16:28:11 EDT Thu 28 Mar 2024
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Thermal Energy International Inc
Symbol TMG
Shares Issued 159,088,949
Close 2018-09-28 C$ 0.085
Market Cap C$ 13,522,561
Recent Sedar Documents

Thermal Energy earns $619,000 in fiscal 2018

2018-09-28 10:27 ET - News Release

Mr. William Crossland reports

RECORD REVENUE HIGHLIGHTS STRONG FISCAL 2018 RESULTS FOR THERMAL ENERGY INTERNATIONAL

Thermal Energy International Inc. has released its financial results for the three-month and 12-month periods ended May 31, 2018.

Highlights:

  • Revenue for the year increased 32 per cent to $17.4-million.
  • Three-year compound annual revenue growth of 21 per cent.
  • Gross profit for the year increased 12 per cent to $8.3-million.
  • Higher operating expenses as a result of continued strategic investment in growing the company plus one-time expenses related to the acquisition of Boilerroom Equipment Inc.
  • EBITDAS (net earnings before income taxes, interest income, depreciation and amortization, and stock-based compensation) for the year decreased 17.7 per cent to $617,000. However, EBITDAS would have been $1.2-million, up 64 per cent, excluding investments in growth and one-time expenses noted herein.
  • Net income for the year increased 57.7 per cent to $619,000.
  • The company had an order backlog of $12.7-million as at Sept. 26, 2018, compared with $9-million as at Sept. 22, 2017.

"I am proud to report yet another record-breaking fiscal quarter and year due to the hard work and determination of our team in the execution of a well-defined growth strategy," said William Crossland, chief executive officer of Thermal Energy.

"Over the last three years, we have invested significantly in our team and capabilities with staff additions in Ottawa, Bristol, Texas, Poland and Germany. We have also expanded our product offerings and expertise and these investments are now starting to pay off. Growing our sales, marketing and technical capabilities and expanding our portfolio of complementary energy efficiency solutions are key parts of a strategy that has resulted in our revenue almost tripling over the last three years.

"In June, just after year-end, we announced the acquisition of Boilerroom Equipment Inc., adding further to our product portfolio, distribution networks, [and] engineering and project management expertise. The addition of Boilerroom Equipment Inc.'s HeatSponge, Sidekick and Rainmaker technologies to our GEM, Flu-Ace, Dry-Rex and CoGen is part of the company's strategy to develop a broad portfolio of thermal energy efficiency solutions targeted at the industrial, institutional and commercial markets and become a unique one-stop shop for all of our clients' thermal energy efficiency and heat recovery needs."

   
                            SUMMARY FINANCIAL RESULTS
                      (in thousands, except percentage data)

                         Three months ended May 31,            12 months ended May 31,    
                             2018             2017              2018             2017

Revenue                    $7,352           $4,754           $17,408          $13,192                      
Gross profit               $3,363           $2,379            $8,334           $7,439                       
Gross margin                45.7%            50.0%             47.9%            56.4%                        
Operating expenses         $2,544           $1,960            $7,845           $6,858                       
EBITDAS                      $850             $463              $617             $750                         
Net income                   $888             $354              $619             $393

Fiscal 2018 financial review

The $17.4-million revenue for the year was the strongest in the company's history and up 32.0 per cent over fiscal 2017's record revenue of $13.2-million. Sales of heat recovery systems increased by $4.8-million (73.6 per cent), while sales of GEM condensate return systems decreased by $597,000 (minus 9 per cent). While fiscal 2018 results did include revenue from the company's record Resolute Forest Products contract, announced in December, 2017, it is important to note that fiscal 2018 would have been a record revenue year even without the Resolute Forest Products order.

For heat recovery, fiscal 2018 included the substantial completion of installations at two major hospitals and a major food and beverage customer, as announced on July 6, 2017, as well as a partial delivery of the superefficient cogeneration heat recovery system at a food and beverage customer, as announced Aug. 31, 2017, and the partial delivery of the large heat recovery projects to Resolute Forest Products, as announced Dec. 5, 2017.

