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Thermal Energy Q3 FY20 Review and Update
1. An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions
TSX-V: TMG | enq@thermalenergy.com | www.thermalenergy.com
Q3 FY2020 Review and Update
Last-twelve-months for the third quarter ending February 29, 2020
2. Forward-looking statements
This presentation includes āforward-looking informationā. For example, statements about the opportunities for repeat business; the possibility or expectation of
additional orders; growth in existing markets; entry into new markets; order backlog; introduction of new products and services; establishment and growth of
new distribution channels; growth opportunities and strategies; conversion of existing orders into revenues; are all forward looking information. Such forward
looking information reflects Thermal Energy Internationalās (āTEIā) current expectations with respect to future events and are based on information currently
available to management. Forward-looking information involves significant known and unknown risks, uncertainties and assumptions. For example, existing and
new 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 a
number of reasons, some of which are outside of TEIās control, which would result in anticipated revenues from such projects being delayed or in the most serious
cases 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 gain
acceptance in new geographical or industrial markets; we may not be successful in establishing new distribution channels or such new channels may not be
successful; 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 frame
anticipated, or at all, due to many factors, some of which are outside of TEIās control, including but not limited to TEIās ability to deliver products on time and in
accordance with specifications and the continuing financial viability of the customer. Readers are also referred to the risk factors outlined in our managementās
discussion and analysis available at www.SEDAR.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the
forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking
informationcontainedinthispresentation.
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 does
not assume any obligation to update or revise it to reflect new events or circumstances,except as required by law.
The term āEBITDASā as used in this presentation is not a recognized measure under IFRS, does not have a standardized meaning prescribed by IFRS and is
therefore unlikely to be comparable to similar measures presented by other companies. This measure is provided as additional information to complement IFRS
measures by providing further understanding of the Companyās results of operations from managementās perspective and should not be considered in isolation
nor as a substitute for analysis of our financial information reported under IFRS. Please refer to our managementās discussion and analysis for the applicable
period for a reconciliation of EBITDASto Net income (loss), the closest IFRS measure.
www.thermalenergy.com | 2
3. Revenue
www.thermalenergy.com | 3
$6.8
$12.4 $13.2
$17.4
$21.1
$24.6
0
5
10
15
20
25
30
FY 15 FY 16 FY 17 FY 18 FY 19 LTM
ā¢ Q3 2020 year-to-date revenue is up $3.5
million or 23% compared to Q3 2019 year-
to-date
ā¢ Last-twelve-months revenue up $3.5
million or 17% compared to the previous
fiscal year ending May 2019
ā¢ Last-twelve-months revenue of $24.6
million is the highest ever reported
($ millions)
Annual and last twelve months for the third quarter ending February 29, 2020
4. Gross profit
Annual and last twelve months for the third quarter ending February 29, 2020
www.thermalenergy.com | 4
ā¢ Q3 2020 year-to-date gross profit increased
$2.6 million or 53% compared to Q3 2019
year-to-date
ā¢ Last-twelve-months gross profit up $2.6
million 33% compared to the previous fiscal
year ending May 2019
ā¢ LTM gross margin increased to 40%
compared to 33% for FY2019
$3.1
$5.8 $6.3
$6.9
$8.0
$10.6
0
2
4
6
8
10
12
FY 15 FY 16 FY 17 FY 18 FY 19 LTM
($ millions)
46% 47% 48% 40% 38% 43%
Gross margin
5. $5.4 $5.4 $5.6
$6.3
$8.2 $8.5
0
1
2
3
4
5
6
7
8
9
FY 15 FY 16 FY 17 FY 18 FY 19 LTM
Operating expenses
www.thermalenergy.com | 5
ā¢ Last-twelve-months operating expenses are
up 4% compared to the previous fiscal year
ending May 2019
ā¢ As a percent of revenue, last-twelve-months
operating expenses decreased to 35%
compared to 39% for the previous fiscal year
ending May 2019
($ millions)
Annual and last twelve months for the third quarter ending February 29, 2020
79% 44% 43% 36% 39% 35%
Percentage of revenue
6. EBITDA
www.thermalenergy.com | 6
($ thousands)
ā¢ Excluding the $1.3 million in strategic
growth-oriented investments made during
FY2018 & FY2019 EBITDA would have been:
ā¢ FY2018: $1.2 million
ā¢ FY2019: $0.9 million
ā¢ Last-twelve-months EBITDA of $2.9 million
is the highest ever reported
ā¢ Strategic growth-oriented investments
made during FY2018 & FY2019 are paying
off
Annual and last twelve months for the third quarter ending February 29, 2020
-$2,049
$564 $750 $617
$176
$2,919
-3000
-2000
-1000
0
1000
2000
3000
FY 15 FY 16 FY 17 FY 18 FY 19 LTM
7. Net income
Annual and last twelve months for the third quarter ending February 29, 2020
www.thermalenergy.com | 7
ā¢ Last-twelve-months net income is $2.1
million higher than the previous fiscal year
ending May 2019
ā¢ Last-twelve-months net income of $1.7
million is more than double the previous
twelve-month record
-$2,155
$259 $393
$619
-$451
$1,656
-2500
-2000
-1500
-1000
-500
0
500
1000
1500
2000
FY 15 FY 16 FY 17 FY 18 FY 19 LTM
($ thousands)
8. Cash position
Year end and third quarter ending February 29, 2020
www.thermalenergy.com | 8
$0.7
$1.1
$3.0
$3.3
$4.2
$3.8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
May.15 May.16 May.17 May.18 May.19 Feb.20
ā¢ Net cash position was $3.8 million as of
February 29, 2020, compared to $4.2
million at May 31, 2019
($ millions)
9. Working capital
Year end and third quarter ending February 29, 2020
www.thermalenergy.com | 9
$0.5
$1.0
$1.4
$2.0 $2.0
$2.8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
May.15 May.16 May.17 May.18 May.19 Feb.20
ā¢ Working capital as of February 29, 2020 is
up $800,000 since fiscal year end May 31,
2019.
