Annual General Meeting of Shareholders

Transcription

1 Annual General Meeting of Shareholders November 2018 An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions TSX-V: TMG

2 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 2

3 Directors and auditors Nominated board members William Crossland John B. Kelly William Ollerhead Michael Williams David Spagnolo William B. White Auditors KPMG LLP 3

4 Management Presentation November 2018 An Innovative Technology Company Providing Custom Energy and Emission Reduction Solutions TSX-V: TMG

5 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 products and services; establishment and growth of new distribution channels; growth opportunities and strategies; conversion of existing orders into revenues; are all forward looking information. Such forward looking information reflects Thermal Energy International s ( TEI ) current expectations with respect to future events and are based on information currently available to management. Forward-looking information involves significant known and unknown risks, uncertainties and assumptions. For example, existing and new customers may not place orders for any number of reasons; fulfilment of orders, installation of product and activation of product could all be delayed for a number of reasons, some of which are outside of TEI s control, which would result in anticipated revenues from such projects being delayed or in the most serious cases eliminated; TEI may not be successful in identifying and developing new products and our new or existing products may not result in new orders or gain acceptance in new geographical or industrial markets; we may not be successful in establishing new distribution channels or such new channels may not be successful; our growth strategies may not be successful or result in the anticipated growth and orders received by TEI may not turn into revenue in the time frame anticipated, or at all, due to many factors, some of which are outside of TEI s control, including but not limited to TEI s ability to deliver products on time and in accordance with specifications and the continuing financial viability of the customer. Readers are also referred to the risk factors outlined in our management s discussion and analysis available at Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information contained in this presentation. Readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this presentation and TEI does not assume any obligation to update or revise it to reflect new events or circumstances, except as required by law. The term EBITDAS as used in this presentation is not a recognized measure under IFRS, does not have a standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. This measure is provided as additional information to complement IFRS measures by providing further understanding of the Company s results of operations from management s perspective and should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Please refer to our management s discussion and analysis for the applicable period for a reconciliation of EBITDAS to Net income (loss), the closest IFRS measure. 5

6 Year End Financial Results Fiscal

7 Revenue Fiscal year ($ millions) $17.4 $12.4 $13.2 $6.8 FY 15 FY 16 FY 17 FY 18 $17.4 million revenue is the strongest in the Company s history FY 2018 would have been a record revenue year even without the Resolute Forest Products project Increase of 32% over fiscal 2017 s revenue of $13.2 million 37% compound annual growth since FY

8 Gross profit Fiscal year ($ millions) $8.3 $7.4 $6.8 $3.6 FY 15 FY 16 FY 17 FY 18 53% 55% 56% 48% Gross Margin Record Gross Profit Increase of 12% over FY 2017 Gross margin impacted by project and product mix 8

9 Operating expenses Fiscal year ($ millions) $5.9 $6.4 $6.8 $7.7 FY 15 FY 16 FY 17 FY 18 87% 52% 52% 44% Percentage of revenue Operating expenses as a percent of revenue continues to decreased despite continued strategic investments in future growth. Excluding $613k strategic investments in future growth ($389k for staff additions & $224K in onetime acquisition related expenses) operating expenses would have been $7.1 million or 41% of revenue 9

10 EBITDAS Fiscal year ($ thousands) $2,048 $1.2M $564 $749 $617 FY 15 FY 16 FY 17 FY 18 EBITDAS decreased 17.7% to $617k compared with $749k in the prior year Excluding the $613k strategic investments in future growth and onetime acquisition related expenses, EBITDAS would have been $1.2 million - 64% increase 10

11 Net income Fiscal year ($ thousands) $2,154 $259 $393 $619 FY 15 FY 16 FY 17 FY 18 Net income increased 58% to $619k compared with $393,000 in the prior year Figure includes $613k of expenses related to strategic investments in future growth 11

12 Year end cash position May 31, ($ millions) $3.3 $3.0 $1.1 $ Steady year over year increases. Cash position up $2.7 million since FY

13 Year end working capital May 31, ($ millions) $1.4 $2.0 Continued growth in working capital Up $700k since last year and $1.5 million since FY $0.5 $

14 First Quarter Financial Results Q

15 Revenue First quarter ($ millions) $6.8 $3.1 $2.6 $2.1 Q1 16 Q1 17 Q1 18 Q1 19 Revenue increased 120% to $6.8 million Record Q1 revenue for the past two fiscal years FY 2019 Includes two months of BEI revenue 15

