TGEN - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to the Tecogen Second Quarter 2019 Earnings 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 our host, Bonnie Brown, CAO of Tecogen. you. Thank

begin. may You

Bonnie Brown

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

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

of Please the note, and archived the website. for the quarter our on regarding call. website is being Investors A section available our the days earnings will our press of release be Investors XX call this is section recorded following in copy also of second

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

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

these available release our our generally GAAP. website. of measures with certain directly we to not call, in measures section the A non-GAAP accepted and in accordance is the measures principles this Investors GAAP refer most accounting press to or comparable financial earnings in financial During will reconciliation of prepared

I'll Ben update. the over call for now to business a turn

Benjamin Locke

Thank you, Bonnie.

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

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

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

to X. Turning Slide

XXXX in our the saw our margins the compared to second the quarter declined million in versus due The XXXX. $XXX,XXX quarter of which a $X.X in revenues second revenues in And part compared to of of large quarter though loss This net to was in improved XX% our of of was quarter quarter-over-quarter, $X.X XX% the $XXX,XXX in loss second second XXXX. as increased quarter XXXX. to million

adjusted EBITDA gross million second and quarter an the Working quarter of end the of negative million of of of increase X% a in million was XXXX. second from result $XX XXXX to the the end The $XX.X $XXX,XXX. quarter at compared profit capital and was $X.X second

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

Service in from very essentially expenses despite QX revenues higher due is flat, are operating our our to X% particularly gross which saw profit segment are XXXX. our achieved Installation the increase. We margins, our that QX our a encouraged mainly on improved profit remained Since gross XX% and we higher of decline year-over-year revenue

talking North for equipment to good the while shortly. in of the local topic our service be it the margin service as call an customers we later opportunity for factory service service generating improvement center XXth ensure have our our in will for demonstrate and about America The in margin maximize revenue value presence important savings company. is the this I the

The prospects. note last is item I will growth in on investment this our Slide continued our

maintaining the system, which Bob R&D we development market and are Emissions as shortly, the Technology, our continue sales TecoFrost of prioritized Specifically, expenses rollout discuss and of Ultera our I we discuss. will the which will

Moving to X. Slide

is Our and Product associated services. and $XX in as consists the of of a backlog XX. at remaining is our which robust $XX August $XX million stands equipment yesterday, million accessories, backlog, million of backlog installation

few are like our I'd to backlog. a point out things There about

variations general, because CHP it’s that and of this variation product chiller is continue mix equipment. gas as in see our mix, products, despite see quarter-to-quarter. healthy quarterly in but well product core contributions a sales engine to chillers equipment we we of I our any mentioned First as and cogeneration strong

half like system first with in would also a that we to backlog installation have our improved at order TecoFrost of I year. facility of the second our indicate our the here in expected in the Massachusetts local

monitor chose order excited and operation. soft launch our as proximity to so first Waltham, We can are site this we this for closely its in due specifically to the a factory

similar launch already strong building year the West of a in a the soft are pipeline expect on projects for XXXX. and We this Coast TecoFrost later

what's not I like it. in item other backlog to The in point would our out is

large been new spread a for to a among pursuing megawatt have over geography opportunity mostly two three us. For in many year, buildings we cogeneration a

not the more and project just about what the yet. other I thought be or due made We enough to disclosing business means this but of for details a at this in its I on few a point. it talk importance, will and opportunity to mention to this decision location opportunity just in will the it though our quarter, material minutes size be expect third

cultivation I'd indoor is facilities for no important unique cost a to chiller demand growing X% say, now item indoor I is to drop X%. about backlog which such It in like see our saw our gas quarter. last mention in we for Another dip was cannabis. as segment, saving Suffice solution our

quickly of built, get come in, in closed transactional sold is the orders sometimes the the of a and span in nature the Indeed chiller all how reflected sales quarter.

