Thermal Energy Reports Record $4.9 Million Revenues for FY2008
Friday September 26, 4:00 pm ET
First quarterly revenue over $2 million in Q4, First Thermal-AUD(TM) revenues
OTTAWA, Sept. 26 /CNW Telbec/ - Thermal Energy International Inc. (TSX-V:TMG - News; www.thermalenergy.com) today announced its fourth quarter and year end financial results for Fiscal Year 2008, ended May 31, 2008.
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Thermal Energy recorded revenues of $4,926,208 and a gross profit of $608,024 for FY08, a 500% increase over revenues of $821,024 and a gross loss of $53,491 in FY07. The Company reduced its net loss for the year to $2,372,508 ($0.025/share), from a net loss of $2,443,265 ($0.031/share) for the previous year.
Revenue for the fourth quarter was $2,750,487, a 470% increase over the $480,179 in revenue for the same period a year earlier. This was the first time Thermal Energy has achieved revenue in excess of $2.5 million in a single quarter. The Company reduced its quarterly loss to $521,388 ($0.005/share) in Q4, compared to a loss of $712,149 ($0.01/share) a year earlier. All figures are in Canadian dollars. Full financial results including Management's Discussion and Analysis and accompanying notes to the financial results, are available on SEDAR and www.thermalenergy.com.
"Fiscal 2008 was a landmark year for Thermal Energy's evolution as a global energy services solution provider," said President and CEO Tim Angus. "More importantly we successfully developed an innovative energy saving program - our Thermal-AUD(TM) Alternate Utility Delivery program - which delivered its first major customer largely responsible for this year's record growth."
Thermal-AUD(TM) provides customers with a way to generate immediate energy savings and positive cash flow from operations starting with the first day of the agreement, all without any up-front or large capital investments. Instead of a capital equipment purchase, the customer purchases the recovered waste energy as green energy at a substantial discount to the fossil fuels being displaced. It provides a further opportunity for customers to meet or exceed emission reduction targets and achieve energy reduction targets, while preserving capital for other projects.
§ Highlights in Q4 include:
§ <<
§ - Recording the sale of a FLU-ACE(R) waste heat recovery system for in
§ excess of $2 million under the Thermal-AUD(TM) Alternate Utility
§ Delivery program with an additional $1.5 million to be earned over
§ the next six years at Fraser Paper's Thurso paper mill;
§ - Entering into an agreement to acquire Bristol based Gardner Energy
§ Management Ltd. The transaction with a base price of approximately
§ $5.4 million CAD and an amount of approximately $2.6 million CAD
§ payable on an earn-out basis over a three year period based on sales
§ of the GEM(R) product line to a new major customer, subsequently
§ closed in the first quarter of Fiscal 2009;
§ - The first revenues generated from the Company's new Thermal-AUD(TM)
§ program through the Thurso installation;
§ - Commencing the first phase of work (detailed design and engineering)
§ for a major FLU-ACE(R) energy recovery system at a fine paper mill in
§ the north eastern U.S.;
§ - Joining the Asia Clean Energy Alliance led by Honeywell (China) to
§ provide energy saving solutions and project financing for China's
§ pulp and paper and other energy-intensive industries;
§ Highlights during the balance of FY 2008 include:
§ - Receiving the first order in China for GEM(R) Steam Traps from Lee
§ and Man Paper Manufacturing Co. to be installed on one of its paper
§ machines in one of their massive plants that produces over
§ 1.5 million tons of containerboard annually;
§ - Receiving the first order from Alberta's oil, gas and petrochemical
§ sector with a contract from an Edmonton-area petrochemical
§ manufacturer, to begin retrofitting approximately one-third of its
§ mid-size facility with GEM(R) steam traps;
§ - Establishing ForEverGreen Energy Inc., a wholly-owned green energy
§ services subsidiary to own and operate the Company's assets to be
§ used under the THERMAL-AUD(TM) program. On August 27, 2007
§ ForEverGreen signed an agreement for up to $3.75M over six years with
§ Fraser Paper Inc. to recover waste heat at its Thurso Mill;
§ - Formalizing a research and development agreement with South China
§ University of Technology (SCUT) focused on the commercialization of
§ the Company's THERMALONOx(TM) nitrogen oxides (NOx) removal
§ technology for China's coal-fired power market;
§ - Appointing Anthony J. Pugliese as Vice President, Sales. Mr. Pugliese
§ came from Direct Energy Business Services where he was Manager,
§ Business Development, Health Care Sector, responsible for leading the
§ development and implementation of market strategies in the Canadian
§ healthcare and public sector markets. Mr. Pugliese was previously
§ Account Manager, Healthcare Solutions with Johnson Controls, Inc., in
§ eastern Canada, and has an extension background in financial
§ services.
