Thermal Energy International Reports Breakthrough Second Quarter 2026 Results

Thermal Energy International Inc. (“Thermal Energy” or the “Company”), a Canadian energy efficiency and heat recovery solutions provider, announced extraordinary financial performance for its second quarter of fiscal year 2026 ended November 30, 2025. The Company achieved the highest quarterly revenue in its history, significantly improved profitability, and strengthened its order backlog and balance sheet, positioning itself for continued growth.

Overview of Q2 2026 Financial Performance

Thermal Energy recorded revenue of CAD 10.2 million in Q2 2026, reflecting more than an 18% year-over-year increase compared to the same quarter last year. This revenue milestone marks the strongest quarterly top-line performance in Company history.

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) soared to CAD 814,000 — more than triple the EBITDA reported in Q2 2025 — demonstrating substantial improvement in underlying profitability. Meanwhile, net income rose sharply to CAD 618,000, a 20-fold increase from the previous year’s figures.

Thermal Energy also reported a strong operating cash flow of CAD 1.6 million before working capital changes, a robust demonstration of the Company’s ability to generate cash from operations.

CEO Commentary: Strong Performance and Strategic Execution

In the earnings call, William Crossland, President and Chief Executive Officer of Thermal Energy, highlighted the excellent quarterly performance, noting that the strong revenue and profitability stemmed from record demand for heat recovery projects and equipment sales.

Crossland emphasized the importance of the Company’s strategic initiatives, including renewed efforts to secure larger turnkey projects and focus on innovative heat recovery solutions like HeatSponge, which contributed significantly to the Company’s revenue growth and orders received.

Crossland also reiterated that the results reflected a broader trend of ongoing operational strength, saying that Thermal Energy was well positioned for the second half of the fiscal year and beyond due to its strong financial foundation and expanding backlog.

Detailed Financial Breakdown

Revenue Breakdown:

• Total Revenue: $10.2 million — 18% increase year-over-year.
• Gross Profit: $4.0 million, reflecting a gross margin of approximately 39%.
• Operating Expenses: Increased to approximately $3.25 million, partly due to higher salary and benefits costs and one-time charges related to leased space and digital investments.

The improvement in gross profit was largely due to higher revenues generated from heat recovery equipment and solutions, illustrating the increased demand for Thermal Energy’s core products.

Adjusted EBITDA increased significantly, driven by higher gross margins and improved cost efficiencies. The Company’s profitable operations were highlighted as a key milestone during the earnings call.

Order Backlog and New Business Wins

A critical metric for Thermal Energy’s growth outlook is its order backlog, which increased to approximately CAD 21.5 million as of late January 2026 — representing a 20% increase compared to the prior year. This backlog reflects strong demand and future revenue visibility as current orders are fulfilled.

Thermal Energy’s order intake has also strengthened, particularly in HeatSponge turnkey projects, where sales have increased substantially due to targeted efforts by the internal sales team and simplified project structures that shorten sales cycles.

Key recent customer contracts include multiple heat recovery orders from global nutrition and multinational building materials companies, demonstrating both repeat business and expansion into strategic industrial sectors.

Operational Cash Flow and Balance Sheet Strength

Thermal Energy’s operations generated strong cash flow, which the Company has used to reduce debt and improve financial flexibility. At quarter end, the Company reported having approximately CAD 2.0 million in cash and working capital of CAD 3.4 million. The Company has virtually eliminated bank debt after paying down over CAD 3.8 million in term loans over recent years.

This improved liquidity and reduced leverage position the Company to invest in future growth opportunities, pursue strategic acquisitions, and continue to scale its business.

Performance by Segment

Revenue growth was supported by both heat recovery projects and sales of energy-efficient equipment. Performance gains in the GEM (Global Equipment Manufacturing) segment also positively impacted gross margins due to higher-margin sales.

The increase in operating expenses reflects investments in talent and technology to support scaling operations, especially digital tools like web platforms and customer scoping engines that help streamline project deployment.

Outlook and Strategic Priorities

Thermal Energy remains optimistic about its prospects for the remainder of fiscal 2026, underpinned by:

• A strong order backlog providing revenue visibility.
• Continued demand for turnkey heat recovery solutions.
• Investments in digital and operational capabilities supporting growth.
• Potential merger and acquisition opportunities to expand market reach.

Management has indicated that while the back half of the fiscal year may present challenges typical of the broader industrial landscape, the Company’s strategic focus on larger and higher-value projects should help maintain momentum.

Risk Factors and Market Challenges

Despite positive results, the Company also faces several external risks and challenges:

• Potential disruptions in global supply chains affecting project timelines.
• Macroeconomic pressures such as inflation and changing commodity pricing.
• Market competition from alternative heat recovery providers and efficiency technologies.
• Execution risks associated with scaling turnkey project deployments.

Management continues to monitor these factors and implement risk mitigation strategies as part of normal business operations.

Conclusion: A Quarter of Historic Growth

In summary, Thermal Energy International delivered an outstanding second quarter of fiscal 2026 with record revenue, improved profitability, and a strong balance sheet. The Company’s focus on heat recovery solutions, strategic expansion in key markets, and disciplined financial management contributed to this historic performance.

With a growing order backlog and renewed operational capabilities, Thermal Energy is well positioned to capitalize on future opportunities in energy efficiency and industrial heat recovery.

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