have noted cultivation in in press two Tecochill As months, for recent facility Massachusetts. facilities few announced and orders we in past cultivation additional Nevada our our in release, the

cultivation indoor quarters cultivation competitive, when cost facilities, operational is up As standard areas becomes New as expansion Tecochill orders the scales from in segment practice expect as to planning the come York growth such in indoor again designing increase Jersey. savings becoming new in. I increasingly and New new and coming see

that the in indicate give the returns strategic dollars backlog of but some financial of I that costs project net project, of also revenues actual the see total. importance investors our Ultera thousand talking the outweighing expected project California includes should to about. a few I hundred will far the this be in from retrofit our idea Bob project was scale,

Lastly, previously, products expansion Again, our revenues, each consistent discuss which is of our very contract of said a when revenues backlog as installation and does quarter. this and maintenance service I segment. recurring not contributor our I additional important of consists is prospects contain the

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

renewed strategy First, chiller as to our products. focus have our on we mentioned, a adjusted sales

our only natural product TecoFrost industrial the chiller gas Tecogen further chiller is adding will refrigeration. and line ammonia the market entirely manufacturer new offering and for an engine-driven

than Tecochill sized but cases and with with system. replacing equivalently outlay in an the far As cogeneration, accomplishes with most TecoFrost, as electric I've less capital lower an same chiller savings competition mentioned, cogeneration or energy

to are terms therefore Chillers manufacturers' much representatives also typically more and in project and engineers specified transactional closing. are of

and West this Massachusetts, East I year are for full here Coast, project important As anticipate confidence the before identified we project sites two Coast Coast U.S. in our have installation to set year-end. we customer mentioned, year. as later first establish similar West next TecoFrost anticipate rollout These

for from to some of the of third-party point these productivity we sites. sites year, Tecogen to servicing to continue while ESCO the retaining and earlier Next, them where sold ADG increased O&M acquired the this a the reliability we agreement

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

Caterpillar, a minutes, have Ultera Technology, in or few MCFA. with excellent progress about America with talk we notably Fork of will most Bob partnership Mitsubishi made as Emissions our through Next, our Truck

on the near-zero emission we using Bob is forklift. emissions of As The describe the a the work goal it's through will of certified engine the program the Mitsubishi are engine the focused doing, engine currently OEM to about retrofit. this make

this be any used will natural retrofitting from For as that this both emissions. or emission technology fuel project, vehicle other near-zero to this engine Ultera could demonstrate goal such result a make achieving fleets forklift in near-zero gas certified engine to standpoint, propane development alternative to a

achieve in earnings execute plans financial the ADG sale and And us expectation asset allows we cash expect that year, forward. to lastly, of the our and half the flow second of with stability growth going to positive our

that, our financials Bonnie, like Bob, detail. progress call on over who followed cover turn more emissions detail to describe Bonnie? by I'd in who our With will the to more will

Bonnie Brown

profit XX% second gross XXXX, Thank $X.X were improvement overall $X.X to of revenue million million highlights X% or margin with compared contains for financial you, quarter profit the some million Total in profit Ben. quarter an gross our XXXX XX% showing the QX QX XX year-over-year. gross margin $XXX,XXX of and for Slide XXXX, year-on-year gross of results. and $X.X a gross to of

decline total assets was the of compared $XXX,XXX, Revenue by that of year's from QX to seasonality those for sales those retained company the This company's quarter the versus is and attributable from assets producing to energy energy production a certain of the the reduction sold. XXXX. $XXX,XXX previous

now on par by groups and previous asset those the we those both retained performed meaning with managed company Collectively, sold the and year.

equipment from in elevates managed proportionally concentrated derived these in more However, sold which warmer the assets and months. chillers, is revenue

flat, year-over-year by our selling $XX,XXX to future. or we expenses decreased G&A increased X.X% while as remaining operating While X% decreased expenses XX% overall relatively expenses $XX,XXX invest or by in

for compared the attributable $XXX,XXX a was $XXX,XXX or quarter QX an of Tecogen $XXX,XXX improvement loss was loss year-over-year. Net to which XX% of XXXX, to

has backlog for our earlier, and is remained discussed $XX Ben growth. million, As at the company currently long-term positioning sizeable

compared of quarter the has EBITDA in earnings in XXXX, of same for the our XX which presents first period the those Slide adjusted presentation referenced for non-GAAP and and months throughout been six second reconciliation our XXXX, to release.

