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: March 10, 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 March 10, 2022, the registrant issued a press release with earnings commentary and supplemental information for the three and twelve months ended December 31, 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 March 10, 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 March 10, 2022 for the three months and year ended December 31, 2021. |
| 99.02 | Tecogen Earnings Call Presentation dated March 10, 2022. |
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 | ||
| March 10, 2022 | Benjamin Locke, Chief Executive Officer |
Document
Tecogen Announces 2021 Results
Net Income of $3.7 million for FY 2021 and $63.0 thousand for Q4 2021
Earnings of $0.15 per share for FY 2021
WALTHAM, Mass., March 10, 2022 - Tecogen Inc. (OTCQX:TGEN), a leading manufacturer of clean energy products, reported net income of $63.0 thousand for the quarter ended December 31, 2021 and $3.7 million for the full year compared to a net loss of $4.1 million and $6.2 million, respectively, in 2020. This represents an improvement of $4.0 million and $9.8 million respectively. The increase in net income for the quarter was due to improved operations and for the year was helped significantly by the PPP loan forgiveness and Employee Retention Credit. Our gross margin increased to 47.5% for the year ended December 31, 2021 compared to 38.3% for the same period in 2020. The company also generated positive cash flow from operations of $465 thousand in 2021 compared to $1.4 million in 2020. The year end cash balance was $3.6 million.
Key Takeaways
Earnings Per Share
•Net income (loss) per share, basic and diluted, was $0.15/share for FY 2021 and $0.00 per share for Q4 2021 compared to a loss of $0.25 and $0.16 per share for the same periods in 2020.
Income from Operations
•Operating income was $130 thousand for the quarter compared to a loss of $4.1 million during the same period in 2020. The increase in our operating income is due primarily to the increased revenue and margins for our Products Segment and increased revenue from our service contracts in the Services Segment. In the quarter ended December 31, 2021, we also saw no goodwill impairment associated with the ADGE contracts whereas for the same period in 2020 the goodwill impairment amounted to $2.9 million.
•For the year ended December 31, 2021, our loss from operations was $1.2 million compared to a loss of $6.0 million for the same period in 2020, a decrease of $4.7 million. The decrease in our loss from operations is due primarily to zero goodwill write
downs with respect our ADGE energy producing assets and to improved operations in the fourth quarter of 2021.
Revenues
•Revenues for the quarter ended December 31, 2021 were $7.2 million compared to $5.7 million for the same period in 2020, a 26.9% increase.
◦Product revenue was $3.7 million in Q4 2021 compared to $1.9 million in the same period in 2020, an increase of 92.0% primarily due to an increase in chiller sales.
◦Services revenue was $3.1 million in Q4 2021 compared to $3.3 million in the same period in 2020, a decline of 6.2% due to reduced lower margin installation activity. Service contract revenue (O&M revenue) increased to $2.9 million or 16.8% in Q4 2021 from $2.5 million during the same period in 2020.
◦Energy Production revenue decreased by $41.6 thousand, or 9.4%, to $400 thousand in Q4 2021 compared to $441 thousand in the same period in 2020.
•For the year ended December 31, 2021, revenues were $24.4 million compared to $28.3 million in FY 2020, a decrease of $3.9 million or 13.6% year over year.
◦Product revenue was $10.1 million in the 2021 compared to $11.5 million in FY 2020, a decline of 11.6%, as a result of reduced sales activities in the first half of 2021.
◦Services revenue was $12.5 million for FY 2021 compared to $15.0 million in FY 2020, a decline of 16.2% due to reduced lower margin installation activity. Service contract revenue (O&M revenue) increased 15.0% to $11.6 million for FY 2021 compared to $10.1 million in FY 2020.
◦Energy production revenue for FY 2021 was $1.7 million, compared to $1.8 million in FY 2020, a decrease of 5.3%.
