q2 fy2020 review and update - thermal energy international...q2 fy2020 review and update january...

An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions

TSX-V: TMG | [email protected] | www.thermalenergy.com

Q2 FY2020 Review and Update

January 2020

Forward-looking statements

This presentation includes “forward-looking information”. For example, statements about the opportunities for repeat business; the possibility or expectation ofadditional orders; growth in existing markets; entry into new markets; order backlog; introduction of new products and services; establishment and growth ofnew distribution channels; growth opportunities and strategies; conversion of existing orders into revenues; are all forward looking information. Such forwardlooking information reflects Thermal Energy International’s (“TEI”) current expectations with respect to future events and are based on information currentlyavailable to management. Forward-looking information involves significant known and unknown risks, uncertainties and assumptions. For example, existing andnew customers may not place orders for any number of reasons; fulfilment of orders, installation of product and activation of product could all be delayed for anumber of reasons, some of which are outside of TEI’s control, which would result in anticipated revenues from such projects being delayed or in the most seriouscases eliminated; TEI may not be successful in identifying and developing new products and our new or existing products may not result in new orders or gainacceptance in new geographical or industrial markets; we may not be successful in establishing new distribution channels or such new channels may not besuccessful; our growth strategies may not be successful or result in the anticipated growth and orders received by TEI may not turn into revenue in the time frameanticipated, or at all, due to many factors, some of which are outside of TEI’s control, including but not limited to TEI’s ability to deliver products on time and inaccordance with specifications and the continuing financial viability of the customer. Readers are also referred to the risk factors outlined in our management’sdiscussion and analysis available at www.SEDAR.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying theforward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-lookinginformationcontainedin thispresentation.

Readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this presentation and TEI doesnot assume any obligation to update or revise it to reflect new events or circumstances, except as required by law.

The term “EBITDAS” as used in this presentation is not a recognized measure under IFRS, does not have a standardized meaning prescribed by IFRS and istherefore unlikely to be comparable to similar measures presented by other companies. This measure is provided as additional information to complement IFRSmeasures by providing further understanding of the Company’s results of operations from management’s perspective and should not be considered in isolationnor as a substitute for analysis of our financial information reported under IFRS. Please refer to our management’s discussion and analysis for the applicableperiod for a reconciliation of EBITDAS to Net income (loss), the closest IFRS measure.

www.thermalenergy.com | 2

RevenueSecond quarter


• Highest quarterly revenue in the Company’s history, up $2.6 million or 51% from last year

$1.7$2.5

$3.1$3.7

$5.2

$7.8

0123456789

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 19

($ millions)

Gross profitSecond quarter


• Gross profit increased by 59% compared to Q2 2019

$0.9

$1.4$1.6 $1.6

$1.8

$2.9

0

0.5

1

1.5

2

2.5

3

3.5

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

($ millions)

52% 57% 53% 42% 35% 37%

Gross margin percentages Certain figures from prior periods have been adjusted to conform to the current period presentation.

Operating expenses (excluding R&D)Second quarter


• Operating expenses increased by 25% compared to Q2 2019, primarily due to:

• $198k increased loss on foreign exchange • $148k as a one time loss due to the Company’s

only lessee customer being granted protection under the Companies’ Creditors Arrangement Act

• Despite these increases operating expenses as a percent of revenue dropped to 31%

$1.4 $1.4 $1.4 $1.4

$2.0

$2.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

($ millions)

81% 54% 44% 39% 38% 31%

Percentage of revenue Certain figures from prior periods have been adjusted to conform to the current period presentation.

EBITDASSecond quarter


• EBITDAS increased $777 thousand compared to Q2 2019

• Highest second quarter EBITDA in the Company’s history

-$487

$84

$285$109

-$68

$709

-600

-400

-200

0

200

400

600

800

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

($ thousands)

Net income (post tax)Second quarter


• Net income increased $497 thousand compared to Q2 2019

-$491

$26

$175$71

-$112

$385

-600-500-400-300-200-100

0100200300400500

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

($ thousands)

Q2 financial summary

• Highest quarterly revenue in Company’s history, up $2.6 million or 51% from last year

• Highest second quarter EBITDAS in Company’s history, up $777k compared to Q2 2019

• Gross profit increased by 59% compared to Q2 2019• Operating expenses decreased to 31% of revenue

compared to 38% Q2 2019• Record Q2 net income of $385k


Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

Q2 REVENUE

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

Q2 EBITDAS

First Half UpdateYear-to-date 2020


First half revenue


• Highest 1H revenue in Company’s history, up $820k or 7% from last year

• But 1H last year included $6.6 million in revenue from Resolute, excluding Resolute, 1H 20 revenue is up $7.4 million or 139%

$2.8

$5.1 $5.2$6.8

$12.0$12.8

0

2

4

6

8

10

12

14

YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 YTD 20

($ millions)

June 1 – November 30, 2015 - 2020

First half gross profit (adjusted)


• Gross profit increased by 35% compared to six months FY2019

$1.4

$2.3$2.9 $2.8

$3.8

$5.1

0

1

2

3

4

5

6


($ millions)

June 1 – November 30, 2015 - 2020

51% 46% 55% 41% 32% 40%

Gross margin percentages Certain figures from prior periods have been adjusted to conform to the current period presentation.

