Thermal Energy International Announces Second Quarter Financial Results

(TheNewswire)

Ottawa, ON - TheNewswire - January 30, 2023 - Thermal Energy International Inc. (“Thermal Energy” or the “Company”) (TSXV:TMG), (OTC:TMGEF), an innovative cleantech company and global provider of proprietary energy and carbon emissions reduction solutions to some of the world’s largest corporations, has announced its financial results for the quarter ended November 30, 2022. All figures are in Canadian dollars.

Record Order Intake and record Turn-key Project development indicate strong, growing demand from customers. Quarterly results reflect residual pandemic impact on the longer sales cycle Turn-key Project orders.

Quarter-End Highlights:

• Revenue: $4.2 million for the quarter, $7.3 million year-to-date

• EBITDAi: $(28) thousand for the quarter

• Net loss: of $(266) thousand for the quarter, $(775) thousand year-to-date

• EBITDA: $(28) thousand for the quarter, $(258) thousand, year-to-date

• Cash and working capital balances are $2.7 million and $1.8 million respectively

• Order intake: $14.4 million for the quarter, $18.1 million year-to-date

• Order backlogii $17.1 million as at November 30, 2022 compared to $7 million at the same time last year, increasing to $19.5 million as of January 26, 2023.

Overview

“The results for this second quarter show Custom Equipmentiiihas continued its record-breaking trajectory and now Turn-key Project activity and pipeline has also resumed with confidence” said William Crossland, Thermal Energy CEO.

“The number of paid Project Development Agreements (PDA) signed, a significant step in the sales and engineering cycle of Turn-key projects, is at the highest level in the Company’s history and total order intake has bounced back to levels exceeding pre-pandemic highs, with Turn-key Project orders now contributing as expected to record order intake figures.”

“Both the pandemic and the following energy crisis served as a warning to multinationals to prioritize energy efficiency and carbon reduction solutions to protect against unpredictable energy pricing. Custom Equipmentiii has excelled in this environment, but the impact of the pandemic on Turn-key projects has taken longer to recover due to the severity of the travel restrictions, as well as the longer project development cycle.”

“However, we are now ahead of pre-pandemic order intake levels and with new projects being identified at the highest ever rate, we’re intent on continuing this upward trajectory. Working even closer with our multinational clients we are in an even greater position to place Thermal Energy front and centre of our customer’s sustainability plans following notable team developments and investments.”

Summary Financial Results

Second Quarter 2023 and Year-to-Date Financial Review

Quarterly revenue and gross profit for the quarter are up 2% and 3% respectively mainly due to increased revenues from condensate return systems. Operating expenses are $372 thousand less than last year mainly due to reduced headcount and staff recruiting fees resulting in savings of $273 thousand, reduced acquisition cost in the amount of $86 thousand, the increase in foreign exchange gains of $53 thousand, offset by the reduction of wage subsidies received by $39 thousand. As a result, the net loss for the quarter was $374 thousand less than last year and EBITDAi 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 revenues was mainly due to decreased revenue from Turn-key heat recovery projects. Gross profit for the first six months was $3.1 million, about 7% lower than last year due to the decreased revenue compared to the same period of prior year. Operating expenses incurred for the first two quarters amounted to $3.6 million, $365 thousand less than last year mainly because of reduced headcount and staff recruiting fees resulting in savings of $294 thousand, reduced Sofame 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 a positive 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 fiscal year was a record $18.1 million. As a result, the Company ended the quarter 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 of projects for which purchase orders have been received, but that have not yet been fully reflected as revenue in the Company’s published financial statements.

The Company has also received $2.4 million in new orders subsequent to the November 30, 2022 quarter-end bringing the current order backlog to $19.5 million as of January 26, 2023. A selection of recent order highlights includes:

1. On December 14, 2022 the Company announced that it has received a $500,000 multisite GEM™ project order from a global brewer to cover mechanical traps at 15 sites across Europe and North America.

2. On November 22, 2022, the Company announced it has received a $2.5 million order for a multi-site carbon reduction and energy efficiency solution from a leading snack manufacturer. On November 29, 2022, the Company announced additional GEMTM orders of approximately $1.5 million. The customer has now extended its multi-site GEMTM project to an additional 9 sites bringing the total project up to a combined 25 sites and $4 million. This project will deliver combined annual utility and water savings of over $1.4 million, annual CO2e reduction of 8,066 tonnes and save more than 17 million gallons of water per year. Valued at $4 million, this order covers the engineering, supply and installation of GEM™ steam traps at 25 sites.

3. On October 31, 2022, the Company announced that it has been commissioned by a leading cereal manufacturer to deliver annual boiler natural gas savings and carbon emission reductions of almost 20%. Valued at $1.4 million, this order covers all engineering, manufacturing, installation, and training. The project was about 1% complete at the quarter end.

