Thermal Energy Reports Financial Results for the Year ended May 31, 2011

OTTAWA, Sept. 28, 2011 /CNW/ - Thermal Energy International Inc. (TSX-V:TMG) (www.thermalenergy.com) (the "Company" or "Thermal Energy") today announced its financial results for the fiscal quarter and year ended May 31, 2011.

Sales for the year ended May 31, 2011 were $9.7 million compared to $5.8 million last year, an increase of 67%. Sales of GEM® Condensate return systems for the year were $4.6 million vs. $4.4 million last year while sales of waste energy recovery systems were $5.1 million vs. $1.4 million last year. Sales of GEM® condensate return systems continue to be affected by the economic environment in Europe and the weakening of the UK pound sterling. Excluding the impact of exchange rate fluctuations, sales of GEM® Condensate return systems for the year ended May 31, 2011 would have increased by 9.3%.

Gross profit for the year ended May 31, 2011 was $4.7 million up 31% or $1.1 million compared to $3.6 last year. As a percentage of sales, gross profit was 48% this year vs. 61% last year. The reduction in gross profit as a percentage of sales is a result of a higher proportion of revenues coming from waste energy recovery systems, which generates lower margins than sales of GEM® condensate return systems.

Operating expenses for the year ended May 31, 2011 totalled $4.8 million compared to $6.2 million last year. Operating expenses include administration, selling, marketing and business development, professional fees, insurance, patent and trademark maintenance and research and development. The decrease of $1.5 million or 23 % can be attributed in part to approximately $1.0 million in one-time provisions and write-offs incurred last year with the remaining $0.5 decrease primarily due to reduced staff and other operating cost savings implemented during the year. As a percent of sales, operating expenses dropped to 49% of sales this year vs. 107% last year.

Net loss for the year was $142 thousand vs. $3.1 million last year. The $2.9 million improvement can be attributed to a combination of increased sales (up 67%) and reduced expenses (down 23%).

Operating cash flow (defined as net loss, plus items not involving cash, plus lease payments received) totalled $570 thousand for the year compared to negative $2.4 million last year an improvement of $3 million.

Working Capital and Cash Balances: The Corporation's working capital has increased steadily over the last 12 months and was $1.9 million as at May 31, 2011 compared to $1.2 million last year, an increase of $703 thousand. Similarly the Company's net cash position (cash and cash equivalents less bank loans) increased this year to $972 thousand as at May 31, 2011 vs. $422 thousand at the end of last year, an increase of $550 thousand.  The strong increases in the Company's working capital and net cash position has been primarily driven by the Company's four straight quarters of positive operating cash flow as described above.

For the fourth quarter ending May 31, 2011 sales were $1.9 million compared to $1.6 million last year, an increase of 17%.  Sales of GEM® condensate return systems for the quarter were $1.5 million vs. $1.0 million last year while sales of waste energy recovery systems were $0.4 million vs. $0.6 million last year. The increase in sales of GEM® condensate return systems was due mainly to partial fulfillment of orders received from a major food manufacturer in the UK, as announced December 23, 2010 and February 18, 2011, while the reduction in revenues from waste energy recovery systems resulted from the substantial completion of the Kruger project announced December 23, 2009.

The gross profit for the quarter was $1.1 million compared to $0.9 million for the same period last year, an increase of $0.2 million or 21%. Operating expenses for the quarter ended May 31, 2011 were $1.2 million, a decrease of $0.5 million from the same period last year. Net loss for the fourth quarter 2011 was $51 thousand compared to $844 thousand for the same period last year, an improvement of $793 thousand.

The Company's net cash position (cash and cash equivalents less bank loans) in the fourth quarter increased by $622 thousand and working capital increased by $98 thousand.  The increase in working capital is primarily the result of positive operating cash flow which for the quarter was $69 thousand, making it the fourth straight quarter the Company has generated working capital growth and positive operating cash flow.

"Over the last two years Thermal Energy has demonstrated a solid track record of growing its revenue base, controlling expenses, and now, generating positive cash flow. Since May 2009 the Company's sales have grown at a compound annual growth rate of more than 56% and this quarter marks the fourth straight quarter the company has generated positive operating cash flow," commented William Crossland, President and CEO.

Business Update: As highlighted below, orders announced to date that are expected to be earned in fiscal 2012 already total $9.3 million.

  1. On December 23, 2010 and February 18, 2011 the Company announced it had received purchase orders totalling approximately $1.3 million from a major food manufacturer based in the UK, to provide GEM® condensate return systems for use at twelve of its manufacturing sites. Sales for the year ending May 31, 2011 included approximately $0.9 million related to these orders with the remaining $0.4 million expected to be earned in fiscal 2012.
  2. On April 11, 2011 the Company announced it had received a purchase order for approximately £246 thousand (approximately CDN $386 thousand) from Salisbury District Hospital Trust, a major hospital in London, UK to install a heat recovery system for use on its heating and hot water system
  3. On May 6, 2011 the Company received a purchase orders for approximately $334 thousand from Frimley Park Hospital NHS Trust in the UK to provide GEM® condensate return products and a heat recovery solution for use on its heating and hot water system.
  4. On June 16, 2011 the Company announced it had signed a contract valued at approximately $5.8 million with Fibrek to provide a FLU-ACE® heat recovery solution for its pulp mill located in Saint-Félicien, Québec. This $5.8 million contract was signed following the successful completion of a $129 thousand funded project development phase pursuant to a project development agreement signed on January 24, 2011.
  5. On July 21, 2011 the Company received a purchase order for approximately $340 thousand from a major multi-national bakery company to provide a heat recovery solution for one of its United States based manufacturing facilities.
  6. On August 5, 2011 the Company announced it had received a purchase order for approximately £1.29 million (approximately CDN $2.06 million) from St Georges Healthcare NHS Trust, a major hospital in London, UK to provide a heat recovery solution for use on its heating and hot water system.
  7. During the fourth quarter ending May 31, 2011 the Company completed the installation and commissioning of the heat recovery project for the China based pharmaceutical company announced in our third quarter press release dated April 29, 2011.
  8. During the fourth quarter ending May 31, 2011 the Company completed the upgrade of the Ontario hospital's heat recovery system announced in our third quarter press release dated April 29, 2011.

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 www.SEDAR.com and www.thermalenergy.com.

About Thermal Energy

Thermal Energy International Inc. is an innovative cleantech company providing a variety of proprietary and proven energy efficiency, emission reduction, water efficiency, and bioenergy products and solutions to the industrial, commercial and institutional markets worldwide. Thermal Energy is also a fully accredited professional engineering firm, and can offer advanced process and applications engineering services. By providing a unique mix of proprietary products together with process, energy, environmental, and financial expertise Thermal Energy is able to deliver significant financial and environmental benefits to our customers.  Thermal Energy's products include; GEM® - Steam traps and condensate return systems, FLU-ACE® - Direct contact condensing heat recovery, and Dry RexTM - Low temperature biomass drying systems. These award winning products have an excellent track record of longevity, proven reliability and performance and have been shown to provide significant energy savings, reduced GHG emissions, improved water efficiency, lower maintenance costs, improved product quality and increased production efficiency.  Thermal Energy International Inc. has offices in Ottawa, Canada, Bristol, UK and Guangzhou, China.

To find out more about Thermal Energy International Inc. (TSX-V: TMG), visit our website at http://www.thermalenergy.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Thermal Energy International Inc.

For further information:

Contact:

William Crossland
President and CEO
613-723-6776

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Thermal Energy International Inc.

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