8-K
TECOGEN INC. (TGEN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: August 11, 2022
TECOGEN INC. (OTCQX: TGEN)
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-36103 | 04-3536131 |
|---|---|
| (Commission File Number) | (IRS Employer Identification No.) |
| 45 First Avenue | |
| Waltham, Massachusetts | 02451 |
| (Address of Principal Executive Offices) | (Zip Code) |
(781) 466-6400
(Registrant's telephone number, including area code)
_______________________________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol | Name of exchange on which registered |
|---|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On August 11, 2022, the registrant issued a press release with earnings commentary and supplemental information for the three and six months ended June 30, 2022. The press release is furnished as Exhibit 99.01 to this Current Report on Form 8-K.
The information in this Item 2.02 and Exhibit 99.01 to this Current Report on Form 8-K shall shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On August 11, 2022, the registrant will present the attached slides online in connection with an earnings conference call. The slides are being furnished as Exhibit 99.02 to this Current Report on Form 8-K.
The information in this Item 7.01 and Exhibit 99.02 to this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits relating to Items 2.02 and 7.01 shall be deemed to be furnished, and not filed:
| Exhibit | Description |
|---|---|
| 99.01 | Earnings Release dated August 11, 2022 for the three and six months ended June 30, 2022. |
| 99.02 | Tecogen Earnings Call Presentation dated August 11, 2022.q22022earningspresentati.htm |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| TECOGEN INC. | ||
|---|---|---|
| By: /s/ Benjamin Locke | ||
| August 11, 2022 | Benjamin Locke, Chief Executive Officer |
Document
Tecogen Announces Second Quarter 2022 Results
Q2 2022 revenue of $6.4 million, an increase of 4.4% QoQ and
H1 2022 revenue of $13.9 million, an increase of 13.5% YoY
WALTHAM, Mass., August 11, 2022 - Tecogen Inc. (OTCQX:TGEN), a leading manufacturer of clean energy products, reported revenues of $6.4 million and a net loss of $856.2 thousand for the quarter ended June 30, 2022 compared to revenues of $6.1 million, and a net profit of $399.6 thousand in 2021. For the six months ended June 30, 2022 revenues were $13.9 million and the net loss was $767 thousand compared to revenues of $12.2 million, and net income of $2.2 million for the same period in 2021. The positive net income in Q2 2021 and the six months ended June 30, 2021 was primarily due to the benefit from the CARES Act payroll support programs.
Key Takeaways
Net Income and Earnings Per Share
•Net loss in Q2 2022 was $0.9 million compared to net income of $0.4 million in Q2 2021, a decrease of $1.3 million, primarily due to the recognition of an Employee Retention Credit in Q2 2021. EPS was a loss of $0.03/share and net income of $0.02/share in Q2 2022 and Q2 2021, respectively.
•Net loss in H1 2022 was $767 thousand compared to net income of $2.2 million in Q2 2021, a decrease of $2.9 million, primarily due to the forgiveness of the PPP loan in Q1 2021 and the recognition of an Employee Retention Credit in Q2 2021. EPS was a net loss of $0.03/share and net income of $0.09/share in H1 2022 and H1 2021, respectively.
Loss from Operations
•Loss from operations for the three months ended June 30, 2022 was $0.8 million compared to a loss of $0.3 million for the same period in 2021, an increase of $0.5 million. Increased operating costs and lower gross profit margins in our Products segment caused the increase in loss from operations.
•Loss from operations for H1 2022 was $0.7 million compared to a loss of $0.4 million for the same period in 2021, an increase of $0.3 million. Increased operating costs and lower gross profit margins in our Products segment caused the increase in loss from operations.
Revenues
•Revenues for the quarter ended June 30, 2022 were $6.4 million compared to $6.1 million for the same period in 2021, a 4.4% increase.
◦Product revenue was $3.0 million in Q2 2022 compared to $2.4 million in the same period in 2021, an increase of 23.1%, primarily due to increased cogeneration and chiller sales into our key market segments including controlled environment agriculture.
◦Services revenue was $3.1 million in Q2 2022 compared to $3.3 million in the same period in 2021, a decline of 8.4%, primarily due to reduced lower margin installation activity.
