Thermal Energy Achieves Record Revenue in Second Quarter

Rhea-AI Summary

Thermal Energy International reported record revenue of $8.7 million in Q2 2025, representing a 22% increase compared to Q2 2024. The company's turn-key heat recovery business drove this growth, marking the second consecutive quarter of all-time high quarterly revenue.

Despite revenue growth, profitability decreased due to product mix changes and increased investments in business growth. EBITDA was $0.3 million with net income of $28 thousand. The company's cash position stood at $2.8 million with working capital of $3.7 million at quarter end.

Order intake for Q2 was $7.3 million, with the order backlog reaching $12.9 million as of November 30, 2024, and increasing to $17.9 million by January 27, 2025. The company has invested in growth initiatives including a new UK production facility, 18 new staff, a new ERP system, and the CREST mobile project identification app, adding approximately $2.3 million to annual costs.

Positive

• Record quarterly revenue of $8.7 million, up 22% year-over-year
• Six-month revenue increased 40% to $17.1 million
• Working capital improved to $3.7 million
• Order backlog grew to $17.9 million as of January 27, 2025
• Positive cash flow from operations

Negative

• Net income declined to $28 thousand from $486 thousand in Q2 2024
• EBITDA decreased to $270 thousand from $830 thousand year-over-year
• Gross margin decreased to 33% from 49% in Q2 2024
• Operating expenses increased due to $2.3 million in annual growth investments
• Cash position decreased to $2.8 million from $3.4 million

Revenue for trailing four quarters also at record high

Ottawa, Ontario--(Newsfile Corp. - January 28, 2025) - 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 second quarter ended November 30, 2024. All figures are in Canadian dollars.

Q2 2025 Highlights:
(Compared to Q2 2024)

• Revenue increased 22% to a record $8.7 million

• EBITDAⁱ of $0.3 million and net income of $28 thousand were lower due to product mix and increased expenses due to investments made in the future growth of the business

• Cash position of $2.8 million was lower due to temporary fluctuations in working capital items

• Working capital was $3.7 million at quarter end

• Order intake was $7.3 million

• Order backlogⁱⁱ was $12.9 million as at November 30, 2024, and $17.9 million as at January 27, 2025

Overview

"Our turn-key heat recovery business drove record high revenue for both the quarter and the trailing twelve months ("TTM") ended November 30, 2024," said William Crossland, Thermal Energy CEO. "This was the second consecutive quarter that we reached a new all-time high for quarterly and TTM revenue. While we remained profitable, the change in product mix, together with the significant investments we have been making to grow the business, reduced our profitability."

"Over the last two years, we have invested heavily in the future growth of the business. These investments include a new, much larger UK production facility, 18 new staff, a new accounting and ERP system, and the development of our custom mobile project identification app ("CREST"), which we launched this quarter. These investments have added about $2.3 million to annual costs but, as expected, we have yet to see most of the corresponding benefits. Although our order intake for the second quarter was lower than a year ago, it marked a sharp increase compared to the first quarter, and we received a further $5.0 million in orders subsequent to quarter end, increasing our order backlog to $17.9 million as of January 27, 2025. Given the relative size of our typical heat recovery turn-key projects, order intake has always been lumpy but our pipeline and the value of projects in paid development with customers remains as strong as ever."

"Finally, we are proud of our continued ability to strengthen our balance sheet with cash flow from operations. Cash at quarter end was impacted by temporary changes in working capital items but cash flow from operating activities (excluding changes in working capital items) remained positive and over the last two years we have reduced debt by $1.8 million and increased working capital by $1.9 million from internally generated cash flow."

Summary Financial Results

In thousand except % data	Three months ended Nov. 30, 2024	Three months ended Nov. 30, 2023	Six months ended Nov. 30, 2024	Six months ended Nov. 30, 2023
Revenue	$8,671	$7,105	$17,140	$12,288
Gross profit	$2,873	$3,489	$6,398	$6,256
Gross margin	33%	49%	37%	51%
Operating expenses	$2,643	$2,782	$5,722	$5,259
Net income	$28	$486	$337	$647
EBITDAiii	$270	$830	$822	$1,244
Cash position	$2,823	$3,424	$2,823	$3,424
Working capital	$3,688	$3,492	$3,688	$3,492
Orders received	$7,268	$12,785	$10,069	$16,089
Order backlogiv as of November 30	$12,940	$17,500	$12,940	17,500

 

Financial Review for the Second Quarter Ended November 30, 2024

Second quarter revenue grew 22% year-over-year to a record $8.7 million mainly due to increased sales from turn-key heat recovery projects, partially offset by decreased sales from GEM traps. Gross profit for the quarter decreased by 18% to $2.9 million, mainly due to change in product mix.