§ - Becoming majority owner through its wholly-owned subsidiary (Thermal
§ Energy International (Guangzhou) Ltd.) into a joint venture with
§ Oriental-Unicorn Sales and Marketing Co., of Guangzhou, China and
§ E5 Enterprises LLC, of Markham, Ontario. Oriental-Unicorn was
§ instrumental in the Company's first sale of GEM(R) steam traps to
§ Lee & Man Paper Co.;
§ - Securing a five-year, $2.5 million line of credit with the Toronto-
§ Dominion Bank to facilitate the Company's co-investment in assets
§ such as FLU-ACE(R) and DRY-REX(TM) systems using its Thermal-AUD(TM)
§ Program;
§ - Closing a non-brokered private placement with gross proceeds of
§ $999,000 to support on-going sales and marketing.
§ Extraordinary and One-Time Charges
In addition to moderate increases in selling, marketing and administrative costs, the net loss of $2,372,508 in FY 2008 included approximately $840,000 in non-recurring costs including cost overruns and foreign exchange losses on a U.S. project through Johnson Controls, warranty-related costs on three projects, and increased legal costs, largely due to the initial legal work required for the GEM(R) acquisition completed in the Q1 FY 2009.
The Company had a working capital deficiency of $2,093,061 at the end of FY 2008, compared to working capital of $559,350 at the end of FY 2007. This was due mostly to the required up-front investment in the Thermal-AUD(TM) assets required for the Fraser Papers Thurso Mill green energy contract, which started to generate revenues in the last part of Q4. Management recognizes the need to further improve liquidity and is aggressively working to increase sales. This process includes expanding Thermal Energy's direct sales force with additional hires in Q1 and beyond.
In Q1 FY2009, Thermal Energy closed a $15 million private placement with a number of leading investment bankers specializing in environmental and alternative energy financings. These funds were used in part to complete the GEM(R) acquisition, to provide funds for investment in Thermal-AUD(TM) assets, and provide funds for increased sales and marketing, and research and development activities.
Outlook for FY 2009
While the Company anticipates a softening of revenues in the first two quarters, a return to revenue growth and bottom line improvements is identified beginning in Q3, resulting from Thermal Energy's corporate client sales strategy. The strategy is focused on multi-site accounts whereby we can demonstrate our technologies and roll them out in a streamlined approach across a customer's entire portfolio. This includes the flow of revenues following the expected final contracting for the previously announced agreement in principle with a U.S. paper mill for a $20 million, eight-year, Thermal-AUD(TM) green energy services contacts, and a number of other significant opportunities in Canada and the U.S. Additionally we anticipate seeing additional revenue growth on a consolidated basis from the GEM(R) acquisition following a normal period of integration and positioning of Thermal Energy's core products with the GEM(R) sales team throughout Europe. We also anticipate the first GEM(R) revenues in FY 2009 from a global preferred supplier agreement with one of the world's largest pharmaceutical companies. Work was underway in Q1 2009 on putting the workflow and ordering infrastructure in place with the client.
Thermal Energy's joint venture in Guangzhou, China is commencing initial positioning and identification of GEM(R) steam traps and FLU-ACE(R) waste heat recovery in Asia both through the Company's Guangzhou office and the Asia Clean Energy Alliance.
THERMALONOx(TM)
Progress with the joint venture at South China University of Technology (SCUT) to develop the Company's THERMALONOx(TM) technology to reduce nitrogen oxides at coal-fired power plants has been somewhat slower than anticipated. This has primarily been due to bureaucratic and financial delays in China. Design work on the pilot test facility in China continued throughout Q4 2008 and subsequently equipment was manufactured in Q1 2009 and readied for shipment to China in Q2.
"While the year ahead is not without its challenges, Thermal Energy continues to work very hard at converting prospects from our qualified pipeline of sales opportunities into contracts and we have every confidence that this will occur in FY2009 at a level that continues to produce record year-over-year growth and significant bottom line improvements," said Mr. Angus. "We look forward to sharing these continued successes with our shareholders in the coming months."
Annual Special Meeting
The Annual Special Meeting of shareholders will take place November 25, 2008 at the Brookstreet Hotel, 525 Legget Drive, Ottawa (Kanata), Ontario, at 9 a.m. Shareholders are asked to arrive ahead of time to complete registration in order that the meeting can commence on time.
§ NOTE: This press release may contain forward-looking statements relating
§ to, and among other things, based on management's expectations, estimates
§ and projections. Such statements including those about the Company's
§ strategy for growth, product development, market position, expected
§ expenditures and financial results are forward looking statements. These
§ statements are not guarantees of future performance and involve a number
§ of risks, uncertainties and assumptions. Many factors could cause results
§ to differ materially from those stated. The Company disclaims any
§ obligation to publicly update or revise any such statements.
There are accompanying notes which are an integral part of the following consolidated financial statements. For complete audited financial statements with those notes and Management's Discussion and Analysis, please go to www.sedar.com or our website at www.thermalenergy.com under "investors."
§ THERMAL ENERGY INTERNATIONAL INC.
§ Incorporated under the Ontario Business Corporations Act
§
