1 A more sustainable future... Today! TSX - V: TMG | Corporate Presentation | October 22, 2015
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This presentation includes “forward-looking information”. For example, statementsabout the opportunities for repeat business, additional orders, entry into new marketsand growth of recurring revenue streams; order backlog; introduction of new productsand services and growth opportunities and strategies are all forward lookinginformation. Such forward looking information reflects Thermal Energy International’s(“TEI”) current expectations with respect to future events and are based oninformation currently available to management. Forward-looking information involvessignificant known and unknown risks, uncertainties and assumptions. Should one ormore of these risks or uncertainties materialize, or should assumptions underlying theforward-looking information prove incorrect, actual results, performance orachievements 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. Theforward-looking information is made as of the date of this presentation and TEI doesnot assume any obligation to update or revise it to reflect new events orcircumstances, except as required by law.
Forward-looking statements
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Thermal Energy is a…
Global provider of energy efficiency solutions to the ICI sectors
We save our customers money & improve their bottom lines by…
Reducing their fuel useand cutting carbon emissions
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Highlights
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Large, fast growing global market with
strong fundamentals
Proprietary & proven energy efficiency
solutions provide high ROI
Low capital intensity business model
4 Poised for growth
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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 20141 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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Proprietary, proven solutions
FLU-ACE®
Direct contact condensing heat recovery
GEM®
Condensate return systems (steam trap)
~80%We can recover of energy lost in typical boiler plant and steam system operations
High ROI with short, compelling payback
16 year track record
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FLU-ACE® heat recovery
Recovery of waste heat from process exhaust
Return hot water for use in production or heating
1 system per location – sells for $100k to millions each
> 30 systems installed worldwide
90% 10-30% 2-5 YEARSRecovery rate Reduction in
energy costsPayback period
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GEM® condensate return system
Improved efficiency vs. traditional mechanical traps
No moving parts – never needs replacing
100’s to 1,000’s of traps per location and sell for $500 to $1,000 per trap
> 80,000 traps installed at 100’s of sites worldwide
10-30% 1-2 yearReduction in energy costs
Payback period
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Mechanical trap
GEM steam trap
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Proven across a number of sectors
PHARMACEUTICAL HOSPITALSFOOD AND
BEVERAGE
PULP AND PAPER CHEMICAL AND
PETROCHEMICAL
AND MANY MORE
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Recent projects
$520K GEMTM order from a leading diversified healthcare company – our largest GEMTM order to date
$656K heat recovery contract from a leading dairy operation with expected payback under two years
$825K heat recovery project for a major hospital resulting in annual savings of $200K
$3.4M heat recovery and GEMTM orders involving 9 sites from a leading Fortune 500 food & beverage company.
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($000’s) FY 2015 FY 2014 Change
Revenue 6,800 13,151 -6,351
Gross profit 3,628 6,974 -3,346
Net income (loss) (2,155) 634 -2,789
Operating cash flow (1,404) 1,349 -2,753
FY 2015 financial review
For the fiscal year ended May 31
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FY 2015 financial review
Factors impacting our FY 2015 financial results:
1. A significant number of our sales team are new and our products tend to have a long sales cycle
2. Susceptibility to the timing of, or absence of, larger orders
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FY 2015 financial review
“We are ever more focused on mitigating against these susceptibilities. This includes winning more business with large, multi-site customers and continuing to roll out our corporate accounts strategy.”
Subsequent to year end, we have announced orders from new customers and new industries, as well as cross-selling and other repeat business from several multi-site customers.
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($000’s) Q1 2016 Q1 2015 Change
Revenue 2,557 1,171 +1,586
Gross profit 1,100 703 +397
Net income (loss) (453) (668) +215
Operating cash flow (336) (473) +137
Q1 2016 financial review
For the quarter ended August 31
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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
18 customers
with >1,600
sites globally
Pulp & Paper PharmaceuticalChemicalFood & 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
2014: Hired 7 sales & marketing staff (net increase of 3)
Plan to hire 4 more sales people (Texas, Alberta, Germany and France)
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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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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Summary
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Large, fast-growing global market
Proprietary & proven solutions provide high ROI
Low capital intensity business model
Poised for growth