Thermal Energy International Announces Strong Second Quarter Results

 

Second-quarter financial highlights:

• $5.0 million in revenue, a 77% increase compared to Q1
• $2.4 million gross profit, up 84% compared to Q1
• EBITDA of $788 thousand compared to $15 thousand in Q1
• Net profit of $580 thousand compared to a net loss of $218 thousand in Q1
• Quarter-end cash balances of $4.9 million and working capital of $4.2 million
• Order intake continues to track significantly ahead of last year – up 103% compared to Q2 last year and up 66% on a year-to-date basis

 
“These latest financial results from our second quarter are extremely encouraging, with a rebound in revenue and profitability and continued strength in order intake,” said William Crossland, CEO of Thermal Energy.

“Like many companies, COVID-19 has had an impact on our operations and revenues, most notably in the fourth quarter of last year and the first quarter of this year, when many existing projects were temporarily placed on hold and there was a reduction in the level of new opportunities that could be progressed without access to customer sites.

“In the second quarter, with the easing of travel restrictions, and sites reopening with social distancing and other mitigation measures in place, we were able to resume delivery of many of the projects that had been put on hold, as well as commence delivery of some of the recently received new orders. This was particularly the case for turnkey Heat Recovery projects, which require onsite engineering, design, and installation.

“As organizations focus on energy efficiency as a way of not only reducing carbon emissions but of decreasing fuel use, minimizing costs, and maintaining production levels, we are well-positioned to continue to provide our customers with the solutions and support they need to grow their businesses.

“Quarter two produced stand out results, with revenue significantly ahead of the previous two quarters and with profitability better than the last two quarters and the same quarter last year. This was due, in part, to the build-up of demand during a time where we had limited access to customer sites. The growth in order intake and revenue demonstrates a growing global commitment to a ‘build back better’ approach as well as our ability as a company to meet surges in demand, as we all continue to navigate these challenging times.

“We continue to have a very strong financial position with positive cash and working capital balances of $4.9 million and working capital of $4.2 million respectively. Furthermore, the measures which we were able to introduce during the initial COVID-19 related slowdown have improved our connectivity, communication capabilities, and remote collaboration, making it possible to deliver these new orders as effectively as possible, and ensuring the Company is ready to respond to marketplace changes.”

Summary Financial Results

For further details, visit Thermal Energy’s Second Quarter Fiscal 2021 Financial Summary presentation here: www.thermalenergy.com/presentations.html

Second Quarter and Fiscal 2021 Financial Review

Quarterly revenue of $5.02 million, delivered a gross profit of $2.43 million. This resulted in a gross margin of 48.4%, compared to 37.2% for the same quarter prior year. Operating Expenses incurred for the quarter-end amounted to $1.8 million. This decrease was mainly due to the cost savings achieved through cost control measures and the government wage subsidies of $212,109 recognized as a reduction to operating expenses in Q2 2021.

A net profit of $580 thousand was incurred for the quarter ended November 30, 2020, compared to a net profit of $385 thousand for the quarter ended November 30, 2019.
Reported quarterly EBITDA is $788 thousand this quarter, compared to $709 thousand for the same quarter last year.

Working capital increased by $1.3 million to $4.2 million at November 30, 2020, compared to $2.9 million at May 31, 2020. The Company’s net cash position was $4.9 million as of November 30, 2020, compared to $4.8 million at May 31, 2020. The increase in working capital is attributed to the receipt of a $1 million COVID-19 related working capital loan during the first quarter, with a current interest rate of 3.45%, and the Company’s positive operating cash flow.

Business Outlook and Order Summary

While the Company ended the quarter with an order backlog of $5.5 million, compared to $8.2 million for the same quarter in previous year, order intake continues to be strong. Orders received during the second quarter this year are more than double the orders received during the same time last year and during the first six months of this fiscal year we received 66% more orders than the same period last year.

While COVID-19 cases have increased again in all our key markets, this time our customers seem more determined to ensure business and projects continue as usual.

The Company defines its order backlog as the value of projects for which purchase orders have been received, but that have not yet been fully reflected as revenue in the Company’s published quarterly financial statements.

A selection of recent orders includes:

• $770,000 heat recovery equipment order for a North American Hospital, announced January 19, 2021
• $1,530,000 heat recovery equipment and extension order for a large publicly funded European healthcare provider as announced October 27, 2020
• $115,689 GEM™ steam traps order for a gas processing plant in United Arab Emirates to help the site continue to reduce its maintenance requirement
• $307,298​ heat recovery equipment order for a Canadian Hospital
• $146,555​ heat recovery equipment order for a family-owned American lumber company
• $112,981 order for GEM™ steam traps from a international Tires producer
• $129,531 site survey and failed steam trap GEM™ replacement​ project for a​ multinational pharmaceutical and biopharmaceutical company
• $101,000 GEM™ steam trap order from leading supplier of yarns
• $840,000 heat recovery equipment order from a multinational food products corporation, announced October 6, 2020
• $236,000 GEM™ steam trap order from a major fruit products processor
• $242,000 order for low maintenance GEM™ steam traps from a major grain and cereal processor
• $118,000 follow up GEM™ steam trap order from a globally recognized Tire Manufacturer
• $920,000 “Bolt-on” CHP FLU-ACE® heat recovery solution for a leading Food Group, announced August 18, 2020
• $262,000 GEM™ steam trap order from a multi-national pharmaceutical company

Full financial results including Management’s Discussion and Analysis and accompanying notes to the financial results, are available on www.SEDAR.com and www.thermalenergy.com/financial-reports.html.