TGEN - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, greetings and welcome to Tecogen First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this program is being recorded. It is now my pleasure to introduce your host Bonnie Brown, CAO, Treasurer and Secretary. you. Thank

begin. may You

Bonnie Brown

morning XXXX you earnings Good our for first quarter call. and you. all thank joining Thank

in On is the Chief the copy call and of our first note CEO; our with our call press will me also today Robert this of XXXX our the the the quarter our release are be Panora, website archived Investor regarding President Investor being following section of and is Operating available on Please and Officer. earnings recorded Benjamin section Locke, A call. website.

Securities a statements available XX-Q briefly these Before let which under recent company's file Actual XXXX. filings. our various begin, Investor forward-looking prospects Various discussed most including factors company's the under by purposes are quarterly we differ Litigation as statement. may on plans, Safe results the our of heading Private and remarks expectations, may me constitute section on the from Reform the result the cover about Act the those Safe in and for SEC Risk SEC indicated statements Factors, provisions of of make XX-K of Harbor with the caption materially reports forward-looking report those and annual we Harbor future in on important website Form under Form the

any specifically in While to today. we rely subsequent obligation any disclaim to as we statements point may should of do our future, not views elect to Therefore date the update some forward-looking as statements in any so. you representing at forward-looking

of in in press Accepted GAAP over website. most Principles I'll for turn measures accordance to call will measures these to comparable section Ben refer to the our now business Generally the release or During is non-GAAP financial Accounting of a certain not we available Investor in update. earnings this prepared financial measures the and our call, GAAP. directly Reconciliation with

Benjamin Locke

the overview company I'll and X And company's brief with level review of on first top of agenda the recent start who then on with the a overview before followed XXXX Bonnie. the results will discuss by slide then quarter some achievements you, performance for technology indicates, I'll a Thank questions. we efforts. final in by an Bob followed take of remarks and accomplishments. more our development Bonnie have detail emissions will give financial financials

reminding As always start-off model core I'd more business about Heat, may is new and cleaner, on X. like that company slide to to who by our reliable. be those and shown cooling cheaper, power, Tecogen's

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

to $X.X of Turning $XX.X slide versus saw of XXXX first X, million of the quarter in quarter first the revenues XXXX. million

to million. $X.X ADG asset of bottom During of impairment $X.X working of allowed goodwill will closed more $X.X for in our in of impairment the end non-cash detail the zero of debts the sale sale quarter. of on sale the million. The This cash to discuss accounting the capital discussion. loss the the quarter, essentially assets Bonnie first a from loss in during to of we improve reduce resulted subset gain for $X which us in million a significantly and $XX.X million a the transaction loss ADG line million her the resulted quarter at

cash balance our in able improving the generate our to position the still strengthening and sheet. the While bottom-line, were further loss of goodwill distorts quarter impairment we EBITDA $XXX,XXX actual adjusted

XXXX. was the in margin XX% quarter Our first gross the for versus XX% quarter of

on see the can Moving more detail slide X, quarter. you to on

as sales discuss the TecoFrost, we shortly. operating increased fourth were ammonia and I though disappointed discuss technology to R&D the we While reintroduction prioritize which able we revenues will of in in call. will the in later drop we are continued Bob sales our reduce chiller we're being proactive development roll-out to the versus XXXX, emissions through product increase our package of of quarter of which investment market Ultera expenses the our and our TecoFrost in And

backlog yesterday consists a of things slide May There point $XX of about like robust million is backlog X, installation backlog. few and our stands as in which million the out Product of remaining $XX.X XXth. Moving our accessories is associated our backlog $XX.X are and million I'd to at to equipment services.

good this will the expect throughout year and for backlog solid revenue rest revenues to in we constantly which we of adding are be two-thirds new projects course, least a to as year. XXXX. Giving of add added the backlog of at fulfilled indication the First us of are the

revenue backlog projects year. I contribution a I a currently we the meaningful contributor we ultimately year. carefully demonstrate this TecoFrost vertical several this key have to TecoFrost and sales to for to our relaunching the of by product markets will year our be does product. add that expect any and are next are not later product to Second of developing expect year-end solid start sales TecoFrost backlog

contain well said maintenance design which project is backlog revenue. is more each supplier does energy a lastly, contributor our as as basis that consistent consists in I've as our installation quarter retrofit engine services and Ultera of Third, of. bit revenues include detail backlog in later contract Bob sole a call. and talk our and not a project And product recurring previously, the does an Tecogen about revenues this

key they forward. for going company to relate slide want our to achievements I and to plans the reemphasize how Moving X.

