Good morning, everyone. Thank you for joining our earnings call. I'm William Crossland, CEO of Thermal Energy International, and welcome to our fourth quarter and year-end earnings call. Earlier this morning, we reported our financial results for the fourth quarter and the year, ended May thirty-first, two thousand and twenty-four. Our news release, financial statements, and MD&A will be posted on our website and have been filed on SEDAR. If you're joining us online, you should be able to see our slide presentation on your screen now. Okay. Before we go any further, I need to point out that today's earnings call may contain forward-looking statements within the meaning of applicable securities laws, and forward-looking statements are subject to risks and uncertainties, and undue reliance should not be placed on such statements.
Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For more information, please refer to our year-end financial statement and our management's discussion and analysis for the quarter and our other filings with the Canadian Securities Regulators. This morning, I'll provide an overview of the exceptional year we had in fiscal twenty twenty-four. Record revenue and EBITDA, despite the fact that our fourth quarter was comparing against our strongest quarter ever in the fourth quarter last year. I will also discuss how we are well-positioned for continued growth, as well as our favorable outlook for fiscal twenty twenty-five and beyond. After my prepared remarks, we will have a question-and-answer session, at which time qualified equity research analysts joining us on the call will be able to ask questions.
Okay, so as I said, we had record revenue in fiscal 2024. The full-year revenue of almost CAD 26 million was 23% higher than it was in fiscal 2023 and 63% higher than it was in 2022, so showing some very good growth. Importantly, we saw strength across the business in all product categories, so record revenue for both GEM and uncertain. And in fact, uncertain revenues have doubled since 2021, and our heat recovery revenue was the highest it's been in the last four years, so it's coming back stronger than ever. In terms of EBITDA, we also had record EBITDA for the year. Fiscal 2024 EBITDA of CAD 2 million represent an increase of CAD 260,000 over fiscal 2023, and more than CAD 2.7 million from two years ago.
In 2024, we made significant reinvestments in our business to drive future top-line growth, and that obviously impacted EBITDA. I'll discuss those investments in a couple of minutes. However, I wanted to highlight that if we backed out those additional growth expenses, our EBITDA for fiscal 2024 would have been about CAD 3.5 million. Net income for the year was almost CAD 1 million, representing an increase of CAD 262,000 from last year, and more than CAD 2.8 million from two years ago. Again, our net income would have been higher if we were to back out the investments that we're making to drive future growth.
Now, looking at our fourth quarter results, as much as I would like to grow every single quarter, there's always been some lumpiness in our business, due in part to our customers' budgets and mostly the timing of large orders. You know, depending on what quarter it happens to fit, our quarterly results can vary quite significantly. And that's why we always encourage you to look at, you know, an LTM-type basis. In the fourth quarter of fiscal twenty twenty-three, in particular, we benefited from that lumpiness, because we posted our strongest quarter ever, for revenue and gross profit, and that quarter included a lot of GEM revenue, revenues from a number of very large GEM orders that we happened to get.
It was a challenging quarter to compare last fiscal quarter, twenty twenty-three, Q4 2023, with Q4 2024, because of that, the great results that we had last year as a record quarter. You know, so as a result of the Q4 2023, our revenue in Q4 2024 was down about CAD 678,000, or 8%, as our GEM sales certainly weren't as nearly as high. That being said, revenues from heat recovery and non-GEM sales of equipment increased year over year, so everything else also increased in the quarter. Gross profit was down CAD 696,000, mainly due to decreased revenues from GEM sales.
As you can see on slide 7, that drop in gross profit accounted for most of the year-over-year variance in EBITDA, but we remained profitable with EBITDA of CAD 422,000 and net income of CAD 290,000 in the quarter. Now we'll jump onto the balance sheet, so turning quickly to our balance sheet, at the end of May 2024, we had cash and cash equivalents of CAD 7 million, working capital of CAD 3.5 million, both up from last year, and for reference, at the end of May 2023, you can see we had cash or cash equivalents of CAD 3 million and working capital of CAD 3 million, as I said. We reduced our debt year over year by about CAD 900,000 to CAD 2.4 million at the end of 2024.
Okay, I know I spoke about this last quarter, but it's important to highlight again. We made significant reinvestments in our business in fiscal 2024. In order to keep up with the growing demand, we moved our U.K. operation to a much larger industrial unit just on the outskirts of Bristol. The larger production facility is 2.5 times the size of our old location and has obviously then more than double the throughput capacity. Growing our business is largely a function of adding more people, salespeople and engineers, and so we did that in fiscal 2024, adding five people to our sales and marketing team, including two new salespeople in France, which is a new market for us.
