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Quarter-End Highlights:
Revenue:
$4.1 million for the quarterEBITDA1:
$(395) thousand for the quarterNet lossof
$(640) thousand for the second quarterCash and working capital balancesis at
$2.5 million and$2.4 million respectivelyOrder backlog2
$7.0 million , up 27.3% from this time last yearCustom equipmentiiiYTD order intake 30% ahead of last year, and 52% greater than the pre-Covid levels the year before.
Turn-key project development:At record levels and 55% higher than pre-pandemic levels.
“Thermal Energy continues to see increasing market demand for carbon emission reducing solutions. And while our top line revenue and profitability continue to be impacted by the global pandemic, and especially the rotating travel restrictions in the countries where we operate, orders, revenue and order backlog for custom equipmentiii, primarily GEM and Heatsponge, continue to show record results and track well ahead of pre-pandemic levels. Similarly, while turn-key solution3 orders have not yet recovered to pre-pandemic levels, turn-key project development with our customers is at an all-time high. In the meantime, we are continuing to invest in the future growth of the company to ensure we can deliver the growing potential project pipeline and capitalize on the current favourable market conditions”, said
Custom Equipment Continues to Thrive
Custom equipment sales require less engineering analysis and site attendance than turn-key projects, and as a result, given increasing market demand for carbon emission solutions our custom equipment orders have continued to thrive, and revenues have continued to grow despite the COVID-19 pandemic.
Turn-Key Solutions - Record Level of Paid Project Development Agreements (PDAs)
In parallel to custom equipment,
A paid PDA is the customer’s commitment to a project whereby, based on an initial estimate of project cost and savings, the customer agrees to front the cost of further project development engineering before a final decision is made to execute the project.
Given the extensive travel and customer site visits required, turn-key projects have been most significantly impacted by the global pandemic, and given the long development and sales cycle required, the turn-key project order intake and revenue have not yet caught up to pre-pandemic levels.
However, in the Last Twelve Months (LTM) ended
“We believe these growing levels of custom equipment orders and turn-key solution paid project development agreements, despite the ongoing global pandemic, indicate that our customers’ desire to reduce carbon emissions is stronger than ever” said CEO
Continued Impressive Penetration into Current Strategic Corporate Accounts Base
A key focus of Thermal Energy’s growth strategy is expanding and deepening its relationships with strategic corporate accounts. As previously mentioned in the Q1 results, over the last 5 years the Company have received over
After placing a third turn-key energy efficiency solution order in
“The hardest part is always getting that first step through the door and the initial major order. But, once the customer starts benefitting from the cost, carbon and energy savings of our solutions, we establish trust in our capabilities and our relationship strengthens. We then continue to collaborate closely with the client to develop further energy and carbon reducing solutions using more of our technologies at more customer sites.” said
Successful and Continued Expansion into
Following the success of expansion in
Positive Market Fundamentals
In
In addition, North American and EU natural gas prices have significantly increased (between 50% and 500%) in the last 12 to 18 months. There is rising demand for carbon allowances under the EU’s cap-and-trade system;EU Carbon Permitsreached an all time high of approximately
With approximately 50% of industrial thermal energy lost on site due to inefficiency, energy efficiency is the fastest, cheapest, and most significant way to reduce carbon emissions, andthe market opportunity for
Investing for Growth
Motivated by the record levelof custom equipment orders and turn-key paid project development agreements,
“Given recent strong growth in the labour market, and especially professional, scientific and technical services, during the quarter we made some one-off investments in our specialist teams to ensure our compensation levels retain our capable and highly trained staff long-term. This allows us to meet our customers’ growing demand for carbon emission reduction solutions. The deep understanding our employees develop of our customers’ operations has fostered strong customer loyalty and helped to achieve high customer retention rates and excellent knowledge transfer across the business over the COVID period.” said
As well as investment in competitive salaries and architecture for growth, this quarter has also reflected the expenses from costs associated with the acquisition of Sofame’s technology.
Summary Financial Results
In thousand except % data | Three months ended | Three months ended | Six months ended | Six months ended |
Revenue | ||||
Gross profit | ||||
Gross margin | 42.0% | 48.4% | 42.2% | 47.8% |
Operating expenses | ||||
Net loss | ||||
EBITDA5 | ||||
Cash position | ||||
Working Capital | ||||
Orders received | ||||
Order backlog6 as of |
Second Quarter and Year-to-Date Financial Review
Quarterly revenue was
For the six months ended
The Company’s cash position was
Working capital decreased by
Order Intake and Order Backlog Summary
Orders received during this fiscal year-to-date are 31.9% lower than orders received during the same time last year. However, orders for custom equipment, primarily GEM and Heatsponge, are 29.5% ahead of the same time last year, and 51.7% greater than the pre-Covid levels the year before. The Company ended the quarter with a total order backlog of
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/financial-reports.html.
Readers are encouraged tosubscribe to
ENDS
For media enquiries contact:
Marketing@thermalenergy.com
For investor enquiries:
613-723-6776
Investors@thermalenergy.com
Notes to editors
About
For more information, visit our website at www.thermalenergy.com and follow us on Twitter at twitter.com/GoThermalEnergy.
# # #
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 and the anticipated benefits of the Company’s current efforts at training and business improvement efforts. 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 atwww.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 recentManagement’s Discussion and Analysis available at www.SEDAR .com for more details about these non-IFRS financial measures.
Neither
1 EBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense.
2 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.
iiiCustom equipment refers to indirect contact heat recovery solutions (HEATSPONGE and SIDEKICK), and condensate return system solutions (GEMTMsteam traps). Turn-key solution refers to direct contact heat recovery solutions (e.g., FLU-ACE®).
3
4 Turn-key solutions refer to direct contact heat recovery solutions (e.g., FLU-ACE®).
5 EBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense.
6 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.
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