Thermal Energy International Reports First Quarter Financial Results

Ottawa, Ontario--(Newsfile Corp. - October 27, 2026) - Thermal Energy International Inc. (TSXV: TMG) (OTCQB: TMGEF) (FSE: EUW) ("Thermal Energy" or the "Company"), a provider of high-ROI innovative energy efficiency and carbon emission reduction solutions to major corporations around the world, today reported its financial results for the first quarter ended August 31, 2026. All figures are in Canadian dollars.

Q1 2027 Highlights:
(Compared to Q1 2026)

• Revenue decreased 9.2% to $6.2 million.
• Adjusted EBITDAⁱ was negative $80 thousand and net loss was $272 thousand.
• Received $6.8 million in orders during the quarter and $6.0 million orders following quarter end.
• Order backlogⁱⁱ at quarter end was $13.0 million, growing to $19.0 million by October 26, 2026.
• For the trailing twelve months ended August 31, 2026:
  • Revenue increased 17%.
  • Adjusted EBITDA was up 76%.
  • Net income increased $889 thousand.

Overview

"While our first quarter results were below our expectations, it is important to highlight that our financial performance can fluctuate materially from quarter to quarter due to the timing, size, and mix of customer orders," said William Crossland, CEO of Thermal Energy. "Our revenue for the quarter was adversely impacted by delays in the delivery of a couple of heat recovery projects because a customer's facilities were not yet ready for the projects to advance, which was outside our control. The delays do not change the value of the projects or the demand we continue to see for our energy efficiency and decarbonization solutions. Accordingly, as usual, we believe investors are best served by focusing on customer adoption trends, our trailing twelve-month performance, and longer-term growth trajectory rather than quarter-to-quarter fluctuations."

Summary Financial Results

Financial Review for the First Quarter Ended August 31, 2026

First quarter revenue was $6.2 million, which was down $633 thousand, or 9.2%, compared to the first quarter a year ago. The decrease was mainly attributable to lower heat recovery and GEM revenues in the quarter, with the most significant factor being delays on the delivery of a couple of heat recovery projects due to circumstances related to client site readiness. Gross profit for the quarter decreased by 6.4% to $3.0 million while gross margin improved approximately 140 basis points to 48.0% due to product mix, with a higher proportion of revenues coming from GEM sales compared to the same period last year.

Operating expenses were $283 thousand higher than the same quarter a year earlier, mainly due to the unfavourable change in foreign exchange of $122 thousand and general inflationary cost increases. However, R&D expense decreased by $80 thousand compared to R&D activities conducted same quarter a year earlier.

The Company had Adjusted EBITDA of negative $80 thousand and a net loss of $272 thousand, compared to Adjusted EBITDA of $350 thousand and net income of $166 thousand in the first quarter a year earlier.

At the end of August 31, cash and working capital balances were approximately $4.5 million and $3.8 million, respectively.

Full financial results including Management's Discussion and Analysis and accompanying notes to the financial results are available on www.sedarplus.ca and investors-thermalenergy.com/en/financial-overview.

Business Outlook and Order Summary

Orders received ("Order Intake") during the first quarter totalled $6.8 million, which was the second highest order intake for any first quarter, but down significantly from the exceptionally high order intake of $11.9 million in the first quarter of last year. The Company ended the quarter with an order backlog of $13.0 million, down 29.7% year over year.

The Company received $6.0 million in new orders subsequent to the quarter end, bringing the current order backlog to $19.0 million as of October 26, 2026. A list and description of recent order highlights is available on page 13 to 14 of the Management's Discussion and Analysis filed today.

Notice of Earnings Call and Webcast

Thermal Energy will host an earnings call and webcast today, October 27, at 8:30 am ET. A question-and-answer session will follow management's prepared remarks, at which time qualified equity analysts will be able to submit questions via the webcast.

The live webcast with a slide presentation will be available at https://tinyurl.com/TMG2027Q1. You may join the webcast via MS Teams on your computer, mobile app or room device. Please join the webcast approximately 15 minutes prior to the earnings call to ensure adequate time for registration and admittance to the webcast.

For more information, including dial-in information, refer to the Company's press release from October 19, 2026.

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Notes to editors

About Thermal Energy International Inc.