◦Energy Production revenue decreased 4.5%, to $354 thousand in Q2 2022 compared to $371 thousand in the same period in 2021 due to site closures as a result of COVID.
•Revenues for H1 2022 were $13.9 million compared to $12.2 million for the same period in 2021, a 13.5% increase.
◦Product revenue was $6.9 million in H1 2022 compared to $4.6 million in the same period in 2021, an increase of 52.1%, primarily due to increased cogeneration and chiller sales into our key market segments including controlled environment agriculture.
◦Services revenue was $6.0 million in H1 2022 compared to $6.6 million in the same period in 2021, a decline of 9.7%, primarily due to reduced lower margin installation activity. Services contract revenue increased 1.7% to $5.9 million in the first half of 2022 compared to $5.8 million in the first half of 2021.
◦Energy Production revenue decreased 8.6%, to $0.9 million in H1 2022 compared to $1.0 million in the same period in 2021 due to site closures as a result of COVID.
Gross Profit and Gross Margin
•Gross profit for the second quarter of 2022 was $2.7 million compared to $2.8 million in the second quarter of 2021. Gross margin decreased to 42.1% in the first quarter compared to 46.3% for the same period in 2021 due to higher material costs reducing Product margin from 43.1% to 33.0%. Services and Energy Production margin remained comparable quarter to quarter.
•Gross profit for H1 2022 remained unchanged at $5.8 million compared to the same period in 2021. Gross margin decreased to 41.8% in the first half of 2022 compared to 47.5% for the same period in 2021 due to higher material costs reducing Product margin from 43.9% to 32.9%.
Operating Expenses
•Operating expenses increased by 11.7% to $3.5 million for the second quarter of 2022 compared to $3.2 million in the same period in 2021 due to increased salaries and R&D costs.
•Operating expenses increased by 4.6% to $6.5 million for the first half of 2022 compared to $6.2 million in the same period in 2021 due to increased salaries and R&D costs in Q2 2022.
Adjusted EBITDA(1) was negative $651 thousand for the second quarter of 2022 compared to $567 thousand for the second quarter of 2021. Adjusted EBITDA(1) was negative $448 thousand for the first half of 2022 compared to $587 thousand for the first half of 2021. (Adjusted EBITDA is defined as net income or loss attributable to Tecogen, adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on equity securities, goodwill impairment charges and other non-cash non-recurring charges or gains including abandonment of intangible assets and the extinguishment of debt. See the table following the
Condensed Consolidated Statements of Operations for a reconciliation from net income (loss) to Adjusted EBITDA, as well as important disclosures about the company's use of Adjusted EBITDA).
“We saw a substantial increase in revenues for the first half of the year compared to 2021. However we also saw a significant increase in cost of goods due to the inflationary environment we presently find ourselves in," commented Benjamin Locke, Tecogen's Chief Executive Officer. "We have instituted price increases that we expect to positively impact our revenues and margins in H2 2022. We are further encouraged by the 30% investment tax credit included in the pending Inflation Reduction Act which will significantly help the economics of both our cogeneration and chiller systems as we continue to focus on clean cooling in our key market segments including controlled environment agriculture (CEA). We expect to have more announcements going forward on how our new business unit focused on CEA can create additional value to our shareholders."
Conference Call Scheduled for August 11, 2022, at 11:00 am ET
Tecogen will host a conference call on August 11, 2022 to discuss the first quarter results beginning at 11:00 am eastern time. To listen to the call please dial (877) 407-7186 within the U.S. and Canada, or (201) 689-8052 from other international locations. Participants should ask to be joined to the Tecogen Second Quarter 2022 earnings call. Please begin dialing 10 minutes before the scheduled starting time. The earnings press release will be available on the Company website at www.Tecogen.com in the "News and Events" section under "About Us." The earnings conference call will be webcast live. To view the associated slides, register for and listen to the webcast, go to https://ir.tecogen.com/ir-calendar. Following the call, the recording will be archived for 14 days.
The earnings conference call will be recorded and available for playback one hour after the end of the call. To listen to the playback, dial (877) 660-6853 within the U.S. and Canada, or (201) 612-7415 from other international locations and use Conference Call ID#: 13672659.