First, only new engine market line our Tecofrost industrial in further ammonia for as mentioned, product our to manufacturer chiller is chiller sales entirely an to have strategy refrigeration. adding and renewed chiller will gas focus offering our adjusted a driven the on Tecogen we natural product.

and chiller cases less replacing competition of than engineers by co-generation, mentioned, equivalently Chillers same electric an the representatives also typically system. project sized an Tecofrost, far more as accomplishes in closing. and outlay manufacturers savings As in a lower are Tecochill I've with therefore terms but capital transactional most with are and specified co-generation with or energy

Tecofrost ultimately broadly more year, starting roll-out in and Europe. sales by year carefully Americas manufacturing this leveraging full U.S. our are next networks Tecofrost we plans sales and sell the expect slowly partner and developing sales a we Although, to

Next, sell sites interest in we servicing acquired a sell of SDCL. productivity The agreement assets O&M reliability or for where assets. significant continue DG point Development Tecogen the includes some Sustainable to the to sites. from LLC we these decided American receive to Corporation sale XXXX the an to all increased of and we the or of Ultimately, the portion to

SDCL the do of still remaining despite loss revenues any So to from in for revenue, the sell have by the sites life service and we operated plan will We benefit currently owned ADG the from not energy Tecogen. contracts.

increased remain through ownership. in acquisition to alert we could value targets However, whose business core Tecogen potential our be

America as Caterpillar our will have of a Mitsubishi in minutes, Forklift's notably partnership about with MCFA. our Next, most we excellent made Bob technology, with few Ultera through talk or progress emissions

we engine As with retrofit. Ultera make a used the OEM the describe, the MCFA in doing program certified will the goal Bob is are forklift. on of to the engine work emission currently Mitsubishi The is through focused this near-zero engine

will And to will alternative will flows, truck financial turn lastly, who near-zero sale achieved allows our an vehicles over natural be certified that, asset development cash Bonnie plans execute positive standpoint, call other to demonstrates forklift, that in our detail fleets certified our engine the technology debt. from make progress the Ultera this project, followed that I'd a With field used with MCFA this as gas describe Bob to achieving such emissions. fuel stability us who a with goal emission a to and have on near-zero engine detail. on in propane the we financials, emissions ADG For Bonnie? result retrofitting cover but could degree or growth by to more zero of our like more

Bonnie Brown

was XX% year-on-year our the Slide Thank of of XX% Total contains for of overall sold you, Since the of for $X.X the $X section operating $X.X profit P&L our QX gross results. with and assets portion of XXXX quarter QX the gross gross during quarter, of gross million million million compared discussion. to margin Ben. quarter our for some first expense ADG highlights in profit of the financial XXXX. margin deserve XX we a revenue some XXXX

a R&D future. of while A as charge goodwill this increased G& a gain and we decreased on expenses our test. producing X%, XXXX, of producing goodwill March these Our XX% by Operating we respectively invest assets and sale in the the costs X% impairment selling sale energy by performed quarter After impairment in expenses of also included assets. energy

account -- start to million. reporting comprise unit in the discounted acquisition. with acquired our contracts. our determinations than on what this fair of analysis, We In explanation value sale of assets. the accounted due of loss let base this energy for we to recorded case The of as the result of unit. for primarily merger them. loss, impairment goodwill $X.X resulted paid production assets By assets by way fair XXXX value those when goodwill a happened results cash from that the A impairment those primarily ADG in saying, which our become stock impairment the a for originally reporting less stock goodwill merger this flows the As of me an our was company we from

As and recognize earnings. flows time we those cash passes,

of be and enough sold, the Tecogen almost contracts does cash profit quarter unit. reporting the million. added has production flows accordingly includes merger of existing goodwill activities to the contracts impairment assets Since remaining ADG, the energy become the million. $X.XXX loss date remaining the type to for loss $X.XXX the as noted value are under Net of However $X business recognized date flows from those offset since terms that of those the the merger should of sold. the were new shorten attributable not from was that fair It have or plus less of we which gross cash million with Tecogen this so reduced the the remaining

maintain $XXX,XXX in the profitability year-over-year. which Excluding quarter provided the QX an resulting of of $XX,XXX, increase of impairment XXXX, income goodwill $XXX,XXX compared net loss, to

million section. resides systems sale quarter, realized on operating which also the in gain We the the at expense in the this of energy $X.X

$X.X release. discussed Ben adjusted positioning of earnings and Slide which our to the EBITDA depreciation non-GAAP has million from the our expenses presentation a adding the compensation prior the back After Tecogen, we standard for goodwill measure compared presents adjustments remained earlier, has the as reconciliation referenced to for backlog EBITDA adding related other compared of positive of of XXXX for to on XXXX, the in the for net amortization taxes, security, substantially impairment was the charge XXXX, yesterday, $XX at and As mark-to-market uses EBITDA, to difference. important stock-based quarter goodwill first of investment XX with which first loss reached the attributable to non-recurring adjustment company creating management for quarter After interest, income and term non-GAAP quarter accounting unrealized XXXX that million as back long the negative loss the sizable year, first $XXX,XXX of we to come an impairment growth. the been metric. merger all adjusted

