OTTAWA, Jan. 29, 2013 /CNW/ - Thermal Energy International Inc. (TSXV:
TMG), a leading provider of custom energy efficiency and emission
reduction technologies to energy intensive industries and institutions
worldwide, today announced its financial results for the three and six
months ending November 30, 2012.
Overview
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6 month sales of $2.1 million compared to $6.1 million last year
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6 month heat recovery sales down $4.2 million
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6 month GEM® steam trap sales up $212,000
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Revenues decreased as expected in the first half of this year due to
some large corporate GEM® sales and the successful completion and commissioning of two large heat
recovery projects occurring last year while this year saw the temporary
delay of installation of heat recovery orders that are now in process,
of which 6 are expected to be substantially completed during the
balance of this fiscal year
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6 month North American GEM® steam trap sales up 51%
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6 month base GEM® steam trap sales (excluding largecorporate sales) up 24%
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Q2 GEM® global steam trap sales up 53%
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Received a $330,000 purchase order from a major hospital for the
installation of the Company's GEM® steam trap technology
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Extended the Greenpower Purchase Agreement with a specialty paper
producer for an additional two years
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Received a $300,000 purchase order from a Fortune 500 food and beverage
company for the installation of a heat recovery system
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Signed a $750,000 contract with a major hospital for the installation of
a heat recovery system
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11 additional potential energy efficiency projects are under development
on a paid or exclusive basis with customers
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As at January 29, 2013, the Company had approximately $3.1 million in
purchase orders in backlog all of which are expected to be
substantially completed this fiscal year
During the quarter Thermal Energy continued to grow its sales and
distribution capabilities. Over the last 24 months Thermal Energy has:
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Doubled its in house sales and marketing team
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Retained 6 new large well known industrial distributors
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Trained approximately 200 sales agents employed by our distributor
partners
"We continue to expand our sales and distribution network and focus on
contracts of all sizes in a variety of key industries," said William
Crossland, the President and CEO of Thermal Energy. "Over time this
approach is expected to strengthen the Company's long term growth
prospects, reduce our dependence on single large contracts and smooth
out our revenue stream quarter-to-quarter. The strategy is already
showing positive results as evidenced by strong GEM® order growth in our key North American market and an increased number
of energy efficiency projects under development. With success of this
strategy in North America we are now beginning the roll out of a
similar program in Europe and the Middle East."
Q2 2013 Financial Review
Revenue was $1.3 million for the three-month period ended November 30, 2012,
compared to $4.7 million for the corresponding period in 2011. The
higher revenue in 2011 was due to heat recovery revenue from two large
contracts (Fibrek project and St. Georges Healthcare NHS Trust). There
were no equivalent contracts in the quarter ended November 30, 2012.
GEM® sales for the quarter, however, increased by 53%, over the
corresponding period in 2011.
Gross profit was $0.8 million for the three-month period ended November 30, 2012,
compared to $2.1 million for the corresponding period in 2011. Gross
profit expressed as a percentage of revenue was 63.5% during the
quarter compared to 45.4% for the corresponding quarter in 2011. The
increase in gross profit as a percentage of sales is a result of a
higher proportion of revenues generated from GEM® sales, which generate higher margins than sales of Flu-Ace Heat
Recovery.
Operating expenses were $1.6 million for the three-month period ended November 30, 2012,
compared to $1.5 million for the corresponding period in 2011.
Operating expenses were increased primarily due to the addition of two
sales staff, two technical staff, one additional finance employee and
increased investor relations costs. However, these cost increases were
offset by reductions in commissions payable and incentive provisions as
a result of reduced revenues and profits, plus a reduction in legal
fees compared to the same period in 2011. Research and development
costs include costs related to the development of a variety of new
products related to the GEM® line and the product development project targeting the Chinese
petrochemical market announced February 2012.
Net loss was $0.8 million for the three-month period ended November 30, 2012,
compared to net income of $0.5 million for the corresponding period in
2011.
Operating cash flow defined as net income (loss), plus items not involving cash, plus lease
payments received for the quarter ended November 30, 2012 was ($0.5)
million as compared to $0.6 million for the August 31, 2012 quarter.
Cash and Working Capital
As at November 30, 2012, the Company's net cash position (cash and cash
equivalents less bank loans) amounted to $0.5 million compared to $1.4
million on May 31, 2012. As at November 30, 2012, the Company had net
working capital of $1.0 million, compared to $2.6 million on May 31,
2012. With Cash balances and unused borrowing capacity of
approximately $0.8 million, management believes that it has sufficient
capital resources to fund existing operations and anticipated capital
requirements in the remainder of FY 2013.
6 Month 2013 Financial Review
Revenue was $2.1 million for the six-month period ended November 30, 2012 as
compared to $6.1 million for the corresponding six-month period in
2011. The decrease in revenue was due to lower revenue generated from
heat recovery sales due to reasons mentioned above. However, GEM® sales increased during the same period.
Gross profit was $1.3 million for the six-month period ended November 30, 2012 as
compared to $2.9 million for the corresponding period in 2011. Gross
profit expressed as a percentage of revenue was 62.4% during the period
compared to 47.9% for the corresponding period in 2011. The increase in
gross profit as a percentage of sales is a result of a higher
proportion of revenues generated from GEM® sales, which generate higher margins than sales of Flu-Ace Heat
Recovery.
