Thermal Energy International Inc. · TSXV:TMG
Thermal Energy International — Shareholder Meeting (November 2020)
39 slides from Thermal Energy International's shareholder meeting presentation, Nov 24, 2020
Slide 1: Annual General Meeting of Shareholders
Annual General Meeting of Shareholders November 24, 2020 An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions TSX-V: TMG | [email protected] | www.thermalenergy.com
Slide 2: Agenda
Agenda • Call to order • Chairman’s remarks • Appointment of scrutineer • Notice of meeting and quorum • Voting procedure • Election of Directors • Appointment of auditors • Close of formal proceedings • Management presentation • Question & answer www.thermalenergy.com | 2
Slide 3: Directors and auditors
Directors and auditors Nominated board members • William Crossland • Michael Williams • John B. Kelly • David Spagnolo • William Ollerhead • William B. White Auditors • KPMG LLP www.thermalenergy.com | 3
Slide 4: Management Presentation
Management Presentation November 24, 2020 An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions TSX-V: TMG | [email protected] | www.thermalenergy.com
Slide 5: Forward-looking statements
Forward-looking statements This presentation includes “forward-looking information”. For example, statements about the opportunities for repeat business; the possibility or expectation of additional orders; growth in existing markets; entry into new markets; order backlog; introduction of new produc
Slide 6: Strategic Plan
Strategic Plan Growing the business & getting the story out 5-year Strategic Plan (F2018 – F2022) • Phase 1- Growing the business (F2018 - F2022) • Invest in growth and drive the results • Phase 2- Getting the story out (F2020 – F2022) • Investor awareness and outreach program • Phase 1 - by F2020 P
Slide 7: Strategic Plan – Phase 1
Strategic Plan – Phase 1 Growing the business Increase Productivity Expand the Business and Profitability Growing Team & Global Product Internal Presence Portfolio Enhanced Support, Marketing Systems and Corporate Tools Accounts Grow organically and through accretive acquisitions www.thermalenergy.c
Slide 8: Strategic Plan – Phase 1 Results
Strategic Plan – Phase 1 Results Growing the business • Almost 80% of sales in last 12 months were from established corporate customers • Now have two experienced Sales Directors managing the sales teams in each of NA and EU • New Marketing team is delivering a range of collateral and campaigns acro
Slide 9: Strategic Plan – Phase 1
Strategic Plan – Phase 1 Growing the business Growth Oriented Expenses • $1.5 million in growth-oriented expenses 1.6 $1.5 added over the last three years: 1.4 $1.3 • 8 new sales positions/territories 1.2 • 5 new engineering positions 1 • 2 new marketing and operations positions 0.8 $0.6 • Marketing
Slide 10: Strategic Plan – Phase 2
Strategic Plan – Phase 2 Getting the story out Started Phase 2 • Investor Conference Attendance • Globe Capital, AlphaNorth Capital Conference • Thermal Energy featured on the BNN Bloomberg Channel • 90 sec CEO Clip and 15 sec advert, aired on BNN • Re-started NCIB • Nov. 2019 – Mar 2020 – 1.7 milli
Slide 11: F2020 The year that could have been
F2020 The year that could have been www.thermalenergy.com | 11
Slide 12: Strategic plan, phase 1 success - Strong growth!
