News

Tecogen Announces Second Quarter 2020 Results

Increased Product Sales and Significantly Improved Cash Flow and Cash Balance

Waltham, MA – (NewMediaWire) – August 13, 2020 – Tecogen Inc. (OTCQX: TGEN), a leading manufacturer of clean energy products, reported revenues of $7.44 million for the quarter ended June 30, 2020 compared to $7.87 million for the same period in 2019, a 5.5% decrease. Product revenues increased 37% to $3.34 million compared to $2.45 million in the same period in 2019.  The decrease in revenue was primarily from curtailed installation activity due to the COVID-19 pandemic and reduced energy production revenue due to customer facility closures. Gross profit for the second quarter of 2020 was $2.91 million compared to $3.43 million in the second quarter of 2019. Net loss was $654 thousand for the second quarter of 2020, compared to $357 thousand for the same period in 2019.

Key Takeaways:

  • Cash flow provided by operations of $2.66 million compared to cash flows used by operations of $2.10 million for the same period in 2019
  • Cash and cash equivalents at the end of the second quarter 2020 of $2.86 million compared to $878 thousand at the end of 2019, an increase of 226%
  • Operating expenses decreased by 9.4% to $3.4 million for the second quarter of 2020 compared to the same period of 2019

Adjusted EBITDA(1) was negative $363 thousand for the second quarter of 2020 compared to negative $205 thousand for the second quarter of 2019. (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 due to the abandonment of certain intangible assets. See table following the statements of operations for a reconciliation from net loss to Adjusted EBITDA as well as important disclosures about the company’s use of Adjusted EBITDA).

On April 17, 2020, the Company obtained a Paycheck Protection Program (“PPP”) loan of $1,874,200 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The proceeds were used for payroll, rent and utilities and we anticipate requesting forgiveness of the loan.

“The second quarter saw many challenges for our business and our customers as a result of the COVID-19 pandemic,” commented Benjamin Locke, Tecogen’s Chief Executive Officer. “We are pleased that our product sales in the second quarter remained strong despite these challenges. Installation revenues decreased as we close out several large construction projects and experienced COVID-19 related delays on other projects, and our energy production revenues decreased primarily due to customer facility closures.  We are optimistic that our product revenues will continue strong for the rest of the year, and that closed energy production assets will resume operations as COVID-19 related restrictions are eased.  Our cash position is now stronger than it has been for some time. We have also used this opportunity to improve efficiencies and reduce operating expenses so that we have adequate resources to maintain our business through the continuing pandemic and to take advantage of growth opportunities as they arise.”

Highlights:

Financial

  • Product revenues grew 37% year over year
  • Services revenues decreased 21% due to lower installation revenue as several larger construction projects close out and construction activity was curtailed due to COVID-19
  • Energy production revenues decreased 52% primarily due to COVID-19 related closures and other facility shutdowns
  • Gross margin was 39% compared to 44% for the same period in 2019
  • Net loss for the three months ended June 30, 2020 was $654 thousand compared to $357 thousand for the same period in 2019, an increase of $297 thousand year over year
  • Net loss per share was $0.03 for the second quarter of 2020 and $0.01 for the second quarter of 2019
  • Working capital increased by $575 thousand, a 4% increase since year-end 2019
  • Operating expenses decreased by 9.4% to $3.4 million for the second quarter of 2020 compared to the same period of 2019
  • Cash flow provided by operations was $2.66 million compared to cash flows used in operations of $2.10 million for the same period in 2019, primarily due to improved collections of accounts receivable
  • Cash and cash equivalents at end of second quarter was $2.86 million (including proceeds from the PPP loan received on April 17, 2020)
  • Terminated Credit Agreement with Webster Business Credit Corporation on May 11, 2020

Sales & Operations

  • Executed teaming agreement with Ainsworth, a Toronto-based company providing high quality technical trade services, highlighting Tecogen as its preferred CHP partner
  • Released a white paper entitled “Building Electrification Policy and Combined Heat and Power Relevance” that provides an in-depth analysis of why electrification policy is generally counterproductive to its carbon reduction goals when compared to combined heat and power (CHP)
  • Current sales backlog of equipment and installations as of August 11, 2020 is $13.1 million, comprised of $10.4 million of products and $2.7 million of installation services

Emissions Technology

  • Planned work with MCFA (Mitsubishi Caterpillar Forklift America) delayed due to restrictions on travel between Japan and the United States

Conference Call Scheduled for Today at 11:00 am ET

Tecogen will host a conference call today to discuss the first quarter results beginning at 11:00 am eastern time.  To listen to the call 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 2020 earnings call.  Please begin dialing 10 minutes before the scheduled starting time.  This 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, through patented technology, 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 and Ultera are registered or pending trademarks of Tecogen Inc.

