Average Daily Volume (3month): 40K
Issued and Outstanding: 164,477,606
Options: 21,657,089 (*NIL Warrants)
Fully Diluted: 186,134,695
Current Price: $0.125
Market Capitalization: $20.6 million
Insider Ownership: 8% - 12,884,572
TTM Earnings: (-$400,415)
TTM Revenues: $17,346,155
TTM EBITDA: $761,453
EV/EBITDA: 28.1x
P/E: N/A
P/S: 1.19x
Debt: $3.49M
Cash: $4.26M
Last Financing: 2008 - $15M at $0.22
Highlights - Award-winning products offering high return on investment.
- Customers in diversified industries with large TAM (Total Addressable Market)
- Strong play on rising energy prices
- Q3 revenue growth of 60.5%
- Profitable last quarter
- Received orders totalling $27.3 million year ending May 31 - 133% year-over-year.
- Recent $4 million order
- $4.3 million in cash, hasn’t diluted since 2008.
- Undiscovered
What is Thermal Energy International?
Thermal Energy is an innovative Canadian cleantech company. The Company is an established global supplier of proprietary, proven energy efficiency and emissions reduction solutions to the industrial and institutional sectors.
Thermal Energy saves customers money and improves their bottom line by reducing the amount of fuel they use and cutting their carbon emissions.
The Company is a fully accredited professional engineering firm. 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 its customers.
By specializing in the engineering and supply of pollution control, heat recovery systems and condensate return solutions the Company has developed and acquired proprietary products that capture up to 80% of wasted energy from boiler plant and steam operations and recycle the saved energy.
Their customers include many Fortune 500 and other leading multinational companies across a wide range of industry sectors, including companies such as PepsiCo, Goodyear, Kellogg’s, Cargill, Resolute Forest Products, Johnson Controls and American Electric Power.
Thermal Energy has a global presence comprising of offices in Canada, the U.K., the United States, Italy and China.
The Company is also a proud member of the Chicago Climate Exchange (CCX).
What do they do and how does it work?
Thermal Energy has developed and/or acquired several proprietary products which include:
GEM™ Steam Traps and condensate return systems - More efficient than traditional mechanical traps
- No moving parts reduces maintenance and eliminates the need to replace
- Typical payback period 1 – 2 years
- 100s to 1,000s of traps per location
- Typical order $5K - $500K
FLU-ACE® Direct contact condensing heat recovery - Waste heat is recovered from exhausts
- Returned as hot water for use in process or heating
- Typical annual fuel saving of between 5% and 25%
- Reduces CO2, NOx and SO2 emissions as well as particulate matter (PM)
- Typical payback period 2 – 5 years
- Typical order $100K to millions
HEATSPONGE Indirect contact condensing heat recovery systems: - Mass customization via modulated design
- Sale via manufacturing reps and OEM
- All sizes of industrial, commercial and institutional sites
- Order value $5K to $150K
DRY-REX™ Low temperature biomass drying systems.
These award-winning products are applicable across a wide variety of industries and have an excellent track record of longevity, proven reliability and performance which provides significant energy savings, reduced GHG emissions, improved water efficiency, lower maintenance costs, improved product quality and increased production efficiency.
The key point is that these products offer a 10-30% reduction in energy costs, high ROI with short, compelling paybacks of 1-5 years for customers.
These products are being used by a broad range of clients in industries including pulp and paper, laundry, healthcare, food & beverage, building materials, chemical, petrochemical, brewing, mining, rubber, pharmaceutical, and agribusiness.
This is a massive market for Thermal Energy to penetrate. They are already embedded with some of the world’s largest companies and we believe it’s a function of time before there’s more pressure on these organizations to improve their ESG (Environmental, Social and Governance) initiatives. Thermal Energy has a long-standing track record for delivering quality to its clients, and the industrial recovery industry is an estimated $450B market opportunity.
What’s changed? Why now?
The business history of Thermal Energy is quite eventful and dates back to 1997 when it first became a publicly traded company.
Back then, it was a founder-led business with zero sales, just beginning to commercialize its offerings in partnership with Honeywell. As the business started to expand, it eventually resulted in the founder's departure from the company, leading to a subsequent lawsuit against Thermal Energy.
Following these events, a new CEO took the helm, but shortly thereafter, there were several board resignations, and another minor legal incident resulted in a settlement, costing Thermal Energy due to the wrongful dismissal of its CFO. Thermal Energy faced challenges in maintaining proper governance measures and, at one point in its history, was even temporarily halted. It was required to undergo a comprehensive company audit to address related party issues and questionable transactions.
Fast-forward to today, Bill Crossland is the current CEO, having been appointed to the role after serving as a Director of the Company in 2009.
Since assuming his role, Mr. Crossland has successfully restructured the operations and significantly improved the overall health of the company. After Mr. Crossland inherited the unprofitable operation he swiftly led the business to it's first full-year of cashflow profitability, and positive net income.
After years of consistent EBITDA profitability, and new record annual revenues, Thermal's income statement peaked in 2020 with roughly $21 million in annual sales. Thereafter, Covid hit and disrupted the business.
Thermal Energy employs a team of skilled project and technical engineers and serves international clients. However, due to Covid, everything came to a standstill—no travel, no engineers, no profits.
Due to longer lead times and a lengthier sales cycle typical of Thermal Energy's industry, revenue recognition naturally takes more time as projects are developed and backlog is addressed. Now that disruptions have subsided, Thermal Energy boasts a record backlog of $31 million.
These positive trends are becoming evident as the backlog begins to translate into the income statement. We've witnessed modest growth over the past twelve months, with a remarkable 60% surge in the last quarter—a trend we expect to persist, albeit with some variability.
When comparing this new trend to the performance of the past couple of years, it's easy to see why Thermal Energy may have been overlooked, especially in these current microcap markets where unprofitable businesses are viewed as junk.
In summary, while Thermal Energy may not be currently profitable, its strong track record suggests that profitability is not only possible but likely in the near future. With a solid capital position relative to its size and minimal capital requirements for continued growth, Thermal Energy is poised to transition from a company in need of capital to one that doesn't.
Valuation
|