About Tecogen
Tecogen Inc. designs, manufactures, sells, installs, and maintains high efficiency, ultra-clean, cogeneration products including engine-driven combined heat and power, air conditioning systems, and high-efficiency water heaters for residential, commercial, recreational and industrial use. The company provides cost effective, environmentally friendly and reliable products for energy production that nearly eliminate criteria pollutants and significantly reduce a customer’s carbon footprint.
In business for over 35 years, Tecogen has shipped more than 3,000 units, supported by an established network of engineering, sales, and service personnel across the United States. For more information, please visit www.tecogen.com or contact us for a free Site Assessment.
Tecogen, InVerde e+, Ilios, Tecochill, Tecopower, Tecofrost, Tecopack and Ultera are registered trademarks of Tecogen Inc.
Forward Looking Statements
This press release and any accompanying documents, contain “forward-looking statements” which may describe strategies, goals, outlooks or other non-historical matters, or projected revenues, income, returns or other financial measures, that may include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "target," "potential," "will," "should," "could," "likely," or "may" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements.
In addition to those factors described in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and on our Form 8-K, under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: fluctuations in demand for our products and services, competing technological developments, issues relating to research and development, the availability of incentives, rebates, and tax benefits relating to our products and services, changes in the regulatory environment relating to our products and services, integration of acquired business operations, and the ability to obtain financing on favorable terms to fund existing operations and anticipated growth.
In addition to GAAP financial measures, this press release includes certain non-GAAP financial measures, including adjusted EBITDA which excludes certain expenses as described in the presentation. We use Adjusted EBITDA as an internal measure of business operating performance and believe that the presentation of non-GAAP financial measures provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance by eliminating items that vary from period to period without correlation to our core operating performance and highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures.
Tecogen Media & Investor Relations Contact Information:
Benjamin Locke
P: 781-466-6402
E: Benjamin.Locke@tecogen.com
TECOGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| June 30, 2022 | December 31, 2021 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 2,831,107 | $ | 3,614,463 |
| Accounts receivable, net | 8,880,828 | 8,482,286 | ||
| Employee retention credit receivable | 713,269 | 1,276,021 | ||
| Inventories, net | 8,203,093 | 7,764,989 | ||
| Unbilled revenue | 2,141,132 | 3,258,189 | ||
| Prepaid and other current assets | 601,419 | 578,801 | ||
| Total current assets | 23,370,848 | 24,974,749 | ||
| Long-term assets: | ||||
| Property, plant and equipment, net | 1,710,644 | 1,782,944 | ||
| Right of use assets | 1,561,757 | 1,869,210 | ||
| Intangible assets, net | 1,099,510 | 1,181,023 | ||
| Goodwill | 2,406,156 | 2,406,156 | ||
| Other assets | 184,809 | 148,140 | ||
| TOTAL ASSETS | $ | 30,333,724 | $ | 32,362,222 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | 3,260,479 | 3,508,354 | ||
| Accrued expenses | 2,269,239 | 2,343,728 | ||
| Deferred revenue | 1,263,919 | 1,957,752 | ||
| Lease obligations, current | 665,310 | 641,002 | ||
| Unfavorable contract liability, current | 274,501 | 330,032 | ||
| Total current liabilities | 7,733,448 | 8,780,868 | ||
| Long-term liabilities: | ||||
| Deferred revenue, net of current portion | 313,131 | 208,456 | ||
| Lease obligations, net of current portion | 974,751 | 1,315,275 | ||
| Unfavorable contract liability, net of current portion | 769,721 | 929,474 | ||
