Thermal Energy International CEO Provides Half-Year Business Update

CEO William Crossland reflects on the latest business activity and record order intake figures. All figures are in Canadian dollars.

CEO William Crossland reflects on the latest business activity and record order intake figures. All figures are in Canadian dollars.

Recovery Across the Business 

With Thermal Energy International’s (“TEI” or the “Company”) financial results for the first six months of the year released last week, this is an opportune time to review some of our activities and successes of the last several months. Those familiar with the Company may be accustomed to some of the details, but it presents an opportunity to refresh and review the fundamentals in a more digestible manner. 

Since our last Spring update, Custom Equipment has continued its record-breaking trajectory and Turn-key Project activity has resumed with confidence.  

We have long heralded the positive fundamentals of our market, but there’s no denying that the message is as prevalent today as it’s ever been. Just over a year ago with Omicron, we faced an unexpected second impact of the pandemic which resulted in some Turn-key Project delays, but the demand and interest for our solutions is unwavering and is clearly illustrated by the high volume of paid turn-key Project Development Agreement (PDA) orders from our multinational clients, as well as our latest record order intake figures. The Company uses the term ‘order intake’ to refer to the total value of purchase orders received by the Company in a given period. (See note with respect to Forward-Looking Statements below) 

This update will provide some key insights into the Company’s recent activities and successes and highlight the post-pandemic recovery across the business. 

  • Last Twelve Months (“LTM”) Total Order Intake has bounced back and now exceeds pre-pandemic highs

  • Custom Equipment orders continue to break Company records, with a growth of over 300% when comparing Q2 YTD over the past 5 years

  • The number of paid Turn-key Project Development Agreements (PDA) signed, a significant step in the sales and engineering cycle of our large Turn-key Projects, is at the highest level in the Company’s history

  • Turn-key Project order intake is now back contributing as expected to record total order intake figures

  • Notable developments in the team, including the placement of a Vice President of Sales for North America  

Record Order Intake  

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As we compare our LTM Q2 F2023 order intake achievement with previous 12-month periods, as shown in Figure 1  we are pleased to report that our order intake is now ahead of pre-pandemic highs.  

This is a significant milestone in our recovery and is the result of our efforts to maximize the impact of our extensive portfolio under challenging circumstances.   

Returning to pre-pandemic order intake levels is of course not our ultimate goal and now that we have achieved this, we are well-placed to continue focusing on future growth. 

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Fiscal 2023 is off to an exceptionally strong start. The record order intake (Figure 2) for the first six months of fiscal 2023 is significant since the results come from a combination of both Custom Equipment and Turn-key Projects, rather than predominantly Custom Equipment as has been the case throughout the pandemic. 

(See note with respect to Forward-Looking Statements below) 


Understanding Thermal Energy’s Delivery Models 

As a precursor to understanding the financial results it is important to understand that we design, engineer, and deliver our energy and carbon reduction solutions using two main delivery models; Turn-key Projects and Custom Equipment. 

Turn-key Projects are developed, designed, installed, and commissioned by our engineering team, with TEI as a single point of responsibility for project development and execution. This requires a collaborative and single-source relationship between the customer and TEI. It also requires extensive travel and customer site visits by our team, which were severely restrained during the pandemic. Given the large size and complexity of these projects, the sales cycle to get a project order is often one to two years with a further year to revenue the order once it is received. As a result, the combined sales and revenue cycle for Turn-key Projects often average between 2 to 3 years. (See note with respect to Forward-Looking Statements below) 

Custom Equipment is the sale of some of our proprietary technologies that are engineered and customized as needed for the customer site and application and shipped as equipment-only. Requiring far less customer collaboration, travel, or site visitation, the combined sales and revenue cycle for Custom Equipment averages between 3 and 12 months.  (See note with respect to Forward-Looking Statements below).

Custom Equipment Continues to Break Records 

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The successful delivery of the Company’s strategy can now be seen reflected in many areas of the business, not the least of which is the steady continued growth of Custom Equipment business throughout the pandemic as seen in Figure 3.  

Order intake figures for Custom Equipment have consistently broken records year-on-year and we see this trend steepening further in the first half of F2023 with an increase of 100% when compared to YTD last year. This growth continues to highlight how well Thermal Energy’s portfolio of technologies and delivery methods is being leveraged by our customers to deliver immediate fuel savings in challenging times.  

