TGEN - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to the Tecogen Third Quarter 2018 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Bonnie Brown, Chief Accounting Officer. Gap]. [Audio

technical by. having are Brown, Please live. now difficulties. are Bonnie stand you We

Bonnie Brown

you, morning, call. Omar. all Thank you. Thank Good our quarter for and third XXXX earnings joining you thank

Benjamin On with Panora, President Chief the and CEO; Officer. me are our call Operating and Locke, today Robert our

income, unknown potential, target, uncertainties statement. that outlooks or containing factors Before which cause statements. forward-looking project, forward-looking similar I’d harbor may read or or statements and matters call or and expressions our likely returns describe to may our to to differ such by begin, conference actual measures revenues, belief, any include will, expressed estimate, goals, statements. other financial statements, and projected non-historical or such those we words These safe plan, may expect, and and strategies, materially that risks, should, like This could, implied predictions other from are accompanying other documents forward-looking intent, anticipate, identify may only results intended known as involve

forward-looking you Given these reliance on place undue uncertainties, should not these statements.

revise statements forward-looking only Forward-looking date and or we of on statements. undertake speak no the update to are they obligation which as made, any

to relating the on and to to development; anticipated operations; operations in services; our technological of following: and described are factors and materially addition and to results to products results incentives, report benefits demand to Form existing XX-K on relating from the competing Form our to future our In relating favorable ability rebates and services; those products past in changes projected and fund business the research quarterly under factors, differ in integration of could for among actual that and services; financing availability cause annual risk our growth. acquired and and issues XX-Q obtain on terms developments; reports fluctuations regulatory environment our the factors the products tax

We now and includes not presentation the evaluate internal including of performance non-GAAP prospective our financial over enables solely excludes financial as of performance perspective understand addition investors provides performance to meaningful better as business EBITDA, current period-to-period correlation measures, which on expenses In that our call historical underlying certain Ben to eliminating adjusted and I’ll that this certain business otherwise and adjusted presentation. our measures. and operating vary measures, when the an apparent non-GAAP to GAAP of items of a believe presentation to and the operating in use be relying our that the GAAP EBITDA turn financial business highlights performance, in operating measures without measure for may operating a business core trends by from financial described update.

Benjamin Locke

Thank you, Bonnie.

financial company’s remarks and results overview Slide our reviewing then to the X, and take recent start along will on emissions by like to the followed have performance before development with Moving for I’ll financials. detail Bonnie the with give achievements of an by we more technology Bob some quarter final questions. accomplishments. I’d then

those reminding cheaper, who new reliable. more and shown about X: cleaner core and model I’d Tecogen’s maybe business power to by is Slide that like our always, heat, off cooling to As start company on

disruptive and infrastructure. to Our buildings is powering proprietary heating, and improving resiliency methods for emissions technology grid of and efficiency, truly traditional cooling the

Turning to Slide X.

second our approximately profit of million brings four and XXXX. $X.X million, for quarter at profit. quarter over quarter This trailing about X.X to quarters third gross The $X.XX of the adjusted revenues the is resulting quarters four Trailing $XX quarters more revenue of a came trailing decrease XXXX generating saw XX.X%. $XXX,XXX was flows, cash representative four Energy EBITDA, production revenues which of almost ADG million of to $XXX,XXX. in

X. Slide Moving to on

margin gross XX% the service the to XX.X%, lowered for total by strong which XX.X%, tendered quarter, of by margins. we product achieve margins lower margins addition the slightly In installation helped increase product of of sales,

were Our feel and expenses, expenses, operating support our in quarter expenses increases the are number R&D of by drive notable we factors selling the also for in necessary which business higher X.X% investment A to future. overall our growth operational quarter-over-quarter.

in We XXth the Florida up Carolina prop our stood in to quarter service to our and more and service cost states. surrounding also centre allow this effective Georgia, customers Florida,

allow initial evidenced more size We Southeast United well product revenues that new by the this overall forward growth in XX% centre the projects dispatch quickly to States. it as to cost up of expect as is economical as Tecogen in start Takeaways the propel be recouped quarter, company increase quarter-over-quarter. the maintenance for as systems will strong in

are which and the Technology. calculated R&D Ultera but investments projects, our in quarter we margins, the in Florida project-specific centre delays, costs due to for making rebound. down Emissions controlling to construction really And such carefully installation Our service expected are were expenses are new in as our and while future

X. Slide quarter. to the notable like for the I’d some Moving review to achievements of

micro-grid large smart economics. We the battery First, CHP benefits but power revenue for new generation our as control the California additional requirements correction UL we requirements evolving update controlled Tecogen with projects expected certification as discussed needs network. and frequency reactive the operating By that the SA Having of for the the XXXX. the meet distributed recent call, the and help can additional adopted revenue out an utility the by generating be the to to certification for inverter ultimately developed required of met also virtue of by states with such on staged of is inverter system. integrate electronics, economic is important to ready programs is an in when by to in feature, XXXX creating utility inverter thereby is CERTS most critical will amount of to in storage certification and was operation allow of Tecogen’s obtained stack certification rolled allowing interconnection smart more many to foundational are requirement The certification additional the certification utility participate previous the in Smart August incrementally. communication the in meet future. State or the we the Inverters utility, complex