non-GAAP EBITDA, measure management uses metric. an Adjusted important a that as

for we Slide XXXX. amortization of or with second and for standard XXXX EBITDA, on net interest, loss the with back after $XXX,XXX which taxes, adding depreciation a to XX, negative shown the negative of Tecogen, second to to As attributable compared $XXX,XXX quarter to come quarter income

the After prior goodwill of mark-to-market comp, adjusted adding unrealized non-recurring and the the adjustments creating investment securities, we non-GAAP from expenses year, stock-based and a reach merger-related loss EBITDA. back charge adjustments, non-cash impairment

$XXX,XXX $XXX,XXX or of to improvement XXXX, adjusted QX for EBITDA an the second was $XXX,XXX XX% For XXXX compared a negative quarter year-over-year. of negative

the for for period EBITDA same an Adjusted $XX,XXX the ended $XXX,XXX, XXXX XX, was to June compared months $XXX,XXX. of six in positive XXXX, negative improvement

I will to the for turn over technology Bob a call Now update.

Robert Panora

thank and morning, Good you, Bonnie.

Truck So let the Forklift with me program. begin

the industry discussed we with have propane MCFA, America, manufacturer the known As trucks. previously, well and propane Mitsubishi a Forklift Caterpillar of been both working electric and with

to trucks an Our technology emissions. been trucks. the objective If – successful, answer adapt are to counterparts to to would fuel produce has negatively Those relative impact the criteria our propane health emissions electric Ultera health. provide that propane their on

of concern are frequent Trucks application to Forklift heightened from indoors. their due Emissions

the Of retuning process. we maximize having the would of were step successfully Ultera effectiveness the be into in the to truck, engine course, the focused second project the in on the System quarter Ultera adapted the final MCFA that

significantly and from retuning, CO is software, tailpipe the MCFA. NOx our two baseline we from iterations of test received as Through improved it done which emissions with were through truck the

baseline reported the call, of respectively the in emissions last form. truck we're as set final As CO and one-fifth our tested and up, its NOx in one-eighth in tuning

we them further discussions MCFA, our that NOx. bring particularly reduction, advised tuning In emissions with could regarding additional

current between being and was we very U.S. that However, separated the inefficient. tuning Japan realized the widely process

for that wall we tuning now to and standard revisit As such, engine certification near-zero had recommended the we the California was underway. conclude

the make the the During could quick the be efficient would iterations with a tuning so more certification, software. impactful cycle is tested dynamometer as engine process to engineers prescribed on a

reviewed consideration. pleased and feedback Japan their the were heard with that MCFA We along So program what several for Mitsubishi options was very recommendations. positive they MCFA’s was under to the met in definitively next. do Ultera meeting with in with we Recently, June, from wanted moving our Management forward

in the engine engineers at Company, the requested Massachusetts. Fork has on the from facility Truck parent collaborative Mitsubishi would course corporate finalizing this Japan on with agreed supplier, of approach work The send that to tuning interactively Tecogen be beneficial. highly We our that

have for September. scheduled the week We tentatively this last of work

can I Ultera today ongoing well. as that Okay. There activities are that several report are other on

request bid up-sized use order of Southern in an an system company the pumping Ultera a municipal in California. in As complete last received a follow-up mentioned to water for has our call, engineering the to

district. The from XXX work ordered newly has submitted capacity engine lot by the and of local and today for are be in design the specifications and in a of our been applied gas doubling early Two acceptance engineering XXXX be natural the largest The in are would horsepower applicable kits to procured caterpillar engines company. supply represent by a completed scheduled the to to will dealer. caterpillar customer system

and is previous discussed Lastly, in this calls.

