Ottawa, Ontario--(Newsfile Corp. - April 25, 2024) - Thermal Energy International Inc. (TSXV: TMG) (OTCQB: TMGEF) ("Thermal Energy" or the "Company"), a provider of innovative energy efficiency and carbon emission reduction solutions to major corporations around the world, today reported its financial results for the third quarter ended February 29, 2024. All figures are in Canadian dollars.
Highlights:
Revenue increased 8% to $6.1 million for the quarter and 42% to $18.4 million for the nine months ended February 29, 2024, on a year-over-year ("YoY") basis
Gross profit increased 17% to $3.1 million for the quarter and 63% to $9.3 million for the nine-month period, on a YoY basis
EBITDAi for the quarter was $322 thousand compared to $816 thousand in the third quarter of last year. Year-to-date EBITDA increased by $1 million or 181% YoY, to $1.6 million
Net income for the quarter was $44 thousand compared to an income of $524 thousand in the same quarter last year. Year-to-date net income increased by $943 thousand YoY
Cash balances and working capital remain strong at $7.5 million and $3.4 million respectively
Order intake was $8.3 million for the quarter and $26.9 million for fiscal 2024 year-to-date (as at April 24, 2024)
Order backlogii was $20.4 million as at February 29, 2024 and $22.9 million as at April 24, 2024
Overview
"We had a strong quarter with growth of 8% and 17% in revenue and gross profit respectively, " said William Crossland, Thermal Energy CEO. "While we remained profitable, investments we made for continued growth did lower our EBITDA and net income for the quarter. These investments included expanding our team, investments in technology, and the recent move of our U.K. operations. We've added nine net new people in the first nine months of fiscal 2024. On the technology side, we made investments in our Carbon Reduction and Efficiency Scoping Tool that allows our sales and engineering teams to quickly and efficiently identify energy saving and carbon reducing opportunities while on site with customers, as well as a new global accounting program and enterprise resource planning software. We also had additional moving, leasing and renovation expenses related to our new, larger U.K. production facility, which has more than double the throughput capacity of our former premises."
"Our outlook remains strong, fuelled by robust business development activity yielding continued growth in order intake and order backlog, and the investments in growing our business mentioned earlier. With our continued track record of driving positive environmental impact while saving our customers money, Thermal Energy is well-positioned to be the energy efficiency partner of choice for multinational companies looking to achieve their net-zero and other sustainability targets."
Summary Financial Results
| In thousand except % data | Three months ended Feb 29, 2024 | Three months ended Feb 28, 2023 | Nine months ended Feb 29, 2024 | Nine months ended Feb 28, 2023 |
| Revenue | $6,063 | $5,603 | $18,352 | $12,884 |
| Gross profit | $3,061 | $2,619 | $9,317 | $5,737 |
| Gross margin | 50% | 47% | 51% | 45% |
| Operating expenses | $2,896 | $1,938 | $8,155 | $5,565 |
| Net income (loss) | $44 | $524 | $692 | $(251) |
| EBITDAiii | $322 | $816 | $1,566 | $558 |
| Cash position | $7,536 | $4,259 | $7,536 | $4,259 |
| Working capital | $3,378 | $2,180 | $3,378 | $2,180 |
| Orders received | $8,320 | $3,969 | $24,408 | $22,072 |
| Order backlogiv as of February 29/28 | $20,400 | $16,200 | $20,400 | $16,200 |
Third Quarter 2024 and Year-to-Date Financial Review
Third quarter revenue was $6.1 million, up 8% from the same quarter the year before, driven by a strong increase in Turn-Key Heat Recovery projects. Gross profit increased by 17% to $3.1 million, due to the growth in revenues and higher margin achieved on Turn-Key Heat Recovery projects.
Operating expenses for the quarter were $958 thousand more than the same quarter last year as the Company continued investing in the growth of the business. The increase in operating expenses was mainly due to higher recruitment and salary expenses associated with the hiring of additional project engineers and sales staff, higher facility costs related to the relocation of our U.K. team to a new facility, and inflationary adjustments to salaries of existing staff. Also contributing to the increase was the Company's continued investment in the digitalization and automation of key business processes. In addition, comparing to the same quarter of last year, the Company had an unfavourable change in foreign exchange of $216 thousand which also contributed to the increase in operating expenses. Third quarter operating expenses as a percentage of revenue increased to 48% from 35% year-over-year.
For the quarter, the Company had EBITDA of $322 thousand and net income of $44 thousand, compared to $816 thousand and $524 thousand respectively in the third quarter a year earlier.
For the nine months ended February 29, 2024, revenue was $18.4 million, up about 42% year-over-year, with higher revenues from both Custom Equipment and Turn-Key Heat Recovery projects. Gross profit for the nine months was $9.3 million, as compared to $5.7 million recorded in the same period a year ago, an increase of 62%, due to higher revenues and higher margins achieved from both Custom Equipment and Turn-Key Heat Recovery projects.
Operating expenses incurred for the nine months amounted to $8.2 million, up $2.6 million compared to same period a year ago. $596 thousand of the increase was due to an increase in foreign exchange loss compared to the same period of last year. The rest of the increase was related to the growth in headcount, the increased business development and marketing activities, higher travelling costs, the continued investment in digital infrastructure, increased facility costs due to the relocation of our U.K. operations, and inflation-related increases to regular operating costs and salaries.