Next, large pull. on The to component water TecoFrost development, reintroduce they we made Examples chilled or and typically I to comfort in and continued terms product line motors. engine an for known bottling but a but not call, systems Tecochill by escalation, cold early of chillers. refrigerant gas more directly facilities these to cooling electric product will precise XXXXs is address more the gas commonly large maintenance of our product or The compressor product on industrial established and in in relying demand systems our mentioned air, electric on reintroduce cooling are performance, buildings, the or Tecochill, discontinued with last prices, case, effective was manufacturing and line excellent in TecoFrost TecoFrost technology particularly grids, hotels and expanding and are grid product electric market as not meant circulated ammonia due the circulate product combined in efficient In procedures. already food chilled TecoFrost facilities. refrigerants, high an manuals, are water meatpacking, of the product the product refrigeration product dairy chill and marketing our current processing found in availability strong entirely systems. Unlike facilities, operated literature this almost markets of as given which include technical are operations, air terms cost circulate fit as storage the resurgence gas

products important TecoFrost aspect reboot to to product previously, be to for I’ve manufacturing An manufacturer a HVAC sales manufacturing to the As flow an Chiller of is jointly contributor mentioned through Filter because chiller work established replacements defined excellent process more transactional. systems industrial partner which and the leading was continuous opportunities business previous a to product. bring and is of those community, the occur to refrigeration throughout market. all compressors with sales sales XXXX's these Filter partner our tend engineering time Systems in Tecogen's this channels. are the using allows our and compressor the the

As such, division join is for market Emerson minimize of a the place re-launch. the using testing, The product the sell as in data, for I to engineering, timeframe to mentioned, and product Tecogen our sales combined filter, maintenance product goal are all channels. Climate operation and manufacturing the phase

strong and more and on help, North market STx In the From to we’re XXth new Tecogen into growing the America side, August, sales several cannabis unit the building was another grow sale systems in we continuing first expected to in units Tecochill construction The design industry planning. half rapidly selling emerging get the of Massachusetts plan from their chillers facilities. announced other indoor of pull first XXXX. in Tecogen's order sales cannabis With TecoFrost XXXX with the we throughout growing two facility. with indoor a of

product the sometimes than electric required for becoming more costs is design the As growing from growth and electric such, by increasingly overall the basis the By needing facilities the reducing infrastructure complexity load, provide. the facilities. which utility first capacity cooling facilities reduces reduced, the Tecochill facility, indoor available power to

School electricity, also expected emissions ESCO project the school by to that backup weather-related imitate of Tecogen And Ultera in basis modular the outages. continued second expected entails grid chose X-megawatt cooling, an a to for centre is early this have design on be Forklift we the the side, power, low decision case project required the elected to with to also move forklift system can and as phase manufacture also for InVerde design combination retrofit forklift provide or a District driving for zero Massachusetts energy forward announced well the data provide partner, InVerde a forklift In to within component megawatt on system systems ESCO, Ultera In of cooling quarter. A high-rise served September, MCFA, to we The multiple to the the York microgrid-enabled large XXXX. in and made installation, noise lastly, proceed and/or leading in Caterpillar maintains this start had for New while site. an power mid-XXXX, efficiency, advantages emissions. value involving System. our or a completed as we to savings uniquely York high is the and is propane due to Tecogen trigeneration provide OEM and units Tecogen the Next, Mitsubishi City with also proposition School project near month an This MCFA resiliency heating development. flexibility validate announced of a of to that their is charge last deployed New America, achieving co-generation This microgrid second our next that outages. only we and but susceptibility which emission in functionality trigeneration power to projects sell that company, existing power criteria products. the engineering everyday heating services

catalyst of as a We also ongoing vehicle located as retrofit the Southern Ultera in Panora to about emissions facility, other with for work a on successful detail announced talk more research to developments California develop at the institution their vehicle applications. Bob will work and optimization recognized Ultera expertise. continue permitting these the generators Generac well for

X. to Slide Moving

product to backlog Our a success in our that detail accomplishment will continues as quarters. future grow ensure result of

stood $XX.X currently about industry press our X. CHP second mechanical million as million line so-called include not as chiller in $X.X November account of does sales of is back recognizes mentioned using million of of Tecochill equipment. instead at backlog of HVAC quarter, at and I’m gas the the backlog The sorry, the Our value chiller not our the does And the tremendous increasingly backlog for of electric the new at the as expected backlog, unit and overall release, chiller Friday, end any – cooling with traditional product from TecoFrost the chillers. $XX.X sales –

to for our and continue not recreation, like products but markets as industrial well overall our Pie-chart our service particularly for hospitality, steady multiunit does consistent a residential, as be the systems, key the core and reminder, backlog markets healthcare, CHP include revenues. As indicates, as our installations, And products manufacturing.

to over some with detail Bonnie our call in followed the who by emissions will turn describe more detail to the financials. Bob, like I’d Now, progress Bob? about more

Robert Panora

engine are as to At have with in what Ben which MCFA, system. previously. in publicly presentation control present, the included not announcing an developing and permission, press call, were custom the I’ll based to U.S. Forklift discussed performance this commercial In working maximize you, Japan is America in Ultera morning, in propane our process, program, that engine which the progress tuning -- the which most to part I say identify for will has industry initiated technology. the or one partner, their of well. at MCFA the Good us except elaborate our Tecogen industry we October want we group understood to Ben. update group forklift the with release in Mitsubishi Ultera PERC, products. as the to emissions engine truck and are routinely today Caterpillar by technical Mitsubishi we and readily coincidentally engineers provide I thank Houston pleased Houston World important our with software listeners of I software. custom with being partner, an the said, control applications able as identified the preparing use Propane we begin we approach our we that industry our to Forum was about our in the

Tecogen, a on MCFA test necessary refine forklift the its using as test-track to its truck plan of is it prototype Houston the to where software send standard cycles. system Our and test will

optimistic We the that emissions a to of truck, there successful to fair of commercialization a work are lead be this done. is will course, near-zero forklift amount although of still,

