Thermal Energy International ((TSE:TMG)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Thermal Energy International’s recent earnings call conveyed a cautiously optimistic sentiment, highlighting a record fiscal year revenue and improved margins despite facing challenges such as a year-over-year revenue decline. The company successfully reduced its debt and laid out strategic initiatives for future growth. While there were concerns over reduced adjusted EBITDA and lower order intake and backlog at year-end, the positive developments, including a strong order rebound post year-end, slightly outweighed the negatives.
Record Fiscal Year Revenue
Thermal Energy International achieved a milestone with a record fiscal year revenue of $29.8 million, marking a significant growth of 41.2% over the past two years. This achievement underscores the company’s ability to expand its market presence and capitalize on growth opportunities despite a challenging economic environment.
Improved Margins
In the face of a decrease in quarterly revenue, Thermal Energy International reported an improvement in gross margins, reaching 53.9%, and an adjusted EBITDA margin of 5.8% in Q4. This improvement reflects the company’s effective cost management strategies and operational efficiencies.
Debt Repayment
The company made substantial progress in reducing its bank debt, paying down $2 million in fiscal 2025, including $1.1 million in the fourth quarter. This leaves only $329,000 remaining to be repaid by January 2026, demonstrating Thermal Energy’s commitment to strengthening its financial position.
Record Order Intake Post Year-End
Post year-end, Thermal Energy experienced a strong rebound in orders, with an intake of $11.4 million between June 1 and September 22. This surge led to a record backlog of $24.3 million as of September 22, indicating a positive outlook for future revenue streams.
Strategic Initiatives for Growth
Thermal Energy outlined several strategic initiatives aimed at driving growth. These include developing indirect sales channels, promoting standardized equipment packages, establishing manufacturing capabilities in Europe, and leveraging the CREST tool to enhance sales efficiency.
Year-over-Year Revenue Decline
Despite achieving record fiscal year revenue, the company faced a 9% year-over-year decline in revenue for fiscal 2025. This highlights the volatile nature of the market and the challenges the company must navigate to sustain growth.
Decrease in Adjusted EBITDA
The adjusted EBITDA for the year decreased to $1.05 million from $2 million the previous year, primarily due to increased operating expenses and lower gross profit. This decline underscores the need for the company to manage its expenses more effectively.
Decline in Order Intake and Backlog
The order intake of $21.8 million and order backlog of $12.9 million at year-end were down from the prior year, reflecting the lumpy nature of the business. This decline poses a challenge for the company in maintaining a steady flow of orders.
Forward-Looking Guidance
Looking ahead, Thermal Energy International plans to drive growth through strategic initiatives, including expanding indirect sales channels in North America and Europe, promoting standardized equipment packages, establishing manufacturing in Europe, and leveraging the CREST tool to enhance sales efficiency. These initiatives are expected to bolster the company’s market position and drive future growth.
In conclusion, Thermal Energy International’s earnings call presented a mixed yet optimistic outlook. While the company faced challenges such as a decline in adjusted EBITDA and order backlog, it also achieved record fiscal year revenue and improved margins. The strategic initiatives outlined for future growth and the rebound in order intake post year-end provide a positive trajectory for the company moving forward.