Gross Profit
•Gross profit for the fourth quarter of 2021 was $3.5 million compared to $2.3 million in the fourth quarter of 2020. Gross margin improved to 48.1% in the fourth quarter of 2021 compared to 41.4% for the same period in 2020.
•Gross profit for FY 2021 was $11.6 million compared to $10.8 million for FY 2020, an increase of 7.0%. For FY 2021 gross margin increased to 47.5% compared to 38.3% for the same period in 2020 due to higher Product and Service margins.
Operating Expenses
•Operating expenses decreased by 48.7% to $3.3 million for the fourth quarter of 2021 compared to $6.5 million in the same period of 2020. Operating expenses were higher in 2020 primarily due to the impairment of long-lived assets and goodwill.
•For FY 2021 operating expenses decreased $4.0 million, or 23.7%, to $12.8 million compared to $16.8 million for FY 2020. The decrease is due primarily to the impairment of long-lived assets and goodwill recognized in 2020 and, to a lesser extent, operating expense cost controls, resulting in decreased payroll and payroll related expenses and reductions in other operating expenses compared to FY 2020.
Adjusted EBITDA was a positive $284 thousand for the fourth quarter of 2021 compared to a loss of $929 thousand for the fourth quarter of 2020. For the year ended December 31, 2021 adjusted EBITDA was a positive $0.7 million compared to a negative $2.2 million for FY 2020. The FY 2021 adjusted EBITDA benefited from $1.2m million of Employee Retention Credit. (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 had a significantly improved 4th quarter and year in 2021 compared to 2020” commented Benjamin Locke, Tecogen's Chief Executive Officer. “As COVID effects recede, our business has started to rebound. We have also been seeing improved sales as a result of our strategic focus on key market segments such as controlled environment agriculture, healthcare and multifamily. Our chiller product in particular has seen significant penetration in the cannabis cultivation space. More than 45% of our current backlog is in this high growth market.”
Conference Call Scheduled for March 10, 2022 at 11:00 am ET
Tecogen will host a conference call on March 10, 2022 to discuss the fourth 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 Fourth Quarter 2021 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 or pending 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 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
As of December 31, 2021 and 2020 (unaudited)
| ASSETS | 2021 | 2020 | ||
|---|---|---|---|---|
| Current assets: | ||||
| Cash and cash equivalents | $ | 3,614,463 | $ | 1,490,219 |
| Accounts receivable, net | 8,482,286 | 8,671,163 | ||
| Unbilled revenue | 3,258,189 | 4,267,249 | ||
| Inventory, net | 7,764,989 | 7,168,596 | ||
| Employee Retention Credit | 1,276,021 | — | ||
| Prepaid and other current assets | 578,801 | 597,144 | ||
| Total current assets | 24,974,749 | 22,194,371 | ||
| Property, plant and equipment, net | 1,782,944 | 2,283,846 | ||
| Right of use assets | 1,869,210 | 1,632,574 | ||
| Intangible assets, net | 1,181,023 | 1,360,319 | ||
| Goodwill | 2,406,156 | 2,406,156 | ||
| Other assets | 148,140 | 196,387 | ||
| TOTAL ASSETS | $ | 32,362,222 | $ | 30,073,653 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Note payable, current | $ | — | $ | 837,861 |