First half operating expenses (excluding R&D)June 1 – November 30, 2015 - 2020


• Operating expenses increased by $290k or 7.3%

• Despite the increases, the Operating Expenses as a percent of revenue remained unchanged

$2.7 $2.7 $2.6$2.9

$4.0 $4.3

00.5

11.5

22.5

33.5

44.5


($ millions)

95% 53% 50% 42% 33% 33%

Percentage of revenue

First half EBITDAS


• 1H EBITDAS is $1.2 million compared to ($119k) last year

• Highest EBITDAS in the Company’s history exceeding the even the annual EBITDAS record of $750k

-$1,145

-$317

$289

-$78 -$119

$1,181

-1500

-1000

-500

0

500

1000

1500


($ thousands)

June 1 – November 30, 2015 - 2020

First half net income


• 1H net income is $626k compared to a loss of $162k last year

• Highest 1H net income in the Company’s history exceeding even the Company’s annual net income record of $619k

-$1,160

-$427

$95

-$110 -$162

$626

-1400-1200-1000

-800-600-400-200

0200400600800


($ thousands)

June 1 – November 30, 2015 - 2020

Second quarter end cash position


$1.0 $1.2 $1.5 $1.8$2.2

$5.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

• Steady year over year increases

• Cash position up $2.8 million or 124% since Q2 2019

($ millions)

November 30, 2015 - 2020

Second quarter end working capitalNovember 30, 2015 - 2020


$1.5

$0.2

$1.3 $1.4

$2.1$2.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

• Continued growth in working capital

• Up $379 thousand since Q2 2019

($ millions)

Order BookConfirmed projects, revenue yet to be recognized


Order bookOrder backlog reported with Q2 results


$2.3

$6.5 $6.5$5.3 $4.9

$8.2

0123456789

Q2 15 Q2 16 Q2 17 Q2 18 Q2 19 Q2 20

• Order backlog at the end of the quarter was $8.2 million, up $3.3 million or 67% higher than the same time last year

($ millions)

YTD financial summary

• Highest 1H revenue in company’s history, up $820k or 7% from last year

• 1H last year included $6.6 million in revenue from Resolute, excluding Resolute, 1H 20 revenue is up $7.4 million or 139%

• 1H 20 also has the highest profit (both Net income and EBITDAS) in the company’s history

• Order backlog at the end of the quarter was $8.2 million, up $3.3 million or 67% higher than the same time last year

• Exceptionally strong and growing cash and working capital• Evidence that our strategy is working • Revenue growth in Germany and Poland• Growth in the number of HR projects especially in the EU • Effective integration of the BEI products in some of our projects



YTD REVENUE


YTD EBITDAS

$482K GEM steam trap order from a top 5 multinational tire manufacturing company

$738K FLU-ACE® heat recovery system order from leading European meat processingcompany

$1.4M order to supply a heat recovery system to a multinational specialty nutrition corporation

$650K high-efficiency heat recovery system order from a leading European brewer

Recent orders

Customers include leading global companies across many sectors



Date Order Value CustomerNov 2019 $482,000 Leading Tire Manufacturing company

Oct 2019 $738,000 Leading European meat processing company

Aug 2019 $1,400,000 Multinational speciality nutrition corporation

Aug 2019 $650,000 Leading European brewer

May 2019 $1,500,000 Leading snack food producer

Apr 2019 $850,000 Top 10 global tissue producer

Mar 2019 $2,300,000 Leading animal nutrition company

Mar 2019 $1,800,000 Major milk processing company

Jan 2019 $2,400,000 Leading food ingredients company

Recent order examples


• Named one of Canada’s Top Growing Companies, in the Globe and Mail, Report on Business’s inaugural ranking of Canadian companies

• Based on our three-year revenue growth of 156% from 2015 to 2018

One of Canada’s fastest growing companies

Growth Strategy & OutlookHighlights

1. Enormous, fast-growing market

2. Experienced and established North American and European sales platform

3. Proprietary products sold to leading companies in many sectors and geographies

4. Growing team, global presence and product offerings

5. Poised to continue strong track record of growth


An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions

TSX-V: TMG | [email protected] | www.thermalenergy.com

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q2 fy2020 review and update - thermal energy international...q2 fy2020 review and update january...

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