Thermal Energy Reports Record Revenue and Profitability in Fiscal 2026

Highlights:

• Revenue increased 12.7% to a record $33.6 million for the year, including $7.1 million in the fourth quarter.
• Adjusted EBITDA[i] increased 83.5% to $1.9 million for the year, including $247 thousand in the quarter.
• Net income grew 749.4% to a record $1.3 million for the year, including $221 thousand in the quarter.
• Order intake increased 37.6% to a record $30.0 million for the year, including $3.5 million in the quarter.
• Order backlog[ii] was $11.8 million as at May 31, 2026, growing to $18.9 million by September 21, 2026.

Overview

“We are proud of our achievements in fiscal 2026, which included new fiscal year highs for order intake, revenue, gross profit, and net income,” said William Crossland, Thermal Energy CEO. “The strong performance for the year was driven by record turnkey projects revenue and strong growth in GEM sales. Additionally, we repaid $328 thousand in bank debt, bringing our balance close to zero by year end, and we repurchased 3.6 million shares, returning approximately $500 thousand to shareholders.”

“Looking at our results for the fourth quarter, our revenue was up 3.9% on higher GEM sales. While our gross margins were down compared to the very strong margins we had in Q4 of last year, they were higher than in any other quarter of fiscal 2026 and up significantly from the second and third quarters. If it were not for a one-time employer adjustment of $149 thousand in the quarter, our Adjusted EBITDA would have been essentially flat to Q4 of last year and our full year Adjusted EBITDA would have been our highest ever.”

“The repeat business we announced subsequent to year end highlights that successful projects often lead to broader customer adoption across sites, regions, and technologies. As we continue to expand relationships with large multinational customers, we are also executing on initiatives that make our solutions easier to deploy, more scalable, and increasingly attractive to companies seeking economically driven decarbonisation opportunities. We believe this combination positions us well for continued growth.”

Summary Financial Results

Financial Review for the Fourth Quarter Ended May 31, 2026

Fourth quarter revenue increased 3.9% to $7.1 million primarily driven by higher GEM revenue compared to the same quarter a year earlier. Gross profit decreased by 6.1% to $3.5 million, while gross margin decreased to 48.7% from 53.9%, due to lower margins on GEM and heat recovery projects, which were partly offset by higher margins on HeatSponge orders.

Operating expenses were $17 thousand higher but decreased as a percentage of revenue to 46.7% from 48.2%. The Company recognized a group incentive in the amount of $293 thousand and a one-time employer obligation adjustment of $149 thousand, while no such expenses were recognized in the fourth quarter of the prior year. The increase in operating expense from these two adjustments were largely offset by a $386 thousand increase in foreign exchange gains.

The Company had Adjusted EBITDA of $247 thousand and a net income of $221 thousand, compared to Adjusted EBITDA of $397 thousand and net income of $224 thousand in the fourth quarter a year earlier.

Financial Review for the Fiscal Year Ended May 31, 2026

For the year ended May 31, 2026, revenue increased 12.7% to a record $33.6 million stemming from increased order intake for both heat recovery projects and GEM equipment sales. Gross profit increased by $1.8 million or 14.6% to $14.1 million. Gross margin improved to 42.2% compared with 41.4% a year earlier. The increase in gross margin was mainly due change in product mix and improved margins on heat recovery projects.

Operating expenses increased $963 thousand to $12.5 million from $11.5 million but decreased as a percentage of revenue to 37.2% from 38.7%. Contributing to the absolute dollar increase was a $493 thousand group incentive recognition (there was no incentive recognized in the prior year), a one-time employer obligation expense of $149 thousand, a one-time restoration cost of $114,000 for a leased space, and inflationary increases on general operating expenses and salaries. These amounts were partially offset by a $193 thousand increase in foreign exchange gains compared to the previous year.

Adjusted EBITDA increased to $1.9 million from $1.1 million while net income increased to $1.3 million from $158 thousand a year earlier.

Business Outlook and Order Summary

Orders received (“Order Intake”) during the fourth quarter totalled $3.5 million. The Company ended the year with an order backlog of $11.8 million, down 7.9% from $12.9 million a year earlier.

The Company received $7.1 million in new orders subsequent to the year end, bringing the current order backlog to $18.9 million as of September 21, 2026. A list and description of recent order highlights is available on page 14 to 16 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, September 22, at 8:30 am ET. A question-and-answer session will follow management’s prepared remarks, at which time qualified equity analysts and institutional investors will be able to submit questions via the webcast.

The live webcast will be available at https://tinyurl.com/TMG2026Q4. 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, refer to the Company’s press release from September 17, 2026.

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

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 the impact of investments that the Company has made on the Company’s ability to scale. 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. Volatility with respect to tariffs and trade regulation may continue and may impact the Company in ways not currently anticipated. 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 and Adjusted EBITDA

Management believes that EBITDA (earnings before interest, taxation, depreciation and amortization) and Adjusted EBITDA (EBITDA plus share-based compensation expense) are useful performance measures. The Adjusted EBITDA approximates cash generated from operations, before tax, capital expenditures and changes in working capital. Adjusted EBITDA also assists comparison among companies as it eliminates the differences in earnings due to how a company is financed. EBITDA and Adjusted EBITDA do 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 or Adjusted EBITDA.

A reconciliation of net income to EBITDA and Adjusted EBITDA is shown below.

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 Adjusted EBITDA represents earnings before interest, taxation, depreciation, amortization, 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.