Strategic plan, phase 1 success - Strong growth! Pre COVID-19 Q3 - Feb 29, 2020 REVENUE • Revenue YTD up 23% compared to prior year • 31% 5 yr CAGR • EBITDA LTM up $2.7 million from F2019 • 51% 4 yr CAGR FY15 FY16 FY17 FY18 FY19 Q3 FY20 • LTM Net income LTM up $2.1 million from LTM F2019 EBITDA • 59
Slide 13: COVID-19 global pandemic
COVID-19 global pandemic Unprecedented times Economic slowdown, customer lockdowns • Even before the Mar 11 global pandemic, economic activity had been slowing for several quarters. • Jan – Mar 2020 - GDP shrank 4% - 5%, the worst quarter in over 10 years • Apr – Jun 2020 – GDP shrank a further 20%
Slide 14: COVID-19 global pandemic
COVID-19 global pandemic Economic slowdown, customer lockdowns During this period of unprecedented uncertainty, our focus immediately turned from growth to risk mitigation • Project development, orders and revenue all dropped precipitously • Q4 Revenue and order intake down 53% and 71% respectively
Slide 15: Making the best of a bad situation
Making the best of a bad situation COVID-19 Global Pandemic After 5 years of team, territory and product growth, we took the opportunity to deliver a backlog of other initiatives • Bring forward digitalization initiatives to: 1. Enable remote working 2. Improve efficiency 3. Capture & transfer knowl
Slide 16: Digital Transformation
Digital Transformation COVID-19; Making the best of a bad situation Digitalization initiatives immediately brought forward to: 1. Enable Remote Working • Implementation and exploitation of 365 & Teams platforms • Video conference facilities and cloud working infrastructures enabled TEI Portal • Coll
Slide 17: Digital Transformation
Digital Transformation COVID-19; Making the best of a bad situation Digitalization initiatives immediately brought forward to: 2. Improve Efficiency & Enhance Collaboration Project • Centralized resources, activities and work-flows in one spot Management • Project Management Office - Digitalization
Slide 18: Digital Transformation
Digital Transformation COVID-19; Making the best of a bad situation Digitalization initiatives immediately brought forward to: 3. Capture and Transfer Knowledge TEI • Knowledge Transfer initiative launched to: Learning • Thoroughly capture essential IP and knowledge across business Centre • Enable m
Slide 19: Digital Transformation
Digital Transformation COVID-19; Making the best of a bad situation High engagement driven through training and regular communication: Knowledge Captured 11 channels of product and project training 75 live training sessions captured with over 120 hours of training Training paths for 10 platforms Com
Slide 20: Early starts
Early starts Project engineering and revenue acceleration • Typical heat recovery projects require two to three months of detailed engineering once order is received. • minimal revenue in first few months • We Initiated some early engineering work on expected highly qualified projects, including: •
Slide 21: Making the best of a bad situation
Making the best of a bad situation COVID-19 Global Pandemic Used the slowdown to improve and enhance systems and capabilities and prepare for a return to full capacity and the new normal • Enabled us to respond to the current circumstances • Prepared us for an altered state of business in the future
Slide 22: Year End Financial Results
Year End Financial Results Fiscal 2020 www.thermalenergy.com | 22
Slide 23: Revenue
Revenue Fiscal year 2020 ($ millions) 25 • Q3 FY 2020 YTD revenue was up 23% $21.1 $21.4 20 • Q4 FY 2020 revenue was down 53% $17.4 • 2% revenue growth for FY 2020 despite 15 $12.4 $13.2 COVID-19 10 • 26% revenue CAGR since 2015 $6.8 5 0 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 www.thermalenergy.com | 23
Slide 24: Gross profit
Gross profit Fiscal year 2020 ($ millions) 10 $9.0 • 11% increase in gross profit for FY 2020 9 $8.0 8 • 24% gross profit CAGR since 2015 $6.9 7 $6.3 • Gross margin increased to 42% $5.8 6 5 4 $3.1 3 2 1 0 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 46% 47% 48% 40% 38% 42% Gross margin www.thermalenergy.com
Slide 25: Operating expenses
Operating expenses Fiscal year 2020 ($ millions) 9 $8.2 $7.8 • FY 2020 operating expenses controlled and 8 reduced in Q4 via: 7 $6.3 • COVID-19 related government support programs 6 $5.4 $5.4 $5.6 • Immediate freeze of all discretionary expenses 5 • 15% company-wide salary reduction 4 3 • FY 2020 op
