Spring Business Update

Thermal Energy has published a business update following its second-quarter results.

This business update draws on some of our core strategic initiatives and provides updates on notable activities, orders, the market and TEI’s competitive position. 


  • Continued positive market changes 
  • Custom equipment continues to thrive – order intake 43% greater than pre-covid levels
  • Record levels of paid turn-key Project Development Agreements (“PDAs”) - double the F2019 pre-covid levels 
  • Secured first PDA for an Energy as a Service (“EaaS”) project from one of our best and largest corporate customers 
  • Repeat order levels from our multinational customers remain high at 70-80%
  • Membership of global coalition of large thermal energy users that represent approximately $1.3 trillion in market capital
Continued Positive Market Fundamentals 

The positive impact of increasing energy prices and corporate carbon emission reduction targets are having on our market has been discussed before in our FY21 Year End Review, as well as our recent Q2 FY22 results. However recent events have put further significant current and long-term upward pressure on energy prices and volatility. 

In 2021, U.S. and EU natural gas prices increased almost 50% and 300% respectively and since the beginning of 2022 have continued to increase further. This means over the last 15 months U.S. natural gas prices have almost doubled, EU prices are up almost 400% and both are forecast to stay at these levels or higher throughout 2022 and beyond. 

U.S. Natural Gas Prices
Source: Trading Economics 
  EU Natural Gas Prices
Similarly, EU Carbon prices have also increased by approximately 150% since the beginning of 2021 and are currently trading in the range of €70 - €80 per tonne (CAD $95 - $110). 
EU Carbon Permits 
 Source: Trading Economics 

Energy and Carbon Price Rise Significantly, Positively Impacting Thermal Energy Projects

As energy and carbon prices soar, we enable organizations to quickly achieve permanent savings. A 100% increase in energy prices doubles the energy savings of our projects and cuts the payback period in half. Similarly, a carbon price of $100 per tonne has been calculated to reduce the payback period of our past projects by an average of 50%. With low and significantly improving financial paybacks, our projects provide a reliable way for our customers to quickly and efficiently meet their 2030 carbon emission reduction goals and knock 10% to 30% off escalating and unsteady fuel costs. 

Whether organizations are fixing energy costs upfront at a high for years to come, or are planning to ride the unknown volatility, our projects are proven to deliver savings year on year, and as such we are seeing a record level of custom equipment orders and an all-time high of paid turn-key Project Development Agreements with our multinational customer base.   

Custom Equipment Continues to Thrive – Order intake 43% greater than pre-Covid levels

After jumping almost 30% to a new record in F2021, custom equipment orders have continued at a record pace. In the Last Twelve Months (LTM) ended February 28, 2022, custom equipment order intake was another 6% ahead of the F2021 record level. This means for the LTM period custom equipment orders are 36% greater than F2020 and 43% higher the pre-Covid LTM ending February 29, 2020.

We benefit from a diverse product portfolio, and we sell our energy efficiency and carbon reduction solutions as either customized pieces of equipment or as fully installed turn-key projects. Custom equipment sales, which require significantly less on-site engineering, were not only less affected by travel disruptions during COVID but have continued to thrive throughout the pandemic period, indicating continued and growing demand from our customers for energy and carbon emissions reduction solutions.

“These higher-margin custom equipment orders, primarily HeatSponge and GEM solutions, delivered record custom equipment revenue in FY21 and are continuing to go from strength to strength in FY22” said CEO William Crossland.

Record Levels of Turn-key Solutions Project Development Agreements (“PDAs”)

The development of turn-key projects for customers also continues at a record pace. In the Last Twelve Months (LTM) ended February 28, 2022, Thermal Energy has received 10 new PDA orders. This is up 25% from F2021 and double the F2019 pre-pandemic level.

“Our large turn-key projects were particularly impacted during COVID as they require an extensive level of travel and onsite engineering, design, and installation. Some of our turn-key projects are preceded, on average by about a year, by a paid turn-key Project Development Agreement (“PDA”) with the customer, as a milestone step in the sale of the final project” explains CEO William Crossland.

“This record high volume of paid turn-key Project Development Agreements now in progress is a very positive indicator of future turn-key business and of our customers’ desire to immediately reduce their exposure to volatile and increasing natural gas prices” said CEO William Crossland.

Energy as a Service (EaaS)

We are also pleased to report that in early March, we received our first PDA for an EaaS project from one of our best and largest corporate customers.

At Thermal Energy, we have often offered our customers the option of purchasing turn-key projects outright or alternatively entering an EaaS agreement (a take-off arrangement). With an EaaS agreement we design, develop, and implement the project on behalf of the customer, and the customer then only pays for the energy the system delivers over time. EaaS agreements allow the customer to quickly and easily begin saving carbon and energy without a long technical review, analysis and approval process and without impacting their capital budgets.

For Thermal Energy, EaaS agreements deliver a stable, long-term recurring revenue and profit stream. Historically customers have always preferred to own the project themselves, but more recently we are seeing increasing interest in EaaS projects from customers as a quick and efficient strategy to meet increasingly aggressive carbon emission reduction targets. 

Continued Penetration into Current Strategic Corporate Accounts 

We maintain strong and direct relationships with our multinational corporate accounts. Consistently between 70-80% of our orders are repeat orders from our extensive list of multinational customers. 

Examples of recent orders from corporate accounts in the food, beverage and nutrition sectors are detailed below.

A leading multinational Food and Beverage manufacturer has repeatedly trusted Thermal Energy to help achieve their global targets to reduce greenhouse gas emissions across their value chain by 40%. In the last 5 years, we have delivered over $14M in turn-key projects and GEM™ orders, and just this month received two further orders for this group totalling almost $700K CAD. 

