| $7,956 |
| Gross profit |
| $1,769 |
| $1,712 |
| $3,118 |
| $3,356 |
| Gross margin |
| 42.5% |
| 42.0% |
| 42.8% |
| 42.2% |
| Operating expenses |
| $1,898 |
| $2,270 |
| $3,627 |
| $3,992 |
| Net loss |
| $(266) |
| $(640) |
| $(775) |
| $(794) |
| EBITDA i |
| $(28) |
| $(395) |
| $(258) |
| $(314) |
| Cash position |
| $2,724 |
| $2,548 |
| $2,724 |
| $2,548 |
| Working capital |
| $1,766 |
| $2,446 |
| $1,766 |
| $2,446 |
| Orders received |
| $14,443 |
| $4,242 |
| $18,102 |
| $6,397 |
| Order backlog ii as ofNovember 30 |
| $17,100 |
| $7,000 |
| $17,100 |
| $7,000 |
Second Quarter 2023 and Year-to-DateFinancial Review
Quarterly revenue and gross profit for the quarter areup 2% and 3% respectively mainly due to increased revenues fromcondensate return systems. Operating expenses are $372 thousand lessthan last year mainly due to reduced headcount and staff recruiting feesresulting in savings of $273 thousand, reduced acquisition cost in theamount of $86 thousand, the increase in foreign exchange gains of $53thousand, offset by the reduction of wage subsidies received by $39thousand. As a result, the net loss for the quarter was$374 thousand less than last year and EBITDA i was $367 thousand better than last year.
For the six months ended November 30, 2022, revenue was$7.3 million, down about 8% from last year. The decrease in revenueswas mainly due to decreased revenue from Turn-key heat recoveryprojects. Gross profit for the first six months was $3.1 million,about 7% lower than last year due to the decreased revenue compared tothe same period of prior year. Operating expenses incurred forthe first two quarters amounted to $3.6 million, $365 thousand lessthan last year mainly because of reduced headcount andstaff recruiting fees resulting in savings of $294 thousand, reducedSofame related acquisition costs in the amount of $106 thousand, a recovered credit loss previously recorded in the amount of$78 thousand due to the collection on the doubtful account, and apositive change in foreign exchange gains of $50 thousand , all offset by the reduction of wage subsidies received by$163 thousand. As a result, net loss and EBITDA were 2%and 18% better than last year respectively.
Quarter end cash and working capital balances are $2.7 million and$1.8 million respectively.
Business Outlook and Order Summary
Orders received (“Order Intake”) during the second quarter of$14.4 million are 240% higher the same quarter of last year.Year-to-date Order Intake for the first two quarters of the fiscalyear was a record $18.1 million. As a result, the Company ended thequarter with a record order backlog of $17.1 million, up 144% from the$7.0 million at the same time 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 also received $2.4 million in new orders subsequent tothe November 30, 2022 quarter-end bringing the current order backlogto $19.5 million as of January 26, 2023. A selection of recent orderhighlights includes:
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On December 14,2022 the Company announced that it has received a$500,000 multisite GEM™ project order from a global brewer to covermechanical traps at 15 sites across Europe and North America.
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On November 22, 2022, theCompany announced it has received a $2.5 million order for amulti-site carbon reduction and energy efficiency solution from aleading snack manufacturer. On November 29, 2022, theCompany announced additional GEM TM orders ofapproximately $1.5 million. The customer has now extended itsmulti-site GEM TM project to an additional 9sites bringing the total project up to a combined 25 sites and $4million. This project will deliver combined annual utility and watersavings of over $1.4 million, annual CO2e reduction of 8,066 tonnesand save more than 17 million gallons of water per year. Valued at $4million, this order covers the engineering, supply and installation ofGEM™ steam traps at 25 sites.
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On October 31, 2022, the Company announced that it has beencommissioned by a leading cereal manufacturer to deliver annual boiler natural gas savings and carbon emissionreductions of almost 20%. Valued at $1.4 million, this order coversall engineering, manufacturing, installation, and training. Theproject was about 1% complete at the quarter end.
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$2,800,000 order for a Turn-key heat recovery and GEM TM project from a premium beer producer ,announced September 30, 2022. The project is to recover waste energyfrom the boiler exhausts and use the captured energy to reduce overallsteam and fuel consumption on site, and the GEM TM trap, a premium venturi orifice steam trap designedto minimize ongoing steam trap maintenance and maximise energy savingsin the steam system.
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$1,400,000 order for a Turn-key heat recovery project from a global nutrition company ,announced September 29, 2022. This is the fourth consecutive projectfrom the Company to recover waste energy from the dryer burnerexhaust.
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$800,000 order for a Turn-key heat recovery project from a leading European meatproducer , announced September 7, 2022. This is the secondproject for this specific application where the technology has beenapplied to a new innovative heat source.
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On September 13, 2022 the company announced a $350,000 order from a leading textilemanufacturer for a wastewater heat recovery system and GEM TM steamtraps, followed by a further $330,000 announced on December 12,2022 . These orders are thefirst RBT systems outside North America and illustrates a milestone inour Sofame acquisition strategy.
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During the first three and half months of the current fiscal year(FY23), GEM TM orders are more than double theamount received during the same period last year with more than $1.5 million GEM steam traporders received in only a few weeks.
Full financial results including Management’sDiscussion and Analysis and accompanying notes to the financialresults are available on www.SEDAR.com and investors-thermalenergy.com/en/financial-overview .
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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 International Inc.
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 investor website at investors-thermalenergy.com , company website at www.thermalenergy.com andfollow 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’s ability to cross-sell its products and sell tomore sites are forward looking statements. These statements are notguarantees of future performance and involve a number of risks,uncertainties and assumptions. Many factors, some of which are outsideof the Company’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 delayedor in the most serious cases eliminated. Actions taken by theCompany’s customers and factors inherent in the customer’sfacilities but not anticipated by the Company can have a negativeimpact on the expected effectiveness and lifespan of the Company’sproducts and on the expected environmental effects and cost savingsexpected from the Company’s products. Any customer’s willingnessto purchase additional products from the Company and whether orders inthe Company’s backlog as described above will turn into revenue isdependent on many factors, some of which are outside of theCompany’s control, including but not limited to the customer’sperceived needs and the continuing financial viability of thecustomer. The Company disclaims any obligation to publicly update orrevise 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 its RegulationServices Provider (as that term is defined in the policies of the TSXVenture Exchange) accepts responsibility for the adequacy or accuracyof this release.
i EBITDA representsearnings before interest, taxation, depreciation, amortization,impairment of intangible assets, and share-based compensation expense.See note below about non-IFRS measures.
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. See note below about non-IFRS measures.
iii Customequipment refers to indirect contact heat recovery solutions(HEATSPONGE and SIDEKICK), and condensate 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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