GEM condensate return systems sales in fiscal 2018 were $4.9-million, compared with $5.5-million in fiscal 2017. GEM condensate return system sales for fiscal 2018 included further orders from a leading performance materials company and the order to an existing pulp and paper customer, as announced Dec. 5, 2017. Gross profit increased 12 per cent to a record high of $8.3-million, compared with $7.4-million the year before. As a percentage of revenue, gross profit decreased to 47.9 per cent from 56.4 per cent in fiscal 2017 primarily due to a higher proportion of heat recovery sales.

Operating expenses were $7.8-million, compared with $6.9-million in fiscal 2017. Despite an additional $613,000 in costs associated with new staff and marketing activities and one-time costs related to the acquisition of Boilerroom Equipment operating expenses as a percentage of revenue decreased to 45.1 per cent for the year, compared with 52 per cent a year earlier.

EBITDAS decreased 17.7 per cent to $617,000, compared with $750,000 in the prior year; however EBITDAS would have been $1.2-million, up 64 per cent, excluding investments in growth and one-time acquisition-related expenses. Net income increased 57.7 per cent to $619,000, compared with $393,000 in the prior year.

Q4 2018 financial review

With revenue of $7.4-million, Q4 2018 was the strongest quarter in the company's history and up approximately 55 per cent over Q4 2017's record revenue of $4.8-million. Revenue from heat recovery projects in the current quarter included the substantial completion of a hospital project as announced Oct. 12, 2017, the partial delivery of a cogeneration project at a food and beverage customer, as announced Aug. 31, 2017, and the partial delivery of a heat recovery project to Resolute Forest Products, as announced Dec. 5, 2017.

GEM condensate return system sales for the final quarter of fiscal 2018 included further orders from a leading performance materials company and the order to an existing pulp and paper customer, as announced Dec. 5, 2017. The final quarter of fiscal 2017 included the fulfilment of sales to a leading chemical producer as well as the fulfilment of orders from a further three sites of the Fortune 500 food and beverage company.

Gross profit increased 41.4 per cent to $3.4-million, compared with $2.4-million for the same quarter a year earlier. As a percentage of revenue, gross profit was 45.7 per cent for the quarter, compared with 50 per cent for the same period last year. The increase in gross profit was due primarily to the strong increase in heat recovery revenues for the quarter and the change in margin was due to a higher proportion of revenue from heat recovery.

Operating expenses were just over $2.5-million, compared with $2-million for the fourth quarter of the year before, primarily due to additional costs associated with new technical and sales staff hired to grow the business, as well as increased advertising and promotional activities and the one-time expenses related to the acquisition of Boilerroom Equipment. Operating expenses as a percentage of revenue, however, were lower at 34.2 per cent, compared with 41.2 per cent for the same period a year ago.

EBITDAS for the quarter increased 83.6 per cent to $850,000, compared with $463,000 for the same period a year earlier. Net income for the quarter increased 150.8 per cent to $888,000, up from $354,000 for the fourth quarter of fiscal 2017.

Cash resources and working capital

As at May 31, 2018, the company had working capital of $2-million, compared with just over $1.4-million as at May 31, 2017. The company's net cash position (cash and cash equivalents less bank loans) increased to approximately $3.3-million from $3-million as at May 31, 2017. In addition to its net cash balance, the company also had an estimated $157,000 of unused borrowing capacity under its bank loans at the end of fiscal 2018.

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

Recent order and backlog summary

Subsequent to year-end, the company had received an order totalling $1.2-million from a leading Fortune 500 food and beverage customer for a heat recovery system (announced in June, 2018).

The company had an order backlog of approximately $12.7-million as at Sept. 26, 2018, compared with $9-million when it reported fiscal 2017 results a year earlier. The company includes in its 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 is an innovative clean technology company providing proprietary and proven energy efficiency and emissions reduction solutions to the industrial, commercial and institutional sectors around the world. The company saves its customers money and improves their bottom line by reducing their fuel use and cutting their carbon emissions. The company's customers include a large number of Fortune 500 and other leading multinational companies across a wide range of industry sectors.

Thermal Energy is also a fully accredited professional engineering firm and provides a unique mix of proprietary products together with process, energy and environmental engineering expertise.

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