Thermal Energy International Inc. provides energy efficiency and emissions reduction solutions to Fortune 500 and other large multinational companies. We save our customers money by reducing their fuel use and cutting their carbon emissions. Thermal Energy's proprietary and proven solutions can recover up to 80% of energy lost in typical boiler plant and steam system operations while delivering a high return on investment with a short, compelling payback.

Thermal Energy is a fully accredited professional engineering firm with engineering offices in Ottawa, Canada, Pittsburgh, USA, as well as Bristol, UK, with sales offices in Canada, UK, USA, Germany, Poland, France, and Italy. By providing a unique mix of proprietary products together with process, energy, and environmental engineering expertise, Thermal Energy can deliver unique, site-specific turnkey and custom engineered solutions with significant financial and environmental benefits for our customers.

Thermal Energy's common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol TMG, on the OTCQB under the symbol TMGEF, and on the Frankfurt Open Market (FSE) under the symbol EUW. For more information, visit our investor website at https://investors-thermalenergy.com or company website at www.thermalenergy.com and follow us on Twitter at https://twitter.com/GoThermalEnergy.

Forward-Looking Statements

This press release contains forward-looking statements relating to, and amongst other things, based on management's expectations, estimates and projections, the anticipated effectiveness of the Company's products and services, the timing of revenues to be received by the Company, the expectation that orders in backlog will become revenue, the anticipated benefits of the Company's current efforts at training and business improvement efforts, opportunities for growth, the Company's belief that it can capitalize on opportunities, the size of markets and opportunities open to the Company and the impact of investments that the Company has made on the Company's ability to scale. Information as to the amount of heat recovered, energy savings and payback period associated with Thermal Energy International's products are based on the Company's own testing and average customer results to date. Statements relating to the expected installation and revenue recognition for projects, statements about the anticipated effectiveness and lifespan of the Company's products, statements about the expected environmental effects and cost savings associated with the Company's products and statements about the Company's ability to cross-sell its products and sell to more sites are forward looking statements. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, some of which are outside of the Company's control, could cause events and results to differ materially from those stated. 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 the Company's control, which would result in anticipated revenues from such projects being delayed or in the most serious cases eliminated. Actions taken by the Company's customers and factors inherent in the customer's facilities but not anticipated by the Company can have a negative impact on the expected effectiveness and lifespan of the Company's products and on the expected environmental effects and cost savings expected from the Company's products. Any customer's willingness to purchase additional products from the Company and whether orders in the Company's backlog as described above will turn into revenue is dependent on many factors, some of which are outside of the Company's control, including but not limited to the customer's perceived needs and the continuing financial viability of the customer. Volatility with respect to tariffs and trade regulation may continue and may impact the Company in ways not currently anticipated. The Company disclaims any obligation to publicly update or revise any such statements except as required by law. Readers are referred to the risk factors associated with the Company's business as described in the Company's most recent Management's Discussion and Analysis available at www.sedarplus.ca.

Non-IFRS Financial Measures

The Company believes the following non-IFRS financial measures provide useful information to both management and investors to better understand the financial performance and financial position of the Company.

EBITDA and Adjusted EBITDA

Management believes that EBITDA (earnings before interest, taxation, depreciation and amortization) and Adjusted EBITDA (EBITDA plus share-based compensation expense) are useful performance measures. The Adjusted EBITDA approximates cash generated from operations, before tax, capital expenditures and changes in working capital. Adjusted EBITDA also assists comparison among companies as it eliminates the differences in earnings due to how a company is financed. EBITDA and Adjusted EBITDA do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures presented by other companies. There is no direct comparable IFRS measure for EBITDA or Adjusted EBITDA.

A reconciliation of net income to EBITDA and Adjusted EBITDA is shown below.

Order Backlog

Order backlog is a useful performance measure that Management uses as an indicator of the short-term future revenue of our Company resulting from already recognized orders. The Company includes in "order backlog" any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company's published financial statements. It is important to note that once an order or partial order is recorded as revenue, the order backlog is reduced by the amount of the newly reported revenue. Order backlog does not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similar measures presented by other companies.

For additional details on non-IFRS financial measures, please refer to the Company's most recent Management's Discussion and Analysis available at www.sedarplus.ca for more details about these non-IFRS financial measures.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

ⁱ Adjusted EBITDA represents earnings before interest, taxation, depreciation, amortization, and share-based compensation expense. See note below about non-IFRS measures.
ⁱⁱ Order backlog represents any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company's published financial statements. See note below about non-IFRS measures.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/321119