Thermal Energy International Provides Business Update and Reports Second Quarter Fiscal 2013 Results

Thermal Energy International Provides Business Update and Reports Second 
Quarter Fiscal 2013 Results 
OTTAWA, Jan. 29, 2013 /CNW/ - Thermal Energy International Inc. (TSXV: TMG), a 
leading provider of custom energy efficiency and emission reduction 
technologies to energy intensive industries and institutions worldwide, today 
announced its financial results for the three and six months ending November 
30, 2012. 
Overview 


    --  6 month sales of $2.1 million compared to $6.1 million last
        year
    --  6 month heat recovery sales down $4.2 million
    --  6 month GEM(®) steam trap sales up $212,000
    --  Revenues decreased as expected in the first half of this year
        due to some large corporate GEM(®) sales and the successful
        completion and commissioning of two large heat recovery
        projects occurring last year while this year saw the temporary
        delay of installation of heat recovery orders that are now in
        process, of which 6 are expected to be substantially completed
        during the balance of this fiscal year
    --  6 month North American GEM(®) steam trap sales up 51%
    --  6 month base GEM(®) steam trap sales (excluding large
        ( )corporate sales) up 24%
    --  Q2 GEM(®) global steam trap sales up 53%
    --  Received a $330,000 purchase order from a major hospital for
        the installation of the Company's GEM(®) steam trap technology
    --  Extended the Greenpower Purchase Agreement with a specialty
        paper producer for an additional two years
    --  Received a $300,000 purchase order from a Fortune 500 food and
        beverage company for the installation of a heat recovery system
    --  Signed a $750,000 contract with a major hospital for the
        installation of a heat recovery system
    --  11 additional potential energy efficiency projects are under
        development on a paid or exclusive basis with customers
    --  As at January 29, 2013, the Company had approximately $3.1
        million in purchase orders in backlog all of which are expected
        to be substantially completed this fiscal year

During the quarter Thermal Energy continued to grow its sales and distribution 
capabilities. Over the last 24 months Thermal Energy has:
    --  Doubled its in house sales and marketing team
    --  Retained 6 new large well known industrial distributors
    --  Trained approximately 200 sales agents employed by our
        distributor partners

"We continue to expand our sales and distribution network and focus on 
contracts of all sizes in a variety of key industries," said William 
Crossland, the President and CEO of Thermal Energy. "Over time this approach 
is expected to strengthen the Company's long term growth prospects, reduce our 
dependence on single large contracts and smooth out our revenue stream 
quarter-to-quarter. The strategy is already showing positive results as 
evidenced by strong GEM(®) order growth in our key North American market and 
an increased number of energy efficiency projects under development. With 
success of this strategy in North America we are now beginning the roll out of 
a similar program in Europe and the Middle East."

Q2 2013 Financial Review

Revenue was $1.3 million for the three-month period ended November 30, 2012, 
compared to $4.7 million for the corresponding period in 2011. The higher 
revenue in 2011 was due to heat recovery revenue from two large contracts 
(Fibrek project and St. Georges Healthcare NHS Trust). There were no 
equivalent contracts in the quarter ended November 30, 2012. GEM(®) sales for 
the quarter, however, increased by 53%, over the corresponding period in 2011.

Gross profit was $0.8 million for the three-month period ended November 30, 
2012, compared to $2.1 million for the corresponding period in 2011. Gross 
profit expressed as a percentage of revenue was 63.5% during the quarter 
compared to 45.4% for the corresponding quarter in 2011. The increase in gross 
profit as a percentage of sales is a result of a higher proportion of revenues 
generated from GEM(®) sales, which generate higher margins than sales of 
Flu-Ace Heat Recovery.

Operating expenses were $1.6 million for the three-month period ended November 
30, 2012, compared to $1.5 million for the corresponding period in 2011. 
Operating expenses were increased primarily due to the addition of two sales 
staff, two technical staff, one additional finance employee and increased 
investor relations costs. However, these cost increases were offset by 
reductions in commissions payable and incentive provisions as a result of 
reduced revenues and profits, plus a reduction in legal fees compared to the 
same period in 2011. Research and development costs include costs related to 
the development of a variety of new products related to the GEM(® )line and 
the product development project targeting the Chinese petrochemical market 
announced February 2012.

Net loss was $0.8 million for the three-month period ended November 30, 2012, 
compared to net income of $0.5 million for the corresponding period in 2011.

Operating cash flow defined as net income (loss), plus items not involving 
cash, plus lease payments received for the quarter ended November 30, 2012 was 
($0.5) million as compared to $0.6 million for the August 31, 2012 quarter.

Cash and Working Capital 
As at November 30, 2012, the Company's net cash position (cash and cash 
equivalents less bank loans) amounted to $0.5 million compared to $1.4 million 
on May 31, 2012. As at November 30, 2012, the Company had net working 
capital of $1.0 million, compared to $2.6 million on May 31, 2012. With Cash 
balances and unused borrowing capacity of approximately $0.8 million, 
management believes that it has sufficient capital resources to fund existing 
operations and anticipated capital requirements in the remainder of FY 2013.

6 Month 2013 Financial Review

Revenue was $2.1 million for the six-month period ended November 30, 2012 as 
compared to $6.1 million for the corresponding six-month period in 2011. The 
decrease in revenue was due to lower revenue generated from heat recovery 
sales due to reasons mentioned above. However, GEM(®) sales increased during 
the same period.

