2017 shareholders meeting - management presentation

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  1. 1. Annual General Meeting of Shareholders TSX-V: TMG | November 28, 2017
  2. 2. 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 Internationals (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 TEIs 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 TEIs control, including but not limited to TEIs 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 managements discussion and analysis available at www.SEDAR.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performanceorachievementscouldvarymateriallyfromthoseexpressedorimpliedbytheforward-lookinginformationcontainedinthispresentation. 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 Companys results of operations from managements 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 managements discussion and analysis for the applicable period for a reconciliation of EBITDAS to Net income (loss), the closest IFRS measure.
  3. 3. Year end financial results
  4. 4. Year end revenue ($ millions) 0 2 4 6 8 10 12 14 FY 15 FY 16 FY 17 $13.2 FY 2017 highlights: Record revenue Up 6.4% over FY 2016 GEM revenue up 28.6% over FY 2016 Heat recovery revenue down 9.4% versus FY 2016
  5. 5. Year end gross profit ($ millions) 0 1 2 3 4 5 6 7 8 FY 15 FY 16 FY 17 $7.4 FY 2017 highlights: Record gross profit Up 9.5% over FY 2016 Gross margin of 56.4% versus 54.8% in FY 2016 Higher proportion of GEM revenue
  6. 6. Year end operating expenses ($ millions) 0 1 2 3 4 5 6 7 FY 15 FY 16 FY 17 FY 2017 highlights: Operating expenses as a percentofrevenue wereflat despite additional staff and increased marketing activities 88.3% 52.1% 52.0% Percentage of revenue
  7. 7. -2500 -2000 -1500 -1000 -500 0 500 1000 EBITDAS Net loss ($ thousands) FY 15 FY 16 FY 17 Year end EBITDAS and net income FY 2017 highlights: EBITDAS increased 33% to $750K Net income was up 52% to $393K
  8. 8. First quarter financial results
  9. 9. Q1 revenue ($ millions) 0 0.5 1 1.5 2 2.5 3 3.5 Q1 16 Q1 17 Q1 18 $3.1 Q1 2018 highlights: Record Q1 revenue Up 45.1% over Q1 2017 Heat recovery revenue up 168.6% Second strongest Q1 GEM revenue on record
  10. 10. Q1 gross profit ($ millions) 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 Q1 16 Q1 17 Q1 18 $1.5 Q1 2018 highlights: Record Q1 gross profit Up 4.3% over Q1 2017 Gross margin of 49.0% vs 68.2% in Q1 2017 Much higher proportion of heat recovery revenue
  11. 11. Q1 operating expenses ($ millions) 0 0.5 1 1.5 2 Q1 16 Q1 17 Q1 18 Q1 2018 highlights: Operating expenses were $1.7M versus $1.5M in Q1 2017: More than half of the increase relates to: New sales staff New technical staff Other strategic growth initiatives 61.3% 69.8% 56.1% Percentage of revenue
  12. 12. -500 -400 -300 -200 -100 0 100 EBITDAS Net loss Q1 EBITDAS and net income ($ thousands) Q1 16 Q1 17 Q1 18 Q1 2018 highlights: Our second best Q1 EBITDAS in the past 5 years EBITDAS lower mainly as a result of change in product mix and growth expenditures
  13. 13. Financial summary Record revenue and gross profit for FY 2017 followed by record Q1 revenue and gross profit L4Q revenue of $14.2 million compared to previous 4 quarters revenue of $12.0 million Cash balance of $1.3 million No debt
  14. 14. Order backlog & recent orders
  15. 15. Order backlog remains strong At the time of first quarter reporting in October of each year ($ millions) 0 1 2 3 4 5 6 7 8 9 Q1 16 Q1 17 Q1 18 $7.8 Order backlog: The value of projects in respect of which purchase orders have been received but have not yet been reflected as revenue in the Companys published quarterly financial statements.
  16. 16. Recently announced orders included in order backlog: $1.32 million heat recovery order from a hospital group $3.28 million from 2 separate orders from a leading Fortune 500 food & beverage customer $351 thousand GEM order from a leading performance materials company $189 thousand GEM order from a leading vacation destination company Orders from many industries
  17. 17. Growth strategy & outlook
  18. 18. Corporate accounts Sales tools & support Growth strategy Growing productivity Grow organically and through accretive acquisitions Enhanced marketing & branding
  19. 19. Corporate accounts New products Sales tools & support Growth strategy Growing productivity Expanding the business Grow organically and through accretive acquisitions Growing our team & global presence Enhanced marketing & branding
  20. 20. Corporate accounts Growing our team & global presence New products Sales tools & support Growth strategy Growing productivity Expanding the business Grow organically and through accretive acquisitions Enhanced marketing & branding
  21. 21. Sales tools & support Heat Recovery Analysis & Proposal Generator Increases analysis and response speed Screen out poor opportunities quicker GEM data sizing data base Online library of sales support resources, case studies, slide decks, product animations, technical FAQ On-going and regular training Fully open internal training program Upgrading and enhancing CRM system
  22. 22. Sales tools & support incentive funding Creates compelling event, provides 3rd party validation, improves customer ROI UK SALIX NHS Efficiency fund Wisconsin - Focus on Energy California - PG&E Quebec - BEIE EU funding in Poland Germany: KfW 294 OCE target GHG program. UK Heat Recovery Fund Canadian Clean Growth Program
  23. 23. Enhanced marketing and branding Added a Sales & Marketing Coordinator (Ottawa) in May 2017 Hiring a Sales & Marketing Coordinator (UK) IN Jan/Feb 2018 New internal and new external newsletters a Updated product brochures and case studies Launched German website in October 2017 Goal: Better communications, better content, shared knowledge and a stronger brand internally and externally.
  24. 24. Corporate accounts update Director of Corporate Accounts (appointed January 2016) to mentor and develop the team Corporate account opportunities expected for every member of sales team Existing customer engaged at a corporate level Manufacturing sites in more than 1 sales territory More than $2 million in sales potential
  25. 25. Corporate accounts update Fortune 500 food & beverage leader Major hospital group #1 Leading performance materials co. Major hospital group #2 Multinational agribusiness company Leading travel destination company Global beer company Leading food ingredients business Large pulp & paper customer Fortune 500 life sciences company Global building materials company Multinational mining & resources co.
  26. 26. Quebec (2014) Midwest US (2014) Southeast UK (2014) Latin America (2016) Ontario / CoGen (2016) Germany (2017) EU Sales Director (2017) Engineering / CoGen (2016) Senior engineering (2017) Junior engineering X2 (2017) Added: Growing our team & global presence
  27. 27. Quebec (2014) Midwest US (2014) Southeast UK (2014) Latin America (2016) Ontario / CoGen (2016) Germany (2017) EU Sales Director (2017) Engineering / CoGen (2016) Senior engineering (2017) Junior engineering X2 (2017) Added: Growing our team & global presence Texas (expect to hire soon) Germany (interviewing candidates for 2nd person) Northwestern North America (2018) France Eastern Europe Planned:
  28. 28. Growing our team &

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