Press Release

Third Quarter Financial Results Ending February 28, 2022

Record Custom Equipment orders and revenue and record Turn-key Project development indicate strong, growing demand from customers.

OTTAWA, ONTARIO – April 29, 2022 – Thermal Energy International Inc. (“Thermal Energy” or the “Company”) (TSX-V: TMG, OTCQB: TMGEF), an innovative cleantech company and global provider of proprietary energy and carbon emissions reduction solutions to some of the world’s largest corporations, has announced its financial results for the third quarter ended February 28, 2022. All figures are in Canadian dollars.

Third quarter highlights:
    • Revenue: $3.5 million for the quarter and $11.4 million for the year-to-date period.
      • YTD Custom Equipment revenue is 12% ahead of last year and 23% more than the pre-pandemic levels the year before
      • YTD Turn-key Project revenue is 18% below last year and 67% below the pre-pandemic levels the year before
    • EBITDA[1]: $(647) thousand for the quarter
    • Net loss of $(894) thousand for the quarter
    • Cash and working capital balances is at $2.3 million and $1.5 million respectively
    • Order backlog[2]: $5.6 million
      • Custom Equipment backlog is $3.2 million, 78% ahead of this time last year and 207% more than the year before
      • Turn-key Project backlog is $2.3 million, 45% less than a year ago and unchanged from the year before
    • Custom Equipmentiii: YTD order intake is 11% ahead of last year, and 39% greater than the pre-Covid levels the year before.
    • Turn-key Project development: At record levels and double the pre-pandemic high achieved in fiscal 2019.


“These disappointing quarterly results reflect the continued ongoing disruptions caused by the global pandemic. Over the last two years, we have made conscious strategic decisions to keep investing in the capabilities and future growth of the Company. We did this because we believe, that emerging from the pandemic there will be an unprecedented market opportunity for growth, and we want to make sure we are in as strong a position as possible to capitalize on this opportunity. But clearly, the COVID-19 pandemic is presenting longer-lasting and much more nuanced impacts than anticipated. For much of the last two years, our customers and suppliers have endured reduced workforces, restricted travel and site access, and growing supply chain issues. Given this, many of our customers, often working with ‘skeleton staff’, have been focusing on continued operations rather than new projects, growth, or development. While our Custom Equipment revenue has continued to grow, these pandemic-related issues have resulted in delayed and protracted Turn-key Project development and delivery, and this is having a significant impact on our recent revenue and results. In addition, recent labour and material shortages and inflation are also having a negative impact on our costs and margins. While we have already begun implementing price increases to reflect this new reality, this will take some time to filter through” said Thermal Energy CEO, William Crossland.

“Nonetheless, despite the recent results, we believe the Company’s capabilities, and the market fundamentals, are aligning for an even more significant opportunity than originally anticipated. Given our customers’ increasing carbon emission targets and sky-rocketing energy costs, we are seeing unprecedented customer interest and engagement. Custom Equipment order intake and revenue, continue to set records and are already significantly higher than pre-pandemic levels. While Turn-key Project revenue has not yet caught up, we currently have 17 Turn-key Projects in paid development. While not all of these projects may come to fruition, this level of project development is more than double the Company’s pre-pandemic high. Consequently, we maintain confidence in the viability of our solutions to answer the market needs and remain encouraged by the current market opportunities. We believe that we can deliver the growing sales pipeline and capitalize on the current favourable market conditions.” said Thermal Energy CEO, William Crossland.

Custom Equipment vs. Turn-Key Projects

Thermal Energy sells its energy efficiency and carbon reduction solutions as either a customized piece of equipment or a fully installed turn-key project. Pre-pandemic, Turn-key Projects represented about two-thirds of revenue with Custom Equipment (primarily GEM and Heatsponge) one-third. But more recently, with strong growth in Custom Equipment, Custom Equipment revenue has exceeded Turn-key Projects.

While Custom Equipment projects must still be engineered and installed at the jobsite, these equipment-only sales are much less complex and much less expensive than our Turn-key Projects. Given the human resource and capital commitment required from the customer, not to mention the detailed engineering, regular site visits and ultimate turn-key installation, our Turn-key Project business tends to have a much longer development, sale, and revenue cycle. The fact that we have been experiencing significant growth in Custom Equipment demonstrates strong demand in post-pandemic markets for thermal energy efficiency solutions and as would be expected is happening first in lower cost and easier to manage Custom Equipment segment. As our large corporate clients begin to return to pre-pandemic business cycles we anticipate Turn-key Projects will rapidly follow.

Custom Equipment

Custom Equipment order intake and revenue continue to be at record levels, approximately 39% and 23% respectively ahead of pre-pandemic levels.

The performance of our Custom Equipment business is extremely positive despite some challenges. Global supply chains have witnessed notable disruption. We have experienced difficulties and extraordinary delays sourcing some key materials and parts which has led to the delay in shipping a significant number of Custom Equipment units. Our work in progress and order backlog over the last two quarters is the highest it has ever been and has therefore temporarily impacted revenue recognition for our Custom Equipment segment.