16 Gross profit First quarter ($ millions) $1.1 $1.5 $1.5 $2.2 Gross profit increased 46% to $2.2 million Gross margin impacted by product and project mix Q1 16 Q1 17 Q1 18 Q % 71% 48% 32% Gross Margin 16

17 Operating expenses First quarter ($ millions) $2.3 $1.7 $1.5 $1.5 Q1 16 Q1 17 Q1 18 Q1 19 Operating expenses as a percent of revenue continue to decrease despite continued strategic investments in future growth Excluding $218k in strategic investments in future growth ($111k in staff additions and $107k onetime acquisition related expenses), cash operating expenses would have been $2.1 million or 31% of revenue 58% 68% 55% 34% Percentage of revenue 17

18 EBITDAS First quarter ($ millions) $401 $3 -$186 $167 Q1 16 Q1 17 Q1 18 Q1 19 -$51 $51K represents a $135K improvement compared to Q1 last year Would have been $167K excluding $218k in strategic growth investments and onetime BEI acquisition costs 18

19 Net income First quarter ($ millions) Q1 16 Q1 17 Q1 18 Q1 19 -$80 -$181 -$453 -$49 $132K improvement compared to last year Includes $218k in expenses related to strategic investments on future growth 19

20 First quarter end cash position August 31, ($ millions) $2.3 Steady year over year increases Cash position up $1.6 million since Q $ $0.7 $

21 First quarter end working capital August 31, ($ millions) $2.3 Continued growth in working capital Up $1.1 million since last year and $2.2 million since Q $0.9 $ $

22 Financial Summary Consistent year over year growth Record revenue and gross profit for FY 2018 and Q1 FY 2019 Operating expenses as a percent of revenue continue to decrease despite continued discretionary strategic investments in the future growth of the company Profitability continues to increase despite continued discretionary strategic investments in the future growth of the company Continued growth in cash and working capital YE REVENUE FY 15 FY 16 FY 17 FY 18 YE EBITDAS FY 15 FY 16 FY 17 FY

23 Order Book Confirmed projects, revenue yet to be recognized 23

24 Order Book Order backlog reported with Q1 results ($ millions) $9.3 $7.8 $7.8 $3.7 Oct Oct Oct Oct October order backlog up 19% to $9.3 million Since then $960k Flu-Ace and HeatSponge heat recovery project for global chemical company $300k to integrate a Flu-Ace heat recovery system into a solar thermal system for a global beverage company 24

25 Recent Orders Customers include leading global companies across many sectors > $300K order from a global beverage company > Integrate heat recovery with solar thermal water heating > $960K order from a leading chemical producer > Turnkey project to combine Flu-Ace and HeatSponge > Order from major petrochemical company > Innovative water and heat recovery project > $1.3M order from Fortune 500 food & beverage customer > Water recovery system as part of sustainability drive 25

26 Recent Orders Customers include leading global companies across many sectors > $690K heat recovery order for hospital > New Canadian customer > $1.2M in multiple GEM orders > leading chemical manufacturer > $1.2M order from a leading food & beverage customer > Further Flu-Ace heat recovery system > $820K order from a teaching hospital > Flu-Ace heat recovery project 26

27 Growth Strategy Increasing productivity & expanding the business 27

28 Growth Strategy Increasing productivity & expanding the business Corporate Accounts Increase Productivity and Profitability Enhanced Marketing Internal Support, Systems and Tools Expand the Business New Products Growing Team & Global Presence Grow organically and through accretive acquisitions 28

29 Corporate Accounts Leveraging trusted global relationships to create efficient repeatable sales Quantity increased Sales team fully engaged Healthy spread across sectors Growing pipeline Revenue increasing The number of active Corporate Accounts has doubled in the last 12 months Twice as many sales people now manage multiple Corporate Accounts compared to last year Corporate Account effort is well spread, spanning 10 different industry sectors Pipeline of open Corporate Account opportunities has increased in value by 50% over the last 12 months Excluding Resolute Corporate Account revenue grew by almost 20% between FY2017 & FY

30 Enhanced Marketing Supporting the sales journey and leveraging sales effort Improve shareholder engagement 5 Key Areas Updated marketing materials and content Position TEI as a global leader & expert voice Launch sector specific multichannel campaigns Increase internal communications 30

31 Internal Support, Systems and Tools Investment in people, training and sales focussed management On-going and regular training Global Conference (June 2018) with multiple streams of activity Monthly Salesforce training & regular LinkedIn training Cross-office engineering resource exchange program On the job product cross-training Provides flexible resourcing Focused sales management professionals EU Sales Director (Jul 2017) 31

