Losses mount at Thermal Energy as Ottawa cleantech firm ‘accelerates’ investments

Thermal Energy
Thermal Energy

A slight dip in third-quarter revenues isn’t cooling the optimistic outlook of Thermal Energy International’s executives, who continue to forecast that the Ottawa cleantech firm will generate record sales in fiscal 2019.

Thermal Energy (TSX-V:TMG) reported revenues of $3.1 million for the three-month period ending Feb. 28, down slightly from just over $3.2 million a year ago. The company blamed the decline on a gap between major projects, but said its revenues for the first nine months of fiscal 2019 are up 50 per cent to $15.1 million compared with the first three quarters of 2018.

CEO William Crossland attributed the growth to “key project wins” over the past 12 to 18 months and significant new investments in sales, marketing and operations, including the hiring of 16 new employees in the past year.

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That additional spending pushed the firm’s net loss to $889,000 for the quarter, up from $159,000 in 2018. In the fiscal year to date, Thermal has posted a net loss of $1.05 million ​– a 290 per cent increase over the previous year.

But Crossland said he’s confident the extra spending will pay off down the line, noting the firm has expanded its footprint into new markets such as Germany, Poland, Texas and the U.S. Gulf Coast. He said new market penetration and Thermal’s acquisition of Pennsylvania-based Boilerroom Equipment last summer have helped Thermal Energy grow its backlog of confirmed orders to a record $16.6 million.

“By taking this approach, operating expenses have increased and profitability has been impacted, but at the same time this accelerated investment is already driving results, as evidenced by the strong level of orders received and the resulting record order book for the coming 12 months,” he said in a statement.

Thermal Energy develops energy-efficiency solutions to reduce large industrial customers’ heating bills, operating largely in the food and beverage sector. Calling Boilerroom a “welcome addition to our portfolio of products and bank of expertise,” Crossland said its technology helped Thermal land a $1.8-million deal earlier this year with a major U.S. dairy group, “a project that neither company could have obtained independently.”

More recently, the company won a $2.3-million contract to install its heat recovery systems at the European facilities of a multinational animal nutrition and agriculture company.

“As we look ahead into the next financial year and beyond, we’ll be seeking to further optimize the significant investment we have made in the business over the last few years, maximizing its benefit to strengthen our profit margins and deliver ROI,” Crossland added.

The company’s shares were down a penny, or 13 per cent, to 6.5 cents in midday trading on the TSX Venture Exchange.

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