19:46:22 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Thermal Energy International Inc
Symbol TMG
Shares Issued 159,088,949
Close 2018-04-20 C$ 0.08
Market Cap C$ 12,727,116
Recent Sedar Documents

Thermal Energy loses $159,000 in fiscal Q3

2018-04-23 08:27 ET - News Release

Mr. William Crossland reports

THERMAL ENERGY REPORTS THIRD QUARTER AND YEAR-TO-DATE FINANCIAL RESULTS AND $690,000 HEAT RECOVERY ORDER

Thermal Energy International Inc. has released its financial results for the three months and nine months ended Feb. 28, 2018.

Today the company also announced that it has received a $690,000 heat recovery order from a new Canadian hospital customer. The heat recovery system is expected to provide the hospital with annual energy savings of $200,000, while reducing its annual greenhouse gas emissions by approximately 2,000 tonnes. The project is expected to be completed and revenue earned over the next six months.

With this latest hospital order, the company's order backlog is now $16.3-million, more than double the $8-million reported at this time last year.

Thrid quarter and year-to-date financial highlights:

  • Revenue was $3.2-million for the quarter, in line with a year ago, and up 19.2 per cent to $10.1-million for the year to date.
  • Gross profit decreased 4.5 per cent to $1.6-million for the quarter and 1.8 per cent to $5-million for the year to date.
  • Higher operating expenses as a result of continued investment in growing the company.
  • Net loss was $159,000 for the quarter and $269,000 for the year to date.
  • The company had an order backlog of $16.3-million as at April 23, 2018, compared with $8-million at this time last year.

"Our strong revenue growth of almost 20 per cent for the year to date and our exceptionally high order backlog are a testament to our growth strategy and the ability of our team to execute it," said William Crossland, chief executive officer of Thermal Energy. "This is tracking to be a banner year for us, and given the strong order backlog, our outlook beyond this fiscal year remains very positive. During the third quarter we received the largest order in our history -- an $11-million energy efficiency project with Resolute Forest Products. This did not contribute significantly to our third quarter revenue, but will boost our revenue from now into fiscal 2019, and possibly early fiscal 2020.

"We remain focused on growing our business, and to do so we must continue to grow and invest in our team," added Mr. Crossland. "In my midyear letter to shareholders on Jan. 29, 2018, I mentioned our plans for hiring a second salesperson for the German market, a technical salesperson in Texas to service the Gulf Coast petrochemical sector, and an experienced U.K.-based marketing manager. I am pleased to say that we have since made each of these additions to our team, and are in the process of looking for additional salespeople in both North America and Europe."

                                     SUMMARY FINANCIAL RESULTS
                                (in thousands except per-cent data)

                                   Three months ended                Nine months ended
                          Feb. 28, 2018     Feb. 29, 2017     Feb. 28, 2018     Feb. 29, 2017

Revenue                          $3,228            $3,225           $10,055            $8,438
Gross profit                      1,600             1,675             4,971             5,060
Gross margin                      49.6%             52.0%             49.4%             60.0%
Operating expenses                1,786             1,720             5,301             4,897
EBITDAS (loss)                     (156)               (2)             (234)              287
Net income (loss)                  (159)              (56)             (269)               39

Third quarter 2018 financial review

Revenue for the quarter was $3.2-million, which was comparable with the revenue in the third quarter of last year. Sales of heat recovery systems increased 3.8 per cent while sales of GEM condensate return systems were down 5.4 per cent for the quarter.

The third quarter included heat recovery revenues from two continuing hospital projects, the continuation of a project at a sixth site of a leading Fortune 500 food and beverage producer (announced July 6, 2017), initial work on the co-generation project with the same customer (announced Aug. 31, 2017), and the early engineering phase of the energy efficiency project with Resolute Forest Products (announced Dec. 5, 2017).

GEM revenues in the quarter included further orders from a leading performance materials company, as well as a number of smaller value orders.

Gross profit for the quarter was approximately $1.6-million, down 4.5 per cent from approximately $1.7-million in the third quarter of last year. As a percentage of sales, gross profit for the quarter fell to 49.6 per cent from 52.0 per cent in the third quarter a year ago. The decrease in gross profit percentage resulted from current heat recovery projects carrying lower margins than in the previous year.

Operating expenses for the quarter were $1,786,000 compared with $1,720,000 for the same quarter last year. As a percentage of revenue, operating expenses were 55.3 per cent for the quarter, compared with 53.3 per cent a year ago. The increase was attributable to small increases in costs associated with new sales and technical staff, plus the timing of audit fee invoices.

The company had negative EBITDAS (earnings before interest, taxes, depreciation, amortization and stock-based compensation) of $156,000 and a net loss of $159,000 for the quarter. This compares with negative EBITDAS of $2,000 and a net loss of $56,000 in the third quarter of last year.

At the end of February, 2018, the company had working capital of $1.2-million compared with $1.4-million at the end of fiscal 2017. The company's net cash position (cash and cash equivalents) decreased to $2.1-million from just under $3-million as at May 31, 2017. In addition to its net cash balance, the company also had an estimated $246,000 of unused borrowing capacity under its bank loans at the end of the third quarter.

Full financial results including management's discussion and analysis and accompanying notes to the financial results, are available on SEDAR and the company's website.

Order and backlog summary

As at April 23, 2018, the company had an order backlog of $16.3-million, compared with $8-million a year earlier. In addition to the $690,000 heat recovery order announced today, and several smaller orders received during the quarter and subsequent to quarter-end, the company's order backlog also includes the following orders:

  • On Dec. 5, 2017, the company announced an $11-million energy efficiency project with Resolute Forest Products. This project represents Thermal Energy's largest heat recovery and largest GEM orders to date. While the third quarter included some initial revenue from the early engineering phase of this project, the project is expected to contribute to revenue during the remainder of this fiscal year, during fiscal 2019 and fiscal 2020. Once completed, the project is expected to provide Resolute Forest Products with annual natural gas savings of more than 35 per cent, while reducing its annual greenhouse gas emissions by approximately 43,000 tonnes. As at Feb. 28, 2018, $232,000 of this order had been recognized as revenue.
  • During the quarter, as announced on Jan. 29, 2018, the company received two GEM orders totalling $386,000 from one of the world's leading consumer products conglomerates.
  • During the quarter, the company received a $310,000 order for a heat recovery system for a new central laundry facility that will handle laundry for several hospitals. This order was not previously announced.
  • Subsequent to quarter-end, on March 26, 2018, the company announced an $820,000 heat recovery order from a teaching hospital. The project is expected to be completed and revenue earned over the next five months. Once installed, the FLU-ACE system is expected to provide the teaching hospital with annual savings of approximately $220,000, while reducing greenhouse gas emissions by 1,007 tonnes per year.

The company includes in order backlog the value of projects in respect of which purchase orders have been received but have not yet been reflected as revenue in the company's published quarterly financial statements.

About Thermal Energy International Inc.

Thermal Energy International is an established global supplier of proprietary, proven energy efficiency and emissions reduction solutions to the industrial and institutional sectors.

We seek Safe Harbor.

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