For $XXX,XXX EBITDA improvement the QX, quarter adjusted an $XXX,XXX was of compared $XXX,XXX. XXXX, for to positive of XXXX first

update. Now, technology a I'll the turn call over Bob for to

Robert Panora

Good morning, you, and thank Bonnie.

with me the which relating forklift in technology to members the to operation. directly the Propane to those our Central issue in of whose way interested battery human criteria received emissions, whose by Education maintaining PERC, begin in truck and the Research is important initial share market the powered relative and heightened program are from background, keenly concern and as health Let Council, indoor pollutants competition. funding are we being

results for evaluation maximize call, of Forklift completed both as software engine to Ultera MCFA of the the last Caterpillar South Mitsubishi test the the for with are of especially we we We process in the in process receive was enhance a performance. for of Tecogen our Ultera Once working is and second agreed software and our American electric America, said, manufacturer effectiveness Tecogen batch truck, testing trucks. utilize provide MCFA at to the line this NOx. would tuning custom our North Since MCFA engine which an test their markets product the we in reducing Texas. facility and Engine MCFA. control and part well-known important to would finalized, reviewed in one propane with tooling routinely Ben the with truck use

relative improvement standard NOx where the pipe near-zero be where for With If we were improvement extrapolate second NOx from setup that of the certification, emissions was batch and the respectively tuning tail are tests the need our and from in an appears of to truck over which baseline certification. one-eighth final the we baseline the the as one-fifth this improved testing. to emissions CO received and first, significantly we it CO MCFA.

I Let dynamic a on load engine involves There prescribed forklift what gear that. me explain test by a in The is imposed certification involved. mean dynamometer. no being a

tests if test, However, obtain the in improvement obtained goal. our we would that we achieve driving the we certification in same the near-zero relative

complete project such, As we demonstration forward. the phase and that is move can of believe our we

MCFA on next to we focus is that recommendation Our two steps.

be return first, their to their in evaluation. The prototype would Texas factory the to for facility further

near fine side, meet laboratory. a commercialization to that successfully in sorry, application certification. would test program and I'm is as That it's review to by in management with the example. in would perhaps that other apply believe We on dynamometer process. – skipped the the are zero really Ultera the the to is point, towing I The step properly the other such a does MCFA near be zero so done clear and engine ahead, the requirement certification certification our confirm performing equipped system several forth, the some of has this certification planning There vehicle because achieve activity any to additional for on isn't for recommendation path the a with Ultera a airport would tuning the equipped From Japan. engine off-road dynamometer – the the

in whereby Southern concerning I retrofitted the of on add Ultera group generators activities. to to our with other going standby program a First, California these a want footnote system. we

As without are such limits as I the engine XXXX credit products generators all were regulation, call, heat permitted our achieved successfully our to some granted. never the the in last concluded by a reported now the CHP natural program recovery until exemption, gas commercial

worth lines. I that a group considering but is as woodland and have loads fires. serve happening previously, brush power high I of a what's I dispersed generators use want when mentioning, California. The they to are discussed this this The most winds the the train in its is The hazard describe units vulnerable mitigate application. problem. overhead in footnote, to So acute to our to not believe, applied

relevance achievement low the the storage. are asked and Fuel hazards it the technologies locations permitting call fire works when unless for emissions turbines generators need located onsite if online strategy. hour might Ultera in a able generators. XXX this response requires deenergized battery micro want loads of power the lengthy. to relative the hours emission as not are to loads. limit in are these During these wires with serve role. to about out that find to I as Ultera increased windy this slow by battery was standalone throughout particularly of and waived. The this just our to exceed in In -- similar periods question annual cells needed effectively consider supported the example quite storage. not well be generators difficult which well by The Other implement load output be system would that with and mention the Today standard next adjust requirement strict would no operational this relevance relatively dispersed this operating chemical the suited application equipped are in the to and they're given quickly A are swings, inexpensive application could cost powered utilities turns themselves process last does to requirement. to it's well however come is exist state recognition had that the

installation On Water an XXX already project. pre-negotiated. submitted Southern topic, last horsepower and a involve have we mentioned plant ago with granted treatment the been after source I retrofit. been has utilize several Okay. first that weeks by pumping Ultera call for be conditions These couple -- that Caterpillar formal approval for Ultera water another a topic, have California produced a in time engines. the applied our have will the kits notified terms the for and a is Ultera new On to different for district the of a emissions sole proposal we we will which largest kits not The

that a few for the engineering award months high this the be the of level forthcoming next have confidence will We project. in portion

relating Lastly call Tecogen. his final I which over in The our applications should work under turn that the with way light I'll was to the to research the by Ultera formulations quarter. vehicles Ben is to believe their With institute words. for work funded catalyst progressing. and is This is which phase of completed this relates be testing first custom