In September 2021, we announced the receipt of an order for the third turn-key heat recovery solution in two years for a prominent global nutrition company. With the relationship spanning Europe and North America, and solutions installed in 17 sites across the group so far, this financial year has not only seen the heat recovery order for over $900K in September but also the delivery of over $400k in GEM steam traps to this account.

We have many other projects under development with both customers, as well as many others from our strategic corporate account customer base.

Bolstering Competitive Position  

In the Q2 financial results, we noted that despite - and throughout - the COVID-19 pandemic we have continued our strategy to strengthen our competitive position with investments in our people, technology, and ongoing customer relationships – the pillars to our future success.  

Investments in People 

“Given the recent strong growth in the labour market, and especially professional, scientific, and technical services, during the second quarter we made some one-off investments in our specialist teams to ensure our compensation levels retain our capable and highly trained staff long-term. This was to ensure we can meet our customers’ growing demand for carbon emission reduction solutions. The deep understanding our employees develop of our customers’ operations has fostered strong customer loyalty and helped to achieve high customer retention rates and excellent knowledge transfer across the business over the COVID period. We need to make sure we retain and continue to grow this key intellectual property and competitive advantage” said CEO William Crossland.  

Growth through Acquisitions and Investments in Technology 

Also in this Fiscal Year, we have significantly expanded our technology portfolio with the acquisition of Sofame Technologies which also had a onetime impact on expenses in the second quarter. Established in 1984 and gaining worldwide recognition for its innovative proprietary products, this acquisition comes with a significant project installation base across Canada, U.S. and Europe, and forms a key part of our strategic plan to grow organically and through accretive acquisitions. 

“Adding  Sofame products to our product  suite  has been a strategic goal that we have been working towards for some time. As recent order intake figures show, our previous acquisition of Boilerroom Equipment Inc (BEI) in 2018 has greatly benefitted the Company. With this latest purchase, we continue this strategic objective and further position Thermal Energy as an industry leader in thermal energy efficiency and emission reduction solutions,” said CEO William Crossland. 

BEI has also recently pioneered new levels of heat recovery through their new and innovative design, previously unachievable in the standard packaged boiler market. Believed to be the only company offering this technology globally, this innovative design requires no moving parts, has no parasitic loss resulting from additional fans or controls, and a rugged yet lightweight casing that minimizes the structural support and installation cost.  

“At a time of escalating energy prices, this technology stands to reshape the global approach to heat recovery” said BEI president Vince Sands. 

We have also continued to advance the market’s trust in our unique GEM Venturi Steam Trap technology by continuing to participate in externally commissioned studies. Time and again these independent studies demonstrate the effectiveness of our technology as a viable and safe alternative to traditional steam trapping methods.  Most recently, our engineers authored a whitepaper for respected TÜV SÜD on Venturi steam traps. TÜV SÜD is a European trusted and universally recognised symbol of safety, security, and sustainability. 

Investments in Customer Relationships 

This year has also seen us join a global coalition of large thermal energy users that represent approximately $1.3 trillion in market capital. The Renewable Thermal Collaborative (RTC) links large industrial thermal energy users committed to ambitious climate and renewable energy goals, with providers of advanced renewable thermal solutions. With thermal energy representing approximately 90% of industrial energy use, many of the RTC’s members have expressed their concern that with their electricity related carbon emission reduction goals largely met, reducing thermal energy use and carbon represents a much more significant challenge. As a sponsor, we reinforce ourselves as market leaders and experts by hosting discussions on the challenges and barriers associated with thermal energy and carbon reductions and presenting proven and viable technologies and solutions.  

“At a time when the market is saturated with new, often unproven ‘green’ technologies, the Renewable Thermal Collaborative (RTC), whitepaper and functional laboratory study are a powerful combination to reassert our dominance as experts in energy efficiency and carbon reduction solutions” said CEO William Crossland. 

Organizations can easily feel paralysed by the need to achieve large carbon and energy savings of targets in many years' time. Instead, and in part due to escalating and unsteady fuel costs, the time to act on proven available technology is clearly now, to not only capitalize on the near-term impact but continue that impact year-on-year. We have and will continue to promote our available technology that has been proven across our large multinational customer base and we remain extremely positive as the market continues to go from strength to strength. 

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 Thermal Energy’s products and services and the timing of revenues to be received by Thermal Energy. For example, information as to the anticipated benefits to be achieved by Thermal Energy’s customers from using Thermal Energy’s products, expected growth in demand for Thermal Energy’s products, anticipated growth in orders or continued order volume, anticipated timelines from order to revenue for various types of projects, the potential impact of Thermal Energy’s project development on the company’s future prospects, the impact of market trends in commodity prices will have on Thermal Energy’s business, the continued or recurring nature of revenues, the potential benefits from Thermal Energy’s investment in automation and digitalization and the market opportunities open to Thermal Energy and the expectation that those market opportunities will continue to grow and benefit the company 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 Thermal Energy’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 Thermal Energy’s control, which would result in anticipated revenues from such projects being delayed or in the most serious cases eliminated. Actions taken by Thermal Energy’s customers and factors inherent in the customer’s facilities but not anticipated by Thermal Energy 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 such products. Any customer’s willingness to purchase new or additional products from Thermal Energy and whether orders 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.  Readers are referred to the risk factors set out in Thermal Energy’s latest Management’s Discussion and Analysis available at for a description of the risks associated with Thermal Energy’s business.  Thermal Energy disclaims any obligation to publicly update or revise any such statements except as required by law. 

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