| Accounts payable | 3,508,354 | 4,183,105 | ||
| Accrued expenses | 2,343,728 | 1,993,471 | ||
| Deferred revenue | 1,957,752 | 1,294,157 | ||
| Lease obligations, current | 641,002 | 506,514 | ||
| Unfavorable contract liabilities, current | 330,032 | 355,665 | ||
| Total current liabilities | 8,780,868 | 9,170,773 | ||
| Long-term liabilities: | ||||
| Deferred revenue, net of current portion | 208,456 | 115,329 | ||
| Note payable, net of current portion | — | 1,036,339 | ||
| Lease obligations, long-term | 1,315,275 | 1,222,492 | ||
| Unfavorable contract liability, long-term | 929,474 | 1,261,386 | ||
| Total liabilities | 11,234,073 | 12,806,319 | ||
| Stockholders’ equity: | ||||
| Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 and 24,850,261 issued and outstanding at December 31, 2021 and 2020, respectively | 24,850 | 24,850 | ||
| Additional paid-in capital | 57,016,859 | 56,814,428 | ||
| Accumulated deficit | (35,833,621) | (39,529,621) | ||
| Total Tecogen Inc. stockholders’ equity | 21,208,088 | 17,309,657 | ||
| Noncontrolling interest | (79,939) | (42,323) | ||
| Total stockholders’ equity | 21,128,149 | 17,267,334 | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 32,362,222 | $ | 30,073,653 |
TECOGEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2021 and 2020
(unaudited)
| 2021 | 2020 | |||
|---|---|---|---|---|
| Revenues | ||||
| Products | $ | 3,693,349 | $ | 1,923,400 |
| Services | 3,086,891 | 3,292,418 | ||
| Energy production | 399,702 | 441,295 | ||
| Total revenues | 7,179,942 | 5,657,113 | ||
| Cost of sales | ||||
| Products | 1,999,637 | 1,258,978 | ||
| Services | 1,450,945 | 1,773,767 | ||
| Energy production | 277,488 | 281,758 | ||
| Total cost of sales | 3,728,070 | 3,314,503 | ||
| Gross profit | 3,451,872 | 2,342,610 | ||
| Operating expenses | ||||
| General and administrative | 2,437,727 | 2,833,965 | ||
| Selling | 723,971 | 571,141 | ||
| Research and Development | 161,015 | 125,707 | ||
| Gain on sales of assets | (400) | (32) | ||
| Long-lived asset impairment | — | 71,963 | ||
| Goodwill impairment | — | 2,875,711 | ||
| Total operating expenses | 3,322,313 | 6,478,455 | ||
| Income (loss) from operations | 129,559 | (4,135,845) | ||
| Other income (expense) | ||||
| Interest and other income | (6,533) | (14,432) | ||
| Interest expense | (655) | (4,741) | ||
| Unrealized loss on investment securities | (56,246) | — | ||
| Total other expense, net | (63,434) | (19,173) | ||
| Income (Loss) before income taxes | 66,125 | (4,155,018) | ||
| Income tax provision | 500 | 2,380 | ||
| Consolidated net income (loss) | 65,625 | (4,157,398) | ||
| (Income) loss attributable to the noncontrolling interest | (2,659) | 95,084 | ||
| Net income (loss) attributable to Tecogen Inc | $ | 62,966 | $ | (4,062,314) |
| Net income (loss) per share - basic | $ | — | $ | (0.16) |
| Weighted average shares outstanding - basic | 24,850,261 | 24,850,258 | ||
| Net income (loss) per share - diluted | $ | — | $ | (0.16) |
| Weighted average shares outstanding - diluted | 25,063,864 | 24,850,258 |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2021 and 2020
(unaudited)
| Non-GAAP financial disclosure (1) | 2021 | 2020 | ||
|---|---|---|---|---|
| Net income (loss) attributable to Tecogen Inc | $ | 62,966 | $ | (4,062,314) |
| Interest expense, net | 655 | 4,741 | ||
| Provision for income taxes | 500 | 2,380 | ||