We they at regarding world clearly afterwards, companies discussions prospects. our the and member are and have with enthusiastic of their and some had PERC forum

with as have willing independent offer to two The to this for again, There submitted a company help successful of are approved. additional commercialization propane We to request if option, seem will it are I and getting believe XXX-hour California well. of the given to to purchase are emergency we permitting other Southern funding be near-zero general use the phase. we customers group kits generators phase incentives we year, natural activities today Ultera that a report annual in can the supplied required today. with on Ultera had Last ongoing customer a exemption for that gas well to generators for beyond that

time, heat all by I’m to commercial final there. At approval confirm CHP credit in yet. official compliance. pleased be limit gas tested to process, they the good so been by within units, to natural to a without very such successfully the X recovery such, X achieved some this at third-party report step the is one, needed extension are but operate engine a As This permit has the to never as outcome test products

which first to Lastly, is institute, our light reformulated institute have further work researchers turn funded material was unfamiliar their relating order this for leading to to identified eminent of to us, our of improve is in which the Ultera a The we catalyst has contacted to Tecogen. material the And the in the removal. that, the in custom This over production phase with common applications assessment. the and in I’ll but vehicles work, samples catalyst other research the progressing. Brown relates evaluation. discussing applications, institute’s formulations be have we’re by discussion NOx scientist of for confirmed who financials. Bonnie Ultera Through call field, With can

Bonnie Brown

Bob. you, Thank

of some financial year-on-year Slide results. to highlights contains on quarter XX results. third the Moving the the of

project, the annuity grew trailing million to four on level important is year compared revenues deliver reliable continue second decreased and sites basis revenue life $XX service for gross a for XX.X% XX.X% declined same This comparative X% year-over-year. trailing gross the margin ADG margin than to for attributable a gross revenue due quarters for quarter product quarter profit of activities from Net chillers a adds of XX.X% and the Product and source Service $X.X margin for XXXX. decrease QX, basis, carry decrease revenue a XX% On Total service quarters for income compared for of Tecogen was ADG the gross flows our the growth by improvement XX% is if continues period on gross a the revenue XX.X% consolidated in its to year-over-year. reaching loss revenue margin consolidated Long-term for XXXX, service quarter increased production revenue the to stream. for long-term million $XXX,XXX. QX, third total the of to production quarter part to ago. margin a revenue compared year-over-year. XXXX, $XXX,XXX to alone quarter. the stream margin product X.X% XX% XXXX, and million total of out bringing cash more to compared installation basis. compared and overall or lower XXXX, third total overall $XX,XXX XX% a profit of was by gross XX.X% the Energy contracts. compared First, revenue it sales service QX, a of quarter. XX% QX, the XXXX XXXX for $X.X by provided compared Energy four our $XX to year-over-year XXXX, service million an $XXX,XXX its for provide XX.X% margin QX, to to with profit which to and This stable our for down XX.X% was bringing to for and was decline of half quarter third installation QX, contributed fleet quarter in of $X.X million XXXX our to contracts

for earlier, discussed and development invested in have costs to XXXX. activities. $XXX,XXX QX in As to These same for we amounted the period compared $XXX,XXX research

by as year-over-year activities. we various -- expenses $XX,XXX XX% invest in selling Additionally, increased

increase in $XXX,XXX to profit compared of QX, presents gross we Florida addition, year-over-year. G&A XX of $XXX,XXX, the and centre EBITDA. loss and Slide decrease to service additional In accounts non-GAAP XXXX backlog our historical in opened $XXX,XXX expenses contributing XXXX, the a in for adjusted of

grown QX has was the to turn-key November our left at end Backlog the the 'XX, million million. at X. of of was of backlog $XX.X QX backlog service as $XX.X product projects. our chart At and and end is $XX.X On strong million

of service energy a or production always backlog revenues. projection does As contract not include

our for the by compared QX, $XXX,XXX schedule right, in difference a on positive XXXX, to at EBITDA Looking was adjusted $XXX,XXX. QX, the a $XXX,XXX negative of XXXX

activities in G&A investments as an for increased previously, gross R&D the decrease shortfall increase and in in expenses in a discussed as As EBITDA. adjusted margin year-over-year and selling well accounts

XX. Turning to Slide

is slightly charts Let’s that period $XX trailing XXXX in trailing review illustrates chart from represented in revenue a Energy The revenue trend period. the overtime, and quarters all percentage our service, model. QX on of 'XX the revenue the the most the chart the dipped previous blue, reaches revenue the product selling total the as growth for green, in increasing four right September costs a of and This blue. XX, is ending with chart green. chart, along bars where trend left, decreasing overtime our using four-quarter right the metrics track by in although yellow gross revenues Starting service revenues the million. the of the with trend of G&A line margin categories on illustrates

forward. various sales improve efforts control expect focus We going these cost and initiatives results to

the Ben I’ll Now to conclude call turn our back to discussion.