| Total liabilities | 9,791,051 | 11,234,073 | ||
| Stockholders’ equity: | ||||
| Tecogen Inc. shareholders’ equity: | ||||
| Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 issued and outstanding at June 30, 2022 and December 31, 2021 | 24,850 | 24,850 | ||
| Additional paid-in capital | 57,202,459 | 57,016,859 | ||
| Accumulated deficit | (36,600,430) | (35,833,621) | ||
| Total Tecogen Inc. stockholders’ equity | 20,626,879 | 21,208,088 | ||
| Non-controlling interest | (84,206) | (79,939) | ||
| Total stockholders’ equity | 20,542,673 | 21,128,149 | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 30,333,724 | $ | 32,362,222 |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | |||
| Revenues | ||||
| Products | $ | 3,010,115 | $ | 2,445,927 |
| Services | 3,050,191 | 3,328,314 | ||
| Energy production | 354,287 | 370,861 | ||
| Total revenues | 6,414,593 | 6,145,102 | ||
| Cost of sales | ||||
| Products | 2,015,466 | 1,390,725 | ||
| Services | 1,473,586 | 1,679,386 | ||
| Energy production | 222,092 | 232,353 | ||
| Total cost of sales | 3,711,144 | 3,302,464 | ||
| Gross profit | 2,703,449 | 2,842,638 | ||
| Operating expenses | ||||
| General and administrative | 2,824,832 | 2,438,452 | ||
| Selling | 503,601 | 580,871 | ||
| Research and Development | 194,853 | 132,883 | ||
| Gain on disposition of assets | (2,500) | — | ||
| Total operating expenses | 3,520,786 | 3,152,206 | ||
| Loss from operations | (817,337) | (309,568) | ||
| Other income (expense) | ||||
| Other income (expense), net | (1,265) | (1,125) | ||
| Interest expense | (12,733) | (5,088) | ||
| Employee retention credit | — | 713,268 | ||
| Unrealized gain on investment securities | — | 18,749 | ||
| Total other income (expense), net | (13,998) | 725,804 | ||
| Income (loss) before income taxes | (831,335) | 416,236 | ||
| Provision for state income taxes | 6,500 | 7,933 | ||
| Consolidated net income (loss) | (837,835) | 408,303 | ||
| Income attributable to the non-controlling interest | (18,383) | (8,672) | ||
| Net income (loss) attributable to Tecogen Inc. | $ | (856,218) | $ | 399,631 |
| Net income per share - basic | $ | (0.03) | $ | 0.02 |
| Net income per share - diluted | $ | (0.03) | $ | 0.02 |
| Weighted average shares outstanding - basic | 24,850,261 | 24,850,261 | ||
| Weighted average shares outstanding - diluted | 24,850,261 | 25,125,210 | ||
| Three Months Ended | ||||
| --- | --- | --- | --- | --- |
| June 30, 2022 | June 30, 2021 | |||
| Non-GAAP financial disclosure (1) | ||||
| Net income (loss) attributable to Tecogen Inc. | $ | (856,218) | $ | 399,631 |
| Interest expense, net | 12,733 | 6,213 | ||
| Income taxes | 6,500 | 7,933 | ||
| Depreciation & amortization, net | 95,985 | 117,404 | ||
| EBITDA | (741,000) | 531,181 | ||
| Stock based compensation | 89,893 | 54,681 | ||
| Unrealized gain on investment securities | — | (18,749) | ||
| Adjusted EBITDA | $ | (651,107) | $ | 567,113 |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Six Months Ended | ||||
|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | |||
| Revenues | ||||
| Products | $ | 6,949,596 | $ | 4,568,649 |
| Services | 5,967,471 | 6,609,458 | ||
| Energy production | 935,849 | 1,024,156 | ||
| Total revenues | 13,852,916 | 12,202,263 | ||
| Cost of sales | ||||
| Products | 4,660,221 | 2,565,012 | ||
| Services | 2,840,338 | 3,216,989 | ||
| Energy production | 558,119 | 626,416 | ||
| Total cost of sales | 8,058,678 | 6,408,417 | ||
| Gross profit | 5,794,238 | 5,793,846 | ||
| Operating expenses | ||||
| General and administrative | 5,298,735 | 4,892,305 | ||
| Selling | 1,004,692 | 1,091,074 | ||
| Research and development | 334,988 | 259,033 | ||
| Gain on disposition of assets | (36,445) | — | ||
| Gain on termination of unfavorable contract liability | (71,375) | — | ||
| Total operating expenses | 6,530,595 | 6,242,412 | ||
| Loss from operations | (736,357) | (448,566) | ||
| Other income (expense) | ||||
| Interest and other income (expense), net | (15,416) | (2,328) | ||
| Interest expense | (13,561) | (9,728) | ||