We a performance to for for organization of catalyst are development completion Ultera. specialized and in leading testing September. the The engaged is with research and a characterize formulate scheduled

that it immediate will that has hopeful to an forklift this program. the are We composite catalyst Ultera, application reduction NOx improve and

to over his call With words. Ben for that, turn final I'll the

Benjamin Locke

Thanks Bob.

want color little XX. in our our core a segments. to outlook and pick moving product give on intend up to So our to growth business I how more Slide bit main on we

Tecogen strong for resiliency our of speed competitor. and economic operation any of First, we capability, system. our interconnect, cogeneration our our permanent the functionality search flagship savings grid from technology of inverter-based microgrid-enabled specialized continue other microgrid generator efficiency and to but see demand the of sets the cogeneration magnet well InVerde variable understood, The is apart

insight Additionally, incentive dispatch, integrates diagnostics, factory monitoring, and metrics. CHP tracking service utility software of cloud-based program our remote data system

the vehicle by shows way, As the system tracking our slide graphic on which indicates, techs. our service the

can factory based there is real-time on yellow stars, Our sites in you them of needs band, our a individual service service centers of see indicated region. our each technicians, by dispatch

are endeavors. centers regardless Tecogen's company a Tecogen one be service assets will always of Our long-term business sustainable any strongest and for viable future of

rinks our as are business as as in chiller ice established continuing cooling. such and such well grow as markets the industrial Second, new indoor we segment to areas cultivation

a turn Since service to a profitable beginning of of map in to desired territory. establishment while operation business will Service Florida the beachhead, centers. the Center effect service year I establishing had again last of our has new drive a the

center service equipment creating are late with Florida but more States our we to Southeast established the added territory, our engines Caribbean. last United service XX more center we in Tecogen opportunity we and in importantly Since Florida established, have in year, the factory for

particularly the TecoFrost support if I Ultimately, Tecochill economic but cooling our in and we've as Center an in our pronounced Service Caribbean, playing expansion. only of Florida factory you Florida. established see benefits broader important gas role Since are have in the

to Finally, specific have that I factory center. a the I want of three to circle in currently back does to megawatts service equipment opportunity American geography mentioned earlier North not for two CHP a

As enough in have backlog, decision the that the XX included win our are center this to opportunity, service planning proactively this we an we we making geography, material due but process in mentioned, I already this should not new award. opportunity is of

a it of While I'm with right would Tecogen measured the to selected, if establish is growth opportunity exists area. in degree mostly expectation project, new particular profitable new untapped the this convey trying that business

this very the North of near-term, product long-term center opportunity expected in the excited in prospects but not just for for for I sales America. the factory another am revenue service

expect the to find I this fall in other. project We the of way early will about or one notify important investors out the course, outcome and

generation distributed in clean, So to propositions moving value would on Slide like closing. systems. reiterate reliable key the of XX Tecogen's I to

cooling First, that to traditional pipeline more our systems heating gas is than use and needs. clean reliable produce and electricity, abundant cleaner, and cheaper,

with generation functionality of storage. certifications, in Our in such microgrid assets systems of and incorporation mind are utility other American designed North distributed terms structure interconnect as

after grid and to to become to systems costs, gas Tecogen these increasingly strive meet resilient facilities goals. are footprint, reduce outages, greenhouse operational improved sought As

unique comprehensive have technologies from other differentiated by technology, proprietary our quality. virtue generation service overall onsite we ourselves Next, and and of longevity, factory presence,

magnet is variable generator the only operating an for speed onboard economics microgrid-enabled key savings InVerde Our CHP optimize features customers. inverter, integrated permanent using system at and technology with that

other no with design becoming chillers for needs. gas natural facilities TecoFrost and refrigeration Tecochill many large cooling and Our are increasingly have basis competitors the

steady And margin tool Tecogen such and the American I new also geography XX foundation always business for enter not a mentioned. previously revenue key provide North company, opportunity as that our for only service as will we are importantly, factory development centers the profitable but

longevity support our due Tecogen's as just in reputation product not products, industry of and is factory a to our but and strong our differentiated result service.

and benefits factory Our markets savings substantially about times in due longer of run service centers customers long-term their the major the Ultimately, the reduced the operation customer service local of concerns and savings. from long-term increased systems to center.

of core maintenance. continuing across for we and margins the installation our are manufacturing, procurement, our term services materials In to improve board, business,