Benjamin Locke

Bonnie. Thanks,

So that of will the reliable, of Tecogen's systems as the end clean, believe favour natural gas ahead XXXX, forces generation I we trends look ahead in the and year market continue. to us,

abundant will First, expensive many the cost with an and for urban aging in U.S. many resource generation infrastructure. come, in the and while natural effective remained be gas distribution electricity to years areas

position or product, advantage natural for about make to be systems of coming industrial Our high we looking to to natural outlook ultimately natural gas more can reintroducing an far in whether more TecoFrost from the gas systems. in forward generation TecoFrost quality in effective By gas costs electric systems air effective electric into sharing clean and chillers, displace penetration and the co-generation processes I’m cost many operations this quarters. cost or rollout the take allow consumption of standpoint. they'd information industrial favour cleaner more significantly excellent are

to globally validated automobiles, Ultera our continues effective chillers, more environment. as the retrofit, dramatically be attention gas have forklifts, as reduces engine buses, other be focused systems component, Next, to Ultera NOx on emissions emissions, standby shown proprietary to we generators, a vehicles, for trucks, cost own OEM many in medium CO be CHP emitted our light adaptable whether and or engines, and is stationary technology or

debatable, While emissions Ultera the to will near-zero we feel vehicles our be of that lastly, in the put industrial valued simply country-by-country, next regulations and transportation And systems. emissions is return quarter. both state-by-state, engine to timing certainly profitability goal highly imprecise technology and

grow segment, our way expenses chillers better We product will this margins that particularly the controlling our do to projects for to continuing turnkey efficient a the managing improve as pragmatic sales, in to profitability. builds in and and by future, our but maintain construction

happy I coming positioning not have we how I’m happy the a am profitable years. So with ourselves are we not for did quarter,

advantages well understood is to I’d fundamental for growing, our upside questions. creation shareholders. technology for turn raised that, and Our tremendous the value operator and over by the strong and With product industry, our and are our business emissions it have offers to like

Operator

Our Dayal, first proceed comes Please question. Instructions] & [Operator question with your Renshaw. Rodman Amit from

Amit Dayal

sitting in Where market softening chillers, in how It's calls. chillers into like is regards traction the cogeneration that on extensively know, to, it what bit sort you guys happening on looks you bit last of looking XXXX, earnings terms is you been chillers generation like in little discussed cogeneration core are So a your the a say versus side growth this side? the more seeing outlook? getting Is of was two side. are more

Benjamin Locke

realize, terms starting still facilities a of accomplish market they cogeneration. their cost our of are is further cogeneration Yes, more is goals and careful reflection I reducing very engineering, in is to chiller that way strong. a energy these seeking Upon we're to What how understanding Amit, much think, use. some effective

may suppliers, but have reasons that And sales co be. the many chillers, So into a in we drop are in we, course, advantage. issues, chiller ongoing. in economical our timing change ourselves into savings. if cogeneration that some with are that And overall our that a we're projects going of terms that certainly of I more makes terms it because for But have advantages, really we other sense cogeneration the cogeneration that there -- to in that's cases project place encourage by we are a differentiating -- get mean is why when projects in Amit, site infrastructure. great there of our that. a have cogeneration come Because, with bid are

I our of So certainly It's my advantage I'm advantages. to saying take of is a that own very But way some competitive market we and appreciating strong. ability sale and unit. our switching more to opportunities Tecogen we certainly to – in sales the a as happy benefits sometimes Tecochill customer well those Tecochill with thought cogen still Amit, have the long of cogeneration standpoint, I'm from have as our and sell to

Amit Dayal

Could it's this previously and You’re you TecoFrost you be history reintroduced. some about it talk when offering? us have continued? saying give why going not Could launched may to about been was it

Benjamin Locke

during electric Yes, I'll quickly sure. pumps new forces gas manuals to hand those over to high all the it's for But, a again, the same those in food The rollout literature lot but have little throughout had but you cold very more. are product expensive the whatever. because protocols. etc XXXXs, do days But right, a there, who a little mean that of around I industrial to when in said, this that it TecoFrost? mentioned But talk up put whether or many, still Tecochill compressor of lot we which yes, good natural the product sometimes very I to become these about cetera, ammonia to history all all processing basically market rates, of pumps we new processes, And and they kind pump bit written it's product we have understood their to rollouts it extensive of facility a now, market a are want natural that engine needs, essentially, gas all Bob service quite electric. prices gas went thing. isn't have all market's and before, the as storage XXXXs, drive the - refrigeration cooling for Bob, product it. mostly a Back reintroduce scary, accomplish the TecoFrost the us And I'll and shuddered didn't a Amit, was I start, opportunity many perfect the our a a but given it. we

Robert Panora

Yes, market. falls we XXXXs still popular the it’s in XXs. those many they early We fight XXXX, the fair And air. But different just think was, late today. the number of running them. quite can I when in -- keep was then TecoFrost gas And prices a actually all sold

them, foods and and and machines in are economics So keep going. nature frankly, hold on it's come have And them. TecoFrost like whole got strong are back can still we’ve our I’m And I sold amazed same it’s it we roaring because said, though. But let's still -- well back. chillers quite it’s back, Tecochill we how running, the key They that name but the it’s – so market, but -- of market. -- obvious that they’re know, the running with -- the a think many customers bunch, forth, TecoFrost, we customers it's which similar it's have different just the like really And and a has have everybody causing a would was I our customers. so were a that crap good generally industrial history. we And service

So work even visit we knowledge institutional pretty current, them them. on the we and we because have

So we either, our them. -- everybody salesman it to to re-educate know we isn't sell have like what

Benjamin Locke

transactional Bob. it’s Thanks the -- lot sometimes going Yes. They them, time, I they sale. our continue And check think, to it. Chill chiller sure I'm -- Cogeneration, mentioned have it. have do this happen all to transactional. are sales more mention and people I’m I was before

systems. processing lot some sometimes -- refrigerant have transacted actually packing, Companies, And And and of cogeneration. thought chiller because firms. about is are. a money have they paying to meat sometime all and to cases contemplated. cogeneration these not they transact They pieces don’t Sometimes can food as they’re have in continue

it us said, getting Very little much. so So time out needed as terms reintroduce it’s a it. perfect effort of back Bob to in for there

we’ll think in be I XXXX. back said, I action early as in So

Amit Dayal

is versus any there TecoFrost may occur Tecochill, cannibalization products? that between these

Robert Panora

No, people. chiller, building a occupied do certainly at that’s in chill The you all. what actually, that's you water, by when not

in You don’t hotel. that do a

like place and not or typical. You don't this a hotel put that ammonia would be in

Benjamin Locke

It's safely.