| Gain on extinguishment of debt | — | 1,887,859 | ||
| Employee retention credit | — | 713,268 | ||
| Gain on sale of investment securities | — | 6,046 | ||
| Unrealized gain (loss) on investment securities | 37,497 | 56,246 | ||
| Total other income (expense), net | 8,520 | 2,651,363 | ||
| Income (loss) before provision for state income taxes | (727,837) | 2,202,797 | ||
| Provision for state income taxes | 10,430 | 15,991 | ||
| Consolidated net income (loss) | (738,267) | 2,186,806 | ||
| Income attributable to non-controlling interest | (28,542) | (20,468) | ||
| Net income (loss) attributable to Tecogen Inc. | $ | (766,809) | $ | 2,166,338 |
| Net income (loss) per share - basic | $ | (0.03) | $ | 0.09 |
| Net income (loss) per share - diluted | $ | (0.03) | $ | 0.09 |
| Weighted average shares outstanding - basic | 24,850,261 | 24,850,261 | ||
| Weighted average shares outstanding - diluted | 24,850,261 | 25,102,470 | ||
| Six Months Ended | ||||
| --- | --- | --- | --- | --- |
| June 30, 2022 | June 30, 2021 | |||
| Non-GAAP financial disclosure (1) | ||||
| Net income (loss) attributable to Tecogen Inc. | $ | (766,809) | $ | 2,166,338 |
| Interest expense, net | 13,561 | 12,056 | ||
| Income taxes | 10,430 | 15,991 | ||
| Depreciation & amortization, net | 217,718 | 241,470 | ||
| EBITDA | (525,100) | 2,435,855 | ||
| Gain on extinguishment of debt | — | (1,887,859) | ||
| Stock based compensation | 185,600 | 93,766 | ||
| Unrealized (gain) loss on marketable securities | (37,497) | (56,246) | ||
| Gain on sale of marketable securities | — | (6,046) | ||
| Gain on termination of unfavorable contract liability | (71,375) | — | ||
| Non-cash abandonment of intangible assets | — | 7,400 | ||
| Adjusted EBITDA | $ | (448,372) | $ | 586,870 |
(1) Non-GAAP Financial Measures
In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, this news release contains information about Adjusted EBITDA (net income (loss) attributable to Tecogen Inc adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on investment securities, goodwill impairment charges and other non-cash non-recurring charges including abandonment of certain intangible assets and extinguishment of debt), which is a non-GAAP measure. The Company believes Adjusted EBITDA allows investors to view its performance in a manner similar to the methods used by management and provides additional insight into its operating results. Adjusted EBITDA is not calculated through the application of GAAP. Accordingly, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Six Months Ended | ||||
|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Consolidated net income (loss) | $ | (738,267) | $ | 2,186,806 |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||
| Depreciation and amortization | 217,718 | 241,470 | ||
| Provision for doubtful accounts | 46,000 | — | ||
| Gain on extinguishment of debt | — | (1,887,859) | ||
| Employee retention credit | — | (713,268) | ||
| Stock-based compensation | 185,600 | 93,766 | ||
| Gain on sale of investment securities | — | (6,046) | ||
| Unrealized gain on investment securities | (37,497) | (56,246) | ||
| Gain on disposition of assets | (36,445) | — | ||
| Gain on termination of unfavorable contract liability | (71,375) | — | ||
| Impairment of intangible asset | — | 7,400 | ||
| Changes in operating assets and liabilities | ||||
| (Increase) decrease in: | ||||
| Accounts receivable | (444,541) | 894,100 | ||
| Employee retention credit receivable | 562,752 | — | ||
| Inventory | (438,102) | 357,072 | ||
| Prepaid assets and other current assets | (22,618) | (242,588) | ||
| Other assets | 308,282 | (537,197) | ||
| Increase (decrease) in: | ||||
| Accounts payable | (247,876) | (1,585,368) | ||
| Accrued expenses and other current liabilities | (74,490) | 290,342 | ||
| Deferred revenue | (589,158) | (45,118) | ||
| Other liabilities | (316,217) | 531,335 | ||
| Net cash used in operating activities | (579,177) | (103,649) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Purchases of property and equipment | (209,034) | (47,504) | ||