We also added four people in engineering and production, as our engineering team was at or beyond capacity at that time, and we also invested significantly in our technology, what we call our architecture for growth. This includes our custom-developed mobile app called CREST, which stands for Carbon Reduction and Efficiency Scoping Tool, which is exactly what it is. Currently, it's in the final stages of development. CREST will enable our sales and marketing team to much more efficiently identify thermal energy savings and carbon reduction opportunities while on site with our customers. In other words, it will help identify more heat recovery and cross-selling opportunities.
Additionally, we invested in our robust global accounting program and ERP software to create agility in our accounting, manufacturing, and fulfillment to ensure we continue to efficiently expand our operations and scale our business. These investments obviously impacted our bottom line by about CAD 1.5 million, as I mentioned earlier. However, most of this has yet to contribute to our top line. These investments will enable the next stage of growth for Thermal Energy over the coming years. We reported previously that our order intake in fiscal 2024 was also a new record high, surpassing the record set the year before by about 8%. It's worth calling out that order intake in fiscal 2024 was around 150% higher than it was two years ago, at almost CAD 30 million this year.
Record flue gas heat recovery and uncertain order intake contributed to the growth in order intake in twenty twenty-four. In terms of order backlog, we exited fiscal twenty twenty-four with an order backlog of CAD 18.7 million, which was our highest ever at the end of a fiscal year, about 43% higher than last year and up 282% from two years ago. Since then, our backlog has grown to about CAD 21.3 million as at September eighteenth. As a reminder, our order backlog represents the amount of purchase orders that have been received but not yet been reflected as revenue in our published financial statements. Our order backlog has traditionally been one of our best leading indicators of revenue on a forward twelve-month basis.
Another important indicator of momentum in the business and a key metric in assessing the strength of our business development pipeline is activity pertaining to project development agreements, or as we call PDAs. This is where the customer is paying us to develop a project for them. At the end of May, we had 33 projects in development after having converted a record number of our PDAs into sold projects in 2024. We continued with strong demand we are seeing for our project development agreement, and PDA pricing, quite frankly, is being increased to reflect this. The team is busier now, and, you know, so we can increase the pricing. Looking at our outlook, I know we shared this slide last quarter, but again, I think it bears repeating.
We are well positioned to continue building on our track record of profitable growth, which we look to do both organically and through accretive acquisitions. Just looking at our top ten corporate accounts, we see tremendous repeat business opportunity and lots of room to grow. In fact, we believe we only have about a 5% penetration with these top ten multinational customers, who combined, have about 1,000 sites worldwide. And finally, according to the International Energy Agency, global investment in energy efficiency needs to triple, if we are to collectively achieve our targets to reduce carbon emissions by 2050. In summary, fiscal 2024 was a banner year with record revenue, EBITDA, and order intake. We made significant investments to continue growing the business. That impacted our bottom line, but not our top line.
We have really strong order backlog, and our PDA activity points to continued momentum in our business. This concludes our prepared remarks, and I'd now like to open the call for questions. I'm going to turn it over to Trevor Heisler at MBC Capital Markets Advisors, who will moderate our Q&A. Please go ahead, Trevor.
Thank you, Bill. If you are a qualified equity analyst joining us on MS Teams this morning and would like to ask a question, please notify me by using the Raise Your Hand feature. And your first question comes from Russell Stanley at Beacon Securities. Your mic is activated. Please go ahead, Russell.
... Good morning, and thank you for taking my questions. First, just around the backlog, as of the reporting date, back up over CAD 21 million, which is great to see. It's in line with year-ago levels. Just wondering, given the shift in revenue mix from custom equipment to turnkey project, would you say the backlog is in line with your expectations? And can you talk to the composition of that backlog, you know, relative to what you'd like to see? Thanks.
Yeah, it is in line with our expectations. I think, you know, the year has just begun, but we're in line with what we had expected for the year in terms of order intake. And it is, as we have expected and discussed before, it is shifting more towards the big turnkey projects. And that's what we expected. So it's a much... I don't know, Russell, off the top of my head, what the percentage is, but certainly I know that turnkey projects have been growing. They were, as I've said before, 60% of our business. You know, it was two-thirds, one-thirds between projects and custom equipment. It's now switching back. It's not, it hasn't gone all the way back. It did get to be reversed, right?
Where custom equipment was two-thirds and turnkey projects were one-third. It's now, you know, approaching fifty-fifty, but turnkey is growing much quicker, and we expect that will continue.