4. $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 energy from the boiler exhausts and use the captured energy to reduce overall steam and fuel consumption on site, and the GEMTM trap, a premium venturi orifice steam trap designed to minimize ongoing steam trap maintenance and maximise energy savings in the steam system.

5. $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 project from the Company to recover waste energy from the dryer burner exhaust.

6. $800,000 order for a Turn-key heat recovery project from a leading European meat producer, announced September 7, 2022. This is the second project for this specific application where the technology has been applied to a new innovative heat source.

7. On September 13, 2022 the company announced a $350,000 order from aleading textile manufacturer for a wastewater heat recovery system and GEM TM steam traps, followed by a further $330,000 announced on December 12, 2022. These orders are the first RBT systems outside North America and illustrates a milestone in our Sofame acquisition strategy.

8. During the first three and half months of the current fiscal year (FY23), GEM TM orders are more than double the amount received during the same period last year with more than $1.5 million GEM steam trap orders received in only a few weeks.

Full financial results including Management’s Discussion and Analysis and accompanying notes to the financial results are available on www.SEDAR.com and investors-thermalenergy.com/en/financial-overview.

Readers are encouraged to subscribe to TEI News to receive strategic news and updates directly to their inbox.

ENDS

For media enquiries contact:

Thermal Energy International Inc.

Canada: 613-723-6776

UK: +44 (0)117 917 2179

Marketing@thermalenergy.com

For investor enquiries:

Thermal Energy International Inc.

613-723-6776

Investors@thermalenergy.com

Notes to editors

About Thermal Energy International Inc.

Thermal Energy International Inc., ranked as one of Canada’s Top Growing Companies in 2021, 2020 and 2019, is an established global supplier of proprietary, proven energy efficiency and emissions reduction solutions to the industrial and institutional sectors. We save our customers money and improve their bottom line by reducing their fuel use and cutting their carbon emissions. Our customers include many Fortune 500 and other leading multinational companies across a wide range of industry sectors.

Thermal Energy is a fully accredited professional engineering firm and by providing a unique mix of proprietary products together with process, energy, and environmental engineering expertise, Thermal Energy can deliver unique turnkey projects with significant financial and environmental benefits for our customers.

Thermal Energy's proprietary products include: GEM™ - Steam traps, FLU-ACE® - Direct contact condensing heat recovery, HEATSPONGE – Indirect contact condensing heat recovery systems, and DRY-REX™ - Low temperature biomass drying systems.

Thermal Energy has engineering offices in Ottawa, Canada, Pittsburgh, USA, as well as Bristol, UK, with sales offices in Canada, UK, USA, Germany, Poland, and Italy. TEI’s common shares are traded 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 and follow us on Twitter at twitter.com/GoThermalEnergy.

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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, the timing of revenues to be received by the Company, the anticipated effects of COVID-19 on the business, backlog and revenue, the expectation that orders in backlog will become revenue, the anticipated benefits of the Company’s current efforts at training and business improvement efforts, opportunities for growth, the Company’s belief that it can capitalize on opportunities, the size of markets and opportunities open to the Company and expectations that order intake will bounce back.. Information as to the amount of heat recovered, energy savings and payback period associated with Thermal Energy International’s products are based on the Company’s own testing and average customer results to date. Statements relating to the expected installation and revenue recognition for projects, statements about the anticipated effectiveness and lifespan of the Company’s products, statements about the expected environmental effects and cost savings associated with the Company’s products and statements about the Company’s ability to cross-sell its products and sell to more sites are forward looking statements. 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. Fulfilment of orders, installation of product and activation of product could all be delayed for a number of reasons, some of which are outside of the Company’s control, which would 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 the customer’s facilities but not anticipated by the Company can have a negative impact on the expected effectiveness and lifespan of the Company’s products and on the expected environmental effects and cost savings expected from the Company’s products. Any customer’s willingness to purchase additional products from the Company and whether orders in the Company’s backlog as described above will turn into revenue is dependent on many factors, some of which are outside of the Company’s control, including but not limited to the customer’s perceived needs and the continuing financial viability of the customer. The Company disclaims any obligation to publicly update or revise any such statements except as required bylaw. Readers are referred to the risk factors associated with the Company’s business as described in the Company’s most recent Management’s Discussion and Analysis available at www.SEDAR.com.

EBITDA and backlog are non-IFRS financial measures, do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similar measures presented by other companies. Please refer to the Company’s most recent Management’s Discussion and Analysis available at www.SEDAR .com for more details about these non-IFRS financial measures.

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.

iEBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense. See note below about non-IFRS measures.

iiOrder backlog represents any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company’s published financial statements. See note below about non-IFRS measures.

iii Custom equipment refers to indirect contact heat recovery solutions (HEATSPONGE and SIDEKICK), and condensate return system solutions (GEMTM steam traps). Turn-key solution refers to direct contact heat recovery solutions (e.g., FLU-ACE®).

iEBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense.

iiOrder backlog represents any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company’s published financial statements.

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