Thermal Energy More Than Doubles First Quarter Revenue

OTTAWA, ONTARIO / October 30, 2018 - Thermal Energy International Inc. ("Thermal Energy" or the "Company") (TSXV: TMG), a global provider of proprietary energy and water efficiency, emission reduction and sustainability solutions to the industrial, commercial and institutional sectors, today announced its financial results for the three-month period ended August 31, 2018. All figures are in Canadian dollars.

Highlights:

• Revenue increased 120% to $6.8 million;
• Gross profit for the quarter increased 46% to $2.2 million;
• EBITDAS would have been $167,406, a $353,675 increase compared to last year when excluding strategic investments in growth and onetime expenses;
• Net loss for the quarter was $49,458, a $131,322 improvement compared to last year;
• Order backlog was $9.3 million as at October 30, 2018.

"Following our record revenue for all of fiscal year 2018, we achieved record revenue again for the first quarter of fiscal 2019" said William Crossland, CEO of Thermal Energy. "The ongoing strategic investments we are making in expanding our team, capabilities and product offerings is clearly beginning to pay off. The acquisition of Boilerroom Equipment Inc. in June not only expanded our offering of complementary products but also gave us direct access to significant new sales channels and provides us with a strong United States base of operations. Last week we announced two orders that moved us beyond our traditional thermal energy efficiency market into the broader water efficiency and sustainability markets. As businesses across the globe search for ways they can reduce operating costs and improve sustainability, they will increasingly be looking to suppliers that have a broad range of sustainability capabilities to identify, recommend, and implement the most advantageous solutions."

"With a strong order book and our expanded team, product offering and market reach, we are well positioned to continue our momentum in fiscal 2019 and beyond."

Q1 2018 Financial Review:

Revenues were $6,800,861 in the quarter ended August 31, 2018, representing an increase of $3,703,277, or 119.6%, over the $3,097,584 recognized in the quarter ended August 31, 2017. The increase in revenues from in the current quarter was mainly due to the partial delivery of the $11 million energy efficiency project with the Pulp & Paper Customer announced December 5, 2017, which was approximately 74% complete as at August 31, 2018, plus the addition of the Boilerroom Equipment business effective June 29, 2018.

The gross profit of $2,209,885 in the quarter ended August 31, 2018 represented an increase of $692,088, or 45.6%, from the $1,517,797 achieved in the quarter ended August 31, 2017. The increase was mainly the result of increased revenues. Gross profit expressed as a percentage of sales was 32.5% in the first quarter of FY 2019 compared with 49.0% in the first quarter of FY 2018. The decrease in gross profit percentage was due to the product split between heat recovery and steam traps.

Administration, selling, marketing and business development expenses ("Operating Expenses") in the quarter ended August 31, 2018 totaled $2,295,743 compared to $1,704,019 in the quarter ended August 31, 2017, an increase of $591,724, or 34.7%. Main increases included onetime costs related to the acquisition of Boilerroom Equipment Inc. ($107,342), the integration of Boilerroom Equipment Inc's results into the consolidated results, increased commission payable related to the increased revenue, the strategic investments in the future growth of the company including the addition of new sales and technical staff and additional investments in advertisement and marketing activities ($110,800), plus foreign exchange losses experienced in the quarter compared to foreign exchange gains experienced in the same quarter of the previous year (a difference of $54,644). Despite the increases, Operating Expenses as a percent of revenue was only 33.8% this year compared to 55.0% last year. Furthermore, excluding the onetime costs related to the acquisition of Boilerroom Equipment Inc. and the strategic investments to support the future growth of the business, Operating Expenses for the quarter would have been only $2,077,601.

EBITDAS for the quarter was negative $50,736, a $135,533 improvement compared to first quarter last year. However, EBITDAS would have been $167,406, a $353,675 increase compared to the same quarter last year if we excluded the strategic investments in growth and onetime expenses noted above.

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