ā¢ February 29, 2020 working capital of $2.8
million is the highest it has been in over ten
years
($ millions)
10. Q3 FY2020 Review and Update
Year-to-date for the third quarter ending February 29, 2020
www.thermalenergy.com | 10
11. Revenue
www.thermalenergy.com | 11
ā¢ Year-to-date revenue is $18.6 million, up
$3.5 million or 23% from the year prior, to
record level
$4.3
$8.3 $8.4
$10.1
$15.1
$18.6
0
2
4
6
8
10
12
14
16
18
20
YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 YTD 20
($ millions)
Year-to-date third quarter ending February 28/29, 2015 - 2020
12. Gross profit
www.thermalenergy.com | 12
ā¢ Year-to-date gross profit increased by 53%
($2.6 million) compared to nine months FY
2019
ā¢ Gross margin increased to 40% compared
to 33% last year
$2.0
$4.0 $4.3 $4.1
$4.9
$7.5
0
1
2
3
4
5
6
7
8
YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 YTD 20
($ millions)
Year-to-date third quarter ending February 28/29, 2015 - 2020
Certain figures from prior periods have been adjusted to conform to the current period presentation.
48% 49% 50% 41% 33% 40%
Gross margin percentages
13. Operating expenses
Year-to-date third quarter ending February 28/29, 2015 - 2020
www.thermalenergy.com | 13
ā¢ Operating expenses for the year-to-date
period are up 3%
ā¢ As a percent of revenue, year-to-date
operating expenses decreased to 33%
compared to 40% for the previous fiscal
year ending May 2019
$4.0 $3.9 $4.0
$4.4
$6.0 $6.2
0
1
2
3
4
5
6
7
YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 YTD 20
($ millions)
93% 47% 47% 44% 40% 33%
Percentage of revenue
14. EBITDA
www.thermalenergy.com | 14
ā¢ Year-to-date EBITDA is $2.8 million higher
than the same period last year
ā¢ Year-to-date EBITDA of $1.9 million is at a
record level
-$1,792
$187 $287
-$234
-$853
$1,900
-2,500
-1,500
-500
500
1,500
2,500
3,500
YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 YTD 20
($ thousands)
Year-to-date third quarter ending February 28/29, 2015 - 2020
15. Net income
www.thermalenergy.com | 15
ā¢ Year-to-date net income is over $1 million,
up $2.1 million compared to YTD 2019
-$1,817
-$9
$39
-$269
-$1,051
$1,056
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 YTD 20
($ thousands)
Year-to-date third quarter ending February 28/29, 2015 - 2020
16. Q3 FY2020 Review and Update
Third quarter ending February 29, 2020
www.thermalenergy.com | 16
18. Gross profit
Third quarter ending February 28/29, 2015 - 2020
www.thermalenergy.com | 18
ā¢ Gross profit increased by 111% ($1.2 million)
compared to Q3 2019
ā¢ Resulted in a gross margin of 42% up from
37% for Q3 2019
($ millions)
42% 53% 43% 42% 37% 42%
Gross margin percentages Certain figures from prior periods have been adjusted to conform to the current period presentation.
$0.6
$1.7
$1.4 $1.3
$1.1
$2.4
0
0.5
1
1.5
2
2.5
3
Q3 15 Q3 16 Q3 17 Q3 18 Q3 19 Q3 20
19. Operating expenses
Third quarter ending February 28/29, 2015 - 2020
www.thermalenergy.com | 19
ā¢ Operating expenses decreased by 2% ($40
thousand) compared to Q3 2019
ā¢ Reducing to 33% of revenue
$1.3 $1.2
$1.4 $1.5
$2.0 $1.9
0
0.5
1
1.5
2
2.5
Q3 15 Q3 16 Q3 17 Q3 18 Q3 19 Q3 20
($ millions)
89% 38% 44% 47% 64% 33%
Percentage of revenue Certain figures from prior periods have been adjusted to conform to the current period presentation.
20. EBITDA
Third quarter ending February 28/29, 2015 - 2020
www.thermalenergy.com | 20
ā¢ Quarterly EBITDA is reported at $709
thousand this year compared to a negative
$734 thousand last year
ā¢ EBITDA up $1.4 million compared to last
year
-$647
$505
-$2 -$156
-$734
$709
-1000
-800
-600
-400
-200
0
200
400
600
800
Q3 15 Q3 16 Q3 17 Q3 18 Q3 19 Q3 20
($ thousands)
21. Net income
Third quarter ending February 28/29, 2015 - 2020
www.thermalenergy.com | 21
ā¢ Quarterly net income is reported at $430
thousand this year compared to a negative
$889 thousand last year
ā¢ Net income up $1.3 million compared to
last year
-$658
$418
-$56 -$159
-$889
$430
-1000
-800
-600
-400
-200
0
200
400
600
Q3 15 Q3 16 Q3 17 Q3 18 Q3 19 Q3 20
($ thousands)
22. An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions
TSX-V: TMG | enq@thermalenergy.com | www.thermalenergy.com
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