Gross profit was $1.3 million for the six-month period ended November 30, 2012 
as compared to $2.9 million for the corresponding period in 2011. Gross profit 
expressed as a percentage of revenue was 62.4% during the period compared to 
47.9% for the corresponding period in 2011. The increase in gross profit as a 
percentage of sales is a result of a higher proportion of revenues generated 
from GEM(®) sales, which generate higher margins than sales of Flu-Ace Heat 
Recovery.

Operating expenses were $3.1 million for the six-month period ended November 
30, 2012, compared to $2.7 million for the corresponding period in 2011 for 
the reasons noted above.

Net loss was $1.6 million for the six-month period ended November 30, 2012, 
compared to net income of $0.1 million for the corresponding period in 2011.

All figures are expressed 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.

Business Outlook
    --  As reported previously, on December 17, 2010 the Company signed
        a Letter of Intent with a major North American pulp and paper
        company outlining the two parties' intent to develop and,
        subject to financing and approval by the pulp and paper
        company's board of directors, implement on an exclusive basis
        heat recovery projects at three of the customer's locations. A
        project has been developed for the first site and is awaiting
        approval by the customer. The second site did not support a
        viable project and further development work is not currently
        being conducted at this site. The final site is still under
        consideration.
    --  In April 2012 the Company received an order for the supply,
        installation and maintenance of a heat recovery system at a
        publicly owned hospital. The project has a total value of
        approximately $1.5 million over seven years which is equivalent
        to a discounted present value of approximately $950,000. This
        order represents the first example of a new financing program
        the Company is developing for its public sector clients and a
        new service and maintenance program being developed for both
        heat recovery and GEM(®) products. The finance program and
        service and maintenance programs are part of the Company's
        strategy to increase revenue and profit while providing
        enhanced value to its customers. Both of these programs have
        been designed to provide a growing and recurring revenue stream
        for the Company.
    --  In May 2012, the Company announced it had received a purchase
        order for approximately $467,000 from a major food manufacturer
        for a heat recovery solution at one of its sites. This order is
        expected to be completed in FY 2013.
    --  In June 2012, the Company received another purchase order for
        approximately $249,000 from the same major food manufacturer
        for a heat recovery solution at one of its sites. This order is
        expected to be completed in FY 2013.
    --  In June 2012, the Company received an order for approximately
        $562,000 from a publicly owned hospital for a heat recovery
        solution. This order is expected to be substantially completed
        in FY 2013.
    --  In August 2012 the Company received an order for the supply,
        installation and maintenance of a GEM(®) system at a publicly
        owned hospital. The project has a total value of approximately
        $548,000 over seven years which is equivalent to a discounted
        present value of approximately $375,000. This represents the
        second example of the new finance and service and maintenance
        programs the Company is developing.
    --  On November 2, 2012, the Company announced it had signed a
        $330,000 contract with a publicly funded hospital for
        installation of its GEM(® )steam trap technology. The project
        is expected to be substantially completed by the end of FY
        2013.
    --  On November 29, 2012, the Company announced it had extended the
        Greenpower Purchase Agreement with a specialty paper producer
        until December 31, 2014. Upon completion of the extended term,
        the specialty paper producer has an option to further extend to
        a maximum of 24 months on substantially the same terms or
        purchase the FLU-ACE(® )Waste Heat Recovery System .
    --  On December 14, 2012, the Company announced it had received an
        initial purchase order totalling approximately $300,000 for the
        installation of a heat recovery system at a food and beverage
        company. The project is expected to be substantially completed
        by the end of FY 2013. Thermal Energy is working on developing
        additional energy efficiency programs for this company at other
        sites.
    --  On December 18, 2012, the Company announced it had received a
        purchase order valued at approximately $750,000 for the
        installation of a heat recovery system at a large publicly
        funded hospital. The project is expected to be substantially
        completed by the end of FY 2013.
    --  The company is currently developing energy efficiency projects
        on a paid or exclusive basis at 11 different sites for 8
        different customers. This compares to 4 sites for 2 customers
        in 2011.
    --  The Company's order backlog as at November 30, 2012 was
        approximately $2.1 million compared to $4.8 million at the same
        time last year. As at January 29, 2013, the Company had
        approximately $3.1 million in purchase orders that had not yet
        been reflected as revenue in the Company's published quarterly
        financial statements.

About Thermal Energy International Inc.

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 its customers.

Thermal Energy's products include; GEM® - Steam traps and condensate return 
systems, FLU-ACE® - Direct contact condensing heat recovery, and Dry Rex(TM) 
- Low temperature biomass drying systems. These award winning products are 
effective in a wide variety of industries and application and have an 
excellent track record of longevity, proven reliability and performance 
providing 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 as well as 
Bristol, UK, United States, Italy and China. To find out more about Thermal 
Energy International Inc. (TSX-V: TMG), visit our website at 
http://www.thermalenergy.com.

This press release contains forward-looking statements relating to, and 
amongst other things, based on management's expectations, estimates and 
projections, the anticipated effectiveness of the Company's products and 
services and the timing of revenues to be received by the Company. These 
statements are not guarantees of future performance and involve a number of 
risks, uncertainties and assumptions. Many factors, some of which are outside 
of the Company's control, could cause events and results to differ materially 
from those stated. The Company disclaims any obligation to publicly update or 
revise any such statements.

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.

William Crossland President and CEO Thermal Energy International Inc. 
613-723-6776 bill.crossland@thermalenergy.com

Babak Pedram Investor Relations TMX Equicom 416-815-0700 ext.264 
bpedram@tmxequicom.com

SOURCE: Thermal Energy International Inc.

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CO: Thermal Energy International Inc.
ST: Ontario
NI: ENV UTI ERN 

-0- Jan/29/2013 22:00 GMT


 
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