Turn-key Projects Turnaround 

It came as no surprise that Turn-key Projects would be more greatly affected by the pandemic than Custom Equipment sales due to the large amount of site development and delivery time required, but the impact was in two specific areas.  

Firstly, some projects mid-delivery were placed on hold whilst sites focussed on essential operations with only skeleton staff. This extended timescales and held up receipt of completion revenue. We are pleased to note that all legacy projects – that is, projects coming to fruition before or during the pandemic - have now been delivered or are in the final stages of completion. 

The second impact on Turn-key Projects was a reduced ability to develop new projects and add new opportunities into the pipeline. Again, travel restrictions, a lack of site access, skeleton staffing on customer sites, and customers’ focus on dealing with the immediate needs and ever-changing requirements of the pandemic all played their part.  

This said, we can see that the impact was temporary as the pipeline of new projects is strong, and we see a record number of projects in paid development clearly highlighting customers’ commitment to significantly reduce fuel consumption and carbon emissions and meet their sustainability goals and objectives. 

  •  Turn-key Project Development Agreements (PDA) at Record Levels 

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Turn-key Project Development Agreements (PDAs) are usually a step in our Turn-key Project development and sales cycle where a customer pays for enhanced project scoping and engineering to design and validate the full scope of the project. Our experience has been that PDAs are a strong indicator of future order intake and illustrate a customer’s commitment to the project.  

There is usually a conversion time from PDA to full order averaging 12 months and although not all PDA orders will result in full Turn-key Project orders, PDA order intake is now at record levels as can be seen in Figure 4 with new projects being identified at the highest ever rate. (See note with respect to Forward-Looking Statements below) 

  • Turn-key Order Intake has Bounced Back 

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This recovery trend can also be seen further down our pipeline and whilst revenue has not yet rebounded due to the implementation time of these projects, order intake figures for Turn-key Projects are showing a significant bounce back, as seen in Figure 5.

  • YTD order intake is 500% ahead of last year 
  • 66% ahead of pre-pandemic highs 

This bounce back will start to be reflected in our revenue as we complete these orders over the next twelve months. (See note with respect to Forward-Looking Statements below) 

Appointments and Restructures Undertaken to Exploit Growing Global Market 

When the 2015 Paris Climate Agreement stabilized global commitment to addressing climate change, we expanded the team, distribution capabilities, and product offering in readiness for the expected market opportunity that is now well underway.  

We strive for excellence, hence our strategy to strengthen our competitive position with investments in our people, technology, and ongoing customer relationships, that has seen some notable developments to maximize the impact on our future.  

  • Sam Mawby moves from Director of Business Development to Managing Director of Europe to drive further success in this key market. Sam has been on TEI’s senior management team for 15 of his 20 years at the Company and has worked across the world with the majority of our global multinational customers.  Sam has been responsible for many areas of the business in his time at Thermal Energy, including European direct sales and our sales network of global agents and distributors. Sam leads the European engineering team and has been responsible for driving innovation and new product development as well as establishing our service offering. This restructure will see the convergence of our sales strategy and engineering resourcing and development as Thermal Energy tackles some of the unique challenges in the European marketplace.
  • Our previous Director of Sales in North America, Dave Coletta, has been repositioned to Global Director of Strategic Partnerships to fully focus on developing long-term and far-reaching relationships with new and existing multinational clients. Dave has been at Thermal Energy for over 15 years and in that time has been responsible for creating and developing many of our global accounts. This move will maximize his success and experience and align closely with our strategic business objectives of extending our work with current group accounts, whilst identifying and driving success in new multisite accounts.

  • Ken Harden has recently joined the TEI team and has been appointed Thermal Energy’s Vice President of Sales for North America and assumes responsibility for all Thermal Energy’s North American sales channels including our existing team of Area Sales Managers and the network of manufacturers reps acquired with the Boilerroom Equipment business. Ken is ideally placed to drive sales in North America being adept at leading direct sales teams and indirect sales at both large multinationals and small energy technology start-ups, managing teams from 3 to 125 people, and delivering annual revenues of up to $500 million. 

Thermal Energy’s Global Market Continues to Grow 

Energy efficiency is often more associated with electricity, and for good reason, since electricity is a more obvious choice for residential and commercial buildings whose energy usage is 50% electricity and 50% thermal energy – usually natural gas. But in the industrial market where we operate, 90% of industrial energy use is thermal energy. 

Most of our customers report having already met their carbon emission reduction targets when it comes to electricity, usually through solar panels, renewable energy, or even purchasing green power but tackling their thermal energy use – at 90% - is far more challenging. 

