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- 1. The Profitable Path toNet Zero TSX-V: TMG | OTCQB: TMGEF Investor Presentation | February 22, 2024
- 2. Disclaimer This presentation maycontain forward-looking statements within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Thermal Energy International Inc. (the "Company“ or “Thermal Energy”) with respect to future business activities and operating performance. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “objective” and “continue” (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. For a detailed discussion of such risks and uncertainties, please see the risk factors outlined in our management’s discussion and analysis available under the Company’s profile on SEDAR at www.sedar.com. The Company does not intend, and does not assume any obligation, to update the forward- looking statements. The term “EBITDA” 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 EBITDA to Net income (loss), the closest IFRS measure. 2
- 3. We provide energyefficiency and carbon emission reduction solutions to Fortune 500 and other large multinational companies. We save our customers money while reducing their fuel use and carbon emissions. 3
- 4. Investment Highlights 1. Energyefficiency is the fastest, cheapest, and easiest way to reduce carbon emissions 2. Unique solutions provide high ROI with short, compelling payback 3. Significant repeat business from F500 and other large multinational customers 4. Continue track record of profitable growth, both organically and through accretive acquisitions 4
- 5. Energy Efficiency isthe Path to Net Zero 5 Global investment needed in energy efficiency2 (USD trillions) 2023 2030 $0.6 $1.8 1 Lawrence Livermore National Laboratory (2022); 2 International Energy Agency (2023), Energy Efficiency: The Decade for Action 5 2/3rds of energy used is wasted due to inefficiency1 Investment needs to triple to achieve net zero by 2050 (IEA)2 Energy efficiency is: • the single largest measure to achieving net zero by 2050 • called the “first fuel” as it provides some of the quickest and most cost-effective CO2 mitigation options while lowering energy bills
- 6. The Business Case •~90% of industrial energy use is thermal • ~50% is lost as waste heat • Higher, more volatile thermal energy costs • Continually increasing cost of carbon (up 300% in EU) Improving thermal energy efficiency is the fastest, cheapest, and easiest way to reduce industrial carbon emissions 6
- 7. Unique & ProprietarySolutions • Suite of complementary technologies that improve thermal energy efficiency • Highly-engineered, site-specific turnkey and custom delivery model • Recover up to 80% of energy lost in typical boiler plant and steam system operations • High ROI with short, compelling payback 7
- 8. Repeat Business Significant repeatbusiness from Fortune 500 and other large multinationals • Over the last 4 years, ~60% of orders have come from our top 10 key corporate accounts • Partially penetrated about 100 of these 10 customers’ sites in 15 different countries • Combined, these 10 customers have about 1,000 sites worldwide (<5% penetration)
- 9. Proven Growth Strategy Leverageexisting high quality customer base Increase portfolio of complementary products Grow team and global presence Grow organically and through accretive acquisitions 9
- 10. Acquisition Criteria 10 1. Accretiveto bottom line 2. Companies with commercialized products with potential revenues between $2M-$20M 3. Companies or products with complementary market positioning or access (i.e TEI products can be marketed through Targetco channels) 4. Products that can be marketed through existing TEI channels
- 11. 11 Strong, Profitable Growth– Q2 & LTM 0 7 14 21 28 FY22 FY23 LTMQ2 • Q2 revenue of $7.1 million, up 71% year-over-year • LTM revenue of $26.1, highest ever Revenue ($ millions) $26.1 $15.9 $21.1
- 12. 12 Strong, Profitable Growth– Q2 & LTM i1EBITDA is a non-IFRS financial measure that represents earnings before interest, taxation, depreciation, amortization, impairment of intangible assets, and share-based compensation expense. -1 -0.5 0 0.5 1 1.5 2 2.5 3 3.5 FY22 FY23 LTMQ2 • Q2 EBITDA of $830k, up $858k compared to a loss of $58k in Q2 a year ago • LTM EBITDA of $3.2 million, highest ever EBITDA1 ($ millions) $3.2 $1.7 FY22 $(0.8)
- 13. 13 Strong, Profitable Growth– Q2 & LTM -2 -1 0 1 2 3 FY22 FY23 LTMQ2 • Q2 Net Income of $486k, up $752k compared to a loss of $266k in Q2 a year ago • LTM Net Income of $2.1 million is the highest ever Net Income ($ millions) FY22 $2.1 ($1.8) $0.7
- 14. 14 Continued Strong Momentum 1Fiscal year-to-date results as at Q2 reporting dates January 23, 2024 compared to January 26, 2023, and January 27, 2022; 2 Represents any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company’s published financial statements; Order intake (YTD1 ) ($ millions) Order backlog2 (YTD) ($ millions) 18.1 Jan 26, 2023 Jan 23, 2024 Jan 27, 2022 Jan 26, 2023 Jan 23, 2024 Jan 27, 2022 6.8 22.2 7.5 19.5 23.6
- 15. 15 Growth in ProjectDevelopment Agreements (“PDAs”) # of Live PDAs January 2023 January 2024 January 2022 14 20 26 • PDAs - we are paid by the customer to complete detailed engineering to develop a project • Usually precursor to the full project order • Important indicator of momentum in our business and the strength of our business development pipeline
- 16. 16 One-Year Trading Performance(as at February 16, 2024) TSX-V: TMG Price $0.30 Market Cap $51.0 million 52-Week Range $0.10 - $0.325 +200.0%