That's great. Thanks for that. Maybe, with respect to the people you've added, understanding it takes time for them to ramp up and hit steady state levels, for lack of a better term. Just wondering, if you know how happy you are with the ramp-up periods or ramp-up times to date? And, you know, to clarify, I guess, do you need to add additional people in either sales or engineering, or are you happy with the team at this point?
Pretty happy with the team. I mean, we have added three more people since year-end, but we believe that's about it for the time being. We're pretty happy with the capacity we have now, and quite frankly, we are pleased with the ramp-up of the new salespeople as well, so you know, we've got a VP sales or director of sales in Europe, VP sales in North America, and, you know, we've got a good sales team now, so we're pretty pleased with where we're at in terms of the sales team, and we don't think we're gonna be actively hiring too many more people for the foreseeable future.
Great. Maybe just one more from me, and I'll get back in the queue. Around acquisitions, can you talk to, I guess, what you're seeing out there in terms of opportunities and how realistic valuation expectations are at this point?
Well, you know, I've mentioned before, we tend. I mean, the acquisitions we're looking at tend to be private, and they tend to be founder-owned and operated. So I would say valuation expectations are always unrealistic when you're talking to the founder. So I don't really see much change. Having said that, you know, the acquisitions we've done before, we usually target somewhere around a one times revenue. But, of course, every business is gonna be slightly different, depending on the profitability and the markets they're in. But that's usually a guide, and I wouldn't say it's changed much. So, you know, we think there's some good opportunities out there for us.
That's great. Thanks, Bill. I'll get back in the queue.
Hello, Bill, your next question comes from Jesus Sanchez of Castellar Investments.
Yes, go ahead. Jesus, you need to unmute.
Okay. Sorry for that. Hi, Bill.
Hi, Jesus.
I wanted to ask about the current backlog and the new order intake. Do we have any new customers, or are all of them repeated customers?
That's a good question. I'm trying to remember the orders. Most of them, I mean, when it comes to large orders, which is the material ones, it's almost always, by definition, a repeat customer. Most customers start out with something small. It's either, you know, sort of a some engineering work for us or a small, you know, GEM trap order. So I would say most of it is repeat.
Okay. Thank you.
Having, you know, having said that, you know, we announced a, you know, a CAD 4 million... You know, about a year ago, a CAD 4 million turnkey project in the pharmaceutical sector, and that was a, that was a new customer. So that was... So, so in terms of the more recent orders, I can't recall off the top of my head, but generally, most of our business comes from a repeat.
Mm-hmm. And regarding your new facility in the UK, do you have an estimated time to start operating it, and the impact it will have?
Oh, it's already in operation. Yeah, it has been for a few months now, and the team is actually thrilled with it. So, I was over earlier, you know, a couple of months ago. It's a great facility, lots of capacity, much better location, so we're quite pleased with it. So it's, you know, it's easily double the capacity of the past facility. And generally, it's been very positively received by our team, so, you know, we're looking forward to it.
Thank you very much, Bill.
Your next question comes again from Russell Stanley at Beacon Securities. Please go ahead.
... Oh, thank you. Maybe just on the project development agreements, can you talk, understanding you're busy there, and you've taken a pricing up on those, which is great to see. I'm just wondering if you can elaborate on what customers are saying with respect to engaging those agreements. You've increased your capacity, I guess, to fulfill them, but just wondering, you know, the eagerness on the part of customers to move forward with those and how happy you are with the conversion rate. Thank you.
I guess the main question is conversion rate. Russell, is that right, or was there something else in that question?
Both the conversion rate, but also, the eagerness of prospective customers to engage in PDAs in the first place.
Yeah, I don't think there's any change there. We had significant growth in PDAs. The team, you know, was probably too busy, and so, you know, we consciously sort of toned that down a little bit because we just couldn't handle much more, and that's why we're increasing the pricing. The conversion rate, you know, I'm still pretty happy with it. It's still early days because it's been a pretty dramatic ramp-up over the last couple of years, and it takes a few years before you really get any good data on conversion rate. You know, I've mentioned before that historically it was around two-thirds. I hope and would expect it'll be similar this time, but it's still a little bit too early to tell.
But, you know, the other thing, Russell, that we're doing is we're making extra sure now. Not only have we increased the pricing of the PDAs, but we really need to make sure that the customer is engaged and wants to proceed.
Got it. Thank you, Bill.
Any other questions?
It looks like there are no further questions at this time, Bill. Please go ahead.
I would if there is no further questions. I'd like to thank everyone for taking the time this morning, and we look forward to speaking to you again next quarter. And if you do have any further questions, don't hesitate to reach out to our investor inquiries email address. Thanks very much, and have a great day.