Robert Panora

But hick cream. smell crab said, for, to It’s biggest and fast. wineries, -- it’s Yes. a food food like out ice we’re is going But probably I it tremendous safety its is breweries, processing as any that was on of absolutely standard get large it food, processing gas in find thing. you’ll which it --

So all these all product the will, if you sold we in markets repacking, processing, with chicken of companies.

know They efficient. water issues ammonia. chilled of water. of much don’t Those name intense It's system. a want has refrigerants. our and warming inexpensive. overlap the in want no will they global It’s It I more with do them. name class the You the if places it’s to And chilled very not use

that’s in once to in everybody has range days would water does ammonia, want ice even these skating industrial what scale the you'll but of large a a most So that Every see who them while, chillers. scale, it are do.

So there is really no overlap there.

Amit Dayal

Understood.

Benjamin Locke

And say I to in round on markets, that’s saying TecoFrost been is some we’ve been want Tecochill peg And feedback a happening that go our in that of trying we’re to hold. getting back. Tecochill the TecoFrost the would just where squeeze really add square what’s these sell to the -- lot of trying we

complementary. a So they got truly

Amit Dayal

Interesting.

on me from more Ultera things. one maybe side Just of

the implications first waiting this sort the on, you or the year? are can permit of about maybe is it then maybe first So, XXXX company? as mentioned last half the or opportunity for talk in timeline. and the if you And But you’ve quarter later

Robert Panora

Yes, sure.

one source engines. of sent We we two all engine. bunch third-party are left. of the I done, do. are with around them I more got has ago. or doing one He kits them to they have guys? well, tests several official a called but And terrific. we heck a different that a of models So bunch you They finally said, this and passed. the said, of up these have week they with customer their Where

So we to slow. the confirm that. of recovery mean, they I to that. had that are heat And achieve really, rely levels none there’s on no credit really

certain indeed. times times -- of to So which would very demand the during now day a opportunity year a it and a shave site the we we’ll that into run where think generator get involving I seasons, certain electricity expensive would and low, would the put can management is of certain peak of this customer be applications

So for taken any at that our got the than would this We logical be time. haven’t step the hands that But be would the But full. technology. we implication. further next that

hours simple a with all able that those own the against the number day during would times electricity with the disrupt the a grid, of peaks prices back creates the day, small with generator, issues sell high energies can real generation, could be cost You push you difficult your of during alternative and running. just very of and deal to all times

think, possibility I the that’s, main here. So

Amit Dayal

And the first of is think? -- half timeline you XXXX, this

Robert Panora

got we No. right We have prospects ourselves into. we refocus any is I think to really get don’t to … now. This on that -- have

Amit Dayal

Do about the talking permit. you I’m you think … could

Robert Panora

within is will was unit. were this Oh that there one more knocking They just off. probably the one them one -- the took to do they They do. last that month. And all

Benjamin Locke

out Amit, just likely it’s Yes, we’ll we’ll that final put likely is investors something When know put that to let out one completed. done, announcement. an

Operator

Our Jang, proceed next Group. your with from James comes question. Maxim question Please

James Jang

couple if So about bit Can the what what's compared there’s like quick of market kind right talk anything comparable or offers just now? the more now to a ones. competitive market advantage a little on the in right TecoFrost, you that that of

Benjamin Locke

mentioned An competition great -- They standing built nuance compressor other I now there. alone our compressor just I think manufacturer TecoFrost, compressors. to so of out And natural long it Yes, driven, there's very engine Tecochill, the but mean, that with I all there. good manufacturer. kind we’re that not Bob. working product gas is, any with sell with important this turn with, not we’re out our -- to don’t I there’s there, any

won't right, effective a they they few you they have customer the So sell system would Vilter, they to back back to rates go efficient cost this. now, back opportunity you, your to able we those to to a Well say, sell years, see XX come hey, electric one be only for another customers are sell the because to to years. a years that for can compressor, those -- more XX when need another to

maybe life, economics instead it that for using so their are ones of up the for of existing to terms market are replace life. so systems compelling end also because to looking Simply not us replace in of reached of but And really sites because just opportunity, electric. their have opens existing gas looking box Pandora's that not of end

we're lot back mentioned, bring So and to Bob a as reasons this good to it. of really looking forward kind of

James Jang

right going but And a are advancing ahead on lot now. with of great they to Ultera, reluctant sell so guys it's forklifts MCFA, you

consumer Like guys? complimentary there's just you working lower for indicated pinpoint Or a rationale they gas-powered full? with looking side is have the the a what's So emission you this on to thing? behind that

Robert Panora

all Yes, with have the, of nothing. them, of the sell I've fork first that so truck there. in industry, electric They propane they discussions the course,

So motivated. really they're

a propane what’s the they make not definitely trucks. the fork MCFA, money-maker They trucks. predominant prefer motivation. company, their think, And for natural do But advantage your on natural those. they them gas as they I are there. and fork sellers electric are, So It's, -- have -- sell an biggest to

for impression I think, I the speak I got. shouldn't That's them.

would customer truck it it. electric perhaps, once as the longer a more, so or to the propane finding weak costs doesn't so And forth. an is operation and it think last that doesn't about make say, fork have charges day whole The -- that

what And of so think to because electric all And the equalled the want forth. electric truck. issues will go of again, battery get being the don't fork that's for. we so who customers things you competition number fair hoping be and But a we're

James Jang

Okay.