| Proceeds from disposition of assets | 67,169 | — | ||
| Proceeds from the sale of investment securities | — | 11,637 | ||
| Purchases of intangible assets | (29,505) | (5,682) | ||
| Distributions to non-controlling interest | (32,809) | (33,812) | ||
| Net cash used in investing activities | (204,179) | (75,361) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Proceeds from note payable | — | 1,874,269 | ||
| Net cash provided by financing activities | — | 1,874,269 | ||
| Change in cash and cash equivalents | (783,356) | 1,695,259 | ||
| Cash and cash equivalents, beginning of the period | 3,614,463 | 1,490,219 | ||
| Cash and cash equivalents, end of the period | $ | 2,831,107 | $ | 3,185,478 |
q22022earningspresentati
OTCQX: TGEN AUGUST 11, 2022 Q2 2022 EARNINGS CALL 1
MANAGEMENT Benjamin Locke - CEO Abinand Rangesh – CFO & Treasurer Jack Whiting – General Counsel & Secretary 2
SAFE HARBOR STATEMENT This presentation and accompanying documents contain “forward-looking statements” which may describe strategies, goals, outlooks or other non- historical matters, or projected revenues, Income, returns or other financial measures, that may include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "target," "potential," "will," "should," "could," "likely," or "may" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. In addition to those factors described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: fluctuations in demand for our products and services, competing technological developments, issues relating to research and development, the availability of incentives, rebates, and tax benefits relating to our products and services, changes in the regulatory environment relating to our products and services, integration of acquired business operations, and the ability to obtain financing on favorable terms to fund existing operations and anticipated growth. In addition to GAAP financial measures, this presentation includes certain non-GAAP financial measures, including adjusted EBITDA which excludes certain expenses as described in the presentation. We use Adjusted EBITDA as an internal measure of business operating performance and believe that the presentation of non-GAAP financial measures provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance by eliminating items that vary from period to period without correlation to our core operating performance and highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. 3
AGENDA Tecogen Overview 2Q 2022 Results Earnings Takeaways Market Update Q&A 4
Providing resiliency and energy savings with a cleaner environmental footprint Units Shipped 5
DISTRIBUTED GENERATION CLEAN COOLING Chillers with lower operating cost and lower greenhouse gas footprint compared to an equivalent electric chiller EMISSIONS 3rd in number of microgrids installed in North America Near zero NOx and CO emissions systems for gasoline, propane and natural gas engines 6
PRODUCT RUN HOURS DISTRIBUTED GENERATION AND CHILLERS SHIPPED 52M+3,000+ KWH GENERATED 2.1M+ METRIC TONS OF CO2 SAVED 200,000+ FACTS ABOUT US 7
REVENUE SEGMENTS We service most purchased Tecogen equipment in operation through long term maintenance agreements through 11 service centers in North America and perform certain equipment installation work. SERVICES CLEAN, GREEN POWER, COOLING AND HEAT Sales of combined heat and power, and clean cooling systems to building owners. Key market segments include multifamily residential, health care and indoor cultivation. PRODUCT SALES We sell electrical energy and thermal energy produced by our equipment onsite at customer facilities. ENERGY SALES 8