32 New products Product Line Product Status Super-Efficient Cogeneration heat recovery system $1.46M order received Two paid engineering studies received Dry-Rex low temperature biomass drying system Multiple customers interested Dry-Rex lab engineer contracted Established biomass testing lab 32

33 New products Product Line Product Status HEATSPONGE indirect contact water and heat recovery RAINMAKER indirect hydronic boiler water and heat recovery Developing integrated heat recovery offering strategy and promotional material Working with Vince to develop BRUCE like automated quote programs 33

34 New products Product Line Product Status Sustainability Products Developing Flu-Ace for water recovery Turnkey water recovery projects Integrating TEI products into renewable energy One order already received in each area 34

35 Expanding our team & Global Presence Added Latin America sales person (Apr 2016) Ontario / CoGen sales person (May 2016) CoGen Engineer (Jul 2016) Junior Engineer (Nov 2016) South Germany sales person (Jan 2017) NA Marketing Manager (May 2017) EU Sales Director (Jul 2017) Senior engineer (Oct 2017) Operational Systems Manager (Jan 2018) EU marketing manager (Apr 2018) Texas sales person (Feb 2018) North Germany sales person (Apr 2018) Poland sales person (Jul 2018) NA to EU Cross training engineer (Sep 2018) 35

36 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 Adds BEI s suite of indirect contact heat recovery products HeatSponge - steam boiler heat and water recovery Sidekick and Rainmaker - First-to-market hydronic boiler heat and water recovery Applicability to small and large industrial, commercial and institutional sectors Expands TEI into the much larger commercial and hot water boiler markets Order size $10k to $200k 36

37 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 Increased distribution network Provides access to BEI s 40 established boiler related manufacturers reps in United States, Canada, and parts of Latin America Direct relationships with boiler manufacturers and other OEMs Access to an installed base of over 1,000 customers 37

38 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 US-based manufacturing complex with experienced work force Allow for vertical integration of TEI products Future FLU-ACE tower assembly Expansion into skid-mounted FLU-ACE piping modules US-based location for GEM trap distribution Expanding into larger facility in

39 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 TEI obtains BRUCE proposal development software Proprietary, scalable, fully automated software that provides engineering estimates and sales proposals in real-time Supports sales and engineering efforts reducing the overhead and time-lines All coding accomplished solely by Vince Sands Adds a highly experienced sales and engineering expertise 39

40 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 Vince Sands, P.E. Founder & President, Marine Engineering & Naval Architecture, US Merchant Marine Academy, Kings Point NY, 1992 Engineering Officer, US Navy Reserve, Cannon Boiler Works, VP Engineered Systems Aalborg Industries, Team Lead, Watertube Boilers English Boiler & Tube, National Sales Manager Triad Boiler Systems, Consultant Founded Boilerroom Equipment Inc in Years of Experience in the boiler industry 40

41 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 BEI has arguably the most advanced indirect contact heat recovery technology in the world. But to grow BEI required a partner with: International sales and distribution capabilities Marketing support Engineering and project development Access to capital to invest in growth 41

42 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 TEI was a customer with established relationships TEI shared our passion for best in class standards for indirect contact heat recovery TEI s commitment to keeping production at the plant meant the employees that were instrumental to creating BEI would not lose their jobs 42

43 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 Bruce sales and engineering software A fully automated software suite that rates, engineers, and provides sales proposal in realtime Standard units can go from initial inquiry to a professionally complete and fully priced bid document in under two minutes Supports all customers and representatives sales efforts reducing BEI s support overhead 43

44 Growth Strategy Acquisition of Bolierroom Equipment Inc., June 2018 Achieving our strategic objectives: Internal Support, Systems and Tools New Products Growing our team and capabilities Growing our global presence 44

45 Longer term: Moving from energy efficiency to sustainability Developing a portfolio of sustainable solutions Businesses around the world are increasing seeking to: Improve sustainability, energy, and water efficiency Reduce GHG and operating costs TEI is increasing able to: Identify, Recommend, and Implement the most advantageous energy efficiency, water recovery and sustainability solutions! 45

46 Growth Strategy & Outlook Highlights 1. Enormous, fast-growing market 2. Experienced and established North American and European sales platform 3. Proprietary products sold to leading companies in many sectors and geographies 4. Growing team, global presence and product offerings 5. Poised to continue strong track record of growth 46

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