Forward Looking Statements

This press release and accompanying documents contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements.  Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in this press release regarding the potential future impact of the COVID-19 pandemic on the Company’s business and results of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Such forward-looking statements include, among other things, 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.  Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented, and Part II, Item 1A of the Company’s Form 10-Q for the quarter ended June 30, 2020 (“Second Quarter Form 10-Q”), in each case under the heading “Risk Factors.” The following discussion should be read in conjunction with the Second Quarter Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and the unaudited condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of the Second Quarter Form 10-Q.  Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.

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, 2020   December 31, 2019
ASSETS      
Current assets:      
Cash and cash equivalents $ 2,859,922     $ 877,676  
Accounts receivable, net 8,163,461     14,569,397  
Unbilled revenue 4,883,779     5,421,811  
Inventory, net 7,296,097     6,405,229  
Prepaid and other current assets 641,415     635,034  
Total current assets 23,844,674     27,909,147  
Property, plant and equipment, net 3,167,604     3,465,948  
Right of use assets 1,908,084     2,173,951  
Intangible assets, net 1,475,794     1,593,781  
Goodwill 5,281,867     5,281,867  
Other assets 195,430     691,941  
TOTAL ASSETS $ 35,873,453     $ 41,116,635  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Revolving line of credit, bank $     $ 2,402,384  
Note payable, current portion 208,939      
Accounts payable 4,074,180     5,271,756  
Accrued expenses 2,896,530     2,599,366  
Deferred revenue 1,103,067     2,635,619  
Lease obligations, current 523,784     536,443  
Total current liabilities 8,806,500     13,445,568  
Long-term liabilities:      
Deferred revenue, net of current portion 128,304     145,464  
Note payable, net of current portion 1,665,261      
Lease obligations, long-term 1,384,299     1,637,508  
Unfavorable contract liability, net 2,315,140     2,534,818  
Total liabilities 14,299,504     17,763,358  
       
Commitments and contingencies (Note 11)      
       
Stockholders’ equity:      
Tecogen Inc. stockholders’ equity:      
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 and 24,849,261 issued and outstanding at June 30, 2020 and December 31, 2019, respectively 24,850     24,849  
Additional paid-in capital 56,704,412     56,622,285  
Accumulated deficit (35,235,389 )   (33,379,114 )
Total Tecogen Inc. stockholders’ equity 21,493,873     23,268,020  
Noncontrolling interest 80,076     85,257  
Total stockholders’ equity 21,573,949     23,353,277  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 35,873,453     $ 41,116,635  

TECOGEN INC.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

































  Three Months Ended
  June 30, 2020   June 30, 2019
Revenues      
Products $ 3,342,794     $ 2,445,448  
Services 3,815,923     4,843,649  
Energy production 276,341     578,299  
Total revenues 7,435,058     7,867,396  
Cost of sales      
Products 2,037,786     1,546,752  
Services 2,285,405     2,530,175  
Energy production 205,876     364,554  
Total cost of sales 4,529,067     4,441,481  
Gross profit 2,905,991     3,425,915  
Operating expenses      
General and administrative 2,637,479     2,683,252  
Selling 602,383     704,700  
Research and development 166,027     372,545  
Total operating expenses 3,405,889     3,760,497  
Loss from operations (499,898 )   (334,582 )
Other income (expense)      
Interest income 238     66  
Interest expense (56,253 )   (17,005 )
Unrealized gain (loss) on investment securities (78,723 )   19,681  
Total other income (expense), net (134,738 )   2,742  
Loss before provision for state income taxes (634,636 )   (331,840 )
Provision for state income taxes 13,171     15,955  
Consolidated net loss (647,807 )   (347,795 )
Income attributable to the noncontrolling interest (6,081 )   (9,334 )
Net loss attributable to Tecogen Inc. $ (653,888 )   $ (357,129 )
       
Net loss per share – basic and diluted $ (0.03 )   $ (0.01 )
Weighted average shares outstanding – basic and diluted 24,850,261     24,826,311  

 










Non-GAAP financial disclosure (1)      
Net loss attributable to Tecogen Inc. $ (653,888 )   $ (357,129 )
Interest expense, net 56,015     16,939  
Income taxes 13,171     15,955  
Depreciation & amortization, net 103,485     98,988  
EBITDA (481,217 )   (225,247 )
Stock based compensation 39,494     39,898  
Unrealized (gain) loss on investment securities 78,723     (19,681 )
Adjusted EBITDA $ (363,000 )   $ (205,030 )