Slide 26: EBITDA
EBITDA Fiscal year 2020 ($ thousands) 2000 $1,941 • Despite COVID-19, annual EBITDA of $1.9 1500 million is still the highest in the Company's 1000 $750 $617 history $564 500 $176 • Excluding the $1.5 million investment in 0 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 strategic growth-oriented expenses -500
Slide 27: Goodwill & Intangible Asset impairment
Goodwill & Intangible Asset impairment COVID-19, unprecedented times require unprecedented actions • Accounting regulations require a valuation of goodwill and intangible assets every year • The valuation must incorporate any significant changes in the market or economy that may have an averse impac
Slide 28: Net income
Net income Fiscal year 2020 ($ thousands) 1500 • Net loss for FY 2020 was $1.9 million due to 1000 a $3.1 million non-cash write down of $619 goodwill and other intangible assets $259 $393 500 0 • Excluding the $3.1 million in goodwill -500 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 and other intangible as
Slide 29: First Quarter Financial Results
First Quarter Financial Results Q1 2021 www.thermalenergy.com | 29
Slide 30: Revenue
Revenue First quarter ($ millions) • Q1 FY 2019 revenue driven by Resolute 8 mega order $6.8 7 • Q1 FY 2021 revenue down 44% due to 6 $5.0 COVID-19 but still higher than Q1 FY 2019 5 excluding the Resolute mega order 4 $2.8 3 2 1 0 Q1 19 Q1 20 Q1 21 www.thermalenergy.com | 30
Slide 31: Gross profit
Gross profit First quarter ($ millions) • Q1 FY 2021 gross profit down 41% due to 2.5 $2.2 COVID-19 $1.9 • Gross margin increased despite COVID-19 2 revenue drop 1.5 $1.3 • Q1 2019 gross margin impacted by Resolute mega project 1 0.5 0 Q1 19 Q1 20 Q1 21 29% 44% 47% Gross margin percentages www.therm
Slide 32: Operating expenses
Operating expenses First quarter ($ millions) • Q1 2021 operating expenses controlled and 2.5 reduced via: $2.0 • COVID-19 related government support 2 $1.8 programs $1.4 • Freeze of all discretionary expenses 1.5 • 15% company-wide salary reduction 1 0.5 0 Q1 19 Q1 20 Q1 21 30% 37% 51% Percentage o
Slide 33: EBITDA & Net income
EBITDA & Net income First quarter EBITDA Net income 500 $472 • Q1 FY 2021 EBITDA still 300 $241 positive despite the 44% 400 200 drop in revenue due to COVID-19 300 100 • Q1 Net loss of $218k but 200 0 approx. $117k positive Q1 19 Q1 20 Q1 21 before non-cash charges 100 -100 $15 -$49 0 -200 Q1 19 Q1
Slide 34: Cash position
Cash position Year end and first quarter ending August 31, 2020 ($ millions) • May 2020 cash position of $4.8 million was 4.9 highest year-end cash position in the $4.8 4.8 4.7 Company's history $4.6 4.6 • Aug 2020 cash position remains strong and 4.5 largely unchanged 4.4 4.3 $4.2 4.2 4.1 4.0 3.9 3
Slide 35: Working capital
Working capital Year end and first quarter ending August 31, 2020 ($ millions) • May 31, 2020 working capital strongest in 4.0 $3.7 over 10 years 3.5 $2.9 • August 31, 2020 working capital further 3.0 benefited from a low interest government 2.5 COVID-19 working capital loan $2.0 2.0 1.5 1.0 0.5 Mai
Slide 36: Orders backlog & intake
Orders backlog & intake As at Nov 19 for the last 3 years Order backlog Order intake • Order backlog impacted 16 $14.8 10 $9.4 by economic slowdown 14 8 since Dec 2019 12 $11.1 $6.8 $10.0 • Strong rebound in 10 6 $5.4 8 activity and orders since 6 4 June 2020 4 2 • YTD order intake 72% 2 ahead of la
Slide 37: Conclusion
Conclusion • Since early 2020 the COVID-19 global pandemic has had an unprecedented impact on the world • First six months of 2020 GDP contracted 30% - 40% - the largest decrease in history • Like most companies, the COVID-19 global pandemic had a negative impact on our revenues • After 5 years of s
Slide 38: One of Canada's fastest growing companies
One of Canada’s fastest growing companies • September 2020 - Named one of Canada’s Top Growing Companies, in the Globe and Mail Report on Business’s annual ranking for the second year in a row www.thermalenergy.com | 38
Slide 39: Thank you
Building back better! Thank you www.thermalenergy.com Thermal-Energy-International on LinkedIn We are happy to answer your questions GoThermalEnergy on Twitter An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions TSX-V: TMG | [email protected] | www.thermalen
Thermal Energy International — Shareholder Meeting (November 2020) on 6ix