2014 annual meeting presentation
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Annual General Meeting of Shareholders
November 6, 2014
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This presentation includes “forward-looking information”. For example, statements about the opportunities for repeat business, additional orders, entry into new markets and growth of recurring revenue streams; order backlog; introduction of new products and services and growth opportunities and strategies 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. 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.
Forward-looking statements
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FY 2014 focus & recent successes
Winning repeat business
Cross-selling
Additional locations
Corporate accounts
Developing new markets and applications
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Hospitals – cross-selling
Example #1:
$800K in heat recovery &
GEM orders in FY 2014
Example #2:
$780K in heat recovery &
GEM orders in FY 2014
$246K heat recovery
expansion subsequent to
year end
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Pharmaceuticals – repeat business
World-leading diversified
healthcare company
FY 2014:
2 GEM orders totaling $281K
1 site penetrated out of 20
locations around the world
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Chemicals – repeat business
Fortune 500 performance materials and chemicals company FY 2014: 7 GEM orders totaling $282K
YTD FY 2015: 1 GEM order for $135K
To date: 13 GEM orders totaling $459K 3 sites penetrated out of
more than 40 sites 6
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Food & beverage – corporate account
Fortune 500 food & beverage leader FY 2014: 2 heat recovery & 7 GEM
orders totaling $2M
YTD FY 2015: 1 heat recovery & 2 GEM
orders totaling $1M
To date: 4 heat recovery & 9 GEM
orders totaling $3.3M 9 sites penetrated out of >100
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Pulp and paper – corporate account
Major North American pulp and paper company
FY 2014: $3.6M heat recovery order GEM survey completed
YTD FY 2015: $57K heat recovery order
To date: 3 heat recovery orders and 1
GEM survey totaling ~$7.7M 2 sites penetrated out of 9
locations
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Penetrated India’s tire
manufacturing industry
FY 2014:
GEM orders from multiple
manufacturers totaling
approx. $159K
Received initial order from
mining & resources sector
FY 2014:
$200K heat recovery order
from a global mining &
materials company
This was also our first order
from Greece
New markets & applications
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Our products deliver
Energy savings of
$48.6M annually
That’s equivalent to the amount of energy used by 46,785 North American homes
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Our products deliver
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Carbon emission reductions of
512,761 tonnes annually
That’s equivalent to removing 107,950 automobiles from the road
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Our impact to date
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>$384
million
in total fuel savings for our customers
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Returned to growth
Achieved record profitability
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Fiscal 2014 financial review
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Revenue
5-year CAGR = 27%
Fiscal 2014:
Heat recovery system sales +77%
GEM condensate return systems sales +37%
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Revenue excluding Mega Projects
5-year CAGR excluding Mega Projects = 20%
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Gross profit
5-year CAGR = 24%
Fiscal 2014:
Gross profit increased 40% over the prior year to a record of nearly $7M
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Net income & operating cash flow $
mill
ion
s
Net income Operating cash flow
Fiscal 2014:
Record net income of $634K
Adjusted operating cash flow of $1.35M
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($000’s) Q1 2015 Q1 2014 Change
Revenue
1,171 1,522 -351
Gross profit 703 970 -267
Net income (loss) (668) (359) -309
Operating cash flow (473) (106) -367
Q1 2015 financial review
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Q1 2015 financial review
Our Q1 results show our susceptibility to the timing of large orders
We had a record Q4 with close to record results in both our heat recovery and GEM businesses
Heat recovery Q4 2014 benefited from the substantial completion of 3 projects
GEM Q1 is typically slower (but Q1 2015 is above Q1 five-year average)
Q1 2015 had no GEM revenue from hospitals
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Large, fast-growing market with strong market fundamentals
Immediate growth opportunities and strategies for future growth
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Outlook
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North American market
>$90B1
>$450B1
Global investment in energy efficiency outpaced renewable energy in 2013
Global industrial market
Source: Bloomberg New Energy Finance, October 2014 1 Calculations based on data from U.S. Dept. of Energy, 2012 Energy Outlook
Large, fast-growing market
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56% growth in global energy consumption expected 2010 - 20401
60% of all energy used is lost due to inefficiency2
1 U.S. EIA, International Energy Outlook 2013; 2 Lawrence Livermore National Laboratory
Energy efficiency represents significant cost reduction opportunities
Investment more than offset by energy savings
Strong market fundamentals
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Immediate growth opportunities
Continue to develop corporate accounts & repeat orders
Cross-selling
Additional locations
11 customers
with >500
sites globally
8 customers
with >250
sites globally
11 customers
with >500
sites globally
16 customers
with >1,600
sites globally
11 customers
with >500
sites globally
8 customers
with >250
sites globally
11 customers
with >500
sites globally
16 customers
with >1,600
sites globally
Pulp & Paper Pharmaceutical Chemical Food & Bev.
Plus tires, plastics, textiles and many more
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Continue growing sales & distribution capabilities in key markets of North America, Europe & the Middle East
Foothold established but key markets still largely untouched
Immediate growth opportunities
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Fall 2013: Retained 2 professional sales recruitment agencies
Hired 7 sales & marketing staff over the last 12 months (net increase of 3)
Looking to hire 2 more sales people (Texas and Alberta)
June 2014: Engaged a global sales and sales management training organization to provide on-going training, coaching and support
Strengthening our sales team
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Strengthening our marketing capabilities
Hired a senior marketing professional
Enhancing current and developing new marketing materials
Launching a new corporate website in December 2014
Continuing to develop our social media presence
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New products & applications update
Reinvent the Toilet – Gates Foundation funded project involving FLU-ACE and DryRex technologies
Continuing work to simplify the process while improving cost effectiveness
DryRex biomass dryer
Patent renewed and market study completed
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New products & applications update
Petrochemical product development project
Final test site confirmed – equipment to be shipped & installed by early 2015
New GEM trap maintenance kit
Unique in-line servicing makes cleaning simple & quick
Patent pending on 3-stage GEM filtration system
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Grow in existing key markets
Enter new markets
Introduce new products & services
Grow recurring revenue streams
Future growth
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Organic growth
and/or
accretive acquisitions
Organic growth
and/or
accretive acquisitions
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