… right, because of kind there wise, I utility the think So last that using just is push going on back still don't whole electric, to it's

Robert Panora

to not are our come back, not they they're that's in the don't though. get fork Batteries to Jump situations. electric we -- still move our problem. but and gasoline. station to necessarily We prefer that's getting for just use two forever. turnkey get they all better, have six use a into the and of a more charging of battery shift, kind back, got Fundamentally the batteries hours, swap bit they the hours through or thing We best

have who prefer customers And the so you the customers and prefer propane. electrics who don't

which to And the will or or the me special now? electric, is take got issue a dealer one You deal off you off as get buy clean table want this give saying propane emissions the the … on the on that cost he'll table, the propane find thing away

Benjamin Locke

credit. near-zero You emissions vehicle a get

Robert Panora

to we’re if lose. us a phase, And to Yes, Yes, think, commercialization our have the you And what get -- to that's with. working near-zero. we they help they we're don't industry lot the is if market. get a so everything dynamics certainly going to lose the want propane I

James Jang

Okay.

kind a it's timeline. So of

So the I guys you steps. out know, kind laid of next

currently Or next that maybe at first ongoing the quarter So are is going you that's of testing now? be the until something facility to year?

Robert Panora

doing some refinements this up. it testing rotation tide getting We're

right-hand have software shift does drive bit testing looks Japan we'll a all cycle, now all tests And to that to to the to driven different races. performance. and see for But no left-hand the their folks three medium-weights, have it clean, and repeated I they last every over driving it’s off good two voice when great. the that to turns, the just and outdoors, just So saying nice in the from at and in we've with driven get working that. possible get over, combination of heavy-weights, done cycles, in Houston And think turns, look the its

James Jang

Okay.

will with you? timing they So evaluation from a their they complete to when -- working you give did once of start the capacity

Robert Panora

about show. that. to tell strictly where say sometime things. I can want we’ve talked to It’s not more don’t we’re than I blind anything

James Jang

could Ultera on Got the also I share automobiles? guess, you -- And Okay. on, for testing on maybe you.

Robert Panora

Yes.

but I this here. As research what said really the the do down of temperatures heard particular the road material? I about you path people it the we said, know your this I some advised know of us and we things has because looking the They concept, -- unique, No, do. And get -- this do with let normal more of at that program of operating may lot a about institute. And – can you went they cannot that. we multiphase chemistry, in, really chemistry they’ve than catalysts you’re really down it's composite haven’t us did

these to samples us put touch they’ve guy. to test this this we’re us with we composite got do is in then going scaling material, of research So save And with what and in up is really But phases need further we’re this expertise good some we benefiting catalyst the development the – of in of really institute because stage, chemistry. program. from which we're this

Benjamin Locke

doing for with remember forktruck work would be development this. that it’s too, development program similar think I asset important with forklift we’ve program I Ultera the for to think and And mentioned the we’re Yes. that of station occurring This vehicles. work is

now certainly and And is valve part package. Ultera our on they that envision where the us or out long-term emissions I same for do near-term, this I retrofits put gas manufacturer, retrofit conversion, something various both a -- every on at retrofit two, something is program, merry But we’re head vehicle, the comes making practical that’s a guess, sometimes put on the that for with where for out of progress the being could we’re of gas we’re And I time the natural number And vehicle the to on be what of number and that’s OEM you with medium near-term Ultera gas forklift, of the hell market terms would there many in want is of time OEM five it right. vehicles we carbonators in to that’s -- factory shooting for a automobile to exercise goal. market a years to car, reasons. will for. whatever mean, not So virtue gas. By companies is there doing mean near-zero pass there fronts. a natural sky natural natural real emissions. ideal one. are And strong that’s be that and

James Jang

marine on Have what to Good. regulation side. could try Ultera for IMO the guys any Good see final or guys. around side, up-end news a the the XXXX One do is the done one. lot marine you industry? the There of work on shipping

Robert Panora

far Well, diesel-based engines not as he that [indiscernible] be that's largely would as guided, I know and far

James Jang

I mean, LPG LNG have right? … power vessels, well, they and So

Robert Panora

LPG about seriously hadn’t I’m plugged fuelled I that I known were I not -- know we’re considering that. ones. even that they not But don’t right guess you’re now. into right.

have We coming into problem trucks went and at have in where little and bit is out. ports discussed the you a the

around. trucks fork driving have We

James Jang

And around, it idle is right?

Robert Panora

that Yes, that that and with but made outreach are themselves. not area, into some vessels that’s familiar what most we

James Jang

off-line. talk We'll Yes.

Operator

comes Our next questions. MAX question Ventures. from with Please your Rick Molinsky, proceed

Rick Molinsky

whole what you -- money that company and company, Do we think the go have with where more not I right contracts, all, was? by from have, drives down cap guys that is from you recognize you don’t are into and think debt. where I’m They’re I quite for could perception interested, the going of debt First see it time. part. There from we’re But at next, the Street a business the business company? we're not because How mean, -- the what the need right market And down. to I’m in to growing. and debt they whatever, evaluation. long-term that in was backlogs bit the right then, Wall million you big like has showed in are million off got a over $XX right, also changed -- moving $XXX yes, they the we as is this Bloom of loss revenues, quarter. They Their thing last a we margins profit $XXX direction. I million Energy, to of I’m How that just the me crazy drives of at a crazy looking of do like it make they are. me get XXXX, want they of

Benjamin Locke

Yes, sure.

