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TMG.v/tmgef...Record revenue but profitability came light due to change in product mix and significant investments made to grow the business...

Thermal Energy Achieves Record Revenue in Second Quarter

Revenue for trailing four quarters also at record high

Ottawa, Ontario--(Newsfile Corp. - January 28, 2025) - Thermal Energy International Inc. (TSXV: TMG) (OTCQB: TMGEF) ("Thermal Energy" or the "Company"), a provider of innovative energy efficiency and carbon emission reduction solutions to major corporations around the world, today reported its financial results for the second quarter ended November 30, 2024. All figures are in Canadian dollars.

Q2 2025 Highlights:
(Compared to Q2 2024)

Revenue increased 22% to a record $8.7 million

EBITDAi of $0.3 million and net income of $28 thousand were lower due to product mix and increased expenses due to investments made in the future growth of the business

Cash position of $2.8 million was lower due to temporary fluctuations in working capital items

Working capital was $3.7 million at quarter end

Order intake was $7.3 million

Order backlog was $12.9 million as at November 30, 2024, and $17.9 million as at January 27, 2025

Overview

"Our turn-key heat recovery business drove record high revenue for both the quarter and the trailing twelve months ("TTM") ended November 30, 2024," said William Crossland, Thermal Energy CEO. "This was the second consecutive quarter that we reached a new all-time high for quarterly and TTM revenue. While we remained profitable, the change in product mix, together with the significant investments we have been making to grow the business, reduced our profitability."

"Over the last two years, we have invested heavily in the future growth of the business. These investments include a new, much larger UK production facility, 18 new staff, a new accounting and ERP system, and the development of our custom mobile project identification app ("CREST"), which we launched this quarter. These investments have added about $2.3 million to annual costs but, as expected, we have yet to see most of the corresponding benefits. Although our order intake for the second quarter was lower than a year ago, it marked a sharp increase compared to the first quarter, and we received a further $5.0 million in orders subsequent to quarter end, increasing our order backlog to $17.9 million as of January 27, 2025. Given the relative size of our typical heat recovery turn-key projects, order intake has always been lumpy but our pipeline and the value of projects in paid development with customers remains as strong as ever."

"Finally, we are proud of our continued ability to strengthen our balance sheet with cash flow from operations. Cash at quarter end was impacted by temporary changes in working capital items but cash flow from operating activities (excluding changes in working capital items) remained positive and over the last two years we have reduced debt by $1.8 million and increased working capital by $1.9 million from internally generated cash flow."

Financial Review for the Second Quarter Ended November 30, 2024

Second quarter revenue grew 22% year-over-year to a record $8.7 million mainly due to increased sales from turn-key heat recovery projects, partially offset by decreased sales from GEM traps. Gross profit for the quarter decreased by 18% to $2.9 million, mainly due to change in product mix.

Operating expenses were $139 thousand lower than the same quarter a year earlier, mainly due to an increase in foreign exchange gains. R&D expense increased by $107 thousand due to higher R&D activities conducted in the quarter.

The Company had EBITDA of $270 thousand and net income of $28 thousand, compared to $830 thousand and $486 thousand respectively in the second quarter a year earlier.

At the end of November, cash and working capital balances were approximately $2.8 million and $3.7 million, respectively.

Financial Review for the Six Months Ended November 30, 2024

For the six months ended November 30, 2024, revenue was $17.1 million, up about 40% year-over-year, with the higher revenues from Turn-Key Heat Recovery projects being partially offset by lower revenues from GEM traps. Gross profit increased 2% to $6.4 million compared to $6.3 million in the same period a year ago.

Operating expenses amounted to $5.7 million, up $0.5 million compared to same period a year ago. The variance included an additional $580 thousand related to the growth in headcount, increased travelling and business development costs, and inflation-related increases to regular operating costs and salaries. The increase was partially offset by the change in foreign exchange gains by $117 thousand.

R&D expense increased by $155 thousand compared to prior year due to a higher amount of R&D activities engaged.

The Company achieved EBITDA of $0.8 million and net income of $337 thousand for the six months ended November 30, 2024.

Business Outlook and Order Summary

Orders received ("Order Intake") during the second quarter totalled $7.3 million. The Company ended the quarter with an order backlog of $12.9 million, down 26% from the $17.5 million at the end of the same quarter in the prior year.

The Company also received $5.0 million in new orders subsequent to quarter end, bringing the current order backlog to $17.9 million as of January 27, 2025. A list and description of recent order highlights is available on page 16 and 17 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.
https://finance.yahoo.com/news/thermal-energy-achieves-record-revenue-120100161.html