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Tecogen Announces Second Quarter 2023 Results

Q2 2023 Revenue of $6.7 Million, an Increase of 5.2% QoQ         


WALTHAM, MA - (NewMediaWire) - August 09, 2023 - Tecogen Inc. (OTCQX:TGEN), a leading manufacturer of clean energy products, reported revenues of $6.7 million and a net loss of $0.8 million for the quarter ended June 30, 2023 compared to revenues of $6.4 million, and a net loss of $0.9 million in 2022.  For the six months ended June 30, 2023 revenues were $12.1 million and the net loss was $2.3 million compared to revenues of $13.9 million, and net loss of $0.8 million for the same period in 2022.

"We saw an increase in revenues compared to both Q1 2023 and Q2 2022 of 25% and 5% respectively. Our sales backlog has increased from $7.1 million at the end of Q1 to $8.3 million at the end of Q2 to $11.3 million today. This backlog does not include our recurring service revenue. The Aegis service contract acquisition meant we had service revenues of almost $4 million this quarter or a 30% increase. We finished the quarter with $1.87 million in cash as we generated cash from operations in Q2 2023 and H1 2023. Overall we made substantial progress towards turning around the business and meeting the objectives we set out earlier in the year." commented Abinand Rangesh, Tecogen's Chief Executive Officer.

Key Takeaways

Net Income and Earnings Per Share

      Net loss in Q2 2023 was $0.8 million compared to net loss of $0.9 million in Q2 2022, a decrease of $0.1 million, primarily due to higher Services segment revenue and gross profit. EPS was a loss of $0.03/share in both Q2 2023 and Q2 2022, respectively.

      Net loss in H1 2023 was $2.3 million compared to net loss of $0.8 million in Q2 2022, an increase of $1.5 million, due primarily to lower Products segment revenue and gross profit and an increase in operating expenses. EPS was a net loss of $0.09/share and a net loss of $0.03/share in H1 2023 and H1 2022, respectively.

Loss from Operations

      Loss from operations for the three months ended June 30, 2023 was $0.8 million compared to a loss of $0.8 million for the same period in 2022.

      Loss from operations for H1 2023 was $2.2 million compared to a loss of $0.7 million for the same period in 2022, an increase of $1.5 million. The loss from operations increased due to lower revenue and gross profit margins in our Products segment and increased operating expenses.

Revenues

      Revenues for the quarter ended June 30, 2023 were $6.7 million compared to $6.4 million for the same period in 2022, a 5.2% increase.

o   Products revenue was $2.4 million in Q2 2023 compared to $3.0 million in the same period in 2022, a decrease of 18.8%, primarily due to decreased cogeneration and chiller sales into our key market segments including controlled environment agriculture.

o   Services revenue was $4.0 million in Q2 2023 compared to $3.1 million in the same period in 2022, an increase of 29.6%, primarily due to revenue from the acquired Aegis maintenance contracts and a 9.0% increase in revenue from existing contracts.

o   Energy Production revenue decreased 1.2%, to $350 thousand in Q2 2023 compared to $354 thousand in the same period in 2022.

      Revenues for H1 2023 were $12.1 million compared to $13.9 million for the same period in 2022, a 12.4% decrease.

o   Products revenue was $4.2 million in H1 2023 compared to $6.9 million in the same period in 2022, a decrease of 40.2%, primarily due to decreased cogeneration and chiller sales into our key market segments including controlled environment agriculture.

o   Services revenue was $7.1 million in H1 2023 compared to $6.0 million in the same period in 2022, an increase of 18.8%, primarily due to revenue from the acquired Aegis maintenance contracts and a 8.3% increase in revenue from existing contracts.

o   Energy Production revenue decreased 5.6%, to $0.88 million in H1 2023 compared to $0.94 million in the same period in 2022 due to temporary maintenance work on two sites.

Gross Profit and Gross Margin

      Gross profit for the second quarter of 2023 was $2.8 million compared to $2.7 million in the second quarter of 2022. Gross margin was 42.0% in the first quarter compared to 42.1% for the same period in 2022. Products margin increased to 33.8% from 33.0%, while Services margin decreased to 47.5% from 51.7%, due to higher labor and material costs. In particular, as supply chain constraints for engines eased, we performed significant engine related replacements and upgrades which negatively impacted Service margins.