| Depreciation and amortization, net | 112,218 | 120,186 | ||
| EBITDA | 176,339 | (3,935,007) | ||
| Stock-based compensation | 51,775 | 58,632 | ||
| Unrealized loss on securities | 56,246 | — | ||
| Inventory write down | — | — | ||
| Long-lived asset impairment | — | 71,963 | ||
| Goodwill impairment | — | 2,875,711 | ||
| Adjusted EBITDA | $ | 284,360 | $ | (928,701) |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2021 and 2020
(unaudited)
| 2021 | 2020 | |||
|---|---|---|---|---|
| Revenues | ||||
| Products | $ | 10,133,329 | $ | 11,466,716 |
| Services | 12,525,594 | 14,950,682 | ||
| Energy production | 1,739,150 | 1,837,181 | ||
| Total revenues | 24,398,073 | 28,254,579 | ||
| Cost of sales | ||||
| Products | 5,601,046 | 6,899,942 | ||
| Services | 6,134,953 | 9,357,478 | ||
| Energy production | 1,074,421 | 1,169,645 | ||
| Total cost of sales | 12,810,420 | 17,427,065 | ||
| Gross profit | 11,587,653 | 10,827,514 | ||
| Operating expenses | ||||
| General and administrative | 9,795,823 | 10,311,086 | ||
| Selling | 2,471,929 | 2,593,168 | ||
| Research and development | 542,079 | 767,323 | ||
| Gain on sale of assets | (10,486) | (11,367) | ||
| Long-lived asset impairment | 7,400 | 251,906 | ||
| Goodwill impairment | — | 2,875,711 | ||
| Total operating expenses | 12,806,745 | 16,787,827 | ||
| Loss from operations | (1,219,092) | (5,960,313) | ||
| Other income (expense) | ||||
| Interest and other income | (23,746) | (2,479) | ||
| Interest expense | (14,238) | (125,824) | ||
| Gain on extinguishment of debt | 3,773,014 | — | ||
| Employee Retention Credit | 1,276,021 | — | ||
| Gain on the sale of investments | 6,046 | — | ||
| Unrealized loss on investment securities | (37,497) | (98,404) | ||
| Total other income (expense), net | 4,979,600 | (226,707) | ||
| Income (loss) before income taxes | 3,760,508 | (6,187,020) | ||
| State income tax provision | 19,491 | 30,171 | ||
| Consolidated net income (loss) | 3,741,017 | (6,217,191) | ||
| (Income) loss attributable to the noncontrolling interest | (45,017) | 66,684 | ||
| Net income (loss) attributable to Tecogen Inc. | $ | 3,696,000 | $ | (6,150,507) |
| Net income (loss) per share - basic | $ | 0.15 | $ | (0.25) |
| Weighted average shares outstanding - basic | 24,850,261 | 24,850,258 | ||
| Net income (loss) per share - diluted | $ | 0.15 | $ | (0.25) |
| Weighted average shares outstanding -diluted | 25,115,518 | 24,850,258 |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2021 and 2020
(unaudited)
| Non-GAAP financial disclosure (1) | 2021 | 2020 | ||
|---|---|---|---|---|
| Net income (loss) attributable to Tecogen Inc | $ | 3,696,000 | $ | (6,150,507) |
| Provision for income taxes | 19,491 | 30,171 | ||
| Interest expense, net | 14,238 | 125,824 | ||
| Depreciation and amortization, net | 469,854 | 414,127 | ||
| EBITDA | 4,199,583 | (5,580,385) | ||
| Stock-based compensation | 202,431 | 190,944 | ||
| Gain on extinguishment of debt | (3,773,014) | — | ||
| Unrealized loss on investment securities | 31,451 | 98,404 | ||
| Goodwill impairment | — | 2,875,711 | ||
| Asset impairment | 7,400 | 251,906 | ||
| Adjusted EBITDA (2) | $ | 667,851 | $ | (2,163,420) |
(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.
(2) Employee Retention Credit
The adjusted EBITDA in 2021 benefits from $1.2 million of Employee Retention Credit.
