Thermal Energy International ((TSE:TMG)) has held its Q3 earnings call. Read on for the main highlights of the call.
Thermal Energy International’s recent earnings call painted a mixed picture of the company’s financial health. While the company celebrated record year-to-date revenue and a strong financial position with significant debt reduction, it also faced challenges such as a decline in quarterly revenue, negative EBITDA, and a net income loss. Despite these hurdles, the company remains optimistic about future growth, driven by a robust business development pipeline and strategic investments.
Record Year-to-Date Revenue
Thermal Energy International reported an all-time high in year-to-date revenue, achieving a 25% increase compared to the previous year. This milestone underscores the company’s ability to generate substantial revenue growth despite market challenges.
Trailing 12-Month Revenue Growth
The company’s trailing 12-month revenue reached $30.5 million, marking a 76% increase over the past two years. This impressive growth trajectory highlights the company’s successful strategies in expanding its market reach and enhancing its revenue streams.
Strong Balance Sheet
As of the end of February, Thermal Energy International maintained a strong balance sheet with $5.1 million in cash and cash equivalents and $2.4 million in working capital. This financial stability positions the company well for future investments and growth opportunities.
Debt Reduction
The company successfully reduced its long-term debt to $1.4 million, a decrease of approximately $2.1 million over the last two years. This reduction was achieved through internally generated cash flow, reflecting the company’s commitment to financial prudence.
Strong Business Development Pipeline
Thermal Energy International’s business development pipeline remains robust, with numerous repeat and new opportunities. This strong pipeline is expected to drive future growth and profitability.
Largest Engineering Contract Signed
The company secured its largest engineering contract to date, valued at $500,000, with a leading multinational pharmaceutical company. This contract signifies a significant achievement and potential for future collaborations.
Successful Repeat Business
A $1 million heat recovery expansion project was announced, continuing a successful partnership with a leading food and beverage company. This repeat business underscores the company’s ability to maintain strong client relationships and secure ongoing projects.
Quarterly Revenue Decline
Despite the positive year-to-date performance, the company experienced a 4.1% decline in quarterly revenue, totaling $5.8 million. This decrease was attributed to lower contributions from heat recovery projects.
Negative EBITDA for the Quarter
The quarter saw a negative EBITDA of $130,000, primarily due to reduced revenue and gross margins. However, the company remains EBITDA positive on a trailing 12-month basis, indicating underlying financial strength.
Net Income Loss for the Quarter
Thermal Energy International reported a net income loss of $400,000 for the quarter. Despite this setback, the company remained profitable on a trailing 12-month basis, with a net income of $230,000.
Lower Order Intake
Year-to-date order intake lagged behind the previous year, reflecting a temporary slowdown. However, the company’s strong development pipeline offers potential for recovery and growth.
Forward-Looking Guidance
Looking ahead, Thermal Energy International remains optimistic about its growth prospects. Despite a temporary dip in quarterly performance, the company expects its significant investments and strong business development pipeline to drive profitable growth in fiscal 2026. The balance sheet remains healthy, and the company is well-positioned to capitalize on future opportunities.
In conclusion, Thermal Energy International’s earnings call highlighted a company navigating through challenges while maintaining a positive outlook for the future. With record year-to-date revenue, a strong balance sheet, and a robust pipeline, the company is poised for growth despite recent setbacks. Investors and stakeholders can remain cautiously optimistic about the company’s trajectory as it continues to execute its strategic plans.