The present paper contains an investigation of the mechanical energy associated with the transformation of the stress-induced martensite, β′. to the parent phase, β, during the shape recovery (SR) of a deformed shape-memory (SM) material. We describe a heat-mechanical energy converter, or solid-state engine, which operates by this SR phenomenon. The energy output of such an engine is expressed in terms of a fraction α of the latent heat ΔH of the martensitic reaction. This α is found to depend on two parameters. One is the difference between the ΔH of the β′ → β reaction and the ΔH of the transformation of the quench-induced martensite, γ′, to β, the other is the fraction of γ′ which can be transformed via the channel γ′ → β′ → β instead of the direct channel γ′ → β. Moreover, it is shown that within certain ranges of temperature T and applied strain ϵ, the heat-mechanical energy balance equation leads to an expression identical in form to the Clapeyron-Clausius equation, which is usually valid for a first-order transition. Within these ϵ and T ranges the coefficient α is also found to be equal to log( T cσ / T c ) where T cσ and T c are the SR critical temperatures with and without the presence of an applied stress σ, respectively. We discuss the role of the γ′ martensite in this process and explain the so-called two-way SR phenomenon. In addition, the parameters that limit the output of the SR energy are evaluated. This output depends sensitively on both α and the material characteristic temperature h = C −1 ΔH, where C is the specific heat. For a solid-state engine made with the Ni-Ti SM alloy, the efficiency is found to be limited to about 5%.