Average Daily Volume (3month): 98K Issued and Outstanding: 161,152,616 Options: 14,259,193 (*NIL Warrants) Fully Diluted: 175,411,809 Current Price: $0.10 Market Capitalization: $16M Insider Ownership: 8% - 12,884,572 TTM Earnings: $372K TTM Revenues: $21.9M TTM EBITDA: $1.5M EV/EBITDA: 9x P/E: 43x P/S: 0.73x Debt: $2.4M Cash: $5M Last Financing: 2008 - $15M at $0.22
Highlights - Profitable
- 33% compounded annual growth since 2015
- Award-winning products offering high ROI
- Customers in diversified industries with large TAM (Total Addressable Market)
- Normal Course Issuer Bid
- $5M in cash, hasn’t diluted since 2008
- Ranked as one of Canada’s Top Growing Companies in 2019
- 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 65 employees and 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 colorful and dates back to 1997 when they first went public. At that time, it was a founder-led business, had zero sales and established its business with marquee partner, Honeywell. Eventually, the founder was pushed out of the business, and later sued Thermal Energy.
After that, a new CEO took the helm and subsequently there was an unraveling eerily similar to the previous departure. The CEO eventually stepped down and along with him there was a series of board resignations and a CFO who was wrongfully dismissed, for which Thermal Energy eventually settled. Alarmingly, the TSX Venture Exchange halted the Company at one point, for a full audit of the Company from poor transactions and related party issues.
Those days are now long behind the Company, after Bill Crossland, who was already a Director of the Company, became CEO in 2009.
Under Mr. Crossland’s tenure, there’s been drastic improvements to the overall health of the Company.
Historically Thermal Energy had never achieved a full year of profitability and in 2009 was losing roughly $3.2M a year. After a full year of Mr. Crossland taking the reigns, the operating expenses were reduced, and it started to reflect in the numbers. By the end of 2011, Thermal Energy had four straight cash flow positive quarters and by 2012 had their first year of net profits of $71K.
Since 2016 the Company has been consistently EBITDA positive and is setting new annual revenue records peaking in 2019 with $21M.
As for Mr. Crossland, when he joined the Company as a director, he only owned 400K shares. Over the past decade since his involvement, Mr. Crossland has actively purchased shares in the open market accumulating 5.7M shares.
While the Company is now operating profitably, it has also overcome many hurdles and hardships and we believe this record setting growth is indicative of managements successful long-term strategy. Additionally, from a macro economic perspective governments and industries around the globe are taking unprecedented action on climate change.
The last financing for Thermal Energy was in 2008 for CAD $15M to complete the acquisition of Gardner Energy Management Ltd. (GEM). Today, the Company has built up a $5M cash treasury from the operations cash-flows.
When combining all the evidence, Thermal Energy is a profitable, well-capitalized Company that’s experiencing growth from long-term investments and industry tailwinds with a decade of strong leadership managing the Company. Additionally, the Company has a strong backlog and a normal-course issuer bid.
Valuation | 