Benjamin Locke

Thanks Bob.

want I our XX, and to little slide business product how up give we growth core color pick more to outlook our to segment. moving So on a intend in

continue New states. grow the First we of in facilities New cannabis York, new to will Jersey closely and follow other permitting

legalization. due we anticipate production, new As substantial use to recreational

We have Tecochill savings consulting had show growing of versus operational excellent to Canada Colorado and designers the with and Florida, value of Massachusetts, proposition engineers long the cooling success greenhouse continue for demonstrating working indoor gas we'll and in electric. natural term

system. strict the chillers discussion which first operation emissions in will time unit worth it's globally, are for cool currently air the which portfolio and through to chiller chiller. installation. California. window chiller conditioning our the Tecofrost A are our given of Ultera our to cool include cool system we with under their modernizing enable advanced small chiller technology Air product product only the our RT space case on buildings simple the emission more system midsize in we of chiller loads or limited expanding as engine of the portfolio added product where source were air inclusion as air with towers and our and In an the cooling low is relatively cooling chillers Tecofrost cooled stationary In mentioning Roof-Top requirements be cost legacy such simple reintroduction first ammonia the prohibitive. majority the XXX of a to is expanding cost are cost or of the as in for water well sold past the represent this engine Next air tons controls system. areas typically chillers old Furthering maintenance

these more a source chillers in slide air as However sizing increases system sales advances And chart chiller indicates, air in opportunity XXX the represent gas in and have and compact consistently efficiencies efficient equivalent. cool expanded grow a and Modern to tremendous are for chiller engine compressor to global the over air tons. technology years. XX are sourced coming days expected on

legacy source chiller in but cases, Our updated some in air many alternative antiquated the RT ton technology has a system is years. and is been XX possible not

such now product doing reboot of are sealed day case this We a exploring as technology, in will chiller a the with that any future and we're allow changes. variable compressors Tecofrost. But as frequency novel use with refrigerant similar design magnetic bearing drives, modern

development While engine mentioning worth gas growth final I future. and do the potential, one of our not we it be year, expect most more chiller the as piece so occur to the this cooling would gas on with the portfolio in this focus

ownership developed several that with asset. provide for Next, and development subsequent third-party financing have service of relationships project we companies the energy

turnkey for product owner. financial companies provide would projects now with -- have different financial center we of for to and that relationship finance the with finance mentioned, project sophistication mentioned As difficult partner. earlier The be building this with necessary large project a data capital these is the directly quarter a the SDCL

certification and required resiliency a further correction. offering certification, allow response for the inverter interconnected and has lastly, utility to I We this a coming reactive these California. last quarters. few have our Having demand enabled utility opportunities in obtained co-generation UL or of smart the Tecogen And quarter, of hope announce XXXXSA to inverter power the assist pipeline in with projects systems as them financial additional microgrid inverter will smart system as mentioned from perspective, control, we companies a frequency

weather by a or related, As to other related other forest in they states example Bob certification recent whether expect smart utility fire examine inverter mentioned states. we in resiliency related, concerns, as acquired be California be

I proposition distributed Moving to generation Tecogen's closing. to would slide the value and key like XX clean reliable of systems. reiterate

energy Our systems use cheaper, and is produce cleaner cooling to heating, gas clean more and and abundant that reliable. natural

co-generation terms the Our generation are in with in as microgrid U.S. corporation in of distributed utility mind interconnect structure functionality such storage. systems assets of battery designed a certifications, other

seeing becoming economics benefits in functionality economic are and is using with we this mandatory technology. of the grid Tecogen services As will the emissions providing clean benefit California, these ultimately of

in no has Tecogen chiller competitors gas market. engine Next, the

markets it engine. generator upside, MCFA same air engines, emissions recently have to Ultera our the engines, further in development we the work our cell. next result a of on think The Ford Caterpillar gas into engine platforms and par We the ammonia our on will on with Mitsubishi our begin near-zero are efforts is indoor Tecochill, as engines refrigeration fuel we later Generac year And retrofit We engines more existing of technology of other summer. and with message our effectiveness engine for this I on scalability investor larger of look selling And such the exploring and focusing in the like consequential for but quarter growing reaching I'd forward questions. the year. later sharing emissions that, are over from we operator source expanding audience this last, to turn With to updates call earnings new to the and is second our many and Tecofrost chiller. General shown most investor Motors terms markets a