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2021 and 2020
(unaudited)
| 2021 | 2020 | |||
|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Consolidated net income (loss) | $ | 3,741,017 | $ | (6,217,191) |
| Adjustments to reconcile net income (loss) to net cash used provided by activities: | ||||
| Depreciation, accretion and amortization, net | 469,854 | 414,127 | ||
| Gain on the extinguishment of debt | (3,773,014) | — | ||
| Employee Retention Credit | (1,276,021) | — | ||
| Long-lived asset impairment | 7,400 | 251,906 | ||
| Gain on sale of assets | (10,486) | (11,367) | ||
| Provision for losses on accounts receivable | 131,206 | 656,397 | ||
| Gain on the sale of investments | (6,046) | — | ||
| Provision for inventory reserve | — | 86,000 | ||
| Unrealized loss on investment securities | 37,497 | 98,404 | ||
| Stock-based compensation | 202,431 | 190,944 | ||
| Goodwill impairment | — | 2,875,711 | ||
| Non-cash interest expense | — | 51,190 | ||
| Changes in operating assets and liabilities: | ||||
| (Increase) decrease in: | ||||
| Accounts receivable | 57,618 | 5,555,235 | ||
| Inventory, net | (596,393) | (849,367) | ||
| Unbilled revenue | 1,009,060 | 1,154,562 | ||
| Prepaid expenses and other current assets | 18,343 | 37,889 | ||
| Other non-current assets | (231,478) | 825,817 | ||
| Increase (decrease) in: | ||||
| Accounts payable | (674,750) | (1,088,651) | ||
| Accrued expenses and other current liabilities | 602,073 | (524,358) | ||
| Deferred revenue | 756,722 | (2,100,011) | ||
| Net cash provided by operating activities | 465,033 | 1,407,237 | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Purchases of property and equipment | (91,451) | (59,952) | ||
| Proceeds on sale of property and equipment | 10,486 | 26,335 | ||
| Purchases of intangible assets | (63,097) | (123,252) | ||
| Proceeds from sale of investments | 11,637 | — | ||
| Distributions to non-controlling interest | (82,633) | (60,896) | ||
| Net used in investing activities | (215,058) | (217,765) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Payments on revolving line of credit, net | — | (2,452,329) | ||
| Proceeds from note payable | 1,874,269 | 1,874,200 | ||
| Proceeds from exercise of stock options | — | 1,200 | ||
| Net cash provided by (used in) financing activities | 1,874,269 | (576,929) | ||
| Change in cash and cash equivalents | 2,124,244 | 612,543 | ||
| Cash and cash equivalents, beginning of the year | 1,490,219 | 877,676 | ||
| Cash and cash equivalents, end of the year | $ | 3,614,463 | $ | 1,490,219 |
q4andfy2021earningsprese
OTCQX: TGEN MARCH 10, 2022 FY 2021 EARNINGS CALL 1
MANAGEMENT Benjamin Locke - CEO Robert Panora – COO & President 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 4Q 2021 Results FY 2021 Results Earnings Takeaways 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
4Q 2021 RESULTS Highlights • Net Income of $0/share Q4 2021 • Net Income $63k • Cash and equivalents balance of $3.6 million Revenue = $7.18 million • Compared to $5.66 million in 4Q ’20, 27% increase • Service down due to lower installation activity, maintenance contract revenue increased 17% Gross Margin of 48% favorably impacted by sales mix and reduced install activity Op Ex = $3.32 million Net Income of $63k • Compared to $4 million loss in 4Q’20 9 $ in thousands 4Q'21 4Q'20 YoY Change % Revenue Products $ 3,693 $ 1,923 $ 1,770 Service 3,087 3,292 (206) Energy Production 400 441 (41) Total Revenue 7,180 5,657 1,523 26.9% Gross Profit Products 1,694 664 1,029 Service 1,636 1,519 117 Energy Production 122 159 (37) Total Gross Profit 3,452 2,342 1,110 47.4% Gross Margin: % Products 46% 35% 11% Service 53% 46% 7% Energy Production 31% 36% -5% Total Gross Margin 48% 41% 7% Operating Expenses General & administrative 2,438 2,834 (396) Selling 724 571 153 Research and development 161 126 35 Impairment and other expenses - 2,947 (2,947) Total operating expenses 3,323 6,478 (3,155) -48.7% Operating profit (loss) 129 (4,136) 4,265 103.1% Net Income (loss) $ 63 $ (4,062) $ 4,125 101.5%