      Gross profit for H1 2023 decreased to $4.9 million compared to $5.8 million in the same period in 2022, a decrease of $0.9 million. Gross margin decreased to 40.6% in the first half of 2023 compared to 41.8% for the same period in 2022 due to higher labor and  material costs which reduced Products margin to 31.9% from 32.9% and Services margin to 46.2% from 52.4%. In particular, as supply chain constraints for engines eased, we performed a significant number of engine replacements in H2 2023 which negatively impacted Service margins. Energy Production margin deceased to 36.9% from 40.4% due to decreased runtime at the sites.

Operating Expenses

      Operating expenses increased by 2.7% to $3.6 million for the second quarter of 2023 compared to $3.5 million in the same period in 2022 due to increases in business insurance and consulting costs, attributable in part to the Aegis acquisition.

      Operating expenses increased by 9.6% to $7.2 million for the first half of 2023 compared to $6.5 million in the same period in 2022 due to increases in business insurance, travel, and consulting costs, attributable in part to the Aegis acquisition.

Adjusted EBITDA(1) was negative $592 thousand for the second quarter of 2023 compared to a negative $651 thousand for the second quarter of 2022. Adjusted EBITDA(1) was negative $1.9 million for the first half of 2023 compared to negative $448 thousand for the first half of 2022. (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).

Conference Call Scheduled for August 10, 2023, at 9:30 am ET

Tecogen will host a conference call on August 10, 2023 to discuss the second quarter results beginning at 9:30 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 2023 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 3,200 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, 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:

 

Abinand Rangesh

P: 781-466-6487

E: Abinand.Rangesh@tecogen.com


TECOGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

 

June 30, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,871,063

 

 

$

1,913,969

 

Accounts receivable, net

 

5,614,291

 

 

 

6,714,122

 

Unbilled revenue

 

1,748,336

 

 

 

1,805,330

 

Employee retention credit receivable

 

46,148

 

 

 

713,269

 

Inventories, net

 

12,027,525

 

 

 

10,482,729

 

Prepaid and other current assets

 

467,390

 

 

 

401,189

 

Total current assets

 

21,774,753

 

 

 

22,030,608

 

Long-term assets:

 

 

 

Property, plant and equipment, net

 

1,352,318

 

 

 

1,407,720

 

Right of use assets

 

920,690

 

 

 

1,245,549

 

Intangible assets, net

 

2,421,379

 

 

 

997,594

 

Goodwill

 

3,129,147

 

 

 

2,406,156

 

Other assets

 

201,898

 

 

 

165,230

 

TOTAL ASSETS

$

29,800,185

 

 

$

28,252,857

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

 

4,212,914

 

 

 

3,261,952

 

Accrued expenses

 

2,554,000

 

 

 

2,384,447

 

Deferred revenue, current

 

2,086,174

 

 

 

1,115,627

 

Lease obligations, current

 

513,811

 

 

 

687,589

 

Acquisition liabilities, current

 

649,241

 

 

 

 

Unfavorable contract liability, current

 

213,559

 

 

 

236,705

 

Total current liabilities

 

10,229,699

 

 

 

7,686,320

 

Long-term liabilities:

 

 

 

Deferred revenue, net of current portion

 

154,149

 

 

 

371,823

 

Lease obligations, net of current portion

 

459,372

 

 

 

623,452

 

Acquisition liabilities, net of current portion

 

1,643,567

 

 

 

 

Unfavorable contract liability, net of current portion

 

490,802

 

 

 

583,512

 

Total liabilities

 

12,977,589

 

 

 

9,265,107

 

 

 

 

 

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, 2023 and December 31, 2022

 

24,850

 

 

 

24,850

 

Additional paid-in capital

 

57,456,945

 

 

 

57,351,008

 

Accumulated deficit

 

(40,551,687)     

 

 

 

(38,281,548)     

 

Total Tecogen Inc. stockholders’ equity

 

16,930,108

 

 

 

19,094,310

 

Non-controlling interest

 

(107,512)     

 

 

 

(106,560)     

 

Total stockholders’ equity

 

16,822,596

 

 

 

18,987,750

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

29,800,185

 

 

$

28,252,857

 


TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 

Three Months Ended

 

June 30, 2023

 

June 30, 2022

Revenues

 

 

 

Products

$

2,445,631

 

 

$

3,010,115

 

Services

 

3,952,971

 

