Thermal Energy Reports Record Revenue and Profitability
News related to:Thermal Energy International Inc · 3 min read
Thermal Energy International Inc., a provider of high-ROI energy efficiency and carbon emission reduction solutions, reported strong financial results for the fiscal year ended May 31, 2026. The company saw a 12.7% increase in revenue to a record $33.6 million for the year, with $7.1 million in the fourth quarter. Adjusted EBITDA increased by 83.5% to $1.9 million for the year, including $247,000 in the quarter. Net income grew by 749.4% to a record $1.3 million for the year, with $221,000 in the quarter.
Order intake also saw a significant increase, rising 37.6% to a record $30.0 million for the year, with $3.5 million in the fourth quarter. As of September 21, 2026, the company's order backlog grew to $18.9 million, up from $11.8 million as of May 31, 2026. The company attributed the growth in order intake to record turnkey projects revenue and strong growth in GEM sales.
For the fourth quarter, revenue was up 3.9% on higher GEM sales. While gross margins were down compared to the very strong margins in the same quarter of the previous year, they were higher than in any other quarter of fiscal 2026 and up significantly from the second and third quarters. If it were not for a one-time employer adjustment of $149,000 in the quarter, the company's Adjusted EBITDA would have been essentially flat to the fourth quarter of the previous year, and its full-year Adjusted EBITDA would have been its highest ever.
The company also repaid $328,000 in bank debt, bringing its balance close to zero by year-end. Additionally, the company repurchased 3.6 million shares, returning approximately $500,000 to shareholders.
Order backlog as of May 31, 2026, was $11.8 million, growing to $18.9 million by September 21, 2026. The company received $7.1 million in new orders subsequent to the year-end, bringing the current order backlog to $18.9 million as of September 21, 2026.
The company's financial review for the fourth quarter indicated that revenue increased 3.9% to $7.1 million, primarily driven by higher GEM revenue compared to the same quarter a year earlier. Gross profit decreased by 6.1% to $3.5 million, while gross margin decreased to 48.7% from 53.9%, due to lower margins on GEM and heat recovery projects, which were partly offset by higher margins on HeatSponge orders. Operating expenses were $17,000 higher but decreased as a percentage of revenue to 46.7% from 48.2%. The company recognized a group incentive in the amount of $293,000 and a one-time employer obligation adjustment of $149,000, while no such expenses were recognized in the fourth quarter of the prior year. The increase in operating expenses from these two adjustments was largely offset by a $386,000 increase in foreign exchange gains.
The company's financial review for the fiscal year indicated that revenue increased 12.7% to a record $33.6 million, stemming from increased order intake for both heat recovery projects and GEM equipment sales. Gross profit increased by $1.8 million or 14.6% to $14.1 million. Gross margin improved to 42.2% compared with 41.4% a year earlier. The increase in gross margin was mainly due to a change in product mix and improved margins on heat recovery projects. Operating expenses increased $963,000 to $12.5 million from $11.5 million but decreased as a percentage of revenue to 37.2% from 38.7%. Contributing to the absolute dollar increase was a $493,000 group incentive recognition (there was no incentive recognized in the prior year)