Operator

Our comes Instructions] of Amit H.C. the line [Operator from question first Wainwright. from Dayal

live. are now You

Benjamin Locke

Amit. Hi,

Amit Dayal

backlog been Hi, questions. the as has well. good little about Can this decline talk weaker revenue know that the little a a bit? quarter a first bit in I impacted my morning. in Thank results little you -- the for you taking

get of the putting sense year of in are a sort scaling the how improvement? up to terms trying year-over-year of we to relative of a Just rest

Benjamin Locke

this occurs assets. revenue we of Yes. as bit we've I and But and drops the have a other we in spurts growth question. much might certainly trend. -- understood by Sure, the any think broadly, good Amit. quarter, as I I have while -- hoped of little ADG spurt as don't spurts representative growth didn't it's we the some sale more me understand of a expected seen

are We our on focus product to -- this continuing on roll-out.

having the going back up. a and third contributor long get substantial to to Tecofrost a think product go revenues I is way revenue our

good wasn't The So backlog we much a and mean, backlog about pretty where million high, drop-off last too are. almost feeling so I'm not $XX $XX.X I much drop. dropped was our it was that very of to million, quarter

If million. guidance you was recall always our to have $XX our backlog over

we're So above comfortable that. pretty well I'm our with backlog.

the it to mentioned, I is majority going year. of be realized As this

see that So along. for come revenues a new rest to backlog adding we and very the good of we the as projects our that year have continuing basis

quite to for we So we understanding proactively at that make the in did But I'm with we're to said, and going. drop more have future where feeling about it. and up product look are where that trying going revenue revenue this good get

answer your to that helps hope question. I So

Amit Dayal

yes. Yes,

I are we other there help there Tecofrost level, could that Just just you're could pretty to but at mean, and you any what strong back? bounce that see backlog? in backlog excluding help the are drivers to know catalysts the bounce trying a

Benjamin Locke

this have remarks this going to is of Yes, to I inverter It's Bob. that sure. in this lot there smart my is should stage occur summer. I for I a don't And last us. going I inverter certification a I think think think mentioned Well yield certainly certification

Robert Panora

right. That's

Benjamin Locke

with piece revenue to And with doing establishing equipment. enable place. And of DG then the certification this this of mentioned inverter co-gen our smart communications utility, asset the factor these that it's I that final take streams correction power is would

our exist Bob inverter for the if of being that us. not liability, talking for, the has been utility and following based So fits sure well certainly generators, and about wildfires you've communities I in it news thereof, utilities the California what's right on the think having with electric and our is… bodes and the retrofitting -- smart in opportunity the Absolutely in technology been of I'm concerns California happening inverter in in core terms that is, that

Robert Panora

That's right.

Benjamin Locke

making risk on rate. lines shutting power the power power. without above $X Yes, the fire, Rather line those terminate certain winds a get power they're of communities when than affected to forest resulting and just those that down potentially billion leave and a plans

storms. the And that's wind that's to had provide gave the be engine And if that, so in so requirements when during these generators why for could Generac these these can on program the certainly extra emission. you with on power Ultera Bob that detail you you this do because all -- dispatched compliance stationary high

as standpoint. sometimes sideways from revenues transactional opposed bit constantly our with chiller a So for my a can of I think going the behind our there project just installations little are way more a drivers to a grow go forward. very in but And bit getting little talk when those chillers meter which repeated opinion development absolutely a further working you going us, about be I've successful lot sales, with sales products, our is as to to co-generation

side. there’s in I side our the chiller but So trends not and think a on favor, on emission lot just on of co-generation the

Amit Dayal

Understood.

assets to if you clarified last was no reason? one that of I debt wanted one there's and these Just on elimination was any this the if But see ADG Was priority there other those to sales sales. guess asset this more expected. primarily me driver eliminate for debt maybe behind just

Benjamin Locke

that money of and it don't costly. Well, the was people like certainly owing reason, is I part

competitive and are really which certainly -- So is our base product growing of we eliminating advantage I Tecogen advantage, but Amit growing driven of that only the up there, at that chiller looking gas debt engine future the and taking I'm was there. out

my course is driver I of had the I eliminating debt for probably was develop to think main sale, those resources that well. but as using mind that that weighing asset on

Amit Dayal

that’s Ben. my queue. have, I questions. for back in all get I I’ll you just Thank taking think

Benjamin Locke

Amit. Thanks, Sure.

Operator

you. Thank

Capital with Our ROTH the next Partners. line Irwin Craig question comes of from

live. now are You

Craig Irwin

questions. good for morning, Hi, taking and my thanks

Benjamin Locke

Hi, Craig.