 

 

3,050,191

 

Energy production

 

350,156

 

 

 

354,287

 

Total revenues

 

6,748,758

 

 

 

6,414,593

 

Cost of sales

 

 

 

Products

 

1,618,456

 

 

 

2,015,466

 

Services

 

2,075,869

 

 

 

1,473,586

 

Energy production

 

220,007

 

 

 

222,092

 

Total cost of sales

 

3,914,332

 

 

 

3,711,144

 

Gross profit

 

2,834,426

 

 

 

2,703,449

 

Operating expenses

 

 

 

General and administrative

 

2,917,283

 

 

 

2,824,832

 

Selling

 

480,786

 

 

 

503,601

 

Research and Development

 

236,556

 

 

 

194,853

 

Gain on disposition of assets

 

      (19,950)     

 

 

 

(2,500)     

 

Total operating expenses

 

3,614,675

 

 

 

3,520,786

 

Loss from operations

 

(780,249)     

 

 

 

    (817,337)     

 

Other income (expense)

 

 

 

Interest and other income (expense), net

 

(21,061)     

 

 

 

(1,265)     

 

Interest expense

 

(1,857)     

 

 

 

(12,733)   

 

Unrealized gain on investment securities

 

37,497

 

 

 

 

Total other income (expense), net

 

14,579

 

 

 

(13,998)   

 

Loss before provision for state income taxes

 

(765,670)     

 

 

 

(831,335)      

 

Provision for state income taxes

 

9,614

 

 

 

  6,500     

 

Consolidated net loss

 

(775,284)     

 

 

 

(837,835)   

 

Income attributable to the non-controlling interest

 

(4,826)     

 

 

 

(18,383)   

 

Net loss attributable to Tecogen Inc.

$

(780,110)     

 

 

$

(856,218)   

 

 

 

 

 

Net loss per share – basic

$

(0.03)     

 

 

$

(0.03)     

 

Net loss per share – diluted

$

(0.03)     

 

 

$

(0.03)     

 

Weighted average shares outstanding - basic

 

24,850,261

 

 

 

24,850,261

 

Weighted average shares outstanding - diluted

 

24,850,261

 

 

 

24,850,261

 


 

Three Months Ended

 

June 30, 2023

 

June 30, 2022

Non-GAAP financial disclosure (1)

 

 

 

Net loss attributable to Tecogen Inc.

$

(780,110)     

 

 

$

(856,218)     

 

Interest expense, net

 

1,857

 

 

 

12,733

 

Income taxes

 

9,614

 

 

 

6,500

 

Depreciation & amortization, net

 

185,175

 

 

 

95,985

 

EBITDA

 

(583,464)     

 

 

 

(741,000)     

 

Stock based compensation

 

28,589

 

 

 

89,893

 

Unrealized gain on investment securities

 

(37,497)     

 

 

 

 

Adjusted EBITDA

$

(592,372)     

 

 

$

(651,107)     

 


TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 

Six Months Ended

 

June 30, 2023

 

June 30, 2022

Revenues

 

 

 

Products

$

4,155,767

 

 

$

6,949,596

 

Services

 

7,089,144

 

 

 

5,967,471

 

   Energy production

 

883,665

 

 

 

935,849

 

Total revenues

 

12,128,576

 

 

 

13,852,916

 

Cost of sales

 

 

 

Products

 

2,831,024

 

 

 

4,660,221

 

Services

 

3,813,471

 

 

 

2,840,338

 

   Energy production

 

557,746

 

 

 

558,119

 

Total cost of sales

 

7,202,241

 

 

 

8,058,678

 

Gross profit

 

4,926,335

 

 

 

5,794,238

 

Operating expenses

 

 

 

General and administrative

 

5,709,766

 

 

 

5,298,735

 

Selling

 

1,000,856

 

 

 

1,004,692

 

Research and development

 

465,658

 

 

 

334,988

 

Gain on disposition of assets

 

(19,950)     

 

 

 

(36,445)     

 

Gain on termination of unfavorable contract liability

 

 

 

 

(71,375)     

 

Total operating expenses

 

7,156,330

 

 

 

6,530,595

 

Loss from operations

 

(2,229,995)     

 

 

 

(736,357)     

 

Other income (expense)

 

 

 

Interest and other income (expense), net

 

(20,231)     

 

 

 

(15,416)     

 

Interest expense

 

(2,272)     

 

 

 

(13,561)     

 

Unrealized gain on investment securities

 

37,497

 

 

 

37,497

 

Total other income (expense), net

 

14,994

 

 

 

8,520

 

Loss before provision for state income taxes

 

(2,215,001)     

 

 

 

(727,837)     

 

Provision for state income taxes

 

32,252

 

 

 

10,430

 

Consolidated net loss

 

(2,247,253)     

 

 

 

(738,267)     

 

Income attributable to non-controlling interest

 

(22,886)     

 

 

 

(28,542)     

 

Net loss attributable to Tecogen Inc.