YE 2021 RESULTS Highlights • Net Income of $0.15/share YE 2021 • Net Income $3.69m Revenue = $24.39 million • Compared to $28.25 million in 2020, 13.6% decrease • Product revenue down for FY 2021 due to • COVID related reduced sales activity • Some supply chain issues in Q3 • Service down due to lower installation activity, maintenance contract revenue increased 15% Gross Margin of 47% favorably impacted by sales mix and reduced install activity Op Ex = $12.8m in 2021 compared to $16.8m in 2020 or 23.7% reduction 10 $ in thousands YE 21 YE 20 YoY Change % Revenue Products $ 10,133 $ 11,467 $ (1,333) Service 12,526 14,951 (2,425) Energy Production 1,739 1,837 (98) Total Revenue 24,398 28,254 (3,856) -13.6% Gross Profit Products 4,532 4,567 (34) Service 6,391 5,593 798 Energy Production 665 668 (3) Total Gross Profit 11,588 10,827 760 7.0% Gross Margin: % Products 45% 40% 5% Service 51% 37% 14% Energy Production 38% 36% 2% Total Gross Margin 47% 38% 9% Operating Expenses General & administrative 9,796 10,311 (515) Selling 2,472 2,593 (121) Research and development 542 767 (225) Impairment and other expenses (3) 3,116 (3,119) Total operating expenses 12,807 16,787 (3,980) -23.7% Operating profit (loss) (1,219) (5,960) 4,740 79.5% Other Income (expense) 4,980 (227) 5,207 Net Income (loss) $ 3,696 $ (6,151) $ 9,847 160.1%
4Q 2021 ADJUSTED EBITDA RECONCILIATION EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization EBITDA and adjusted EBITDA were both positive at $176k and $284k respectively EBITDA Non-cash adjustments • Stock based compensation • Unrealized and realized (gain) loss on investment securities *Adjusted EBITDA is defined as net Income (loss) attributable to Tecogen Inc, adjusted for interest, depreciation and amortization, stock-based compensation expense, unrealized loss on investment securities, non-cash abandonment of intangible assets, goodwill impairment and other non-recurring charges or gains including abandonment of certain intangible assets and extinguishment of debt 11 Non-GAAP financial disclosure (in thousands) 2021 2020 Net income (loss) attributable to Tecogen Inc. 63$ (4,062)$ Interest expense, net 1 5 Income tax expense 1 2 Depreciation & amortization, net 112 120 EBITDA 176 (3,935) Stock based compensation 52 58 Unrealized (gain) loss on marketable securities 56 Long-lived asset impairment - 72 Goodwill impairment - 2,876 Adjusted EBITDA* 284$ (929)$ Quarter Ended, Dec. 31,
YE 2021 ADJUSTED EBITDA RECONCILIATION EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization EBITDA and Adjusted EBITDA favorably impacted by Employee Retention Credit of $1.2m EBITDA Non-cash adjustments • Stock based compensation • Forgiveness of PPP loan • Unrealized and realized (gain) loss on investment securities *Adjusted EBITDA is defined as net Income (loss) attributable to Tecogen Inc, adjusted for interest, depreciation and amortization, stock-based compensation expense, unrealized loss on investment securities, non-cash abandonment of intangible assets, goodwill impairment and other non-recurring charges or gains including abandonment of certain intangible assets and extinguishment of debt 12 Non-GAAP financial disclosure (in thousands) FY 2021 FY 2020 Net income (loss) attributable to Tecogen Inc. 3,696$ (6,151)$ Interest expense, net 14 126 Income tax expense 19 30 Depreciation & amortization, net 470 414 EBITDA 4,200 (5,580) Stock based compensation 202 191 Unrealized loss on marketable securities 31 98 Long-lived asset impairment 7 252 Goodwill impairment - 2,876 Gain on extinguishment of debt (3,773) - Adjusted EBITDA* 667$ (2,163)$ Year Ended, Dec. 31,