We make our case with the simple fact that thermal energy efficiency is by far the fastest, cheapest, and most significant means for our customers to reduce their energy use and carbon emissions, but there are three external factors that create an even more lucrative market for us, these are: 

  1. Dramatically increased thermal energy costs 
  2. Continually increasing cost of carbon 
  3. Increased carbon emissions reduction targets  

Energy costs are notably volatile and have dramatically increased in the last 24 months, soaring up to 300% higher in Europe and 50% higher in North America than the long-term averages leading up to 2020, during which time Thermal Energy International was growing at 31% and already offering desirable paybacks. Forecasts by Trading Economics predict these prices will either stay or increase, so if the company growth and paybacks were strong then, they’re even better now and poised to meet and exceed pre-pandemic levels. (See note with respect to Forward-Looking Statements below) 

The second contributing factor is increasing carbon costs. In Europe, carbon credit prices have increased by approximately 300% in the last two years, sitting at around CAD $120/t when converted from Euro. Canadian carbon taxes recently increased from $50/t to $65/t and are expected to rise to $170/t by 2030. To put that into perspective, $100/t improves our project paybacks by around 50% on average when considering past projects, which has a meaningful impact on our customers. 

With the increasing energy and carbon costs, our customers not only benefit from the longevity of our projects and proposed energy savings and reductions, but they’re benefitting from paybacks previously unseen.  

Finally, there has been a greater imposition of carbon emission reduction targets with most companies now targeting a 40% to 75% reduction by 2030, and driving towards net zero by 2050, bringing plenty of potential opportunity for TEI for the next 20 to 30 years. (See note with respect to Forward-Looking Statements below) 


Since the beginning of FY23 (June 2022), we have had the opportunity for multiple noteworthy announcements.  

Sept 7th  - $800,000 heat recovery project for a leading European meat producer where in the second project of its kind, we have identified a new heat source for our technology to be applied. 

Sept 13th - $350,000 order with a leading textile manufacturer. This major equipment order marks a significant milestone in delivering on the acquisition of Sofame in July 2021. This is the first Sofame system designed, engineered, and sold independently by Thermal Energy since the acquisition, and is also the first RBT outside of North America. Work with this textile manufacturer has expanded to 7 in the last few years. 

Sept 20th - $1.5 million GEM intake in only a few weeks delivering a record GEM order intake start to the financial year. This figure comprised several notable orders from a variety of sectors ranging from Food and Beverage, Petrochem, and Pharmaceutical. 

Sept 29th - $1.4 million HR project. 4th Turn-key project in 4 years for a global nutrition company and is a classic example of where a customer sees the success of our projects and the impact of our technologies and rolls them consistently across their sites. 

Sept 30th - $2.8 million combined GEM & HR Project for a premium beer producer. Our technologies are very well suited to the brewing industry and with this order, we have worked with more than half of the top 10 global brewers. 

Oct 31st  - $1.4 million Project with a leading cereal manufacturer we have worked with previously as they looked to extend the success of previous projects. 

Nov 22nd & Nov 29th - $4M Multisite conversion for global snack food giant. This order was received and press released in two stages and comprised of a $2.5M & $1.5M announcement, again from a customer that is ramping up its rollout of our technologies across the group. 

Dec 12th - $330,000 follow-up RBT order for a leading textile manufacturer taking the total for this customer to approximately $1.3 million. 

Dec 14th - $500k GEM multisite project with another global brewer in what we hope to be the first step in a multisite full trap population conversion. 


Forward-Looking Statements   

This update contains forward-looking statements relating to, and amongst other things, based on management’s expectations, estimates, and projections, future growth potential, anticipated sales cycles for various types of projects, industry and economic forecasts, the anticipated effectiveness of the Company’s products and services, the timing of revenues to be received by the Company, the anticipated effects of COVID-19 on the business, backlog, and revenue, and the expectation that orders in backlog will become revenue.   
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.  Information as to economic and industry forecasts are based on third-party sources and are not independently verified by the Company.    

 Forward-looking statements are not guarantees of future performance and involve several risks, uncertainties, and assumptions. Orders received in a fiscal year may not become revenue for the Company within such fiscal year.  Many factors, some of which are outside of the Company’s control, could cause events and results to differ materially from those stated. Fulfillment of orders, installation of products, and activation of products could all be delayed for several 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      
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.  

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