Operating expenses were $3.1 million for the six-month period ended November 30, 2012,
compared to $2.7 million for the corresponding period in 2011 for the
reasons noted above.
Net loss was $1.6 million for the six-month period ended November 30, 2012,
compared to net income of $0.1 million for the corresponding period in
2011.
All figures are expressed in Canadian dollars. Full financial results
including Management's Discussion and Analysis and accompanying notes
to the financial results, are available on www.SEDAR.com and www.thermalenergy.com.
Business Outlook
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As reported previously, on December 17, 2010 the Company signed a Letter
of Intent with a major North American pulp and paper company outlining
the two parties' intent to develop and, subject to financing and
approval by the pulp and paper company's board of directors, implement
on an exclusive basis heat recovery projects at three of the customer's
locations. A project has been developed for the first site and is
awaiting approval by the customer. The second site did not support a
viable project and further development work is not currently being
conducted at this site. The final site is still under consideration.
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In April 2012 the Company received an order for the supply, installation
and maintenance of a heat recovery system at a publicly owned hospital.
The project has a total value of approximately $1.5 million over seven
years which is equivalent to a discounted present value of
approximately $950,000. This order represents the first example of a
new financing program the Company is developing for its public sector
clients and a new service and maintenance program being developed for
both heat recovery and GEM® products. The finance program and service and maintenance programs are
part of the Company's strategy to increase revenue and profit while
providing enhanced value to its customers. Both of these programs have
been designed to provide a growing and recurring revenue stream for the
Company.
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In May 2012, the Company announced it had received a purchase order for
approximately $467,000 from a major food manufacturer for a heat
recovery solution at one of its sites. This order is expected to be
completed in FY 2013.
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In June 2012, the Company received another purchase order for
approximately $249,000 from the same major food manufacturer for a heat
recovery solution at one of its sites. This order is expected to be
completed in FY 2013.
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In June 2012, the Company received an order for approximately $562,000
from a publicly owned hospital for a heat recovery solution. This order
is expected to be substantially completed in FY 2013.
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In August 2012 the Company received an order for the supply,
installation and maintenance of a GEM® system at a publicly owned hospital. The project has a total value of
approximately $548,000 over seven years which is equivalent to a
discounted present value of approximately $375,000. This represents the
second example of the new finance and service and maintenance programs
the Company is developing.
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On November 2, 2012, the Company announced it had signed a $330,000
contract with a publicly funded hospital for installation of its GEM® steam trap technology. The project is expected to be substantially
completed by the end of FY 2013.
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On November 29, 2012, the Company announced it had extended the
Greenpower Purchase Agreement with a specialty paper producer until
December 31, 2014. Upon completion of the extended term, the specialty
paper producer has an option to further extend to a maximum of 24
months on substantially the same terms or purchase the FLU-ACE® Waste Heat Recovery System .
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On December 14, 2012, the Company announced it had received an initial
purchase order totalling approximately $300,000 for the installation of
a heat recovery system at a food and beverage company. The project is
expected to be substantially completed by the end of FY 2013. Thermal
Energy is working on developing additional energy efficiency programs
for this company at other sites.
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On December 18, 2012, the Company announced it had received a purchase
order valued at approximately $750,000 for the installation of a heat
recovery system at a large publicly funded hospital. The project is
expected to be substantially completed by the end of FY 2013.
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The company is currently developing energy efficiency projects on a paid
or exclusive basis at 11 different sites for 8 different customers.
This compares to 4 sites for 2 customers in 2011.
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The Company's order backlog as at November 30, 2012 was approximately
$2.1 million compared to $4.8 million at the same time last year. As at
January 29, 2013, the Company had approximately $3.1 million in
purchase orders that had not yet been reflected as revenue in the
Company's published quarterly financial statements.
About Thermal Energy International Inc.
Thermal Energy International Inc. is an innovative cleantech company
providing a variety of proprietary and proven energy efficiency,
emission reduction, water efficiency, and bioenergy products and
solutions to the industrial, commercial and institutional markets
worldwide. Thermal Energy is also a fully accredited professional
engineering firm, and can offer advanced process and applications
engineering services. By providing a unique mix of proprietary products
together with process, energy, environmental, and financial expertise
Thermal Energy is able to deliver significant financial and
environmental benefits to its customers.
Thermal Energy's products include; GEM® - Steam traps and condensate return systems, FLU-ACE® - Direct contact condensing heat recovery, and Dry RexTM- Low temperature biomass drying systems. These award winning products
are effective in a wide variety of industries and application and have
an excellent track record of longevity, proven reliability and
performance providing significant energy savings, reduced GHG
emissions, improved water efficiency, lower maintenance costs, improved
product quality and increased production efficiency.
Thermal Energy International Inc. has offices in Ottawa, Canada as well
as Bristol, UK, United States, Italy and China. To find out more about
Thermal Energy International Inc. (TSX-V: TMG), visit our website at http://www.thermalenergy.com.
This press release contains forward-looking statements relating to, and
amongst other things, based on management's expectations, estimates and
projections, the anticipated effectiveness of the Company's products
and services and the timing of revenues to be received by the Company.
These statements are not guarantees of future performance and involve a
number of risks, uncertainties and assumptions. Many factors, some of
which are outside of the Company's control, could cause events and
results to differ materially from those stated. The Company disclaims
any obligation to publicly update or revise any such statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Thermal Energy International Inc.
