Thermal Energy International Reports Fourth Quarter and Fiscal 2024 Results

Fiscal 2024 was a record year for revenue, order intake, and EBITDA

Ottawa, Ontario--(Newsfile Corp. - September 19, 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 fourth quarter and year ended May 31, 2024. All figures are in Canadian dollars.

Highlights:

(Comparisons are on a year-over-year basis)

• Revenue: $25.9 million (up 23%) for the year, $7.5 million (down 8%) for the quarter.
• Gross profit: $12.5 million (up 30%) for the year, $3.1 million (down 18%) for the quarter.
• EBITDAⁱ: $2.0 million (up 15%) for the year, $0.4 million (down 64%) for the quarter.
• Net income: $1.0 million (up 36%) for the year, $0.3 million (down 70%) for the quarter.
• Order intake: $29.5 million (up 8%) for the year, including $5.1 million in the quarter.
• Order backlogⁱⁱ was $18.7 million as at May 31, 2024, up 43% compared to last year, and $21.3 million as at September 18, 2024.

Overview

"Fiscal 2024 was a remarkable year for Thermal Energy International, setting new records in revenue, order intake, and EBITDA," said William Crossland, Thermal Energy CEO. "Given the nature of our business our quarterly results can vary quite significantly. In this regard, our continued growth in annual revenue and profitability is especially noteworthy considering the exceptional fourth quarter we had in the prior year, which included revenue from a number of exceptionally large GEM orders, including $1.9 million from two major customers alone. Despite the lower GEM sales this quarter, our GEM sales for the year were still the highest ever and we also had significant growth across our business."

"We reinvested more than $1.5 million in the future growth of the business in fiscal 2024, including adding 9 net new team members, moving to a new UK facility and more than doubling the throughput capacity, and developing a proprietary mobile app to help us more quickly and efficiently identify energy-saving and carbon-reduction project opportunities. While these investments have yet to impact top-line growth, they better position us to capitalize on the strong momentum in the marketplace demonstrated by the growth in order intake and order backlog, as well as the increased interest in project development agreements from our customers."

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.

Summary Financial Results

Fourth Quarter 2024 and Fiscal 2024 Financial Review

Fourth quarter revenue was $7.5 million, down 8% compared to the fourth quarter the year before, which benefited from a number of very large GEM orders, with GEM revenue of $1.9 million coming from two major customers alone. While GEM sales were lower in the fourth quarter of fiscal 2024, revenues from heat recovery projects and sales of other equipment increased year-over-year. Gross profit for the quarter decreased by 18% to $3.1 million due to the lower revenue and product mix (lower GEM sales) during the quarter.

Operating expenses for the quarter were $97 thousand lower than the same quarter a year earlier. $230 thousand of expenses relating to an internally developed data collection and scoping tool, which was previously recorded under Operating expenses, were reclassified to research and development in the fourth quarter since some features of the tool were developed for research and development purposes. This was the main contributor to the decrease in Operating expenses. The decrease was partially offset by an increase in salary expense as a result of growth in the Company's sales and engineering personnel.

For the quarter, the Company had EBITDA of $422 thousand and net income of $290 thousand, compared to $1.2 million and $971 thousand respectively in the fourth quarter a year earlier.

For the year ended May 31, 2024, revenue was $25.9 million, up approximately 23% from last year. The increase in revenues was mainly due to higher revenues from heat recovery projects. Gross profit for the year increased 30% to $12.5 million compared to $9.6 million the prior year. The increase was attributable to the higher revenue as well as higher margins achieved on heat recovery projects and sales of equipment.

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.

Operating expenses for the year amounted to $10.8 million, up $2.5 million compared to the prior year. $603 thousand of the increase was due to higher foreign exchange losses. The rest of the increase was due to higher costs on business development and marketing activities, the investment in a new production facility, inflationary increases on regular operating costs, and increased salaries due to increased headcount.

The Company achieved EBITDA of $2 million and net income of $982 thousand for the year.

Year-end cash and working capital balances were approximately $7.0 million and $3.5 million, respectively.

Business Outlook and Order Summary

Orders received ("Order Intake") during the fourth quarter totalled $5.1 million. The Company ended the year with an order backlog of $18.7 million, up 43.4% from the $13.0 million at the end of the prior year.

The Company also received $2.6 million in new orders subsequent to year end, bringing the current order backlog to $21.3 million as of September 18, 2024. A list and description of recent order highlights is available on page 15 and 16 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, September 19, 2024, at 8:30 am ET to discuss its fourth 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 will be available at https://bit.ly/TMG2024Q4webcast. You may join the webcast via MS Teams on your computer, mobile app or room device. Please join the webcast approximately 15 minutes prior to the earnings call to ensure adequate time for registration and admittance to the webcast.

For more information on joining an MS Teams meeting, visit: https://bit.ly/TMGMSTeams.

To access the conference call via dial-in (audio only), please use the information below.

Calling from Canada: +1 437-703-4481
Find a local number: https://bit.ly/TMG2024Q4local
Phone Conference ID: 147 635 09 #

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

 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.

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.

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.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/223837