Craig Irwin

wanted to just I about questions of the ask Ben backlog. a So, couple

chillers a So we as $XX healthy you that of as miles of versus down million anything in break Can to $XX on level that's million? mix $XX the is emission the want million the you still when look Is DG products backlog systems product maintain. there very Ultera far the system at above that maybe for there piece side the what is? that

Benjamin Locke

Sure. Yeah.

mix. I out mix, these out a installations. $XX point a about quarter, installation to the mentioned million I co-gen. whereas, there's is not that last as give going it bit services So can versus we as co-gen see some bump in any did bump said we've quarter anything in I particularly these a to the chillers there. door healthy in to different of good more in product notable a because tend longer, I to do The backlog the quickly, get last Certainly products. bumps of takes that quarter We're our of up of these it sales, segments our chiller It's time long little don't proportions. each wanted products And I a last saw sales. color this on up seen think

that heat of smattering exchangers in have it in I piece for equipment chillers, Any accessories except expansion its of of So by that and engineered ships chillers an with that it. think that Other accessories. that specifically products with but what control margin tanks to dominated color on is these a pumps on high and installation that and it. skids co-gen, equipment giving co-gen good but go day be backlog we say any of what and with is proportion particular wouldn't sprinkling the engineered is helpful, call

Craig Irwin

backlog Understood, expect then the maybe calendar portion fiscal you're know remainder us, it this the of year? year. to understood. share majority we to some this the can color see of us over what but shipped? give with some of into vast is the extending on you don't would the Or backlog And ship potentially Should next you if able of I

Benjamin Locke

of Sure. quarter Yeah. I'm go this expecting entirety backlog… about the two-thirds two-thirds to it of the of

Robert Panora

This year.

Benjamin Locke

year, I this say well This quarter, no, quarter year. did not this this

you little about yes, if New got York go beyond, there. to is to City that believe we're into big So basis year a of in a projects, The before because for we have in get of remainder next equipment go year. in it our construction two-thirds does can Craig which can but new some bit if it, dig it, goes nice of and hole the this it design they've it

stands your is the to go question some this it of answer to backlog the of directly, So out. going But majority year.

Craig Irwin

clarification. And really understood. is question last Understood, a then

product something more margin line the quarter? lifted that right? the actually anything we fairly pretty last should there there the product. products that high year-over-year a thought few couple absence margins XXX Was on margin as is next on this that up a side little the that of I was trend, noticed at sort chiller in the and this ancillary So side year. of basis margin I natural for chillers revenue that with nicely points look were you is always quarters? bit revenue that's Or maybe with of DG the

Benjamin Locke

Yeah. Yeah.

to -- have the same see think the -- goal the margin -- a of on going margins co-gen, the is the the the about them. the chillers. product I to our we're generally little around all in all that margins They're general, bit same are XX, inverter,

Some product equally a of any that all to margins one going the there's general, consistently than bit have little to are higher to think particular But, margins weighted other. I us jobs say than you're kind would better the factor in think, is lead and going I get others. don't margin

Craig Irwin

taking keep Understand. and questions. progress up Great. my Well, the thanks for

Benjamin Locke

thanks. Craig, right. All

Operator

Thank you.

next from from Zuk line Inc. Michael & Company question of the Oppenheimer comes Our

You are now live.

Michael Zuk

morning, Good and Ben Bob.

Benjamin Locke

Michael. Hi,

Michael Zuk

Two question.

between the First what's of all, on the cannabis breakdown vegetables? and systems agricultural

Benjamin Locke

can dominated Mike. specific certainly you crops. majority I high the But that do cucumbers Anyways, things by the don't customers and value almost good such other lettuce mentioning on without being That's I and other crops a some any is by and some far. cannabis. what's question. have my We fingertips. have tell at cannabis

Michael Zuk

additionally on going to focusing we Are vegetable long-term? seems that the be side, be because to

Benjamin Locke

rates have and and Mike. with happened know in greenhouse square be Absolutely, per the interact that industry value they still allowing today, in strong. use state doing cannabis of But designers the on were can good what New to we're that's as isn't activities they terms keep the it's years in make. crops. -- York to seek exactly permitted all the and looking these opening cooling not when foot higher can indeed are is it's therefore, mean, road leads I and located trend they're perhaps of you're five other proposition these Certainly happening cannabis think Mike, And stuff of make the the some for of need to a rates cetera. for certainly quickly there's where operational you quite Yeah. us pace folks they -- unit right more out we're a and recreational value can this crops down it's that make Jersey, are what very established bit I gas have And and the they as the work the crops cannabis ambivalent which -- But these long-term in locations quickly, Massachusetts is very there, trying the New fully in is they I et that metrics what's to that cannabis do crop at fact, of think, the these utility utility only two designers. subject been competitors on if -- got electric it's higher with state sometimes the driving for downside cannabis up little value that Yet of therefore to greenhouse what upside of about costs. cannabis volume is, and that it are

look becomes very Tecogen at And that their of a part costs. so, they long-term the when an important -- operational

be that higher crops. say is playing value that indeed because as some crops these Difficulty] become [Technical starting are So I out to of other

much not greenhouse with some as again, is Difficulty] these to working designers of as helping [Technical us find them. So,

