Ottawa-based Thermal Energy looks to strong backlog to offset stagnating revenue

Thermal Energy
A Thermal Energy's FLU-ACE heat recovery system.

Despite relatively flat revenues, Ottawa’s Thermal Energy International Inc. (TSX:TMG) believes its year-to-date and impending orders bode well for future growth.

The clean-tech company reported third-quarter results Tuesday that included revenues of $3.2 million in the three-month period that ended Feb. 28, virtually the same as in the same period a year ago.

While Thermal Energy saw a 9.7 per cent increase in sales of its heat recovery systems this past quarter, a 25 per cent drop in sales of its flagship GEM steam traps offset revenue gains.

Gross profit also fell this quarter, representing 52 per cent of sales this year as opposed to 63 per cent in the third quarter of 2016. The company reported a net loss of $56,000, as compared to net income of $418,000 a year previous.

Despite the lacklustre quarter, Thermal Energy believes it will end the year on a high note. The company’s year-to-date profitability is trending higher than this time last year, and its current order backlog of $8 million represents a 70 per cent increase year-over-year. This backlog features $3.5 million in orders from three hospitals, as well as thousands of dollars more from ethanol producers, pulp and paper mills and repeat business from a Fortune 500 food and beverage company.

Thermal Energy is coming off a strong second quarter which saw a 23 per cent year-over-year revenue increase and a $1.7 million order earlier in the year which gave the company’s share price a major boost.

“Thermal Energy International is well-positioned to capitalize on the strong market conditions we are witnessing around the world,” CEO William Crossland said in a statement.

At the end of the third quarter, net cash on hand was approximately $2.6 million.

Shares of Thermal Energy showed little reaction to the quarter’s results yesterday, ending the day slightly below its opening price.