The Company achieved EBITDA of $1.6 million and net income of $692 thousand for the nine months ended February 29, 2024.
Quarter end cash and working capital balances were approximately $7.5 million and $3.4 million, respectively.
Business Outlook and Order Summary
Orders received ("Order Intake") during the third quarter totalled $8.3 million. The Company ended the quarter with an order backlog of $20.4 million, up 26% from the $16.2 million at the end of the same quarter of the prior year.
The Company also received $2.5 million in new orders subsequent to the quarter ended February 29, 2024, bringing the current order backlog to $22.9 million as of April 24, 2024. A list and description of recent order highlights is available on page 16 and 17 of the Management's Discussion and Analysis filed today.
Full financial results including Management's Discussion and Analysis and accompanying notes to the financial results are available on www.sedarplus.ca and investors-thermalenergy.com/en/financial-overview.
Notice of Earnings Call and Webcast
Management of Thermal Energy will host an earnings call and webcast today, April 25, 2024, at 8:30 am ET to discuss its third quarter financial results. A question-and-answer session will follow management's prepared remarks, at which time qualified equity analysts will be able to submit questions via the webcast.
The live webcast with a slide presentation will be available at https://bit.ly/MSTeamsLauncher. You may join the webcast via MS Teams on your computer, mobile app or room device using the Meeting ID: 336 346 945 221 and the Passcode: bwTidd. For more information on joining an MS Teams meeting, visit: https://bit.ly/TMGMSTeams.
To access the conference call via dial-in, please use the information below.
Calling from Canada: +1 437-703-4481
Find a local number
Phone Conference ID: 951 767 501#
The webcast will be archived on Thermal Energy's website following the call date.
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:
William Crossland
President and CEO
Thermal Energy International Inc.
613-723-6776
Investors@thermalenergy.com
Notes to editors
About Thermal Energy International Inc.
Thermal Energy International Inc. provides energy efficiency and emissions reduction solutions to Fortune 500 and other large multinational companies. We save our customers money by reducing their fuel use and cutting their carbon emissions. Thermal Energy's proprietary and proven solutions can recover up to 80% of energy lost in typical boiler plant and steam system operations while delivering a high return on investment with a short, compelling payback.
Thermal Energy is a fully accredited professional engineering firm with engineering offices in Ottawa, Canada, Pittsburgh, USA, as well as Bristol, UK, with sales offices in Canada, UK, USA, Germany, Poland, and Italy. By providing a unique mix of proprietary products together with process, energy, and environmental engineering expertise, Thermal Energy can deliver unique, site-specific turnkey and custom engineered solutions with significant financial and environmental benefits for our customers.
Thermal Energy's common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol TMG and on the OTCQB under the symbol TMGEF. For more information, visit our investor website at https://investors-thermalenergy.com or company website at www.thermalenergy.com and follow us on Twitter at https://twitter.com/GoThermalEnergy.
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Forward-Looking Statements
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 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 by law. 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.sedarplus.ca.
Non-IFRS Financial Measures
The Company believes the following non-IFRS financial measures provide useful information to both management and investors to better understand the financial performance and financial position of the Company.
EBITDA
Management believes that EBITDA (earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense) is a useful performance measure as it approximates cash generated from operations, before tax, capital expenditures and changes in working capital, and excludes impairment of intangible assets. EBITDA also assists comparison among companies as it eliminates the differences in earnings due to how a company is financed. EBITDA does not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. There is no direct comparable IFRS measure for EBITDA.
A reconciliation of net income (loss) to EBITDA is shown below.
| Three months ended | Nine months ended | |||
| Feb 29, 2024 $ | Feb 28, 2023 $ | Feb 29, 2024 $ | Feb 28, 2023 $ | |
| Total net income (loss) attributable to owners of the parent | 29,011 | 530,596 | 651,031 | (247,586) |
| Total net income (loss) attributable to non-controlling interest | 15,440 | (6,797) | 40,789 | (3,367) |
| Interest charge | 94,213 | 152,646 | 322,116 | 369,042 |
| Income tax (recovery) expense | 17,115 | (4,851) | 112,107 | 1,491 |
| Depreciation and amortization | 100,488 | 91,448 | 267,745 | 274,778 |
| Share based compensation | 65,307 | 53,319 | 171,945 | 163,615 |
| EBITDA | 321,574 | 816,361 | 1,565,733 | 557,973 |
Order Backlog
Order backlog is a useful performance measure that Management uses as an indicator of the short-term future revenue of our Company resulting from already recognized orders. The Company includes in "order backlog" 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. It is important to note that once an order or partial order is recorded as revenue, the order backlog is reduced by the amount of the newly reported revenue. Order backlog does not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similar measures presented by other companies.
For additional details on non-IFRS financial measures, please refer to the Company's most recent Management's Discussion and Analysis available at www.sedarplus.ca 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.
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i EBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense. See note below about non-IFRS measures.
ii Order 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 EBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense.
iv Order 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.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/206774
SOURCE: Thermal Energy International Inc.
