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Independent Reviews for Venture Investors

TMG.V - On the way.

Thermal Energy Group (TMG.V) is a global supplier of proprietary, energy efficiency and emissions reduction solutions to the industrial and institutional sectors. TMG.V is a fully accredited professional engineering firm, and provides a unique mix of proprietary products along with process, energy, and environmental engineering expertise.

TMG.V's proprietary products include: GEM™ - Steam Traps, FLU-ACE® - heat recovery, HEATSPONGE – Indirect contact condensing heat recovery systems, and DRY-REX™ - Low temperature biomass drying systems.

Coverage was initiated March 2021 with a note issued in November 2021. Below is an update.

News Releases

Nov. 26 - Granted Stock Options: A total of 2,125,000 options at $0.14 cents to purchase common shares of the Company to directors and officers of the Company as part of an overall remuneration and incentive program.

Dec. 07 - Board of Director Change: John Kelly has stepped down as Chairman of the Board. Mr. Kelly has been the Chairman for 12 years. He will remain an active member of the Board of Directors going forward. William White has been appointed as Mr. Kelly’s successor. Mr. White has been an active member of TEI Board for five years.

Jan. 26 - Announces Second Quarter Financial Results

Mar. 29 - Provides Spring Business Update:

i) Custom equipment (HeatSponge & GEM) continues to thrive order intake 43% greater than pre-Covid levels;

ii) Record levels of paid turn-key Project Development Agreements (“PDAs”) - double the F2019 pre-covid levels. In the Last Twelve Months (LTM) ended February 28, 2022, Thermal Energy has received 10 new PDA orders.

iii) Secured first PDA for an Energy as a Service (“EaaS”) project from one of our largest corporate customers. With an EaaS agreement we design, develop, and implement the project on behalf of the customer, and the customer only pays for the energy the system delivers over time. EaaS agreements allow customer to quickly begin saving carbon and energy without a long technical review, analysis, approval process and without impacting their capital budgets;

iv) Repeat order levels from our multinational customers remain high at 70-80%;

v) Membership of global coalition of large thermal energy users that represent approximately $1.3 trillion in market capital - The Renewable Thermal Collaborative (RTC) links large industrial thermal energy users committed to ambitious climate and renewable energy goals, with providers of advanced renewable thermal solutions.

Apr. 29 -Third Quarter Financial Results Ending February 28, 2022: Results reflect continued pandemic impact but record Custom Equipment orders and revenue and Turn-key Project development indicate growing demand.

July 5 - Announces the Passing of Board Member and Former Chairman John Kelly


In the last nine months, TMG.V was valued as high as $0.185 cents and as low as $0.07 cents.


Overall, YTD 2022, Revenue are flat from YTD 2021. Net losses are higher while Backlog and Cash are lower.

Unfortunately, a similar profile is also present for Q3 2022.

For much of the last two years, our customers and suppliers have endured reduced workforces, restricted travel and site access, and growing supply chain issues. Given this, many of our customers, often working with ‘skeleton staff’, have been focusing on continued operations rather than new projects, growth, or development. While our Custom Equipment revenue has continued to grow, these pandemic-related issues have resulted in delayed and protracted Turn-key Project development and delivery, and this is having a significant impact on our recent revenue and results.

Pre-pandemic, Turn-key Projects represented about two-thirds of revenue with Custom Equipment (primarily GEM and Heatsponge) one-third. But more recently,Custom Equipment revenue has exceeded Turn-key Projects

These naratives are reflected in the revenue and backlog numbers provided at the Q3 2022 Earnings.


YTD Custom Equipment revenue is 12% ahead of last year; 23% more than the pre-pandemic levels the year before

YTD Turn-key Project revenue is 18% below last year; and 67% below the pre-pandemic levels the year before

Overall, Custom Equipment revenue growth is not making up for Turn-Key Project revenues declines. Turn-Key revenues at 18% below 2021 is concerning (i.e. no bounce from YTD 2021?). Never mind 67% pre-pandemic levels!


Order backlog[2]: $5.6 million

Custom Equipment backlog: is $3.2 million, 78% ahead of this time last year and 207% more than the year before.

Turn-key Project backlog: is $2.3 million, 45% less than a year ago and unchanged from the year before.

The Custom Equipment increases are impressive but again the 45% decline in Turn-Key Project is significant.

Custom Equipment

We have experienced difficulties and extraordinary delays sourcing some key materials and parts which has led to the delay in shipping a significant number of Custom Equipment units. Our work in progress and order backlog is the highest it has ever been and has therefore temporarily impacted revenue recognition for our Custom Equipment segment.

To protect and strengthen our supply chain, we are developing alternative and secondary suppliers in line with our quality systems, and fully utilising our U.S. based facility to increase bulk purchases and increased stock holdings.

This is encouraging. It reflects that Custom Equipment's revenue contribution could have been higher in Q3 2022. More importantly, Thermal Energy is taking action to mitigate the situation with alternative and secondary suppliers.

Turn-Key Solutions

Turn-key Projects already in progress during the pandemic have taken longer to complete and for revenue to be realized, mainly due to travel and site access restrictions, and covid isolation and sickness of our customers’ staff. Also cited: Highly qualified pipeline projects with recognised financial benefits have n some cases been affected simply by budgetary cycles.

Its understandable that project delays impacts revenue recognition. Similarly, budgetary cycle with project approvals.

Turn-key Projects[3] are developed in partnership with the customer often with the implementation of a paid Project Development Agreement (“PDA’). In the Last Twelve Months (LTM) ended February 28, 2022, Thermal Energy received 10 new PDA orders and currently has 17 Turn-key Projects in paid development with customers. Both of these figures are at least twice the Company’s pre-pandemic highs and easily the highest level of Turn-key Project development in its history.

With PDA orders trending up, its unclear to which extent they are accounted in the YTD 2022 backlog.

“...Although the disruptions are expected to continue in the short term, the reasons for disruptions are known, understood and are being managed, and we believe order intake will bounce back due to the continued viability of our solutions to quickly and dependably achieve customers carbon reduction targets and significantly impact their ability to manage volatile energy prices.” - Thermal Energy CEO, William Crossland.

While the impediments are "known, understood, and being managed" there is no clear set of actions described by Thermal Energy. Is the company adapting to the situation by streamlining processes or engaging in other activities?

In short

The declining valuation of the past nine months continues to be directly reflected by the earning results. Unfortunately, Covid-19's is still having an impact on Thermal Energy's (TMG.V) revenues and backlog numbers.

Overall, it appears that TMG.V is struggling to capitalize on its own rhetoric around carbon emission reduction. However, the ten new Project Development Agreement (“PDA’) orders may be an indicator of future growth.

Unlike Custom Equipment's supply chain remediation, the course of action taken to remedy Turn-Key Solutions impediments lacks clarity. Some companies have permanently changed how they do business. TMG.V?

Nonetheless, the Energy as a Service (“EaaS”) offering (i.e. TMG.V design, develop, and implement the project on behalf of the customer, and the customer only pays for the energy the system delivers over time) seems promising.

The absence of a quantified sales pipeline and the rate of new product introduction is still at issue, despite important developments being continually under reported to the market (i.e. Curtiss-Wright, Energy Buyer Coalition Sponsorship, TMG's Venturi Technology, TÜV SÜD's white paper, and HeatSponge Type III Configuration).

Thermal Energy continues to underperform but there are signs that a reversal might be on the way.

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.


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