We reach and wider still Ultera future TecoFrost intellectual goals markets. resourcing on reboot and margins the such of while important development as profitability property are opportunities the working maximizing for vehicle our our and associated

on Ultera the our par Generac same, effectiveness reaching with Ford our GM the our engines, investor scalability many forklift another from shown engine in third more these Technology project. the engine have engines, of is update and We on cell. a with larger The message quarter on Emissions later and engines a emissions our summer. and audience think engines, the forward look platforms, of Mitsubishi recently result engines, retrofits to is Caterpillar this the near-zero on earnings We fuel sharing

it turn operator I'll for questions. over that, With the to

Operator

now Thank Wainwright. Amit from session. conduct our Instructions] Dayal Our you. question. question Ladies state your and will H.C. gentlemen, with we Please question-and-answer first comes [Operator

Amit Dayal

Good you. Thank morning, everyone.

Benjamin Locke

Good morning, Amit.

Amit Dayal

help of or the these XXXX sequentially a half guess, improve would better show you what in weaker revenue-wise that be perspective? drivers relative into the if year-over-year to the performance, of of revenue comps to the from going over of to half, half would respect were second first I some first With sort XXXX, some here

Benjamin Locke

where mentioned That's in come thing, or different. to down the the of and so to more chillers. increased what through is orders our product the a I've – can chillers to. comes tend be product not year is you're Orders orderly of orderly, most certainly lot probably Well, the it Yes. and sometimes see Amit. them because sales I timing think going of in the our of rest that's anyways main

take that can bit confident longer, They virtue drag projects sales I'm or mentioned before, And in activities much these cogen tend as be as a chiller A very out be, quite proceeding said, of tend permits on quickly. project about more other in to the by transactional. I I building because little sometimes to chillers whereas the time. going don't

said, I've the So about order I back and for the that, the on of half And that I'm thing. of even as this very would we confident queued up I'm of the instead chiller that topline orders for to fact of expected. our rest first planning should have – boost more of our the additional of getting particularly side is be provide very year, that XXXX. good rest not for the course mentioned in but year, That

Amit Dayal

And Got the or year in rest of it. to Thank sort of in we saw you we should expect levels, for the some second for should what the gross then margin we variance? place remain quarter that. expect

Benjamin Locke

Yes.

excited maintaining we it investors can did guidance constantly above to expect. don't trying So real if XX%. we're what we We want this to hard we should quarter. believe kind I'm and our to of get that me, of XX% pretty We're there. achievable increase our to worked that's margin Certainly, increase. feel like about get I

that different go to to XX% our going of terms forward. there, going But business installation of to we're I'm could or of try XX% to things the sometimes, to continue but are that and so going keep uncertainties up in margin maintain there parts different on, that types understanding

Amit Dayal

Understood.

a in to it set Do If Just to it into regards this to center. need How does does you you? last How like come one were it? me for potentially up service long fruition, goes setting to hire? what much take new one up? it cost you to

Benjamin Locke

quite already things Great coherently. out that question. And we've thought

to can with I cost would tremendous a being can't exactly, a get happening happening to see building with this resources do us having you and out it see a tell van all people. I but I for us reach do cost quickly. year see see with be could additional could ourselves significant. it don't established see and to I not And I the needing very the can't resources for us that. there this. potentially. So to I it

started at Florida good So quite it. with efficiently good and results. we're up the pretty one We've

I should opportunity And this, one, this and see so XXth quite quickly can proceed manageably. the happening

Amit Dayal

in I Understood. That's have you. what back guys. queue. get I will Thank

Benjamin Locke

Thanks, right. Amit. All

Operator

from your question Instructions] Michael [Operator Oppenheimer. state Our Please Zuk question. with next comes

Michael Zuk

and Good morning, Bonnie. and Ben Bob,

Benjamin Locke

Mike. Hi,

Michael Zuk

question coming and installed in on are growing there lot I opportunities are what what know geographies systems indoor a in have the states from or systems in growing, a geographic of Massachusetts. a standpoint? indoor that couple Massachusetts A future opportunities in? of you But other onboard