The supply chain disruption goes beyond raw materials, extending to labour shortages due to sickness and quarantining requirements as well as general employment levels. The ‘Great Resignation’ has sent shockwaves through the labour market affecting the supply chain. These problems are significant, and they are global. To protect and strengthen our supply chain, we are developing alternative and secondary suppliers in line with our quality systems, and fully utilising our U.S. based facility to increase bulk purchases and increased stock holdings to better respond to supply issues.
Despite these challenges, record order and revenue levels for Custom Equipment are consistently being achieved.

Turn-key Solutions

Turn-key Project development is at record levels.

In parallel to Custom Equipment, Thermal Energy also develops and delivers unique and innovative turn-key carbon emissions reduction and sustainable thermal energy solutions for its customers. These Turn-key Projects[3] are developed in partnership with the customer often with the implementation of a paid Project Development Agreement (“PDA’).

In the Last Twelve Months (LTM) ended February 28, 2022, Thermal Energy received 10 new PDA orders and currently has 17 Turn-key Projects in paid development with customers. Both of these figures are at least twice the Company’s pre-pandemic highs and easily the highest level of Turn-key Project development in its history. 

A paid PDA is the customer’s commitment to a project whereby, based on an initial estimate of project cost and savings, the customer agrees to front the cost of further project development engineering before a final decision is made to execute the project.
Turn-key Projects already in progress during the pandemic have taken longer to complete and for revenue to be realized, mainly due to travel and site access restrictions, and covid isolation and sickness of our customers’ staff.  Suppliers on these projects are often highly integrated into the project delivery and they have faced similar problems with staffing as well as with the manufacture and supply of essential equipment. In summary, regular holdups have created an inefficient staccato delivery and a ‘long tail’ on our Turn-key Project delivery that we did not anticipate after restrictions eased.

While the easing of COVID restrictions allowed for some normalcy, we did not envision that our large multinational clients and key suppliers would continue operating on skeleton staffing and prioritising essential operations due to the limited workforce, for as long as they did. Challenges accessing the whole project team at once, even when restrictions are eased, has meant a reduction in normal progression.  Our teams have faced challenges in progressing the development of projects in our pipeline. Throughout our development pipeline, momentum of communications with key people and the ability to gain the necessary site access have meant project development and closure have slowed whilst our teams wait for travel restrictions and isolation periods to end as they manage protracted sales cycles. Highly qualified pipeline projects with well recognised financial benefits have also in some cases been affected simply by a delay in natural budgetary cycles.

“The record PDA levels can be seen as a positive indication of future Turn-key Project order intake levels. Other areas of the Turn-key Project pipeline however have been impacted since the onset of the pandemic and this is reflected in the financial results. Although the disruptions are expected to continue in the short term, the reasons for disruptions are known, understood and are being managed, and we believe order intake will bounce back due to the continued viability of our solutions to quickly and dependably achieve customers carbon reduction targets and significantly impact their ability to manage volatile energy prices.”  said Thermal Energy CEO, William Crossland.
Positive Market Fundamentals

It’s clear that the disruption of covid has lasted longer than anyone expected and longer than simply the government-imposed lockdowns and restrictions. Although we cannot predict how long our customers and suppliers will have to manage these staffing and operations challenges, the requirement to reach net-zero and reduce carbon emissions persists and is influenced further by the extremely volatile and increasing energy prices.
As reported in the last quarter, North American and EU natural gas prices have significantly increased (between 100% and 500%) in the last 12 to 24 months. There has also been a rising demand for carbon allowances under the EU’s cap-and-trade system. EU Carbon Permits reached an all-time high of more than 90 EUR in February 2022, and continue to trade in the 80 – 90 EUR range, 100% to 300% higher than they were 12 to 24 months ago. Meanwhile, Canadian Carbon Taxes are now $50/t and are expected to reach $170/t by 2030.

As our customers seek to establish a ‘new normal’, they also reconsider and refocus their priorities. In the face of staffing crises, operational restrictions, increasing energy prices and emissions targets, any move to cut operational costs is more advantageous than it has ever been. Since Thermal Energy provide an immediate and easy route for multinational manufacturers to achieve the required savings, these factors only increase the economic attractiveness and short-term paybacks to our customers.

“The mounting pressure on our customers is multifaceted, to respond to consumer and Government pressures to reduce emissions, whilst achieving operational effectiveness amid energy cost increases and workforce disruptions. This refocusing of priorities benefits Thermal Energy since longer paybacks are being considered, allowing previously considered pipeline opportunities to be revisited,” said William Crossland.

With approximately 50% of industrial thermal energy lost on-site due to inefficiency, energy efficiency is the fastest, cheapest, and most significant way to reduce carbon emissions, and the market opportunity for Thermal Energy is significant and growing.