4Q 21 PERFORMANCE BY SEGMENT Product Revenue increased 92% QoQ • 257% increase in chiller shipments • Product backlog improving with outlook for 1Q and 2Q 22 positive Service Revenue declined 6% QoQ • Installation services down 85% QoQ • Service contracts (O&M) up 17% QoQ • Services Gross Margin increased to 53% Energy Production Revenue decreased 9% QoQ Gross Margin 48% 13 4Q Revenues ($ thousands) 2021 2020 YoY Growth Revenues Cogeneration 721$ 999$ -28% Chiller 2,794 782 257% Engineered accessories 178 142 25% Total Product Revenues 3,693 1,923 92% Service Contracts 2,973 2,545 17% Installation Services 114 748 -85% Total Service Revenues 3,087 3,293 -6% Energy Production 400 441 -9% Total Revenues 7,180 5,657 27% Cost of Sales Products 2,000 1,258 59% Services 1,451 1,774 -18% Energy Production 277 282 -2% Total Cost of Sales 3,728 3,314 12% Gross Profit 3,452 2,343 47% Net income (loss) 63$ (4,062)$ Gross Margin Products 46% 35% Services 53% 46% Aggregate Products and Services 49% 42% Energy Production 31% 36% Overall 48% 41% QTD Gross Margin 2021 2020 Target Overall 48% 41% >40%
YE 21 PERFORMANCE BY SEGMENT Product Revenue decreased 12% YoY • 340% increase in chiller shipments • 65% decrease in cogeneration • Product margins increased to 45% from 40% Service Revenue declined 16% YoY • Installation services down 81% YoY • Service contracts (O&M) up 15% YoY • Services Gross Margin increased to 51% from 37% Energy Production Revenue decreased 5% YoY Gross Margin increased to 47% from 38% Gross Profit increased 7% due to favorable product mix and reduced install activities 14 YE 2021 Revenues ($ thousands) 2021 2020 YoY Growth Revenues Cogeneration 3,264$ 9,234$ -65% Chiller 5,723 1,300 340% Engineered accessories 1,146 933 23% Total Product Revenues 10,133 11,467 -12% Service Contracts 11,587 10,078 15% Installation Services 939 4,873 -81% Total Service Revenues 12,526 14,951 -16% Energy Production 1,739 1,837 -5% Total Revenues 24,398 28,255 -14% Cost of Sales Products 5,601 6,900 -19% Services 6,135 9,357 -34% Energy Production 1,074 1,170 -8% Total Cost of Sales 12,810 17,427 -26% Gross Profit 11,588 10,828 7% Net income (loss) 3,696$ (6,151)$ Gross Margin Products 45% 40% Services 51% 37% Aggregate Products and Services 48% 38% Energy Production 38% 36% Overall 47% 38% Gross Margin 2021 2020 Target Overall 47% 38% >40%
2021 EARNINGS TAKEAWAYS Business Segments Recovering from COVID Challenges • Q4 Product Revenue $3.69 mm, Product Backlog $11.8 mm • Continued penetration into Cannabis and controlled environment agriculture markets • Signed up new reps and sales partnership agreements for chillers to focus on key cooling market segments Consistent Growth in Service O&M Segment • Service O&M up 15% YoY, 17% QoQ • FY 2021 Service Gross Margin 51% Sustainable Corporate Improvements • Improved margins in Products and Services segments • Operational and manufacturing improvements Strong Cash Position • Quarter-end cash and equivalent balance of $3.6 million • Current cash balance $4.2 million • Expect ERC cash ($1.2 mm) pending 15 Multi-Family Residential 19% Controlled Environment Agriculture 27% Hotel 14% Other 29% Healthcare 11% Backlog by Customer Type
PATHWAY TO GROWTH Anticipate Introduction of Tecochill Air Cooled Chillers that incorporate the Tecogen hybrid drive technology by Q4 2022. 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 battery2022 16
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 17