Benjamin Locke

Well, think working not are both New now. medicinal audience the New New is allowed are in that both use. And largest York to use and ones Jersey Sure. states if and Jersey recreational are sure right I'm the I the marijuana just get New the actively certainly York, of – that knows

going thinking common and just in to Michael, the And sales time. to just is fact, the a that holders and the matter volumes are lot of are the permit a going happen And recreational in of builders happen regardless. is cities assuming these of it's

biggest Jersey, the ones. New York, New So

sales in those of those areas. those course, we've got as We’re quite reps anyway and active geographies in in agents

and importantly, are constant owners expand. developers build who permits and the with to to as is who they has permit More discussion we in site we're looking look tracking And facilities.

state. in favor, they This authorization the of that type works of it be away. states. After mentioned going chiller New any our population. the other following seems our be see the that of for are federalization That's And press a works to few that years. occur I'm smaller some favor. state-by-state it's a fact utilities and wouldn't been state-by-state still everything that's in There work in that are Nevada, and Mike, there. Certainly, state people our I going the stuck York, New on. Jersey, thing within that sold we and don't because, a we course,

Michael Zuk

positive follow-up as New hookups, then into regulations And a regard coming in Greater of of the will New already the us a with natural retrofits for with building, natural the a in City new the positive, it bit area, would gas City, be new bit. opportunity to possibility subject a It existing it changing might negative a be from York capping question, of standpoint? or this the negative? little little on an a but gas seems With hookups, and be for a a York

Benjamin Locke

Yes. Well, in whatever general, building getting the efficiency the building. grid Mike, one the and they're understood. electricity CHP and the profile We're greenhouse is gas their benefits however well from to their heating at XX% operating grid, thing is

efficiency. CHP anything, higher is the reduction of they being CHP result, in a using favorable And result a a to of buildings as footprint can can see position of a a regardless a going because carbon overall as actually efficiency. building. as their And So be themselves see in

in of versus disadvantage carbon almost be renewable a I limits advantage they some think gas some have typically we general, now. these utilities. buildings, utilities, looking the Bob an And could comes When at savings the profile to greenhouse worse, opposed but grid in components, position for position. all down it I'm as Certainly, to XX% have see better Bob,

Robert Panora

two we the York, in ones Massachusetts. one better better. to to and states deal That's big that, better right that than but two Massachusetts with one Many maybe New it’s than or in California, states were those

a other if you room anything tax cogenerate have building carbon for come they supply solar than can't do no much it, there's of you regulations panels. for that the So big as electricity your about,

Ben? hookups a I in probably Westchester, work will our that's that We forth, in so out hopeful think we're will. So problem and favor. it think is The it

Benjamin Locke

there's Yes, where well, there are certain gas. areas

Robert Panora

of supply many exists. we with though, that see, gas the Typically, just tap else, into we buildings there hookup that a big off already and gas Yes. everything there's boilers and

hookups that Westchester. So in they'll I way eventually will gas new maybe itself in figure a us we there get more to Westchester, sort may the think think hurt out out because but

Michael Zuk

what a from sales and and effort then doing expanded standpoint, beyond we in California? center And new are marketing the sales in with our Florida, we service the northeast

Benjamin Locke

Yes.

our our mixed in of – of it's help. needs Francisco is opportunity. it's and well their existing And fleet California course bag have San We in is profitable. there Los Certainly, service centers Angeles. two a running and utility California structure quite

out of California to the sun where mentioned to inverter take the SA, you got if can help reach sky up certification, smart you've periods certification utilities smart is trying need them the we're to they and is during in and That's I inverter us. much peaking very out and this down of when XXXX services. the correction and for frequency of going opportunity types and an these That's And solar that. advantage before,

But of their own projects say, on core in of downside proceed production CHP. proceed the and California, of I California, much our a simply energy think renewables their to of just That's On to they certainly they challenge. of have suffice economics most visions how want be renewable. economics, a of bit

to to high cogent it's forward. It's not get will even able that you incentives rates, from an to not a renewable. building you're that’s electric be give that go you lead going ROI operation just though The and fundamental of you plant, got because may California

there's much So not But not Certainly, mixed and again, happens California, of and opportunity it's personally sometimes there's type gas that any for policy to versus of I you kind about that. can bag. savings directives try of get do behind a stuck renewables.

Michael Zuk

Appreciated.

Benjamin Locke

talking good It's you. Mike. Sure, with

Operator

Thanks.

