{"id":4111,"date":"2015-12-24T12:41:14","date_gmt":"2015-12-24T17:41:14","guid":{"rendered":"http:\/\/www.cusjc.ca\/ottawainsight\/?p=4111"},"modified":"2017-11-19T20:51:03","modified_gmt":"2017-11-20T01:51:03","slug":"thermal-energy-hoping-sales-heat-up","status":"publish","type":"post","link":"https:\/\/www.cusjc.ca\/ottawainsight\/?p=4111","title":{"rendered":"Thermal Energy hoping sales heat up"},"content":{"rendered":"

After one of its worst fiscal years on record, Ottawa-based cleantech company Thermal Energy International (TSX-V: TMG) says its potential to grow lies in the hands of its sales department.<\/strong><\/p>\n

\u201cSales is what drives the future of this company,\u201d Thermal Energy Chairman John B. Kelly told shareholders, at the company\u2019s annual general meeting on November 12.<\/p>\n

From 2014 to 2015, Thermal Energy saw a 48 per cent decrease in revenue.<\/p>\n

\u201cThe board and management are not happy about the outcome of last year, I might even say this is an understatement,\u201d Kelly says.<\/p>\n

Despite the poor showing in 2015, CEO William Crossland says Thermal Energy does not intend to change its long-term strategy. Last year was a record for Thermal Energy, with a revenue of more than $13.1-million and a net profit of $978,267.<\/p>\n

The company currently sells two products aimed at increasing industrial energy efficiency: GEM steam traps and FLU-ACE heat recovery systems.<\/p>\n

Revenue fluctuations<\/strong><\/span><\/p>\n

Crossland explained that Thermal relies on a small number of large sales to drive its bottom line, causing large year-to-year fluctuations in revenue.<\/p>\n

\u201cYou have good years and you have bad years,\u201d Crossland says in a phone interview.<\/p>\n

This year has already proven to be better for the company, with Thermal announcing three new major contracts in the last month alone. The company reported revenue of $2.6 million in its first quarter, compared to $1.1 million in the same quarter last year\u2014a yearly growth of 118 per cent.<\/p>\n

\u201cWe set out a strategy and we want to implement it,\u201d Crossland says.<\/p>\n

Thermal\u2019s current strategy, a sales-driven approach, can be traced to 2011, when the company added six employees to the sales team, as well as a marketing and sales coordinator.<\/p>\n

The results have been mixed so far, with Thermal earning profits in 2012 and 2014, but incurring losses of more than $2 million in both 2013 and 2015.<\/p>\n

Crossland believes Thermal\u2019s strategy and personnel are ideal for the current market. He\u2019s also bullish about the demand for high-efficiency, emissions-reducing products.<\/p>\n

\u201cWe\u2019re in the right place, at the right time, with the right people,\u201d says Crossland.<\/p>\n

The need for local sales<\/strong><\/span><\/p>\n

Ashley Thibaudeau, a cleantech analyst from the economic development agency Invest Ottawa<\/a>, says one of the challenges that a small cleantech company may face is the inability to sell in its own backyard.<\/p>\n

Thibaudeau says one of the challenges that small cleantech companies face is the inability to sell in its own backyard.<\/p>\n

Thibaudeau said in the case of Thermal Energy finding and selling to Ottawa customers is difficult because she says, \u201cThe only real clientele for these companies [in Ottawa] is the federal government.\u201d Thibaudeau says local companies, like Thermal Energy, often overlook opportunities with the government.<\/p>\n

Thibaudeau says government philosophy, in addition to movements like COP21 and the possibility of a carbon tax or cap and trade system can help press the issue of emissions reduction and drive increased investment in the cleantech industry.<\/p>\n

\u201cWe\u2019re all feeling pretty warm and fuzzy,\u201d says Thibaudeau.<\/p>\n

\u201cBut we also know that theses things, getting policy actually pushed through, can take a long time,\u201d she says.<\/p>\n