understand You investors know know what with that and, the it. -- it’s people that of natural -- fuel biogas, if use but you you gas. oh, cell that's use don’t technology gas. not our using of working energy. course, fuel a all lot use -- we’re a ultimately something is it fuel think cells But suppose it’s renewable of natural I it’s cells understand They

are to reasons for that, efficient you natural particular, me into you and goes out. fuel many in it’s almost comes they we over they don’t And is unit a pragmatic unit out. say, a I economics make really a heat comes absolutely so the overall use And have with would what fuel their And to the of efficiency what electricity comes we’re comes in say for market cell future. the okay, on a cap -- consumption prefer you’re viability the of installation. what of we frustrating are project foundational are. want all Except it’s Yes, that, and would -- cost to of more perception and out of of time break-through much cells than in it’s seem not efficient is gas of it plan this why of us. because more and a how say, gas terms that perception would unit I in a say the out do there thing, of that to comes break-through, the that as not in equally terms business out, that not

last. appeal. a It will realm you And long more happened in to seems specified. consumer, how more product an now. And the got right more sometimes, we’re on things make for it I’m cell again, to to product quickly get as shifted -- fuel that's that's just our know, and people want have intelligent understood So not those sexier. that? anything you add Bob, be able sure

Robert Panora

rather we’re say than that, how Well, different what that terrific our for, is. I be their knock would valued really well. as read they’re the that's I in we I agree we agree something perspective, have a into should going think getting similar basically, yes, look they how but at. with I look If higher, I with And similar with agree That's That’s this, were at. opinion technologies, this. I valued how I that’s should read I I really, And to But exactly. if you what a think, into. it’s business quite say, down, business I you’re think, not would is I business, try be

Rick Molinsky

you year, pretty just doing to the be wake are are doing for road saying. I'm And or the wait the you for next up more shows much going more --

Benjamin Locke

very really, well, some much quarters on are is coming I’ll path focused driving know, projects moves the set ESCOs we’re much getting our relationship the larger you And needle. for of on getting the think, I’m that and I reboot myself, these next Yes, tell Tecochill, TecoFrost, this of strategy you as and years. that

on. what I’ve been that’s So focused

shout that. I And as message. Bloom said, will, for they for reiterate this but make start certainly, Bob And lot sure foundational starting I them, now. things I can the same are of to think loud I'll as those won’t I certainly mentioned as getting drivers come they’re together conveying a myself street us, the that economic more us. to in Maybe see

Operator

Inc. from with Please next Michael question comes and proceed Oppenheimer Company your question. Our Zuk,

Michael Zuk

Florida I service want up the to bring centre.

up that office? are revenue office? that be Will dedicated out Or running Now expand going. adding to sales how to of and opportunities you is Florida you that and engineers going do

Benjamin Locke

with way great we And, things through start standing need point -- with reach where we service count, off engines, It's the And you have forward question. engine centre. Sure. have course service an up critical a move and that a some gone Typically point prescribed a you our you of as fact, these of centres. in very recently started we up dive-down the there. that's thoughtful

that these very on, salesman. will and the that As also we service-tech we that little it. selected he's to increases, a of then busier, is, this get office bit go the hire guy a as it person run engine But And that and count good of eventually a they’ll to at point a tech. where are course,

bit effective the of all -- kind are my can engineers good sales. people and do that a of of of here all and people, Now, little are work

sales I engineer that of idea would kind dedicated as engine kind time, supplemented It time, and New Waltham. California. have like here absolutely, of I grows dedicated people in over engineer as and slowly count, of some Jersey, just So metric in our a see the by And business sales having sales course York stage able own down a happening. to our a development office he the envision that engineer I Over there can do that New just in be it dedicated have himself, increases. can as we sales

Michael Zuk

cusp now more technologies. will have series a drive of just are you add add driver to of on think, sales understanding But would I engineers it's of we good I Because two revenue of company, develop eventually now, products developing if or that the the that to we three an stream the encourage across bit coming really of be people be going cost. upfront on and array this products that now can a the revenue. little will

adding The some strain would a line now And is staff immediately. there so even is if cost I bottom be little to bit drive of and revenue encouraged drive revenue. to

systems. to got You and design systems the people sell have place help can the in that the

I'd that I encouraged that us I'm have. on like go That’s to tech. forward So all

Benjamin Locke

engineers Mike. mean kind fundamentals a was to of I George, couldn't is of and good there engineer by. more you hire because with that him get Thermo one I when Electron are which good of John the agree hire we come

some -- really come So they're real they come company, you engineer for across Because absolutely, to a come are good know and our asset engineers They're when be hire. I by to by. really the can notch. that top hard I’ll of an Mike hard

get want the you while can. ones So you to good

Michael Zuk

up Well, Keep I forward. work. am encouraged going the good

Benjamin Locke

Mike. Thanks

Operator

your question. Blanton, next Harbor with from Please Alex comes Clear Our proceed Asset question Management.

Alex Blanton

Slide I of my say, been Most But X. questions I want like to answered.

done, related very smaller the a think revenue, that so to good. there really I that. the people time done way you've I with on presented you the backlog calculations way do don’t think is line? the question Slide the I all What first X. of have summary was And it have that's

Benjamin Locke

address want Bonnie, do you to that?

Bonnie Brown

came That of backlog. previous number would that be the out revenue

Alex Blanton

Okay.

So what are the other revenues then?

Bonnie Brown

Well, there's service …

Alex Blanton

are what were in backlog, If not they they?

Bonnie Brown

and are and yes, as production in service service up, there's production energy energy There's Adding our numbers. also well.

Benjamin Locke

the in But not backlog.

Bonnie Brown

But backlog, not the in right.