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

Benjamin Locke

Alex. Hi,

Alexander Blanton

Waltham. ask to there wanted in your in about plant capacity I morning. Good

what's that to more Assuming with that what capacity shifts, shifts, plant other of you compared go the you're doing now?

Benjamin Locke

to at of about I'm here. very terms comfortable room enough. sure. here worried in much double with some certainly what sorting capacity. if we got something It's without can And We've can certainly good out not sweat, question, in what just We do expand capacity of facility. our you our Yes, our building our I'm thought our a we and too offices we this that. will, basement, cleaning Certainly, out about have

ever evening at if expansion, at certainly, look you et think one having looked we probably different these to I got bit we point that But where could capacity beyond would Now got – We've to beyond cost-effectively. had maybe more Xx – expansion point look before that, but get start shifts, things out, beyond capacity and maybe your ever so doing Xx little could cetera, the to to build locally, about that. shifts. we where we the else a we thinking

more in then still Massachusetts and and somewhere amenable Certainly, part built a manufacturing of could the New that the be out some products else, there's certain be here. of And there's products lot northern southern are of Hampshire. built to farmed

So worried I'd excited it's the down not expanding it. calls about. I'm knocking Certainly, walls market for if something be start and production our to too

Alexander Blanton

you you say have without double capacity going… much more You capacity, how more? Do you said your could but approximate percentages? Do

Benjamin Locke

Yes.

I a building could knocking With think down say here. capacity cetera, our could bit but double here safely in without we can little we having our walls, of in to it et I Waltham. change investment double

Alexander Blanton

And without shifts? going to additional

Benjamin Locke

[indiscernible] both suffice here. or the have But think I'm doubling to we can those. go down too be different could Possibly. us if I'm because I we're manage or not and would taking capacity, there, say, knocking don't different lot there into effectiveness a detail certainly offices whether it's of shifts. a get to see just walls into our much that thought either of but sure going to cost I of sure into I for building by out can

Alexander Blanton

of lot a leverage leverage, expand building. you you within gives operating That can if your Fine.

Benjamin Locke

building, that got too. sure aside, so having soon. XX just another we'll have just There we is – we centers There and we other – can units. as are little this don't service Alex, are these XX hopefully And does. have we Yes. put other places we've buildings that really maybe building can helpful, can places It

Alexander Blanton

see. I

point. that's to Okay. Kentucky. I Well, a you is around There's called very Kentucky. ask AppHarvest, about industry good in wanted Eastern company the indoor which Kentucky agricultural developing Eastern Morehead, a

edition is and on reportedly But and square XX is have of any that plan agricultural available with This million which was the X.X a this efforts And on the tomatoes, big, you indoor one will grow there. to relation XX feet XX marketing cost is largest in farm they this very back described a they're expand will effort. imports of in effort? under acres minutes from probably and people the will XXX million, planning current to first Have from website. March big glass employ and Mexico, minutes an $XX indoor

Benjamin Locke

walked are Sure. of about fact I'm if kind we’re and – cooling, going. we XX,XXX perk bit And feet of metric or all these XXX terms can so. chillers up you certain monitoring there's of their little because Yes. of tons, a square we big would my to I and cultivation. are where mentioned in about in it fact look facilities of It’s I our And a a using they in one guys, hall, down know ears the it DTx

different that facilities to mean so small them? applicable these to equipment. small, much more needs look and as to then make facilities familiar they at too may I energy need how bit, And they too what I'm these So little are again, for we their AppHarvest, with say, our can you cooling are And are a as many of a maybe. and guess we specifically

in the opposite. case Now AppHarvest, of us. a it's the for It's think opportunity I large very

chillers, through that, So we our but do through there's cogent not just could equipment. our ways

go There’s are definitely But then the these I’ll answer at your staying the question, it. to Alex, Kentucky better for top generally specifically. look and of in larger back So facility, speaking, on we’re all one the fit and we facilities.