International focus<\/strong><\/span><\/p>\n

While optimistic about the effect a federal Liberal government could have on the cleantech industry, Crossland is more focused on international opportunities.<\/p>\n

\u201cThe US and China\u2019s movements are more exciting than Canada\u2019s because the world will follow them,\u201d says Crossland.<\/p>\n

One aspect of Thermal\u2019s strategy that changed this year is customer service. Crossland says a lack of communication between Thermal and its existing client base led to several clients being lured away by competitors.<\/p>\n

Crossland gave an example of a Thermal sales person who left the company, taking his client contact information with him. Incidents like this opened the door for major competitors, notably US-based steam company Spirax Sarco<\/a>, to come in and make a sales pitch if ever a GEM steam trap wasn\u2019t working properly.<\/p>\n

The issue, Crossland admitted, was that there aren\u2019t any direct economic benefits in following up with clients. \u201cWe\u2019re still figuring out a business model, it\u2019s a challenge. But for now it\u2019s important to keep up our reputation,\u201d he says.<\/p>\n

Crossland says Thermal has taken steps to address the problem. It has added stickers with the company\u2019s information to all of its steam traps and sends out anniversary cards to its clients. It also transferred its paper trail of client contact information to a user-friendly database.<\/p>\n

Thermal Energy\u2019s current strategy is in stark contrast to that of the company\u2019s founder and original CEO, Thomas Hinke.<\/p>\n

Fired in 2005, Hinke attempted a strategic partnership approach in the late 1990s, in which Thermal would attempt to form relationships with more established companies, who would provide sales and customer service.<\/p>\n

Grumpy shareholders<\/strong><\/span><\/p>\n

Another difference with Thermal\u2019s current strategy is share price. The share price, which was as high as $2.85 per share under Hinke, currently sits at $0.04 per share. The low price has angered some, including longtime shareholder Youssan Duvnjak.<\/p>\n

\u201cEven though the company is doing crappy, the share price doesn\u2019t have to be crappy,\u201d Duvnjak says. \u201cWe need to bring the sexiness back to our stocks.\u201d<\/p>\n

But Crossland disagrees with the shareholder\u2019s comment at the annual meeting. He explained how Thermal had focused too much on self-promotion in the past. The CEO says he did not want to create an illusion of the company\u2019s worth and that it needed to earn a higher share price.<\/p>\n

Thibaudeau says, while a strong sales team is an important indicator of a company\u2019s potential survival, what is crucial are the every day decisions made at the top.<\/p>\n

\u201cIt\u2019s on that business owner to say well we\u2019ve had enough. Or to say, well no actually, we\u2019re going to push through this,\u201d Thibaudeau says.<\/p>\n

The message at the annual general meeting was clear\u2014the company and its shareholders expected better from its board of directors.<\/p>\n

\u201cI hope if things don\u2019t look good ahead, that you\u2019ll look at yourselves to make some changes,\u201d says Duvnjak, addressing the board of directors.<\/p>\n

\u201cWe know we can\u2019t come back here with the same outcome,\u201d Kelly says.<\/p>\n

Crossland remains optimistic. \u201cWe have the best in-class products, there is no reason to not to be successful,\u201d he says.<\/p>\n","protected":false},"excerpt":{"rendered":"

After one of its worst fiscal years on record, Ottawa-based cleantech company Thermal Energy International (TSX-V: TMG) says its potential<\/p>\n","protected":false},"author":129,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[333,1],"tags":[387,386,388,283,385],"class_list":["post-4111","post","type-post","status-publish","format-standard","hentry","category-corporate-profiles-2015","category-news","tag-energy-efficiency","tag-heat-recovery","tag-laurene-jardin","tag-thermal-energy","tag-william-crossland"],"_links":{"self":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/4111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/users\/129"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4111"}],"version-history":[{"count":6,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/4111\/revisions"}],"predecessor-version":[{"id":4556,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=\/wp\/v2\/posts\/4111\/revisions\/4556"}],"wp:attachment":[{"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cusjc.ca\/ottawainsight\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}