Operating expenses were $139 thousand lower than the same quarter a year earlier, mainly due to an increase in foreign exchange gains. R&D expense increased by $107 thousand due to higher R&D activities conducted in the quarter.

The Company had EBITDA of $270 thousand and net income of $28 thousand, compared to $830 thousand and $486 thousand respectively in the second quarter a year earlier.

At the end of November, cash and working capital balances were approximately $2.8 million and $3.7 million, respectively.

Financial Review for the Six Months Ended November 30, 2024

For the six months ended November 30, 2024, revenue was $17.1 million, up about 40% year-over-year, with the higher revenues from Turn-Key Heat Recovery projects being partially offset by lower revenues from GEM traps. Gross profit increased 2% to $6.4 million compared to $6.3 million in the same period a year ago.

Operating expenses amounted to $5.7 million, up $0.5 million compared to same period a year ago. The variance included an additional $580 thousand related to the growth in headcount, increased travelling and business development costs, and inflation-related increases to regular operating costs and salaries. The increase was partially offset by the change in foreign exchange gains by $117 thousand.

R&D expense increased by $155 thousand compared to prior year due to a higher amount of R&D activities engaged.

The Company achieved EBITDA of $0.8 million and net income of $337 thousand for the six months ended November 30, 2024.

Business Outlook and Order Summary

Orders received ("Order Intake") during the second quarter totalled $7.3 million. The Company ended the quarter with an order backlog of $12.9 million, down 26% from the $17.5 million at the end of the same quarter in the prior year.

The Company also received $5.0 million in new orders subsequent to quarter end, bringing the current order backlog to $17.9 million as of January 27, 2025. A list and description of recent order highlights is available on page 16 and 17 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, January 28, at 8:30 am ET. 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/TMG2025Q2. 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, including dial-in information (audio only), refer to the Company's press release from January 15, 2025.

Readers are encouraged to subscribe to TEI News to receive strategic news and updates directly to their inbox.

ENDS

For media enquiries contact: Thermal Energy International Inc. Canada: 613-723-6776 UK: +44 (0)117 917 2179 Marketing@thermalenergy.com

For investor enquiries: William Crossland President and CEO Thermal Energy International Inc. 613-723-6776 Investors@thermalenergy.com

 

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, France, 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 to EBITDA is shown below.

	Three months ended		Six months ended
	Nov 30, 2024 $	Nov 30, 2023 $	Nov 30, 2024 $	Nov 30, 2023 $
Total net income attributable to owners of the parent	12,978	462,777	291,268	622,020
Total net income attributable to non-controlling interest	14,694	22,762	45,876	25,349
Interest charge	78,151	114,639	165,446	227,903
Interest revenue	(12,739)	-	(43,938)	-
Income tax expense	16,669	93,209	35,011	94,992
Depreciation and amortization	94,687	83,124	198,112	167,257
Share based compensation	65,306	53,319	130,612	106,638
EBITDA	269,746	829,830	822,387	1,244,159

 

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.

________________________
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.
ⁱⁱⁱ EBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense.
^iv 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.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/238653

FAQ

What was Thermal Energy's (TMGEF) revenue growth in Q2 2025?

Thermal Energy reported a 22% increase in revenue to $8.7 million in Q2 2025 compared to Q2 2024.

How much did TMGEF's order backlog increase by January 27, 2025?

The order backlog increased to $17.9 million as of January 27, 2025, up from $12.9 million at November 30, 2024.

What caused the decline in TMGEF's profitability in Q2 2025?

Profitability declined due to changes in product mix and increased investments in business growth, including new facilities, staff, and systems totaling $2.3 million in annual costs.

How much working capital did TMGEF report as of November 30, 2024?

Thermal Energy reported working capital of $3.7 million as of November 30, 2024.

What was TMGEF's gross margin in Q2 2025 compared to Q2 2024?

The gross margin decreased to 33% in Q2 2025 from 49% in Q2 2024.