Alexander Blanton

the March the broadcast website, the on XX look year. would If to anybody It’s XX was like at minute minutes. broadcast original XX this

One that don't an see recently de which long was interview, on Hannity an interview de the was that had with entire he well And this Fox Okay, took very hour. and of what but Mayor program, Hannity. in Sean New to York wanted hour I Hannity, usually question. Mayor Blasio Blasio more I to was during case, good. in watch say.

point one he at said he that every wants building. And

their greenhouse with do to of every has to is part, he building compared York emissions. of And Deal said this City the gases this get reduce current are on. on so worst Green his Now his and to that York footprint reduce in he green. to one and course their in and New he City but of exaggerated he that opinion, emitters something buildings New And said New wants and

goal. this of might in much how New how about emissions you aspirational can they to willing add of and that they know terms thinking reducing buildings? I to York don't do What be what I is further in footprint much to Now, and actually just what are said and City, about carbon

Benjamin Locke

been question myself. puzzling I've that Sure.

trying not There's greenhouse more creates going the neutrality, as of of People energy of And has needs gas is significant. which are their then in And down. footprint. contradiction buildings goals up, all cut certainly plugging exciting. that York a of is energy terms laptops. New terms course Energy buildings needs you certainly, carbon very in are their say, need. in to their in

move getting XX% the CHP, footprint. is the solar in a equipment, needle to terms efficient for your isn't best as something maybe A in piece Curtailing of for footprint bang gas getting making the needle couple kind a or going greenhouse down of of of that's the power but a greenhouse the going these panels significant generation Bob gas like buck And may in needle. of reduction your that move that your terms mentioned, little elevators to bit, building's buildings. from move

going I through renewable not electricity whether or to of prices. then that it's away. the think of I wind through So going for one distribution where result to type if us. to the programs these to, opportunity is higher honest, other other think an is what result lot And resources, it's going be are be of end electric way or a to it's in the And going go

whether going that it's distribution challenge. a it's infrastructure wind be still power, deliver from or to to The anything,

rates electric still much think reductions, put to I gas uphill with incentive And of are economic an to be to by greenhouse I that more going in create CHP the provides, So virtue trend. faced those just think going our buildings. it's equipment

out how customers, happen carbon my to start all cogeneration by telling bills, we'll tax having going real getting is of overnight what and Alex, years. see it. next whether few building legislation and that's in of pans whether ahead this equipment, putting But Now, this it you're that goes I'm the in

– of so probably other expect greenhouse any than could you the your improving more footprint measure. gas drastically You’re improving building,

thing so think for greenhouse So role us. are say I'm owners reducing But to the can. going understand gas. go you add in is building you good that, their But must of not as to importance Bob, to ultimately far going anything CHP I to this a and the

Robert Panora

No.

don't to many forth. buildings a they They too new more don't And buildings large The in I architecture their the glass, options. want impacted good think have have they so York as New electricity with negatively. that's we deal and and built, City, more just use that have characterization. are they cooling

would footprint San but in our And they couple meet building, can because a for look maintain Francisco this I've where it seen architecture. the requirement also equipment in at the sites of carbon of

I So are these all – always those us. type legislations of if things, think fairly, they're will for good enacted

So…

Alexander Blanton

it aspirational? mentioned that of is deal you But lines will these along legislation. is any know Do you specific Or that just coming this? legislation with

Benjamin Locke

City New the think Council that certainly requirement. council city York I Well, – passed

teeth of is the goes that's this who city wait knows we'll then much enforcement next years. to that it, And thing see. course, that area and Now two how if council in of kind into

things from unpredictable for the show them some saving get And grid, I benefit decision on much cap If savings just it into their type make are What then the all their customer because information start or of that. you'd that much carbon out let how is and and penalty, to is. how to then based the just greenhouse from you're my try this what is is we lay this customers from were standpoint. there

Alexander Blanton

Okay. Thank you.

Benjamin Locke

Alex. Sure,

Operator

closing Ladies remarks. back questions to I'll there it turn and gentlemen, this further are no time. at management for

Benjamin Locke

on to months as coming for the you in updates weeks call give and listening everyone we the and happen. for Well, thanks again they hope

Operator

you. today's conference. disconnect. a concludes Thank may day. great Have This parties All

Tecogen (TGEN) 13 Aug 192019 Q2 Earnings call transcript