Thermal Energy International Inc V.TMG

Key points ...

[prone]

--> a $330,000 order to deliver a second RBT® wastewater heat recovery system at a newbuild facility for a leading textile manufacturer.

---> approximately $1.3 million in energy efficiency and carbon emission reduction solutions for this industry leader across multiple sites in Africa and South Asia.

The relationship with this customer began just before the pandemic in late 2019 with GEM™ steam trap projects at two of their sites.

As world travel reopened fully in 2022, a major equipment order was announced for this customer that was not only the first Sofame system designed, engineered, and sold independently by Thermal Energy since the acquisition of Sofame in July 2021,

---> (Sofame) .. expanded Thermal Energy’s offerings to include heat recovery from both air and water.

This was later succeeded by a further order of GEM™ steam traps.

[Mostlyserious]

Not a big one, but it is the newer acquired application.  Every installation of the RBT wastewater heat recovery system is effectively a reference of some sort, so hopefully this is just another product in the suite that can capture opportunities that were not previously attainable with traditional heat recovery applications and GEM traps.  I think that is the value of this thing

[prone]

The best point is that 'water' is recovered in a 'dry' environment.  Water will become 'golden'. These small sales explain the increase in sales that fill in the gaps. This confirms that projects that started in 2019 & 2020 & 2021 are still in the 'pipe'. So more to come.!!

[prone]

A 'Strong Sales Base' is the stabilizing factor for all businesses.    As it grows - so does the top line....

[panapple42]

1 year payback.

[Mostlyserious]

After they have a few proven installations at this payback rate, you would think they should be selling like hotcakes.  Hopefully TEI is still generating at least 40% gross margin....no need for a micro company like ours to effectively subsidize these huge companies. 

[stockpickman]

As Prone states, so much info in the news release......just a matter of time before .11 is really really really cheap..... - Sofame, TMG, Gem products in one overall solution  - new construction now in the mix of offerings - BEI products compliment all the other products and vise versa - under a year payback - water efficiency in this project as well as many others - governments and

[prone]

It is about defining the 'unprecedented' increase in customers coming forward - and - not being as hesitant. Covid has caused 2&3 year delays in sales being inked. A lot of small stuff supports the company while the engineers are running their 'butts' off finalizing the PDAs. The recent 'big' sales suggest, that was the focus for the AGM - so - a flurry of medium

[Mostlyserious]

I think that is the biggest obstacle to attrafting investors.  Signed backlog is nice, but unless it is big enough to clearly show growth in revenues compared to the previous year, there is that uncertainty due to the history of quarters of silence.  They could easily disclose the bid pipeline with appropriate wording to help readers understand the appropriate level of uncertainty. 

[prone]

Nor sure where you are coming from..? In my mind - Aug to Aug is a likely 30M over 12 months.  Sept to Sept looks similar. 30M/12 = 2.5 M per month.  or 5M every 2 months. Considering an existing 7-8M sales base.  24 M/12 = 2M per month going forward. YOU want a BIG one for Christmas = 5 M or 2-2.5Ms.  You just raised the bar above 30M per year. January 1 we will get

[Mostlyserious]

Half a dozen years ago we had an $11M contract just before Christmas. But I agree that in twrms of volume, this is rhe best end to a year. What I am saying is that nobody can have confidence in extrapolating latesr contracts due to lack of historic regularity in signing contracts.  Otherwise based on the last 3 months, the run rate for the year could be almost $50M so $30M is a gimme. 

[prone]

'Unprecidented' means just that.! It is due to be qualified by TEI.  Their confidence is obvious. With all the turnkey sales NRs - it is interesting that they STILL have 17 PDAs. This demand and PDA backlog, qualifies their need to add engineers, sales and marketing. The new board addition will be more current to today as well. So smile....

[AlbertESG]

The backlog was at 6 million at the start of Q2, and there were more than 11 million in deals announced during the quarter. Surely they were able to pull a record revenue quarter out of that pile. In fact, that is enough for 3 record quarters in a row, and it doesn't even include any small orders that happened to roll in. Who knows though. I try not to underestimate the company's ability

[Mostlyserious]

Albert, it will depend on timing of the execution.  I think most are "within 9 months", so there may not be a record quarter but could be a couple of decent consecutive quarters that in that sequence may constitute a record couple of consecutive quarters.   In any case, it is only exciting if this rate of sales acquisition continues.  A record year blip os

[AlbertESG]

I believe that the company uses the percentage of completion method of revenue recognition, so if they complete roughly 25% of a million dollar project in a quarter, they book 250K of revenue in that quarter. I guess it still depends on how long it takes to "launch" on a project as well as how many projects they can be working on concurrently. And yes, the sales pace will have to

[panapple42]

December 2018 NG was 29 Euro/MWH.  In July 2021 it surpassed ~29 Euro/MWH, the first time since 2018. Since July of last year the price has gone from 29 to about 140 Euro/MWH, where it sits today. Furthermore, a major source of gas has been disrupted indefinitely.  It is still unclear how this will be  replaced but it is almost certain to cost more that it did back in 2018. 

[panapple42]

TMG is selling money now.

[panapple42]

Also of note:  From Summer 2021 to December 2021 the price roughly doubled from  about 32 to 64  Euro/MWH.

[panapple42]

Nat Gas in US also appears to follow a similar pattern, up about 400 percent from the 2020 lows.

[Mostlyserious]

Notwithstanding the impact of various higher fuel costs on the cost of production of anything that has to be passed on clients, these higher natural gas prices probably still resulted in significantly lower payback periods to TEI clients.  That last wastewater heat recovery project had a one year payback.  Looking to the future, the sales team should be branding it as "Hotcake"