Thermal Energy's First Quarter Highlighted by Record Q1 Order Intake and Higher Order Backlog

Q1 2026 Highlights:

(Compared to Q1 2025)

• Order intake increased 323% to $11.9 million.
• Order backlogⁱ at quarter end increased 37% to $18.5 million, growing to $20.8 million by October 27, 2025.
• Revenue decreased 19% to $6.9 million but was 32% higher than Q1 2024 and 119% higher than Q1 2023.
• Remained profitable with Adjusted EBITDAⁱⁱ of $350 thousand and net income of $166 thousand.
• Repaid $130 thousand in long term debt (remaining balance of only $200 thousand at quarter end).

Overview

"Our order intake was the highest amount ever achieved in our fiscal first quarter period and drove our order backlog up 37% year-over-year," said William Crossland, Thermal Energy CEO. "The increased order activity was seen across the business, including turnkey heat recovery and custom equipment, and included orders from customers spanning several sectors. However, as we indicated last quarter, the majority of the revenue from the orders received in the first quarter is expected to be earned in the second half of the fiscal year, and so we are expecting overall revenues in fiscal 2026 to be more heavily weighted towards the back half of the year."

"While our revenue was down in the quarter, compared to the abnormally strong and record first quarter revenue we had a year ago, Q1 revenue this year is still 32% higher than Q1 2024 and 119% higher than Q1 2023, so the longer-term trend still remains very positive. And importantly, we remained profitable, continued to generate strong operating cashflow (before changes in working capital items), and repaid a further $130 thousand in bank debt. Since the end of fiscal 2022, we have repaid $3.7 million in acquisition and COVID-related debt, with the remaining balance scheduled to be fully repaid by January 2026. With our growing order backlog and strong balance sheet, we are well positioned for both the balance of the fiscal year and our future growth."

Summary Financial Results

Financial Review for the First Quarter Ended August 31, 2025

First quarter revenue decreased 19% year-over-year to $6.8 million mainly due to lower revenues from heat recovery projects, partially offset by higher revenues from equipment sales including GEM traps and economizers. Gross profit for the quarter decreased by 9.5% to $3.2 million while gross margin improved approximately 500 basis points, mainly due to lower revenues from heat recovery projects.

Operating expenses were $207 thousand lower than the same quarter a year earlier, mainly due to the favourable change in foreign exchange of $233 thousand. R&D expense increased by $45 thousand due to higher R&D activities conducted in the quarter.

The Company had Adjusted EBITDA of $350 thousand and net income of $166 thousand, compared to Adjusted EBITDA of $553 thousand and net income of $309 thousand in the first quarter a year earlier.

At the end of August 31, cash and working capital balances were approximately $4.3 million and $2.7 million, respectively.

Business Outlook and Order Summary

Orders received ("Order Intake") during the first quarter totalled $11.9 million, which was the highest order intake for any first quarter in the history of the Company, more than four times the order intake achieved in the first quarter a year ago and more than double the previous Q1 record. A list and description of recent order highlights is available on page 13 and 14 of the Management's Discussion and Analysis filed today.

The Company ended the quarter with an order backlog of $18.5 million, up 37% from a year earlier. The Company received $2.3 million in new orders subsequent to the quarter end, bringing the current order backlog to $20.8 million as of October 27, 2025.

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

Thermal Energy will host an earnings call and webcast today, October 28, at 8:30 am ET. A question-and-answer session will follow management's prepared remarks, at which time qualified equity analysts will be able to submit questions via the webcast.

The live webcast with slide presentation will be available at https://tinyurl.com/ybk2yynx. 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 October 15, 2025.

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

ENDS

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 Croslland
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 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.

ⁱⁱ Adjusted EBITDA represents earnings before interest, taxation, depreciation, amortization, and share-based compensation expense. See note below about non-IFRS measures.

ⁱⁱⁱ Adjusted EBITDA represents earnings before interest, taxation, depreciation, amortization, and share-based compensation expense.

^iv 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.