Strong Growth and Financial Performance
In the first nine months of fiscal 2024, Thermal Energy achieved convincing growth across several key financial metrics. In particular, our revenue and profitability have seen substantial increases (revenue and EBITDA were up 42% and 181% respectively for the first nine months), underscoring the strength of our business model and execution of our strategy.
Although our year-end financial results will not be formally reported until September, last week we announced that we received orders totalling $29.7 million in fiscal 2024, representing a new record for order intake in a fiscal year and surpassing the previous all-time high we achieved in fiscal 2023. The 151% growth in order intake over the past two years reflects the underlying demand for our innovative energy efficiency and carbon emission reduction solutions and is a testament to the trust our large multinational customers place in us.
Importantly, thanks in part to our strong order intake, we are starting Fiscal 2025 with the highest order backlog we have ever had at the beginning of a fiscal year. I will discuss the significance of this a little later in the outlook section below.
Some of the previously announced key orders that led to our record order intake for the year include:
- A $1.9 million turn-key heat recovery project for a global materials company;
- The first order for our new Hybrid Flu-Ace that combines a Flu-Ace heat recovery unit and Perco-Ace direct fired water heater delivering instant hot water with a combustion efficiency of up to 99%;
- A $3.7 million heat recovery order from one of Europe's largest food and drink producers;
- A $2.6 million heat recovery order from a multinational dairy and nutrition company;
- A $1.9 million order, representing repeat business, from a global nutrition company (our sixth turn-key project with this customer); and,
- A $4 million turn-Key heat recovery order from a leading pharmaceutical company under a new Global Master Services Agreement
And more recently we have received:
- $1 million in orders for two HeatSponges and one Flu-Ace at two different sites, plus a Project Development Agreement for a larger turn-key project at a third site at one of the world’s largest frozen vegetable companies; and,
- A $720 thousand order from a Canadian hospital for one of our proprietary RBT® wastewater heat recovery systems. This is the third RBT we have sold to this customer.
Exceptional Stock Performance
The performance of our stock in fiscal 2024 has been equally impressive. Our strong financial and operational performance began to catch the attention of the investment community in September of 2023 after we announced a $4 million heat recovery order – which was our largest heat recovery order since before the pandemic and our first turn-key heat recovery order from a pharmaceutical company – and 14 days later announced fiscal 2023 fourth quarter results – which were among our best quarterly results ever, with record highs in both revenue and gross profit – marking a great finish to an outstanding fiscal 2023 year.
We then went on to report solidly profitable growth in each of the first three quarters of fiscal 2024. Along the way, in addition to announcing several impressive orders, we drew the attention of Beacon Securities, resulting in sell side research coverage, which was a first for Thermal Energy. All of this contributed to a 420% year-over-year increase in trading volume and a staggering 1,200% surge in value traded in fiscal 2024.
To help put things into perspective – and while the calendar year does not match our fiscal year – this past February, the TSX Venture Exchange published its TSX Venture 50 list, recognizing the top performers on the exchange for calendar 2023. Our 140% share price appreciation in calendar 2023 would have secured us top spot in the Clean Tech & Life Sciences category if it were not for one criterion: a minimum share price of $0.25 as of December 31, 2023. Unfortunately, we closed the day prior at $0.24, narrowly missing the mark by a cent.
Investing in Future Growth
We are committed to sustaining our momentum and have been investing in future growth by expanding our team, moving into a new and larger UK facility, and investing in technology. On the personnel side, at the end of the third quarter, we reported nine net new hires in the first nine months of fiscal 2024. This number has since increased to 12 net new hires compared to the same period last year. Two of these new hires are salespeople in France, which is a new market for us.
In response to the increasing demand for our products, in the third quarter of fiscal 2024 we moved our UK operations to a new, larger facility enabling us to more than double our production capacity.
Finally, on the technology front, we’ve been investing in our digital infrastructure, which we call our Architecture for Growth and includes:
- A robust global accounting program and ERP software to create agility in our accounting, manufacturing and fulfilment and to ensure we continue to expand our operations in an efficient and scalable manner as we continue to take on more technologies, projects, territories and routes to market.
- Our new Carbon Reduction and Efficiency Scoping Tool (“CREST”), which is a custom-developed mobile app that enables our sales and engineering teams to efficiently collect site data and identify thermal energy savings and carbon reduction opportunities during principal customer visits. We are in the final stages of development of CREST and as we have discussed before, we expect CREST to help us increase sales and engineering efficiency and help identify more heat recovery and cross selling opportunities for our direct sales team. This tool is especially valuable given the number of solutions we can offer our customers and ultimately affirms our assertion as technology leaders.
Strong Outlook for Fiscal 2025 and Beyond
Looking ahead, we believe our outlook for fiscal 2025 and beyond remains very positive. Our order backlog at the start of our new fiscal 2025 year was higher than it’s ever been at the start of a fiscal year. In fact, it’s approximately 40% higher than it was at the beginning of fiscal 2024. While not all of that backlog will necessarily be fully executed in fiscal 2025 (and we may receive additional orders that we do execute fully in fiscal 2025), our order backlog has traditionally been one of our best leading indicators for revenue on a forward 12-month basis. In addition, we believe our strong business development momentum and pipeline, coupled with our investments for future growth, position us well for continued success.
In closing, I want to thank our shareholders for their continued support and confidence in Thermal Energy International. Our achievements in fiscal 2024 would not have been possible without the dedication of our talented team and the support of our valued customers. We are excited about the future and I look forward to sharing more successes with you soon.
Sincerely,
William Crossland
President and Chief Executive Officer
Thermal Energy International
Forward-Looking Statements
This update 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 as to the outcomes of various initiatives undertaken by the Company. 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. 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.