CEO William Crossland reflects on the past fiscal year ahead of the Q4 and year-end results.
Building back to pre-pandemic growth
This year has been simultaneously challenging and transformational for Thermal Energy. Like many companies, COVID-19 has had an impact on our operations and revenues. We pride ourselves on delivering site-specific, best-in-class solutions for our customers, but this often relies on detailed and collaborative site visits.
Many existing projects were temporarily placed on hold, and only a limited number of new opportunities could be progressed without access to customer sites. This was especially the case for March – August 2020 period (Q4 2020 and Q1 2021). But as travel restrictions began to ease, and some sites reopened with social distancing and other mitigation measures in place, we were able to resume delivery of many of the projects that had been put on hold, as well as delivering some of the new orders received.
Our large turnkey projects have been particularly impacted during this time as they require a high level of onsite engineering, design, and installation. But despite the challenges of the pandemic, we reaped the benefits of our diverse product portfolio and strategic acquisitions by closing out the fiscal year with record order intake for both our higher margin HeatSponge and GEM solutions. These product categories are generally sold and shipped as a customized equipment package and therefore require less engineering analysis and site attendance than our turnkey projects.
Internally, the slowdown provided a unique opportunity for us to improve connectivity, communication capabilities, and remote collaboration, making our team more virtually accessible and streamlining processes. As a multinational company with corporate offices in three countries and employees spread across seven countries, these efficiency enhancements will continue to benefit the company going forward.
Given the large number of new employees, products and applications added over the last few years, we launched a company-wide training and knowledge-sharing program which forms part of an ongoing commitment to upskill our team. All these initiatives were designed to ensure the Company emerged from this period stronger and ready to respond to marketplace changes.
As the world continues to respond to the ongoing impact of the pandemic, there is a growing global interest in a “build back better” approach. Businesses are looking to energy efficiency as a way of reducing carbon emissions and fuel use, minimizing costs, and maintaining production levels. This, together with an ever-growing demand from both consumers and legislators to limit emissions and safeguard the environment has resulted in virtually every major country and company in the world aggressively increasing their carbon emission reduction targets as they drive toward net zero by 2050. With a growing range of carbon emission reduction solutions and capabilities, Thermal Energy is very well positioned to continue helping our customers achieve their carbon emission reduction goals for years to come.
A Growing Product Portfolio
Our top performing product categories (according to recent order intake figures) are as a result of acquisitions – GEM in 2008 and HeatSponge, as part of the BEI acquisition, in 2018. Order intake for GEM during fiscal 2021 was the highest in the Company’s history and more than 25% greater than each of the last two years. Meanwhile, order value for HeatSponge products was also a record, 28% ahead of last year and 47% greater than the year before.
BEI in particular has had a year of considerable growth.
Offering an extensive, market leading portfolio of emissions reduction technology and solutions, remains an objective of the company and acquisitions form a key part of that. This is most clearly seen in our recent acquisition of Sofame. The technology Sofame has developed over the last 30 years strongly aligns with our own proprietary products and growth plans. It provides us with an expanded portfolio of complementary energy efficiency and carbon emission reduction solutions, as well as a significant project installation base – with hundreds of individual Sofame units installed across our key markets of Canada, US and Europe.
With this latest purchase, we continue to bolster our strategic objective and further position Thermal Energy as an industry leader in industrial, commercial and institutional thermal energy efficiency and carbon emission reduction solutions.
Supporting and Leveraging Existing Customers to Drive Growth
Over the last 12 months it has become more important than ever to maintain contact with our project installation base and foster the relationships we have with our growing list of large multinational customers. As a company, we place a great deal of emphasis on nurturing and owning direct working relationships with our customers, which include some of the biggest names in food & beverage, pharmaceutical, pulp and paper and hospitals and healthcare.
Going forward, a pivotal part of our growth strategy will be to leverage these relationships further to develop and deliver replicable carbon emissions reduction projects for a customer’s multiple sites across the globe. We are already seeing the positive impact of this approach with the following orders announced just this past the year:
We have also announced numerous orders with hospitals, including:
It is a source of great pride that we have been able to support the healthcare sector at this time, helping sites meet their carbon emissions reduction targets and deliver significant financial savings, and we will continue to do so.
Uplift in Investor Relations Activity
As we continue to build the company’s revenue and growth figures back up to pre-pandemic levels, we also want to increase our focus on investor relations, so we are scaling up our efforts on this front.
We understand and appreciate the importance of keeping both current and prospective shareholders updated on the company’s progress and successes and are poised to better communicate with the market. Already we have launched a newsletter for shareholders and, despite many in person conferences being cancelled due to COVID, I have attended several investor and industry virtual events and panel discussions. Here I have been explaining the business case for reducing emissions and presenting the unique investment potential of Thermal Energy International as a company with a proven, profitable, sustainable growth story and a compelling valuation.
We plan to increase this level of activity with several more virtual events scheduled for the coming months. Several of these will focus on the U.S. market as we recently began trading on the OTCQB Market. Being traded on the OTCQB is an important part of our strategy to continue to pursue expansion opportunities in the United States. It is timely and provides Thermal Energy with the opportunity for greater engagement with U.S. investors. It also allows U.S. investors to invest in our common stock more easily at a time when interest in accessible ESG investing and demand for energy efficient and sustainable solutions continue to grow.
Building on momentum
In September of last year, we were listed as one of Canada’s top growing Companies based on our FY 2020 results. Despite the challenging months that followed we remained focused on growing our market share in our key markets of North America and Europe, expanding our complementary product offering to provide a more comprehensive solution and supporting our existing customers in reducing their carbon emissions through efficiency.
The global market for energy efficiency and carbon emission reduction continues to improve. Governments and companies the world over continue to pursue and implement measures to reduce carbon emissions as they look to achieve their publicly announced carbon emission reduction targets. Energy efficiency can help them achieve their targets faster and more cost effectively than all other initiatives. Thermal Energy International is very well positioned to assist our customers achieve their carbon emission reduction goals and drive the economy to net zero by 2050.
The current environment represents a unique opportunity to build upon the momentum of an improving market. Looking forward, this year we plan to proactively increase our investment in growth, including investing in efficiency and architecture for growth as well as adding a number of new staff positions, thereby enhancing and expanding our already proven multifaceted growth strategy. I am excited about the future and believe we have the right strategy in place to capitalize on the current market conditions and continue delivering proven profitable sustainable growth.
I would like to take this opportunity to thank our shareholders for their loyalty and support and as I look ahead, I am confident in our team, strategy, and offering and I’m very proud of what Thermal Energy has accomplished – especially given the extremely challenging and unprecedented time we are currently in. I look forward to the next chapter in our growth story.
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About Thermal Energy International Inc.
Thermal Energy International Inc., ranked as one of Canada’s Top Growing Companies in 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, we 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, Italy, and China. TEI’s common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol TMG and the OTCQB® Venture Market (“OTCQB”) in the United States operated by the OTC Markets Group Inc., under the symbol TMGEF.
For more information, visit our website at www.thermalenergy.com and follow us on Twitter at twitter.com/GoThermalEnergy.
This letter release contains forward-looking statements relating but not limited to management’s expectations, estimates and projections, anticipated benefits to Thermal Energy’s customers, Thermal Energy’s ability to help customers meet emissions goals and achieve savings, anticipated growth in demand, growth strategies and the anticipated benefits of Thermal Energy’s focus on training, business improvement and investor relations. 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 Thermal Energy’s control, could cause events and results to differ materially from those stated. Thermal Energy 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 Thermal Energy’s business as described in Thermal Energy’s most recent Management’s Discussion and Analysis available at www.SEDAR.com.