$

(2,270,139)     

 

 

$

(766,809)     

 

 

 

 

 

Net income loss per share – basic

$

(0.09)     

 

 

$

(0.03)     

 

Net income loss per share – diluted

$

(0.09)     

 

 

$

(0.03)     

 

Weighted average shares outstanding - basic

 

24,850,261

 

 

 

24,850,261

 

Weighted average shares outstanding - diluted

 

24,850,261

 

 

 

28,250,261

 


 

Six Months Ended

 

June 30, 2023

 

June 30, 2022

Non-GAAP financial disclosure (1)

 

 

 

Net loss attributable to Tecogen Inc.

$

(2,270,139)     

 

 

$

(766,809)     

 

Interest expense, net

 

2,272

 

 

 

13,561

 

Income taxes

 

32,252

 

 

 

10,430

 

Depreciation & amortization, net

 

291,095

 

 

 

217,718

 

EBITDA

 

(1,944,520)     

 

 

 

(525,100)     

 

Stock based compensation

 

105,937

 

 

 

185,600

 

Unrealized gain on marketable securities

 

(37,497)     

 

 

 

(37,497)     

 

Gain on termination of unfavorable contract liability

 

 

 

 

(71,375)     

 

Adjusted EBITDA

$

(1,876,080)     

 

 

$

(448,372)     

 


(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, 2023

 

June 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Consolidated net loss

$

(2,247,253)     

 

 

$

(738,267)     

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

291,095

 

 

 

217,718

 

Stock-based compensation

 

105,937

 

 

 

185,600

 

Provision for doubtful accounts

 

44,000

 

 

 

46,000

 

Gain on disposition of assets

 

(19,950)     

 

 

 

(36,445)     

 

Unrealized gain on investment securities

 

(37,497)     

 

 

 

(37,497)     

 

Gain on termination of unfavorable contract liability

 

 

 

 

(71,375)     

 

Changes in operating assets and liabilities

 

 

 

(Increase) decrease in:

 

 

 

Accounts receivable

 

755,831

 

 

 

(444,541)     

 

Employee retention credit receivable

 

667,121

 

 

 

562,752

 

Unbilled revenue

 

56,994

 

 

 

1,117,057

 

Inventory

 

(1,133,618)     

 

 

 

(438,102)     

 

Prepaid assets and other current assets

 

(66,201)     

 

 

 

(22,618)     

 

Other assets

 

325,688

 

 

 

308,282

 

Increase (decrease) in:

 

 

 

Accounts payable

 

839,784

 

 

 

(247,876)     

 

Accrued expenses and other current liabilities

 

178,241

 

 

 

(74,490)     

 

Deferred revenue

 

752,873

 

 

 

(5 89,158)     

 

Other liabilities

 

(359,369)     

 

 

 

(316,217)     

 

Net cash provided by (used in) operating activities

 

153,676

 

 

 

(579,177)     

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of property and equipment

 

(19,607)     

 

 

 

(209,034)     

 

Payment for business acquisition

 

(170,000)     

 

 

 

 

Purchases of intangible assets

 

 

 

 

(29,505)     

 

Proceeds from disposition of assets

 

16,863

 

 

 

67,169

 

Distributions to non-controlling interest

 

(23,838)     

 

 

 

(32,809)     

 

Net cash used in investing activities

 

(196,582)     

 

 

 

(204,179)     

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Net cash provided by financing activities

 

 

 

 

 

Change in cash and cash equivalents

 

(42,906)     

 

 

 

(783,356)     

 

Cash and cash equivalents, beginning of the period

 

1,913,969

 

 

 

3,614,463

 

Cash and cash equivalents, end of the period

$

1,871,063

 

 

$

2,831,107

 

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