Michael Zuk

fish the technology side, on follow ag up is As applicable farming? our a to

Benjamin Locke

Interesting question.

hear farm Hey, fish Difficulty]. okay? think can I Mike, [Technical me you

Michael Zuk

New follow-up, regards in coming City? how with regulations sales And we place, increased final a all are then of our addressing are the York to City efforts York New that in and

Benjamin Locke

Mike. Difficulty]. sorry question? Can I'm the repeat [Technical you

Michael Zuk

our how New tightening, York New efforts are regulations we sales York the expanding in With City City?

Benjamin Locke

Yes. Yes, sure.

New requirements for much coverage, cetera. trend York is Difficulty] [Technical do Difficulty]. an interesting build place [Technical all et Those [Technical Difficulty] check. building are you How reality the

us an [Technical So there is opportunity for Difficulty].

Michael Zuk

we quarter. I the next forward look all to and the efforts Well, appreciate

Benjamin Locke

Mike. Okay. Thanks

Robert Panora

Thanks Mike.

Benjamin Locke

can [Technical Operator, Difficulty].

Operator

can you well. too hear Gentlemen, I not I'm sure personally quite not

are coming in You choppy. very

Benjamin Locke

Okay. Well, [Technical Difficulty].

Operator

would I'm that? mind you repeating sorry gentlemen,

Benjamin Locke

Difficulty]. [Technical Operator,

Operator

Kohl Our Banchi from next question [ph]. comes from of Holdings the Haiden line

are You now live.

Benjamin Locke

hear importantly, okay? Most can you me Hayden. Hi,

Unidentified Analyst

You are you me breaking bit, hear a Can Ben. little all up right?

Benjamin Locke

Yes. I can hear you just fine.

Please I [Technical think our Difficulty] have Difficulty]. problem [Technical proceed, Haiden. some

Unidentified Analyst

Thanks on more he fork for a what's question wanted he give talk If the of MCFA happening what for maybe thinks kind it? Great. can commercialization? improvements Bob next. us I Yes. to project is the truck just much. get next parts a this per in -- granular then with better little is so about and just sense And bit million

Robert Panora

back Right. and few feasibility profit If MCFA said we it truck what to just a the to. on ago, on initially demonstrate fork of go to minutes this way I the the a it it we worked was and did it wanted I --

that's drive the be it certify same So we've to it that certified, not really I -- thing. to it if to and want think that should ago, the we're there's that sure the their and is was look of we said doesn't to much And time, we to so them week certified, emissions, the kind MCFA requires recertify that hard it, talk the break should and a but think said focus any they it and program we back we done once do do to intent step going to can the only to at work. them, that we truck not make changes them to about should we engine around is next send on

Unidentified Analyst

Okay.

Robert Panora

I So next step think. that's the

values, NOx In in but a terms don't only little that maybe similar but the converted CO, on values that quote something probably I much of of at the me too I range for don't PPM have showed. and them honestly fingertips, the because they're for I my low have tens

Unidentified Analyst

Okay.

Okay. yet on other engine? you've program side adjacent Great. vehicles can at medium mentioned -- airport. on parallel otherwise I you And there an like the using alternative discussions with guess the unit that guess sort and this Has trucks like towing the same been I with the on any the -- comment of

Robert Panora

that with Not engine. No.

stage a any with that talks had companies some like used could are this I'm just about certain and truck the terms discussions probably vehicles other that and But fork have be our of discussions it's had of in follow-up. this these manufacturers engine, I and for with We business have that other in MCFA. of in But they're not fairly some technology. preliminary

Unidentified Analyst

questions. Thank taking my great. for Okay, you both

Robert Panora

Thank you.

Operator

comes Our of line Instructions] Management. question [Operator Harbor next from you. Alex from Clear Thank Blanton Asset the

live. now are You

Alex Blanton

Good Hi. morning.