Summary Financial Results

Q3 Feb 2021

Third Quarter and Year-to-Date Financial Review

Quarterly revenue was $3.5 million, down 6.5% from last year. The decrease is due to the decrease of revenues from Turn-key heat recovery projects.  Gross profit for the quarter was $1.5 million which was decreased due to COVID-19 related quarantine requirements, labour shortages and raw material price increases.  This resulted in a gross margin of 42%, compared to 44% for the same quarter prior year. The company has already implemented a number of measures to mitigate these issues, including price increases. Operating expenses incurred for the third quarter amounted to $2.3 million which was increased mainly due to the reduction in covid related government wage subsidies of $247 thousand, acquisition costs of the technology from Sofame Technologies Inc. of $82 thousand and an increase in other operating expenses of $329 thousand because of lifting temporary COVID-19 related cost control measures, increase in labour cost, and investment in the growth of the European team. A net loss of $894 thousand was incurred for the third quarter and EBITDA was $(648) thousand.

For the nine months ended February 28, 2022, revenue was $11.5 million, down 1.2% from last year mainly due to the increased revenue from indirect contact heat recovery systems offset by the decrease of revenues from turn-key heat recovery solutions. Gross profit for the first nine months was $4.8 million decreased mainly due to COVID-19 related quarantine and isolation requirements, labour shortages and raw material price increases. This resulted in a gross margin of 42%, compared to 47% for the same period prior year. Operating expenses incurred for the first three quarters amounted to $6.3 million which was increased mainly due to a reduction in government wage subsidies of $680 thousand, an increase in acquisition cost of the technology from Sofame Technologies Inc. of $174 thousand and increases in other operating expenses of $1,065 thousand because of lifting temporary cost control measures, investment in the growth of European sales team, increased travel and business development costs, and increases to staff salary in order to catch up with the significantly increased annual inflation rate and to ensure we remain competitive and are able to effectively execute the projects in our pipeline and capitalize on the current market. These cost increases were offset by the increase in foreign exchange gains of $498 thousand compared to the same period prior year. A net loss of $1,689 thousand was incurred for the first three quarters, and EBITDA was $(962) thousand.

The Company’s cash position was $2.3 million as at February 28, 2022, compared to $4.2 million as at May 31, 2021. The decrease was due to cash used in operating activities of $802 thousand, investing activities of $350 thousand (primarily the acquisition of the Sofame assets) and financing activities of $811 thousand (repayment of long-term debt and lease obligations).

Working capital decreased by $2.3 million to $1.5 million on February 28, 2022, compared to $3.8 million on May 31, 2021. The decrease in working capital was mainly due to the decrease in cash and cash equivalents, the increase in trade payables and other liabilities, offset by the increase in inventory.

Order Intake and Order Backlog Summary

Orders received during this fiscal year-to-date are 39% lower than orders received during the same time last year. However, orders for Custom Equipment, primarily GEM and Heatsponge, are 11% ahead of the same time last year, and 39% greater than the pre-Covid levels the year before. The Company ended the quarter with a total order backlog of $5.6 million, down 9% from the $6.1 million at the same time last year, and with the Custom Equipment order backlog 78% higher than the same time last year.  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 financial statements.

Full financial results including Management’s Discussion and Analysis and accompanying notes to the financial results are available on and

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

[1] EBITDA represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense.

[2] 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.
iii Custom equipment refers to indirect contact heat recovery solutions (HEATSPONGE and SIDEKICK), and condensate return system solutions (GEMTM steam traps). Turn-key solution refers to direct contact heat recovery solutions (e.g., FLU-ACE®).

[3] Turn-key solutions refer to direct contact heat recovery solutions (e.g., FLU-ACE®).


For media enquiries contact:
Thermal Energy International Inc.
Canada: 613-723-6776
UK: +44 (0)117 917 2179

For investor enquiries:
Thermal Energy International Inc.

 Notes to editors

About Thermal Energy International Inc.

Thermal Energy International Inc., ranked as one of Canada’s Top Growing Companies in 2021, 2020 and 2019, is an established global supplier of proprietary, proven energy efficiency and emissions reduction solutions to the industrial and institutional sectors. We save our customers money and improve their bottom line by reducing their fuel use and cutting their carbon emissions. Our customers include many Fortune 500 and other leading multinational companies across a wide range of industry sectors.

Thermal Energy is a fully accredited professional engineering firm and by providing a unique mix of proprietary products together with process, energy, and environmental engineering expertise, Thermal Energy can deliver unique turnkey projects with significant financial and environmental benefits for our customers.

Thermal Energy's proprietary products include: GEM™ - Steam traps, FLU-ACE® - Direct contact condensing heat recovery, HEATSPONGE – Indirect contact condensing heat recovery systems, and DRY-REX™ - Low temperature biomass drying systems.

Thermal Energy has engineering offices in Ottawa, Canada, Pittsburgh, USA, as well as Bristol, UK, with sales offices in Canada, UK, USA, Germany, Poland, and Italy. TEI’s common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol TMG.

For more information, visit our website at and follow us on Twitter at
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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 anticipated effects of COVID-19 on the business, backlog and revenue, 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 that order intake will bounce back.. 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   
EBITDA and backlog are non-IFRS financial measures, do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similar measures presented by other companies. Please refer to the Company’s most recent Management’s Discussion and Analysis available at www.SEDAR .com 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.

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