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



































  Six Months Ended
  June 30, 2020   June 30, 2019
Revenues      
Products $ 6,093,273     $ 5,469,974  
Services 8,277,294     8,754,945  
Energy production 1,027,191     1,819,108  
Total revenues 15,397,758     16,044,027  
Cost of sales      
Products 3,705,250     3,490,214  
Services 5,304,070     5,004,708  
Energy production 690,280     1,164,431  
Total cost of sales 9,699,600     9,659,353  
Gross profit 5,698,158     6,384,674  
Operating expenses      
General and administrative 5,326,941     5,338,663  
Selling 1,458,170     1,397,954  
Research and development 530,363     717,627  
Gain on sale of assets     (1,081,049 )
Goodwill impairment     3,693,198  
Total operating expenses 7,315,474     10,066,393  
Loss from operations (1,617,316 )   (3,681,719 )
Other income (expense)      
Interest income 11,965     598  
Interest expense (116,238 )   (45,031 )
Unrealized loss on investment securities (98,404 )   (19,680 )
Total other expense, net (202,677 )   (64,113 )
Loss before provision for state income taxes (1,819,993 )   (3,745,832 )
Provision for state income taxes 18,393     7,786  
Consolidated net loss (1,838,386 )   (3,753,618 )
(Income) loss attributable to the noncontrolling interest (17,889 )   116,412  
Net loss attributable to Tecogen Inc. $ (1,856,275 )   (3,637,206 )
       
Net loss per share – basic and diluted $ (0.07 )   $ (0.15 )
Weighted average shares outstanding – basic and diluted 24,850,256     24,822,555  

 












Non-GAAP financial disclosure (1)      
Net loss attributable to Tecogen Inc. $ (1,856,275 )   $ (3,637,206 )
Interest & other expense, net 104,273     44,433  
Income taxes 18,393     7,786  
Depreciation & amortization, net 193,637     267,232  
EBITDA (1,539,972 )   (3,317,755 )
Stock based compensation 81,730     77,933  
Unrealized loss on marketable securities 98,404     19,680  
Non-cash abandonment of intangible assets 179,944      
Goodwill impairment     3,693,198  
Adjusted EBITDA $ (1,179,894 )   $ 473,056  

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)














































  Six Months Ended
  June 30, 2020   June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:      
Consolidated net loss $ (1,838,386 )   $ (3,753,618 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation, accretion and amortization, net 193,637     267,232  
Stock-based compensation 81,730     77,933  
Goodwill impairment     3,693,198  
Gain on sale of assets     (1,081,049 )
Provision for losses on accounts receivable     29,849  
Abandonment of intangible assets 179,944      
Non-cash interest expense 50,775     12,087  
Changes in operating assets and liabilities, net of effects of acquisitions      
(Increase) decrease in:      
Accounts receivable 6,405,936     2,517,901  
Unbilled revenue 538,032     (936,106 )
Inventory (890,868 )   (695,835 )
Due from related party     9,405  
Prepaid expenses and other current assets (6,382 )   (15,282 )
Other non-current assets 532,293     40,003  
Increase (decrease) in:      
Accounts payable (1,197,576 )   (918,484 )
Accrued expenses and other current liabilities 284,506     (380,351 )
Deferred revenue (1,671,239 )   (966,776 )
Net cash provided by (used in) operating activities 2,662,402     (2,099,893 )
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property and equipment (53,674 )   (52,444 )
Proceeds from sale of assets     5,000,000  
Purchases of intangible assets (123,254 )   (22,738 )
Unrealized loss on investment securities 98,403     19,680  
Payment of stock issuance costs (802 )   (1,011 )
Distributions to noncontrolling interest (23,070 )   (27,413 )
Net cash provided by (used in) investing activities (102,397 )   4,916,074  
CASH FLOWS FROM FINANCING ACTIVITIES:      
Proceeds (payments) on revolving line of credit, net (2,453,159 )   (2,021,519 )
Proceeds from note payable 1,874,200      
Proceeds from the exercise of stock options 1,200     20,756  
Net cash used in financing activities (577,759 )   (2,000,763 )
Change in cash and cash equivalents 1,982,246     815,418  
Cash and cash equivalents, beginning of the period 877,676     272,552  
Cash and cash equivalents, end of the period $ 2,859,922     $ 1,087,970  
       
Supplemental disclosures of cash flows information:      
Cash paid for interest $ 36,326     $ 23,551  
Cash paid for taxes $ 5,222     $ 28,524  

(1) Non-GAAP Financial Measures
In addition to reporting net income, a U.S. generally accepted accounting principles (“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 due to abandonment of certain intangible assets), 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.

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