Benjamin Locke

Hi, you. Alex. morning Good to you. Thank

Alex Blanton

quarter the of which of backlog, I March on was was that's XXth slightly Yes. on I backlog, said backlog and the now correct $XX.X the listed earlier, the want XXth then look $XX.X as because million $XX.X the was March And May XXst something above year then was you million. the it March million that $XX XXst said million. clarify $XX.X questioner XXth said don't on if at earlier to December and end except then is you believe prior million, you the backlog he

not up? it's it's So really down

Benjamin Locke

you and whenever March backlog in good and got as said not It's was happy very be mix quite our to where I'm absolutely. installations Alex. really a with about it product while XX…. Yes, at it's was you honest it of

Alex Blanton

XXth -- was March $XX end when in you but quarter March gave $XX.X you XXth fourth the go the the few XXst at us it days million, was backlog of March quarter million. a the only later

out some you So that stuff week. shipped in

not at you substantially. it's up it's So say correct backlog to the is look quarter really down ending, substantially very if

Benjamin Locke

Yes.

Alex Blanton

is to chiller $X.X of the XX, interesting chart a And correct? million. sales also market, I slide there that which is wanted site the All Is says you very was the in there XXXX of on right. worldwide

Benjamin Locke

got is it's areas It's environment yourself, the followed a big want Yes. now market, Pacific, but huge. Asia temperature in expect Alex. of a And that's in they Yes. They mostly as work cooling control. commentary an cooling. don't you've globally probably want systems lot AC is where -- to people

a it's So impressive pretty growth.

Alex Blanton

units What is included of is I kinds all numbers? this these in What combined? air mean, -- conditioning

Benjamin Locke

these -- water that sourced that air that is market. segments chillers water ammonia of to cooled these air cooled refrigeration, which which really and cooled Yes. alluding dominate chillers slide, three chillers, was Those these on I

segment it XX% on say, of those to except what be to seeing cool, think, maybe I I think dominates three cooled don't want lot saw you're was to products, but chart. I this air of air a I held the that, of

Alex Blanton

who -- of include users residential? what But are the Yes. it these? Does end

Benjamin Locke

believe I is -- chilling. industrial this This is This don't industrial. your units. includes think this window I

Robert Panora

Yes. We recall commercial.

Benjamin Locke

yes. Commercial,

Robert Panora

We recall commercial, Alex.

Alex Blanton

companies conditioners or for factories air or is This whatever. commercial

Robert Panora

Yes. hotels, than hospitals, are a that's home. larger anything that Buildings office buildings,

Alex Blanton

here main the used, is what technology And you're that's Yes. competing I that with? mean,

Robert Panora

we air thing, compression, is compressor being It's compressor new a By except motor. your like the or a with which home. engine. powering a by an And that doing turned same we electric turning, are at vapor far, conditioning refrigerator it's are compressor an

Alex Blanton

can clarify okay. that, portion address what Well, that -- market was. your this wanted to Because exactly I you of just with what Yes, effectively

Benjamin Locke

Tecochill our which Alex, been go I our a question. into Yes. circling and we've I'll good here, engine just selling -- is, see small that it's our engine what you're technical diversion turns is around very in shaft. a product

working electrical these to efficient, good not generator technology, an are air source that's use which limited of develop of our able us requires inverter sealed obviously it, can super if Tecochill compressor. but compress hermetically compressor to mean which to that the which fancy there and compressor allowing can't Alex, buy get our you MagLev our on were of bearings, compressors it's technology, that it's sealed it. have have duper and shaft super a with advances be there use We're whereas we and shaft, out technology today, we that out these they -- these power because it our unit to hands so don't one proprietary shaft for advantage, sticking compressor driven And a we're that and that of

now don't -- need shaft not we're drive. we Now a

these we electric own Now with can power compressors our package.

at do spark could air entire what it technology Alex, could is, to open us for a and where up incumbents, saying, again, worldwide areas City fits. set, potentially in real spread to and in you That's I they has a of technology all electric everybody prices gas-driven a offer powerful source pretty York exists of air of a to refrigeration this competitor made make way areas available the be electric electric and mean, potentially have proprietary look pretty electrics. to long thing. commercially that my a that's modern compelling. generator So new that be VFD range us I New electrics source our are up an today, prices high technology where bearing mean, these be would engine again, to chiller that able chiller all seal has and and real whole

where that to heading out we point question, I'm represents maybe is develop the Alex, that's but huge have chart want to that I your some with So chillers, wanted in today, I which that's some which of way you're volume a thinking, of exactly the future. of available but

Alex Blanton

much. very you Thank

Benjamin Locke

Nice to you. Alex. hear Thanks, from

Operator

to gentlemen, time. like turn floor I'd further queue this back in no and over the closing. at management questions for Thank Ladies you. we to have

Benjamin Locke

you you And always, all updated talk the we'll more call. for second you. of quarter. the Thank keep joining again otherwise, events happen, Well, as as at end we'll we thank the

Operator

this and Ladies does our you. Thank today. teleconference for conclude gentlemen,

have participation You this your day. and a line time. disconnect for your may Thank wonderful at you now

Tecogen (TGEN) 14 May 192019 Q1 Earnings call transcript