Alex Blanton

Okay.

encouraging, in that the backlog what of kind to that’s XXXX? average So that November delivery backlog, time is

Benjamin Locke

Mike, It’s hard And because it’s good thing. but address say, real that. to It’s a -- a good make. to I'll point

can out in And installations So much which the course, in got those goes quicker. go product backlog, it. has of of we've over course, it, sometime. installations And

got parcel So number more on saying, you it, in if to understand because kind but this a decision and installation, it. product of and chillers I’m in is in has with focus chillers there more means kind products what part lot backlog that of

I versus tend an break installation piece chillers of we’re they more than moving why you time we to I installation is quicker the average say backlog, turnover that out more versus it product much turnkey these days product So is backlog. our can and But the don’t the in turnover. can’t which there give because

Alex Blanton

that the January centre and a there, those school system? is are Then, of projects in quarter lot the mega you've mentioned data for there

Benjamin Locke

them is. of One

not. One of them is

Alex Blanton

not? is one Which

Benjamin Locke

both megawatt projects. They’re

And careful One about been of what sales just signature. are of them cases already and is note we’ve within and It’s in them one our we’re -- we not in backlog. he it we’ve them you a something not. our the simply This some specified documents, because -- -- is we’ve something. and thinking has one for just in as investors very is and put awaiting of as well, is

one So that in and is backlog. that first criteria qualified our

I very still that one backlog full is including meet until number. backlog just second our into didn’t to want we The it formal for close. put criteria in

Alex Blanton

school the one second The being system?

Benjamin Locke

Correct.

Alex Blanton

you sell Okay. How sales it to cycle take those What's did timeline there? long two? the

Benjamin Locke

a over takes say it but up past versus to to It's tough an both tough of up certainly probably the It's Mike. originated projects. originated in earnest. picking earnest, for to year over say when when us It's those it year ago,

Alex Blanton

in in of kinds -- us many or the let's of not what’s those pipeline, say, it’s backlog, give can or the of Okay. projects? it’s How an those you the pipeline but idea of say in

Benjamin Locke

lead very I'd I for I’m quite might things think, But to I comfortable talk as in speculative, backlog those Yes. simply did. I’m just because I’m conclusions not ready that to make happy not more the yet. about that put rather things to the I investors and them are

Alex Blanton

general, didn't how me is the I in pipeline? give to but Okay. specifics, want you just

Benjamin Locke

tell CRM general, – it's decreasing not our it’s in in you, put I’ll If size, this is way, In not good. increasing it very we’re size.

leads. of plenty a seeing are We

us, fit an I help the I and make a yield therefore, us sites to outreach last quarter, of advanced for maybe invested mentioned effective determine efforts that in analytics, more think, sales good tool that improve. we kind cost using ourselves

pipeline is pipeline still Mike. very And strong, still our So our yes, strong.

Alex Blanton

you an did RC? say, acronym used there? You What

Benjamin Locke

a We’re -- Salesnet, tool. there’s -- That’s Salesforce, using related CRMs it's out CRM. there. management sales also contract

as And our We I our for sales. have space, in growing it’s managing our backlog. own terms CRM of said,

strong. Our to be sales process continued very

Alex Blanton

Could venture? what joint Caterpillar? XX-XX joint briefly find couldn’t a Is venture? describe it. on Mitsubishi you it? just but Or that I I website, is the look

Robert Panora

it. and I you can or Then just fork and type right go MCFA, say into … to truck, Go forklift

Alex Blanton

and their a financially. on find looked not website what description I could I of is company

Benjamin Locke

send offline. can We like you

Robert Panora

some comfortable him No, understand don’t I same just feel the I I'm company. the of But the I think, was there think, I see direct that sort should it’s largely, what actually. behalf. doesn’t a I don’t it saying joint I if but lot I content speak to venture to, that of is he place I a on want in is And him of describe their structure Mitsubishi

Alex Blanton

Can you give us an idea of their share of the market?

Robert Panora

top so Central this in particular America if speak have permission America, companies trucks. North they know They But it’s told And just several I of clear, don’t does venture that. supply, fork I’m me, South I America. and to but the joint to

entities are other do there within the So parts of Mitsubishi other world. that the world

Alex Blanton

think, the country? throughout does I earnings has expand use your last of How your that since report, Canada Finally, approved market? marijuana

Benjamin Locke

cetera. Yes, not growth the suffer terms national, have in it's Massachusetts. set mean, sometimes but well, when our, et little pick I to again, yes, up have less it's, been where it’s it, it's our just facility chillers market. most locate any selling bit A can facilities effective utility Canada sure, to sold rates that What nationally. absolutely. into options equipment growing of We’ve different and they to when a cogen the they cost that’s as some we've in that Whereas is some state-by-state, of States, of story and electric where to lot rates, high the United with growth in place

growth You're XX,XXX have facility put that some square to in that foot electric doesn’t much capacity. trying municipality

So there in is opportunity Canada.

good very making We’re progress there.

as we’re there. so nationalized, but in already absolutely it’s have rep us. it’s for the We’ll U.S., we’re quite not traction see that quite as a here much It’s Because doing is sure. well as seeing there. I’m We

Operator

and closing I end gentlemen, session. Ben we Locke Ladies to And have like the the the turn question-and-answer reached remarks. of to for would back call

Benjamin Locke

our at look in joining to the afternoon, for of call. all forward beginning you the And thank we the quarter So everyone. to talking again Good XXXX. share with you fourth results

Operator

It concludes today's conference.

lines for may You at you your disconnect your this time. Thank participation.

Tecogen (TGEN) 13 Nov 182018 Q3 Earnings call transcript