- 17. Summary 1. Energy efficiencyis the fastest, cheapest, and easiest way to reduce carbon emissions 2. Unique solutions provide high ROI with short, compelling payback 3. Significant repeat business from F500 and other large multinational customers 4. Continue track record of profitable growth, both organically and through accretive acquisitions 17
- 18. The Profitable Path toNet Zero TSX-V: TMG | OTCQB: TMGEF www.thermalenergy.com
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- 20. • > 2/3rdsof the energy is lost due to inefficiency • Energy efficiency can have much greater impact than renewable energy • Reduces emissions & saves money! “Energy Efficiency, the world’s first fuel” – IEA • ~90% of industrial energy use is thermal • Industrial energy efficiency < 50% • Industrial thermal market is > 2x residential and commercial combined Industrial 26.4 Our Focus: Rejected Energy 67.5
- 21. Company Timeline 1991 TEI founded 1994 IPO 2008 GEMacquired Complementary product Higher margin regular orders EU operations 2020 (pre-pandemic) Revenue: $25M EBITDA: $2.9M Net income: $1.7M 2007 Crossland joins Board Revenue $1M Net loss: $2M 2009 Crossland appointed CEO Revenue: $4M Net loss: $3M 2018 BEI acquired Complementary product New sales channel Commercial market 2023/24 Stronger than ever Q2FY24: Record high trailing four quarters revenue, gross profit, EBITDA, and net income 2015 – 2020 Investment and expansion 30% revenue CAGR 2008 – 2012 Global recession 2021 Sofame acquired Complementary products Significant installed base 1991 – 2007 Mostly focused on R&D 21
- 22. Thermal Energy International| TSX-V: TMG, OTCQB: TMGEF Two Delivery Models 1. Turn-key Projects 2. Custom Equipment • Far less customer collaboration, travel or on-site work • Order to revenue between 3-6 months • Require significant customer collaboration, travel and on-site work • Take 2-3 years to develop and close • Project Development Agreements (“PDA”) - detailed engineering to develop the project, usually a precursor to the full Project order • 12 months to execute project • Most revenue in final 6 – 12 months investors-thermalenergy.com | 22 Turn-key Projects: Custom Equipment: 2 - 3 years: Final project order Complete project and fully revenue 3-12 months 12 months Obtain order for Project Development Agreement (PDA) Opportunity identification 12 months 6 months - 1 year: Produce, ship and revenue 3-6 months 3-6 months Obtain order Opportunity identification
- 23. Senior Management 23 William M.Crossland, B. Sc, MBA President & CEO; Director Robert Triebe, M.Sc., P.Eng. B. Sc. COO More than 25 years of experience delivering corporate growth, development, finance and M&A transactions to a broad range of industries with an emphasis on Cleantech, Alternative & Renewable Energy and Food & Beverage. Recognized expert in environmental technologies, responsibilities have ranged from R&D to project design and implementation. Expert Reviewer with the Sustainable Development Technology Corporation (SDTC). Julia Zhang, CPA CA CFO Sam Mawby, M.Eng, MBA Director of Business Development & Technology 15 years of financial management and reporting experience across publicly traded companies, environmental engineering consultancies and multinational businesses. Over 15 years of steam industry experience heading up the technical team and business development functions, spearheading large projects for Fortune 500 and multinationals. Isobel Wales, B.Eng, MA Director of Operations Vince Sands, P.E. Founder & President, BEI Almost 15 years of engineering and management experience across manufacturing, quality, supply chain and export. Marketing and operations lead providing the link between technical, production and sales teams. Founded Boilerroom Equipment Inc in 2005. Over 26 years of experience in the commercial and industrial boiler industry across sales, engineering, and senior management positions.
- 24. Board of Directors 24 WilliamWhite, BSc (Eng) Chairman William M. Crossland, B. Sc, MBA President & CEO; Director Past President of DuPont Canada following 30 year career with DuPont globally in progressive sales, operations and senior management roles. Currently Chairman of CHAR Technologies, COO Woodland Biofuels, Chair of advisory board for Schulich Center of Excellence for Responsible Business and Chair of the Sustainable Chemistry Alliance. More than 25 years of experience delivering corporate growth, development, finance and M&A transactions to a broad range of industries with an emphasis on Cleantech, Alternative & Renewable Energy and Food & Beverage. David Spagnolo, BSc (Eng), PhD Director Michael Williams, BSc (Eng), P.Eng, MBA, CFA Director Senior Vice President, Oil & Gas of Ausenco., a global engineering, procurement, construction management, and operations service provider to the energy and resources sectors. Prior to this he was Founder, President of Reaction Consulting Inc. (sold to Ausenco 2014), and the President of Triumph-Effisyn Ltd. Portfolio Manager, Independent Accountant Investment Council Inc.; Sales Manager & Senior Account Executive, Honeywell Limited; Manager, Program Development in Eastern Canada, Johnson Controls. William Ollerhead, BA, MBA Director Principal, Ollerhead Capital; CEO & Director Cuspis Capital Ltd. Since founding Ollerhead Capital in 1997 he has structured and arranged $800 million of private debt financing. Previously worked in corporate finance and fixed income sales and trading for a major investment dealer and debt private placements for two institutional investors.