Mr. William Crossland reports

THERMAL ENERGY INTERNATIONAL'S FOURTH QUARTER REVENUE GROWTH OF 84% CAPS BANNER YEAR

Thermal Energy International Inc. has released its financial results for the fourth quarter and year ended May 31, 2023.

Highlights:

• Revenue: $21.1-million for the year and $8.2-million for the quarter, an 84-per-cent increase compared with the same quarter last year;
• EBITDA (earnings before interest, taxes, depreciation and amortization): $1.7-million for the year and $1.2-million for the quarter, a 476-per-cent increase compared with the same quarter last year;
• Net income: $720,000 for the year and $971,000 for the quarter;
• Order intake: $27.3-million for the year and $5.2-million for the quarter;
• Order backlog: $13-million as at May 31, 2023, and $21.4-million as at Sept. 26, 2023.

Overview

"The fourth quarter was one of our best quarters ever, setting new records for revenue and gross profit, and was a great finish to an excellent year," said William Crossland, Thermal Energy chief executive officer. "For the fiscal year, we had record gross profit, and our second-highest annual revenue and EBITDA. We saw a return in demand for our turnkey solutions, adding to the already strong growth we had in custom equipment. Additionally, our order intake and number of signed project development agreements in fiscal 2023 were higher than ever.

"We continue to see strong interest from companies looking to save money while reducing their carbon emissions. Since the end of our fiscal year, we've received $8.4-million in new orders, including a $4-million order from a multinational pharmaceutical company -- our largest turnkey order since before the pandemic. Additionally, we have several active project development agreements that we expect to convert into orders, and we have a robust and growing business development pipeline, positioning us well for a solid fiscal 2024."

Fourth quarter and fiscal 2023 financial review

Fourth quarter revenue was $8.2-million, up 84 per cent from the same quarter the year before. The growth was mainly due to the higher revenues from both custom equipment and turnkey heat recovery projects, due to the increase in sales orders received in fiscal year 2023. Gross profit increased 101 per cent to a quarterly record of $3.8-million, due to the growth in revenues. Operating expenses were $845,000 more than the same quarter last year, mainly due to staff's salary and incentive increase, change in foreign exchange gains, and reduction in government subsidies received as compared with the last quarter of fiscal year 2022. Expenses are also up due to a number of growth-oriented investments being made, such as additional project engineers, sales staff in new markets, and a significant investment in the digitalization and automation of the key business processes, all of which are designed to increase efficiency, profitability and top-line growth. Nonetheless, as a result of the increased revenues and gross profit, the net income and EBITDA for the quarter were $1.1-million and $967,000 better than the fourth quarter last year, respectively.

For the year ended May 31, 2023, revenue was $21.1-million, up 33 per cent from last year. The increase in revenues was mainly due to increased sales orders received in fiscal year 2023. Gross profit for the year was $9.6-million, an increase of $2.8-million, or 42 per cent, mainly due to the increased revenue from GEM. Operating expenses incurred for the year amounted to $8.3-million, $140,000 more than last year, mainly because of increased staff costs, investment in digitalization and less government subsidies received, offset by the reduction in acquisition costs in the amount of $188,000, and the increase in foreign exchange gains of $84,000. As a result, the company achieved net income of $720,000 and EBITDA of $1.7-million, both representing an increase of $2.5-million from the prior year.

Quarter-end cash and working capital balances were both around $3-million.

Business outlook and order summary

Orders received (order intake) during the year totalled $27.3-million, an increase of 130 per cent compared with $11.8-million in the prior year and the highest 12-month order intake in the company's history. As a result, the company ended the year with an order backlog of $13-million, up 166 per cent from $4.9-million at the end of the prior year.

The company has also received $8.4-million in new orders subsequent to the May 31, 2023, year-end, bringing the current order backlog to $21.4-million as of Sept. 26, 2023. A list and description of recent order highlights is available on page 15 of the management's discussion and analysis filed today.

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

About Thermal Energy International Inc.

Thermal Energy International provides energy efficiency and emissions reduction solutions to Fortune 500 and other large multinational companies. It saves its customers money by reducing their fuel use and cutting their carbon emissions. Thermal Energy's proprietary and proven solutions can recover up to 80 per cent 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, United States, as well as Bristol, United Kingdom, with sales offices in Canada, the U.K., the U.S., 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 its customers.

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