2Q 2022 RESULTS Highlights • Net loss of $-0.03/share Q2 2022 • Net loss $-856k • Cash and equivalents balance of $2.8 million Revenue = $6.415 million • Compared to $6.145 million in 2Q ’21, 4.4% increase • Service down due to lower installation activity Gross Margin of 42% due to higher cost of material Op Ex = $3.52 million Operating Loss $817k Net Loss of $856k 9 $ in thousands 2Q' 22 2Q' 21 Change % Revenue Products $ 3,010 $ 2,446 $ 564 Service 3,050 3,328 (278) Energy Production 354 371 (17) Total Revenue 6,415 6,145 269 4.4% Gross Profit $ - Products 995 1,055 (61) Service 1,577 1,649 (72) Energy Production 132 139 (6) Total Gross Profit 2,703 2,843 (139) -4.9% Gross Margin: % Products 33% 43% -10% Service 52% 50% 2% Energy Production 37% 37% 0% Total Gross Margin 42% 46% -4% Operating Expenses General & administrative 2,825 2,438 386 Selling 504 581 (77) Research and development 195 133 62 Total operating expenses 3,521 3,152 371 11.8% Operating profit (loss) (817) (310) (508) -164.0% Net Income (loss) $ (856) $ 400 $ (1,256) -314.3%
2Q 2022 ADJUSTED EBITDA RECONCILIATION EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization EBITDA and adjusted EBITDA were a loss of $741k and $651k respectively EBITDA Non-cash adjustments • Stock based compensation *Adjusted EBITDA is defined as net Income (loss) attributable to Tecogen Inc, adjusted for interest, depreciation and amortization, stock-based compensation expense, unrealized loss on investment securities, non-cash abandonment of intangible assets, goodwill impairment and other non-recurring charges or gains including abandonment of certain intangible assets and extinguishment of debt 10 Non-GAAP financial disclosure (in thousands) 2022 2021 Net income (loss) attributable to Tecogen Inc. (856)$ 400$ Interest expense, net 13 6$ Income tax expense 7 8$ Depreciation & amortization, net 96 117$ EBITDA (741) 531 Stock based compensation 90 55 Unrealized (gain) loss on marketable securities - (19) Adjusted EBITDA* (651)$ 567$ Quarter Ended, June 30
2Q 22 PERFORMANCE BY SEGMENT Product Revenue increased 23% QoQ • 60% gain in chiller revenues Service Revenue declined 8% QoQ • Installation services down 100% QoQ • Service contracts (O&M) down 1% QoQ due to parts shortages • Services Gross Margin at 52% Energy Production Revenue decreased 5% QoQ Gross Margin 42% 11 2Q 2022 Revenues ($ thousands) 2Q' 2022 2Q' 2021 Change % Revenues Cogeneration 954$ 1,050$ -9% Chiller 1,738 1,089 60% Engineered accessories 318 307 4% Total Product Revenues 3,010 2,446 23% Service Contracts 3,050 3,084 -1% Installation Services - 244 -100% Total Service Revenues 3,050 3,328 -8% Energy Production 354 371 -5% Total Revenues 6,415 6,145 4% Cost of Sales Products 2,015 1,391 45% Services 1,474 1,679 -12% Energy Production 222 232 -4% Total Cost of Sales 3,711 3,302 12% Gross Profit 2,703 2,843 -5% Net income (loss) (856)$ 400$ Gross Margin Products 33% 43% Services 52% 50% Energy Production 37% 37% Overall 42% 46% Gross Margin 2022 2021 Target Overall 42% 46% >40%
2Q’ 22 EARNINGS TAKEAWAYS Business Segments Adapting To Supply Chain Challenges • 2Q Product Revenue $3 mm – 23% increase vs. 2Q-21 • Price increases to address higher manufacturing costs • 2Q ending backlog of $10.7 million. Current backlog at $9.4 million • Continued penetration into controlled environment agriculture • Continued success with Multi-family residential • New sales relationships for chillers focusing on new market segments and geographies 12 Multi-Family Residential 28% Controlled Environment Agriculture 26% School 26% Other 19% Healthcare 1% Backlog by Customer Type
PATHWAY TO GROWTH Tecochill Hybrid Drive Air-Cooled Chiller to be launched at AHR in Feb 2023. This addresses a gap in our Tecochill offering as air cooled chillers are typically sold in larger volumes compared to water cooled chillers in our size range. Focus on Clean Cooling applications where there is a simultaneous cooling and dehumidification load. Continue to increase market share in regional cannabis markets including New England, Mid-Atlantic and Florida with a goal to have a minimum of 30% market share per state in facilities > 10,000 sq feet. Clean Microgrids using CHP in combination with other energy technologies including solar and battery 13 New Business Unit Established Focused on Controlled Environment Agriculture (CEA) markets
Q&A Company Information Tecogen, Inc 45 First Ave Waltham, MA 02451 www.Tecogen.com Contact information Benjamin Locke, CEO 781.466.6402 Benjamin.Locke@Tecogen.com 14